In 1981 Sandy Lerner and Leonard Bosack developed devices called “bridges” which allowed different networks the ability to communicate with one another. After their discovery was rejected by Stanford University the two hired friends and used credit cards to fund operations in a house they shared with Bosack’s parents. After 5 years of development they sold their first Cisco product which was a router they had assembled in their kitchen. With only word of mouth advertising and profits nearing $250,000 a month they sought out investors. The only interested investor Sequoia Capital invested $2.5 million dollars. For this investment amount Sequoia received one-third of Cisco’s stock and gained management authority over their company. Due to the new corporate atmosphere Lerner and Bosack both left the company in 1990 for $170 million dollars. While Lerner made it her mission to create a culture at Cisco that went well beyond traditional notions of customer support, she consolidated all functions that directly touched the customer into “Customer Advocacy”. Despite her departure this legacy lived on at Cisco.
During the dotcom boom, Cisco’s market value grew from around $9 billion to a peak of $555 billion. This growth was the result of an aggressive acquisition strategy in which Cisco acquired 73 companies from 1993 to 2001. The principle behind the strategy was to develop new product ideas through partnerships, acquisitions, and external investments rather than completely rely on in house R&D (Gulati, 2009). In 1997 Cisco created three decentralized lines of business: Service Provider, Enterprise, and Commercial. This was done in the attempt to meet the customer service needs of different types of customers without compromise (Gulati, 2009). A key component of Cisco’s business strategy was a commitment to intimate relationships with their customers.