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Raptor Networks
Technology, Inc. completes development of revolutionary “distributed Ethernet switch
architecture” redefining the price – performance paradigm of 10GbE networking
Technology
(RPTN.OB-OTC BB)
Raptor Networks Technology, Inc.
1241 E. Dyer Road, Suite 150
Santa Ana, CA 92705-5611
949-623-9300
Thomas M. Wittenschlaeger
Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
April 21, 2005
BIO:
Thomas Wittenschlaeger
Chairman and CEO
Thomas Wittenschlaeger is a seasoned technology executive who specializes in business
performance optimization. He was appointed CEO of Raptor Networks Technology, Inc. in
March of 2004, and completed a $7.35M equity raise in the first seventy five days of his
tenure. Raptor Networks Technology, Inc. is an early stage technology company providing
standards based and unique patent pending switching technologies that are modular and can
benefit networks that incorporate newer applications such as video, VOIP, storage networks
and other high-bandwidth network applications. This cost-effective “Distributed
Network Switching Technology'' enables upgrading of networks with switches to provide more
advanced management of these new applications. This is the highest density 10 Gigabit wire
speed offering currently on the market, with the versatility to run the most advanced new
data applications at the most cost-effective price.
His career, which began as a systems engineer in large scale, real-time systems has
culminated in the specialty of improving businesses not performing to their full
potential. His last assignment, as senior vice president, corporate development of
Personnel Group of America, Inc., found him responsible for corporate development,
marketing and sales, technology investments and investor relations. In addition to
identifying and putting in place new go-to-market initiatives, he supported the CEO in
taking this company through a comprehensive financial restructuring and bond exchange;
avoiding bankruptcy and adding at least five years of additional viability to the firm.
Prior to joining PGA, Mr. Wittenschlaeger accumulated 22 years of experience in the high
technology products and services sector including positions with Viasat, Inc., General
Motors Hughes Electronics, and Honeywell. Beginning as a member of the architectures for
distributed computing, real-time systems. From there, he transitioned into a variety of
business-centric roles, including business development responsibilities in aerospace and
commercial product divisions struggling to assert market presence. He served a five year
stint as Hughes' corporate director of market research, diagnosing and working to properly
position over fifty different technology products, ranging from adaptive cruise control to
night vision systems for potential incorporation into the automotive market.
He led the team that rebundled Hughes' $6B defense business prior to its sale to Raytheon.
His next assignment was a challenging business turnaround, working to bring the air
traffic control business of the Command and Control Systems division from a $120 million
loss position to profitability in eighteen months. His most recent position within Hughes
was director of international finance and business assessment at Hughes Space and
Communications, the company's spacecraft manufacturing arm, in which he assisted new
customers in the construct of their business plans to facilitate accompanying demand for
new spacecraft. At Viasat, he held the position of senior vice president and general
manager of ViaSat Satellite Networks, the commercial arm of ViaSat, Inc. In this capacity,
he led and was responsible for all aspects of the business, including operations, P&L,
client development, staff functions and product development. He took this business from a
heavy loss position to profitability in eleven months, and from $3.9 million in revenues
to over $65 million two years later, including the successful completion of an acquisition
that doubled the size of the company for 20% of its equity value.
Mr. Wittenschlaeger is a 1979 graduate of the US Naval Academy, with a bachelor of science
degree in electrical engineering, and postgraduate work in nuclear engineering. He served
in attack submarines in the Pacific theatre and returned to active duty for Operations
Desert Shield and Desert Storm. In addition he is a graduate of the UCLA Executive Program
in Business and cofounder of the school's Executive Program in Marketing. He was the
winner of the inaugural Malcolm R. Currie Corporate Innovation Award at Hughes Electronics
and has lectured in the business schools of UCLA, University of Indiana, and the University
of Mainz in Germany. He is currently awaiting patent approval for an aural process for
personnel suitability screening.
Company Profile:
About Raptor Networks Technology, Inc
Raptor Networks Technology, Inc. provides standards-based distributed switching
technologies that benefit networks that provide newer services such as video, VOIP, high
speed storage and other latency sensitive network applications. This patent-pending
“Distributed Network Switching Technology'' blurs the distinction between core
switching and edge switching, enabling network build outs and performance upgrades of
traditional chassis-based installations in a highly cost effective manner. Management
believes that the unique advantage Raptor provides is data transport at wire speed (the
maximum speed at which the equipment is built to operate) over a broad geoography,
providing the highest density 10 Gigabit wire speed offering currently on the market, with
the versatility to run the most advanced new data applications.
CEOCFOinterviews: Mr. Wittenschlaeger, what was your vision
when you joined Raptor, and how has that developed?
