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Transcript: Chris Darby talks with Michael Morell on "Intelligence Matters"

INTELLIGENCE MATTERS - CHRIS DARBY

HOST: MICHAEL MORELL

PRODUCER: OLIVIA GAZIS

MICHAEL MORELL:

Chris, welcome. It is great to have you on the show.

CHRIS DARBY:

Mike, it's an honor to be here. Thank you.

MICHAEL MORELL:

Chris, no doubt, the place to start here is explaining to folks what In-Q-Tel is, why it was formed, what it does.

CHRIS DARBY:

So, In-Q-Tel's the strategic investment arm of the C.I.A. and the broader intelligence and national security community. And we were formed in 1999, largely as a vehicle to access innovation, where that innovation may reside. I think there was a recognition on the part of George Tenet and others that C.I.A. just wasn't seeing these emerging companies that were being formed in Silicon Valley, Boston and elsewhere. And in the simplest terms, In-Q-Tel was set up as an investment vehicle to get to those companies.

MICHAEL MORELL:

You know, I was on his staff at the time. I was his executive assistant. And part of it was a realization that the way we used to do things, which was develop our technology internally ourselves, was simply not possible anymore because the world of technology outside the C.I.A. was moving so much faster and in so many different directions than we were able to do internally. So, Chris, this is In-Q-Tel's 20th anniversary. So, congratulations.

CHRIS DARBY:

Thank you.

MICHAEL MORELL:

And give us a sense of what In-Q-Tel has accomplished over the last two decades.

CHRIS DARBY:

Sure. I think the first thing that In-Q-Tel accomplished is it established a process for communicating the requirements of our customers to this community that just isn't familiar with the business of intelligence or national security. It's about a conversation with these companies and trying to translate what are often really unique requirements into something that the commercial sector can embrace and can act on.

And so, it's not that In-Q-Tel is the innovator. What we're doing is we're trying to imagine something new and then communicate that to these companies who have the innovative technologies and products. So, it's really about process more than anything else. And if I look back over the 20 years, we've gone through all the different phases of a startup. I think that we found our way with some early investments in companies that became very successful; companies like Palantir and FireEye who had a meaningful impact on mission.

And I think we've taken it to a whole new level lately. I'm told we're one of the more prolific investors in the world. So, we make an investment a week in one of these new companies. And what we're really doing is paying them to adapt their technology to the unique environment that our customers have.

MICHAEL MORELL:

What do you need to see in a company in order to make an investment in it?

CHRIS DARBY:

Well, it might surprise a lotta people to know that the first thing that we look at is the team. Who are the individuals leading this team? Are they credible? Do they have domain expertise? Do we have reason to believe that they can deliver and be successful?

Then we look at technology. And we say, is that technology the technology we need to meet a particular requirement that is associated with delivering a capability? And finally, we look at the financing and just the general health, economic health, of the company.

MICHAEL MORELL:

Chris, how have your customers, which is the intelligence community and even the broader national security now-- how have they changed over the last 20 years? And how have you changed as a result of that?

CHRIS DARBY:

Well, I think there's been, Michael, as you well know, a major shift recently. We've been at war for my entire tenure here at In-Q-Tel. And I think that as we've drawn down and gotten back to more traditional intelligence and national security threats and missions, I think the requirements change.

And so, we're not simply focused on counterterrorism and C.T. and the sorts of things that we were focused on. And now, it's more the classical capabilities. But classical capabilities in a whole new technology environment. There was no iPhone when I took this job, 13 years ago--

MICHAEL MORELL:

Fascinating. Fascinating.

CHRIS DARBY:

There was no CRISPR tool. The tech has moved so quickly and is in fact accelerating. The other thing is that if you think about technology, the intersection set between what the private sector is doing and the requirements of the intelligence community or defense community has never been greater.

We look at things like identity intelligence. In the commercial space, they may call that ad tech. What are the characteristics of the consumer and what fidelity can I get to those characteristics? Well, obviously, that's of interest to the intelligence community.

