John Chambers grew up in West Virginia and went on to run what was once the world’s most valuable company, the computer networking firm Cisco Systems Inc. Now he is trying to help economically lagging West Virginia by making it a “start-up state” akin to Israel, which has been called the start-up nation. I interviewed Chambers recently about his hopes and the magnitude of the challenge.
Short version: It’s going to be very tough.
Chambers was born in 1949 while his parents were in medical school at Case Western Reserve University in Cleveland. He grew up mostly in Charleston, W.Va., and earned a bachelor’s degree and a law degree from West Virginia University. Though he moved away to make his fortune, he never lost his love for the Mountain State, its people and its natural beauty: “canoeing the Elk River, navigating the rapids of New River, and hunting grouse near Ravenswood,” as he reminisced to WV Living magazine a decade ago.
Chambers became a salesperson for IBM, then for Wang Laboratories, before joining Cisco in 1990, six years after the company was founded in Silicon Valley. He was the chief executive from 1995 to 2015, including the period between 2000 and 2002 when it went in and out of being the most valuable company in the world by stock market valuation.
His main new gig is founder and chief executive of JC2 Ventures, a six-person venture capital operation that says it “focuses on helping disruptive start-ups from around the world build and scale.” He has also been contributing to his alma mater, West Virginia University, whose John Chambers College of Business and Economics is named after him.
When I interviewed him, Chambers still exuded the can-do attitude of a tech C.E.O. He started out by asking me what he could do to make this the best interview I would do all year. He said he had given advice on start-up culture to Narendra Modi, the prime minister of India, and Emmanuel Macron, the president of France, and wanted to bring the same lessons to West Virginia.
India, France and West Virginia are about as different from one another as I can imagine. I asked Chambers what they have in common when it comes to growth opportunities. “You’ve got to take the leaders who have courage, who want to work together,” he said. “It needs the community pulling together. Start-ups are at the heart of it.”
To assess the challenge ahead for Chambers and his fellow Mountaineers, I gathered some data about the health of West Virginia’s economy and its people. According to the most recent numbers, it is tied for last with Mississippi in the share of adults with a bachelor’s degree or more. Only Mississippi has a lower life expectancy at birth, and only Mississippi has a lower rate of participation in the labor force. West Virginia has had the nation’s lowest population growth since 1950 and is the only state that lost population from 2000 to 2022.
To me, the most disturbing statistic is the age-adjusted death rate from drug overdoses. In 2021, West Virginia’s rate of 90.9 per 100,000 people was 60 percent higher than that of Tennessee, the next highest state, and nearly three times the national average, according to the National Center for Health Statistics.
The decline of coal mining is a big cause of the state’s struggles, of course. Employment in the sector peaked in 1940 at around 130,000, according to the state government. It’s now a tenth of that. But other sectors have also failed to thrive. Starting in the 1920s, Union Carbide made West Virginia a world leader in chemical manufacturing, which offers high-paying jobs. But Union Carbide was weakened by a leak of toxic gas at a plant in Bhopal, India, in 1984. It sold off businesses and was merged into Dow Chemical in 2001. State employment in chemical manufacturing has continued to decline, falling 45 percent since 2001.
Chambers remains optimistic, and he’s barreling ahead. He’s focused on education, specifically training students for digital jobs. He has promises from business leaders to build in the state. He’s helped start a group called Vantage Ventures to assist West Virginians who want to “build high-impact, scalable businesses.” According to Chambers, during Vantage’s last investor pitch day, almost $2.5 billion in investor capital was secured for the 62 start-ups the Vantage network supports.
Chambers also pointed to Ascend West Virginia, a talent program that has attracted skilled workers to West Virginia from 21 states as well as the European Union. Ascend West Virginia was created by Brad Smith, who was the chief executive of Intuit (creator of TurboTax and QuickBooks) and is now the president of Marshall University in Huntington.
Those are exactly the right things for the state and its allies in business to be doing. But I question whether they’re having the payoff (so far) that Chambers claims. For example, Chambers said that the state’s gross domestic product grew by nearly $18 billion from 2018 to 2022. True, but that was all from inflation. Adjusting for inflation, the state’s economy shrank by 1.1 percent over the period, the seventh-worst performance of any state.
Chambers also touted a planned $700 million investment “to build the next generation of digital health care, clean tech, immersive A.I. and mobility.” That sum is intended to come from money raised by the NOVA West Virginia Investment Fund, a private, for-profit investment vehicle that aims to have a positive social impact. LG Electronics is planning to chip in through its LG NOVA venture-building arm, though it hasn’t said how much. It has also committed to creating 275 jobs in the state. Ali Diallo, the managing partner of NOVA West Virginia, said the vehicle will open an office in West Virginia next month. It hasn’t announced any investors, although Diallo told me “we feel very comfortable” about raising and deploying that sum over the next five years.
As for West Virginia becoming a start-up state — not yet. Chambers said that “in the past five years alone, West Virginia has ranked third in start-up growth.” According to the link provided, that’s based on census data for the change in business formations between January 2022 and January 2023. In one respect, that’s a tad too modest. I calculate that West Virginia was second, behind Wyoming, over that period. In another respect, though, it’s kind of cherry-picking. Comparing all of 2023 with all of 2020, West Virginia was 13th in the rate of business formation.
