Cisco Systems & Urban Decay: Sandy Lerner (2018)

Okay, so on to today's show. It's from our archives and is truly one of the wildest stories you will ever hear about backend internet technology. In large part because of the person in question, Sandy Lerner, who co-founded Cisco Systems. It's a company that probably helps you do what you do without you even knowing it. But the story is also interesting because Sandy founded the punk aesthetic makeup brand, Urban Decay. and went on to build one of the largest private libraries of Jane Austen books on earth. Yep.

All that and more in this one, we first ran the story in October of twenty eighteen. Enjoy. I had to go get another job besides Cisco. And we had only my income, and we were mortgaged the house to the hilt, which we might have lost at any particular time. And we had creditors up the wazoo and I had people calling me at two in the morning complaining because they didn't have their routers.

Yeah, it was very hand to mouth. In a way that I think that people who want to be entrepreneurs these days Really don't understand. From MPR, it's how I built this.

show about innovators, entrepreneurs, idealists, and the stories behind the movements. they built. I'm Guy Roz, and on today's show, how Sandy Lerner helped launch one of the most successful companies in the world. Why she had to leave it. Now she went on to remake herself again and again.

And again. If you use the internet today, or if you're listening to me right now through your smartphone or a computer, There's a pretty good chance that that information is flowing through a network that was developed by Cisco Systems. Cisco is the largest networking company in the world. Its hardware, servers, routers, and software touch almost every part of the internet. One computer can talk to another computer.

Isn't particularly earth shattering, right? But in the early eighties This was a pretty big challenge, even at Stanford University. If you worked on a computer in, say, the engineering department, it couldn't talk to a computer in another part of the campus. Things that we take for granted like

email or instant messaging or Slack. There was no infrastructure to make these things work on a big scale. But there was an informal group of graduate students at Stanford. That was trying to solve this very problem. And Sandy Lerner happened to be part of that group.

She and another grad student, Len Bozak, founded Cisco Systems. Today, it has a market cap of around 200. billion dollars. But that growth? It happened largely after Sandy and Len left the company. after Sandy was pushed out.

It was pretty devastating at the time, and we'll get to some of that story, but we'll also hear how after all of that, Sandy went on to build another successful and entirely different type of business, a cosmetics company called Urban Decay. And then she reinvented herself yet again by starting an 800-acre sustainable farm in Virginia. Where she now lives. And even Sandy's childhood almost sounds like a fairy tale.

Her mom and dad split up when she was just four years old, and there was so much turmoil in the family that Sandy was sent off to live with one of her aunts. Which sounds like it could have been pretty traumatic. Except her aunt lived in Beverly Hills and made Sandy The center of her life. I thought It was a wonderful thing to go and stay with my aunt.

She was very cool. And she had a very elegant world. We would go to the May Company tea room. And sit in that gorgeous blue dining room, and I didn't think life got any better. So you um Your childhood was spent um

largely in living with his aunt in Beverly Hills. Until I was six, and then there came a day when My aunt's sister said If you come and live with me, I'll give you a pony. Hm. And my other aunt, Beverly Hills, said well, if you live with me, when you're sixteen you can have a car But you know, when you're six you're thinking, My God, I might not even live that long

Maybe there won't be cars, so I took the pony. Wait, they were competing for you to live with them? Did I hit the jackpot or what? So you at age six moved to where? Clipper gap. Higher Sierra foothills up on the North Eastern

Yeah. Of California. Where do they live? Was it a a ranch? Was it a farm? Well it was it started out at hundred and eight acres and uh they were farming pears and my grandpa lived up there also. And uh raising some cattle.

And I just Fell in love with farming. So you um I guess uh when it was time to go to college you

Stayed pretty close, right? Oh, I left home at fifteen and got a job working at the bank for a year and a half before I went to college. So where did you go? Auburn? Six miles down the road. Was it interesting? Did you was did was it just a job? You know my uncle It was a very small town. My uncle went to Kiawanas with a bank manager and you know, I think my uncle was kind of watching out for me and making sure that I had a a safe place to work.

But it was a terrible job. The bank um owner made all of the tellers kneel. So he could check that our skirts were long enough. And he called us all Louise. This is in like nineteen seventy, nineteen seventy one. Nineteen nineteen seventy one, nineteen seventy two. We were all Louise because he knew Louise and she'd been there a while and we didn't really rate our own names. And were you at that time um D were you enraged about that? Did you seethe about that?

You know, it was the first time I'd ever experienced any sort of sexism. I mean, on the farm I was the kid, you know, so you did the boy jobs, you did the girl jobs, you did you know, I loaded the gas trucks, I drove a truck for a summer. Um you know, you just You just got on with it. And it was the first time I hit sexism. Yeah.

completely rattled my world and I needed to get out. I just needed to get out. So I I guess it was around that time that you did decide to go to college, um and you went to I think it was Chico State in in California. What did you what did you study there? My undergraduate degrees are in

International relations with an emphasis on comparative communist theory and a minor in Marxist economics. Wow. Yeah, right. Did you have a sense of what you wanted to do? Oh absolutely. I went through college in two years. Um and I wanted to be I I had it all mapped out, I would have my PhD by the time I was twenty two.

