tv Bloombergs Studio 1.0 Bloomberg December 25, 2018 5:30pm-6:00pm EST
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the nikkei tumbled 5% into a bear market with all but two members in the red. they are poised for the worst december on record. ♪ 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. chambers led tech's bellwether out of the devastation. he ultimately grew cisco's revenue from $70 million to $47 billion when he stepped down in 2015. he is now focusing on finding the next cisco, investing in a raft of start-ups that he believes are the secret to keeping america great.
joining me today on "bloomberg studio 1.0," former cisco ceo and chair john chambers. now founder of j.c.2 ventures. 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. i understand your first day on the job they put you in a telephone closet. you were not a nobody. you'd 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 was a prior i.b.m.er. and a company called wang liberties with 32,000 people. i came to silicon valley and i had always heard it was unusual, but the first day, our company was growing so rapidly. i joined when there were 400 people. they had no space. 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? then there was a problem with a customer and i jumped into it and found our customer support
team, and there was none. so 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. the guy who was willing to sit in the telephone closet. 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 that i came along. i might have been a surprise because that's not necessarily the logical time to have a child. they both were amazing. my dad taught me about vision and strategy. he could see five and 10 years out. to answer your question how it makes you feel, my hands are sweaty now talking about it. tremendous weakness. i would never have disclosed it except on a take your father to workday 20 years ago, a young girl came up and tried to ask a question in front of 500 of her peers and she couldn't get it out. she had written it down. she started to cry and leave. i came off the stage and said something and she said she was dyslexic. i said i was too. we sat down on the floor and i walked her through, how to get the question how the like you're talking to somebody. 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? so dyslexics don't think serially. they go a, b, z. if you learn how to use that to 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. everybody has this in life. 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, z, so i can connect to the dots quickly and see a trend in the market, a chances to, instead of selling routers, set up the internet and change the world. i get that. emily: you became ceo of cisco. you joined in 1991 and 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. emily: yet they still put you in the telephone closet. john: the culture. if you don't fit into a very
relaxed, fast moving pace in silicon valley, you're going to struggle. i believe that we are all equal in life in my office should not be nicer than the executives. that's what we always did. we put employees around the windows before it was popular. and we created a culture that there was no reserved parking including for the c.e.o. it's rare you get to take a company from 400 people to 75,000. from $70 million to $47 billion and change the world at the same time in terms of how the internet made a difference and -- in all our lives. emily: five years into your tenure, the dot-com bubble burst. did your bubble burst in that moment? john: when i saw wang fall from grace and 32,000 people lose their job -- and i watched what happened at ibm, where it should have been the leader in the world forever, and yet it felt for almost 20 years. it has just slightly improved since then. i knew transitions happen. i had been told that leadership was learning, but it was about
as lonely as it gets in 2001. emily: how so? john: people who had been complementary, some of them turned. to me, you are consistent in your behavior and life. something changes, you don't turn on the person you said good things too. there were tough comments made, that is part of leadership. if you can't take constructive criticism, you can't lead. 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 industry. when you get knocked down, you determine how much was self-inflicted, how much is market, how long it will last, which is usually longer than you think. it will probably be deeper than you think. then you share with everyone what you would look like when you recover. here is what you will do to get
there, and then here is how you measure success. you share that with your shareholders, employees, customers. emily: when you were down, did you lay out a strategy about how to lead the company out of it? or figure it out along the way? john: our business, if you can imagine, grew 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. didn't stop ordering, disappeared. when i saw that number, i went on a plane and toured the world for about two weeks. 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. and most of them were left behind. many of them disappeared. emily: you went on to run cisco for 24 years. john: yes. emily: biggest regret? john: i did not see 2001 coming. i'm usually really good at
connecting the dots. we did see the big recession in 2008 coming, so i learned from it and in the middle of 2007 i said there's something wrong in the financial market. our numbers are fine, above the quarter again, the next quarter was shaping up nicely. but all of a sudden the big banks lowered their ordering. my numbers are fine but i learned not to just trust numbers. i called the ceos and they said not a big issue. we're just slowing a little bit. 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 biggest recession we've seen. but 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 fun. but it was the rush to know when you have to change.
my last 10 years, i wanted to make a smooth transition. i said i will re-up for five years and then suddenly i said i'm re-upping for two to four. everyone knew that meant i wanted to move on to my next chapter and wanted to get my family in good shape to make it through the next transition. three years to the day was the date we announced i would move to executive chairman and make for a smooth transition. ♪ emily: is silicon valley too arrogant for its own good? john: yes. ♪
emily: there was a time when cisco was one of the top tech companies getting all the glory. was it hard to watch amazon and google and facebook and apple become that? john: not at all. my dad taught me you always take pride in your peers' success. and it's so important the industry does well. emily: that's awfully
benevolent. john: no, it is practical. i believe you don't win by yourself, you win as a team. why should you object to someone else being successful? also i'm getting another chance to do the next cisco with these start-ups. i always enjoyed it when my peers were successful. not by competitors but my peers. emily: the ground is shifting the need facebook and google and apple and amazon. 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 really tough question, so i will first avoid it and tweak it a little bit. i just agree that they were asleep at the wheel. i'm a big fan of cheryl sandberg and believe in gender diversity. i was the first ceo to ask her to speak to my leadership team of 3,000 people and required everybody to read the book. emily: i remember that. john: i said you are too tough on the women.
