Transcripts For CSPAN Fortune Brainstorm Tech 2019 20240714

The fbi official in charge of Cyber Security joined tech ceos, entrepreneurs and officials to discuss Technology Policy and on a Forum Innovation at a Fortune Magazine summit in aspen, colorado. Thank you. Moving on to our opening interview. Sometimes plan a does not work out. You have to be ready to improvise. That is one of the themes in our next story and conversation. I want to welcome the cofounder and ceo of post mates, Delivery Service that is part of the race to remake the way beast shop and get our stuff. He has raised a quarter billion dollars. You know, average in cilic and ballet. Sharing how his company is facing the challenges and also introducing us to a new friends. Please welcome sebastian lehman. Ok, the biss model is Pretty Simple. There are few other Delivery Companies out there that of gotten pretty big as well. But you guys have focused on innovating in certain areas can you explain how you approach innovation. Bastion good morning first of all. Thank you for having me. Excited to be here. We like to complete not dollar per dollar but with innovation as you mentioned. And i think in many cases it is the smarter way to compete. Money is one angle and an important one. But if youre not the most well capitalized player in a space that youre operating in, you have to find alternatives to compete. Do as a company at post mates. Have ithe innovations we think we brought here today. There is uphat piece of the networks we are building that can be served with Autonomous Vehicles. And ours is called serve. It drives itself, hopefully not off the stage and understands there is an object here, for example. We call that socially aware navigation. Sonavigates on the sidewalk, it needs to do things different lathe than on the street. It is all built inhouse. The team it needs to do things differently than on the street. It is all built inhouse. Excuse me, im a little distracted. So my. It is the first time she is on the stage. Sheet . All a robots rc. She. s all a robots are fromt you something here an ice bakery, apparently it is a staple in aspen. Paradise bakery. [laughter] the baked goods are fine. This is that. It is our little ipod. Ok so lets sit down while i im going task ask his questions. Why bring it inhouse. There are a few companies doing this. Already. Youre not offended if i do not . Why bring itou inhouse if that was not your competency two years earlier. Bastion we looked at the landscape to figure out if there were companies we can acquire to help us build serve. It turns out the way it sometimes is in Silicon Valley that the valuations of his companys works truly high. He said, you know what, we think we can do it inhouse, we do faster. Because the only thing that we need to do inhouse is to be our own customer. We do millions of delivery every month played we have all the data that every Company Needs in order to build the Autonomous Vehicles to perfection. We decided to ring it inhouse. Roadmap. S the when is it launching, house luncheon, where is it launching, how difficult is it to roll it out into cities. Bastion the beautiful thing about service that because it operates on the sidewalk we do not have to wait until it has achieved, until we have permission to to play with autonomy. This means we can use it in the mode we call semiautonomous. We have an operator that can look at it and intervene in situations where it cannot figure out yet itself what to do. Is the operator sitting in some war room . Bastion remote in San Francisco. We work with veterans organizations across the country help them have better help veterans find jobs when theyre back from serving this country. I think that is a bit of a part of it. But obviously, selfishly it helps us deploy it serve, and we are testing it now and l. A. Might get more questions on serve later and innovation. But lets get serious for minute, are you going public . Bastion ok. I think you know the official line is that i cannot comment on this in any way. Towould love to taste take postmates public. I have said it before. I think it is one of the Great American Consumer Brands we have in the millennial customer group. It is well loved. And our plan is to take it public. Reports that the you are in talks with several other players, Companies Like uber for example. Where do those rumors come from . Are they, can you substantiate them . Bastion well if i would know where they are coming from i would have addressed that already. Look, it is a small industry. Theres a finite amount of players. Postmates has to mend distraction this year. We are growing twice as fast as he reads, as grub hub. I think people noticed that. If you take the necessary steps to prepare your company to go public you will get inbound. And we do with all inbound request the same thing we have done always appeared we look at it and make the smart decision. That is what we do. Theres quite a bit of overlap with Customers Using multiple brands in the space. Cases at someme locations at least, maybe not in los angeles, but at locations does the lacko brand loyalty naturally lead other factors the lack of brand loyalty does that naturally lead to other factors in the space. See the leastl overlap is between postmates and any of the other lap. Other brands. We are very focused on the melinda customer. 60 of our customers are female. We are focused on the millennial customer. 60 of our customers are female. We have a lot of exclusive merchants. We have carved out a Customer Base that we like and that is very unique. What is the reason for the popularity in los angeles . You seem to have large market share their specific. Bastion in a laypeople think postmates is cool. It is difficult to understand because in Silicon Valley in los angeles people think postmates is cool. In Silicon Valley, nothing wiles us. You almost have this, for players with the old market share. We were the first in los angeles. A superpower. People that have very limited time, musicians, entertainers discovered the app. Now five or six years ago. They thought adjustment is things. They started talking about it. Creative people started writing it in movie skips scripts, and tv series and movies. That helps. Im afraid to say that it was not me that medical. But that made it cool. But it really has an iconic status in l. A. In l. A. If you want to have something delivered, you will say to postmates it regardless of what service you use. You have become a verb. I want to go to you all for questions, please think of some. Speaking of california, how many of you are familiar with the bill that is coming up, ab5. This would potentially reclassify independent contractors as employees. Have any contractors you have currently . Bastion around 400,000. What does that do for your Business Model . If that passes . Bastion i think the right way to look at this is to understand what it does to the people that do the deliveries on the postmates platform. Forhave, and this is true most of the platforms in the delivery space, you have almost 90 of all the postmates we have on the platform they work on the platform less than five hours a week. It truly is some mental income. It is 400 it is truly supplemental income. 400, 500, 600 a month. It is the same amount of money that most americans cannot spare when it comes to medical offenses per year. We believe postmates fills a gap when it comes to income. An important gap. This is why the august lee believe that leaving these people as independent contractors, as matter fact not leaving them but make sure that in any bill it passes that we solidify their status as an infinite contractors is the right thing to do. And you think you have a good chance of making the case that they remain in petty contractors . Bastion postmates works with labor unions, the governors office. We have the fleet Advisory Board now for a much two years. It helps us do the fleet. And i think we have put forward a proposal that makes it very clear that we care deeply about the workers on the platform. Where will billing to willing to put a benefit fund, chat more worker voices on the platform. So yes, i think we are doing the right thing. Questions from the audience. People need more coffee. If you have a question, raise her hand. Lets talk about innovation. Raise your hand. Seems like its a Pretty Simple Value Proposition here. What other ways are you looking at not only offering more to your customers, but also optimizing the way you operate . Bastion i will give you a few examples. When the comp he was two years old, we unveiled our api, delivery as a service. Thus first in a space. The space. T in it allows us to act more like fedex. If you are one of our our customers if youre apple or walmart or 7eleven, you can have access to the postmates fleet and do things that were priestley nolan are possible. Fastan deliver your goods in 3000 cities in the United States. It is a great product. It grows actually fast. Almost to hunter percent year over year growth on the api side. 200 yearoveryear on the api side. Over third of our orders come from subscribers today. Pay a monthly or annual fee and you get free deliveries in return. We launched Postmates Party a few month ago. It has done a lot more. It is the same age as my daughter, but it is done a lot more already. Theres a lot going on her brain. He does cannot see that. Bastion postmates allows you to free delivery or Somebody Just placed an order with your location. When you open the app you can see great places you can tag onto. So you trade a few minutes of your time for free delivery. And in your and it helps to increase efficiency. Bastion we do the thing selfishly, but many, many times they have a great benefit to the customer as well. Efficient ando be batch and bundle deliveries. We launched it to month ago and it is now 15 of total volume. Anyone here use postmates . Arty aixa the vehicle you said you are testing in los angeles, what if people randomly come upon it, how they react. It . People stop and look at a and do she have programmed responses and countering people . Is a great question. We have a team focused on the interactions part. Yup a few interactions on serve. You have an illumination around the ring. The display. People are very curious. They want to interact with it. To the extent that we will have a more sophisticated program as part of the launch that allows serve to get back. We are thinking about use cases where you could ask sir for help. Or serve could ask you for help. Theres a delivery robot in a hotel, i do not know which hotel, that delivery robot delivers food. Rims service. The one thing it cannot do is press the button to move the elevator to a floor. So it will ask you to press the button for the robot. It is a great interaction because it actually shows how we can come plenty to other. We started how we can complement each other. What does it do if nobody is in the elevator . Bastion it waits around. Serve does not do elevators yet. We started testing it in a community for elderly people. We wanted to do that in a gated community because we thought if we can figure out a way that it not justeatening to the millenials who are used to technology around them, but to a group of our society that is a little bit less used to it, we will achieve great learning. It was fascinating to see the interactions there. We wanted to make it as easy to use and interact with as possible. Question. That she collected data as she is going around because she has two pretty fearsome cameras. How are you approaching