A Blog by Jonathan Low

 

Oct 15, 2018

The Reason Tech Companies Need To Reinvent Themselves Every Few Years

Because technology and the global economy are changing at that rate and companies have to keep up or become irrelevant. JL

Eric Johnson reports in Re/code:

Every company gets knocked down. The key is how, when you get knocked down, how do you get back up? It took Uber seven years to pass Tesla. The next companies will change in three to four years. So, it’s this speed of change that we have to get used to, and that’s where you need a replicatable process. Speed is three to five times faster and the implications are three to five times more so.
After 26 years at Cisco, the company’s former CEO and chairman John Chambers is ready to share what he’s learned with a new generation of entrepreneurs. But as a startup investor, he’s also cognizant that the speed of business is faster than ever.
On the latest episode of Recode Decode, Chambers told Recode’s Kara Swisher that businesses used to have to reinvent themselves every decade to remain viable. Now, they have to be ready to do that “every three to four” years; even if they are doing the “right thing” based on their historical business successes, complacent players risk getting disrupted by a rival who can look at the landscape from a different angle.
“Microsoft would probably be an example — with Satya [they] have reinvented themselves, most companies do not,” Chambers said. “Intel [is] a great company, but they really, it’s one or two products that they’ve had that’s doing the majority of their profits. Not true at Cisco and it won’t be true at my startups.”
In his new book “Connecting the Dots,” Chambers also argues that the U.S. as a whole is in need of an entrepreneurial reinvention. Silicon Valley no longer has a monopoly on startups, he said, as countries like France and India have explicitly developed tech programs to encourage investment. And Chambers stressed that a comparable movement stateside must include all 50 states — not just existing tech hotspots like San Francisco, New York and Austin.
“We kept doing the right thing too long,” he said, pointing out that France has gone from 140 venture-backed tech companies in 2015 to 740 this year. “We assumed we were entitled to continue to lead, in Silicon Valley and this nation.”
“We have to have a national digital policy,” he added. “We’ve got to become a startup nation again, we’re losing it rapidly. That heat is being turned up on the frog in the pot, and we don’t even know we’re getting cooked.”
You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts and Overcast.
Below, we’ve shared a lightly edited full transcript of Kara’s conversation with John.
recode_divider
Kara Swisher: Hi, I’m Kara Swisher, editor at large of Recode. You may know me as the person who just taught thousands of people that Cisco is named after San Francisco, but in my spare time I talk tech and you’re listening to Recode Decode from the Vox Media podcast network.
Today in the red chair is someone I’ve known a very long time. John Chambers, the former CEO and chairman of Cisco. He worked there for 26 years, stepping down as executive chairman just last year, in 2017. He’s also the author of a new booked called “Connecting the Dots: Leadership Lessons in a Startup World.” John, welcome to Recode Decode.
John Chambers: Kara, it’s a pleasure to be with you, again.
Thank you. Thank you. You’ve been onstage with me at AllThingsD, I think, was when we were doing that, and then we’ve met many times ...
Oh, yeah, that’s when we did that “Voice would be free” ...
Voice would be free.
And completely transformed the service provider industry.
Right, that’s right. Oh, my God, I think that was, when was that? Ten years ago, it was, probably.
It’s more than that.
More than that.
Probably 14.
Right, so let’s talk a little bit about what your ... Let’s give your background
for people who don’t know you.
Sure.
You ran Cisco, which was one of the most important companies. I think we met during the AOL days. Remember when they had that outage?
Oh yes, Steve-
And blamed it on your ... Yes, blamed it on Cisco servers.
Well, it’s ...
What was it?
It’s like any outage.
Yeah.
A company can deal with their mistakes and step up to it, and we solve the problems.
Yeah.
Oddly enough, the customers who support you the best are usually the ones that have had problems, and you work through ...
Yeah. But that’s where we met ...
So they ended up being a great partner.
It was during that outage.
Yeah.
Cause we talked for my book on AOL.
Yes, we did.
So talk about ... You were at Cisco for 26 years, talk about that for people who don’t understand what that was. You built it into a ...
Well, it was a rush. And to give you just a little bit of background in total, I started straight out of school after about nine-and-a-half years in college — a slow learner, if you will. And I went to IBM, so I saw the mainframe era, and then as mainframes gave way to mini computers I was at Wang Laboratories. And then as mini computers ...
So you hit em all.
Went to PCs and the internet, I went to Cisco. So I’ve had the chance to see all the major technology trends. And then going into today’s world from the internet, to the digital world, to artificial intelligence. At Cisco, it was a rush. Joining the company when it had 70 million in sales and 400 people, and growing the company ...
Explain what it did then. What it was started to do.
In very simple terms, it allowed networks to be able to talk to each other, primarily in universities, etc. It’s really the geeks that love it.
Because that’s where ... that’s where that was happening, the internet was happening.
Exactly. And what I saw at Cisco was the chance to make this mainline. And when we said Cisco and the internet would change the way the world works, lives, learns and plays in the early ’90s, people thought we were out in left field. As it turned out, it did.
Now you were making the ... explain what you did, in a very simple way, what you all made.
What it allows is the ...
You’re the backbone.
It’s the backbone, it’s the stop lights that move data around the world, to get your data from wherever you started till it ends up in the right location. And then we moved from just making the backbone, the routers, into switching, did acquisitions.
Lots of acquisitions.
In Silicon Valley, we were the ones that wrote the textbook on how to do acquisitions. Then we moved into voice over the internet and video over the net. Then into data centers, then into security and collaboration. And so it was an honor being part of growing the company from 70 million in sales to 48 billion, 400 people to about 75,000 people. We won most of the top financial awards in terms of market capitalization, sharing that with employees. And also the top corporate social responsibility awards from political parties.
So what Cisco did though, was really ... it was sort of the quieter member of ... Like, the big companies like Yahoo and eventually Google and others got all the attention because they were consumer-facing. But Cisco really was the background of ...
We were the ones that made it work for business.
Right.
And we were business, focused on it, and for a brief time we were the most valuable company in the world. And we took technology and said here’s how it’s going to change the way you work, live, learn and play. And we had a blast doing it.
So you did how many acquisitions over the course of the ...?
180. Honored to be in a lot of the textbooks written about it, Oracle would say they modeled their acquisition model after us.
Right, right.
And now acquisitions are a logical way to grow, Kara, as you know. But back in the ’90s, almost all of them failed.
Right.
So we said, how are we going to do it differently? And we began to do something that refers to the little bit that I’m trying to teach now, is get a replicatable innovation playbook for anything you do.
Right.
Whether it’s how you do acquisitions, and stay in while most of them fail, and what are you gonna do differently. How you digitize a country. How you’re No. 1 or No. 2 in every product area you go into. Eighteen major products, no company’s ever done that before or since.
Right, right.
Low barriers to entry. And we had a lot of fun doing it. There’s also no substitute, as you know, being in this industry for a number of years, at being in the right spot at the right time.
