Mayan Networks Inc. may be going the same way as its namesake civilization.
The startup, which is developing a next-generation Sonet switch for metro area networks, is the latest in a line of startups feeling the effects of an ongoing optical networking shakeout. Today, the company announced to employees that it would be downsizing its workforce in an effort to cut costs and asked for volunteers to take the lead in falling on their swords for the company.
One source anonymously sent Light Reading an email purportedly issued internally by Andrew White, VP of corporate resources at Mayan:
- In order to conserve our cash to be able to complete future development we must reduce our expenses now and focus only those resources we need on the
essential work that has to be done. Consequently, we have determined that we
must reduce our workforce commensurate with those needs and the capital we
As we consider the necessary steps to be taken, we want to offer our employees the opportunity to volunteer for separation before we proceed with any involuntary reduction in our workforce. Some individuals who have key skills that we have identified as essential for the achievement of our goals will not be eligible for this separation package.
Mayan raised its initial $8 million round of funding in November 1999. Since that time it has grown to nearly 200 employees and has added over $90 million of funding to its coffers but still hasn’t been able to announce a customer.
Mayan's problems could stem in part from the fact that it had been targeting competitive local exchange carriers (CLECs) as customers. Shorter sales cycles and greater interest in partnering with startup equipment companies originally made these service providers good customers for startups, says Dennis Barsema who was CEO of Redback Networks Inc. (Nasdaq: RBAK) until last July and has recently emerged as CEO of component startup Onetta Inc.
But now, with the capital markets drying up, numbers of CLECs are running out of money and shutting down operations. AduroNet Ltd., Digital Broadband Communications, and FiberStreet are just a few of the most recent casualties (see AduroNet Goes Bustand Digital Broadband Fades Away).
Equipment startups are often the hardest hit by these closings. For example, Zaffire Inc., a metro DWDM player, announced a $20 million contract with FiberStreet a month before the company closed its doors (see Zaffire Gets Zapped). Ironically, Mayan and Zaffire, which both appear to be struggling, are co-sponsoring a seminar on the future of optical networking in the metro area network. It's set to begin on March 6.
And since the company is competing in an already crowded market, a reduction in potential customers is not a good sign. Especially, when some of its competitors are large players like Cisco Systems Inc. (Nasdaq: CSCO), through its Cerent acquisition; Redback, via its Siara deal; Lucent Technologies Inc. (NYSE: LU), through its Chromatis buyout; Fujitsu Ltd. (KLS: FUJI.KL); and now Ciena Corp. (Nasdaq: CIEN), through its acquisition of Cyras.
The scene is also crowded with other startups that haven’t been bought yet, like Astral Point Communications Inc., Geyser Networks Inc., and Ocular Networks Inc.
Mayan did not return phone calls by press time. But in previous interviews Dan Gatti, the company’s CEO, has acknowledged that the onslaught of CLEC closings was having an impact on the company (see Zaffire Gets Zapped).
-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com