for us men, we have to lean in, we're not doing our job. emily: do you think she is too tough on women? john: i think her book was a little bit too tough on women. she was making a point. she said we have to control 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 and the message of 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. using cisco's example when i was there, we had 30% of our board female before anybody started using those numbers. and we didn't do it because it was just the right thing to do. we had really talented female leaders who were amazingly good. you have to pay everybody
equally. that should be a given for the same job. it's easy to do in a large company. you just rank people. people at the same rank should be paid at the same level. period. 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. i know it is tough to answer this question, but what do you think sheryl and mark should be doing differently? john: this is where i am believer in replicatable playbooks. how you handle a challenge or when disaster strikes or whatever you want to call it. the first thing you do is determine how much was external and how much was internal, how long it will last, how deep it will be. you then outline your strategy for it and paint the picture of what your company should look like coming out. i think it is important all high
companies and leaders do that. and 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 stiff-arm government. you have to say, how do we work towards legitimate goals? you have to build trust relationships and a track record of being able to do it. the lesson learned is, 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 for tech versus good and tech 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, everybody sings your praises. like me in 2001, the minute i tripped, people turned on me i never dreamed would. by the way, we came back. every time we got knocked down, we came back stronger. that is the likelihood for
facebook as well, but it means they have to do things differently. mark and sheryl are good people, but they have to deal with issues in front of them and deal with them decisively. you have to say what does it look like an work jointly with government to say, how do we get there? emily: given how many times you have seen this movie before, do you think facebook will recover? john: the answer is, any company that doesn't constantly think they're under threat has a problem. you saw the press 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 reinvent ourselves and deal with tough issues that come at us. we will get left behind. 40% of the fortune 500 won't exist in 10 years. the same is true of high tech companies, maybe even more. if they don't navigate through
their problems, they will get left behind. emily: it's interesting you mentioned amazon. they just said they're going to create 50,000 new jobs and you have people in new york protesting in the streets. they don't want amazon in their city. why is that? john: anybody who doesn't want amazon in their city with a talent they attract should think about it a little bit more. secondly, and i think jeff is aware of this, we have to create an environment where we create more jobs than we destroy. i would have loved to have seen them locate one of their two locations in the midwest, where we are losing jobs. it's an area that if we don't create a start-up culture in new jobs, we'll have the voting patterns you're seeing now. 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 have as good of lives as their parents and their children won't have as good as lives as them. all they want is a shot and i think the high-tech community
needs to jump in and make a difference. emily: is silicon valley too 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. or we'll give you a stipend if your job is displaced. people in west virginia, ohio, and georgia, they just want a good job and be proud of that. secondly, we have to realize that 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 cisco put network academies in every state in the u.s. and trained 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% in high tech 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 world in a positive way. we have to be careful that our overconfidence is probably erring on being too arrogant. ♪ emily: where do you think the next silicon valley is? john: india. ♪
emily: where do you see the biggest potential for disruption? john: the answer will occur in every industry. it will wipe out 40% of the fortune 500. the big companies won't exist in 10 years. they'll be uber'd or amazon'd or netflix'd, or whatever word you want to use. 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.
a while the job of the ceo used to be vision and strategy, develop, recruit, retain and change the leadership team, culture, and communications, that job is three times faster. emily: you're investing globally. john: yes. emily: where do you think the next silicon valley is? john: india, if i had to bet on one country. it is also why it is so important to realize how important selective 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., polytechnique out of france. but they're a much 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 very 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? john: it's not the most gentle way to solve it, but the issue is real simple. you have to have the same level playing field in china for american businesses as china has here. our government has to be careful. we have to tell china coming here is what you need to do to get back to normal relationships. so the pressure is probably the right thing to do, maybe not as gentle as i would like to see it. but it does have to get fixed. it cannot continue to do the way it has been. emily: this brings me to politics. you describe yourself as a john mccain republican and co-chaired 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: i think he has identified a key note throughout the mid part of this country and the southeast, and that is what we alluded to earlier, people are
no longer optimistic their children will have a better life. for me, it is hard to understand. but i do grasp that things have to change. this is where it needs to change. i tend to work with both parties very well. i get along with nancy pelosi, kevin mccarthy, chuck schumer, and i get along with the top republican senate leadership. and this is where our countries have a chan to come together and make a difference. we can do it around startups and job creation. everyone grasps, regardless of whether you're in new york or minneapolis or indianapolis or charleston, west virginia, or silicon valley, it's about start-ups, where the jobs can be 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're traveling the world. you are advising president macron, prime minister modi. how do they think about how the president treats them? john: those countries realize we need a relationship between each
other. you don't have any conversations with heads of states as fixed presidents have told me in the u.s. i'm dating myself -- if you go out and 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 sat out an election. i got asked election night in portugal who i voted for. i said -- i already voted by absentee ballot. i said i had voted for democrats for the first time. as i look forward, i think it is important that 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 doing in gerrymandering the territories, et cetera. i think we need to get our act together and be led from the center and do it inclusively. emily: would you like to see a serious republican challenger to president trump? john: we need whoever is leading, whether president trump for the next four years, 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. the rest of the world, even they're frustrated with us at times, 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 because we don't? it took us 19 years to redo our tax code. we are just getting regulations 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." you are sharing your life lessons from the battlefield. we are in this time where many people are questioning is the world really getting better or worse? so what is your advice to people building companies now? john: the speed of change will be so 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 the technology and industry doesn'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? oh, yeah. in the end, america always does the right thing. emily: that is a great place to leave it. former c.e.o. of cisco and founder of j.c. ventures.
>> 7 a.m. in singapore and 6:00 a.m. in tokyo. here are the first word headlines. president trump has expressed support for treasury secretary steven mnuchin after questions said why -- the president mnuchin is a talented guy and appeared to roll back on his criticism of jerome powell. he repeated the fed is raising rates too far but he is confident policymakers will get it pretty soon. newa has released regulations promising to treat all companies equally whether they are state-owned, private, or foreigners. this will go into effect