Speaker 1:
From the library of the New York stock exchange at the corner of Wall and Broad Streets in New York city, you're inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans create jobs and harness the engine of capitalism right here, right now at the NYSE and at ISIS to exchanges and six clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of intercontinental exchange.
Joshua King:
We're delighted to bring our audience another episode of SLICE Uncut, which delivers listeners the full conversation between the New York Stock Exchanges, Executive Vice Chairman, Betty Liu, and her guests on SLICE an interview style program that seeks to unearth what entrepreneurs and disruptive brands are doing to change our way of life and our future. This episode is Betty's conversation with John Chambers, founder and CEO of the Venture Capital firm. JC2 Ventures. Prior to founding JC2, Chambers served as CEO and Executive Chairman at Cisco systems, growing the company from 70 million when he joined in 1991 to 47 billion. When he stepped down as CEO in 2015. At JC2 Ventures, John helps startups from around the world, build and scale with a focus on promoting entrepreneurship, gender equality, and accelerating overall new business creation around the world. In addition to his private sector career, he's been heavily engaged in global civic work for decades.
Joshua King:
He was the vice chairman of President George W. Bush's National Infrastructure Advisory Council, and worked with the previous administration on President Bill Clinton's trade Policy Committee. In 2018, John was appointed global ambassador of French Tech by President Emmanuel Macron and is the chairman of the US-India Strategic Partnership Forum. And John also added Author to his resume, when he recently published his, How to guide, Connecting the Dots lessons for leadership in a startup world that covers his new rules for disruption and lasting success in the digital age.
Joshua King:
Betty and John covered all those topics. And more during a far ranging conversation in the NYSE boardroom that was edited down for the Cheddar business broadcast. We picked up everything from the cutting room floor, and we presented to you here inside the ICE House. How can companies connect the dots to understand the future of their business space, stay ahead of their competition and ensure they're all disruptors and not the disrupted? Also, how can the global economy be prepared to create jobs as AI and digitization replace traditional manpower work? The full uncut SLICE conversation between the NYSE's Betty Liu and John Chambers right after this.
Speaker 3:
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Betty Lui:
John, thank you so much for joining me on SLICE.
John Chamber:
Betty. It's a pleasure to be back with you again, congratulations on your successful IPO in terms of being a acquired by the New York stock exchange and also how you are transforming the exchange together to next generation leadership.
Betty Lui:
Thank you, John. And it's so great to be back with you here in a different setting. But you and I have had so many conversations over the years and it's been so incredible to see your career and what you did at Cisco. And now what you're doing, which I think is so cool. I want to talk about JC2, your venture fund. I was reading a little bit about your outlook. Which is a little bit different than what other people say. Because you hear so much about these big IPOs. So your sense is that like venture funding is off the charts and it's growing and we see back companies are growing but it's actually declined over the last 20 years.
John Chamber:
Yes it has.
Betty Lui:
And that's something you want to bring out more and talk about?
John Chamber:
I do it's interesting in the next chapter of my life around JC2 Ventures, it's really about job creation. An inclusive job creation across all 50 states and in Europe and in Asia. Technology is probably going to destroy 20% to 40% of the jobs we know today. And that number may be conservative and large companies will won't add head counts. So if we don't get the startup engine going faster. If we don't get more Venture Capital spread into the system for a number of startups, we're not going to have the job creation for the next decade we need for 25 million job growth in the US.
John Chamber:
And probably 10 to 15 million of jobs that we're going to destroy. So rather than let the problem come upon us, how do we prevent it ahead of time? And to do that in a fun way, and to be able to do it with startups, both as advisor startups around the world but also particular emphasis, 18 of them that I coach and mentor today. And it's the time of my life. It's like having grandkids, Betty, and your kids aren't over enough to get there yet. But it is the neatest thing you do. Except this time, these grandkids are my children and my partners in business growth. And I've seen every movie they're going to face. And I help them through it. And then watching them grow and expand. And I get my pick of the litter everywhere in the world. So 18 I picked, I love.
Betty Lui:
Well, I was going to ask, do you get pitched a lot? How do you find the companies that are in your fund?
