195. How Silicon Valley Took Over National Security

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2:59Welcome to The Rest is Classified. David McCloskey here. We have a very special bonus episode today on an absolutely wild article that was recently published in the Wall Street Journal all about the hidden debt that Apple owes the CIA, which immediately got my interest because I love any story about someone owing a debt to the CIA. It is a great story on its own, but it's also a great jumping off point for a much bigger conversation about the intersection of tech and espionage and national security. We are very lucky to have with us today the author of that article and a terrific new book on this topic.

3:42And we're also lucky that Gordon is still gone on vacation. So I am running the show here all by myself. We are joined today by Sharon Weinberger, who has covered the intersection of technology and national security for more than 25 years. She has been the national security editor at the Wall Street Journal and The Intercept. She's the author of wonderful books on DARPA, the Pentagon's very strange weapons program. She is now the editor-in-chief of the Bulletin of the atomic scientists. And her new book is called Valley of Death, How Big Tech is Fueling the Future of War. And I have read it. It is absolutely essential reading for people who want to understand what is going on in national security today.

4:26So Sharon, thank you so much for being with us today. Hey, thanks so much for having me. I want to start with the article because it's this absolutely fascinating story about the CIA saving Steve Jobs' bacon back in the 1980s. So I'm wondering if you could just, if you could set that story up for those of us who maybe haven't read the article. Sure. So I think like a lot of journalists, you know, we hear stories, especially in national security, intelligence, you hear stories, sort of urban tales, apocryphal stories. Some of them are true. Some of them are not true. And a lot of what we do is trying to run them down.

5:06So about 10 years ago, shortly after I had published my last book on DARPA, The Imagineers of War, a former DARPA director named Vic Reese had dropped in to see me at my office and we were just chatting and catching up. And he starts telling me this story about meeting with Steve Jobs when he was the director of DARPA back in the early 1990s. And he said sort of half jokingly, he's like, you know, I saved Steve Jobs. And I'm like, what? He's like, I bought a whole bunch of Nex computers for DARPA, which of course makes perfect sense because DARPA had been behind ARPANET, early internet, computer networking.

5:46And then he's like, okay, I bought maybe a few dozen. But I heard from someone at DARPA who had come from the National Security Agency, that the NSA had bought a whole lot of next computers. And he's like, so you know, maybe I save Steve Jobs, maybe the NSA Steve Jobs, but we save Steve Jobs. And I'm like, that's fascinating. I wonder how I track that down. And you know, I've dealt with the NSA a lot from my days working at the Intersect when we were publishing on the Snowden Archive and had a very good relationship with NSA public affairs as much as one can have. It's a very forthcoming organization in my experience, right?

6:26Yeah, but I knew it wasn't going to be like, can I call up the NSA? And like, did you really buy millions and millions of dollars? So I kind of put it on what I call an informal list of back pocket stories, you know, things that I kind of scratch away at. So when I have interviews with other people, this is 10 years ago, I asked people about it every once in a while, like Google, I look through FOIA archives, looking for any clue, because like, where do you even start? Because even the DARPA director, he knew was probably true, but you know, he couldn't be a firsthand confirmation of the intelligence community part of it.

7:01Did you think it was true at that time? Or did you think it was this kind of like apocryphal, sort of exaggerated made up story? Both. Meaning I thought it was certainly true. I mean, obviously it was true that DARPA had bought some. Vic Reese, the DARPA director, had heard about it. It was from an employee at DARPA who had come from the NSA. So it was definitely true that NSA had bought a larger number than DARPA had, but that it saved Steve Jobs, which was the whole point of the story, that it saved Steve Jobs and by extension, Apple, enabling Steve Jobs to go from next back to Apple. So I didn't, that part I was a little bit dubious on.

7:39And then I think it was about three or four years ago, I was on LinkedIn and I see a random post from a guy I didn't know talking about the NSA and Steve Jobs and saving Western civilization. And I'm like, okay, that is a little too weird. That's random in the sense that I didn't know this person, was not a person currently in the intelligence community. And so I immediately emailed the guy and I'm like, I'd love to talk to you about Steve Jobs and the NSA. And this, this gentleman was named Dane Erring. And so it turns out two things, A, he worked on the contract and B, even more bizarre, the NSA was just a cover for the CIA that, which for me was very sort of weird.

