BY BETH SCHULTZ Network World, 4/24/00 By this time next year, some of the corporate newbies we're profiling here will have gone public, and maybe they'll have grown enough to qualify for the Network World 200, our annual ranking of the top public network vendors by revenue. Others will have been consumed by bigger, technology-hungry vendors, their products and services to live on under different corporate banners. Either way, the unfolding histories of their hot products and services are worth following closely.
1. 2nd Century
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See which venture capital firms are funding our picks 1: 2nd Century
Headquarters: Arlington, Va. 2nd Century Communications is a next-generation competitive local exchange carrier (CLEC) that preaches the convergence gospel and believes mightily in the power of ATM. This CLEC is delivering a host of services, including local and long-distance voice, Internet access, e-mail and Web hosting, over the same T-1 access link. At the customer premises, voice and data feed into a Vina Technologies integrated access device, which converts the traffic into ATM. Out in the WAN, 2nd Century uses Siemens/Newbridge MainStreetXpress 36170 ATM switches and Terabridge Technologies' PathMinder softswitch, for network intelligence. 2nd Century already operates in 12 cities. It plans to increase the number to 35 by year-end and 48 by mid-2001. It's got the gumption, and the cash. In January, the carrier pulled in a whopping $50 million in financing from a single source. A phenomenal figure for any start-up, these big bucks simply top off the $30 million 2nd Century had already accumulated in round one and two funding. 2nd Century targets small and midsize companies with its convergence mission. It wants to "e-enable them," helping such companies better compete in the new 'Net economy. Click here to go back to the top
Headquarters: Boston The need for Web content distribution continues to spawn interesting new companies, Adero among them. Like competitors Akamai Technologies (one of the 10 companies we watched in 1999), Digital Island and SightPath, Adero provides caching and replication services from servers it places around the Internet. Content distribution is just the first step for this start-up. What Adero is really shooting for is the creation of a global server network on which rides its basic content distribution service, plus more advanced functions, such as transaction processing. With GlobalWise Commerce, for example, a company could rely on Adero to process e-commerce transactions on servers in close proximity to their customers. Pushing the worldwide angle, GlobalWise Context will let a company localize and personalize e-commerce content and transactions. With GlobalWise Applications, companies will be able to run business-to-business and business-to-consumer applications on Adero servers across the Internet. The services ride over Adero's GlobalWise Network, which includes more than 70 nodes in 28 countries, in partnership with 17 Tier 1 Internet backbone providers. To speed content delivery over that network, Adero recently acquired software companies StarBurst Software and Fast Engines. Nearly 50 businesses have signed on with Adero, including Barclay Card, BigDeal.com and the International Herald Tribune. Click here to go back to the top
Headquarters: Portsmouth, N.H. Network World's "Wired Windows" columnist Dave Kearns bestowed his networking Most Valuable Player for 1999 Award on Bowstreet founders. It only seems logical that we closely track what these guys are up to. And what's that? Business-to-business e-commerce with big doses of automation technology, XML and directory services, manifesting themselves as a new e-commerce standard and a software environment. The standard, known as the Digital Services Markup Language (DSML), presents directory services information in XML. AOL/Netscape, IBM, Microsoft, Novell, Oracle, Sun - anybody who's anybody in directory services - support DSML and are helping with further development of it. The product, Web Automation Factory, lets companies customize business-to-business e-commerce sites and integrate content - internal or external - virtually at will. In its five months of shipping, the package has already been put to use at Fortune 500 companies such as Federal Express, IBM, Merrill Lynch and at dot-com ventures such as Adauction. com, Get Connected and NetRatings. In fact, Bowstreet reports that during the fourth quarter 1999, it entered into contracts valued at more than $1 million. E-commerce, XML and directory services all promise to be big technologies in the 2000s, and Bowstreet is definitely at the crossroads. Click here to go back to the top
Headquarters: Sunnyvale, Calif.
Headquarters: San Mateo, Calif.
Headquarters: Sunnyvale, Calif. NoWonder has all the makings of a successful e-business - prominent backers (including eBay Founder and Chairman Pierre Omidyar), overflowing coffers and, perhaps best of all, a pretty cool solution to a problem that has plagued user organizations since the advent of networked PCs: effective technical support. NoWonder provides a friendly online resource for computer users with questions about software, hardware, programming and the like. A user has the option of getting help while "talking" to a technician in a live chat session or via e-mail from a qualified expert. For a particularly troublesome scenario, a user can grant shared desktop access so a technician can actually fix the problem. For a minor quirk, a user can simply browse through a list of Web sites and link to those that might help him remedy the problem on his own. To date, a half-million registered users have tried NoWonder's online help, supplied by thousands of technicians. Customers include AOL/Netscape, Apple Computer and Microsoft, and partners include McAfee.com and SkillsVillage.com. Now NoWonder's challenges are bringing on additional corporate service providers and IT consultants and building a robust infrastructure for the sale and delivery of support services. NoWonder will charge fees to service providers that use its infrastructure, and technicians will be chosen for the live help sessions through a reverse auction bidding process. Are technical support e-marketplaces the wave of the future? Keep an eye on NoWonder to find out. Click here to go back to the top
Headquarters: North Andover, Mass.
