Ford Brook returned three days later, brimming with confidence and wearing a charming smile. He likely believed that with Sequoia Capital's backing, this financing negotiation would be a resounding success!
"Reach out and don't hit the smiley person"—let him enjoy his moment of glee.
Still, the reality remained; the bullet would eventually fly, and pain would come.
Henry and Bosak welcomed Ford Brook into the conference room. First, they poured him a cup of coffee, then engaged in light banter about various topics, deliberately steering clear of financing discussions. Anyone who rushed into negotiations would only find themselves at a disadvantage.
However, Ford Brook was not someone to take lightly. He was exceptionally patient and had a way with words.
Ultimately, Henry found himself speechless.
A seasoned negotiator, Ford Brook hadn't lost the battle yet, but he was pushing it! After all, Bosak was a high-tech expert, somewhat less skilled in the nuances of negotiation. Despite Henry's earlier cautions, Ford Brook's persistent arguments eventually swayed Bosak.
Henry decided to be direct. "Financing is fine," he stated plainly, "but if it mirrors the last proposal, then we won't proceed!"
With a smile, Ford Brook replied, "Don't worry; our terms this time will definitely satisfy you!"
He then produced another proposal, similar to the previous one, but with adjustments to the financing amount and equity percentage.
This time, Sequoia Capital was offering $40 million in exchange for 33.3% of Cisco's shares! For the average person, this might seem like a generous offer. However, Henry was no ordinary individual; he was a time traveler, clearly aware of just how successful Cisco would be in the future. Such an offer wasn't tempting enough.
The Posacks were elated, excitedly discussing the substantial difference from the last offer. However, their excitement mattered little; Cisco's financing hinged on Henry's approval as the controlling shareholder.
Ford Brook, meanwhile, sat confidently sipping his coffee!
"To be honest, Cisco isn't in need of money," Henry stated flatly. "If we were dealing with a different venture capital firm, we might not even entertain this. What I truly value are the various resources within Sequoia Capital, not just capital. Therefore, we cannot agree to sell you such a large share!"
Ford Brook was taken aback, gazing at Henry in surprise. The young boy's face held a surprising maturity, and his bright eyes sparkled with intelligence. Reacting to Henry's words, Ford Brook straightened up, now even more determined and optimistic about Cisco's future!
Investing is both an art and a science. When investing in a company, the preeminent factors are the people and the team. Within the same tech sector, why do investors show a keen interest in Apple? It's due to the leadership of Steve Jobs and the outstanding Apple team! Only a capable leader and a strong team possess the potential for innovation, ensuring profitability for investors!
Without a doubt, Ford Brook saw Henry as a qualified leader.
"Then, how many shares are you willing to sell?" Ford Brook asked with newfound sincerity. He had resolved to secure Cisco shares!
After considering it thoughtfully, Henry responded, "I can agree to sell up to 10% initially, with a promise of first financing rights for the next round!"
Ford Brook quickly agreed, "That sounds acceptable!"
"Well, then let's discuss how much Sequoia Capital is willing to invest to obtain that 10% stake!" Henry inquired.
"Ten million dollars!" Ford Brook proclaimed confidently.
Henry shook his head. "Ten million would only secure you 5%."
"Impossible! Cisco isn't valued that high right now!" Ford Brook exclaimed.
"While it's true Cisco isn't worth that much now, its potential is limitless. Since the establishment of the National Science Foundation Network, Cisco's performance has been on the rise. In half a year, it could very well multiply in value. I believe you understand that the value will only grow," Henry explained lazily, taking a sip of coffee. "If you prefer not to invest now, we can reconvene in six months. But be aware, the price may rise!"
Upon hearing this, Ford Brook's smile faltered, and uncertainty clouded his expression.
Time was not on his side. The internet age was rapidly evolving, and no one knew what Cisco might transform into in six months. If Henry were to raise the price then, would Sequoia Capital be willing to invest?
Caught in a quandary, Ford Brook hesitated for a moment, sitting in silence as he contemplated the situation while Henry and Bosak waited quietly.
Suddenly, Ford Brook looked up, declaring, "I need to make a call!"
"Go ahead," Henry responded.
While Ford Brook stepped away, Henry exchanged a glance with Bosak, signaling that they had the advantage. Bosak, who admired Henry's acumen, had no idea that Henry was merely a shadow of the real Zhuge Liang—a leading strategist known for his brilliance. Henry was merely learning the ropes!
After finishing his call, Ford Brook returned, a bittersweet smile on his face. The glimmer of joy mingled with his earlier anxiety told Henry everything he needed to know: Sequoia Capital had agreed to his terms. Ford Brook approached Henry and extended his hand. "You're a tough negotiator, kid! Alright, our company agrees to invest $20 million in exchange for 10% of Cisco's shares. However, you must grant us the first rights to financing in the future!"
