Coriolis Shuts Down

Coriolis Networks Inc. closed yesterday, a little more than a month after announcing its largest revenue equipment deployment to date (see West Looks East ...). The Sonet multiservice provisioning platform (MSPP) maker says its board decided to pull the plug after it was unable to get a funding commitment from venture capitalists.

Greg Wortman, formerly Coriolis's VP of marketing, says a consortium of banks are now meeting to decide what to do with the company's intellectual property. "Unfortunately our four customers are without any support from Coriolis," he says.

Those customers were energy subsidiary Vic Tokai (via reseller Nissho Electronics Corp.); Alaskan CLEC General Communication Inc. (GCI); Georgia-based Marietta FiberNet; and Ephrata, Pennsylvania-based D&E Communications Inc. The company also says it was on the shortlist of companies AT&T Corp. (NYSE: T) was considering in its latest multiservice access architecture request for information (RFI).

Whoa. Hold the phone. Why would a VC not want to invest in a company that already has a revenue-producing product, had an "in" at AT&T, and already has a reseller arrangement hammered out in Asia?

"[The VCs] were looking for more of a near-term exit strategy than they were able to see in the company," says Wortman. He says VantagePoint Venture Partners was the last firm that Coriolis had talked to regarding funding. Geoff Mott, managing director at Vantage Point, could not be reached for comment.

Perhaps another factor is that Coriolis didn't have enough customers and lacked a marquee account. In addition, its market perception was low compared to its competitors. In the overall results from Heavy Reading's equipment survey last year, Coriolis ranked 17 in the Sonet MSPP category and 18 in the SDH MSPP category (see Heavy Reading Surveys Telecom Vendors).

Finally, while the company had a unique MSPP, it lacked the wider next-gen Sonet product line that incumbent players hold dear. For example, the chart below shows how Nortel's Sonet products positioned against Coriolis's smaller lineup.

Table 1: Next-Gen Sonet Product Scorecard
Vendor Access CLE MSPP MSTP MSSP Core STS1/ VC4 Switch Product Breadth (1-5)
Nortel OPTera Metro 3100 OPTera Metro 3400, 3500 (Sonet); OPTera Metro 4100/4150 /4200 (SDH) OME 6500 OME 6500 OPTera Connect HDX 5
Coriolis OptiFlow 1000 OptiFlow 3000 n/a n/a n/a 2
Source: Heavy Reading

Access CLE: access customer located equipment
MSTP: multiservice transport platform
MSSP: multiservice switching platform

But maybe the real reason Coriolis couldn't find funding is because VCs didn't want to support the company's snack allowance, which it boasted of in an actual press release issued in January 2001. Here's a snippet of the release:

    During this growth spurt between year-end 1999 and year-end 2000, headcount exploded from 24 to over 100 and expenses for employee dinners at the office swelled tenfold. The snack food consumption at this fiber-optics networking company mushroomed from $200 to more than $1,500 per month. The sales and service department progressed from non-existence to a staff of 18 in just four months.
"Some CEOs think the best way to grow a business is to raise more and more venture capital dollars," Corliolis CEO Bob Castle, was quoted as saying in that infamous press release. "I prefer to grow a company with a more conservative capital position to maximize the opportunity for shareholders to get a return on their investment."

Whatever the reason for its demise, the company's remaining 55 workers are jobless, and its backers -- which include TL Ventures, EnerTech Capital, Bessemer Venture Partners, New Enterprise Associates (NEA), and Columbia Capital -- aren't getting much of a return on the more than $84 million they invested.

— Phil Harvey, Senior Editor, Light Reading

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truelight 12/5/2012 | 2:38:47 AM
re: Coriolis Shuts Down Agreed and likely paid 120K+ for nothing. But that is the story of most startup's in the bubble. Big ideas, lots of execs and little action in getting it done. The VC community is screwed up bveciae they invest in the RESUME of the executives not what they have really done.
uno04 12/5/2012 | 2:38:47 AM
re: Coriolis Shuts Down >>Let's see, there's (probably includes 2000 too)...

>> Can't think of any more...

How about ALLOPTIC? They started in July 1999 and is still limping along with occasional news here and there.
truelight 12/5/2012 | 2:38:46 AM
re: Coriolis Shuts Down Alloptic is gone. The VC moved ou the people that new wat they where doing and but in some butt head cronies that know nothing and have done nothing ;-[
BobbyMax 12/5/2012 | 2:38:41 AM
re: Coriolis Shuts Down When a start-up goes to VCs and presents a false picture of the technology and misrepresents qualifications of the management team, the VCs have no way to find it. In spite of the claims of VCs they do not much about management and technology.

The company ate up $84 million dollars of investor's money with nothing to show for. The management extended their tenure by not telling the truth. This practice is very common with a majority of start-ups.
light-headed 12/5/2012 | 2:38:40 AM
re: Coriolis Shuts Down you forgot procket, zhone and force10networks
PO 12/5/2012 | 2:38:39 AM
re: Coriolis Shuts Down There are many startups which have received significant positive coverage in the past, who haven't announced much positive news lately, or delivered on even the first of their promised from years past. Some have good products which haven't "broken through". Others are simply overhyped and full of execs who should never work in this industry again. We each, I'm sure, have guesses and opinions as to who is who.

I'm still waiting anxiously to see who's on LR's newest "Top Ten Startups" list. After all, it's not like there's been a lot of new startups over the last couple years.
hrdhtr 12/5/2012 | 2:38:35 AM
re: Coriolis Shuts Down Pluris, Photonex & soon Axiowave?
RGreg 12/5/2012 | 2:38:32 AM
re: Coriolis Shuts Down Companies hanging tough

* Calix ist still going strong, & I think they started in '99 or earlier.

* Confluent, while starting in 2000, sort of merged with part of Lightchip, which started in '99 I think.

Also, there are a few other companies, like TeraBlaze (Agere) and Telephotonics (Dupont) and Cierra Photonics (Bookham), which were gobbled up by much bigger companies when times got tough. As an earlier poster said, it's a thinning of the herd, and at least some of those guys kept their jobs.

But I feel bad for the guys I know at Coriolis... speaking from experience, going through a layoff sucks.
RouterOttawa 12/5/2012 | 2:38:31 AM
re: Coriolis Shuts Down Tropic and Hyperchip are still breathing. Both appear to have morphed from their original business plans though.

Perhaps LR should have a Top-10 survivors list.
lightmaster 12/5/2012 | 2:38:29 AM
re: Coriolis Shuts Down Hatteras, PacketLight... all long in the tooth
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