privacy of what she sees. Does postmates operate outside the u. S. And if not you want to and if so where . Bastion we do in mexico, where live index custody. It is a great market for a spring we may expand further. It is a great market for us. We may expand further. The data we collect, we did the same as everyone else, we will just sell it to the highest better. [laughter] withink it is unique facial recognition so no one will be safe once these are fully deployed. [laughter] your person here is just as like freaking out. That i was born in germany maybe that is just part of my evil plan. [laughter] you did make a joke. Backstage about how one point he could shoot lasers. At some point it could shoot lasers. Bastion there is always a little truth in everything. I wonder if you could talk a little bit about, it is not the space inside is not huge. How efficient is it and cost efficient in terms of replacing humans at some point . Bastion it is important to really understand when it comes to innovation that whatever you see in any moment in time does not is not how it needs to be forever. First imac was a slow computer but it looks great and it captivated people. It had a handle on it say thought you could carry around with you which of course nobody does of the desktop computer. We wanted to take the same approach. To create some thing nonthreatening that has a medium formfactor about the size of a kid when it is around 10 years old. That is in our peripheral vision when we walk on the street, that is where we walk and look and communicate. This is the first version. Fewnly needs to work for a number of deliveries on the platform for us to make sense to operate it. It does not have to do one had a percent of all deliveries. In fact we do not think it should. But it can do very short deliveries. Aixa do deliveries that are not time sensitive. It could deliver prescriptions from walgreens. There a lot of use cases where we believe the formfactor we have today is very sufficient. And to be honest most deliveries we do on the postmates platform do not take up more space than what is inside of serve. The question about independent contractors versus employees. I know at some point this is a question for uber and left a and,s and others. The same answer as with innovation or the idea that we will replace everything is as true as computers have replaced all of us up to this point. It will help, it will augment, it will make things possible that have not been possible before. I think it is also important to see the other side. Can you imagine we have deployed a few thousand of these. They are here to help us fulfill the dream of having an infrastructure that can deliver goods locally at zero cost or close to zero cost. With that allows is it allows local businesses to distribute their goods furniture miller low cost. I believe that is important. It helps to deliver their goods for an extremely low cost. It helps local businesses thrive. It helps hundreds of thousands of retailers in the United States compete with amazon because they will have a better and faster interceptor than amazon has. That is a Positive Side to things to look at. Talked about how you dreamed of coming to cilic in valley two senate call come to Silicon Valley. Has it become harder for you or others to come to Silicon Valley and scale in cilic and valley or San Francisco or elsewhere in the area echo bastion in my view there was a time when you could be a founder and entrepreneur and you had a year to tinker around. In a way that was enjoyable. Was unimportant to the bigger companies. It gave you time to figure things out. The huge challenge now is whatever you do, if it has the chance of success will get copied and it will get attacked from all sides immediately. It is a lot harder. Maybe that just means the ideas we need to work on or thing about have to be more fundamental than just how can we can get you a pizza and 25 minutes. Forward to seeing what news unfolds with you in the next few months. Thank you so much. Bastion thank you. I will see you out there. Baked goods for anybody. Givee we move on i want to a huge thanks to our premier partners, share well. Herman miller. Intel. Kpmg. Oracle. Nd Rbc Capital Markets i also want to thank our pack, ida ireland, new york stock exchange, and trip auctions. Thank you. Ok last september our next guest was appointed executive assistant director of the fbis criminal cyber and services branch. She is the fifth highest ranking official at the fbi and the top ranking agenda woman on the agenda. She oversees all fbi criminal and cyber investigations worldwide and works to protect rigell digital infra structure, most of it controlled and run by private companies. Please welcome amy hess with fortunes andrew ness got. Andrew good morning. Shelley . Re everyone, shall we. Recent poll say americans are more afraid of cyber activity then new clear weapons and terrorism. Should we be afraid . Amy short answer, yes. But i do not see those things as we usually exclusive. Cyber mean by that is involves all of those things all of those traditional threats we have seen over time, terrorism, espionage, intellectual property theft, crime, now takes on a whole new path in the sense of cyber capabilities. The x financial increase in technology we have seen has enabled those things to be really a lot scarier. Yes. Ew so before i asked you about the specifics, tell me about your role and what encompasses. We breakthe fbi ourselves down into separate divisions. One of the divisions i oversee is specifically focused on criminal investigations. Everything from public corruption and whitecollar Election Fraud all of those things, Violent Crime as well as financial crime. Another division i oversee is our cyber division. Those are the folks who are really looking at the intrusions. They what is out there as far as what the botnets or in skimming or business email compromise. And how it manifests itself. Im also responsible for all of our Global Operations across the planet. Seo plenty of free time andrew so you have plenty of free time. Amy right. We are about china and concerned about Global Competitiveness for United States p what are you saying come out of china and what we worry about. Amy china clearly their goal is to become the worlds dominant superpower. To do that, they are willing to steal information, clearly. To steal electoral property. To steal pii. To steal military secrets, government secrets, academic secrets, r d. In the process of doing all those things, they also are investing in companies. Encompassing the u. S. Theyre part of the supply chain. Investing in companies in the u. S. All of those create a risk we see where they can be get information that American Companies and American Ingenuity has developed. It has taken years to get it for free. They get it quickly. It positions them to achieve their goals. Andrew so what roles you play in pushing back against that . Amy for one thing the fbi core nates with a lot of other agencies. That includes coordinates with dhs in looking at how we defend our networks. Also we work with the department how we may be able to see what is happening outside the United States and how we may be able to take offensive actions potentially. The fbis main role is really accountable. Trying to figure out the attribution p who is response before this thing, and how do we hold them accountable. So whether that is through indictments or criminal charges or weathers through sanctions, that is our role to try to make that happen, figure out who did it, the federal bureau of investigation. Figure out who did it and hold accountable. To steal intellectual property. Earlier. Different thania china . Amy it is. Theyre still interested in stealing government secrets, military secrets, r and d. But what you have seen publicly over the past several years is several years is this malign foreign influence. Influence campaign. Being able to use and take advantage of our social media. Our dependence really i would call it on social media. It is really i hope makes people question whether or not what they are seeing or hearing or reading israel. Because we have seen or reading is real. We are seeing instance after instance where they are using those platforms to try to divide us. Andrew lets talk about a specific incident that happened and hit the headlines recently. The florida voter registration. Saw doj start charged russian nationals at the thee you who worked at gru a while ago with intrusions, stilling information. We saw that in the runup to the president ial election in 2016. We realized we have to bring all the resources we have in the fbi together to identify that type of activity when that is happening. And other agencies needed to do the same. We formed a Foreign Influence Task force comprised of our cyber division, our criminal best to get of division, counterintelligence, even counterterrorism. And looking at that problem we have never stopped after those are just right and if i where we see that activity happening. We did that into the midterm elections in 2018. And we are continuing to look for that type of activity into the 2020 campaign. And the elections. When we see, and we saw, standing activity or scanning activity. We saw attempts to try to infiltrate these, obviously these election networks that were being used. We have no evidence that there was any indication of where changed or anything like that. But there were certainly instances where trying to gain access information that surrounds the electoral process should be concerning to us. The fbi received a lot of criticism for that incident and it was really round transparency. And it was part and parcel with cybersecurity. The criticism with the fbi was not transparent enough and was not sharing enough information with a host of in folks involved in the butter process. How do you feel about that because transparency is an asset and a risk in this line of work. Amy it gets us into a good whenssion i think as to companies see something come activity that looks off. That they know is maybe not something, but maybe is we are highly encouraging them to contact us. The problem is that first off, of course we recognize the competitive advantage the companys have or do not have when they acknowledge they may have been attacked. Right . That is number one. That outreach to the government. The problem is if you do not do that, youre potentially not only enabling us to come in and help you but you are also potentially not being able to share that information with other people, or even to prevent the next one from happening to yourself. I will set that in certain instances we are talking about here, when the Victim Company does contact us, we take that very seriously. Obligation if you will to tell the world if a Victim Company says hey, i really do not want to the world to know about this. I want to work through it just make sure i understand what we have. Then lets talk about that. Bring us in we can look at it together. And see if there is actually some thing to it. Andrew yes. And i will come back to that. I want to ask about the current administration. Trump pushed through a National Cyber strategy, right . He put it out there and signed a bill to train local Law Enforcement in kind of cybersecurity tactics i guess is the best broadest way to put it. Do you feel like we are doing enough from a u. S. Governmental standpoint, that wed executive or legislative branch however you like to buy down to break it down. Amy no. I think we could oyster better at this. This