Ciena
"A Jackpot for the Record Books"
As the network specialist, Ciena helps form the backbone of today’s Internet. Ciena offers leading network infrastructure solutions, intelligent software and supporting services. Its solutions form the foundation of many of the world’s largest, most reliable networks serving, enterprise, government, research and education markets across the globe.
Rapid Value Creation
The company began in 1992 as a technology enterprise spinout of General Instrument, originally developing a breakthrough solution to bottlenecks in the backbone of the Internet. With its wave division multiplexing, Ciena turned a one-lane fiber optic street into the Internet super highway. Multiplexing zaps a rainbow of 1,000 colors down a fiberglass hair at 186,000 miles per second. Its technology dramatically increased the transmission capacity of fiber-optic networks by 1600% without installing new lines.
Seizing the opportunity, Spencer Trask & Co.’s Chairman, Kevin Kimberlin, spearheaded Ciena’s initial financing, and was later joined by blue-chip co-investors Siemens, AT&T, Bessemer Trust Company and Sevin Rosen. Through a rapid ‘value creation effort’, Ciena was quickly transformed from a development stage company to a leading supplier of fiber-optic expansion products. According to Goldman Sachs, the company holds the record as the fastest growing company in its first year of product shipment in the history of American business. By its second year of shipping product revenues soared to $412 million.
Ironically, the communications abundance brought about by this world-changing company, drove both the high tech mania of the 1990’s by enabling the Internet and, as pointed out by The New York Times, also caused the telecom meltdown of 2001. Once-great companies Lucent, Nortel and AT&T, were too big or too slow to accept the big idea laid out in Ciena’s first business plan, which boldly stated, “This plan will make obsolete the existing plant of the telecommunications industry.”
Reaping the Rewards
As a result of pioneering this field, Ciena became one of the best venture investments of modern times. First round investors saw a 750-fold increase in value from “the largest stock offering by a start-up in history”, as the The New York Times characterized the deal.1 The Wall Street Journal called it “A Jackpot for the Record Books,” and wrote, “investors who bought early – before Ciena went public in 1997 – now can boast of 100-to-1 or better returns on their stock.” According to the Journal, “$100,000 invested in Ciena’s first year...is valued at about $280 million.”2
Today, Ciena is a well capitalized, efficiently run, and profitable public company that continues to drive communications technologies across the planet.
Spencer Trask has a history of identifying important trends long before others. In the case of Ciena, they saw the potential to create a world leader in photonics — a new field destined to change the telecommunications industry.
(1) The New York Times, March 3, 1997
(2) The Wall Street Journal, June 5, 1998
