Network architecture, multi-protocol routers, and data centers are rarely the central topic at a party (unless you somehow find yourself at one of those types of parties). And yet the world’s largest provider of those services, Cisco, has one of the most exciting founding stories, completely deserving a movie like The Social Network to tell it.
On the one hand, it’s a “college-dropout-startup” story, only this time, it was the professors who came up with the genius idea, not the students. Len Bosack and Sandy Lerner, both in charge of computer facilities at Stanford University, had discovered a way to make two computers talk to each other. To drop out, however, as we’ll see in just a bit, was not their willing choice.
On the other hand, it’s a classic “Bonnie-and-Clyde” story. Bosack and Lerner, husband and wife, were managing computer facilities in the University’s two separate departments. Creating the router was, then, a pragmatic necessity—the couple needed a way to stay in touch throughout the workdays. The only problem was that the router used the University’s technology extensively (some sources say it was a replica of Stanford University’s “Blue Box” router, the invention of which Lerner took part in), so when the two decided to patent their device and put it up on the market, the University opposed and forced them to resign.
Eventually, the two parties came to an agreement: Stanford University agreed to give Cisco a license to use and sell routers with the updated technology for a fee of $169,300. To put things in perspective, that amount of money could buy 0.00003% of the company at its highest point in price stock.
Rapid Expansion and Market Domination
In the ‘80s, digital technology was still a dark forest for many, including venture capitalists, who always like to sniff out the next big thing. In the pre-internet-bubble times, nobody was looking for the “next big thing” in the tech sector. It was probably the reason why it took the couple more than 80 meetings with venture capitalists before they landed their first $2.5 million investment.
By 1990, however, the company went public at a market cap of $224 million, a number few could imagine for a dorm room tech startup at the time. The company continued to accelerate, and by the peak of the internet bubble, it was documented as the most valuable company in the world for a time period.
What led Cisco to this massive success? Well, for one, it would be simply ignorant to disregard the timing (and the fact that it all took place in San Francisco.) While the company was straightening out its inner issues, the market was slowly maturing to become as computer-and-internet-dependent as it is today. When John Morgridge became CEO in 1988, he told Forbes that the founders of Cisco “had no clue about sales,” and were “basically selling to their peer group, through word of mouth.” By the time Cisco was all grown up and trained for corporate success, the market was hungry for more.
But it also would be a blunt mistake not to give credit to smart management. Cisco’s founding couple got a lot of things right, and without those decisions, the company would have never survived the uber-competitive tech climate of the early 2000s.
Their first products used custom-tailored software engineering that could easily adapt to rapidly changing technology, which meant they could ship out the same software year after year—talk about cost efficiency! Once the internet wave hit, Cisco was also one of the first to jump onto the bandwagon, effectively creating a monopoly in the router market. Perhaps it was a mix of circumstances that sprung up the idea of Cisco, but it was the consistently smart decision making that made the company into what it is today.
Cisco: the Authority Point for All Things Network-Related
Today, Cisco is the world’s largest company in network technology for businesses of all types and sizes. Throughout the years, the company has learned the unique needs and common security gaps for most different companies. For service providers, Cisco tackles massive traffic challenges and offers solutions such as accelerated 5G network services.
Cisco’s story is both inspiring and educational, and we’re proud to have them as our corporate partners. What do you think about their way to the top? Anything that resonates with your own entrepreneurial journey? If you want to learn how you can use I.T. to escalate your business growth, get in touch with us—we want to hear about and help with your challenges and goals. You can do so by calling us at 844-44-JMARK, sending an email to [email protected], or just getting in touch through the Contact Us page of this website