“Actually, we left RAD because it was so successful,” says Noam Levine, CEO and co-founder of Redux Communications, looking back over the path taken by his start-up company’s four founders. The quartet left RAD just when they should have begun profiting from having successfully penetrated the broadband chip market.
And so, instead of being carried aloft on RAD’s shoulders, Redux was established in November, 1999, to provide silicon-based solutions to the broadband access sector. The four founders - Noam Levine, Daniel Bar-Lev, Gary Golembo and Israel Ben-Shachar - turned to former Motorola Israel president Elisha Shahmoon. He had faith in the idea presented by the brash young men who came knocking at his door and invested $700,000 of his own money. Later, VC funds Giza and Genesis came on board with $5 million, and the start-up was underway.
Despite the RAD connection, and despite appealing to the same markets, the product currently under development at Redux is something entirely different. Broadband infrastructure for houses, very simply put, must provide a very wide band. Home users will want to pay the same $20 for broadband that they now pay for dial-up modem access. Internet service providers must therefore, cut costs and make use every bit of broad band not yet in use.
Redux is attempting to facilitate maximum utilization, giving Internet providers the possibility of making the unsophisticated information pipeline reaching homes more intelligent. One example is allowing identification of data or voice transmission on the network, thereby determining priorities. Defining priorities allows better band utilization, since smooth and undisturbed VoIP calls are more important to customers than whether video files arrive by e-mail one second earlier.
Redux cofounder and VP marketing and sales Daniel Bar-Lev says that Redux’s technology can profoundly analyze information on the network and classify it, afterwards using the information to distribute bandwidth, filter traffic (preventing it from reaching unsuitable destinations), replace addresses, quantify for traffic billing purposes, monitor performance in order to verify that the customer is receiving what he was promised, etc. In general, transferring these operations from software to hardware improves performance and significantly reduces costs.
Redux’s idea can constitute a fairly good solution for organizations obliged to block access to Napster, when their dedicated employees use up bandwidth downloading the songs of Britney Spears. The solution allows access to Napster to be defined as the lowest priority on a predefined bandwidth and limited to times when there is no overloading, (and only in order to choose better singers than Britney Spears).
Redux expects to launch its product in mid-2001. As of now, there is no concrete prototype. The company’s cooperation setup is aimed in several directions. The company is negotiating with silicon manufacturers for inclusion of its chip in their products, although there is no signed agreement as yet. Redux is also negotiating with service providers, who like the applications that Redux can offer. Yet another direction for cooperation is the market of applications providers, who may use Redux’s chips (such applications include billing, performance monitoring, and residential gateway).
”Globes”: What about your competitors?
Levine: ”Fujitsu attempted to compete with us and failed. Indeed, several days after we founded Redux, they knocked on our door and asked to cooperate with us. They tried to go against us head-to-head, saw they were getting nowhere, and immediately agreed to cooperate.”
In principle, Redux’s basic technology can be found in a number of companies that construct the backbone layer, but Bar-Lev believes Redux has no competitors in the access layer. He explains that the reason is that the broadband access field is still very undeveloped, and companies have not yet sensed the market, and are therefore fearful of entering the field. Another reason for the lack of competition is that a development of this type demands great expertise, while entering the customer’s home requires significant cost reductions to make the operation feasible.
Levin says that Redux’s backbone technology is very heavy. An individual chip costs several hundred dollars. Philips is manufacturing for Redux and will try to meet the expected demand for the Israeli start-up’s product.
Levin: “If I had wanted to choose a fab several years ago, all I would have had to do would have been to approach a few manufacturers, wait for their faxes to arrive with price bids, and choose one of them. Everything was easy back then, because everyone was starved for customers. Today the situation is completely different. All the manufacturers are stuffed to the gills with work. If you contact a chip manufacturer, he won’t answer you, because you are a tiny start-up, and for him, you don’t even exist. In our case, we managed to reach the manufacturers we wanted to talk with, and got reasonable bids. Everyone did comprehensive due diligence for us to make sure they weren’t wasting their time.”
Redux currently has 34 employees and a clearly defined goal – to double its staff by year-end. At the same time, despite the company attractiveness, having been marked as very likely to succeed, it faces a difficult time recruiting manpower, due to the great shortage of chip designers in the market. “Not everyone defining himself as a chip designer fits our definition of the term. We do have a problem.” Ironically, despite the difficulty in recruiting employees, most of Redux’s employees live in the area (Modi’in), which, in contrast to the central region, is not known for its high tech population.
The choice of Modi’in was not made in the hope that overseas investors would think there was a connection between the company and Israel Defense Forces Intelligence unit 8200, which is more famous overseas than in Israel, but for several practical reasons. Levin: “First of all, Bar-Lev and I live in the area. Seriously, though, Modi’in is a very centrally located town, which can be reached easily from anywhere. The population is very young and includes many high tech people that get stuck in traffic jams every day on the road to Tel Aviv.”
Name: Redux Communications
Founded: November 1999
Product: Network processor for access products
Market: Broadband equipment manufacturers
No. of employees: 34
Shareholders: The founders, Giza, Genesis
Published by Israel's Business Arena February 19, 2001.