Technology titan and former boss of internet networking company Cisco, John T Chambers has invested in 16 startups around the world, two in India — Uniphore Software Systems, a speech recognition solutions startup and Lucideus, a digital security services firm, in October this year. Chambers, founder & CEO, JC2 Ventures, sees startups leading much of the new job creation, with India possibly rivaling Silicon Valley in entrepreneurship, in less than a decade. In a recent interview with ET, Chambers discusses the startups scene in India, future of large companies, how new companies will drive job creation and so on. Edited excerpts:
There’s much concern around job destruction as companies adopt digital technologies. How do you see technology world evolving and what role will startups play?
The whole world is going digital. You are moving from 1,000 devices connected to the internet (back in early ’90s) to 20 billion today and 500 billion in 10 years. Every company will become a technology company. Large companies of the world will unfortunately not add headcount because of productivity gains and consolidation. When you go digital 30% of the jobs (as we know them today) disappear. That’s why we got to upgrade skills.
India is going to be a startups nation and indeed it will be a startups world. Majority of the innovation, majority of the job creation especially the medium to high paying jobs will happen in startups.
What does the startups world mean for large companies?
Every CEO is looking at how do they grow their revenues; how they can move to new markets. Every CEO realises it’s about automation and productivity. Every CEO knows that they got to do innovation in a way that they have not done before and they will probably partner with startups in a way that we have not seen before.
Why aren’t many startups in India able to think global – like Uber, Airbnb, Facebook, Google. Is it possible now that some startups in India become global companies?
It’s possible. Its important to understand there’s no entitlement. Silicon Valley can be displaced. Before Silicon Valley, Boston was the high tech centre of the world. We thought we were invincible – 1,000 high tech companies and in a period of three decade we disappeared. They had great VCs, smart people. So, there’s no entitlement who is going to lead in this. Fast will beat the slow, you disrupt and you can get disrupted.
To the second part, India did not have what I would call a startup agenda even though we have world class engineers coming out of IITs. India’s skill set is unbelievably good. But the initial set of startups in India were clones of what was started in the US. Uber knockoff, Amazon knockoff and something like that. Now you are starting to see the emergence of the next generation of startups out of India — Uniphore is one of them and you suddenly began to realise they could lead in the whole market. Lucidius as well.
In India today 90% of the VC money goes into the top six cities. It can expand across all states and territories. I am trying to play a role in Indian startup ecosystem where we can generate a good number of jobs as well.
India needs more than 1 million jobs per month. Startups don’t create that number of jobs. Where’s the room to create those kinds of jobs? Or will there be thousands of startups and that’s how it will be?
More than 70% of the jobs created by startups are after they go public. If you haven’t got a bunch of IPOs you got a problem. At Cisco we changed the world in terms of how internet changed everything. Now we are going to try and do the same things by being a role model in France, US and here in India about how the startups really become the economic engines, the job creation engines.
My goal is to have my startup headcount grow at 40-50% a year on average. And I am actually running at almost 80% when I total all 16 of my startups. It has to be done right — to build scale, have the right IPO capability and so on.
What do you look for in startups?
The first thing is that majority of startups will fail. When I acquired 180 companies (at Cisco) I told the market that I expect 90% of them to fail. Same thing is true of startups — majority will fail. What I can do is by picking the right startups that truly want to be mentored, I can raise the odds dramatically and also help them scale, help them get access to markets, help them understand channels etc.
So, what do I look for? The first thing I look for in a startup is a market transition that is going to combine the technology transition. Second thing I look for is the founder, the CEO. Do they want to be coached? Are they real quick, smart and understand what’s possible?
Then I go straight to customers. and the customers tell you what do they really think about the company. Then I look, is there sustainable differentiation in the products? Next, I look at how close to inflection point is it in terms of the direction. Then I look at what the other advisors are like. It’s a combination of things that makes a startup successful.
You invested in 16 startups around the world. Do you have time to hand hold and scale all of them?
It goes in waves a little bit. This is what I do now. I am pretty focussed on digital agenda in France, digital agenda in India and startups.
I intend to invest more, but I got to build scale as well. I love what I do now. I compare this in some ways to grandkids. I give my advice, here’s what it is, here’s how you handle a customer situation, an employee situation and I give it back. Though if they don’t want to be coached I don’t waste time. The real value is to see the teams progress and that’s what gives me real joy in life.
You said that India is at the cusp of becoming a startup nation. When you say startup nation will it be similar in scale that Silicon Valley achieved. We are nowhere near that at present.
Ofcourse you are not. But neither was Silicon Valley when Boston was the Silicon Valley of the world. We looked over Silicon Valley and we thought that those guys could not even spell computing. There’s no entitlement.
Out of the IPOs in the US in recent years year – the number from Silicon Valley is not even close to the 1990s. But a startup was in existence for at least 10 years before it IPOed. Majority of the Indian companies are just getting started.
Lot of people don’t realise the changes you make this year or last year don’t show up in dramatic job increases or IPOs. But there are unicorns which have been around for five years or more. This is what I love about India — the country is truly ready for a transformation.
Average age in India is around 26 years and you got great educational institutions. So you are in a position to perhaps lead in this arena. I will be disappointed if India didn’t rival Silicon Valley within a decade.
India has got 6 lakh engineers, US has 60,000 per year. Out of my 16 startups, half of them have graduates from Indian schools. India has all the ingredients and that can change the paradigm.
The US administration keeps erecting barriers on H1B visas. How do you see that?
Almost 60% of the H1B visa users are from India. I personally believe in very open immigration for high skilled labour. Period. I met with 12 Silicon Valley startups recently and about half were Indians. It’s in our countries best interest to make this work. We probably have four million Indian diaspora in the US and I like to see that number go up dramatically.