The NetSuds (TM) Report

The November 1, 2001 Issue:

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Definition:  "com and .com" = Telecom, Datacom, IT or Internet

In this Issue:

        1.0  Heard on the Net
        2.0  Jobs in the "com and .com" Market
        3.0  NetSuds on Tour - CNT, MTTA, Exp@Nets
        4.0  Tidbits
        5.0  Calendar of Events
        6.0  Apply to Present at a NetSuds or MedicalSuds Entrepreneurs Breakfast
        7.0  How to be a Survivor in Challenging Economic Times
        8.0  Garage CEO: The Time To Start A Company Is Now
        9.0  Common Myths About IP Telephony Management
        10.0 A Commentary from the NGN Conference
        11.0 Guest Writers for this Report

1.0 Heard on the Net

        1.1 People on the Move:

        Please email:  people@netsuds.com to report a change in your
        job status if you are moving from or to a company in the
        "com or .com" space.

        NetSudser Ralph Jenson has joined HeatSeeker Technology Partners
        as a senior consultant.  Ralph was a co-founder of ISP gofast.net
        and will now be assisting HeatSeeker clients with his expertise in
        convergence technologies.  www.hstp.com

        NetSudser Thomas Dasher has joined Conseco Finance as Senior Vice President,
        Corporate Development in St. Paul where he be responsible for new business
        development and future M&A work.  Contact Thomas_Dasher@consecofinance.com

        NetSudser Mack Traynor has left DoTheGood where he was CEO.

        NetSudser Eric Miller has left Archwing and joined Frontier Communications in Lakeville.

        ADC President & COO Lynn Davis retired.

        NetSudser Frank Crusing resigned as President of Gabatan.

        NetSudser Jane Brown resigned as President of the MHTA to head a social service
        organization in town.  The MHTA has seen tremendous turnover in the last year
        at all levels in the organization.
                       
        1.2 Companies on the Move:

        Please email:  start-ups@netsuds.com to report (1) the formation
        of a new start-up, (2) momentum change at an existing start-up,
        (3) addition of key hires, or (4) a funding event at a start-up.

        Please give details on the above including any information you do
        not want made public.  We are very discrete.

        Bravara, headquartered in Palo Alto but with all software development
        in St. Paul, has folded as of mid-October.  Ted Stockwell, head of
        the St. Paul development team, along with about a dozen engineers
        with network protocol design and development expertise, were left
        without jobs after Bravara was unable to raise another round of
        funding.  Previous funders included Apax Partners, St. Paul Venture
        Capital and Anila.

        NetSudsers Susan Misukanis, former VP of Marketing at Innuity
        moves with her partner Steve Rodgers, former Director of Marketing
        at Innuity to launch Misukanis & Rodgers.  Misukanis & Rodgers
        is a full-service marketing agency that provides creative branding,
        lead and sales generation programs and public relations to MN-based
        tech and bio-tech companies.  Contact Susan at
        smisukanis@misukanisrodgers.com.

        NetSudser Paul Distefano, CEO of San Jose-based Chaincast -
        www.chaincast.com - has led the acquisition of Seattle-based StreamAudio.

        Unlimited Scale - www.unlimitedscale.com - has been hiring a little
        lately.  The website is a little more content rich these days.

        2.0 Jobs in the "com and .com" Market

        Please email:  jobs@netsuds.com to report job openings in the
        "com and .com" Market.  In the body of the message, give the
        name of the company and a URL link to the job postings.

        ** Dakota Wesleyan University  
                http://www.dwu.edu/humanresources/jobopenings/JobOpenings.htm#kelley_center
        *** Onvoy http://www.onvoy.com/frames/frameonvoy.html
        *** Computer Associates http://www3.ca.com/career/default.asp
        *** Shumaker & Sieffert, P.A. http://www.ssiplaw.com/jobs.html.

        3.0  NetSuds on Tour - CNT, MTTA, Exp@Nets

        NetSuds loves on-site tours!  Email me if you want to show off your
        company.  I can be reached at matt@netsuds.com.

        3.1  CNT - Computer Networking Technolgoy

        Do you think of CNT when you think of leading electronic equipment
        developers in the Twin Cities?  Perhaps you should.  While ADC may
        still be the largest telecom/datacom company in Minnesota, ADC can
        not compare with CNT on the number of engineers working in the
        electronics and protocols area.  I haven't run the numbers but CNT
        may be our largest electronics communication company in Minnesota.

        I met with Jim Morin (VP) and Bill Collette (CTO, VP Engineering)
        at CNT and spent 90 minutes touring the very nice CNT facility off
        of 169 and 694.  CNT plays in the storage networking market where
        Minnesota seems to have established a "cluster" of technology
        companies.  Storage has evolved from server attached storage (disk
        drives on computers) to internetworks of pure storage accessed over
        LANs and WANs using protocols such as Fiber Channel, iSCSI and IP.
        It sits at the juxtaposition of storage, bandwidth, processing and
        protocols.

        Mac Lewis, now leading Sherpa Partners, was Tom Hudson's predecssor
        at CNT.  Taking up from Mac's leadership at CNT, Tom and his team
        have evolved CNT to the point where last year revenues hit $176M
        and a secondary public offering netted the company $110M. Today,
        CNT employs over 700 people, the vast majority of which are located
        in Minnesota.  That number includes all 120 engineers and 175 tech
        support professionals in Minnesota.

        The core product at CNT is the Ultranet Edge; a storage area networking
        device for the access network.  In essence, the Ultranet Edge converts
        fiber channel to ethernet, allowing storage devices to be connected
        over the LAN (ethernet) or WAN (by connecting to an router). There is
        some concern that the function of the Edge could be subsumed in to the
        router or the fiber channel switch.  However, Bill was quick to point
        out that millions of lines of code and interoperability testing has
        been done to ensure that the Edge does the protocol conversion correctly
        and with high performance.

        It was clear in visting the lab that interoperability is a key issue.
        Most every kind of storage device was present (they are big and there
        are a lot of them!) and the barrier to entry for a competitor is steep.

