Long-term Goals and Future Outlook

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Hostinger is an all-in-one platform that brings everything into one place: your domain, website, email marketing, AI tools, and AI agents. You can create websites, online stores, and custom apps with simple prompts. Then use AI agents to automate tedious tasks and grow your business. Go to hostinger .com slash decoder to bring your idea online for under $3 a month. Use promo code DECODER for an extra 20% off Hello and welcome to Decoder. I'm Neilai Patel, editor in chief of the Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with Chuck Robbins, the CEO of Cisco. Cisco is one of those big companies that everyone has heard of, but most of us don't have to interact with very much. This is not really a consumer brand. But all of us are in some way using Cisco's products and services every day, because Cisco makes a huge amount of networking equipment for other big companies like telecoms and ISPs. It's a luck that somewhere between me recording this and you listening to it, the bits have passed through Cisco's products. Without the actual routers and switches and silicon and the software to make those things work, there's no internet, there's no cloud, and there's no AI. That's Cisco's big new business, of course, building all of the networking needed inside all of the data centers that the AI companies are trying to build. And of course, Chuck and I spend a lot of time talking about that. Most importantly, I want to know where he thinks we should build all of these new data centers, because it's not clear that anyone really wants them around. A data center is fundamentally an unpleasant neighbor to have. They're loud, they're ugly, and they use a lot of electricity, making rates where regular people go up. And now AI itself is pulling pretty badly across America. So there's fairly robust bi,partisan opposition to new data center builds all over the country. So of course I asked Chuck the obvious first question: Should we build data centers in space? Elon Musk obviously seems to think so, and he's pushing SpaceX in that direction, promising a million data centers in space. On the other hand, Sam Altman, along with a whole bunch of experts who understand space, well, they think we're not there yet. So I asked Chuck which way he's leading. And I think you'll be a little surprised at how quickly and emphatically he answered. You'll also hear me ask very directly whether Chuck thinks AI is a bubble. And you'll hear him say very directly that he thinks it is. And he would know, during the dot-com bubble, Cisco, which builds networks, was briefly the most valuable company in the world. Chuck has seen a lot of ups and downs. But while AI is in the news, one of my favorite things to do on Decoder is bring big companies that are kind of hidden in plain sight out into the open. Cisco is a perfect example. Chuck has made some big bets around chip investments and positioning Cisco on what he calls the leading edge, but not the bleeding edge. That's really fascinating when you think about the kind of infrastructure that he sells to companies all over the world. These companies are dealing with an increasingly fractured global landscape. And those companies and their governments are asking big questions about who owns data, where it can be stored, whether the internet in all those countries should have independent kill switches. Those are all important questions that are being asked every day, and they don't have easy answers. You'll hear Chuck really dive into how complicated it is, keeping the world connected in the deeply weird reality of 2026. Okay, Cisco CEO Chuck Robbins. Here we go. Chuck Robbins, you're the CEO of Cisco. Welcome to Decoder. It's great to be here. Thank you. I'm excited that you're here in person. I have a lot of questions for you. It seems like a very complicated time to run an infrastructure company, which is fundamentally what Cisco is, especially uh an infrastructure company for global infrastructure. Like the internet's a global network, and that seems under a lot of pressure from a lot of different directions. So I want to get into a lot of things with you. But I actually want to start with just a question I've been dying to ask you. Ever since we scheduled this interview, I thought finally I can ask this question and someone will be able to tell me the answer. Should we put data centers in space? Absolutely. Yes. And we will. You think so? Yeah, I think so. You're you're you know, right now we're dealing with lots of power constraints. And up there you don't have that. And uh if you think about the people who are talking about putting data centers in space, I wouldn't doubt 'em. So the Elon. Yeah. And there's uh there's a lot of stuff we're working on right now we're thinking through relative to what we need to do to our portfolio to make it um work properly in the conditions that might exist up there. Uh but uh no I think we're gonna see it. Elon's plan uh he recently filed for approval for this plan is to launch a million satellites, uh part of a constellation. Obviously he's launched constellations before. Uh you mentioning power, that's obviously solar. Yep. Can't we just do solar power here on Earth? Is is that not a possibility? Well I think up there you have unlimited, um unimpeded. And so it's it's just easier. You don't have to deal with a lot of the the challenges that people where people don't want these data centers in their communities or near them, so that's obviously off the table. I think it solves a lot of problems. There's a lot of challenges figuring out how to make it all happen. Yeah. But uh given his history I wouldn't doubt him. And we're gonna prepare to uh Aaron Powell What does that preparation look like for you? Aaron Powell Well it's a very early stages right now. Our teams uh came to me literally, I think it was about two or three months ago, my head of product came and said, We really have to be prepared for data centers in space. And I looked at him like he was crazy. We don't even know everything we need to do yet, but uh we're in the early stages of just making sure the atmospheric issues, the temperatures, I mean all those things will have to be taken into consideration. But at some level you don't have to, we don't have to deal with all the cooling and things of that nature, which add a lot of weight to the product because you first start thinking about how do we get them up there. And so there's there's a lot of things that our team's thinking through right now. What does that networking stack look like for you? Do you have to invent a whole bunch of new stuff? Is it the same stuff in it without as many cooling loads or with less than a generally the same with with perhaps different interfaces for different satellite technology, things like Aaron Powell Do you want to be on the on the bleeding edge of that or you wait and see if if Elon can prove it out? Aaron Powell No, I'd like to be on the front the leading edge. How about we say that? Makes sense. Maybe not bleed, but let' lesad. Aaron Powell What does that investment look like for you? Are you gonna stand up a team? Aaron Powell The teams that currently build our data centers are the logical ones to actually do this analysis, and I think that's what's tr that's what's