Tariffs didn’t bring manufacturing jobs back to the US

25:09Does it make sense to have a$200 per entry pricing model? Or can we kind of shift the value creation left and say, hey, we, Global Freight Forwarder, are going to help you manage your supply chain network to be more compliant, to be more resilient. We're going to help orchestrate your supply chain. And we're going to stop billing you transactionally to clear goods across the border.

25:34Nilay Patel:We have to take a short break here. We'll be back in just a minute.

26:05Nilay Patel:Thank you. as one. So patient data flows securely and care is delivered without interruption. That's a healthy approach. Plus sassy and zero trust security protecting financial data across a bank's 2000 branches. That means identities verified, transactions secure, threats blocked, nest eggs, safe and sound in the best of hands. And AI powered networking that optimizes traffic across five continents. So yeah, modern enterprise is complex. Comcast Business makes it simple. When you add it all up, no one does business like Comcast Business.

26:52Welcome back.

26:53Nilay Patel:I'm talking with Altona CEO Evan Smith about what automation does to the entire customs process. It strikes me, just with this acquisition in particular, The governments of the world, the people of the world were putting up a lot of trade barriers for a lot of reasons. And you have a view of what you might call the path of least resistance, right? How do I get this object from here to there with the fewest amount of forms? And it's funny because the forms represent one kind of friction and you can just point the gun at it. You can just point the agent at it and overcome the friction. Do you find that the AI systems are getting more efficient at that?

27:31Nilay Patel:or my criticism of AI in general is they're not actually learning. If you fill out the form one time and you run the agent again, it in many ways is starting over from scratch. You're going to burn all the same tokens again and maybe the inference in general will get more efficient, but the compute task itself, even though it's been repeated so many times, does not get optimized. Is there efficiency there for you? Yeah, there is. I think in the world of just LLMs predicting the next token, you're right. In a world of agents that follow SOPs, I think you're wrong. And what I mean, and I'll just, I'll narrow it specifically to where I know what I'm talking about, which is this trade and customers and supply chain world.

28:17So the Servo platform and now as part of Altana, you can go as a logistics provider. You can say, I'm going to create standard operating procedures for every one of my customers and their data pathologies. So I'm bringing in, you know, I've got PDFs with these data fields in them with these like weird numerical formats. I've got, you know, Chinese script coming in alongside English script. And here's how to handle these weird edge cases that would break earlier systems. And you can feed the machine a document to distill rules like standard operating procedures to handle that just like a human would follow those rules.

29:05They also have the user experience where as the broker interacts with the customs entries and with the data coming from the supply chain on a customer by customer basis, they have a workflow where as the user modifies something here or there, the platform auto suggests an update to that standard operating procedure. And then you can go and kind of key in an SOP from scratch. And so it's learning SOPs, it's codifying SOPs, and it follows SOPs. Is there a theoretical way that those SOPs could be kind of broken or where there's a fail case? surely. But in general, it's amazing. And this is why, um, this is why agentic AI in the logistics space generally is having its moment.

29:55Like there's like every fifth company in Y Combinator is doing something around logistics automation where it's like, Oh, I can take all these kind of unstructured and semi-structured data inputs and reason, like extract information from them, reason about them on a customer or trade lane or kind of outcome-specific basis, and then orchestrate a workflow. And that just wasn't technically possible until like January.

30:21Nilay Patel:I do love the phrase data pathologies. I like the idea that a company's structured data is actually like diseased in some way. And only AI can solve it. It's very good. I guess I hear you that I'm wrong, right? You can build around the models a system that gets more intelligent over time and maybe gets more efficient on a timescale, right? I'm just asking about like literally burning tokens, like using the intelligence of the models. Is that getting more efficient or is it the deterministic systems around it that help the users update these standard operating procedures? I'm probably the wrong person to be highly opinionated about this, but my co-founder who is entitled to this opinion has observed that there's no real ROI on Fable right now.

31:09Okay.

