Ep 136: OPM Director Scott Kupor on Launching the U.S. Tech Force & Bringing Merit Back to Government

0:00TechForce is an ambitious project to recruit at least 1 ,000 engineers into government. How do we set the government up to be a real player in the AI world? You were the first hire managing partner, Andreessen Horowitz. The whole idea was, could we create a talent network? Why leave A16Z to join the Trump administration? The message has been, come to the federal government and get lifetime employment. That's the worst message I've ever heard. Why don't we tell the message, which is, come to government, work on incredibly hard, incredibly complex problems, solve real world issues that will affect tens of millions and millions of people.

0:29We're going to be off to the races on trying to recruit some really amazing people.

0:39Scott Cooper is the director of OPM, the Office of Personnel Management, which means he's in charge of how the government hires and fires and brings in talent. He has an exciting announcement this week, which is the U.S. tech force. We're going to be bringing in a lot of top talent to our government. Scott previously helped build A16Z, one of the top venture capital firms. He was the first employee there and managing director with Mark and Ben. And now he's taking a lot of the lessons from the top of the tech world into how we manage the millions of people in our government. You know, for the last couple of generations, it's really been broken how the government hires, how it fires, has not been able to reward the top performers enough.

1:13It's not been able to get rid of the very bottom performers. That's changing with the Trump administration. And we're going to talk to Scott about it. Welcome to American Optimist. Really excited to be interviewing Scott Cooper today. Scott, you're the director of OPM, the Office of Personnel Management. Before this, you were a managing partner at A16Z. I think you also were the first employee there, I think it says. I always thought of you as a partner there, but I guess you were the first person working there, huh? That's awesome. I'm not sure which is better, but I'll take both titles. My head of defense was the first employee at Palindry.

1:40He's on the board there now, too. So director of OPM, what does this mean? This is a big role in the government. What are you doing for a living these days? Yeah, so most people probably never heard of it. And honestly, I hadn't heard of it either before I started working at OPM. But basically, the simple way to think about it is we are kind of the talent organization for the federal government. So we're responsible for all policies that relate to people, everything from like hiring practices to performance management. And we're responsible for making sure that hopefully the government has the right talent to do the right jobs on behalf of the American people.

2:08So it's a pretty interesting and very, very cool opportunity. Awesome. Well, I have a lot of opinions around hiring practices and management in the government and accountability. So I'm excited to talk to you. We should get into those. Yes, yes. This is very important. But first, we're thrilled to talk to you about there's something you're announcing the launch of this week, which is the United States Tech Force. Tell us about this initiative. What are you doing with the Tech Force? Yeah, so Tech Force is really designed to address two fundamental problems that we have in the current workforce and government.

2:35One is we just have a shortage of modern software developers with AI talent. And that's just a function of, as you well know, Joe, of just how quickly AI is changing the world. So we're missing kind of talented people there to help make sure that AI can be a first class citizen in government in the first place. And then the second big part of this is we've got a real early career talent problem in government. So you and I may have talked about this, Joe, but just to give you perspective, we've got about 7 % of the workforce in the federal government that is early career. And so I'm not supposed to say, you know, ages, but let's call it under the age of 30 is the way to think about it.

3:09Yeah. And that compares with about like 22 % in the non-federal workforce. So like we are way under indexed on early talent. You're not recruiting early talent. We are not recruiting early talent. And we've got a huge percentage of our populations that's over the age of 50. So we've got a serious barbell problem, which is we're going to like retire out a ton of people over the next 10 years. And we're doing nothing to actually replace them with people who are modern, understand new technology. And so TechForce is basically an ambitious project to recruit at least a thousand engineers into government.

3:39We're going to let them work across all different agencies. So like some of them will work for, you know, your friend Emil over at Department of War. Some of them will work for Sam Korkos over at IRS. They'll be scattered across all the agencies. And we're going to put a kind of program around it. So they'll be part of a team. We'll do a speaker series. You know, Joe, maybe since we're on the podcast here today, we'll get you come and, you know, do a talk with these people about what's it like to be a startup founder and venture capitalist. And then at the end of the two year period, we're going to basically create a job fair with them in the private sector.

