Cisco Systems: How Two Clever College Kids Built a Silicon Valley Legend

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  • Silicon Valley is full of legendary startup tales of people with little more than an idea, beating the odds by successfully building world-beating businesses within years. Not many come with the romantic twist of Cisco, though – the networking major (66,000 employees and $100 billion in assets today) was built by a young, married couple – Leonard Bosack and Sandra Lerner, both employees of Stanford University at the time that they formed their business.

    The early years – mired in controversy

    Formed in 1984, Cisco Systems was named after the city of San FranCisco. While Cisco’s company legend chooses to paint the company’s startup days in the heroic tones of a struggling husband-and-wife founding team setting their company up with a revolutionary new router design, the truth may have been a bit less wholesome.

    Even when Cisco’s founders had the company up and running in 1984, they are said to have continued their employment at Stanford, spending their time working on a copy of the Blue Box router that Stanford pioneered. The controversy involved both the software and the hardware that made up the router. Cisco’s first multi-protocol router was reportedly a close copy of Sanford’s own Blue Box. The software that it ran on was a slightly modified version of pioneering router software code that came from a research engineer at the university. It was this software that Cisco’s staff are said to have later converted into the company’s famed Internetwork Operating System or IOS (the company licenses use of the brand nameiOS to Apple for use with its mobile products).

    When Stanford’s management learned of the unauthorized use of its software, it reportedly forced Bosack to resign from his post at the university and even threatened criminal proceedings against him for plagiarizing its hardware and software designs and its ideas. A year later, though, Stanford and Bosack found a way to work their differences out. Stanford decided to license several pieces of its hardware and software design to Cisco.

    More drama followed. Shortly after the company went public in 1990, the company’s board, led by a venture capitalist that the couple brought in, decided to fire Sandra Lerner for reasons of disagreement to do with management style. In a gesture of solidarity, her husband Leonard Bosack voluntarily came out of the company, too. The couple is said to have owned $170 million worth company stocks when they came away. While Cisco didn’t reach its greatest heights while the founding team was with the company, it was the start they gave the company that was in many ways responsible for its success.

    The router that Leonard Bosack and Sandra Lerner designed

    It can be difficult to tell which Silicon Valley legends are the whole truth and which aren’t. Even Stanford’s own website fully credits Leonard Bosack and Sandra Lerner with the development of the first router that allowed formerly incompatible computer networks to talk to one another. Stanford apparently wishes to paint a wholesome face on the entire incident involving its threat to bring criminal charges against the founding couple behind Cisco.

    In reality, major inventions aren’t usually made by one or two people. They are formed bit by bit by entire teams bringing hundreds of great ideas in. They all deserve credit.

    Cisco’s router started at the same Xerox PARC that inspired both the Windows and the Macintosh OS

    While the Xerox Alto computer is said to have inspired Steve Jobs and Bill Gates with its revolutionary mouse-based user interface, it inspired other pioneers in computing with its Ethernet technology. When Stanford’s staff members and research students were allowed a look at the Alto, they were inspired to attempt a system of their own – a system that could allow computer systems around the Stanford campus to communicate with one another. In those days, it was unheard of for computers with different hardware and software builds to be able communicate with one another.

    The attempt ended in success. The result was the Blue Box – the world’s first multi-protocol router that successfully allowed computers on different operating systems to talk to one another. No records seem to exist of the exact identities of all the people who brought their genius to bear on the device. A few names do stand out, though. The main computer hardware on the box was the work of Andy Bechtolsheim (a future founder of Sun Microsystems). Other networking boards were designed by other researchers and staff members. Bozack was a member of that team. The software that ran the hardware was primarily the work of Stanford staff researcher William Yeager.

    Yeager’s Blue Box software established the base of what would become the Internet Protocol of the future – the protocol that would allow every network-connected device from workstations to printers to talk to one another.

    The Blue Box running Yeager’s software was so successful that it was used on Blue Boxes connecting every department of Stanford together. Demand came in from other universities, too. As Stanford attempted to build a more advanced version of the Blue Box, Bosak and another staff member called Lougheed are said to have obtained a copy of Yeager’s software, presumably to debug it and improve it for the Stanford Blue Box evolution project.

    At this time, though, Bosack had reportedly already copied the design of the Blue Box for commercial purposes, without Stanford’s knowledge. Bosack’s Cisco were apparently assembling units in their living room to sell for profit. Bosak and Lougheed’s attempts to improve Yeager’s software were done on Stanford’s time – presumably to further Stanford’s own Blue Box program. In reality, though, they may have been just using their time at Stanford to improve a product that they planned to sell as their own. Working as a Cisco representative, Bosak is said to have even managed to sell several networking boards made at Stanford at the university’s expense to Xerox. Bosak was forced to resign shortly after.

    The situation finds resolution

    Sandra Lerner has said in an interview that she didn’t consider the actions of Cisco in those early years to be unconscionable because they were only trying to bring the technology that Stanford held, to the world.

    At the time, Stanford had two choices – to engage Cisco in a long legal battle or to simply make the best of the situation by asking for compensation. Cisco and Stanford entered a royalty agreement later.

    Things have worked out well for both Cisco and Stanford. Both organizations are very successful. Stanford continues to be one of the world’s best universities and Cisco is one of the world’s most respected names in networking. Its products run the networks in many businesses and homes and thousands of young people heading for careers in networking find Cisco’s certification programs valuable CCNA certification boot camp training classes by Countrywide offer some of the best Cisco training around). 

    The controversial ways reportedly adopted by Cisco’s founders may have made universities less open, though. Universities being places where people freely share ideas, often get mired in problems to do with idea ownership. Just as when Facebook’s Zuckerberg and the Winklevoss brothers publicly feuded over ownership of the Facebook idea, the hijacking of the ideas that built the multi-protocol router may have resulted in a certain amount of academic mistrust in universities. People may now more afraid than before to freely share their ideas.

    Travis Adams loves all things IT. He regularly blogs about the history and innovations of the industry.

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