Chasing Cisco

Cisco was growing rapidly, providing networking equipment to speed the new digital freeway. To me, networking seemed dull. Yes, it was great for sending data back and forth, and there were lots of business uses for that. But it was just bits in the stream — techie flow control. When my boss and I both got dumped from a printer manufacturer in Berkeley, he told me as we walked to our cars, “Jim, Cisco’s hiring!” Cisco: I always thought of a food distribution service when I heard that name, though of a different spelling. Bits and cables: no thanks.

Cisco’s booming success was making me think twice, especially on those occasions of frustration with the pace of Japanese business. They had a sizable M&A group — Mergers & Acquisitions — and were actively buying companies to build out their technology. Or maybe just to cover their bets. John Chambers, CEO, was giving investors solid performance year after year.

With this similarity of investment focus and our distribution relationship in Japan, in June of ‘96 I decided to give Cisco a ring. After leaving messages with the VP, I got a call back from Chase Bailey. We chatted on the phone to introduce ourselves.

Born in Kansas, Chase had lived in the San Francisco area until he founded Efficient Networks six years earlier and moved to Texas. We talked about Steamboat Springs, where he had a ski place and where I’d worked after college. Of more current relevance, he’d been to Japan many times and had friends there.

“I’ve founded five companies. The VC behind Efficient wanted to place a CEO; I was tired of being an entrepreneur. It’s exhausting!”

“I believe that,” I concurred. “How long ago did you join Cisco?”

“I’ve been here one month.” We talked a bit about ATM networking and set up a time to meet at the end of summer.

In August, I took Noriyuki with me to meet Chase at Cisco’s headquarters. We passed by his cubicle as he picked up a folio on our way to the conference room. The cube seemed incongruous with his stature. I couldn’t tell if this were his own inclination for simplicity after the rigors of heading a company, or Cisco’s culture.

We started with ZeitNet. “So why did Cisco invest in ZeitNet for ATM networking, yet hold stakes in Ethernet companies?” I asked.

“I talked with Amit Shaw about merging the company with Efficient, but our Board of Directors didn’t like the idea. Maybe Cabletron bought it for the expanded distribution channel. As for tech, Cabletron has never been leading edge. Most of their out-front stuff has been sourced from other companies. Cabletron is not a leader.”

“Cisco’s a leader, yet you outsource or acquire technology.”

“Cisco doesn’t really care much about ZeitNet. We want independence from network interface card manufacturers. As to protocols, we want to provide for any and all.”

“A full bag of treats for every customer,” I quipped.

“Sure. That’s why we like Andy. I knew him before he founded SUN. We’ll do a lot with Gigabit Ethernet. But if you only focus on the technology and not the customer, you’ll miss out. Besides, the technology is always changing. I like looking five years out. I’m basically a VC for Cisco. Now I’m looking into cable modems, ADSL, HDSL — all kinds of protocols. But these won’t be enough in five years. Our customers, and the new generation kids, will all want it to feel like you’re right there at a PC — no waiting, no hesitation.”

After we’d covered more networking ground, I let Ichihashi-san give Chase a quick review of Itochu and CTC. In closing, I asked him if he still went back to Steamboat to ski. “Actually, my idea is to move up to Tahoe in a few years. Lots of places to ski there!”

“Hey, you’re stealing my dream!” I said. “Hopefully, we’ll both get there.” As we adjourned and headed out, I concluded that Chase had a much better shot at seeing that dream come true. But who knew? Maybe we’d both make it up to paradise.