is the future i think we could always do better at this. This is the future. If you thing about technology today. This is a wholesale change in the way we function. As a government. As a people. As a society. Now. The pearlescent ration of Technology Means we need people who understand now the proliferation of Technology Means we need people who understand it and can get into the zeros and ones. We also need people who understand policy. You and know how to under conduct an investigation. To bring those together to come meant each other. I think that is where we tend to fall short is figuring out how those things can work in symphony. Thatring in and encourage type of collaboration and coronation. Where doing a lot in that area. But we can do more. Andrew we collaboration we need more people it sound like. We need more money, do we need more laws, what else we need amy certainly i would like to Say Technology is expensive. The people who understand the courseogy, we are of extreme demand across the board. The government will never be able to compete with the private sector when it comes to salary. We hope he can compete when it comes to the mission. Youre never going to be able to do some of the things you can do in the government that you would do in the private sector. And we need each other. To share information. I think personally if i had the ideal space here i would like to see an ability to move back and forth between private sector and government more easily. I think that would i think further develop all of our understanding and are capable across the board. Andrew yes, so lets bring this down and watch we we be afraid of quite literally. Numberrst i think the one thing is, we continue to see in the fbi, the lowest common denominator of where the attacks come from. That would be the human. Andrew thats our fault. Amy its the user, user error. But we to place he is you do not update your systems. We do not update. We do not get the passes. Because it is inconvenient. It comes at an inconvenient time and we put it off. The clicking, the perpetual clicking of things that you do not know where they lead to. Andrew stop using computers. Amy it is amazing to me. We have the Internet Crime complaint center. We call it ic three. It is taken into under 50,000 complaints. The vast majority of those are nondelivery. T, also extortion. And data breaches. When we ask and peeled away, how did this happen, inevitably, much of the time it comes down to well, i thought this link was from a person i trusted. Or from someone that i thought was a legit minute a legitimate sender. That is what led us to where we are today. Andrew what share of your work would you say is these very large, youre concerned about nationstates and really highlevel stuff, versus this kind of pedestrian stuff we hear from our local i. T. Guy. Amy thats a great question and we are concerned about both. And it comes to nationstates, you have some very civic gay people out there, spaghetti governments. We talked about china sophisticated people and civets its getting governments. We talked about china and we have formally charged them, actual agents of their government with doing things. The ap t10 indictments. Back last december. Andrew this is the chinese hacker incident from last year. Amy yes and the managed service providers. We saw an addition to the gru, the russians with the election piece you also saw the weredoping case where they able to hack into the asian agents of the russian government hacking into the antidoping organizations. We see this from iran and north korea, but others. We need to be concerned about nationstates because of the capabilities they may bring to bear. And of course of the other end of the spectrum the criminals. The people who are just doing it to line their profits are getting pretty good at this. Moneyou look at how much goes through the really the criminal ecosystem i will call it, is pretty phenomenal. We look at the statistics that we try to do like basically, recover assets in the financial fraud kill chain. We call it the recovery asset team. What they saw is in just of the course of the little over a year come about a year and maybe three or four months, there were millionrecover 380 dollars and that represent about 78 of what was called in. That probably peoples life savings. The criminals are getting really good at figuring out how to con you out of your money. Also how to deliver the malware. It is whole ecosystem. One person does malware and one person does a little a delivery system, one does foolproof hosting, another windows and they all Work Together in concert to be able to attack you and take you, to take what belongs to you. Andrew i went to sleep so well tonight. [laughter] lets go to the body is for questions. Hello joel miles from accuweather. What is your greatest fear of is next 10 years, even if it a low percentage possibility. Myers low percent is part ability. What is your greatest fear . Amy my greatest fear would be with respect to our critical infra structure. Our critical infrastructure, i mean you do not have to go to many steps out to thing about the consequences of somebody taking out even a small portion of the United States critical infra structure. Weather as telik mitigations or finance or energy or transportation if it is telik medications or finance or energy or transportation. Telecommunications. What you alluded to the pool of ration of technology has led to amazing things, Autonomous Vehicles, interconnected devices, the internet of things. The rush to get things to market means that sometimes securities an afterthought. That is concerning because now we are trying to patch things that are already out there and potentially vulnerable. And usually are. We read a lot in the headlines recently about the president s somewhat unique relationship with the fbi. Leadercuriosity, u. S. A thinking about guiding the organization, how do you stay and remain fiercely independent and above the plug afraid . Amy above the political fray. Amy exactly what you just said. The fbis job is to collect the facts. To do it independently. To do it a politically. To the best of our ability to identify and uncover the facts. No matter where they lead and who likes them at the end of the day we present the facts. That is what we do. ,or us as an organization particularly for leaders in my organization, it is important to keep our folks focused on the mission. We get criticism across the board. We have for 110 years. It is important we focus on what we are doing and that we are doing at the right way. Magazine. Miller, pc theres been a lot of controversy about ransomware tax with cities and ever things, whether people should pay the ransom or not. What is your best recommendation . Amy i will always say does not a good idea to pay the ransom. Because it just further encourages and we have seen it, the encouragement that gives to others who co that is a possible business. What we have seen is really a transition over time in the way that ransomware is deployed. Rather than going after the obvious targets of the large companies, the ones who have the big money who could probably pay out, now you see transition to focus on Smaller Companies smaller businesses, the ones that potentially do not have good security and that are more susceptible to copper mice. That is concerning susceptible to compromise. That is a lower dollar amount but a lot more return on investment. What we would like people to do and copies to do is develop their security, develop their have your backups your systems in place. Get those systems updated. So that you will not fall prey to this. Or if you do, and you made some point, then you have a place to go. You do not have to pay that ransom. Youre not beholden to them. The last thing ill add on that is there is never a guarantee that if you do pay the ransom, that youre going to get your data back. That is a scary proposition. Andrew specific to municipalities. Amy of course we have seen a lot of that rain one of the things we have seen a lot of that let lee. We focus on on our partnership with state and local governments and with the private sector and contractors providing the services, trying to think ahead the best messes i could set out his youre going to be a target. Your thing about youre going to be a target so thick about yourself that way. Whether you ominous the polity or a Small Business or whether you are a unison polity what are youty. Doing to develop the practices the protocols, the systems, the security in place. We say do not pay the ransom because you just encourage the behavior. You pay the ransom now and some else gets hit or you get it later. Cost ait turns out to lot of money for folks to reconstruct their data and to recontractor systems. But that is why we need to be thinking about that in advance. Andrew all right. Fortin therekett there is a bill floating around congress that would enable companies to take more active measures after cyber attacks. People called the hack back bill or what your thoughts. Andrew so you hack back. Amy i have concerns about private industry taking offensive action. Lead to some very dangerous places. It could lead to some dangerous places for our government. We are thinking through what are the consequences of government offensive actions. You think about the Collateral Damage it could incur you think about all the consequences. You think about the potential for retaliation. There are a lot of things need to be factored in before somebody starts taking offensive actions paired what you might think the civil hack back, it has a lot of tertiary and secondary consequences that you may not even be aware of. And could potentially be exponentially more damaging to not a u. S. The company but others. And to our critical damaging to not only you as a company but to others and our critical info structure. How do we regulate Technology Companies echo does the f you have too much power, not enough, how do you see that andrew does the app you have too much power or not enough, how do you see that . Amy the way we do business is our system of government was set up in such a way that i think the check and balance is important. I think the criticism is important frankly. It keeps us in check. The regulations are important. The ability to progress as a nation, though, depends on how well our legislation keeps up with the changes in our society, and the changes in technology. The fbi seriously not the only agency that is out there in this business, even though sometimes it seems like we are. In the news. That interagency piece is really important. The way we interact with dhs and dod and the private sector and academia and state and local government is hugely important because each one of those brings a different perspective, and is quickly important to the way to ensure that not one particular Government Entity or any entity has too much power. Got it. Please come around applause. Amy thank you for so much for being with us. Andrew was not wonderful . Wonderful . Andrew the leading chip maker, qualcomm, as one of the largest manufacturers of ships they still have to work hard to share to stay ahead. To share what the 5g future holds, please welcome qualcomm ceo Steven Mollenkopf and fortunes aaron pressman. Steve, welcome back to the states paired when you hear that some but he lost out, this is the guy they lost out to. Your life are qualcomm. Youre an electrical engineer and you have your name on dozens of patents. Youre going to demystify 5g forest, right . Steve i will