Mm-hmm. Um, I mean obviously your We'll get to this. I mean you're a highly intelligent person, but were you just sort of Did you feel unusual? I mean that's that's very fast. I mean it was it was a lot of work. It was it was a tough two years, but on the other hand, I was so convinced I was never going back to that bank.

Never. Yeah. Never. Ever, ever going back to that bank and having to put up with that. And I ended up getting an absolutely first rate education. So how did you go from studying Marxist e economics and international relations to

Studying computers. Well, I went to Claremont Graduate School because I had a full scholarship. And the first quarter I ended up being an advisor in the computer room. Mm. And

You know, nineteen seventy five I was making twenty five bucks an hour computer programming. And You know, to me it was easy and it was Um Something that's not.

I thought would pave the way to being able to enter the job market in a good place. So you are studying um y you're sort of exposed to computing at Claremont. And then what? What was your next move? At this point I still thought I wanted to be an academic.

Um And so I Picked up my Little self and applied to Stanford and because the political science department they're

needed programmers because of course they were getting to the point where you couldn't publish anything if it didn't have some numbers in it. Um They let me in. Hm. And

I got in and immediately segued into the statistics and computer science department. nineteen seventy five, seventy six stand for like now it's a legendary time, right? I mean it's like we're talking about, you know, the beginnings of the internet and all these the you know, the people influenced by J C R Lick Liter and and Steve Jobs going through Park Xerox and all that that era. That was an amazing time.

You get to Stanford. in late seventies. Is what does a computer look like at that point? Like what were you w working with there? Well I was really lucky at Claremont we had a deck system tan. And uh that's what I learned to program on and I learned a number of the programming languages and did a little bit of of systems programming, but when I got to Stanford they also they had deck ten and deck twenties. Which was great because it's a huge time sharing system that would have two hundred simultaneous users.

And since I'd been running the math and statistical software on the time share and computing at at Claremont, um They had uh the lots volunteers, and so I became a lots volunteer. A lots volunteer. Largely overloaded time sharing system. Got it. Okay. Little orange time sharing system. So just just explain this to me in language that I can understand. When you say you were programming These computers you were taking in raw data and helping them to create statistics from that raw data. That's right. And this was just in this just would come to you intuitively, like you just kind of learned this

Yeah. Absolutely not, I work my butt off. When I was in high school girls didn't get to take fourth year calculus. And when I was in high school girls didn't get to take physics. So I had to learn all that stuff in graduate school. You had to learn how to program a computer. Oh absolutely. What did you love about it? Um Two things. One the money. And two, the independents that it offered was

was hugely attractive to me. You know, not being tied to hours, not being tied to a desk. You know, I've always been kind of an anarchist. And the idea that you could come and go and as long as you got the work done, nobody cared about your day. Yeah. w when you got to Stanford, what was your impression of the place? Was it was it like

Wow, I've finally arrived to this amazing Valhal of technology. No, not technology. Of smart people. Um I wasn't a freak anymore. They were very welcoming and I had great friends that computers The computer science and

And we would have two meals a day together and with who? This group of engineers. All hanging out around computer labs, basically. The the computer system. Absolutely. We hear a lot about the and we know a lot about the gender gap in in the tech world.

We're talking about the late seventies. I mean You must have been like one of one or two or three women around all of these male There were very few. I think I was the only graduate level female, but it was also a very welcoming group and they didn't care really if you were three foot high, green, and stink as long as you

Could As long as you had the technical chops and you kept up. And I could do that. It's a small group of people.

You know, there were probably about eight, ten or twelve of us people would sort of drift in and drift out. But remember we had two meals a day together. We spent the weekends In lots together. I mean I would leave these people at two in the morning. Geeks. Total. One people had written the first spell checker and typed in the entire dictionary themselves. had a triple major at Stanford and a master's degree in four years.

Um And we were all computer addicts in love with this particular architecture. Um we maintained our own internet, we built our own printer inverse interfaces, we built our own computer terminals. It was just one of those times in life where what you

What you gave you got back. How did you meet um Len Bozak? I met Len the first time when he was interviewing Stanford, and I mean that it Stanford was not interviewing Lynn. Len was interviewing Stanley. Go to become a student there. Well, he was thinking about getting a master's degree and he was kicking around thinking he needed something to do. And on that day I remember we went to Chinese food. And remember these guys are all largely overweight and um they're not the people who were picked on the baseball team and we're all sitting around there and these guys are flaming themselves out with hot oil on the Chinese food and they're like all red and they're like perspiring and everything.

And Len sat there and they were all like being very noisy and you know, of questionable hygiene. And Len sat there and his clothes were ironed and his clothes matched and he had this beautiful blond hair and this very soft voice, and he could eat with a knife and fork, and when they would get all done arguing with each other, they would look at Len and he would say, Well, you know, basically essentially what is what is the answer? And Len didn't join in until they invited him, and then he would tell them the answer, and then they would have another topic and argue and argue, and then they would come back and say, Well Llen, what is the answer? Yeah, I was just absolutely enchanted. I had never seen a more perfect human being in my entire life. And

Basically You guys. Became partners. It was very quiet because the dynamics of the group were that You know, you you weren't supposed to have favourites.

That would have been very destructive to kind of the collegial kind of group dynamics there. And so it was really nobody even knew we were seeing each other until we decided that that we wanted to get married. So I'm trying to try to um get a sense of What

some of the problems you were dealing with in at Stanford in the early eighties. Basically Stanford Right, at the cusp of you know, at the sort of the the bleeding edge of the technological revolution Lots of computers all over Stanford, presumably.

