Xsigo Systems

Xsigo Systems

By
Mark Leslie, Andrew Rachleff, Victoria Chang
2007|Case No.E270

Xsigo had started on strong footing. Krishnamurthi was a former top Juniper Networks engineer and he had founded Xsigo with his two brothers, one of whom was also a former Juniper engineer, while the other had worked at Sun Microsystems. Right off the bat, the company garnered the attention of top Silicon Valley venture capitalists such as Kleiner Perkins Caufield & Byers and Greylock Partners, raising $10 million in its first round. Even Juniper board members were eager to invest in Xsigo once hearing about the company.

But just six months after the company launched, Xsigo had to “reset” its technology. Other technology issues plagued the start-up as well such as skewed product timing estimates and the requirement for unplanned product features to be added. Amidst the technology challenges, Krishnamurthi’s father was diagnosed with Leukemia, affecting his and his brothers’ attention to the company. All of these issues caused the company to delay its product launch. As the company was gaining some traction, the team was dealt a third blow—a new competitor called Nuova, backed by Cisco Systems, had begun poaching Xsigo’s engineers, allegedly offering them $1 million to $1.5 million guaranteed payouts.

Krishnamurthi anxiously waited in his office for his senior team to arrive. They had to put their heads together to determine how to get the product development back on schedule, given the latest damage caused by the hemorrhaging of Xsigo’s engineers. Given the company’s latest setback, Krishnamurthi also needed to determine how best to communicate with Xsigo’s Board and its investors.

Learning Objective
This material is available for download by current Stanford GSB students, faculty, and staff, as well as Stanford GSB alumni. For inquiries, contact the Case Writing Office.

Available for Purchase