United States CTO, Michael Kratsios, discusses current technology initiatives for the US government and how the current administration is approaching blockchain technologies.

Bellevue, WA - October 25, 2019 light editing of live discussion

ArcBlock attended the COSM Technology Summit in Bellevue, WA, from October 23 to October 25. This year, the COSM event is hosting a world-class group of thought leaders, technology companies, and organizations focused on AI, Blockchain, Crypto, and Life After Google. During the summit, we had an opportunity to listen to Michael Kratsios, the current CTO of the United States discussing the administrations approach to technology including blockchain, cryptocurrency and more.

We're honored to have you here, and a few of you and, your role in the administration do these issues, and there's a lot of stress on what we do in the United States,and there are some clients that the Trump administration is not improving the environment within the United States. I think that is a real misconception. And what are you trying to do in the United States?

Speaker 2: Oh yeah, that's a fantastic question. I do. To me, I think if it probably makes a little bit of sense to provide some sort of context of the group about how genuine we approached for our having approaching technology also in the past two and a half years. And I think I'll give a couple of minutes on that and I think that will really inform sort of the second thing you were asking. So something that many of you probably are aware of when the person was campaigning in 2016 in there wasn't a lot of discussion by him on tech policy broad. There was a lot of discussion on things like trade, healthcare, economy, jobs, American workers, but specifically on tech; there really wasn't. So when I joined the transition effort the week after the election-

Speaker 1: Week two, right?

Speaker 2: I think it was one of the most interesting and amazing opportunities just to, I mean, intellectual destruct thinking about how do you generate a national strategy around technology where we're driving towards? And to us, I think we had some very high-level guiding principles. We knew the president didn't believe in the American exceptionalism that the power of the American worker to innovate and in tuned to out-innovate all our competitors. If there are strong thoughts, you continue to do on trade-related issues and any idea that we need three fairly typical training tradies situation. So sort of taking those concepts and distilling them down to a two tech agenda for the country was a huge opportunity and one that I got very, very excited about.

So later on with that was sort of putting my old VC hat on, one thing we had seen over kind of the last few years leading up to the new election was, we were spending a lot more time thinking about sort of regulatory issues associated with some of our portfolio companies and potential investments. So we had done things like Space X, Airbnb, Stripe, all of those. Just think about how regularly those particular industries are. It's actually extraordinarily challenging and the high regulatory burden to have a rocket ship off the roof and going into space. So the idea that there hadn't been any private company to do that before, Space X isn't necessarily surprising. And for me, I think it was another opportunity you could sort. You don't get on the other side of the fence and say, look, how can we craft regulations in order to drive innovation domains that are potentially stifled by refining this very important area.

So taking all those factors together, we ended up... I had the opportunity to join the administration and very enthusiastically joined at the inauguration, and for the first three months were about generating what is it wasn't our high-level tech policy as called. And we settled on a 30,000-foot goal, which is to ensure American leadership in emerging technologies. We fundamentally believe that the United States must be enrolled in next-generation technologies. We the world and things like artificial intelligence, Quantum computing, advanced manufacturing, 5G, whatever it may be. These are the technologies that are going to drive economic growth for years to come. They're the ones that are going to be employing the next generation of Americans. And if we're not leading the world, then we're not going to be able to reap the benefits as a country that other nations will.

So with that high-level goal, we then pursued sort of this 18 months sort of effort to generate and begin launching national strategies on each of their funds. And they've taken various forms. We've done executive orders, and that's how we launched the national strategy on AI called the American AI initiative, which we can get into. Another Avenue we've taken is through legislation. So we signed the bipartisan national quantum computing initiative act, and this was an effort that Congress came together with what I asked. I said, let's find a way to drive leadership. And many of you may know in this room we had a great breakthrough that was announced by a private company earlier this week about cheating quantum supremacy.

Speaker 1: Google?