But I guess they couldn't communicate with each other? Was that that was a problem? Well it used to be that You either bought DEC computers, you bought IBM, or you bought HP, or you bought data general, or you bought, or you bought whatever. Like a IBM could only communicate with an IBM. No, it wasn't that is true, but the reason was that it was so new

You entered into this unholy alliance with the vendor and they would help you. I see. So some departments had uh IBMs, some had Deck, some had Dell, some had Wang, whatever was around. Well, whatever they felt matched their research or their You know, pedagogical requirements. were a law into themselves, and they

bought what they wanted. Which is typical of universities, right? Everybody wants autonomy. So the five thousand computers Uh probably many more at Stanford today, obviously but but this is the late seventies and these computers could not talk to each other. That's right. And meanwhile, Stanford, I guess, was was actually trying to build its own computer network, right? I mean it w and and that wasn't working so what in in the meantime We built one you were doing a shadow network yourselves. Yeah. Plus plus plus all the people in the in the ARPANET community who were working on parts of this And ARPANET this this precursor to the internet. This w this was the thing funded by the government. Yeah, and that's what ARPA was for. It was it was a network to foster

the interaction and inner sharing of among the different people who were taking taking ARPA money. So so How are you doing this w d was Stanford aware of what you were doing?

Officially? Absolutely not. Mm-hmm. We were definitely under the radar and we kept it under the radar and it wasn't until one day I think it was about t nineteen eighty one. Uh

Time sharing Ethernet. became the Stanford University Network. Wow. Just one day it just You know the

Benediction went in in our direction and then we were the we were the Stanford University Network. So you created a system that would allow these computers to communicate. What today we would I guess call a router. You build a network at Stanford, what was the thing that was motivating you guys? Why did you want to do this for Stanford?

I didn't do it for Stanford. I think there's a lot of misunderstanding about those early ARPA years. We did it because It was the right thing to do. ARPA was giving money, it was all public.

public domain. Nobody had a financial motive. And the thing that ARPA did that was so Amazing even today was the It gave the right people the right money. It wasn't political, it wasn't there wasn't any religion involved in it, it was just this collection of these incredibly smart, dedicated people who made things. And

I was really, really lucky to get to be a part of that. I mean everything that you could do every day and you could hook something new up or you could you know you could get a message someplace or you could you know you could get these milestones and it was I I guess if you're a nerd it was just a tremendous adrenaline rush. So You are in your twenties at this time. And ARPA, this government agency, is

funding all these cool projects that eventually would help To create the internet. Um, you are part of this team that That creates a network. That Stanford then adopts as its

It's protocol and and at that point these five thousand computers Are able to talk to each other. So what at that point w you and Len, were you married at that point? Yeah, we married in nineteen eighty. We both graduated from Stanford, same department, same same platform um in June of nineteen eighty one with master's degrees and Lynn had walked into a job as the head of um computing systems for the Department of Computer Science and I had gotten a job running computers for the business school. So we were looking at

Long, happy Nerdy careers in that environment. But didn't you want to do something with with the routing technology that that you'd worked on? Oh absolutely. But Stanford said, No, you cannot license this technology. They would not entertain

Any any licensing. We had done our part and we had taken the government's money, this is all public domain, we'd invented all of these wonderful things, but the Office of Technology Licensing didn't let anything out. And Stanford was not even letting us sell it to the universities. Are frustrated. Because you believe that this technology needs to get out into the world, that there's

All kinds of We took harbor money. This is United States money. We don't have a right to this stuff. We didn't develop we we did develop it, but we didn't invent it. It was a community of people were very smart and very committed in all of these different places and in Stanford, all of these different departments. There was a huge community at that point, and Stanford was saying Just no. Hm. And you didn't care. You weren't saying, hey, we're gonna take the money for this. No. The the money would go to Stanford or or whatever. We didn't care. You didn't care. We didn't care. You just wanted it to be on the street. Stanford could have taken a hundred percent of it as long as you know they paid the bill for the part. I see. We had good jobs. So was it at that point where you and Len just said

We better start a company and do it ourselves. At that point I believe that Len knew a whole lot more about business than I did, and at some point he looked at me and he says, Well, we're just gonna have to go and build this stuff on our own money because we can't do it. The university won't allow us to do it within the university. So one day I drove up to San Francisco with a five dollar bill and started the company. A five dollar bill for Cost you five dollars at that point to register with the California Secretary of State for a new company. And so you are trying to build a company that just in layman's terms Would help.

um computers communicate. Right. And you called it. Well, that came later. Cisco is actually the Thirty sixth theme.

that we tried to get anything having to do with computers we couldn't have. Because it was a taken by someone else. Yeah. So Cisco as in San Francisco. Yes. And I designed it it was my name and I came up because remember at that point a router's a gateway. So I came up with the little logo of the Golden Gate Bridge. Which is still the logo for Cisco. Absolutely and it was a part of San Fran and Cisco and So we just with tears on her eyes basically said, Well, I guess we've gotta go do this. I had no idea what we were getting into. I mean you had no interest in in leaving your jobs at Stanford at the at that point, leaving this comfortable life, you know, sort of servicing their computers. By this time this was nineteen eighty four and they were starting

to be creeks. I mean I was paid half of what my predecessor made and I was paid I was paid a third of what my successor was paid. Wow. And you know, when the faculty would meet at the beginning of the year to plan the curriculum, even though I was the head of all of the computing facilities. both administrative and the curriculum computing

