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White Rock Got Rocked

Phil Harvey
8/31/2006

2:10 PM –- From The Philter's Fat Lady file, Allen, Texas-based White Rock Networks Inc. is about to shut its doors as the company searches for a buyer. Here's an email sent around this morning by WRN management:

The Board of White Rock Networks decided today to furlough all but a skeleton staff of its U.S. employee team and suspend virtually all operations while it waits to see if its search for an acquirer can be quickly concluded. If not, White Rock will proceed to sell its key assets and wind the company down permanently.

"It gives me and our team no pleasure whatsoever to reach this juncture after nearly seven years of working hard to establish White Rock as one of the long term successful participants in the Metro Optical systems market place," said Lonnie Martin, Founder and CEO of White Rock. "Fundamentally, the Telecom Depression, and all of its residue, took too big and too long a toll on younger entrants like us, and at the end of the day we could not look our investors in the eye a sixth time and convince them that millions more in equity would make our future dramatically better."

White Rock's still-unique architectural approach of a lego-block-like optical transport product family established new bars for price/performance, compactness, low power consumption, and ease of use. Its products are now deployed in the networks of more than 130 U.S.-based ILECs, CLECs, CATVs, wireless, and institutional customers.

Limited Tier 1 TAC support will be provided between the hours of 9A and 5P CDT Monday through Friday excluding holidays until further notice. Our TAC number is 866-WHT-ROCK (866-948-7625).

— Phil Harvey, News Editor, Light Reading

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wild_thang
wild_thang
12/5/2012 | 3:42:35 AM
re: White Rock Got Rocked
Well sorry to hear the news for some of my longtime friends on The Rock. Good idea, good execution, bad timing. It was fun while it lasted.

A former WRN'er (#11)
paolo.franzoi
paolo.franzoi
12/5/2012 | 3:42:34 AM
re: White Rock Got Rocked

White Rock was primarily a SONET company. Huawei is primarily an SDH company.

However, they spoke some truth. Lots of companies were created during the bubble to sell to the multiplying number of customers. Once those customers went away, the industry was back to the few customers that were already there. Products like White Rock's (Good, Bad or Indifferent) generally had minimal if any advantage in these old customers. Not enough to make any real traction. So, poof....lots and lots of companies disappeared.

seven
wild_thang
wild_thang
12/5/2012 | 3:42:32 AM
re: White Rock Got Rocked

Which is basically what I meant by good execution, I guess the other poster missed the point. They had several products (boxes) they built and produced in a timely fashion and they generally met their objectives in terms of features and product family and timely releases. But the market they intended mostly dried up and they tried in vain to adapt and survive. From an engineering point of view they were pretty succesful and innovative.

Anyway, Huawei should not be celebrated for stealing and reverse engineering. IMHO


-----------------------------------------------
White Rock was primarily a SONET company. Huawei is primarily an SDH company.

However, they spoke some truth. Lots of companies were created during the bubble to sell to the multiplying number of customers. Once those customers went away, the industry was back to the few customers that were already there. Products like White Rock's (Good, Bad or Indifferent) generally had minimal if any advantage in these old customers. Not enough to make any real traction. So, poof....lots and lots of companies disappeared.

seven
optical
optical
12/5/2012 | 3:42:31 AM
re: White Rock Got Rocked
Good product concept, just miserable timing when their product finally came out. To their credit, they hung in there fighting for every revenue dollar that they could. My thoughts go out to all those who have lost their job through this shut down and hope new opportunities come soon for all.
straight shooter
straight shooter
12/5/2012 | 3:42:30 AM
re: White Rock Got Rocked
Optical said: "Good product concept, just miserable timing when their product finally came out. To their credit, they hung in there fighting for every revenue dollar that they could. My thoughts go out to all those who have lost their job through this shut down and hope new opportunities come soon for all."

I will second that. Great group of people that should hold their heads high. Remember, in the end life is measured by quality effort and trusting relationships, not revenue dollars and bank account balances.

-Straight Shooter
straight shooter
straight shooter
12/5/2012 | 3:42:26 AM
re: White Rock Got Rocked
My previous post did not refer to success in business, it referred to success in life.

Red Panda when you are on your deathbed you will not say "I wish I made one more million", you will say "I wish I spent more time with my kids" or "I wish I enriched one more life".

Millions come easy compared to a rich life.
Scott Raynovich
Scott Raynovich
12/5/2012 | 3:42:25 AM
re: White Rock Got Rocked
>Millions come easy compared to a rich life.

Yes, and we know that folks working at telecom startups are really just in search of quality of life -- and thankful when they get thrown under a truck!
wild_thang
wild_thang
12/5/2012 | 3:42:09 AM
re: White Rock Got Rocked
Agreed straight shooter. Panda hasn't got a clue.

Good people and it was a great culture and experience particularly the first couple of years. Many people gained valuable experience and produced something worth being proud of. It didn't sell. So what, so the VC's did not make thier millions. It would not have meant much more to the employees if it had been wildly succesful. I've been on projects that have sold many millions and not been any prouder of what was accomplished from a technical sense. And in the end even on those wildly succesful projects, the market changes and people are canned and the end result is the same.

