17 Conference Report #techonomy17

A Conversation with Cisco’s John Chambers

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  • Cisco's John Chambers speaks with David Kirkpatrick of Techonomy. Photo Credit: Paul Sakuma Photography

Speaker

John Chambers
Executive Chairman, Cisco

Interviewer

David Kirkpatrick
Founder and CEO, Techonomy


A conversation between David Kirkpatrick and John Chambers of Cisco. Below is an excerpt from their conversation. You can download the full transcript here.

Kirkpatrick: I want to just immediately bring out somebody who I have tremendous respect for and who is a legend of global business and American business, John Chambers. So John, would you please come out here?

[APPLAUSE]

Kirkpatrick: John Chambers is—you’re still executive chairman right this minute?

Chambers: Until the middle of December, yes.

Kirkpatrick: Until the middle of December, he’s executive chairman of Cisco, which he ran as CEO for many years, and when he arrived at Cisco as CEO—what year was that?

Chambers: I came to Cisco in January of ’91, became CEO in January ’95.

Kirkpatrick: That’s the year I started covering tech. That’s exactly the month I started covering tech, January ’91.

Chambers: Both of us were lucky.

Kirkpatrick: No wonder we’ve known each other a long time. Cisco had $70 million in revenues when he arrived in January ’91. When he left, which was about two years ago, they had $50 billion in revenues. They had 400 employees when he arrived; they had 75,000 employees when he left. So there’s cause for him being a legend. He is one of the great leaders and thinkers of American business. And not only is he a really very effective and thoughtful manager, but he has an ability, as you’ll see, to think about the context of business in an extremely constructive way and he has engaged at a global level for probably as long or longer than any other big corporate leader that I know. And I mean the way we really got to know each other was at Davos.

Chambers: Yes.

Kirkpatrick: Where you have been a really, really deeply committed participant for decades. And I think the reason, probably as much as anything, that you were able to grow Cisco so much was how global of a view you did take.

Chambers: That’s the nicest intro he’s ever given me. So the next question’s going to be really tough. [LAUGHS]

Kirkpatrick: Well the next question is—the next question you could say is a little more parochial even, because I wanted to talk about the United States. You have been, from the earliest period, an advocate for the internet as a competitive opportunity for the United States, an engine for growth. You famously were an advocate with President Clinton back in the day for what the internet could be. So how did that go? How do you think we have come in this period and how would you assess where the U.S. is right now in terms of our sort of application of connectivity for our benefit?

Chambers: So I had the honor, and I think both of us were very fortunate, we came into our jobs just as the internet took off in the early ‘90s. It sounds very normal today to say the internet was going to change the way you work and live and learn and play and it would change every business and forever change how you touch your customers. But that’s what happened. And in the mid-90s I was with President Clinton onstage at the White House, scared to death because I was about to become CEO and I was trying not to mess up this thing on a national agenda, but it was about the internet era, and Ira Magaziner was the thought process behind it for President Clinton. President Clinton was on my right, Vice President Gore on the left, and he was talking about what we were going to do as a country and what a difference it would make in the country and I was there to talk about it from the business, the technology side, to really fill in the opportunities that he outlined. And many people did not grasp that day the tremendous opportunity but also the challenges that go with it. As usual with creative ideas, most people were challenging.

Fast forward to the end of his term. In eight years—and remember, I’m a moderate Republican, which is kind of endangered in this world, but basically 24 percent in the average American household income—the last time America got a raise was 2000—34 percent growth in GDP and 22.5 million jobs.

Kirkpatrick: The 24 percent was what exactly?

Chambers: The average mean American household income increase. So in other words, the average person from 1992 to the time that he left office, their income went up by 24 percent. But it was around the internet era and people got it.

Now, where we are today is the U.S. clearly led in this last transition and was literally years ahead of everyone else. David, today it’s not the case. We are the only major country in the world that does not have a digital era plan that is at a national level, not just for the country, but also in terms of startups, and job creation.

