Stanford’s Steve Blank is warning lawmakers that the Defense Department is not organized to defeat or deter China and is proposing the Pentagon spend large sums of taxpayer cash on new technology to compete with the communist regime.
House Select Committee on China Chairman Mike Gallagher is leading lawmakers on a visit to Silicon Valley this week, with planned stops at Stanford University for meetings with policy experts and with Apple CEO Tim Cook on Friday, according to sources familiar with the committee’s plans.
Mr. Blank, co-founder of Stanford’s Gordian Knot Center for National Security Innovation, said he expects to visit with Mr. Gallagher, Wisconsin Republican, and plans to promote the need for Congress to make a roadmap for the Defense Department to follow for funding new tech alongside private investors. The Gordian Knot Center launched in 2021 with funding from the Office of Naval Research.
“We really don’t have a playbook for how to engage and how to compete with a nation like China that’s basically taken a whole of nation approach to competition,” Mr. Blank said.
His preferred playbook involves expanding the Defense Innovation Unit and the new Office of Strategic Capital with more funding.
The DIU is intended to help develop tech for use by the Defense Department, and Mr. Blank is advocating that the unit hand out new commercial tech contracts worth more than $100 million. The contracts would go to companies developing things such as drones, underwater vehicles and artificial intelligence.
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The Office of Strategic Capital was formally established last December with designs on eliminating the “Valley of Death” covering the gap between tech invented in a lab and the production making it commercially available.
The Department of Defense previously tried similar things and failed. For example, the Army Venture Capital Fund, the department’s venture capital firm established in 2002, was shuttered last year.
The intelligence community has also had more success funding bets on tech companies than the military. In-Q-Tel, a nonprofit strategic investment fund contracted with the CIA that has funded tech startups for more than 20 years, has blanketed Silicon Valley.
In-Q-Tel has hundreds of observers spread across the boards of companies it pays, sitting in on meetings where founders aspiring to be the next Mark Zuckerberg and Elon Musk make decisions about their companies’ future, according to In-Q-Tel investment partner Katie Gray.
The observers listen as the entrepreneurs decide whether to accept investment offers. The entrepreneurs have become more aware of the danger associated with taking foreign funders’ cash, Ms. Gray said at an Intelligence and National Security Alliance conference in March.
“We’re not on the board of directors, but when we invest in a company, we are sitting in the boardroom,” Ms. Gray said at the conference featuring an audience of government officials and contractors. “I think at any given time, we have about 300 or so boards that we are attending meetings for.”
Ms. Gray said In-Q-Tel has invested alongside an estimated 3,000 co-investors funding America’s critical tech. By pairing taxpayer dollars with private venture capitalists, In-Q-Tel aims to keep taxpayers from footing the entire bill when a bet on a new founder goes bad.
The Defense Department appears intent on developing a similar investment capability for the military. At the March conference alongside Ms. Gray, the Office of Strategic Capital’s Wesley Spurlock said DOD aims to move beyond acquisition and grants and toward making investments alongside private funders.
He encouraged the intelligence officials in the audience to quickly learn how the venture capital community operates to prepare for the future.
Lawmakers making decisions about how to fund government agencies looking to work with venture capitalists are meeting investors this week. The lawmakers concerned about the tech race with China touring Silicon Valley are meeting prominent venture capitalists Marc Andreessen and Vinod Khosla, according to a source familiar with the committee’s plans.
Source:Washington Times
