Once dazzling wireless startup may be near collapse after layoffs
Copley News Service
February 22, 2003
Bruce V. Bigelow Copley News Service
SAN DIEGO -- One of San Diego's most prestigious wireless startups has laid off all but a handful of its employees and appears to be going out of business.
Founded in the euphoria of the late 1990s, graviton - which uses all lowercase letters in its name - raised roughly $66 million in venture capital and hired former US West chairman and chief executive Solomon Trujillo to lead it.
The company set out to exploit the promise of wireless sensor networks - technology so dazzling that Fortune magazine named graviton one of its 18 "Cool Companies" of 2002.
But former employees said Trujillo's aggressive strategy and a big-business management style proved wrong in many ways as the telecommunications industry cratered and capital markets receded. They describe graviton as a company with a noble pedigree, but one that lacked the guerrilla mentality that drives most startups - a sentiment that may eventually become its epitaph. The handful of executives who remain at graviton's San Diego headquarters are not inclined to self-examination, however. They refused to confirm the company's final round of layoffs, which occurred Feb. 3.
Though the lights are still on and the company's Web site is still accessible, several sources familiar with graviton's operations say the company is methodically shutting down its operations.
An estimated 30 to 40 employees were laid off in late January, but graviton apparently required most to sign confidentiality agreements or forfeit their severance pay.
When asked for comment, one graviton official would say only, "We are a private company and we don't have to tell you anything." A reporter who visited the company's mostly vacant offices was told graviton would not comment and was asked to leave.
Attempts to reach Trujillo also were unsuccessful.
Trujillo, 51, recently was named as chief executive of Orange S.A., the French telecommunications giant, effective March 3. While Orange's Feb. 13 announcement noted that Trujillo retired from Denver-based US West in June 2000, it made no mention of his subsequent 28-month tenure at graviton.
Many members of graviton's board also joined the wall of silence, including representatives of several prominent venture capital firms that backed the company.
One source said board member Howard Birndorf, whose San Diego-based Nanogen backed graviton, has been working to salvage graviton's proprietary technology. Like several board members, he did not return calls seeking comment.
Firms that funded graviton include a Who's Who of venture capital: Kleiner Perkins Caufield & Byers, Merrill Lynch Capital Partners, Earlybird Venture Capital, SI Ventures, and Shell Internet Ventures. Corporate investors included Qualcomm Ventures, Motorola Ventures, Global Crossing Ventures, Siemens Venture Capital and Sun Microsystems.
A key strategic investor was In-Q-Tel, a venture capital firm backed by the Central Intelligence Agency. Officials with In-Q-Tel did not return calls for comment.
While no official explanation was available from the company, observers said graviton was caught pursuing an aggressive strategy as the technology boom evaporated and the market downturn exerted unexpected pressures.
The company also faced at least eight rivals, including Axonn of New Orleans, Crossbow Technologies of San Juan Capistrano, Calif., and Phoenix Contact of Harrisburg, Pa.
Using wireless technologies licensed exclusively from the Oak Ridge National Laboratory, graviton based its networks on advanced sensors that use so-called "machine-to-machine communications."
The company said its networks could be used in an airport terminal to detect radiation or harmful chemicals, to remotely monitor electric utility systems or to measure flow levels and syrup usage in automatic soda machines.
But some sources, who would only speak anonymously, spoke critically about graviton's "big telco" mindset and top-heavy bureaucracy, which at one point consisted of a chief operating officer, chief marketing officer, chief technology officer and at least 10 vice presidents.
"Startups are usually much more close-knit and much flatter organizations," one source said.
In fairness to Trujillo, several sources said his strategy from the outset was to drive graviton aggressively - to run hard and fast to win business. Yet that strategy, which was formulated amid the tech boom, became increasingly out of sync as the recession deepened and corporate spending withered.
"He certainly had a big company background and humans are kind of the victims of their experiences," the source said.
For 2001 and much of 2002, one source put the company's "burn rate" at roughly $2.3 million a month - considered higher than usual for a startup with roughly 100 employees.
Some also believed that Trujillo's salary, said to be $750,000, was too extravagant for a startup.
"I've been in big companies and I've been in small companies, and that's not a startup mentality - it just isn't," a source said.
"The other side of that is that the board approved it. The board recruited him. The board paid him and the board's compensation committee approved it, that and the severance and every other piece that he worked out for himself. In the end, it comes down to a corporate governance type of issue."
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Damn!
Graviton caught my imagination - as I know it had your's. |
