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Chapter 10 - Networking: Market Competition 1981-1983

10.1 Interlan

With each passing month of 1980, Paul Severino’s entrepreneurial yearnings proved impossible to ignore. He knew he could no longer repress what he longed to do most: start a company. Uncertain as to what the company’s focus might be, he searched for a compelling idea, a vision of economic potential around which to organize a company. First he drew upon his own experiences and his hard earned lessons: computer design and networking at Prime, bus level products at Data Translation, and the OEM strategy so key to DEC. He then scanned the technical and trade literature, imagining numerous fits of promising technologies and his competencies. And then he saw Xerox’s Ethernet Blue Book. Severino remembers:

I just thought it was time for me to do something else. So I started to think about computer networks, but I couldn’t see it until I saw the first Blue Book. The biggest problem you have doing something proprietary from a small company is that nobody wants to buy it. So, if this thing really looks like it could be a standard, this is the place to do it. And there was only really one company that was visible in LANs and that was Ungermann-Bass. 3Com hadn’t really announced any products yet, and it was really a consulting house.

As a sanity check, Severino sought the counsel of a few trusted friends, such as Russ Planiter, a Vice President of Prime. Over a few dinner conversations they kicked ideas around until early October when Severino laid out the case for local area networking. Planiter listened more intently than usual because he had decided to leave Prime to join the venture capital partnership J. H. Whitney and knew he needed to find investment opportunities. Planiter offered to work on a plan together, if he could have a first right of refusal. Severino, knowing he needed financial backing and knowing no one he would rather have as an investor, readily agreed. Severino recalls:

So that’s what we did, and we built this business plan about a LAN company that was going to be board level oriented, which was a different approach from what was going on then. The first computers we would connect to were Unibus, Multibus and Q-bus machines.

They thought their plan sound, but others were decidedly less eager to invest. Severino and Planiter listened as his new partners told them that they needed an Ethernet expert. The obvious place to look was DEC and they soon identified Dave Potter as the best candidate. Again Severino:

One Saturday morning, I just gave him a call, told him who I was, what I was doing, and told him I wanted to talk to him about starting an Ethernet company.

In May 1981, with Potter’s agreement to join Severino, the partners of J. H. Whitney agreed to invest. On June 1, 1981, Severino formed Interlan, Incorporated. Work began immediately with the intent to develop products and have them available for sale by the end of the year.