happening right now. The cooling piece of it, for example, to me, seems challenging in a lot of ways, right? You you have to move the heat out of the products. There's no air in space. That's not gonna naturally happen. Yeah, I'm just curious. Like I we we've written a bunch of should we put data centers in space stories now and I was dying to ask you these questions 'cause it feels like someone has to do a lot of basic R and D work to make this. Six months from now have my chief product officer do this with you and he can he can go through a lot of that with you. Fair enough. Let me ask you the flip side of this. You mentioned this already. There's problems with building data centers in the United States around the world. I want to come to that in more in more depth. But are we just running away from the problems of politics and saying we'll just do it in space where there's no one to get in our way? I don't think that's it. I think it just eliminates a lot of the challenges that that you're facing on the planet. And so let me let me assure you, I grew up on a farm in Georgia. So the last thing I ever thought I'd be talking about are data centers in space. But uh if you think about a lot of the dynamics we're dealing with, I don't think it's politics so much as it is a lot of the uh uh physical limitations, the the community there there there is an aspect where the a lot of the people in the communities don't want these things in their backyards and I get that. Sam Altman is one who says immediately, I don't think they should be in their backyards. We got enough rural areas in this country where we ought to be able to put these things. Sam Altman also notably says uh data centers face the pipe dream. So who you gonna bring? Who you got? Yeah. Uh I I wouldn't bet against Elon. All right. Fair enough. Let's talk about Cisco for a second. Cisco is you've been CEO for eleven years, you've been there for almost thirty, I want to say. This is a company that goes boom and bust with boom and busts. Right? In the in the I think in the dot com era, Cisco is briefly the world's most valuable company Trevor Burrus For about a day, I think. Yeah. Infrastructure's cool again, you know. It's time to build, as they say. What is Cisco to you right now? How would you describe this company? Aaron Powell We securely connect everything. I mean that's basically what we do. We connect systems, we connect people, we connect things, and we do it in a secure way. We're connecting AI data centers, we're connecting GPUs within AI data centers, it's it's really primarily about secure connectivity. Trevor Burrus So when you connect everything, uh I think primarily when people have thought about that, they've thought about honestly last mile. Like you build the big internet, that's an enterprise problem, and then we're gonna do five G and it's more world congress. We're gonna do 6G now. Who knows what that's gonna be? But that's the big internet that people have long thought about. There's uh I know you have a big corporate business. The turn for networking right now feels like data centers, right? It feels like we're building these big data centers. We're going to link up a bunch of GPUs in ways we haven't necessarily linked up those GPUs before. We have different kinds of workloads because of AI. Is that a meaningful difference to how you conceive of Cisco? Aaron Powell There's certainly more and faster innovation around things like our silicon that we design ourselves that is going into the data centers. So the data center, the continued evolution of the data cent ers is forcing us to drive those cycles faster. And if you look at our enterprise data center business, which if you go back to 2010 when the cloud came along or 2008 or whenever it was, there was a belief that we were never gonna sell another there was never gonna be another private data center built. And if you look at the last eight quarters, I think we've had six of the eight we've had double digit growth in our enterprise data center networking business. And we had high single digits in the other two quarters. So we see that business growing at the same time that if you go back five or six years, we had relatively zero business from the big hyperscalers. And this year we'll do billions, and most of that's driven by AI infrastructure in their data centers. So I think your assumption is accurate. Aaron Powell Is that just a lack of their capacity, right? Amazon or uh Microsoft wants to build out another data center for themselves and they can't do it themselves because they're building so fast. So they're turning to you. Aaron Powell No, we're selling them equipment that they're using to build their own data centers. So they're building them. Aaron Powell So what was the turn? Why why did that line start growing for you when it wasn't before success in business is always a combination of good decisions and a lot of luck, uh I think. And so the luck struck in two thousand sixteen when one of my engineers who ran our hardware who built our hardware came to me and said there's this silicon company in Israel that I think we should buy. And we had uh it it it gave us the opportunity to have to standardize on a single silicon architecture across the entire portfolio. So in twenty sixteen we bought this company. It was called LIBA. You know, we're one of basically three companies in the world that can build the networking silicon that's needed to connect these GPUs, run the training models, run these AI data centers. And so that was a big part of what's helped us get there. And to be candid, if we didn't have that silicon today, we would not be participating in this phase because otherwise I'd be buying merchant silicon like all my competitors and I'd be just like everybody else. That's the biggest th Aaron Powell We have a lot of competitors or would-be competitors come on the show and talk about networking. That seems like a growing business for a class of companies. The one that I'm particularly interested in is NVIDIA. You guys have a deep partnership with NVIDIA. They just had GTC. Uh you know, Jensen's out there, he's he's pointing out that their networking business is is huge. It's bigger than yours in some ways. Their their last uh fiscal year at 31 billion, I think you guys were at twenty billion in the last quarter. It it's billions bigger than yours. Is that a threat to you that NVIDIA is so deep into building up the networking component? Because there's obviously selling the GPUs. Yeah. There's a a a a a place they could go, right? They can just expand their footprint. Is that competition? Is that coopetition? It's coopetition. I think in some cases, if you look at the big hyperscalers, they they actually build their own integrated architecture, using best of breed, whoever they want to use. And they they are very good at balancing their spending across multiple vendors. They like to have optionality. They want diversity at the silicon level. That's how they think. Uh you see some NeoClouds as an example, NVIDIA sells a fully integrated stack that has networking included in it, and sometimes they'll just that that's a patholase resistance and it helps them get there faster. So sometimes they'll buy that. If you look at the enterprise, most enterprises have built forty years of knowledge processes, everything around our platforms