Today, Cisco CEO John Chambers announced he would be handing over the reins to Chuck Robbins, a UNC grad who went to high school in Rocky Mount. And who worked from time to time at Cisco’s RTP campus, which is nice, because having a boss in San Jose who has deep roots in North Carolina could be a good thing for the Cisco folks here. Anyway, I hope.
I was thinking back when I heard the news to the time more than 15 years ago when I was eating lunch with a bunch of much, much more important reporters on the patio of Chambers’ house overlooking the Pacific Ocean. This was at the height of the dot-com era. Cisco was manufacturing the hardware for the new and growing Internet, and it couldn’t ship the stuff fast enough. Business journalists were flying in to Silicon Valley, beating a path to Cisco’s door, because this was the next big thing. Fortune Magazine in 2000 would proclaim Chambers quite possibly the world’s greatest CEO. Here is what Fortune wrote in May 2000, when Cisco’s stock value was approaching $500 billion:
“Ask a knowledgeable observer of the business scene, Who is the world’s greatest CEO? and you’re likely to get names like Jack Welch, Lou Gerstner and Nobuyuki Idei at Sony. Why not John Chambers? Cisco has grown up so fast that some might not be ready to put this wired West Virginian in that league. But chew on this. When Chambers became CEO in 1995, Cisco had a market cap of $9 billion. Today it’s 54 times that. In other words, Chambers has presided over the creation of more than $480 billion in stockholder value. Four hundred eighty billion! That has to be the greatest first five years any CEO has ever had. Yeah, maybe we’re putting Chambers in the hall of fame before his time, but isn’t he just as good a bet as Ken Griffey Jr.?
Well, that was an interesting juxtaposition 15 years ago. The writers could not have known that Griffey and Chambers, who both had sensational ‘90s, would not have such great 2000s. Junior was hurt a lot. Cisco suffered through the dot-com bust and then had to weather intense competition. Everyone wanted a piece of the Internet plumbing business.
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Cisco is still a good company, but its market value is now around $149 billion, a lot less than it was in 2000. In other words, Cisco has become a normal company, as opposed to a company that business journalists write ga-ga prose about. Hey, given how treacherous the technology sector has proven to be in past decades, surviving is an accomplishment. A lot of Cisco’s competitors and customers didn’t make it. At least Chambers goes out having created $140 billion in wealth over some of the craziest ups and downs in the history of technology. There’s that.
At the same time that Cisco was peaking in market cap in 2000, Apple was barely a blip, a pioneering personal computer company that had slid into irrelevance. You could have bought all of Apple for less than $9 billion, what Cisco was worth at the beginning of Chambers’ run.
Steve Jobs had come back from exile to the company in the late ‘90s, but no one in 2000 was calling him the world’s greatest CEO. Not yet. But by the mid-2000s, he had begun the transformation of Apple into the world’s greatest consumer electronics company. Today, Apple is worth around $740 billion. From basically nothing to $740 billion in less than 20 years. Hall of Fame numbers for Jobs and Tim Cook.
There’s a lesson in Cisco’s ride, however, for the folks at Apple, an “All glory is fleeting” lesson. At the very moment when your praises are being sung on the cover of glossy business magazines, someone in a garage or basement or dorm room is working on technology that is better and cheaper. Always. Ask Chambers. So Apple may be worth a trillion dollars in five years or $9 billion again. I have no idea. Nobody does.
One thing I do know is that Junior Griffey is a lock for the Hall next year. His stock is still pretty high.