To spy on people who use the technology. So the Trump Administration put severe restrictions on business dealings with hauwei. Now hauwei said it doesnt do the things it has been accused of and here to say that again is the chief Security Officer andy purdy. Were going to ask andy tough questions and ive invited two top reporters those questions. But let me be frank, in the next ten minutes or so there is no way we are going to be able to prove who is right. Even if we disassembled a router live on television but were going to give it a try. Katie roof of the wall street journal and dan gooden, security specialist. Thank you for being here. And lets start with the position that we are not going to be able to prove this. Everybody is arguing but how could we prove you are right, hauwei products are safe . We fundamentally need to take steps to make america safer in cyberspace. We have to have a clearocus on program for addressing the risk from all products. Like a laboratory sort of idea . Yes, well give this one a stamp of approval it is safe. Better and more comprehensive than that. The fundamentally there needs to be pressures in place to evaluate the product baz the bad guys can cause bad things. No question. Youre being accused of being the bad guy. Were being accused of potentially in the future the Chinese Government would force us to do things and we forget about the fact that the Network Operators control access. We have minimal access to Customer Data and all of the access we have is control and mon toward and completely auditible. There are t Chinese Government getting involves and they have gotten involved with Different Technology in their country. How can we be so sure theyre not going to get involved with what youre doing . Right now nokia a allowed to the United States only because they are subject to government monitored Risk Mitigation. We would line to talk with the u. S. Government about a Similar Program of mitigation. But in fact more importantly for here, we buy 11 billion worth of products from american mp and if the current provision stands we wont be able to buy from the folks in your viewing audience. I want to get to the point about the con ten shun this is audible in a minute but first going back, the aftermath of the San Bernardino shooting in four or five years ago, the fbi required apple to make special provisions that would allow them to open up the shooters phone. Apple resisted. They went through a Court Process and they successfully beat that down. Simply dont exist on the Chinese Government. If the Chinese Government comes to hauwei and said, we want an indetectible back door on your router, what possible recourse does hauwei have . Two things. And our founder mr. Wren indicated he would shut down the company before he does that wouldnt the Chinese Government just put his family in jail . As the director the Deputy Director of National Intelligence said, back doors weaken the test and secondly the Customer Data is critical. That is what she said and were open to that kind of germany is acceptable, the u. K. Found acceptable and the canadian government found acceptable. If you put something in the supply chain, they are undetectible. What is this magic thing to allow people to detect there is a back door, this hardware implanted in a hauwei router . Im referencing the principle director of National Intelligence who said we can do it. There are companies and processes that could find it. But more importantly were for getting it is not just about the equipment, it is the Network Operator and the at t and verizon of the world, they monitor the network and in bound and outbound because we know the bad guys will get in and we have to maintain the resilience of our communication and that is why we have to more toward a more comprehensive approach in this country. You and dan have expertise in security. Say there are no back doors. It is perfectly safe. But the Chinese Government decides that it wants to shut down telecommunications. Could they could a router, a device of 5g network to switch it off from a Central Location . Well, you would need to have a back door in there. It would have to be prebuilt into that. You could understand the reason for concern of Something Like that. Which is why we dont want to have an approach that is not going to make america safer. Banning hauwei is not going to make america safer. And the fact is five nations in the world could implant malware in networks and systems around the world so whave to have different about china and this is also something that happens with another company a virus maker kaspersky based in russia. Russia and china are different than the other five nations that youre mentioning in the fact there are no checks and balances on the government. And if the government said you are going to do this, the company has no other choice but to do it. One example, nokia is allowed to do business in the United States despite a Major Joint Venture in china with shanghai owned by the china government and despite the connections with the china government, theyre allowed to do business in the United States because there is a government monitored Risk Mitigation program. We want and it satisfies the u. S. Government. We would like to talk about such a program for hauwei. You would like an even chance . And so now that the u. S. Is getting involved and cutting access to your suppliers here in the u. S. What does this mean for your business and what is your plan b. If you cant get what you need to make