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Companies That Don’t Partner With Startups Will Become Irrelevant, Says John Chambers

John Chambers said that 40 percent of the Fortune 500 companies will become irrelevant if they do not partner with startups. 

Employees sit in ball chairs as they work on laptops at Flipkart  headquarters in Bengaluru, India (Photographer: Dhiraj Singh/Bloomberg)
Employees sit in ball chairs as they work on laptops at Flipkart headquarters in Bengaluru, India (Photographer: Dhiraj Singh/Bloomberg)

Around 40 percent of the Fortune 500 companies will become irrelevant or shut down in the next 10 years as they failed to partner with startups to drive innovation, according to John Chambers.

The former Cisco Systems chief executive-turned-venture capitalist said these companies kept doing the “right thing” for too long and have not partnered with startups to get ahead.

“America learnt a long time ago that accelerating these startups will actually enable you to innovate even faster,” he told BloombergQuint in an interview. “Large companies will have to reinvent themselves and partner or acquire smaller companies for the innovation combination. It is a work of art how you do both together.”

A technology-enabled business model, according to Chambers, is important to survive in the world which churns out hundreds of startups each day. “If you don't get ahead of that, you get left behind and get disrupted very quickly.”

Chambers said a majority of the graduates from the Indian Institutes of Technology, Stanford and the Massachusetts Institute of Technology prefer aligning themselves with startups instead of larger companies since that is where the innovation is going to happen. “The large companies should know that this is a market transition that’s going on and they can't keep doing things the way they used to,” he said.

But It’s Not Going To Lead To More Jobs

While startups will be the job creators for the next decade, the large companies in India, Europe and the U.S. will not expand their headcount because artificial intelligence and automation will probably decrease it, said Chambers, adding that Indians must understand startups don't add dramatic headcount until they get to the third or fourth fundraising round.

John Chambers, however, lauded Prime Minister Narendra Modi’s efforts with respect to the ease of doing business, changes in the bankruptcy code and for getting the “startup engine” going in the country.

Watch the interview here