Right, right, absolutely.
So timing has huge advantages.
So tell me, where is Cisco now? Obviously you tried ... you moved into voice, you moved into video and different things like that. You also tried to move into media, that didn’t work quite as well, some of the media stuff you all did, it was so many products that Cisco had that ...
Well, yes. And by the way, what Cisco does, and one of the important things on the transition to the new leadership is I watched while most of these companies failed in leadership.
Right.
And the CEO we brought in from a very small company to a very large company has to be very careful in the transition to the next leader, and as you know the industry’s littered. Most all of them have failed. And so when we decided to make that transition at Cisco, we said we want to do this in a way others have not, we wanted it to be a Harvard case book study, we were too close to Stanford, people would have said home cooking. And it was. And we did a very smooth transition.
But part of it was also once that transition was over, to give the reins to the new leadership and to step away, and it’s their company to run. And so I deliberately have not been involved in that, and I really don’t comment in terms of where the company is.
Right. So talk about that transition for you. Because you were Cisco, pretty much.
Well, it was an honor.
You were the face of ...
Because I hired everyone except 23 people in the company. We moved from a single-product company to 18 products. We created 10,000 millionaires in the Valley, back when a million was really a million.
Right, right.
Could buy you a house in the Valley, etc.
Not now, I gotcha.
We won every corporate ...
Can buy you a small apartment.
It will, unfortunately.
It can buy you a very small apartment in the Bay Area.
And we won every corporate social responsibility award there almost was in the world.
So what it’s like to have changed ... to move from that, from that.
Well I thought about it for over 10 years.
Yeah, you were leaving for a while, I remember.
Well, not leaving for a while. But knowing that I needed a turnover at a point in time. And I kept saying I’ll be here five more years, five more years, and then suddenly I said three to four, and that was a clear message. And I left at three years almost on the moment. And it’s like your family. We are a family at Cisco, I knew every illness of every employee, their spouse, their children. We worked together as a common team. We were fearless. No one really ever beat us, if you really think about router competitors, switching competitors, etc. We still are the key leader in 40-70 percent market share in each category. And then we moved into new areas.
But we wanted to make this transition work, and we wanted to do it different than others. So I thought about it for 10 years, and the board obviously made the call, but we set it up as being an example for others to learn from. And if you think to the high-tech companies who’ve done this, almost all of them crashed and burned or went sideways.
Yeah. So what have you been doing since then? What is your ...
Oh, I’ve been having the time of my life.
Okay, so this was a year ago when you ... you stepped back before that, but ...
I stepped back about two-and-a-half years ago.
Right, right.
So since then, I’ve been entirely focused on a startup world. At the time ...
Which ... did you do investing before?
No, but I did at Cisco. We did $2.1 billion dollars in investing companies.
That’s right. Yeah, you had your venture ...
We acquired 180 companies. It was one of the key ways that we grew was really keeping our fingers on technology.
So what were you looking [at] in startups? You have your own fund?
I have my own fund, and Shannon Pina who’s here with me, is the chief of staff, it’s a magnificent company with three people. So going from 75,000 people supporting you to three is culture shock. But what it really is focused on is where is the world going, not where it’s been. And it’s focused on how do we become a startup nation again. It’s focused on, we think we’re the leader of innovation in America, we no longer are. Bloomberg, we’re not even in the top 10 countries anymore. We’re decreasing the number of startups per year ...
Yes.
And it’s a 20-year low. France, where three years ago I said it’s going to be the startup nation in Europe, it went from 140 venture capital-backed startup technology companies to 740. In three years. It’s become the model for Europe. I want to see that happen again in the U.S.
And with digitization and with a lot that’s going on in high tech, we’re going to destroy 20-40 percent of the jobs that exist, everywhere in the world. So we’ve not only got to in the U.S. create 20-30 more million jobs, we’ve got to create more jobs for the ones we destroyed. So we have to become a startup nation again.
So let’s get to that, because did you see the cover of the Economist last week was “peak Silicon Valley,” that it was losing ... people are going elsewhere. We’ll get to the politics problem in that, because that’s part of it.
Small issue, easy to cover. Politics.
Yeah. But talk about ... so the concept of your book is that we have lost this. That we’re not that anymore.
I think we are no longer the leaders. But the concept of the book is, how do you lead in a startup world? And it doesn’t matter if you’re in the largest companies in the world like a Walmart or a Boeing or a JPMorgan Chase or a small startup or a leader in any of those categories. You have to think more like a startup in terms of innovation.
Right, I want to get to that in a minute. But why do you think we’ve lost that? Because people think of Silicon Valley and the U.S. as a startup culture. The start of entrepreneurship, the greatest companies were started here, from Cisco to Google.
It’s the right question. The answer is we kept doing the right thing too long. We assumed we were entitled to continue to lead, in Silicon Valley and this nation. I’m out of Boston 128, the interstate that goes around Boston.
Sure.
We were the high-tech center of the world, we couldn’t even spell Silicon Valley in the ’80s.
Right, right.
And within two decades, there aren’t any major high-tech companies there anymore.
Right.
Same thing could happen to Silicon Valley. So the first thing is, we kept doing the right thing too long.
What does that mean?
That means we continued to think that we were the innovators and didn’t realize that the global landscape was changing rapidly, and that to be an innovation leader in startups, it’s gotta be inclusive across your whole country, not just in Silicon Valley, Austin, Texas and New York. It also means the government has to get out of the way, and we got so much put on us.
I’m a West Virginian in my background, most people have never hunted frogs, caught frogs, or ate frogs, but what you study in school is you put a frog into a warm pot of water and you slowly turn up the temperature, the frog cooks. If you put him into the boiling pot of water, they jump right out. The rest of the world is jumping out to a new level of innovation.
They’re setting audacious goals of digitization for their country, it doesn’t matter if it’s India with Prime Minister Modi, Macron in France, and they’re setting startup innovation as a key plank. And they address it from everything, from immigration to how they remove the regulation issues, and they’re moving at a speed much faster than the U.S.
I never thought I would see this happen in my lifetime. I understood the concepts of a Silicon Valley, a Texas and New York, and the challenges of getting across the country. But I never felt the U.S. would lose its leadership this fast. So I think we’ve got to make it a national priority.
We’re the only country in the world without a digitization strategy. The only one. I mean, Macron outlined it the minute he became president of France. Modi did three-and-a-half years ago. They tied it to GDP growth, job creation, startups, and they are tripling and quadrupling the number of companies they have.
So why is it that we didn’t? Why is it that it didn’t? Because the internet was started, as you know, by the federal government. It was ... tech has been largely unfettered from a regulatory point of view, for most of its ...
It largely has, that’s fair.
It largely has. So what hasn’t it done?
Regulations on startups and how difficult it is to become public, etc., and maybe even short term, mentality of investors including VCs and stock market ...
Right, there’s no lack of money. There’s no lack of investment.
