Latest / Success Story with Scott Clary / Dmitri Alperovitch - Co-Founder of CrowdStrike | What Happens if China Invades Taiwan

Transcript

Dmitri Alperovitch - Co-Founder of CrowdStrike | What Happens if China Invades Taiwan · Success Story with Scott Clary

• 0:00
  You have an arms race, a conventional one, a nuclear one, you have a technology war,
• 0:04
  you have an economic war, you have a space race where both countries are trying to get to the moon
• 0:09
  before the other, and potentially then on to Mars. The one thing that is most similar and most
• 0:15
  dangerous is you have a regional flashpoint that can take the two powers into a conflict.
• 0:19
  The Berlin Wall actually stabilized the Cold War. China, I think, is actually a weaker power
• 0:23
  than the Soviet Union ever was doing the first Cold War. If you're a Western business,
• 0:27
  you can't operate in a place if you don't have access to, or as you can trust.
• 0:30
  At the height of 2008, right, at the time when we had our real estate bubble,
• 0:34
  real estate was about 10% of our GDP. Today in China, it is 30%. Just on a match in both sides,
• 0:41
  China has encircled Taiwan with these military exercises, but you have about 4,000 Chinese
• 0:47
  nationals crossing that border every single day. There's not 4,000 Americans trying to get into China
• 0:52
  every single day. Mission accomplished, pull out, and no one rusher bats at eye, and he's
• 0:56
  perfectly secure in his position, pal. Welcome to Success Story. I'm your host,
• 1:02
  Scott Clary. The Success Story podcast is part of the HubSpot podcast network. Very
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  I'll see you in Boston.
• 2:09
  Dimitri, I'm excited for this. I'm very interested in not only what you've built over your
• 2:15
  career, obviously massively successful, but your transition from somebody who has focused on
• 2:21
  building companies, on protecting companies to somebody who is looking at threats internationally.
• 2:28
  So I guess there is a little bit of a segue. There is a little bit of a common thread
• 2:31
  between what you've built and then what you focus on now. But maybe just talk to me about
• 2:37
  what you believe is happening with China, why you believe that we are currently in a cold war.
• 2:44
  Yeah, I believe we're fundamentally a world on the brink, which happens to be the title of
• 2:49
  my book. And we are on the brink potentially of a catastrophic conflict. You know,
• 2:57
  three years ago now, I was one of the first geopolitical analysts to have predicted that
• 3:02
  Putin was going to invade Ukraine months before it actually occurred. I came out publicly saying
• 3:07
  he's going to do it this winter before the winter was going to be over. And the reasons that drove
• 3:12
  me to believe that he would do this are the same reasons that I'm not seeing apply to the situation
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  across the Taiwan straight, which she, I believe, wanted to invade Taiwan and conquer it.
• 3:26
  Not necessarily in the immediate future. I don't think this is imminent. This would be
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  an incredibly difficult military operation to pull off, perhaps the most difficult in history.
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  And he's simply not ready yet. But over the course of the next 48 years, I think you have
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  a window that's going to open where he's going to potentially achieve a military balance of power
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  in that specific region and that specific operation that could lead him to think that he has
• 3:55
  an advantage over the United States, over Taiwan, over Japan, over Australia, to potentially
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  launch this operation. And I argue in the book that Taiwan is really existential to US interests
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  in a way that I think most Americans do not pay attention to. I think in many minds, to the extent
• 4:12
  that people think about Taiwan and they think about semiconductors, I think wachips. And of course,
• 4:17
  Taiwan is the world's factory for production of semiconductors. It produces most of the advanced
• 4:22
  chips, but also a lot of foundational chips that you need for pretty much anything, any modern
• 4:28
  electronics that you might have to keep driver or economy. But beyond the chips, Taiwan's
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  position in the region, the anchor point of the first island chain that helps to keep China contained
• 4:41
  is really, really vital. And it's always been vital to the US policy. In fact,
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  General Douglas MacArthur in 1950, 75 years ago, said that this is an unsingual aircraft carrier.
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  We'll hunt before the age of the, the dawn of the age of computing, long before semiconductors,
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  it was that vital to us. And I do think that we're now in a new Cold War with China
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  that plays out on a whole slew of battlefields. We have a global competition for supremacy and
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  questionably taking place with China. There's economic, there's diplomatic, there's military,
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  there's technological, and it plays out in every corner of the world, whether it's Latin America,
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  Africa, Europe, and certainly Asia as well. You have an arms race, a conventional one, a nuclear one,
• 5:30
  you have a technology war, you have an economic war, you have a space race where both countries are
• 5:35
  trying to get to the moon before the other, and potentially then on to Mars. So you have all these
• 5:41
  elements of the competition. Of course, the one thing that is most similar and most dangerous is
• 5:47
  you have a regional flashpoint that can take the two powers into a conflict. So during the first
• 5:52
  Cold War, that was really West Berlin. People have forgotten already by and large because the Cuban
• 6:00
  missile crisis is so prominent in everyone's minds about this risky period in the Cold War,
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  where you had a very high risk of nuclear war. But that was 13 days in October of 1962,
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  and half which time most people didn't even realize there was a risk because that information
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  did not get publicized by the Kennedy administration right away. But the summer before was actually
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  much more dangerous or just as dangerous, I should say, because that summer, President Kennedy
• 6:33
  meets with Khrushchev in June of 1961. Going into that meeting, he once established a better
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  relationship. He thinks that we've had 15 plus years of the Cold War, and that's enough,
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  and it's time to set this relationship on a better track. He writes letters to him. He goes into
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  the meeting, and Khrushchev wants to have none of it. He is saying, you need to pull out a West
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  Berlin, you and your allies, where I'm going to invade. And Kennedy comes away shaking up from this
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  meeting, and he gets determined to fight for West Berlin, even at the risk of nuclear war.
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  He goes on television that summer. He warns the American public of a potential conflict that
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  is coming. He outlines the case for why we're going to risk nuclear conflict over this little
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  outpost of freedom surrounded by East Germany. And he even asks Congress to allocate money for
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  fallout shelters to prepare for nuclear conflict, right? That was the entire summer. That was
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  incredibly dangerous. You had more duck and cover drills and the like during that period. And then
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  in August, at the end of that summer, Kennedy has woken up one day, and he's told that the East
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  Germans are building the wall. And you know what he does? He celebrates. You know, 25 years later,
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  you had President Reagan say, Mr. Gorbachev tear down this wall, but Kennedy says, you know what,
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  this is not a perfect solution, but it's much better than the war. And if he's building the wall,
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  he's not invading. We have just pulled back from the brink. And the cold war actually stabilized,
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  I mean, the Berlin Wall actually stabilized the Cold War and allowed us to get much later on,
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  but then I follow in decades to detain to arms control agreements and really step away from the
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  brink. And I argue today, we need, of course, a figurative wall across the time, one straight. We
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  need to restore the military balance of power, power. We need to restore deterrence. We need to
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  extract more economic leverage over China to deter this action against Taiwan that would be
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  devastating for us, would be devastating to the world. And if you can do that, the Cold War
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  wouldn't end. You would still have this global competition taking place, but we would not be very
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  likely to go to a conflict with China because this is the only place where US troops will likely be
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  committed to fighting China. President Biden has now set on four occasions that he would send
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  Americans to fight for Taiwan. That will not happen anywhere else. That will not happen over some
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  rocks, artificial islands in the South China Sea. That will not happen in these Senkakwa rocks
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  that are disputed territories between Japan and China. We would find a way to de-escalate a crisis
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  over those things because they're not fundamentalistic to us, right? But this is, and this is that one
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  place where you risking horrible war. So I appreciate the context and the thesis and the amount of
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  research you've put into this, because like you said, I think a lot of people's memories are very
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  short. Now, I also think that a lot of people are very ignorant and I think are so concerned
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  with what's happening in their own backyard. They are not as wellverse. Some people are, but of
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  course, as you are in what's happening overseas and what's happening with China and they maybe
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  just see it on the news, but it's just another problem out there and it doesn't mean a lot to
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  what's happening in my day to day. And I think that the majority of individuals are kind of just more
• 10:00
  selfish and focused on what's happening in their own life. So I'm curious, first of all,
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  for you in particular, you made your whole life was spent in threat analysis and preventing threats.
