Scott Kupor's New Plan to Bring Tech Workers Into the Federal Government

of course we know that the new administration. Of course, lots of people from the tech world have come to it, I think probably most famously Elon Musk and the whole Doge endeavor, which you know, we'll get into perhaps where we stand on the verdict for that, but widely viewed

is not particularly transformational et CIEC. Nonetheless, a lot of like buying a lot of people from the tech world thinking about what aspect of our most dynamic industry in America can be brought into the public sector to perhaps make it a more dynamic place, maybe more efficient, maybe more effective, and a maybe a more desirable place to work for talented people.

So how do you hire, how do you fire? Performance management system so HRIT systems, And then we're also across functional organization that everything we do obviously touches all the different agencies. So we're trying to make sure that we've got consistency of policies across the government. And the simple goal in my mind is just how do we make sure we have the right people in the right jobs in the federal government. That's basically the forward articulation of what we do.

You know, I'd been an injuriesent, as you know from the Founding for sixteen years. Super proud of what we did there, and Ben and Mark were incredibly gracious in giving me this opportunity, and I really felt like this, there is an opportunity in this administration to do something differently.

So you mentioned a bunch of technology people coming to the administration, there's also just a bunch of you know, business people more generally, and look, we're not going to make a mistake of applying every private sector you know, method and model to the federal government. But I think what the President has asked us to do is to think differently about things and giving us kind of the permission and the flexibility to do that. And so to me, look,

I I've been around the venture capital business. You know, ultimately company succeed or fail. My lesson from the venture capital business is they succeed or fail almost entirely because of the people in the organization and the organizational structure

and the culture and the incentives. It's pretty simple. And so my view is, look, why can't we learn some of those lessons and apply them as appropriate to the federal government and think about creating a culture where we've got great people who can do great stuff on behalf of the American people.

about this new project. What is it and then why is it different from past efforts to infuse technology or infuse tech thinking into the government.

modernizing government infrastructure. It's a two year program and we partnered with about twenty five of the largest private technology companies, private sector technology companies, i should say, And we're really trying to accomplish a couple things here. Number one is the government has a dearth of what I would call

modern software expertise and modern AI technology expertise. And that's not a knock at all on the organizations, but a lot of what these big cio organizations of the government have to do as they're maintaining these massive legacy infrastructures, and so the ability to do bespoke development is quite difficult in those organizations. So this will be a vehicle to help them accelerate bespoke development across the entire government.

The second problem we're trying to solve is we have a massive early career pipeline problem in the federal government. So seven percent of the federal workforce is early career let's call that less than five or seven years worth of work experience, and that compares to about twenty two to twenty three percent in the non federal sector. So by a factor of three to one, the federal government is completely failing at getting early career people into government.

And if you look at the other end of the spectrum. By the way, so we've got about forty four percent of our population that's over the age of fifty, and that compares with about a third in the you know, non federal workforce. So we've got this looming problem, which is we're going to have a ton of people, you know, over the next five percent years who rightly so you know, are at retirement age and want to go do other things. And we've done very very little to actually replenish the pipeline.

So this program is really intended to do that. And one of the ways we're doing that is by making it a two year program. So I don't think it's reasonable for us to go to a twenty two to twenty five, twenty seven year old person and say, decide today, do you want to commit forty years of your life

to be a career public civil servant. What I'd rather do is expose them to the problems in government, let them actually have a great experience, and you know what, like we should convince them over time how great this is. But you know what, if the end of the two year period they want to go back to the private sector,

that's great. And that's why we've lined up all these private sector partners who are going to actually help run a job fair for us and make sure that we have kind of greater a connectivity between the public and private sectors.

she meant DOGE. And you know, I'm not part of DOGE, but obviously, look I come from you know, I know lots of those people. And I said, well, how are we ruining things? She said, well, our whole value prop to employees has been come to the federal government and have lifetime employment. And I said, oh my gosh, you're not going to like my answer, because number one, I'm going to tell you like, that's a myth and a lie that people have been telling you. There is no

such thing as lifetime employment. And two, I said, look, that's the most that's the worst least compelling kind of narrative that I've ever heard that I'm going to go tell some twenty five year old like, that's the value proposition. I'm coming to work with the government. So number one is like, we have to change the narrative. The narrative in my mind is come work on the toughest, biggest,

most complex problems. You know, do some public service, but then give yourself career options and you know what, if you want to go to the private sector after that, you know, God bless you, that's a perfect thing to do. So that's part of the problem. The other problem is the nature of what happens in government. And you know, you know Jen Polka, as you guys mentioned in your intro, who's like brilliant on this stuff, diagnosed it per which is so much of what government does is it's a

