A lot can be learned by startup businesses from studying this era.
Where and When was Supercomm ’99?
Supercomm 1999 was held in Atlanta’s Georgia World Congress Center from June 6 to June 10. With this backdrop, Cerent formally announced the company and its first product, the Cerent 454. Cerent became the talk of the show and generated massive excitement across the telecom industry. Its wares were on display in booth 459A.
Cerent was poised to shake things up!
The Run Up to Supercomm ‘99
Supercomm ‘99 was phenomenal for Cerent. Many of the Cerent sales and marketing people told me that Cerent was the best company they had ever been a part of. “We were the hottest company . . . ,” reflected Terry Brown, Cerent’s vice-president of sales, marketing, and customer service.
By the end of 1998, Cerent had secured over 20 customers and by the time the company was launched at Supercomm ‘99, Cerent had more than 200 customers. Terry’s U.S. map, featuring red dots representing the location of each new customer, had acquired a bad case of the measles.
“We kept that count going,” according to Bill Peatman, Cerent’s marketing communications manager, “The dots don’t lie. That steady progress helped us get press coverage and it disarmed the competitors and also the competitive technologies, such as Metro DWDM. Our approach was more scalable, upgradeable, and it was a paradigm shift.” Having many customers demonstrated the superiority of the Cerent solution over competing ones.
In February 1999, it was all smiles at Cerent as the company and Williams Communications negotiated the terms of a twenty-five million dollar contract. When announced at Supercomm ’99 in June, this deal put Cerent on the map as a serious supplier of next-generation SONET equipment.
Terry Brown highlighted this milestone, “There were definitely a lot of independent telephone company customers, but I would say that the tipping point customer in many respects was Williams. They could buy the basic product in volume, the OC-48 DS3 aggregation product. They could buy Release 1 in volume. And they fancied themselves as go-getters. ‘We’re not MCI, we’re Williams,’ the company’s executives boasted.”
Bert Soto, Cerent’s sales representative for Williams, a company he called on while previously at Alcatel, observed, “In a matter of weeks, we worked off ten million dollars of their twenty-five million dollar commitment from those first orders.”
The optical market was hot. Almost half of the Williams’ side of the contract was fulfilled at the outset of the relationship. The spending frenzy of many service provider customers went unabated for the balance of 1999. Cerent was benefitting immensely from open wallets and service providers were taking advantage of the great value Cerent provided. Corporations, like individuals, like to get a big bang for their buck.
Alan Liew, one of Cerent’s early sales engineers, called it in early 1999. All of the major optical transport vendors—Lucent, Nortel, Alcatel, and Fujitsu —were literally afraid of Cerent. Their former customers told them why they should be wary of Cerent in no uncertain terms. They all scrambled to introduce or announce new optical transport products in and around Supercomm ‘99. What these “lumbering” suppliers said and what they did were two different things. But regardless of their claims and counterclaims, all of them scrapped their existing product lines and within two years introduced new products to effectively compete with Cerent.
An International View of the American Telecom Market in 1999
Yoshio Utsumi, Secretary-General of the International Telecommunication Union (ITU), delivered the keynote address on the second day of Supercomm ’99. His talk, entitled The Future State of the Telecommunications Industry: Does anyone know where we're heading?, touched on the theme of telecom connecting the world.
Utsumi said, on June 7th, “More Americans make computers than build cars. More Americans build semiconductors than construction machinery. As in other advanced economies, the telecommunication, information technology and media industries generate 10% or more of GDP.”
Indeed, the telecom business was booming in mid-1999, spurred on by the deregulation entrenched in the Telecommunications Act of 1996. Statistics revealed that over 140 million people around the world were already surfing the Net. On top of that, e-business had accounted for $43 billion in sales the year before. Utsumi added, “E-commerce is projected to exceed $300 billion annually by early in the next decade. Perhaps most astonishing is the fact that more than 90% of web-based sales revenue [in 1998] went to American companies.”