31:10Nilay Patel:So the more intelligent model is not like helping you out. I'm curious about this because Altana as a software platform solves a lot of very bureaucratic challenges as trade barriers go up. There's another set of challenges I want to ask you about, which are essentially military challenges. We'll come to that. But it just seems like it's a bit of a cat and mouse game between the amount of bureaucratic trade barriers we can put up and the amount of software we can deploy at those barriers to just overcome them. And at some point, like the cost curve might bend and the bureaucracy might win. Well, I'll tell you our product strategy and just our overall thesis on flipping the script.

31:52So right now, every time a shipment arrives at the border, it's as though it's the first time the government has ever seen that shipment of goods.

32:01Nilay Patel:This is an abstract government or our government? Every government in the world. Okay. What I'm saying is true. So the customs process has been built up for millennia to scrutinize a shipment and to, you know, levy the goods and then let it through the border. Right. And it used to be the case that when it was kind of cuneiform tablets and, you know, sailboats going up the Tigris or Euphrates River and transporting goods, somebody could look at each of the things in there and issue a levy and that was it. Right. And as container shipping came about and the scale of goods being entered at a port just exploded, and then with air cargo and just the velocity, it became impossible to look at all the shipments and to look at all the goods and shipments.

32:57And so for decades, the whole concept was, all right, we'll do random sampling, random targeting, and we'll let the kind of intuition of the port officers dictate what they're going to go look at. After 9-11, that was no longer OK. And so then a whole kind of technology and policy framework arose in the post-9-11 world where it was risk-based targeting and segmentation. So the idea was we're going to try to pick needles out of the haystack using analytics. And with the systems that existed at the time, those are pretty crappy. I'm not going to name names, but one major government I know intimately well has a 0.5 % targeting hit rate in their customs targeting system.

33:44So these are like rules-based systems where it's like, if a container of frozen squid comes in, search it for cocaine. That's a real example. That's great. Yeah, they found cocaine one time in the box of frozen squid and every single shipment of frozen squid thereafter has been opened. And guess how many times they've found cocaine in the box?

34:07Nilay Patel:I mean, I guess it's zero. Zero. Yeah. So that's been the state of the art for the last 20 years. And now our point of view is that with AI, two things are possible. One is that you can continuously monitor and screen everything. You don't have to selectively target. And two is that as these trade policies are increasingly focused on the goods and their provenance. I'm sure we'll get to that in conversation, but like network shape, supply chain network is kind of the dimension of trade analysis. It becomes imperative to have a sense of product identity. So instead of just like transaction by transaction by transaction at the border, it's Groundhog Day.

34:54And like, I've never seen this before. I have to reason about whether this is the right customs codes and the right duties. And did the Food and Drug Administration get their permit to release these pharmaceuticals or whatever. We ought to just have a library of trusted goods in the same way that we have a register of trusted travelers. And that's what we're building. So an Autana product passport for the US government is becoming a library of known and continuously monitored and vetted goods and their production pathways, where you can, in one shot, you can look at the compliance attributes, you can look at the national security dimensions of it, you can look at the safety dimensions of it.

35:34You can look at the tariff dimensions of it and have that all continuously reviewed and monitored. And the benefit to the importer is like, do it once. And right. So, and, and, you know, I remember going through the airport, uh, in the early days of like trusted traveler programs and thinking there's no way in hell I'm going to give the government any information about, you know, my, my travel, my personal life, any of that, that I don't have to. And then you kind of see the benefit of the security facilitation, the travel facilitation. And it's like, well, I think I'll make that trade. And that's where we're enabling the private sector to engage in a new way with government agencies around the world.

36:21So we're doing this now at scale in the United States. We're doing it at scale in the context of defense procurement. And we're going to be doing this in a pilot context in Europe and I think the UK in the coming months.

36:33Nilay Patel:Trevor Burrus There's a lot to unpack there. I'm curious about the product passports. Again, this strikes me as a solution to an administrative problem, a political problem, right? The Trump administration particularly wants to move manufacturing out of China, wants to reduce this dependency on China. A lot of companies, big companies want to move their supply chains to get them out of those risky parts of the world. Maybe they want to clean up the environmental impacts or the labor impacts of their supply chains, you provide all that to them, right? We can vet this, this product is going to show up.