I’m not so sure I would agree. So just giving you the numbers, the U.S. used to have 90 percent of the venture capital 20 years ago. Ten years ago, 80 percent. Today it’s 50 percent. The number of IPOs going public on the New York Stock Exchange or Nasdaq will be a little bit over 200 this year, up slightly from the last two years. In the mid ’90s, when we created 24 million jobs in eight years, there were 750 companies going public per year.
It needs to be a national policy, and we need to drive it. Every other country in the world, their top government leaders and their political parties on both sides are focused on how do they digitize their country, understand the downside from it, because it will destroy a lot of jobs, how the education system has to change. And startups and small companies getting bigger will be where all job creation occurs.
So how did that happen in the first place? I have some other theories about it, including having to do ...
What are your theories? Go ahead.
That there’s five giant companies going down the highway like semi-trailers and nobody can get past them now ’cause they’re all ... they don’t compete with each other, really. I wouldn’t say Amazon, Apple, Google and Facebook are competing with each other at all, practically. You know, they’re sort of splitting up the pie in certain areas. And that there’s no room for startups to go around them, in any way.
And the government can’t do anything about it because it’s not Microsoft, like in the old days that you could target one company. That individually they’re all so dominant that there’s no room for anybody else. And why would you go public in a lot of these places? That’s the other part, is they have all this cash and they don’t have to go public, and they can wait to go public. And why do it in the first place? Is there any benefit to it? All kinds of reasons like that.
Well then, going in the reverse order, you’re right that a number of companies are hesitant about going public. And there are a lot of reasons for that. First is they can get the cash on it, and the second is they don’t have to put up a shareholder activist, a recorded reporting, they can stay private for a longer period of time. Now unfortunately for that, the employees don’t benefit as much, and the average American who invests in the stock market does not benefit.
Yes, right.
So this is not in our best interest.
Right, right.
But secondly, don’t let those numbers, Kara, fool you. They’re small compared to ... venture capital is down too, 50 percent of the world’s venture capital is here now.
Right, yes.
Our number of unicorns have decreased by 20 percent of the world’s unicorns, which are future job creators, etc. Our startup arena is anemic in terms of it, and it’s primarily in six geographies where 90 percent of the U.S. venture capital goes into. So how we change that as a country is very doable.
Now to your second question, I’ve always loved taking on big companies. And with my startups, when I select which ones to do — and I get the pick of the litter, you could argue do I deserve that or not — but the venture capitalists usually say, “Here’s a portfolio. John, you know how to scale companies, you know how to help operations, you know how to develop CEOs. We’ll give you very favorable terms,” and so I do get to pick. But my goal is for each one of them to be No. 1 in their segment of the industry they go after. And I’ve never worried about taking on the giants.
At Cisco, we took on companies like Intel, like IBM in the initial days. We took on the Nortels, the Lucents, the Alcatels. And what happens is, as companies get bigger they get slower, they often get crossway with government, they forget that you must give back as well as take in terms of profitability, etc. So I actually think companies are more challenged now in terms of, is tech for good or is tech for bad in this country?
Yeah, we’ll get to that. Yeah.
And a segment of it might be that it’s stifled segments of startups. I’ve actually found the reverse. Most of the innovation is coming out of startups today. When you have a SparkCognition partnering with a Boeing, and Boeing’s a very innovative company, but they’re doing a 50/50 joint venture on the next generation of unmanned aircraft and how you do the systems to maintain this. A company with 200 people down in Texas.
Or there’s another company in New York that basically has artificial intelligence, and all of a sudden the biggest companies in the U.S. are working with that company on how they transform their business. They went from a 1.4 million run rate last year to over 70 million this year. So I would actually argue that startups will be where most innovation happens.
Oh, I think it’s true, that is true.
And that as long as it’s a level playing field they can do well. Now to your point, maybe venture capitalists shy away from investing in an area that might be too direct with an Amazon, or too direct with a Facebook, etc. But about the time that large players think they’re invulnerable, they are very vulnerable.
What can the government do right now? Assess this government, right now. Or the past two administrations. This one doesn’t have almost any interest in that, from what I can tell.
Well let’s ... Yeah, I know, that’s a very provocative question and I would answer it very square.
It’s not provocative, it’s true. There’s no CTO, there’s no science adviser ...
Kara, I love you, you get the issues on the table.
I know you’re Republican, but I’m curious what kind of Republican you are these days.
But I’m also ... Okay, let me go in reverse order.
Okay. All right.
I support as many Democrats as I do Republicans.
Okay. But you were one of the few Republicans in Silicon Valley at the time ... you brought ... we were talking about John McCain, and again, I’m so sorry ...
John McCain was one of my best friends in life. He taught me so much.
Yes. You brought him to AllThingsD.
I miss him so much.
Right. But you’re kind of a John McCain Republican.
Yes, I am.
Yeah.
But also, understand, I think the definition of Republicans and Democrats has really blurred. I’m after a country where you just do the right thing for the country. That you do the right thing for all citizens, inclusive of all citizens, for all states, etc. And my basic philosophy, and I try to use this with startups, is one of your core values should be just do the right thing.
That’d be nice, John.
And so I’m a person that believes in social equality in all ways. My Republican counterparts would call me liberal in that. I would just say I’m in touch with the world that exists. And yet I believe effusively in the value of business creation and job creation, and working together on it. So what are we missing?
To a ... I want to make that point. I mean, you and Meg Whitman were one of the few Republican ... outspoken Republicans, at the time. This was 10 years ago, 10-15 years ago.
And Safra Catz was probably the third.
And Safra Catz. Although she’s now not as much ... she’s also like you, I think she’s very similar to you. I just actually shared an airline flight with her.
She’s really good, by the way.
Yeah, she’s great.
Yeah.
She’s amazing. But you all now look like Communists at this point, like compared ... you know what I mean? In the Republican party.
No I don’t think so. I know the Republicans well.
Well, Socialists then.
And I know the Democrats well. I’m a moderate in this environment.
How do you asses? Yeah. So what do you do as a moderate?
Basically you try to bring the country back together. And you have the courage to lead, make very bold projections about what can be done. You can imagine saying in Europe, “France will become the startup nation in Europe,” but at the time, it’s the worst place in Europe to do business.
Right.
In three years, they are. The U.S., once we decide to put a person on the moon, we can do it. And both parties should come together. It’s about job creation, it’s about equality, it’s about all 50 states.
So how do you get them to that? Because it seems like all we’re arguing about is the most inane of things.
Well, you said it very well. I think we’re focused on — my parents were doctors — what I call symptoms, as opposed to underlying issues. We’ve got to become a digital nation. We have to have a national digital policy. We’ve got to become a startup nation again, we’re losing it rapidly. That heat is being turned up on the frog in the pot, and we don’t even know we’re getting cooked.
So what does the government have to do? And then I want ...
Well, the government has to create ... It was a good first step on the tax policy. And Kara, you know, I was the poster child in Washington for what, 17 years, trying to get tax policy changed. It hadn’t changed since Microsoft became a company. And so that was a good first step. The second step ...
