Every startup company goes through ups and downs. When challenges arise, the first response from Matrix has been, "Let's get together as a team and work through these problems." Their commitment to me has been solid and unshaken.
Many American immigrants hold the dream of working hard and someday starting a business. Ashraf Dahod has done so not once, but five times.
Master of the American Dream
As a child growing up in Mumbai, India in the 1960s, Ashraf “Ash” Dahod fantasized about moving to the United States working in the technology industry. Televisions had not yet made it to India and computers still held a mysterious allure. “I was very intrigued by computers. I wanted to understand them and someday be in the position to design them,” he says.
Fast-forward half a century to today. Ash is founder and chief executive of Starent Networks. The company’s software, hardware and services make it possible for millions of consumers to send email, upload photos and watch television on their mobile phones. Starent, which has hundreds of employees all around the world, brought in $250 million in revenue in 2008.
Prior to founding Starent Ash launched four other tech companies, each of which had a different outcome and provided lessons that led him to become more successful in his current venture.
Ash earned his first degree, a bachelor’s in physics from the University of Bombay, in 1971. Upon graduation he flew to the University of Michigan in Ann Arbor. After earning his bachelor’s degree in engineering, he continued on to earn master’s degrees from Stanford University and moved to Massachusetts with $150 in his wallet.
He took a position with the Mitre Corp., a nonprofit research organization, where he worked with an elite team that devised and patented a local area network—a novel idea in the 1970s (3Com would not be founded for a few more years). While at Mitre, he earned a master’s degree from Northeastern. He and his colleagues wanted to spin out their idea into an independent business but they were unable to secure funding. His boss told Ash that if he wanted to start and run his own business someday, he should get an MBA. Ash followed his mentor’s advice and applied to Harvard Business School.
He earned his master’s there, and then began work on a paper about LANs. His research became the basis for a new company: Applitek Corp. Ash rented a 20’ X 10’ office where he and his cofounder could build a prototype of a device while his wife and mother worked the phones.
Matrix Partners’ Timothy Barrows, then a young banker with Merrill Lynch, put together a group of angel investors to fund Ash’s company. Applitek raised several rounds of venture capital over the next five years (Matrix was not among Applitek’s investors), which enabled the company to build the world’s first cable modem and a new approach to LANs. In 1987, after a disagreement with his venture investors over acquisition negotiations, Ash left the company.
Six months later Ash started Sigma Network Systems, a provider of multi-layer, multi-protocol switching systems. After four years of working on the business, he and his cofounder sold Sigma to Standard Microsystems for $15 million. Ash continued to work there until Sigma was sold to Cabletron. Ash left the company after that acquisition and wanted to start another venture right away. “I was ready to build something really big this time,” he says.
Ash cofounded NetCore Systems in 1995, which made large-scale, high-speed switching products for telecom and Internet service providers. Matrix Partners led the first round of investment. NetCore’s terabit router—a hybrid of IP and ATM protocols—was twenty times faster than products offered by giant competitors such as Cisco.
“Those were crazy days,” Ash recalls. “We had multiple acquisition offers. The hardest decision was whether to sell or go public. The key advice I got from Matrix was that despite all the hype of the bubble, time-to-market was not in our favor. We may have had a better technical solution but another startup, Juniper, was nine months ahead of us. They had locked up all the OEM relationships we would have needed to take on Cisco.”
Ash and his board decided to sell. Tellabs purchased the company in 1999 for $575 million, making a number of NetCore’s 85 employees millionaires. It turned out to be the right decision: A few months later, the stock market crashed.
Ash still wanted to build a significant company and take it public. He thought about emerging trends he could exploit for a new company and noticed the worldwide explosion of cell phone adoption rates. He figured there would be an evolution of content and bandwidth in mobile just like there was for computers and the Internet. He decided to build a business that would enable carriers to deliver all that to their customers.
Matrix provided Ash with seed capital to start his new company, Starent Networks, in August-2000. However, Ash’s three NetCore cofounders who had been with him since the Applitek days decided they did not want to be part of founding yet another startup. “I had to build a new founding team from scratch,” says Ash. “I relied heavily on introductions from Matrix. I knew that anyone they brought in would be a strong candidate who would fit in well with our culture.”
The partners at Matrix began scouring their network and helped Ash identify two cofounders, their vice president of engineering and head of Greater China.
Starting a new venture in a major recession proved to be Ash’s greatest challenge. The telecom market was melting down and the spending budgets of carriers were frozen. New customers were harder to win than ever before, particularly for an unproven startup.
Starent had two factors in its favor. Telcos were forced to make cuts wherever possible in their voice businesses, but they were willing to spend money to support profitable high-speed data networks. The trend toward value-added services added to Starent’s top line. Given the environment, Ash had to find a way to keep costs low. He outsourced Starent’s software development to a business he founded in India in 1993. The move allowed the company to get more work done, faster and for less money than the competition.
“Every startup company goes through ups and downs,” says Ash. “When challenges arise, the first response from Matrix has been, ‘Let’s get together as a team and work through these problems.’ Their commitment to me has been solid and unshaken.”
In 2007 Starent brought in $145 million in revenue, and in June of that year the company listed its shares on Nasdaq. “My biggest regret is that I did not accept Matrix’ offer to invest in my first company,” says Ash. “We believed we could get a better valuation. I learned later the venture business is not just about those early valuations—it is about the value you create by having the right partner.”
“I consider myself fortunate to have known and worked with Ash for so many years,” says Tim. “There are exceedingly few people with his combination of exceptional leadership and vision, as well as technology and business skills. When people ask me to define what it means to be an entrepreneur, I always think of Ash.”
Starent Networks develops infrastructure products and services that enable mobile operators to deliver multimedia services to their subscribers.
Matrix Partners Board Members