Startup School, Meraki, Acquisition instead of Innovation?

 yCombinator just posted all its videos from Startup School 2013.. Including the Jack Dorsey talk that I posted earlier.

Meraki was a company that grew out the Roofnet Project at MIT to make wireless meshing and networking easier. They were acquired by Cisco, and now have turned full circle to supply MIT with wireless networking.

How can it be cheaper for companies just to acquire rather than innovate? Shouldn’t have Cisco spent $1.2 billion on R&D instead? WPP is another company that behaves in a similar way – instead of trying to understand a new generation, they just bought Vice.