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  Why did you move from crowd strike? Why did you move from cyber security,
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  understanding threats to businesses in the US and abroad into this geopolitical arena?
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  Because you've gone so deep into this. What is, I can sort of see a common thread,
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  but I want you to tell it to me because I want to understand where you take your career,
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  why did you move from building businesses, investing in businesses? And I think you still have a
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  family office now and you're still investing and that could be your full-time thing. But you chose
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  to put a book out, write a book about this, invest in this, learn about it, understand it,
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  sort of be a prominent voice for this particular subject. So walk me through that.
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  Well, I've always been passionate about geopolitics, so this is not just something I woke up
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  one day and decided to do. I studied in college, along with cyber security. So this has always
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  been in the back of my mind. I always been a news junkie following. Russia very closely,
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  following history very closely, always been in history junkies well. And in 2010, my life really
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  changed. In fact, it was in January of 2010 when I was still an executive at McAfee at the time,
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  one of the largest cyber security firms. And I get a call from a company called Google,
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  you may have heard of them. And they told us that they were experiencing an intrusion
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  from what they believe was the nation's state of China and that they wanted to collaborate
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  with McAfee because a number of McAfee customers, really huge companies, were part of that whole
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  intrusion. It was the first time really that the public, when Google would later come out with
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  their investigation learned about nation states doing cyber hacks. Before that time, everyone was
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  sort of focused on criminals, people breaking into bank accounts, stealing your credit cards,
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  sending you spam and fishing emails, or activists are doing this for notoriety or some sort of
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  political purpose, but not intelligence agencies, not armed services. And if anyone really thought
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  about it, they would say, well, they're probably doing something but it's probably against national
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  security targets. They're doing espionage and cyber like they've traditionally done against
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  political targets and whatnot. And this was a private company, right? The set of private companies
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  are hacked. And as I started pulling on the threads and that investigation ended up leading,
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  calling Operation Aurora, realized that this was happening all over the place. That intellectual
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  property was being taken by China. Later on, I've done investigations on North Koreans,
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  of Iranians, of Russians, and really realized that the nation states were a huge part of this
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  cyber ecosystem and I want to phrase back then that said that we don't actually have a cyber
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  problem. We have Russia, China, Iran, and North Korea problem. And what I meant by that is not that
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  every single hack is coming from those four places, but a huge number of them are
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  and both from a nation state perspective, the intelligence services and the militaries of
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  these countries doing this, but also cyber criminals are operating in some of these countries.
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  And the reason that it's happening is because those countries are adversarial to our interests,
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  obviously, and have been for many decades. And at a minimum, when they have criminals operating
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  within their country, they're hacking American businesses, American consumers, and in minimum,
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  they tend to look away and not follow through on prosecution requests from our law enforcement
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  alike. And at a maximum are supporting them, potentially even recruiting them into their
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  intelligence services, giving them taskings and the like. And it's not to say that there are no
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  criminals, let's say in America or in Britain or elsewhere, they're doing cyber activity,
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  but they tend to get caught quickly. And law enforcement in those countries tend to investigate
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  them and prosecute them. And that does not happen in Russia, in China, in Iran, in particular,
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  no real cyber crime in North Korea, it's all state-sponsored. And that's really the difference
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  that you've been able to create an ecosystem of impunity that exists in these countries where both
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  criminals and activists and ultimately, of course, nation state actors are doing all this stuff,
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  where over time it became the majority of all the activity that we started to see against Western
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  businesses. And geopolitics were at the heart of it, right? The problem was not a technological one.
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  It was one of understanding who your attackers are, attribution was vital. That was the whole
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  premise for starting CrowdStrike in 2011. When I realized that the nation states are a huge problem,
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  and you need to understand the adversary, we had a tagline early on in the company's life,
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  you don't have a malware problem, you have an adversary problem, and that was really game changer
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  in the thinking about how to approach the cyber issue. And I ended up being involved in a lot of
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  high-profile investigations. There were really geopolitical events that our country has gone through,
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  whether it was the hack of the DNC in 2016, or the hack of Sony by North Korea in 2014, and many
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  others. And this has always been a huge passion of mine of how do we actually think about this
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  problem differently, not just as a technology problem. So when I retired from CrowdStrike in 2020,
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  I wanted to focus full-time, or most of my time, on really addressing the problems that America
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  faces in the geopolitical realm, primarily focusing on the competition with China that I believe
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  will be the defining factor of the century, and how do we win this new Cold War? So in some ways,
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  it was a very natural transition and a culmination of a lot of things that have done over a course
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  of my life for the last 20-plus years. I'm actually curious. Have you ever worked with Keith
• 16:08
  Crack? Because I know that he also focuses on this post-tech career. So he's also focused on
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  sort of the emergence of China and the risk they pose. So I'm curious if you've ever done anything
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  with him, and it's totally a separate conversation, but it's interesting. Yeah, go ahead.
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  Yeah, absolutely. So he's got an institute, which I also do. I have one in Johns Hopkins. He
• 16:35
  started one at Purdue University, focused a lot on this global competition. He focused a lot on
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  semiconductors, which we do as well. At my own think tank, Silverado. So we have some overlaps.
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  So it's obviously, when you start to pay attention to it, you start to realize how big an issue
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  it is, and you sort of had a front row seat because you were dealing with companies that were
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  on the receiving end of some of these attacks. So I've listened to a few of your thoughts
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  on this. Radalio believes that China will have an inevitable rise, and you disagree with that.
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  And I'm curious about if you disagree with Radalio's view on China's inevitable rise,
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  what do you believe can happen? At best case scenario, what does us winning this cold war
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  look like? And what is the perfect set of geopolitical conditions that you hope to accomplish
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  with awareness, with advocacy, with think tank, with policy influence? I guess I don't want it
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  to just be doom and gloom. I want to have some sort of roadmap for where we can go, given that this
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  is a real threat. Yeah, and you know, my book world on the brink America can be China in the
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  race of the 21st century is actually very optimistic, believe it or not, despite the title because
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  the first half of the book talks about the problem, the reason why I tell him on matters,
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  the reason why we're in path to conflict. But the second part of the book actually talks about
• 18:03
  solutions. And it argues that we have every strength over China. China is much weaker than we think
• 18:09
  that they are. We are much stronger. China I think is actually a weaker power than the Soviet
• 18:14
  Union ever was during the first cold war. If we won that one, we can absolutely win this one.
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  We have all the ingredients for victory. The only question is that we're willing to use them.
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  Do we have the political will to do so? And look, the strategy for victory begins with keeping
• 18:29
  the cold war cold, right? We managed to do that for the first cold war. It was not easy and there
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  were these very tense moments, of course, particularly in the 1960s, where the conflict
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  risked escalation. But if we managed to do that with China, if we managed to keep them from
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  invading Taiwan, their long-term trajectory is not great at all. I completely disagree with
• 18:55
  Ray Dalio. In fact, this was a common wisdom, you know, 10, even five years ago that China's
• 19:01
  rising is inevitable. America is in decline. I never believed that. Nowadays, more people,
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  I think, are moving over to my side of the equation rather than his. Because if you look at
• 19:12
  just economics and demographics, China is really screwed, right? So let's begin with their economy,
• 19:20
  which is now stagnating on a relative basis. The era of double-digit growth is gone.
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  For longest time, as they went on this historic growth path for 40 years, that double-digit growth,
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  people were asking the question, would it ever end one day? Well, we got the answer,
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  is yes it would. And the cause of that was middle-income trap, which, you know, most countries
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  hit, right? You know, you had Japan experience at Korea, Taiwan, all these countries that experience
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  rapid growth initially, eventually hit about $10,000 per capita and labor costs rise, productivity
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  declines and growth stagnates or becomes much, much lower on par with all the developed countries.
