CEO Chat With Jerry Guo, Casa Systems
The history lesson
Steve Saunders: Last time I was here [at your HQ), the entire lobby was full of products being shipped to customers. I thought: well, that's funny. So I took a photograph of it. It was a great visual for the success that Casa is having. What do you attribute that success to?
Jerry Guo: Two things. The passion of the team -- the team is really passionate about creating the new technology. And talent. So it's both.
SS: You think they're taking it all personally, then?
SS: So it's a mission.
JG: It's a mission. We don't say this is a business; we don't say "nothing personal." It is personal.
SS: Yeah, I say the same thing. People will tell me Light Reading lost a contract or something, but hey, "don't take it personally." I'm like: how else am I supposed to take it? I own the business. How much more personal could it be?
JG: I take it very personally.
SS: Exactly. Tell me a little bit about the history of Casa. What's the relationship between Casa and River Delta? How did River Delta set the stage for this company?
JG: Legally of course there is no relationship. But a lot of the original founders of Casa came from River Delta, including myself. I was the VP of Engineering at River Delta. So we developed the CMTS at River Delta. And at the end of it, we realized that it was a good CMTS for its time but it was not something which could be used for the kind of streaming video content which was going to come next. The design was limited by what was available at that point, and also people were focusing on web browsing. We realized that's not what the industry would eventually need. And we also believed that the whole industry will go "all IP" and will go through this conversion phase to video.
SS: When did you realize that?
JG: Our first product could do IP. We released that one in 2005. It may have been a little bit ahead of its time but we believed that convergence was going to happen, and, longer term, the migration to IP.
SS: Do you think it's happened faster than you thought it would be?
JG: Slower than I thought.
SS: Why is it taking longer, do you think?
JG: You really need a lot more channels than what was available ten years ago. We were doing 16 bonded channels. Not enough. You need more channels for video and DOCSIS together. And it takes a lot of time for people to even think that way. People were so used to what they had at that point.
SS: You have an engineering background. Do you think engineers have different attributes as CEOs than the CEOs who came from, say, a financial background?
JG: You see successes from both sides, right? There are pros and cons in both. CEOs from a technical background tend to be much more passionate about technology. And the creation process itself. So I'm biased because I'm an engineer.
SS: You got a huge round of investment at one point; almost $100 million.
SS: Were you surprised at the size of the investment that you were able to attract? Had you been looking for less and the investor just came in and said we want to go all in, here?
JG: We didn't need the working capital. So it was actually a secondary run.
SS: Really? What did you do with the money?
JG: We bought back some of the shares.
SS: That's always nice. So they were really coming to you?
JG: Yes. We had multiple investors very interested at that point.
SS: What's the investors' hope for the company?
JG: As with a lot of the investors, they hope for a very large return, and at the same time they want to leave a legacy as well.
SS: Do you get a lot of pressure from them for IPO?
JG: I'm not getting pressure from them but that's really their plan.
SS: Can successful IPOs happen in the communications industry?
JG: The short answer is yes. We're in touch with the investment banks and based on what they say the public market is very friendly to good technology companies right now. There is actually a big shortage of solid technology companies. So the market conditions are very friendly.
SS: That's exciting.
JG: Yes. And we have all the right ingredients for a successful IPO. We have very high growth rate. That's very rare, even compared to other successful big companies. And we are cash flow positive, and not too many of them are like that.
SS: It's the complete opposite of 2000. Remember the optical companies back then? No product, no revenue.
JG: Right. So we're cash flow positive and we have a diversified customer base. Even though we are in the service provider space we are global and we have hundreds of customers. We don't have just two customers. And we are also diversifying into new categories like wireless.
SS: Do you have any feelings about timing of the IPO?
JG: We are preparing for it and making ourselves ready. I was advised not to say specifically.
SS: I wouldn't ask you to say anymore. All I would say is remember your friends and family!
JG: [laughs] Yes, absolutely.
Next page: Moving into wireless