Mellanox Technologies

Nine founders, and a name one woman came up with

Mellanox was founded in March 1999 in Yokneam Illit by nine founders, a relatively high number for a typical Israeli startup. Most of them were former engineers at Intel and at the local company Galileo Technology: Eyal Waldman (CEO), Shai Cohen, Roni Ashuri, Michael Kagan, Evelyn Landman, Eitan Zahavi, Shimon Rottenberg, Udi Katz and Alon Webman. According to the Hebrew Wikipedia, the name "Mellanox" was thought up by Waldman's wife, by combining the word "millennium" (the company was founded close to the start of the 2000s) with the ending "-ox". The choice of such a large founding group reflected the nature of the project: developing a complex communications chip requires many specialties at once (chip design, software and network infrastructure), not just a single product idea.

InfiniBand: the technology Mellanox bet on

Mellanox chose to focus on InfiniBand, an especially fast communication protocol between servers, developed as an alternative to ordinary Ethernet for environments where every millisecond of delay matters: scientific supercomputing, and later also the large data centers of tech giants. This bet on a relatively niche technology, instead of competing directly in the larger general networking market of Ethernet, proved successful. InfiniBand became the de facto standard in the world of supercomputers, and by the middle of the 2010s it was installed in almost half of the world's leading supercomputers on the TOP500 list, a professional list that ranks the fastest supercomputers in the world.

A dual listing: Nasdaq and Tel Aviv

Mellanox went public on Nasdaq in February 2007 under the ticker MLNX and raised about $102 million at a company valuation of more than half a billion dollars. That same year it was also listed for trading on the Tel Aviv Stock Exchange, a dual-listing pattern common among large Israeli tech companies that gives access both to American institutional investors and to the local investing public. In the decade after the IPO, the company expanded its product line significantly: from individual network cards to a whole family of adapters called ConnectX, network switches called Quantum (InfiniBand) and Spectrum (Ethernet), and also optical cables and transceivers under the LinkX brand. In this way it went from supplying a single component to supplying a complete networking solution.

$6.9 billion: what the NVIDIA deal looked like

On 11 March 2019 NVIDIA announced an agreement to acquire Mellanox in a deal worth about $6.9 billion in total, at $125 in cash for each share. According to NVIDIA's official announcement, the goal was to combine its computing platform with Mellanox's networking solutions and together create unified infrastructure for hyperscale data centers. Intel, Xilinx and Microsoft are known to have also been interested in acquiring Mellanox before the agreement with NVIDIA was signed. Contrary to a common assumption, the announcement of the agreement in March 2019 was not the end of the story: the deal had to pass a thorough regulatory review, and about 13 months passed before it actually closed, on 27 April 2020, after approvals from antitrust authorities in the European Union, the United States and China.

What happened to the founders after the acquisition

Eyal Waldman, who led Mellanox as CEO for all 21 years of its existence as an independent company, left NVIDIA in November 2020, about half a year after the deal closed, and according to reports earned about $240 million from the sale. He later continued as an entrepreneur and as a funder of other startups in the Israeli tech industry. Michael Kagan, one of the original founders and the person who led the company's technological development, chose a different direction: he stayed inside NVIDIA after the acquisition, and was later appointed chief technology officer (CTO) of the whole company. This is a relatively rare example of a founder of an acquired company who goes on to a senior, influential role in the acquiring company, and not just as a temporary adviser.

Why it matters today: InfiniBand and AI

The acquisition, which at the time was described mainly as a move by NVIDIA to strengthen its position in scientific supercomputing, turned out in hindsight to be a critical step in the company's preparation for the AI wave that developed right after it. Training large language models requires connecting tens of thousands of graphics processors at the same time, at very high speed and with very low delay. That is exactly the problem InfiniBand was built to solve, long before anyone talked about "generative AI". The technology, together with Spectrum-X, an Ethernet platform for AI that NVIDIA developed on the basis of Mellanox's know-how, became the backbone of the huge training networks run by companies such as OpenAI, Meta and Google. So an Israeli networking company founded in 1999 now sits, through the technology it invented, at the heart of the physical infrastructure of the AI revolution.