John Chambers has pretty much seen, and done it all in corporate America.
Chambers led Cisco for two decades, surviving the dot com crash and going onto build the company into the tech powerhouse it is today through numerous acquisitions and impressive operational skill. Along the way he developed close, lasting relationships with world leaders such as France President Emmanuel Macron.
Since leaving as Cisco's chairman in December 2017, Chambers has led his own venture capital firm (backed by his own money) called JC 2 Ventures. JC 2 invests in early stage companies ranging from a drone maker to a food company that sells cricket-based snacks.
So with that extensive resume as a backdrop, Yahoo Finance Live asked Chambers his thoughts on CEOs managing through the current meme stock movement sweeping the markets. To be sure, how CEOs of meme companies have reacted varies wildly.
On the one hand you have AMC Entertainment CEO Adam Aron, who has taken the frenzy in his stock to raise large chunks of cash and give interviews to YouTube stars. The other end of the spectrum is Bed Bath & Beyond CEO Mark Tritton, who has preferred to remain focused on his turnaround plan and the future fundamentals of the business.
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Here is Chambers' take on the present frenzied moment from an excerpt of his interview on Yahoo Finance Live (full interview above). It has been edited for length and clarity.
Yahoo Finance: You have done just about everything in corporate America, what would you do if you were the CEO or on the board of one of these meme stock companies?
Chambers: I think many of us have learned from the past, so let me be critical of myself. In 2000 after we had the dot com bubble and the market kept going up, my lesson learned is you have to say at a point in time this is moving beyond what is justifiable. And it's important for my shareholders to know that although I am happy when the stock goes up, it doesn't justify this type of numbers.
You just have to be transparent and honest. You can't control the market, nor should you tell people to do it. But you have to be able to tell people here is my concern. I think the price is at an unreasonable level. And it will eventually come down as it seeks its home.
As a person that has seen short squeezes begin to squeeze a company — it's a very unpleasant prospect — I like the fact there is a little balancing action here. And perhaps over time if government doesn't overreact, it finds a middle level ground to prevent some of the activities going on on both sides of these bets.
Yahoo Finance: The only company we have seen take advantage of these rising stock prices is AMC by selling more shares. We have seen GameStop start to nibble at that. Do you think the companies have a fiduciary duty to take advantage of the stock price going up, say by raising more cash?
Chambers: I think think this is a cultural question, an ethical question and a practical question. I don't ever try to put myself in another CEO's position. But for me, I believe that every time I raise cash whether it's with a startup in a Series A or angel investing Series C or an IPO, you owe an obligation to try to position each shareholder to make money and to be able to profit assuming you execute on your plans.
So personally I struggle if I ever believe the price we are asking new investors to pay is above what I think the price should be that is a fair win, win. I do that when I raise money. If I think they are stretching too far, I say that's not good for future shareholders. And I try to be as transparent as I could at the time. At Cisco, if I felt the stock was getting heated a little bit we ought to slow down a little bit. I do think as a CEO you have to be careful here.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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