Security, Resilience, and the Future of Mobile Infrastructure

0:00I was at Davos last year in a cyber forum and one of the speakers was talking about Salt Typhoon. It was a closed door room of 60 cyber folks and she said, wait, how many people know about this? It was five out of 60. What we learned was that China has infiltrated major telecommunications carriers in the U.S. for all intents and purposes fully. So they can listen to the phone calls, the lawful intercept plug-in points. They have control of those and they can just turn on at any time and listen. I mean, what do you do on your phone? You know, how much of your life runs on your phone? Basically all of it.

0:29And what we continue to learn is that that's true for everybody, everybody in the United States. Rather than trying to ferret through the existing carriers on Guam and find all the China and try to get rid of it, let's just do a clean install of a telco on top of the existing physical infrastructure. Just assume it's hostile. This was literally three months before the salt typhoon and it was broken. We learned that China had compromised the X1 interface, all these major telcos. The more folks who are kind of bringing, connecting the dots, speaking the same language, I think the better off we all are from a national security and economic prosperity perspective.

1:03In late 2024, the United States confirmed that Chinese hackers had infiltrated every major American cellular carrier. The operation, Salt Typhoon, gave China access to lawful intercept systems, live phone calls, and the communications of senior government officials. It was not a one-time breach. It was the product of an industry-wide failure in cybersecurity. Years before the story broke, a former Green Beret and Palantir executive had started building a new kind of cell network, one designed to operate securely on top of compromised physical infrastructure. The Navy was an early partner, testing the technology on Guam before anyone outside the intelligence community fully grasped the scale of the threat.

1:47David Ulovich speaks with Justin Finelli, CTO of the Navy, and John Doyle, founder and CEO at CAPE. Thank you guys for being here. We are very lucky to have Justin Finnelli, the CTO of the Navy, on his second tour back with the Navy and in this role. And we have John Doyle, the founder and CEO of CAPE with us. And we're going to have a terrific discussion about building for the country, building for the Navy, partnering with the Navy, and all the technology transformation work that is going on at the Navy. So thanks guys for being with us today. Thanks for having me. Justin, just give us a quick background on who you are, what's your job today, how long you've worked in this space.

2:29Thanks for having me. Awesome to be with Winters. That's actually a big part of my job is, hey, let's figure out where needs are, where gaps are, listen to our sailors and Marines, spend time with them, and then connect dots for people who are bringing either improvements or breakthroughs. The name of the game is how do we lessen pain and increase gain? And so across the board, it's a little bit of signal-to-noise detection. The good news is we have a really healthy and thriving and growing ecosystem. And so this is not a me thing. This is, hey, how do we make sure that folks who are super innovative are able to get in?

3:11How do we catalyze? And so my backstory is I'm an engineer. Air Force picked electrical engineering. It was a pretty good time for that. This is just before the world starts getting eaten by software. When was this? Well, you're going to date me. This is early 2000s. Okay. This is right after 9-11. But the hardware revolution and the internet starting, I think that quote from Mark Andreessen happens late August. Early 2000s, yeah. And then we start to, like, kind of my office within the Navy at that point starts to ride the wave towards software. So really early glistenings on software-defined warfare.

3:47No one called it that at that point. I think the earliest name was. network-centric effects. Right. That sounds like a Cisco term where I used to work. That were in verges. Very strong early BD efforts by Cisco. Overnight success, a decade in the making, right? And so, like, they end up adding up. And so, kind of an engineer, waypointing through. So, worked in the intelligence community, in the actual manpower and business systems, operational systems within Department of War and Department of Navy. Went to DARPA, helped stand up two new agencies from scratch. So Space Development Agency and ARPA-AIDS, so DARPA for Healthcare.

4:27Oh, cool. And then... Is that something that works with like the VA and things like that? Yeah. Yeah. Yeah. And so when I was at Defense Health, we were working with VA to try and connect the dots. This is during Trump 1. Let's make sure that we are flattening the government connecting where we can be connected, right? Have synergies. At one point there, the health records for the veterans were on a different backbone than the health records for active duty. It didn't make sense. So kind of trying to be, again, around people who want to make things happen, scouting for new capabilities, new technologies, and then pulling those through.