        It was nice to see a large networking company with leading-edge products
        doing well in Minnesota.  CNT has its share of challenges but appears to
        be focused and working in a large and growing market.  www.cnt.com

        3.2  MTTA - Minnesota Technical Training Academy

        The MTTA opened this Autumn as an alternative high school for those
        students seeking a more technically focused track.  Funded primarily
        by the Minneapolis School District, the MTTA opened with 220 students
        in a converted retail space between Radio Shack and Target in southeast
        Minneapolis.

        The school interior looks more like corporate office space. There are
        PC labs, glass-enclosed networking centers flush with new HP servers,
        Cisco routers and switches, SUN servers, etc.  The school consists of
        3 clustered learning centers with 5 break-out "classrooms" surronding
        each learning center.  SUNRays are everywhere; a technology which I
        like and which is perfect for this environment.

        Time will tell how the school serves its students, parents and the
        business community.  It clearly is a step in the right direction to help
        students become more technically adept.

        Thanks to Dee Stuart for inviting me to tour the MTTA. www.techacademy.org

        Note:  Since taking the tour, I was surprised to read the 10/31/01 Star
        Tribune article describing the funding cut-off from the Minneapolis School
        District.

        3.3  Exp@Nets

        It is rare that I would take a tour of a sales, marketing and service arm of
        a major corporation but Exp@Nets proved to be an informative tour and discussion.
        I was hosted by Marketing Specialist Sarah Schwinden and met with VP/GM Don
        Barrett and Sales Manager Susan Page.

        Exp@Nets is a 40-50 person office in Mendota Heights and sells both voice and
        data equipment and services.  You can get a Definity PBX from them but you may
        be surprised to hear that IP-PBX's from both Lucent and Cisco are selling very
        well these days.  It seems as if a hurdle has been cleared in customer's minds.
        When the first digital PBX sale rolled in years ago, the digital PBX was just
        barely a match in features in comparison to the older analog PBX.  But digital
        was the future so digital won the sales war by being sold as the obvious migration
        path.  It's happening again.  While the IP-PBXes are not much, if any, more
        feature-rich than their digital TDM cousins, they are considered "the future".
        Apparently, there are some reference accounts now in the Twin Cities which are
        driving wider acceptance, etc.

        As you know, my 612.279.2154 office number is an IP-Centrex (a shared IP-PBX in
        some ways) and I like the newer features while still acknowledging some reliability
        issues with the newer technology.

        Exp@Nets is becoming less voice-centric and more application-agnostic.  Bits are bits.
        Fix the customer problem, offer a solution, use whatever product does the job.  Not
        just a Lucent shop, Exp@Nets offers Cisco and other solutions/products.

        4.0  Tidbits

        4.1  Terrorism and the Entrepreneurial Spirit

        Israel is one of the top regions of the world for venture capital and
        start-up activity.  It is also one of the most fought-after and
        sought-after regions of of terra firma in the world.  Religious and
        national conflicts rock Israel on a daily basis.  Armed soldiers
        patrol the streets in uniform.  Israel stands as the only true
        democracy in a region beset by violence and turmoil.

        Yes, Israel produces more start-ups than any other region outside
        Silicon Valley.  It ranks on a par with Boston.  Why?

        Israel has learned to cope with terrorism as a way of life, as the
        price of freedom in a world where many factions in and out of the
        country would sooner them destroyed.  Many of its business leaders
        have technical and military backgrounds.  Founders typically have
        a distinguished military career marked with technical expertise in
        wireless, security, communications and other related fields.

        I have only been to Israel twice but I marvel at the resilance of
        the people in this country who live with the prospect of terrorism
        on a daily basis.  Yet, they also live freely as a democratic
        society.  In many instances, Jews, Christians, Mulsims work side by
        side or in the same districts.  Those of Palestinian heritage are
        contributing members of society.  Alas, it is the extremists who
        can not be trusted and which make daily life threatening.

        Many great US comapanies have a large presence in Israel. Cisco,
        Lucent, Nortel, ADC and others have R&D centers in and around Tel
        Aviv.  Many venture capital firms exist solely in Israel. Others
        have offices and partners in Israel.

        Freedom and innovation go hand in hand.  Entreprenuerial activity
        is a big part of demoractic societies and nearly non-existant in
        dictatorial and/or non-capitalistic societies.

        4.2  BroadBand Phone, A Cool Feature

        Another cool feature of my CompleteIS - www.completeis.com - and Cisco
        IP Phone / IP Centrex telephone solution is the ability to get my
        voicemails delivered to my email as a sound file.

        Why is this cool?  I can now maintain a complete record of my voicemails
        for as long as I want.  I can file them any way I want, share them with
        many people, etc.  I can email them to other folks, post them on a
        website, etc.

        Try that with our TDM-based PBX.

        My one complaint so far with the IP-Phone ... It sometimes goes silent in
        the middle of a call for 5-10 seconds.  The phone display shows a reset in
        progress.  Not cool.

        4.3  Networking ... That's How It Works

        From:   Rich Paschburg [mailto:rhpaschburg@home.com]
        Sent:   Wednesday, October 03, 2001 9:12 PM
        To:     Barrett@pacbell.net
        Subject:        RE: I plan to attend Oct 23 meeting

        Hi Richard,

        Yes, in response to your message, the steps I used to get hooked up with
        NetSuds may be a bit interesting.

        I've had the opportunity, and the need, to improve my networking
        opportunities after I was downsized on July 18.  I enjoyed working in the
        fast paced world of the data networking industry at MMC Networks, part of
        Applied Micro Circuits Corp.  As the Software QA manager there, and with
        responsibility for software tools/lab/release, I built a QA organization
        from scratch and provided infrastructure that let the overall development
        group grow four-fold.  MMC customers include Lucent, Cisco, and Nortel.
        But as you can imagine with customers like these, the economic downturn
        hit the company hard, and thus the downsizing.

        I recognized the importance of networking as I started looking for a new
        software QA or development management position.  And I volunteered for a
        group of colleagues to research networking organizations in the Bay Area.
        Also at this time, I was investigating a prospective company to find out
        more about it.  I did a Google search on the company's email domain name.
        It turned out that the company has a branch in Minnesota.  And the search
        turned up a NetSuds newsletter congratulating a member on joining that
        company -- his email id was included and was caught by the search.  I was
        obviously curious about NetSuds and soon found out about the San Jose
        branch.

