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tv   Bloombergs Studio 1.0  Bloomberg  December 23, 2018 8:30am-9:00am EST

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♪ emily: he is one of the longest running ceos in tech history,. hailing from west virginia, john chambers got his start at ibm before landing a job at cisco in the early 1990's. he became ceo in 1995, five years before the tech industry went bust. he ultimately grew cisco's revenue from $70 million to $47 billion in 2015. he is now focusing on finding the next cisco, investing in
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startups he believes are the secret to keeping america great. joining me today on "bloomberg studio 1.0," former cisco ceo and chair john chambers. thank you for joining us. john: it is a pleasure to be on your show again. emily: i want to start in the middle when you joined cisco. your first day on the job they put you in a telephone closet. you were not a nobody. you had a 15-year career, but is that true? john: it is true. i had come from the east coast with an east coast mentality. i came to silicon valley and i had always heard it was unusual, and our company was growing rapidly, so they put me in a telephone switching closet. i immediately thought, should i give my wife a call and say i'm coming back to boston? there was a problem with the customer and i jumped into it and found our customer support team, and there was none.
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i knew what the problem was and i was off to the races. i knew the difference i could make. i loved the valley, how fast we moved, but it was a cultural adjustment. emily: i want to talk about where that guy came from. you were raised in west virginia. tell me about your upbringing. john: i was raised by two doctors. they were in med school at the time. they both were amazing. my dad taught me about vision and strategy. he talked to me about how to do it in the which was unusual for a doctor. mom was internal medicine and psychiatry. she taught me the emotional side. they are two of my idols in life. emily: you talked about growing up dyslexic.
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how much of a struggle was that for you? john: it was a time when it was not understood. you read backwards. you invert letters. you can make the same wrong turn again and again and again. my hands are sweating now talking about it. tremendous weakness. i would never have disclosed it except 20 years ago, a young girl came up and tried to ask a question and she couldn't get it out. she had written it down. she started to cry. i came off the stage and said now, just ask the question. and she said she was dyslexic. i said i was too. i remembered i had a microphone on and had announced to the world i was dyslexic. contrary to what i thought, a lot of people said we appreciate the openness, but a lot of people said, i am too or can you help my child understand this? if you learn how to use that to
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a strength, you can picture things in a way that other people cannot. emily: how does it impact you as the ceo? john: you live with it. you play to your strengths and deal with limitations, but you can also decide how far you take that weakness and make it a strength. for me, i like to go a, b, c, so i can connect to the dots quickly and see a trend in the market, a chance to sell routers. emily: you became ceo of cisco. by 1995, you were in the top job. how did that happen? john: they promised me the top job in two years. it took four. if you don't fit in to the pace
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in silicon valley, you will struggle. i believe that we are all equal in life in my office should not be nicer than the executives. we put employees around the windows before was parker and created a culture with no reserved parking. it's rare you get to take a company from $70 million to $47 billion and change the world at the same times in terms of how the internet made a difference and all our lives. emily: the dot com bubble burst. john: when i watched what happened at ibm, where it should have been the leader forever, and yet it felt for almost 20 years. it has just slightly improved since then. i had been told that leadership was learning, but it was about
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as lonely as it gets. emily: how so? john: people who had been complimentary turned. to me, you are consistent in your behavior and life. something changes, you don't turn on the person you said good things to. there were tough comments made, that is part of leadership. if you can't take constructive leadership, but this is the amazing thing we did again and again at cisco, i developed an approach to how you deal with transitions or opportunities. we acquired 180 companies. our playbook was the best in the
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industry. when you get knocked down, you determine how much was self-inflicted, how much is market, how long it will last, then you share with everyone what you would look like when you recover. here is what you will do to get here, then this is how you measure success. you share that with everyone. emily: when you were down, did you lay out a strategy or figure it out along the way? john: our business, if you can imagine, crew at 70% the first week of december in 2000. there was no indication of problems. by the third week in january, it was minus 30%. 25% of my customers disappeared. i went out on a plane and i decided this is a 100 year flood and i said we will adjust appropriately and quickly and made all changes in 51 days. i painted a picture of what we would look like when we came out of it. we tried to do the best to take care of employees who were laid off. we were out of that and gaining market share at the time when most of my peers did not change. many of them disappeared. emily: you went on to run cisco for 24 years. biggest regret? john: i did not see 2001 coming. we did see the big recession in 2008 coming, so i learned from it and in the middle of 2007 there is something wrong in the financial market. our numbers are fine, above the quarter again, but all of a sudden the big banks lowered
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their ordering. i learned you don't trust numbers. i called the ceos and they said not a big issue. i have seen that pattern. i said we have a problem coming at us. the stock went down, of course. by mid-2008, we were in the recession. this time we were ready. we powered through it. emily: you left after 24 years. why not make it an even 25? john: most ceos don't survive more than five or six years. emily: you must be one of the longest running ever. john: it was a lot of time, but you have to know when you change. my last 10 years, i wanted to make a smooth transition. i said i will re-up for five
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years, then suddenly two to four. everyone knew that meant i wanted to move on to my next chapter and wanted to get everyone ready for the transition. ♪ emily: is silicon valley to arrogant for its own good? john: yes. ♪ emily: there was a time when cisco was one of the tech companies getting all the glory.