37:07Nilay Patel:Like I said, at the top of the conversation, the rubber has really hit the road on all of that, on all those policy goals. Are you seeing manufacturing move out of China into the United States? You've got these passports. Are you seeing the origins of those passports change in meaningful ways? Yes. Although probably not exactly in line with the policy objectives of the administration. So without getting into political commentary, which I'll mostly skip, I'll just kind of, I'll tell you, as a reader of the news and of the data, and then as an observer of the supply chain network itself through our own platform, I can give you some points of view.

37:52So one question is, is the United States reducing its dependency on China as a source of manufacturing? And I think the answer, probably controversially, is no. So what's happened? And we see this in our data. We see this in the macro statistics as well. Since these trade barriers, in particular, the Liberation Day tariffs and everything, all that kind of everything since, you've seen a proportionate decrease in Chinese exports to the United States with a proportionate increase in U.S. imports from third-party countries. Think, you know, Vietnam, Mexico, Canada, Malaysia. And we can see through our own platform where those input flows of goods are coming from.

38:49And the answer is China. So basically, we've just sort of rerouted Chinese goods through third-party countries where they're undergoing some amount of transformation or not on their way to the same end market destination at a higher cost. And we can say that numerically, right? Now, that's part of the dynamic between or behind the renegotiation of the USMCA, for example. So I'm sure we'll talk about that, but, but, um, you know, this notion of supply chain traceability as becoming the kind of buzzword and all of these industrial policy initiatives and trade policy initiatives, that's at the core of it.

39:32You know, like what's the actual provenance of the goods? What is the, what's that multi-tier value chain network of the goods? And, um, and we have to know that if we're going to have policies that, you know, try to reshape the network itself. so that's one dimension of the China question I think another one is like have we created more jobs have we created more manufacturing in America there I think it's kind of a mixed picture the PMI which is a index of manufacturing output in the United States it went down after the tariffs so we were we were declining following the the big wave of tariffs last year as a as an economy in terms of our manufacturing output.

40:18And in the last, you know, five, six months, that number has actually trended above, you know, 50 % or scale one to 100, but it's, you know, above the neutral level and it's now actually increasing and it has been increasing. So one way you might think about that, I don't know that this is true, But one way you might observe that is in the initial shock, you had U.S. manufacturers who are importers of stuff in order to make more stuff. And if the input cost of those things or the input availability of those things is highly disrupted, then so are their supply chains and their own output. Right.

40:56So I think and I know anecdotally from our own customer base, that was absolutely the case. So that, you know, the first the first impact of the tariffs was was actually negative on U.S. manufacturing. And what might be playing out that we should be open-minded about is that as the network adapts to the new tariff environment, you're seeing a general tilting of the scales in favor of U.S. manufacturing and therefore an increase in the PMI and the rest of it. What might also be playing out is that the AI data center thing is peanut buttering over everything. So, and then the other, just the last thing on manufacturing is, are we or are we not creating a bunch of manufacturing jobs in America?

41:41On a net basis, again, no political statement here, just kind of observing the data. On a net basis, the answer is no. So manufacturing jobs continue to decline. And then how do you square this increase in manufacturing output that we just talked about with the decline in manufacturing jobs? And the answer there must be industrial automation. And, you know, I think it was always kind of naive to imagine that we're going back to the assembly lines of the 1920s in America. So, you know, is it important to have economic security for a country? Yes. Is it important to have the manufacturing capacity to make very important things, you know, on your own soil or with trusted allies?

42:23Yes, it is. are those efforts going to lead to an explosion in blue-collar, well-paying jobs? That is a question that has not been answered.

42:36Nilay Patel:I do think we can leave the political question of who in the administration sold a very naive vision of what would happen after these tariffs and who didn't aside. but on a policy basis, the goal of the tariffs was to increase costs on goods made out of the country so that we would manufacture them here. So it would become economically viable to manufacture things here. And you're saying that basically has not happened. And if it does happen, those factories will be automated anyway. We had the CEO of Siemens on the show who builds factories for people. And he was straight up like, yeah, I'm going to put robots in Kansas.