"Deal! Ha ha, here's to a fruitful partnership!" Henry replied, a wide smile forming as they shook hands.
"Happy cooperation!" Ford Brook echoed.
Sequoia Capital investing $20 million for only 10% of Cisco's shares was indeed a bold move. Yet, given the market monopoly Cisco was establishing, the investment was sensible. Sequoia Capital understood the importance of securing high-potential companies, especially given Microsoft's recent IPO and soaring stock prices. Cisco was now firmly in their sights.
The seismic shifts taking place in the computer sector made such investments worthwhile. It was clear to Sequoia Capital that as computing technology proliferated, the role of networking would become even more vital, making Cisco indispensable. Not seizing the opportunity to invest in a pivotal company would starkly contrast their ethos as savvy investors.
Three days later, Cisco and Sequoia Capital finalized their investment agreement. Cisco's account soon swelled with an additional $20 million. Consequently, the share distributions changed: Henry held 67.5%, the Posacks owned 22.5%, and Sequoia Capital acquired 10%.
In line with their strategy of discreet operations, the specifics of this agreement were kept under wraps from the press. Following the investment, Cisco, already a monopolistic player in the market, immediately began a series of collaborative efforts with Sequoia Capital.
First off, Sequoia's wealth of corporate management experience greatly aided in enhancing Cisco's internal management. They also assisted in recruiting top talent from larger companies. One standout, who surprised Henry, was John Chambers. In Henry's past life, John Chambers had successfully transformed Cisco into a corporate giant, earning recognition from "Business Week" as one of the world's top corporate leaders within just three years.
John Chambers boasted multiple degrees: a Bachelor in Business Management, a Bachelor of Laws, and an MBA in Finance and Management. His previous roles included executive positions at IBM and Wang Labs.
Henry found it impossible not to appoint Chambers as Senior Executive Officer of Global Operations, entrusting him with key company decisions. Had Bosak not already been in the CEO position, and had John Chambers just been new to Cisco, Henry might have appointed him to lead outright. Chambers's addition bolstered Henry's confidence in the company's future. As the board chairman, Henry could delegate routine operations, allowing him to concentrate on more strategic concerns. While Bosak was outstanding in technology, he lacked in management proficiency. Thankfully, John Chambers' presence ensured that the operational side was in capable hands. Ultimately, they transitioned Bosak to the role of Chief Technology Officer.
Secondly, Cisco utilized Sequoia Capital's extensive resources and networks to expand aggressively into international markets.
Finally, with ample funding, Cisco boldly ventured into growth mode, ramping up mergers and acquisitions without hesitation!
Henry and his team first secured a 10,000-square-meter site in San Jose to construct a new manufacturing facility and began recruiting and training staff. Subsequently, they relocated the headquarters to a prime office building in downtown San Jose, hiring many technical specialists to enhance and innovate their routers while working on developing second-generation products. This move solidified Cisco's status as a technology leader!
As Cisco aligned with Sequoia Capital, Henry immersed himself in challenges. Crossing time didn't render him infallible; he understood that every change could have a butterfly effect. Therefore, while managing the company, he diligently studied business administration and finance. The environment heavily influences personal growth; as the saying goes, "Near Zhu is red, and near ink is black."
Each day, Henry absorbed knowledge while working alongside a host of brilliant individuals!
With Cisco steadily advancing, media attention began to shift towards the burgeoning company.
"On June 1, 1986, the world's first network comprised of 10,000 routers was born. This network, based on Arpanet, connected numerous renowned American universities, the U.S. Department of Defense, and NASA. More than 40,000 computers operated within this interconnected system!" Arpanet was the precursor to the modern Internet. Since its inception in 1969, the U.S. Department of Defense established connections between major academic institutions.
When the news broke, the industry was left awe-struck!
Forty thousand computers being able to communicate within a network was revolutionary! It was essentially the foundation of a small-scale Internet!
Prominent publications such as the "New York Times," "Los Angeles Times," and "Washington Post" reported on the groundbreaking development, highlighting its epoch-making significance! Consequently, a multitude of companies soon joined this network! Cisco's credibility and growth accelerated dramatically. Meanwhile, the U.S. Congress decided to entrust the National Science Foundation Network to certain American companies to further expedite its development!
Among these powerhouse firms were IBM and MCI, and their involvement would shape the telecommunications landscape! The backbone network functioned as the core, connecting countless computers that needed to join to access online communication. Without integrating with this backbone, data exchange would be virtually impossible!
Cisco aspired to join this network; unfortunately, without adequate resources, it could only seek assistance.