and our technology. So that's a big part of why NVIDIA values our partnership, is what we can do together in the enterprise. And the other thing we have, which no one else has, is security. And so as we move to this agentic era and you have agents operating all over your infrastructure, you have to do security in the network because you the the the latency requirements are going to require that I'm doing full-time security on these agents all the time. I'm doing access validation , identity of validation of agents. And we're the only networking company that has a big security business, and none of our security competitors have a networking business. So it's a big advantage to us as we go forward. Yeah, we we just had the C of Okta on the show and his entire pitch was I will build you a kill switch for your agents. Yeah. Is that something that is competition for you? Is that something that will work alongside what you're you're planning? I actually think there's a great opportunity for us to partner with them because that kill switch might be implemented at the network layer because we may see something happening that they don't see at the upper layers. So we'll we'll figure it out. But the teams are working on this day and night right now. The deal is getting made here in Dakota, you heard it here. Exactly This seems like the the opportunity, right? When I when I say Cisco is a company that kind of grows with booms and busts, the amount of compute that everyone is describing that they need in order to deploy agents at scale across the enterprise, in order to train the next generation of models. This is a vast amount of compute. You are obviously going to help build the data centers that supply a lot of that compute. The question I have is do you see the revenue on the back end of that? Right? This is a lot of growth, a lot of forward investment for for them and and for you, right? I mean, we're we're getting the revenue now. We would not expect this this build out to end anytime soon. And I think if you look at everybody wants to talk about comparing this to the dot-com era, right? And is it a bubble? I'm like, well did the dot-com did it bust? Or did the winners emerge, the losers fail ed, and now we have what we have, which if they hadn't been successful, we wouldn't we wouldn't be talking about anything we're talking about today. So it it wasn't like it went away. You know, people lost money and uh but the winners emerged. And I think you're gonna see the same thing here. The difference is in a lot of cases, the companies that are spending so much money on this infrastructure view it as an existential issue. So they're they're going to continue to build, they're going to continue to invest, and I think they've proven that over the last few years, and I think it's got we have a long way to go. We're very early in this cycle. So I I have two thoughts about this that I'm I'm I'm eager to to push you on. One, and this is I think just related to the the infrastructure. A big part of the bubble there was we built a fiber network that sat dark for ages. And you can say that was good or bad, but we had it and the fiber itself was valuable, even if it wasn't full of traffic yet. Is a data center valuable on the same scale? If you build a data center and there's not the consumer workload to run it, 20 years from now, you can't just show up and plug into the fiber the way that you could Yeah, I think that the difference is is that unlike that fiber, these data centers are being used day one at full capacity. Sure. And and in our world, the it's it's about the networking connectivity, but it's also like optics. We haven't talked about optics, but we made some strategic acquisitions in optics, which has also just been a big deal for us. Because at some point you're not going to be able to get the packets off the processor uh over copper because the speed's just too great. And so us having both those technologies in-house are also is also another benefit for us as we look to the future. Aaron Powell The other question about the comparison of the dot-com era that I've been really thinking about is less dot-com and more mobile. But if you look at the promise of the dot com era, it was we're gonna take the economy and we're gonna move it onto the internet. Right broadly. We're you're gonna buy all your You're gonna buy all your pet food online. And like maybe you weren't gonna buy it on a Dell desktop PC. It actually happened when we got to mobile , right? We just moved the economy onto the internet, everyone's doing e-com, and it turns out buying pet food from Amazon on a f on a computer totally works and that computer is a phone. And then Apple and Google get to extract rent from everybody for all their purchases and games. And like we have an economy that works that way. The promise of AI is we're gonna do it again, right? We're gonna move the economy a third time to a next paradigm in computing. What's the evidence you see that that is happening, or will happen at the scale necessary to support this investment? Well, if you look at um just some of the early agen tic platforms, you heard Jensen this week talking about OpenClaw. If you just look at the early promise of what that can do for you, uh, I think you're gonna see that it's gonna automate a lot, it's gonna it's gonna make your whole purchasing process different. I just reflect back on two thousand seven when the iPhone came out. None of us had any clue what we'd be doing with that phone today. None of us. I mean, I s maybe there's some people somewhere who who were such visionaries, they saw it coming. But the application portfolio that we have today is much broader than we ever thought it would be. And I think you're gonna see the same thing emerge around AI. We don't know what all is going to come. We have ideas about things that we think will happen, but we don't know everything that's gonna happen. And I mean, this stuff's changing so fast . You know, I talked to Kevin at OpenAI and he Kevin Will, and he's like, we'd sit down and have meetings about what are we going to do the next two months, and then three weeks later we'd throw it out and start over again because everything's changing so quickly. And I think that's the way we're going to all have Aaron Powell Is that changing the way that you're selling your products to build this capacity? Because if you don't know what the capacity is for, it it must change how it's being built. Aaron Powell Well it's changing a lot in how we design silic on. Um these customers are so big that they're a market of one. So we have unique requirements coming from an individual company which uh which we haven't had to deal with in the past. We built general purpose So you have different applications, different use cases, different customers that are that are leading us to have to move faster and build more variants of some of this technology than we would have in the past. Aaron Powell That's right up against the insatiable demand of other silicon providers, right? There's a capacity crunch for chips, there's a capacity crunch for RAM . How is that working for you? Are you able to get the flexibility you need? When you look at fab capacity, we would we we could use more, but the world could use more. Everybody I I don't think you get anybody on here who builds chips that wouldn't