Photuris Crew Rides Again

A core team from bubble-era startup Photuris is back, heading a shoestring-budget startup aiming to build optical subsystems for the access market.

The startup, Nistica , bears more than a passing resemblance to Photuris -- which became part of Mahi Networks, which became part of Meriton Networks Inc. (See Meriton Buys Mahi Networks and Mahi Nabs $70M, Photuris Assets.) Nistica's founders, CTO Thomas Strasser and COO Jefferson Wagener, were two of the earliest employees at Photuris, and the CEO they recruited is Ashish Vengsarkar, a Photuris founder and that company's last chief executive.

And Nistica is chaired by Bill Cadogan, the former ADC (Nasdaq: ADCT) CEO who sat on Mahi's board.

Investors include Pennsylvania Early Stage Partners, Technology Venture Partners LP , and Cadogan, who has been a partner with Vesbridge Partners LLC but will leave at the end of the year. (Cadogan is investing as an individual.)

One big difference from Photuris (other than the fact that the name of the newer company doesn't exactly roll off the tongue): money. Nistica, having raised less than $5 million, doesn't yet have deep pockets. Photuris raised $105 million in three rounds before cratering, possibly due to a lost deal with SBC -- now AT&T Inc. (NYSE: T). Photuris got acquired by Mahi Networks, which picked up $70 million in extra funding with the deal, and Mahi got swallowed by Meriton, which later raised another $54 million for itself. (See Photuris Gets New CEO and $40M and Photuris & SBC: The Inside Story.)

Nistica's Series A financing amounts to "more than $4 million" in equity and debt, according to Vengsarkar. Founded in January 2005, the company has just 10 employees.

(Photuris isn't dead yet, by the way. "The Photuris product remains part of the Meriton portfolio," Cadogan says.)

The whole idea is to keep costs down -- appropriate, considering the company is targeting the access market. Nistica and others see potential there for the kind of optical-network flexibility that's been brought to the metro and core through tickets like reconfigurable optical add/drop multiplexers (ROADMs). The advent of bandwidth-eating applications such as IPTV should help push that drive, so the theory goes.

But carriers resist putting overly expensive equipment into the access, which is why most ROADMs haven't been targeted there. "Many of these types of technologies are too expensive to be deployed at the edge of the network," Vengsarkar says.

Despite dropping hints about things like ROADMs, Nistica won't reveal its product plans until next month's Globalcomm show. He notes, though, that the company will offer modules and subsystems (a.k.a. linecards), selling wares to OEMs but not building an entire system itself.

Vengsarkar admits Nistica is interested in the "agile" optical network -- one where wavelengths can be provisioned on the fly. That's been a theme in optics for some time. JDSU (Nasdaq: JDSU; Toronto: JDU), for example is basing most of its optical strategy on the concept of agility. (See JDSU Gets Agile and JDSU Tunes In Agility.) The kicker is going to be some kind of intelligence that Nistica puts into its modules, Vengsarkar says -- that is, the subsystems will be not only cheap, but smart.

Nistica's competition will include the larger optical-component companies like JDSU, as they've pushed their businesses into the module and subsystem areas during the past few years, seeking better margins. Nistica could also become a module supplier to someone like JDSU, Vengsarkar notes.

Of course, this whole access thing has occurred to JDSU, too.

"We are developing a range of products which include access ROADMs as well as more simple tunable OADMs," says Jy Bhardwaj, general manager of JDSU's agile optical networks business unit. He says the former will be based on the wavelength-selective switch, one of the newer ROADM component options. (See ROADMs Roll On.) As for whether Nistica might be a serious competitor, Bhardwaj declined comment.

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:53:14 AM
re: Photuris Crew Rides Again I'd expect there's a whole wave of startups being prepared along these lines -- lean investment, targeting subsystems rather than systems.

They'd all be selling to the same systems vendors, though, so I guess somewhere down the line, someone would launch a systems startup that uses these subsystems. Or maybe subsystems becomes quickly overcrowded, with carnage ensuing.

If you were doing a startup, which area would you pick: Systems? Subsystems? Chips? ... Software?
paolo.franzoi 12/5/2012 | 3:53:13 AM
re: Photuris Crew Rides Again

Maybe Software.

The problem starts in silicon. The cost to design and produce new 90 and 65 nanometer silicon has gotten outrageous. This means the number of new devices that explore unique technologies is going down.

OpticOm 12/5/2012 | 3:53:13 AM
re: Photuris Crew Rides Again Answer: All the above.
scs_reader 12/5/2012 | 3:53:04 AM
re: Photuris Crew Rides Again The question I have is who are these loser VC's that keep putting money into these guys that cannot create a successful startup? Don't they ever learn their lesson that some people are just not meant to run startups? I mean look at these losers from Photuris (I know some people that worked there). They just figured out that you shouldn't waste money? I bet if you looked at their backgrounds you would see they are all from big companies were wasting money is par for the course. I have had two successful startups now that I have sold to public companies. I am well on the way with my 3rd. I have never worked at a large firm, and have always watched every penny spent. But I doubt the VC's would be interested in me because I never worked for Loosercent or Microsloth. Everybody that invests in VC's deserves what they get.
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