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When Lucent Technologies acquired Ascend Communications for $24 billion last June, Ascend CEO Mory Ejabat walked away with $110 million in stock.
Three months later, rather than retire at 49 to a tropical paradise, Ejabat teamed with Jeanette Symons, the former chief technology officer of Ascend, to start a new business in Oakland.
"I love to work. I might be crazy, but I love it," he says. "I work all my life. I cannot stop."
His new company is hardly a scrappy little startup. A month after founding the company, Zhone Technologies announced its first round of financing - a $500 million placement from a group of investors that included Kohlberg Kravis Roberts & Co., Texas-Pacific Group, CS First Boston and New Enterprise Associates. Since then, the company has made four acquisitions and built a staff of 370 people. Zhone is working to develop what it calls the "next generation of communications equipment" Its products, says Ejabat will allow telecommunication carriers to deliver high bandwidth services in a costeffective way without the problems now encountered in the so-called "last mile" of infrastructure that connects households and businesses to telecommunication networks.
The San Francisco Business Tunes recently spoke to Ejabat about Zhone's plans, the company's buying spree and what it means to be a startup with a $500 million bankroll.
Q: A month after you formed Zhone you raised $500 million in venture capital. That's not too shabby for the first round of funding for a startup.
A. We had good investors.
Q: Other than the fact that you could, what was the reason you decided to seek such a large initial round of funding?
A: The main thing is I didn't want to go off and on and have to raise money as we built the company. We wanted to build a very credible company for building products that the carriers will use and to do that you have to have mass. Part of our strategy was to build the product internally and acquire some companies that would accelerate our time to market Because of that we needed that much money.
Q: Do you think this is a reflection of the nature of the telecommunications industry, or does it say something about the way...