POLITICO Pro Q&A: Michael Brown, director of the Defense Innovation Unit – POLITICO

Brown, a former CEO of cybersecurity firm Symantec who came to DIU in 2018, says that the unit, which also has offices in Boston, Austin and D.C., is steadily making strides to ensure the military is well-positioned in the commercial sector’s innovation ecosystem.

But there are also few signs the Chinese have given up their aggressive efforts to invest in American start-ups.

“China has been able to continue at their previous rate,” Brown said. “The level of Chinese investment in technology has not gone down one bit since we wrote the original report.”

Brown spoke to POLITICO Pro about how DIU is scaling up, the growing willingness of once-wary tech firms to partner with the Defense Department, and why he sees the competition with China as increasingly a tech marathon and not an arms race like the Cold War.

This transcript has been edited for length and clarity.

What is most different about DIU now?

A lot of the efforts that have been underway are about scaling DIU. We have our own contracting capability, a big deal for us. Then we’ve put in the additional structure of having a dedicated defense engagement team that’s always scanning for the most important problems. And then there is the commercial engagement team scanning the innovation ecosystems where we live. This dedicated team’s job is to understand where the interesting solutions are being successfully deployed commercially. For example, in AI, “Who’s got the best technology that can detect anomalies in big data, or who’s got the best technology to do sensor fusion?”

So I think the structure we have of dedicated teams doing contracting, defense engagement, commercial engagement allowed us to achieve the next level of impact for a growing number of projects.

Are more companies engaging with DIU?

We have started our 105th project. So we have a lot more projects underway now than we did two years ago.

Responses from companies are up 35 percent from 2019. A lot more people are finding out about us. Some companies have been successful and now they are returning for another opportunity to work with DoD.

So there is less political resistance in the Valley to working with the Defense Department?

I think we’ve been on an upward slope for some time now. So we’re seeing an increasing number of companies that want to work with us. Some of that is because we work in spaces where companies and their employees have recognized from day one they’re going to be working with the government such as in autonomous systems or commercial space.

Even in AI and cyber, if they are smaller companies, versus a Google or Microsoft, their primary concern is how they grow their company or how they make payroll. Or how do they get to the next investment milestone? They’re much more concerned about what DIU can do to help them get access to DoD contracts than they are about trying to make a political statement

I think it’s really only the large multinationals — so Google, Microsoft, Amazon — that face that kind of question. And all of the management of those companies, including Google, have said publicly now they’re going to support working with the Defense Department. We’re working with Google on a number of projects now. So I don’t see much resistance. Of course, there’s a cultural difference between D.C. and Silicon Valley, but I don’t think that is what gets in the way of having us do even more with small companies. It is more of an economic decision, whether DoD is able to go fast enough and whether the company will be able to land a high-volume contract.

Are there bureaucratic impediments to working with more players?

While I’m very proud of what we’ve done at DIU, we’re not frictionless compared to their other customers. There are still things that make it a little more difficult working for DoD than other commercial customers they might work with. So we’re continuing to try and break even more barriers down so that more companies will consider us. That’s working in the aggregate, but we’re not going to be happy until every company would look at what we’re doing and say, “yeah, I’d like to be working with DIU.”

And that is translating into products in the field?

We had a record of 11 capabilities transferred last year to the military. That means both a production contract for the vendor, plus capability scaled to the warfighter. We never consider a project successful if it’s just a contract completed and no capabilities deployed. We really require both of those for a project to be successful.

You sounded the alarm about Chinese venture capital. Have recent reforms to the Committee on Foreign Investment in the United States made an impact?

I think I have the same level of concern as many in the national security arena. So of course I was enthused to see that the Foreign Investment Risk Review Modernization Act and the Export Control Reform Act were passed in 2018. But unfortunately, it’s taken some time for the new rules to be put in place by both Commerce and the Treasury. In the meantime, China has been able to continue investing at its previous rate. The level of Chinese investment in the technology space has not gone down since we wrote the original report in 2017.

CFIUS of course was very aware of the fact that more Chinese companies were trying to buy U.S. assets, especially in fields like semiconductors. CFIUS already had the jurisdiction to stop straight acquisitions. What CFIUS needed was the framework to better assess intellectual property transfer because of large venture investments, technology licensing deals, or joint ventures. I think we have the right laws in place. We’ve got to make sure that our regulatory system now catches up in terms of our rules and process. But then I expect the Chinese are going to figure out, “now that that door is blocked, what’s the next open door I can go through.”

So you really are on the front lines of the tech race with Beijing?

The president has called it strategic competition with China. I think he’s right. I differentiate that from the Cold War arms race. It really is a tech competition because China sees the value of transforming their economy through high technology to get higher paying jobs, to grow their economy, to be the source of technology for world markets and to set standards. So in the tech race, it’s going to be much more important for the U.S. to invest in our own strengths. What we really need to focus on is investing for the technology breakthroughs for the next 20, 30 or 40 years. This requires an increase in federally-funded research, improving our [science, technology, engineering and mathematics] education and growing our talent, and encouraging the private sector to invest for the long term.

What moonshots are we creating today? I think it’s that commitment to being preeminent in science and technology — making sure we’ve got the right policy framework so we’re encouraging a lot of innovation in these spaces — that will keep us at the forefront of what I’ll call the game-changing technologies: AI, biotech, autonomous systems, quantum science, cyber. In some areas, China’s already ahead, like 5G, and small drones. We don’t want those situations to become the norm even though that’s China’s game plan.

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