5:01And I think right now we have the most encouraging best set of pullers I've ever seen. So it's a great time to be in the moment and in the ecosystem. Awesome. John Doyle, who I've known for a long time. You. We're excited to be investors in CAPE. We've been investors, I think, from the very beginning. The very beginning. Yeah, just almost exactly four years ago. It's February 28th. Amazing. Okay. A lot is our street. This is the relationship anniversary. A lot has happened in that time. Tell us, before we talk, I want you to tell us what CAPE is, but before that, you've had an amazing career. To the extent that you are able and willing to tell us about your career, tell us what you've done before starting CAPE.

5:40Sure. Cool to be here. Thanks. My background, I was a computer science major, but then as soon as I graduated, I went in the Army. We had just invaded Iraq. I joined up, became a Green Beret. I was Army Special Forces from 2003 until I left in 2008. Brief detour to law school. I'm a law school graduate, Harvard Law School. Passed the bar. I figured out early I never wanted to be a lawyer, and instead I went to Palantir. This was 2012 or 2013. And the way that people found their way to Palantir in those years, I did. I had an amazing run there. Nine years at Palantir. Started as a forward deployed engineer doing technical work, wrote code.

6:14but my signature contribution to the company was running the national security business from 2017 until I left in 2022. Amazing, super mission focused, it's kind of a wild five years. We went public in the middle of all that but it's also where I had the opportunity to learn about a whole host of vulnerabilities that exist in the commercial cellular network and that was interesting to me and then I was obsessed about it and then I had ideas on how to fix it and so in 2022, with the help of the American Dynamism team who was really in the early days at that point. I left Palantir to start CAPE.

6:49Awesome. All right. What is CAPE? CAPE is a global cellular network, commercial cell network. So your phone, hopefully it says CAPE. Here's my safe Verizon in the upper left-hand corner. Mine says CAPE because I'm on the CAPE network. It's live in 190 countries. We're more private, more secure, and more resilient than any other commercial carrier on earth. We're going to dig into this a little bit, but just briefly, what does more private, more secure, and more resilient mean? Right, that's a good question. Those all mean different things. When we talk about privacy, we are highly differentiated in the way we manage our customer data, the way that we assign identifiers to their phones.

7:23You need a bunch of identifiers on your phone for it to work. We rotate ours, kind of like Apple rotates Mac addresses on the iPhone. We do that for a bunch of other ones. More secure means, it means a lot of things as we've four years now into starting and running a telco. When an entire team with almost no telecom experience when we started, a bunch of defense tech folks started a telecom. What we learned was that the status quo in the telecom industry was really, really poor when it comes to cybersecurity. And then I'm sure we'll talk about Salt Typhoon at some point a few years in. This became not just a suspicion, but a reported story.

7:55And so for us, that just means deploying commercial cloud, employed industry best practices when it comes to cybersecurity. When we find off-the-shelf components that are lacking from a security perspective, we just build our own and we in-house it. And so over four years now, we've been able to make real strides, and we are, I'm confident in saying, meaningfully better than any other carrier from a cybersecurity perspective. And then resilience for us means we are what's known as a mobile virtual network operator. In the V, the virtual means we don't own any towers. We rent capacity on towers from major carriers wherever we are in the world.

8:25In the U.S., the list of companies that that includes. Overseas, we just announced last week a partnership with Rakuten in Japan. We did a joint U.S. and Japanese self-defense force military exercise on Rakuten's physical infrastructure with CAPES software in Japan. It was really successful. So, but what that means is we become and what we've built is a network of networks. So we stitch together physical infrastructure wherever we find it. And the result is that you're not reliant on any one physical infrastructure provider. I won't name any names, but in the last six months, two of the three major US telcos have had significant outages.

8:59Those aren't as scary for a CAPES subscriber as they are for someone else because there's another network you can fail over. I see. Awesome. Awesome. Well, I'm going to get to how you two met in a moment, but Justin, you are CTO of the Navy. That is a very, very big title, and with it must come a significant amount of responsibility, opportunity, and impact. You know, when you stepped into that role as CTO of the Navy, how did you decide how to figure out your priorities? How did you identify opportunities? What are those opportunities? What are the priorities? and what are some of the things that you have focused your efforts and time on in the role?