Although many people feel that certain people benefit and others didn’t. But let’s move on.
The economy, the economy speaks for itself. And it was way overdue. And was it perfect? Of course not, but at least it was a great start, and we’re bringing back money and investing it back in America. You can’t argue with the results on that. But that was a transaction.
We need to say, “How do we change our education system? How do we have the courage to make changes that other countries are already doing?” I go back to France. France, with Polytechnique, top engineering school, in my opinion, in Europe, is the best source for engineers for American companies today. Then they have creative ideas like School 42 that is a private, tuition-free, nonprofit organization that is starting to really crank out engineers, and while it’s very mixed, if you take those top-quality engineers, as I talked to one of the startups today, they are a source as good as Polytechnique, and you see other countries moving.
I think we’ve gotta have the courage to do this differently, and if we’re waiting to take companies public, we’ve got to find a way of growing them faster to create the jobs.
So, you say a digital strategy for this country. How does that ... Who has to do that?
All right. So, let me parallel. It’s a great question. Let’s look at the internet strategy that occurred. I had the honor — and I’m speaking to my age now — of being at the White House with President Clinton when we announced the internet era and said, “This will change our country.” And to his tremendous credit, even though he’s a Democrat ... Nobody can be perfect. A little bit of humor for the Californians here. You’ll get used to it, Kara.
Okay, I got it. I got it. I got it. I’m good.
My humor hasn’t got any better. We outlined what it could do for the country, and fast-forward eight years, 22.5 million jobs. The last time America got a raise other than they’re starting to this year was in that period where the average family income went up to 24 percent and the economy grew 34 percent.
With digitization, you could do the exact same thing. Good news and bad news, it’s gonna move much faster. The speed ... And just think about how long did it take Amazon to displace Walmart as the most valuable company? 21 years. How long did it take Tesla to displace GM? 14 years.
Mm-hmm, but we’ll see on that one. Right?
Yeah, we’ll see.
We’ll see.
But it’s like any leadership ...
It’s still an important company. Yeah.
Well, what he’s done has been amazing.
Absolutely.
Every company gets knocked down. The key is how, when you get knocked down, how do you get back up? And then it took Uber seven years to pass Tesla. The next companies will change in three to four years. So, it’s this speed of change that we have to get used to, and that’s where you need a replicatable process.
Other countries are saying, “This is where my digitization strategy is going.” Use Modi as an example in India. 1.3 billion people, he’s gotta generate 1.2 million new jobs per month, and he has the courage to outline digital strategies for his country, and I’m honored to be his adviser on this, and it means 2 to 4 percent extra GDP growth. It gives him a chance to add 1.2 million jobs per month. Think about that number. It gives him a chance to do smart cities. They have to become a startup nation. They have to become a manufacturing center, and here’s his plan to get there.
France did the exact same thing. Even though Macron and Modi come from opposite sides, I am the global high-tech ambassador for France. Can you imagine the U.S. having a German or a French person responsible for the technology ambassador here? It gives you an idea how out of box these people are thinking.
Right. So, who needs to do it here?
It needs to be owned at the top, but also, both parties have to come together. If the first country to digitize was Israel and all three political parties came together, Shimon Peres, a prior friend of yours, great friend of mine, miss him every day, and Netanyahu said, “This is in our best interest to do it,” and they digitized their country, formed 20,000 jobs, GDP growth, etc.
So, from the top?
From the top, but then businesses ...
John, it’s not coming from the top. I’m pretty certain he just wanders around yelling about Russia. That’s pretty much it.
Well, this is where I think we’ve gotta have ... All sides are equally responsible. The Democrats and Republicans have to bring this together and have a common goal. The neat thing is, Kara, who in America can disagree with job creation? With small business?
Of course, but I’m just saying, I’d like to understand how that’s gonna work given the current political discord.
Well, I think there is nothing like an opportunity and a challenge, and a roadmap to get there.
Yeah, but I want to know brass tacks. How is that gonna happen?
All right. So, brass tacks is you make India successful, you make France successful, you say the U.S. should follow that model. We’re no longer the leaders. Secondly, you get both political parties on this issue to put aside their differences and say, “Everyone should care about startups in every one of the 50 states. What do we need to do it?”
So, again, who does that, John?
I think you need to have examples in business, and I intend to be a role model, and we’ll see if I can earn that trust or not. Instead of doing startups in Silicon Valley where, Kara, it’s much safer for me to do, because I can back-channel every person I hire, I know all the venture capitalists, I get my pick of the litter for every company I go into in spatial terms. I’m deliberately doing it across seven states now, and I intend to go ...
You and Steve Case are wandering the country.
Steve has the same concept. He’s just doing it a different way, and I applaud what he’s doing, and I know you know him very well, but we have to have business leaders step up to this. I would challenge the big companies you just mentioned. Why not take a certain amount of their tremendous wealth and give it back to society in startups in all 50 states and take a couple states and sponsor them? I aim to do that in West Virginia.
Well, they’re busy testifying in front of Congress for ruining democracy, but that’s why they’re busy. They’re not in the best shape. We’ll talk about the image of tech, but right now tech doesn’t have the best ... Techlash, yeah.
Well, tech has moved from the image in the ’90s with the internet to tech is good for everyone, and every government leader, Democrats, Republicans, all agreed, and with TechNet, John Doerr and I founded it, and for 20 years we went to Washington, we were trusted by all sites. Still, TechNet is within that, but we’ve gotta be very careful.
Tech isn’t just about making profits or doing what’s right for your company. Citizens and governments have very legitimate concerns, and if you don’t address if we’re gonna destroy jobs, how do you create them? Cisco with Networking Academy has created seven million students trained on this over 20 years, and we focused on each country, on giving back. I think tech has to get back to the basics.
Well, I think that right now the narrative is damage, the damage caused by everything from tech addiction to the Russians to fake news to the political discourse.
Yeah. Can I have fun with this one?
Yeah, please.
I’ve been through this. Basically, with the internet, it was gonna destroy a lot of jobs, and we focused on how does it create more. We focused about how business and government, regardless of political party, could work on common objectives. I was in China in the mid ’90s, and one of their talk show hosts, she said, “People are addicted to the internet, and look what you’re doing to our children.” I mean, that was out of left field ...
Yeah, I remember that.
... but the issues were the same, and we said, “Here’s how we do the legitimate balance.” And this is where, even though I come from a conservative basis in terms of my attitude toward job creation, etc., this is where I think all parties have to come together and say, “We’re gonna change.” So, it requires the citizens. Why did France change? They had a leader at the top, actually two. Hollande started it but Macron took it to a whole new level, but the citizens were ready. The citizens realized that startups could be the future.
If you would’ve gone to Polytechnique, their equivalent of Stanford or an MIT, and asked them seven or eight years ago, “Are you gonna go into government or big companies?” 90 percent of the students would’ve said government or big companies. When I lecture there now with the secretary of defense from France, we talked about startups, and now the majority of people at Polytechnique are going into startups.
