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Cheeky SalesCrunch flips Cisco $1 for WebEx biz

Will give a 15 per cent stake as deal sweetener

A serial entrepreneur with a penchant for sales has made Cisco Systems an offer that it most certainly can refuse and also snicker at: $1, plus a 15 per cent equity stake, in rival SalesCrunch if Cisco hands over its WebEx online meeting biz.

In a statement, New York-based SalesCrunch tried to make the case that the online meeting business did not fit in Cisco's core networking, routing, and telepresence business. Rather than chuck it in the trash, as it did the Flip camera business in a reorganization in April 2011, Cisco should just fork over the entire WebEx biz to SalesCrunch, a tiny rival 15 employees and 10,000 users, for a buck and that 15 per cent stake.

"At SalesCrunch, we deliver a far superior technology platform – optimized for sales and meetings efficiency – at a fraction of the cost attainable by WebEx and its competitors who have massive legacy infrastructure costs," Black said in his statement. "Although WebEx doesn't fit into Cisco's core business, it doesn’t have to suffer the same fate as Flip. While Flip faced intense competition from Apple's iPhone and others, it had a solid brand that could have easily been refocused to a vertical market."

SalesCrunch said that should Cisco take it up on the $1 deal, it would migrate WebEx customers to its own platform over the next twelve months and would get WebEx software engineers and sales people improving and peddling the SalesCrunch platform.

It is hard to say what that 15 per cent stake would be worth, but it is a hell of a lot more than $1 and the miniscule value of that hypothetical 15 per cent stake in SalesCrunch. Cisco shelled out out $3.2bn in cash for WebEx back in March 2007 when it was impatient to help drive video traffic to corporate networks, and after taking into account WebEx's $300m in cash, the price that Cisco paid was closer to $2.9bn. At the time, WebEx, which was founded in 1995, had $380m in revenues and 2,200 employees and had been a public company for seven years, with 2.2 million registered users.

Cisco WebEx activity map

Cisco's global WebEx activity map (click to enlarge)

Cisco doesn't break out revenues for WebEx, but its collaboration business, which includes WebEx services as well as other telepresence offerings, generated $1.05bn in sales in the company's second quarter of fiscal 2012 ended in January, which saw the company rake in $11.53bn in sales and $2.18bn in profits.

Call WebEx a big chunk of that $4bn-ish collaboration business, and you can see how ridiculous the SalesCrunch offer is. Cisco's online activity map for WebEx really makes it clear, showing where WebEx meetings are going on in real-time around the world. As you can see from that page, Cisco has 5.4 million registered WebEx meeting hosts and there are more than 23 million participants in online meetings each month, with an average of 320,000 meetings per day across 230 countries.

"This is a cute publicity stunt from SalesCrunch," a Cisco spokesperson told El Reg, "and we appreciate that they like our technology, but we have no intention of selling WebEx."

Well, certainly not for a dollar and maybe not even for several billion.

The question is whether this is some sort of stunt to get SalesCrunch to come to the attention of some other suitor that doesn't have online meeting software but does want a cloudy application to add to its portfolio. VMware might find an acquisition of a company such as SalesCrunch interesting, and so might Hewlett-Packard or Dell, which have their own cloudy and SaaSy software aspirations, or Oracle and IBM, which like to buy smaller software companies and grow them.

SalesCrunch founder and CEO Black, who started the company in April 2010, has a background in real estate and sales and is no stranger to the Web 2.0 startup game. While in college back in 2000, Black created and then later sold an online auto insurance portal called Everymile.com, and before that he founded a nutrition supplement company called Europro that he flipped the year before.

Black did a stint as vice president of sales at The Corcoran Group, a commercial and residential real estate firm located in New York, and from 2005 through 2010 he was one of the founders and the vice president of sales for online real estate broking site Trulia.com, which raised over $33m in investor capital from angel investor Ron Conway and equity firms Sequoia Capital and Accel Partners.

Last January, Black was able to secure $1.4m in seed funding for SalesCrunch from First Round Capital, Accel Partners, NextView Ventures, Progress Partners, AOL Ventures, and Alfred Lin, an angel investor who used his own money instead of Sequoia Capital's.

So, here's what I just did, John Chambers. I downloaded a copy of the open source Vyatta Network OS and I am going to start up a router business with a bunch of old servers I have laying around. I am going to call my company CrunchBird, and I'll take that pesky old multi-billion dollar router biz off your hands for a cool $1 plus a 15 per cent stake in CrunchBird with me keeping the other 85 per cent stake. Deal? ®

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