        Hope this story helps.  I'll see you at the event.

        Regards,
        Rich Paschburg

        4.4  NetSuds Partner Program Addition

        HeatSeeker Technology Partners - www.hstp.com - is the newest addition to
        the NetSuds Partner Program.  HeatSeeker Technology Partners is a Twin
        City-based professional services company providing innovative system and
        network solutions.  They assist companies that are under pressure to
        redesign, implement and manage their IT infrastructure in order to keep
        pace with business demands.  Their network and systems optimization experts
        help lower costs, while they help improve efficiency by introducing the
        best of convergence technologies.  For more information, please contact
        President Mark Sanda at mark.sanda@netsuds.net.

        See http://www.netsuds.com/partner/

        4.5  NetSuds Partner Program Addition

        Jean-Claude Inc. - www.jc-inc.com - was also added to the NetSuds Partner
        Program this month.  Jean-Claude Inc. specializes in developing a web
        presence for start-up companies and small businesses.  Other start-up
        support services include Marketing and Human Resources.  We will consider
        stock options as part of payment for services.  For more information
        please contact President J.C Gureghian at jc.gureghian@netsuds.net.

        See http://www.netsuds.com/partner/

        4.6  Another KMC Telecom Perspective

        Hi Matt,

        I'm not a member of NetSuds, but I happened to surf to your site and read the
        October newsletter.  You are absolutely correct about KMC.  We have never had
        better service from a telco and I'm moving as much of our infra-structure
        over to them as fast as possible.  They believe in service.

        We recently installed a DS3 of 28 PRI circuits with them. Previously, we were
        using GLOBAL CROSSING and they couldn't successfully install 6 PRIs in a 6
        month period.  KMC installed the entire DS3 within 2 weeks of us signing the
        contract.  They continue to show us great service for all of the circuits we
        have been installing and I would recommend them highly to anyone.

        This must sound like a commercial, but I don't own their stock and I'm not
        compensated to be a cheer leader for them.  I believe when a company does a
        bad job we should be vocal, but when a company does a great job we should be
        MORE VOCAL!

        My 2 cents...

        Timothy K. Davis, President       Voice: (952) 225-4200
        http://www.infinetivity.com         Fax: (952) 882-2992

        4.7  128 Venture Capital Group

        Every month in Boston, a group known as the 128 Venture Capital Group
        meets for breakfast to hear from investors and promising start-ups.
        [Sounds a little like NetSuds' EBs!]  www.128vcg.com has been meeting
        since 1982 and are about to host their 238th Monthly Breakfast Networking
        Meeting.  I thought it somewhat humorous that the group charges different
        rates for entrepreneurs ($45), investors and wanna-be-entrepreneurs ($50)
        and consultants/service providers ($55).   Nonetheless, the track record
        and longetivity of such a group points to the constant need to press the
        flesh, network, network, network.

        4.8  The Downsized VC

        While in Atlanta for a Conference, I led 2 panel discussions with 2 sets of
        4 venture capitalists.  To a man, all said that the population of VCs will
        shrink by 66% in 2 years.  2 of every 3 venture capitalists will no longer
        be in the business.

        Will this mean we will lose significant VC professionals in the Twin Cities
        market?  I doubt it.  Some angels and smaller firms have already been
        "downsized".  Saint Paul VC dropped a Partner recently but then added a new
        Partner at about the same time.  Bluestream, Crescendo, Norwest and Piper
        Jaffray all seem strong enough to withstand the trend.

        What has happened in 2001 is a reversal of activity at VC firms.  In 1999,
        a partner spent 80% of his time working on new deal flow and 20% working on
        portfolio management.  Those percentages are now reversed.

        4.9  The MedicalSuds Explosion

        MedicalSuds was launched as MedSuds on May 31 to an evening gathering of 300+
        medtech, biotech and life sciences professionals.  MedSuds died (as the brand)
        but the concept is strong and vibrant with MedicalSuds.  The next gathering on
        August 16 drew 500+ downtown Minneapolis on the same night as Vikings home game
        (pre-season).  Our first MedicalSuds Entrepreneurs Breakfast drew 170 on October
        26 and the next event on November 16 is looking very positive.

        There is a great need for medtech, biotech and life scienc professionals to
        network and do business in the Twin Cities.  Encourage your friends in those
        markets to check out www.medicalsuds.com 

        Our November 15 event, hosted with MNBIO and the UofM, is a dynamite 1-day
        Conference at the Hotel Sofitel.  The speakers and panelists are world-class and
        the event is drawing attendees from around the USA.  www.medicalsuds.com/bio/

        5.0  Schedule of Events

        5.1 - Minnesota

                11/2   Marriott SW Minnetonka - Entrepreneurs Breakfast
                         http://www.netsuds.com/eb/2001/November/

                11/15  Hotel Sofitel - MedicalSuds Evening Gathering
                         http://www.medicalsuds.com/eg/

                11/16  Marriott SW Minnetonka - MedicalSuds Entrepreneurs Breakfast
                         http://www.medicalsuds.com/eb/2001/November/

                12/5   Minneapolis Convention Center - NetSuds Evening Gathering
                         TBA

        5.2 - Outside Minnesota (iSuds)

                The October 18 iSuds launch in Raleigh Durham drew 200 professionals!

        5.3 - pulver.com Events - http://www.pulver.com/conference/index.html

                12/4-  San Diego, CA - Softswitch Expo 2001
                 12/6  http://www.pulver.com/softswitch/
                February 5-7 - 5th Annual IP Communications Industry Executive Summit,
                        Ritz-Carlton Kapalua, Maui, Hawaii ( http://pulver.com/execsummit )
                April 8-11 - Spring 2002 VON, Seattle, WA
                May 29 - 31 - EAT'M (Emerging Artists and Technology in Music) 2002,
                        Las Vegas, NV ( http://www.eat-m.com )
       
        5.4 - Non-NetSuds Events
               
                11/8   The Depot Minneapolis - MinnesotaBusiness AfterHours
                         http://www.minnesotabusiness.com/afterhours.htm

                11/2,9,16 - Minneapolis - Advanced Speaking Skills Workshop by Joan Moser                                                          http://www.spokenimpact.com/workshop%20Nov%202001%20-%20Speak%20Like%20Pro.htm
               
                John M. Morrison Center for Entrepreneurship, house on the Minneapolis
                campus of the University of St. Thomas, offers a number of special
                outreach/lifelong learning programs with Just-In-Time information. 
                Visit http://www.stthomas.edu/entrep/programs for a calendar of events.