8:30Like, why would you, I mean, you know, NSA, no such agency. Why would you use that to cover for a CIA contract? It gets even more convoluted. But I called him up and he talked about, you know, he had worked at the time as a contractor for the National Reconnaissance Office. So it turns out the NRO, the agency that controls our strategic spy satellites, that they had been the end customer. But as you probably know better than me, there used to be program B in the CIA, which managed reconnaissance programs. So the CIA was the buyer of these, but it was a CIA contract. The NSA was used as cover and the end user were spies in the NRO.

9:15and Dane opened the doors to his former boss, Joe Romello, who had worked at the CIA. And from there, that was a real breakthrough. So that began to sort of unspool the threads of the story. Jobs at this point, what is he doing? We think of the black turtleneck Jobs launching the iPhone, but at this point in time, he's not at Apple, right? He's preparing to return. Yeah. So he had been exiled from Apple and, you know, as often happens in these management disputes instead of, in fact, there's another great book out called Steve Jobs in Exile, which covers little bits of this as well, and is a great book for people very interested in Next.

9:53So Steve Jobs had been thrown out of Apple and formed his own company called Next that was building, and even people who are not into computer history will probably recognize these very beautiful black boxes. And this was the company that was like, you let a genius loose with no controls. And this is what happens. He designs this beautiful, wonderful computer ahead of its time with built-in networking capabilities before you have even the internet. And it's beautiful and functional and has beautiful graphics. And it is too expensive for anyone to buy. It was too expensive. So we're in the 1980s now, mid-1980s.

10:31And so they were targeting universities. That was one of the major customers, never really caught on there. It had little bits of, you know, business here and there. You know, some talent agency bought it because they thought it looked really cool, which it did, but they weren't really using its full capabilities. And Joe Romello, the CIA official, who was sort of a CIA official ahead of his time, he was, you know, a technology enthusiast and was looking at, you know, how do we get into the hands of people looking at satellite imagery, computers that can allow them to interpret, share, basically do what they're doing a lot better and taking advantage of state-of-the-art capabilities.

11:16So that's where Joe Romello and then also his colleague, Jeff Harris, who goes on to become head of NRO, enter the picture. So what capability do those computers give the U.S. intelligence community and military that they didn't have? I also understand from the article that once they were procured, there were some modifications made to them along the way. So there's a difference between what, as often happens with new technologies, between what people thought they would get out of them. And Joe Romello talks about how, like, you know, his idea was that, okay, it has high speed processing, good graphics, but also that you could literally download onto an optical disc, that you could share briefings, you could share intelligence around town.

12:06And they did. They did what I think he called aftermarket modifications, where they use some of their own contractors in Silicon Valley to upgrade the computers that they didn't even necessarily tell Steve Jobs about originally. So the idea was that you could ship these to analysts at different places, different NRO analysts, and it would allow them to do things that they couldn't do with the old workstations in terms of graphics, in terms of interpretations, and in terms of creating presentations and share those presentations, whether with the White House, senior military commanders or others.

12:43Interesting. And then from the other side, what does that contract do for jobs? And why didn't jobs ever thank us for this amazing contract? I mean, I think it would be too much to say, you know, Next was not going to go bankrupt per se. They had at that point investment. I think one of their most significant outside investors was Ross Perot, as is well known. But the company was doing badly. And so if the idea was that either the company was going to succeed, it wasn't doing that, or become a springboard for Steve Jobs to do something else. So that going back to what I thought was the most apocryphal part of the story where I'm like, okay, so the intelligence community bought a bunch of computers.

13:30How much of a difference did that make? Now, there may be people associated with Next who disagree with this, but the people I spoke to both on the intelligence side and who were senior within Next at the time all agreed that that contract was absolutely essential for the health of the company, of keeping it going and more importantly, showing what it could do. In particular, Dean Ehring, who worked on both sides, he had originally been a contractor with NRO working directly to support Joe Romello at the CIA, and then later went on to work at Next. The argument he makes to me, which is similar to others, is that those years allowed Steve Jobs to mature as an entrepreneur, to realize perhaps some of his, you know, the limits of needing to listen to other people, to show that he could deliver.

14:21It gave him basically a runway that he wouldn't have had. And I am sure there are ways to nitpick at that argument. But when you look back at the other sales of Next, there really wasn't much else there. There were bits here and bits there. But that federal contract, that contract to work with the NRO and CIA was really the most significant thing around and made a huge difference to the company. Do you think Jobs, how did he see it, I guess? I am not a Jobs expert. And I was mostly, so I've read, as other people have read about jobs, fascinating, unique, sometimes volatile person, iconic entrepreneur.

