Cisco Systems former CEO and JC2 Ventures Founder John Chambers joins Yahoo Finance Live to discuss the future of Big Tech companies like Facebook in this choppy market.

Video Transcript

JULIE HYMAN: Well, Uber, like many of the large or largest cap tech companies that we've been watching this year, have not done well to kick off 2022. In fact, they didn't end 2021 terribly well either. And perhaps most representative of that is Facebook, but we've got a lot of tech companies that have been under pressure.

Let's get some perspective from a tech industry veteran, John Chambers, former executive chairman and CEO of Cisco Systems and current founder and CEO of JC2 Ventures. John, it's always great to get your perspective on these matters. And Brian and I have been watching the Facebook/Meta situation with a lot of interest here. And I wonder as you watch it, are there any takeaways for the broader technology industry, given some of the turmoil that we have seen in the group thus far this year?

JOHN CHAMBERS: Well, Julie, first, it's great to be back with you and Brian. We're really looking at what I think will be an exciting year in the market, one of almost roller coasters, if you will, in terms of the performance with tremendous ups and then downs that it's like riding the roller coaster where you get to the bottom and you wonder, is it ever going to end? And your stomach's already up in your throat at that time. That's what this year is going to be about, in my opinion. It will be very much a year of agility.

In terms of the tech stocks, long-term techs is the future. Every company becomes a technology digital company. But what you are going to see which might surprise people, we forget it's hard to stay on top more than 10 years. And the big players in tech have stayed on top for 20 years. So there are naturally going to be some challenges, some turnovers going to occur, and the same things with companies like Peloton that are 10 years old. They're going to make a run, and if they don't reinvent themselves, they get left behind.

But in the long run, I think tech will be fine. But this will be a year that's going to be very choppy. Fasten your seatbelts. If you haven't got the stomach for that, you should probably watch from the side. And I actually thought of following my own advice about the third week in January with how quickly the market went down.

BRIAN SOZZI: Well, John, just staying on that, do you think Facebook's reign is over here?

JOHN CHAMBERS: Not necessarily. A company that is well run-- and Facebook is well run-- when they try to reinvent themselves and they hit challenges along the way, you want to see how much was done to them by the market and changes in the market and how much was self-inflicted. You develop the classic five to seven key priorities you're going to do differently to come out of that. You communicate that to your employees, to your shareholders, to your partners, and then you give regular updates to those groups as you turn around.

At Cisco, I've seen that movie, as you all know, many times. Brian, you watched me go through it. In '97, you watched 2001, 2008. We managed through it two out of the three pretty well. But each time, we came out because we changed ourselves, said how much was self-inflicted, how much we need to do different. Communicate with the market what we're going to do and came out of it even stronger. It'll be interesting to watch Facebook.

But the takeaway is you take the six largest tech companies who have been on top for more than two decades, you go fast forward 10 years from now, probably at least two of those will no longer be in the leadership role. That's just naturally what happens. It's hard to stay on top, hard to reinvent yourself, especially through different generations of leaders.

BRIAN SOZZI: You're right, John. I did watch you. And what I saw from you while you were leading Cisco, no matter the quarter that you put up, you are out there in front, giving some form of guidance and telling people like it was. So what would-- what's your advice to leaders like a Mark Zuckerberg or others in tech that how do they overcome surprising investors again three months from now? Because I think this quarter from them-- I'll even lump in Netflix-- I think all these quarters came as a surprise.

JOHN CHAMBERS: Well, I think the important thing is that if you see a surprise coming, you do best to give a general awareness of the surprise. Once it occurs, you want to be very crisp on how much was self-inflicted and how much was inflicted by the market. And don't kid yourselves. The market will figure it out. And third is just be transparent and candid. You need to do that with your investors, your employees, your partners. And it's kind of like providing, Julie, guidance in the market. You want to under-promise and overdeliver. You want to do the same thing as you overcome hurdles.

