December 16, 2003 3:42 PM PST

Cisco's brain drain continues

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Cisco Systems has lost another entrepreneur to the start-up world.

Andreas Bechtolsheim, father of Cisco's gigabit Ethernet products, left the company on Tuesday after seven years. Bechtolsheim wasn't available for comment, but according to reports in The Wall Street Journal he has gone to work for a start-up he helped found called Kealia, based in Palo Alto, Calif.

"This has been a very difficult decision for me because Cisco is such a great environment to work in," he said in a statement provided by Cisco. "I've really enjoyed working with a great team at Cisco for the last seven years."

Even with the economic downturn in full swing, many top executives have left the company for start-ups in the last couple of years. Don Listwin went to Openwave Systems. So did Kevin Kennedy, before going on to become CEO of JDS Uniphase. Carl Russo helped start Calix. Bill Nuti went to Symbol Technologies.

"These people are ambitious," said Paul Sagawa, an equities analyst with Sanford Bernstein. "But I think Cisco still has a deep bench."

Bechtolsheim is somewhat of a serial entrepreneur, known for big ideas that often generate big bucks. Back in 1982, he co-founded Sun Microsystems. He left that company in 1995 and founded Granite Systems, a gigabit Ethernet switch start-up. Cisco bought the company for $200 million a year later.

Bechtolsheim, whose most recent title was vice president and general manager of the gigabit-switching business unit, has been in charge of Cisco's enterprise switching business since the Granite acquisition. Technology he developed while at Granite has become the cornerstone of the Cisco Catalyst switch family.

Most recently his group developed 10 gigabit-per-second Ethernet technology for the Catalyst 6500. This technology is being used in high-end server farms to shunt traffic between servers. It's also being used by academic institutions developing supercomputing technology.

Little is known about Kealia. The only information given on the company's Web site is its address in Palo Alto, Calif. The company was incorporated in 2001, according to public documents filed in California. David Cheriton, who co-founded Granite with Bechtolsheim, is listed as the chief executive officer of the new company.

Cheriton's involvement could be a clue as to what the company is developing. He is a computer science professor at Stanford University and leads the Distributed Systems Group. His research includes areas of high-performance distributed systems and high-speed computer communication with a particular interest in protocol design. This technology could be used to develop servers that distribute streaming content such as video across the Internet.

Another key piece of evidence that supports the streaming video theory is that Bechtolsheim has filed at least six trademark applications with the U.S. Patent and Trademark Office to protect words that have "stream" or "net" in them.

Cisco officials said the company has not made any investment in Kealia.

Some wonder if Cisco has been waiting for Kealia to get further along in its product development cycle before investing in it. According to Silicon Valley sources, Bechtolsheim has had a rocky history delivering technology on time. After the Granite acquisition, it took Cisco almost two years to ship its gigabit Ethernet switch, which was based on the Granite technology. Sources say the company spent more money than it had expected trying to get the chipsets to work. Since then, however, the Catalyst switch family has become the cash cow of Cisco's stackable switching line.

"Based on their past history with Bechtolsheim, I'm sure they would be more careful about investing in one of his companies," says Michael Howard, an analyst with Infonetics Research.

 

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