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  1. TheOptimist

    285 Posts.

    Outgoing Sun president Ed Zander joins startup's board
    New venture will cooperate--and compete--with Sun.
    By Justin Hibbard
    May 13, 2002

    Two weeks after announcing his resignation as president and COO of Sun Microsystems, Ed Zander is joining the board of a startup that will play partner and competitor to Sun.

    Netezza, an 18-month-old venture in Framingham, Massachusetts, is developing a computer that is tailor-made for one thing: handling requests for data from so-called business-intelligence programs, which mine information from huge databases. That particular focus makes the company more of a threat to big-database specialists like NCR than to Sun, which makes computers for general purposes. Still, Sun has sold many machines for querying large databases.

    In an interview with Red Herring, Mr. Zander portrayed Netezza's device as a companion to Sun's products. "I think, actually, it runs alongside Sun servers," he says. "It complements them." For example, a Sun server could run a business-intelligence application while Netezza's computer fielded the application's requests for data. Mr. Zander names Sun, IBM, and Hewlett-Packard as Netezza's most likely partners. "One of the strategies is to sell alongside those companies."

    Netezza has scored an early victory by recruiting Mr. Zander, who has been in high demand since he announced his departure. "I don't pick just any old board," he says. The invitation was first extended last year by Netezza's CEO and cofounder, Jit Saxena, who worked with Mr. Zander more than 20 years ago at Data General, a computer maker that is now a division of EMC. "Ed had many opportunities to be associated with startup companies," says Mr. Saxena, who is also chairman and cofounder of Applix, a customer-relationship software maker. "This is something really unique."

    Mr. Zander has spent most of his career managing day-to-day operations at high-tech companies. He began serving on boards in the mid-'90s and is currently a director at SeeCommerce, Portal Software, and Multilink Technology Corporation. "It's fun to sit on boards and watch guys like me running companies," he says. "I learn a lot of things."

    One thing he has learned is what it's like to be CEO of a small, growing company. Whether or not he'd like to try his hand at such a job is a thought he won't entertain until after his 15-year tenure at Sun ends officially on June 30. "Then I'll take some time off and go to the mountains and decide some of those questions," he says.

    In the meantime, he'll get a taste of the startup life by working with Mr. Saxena--but only as a board member. Earlier this month, speculation swirled about whether Mr. Zander had accepted an executive position in the Boston area after the Boston Globe reported that he had bought a $1.8 million condominium at the Ritz-Carlton Towers on Boston Common. "I was pissed about that," he says. "Isn't there any privacy anymore? When the Red Sox win the World Series, I'll go back to Boston. So you can be sure I won't be back for a few decades."

    As a member of Netezza's board, one of Mr. Zander's first tasks is to help Mr. Saxena hone the company's business plan. "The real key is to stay focused on who you're trying to sell to," Mr. Zander says. "I think Jit has got a niche--a big niche--in business intelligence."

    The research firm IDC expects worldwide revenue from business-intelligence software to reach $12 billion in 2005, more than triple the amount in 2000. Sales of hardware for running the software will likely grow in lockstep. Early on, Netezza will target customers that are operating extremely large databases.

    "The sweet spot for Netezza over the next couple years will be above 10 terabytes, perhaps above 50 terabytes," says Richard Winter, president of Winter Corporation, a database research firm in Waltham, Massachusetts. (A terabyte is 102.4 times the size of a PC's 10-gigabyte hard drive.)

    Currently, databases of that size require expensive combinations of hardware and software from companies like NCR, IBM, Oracle, and, yes, Sun. Netezza aims to beat those outfits on price and performance by using inexpensive components--including open-source databases, programmable chips, Intel processors, and the Linux operating system--and original engineering that enables many processors to run in parallel. The finished product will come in a rack-mounted box.

    Netezza is testing early versions of its machine at companies that Mr. Saxena declined to name. "Our initial beachhead will be companies that do outsourced analytics for many large customers," he says. (Think Harte-Hanks or LexisNexis.) So far, Netezza has raised $28 million in venture capital in two rounds from Battery Ventures, Charles River Ventures, Matrix Partners, and individuals, including Mr. Zander.

    An eventual exit strategy for those investors may involve selling Netezza to a big company with complementary products--like Sun. In 2000 Sun paid $2 billion for Cobalt Networks (now known as Sun Cobalt), which, like Netezza, makes inexpensive, rack-mounted server appliances. Could Mr. Zander facilitate such a deal for his old friend Mr. Saxena? His answer: "Jit's too expensive."

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