43:11Nilay Patel:Like, that's the way we're going to do it if we do it at all. Are you seeing that kind of explosion of interest? Are you seeing that kind of response? There's USMCA news like literally today that we will come to and maybe that will shake everything up again. But it's been a year and a half since Liberation Day, since that whole conversation. Whether or not that actually happened, I think you're confident in assessing just based on the numbers. Well, yeah, I think at the macro level, it seems clear that manufacturing is generally going up after going down at first. Manufacturing jobs are not. And that industrial automation would explain that.

43:52I have a front row seat into a few different industries, just given the work we do, where I'd say, you know, there's evidence of the industrial policy working. I'll give you one. Drones, autonomy more generally. So the Chinese control roughly 90 % of the relevant value chain components for autonomous systems. So even if you have a U.S. startup that's saying, hey, we're making everything here in America. No, you're not. You're assembling component parts to make an air or land-based drone. And you're saying made in America.

44:31Nilay Patel:But I just want to say we had Adam Bree from Skydio on the show just a few weeks ago. Like legitimately the conversation he and I had. It was where does it come from? And we are helping that industry with this question and with that problem statement. but it's not going to happen overnight. But what I will say is a couple policies actually came together in a coordinated way to create a real US market for not just the end platforms, but the components themselves. So on the one hand, you had a bunch of FCC restrictions and import restrictions generally that said like, you know, none of the logic, none of the system controls can come from China.

45:17And, you know, they have to be U.S. made, have to have U.S. parts or at least non-Chinese and some of the fine print. And then what that did was it effectively turned off the supply chain for these platforms and it made everything more expensive. Okay. So to pair alongside that, what they did was they created a large source of demand and revenue. And so in the Department of Defense, Department of War. There's now this program called Drone Dominance. And it's billions of dollars of committed capital. So there's a strong market signal. And actually, Altana is playing a role in certifying the value chain.

46:00So how do you have component parts that are trusted and where there's real provenance? And it's pretty wild. I mean, you're seeing like a little Shenzhen forum in El Segundo around all these like defense tech bros who are building autonomous systems. And, you know, that's kind of what it takes is you have to shape the market sufficiently to achieve your policy objective. And some of it is like putting up barriers, some of it's putting up outright bans in this case, and some of it's subsidies and some of it's directed investment. And that's the other piece of it, which is, you know, the administration over the last 15 months has gotten incredibly aggressive on the, you know, not just throwing up barriers, but actually making offensive moves.

46:52So, you know, it's grants, it's equity investments, it's loans with warrants, choosing winners in the private sector and then just like plowing capital and procurement into them. You know, we're in the process of creating a national stockpile of critical minerals and magnets. So, you know, methods aside, like, is that the right kind of policy outcome to aim at? Yeah, I think so. I think, you know, we learned over the last year and a half that you don't have economic security if you don't control critical minerals. So you got to do something.

47:28Nilay Patel:We're going to pause here for another quick break. We'll be right back.

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49:05Nilay Patel:welcome back i'm talking with altona ceo evan smith about north american trade in canada

49:13Nilay Patel:last time you're on the show the idea that a bunch of warehouses would pop up in canada and mexico to import almost complete products from china so we could get them over the border inside the USMCA, it was, I would say it was like a hack. Like you knew that was going to happen. You could see it beginning to happen. We could see it happening. Yeah. And it is, it has just like happened. Like this is what happened. The other thing that, um, just along that exact same line is, um, is in September, the United States ended the customs de minimis exemption for a low value imports. So there used to be a threshold at$800.

49:52You didn't have to pay duties. There's no customs declaration note. And in order to exploit that, you had those Mexican distribution centers, Canadian distribution centers where containers full of stuff were coming in, but then being drop shipped one by one across the border to US consumers. So the same has been true in Europe and the UK, and they too just ended their de minimis exemptions. So it's not just the United States adding all this complexity and friction to businesses and consumers. This is happening everywhere. Sorry, let's go to Canada, which you're surely going to ask me about.