try. Start by demystify and qualcomm. We describe it as a chipmaker but you do not make and print the chips, you design them. Steve sure, and i would say we do not think of ourselves as a chip manufacture. The history of the company is really less about that and more for whereave a vision wireless can take us. We tend to invent the fundamental technologies that create that. Essentially, what is that we need to do as an industry to create a downstream industry that can use cellular. That tends to be shared with the industry through the cellular standards bodies, which we are very active men and have been for long time. Then we provide chips, chipsets usually at a fairly high level of integration, including a lot of software, the make it easy for people to use our chaps. What happens as Everybody Knows the product business, which is the chip business and it has grown over the years. So they think that a sort of what we dupe it but really what we are doing is try to figure out what technologies need to be invented, and delivered at scale , so that industries can take advantage of cellular. It is probably more exciting and impacts more industries now that it was over the last 30 years of the companys history. Terms of aars old in tech company. Beasley the next 30 years are probably going to be more broad, and pretty exciting. Aaron in addition to selling the chips you invent things at the core of mobile phones and other devices. Then you license. You receive royalty fees, very look of royalty fees on those inventions. That has been sort of an area of controversy over the last few years. One thing that happened when youre here last, two years ago, you predicted that the big value are having with apple where they were suing you over the royalties in your counter seeing them, you said is going to be a settlement. Its not going to go on and on and on. Everybody kind of laughed, they do not believe you what happened in april, he settled with apple. How did you come to that. Steve this unfolded very much the way we said. Frankly. What happens i think is there always disputes about the price of ip. Sometimes those disputes are public, sometimes they tend to use global characterization drum ever these are big sophisticate companies. Ultimately these things get resolved and the normal working relationship between the market parties is what is left over. That is what we have here. If you look at engagement between, certainly between us and apple and between us and other companies, almost always after a licensing dispute, it settles down and the focus is really how do we get product out together. One way or the other. That is really what dominates now. A much more comfortable spot for both companies. Im very happy to have that. Aaron the stock market is happy as well. Your stock is up 33 since that settlement is it like to be a ceo how you feel when your best customer is suing you . Steve while this is not our first rodeo in terms of this. The key thing we keep our eye on one of the big things, the big 5g is coming or technology is coming. And typically if you have Great Technology you can figure out commercial disputes. Ok . It really has to do not so much with ru selling a product to them or not, it has to do with your relevance in the industry. And who should you be working together with. Those type of things. That creates the environment for you to go. So when all this sort of external stimulus into the company out of the company is very focused on pulling in 5g. So if you look at what are people really doing. That is what they were working on peering we emerge from the dispute. All of a sudden, you see the qualcomms got a very strong position in 5g. Aaron so it was not a distraction from the business of the company. Steve it was a distraction to about 10 of us, certainly distraction to me. But the people who are focused on technology, their focus on technology because they love it. And that kind of understand how unique it is. We have a great team. They really demonstrate that during expense. 33 n i said a stock is up since the middle of april which is impressive. Your stock was up 50 in the first few weeks after the settlement one another 60 one another legal externality as youre calling it dropped. That was a court really in california that the federal trade commission was saying your anticompetitive in your licensing practice. That court battle was ongoing, so your stock has dropped somewhat over the last month. But what is going on there was recent news just yesterday. Right. That is we obviously disagreed with the judges ruling. Aaron just a little. Steve were going to the process of a stay and ultimately an appeal. Theres a lot of backandforth, a lot of things. If you look at what happened yesterday with the department of justice actually filed an amicus brief in the court. A lot of people say sometimes say the briefing speaks for itself and are downplaying it. In this case that briefing is so articulate, it is probably a better articulation that i could make in terms of why we think we are right on the law. Why we think we are right in terms of process, and ultimately whether we will prevail. I would encourage people to read it. And we member the writing entity is not some random person. This is the department of justice. The person that actually the entity that holds this way here at least in antitrust law. We were happy to see that. We think we will prevail. This is these take a long time. Again, the important component of that is really for us is 5g is happening, were launching it, we will get through this and , the company will prevail. It is important we get through this properly. Aaron as i was putting together this mornings daily tech briefing for our datasheet newsletter, which i hope everyone is ascribing to, i did read some of the briefing. One of the reasons they are offering for why you should not be prosecuted in this way is that for u. S. National security. Why is qualcomm important to u. S. National security . Steve while they also said we were right on the lot to. It has to do with the relevance of cellular technology. They essentially i think recognized our leadership position in 5g. And also then, the importance of 5g in this case they made it, they made particular reference to the security of summit defense of some Defense Systems as well as in the case of the department of energy which also filed a declaration, the pardons to the infrastructure and the importance of it being secure as it goes forward. The importance of it to the infrastructure and the importance of it being secure as it goes forward. Mystrategy for connecting thing is intersecting with 5g. And we need to make sure that the leaders that produce those technologies continue to be successful. That is really what is it about. Particulardo with us not as much with us particular and more to do with our leadership position in 5g and how important 5g is tied down some industries. Aaron lets try to demystify 5g. I got to go to providence, rhode island, one of the few places with 5g inservice for consumers. Can we do a show of hands, how many people have any people the . Aience tried a 5g phone yet couple of her hair. Not too many. I tried the 5g phone and i downloaded a Reese Witherspoon movie on my phone and 10 seconds. Very impressive. Im not sure that is enough to make me want to sign up for 5g service. Tell us a little about what is this technology really going to bring to us besides the speed. Speed is a part two. Too. Eed is important vectors ofas two interest. The first is purely to the cellular industry, what is a vantage for them of launching 5g. It is basic basically the ability to keep up with the demand of wireless video. The peoples wireless video dramatic wireless video is going to magically. Aaron Reese Witherspoon boone is doing an apple video. Steve and even beyond Reese Witherspoon there is a desire to get data. Colleagues wasy suggesting we might want to download 600 episodes of the simpsons on her phone. Steve that is an example theres a true menace amount of data demand and that will continue for long time theres a tremendous amount of data demand. That allows the operator to get access to that at one 30th of the cost. And it allows it to have access to new bands gives it to medas ability to provide services to the consumer tremendous ability. And even compete with wireline operators like cable. You see verizon doing that in the United States. Classic more issue. And has less to do with the dramatic impact to the consumer. Data speeds what people see that they love it. But it is incredibly beneficial for the operators to launch. So much so that i think if you do not have a good 5g strategy and to plummet strategy you will be left behind. The history of the industry and deployment history the point strategy. Aaron how is the u. S. Doing on 5g . Steve there didnt quite well. Theres a lot of rhetoric around that. Aaron the race to 5g. Steve yes, what is happened to 5g in the first case is that the first time as a global launch. Typically see technologies happen in one jogger fee, typically japan and korea and the United States, then is actually launching worldwide. Of course we had a lot to do with that. We basically run around, talk to the operators, try to orchestrate and make sure all of the industry participants are ready to launch 5g. Reason is launching more genetically worldwide has to do with the second reason of why more dramatically worldwide has to do with the second reason. How do i create the conic to any fabric underneath everything so the conductivity fabric underneath everything so industries can take of digitization in infrastructure, health care, they need to figure out how they deal at the digitization of their staff, their people, how do i remotely control things securely. Friday was designed purposefully to allow 5g was designed to allow that to occur. The first time the cellular roadmap interacted with these industries prayed we talk about the steam engine and other in we talk about the steam engine and other industries. It had give can impact peer what qualcomm tries to do is first we invent the fundamental technologies that allow it to occur. We put it in the standards bodies. Then we try to figure out how to get this out at scale so people can run these businesses permits. Typically is about how do i create a bigger pie. What happens is industries are being impacted that are serious industries as opposed to just Consumer Industries. Obsolete Consumer Industries are serious. But if youre try to figure out how to control pcs, the infra structure of an industry, or how to fund mentally disrupt the infra structure of health care or education, that becomes industrial policy for countries. And country say i do not to be late so i better launch as soon as possible. Because i want to start running the permits myself. And of course that is great for qualcomm. That is what you see if you actually see 5g wrapping faster than 40. Both in terms of number of devices. Even in south korea. Aaron almost nobody had their hand up. How long until most people have their hand up . Next year. Today you can go into verizon and by a samsung 5g device. And it looks exactly the same as the 4g device. They dont even know it is a 5g device. They are going to have access to 5g very dramatically. Very different than what happened in the 4g transition. We had much thicker devices, a lot of early teething pains of the technology. Terrible battery. That is not what you have today. And all the things people talked about that you would not be able to solve, how do you make