From the Reins of Cisco to Raising Unicorns
John Chambers knows how to spot them. Market transitions, great leaders, technological shifts, and promising companies—the “unicorns” set to become billion-dollar enterprises.
In 20 years as CEO at Cisco, Chambers helped at least 10,000 of his employees become millionaires. He oversaw 180 acquisitions. He grew the company’s assets from the millions to the multi-billions. Along the way, he watched others flounder as they tried to navigate economic booms and busts and technological changes. And now, after two decades of creating economic value through one of the world’s largest companies, Chambers is dedicated to creating prosperity from the ground up.
“This is a time where you either disrupt or you get disrupted,” Chambers boldly states.
Investing over $70 million in 16 innovative startup companies from around the globe, he hopes to change the world one more time with JC2 Ventures by supporting and mentoring the next generation of entrepreneurs.
His focus comes from a belief that almost all job creation in the future will come from startups. “People say JC2 Ventures is a venture capital company. That’s fine, but it’s much more than that,” explains Chambers. “It’s a specific, purpose-driven venture capital company. It’s about creating the next generation of great companies in this country and around the world.”
Lessons from Transitions
Growing up in West Virginia when it was the chemical center of the world, Chambers saw an industry go from first to worst and the profound effect that could have on a community.
“In West Virginia when I was growing up, people had a very high standard of living,” says Chambers. “Then to watch us tumble when the market changed, the implications for the state and for our communities was extremely painful.”
At IBM he saw a similar effect when the giant humbled by the changing PC market.
“They missed the transition from mainframes to mini-computers to PCs to the internet. It took them almost 20 years to recover,” says Chambers. “That showed me how important it is, once you’re on top, to constantly monitor the technology trends and get it right.”
Chambers is sharing his business philosophies with the world in his first book, “Connecting the Dots: Leadership Lessons for a Startup World.” Providing strategies for leading companies through markets shifts and periods of disruption, he shares the story of how he overcame childhood dyslexia to become one of Silicon Valley’s most revered business leaders. He hopes these lessons and mistakes will help the next generation of leaders and entrepreneurs beyond those that he works with at JC2 Ventures.
“I learned to deal with setbacks as a younger person dealing with dyslexia,” he says. “You have to deal with your setbacks in life and not panic when they occur. Likewise, if you’re going to be aggressive in the market and have a chance to achieve big dreams, you’re going to hit some bumps along the way. You want to teach your team that it’s how they handle those bumps and setbacks that is so key.”
Startups Make Us Stronger
Cisco had some issues that were self-inflicted while others hinged on the dot-com bubble that burst in 2001. He thinks that perhaps the fear of another “dot bomb” is causing both investors and the government to lose faith in new and cutting-edge technologies. Yet, he maintains that the stock market is too short-sighted and there are simply not enough startups and unicorns in the U.S.
“We used to be the number one leader on innovation in the world; right now, we’re number 11,” says Chambers. “We used to lead the world in terms of startups, but the number of new companies starting in the U.S. is at a 40-year low.”
“With artificial intelligence and the business process changes that are occurring, the majority of large companies will not add headcount over the next decade,” he continues. “So if we’re going to employ more people here in the U.S. or in Europe or in Asia, we have to look at how to get these startups growing faster and being more focused.”
In terms of startups per capita, the United States is currently lagging behind Israel and the UK, to name a few. According to Chambers, a robust startup landscape is required for economic growth and innovation, two cornerstones of any country’s leadership position on the world stage that are also vital to a thriving society.
Chambers asserts that our government needs to promote more technological innovation and that we all bear some responsibility in a societal contract to foster a good startup culture. “I think you’ve got to be very transparent both with the market, with your customers, with the citizens and society about the challenges we face as well as the opportunities, and then say how do we address those challenges,” says Chambers. “I think now is a time when business and governments and citizens must work together. Business cannot hide behind the scenes in saying, ‘but that’s society’s problem.’”
The Chambers Effect
While he doesn’t have a crystal ball, Chambers has an unprecedented knack for spotting major transitions and picking the right pony. With his investments, he looks for companies with new business models, groundbreaking technology, a world-class CEO, and a focus on customers.
