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Optical/IP

Xanoptix's Strange Story

An intriguing story may lie behind Xanoptix Inc., a startup that yesterday announced its first product -- a massively parallel transceiver (see Xanoptix Unveils 200 Gbit/s Transceiver).

The story goes that Xanoptix was formed by a venture capital firm that was turned down as a potential investor in TeraConnect, a spinoff of Sanders, a Lockheed Martin subsidiary now owned by BAE Systems (see Lockheed Spins Off Transmitter Startup). Is that clear?

The unidentified VC firm simply wouldn't take no for an answer. Rather than retire gracefully, it hired ten of Sanders' key researchers and set up Xanoptix.

Two independent sources, one of them claiming to have connections with BAE, gave Light Reading this version of events. Jim Norrod, Xanoptix' CEO, declines to comment. But he also declines to identify Xanoptix' investors, which have already pumped $35 million into his company, suggesting that there's something unusual going on. Xanoptix is currently pursuing another round of finance.

Norrod says he doesn't know whether TeraConnect is developing a competing product, as our sources suggest. "I have no idea what TeraConnect is doing, and I don't care," he miffs. "We're too busy developing our own business."

However, Xanoptix' CTO, John Trezza, former head of the electro-optics group at Sanders, says he took his entire team with him when he left there. The implication is that TeraConnect doesn't have the expertise to develop a massively parallel transceiver, so it must be working on something else.

So, what’s all the fuss about?

Xanoptix' new product, the XTM-1, could be used to create low-cost, high-performance campus networks. It’s a module that promises to carry vast amounts of data over bunches of fiber for distances of up to 4 kilometers. Think of it as Very Short Range (VSR) Sonet on steroids (see OIF Sets Short-Range Sonet Standard)

The XTM-1 could form the basis of optional interface cards for high-performance equipment from the likes of Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR).

Each XTM-1 unit interfaces to 72 multimode fibers: 36 coming in, 36 going out. That makes 108 active devices in the module. No, our math isn't at fault. There are 36 detectors and 72 lasers -- each laser has a spare, because the low manufacturing yields and laser reliability require it, according to Norrod.

Though that may sound like a black mark against Xanoptix' lasers, it's worth noting that the manufacture of laser arrays is a notoriously low-yield process. Most laser array makers are putting four, or at most 12, vertical cavity surface emitting lasers (VCSELs) on a chip (see Laser Blazers). With its array of 72 VCSELs, Xanoptix has upped the ante more than a little.

The startup also says it's got a method for making arrays of distributed feedback (DFB) lasers, rather than VCSELs. "DFBs will give us the technology to go further than four kilometers," says Norrod.

— Pauline Rigby, senior editor, Light Reading http://www.lightreading.com

MultiMode 12/4/2012 | 7:42:43 PM
re: Xanoptix's Strange Story Please... Do your homework before you weigh in with your commentary. TeraConnect has developed nothing that isn't "open-book technology". Flip chip and the likes that they are utilizing is not IP, and there is absolutely nothing wrong with the Xanoptix group leaving Sanders and developing their own IP.
optomatic 12/4/2012 | 8:12:00 PM
re: Xanoptix's Strange Story I don't it's necessary to paint the situation as a dichotomy of either total anarchy or complete corporate control. There is a clear difference between individual employees leaving a company because they are personally unfulfilled and a third party enticing an entire group of employees to leave for promises of or actual heavy remuneration. It's easy to side against the corporate titans that have their design team stolen, but how would you feel if it were the other way around? What if the design team were in a startup and a heavy-spending corporation stole the team? Would it still be such a great thing?
Half-Inch Stud 12/4/2012 | 8:12:03 PM
re: Xanoptix's Strange Story I hold high respects for any design and process person from Sanders. Further, their Management history is top-notch business-Savy, and has been. They re-earn their respects every year.

...just ask any other division of LMCO. Particularly Comsat Fab-Labs, Utica, Syracuse, Camden, North Plainfield Hybrid Microcircuits, Valley Forge, East Windsor, and the Newtown Campus. There are more, but I'm at risk of being boring.

The mighty BAE Systems stepped in and bought the wild card when they got Sanders. However, BAE had closed their UK GaAs fab at that time because it was bad business and viewed the world-class Sanders fab as equally business foolish amongst a family of military hardware production programs. The timbers shivered once again, and many professionals felt betrayed - for the last time.

Several corporate buyouts can have a damming effect on even the best fab teams. Perhaps the best fab team in the world is not residing in New Hampshire anymore.

Perhaps landing on a sandbar is better than being in a sandbox. The two NH spinouts are completely capable of their goals and will not be out-flanked. They have been groomed from the best [read as ruthless or/and strategic] management culture in the industry. They WILL take candy from a baby. Your baby.

H.I. Stud
KPSmells 12/4/2012 | 8:46:29 PM
re: Xanoptix's Strange Story Mr Heywood, Not just big companies, VCs have been doing this for a while. Please sniff around and you will get lots of evidence all over.
Peter Heywood 12/4/2012 | 8:46:55 PM
re: Xanoptix's Strange Story Just wanted to point out that big companies sometimes are equally underhand about stealing ideas from startups.

