Chapter 13 - Data Communications: Adaptation 1979-1986
13.13 Cohesive Networks
After Art Caisse, Audrey MacLean and Roger Chrisman parted company in July 1982, Caisse wasted little time and in September incorporated his new company, Cohesive Networks. After further deliberation, strongly influenced by those he recruited to join him and the feedback he received from potential investors, Caisse changed the product opportunity Cohesive Networks would target. Like NET, Cohesive Networks would focus on developing a high-end T-1 multiplexer.
After closing a $2.8 million first round of venture capital, Cohesive took office space a short drive from NET. Reflecting on the competitive spirit that motivated each company, a spirit reminiscent of that between Ungermann-Bass and Sytek, Forkish of NET remembers:
We had, I think, respect, fear, and dislike all at the same time for Cohesive, because we knew we were going to compete with them. From day one, when we got our funding, we knew that the enemy was Cohesive, and I think both companies probably made it into more of an enemy type perception than they had to, but it was also part of our feel for motivation. We simply were not going to be beaten by those guys.
By early 1985, Cohesive Networks had closed a $7.5 million second round of financing and began selling its CN-1; a T-1 multiplexer positioned essentially head-on against NET’s IDNX. Only NET held a key advantage, it was already shipping product. Cohesive Network management, feeling the need to generate credibility and to ramp sales faster than they were projecting, began discussing the idea of OEMing their product to a number of leading data communication companies. Meetings were held with Codex, by then dissatisfied with its Avanti product, Amdahl and General DataComm (GDC). By the spring of 1985 a lucrative deal was signed with GDC, one calling for GDC to buy $40 million of CN-1s. GDC began selling the CN-1 in September 1985 as the MegaSwitch. Cohesive Network sales for calendar year 1985, however, were a disappointing $1.5 million with a loss of roughly $5 million.12
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Author estimates from the DCA 1987 Annual Report, p.22