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YAGO goes for gigabit glory

By Jodi Daniels

During the summer of 1996, Piyush Patel had a hunch that his company was developing some really hot technology, but he wanted to be sure.

So he put together some slides and went out to talk to - of all people - five of his competitors.

"We wanted to get some feedback, so we went ahead and talked to two Gigabit Ethernet companies," says Patel, CEO and president of YAGO Systems, Inc. "Sure, they'd know our plans, but who better to ask if we're on the right track?"

As it turns out, YAGO had something that even its competitors admitted was special: a Gigabit Ethernet switching router that could replace existing backbone routers.

"YAGO is at the top of the list when it comes to companies to watch in 1998," says Esmerelda Silva, an analyst at International Data Corp., a market research firm in Framingham, Mass.

"They are doing a very high-end 10M/100M/ 1000M bit/sec switch, which is essentially a wire-speed router."

The YAGO technology is a hardware-based switching router capable of switching traffic, at Layer 2, 3 and 4, at gigabit rates on all ports.

Layer 4 switching uses TCP session-related information in HTTP or File Transfer Protocol to make intelligent switching decisions. That's different from basic Layer 2 switches, which transfer data between ports based on the destination address of individual packets. It also differs from Layer 3 switches, which perform routing functions at wirespeed.

YAGO plans to ship its Multi-layer Switching Router eight- and 16-slot devices by the second quarter of 1998. In addition, YAGO will deliver WAN interface cards for its box, including OC-3, OC-12, OC-48 ATM and IP over Synchro-nous Optical Network (SONET), Patel says.

If you think this sounds like an interesting company, you're not alone. Cabletron Systems, Inc. was so impressed with YAGO that it has acquired what sources estimate to be a 20% to 40% stake in the Sunnyvale, Calif., start-up.

YAGO plays down the likelihood of being purchased outright and instead is focused on competing with the likes of Cisco Systems, Inc.

"Our goal in 1998 is to tackle Cisco head-on," Patel says. "We also plan to beat the typical $10 million-a-year run-rate [the rule of thumb investment bankers use to judge a start-up's ability to go public]. Our goal is $10 million-a-quarter by the end of 1998."

YAGO has its work cut out for it. It will compete with a host of start-ups, such as Extreme Networks, Inc. and Foundry Networks, Inc., as well as some established players, such as Bay Networks, Inc. and Cisco.