Building the Base Episode 13: Ted Schlein, Chairman and General Partner Ballistic Ventures and General Partner, Kleiner Perkins

Building The Base Website Graphic Episode 13 V1

In this week’s episode of Building the Base, Hondo and Lauren join Ted Schlein, Chairman & General Partner, Ballistic Ventures and General Partner, Kleiner Perkins to discuss the future of the defense industrial network.

Throughout the podcast, Ted touches on inefficiencies within the defense industrial base regarding its acquisition of cybersecurity technology. One of Ted’s most important views highlighted is that the government should not be playing the role of investor, but it should be finding out how to be a better partner and customer to contractors. To that end, faster and more efficient acquisition processes should be at the forefront of the DoD’s concerns.

Hondo, Lauren, and Ted go on to discuss a variety of topics, including:

  • Measuring risk in investment
  • The relationship between and roles of venture capital and the government
  • Having a true public-private ‘partnership’
  • Disinformation
  • Talent acquisition in cybersecurity

Podcast Transcript

BENS Intro 00:00
The business executives for national security welcomes you to building the base here thought leaders and practitioners discuss how we can ensure our shared security and prosperity. They’re shaping the future of the national security industrial base, your hosts or Silicon Valley defense expert Lauren Bedula, along with BENS Distinguished Fellow and former head of acquisition for the Navy, Marines and special operators, Hondo Geurts.

Lauren Bedula 00:30
Welcome back to building the base, Lauren Bedula, here with my co host Hondo, Geurts. And we’re excited to record episode 13. And have Ted Schlein with us today who is really the most notable cybersecurity investor in the United States, but really the world. Ted is a general partner at ballistic ventures and Chairman there. So they’re about 12 months and excited to hear a little bit about what they’re up to, but also at Kleiner Perkins. And Ted is a really strong partner to the national security community. So I’m excited to talk about that today. And what really drove that connectivity and how he serves as an interlocutor between Silicon Valley and in the national security community. So Ted, thank you so much for joining us today.

Ted Schlein 01:13
Thanks for having me.

Lauren Bedula 01:15
We want to start with your story. We love doing that at the top of our show. Some have referred to you as an early unofficial Apple product tester. And as I mentioned, now you are a close partner to the national security community, but your main role is an investor in Silicon Valley looking at cybersecurity. So can you tell our listeners about what got you into this today?

Ted Schlein 01:36
How to connect all those dots? Well, if you go back to say the mid 80s. I was very fortunate growing up that my father was on the board of Apple computer in the very early days. So he was on the board from something like the mid to late 70s to like the late 80s or so. And so growing up I had a computer that gave every board member one of everything they made. And my dad actually didn’t know how to use a computer wasn’t why he was on the board. So used to give them to my sister and I. And so you know, my first computer was a two plus and I had a to e A to C, we had a lease around the house. You know, I got original Macintosh and then you get a Mac 128 iMac 512 A Mac Plus, I think by the time I went to college, I had a Mac Plus with a laser writer. So anyway, I always had a computer in my life growing up, which was very unusual. So when I graduated from college in May went to my first startup company, which was Symantec. I showed up with the only Macintosh in the entire company. Now, there were only 30 or 40 people at Symantec at the time, but my love of the Mac, and all things about the Mac was was real. My sister actually worked as a Mac evangelist. I knew all the people promoting the Mac, the folks that did all the software for the Mac, I knew and the first product I did for Symantec was something called Symantec utilities for the Mac, which was basically my version of Norton Utilities, but done for the Macintosh. No one had ever done it a compendium utility products. And so design that brought that to market it didn’t, it did really well. And the CEO of Symantec. At the time, Gordon Eubanks was, uh, what else he got up your sleeve. And I said, Well, there’s these things called computer viruses that people are going to care about. And to date, there’s no commercial software for it. It was all shareware. McAfee was the main shareware product that was available. And it’s kind of an interesting business model. And, but it was kind of it was starting to do pretty well. Now you got to keep in mind, there were maybe like 30 or 40 viruses. versus, you know, since we started talking 30 or 40 viruses have been created. So, you know, it’s not like a, you know, wasn’t a big problem yet. And local area networks really hadn’t been established yet either. So everyone, you exchanged information via floppy disks. So I convinced the convince the folks at Symantec that that the next product wanted to do was going to be this antivirus software. And we should commercialize antivirus. And I worked with this wonderful developer, he gets zero credit in the industry. His name is Paul Koza. He probably owns half the state of Maine Be my guest. But he and he and I sat down I designed it and he built it the woods called Symantec Antivirus for the Macintosh and it was the first commercial sort of antivirus software. And then people sort of sell tie it back to the Mac question you asked me You know why the Mac? My theory was Mac users actually really liked their computers and PC users didn’t care about them. It was like a tool. And therefore, if you could prevent viruses from being on this thing that they really cared about, they would buy the software that they would actually care about it. So that was that was the three of my first ad that I did was a flatlining. So think about like an EKG, it’s just flatlines. And the headline was, do you want this to happen to your Macintosh. So it’s a little bit of a scare tactics to, to get them to think about this. But that’s what the minutes would start the commercial antivirus business for for Symantec. And then we bought Norton computing, we did the PC version, what I had done on the Macintosh side, and that’s ties together a couple of things I think you brought, we haven’t gotten into the national security side of it yet.

