Petaluma networking startup Cyan Optics makes its public debut today, reuniting some stars of Telecom Valley and prompting industry buzz over the technology it spent three years developing.
"This is the DNA of Telecom Valley," said Michael Howard, principal analyst at Infonetics Research, a Silicon Valley consulting firm. "These guys have started a lot of companies."
Cyan CEO Mike Hatfield founded Petaluma's Calix Networks, a $250 million company that makes network access technology. He also co-founded Cerent Corp., sold to Cisco Systems in 1999 for a Telecom Valley record $7.3 billion.
Other Cyan executives held top posts at Calix, Cisco, Advanced Fibre Communications and Turin Networks.
Still, the Petaluma startup is entering a highly competitive market that's just now recovering from recession, said Simon Leopold of Morgan Keegan in New York, which provides investment banking and advisory services.
"For a startup that's not offering something truly revolutionary, it's hard," he said. "There are significant barriers to entry."
Telephone, cable and other communications providers are struggling with a rising flood of traffic over their networks, and Cyan has a unique solution, Hatfield said. The startup's technology makes it easier -- and cheaper -- for carriers to handle the flow of voice, video and data, he said.
"This is where you're going to see a lot of investment," Hatfield said.
Cyan incorporated in 2006 but kept quiet about its technology until today, when the company unveiled a suite of equipment for managing digital communications.
The company's biggest innovation is 3-D software that allows network operators to see "layers" of traffic on their systems, Howard said. "They've done something that's completely new," he said.
Cyan won't say how much it's raised in three rounds of venture funding, but filings with U.S. securities regulators indicate it received nearly $35 million from a half-dozen equity funds, including Azure Capital Partners, Juniper Networks and Norwest Venture Partners.
Cyan already has 20 customers, mostly regional telephone companies, cable operators and data centers, Hatfield said. It has been targeting independent carriers, who stand to benefit from $7.2 billion in federal stimulus funds for rural U.S. broadband networks.
That's a good strategy for Cyan, said Mark Lutkowitz, an analyst at Telecom Pragmatics, a technology consulting firm based in Nashville.
"All the action is happening with the independents," Lutkowitz said. "There's going to be a lot of growth there."
Cyan has 52 employees at its Petaluma headquarters and plans to add staff as the business grows, Hatfield said.
"There are really talented people here that you can build a company around," he said.
Cyan does engineering, testing, marketing and other functions in Petaluma, but outsources manufacturing to Flextronics, a Singapore-based contract manufacturer with locations in Asia, North America and Europe.
In addition to Hatfield, Cyan's team includes chief technology officer Steve West, a co-founder of Turin Networks and a former engineering director at Advanced Fibre, which sold to Tellabs in 2004 for $1.5 billion.
Sales chief Eric Clelland is a Cisco veteran and former sales director at Cerent, and marketing chief Frank Wiener was in charge of product development for Calix.
Rick Johnston, who heads Cyan's business operations, is a veteran of Calix, Advanced Fibre and Telecom Valley's original startup, Optilink.
You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.
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