Tacit Ready to 'Spar With Gorilla'

WAFS startup has new president, and deals may follow

September 24, 2004

3 Min Read
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When wide-area file services (WAFS) startup Tacit Networks Inc. went looking for a president, CEO Greg Grodhaus turned to a familiar face: former InfiniCon Systems Inc.CEO Chuck Foley (see InfiniCon Names New CEO).

Grodhaus and Foley have a history. Before Foley headed InfiniBand startup InfiniCon, he worked with Grodhaus at three other companies, most recently Inrange Technologies. At Inrange, Foley, Grodhaus, and Tacit CFO Geoff Lapres helped take the switching startup public in 2000 before it was acquired for $190 million by Computer Network Technology Corp. (CNT) (Nasdaq: CMNT) in April 2003 (see CNT Walks Off With Inrange).

So is Tacit looking to follow the same blueprint as Inrange? Its far too early to consider going public. Tacit is barely a year into shipping its appliances that run caching software to compress files to improve performance over WANs. And it’s at least a year from profitability.

There are whispers in the industry that Foley’s role is to find a buyer for Tacit. He says it’s more likely that Tacit will use some of the recent $16.9 million funding Tacit received in May for acquisitions, such as its recent deal for the intellectual property of AttachStor (see Tacit Attaches Patent Portfolio). But when Cisco spent $82 million on Tacit competitor Actona in June, it got Tacit’s attention (see Cisco Acts on Actona). You can bet it caught its investors’ attention, too. Cisco previously owned 17.25 percent of Actona, which made its valuation $100 million.

“Cisco validated the market,” Foley says. “Actona had no customers or GA product, and they went for $100 million.”As switch vendor McData Corp. (Nasdaq: MCDTA) can attest, Cisco can change the dynamics of any market it enters. Cisco is porting Actona’s software onto its hardware and expects to have WAFS product by the end of the year.

Grodhaus and Foley were gone from Inrange before Cisco got into the switching market, but they’ll have to face the networking giant now.

“It’s like sparring with a gorilla, you have to be quick and nimble,” Foley says of competing with Cisco.

WAFS is specialized software that caches files and offers centralized, bidirectional access (read/write) to multiple remote sites (see Watch Out for WAFS). It is used to overcome lags encountered when sending files to remote sites using traditional file protocols, such as NFS and CIFS. It’s considered a lucrative emerging market, but it’s crowded with startups such as Tacit, Actona Technologies Inc., DiskSites Inc., Riverbed Technology Inc., Signiant Corp., and now giant Cisco.

“We fix a major bleeding-from-the-neck problem,” Foley says of WAFS. “Let’s face it: All of us in the business are looking for the bleeding-from-the-neck problem.”Of course, startups in emerging technologies can end up bleeding from the neck, too, although Tacit should have enough funding to stay afloat for awhile. Foley says Tacit has a roadmap to add support for more platforms (it supports Windows and Linux now), more application-specific optimization (it currently enhances MS Office and AutoCAD), and better email optimization with the AttachStor technology.

He would also like to expand Tacit’s channel distribution and marketing, but realizes the company must make smart decisions if it is to survive.

“We’re well funded,” Foley says. “We can use this money to go to profitability, or we can use it to grow faster. We might use the funding to invest more aggressively, like we did with AttachStor. It’s like we have one sub, three torpedoes, and lots of stuff to blow up. We have to pick our targets wisely.”

— Dave "bleeding-from-the-neck" Raffo, Senior Editor, Byte and Switch

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