Speaker 2: Yeah. And we can talk a little bit about that later on because I think that's a fantastic example of the type of innovation that we're attempting to drive here in the US and improve the model. That sort of underpins all of our strategies was kind of that outgroup in a squeak. So, that's what we've been doing. And I think for each of those strategies there are general efforts on research, on workforce and on regulatory areas and captain jumping in half.

Speaker 1: Well, we had about a 19% drop in the number of IPO. So our stock market is shrunk 50% and the number of public companies, our numbers startups is not of flourishing.

And while here we are calming as a rival, MSU has three times or more IPO's the hallway startups and all this amazing entrepreneurial energy. And you're talking to me about these sort of choosing these areas where we have to dominate, and I think these are kind of top-down concepts. They're fashions that are typical of governmental policy. The idea of quantum computing is anywhere near relevant now, but all these various areas are now global. And Bill Joy made the point that the smartest people never work at all as the smartest people never worked for you. Companies succeed to the extent that they attack the energies of all smart people who necessarily don't work for you.

I think there's a debate in the administration about immigration, of it was people are not in MIT and always one of the best things we going to do to raise the smart people from the world just to get citizenship to people to get a Ph.D. is that manager feels that in the United States and want to join us. Tell him about how much progress are you making and that domain.

Speaker 2: Everything kind of break it down and just sort of like, I guess two answers. I think on the survey, on your first point. I think that the way we view the world is the innovation ecosystem in the United States is one that really I think sort rests on three legs. It's one part academia, private sector and federal governments all play a very important and unique role in driving innovation and discovery and job creation in the United States and for us I think you don't learn where the course of history that kind of that the role of the federal government in that puzzle oscillated and ground depending on what administration is in place. And you think of prior administrations making investments in things like Solyndra or something that people thought maybe would be a good idea for ministration to do. The attack we have taken over the last few years is figuring out what role the federal government has, which the private sector in which academia is not filling or are not necessarily incentivized pride. And to us, that's early stage creating repetitive basic research and development.

That is something I think your point about quantum spot on. That's not going to be commercialized today. I mean, we have, IBM for example, that has a Quantum computer that says what's on the cloud that customers can do. But the reality is no one is using one computer. It's not something that's going to be readily commercialized for many years. So the question is if the private sector isn't incentivized to try that research, who is? And that's where we play an important role as federal agents and seeing the early-stage research dollars today and things like quantum through our agencies like national science foundation, [inaudible 00:10:20] signs that are national labs, those are places that are going to huge dividends down the road. The second piece, it's not only early-stage competitive, pre-competitive R and D dollars, it's also actual physical assets, which the federal government has is going to fund, which the rest of the ecosystem does not.

So the most obvious example is our high-performance computing infrastructure at our national labs. We have four of the top 10 faster than theaters in the world that are run by the federal government at our national labs across the country. Those are resources, which even the wealthiest companies in the world are not investing billions of dollars in building the next one. We're doing it as a federal government, as a user facility for American entrepreneurs and American companies to come to test their whatever they need to do about our facilities. So for us, I think yes, we should be thinking very critically about how we can drive more innovation. But NRC is what can we provide that ecosystem that we can. And that builds into the talent question, which is your part too. So to answer the talent question, I think before we jumped in integration, I think that the first thing to think about is again, what does the federal government have, which to drive further growth in talent in the US, which is very important.

We have the ability and continued to spend lots and lots of taxpayer funded dollars on funding graduate students around the country. So in our executive order that created the American AI initiative that the president or smartly included a requirement for agencies to prioritize grants and fellowships towards AI-related graduate programs. So the question is there is we have certain toggles where we can sort of push the envelope on talent in areas, which are critical for our national theory interests of our country. Now on the immigration question, I could not agree more. And the White House has been very clear that a transition to a merit-based immigration system is something that will benefit our country. And it's something that we want. The president consistently talks about the need to merge the best and brightest to come to the US. And as probably everyone in this room knows, I think it's very challenging for Washington to be able to drive the American system without addressing all the other ten different things that everyone else wants.