4:12So our hope is we're partnering with about 25 of, you know, the best technology companies, obviously companies that you know well, like Palantir and Andril and others. And our goal is to show that you can do awesome work in the government. And then if you want to go to the private sector, the private sector values that work experience and they will hire you into, you know, an amazing job at a place like Palantir, for example. I love it. And take us aside the White House. How did this come together? Why do you guys do this? How do you make it happen? Yeah. So, I mean, the problem was pretty obvious when you look at it.

4:38So, like, it wasn't like you had to look under any rock to realize there's a problem we had to solve. And as I talked to every single CIO or kind of tech head across the agencies, they all said the same thing, which is like we have very poor ability to be able to recruit early career. And when I dug into it, what I found out is we have a terrible message that we've been relying on for early career people. The message has been come to the federal government and get lifetime employment. Basically, that's been our message essentially for recruiting, which, you know, as you well know, like I'm pretty sure nobody's ever joined one of your companies, Joe, because they were like excited about the prospect of lifetime employment.

5:10And so I was like, that's the worst. That is the worst message I've ever heard. Like, why don't we tell the message, which is come to government, work on incredibly hard, incredibly complex problems, solve real world issues that like will affect, you know, tens of millions of billions of people. And oh, by the way, like, you don't need to be here for 40 years if you want to be here for 40 years. That's great. Like, come for two years, three years, four years, go to the private sector, you know, make money if that's what your goal is and come back. And so that's what we're trying to solve. And so once I pitched that kind of inside the White House, everybody understood it.

5:39And I'm super grateful that we've had the sponsorship of Susie Wiles on this, who, you know, kind of has really helped us kind of navigate kind of through all the various, you know, things you have to do to get these policies through on the other end. So I'm excited about it. We're going to, you know, we will have, you know, we just launched it, as you know, and, you know, we're going to be off to the races on trying to recruit some really amazing people. I love it. Well, she seems like the key to a lot of these things happen in the right way. You know, before we go deeper on this, before we go deeper on this, on this, Scott.

6:06You were the first hire managing partner, Andreessen Horowitz. Obviously, you probably learned a lot about talent there and know a lot about talent from that work. Tell us a little bit about what you guys did there and your focus on talent there as well. Yeah. So, you know, as you may recall, like one of the big things that we try to do with Andreessen Horowitz was to say, look, could we do something other than obviously just be a provider of capital? And I know you've done this a lot, obviously, in your firm as well. And so one of the big areas we thought we could add a lot of value is around talent.

6:33So one of the very first hires we made was actually a woman named Shannon who used to run HR for us at Opsware and LoudCloud. And then a guy named Jeff Stump, who actually comes from the executive talent world. Those were probably one of my first two hires in the first six months of being there. And the whole idea was, could we create a talent network, right? So could we basically use the brand of A16Z to go know all the best CFOs and heads of engineering and BPs of sales and also do the same thing on the individual side, know all the best product managers and engineers? because, you know, as you well know from having funded a lot of entrepreneurs, you know, many people know, they know their first five or 10 hires, but it's pretty hard for them to kind of scale beyond that because, you know, they just haven't built the kinds of networks that obviously we have the ability to do.

7:13So that was the whole theory behind the firm was build the big talent network and then be able to talk to the talent and say, hey, you know what, we can kind of be your consigliere into the entire like A16C startup community. So if you're interested in healthcare stuff, great. Here's like 20 healthcare companies that are all looking for people with your skill set. And then let's just let the companies, quite frankly, compete against one another for that talent. So that was kind of the big thing that we tried to do on talent. And it's a little bit of kind of how I think about it in the government here, which is OPM, my department, we're going to do hopefully a lot of the outbound recruiting, a lot of the initial evaluation of the folks.

