Oct 1, 2018 · 1h 0m · how-i-built-this
Cisco Systems & Urban Decay: Sandy Lerner
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz chronicles the remarkable career of Sandy Lerner, exploring how she co-founded networking pioneer Cisco Systems, survived a painful corporate ouster, and successfully reinvented herself through groundbreaking ventures like Urban Decay cosmetics and sustainable farming.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 39.7% of the talking time here. How this is scored →
Guy as informed peer 1.7 Guest teaching 2.1 Guest disagreement 1.8 Guy pushing back 0.5
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:44 Sandy rejects host's defense of VC logic
When Guy suggests VCs were reasonable to doubt public-protocol software, Sandy sharply rebuts the premise by retorting that no one else was actually capable of executing it.
Hardest push from Guy ▶ 27:36 Guy Raz defends investor skepticismGuy presses Sandy on why VCs refused funding, proposing that investors were justified in hesitating on unpatentable public-domain protocols.
Biggest teaching moment ▶ 24:55 Sandy corrects assumption about hardware expertiseGuy asks how Sandy learned hardware engineering as a programmer, and Sandy immediately corrects his misconception by identifying Len Bosack as the sole hardware genius.
Guy holds their own ▶ 8:20 Guy Raz cites foundational tech historyGuy demonstrates deep domain knowledge by citing J.C.R. Licklider, Xerox PARC, and early ARPANET milestones when setting up the Stanford computing era.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Live Show Announcement in Los Angeles | 0 | 0 | 0 | 0 | Introductory monologue and teaser by Guy Raz outlining the episode themes and event announcements. | |
| Growing Up Rural and Confronting Workplace Sexism | 1 | 1 | 1 | 0 | Guy Raz asks open-ended questions about Sandy Lerner's upbringing, and Lerner details early farm life and blatant sexism experienced at a bank job. | |
| Fast-Tracking Academics and Entering Computing | 1 | 2 | 1 | 0 | Lerner explains fast-tracking her undergraduate education and pivoting into computer programming for the high wages and workplace independence. | |
| Immersed in Stanford’s Early Computer Labs | 2 | 4 | 2 | 1 | Guy contextualizes late-1970s Stanford computing culture, but Sandy corrects his romanticized framing and clarifies her technical proficiency was pure hard work rather than intuitive genius. | |
| Meeting and Partnering with Len Bosack | 3 | 3 | 2 | 1 | Guy Raz probes the technical problem of incompatible campus computer systems. Sandy breaks down vendor lock-in, meeting Len Bosack, and the public-spirited ARPA ethos. | |
| Founding Cisco After University Resistance | 2 | 2 | 1 | 0 | Sandy explains how Stanford's refusal to license publicly funded ARPA technology forced her and Len to launch Cisco independently. | |
| Severing Ties with Stanford and Licensing Routers | 2 | 2 | 2 | 0 | Guy summarizes the legal confrontation with Stanford over technology ownership, and Sandy clarifies how the departure of key engineers gave them leverage to settle a fair royalty. | |
| Assembling Routers from the Living Room | 1 | 3 | 2 | 1 | Guy asks how Sandy built hardware; Sandy promptly corrects him that Len Bosack handled the hardware engineering while she focused on software and operations under extreme cash constraints. | |
| Pitching VCs and Navigating Investor Bias | 2 | 3 | 4 | 2 | Guy Raz challenges Sandy by suggesting venture capitalists had valid reasons to doubt non-proprietary tech. Sandy sharply dismisses the logic and highlights pervasive investor bias. | |
| Sequoia Capital's Investment and Corporate Friction | 2 | 2 | 3 | 1 | Sandy recounts bringing in Sequoia Capital and the resulting clash between the technical founders and aggressive sales culture, including her debate with Don Valentine over market size. | |
| Ouster from Cisco and Bosack's Resignation | 2 | 1 | 2 | 0 | Sandy details her abrupt firing by CEO John Morgridge, the attempts to divide her from Len Bosack, and Bosack's immediate resignation in solidarity. | |
| Life After Cisco and Creating PetNet | 2 | 3 | 3 | 1 | Guy notes the narrative that the founders walked away fabulously wealthy. Sandy pushes back on the superficial framing, detailing the emotional devastation and building PetNet. | |
| Disrupting Beauty Standards with Urban Decay | 2 | 3 | 2 | 0 | Sandy explains starting Urban Decay to disrupt conventional pink-centric beauty standards, self-funding to avoid VCs, and later selling because color lacks patent protection. | |
| Ayrshire Farm, Enduring Partnerships, and Epitaph | 2 | 2 | 2 | 1 | Sandy discusses running Ayrshire Farm, maintaining a philanthropic partnership with Len, and prioritizing quality of life over maximizing stock value. | |
| How You Built That: Core Performance IcePlate | 1 | 1 | 0 | 0 | In the 'How You Built That' segment, Justin Lee shares how he and his co-founder developed the IcePlate cooling system for tactical and industrial gear. |
Statements from this episode (23)
Lerner's first bank employer made tellers kneel to inspect skirt lengths
“The bank owner made all of the tellers kneel, so he could check that our skirts were long enough, and he called us all Louise.”