Given the fact that would have to be driven through legislation, we've tried as best we can to find regulatory tweaks that we've made controls in ministration to increase the number of talented foreigners coming into the US, one of the best examples is examples as a change we made to the HIV laundry earlier this year. Let's say it's a two-part lottery where folks who have sort of masters or advanced degrees are pooled with people that don't have them in a lottery's done, and then they select someone and do another lottery. Long story short, we flipped the lotteries, and what you've seen is roughly about 15% to 20% uptick in the number of advanced degree holders who get each one needs. So if there are places, if we can, we're trying to find it. And our ultimate goal is to drive a system where we actually do get the best and brightest from around the country and around the world.

Speaker 1: So any questions for the chief technology officer of the United States?

Speaker 2: We work in the same building together.

Speaker 4: Hello again. I am a blockchain guy, and many blockchain companies leaving the US and being established in countries like Switzerland. For us, it seems the Trump administration is sending signals that seem hostile and have sent shivers through many of us. I noticed that blockchain is notably absent from your list of technologies you care about?

Speaker 2: I think the first thing is to differentiate between blockchain and cryptocurrency. The administration has and will sort of continue in price blockchains and technology, which can have sort of dramatic impacts on the way that the federal government operates, that multiple companies around the world are able to manage and oversee their supply chain. That's something that we have encouraged and continue to drive. Now you're cryptocurrency question, I think it is one that we can continue to think a lot more closely about.

We believe that we need a safe financial environment, which is able to ensure that criminals and people who want to use money transfers to engage and illicit activities are in a way not allowed to do so. I think it is important to get help from the community to bring education to those folks, and I'll help them understand that in some ways, this meeting could potentially even be better at helping them solve some of those problems. But I think we would want to encourage dialogue and folks who are just not familiar with technology and understand how we can potentially make the steps there.

Speaker 1: Recently, the SEC pretty much closed down Telegram's next-generation blockchain, and it's discouraging to the industry overall. From our perspective, it appears that they tried to do everything right, and they were rejected. How do we solve this going forward?

Speaker 2: Oh, we should all as a community kind of brainstorm together about how we can sort of break these ideas in a way that Washington understands. I think that the reception that Facebook received upon Libra's launch, I think, is one that surprised people in the Valley but was not the least bit surprising to people in Washington. And trying to sort of understand the disconnect is challenging. When Mark Zuckerburg comes in testifies to the Hill even as recently as this week, we are talking about wanting to work with regulators. That's a fantastic thing to say. But the problem is something that works in the Valley doesn't always work in Washington without some work. So I think understanding that the system is a little bit clumped to it could sort of help using a monitor.

Speaker 5: What are you doing to get young, tech-minded people interested in working for the US government?

Speaker 2: Many of today's engineers want to go and optimize search engines, and they want to optimize Ad sales on social networks, and I think that's very different than maybe it was 20 years ago, and we've talked to the semiconductor industry. I mean, this is a bedrock vertical industry for our country. It's really hard, and most people are want to work at Google or Facebook as they are fantastic companies. I think it's sort of a two-pronged approach. One, you have to find interesting pathways to be able to allow people to easily transition in and out of the private sector and government. We bring universities, spend the next 30 years of their life working for local level tribal government things. It is a bit of a pipe dream, but you can establish programs that allow them to hop in and out with the as you can. For example, one that actually the last administration launched, the Presidential Innovation Fellows Program.

And this is one where we take roughly about 40 people from across the United States who are in different stages of their careers. We have the former CEO of the Symantec, for example, join and they're able to do a sort of tour of duty in the federal government, work at an agency and drive change in a way that sort of most general bureaucrats are not thought about. And I think we need to continue that,and create options for those people in addition to finding interesting pathways and hiring options for the agencies to bring this talent in. Without that, I think we're going to continue to lag behind.

Speaker 1: What's your future? How long are you going to stay and cover this?

Speaker 2: Another five years, at least.