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Optical/IP

Wasik Plugs In at Turin

PETALUMA, Calif. -- Henry Wasik, the new CEO at Turin Networks Inc., sits in a bare office in a Petaluma office park. There are no motivational wall hangings, personal effects, or fishing trophies. No putter. No golf ball. It's as though Turin bought a plug-and-play corporate general at Fry’s and installed him there.

The difference? He doesn't sound like a CEO trying to paint a rosy picture for the press.

“Statements like ‘we doubled our revenue over the last year’ don’t really mean much right now,” Wasik says. “You know, it’s the old story -- it’s real easy to get to $100 million in revenue, but to go from there to a billion is harder.” [Ed. note: Tell me about it!]

Wasik arrived at Turin in November from across the way at Alcatel (NYSE: ALA; Paris: CGEP:PA), where he led the Voice Networks and Applications Software & Solutions businesses. Before that he worked at Petaluma stalwart DSC Communications and a couple of startups.

Wasik says he found no major dysfunction when he came to Turin in November. Rather, he has focused on several low-profile organizational changes, which he says are helping control the company’s burn rate.

Turin, named after the Italian city where Nietzsche went mad, started in 1999 and has yet to turn a profit, surviving to date on roughly $170 million in venture capital. That's saying something, especially given that Turin began life on the bubble, where it appeared to be the nerd of the crop of flashy Ethernet pure-plays starting up at the time. But, Wasik points out, Turin is still alive while a lot of the pure-plays have perished.

“Today, everything is TDM,” Wasik says. “And that’s where all the capital is sunk in the ground, so you have to maximize that investment.”

That down-to-earth strategy is what kept Turin in business through some very lean post-boom years; and lately the company seems to be finding its groove.

It signed up Japanese carrier NTT Communications Corp., inked reseller deals with Ciena Corp. (Nasdaq: CIEN) and Motorola Inc. (NYSE: MOT) (the two also became investors), and reached the 100-customer mark. A Heavy Reading report -- Telecom Recovery Investment Opportunities in March 2004 -- identified Turin as being among "the strongest IPO candidates among telecom equipment startups." Reports from trading partners note that Turin’s products are going head-to-head with those from Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Ltd. (NYSE/Toronto: NT) -- and winning.

The great majority of Turin’s customers are independent operating companies (IOCs), a class of customer that Wasik says never really stopped spending after the telecom equipment industry soured a few years ago. “The relationships are important and take time to build, but the sales cycles are shorter,” Wasik says of the IOCs.

And Turin isn’t turning down any new opportunities; lately it’s the wireless carriers that have come calling. The carriers need a way to more efficiently multiplex data connections onto a Sonet ring as wireless applications use more and more bandwidth. They are looking to Turin’s multiservice provisioning platforms (MSPPs), which combine a Sonet add/drop multiplexer, a digital crossconnect, and edge switching capabilities to help carriers squeeze wasted bandwidth from their backhaul networks.

Indeed, Turin says it has been in talks with possible wireless customers for six months, and will announce customers soon. "So far, they've been mainly the bigger guys –- Alltel and above,” says Wasik, referring to Alltel Corp. (NYSE: AT), the sixth largest wireless carrier in the U.S. “Between our partners and ourselves, there is some activity with all of them.”

Traditionally, a central, standalone, digital crossconnect system (DCS), such as the Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) 5500, sits at the mobile switching center (MSC) and aggregates the many T1 and T3 lines coming in from the wireless carrier’s cell towers. By placing multiple Turin MSPPs near those cell towers, the wireless traffic can be groomed and switched immediately, eliminating much of the idle capacity usually hauled back to the MSC.

“By distributing that switching and grooming out into the access network and closer to the cell towers, they can reduce the amount of traffic hauled to the MSC by up to 30 percent,” says Heavy Reading chief analyst Scott Clavenna.

With this “next-generation DCS” application, Turin may have gotten a jump on Tellabs, which has long ruled the wireless DCS space with its 5500 product.

Tellabs’ director of global portfolio marketing, Stuart Benington acknowledges that bandwidth inefficiency is common in the network between the base stations and the MSC. “There are economies to be gained” from the distributed grooming approach in which Turin’s devices are used, Benington says.

Benington says his company is now developing a pizza box-sized device that will reside at the base stations and “harmonize” the wireless traffic before routing it to the 5500 at the MSC. “There is definite potential for more inefficiency as higher-bandwidth, next-generation services roll out,” he says.

Meanwhile, Turin is expanding its IOC customer base at a rate of 10 to 15 per quarter, Wasik says. Most of them are North American carriers, although Wasik says his company will be announcing a large, new Korean customer soon.