Lerner: Earned $25 an hour computer programming in 1975
“And, you know, in 1975 I was making 25 bucks an hour computer programming.”
Stanford peer created first spell checker by manually typing entire dictionary
“One of the people had written the first spell checker and typed in the entire dictionary himself.”
Stanford router project began as an unauthorized shadow network by Cisco founders
“Officially? Absolutely not. We were definitely under the radar, and we kept it under the radar, and it wasn't until one day, I think it was by, Became the Stanford University Network.”
Lerner: Early ARPA networking work had no financial motive
“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.”
Lerner: Stanford refused to license early router technology
“But Stanford said, no, you cannot license this technology. They would not entertain 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 Technolo…”
Lerner: Cisco was the 36th company name attempted
“Cisco was actually the 36th name that we tried to get. Anything having to do with computers, we couldn't have.”
Stanford paid Lerner half her predecessor's salary and one-third her successor's
“I mean, I was paid half of what my predecessor made, and I was paid a third of what my successor was paid.”
Stanford barred computing head Sandy Lerner from meetings because venue excluded women
“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 I went and had lunch with the faculty wives because where they had …”
Lerner: Cisco settled with Stanford via product royalties and 3-year network maintenance
“We ended up paying them, I think, a very fair royalty for the first Gosh, I want to say three million dollars a product or something. Very fair royalty. And we had to fix their network for three years.”
Lerner: Cisco booked $250K monthly by 1987 without a sales team
“By 1987, with no sales force, we were booking a quarter million dollars a month.”
Lerner: Cisco pitched 70 to 80 venture investors before raising funding
“We went through about 70 or 80 of them.”
VCs rejected Cisco believing public networking protocols had no commercial value
“And the problem was that, you know, at this point, the investor community, which was a whole bunch of old, you know, Fairchild semiconductor salesmen, they didn't think that you could make any money on a public protocol because, of course, everybody would do i…”
Lerner: Older Silicon Valley VCs could not relate to female founders
“First of all, there was a woman founder, and they're all 60 or 70. They just didn't know how to relate to a woman In business”
Sequoia's Don Valentine invested $2.6M in Cisco, leaving founders with just 30%
“He gave us 2.6 million dollars, and Len and I got about 30%, 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.”
Incoming CEO Morgridge told Lerner she was everything wrong with Cisco
“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 you're everything that's wrong with Cisco.”
Cisco CEO John Morgridge abruptly fired co-founder Sandy Lerner six months post-IPO
“I was 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, ah, you know, I think it's time you retire. He says, you've got all this money now, you just, time to …”
Lerner: Co-founder Len Bosack resigned from Cisco in solidarity
“And so Len, I think you probably could have knocked over both Valentine and everybody else like little bowling pins when Len walked up there and walked out with me.”
Cisco founders threatened PR disaster post-IPO to recover full unvested equity
“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 tar and feather the other one with, girls don't know how to play on a team.”
Lerner: Bosack and Lerner donated 70% of Cisco exit proceeds
“Remember that right after that, Len and I put 70% of the proceeds into charitable vehicles.”
Lerner: All cosmetic brands use identical base ingredients
“Everybody uses the same stuff. It's just how they put it together and what they're willing to pay for.”
Lerner sold Urban Decay because cosmetic colors cannot be patented
“Oh, I, for the simple reason that there's no intellectual property. You can't patent color.”
Founders sold all Cisco stock due to zero respect for management
“Len 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 bil…”