sure it works, all these things, they already solved and there in the devices. So, we feel very good about it. If you look at what the operators are ranging the next year, it will be difficult to not buy a 5g phone. Aaron i want to get into a few of the examples to help people understand how 5g applies beyond phones. One we were talking about his cars. Now, you may have heard or read that selfdriving cars are going to communicate with each other and with the over structure infrastructure with 5g. Even before we get to selfdriving cars. Steve connected cars, a dramatic chand trent. Dramatic trend. I want to get things off the car. The User Experience that people demand in a car now really has its dna from the cellular space. I want software updates, streaming audio. That is what people demand. Very much a mobile experience. So, it needs to be connected. If you move forward, as you start to move into selfdriving cars, self organizing traffic patterns aaron we desperately need self organizing traffic in boston. Steve we have been inventing that for some time. Happens is the computing that is appearing in the car dramatically increases but we also have a need for cars to communicate to other cars. Often through the network but also through the other cars. To a caru talk company, and i came from detroit yesterday, they are all trying to figure out, how do i take this and change the experience of being in a car, the safety, all these things. Pretty dramatic. Our problem is how do i scale this up, how do i get the bandwidth to take technologies that are clearly important for these markets and how do i make sure it meshes into those markets the way we need them. Aaron shortly we are going to come out to the audience for questions or comments from you. Maybe more on 5g. I want to ask, one of the reasons qualcomm stock is where it is is that the smartphone resolution revolution seems to be almost played out. We are not increasing at the rates we use to. Qualcomm has tried some other areas. Chips, laptops, smart watches. None have quite hit yet. What do you think are the best Growth Opportunities for new markets beyond smartphones . Steve sure. I would say we do have a fairly significant nonmobile businesses. But the reality is we have a very significant local business. Of course when 5g happens and you dont even have to believe market growth, but unit growth in order to believe the story. We will see an increase in the price of the units that we sell in 5g, and an increase in the amount of content qualcomm gets. I would say the dynamics of the cellular industry, even without market growth, unit growth, continue to be very attractive as five gree rolls out and starts to become a larger proportion over the next several years. Aaron we will probably be saying more. That 5g phone is about 1300. Steve but you are going to get more. But the second aspect is, our auto business, which i think is a 5 billion backlog, continues to be important. Aaron how fast is that growing . Ve several years ago is it was probably 2 billion less, something along those lines. We have a tremendous business in, i would say, the networking and the internet of things. Everyone has that issue but essentially what happens is more and more people are trying to figure out how you get the combination of Cellular Plus computing. And drive it forward. We are going to see that. You will also see tremendous theness model evolution and opportunity for us to not only sell products, but also to help enable new industries to grow off of these products. Maybe there will be a new Business Model for qualcomm, but you do not have to believe much more than 5g will happen and qualcomm will get more per device to make it, we think, a very attractive company. Aaron a strong pitch. Are there questions or comments out in the audience . Wait for the microphone, please. And if you could give us your name and affiliation. Back here. I have two questions. One, you were talking about the 5g race and trying to get there. There are only a few Telecom Providers in the world. Is anyone not ready for that . The second question is, and i could be wrong on this, is there a uniform standard for 5g as there was for 4g in the past, and if there is not a uniform standard, how will that impact different types of 5g networks across the world . Steve let me answer the second question first. Yes, absolutely it is a unified standard. Hearnk very little you a question, will it bifurcate into multiple, we do not see that happening at all, actually. Definitely a global standard. In terms of who is ready and who is not ready, there is always this decision that operators make, which is, what is the use case, and can i afford to basically put in the that is required to deploy 5g . That tended to be a discussion we have heard maybe over the last three years ago we would have heard that. Today you do not hear that that much. Most have committed to a 5g roadmap and they are in the process now of, how do i get this out quicker, how do i get it out before my competitor . There are a few not doing that, but where there may be an issue with the spectrum is not available, perhaps in india, but the operators are quite keen to move forward on. Our problem now is not to convince people how to go to 5g, it is how do i support this global launch, which is great and what we anticipated. Aaron we have a question over here in the front. We have course work with qualcomm starting in the 1990s. Whatng five years ahead, industries do you think 5g will revolutionize that we do not hear much about like medicine, some other kind of businesses that are really important but we dont hear much discussion about . Steve sure. Logistics, traffic dow, fleet management, how you move things around securely in big cities. 5g is really tailormade to that, really. We have always believed that health care has an opportunity to be disrupted by having secure communications. So this whole issue of, how do i that the people take home with them are secure enough and authenticated so i can make a medical decision. Probably less of a technical problem, more of a, how do i solve the legal and regulatory issues associated with that. Should we do that . Tremendous opportunity to both improve lives and have great economic value. Education i think will be significant. But really what people are trying to figure out is, i have infrastructure or i have people or i have fleets or things if i was able to control them and to make decisions about the data that they generate, realtime, i can optimize my business or i can even generate a new business. So, very small example. Qualcommhe early 2000, has all the technology that is required. What we were thinking about is maybe we can go into e911 and he could find people if they have some sort of emergency. In reality, very Small Technology went into the phone. It had position location, the ability to be connected to the internet, and that very small innovation created things like uber, and just tremendous Business Model innovation. Today with 5g we are creating more Technology Change in bigger industries. And i think that is downstream innovation, which qualcomm ignites but doesnt actually do. There will be tremendous winners and losers at a global scale. So, that is the reason the company is so excited about it. We offer you skate as the pie grows but not in the end. Aaron i have one last question for you. There has been a lot of consolidation in your industry. Not that long though you wanted to spend 40 billion plus to acquire nsp, then the biggest tech merger ever was proposed. Then he former ceo of your company talked about taking qualcomm private. None of those deals happened. So is there still something out there that you would like to see that qualcomm would acquire . Steve i think there is always opportunity. We are focused today on driving 5g as well as and i would say also driving the opportunities that we agree with apple on. Which is a pretty good ramp. We think we have a unique funnel of opportunities. The question is what do we have to add to that to derisk those opportunities. Aaron what do we need to add . Steve everyone tries to ask me that. But you can see the type of industries and things that are important. But i think we have a very strangle stable and strong roadmap for the next few years. Aaron steve, thank you so much for the conversation today. Steve thank you. [applause] hi, everybody. Our next guest is a tech veteran. Her experience has ranged from complete like google and working with the to tell us how she plans to make it happen, please welcome her. [applause] thank you. How is everybody doing . Today i want to talk to you about ai at the frontier. And before i do that there is a classification i want to make. When i talk about artificial intelligence, what im after talking about is a blend of Computer Science and statistics at the age of humanity. To buildis information inference and decisionmaking systems. I am sure many of you have heard about the africa rising narrative that has been going on a couple years the past decade. I was originally born in nigeria and i was a nigerian visiting San Francisco. The imf, we know that most of the worlds emergency they are coming from subsaharan africa. 1. 2 billion population is under the age of 25. At the end of the decade, africa it will have 90 cities that population of at least one million. By contrast the United States have 10 of those cities. This is most interesting to me. Is the home of half of all global payment users. Different Million People using mobile payments. When i talk about machine , ning at the frontier instead i am talking about deploying this inference and decisionmaking system in a frontier environment. When you think of a frontier, what i usually think about is the American West before the pacific settlement. That environment necessitates a kind of innovation make life work. America innovated so many different things. I mentioned the creation of Silicon Valley. We are at the edge of another kind of technology frontier. This time around it is not in San Francisco, it is happening in africa. There are the same conditions that necessitate a different kind of technology innovation. One of the most interesting is youabout this skill do not understand their power until you travel. So last summer, i went on vacation with my family to kenya. We arrived at the airport and immediately at the airport we went a few doors down and i got data access on my phone. I didnt think anything of it. I went to my phone and looked at the app and i was very surprised that i was being offer some limited amount of Financial Services immediately. The system decided there was enough data about me to offer me discounted services. I was rather intrigued. I took my phone, called uber, uber took me to where i was going, used for Delivery Services to get me to the house, and i did that with the same Technology Habits that i am used to in San Francisco and nairobi. What struck me was we then went to the border of tanzania. To get there we go through all these small towns and villages. And the interesting thing about doing that drive was really seeing how far deep technology had fully penetrated. We are talking about very small villages, and yet in those small villages you can still move use mobile payments. I realized then that this transformation is going to radically change what the continent looks like. One of the interesting things that has emerged in that kind of Technology Wilderness is, for example, what do you do where there are either no roads or there are bad roads. One of