Eisodus Networks Pvt. Ltd.: A Tale of Unsuccessful Commercialization Attempt by a Start-up Founding of Eisodus: Eisodus was founded in October 2002 by Professor Abhay Karandikar, Sunil Mehta and Abhijit Gadgil. Initially, Prof. Karandikar officially joined as the chief technical advisor to the company. He could not become a full time employee of Eisodus as he was a faculty member at Indian Institute of Technology (IIT) Bombay. He finally joined full time from January 2005 after taking a year long sabbatical leave from IIT Bombay. Background of the Founders: Prof. Karandikar obtained his BE in 1986 and MTech and PhD from IIT Kanpur in 1988 and 1995 respectively. During 1988-89, he worked for the Indian Space Research Organization (ISRO), Ahmedabad, an Indian government funded laboratory engaged in research in the field of space applications. He was a member of technical staff and team coordinator in High Performance Computing Group (HPCG) of Center for Development of Advanced Computing (C-DAC), Pune during 1994-97. Since 1997, he has been working in the department of Electrical Engineering of IIT Bombay as a faculty member. Prof. Karandikar had extensive consulting experience in the area of networking and communications technology and was actively engaged in research related to quality of service (QoS) guarantees in Internet and architectures for next generation networks (NGN). Sunil Mehta obtained his BTech in Aeronautical Engineering in 1982 from IIT Bombay. In 1983 he joined MBA programme offered by Carlson School of Management at the University of Minnesota in USA and completed it in 1985. He joined his family business of transport and clearing/forwarding agency in 1986 and was also involved in the building of a chemical manufacturing business till 1989. In 1990 he started Telenet This casestudy has been prepared by Prageet Aeron, Doctoral student at Indian Institute of 1 Management, Ahmedabad, under the guidance of Prof. Rekha Jain, Indian Institute of Management, Ahmedabad for academic discussion only and does not represent appropriate or inappropriate handling of a business situation. Systems Private Ltd. which was involved in the development and manufacture of telecommunication equipment such as ISDN based modems and other customer premise equipments (CPEs). Telenet had its own PCB development plant based at Navi Mumbai near Mumbai. Abhijit Gadgil completed his BE from Pune University in Electronics in1998 and obtained his MTech, working under the guidance of Prof. Karandikar in July 2002. He had experience in the development of protocol stacks and had successfully developed and released MPLS stack on Linux platform and a Linux based MPLS Emulator (LiME) which was freely downloadable. After passing out he joined Eisodus as a promoter with Prof. Karandikar and Sunil Mehta. Indian Telecom Scenario: National Telecom Policy (NTP 94) identified the importance of telecom development for the country and realized that the kind of investment required by the country in the telecom infrastructure could not be bourne out by Government alone. So it laid the foundation of a policy for the participation of private sector in the development of telecom sector in India. National Telecom Policy (NTP 99) went a step further and laid down the direction for the Indian telecom development. A series of progressive steps such as the introduction of third and fourth telecom service provider in each circle led to considerable competition among the players. As a result the prices plummeted and high demand for telecom services was being witnessed during 2002-2003. Although the operators had laid down their equipment but the size of demand was such that they were constantly in the process of ramping up their infrastructure. The regulations also were playing a major role in the creation of new opportunities irrespective of the choice of the technologies. With near total opening up of access services to all for voice, video and data, new technologies were being developed to achieve convergence. This casestudy has been prepared by Prageet Aeron, Doctoral student at Indian Institute of 2 Management, Ahmedabad, under the guidance of Prof. Rekha Jain, Indian Institute of Management, Ahmedabad for academic discussion only and does not represent appropriate or inappropriate handling of a business situation. Broadband has been defined as an always on connection with download speed exceeding 256 kbps in India. India with its rising middle class and a large young and techno-savvy population was expected to bring in a very high demand for broadband connectivity. Recognizing the potential of ubiquitous broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele- medicine, e-governance, entertainment as well as employment generation by way of high speed access to information and web-based communication, Government finalized a policy to accelerate the growth of broadband services and this was released as the Broadband Policy document in 2004. However, given the state of last mile connections across India which were mostly copper based many innovative