I'd love to have more capacity. Uh same thing for memory . We're in a we're in a crunch for probably 18 months, something like that. We're doing everything we can to try to secure what we what we need, and we feel pretty good about where we are right now, but we'll see how the how the how the demand plays out over the next year and Aaron Powell It occurs to me just talking to people about RAM margins. I've I talked to consumer laptop vendors who say there there might not be consumer laptops this year. Right? Like it it might just be priced out. Priced out. Yep. You might just never be able to cover the cost. We might just be out. Um the C of Razor, which makes gaming laptops with lots of fun lights. He's like week to week, I don't know what the m the margin on that product will be. You've got to build a a big piece of the infrastructure puzzle. The GPU is useless without the networking. This has to equalize somewhere for you at least, right? Where you say, look, this is our margin to build the networking to get the value out of the GPUs that you're buying at super high rates from NVIDIA and whoever else. Is that working in the market to equalize at least your prices? Networking equipment uses a lot less memory than compute platforms do, obviously. So we have memory in every That's bill of materials. Bill of materials. Thank you. Sorry about that. And yeah, w the the customers understand um and what I keep trying to explain to them is we're the the the price increase are happening upstream from us. You know, we're we're just an ab uh an absorber of the price increase. And we're having to do more frequent price increases than we have and, we're having to change our terms to be able to deal with the same thing that your your other guests talked about, which is d the dynamic nature of the pricing that we see right now in the memory space. But when you go to the large hyperscalers, I said earlier it's existential. What we've just adopted with them is more of just a transparent model that says here's here's what we need, here's how it works, here's our pricing. And and they're generally like they they understand. Everybody's in the same boat. It's not like you're gonna go somewhere else and somebody's gonna give you memory at you know ten percent of the cost of what we're giving it to you for. I mean everybody's just trying to trying to deal with the capacity crunch right now. We have to pause here for a quick break. We'll be right back . Support for the show comes from Upwork. Scaling your business isn't about executing some growth hack. It's about knowing when to delegate, even when it means hiring someone new. Upwork can help make it easy by bringing in the right freelancer when you need them. So you can stay focused on what you do best. Thousands of growing businesses already trust Upwork to hire flexible, high-quality, freelance talent for everything from one-off projects to ongoing support. 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Promo code decoder for an extra twenty percent off Welcome back. I'm talking with Cisco CEO Chuck Robbins about the big decoder questions. I think this brings me to the decoder questions because I uh my next set of questions after this are really how you're handling this sort of interlocking set of complicated puzzle pieces. Uh tell me how st Cisco is structured right now. How's the how's the company work? How big is the company and how's it organized? We're 85,000 people plus some contractors, but um and and we're structured functionally like most companies. We've got a sales organization, we've got a product organization. The one change that I made about 18 months ago is that I consolidated all of our products under under a single leader for the first time that I can remember. It's a big complex portfolio. And uh so we did that. Uh you know, we've got a services organization, it's fairly functional, pretty standard. You've been reducing the size of the company pretty substantially over the past three year three years, I would say, two, three years, twenty, twenty-four, had you two big rounds of layoffs, you just had some other little layoffs. Most of the time those are rapid reallocations that we need to do. It's unfortunate, but typically the ones we've done have not been about reducing the total number of headcount. At least up till now they have not generally been that way. Aaron Ross Powell of those changes. There's a lot of are these AI related layoffs. Are is that on your mind that you might be thinking about new kinds of structures, new kinds of engineering structures. Sam and I were talking about this last week, and uh let's say that our our engineers become twice as productive because of coding as an example. This year we'll have five or six products that'll be 100% written by AI. Next year we'll probably have 70% of our code that'll be written by AI. You still have to test it, you still gotta go through all that stuff. But let's say you make them twice as productive, just for simplicity of math here. Then companies are gonna have to decide, am I going to maintain the same pace of innovation with half the people, or am I going to double my pace of innovation with the same number of people? And I think different companies are going to make different decisions in some variant in between. Uh and I think that's where we're gonna head. But we gotta we gotta see this all come to life. I mean, we're seeing the early successes of coding, but we haven't we haven't seen the unintended downside yet that we haven't figured out. We got 20-year-old code, 30-year-old code that's integrated in systems, it's written in C as an example. And my head of product told me we took all these old lines of code, we compressed it to about 20% of what it was before, converted it to a modern language using AI. And my first response w to him was you better test that like crazy before you put it in a product and put it in a customer environment. So there's a lot of stuff we're still we're still learning as we go through there. If Cisco fails , something bad happens in an escalating catastrophic way. How do you think about that risk? I mean, this is I keep joking that I ask everybody the org chart question. I've asked it for five years, and there's like two answers: like we're functional or divisional, and we get through it. And now I think we're on the cusp of seeing some of the weirdest org charts in business history. I manage a team of two people and five hundred agents. all using agent strike code. I don't know any of that's going to work. You can't take some of those risks, but you're describing the productivity gains that might come with some of those risks. How are you thinking about that? You're right. Our stuff, the the whole mental model around our software development. Kevin Will from OpenAI said he made a comment at our AI summit one and he said, you guys should be using these models when they're working properly 10% of the time just to get to get to use them. And I sat there and I I listened to that comment and it's just a different way of thinking. I mean granted they're gonna get it to full, but y you just go into it recognizing that it's it's still evolving. We don't have that luxury. Our stuff has to work. So we'll have to uh we'll have to figure this out as we go. But we've seen how dependent the world is on technology functioning