How a startup that Cisco bought six years ago is totally shaking up the $208 billion company’s status quo


meraki cisco san francisco office tour 18
Cisco Meraki General Manager Todd Nightingale thinks his division’s independent culture is vital to its success within the larger organization.
Katie Canales/Business Insider


SAN FRANCISCO — Walking around the halls of Meraki’s Mission Bay office on a Friday afternoon, you’d be hard-pressed to guess you’re on a Cisco campus.

The sales floor is simultaneously bustling and empty. Everyone’s gotten up from their desks to crowd around a small golden retriever — the newest office puppy to join a floor that’s already littered with dog beds and water bowls.

For the second time in a short while, somebody strikes a large gong. It’s the fifty-first week of Cisco’s fiscal year, and one of the sales people just closed a very large deal, valued at over $20,000. It’s the kind of deal that could qualify them for an all expenses paid tropical getaway reserved exclusively for the top sellers.

“I assure you, every startup in week 51 is doing this the same way,” said Todd Nightingale, senior vice president and general manager at Cisco Meraki. Nightingale went to MIT with Meraki co-founders Sanjit Biswas, John Bicket and Hans Robertson, but only joined the company in 2012 — four months before the acquisition.

The atmosphere is more like you’d find at a younger, hungrier company — not Cisco, a 33-year-old networking tech giant that’s valued at $209 billion on the open markets. And yet, Meraki is, indeed, a subsidiary of Cisco.

International flags hang around the sales floor at Meraki to highlight different regions of focus.
Katie Canales/Business Insider

Cisco acquired Meraki, an enterprise networking company, in 2012 for $1.2 billion in an effort to “offer more software-centric solutions to simplify network management,” as it explained at the time, and to build devices that embrace the smartphone revolution.

Six years into the acquisition, Meraki accounts for just 1,590 of Cisco’s 72,000 employees around the globe. The division has around 250,000 unique customers and more than 3.5 million devices online. But its influence is outsized within Cisco, as the 33-year-old, $208 billion company attempts to adapt to the changing landscape in Silicon Valley.

CEO Chuck Robbins has said himself that there’s an joke inside the corporation about moving things toward the Meraki model, where they sell services as an ongoing subscription, not a one-time purchase.

“We couldn’t decide if we needed to ‘Merakify’ the core, or ‘Merakitize’ the core,” Robbins told an audience of executives in February.

To Nightingale, that boils down to one key tenet: “The religion of Cisco is there is no technology religion,” he said. “I guess my religion is ‘it could be simpler.’ It could always be simpler for our customers.”

Meraki is designed to be simple

A display case shows off old versions of Meraki’s networking technology, collected since its founding in 2006.
Katie Canales/Business Insider

Meraki started off selling wireless networking systems, and has since expanded its product line to include other networked devices like security cameras and, for a brief period in 2016, desk phones.

Its products are designed to be plug-and-play, with simple hardware and an easy to understand software interface that mean a small-to-midsized company can set up a wireless network without a trained IT person.

Meraki’s product line includes wireless networking boxes, like the one pictured above, and software to manage the network. Meraki also sells other devices like security cameras.
Meraki

Meraki also uses a cloud/subscription model that’s hard to find elsewhere at Cisco. Cisco is the industry standard for complex but robust industrial and enterprise grade networking. Historically, it’s relied on the old enterprise tech model of expensive hardware sold with software licensing fees, and what critics describe as vendor lock-in.

Cisco doesn’t breakout specifics on Meraki in its financial disclosures, but the company’s Infrastructures Platform unit, which includes Meraki, was up 2% year-over-year in its fiscal Q3 2018. Among the reasons cited by Cisco in a quarterly filing is “solid revenue growth from wireless products driven by Meraki.”

Meraki wants its employees to spend time together

A central feature of Meraki’s office is a large rec room where employees can play video games and shoot pool.
Katie Canales/Business Insider

Cisco has largely left Meraki to its own devices, leaving it to keep doing what’s clearly working for it.

Andrew Lerner, research vice president at Gartner, said that conversations with the company’s customers indicated that “Meraki behaves mostly autonomously inside of Cisco.”

“We believe Cisco has purposely made this decision to preserve what makes Meraki attractive and different in the first place to customers,” Lerner said.

Meraki’s autonomy is most clear when it comes to the corporate culture.

At Meraki HQ, located in the remote but developing Mission Bay neighborhood, employees play video games in a large break room, which sports a pool table and built in book shelves that give it the look and feel of a finished suburban basement. Others take refuge in the instrument-adorned music room or the naturally lit, design-forward cafeteria space where Meraki serves free lunch.

“I used to get asked all the time, ‘how come Cisco lets you keep your culture? You were able to freeze your culture and not change it.’ And I was like, man, freezing your culture is a disaster. They gave us the freedom to continue to grow our culture. And we worked hard to make sure that happened through the acquisition,” Nightingale said.

The campus was designed, Nightingale said, so that employees can socialize with one another and interact with people outside of their immediate teams.

“This sounds so Silicon Valley-esque, but I believe strongly in this idea of Radical Candor and that if you build relationships with people then you’ll be able to get the feedback you need from them,” Nightingale said, referencing Kim Scott’s 2017 leadership book— copies of which are stacked high across his desk to pass out to inquiring visitors.

“We’re pretty transparent with everyone at Meraki that we want people to invest in their relationships with those who they work with, and that it is time well-spent.”

The office also features a large, naturally-lit cafeteria.
Katie Canales/Business Insider

This philosophy also extends to how Meraki expands regionally. Nightingale is fundamentally against having office space dedicated to one team or another — everybody on every team needs to be near each other, he says.

Even its customer service employees are based in San Francisco, so they can eat lunch with engineers and product designers and have a sense of what’s going on outside of answering calls all day. But also, Nightingale said, it gives them the chance to move up in the organization, which means employees as well as customers get a “complete” Meraki experience.

It’s also important to Meraki that employees don’t get siloed in their understanding of the business. Every Meraki employee, from customer service to public relations, learns how to give a Meraki product demo in their first few days at the company.

“You should watch our general counsel give a killer Meraki demo. It is awesome, and it’s shockingly helpful in her job when she’s negotiating contracts with other lawyers who don’t really know what’s going on,” Nightingale said.

There are also perks to being part of a $208 billion company

Cisco’s branding is present but minimal at the Mission Bay office.
Katie Canales/Business Insider

Meraki’s acquisition could have gone differently. Cisco is an aggressive acquirer, and acquired 11 different companies the year that it bought Meraki. In some cases, those acquisitions haven’t gone so well.

But if Nightingale feels at all constrained by being a part of the Cisco corporate empire, he gives no indication.

“I think we were some combination of lucky and clever. I’ve been through an acquisition of a small tech company into a large one in the past, and I saw it go that way where a loss of autonomy and a loss of culture leads to a loss of core technologists and innovation,” Nightingale said.

But Meraki embraced other aspects of its corporate parent. For instance, Meraki is now integrated with Cisco’s ordering system, so customers can buy equipment and services from both companies from one place.

Meraki has also updated its technology with hardware and software from Cisco. Cisco makes secure processors for its products, for example, which Meraki now uses in its own hardware.

“It’s amazing technology, it’s been built in house at Cisco,” Nightingale said. “It solves an enormous and very complicated problem for us and really lets us grow that much faster.”

Plus, it helps that Cisco has deep pockets.

“In a lot of ways there is more pressure to succeed as a startup,” Nightingale said. “We want to make sure we’re always returning as much value to the business as possible, but being part of a place like Cisco whose entire corporate philosophy is designed around innovation gives you a lot of leeway.”



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