John Chamber:
Well, originally I found them by the CEOs coming and wanting to have a coach and then they'd have to convince their Venture Capital group that they need really a partner to help them grow in scale. Now it's actually a 360 flywheel where the Venture Capital group realized companies are waiting longer to go public. They don't have as much experience on growing scaling companies. That's my expertise. And also I just love teaching. And so as you do it successfully with a couple companies, then other CEOs ask you, and literally I get an opportunity almost in every hot startup there is to produce if I want to. I'm not sure that good but I've seen every movie. And I've done some things right. And I've made mistakes and that's really what they want us the lessons.
Betty Lui:
Right. They want the experience and how to scale as you say, a business. You took, I think Cisco and you were a CEO from one and a half billion to 47 billion in revenue. That's scaling a business
John Chamber:
400 people to 75,000.
Betty Lui:
Amazing.
John Chamber:
And so it was just fun.
Betty Lui:
So we'll talk about that in a moment but staying on JC2 though. So why do you think venture funding has gone down?
John Chamber:
Well, I think it's a combination. I think one of the biggest mistakes you make in this new technology world and it's about change everything. Every company will finally become a technology company. Every company will be a digital company. And that means the speed of change is going to occur even faster. But what is happening in today's environment is the US is no longer leading innovation. We're not even in the top 10 according to Bloomberg Billionaire Index. Our startups have gone from 90% of the world's Venture Capital are just two decades ago to 50% today. And we have not made the change in regulations and not made the change in ease of doing business and brought these startups across all 50 states. So our country... The number of IPOs, well, it's a good it's up year over year, back to your question about a lot of money going into the market.
John Chamber:
But these are unicorns that would've normally gone public a decade ago or five years ago. And so the number of startups actually were close to a 20 year low. And if you take out the big unicorns and how much money's going into death and the VC world, there isn't near as much money as we need to really grow the number of startups two or three fold to create those jobs. Countries that you would never consider ahead of us, are France when from 140 Venture Capital backed startups per year to 740 in four years. India, which would be the last place you would invest in terms of being a very slow leaders.
Betty Lui:
Right. You definitely. Don't think about.
John Chamber:
And so now we've got to realize we need to reinvent ourselves much. The exchange needs to reinvent itself. Our country does in terms of startups, etc.
Betty Lui:
I think if you're not reinventing yourself, you are going nowhere, right?
John Chamber:
You disrupt or you get disrupted.
Betty Lui:
Exactly.
John Chamber:
It isn't you don't go anywhere. You get left behind and you die.
Betty Lui:
That's true. And I think that's something thinking now about your Cisco career. That you had to constantly think about right?
John Chamber:
All the time.
Betty Lui:
So how did you make sure that you weren't disrupted?
John Chamber:
Well, the first thing is you learned the lessons the hard way. I came out of West Virginia, which used to be the coal center of the world, 125,000 coal mine jobs today, here isn't 160,000 in the whole US. Used to be the chemical center of the world with Carbide, DuPont, FMC etc. And the chemical centers moved to other places. And we went from one of the most successful states in the union to being challenged. Very good people, but not with the job creation for our young people.
Betty Lui:
So you said how that up close?.
John Chamber:
So up close now went to Boston, 2028. We couldn't even spell Silicon Valley. This really is crazy Californians and we were the center of High tech with the Wangs and the data generals and the decks and the nerdy. The million jobs around them. And now there's not a single major High tech company there. And so I've learned if you don't disrupt, you get enough behind. If you keep doing the right thing too long. And that's the danger of being very successful is you don't change. Then you get disrupted very properly. In Amazon, you get googled, you get Ubered. Put are verbs now.
Betty Lui:
I always wonder about that with CEOs who run huge public companies. As you mentioned, 75,000 employees. How do you make sure that they are constantly disrupting themselves or that they're entrepreneurial because that's hard with 75,000 people?
