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Entrepreneurial Capitalism and Innovation:
A History of Computer Communications 1968-1988
By James Pelkey

Entrepreneurial Capitalism & Innovation:
History of Computer Communications
1968 -1988
By James Pelkey

This history is organized by three co-evolving market sectors and also standards making.
An overview of the schema is presented in the Introduction.

Ch. 1: Emergence
Ch. 3: Competition
Ch. 5: Market Order
Ch. 11: Adaptation

Ch. 2: Vision
Ch. 4: Arpanet
Ch. 6: Diffusion
Ch. 7: Emergence
Ch 8: Completion
Ch. 10: Market Order

Ch. 9: Creation

Ch. 12: Emergence



Chapter 7
Networking: Emergence 1979-1981
LANs and DataPBXs

7.12     Robert Pliner and the Founding of Sytek

Local area networking meant little to Michael Pliner when he joined Ford Aerospace (Ford) in Sunnyvale, CA in 1975 to launch an in-house software development effort to win government contract work. Four years later, with a staff of forty-five dedicated to networking projects, Pliner needed no one to tell him local area networking was poised to take-off. [11] Pliner had read all published material on local area networking and made an effort to meet anyone considered an expert, including Metcalfe and Bass. He also struggled with whether it was time to leave Ford, discouraged by the idea of simply starting a one-person company.

When Pliner confided to four of his staff that he was thinking of leaving Ford, they immediately voiced their desire to join him. Planning began for the new company they would name Sytek. Pliner remembers trying to strengthen his team:

"“Charley Bass and Bob Metcalfe and I met regularly. We tried to convince Bob Metcalfe to join Sytek and he said "No, I want to run my own company."

In July 1979, the five founders -- Pliner, Ken Biba, Tom Berson, Jack Goldsmith, and Bob Kroll -- incorporated Sytek and continued doing what they knew best: consulting. Their first client was none other than Xerox which gave them a $250,000 contract to write the communication protocols for their X10 Telecommunications Network. Other clients, such as Cox Cable, Hughes, TRW, and several government agencies, quickly followed and before they knew it they had completed their first year with fourteen clients, revenues of $1.3 million, and a bank balance of $300,000 that made possible the exploration of strategy options. Pliner recalls:

"In 1980 we took the money we made out of the consulting business and we said "let's reinvest it and let's try to build something," and we decided to go different than everybody else, we went broadband.”

Broadband would differentiate Sytek from those firms employing the baseband technology of Ethernet. Broadband technology held the potential to carry both voice and video, in addition to data, and to support multiple simultaneous communication channels. Their competence in broadband represented a diffusion of technology from MITRE to Ford and now to Sytek. Lee LeBarrie of MITRE remembers:

"We went out to Ford Aerospace and talked to them, exchanged things -- information. They were interested, of course, in the MITRENET CSMA. And the people who were involved in that effort actually split off and became Sytek."

Their first revenue opportunity came before they even had a broadband product to ship and would end their friendly relationship with Ungermann-Bass, the third local area networking firm to incorporate that June-July of 1979.

[11] His group had built FordNet, a .8 megabit per second CATV-based network with lineage to MITRENET; Flash-Net Fiber Optic, a high-speed network; and had evaluated local area networking for the Air Force numerous times. Pliner’s team presented a paper at the MITRE/NBS Symposium.