We have to get that energy back as a country. We control our destiny, still have 50 percent of the venture capital in the world, still have the role models and the training, and we can scale quicker than anyone else, but we’ve gotta understand continuing to do the right thing too long got us in trouble.
How do you look at what’s going on in China? Because I just interviewed Kai-Fu Lee. They’re cleaning our clocks in AI and other areas, for lots of various reasons, for all kinds of reasons.
Well, China I probably know as well as most of your visitors. I was part of Wang Laboratories, as I said earlier, which is a Chinese company in America. Dr. Wang, the most brilliant man I ever met, and he was Jiang Zemin’s roommate, the person who was president of China.
That was fun.
So, I got huge access. I mean, it’s the same class group. I got huge access to the Chinese leadership, and I’ve had ... You talk about market transitions, and Kara, I have a lot of weaknesses, but I get market transitions right. I listen to customers, and I place my bets usually in areas that end up being right because of crowdsourcing and data collection. I bet on China in 1995, at a time almost no one else did, and it served Cisco very well.
Right, which they were copycats. We talked about that, they were seen as copycats then and not an innovation center.
No. I knew they’d be innovative immediately because at Wang Laboratories, when we put in Wang mini computers in China, everybody would read the books, even if they had nothing to do with mini computers. I knew they’d be our biggest potential partner or challenge on a global stage.
Right. So, how do you look at what China’s doing now?
So, currently in China, I think unfortunately it’s developed into win-lose mentality.
Yeah, it’s a tough place.
China, during my lifetime, has largely been a win-win partner. You had to negotiate, top at a win-win. In the last 10 years, it’s really lost that relationship with the U.S. to where it’s been a loss for the U.S. and a win for China. We have to get back on a win-win, and we’ve gotta find a way that it benefits both countries, which I think it does, and I’m optimistic we’ll get there.
I think if you’re betting on one country right now in the emerging world, it’s India. It’s an instant replay of China. It’s a democracy as well. You’ve got an amazing leader in Modi who’s taking risk that others would not. Couldn’t you imagine, it takes us 17 years to change our tax policy. Modi demonetizes his currency in a weekend.
Well, it’s nice being a little fascist, but go ahead. Move on. It’s easy.
Well, no. He basically ... What he did was change the currency in terms of taking circulation out that had been counterfeited, etc.
Yeah, but he’s a little bossy. I’m gonna say bossy.
Well, most good leaders are a little bit.
Not that much.
Kara, even you and I occasionally ...
I get it, but I don’t run a country. He’s got some issues, Modi, but ...
But it’ll be fine. The neat thing is I think it’s the best thing that’s happened to India since Gandhi, and if India can increase their standard of living ...
There’s some social issues there that are problematic, but go ahead.
There are.
Yeah.
But which other country are you gonna bet is gonna double their per capita income every 10 years for the next two to three decades? India.
So, not China. That’s interesting, because I feel like China in AI, with the data they’re collecting ...
Oh. Now, you hit a different issue. The issues about technology leadership, you’ve gotta have a national policy, and they clearly do.
Yes, they do, and they stick to it.
They have a national digitization policy. They have AI being very important, just like the internet, and they make it a national policy to lead here, and they remove the roadblocks for that happening, including some roadblocks on intellectual protection, which is very important to maintain.
But the internet, we maintained our leadership on in the U.S. because we moved very rapidly, and we created a win-win relationship with China. We need to do the same thing on digitization, but this requires technology leaders to be a part of every company and of every political office, and this is where maybe I’m a dreamer, and most of the time when I do dream and say, “Here’s how we can get there,” that often happens.
I believe our country can get this right, but it requires taking a step back and saying, “We have to do it differently.” It requires the Republicans and Democrats working together, and it requires the citizens to say, “This is what we want. We want a startup economy again.” I want my children ... Remember, I’m from West Virginia. I lived in North Carolina, Georgia, Indiana, Ohio, Illinois. We’re leaving behind that part of the nation, and the people know it. It’s gotta be inclusive in what we do, and that’s really what the book that I’m writing about is.
So, we’ve just been talking about how the U.S. is lagging behind everybody else, and I agree with you in that regard, and we’re leaving a lot of people out.
Yes, we are.
I think that’s a harder problem to deal with for ...
Yes and no, but I think it can be dealt with if we do startups right on a different scale.
Right. Exactly. So, it’s not just a matter ... I think it’s a matter of national policy. I agree with you in that, but I don’t think we have any kind of political will to do anything about it. I just don’t. I just don’t see where it’s gonna come from. And maybe these things change very quickly, and they did before, and so maybe they’ll do it again, but it’s really hard to imagine ...
It’s a fair challenge.
... given tech is on the ropes from an image point of view, so they’re not focused on anything but sort of saving their hide, and our government is completely out of touch with challenges that are coming, a lot of challenges. That’s just my feeling, but let’s talk about these leadership lessons that we have to do. So, talk about some of them from the book, of what you think is critical.
Sure. Well, first, I wrote the book. I thought books are appropriate to write once you’re dead and somebody else writes them about you, and as you know, I’m dyslexic, so writing is very painful for me, so the last thing I wanted to do was to write a book. I changed my mind because in my current new chapter in my life, I’m doing startups. I have 16 of them I’ve invested in, about $100 million invested in these startups, and I want them to be the role model for how do you grow and scale startups in this country, not just in Silicon Valley. I deliberately have them across seven states, and I want to take it to 10, and I want to show that this is a model that could work across our country. The second thing is I’m ...
I’m sorry. Do you have one in West Virginia?
We will probably do that very shortly in November.
Okay, given you’re from there.
Not to get ahead of the announcement.
My family’s from there.
Thank you.
My dad was from there, Morgantown.
Oh, I knew I liked you well.
Yeah, yeah. He went to University of West Virginia, and medical school.
Well, we’re gonna announce with the University of West Virginia in November major changes on startups and the university business curriculum and stuff.
Oh, that’s great.
We’re gonna try to make it a model, much like Steve Case is trying to get different ...
Rise of the rest.
So, what I’m focused on is not how do we make 16 companies successful, and I measure them on do we grow headcount jobs by 40 percent a year, which means by definition, they gotta grow 50 percent to 100 percent of revenue. So, I’m trying to say, “Here is the model,” much like we did as Cisco, where I acquired 180 companies, and most people would say we did it better than anyone else, and it allowed us to move from one market to the next to the next.
Right. So, talk about these leadership lessons.
So, the leadership lessons is much like you do your own podcast, etc. You have a replicatable playbook of innovation you do again and again, and you change when somebody catches you, as you said a moment ago, but that’s exactly what I’ve learned to do over the years. So, replicatable playbook for how you do acquisitions, a replicatable playbook for how you do digitization of countries, a replicatable playbook for how you deal with customer problems, a replicatable playbook for how you become one or two in each category.