Uh I went and had lunch with the faculty wives because where they had their annual meeting um didn't allow women. This is in this is in nineteen eighty five Three eighty four. Yeah. So it was it was starting to creak and I was getting a little bit bored and You know, the c the mini comp the microcomputers were starting to come in and I really didn't have a lot of interest in that so I would say that

I was ready for something else, but You know, it's a complete misunderstanding of the times to think that Len and I had huge dollar signs in our eyes and knew that this company was gonna go public and make a bazillion dollars. Okay, so Sandy, but based on whatever, this is a this is really where the story gets a little complicated here. So I'm gonna try and abbreviate

And just say that. During that period you I think you you leave Stanford. And then Len also leaves. And then around the same time, Stanford like looks at what you guys are doing with Cisco and and and they claim that you've stolen their technology, right? And and they threaten to take legal action. Yep. So so how did you deal with that situation? Well, when Len and I left

Well Len when Len left Stanford, a great deal of the engineering team behind the Internet at Stanford left and so Stanford was left with a network it didn't have any ability to run and certainly Nothing to maintain. So within that very fortunate confluence of events, a very serendipitous confluence of events, we actually did have some bargaining power and we ended up paying them, I think, a very fair royalty for the first

Gosh, I wanna say three million dollars a product or something. Very fair royalty. And we had to fix the network for three years. So that's A pretty good deal. You know, it's what it's the deal they should have made to begin with. You know, if they'd have said here, pay us a modest royalty that you can handle from a cat fo point of view and maintain our network, we'd have gone, Okay Hm. And how are you first of all, how are you funding your company I mean to build it. Credit cards. We mortged we mortg mortgaged our home. A friend of mine that used to work for me at Stanford would sit on the

Telephone and tell our vendors that the check was in the mail. How were you even getting customers? You were just just word of mouth. The internet knew. Me and Lynn, the Internet knew about the routers. The Internet was the Internet. Who was part of that wanted what you were Absolutely. By nineteen eighty seven

With no sales force we were booking a quarter million dollars a month. Wow. Who who are who are your customers? Our first customer um was Hewitt Packard Laboratories. Second one was Rutgers University. Third one was Boeing. And By that time the internet community had matured and it was no longer just the bleeding edge that that were ordering these inter networks, which were networks of networks. So it had kind of moved into the keeping up with the Joneses in the sense that if you didn't have an internet It was kind of you were backwards, so the style had changed. And you guys were building these in a in our living room and Lynn's parents. Like soldering irons, like try to figure this out. Absolutely? Well, job started in garage. At least I had a living room.

Alright, heat. W what did the actual when you when I'm trying to imagine you guys soldering and building these Routers. Wha what do they look like? Was it uh was it a giant thing? Was it the size of this room? You know, I would say it was the size of a good size bread box. So it wasn't that much b it was more or less the size of today's routers. Well Today's routers are that size, but you know it was it was the size of a microwave. Yeah.

Well can I ask you a dumb I'm gonna ask you a dumb question, because are you and Len Were programmers. You you're you guys could sit at a terminal and figure out how to create these programs that would then do things. Cisco is a hardware company. That's what I'm qu that's what I wanna know. How did you How did you know how to build the hardware? Is this something that you just kinda figured out? I had nothing to do essentially with the hardware but Len is a sub Superb.

hardware engineer, and that's how Cisco made its money, because of Lynn. And his hardware engineering Lynn also happens to be An unparalleled systems programmer. Lynn's just really good. Were you stressed out about I mean I okay, I g I understand that you were not motivated by money, but you had to m have money. The company had to be sustainable. I had to go get another job besides Cisco. I worked for Slumberger Computing um Computer Systems Laboratory running running their computers. And we had only my income and I didn't have a car and we had seven people that were working um we were mortgaged the house to the hilt, which we might have lost at any particular time.

Um and we had creditors up the wazoo and I had people calling me at two in the morning complaining because they didn't have their router or their terminal server and uh yeah, it was stressful.'Cause you didn't have a factory. You were making each one. We didn't have the money to build the damn things. We were having to buy parts on credit. Wow. We had every credit card maxed out. Kirk Laheed, who was one of the founders, gave us ten thousand dollars, Lynn's parents gave us ten thousand dollars, Robert Michaels loaned us ten thousand dollars, um he worked at HP. Uh H P Labs.

But everybody w all these people wanted to buy them from you. You just could not make them fast enough and you didn't have the money to make them. Think about the university payment cycle. You know Universities by the time they're they're budgeted. Right. Ninety days later.

Yeah. I mean literally We would get the money. We had pretty good margins. I mean, we were we were doing a good business. We would get the money and we would pay off the the two months bills before. Wow. But then if you had an order for another twenty bucks we had We had no we had no collateral, we had already mortgaged the house.

