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More from RSA Conference 2023

John Chambers

CEO & Founder

JC2 Ventures

Three insights you might have missed from the RSAC ’23 event

The cybersecurity industry is at a crossroads, and investors face serious challenges. For that reason, timing was ripe for a well-attended RSA Conference 2023 at San Francisco’s Moscone Center, where theCUBE analysts reported live on keynote breakdowns, major announcements and hallway talk. The narrative from security vendors has been that organizations don’t spend enough money on cyber defense, according to theCUBE industry analyst Dave Vellante. But is that true?“The conventional wisdom is it will help; or at least it can’t hurt,” according to Vellante in a recent Breaking Analysis

The future of cybersecurity and AI: An exclusive interview with John Chambers

The future of cybersecurity, the role of artificial intelligence and insights on the investment landscape were key talking points during a conversation between industry analysts John Furrier and Dave Vellante and John Chambers (pictured), chief executive officer of JC2 Ventures and former Cisco Systems Inc. CEO, at today’s RSA Conference in San Francisco.The security of the past, which was siloed and complex, will no longer work, according to Chambers. He envisions the future of security as an architectural play that encompasses a 360-degree approach, from risk assessment and prevention to recovery

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John Chambers | JC2 Ventures

John Chambers

CEO & Founder JC2 Ventures

>> We're back at Moscone West, theCUBE's coverage of RSA 2023. A man who needs no introduction, John Chambers is here, friend of theCUBE. Great to see you again. Thanks for coming out.

>> Dave, it's a pleasure. John, to be with you again.

>> John Furrier: Great to see you.

>> So John, a question that John and I ask a lot of executives like yourself, is security a do-over?

>> Oh, now that's not the way I've had it framed before. So I'm going to buy a little bit of time. Distract your audience while I get my answer on it. The answer is yes. I think security of the past isn't going to work. Those were in silos, individual products, very complex, required human intervention. Were not simple to use or install. You didn't understand the benefits and able to quantify where you put your risk. I think you're going to see security of the future an architectural play, which thinks about it from where are you versus your peers? If you invest money, where should you invest? How does it lower your cyber insurance or work through it? How do you prevent the attacks once they start to occur and shut 'em down quickly? How do you recover from 'em, et cetera? And that whole 360 degrees. So I think you're going to see a next generation of security leaders. You and I were teasing earlier, John, about is security kind of boring, something of the past. I would argue no because you're going to see a whole new generation of leaders within it. Security is set up for an architectural play. Nobody's been able to capitalize on it. And the only way you have security is if it were to not require human intervention. And for the pieces to talk and communicate together.

>> Yeah, the integrated system aspect of it is interesting. You and I have talked in the past I know in your previous job as the CEO of Cisco, did a lot of networking. You got networking packets, that's kind of footprints. You can see deep packet inspections, see what the patterns are. Modern applications now on top of containers in Kubernetes are cloud native. You have a lot of scale and speed, new code coming out, and AI's at the center of it. Two years ago you said AI's the next big wave. It's here.

>> Yes.

>> So you got new AI. You got network, more solid network functionality, and these modern apps. The stack is now trying to be secure. What's your vision on this? Because you got AI driving a lot of change, but the packet's still got to move from point A to point B and be secure, and there's more of them.

>> Well, John, you've asked about six questions, and the group, and let me kind of answer it in the segments we went through. I think security of the future will be, as I alluded to, an architectural play. Security companies today are primarily one product where they get 60, 70, 80% of their revenues and most of their profits. I think you've got to think about security on how the pieces tie together and how they communicate across those. I'm fortunate enough to have nine security startups. We're on an unusually good quarter. And as you know, startups go up and down. They have a problem every other week. But out of the nine, in the most recently reported quarter internally or last year if they haven't reported this quarter, they're growing between 40 and 300%. Now what that says in an industry that's growing 10 to 12%, that's all security's growing. And while it might be slowing a little bit which it probably is cause of budget issues, when you hit those elements, you're really with the next generation of security players who make it simple to use, who use voice recognition as the primary potential single sign-on for identity in the future, who take a complex issue like how good is your security strategy for your company that makes the CEO comfortable or the board comfortable and is able to explain it to you in multiple terms. What does this really mean to you? Those type of things I think are the ones that interest people the most now.

>> You know, when you look at investing in security companies or in startups, you know this better than I do. When you look at the market, with the exception of Microsoft, they've got a big, you know, security business, I guess. It's hard to tell. They're kind of everywhere, but no one company has more than, you know, single digit market share, right? Now when you were a CEO of Cisco, I think 60 plus percent market share.

>> John Chambers: Okay.

>> And so do you think that will change in the future?