        6.0  Apply to Present at a MedicalSuds or NetSuds Entrepreneurs Breakfast

        Every month since Autumn 1999 NetSuds has had an Entrepreneurs
        Breakfast (see http://www.netsuds.com/eb/ for past and current
        events).  If you are a pre-IPO "com or .com" start-up, you can apply
        to present your company to the investment community at a future
        breakfast event.  Apply online at http://www.netsuds.com/eb

        Apply to present at a MedicalSuds Entrepreneurs Breakfast (coming
        soon) at http://formmail.to/medsuds

        7.0  How to be a Survivor in Challenging Economic Times

        by NetSudsers Andrew Humphrey and Andy LaFrence - ahumphrey@faegre.com
        & alafrenc@kpmg.com

        Andrew Humphrey is a partner in Corporate Finance at the law firm of
        Faegre & Benson and head of the firm's Emerging Companies practice.

        Andy LaFrence is the partner-in-charge of the Twin Cities Emerging
        Companies and Medical Technology practices at KPMG.

        It's hard enough being an entrepreneur in good economic times. Even
        when the markets are headed north, and venture capital is easy to come
        by, there are few shortcuts past the hard work involved in growing a
        business.

        This year, entrepreneurs face an even greater challenge.  With emerging
        businesses struggling to find private and public financing, and demand
        for products and services slowing, the resilience of entrepreneurs and
        their companies is being put to the test.

        There's no magic formula to separate the winners from the losers.  An
        economic slowdown can take its toll even on solid, well-managed
        businesses.  But those companies that do thrive in tough times
        generally share three characteristics: They're realistic.  They
        communicate well.  And they've won the commitment of their key
        constituencies.

        Be Realistic

        Entrepreneurs are optimists, and that's one of their strengths. But
        don't let head-in-the-sand optimism get in the way of cold, hard
        business thinking.  When the health of your company is at stake, you need
        to be brutally realistic in assessing your business plan and your
        financials.  If you don't take immediate steps to prevent or correct
        financial problems, those problems can balloon into a crisis with amazing
        speed.

        You shouldn't wait for government economic statistics to alert you to
        potential troubles.  The warning signs are almost always there, and when
        you look back with 20-20 hindsight, you'll wish you had paid more
        attention to them.  You may miss your internal numbers for a couple months
        in a row.  You may see an uptick in cancelled orders or an aging in your
        accounts receivable.  Your vendors or other business partners may miss
        deadlines and shipments.  Your turnover rate may drop as employees face
        diminishing prospects in the job market.  By finding the "trip wires" for
        your industry, you can often spot a slowdown several months before it
        makes the headlines.

        When you see those warning signs, it's time to get real.

        Realism starts with you.  If you're a senior executive, assess the skills
        needed for your business to survive an economic downturn - and recognize
        that your current management team may not have them.  Don't hesitate to
        recruit experienced outsiders, particularly those with turnaround
        experience, into senior positions in marketing and finance.

        If you're a Board member, don't give the management team a free ride.  Be
        prepared to question the assumptions underlying their financial
        projections.  It's easy for the chief executive, particularly if he or she
        is the founder, to cling to the company's original business plan long
        after market conditions have made it unworkable.  That's when an
        independent Board of Directors is critical - to make the tough choices
        necessary to keep the company alive, even if it means substantially
        re-working the business model.

        When you're realistic about the problems facing your company, you also
        have to be realistic about solutions.  Here are some basic strategies:

        Don't expect to sell your way out of a crisis.  Your investors will always
        be skeptical of survival strategies based on unrealistic sales projections
        that aren't historically valid.  If you couldn't achieve a forty-percent
        growth rate in an up market, why would anyone think you could do it in a
        down market?  Rosy sales forecasts are generally a way to avoid the harsh
        reality: you're going to have to cut costs.  Those that delay doing what's
        necessary to bring down expenses generally sink the fastest.

        Get good advice.  Tough times are when directors really earn their fees.
        The same is true of your lawyers and accountants.  Most of these outsiders
        have been through the economic roller-coaster with many other companies.
        Get them involved early, and listen to their advice as you re-work your
        business plan.

        Maintain your integrity.  Don't stretch the truth in your public statements
        or communications with employees, customers, and vendors. When your company
        faces economic challenges, your trustworthiness and integrity count more
        than ever.

        Consider the worst case scenario.  Sometimes the market has changed so much
        that your business model no longer works.  It can't be fixed. You have to
        be ready to consider dramatic alternatives - joint ventures, mergers and
        acquisitions, re-location, etc. - to avoid a financial collapse.

        Fundamentally changing a company's direction may accelerate its decline,
        but it can also be a catalyst for a new and more profitable direction.

        Tell Your Story

        It's not enough to have a good plan to see you through a difficult market
        or to recover from financial setbacks.  You also have to build or restore
        confidence in the company among your internal and external constituencies.
        That means developing a thoughtful communications plan with a consistent
        message, targeted to your various audiences: investors, employees,
        customers, vendors, media analysts, and the public.  Even if your internal
        numbers suggest that you've turned the corner, your business is still at
        risk if you haven't successfully told your story in the marketplace.

        Here are some tips on getting your message out:

        Get your story right.  Make sure you have experienced in-house public
        relations counsel or a sophisticated outside agency (or both) to support
        you.    Your communications plan should be on a par with your financial plan.
        In most cases, neither will work successfully without the other.

        Don't sweep troubles under the rug.  If you try to cover up financial or
        other problems, chances are, they'll come back to bite you. Talk to your
        investors.  Talk to your bank.  Talk to your employees.  Your frankness will
        go a long way in winning their long-term support.
       
        Avoid the death of a thousand cuts.  Make sure you get all the bad news out
        at once.  It's much worse if you have to come back a second or third time
        and report new and unanticipated setbacks.  Make sure your numbers add up,
        take the heat for the company's problems, and then move on.

