Start-Up SalesCrunch Makes Unsolicited Bid for Cisco Unit WebEx

Published on March 13, 2012
by Arik Hesseldahl

For months, the rumor mills have whispered here and there about WebEx, the remote-meeting service owned by the networking giant Cisco Systems. As that company has gone through numerous contortions, shedding jobs and business units, WebEx has stood out as another acquisition that might find itself on the chopping block.

I made the case myself last year about why Cisco might kill or sell WebEx, only to be told in no uncertain terms that Cisco didn’t see it that way. Collaboration is still a big part of Cisco’s strategy, because it fits with enterprise video.

And yet the rumors about WebEx being shopped around persist. So today, a bold offer emerged from a start-up called SalesCrunch to buy WebEx for $1 and 15 percent of the equity in the company. The plan is to transition WebEx’s entire customer base to a new platform, kill off the old one, and move on.

It may seem a trivial offer, but it’s not, though there’s a good argument to be made that it’s a publicity stunt meant to get a lot of attention. SalesCrunch is backed by Accel Partners, First Round Capital, NextView Ventures and AOL Ventures. It’s essentially a new, more flexible, fully thought-out competitor to WebEx, one that poses a fair competitive threat. SalesCrunch is more social than WebEx, and tells you more about how engaged the parties attending a meeting actually are, or whether they’re zoning out and checking their email.

But why offer to buy it? SalesCrunch CEO Sean Black told me that the plan is to grab Cisco’s WebEx assets, including its engineering teams, and put them to work on building out SalesCrunch.

WebEx isn’t a core business to Cisco, Black says, and is in many ways comparable to the Flip camera business that Cisco infamously killed last year. “Cisco admitted that it’s in a lot of businesses that it shouldn’t be in. There’s been a lot of outcry from shareholders that it should stick to the business of selling routers and switches,” he told me. “WebEx is really the first online meeting application. It is literally as old as the Internet itself. And the team that put it in place is there to wring every efficiency they can out of the business, so they’re good at efficiency, and not at innovation.”

Cisco’s WebEx team, Black argues, is too busy running the business and maintaining its large user base to build the next great online meeting platform.

The idea for offering to buy WebEx came up in a management meeting as sort of a jokey, offhand comment. “But the more we thought about it, the more it made sense,” Black told me. “Why shouldn’t it be us? We’ve heard it’s been shopped around for eight months, with no takers.” Without a buyer, it might suffer the same fate as the Flip camera, and simply be shut down, he says.

Cisco hasn’t commented yet, but it probably will. I’m no expert on these things, but I wonder if this constitutes the kind of legal offer that will require Cisco’s board of directors to consider the offer seriously. We’ll see.

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