Get a clue.

optical
optical
12/5/2012 | 3:42:05 AM
re: White Rock Got Rocked
red panda, Mr. big time Success, why don't you highlight all of your success for us to see?
^Eagle^
^Eagle^
12/5/2012 | 3:42:04 AM
re: White Rock Got Rocked
Panda,

I tend to agree with you re WhiteRock. While I do give kudo's to the technology team for delivering what they said they would and on time (a rare thing in this business); there was a serious flaw in their idea and market approach that in my opinion put them out of business and doomed them from the first day.

They failed to recognize the true ecology of telecom. Even during deregulation, the competitive carriers that sprung into life were only a small fraction of the total market. Their plan focused too much on new players entering the market and trying to co-locate and ignored for too long: MCI, ATT, Sprint and the RBOC's.

Even during the boom times, the traditional carriers were still the dominate market. And once GWB was elected, it was obvious to even the most casual observer that the days of the competitive local access carrier were doomed. It was clear the RBOC lobby would win the day and that telecom competition would largely dissappear. It was clear that the regulatory environment that had fostered competition was going to change and that mergers of big players would be fast tracked through the government. (note, this is not a comment of if this was "good or bad".. only a statement of what the facts are and were).

I think you touched on it when you mentioned their demise was triggered in part by the collapse of the insurgent alternate carriers that were their target market.

Their big fatal mistake was not building for the RBOC market and not actively engaging them. They thought that the competive carriers and small independents would be enough for them. By the time they figured out that it was essential to long prosperity to sell to the major carriers, they were late to the game. They had that OEM deal with Tellabs, but that was a late deal. What they didn't realize was the Tellabs deal was not an exit, at least not at the time they needed it (that was clearly their hope.. that big T would buy them) The platform they designed could be emulated and similar functions put into the native platforms at various big players. This is one of the great lessons of Cerent and it's rise in volume shipments then it's subsequent retraction in market after similar features were incorporated and made better by Fuji et al.

The only chance Whiterock had was to sell out to a big player much sooner in the game. They had the chance to do that and turned down some offers in hopes of bigger things later. By the time they realized the big picture it was too late.

It is of interest to note that their VP in charge of Sales and Marketing in the early days when company was setting strategy was Andrew Knott. He followed a similar path of focusing on the smaller carriers at his previous post: Positron Fiber Systems. He did a similar play at Positron and while Positron sold to RelTec and then Reltec to Marconi, the value recieved was way low considering it was sold off in the boom of late 90's. This was due to Positron missing out on big carrier sales and focusing almost entirely on small CLEC's and independents in Iowa, etc. Positron had great technology, great engineering and operations. IF the strategy at Positron had been more robust in terms of selling into big carriers, I think Positron could have recieved a much larger buyout.

Andrew Knott went on to duplicate his strategy from Positron at Whiterock. Focus on small guys first and hope big guys follow.

I believe you have to focus on small customers to build traction, but not to the exclusion of big carriers. You work big carriers in parallel. Get into the heads of their long term strategists. Help the carriers help you find a big partner to sell to them and to make sure your road map fits their needs. Do deals with small players of course, but not to the level it causes you to loose focus on who really has the pay check.

The big carriers are who drives all the sales that all the OEM's and component players count on to make payroll. Anyone in this industry who does not understand that Ma Bell still has your paycheck in her pocket either directly or indirectly is missing the obvious.

If they had focused more on bigger players earlier and made strong strategic partnerships earlier (similar to what Meriton and Tropic and ADVA have done successfully) they would have had real volume sales to RBOC accounts by now. And would be alive and kicking.

It was entirely predictable that they would fail. They were even warned by several back in the early days of the company. They were told that Ma Bell was and would be the majority of the market for the foreseable future, regardless of the name "Ma" took or how she was dressed up, she was still MA BELL.

If they had focused earlier on the bigger players, even though it was a long sales cycle, their product roadmap would have matched the market needs long term more closely. And if they had partnered earlier with big partners, they would have had a chance.

The Tellabs partnership was too little, too late.

They also had a good chance to go IPO when things were hot.

They failed because they failed to "take the money" when it was available either via a buyout earlier or an IPO. Big ego's thought they could do better by staying independent longer and later get more $$.

This was the essential failure. This thinking led to making wrong hires and wrong decisions on market especially product roadmap, sales strategy, and timing.

this is of course my opinion only. I think I might get spammed for this post. Lots of Whiterock fanatics out there.

At the end of the day, good team. Wrong decisions led them to execute the incorrect strategy exceptionally well.

I lay this at the feet of the leadership at Whiterock.

At the end of the day, Panda is correct. The company failed.

wishing the best to the team that put in all those years and hours. I know there are not many SONET/DWDM/Optical transport jobs available any more in DFW area.

Best of luck

sailboat.
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