        Deal with layoffs properly.  Nothing will attract more negative public
        attention, or create more internal damage for your company, than a bungled
        reduction in workforce.  And yet most companies do it very badly.  Companies
        that postpone layoffs until they have no other choice often have to cut much
        deeper than if they had taken corrective action earlier.  When you need to
        cut back, do so promptly and fairly (there are many legal landmines for
        employers that take a wrong step).  Remember that your communications program
        regarding layoffs is directed as much to those who remain with the company as
        those who go.  Inevitably, the employees who stay will lose friends, and if
        they feel those friends have been treated badly, their own morale will
        suffer.  One CEO we know took the time to meet personally with every employee
        who was leaving, and every employee who was staying, in order to explain the
        reasons for the company's actions.  That's a tremendous investment of time,
        but the CEO knew that proper communication was essential to implementing
        layoffs without disrupting the company's culture.

        Of course, it's important to balance respectful treatment of employees with
        corporate security.  Disgruntled employees can wreak tremendous damage by
        stealing information or physical goods or hacking into the company's
        computer systems.  If you're implementing a layoff program, make sure you
        have put appropriate physical and electronic security measures in place to
        prevent retaliation.

        Tell the whole story.  Fuzzy details and incomplete plans won't win
        confidence.  Particularly for companies trying to recover from financial
        difficulties, your plan needs to be thorough and convincing.  If you don't
        fill in all the squares in the puzzle, outsiders will usually assume it's
        because you don't know the answers.

        Get Commitment

        If you've taken an honest look at the challenges your company faces and
        communicated your plans, you'll be better able to retain the confidence of
        those most critical to the company's survival.  To move forward, you'll
        need enthusiasm and commitment from all of the following groups:

        Investors.  Bad news in and of itself won't necessarily be enough to scare
        them away (unless the bad news comes in the midst of a tidal wave, as it
        did last year).  But they will be ruthless unless you demonstrate that you
        have a realistic plan for survival and profit.

        Vendors.  Deal with your business partners honestly.  Remember: they talk
        to each other.  Candor can also be very refreshing, even when it's about
        bad news.  One of our clients took the initiative to call and give us
        advance warning that the company was going to have trouble paying its bills
        in the timeframe we had discussed.  But he wanted us to stay on board and
        counsel him.  We did.  He didn't have to give us early notice, but by doing
        so, he enhanced his credibility.

        Employees.  If your key employees walk, you're often left with no business
        to manage.  But it's harder to offer incentives to employees when your cash
        flow is short and their stock options are under water.  There may be times
        when you have to risk the wrath of investors (and the impact on your
        financial statements) by issuing or re-pricing options.  But remember that
        communication is still the most important tool you have.  By keeping your
        top performers in the loop - listening to them and acting on their feedback
        - you'll give them a personal and emotional stake in the success of the
        business.

        Officers and Directors.  Tough times put a premium on leadership.  You'll
        need to quell doubts internally and externally, design and sell a revised
        business plan, and build confidence in the market.  Having the right
        leaders on the Board and on the executive team, who understand the hard
        steps necessary to turn the company around and are committed to its future,
        is essential.  If your leaders aren't both the company's strongest
        cheerleaders and its harshest critics, you will have a difficult voyage.

        Will these steps guarantee you a safe passage when the going gets tough?
        Unfortunately, no.  An unforgiving market can take its toll even on
        companies that do everything right.  But paying attention to fundamentals
        will increase the likelihood that your business will be one of the survivors.

        8.0  Garage CEO: The Time To Start A Company Is Now

        From Information Week Oct. 1, 2001, Tony Kontzer

        Guy Kawasaki offers a top-10 list of reasons why now's the time to launch.

        SAN JOSE, Calif.--Guy Kawasaki resurfaced Monday in a big way, albeit on
        a small stage.  The one-time Apple Computer evangelist and current CEO of
        Garage Technology Ventures (formerly Garage.com), appeared before
        DSL-industry execs at the Broadband Home fall conference here, and he
        brought all of his speaking powers with him.

        Kawasaki, whose investment firm has shifted its emphasis on dot-coms to a
        more balanced technology portfolio, relied on his trademark top-10 approach
        to deliver a mixed message to his audience: It's a terrible market in which
        to try to get funding, but it's a great time to start a company. He also
        made it clear to attendees that, regardless of technological innovation, if
        broadband is to penetrate the home in a timely fashion, the industry has to
        make installation easier. "Fix this problem, and you're 90% there," he said.

        As evidence of his theory that this is the right time to start a company,
        Kawasaki offered October 1987, when the stock market crashed and Cisco
        Systems was funded by Sequoia Capital.  Given that historical reference
        point, he presented a top 10 list of reasons that now is the time to start
        a company:

        1) You can't get in as much trouble (because you won't have as much money to spend).

        2) There's much less noise (i.e. competition).

        3) Expectations are lower.

        4) It's easier to recruit.

        5) It's easier to retain people.

        6) Rents are cheaper. (He told of having to make PowerPoint presentations to
           landlords during the dot-com boom in order to make a case for why Garage.com
           should have the honor of putting a $2 million deposit on office space.)

        7) Professional services are more available.

        8) There's lots of used equipment available.

        9) Everyone is available for meetings.

        10) You have to build a stronger company.

        9.0  Common Myths About IP Telephony Management

        By NetSudser and UNIMAX employee Brian Lebakken - www.unimax.com

        First, let's start with a fundamental question:  Why are people migrating
        to IP Telephony and Network Communication Servers (NCS)?  To some, it may
        be the appeal of 'toll bypass' - eliminating long distance charges by
        routing telephone calls over a data network.  However, with falling long
        distance toll rates, this has become less significant as a primary driver
        for installing IP Telephony.  For most, the truly compelling reasons to
        deploy IP Telephony are twofold.

        1.      Lowered infrastructure costs

        2.      Increased value through IP-enabled applications

        Infrastructure costs are reduced because you only have to maintain a single
        converged network that carries both voice and data, instead of separate
        networks (including proprietary equipment and cabling) for both. And,
        since these NCS systems are based on open standards, numerous interoperable
        applications are available to improve customer relations and increase employee
        productivity.

