Former Cisco CEO John Morgridge joked yesterday that Stanford University should have taken stock not cash from Cisco after its founders essentially set up and ran the company from the university's campus in Palo Alto, California. 

Stanford graduates Leonard Bosack and now wife Sandy Lerner established Cisco Systems in December 1984.

They were later requested to pay Stanford a fee to license the technology, after the university claimed that the company had been developed with the use of university resources and premises.

Cisco settled with the prestigious university for less than $150,000 (£89,000) in 1986 but Morgridge, who grew the company from 34 employees in 1989 to 2,400 by 1995, said at Cisco Live in San Francisco today that the academic institution would have been better off taking shares in Cisco instead of asking for cash.

He said: “This [Cisco] was a company that was kicked off the campus because they were operating a business. We settled with Stanford for an amount that was less than $150,000. We’ve never had any difficulty with Stanford because we paid them. But they might have been better off taking the stock." 

Bosack and Lerner pioneered Cisco's multi protocol technology at Stanford so they could communicate between their respective departments on the Stanford Campus. 

Despite declining revenues and profits in the company’s latest financial results, Cisco is still worth approximately $125 billion (£74 billion).

When Stanford University asked for the fee in 1984 Cisco had between 50 and 100 employees. Today the company employs 50,000 people. 

Many of Silicon Valley’s leading technology companies have their roots closely linked to Stanford, including Google, Hewlett Packard and Siri.

Morgridge said it's "not too surprising" that Cisco got its start at Stanford, adding that Stanford and nearby Berkeley have been tremendous contributors to the evolution of IT.