Hondo Geurts 05:58
A Ted, it’s great to have you here. It’s, you’re one of those unique individuals, as you say it’s got a foot in all these different camps. And innovation to me is how to bring all these things together, maybe a new combinations. But, you know, as the DOD and national security, they all think they understand venture capital, I find a lot of them don’t actually understand venture capital, they think it’s all about, you know, developing technology or something. Can you give our listeners kind of your sense, you know, the next decade or two of your after your Mac experience and Symantec was being very successful in the venture world? What’s what’s your, you know, what’s venture 101? And then how might that best apply in the national security space?

Ted Schlein 06:45
Alright, Honda. So, yeah, after 10 years at Symantec, I’ve been at that venture capitals for last 26 years, most of them 25 of that with just Kleiner Perkins. And it’s the number one thing you’ll look for, as a venture capitalist is a great entrepreneur. You know, it’s so it’s people always, what’s the secret sauce, I said, people, I mean, at the end of the day, it is very much about the people. And I always say I’ll take a great team and a bad idea, over a great idea and a bad team any day, because a great team figures out it’s a bad idea. And they change it and they end up doing something good. And I’ve seen that pan out so many times. And so the main ingredients as when you’re looking for an early stage company, is who? What have they done? Why do they have the credibly wire the capability? Can they get other people to follow them? Because he can’t do this alone? Will they be great recruiters will they be great salespeople, the end of the day, you got to get somebody to buy your product, you got to raise money, that’s all selling. And addressing a large market. I had an old partner at Kleiner Perkins, who say it’s just as hard to build a small company is to build a large company. So you might as well go build try and build a large company. And it’s, it’s true. So you want these these large, potential untapped markets, where you have an amazing team that can build a defensible technology position around it. And getting all those things to line up is not easy. It’s, it’s very hard. And and every so often, it happens, it’s like lightning in the bottle, and it does something fantastic. And we’ve seen unbelievable creations come out of Silicon Valley, driven by that entrepreneurial spirit and community. And you know, and now that’s been exported around the country, and quite honestly, around the world. You know, I when I got involved, I think 85% of all venture was done the United States, I think that’s down to about 50%. We could argue that’s a good thing or a bad thing. And I can make both sides of that argument. But it’s because the model works, which is risk capital, look, I, I can lose all our money when you make an investment. And guess what most of them don’t work out. That’s okay. The venture model is all about risk taking. It’s all about measuring the amount of money you deploy against building that company solving that problem. And removing risk. And every venture, by the way has four kinds of risks. There’s people risk, technology risk, market risk and financial risk. And your goal is to remove versions of that risk along the way and then put your money in as that happens. And so, it is, as I said, it’s very hard to do, I would argue venture is a relatively boutique industry. As an as an asset class, and I always hit hesitated when people would call it an asset class, it’s really not very big. Like, if you took the entire venture industry, even with the growth side of venture versus the early stages, it’s probably the equivalent, like three hedge funds in New York, you know, but I mean, it’s not, you know, it’s not a, it’s not a huge part of the economy, yet it delivers an enormous part of the GDP, because so much of the country’s innovation engine started with with these early stage venture dollars. So now you asked Honda, you know, you know, should the DoD apparatus and other parts of the government be in the venture business, I’ve never had like an a, an IRR, conversation with anyone in in that in that group, I’ve never had anyone give me a great conversation about, you know, multiples of capital, removal of risk. All the things that it takes to make it worthwhile to do venture. It’s, and so I’ve never believed that’s a great use of, of government dollars, you know, there’s plenty of money to to go after the opportunities. If the people are there, and the opportunity is there. You can’t just make it up from whole cloth.

