Legendary Entrepreneur and Author Judy Estrin (Part 5)

SM: What did you do after NCD?

JE: We took six months off thinking we would not start anything again. Then six months later we started Precept, which was video streaming software. That was before video streaming was popular.

We had a wonderful product but it was dependent on multicast. Cisco talked about multicast in all of their whitepapers as if it was deployed, but it was not deployed. That meant we had a product that was dependent on an infrastructure that was not deployed yet. That made our growth a little slower.

Another thing that was happening was the Internet bubble was starting. It became all about marketing. To be honest, I hated the bubble. When form overcomes substance I get out of the way. In 1998 the CTO of Cisco wanted to leave, but could not until he found a replacement. He came to me and offered to buy Precept, and then I would go be the CTO.

I did not necessarily want to be CTO but I knew the company was in a fragile state due to the market, and the infrastructure was not there. This was the right exit strategy, so I sold the company for $82million. We had $1 million in revenue. From the time Cisco bought us stock went up five times afterwards. They ended up using the technology. They have products that use Precept technology now, and some of the people who went over from Precept are still there. In the end it was a beneficial acquisition for them. I did that for two years.

SM: Cisco was already quite large. What was it like to be inside Cisco?

JE: I was on the board of big companies prior. I went on the board of FedEx in 1989, and in 1995 I went on the board of Sun. When I was at Cisco it grew from 18,000 to 36,000. The first year I was CTO and the second year I was CTO plus I ran all centralized software, which accounted for 4,000 people. It was a fascinating experience but not something I wanted to do forever. I had committed to do it for two years, and after two years I knew it was not what I wanted to be doing.

It is different being in someone else’s culture rather than being in a company whose culture you built. You can create a culture that you embrace and believe in when you start a company. There is nothing wrong with Cisco’s culture, and it works for Cisco, but it is not the type of culture that I felt I could thrive in. The fact that it was at the peak of the bubble aggravated it because everything was about time to market and not about technology and investment in innovation.

SM: Cisco’s innovation strategy has always been acquisitions.

JE: M&A reported to me, I just had different views on what should be done internally versus externally. It was a fascinating experience. I think I gave the company a lot and gained a lot as well. I am not sorry I did it. It made me realize the passion I have for building companies. I am an entrepreneur.

SM: What did you do after Cisco?

JE: I started a company called Packet Design in 2000. I was very concerned about innovation and how short term everything was after the bubble. Our idea was to look further out and do more research, including things that could fail. We would then have a portfolio of technologies and spin companies out that made sense.

SM: Was it an incubator model?

JE: It was a technology incubator and we were very focused on the networking market. By the time we were ready to license or spin out anything the networking market was gone. We wanted to spin out companies to be acquired, but the market dynamics had completely changed. Of the three companies, one is a healthy private company called Packet Design Inc. One had phenomenal technology assets but never got off the ground and was shut down by the VCs who lost patience; that was Precision I/O. That was a humbling experience for me. The other one has been refinanced and changed its name, and I don’t have anything to do with it. The first time the VCs did a crush down round I said, “OK, you guys can do this but I am off the board”.

This segment is part 5 in the series : Legendary Entrepreneur and Author Judy Estrin
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