Billions In The Bubble: Siara CEO Vivek Ragavan (Part 4)

SM: Who was on was your team at Siara?

VR: Dave Stiles was the CTO. Mike Yamamura came over from AMD where he ran ASIC development. We had a great software team. We hired Ravi Chandra from Cisco, and he built the whole routing team. We brought in Pankaj Patel from Cisco to run the engineering. Bill Kind came over from Ascent to run marketing and do some product management. He did everything other than engineering.

SM: How much money did Vinod fund it with?

VR: I think he put in $1milion himself as a Series A to get things started. I did the Series B, which was $10 million.

SM: You arrived when the company had just $1 million, so I am sure you knew it would not last that long.

VR: I considered raising the Series B my first job. Without it the company would not even start. It was tough, but it was during the height of networking in 1998. Vinod was already in and others wanted to invest. My boss, Bill, at ADC also wanted to invest in the company as well, so we took $3 million from him as well. We also had access to an additional $8 million from ADC as a venture loan.

SM: So your Series B was really closer to $18 million?

VR: All combined, yes. Bill agreed to it because we were building a platform that he could utilize at ADC. He was in the video business for cable, so we were able to let them build a card for our platform. That would make it a replacement for one of the products being sold to the cable industry. ADC could then sell the complete platform to the cable industry. The gross margin of every sale that was made would be utilized to pay back the loan. If the loan was not paid off in a certain period of time it could be called. It was a good deal on all fronts.

SM: Where a lot of your customers from ADC relevant?

VR: A particular configuration of the cable industry was relevant. The main market was any service provider or carrier who offered combined services. There was a whole slew of new data ISPs like Qwest, and our box was for them. We just figured the cable industry could use the box as well if it had a video card, which ADC would develop, and then they could also sell it to that industry for us.

SM: The business sold quickly. How much did you build it up to prior to the sale?

VR: We raised $18 million in early 1999. I officially joined the company in Febuary of 1999; prior to that I was consulting. I had to finish the first quarter of ADC before I could move. We started hiring in early 1999. We hired engineers left and right. When I joined there were 15-20 people, and by September we had over 75. Around September we had made a lot of progress selling the product but we still had to raise a Series C. We wanted to raise $70 million, and we did that at the height of the market. We raised it without a product, and in fact we had a tough time keeping people out.

We had already received a couple of nibbles by then as well. Juniper was interested but we could not come to a deal. They offered twice. The first time we felt they offered too little. The second time they walked away. In October we had serious interest in the company from Redback. They had the application software built on their own platform, but they needed the routing and the hardware. They already had an established business around their software. What they lacked was the underlying routing engine. It was a perfect fit for them. Our product was half done. The ASICs were underway and all conceptual design was done.

This segment is part 4 in the series : Billions In The Bubble: Siara CEO Vivek Ragavan
1 2 3 4 5 6 7