Hondo Geurts 11:27
Right, I often say one of the best things that you could do is provide a clear, transparent view of what they need. Because if folks know what they need, if you can understand the addressable market, the money is there, whether it’s venture or at some other to the challenge, the government seems to be with some confidence and clarity, talking about what they actually need, and then buying what they say they need.

Ted Schlein 11:52
Yeah, what? So a question I get asked probably out to say 10 times a year by somebody from DOD, is, you know, what, what, what’s wrong with the system? You know, how do we get it to work? And I’ve probably answered this question for the last 20 plus years. And, you know, part of it is one, they just make it so hard. You know, we our companies are used to selling to the largest corporations in the world. So I get it, if you looked at the DoD as the largest corporation in the world, okay, but it has actually a bunch of sub corpse in there that you know, that become small, it doesn’t have to be that difficult to do procurement and acquisition of something that solves a problem. A, you got to know what the problem is you want to solve as you just pointed it out. Because otherwise, it’s garbage in garbage out. And be it there’s just usually an entrepreneur that’s probably already solved it. If not, if they see a big enough market, they will, they’ll run down that that road and solve it for you. You just got to make it easier for them to get access to get deployment of the technology. This is why I’m you know, I love the work I do, I think you tell because at least at least a small slice of government intelligence community, we try and facilitate the ability to procure, you know, commercial software for a branch of the government. But the Department of fence is, has been a tough nut to crack around this. And they’re trying to get better. And we’re coming up with, I think, new innovative ways to maybe go after the problem to

Lauren Bedula 13:36
inserted your talked about you’re an operator of founder, investor and an advisor, not just to tech companies, but also to the US government and for different capacities, all related to national security, you are on a board to advise the Secretary of Homeland Security, you’re on a separate DHS, Department of Homeland Security Board to advise their cybersecurity lead, you work with Inc you tell which is the CIA’s investment arm on their board. And then also the National Security Agency NSA as as a member of a board of advisors there. So can you tell us about we’ve talked about your history and Silicon Valley and history with tech companies now also investing for many years? How did you get so close with the national security community?

