Former Cascade execs launch start-up

The two leaders of the former Cascade Communications--Gururaj "Desh" Deshpande and Dan Smith--are at it again, gaining $20 million in two rounds of venture funding for Sycamore Networks, a new network equipment entry targeting the fiber-optic networking needs of carriers and service providers.

Sycamore is focusing on technology that will provide greater control for network layouts implementing fiber-optic strands. The idea is to allow carriers and service providers to implement a sophisticated set of services by using its product, according to executives, allowing for management of what is expected to be a glut of high-speed bandwidth in the coming years, observers say.

The company will debut test versions of its products in the first half of next year, with final shipment due by the end of the year, according to executives.

Deshpandi pegged the market the company is targeting at $8 billion to $10 billion over the next few years. "The opportunity is huge," he said.

The latest high-end networking play to come out of Western Massachusetts highlights a remarkable trend for former members of the Cascade executive team, a firm acquired in the spring of last year by Ascend Communications.

Free from the contractual requirements associated with the Ascend merger, former Cascade executives are turning up in start-ups all over the area. Nascent firms such as Argon Networks and Castle Networks include top members from the Cascade team. Some have even set up shop in Westford, Massachusetts--the former home of Cascade.

What all these start-ups are facing--despite a ton of new carriers and bandwidth providers--is a glut of similar entries all gunning for the same niche, with varied types of technology. A slew of well-funded firms have decided that upgrades to current carrier networks and future network build-outs represent an opportunity too large for only Cisco, Ascend, Lucent Technologies, Nortel Networks, and other giants.

The current terabit routing and fiber-optic oriented entrants will likely follow a script similar to the market for Gigabit Ethernet networking technology, according to analysts. A huge number of start-ups garnered piles and piles of venture capital money in order to make devices based on Gigabit Ethernet technology in the mid-1990s. But the market was soon characterized by acquisitions, with a lonely few remaining independent at this point, left out in the cold.

Some view the success of Cascade as an inspiration for their own goals. Cascade survived in an acquisition-minded networking industry, becoming one of the few companies to go public and thrive from the early 1990s. Others that remain independent are few and far between, with Fore Systems and Xylan notable networking exceptions.

Deshpande, former chairman at Cascade, will serve in the same capacity for Sycamore. Smith, president and chief executive for Cascade, will also take on the same roles at the new firm. Matrix Partners and North Bridge Venture Partners are among the venture capitalists investing in Sycamore.