Mr. Wittenschlaeger: “The vision when I joined Raptor
Networks was to bring to market a breakthrough technology: the world’s first truly
distributed switch architecture. Much as we’ve seen happen in computing, with the
mainframe to P.C. evolution, the implications of this on the networking market are very
profound, not only on the performance side but - more importantly - on the cost side. That
got me very excited and was my principal reason for joining Raptor more than a year
ago.”
CEOCFOinterviews: What are some
of Raptor’s accomplishments since you’ve taken over as CEO?
Mr. Wittenschlaeger: “Within the past year, we have
accomplished a great deal. We have completed all of our patent filings, as well as both
product and software development. We have installed initial units in customer facilities
located at up to forty kilometers apart. We have fundamentally not only proven the
technology, but we have productized it. We have made extraordinary progress over the past
twelve months.”
CEOCFOinterviews: What does the
technology do that is not happening now?
Mr. Wittenschlaeger: “The way all traditional networks
are built today, is you have a cluster of core switches in the middle with edge switches
that are closer to either the users or the devices they serve. What Raptor has innovated,
is a way to blur the distinction between core and edge switching. You take our stand-alone
“smart switches” and locate them wherever you like, connect them over fiber.
When they are connected, the switches come up and bind, not as separate switches
communicating amongst one another, but as one gigantic switch that just happens to be
located over hundreds of square miles. The implications of this, when you send data into a
switch to go to a destination, fundamentally, is that you now have “single hop”
routing capability, or straight “cut-through” routing over hundreds of miles. If
we were Federal Express, in their hub model, where all traffic goes through the Memphis
hub, the minute any plane would land in Memphis, that same plane would simultaneously land
in every other airport they serve. That is how our switch architecture works. When data
goes into one of our switches, it can see every port in the network as though it were
inside itself, which means that all delivery is local rather than multi-hop, dramatically
improving the speed and cost of network implementation. We believe that this technology
and topology will fundamentally redefine the networking marketplace.”
CEOCFOinterviews: How do you get
the networking marketplace to sit up and take notice?
Mr. Wittenschlaeger: “That is a tough thing because it
is just like when the PC first came out and all the mainframe people pooh-poohed it as
nothing but a toy computer. If you move the timeline forward twenty plus years, you can
hardly find a mainframe anymore. The same reality is today true in the networking
marketplace. The large established players make their revenue on these extraordinarily
complex core switches. The reality is that what we have innovated obsoletes the core
switch model. Our hypothesis is that the way to get people to notice is by providing an
order of magnitude improvement in performance with an order of magnitude reduction in
price. When you have that kind of disruption in the price performance curve, we believe
people will stand up and take notice.”
CEOCFOinterviews: How do you
market your technology and whom are you targeting?
Mr. Wittenschlaeger: “The beautiful thing about our
particular open – standard technology is that it is fully compatible with all
existing network architectures. There are a couple of ways to get people to try our
technology. The first one is if they have an installed traditional architecture that
isn’t performing as well as it needs to. In other words, maybe the core architecture
has a time delay that is so high that the network cannot run certain applications like
voice over IP or streaming video. In that case, we just drop some Raptor switches into
that network, run them in parallel with the existing switch architecture, and open up a
gigantic low latency pipe through which they can send other latency sensitive traffic like
voice over IP and Streaming video. That unloads the rest of the network so it can continue
passing latency insensitive traffic like e-mail and block data transfers. So…the
first way we get people to purchase it is as a performance-enhancing adjunct to existing
networks. The second way we get them to buy our network is when they have a genuine
cross-campus or multi-building environment and cannot afford to put in a traditional
architecture, because the cost of putting a switch in multiple locations becomes daunting.
In that case, it becomes an economic play where they are able to achieve ten-gigabit
activity at a price they thought they would pay for one gigabit. Those types of order of
magnitude improvements in the value proposition are another way that we sell the
product.”
CEOCFOinterviews: How do you get
‘in the door’?
Mr. Wittenschlaeger: “We are selling through direct
sales, so we have our own professionals out on the street, working with customers to
develop their needs and a good solution for their needs. We sell through distribution; we
have distributors in various locations including the United States and Australia. We have
a distributor for Europe, the Middle East and Africa. Speaking of trade shows, the largest
trade show for the data networking market is coming up here on May 3-5 (2005);
NetWorld+Interop in Las Vegas. We will have a significant presence this year at that trade
show. We have used a combination of direct selling, selling through distribution and
through value-added resellers, tradeshows, and full-page advertising in Network Computing
magazine, with a circulation of 220,000. Over time, our goal is to educate the market as
to what distributed switching means, as opposed to centralized switching. Once the market
has a better grasp of the advantages that that typology offers, then we will be in a good
position to move forward with what we believe is going to be a robust sales model.”
CEOCFOinterviews: Is
word-of-mouth a factor for you?