properly. And uh so we we'll have to just assess it as we get closer, but I think there's gonna be an awful lot of testing that has to get done. But the flip side is we think we can f we think AI can help us find bugs more quickly. It can help us assess customers' infrastructure to say, hey, you're running these four versions of our software. We've seen a lot of instances where when you're running those four, it's created a problem. Or there's cybersecurity risks in certain parts of the code that AI can help us find. I mean, there's a lot of upside , so there's a lot of opportunity for AI to help us become more reliable, safer. Aaron Powell You've mentioned security several times now. The flip side of we can deploy AI to help us with security is your advers aries or attackers might be able to deploy AI to attack you much more efficiently. And they are how is that playing out for you? uh of in email and video and and people replicating me and sending it to some I mean it's it's just gonna get crazier. And so we have to be better at using our tools and I have also been a big proponent of all of the security competitors in the industry uh sort of laying down our weapons. And we still compete, but in service to our customers, I believe we have to share intelligence real time much more effectively today to help our customers deal with this. Because any one of us on our own is going to be less effective than all of us together. And so that's a big thing we've been pushing . We've we've been building a lot of capabilities. And there's a lot of opportunities to integrate our platforms and our threat intelligence. And if you think about what you can do with models, if you start training on threat intelligence and conditions that you know led up to threat vulnerabilities, there's an awful lot we can do to get ahead of this and we need to do that. I think this brings me into the other decoder question that I ask everybody. This is the one that I think it's gonna be under pressure for everybody at the scale of change you're you're describing here. How do you make decisions? What's your framework? Aaron Ross Powell When when I actually wrote my thesis when I was going through the process of becoming CEO and the board was assessing the candidates. One of the things I called out in the document was that, and this is twelve years ago, okay, or eleven and a half years ago, I said that this the industry is moving so rapidly, you're going to have to have team based strategy. You have to have a lot of people developing strategy because there's no one individual in general. There's some brilliant minds, so I'm not ruling any human out, but that can actually come up with the exact right strategy every time they're assessing what they need to do. So we spend a lot of time together as a team. We spend anywhere from one to three hours together every Monday. We're off-site together for two to three days every quarter. And the way we make decisions, look, 99% of the decisions get made below me because they're easy, or or people two smart people agree. And when they get to me or any other CEO, they're typically, you know, you're usually assessing two potential bad choices. Um, or you got two smart people who completely disagree, which tells you it's complicated. In general, we we just spend a lot of time in transparent discussion and open communication about uh about how we're gonna make the decisions. Uh at the end of the day I'm I own 'em. So and I have this belief that, you know, when when a decision goes really well, you give everybody else the credit. And when it goes very poorly, it's all on me. And that's how you just have to operate. Aaron Powell The decisions question you are dealing with a vast amount of uncertainty, right? The how the global internet will be structured is a vast amount of uncertainty. What the hyperscalers need is they build out new capacity for uncertain workloads. Who knows? We're gonna sell a bunch of products to the neo clouds which have circular financing and those bills might not get paid at which I want to come to. That is a lot of uncertainty. Whether or not all of this infrastructure investment pays off in GDP growth, I would say is the biggest uncertainty of all. How are you dealing with that? Well, you've got the geopolitical situation, you've got sovereignty requirements all around the world emerging, you've got two wars around the world, you got tariffs, you got memory costs. Aaron Powell That is a lot of uncertainty on your decision making. You're saying it all rolls up to you when it goes around. How has that affected how you're making choices? Aaron Powell You just have to move faster. I we had a we had an um an all hands with our entire company yesterday. We do it once a month. I told him I said, look, if if speed and change, if the makes you uncomfortable, you're gonna be uncomfortable. It is a world where companies can get seriously damag ed in a very short period of time. And this is what's driving a lot of the investments because there's a big FOMO issue in the C-suite today. CEOs are like, what am I missing? What's my competitor going to do that I don't know about? And so I think what that leads us to is you you know, we used to say get 80% of the information you can and then make the decision and then adjust as you go. And I think that's maybe it's not eighty anymore. But you're gonna have to take that approach and you're gonna have to be willing to take risks and you gotta be comfortable being uncomfortable. And if you're not, it's gonna be pretty complicated and pretty stressful time. capital are being allocated for infrastructure. Does it come up that the products that might pay this off don't exist? Does it come up next to the FOMO? Aaron Powell Depends on the customer. If you look at the telcos uh the cloud provid ers, the people whose core business is highly dependent upon products that we build I mean everybody's is, but I mean we will have those conversations, you know, with their CEOs and their leadership team. You go to Mobile World Congress as an example. We were just there. Every meeting the CEOs in from those some of those carriers and service providers. So they care. When you get into the enterprise space, some of them are super technical. They understand the value of technology. So they want to talk about trends. They want to talk about what's what what do we see other companies doing or what are we doing as an enterprise that they should be thinking about. But usually if there's a big something big going on the table, my my only I feel like there's a split right now in the market. I I understand the enterprise use cases for AI. I understand why you'd want to build as fast as you can there, right? Particularly software development, as you described. Like we can we can see the benefit. We talk to developers all the time here at the Verge. They're like our entire jobs are different. Like the world has changed. The market has cracked open. Something is going to happen there. And then you downstream of that, you can see, okay, well, we hired a bunch of engineers to build us business process automation. Now maybe we get way more value out of those engineers, we get way more automation. There's something in the enterprise that's going to happen with the guy that feels like I understand the value. Do you see any consumer applications of