these computers . Well, we are going to be impacted over time. Were going to make sure we fin a waytxpiration of the 90day period, that those products can be supported. So were not sure exactly what the impact will be. But we know that two things. If we cant buy one of the Major Telecom providers in the world from American Companies 11 billion worth well find people who will sell to us and once we have the capability in place, will we come back and buy from the same companies and what are other Companies Going to say when they say we would like to buy from American Companies too and were worried maybe well get cut off in the future. So it is cutting off your nose to spite your face if you dont let up for American Companies. Let me take a quick commercial break and come back and talk about this and hauwei and well be back in a couple minutes. Welcome back to today in the ba tell me as an american, you have a background in economics and law . How do you when you are talking about security say to yourself and im not accusing of you anything, and im jest genuinely curious, how do you know youre right . How do you know youre on the side of good . I believe you believe you are. I dont have any reason to think you arent. But how do you figure that out . Im not defending hauwei. The people listen to what i say is im promoting a safer cyberspace just asdy when i was in the white house staff helping to write the National Security for cyber security. We need a more comprehensive Risk Management program and stronger congressional oversight and more funding and we need goals, objectives and milestones so we can assess progress and find out when there is failure and prioritize how to work together. That is what im saying. I saying trust anybody because it is no longer trust but verify under president reagan, it has to be trust through verification and the ome take for u. S. And chinese products are worthy wt do you relations to improve . Lowehe escalating. I hope china will not bar apple and they will not create the list that the u. S. And were seeing mixed messages in the world and sometimes you wonder whether there are two people in the world playing three dimensional chess with china u. S. Relations. We have to calm down and have a cleareyed focus and effective Risk Management and hopefully open up the markets better and hopefully we could discourage and hold countries accountable for the them of intellectual property and basically wrongdoing in cyberspace. I had a conversation with a security expert who used to work for the nsa and now in private practice. Asked him what he thousand about the whole hauwei thing and he said theyre development process, the way they go 15 yea 15 years bin have what is knowns a secure Development Life cycle andll most other companies figured out how to stamp out ten, 15 years ago. A free market, that could be up to the free market to say buy cisco. The p to have trust in w in hauwei partly because of the number of flaws coming down are different than what you see from the hauwei competitors. What are you doing to shore that up . Weve made a commitment at the beginning of the year to spend 2. 5 billion on the next five years and the fact that were subject to scrutiny within canada and the u. K. And germany will apply to all vendors, we get criticized by the lead guy in the u. K. Hes ripping us to shreds. You have to do this Better Software engineering and be accountable and show progress. We like our competitors to benefit from that scrutiny and will raise the bar for anybody. What is your position, andy . Youre on a p. R. Tour and the truth about hauwei and ive seen you on television pushing for what youre asking for, a fair level where everybody gets tested. Do you think it willout. I dont know. Im optimist. And we hope as folks calm down that we could protect our customers, Rural America who depend on us for quality and service. We hope can he with protect American Companies who we buy from. We think theyre the best in the world. We want to continue to partner with them and maintain those jobs here in the United States. And maintain our competitiveness as a country and hopefully we could build an industrial policy so america could be a leader in 6g. Andy purdy is the chief Security Officer from hauwei. Thank you. The secrets of sand hill road from one of the people who know it best when press here continues. Welcome back to press here. Ive been working on a new podcast called sand hill road where we take you behind the scenes of vebtdure capital so imagine my light dlooit when i saw this book the secrets of sand hill road and i planned to tear out huge sections of the book and use them in my podcast. Lets hope that is okay with the books author scott cooper because hes sitting across from me this morning. Hes been in Venture Capital for many years and in fact employee number one at Andrew Horowitz where he is partner. Thanks for having me. What is the secret of Silicon Valley that Everyone Needs to know. I realize you wrote a whole book about it. How much time do we have . Not as much time to read the whole book. What is the top secret where nobody knows thihis the biggests just that the entrepreneurs are on the same team and just sometimes given misinformation or lack of information that it feels sometimes like were going for different objectives but at pani that have the object to be big longtermfree standing business and the facebook and googles of the world and that is something we share in common with entrepreneur. What do you look for