The Little Guy That’s Beating Cisco

It’s no accident that InterOptic, a Naperville firm specializing in fiber optics employed for switching data over the internet, has been little known since its founding in 2005. Its owners kept a low profile to avoid rousing much larger competitors such as Cisco and Juniper Networks while it was undercutting them in data transmission contracts.

The quiet period has expired. InterOptic recently landed big contracts in IT networking with the state of California, the U.S. Navy, Stanford University and a growing list of Fortune 500 companies. Fiber optics are a $12 billion industry in North America, and with sales of less than $20 million last year InterOptic occupies the smallest of niches. But CEO Tim Dixon predicts revenue could double this year.
InterOptic offers the same optics that Cisco and others bundle into their own transceivers, but the dirty secret of the industry is that nearly all optics are made by third-party manufacturers in Asia and supplied to anybody. InterOptic has become expert at buying its optics at a bargain, programming them to fit customers’ requirements and then beating Cisco and others by 30 percent or more in price. “We can take less margin in this business and still turn a very nice profit for ourselves,” Dixon says. “We’re offering customers the lower-priced generic alternative to the brand name. But the quality is still the same.”

Customers once were leery of independents like InterOptic but are warming to them now. “The big reason we use InterOptic is for their cost advantage,” says Tim Cothern, a program manager at Hewlett Packard Enterprise who manages a U.S. Department of Defense contract. “Their optics are cheaper yet their speed of delivery is actually faster.”
InterOptic has been backed by a little over $10 million from Pritzker Group Venture Capital. Adam Koopersmith, a partner at Pritzker, says the money has given InterOptic a boost in bidding on contracts for big accounts. “They like to see a strong balance sheet with the suppliers they deal with,” he says.

They also like to see experience, something Dixon, 56, has in spades. With a 1982 degree in electrical engineering from Purdue University, the Indiana native worked at Lucent Technologies when it was still part of Bell Laboratories, then spent eight years at Tellabs in Naperville in the 1990s before leaving for Silicon Valley to work at Calient Technologies and a couple of startups. He was recruited by InterOptic founder Charles Perillo in 2008, first as a consultant and later as chief executive. For many years, the company had no sales staff, a failing that promotion-minded Dixon has fixed. It still has just 16 employees.

Dixon figures that eventually Cisco or some other large fiber optics supplier might come calling with a buyout offer. A public offering is also possible. “This company is profitable, so there is no hurry,” says Koopersmith. “We’ll let the market dictate the best time for us to exit this investment.”
InterOptic has been backed by a little over $10 million from Pritzker Group Venture Capital. Adam Koopersmith, a partner at Pritzker, says the money has given InterOptic a boost in bidding on contracts for big accounts. “They like to see a strong balance sheet with the suppliers they deal with,” he says.

They also like to see experience, something Dixon, 56, has in spades. With a 1982 degree in electrical engineering from Purdue University, the Indiana native worked at Lucent Technologies when it was still part of Bell Laboratories, then spent eight years at Tellabs in Naperville in the 1990s before leaving for Silicon Valley to work at Calient Technologies and a couple of startups. He was recruited by InterOptic founder Charles Perillo in 2008, first as a consultant and later as chief executive. For many years, the company had no sales staff, a failing that promotion-minded Dixon has fixed. It still has just 16 employees.

Dixon figures that eventually Cisco or some other large fiber optics supplier might come calling with a buyout offer. A public offering is also possible. “This company is profitable, so there is no hurry,” says Koopersmith. “We’ll let the market dictate the best time for us to exit this investment.”