Leadership is lonely. A great leader is often viewed from the outside how did they view in terms of their stock, the markets. But you're actually more a product of how you handle your setbacks. And that's often how you're viewed internally to your companies. So key rules of thumb-- transparent, be candid on what you self-inflicted, what you're going to do differently. Give regular updates, and don't hide.

And when your critics have good points, admit that they have good points. 2001, Brian, you remember, I got knocked on my tail very hard with the most valuable company in the world to people saying, John, maybe you've been there too long. And as you know, we came back. But I was very transparent. I said, this is a 100-year flood. Others haven't seen it yet. We're going to prepare for the 100-year flood. We made all our changes in 51 days.

Here's what we did to ourselves. Here's what the market did. And we gained share starting in the second quarter after that. That's how you deal with downturns. I've seen the movie an awful lot. I've messed it up at least once in each of those. But those kind of, if you will, playbooks, I think, are very applicable today as they were five, 10, 20 years ago.

JULIE HYMAN: Well, let's talk about the playbook for 2022, if we could, John. Because I know you have made some-- I make it my policy to never make predictions. But I know you do, and you're good at it. So that's why you're in a better position to do it than I. So let's talk about your predictions for this year. And the first of them has to do with inflation as the current big challenge that's replacing COVID. Talk to us about why you're seeing that. And, you know, we're seeing it in earnings today, even, that some companies are just doing this better than others.

JOHN CHAMBERS: Well, I think the-- many of the leaders had it wrong. And so did the market. They went into this year thinking COVID was the number one issue. And the second was often the availability of the workforce. If you've seen the movie before, clearly, inflation was starting to heat up. And the number one determinant of the market this year, in my opinion, will be the Fed and the central bank's global reaction to it. Historically, the Fed did not do well on the ups or the downs.

However, during this downturn 2 and 1/2 years ago, both the Fed and the fiscal policy from our government were united and did a very good job. And that's why a year and a half ago, I said 2021 was going to be a good year, contrary to what most people thought. And I thought the stock markets would do fine, and they did up, 20 and 28%, depending on which indexes you look at.

This year, it's going to be tougher. Inflation is going to be there. We don't know if two rate increases are in front of us or four. If the Fed can get a soft landing, then I think you'll see the year up 5%, 7%, based upon what I've been told by people in the know. But it's going to be about agility, and it's going to be ups and downs. The second issue that people needed to be focused on-- we tend to forget it-- is that cybersecurity is going to be front and center again.

Brian, you remember back in mid last summer when all the ransomware attacks were happening. And it was in the top three priorities of every CEO. It's amazing how quickly we forget as a nation and as investors. So cybersecurity, it will come back. There's going to be hacks and challenges. There was one announced today, supposedly potential attacks coming out of Russia on US or UK banks in terms of the direction.

Third thing, Julie, I bet on is AI. This will be the year where it goes mainstream. It will move from just an area of customer service where a company does well, like an ASAP or a Uniphore out of my startup group and grows 200% or 300%. But now it's going to go mainline in terms of the direction. The Great Resignation is going to continue. Your ability to hold on to employees and create the right culture is going to be front and center on it.

And COVID, while it's going to have a challenge in our markets, it's going to be number 5 or 6 on the list. It means you're going to have to manage to it, but it isn't going to have, in my opinion, dramatic effects on the economy. You go back to two years ago, Brian, in this session with you all in March, I think, 19 of 2020, and I said something was going on unusual in Southeast Asia, coming out of China with this virus. And I said I saw my businesses start to slow there.

And I said this is going to be more of an issue than before. And you all's headline was going basically John saying this is going to last well into 2021, which it did. And it was a tough year in terms of the direction. So Julie, I connect dots. I'm the pattern recognition guy. Those would be my best shots for this year.

JULIE HYMAN: All right, John. We'll put it in the bank. We'll check back in with you to see how it goes. John Chambers, it's always great to chat with you. Thanks so much for making time for us. We appreciate it.

JOHN CHAMBERS: Julie, I'll be there for you and Brian anytime. Enjoy being on your show, and you all have a great day.