MICHAEL MORELL:

So, Chris, your job at the end of the day, is to deliver capability to the national security community in a way that enhances their mission. What are the things that make that easy for you to do? And what are the things that make that hard for you to do?

CHRIS DARBY:

Well, I think that the thing that makes it the most fun for us to do, I'm not sure I would use the word, easy-- but is this notion of leveraging our creativity and imagination. Looking at the way our customer does something today and imagining a different way to do it based on our view of what the commercial space looks like.

And once we imagine it, we take a very architectural approach. We say, what are all the different elements that you would need to bring together to deliver this new capability? I think the thing that can make it challenging sometimes is that our customers tend to think in terms of very, very specific requirements. And I think that if you get too specific and you try and mitigate the risk of a technology too heavily, you actually will contract the creativity out of the process.

MICHAEL MORELL:

Right.

CHRIS DARBY:

And so, that can be challenging for us sometimes.

MICHAEL MORELL:

Right. Right. Chris, where does the name come from?

CHRIS DARBY:

So, let me preface this by saying I wasn't there at the time. And I've found, Michael, in my tenure, that there are approximately 2,000 people that were responsible for naming and founding In-Q-Tel. But I've heard that it actually started as In-Q-It; In, intelligence, Q for the MI6 Q, and It for I.T. Evidently, there was a trademark dispute or something along those (LAUGH) lines, and they just pivoted to In-Q-Tel.

MICHAEL MORELL:

Interesting. So, Chris, you sit in a very interesting place, I think. You sit at the intersection of technology and national security. And I'd love to get your perspective on how those two things impact each other and how that, today, might be different from what it was, you know, 25 years ago during the Cold War, and how that maybe different, five to ten years from now, than it is today.

CHRIS DARBY:

Wow. Michael, that's a good one. The technology underpins society today in a way that it never has before. If you think about the interaction that we have every day with technology, with smart homes and mobile devices, autonomous vehicles, tech is just embedded into life in a way that it wasn't when you and I were growing up.

And I think that if you look at technology as a national strategy, which, frankly, other countries (some of them) do, it will lead you to a different national security answer than if you look at it as simply a tactic or a capability. Identity intelligence today is far more meaningful, I think, than it has ever been before. And if I layer things like A.I., artificial intelligence, on top of that, it's gonna be very interesting to understand what we can learn about people, what we can learn about intentions. And then how do you shape those things? This whole notion of shaping opinion and so on has taken on a whole new gravity, I think, for us as a nation and probably for the world.

MICHAEL MORELL:

Yeah. It seems for the I.C., right, that these technologies do several things. One is they enable our adversaries, right. They give them capabilities they didn't have before. They create challenges for how the intelligence community operates and how they do their job; and therefore, you need to adjust to that.

And then they create huge opportunities for the intelligence community to use those capabilities in what it does every day, right. And so, it's a kind of complex jigsaw puzzle there to figure all that out, if you're sitting, you know, in your seat or the D.N.I.'s seat or the director at C.I.A.'s seat.

CHRIS DARBY:

Yeah. In my seat, basically what I'm seeing is a diminishing marginal value of capital expenditure.

MICHAEL MORELL:

What does that mean?

CHRIS DARBY:

What that means is anybody can put a satellite constellation up. High schools are putting satellite--

MICHAEL MORELL:

Right.

CHRIS DARBY:

--satellites up--

MICHAEL MORELL:

Right.

CHRIS DARBY:

So, I can create situational awareness. I can get imagery. I can do tag and tracking and locating and things like that with commercial platforms that clearly don't have all of the capabilities that the exquisite systems might. But I don't need to be a wealthy nation anymore to have an intelligence capability, to shape or impact another nation, to even have some level of kinetic impact with cyber and things like that. So, there's a democratization, basically, of--

MICHAEL MORELL:

A leveling of the playing field here--

CHRIS DARBY:

Absolutely, there's a leveling of the playing field.