        This technology is still young, however, and you should be aware of its
        limitations.  While there are some definite advantages in both of these areas -
        lower infrastructure costs and value-added applications-there are still some
        glaring oversights, especially when it comes to system management.  Let's take
        a look at some of the often-overlooked management costs associated with these
        two areas, and what's really available with NCS and IP Telephony systems today.

        Myth #1:  The cost of moving phones is eliminated!

        When a person moves offices or buildings, a phone attached to a traditional PBX
        system has to be either reprogrammed or the phone cables must be rewired for
        each move - typically in a small wiring closet somewhere in your building. 
        Relatively speaking, this is a labor-intensive and time-consuming process.  With
        IP phones, however, this reprogramming/rewiring element disappears.  An IP phone
        can simply be unplugged from one network jack and plugged into a different one. 
        Simple.  For example, on Friday afternoon your accountant Stanley can box up his
        computer, IP phone, and Dilbert cartoons and move them down the hall next to
        your office.  He doesn't need to wait for those telecom people to do that for him
        anymore.

        In some respects this is a big improvement, but it only simplified one element of
        moving people - the physical component associated with rewiring or reconnecting
        the same user's phone in a new location.

        Now, let's consider the logical reasons behind an employee's move.  Did Stanley
        get a promotion?  Did he change departments?  Did your company just lease a new
        building or floor? 

        In many cases, the need to move a phone is indicative of some other change that
        requires database updates.  The IP-based PBX still may require some programming
        (e.g., to change Stanley's department, or the class of service features
        associated with his phone).  In most cases, the total cost of moving a phone has
        not entirely disappeared, although at first blush it appeared to do so.

        In addition, there's another important cost to consider-Enhanced 911 (or E-911).
        Many companies are required by law to maintain an E-911 database that identifies
        the location of all employees and phones in an organization.  If someone has a
        heart attack, calls 911 but loses consciousness, the paramedics need to know not
        only that the person works at 123 S. Main Street, but also that he's on the 14th
        floor in the corner office.  Maintaining accurate information in this database
        is critically important.

        Now, suppose Stanley unplugged his phone and moved it to a new cubicle (since
        it's so easy to do now) without involving your IT group and updating the E-911
        database?  After a short period of time, that E-911 database would be completely
        worthless, and this should be a matter of great concern.  Unlike an e-mail system,
        your employees' lives literally depend on its integrity. 

        So, despite the claims of the NCS vendors, the cost of moves doesn't go away, but
        rather, the cost of one element of moving phones (the physical wiring aspect) is
        eliminated.  Moving phones has always been more than simply cross-connecting a
        few wires and managing this activity is still very much needed in the world of
        IP Telephony.

        Myth #2:  The overall costs for MACs are greatly reduced!

        As Mark Twain once said, "The rumors of my death have been greatly exaggerated." 
        So, too, is the case with the claims of reduced costs for MACs. While moving
        phones has been improved to some degree, what about the times when you need to set
        up a phone for a new employee, or remove a phone when an employee leaves, or
        change a display name if the employee gets married?  Do the costs associated with
        these changes disappear as well?

        No.  In fact, there is little difference between the legacy PBX system and the
        new IP-enabled NCS system in this respect (aside from the interface, which we'll
        address later).  In both cases, information has to be entered into each system's
        database.  So, while it might not be much better, at least it's not any worse. 
        Right?

        Unfortunately no.  Consider this analogy:  You go out and try to create your
        ultimate home theater system.  You have two choices.  You can either go out and
        buy everything from Brand X-the TV, surround sound speakers, DVD player, stereo
        receiver, etc. - or you can pick up your latest issue of Consumer's Reports and
        build the ultimate system from a variety of different manufacturers.  If you buy
        everything from Brand X, you'll end up paying more and you won't necessarily get
        all of the features that you want.  On the other hand, if you select the best of
        breed components, you'll end up with a far superior performing home theater at
        the best price. 

        Unfortunately, you'll also end up with six different remote controls.

        This is similar to what's going on in the world of telephony. Before, you could
        only buy the single-vendor telephony solution.  It was expensive and you didn't
        have all of the features you wanted, but it was relatively straightforward to
        purchase, install, and manage.  Today, with systems based on open standards, you
        can select the very best of breed telephony applications at the best price - but
        with just one little problem.  You still end up with six remote controls.

        The home entertainment industry solved one of their big problems with the advent
        of the Universal Remote Control - a single device that could manage all of the
        components in your home theater.  And that's just what the IP Telephony industry
        needs - the equivalent of a universal remote control.  Again, without the proper
        tools, management of IP Telephony will become more costly, not less costly.

        Myth #3:  Migration will be easy!

        Another detail that gets overlooked is how NCS systems and IP telephony
        applications get set up.  If you ask the vendors, they'll either offer to do the
        work for you (at a cost, of course), or they will point out their nifty 'batch'
        setup program that comes with their system.  But, you should ask yourself these
        questions:  Does this 'batch' program allow you to define all of the fields
        you'll be using in the system?  Where do you get the input for the batch program?
        Do you need to create this from scratch (in a spreadsheet), or do they provide
        some utility to extract the information from your existing PBX? Can you set up
        your information in advance and can you coordinate the changes on your schedule?
        Can you sequence groups of changes to occur at different times? Can you use
        this utility 'piecemeal', or does it really only work if you're going to do a
        flash cutover?

        In most cases, the answers to these questions are disappointing. The batch
        utility is generally useful with a greenfield installation (putting in a
        completely new network), where it is reasonable to assume that all of the phone
        stations will be created in a single flash cut.  But for most sites with an
        existing phone network, it is far more likely that groups of users (perhaps by
        functional department or location) will be migrated gradually to a new IP-based
        system.  The process of migrating users may take months or years before the
        existing PBX is completely replaced.  To do this controlled, gradual migration
        requires something more comprehensive than just a simple batch set-up utility.
        It requires a framework approach that has intelligence to identify user
        information from an existing PBX, stage the information based on your criteria,
        and then provide you with the flexibility to make these changes on your schedule. 