the solution is you can take to the air. Theres a company out of San Francisco that have created a very innovative logistics solution. What they do is use drones to deliver blood to rural africa. These are villages that cannot get blood fast enough. So you can just use a drone to get the package and a life of a person of sit is saved. These are the kind of radical acknowledging innovations based mostly on data and the mobility of data as well as Machine Learning that we are seeing in an african environment. I want to end with an Interesting Data story. Report, which is our annual report of development, we realized nigeria was one of the countries with the Fastest Growing rate of open source. We went down to see what the developers were up to. And we used data to inform on what we should do. Data and weugh our invited the top contributed to come. It was an amazing event. What was interesting about that event was everyone earned their way through the work. It doesnt matter who they were. Whether they were born into affluence, poverty. All that mattered is there work. And it struck me. Believes person whod in datadriven approaches, had never really seen how powerful it was that brought all these people together, many of them who never even knew each other. Created a community for them through our data. This data is the power of all of us through each of us. Thank you. [applause] thank you so much. Now we are going to move on to crypto. When the first bitcoin bubble burst, many people wrote off crypto currencies for good. Our next guest will discuss with her black Chain Companies will emerge from the crisis of confidence and how they plan to get ahead with big ideas. Ndease welcome joe lubin, a dominic williams, with fortunes jen. [applause] thank you for being here, guys. Thanks for having us. Lets do an audience poll. Who here owns cryptocurrency . Ok. And who here is thinking about buying cryptocurrency . Ok. That is a pretty even split. All right. Just by way of introductions, dom, you are calling yourselves the internet computer, the centralized Cloud Platform that lies on black chain where you have servers across different data centers. Kind of a decentralized data center, and that is part of the foundation of what you are trying to do in terms of potentially disrupting some of these big tech giants. Whether salesforce or linkedin, you are talking decentralized versions of these big social Media Companies or amazon Companies Like that. Etheriu are cofounder of um, and a block Chain Development company. Right now it is the second leading cryptocurrency. When you started it, you hear a lot of people talk about disrupting banks, tech. Was that part of it when you , arted your Company Different kind of facebook or google . How did that play into your vision . Bitcoin essentially invented a couple things. Invented this nextgeneration decentralized database. And something called crypto economics and a token via mechanism design and it would moneyivize people to buy for the people and by the people. In that way it essentially build a decentralized thrust system. So in 2012 many people came along and said we should be using this kind of database infrastructure for everything. And so, of that, my company was born. And we built essentially what we then called a world computer. Then, including us, had built tools and infrastructure and had been building in different verticals to essentially do some of the things that dom is intending to go after these Major Services on the internet. But it is also much more than that because we are bringing a new trust foundation, we are building a global settlement layer, and we are able to build a new kind of Financial Funding where we can issue we have issued essentially billions of dollars worth of Digital Assets on that platform. Dom, so, the idea of an internet computer, we already have the internet, we already have amazon web services, we already have ethereum, why do we need an internet computer . So, the internet computer is reinventing the internet as a computer that can host and run secure software with a range of superpowers. And these address problems, major problems that are stalking tech today. So, it is intended as a complete trillionnt to a 3. 6 legacy i. T. Stack. It addresses major issues such as the difficulty of creating secure i. T. Infrastructure. Thelso addresses difficulties we have with the monopolization of the internet today and provides a platform to create a new breed of open Internet Services that will provide a better platform for innovation, entrepreneurism, investment and so forth. , to create azation decentralized version of some of these huge tech companies, is there any evidence that she might not even call it a company, is there any evidence that you could rise to that dominance . It is not even competing on the same level. Tech isost powerful network effects. The increasing monopolization of the internet is driven by network effects. One approach to deal with that increasing monopolization of the internet is to bring in and try toegulation break up big tech. Computer provides a platform for the creation of open Internet Services. An open Internet Service you can think of as being something roughly analogous to an open source project where the service itself has an independent existence and is managed by a government system. Most of all these things provide a means to address Platform Risk. A hard bringer of what was to come was zinger. They were a very successful company. Facebook changed the rules and a few months later they lost 80 of their value. Today, 18 of the last 22 tech ipos mention Platform Risk as existential threats in their s1 filings. The problem is if you build on the api, and if you build on top of big tech, and you are building on sand. You just cannot trust it. For example, hundreds of startups a few years ago had their access to linkedin revoked. Provide anet services way to create, for example, open itesforce, taking linkedin, would become part of the fabric of the internet itself and would be able to guarantee that its apis would never be removed or revoked. So that entrepreneurs and investors wanting to build new Internet Services that needed to incorporate business profiles can securely build on top of open linkedin. This will create a neutralized effect which will drive development of the open internet rapidly. Who is going to build . Essentiallyis to build on protocolbased open platforms. If you are building on facebook you are building on a platform somebody else controls. They are probably towards the end of their monetization cycle and they will have to eat your lunch. If you are building on tcpip, which is a protocol, then you can be relatively certain that that is not going to shift from under you for competitive reasons. 0, which will be the evolution of where we are right now, web 2. 0, will be lots of decentralized open platforms. Platforms like ethereum, platforms like definity, platforms for decentralized stores, decentralized whatever. And all these things we can have the governance discussion soon. All of these things are currently contemplating massively decentralized governance. And that plays out in a lot of different dimensions. Did you incentivize the building of this . If it is decentralized, you do only isceo, it is only nonprofits who can do this . No. With this New Invention called crypto economics, enables the issuance of a token, and effective mechanism design so lots of Different Actors can pursue their selfish interests, perform different roles, and achieve the goals in the system. So you can achieve decentralized governance while still enabling people to pursue their own interests. Can you make money doing it . Absolutely. Put it this way. If you are not trip and or and you wanted to build a new Business Service if you were an entrepreneur and he wanted to build a new Business Service, would you rather build on top of closed proprietary linkedin, and you dont even have that choice anymore because it has closed out the apis out. But lets say prior to linkedin still provided api. Who would you rather build on . Linkedin, oretary a linkedin that guaranteed your foundations were solid and would never revoke your access and break your service, as linkedin did to hundreds of startups . That is the reason the opera and the open internet will succeed. Enormous numbers of people are leaving Big Companies partly because the technology is interesting but also they believe in taking the internet back to its roots. Making it more open, writing a better platform for entrepreneurs and investors. It is a huge movement, which of course is partly represented by the success ethereum has got. And it is not going away. It is part of a major transition to a different model. I am going to come to questions in a minute, so get them ready and we will bring you a microphone. I wanted to talk a little about ethereum. It is the second leading cryptocurrency, which had this terrible crash. Started to bounce back this year. Bitcoin is up about 160 . Ethereum is only about 60 . Still good but it has not had the same bounce back bitcoin had. I know you are still trying to scale this with questions about that. You are planning on blanching on launching ethereum 2. 0. You also had restructuring too. Headcount reduction. But in terms of scale, is it betook allergy that really can rise to the level where it could replace these huge platforms, google, amazon . It is fair to say that ethereum is the second largest cryptocurrency if you only look at that dimension, but it is by far the largest block chain ecosystem. If you look at the number of developers and projects that are building on the platform, we have scaled enormously even during crypto winter. So, many of the people who were focused on the more speculative aspects related to bitcoin or related to ether or the many tokens that were launched on the ethereum platform, some of those projects worked out well, many of them worked out quite badly and a lot of the speculators have fled. Some of them are coming back at this point, as we have seen. But all through that, the technology and entrepreneurs that have been drawn into the ecosystem have stayed. Ofe you see the value decentralization and Building Systems in different ways, you cannot unsee that, you cannot really go back to building on web 2. 0 architectures. Through that period, our ecosystem has grown enormously. Throughout that period, enterprise usage of our ecosystem has gone, grown exponentially. So, we have seen even on a transaction basis, the hit on ethereum is it can handle around 20 transactions per second, but that is layer one at the base trust layer. Layer two where we have many technologies that anchor into layer one, we are seeing hundreds of thousands of decentralized transactions coming online on exchanges and games, et cetera. Scalability is here and it will be here in spades we release ethereum two, which gets started in its release early next year. Any questions in the audience . Do we have any . I see a hand in the back. Yes. Hi. I would like to hear a little bit more about governance, which you alluded to but did not explain. If you are ace of decentralized governance how can you build something that will take on google and facebook . A lot of people say it is dysfunctional. It takes years to create basic scaling. And what exactly will you do to put in a governance structure people can understand and possibly participate in . The theory of decentralization is a very powerful one but it does require good covenants, like Everything Else on the planet. As we would all agree, governance is difficult. Governance of decentralized platforms is a new thing we are trying to figure out. I feel like the Ethereum Foundation governance has been excellent. I believe that we launched an unprecedented platform and about 1. 