Company Builder

Alok Sharma knows he's lucky. He got a second chance.

Sharma, 36, is a former member of the Hewlett-Packard team that is developing the architecture for Intel's 64-bit Itanium processor. Most recently, he road-mapped a next-generation Internet platform that aims to expand network bandwidth, smoothing the way for rapid delivery of telephony, video, and high-speed Internet access. He spent the summer of 1999 attempting to make the big leap from engineer to entrepreneur, serving up his business plan to venture capitalists like Sequoia Capital and U.S. Venture Partners.

Last October, Sharma took his best shot at a chance to build his own company: He lined up a follow-up pitch meeting with Atiq Raza. A luminary of the chip world, Raza, now 51, led Advanced Micro Devices's ambush of Intel by bringing the K6 family of processor products to market and laying the foundation for the development of the Athlon processor.

Raza, who at the time was AMD's president and chief operating officer, was reportedly next in line to become CEO. But he shocked the chip-making industry when he abruptly left AMD in August 1999, citing "personal reasons." Through Silicon Valley's VC network, however, Sharma learned the real reason for Raza's move. In the fall of 1999, Raza quietly began to assemble a new enterprise, dubbed Raza Foundries Inc. (RFI), a high-intensity "meta company" that seeks to invest in broadband networking and communications startups, and then turbocharge their growth by providing technical and executive strength.

Sharma's first meeting with Raza had ended with a rejection in record time. "Atiq threw me out after just 10 minutes," reports Sharma, cracking a bemused grin at the memory. "He said that my proposal was not a multibillion-dollar play. He told me that if I wanted to make a big play, I had to think about the entire end-to-end network. I had to bring the customer and the network together."

So Sharma went back to the startup lab. Working with a team of optical-engineering experts, he cobbled all of the components into the architecture for the broadband system. Then he made himself a promise: He wouldn't blow a second meeting with Raza. He labored over his PowerPoint presentation. He rehearsed his pitch. On the day of reckoning, he drove to an apartment that Raza keeps in San Jose, set up his laptop on Raza's kitchen table -- and never got past "hello."

"Atiq just grabbed my laptop and flashed through the presentation himself," Sharma recalls. "After 10 minutes, he turned to me and said, 'I like it now. I'll invest in you.' " Before the day was over, Sharma got a $100,000 note on $1 million in funding; met with Raza's attorneys to sign off on the deal; and took off on a fast-forward race to build his new company, Pacific Broadband Communications Inc. At every turn, the catalyst in that race has been Atiq Raza himself.

As Sharma would soon learn, RFI attempts to do more than invest in broadband networking and communications startups. Its goal is to help build these companies. RFI brings in a SWAT team of top-flight engineers to work side by side with its partner companies, helping them cut time to market. Its senior team of engineers delivers instant credibility to unknown startups, enabling them to recruit top talent and to form strategic partnerships with big-time vendors and customers. Above all, RFI brings to bear a hard-won set of best practices for accelerating the phases of a company's evolution -- and for navigating the speed bumps that often trip up startups.

It sounds like a highly credentialed Internet incubator, right? Don't tell that to Atiq Raza. "We call ourselves a 'foundry' because we are doing something difficult," he says. "We are creating hard-to-build companies that will be substantive. We are not betting on probabilities. Just as traditional foundries cast ingots and steel, we are casting a template for building breakthrough companies."

Raza's support doesn't come cheap. On average, RFI takes a 25% to 50% stake in its client startups. But RFI has already scored one success: YuniNetworks Inc., a company that is developing multi-terabit switching-fabric technology for Internet routers.

In December 1999, YuniNetworks's two cofounders, Kenneth Yun, 43, an electrical-engineering professor at the University of California at San Diego, and his sister Kay Yun, 37, a former VP of corporate finance at Goldman, Sachs & Co., signed on with RFI. YuniNetworks ramped up quickly, growing from 4 employees to 30 in just four months. Applied Micro Circuits Corp. (AMCC) was so impressed by YuniNetworks's technology that it made a bid to buy the company when it was just six months old.

"They told us that Yuni looked like an 18-month-old company," says Raza. "So we told them that they'd have to pay for an 18-month-old company." RFI's 2.25 million-share stock deal for YuniNetworks was worth about $250 million. RFI reaped $100 million.