50:31Nilay Patel:It is the next question. Just this week, President Trump announced new tariffs on Canada, maybe because he's mad about wildfire smoke. Maybe just because he's mad that Spain won the World Cup. Like it's unclear exactly what happened to provoke a new round of tariffs. Jameson Greer, who's the United States trade representative, just did an interview with the New York Times and he's like, we're going to run it back on tariffs. Like we got smacked down at the Supreme Court, but we take that as an invitation to find a new legal mechanism to do tariffs the way the administration wants, the way that President Trump wants.

51:02It is unclear to me what legal foundation,

51:05Nilay Patel:the new tariffs against Canada are resting on, whether they will be upheld. Just based on what we have been talking about here, politics aside, policy outcomes, it feels like the tariffs broadly did not do the things the administration wanted. There are some things that worked better, particularly plowing capital into markets, picking winners and losers, which is not a thing that people generally love when the United States government does, but it has worked in some cases. And yet we're going to do tariffs again. I'm curious for your view on how trade with Canada will change now that we've announced some tariffs that may or may not exist, that may or may not get rebated over time.

51:45Nilay Patel:And more particularly with your view of the network, how you see the network adapting to them. Here's my take on Canada. This is going to be the greatest TikTok clip of all time. Here's my take on Canada. All right. I better be careful. So, look, the Canadians have not come to the table on renegotiating the trading relationship with the United States. And, you know, I kind of know that from some of the behind the scenes stuff I'm exposed to, but I also know it because it's reported. Whereas Mexico and the United States have been very constructively working on what will become the new rules of the USMCA and in particular supply chain traceability, which is kind of the linchpin of the new framework that the United States is going to.

52:38The way I see this latest round of Canadian tariffs, so this is Section 338, which I admittedly hadn't heard of until a couple of days ago. So with 48 hours to consider it, I actually think 338 has a really strong legal foundation for the specific complaint in this case. So 338 gives the president the authority to implement counteractive measures when a trading partner is selectively biasing or penalizing U.S. trade relative to other countries. And what the Canadians did in the last year and a half was just that on autos, on dairy products, on alcohol. You know, there's no U.S. alcohol in the same shelves that there's European alcohol.

53:31So there's plenty of legal authority for the claims themselves. Where it's going to get interesting is the remedy. So it says that, you know, the remedies have to be proportionate to the damages. So, you know, did the tariffs that we, the 50 % across this peanut butter of Canadian imports, was that proportionate to the three or four industries that were called out? Probably not. But how long is it going to take to adjudicate that? It's going to be a long time. And in the meantime, everyone's working to put something new in place for the USMCA as the U.S. opted out of the agreement. And there's kind of a shot clock to get to some new rules.

54:14So I kind of see the whole thing in the context of they're trying to force the Canadians to the table around the USMCA renegotiation.

54:22Nilay Patel:I can see that in the abstract of we're doing geopolitics. We're having a good time. We're all playing risk together, all the blues in the Senate. But from a policy perspective, right, the Liberation Day happened. You're saying it may or may not have had the numeric effects that we wanted it to have. Some other policies had good effects. and then we ended up paying a lot of rebates because the legal foundation wasn't solid. Donald Trump and John Roberts are going to be in a fight that will be very interesting to legal academics 100 years from now. But right now on the ground, well, we're just about to have that fight again and we might rebate all those tariffs again.

54:58Nilay Patel:That happened with the Liberation Day tariffs at higher rates. It certainly could play out that way. You run the software to manage all this administrative and bureaucratic complexity. How do you see the tariff rebates playing out inside your system? And does that tell us anything about how companies and markets might react to this new round of tariffs? You know, we're certainly helping our customers with the rebates. You know, we can kind of calculate duties at any point in time of the then applicable law and do that over a bunch of complexity, like you said. I think this is the new normal. And again, it's not just the United States.