• 20:14
  China right now is at $13,000 per capita. And the prompt for China is that they hit this
• 20:19
  middle-income trap too early, right? When Japan did it, when Korea did it, they were already developed
• 20:25
  countries. Most of the population was in middle class. And that's not the case in China. You still
• 20:31
  have a huge amount of poverty in China. You still have huge rural populations that have not
• 20:36
  participated in this boom and in this boom. And that is really the challenge now for them,
• 20:44
  how to manage their slowing growth when you've got enormous economic challenges that still remain
• 20:51
  in the country. And on top of that, you've got incredible mismanagement of the economy that's
• 20:57
  been taking place on decision being because this is a guy that doesn't understand economics. He's
• 21:02
  a traditional Marxist-Leninist, very ideological, and has driven away most of the bureaucrats
• 21:08
  that they've had for decades in power. They've now left the Paula Bureau, have been kicked out,
• 21:15
  and he's replaced them with security men, with hardcore power people because he's obsessed,
• 21:22
  of course, with population control with security, to the exclusion of economy. He's driven a lot
• 21:27
  of businesses away by cracking down on both the domestic tech sector, Jack Ma, for example,
• 21:34
  as well as foreign companies, many law firms, Western law firms have left the country. And of course,
• 21:39
  if you're Western business, you can't operate it in place if you don't have access to lawyers
• 21:44
  you can trust. So he's created a very unattractive environment there, which is why foreign direct
• 21:50
  investment in China has dropped 20% a year over year and is likely to keep continuing going down
• 21:55
  over time. And you have a huge real estate bubble just to give you a sense of what it's like right
• 22:03
  now. At the height of 2008, at the time when we had our real estate bubble, real estate was about
• 22:09
  10% of our GDP. Today in China, it is 30%. Just on a manageable size. Now, it's a little different,
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  they're not as leveraged as they are. The rest of the financial system is not as significant as
• 22:23
  it was for us in 2008 because guess how they're financing much of that real estate boom.
• 22:28
  They're financing it through the middle class because the way that development works in China,
• 22:33
  if you're a developer, you're getting huge deposits from people that want to buy apartments and
• 22:37
  you're using those deposits to actually finance the construction much of it. So as they've
• 22:43
  built me all these ghost cities as they've had this over capacity in real estate, it is not the
• 22:48
  banks mostly. They're in trouble. It is life savings of the middle class because in the middle class
• 22:53
  in China, where do you put your money that you've saved? You're not going to put in a bank in a
• 22:58
  state-owned bank, you don't trust it. You're not going to put in a mattress because you know
• 23:02
  that it can be seized by the government. You're not going to put it in the stock market because
• 23:05
  you believe it's rigged. In fact, it's remarkable that you've had this incredible growth in China
• 23:09
  last 20 years. The stock market has basically stayed flat. So that tells you that there's no
• 23:15
  new investment in equities in China. It's all gone into real estate for the most part.
• 23:21
  Those people are going to be wiped out. Now Xi Jinping doesn't care about that because he's got
• 23:24
  such an incredible surveillance state and control of his population, but it's not great for
• 23:29
  your economic productivity to have the middle class lose all their life savings.
• 23:34
  And on top of all of those challenges, which are enough to give anyone a headache and seem
• 23:41
  daunting, you are the population collapse that has already started to take place. They are
• 23:45
  already starting to lose people every single year. The death succeed, the birth rates,
• 23:51
  and it's escalating and is going to continue to escalate throughout the century.
• 23:56
  So they're going to go from about 1.4 billion people that they have today to
• 24:01
  conservatively speaking, around 550 million by the end of the century. An incredible decline
• 24:08
  in population, which by the way is highly deflationary, highly likely to cause further stagnation,
• 24:16
  and is an economic headwind that I don't know how you escape. So for all those reasons,
• 24:24
  I think over a long term, their economic prospects are not great. The growth rate is about
• 24:30
  the same as ours today. And of course, the economy is 25% smaller. And at that growth rate,
• 24:35
  unless something dramatic changes here or China, they're now going to eclipse us economically.
• 24:41
  So this idea that they're rising power with, decline power, I just fundamentally disagree with.
• 24:46
  And we've got every strength, right? We've got an incredible innovation economy,
• 24:51
  whereas most of the AI innovation that's taking place, it is here in America, right? Where do you
• 24:57
  have incredible access to capital, where companies like CrowdStrike is able to raise enormous
• 25:03
  money in the private markets and then later in the public markets? It's here in America,
• 25:08
  where you have incredible single market, the largest in the world, where selling a product
• 25:16
  in Alabama is exactly the same as it is selling in Seattle. That's not true anywhere else in the
• 25:22
  world. You go to Europe and it's a collection of, you know, almost 3,000 countries and
• 25:28
  with different languages, different cultures, different go-to-market strategies. It's a
• 25:33
  huge challenge to operate there, right? Unlike here in America, you have the greatest military
• 25:37
  in the world, you have the greatest alliance network, the world's biggest economy. We have
• 25:41
  enormous advantages, probably our biggest disadvantages are political system and the dysfunction
• 25:46
  that we have here in Washington DC. But aside from that, the strengths are enormous and China has
• 25:53
  these huge, huge problems. So I argue that if we are managed to avoid a war, which should be
• 25:59
  the defining priority for the United States foreign policy, if we manage to preserve Taiwan's
• 26:06
  de facto sovereignty and keep China contained in that region, we can weight them out, that they're
• 26:14
  going to experience more and more stagnation. The economic situation is going to cause
• 26:18
  them more and more problems, which is going to impact their ability to spend money on the military
• 26:22
  and threaten war and so forth. And their influence already, economic influence in the world
• 26:28
  is declining because the economy is not growing, so it's less attractive to invest in it. And they
• 26:35
  don't have extra cash to invest in projects like the Belt and Road Initiative. They wanted to
• 26:40
  spend about $8 trillion or a decade, a decade and a half on Belt and Road. They spent less than
• 26:47
  two and it's basically stagnating as well because they're out of cash. So for all those reasons,
• 26:55
  I disagree with Ray Dalia. No, I appreciate you walking through this. So the solution really,
• 27:03
  when you go through all those reasons, it sounds like a really China is not going to self-destruct
• 27:10
  completely, but they're hurting themselves significantly. So if you help preserve Taiwan's
• 27:16
  sovereignty, if you don't escalate into a war, if China's self-destructs just to put it in
• 27:21
  layman's terms and make it very simple and clear, then this is this is sort of the best possible
• 27:26
  outcome. But I'm curious if you think there will be a point where China starts to understand that
• 27:32
  they're declining and they already probably do to some degree, but when they understand they're
• 27:36
  starting to decline, if they understand that Taiwan is this linchpin for the US and so important,
• 27:45
  strategically and economically because of what they produce, do you think that or what is your
• 27:52
  opinion on how does the US preserve Taiwan's sovereignty and not encourage this knee-jerk
• 28:05
  offensive reaction from China when it sees that it's in decline and it almost lashes out to a
• 28:12
  degree. Is that some sort of concern that can be alleviated? Is that even a concern? And if so,
• 28:19
  how would we alleviate that concern? You know, it's got you absolutely nailed that this is
• 28:25
  absolutely the challenge. Now what we have going for us is that they're so unbelievably arrogant,
• 28:30
  she's been in particular. I'm pretty convinced that he does not believe he's in decline. He's
• 28:35
  listening to Ray Dalio and wanting to listen as long as possible to Ray Dalio and others that think
• 28:41
  China is rising and its rise is inevitable because as long as they're that self-confident,
• 28:47
  he will think that he has time to deal with this issue of Taiwan. And the longer, the more time
• 28:55
  we have, the more we can spend it on building up defenses and reversing this military balance
• 29:02
  of power that has become more even in the last few years. It's not because China has become so
• 29:09
  strong. Yes, they've modernized the military. Yes, they've invested in a lot of these capabilities.
• 29:13
  But more importantly, we've taken our eye off the ball, right? For the last two decades,
• 29:17
  we've been distracted. We've been fighting wars in the Middle East. We're now immersed in this
• 29:23
  conflict in Ukraine. We're doing, you know, back in the Middle East, we're trying to confront
• 29:30
  Iran and so forth. And this was their singular focus from a military buildup perspective for literally
• 29:37
  the last 45 years. And Taiwan's taken their eye off the ball because they've gotten complacent,
• 29:42
  particularly in the 2000s and early 2010s, where they thought that better economic relations with China
• 29:47
  would preserve their de facto sovereignty and the threat to them has gone away. Well, now everyone's
• 29:55
  woken up. In fact, thanks to Xi Jinping and thanks to his aggressiveness and thanks for just
• 29:59
  threats, you know, just in the last few weeks within the inauguration of a new president, Taiwan,
• 30:05
  last month, China has encircled Taiwan with these military exercises. Well, that is having the
• 30:11
  opposite reaction to what they think because it's getting the time when he used to care more about
• 30:16
  their defense to invest more to build up capabilities. And this is incredibly difficult to pull off,
• 30:21
  right? I want to give you one historical case here. So this month was of course the 80th anniversary
• 30:30
  of D-Day, the largest amphibious operation in history, 160,000 allied troops crossing English
• 30:37
  channel to land on the beaches of Normandy, 160,000. Today, this year is also the 80th anniversary
• 30:44
  of another amphibious invasion that never took place. And that was the invasion of Formosa,
• 30:52
  as Taiwan was called at the time, that was prepared as a plan by the Joint Chiefs of Staff.