MICHAEL MORELL:

Yeah. Chris, I want to pick up on the economic aspect of this. As you know, economics has always been important to national security in a very large sense, in a Paul Kennedy, you know, great powers, sense, in a very specific sense like terrorist finance or illicit finance. But, you know, it really seems to me that economics and national security, largely because of technology, are becoming intertwined in a way that's never happened before, in a very deep way. I just want to get your reaction to that.

CHRIS DARBY:

Yeah, I don't think there's any question that they're intertwined these days. I think if you look at everything from projection of power to pre-deployment of capability, it's about technology. It's about your nation's technology and the way it is deployed around the world.

And we're seeing adversaries leverage that, I think, quite successfully. I don't think you can rely on simply bespoke, build-it-deploy-it methodology anymore. I think you've got to look at it as a very long-term strategy. And I think that you've got to understand that the intersection set between the private sector and its capabilities and government's requirements is growing. It's absolutely growing.

MICHAEL MORELL:

What's your sense? You know, Snowden, the Snowden disclosures -- did some damage to the relationship between Silicon Valley and the government.

CHRIS DARBY:

Uh-huh.

MICHAEL MORELL:

What's your sense for where that is today?

CHRIS DARBY:

So, at the end of the day, I believe Silicon Valley and all the other places where startup innovation and venture capital happens in this country are patriotic. They understand the good things that this country has done for them. Most of these companies couldn't be built anywhere else in the world.

MICHAEL MORELL:

Right.

CHRIS DARBY:

And even if you look at the foundational platform that they're building upon, the internet, well, that came from the U.S.G. And so, I think at the end of the day, these companies recognize that. Now, they have shareholders that they're beholden to. But I think one of the things that sometimes is lacking is a communication.

You've got to speak the language. I think one of the unique things about In-Q-Tel is that we operate at the intersection set of three very different worlds. We operate at the intersection set of government, the startup community and the venture capital community. And we act as a translator in that intersection set. And I think that, to the extent that the government can enter into a conversation with the private sector and be more transparent about what its concerns are, and what its objectives are, our experience is that the private sector's very open to assisting.

MICHAEL MORELL:

And just so people know, when you say venture capital community, you mean those companies who invest capital in these companies to get them growing and keep them growing, and to get them to where they want to be?

CHRIS DARBY:

Absolutely. The venture capital, you can think of them as the fuel behind all of these companies.

MICHAEL MORELL:

I know when you first started out that you were primarily focused on U.S. technology. Is that broader now? Are you looking outside the United States as well?

CHRIS DARBY:

We are. And we have, for a number of years. I would say probably 10% of our investments are outside of the United States. And we did just open offices in London and Sydney as well. Not all innovation happens within the borders of the United States. And I think it's incumbent on the intelligence and defense communities to make sure they have the best capability that they can possibly get. And sometimes that's outside the U.S.

MICHAEL MORELL:

There's some special challenges that come with that when you knock on somebody's door and say, hi, I'm from In-Q-Tel and I work for the C.I.A. and--

CHRIS DARBY:

We don't usually lead with that, (LAUGH) Michael. We certainly don't hide the fact that we support the U.S. intelligence and national security community. But again, we start with a conversation. We start with learning about what they do. And I don't care where you are. I don't care whether you're in Tel Aviv, Oslo, Moscow, if you've got a company that you're proud of, you want to talk about that.

And you want to discuss what it is that you have. To the extent that we help these companies adapt their technology so that they can access a market, and if it's an international company, perhaps they want to access our market, but they may also want to sell to the U.K. or sell to the Australians as well. So, I think we facilitate market access for them.

MICHAEL MORELL:

Chris, the competition with China over technology, how do you think about that?

CHRIS DARBY:

I think about that a lot, Michael, as you can probably imagine. The Chinese have a very, in my mind, sophisticated strategy when it comes to technology. And they pretty much have to, if you think about their population base and what they have to support over a long period of time. They need to take a long-term view of technology.

