“It was a chaotic, unproductive group of design centers.”
“They didn’t have agreement on what the product specifications of the product should be.”
“There was a natural grouping of datacom versus telecom and my interest was in the telecom side. Vinod is a difficult person to deal with and I had to use all my management skills to manage his involvement in the project, but not in a perfunctory way, though I seem to recall having all the resignations of the Petaluma development team.”
The decision to split Fiberlane into two, driven by the Petaluma team’s protest, was reached by the Fiberlane board, which consisted of Vinod Khosla, Raj Singh, and Don Green at the time. Vinod was the key decision maker on the split since Raj Singh didn’t seem to offer a strong view on organizational details:
“I don’t recall what his opinions were on the organization.”
“History is written by the winners. And I’d say that Vinod was one of the winners. But the Petaluma team did the best. Siara blew away.”
And in characteristic, dry, English humor:
“It’s too bad we weren’t more creative in the names of things; then it wouldn’t be so difficult [to remember them].
“I saw the opportunity as strategic – good engineers working on a product that was parallel to the AFC product. Knowing the [Cerent] engineers, I thought it was a good investment to be made in the hope that either we’d make a lot of money or build a big company.”
“What I was not prepared for was the deep check that Cisco wrote for Cerent. And when I looked at it from an acquisition by AFC, it wasn’t going to happen, or the price would be so ridiculously high that AFC would not be a player in the game. It turns out that when all the dust settled, AFC had about $1B left on its balance sheet because of the value of the Cisco stock that they hadn’t sold [in 2003]. I retired at that point.”
“We took it. We did not quibble. It was such an unbelievably high price that going back and trying to get a few more million would have put at risk the offer they made.”
“The merger took place with a stock transfer.”
“Cisco was very good at acquiring companies and letting them complete their product development. They would buy into a market they weren’t currently in.” And the optical transport market, after the signing of the Telecommunications Act of 1996 by President Bill Clinton, was superheated.
Cisco’s primary motivation, Don noted, was to grow into new markets. The company used its “high-priced” shares  to do just that. Cisco saw optical transport as one of the markets to grow into and they decided to do it with Cerent and Monterey, augmented with a few other subsequent acquisitions in the optical transport space:
“The motivation of Cisco was simply to grow into other markets it wasn’t already in, and go build an operation through acquisitions of promising small companies and use their high-priced shares as a useful tool to make that happen.”
Don Green’s perspective of how Carl Russo was inserted into the management mix:
“Well, what really happened is that Vinod and Mike didn’t get along. He resisted Vinod to the point where Mike had to go. He participated in the beginning with Carl Russo, in the management [of Cerent], and then he slowly faded away. I don’t remember the terms in which he left. They were not publicized. But these things happen with startups. Mostly, startups fail because of management interfaces.”
“The S-1 was written and we put a haste to everything with a big offer coming towards you and you’re trying to go public at the same time. It collapsed things in time. So, Cisco probably felt they needed the technology. I’d be guessing what they think [on their motivation], but there’s a nice juicy plum sitting there to be eaten by the IPO process or should we grab it because we can move faster than the lawyers and the bankers can move, and they put it into their marketing plan for the products. I don’t think there was any peculiar things, it just happened faster.” Indeed, Cisco’s multi-billion dollar offer for privately-held Cerent put the upstart startup’s IPO process on the backburner.
On who to sell to, and why to sell to a certain customer category, was a process shaped, early on, by Mike Hatfield, Don told me. The Independent Telephone Companies were more accessible, more available, and more receptive to the deployment of new technology, such as the Cerent 454, than large, incumbent service providers. These smaller, predominantly rural telephone companies were the initial targets in 1998. These Tier 3 and Tier 2 telcos were simply more flexible than the Bell companies:
“The bigger the company the harder it is to convince them to buy new technology. We started with the small companies because they were more readily accessible and more available to get them to buy new equipment. And they’re not so rigid in their specifications.
“I’ve always been open to people that say, ‘I’m leaving to start up something,’ and I assume that they’re not going to steal your design. And if you encourage people to feel that they can lead and start up a company, you may see a better part of them.”
“Time gives you the advantage of knocking the peaks and valleys off events and the people don’t stick up or down and you forget their contributions. We had a team of people that held together very well in each of the entities I was involved in.”