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emily: there was a time when cisco was one of the tech companies getting all the glory. was it hard to watch the others become that? john: not at all. my dad taught me you always take
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pride in your peers' success. emily: that is benevolent. john: it is practical. why should you object to someone else being successful? i have the next chance with these startups. i always enjoyed it when my peers were successful in the not -- not my competitors, but my peers. emily: the ground is shifting beneath these companies. what is your take on the controversy about how facebook was slow to act when it comes to election meddling and fake news, and how management was asleep at the wheel? john: one of the things for your audience watching this, and you have asked me a tough question, so i will first avoid it and tweak it a little bit.
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i'm a big fan of sheryl sandberg and leaning in and gender diversity. i was the first ceo to ask her to speak to my leadership team of 3000 people and required everybody to read the book. emily: i remember that. john: i said you are too tough on the women. we have to lean in. we are not doing our job. emily: do you think she is too tough on women? john: i think her book was tough on women. she said we have to our destiny and lean in. when you are breaking out of a challenge, you have to do it by making bold statements. emily: as much as i have benefited from lean in, you can't lean in if the door is nailed shut, and don't companies need to lean in more too? john: yes, they do. we had 30% of our board female before anybody started using those numbers. we had really talented female leaders who were amazingly good. you have to pay everybody equally.
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that should be a given for the same job. people at the same rank should be paid at the same level. in a startup, if you require people to interview one female for every open position, we saw the numbers change dramatically. emily: we know you are friends with sheryl sandberg. i know it is tough to answer this question, but what do you think they could be doing differently? john: this is where i am believer in replicatable playbooks. the first thing you do is determine how much was external and how much was internal, how long it will last, how deep you will be, then outline your strategy can paint the picture of what your company should look like coming out. it is important all high companies and leaders do that.
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they realize that in today's world you have to be very transparent and because it will get out anyhow. you have to be realistic that you can't reform government. how do we work towards legitimate goals? you have to build trust relationships and a track record of doing it. the minute you find yourself with a major challenge in front of you, you realize how serious it will be. i think silicon valley is struggling tech versus good versus bad, and are we a force for the good for the majority of america and around the world? i think we can be, but we have lost that focus. it is important we get back to it. emily: do you think facebook is a threat to democracy? john: no. the interesting thing is that when a company or leaders are doing well, it was like 2001, the minute i tripped, people turned on me. by the way, we came back. we came back stronger. that is the likelihood for
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facebook as well, but it means they have to do things differently. mark and sheryl sandberg are good people, but they have to do with issues in front of them and deal with them decisively. you have to save what does it look like an work jointly with government to get there. emily: given how many times you have seen this movie before, do you think facebook will recover? john: any company that doesn't cost me think they are under threat has a problem. you saw on amazon, jeff bezos, who is a good leader, but he said to his employees that amazon could be one step away from failure if we don't have the courage to the indent ourselves and deal with tough issues that come at us. 40% of the fortune 500 exist in 10 years. the same is true of high tech companies even more. if they don't navigate through their problems, they will get left behind. emily: amazon said they will create 50,000 new jobs and you
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have people in new york protesting in the streets. they don't want amazon in their city. why? john: anybody who doesn't want amazon and their city should think about it a little bit more. secondly, we have to create an environment where we create more jobs than we destroyed. i would have loved to have seen them locate one of their two locations in the midwest, where we are losing jobs. if we don't create a start up culture there, for the first time -- and i lived in north carolina and georgia and west virginia and ohio and indiana and illinois -- and for the first time people in that part of the world think they won't not have as good a life as their parents, and their children will not have as good a life as them. all they want is a shot. this is where the high-tech community needs to jump in and
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make a difference. emily: is silicon valley to arrogant for its own good? john: yes. you have to be very careful. first is inclusiveness. secondly, people around the country don't want to be told who they should vote for. people in west virginia, ohio, they just want to have their job and be proud. secondly, we have to realize what we do is very good, but we are also destroying jobs, and we have to deal with that. with the internet, we knew it would destroy a certain number of jobs, so we put network academies in every state in the u.s. and train 7 million students when i was there, many went on to college. we went into the middle east, palestine, created a partnership between startups and the arabs and jewish population about how we work together and the gdp went from .5% to 6.5% in three years. this is where i would like to see silicon valley come back to do what we do best, change the
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world and positive weight. we have to be careful that our overconfidence is -- ♪ emily: where do you think the next silicon valley is? john: india. ♪
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emily: where do you see the biggest potential for disruption? john: in every industry. it will wipe out 40% of the fortune 500. by the way, each of those big companies could get displaced as well. you are in a period where you disrupt, are disrupted, and have to reinvent yourself constantly. while the job of the ceo used to be vision and strategy, develop, recruit, change the leadership team, culture, and communications, that job is three times faster.