John Chamber:
You've raised about three or four different questions. The first is you have to start with the philosophy as CEO. If you're not changing, you're going to get disrupted. And that secondly, you're going to have to become a technology digital company, period. And move with a different speed of innovation. Now what's working against you is the markets are very short term focused. And the pay is on this quarter, this year, your shareholders don't want to hear your taking risks for three, four or five years out. They look at the return.
John Chamber:
You can have shareholder activists jump in and destroy your business model. And I don't think it's good at all. And that's one of the reasons many companies are delaying going public. It's because the regulation strain and the other issues that I've alluded to on it. So it starts with the CEO. She or he has to determine they're going to disrupt themselves.
John Chamber:
Then they're not going to be able to attract the same level of talent that Wall Street used to be able to do or GM or Walmart used to be able to do. You're now going to see that talent is going to startups and that's true around the world. And the startups are taking a longer tramatic term. It's almost 10 years before the average one goes public now. And so you're going to see big companies, suddenly partner with startups in a way they would never have done even five years ago, much less 10 years ago. And it's because they want the innovation partners. So that's one of the key things that's happened in the market that I think is going to be pretty exciting for these startups. And then you got to be careful. The big companies either love you too much or they don't love you at all. And they can burn resources.
John Chamber:
So, how to do this partnership, I think would be one of the fun things that will occur over the next couple years. But you have a company like ASAPP, which your viewers have never even heard of. Stealth company here in New York city. And it is probably the top AI company machine learning in the nation. And they've gone from a million in orders last year about 60 some million, this year, way over 180 million. And their average order is 15 million 1st order. And it's because companies are looking at how you use Artificial Intelligence and partner with a startup to help create that urgency and the transition in a very unique way. I think that's model for the future. A SparkCognition. Another one of my startups out of Texas.
John Chamber:
This is public partner with a Boeing to design the next FAA architecture for unmanned aircraft. So I think the really creative innovative companies and make no mistake about it, those companies I was talking about in both categories, the larger companies are innovative, but they've learned they're going to innovate in a different way.
Betty Lui:
As you say, through partnerships perhaps.
John Chamber:
Startups in a way that I wouldn't. If you were to say it's a partnership 10 years ago, advising your startup, I'd say, "Don't partner with a big company because first, unless you change their top line and bottom line, you're irrelevant. And the partnership is more tactical." But today what these startups bring is the innovation and the ability to recreate faster.
Betty Lui:
And think differently.
John Chamber:
Exactly. And that's often what the CEO surely wants.
Betty Lui:
Speaking about thinking differently, you mentioned earlier about how a lot of these startups, when they come to you. They are asking you for coaching they want to hear how you scale the business. So what are the most common questions you're asked this side?
John Chamber:
It's a great one because I had a number of mentors and I was fortunate and I really sought them out but they were often mentors in the key category. I had some great government leaders, President Bush, President Clinton, Shamone Brez who passed away about two years ago. One of the best I've ever seen. And then I had a lot of customers who were mentors at the CIO level, etc. And I think the questions that am getting, they are different than what I asked my mentors is more about outcomes. And how do you grow and scale a company? How do you handle your setbacks? How do you handle a crisis? How do you deal with a leader who's not developing what do you need to do? How do you do an acquisition? How do you form culture because a startup CEO, she or he has to focus on strategy and vision for the company, developing, including, retaining and changing the leadership team, communications and culture. And culture's the one they often underestimate.
Betty Lui:
That's so interesting.
John Chamber:
You never have a strong company without a strong culture. You may or may not like the culture at a Microsoft, Intel like Cisco and HP or Uber but you never see strong companies without it.
Betty Lui:
Well, even having started my company. Was a very small company. I came to appreciate how important culture is. It starts from very small and it becomes even more important as you grow bigger and bigger.
John Chamber:
And then communications, which you, Jack Welch, somebody that led three generations ago, great strategy and vision. Very good on developing leadership, deans at Crotonville, etc, understood the importance of the GE culture. But not a great communicator. And today's world as a CEO, your customers expect your company to respond to any issue brought to them through any channel in five minutes. 71% consumers do that and so-
Betty Lui:
That's different than years ago.