Headquarters: San Francisco Something is afoot in the systems management industry: Fledgling and established vendors alike are heavily pushing automated, integrated management systems for networks, systems and applications. Start-up RiverSoft is in the thick of it. In fact, RiverSoft has one of the most far-reaching strategies, reports Dennis Drogseth, a director at market researcher Enterprise Management Associates, in the Feb. 7 newsletter on network systems management he penned for Network World. Granted, everybody has a lot to prove in this market and plenty of naysayers to convert, but for a young company, RiverSoft is doing convincingly well. In January, the company debuted the network management operating system, called i3 philOSophy, and announced plans to push it as a de facto operating system. I3 philOSophy essentially acts as middleware, allowing smoother operation between network applications and the servers they ride on. One of its licensees is SilverBack Technologies, another company on our watch list. The first application, OpenRiver, detects and maps the connectivity of networks and their subsequent changes. Because of the automation of typically manual processes, customers don't accumulate the high costs often associated with change management. RiverSoft is targeting any organization with a large and complex network, service provider or user enterprise. Enterprise customers include Booz Allen, Nomura Research Institute and Goldman Sachs. In one of its latest moves, RiverSoft promises to divert some of the $35 million in round-four financing it received in late February to building a world-class support operation for these and future customers. Click here to go back to the top
Headquarters: Billerica, Mass. SilverBack has latched onto the application service provider (ASP) concept, but it isn't hosting anything, at least not remotely. In an unusual twist, SilverBack offers on-site hosting of network management applications. SilverBack gives customers a homegrown, Linux-based device that runs off-the-shelf monitoring, reporting and security tools and customized application software. The box sits on a critical path, say off the main router, gathering, integrating and then correlating information from those tools. Subscribers to SilverBack's InfoCare service can view the data locally through a Web interface, in real time, to find out what device or application has failed; why; how the network might be impacted; and how the problem might be fixed. Because the InfoCare service is local, it isn't subject to the vagaries of Internet connections from which other ASPs may suffer. SilverBack unveiled InfoCare in late February. It offers network alerts, asset inventory, network infrastructure performance monitoring and security scanning applications. Later iterations will add intrusion detection, root cause analysis, application monitoring and network virus scanning. Click here to go back to the top
Headquarters: Westborough, Mass. Once known as BlazeNet and focused on bringing application-aware switches to small companies, this start-up vendor is now known as Top Layer Networks and is intent on seeing its product deployed in big enterprise networks. The shifts came following the arrival of Bruce Cohen as president and CEO, and his recognition that BlazeNet could get a lot more mileage of the technology if cast differently. He wanted to promote the importance of the company's policy engine and the fact that it could prioritize traffic based on Layer 7 application information. Looks like his thinking was sound. AppSwitch 2500 has won industry kudos all around, including our own Best of the Tests Award for 1999. Our testing, conducted by Network World Test Alliance member John Bass, verified that the switch can achieve wire-speed performance while handling Layer 2 and 3 bridging and routing functions; acts as an application-level firewall; and can prioritize the flow of network traffic by application. Bass, who is technical director for Centennial Networking Labs at North Carolina State University, said he was skeptical at first but that the switch definitely passed his muster. And, perhaps more important, the AppSwitch 2500 has passed the rigors of various enterprise users. Top Layer is growing an impressive customer list, populated by names such The Boston Globe and Bear Stearns. Whether Top Layer ever reaches the heights of Cisco remains to be seen. But it has made an impressive start. Click here to go back to the top
Where are they now?Of the 10 young companies Network World tracked last year, half went public, mostly in staggering IPOs. Two were acquired, another is headed for the same fate, and the final two remain independent. Here's a closer look at how our picks have fared.
Akamai Technologies Status: Went public Oct. 29, 1999; for 1999, reported $4 million in revenue and a $57.5 million net loss. Highlights: Grew customer base to nearly 400; in fourth quarter 1999, forged into streaming media content delivery with acquisitions of Network24 Communications and Intervu; partnered with CLECs and Internet players, including AOL, for last-mile connectivity.
Bluestone Software Status: Went public Sept. 24, 1999; for 1999, reported $15.6 million in revenue and a $15.1 million net loss. Highlights: Shipped industry's first dynamic XML server and Release 6 of its Sapphire/Web Java application server; extended relationship with distributors; brought in new top managers; added customers such as ClickMail.com and Food.com.
Covad Communications Status: Went public Jan. 22, 1999; for 1999 reported $66 million in revenue and a $195 million net loss. Highlights: Extended DSL service to multiple U.S. cities, including Atlanta, Chicago and Seattle; began voice-over-DSL trials; forged agreement with AT&T and Qwest that resulted in nationwide DSL connectivity; ranked as fastest-growing NW200 company.