        If the vendors and application developers don't have the tools or the framework
        to provide a robust migration strategy, you can just outsource the work back to
        a system integrator or VAR, right?  Just pay them to do the work.  It might be
        fewer headaches for you, but it won't be cheap.  The lack of tools means that
        someone will have to do a lot of work, and you'll ultimately end up picking up
        the tab.  So much for the big cost savings in your first year of ownership.

        Myth #4:  Our web-based interface is easy to use!

        Just about all of the new NCS systems and IP Telephony applications promote
        their 'web-based' interface as though it were a panacea for the issues associated
        with system management.  Nothing could be further from the truth.  As an example,
        think about what type of interface you use for e-mail.  Many popular
        applications, like Microsoft's Outlook, have both a Windows-based client and a
        remote web-enabled access.  Why doesn't everybody just use the web-based interface?

        Quite simply, a web-based interface is usually slower and provides less
        functionality and 'richness' in the user interface.  It works great when you need
        remote access for simple activities.  For example, you could be in Tokyo on an
        Apple computer and you could still check your PC-based home e-mail.  But, when
        you're in the office, at your desk, you'll still use the fully featured Windows
        application.  Why?  Because it is faster and it provides many advanced features
        that the web-based interface does not.

        Also, try doing bulk changes with a web-based interface.  What if you want to
        change a value for all 500 employees?  Are you going to visit the web page 500
        times and fill-out the same form?  With most system offerings today, that's
        exactly what you would have to do.

        Just as in the case with the e-mail program, web-based interfaces should be
        deployed where it makes sense-to provide universal, remote access for
        frequently changed information.  Setting up a web page on an intranet for a
        self-service or help desk application makes a lot of sense. Using it as the
        native administration interface does not. You need both-a web-based interface
        and a native language (Windows) client interface.

        Myth #5:  We provide a single point of entry!

        Not so.  Unless you define single point of entry as having web-based
        interfaces that all "look" the same ("see, we have the same logo in the upper
        left hand corner") and only work with that particular Vendor's applications. 

        There are actually a couple of issues to consider here.  First of all, do you
        really even want a single point of entry solution?  Or, do you want multiple
        points of entry with a single, coordinated point of synchronization?  You
        should choose the latter, if it is available.

        First, let's take a look at the biggest area where people need to unify
        data - updating a PBX or NCS database and a voice messaging database.  A
        person's PBX extension typically maps to their voice mailbox number.  Their
        name should appear identically in both systems.  Other user attributes, like
        the employee's department, their forwarding targets, etc. have related
        information in both databases.  Clearly, this information should be
        synchronized between the two systems. 

        But, today, most system administration interfaces (even with their common
        "look") will not automatically update the messaging application when a
        redundant change is made to the IP Telephony application.  This is even true
        for multiple applications provided from a single vendor where simple changes
        (like adding and removing users) must be duplicated on the messaging
        application.  Sure, you might have common looking web pages, but do real
        changes get synchronized automatically?  If I need to change "Robert" to
        "Bob", or "Smith" to "Smith-Barney" - do I have to make this change multiple
        times?  Yes, you do.

        The bottom line is that without a unified management framework-one that not
        only looks the same, but offers intelligent, synchronized management of all
        common information - you are likely to spend a lot of time doing redundant
        data entries.  Again, more of your cost savings disappear.

        Myth #6:  Open Standards makes systems easier to manage!

        Not so, at least not today.  The advantages of open standards, as they are
        used today, only pertain to the applications you wish to deploy on top of
        the NCS platform - which gives you, the customer, more options. Diverse
        applications are now available - from call center solutions and auto
        attendant applications to full e-commerce and web-integrated applications -
        and these solutions can work on Box X or Box Y or Box Z. Finally, you have
        the freedom to match the best applications with the best NCS platform at
        the best price.  But, where before you had only two applications to manage
        - switching and messaging-now you will have many more. 

        Unfortunately, while open standards may give you the freedom to select the
        applications to best suit your needs, it hasn't been utilized in the
        management of IP Telephony applications.  These interfaces are frequently
        just as proprietary as the PBX systems they replace.

        But, you may wonder, the vendors that I've been talking to do claim to use
        open standards for their system management.  Are they lying? Well, it all
        depends on how you define open standards.  Many systems will offer a
        "standard" browser interface using "standard" HTTP as the protocol, but
        underneath this "standard" interface is a proprietary application interface
        that only talks to their system.  Under the hood you'll see that they have
        implemented their management interface using standard protocols, but the
        format of the information, the method for changing the information and the
        information itself is different for each application and each vendor. 

        Here's the litmus test.  Pick any three vendors that offer a "standard"
        web-based interface.  Can you use vendor X's application to manage vendor
        Y's device?  If not, then the "standard" interface isn't buying you much
        of anything.  It's meaningless unless they provide a standardized management
        interface that defines the formats, methods, and relationships between the
        various applications.

        Conclusion

        IP Telephony certainly has the potential to do great things, but it still has
        a way to go before it fulfills its total promise of lower infrastructure costs
        and easy deployment of new applications. 

        The cost of moving phones don't completely disappear, nor do the overall costs
        associated with MACs in general.  In fact, depending on how many different
        applications you choose to deploy, these costs can go up. Migration tools are
        still limited and they don't adequately address all of the needs of an
        enterprise customer who needs to manage a gradual transition from an existing
        PBX - not simply perform a one-time flash-cut.  The web-based user interfaces 
        are cumbersome and slow because web-enabling an interface does not add any
        inherent value, and in most cases, it detracts from the usability and advanced
        functionality needed for a standard administration interface.  A single point
        of entry solution is not universally available, and most vendors seem to
        confuse single point of entry with a similar interface that is shared by
        different applications.  For effective management, customers will require
        multiple points of entry that are intelligently propagated and synchronized
        with a wide variety of applications.  And lastly, despite the buzz surrounding
        "open standards" in IP Telephony, most vendors have implemented proprietary
        management interfaces that are simply accessed through "open" or "standard"
        means. 

        Lowered infrastructure costs?  Increased value through IP-enabled applications?
        Wouldn't a solution to these management problems enhance this core value
        proposition?

