Most great technology revolutions begin the same way. Overexcitement and overfunding inevitably create too much capacity too quickly. As the bubble bursts, only a handful of the original companies survive. Nowhere is this more true than the Internet. This book captures the creation and bursting of that bubble from the perspective of one of the companies certain to survive.

Bob Slater has done it again, giving us a thoroughly researched insiders' view into exactly what was happening at Cisco Systems during its meteoric rise and even more important how it coped with the collapse of the Internet bubble. The media has venerated John Chambers, and quite deservedly so. Fortun- ately, Slater's unique access to him as well as his team, competitors, and investors has allowed Bob to give us the most insightful view of this high-tech leader we have today.

In March 2000 Cisco Systems, with a market capitalization of $531 billion, was the most valuable company on the planet. With 44,000 employees and a stock price at $80 per share, Cisco was poised for unstoppable growth and unending glory. Six months later with the crisp smell of cold cash in the air, Cisco president and CEO John Chambers vowed to change the world. Who knew that in a matter of days disaster would strike?

The Eye of the Storm: How John Chambers Steered Cisco Through the Technology Collapse offers the gripping account of the high-tech American dream turned nightmare. Bestselling author Robert Slater's riveting narrative traces the path of Cisco's rise from anonymity to prosperity and then to its sudden, shocking fall, as a world without ceilings gave way to a world where no floor was in sight.

Through unprecedented exclusive interviews with Chambers and Cisco's top executives and unparalleled access to Cisco's private forums, Slater reveals the confidential workings and insider decisions behind what was nothing short of a business miracle before the vision went temporarily awry. Unadorned and unequivocal, this is the fascinating story of how Chambers, once widely hailed as "King of the Internet," navigated Cisco through a period of inconceivable success before guiding his company through unimaginable misfortune.

Preface vii

Introduction 1

PART ONE THE VISION AND THE FLOOD 5

1. The Vision 7

2. The lO0-Year Flood 35

3. Grinding to a Halt: Who Is to Blame? 47

PART TWO FLASHBACK MODE 63

4. On Massive Hormones 65

PART THREE JOHN CHAMBERS ARRIVES ON THE SCENE 89

5. The Heir Apparent 91

6. Evangelizing the Internet 126

PART FOUR THE STRATEGIES AND THE CULTURE 149

7. Doing Things Differently 151

8. Go Bleed with Them 186

9. Silicon Valley Is Our Lab 197

PART FIVE ADJUSTING TO A NEW REALITY 227

10. Preparing for Adversity 229

11. The Recovery 248

12. Getting Ready for the Upturn 265

Notes 277

Index 283