5 years and had continue to improve it and have pioneered an architecture that will scale it enormously. And essentially end up being a base trust layer for the planet. Governance on the ethereum project is from from affinity, different from polkadot and that we are focusing on having lots of Different Actors in different roles who are all incentivized to make the plat or better platform better, have voice, and i like the idea of more automated governance. There will be governance by token votes, and we already do some of that. But there are projects that are contemplating building layers and layers of governance of these platforms. And i think it is going to take years to figure all that out. Ethereum will do the same thing. Prudently. But even without that, i believe that many Different Actors all committed to improving the platform will be able to the big entities who perhaps have a smaller number of highly incentivized actors and as we get the layers of governance right over time, it will be a foundation for many kinds of systems on the planet. The internet of governance give iptions, which addresses and so on. The internet computer has systemsd governance that serve both to ensure the internet computer network, which is comprised from independent data centers, remains open. It is also a key part of the means we use to address risk which is important. With respect to the second part of the question, how can we compete with giant organizations such as google and facebook, the definitive foundations strategy is to apply enormous resources to rnd. Although it is not a profit organization, it really uses the Silicon Valley playbook. We have more going live soon. Researchers and engineers, and using the best Engineering Research practices we can to deliver internet technology. In that sense, although it is notforprofit, we work in exactly the same way. And indeed, we have been successfully hiring some of the very brightest and best from places like google. If they wantedk, to they could ban someone from the platform. With google, they can ban from the platform. What do you do about bad actors . What is your power what is the networks power . That is the difference between the internet computer and ethereum. The internet computer does have, the network has an onboard important open governance system and capable of neutralizing bad actors. The debate about whether that is a good or bad thing, perhaps bad actors should be tolerated. I would not want i do not have a Firm Position on that. But we do have the technological means to address that. From the start the ethereum project assumed the vast majority of apps, transactions on the network would be valuable because they would be between significantly identified or fully identified actors. We have built infrastructure that enables us to issue Digital Assets in many Different Countries with full identity checks, aml, kyc, et cetera. So we are bringing identity and representation to these applications. But it is a deep, philosophical issue. Yes or o . Or no . Should we have a base layer that is permissive list or one that is essentially sensor herbal sensor abode by government actors . Sensorable . We will have to have the discussions and 50 technology in with their belief systems. Your personal beliefs, yes or no, bad actors should be tolerated, yes or no . That is a difficult question. I would say generally no. But who defines the bad actor . That is all the time we have. Thank you both so much for being here. [applause] ok. Our final guest this morning is an air force major was appointed last year as a white house fellow serving in the White House Office of science and Technology Policy. He is also an inventor of three u. S. Technology patents. We are so fortunate to have him here at brainstorm tech to share insights on how the u. S. Will stay ahead when it comes to Transportation Technologies from commercial drones and Autonomous Vehicles to supersonic flight. Please welcome joseph, with fortunes adam. [applause] , thank you very much jen. Welcome, joe. And thank you for all of you for sticking with us to the very end. We are very excited you are here. I feel like we are very far apart, so we will have to pretend we are closer. So, a couple things. Joes boss was supposed to be here but he had something, very legitimate reasons soething some very specific policy areas he is responsible for. So i will not ask him to speak for the Trump Administration for anything beyond those policy areas. I just wanted you to know that. I appreciate it. I also wanted to tell you, joe is an activeduty air force officer and a policymaker in the white house. So if there is a lot of jargon that comes up, i have encouraged him to use that jargon and explain it to us. So start off by telling everybody just a little bit about your background. I started as a techie. I was a Computer Scientist at stanford. Then i worked in Silicon Valley for a couple years for a Company Called aol in the old netscape building. I was a software engineer, worked on a lot of emerging technologies in the 2005, 2007 timeframe and was looking for an opportunity to serve our country, to work on policy at the government level. I ended up leaving Silicon Valley to join the air force. So i have spent the last 10, 11 years in the air force as a pilot. I fly a large cargo airplane. We fly all over the world including combat in afghanistan and iraq. And fortunately, this year i was given a very excellent opportunity to serve in the white house in the office of science exec policy. Borrowsy area kinda from both my Tech Experience and from my experience as a pilot in the air force. I lead our advanced transportation portfolio, which includes Unmanned Aircraft systems, uafs, Automated Vehicles, supersonics, and then this concept of urban air mobility, which is really the future of transportation in large cities. Great. Area that youicy described as being the furthest along. So, tell everybody what the white house is doing by way of talking about what this will look like, what drones will look like in the United States . I have been in aviation for a long time and watching the Drone Industry explode has really been mindboggling, honestly. The speed at which that is happening. Timeframe,016 regulators were thinking through , how are we going to enable operations of these types of vehicles in our National Airspace system, with other traffic, overcongested areas, et cetera. I think as they were working through that, they kind of realized, well, we do not really have any data that would speak to how safe are these, what kind of performance characteristics do they have, can they safely fly over large populated areas. Tbd on that. So, we kinda were thinking, how can we get data, but more importantly, how can we get data with a local context . So, flying a drone in San Francisco is really just a different operation than doing so in rural oklahoma. Regulators at the are not necessarily to make all those decisions to affect all those different parts of the country. So we created this Pilot Program called the uaf integration Pilot Program, or ipp as we call it. The idea it was to use publicprivate partnerships between state, local, and tribal governments with private industry to work through some of the different drone use cases in various communities across the country. So we have nine participants of that program. They are exploring use cases from pipeline inspections, to delivery of medical devices, Law Enforcement uses. And the whole point and idea of the program is taking the data from those various localities and bringing them back to the faa so that we can make rules applicable to these aircraft. When you say participants, these are companies or entities, or locations, or what . Is a Government Entity. Could be a city. Chopsaw nation is one of them. San diego is another one. And they have partnered with a private company that has a particular use case that would be relevant to that area. And they can explore different areas in thepolicy different cities. So it was a competitive process to select those but was managed mostly by the department of transportation and the faa. But we are about one year to that program we have already seen an explosion in the number of different types of use cases. The faa has made some movement on regulatory action as a result of the program. Just recently about two months ago, we released a notice of proposed rulemaking on uaf operations over people and at night. So, prior to this rule, and as it sits today, because it is only proposed, those operations are prohibited unless expected by the faa. They would award exceptions and some circumstances, but the majority of the waiver operations they would give wherefore over people and over were for over people and at night. We are now freeing up resources to work through more complicated use cases like, well, what about the on visual line of sight. Right now flying a drone is like flying a kite. You cannot legally operate it if you cannot see it. Is now workinga ghrough waievrs and throu waivers to make that happen. You are saying all drone flights that the operator cannot see our currently illegal . So, unless ecepted excepted by the faa. And they had been issued in some cases. When they consider whether or not we will accept a rule, there is a lot of information and data that the vendors to provide to really allow the faa to accept some level of risk. So, beyond the visual line of ht there was to fly your drone beyond visual line of sight had to have a manned aircraft flying with it. You know, that is not in most economic approach, i would say. But when it comes to safety, everything in airspace under most circumstances is see and avoid. My hunch is hobbyists are violating this law every day. Is that a correct assumption . I think that is a fair assumption. Have theld say you criminal and the negligent. And i think most of the concern that we have right now is really around the negligent. So, that maybe takes me to points of counter uafs, which is another policy issue that we are working on from the white house as well. En the last bill from 2018, w lobbied very hard to get additional authorities for department of justice and department of Homeland Security to be able to identify, track, detect, and in some cases mitigate drones that are operating in areas they are not supposed to be operating. Previously only dod and department of energy and those authorities. So, Congress Worked with us and that is what we arrived at. But moving forward we do not necessarily see a federal response every time i drone is flying somewhere it is not supposed to. We would like to see that expanded to state and local as well. It is interesting you are talking about an area where the law currently is not sufficient in your opinion because the law did not anticipate this. Well, first i want to ask you, put on your pilot hat for a moment. How concerned are you as a pilot about drones . I think your policy outlook is about how do we make this work commercially, and it is an exciting new field. But how concerned are you as a pilot . As a pilot, honestly i am not that concerned. If you think of the types of operations i would do as an air carrier or a large aircraft s 400, most drones, it feet for drones, and most dont operate above that. Are going to