I think the big thing is that they don't differentiate their national security policy from their national economic strategies. I think they view it as one and the same, whereas we keep those buckets of money and those policies very separate. I think the Chinese view them as being intertwined. And even the legal basis for that interconnection is there.

If I'm a company in China, I am legally obligated to cooperate with the government. And one can say, yes, and the government is very supportive of those companies as a result of the fact that they're legally operated to cooperate. I think the Chinese have a layered approach. I think the Chinese look at technology literally from the ground up. They look at real estate; then they look at infrastructure, whether it be utilities; they look at communications; they look at hosting services, applications.

And I think that they look at it at a global level. And if you look at it from an intelligence perspective, because your show's Intelligence Matters, you probably don't have to worry about accessing an environment if you own that environment. And so, I think the Chinese have a very, very well-thought-out and sophisticated strategy.

MICHAEL MORELL:

You know, it sounds to me a little-- I spent a little bit of time looking at China's strategy with regard to getting the energy that it needs, and the resources that it needs. And the Western view of energy security is simply to maximize it. It doesn't matter who owns it. China's view was always we have to own it from being in the ground all the way to the consumer back in China. We want to own that whole supply chain, right. That's security to us. And it sounds a bit similar on the technology side.

CHRIS DARBY:

It absolutely is. I think that they understand that control is important. And if they abdicate control, they may not be able to achieve their long-term goals. If I look at what they're doing with A.I. and bio, for example, again, they're playing a really sophisticated, long game. I think that when we look at their A.I. initiatives, we think about it from a national intelligence or defense perspective. I immediately go to bio. If you look at Beijing Genomics Institute and places like that, they've got these huge genomic datasets. And if I'm China and I'm worried about my health care over a long period of time--

MICHAEL MORELL:

That makes sense.

CHRIS DARBY:

--I'm going to apply A.I. to those genomic datasets to decrease my cost obligations over a long period of time for my population. So, it does make sense.

MICHAEL MORELL:

So, in this competition for these high-tech industries, what are the most important?

CHRIS DARBY:

I would actually say bio is the most important right now. And I know that that's probably not a popular--

MICHAEL MORELL:

You don't hear that. You don't hear that a lot--

CHRIS DARBY:

It's not a popular answer in--

MICHAEL MORELL:

Right, it's an unconventional answer.

CHRIS DARBY:

--in Washington. I heard a quote from a scientist. In fact, I think it was a Chinese scientist who said that the Europeans won the industry revolution, the Americans won the I.T. revolutions, and the Chinese want to make sure they win the bio revolution. And if you think about what we can do with synthetic bio these days, when you think about its ability to cure disease, to deliver food, bio is the essence of life. And it's also probably, on the reverse side, the greatest threat--

MICHAEL MORELL:

Right.

CHRIS DARBY:

--because there are two sides to the bio opportunity. And so, it would be my number one, closely followed with probably a more conventional answer, which would be the A.I. answer; the notion of increasingly intelligent processing and predictive analytics.

MICHAEL MORELL:

Is there a difference between A.I. and machine learning?

CHRIS DARBY:

Machine learning is probably a subset of the broad A.I. category. There isn't a huge difference, no. People are bending the words in a number of different ways.

MICHAEL MORELL:

Chris, in this competition between the United States and China, which I think is going to define a good bit of the future here, and define in many ways what the future looks like, what do you think China's strengths and weaknesses are, and what are our strengths and weaknesses?

CHRIS DARBY:

So, I think China's strengths lie in the mass of data. You've probably, Michael, heard the phrase, data is the new oil. And China is just awash with data. And they don't have the same restraints that we do around collecting it and using it, because of the privacy differences between our countries.

And so, China's going to have this corpus of labeled data that they can leverage. In fact, if you look at the most valuable A.I. firm in the world today, I believe it's probably SenseTime, a Chinese firm, an A.I. firm, that really trained its algorithms and trained its deliverables on a massive set of facial recognition images that they gathered from the cameras that are distributed. Well, they took that and they're leveraging it into all sorts of different opportunities--

MICHAEL MORELL:

So, the more data you have, the better you are at developing those algorithms?

