Billions In The Bubble: Siara CEO Vivek Ragavan (Part 5)

SM: How is it that Siara knew the gaps in the Cisco architecture?

VR: Ravi came from Cisco, and what really enticed him to come was the chance to build a new routing architecture. His expectation was that it would have all kinds of advantages over the Cisco IOS architecture. Ravi was the one who implemented the designs at Cisco, so he knew it inside and out. Siara offered him the chance to attempt a new architecture that could answer questions Cisco IOS could not, and he could do that from scratch. He brought his team with him; by March of 2000 he had 50 people over.

SM: Redback was enticed by that work?

VR: Redback saw what we had already done. They saw a great routing team that they could not build. They were already a public company, so there was no way they were going to build a team like the one we had. That is why they acquired us.

SM: That was in March of 2000?

VR: The agreement was signed in November 1999 and closed in March of 2000. Redback funded Siara in the interim. We had to cancel the $70 million we had raised in Series C because we were being acquired.

SM: You built Siara on $10 million in equity and $8 million in debt. What was the acquisition price?

VR: It was $4.3 billion.

SM: That is a multiple for the ages!

VR: Vinod was quite happy.

SM: What happened at that time? Did you stay with Redback?

VR: The six senior guys at Siara, me, Pankaj, Bill Kind who came on board in October 1999, Dave Stiles, Mike Yamamura and Ravi Chandra, had a deal. Each was supposed to have a certain position at Redback, and if he did not receive that position he could be accelerated out. I was supposed to become CEO because Dennis ultimately wanted to move on, and he was happy with me transitioning to CEO at some point in the future. I started out as COO reporting to him. Ravi, Dave, Bill and Mike all had equivalent titles.

Accordingly we all joined Redback in various positions. Pankaj became VP of Engineering of the entire company. Bill became VP of Marketing and I became COO. We stayed for a while. Bill was the first to leave because he was supposed to become COO of Redback but the company figured out in about six months that they did not need a COO. I became CEO in six months.

SM: Did you run Redback when the market was collapsing?

VR: Initially I was running it when the market was going up. I became CEO in June of 2000. The market started turning around March of 2000. Redback stock was in the $100 range when they signed the deal with Siara. It went up to about $180 in July/August of 2000. In October and November of 2000 it had another collapse from which it never recovered.

SM: The dot-com stocks collapsed in March of 2000 and never came back up. The telecom market came back up, and a lot of companies went public then as well. Then the ultimate decline hit telecoms as well.

VR: Yes, and I was there for that entire cycle. I was CEO from June 2000 to May 2001. When I left the stock was at $20, but it was not done declining. A few days after I left I sold all of my stock. I certainly did not sell as high as I could have, but I had insider information. I waited for the approved windows and sold when I was permitted to.

SM: The executive team transitioning into a company does not have the same privileges of liquidity.

VR: The venture funds that own stock have to distribute stock and that the market knows about it. However, they can do it at any time. I don’t know how quickly our VCs distributed theirs, but I think they made a good amount of money. Vinod had two or three of those deals, because Cerent was another one.

This segment is part 5 in the series : Billions In The Bubble: Siara CEO Vivek Ragavan
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