September 24, 2010, 4:54 PM — A parallel effort to Juniper Networks' Junos Innovation Fund (JIF) for seeding external software start-ups is a relatively new internal incubation lab.
Under the aegis of the office of the CTO, Juniper's incubation lab was conceived a year ago and started up in the last two or three months. Funded out of Juniper's $700 million R&D budget, the lab explores high-risk, "disruptive" opportunities for new products, markets, business groups or other endeavors for growth.
The Microsofting of Juniper Networks
"We wanted to address two problems," says Juniper CTO Pradeep Sindhu. "As the company grows, how do you maintain the rate of innovation? [How do you maintain] stability of funding in innovation, and keep it aligned with business of the company and business units?"
Unlike JIF, the incubation lab covers the breadth of Juniper's product portfolio, not just software; and it cultivates and funds internal start-up projects only - it does not infuse capital into external companies.
There are five to six incubations at a time, Sindhu says. Each is staffed by four to six people and the incubation period is six to nine months.
"The objective is fast fail," Sindhu says. "This is not a research lab where people are going to spend 10 years developing some fundamental science."
Sindhu would not say what the five or six projects involve. He said there are three possible outcomes for them: they fail; produce product for an existing business unit; or produce product for a new market that requires the formation of a new business unit.
"They are sensitive projects," Sindhu said. "And it is not a case where our business units do not innovate - they innovate all the time. Innovation in the incubation lab was disruptive: things that have high risk but high potential at the same time."
Though separate, the incubation lab is synergistic with JIF and Juniper's software platform and ecosystem strategy overall, Sindhu says. All are designed to accelerate the rate of innovation at Juniper.
Recent examples of innovation acceleration platforms are Google's Android and Apple's iPhone in the mobile space.
"The time at which the ecosystem takes off is accelerating," Sindhu says. "The time for take-off is shorter."
JIF is helping external ecosystem start-ups take flight. The "sweet spot" for capital infusion from Juniper is in the Series B or C rounds with minority positions of around $2 million, says Tom Fountain, Juniper vice president of corporate strategy.Juniper has the opportunity to take a board seat at the company but is not trying to be a venture capitalist, Fountain says. Juniper would rather partner with VCs.
Start-up investment opportunities are gleaned from Juniper's employee base and individual product groups, entrepreneurs that seek the company out and from VC referrals, Fountain says. Ideal candidates are those companies that are nine to 24 months from introducing product into markets of interest to Juniper but where the company currently does not play.
JIF has a two-year life cycle, at which time Juniper will re-evaluate its need. Fountain hopes by that time, the Junos ecosystem will be self-sustaining.
"We hope to continue strategic investments but not a specific vehicle for the Junos ecosystem," he said. "We hope it's vibrant."
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