THE BILLING: HITE (www.hite.ca) DATE: MONDAY, April 30, 2001, 6:30 PM "Sedona Networks - No Pain, No Gain?" After 3 years of hyper activity -developing product, recruiting personnel, attracting funding, promising start-up Sedona Networks recently shut it's doors and went bankrupt. With a promising product, market, and $28 million (U.S.) in funding the stage was set for commercial success and continued growth. Just what went wrong ? Find out April 30 as HITE explores the reality of the explosive potential and dangerous pitfalls that today's hi-tech start-ups are facing- with Joseph Elchakieh, CEO, Sedona Networks. THE SUMMARY: A VP from an ex-SN's new company attended Joseph's HITE speech, "No Pain No Gain." This is the ex-SN's paraphrase of the VP's summary of Joseph's speech. The talk was about two hours, and "very good, very convincing." 90% of the time Joseph was "great." 10% of the time he "said something stupid." Joseph said he made three main mistakes: 1. Not taking money when he could have. He said that, a short while before the troubles, he could have raised $50M, but didn't feel he needed that much and so turned it away. If he HAD taken the money he would have had enough to still be steering the company in a new direction: toward RBOCs and away from CLECs. 2. Targetting a market whose business model was corrupted (i.e. the CLECs). Their business model was not feasible, despite the fact that they had a lot of money to spend. Long-term, this was not the right market to target. 3. Laying off 50 people to attract financing. This was a mistake because, "if the financing story was bad at 130 people, it wasn't any better with 90 people." The big layoff caused major morale problems and was instrumental in ultimate failure. Despite this honest admittance of mistakes, Joseph did tell the audience that he tried to save the industry from doom. He noted that, last February, he went out on the road to tell CLECs that they needed to change their business model; that their business model would spell the Death of the CLECs. But it was too late. The talk did not include information about the suitability or readiness of the Sedona Networks product. Analyst Tom Nolle was not credited for giving Sedona Networks the heads-up about the FCC's order, 99-238 (which in essence protected any new data infrustructure laid by the RBOCs from having to be resold to CLECs). Joseph said he is starting an new company in Ottawa, again in the networking space. Right now, it's "all on paper."