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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3 putts 12/5/2012 | 2:36:12 AM
re: Coriolis Shuts Down
I made a mistake in my previous post. It was *not* the CTO, but the Founder and Chief Scientist that interviewed me for fishing for architectural solutions. Looking at the mgmt team pictures refreshed my memory.

How did I do that? You can visit their old website by going to www.archive.org - a virtual time machine - and entering www.coriolisnet.com.
alcabash 12/5/2012 | 2:35:52 AM
re: Coriolis Shuts Down **** www.alidian.com

I guess just a coincidence. I remember their arrogant CEO (japanese dude) trying to sell his slideware to Alcatel and boasting on how he had screwed Lucent in his previous job. Alcatel ran away as soon as he opened his mouth. I was wondering what had happened to them. We now know !
Canopener 12/5/2012 | 2:35:46 AM
re: Coriolis Shuts Down "".... and partly because the ones that are failing are being propped up for other, not-entirely-commercial reasons - something which is making those who put their hard-earned money into Redfern look for avenues of redress."

Sounds Like I touched a raw nerve, sorry!"

No problem, it's not my nerve, but I do know someone who is not a happy chappy...

"I continue to see Redfern touted in the Australian press as a success and every politico seems to want to claim responsibility for creating Redfern Photonics, I just don't see the product in any areas that I work. Do you have any details on RBNI products?"

RBNI started in the metro ethernet space, but have moved back into what they see as a better niche, helping extend the reach of DSL networks - see http://www.rbni.com/applicatio... for more details. I've heard various announcements about customers, but none are listed on their website.

"To be honest my experience with Australian start-ups is that they are usually technically very component but very weak on Market understanding and Manufacturing contacts. Initially they target great technology at the wrong opportunity and than by the time that Marketing and product design get aligned they discover their manufacturing cost structure is too high and just give up, sad indeed."

Very true, but also true of a lot of start-ups. Another difficulty of being located outside of your major market is not being "in-the-loop" with understanding where trends are going. You end up being too slow to respond, and so eventually can't compete. It needs real dedication to compete from outside a major market, and it really needs a presence in the market. Israeli hi-tech companies seem to be better at this than most.

truelight 12/5/2012 | 2:35:38 AM
re: Coriolis Shuts Down Mangrove Networks then
Demander 12/5/2012 | 2:35:04 AM
re: Coriolis Shuts Down "than some wireless-bio-nuclear-anti-terrorist fast acting errection pill with nano-technology GPS locator"

Wow! do you have one those?

netskeptic 12/5/2012 | 2:33:26 AM
re: Coriolis Shuts Down > This may no longer be true, but the last
time I checked the IEEE health insurance offering
was only available in some states,
and MA was not one of them. :-(

And even worse, unlike other group insurances they can turn you down on preexisting condition. I can understand reduction in benefits and/or higher premiums for people with preexisting conditions, but they simply denied the coverage.

I had much better luck with Small Business Service Bureau in Worcester. But you (or your spouse) have to be really self-employed to use their services.




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