• 30:57
  And that was never executed because it had called for 300,000 personnel to invade the island to
• 31:06
  fight through for months against entrenched Japanese positions on the unbelievably challenging terrain.
• 31:13
  You've got mountains, you've got rivers, you've got forests on that island, you've got very rough
• 31:20
  and shallow waters surrounding it. And when Roosevelt looked at this plan with Douglas MacArthur and others
• 31:29
  that was his senior military advisor, he said, no, this is too risky, this is too hard, we're
• 31:34
  not going to do it. We're going to bypass it and invade Okinawa instead on the way to the
• 31:39
  invasion of Japan, right? So even back then, 80 years ago, this was considered incredibly hard,
• 31:45
  we harder than Normandy, right? It has only gotten more difficult since then because
• 31:52
  over the last 80 years, the advancements in military technology have largely benefited
• 31:56
  defense, right? You've had all these asymmetric abilities have been developed from, you know,
• 32:01
  javelins and a tank, guided missiles to stingers, to air and to ship missiles to all sorts of
• 32:10
  sensors, air defense batteries that are highly capable and so forth, right? So it is now easier
• 32:17
  than ever to defend the silent that has always been incredibly difficult to conquer in the natural
• 32:22
  fortress. And the only reason why right now the threat is so cute is because the Taiwanese have
• 32:29
  dropped the ball, we've dropped the ball and not focused on it. The longer he waits, she, the more
• 32:37
  time we have to restore that military balance of power, which we're trying to do as fast as possible,
• 32:42
  right? We're spending billions of dollars on building up our capabilities in the region.
• 32:48
  Our allies are doing the same thing. The Taiwanese are rapidly increasing their spending,
• 32:52
  the Japanese are as well, the Philippines, the Australians. So if we can get more time,
• 32:59
  this is going to be much better for us and worse for him. And as long as he's delusional,
• 33:04
  as long as he thinks the time is on his side and he is arising power, the better it is for us.
• 33:11
  Because I think that the delusion leads him to think at any point, he can just snap his fingers
• 33:17
  and Taiwan is his. I think that that's probably what's in his head right now. But you're saying that
• 33:25
  even though it's such a small, like geographically small sovereign nation, it would still be
• 33:31
  incredibly hard, especially with allies in the region, for them to be taken over. That's phenomenal.
• 33:38
  This may not mistake about it. If he goes for it, this will be the most complex military
• 33:45
  operation ever taken place in history. Obviously, the Chinese don't have a history of it, don't have
• 33:51
  the experience. The last war they fought was in 1979 against Vietnam, which did not go over well.
• 33:56
  So the challenges for him are numerous. And unlike Putin, the stakes for him here are very, very high
• 34:04
  and he knows it. So Putin, I argue, could lose an equine because the goals are so ambiguous that
• 34:10
  he's defined. He said, deenatification, demilitarization, what does that even mean? I've
• 34:16
  argued for two and a half years now that he could declare victory tomorrow, mission accomplished,
• 34:21
  pull out, and no one rush about tonight. And he's perfectly secure in his position power.
• 34:27
  Xi Jinping does not have that luxury. For him, this is a binary outcome, right? You either take Taiwan
• 34:32
  or you don't. And if you don't, and you go for it, this can endanger, and personally, this
• 34:38
  and an Israel power, this can put the CCP under existential risk. So if he goes for it, he needs to know
• 34:47
  that he has a high chance of winning this thing. And winning it quickly because he doesn't want to
• 34:52
  see a drawn out conflict like what Putin got in Ukraine, where you're spying for two and a half
• 34:56
  years, that is, he looks weak if he looks weak, if it does that. And well, not just that, but
• 35:01
  you know, the world economy gets destroyed, Chinese economy gets destroyed. This is really the
• 35:06
  stakes here are so much bigger than they are in Ukraine because Taiwan, of course, in the Taiwan
• 35:11
  state, are such a huge part of the global economy. You know, if China is fighting America for Taiwan,
• 35:17
  there's no imports going into China. There are no exports going out, right? So this is going to
• 35:23
  be catastrophic for them, catastrophic for the world. The world will be instantly in global
• 35:27
  depression. He wants to have sort of a quick ripping off the band-aid and operation in the last
• 35:33
  a few weeks. And it's over, right? And ideally, he keeps America out where he only has the Taiwanese
• 35:40
  fight and he knows that they likely will not sustain themselves for long. If that had a situation,
• 35:46
  I just want to take a second and thank the HubSpot podcast network for sponsoring the show's
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• 35:55
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  like my first million hosted by Sam Parr and Sean Perry. They feature famous guests like Alex
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  Listen to my first million wherever you get your podcasts. I was going to ask, so
• 36:21
  you mentioned, you mentioned a few times like there has to be some decoupling from businesses
• 36:29
  focused on doing business in China, but also the US as well because we're all interconnected.
• 36:34
  So how do we achieve this decoupling? I thought about this because Keith speaks about this
• 36:40
  quite often. Keith Krakhi speaks about how we have to start to become less dependent on doing
• 36:46
  business in China. I think this is actually what he advises companies to do. He advises them
• 36:51
  to have a China policy to a degree. So what is the playbook for a private business and for just
• 36:58
  the US in general to start to decouple and become less integrated with China?
• 37:03
  Yeah, so I don't believe in decoupling for two reasons. One, China is too big to decouple from
• 37:11
  and even if we somehow did it here in the United States, not of our allies would fall
• 37:15
  us over that cliff. The opportunities to do business in China, to produce in China, they're just too
• 37:23
  great. And two, it's actually counterproductive to decouple because if you decouple completely,
• 37:28
  let's imagine you could do it, you have no leverage over that, which is ultimately not what you
• 37:32
  want. You want to have as much leverage over their economy as possible to try to enhance your
• 37:37
  deterrence and you want to decrease their leverage over you so that it gives you freedom of operations,
• 37:43
  so that Xi Jinping does not delude himself into thinking that, oh, there's so depend on my economy,
• 37:48
  there's no way that they're going to fight me for Taiwan, I can take it all my own.
• 37:52
  And to do that, I argue it's not about decoupling, it's about what I call in the book,
• 37:59
  in a directional entanglement. It's creating that asymmetric dependency where China is more dependent
• 38:05
  on us economically and we're less dependent on them, particularly in the areas where it really
• 38:11
  matters for the 21st century. Look, ultimately, if you take the long view and sort of set Taiwan aside,
• 38:16
  I believe that whoever wins the 21st century is going to be the one that wins it economically,
• 38:23
  of course, which was also true in the last century. And to win it economically,
• 38:28
  you have to win it technologically. And I believe there are four critical technologies that are
• 38:32
  essential to that victory for the 21st century. They are AI and autonomy and you know,
• 38:39
  probably self-explanatory to your audience, why that's important and that's going to be really
• 38:42
  groundbreaking. The second one is closely related. It's biotech and synthetic biology,
• 38:48
  which is going to be revolutionized by AI, most likely not just in the areas of medical sciences,
• 38:53
  but in things like bioenergetics, the development of new energy sources in a lab,
• 39:00
  development of new materials and biomefactoring that could be more durable, more lightweight,
• 39:05
  less carbon-intensive, really incredible innovation that I think we're in the precipice of having.
• 39:11
  The third one is space, particularly low-orthorbit, and you've seen the revolutionizing a space
• 39:18
  with the advent of low-cost lift into space with the invention of reusable rockets by Elon Musk,
• 39:27
  and now Jeff Bezos and others, and particularly the innovations you're seeing in low-orthorbit,
• 39:34
  with these very small cheap satellite constellations that are being deployed,
• 39:38
  they're revolutionizing communication, navigation and positioning, intelligence,
• 39:44
  surveillance and reconnaissance, and all sorts of applications we haven't even invented yet,
• 39:49
  that you're going to have in low-orthorbit weather latency to the satellite is very low,
• 39:55
  and you can have very cheap satellites that are numerous being deployed there.
