"Our real competition is Packeteer. Cisco doesn't even begin to compete with Allot Communications. We don't compete with Cisco. Anyone settling for Cisco's products won't come to Allot, and anyone coming to Allot won't want Cisco." So says Eran Ziv, president of Allot Communications, which provides technologies for Quality of Service (QoS) assurance on IP networks and Internet bandwidth management.
Ziv is actually referring to the Israeli quality assurance company acquired by Cisco two years ago. At the time, Allot already said that their product was better, just as ECI Telecom general manager Doron Inbar is now declaring that his company's XDM product is superior to that of Chromatis, which Lucent acquired for $4.8 billion.
Allot presented its new Virtual Bandwidth Manager (VBM) solution and its QoS solution for user access to the "one last mile" without installing equipment on the user's network. This solution is an upgrade of Allot's comprehensive next-generation solution for providing services, QoS, and IP service billing capacity.
In 1998, Allot was crowned by Data Communications Magazine as one of the "Top 25 Hot Start-ups" and in 1999 won the "Hot Product of the Year" award. The company operates out of offices in Hod Hasharon, with additional offices in the US (San Francisco, New York, and Atlanta), France, Germany, Britain, Denmark, and Japan.
When talking with Israeli start-ups, the acquisitions of foreign companies is a delicate subject. Everyone wants the billions; only a few have a real chance to survive alone in the wild global communications market, but they will never say so. Ziv also expresses himself cautiously in this area: "Allot is a good example of a start-up that developed well and properly, was not sold after a year for billions of dollars, and did not stop working. We have 90 employees, of whom 45 are engineers, and we manufacture with the help of subcontractors."
"Globes": What do you actually do?
Eran Ziv: "We provide tools to help network managers decide how to manage their bandwidth. The regular IP world is an anachronism. The early bird catches the worm. We enable people decide which application is more important, which customer is more important, and so forth."
And the market wants it?
"Just as today there are no networks without a firewall, in the future there will be no networks that are not managed in accordance with the organization's policies. This is a hot field, and you see ventures coming from various directions."
What does your new product feature?
"One integrated system that supplies the requirements of organizations on the one hand and those of service providers on the other."
CEO Yigal Jacoby founded the company following his success in Armon Networks. Are the two connected?
"Armon collected information from the network. Allot goes a step further and helps analyze the information and automatically change the network's activity according to the findings. The control system accompanying the product enables the manager to make decisions in advance, according to various rules or scenarios."
Where is the company today in terms of strategy?
"The company focuses 60% of its investment in marketing. We are building the system to enable us succeed as an independent company. That's the direction, but it doesn't mean we won't consider a serious offer. We recently raised capital at a $100 million value, after money. The company's value increased by 600% within a year."
A secure self-definition
During the SuperCOMM 2000 exhibition Allot announced the completion of a $10 million financing round at a company value of $100 million, after money. The round began in March, and the original intention was to raise $15 million at a value of $115 million, after money, but this was not realized.
The company announced that the next stage would be an IPO on Nasdaq. The financing round was led by the Tamir Fishman fund and Dain Rauscher Wessels. Both invested $4 million. Other participants in the round included the Tamar, Genesis, Gemini, and Walden venture capital funds, the investment arm of BancBoston, and Japanese fund JAFCO. All these invested a total of $6 million.
Up until now Allot has held four financing rounds. The company raised $1.5 million at the seed stage. In the first round in February 1998, $4.3 million was raised. The second round, held in the second quarter of 1999, raised $7 million.
Published by Israel's Business Arena on June 29, 2000