compliance based culture. Right, It's not just literally you know that we follow laws, but if I do something wrong, you know, I'm worried about getting an inspector General report, or I'm worried about a GAO report, or I'm worried about some congress person hauling me in front of their committee to testify about stuff. And so the short answer as a result is like, we have a zero risk

based culture inside of government. There's no concept of you know, you know, you guys mentioned I came to the venture capital world. You know, in that world, look, we take crazy risk because all we're doing is trying to maximize

upside opportunity. Now, I'm not proposing we do that in government, and I've been using the term measured risk as a better way to try to describe it in government, but like, we have to kind of change the culture and enable people to think about the upside opportunity that comes from taking modest amounts of risk. And unfortunately, particularly on the technology side of things, that has not been the case.

And so again, if you're a young, you know, early career person, I think you want to do cutting edge stuff, you want to learn things, you want to kind of go out a little bit on the risk curve. And right now, at least historically, government has not been in a minimal place for that.

the left tail. Just from a money standpoint, the employee of the federal government never has the chance to experience a right tail outcome. The highest paid worker in the federal government, it's a very decent salary, but you know, in the compared to very even moderately successful people, you know, the most senior successful person in the federal government will make less very often than just sort of like someone

who's hung around Google for a long time. So, like, how much of a problem actually just comes down to that simple monetary fact.

as you go farther through your career. So yes, it's totally unrealistic, you know, unless you're rich and you just decide you want to do something different. It's totally unrealistic for us to think we're going to compete against like a VP at Google for a senior level executive person in the government. So that's not even in my mind, like, that's not even worth worrying about, basically, because like the pay gap is just crazy and nobody's going to do that.

But my experience, at least, and you know, you guys have been around a lot of organizations, is look, there are some people who are purely kind of profit maximizing, and that's great. It's not I'm not have no normal objections to that, obviously, but my sense is that's actually

a relatively small minority the population of employees. I think most employees come to work every day because they're being challenged, they're learning, they have career development opportunities, they work for someone who cares about their career and they feel like, you know, they can be rewarded when they actually do good stuff. They feel like they're held accountable Like that, to me is a culture that we can create inside

of the federal government. And you know, even if it means yes, in a short period of time, you are going to have like a you know, remuneration challenge relative to the private sector. But this is also why again just to go back to it, This is why I think this whole narrative of come, you know, work for the federal government for forty years, to me is just crazy. Like we should have an open idea that you can go back and forth being the public and private sector.

And you know what, if you have points in your life where you think, like profit maximization is the most important thing, then yes, like you should go to the private sector because the government's never going to deal with that. But I think we just have to break this. Like, to me, this dichotomy that there's one way to go or the other makes no sense. So look, in the perfect world, I'd wave a magic wand and say we pay everybody like what they can get paid to Google.

But that's not realistic, and quite frankly, you know, there's there's zero support in Congress for that. The final thing we can do, though, just to Joe, to give you one last perspective, is we can do things inside of OPM to mitigate some of the challenges on the compensation side of things. So let me give you a very specific example. So, as you probably know, there's a GS schedule which is like everybody gets paid, you know, GS

one through fifteen. These are different levels today. All those GS schedules are driven off of tenure and they're driven off of degree requirements. So if I don't have a college degree and I haven't worked for ten years, no matter how good I am, I can't get to a GS fifteen level in government. In my mind, that's just silly, quite frankly, right, that's the opposite of a merit based culture.

You all will remember, since we've talked does, right, You'll remember I won't mention his name, but you know there's a doge engineer with a very colorful name that turger listeners have heard of. You know, when all the kind of exciting dose stuff was happening, there was a quote from an administration official who said this guy's terrible. We never would have hired him because he didn't graduate from college and he didn't have whatever five years of work

experience coming here. And in my mind, like, I literally wanted to pull my hair out when I heard that, because I'll say, that's the craziest thing in the world. Like, if this guy is capable of performing at a GS fifteen level, why should we care about what his tenure

is or whether he has a college degree. And so one of the things we're doing inside of OPM is we're going to eliminate all requirements and all tenure requirements in the pay schedule and so as a result, if someone is doing awesome, like we can hire them at the appropriate level. So some of the pay gap problem is not just a numerical problem, it's a leveling problem. And I think we can solve that even in the absence of congressional legislation.

And that is the basis on which, like, my application gets through or doesn't get through to the next round of screening.