9:37I left and came back. And so I'll tell you the quick story about coming back. I was doing healthcare. I was loving it. We were getting after it, making huge strides. And so you always know where your cowboys are in the organization. And so someone who I worked with a little bit, but not a lot, said, hey, I heard you're coming back to work with us. And I said, oh, I hadn't heard that. And he said, yeah, the Navy is pulling you back in. And I said, I really like what I'm doing. And he goes, it's different from when you left. We've slowed down. I said, oh, and he goes, and we know how to fix it, but we need you.

10:09And I did not want to go. And so we had just kind of this group of unleashed folks and they knew where others were. And so they kind of handed me, hey, here's a pipeline of wins that we'd like to get through. And so what that ended up looking like was it for us kind of formed part of the barbell strategy. And so like from a finance perspective, we're excellent at the high end, but on the lower charitable commercial, there hadn't been a lot of really strong experience of moving that through quickly. And I think I probably had the best team anywhere and I had some experience doing it. Is that a sourcing issue or procurement issue or contracting issue of identifying the technology priorities?

10:48What makes the low end of the barbell? Why hadn't that been moving or what needed to change? I think reps. And so if everyone was previously trained on here's how you buy a plane, here's how you buy a ship, then everything looks like that. And so we started with what are the differences if you're doing software? And so we found the folks who are saying, hey, I think we can accelerate software acquisition. I think we can spot talent. I had done a little bit of VC work at that time. There were four VCs making investments in the space. There's 168 now by my last count, 42X in seven years. Means that we have private sector that's ready to go knocking on the door.

11:24We have some folks in senior leadership positions now who are saying, hey, come in. And so that was a shift for us from make everything yourself innovate to let's be adopters of innovation. And so that just between practice and kind of a different way of measuring yourself, that was a huge shift for us. Now, the good news is there's so much for support for this right now that even if people haven't had experience, Just, what, three months ago now, Vice Admiral, total champion of these type of efforts, initiator, succeeder at many levels said, hey, let's do a boot camp together. And so we took all the program managers and contracting officers, most of them who had never worked with commercial or very little, and said, here's how you do this differently.

12:09Here's how you can do something in three months that used to take 18 months. And so we had the folks who were doing that well and pulling things through. And then we had folks who had questions. we kind of workshopped that out. It's a tale of two cities now. It's really exciting. See, that answer is excellent because when I asked the question, I was just thinking about all the things that startups were doing wrong, that they didn't know, or the private sector wasn't partnering with the Navy. But what you just spoke about was really about internal education, internal training, rethinking about how they work with the private sector.

12:39And maybe it really takes both halves. You need the startups and the companies to figure out how to work with the government, but the government has to figure out how to work with the companies too. I think we weren't listening enough before. And it's definitely like a collective action thing. We can talk about the outside in, but the inside out was the bottleneck. And so we've taken huge... Yeah, like the primes have had 70 years to refine the go-to-market motion of how to sell to the government. They already know how to do it. And it's a new muscle for startups to build. Maybe this is a good segue, John, to you.

13:09How did you meet Justin? How did you get to meet the Navy? And how do you sell to the government? Maybe we'll get to that last part later. Sell to the government. Yeah. Yeah, it's a great question. And maybe as a bit of framing, when I started CAPE four years ago, and I didn't make this up, the conventional wisdom was if you're going to do a defense tech startup or a dual-use startup and sell to the government, go to the Navy last because they were the hardest to do business with. The Air Force was fastest. The Marines are also fast, but don't have very much money. The Army is somewhere in the middle there and then go to the Navy last because they're the slowest to adopt.

13:41And that was just conventional wisdom that got repeated over and over and over again, which is important framing for when I met Justin and had the opportunity to brief, he was at PEO Digital in the Navy, and had the opportunity to brief them on an exercise we had just done at CAPE where we deployed our network in support of a training exercise and had discovered, had done a lot of validation. It was a really good early, early proof point for us and had discovered an interesting feature where we thought that we could offer a trusted cellular connection over known compromised physical infrastructure.