>> I think it has to, and for mainly positive reasons. One of the things that I was taught early on by Jack Welch at GE is he said, John, if you don't have at least 20% market share, spatially and what he understood about technology companies, you don't have staying power. So to have a lot of players in a security architecture where nobody has even 10%, you're going to see a consolidation in that. And you're probably going to see a number of new generation leaders. I do think it's set up for one or two or three players to lead in this. And it could be a startup who just gets bigger and moves into market adjacencies and use the innovation engine to really go. Or it could be one of the existing security players, a CrowdStrike, Palo Alto Networks at Cisco that makes the transition. I'm betting either way I'll be okay. So it could be a company like Rubriks that is just on a tremendous growth range and a very high unicorn approaching double digits capability who decides to go into multiple other areas which I'd love to see Bipul do. Or it could be one of the startups that suddenly really scales dramatically and begins to piece it together. Or an existing incumbent who reinvents themselves. Now the problem with existing incumbents, it's hard to reinvent. You've got to get the next market transition right. That's when you gain share. So the business model in security is now going to be enabled by AI, and it's going to be enabled around simplicity, ease of use, how you purchase your stuff. And security has to be built in from the very beginning. It can't be an afterthought. You overlay security on an electrical grid, all you're doing is put band aids on it. It has to be designed from the beginning of how you do it. Same thing with networking with a company called Now which Pankaj Patel is leading. It's designed ease of use it reduces dramatically your operational cost. And it was designed for simplicity from the very beginning with zero trust built in from the very beginning. So until you get that in supply chain, until you get it in the electrical grid, until you get it in the networks, you really don't have security of today. So there's going to be a new player here. I'd love to be a part of that. I'd love for 'em to buy my company. So I'd rather for one of my companies to be that mover.

>> John, you're investing a lot, as you mentioned earlier which is great, and you've seen the market moves. We're in a market now that many people are saying, look, it's a shift. It's not like a market. Well, you buy some companies, some white space, product roadmap, fill that in, buy it, integrate it in. This is a market where there's opportunity for revolutionaries to take big positions, new companies, startups coming in. And as my friend Jim Anderson, a VC, old school VC said some of the startups are ideas that no one gets or sees. It looks different. Is there something that you see out there that you might be, that might be different because we don't, it's not a follow the herd mentality. I guess, AI that's going on hype right now, but in these big movements, when these big market step functions, where there's a change of the guard, there's always that company that no one gets. Could be a little company, two guys out of Stanford build a box, connect networks together. Could be Airbnb type. No one, what is this company? What is that in your mind?

>> Okay, a series of questions on it. First, I'll start with a way out there approach. You all remember I said voice would be free, and it destroyed the, my service provider customers were pretty upset with me saying that because they enjoyed their revenues and their profits. But it was obvious it would be because it was such a small load on the internet that companies would give it away to get the data and get the video side. One that's unknown that I think is going to change dramatically, and it's counterintuitive because of the deep fakes going on especially with artificial intelligence, is the voice. You're going to be able to imitate Dave or John, and I won't be able to tell it's not you. However, if you really look at voice, it is broken up in a single second to 8,000 samples, and in five seconds, 40,000 samples. It can't be spoofed. And so all of a sudden you're going to be able to see a company like a Pin Drop, be able to say in voice, it may be the single ID sign on, and wouldn't it be so nice starting your car or logging into a call center or the ability to get on an airplane where you're able to just say a couple sentences, and they get it. And before you say, well John, that doesn't work because of the AI capability and deep fakes, it's the reverse. You'll be able to say very quickly, this was Dave. You'll be able to say no it was not, and it was another human. Or you'll be able to say, no, this was engine, machine driven, and the machines actually get a signature that you're able to associate with it. So that's a way out there type of move. The second thing is that you're going to have a player like a small company, like a Safe that starts out of India and is growing at about 200% per year just on ranking architecture for how secure are you, where do you put your investments, et cetera. And then they have the courage to do cyber insurance tied to that which gets a 360 going. Small company, couple hundred million in evaluation, just did a major finance run for, if you can imagine, $52 billion, million dollars. And they have seven term sheets. Clearly that's something nobody's seen in the market. Or you could have a Now that rethinks networking with security, and they'll be doing a fundraise very, very shortly, and I think that will go extremely well as well. Maybe a way out player, you think of a Rubriks as a storage system and backup. Well, they're now a security system, and the best form of defense against ransomware there is.

>> Dave: They kind of pivoted.

>> They pivoted, they reinvented themselves. So those are the type of things. But I think it's most likely be players that weren't on people's radar screens two years ago. You're nice in giving me credit for AI saying two years ago it was going to cross the chasm. I said it six years ago, a little bit early. But to me, AI is going to be bigger than the cloud and bigger than the internet combined. And I bet six years ago on AI companies, a ASAP or a Uniphore or a Spark Cognition or a Sprinkler. And so I think those are the exciting moves today that will create the next generation of (cross talking).