I forget what the acronym stands for, but it's PACE that existed until nineteen eighty and there was a lawsuit at the very tail end of the Carter administration, very beginning the Reagan administration, first Reagan administration, where there was desparate It was a disparate impact claim basically, so the kind of test results on this exam were disproportionately negative

for minority applicants versus majority applicants. And so in nineteen eighty one, the government entered into a consent to free where basically they banned essentially the use of these examinations. And from nineteen eighty one until literally four months ago, we were living under that consent decree. Nobody ever revisited it, and as a result, every agency was terrified to use any kind of actual merit based assessment for hiring because they were afraid they would run a foul of this

consent degree. Luckily for us, we revisited it along with the Department of Justice, and we got out of the consent decree. We actually found the original plaintiff actually was still alive, Levano was his name, and we actually, you know, finally said okay, forty three years later, we think it's time to get rid of this consent degree, and they

agreed to that. So for the first time ever, now we have kind of avoided we've eliminated the risk that the agencies worried about, which is if I use a technical assessment to judge somebody in the employment process, I might get sued, you know, under some type of disprit impact theory. So we are now doing that. So number one to answer your there was a long way to answer your question. But so like, the way we're going to evaluate people is they actually have to demonstrate merit.

So there's lots of private sector tests as you probably know, code signal, all these other things, and every single private sector company uses where they're like, hey, basically, let me give you a coding test if you're applying for a software development job, and then we can level you and figure out are you a you know, GS five or GS fifteen based on that, and then we can do secondary stuff like obviously an in person interview or other things to make sure that you know, you're actually a

good fit for the organization. So that's kind of thing. The more when we have to do on the front end, does that make sense at least?

a problem in private sector too. I'm pretty sure that if you went into facebooks or Google, et cetera, they would also not have a clean answer of like which software engineer is more productive or core attributed more value than the other one.

of people get ranked A four or five. Okay, so meaning basically, you know, everybody is in you know, kind of like Globa gone and well well above average. And then about zero point two percent of federal workers get ranked A one or two, meaning that you're performing below expectations. So number one, like, we've had no system that actually recognizes like outstanding performance and quite frankly unfortunately, no system that actually holds accountability on the other end of the spectrum.

We're changing that. We've already put out regulations for the most senior executives what are called the sees, which are the most senior executives, where we effectively. For the SEES have put out a regulation that requires a forced distribution, so a cap of thirty percent of fours and five rankings, which we think is appropriate to actually distinguish people, you know, in terms of their performance. So number one is we got to reform the system, period and we're working on

that and you'll see more regulation from us. In that number two, you're actually right, which is look like sometimes the metrics are hard, right, so you know, you don't really want to measure like lines of code that somebody produces because obviously all code is not created equal. But you know, what I think does work in the private sector is, look, managers are responsible for their frontline workers. They meet with one on one, they have you know, weekly,

they have a sense of what they're doing. They provide feedback along the way, like I think the performance management ongoing process works better in the private sector. In the public sector, what I found is instead of managers, we use the term supervisor, which I think actually unfortunately does a disservice to what the job is. Like, I don't think the job is necessarily supervision. The job is to manage, meaning are they working on the right stuff, are they

doing the right things. Do they need training for this kind of stuff, And historically we haven't done a great job on that. So one of the things that we just did, for example, is we just rolled out a brand new training program that's mandatory for all supervisors specific to this issue on performance management, so to teach them like what does a one on one look like? You know, those of us who go up in the technology industry.

The first book that we were all assigned to read was Andy Groves Only the Paranoids Survive, which I still think is a fantastic book. I don't know if y'all have read it. It's actually a really all I have read it.

year people actually get feedback. So it's totally unfair to the employee and it's also just unfair to top performers who are not actually getting differentiated reviews and differentiated compensation.

that thirty percent of the individuals. And you know that's a you know, we can argue whether it's sixty percent or eighty percent, but the point is, like, let's let's actually really pay per performance, and let's differentiate compensation as a posed to giving everybody a three hundred or five hundred dollars bonus, which in the scheme of things, has little retentive or incentive value for employees.

tell me your problems. What are you trying to solve? And their job is kind of to translate that into ultimately in tech speak, what we'd call a PRD a project requirements document for the engineers to develop against. So like that's the role we need. So in a well functioning engineering organization, you have developers, you have designers, uh,

and then you have product managers. And the product managers probably aren't puting their hands on the keyboard actually you know, you know typing, you know, ones and zeros, but they are literally that go between between like the end user customer and then the requirements that ultimately drive the development process.

