Editor’s note: Steve S. Rao is a Council Member At Large and Former Mayor Pro Tem for the Town of Morrisville and an Opinion Writer for WRAL Tech Wire. He served on the Board of the New American Economy, now the American Immigration Council, and on the NC League of Municipalities Race and Equity Task Force. He is a regular contributing writer to WRAL TechWire.
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MORRISVILLE – Over the past few weeks, I have appeared on radio shows and podcasts speaking on the two sexiest words in the Tech Industry, Artificial Intelligence. I am frequently getting asked what the acceleration of Artificial Intelligence will mean for the future of jobs in our state and nation, for company strategies, and for our lives overall.
I just finished Henry Kissinger and Eric Schmidt’s book on the future of AI and have been watching documentaries like Fareed Zakaria’s special on AI, which featured the “Godfather of AI, Jeffrey Hinton.”
A must read from the Steve Rao book club recommendations.
A few weeks ago WRAL Tech Wire reminded us of the job loss which could take place when IBM CEO announced that IBM would be laying off over 8000 white collar jobs in the near future. None of us imagined that this type of automation would happen so fast and I really do believe that the face of labor as we know it is changing every day.
As both an elected official and a political analyst on WPTF Radio and PBS Carolinas, I am concerned on what this acceleration of AI Innovation means for our economy, and believe that this is an issue that federal, state and local government leaders should be talking very seriously.
Over the next few weeks, I will be posting additional insights on AI and its impact on our lives and our economic impact.
With all this being said, I wanted to talk to an expert, someone who has more hands on experience with disruptive technology and changing economic trends.
Whom could I call? Was it time to Phone a Friend like in the Show Who Wants to be a Millionaire?
Who could be my Phone a Friend?
I reached out to family friend, John Chambers, former CEO and Chairman of Cisco Systems for a 30 minute conversation on AI and our future. I could not think of a better person to share their insights on this topic than John who led Cisco from $20 million to $47 billon in 20 years and acquired 180 companies along the way. John saw Cisco through eight downturns, and is now CEO of JC2Ventures a global Venture Capital Firm where he invests in startups all around the world. He Chairs the Strategic Indian partnership Forum and advises Indian Prime Minister Modi on start up and technology strategy. He is also the recipient of the Padma Shree Award, the highest civilian award given by the Government of India.
Here is my summary of my quick conversation with John as I had my cup of coffee and he had his diet coke over a Google meet up.
RAO: John, what is your take on AI? Did you see, predict this AI momentum taking place so fast?
CHAMBERS: I have talking for years about AI but we are seeing it now “cross the chasm” and go main stream. The last few months have been an inflection point with most high tech companies talking about how important it would be in their future plans. (Microsoft, Google, AMD) and of course Chat GPT. I bet on three new start up AI players five years ago and they are all doing very well as they are $billion dollar unicorns. In fact, I am telling my other 17 portfolio companies that they need to become AI companies.
Actually, it is very similar to when companies like Fidelity Investments during the Cloud Revolution, decided that they were only going to invest in companies with an Internet Strategy. We will see more companies pushing an AI Strategy. I think this will be important for their success moving forward.
- IBM CEO Arvind Krishna announced that AI will eliminate 8000 White Collar jobs in the very near future. How concerned should we be about significant job loss moving forward?
I am very good at seeing patterns, predicting trends, and Connecting the Dots, (no pun intended on my book).
For the past five years, I have talked about how AI would cross the chasm, and then have a very immediate impact on our economy and way of life. It is happening much faster than many of us in the industry had envisioned and we will now see AI automation be utilized by companies eliminate jobs at a very fast rate to increase productivity.
This is why we need to have policies in place as a nation that can aggressively invest in workforce training programs so displaced workers can be re trained for the new jobs which will support AI and other emerging technologies.
In terms of job loss, I see where are now with AI similar to the situation we saw ourselves when the Cloud came along. The Internet came along. Many retail order entry jobs were lost but then other companies, like Google and Amazon came along and we eventually were able to put people in jobs where their skills were more valued. New, higher paying jobs were created. GDP growth rose, wages went up, and we experienced significant economic growth during this period.
Also, I am convinced that many of these new jobs will be with start ups, and this is why it is critically important to have a robust start up ecosystem in the United States. (In 2019 at the CEO Forum in Raleigh, Chambers predicted that we could lose 40% of present jobs globally but create 15 million new jobs, many in start ups)
I mentioned to John that his continued passion for start ups reminded me of the insights that he shared on CNBC a few years ago:
Regeneration through startup growth and creation is the answer that will have a real, lasting impact for the U.S. Startups will be the drivers of job creation, GDP growth, inclusion, and innovation in the future, which is why we see young talent favoring small companies for employment over large, global brands. (John Chambers, CNBC, 2019) See: https://www.cnbc.com/2019/07/25/john-chambers-embrace-companies-that-will-bring-a-new-form-of-capitalism.html
Prime Minister Modi in India, is getting start up strategy right in India, as they have 100,000 start ups now and have surpassed China with over 87 unicorn start ups this past year. One of my friends is Sacet Modi (no relationship to the Prime Minister, founder of Safe Security in India. He has done a great job building a business in India around AI Cyber Risk Assessment. He raised $50 million on a $200 million base and had 7 term sheets. His success will become more of the norm in India.
