tech2 News StaffJun 07, 2016 15:55:40 IST
Four Cisco Systems executives are resigning from the company in an apparent disagreement with their roles under a recent reorganisation. Mario Mazzola, Prem Jain, Luca Cafiero and Soni Jiandani are popularly known as the 'MPLS team' thanks to the initials in their first names. They were in charge of forming product-development startups that Cisco would initially fund and later acquire. When the company's new CEO Chuck Robbins took over, the organisational restructuring of the company found them relegated to the role of advisors. A far cry from once being the most trusted team of engineers when John Chambers was the CEO.
According to a Business Insider report, Chambers had poured in billions of dollars into the startups they launched. The team decided to leave the company on 17 June, according to an internal memo posted by Robbins. Cisco also said Soni Jiandani would be the only one to retain the title of senior vice president.
Over the years, Cisco has funded and later purchased MPLS-led startups thrice. The products made by these startups became crucial to Cisco’s business. These “spin-ins,” as they became known, were a favored innovation strategy of Chairman John Chambers, who gave up the CEO title to Robbins last summer. A "spin-in" is when a company chooses to be the sole investor in a particular start up, hence giving the employees at the start up the freedom to develop experimental products.
In addition to bankrolling these startups, Cisco also gave them equipment and office space to assist in their functioning. In turn, Cisco received the right to buy their products at a predetermined price if they met certain financial objectives. What allegedly struck everyone as unfair was that according to former Cisco employees, the MPLS team seemed to receive financial rewards and other benefits that other product developers at the company didn’t, thereby creating a loss in morale of the other team members.
The Wall Street Journal reported that one of their most recent startups, Insieme, received funding worth $135 million from Cisco, which in turn received a stake of about 84 percent of the company’s shares, according to Cisco filings with the Securities and Exchange Commission. Cisco said in November 2013 that it was ready to pay up to $863 million for the remainder of the company.
“I have personally learned so much from them, and they will always be an important part of Cisco’s engineering story,” Robbins said in the memo.
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