Ted Schlein 14:22
Yeah, it’s, uh, let’s step back for a second I’ll get into that is in Silicon Valley. There was very few of us that took an interest in Washington for a long time. And I think the belief was, well, let them do their crazy thing there. And we’ll do our thing here and hopefully then the two will never meet. I kind of thought that was a little short sighted. I learned from my partner John Doerr had spent lots of time going to Washington and I kind of watched what he was doing. And we quickly learned is they can do a lot of good And they can do a lot of bad. And they can think they’re doing good. And the the secondary effects can be quite bad. So if you don’t take the time and energy to understand it, and spend the time and see if you can help lawmakers and others craft some of the policy, you know, you’re going to live with what you get. And that can be pretty detrimental over time. So. And then at one point, I became the chairman of National Venture Capital Association, which is sort of the trade association for the venture industry. And I was in Washington all the time, all the time meeting with members of Congress and on different policy issues. So I spent a lot of time here and starting to get an appreciation for what was going on. I think the very first time I got tapped to do something officially was under Secretary Rumsfeld in DOD, where you wanted to figure out how to get technology into warfighters hands faster. And he had asked John Kasich at the time, who’s the congressman from Ohio, and governor of Ohio, you know, to help them out with that. And John knew a couple of us. And he said, Well, let’s get Ted involved in this, this project. And in we did that for a couple years for the Department of Defense. And things I learned there is don’t have whatever you’re working on getting named, and don’t get a budget. Soon as you have a name and a budget, you’re screwed. Because for two years, we operated and we were able to identify problems, DOD had bring together some technologists that could help solve those problems, or introduce them to people in Silicon Valley that have to deal with life problems, etc. And it was working great. It was it was doing good. And then we got a name and a budget, and we got shut down for oversight. And that took two years. And by the time it came out of the oversight review, I was gone. We’re all done. So that gave me my taste in you know, wow, they need help. They really need help. And because I’m a cybersecurity geek, as you as you pointed at the beginning, I think the original attraction was Well, Ted seems to be able to figure out what we’re going to need in the world of cyber, maybe a little bit before others can figure that out. Let’s go tap that. He’s been going back and forth, he kind of gets Washington, he can we all want innovation and technology, or at least we theoretically all want innovation and technology. And maybe we can help be that bridge. I think the first person that tapped me for for helping out on NSA was a brick legit. Asked whether I would come in and help out on some stuff there. And I’ve had the pleasure of serving numerous different directors over the years there. And then look, I I make it a point to truly understand all the different facets inside of Washington that pertain to national security to figure out how my background and dealing with the commercial sector can help that if at the end of the day, your if your shining light is, you know, how do we make the country in the world a safer place? You know, I have my little slice of that, which is, you know, I do with food technology and innovation and entrepreneurs. But you got to work with all these different groups. It’s, you know, as we pointed out earlier, DOD, Nothing’s easy in this town. Right? So you’re, you got to make sure you have your relationships across the board in so many different places. And in that kind of, can I explain anything has to do with innovation except on DHS? No, Secretary orcas asked. So, you know, I thought well, this can be fascinating, so much about immigration and border control. What do I I don’t know anything about any of that. But I think

Hondo Geurts 19:03
one by fears is we think are the industrial base and industrial terms, not in network, you know, very fluid and agile terms. But I am optimistic. I’m seeing, you know, your your 30 year veteran to bring. But in the last five years, the amount of cross pollination and interest from, you know, traditionally commercial startup in national security is really starting to grow. Are you seeing that same trend? And do you think you think we’re in a positive vector of bringing the two communities together and figuring out how to really leverage all the strength in the nation? Are you see that kind of flatlining or is it getting worse?

Ted Schlein 19:44
I don’t see it getting worse. I see in certain times some places it’s getting better and others that sort of see the same rhetoric I’ve seen for years, so I’ll try and parse that out it everyone wants to talk about public private partnerships. I love public Private Partnerships, kind of, you know, the alliteration is great. So it sort of works. Then, you know, just peel the onion back one layer. So what do you want? Like? What do you want from the private sector? Let’s talk about, what are you willing to give? partnership means like, there’s a give and take versus giving a give. And that’s usually where a lot of these things fall down is understanding the give and take aspect of a partnership. And I think that’s starting to finally break down, oh, we need to offer the private sector, something so that they care, they don’t just have to, you know, care, because we’re the public sector, and they’re doing good. And I loved seeing it that because you brought up industrial policy, I love talking about industrial policy. So I got, although I gotta bring this back to the dip as well. But look at this, the new inflation Reduction Act. You know, it’s like, public private policy, on steroids, like, you know, kind of for real, you know, some subsidies, some some, you know, it’s a little bit more carrot and stick, which is probably the right way to go for that I’m not I’m not a, you know, I’m a policy wonk when it comes to cyber policies. I’m gonna stay away from all that macro economic stuff, although I do opine on that title. But my, my point is, it starts to show a recognition, well, we got to give to take, you know, we got that in. And so therefore, I love that about it. With the end goal in sight, as you know, we’re going to do something about climate or excetera. So when I see that happening, and different groups, I think are getting a little bit better at that than than others, you know, it’s Sissa, doing the JCTC, which is a partnership with the private sector to share data, knowing full well that we got to give data to get data, and we got to give value to get value. That’s a change. That’s a chain it’s a positive change. And I do love I do love seeing that in terms of the evolution of the dip. And then I want to get back into industrial policy if you guys want to go there. But it turns out the evolution of the DIB I used to got on my way this this is all my dear friends off and that’s it. You’re have any defenseman. You know, I thought I thought it should be illegal for the Department of Defense to use the DIB to do any software project. Period, like illegal, you know, and people look at me, unfortunate it was the vice chairman, the Joint Chiefs was sad sitting next to me at that dinner one night where I was posing this to him, he thought is insane. And like, Could I change seats here. But my point is, obviously really shouldn’t be illegal, but it was it was that there are far more efficient ways to to build software for far faster, far cheaper, and far higher quality. Why wouldn’t we do it that way, versus these folks who are awesome at building weapons systems, missiles, airplanes, ships, you know, the heart that the stuff that we’re never going to do out in Silicon Valley, nor should we be doing out in Silicon Valley or elsewhere. So and that’s an evolution to me that Pentagon hopefully recognizing that it really should be one of the world’s largest software companies, not hardware companies that and and therefore, how do we do that? How do we get the best of the best creating software for us and I believe a new digital DIB will arise. From this. I’m, I’ve been fortunate to serve on the board of a chemical rebellion defense, which is a good example of this. But there’s there’s going to be other companies that are going to come from the Silicon Valley like model, attracting the best of the best engineers using equity to incent to go solve really hard, probably mostly software problems for the Department of Defense and all the different agencies and what will happen VOD will get better systems faster, far cheaper. They might not know what to do with that. But you know that that’s that. That’s that’s what will ultimately happen. And when those companies initial companies are successful, more will follow because that’s how my industry works. You know, if the money can be made, they will come the resources will be there and the DoD doesn’t really have to do anything other than by you know, because it solves their problem. Yeah, I don’t really need anything else.

