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Khatod Ventures Into Software

A year after leaving Nortel Networks Corp. (NYSE/Toronto: NT), Anil Khatod has turned up as a venture capitalist (see Atlas Venture Hires Anil Khatod ). And he's got one word for the opportunity he sees -- software.

Khatod says software, in the form of provisioning, billing, and other "service commerce" tools that support the rollout and maintenance of data networking services, will be key to making the most of telecom gear that's already installed worldwide.

"One of the telecom industry's biggest problems is that it's difficult for carriers to roll out new services," he says. Software that speeds up service rollout is a market begging to be addressed.

Dividing his time as a private angel investor and as a new partner at Atlas Venture, Khatod aims to scout companies that can fill the need for software. But he'll be going at it selectively. He's focusing only on Europe and the U.S. And he's likely to keep his investments conservative.

"The days of people raising $70 million to $100 million to start a company are gone," he asserts. He says startups need solid, believable plans for generating revenue without burning through tons of resources. That usually entails at least one large customer willing to sponsor development and to sign on when it's done.

Why won't Khatod venture in Asia? Isn't that one region where growth in telecom hasn't fallen as drastically as it has stateside? "It's a question of how far you can meaningfully expand. The field [in Asia] is seriously crowded with a few venture firms." Atlas Venture plans to take advantage of its locations throughout Western Europe and the U.S. instead of spinning its wheels against the competition in Asia, he indicates.

Khatod is clear that he doesn't expect his venture efforts to grow the way many startups did in the boom time. Indeed, he doesn't see any meaningful recovery from the present downturn until 2004 at the earliest. By that time, an ongoing shakeup in the carrier market will have helped surviving carriers whittle down their debt and start addressing what he sees as ongoing demand for bigger bandwidth.

Khatod left Nortel in July 2001, just shortly after assuming the post of chief marketing and strategy officer. While he denies any negative feelings about his former workplace, he says he needed a change. Apparently, he'd been chomping at the bit after 19 years at the company. "It wasn't fun anymore."

Khatod's Nortel jobs included president of the Optical Internet, Wireless Internet, and Global Internet Solutions groups; and senior VP, marketing and sales. He says his promotion just four months prior to his departure really was an extension of what he'd been doing for awhile.

In a way, Khatod's returned to what he likes best. Even at Nortel, he invested as an angel in several startups in various parts of the world, albeit in market areas in which he says Nortel didn't compete. He'd rather not specify the startups, but he's on the board of directors of OmniGuide Communications Inc., an air-filled fiber company launched in 2000 by well known optical entrepreneur Mukesh Chatter (see A Fiber Filled With Air, Stealthy Startup Leads With Layoffs, and OmniGuide Puts Khatod on Board). According to SEC documents, he also held shares in Alteon WebSystems (Nasdaq: ATON) prior to that company's purchase by Nortel in 2000.

Khatod started his career as a management consultant in 1976 after graduating from business school in India. He founded a semiconductor module company in 1980 in California and joined Nortel in 1982.

— Mary Jander, Senior Editor, Light Reading
www.lightreading.com
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jamesbond 12/4/2012 | 9:49:43 PM
re: Khatod Ventures Into Software "One of the telecom industry's biggest problems is that it's difficult for carriers to roll out new services," he says. Software that speeds up service rollout is a market begging to be addressed."

This is bullshit. There are two dozen (atleast)
companies already providing "provisioning"
software. He was a stake holder in Alteon while
working for Nortel. I would say let SEC investigate how was Alteon acquired by Nortel.


wilecoyote 12/4/2012 | 9:49:42 PM
re: Khatod Ventures Into Software Who cares what this guy says? He hired a bunch of world class idiots at NT and was one of the guys who bankrupted the place.

