The Daily Start-Up: Force10 Finally Lives Up To IPO Promise

By: Scott Austin | March 2, 2010 (Featured on The Wall Street Journal)

Force10 Networks has finally filed to go public after blabbing about it for years. Well, this is a juiced-up Force10. Last year, two competing 10-year-old network equipment makers, Force10 and Turin Networks, decided they needed to combine in order to persuade fussier public-market investors to buy into an eventual offering. That merger, billed at the time as a rare 50-50 deal, brought together two companies that had raised some $600 million in venture backing combined from at least 25 investors. Its IPO filing is written from the point of view of Turin Networks, which states it acquired Force10. Either way, the combined company generated $199.2 million in revenue in 2009 on a pro forma basis. But because the two companies’ costs are so high, especially sales and marketing, it recorded a pro forma loss of $76.3 million. Indeed, the company expects its operating expenses to increase due to a variety of reasons, so its losses should continue to pile up “for the foreseeable future.” This all sounds a bit like another IPO registrant, Calix Networks, also a telecommunications equipment maker founded in 1999 that raised a ton of venture capital and foresees mounting losses. Will the public market look beyond the red ink?….

Facebook can’t seem to win. It’s come under fire repeatedly in the past for allegedly impeding on its members’ privacy. Now it’s accused of being too charitable in an effort to settle a class-action lawsuit about privacy concerns. According to The Wall Street Journal, Facebook offered $9.5 million to settle the case last year, while denying wrongdoing. The platintiffs’ lawyers would retain 30% of that amount, while the rest would go to a newly created privacy-rights foundation. The judge is weighing objections to Facebook’s offer. Says the plaintiffs’ lawyer, who is in favor of the settlement: “I’m not interested in being the kind of class-action lawyer who spends $1 per class member to send everyone a check for 50 cents.” Darn, I was banking on that 50 cents…

Business plans often include a section called “competitive analysis,” which attempts to identify potential competitors and their products. But beware, writes serial entrepreneur Steve Blank – if done wrong, this analysis can set companies “back months and possibly even kill them.” Blank says that as a result of this competitive analysis, start-ups often waste time developing features to match their competitors even if the customers couldn’t care less about the features. Instead, a start-up needs to identify the features that matter most to potential customers…

Part James Bond, part Tiger Woods, a new mobile app that sets a time limit for text messages so they self-destruct is creating quite a stir online. Called TigerConnect Clinical Collaboration Platform – Standard – its founder claims the name was in place before the Tiger Woods scandal – the app removes both sent and received texts from the original phone, receiving phone and server after a specified time limit. As tech site ITWeb says, it’s “perfect for cheating spouses, shady politicians, sexting teens, and people who send a lot of stupid texts while drunk.” Or, in the words of Time.com, it’s “like paying $2.50 a month for stupidity insurance.” To see a video of how it works, click here.
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