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emily: where do you think the next silicon valley is? john: india, if i had to bet on one country. it is also white it is so important to realize how important immigration is for this country. we want to be the place where the best and brightest from all over the world want to go with proper security clearance when they come in. in india, they graduate 600,000 engineers a year. we only do 60,000 a year in the u.s.. a huge amount of startups are out of i.t. pools in india, like stanford, m.i.t., polytech, but a larger scale. emily: are you worried india or china could surpass the u.s. and that our policies might enable that? john: absolutely. i think it is something we have to be realistic on. it has to be a level playing field. india and the u.s. should be the most strategic partnership in the world. emily: here we are in a trade war with china. is that the right strategy?
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john: the issue is simple. you have to have the same level playing field in china as china has here. we have to tell china coming here is what you need to do to get back to normal relationships. the pressure is probably the right thing to do, maybe not as general as i would like to see it, but it does have to get -- gentle as i would like to see it, but it does have to get fixed. emily: this brings me to politics. you describe yourself as a john mccain republican and cochaired his campaign and have given money to both parties and voted for hillary clinton? john: yes. emily: what you think about trump's policy? john: if you look, he has identified a keynote throughout the mid part of this country and the southeast, and that is what
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we alluded to earlier, people are no longer optimistic their children will have a better life. for me, it is hard to understand. i do grasp that things have to change. this is where it needs to change. i work with both parties very well. i get along with nancy pelosi, kevin mccarthy, chuck schumer, and the top republican senate leadership, and this is where our countries have a chance to come together and make a difference. we can do it around startups and job creation. whether you are in new york or minneapolis or indianapolis or charleston, west virginia or silicon valley, it is about startups and where the jobs are being created. if we can do that uniformly across the 50 states, let's put a person on the moon, let's dream. let's do it. emily: you are advising emmanuel macron, premise to modi.
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john: those countries realize we need a relationship between each other. you don't have any conversations with those states if you share the conversation afterwards. i think the practicality is we need india. if you watch the relationship between prime minister modi and president trump, it is very good. i think the relationship on average is good between president macron and president trump. emily: in 2020, what do you want to see? are you going to be involved in that? john: i would like to be. i was not in the last election. it is the first time i set out an election. i got asked election night in portugal who i voted for. i said i had voted for democrats for the first time. as i look forward, i think it is important both parties get back to the middle. america does not want to be led from the far right or far left, and yet that is what we are
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doing. i think we need to get our act together and be led from the center come and do it conclusively. emily: would you like to see a serious republican challenger to president trump? john: we need whoever is leading, whether president trump, or a democrat, or an outsider. we need to get the country back to the middle and inclusive. a country divided is not good for the rest of the world. they still know america has to lead. i think some of the issues being addressed from tax policy to ease of doing business should have been done decades ago. and taking on china, if someone is not treating you fair and you don't stand up to them, is the problem the person doing that or ourselves? it took us 19 years to redo our tax code. we are just getting regulations
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addressed, so it is important to realize both parties have good ideas. president clinton and president bush taught me that. i was close to both of them, and still ask for advice and help on tough issues. i think america will come back again. i think it has to be around startups as a logical uniting point. emily: you have written a new book, connecting the dots." many people are questioning is the world getting better or worse, so what is your advice to people building companies now? john: the speed of change will be fast. this is where government leaders know they cannot do it by themselves because they need the industry and technology to help understand, but if they don't understand the legitimate needs of government, then government will take action which will probably hurt both sides, so i would like to see business and government working closer together. am i an optimist on the future? yes, i am.
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emily: that is a great place to leave it. john chambers, thank you so much. ♪
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