fwiw, friday's edition of the Globe and Mail featured a small piece on the Extreme nouveau riche.
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Startup produces quick dividends
Year-old Extreme Packet Devices makes employees into millionaires with sale to PMC-Sierra
By Simon Tuck
03/04/2000
The Globe and Mail
Metro
Page B4
Ottawa -- Extreme Packet Devices Inc. is a one-year-old startup that produced incredibly quick dividends -- even by technology industry standards.
The Kanata, Ont.-based company, founded just 12 months ago with $3-million by three ex-Newbridge Networks Corp. tech wizards and another friend, was sold yesterday to PMC-Sierra Inc. of Burnaby, B.C., for $415-million (U.S.) in stock.
The privately held semiconductor company yesterday became the latest technology industry startup to produce a slew of millionaires -- before it produced any revenue. Each of its 60 employees has a chunk of the company through stock options, as does Terence Matthews, founder of Newbridge Networks Corp. and EPD's key venture capitalist.
The average EPD employees is less than 30 years old.
"Everybody in the company did quite well," said EPD president Bruce Gregory. "I feel great -- the whole team here is pumped."
EPD, which makes high-speed semiconductors that direct traffic on busy telecommunications networks, outsources its designs.
Mr. Gregory said the company commanded such a hefty price tag because it has top-notch technology -- and a great team. "We got a jump on our competitors of about a year."
The telecommunications networks business is one of the hottest areas of technology because large, so-called carriers -- such as telephone and Internet companies -- are scrambling to add capacity to keep up with demand caused by the explosive growth of the Internet.
Jordan Worth, a telecommunications analyst at International Data Corp. (Canada) Ltd. in Toronto, said the price tag reflects the value of key pieces of technology. "I don't think it's a ridiculous amount of money given the state of the market right now and its value in moving us closer to making the Internet a more manageable and controllable place."
EPD was founded by ex-Newbridge engineers Albert Heller, Mark Janoska and Henry Chow, and Mark Waite, a Boston-based business development specialist who came from Toshiba Corp.
But the four founders and company's other employees weren't the only ones to cash in. Terence Matthews, Newbridge's founder and chief executive officer, has been EPD's key investor through Celtic House International Corp., his personal investment arm. Other investors include Furneaux and Company, Centara Corp. and Blackboard Ventures.
Andrew Waitman, one of Celtic House's three partners, said EPD was seen as a good investment because it has a team of top-notch designers working in a key area of the industry. "It's an area of technology that is a most valuable piece of a router."
EPD's founders chose funding from Celtic House instead of becoming a Newbridge affiliate because they anticipated their key customers would be telecommunications giants such as Nortel Networks Corp. of Brampton, Ont., and Lucent Technoloiges Inc. of Murray Hill, N.J. -- also among Newbridge's key competitors. |