Modi is getting it done in India with Start Ups and has developed a national playbook for start up success.
What advice do you have for start ups in our region as it relates to an AI strategy?
First, it is critically important that we accelerate start up growth so we can create many new jobs.
Modi is getting it done for start ups in India so the global competition will be getting more fierce in this area. I would like to see North Carolina have more start ups come out of the universities. We see this taking place more in Silicon Valley and Boston with companies coming out of Stanford and MIT. I have been helping with these efforts in my home state of West Virginia. In West Virginia, 52 start ups are tied to our universities. Many successful start ups come from the engineering school so NC State would be a natural fit for more start ups along with Duke and Carolina. North Carolina should accelerate these efforts.
In terms of AI, just like the cloud, there are just a few applications now, particularly customer service and call centers. I strongly believe that every successful company needs to become a Digital Company and this rule will apply to start ups. Companies will need to find out what AI applications fit into their business model and how they can best leverage these applications to grow their companies.
There is so much Venture Money going into AI at the moment and it will increase significantly in the near term.
The three AI customers I bet on are doing very well so North Carolina investors should be looking at AI investments as much as possible.
In your book Connecting the Dots, you mentioned having a Playbook that you can have always relied on when you ran Cisco through good times and downturns. What should be our Start Up Playbook?
Yes, a playbook for success is important for any start up. I plays have a few that come to mind.
- A Solid CEO:
First and foremost, the CEO of your start up is critically importan for the success of any start up. A strong leader who can execute on a vision and establish a culture of continuous innovation. I was so happy that all of the CEOs of the eight companies I had acquired during my tenrue were there when I stepped down as CEO.
- What is your Differentiation?
Any start up also has to have a key differentiator from other companies in your market. It could be the application or technology that you are supporting, the ways you are solving problems for customers, vertical markets, geography, etc. Differentiation and a strong value proposition will enable a start up to get acquire early adopter customers and eventually cross the chasm and achieve market success.
- Always Be Customer Driven
Responding to the needs of your customers is also critical, and taking their feedback as you improve your products and services is critically important. At Cisco, we took customer service very seriously and this contributed to much of our success early on.
In June, you introduced Prime Minister Modi at the Kennedy Center Reception and predicted that India would be the number one economy in the world. Why are you so confident in this prediction?
This is a movie I have seen play out before. I once again was just looking at a pattern I am observing in India and making a prediction, which I do believe is one of my strengths. I just love to Connect the Dots, once again no pun intended on my book.
Just at the direction the country is headed in. I think the momentum speaks for itself.
Sixty % of India’s population is under 35 and very optimistic about the future. Also, the population will go from 1.4 billion to over 2 billion in the next few years while China will go from 1.35 billion to about 700 million. India is projected to grow between 6% to 12% over the next five years.
Do the math and you will see that India is on its way to the number one economy in the world.
And you have a visionary leader in Narendra Modi, who has been able to transform a very slow moving and bureaucratic government to one that is agile, and aggressively investing in a digital economy across 29 states at a rapid pace. (Digital Currency, Digital Manufacturing) and both entrepreneurial and large companies.
Finally, India has evolved into a start up nation. Out of the 100,000 start up companies, 87 are billion dollar unicorns, surpassing the number of unicorns China had last year.
Yes, I stand by my prediction that India will be the number one economy in the world in the not too distant future.
I am surprised that no one else has made this observation but it was great to make that prediction in front of Prime Minister Modi before I introduced him. I have met over 40 world leaders in the span of my career and he is one of the most dynamic and visionary leaders I have ever met.
In conclusion, I walked away from this interview even more excited about the opportunity we have in the Research Triangle to continue to grow a strong, robust entrepreneurship ecosystem. Continuing to grow a pipeline of successful start ups will be critical in accelerating job creation. I am hoping we see even more AI start ups in the region and that company leaders push their organizations to pursue an AI strategy.
India’s strides in this area should be a wake up call to us here in North Carolina and much of the United States that the best and brightest minds in the world may actually quit coming here to start their companies.
At the same time, my time with John made me realize how fast AI innovation is moving and how important investments in workforce training will continue to be to successfully transition our workforce to create the new jobs of the new economy in the midst of rapid job loss due to automation.
Seriously, I am surprised that we are not hearing about this issue from Presidential, Council of State and Congressional Candidates in this election cycle.
The next Governor of our state will have AI on their watch and how can you be running for Labor Commissioner and not talk about AI and its impact on the future of work in our state?
The time for that conversation is now.
I am looking forward to bringing John back to the area in the very near future for a Virtual Fireside chat.