7:46But then I want to expose those folks to Department of War, to Department of State, to all the other agencies. And quite frankly, let's let the agencies compete for that talent by figuring out what's the best match between the skill set this individual has and what the needs of that agency are. I love it. I don't think Department of State is going to be able to compete against Department of War, unfortunately, for top talent with how structured right now. But you can't comment on that, maybe. You authored Scott, one of the definitive guys of Silicon Valley as well, Secrets of Sand Hill Road. For those who haven't read it, what are a few of the key lessons from Silicon Valley?

8:16I want to ask that you learned from being there. I appreciate it. Yeah. So look, I think the whole idea behind the book was kind of to demystify this process. As we all know, look, entrepreneurs might do this once or twice or three times. Not everybody's as prolific, Joe, as you are. But as venture capitalists, we do this hundreds of times. And so the asymmetry of information is just crazy. And so the whole idea was just demystify it, help people understand it so that we can actually encourage more people to be entrepreneurs. So they're not necessarily, and by now they're no longer secrets, but some of the ideas were kind of how VCs evaluate opportunities, how they think about kind of evaluating teams, how to think about kind of the risk profile that VCs were looking for.

8:54So you You probably used to get these pitches every now and then where people would tell you this awesome story about they're going to conquer the world. And then they'd say, oh, but by the way, if we don't, don't worry. There's like 10 acquirers who will acquire us. And like, you know, we immediately all pull our hair out. We're like, we don't care about those acquirers. Like we care about the conquer the world strategy, right? It's like none of us is in the risk minimization business, right? So it's things like that that hopefully help people understand how the business works. And my whole goal in doing it was like, you know, as I know you agree with, like the more entrepreneurs, the better.

9:22Like we should just have like everybody who believes that they're qualified and wants to go try something. We should, you know, make sure they have the information to figure out is venture capital the right source of capital for them. Well, everyone should read your secrets of Sand Hill Road. So you guys, I mean, you built an amazing firm. We've done a lot of stuff together between our firms. You're crushing it. Why leave A16Z to join the Trump administration? What inspired you to do this? Yeah, you know, it's funny. So I was a my last time I was in government was literally when I was a junior in college.

9:49I did a summer internship in the first George Bush administration. And they used to call it actually the old executive office building, not the Eisenhower. So that's how that's how long I've been since I've been in the seat. So the truth of the matter is, you know, like I sent Mark and Ben an email when when they were getting more involved in the campaign last summer. And I was like, hey, like, you know, if Trump wins and there's something that's interesting that works out, I'd love to at least like, you know, volunteer to spend some time there. And I kind of forgot about the email. And then Mark, like, reached out to me, like, end of September.

10:16And he's like, remember that email you sent us? And I was like, oh, shit, I forgot about that. He's like, you got to go meet this guy, Howard Lutnick, who at the time Howard was doing the kind of pre-election transition work for Trump. And so one thing led to another. And then look, what I just got excited about at the end of the day was like, it was the right time for me personally. Having been at 860 for 16 years, I've just been incredibly blessed, incredibly lucky to learn all kinds of great things. My kids were out of the house, so it made stuff like that easier. And then I was like, wow, like, I really believe, and this has been true, that we have an administration who cares about people development, you know, right sizing the workforce, making sure we have the right talent for the right jobs, and really thinking about how can you introduce the concepts of efficiency and, you know, kind of quality in a new way into government work.

11:00And so it just was like the confluence of all these great things coming together. And, you know, it's been exactly as advertised. And, you know, you probably have spent way more time with the president personally than I have, to be honest. But like what I found with the president is look like he it's what you see is what you get. He tells it like it is. And, you know, like when he told me when I interviewed him, he's like, look, this is an important thing that we're going to do. And we're going to make sure that we have the right talent and everyone is held accountable for the work they're doing.

11:25And we're going to hire based on merit principles. I was like, sign me up. That's something that I care. It's near and dear to my heart. I remember when Latna was running the transition with Elon and Vivek in the room. I was in the room a little bit. And it's just really exciting. Like you guys are bringing in top talent and pushing people hard. And, you know, I'm probably closer to a lot of the secretaries than I am the president, but he was in fine form last night at the holiday party, making fun of Chamath and everyone and everyone else who was there as usual. So we were having having fun with this.