Chambers likes to personally nurture all of his projects and considers himself to be in partnership with every CEO, including his work with Aspire Food Group (which has a mission of solving world hunger through crickets) as well as artificial intelligence company SparkCognition.
“When I started investments in key companies, my investments were as much mentoring and coaching as they were financial. My goal is to be a true partner with the CEO on his or her journey,” says Chambers. “With each of my startups, and especially at SparkCognition, I look for potential market growth and an impending transition.”
The Market Transition
The next big thing, according to Chambers, is automation (to wit, Aspire is a robotic farm) and artificial intelligence. He believes that even though AI may seem over-hyped, it is going to be the greatest productivity factor in our lifetime.
“It will have challenges in terms of changing business models and how we create jobs for those employees who get displaced. Intelligent devices and intelligent processes will be everywhere in the network, from the cloud to data centers throughout the network all the way to the edges,” he says. “The key will then be the security of all of the above because the true currency of the future will be trust and a strong track record, and security is at the heart of that.”
Chambers believes artificial intelligence will allow people to live longer, be dramatically healthier, and allow us to have a higher standard of living—if we do it right. He predicts the pace of digitization, AI, and automation taking hold in everyday life will be “three to five times faster” than the transitions the internet brought.
“AI and automation will transform everything we do in terms of digitization in our lives, our businesses, our cars, and our homes. That said, as with any major change, there will of course be challenges. We’ve got to be realistic on how we’re going to manage those challenges and the legitimate concerns of citizens and government,” he cautions. “Change makes people uncomfortable, no matter how much you believe it’s needed. This is something that’s going to happen, period. So, how we get ahead of it, and how we balance it is the key takeaway.”
What Makes a World-Class CEO
Partnering with a company like SparkCognition is exciting for Chambers, not merely because of the technology, but because of the people involved as well. Chambers always looks for leaders who are focused on market transitions and not on competitors. These CEOs can sense when their company is near an inflection point and know how to take advantage of that and drive it forward. Digitization presents such an opportunity.
“Digitization is clearly at the very forefront of how you use artificial intelligence to change business process and business models,” he says. “But it’s not about technology. It’s about the outcome you want, and it’s how a leadership team can work together to be truly brilliant. I think one of the top young CEOs in the world, Amir Husain, has a vision of what he can do and how he uses these market transitions to achieve these outcomes.”
Chambers says that what is so “wicked smart” about Husain is that he knows what he doesn’t know, and that he’s willing to ask for help and advice on that. And it definitely takes a great leader to know one—Chambers has racked up countless accolades for leadership style and his success as a CEO, including being named one of Time’s 100 Most Influential People and Harvard Business Review’s 100 Best-Performing CEOs in the World.
A key lesson for CEOs it to “deal with the world the way it is, not the way you wish it was,” says Chambers. “Setbacks are inevitable. If you’re taking good business risks, determine how much the setbacks were self-inflicted and how much of it was the market. If the majority of it was market, you need to focus on how to come out of it. If your strategy was working before, stay with it. If the issues were created internally, then you’ve got to fix the issues.” He stresses, “How the CEO navigates through difficult situations determines the success or failure of the company.”
Listening to Customers
For Chambers, the conversation will always come back to company culture (“ultimately, creating culture is one of the cornerstones of good business,” he says). Chambers made Cisco a family, and was rewarded with some of the lowest turnover in the industry and employees who worked to help the company bounce back when necessary. He makes it a point to treat employees and customers alike with respect, and in fact, Chambers credits customers with his ability to sense market transitions.
“You’re often more a product of your past in terms of how you’re able to see the future and how you learn from it,” he says. “So, what I do when I think about market transitions, is listen to my customers.”
With these elements in place—a culture-oriented company, a world-class team empowered to have a huge impact, and an impending market transition—Chambers advises setting “audacious” goals. “Many people might say I had too many dreams,” he says. “I respectfully disagree. I wish I had dreamed even bigger and taken more risks, and that’s what I am helping startups do today.”