Why Cisco paid $700 million for this guy's company after buying his last one for $3 billion

Cisco announced its plans to buy a small European videoconferencing startup, Acano, for $700 million cash (plus incentives) on Friday. 

That's a pretty high price for a startup that launched in 2012 with about 200 employees, according to its LinkedIn profile.

Scuttlebutt is that Cisco got into a bidding war to buy the startup. The person we talked to didn't know who else was after Acano, though Microsoft's name was kicked around. 

Plus, it turns out that there's a long history between Cisco and the CEO cofounder of Acano (OJ "Odd Johnny" Winge), and the founder of another competitor, Pexip (Simen Teigre).

Simen Teigre was the founder of Tandberg, the videoconferencing company Cisco bought in 2009 for $3.3 billion. OJ Winge was an early employee and key exec at Tandberg.

Both of them joined Cisco after that acquisition and both left not too long after their stock lockup periods expired, Teigre to found Pexip. 

Winge, who had been running Cisco's collaboration unit, went to a venture capital firm, Ubun Partners. That's where he funded Acano (composed of a lot of former Tandberg engineers) and joined as its CEO.

Rowan Trollope took over Winge's job as general manager of the Collaboration group at Cisco. 

Solves a big problem

Acano, like Pexip, solves the problem of getting a lot of different videoconferencing products to work together. Not all of them use the same audio or videoconferencing technology - that's why you can't just Skype someone who uses Cisco's WebEx.

Acano is particularly good making Microsoft's popular enterprise videoconferencing product, Skype for Business, work with Cisco's many flavors such as Telepresence, WebEx, Tandberg Systems.

Cisco has been struggling to compete with Microsoft ever since it bought Skype. It spent years trying to block the acquisition, and when that failed, it actually tried to convince the government that it should force Microsoft to change Skype so it would play nicer with Cisco's products. 

Acano and Pexip aren't the only startups to solve this problem. So do Spontania and Blue Jeans Network (another company founded by an ex-Cisco exec).

But because Acano and Pexip were built by the guys that built Tandberg, Cisco was always watching them closely.

When Pexip came out of stealth, Cisco reportedly threatened it with patent infringement lawsuits, says the person we talked to. Cisco owned Tandberg's patents but some of the star engineers responsible for those patents were now working for Pexip.

It never blew into major litigation. Such threats are often settled by sharing the patented technology and/or the threatened company agreeing to pay the other company licensing fees.

That left Acano

Meanwhile, Acano had apparently been growing well, landing reseller partners like Hitachi and Vizcom.

So Cisco decided it wanted to own it, even if it meant winning a bidding war to get it.

And i'ts bringing Winge back into the fold. He will become head of a new team within Cisco's Collaboration Technology Group, Cisco tells us, reporting directly to Trollope, Cisco tell us.

Cisco declined comment on the bidding war.