Lauren Bedula 24:52
Digital Deb I love that. So Ted, you have a great track record and building success. spool operations. One of the issues we like to look at when it comes to the defense industrial base is almost this disappearing middle, the you’ve got consolidation at the top and several large primes. And then a lot of small companies that are newer entrants, very interested in supporting the Department of Defense, I agree with you where I think there’s this increased appetite on both sides to do so. But a lot of the efforts as of late are to provide a lot of smaller companies with smaller checks and give them the opportunity to test things out over in a corner. And some folks think that’s diluting opportunities. What’s your take on this approach? Do you have any recommendations about what we could be doing? Better? Here’s your thoughts.

Ted Schlein 25:45
Yeah, look, I, I like to solve problems, I like to solve them fast, and I like to solve them as efficiently as possible. Some of those words don’t necessarily go with government bureaucracies. And so I don’t have a lot of patience for it, you know, is, you know, I, maybe it’s another reason why these people asked me to help them out. Because I, you know, I don’t have a whole lot of patience for the bureaucracy. I, I, when we started talking a little bit more about the security of the country, I’ll show you where I think that really hurts us, quite often. But when we’re, when we’re talking about just innovation, ideas, find the best people that are solving this problem, and buy from them. You know, spreading spreading it out like peanut butter to a whole lot of folks thinking you’re doing it’s treating it almost like a nonprofit situation, I don’t think is going to end up solving your problem at the end of the day. And so I think we just got to look at what is the purpose, because these are all tax dollars against bent. So what is the purpose to do small business generation? Or is it purpose to solve the problems of the Department of Defense? And I’m not so sure those two things align? You know, if you think both of those are your purpose,

Lauren Bedula 27:03
and certainly a way to incentivize that growth to because we’ve looked into some of these programs are incentivizing you to stay as a small company. And ultimately, from an economic perspective, we want to help these companies grow. And so to your point earlier, it’s maybe not having the US government figure out how to be an investor, but be a better customer. In that sense. I’m

Ted Schlein 27:25
100%. There. I you know, if I talked about the, the IRA earlier, if there’s a part of it that I’m a little scared of, I hope it works out? Well, it’s the 239 billion that is used somewhat as investment dollars by the Department of Energy. And, you know, hopefully, they figured out a lot of things. But you know, picking tech and picking companies, I think is really hard for the government to do versus let those of us that do it for living, figure that out. And just incent a un adoption cycle and incent an acquisition cycle would be a good use of it that I agree with you.

