3 years after launching their first product, these former Cisco execs have sold their startup to Juniper for $405 million (CSCO, JNPR)
- Juniper Networks is buying a startup called Mist Systems for $405 million, less than three years after Mist launched its first product.
- Mist makes what it calls the first artificially intelligent WiFi system for businesses.
- Juniper is paying big bucks for Mist, but it gains a lot for the money: Mist was founded by two executives who helped build Cisco into a giant in the WiFi industry.
Juniper Networks on Monday announced that it plans to buy Mist Systems for $405 million.
Mist makes what it calls the first artificial-intelligence-driven WiFi. Its flagship product delivers WiFi using high-performance hardware, along with a cloud service.
The access points include some patented tech designed to help the wireless network perform reliably, but it's the cloud service that makes Mist different. It can analyze the network and do things like troubleshoot problems with the help of an AI assistant named Maven.
It can also deliver location-aware apps, so that a business can grant access to apps or websites when the user is in the right place at the right time. For instance, when a traveler walks through a hotel's doors and arrives at the reception area, the WiFi can automatically pop up with everything they need to check in.
Mist's founders helped Cisco rule a market
Mist was founded in 2014 and launched its first product in the summer of 2016. Its claim to fame was that its founders, Sujai Hajela and Bob Friday, were among the people who helped Juniper's oldest rival, Cisco, become a WiFi networking powerhouse.
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They led groups that built Cisco's internal WiFi products and were responsible for one of Cisco's bigger acquisitions, buying the business-WiFi company Meraki for $1.2 billion in 2012.
Meraki's subscription-based service has since become the model that Cisco is remaking itself on, with a new focus on subscription-based cloud services.
At Cisco, the two execs knew they wanted to go out on their own and build a new kind of wireless network designed from the ground up with mobile devices in mind. But the key inspiration for the company came from Hajela's daughter, the founders told Business Insider in 2016.
In 2014, before trying to drum up a Series A venture-capital investment, Hajela told his daughter about his newfangled WiFi product idea, he said at the time. She told him, "Dad, that's too technical," adding that she just wanted a network that put whatever information she needed about wherever she was at her fingertips.
That idea, coupled with their backgrounds, helped the founders raise about $14 million in a Series A from Norwest and Lightspeed, on top of about a $500,000 seed round raised from Lightspeed. By the time they launched their product, they had 20 prospective customers trying their new take on WiFi.
Since 2016 they've gained more customers, including big names like Ikea, Okta, Raley's, PetSmart, Stanford, and Juniper, as well as two of the Fortune 10, seven of the top 40 retailers, a major facility at a large US healthcare system, a mobile carrier, and an airline.
Mist also raised $88 million, according to PitchBook, and was valued at $246 million as of its last raise in 2018. Investors included Cisco, meaning it had to be aware and keeping an eye on Mist.
That also means that Juniper is paying a premium for Mist Systems of about $160 million more than its year-ago valuation. No doubt Juniper is hoping Mist will be for it what Meraki was for Cisco: a way to sell more cloud services, with a business model built on recurring cloud subscription revenue.
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Reviewed by mimisabreena
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Tuesday, March 05, 2019
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