Cisco ex-CEO John Chambers is taking on his former company with new networking startup called Nile

In his 2 decades moving Cisco, John Chambers turned a machine networking upstart into 1 of the world's astir ascendant tech companies, with adjacent to $50 cardinal successful yearly gross and elephantine customers crossed the globe.

Now, 7 years removed from selling switches and routers, Chambers is challenging his erstwhile leader with a startup that's coming retired of stealth mode connected Wednesday. Chambers, 73, has teamed up with ex-Cisco improvement main Pankaj Patel to make a institution called Nile, which is promising to upend the satellite of firm Wi-Fi.

It's a marketplace that for years has seen Cisco conflict it retired with Juniper Networks and Aruba Wireless, present a portion of Hewlett Packard Enterprise. Chambers and Patel accidental that neither Cisco nor its existing rivals person developed the wireless exertion needed to conscionable the demands of the modern-day office, with its swarm of devices, inclination toward hybrid enactment and precocious information threats.

"We're gathering thing that our anterior institution was not building," Chambers said successful an interrogation with CNBC. "It's a full caller area. It isn't similar we did something, and we're trying to marque it better."

Nile has raised $125 cardinal successful the 4 years since helium and Patel, the CEO, teamed up to commencement the company, though its backing rounds person remained confidential until now. Through his concern firm, JC2 Ventures, Chambers said helium owns 10% of Nile. Other investors see March Capital, 8VC and Iconiq Capital.

Nile's exertion has lone been mostly disposable to customers since May, truthful the institution has a agelong mode to spell earlier marketplace stock conversations go meaningful. A spokesperson said Nile has 20 accumulation deployments, including astatine Sprinklr, ThoughtSpot and the University of Missouri-Kansas City.

Nile is pitching a elemental idiosyncratic experience, with nary request for clients to woody with upgrading hardware. Rather than selling big, costly boxes — the Cisco exemplary — Nile volition complaint organizations based connected the fig of radical who usage its networking infrastructure each month.

That's peculiarly applicable astatine a clip erstwhile employers are figuring retired their hybrid and distant enactment plans. Patel says Nile's services-only offering volition prevention clients 30% to 50% astatine each determination wherever it's deployed.

"We are precise different," helium said. "We genuinely align to the fig of users connected a network. In a building, if determination are 250 oregon 300 users connected a fixed day, we lone complaint them for the fig of radical who are utilizing it."

Nile is acold from the archetypal institution to onslaught Cisco and the different hardware vendors with a software-based alternative.

While Chambers and Patel were inactive astatine Cisco, aggregate Silicon Valley startups raised large task rounds arsenic they touted an attack called software-defined networking that progressive processing precocious bundle and putting it wrong commodity boxes. But the hype ne'er materialized into large caller companies arsenic the incumbents, including Cisco, acquired their mode into the market.

More recently, Cisco has started allowing customers to wage for networking arsenic a work (NaaS), with the 2021 introduction of what it calls Cisco+. And earlier this year, HPE announced GreenLake for Aruba. However, fewer ample companies person signed up for these sorts of arrangements, said Brandon Butler, an expert astatine exertion manufacture researcher IDC.

"Incumbents have tried to bash NaaS for a agelong time," Patel said. "It's been a buzzword successful the manufacture forever."

Chambers says Nile's attack is to bash for networking what Amazon did for retention and computing, allowing radical to rent resources and wage for what they usage each period alternatively of requiring them to buy, acceptable up and negociate their ain hardware. IDC's Butler said that, wrong the information center, networking is lagging down compute and retention successful the determination toward consumption-based usage.

Nile's archetypal merchandise lineup includes entree points that administer Wi-Fi successful a facility, entree switches that link to entree points and organisation switches that tin link entree switches to the internet. The bundle lets administrators spot if the web is functioning properly, larn astir issues and show show of applications.

While taking connected Cisco is simply a gangly task for immoderate startup, fewer radical are amended positioned to cognize the company's weaknesses than Chambers and Patel, who person worked unneurotic successful immoderate capableness for astir 25 years. Chambers joined Cisco successful 1991, a twelvemonth aft the company's IPO and, successful 1995, took implicit arsenic CEO, a presumption helium would clasp for the adjacent 20 years. Patel spent astir 14 years astatine Cisco and earlier that was an technologist astatine a institution that Cisco bought. By the clip of his departure, helium was among Cisco's apical 4 executives.

"Whether it's a nationalist institution oregon a backstage company, a tiny oregon mean oregon ample company, immoderate institution is fundamentally up for grabs arsenic acold arsenic we are concerned," Patel said. "Why? Because anyone successful immoderate enterprise, tiny oregon large, needs connectivity to bash their job."

Cisco, meanwhile, has been mired successful low-growth mode for good implicit a decade, which includes the process extremity of Chambers' vocation there. The institution hasn't generated double-digit gross maturation since 2010, coming retired of the fiscal crisis, and has lone topped 5% erstwhile since 2013.

For Chambers, taking connected Cisco carries immoderate irony. As CEO, Chambers was known to marque beingness hard for his lieutenants who near for a rival company. The astir notable illustration was astatine Arista, an endeavor networking institution co-founded by Andy Bechtolsheim and David Cheriton, who had sold a anterior institution to Cisco.

In 2008, the duo hired Jayshree Ullal, who had been a apical Cisco executive, arsenic Arista CEO. It was a determination Chambers took personally. In 2011, according to the Wall Street Journal, Chambers "told executives to support Arista from winning immoderate caller concern from Cisco customers." His income unit past formed a "Tiger Team" to impede Arista's "marketing efforts and forestall its archetypal nationalist offering plan," the Journal reported.

In 2014, Cisco sued Arista for patent and copyright infringement, mounting disconnected a protracted ineligible combat that ended 4 years aboriginal with Arista agreeing to pay Cisco implicit $400 million to extremity the litigation.

Chambers told CNBC astatine the clip of the lawsuit, "We needed to nonstop a connection to the marketplace that we volition support our innovation and besides support our customers." Ullal responded, telling CNBC that Arista was "definitely blindsided and disappointed."

"John should person astatine slightest picked up the telephone and called me," Ullal said astatine the time. "Instead it was successful the press, and we lone got it 5 days later."

When asked astir the examination betwixt what ex-Cisco executives did successful the past and what he's doing now, Chambers called it a "fair question." He said that helium and Patel person been retired of Cisco "for galore years" and person done astir 8 startups unneurotic since then. He said Nile is going aft a marketplace successful modulation that each the incumbents person failed to alteration on," and helium added, "I've ever believed your contention ever comes from below."

Chambers besides brought up different Cisco alum, who near the institution to physique a thriving rival called Zoom. Eric Yuan, Zoom's laminitis and CEO, had joined Cisco successful 2007 done the acquisition of WebEx. He near Cisco successful 2011 aft failing to get traction internally for his effort to physique a much modern video-conferencing system.

Yuan started Zoom, which became a household sanction during the pandemic due to the fact that of however casual its video chat bundle was to acceptable up and usage connected immoderate instrumentality successful the office, astatine location oregon connected the move. Chambers is highly complimentary of Yuan and adjacent uses Zoom for his virtual meetings (including this one).

"He was precise creative," Chambers said, of Yuan. "I privation we'd been faster connected our feet to equilibrium that."

WATCH: 'If you're reasoning astir investments now, I would deliberation cybersecurity companies,' says John Chambers