>> You started investing in AI six years ago?

>> Six years ago. I made five major, five major investments.

>> And so what did you see at the time and what's different now?

>> Well, what I saw at the time was that I felt it would be the next cloud and the next internet. Both of which I did a pretty good job of seeing around the corners and then betting, not just saying here's what was happening, but betting with it. And you could see customers, the really leading edge customers grasp the change here. And I saw how AI completely changed the customer experience for companies in their call centers. And that would be the first application, much like the Internet's first application could be as simple as entering orders online. And once you see that, you begin to connect the dots and the balance. And then everything I saw continued to build upon it. And so it's classic. (cross talking)

>> What's around the corner now in your mind? Cause you got data, you got AI, clear path there, see that? What's around the corner that you're looking at now that you're connecting the dots on?

>> Well, two things. First of all, I think you articulated very well who the winners are going to be in AI in part. It's about compute, then it's about the data. And the companies aren't going to give out their data. It's nice to have a ChatGPT out there for the internet. But there's no way a given company, especially a security company or enterprise company is going to give access to their data to others. So it's the ability to really think about how do you use the data in an effective way and then how do you do the logarithms to AI piece of it to really change things. So I think you're going to see a gold rush here. I think some of these companies unfortunately are going to get overvalued again. Our memory is remarkably short, isn't it? (all laughing) Like two months. And to suddenly wake up and say, well, I'm going to bet on the new player who's just starting with a new idea. If you didn't bet five and six and seven years ago, you're probably not going to be a player here long term. So it's going to be fun to watch how it shakes out. What's just around the corner? If somebody could get AI and cybersecurity together uniquely, that gets exciting. But every company's going to be an AI company. Every company's going to be digital. That means techs here to stay, and the future looks very good. Question is, can the US lead in this or not?

>> Well, good question. I mean what's your investment philosophy right now in terms of growth capital versus sort of early stage? How do you think about that?

>> Well, I'm a little bit over the board more than I'd like to be. I originally would say I'm a B level investor. Once it gets up to C, D, E series, it's out of my pocketbook. I invest all my funds myself with my four partners together. I today would actually say I'm investing earlier. I like the seed and series A because I can grow 'em, and I've seen the movies, and I can pick the mix that I want. And I can also pick diversity in the leaders. Three out of the last five companies I've added are headed up by female CEOs, which I think we need to do a much better job of as an industry, especially the VCs. But my ideal target is a company that has a run rate of about 2 million that I know I can help 'em grow to 10 to 50 to 100. And so my goal is really not an investor. I'm more of a strategic coach, a partner, an advisor, and somebody who's kind of there to listen on the tough things.

>> Well, you got, honestly, you got the pedigree, you're doing great work, and you're in the trenches. You mentioned competitive USA. I want to get your thoughts on a lot of young people I've been talking to, they're looking at our society and they go, you know, there's a lot of change going on. There's a lot of fears, lot of recession. What's the future look like? Global economy. What's the best way we can be more competitive as a country on the global stage as intellectual property rights are being viewed? You mentioned people aren't going to give us their data. That's, some are saying, we're saying in theCUBE, that's the new IP. Be the AI, work with AI, but as a country, how do we, what's a positive outlook and what is some steps we can take?

>> Well, let's start with the challenges. There's no entitlement. You have to earn the position. And Silicon Valley doesn't have that, nor does the US. You have to earn it. We need a higher sense of urgency. However, we control our destiny more than anyone else. And so our destiny on the number of unicorns, what is it? 1,667, probably a third aren't going to be unicorns a year from now, maybe half. But the number coming in, we grew last year at about 12%. China only grew three, 4%. India grew 22%. In fact, if you look at what is occurring in India, they had more unicorns created than China did. So a changing of the guard perhaps in emerging markets is very possible in terms of the direction. So I think it's all about this country being the best startup country, not just in Austin and Boston and Atlanta and Silicon Valley, but in all 50 states. That's what I'm doing in my home state of West Virginia. You want to say West Virginia startup state? Guess what was the number three startup state in the nation this last year?

>> Really?

>> West Virginia, 90% growth in startups. Industry averaged 27. Guess what state has the lowest unemployment in its history? West Virginia.

>> John: Really? Sounds like someone's been doing some work there.

>> Joe Manchin for President here?

