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Mario Mazzola's parting email message to Cisco

"While leaving Cisco is difficult, it is hopeful to note that Luca, Prem, Soni and I have been involved in the funding and fostering of a fourth mode of innovation for Cisco, 'ALPHA,' or internal startups. These are projects funded by and within Cisco that provide the opportunity for engineering teams to attract new ideas and talent from both outside and inside the company."

Tallahassee, Florida:   Fri, 6/17/16 - 11:11pm    View comments

For the past 23 years, I have been privileged to be intimately involved in the growth and evolution of Cisco - from one of the original routing companies to one of the key pillars of the IT industry, with revenues of over $49 Billion. Beginning with the acquisition of Crescendo Communications in 1993 under John Chambers' leadership, I have had the opportunity to lead world class engineering and marketing teams that have shaped Cisco. I would like to thank John and all of the teams including engineering, sales, IT, manufacturing, services, business development, human resources, marketing and finance.

Crescendo was the first acquisition Cisco made. The manner in which we managed the integration of our team of 40+ engineers into Cisco set the framework for the long and successful strategy of acquisitions to fuel the growth of Cisco profits and revenues. John felt that a better together approach combining Cisco Routing and Crescendo Switching was best for both companies and most importantly the customers. History has shown just how correct John was - following Crescendo, the subsequent acquisitions of Kalpana, Grand Junction and Granite formed the basis for the full Catalyst family of products that made Cisco a more complete networking company. Products such as the Catalyst 6000 family, which alone has generated +$10's of Billions in revenue for Cisco, provided the foundation for both internal development and continued acquisitions which allowed Cisco the freedom to expand into new market opportunities. It is without a doubt that all of our efforts would have come to nothing if were not for the support of Randy Pond. During and after the acquisition, along with the Cisco sales force and services teams, we were able to understand and adapt to the changing market and technologies being introduced. 'Cisco Fusion' was the first but not the last time that our efforts in engineering new products was complemented by a talented and energetic marketing, sales and services teams, and I personally thank all of them.

I have been fortunate to have had the support of many great engineers during my time at Cisco, but have been especially privileged to have maintained close ties to a number of them from my early days at David Systems - Prem Jain and Luca Cafiero, in addition to Tazio De Nicolo and Tom Edsall. Prem, Luca and Soni Jiandani have been intimately involved in the entry of Cisco into new markets and been responsible for the associated growth in revenue for the company. During the first decade of my tenure, I was fortunate to lead the Enterprise Line of Business and subsequently served as Chief Development Officer for Cisco. We drove the integration of Selsius Systems (VoIP) and Aerospace Wireless acquisitions amongst many others into the fabric of networking as Cisco transitioned beyond its core route and switch business and set the foundation for becoming the provider of end to end IT infrastructure. Acquisitions are not the only path to growth. As Prem showed during his leadership of the core routing business during this time, new ideas and Innovation developed organically within Cisco such as Tag Switching that became the foundation for the transition of Service Provider business to both IP and MPLS which served as important catalysts for growth. In addition to championing MPLS as a technology, Prem was key in the delivery of the CRS, ISR and 7600 routing platforms. It was also during this period that Luca and others made Cisco a leading innovator in switching ASICs, PoE, high-speed Optics which formed the foundation of much of Cisco's core competitive differentiation and resulting revenue.

One of the great joys of any engineer is when they are given the chance to solve a problem in a new way - come up with a creative and different approach altogether. When John asked what other paths there could be to continue Cisco's innovation and growth, especially into new adjacent markets, we had the opportunity to introduce a new, more directed acquisition model - the spin-in. We entered the Data Center market with the first spin-in, Andiamo Systems, which became the MDS SAN product line. The creative model of the spin-in demonstrated that by tying specific execution timelines, revenue and profitability targets to engineers' compensation, a new market could be opened for the company with minimal financial risk to Cisco.

The first spin-in, Andiamo, was entirely funded by Cisco. The executive team of Prem, Luca, Soni and I remained in our Cisco roles and were not included in this new compensation model. Only the engineering teams lead by Buck Gee, Tom Edsall, Tazio De Nicolo and Umesh Mahajan participated directly in the Andiamo spin-in. I would like to thank Luca and Soni along with the DC Sales teams who were responsible for the go-to-market success of MDS. The results saw Cisco quickly gaining 50% market share in SAN Modular market by signing new deals with companies such as EMC, NetApp, IBM, Hitachi and HP. This is another technology and business transition that has resulted in sustained revenue for Cisco over the last decade. In addition to revenue resulting from MDS - a direct result of the Andiamo spin-in - was the SAN-OS software platform which formed the foundation for the NX-OS software used by Cisco across its Data Center switching portfolio.