        Of course.  Managing a network of NCS devices and IP Telephony applications
        requires a comprehensive framework that permits multiple user interfaces that
        are all synchronized at a common point.  When you change an attribute of a
        user's phone, like the display name, you need to enter the change in once and
        have this change automatically synchronized with all related applications. 
        Just like the case with your home theater system, you'll need a universal
        remote control.  Until the NCS vendors and IP Telephony application developers
        provide a truly unified means for migrating and managing these systems, the
        set-up and day-to-day management of IP Telephony systems will be costly,
        difficult, and frequently redundant, in stark contrast to the potential savings
        that these systems are capable of delivering.

        10.0  A Commentary from the NGN Conference

        By John McQuillan and Dave Passmore, NGN (Next Generation Networks)
        Conference Co-Chairs

        This has been a very difficult year in the network industry, with
        cutbacks in capital expenditure, failures of many startups, and now
        dimming macroeconomic prospects and the sobering aftermath of the
        terrorist attacks.  At the NGN conferences (Boston, November 5-9,
        2001; http://www.ngn2001.com/ngn/b1nx1mcq.asp ), we focus on the
        future, the next generation. But what about the present -- are we
        facing a lost generation of network innovations? On the surface it
        seems that many initiatives are currently stalled.

        The Optical Revolution Deferred

        It now appears that deployed optical networks will not be moving
        from 10-Gbps rates to 40-Gbps rates any time soon.  This is a big
        shock in an IT world accustomed to the regular pace of Moore's Law,
        which yielded faster processors, larger memories and bigger disks.
        At the same time, the shift from OEO conversion to an all-optical
        network has been delayed significantly.  Also, the penetration of
        WDM technology from the WAN to the metro area has not yet
        happened, as ILECs concluded they had enough fiber, and most CLECs
        have left the scene.  Will there be a "lost generation" of optical
        component vendors and systems companies that were founded on the
        premise that we needed 40 Gbps, lots of wavelengths, and pure
        optical transport and switching?

        Disappointments in Broadband Access
       
        The DSL industry has suffered a setback as most of the DLECs have
        gone out of business.  Cable MSOs are moving ahead with broadband
        deployment, but that does not help most businesses.  Innovations
        for optical access -- including PONs, Ethernet over fiber, and
        lower-cost SONET -- are all promising but have not yet been widely
        deployed, in part because the incumbent carriers have cut back on
        spending and postponed new initiatives.  Many industry participants
        were counting on massive adoption of low-cost broadband access to
        enable new multimedia services and the transformation of the web
        into a platform for more commerce and entertainment.  Another
        "sure thing" was that everything was moving from the enterprise
        into the Net -- web servers, storage, applications, the works. The
        fall of Exodus, the missteps of many ASPs, and the perilous financial
        state of some Internet data centers has caused many enterprises to
        rethink their strategies.

        Deferral of Packet Voice and MPLS
       
        It has been an axiom in our business that everything is moving to IP,
        including voice.  While there has certainly been more progress in the
        past year, the widely anticipated shift to packet voice is not
        apparent in the networks of the major carriers.  In fact, the whole
        premise of multi-services networking seems to be given lip service
        only.  Where are the MPLS networks that we were expecting to be
        carrying multi-services traffic by now?  Again, the vendors have
        developed the tools but the service providers have not yet seized the
        opportunity to offer next generation services.

        The Causes -- and the Timing

        At NGN, we will explore each of these situations and others, probe the
        reasons for the slow adoption, and forecast when conditions will change.
        For example, is Internet growth rapidly decelerating?  Lehman Brothers
        reports that use by individuals grew at an annual rate of 15% in June,
        down from 46% in January.  NGN will feature a session on this important
        question.  Plus, there will be a keynote speech from Ted Leonsis, vice-
        chairman of AOL, the largest Internet provider to individuals, which
        raised its rates 9% in July.  This will be followed by sessions exploring
        pricing and investment trends in the Net.  What will it take for service
        providers to succeed in the new environment?  NGN features a superb new
        tutorial by Claudia Bacco on the new service provider landscape, as well
        as a symposium on Friday with presentations from 10 CTOs, VPs of
        architecture, and chief strategy officers.  We have also added two new
        sessions to highlight areas where innovation appears to be taking hold,
        areas that you need to monitor:

        * Metro Service Providers: While many segments in the service provider
        industry have been experiencing difficulties, new metropolitan carriers
        are blazing a new path with breakthrough technologies and innovative
        pricing.  They are building remarkable optical IP Internet infrastructures
        within key metropolitan areas domestically and internationally. By
        offering virtually unlimited, unmetered metro-area communications at a
        fixed price, these revolutionaries are eliminating the bandwidth barrier.
        One provider offers 100 Mbps of non-oversubscribed Internet access for a
        flat $1,000 a month. This makes access to the Internet, and metropolitan
        service, seem like a simple extension to a LAN.  Others offer high-speed
        low-cost interchange between last-mile providers and the Internet.

        * Fiber to the Home: FTTH has been a promising future technology for a
        long time.  Fiber to the curb has achieved some success in rural
        environments, particularly for voice.  But FTTH has suffered from poorly
        planned deployments by inexperienced municipalities.  This is beginning
        to change.  Daniel Island, off Charleston SC, is a 4,000-acre planned
        residential community with over 300 homes, a hotel, a sports complex,
        apartment buildings and small offices, all linked by fiber. These early
        successes may be reinforced by new federal legislation.  The Broadband
        Internet Access Act provides a two-tiered, five-year tax credit: 10% for
        the deployment of current-generation 1.5-Megabit service to rural and
        low income areas; and a 20% credit for the deployment of next-generation
        22-Megabit service to rural, low-income and other residential areas.

        11.0  Guest Writers for This Report

        I have opened up the Monthly NetSuds Report to guest writers. If
        you have a passion for a topic, and you can write (at least no worse
        than me), send an email to me at matt@netsuds.com.  You can even send
        copies of your work.  It needs to be on "com and .com" topics and can
        include entrepreneur/investor activities.  Good information from our
        service providers and vendors is also welcome so long as it is not a
        "commercial" for any one company or individual.

        We will consider both sponsored and unsponsored columnists and guest
        writers.

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Matt Noah

1460 Lake Drive West
Chanhassen, MN  55317

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matt@netsuds.com

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