So here here's what I'll get. You guys it's it's just a a few of you main mainly you and Lin at the beginning, trying to build this, you obviously have this thing that a lot of companies are interested in a lot of universities, a lot of people are interested. Why didn't you just go and get some investors to put some money into the company? We went through about seventy or eighty of them. Seventy or eighty. And the problem was that

You know, at this point the investor community, which is a whole bunch of old s you know, fair child semiconductor salesmen. They didn't think that you could make any money on a public protocol because of course everybody would do it. You know, Dechnet was a proprietary protocol. SA was a proprietary protocol. Uh PEP was proprietary protocol. But of course your technology was in the public domain, so they thought, you know, anybody could do this, right? You you you you don't own this. Right. Everybody else was gonna do it. Wh which makes sense. Right. Except that if everybody could do it, why didn't they? So what did when you went to investors and you pitched them on this.

First of all, there was a woman founder. And They're all sixty or seventy. They just didn't know how to relate to a woman in business, you know. And you know, Lennis A great guy, but he's not normal.

Mean well, the two of us are pretty abnormal. I mean, so I was basically a translator a lot of times. You were the f you were the face, you were the front man? Well then. Not a lot of people can have a conversation with Lynn. And were you feeling I don't know, were you feeling dejected or nervous or anxious? Uh I mean you you needed to build these, you didn't have money.

I think that I've never been in a war. But I think that we had all of us who were there, there were probably about ten or twelve of us at that time. Very much had a trench mentality. How are you paying everybody?

Um we could get Enough? Income fast enough to meet payroll. And we had a whole bunch of free labor. Lynn's parents were building cables and my aunts came down and did Xeroxing for us and I was managing the cash flow. But it was very hand mouth. In a way that I think that people who want to be entrepreneurs these days really don't understand. Was it exciting or was it?

No. It was nerve wracking. I if you can imagine being in a world war one trench in the mud being constantly shelled by the by the Germans and the mustard gas and and no food and no relief and no sleep. I it was that exciting. When we come back. How Sandy and Len finally did get their funding for Cisco Systems.

and why they both eventually walked out of the company they built. Stay with us, I'm Guy Raz and you're listening to How I Built This. from NPR. Hey, welcome back to How I Built This from NPR. So by the mid-1980s, Cisco Systems was up and running, and Sandy and Len went through a bunch of different investors trying to get their router company funded. Until finally?

They found the guy they needed. I guess it's at that point where you come across uh a guy who is becomes pretty well known to people who follow the investment uh the V C world, a guy named Don Valentine. You um come across him, and this is a time where you are really desperate for cash. And what is Don Valentine? He's with Sequoia Capital.

What does he say to you? Dawn told us that, well, you know, I've taken two hundred companies public, you walk into his office and you know, like your little cubes back there, he's got like all these loose side cubes, you know, making this kind of Untenable Mountain and he says, you know, you'll be part of the Don Valentine group of companies. He had already launched tons of companies. Including Apple and Intel. Well. So so the guy who launched Apple and Intel

is coming to you and saying, I'll invest in you. Yes, and telling us that Don't worry about getting your own lawyer. We'll you know, we'll pay for it. You know Len and I walked into a four year vesting plan after funding the company for three years. Clearly a mezzanine investment. We were making we were booking a quarter million dollars a month at that point. Four year vesting plan means that your We have four years to

to put in to get our stock and no employment contract. And what did he get? What did he give you and what he get? Lynn and I got about thirty percent, but remember he was the chairman of the board of the company and he got stock from that and all of his friends got stock.

I think we're foreshadowing that this story does not end well, but we're gonna get to why. So so V John Valentine is now essentially The Bash. Right. And and so d does he say that you guys I don't want you to run the company anymore.

No, no he was Don is much more clever than that. Um, you know, Dawn said, Well, for the good of the company we need to get you a professional CEO. For the good of the company, you know, we need a professional CFO. And Lynn and I were still kind of doing the I think we wanted to believe it. Yeah. You know, we had given our health, our marriage, everything for this company, and here's this guy who's been wildly successful and and we we truly did want to believe that that was for the best. And his next strategy was to bring someone in who was hostile. As a CEO. As a CEO. This is John Mortgage. Yeah, and he denies it, but I will swear on the lives of my cats the first thing he said to me was I hear your everything that's wrong with Cisco. When the first time you meet the new CEO of the company that you started that.

Mm-hmm. Yeah. So When John Mortgage comes in to run the company.

Tell me what he would have thought was wrong with Cisco. Well Cisco by this time. had a sales force. But remember the sales force looked like Don Valentine, but younger. Salesmen

Way into the this current millennium are still having the parties with the naked girls jumping out of the cake and and all of this stuff. that came into Cisco. And these guys were used to having a product that they frankly didn't understand, but to sell a Cisco box I think you had to understand some part of it because it's what made us different and it's what's made us successful. And at one point I looked at Don and I said because he was arguing that we didn't need more floor space'cause we

we literally didn't have a place to set the boxes that we were making. And he says, Every company I invest in always wants more space and they always go out of business. And I said, You don't understand on This is gonna be a one billion dollar company. And he looks at me and he goes How do you know that? Look at the people here. And then I said the most stupid thing I've ever said in my life.