John Chamber:
... You've got to think differently. And on a crisis is basic as sounds. And this is one of the other things I do with my startups to talk about successes and mistakes made. But I've seen this movie so many times. When you have a crisis, it's very simple. Determine how much of it was self-inflicted and how much of it was market driven, determine what you're going to do to deal with a crisis, outline it and say what you're going to look like one and two and three years out.
John Chamber:
You then explain what happened to you and simple to understand terms. And then you report to your constituencies whether it's the citizens, shareholders, the customers, or the employees, here's where you are in status and a regular update. And it's basically, and be transparent and deal with it once. You could see for startups, it's also great lessons for some of what the high tech companies have made the mistake on in the last year. So it's lessons learned the hard way.
Betty Lui:
So John, what has been the biggest difference? You were running a company with 75,000 people and now you're at JC2 with three people. What's the big difference?
John Chamber:
Some of it's are similar. In other words, I build an ecosystem around me just like I did at Cisco with Venture Capitalists, with key customers to give you advice, industry expertise, the media that I trust, except this time, I only deal with media I completely trust. And that hasn't changed. It's just a skill issue. But the thing that has changed is I have more control of my destiny. But it's also very humbling. You don't realize how much was being done for you ahead of time. I walked out of a very good media session last night with one of my startup sprinkler. And it was a great session. And I went out to call Uber and I called Uber. And instead of Uber finding me immediately got lost twice. And then he dropped me and I used to have my car up with security there. Here's my briefing on what I want to be doing the next years for tomorrow, etc. So some of the things I do miss but as a whole, I love-
Betty Lui:
But it's fun in a way.
John Chamber:
Oh it is. I love being in control my own destiny. And I do control completely. Now only do things that I really want to do. I don't do anything anymore in business that I really don't want to do. Just kind of cool.
Betty Lui:
Which is not always the case when you're running a big public company?
John Chamber:
A lot of things. It's just-
Betty Lui:
Your schedules, not yours?
John Chamber:
... part of the job and some things you have to do because of your role. Sometimes you can't be as transparent because you will step on customer's toes or political toes, etc. Fun thing today is I can say what I really believe. Hopefully with class and certain term. You can judge whether I do or not.
Betty Lui:
You always do.
John Chamber:
I try, but it's also I think just more relaxing for me. I have fun every day in everything I do.
Betty Lui:
So one of that is writing this book Connecting the Dots. So why did you write this book?
John Chamber:
Well, I'm dyslexic and dyslexic hate to read and we actually read backwards and invert characters, etc. And so the last thing I ever thought I would do would be write a book. And yet as I talked around the world and didn't matter if was in Dubai, Paris, London, Berlin, New York, Austin, Texas, Dubai, Shanghai, everybody was asking the same questions. And then they'd often say, "John, why don't you write a book?" And I didn't want to but when I looked at it, we collected 587 different questions but the top 25-
Betty Lui:
Were the most common.
John Chamber:
... were 90% commonality. So I tried to write a book more like you would work with a young CEO or an MBA class or leader that wants to learn about mistakes made, etc. And so I wrote it in chapters sharing with how do you deal with setbacks. Which is the most important thing you can do for your two teenage boys. It isn't their successes they have,-
Betty Lui:
Its setbacks.
John Chamber:
... It's how do they handle the setbacks? And you'd do anything. To help them through do those setbacks almost. And it's how do you learn to communicate differently? It's how do you do acquisitions? It's how do you identify market transitions? It's what are the startups and the future going to look.
Betty Lui:
But you get to pick and choose what you want to do. And I noticed that you've gone on and taken some really interesting roles. So one of them is global ambassador of tech for France. So why did you take that on?
John Chamber:
Well, I'm a believer that as we alluded to earlier, the technology and digitization and AI is going to destroy a lot of jobs. Secondly, it doesn't matter if you're in France, US India, the Venture Capital is going into primarly Paris, New York, Silicon Valley, Deli, and Mumbai. And if you've got states in India that have 50 million people or eight regions in France that are outside of Paris, you've got to bring the success across the board. So what I'm doing is trying to help the technology really spread and create jobs.
