Posted by Tom Foremski - March 7, 2005
It’s 11am and a sunny day but I'm in a small windowless room in Cisco building 10, with Dan Scheinman, head of acquisitions.
Interestingly, Dan is also head of Cisco’s corporate PR, a rare combination of executive responsibilities.
Dan is in a good mood, tells me he loves blogs, especially Wonkette. "When you find somebody that shares your sense of humor, it’s a rare thing," he says.
He talks about Cisco's M&A strategy in the post bubble years:
-The downturn reset everything, there was no longer any need to rush, Cisco could go back to basics and take its time making acquisitions.
-In the late stages of the bubble, there was a lot of pressure to make acquisitions because of the risk that a company would IPO and get a huge valuation and that would increase Cisco's acquisition costs in the future. Cisco learned to slowdown, to wait and have discipline. The trick is to find companies at the right inflection point in their business when customers are beginning to vote with their money.
- He admits that he hasn’t picked all winners so far, out of the 15 acquisitions he has made. But new businesses are ahead of plan and produced $1.3bn in annual revenues versus a forecast of $1.2bn. He thinks Cisco might need to move a bit faster in making acquisitions this year.
[Most recent announced acquisition was end of Jan 2005: Wireless switch start-up Airespace in a stock deal worth about $450 million-CNET News.com]
I ask Dan about the fabled meetings Cisco has with VCs, where it tells them its roadmap and they run off to build startup companies that Cisco might buy.
-That was largely a myth he says, Cisco should talk to VCs more often because it does not do enough of that. Figuring out the next big thing is tough because it always comes from unexpected directions.
I put in my two cents that blogging is likely part of the next wave of killer technologies, and that these are media technologies. They are going through the classic phases that mark a "next big thing"--ridicule, then a grudging acceptance, then considered blindingly obvious.
-Dan says that there is no doubt that blogging is part of a trend in which the media sector is entering a golden age, in which the consumer is becoming highly empowered. Moving large video files and music files around is going to make the media sector a key driver of network equipment sales. And the digital home with its media systems and broadband connections is going to be very important. But control of the digital rights management technology (DRM) is an unresolved issue and the DRM has to be based on an open industry standard.
What else is hot, I ask?
- Wireless in the enterprise will be very big, there is very low penetration so far in that market, he says. Cisco is prepping a “signed” email product to reduce spam.
Is there enough innovation in Silicon Valley?
-The VCs are not investing as much as they used to in early stage funding, he says, but the effect of that on innovation has not yet shown up. Overall, Silicon Valley’s aura has diminished and the parade has moved on. There is a lot of innovation in Bangalore and China.
I say that I would bet that engineers in Bangalore would rather be here than there, because Silicon Valley continues to have tremendous allure globally. I point out that Las Vegas didn’t go away when Indian Casinos sprouted up across the US--it became the premium brand.
Dan says he is a local boy, he grew up in Burlingame, and he loves the excitement of being in Silicon Valley and the excitement people have in building something new. The key is to think big he advises.
Or at least big enough so that Cisco can buy you, I think to myself later.
Tomorrow: Find out more about [email protected], Dan’s efforts to overhaul traditional corporate communications. The Cisco news operation gets more readers than most US business and computer trade publications.
From Dan's bio:
- Daniel Scheinman, Senior Vice President of Corporate Development leads the merger and acquisition, venture investment, strategic alliance, technology incubation and corporate public relations organizations within Cisco.
- Prior to assuming the role of Senior Vice President of Corporate Development in 2001, Dan was the general counsel
at Cisco. Dan’s talents were recognized by The National Law Journal where he was named one of the 100 most influential lawyers in the U.S.
- Dan holds a Juris Doctorate degree from Duke University Law School and a political science degree from Brandeis