Why Cisco’s Jeetu Patel thinks product strategy should drive acquisitions

Since its earliest days, Cisco has been known as an acquisitive company. Jeetu Patel, president and chief product officer, joined the company six years ago and he wanted to move the company from being reactive when deciding which companies to buy to being much more strategic and aligned with his own personal build versus buy philosophy.

Under Patel's leadership, the company has been involved in approximately 28 acquisitions with the $28 billion Splunk buy being by far the largest. Patel joined me on the FastForward on PPN podcast recently and talked about how he decides when to buy a company and how that differs from when he came on board.

It all starts with a product-driven approach, and that needs to be clearly defined first. "The reason I don't like having a strategy which says what is your acquisition strategy, is that I don't have an acquisition strategy. I have a product strategy,” Patel told FastForward on PPN.

When he came on board in 2020, he felt the company was operating more like a holding company, buying companies when they missed a trend or it was too hard to build. He wanted to get away from that approach. "We would just miss market transitions and we would then pay the premium and buy stuff," he said. "And that never sat well with me because deep down in my heart, I'm a product guy and I want to build great products that people love that they can talk to their friends and family about."

He decided to change the focus of acquisitions and he described a three-principle approach. "So one of the things that we decided to do very early on when I came was that our strategy is not going to be about acquisitions. Our strategy is about making sure that we define a true north that we want to get to for our customers," he said.

Next, he was going to focus on adoption, which he believes is a good proxy for value. "It's not a guarantor of value, but if you don't have adoption, you don't have value," he said. And finally, he believes in interoperability (even if Cisco as a company wants to be central to your technology approach).

"And number three is having an open ecosystem so you can integrate with everyone else in the world. Don't be arrogant about thinking a closed ecosystem is going to work.”

He says with those three principles in mind, he can then look at whether an acquisition can accelerate their strategy, and if it can, he's more than willing to "deploy our balance sheet." 

So far this year, the company has announced the intent to acquire three companies involving AI observability, non-human identity/credential security and identity lifecycle security. Cisco did not reveal the financial terms of any of these deals, suggesting that they fall within the smaller deals that Patel seems to favor, and plug into Splunk's data and observability platform, while also filling a need and bringing in talent.

But he's clear that acquisitions should always be a means to an end, not an end unto itself. "The strategy in and of itself should not be an acquisition strategy. The strategy should be what is your product strategy and an acquisition may or may not fit in.”

Editor's Note: Some of the quotes have been lightly edited for clarity.