Pax Silica: Inside the Trump Administration’s Tech Strategy with US Under Secretary of State for Economic Affairs Jacob Helberg

In lockstep with our private companies and our builders to build platforms that are commercially viable and that will can ultimately live outside of the government as a private.

And in my speech at Hudson, I outlined our different lines of efforts, including our policy roadmaps and our projects and Um about a week and a half ago, we we basically did the first big, you know, what would be the tech equivalent of a product rollout where we announced a forward deployed industrial base with our oldest ally in Asia, the Philippines.

Um, we made this um arrangement with them where they are granting us four thousand acres, which is obviously very substantial. It's a third of the size of Manhattan. to do a very large industrial build out um that's one of a kind that that helps combine the predictability and certainty of the American common law system with the industrial comparative advantages that the Philippines offers.

And the goal is really to secure inputs that are vital for our supply chains. And so we're super excited to be here in San Francisco, talk to builders and see ways that we can actually accelerate supply chain security for our tech companies.

councilates and embassies. It's very unique to uh do a gift of four thousand acres, but fortunately there's no statutory limits on how big or small property can be. And so that's phase one. So right now it's actually diplomatic property um that is effectively you know, uh, governed by the same laws as as our embassies are.

Um, phase two will be the long-term development and build out of the land. And so we are gonna spend uh we have two years, a two-year window to negotiate the details with our uh Filipino counterparts on the investor protections that will apply to the land, the taxation regimes and

uh and all of the different, you know, legal safeguards that investors will be able to benefit from from for the long term. And the goal is within that two year window to actually have a long-term framework that will be multi multiple decades.

And so the goal is to identify uh key geographies that actually have uh industrial, you know, strengths and bring unique capabilities to the table that could actually help us move the needle meaningfully in in you know different segments of the supply chain. So the Philippines already has a native indigenous

Manufacturing ecosystem that's already quite deep. It's um, it's our oldest ally in Asia. So we have a very deep values alignment with the Philippines. And so we think that the nexus between the values alignment combined with their industrial advantages actually makes for a very compelling value proposition for a lot of companies. We're talking with a number of companies focused on the robotics supply chain.

As you guys know, living out here and I'm sure you guys uh include robotics companies in your portfolio. Uh, but the robotics supply chain, uh, robotics is an incredibly promising industry uh that really is poised to change a lot of things in in manufacturing as well as in people's daily lives. And the supply chain. is right now completely dominated by China. And so that's an in that's an area where that's, you know, where we're particularly interested in potentially making a bet on.

And the Chinese government, by virtue of its system, really built all of this in-house, which for us, you know, when we think about how we should, we want to secure our supply chains, we need to make a lot of investments, you know, that um That are, you know, touch upon these kinds of industrial capabilities. But as Americans, we're not going to do this in-house inside of the government.

In a way that's very, very competitive. So the question for us is, you know, how do we compete in that landscape at a time when we want to reindustrialize? And the answer is. We're not going to do government operated supply chains because that's not how we shine as a country. And I the, you know, sort of where we've landed is.

Our superpower is really our private sector and our companies. And it's sort of the old Steve Jobs quote that, you know, American products enchant and delight users around the world by the billions. And that's how But you know, that is really is our edge as a country. And so how do we, you know, adopt a product based, a product-centric approach?

to, you know, our foreign policy where we can actually um use that kind of approach to to achieve foreign policy outcomes. And and what we've done, so that's very much sort of the lens of how we've, you know, decided to focus. our economic security strategy. Um, the answer's been trying to work in lockstep with our private companies and our builders to build platforms that are commercially viable and that will can ultimately live outside of the government as a private service.

And so the forward deployed industrial base is meant to be a platform. uh for pro for private investment that will be viable for the long term. It's the first of its kind. We're thinking about making a big play in the logistics space in partnership with um large, you know, corporates. Um and in June, um, we're we're looking at potentially doing a broader rollout where we're gonna roll out four or five different big lines of effort. You guys are both invited to Washington for it.

Um, and uh and so you know, having a product-based approach is very much how we're thinking about it.

Um, there's a lot of waste because there's a lot of roads to nowhere. Um and and what happens is. You know, China will basically deploy capital to its own companies that then, you know, basically write IOUs to the host country. And the host country realizes that um, you know, we they they, you know, they've gained a reputation for these projects have gained a reputation for being a debt trap because

Um, China will say, you know, we'll build a road and you know, as a loan, except the company building the road is Chinese. And so China can basically decide, you know, what the price is. And as you guys know, you know, when you build a house or when you do any construction project, A lot of projects run over budget a lot. And so, you know, when a host country thinks it's taking on, you know, X million dollars in liabilities and it actually ends up being 10X that.

