Pipeline Q&A: Syndesis

This month, Pipeline sat down with Syndesis’ CEO John Lochow. Despite many internal changes amidst telecom’s downturn, Syndesis has solidified a strong position with major Tier 1 providers including SBC, Telecom Italia and Bell Canada. Lochow has high aspirations for his growing company, which he hopes to build into the first choice for OSS among Tier 1 service providers. He answers Syndesis’ critics who say his product is too expensive to maintain, and explains how he is reshaping the company’s relationship with Cisco Systems. Lochow further describes the company’s future, including preparing for a possible initial public offering within the next three years.

Pipeline: Syndesis has suffered its ups and downs like everyone else. What steps did you take during the downturn to make sure the company would be prepared when the next upswing happened?

Lochow: When I first arrived at Syndesis four years ago, we had very little in the way of formalized processes or controls. So we spent a significant amount of effort to first operationalize the business, and once we did we could focus on productizing the product line. So we spent 2 and half years of our 5 to 10 year plan on productization. We needed to have more on the IP side, plus a lot more breadth in our solutions. We were a one trick pony and really needed 10 or 15 different products.

A major part of our business plan was to get key customers in each part of the world - north and south America, northern and southern Europe and in the Asia-Pacific region. We would concentrate on one Tier 1 in each of those markets and have them prove out the product in their region. We wanted to find customers that would bet their business on us.

We lived through the downturn and didn't burn through any of our cash as we put the final bells and whistles on the product. Now we are about 5 months into a sales force expansion and have a lot of hiring going on. We are going back into the hardware vendors and SIs and building value propositions that would lead them to OEM, sell, recommend or support our product.

We are expanding into wireless and other areas we haven't been in before. And we are expanding our marketing and intend to spend the money we have been sitting on to promote the company. Our 5 to ten year plan looks like about 8 years, with an ultimate goal of doing a public offering in '07.

So far we've tracked to our business plan 100% and for the next three years we plan to drive our revenue up to a target level for the IPO, and add to cash. We've followed this plan while many other OSS vendors were doing foolish things and trying to win during the downturn, which was not going to happen.

Pipeline: What do you mean by “bet their business on us?”

Lochow: A lot of OSS companies are selling a $200,000 license to solve a niche problem for a low level guy. But can they have $10 billion product lines that rely on them? We wanted customers that would bet their business, so examples include Telecom Italia where we're doing between 15,000 and 20,000 DSL circuits per day, and SBC. I didn't want to sell $500,000 licenses and make a business on that. We wanted to create a Siebel or an SAP – charge a fair amount of money and deliver a fair amount of value.

Pipeline: What’s considered “fair” can be very subjective. How does your personal sense of integrity insure that what you charge and deliver is “fair” for your customers?

Lochow: I was CIO of a service provider and had been burned too many times by software vendors that under delivered and over promised. After 20 years I swore I'd never do that myself. We over-deliver and under-promise. Our reputation is understated. People will say we don't know much about [Syndesis], but they are very honest. The second thing that comes across is that we aren't everywhere, such as in Tier 2s and we're not in enterprise, but where we are and have a customer, no one can get in because our customer service ethic is so thorough and it engulfs a customer. We had an example last weekend of shifts working 24 hours a day for two weekends to diagnose a problem for Telecom Italia. We've had 13 people 24 hrs a day for 2 days to find their problem over the weekend so they can do their month end. We will do anything and go anywhere to make the customer look good.

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