So, what I’m doing now with startups is a replicatable playbook of how do you get the market transitions right, how do you select the right CEO to be able to do this, how do you listen to customers that will tell you, “These are the companies you should invest in,” how do you be pretty sure that the venture capitalists, the angel investors, are the skills that are needed within this, and that they’re building a great team, and then you just cookie cut it with tremendous speed.
I think that model will work across the country, and partnering with VCs, much like I did during the ’90s, partnering with the major VCs in the Valley, and they gave us the pick of the litter in terms of which companies to acquire.
So, you’re talking about doing replicable, but most people think of venture capital as artisanal, really. That’s how they sell themselves, that they are special, and that it isn’t replicable.
Okay. I agree with part of what you said.
I think they’re lying, but go ahead.
Okay.
I think they just like staying here in Silicon Valley.
I’d love to find that out. I think what it is is they are brilliant at identifying trends early.
Mm-hmm, some of them.
My skill is not ... See, there’s only one Steve Jobs. I am basically a person that goes and listens to customers, and they’ll tell me which companies to buy or which companies to invest in, and so I focus on how do you scale and grow an organization. That’s where my skills are, and I’ve seen every movie there is in the world, and I’ve done some things right, and lots of mistakes along the way, but with these small companies, they learn so quickly, and so what I’ve learned is, when I sold the saw the small companies over the last two-and-a-half years learning at this pace, that’s when my friend said, “John, you should write a book,” because it isn’t about startups. It’s about a startup world where every organization, whether they’re government or big companies or small companies, must have a startup mentality on speed, fearlessness, ability to dream.
My regrets are not that I dreamed too big. It’s I probably should’ve dreamed bigger and take more risks on it. So, teaching that is very key, teaching the startups how to deal with the media. It is so fun teaching a young CEO how to interface with somebody like you, Kara, and how do you handle questions, and how do you answer the questions, but also, when do you deflect them, and how do you have fun in an interview and direction, teaching them how to scale an organization and how to do channels and how to do R&D. How do you go global, etc.? I think that’s what’s missing. If we’re waiting longer for the companies to go public, then you don’t have the benefit of the boards being ex-CEOs of other companies and helping you grow. And the VCs, to your earlier point, most of them are good on ideas, but not anywhere near as good with scaling.
Yeah, but the way, the industry’s been done is it’s very artisinal ... It’s like you have to be here, you have to do this, this. It seems like they keep teaching, doing the same thing over and over again. They keep making the dough, and I’m like, “Can’t you just do this in a more organized fashion?” They all act like they can’t.
Well, I think you’ve hit on several things that have fairness. The first is the model that made us successful a decade or two ago isn’t gonna make us successful now. We talked earlier about 90 percent of venture capital going into Silicon Valley, just ... What was that? In the U.S., 20 years ago, today it’s only 50. You have to do different models. So, I’m trying to be a model of how to do it differently, just like I did at Cisco on how do you acquire the kinds of...
So, give me some of the ... So, what are some of the key lessons?
Oh. Well, the most basic one of all is what’s the role of a CEO. It’s vision and strategy for the company. Everybody gets that. It’s about developing, recruiting, retaining and changing the leadership team. That’s hard to do. Third is culture, and most young CEOs don’t get the culture, and then the fourth, in today’s world especially with social media and everything else, you’ve gotta be unbelievably good on communications.
So, go through that. Let’s go through each of those. Go ahead.
Okay. So, let me start with a fun one, culture, which most CEOs forget how important it is. You never have a great company without a strong culture. You may like the culture of the company, the Microsoft or Cisco or an Intel or a Walmart.
Which are all different.
But they are very strong in terms of the culture, and you can never have a great company without it. Most startups don’t even think about culture. Culture should be what do you stand about. Are you customer-first? Do you treat people as equals within your organization? Do you really just do the right thing? Do you make innovation happen, etc.?
If you define your culture right, it permeates and is the foundation for everything else you do, and when you teach these young companies about that, the first reaction is, “No, I don’t think so.” And then all of a sudden you see them finally get it, and then you see them reinforce that you now recruit people based on the culture you have, and you reject the people who don’t fit into the culture.
If you’re truly gonna be customers first, it’s gotta permeate everything that you do on it. So, this to me is like grandkids. I’ve seen the movie so many times before. I’ve seen the movie so many times before. I’ve messed it up a number of times, got it right a number of times. You get ’em excited about what’s possible then you can show them the road map and then you give ’em back to management in the evening when it’s time to call her up.
So culture, whatever the culture may be. They can be very different.
They can be very different, but the CEO, she or he’s got to own it. Culture can be inclusion. Culture can be corporate social responsibility. Culture can be technology, innovation, leadership ...
It can be just mean people.
But it’s gotta move with tremendous speed.
Some companies are just mean and that’s the way they are.
Oh, I think there’s some mean companies in this world. I think there’s some tremendously good ones.
Yeah. Some of them do very well, mean.
They do, but if the ...
Microsoft was very mean for a long time and it worked for them.
Yeah, but let’s ... It’s fun, Kara, I love interviewing with you. But let’s use Cisco as an example. Nobody would define us as a mean culture.
Nope. Nope.
I knew every illness of every employee in the company. We won every corporate social responsibility award, yet we were one of the most profitable companies in history.
Yeah, I don’t think any of them succeeds, necessarily, but I think mean can succeed just as well as nice.
Oh, it can. That’s fair. You may like the culture at Uber, you may not, but boy they really have a strong culture.
They’re really sorry now about that. Have you seen the commercials?
Yes, I have.
They’re very sorry.
Well it goes back to ... Every company and every leader’s going to get knocked on their tail. It isn’t how well you handle your successes, it’s how well you handle your setbacks. And that’s what I teach in this book.
I’m a product of my setbacks. Being dyslexic. How did you do it? Almost drowning at a very young age and my dad saving me and then teaching me how you do you deal with rapids and currents. Then seeing 10 years later somebody drowned in the same spot and it could have been me. Learning for how do you stay calm under tremendous pressure, we’re teaching that as fun. The ability to do that, in this book is what I’m focused on. It covers everything from ...
All right, so wait. So, culture, what’s the second one?
Really the first one is vision and strategy for the company. You’ve got to be able to outline it. As a young CEO or in an existing company, you’ve got to be really crisp. How is your vision different than your counterparts? What is your strategy? What are the top elements that are required to accomplish that? Then, how do you build a leadership team? It sounds easy to do.
No, it’s not.
It’s really hard. And then how do you know when to change your founders? How do you know when to reject people who can’t fit into the culture? How do you evolve your team? We had eight CFOs at Cisco. We never missed a beat. Eight heads of sales at Cisco. We knew how to make those transitions well, teaching these companies how to do it.
Then communications. During Jack Welch’s time — and he’s a good friend and actually one of the endorsers of the book — you didn’t have to be good at communications to be a great CEO. In today’s world you better be good at communications and that includes listening, social media, ability to take complex topics and move with tremendous speed because your brand image, damage can be done to it in an hour that would have taken in Jack Welch’s time months to occur.
