MYLES UDLAND: Let's talk now big picture,
tech industry, everything else happening there.
John Chambers joins us now.
He's a former CEO at Cisco, one of the most respected
voices in the tech space.
John, it's great to speak with you this morning.
I'd love to begin thinking about some comments that you made
in an interview last year about how the post-tech bubble
and the around the crisis were really the two moments that,
you know, informed more of your time
at the top of a major company than any other.
And we've just come through a big crisis.
And I'm curious, in conversations
with other leaders, conversations
with portfolio companies you're involved with, how things
changed for businesses in 2020 and how we're starting
to see those changes implemented as we begin
to see the other side of this.
JOHN CHAMBERS: Well, what's interesting is you may see
an instant replay of what occurred in the 1990s
where technology and the internet
literally ushered in a decade of economic growth, 34% growth
in GDP, average household increased 24% in their income.
And it was driven by an underlying technology
infrastructure build out.
I think what we've talked about several times, Myles,
before with you, and Julie, and Brian is you look at what
is occurring with digitization.
And it used to be, a decade ago, a conversation piece.
Now every country, whether you're India, US, France,
is looking at digitizing their country.
And every company's going digital.
What it really says is what we've
talked about during this decade, every company
becomes a technology company, is happening.
And I have 20 startups that are a good balance
of that across the board in terms of what we're seeing.
All the business-to-business activity is up.
And it's uniformly up over the last four to five months.
To the direct part of your question,
Myles, as you come out of this, we
either go one way or the other.
Either this is an inflection point up,
or you begin to level off and slowly go down
if you're more pessimistic.
I'm more the optimistic side.
I'd like to see the Biden administration
make technology front and center in terms
of siloed issues on it.
And I'd like to see them use it to drive the economic growth
for the next decade.
Startups are on fire.
The availability of money is obscene.
And SPACs just add to that fuel.
BRIAN SOZZI: John, I was thinking back
before we came into this interview
of all the things you and I have talked about through the years.
We haven't really talked a lot about 5G, 5G infrastructure,
and the rollout.
Do you think the market investors are really
underappreciating how transformational
this technology can be?
And I ask that because when you see Warren Buffett buy
a stake in our parent company Verizon, which
is obviously rolling out 5G, to me,
it sends a huge positive signal.
JOHN CHAMBERS: Well, first of all, compliment
to your parent company.
I think what Hans, the CEO, is doing there
at Verizon is really reinventing the company
and preparing it to be able to provide services
as opposed to infrastructure.
To your question about 5G, it's part of the bigger movement
of the Internet of Things and digitization
as everything moves to the edge.
So I look at getting market transitions right
enabled by new technology.
5G, artificial intelligence, cloud moving to the edge--
75% of the transaction and applications at the edge.
And that includes all the way down to energy.
So I think the market is underestimating
where the true growth is going to come.
And when I look at, you know, market
transition's-- which I'm usually pretty good at getting.
I have a lot of other weaknesses.
But the market transition's around 5G.
Internet of Everything is 500 billion devices get connected,
access occurring at the edge.
Even energy at the edge in a sustainable and
environmentally-friendly way are the big bets that I would make.
JULIE HYMAN: John, you have a big portfolio
of different startup companies that you've invested in.
JOHN CHAMBERS: Yes. JULIE HYMAN: And you--
as we've been talking about, you talk to a lot
of people, a lot of leaders.
I know it's hard, kind of like picking your favorite child,
but I'm curious what next wave of technological advance
are you most excited about that you think is gonna
be the most transformational?
JOHN CHAMBERS: Well, I think the big picture
is one of digitization.
And when I talk to a leader like Prime Minister Modi in India,
he's basing his whole strategy on a digital India.
And he's a very good friend, and I'm his advisor.
You're seeing Macron in France do the same thing.
But if I were to bet on one technology
that is here and now--
quantum computing, to me, is 5, 10, 15 years out--
but artificial intelligence is really starting to take off.
My average AI company is growing between 150% and 300%.
First applicability of it is around customer services.
So watch the call centers.
As the coronavirus forced everyone to go home the call
center agents-- and remember, there are more agents in call
centers in the US than there are Uber drivers or people working
at the major retail stores--
that began to be automated to where you provided a better
service with tremendous payback for the companies,
but also with much higher consumer satisfaction
when they called into it.