• 40:00
  And the last one is green energy, and as we're transitioning away from fossil fuels,
• 40:06
  trying to address climate change, the technologies like batteries and wind and solar and EVs
• 40:14
  are going to be the new oil, the new energy sources of the 21st century,
• 40:20
  and I believe that we have to try to dominate as many of these sectors as possible,
• 40:26
  technologically, and try to reduce our depends on China and all of them.
• 40:31
  Now, in these four sectors, specifically, this is sort of the mission, mission critical.
• 40:37
  They're mission critical for the economy, they're going to be defining, I think,
• 40:40
  economic growth over the course of the century. The good news is that in the first three
• 40:44
  we're leading, in AI and autonomy, we're by far the leaders. It is not an accident that virtually
• 40:51
  all of the companies that are producing these foundation models, these huge LLAMs,
• 40:57
  are all American companies. We have not just the talent base, but the access to capital
• 41:03
  that you have available in very few countries. It takes hundreds of millions of dollars now
• 41:08
  to train these models at the cutting edge. That is likely to go to a billion. In fact,
• 41:14
  the interesting thing about AI is it's probably the first technology that humans have
• 41:18
  invented. I can't think of any other where the cost goes up with every single iteration,
• 41:25
  right? In everywhere, everything else, whether it's Moore's Law with computing, whether it's
• 41:31
  the internet or production of cars or anything like that, the cost always drives down with scale.
• 41:38
  Here are the effects of the opposite, right? You need more and more money to produce these
• 41:43
  models very quickly. I think a year or two out, it will cost you a billion dollars to produce
• 41:48
  these models. Well, there are very few places in the world that could raise that type of money,
• 41:53
  and mostly it's China and the Middle East, right? The problem that China has is that they don't
• 41:59
  have access to chips, which are essential for building these models because we've banned the
• 42:07
  export of high-end GPUs to China, and we've banned the export of equipment that you need to
• 42:12
  manufacture those GPUs, and they're falling behind more and more every single day. In biotech,
• 42:18
  we're also had, and again, I think biotech will be completely upended by AI. That is a future,
• 42:24
  so if you're leading an AI, you'll likely be leading in biotech. Space will be leading as well,
• 42:29
  thanks to SpaceX, thanks to Amazon and its Kuiper constellation that's going online shortly.
• 42:36
  The lead is not as great, but so far we're ahead, and the good news is that the first mover
• 42:42
  advantage is really significant because there's only so much space in space, particularly in low
• 42:49
  or thoroughbites. The projection right now is that you'll have about 50,000 satellites in low
• 42:54
  or thoroughbite by the end of the decade. Well, if you get that many, and they're mostly American
• 42:58
  satellites, no one else is really going to have a lot of space to put theirs up there because of
• 43:03
  interference issues and the likes, so if China doesn't get their act together soon, they may find
• 43:08
  themselves without anywhere to go, at least in Leo orbit, which is incredibly advantageous.
• 43:15
  And the last one we're losing badly, they're dominating in every single part of that green energy
• 43:21
  sector, whether it's EVs, batteries, solar, wind, in part because they've stolen so much IP,
• 43:28
  I've dealt with that over the course of my career, CrowdStrike, and elsewhere where most of these
• 43:32
  companies that we've had in these sectors have had their technology stolen by the truckloads
• 43:39
  through Cyberspinage, they are leading because of dumping and subsidies and our capacity
• 43:45
  that they're creating in these sectors, and we're trying to desperately adjust to that,
• 43:50
  trying to student tariffs both in this country and our allies are looking to do the same as well,
• 43:55
  to prevent that dumping on our shores to allow our businesses to innovate and to not be driven
• 44:03
  out of business. And then with those four technologies, you also have two critical components
• 44:08
  that are essential, right? I mentioned one of them, semiconductors, you can produce any of these
• 44:12
  things without chips, and critical minerals as well. So everything from lithium, a coal ball,
• 44:17
  the nickel, obviously the rarest as well, and here it's a mixed bag as well because in critical
• 44:23
  minerals, we're losing pretty badly because China is refined and processing so many of these
• 44:28
  minerals, about 90% of them, depending on the mineral. And in semiconductors, it's very much a
• 44:33
  double edged sword because we've been able to curtail their advancements in the high end chips,
• 44:39
  in the leading edge chips, but we've let them dominate what I call the foundational chips,
• 44:44
  29 meters and above, which are essential to just about everything and over the next two to three
• 44:49
  years, they can be by far the leading producer of those chips. So there's work to do here. I think
• 44:55
  fine large, I would say we are like a B minus in this race, but we gotta do a lot better.
• 45:02
  So one more piece that I'm very curious to get your opinion on because I'll explain where
• 45:09
  this thought came from. And we can talk about TikTok and we can talk about China's cultural
• 45:16
  influence on the US, but I'm actually more curious about the inverse. I'm curious what the
• 45:24
  not members of the CCP or people that are close to the government, but the middle class or
• 45:31
  just the average individual in China culturally is the US impacting them or influencing them so
• 45:38
  much so that they actually feel like they would be more akin to or would like to adopt more US
• 45:45
  culture, which could lead to some sort of benefit, intangible benefit if we can influence them in
• 45:51
  some way. That's not just technological. So yes and no, I would argue that we're influencing them
• 46:00
  sort of by default because if you look at what's happening in our border and I'm not a fan of
• 46:05
  open borders and uncontrolled immigration, but I do think immigration is ultimately strand of
• 46:09
  hours, but you have about 4,000 Chinese nationals crossing that border every single day.
• 46:15
  There's not 4,000 Americans trying to get into China every single day, right? So it's unmistakable
• 46:20
  that we are the attractive one. Now again, this is uncontrolled immigration that is ultimately
• 46:25
  counterproductive. Probably a number of them are intelligence operatives, not just people looking
• 46:29
  for better life, although I think majority probably are, but we should be having a merit-based
• 46:35
  immigration program. We should be controlling immigration and figuring out how do we pick the best
• 46:40
  people from all these countries to come here and help it out in a way that I was able to do
• 46:45
  because I'm entering into this country as well. But that tells you something about the fact that we
• 46:51
  are still the beacon of innovation, the beacon of opportunity for the rest of the world.
• 47:00
  Many people from across the globe want to come here, want to immigrate here, want to have a
• 47:05
  better life for their kids here. At the same time, you also have this rising nationalism that has
• 47:12
  been accelerated under Xi Jinping. And if people are not leaving, and mostly they're leaving because
• 47:18
  of economic dislocations that have taken place in China and unemployment is skyrocketing.
• 47:24
  And so forth. But if you're not leaving, you're probably very, very proud of China and what it's
• 47:29
  been able to do, which is remarkable, right? Over the last 45 years, the greatest rise,
• 47:35
  economic rise of a nation in history. You're very proud of its growing military power and its growing
• 47:42
  diplomatic cloud. And you've also been kind of making fun of the United States for the last
• 47:47
  15 years as well, both with the financial crisis in 2008, all the political dysfunction that you've
• 47:57
  seen us have, the pull out of Afghanistan and so forth. So you've been laughing at our expense
• 48:03
  quite a bit lately. And you're seeing this play out in the Chinese market right now, where
• 48:11
  the other encouragement certainly of the CCP and the government there, but also because of the
• 48:16
  growing nationalism, the attractiveness of American brands, whether it's the traditional brands that
• 48:24
  people associate with America like Coca-Cola and McDonald's and so forth or even Tesla and Apple
• 48:32
  is decline rapidly. And people are preferring domestic alternatives for nationalistic reasons. And
• 48:37
  because they're increasingly getting aggrieved at America and what they see as Americans attempts
• 48:43
  to contain China, which we're absolutely are doing, right? We're not saying it, but we're 100%
• 48:47
  doing it and I argue we should be doing it. So, you know, if you want to have a better life,
• 48:54
  you're going to come here, but if you don't, you're going to sort of fall back on, we want to be the
• 49:00
  greatest, we were the greatest country in history, China, for much of human history, right? For much
• 49:05
  of human history, human civilization, they were the most powerful, the richest, most populous country,
• 49:12
  and is only in the last few hundred years with the advent of the Industrial Revolution
• 49:16
  when that changed, right? First, Europe eclipsed them and now America, and they think it's their
• 49:21
  rightful place to assume that mantle of being the first, and they see us as trying to contain
• 49:27
  that, which we are. And they're antagonistic towards that as to be expected. And as there is
• 49:34
  there any benefit to even entertaining some sort of cultural war that we can win to assert more
• 49:40
  influence or is that ship sale? I think it's very difficult where you don't have a free market
• 49:47
  economy. You have full control over the information space, right? The great firewall and the
• 49:53
  censorship that's taking place, they're incredible surveillance networks. So I think the best thing
• 49:59
  we can do, and this is not just related to China, but really the rest of the world, is not to be
• 50:04
  moralistic and lecturing to countries about democracy or human rights or any of those values.