so forth. How do you think about that in light of the fact that these are two year roles and you know, again maybe in some cases someone will do two years and then continue their career in the federal government, but that but you know, especially given the pay gap that emerges specifically for technologists, like that's probably you're taking on the one area where the pay gap probably gets

the widest over time. How do you think about fostering, fostering and maintaining that kind of knowledge, especially given what you laid out at the very beginning, which is this, I don't know if crisis is the right word, but these looming retirement of all these people that do have years of accumulated knowledge about how things really work.

retirement for you know, several million and new attempts. Basically who have you know, kind of completed their professional careers and we are completely it's a very I won't go into the details I want for you, but there's literally it's a like a ridiculously manual paper based process where for years we have had people literally filling out paper applications as recently as the beginning of this year and sending paper by postal mail and all kinds of stuff.

And we literally have a mine in Bowyers, Pennsylvania, which is very fun if you ever want to come see it, where we have hundreds of millions of file cabinets of people's retirement records.

and they've been completely redesigning this retirement application. So we now have what we call ORA, the Online Retirement Application, where instead of paper, people actually can go, you know, in the year twenty twenty five onto a you know computer and and you know, type in their Apple their information, upload their documents, it gets routed to the HR and it's you know, it's you know, vastly better than what

we've had. So I bring this up to say, look, I think this is me is a good example, which is all those people are going to disappear at some point in time, and then the responsibility for that application is going to shift to the existing CIO organization within OPM to maintain it, to integrate it with other systems. And so a requirement of being able to do that development process for Joe and his team is, Look, they have to do documentation, they have to do training of

the team. Look, I think it's not an insurmountable problem. I just think it means, as part of your process, you just have to anticipate that there is going to be a time where people are going to disappear. And quite frankly, it's a smart thing to do anyways, because we just know and look, this happens in private companies all the time. Look people's average tenure in private companies. I can tell you in Silicon Valley it's way less than four years, is what the average tenure of an

engineer is. So these are not new things. They are new things to the government, which is this idea of kind of knowledge capture and knowledge management, you know, kind of in light of the fact that people might not

be there for their entire career. But I think it just means, as we've designed this program that we have to have the appropriate level of documentation, of integration of source code notes and all those things that are you know, you would do in a normal circumstance to recognize that. Now look at Joe in the perfect world. I hope people love it and they're like, wow, this is this is exactly where I want to spend the rest of

my life, and that's awesome. Want to do that like we want to keep them in government, but you know, I think we'll also have to deal with the practical realities that you know, the current generation of you know, people are not thinking about you know, three, five, ten year you know, employments basically think things are much more clearer than that.

So but it's a great it's a great question so look, there's a couple of things that we're doing both inside and outside this program. So outside the program more generally, one are the big things that OPM is driving along with OMB, you know, kind of the offseome management budget is we're working with all the agencies to basically what I would call do headcount planning and reshape the priorities

for the organization. So there's a huge amount of government is very good about adding things to the plate, and they're very bad about actually ever taking anything off. So every time something new comes down from Congress, we add you know, thousands of more people, We add stuff to the plate. And then we have this list now of twenty things, probably five of which we've been doing for twenty years, and quite frankly, nobody even remembers while we're

doing them anymore. They've just now become like, you know, embedded into our culture. So part of the exercise in order to kind of make the throughput faster and to make sure that an engineer isn't like sitting on their hands dealing with you know, crazy bureaucracy, is we have to go back and look at prioritization and actually remove services that are no longer statutory, and they're no longer valuable to the American people. So that's the exercise we've started.

That's the exercise that we're kind of is ongoing right now. But the purpose of that will be not only to make sure that we're hopefully spending our money in the right places, but will also be to remove layers that

ultimately slow down the actual work product of government. The second thing we can do is, as I mentioned, we're really trying to kind of change the performance management culture in government and eliminate barriers to people being able to move through the organization and change the idea that you can't take any risk. I mean, obviously that's a big cultural challenge that we have in government. So everything from

down to like what your performance plan look like. Your performance plan should have, you know, efficiency, it should have you know, some measured amount of risk taking in there. So things that again will speed the pace of deployment and makes sense. The third thing we're doing is and this is again you guys asked me, you know, how is this program different from other programs. As we hire

these thousand engineers, ultimately they will live in various agencies. Right, So, doctor oz At CMS says, you know, it's like, look, I need seventy five engineers to do you know, kind of important projects there or obviously Department of War you know, have lots of stuff, so they're going to live in

