For 20 years, John Chambers was the face, voice, brains, and–yes–conscience of Cisco Systems (CSCO), a pillar of the internet economy now valued at $216 billion.
Today, from his sprawling Palo Alto, Calif., home overlooking the San Francisco Bay, he operates a “purpose-driven family office” investing firm, JC2 Ventures, with his son, John J. Chambers, and former communications manager, Shannon Pina.
They’ve invested about $75 million in 16 companies, including a drone analytics business and a company that believes crickets could be the answer to world hunger.
“I’m going to try to change the world one more time,” says Chambers, who retired as Cisco’s CEO in 2015 and left its board in 2017. “We focus very much on companies that are at inflection points, making market transitions. Our purpose is job creation, innovation, inclusion, and investing in technology that does good works.”
The latter attribute is something that resonates deeply with Chambers, 69, who repeatedly invoked the role of tech in society when ruminating on a variety of topics during a wide-ranging 90-minute interview with Barron’s.
On how Silicon Valley is dealing with cybersecurity and issues around hate speech. “The industry has to be very careful,” Chambers says. “In the early ’90s at Cisco, we tried to do tech for good, such as re-educating the workforce…Some companies now have grown without concern for others, and have been tone deaf to the government,” he says, which has led to distrust of content on their platforms, the evisceration of jobs in competing fields, and a general distaste for the tech community. “I would encourage company leaders to think about tech for good,” Chambers says.
On the escalating trade war between the U.S. and China. “We live in a connected world, and it is within everyone’s interest to make it a win-win world,” says Chambers, a long-time Republican who voted for Hillary Clinton for president in 2016. “Two decades ago, we worked with China, but we now have two sets of rules that need to get back in line.”
Though he agrees in general with the Trump Administration’s stance on unfair trade rules, Chambers thinks the issue could be handled more “gently” without putting tech companies that do business in China in the cross-hairs of punitive tariffs.
On whether tech is ensnared in another dot-com bubble. Chambers doesn’t agree with the premise that tech stocks are overheated, and on the precipice of a correction.
“No. There are record profits and we have competitive P/E ratios,” he says. “The stock market has become so short-sighted, and there are too many regulations. If anything, there are not enough IPOs or unicorns in the U.S. We’ve got to become a startup nation again.”
On how older, larger companies are struggling to cope. The current digital era, as Chambers calls it, moves three to five times faster than during the internet age of 1990-2010.
“Traditional companies can’t move with the speed they once did,” says Chambers, who ominously predicts 40% of large companies won’t exist in several years. “Anyone who misses, will be Amazon-ed or Uber-ed.”
The trick for many Fortune 1,000 companies, he says, is to take calculated risks and acquire the right startups in artificial intelligence, robotics, mixed reality, and other fledgling technologies–much as Cisco did, when Chambers oversaw 180 acquisitions as CEO. He holds the honorary title of chairman emeritus of the company, which he grew from $1.2 billion in revenue in 1995 to more than $50 billion in 2015.
“We created 10,000 millionaires at Cisco, and we want to do the same with the companies in our portfolio,” Chambers says. “We shall see.”
Sign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.