Cisco Systems & Urban Decay: Sandy Lerner

Hey, it's Guy here, and before we start the show, I just want to let you know that we still have tickets available for our upcoming live show in LA. It's with Michael Dubin. He's the co-founder of Dollar Shave Club. It's an amazing story of how he turned that into a billion dollar company. And if you haven't been to a live show, they are so much fun. It's a chance to meet me and meet the team behind the show, and also a chance to meet your fellow HIBT listeners. So if you want to take it, go to nprpresents.org. That show is supported by American Express. And hope to see you there. 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 mouth. In a way that I think that people who want to be entrepreneurs these days really don't understand.

It's how I built this. about innovators, entrepreneurs, idealists, and the stories behind the movements. they built. Guy Raz, 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. Then 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.

Now the idea that 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.

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 Part of the state. 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 it just a job? You know my uncle It was a very small town. My uncle went to Kiowanas with the 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 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. These were the Vietnam years remember. 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.

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 Starting 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 you 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 there 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. Mm. 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 Clarmont 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 timeshare 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 worked 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 Valhalla 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 Lots the time sharing system. 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. 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 I mean I would leave these people at two in the morning. Geeks just total programmers, total when the 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 are 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 blonde 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 Lynn and he would say, well, you know, basically essentially, what is what is the answer? And Lynn 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 Len, what is the answer? And 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, or you bought IBM, or you bought HP, or you bought general, or you bought, or you bought whatever. Because those were the only ones that could communicate. Like a IBM could only communicate with 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 they

were a law into themselves, and they bought what they wanted. Which is typical of universities, right? 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 all the people in the in the ARPANET community who were working on parts of this

And ARPANET is 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 ideas and information among the different people who were taking taking ARPA money. And that's what we were doing. 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. Are

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

Benediction went in 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 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

I mean 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'd 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. 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. Because you believe that this technology needs to get out into the world, that there's All kinds of We took our 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 out there. 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 f in layman's terms, Would help. um computers communicate. Right. And you called it? Well, that came later. Cisco was 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 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. Three eighty four. So it was it was starting to creak and I was getting a little bit bored and You know, the c the mini comput 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 er 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 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 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 foot 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 credit cards. We mortgaged we mortgage mortgaged our home. A friend of mine that used to work for me at Stanford would sit on the How were you even getting customers? You were just just word of mouth. The internet knew. Me and Len, 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. Like soldering irons, like try to figure this out. Absolutely. Really? Well, job started in a garage, at least I had a living room. 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? 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's the size of a microwave. Yeah.

Well, can I ask you a dumb I'm gonna ask you a dumb question, because uh 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 want to 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 Lenin is a sub Superb.

hardware engineer, and that's how Cisco made its money, because of Lynn. And his hardware engineering Lyn 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 Slow Roger 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 we were working um we were mortgaged the house to the hill, 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'd already mortgage 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 the 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'em. Seventy or eighty. And the problem was that You know, at this point the investor community, which was a whole bunch of all s you know, Fairchild

Semiconductor salesman. They didn't think that you could make any money on a public protocol because of course everybody would do it. You know, Decknet was a proprietary protocol. SNA was a 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. They had no clue what I was talking about.

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. 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? 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 Rod 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 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 investing 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 did 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 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, Don 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, he's swear that.

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. There was a type, you're saying.

that came into Cisco. So it sounds like uh like once the the money came in from Don Valentine and and Sequoia. um there was just a complete like they kind of took over the culture that you guys had. You had this culture of passionate computer programmers and they brought in salespeople who were who who had different a different motivation, right?

Well they know I had a different motivation. They had a a very different set of experiences. And we had a very complicated product. I mean, we were people who've been talking to each other for a decade at that point. We were all at Stanford together. And I mean i if you think about it 20 years ago, try explaining what a router did to people. And we didn't Talk normal things in the stale salesman.

They would come in and they would start talking to you know, Dave Means or Lan or Robert Michaels or you know, Kirk Lahe, or Greg Zoutz, or one of those people. And The engineers would just like be staring at them. They were speaking the same language. They had no clue and so I was trying A to translate and B to take the flak from the salespeople, translate it, write it up And discuss it with the engineering people. 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. So Th this is this is a a another

Part of the story where it's 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 wanted you out? That's right.

one day the your CEO, John M Morgridge, calls you Into his office? Yep. And What do you remember about that day? Everything.

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. That was it. Now, you're 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 noticed 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. Uh you name it. Um which uh it sounds like it. I mean it I mean I don't know how you could have had a animal marriage.

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 this wedge between us and Sounds like it was working. Well, except for one thing, and someone like Don Valentine has no way to really internalize Lanfer

All of his things that can make him very unusual and sometimes very difficult. He is fundamentally fair. and decent, and it is inviolable. Um

Lynn I I don't know, you know, you're on the board whether you've heard about this, but um Mortgage just fired me. And then looked at me in his usual way, and his little nose kind of goes up one side and he says. 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 Lynn 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 but it speaks to how much he respects you. I agree with you and Len and I

Іно ви респект і час. And We adore each other and we j we're each other's best friend. And I should say you're you're no longer uh married today, right? 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 fundamentally see black and white right and wrong. And Lynn is one of those People.

That has an un Early. Sense of ethics. Did they They must have panicked when he walked out with you. They did.

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$170 million. 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 as 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 now 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 Lyn 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 Fifty million dollars. I know. and 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 Yeah, it's

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 is you are thirty five years old when this happens. You are a very young person. Um You 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. Mm.

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 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 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 built in Cutnet.