Um, that's when they kind of end up in quicksand. And so the Belt and Road Initiative has really garnered a reputation for um really being a tool of political leverage. that um a lot of countries are still digging themselves out of. And so

Exactly. Versus one where it's positive sum. I think a lot of countries don't feel like they have enough upside in it. It is Chinese workers, Chinese companies, you know, and a lot of the times it's Chinese equity because the debt converts to equity if, you know, the host country defaults. They do a lot of the times. And so, you know, we we're approaching it totally differently. And because we're approaching it by putting our companies in the driver's seat.

Um, it's actually, you know, in in a lot of ways it's much more ethical because um because the deal is structured in a way that's really meant to be. um, you know, an a true joint venture and and one that will be optimized for commercial viability, not just, you know, for political purposes.

Overseas we're leading we're seeing that growth translate to record demands for copper, record demands for cobalt.

record demands for, you know, lots of different inputs that go into data centers and um and, you know, record demand for electricians and all the rest. And so the takeaway for a lot of these countries is Um, if they find ways of actually um having a bigger part and a bigger stake in that supply chain at different layers, layers that make sense for their companies and their economy, they can actually derive a lot of economic growth from that revolution because

You know, the amazing thing about the tech industry, especially when we go through these inflection points, um, as you guys know, is the pie grows really fast. And so it's really not zero sum, which actually makes it uh uh incredibly conducive to forge very mutually beneficial partnerships because we're not approaching it as, you know, what I gain, someone else loses. It's actually because the pie is growing, we're partnering together.

And this is very much part of the ethos of how we're partnering with the Philippines. Um, we we are developing a partnership where we both have skin in the game and we both share in the upside of success. And so, you know, risk is evenly allocated and and and so is upside. And so Ultimately, it's very much a win-win proposition.

Um, what do you think is important to do in the US itself versus to partner with other countries? And how do you figure out what goes where?

It's uh other things than Celsius, uh or no name or company. Um uh we consume a lot of stuff. I mean, Americans like to consume. You know, we we're a risk taking culture, we're a high consumption society. And um and our production levels uh are not 20 or 30 percent. We produce a lot less than that. And so part of what we're seeing is if we narrow the gap between what we between what we consume and what we produce.

We will reindustrialize America because that will be a massive reindustrialization plan that will inevitably include a lot of. You know, semi-autonomy or full autonomy. And because if we industrialize in an economy where unemployment's already at four percent. It will have to be, you know, very, very autonomous, which is possible. Singapore has proven that that's possible. They have highly autonomous ports, you know, factories.

Um, I think a lot of countries actually really see that as a business opportunity for them to also be able to have, you know, more production in their respective regions. And so part of the idea for the forward deployed industrial base and these economic security zones is actually to have a hub-based approach where we can leverage the industrial attributes. So for example, if regions have a lot of rare earth minerals or, you know, for example in the case of the Philippines

a very deep indigenous manufacturing ecosystem, you know, things that they're really good at or have unique advantages in. We can leverage that to to really help um capitalize on that in and make sure that they can actually contribute to their supply chains for areas where they're that they're really good in. Um and and ultimately, you know, help foster regional hubs because

You know, the population of Africa, for example, is growing massively. The um, you know, South America is is also growing very, very quickly. You know, places like Brazil, Argentina. Um, and so I think having a hub-based approach is very promising. And ultimately America is, you know, remains the economic engine uh uh of the global economy. And so Um, I think the parts that we reindustrialize here will definitely be the biggest driving forces. And and you're totally right. I mean, we

the the effort to uh bring back semiconductor fat production here is already well underway and so that will continue. Um It's already in flight and there's a whole host of reasons why it wouldn't necessarily make sense to try to replicate that elsewhere because it's highly technical. The the global talent supply of of t of talent available in that area is very finite and limited.

Um and it's also extremely capital intensive. So it wouldn't make sense to, you know, replicate that elsewhere before it's finished here. Um, but you know, the the um unfortunate and you know good news is Um the we, you know, the supply chain is vast and uh and there's a lot of things that still need to be built. And so the world I think is actually really, really ripe with opportunity in that sense.

And so are there considerations around other mechanisms that the government can use? I know there are there have been, but I'd be love to love to hear um how uh you all are thinking about other aspects of the supply chain that may be raw materials, that may be heavily subsidized or propped up by foreign governments, et cetera, and how we should address those areas in in addition.

