Cisco Sinks $100M in Insieme

Money Sign

Cisco has made a $100 million investment in Insieme, a networking startup launched by three Cisco employees. Cisco also retained an option to buy the company for $750 million, according to a memo obtained by the New York Times.

Insieme was founded by Mario Mazzola, Luca Cafiero, and Prem Jain, three Cisco employees, as a “spin-in” company designed to be purchased by its father company. Spin-in companies are created by a company’s employees to create disruptive technologies quickly, but risk damaging company morale as they allow selected employees to make a lot of money with very little risk as other employees are left in the cold, as the New York Times pointed out.

“Insieme’s product development efforts are complementary to that of Cisco’s current and planned internal investments,” states the memo obtained by the New York Times. “Insieme and other internal programs will be components of Cisco’s broader programmability framework. These types of investments have strongly benefitted Cisco in the past, and we will continue to look for similar ways to complement our internal development capabilities.”
Insieme will likely boost Cisco’s portfolio in SDN, software-defined networking, a rapidly expanding sphere as the business world transitions to the cloud.

“The network is no longer a cost center; it is central to revenue generation and strategy execution,” the memo says, adding that S.D.N. “promises to make the network more agile, scalable, and cost-effective.”