that scale beyond just I'm going to tell the Alexa to buy me shoes and then it's gonna cause uh quite honestly I don't yet, apart from Google search got a lot weirder in the past two years. Aaron Ross Powell I don't have any great examples yet. Um you're right, you are seeing sort of some horizontal areas in the enterprise that are consistent across almost every company, like coding. Customer service is one that everybody's uh working. You start to see some emerging horizontal use cases and legal uh and and we see s we see a lot of use cases in our people organization too. Um and I think those are pretty standard. Everybody's everybody's at least aware of those opportunities. People are at different stages on the journey. But uh yeah, I'm not a I'm not the consumer expert by any stretch. We're we're pure B2B, so that's where I spend all my time. Aaron Powell I think this relates to why I started out by asking about data centers in space. And I've heard Sundar Pachai say variations of this idea. Without the big consumer application that everybody understands and sees the benefit, putting the data center in the backyard is becoming an increasingly harder sell. Yeah. Right. The power requirements, the water requirements, which I I I know are controversial and often argued about, but just the energy, resources requirements of the data centers are making the data centers unpopular. I don't think it's all that. I don't think the environmental argument historically wins in America. Like I drive a V8 Mustang. I'm gonna keep driving that car. Like we have an EV that's parked right next to it, but those cars are popular for reasons, right? Fast fashion, enormous environmental impact. Yep. People like it. Yep. There's not an AI product for consumers that they like so much that just transcends the objections they can reach for. We're seeing it play out in really weird ways. Like in bipartisan ways, people are pushing back against the data centers. Are you gonna be able to hit your goals if data center construction slows? And uh is there a way to overcome those goals without the great consumer product? I think there is. I look we're we've been the most innovative country on the planet for a very long time and uh that's not going to change. And some of the smartest people in the world are actually trying to solve these problems and they will. By the way, I think if you give s some of those residents the greatest AI tools on their phone that they've ever seen in their lives, they still don't want the data center in their backyard. Really? I I I don't I don't think they're gonna say, Oh, this is great, so I'll go ahead and drive my energy costs through the roof and I'll be okay. You know, we saw a little bit of this with five G. They didn't want radio towers. You remember remember that whole thing? Oh, I remember this is that at a much greater scale. But um I think we'll I think they'll we'll figure it out. So the 5G comparison is really interesting. I know you just came back from Mobile World Congress where we are gonna six G now. Six G's coming. AI has the the same problem, right? You can't describe what it's for in a way that might overcome the objection. That feels like a fairly unique point for the whole industry to be at, where the next generation of technology is very exciting to a handful of providers. It's the future of your business in real ways. And the applications are harder and harder to describe. You've seen it all. I'm asking this question on that on that big sweep, right? We're talking about the internet. It was easy to describe what the internet might do for people. There was there was an excitement there. That's where you got startup founders from, like in that way that you got founders from. This one just seems more nascent to me. How would you place that in in your sweep of history? Aaron Powell We've seen some unique 5G use cases that have been like manufacturing has been a great one . But they're very niche, right? The most prevalent 5G use case is actually backup connectivity for branches, as an example. But you're right, we didn't have the number of use cases, and I think if you I think robotics in general um could be the could be the real um driver of the utilization of 6G once it gets built. Uh but again it's it's early days of being defined. It's still typically we've talked about these sort of tech transitions for years and years and years before they come to fruition So I think we'll have to see on 6G. It's still TBD, but I I don't expect that you'll see the same mistakes made from a from a speed of investment perspective until they become more clear. We're gonna take another quick break. We'll be back in just a minute. Need anything from Tesco? Like Tesco finest salted pretzel or caramelized biscuit chocolate Easter eggs. £12 each with your Tesco Club card or Tesco finest extra fruity hot cross buns. Two packs for just three pounds. Because every little helps. Selected hot crossbuns, majority of larger stores, and online and 6th of April. Club card or app required. Exclusions apply This week is the 50th anniversary of Apple. And so this week on the VergeCast, we're taking stock of where Apple is five decades into its existence. How's the company doing? And we also decided to do something slightly ridiculous, which is identify and rank the 50 best Apple products of all time. After a lot of hours of debating, I think we finally got there. That's on the VergeCast this week, along with the state of OpenAI as it, raises a ton of money, tries to go public, and tries to convince you that you also love AI. All that on the VerchCast, wherever you get podcasts. Welcome back. I'm talking with Cisco CEO Chuck Robbins about the data center needs of the AI era and whether or not consumers will buy into having all those data centers built across the country. The internet also was hand in hand with globalization. Yeah. Right? We ha we we both have iPhones are made all over the world. Uh and you had this giant global network. Maybe this is gonna lead to an age of prosperity. Maybe this is going to e lead to an age of extreme labor displacement. Like you can read that however you want. There's a lot of opinions about what the internet and particularly global manufacturing, uh globalized manufacturing led to. That's all being undone. You can see that every single day that's being undone. Whether that's tariffs with in an effort to bring manufacturing back to the United States, which we talked about on the show with many of your peers, or whether it's hey, we're gonna put up big walls on the internet, right? Australia's gonna have a social media ban for te ens. They gotta enforce that somehow. That's probably gonna happen in the network layer. You have the European Union saying the data has to be here. We have to put the data here. The European data has to be in Europe. You build the networks. I'm imagining all of this is just one more layer of complication, even as you describe, okay, we should have global systems that bring us to an era of shared prosperity. How are you dealing with that? What you're seeing play out is not only do countries, and it's not not limited to Europe uh at this point, uh not only do they want to have data sovereignty, they want to have uh sovereign control over any technology they're using. They don't want the US to have the ability to impede