So if I had to bet on one technology right away,
it would be artificial intelligence
around customer services.
Watch companies like ASAP or Unifor.
Or one that we may see exciting on your all's show
in the not-too-distant future is Sprinklr that they look at.
Secondary, I'd bet on infrastructure
moving to the edge.
The 5G question that Myles asked,
I really like Pensando with intelligence
at the edge where you combine compute, security, storage,
architecturally on it.
And the innovation pace, Julie, is faster than I've ever seen.
And it's being fueled by more and more money.
So that's the reason I'm optimistic on the economy
for this next decade.
MYLES UDLAND: You know, John, I want to ask a little bit more
about SPACs and about the way that financing has
changed within Silicon Valley.
And, you know, like, I don't know how you're thinking
about this moment because I think
that what a SPAC, in theory, does kind of seems OK.
But if you look at the practice of it,
I'm not sure that it's market friendly.
I'm not sure its founder friendly.
How are you looking at that innovation,
if we want to call it that?
JOHN CHAMBERS: Well, you know, and that's
a great question, Myles.
I'm really looking at it as we're in the early stages.
And it's all the things that you said.
For me, I think SPACs are here to stay.
I think there are gonna be some tremendous successes there.
But watch the successes-- and I think you all had some articles
written on it as well--
that when you have a SPAC led by a very strong operational
person and you combine it with a strong financial organization--
much like what Dave Cody did out of Honeywell
with Goldman Sachs--
I think that's a combination that can be very effective.
If I look at my portfolio of 20 companies-- and granted,
a reasonably-small portfolio-- but we've
already got four unicorns.
If I look out over the next year and a half,
probably six companies will go public out of that group
either through SPACs or an IPO effort,
assuming the market stays up on it.
And it allows you to accelerate going public and getting
the exposure where the average consumer,
average investor in the US can actually participate.
I did not like when people waited
to go public until they were at $50 billion of valuation.
I think giving the market a chance to participate earlier
and these small companies to grow
very rapidly through a variety of ways of going public--
are there gonna be some train wrecks out of the SPACs?
Of course.
And, you know, I think it goes back to the basics.
Have you got a good vision and strategy?
And that's where the SPACs can be
huge for a visionary company.
Have you got a plan toward operational excellence
and free cash flow over time?
And most important, can you hit the growth?
And it'll be fun to watch.
Do we see more and more companies
go SPAC of higher quality?
And I would anticipate, however, there will be some shakeouts
on the negative side.
BRIAN SOZZI: Now, John, I do want to switch gears
quickly before we let you go.
JOHN CHAMBERS: Sure.
BRIAN SOZZI: I'm sure you're watching the weather activity
in Texas, really, rolling blackouts,
people still not being able to get heat, disturbing stuff.
But how do you think the Biden administration
should address this--
clearly, it's an infrastructure issue
in part due to climate change.
But how do you think they should address this
in any infrastructure bill?
JOHN CHAMBERS: Well, I think they've gotta
really build for the future.
And what you talked about with 5G
is going to occur in energy as well.
Energy has to move to the edge of the grid.
It has to be sustainable.
And it's gotta be environmentally friendly.
And it's gotta be resilient to these type of activities,
whether it's the fires in California
or the terrible winter that we're seeing
all the way through Texas.
And you've gotta go with an overall architectural approach.
Our National Grid is very fragile,
and it's not prepared for the changes
that are about to occur.
But let's not do it in an old world fashion.
Let's go where the market is going
and in a very tech-friendly fashion in terms
of how you implement it.
One of the reasons I'm optimistic about Bloom Energy
and what I think they can do in the future,
with their fuel cells going to hydrogen
at the edge of the grid.
MYLES UDLAND: All right.
John Chambers is the former CEO at Cisco.
John, really appreciate you taking some time
to talk with us this morning.
Always good fun.
I hope we can stay in touch.
JOHN CHAMBERS: Oh, it's a pleasure, Myles.
I'll come on any time you guys want me.
It's a pleasure. Julie, thank you.
Brian, a pleasure.
Myles, once again, have a great day.