• 50:09
  It is to live our ideals and to have the most vibrant, reductive, innovative economy in the
• 50:19
  world that everyone wants to be a part of, right? It's lead by example, not to lead by moralizing
• 50:25
  and lecturing as we've done really for the last 45 years. I think that creates resentment.
• 50:32
  That gets people to push back, you know, when they hear us say that we're the world's greatest
• 50:36
  country, the most free country, they're saying, you know what? I don't believe that. I don't
• 50:40
  agree with that, right? And you know, there'll be many people in Europe who will say, really,
• 50:43
  like you're the most free country, not quite, right? And it's just very tone death when you approach
• 50:51
  it that way. But if we live our ideals and not, you know, engaging these missionary activities to
• 50:59
  promote, promote them, but promote them essentially by default, that's ultimately way more attractive
• 51:05
  than what we're doing today. And the other thing is it's not as provocative because the last thing
• 51:13
  we want to do is actually make Xi Jinping and the CCP feel threatened, right? That goes back to your
• 51:20
  thesis where you just want them to just think that they're killing it, think that they're,
• 51:24
  you know, in control, that's and give us time. That's really the goal. But also you don't want
• 51:29
  them to think that we're trying to undermine their regime in China because, you know, I don't know
• 51:34
  about you, but I'm done with regime change adventures. I'm kind of full of it. And certainly we
• 51:40
  can change the regime in China, nor should we try. So you don't want them to think that we're trying
• 51:45
  to cause that in China because that could get them to be more provocative, more aggressive,
• 51:51
  and actually trigger a war that you want to avoid. So if you are, you know, applying the
• 51:58
  Teddy Roosevelt mantra of speaks softly, carry big stick, we've done the opposite, right? We are
• 52:05
  speaking aggressively and we're carrying no stick because we've let, you know,
• 52:09
  the military balance in the region atrophy so much. So we got to get back to the basics here.
• 52:14
  Very, very smart. And then what I just mentioned about cultural influence, obviously TikTok is
• 52:21
  huge topic right now. Do you feel like, what are your thoughts on TikTok? Do you feel like it is,
• 52:27
  it is some sort of foreign technology that's actually trying to disrupt American culture and society?
• 52:35
  Is it something more malicious than that? Something that it really is not malicious at all?
• 52:42
  Because it's just so in the news all the time and now it's now there's support for banning it
• 52:46
  and obviously everything is going through the government. So I'm curious about your take on
• 52:50
  on that. And also, not just TikTok, are there other things that the average American individual
• 52:58
  in a Western country should be more aware of and TikTok is maybe just a distraction?
• 53:04
  Yeah. Well, as you know, Congress passed this bill, a present Biden sign to force a divestiture
• 53:12
  of TikTok right from by dance. It's not a ban of TikTok. If they divest in the next, you know, year or so,
• 53:21
  there's not any ban on TikTok. And I'm supportive of this bill, but I also think it's a distraction.
• 53:26
  I'm supportive of this bill because TikTok fundamentally is not a social media company.
• 53:31
  It is a media company for us, right? Yes, the content on TikTok is user generated, but the algorithm
• 53:38
  and frankly, let's face it, human moderation decides what you see and what you don't see.
• 53:43
  Editing is really, really vital. And you don't want a company that is controlled by an adversarial
• 53:50
  country to have that level of leverage over the American public. You just don't, right? Imagine
• 53:55
  it from the Cold War, we said, you know, we want the prov, the, you know, the main newspaper of
• 53:59
  the Soviet Union to have the circulation of the New York Times. You know, if that were happening,
• 54:05
  we would take netchers against it, right? In fact, we did because we have foreign media rulers
• 54:09
  ownership rules in this country, particularly when it comes to television stations, which, you know,
• 54:14
  you know, most concerned about or have been traditionally. And, you know, in the 1980s, when
• 54:20
  Rupert Murroch is an Australian citizen wanting to buy the Fox network, not Fox News, but the
• 54:25
  actual Fox network, he was told, no, until you become an American citizen, you cannot do that,
• 54:29
  right? Even though he was coming from a friendly country, right? Australia is an ally of ours.
• 54:34
  He was preventive from doing so. And even as an American, if he or anyone else wanted to buy
• 54:39
  about 40% of the television markets in the United States, the local television stations,
• 54:47
  they would be preventive from doing so because of regulations that talk about concentration
• 54:51
  of media ownership. Well, here you have a media company, TikTok, that self-admittedly says that
• 54:58
  they have users that are basically half the American public, right? That's a problem.
• 55:05
  Now, I don't think that's the biggest problem we faced with China. I can think of
• 55:09
  100 things that I would do long before I worried about TikTok. But, you know, as long as you're
• 55:14
  confronting them and TikTok is potentially an influence platform that they can leverage,
• 55:21
  I have no problems with that. It's a challenge that is dominating so much of the conversation,
• 55:26
  and you can't confront the other things that China is actually doing, like on overcapacity
• 55:33
  of semiconductors and trying to take over our energy sector with dumping of all these green
• 55:39
  energy technologies unlike. But it's still a problem, and we should absolutely address it.
• 55:45
  I was thinking about just one last thought on sort of different influence from China. And I
• 55:53
  thought about when Jack Ma obviously from Alibaba was sort of silenced by the government. I
• 56:02
  thought that was interesting, and it was interesting to me because you would assume that the
• 56:05
  government would want to support people like that and create. And I guess this goes back to
• 56:11
  the sort of their ignorance as to how powerful they are, how successful they are. But you think
• 56:16
  someone like Jack Ma would be a good spokesperson for China and be a good representative and reflection
• 56:21
  of success and innovation. Is that another thing that China has a hard time doing almost once
• 56:29
  you get too successful, limiting that success to a degree of that success is not directly correlated
• 56:35
  to the government? Well, it's not China, it's Xi Jinping. That's ACCPS, right? Yeah.
• 56:41
  I've argued that Xi Jinping has been just godsend to us, to America.
• 56:47
  Because everything he has done has been to the detriment of China and to the benefit of us,
• 56:52
  not just by ruining the Chinese economy and cracking down on the innovators like Jack Ma,
• 56:58
  but also pushing businesses out. And of course the aggressiveness of his diplomacy,
• 57:03
  this wolf warrior diplomacy has literally driven all these countries in the region into our arms.
• 57:10
  There's a great quote by the Singaporean foreign minister this past weekend.
• 57:16
  There was a Shangri-La conference, the Sengal Defense Conference, in Singapore,
• 57:21
  where the United States comes, China comes, all the regional countries. And the foreign minister
• 57:26
  from Singapore said, you know, all these countries in our region are running to us arms, not because
• 57:33
  of us policy, but in spite of it. We have not done a whole lot to make ourselves more attractive
• 57:40
  to them. We've not engaged them as much as we should, but they see themselves as having no
• 57:45
  choice because they're looking at China, they're looking at the aggressive actions they're taking
• 57:49
  in South China, see in East China, see in their wolf warrior rhetoric, and they're saying no
• 57:55
  things. As much as we don't like America, and let's face it, we've got lots of problems, lots of
• 58:01
  wars, and lots of people don't like us, and jealous of our success, they would still prefer us
• 58:06
  or China. And I already in the book, by the way, that this pursuit of wanting to be loved that we
• 58:13
  have in this country, wanting to be seen as the world's greatest power, you know, as benevolent
• 58:18
  power, the shining city on a hill, is an obsession that we need to give up in this country.