If you watch who is leading, it will shock you. Israel, you can say that doesn’t count because they’re a startup nation. But it was Shimon Peres and [Benjamin] Netanyahu who started this in motion about six years ago. It was France, in Europe. And when we said France would become a great place to do business and it would become the startup nation of Europe, which I said three years ago onstage with at that time Economic Minister [Emmanuel] Macron, even my closest friends said, “John, great place to go for dinner, great place to go vacation, but not a chance.” And fast forward to today, watch what just happened last quarter. They’ve been the top startup engine in Europe in terms of VC investments in tech startups as of last year. They went from an average of about 120 per year to 486 in two and a half years. They also, as you know, in startups—I saw there are several VCs joining us—you start off with smaller investments and as a company gets bigger—it took them only one year from the time they became the startup most investments by VC to be number one in terms of total dollars.

And what surprises you, go to India, somewhere you might consider a third world nation. [Narendra] Modi, in India is as good as you hear. He’s outlining the digital agenda for his country. He’s leapfrogging other countries, including the U.S., with how does he go after this as a country and how does he create 1.2 million jobs per month, how does he grow the average income of every citizen in India, not doubling every 10 years, but doubling every five to six years. To the U.S., we still don’t have a national agenda on this. We talk about startups and job creation and job destruction, but we don’t time them together and we have still failed to deal with our failed education system.

Kirkpatrick: So Modi doesn’t just say he’s creating jobs, he actually has a strategy to do it.

Chambers: Not just a strategy. If he doesn’t create 1.2 million jobs per month, he’ll have social unrest. Because—

Kirkpatrick: But he sees digitalization as the tool.

Chambers: It’s digital India, everywhere. But he also understands his strengths and limitations. He knows it’s going to destroy jobs. He knows he’s got to get a startup engine going faster. He knows he’s got to make this inclusive across all 29 states and the five territories. And he is fearless. When he believes it’s in the right interests of his country, he first inspires hope, he then gets people to believe it’s possible, then probable, and then execution. Now, he needs even more execution arms around him, but so far he’s off to a great start. India will be the fastest growing economy in the world for this next decade. When I said that three years ago, people looked at me like I was crazy. You know, “What about China? What about the other countries?” I think it was Morgan Stanley or JPMorgan Chase just came out with saying India will grow an average GDP growth of 10 percent per year for the next decade.

Kirkpatrick: 10 percent?

Chambers: Think what that means in terms of the economic benefit to his citizens and the economic inclusiveness. In the United States, we’ve got the opposite problem. Most of the creativity and startups are on the East Coast or West Coast. We’ve moved from the startup nation—I mean, think about it, all of us understand in this room, we are the best in startups, right? Wrong. We’ve become the worst. In the first half of this decade, 2010 to 2015, we only grew startups by 12 percent. Our peers in countries like Australia and France and India grew at 40 to 60 percent. And what did China grow? At 100 percent, 4,000 startups a day.

Understand the implications. If you believe, as I do, that digitization and many of the cool technology things we’re talking about will destroy jobs in large enterprise accounts and 40 percent of them won’t even exist in a meaningful way in a decade, if you don’t get the startup engine going faster than ever before, you’ll leave behind your nation. And you’ve got to do inclusive of all states, not just the East Coast and the West Coast. Today we are at a 40 year low on the startups. Today you’re going to struggle to see the Nasdaq get to 100 IPOs this year and under 100 last year, and we normally do 200 to 240. At a time when we should be doubling and tripling our IPOs to achieve the 25 to 30 million jobs our political leaders have outlined, we’re going the other way.

So on the one hand, I’m a huge optimist on what this means. It will occur probably three to four times faster than the internet era. On the other hand, if we don’t deal with our basic issues in terms of inclusion, in terms of an education system that has failed, in terms of a startup engine that is the envy of the world, not in last place of the major countries, we’ve got a problem.

Kirkpatrick: Geez, I’m glad you’re leaving Cisco. You’re letting yourself think about some other good stuff. We need your voice on this. Thank you so much for saying that.

Chambers: Well it’s fun, but you know, I have lots of weaknesses. My wife could get you a list, she could talk for an hour on it. But I can talk about market transitions and I get those and I understand how to take a market transitions, identify the right leaders and make it happen. So in my next life I’m going to take 10 to 12 startups and lead by example. They won’t just be here in Silicon Valley. They’ll be spread throughout the country, in Texas and Georgia and in Colorado and in Illinois and in West Virginia and in New York and in Berlin and Paris and also in India. Not because that’s a good business strategy, because those of you in the VC world know you’re better off staying close to home. But I want to show we can really make it inclusive. My job is to see those grow 25 to 50 percent a year in terms of headcount and to be a model where I can push the country on how we do things differently and have fun doing it.

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