14:12We tested this within the U.S. borders by simulating a compromised telco. turned out to be a good thing to simulate. When we talked to Justin in his office about it, Justin said, let me talk about Guam, right? We have this problem on Guam, which is we believe that there's a real problem with penetration of the telcos on Guam. They've been compromised. They've been compromised, and it's strategically important ground, of course. I mean, it's a really hard problem to unravel. Maybe we can just deploy, what if we just deployed the CAPE network on top of the known compromised physical infra? Could we trust that connection?

14:43And we worked with Justin and his team, and what I think became was sort of on their end also a prototype of the system and the way of thinking that you've developed and really gone a long way towards implementing over the last four years to get a pilot together quickly and not spend a bunch of time wringing our hands over exactly all the kind of classic things that are hard to get under contract. We worked as a sub with a major prime. We worked with Justin in his office to identify funding from DIU, the Defense Innovation Unit, to help us go faster. And then we just went to Guam. And one thing, I want to hear Justin's perspective on this story and his side of it, But a really important thing that you did early on that I have a ton of respect for and I've seen now play out many, many times over is insist from the beginning on defining success metrics.

15:24He calls them or they call them world-class alignment metrics. Whams. We call them success metrics. It's the same thing. Let's be rigorous and specific at the outside. What does winning look like? And what does that mean? And why is that important? And really transparently, you don't know the story, but we thought it was a pain in the ass internally. We didn't get hung up on contract and we get hung up on dollar amount. We iterated with your team several times on the whams. We got the whams that got to be right, the whams that got to be right. But they were, and we got them really crisp and we got really strong alignment between the Navy and between Cape on what success looked like.

15:56And then we went and executed this pilot and it was ahead of schedule and under budget and we hit all the whams. And in the middle of that story is when the salt typhoon news in the US broke and it turned out to be the case that Justin and his team in partnership with DIU had incubated and validated this technology that then was critical for an emerging national security threat. So in my mind, it's exactly the way that system is supposed to work. That's a little rambly. I want to hear your perspective on how that went. So the normal, hey, we need to meet. We have a game changer. Yep, everyone has a game changer.

16:26We think we're awesome. I know. And so I go and see them and I'm impressed with the tech, but the translation is always the problem, right? Everyone who wants to meet with us, they're like, if I just convince this person, But then we have to go back and convince people. And then ultimately, there's going to be a room that we're not in where a decision is going to be made. And so this is why, and you tell that story, but I'm not surprised that it was annoying because the translation is what carries forward. So like what often will happen is like someone will say like we can do something with quantum that no one else can do.

16:56And like, yeah, but who's going to explain that to everybody? Like if we're talking about tech and we're not talking about outcomes, then like how many engineers do you think are in that building, right? or can pull this forward. And so to this point, it was pretty clear that, hey, there's pain relief here. And it's actually, this is an interesting one to carry like things that we haven't really shared is defense acquisition system historically like hinges on a requirements axis. And that's a slow axis. That's three years to write them all of this stuff. This was ahead of need. And so this is a case where we're looking at things that we think could be game changers, but not following like the full formal process and small dollar amounts.

17:35And then like ultimately like little bets that could turn into big bets if they carry. And so you guys doing the business case and the mission case for us, like it made it a lot easier to pull that forward because there's still so many levers. So the continuation of that story, like what I thought about it was, hey, if these guys can get over the hump, then we have an ace in the hole here. And what we did and kind of what that looked like at scale was when we stood up the team, the tech director team for this program executive office within acquisition, when I'm at this point acting CTO, we're looking at it and we're saying, we only have a handful of new investments.

18:17There aren't even as many investments as there are problems. Right. And so I was like, when are we going to get after these next ones? And they're like, next year. I'm like, but there's going to be more. It's like me sprinting against Usain Bolt. If he has a head start, I'm not going to catch up, right? It's going to increase the distance. And so what we did at that point was we started wildcatting. And we said, hey, you did two pilots last year. How many do you think you could do? Well, if we really pushed it, we could do five. Great, we're going to do 25 this year. Oh, gosh, figure it out, right?

