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Mahi's Got a Big Fish to Fry

Light Reading
News Analysis
Light Reading
6/23/2000

Mahi Networks Inc. http://www.mahinetworks.com is as stealthy as they come: requests for briefings are declined, questions posed to randomly dialed employees are dismissed, and the identities of key personnel are kept secret.

The Petaluma, Calif.-based company may even be purposefully cultivating its own mystique. Just a few weeks ago, it hinted that it was pursuing something big when it quietly announced a $60 million round of financing led by the investment banker Goldman Sachs Inc. http://www.gs.com (NYSE:GS). Among other investors, Sequoia Capital http://www.sequoiacap.com and Benchmark Capital http://www.benchmark.com, two well regarded California venture capital firms that funded the company at earlier stages, participated in the round. Large rounds of funding led by investment banks are more common with companies preparing to go public than they are with those that haven't yet announced their staff.

Early indications are that the $60 million will be put to quick use--Mahi is pursuing an ambitious do-it-all box for the edge of optical networks, according to sources familiar with the product.

"It does everything except change the oil in your car," says Peter Tierney, founder and chief operating officer of Sphera Optical Networks Inc. http://www.mopicalnets.com, a New York city based startup carrier with an optical backbone. "When you look at it, it's really complex stuff," adds Tierney. "If these guys pull it off, they'll deserve an Academy Award."

Mahi's product is being designed to aggregate different types of traffic on existing networks and shunt them on and off optical wavelengths. It looks to be competing with Tenor Networks Inc. http://www.tenornetworks.com, according to Tierney. Tenor and Mahi have presented their plans to Tierney, who says he may want to use this type of gear to offer a range of lower bandwidth services to corporate customers at some time in the future. Right now, Sphera is only offering very high bandwidth pipes, OC-3 and above, mainly to carriers, ISPs and ASPs. It's an early user of equipment from Sycamore Networks http://www.sycamorenet.com.

Greg Peters, Mahi's CEO, downplays the comparison with Tenor. "We don't see ourselves as a head-on competitor [with Tenor]," he says.

"We're totally engaged with our customers, who are dictating what we do," Peters adds. It's the prospective customers who don't want any publicity, he says. Peters took the Mahi aura of secrecy up a notch by declining to describe his professional background.

Tenor officals say they aren't familiar with Mahi, other than seeing a Mahi representative poking around their both at the Supercomm trade show.

Tenor's box does a lot more than aggregate traffic and shunt it on and off optical backbones. It also meters every packet and circuit that it handles, enabling operators to charge more for better quality services and package services more creatively (see Tenor Builds A Network Toll Booth ). So far as Tierney can tell, Mahi intends to go one better than that. "If Peters can pull it off, it'll be a real smoking box," he says.

"God boxes" like Tenor's and Mahi's, that aim to do everything, are out of favor with Cisco Systems Inc. http://www.cisco.com. It says such boxes often deliver ho-hum performance because they can't be good at everything (see ONI Goes For IPO). Tierney dismisses this. "When you speak to the Kremlin, what do you expect other than propaganda from the Politburo," he says.

Tenor points out that it's close to starting trials of its box in carrier networks. Mahi appears to be a long way behind.

Other than an animated graphic announcing the funding, there are no press releases or announcements on the company's Web site. The company doesn't even list any of its employees.

The closest the company comes to describing its market positioning is this, from the Web site: "Enhanced service offerings include broadband wireless, DSL services to emerging businesses, VPN services to large corporations, and transparent LAN services to major enterprise customers. As carriers compete for market share, equipment providers will be challenged to provide the "right" technology for competitive forces operating a transitionary network."

--By Peter Heywood, International Editor, and R. Scott Raynovich, Executive Editor, Light Reading (http://www.lightreading.com)

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