11:51That's funny. So I'm invited. I didn't see you last night because I got invited to the Hanukkah party. And I know that's interesting that, you know. I'm going to JD's Hanukkah party. So, you know, we got to mix it up. So you've been confirmed about six months ago as OPM director. This is a position that I'm really passionate about because I think our government needs to rethink a lot of things around how merit works and how accountability works and all of that. And I want to talk to you about those things. But first of all, what's the most interesting or surprising thing you've learned so far running OPM?

12:19What shocked you or what's been new to you? Yeah. So I kind of knew this vaguely, but I would say it's really become front and center. So you and I have talked about this a little bit. But like when you look at kind of the way we do performance management in the government, the system is just it's just completely broken and it's so embedded in the culture. So quick anecdote, you know, everybody gets ranked one through five every year, one being the worst and five being the highest. And, you know, in the government, if you look across, you know, government for long periods of time about like, you know, 70, 80 percent of people get ranked a four or five, meaning like 70, 80 percent of the people are well above like average, basically.

12:56and literally like 0.2 % of people get ranked a one or a two basically. And, you know, you know, as well as I having run a bunch of companies, there's no magic number that should be in that lower quadrant. But look, it's really hard to hire and people make mistakes like, you know, a five to 10 % turnover of people who just for whatever reason aren't able to do the jobs you need them to do, or you may have made a mistake in hiring, like it's not unreasonable. But what's happened is like, everybody's gotten very, very focused on these ratings. Like that's like kind of how people almost, you know, that's the highlight of their year is getting their rankings.

13:27And so this kind of great inflation has become so endemic in government that, you know, what, you know, what this year kind of convinced me and we're doing this and are in the across the government is you have to kind of effectively legislate, you know, effectively a force curve in order to change this behavior. So you have done that at senior levels of the organization. Yeah, we're doing it. We're doing it. We're going to do it this year for the rest of the organization. But like in the absence of us actually putting regulation in place that forces this behavior, it won't happen. And then you get kind of the bad consequence of that, as you well know, right?

13:58Which is, look, if you have a bad performance rating system, then all the financial incentives get screwed up because, you know, people peanut butter out, you know, awards basically. And there's no like real differentiation between the guy who's like knocking the cover off the ball every time versus the person who's like showing up to work and doing a fine job, but not like a real bar racer. And so these concepts, like I kind of had an inkling for it, but it was just really probably a big surprise to me to understand just how embedded it has become in the culture. And so, look, I'm excited about the work we're doing.

14:26It's going to be a major cultural shift. It's going to be hard. I get that people don't like it. But, you know, what we're trying to do is create a high performance environment where great people come, they can be promoted when they do great work, they can get paid when they do great work, and also have a system on the other end where, quite frankly, if people, you know, are not able to do the work they're supposed to do, and they've been given an opportunity to improve and they can't do it. Like you have to be able to hold people accountable at that end of this curve as well. Feels like both ends are really important, right?

14:53So you have to be able to say this five or 10 % or whatever it is actually not performing. And right now, I think we've changed a lot of rules in the 1970s that made it really hard to fire people and they get to lay things for years. And it's insane. I know you guys are working on making it so you can actually let people go if they're not doing well, which I think we need to do more of. And at the same time, rather than just give like everyone one, a four or a five, if someone's in the top five or 10%, maybe there's, is there some way you can like get the very best talent to be recognized as well?

15:18You're really outperforming. Cause I feel like a new company, they get that, but you don't have that in the government right now. Yeah, we can look, we have some limits. So, but there are like, you know, there, there are bonus pools and all these agencies, there are these things called special act awards where you can give people money. And then, you know, there's other stuff, which, which understandably people value outside of money. So people value time off or people value, you know, different experiences. So there is a way to do it. Look, we're never going to like – you're never going to have somebody who's got a 100 % bonus program in the government.