John Chamber:
And I measure my success in 50% job creation per year for all my startups. And we're well ahead of that now. And by definition, it means your revenue has to be well ahead of 70% and do your duty conclusively and who would've ever thought that France would have an American High Tech person after snowed and everything else as their global ambassador, but yet that's what Macron understood.
John Chamber:
If France was going to change, he needed to bring people that brings new ideas and new concepts who truly care about the country and care about giving back. And I took 40 Venture Capitalists to France last December. We're probably going to do it again this September. And we showed them the startups, and it's going from 140 Venture Capital back startups per year to 743. And so it's up fivefold at the time the US is going down. So it's the building to make a difference. And you don't what me to, Betty, I'm going to take these apple in France and send it to America,-
Betty Lui:
Let's do the same.
John Chamber:
... We have to do better. They move at a different speed. You know how long I worked on tax reform and repatriation of earnings, 17 years. France changes things in six months, India demonetizes their currency in a weekend. They change their angel tax investing for startups in India in one day. After I talked to the Prime Minister and talked to the press about what was needed on it. We are moving too slow in this country. And while on some things with the administration, I don't agree. What I do agree is the change in regulation but we need a national digitization policy and we need to become a startup nation again.
Betty Lui:
And we need to do it faster. You mentioned India too. So you're an advisor to the prime minister committee.
John Chamber:
Prime minister committee.
Betty Lui:
What have you advised him on?
John Chamber:
It's so fun because I had the chance to chair the US-India Strategic Business Partnership Forum, which is the top companies working together and to reset with the board our focus not just about trade but job creation of both countries, how you work with government common goals? How do you do this inclusively? And to really transform both India and the US and we're can learn a lot from each other. Modi is in the top three leaders I've ever met my life. And if he gets re-elected and I think the odds are good that he will, I think he will not just set a stage for growth for India for five years but for the next 25. They're going to be the fastest growing economy in the world. When I said that four years ago in India, everybody said no way. And yet it's growing now over 7%. It'll probably grow close to 10% and it'll be more inclusive and where I'm honored to be as advisors.
John Chamber:
How do you do a digital India? What does this mean for manufacture? What does it mean for smart cities? What does it mean for startups? What does it mean for education, healthcare, the environment? And they're approaching it and he's approaching it with a total globalization picture on how India leads in this. And so they move from a very slow follower, leapfrog game to a fast innovator. And now of a sudden they're saying, "Perhaps he's going too fast. I think he ought to go faster." But he's changing a country with a vision and a dream. And that's what Macron is attempting to do in France. But as in France they are resistant to change at a certain point. But I think he's absolutely got the right strategy and the vision for inclusiveness in France.
Betty Lui:
It gives you so much context. Anyone who says it's so hard to change a ship or it's so hard to turn around a big company. Turning around a whole country.
John Chamber:
Especially if they've been successful.
Betty Lui:
Yes.
John Chamber:
But anybody who doesn't change will get left behind. And if there's one take away message-
Betty Lui:
I was going to say yes.
John Chamber:
... Is you disrupt it, you get disrupted, you grow or you die.
Betty Lui:
And John, just before we go, I noticed that just in the course of our conversation and having gotten to know you is that feedback is really important to you.
John Chamber:
Yes it is.
Betty Lui:
You seem to be always open to feedback and you ask for it. So was that like a cornerstone of your leadership style?
John Chamber:
It really was. There was only one Steve Jobs and he just somehow knew what to build. And by the way, it took him seven years. What I do is I just listen to my customers and listen to our employees and I treat employees as part of a family. I knew every onus of every employee, their spouses, their children, that's not just 75,000 employees. You include their spouses, their children and 50,000. There's life threatening. We were there for them like no one else. And that's why our attrition ran 5% in an industry that runs 15%. And that's where our acquired companies that you're acquiring people. Next generation product ran atrition at 4%.
John Chamber:
And that's unheard of but it is that leadership style and then getting really bright people around me who can run with it and we're much better together as a team. And then you can take these new emerging technologies that I'm betting on like Artificial Intelligence, like the Internet of Things, like digitization, like cyber security, maybe one more time, not only changing the world from job creation but also changing world hunger with crickets and robotic Internet of Things cloud based cricket farming. When I first started sharing them here on the New York stock exchange on CNBC, everybody found them interesting. I said, "this will be the next form of protein."
