The case of forming a company to solve a problem

By 1990 Ethernet [the networking backbone for everything from corporate networks to wireless WiFi networks] had arrived at a crossroads. Though it now transmitted data at 10 megabits per second, the rapid evolution of personal computing meant it was becoming a bottleneck. A group of former 3Com workers, along with Ethernet co-inventor David Boggs, met to discuss technical challenges to form a new company around. While eating pizza one day in the kitchen of a college friend of Mr. Metcalfe’s, they were discussing ideas for Ethernet-based home automation systems. Finally, a young engineer named Larry Birenbaum burst out: “Why can’t we just make Ethernet run ten times faster?”

Mr. Boggs pooh-poohed the notion. Ethernet was based on the concept of managing collisions between data packets-and ten times the number of collisions would be unmanageable. But another engineer in the meeting, Ron Crane, jotted down a simple explanation of how one might “switch” Ethernet packets, thus all but eliminating collisions. The company that the group started that day, Grand Junction, would go on to build Fast Ethernet, running at 100 megabits per second on ordinary telephone wire, ending Ethernet’s bottleneck. Cisco Systems bought Grand Junction for $348 million in 1995.