Cisco has just released an employee memo announcing its investment of $100 million in a new “spin-in” company called Insiemi, and advanced networking startup, which might eventually be purchased for an additional $750 million. The New York Times defines a spin-in as a company designed to be bought by its parent company, in this case Cisco. Insieme was created by Cisco employees Mario Mazzola, Prem Jain, and Luca Cafiero, who had already created two other spin-ins in the past. Spin-ins have the potential to be disruptive to the lead company as a whole, as “employee of the month” types can make millions off of them, while the rest of the staff makes nothing.
In the memo, entitled “S.D.N.: Evolving the Network as a Platform,” Cisco said:
Insieme’s product development efforts are complementary to that of Cisco’s current and planned internal investments. 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 regarding software-defined networking, or S.D.N., which is tied to cheap deployment of large cloud computing systems. The memo adds:
The network is no longer a cost center; it is central to revenue generation and strategy execution. S.D.N. promises to make the network more agile, scalable, and cost-effective – Cisco is operating from established positions of strength, which include the scale of its operating systems, superior ASICS, unique embedded intelligence, experienced engineering expertise, and an expansive installed base – most of which has no interest in completely replacing what it has already invested in so heavily.
While some employees will likely disagree with Cisco’s shift in operating process, David McCulloch, Cisco’s director of corporate communications, broadly states, “Seventy percent of the world’s networks are Cisco, it makes sense that when customers talk about how to program them they’d talk to Cisco – Our strategy has always been we will build, we will buy, and we will partner.”