John Chambers - Pattern Matching, Playbooks, and Winning Product Categories - [Founder’s Field Guide, EP.6]

**Patrick O'Shaughnessy** (0:00)
This episode of Founders Field Guide is brought to you by Microsoft for Startups. Microsoft for Startups is a global program dedicated to helping enterprise ready B2B startups successfully scale their companies.
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founders Field Guide. Founders Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at investorfieldguide.com.

**SPEAKER_2** (1:57)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:20)
My guest this week is John Chambers. John was the CEO of Cisco from 1995 to 2015, where he helped grow Cisco from $70 million to $40 billion in annual revenues. In this conversation, we discussed the best business lessons he learned from longtime GE CEO Jack Welch, his key lessons from acquiring over 180 companies for Cisco, pattern recognition and playbooks, capitalizing on market transitions enabled by new technologies, the value of team offsites and a lot, lot more. I was immediately drawn into John's magnetic personality and it's easy to see how he was so adept at running a 40,000 person company for two decades. I hope you enjoy this great conversation with John Chambers.
So John, I was toying with how to begin this conversation for everyone to hear and I thought a really neat entry point would be the observation you told me about from Jack Welch that you need a near death experience as a company to become a great company. Can you walk me through that idea and the episode for you?

**John Chambers** (3:19)
Jack Welch at GE was one of the greatest business leaders of the generation in front of me. And I'd say many people would say he was the best.
He did many things well, but one of the things he did was benchmark companies, learn from them. And you see when he sent his teams out to benchmark companies, if they got one idea from the company, it was great. When they benchmark Cisco, we were shocked. They came away with 22 areas they wanted to emulate and learn from and direction.
And Jack Welch, even though he was not a technologist at all, understood the market transition going on. So we became good friends and developed a trusting relationship.
In the mid 90s, and we were on our way to becoming the most valuable company in the world.
I was talking to Jack and he said, John, you've got a good company. And I said, I know Jack that you're baiting me on this. I think we've got a company that is pretty close to becoming a great company. What am I missing?
He basically said, John, a near death experience. And I said, well, I've gone through some tough times and I rattled off the economic recessions, et cetera. And he said, no, John, until you go through a near death recession, setback type of approach, you will never be a great leader yourself because you have to question your own ability to lead your friends who suddenly turn on you. You've got to go through that and your company has to go through it as well. That's one of those things when you hear pieces of advice, you go, Patrick, that was a good advice. But probably not. I'll put it over here to the side 2001, the.com bus. He was exactly right. It was the hardest year of my business career. We had never missed a forecast with created 10,000 millionaires in our company. We were on a roll. We've run every award imaginable as a company. And all of a sudden, people were questioning, how do we go from the most valuable company in the world to a company? Should I even be leading the company? It was a tough year for me. We had to lay off 7,500 people. Very painful. These were my family. I knew many of them very, very well personally.