Um, they're not that rare. I think, you know, some people have said that you they're everywhere. It's not totally true either. I mean, they they're not everywhere, but uh but they're in lots of different places. I think they the sort of key thing is uh that really drives, you know, the economics of these of those industries is how much energy do you need to pump into the ground in order to extract a given mineral at a given, you know, quality grade?

Uh and then what's actually really rare is the refining process because the number of refining or the number of processing facilities for these minerals is uh very, very limited outside of China. They exist, but in very limited, you know, quantities. And um, and you're right, and China obviously subsidizes the hell out of them. Um

And so, um, and so it's it's very exciting to be able to, you know, share uh with you on the on that that um the Trump administration's actually really had a very, very comprehensive approach. I mean, we've been really focused on the mineral security issue. Pretty much since day one of the administration, we did the largest um critical minerals summit in the in the history of the State Department.

Um, in February on February 4th, with over 55 countries that participated, we signed critical minerals MOU deals with dozens of countries who have, you know, lots of different kinds of minerals. And now one of the things that we're doing and and you know have been aggressively pursued across the administration is

um allocating capital and investments in into a lot of these projects to make sure that they have access to the resources to expand production. So that's on the supply side. On the demand side, the administration is hard at work at

negotiating deals with countries to address the pricing issue. Because as you guys know s from the business that you invest in, you can invest a lot of money in a startup, but ultimately a lot of the economics of, you know, whether a company can be viable is really based on the price, you know, that that company is able to provide a service for. And so the pricing mechanism is really, really central to unlocking long-term commercial viability.

And I'm incredibly confident that we actually will resolve the pricing issue for the minerals market before the end of this administration.

And one of the amazing superpowers of the venture capital business is, you know, you guys are kind of hardwired to be able to assess a lot of the personality attributes of founders and and operators to to tell, you know, some of the things that are harder to read from a deck or or spreadsheet.

on does this person really have, you know, what it takes to be able to execute, you know, and address execution risk, you know, underlying scientific risk, you know, all the different risks that inevitably exist in any company? Um, and so and so the feedback, um, and so we actually would really love for the venture capital ecosystem to help be part of the solution because I think, you know, you you guys are better positioned to assess, you know, who are the best players in the space.

Um, and and we can take that, you know, as an important signal to help inform, you know, capital allocations that we make on the government side to make sure that we allocate money in the right places. Um, and in the most efficient way possible, especially, you know, as good stewards of taxpayer money.

The other thing is I think beyond sort of assessing, you know, who the best players are, I think on the innovation side, I mean, there's a number of really great companies, especially out here in the Bay Area, who are working on new materials and you know, um, rare earth-free, you know, magnets, uh, and and lots of other kinds of innovations. And and I think that's where we have, you know, there's a lot of room and potential for.

Potentially coming out with um, you know, a rabbit out of a hat situation where we somehow end up solving this issue in a way that was completely unanticipated through innovation. And so Um, and that will ultimately be a solution that will really be born out of the tech industry, not the government. Um, and so, you know, that um those are things that we obviously want to be attuned to and help be supportive in any way we can.

uh new new semis designs, for example. There are some longer term plays that are more capital intensive. And so we balance our our views on that and nuclear and such with software that is gonna ship this year. Uh-huh.

So the uh administration's approach to expanding our domestic energy supply is, you know, obviously part of that, expanding nuclear. You know, the administration's really undertaking a lot of efforts to basically cut red tape. um accelerate the the deployment of um American nuclear energy. And um from memory, it was actually one of the first executive orders that the president signed that where uh they said that they wanted to quadr quadruple our domestic nuclear supply.

As well as um, you know, a lot of actions to deregulate. Um, the one big beautiful bill included a lot of tax incentives. And through the State Department, um, we were looking to help con, you know, be play a constructive part in shaping that environment. By creating these evergreen, you know, systems, basically, um, like the forward deployed, like the forward uh deployed industrial base.

that will be a long-term platform and hopefully a replicable one that we could pursue in other geograph in in other geographies. And the idea is that for the long term, you know, our technology companies will have these platforms to operate in that will provide, you know, that will really be a competitive strategic edge. um that they can use to build very, very quickly and and actually get to market faster.

And so often the key is legislation or other approaches. How do you view uh making this stick if you think it's so important for our country's future?

American business people and entrepreneurs should know about these policies in terms of how they affect them.