the use of that product under any conditions. As an example, some of the meeting platforms like WebEx or Zoom, et cetera, those things. They they don't want any other country, and I'll say the US, but any other country to have the ability to cut off their access to use these platforms if they were going to invest and use them for critical reasons in other countries. In many cases, they would prefer to have, let's use Europe as an example, European companies that build the technology that they use in their infrastructure. In many cases, they don't have that capacity at scale. And so then they have to go default to who are the companies that I trust? And trust becomes such a big we talk we've it it's a big discussion obviously around AI , but it it is really a big deal. And so for us as an example, every country we operate in, we have always tried to be good citizens, good members of the community. We've had education programs where we've been training on digital skills around the world for 25 years, 30 years. Last year alone, we trained over we had five million learners go through one of these programs around the world. And so that trust element is going to become very important. The technology is one thing, you have to build technology that can be deployed the way they want it to be deployed. And then that you have to have a very high degree of trust. Aaron Powell Is this changing how you're architecting some of your products? It is. What are some specifics? Well, you know, you'd love if you have a cloud solution, historically what you would do and a lot of lot of companies were built this way, you build global instances and you you partition it and you sell it off to different customers. If you go to Germany as an example and Germany says, I want to have my version of that running in my country, it's architecturally different than how you might have designed it to begin with. So we're now designing a lot of those control systems or those uh cloud oriented systems so that they can be structured in a way where they can run in a country alone and and we don't think about building global instances anymore. Aaron Powell This is like a very different way of building the internet, right? Like it just isn't the thing. Like my first experience with the internet was watching the coffee pot at the University of England, right? Like this was the promise when I was like a kid watching like a one frame a minute live stream of a coffee pot. Being like, I can go there. And now we're like, oh, we're this thing happens. You watch live streams of coffee pots for real. Do you remember this? Like nineteen ninety four, this is like the first video feed on the internet was a coffee pot in Cambridge. Oh, yeah, yeah. It's like blew my mind when I was a kid. This is like in some ways it's more than ever, right? You can watch live streams of all the coffee pots ever. If you want to. Uh and in some ways this is just closing down, right? Every country is saying our citizens are here, we're gonna manage what they do, their lives are on the internets, we are gonna control the internet in our country. And that's happening all over the place in all kinds of different ways. It's honestly happening state to state. Like the internet in California looks different than the internet in Texas today. You're the networking uh s provider for for many of these countries, for many of these companies. When you think about the sweep of what the internet might look like when you think about the amount of compute that's happening in a data center as opposed to happening locally on my laptop, right? Which is always a kind of dance. What does the internet of the next five years look like to you? Well it's gonna be more fragmented for sure. Uh I think you are gonna see lots of district you're seeing the cloud providers build in regions and certain places and they're having to re architect to to to think about this. For most of the functionality that we use the internet for today, I'm not sure it's gonna change much, to be honest. There are gonna be controls that are gonna exist, but I don't think it's gonna change the core normal operating functionality of how it works today. They'll be there in the case of an issue or an emergency. Now where you store data and all those kinds of things are that that's not the network's issue. So how that plays out is is independent of what we would think about. But um I think you get in a times of crisis, then that's when you might see things happen differently. If you're a certain country and you get into a conflict and you wanna you wanna isolate yourself for from a communications perspective so that you you can trust that your communication is clear and then maybe that creates short term dynamics for your citizens. Uh but I don't think on a normal day to day basis it's gonna be that meaningfully different. I mean we we're seeing that right now, right? India shuts off the internet and cashware all the time. The Iranian internet is like on and off every day. Like are are those things that your customers are coming to you and saying one level up, the government wants the this capability of the network, can you help us build it? They are having those conversations around primarily not wanting to have a third party or another country disintermediate their capabilities through tech by having some control lever or kill switch or something of that nature. That's that's that's typically what they're talking about. How does that play into AI a bit, right? Like now we have these workloads built on networks that you're supplying and you've got a bunch of agents doing stuff all day long and you're saying we're gonna be the security provider for it. It at some point does Donald Trump get to say, turn off the agents, it's getting out of control. Well I think you have to think about security at an agent level, like you do an employee level, but on steroids. Yeah. Um it's gonna be five to ten X m more security that you'll need to apply. Uh maybe more, I'm just throwing numbers out. But um I think we gotta we have to figure that out as we get going. But it's certainly going to introduce uh an entry point for bad actors to do things that you certainly wouldn't want them to be able to do. And it's we're we're we're learning Aaron Powell I feel like for most of this conversation, my assumption has been this is gonna keep going. This is gonna keep working and the problems will be complicated and everyone will work diligently and we' solllve them and someone will invent the consumer product and all all of this will pay off. What if it doesn't? What if this bubble pops? What does that look like for you? There'll be lost, misplaced capital, there'll be companies that'll shut their doors, uh, and then there'll be the winners will emerge and will build out at scale just like we saw the first wave. I would suspect that's what will happen. I think there's certainly going to be companies that are going to cease to exist. They're going to go away. That's what happens on any of these early things. You know, it you you you take a risk. That's why the reward's so high. It's it's risk reward. And so it's just uh it's the nature of these massive transitions and this is bigger than probably it's bigger and faster than anything we've ever seen. Aaron Powell The amount of capital tied up in what you might call circular