• 58:25
  We don't need to be loved. It would be nice, but you know, the reality is that powerful countries,
• 58:32
  companies, people are never loved. People are always jealous of their success and want to take
• 58:37
  them down a notch for it. But as long as people hate China more, that's a win, and that's what we
• 58:44
  should strive for, right? And Xi Jinping has been a great gift to us in that sense, and I sort of
• 58:51
  joke that if he's not on the CIA payroll role, we should pay him because, oh my god, almost every
• 58:56
  policy he's undertaken has been to the detriment of China. Now, this is all fun and games,
• 59:02
  up until a moment he invades and causes a global conflict, so hopefully he doesn't take it too far,
• 59:08
  but so far it's been great because he's walking us up, and he's walking up the rest of the world.
• 59:14
  If, you know, there's people that are listening to this, that are business leaders that are
• 59:18
  building things, and after listening to this, I know that you said we shouldn't decouple from China.
• 59:23
  But the average entrepreneur that would be listening to this podcast would be very scared about
• 59:28
  going into China. It's like, it's very stressful. It's just anxiety inducing. It seems like a headache
• 59:33
  that if I get to that point, I'm sure they'll have the support and the resources to navigate it,
• 59:36
  but just coming from you, obviously you don't want to decouple. You want to increase leverage.
• 59:43
  How can a business leader or an entrepreneur, of course, if you're already in
• 59:47
  China, I'm sure you have your ship figured out, but say you don't. Say you are growing,
• 59:51
  you want to scale outside of North America and outside of Europe and APAC and Amia. I guess
• 59:57
  it would be APAC, excuse me. What would be the playbook? What would be the strategy to do this
• 1:00:02
  thoughtfully and carefully so that you don't open yourself up to liability? You don't do the wrong
• 1:00:07
  thing. What's the words of wisdom for an entrepreneur that wants to go overseas?
• 1:00:12
  Yeah, so let me be clear what I mean by we shouldn't decouple. The top imports from China today
• 1:00:18
  into America by value are toys and apparel. I argue that it's fine to buy cheap sneakers
• 1:00:28
  from China and toys as long as they don't have lead in them, so that would be nice to
• 1:00:34
  not to have them poison our kids. These are not strategic resources. When it comes to
• 1:00:40
  advanced technology, absolutely we should not allow China to have access to our technology,
• 1:00:47
  particularly in those critical areas that I mentioned and to prevent them as much as we can
• 1:00:53
  from advancing in those areas through export controls on production of semiconductor manufacturing
• 1:00:59
  equipment, for example, and the like. If you are a business that is looking to go into China or
• 1:01:08
  is looking to expand operations in China or thinking about the future of operations in China,
• 1:01:14
  you should absolutely be thinking about the geopolitics here, right? As the saying goes,
• 1:01:18
  you may not be interested in geopolitics, but geopolitics is interested in you.
• 1:01:22
  And even if you think there is 5% chance that I'm right and we're in a path to catastrophic
• 1:01:28
  conflict here, that 5% can be pretty existential to your business. I was meeting with a major
• 1:01:34
  fortunate one on a company recently. They've seen executive and they told me, you know,
• 1:01:39
  if the scenario outlined in me tree plays out, our company will cease to exist. My response was,
• 1:01:44
  what kind of sounds bad? Maybe we should do something about that. And I believe that most
• 1:01:51
  companies need to have a China strategy that is minimizing the risk to them, to their companies
• 1:02:00
  from a potential conflict. And by the way, even if you think that conflict is unlikely,
• 1:02:05
  if you think the future doesn't know what he's talking about, this is never going to happen,
• 1:02:09
  guess what? The economic relationship between the US and China is only going one way, right?
• 1:02:14
  tariffs are only going to go higher. Export controls are only going to be put more and more
• 1:02:18
  into place. And that is not getting reversed, right? There's bipartisan consensus in this town
• 1:02:25
  on China. Trump started in 2016, Biden largely continued and expanded on it. Then Trump,
• 1:02:32
  you know, if he gets in, again, is talking about going even further. So this is not changing,
• 1:02:39
  where there is fundamentally realignment in the economic relationship that's taking place.
• 1:02:45
  And business need to need to take that into account. The environment, being able to do business
• 1:02:51
  with China is getting harder and harder. And you need to weigh the opportunity costs, you need
• 1:02:55
  to weigh the risks. And frankly, they tracked it in the sellout market, right? So if that market
• 1:03:00
  is only growing about 3%, still a huge market. And you may still want to have some access to
• 1:03:06
  some exposure, but it may not be as important as other markets as, let's say, India or Indonesia,
• 1:03:12
  which, you know, is the fourth most populous country and has enormous opportunities in front
• 1:03:17
  of it, Vietnam and so forth, Mexico. So, you know, you need to be thinking about this and whether
• 1:03:25
  it actually makes sense to operate in China, particularly China, there's becoming more nationalistic,
• 1:03:31
  more adversarial to our interests, and increasingly, it's telling its population, do not buy
• 1:03:36
  American, right? Both through influence campaigns, but also through directives. So for example,
• 1:03:42
  there is this directive A, so-called directive A, that the Chinese government has issued in recent
• 1:03:48
  years that tells their government agencies and state-owned enterprises to basically have an ex-couple
• 1:03:54
  years to remove any American software or American hardware from their networks, right, to decouple.
• 1:04:02
  And by the way, if the government agencies are doing this in the state-owned enterprises,
• 1:04:07
  you know that that's going to percolate elsewhere, because, you know, as if figuring out how to
• 1:04:12
  get just all sufficiency, they're going to push that on everyone else. So your time in China is
• 1:04:17
  highly limited, right? And when I see companies like Tesla, for example, and German automakers,
• 1:04:23
  you know, really doubling down on China, I'm sort of saying, what in the world are you thinking?
• 1:04:29
  Because the goal, stated goal, they're not even hiding, is to kick you up and ultimately,
• 1:04:33
  right, is to replace you with an existing indigenous vendors. And to subsidize those vendors to make
• 1:04:39
  life much more difficult a few over time. So yeah, you may have a few years of great returns and
• 1:04:45
  an opportunity to make money, but I hope you're using that to do risk and to invest in other parts
• 1:04:51
  of your business that are not relying on China, because that bananze is coming to an end.
• 1:04:57
  And in some areas has already ended, right? And you've seen this play out in virtually every
• 1:05:02
  sector that they've considered to be strategic, and it's going to play out in others as well.
• 1:05:08
  No, very good. You know, you put this book together, you interview a whole bunch of individuals
• 1:05:15
  on geopolitics as well. This is sort of where you spend a lot of your energy and your time.