The United States was well positioned to exploit this “global economic revolution.” Cisco’s John Chambers, who would also speak at this Supercomm, touted the power of the Internet to boost productivity for companies and governments alike while improving the standard of living for people the world over. Utsumi addressed the American contingent of his global audience assembled in Atlanta, “You are the world leader in many areas of telecommunications and information technology. You are a world leader in software and content. And you are the leading developer of electronic commerce.”
He implored America’s telecom businesses to take a page from “Atlanta’s greatest son, Dr Martin Luther King, [and] his dream of a society where all people would be treated as equals and provide every citizen with the opportunity to realize his or her potential.”
Utsumi added, “This should serve as an inspiration to all of us in the telecoms industry. To deny access to information to large tracks of humanity will effectively condemn them to a life of ignorance and economic marginalization.”
Inspired by the enshrined words of Martin Luther King’s “I have a dream” speech, Utsumi sought “a world where the creative energies of all of us in this dynamic industry make it possible for everyone everywhere in this ‘global village’ to have easy and affordable access to the networks.”
Many new service providers entering the market – such as Competitive Local Exchange Carriers – and numerous next-generation equipment providers – such as Cerent, Lightera, Sycamore – sought to build more cost-effective networks to accommodate voice and carry Internet traffic.
Supercomm ’99 Week
Utsumi’s clarion call was answered by upstart startup Cerent that sought to challenge the status quo in optical transport and take down the “evil oligopoly” of legacy equipment suppliers.
Cerent’s coming out party was Supercomm ‘99. The debutante had reached maturity and was ready to be shown off to the telecom aristocracy. Cerent introduced itself against the backdrop of the formal debut presentation held at Supercomm in the Deep South. Cerent and its wares were on display for all eligible suitors to see at the industry’s annual cotillion.
Doug Juers, Cerent’s sales representative for the northeast Independent telcos was already celebrating his recent contract win with Frontier and Jeff Parow was enjoying the increasing amount of business he drummed up for Cerent in the southeast states. Eric Clelland’s sales team was firing on all cylinders and the foundation that they built paved the way for increasing success in the new markets that alternative carriers were creating. Cerent helped fuel the business case of these new players with its cost-effective and space efficient platform. The Cerent 454 was a natural fit for co-location spaces, metropolitan transport networks, and even larger regional networks.
“The excitement and the team we had back then during Supercomm ‘99 is what stands out for me,” recalls Doug. “It was just so freakin’ exciting. Everyone at Cerent was excited. We had unbelievable booth traffic. It was the most excitement I’ve seen for one vendor in a booth, ever.”
For Jeff, Supercomm ‘99 held close to home in the Georgia World Congress Center was the highlight of his career, “That tradeshow was fantastic. It was just a tremendous coming out party. I remember we were able to solidify some very key customers. It was where we were also able to close some more business. The energy and the momentum that we had were phenomenal. We were able to sway some customers who were still on the fence. It was during that Supercomm meeting that we essentially solidified the commitment from Horry Telephone and they were ready to move forward with Cerent.”
Jeff added in 2013, when he had joined Cyan, “Horry Telephone became a huge customer and they’re such an entrenched Cisco customer today that we’re still trying to break that door down in my new role at Cyan.”
Drama on the Trade Show Floor
Supercomm ‘99 had plenty of drama too. Cerent’s competitors tried to gain entry to the company’s booth to assess what this nouveau riche startup had going for it. They were quickly asked to leave. Doug had booth duty and he remembers Terry Brown patrolling the perimeter of the Cerent booth, “Guys were showing up with their Supercomm entry badges turned around, so you couldn’t see what company they were with. It was usually Lucent or Fujitsu trying to get in to see the Cerent 454. Terry just stood in their path, ‘You need to get out. Just get out.’”
Doug and his Cerent colleagues took their cue from those incidents. He remembers John Colvin doing the same thing to other unwelcome arrivals, “You need to get out! There was no physical contact, but there were a couple of competitors wandering right next door and we made sure they got the hell out.”
