I was reading Sprint’s CFO comments regarding Clearwire wasted money early on and remembered one of my old posts; Too Much Money and Ego; If you want to kill a Start-up! Successful companies stick to their fundamentals from the beginning. Although a company can and should evolve from an early stage start up mode into a more solid and robust operations, brings different caliber of managers in different stages and gradually morph into a “corporate” mind set; successful companies stick with their roots even in the later stages. This includes operating under tight-cash flow and careful spending and expansion to maintain their margins. With huge amount of money at the beginning and big corporate mentality from day one, there will be no “fundamental” to build the company culture around it. Also, building a “green field” nation-wide wireless operator does not make sense; anymore. You build the network without customers; increase your OpEx dramatically without increasing your revenue at the same time. That is why Clearwire’s net loss more than doubled in the Q1 to $267 million, compared to a net loss of $94.1 million during the same period last year.
The latest news regarding acquisition of Starent Networks by Cisco for $2.9 Billion is good news for entrepreneurs; and for Cisco. Finally they found their “right” way to go into wireless market. Early 2000, when 3G was the “hype” at the peak of dot com bobble, lots of companies start to position themselves to grab a little bit of business from usual suspects (Ericsson, Nokia, etc). New IP infrastructure proposed by 3GPP and its new components opened a new path for small companies to add their niche product into main stream. GGSN was the focal point of new “parallel data network” for mobile operators and legacy vendors were not expert. Different companies started with the promise of ultimate GGSN with wide variety of functionality. Lots of VCs at that time were ruling off any chance of success for these new guys in completion with big boys. But Starent made it! Focusing on a niche market and a good plan they made it. With revenue, around $250 million, in less than nine years they showed if you do your homework you can make it and sell to big operators. But, what was the secret? I met Ashraf (CEO and co-founder) couple of times; a real entrepreneur, down to Earth and hard working engineer. Anthony P. Schoener (VP of engineering and co-founder) is an experienced engineering manger. But I guess the main secret is consistency. The founders are with the company from the beginning and they are leading the company; CEO and VP of engineering. Remember Eugne Kleiner law, “Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas”. HP, Intel, Microsoft, Apple, Starbucks, Dell, … are just examples of companies that founders are/were running them into success. I know people will also refer to companies failed because founders were involved, but the big jackpots are by founders!