An Internet Success Story.

• Author: HOLTZMAN, HENRY

Making the Cisco Connection: The Story Behind the Real Internet Superpower

David Bunnell with Adam Brate

John Wiley & Sons Inc.,

New York, NY

2000; 205 pages; $24.95.

There would probably be no Internet as we know it without Cisco Systems. The company's founders, Leonard Bosack and Sandy Lerner, were at Stanford University during the mid1980s-young computer engineers. They correctly saw that the growth of the Internet was being held back by the inability of different networks to communicate with one another.

They developed an electronic router that corrected this problem.

At its highest up-tick on the stock market, Cisco Systems had a value of more than $300 billion. In the computer industry, only Intel and Microsoft had ever previously reached that impressive milestone.

Author David Bunnell points out that dominating the marketplace for routers was a result of far more than vision and luck. Cisco has competitors, but the competitors lacked an unorthodox approach to achieving fast growth. Using 20/20 hindsight it's clear to us that Cisco's vision and execution was right on target. At the time, however, the approach was controversial, if not somewhat bizarre.

Using a concept called "innovation by acquisition," Cisco bought out even tiny competitor companies who were making innovations in the router field. Traditionalists considered this an expensive way to do R&D.

Cisco made it even more expensive by offering the smaller companies huge amounts of cash and stock. They justified it by getting proven technologies while eliminating possible competitors in the most painless way possible. The companies being acquired never considered their takeovers as hostile when their shareholders (usually owners and employees) received 20 times or more the value of their company.

The second aspect of Cisco System's approach was a fundamental...