in an investment . I though that you recently had lyft and pinterest and Big Companies go public but a lot of times you get in early before they had any traction. So how are you able to identify that . We do. So usually we try to get in as early as possible. The big thing it turns out to be and i talk about this in the book, is team becomes the most important factor because we know the market will revolve and change over time and the products will change over time. I think people generally dont change very much over time. But were really looking for kind of what is it that makes this team uniquely suitede oortw Something Different than nobody else knows and had experience that nobody else knows and do they have the sticktoitness to do something that is tough to do. And now so Many Companies are going public, why do you think that is . You have slack coming up and the others i just mentioned. Why is now been such a big year for ipo . I think what is happening is the companies are just getting to the point where in order to provide employee liquidity, ipos are important and a lot of the companies when you think about technology, over time they need to do acquisitions to sustain new products cycles and new growth and doing that as a Public Company is better. Some of it is where we are in the cycle. What kind of tenure were in and the Companies Take eight, ten, 12 years to get public and it is the postglobal financial crisis starting to kind of [ inaudible ] [ technical difficulties ] [ technical difficulties ] it went up from 30 to 300 on the first trade. At time we celebrated that and it is crazy so something has gone terribly wrong. [ inaudible ] [ technical difficulties ] [ technical difficulties ] but given that lyft hasnt gone very well, what do you think that says about iappetote [ technical difficulties ] [ no audio ] [ technical difficulties ] [ no audio ] [ technical difficulties ] [ no audio ] it is very interesting dichotomy of activity and does that mean if im nd im sitting in the ffice with my nowhere job and lohe time to quit your job and do this because there is so much money out there and there is so many so many places. I think it is a good time and that is true quite frankly for the last six or seven years so i dont know if now is better than it was what about next month . Or one year from now. I could have been a contender. Exactly right. Look, i think the point is true which is there is more capitals than there ever was and Something Like 500 new firms in the last ten years are doing what we call is early stage [ inaudible ] and so the number is going to be here to 2 mlion . We do two things. The introduction piece is we have a lot of referral sources for people who are in the valley and known for a long time and we spent time also looking for resources and so we go to universities and say who are the interesting Computer Science professors doing something that we care about and that is a conduit for graduate students. So if you are ann industry founder you want to find somebody with a referral source and if that doesnt happen well find you based upon our outreach in the community. I like when i walk in horowitz how many people would kill to get past the receptionist . So in your book, you expect to be about and that is an important part of the book but you touch on employee options for transfer restrictions, discount analysis. This is a serious book about Venture Capital. Will you learn this from the book. I appreciate it. The whole purpose of the book is to take the covers off a business that for a long time has been a mystery to a lot of people and i think that discourages people from even trying to start businesses or think about ventdure because it is a black box. So i hope i didnt go into too much detail on some of the things but the whole idea is if we could demystify the business and that encouraged more entrepreneur and that is good for the country. And Venture Capital hasnt been diverse and until recently general partners, maybe three. So you went from zero to three in the past year with a pretty significant move for the industry and from zero to one partners, so are you thinking about diversity in a different way and what changed your thinking . So the thing that happens, youre right, we have three female general partners and when we started the firm we had a hard rule, you have to be a founder or a ceo to be a general partner and we have a lot of reasons for that and dont have time to go into it but we realized over time it is very narrow and the reality is that is not a Diverse Group of people, particularly with working knowledge and we thought about what are we trying to solve for and we need a competitive business and the real issue is are you attracted to the bestntur blding and one evidence that is youve been a founder and ceo but other ways like our expert on u. S. China BusinessDevelopment Deals or people care about that, say we relax that ceo criteria and then have a broader pool. Im going to end on that very important because you mentioned how little time we have and well be back in just a minute. That is our show for this week. I mentioned a new podcast earlier, sand hill road and we have a upcoming interview with scott kuper and here is a clip from emergence capital talking about when a company goes public. I dont know what will happen and you cant predict the future and it had a phenomenal day. Ly not experience that. So please tell me what that is like. It is a lot of anxiety, it is a lot of happiness and joy. It is a lot of