In the world of technology, stardom seldom lasts forever. Gururaj ‘Desh’ Deshpande was one of the richest persons in the US by virtue of his 21 per cent equity in Sycamore Networks (an optical fibre gear maker he had founded in 1998) when the company attained a peak market value of $40 billion in March 2000. Those were the tech bubble days and the company was expected to ride on huge demand for optical fibre which would power the ever-growing internet traffic.
But on Friday, the Chelmsford, Massachusetts-based company shut shop 14 years after it was started. The company ended its last trading day at a market cap of $66 million and was dissolved after completing the sale of its last product line. The dissolution of Sycamore, one of the hottest tech firms over a decade ago, has been in the works for the last few months.
Not that Desh Deshpande, as he is popularly called, and also the brother-in-law of Indian tech billionaire NR Narayana Murthy (Deshpande’s wife Jayashree is sister of Narayana Murthy’s wife Sudha), is a poor man now. Deshpande is currently involved in several ventures – he is the chairman of tech companies A123 Systems, Tejas Networks and HiveFire, and private equity firms such as Sandstone Capital and Sparta Group, although the fortunes of some of these companies may not be promising.
Sycamore’s fate ended up in doldrums as the company failed to see the technology shift; stuck to its initial product line and at the same time, refused to spend $1 billion cash it had to diversify/expand, argues an article in Wall Street Journal. Sycamore’s fortunes started falling in early 2000s only when the expected high demand for internet traffic never took off. By the time the market recovered, the telecom network operators had shifted to different technologies and competitors like China’s Huawei Technologies Co. ate Sycamore’s lunch.
Sycamore did not invest in innovations, nor did it acquire such capabilities. Instead, it distributed whatever cash it had as dividends (estimated to be $750 million over three years). Sycamore is now history. And it is definitely not a proud moment for the Hubli boy, an Electrical Engineering graduate from the Indian Institute of Technology, Madras, and a Ph.D. from Queen’s University in Ontario, Canada, who once figured in the list of the richest Americans.