That time is past. But, contrary to public sentiment the startup entrepreneur is not a dying breed.
Syed Ali sold Malleable Technologies, a communication IC company he helped found, to PMC Sierra in June 2000 during the over-heated days of the networking and communications boom. “I could have gone and opened up a small bar in Hawaii and kicked back,” says Ali. “At the end of the day if you have $10 million or $1 billion, it doesn’t change your quality of life.” But Ali is not sipping Mai Tais in Hawaii; he’s back with his nose to the grindstone in Silicon Valley, building Cavium Networks, a security processor venture that many VC investors would love to get in on when it raises a second round of venture capital soon. After the carnage, as all of the wannabes pack up their U-Haul trucks and head out of America’s technology hubs, the real startup entrepreneurs may be emerging from the ashes.
Cavium raised its first round of VC money in early March 2001 after the markets had crumbled. But Ali echoes the sentiments of many in a select group of die-hards when he insists, “For good companies with good ideas and good teams it’s better now than it was a year and a half ago.” According to Ali, venture investors are wary of anything but what they perceive to be a sure thing. In a market where VCs are tight fisted, Ali has been inundated by calls from would-be investors, desperate for quality deal flow.
Cavium’s security processors are designed to handle all aspects of network security, as well as e-commerce and e-business security. From a market standpoint, the company is in a good spot at the right time because enterprises suddenly seem willing to pay for security and demand security capabilities from the various enterprise hardware products that they purchase. Hence Cavium’s security processor appeals to a diverse set of technology product vendors. It can go into servers and server load balancers, as well as products by VPN vendors and more. That means a potential client list that includes the likes of Compaq, Sun, Dell, Cisco, and SonicWall among others.
It’s not a completely untapped market, with public players hi/fn and Broadcom leading the charge, but Ali explains that his high-end chip can do 50,000 transactions per second, versus the high end Broadcom offering, which can do only 4,500.
He brought together an all-star team of engineers to build a product that would properly address the market opportunity that he had put his finger on, and out-execute his competition. VP of IC Engineering Anil Jain led the design of the 1.2 Ghz Alpha processor at Compaq and brought some of his team with him to Cavium. VP of Software Engineering Khaja Ahmed is a veteran information security expert. Cavium has not hired a single member of its 40 plus person team through recruitment. All hires have been people who have worked with the founders. The result is a very technology-intensive effort to bring the product out in a year. It’s entrepreneurship at light speed — but not the fluffy stuff of the late 1990s.
“There were two levels of people who did startups. You had the half-motivated people whose primary motivation was the financial aspect, and you had people who really believed in this process and wanted to do new things,” says Ali. He talks about Silicon Valley with a kind of reverence, which is interesting for a guy who started out wanting to work in the media, as a DJ for All India Radio in the late 1970s, and as the producer of a few TV documentaries.
Ali’s father had come to the U.S. from Hyderabad in the late 50s to get a degree from Berkeley, but had gone back to India. He encouraged his son to get an engineering education and build a career, and Ali eventually decided to do a masters in engineering at the University of Michigan just as a way to come to the U.S. — where he had a dream of eventually getting into the media again. A decade as a semiconductor design engineer in Silicon Valley, and it was clear that his career had taken a different turn.
Ali admits that he has the classic “type A” personality of a startup entrepreneur —and that he enjoys taking things from zero to $100 million, rather than struggling to increase the margins on an existing business. Prior to Malleable and Cavium he grew two $100 million business groups at Samsung from scratch.
Initially when I was in school my dad always told me you are performing to less than 50 percent of your potential. You are capable of much more,” Ali remembers. “When I came to the U.S., the environment, the friends that I had and the whole experience really brought out that other 50 percent. The competitiveness, the atmosphere, the infrastructure where you know that if you stretch out you are going to be successful.” He smiles, then adds, “This is the definition of what a true capitalist ecosystem should be. It’s amazing. When you go to a party here, people talk about ideas and trends.”
It’s a point of view that no doubt many siliconindians would share. In the end it’s not so much about the simple material rewards, but about the experience of building something in an environment that allows for explosive growth and change. That’s why so many successful startup entrepreneurs go back and do it all over again. Ali probably wouldn’t be happy in Hawaii.
The startup entrepreneur lives. The passion to change hasn’t gone away, and the companies of the future have yet to be born.
