yesBenjamin PimentelNone
×

Get access to Protocol

I’ve already subscribed

Will be used in accordance with our Privacy Policy

John Chambers on the Silicon Valley exodus: ‘We’re in real trouble’

"The complacency is scary."

​John Chambers

John Chambers is worried about the future of Silicon Valley.

Photo: JC2 Ventures

John Chambers is considered somewhat of a legend in Silicon Valley. And he's very nervous about its future.

Chambers led Cisco for two decades, guiding the tech giant through major waves of disruption and innovation. After stepping down in 2015, he embarked on a new career as a venture capitalist, launching JC2 Ventures in 2018.

His views still resonate in tech and Silicon Valley, where he's often viewed as an elder statesman and mentor. And he has a lot to say nowadays.

In a conversation with Protocol, Chambers shared his deep concern about the future of California, and particularly Silicon Valley. He spoke of the alarming wave of departures from the region and the state, led by Hewlett Packard Enterprise and Oracle. He also shared his frustration with California's leadership and explained his decision to endorse the potential candidacy of the former mayor of San Diego, Kevin Faulconer, as the campaign to recall Gov. Gavin Newsom gains momentum.

This interview has been edited for brevity and clarity.

You endorsed former San Diego Mayor Kevin Faulconer's potential gubernatorial run. But are you supporting the campaign to recall Gov. Gavin Newsom?

Two separate items. Am I supporting Kevin? Absolutely. Am I actively involved in the recall? No. If there is going to be an election, I do think it is time for a change. I think we are in trouble in California.

At the present time, California is not a good state to do business in. It is getting worse. It used to be that every startup that I was involved in, if they weren't in Silicon Valley, they were talking about: When would they come? No one's asking that question anymore. When you see Hewlett Packard [Enterprise] leave — they were the original garage startup and the one that I modeled after culturally — when you see Charles Schwab leave, when you see Elon Musk leave himself, you realize our state has a problem and we are in denial.

The issues aren't anything to do with any political party. The issues are our regulations are non-competitive; our cost of living is non-competitive; our tax structure is the worst in the nation.

They had the golden goose, and nobody seems to care that suddenly the geese are flying away.

The implications for our state, long term, are terrible on job creation. Remember each core job in tech supports five additional jobs, everybody from the people who build houses to the dentists to the people who do the landscaping, the Uber drivers and so on.

I believe it's time for a change. It would be easy to just ignore this and just automatically go with startups moving throughout the nation. But I owe an obligation to Silicon Valley for us to know what I think the outcome will be at the current trends. Because I've seen the movie so many times before.

This is self-inflicted, entirely. It's a regulatory environment that takes business for granted: that when they pass regulations, they don't even do a study on the impact on jobs, especially startups and small companies. You can hit a big company with a billion-dollar fine and their stock probably won't even move. You hit a small company with regulations on privacy or other issues and that means they may not be able to be viable. Or they'll have to go to another state for the majority of their employees.

You have to realize this is global competition for new companies and existing companies. And we're not even competing. You're going to disrupt or you get disrupted. At the present time, we're getting disrupted at tremendous speed. And the complacency is scary.

It's too late once the jobs are gone, and then all of a sudden our kids can't get jobs in the state, regardless of where they are. It's too late when you suddenly say, my tax base got cut by 30% because the companies and employees left. If I were doing a startup today, I would go to Texas.

Is there a regulation that stands out for you as an example?

I think the effects of the privacy rules being passed. Do I believe that we've got to have privacy regulation? Absolutely. But you've got to understand the economic impact, especially for small companies. For every regulation passed, there should be an accompanying summary of what it means to jobs, especially jobs in startups.

The large companies will not add total headcount over the next decade anywhere in the U.S. There'll be some, like an Apple, that may go up dramatically, or an Amazon, but the banks, the manufacturing, the tech companies won't add [jobs] in total. So if you don't create an environment that is very friendly to small businesses getting bigger and startups getting bigger, you've got an issue coming at you.

Is it too late for California, in your view?

I think that the luster is clearly going off our star. I think we missed an opportunity to clearly lead in the next generation, which, by the way, we could have done.

Is it too late? No. But have we lost a huge amount of momentum? Yes. Is it very manageable and fixable? Yes, it is. But it requires a concerted effort starting with: We want this to be the state that does the best job creation. I believe we're in real trouble in California.

What are the implications, in your view, of the tech exodus from California? Some people would say that's actually a good thing because it creates new centers for tech.

Well, it's a good thing in that every state in the U.S. has to become a digital state and a startup state. And this is something that creates opportunities. I don't think there's any entitlement on where the future startup state will be. It's up for grabs. But right now, if you're handicapping them, you probably would handicap new players like Texas. Watch how quickly Florida has come up. You'd have to handicap it against New York and California.

What are your own initial thoughts about the Biden administration's approach to tech?

It's too early to tell. I think he has appointed people who are tech-savvy. [But] neither party ran on startups, on digitization as part of their platform. [Prime Minister Narendra] Modi did in India. [President Emmanuel] Macron clearly did in France. [Note: Chambers is an advisor to the Macron government, which named him global ambassador to French Tech. He is also the chairman of the U.S.-India Strategic Partnership Forum.]

This is our game. We invented this, and yet we're getting beat by others on it. Watch how far Texas has come in just five years. Five years. And who would have thought Montana or West Virginia would be a great place for a startup.

The U.S. needs a digital policy. France used to be the worst place in Europe to do business. They moved from a startup environment that was just terrible to the fastest-growing startup environment in all of Europe. We need to get back to a startup nation, a digital nation, and we need a national plan to go about it.