So you say, “How do these characteristics work?” Then you teach them. Understand if you haven’t got a market transition going on in different business models, don’t go into that market. You’re going to get hammered. The 100th person into the new market without differentiation is going to get crushed.
So you catch these technology trends — computing moving to the edge, the importance of security, internet of everything, 500 billion devices getting connected to the internet. The ability to manage that data and to be able to get the right outcome at the right time with the right person or machine to make the right decision. Those are huge opportunities and that’s why I’m so optimistic that the job creation engine can be as strong as it was in the ’90s or even stronger if we ride this digital wave right.
So what kinds of jobs are those? Because obviously ... I was just talking to Kai-Fu Lee about the loss of jobs, that they’re gonna ... Especially in China, the manufacturing jobs are all going to be automated, so they’re going to have to deal with that, for example.
Completely agree. My number is unfortunately 20 to 40 percent of the jobs today will get destroyed, and I said that three to four years ago. That’s why most of ’em are on the startup bandwagon. Large companies will not add headcount. Mathematically, if you’re not growing at least 10 percent, you’re going to give raises to your employees. You’re basically going to give some profits back to the shareholders in terms of the issue and you’re going to drive productivity at 4 to 5 percent which enables the first two.
So by definition unless your company’s growing at probably in double digits your headcount growth over the next decade, it’s gonna be flat to probably negative. It means that if we don’t get dramatically more startups, more companies are going out of business in the U.S. than are going in.
If we don’t increase the number, not incrementally by 10 or 20 percent like we’re trying to do on IPOs this year, think of IPOs as the tip of the iceberg, but you think about how do you do this by 50 or 100 percent? Then you have to think about it differently. That’s what our counterparts are doing in this world. You’re in a world where you either disrupt or you get disrupted.
Mm-hmm, which is not new.
It’s not a zero sum game.
Which is not, it’s somewhat new, but ...
But the speed of it is three to five times faster and the implications are three to five times more so. So what I’m trying to do with this book is saying this is really an example. I hope for a go-to book for leaders, whether they’re businesses or individuals with how do you — what I loved in college, which is give me the Cliff Notes. Tell me the stories that make me understand why this process worked. That’s how you remember these stories. You do that so well in your business.
Then, like the Cliff Notes, at the back give me the key takeaways. So all 13 chapters we have Cliff Notes at the back of it. It’s something that I hope that people will read and probably find more interest in certain chapters initially than they will perhaps six or 12 months later. If it really works right, you’d love to see MBA schools say, “This is your Bible for really how you develop business.” While the ideas in and of themselves are not new — the idea of an innovation playbook and how do you do that for every aspect, the idea of how you deal with setbacks, etc. — the stories with it are. I’ve experienced good news and bad news in ways that no one else has.
Is there a key problem most troubled companies have or are they all different?
Ah. It’s a great question. I’ve never been asked exactly that way. If there’s one thing that ... a problem a company gets into trouble on, it’s getting too far away from their customers. The second thing is they miss some market transition, and those, Kara, are occurring at a faster and faster speed and therefore you’ve got to be watching for them. By the time it’s obvious, it’s too late. The third thing is a company fails to reinvent itself. And the fourth thing is they keep doing the right thing too long. So, yes, there is. And that’s very predictable.
Talk about the first one. The first one was that they don’t focus on customers.
Yeah. I saw it at IBM. IBM got on top of the world by being the most customer-centric company, and yet as we got and bigger — and I had joined them in the mid 70’s, unfortunately about the time they plateaued out — they were not listening to customers. In fact, I actually got criticized by my management about saying, “Don’t tell me the mini computer that we’re building isn’t good for customers. Just go out and sell more.”
“We’ll make it good.” Yeah.
It wasn’t a good product for them.
“We’ll make them love it.”
That’s where they got displaced by the DECs and the Wangs of the world.
That goes everywhere. I remember being at the, years ago in the record industry. I was like, “Nobody wants albums,” to one of them. And they were like, “That’s the way we’re doing it.” I’m like, “Nobody wants ’em.” Like, you’re selling Coke in a 64-ounce bottle and they want cans.
Exactly.
So give them cans.
So your ability to listen to consumers in ways that you haven’t before. One of the companies that I am invested in that I really love is Sprinklr out of New York City. If you’re not familiar with them, it’d be a fun one. They are probably the top social management platform. They go across all 24 social media capabilities as well as traditional email, etc. They have the ability to often see trends before the company, a consumer even logs into the website. They do this remarkably well. But that’s moving where the market is going in terms of the future.
Right, correct. So that not listening to customer. The next one.
The next one, and then I might get them a little bit out sequence versus what we said, is to just keep doing the right thing too long. That’s what GM clearly did. I would argue that’s what IBM did. That’s what Wang did. If you don’t constantly reinvent yourself, and Microsoft would probably be an example, with Satya [they] have reinvented themselves, most companies do not. Intel, a great company, but they really, it’s one or two products that they’ve had that’s doing the majority of their profits. Not true at Cisco and it won’t be true at my startups.
So how do you constantly reinvent yourself? And not any longer every 10 years, probably every three to four. And you have to think that way. Then you basically have to build an unbelievably strong culture to catch these changes in terms of the market.
Mm-hmm. And most people don’t do that. They don’t see the changes. Oh, you can see the changes and make it badly. You guys were early to the media question. What was that thing you had, was a TV set? I remember.
Oh, we were very quickly with telepresence.
Telepresence.
With the ability to do these sessions ...
You were all into that.
Which you ought to use now.
I know, but you were right.
Today I use Google Hangouts.
You were right directionally. You can be right directionally and wrong in the product.
Well, it actually was very profitable for us, what we did, and we needed to take it to the next level.
What was that called? It had a name.
It was called telepresence.
Yeah, but there was another name. You had another product. You put it on the TV, oh I can’t remember. You bought the Flip camera, if you remember.
Yes, we did.
My favorite. Made a killing.
And by the way, it was one of ’em that we were right on direction and wrong on execution.
Yeah, yeah. Well, you didn’t know that iPhone was coming out with the camera.
We actually had the two ...
Oh, you probably did.
We did not. If we’d known that, we should have put on every smartphone out there video and Flip should have the been the cloud provider of it. But it shows you, once in startups, it’s a portfolio play, like acquisitions. The majority of startups will not work. Society needs to understand that. And with my portfolio I hope will be profitable for the majority ...
No, you can be right. You can see the shift and then not make it. Or you can be like a Steve Ballmer. I’ll never forget when he said, “These mobile phones, who cares?” And I was like “What?”
Same comments were made about the internet. “What is the internet? It’s just for these techies and the university.” Now every company, everything we do is going to be connected to technology. The U.S. should lead here. What I’m trying to do in this book is to say, “Here’s an example in how to do it.”