On the regulatory environment in the United States:
“I think the telephone business as it was, is a high ethics business, but they had a framework around them that was basically unfair. The franchise telephone service is an area that held back the U.S. telecommunications market for quite a number of years.”
Cerent’s two founders were masterful at using emerging technologies to develop a better mousetrap. Don knew this and put his faith in Ajaib Bhadare and Mike Hatfield:
“Taking advantage of a known marketplace and applying new technology to it . . . There is a place in your product to use [new technology].”
On what kept Don going during the tough times of his long and distinguished career, and how he maintained his focus to achieve success:
“It must be my personality. I’m not a very moody person. The ups and downs have less of an effect on me. The area of success I had is getting the most out of people. Giving people a sense of success. Recognizing that people like Mike Hatfield and Ajaib Bhadare, for that matter, have a personality that is not too dissimilar to mine.”
“I’ve always believed in helping people solve the problems and not try to solve them for them. It’s a management technique that a lot of good managers have to deal with in today’s reality. It’s not the end of the world if a customer is mad at you.”
Don mentored many people throughout his career, yet he had no mentor. In dealing with his team:
“It’s part of my makeup. I speak quite slowly which gives people the chance to break in, which is actually a good thing. Monopolizing the conversation is not a way to be successful so the pauses allow people to get their point across.”
On John Webley’s Turin Networks, which ultimately pivoted to compete with Cerent after the telecom meltdown circa 2001:
“I didn’t look at the architectures produced by Cerent and Turin as being competitive, but they probably were.”
“Turin was meant to be a more flexible system than the Cerent system and the backplane was the key to that. It was a circular backplane with every service provided from a variety of different junctions.”
When I brought up the sale of AFC to Tellabs by John Schofield during the interview, Don became animated (and I daresay, pissed off, in his own quiet manner, of course) when recounting how John sold out Don’s beloved AFC to Tellabs:
“John annoyed the hell out of me. I left him a company that was profitable, well run, and had a billion dollars cash flow and he went and sold the company to Tellabs.”
On anecdotes and funny stories in the workplace:
“Humor to me is peculiar in the sense that if it’s used in the right way it can make things better and if used the wrong way it can be harmful to the thought you had. But I always felt that when addressing a large group of people, if you can find a little bit of humor and connect it to the subject that you’re talking about, and I’m not talking about telling jokes, [you can effectively get your point across].”
“Humor makes people relax and you can slide it into the conversation or be anecdotal and tell a story.”
On producing the Cerent story, I wrote:
“I thought, who would want to hear the story of a startup, and then I realized that a lot of people are curious. How come this person or these people, found a way through this maze of technology and money, and ended up with a house on the top of the hill?”
It was then that Don’s eureka moment arrived, and he decided in mid-2013, to write his memoirs.
On building the Music Hall in Sonoma County:
“One experience I had was getting the music hall built. It took 15 years and started off with $11 million and ended up costing $125 million. And to raise that money from the community allowed me to meet with every person that had some money over the 15 years and ended up with a world-class music hall.”
That was quite a legacy itself. And Don and Maureen have built on the philanthropic legacy of Charles and Jean Schultz, well-known around Sonoma County and the North Bay. For example, the Don and Maureen Green Music Center features the Schroeder Hall, named for one of the characters in the beloved Peanuts comic strip.
Don added, “Well, it was almost finished and we were struggling to get the last 5 or 6 million dollars, when one of the robber-bankers came along and contributed $20 million to finish it off. He . . . pause, tears flowed . . . came along, at the end, and pushed enough money to finish it off, so I should be grateful to him for that.”
“But suddenly, I had moved into a world of bankers where they have a different attitude to money. They made me thankful for the career that I had in the telephone business. And that’s a whole other story.”
Indeed, and that story, among many other moments in his life, is found in his wonderful biography, Defining Moments – A Memoir.
 Cisco’s stock price peaked in March 2000 at just over $80 per share and in nine months it lost more than half its value to around $39 per share. The stock took another 100 percent hit in less than three months, reaching a further low of just over $20 per share. Between March and September 2001, another halving of the stock price took place, with shares settling to a low under $12 share. Today (mid-November 2016), Cisco’s share price is bumping into a $32 per share ceiling, still not reaching the $39 level it fell through at the end of 2000, more than a decade-and-a-half later.