Betty Lui:
But you were like now. This is the next-
John Chamber:
And it was under height and it is off to race. So to do that and to listen constantly is what I believe is right in life. I also believe it's the right thing to work with governments and citizens for legitimate needs on privacy, etc but be very careful if businesses don't move, government will regulate and the unintended consequences might do more harm than the good they're trying to solve.
Betty Lui:
And John as part of JC2 Ventures, I'm really curious. What are the new technologies you're investing in that get you really excited?
John Chamber:
Well, it's fun. What I try to do that is I look at a market and figure out where there's a business transition occurring combined with a technology transition so much like the internet did, if you will, 20 years ago. It's effect on telecom, voice being free, etc. These new models are built around business models that occur by every industry. Every industry will become a technology in digital company. So the transitions offer to occur in financing the streets first or retail or manufacturing almost never in healthcare and mining. Now they're happening across the board.
John Chamber:
The areas that I'm most optimistic on would be Artificial Intelligence machine learning. It might be along with the internet, the only technology that ever was not over hyped and actually exceeded expectations. And it will affect every company in terms of productivity and job transformation, cyber security, as you begin to look across it, you're talking about security being an increasing issue.
John Chamber:
So the ability to do a phone where you take your apple phone or your Android phone and slide it into a secure case. So nation proof state, capability is key and that would require first for defense workers but also for you and I. Because the bad guys can get on your phone download, whatever's there.
Betty Lui:
Totally.
John Chamber:
Or worse, turn it on or off anytime and take video. I have six startups in the area, the five of six are growing over 200%. The iTech that I've talked about in terms of the next generation of protein, which is really an Internet of Things, cloud based application for farming and Itech is probably the only under hype technology I've seen in a while and then everything from drones. And how do you protect against unwanted drones and secure airspace, etc. Have the top company in D drone that is doing that with your handling it.
Betty Lui:
It's a wide world-
John Chamber:
Is very wide.
Betty Lui:
... Of technology companies. I imagine that you're having fun and right now investing in these companies but I think fun has always been part of your leadership style.
John Chamber:
We were on the New York Stock Exchange today and one of the dealers on the floor came up and said, "My brother, worked for you and JPMorgan Chase and at Goldman Sachs 20 years ago. "And I remembered him because he was one the best salespeople we'd ever had but it was a culture. And he said, "I enjoyed that so much. We built a family." And I enjoyed every day that I was at Cisco. There were times during the day I wasn't having fun.
John Chamber:
But as a whole, I really loved it. Now, what is cool about what I'm doing now, is like being a grand parents. I get to know where pick my grandkids in terms of which startups that I work with or not. I get to give them advice. They think I'm reasonably intelligent. They also appreciate my mistakes. And then after I give them advice, I give them back to management on a Friday evening and I go have a bourbon and ginger. And so I'm having more fun, Betty, than I've ever had. And I think it's important in life that we enjoy what we doing every day and trying to change the world in some small way at the same time.
Betty Lui:
John, thank you so much for this conversation.
John Chamber:
It was a pleasure as always. It was a lot of fun.
Betty Lui:
It was.
Joshua King:
Thanks so much for joining us inside the ICE House for a special uncut recording from the SLCIE episode with John Chambers, which appeared on Cheddar business and as part of Intercontinental exchanges insights that can be found at the ice.com/insights. So that's our conversation for this week. Our guest was John Chambers, CEO of JC2 Ventures and Chairman Emeritus of Cisco. If you like what you heard, please rate us on iTunes. So other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet us @IcehousePodcast. Our show is produced by Pete Ash and Theresa DeLuca with production assistance from Steve Broman Chuck and Ian Wolff. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor is affiliates make any representations or warranties. Expressed or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content here in. All of which is presented solely for informational and educational purposes. Nothing here in constitution offered to sell. A solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of mental clarity.