Anyone who reads this article beware. It's guys like this that huffed and puffed the bubble in the first place.
powerguru 12/4/2012 | 9:49:42 PM
re: Khatod Ventures Into Software I agree absolutely, and now he is huffing and puffing to overload his pockets again. What a looser
Nuetrino 12/4/2012 | 9:49:41 PM
re: Khatod Ventures Into Software "I was at Nortel and like the rest of us, we all wondered what Nortel Exec's were thinking when they spent 2 Billion on a company with ONE box (one that Bay already had, although admitidly smaller"

Bay/Nortel did not have a comparable box to Alteon - the only thing close was embedding the iPivot code into Accellar- which in fact worked very well. Intel snatched up iPivot before Nortel new what happened - and rumor is Nortel actually tried to buy it back from Intel. After Cisco bought Arrowpoint, for an exorbitant amount - Nortel had to make a move as well. Khatod may of been an investor but was not influential in the Nortel Alteon deal - which originated with Nortels now dead ASP group.
optical_man 12/4/2012 | 9:49:41 PM
re: Khatod Ventures Into Software Khatod was given stock options in Alteon prior to it's acquisition by Nortel? That is VERY interesting.
I was at Nortel and like the rest of us, we all wondered what Nortel Exec's were thinking when they spent 2 Billion on a company with ONE box (one that Bay already had, although admitidly smaller).
Everyone involved with Alteon stock became instant multi millionaires.
If Khatod was given stock (I wonder who else was at Nortel) in Alteon, that would be a MAJOR breach of Shareholder trust, and possibly ILLEGAL. To tell a company that "if you give me 100,000 shares, I'll guarantee you a huge buyout, and we'll both get rich" sounds illegal to me, but I'm not a lawyer.
Anyone think NT now being at $1.00 because of stunts like this deserves SEC investigation?

Lightreading staff? There's no love lost among the American investing public for Telecom companies right now.
May be a way for your website to gain national attention if you can bring this together and get NBC/ABC/CBS interested......
Lightmare 12/4/2012 | 9:49:30 PM
re: Khatod Ventures Into Software 2bits, open your eyes a little and you'll see this behavior was SOP at nearly all high tech companies in the 90's.

Executives at large and small companies swapped spit by being on BOD's, TAB's...

Systems vendors exec's would be given stock from the component vendors in exchange for approval to use their parts in their system.

Customers were given stock from the systems companies in order to get an approval to use their HW (Williams, qwest...)

Billions were made via cross polination.

It's a complete SHAM and in the end the exec's made out like bandits and the worker bee's got screwed.

Some wonder why the industry is in the shitter.
2bits 12/4/2012 | 9:49:30 PM
re: Khatod Ventures Into Software Earlier posts mentioned that Nortel paid $2B for Alteon. In fact the purchase price was over $6B. I remember the difficulty Nortel exec's had answering reporters questions about why they would pay $6B for a company when the total annual market for its product was less than $1B (!)

As to AK's personal involvement (owning a venture stake prior to acquisition). The Alteon acquisition closed on October 5, 2000 and one month later (Nov 14th, 2000), AK was named head of Nortel's Personal Internet group with the president of Alteon reporting to him. This cannot be called an arms-length relationship. AK is now a wealthy angel investor and we're beginning to see how this came to be.
Iipoed 12/4/2012 | 9:49:29 PM
re: Khatod Ventures Into Software The alteon deal was the worst decision made if they did in fact pay 6b for alteon. They could have bought Foundry for that. Foundry would have brought a far superior and more cost effective load balancing solution with much greater market share. And guess what they would have picked up some pretty good L2 L3 products along with an outstanding customer base.

Of course Nortel via bay had done a deal with the Foundry execs previously, Centillion was acquired by bay, and was founded by the same Foundry execs.
jamesbond 12/4/2012 | 9:49:29 PM
re: Khatod Ventures Into Software Executives at large and small companies swapped spit by being on BOD's, TAB's...

-----------------------------------------

Real question is -- is this stuff legal? if
not why isn't SEC investigating it?
dodo 12/4/2012 | 9:49:27 PM
re: Khatod Ventures Into Software " Nortel says it will pay $7.3 billion for Alteon, which last quarter nearly doubled its revenues to $51.5 million"
This is from the announcement of July 28, including this comment from CC:

"In the new economy, the value and richness of content across the Internet is increasing on a massive scale," said Clarence Chandran, Chief Operating Officer, Nortel Networks. "Our acquisition of Alteon WebSystems will accelerate the delivery of an Internet data center capable of moving content seamlessly and rapidly across high-performance optical Internet and 3G wireless networks."

And then the optical world started to crumble in OCT 2000 and Anil found a nice hiding place in Personal Internet for himself and his ilks.
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