And also my platform for what I want to do next, I had the unusual opportunity to help change the world with the internet. I’m very proud of what we did both socially and business wise and how we shared it across our customers, our citizens, our company, the employees and the shareholders. I now am trying to do that with digitization, not just in the transforming countries in my prior role with Cisco, but now with startups. I think they will be the future for innovation.
We’ve got to wrap up soon, but is there one part of the country that you see great promise in? Or you’re trying to do it across the country?
Well, the great promise is in the areas that are reinventing themselves the quickest and that’d probably be Texas. I am optimistic in Silicon Valley but boy, we got to change. What I want to see is I want to see every state make this a top agenda, regardless of politics.
Mm-hmm. Any governor you think is, Hickenlooper in Colorado? He’s pretty sharp.
Well, Hickenlooper is a very good example.
Stacey Abrams if she wins in Georgia is an interesting person.
There’s going to be a lot of interesting candidates regardless of your political views on it. It goes back to, it starts with the university. Why is Silicon Valley so successful? Stanford. Why is the Boston area so successful? MIT. So the West Virginia University has to make digitization, artificial intelligence one of its top priories. I went to France, my last trip to France...
You love France, John.
I met with 250 startups.
Do you speak French?
I’m learning, poorly.
Oui. Yeah.
Then I popped into one of these classes in a university in the northern part of the country that’s in a fairly poor area. I was going to go talk to them about artificial intelligence and how they oughta think about this. I walked into the class, it was an artificial intelligence class.
Those French!
So others are changing faster than we are. Countries like France, that was very slow to change, they’re getting back to their entrepreneurial roots.
Yeah. We gotta keep up with France! If we can’t keep up with France, what are we?
If France can do it, tell us. Exactly. Why can’t America do this?
Right? They did help us in that war, that original war.
If India can do this, why can’t America do this? We need to put the country back into a startup nation.
You know why, because we’re fat, stupid and arguing with each other over stupid things. That’s why.
Completely agree.
We’ve just gotten lazy.
Going back to, my parents were doctors. We’re focusing on the symptoms, not on the underlying issues. We’re a great country. We need to be great on startups. It needs to be inclusive. We need to get our immigration policy working where we attract the best and the brightest from all over the world for these companies. Forty percent of the Fortune 500 were founded by immigrants or the children of immigrants. Out of my startups, 60 percent ...
I agree. What would you say to the president about the immigration policy? I’m assuming you’re pretty liberal on that issue.
Well, I’m not liberal. I think I’m in touch. This is a country of immigrants. We ought to attract the best and the brightest to this country as fast as we can and make it the best place to do it.
Full stop.
Full stop. And this is in the interest of creating jobs in America. I’m not trying to solve world hunger, but for well-educated people who can come in and make a huge difference on job creation and help us on innovation, we not only should attract them to our universities, we should keep them. And they still want to come to the U.S. The scary part is before we used to say, “Well, for the engineers, for financial reasons, put some of the resources in India.” Do you know where my startups are today even though they’re founded in the U.S.? They have a lot of their engineering resources in France and Germany, of all places.
So we’re falling behind. I want to get back to, how do we change this? Kara, perhaps it’s a dream, but I think you’re now seeing more and more people focus on us doing this. I think the American people are very smart. It’s not about politics. It’s about just doing the right thing and giving their kids a chance for this.
And back to the issue you raised indirectly, we’ve got to get the kids, especially on gender and diversity, excited about technology and excited about entrepreneurism in the third and fourth and fifth grade. That’s where you lose the women, you know?
I think if you’re not an entrepreneur going forward, you’re screwed. You’re just screwed. If you don’t have an entrepreneurial nature, everybody, you’re screwed.
That’s the book. It’s about leadership, entrepreneurism, startups, regardless of what size organization you’re in.
It’s a mentality, actually.
It is a mentality. It’s a mentality of being able to dream. It’s a mentality of setting goals that are audacious. It’s a mentality of having no fear, sometimes through lack of knowledge, which is okay. Then it’s a mentality of, you get knocked down — and a majority of startups will fail — then get back up and go again.
Well, we also do put in all kinds of things to stop talented people. It’s an idea of talentism. I always think there’s, I always use this example that there’s a small girl in, I don’t know, rural Tennessee who could solve cancer and she will not because there’s gender issues around her. She doesn’t get the education she needs. There’s opiate problems. We put so many things, sexism, racism in their way that it makes it much harder for them to jump those obstacles.
It does, but I think it’s doable. My generation did not fix this. We did a pretty good job at Cisco on our board of directors, senior leadership, gender diversity, etc. In terms of the total mix, as you know, we’ve flatlined out as a country on the number of female CEOs and mix of the high-tech companies on gender.
In India, with one of the startups, all they did was require, for every opening, one female to be interviewed.
Yeah, that’s a new thing in California that’s ...
It went from 24 to 34 percent. So this generation of millennials can fix it if you just give them the nudge.
I never thought I’d think legislation would fix this but at this point I’m like, it’s either like, just on gender alone, it’s either women are stupider or it’s sexism. And I don’t think women are stupider.
Well, you’re 54 percent of the college graduates. I learned a long time ago you’re smarter.
Yeah, at this point I think ...
I don’t say that ...
What do you think of the legislation about boards?
Well, I don’t think you ... Legislation’s not the way to solve this.
No, but it hasn’t been solved.
I think by the time the government goes at it, you’ve got a real problem. Diverse boards produce better results, period. Diverse leadership produce better results, period. You fix it in the startups. And by the time .. You’re talking to a person who worked on tax policy for 17 years. By the time the government does something, it’s too late and they’ve messed it up. I think they’ve got to create an environment.
The companies have to also own this. This isn’t about just making profit. It’s about doing the right things and having inclusion as part of your culture. But it’s the startups that’ll solve this. If that’s where all the jobs are going to be created, which it will ...
Yeah, that’s a fair point.
... then go fix it there.
Yeah, yeah. I was talking to a CEO and he was like, “Well, it can’t just be about doing the right thing.” I’m like, “Why?” It was like, why not? Why not? Why can’t it be about doing the right thing?
That’s the values I teach. When I talk about culture, I try to encourage people to put customers first. The CEO, she or he has got to own the culture and then just do the right thing. I was on a video conference with a young woman out of France. Twenty-five employees in her company. She’s got a tiger by the tail in terms of how you change the workplace and what do you do on this. She focused on her culture and values. She would not have done that originally, but last time I mentored her when I was in France, I said, “Here’s what I want to cover the next time we’re together and here’s the approach.” So I’m really optimistic about the future but I think it’s gonna be the millennials who fix it.
Yeah, let’s hope. Any way, Jacques, I really appreciate it.
Ah. It’s a pleasure. It’s been too long. We have to do this more often.
Absolutely. I have a lot of questions. I’m going to France with you. I’m coming to France with you.
Okay.
The food’s good too, I hear. It was great talking to you. Thanks for coming on the show.

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