Mahi Networks

Chris Rust strained to reach a small finger-hold on his rock-climbing route up El Capitan, a 3,000-ft vertical cliff in Yosemite National Park. Rust, the founder of Mahi Networks (Mahi), a start-up telecom equipment manufacturer, had decided to take the weekend away from the company in order to clear his head. Since launching in September 1999, Mahi had attracted investment from top VC firms, hired over 300 employees and made substantial progress toward building a breakthrough intelligent transport switch for metropolitan (metro) area networks. It had been an exciting and rewarding journey. Yet now, in June 2001, Rust also reflected on the challenges that lay ahead. The start-up had spent almost $60 million in venture funding, but had yet to close a sale with one of its phone company prospects. Furthermore, there were strong indications that the telecommunications equipment market, which had been extraordinarily strong in the late 1990s, could be headed for a downturn in the near future. Rust’s top priority was to close one sale of at least $150 million within the next year in order to set the stage for his next financing. He wondered whether Mahi could have done anything to avoid the cash crunch the company currently faced, as well as what steps he and his team should now take to reach their immediate goal.