In March of 1985 I had the battlefield promotion to become CEO, actually interim CEO, of Excelan. My co-founder Inder Mohan Singh had just quit. Till then I was the VP of engineering and a true hard core Silicon Valley techie.
Excelan was founded in April of 1982 to provide networking for a plethora of computers. Old established order of mainframes and minicomputers was giving way to desk-top computers and back-end servers. IBM PC was announced in September of 1981. Sun Micro-system was formed in February of 1982. UNIX operating system was coming on its own and there were about 50 start-ups building super computers around various powerful micro-processors and standard busses that were being announced on a regular basis. In fact UNIX itself had not standardized yet, there were several versions of it around then. Networking standards for both hardware and software had not quite emerged yet. There were various topologies that were being pushed: Token Ring (IBM), Token Bus, CSMA-CD (Ethernet); also, base-band and broad-band at he physical layer. Standards for protocol software also had not firmed up yet. IBM was pushing SNA, DEC had its DECnet; Apple announced its Apple-Talk; DARPA’s TCP/IP was built into BSD UNIX that Sun Micro-System had adopted; Xerox was pushing XNS. Various industry groups were also pushing OSI protocols. As for as busses were concerned, we had Multibus by Intel, VME bus by Motorola, Unibus and Q-bus by DEC, PC bus by IBM and many more!
It was truly wild west out there. Inder was unable/unwilling to chose between various options. Excelan quickly got bogged down doing too many things; meaning doing nothing useful for customers. Even though, we had done Ethernet boards for Multibus, VME bus, Unibus, Q-bus and PC bus, we had no software and drivers for these boards. So we were pedaling raw hardware that end users were unable to use. Many OEMs signed up with us to design our boards in their systems. It was very hard to support them as they had various operating systems and needs. We got very busy but company had no focus and no story for the market place. Revenues were very slow to materialize. Company was very under-resourced for the job it was trying to do.
To make things even more interesting, Inder also had decided to do a network analyzer that Excelan was ill prepared to handle. Network Analyzer was seen by Inder as easy money and he had spent about a million dollars to buy inventory to build about 100 units. Company got in financial trouble as it had burnt through most of the capital it had raised by early 1985. We were still burning about about $150K/month and had a little less than a million in the bank when Inder was let go. I was told by the board to conserve cash while they went looking for a CEO to replace Inder. It was very clear that we were not going to last more than six months unless some thing drastic was done.
As my first day as interim CEO, I decided to let go about a third of the company go extend my runway to about 9 months. I also decided to sharply focus company the company, decided not to do any more hardware; just stay with what we already had and focus on software. I hired contractors to port publicly available TCP/IP software to our boards and decided to narrow down the various other options to just support networking IBM PC’s to couple of standard UNIX machines and to DEC minicomputers. This narrow focus reduced complexity by almost 99%. We were going to connect your PC (which were selling almost 100,000 a day by then); to your UNIX Machines that were selling about 10,000 a month; to your DEC mini-computers that were selling about 3000 a month. All this using Ethernet and TCP-IP! We had narrowed our bet and market but had a sharp story to tell this market place. I also, put Network Analyzer on fire sale to clear out the inventory. All this had to be done in 90 days, so as to have enough time for marketing and sales.
90 days later we opened up an ad campaign, spending $50K per month. It was a risky bet again as this additional cash burn was to shorten the runway. But , it was an almost instant hit. Revenues started to grow rapidly and within three months we were profitable and cash flow positive! The board which had no faith in me was now looking with amazement as to what had been achieved.
Here is the ad that ran!