Hm. You spent a couple years in the Bay Area after you you're ouse it 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 makeup. 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

Happy cum 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 And 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 could 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. Well. 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. 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 it's 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? 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 have been a little bit more. I mean, you were and you are such a highly respected technology pioneer and

And you had all these friends in this community. 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 adverb and decay was does 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 VM H which the company that that Includes Louis Vuitton. Why? Oh I It for the simple reason that there's no intellectual property. You can't patent colour.

Right, meaning w like other companies could could could keep knocking you off. So you just what you just figured Like this. Yeah, done with this. Was it worth the price? Was it worth selling it? Um I I made money. And I believe 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 in two thousand, unfortunately, right.

Uh, 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. That's why we survived the Ice Age, which may come again. 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. You know, sustainable. Organic and humane paradigm. Hm. And I am. But I mean but 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, Sadie, it's 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 uh like the nineties You still

collaborate together and and and Clearly like you still value each other tremendously. Yeah, and our foundation is called the Ampersand Found because it stands for Lynn and Sandy. Oh that's so cool. And we both have put our money in, no matter what we do with our personal lives 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 space alien. until m 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 a it's a bit of a touchy question, but I wanna ask you it anyway. You have been able to do almost ever 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 a billion. Yeah, last time I checked I think I would've 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 Lyn, 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, PE 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 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. Yeah. 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. One word. I I can't sum your I can't summarise 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 two hundred billion dollar company. In addition to running Ayrshire Farm and running its restaurant, Sandy also started a library in the UK, the Cotton House 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. And please do stick around because in just a moment we're gonna hear from you about the things you're building. Hey thanks so much for sticking around because it's time now for how you built that. And today's story begins about seven years ago, outside San Diego.

Literally on a manhunt. We were searching for an armed suspect. The mission was tough, the suspect was even tougher. This is Justin Lee. He was a sheriff's deputy at the time, and he was one of the people chasing that suspect in the California desert. It was incredibly hot. Uh hundred degrees is really hot if you're in San Diego. And we were sweating a lot. We were carried about forty pounds of gear. And Justin kept thinking, there has to be a better way to stay cool out here.

Now he didn't know much about design or engineering, but After he got home, he called up a friend Who did? Oh yes, J D is a uh management science and engineering major from Stanford. JD and Justin started to bat around a bunch of different ideas, and after a few years, they eventually designed a piece of clothing that could keep someone comfortable in hot. or cold weather. It's just a compression base layer shirt that would look a lot like a Nike or an Under Armour shirt that somebody might buy at Dick Sporting Goods, but it had unique pockets that could hold heating or cooling elements. So they took this idea and put it up on Kickstarter. And a few weeks later

The phang. And it was actually the US Army. The army had been looking for a way to keep soldiers cool, and they said to Justin, Hey, we love the shirt, but Can you make it stay cooler for longer? One way that we we put it is we built a scalpel for athletes and they asked us to build a sledgehammer for soldiers.

But how were they gonna build that sledgehammer? Well, Justin and JD were stuck for several weeks. And then I was having drinks with a few friends that had just come home from Afghanistan. They had remarked that our shirt that was on Kickstarter reminded them of how they tried to stay cool overseas, which was they freeze bottled water. and then they jam it in their body armor. And that is when I had the light bulb moment of oh

Justin's light bulb moment was maybe I could create a frozen water bottle that you could strap directly to your body, like a flat plate of armor. Well, that's exactly what JD and Justin came up with. The way it works is you fill it with drinking water. You freeze it overnight and then you wear it. And as your body heat melts the ice.

You have cold water to drink. JD and Justin called it the ice plate. And they made it so it could stay cold for like two to four hours. They took it back to the army to pitch it, but okay, this is the army, right? So it turned out it was going to take years to deal with all the military red tape. before Justin and JD could actually get a contract. And we just couldn't do that. We were gonna basically go broke. So we took it to the commercial market in August of 2016. But they started to get some pushback. Negative pushback from the market.

uh oh it'll never work, that's a dumb idea. There was every objection to the sun. People just didn't get it right away. And we were just like, Oh my gosh, have we just made the biggest mistake of our lives? But just a few weeks after they launched the ice plate. Their luck completed. September 2016, we got a live chat from a gentleman named Kevin Fry, who worked for Chick-fil-A at the time. Chick-fil-A happened to be looking for a better way to keep their outdoor employees cool on hot summer days. So Chick fil A now uses the ice plates at about two hundred of their stores. So yeah, we uh we've been busy. And since they launched their company two years ago,

Justin and JD have sold about 20,000 units to law enforcement, to construction workers, even to the secret service. This is the most fun I could have ever dreamed of having. It's nerdy engineering stuff. It's helping the men and women who protect our country and our communities. Uh it is so much fun. I couldn't have designed a job this much fun if I tried. Justin Lee, his company is called Core Performance. It's based in McClane, Virginia, and if you want to find out more about it, Or hear previous episodes, head to our podcast page, how IbuiltThis.npr.org. And of course, if you want to tell us your story.

Go to build.npr.org. And thank you so much for listening to the show this week. You can subscribe wherever you get your podcasts, and while you're there, please do give us a review. You can also write directly to us, that's hibt at npr.org. And if you want to send a tweet, it's at How I Built This. Our show is produced this week by Rachel Faulkner, with music composed by Ramteen Arablui. Thanks also to JC Howard, Noor Kutsi, Neva Grant, Sanaz Meshkinpur, and Jeff Rogers. Our intern is Mia Venkat. Guy Raz, and you've been listening to how I built this? From NPR.

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