For the time being, I'm not going to name names, but I've heard of at least one instance where a big company made out that it was interested in financing a startup as a ploy. On the pretence of doing due diligence, it got all the inside dope on the startup's technology. Then it pulled out of the deal and set up its own venture targeting the same technology a few months later.

I'm interested in hearing from folk that know of other instances of this happening. It would make a great story for Light Reading - and would also blow the whistle on some of the worst offenders.

So, please contact me on [email protected] with any info that might help.
pitol 12/4/2012 | 8:47:22 PM
re: Xanoptix's Strange Story On a more friendly note....

It sounds as if the deal was a result of inactivity at TeraConnect. That's the typical driver in these cases...not $$$. It's sad to see good technology die as a result of bureaucratic indecision.

If Sanders has a case and suffered legitimate damages as a result, then I'm sure they'll be compensated. This would probably need to occur in order to raise more investment capital.

If it was flagrant and costly, then there is no need to get emotional, I'm sure the "greedy 3rd tier VC" will not profit from its actions.
SPARKLE 12/4/2012 | 8:47:22 PM
re: Xanoptix's Strange Story You know what, I am all emotional. The best ideas aren't worth crap unless they're actually implemented. And they're an offense to humanity if all they're used for is destruction or military science.

I suppose it makes much more sense to create fantastic science on the ticket of the people through government contracts, then use the science to kill foreign nationals when they challenge us. Honest to God the motivation and what the DOD bandits find noble scares the crap out of me.
SPARKLE 12/4/2012 | 8:47:45 PM
re: Xanoptix's Strange Story Really heavyreading you should get a grip. The engineers, designers and code geeks driving these companies are engaged in the single largest expansion of mankinds intellectual capital since the beginning of time. WHAT WE DO TODAY WILL FUNDAMENTALLY CHANGE THE WORLD FOR OUR CHILDREN, THEIR CHILDREN, AND THEIR CHILDRENS CHILDREN. More than Oppenheimer, more than Einstein, more than Stephen Hawking.

All the theoretical science, fear science and non-science of the last century will be erased by our science in the next 10-20 years. If you don't believe it, turn off your cable, unplug your phoneline, toss your laptop and work your lawn until your hands bleed.

My forefathers did this to be in this country, to furthur their children, to stop Hitler.

I'll be damned if corporate victims like you will dictate my kids future to me.

Go to sleep somewhere, if your lucky you'll get over whatever bone it is your picking and get with tomorrow.

Otherwise, look on Ebay for all my leftover 8086's, motorola analog cell phones and dinosaurs. You should feel at home.

We are building, breathing, creating the future of knowledge and knowledge dissemination.

Big L on your forehead guy, happy day!
heavyreading 12/4/2012 | 8:47:45 PM
re: Xanoptix's Strange Story Your message is all emotional.

You are essentially saying that it is OK to steal intellectual property of another company and the value of another companys shareholders in the name of entrepreneurism. Right ?!

You are nuts and also a founder/employee of Xenoptix. Wait till you, your company and your investors are sued by Terraconnect/Sanders shareholders.
heavyreading 12/4/2012 | 8:47:45 PM
re: Xanoptix's Strange Story So you must be one of those 5 guys who founded xenoptix by stealing the intellectual property from the parent companys shareholders. I hope some VC does the same to your startup xenoptix, that is, steal some of your key employees and your wife (if she is cute) and start a competing startup in the name of entrepreneurism.

Capitalism and Entrepreneurism does not mean Anarchy and Lawlessness.
noitall 12/4/2012 | 8:47:55 PM
re: Xanoptix's Strange Story what, is the first ammendment null and void? can people not go after obvious investment opportunities in the form of promising entrepreneurs?

you must work for nortel, lucent or cisco, or one of those sleepy defense contractor type companies masquerading as technology firms...

get real. this happens all the time. bright people stagnating in places like those mentioned above are lured by someone: a visionary, a recruiter, a VC, a friend/former co-worker, to go off and do something special on their own. to make something happen. to create something from nothing...to launch a product that would die in the labs of these companies.

attitudes like yours are completely contrary to the entrepreneurial, opportunistic nature of this valley. so save the 1970s era thinking or just retire.
thanks
noitall

p.s. if you think nea is a third rate vc firm, you REALLY are clueless. maybe change your username to HEAVY HEART.
heavyreading 12/4/2012 | 8:47:56 PM
re: Xanoptix's Strange Story This just clearly proves how the greed of 3rd rate me-too VCs have killed the optical sector. BTW, there are more stories like this that includes the so called "reputable name" VCs. NEA especially is quite notorious at this game. That is, stealing people out of their current jobs to start companies. I sincerely hope all of these startups get sued for intellectual property infringement as well as the VC firms/partners for aiding such activity quite openly.
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