Which was Leaving me out of it. These people are really, really special. And I did it because I felt I grew up with a grandma who said pretty is as pretty does and you don't say nice things about yourself, you know, you you know, I was being modest. I was saying, you know

Even if you don't like me. which he didn't. He loathed me. Look at these other people. They're truly special. I mean these were people That came out of Stanford at the end of the seventies. You don't know what you've got here. How many women worked at Cisco at that time? Well

Not very many, although we had a couple that were doing inside sales and we had um My friend who was still at that point running the purchasing department. Um, I do remember that at the executive meeting, the head of HR who was a former Miss California and I were the only women. Th this is this is a a another It's a little complicated and and there are obviously different versions of of of what happened.

But essentially there was a lot of tension at Cisco, and it and it it seems pretty clear that there was somebody or some group of people who wanted Who on you have to do it. And so I guess one day that your CEO, John M Morgridge, calls you In the office.

And What do you remember about that day? What happened? I was just sitting in my little office in the corner as I did every day and he came in and he sat down in the chair without making an appointment and he said uh you know I think it's time you retire. That was it. Now, you just time to retire.

And I said, Well, John, I'm not even half vested yet and I've got a lot I still think I I'm doing here and I started of course in my practical way to tell him what I was doing and um he practically told me to shut up um and basically I was fired. Wait. But your share of the c of the company w was gonna fully best in four years. This is two years.

Bingo. If you would were to walk out of that point. I'll be walking out with half my net worth. I notice they only fired me and not Lynn. And you could do nothing about that?

You know, at that point it was women don't get along, they're not playing team players, you know. This was six months after the company IPO. So you fire one of the founders. Big deal. And Len and I were not getting along. We did have a an adjustment period where it was very difficult to do. We've given everything up for the company, our health, our marriage.

I you name it. Um. People handle stress in different ways and They were simultaneously pandering to Len's ego, and I had no idea Len had an ego until then, but you know, he went on the road show. He got the board seat, and I was literally chop liver. And so they they very consciously tried to drive the swedge between us and Sounds like it was working.

Well, except for one thing, and someone like Don Valentine has no way to really internalize Len for All of his things that can make him very unusual and sometimes very difficult, he is fundamentally fair and and decent, and it is inviolable.

And I went to him and I said, Um Lyn, I I don't know if you know, you're on the board whether you've heard about this, but um Mortgage just fired me. I am sure.

You are mistaken. And I said well. I'm sure I'm not, the words you are fired leave the building. were said. And so Lynn

I think you probably could have knocked over both Valentine and everybody else like little Bowling pins when Len walked up there and walked out with me. He walked out in solidarity with you. He absolutely did. He walked gave up half of his Potentially. We ended up getting it back.

But only because it would have looked very bad for the stock six months after when Both. of the founders walk out and you can't tarn feather the other one with girls don't know how to play on a team. So you did manage to Retain your one third stake.

In the company. to expose all this stuff six months after the IPO. Right. Yeah. It speaks to the power of Your

intellectual partnership that Lynn Walked out with you. I mean it's sp it speaks to how much he respects you. I agree with you, and Lenin, I You know, we respect each other as people.

And We adore each other and we j we're each other's best friend. Hm. And I should say you're you're no longer. Uh Mary K. That's right.

But What fundamentally hit was something that they could not have reckoned on, and that is that there exist people in the world who Who fundamentally see black and white right and wrong. And Len is one of those

People. That has an un Eric. Sense ethics. Did they

They must have panicked when he walked out with you. That could have That could have sunk the company. They were wholly, wholly taken aback. They had no plan B. Okay.

So Sandy Somebody who knows somebody who who who's hearing the story. and knows a little bit about it might ask you this question, which is When you and Lan walked out,

It's been reported you walked out with one hundred and seventy million dollars. Their argument, Cisco's argument was, look, you guys are now rich, just go enjoy life. And so I mean you did have all that money. Was any part of you like, Yeah, right. I mean I I I did my job here and okay, I'll move on.

You know it it could have been that way had the sequence of events been less brutal and less personal. Yeah. They could have bought Lynn and I out. We could have

facade of a relationship. It could have been done Five hundred ways that would have been A positive thing. Yeah, it's probably time for me to go. It's probably time for Lim to go. We're just not good people. In a collaborative environment. So you you both leave the company. And

How was your emotional state at that time? Or I was a wreck. Uh you know, my entire adult working life was tied up in everything that had been done and sacrificed and built in that company. And The people who stayed there were no longer not my friends. Yeah. The people

who were customers of them were no longer now not my friends. And It was It was a time that You know, any kind of tentacle or root that I had managed to put down was just forcibly ripped up.

I was on my own, I had A comfortable amount of money. Remember that right after that Lynn and I put seventy percent of the proceeds into charitable vehicles. Which does not get distributed until both of you guys are long gone, right? Well, yeah, and and we've Paid out about the black. Fifty dollars.

Oh no. on a private charity that that we've been funding since since that time. So, you know, I had money, but we're not talking about billions. We're talking about You know. A tenth of that. You guys sold all your stock. We did. You know, certainly people would say, Well, you look, you're crying all the way to the bank.

Um yeah, how much money can you spend? How much money do you really need? I'm not somebody that you know, I live in a log cabin. Um You know it What they had taken from me was what they meant to take from me, which was Basically my whole working identity. And the amazing thing is you are thirty five years old when this happens. You are a very young person. Um y so you're thirty five.