15:46That's just not going to work, obviously, relative to the private sector. But I think there's enough tools at our disposal where if we get the performance right, we can also create an incentive structure that actually kind of mirrors the behavior we want to see. So yeah, look, I'm quite confident we'll get there. But you're absolutely right. Like the origin of this is there was this whole civil service reform act that came out – I think you're right – in the late 70s. And, you know, the whole idea was like, OK, we were worried about like patronage type problems, right? We're worried that like you fire somebody because, you know, I like Trump and they don't like Trump and that's why I fire them.

16:17And so like rightly so, we want protections for those things. But it's become a real problem because you've got this whole civil service system. And then, of course, most of the employees are unionized as well. So you've got kind of these double layers that make it very difficult to get to a high performance culture. or so, you know, we're going to do what we can at some time. You need legislation to get all the way there. But I think there's a lot we can do just to regulate. Yeah. The actual history, which I know we've talked about a little bit is I think the very first one of these acts was 1883, right?

16:43It was the Pendleton Act. And that's when they first put in. The Pendleton Act. You got it, man. Yeah. That's when they first put in the merit-based tests in the civil service. This is partially because the government had gotten a lot bigger after the Civil War and everyone's just bringing in their friends. And A, you didn't want to be able to, like you said, you want to protect people from being fired randomly. But what's interesting to me, and I hadn't realized this until I started researching this in the past years, is you used to have to pass a pretty hard test up until the 1970s to run things in government.

17:06And unfortunately, those tests, like every other test in our society, had some disparate impact. There were some people with different backgrounds who do better or worse, not because the test wasn't fair. That's just the nature of our society. And so therefore, we stopped doing the tests. And so in my view, without any of these tests, you just get people who are not nearly as good sometimes because you can't screen out the problems. And are we thinking of putting back in tests at all? Is that what we're going to do? Absolutely. So first of all, like your history is awesome. And by the way, I've got a blog post coming out.

17:33I'll make sure you see it shortly on Pendleton Act. You seem to be wonky like I am on this stuff, which is good. So I'll be interested in your feedback. But yeah, look, the short answer is yes. So you're exactly right, which is the test was called PACE, P-A-C-E. It probably stands for something, which I'm forgetting what the initials stand for. But you're right. What happened was basically starting in like 1978, 79, there was this lawsuit around disparate impact. You're right. Basically, that's what happened. And at the very end of the Carter administration, very beginning of the first Reagan administration, the government entered into a consent decree that basically said, like, we will no longer use this test.

18:07And literally, that consent decree existed until about three months ago, when we kind of went back to the original plaintiff in that case, actually, who was still alive. And we were able to actually get to a resolution where we got ourselves out of that consent decree. But in that intervening period, literally for like 42 years, basically the government did away with any form of test not just like that pace test which was kind of a an aptitude test and a leadership test but also any kind of like functional tests like you're a software developer joe like can you actually code in python like you tell me you can it turns out like we didn't actually do that we we let you put check marks on your application which said yes like i know python i know c plus plus you know i know like ai stuff we literally relied on self attestation of a candidate of their skill set in order to hire them in government And so one of the big things the president did when he came in was he put out a series of executive orders around what we call merit hiring, basically.

19:02And now with the now that we got rid of that consent decree and we actually have all these functional tests now for the first time, we will actually be able to use like, you know, technical assessments to be kind of the first gauge on people's ability to do these jobs. So we're rolling that out. And in fact, actually, the tech force thing that we were just talking about will be a great example of this. So as people apply for this test, for these jobs, we'll actually have them go to a normal third-party tool that you or many of your companies would use, like a hacker rank or things like that, right?

19:35And basically use that as a way to determine, do they have the right functional skill set to do these jobs? So we're going to get there. And we got a lot of work to do around it. I actually helped start something called Merit First, which is using AI to develop a bunch of these tests for our companies, too. So I think it's a new big thing where we're pushing back towards merit, not only in government, but in other areas as well right now. I think it's a great theme. You guys are part of this wave and been pushing that. Oh, that's awesome. All right. Well, maybe offline we can talk about that and see if there's an opportunity for the government.