55:40The Chinese have put in place kind of the mirror image of the United States from an export licensing standpoint. And they're compelling the private sector to get certificates and permits and permission from the Chinese to take critical minerals, battery technologies, a whole set of things. and trace those all the way through the end uses and end markets through a big global network. The Europeans are doing the same thing. The Europeans just gave themselves the legal authorities to do a whole lot more on the trade barrier, trade enforcement standpoint as a unified customs authority. So I don't see the world going any other way than unilateral behavior where geo-economics is kind of part and parcel with geopolitics and it's getting expressed as these mostly trade policies, but economic security more broadly.

56:39Nilay Patel:So I think that brings us sort of inexorably to the next turn, which is the military, the warfare turn. We can see it playing out today in the Strait of Hormuz, right? The United States launched an attack on Iran. Iran shut down the Strait. We've brought global shipping in that area to basically a dead halt. We're now maybe in a much longer war about who will control the strait, what those tolls will be. Altana has a role to play there too, right? You can obviously watch goods move around there. You can reroute the goods. Put that into context for us. That is the next turn. It feels like, yep, we can play a lot of economic games.

57:12Nilay Patel:We can play a lot of policy games. But when we start firing bullets, like everything changes in very dramatic ways that are hard to deescalate. Describe what you're seeing there and what the pathways out of it might be. That's a big question. I think the lesson that everyone's learning in Hormuz is that economic choke points can and will be wielded against adversaries and that they can and will lead to kinetic or, you know, actual, you know, live physical warfare kinds of outcomes. So it's no longer theoretical. It's no longer, you know, hey, I'm sanctioning these banks, which is kind of what you and I grew up with.

57:58And it's, you know, any of these economic choke points, supply chain choke points, especially if they're asymmetric, meaning it's more painful for you when I turn you off than it is for me to lose you. So a great example of this is rare earths and critical minerals in China. You know, like the dollars that U.S. end markets generate for Chinese critical minerals providers, you know, they're a rounding error. Nobody cares. But when they turn those off, they can shut down the United States' ability to make a weapon. So it's highly asymmetric. And those can and will be exploited. and those can and will turn kinetic.

58:48I think that's the world we're entering.

58:50Nilay Patel:Literally, last time I'm on the show, you and I talked about John Mearsheimer who spent his entire career predicting that we will go to war with China. He was my professor at the University of Chicago in like the late 90s. Do you think that's inevitable? Like, I mean, the promise of Altana is we're going to fix globalization. We're going to make this, we're going to make trade easier and the promise of trade, particularly global trade, is you'll have so many economic interdependencies that war will be unprofitable? Look, I think the extent to which you can delever to those asymmetric choke points and kind of economic weapons, the more likely it becomes that there will be peace.

59:31You know, so if the US and the EU can make semiconductors and have supply chain and economic security in the realm of advanced electronics in the event of a Chinese blockade in Taiwan, for example, then there's a much lower probability of war if and when that occurred. And I think you can kind of apply that same argument across all these choke points. So yeah, I think supply chain resilience, redundancy, having that kind of network capability to see and then manage through that and simulate and design more resilient systems. That is the best path, short of controlling the switch yourself as a president, but that's the best path to creating a world that's more likely to be peaceful.

1:00:30Nilay Patel:The Strait of Hormuz in particular is fascinating because it is oil, right? And we can see what's happening to energy prices around the country and world is that conflict waxes and wanes in the ways – well, it only appears to be waxing. There are moments of waning. It's like one of those iPhone charts like cumulative sales always go up. Like that's what appears to be happening there. Do you see that in the data that energy prices are affected by literally the number of ships day to day or is that more of – is the system responding to the shock? Both are true. And you're seeing what's so cool about Autana is like you can get so many layers beyond the headline.

1:01:13So, you know, how is the shock to the helium supply, you know, out of the Gulf cascading through semiconductor value chains and pushing on costs there? Like we can actually give you numerical answers to that and we can show you the dependencies and the pathways. So, yeah, look, I think in general, we tend to, when I say we, I guess it's, you know, pundits and policymakers and people who play risk. I think we tend to both over and underestimate the substitutability of goods. And that's been super interesting. It's like, well, oh, gee whiz, these things are going to turn off. And then there's lots of examples where they were much more substitutable than folks knew and or, you know, the trade routes could lengthen and you had 40 days to a voyage and still supply chains flow.