You're ousted from the company that you founded. You do have quite a bit of money at this point. So what did you do? You know I come from a family that believes very strongly in the common good. I've I've been given great values with respect to work and

You know, I decided that Animals were always my first love. Hm. And there were five animal shelters in the Bay Area that if your pet happened to cross the street it could end up in a s in a shelter sixty miles away. And they had no way

to tell where your pet was and a lot of times by the time you figured it was really missing, it had been euthanized. And then I went across the street to the animal shelter and I said, you know, hey, I have this idea for network. And we could put all these animals, you know. you know, in this database it would be shared by all of these five networks that ring the bay, and we could call it Petnet.

And You know, you guys could Just sit there and you know, take a picture of the animal and like type in a few things about it and people could sit at home and see if where their animal was. So

I just started working really, really hard with Marin and um Peninsula and uh San Jose and the um Palo Alto and the Oakland Um Oakland Shelters building Cutnet. Mm. You

spent a couple years in the Bay Area after you you're ousted from Cisco. Um and then I guess in the mid nineties you started a cosmetics company, Urban Decay. Which is complete like total d totally different direction, right? Oh yeah. How did that how did that happen? Um my aunt whom I adored, um I was turning forty and she said, Hey kid, it's time to lose the T shirts and jeans and by the way, uh you could use a little makeup. And I adored her and I thought she loved me and so I took that to heart.

And I thought that jeans and T shirts were not a negotiable item, so I would concentrate on the make up. And I went to go look at that and I went to the department store and it was all great if you were Christy Brinkley. You know, I don't look like Christie Brinkley. And I I've always been kind of a H C Punk sort of person, just'cause I don't fit in. So I tend to gravitate toward those fashions that

belong to those people who Enjoy not fitting in. And You know, it was all pink. And I just go, I c I can't do this for the rest of my life.

This is not right. Why is Your nails red. Well because it has to match your lipstick. Why? Do you stand there and put your hands up by your face? No. Your nails should maybe match your clothes. How about that? What if your nails matched your clothes? So um Makeup's a very easy thing. You can do it three weeks. We're on the shelf in three months. You know, just add fifty thousand dollars and stir. Because at this point you were like, I am never going to outside investors ever again. Bingo. So you had the money and you funded this company. That's right. And because you could do that, you can make it happen quickly on your terms. And so what was the what was Urban Decay? What would make it different? Well, I just thought, you know, there's a whole market for people like me that

really grew up in the time of You know, Vietnam War and hippies and punks and you know I was I was really heavy into the punk scene at that point. I was the little delayed gratification. So I just started making these really cool colors. Like beautiful blues. We had a kind of a light steel blue that was called UVB.

Uh we had plague, which was um kind of purple with a green tint. Um Roach, which was an absolute drop dead gorgeous, and we had mildew, which was a really lovely lovely green. We had Uzi, which was a gorgeous kind of steel steel color. So you were making up colors and uh giving them some interesting names. Um and really, really good ingredients. The first place we were in was in Nordstrom's and Neiman Marcus. Wow. We were Using top of the line ingredients and it was absolutely committed to no animal testing. And y because you put your money behind it, you was you were able to get like how did you get Nordstrom to agree to to carry it? Because A it was a really good product. And B, I think it was good timing because

You know, you're talking about the mid nineties, you know, you're talking about Nirvana and you know the the grunge wave and you know, Pearl Jam and that whole thing. And I think Nordstrom rightly felt that they were missing a market. So it's c I mean it's really cool because you uh sort of had spent so the previous like two decades Really? Understanding, learning, mastering computer technology is And I have to assume that you had to dive into cosmetics in the same way'cause I I mean did you know to really easy. You know, the base of the nail polish, how much mica you want to put in it, the base for the you know, the the color cosmetic eyeshadow, what kind of mica you're using, how much mica, how much pigment you're putting in it.

Um Everybody uses the same stuff. It's just how they put it together and what they're willing to pay for. So you so you would go to these uh factories that would make that make makeup for a hundred different companies and you would tell them exactly what you wanted to do. No, we would make it. We would sit on the bench with the people and and make it and we had three weeks to get it out on the shelf before the same company would I mean You were and you are such a highly respected

technology pioneer and and you had all these friends in this community. W did anybody ever say Sandy Cosmetics. That's interesting. That's like a total departure. Um, I wanted it to be a total departure because um And I was I was using my technical chops for PetNet.

So I was doing that and the The makeup to me was really I was quite offended by the makeup industry putting all the women in this pink box, you know, our first our first ad for urban decay was just pink make you puke. You know, to me it was about choice. I I guess to to um to illustrate like how kind of punk this um urban decay was, um I've read that

Dennis Rodman used it. Like that was used to be. Dennis Rodman, um the cure we the cure used it, um when Stefani used it. I mean we had a we had a whole lot of people who were who were using our makeup. So why why did you I I mean, I I think it was like five years after you launched Urban Decay that you sold it, um to to L V M H which the company that that includes Louis Vuitton. Why? It for the simple reason that there's no intellectual property. You can't patent color. Right, meaning w like other companies could could could keep knocking you off. So you just what you just figure it's just.