financing with some of these neo clouds, that seems dangerous to me. It seems like if I had to point it where the where things will get shaky first, it will be , well, we did a lot of forward investment, a lot of debt investment into neo clouds against workloads that themselves have not yet paid off eventually all the way, you know, the bill comes due, right? Or the investments don't happen. Aaron Powell It is, but not particularly for us. We're super conservative. And so we um I I don't I don't think the I've heard instances where we've looked at some of the financials and have chosen not to do business with some of these folks. Um and I think every company's gotta make their own decisions. We also have creative financing solutions that protect us that, you know, that we can work through, but we're not uh you know, we we learned a lot in two thousand Aaron Powell The name NeoClouds, are you are you in them or are you staying away from them? Aaron Powell No, we're we're in we're in some of them. Some of them want to use us. A lot of them want partnerships with us, honestly, because they want the enterprise access and they don't have a robust enterprise uh sales force and they think that we can help them there. And so in many cases we work together to figure that out. The other way I can see things maybe not get shaky but change dramatically in the way that changes the sort of investment availance of the AI industry is if inference becomes more valuable than training. Right. So far, uh all the emphasis has been we gotta run these GPUs red hot to do training because the next version of the model will finally be capable enough to I don't know, be your girlfriend. Like whatever it is that they think they're gonna do. Like they're the something about training has been the the point. Yeah. We're gonna we're gonna build AGI. There's a chance that w the models are good enough and it's actually just inference now. We're just gonna run agents and cloud code is big enough to to actually affect meaningfully affect uh enterprise cost dynamics. Is that change your business if we're done with training and actually inference is the point? No, it actually is great. Yeah. I don't think you're gonna be done with training by the way. I think it's gonna be additive. I think the inferencing stuff's gonna be additive. Do you need all the new data center build out if it's the inferencing instead of the training? Well, I mean we w we would like to participate and we'd like to see that continue to grow, obviously, because it's good for our business. But the inferencing side and and some people believe that that's going to be bigger. A lot of enterprise customers are gonna wanna do the inferencing at a point of interaction with a customer and have an immediate value that they're garnering in that interaction with that customer, and that's gonna be very distributed. And so distributed compute requires high performance networks, which is good for us. So we like that. I think I I saw some press releases out of NVIDIA GTC about more compute coming to the edge of of certain big network providers. Are you seeing that play out? It's still early at the edge. I think everybody believes they're gonna need it. And we're seeing certain applications where you're starting to see people pilot it. And I think this may be a good opportunity for the uh telecom providers. They are the there's always been this thesis that edge compute was going to be a big benefit for them. That w that was the thesis of five G. I went to a I won't say the name. It was part of it, yeah. I went to a I went to a a very long dinner with one of the major telecom providers and they told me all the all all about self-driving cars powered by edge networks. You could see this uh become something, you know, there's there's discussions now of inferencing grids and dynamic routing of uh of these inferencing requests based on everything from cost of power at a given certain time at a given time of day to capacity that's available. I mean there there's a lot of thinking about how this plays out and I think with it's um it's still TBD, but uh it's coming. So I want to just bring this all back around. The the business here is is building data centers with people, right? With with big customers. It's part of it. We also connect all the employees and everything else too. I mean do you want me to talk about WebEx for another hour? Because I I have a lot of notes about WebEx. We could talk about anything you want. Apple uses WebEx. Does Tim Cook ever say, dude, can you just make the Mac client a little bit better? No, it's actually better than most others. Do you use it? I mean, I I'm a journalist. I'm on calls with all these companies all the time. So WebEx comes up in my life. Okay, good. Well I'm glad to hear that. I think I I'm just telling you, find the person in r the native. We gotta do it on the show and we'll just go through a demo together. Okay, we'll be but you gotta be there. I gotta be there. Yeah. We'll just we'll we'll live do notes on a WebEx. Every time an enterprise software CEO comes on the show, I'm like, do you use your product? And I would say it's fifty-fifty. Uh I do all day long. You obviously d.ude All day long. But I was also a coder early in my life, so I'm a little weird. Uh I've used cloud code, so I'm you know. So you're in it. Yeah. Yeah. All right. But I'm saying the growth of the business, the explosive growth that everyone's seeing is is is in AI, right? It's in building these new generation data centers, this new generation of compute. The problem and I just keep c circling around to it, is the people don't want those data centers near them. And I you have yet to see the argument for why that should happen. I th in my mind, the argument is great consumer products, right? Like that's if you're like that's where Netflix comes from, I think people will calm down. But that's not the argument we're making right now. There isn't a product like Netflix. That's where Netflix comes from. If you're like Netflix is building a data center in a town, you'd be like, that rules. Yeah, it's gonna be faster. Right. Is Tom Cruise gonna be there? Like there something there would be right there you would have some emotional connection to the thing that's happening. We don't have that right now. The pressure on not building these data centers is only gonna go up. Right? In in weird ways. I think in Alabama, uh there's a state center that proposed blocking solar build-outs is a way to reduce data center interest in his state. Like that's a weird outcome. What happens if we can't build more data centers? What happens if the public just doesn't buy in? We'll build them in space faster, I guess. I mean, this is what this is why I started saying, are you just trying to escape the political problems of Earth? I don't I don't think they're political problems. I think they're issues of util ity and power and cooling and water and all those things. I mean they're all interconnected, but uh I don't wake up every day and deal with this issue. Um, but the people who do are very smart people. I think the thing that a consumer is going to be okay with is if you if you go in somewhere and you not only build a data center, but somehow you increase the electric uh the utility capacity of that community, or you do something positive in that community