1:02:18In other cases, you're learning about choke points that are not at all substitutable and, you know, those kind of Achilles heels reveal themselves. So, you know, Altana has kind of like a bingo board of these things. But what I'm really interested in is like, how can we get to a world where you're not discovering those the hard way? And how do you get to a world where you can detect them, you can simulate them, you can build constructs like scenarios that actually shape either policy or capital allocation? And we've got a whole product R &D area where we're enabling policymakers and firms to simulate these things and build those plans and do kind of long-range almost network architecture would be the way to think about it.

1:03:11Nilay Patel:I want to end here because I know you have a lot of thoughts about network architecture and federating data, which is maybe the most pure decoder bait of all. Altan is a system. It works best if everyone participates in the system. You obviously spend a lot of time convincing people to participate in the system. That means they have to offer you some data. They obviously have to get some data out of the system in return to be valuable. You're talking about AI quite a bit in this conversation. There's a lot of concern about the AI just hoovering up all of the data and using it for whatever purposes the labs want to use them for, eating businesses like yours or maybe not even just protecting that data at a base level.

1:03:51Nilay Patel:that is the architecture of your product, right? You gave a keynote presentation about federating data. I want you to end by just talking about that. There was a version of the world I think you and I grew up in in which, I don't know, multipolar, multiparty like organizations across the world would just show up and share data and make everything easy and they were geared towards cooperation. You have been describing like unipolar actions over and over and over again. this conversation. Altana is supposed to make that a little bit easier. It's a system that will connect a bunch of individual rational actors.

1:04:29Nilay Patel:The data has to connect in a way that everyone is comfortable with. That seems very hard. Can you just describe that at the end? How are you getting everyone to participate in this? Because it feels like a software solution to a politics problem. It is a software solution. The other way I'd describe it is it's a market making solution. So a lot of our calories are spent from a government affairs standpoint or from a sales standpoint, bringing parties together that have aligned interests in these novel ways of working to solve a network-shaped problem. So Altana, at the highest level, we're a network.

1:05:08You join a network, you benefit from what the network provides. So that's the connectivity to other parties in the network. It's the intelligence and visibility that's revealed in the network. And as you connect to the network, you are contributing to that network. What we are not doing is sharing everybody's data with each other. And that was the point. So there's no world, there certainly wasn't back then when we started the company, and it's becoming even more true that you're not going to reach this nirvana data commons where everyone's just kind of pooling data in one place. So how do you have shared visibility?

1:05:42How do you have interoperability across global commerce in a world where sovereignty is ever increasingly important? And our answer to that is federation. Like you've got to put the software and the data in the hands of, or, you know, in the control of the actors that require it. And especially on the scale of like working with a customs agency or a defense agency, you know, it's, it's non-negotiable. So we're architected in, in this kind of hub and spoke model where, uh, the spokes are customers with very large sensitive data sets that, you know, need us behind a firewall or even in front of a firewall, but with, you know, kill switches and corporate governance and so on.

1:06:32And what we're doing is we're bringing the platform to their data. We have very specific rights to the learnings. So as we connect to the data, as we process it, we have the rights to build out the supply chain network view. So we're not taking pricing. We're not taking like a detailed bill of materials, but the supply chain connections themselves are revealed from the data as we connect this supply chain graph. And then the other bucket of rights are around learning with pre-trained models. So what we can't do is memorize our customers' data. What we can do is take a pre-trained model. For example, we have systems that detect risky shipments in global trade, or we predicted the valuation of goods or the customs classification of goods.

