Lightning challenges Cisco

The Brunner family are natural entrepreneurs, but also typical techies. For years, their company, router maker Lightning Instrumentation, was comprised almost entirely of research and development engineers and employed just two sales staff.


Company: Lightning Instrumentation

Activity: Router and firewall hardware

Founded: 1992

Country: Switzerland

Backers: Angel investors, including former Telinco founders Chris Matthews and Peter Randall


+ Promising technology
+ Deep-pocketed backers
Saturated market



That was until a group of British investors, led by the founders of Internet service provider (ISP) Telinco, Peter Randall and Chris Matthews, took the helm and started to shake it up.

Lightning makes integrated router and firewall hardware for small and medium sized enterprises (SMEs) and home users. The company offers ISDN, xDSL, cable and wireless modem hardware as well as leased line routers, all built on top of the Linux open source operating system.

The products include IPSEC standard encryption support. In addition, support for virtual private networking will be added during 2002. The products are small and can be plugged straight in and switched on without a lengthy configuration process, claims Randall.

"What excited me about Lightning was that its products were immensely strong. It had great products, but little or no marketing or sales expertise," says Randall. The company was kept afloat on the cash generated by other ventures run by the Brunner family.

Such is the strength of the technology, that Randall believes that it could potentially have a far greater use beyond the home and SME markets. For example, small, low-cost firewall devices could provide additional protection for bank automated teller machines (ATMs).

Crucially, the products are cheaper than competitors'. "If you take our product and match it against Cisco, we are 50% cheaper," says CEO Randall. That price competitiveness has helped win customers such as France Telecom, Swisscom and French cable and satellite television operator Canal+, who re-sell the product to their high-speed Internet service users.

Former army officer Randall and his associates invested GBP1.4 million (€2.3m) in the company after selling their former start-up Telinco to ISP World Online for between GBP250 million (€400m) and GBP500 million (€800m). But none of them are engineers themselves. Prior to Telinco they had also been involved in paint manufacturing and paper mills.

Already, Randall is looking to achieve profitability on an earnings before interest, tax, depreciation and amortisation (EDITDA) basis by March 2002. By then, sales are expected to have increased to a run-rate of around SFr9 million, compared to the SFr6 million when Randall took helm in September 2001.

But to maintain such a growth rate, Randall will need to do more than just beef up the sales force. He will need to seek out new markets and forge new partnerships.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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