By Jenny M. Sakhrani and S. Ramesh
Born in Lahore, Pakistan, 51 year-old, Saiyed Atiq Raza came to the United States in the late ‘70’s to study materials science at the University of Oregon, with just $3,000 in his pocket. Back then, he started earning his great reputation by excelling at each thing he did. He has come a long way, has been the president and COO of Advanced Micro Devices (Nasdaq: AMD) on route, but he remains focused on substance, not on style.
Mr. Raza is the founder of Raza Foundries, an incubator type of company that he terms a “meta-company”. Mr. Raza chose the name “Foundries” to differentiate his model from that of the traditional incubator or VC. “Just as traditional foundries cast ingots and steel, we are casting a template for building breakthrough companies”, he says.
While most incubators invest in a wide variety of companies, Raza Foundries focuses only on companies in the broadband networking and communications spaces. There is risk in investing with such a narrow focus, but it also allows Raza to apply his tremendous expertise and reputation in the chip design and communications industries to give his investments a huge boost over their rivals.
When asked what makes his model work, Mr. Raza says, “Focus; expert domain knowledge; world class personnel and resources; best practices management methodologies; and fast track development process.”
“The whole point is to offer the services that the venture capitalists and the incubators don’t offer any more as the size of their investments grow. We are doing something difficult. We are building hard to build companies that will be substantive. Our strategy is to utilize our full network of resources to augment those of the founding team of each Partner Company. Our resources join the Partner Company for maximum effectiveness such that each company has a world-class, highly experienced team covering all functional areas.”
And does his model work? Well, Raza has managed to turn VC’s to believers in his model. “Atiq has one of the few incubator models that I like,” says Vinod Khosla, a partner at VC firm Kleiner Perkins Caufield & Byers.
Raza Foundries also has started proving its model. In December 1999, Raza funded YuniNetworks, a maker of high speed routing gear. He helped the company with the daunting task of completing six communications chips in 8 months, suggested modifications in the design of the chips, and hooked them up with engineers, contract manufactures and potential clients. The result - YuniNetworks was bought in April 2000 by Applied Micro Circuits (Nasdaq: AMCC) for $300 million, netting Raza Foundries a profit of over $100 million.
Mr. Raza admits that he still has to prove his model works. Raza Foundries never had the high profile of other incubator style companies during the dot com bubble. But by focusing on execution and substance, he believes his foundry can turn out a steady stream of successful companies.
Jenny M. Sakhrani is CFO and S. Ramesh is president of Philosopher’s Stone Ventures (Redondo Beach, CA), a business incubator specializing in the development of high-tech companies.