Cisco Buys Startup for $1.2M per Employee

You rent some office space from Cisco Systems Inc. (Nasdaq: CSCO). You start a company and hire nine engineers. Eight months later, with no products and no revenue, you sell out to your landlord for $13 million. Another day in Silicon Valley.

That is exactly what M.I. Secure Corp. founders Michael Hearn (CEO) and Igor Plotnikov (VP, engineering) did. Cisco announced the completion of the acquisition in a two-paragraph statement Tuesday.

The $13 million will be divided among the small company’s 11 employees -- all engineers and investors who will now become Cisco employees.

M.I. Secure has spent its short life conducting research on security technology and VPN networks (see Cisco Intros WebVPN Module).

“M.I. Secure has developed advanced features and functionality for security and VPN solutions, and they will be integrated across platforms in multiple technology groups,” Cisco says in an email response to Light Reading (see Infonetics Surveys VPN Users). Cisco declined to release any further details on M.I. Secure’s technology pursuits.

The firm and its intellectual property will be absorbed by Cisco’s Security Technology Group. “The M.I. Secure team possesses an advanced security skill set with an average of 15-plus years of experience within the team, which will prove valuable to future Cisco development efforts,” according to the email.

M.I. Secure had its own board of directors in place at the time of the acquisition, Cisco says, but won’t divulge the identities of its members.

While no current or former employees of Cisco were employees of M.I. Secure, the firm leased office space and resources at Cisco's campus in San Jose. “Due to an immediate need for space and resources, this arrangement made sense,” the Cisco e-spokesperson says. “This isn't an unusual arrangement, as Cisco has considered this in the past.”

Attempts to reach M.I. Secure officials were unsuccessful; San Jose telephone information had no listing for the company.

Cisco says it had no financial stake in the company until March 2005, when it took a minority ownership worth roughly $800,000.

-Mark Sullivan, Reporter, Light Reading

Green_Acres 12/5/2012 | 3:10:49 AM
re: Cisco Buys Startup for $1.2M per Employee Does anyone know if that is Igor Plotnikov of Uroam (aquired by F5 in 2002)?

Back then his focus was SSL VPNs...
topolino 12/5/2012 | 3:10:46 AM
re: Cisco Buys Startup for $1.2M per Employee Here we go again! Is this the beginning of another bubble & another round of irrational exuberance? Will the vulture capitalists be released from their cages to jump on anything optical again?
netorange 12/5/2012 | 3:10:43 AM
re: Cisco Buys Startup for $1.2M per Employee Maybe this is how much Cisco needs to pay in 2005 to get some effective employees. Over here in sales it is like the Night of the Long Knives ever since Microsoft chose Aruba.
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