Scott Messenger recalls his experience at the show, “Fantastic! I was doing booth duty. I remember Tom Corker leading a presentation for the analysts. What a show . . . I’m not religious, but if I was, I would’ve thanked God for giving us the Cerent 454 team . . . it was absolutely the pinnacle of all shows. I had been to a lot of shows with Rockwell and Alcatel, and I was already a million-miler frequent flyer, and Supercomm ‘99 was absolutely the pinnacle of being part of something super special. And all the buzz around Cerent . . . you guys knocked it out of the park, especially the marketing . . . I was very green to the company, but I was not green to the industry. And I knew what a show like this meant, and I knew what traction was, and I knew what it meant to have a group of Cerent’s leaders presenting on a flat screen talking about the value of the product, I knew what flying under the radar meant, and I knew about what coming out with something this huge meant. We were the talk of the entire show. It was awesome.”
Williams supported Cerent’s formal coming out party by agreeing to jointly announce its use of the Cerent 454 and their $25 million commitment for the product. The press release hit the wire on June 8th. Carl Russo was quoted in our local newspaper, The Press Democrat, “I think Williams could be viewed as the ‘statest’ of the art. They are one of the most forward-looking service providers out there. For them to choose the product and the company, we believe it to be a nice endorsement.”
Why not, indeed? One month and one day later Cerent would file its S-1, a move to parlay its “hotness” into the public markets. Cisco would deny Cerent’s IPO by swooping in and acquiring the company instead. Cisco and Cerent made their announcement in July 1999.
The Insider’s Breakfast
Terry Brown delivered the Insider’s Breakfast presentation on a big screen in a massive conference room at the Wyndham Garden Hotel in downtown Atlanta. It was an event to remember. The event was oversubscribed, primarily because of the buzz Cerent and its product generated prior to the show.
Showtime was set for the very early morning of June 7, 1999, just hours before the exhibit hall opened at the nearby Georgia World Congress Center. Customers flocked to Cerent’s event, tickets in hand, many of them noting that it modeled Advance Fibre Communication’s events Terry previously held while working there. The Cerent Insider’s Breakfast was an even bigger success than those earlier ones put on by AFC.
Bill recalls, “The breakfast presentation was packed. We had a big line forming so I went out there and served our customers orange juice and coffee. We had set up a poolside area where customers could eat as well as the designated dining area before they entered the conference room for Terry’s presentation. We even had flowers scattered in the pool and someone said it looked like a setting for a Viking funeral.”
The ballroom was packed, with many in attendance hoping to find out what the buzz was about surrounding Cerent. Media were not allowed in. Bill adds, “That was probably one of the most successful tradeshow experiences I was ever part of. We built the booth, we conducted the Insider’s Breakfast, we even sponsored the Supercomm cups; every beverage glass had the Cerent logo on it.”
Customers were admitted for the first presentation fifteen minutes before the first talk at 7:00 am. Two more presentations would follow. It was an overwhelming success, and for those geeks interested in reading about Terry’s presentation, a transcript of it is included in Appendix 5 of my book, The Upstart Startup.
Bill Peatman returned to the scene in Atlanta one year later for Supercomm 2000, “I was in the bar at the Wyndham with a bunch of Cerent sales alumni and the lady who I booked the hotel with, the event manager for Supercomm ‘99, was in the bar, and she recognized me.”
“She came over, gave me a hug, and said, ‘Drinks for all of these guys. They believed in us. Cerent’s Insider’s Breakfast was our first event.’”
“The sales guys had both feet in the trough and they started ordering Courvoisier and . . . She didn’t care, she was all fired up that the ‘Cerent team’ was back.
The only difference: Cerent’s team had donned the teal color of Cisco Systems.
 Alcatel’s 1603 SMX was an OC-48 SONET multiplexer that featured DS1, OC-3 and OC-12 drops. This product, billed as next-generation by Alcatel, was at least 50 percent more expensive than a like configuration of the Cerent 454.
 This BLOG post is associated closely with Appendix 5 of the The Upstart Startup (2014).