Business formation is only one aspect of a start-up culture, since not all businesses that are formed are entrepreneurial and growth-oriented. West Virginia was below the median of states on the Kauffman Early Stage Entrepreneurship Index for 2021, the last year available. The index is by the Kansas City-based Kauffman Foundation, which researches start-ups and encourages their formation. (Florida ranked highest and Rhode Island lowest, for what it’s worth.)
West Virginians have had their hopes dashed many times before. In 2020, Gov. Jim Justice, Sir Richard Branson of the Virgin Group, Transportation Secretary Elaine Chao and Chambers announced that West Virginia had won a $500 million “certification center” for the Virgin Hyperloop, a technology for transporting people in tubes at up to 600 miles an hour. Last year Virgin quietly canceled the plan.
A planned truck-to-rail gateway near Huntington was never built. A redevelopment of the Hobet mine south of Huntington went bust, although there are plans now to make it a solar farm. “There was the maddening pursuit of a natural gas cracker plant that turned up empty,” The Herald-Dispatch in Huntington wrote in 2022. (It would have processed ethane, a component of natural gas.) “There was the announcement from the Justice administration in 2017 that a Chinese energy company was going to invest more than $80 billion in natural gas projects in the state. That project turned out to be nothing.” (More on that here.)
The development that has occurred has been largely in border counties, so while the tax incentives are covered by West Virginians, many of the jobs go to people out of state, according to Kelly Allen, a lifelong West Virginian and the executive director of the West Virginia Center on Budget and Policy. That, she said, includes plans for a $3.1 billion sheet-steel mill along the Ohio River — which is one of the best things that has happened to West Virginia’s economy in years.
So West Virginians could be forgiven for being skeptical of the latest push. “You can’t just birth a venture capital hotbed overnight by granting some scholarships to a university and announcing a flywheel effect,” Greg LeRoy, the executive director of Good Jobs First, a Washington, D.C.-based policy research center, told me.
On the good side, West Virginia is clearly open for business. Take it from Brad Smith, another native of West Virginia who made good in tech and is giving back. “Everyone you need to make a decision can fit in an S.U.V. in West Virginia,” Smith told MetroNews this year. “You can come here and make things happen.”
That responsiveness is a big reason that LG NOVA chose West Virginia as the first state where it will collaborate extensively with a local investment vehicle on product and business venture development, Sokwoo Rhee, who is LG’s executive vice president of innovation, told me. “For any business, especially a software or platform business, decisions need to be made quickly. West Virginia seems to have that,” he said.
Don’t count out love as a motivation. “What I am excited about is how much I love this state and how much it has meant to five generations of my family,” Chambers told the Daily Athenaeum, the student newspaper of West Virginia University, in 2018. “Anytime I talk about West Virginia around the world, there is a soft spot for it that I cannot explain.”
I felt that warmth when I interviewed Chambers. “Everyone we’ve ever asked to help has helped,” he told me. “Don’t feel sorry for us. We are very capable. And we will deliver. Isn’t it exciting to change the world?” Just changing West Virginia would be exciting enough.
The Readers Write
On the baby bust, a decline in births might be OK. At least compared with war, famine, pestilence and plague, not to mention climate change. There seem to be just too many people on our little blue dot.
It can cost thousands of dollars out of pocket to produce one baby. Until that aspect is addressed, our birthrate won’t go up by very much. Wealthy people don’t worry about the cost and poor people get a lot of free care. The middle class, as usual, gets stuck.
Thank you for writing positively about immigration. As a child of World War II immigrants I am biased, but I firmly believe that immigrants are among our most loyal, hardworking, trustworthy citizens. Years ago I went to a senior center’s Fourth of July luncheon and noted that the immigrants were the most enthusiastic vocalists of the Star Spangled Banner and the Pledge of Allegiance, while we old-timers were like, “Let’s get this over with and eat.”
I favor buying local strongly. Local might be more expensive, but it puts money back into the local economy. Also you understand who produces what you’re buying and under what circumstances. Are you eating something made by child labor and are they getting pesticided?
I read this morning’s Quote of the Day in your newsletter (“The evil was not in bread and circuses, per se, but in the willingness of the people to sell their rights as free men …”) and, reflecting upon it, decided that the most salient point within this epigram is the year in which it was published.
In 1956, we had only a nascent understanding of the reward and motivation pathways within our neuroanatomy; the powerful reinforcing effects of neurotransmitters like dopamine; and the numerous pathways in which these subconscious networks connect to the executive function centers of our prefrontal cortex. As a result, there existed strong opinions like those of Mr. Moreell’s, with an implicit primacy assigned to free will. In 2024, with nearly 70 years more research to bolster our understanding of human behavior (as well as dual epidemics of obesity and opioids), many of us see it differently now: The evil is, in fact, the bread and circuses.
Dr. Douglas Krohn
The writer is a clinical assistant professor of pediatrics at New York Medical College.
Quote of the Day
“You can have oyster sauce shipped to your small town or your corner of a large city, and find mullein-leaf tea, tubs of Vegemite and egusi seeds, too. I had a hankering for a St. Louis-style pizza. I didn’t have to fly to Lambert Field. Two or three clicks on the laptop and the mail carrier soon brought me a few pounds of the Provel cheese.”
— Sam Sifton, “Plush, Perfumed Pepperpot,” Cooking newsletter, (Jan. 28, 2024)