Turin holds the No. 8 spot on the latest edition of Light Reading’s Top Ten Private Companies.

— Mark Sullivan, Reporter, Light Reading

optical 12/5/2012 | 3:25:38 AM
re: Wasik Plugs In at Turin Turin is a perfect example of experienced seasoned leadership who know their market. The strategy of going after IOC's and building off of that success was the correct strategy. Many start ups made/make the mistake of trying to land the big accounts (most of the time , the pressure came from inexperienced or telecom bubble boy VC's who thoguht they knew best), which for a start up is extremely dificult , if not impossible at times.

Way to go Turin, I wish you the best!
palaeozoic 12/5/2012 | 3:25:37 AM
re: Wasik Plugs In at Turin “Statements like ‘we doubled our revenue over the last year’ don’t really mean much right now,” Wasik says. “You know, it’s the old story -- it’s real easy to get to $100 million in revenue, but to go from there to a billion is harder.”

I guess I haven't been keeping good notes. The truth would seem to be the opposite: it used to be easy to get to $100 million in revenue (hand out a few shares to a service provider, they buy your equipment, we smile as we enter the bank); now it's kind of tough.

The bit about getting to a billion being harder than getting to $100 million is kind of like saying that running a marathon is harder than running a 10K. Well...duh, but don't you still have to get to a $100 million first?

Am I missing something here?
paolo.franzoi 12/5/2012 | 3:25:36 AM
re: Wasik Plugs In at Turin
Nope, you are not missing something.

I think you could read it like this....

There is enough business in Tier 2 and Tier 3 carriers to get to $100M in revenue. To get to $1B in revenue, you need to crack a Tier 1 account.

Cracking Tier 1 accounts (which after some mergers in the US might equate to 4 - 5 companies) is very difficult, especially for a company of $100M in Sales.

Your commentary to me goes something like this....

During the bubble there were lots and lots of Tier 2 and Tier 3 carriers. So, competition for their business was lower and it was easy to create adoption of product.

I think that this is true. The bubble allowed a whole bunch of companies to sell product that frankly had no future. Many of these companies have collapsed to nothing or close to it. An example list of the dead (or dying):

ASC, Turnstone, Copper Mountain, Cosine, Corvis (not Broadwing it is a carrier), Sycamore, ONI (ever notice how Ciena never talks about ONI products)

Teetering on the Edge....

Ciena, Redback, Pairgain (ADC is getting clobbered in the HDSL business)

And those all are or were public companies. There were additional carrier and component companies as well as Private Companies that died.

Interesting to note, that the teetering companies are primarily pre-bubble companies.

seven
bigbangtheory 12/5/2012 | 3:25:32 AM
re: Wasik Plugs In at Turin It was and is less strategy than survival. The reality was that the big guys were not interested in anything from a startup like Turin. Turin would have gladly concentrated on them if there had been any interest. The ONLY custormers were smaller IOCs, so that's where they concentrated. It was also fortunate for Turin that their box scales well to the needs of smaller telcos. This was also not so much planned as just the way it worked out. Leadership at Turin has always been dubious at best (though I don't know about the current crop).
Blow it out your Glass 12/5/2012 | 3:25:25 AM
re: Wasik Plugs In at Turin Scalability was a major driver for Turin from the start. The whole switch concept was based on the idea that low start-up costs were important. Turin wanted to build a box that did not need a lot of common control or force the small guys into buying a ton of switch bandwidth when they didn't need it. At the same time the concept allows the switch to grow to a fairly large size.

It was planned, it did not just work out that way.

BIOYG
Central_Scrutinizer 12/5/2012 | 3:24:38 AM
re: Wasik Plugs In at Turin Funny how Turin announces all their good news, and won't talk about the bad.

I heard from a friend, of a friend that they are struggling with quality issues. Field failures, DOAs, and upgrade snafu's!

The management is draconian, and has been heard saying, "If you don't perform, you're fired!" Morale is low, as soon as someone [read Cisco] decides to start hiring, expect an exodus.

My buddy thinks the new guy is basically Webley's yes man.
Blow it out your Glass 12/5/2012 | 3:23:35 AM
re: Wasik Plugs In at Turin How does that make Turin any different from any other of the surviving 1999/2000 start ups? Certainly all that can be said of other Petaluma companies (and has been repeatedly).

Do you really expect a huge press release each time a customer has a problem during turn up?

Turin is playing the same game everyone else is. Some of what you say is true no doubt but it should come of no surprise to anyone who has been following this crop of start ups.

BIOYG
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