>> Yeah, Joe Manchin's quite enthusiastic. Shelley Moore Capito's very good as well. A lot of good players. But what I'm saying is, we took control of the state, changed the education, made it inclusive, got Democrats and Republicans, Shelley Moore Capito a Republican, Joe Manchin a Democrat, the governor, Republican, Speaker of the House, President of the Senate, common vision. And we did things that people thought couldn't be done. And we moved from 45, 48 in every category to three. Number six in GDP growth, tied with Oregon. I mean, we're playing at a different level.

>> What's the infrastructure there? I'm sure there's got to be great connectivity. Connectivity, internet access.

>> The infrastructure is actually the people.

>> Yeah.

>> We had a common view. It's amazing what you're can accomplish when you don't care who gets the credit. And people worked at a common vision and put aside their differences. I think the common infrastructure here is West Virginians, we're basically very good people. We care about winning together. We try to do the right thing, and we have the courage to dream. We were the chemical center of the world and the coal mining center of the world when I grew up. We perhaps have a chance to do it again, but it isn't West Virginia. We need to do that in all 50 states.

>> John: That's a formula.

>> That's what I'm doing in France with Macron as his key global ambassador for high tech. And in India with Modi. He calls me his global ambassador, but I'm really the Head of US India Strategic Partnership Forum. Probably the most strategic relationship in the world to the US at the present time.

>> Where are you on public policy right now? I presume you don't want to pause investment in AI. You're seeing, you know, FTC wants to break up big tech. We saw today, Activision, the UK government is blocking, and I'm not sure the, you know, US is not far behind. We kind of stopped the NVIDIA arm acquisition. Where do you think we are? It feels like the pendulum's swinging. Are you comfortable with that? Would you like to see a better public-private partnership?

>> Well, I think there has to be a better public-private partnership. Let me be critical of my industry for a moment. During the 90s and the first decade of 2000s, we were a leader in the industry and the internet in a big way. And our peers and competitors were very good. We had no major issues in the European Union or in China or in the US or others. But we always were able to say what is the public policy goal that's fair and how do we work together? As opposed to giving the Heisman move and stiff arm. The big tech companies, they brought this on themselves, and they didn't work with government for legitimate needs. And you have to have, in my opinion, and that isn't all of 'em, but several of 'em did. You have to have a clear economic path, but you also owe an obligation to society. If you don't do both on issues of privacy, fairness, et cetera, you're going to be regulated. And then anti-trust will follow. Both the Democrats and Republicans told us this was coming. We didn't listen very well. So I think this is one where I think it's time for a gut check in terms of is high tech good for America? My group at Cisco, 92% of Americans felt it was good. Today a majority of Americans think it's not good. We have to re-earn the public confidence. If you don't, you're going to see activities that come within it. Now to your question about AI and do we need a pause? A lot of smart people said this. I don't know what they were thinking. The horse isn't out of the barn. Every horse in the world is out of the barn and in other countries. Out of my 20 startups, 19 are AI companies today. Pause is not an option. That is so deeply inbred, it is the future of defense. It's the future of these companies. It's productivity. You'd crash the system if you even tried to do this. And it's not doable. So I think there is one where people have a legitimate concern. And the legitimate concern is we need guide rails, and we need 'em quickly. But a pause was a non-starter from the beginning. And I don't understand why people even thought that was a viable option.

>> Yeah, I agree. (cross talking)

>> Even very few political leaders, well, if you're another country you want to catch up. Or if you're an existing incumbent that doesn't have a good strategy in AI perhaps. But this is one, disruption waits for no one. So we better lead, and we better get the right guardrails up. (cross talking)

>> Do you think it's US one the rest of the world zero right now or?

>> Oh, no. I think this is a jump ball.

>> Dave: Oh, okay.

>> And look to cybersecurity as an example. Are 80% of the unicorns in cybersecurity in the US? Yes. Do we have a good chance to play this one well? Yes. Will we play it well enough? I don't know. On AI, it's much more of a jump ball. There's a lot of technology going on around the world in this area, including deep fakes, road country espionage.

>> John: Misinformation, disinformation.

>> Yeah, if you look at it and you use China as an example. And I believe in the long run, US and China should learn to work together. And I think that will eventually come back. But in the short run, it's clearly going to be extremely bumpy in terms of the direction. And you have to have intellectual property protection per your comments. You have to have the capability to say if the US is going to lead in defense, we better lead in AI and cybersecurity as we move forward. At the present time, even using the US Defense Department slash reports that I saw, China leads the US in probably 15 of the 20 most important areas. Two, we can't lose AI and cybersecurity.

>> John, you always bring the energy and the insight. Thank you so much for joining us again on theCUBE, John, and I really enjoy our time with you.

>> John, Thank you.

>> Thank you, John, appreciate it.

>> All right, Keep it right there. We'll be back with theCUBE's coverage. RSA '23 from Moscone. You're watching theCUBE. (upbeat music)