Intellectual property development company Xelic Inc. does not have any local clients, but its products still can be found at facilities in the area.
"Our stuff might be sitting in a chip, on a card, in a box that's in a Verizon local office here in Rochester," co-founder Dave Wurthmann said. "We didn't sell it to a company in Rochester, but one of our clients may have sold it to a company that sold it to another company with an office in (Rochester)."
There are a few levels between Xelic's software and its end user. Xelic works in the optical transport networking industry.
The company creates software that clients can compile into hardware chips that support a business' ability to communicate over optical fiber networks. A large portion of Xelic's IP catalog is made up of networking cores, whose main functions are to route telephone calls across the public switched telephone network.
Clients include major semiconductor chip manufacturers such as Broadcom Corp., PMC-Sierra and Cortina Systems Inc., as well as networking system companies such as Juniper Networks Inc. and Cisco Systems Inc.
Xelic has seen growth as the telecommunications industry has turned around, Wurthmann said.
"The better companies like Cisco or Juniper do today, the more they have for their R&D budgets to buy from us in the future," he said. "Money in our clients' pockets always helps us."
Xelic has seen solid growth in recent years. Co-founder Mark Gibson said the company has grown 35 percent in each of the last three years.
Xelic landed on the Rochester Top 100 list of fastest-growing private companies in the region in 2009, 2010 and 2012. It has 18 employees, up from 14 at the start of 2011.
The company's outlook was not always so clear. Wurthmann, Gibson and co-founders Mark Grabosky and Doug Bush formed the company in 2002, when the telecom industry was bottoming out.
The four founders worked previously as engineers in Rochester at Mint Technology, an engineering services subsidiary of California-based electronics company LSI Corp.
"We were working for a larger company that was based in California," recalled Grabosky. "One day you're working and the next you get a call saying they're scaling back and closing your design center.
"We decided going forward we didn't want that to happen again. We wanted to be in control of what we were doing with local ownership."
The partners launched Xelic by doing consulting work for general software-engineering projects. They used the money from those projects to build Xelic's IP catalog of networking cores and systems. The telecom industry struggles proved to be a benefit.
"It kind of helped us in a way," Gibson said. "A lot of our competitors had downsized and found themselves on the sideline. We were able to hang in there and foster this IP company until 2005 when things started to pick up."
By that year, Xelic had built a vast IP catalog that could accommodate the complex systems major clients required. That allowed the company to land larger contracts, which boosted employment. Most importantly, Grabosky said, Xelic was able to start making a name for itself.
"We started building brand awareness in an industry where there aren't a lot of companies that do what we do," Grabosky said. "We don't do any advertising. We don't have an active sales force. We get calls and emails from companies who know what we do and how good we are at doing it."
Xelic has been examining its growth strategy, looking into potential new markets and new IP products to invest in, Gibson said. He admitted one of the challenges for Xelic will be to keep up with the vast array of new technology.
"You always have to keep reinventing yourself and chasing the next generation of stuff," he said.
Still, while technology can be a challenge, it remains the driving force behind Xelic's business, he added.
"That's what keeps us going," Grabosky said. "If technology ever stopped growing, we'd all be out of work."
The Rochester Top 100 program is presented by the Rochester Business Alliance Inc. and KPMG LLP. Launched in 1987, it recognizes the fastest-growing private companies in Greater Rochester. This year’s Rochester Top 100 event will be held Nov. 6. For more information, go to rochesterbusinessalliance.com.
A provider and developer of optical networking intellectual property cores.
2012 ranking: 7
Top executives: Founding partners Doug Bush, Mark Gibson, Mark Grabosky and Dave Wurthmann
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