1:07:26And those models are pre-trained. They're learning across the network. And as we learn from any given customer's data, those model weights and configurations can be kind of lifted off for the benefit of the network. And that is the quid pro quo. It's like you give a little and you get a lot. And, you know, like I said, the go-to-market and the government affairs is increasingly putting together these parties at the highest level. I'll tell you a couple vignettes. We're very proud of our platform in the UK. We provide the underlying infrastructure for what they call their global supply chain intelligence program.

1:08:05And it's this whole of government, United Kingdom, supply chain and economic security control tower. So I think there's 10 agencies that are all part of this. They're pouring their data into the platform. We bring the global picture. We bring the software, the models. And they're reaching these kind of supply chain resilience and economic security policy outcomes that are, I think, world leading. And they're doing this on this intelligence platform that underpins it. we've been pairing them, we've been putting them in the room with senior folks in the United States, in Australia, in the Netherlands, and we're helping them learn from each other on the art of the possible.

1:08:44And we're helping them imagine ways of potentially coordinating policy responses across these agencies and collaborating on some of the actual interventions themselves in the supply chain. Like what if we all collaborated on traceability in the critical minerals context? So, you know, I don't think it's unnatural for these parties to join the platform. I do think it's novel for them to imagine some of these new ways of working. And that's kind of the friction in the sale. And I'm proud of the progress we're making. And it's like any other network business. You know, the more mass it builds, the more inevitable and the more valuable it becomes.

1:09:22Nilay Patel:Let's end by just zooming out a little bit. We've described sort of a world in which we inevitably move towards more war, right? We're just going to go to war against China because there's choke points and people are going to squeeze them. Then there's kind of your vision. We're going to imagine new ways of working together in which maybe we're not in part in big NGO organizations that manage trade globally. But everyone is acting in their rational interest and we have a view of the network that makes it easier to imagine new ways of working with all kinds of supply chain traceability. Tell me where we are in the journey of those two things.

1:09:54Nilay Patel:Like end there, put it to make it not abstract, to bring it all the way down to people on the ground who are feeling anxious about the state of the world today. Which way is it going? Which way do people want? I think we're going toward a world that is more economically secure and therefore more physically secure. So by knowing the provenance of goods, by designing supply chain networks and actually getting – cutting through the fog and being able to make these decisions proactively. by helping the public and private sectors engage with each other constructively and collaboratively on these dimensions.

1:10:30The arc of history is moving toward more economic security and therefore less motivation to need to go to outright war in the event that those economic dependencies are weaponized. So, you know, will there be flashpoints? Of course there will. is there going to be a world of friction? Of course, there will. I think at the end of the day, everyone wants to be safe. They want their kids to be safe. They want their wealth to grow. They want to spend time with people they care about and not have to sweat this stuff. And in a world that's transitioning from one equilibrium to the next, I'm optimistic about the direction of travel here, even though it's going to be messy.

1:11:18Nilay Patel:Evan, it is always a pleasure to have you on the show. We're going to have to have you back faster than a year and a half. Thank you so much for being on Decoder. Anytime.

1:11:27Nilay Patel:I'd like to thank Evan for taking the time to join Decoder, and thank you for listening. I hope you enjoyed it. If you didn't let us know what you thought about this episode, or really anything else at all, drop us a line. You can email us at decoderattheverge.com. We really do read all the emails. Or you can hit me up directly on Threads or Blue Sky. We're also on YouTube. You can watch full episodes at DecoderPod. We also have a TikTok and an Instagram. They're at DecoderPod as well. They're a lot of fun. If you like Decoder, please share with your friends and subscribe over to your podcast.

1:11:50Nilay Patel:Decoder is a production of The Verge and part of the Boxing New Podcast Network. The show's producers are Kate Cox and Nick Stat. This episode was edited by Kabir Chopra. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. We'll see you next time. Support for this show comes from Comcast Business. Modern enterprise is a lot of moving parts. Comcast Business helps you orchestrate it all. With SD-WAN working at scale to keep 150 hospital locations connected and working as one. Plus SASE and Zero Trust Security protecting financial data across a bank's 2 ,000 branches.

1:12:27Nilay Patel:And AI-powered networking that optimizes traffic across five continents. No one does business like Comcast Business.