Westlake start-up Xirrus builds on legacy of its predecessor.

Byline: Allison Bruce

Jun. 12--The founders of Xirrus Inc. share an office, with three desks made out of painted doors arranged around a room filled with white boards and papers charting out ideas.

They aren't alone. Most offices house three employees. Other space is set up with cubicles.

It has a start-up feel that the company wants to keep as it grows. The Westlake Village firm sent out the first shipments of its wireless local access network product last month.

But Xirrus is not just any start-up. The leaders are from Xircom Inc., a company launched in Thousand Oaks in 1988 -- and sold to Intel Corp. in 2001 for about $748 million. It is a young venture with a wealth of experience.

Dirk Gates and Kirk Mathews founded Xircom, which provided wireless technology to connect laptops to corporate networks and the Internet. By 2001, the company had grown to close to 2,000 employees with annual revenues of about $500 million.

After the Intel acquisition, the Xircom leaders went in different directions, with some going on to other start-ups. But in 2003, Gates started talking with Patrick Parker, former general manager at Xircom, about starting a company that would combine the separate components of a wireless network into a single device.

Parker said there was a "huge void in terms of a missing product out there."

By the end of 2003, they had started using about 1,000 square feet of space in a building leased by another company in the office park where Xirrus is now located. The company officially formed in 2004 with Gates as chief executive officer, Parker as chief development officer and Steven DeGennaro as chief financial officer. DeGennaro was senior vice president and chief financial officer at Xircom.

Before long, Mathews had signed on as chief technologist at Xirrus.

Gates said it was a hot market for an innovative product, but what really motivated him was that he could pull the old team back together.

"We have zero team issues," Gates said. "We've worked together so long, we know each other's quirks." The others laughed.

"We have zero team issues we didn't already know about," DeGennaro amended.

Xircom's legacy gets Xirrus in the door to talk with customers or vendors, as well as draws in interested employees.

The Xirrus name, which carries on the "X" from Xircom, lends weight to the company, said marketing director John DiGiovanni. The "X" is even subtly incorporated into the face of the units.

The company has grown from three employees to about 50. Its offices have about 5,000 square feet and an additional 800 square feet across the walkway that includes the testing lab.

Most corporate wireless local access networks, or WLAN, are complicated and expensive to install, DiGiovanni said. Xirrus' product integrates the access points, often scattered around a building with a wireless network, and controlling WLAN switch into a single device that can deliver four, eight or 16 channels for up to 864 megabits of radio frequency bandwidth. The channels work together without overlapping.

One public relations representative for the firm said the devices looked like "a smoke detector on steroids." Skepticism to success Mathews admits to being skeptical about the technology at first. "It's not obvious that you can put so many radios in such a small space and have them work," he said.

But the units have proved successful. Xirrus received the best start-up firm award at the NetWorld+Interop conference in early May.

The list price for the units range from $3,999 to $11,999, while the management platform goes from $4,999 to $24,999, depending on the number of WLAN Arrays they support, DiGiovanni said. The optional remote power system is $1,999.

Xirrus maintains that the systems allow less equipment to support more users, simplifying the network design and making the total cost to customers lower.

One of the test sites was at Viewpoint School in Calabasas. Two of Gates' children attend the school.

Paul Rosenbaum, associate headmaster and chief operating officer, said the 16-radio unit was installed prior to Christmas and has been a good solution for the school.

The single unit has a radius of about 150 feet and covers classrooms in a two-story, 7,000-square-foot building. Rosenbaum said the signal stretches out to the parking lot and doesn't create any blank spots without access in the building. With 142 laptops on carts that move all about the school, that's important.

It's an improvement over the system the school had before, which included access points scattered in closets throughout the school. "If it's working in one place, it's working everywhere," Rosenbaum said.

He's considering installing four units in a new 41,000-square-foot building.

About 60 percent of Xirrus' employees were once Xircom employees, Gates said. The other 40 percent have experience with other high-tech companies.

Gates said Xirrus benefits from being in an area where it can select from a group of prospective employees with experience working in start-up firms O and the expectation they will have to work 10- to 14-hour days for six or seven days a week.

There are pros and cons to locating in an area such as Westlake Village as opposed to the San Francisco Bay Area, Gates said.

The Bay Area has a larger labor pool of entrepreneurs, networks of venture capitalists and high-tech companies. But the labor pool is much more fluid, with employees moving from company to company.

"It would be very difficult to find a team that has got a decade of experience together," he said.

In the Westlake Village area, the labor pool is much more stable, he said. And the firm is removed from the fever pitch of Silicon Valley.

It's also easier to lay low.

"If you want to run stealth, you can really run stealth," Gates said. "We didn't want to create a buzz until now. We wanted to attract a buzz with the product." Gates said it is too early to be planning on a public offering or acquisition by a larger company.

"That (acquisition) tends to be the norm in technology," Gates said. "Right now, we are focused on building a business." The company is building distribution channels and seeking partners. It has 20 to 30 resellers and would like more than 100 by year end. The company also is expanding its European presence.

By next year, Gates expects to have partner companies established that will buy the systems and sell them under their brand.

Xirrus has the potential and market to grow into a company as large as Xircom was, but its leaders hope the company will keep a start-up culture.

"Communication between people makes things happen faster," Parker said. "That's the lesson we learned at Xircom. It's easy to wall out a facility and have very nice offices and everybody talks by e-mail." But that isn't how ideas are advanced, he added. The company benefits from employees knowing what their co-workers are working on and the self-motivation that comes with a small company.

"In the long run, it will help make the company successful," Parker said.

ON THE NET

http://www.xirrus.com

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