And things that we could do better in the policymaking space to make sure that we can actually make, you know, um provide some support for our companies to be more competitive in those markets. Uh, we also want to hear, you know, it's been great to already get a lot of feedback from a number of different companies on partnerships that are already in flight and opportunities that they see on the table.

Um, on the supply chain security side. So there's a lot of cross-pollination and partnerships that are already being forged between American companies and companies in India and Japan and South Korea, even in Singapore.

And so understanding where they see opportunities for what segments of their supply chain helps us get a better understanding of what's working and what can we help grow, you know, as quickly as possible and scale. And so that part is is very useful. So I would say expanded market access, um, strategic partnership opportunities on the supply chain side. And um, and then we also want to make sure that we um actually create a space where we can talk about important intellectual property. Um

intellectual property conversations. Um, you guys are obviously very involved in the AI industry. And so I'm sure you've been uh, you know, spending a lot of time thinking about the whole model distillation debate, which is Super important to actually protect the economic value of these hundreds of billions of dollars in investments in AI companies.

And so we, you know, that remains a really important unresolved area of policy um where I think, you know, getting the input from the builders who are the closest to the development of this technology is super important.

lots of processes. Um, but the the really extraordinary thing is we have a president who, you know, also spent most of his life in the private sector and who really likes speed. I mean You know, the running joke, um, especially, you know, with our counter counterparts overseas that deal with the Trump administration is that we like to move in Trump time um because, you know, the president when he likes something, he wants it yesterday.

And and so that part's really been amazing because The appetite to try new things and the appetite for risk and and to move really, really fast is. Highly unusual by government standards and really speak for the philosophy that President Trump brings to.

uh brings to bear in the Oval Office. And so that part's really been extraordinary. That combined with the the really great leadership that we've been able to benefit from at the cabinet level from Secretary Besson, Secretary Lutnick, Secretary Rubio, um, Secretary Bergum, who you know, it's an incredibly collegial team.

And um, and they really, you know, operate with a level of professionalism that's been incredibly inspiring for people like me and the subcabinet um to be able to benefit from and also, you know, work very constructively with our bureaus.

And and I actually think, you know, one of the really big flaws in that whole line of thinking is I really wouldn't say we're an established power because I think for most of our history, I mean, one of the things that really makes America quite unique and and very different. is from the earliest days of our founding, we've always been a nation of underdogs. We started out as 13, you know, uh, you know, disorganized.

You know, unruly colonies, you know, rebelling against an empire of polite society and, you know, the educated expert class. um and um who said that you know we our project as a republic would never succeed and if there really is one through line um across our history is almost any decade in the you know the history of our country, there have been, you know, a the a class of experts that predicted, you know, our decline.

are, you know, that we've reached the limits of our power, whether it was the Great Financial Crash, whether it was the Iraq War, the first and second oil crisis, you know, the Vietnam War, you name it. And, you know, the amazing thing is um Americans perform really, really well when, you know, we feel like

our backs are against the wall and it's crunch time. I mean, I'm sure you'll remember during COVID, there were these very dramatic, you know, Atlantic magazine covers about the great unraveling of America and Against the odds of, you know, everyone and the mainstream press, we came out with a with a vaccine in under a year that actually performed much, much better than every other alternative out there.

and came out of COVID much earlier. China obviously was bogged down and it's zero COVID policy, the effects of which it's still feeling today. And so the reason I say this is because I think, you know, culturally it's something that makes America very, very unique. And I think it's something that really hits close to home for Silicon Valley because it really Silicon Valley embodies, you know, the quintessence of the underdog mentality. Every

You know, you have people who, you know, some of them are dropouts. They sort of, you know, dare to question, you know, old orthodoxies and, you know, they hear no 45 times before getting to a yes and they keep going. And and so it really is, you know, part of the DNA of, you know, what makes a founder a really great founder.

And so I and and I think it's it really is that kind of spirit, that that new frontier mentality that makes Silicon Valley unique, but that has really, you know, characterized America as as a nation that's allowed us to always bounce back whenever we we've experienced a setback. And so it makes me really, you know, um optimistic about the future of our country. And and I think, you know, my message to

founders, you know, executives in Silicon Valley and as well as our partners overseas is I think that is the very that's the kind of spirit we want and are looking for um when we want to partner with people. But And and it's also the kind of of ethos that people should expect from us, you know, when they when they when they ask themselves, you know, what can I expect from Americans versus

you know, executives from another country, um, say China. And and I think the answer is, you know, with America, a lot of the times. It's very positive some because our companies already work on positive sum partnerships all around the world. And, you know, it it will involve a lot of tenacity and creative thinking. And that's how American founders work.