land in about five seconds. So i am not concerned. That being said, this is definitely something that we need to work towards. And i will bring up another policy thing we are working on. That is the concept of remote id. Right now i could download an app on my phone, point at the sky, and i can see all the airtraffic and say that is southwest flight number x, United Airlines flight number y. You cannot really do that with drones because they do not emit. They are not required to have transponders, they are not required to record position. That produces a little concern from the government side but also Traffic Management side. What happens when there is a lot flying around and we dont want them all hitting each other . Remote id is what we view as the foundation of enabling this new industry. I assume remote id is something the faa can do through rulemaking . That is exactly right. They have been working on it. The eta for that is the end of the year. Can you talk about one of the companies that participated in this Pilot Program . Also, is the white house involved in the global conversation . I know zipline is doing things in africa, but also in the u. S. I think. I would probably avoid talking about any specific company or endorsing any specific action there. But what i would say is that each locality is working through very different use cases. I was just out at oklahoma at a drone counsel they had with my boss. The use case they were working on there was debating feral hog traps. , they are working with a Consulting Firm that provides, manages, and practices packages the drones and operates them anyway that gets past this problem. I was not aware that was an issue that drones could address. But we watched a demonstration. The drone flew in. It could be either geotech, or think they were using qr cods to identify the drop zone when we went and looked at it. Advertised, its drops a bunch of feed into the hog trap. So, i think that just really goes to how interesting, exciting, and honestly successful this program is, because it is getting folks to work through use cases that none of us would have imagined. You put that in the who knew category. Another policy you are working on really surprised me because it was in the back of my conscious that we are still interested in commercial applications of supersonic transport. The concorde went out of production and commercial flights many years ago. Why now . Honestly,is really, the industry has kind of spurned this renewed industry. There are a lot of Companies Working on this now. Lockheed just got in. They are also working on the x59 demonstrator with nasa. The industry came to us, and they had a renewed use case for how these jets are going to be successful. Obviously for concorde, there are a lot of issues with concorde and terms of noise, pollution, cost. The Business Case didnt really close. I would argue in today, propriety airplanes with that level of pollutants probably would not be accepted by most communities. So, the industry now is taking another look at it, with the benefit of almost 50 years of research and development in the subsonic category that made engines more efficient, noise standards more stringent. So, that is kind of what i would say started this. Our view is not to decide winners and losers in terms of, is this going to be a successful new area. It is more to enable testing and Market Conditions will dictate that. You have a policy viewpoint. The white house is taking the time to work on this. So the viewpoint is we think this would be a good thing to come back in a commercial sense. A good thing for her to come back in a commercial sense, but also aviation, when you think of r d and aviation, research and development in one particular area is a lot of applications in other areas as well. So we would expect that spurning, getting more research and develop going on in the supersonic space is actually going to help the Aeronautics Industry as a whole. It might even open our eyes in terms of what is possible for the future of transportation. I know you said you fly transports for the air force. Have you ever flown faster than the speed of sound . We never fly supersonic intentionally, so no. [laughter] would you like to . Oh sure, absolutely. Not in a c17 though. In a plane that is built to fly supersonic. Quickly,kly real you used the term urban air mobility. I think that means air taxi. Companies like uber are developing things like this. Is this a real thing, or is it Science Fiction . The answer quickly is it is very real and that is coming. As phasef small uafs one and there are multiple sub phases with small ua f we need to get through in order to get through a success there, but in terms of what is next i am thinking larger uafs, passenger andying, cargo carrying, that really gets into the realm of the vehicles thaqt uber and others are working on. Our view is more of its an ecosystem. When you think of urban mobility, it is not just the airplane. So, electric vertical takeoff and landing is predominant airplanetype in considered, but there is additional infrastructure that comes with that. Where will they land . Some of them i met with a number of companies in the space. One of them told me that these vehicles when they go to recharge his lovely drawing the current of an average grocery store. And infrastructure may not be able to support just plugging in a grocery store. That is something we need to think about. We are very active in this space. We are working on the small areas first. An urban air mobility grand challenge where we have been working with them on that. I would not say we will be seeing this this year or next year, but i think it is definitely on the horizon. Be the same standard the faa currently has for airplanes . Absolutely. I have a lot of companies from Silicon Valley that come that are working on these vehicles. They come and ask, how can we get these flying . The very first question i have for them is, have you talked with the faa and are you familiar with the certification process . Our view is the existing faa certification process under 23 is sufficient to address a lot of the new categories of airplanes we are seeing. This is where i would probably lean on the community for little bit of help. I left the private sector to come work in the government. And i think we need in some of these areas, we need more folks with government experience working with private Sector Companies to kind of help understand the realities and it comes to aircraft certification, operation certification. That being said, we can get there. Something i am really excited whichwas googles wing, was essentially a Package Delivery element of the ipp they were going to start doing operations in virginia. They received a part 135 operation certification, which basically means they are a small air taxi carrier. They comply with the same requirements that small air taxi, if im going to go to las vegas, if i am going to fly a tour helicopter, that would be a part 135 operation. There are training requirements for pilots, Maintenance Requirements for air currents airplanes. And they got the certificate. We have time for a couple questions. None theere are one thing we have not talked about his Autonomous Vehicles. This is a huge interest in Silicon Valley. In talking about what you Pay Attention to, you do not lead with that. Why . Autonomous vehicles i think are little more complicated. When we think about the aviation issue, for example, the way the faa likes to couch regulation is we think about the airmen, the airspace and the aircraft. And we have to come up with rules that address all three of those things. And in the Autonomous Vehicle space, so, with aviation it is all controlled by the faa, so it makes it relatively easy for them. In the Autonomous Vehicle space, some elements are controlled by different state and local entities. Airmen, drivers licenses for operators are issued by the states. Federal Motor Vehicle safety standards. Then the airspace, which equates to roads, different players there. State, local, and federal. So, i think it is a little bit more complicated. And for that reason i think we need to do a little bit more research before we just integrate Automated Vehicles into our road systems, much like what we are doing with uaf. Dot has been taking the lead on this. 2. 0, which was framing the discussion in terms of safety. For nifta,they call which is largely responsible for certifying these kind of howcles, to think through, are we going to have to change our certification for these to work . And i will use an example. Them e according to that may not necessarily be the case if there is not a person that needs to manipulate the steering wheel. Tat the way that nafta nif has written the rules, that is how it is been. Faa is more performancebased. When i went to fly the simulator, the airplane had no front windscreens at all. Just lcd screens tied to cameras. That is kind of the difference between performancebased and specification. Instead of saying an aircraft much have a wins must have a windscreen, it might be how the pilot can see unobstructed. Portray a policy situation where drones are less complicated from a policy perspective. Officee a sense in your that maybe one thing the white house can do would be to try and make Autonomous Vehicle policy regulations less complicated . Yes. Working through what our policy actions would be in that space. It obviously requires coordination with a number of different entities, both in the white house, state, local and otherwise. National legislation on avs in some point in the future, i would not rule that out. When you think about it, we have to herds them all into one unified strategy. And that will take some work on our end. We have time for a quick question and quick answer. You talked about urban air mobility, and drones are generally under 400 feet. How do you envision air Traffic Systems . Is that something you envision. Absolutely. We identify it as u. A. S. That depends on the Remote Technology they mentioned earlier. When we start thinking about larger airplanes that are mixing in, you know, commercial air traffic, helicopter traffic, things of that nature, were going to have to think about what does u. T. M. Look like in that case. Were hoping we can get it right for small u. A. S. First and then well tackle that problem next. Will we see commercial s. S. T. s or level five Autonomous Vehicles . Definitely commercial s. S. T. s. Joe, thank you very much. [applause] thank you. Supreme Court Justice Ruth Bader Ginsburg delivers remarks in arkansas hosted by the Clinton Foundation and Clinton School of public service. Live coverage begins tuesday at k4r7b30 p. M. Eastern on cspan. This is the story of how this this whole new economy was built, and ive always been really interested ever since i was working in washington of how business and government interact with one another. They they have an antagonistic relationship but they have a collaborative relationship. The real story is about private Public Partnership in many ways. In ways that are sometimes unseen. So this was this story is a great way to get into that. University of washington history professor Margaret Mara discusses her book, the code. Sunday at 8 00 eastern on cspans q a. Robert gates, former House Majority leader eric kanter and former white house chief of staff andrew card talk about the future of representative democracy. This was part of a recent forum hosted by the college of william and mary in williamsburg, virginia. Its 90 minutes