Foundry Networks Status: Went public Sept. 28, 1999; for 1999, reported $134 million in revenue and $23 million in earnings. Highlights: Extended product line with NetIron core routers, Layer 4-7 switches, firewall load-balancing features and new BigIron modules; grew its installed base to 1,500 customers, including AT&T, Industrial Light & Magic and the U.S. Army.
Inktomi Status: Reported $71 million in 1999 revenue and $24 million net loss for the year. (Public since June 1998.) Highlights: Signed on major new customers for its shopping and search engines, including MSN and Merrill Lynch OnLine; teamed with Digital Island and RealNetworks on development of a global streaming media network; released several new products, including Traffic Server 3.0 and search engine services.
Manage.Com Status: Privately held, so financials undisclosed; raised $14.5 million in second-round venture funding. Highlights: Developed the standards-based manageXML language and rolled out a number of new services, including eChristmas Readiness Assessment service; my.Manage.com, for online performance monitoring among e-business communities; and the "extranet-ready" FrontLine e.M software, which Top Layer Networks is using in its Layer 7 switches.
Network Alchemy Status: Acquired by Nokia March 3 for $335 million in stock. Highlights: Added load-balancing and failover features to its CryptoCluster servers; signed on customers such as Conoco, Instinet, MasterCard International and Monsanto; aligned with providers such as AboveNet Communications and Sprint.
Nextlink Status: Merger with Concentric Network pending; the $2.9 billion deal is expected to be finalized this quarter. Highlights: Boosted number of LMDS-based wireless frequencies it owns through two acquisitions; began offering wireless broadband service in multiple U.S. cities; brought in new top executives, including Dan Akerson as chairman and CEO.
Red Hat Software Status: Went public Aug. 11, 1999; for 1999, reported $33 million in revenue and $58 million net losses. Highlights: Forged strategic alliance with Dell to have Red Hat Linux factory-installed on PowerEdge servers; agreed to license and distribute IBM's Java for Linux; acquired open source software maker Cygnus Solutions and e-commerce payment processing software vendor Hell's Kitchen Systems; fleshed out product line with Version 6.1 of its operating system and an e-commerce server.
Ukiah Software Status: Acquired by Novell in June 1999; terms of the agreement were not disclosed. Highlights: Novell incorporated Ukiah's policy-based management software into ZENworks for Networks and ZENworks for Servers; Ukiah stand-alone products discontinued.
Venturing into start-ups No fewer than 34 venture-capital firms are involved in financing the start-ups we're watching this year. (Only one company,
Network ICE, is financed entirely by private investors.) The only firms funding more than one start-up on our list are:
Fidelity Ventures
Integral Capital Partners
Matrix Partners
Morgan Stanley Dean Witter
North Bridge Venture Partners
Related links Contact Signature Series Executive Editor Beth Schultz Start-up carriers make converged services pitches Adero's new twist on upgrading its network Bowstreet boosts B2B software
Loudcloud floats new Web site services concept Returning fire with ice NetBuzz: No Wonder
Start-up touts low-cost connections over optical fiber The move to more automated, integrated management solutions continues Net monitoring service on tap from SilverBack
Top Layer switch lives up to promises
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Founded: July 1998, by Charlotte Baker, Vince Rocca, Oscar Williams and Mike Viren, who all had been marketing and
technology executives at Intermedia Communications. 
Founded: October 1998, by Robert Carney, Paul Cheng and David Crosbie, former marketing directors at QoS appliance vendor
Sitara Networks; and Oliver Jones, founder of streaming video vendor Vivo Software. 
Founded: January 1998, by network management software veterans Frank Moss, formerly chairman and CEO of Tivoli Systems,
and Preferred Systems co-founders Jack Serfass, Joe Sommers and David Sweet. 
Founded: September 1999, by former AOL/Netscape executives, including Ben Horowitz and Marc Andreessen.
Founded: April 1999, by Clinton Lum, Greg Gilliom and Robert Graham, all formerly in product development and management
positions at Network Associates.
Founded: March 1997, by Chris Derossi and Konstantin Othmer, who held executive positions with General Magic and Catapult
Entertainment, respectively. 
Founded: October 1998, by Anthony Zona, who had been in product management at Lucent; and Jeff Gwynne and Jeffrey
Masucci, co-founders of IPA Technologies, which provided consulting to broadband equipment vendors and service providers. 
Founded: In February 1997 by Philip Tee, who had been chief technology officer at message management company Micromuse. 
Founded: June 1999, by John Igoe, Robert Klotz and Deborah MacCallum, all of whom had been remote network management
specialists at Nortel Networks. 
Founded: In January 1997, by switch engineers from FORE Systems and Digital.
Funding: $31.5 million, in three rounds.
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