A Dream Team at the Wireless Edge

With the formation of Tahoe Networks, the co-founders of Shasta are working to transfer their wireline IP expertise to the wireless realm.

Wireline IP pioneers Anthony Alles and Arthur Lin admit their knowledge of wireless technology is limited. But that doesn't stop them from believing that their latest venture, Tahoe Networks, will give mobile operators the key to unlocking the riches within next-generation networks.

That's because Tahoe does not address the wireless access portion of the network, but rather the edge. That's the network region where the duo made their mark in wireline by co-founding intelligent edge-router maker Shasta Networks, which was sold to Nortel Networks for $340 million in 1999.

In wireless networks, the edge is the portion of the network beyond the base station where scale, services and speeds are largely determined and all-important billing information is rendered. Unless this portion of the network is optimized, even the best radio connection will leave users wanting for better performance.

Despite that, wireless carriers tend to take the core network for granted, said Alles, Tahoe's CEO. “They think that once they get the [signal] to the black box, it magically takes care of itself,” he said. “But it's not that simple.”

Wireless operators' current circuit-switched networks are fine for voice applications, but they need to migrate to packet-based architectures to handle millions of data users, Alles said. Tahoe plans to address this space with its mobile service edge routers, which are designed to intelligently manage packets flowing between wireless networks and IP core network.

And Tahoe knows edge routers. After meeting at Cisco Systems in 1993, Alles and Lin — who is now Tahoe's president and chief technology officer — left the burgeoning IP vendor to co-found Shasta, which pioneered the broadband subscriber aggregation and network services markets.

“That's what I like, that they come from the data-networking side. They started Shasta and have some of the engineers from the original Cisco router team,” said Brian Modoff, senior wireless analyst at Deutsche Banc Alex Brown. “If I'm betting, I'm betting on teams. And I like this team.”

So does VC firm Redpoint Ventures, which joined Accel Partners in giving Tahoe $50 million in first-round funding last year. This is the second time Redpoint has bet on Alles and Lin, having seeded Shasta after employing the twosome in its entrepreneur-in-residence program for more than a year.

“They are wicked smart and have a very clear idea about where they want to go,” said Geoff Yang, a partner at Redpoint. “Anthony is one of the best product-marketing visionaries I've ever met, and Arthur excels at executing technology. Together, they make a great team.”

Indeed, the combination of the duo's dissimilar talents and personality traits make them attractive to employees. While Alles focuses on organizational direction, Lin is a “people person” whose nurturing personality allows him to push his engineers without backlash.

The mix works with investors as well. Although he started in telecom as an engineer, Alles' strengths are his marketing acumen and strategic thinking. Lin fits more into the mold of a classic engineer — detailed, focused, practical.

“When we were at Shasta, people used to ask me, ‘Arthur, why are you talking about profits and margins? All that matters are revenues and growth. You're too Old Economy,’” Lin said. “I joked with Anthony that, after Shasta, I might have to retire because I just didn't get it.”

Today, Lin is getting the last laugh because his profit-based model is just what service providers are seeking today. This bottom-line mentality was fostered at Cisco, from which they “shamelessly stole” the sales-oriented philosophy they share equally, according to Alles.

“Companies exist to drive sales, not to build products and technology,” he said. “Too many companies lose sight of this.”

Of course, to drive sales, Tahoe had to learn the inner workings of wireless networks, of which Alles and Lin had little knowledge. After starting the company, they quickly moved to establish an R&D center in Finland, the heart of global wireless technology. Lin said the economic downtown helped Tahoe recruit talent — underwater stock options and general market frustrations meant many people were more willing to join a start-up.

That may be the case, but Yang said the primary reason people were willing to jump from established wireless companies like Nokia, Ericsson, Sonera and Openwave to Tahoe was the opportunity to work with executives like Alles and Lin, who have a proven track record and a good idea.

“The truth is these guys would attract talent even in a tight job market,” Yang said. “Really good people want to work with other good people on really great projects they feel they can make a contribution to.”

With this mobile expertise on board, Yang said Tahoe has an ideal team for developing a router to manage the delivery of IP service on wireless networks that can compete with offerings from CommWorks, Cambia Networks and large vendors such as Nokia and Ericsson.

Alles expects considerable competition in the space, which should heat up as carriers deploy next-generation networks.

Although it's too early to pick a winner — Tahoe won't even begin network trials until this spring — Alles said the formula is relatively simple: execution in real-world environments, not slide presentations.

“As one of my mentors told me, ‘Never underestimate the power of a working product.’”