18:48And so on the back end, how do you catch 25? We need a funnel, right? And so what we did was we had a couple light caped that when they are really comparatively advantageous, it greases the skids on the funnel. And so no one was going to be able to do the Rue Goldberg all the way through. But if we had side-by-side, if we had AB and could show how much better that was, then I thought people would get a taste of that. They did. And then when opportunity or crisis strikes, then you scale and you have like kind of those use cases. That's a good, so I guess my question is, your team in your office can drive these pilots and drive these evaluations, how do you take that innovation and then spread it across the Navy and make sure, is it your team's job to make sure that you know what all the problems and needs and asks are across the Navy?

19:38How do you basically make sure that the new technology, new capabilities, and the awareness of those capabilities get spread across the Navy? Yep. I have the pleasure of working with some of the best servant leaders you've ever seen. I can normally keep people up until they get offers about four times their salary. At that point, it's harder to keep them. But the amount of kind of talent on a small team, it would still be a bottleneck if we were trying to keep it in-house. And so what we do is always scouting, but more so it's a network of networks. So to go meta with CAPE, like we're looking at here's what's out there, here's what's available.

20:13And then we kind of have the unleashed people that we know in every community. Within the munitions community, here are the hitters. Within the robotics and autonomous systems, here are the hitters. Here are proxies. Here are some investors who are looking at this. When a new company is in stealth mode, we probably know more about it than others, right? And so that landscape, I'd say in general, what's happened, and this isn't our team, this is the department under a really strong leadership, is we went from a group of just straight builders trying to build everything to gardeners. And we're, okay, that's coming along, right?

20:48We planted a seed there and it's springing, right? And so how we pull those through, we have an innovation adoption kit. We wanted to make sure these tools scaled. And a cool story recently is I was with the special ops community and they said, yep, we're doing an exercise. And through the innovation adoption kit, we found these pilots and we're going to send them into Horizon One. I was like, who told you to say that? And they're like, well, like sometimes we think of ourselves as the proving ground for the larger departments, Big Navy, otherwise, right? And so if we are learning things within the special ops community on maneuver warfare, and that applies to the Marine Corps, then if they have the business and mission case, why wouldn't we pull that through?

21:31And so it gives us an easier way to do that translation and conversion. You're using constant conversations with lots of people at all. But we're speaking the same language. Sure. And so the overhead costs are way down. Like we're now all talking TCP IP instead of there were 27 different dialects. Totally. So maybe, John, has that been your experience? So you, I would say, are sort of in the, you're starting to mature from a go-to-market standpoint as a company. You now have multiple engagements with the government across different areas of the government. Do you find that they're talking to each other?

22:03What advice do you have for founders who want to sell to the government? I mean, you've found a number of, and by the way, selling telco services is not easy when there's very, very large entrenched incumbents. So talk to us a little bit about how you've been able to then take relationships and successful outcomes like you've had with the Navy and expand from there. And what does that look like a little bit? It's a great question. Do they talk to each other? And then how do you navigate that? The one thing that's been true forever is if you fail, that gets around fast. I see. And so bad news travels.

22:38Yeah, bad news travels. Yeah, really quick. And so that's always been the case. What's interesting for us, and maybe it's broadly applicable, is the work, certainly the Navy is doing the work DIU is doing to do these tech validation and like move companies and tech more quickly through the stages of adoption. A really powerful thing is unclassified and shareable tech evaluations. On Guam, we did something we, I shouldn't name the company, I guess, but we had an independent pen tester, a really credible third party come and do a deep dive on the tech and evaluate it at multiple levels of the stack.

23:14And they wrote a 50-page report that DIU paid for because they wanted it and it was the right thing to do, but also they made it unclassified and shareable. And now we can use that across services. We can use that with other customers within the U.S. government. We got permission to share it with investors as we went out to raise more money. And that has really positive effects for the company because we don't have to convince people that it works and does what we say that it does. But it's also really beneficial to the government, not only because it helps our tech get out more broadly, but the fact that we're then able to go raise more money and more capital and go more quickly.