Cambrian CEO true to his
vision
Kanata firm becomes leader in only two
years
Karyn Standen
The Ottawa Citizen
When Cambrian Systems
Corp. was founded two
years ago, there was little
evidence suggesting
anyone wanted the
technology it hoped to
create. Nevertheless, the
fledgling Kanata company
stuck to its ambition to
build high-speed
networking gear designed
to transmit data at high
speeds across cities and
to connect the traffic to
so-called long-haul
networks stretching
around the world.
Yesterday, Cambrian's
perseverance and vision
were rewarded when
Northern Telecom paid
$300 million U.S. for a
company that has yet to
release any product.
"We had a vision in
1996," Cambrian chief executive Don Smith said. "We envisioned being
world leader in a space that, in 1996, there was no market research out
there saying that this was even a market. I feel really great, and pleased."
Data traffic on networks is increasing by about 30 per cent to 40 per
cent a year, significantly outpacing voice traffic, which is growing by just
three per cent annually.
While long-haul fibre-optic networks were designed to carry data traffic
at high speeds across vast distances, networking systems within cities
were built primarily to carry voice traffic. That, says Northern Telecom
Ltd. chief executive John Roth, has created a networking "bottleneck" as
the demand for data transmission within cities increases.
"We see a tremendous amount of data traffic within cities," Mr. Roth
said, adding that the market for metropolitan optical networking is
expected to be worth $2 billion a year "in the not-too-distant future."
Cambrian was founded by former Mitel Corp. colleagues Don Smith
and Gino Totti in 1996. Mr. Smith became chief executive and Mr. Totti
became vice-president, in charge of engineering. Early in 1997,
Cambrian became a Newbridge Networks affiliate.
The company grew quickly, expanding from a handful of employees to
its present roster of 170 people. To fund its rapid growth, Cambrian has
raised about $25 million in private investment, giving it a market value of
$48 million Cdn.
It also created a reputation as a leader in the metropolitan optical
networking technology industry.
"Every customer we talked to said Cambrian had figured it out," said
Nortel vice-president Brian McFadden, referring to Cambrian's
expertise in the burgeoning market.
Yet despite the fact that Cambrian seemed poised for impressive growth
as an independent company, Mr. Smith decided to join Nortel.
"I never expected us to do this alone," he said. "I always knew that we'd
need to have partnerships of some kind."
Seventy-five per cent of North America's Internet traffic is carried on
fibre-optic networks built by Nortel. Mr. Smith says Cambrian needed a
partner with extensive market reach in order to help get its product to
customers ahead of its competition.
"In any of today's data-driven market opportunities, moving fast to
market is vital," Mr. Smith said. "Nortel is the leader in the long-haul
sector. The next place that's going to be hit by this data networking
explosion is metro. So clearly, this is a very good fit (with Nortel)."
Mr. Smith will remain vice-president and general manager of optical
networks at the new Nortel division.
Mr. Smith arrived in Canada 20 years ago with a degree in electrical
engineering from the Imperial College in London.
After a brief stint at Bell-Northern Research in 1978, he joined Mitel
Corp. as a product-line manager. It was there that he met Terry
Matthews, whom he calls a mentor.
Mr. Smith, who rose to become an executive vice-president at Mitel, left
the Kanata company in 1986 to join AIT Corp.
Under his leadership, AIT snared a 90-per-cent share of the global
market in travel document readers used at passport control stations.
Then the company, which had consistently made money since 1978, hit
hard times. In August 1996, Mr. Smith resigned as chief executive,
shortly before AIT announced a $9.4-million loss on revenues of just
$2.3 million. That compared with a profit of $1.6 million on sales of $7.6
million for the year-earlier period.
Mr. Smith says he prefers not to talk about his time at AIT. "I've been
out of that business for a long while," he said.
After a few months as a consultant, Mr. Smith co-founded Cambrian.
Negotiations to join Nortel became intense in October, often requiring
"working seven days a week," Mr. Smith recalls. He says he was not
bothered by any doubts over the decision to join Nortel.
"I'm an analytical person," he said. "Once I've analysed something and
found it to be a good opportunity, I know I'll find a way to get it done."
Colleagues describe Mr. Smith as a skilled leader.
"Don is very persistent, intuitive and intelligent," said Kent Plumley, a
partner with Ottawa law firm Osler Hoskin & Harcourt. "Managing a
company through this kind of growth is a tremendous achievement."
imPATH Networks vice-president Jim Paul, who worked with Mr.
Smith at Mitel, agrees.
"Don has good vision in the industry. He's able to execute a plan well."
Cambrian's assistant vice-president of marketing, Solomon Wong, says
being acquired by Nortel is "like winning the Stanley Cup."
And while he says some employees expressed sadness at no longer
being independent, most were "euphoric" about the acquisition.
"At the end of the day, we're in business to make money," Mr. Wong
said. "Emotionally, we think, in the back of our minds, that we could
have gone all the way on our own and become a billion-dollar company.
But that's a high-risk venture. This (deal with Nortel) helps us get to that
end." |
