Latis managing networks for streamlining customers

EDITOR’S NOTE: A continuing series of exclusive Business Report question-and-answer interviews with top management of leading e-business companies in the Boulder Valley.By Elizabeth Gold

WESTMINSTER — With corporations scrambling to succeed in a lean economy, the strategy of streamlining staff and core competencies is making the difference between staying in business and declaring bankruptcy. As a result, the practice of outsourcing is spreading as a way for companies to become more financially fiscal and flexible in the current challenging times.

Recognizing the exorbitant amount of resources spent on constructing and maintaining network infrastructures that involve multiple locations, providers and technologies, the founders of Latis Inc. in June 2000 pooled their experience to create a company that could turn the chaos into a single outsourced task. Billing itself as the world’s first operating service provider to design and maintain shared Internet infrastructures, Latis closed on $21.4 million in financing this summer.

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The money is currently funding network operation development and sales calls, said Cliff Dodd, the company’s chief executive officer. “Even though we recently came out of stealth mode, we’re not ready for prime time. We’re signing up customers while we continue to grow our capabilities and functionalities.”

The Business Report: As one of the more recent additions to the Latis executive team, you bring a background of experience that’s becoming more common to new ventures these days.

Dodd: Among other things, I was CIO (chief information officer) of Qwest International; CIO at Ameritech, the equivalent of Qwest in the Midwest; and senior VP of systems and software development with American Express. I was impressed with the team here (which includes co-founders Tom Higley and Rajat Bhargava, co-creators of Service Metrics, sold to Exodus Communications for $280 million in 1999).

BCBR: What do customers get when they sign up for SmartGrid, Latis’ premier product?

Dodd: Think of SmartGrid as a set of processes and software that allows us to weave together a network made up of multiple network providers and multiple data providers. It does that in one optimized solution, hence the word “grid.” We’re provider-neutral. It doesn’t matter if a company uses AT&T or Qwest or anyone else. We cross over vendor boundaries and design and manage the solution so customers have only one lens on the entire subject.

BCBR: Where did your recent Series A funding – $21.4 million – come from?

Dodd: Our largest funding came from Softbank. The rest is from Feld Ventures, 3i, our founders and angel investors. Latis took its time to find the right types of funding. Softbank has quite a presence in Asia as well as in the U.S. 3i has quite a presence in Europe, and Feld Ventures is heavily into information technology and consulting enterprises. All three of these groups are intricately involved with helping us grow. This wasn’t a remote control investment on their part.

BCBR: How long do you expect the Series A money to last?

Dodd: We’re funded through early 2003. I don’t want to be so bold as to say we won’t go back for more, but the math now says that we’re set through 2003.

BCBR: As part of a team of experienced executives with successful track records, what are the strategies you’re using to make Latis lucrative?

Dodd: Our business model points at a need in the marketplace that’s growing and that’s predicted to grow at an even higher rate in the near future. We have a low burn rate and a forward-looking business model rather than a debt service model.

Three things are necessary for a business to make it – focus, focus, focus. It’s necessary to keep focused on core competencies, on the mix of talent that’s necessary to make those things happen, and on channel strategies that feed customers into the company. We work to not get distracted from any of these things.

BCBR: How is the economic situation affecting your business?

Dodd: It’s both good and bad. All companies are looking for ways to reduce their operating expenses, and we offer a positive ROI. We can always get an audience with that fact. The bad side is that there’s a lot of turmoil out there, and a lot of dust in the air. A lot of people don’t know where they’re going to be next month. They’re worried about making payroll. We expect our sales rate to be slow because of that.

BCBR: What is your revenue model, and what is the profile of your target customers?

Dodd: Most of our margins will be in the area of managing complex networks. That’s where the majority of our recurring revenue will come from. Our secondary margins will come from designing complex networks. We don’t have a price list because every customer is different, but the cost for managing a network will start at about $400,000 a year.

We’re targeting companies whose expertise and core skills are not in the technical network management areas. That includes the health-care industry, retail food, the government and financial services.