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August 27, 1999
Technical Visionary, Market Wizard
A P Kamath
Dr Gururaj "Desh" Deshpande is certainly not new to media attention and awards. He was named one of the "Visionaries of the Industry" (Communications Week, 1996), one of the "Top 25 Technology Drivers" (Network Computing, 1996) and "Entrepreneur of the Year" (Communications Week, 1995). Here is a man who received wide media attention when he sold Cascade, a start-up company he had founded, for $ 3.7 billion in 1997.
But even then Dr Deshpande is surprised at the attention and awards that Sycamore Networks, which he founded less than two years ago, has been getting.
Sycamore, the leader in the delivery of intelligent optical networking solutions for carriers and service providers, has been constantly in news in the last three months.
In June, for instance, Telecommunications magazine chose the Chelmsford, Massachusetts-based company as a Hot Start-up to Watch for 1999. Telecommunications is a leading monthly publication covering service provider technology, its market, and related business trends and developments. And then there were highly favorable articles in such magazines as Fortune which named Sycamore one of "12 Cool Companies for 1999". The firm was recently named one of the hottest privately held companies by Red Herring magazine and Upside.
"We have known for a long time that Deshpande is one of the most innovative entrepreneurs," says renowned surgeon and Harvard University professor, Dinesh Patel who has known Dr Deshpande for many years. The two have been involved in The Indus Enterprise, which among other things, mentors new entrepreneurs. "And yet he is one of the self-effacing person who would let his work speak for itself."
And certainly Dr Deshpande's work is being discussed across the country in major magazines -- and in boardrooms and among young entrepreneurs, especially from India, to whom this IIT-trained high-achiever is an idol.
The Telecommunications selections, chosen by the editors, were based on innovative technologies, financial backing, and management credentials.
Citing Sycamore's strength in optical, networking and management expertise, the editors wrote, "chances are strong that Sycamore has everything necessary to establish itself as a leader in building intelligent end-to-end optical networks."
The editors were also impressed with Sycamore's $ 24.5 million contract from the Williams Network as evidence of the company's credibility. (A few weeks later, Sycamore added another major customer -- Millennium Optical Networks, the first metro-based CLEC to deploy an intelligent optical network). The market for optical networking products is expected to grow to more than $ 5 billion by 2001, and industry experts expect Sycamore to be a lead player in this market.
"We are very pleased to receive this award from an important publication in the carrier marketplace," said Dr Deshpande, Sycamore's chairman. "Obviously, there are currently many start-ups in the carrier space and the selection process could not have been easy. Sycamore has been on a very fast track since our launch in late 1998, and it is rewarding to receive recognition from Telecommunications's experienced and talented editorial staff."
The selection process included discussions with market research analysts. According to Frank Dzubeck, president of Communication Networks Architects, "It is an amazing feat for an optical network player to go from product inception to shipment in nine months." Sycamore recently closed a $ 20 million third round of funding, bringing the total funding to more than $ 40 million.
Recently Sycamore filed a registration statement with the Securities and Exchange Commission for an initial public offering of its common stock.
All shares will be offered by Sycamore. The offering includes shares that the underwriters will have an option to purchase from Sycamore solely to cover over-allotments, if any. The proceeds of the offering are expected to be used for general corporate purposes, including working capital and capital expenditures, and the repayment of debt.
Morgan Stanley Dean Witter is acting as lead manager and J P Morgan & Co., Lehman Brothers and Dain Rauscher Wessels, a division of Dain Rauscher Incorporated, are acting as co-managers of the offering.
The decision to offer shares to public came in the wake of slew of attention grabbing media honors.
For instance, Fortune magazine recently cited the firm's fast, first year ramp-up that has included developing and shipping products, as well as booking revenues of nearly $ 30 million.
It said, "No other networker -- not Cascade, Ciena, or even Cisco -- has ever left the starting gates so quickly."
In addition to an impressive track record, Fortune considered Sycamore's goals to "do nothing less than change the nature of the Internet," as a factor in their selection.
Sycamore was founded in February 1998 by Deshpande, Rick Barry and Eric Swanson, (both from MIT's Lincoln Laboratory).
Prior to Cascade, Dr Deshpande co-founded Coral Network Corporation in 1988 and was with the company until 1990. Previously, he served in various management positions for Codex Corporation, a subsidiary of Motorola, and taught at Queens University in Kingston, Canada.
Dr Deshpande, who holds a B Sc in electrical engineering from the Indian Institute of Technology, did not come to the United States directly as most IIT students do. Instead, he went to Canada because of the attractive fellowship he received there and earned an ME in electrical engineering from the University of New Brunswick in Canada. He then went on to earn a Ph D in data communications from Queens University in Canada.
One of Dr Deshpande's biggest assets is that he is an anomaly, says Paul Callahan, group director at Forrester Research. "He's a rare combination of someone who can actually read markets and be a technical visionary at the same time," Callahan told Red Herring magazine two years ago.
Take for instance, Cascade, the company he started in 1990 based on his hunch that all PCs would one day be linked to each other by a large public network. The Internet was hardly known in early 1990.
"It didn't really matter if it was the Internet, frame relay, or ATM," he said a few years ago. "I simply knew in 1990 that every computer would have to get connected to every other computer in the world."
Within a few years of its establishment, Cascade became the leader in the worldwide market for frame relay equipment. According to Cascade, whose customers include major ISPs like UUNet, PSI, and Netcom, nearly 70 per cent of all Internet traffic passes through one of its switches.
Now that Sycamore has become yet another huge success story, what will be his next move?
Dr Deshpande is brimming with visions. But right now, he is waiting to see how the public offering will be received. And for the record, he is forbidden by law to talk about the state of affairs at his firm or his future plans till the public offering is finished with.
But we can guess, can't we?
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