products were required to provide the kind of service customers were looking for and this was seen as a huge opportunity by the new companies that were coming up. This growth was expected to drive a demand for network based products in the carrier space. The Opportunity: Broadband access industry, which was on a fast growth path, has been upgrading the technology constantly. The broadband access network comprises of first mile access and metro core network. The most popular first mile broadband technology at the time was Asynchronous Digital Subscriber Link (ADSL) with ATM (Asynchronous Transfer Mode) as the transport protocol for ADSL. The other alternate first mile technologies were Data over Cable Service Interface Specification (DOCSIS) networks and Passive Optical Network (PON). However all these first mile access technologies had some problems associated with them. For instance, ADSL had an issue of complexity of management and high overheads when integrated with Internet protocol (IP) based networks. The DOCSIS based cable network was associated with high latencies and low bandwidth per customer due to its shared nature. PON with ATM as the transport mechanism suffers from problems similar to that of ADSL. This casestudy has been prepared by Prageet Aeron, Doctoral student at Indian Institute of 3 Management, Ahmedabad, under the guidance of Prof. Rekha Jain, Indian Institute of Management, Ahmedabad for academic discussion only and does not represent appropriate or inappropriate handling of a business situation. For metro core network Synchronous Optical Networking (SONET) or Synchronous Digital Hierarchy (SDH) rings with ATM as transport are primarily used. Post 2000 there has been a significant shift in traffic patterns and data traffic forms a major part of the total traffic volume through both the last mile as well as metro core network. Time- Division Multiplexing (TDM) based technology is considered inefficient and consequently, a shift from TDM centric network to packet friendly IP based networks is slowly taking place across the spectrum of networks. The existing access networks had problems such as low bandwidth, inefficient usage of existing bandwidth, inflexible provisioning at granular levels, and high cost. So, there was a need to develop a product that could bridge these problems and further add value for the telecom companies and their customers. Motivation: During his MTech days Abhijit had regular interaction with Prof Karandikar and during these interactions they had came up with some interesting ideas related to carrier equipment especially with respect to India where last mile access was mostly copper based. Once Abhijit graduated from IIT Bombay, he and Prof. Karandikar were looking for ways to operationalize their ideas by setting up a company of their own. Meanwhile, Sunil Mehta came over to meet Prof. Karandikar for some consulting work as he wanted to introduce a new line of products for his company Telenet Systems Pvt. Ltd. which at that point of time was manufacturing ISDN based modems and some other telecom equipment. But Telenet Systems manufactured no high end products that could be used by the network providing companies such as the telecom service providers (Telcos) or the Internet service provider (ISPs). During the meeting Prof. Karandikar and Sunil Mehta realized that their views about the future of access products were closely aligned and they decided to join forces to pursue their ideas together. Both Prof. Karandikar and Abhijit Gadgil had no prior entrepreneurial experience. For Prof. Karandikar who was to become a first generation entrepreneur with Eisodus the This casestudy has been prepared by Prageet Aeron, Doctoral student at Indian Institute of 4 Management, Ahmedabad, under the guidance of Prof. Rekha Jain, Indian Institute of Management, Ahmedabad for academic discussion only and does not represent appropriate or inappropriate handling of a business situation. basic motivation was a chance to develop a high end technology product and a chance to create a successful company from IIT Bombay. Among the IITs, IIT Madras (the TeNeT group led by Prof. Ashok Jhunjhunwala) had successfully started and was operating several companies within the telecom segment. Prof. Karandikar was sure that such an initiative could be taken up at IIT Bombay as well. Sunil Mehta on the other hand wanted technical expertise of Prof Karandikar and his students to be able to develop high end products and possibly take Telenet Systems to the next level of evolution. His idea was to merge the technological knowledge of Prof. Karandikar and the manufacturing experience of Telenet Systems Ltd. to come up with market dominating and technologically superior products. Apart from the founders other people who joined Eisodus included MTech students of IIT Bombay who graduated in 2002 and were closely associated with Prof. Karandikar during their MTech days. These included Zainul Charbiwala and Praveen Kumar. Both were looking for an opportunity job that was both challenging and promoted learning.