Lauren Bedula 28:09
I want to pivot to the economic outlook and how it may impact some of these issues. I’ve heard you say in the past, no one wants to be less safe. So maybe we won’t see an impact necessarily to cybersecurity as we would other fields. But as an investor, if you have an entrepreneur coming to you and saying, Hey, we want to do business with the Department of Defense in this market, does it change your reaction? Or what would your take on that be with the economic outlook,

Ted Schlein 28:38
it wouldn’t be the it wouldn’t be the first customer I would be telling any entrepreneur to go after. You know, at the end of the day, these companies live and breathe by purchase orders. So you know, they need cash coming in, you know, often you start the dance with Department of fence and you’re still dancing. 12 months later, these guys tend to work. Even if it’s an enterprise software company in three months cycles, you know, we do a proof of concept, prove it out, get into a negotiation for purchase. So somewhere between three and six months, they’re there, they’re actually able to get a purchase order and rent. So our typical advice is don’t go after DoD right away. And you know, go after some low hanging fruit which is going to be just other areas of the global 1000 companies or even smaller than that, to sell to. And therefore, in the economic cycle, the way it affects the venture world is around capital capital preservation. You know, can you raise capital as easily in abundance as you could in the past? Well, when the markets are this volatile, and capital tends to tighten some and so you tend to want to give advice to entrepreneurs as you know, save save your money. You know, be more rational don’t assume you can just raise more money at a higher priced, like you could do for almost a decade, maybe 12 years, last 12 years, he has always assumed it was always going to be up until the right don’t assume that anymore. So therefore your cash flow just becomes that much more important. Therefore, you need customers that you can execute on in and collect cash from sooner. Now, once the government is a customer, they pay their bills on time, their third grade customer, we were on so

Lauren Bedula 30:27
and they continue to spend so there’ll be less disruption, as you may see on the commercial side. And the theme of Outlook, I went back and something I like to do when I prep for these is dust off some old discussions or presentations that our guests have given. And I listened to one Ted that you gave us in 2013. And the topic of Google Glasses came up, and you said, without a doubt, there’s going to be a focus on wearables, but it might not be glasses, it might be something like a necklace, necklace or a watch. And so I wanted to get your take, you weren’t wrong there. I know, we all have our digital watches and stay connected in those wearable ways, rings in the like, what does the cybersecurity field look like going forward? And how might innovations in that sense impact national security or anything keep you up at night on that front?

Ted Schlein 31:19
Oh, he’s been doing this 36 years. So the security front. So, you know, unfortunately, the bad guys have all gotten smarter, they have gotten better resourced. When I started on this nation states really didn’t participate. It was the average hacker sort of thing. So it’s the sophistication of it is, is is really tough that if I had to pick some themes, which is, you know, something I end up talking about, I think, the things I care about right now. Something I call zero authority, people like to call it zero trust, I just call them zero authority, which is don’t allow any one or any system or any workload to have access to anything except by exception. And so how would you do that? Like versus versus, you know, let’s let everyone do everything, and then we’ll figure out what they shouldn’t be doing. And then we’ll try and cut them off later. And so I try and invert the model of, I’ll just I’ll just call it zero authority and and what infrastructure would be necessary to make that happen across the entire technology substrate, from the individual to the workload to all aspects, then there’s one, I’ll throw a few of these out and see which ones you want to chat about. The thing that I am most concerned about and spend the most personal time on is the use of an open democracy against itself. And I think that is one of the things we’re all wrestling with. And it takes its form in so many different ways. Some people like to talk about disinformation, misinformation, Mal information, whatever some, some might want to talk about, you know, media that is fake, commonly called Deep fakes. But you could, you could talk about just the use of the Internet itself, and the infrastructure that gets used for a lot of really private purposes. And, and how, how well designed is it really for making, you know, doing that, and being so it’s it’s this idea that we are an open democracy with open infrastructure, and how that gets reversed on ourselves, ultimately? And then for what do we do about it? I have been starting to talk about this, mostly, hopefully, just get people’s attention that this whole disinformation stuff is just the new malware. I use that as the analogy because at least now finally, after 35 years, people get what malware does. And we’ve taken it seriously. We’ve tried to prevent it. And the conversation around disinformation become so politicized and it’s I don’t I don’t care about that. I just think that people, individuals, and I think corporations need to make decisions based upon accurate information. How do we make sure that that happens? And if it’s not, that’s to me like malware, it’s doing something bad zoom done bad on purpose. And it’s a little bit more insidious because it’s hidden as being good. Malware is, you know, I go look for a signature i You know, chances are not supposed to be there and I get rid of it. When it’s piece of malware or Trojan or however you you want to go after it. So that would be that’s probably, I think one of the big issues we’re all facing today and how you go after that. How do you go after that? From a technology standpoint? How do you go after from an adoption standpoint, I think is going to be a major, major concern. I think there’s just new innovation around the new workforce. And how do you secure remote workers? How do you secure workers who don’t just live by Hey, come into my office, here’s your computer, these are the apps you you access. And that’s it, you go look at any average workers desktop, they’re using 40 Different outside services, with you know, and maybe they’re using their, their, their Google Suite, or their, their, their mic or their Microsoft products as well, but not mainly. And so, you know, and so that and, you know, the the security of a system is inversely proportional to number of networks, number of nodes number applications to that system. So it just expands exponentially where how insecure a system can get. And that’s kind of a new workstyle. So how do you, how are you going to deal with that, and what, what, what technology become and put in place to solve some of those issues. So I rattle off a few of the things that do keep me up at night, and, you know, keep us busy at ballistic.