15:01So I think that there was this one moment, I remember a story that I tell in the book, where they're about to go to Washington, they're going out with their federal contractor partner that was helping on the contract ESL. And suddenly, Steve Jobs is like, you know what, I don't want to do this. I don't want to work with the feds. And they're like, Steve, the limousine is idling outside. We got to go to the airport. And I think they basically have to get Ross Perot to intervene. And when I asked the person who told me the story, who had been a senior person at Apple and then at Next, like, well, why?

15:33What happened? And that incident triggered this guy's resignation where he's like, I just couldn't take it anymore. Like, that was the last straw. And somehow, we don't know why he threw a fit. Like, suddenly, I'm not going to work with the feds. And we don't know why he changed his mind, although I think it was probably Ross Perot's intervention. So he certainly had some frustrations. But at the end of the day, and the question of thanking the CIA or not, the only thing he cared about was his vision. And so he was going to take and did take CIA money, intelligence community money, if it was going to help him succeed.

16:11And the second he didn't need that money to succeed and he had the consumer market, he wasn't going to turn back and be like, thank you very much. I mean, that is sort of the singular focus of visionaries. It can be fantastic or it can be frustrating. We're still waiting, Apple. We're still waiting for our thanks. So I want to widen the aperture a little bit and ask you about the dynamic that we're seeing today between Silicon Valley defense tech and the government. Because I think one of the kind of themes of your book is tracking this relationship over time and how the power dynamics have shifted, how the innovation dynamics have shifted.

16:53I'm just kind of curious if you could give us, you know, as we fast forward from the 80s and early 90s of these government contracts helping to save jobs, where are we today in this dynamic between the tech guys and the agencies? So the job story ends where there's a break in that partnership because both the, you know, Steve Jobs no longer, he has the consumer market that's booming and government doesn't fully realize how important, you know, the computing revolution and software may be and just isn't used to operating that environment. So fast forward to today, we now are at, I mean, I would have said like even six months ago, we were, you know, six months away from the beginning of a huge wave of Silicon Valley, you know, really going in on defense tech.

17:46Now we are like in the middle of it. Every day I'm hearing of new companies. And when I say Silicon Valley, I mean it metaphorically. Some of them are certainly Silicon Valley, but it's also, I mean, the sort of the Silicon Valley venture capital community. You know, we have tens of billions of dollars going from venture capital into defense startups. And there are now hundreds of new companies. And more than that, sort of this political alignment, this sort of like defense tech bro moment, which I mean both positively and negatively in some senses, where it's like, let's build, let's re-industrialize, let's help America.

18:23And it's interesting from a national security perspective. It's interesting from a political perspective. I think there are some uneasy divisions within this temporary alliance that we have. But we are really in what I would call a Silicon Valley defense tech moment. That's a turning point. Where do you think it's come from? Because, I mean, for a long time, I guess the, you know, the sort of generalization, which I think spoke to something that was true, is that Silicon Valley tech entrepreneurs in general wanted very little to do with the national security state. I mean, obviously there are exceptions, but there was kind of this arm's length, you know, perspective.

19:05And it feels like the dynamic you're describing is, I mean, in some ways a return to form of an earlier era of, you know, when the Pentagon was playing a significant role in kind of nurturing Silicon Valley. So, I mean, is it a cyclical thing where we're back to where we started? Or, yeah, where does this new dynamic come from? It's cyclical, but it's a different dynamic. So I think at this point, a lot of people know that Silicon Valley was sort of founded on the backs of Pentagon funding, on semiconductors, on electronics, on all the early things that we needed in the Cold War, which created, really, really created, was responsible for the companies and the atmosphere that eventually became Silicon Valley as we know it today.

19:49So it's cyclical in the sense that now we have this return of Silicon Valley to defense. But there is a big difference between then and now. So in the Cold War, the Pentagon was the biggest funder around, whether it was for semiconductors, whether it was for other digital technology or electronics going into the military system. DARPA created the underlying research for computer networking. They were the only ones funding computer networking at the beginning. Now, what venture capital, the dollars in the private sector and the capital markets can bring dwarfs what the Pentagon can spend on research and development.

20:30So once again, we have Silicon Valley working in defense. But now Silicon Valley has a lot more power than the Pentagon had back in the Cold War because it's not relying on Pentagon dollars. It wants the Pentagon as a customer, but it doesn't need the Pentagon to develop new technology, which introduces this whole new dynamic that I look at in the book, which is what happens when sort of venture capitalists and billionaires have a lot of control over the underlying technology or sort of what I call the billionaire's bomb. And so you can see that, you know, love him or hate him. Elon Musk is an incredible entrepreneur.