Mr. Wittenschlaeger: “Word-of-mouth is always a factor
for us, especially among senior executives that have genuine infrastructure needs. What we
believe will happen in the switching market for the next five years, is exactly what
happened in the computing market, and that is that topologies will morph from purely
centralized to purely distributed. As they morph, not only do we expect to have a robust
product and service business but we expect to have a robust licensing business, because we
are patent-pending on the patents for distributed Ethernet switching.”
CEOCFOinterviews: Are you doing
the manufacturing?
Mr. Wittenschlaeger: “It is all done right here in California.
Our contract manufacturer is actually ten minutes out our door to the north; the company
is EMI, which is our contract manufacturer. Our chip provider, Broadcom Corporation
(Nasdaq: BRCM); is about ten minutes south of us. We sit directly between our supplier of
chips and our contract manufacturer. We do the architecture, the integration and the
typology that provides customers tremendous value. Our contract manufacture is fully ISO
certified. They are an extraordinarily high-quality house. That model is consistent with
our approach to be a horizontally integrated enterprise rather than vertically integrated.
You might notice that all of our competitors are in the Silicon Valley; many of them make
their own chips and wafers, which means, they are vertically integrated rather than
horizontally integrated. That builds in a cost disadvantage; because you have a very high
fixed cost to serve the market place. In our case, because of the extraordinarily high
quality of merchant Silicone today, we are horizontally integrated, which gives us
flexibility and market advantage that almost no one else enjoys.”
CEOCFOinterviews: You have
identified five market niches; are you focusing on any one in particular now?
Mr. Wittenschlaeger: “The real answer to that question
is a function of how does one best sell a breakthrough technology. What we are talking
about is a radical departure from the way from the current architecture of networks, from
a centralized approach to a fully distributed network architecture approach. When you have
that radically a topology change, and moreover, a radical price performance change, the
reality is it applies to all market segments; the storage market, the technology refresh
market, video, video editing, video remastering and transport, or even IP Telephony. It is
clear that the discussion on application convergence is a real one. We believe in five to
seven years, your phone service, your cable service and your high-speed access, will all
come into your home, office or premise, on a single fiber. If that will happen, which we
strongly believe it will, then all the segments of the marketplace will need very
affordable, very high-speed, very low-latency transport. That is what we offer. We have
the fastest transport in the marketplace and the lowest cost in the marketplace. That
applies in a broad brush to every market segment out there today.”
CEOCFOinterviews: Will you tell
us about the financial condition of the company?
Mr. Wittenschlaeger: “Raptor is an early-stage company.
We first went public and incorporated in October of 2003. The company is a bulletin board
company, trading on the OTB under the symbol RPTN.OB. We took first revenues in December.
The company spent the first year and three months of its existence developing its
architecture, developing product, testing product and beginning the process of
building-to-inventory. Where we sit today is our equity trades publicly. We have no debt
other than convertible note that direct converts to equity. We continue to use equity
financing to fund both operations and the marketing of our products. We now have a
million-and-a-quarter of fully fungible inventory. At this point, all of the development
and testing, as well as suitability and compatibility checking is complete. It is now a
purely marketing and sales game from here on out.”
CEOCFOinterviews: Do you have the
right people in-place for that effort?
Mr. Wittenschlaeger: “The team we have in-place is
extraordinary. When you look at our website, you will notice that everybody on the team is
experienced, and a little more mature than some management teams in the space. As a
result, we are a pragmatic group of people. From that perspective, I think we are
well-positioned because most of us have been in the tech space for 25 plus years. We
understand what does and does not work. We have relationships that enable us to have
conversations at the highest level of the various enterprises. The question is do you ever
have a perfect team? Nobody has a perfect team. I think we have a good one.”
CEOCFOinterviews: Why should
investors be interested and what should they know that they might not realize when they
first look at the company?
Mr. Wittenschlaeger: “From an investor perspective, we
believe that there is no question that today’s 10/100 Ethernet networks, will evolve
to 10/100/1000, 10/100/1000/10,000. We believe that gigabit and 10-gigabit, will move onto
the marketplace quickly because of converged applications like Voice Over IP and streaming
video. We believe that our competitors, with extraordinarily high prices for their
traditional architectures, have hampered the adoption of 10-gigabit Ethernet into a market
insatiable for bandwidth. We believe that there is little question but that applications
such as voice, high-speed access and entertainment will converge. If you believe that
network architectures will become distributed from their current centralized
architectures, a company like Raptor, who is first to market with a patent-pending
distributed Ethernet switch architecture, with the speed to handle emerging converged
applications, and who has cut the cost of adoption by more than 50% could likely generate
appreciable value to its client partners and to its investors over time. From our
perspective, that represents an attractive play for investors from a sources-of-value
perspective.”
CEOCFOinterviews: In closing,
what would you like people to remember about Raptor Networks Technology?
Mr. Wittenschlaeger: “I would just like to say that the
Raptor team is wildly enthusiastic about what we are doing right now. We have a group of
people that are committed to seeing this to success. We are all very excited to be part of
it.”
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