Hondo Geurts 36:27
Some great ones in there, the one I didn’t hear. So I think of an enduring competitive advantage. But democracy is its ability to attract partners, allies and whatnot. In working with the types of folks who work on the government, they really struggle I think, even more so than others about a integrate allies and partners into cybersecurity or in a homeland defense or intelligence. What’s your take on how we can work better with our allies and partners leverage if, if I’m using the network analogy, bring more of those nodes into the network? Whether it’s, you know, the talent or the capacities? And how does that apply in the kinds of fields you’ve spent your, your time in?

Ted Schlein 37:11
You let’s let’s zoom up on that for a second. Because I think it hits one of the seminal issues that the United States faces today, which is the US has been used to being the sole big dog in the world, and having its way in all sorts of different ways. And now it has a competitor. And I think as a country, we’ve had a lot of trouble adjusting to having a competitor on par with us. And obviously, I’m talking about China, in this case, because a lot of what I get called into now is how to make us more competitive with China and what to do about that and everything. And you have a competitor that also doesn’t play by the same rules that we play by, and that makes everyone freak out and uncomfortable, not know what to do. And, you know, how do you how do you compete against a competitor that doesn’t do the same things that we do and competes the same way that we compete and everything, and you can, you know, you can get all wound up about it, and you can complain about it? And, and you know, do tariffs about it? And you know, do kind of whatever you want. But the end of that that’s the way it is. And so we’re off that I think I think that Western democracies and our dark selves included are all struggling with how do we compete in today’s world, because at the end of the day, economic security is national security. And so a lot of what I spend my time on is around economic security as it pertains to national security and and therefore What’s the role innovation plays in helping economic security because it ends up translating into national security issues. And so I think that’s a lot of what kind of the rewiring our of our economy is going to be about. And we’re I really applaud things like the chips act as a just as an as an example. And I hope we hope we see this for decades to come. In the sense of people who call that industrial policy, people also get scared of calling things industrial policy. So I’ve changed it. I just think the US needs a business plan. And it’s because I’m a venture capitalist. I can talk about business plans and at least know somewhat what I’m talking about. And I I think ultimately the US government needs a business plan. It needs to know what industries it feels is strategically important for it to dominate. I mean that dominate and then line up the resources of the country and our allies. This to get your question Hondo to compete and win in those areas. And you can’t be all things to all people. You can’t When everything, but I think it’s this idea of partnership with an agenda. And, you know, I’ve seen us go too far to being, you know, isolationism won’t get you there, it doesn’t get you, you know, the partnerships with the folks you want the partnerships with. And complete and utter globalization doesn’t get you there either. You know, I remember reading The World is Flat from Tom Friedman being fascinated by it, but then you can easily start to see how everyone’s economies start to get interconnected, and how there’s good in that we can, you can point to how it’s gonna be bad. But we’ve seen, we’ve seen examples of that. And so what are we going to do, which of these segments do we want to own, because it’s strategically important for us to make sure that some portion of it is not in some authoritarian regimes hands, to ensure our economic security. And I think ultimately, that is what the country is kind of struggling to transition to, it’ll take us because we’re a bureaucratic democracy is going to take us decades to get there versus, you know, laying out a five year plan where it just happens, I get that, I get that. But that’s, that’s what I see happening. And I think that’ll bode very well, by the way for my industry, to tie it back. I mean, I think innovation is ultimately going to be the big driver of where this growth comes from. But we can bring in so many other partners as part of that, and line it all up, you know, think about if we decided we’re going to put tons of this manufacturing of some area of industry that we care about down in Central America or Mexico and, and train in build that that area up, it might help solve some of our immigration issues that the country deals with every so it, it sort of lines up with strategic initiatives, but you need a long term vision, and not, you know, to year to year segments of time to pull some of these things off. But I think innovation will be one of the great ways to try and enable all that.

