Tsaos Recommit to Cisco, Expect More Growth for Linksys

Victor Tsao doesn’t have to work for Cisco Systems Inc. anymore. But he’s going to.

It’s been nearly two years since the cofounder of Linksys, an Irvine maker of consumer networking gear, sold out to Cisco for $500 million.

The deal made him and his wife Janie, also a cofounder, two of Orange County’s richest people. Victor Tsao still heads the unit, running it with the energy of an entrepreneur.

He declined to talk about the specifics of his employment pact with Cisco. But Tsao said he does plan to stay on for at least two more years.

From the sound of it, Tsao could be there longer.

“I’ll be here for a while,” Tsao said. “We have a lot we want to do.”

Tsao’s recommitment wasn’t a given, particularly in the tech industry. Founders often bolt after their contractual obligations are up.

But not Tsao. The promised “synergy” from Cisco’s buy of Linksys seems to have panned out in his view.

Talk to Tsao for five minutes and he uses the word “brand” at least 10 different times.

“Linksys is a brand,” Tsao said.

He praises Cisco for letting the unit stay independent and grow its brand, which Linksys had been doing prior to the buy.

That doesn’t mean that joining Cisco has been seamless.

“If I were to give it a grade, I would give it an A-,” Tsao said.

Why the minus?

“There’s no perfect marriage,” Tsao said. “While overall it’s been positive, we really have had to learn to work with each other. We really do see synergy, but this is a totally different side of the market.”

Cisco is better known among corporate technology managers than consumers. Its routers are a staple of data rooms across Corporate America.

That means Linksys had to school Cisco in the fickle buying patterns of consumers and show how different it is to deal with stores versus a corporate buyer.

In Cisco’s world, face time with the chief information officer is what makes the difference. In Linksys’ world, shelf space at the local Best Buy is the holy grail.

Did Cisco understand this when it acquired Linksys? Tsao laughs.

“Well, a very small community did,” Tsao said. “We’re in the consumer channel. They know the model, but execution is key. The Cisco organization was built through serving high-end customers, not to satisfy consumer needs. But the senior team understands this and they delegate this to us.”

Cisco has given enough authority to the Tsaos that they’ve been promoted to senior vice presidents, one step up from the vice president titles they held following the acquisition.

The Tsaos report to Chief Executive John Chambers.

“We didn’t really expect it,” Tsao said. “But the title is recognition of the business unit. Even though it’s a smaller division, it has the ability to really grow.”

Linksys has long made a name for itself since the late 1980s, when the company was founded.

Linksys had a simple goal during the early years: find a way to link more than one computer to a printer.

Tsao, who was working in middle management at Irvine-based Taco Bell Corp.’s local information technology unit, was inspired by the “linking printers” idea after talking with a friend from his native Taiwan.

His buddy had built a device that linked a computer to a printer via telephone wire instead of the bulky cables that commonly were used.

Linksys was started with money from the Tsaos’ own pockets. Its first product was called MultiShare, which linked printers with relative ease.

Almost overnight, Linksys was making 8,000 routers a month.

Linksys’ early success drew the attention of small computer products sellers. But big retailers such as Best Buy wouldn’t give Linksys the time of day.

Interest for the routers grew so hot that major distributors such as Santa Ana’s Ingram Micro Inc. and El Segundo’s Merisel Inc. heard about the company from their customers. Where a computer products maker usually has to go to a distributor, they called on Linksys.

The company eventually developed routing products for computers and then wireless routers that are all the rage in homes today.

Tsao said he’s learned a thing or two about being part of a public company.

“For the first six months it was difficult,” Tsao said. “It’s been a good learning experience going from a privately held company where you can say anything you want to being at a public company. We have to conform to Sarbanes-Oxley, conform to certain standards of accounting and finance.”

But in the end, Tsao said it’s been worth it. Today the company has about $1 billion in yearly sales, according to a Business Journal estimate.

“We want to grow Linksys into a multibillion dollar organization,” Tsao said.