Jasmine: Wall Street's Way to San Jose

A new metro optical vendor has blossomed in San Jose, but it has its roots on Wall Street.

The company’s name is Jasmine Networks, and it has three things going for it. First, it’s developing some novel, silicon-based service provisioning technology. Second, it has attracted some top-of-the-line technology talent. Third, and most importantly, it has exceptionally close ties to Wall Street investment banks –- something that should make its path to an IPO both short and sweet.

“Most startups now hope to go from formation to IPO in 18 months. We’ll do it in 15 months,” says Mouli Ramani, vice president of business development at Jasmine. The company was founded in February this year -- and the plan is to take it public mid-2001, he says.

The few people who have been briefed by Jasmine have been wowed by its story. “This is a kick-ass company, and it seems to have appeared out of nowhere,” says Scott Clavenna, president of PointEast Research and director of research for Light Reading.

So what’s it working on?

Jasmine is developing a multi-protocol edge switch, called the CNS (for Converged Network Services) that will be installed in metropolitan area networks (MANs). The CNS will support a bunch of different protocols and interfaces (IP, ATM, gigabit Ethernet, voice, Sonet, and so on), according to Jasmine, and will allow service providers to mix and match different speeds and feeds to accommodate their network needs. At the product’s heart are twin buses -- one for packet traffic, and one for TDM. Each runs at 80 Gbit/s.

So far, so what?

Well, Jasmine says that’s just the basics. What sets their product apart from the plethora of optical startups now trying to shoehorn into the MAN market, Jasmine contends, is its ability to make money for service providers by letting them quickly and easily roll out differentiated services.

“A lot of startups are focused on building the infrastructure, and that’s missing the point where service providers are concerned,” says Ramani. “We don’t just want to build them a box; we want to build their business case for them as well, by giving them the means to make money over that infrastructure.”

That may sound like the same lame service-provisioning spiel some other startups are starting to trot out, but it’s not. For one thing, Jasmine’s got a new and different take on service-provisioning technology. Specifically, it’s planning to bake (or “fuse”) support for different applications and services right into the product’s ASICs (application-specific integrated circuits), rather than running them as software. The ASIC approach will ensure that these services can be easily and quickly activated, and also that they will run at top speed, Jasmine claims.

Right now they’re planning to do this for three services: bandwidth trading, allowing carriers to trade capacity in real time; virtual lambdas, enabling them to subdivide and resell wavelengths; and virtual private networks (VPNs). Jasmine intends to support other services in software.

Another difference: This startup’s got the technical know-how to make its ASIC-bake a success. Its CTO is N. S. Rao, who has quite the track record when it comes to developing networking silicon.

Rao previously worked at Cerent (subsequently bought by Cisco Systems Inc. [Nasdaq: CSCO]), developing some small, high-performance ASICs that pretty much revolutionized the Sonet market when they were bunged into svelte add-drop multiplexers (ADMs). He then moved to Cyras Systems Inc., where he developed still smaller ASICs. Now at Jasmine, he’s working on his tiniest chips yet.

Jasmine says the wee silicon will allow it to make a switch “the size of a microwave oven,” saving service providers huge amounts of money by making maximum use of available power and space in colocation facilities.

For now, however, the microwave-size switch is still on the drawing board. A larger beta version of its CNS product -- which Jasmine claims is already in beta tests -- is based on chunkier field-programmable gate arrays (FPGAs), which represent a sort of halfway house between software and ASICs. The ASIC edition won’t ship until next year.

Rao isn’t the only notable staffer at Jasmine. Ramani was formally VP of strategic marketing for optical Internet products at Nortel Networks Corp. (NYSE/Toronto: NT), where he worked for eight years. Also on board is David Robert, formerly a VP of sales at Nortel, where he worked for 15 years.

And, significantly, the company also has some heavy-duty Wall Street connections -- which should serve to smooth its path to an IPO.

Jasmine’s founding chairman and director of the board is E.S.P. Das. Until six weeks ago, Das was vice-chairman of investment banking at Merrill Lynch & Co. Inc. (NYSE: MER). Its CEO is Ravi Dattatreya, who previously served as senior vice president at Sumitomo Bank Capital Markets, as well as with Prudential Securities, and Goldman Sachs & Co. (NYSE: GS). (It’s a sign of the strength of Jasmine’s Wall Street ties that executives like Ramani have homes in Silicon Valley and corporate apartments in Manhattan, near The Street).

Wall Street’s gain is the VCs’ loss. In fact, Jasmine appears to be yet another example of the waning influence of venture capital firms in optical deals. Das and Dattatreya are wealthy enough that they put up the first $10 million round of funding for Jasmine themselves. VCs were persona non grata at this stage of the company’s inception.

More recently, Jasmine deigned to allow three VC firms to contribute $80 million to their war chest. But its Wall Street connections allowed it to make an end run around the usual tier one VCs -- such as Kleiner Perkins Caufield & Byers, New Enterprise Associates, or Sequoia Capital. Instead, it picked Baker Capital Corp., Optical Capital Group (which is backed by Corvis Corp.’s David Huber – see Huber Extends His Reach), and Jackpot Enterprises. (As its name suggests, Jackpot Enterprises started life in the gaming industry, recently moving to reinvent itself as a VC and incubator. It is shortly to be renamed JNet Enterprises -- not a moment too soon).

“That’s not so much a ‘who’s who?’ [of VCs] as a ‘who cares?’ It’s clear from Jasmine’s choice of backers that they aren’t just blasé about VC money -- they’re not especially interested in getting their advice either,” comments one industry observer.

Ramani says that’s not true: “We think the VCs we picked are exactly the ones we need. They will provide us with senior management discipline, without being pushy or nosy or trying to tell us how to try to run a telecom operation. They won’t be so hands-off that they are invisible.”

However, he also notes: “Each of the founders has a healthy skepticism over the value of VCs. We wanted partners who would give us flexibility.”

Jasmine now has a staff of about 150 -- 45 of whom were rattling around its cavernous new offices in San Jose when Light Reading paid a visit last week. Once word gets out of the company’s plans for a shake ’n’ bake IPO, it should have little trouble in filling the rest of the space.

Stephen Saunders, US Editor, Light Reading http://www.lightreading.com
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