Going back to California: Are you considering moving, John?

If I were 25 years younger, the answer would be: It's my wife's decision, but I would. My brother-in-law and sister-in-law who had startups here in California, they moved to Florida several years ago.

Each of my startups that are located in California [is] considering: Should they stay here? Should they have the majority of their headcount remain in California? I don't know of a company that's not thinking about that.

What do you tell them?

Your decision. Here are the pluses and minuses.

Have you considered becoming active politically?

If I were going to be active politically I would have had to do it about 20 or 25 years ago. And I thought pretty seriously about it at that time. I had friends who encouraged that. But I'm not a political person. I like Democrats [and] Republicans. I have a great deal of admiration for Biden; I have a great deal of admiration with George Bush. And so I tend to be more focused on just getting things done. Will I, however, support, regardless of party, people whose values that [I] share? Answer: yes. I believe hugely in democracy and the faith in our electoral system.

People

No editing, no hashtags: Dispo wants you to live in the moment

David Dobrik's new photography app harkens back to the days of the disposable camera.

Dispo turns the concept of a photography app into something altogether different.

Image: Katya Sapozhnina, Diana Morgan, Amanda Luke

Instagram was once a place to share Starbucks cups and high-contrast pet photos. After Facebook acquired it in 2012, it has turned into a competition of getting as many likes as possible (using the same formula over and over: post the best highly-curated, edited photos with the funniest captions). More recently, it's essentially become a shopping mall, with brands falling over themselves to be heard through the noise. Doing something "for the gram" — scaling buildings, posting the same cringe picture over and over — became the norm. Pop-up museums litter cities with photo ops for posts; "camera eats first"; everything can be a cute Instagram story; everything is content.

And to be clear, Dispo — a buzzy new photography app that just came out of beta — is still a place for content. It probably isn't going to fix our collective online brains and their inclination to share everything about our private lives with others online. It's still an app, and it's still social media, and it encourages documenting your life. But it runs pretty differently than any other image-sharing app out there. And that might be what helps it stand out in an oversaturated market of social networking apps.

Keep Reading Show less
Jane Seidel

Jane Seidel is Protocol's social media manager. She was previously a platform producer at The Wall Street Journal, creating mobile content and crafting alert strategy. Prior to that, she worked in audience development at WSJ and on digital editorial at NBC Universal. She lives in Brooklyn.

Sponsored Content

Building better relationships in the age of all-remote work

How Stripe, Xero and ModSquad work with external partners and customers in Slack channels to build stronger, lasting relationships.

Image: Original by Damian Zaleski

Every business leader knows you can learn the most about your customers and partners by meeting them face-to-face. But in the wake of Covid-19, the kinds of conversations that were taking place over coffee, meals and in company halls are now relegated to video conferences—which can be less effective for nurturing relationships—and email.

Email inboxes, with hard-to-search threads and siloed messages, not only slow down communication but are also an easy target for scammers. Earlier this year, Google reported more than 18 million daily malware and phishing emails related to Covid-19 scams in just one week and more than 240 million daily spam messages.

Keep Reading Show less
People

Citizen’s plan to keep people safe (and beat COVID-19) with an app

Citizen CEO Andrew Frame talks privacy, safety, coronavirus and the future of the neighborhood watch.

Citizen added COVID-19 tracking to its app over the summer — but its bigger plans got derailed.

Photo: Citizen

Citizen is an app built on the idea that transparency is a good thing. It's the place users — more than 7 million of them, in 28 cities with many more to come soon — can find out when there's a crime, a protest or an incident of any kind nearby. (Just yesterday, it alerted me, along with 17,900 residents of Washington, D.C., that it was about to get very windy. It did indeed get windy.) Users can stream or upload video of what's going on, locals can chat about the latest incidents and everyone's a little safer at the end of the day knowing what's happening in their city.

At least, that's how CEO Andrew Frame sees it. Critics of Citizen say the app is creating hordes of voyeurs, incentivizing people to run into dangerous situations just to grab a video, and encouraging racial profiling and other problematic behaviors all under the guise of whatever "safety" means. They say the app promotes paranoia, alerting users to things that they don't actually need to know about. (That the app was originally called "Vigilante" doesn't help its case.)

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

People

Anjali Sud is reinventing Vimeo and the future of video

It's not a YouTube competitor anymore. It's something much bigger.

Anjali Sud has been CEO of Vimeo since 2017, and has totally changed the company in that time.

Photo: Vimeo

Anjali Sud's first day as Vimeo CEO was an eventful one. Not only was she standing in front of the company as its new leader, she was telling them that things were about to change. A lot. After more than a decade operating as a home for streaming content — sometimes a YouTube competitor, other times coming for Netflix, never quite reaching either goal — Vimeo was going to become a SaaS company. It would be wooing IT managers and vice presidents, not A-list directors and Golden Globes voters. Even after the initial shock wore off, she knew it would take a while to change the structures, incentives, goals and workflows to become a different kind of company.

That was 2017. Now it's early 2021, and Vimeo is on a tear. Sud and her team are getting ready to spin out of Barry Diller's IAC later this year, turning Vimeo into a public company in its own right. They've raised $450 million in capital ahead of that change, and are currently valued at about $5.7 billion. Vimeo has more than 200 million users, 1.5 million of whom pay for its services. Its revenue increased 54% in the most recent quarter compared to a year ago, and by some measures the company is already profitable.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Latest Stories