CHRIS DARBY:

Oh, absolutely. Yeah. An algorithm without data is useless. And it's not just data; it's labeled data.

MICHAEL MORELL:

What does that mean?

CHRIS DARBY:

What that means is if I've got a picture of a cow, I've got to know it's a cow. Somebody's got to say that's a cow and not a pig. And what the Chinese are doing is they are labeling data at a level that is just orders of magnitude more than anyone else in the world.

And I would be, too, if I were the Chinese, by the way. They're doing it on the bio side. They're doing it in imagery. They're doing it all over. And I think that that's going to be a big advantage for them. That will be a strength; this notion that they have the largest labeled data set in the world is going to be a huge strength for them.

MICHAEL MORELL:

What about the subsidies they provide their companies?

CHRIS DARBY:

Well, they--

MICHAEL MORELL:

The theft of intellectual property they provide their companies, is that an advantage at the end of the day or--

CHRIS DARBY:

It's an advantage to a point. So, it certainly allows them to catch up fast. But once you've caught up, you've got to keep going. And so, the thing that will determine, I think, how successful they are over a long period of time, some of these companies, will be their ability to imagine what comes next.

I think that if you look at what's happened in the United States over the last 50 years has just been this blossoming of imagination. This country was built on imagining something better, something new, something different. And if you look at all of these companies that have built themselves up and been successful in the U.S., it's been based on this imagination. It will be interesting to see whether the Chinese economy is that imaginative--

MICHAEL MORELL:

And this is our main strength, from your perspective?

CHRIS DARBY:

I believe it is. I think our educational system is still exceptional. And really, what I'm saying is that over the next 20 or 30 or 40 years, I think it will be this notion of creativity and imagination that differentiates us. For the next little while, I think we've got a great educational system, we've got good infrastructure, great post-secondary educational system. I think we probably have some things--

MICHAEL MORELL:

We've got some things to do at the lower levels--

CHRIS DARBY:

Yeah, I was going to say, at the lower--

MICHAEL MORELL:

Yes, yes, yes.

CHRIS DARBY:

--levels, we probably need to work a little harder. But our post-secondary education is superb.

     MICHAEL MORELL:

Chris, so you know, one of the key questions here is: What's the right role for the U.S. government in this competition between China and the United States? I know that's a really tough question.

CHRIS DARBY:

So, it's above my pay grade to answer the question, Michael. Let me answer it from the perspective of someone who operates at the intersection set of venture capital startups and government. I think there are seams that the government needs to fill in the investment ecosystem.

What I mean by that is there are places that the venture capital community don't invest, for good reasons. Venture capital is a pattern recognition business. I have a tried and true model for how I create value for my stakeholders. The university systems are a little bit too early for our V.C.'s. They don't generally put huge amounts of money into university startups.

The Chinese, the high-end capital firm, just dedicated $1 billion to the universities, which I think is probably a smart move on their part. I think that we need to pour more money into that as a nation. And we need to understand where that technology goes after we pour the money in. I think that there are certain areas that we need to own and control a little bit more closely than we do today. And I think that the government may have a role to play in doing that. And ultimately, I think--

MICHAEL MORELL:

When you say own and control, what do you mean by that?

CHRIS DARBY:

Well, if you look at microelectronics and the role that microelectronic plays in intelligence and national security, I think there's a risk that we cede the microelectronics industry to others if we're not careful. And so, I think we have to invest--

MICHAEL MORELL:

And it becomes a national security vulnerability?

CHRIS DARBY:

Absolutely. And the data labeling that we mentioned earlier, I don't think we can afford to be that far behind in data labeling.

MICHAEL MORELL:

So, you put all this together, their strengths, our strengths, whether or not the government goes down this road you're talking about, which certainly makes sense to me. How do you see this playing out over the next ten, 20 years? And I know, again, this is a hard question. What's your best guess?

