Newsmaker: Cisco's new acquisition talisman

(continued from previous page)

There are a lot of deals getting done lately by private equity firms. For example, Avaya and Palm just got investments from private equity. How has this changed the M&A environment for Cisco?
Hooper: Just like any market, mergers and acquisitions go through cycles. A couple of years ago, we were the sole buyers of a lot of companies. That gave us a lot of buying power. We could take our time making decisions, and we could dictate the terms more. Today, things have shifted. The IPO market is back, and private equity is transforming things. We absolutely have to operate differently. I think with WebEx we showed our ability to move very quickly on a medium-sized public company. And that's very important.

In the late 1990s almost every start-up was hoping to be acquired by Cisco. Do you think that's still true today?
Hooper: Yes, I'd say a lot of companies still would like to be acquired by us. That means that we know about pretty much everything that is out there now. And we can still say "yes" or "no" to a lot of deals--and we do. Even in an environment like today's, we make sure it works for us.

What have you had to say "no" to recently?
Hooper: Avaya was on the market for a while, and we did not make a high market bid for that company. We don't do acquisitions to consolidate a market, because those acquisitions don't drive growth. A good M&A strategy looks to build the market by extending the technology and business model.

Cisco has changed so much in the past five to 10 years. And now the company is getting into several new markets. Where do you think Cisco will be in another five years?
Hooper: That's a really good question. Change is the constant in this business. If you don't change, whether you're a $5 million a year company or a $36 million company, you will lose market position. Technology is developed in rapid cycles, and it really punishes those who don't change. If you look back, only 19 percent of the Fortune 500 companies in 1965 are on that list today.

If you don't change, whether you're a $5 million a year company or a $36 million company, you will lose market position.

I think where we will see a lot of change and where we will evolve is in the consumerization of technology. We'll help bring applications that consumers are using at home to the small- and medium-sized businesses and large enterprises. We'll also enable our service provider customers to provide those technologies to their customers. And we'll work with customers in ways we haven't before to address new business models.

You came to Cisco through an acquisition. And several other key executives have as well, such as Charlie Giancarlo. What is it about Cisco that entices smart, entrepreneurs to stay at the company?
Hooper: That's right, I was part of the Lightspeed acquisition in 1998. I always joke that I am nine and a half years into my two-year commitment with Cisco. Actually, Cisco counts the time served at the company that was acquired, so I've been here over 10 years. I got a nice gift, too.

Yeah? What did you get?
Hooper: A Bose noise-canceling headset. They're great for when I have to fly coach. You know we're pretty frugal around here when it comes to travel. But to answer your question seriously, it wasn't the headset that kept me here. It's really the opportunity and ability to do things that have never been done before.

Like you said, Cisco looks different today than it did in 1998 when I came to the company. Initially, I was working on voice over IP for the service provider business. And since then, I've had the opportunity to get into M&A and private equity. I've spent some time in China and India. Now I get to sit around a table with other smart people and look for market changes. I think the people who stay are the ones who embrace change for the company.

People who have held your job in the past have all had great success. Mike Volpi oversaw the M&A heyday with 75 acquisitions. He's now CEO of a start-up, Joost. And Dan Scheinman, the last guy who had this position, did the Linksys and Scientific Atlanta deals. Now he's running a brand-new division for Cisco. What would you like your legacy to be?
Hooper: It might be a little soon to talk about legacies. But we are in a dynamic time in the market. It's a high-growth stage of the economic cycle. There are massive technology and business model changes occurring. And I'm looking for ways to take advantage of those changes to help Cisco achieve the high end of our target, which is 15 percent growth yearly. And my hope is to continue this growth as the company gets increasingly larger.  

More Newsmakers

[CiannaT]

MauroNewMedia has posted a new article on Pulse>UX titled: "Why Cisco flipped over the Flip Video Cam (and paid $590 million for a small dose of simplicity)". Ever wonder how much simplicity costs? This post digs into Cisco's acquisition of the Flip Video Cam (a paragon of simplicity) and why buying simplicity does not work for corporations with complex IT products. If you ever wondered if your company is actually capable of creating simple user experiences, check out our list of key factors that are correlated with creating simple products on a corporate-wide basis.

Read the full article: http://www.mauronewmedia.com/blog/