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

Entrepreneurial Capitalism & Innovation:
A
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.

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

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

STANDARDS
Ch. 9: Creation

INTERNETWORKING
Ch. 12: Emergence

 

 

Chapter 8
Networking: Turbulence 1981-1982
The PBX, the IBM PC and the Chaos of Competition

8.3     Bridge Communications

In February 1981, when Judith Estrin left Zilog for Ungermann-Bass (UB), Bill Carrico wondered whether it might not be time for him to jump ship as well. Carrico recalls:

"The irony of it is that, while I was trying to decide what to do with myself, and while Judy was at Ungermann-Bass, I talked to Ralph about coming over and working with Ungermann-Bass, and he just kind of dismissed me out of hand."

When Carrico told Estrin that he intended to leave Zilog, Estrin confided that:

" Within two weeks, I sensed that I had made a mistake in that I was in a role that just wasn't fulfilling to me. I had come into a role without enough responsibility.”

Having worked very closely and successfully together at Zilog, Carrico and Estrin easily turned their similar discontents into reason to start a company together. However, Estrin first wanted to complete the UB OEM agreement with Xerox for XNS, which she did in May. She then resigned from UB, evoking both surprise and shock -- no one left a high-profile start-up, and certainly not after just five months. Once it became clear that she was founding a competitive company, feelings of many at UB turned to resentment and even anger.

In June 1981, Carrico and Estrin incorporated Bridge Communications. They first looked to carve out a new strategy rather than simply imitate others. As they enumerated the existing companies and strategies, they envisioned a world populated with incompatible networks and users’ needs to interconnect them: How would computers and devices on a Zilog network connect to those on an Ethernet network? And what about the problems of interconnecting XNS networks to TCP networks? What was going to happen when IBM introduced their rumored token ring network? Estrin remembers

"Now, when we started Bridge, we didn't have the intention to compete against Ungermann-Bass. Our first business plan was very focused on bridges and gateways, but as internetworking, connecting networks, as opposed to the networks themselves.”

But as they began product design, they saw a common product architecture would allow them to develop the desired bridges and gateways as well as network controllers. And, since few networks existed needing to be interconnected, logic prevailed and they broadened their vision to include Ethernet controllers and terminal servers.

The business plan came quickly after the vision, but they lacked personal funds to bankroll a company and had little choice but to run the venture capital gauntlet, which fell to Carrico. Estrin began consulting to pay their living expenses. Estrin remembers:

"During that six month period when we were raising money, I went to consult for Xerox, and what I did for Xerox was help document their XNS protocols, which then were put in the public domain."

Carrico remembers:

"We did Ethernet and XNS because those were the things that were closest to being a standard, and from day one, we felt that standards were going to be the key to our business."

On September 25, 1981, four founders, Carrico, Estrin, Eric Benhamou and Jean-Pierre Boespflug, incorporated Bridge Communications. Between a first closing in December and a second closing in February 1982, they sold $1,835,000 of Series A Preferred Stock to venture capitalists with a post-money valuation of $2.8 million.