It was after 12 years acting in various capacities with Cisco, including 4 years as the CDO, that I became involved with the second of the Cisco spin-ins, Nuova Systems. Nuova started not as a directed spin-in, but initially as an independent company with myself along with Prem, Luca, and Soni as some of the primary investors in the summer of 2005. The decision to leave Cisco and start a new venture at that time was, as it is now, difficult but often the opportunity to build something new - to be responsible for completing a difficult project is appealing to the engineer in all of us. Roughly a year after we had started Nuova, in summer of 2006, John Chambers approached the team and asked if Cisco could act as the primary and exclusive source of additional funding for the project. Subsequently, Nuova became the second Cisco spin-in providing a disruptive entry into the multi-billion-dollar server market, with UCS reaching +40% market share in blade server business in the Americas, along with Nexus 2K and 5K. To date, all have produced over $10's of Billions of revenue and a growing base for Cisco.

I would also like to take the opportunity to thank the team involved in our latest project, Insieme Networks. Insieme, similar to Nuova, started with seed funding from the founding team including myself, Prem and Luca. Once the project showed merit, Cisco asked to act as the primary and exclusive source of additional funding. Insieme was a further evolution of the spin-in model, and we are proud of the contributions the INSBU team has made to Cisco both in terms of new products - ACI and Nexus 3000/9000 - all of which are already contributing over $2 Billion annual run rate, with revenue growing 100% YoY. Cisco has been a leader in DC Switching as a result of these innovations and maintains 62-66% market share over the last 6 consecutive quarters in this high growth market. More significant contribution can be attributed to the approaches fostered by the INSBU engineering team including new agile ASIC and software development methods, reducing the time for delivery of new ASIC and software functions from years to months. This has allowed Cisco to leap ahead of the merchant silicon market and the switch vendors leveraging merchant silicon both in terms of cost as well as capabilities.

Reflecting back on the impact of the spin-in model, I see it as highly successful. To date, $10's of Billions of revenue over the years has resulted from a relatively modest investment in acquisition costs for the combined Andiamo, Nuova and Insieme spin-ins. Out of the very successful acquisitions Cisco has done in the past, these three spin-ins have ranked amongst the top in the industry resulting in some of the best risk/reward ratios in the business. Not only have they proven to be successful - having met and exceeded revenue/margin expectations- but led to expansion into new large addressable markets. They have done so in a manner which mitigated the risks to Cisco. Unlike many acquisitions, they explicitly tied the earn-out to specific revenue and margin targets. After the new product families proved they were making a sustained impact on Cisco revenue and increased Cisco's footprint along with relevance in the adjacent DC marketplace, the teams involved were then compensated directly related to the revenues and margins generated. The continued revenue potential of the products resulting from these projects, Nexus 2/5/6K, Nexus 9K, UCS, ACI and MDS, all have shown that when managed well, the spin-in model complements the internal development and classical acquisition approaches Cisco has taken.

Sustained revenue, high margins and entry into new markets have been the most obvious external results of these spin-in efforts. But possibly the most important impact has been the introduction of new ideas and new engineering talent into Cisco. While leaving Cisco is difficult, it is hopeful to note that Luca, Prem, Soni and I have been involved in the funding and fostering of a fourth mode of innovation for Cisco, 'ALPHA,' or internal startups. These are projects funded by and within Cisco that provide the opportunity for engineering teams to attract new ideas and talent from both outside and inside the company. Noiro Networks was initiated to develop open source contributions to OVS and OpenStack projects. Others developments such as the Tetration Analytics Platform being launched this week are a result of the ALPHA innovation funding model we have put in place within the INSBU organization. There are other ALPHA projects in development as well. I believe this new approach to innovation and revenue growth will prove as useful to Cisco as acquisitions, internal innovation, and spin-ins have proven to be.

My involvement in the growth and development of Cisco, a company that I have been associated with for these last 23 years, has always allowed me to feel that I was able to foster the commitment and desire of the teams I have worked with to execute and deliver innovation, profits and revenue. Through the different approaches we have taken to drive the business whether it was via acquisition, internal development, spin-in or most recently through ALPHA projects the desire has always been to take responsibility for and execute against a plan for the betterment of Cisco, its customers and shareholders.

Cisco will always remain a strong player in the IT industry impacting numerous transitions going forward. We wish everyone at Cisco an even brighter future. My partnership and friendships with all of you across Cisco engineering, sales, manufacturing, services, business development, human resources, marketing, IT and finance, along with the numerous gifted individuals I have had the privilege to work with has allowed me to achieve goals and results for Cisco far in excess of anything I could have imagined when I first joined 23 years ago. I wish to thank you all.

My sincere best wishes to all of you at Cisco as it looks forward to taking its next steps towards improved growth and impact on the industry.

Warmest Regards



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