• 1:05:21
  I'm curious if people were going to put the link for the book in the show notes, you can probably
• 1:05:24
  get the book wherever you get your book. So Amazon will link your social as well. Is there anything
• 1:05:32
  even fast forward to today that you wish you had put in the book that highlighted a certain
• 1:05:37
  thing that you didn't put in something that you wish you added that's just like a mission
• 1:05:41
  critical thought or just something that has really been just sort of percolating in your head
• 1:05:47
  recently? Yeah, anytime you write a book, you have to cut a bunch of stuff, by the way. I know,
• 1:05:52
  it never ends, right? One of the things I did talk a little bit about in the book, but I actually
• 1:05:58
  expanded since then I published a piece in one of the rocks on this issue is this idea that's
• 1:06:03
  becoming more and more prevalent in national security community circles that China is not going to
• 1:06:08
  invade Taiwan because of all the difficulties of military invasions that we've talked about,
• 1:06:12
  and it's going to take Taiwan through a blockade or some sort of gray zone operations that they
• 1:06:18
  are increasingly doing right in the Taiwan straight. And I debunk that narrative in a very
• 1:06:24
  detailed fashion this piece in one of the rocks because the reality is that there's no modern
• 1:06:29
  precedent in history, at least in recent times, of even a city, much less a country and nation
• 1:06:38
  falling and capitulating because of a blockade, right? You could look at the siege of Lenin
• 1:06:43
  grad by the Nazis in World War II, two and a half years and a million, 1.1 million people starved
• 1:06:49
  to death and they did not surrender. More recently in the 1990s, 30 years ago, you had the siege
• 1:06:56
  of Sarajevo by the Bosnian Serbs, 65,000 casualties, they did not surrender. And as I read in the
• 1:07:03
  piece, Taiwan is way more sufficient, but self-sufficient than most people think. On food production,
• 1:07:08
  they are basically self-sufficient. Yes, they import a lot of food, like every other country does,
• 1:07:14
  but most of their food imports are things like beef, for example, that is coming from the United
• 1:07:21
  States. Well, you can do without beef if you had to. They have a hot pork industry, so you could get
• 1:07:29
  not necessarily a lot of cow meat, but potentially pork beef, but they also have a lot of fish
• 1:07:34
  in their waters, in their lakes, in their rivers, and surrounding waters. They produce a lot of rice,
• 1:07:39
  they produce a lot of vegetables, they produce a lot of pineapples, and other fruits, so they are
• 1:07:46
  not going to starve to death in a blockade scenario. They're not going to be leningrad. It won't be
• 1:07:50
  the greatest diet, the most luxurious diet, they won't be dining in caviar and have intuna and
• 1:07:57
  the like, but you can sustain yourself. Even when you look at some energy where they do have a
• 1:08:04
  big problem because 98% of the energy is imported, largely LNG and oil. They do have some self-production
• 1:08:11
  of energy sources. They have nuclear, although they're kind of moving the other direction. They've
• 1:08:15
  shut down half of their reactors and they want to shut down the rest next year, but if push comes
• 1:08:21
  to shove, you can potentially reopen those. They have a bunch of hydro, they have increasingly more
• 1:08:26
  and more solar, they have a bunch of wind farms off their coast as well, so they have some production
• 1:08:31
  of energy, and fundamentally it's a tropical place, tropical climate. Unlike let's say Ukraine,
• 1:08:38
  where the Russians have been trying to destroy the energy sector and make Ukrainians a little
• 1:08:42
  at freeze to death, and by the way, they're not surrendering even though electricity is out in
• 1:08:47
  a lot of these places continuously. In Taiwan, you're not going to freeze to death, so you're not
• 1:08:52
  going to starve to death, you're not going to freeze to death. Economy is going to be in really
• 1:08:56
  terrible shape, but again, like terrible economies do not lead to capitalization. You can look at
• 1:09:03
  our own sanctions policy against let's say North Korea or Iran or Iraq during Saddam Hussein times,
• 1:09:09
  right? We've largely destroyed those economies and nothing happened. These countries did not
• 1:09:15
  adjust their policies even much less surrender. So this idea that China through just pressure
• 1:09:22
  is going to make these people, their democracy, their freedom loving, they are very proud
• 1:09:30
  of their nation, they're very proud of their heritage and history, which is very distinct from
• 1:09:34
  mainland China's, that they would just let them, that they would just capitulate to that pressure,
• 1:09:40
  I think is just really ridiculous, and it's a fundamentally misunderstanding the Taiwanese people
• 1:09:47
  and their resiliency, and that's why I think China hasn't yet done it because they could do
• 1:09:55
  tomorrow, they could have done it 10 years ago, right? Blocking in Taiwan is fully within their
• 1:09:58
  capabilities, but they know that it's not going to achieve that effect. It's going to ruin China's
• 1:10:03
  economy because of their own reliance on semiconductors coming from Taiwan, and also because Taiwan has
• 1:10:12
  reciprocal measures it can take, it can try to blockade China, for example, it has missiles that can
• 1:10:16
  reach most of the largest Chinese ports. It can, again, institute a counter blockade of chips
• 1:10:24
  into China, so there's lots of things that Taiwan can do to respond to blockades and make
• 1:10:31
  this a really terrible situation for China. So that's why I think that the main threat to Taiwan
• 1:10:36
  is that of invasion as difficult as it is, and I think Xi Jinping knows this, we know that he's
• 1:10:41
  given the order to the Chinese military to be ready to invade by 2027. It doesn't mean that they
• 1:10:46
  will invade in 2027, or they will be ready because obviously we know that you can give many
• 1:10:50
  government agencies deadline, whether it's in America or in China, and it doesn't mean that they're
• 1:10:54
  going to meet it, but that's the intent, right? And it's an indication of that intent, and I do think
• 1:10:59
  not necessarily 27, but like we 28 through 32 is that dangerous window when you could have his
• 1:11:07
  really last term in office. He's coming up for Communist Party re-election 27, very likely to
• 1:11:12
  win it, almost certain, unless something dramatic happens. That term ends in 32, and he's going to be
• 1:11:18
  79 and 32. And unlike perhaps our system, the Chinese people don't tend to elect leaders into
• 1:11:25
  their 80s. We could learn something from that by the way. But he may be thinking of that as the
• 1:11:33
  potential twilight of his power, of his life maybe even, he's not the healthiest by the looks of
• 1:11:40
  things. So if he wants to do it on his own watch, as I believe he does, I think he's really ego-driven,
• 1:11:46
  he wants to go down into the pantheon of Chinese history as a great leader that accomplished this
• 1:11:51
  rejuvenation of the Chinese nation, as he calls it, the taking of Taiwan, something that
• 1:11:55
  Mao could never do, right? That's his probably window of opportunity. And as I mentioned, that you
• 1:12:02
  weigh much longer beyond that, and the balance of power militarily really starts changing, and
• 1:12:08
  potentially even economically, if we take a range of actions that are suggest we take, and things
• 1:12:12
  get much worse from him. Amazing. Well, not amazing, but a very fascinating, wrong word. No,
• 1:12:19
  this is incredible. I just want you to tell people where they can connect with you. I mean,
• 1:12:30
  your book, World on the Brain, Cow America, can be China in the race for the 21st century. That's
• 1:12:33
  going to be everywhere you can get books. Do you have a website or social or anywhere that you'd
• 1:12:39
  like to send people to just consume more, learn more, interact with you? Absolutely. So I'm also
• 1:12:45
  podcasted, called geopolitics decanted. We're talking regularly on these issues of war and Ukraine,
• 1:12:50
  China, and the like. And on obviously X, I'm DL Paravatch, my first initial and last name,
• 1:13:00
  and LinkedIn and so forth. So connect me with me there. Perfect. Okay. And last question I like
• 1:13:08
  to ask everyone, and this is less about geopolitics is less about China. This is just more about you
• 1:13:13
  and just some last words of wisdom for the audience because you've had such an incredible career.
• 1:13:18
  You've built incredible companies. I mean, and this is sort of what you've dedicated your
• 1:13:22
  life to now. So you've had success in multiple fields. You've now you've written the best-selling
• 1:13:26
  book. If you could go back and you could just tell your 20 year old self one thing,
• 1:13:31
  one one piece of wisdom or word of advice, what would that thing be?
• 1:13:35
  Everything will come together. You know, I've never had a career plan, if you will.
• 1:13:42
  I always assume that opportunities would come along as long as you recognize it.
• 1:13:46
  And it comes at the right time. You can seize it. And it's always worked out well for me.
• 1:13:50
  I never planned to start CrowdStrike. It just sort of happened when, you know, I had this
• 1:13:56
  experience with Google. I led this major investigation. It opened my eyes to what was happening
• 1:14:02
  to this country with all these nation-state attacks. And I said, wait a second,
• 1:14:06
  the industry is really not responding to this. There's an opportunity here. Let's start a company.
• 1:14:10
  And I never planned to start a thing tank or write a book. But I've been passionate about
• 1:14:17
  this issue and had an opportunity. Obviously CrowdStrike became a huge success. We took a public,
• 1:14:24
  decided to retire and focus my full energy on this issue and try to give back. But also on the
• 1:14:30
  book side, I was one of the first ones to have predicted the war in Ukraine as I mentioned
• 1:14:36
  months before it occurred. And that really drove me to write this book because I said, you know what,
• 1:14:41
  if I turn out to be right on that issue, if there is even a small chance I'm right here,
• 1:14:48
  we need to raise public awareness. We need to try to build consensus to try to confront this
• 1:14:52
  problem that is staring us in the face that we have a little bit more time to try to solve,
• 1:14:57
  unlike with Ukraine. And that became the opportunity to write this book, which became a national
• 1:15:02
  ambassador. So, you know, it's important to not over-plan, I think, or at least it has been
• 1:15:08
  important to me and to just be always on the watch out for the opportunities that get presented and
• 1:15:14
  to grab them when you can.