CHRIS DARBY:

My best guess, and hope, actually, is that we establish a mutually uncomfortable understanding with one another and place in this world where we can operate-- in business, we call it co-opetition. We understand that there are certain areas where it's in the interest of mankind if we cooperate. It just makes good sense.

But we have our own interests. We have our own ideologies and so on. And we will compete in certain cases, based on those. From a tech standpoint, tech has a way of leveling everything over a period of time. If you look at the way smartphones proliferated around the world, you can't go to a country in the world where there isn't a smartphone.

And I think that the notion that tech is going to be hugely differentiated between our countries over a long period of time-- I don't see it. I don't see it. So, I think it's going to be up to the policy-makers to find that fine line that allows for the coopetition, globally.

MICHAEL MORELL:

Are you one of these people, Chris, who thinks there may end up being two different internets or not?

CHRIS DARBY:

I think that's really hard. I think there will be layers and there will be forks in the internet. But I think the foundation of TCP/IP and what we call the internet is here to stay. I think we'll iterate above it, and we will probably create some versions that are a little bit off. But I think the foundation is not going to go away.

MICHAEL MORELL:

Chris, you've been terrific with sharing your time with us. Just a couple more questions. People always ask me, no matter where I go, "Michael, what keeps you up at night? What really worries you?" I want to turn that question around and ask you that question.

CHRIS DARBY:

The thing that worries me most, Michael, is will we allow ourselves to have a failure of imagination. Will we allow ourselves to become complacent in the fact that we do have great technology? We do have great companies that we build in this country. But I had the good fortune of working at Intel for a while, and I was in meetings with Andy Grove, who of course-- only the paranoid survive. My paranoia really revolves around us losing that creativity and getting too comfortable and losing our imagination about what could it look like; what could be done differently. That keeps me up at night a lot--

MICHAEL MORELL:

What puts that at risk?

CHRIS DARBY:

I think that, as a nation, we're distracted. There's a lot of distractions going on right now. And people are worrying about so many different things that they're not taking the time on a day-to-day basis to think what I would characterize as good thoughts. Get into the shower and think, well, I wonder if I could build X. I wonder if I could do this. I think we're all distracted--

MICHAEL MORELL:

We're all watching TV. We're all watching hearings on Capitol Hill--

CHRIS DARBY:

Yeah, we're distracted right now. And I think that could ultimately be our Achilles heel.

MICHAEL MORELL:

Interesting. Chris, what do you look for in the folks you hire at In-Q-Tel?

CHRIS DARBY:

Yeah. I'm asked this a lot. I look for three things. The first thing I look for is integrity because if you think about-- and when I say integrity, I'm talking about if you say you're going to do something, will you do it. Are you loyal to a higher cause?

All of the different things that are, I think, really important if you're going to serve the mission that we serve. Because we're a 501(c)(3) not-for-profit. We are not a traditional venture capital firm by any stretch. You come here because you're interested in serving the mission. So, I look for integrity first.

The next thing I look for is that creativity. Do you think about problems differently? Do you look at something and go, 'Hm, I could do that with this particular thing?' And the last thing I look for is a sense of humor. And I don't mean telling jokes. I just mean the ability to maintain perspective when everything's burning down around you because we're in a hard business. Our customers are in a hard business. And it's a very stressful time. I think that the best companies are the ones that have this sense of humor and are able to take a step back and enjoy themselves and--

MICHAEL MORELL:

You know the way I put it? And I know exactly what you're talking about. The way I put it is that you don't take yourself too seriously.

CHRIS DARBY:

Yeah.

MICHAEL MORELL:

So, you're in these extraordinarily important meetings and you're not takin' yourself too seriously. That's really important.

CHRIS DARBY:

That's what I look for.

MICHAEL MORELL:

Chris, thank you so much for taking the time to join us today.

CHRIS DARBY:

Michael, it was my pleasure. A real honor. Thank you very much.

MICHAEL MORELL:

Welcome.

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