Lauren Bedula 42:16
Yeah, one final question. 10 There’s so many great ideas there. But to hit on something you said earlier, when you’re evaluating companies for investment, the first thing you said was you’re looking at the people. And so talent is going to be at the end of the day, that driver in terms of development of these technologies, implementation and use of these technologies, and making this happen? How do you think about talent, and what we can be doing better to attract talent to the national security realm?

Ted Schlein 42:44
Well, I, you know, it starts in education. And I’ve, I’ve always believed this, you know, we ought to look at the switch of the the engineering schools in this country, higher education at the engineering schools, and then hopefully down until high school level as well, and have a mandate that we, you know, we would like to see, you know, I always put my cyber hat on. So that’s kind of where I skew it. But, you know, we want to see 200,000 Cyber graduates a year, we want to see 400,000 Cyber graduates a year. And by the way, let’s, we’ll give them if they do this, in graduate this degree, I think this would be a great use of grant money. Not loans, not debt, grant money, to, to, to for them, and they got to come serve, haven’t come served for four years inside of the cysa or NSA or CIA or DOD or wherever we need the US Cyber Command wherever we need the talent. And make that a mandate, because eventually they’ll be out in the private sector. And so we bring them in train them, put them out in the private sector, you now have people have served both in government and the private sector, which I think is better to get it this this public private partnership. So we talked about earlier and understanding of the two, but I would make it a major initiative, that this is what we’re going to do. And I’ve seen little pockets of this. So that it it’s good. So that’s, that’s one part of the question. The other part is just been a political hot potato for a long time, but immigration in an h1 B thesis, you know, think about well over half the company started in, in the United States, the have all been done by immigrants. And they employ, you know, millions of Americans in these in these companies, these immigrants become Americans and, and they’re great for the economy. So why you would not staple a green card on to every PhD candidate that comes through here. diploma doesn’t make any sense to me. Keep them here, man. You know, these people come here to to get their education get trained in. And I would do, obviously specifically in the areas that line up with the business plan. So if you’re gonna come here and get educated and get your PhD in robotics and we want to dominate robotics, we’re going to you, you’re a citizen, you’re American citizen. You know, what do you what else can we do for you? And you can be pretty systematic about it. But you just got to decide that that’s what you want to do. And, you know, it’s it’s easier for me to say it on a podcast for them for anyone to ever execute it.

Lauren Bedula 45:38
Well, Ted, on behalf of Ben’s, and I know, we’re all proud members. And I think we can use Ben’s as a vehicle to encourage more collaboration like yours with the Silicon Valley stakeholders and national security community. Thank you so much for taking the time. I have some takeaways just this idea of how important it is for two way work and effort between both the private sector and the US government is important. The future of a digital div. I’m definitely going to use that term going forward. But thank you so much. We’re gonna take some of these ideas and continue to push these through Ben’s thanks for your time, Ted.

Ted Schlein 46:12
Thank you guys for having me on. Really appreciate it.

Outro 46:15
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