White Rock Got Rocked

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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chip_mate 12/5/2012 | 3:42:03 AM
re: White Rock Got Rocked Oh come on fellas, quit cutting White Rock slack.

How many of you saw the Palace Building they occupied on George Bush Highway in Dallas?

The thing was worthy of Verizon or AT&T.

If White Rock's 'highway image' was one of opulence, then I'm terrified of what their internal accounting sheets show as "normal operating expenses".

White Rock lived the good life, but not the Start Up Independent Vendor life.

I know college kids who treat their credit cards better than this outfit treated their bank account.

Focus 12/5/2012 | 3:42:03 AM
re: White Rock Got Rocked A lot of truth in the message thread and some things that need a little correction.
1. There was never an offer to buy the company. Had there been, the management would have considered it carefully. It was understood that WRN had little chance to sell to the RBOCs as a stand alone....but WRN did try throughout its existence.
2. Selling to the RBOCs on a standalone basis required $$$$ for OSMINE and this expense had to be considered against the feature needs of getting to a competitive MSPP and broadening the product line. The main platform did receive OSMINE for an earlier SW load but was not reinvested in for later releases due to a lack of traction with the RBOCs.
3. Panda is right, it is depressing to spend numerous years of your life building something and then seeing it fall away. Taking pride in a subset of the overall outcome is just personal justification of the effort.... a natural reaction for those who tried to make this work. The result is still a failure to pay back the stakeholders in total.
4. Andrew did not set the product direction alone. It was set by collective effort, driven by the market and the resources available.

"Ill" Duce 12/5/2012 | 3:42:02 AM
re: White Rock Got Rocked Panda is correct.

White Rock is just another example of a company driven by "cool technology" rather than by a true market strategy. So many of these companies are built around a box and an engineer, but they fail to take into account the business.

The words "unique approach" are not part of the vocabulary of any of the RBOCs, especially with regard to CO gear. Metro Optix had a unique appraoch witrh regard to a piggybacked DS3 cable and they were soundly rejected. Huawei wasn't even a player then. Therfore it is not possible to say they had a viable product. The design, aling with the market strategy was wrong. If it wasn't they would still be around.

I also believe there is a fundamental blind spot with many VCs. They don't seem to understand the markets and customers these startups are selling to. They watch the latest presentation pimping the newest fad and they glom on afraid they will miss out. The easy money fuels the proliferation of these poor ideas and strategies. It is left only to the market to cull them.

Way too many of these companies are run by engineers with a plan to build something and then sell the company and retire to their own private island ala Cerent. But Cerent actually produced a product that completely disrupted a market space. Even if they had not been purchased by Cisco, they would have been successful.

Don't get me wrong, engineers have their place, but keep them out of the marketing and the strategy suites. They are too obsessed with what they can build rather than what the market demands.
sfwriter 12/5/2012 | 3:41:54 AM
re: White Rock Got Rocked Anyone else notice the new fifth column? Of the top blogs today, Phil's are the top four. I think he deserves a raise.
jmunn 12/5/2012 | 3:41:54 AM
re: White Rock Got Rocked I hope some of the best engineers will be willing to move to new areas of the country and apply to non-startup companies like ADTRAN who's web site shows openings in Huntsville, AL and Mountain View, CA.

I would be interested in a short account of when key personel left and what might have triggered it. I have seen a pattern of highly capable people leaving long before the final outcome.
"Ill" Duce 12/5/2012 | 3:41:53 AM
re: White Rock Got Rocked He's right. I remember when that building went up. Then again, White Rock wasn't the only one with a building. Metro Optix had one,with some pimpin' furniture and Nespresso machines. I think Santera did as well.

If I was going to blow a bunch of VC money without delivering a product, I'd hire some actors to populate a rental space and send the rest of the dough to an offshore account.

A man can dream can't he?

"Ill" Duce 12/5/2012 | 3:41:53 AM
re: White Rock Got Rocked 1. If you're an engineer, go to Huntsville, it's got a great quality of life. Mountain View is nice, but you'll have to give up the McMansion

2. If you're in marketing, and you're actually an Engineer, my advice is to go back to being an Engineer.

3. It's my recollection that "key personnel" churned in and out like play-doh in the Barber Shop set.

It really doesn't matter who left and when, what matters is that the business plan was faulty. If you change guides, but the map is the same you're still going down the wrong path, and since no one wants to either admit failure or point out the failure of someone else, the company lumbers along the road to perdition. Like so many so-called "business plans" and "strategies" I see, no one is willing to step up and call bullshit on the assumptions.

Most plans don't calculate the risk associated with the venture. Markets are ALWAYS overstated and costs and risks are always DOWNPLAYED. I see it on a daily basis. It's not just in our industry, it's pandemic. Critical assertions and thinking are not valued in our business culture despite what you might read in rags like "Fast Company."

douggreen 12/5/2012 | 3:41:51 AM
re: White Rock Got Rocked I agree with Panda (gag) in one sense that you have to sell to the market that exists, not the one that you want to exist. In my career, I learned (the hard way) to avoid companies that first had to explain to the customer that he had a problem before explaining how their product solved it. I want my product to be the one that they desperately want but couldn't find.

That being said, markets change. WR, I believe, had a product that had a future in a market that existed, but things changed. In an efficent environment, the product ideas that don't survive a market change simply die, and those involved move on to something different. That didn't happen here, and the company kept going for years on the hope that the pendulum would swing back again.

A great deal of the probelm, IMO, lies in the VCs. VCs HATE to write off an investment if they see even a slight chance that they might morph the company into something that will survive. In my former life, I consulted for several VCs on portfolio management issues, and I could never get them to take their money out of a company, no matter how bad it was. The reasons are very complex...a story for another time.

White Rock was a victim of having a little bit of success...just enough to allow their investors to fool themselves into pumping in more money, but not enough to sustain a business.

Where I disagree with Panda is this: The time spent at work DOES mean more than simply the product that you produce. I actually enjoyed my work in Telecom (the work itself), both at the succesful and unsuccesful companies. In fact, some of my best years were at a failed startup because it got me out of IBM, I learned a lot, and I got to work with good people (for the most part). Perhaps we only disagree in our wording (I hope so).

When I stopped having fun in Telecom, I left. I still check in on LR once in a while because I still have a lot of friends here.

Doug Green,
Logic and physics teacher, track coach.
crazyoptics 12/5/2012 | 3:41:48 AM
re: White Rock Got Rocked Sail,

You disappoint me.
"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."

What I believe is correct about focusing on the bigger players earlier, you seem to lump Meriton and Tropic as two that have had great success with the big guys.
Last I checked, Tropic is barely holding on and Meriton couldn't get a new customer to save their life. Besides, their cash flow is so great that without any orders from BT yet the rest of the company sgould be slimmed down to save itself (Maybe they need to slim down with some of their AVP non-talent-yuck).

Regardless of the precedures that White Rock followed, I wonder if the VCs decision was based on the large retrofit technical problems that White Rock was going through at the end. Wonder if they got a sniff of that catastrophe.

I wana ROCK!........

Not too "Crazy" today.
[email protected] 12/5/2012 | 3:41:43 AM
re: White Rock Got Rocked Ok, while you all are deciding weather or not White Rock deserves the destiny they received, I have 2x White Rock VLX2020 shelves, fully populated that I would like to sell. I have gently ripped them out of my network and replaced them with Cisco equipment following their collapse. If anyone is interested in this equipment, please let me know. [email protected]
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