This Is The Blog Post Everyone Is Passing Around To Explain Why Cisco Just Spent $1.2 Billion

Business Insider

Cisco bought a wifi startup called Meraki for $1.2 billion.

Here's the blog post everyone is passing around to explain how that happened.

It's from Doug Leone, who got his VC firm, Sequoia Capital, to invest in Meraki:

Quick: when was the last time you plugged in an Ethernet cable? If you have trouble answering that question, you’re one of the reasons why Cisco has agreed to acquire Meraki.

Six years ago  Sanjit, John and Hans  saw our Wi-Fi world before many others. Meraki offered smaller wireless ISPs a complete package to roll-out wireless networks without a lot of time, money or expertise. It gave upstart ISPs a way to enter new markets and disrupt existing ones. The benefits were obvious: the ability to scale without wires, low cost of entry, ease of use, and network analysis tools to help operators maximize revenue from their small networks.

I’ll always remember meeting the guys for the first time. We were introduced by Rajeev Motwani, Larry & Sergey’s thesis advisor at Stanford. They were a bunch of MIT PhDs who had built a very proprietary solution as part of their own thesis called RoofNet. They were clearly world-class, super smart and personable. I bought their product to test it out.  It was so easy to use, I set up a wireless network myself in minutes. You just plugged in the box and it worked. That’s all we needed to see. Chris Sacca, who was at Google at the time, was equally enthusiastic. Google bought 1,000 routers and invested as well.

The biggest challenge came early on in deciding where to aim the product. We wasted nearly a year evaluating different markets: entrepreneurial building owners, ad-supported Wi-Fi, retail, SMEs, large corporations, even the developing world. We eventually settled on SME, for product fit and speed of revenues. From there Meraki took off.

It was amazing to watch the founders grow into leaders: Sanjit as CEO, John as CTO, and Hans as VP of Product Management. I’m really proud of the fact that they’re still in those positions today. The three of them built one of the most high performance teams I’ve ever seen. They made very few mistakes. They executed, quickly refined a best of breed product, and expanded into complementary markets.  

The smartest move came in 2009 when we released business-class cloud-based software to control the hardware. This made it dramatically easier for IT to rollout and manage network access,  with a solution that worked especially well for lean-IT  distributed environments like branch offices, hotels, restaurants, retail locations, and schools.

Before Meraki if you got a call at 1am you’d have to go into the office, access a control panel and fix the issue yourself, or even travel to the location of the problem. With the webapp, network admins can log on via their browser and get a centralized view of all their deployments, right down to the device level. And it’s the only multi-tenant offering, which brings the benefits of scale, constant innovation, zero maintenance and low costs. They simplified a complex ecosystem and pioneered networking as a service. Meraki now offers a complete multi-tenant cloud solution with products for WLAN, VPN/firewall security, Ethernet switching, WAN optimization and mobile device management.

As an early business partner to Cisco, it’s exciting for us to see these two transformational companies come together 25 years later.  Cisco’s business execs worked with the founders as true partners and shared an inspiring vision that got us all excited.  Then they moved at lightning speed to get the deal done.  Within four days, we had a handshake agreement with Cisco.  They drove a fair bargain.

Now Cisco gains a new growth driver. Mobile is dramatically reshaping every workplace in the world, and people expect ubiquitous, reliable and accessible wireless from their coffee shop to their hotel room to their office. More than 1 billion  connected  devices will ship in 2012 alone . According to Meraki, last year mobile devices accounted for a majority of devices accessing networks, overtaking PCs for the first time. Of course tablets and smartphones never had an Ethernet port, and now many computers like the MacBook Air don’t either. At the same time, more and more apps are moving to the cloud, consuming more and more bandwidth.

As everything from your tablet to your camera to your TV to your fridge connects wirelessly the trends will only continue.  Om Malik put it best:  we live in a multiple device Wi-Fi world. Change means opportunity. Sanjit, John and Hans and their first-class engineering and product teams in San Francisco will continue to build terrific products for years to come.

As for your Ethernet cable? The holidays are just around the corner. It might make a nice ribbon on the gift for the geek in your family.



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