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Iris Group Wilts; Metera Next to Shutter

Light Reading
News Analysis
Light Reading
9/24/2001

The bloom appears to be off the Iris Group companies, as Metera Networks Inc. is the latest of the optical incubator's companies to shut down for lack of funding.

The Iris Group is a loose-fitting group of companies that included Coree Networks Inc., Iris Labs, Metera, and Latus Lightworks Inc., all of which raised some $90 million in funding last year in an ambitious play to build a coordinated optical network architecture (see Iris Group Unveils Network Architecture and Iris Group Shuffles Executives).

As recently as a month ago, however, the group's plans started to fall apart as executives at the companies failed to secure additional funding to keep things moving along.

So, where are they now?

Latus Lightworks: The Richardson, Texas-based DWDM equipment maker closed its doors on September 21, leaving about 125 people without jobs. The company couldn't find the funding it needed nor could it locate a buyer able to move fast enough to bail it out (see Lights Dim at Latus).

Metera Networks: This Richardson-based metro optical equipment maker is set to close on September 28, leaving about 118 people in Texas and 20 in Ottawa without jobs, according to sources at the company. Though the company was only weeks away from customer trials, its founders and venture capitalists couldn't agree on a way to keep it afloat.

"We tried to come to a resolution in terms [with the investors], but we couldn't find anything acceptable to all parties," says Hamid Rezaie, Metera's cofounder and vice president of product planning. "Everyone involved tried very hard."

Metera is letting employees into its offices this week to conduct job searches.

Coree Networks: This New Jersey-based core switch maker never really got off the launch pad before it resized itself. The company still employs about 12 people who are continuing to study whether it's feasible to restart the core switch maker in a few months, according to William Szeto, president and CEO of Iris Labs (see Coree Networks Raises $30 Million and Coree Cuts Back).

Coree employed about 50 people when it announced its first round of funding in February.

Iris Labs: This Plano, Texas-based company is the only one of the four Iris Group companies that is still fully operational, Szeto says. It employs about 30 people. Iris Labs was founded to provide consulting and network software support to the Iris Group companies.

Some months ago, however, it began to focus on companies outside its doomed circle of kindred startups. The company has raised $7 million to date and is currently seeking between $10 and $15 million.

The venture capitalists involved in the various Iris Group companies include Hook Partners, Mayfield Fund, Sevin Rosen Funds, Vortex Partners, and Lightspeed Venture Partners (disclosure: Lightspeed is an investor in Light Reading).

As Metera and Latus decided to close, employees at both companies griped about feeling abandoned by investors that had recently pledged support. "They asked us to agree to all kinds of things [to get more funding] and we complied," says a source close to Latus Lightworks. "It didn't amount to a hill of beans. We still don't have our funding."

Others, however, are taking the Iris Group’s failures in stride, realizing that while the economy has slowed too quickly for investors to hang on to month-old promises. "As long as you're VC-funded, the world can change very fast," says Iris Labs' Szeto. "The last time I checked, venture capitalists aren't in the business of running charitable organizations.”

Michael Zadikian, cofounder of the Iris Group companies, couldn’t be reached by press time. Zadikian founded Monterey Networks, which was bought by Cisco in 1999 and shut down earlier this year (see Iris Group Attracts $60M and Optical Mania in Texas) and What Cisco Stepped In).

Richard Couch, CEO of Diablo Management Group (really!), has been hired by Latus' and Metera's investors to help sell each company's assets and intellectual property, according to people close to Metera and Latus. Couch did not respond to a request for comment.

Sevin Rosen's Jennifer Gill Roberts and Mayfield Fund's Todd Brooks, through their respective representatives, declined to comment for this article. Lightspeed's Barry Eggers and Christopher Schaepe also declined to comment.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com

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dawgg
dawgg
12/4/2012 | 7:49:02 PM
re: Iris Group Wilts; Metera Next to Shutter
How about the comment of Iris Labs being fully operational? Could the management team at Iris share with us what they have been smoking? Especially since they also happen to be thinking that they will be raising 10-15 million and getting additional customers (relying on leadership that is not liked by the employees, other Iris Group companies, or the VCs).

Dig your heads out fellas!

All 30 people have resumes on the street and no one is working; entire day is spent looking for jobs and interviewing. Current feeling amongst all of us is that Iris shutters on Friday (along with Metera).

-D
hughman
hughman
12/4/2012 | 7:49:02 PM
re: Iris Group Wilts; Metera Next to Shutter
Maybe they should share whatever it is they're smoking as part of the severance package (or THE severance package).
gea
gea
12/4/2012 | 7:48:52 PM
re: Iris Group Wilts; Metera Next to Shutter
I kept hearing how these companies had some kind of common platform that was supposed to be all-powerful. All I could ever detect from it was that it was using a form of wavelength concatenation in order to create super-huge concatenated pipes between mammoth routers. Supposedly, it was also supposed to allow any vendor to design to their spec.

If this is true, and if there was any real advantage to their architecture, then they should license the technology and maybe even reform itself as a clearing house for this architecture--ie, not actually build anything, but do the standards and research work and license the technology to all comers.

But then again, I suspect it was all a lot of hot air...
food4thought
food4thought
12/4/2012 | 7:48:49 PM
re: Iris Group Wilts; Metera Next to Shutter
Where do you get your information?
From my sources, the people at Iris Labs are still working.

"Why?", you ask.
Not working is certain death for the company.
On the other hand, working gives them some hope.

Plus, it pays better than unemployment benefits.
lightbuster
lightbuster
12/4/2012 | 7:48:45 PM
re: Iris Group Wilts; Metera Next to Shutter
So it hit the metro....who's next WhiteRock..Metro-optix...!!!!!
optipal
optipal
12/4/2012 | 7:48:44 PM
re: Iris Group Wilts; Metera Next to Shutter
food4thought wrote:
"Why?", you ask.
Not working is certain death for the company.
On the other hand, working gives them some hope."


Do you really think the employees can save this last company from falling??? This comment is an insult to their intelligence.
At least they have some time to look for a job, unlike some of the other companies.

Regards,
Optipal

lessjobtx
lessjobtx
12/4/2012 | 7:48:39 PM
re: Iris Group Wilts; Metera Next to Shutter
Iris is definitely smoking something. How can you get more funding when you don't have a product. Tweedle Dee and Tweedle Dum definitely took the VCs for 90 million.
gea
gea
12/4/2012 | 7:48:32 PM
re: Iris Group Wilts; Metera Next to Shutter
No. I think Whiterock may be the right thing at the right time, if they can survive long enough to make it past the recession.
Telecom_Guy
Telecom_Guy
12/4/2012 | 7:48:30 PM
re: Iris Group Wilts; Metera Next to Shutter
Of course White Rock Networks is going to survive. Why?? Because they have the extremely dense SONET products. And the US market is still deploying sonet. If companies want to develop a fractional widget sharing ring or whatever let them try to do it and go under!! Even FDM isn't making it. Centerpoint or Kestrel or any of those others with a weird technology will go under. I see it happening over and over.

I also think companies that are price competative and are dense will survive in the metro DWDM. Sorrento seems to be doing quite well. Their stock is kind of low now, but I'm sure they're going to be bought out soon. They have a good stable DWDM system and are beating the heck out of ONI in all the accounts they are in. ONI is probably one of those that is a good product but maybe has too much hype and snooty sales guys. Good thing I didn't buy ONI stock.

just my thoughts
seabizkit
seabizkit
12/4/2012 | 7:48:30 PM
re: Iris Group Wilts; Metera Next to Shutter
Sorrento beating the heck out of ONI! That's a very weird view!! Sorrento is falling apart!!
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