21:11He saw back over two decades ago the potential of the military market, of the launch market, and really, really went into that before anyone else did in a successful way. But when he's had disputes with the government, for example, during his break with Trump and he threatened, well, we just don't have to send people the International Space Station. Good luck to you. And he backed down and didn't do that. But it raises this fascinating question. I mean, you wouldn't have had Lockheed Martin back in the day saying, well, you like your stealth aircraft, but we're mad at you. Maybe we're not going to give it.

21:44It's just a completely different dynamic. And we have to deal with that and not pretend it doesn't exist. Yeah, I think when we talk about the defense industry, there's a tendency to think about the big primes here. You think about Raytheon, you think about Lockheed. The dynamic you're describing is one where, I mean, that's still true, but now we have to think about SpaceX and we have to think about Palantir and we have to think about Microsoft and Anthropic and all of these big tech players that are now involved in the defense ecosystem. I mean, what do you think this dynamic will do to the way that the Pentagon or the intelligence community sort of arms itself and prepares for future conflicts?

22:29Like, what are going to be the political implications of this? It's going to be a real problem. So let's take the Anthropik dispute with the Pentagon. So a number of months ago, shortly after the Maduro raid, Anthropic, which was the AI provider on classified networks for the Pentagon, raised questions about how their models were used in the raid. They were concerned about two of their red lines, which were that they don't want AI to be used for lethal targeting without sort of human in the loop. They want human decision makers. And their second red line is on having their AI used for mass surveillance of Americans.

23:13And so it was obviously the first that they were probably concerned about, both for the Maduro raid and in other areas. The Pentagon, and particularly the chief technology officer, Emile Michael, who comes from the world of Silicon Valley, was sort of outraged. Like, how dare you ask the Pentagon, tell the Pentagon how your model should be used? And so he, in true Silicon Valley fashion, went all in and said, we're not only going to end your contract, we're going to deem you a supply chain risk so that no other federal... So it kind of became this, it was like, it was the, you know, battle of the Titans, Silicon Valley versus Silicon Valley only played out in the Pentagon.

23:55Which is like what we do for like Chinese manufacturers of like intermediate components. You're like, you're a supply chain risk. Exactly. I think there were problems on both sides of this dispute. So I think there's a tendency among some people to be like, oh, Anthropic was fighting for all that is good and right in this world and like stopping Terminator robots. And I'm not saying that they were or weren't, but I think that there was a very legitimate Pentagon concern about like, who is this? You know, why are they dictating how we use their technology? And so even if you agree with Anthropics Redlines, and there are arguments that those redlines already existed inside the Pentagon, but even if you agree with them, suppose it was a CEO that you didn't agree with and they were doing redlines you didn't agree with.

24:43So that sort of conflict has to be addressed. And it's not being addressed, I think, in the most productive way, because this is the real problem. I think it is legitimate to be like, we don't want CEOs to dictate to government how things should be used. On the other hand, they can, because Anthropic is a private company. SpaceX is a private company. And so that is the problem. You know, when Elon Musk gets mad about something and said, oh, I'm not going to let you do that. you can just think, oh, the government can wave a magic wand and make companies do things. It's not that easy. And there actually are laws that dictate what the government can or can't do.

25:24And it's kind of hard, which is why I think the Pentagon went overboard on the supply chain. What levers of government can we use to pressure them? And it's because they don't own the technology the company does. You mentioned earlier the phrase, the billionaire's bomb. And in the book, you walk into this incredibly interesting war game that the Pentagon's Office of Net Assessment runs. I thought it was a wonderful illustration of the essence of the problem here. Could you describe that? Yeah. So the two stories that really got me thinking about this as a book, one was the Apple and Steve Jobs story.

26:02And the other, which came from a different former DARPA director, was about an Office of Net Assessment. This is this sort of strategic think tank in the Pentagon that does sort of long range thought studies, war games, etc. And I've been told that the Office of Net Assessment commissioned a study back in I think it was about 2013, looking at could a rogue entrepreneur company, maybe a billionaire, and they did mention billionaires, could they create a company that would surreptitiously build and sell nuclear weapons as a commodity? Like, you know, countries want nukes and we want to build them.

26:41And they did this very detailed analysis of like where they would get uranium, how much it would cost, how much would it cost to enrich, where would you base the assembly, where would you base the salespeople, how would you evade detection? And I eventually got a hold of the study itself and then spoke to all of the living people who worked on it. And what they told me, and you think this is back in 2013, so it's kind of amazing. Like, they're like, yeah, we were thinking of an Elon Musk. We were thinking - Did they say his name when you interviewed them? No. So the study specifically says that we are not going to name any Americans in the study.