Innumerable CEOs of private venture-funded tech companies are pointing to the general depression in the tech sector as if to say see, it’s not my fault. Gupta (who has a raspy voice that could be described as the Indian version of Marlon Brando as Don Corleone in “The Godfather”) has no trouble insisting that Narad is “the coolest company around,” and even “the Netscape of this new market.”
It’s not quite Naveen Jain saying that Infospace would be the first trillion-dollar company, but it’s bold, and Gupta better have some serious muscle to back up his ambitions plans. Otherwise he could, like Jain, tarnish his credibility — which he firmly established when he sold two companies to Cisco in the second half of the 1990s (MaxCom Technologies and Dagaz Technologies).
The Play
Fortunately, Gupta does have a pretty interesting offering in hand. Narad is in the broadband space. But Gupta is quick to clarify that by broadband he doesn’t mean 128 kbps out of a DSL or cable modem. “ADSL isn’t broadband, ADSL is bull$#*!” Gupta says. “It’s a souped up modem!” Gutpa is talking about a speed of 100 megabits for his broadband pipes. This is the point at which he estimates bandwidth issues start to disappear for services like video on demand.
Narad’s take on the broadband problem is to partner with cable MSOs and develop switched Gigabit Ethernet over Hybrid Fiber Coax (HFC) services. The company also builds the software for the management of these broadband IP services.
Gupta says he has “no competition,” since Narad is the only company able to provide switched Gigabit Ethernet over the existing HFC network. The ultimate goal is to allow Cable MSOs to offer IP and network services like VPNs, networked storage, and even basic T1 and voice connectivity to the under-served small and medium-sized business market. Such capabilities could turn cable operators into serious competition for phone companies.
Gupta claims that Narad’s products make even the first small or medium-sized business customer a profitable one for cable MSOs. “In the U.S., for every ten residences there is one small business,” Gupta explains. “For a node of 500, there are 50 small businesses. All you have to do is capture one — and then most of the expensive part of the node is paid for. And then to get consumers, the marginal business case is really good.”
He continues, “if you can capture a reasonable fraction of the small business market it turns out that the business model is really great for cable operators with our equipment. They get paid off in a year, and they get 70 percent IRR.”
Proof Time
When siliconindia last covered Narad as a startup in 2000, it wasn’t clear if the technology even worked. Now, Gupta says, things are well on their way for the 150 person company based in Westford, MA., which has rasied $64 million (enough, according to Gupta to take the company to profitability).
The company just shipped out beta products to three “very large MSOs” in the U.S. and one in Europe and Japan. By June the company expects to be shipping arbitrary volumes. Gupta claims that VCs and investment banks are calling off the hook, but he isn’t in a hurry to raise more money.
Broadband became a dirty word, with the collapse of Excite@Home and others. But Gupta simply scoffs at those business models. “If broadband means lots of bandwidth, then to me broadband is a losing proposition for whoever. If broadband means a set of services for which you can charge appropriately then broadband becomes interesting.”
Creating a large market is never a walk in the park. Despite Gupta’s charismatic language, he still has a lot to prove. Probably even to the bankers that he hopes will make Narad the next big thing on the public markets.
