When it came to industrial revolutions though, John apparently didn’t like the numbering scheme of “third industrial revolution,” which Cisco led during the first few years of the new millennium. Instead, he talked about the “Internet Economy” and the “2nd Industrial Revolution,” a misnomer, since the rest of the world sees the third industrial revolution as the one dealing with communication and computer (information) technology. Cisco played a big role in this arena, whether you call it the second or third revolution, driven by the many acquisitions it made – Crescendo in 1993 and Cerent in 1999 – leading up to the year 2003.
John went on the offensive with his target customer base, arguing that investment in technology led to productivity gains, an increase in both capital and operating efficiency for its customers. Using information from the U.S. Government’s Bureau of Economic Analysis, Chambers presented the chart below as an example of how productivity had been ramping up with the proliferation of computers, implementation of networking architectures across local and metropolitan area networks (LANs and MANs or WANS), and the adoption of the Internet as a business tool. Whereas productivity only improved by 1.5 percent during the 1980s, the years leading up to the 1996 signing of the Telecommunications Act resulted in another 1.6 percent increase in productivity and a whopping 2.6 increase during the final four years of the 1990s. The first year of the new millennium brought another 3.0 percent increase and the following year delivered a massive 7.3 percent.
While he wowed world leaders and other business executives with an evangelistic fervor, Chambers pushed his acquisition team to acquire the technology he needed in order to storm the ramparts of new markets. Entering new markets, in any country, as fast as he could, became the company’s focus. Chambers demanded to be the first mover and capture the entire world as fast as he could. He also avoided getting embroiled in manufacturing issues and instead, just as Mike Hatfield at Cerent had done, outsourced all manufacturing. This allowed his management team to focus on “capturing near-absolute control of a brand new market ,” time and time again.
John encouraged his leadership team in the spring of 2000, in preparation for Cisco’s fiscal year 2001, to get on board and push hard to ensure the company achieved the status as the first trillion dollar company in history. This seemed inevitable, in early 2000, as Cisco’s valuation by March of that year hit $531 billion, exceeding that of General Electric, General Motors, and Exxon. Cisco revenues were approaching $20 billion annually too.
Analysts fawned all over themselves to try and outdo the others with platitudes for Cisco’s success. John Chambers quoted a number of them regularly:
“We humbly submit that over the next 2–3 years, Cisco could be the first trillion dollar market cap company—and don’t think they wouldn’t love it.”
- Paul Weinstein, CSFB
“One-Stop-Shopping for Service Providers? A Trillion Dollar Company if It Does It! . . . Then, it will be the undisputed Titan of the Network Era and the first trillion-dollar company on our planet!”
- Eric Blachno, Pennsylvania Merchant Group
But all good things must come to an end. Cisco was not immune to either the dot.com bust or telecom meltdown, in spite of it doing much better than its telecommunications manufacturing rivals. Its stock price plummeted even before its revenues slowed, but its market cap disintegrated rapidly during 2002, in concert with the devaluation of its once much-touted stock.
And, productivity tanked across America as worker output per hour hit the down slope . Even fifteen years later, Cisco’s recovery has been slow. Meanwhile, Wall Street is looking for its new “first-trillion-dollar-company.” Consensus is that it will come from an “A-list” of companies – Alphabet, Amazon, or Apple.
Time and the markets will tell.
 End of the Line: The Rise and Coming Fall of the Global Corporation, Barry C. Lynn, 2005, Doubleday, New York.
 Ibid, chapter 5, third page.
 The graphic below reflects the fall off in productivity since the time of the telecom meltdown. Productivity peaked in 2003 and then rapidly fell off, just as output per person dropped.