Yeah, done with this. Was it worth the price? Was it worth selling it? Um I I made money. And I believe but by the way, I think Urban Decay is now owned by L'Oreal. Yep. Four hundred million dollars. Four hundred million dollars. That's not what they paid you uh in two thousand, unfortunately, right. Um but still, you know, you started this company, it's probably cool to see this around. I mean still around. Absolutely. So you um have this entirely other part of your life which is Arguably the biggest part of your life which

now which is a f a sustainable farm in Virginia. You you Completely left the West Coast. Built your Life in the Virginia countryside.

Where you raise rare Breeds of Cattle and Pigs and chickens. And turkeys. And turkeys.

Tell me about tell me about that. How did that start? Well, you know, I was raised on a farm and I believe in eating meat. I mean we've got these pointy teeth right here. But You know, I The idea that you had factory farm to me was Beyond horrifying. And I absolutely believe that we did not use that kind of farming when I grew up. We farmed the way my grandfather knew how to farm, which was the manure on the fields and you fed your cows good things and at the end of the time your cow fed your neighbor. I mean we would no more have poisoned our cows because we would have poisoned our neighbors at that point. So

I was convinced that I could find an economic model. Because I have the resources. To raise large livestock profitably. Yeah, sustainable. Organic and humane paradigm.

Hm. And I am. But I mean but I imagine but I mean I have to imagine that f like doing this kind of farming is hard. You know, I'm one of those people that doesn't have, I guess, the good sense God gave it up to to just not do something because it's gonna take a whole lot of hard work. Farming is the hardest thing I've ever done. Much, much harder than learning calculus as a graduate student and you know

Physics and the rest of all of that stuff. Uh it's it's it's much, much, much harder than anything I've done and it takes More work. And more heartache and more aggravation than you can ever imagine.

You know, Sandy, something that that is really striking to me is that you you still have this partnership with Len. Like like even though you haven't been married since like the nineties, You still collaborate together and and and Clearly like you still value each other tremendously. Right. And our foundation is called the Ampersand Foundation because it stands for Lin and Sandy.

Oh, that's so cool. And we both have put our money in no matter what we do with our personal lives for the rest of our lives, we are each other's legatees. Yeah. But you know, it is good that that Lynn and I found each other because we've Probably

were more suited to each other than most everybody else on the planet. Um you know, my parents thought Lynn was an a a space alien. Until until he fixed my uncle's chainsaw. Then he was like the golden boy. But When my parents and Lynn's parents met each other for the first time, I think they were each expecting sort of like E T and and wife, you know, because both of their children were so bizarre.

Um You know, it was it was a little it was a little touchy there for a while. I mean, I know you've been asked this before and it's it's a bit of a touchy question, but I wanna ask you it anyway. You have been able to do

alm anything you wanted to do, and you've given away So much of your wealth. Um, had you and Len kept that stock, you would have been it would have been worth fifty Maybe more billion. Yeah, last time I checked I think I would have been been worth nine billion, but it's it's probably gone up since then.

What do you think about that? You know, I think that nobody can see the future. And that Lynn and I Agreed to sell our stock. on a very joint basis and we did it because we fundamentally had no respect for people running the company.

And it wasn't really that we didn't believe in the company. I mean I was the one who said that Cisco would be a billion dollar company and I knew that that was as long as those people stayed there, even without me and Len, they had a technology legacy. That they would be successful. It was because Lynn and I did not wish to live our lives with those people having any more control. Over Our day. It had nothing to do with

with financial You know we We made a pile of money and it really had nothing to do with, you know, ROI or you know P and E rates and you know what that company was gonna do. It had to do with the quality of our life and how we wanted to to look at the morning. How how much of your um of your success do you attribute to

your intelligence and your hard work and how much do you attribute to just luck? You know, I've always said that it's a third being smarter, a third working harder, and a third luck. No. Take that back. half working harder and a half

Pure luck, because that adds up to more than one. And there were times That Cisco could have just been an asterisk and a footnote. I mean there were so many times that company could have gone under and we were saved by circumstances out of our control.

So there was huge luck in there. I still work harder than anybody I know. That's my great gift, and I love work. I'm I'm I'm besotted with work. You know I've already I've already designed my epitaph. It has one word on it.

What do you think it is? One word. Wow, that's tough. I I can't sum your I can't. summariz your life into one word, Sandy. I I I don't know. I have no idea.

Bold. Both. Sandy Lerner, co-founder of Cisco Systems and founder of Urban Decay Makeup. By the way, Sandy did guess right when she once predicted that Cisco was gonna be a billion-dollar company. It is now more like a 200 billion dollar company.

In addition to running Ayrshire Farm and running its restaurant, Sandy also started a library in the UK, the Chotenhouse Library, which contains thousands of books written by female authors around the time of Jane Austen. Who, Sandy says, is her drug of choice. In fact, a few years ago. Sandy wrote a Pride and Prejudice sequel. It's called second impressions.

Thanks so much for listening to the show this week. If you're not a subscriber, please do subscribe wherever you get your podcasts. If you want to write to us, our email address is hibt at npr.org. If you want to follow us on Twitter or at HowI Built This or at GuyRaz. And on Instagram, you can follow at how I built this NPR or my account at guy.ros. This episode was produced by Rachel Faulkner with music composed by Ramteen Arablui. Thanks also to Janet Bu Jong Li. Liz Metzger, Faris Safari, Dereth Gales, JC Howard, Julia Carney, Neva Grant, and Jeff Rogers.

I'm Guy Raz, and you've been listening. to how I built this. This is NPR.

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