Cisco has broken new ground with its new venture capital (VC) firm, Decibel. The entirely independent VC is a blend of a startup’s entrepreneurial spirit and the wisdom and resource of a major tech company like Cisco. Decibel will focus exclusively on early stage investmentss across the enterprise and B2B landscape. To learn more about fostering the future of innovation, we spoke with Cisco’s VP of Corporate Development and Cisco Investments Rob Salvagno and Decibel Founding Partner Jon Sakoda.
Can you tell us what Decibel is and how it operates?
Jon: Decibel is a new venture capital firm, and this is the first time a major tech company has started a VC firm from scratch as an independent entity to focus on accelerating enterprise innovations. Decibel will execute its own investment strategy, fund operations, and portfolio management, all while still having unique access as a highly collaborative and aligned partner to Cisco. Starting a firm this way lets you take a blank sheet of paper and imagine what the entrepreneur of the future might want. We took the best of both worlds by combining what independent VC firms do and blending it with the best of what Cisco has to offer to start-ups. And there are a lot of unique advantages that a global company like Cisco can bring to start-ups at very early stages.
Rob: What makes Cisco so unique is that we’ve always embraced a multifaceted approach to innovation – our foundational R&D capabilities combined with our ability to partner, invest and acquire. When we think about that tool kit, we know it has to constantly evolve, because the market is constantly evolving. So even though Cisco has been one of the most active corporate venture investors for a long time, we knew there was more we could do – in this case at the very initial stages of an entrepreneur’s journey. We felt the best way to capitalize on this was to find a way to marry the best of early stage investing with the capabilities that has driven Cisco’s success.
What is the differentiator for Decibel?
Jon: Historically, venture firms have started out very small. Usually they begin with just a handful of people and even the largest ones don’t have more than 100 total employees. As you might imagine when you start from scratch, capital is just one small piece of the puzzle. What’s really important is the advice and the access of incredible mentors and wisdom that come from companies, as well as resources that startups need to succeed. You need access to people that really understand technology, people who understand markets, and customers. It’s hard for small groups of people to access that wisdom everywhere in the world and to replicate the amount of resources that Cisco has created over the course of many decades. Being able to marry the agility and the long-term orientation that independent VC firms have with all of the resources and history of a company like Cisco, has never been done before.
Rob: What’s unique here is that it is about pulling together the best of both worlds. The venture industry has perfected the art of how to invest today based on how you believe things may evolve many years down the road. VCs are great at providing coaching and guidance to their founders and start-ups that pull from the collective experience gained from investing in many different companies and situations. Now, if you look at a successful technology company such as Cisco, we have built a business that has scaled into the billions through our own development, sales and channels, customers and acquisitions. With that, we have a tremendous amount of resources to bear. So we see this as an opportunity to bring the best of the investing world together with the best of what only Cisco can provide.
What are the focus areas of investment?
Jon: When Rob and Chuck Robbins and I started to talk, I think we imagined Cisco and where our customers might be ten years from now. And when you think about that mandate, it’s relatively broad. Cisco unlocks innovation from everywhere around the world. Almost every company today is investing in some sort of disruptive innovation. We want to invest in companies that are helping our customers use innovation as a weapon in the game to transform their respective industries. Cisco has an amazing portfolio of products and investments that are already making an impact for them. I think together what we are trying to do is imagine what the future of every industry will look like and work with entrepreneurs to build the companies that will be relevant to all of our customers over the course of ten years.
When we look at every industry that is going through digital transformation today, you could not have imagined how companies like Uber would have an impact on the transportation industry 10 years ago. You could not have imagined how companies like Airbnb would have an impact on the hospitality industry 10 years ago. I think all of our customers are going through some form of digital transformation themselves to capitalize on all of the innovative technology available to businesses and consumers. I don’t think there is a bigger investment opportunity for startups or for VCs and Cisco than helping them go through this digital transformation.
What is your vision for Decibel?
Rob: I think we have the opportunity to create something for entrepreneurs and Cisco that’s never been done before. For entrepreneurs, it is about raising the bar on what they should expect from their investors – a best in class, early stage focus coupled with the ability to pull on an unprecedented set of resources – from founders to customers. For Cisco, it is about opening up another channel into the entrepreneurial ecosystem that provides a unique lens into what the future holds across the trends, technologies and markets we care about.
Jon: The VC industry is relatively young, it’s only a few decades old, and it’s going through its own transformation. We are unlocking the potential of great companies like Cisco and helping to bring that to entrepreneurs. If we do that successfully, ten years from now companies will view it as a model for how large companies like Cisco should be partnering with the startup community.