those agencies. But what we're not going to do, which is historically where I think these programs has failed, is if you drop these teams just into the blob that is the federal government, they're going to have a terrible experience and they're going to get lost, and they'll their two years will literally go by without them actually having accomplished anything. So our whole goal with this is keep

these teams together. So when you know what I'm what I'm hoping from doctor Oz is there's going to be a team of seventy five engineers who are going to be a team, and they're going to work on the projects that he thinks are the most important projects. And of course they have to integrate with the existing CIO organization because so much of what we do has integration

back ends and all that kind of stuff. But we've got to make sure that that happens because otherwise, you know, you hire a random you know, intern to and you PLoP them into ananization and they get swallowed by the beast. Basically, it's just it's understandable why that happens. So we've got to think about the organizational implications of bringing people in

and make sure they're set up for success. And you know, my expectations are and certainly the conversations that I've had with all the agency heads are that they understand that, and they understand that for them to achieve what they want to do, they have to create the organizational structure that enables these guys to actually do what they're there for.

the federal workforce should be, et cetera. One thing that I could see as a bit of a problem about maintaining careers if federal workers do not feel that they are respected in their jobs. And there is a rhetoric that is that you hear it's like the federal governments they you know again some people it's like, oh, they're leeches, they're part of the deep state. They're all look and they spend money on this, and that's ways. But even that spending looks like what I observe is spending in

the private sector, et cetera. And then you know, there's at least from this administration, there's been these sort of seemingly from the outside and probably from the inside, capricious layoffs or arbitrary layoffs. And so if you respect this workforce, then how how could you possibly have just like cut so arbitrarily. I mean, these are this is what it seems like when you think about building a talent pipeline.

Do you think think about this dimension and do agree with the sort of premise of the question that it's a challenge that no one is going to work at a place if their boss is to some extent sort of think they're you know, do not respect them.

that I've ever learned from. And I had worked for him for literally ten years prior, so for twenty six years of my life I've had the benefit of learning from Ben. The most important thing I learned from him is exactly what you describe, which is when you have

restructurings in companies, basically you have broken trust with your employees. Okay, so, particularly in the startup context, right, Like, you know, when we were in startups, we personally recruited every single person into that company, and we told them how we were going to conquer the world and how awesome we were going to be, and we believed that we weren't like lying to them. But it turns out we were wrong.

Like the market change, we didn't have to no money and and you know, we had to live through this in our loud cloud opsware days we laid we had to lay a bunch of people off, and so you've immediately broken trust with those employees. So you are from that day forward basically in a situation where you have to rebuild that trust. Right, so you have to demonstrate to them that you know it wasn't capricious and arbitrary, and that you're not like lying to them in a jerk,

but that you actually do care about them. And it turns out, through no fault of their own, their next door neighbor who sat in the cube next to them unfortunately lost their job because like we couldn't afford to pay them anymore. So I say that only to say, look, I recognize that very clearly. I understand that. And if you literally go back to like the testimony I gave when I went through my hearing, I said that very splicit. I think that's important. All that being said, I think,

look the way to think about. Let me just give you the context of the headcount reductions that happened in the government, because I think there is in my mind at least some misinformation out there that I think is worth talking about. So it'll give you some numbers. You know, you've got a very sophisticated audience. As at the end of the year, roughly about three hundred and seventeen thousand

people will have exited the federal government. Okay, we started the year at about two point four million ish roughly in terms of civilian These are civilian employees, by the way, so forget about the armed services, because my organization doesn't touch that. About two point four million civilian employees will be roughly two point one million civilian employees as of December thirty first of this year. At the same time,

we hired about sixty six thousand employees. So on a net basis, call it two hundred and seventy you know, two hundred and sixty two hundred and seventy thousand roughly kind of net departures from the government. If you go back to that three hundred and seventeen thousand, number, ninety two and a half percent of those people took some form of voluntary retirement. So we had this thing called DRP Deferred Resignation Program that was the back that was

literally half of it. One hundred and fifty four thousand people took that, which was an eight month seference that we gave to people to voluntarily leave government. And then the rest of it was where there are some other programs. The acronyms aren't relevant for your for your listeners, they're called Viera and VISA if people want to look them up, but those are other voluntary kind of you know, retirement programs.

And then only seven and a half percent of people were removed through either rifts or what we call probationary employees, which is in the government, if you've been if you've been there for one or two years, it depending upon the job. You're kind of the closest thing to an app will employee that we have in the federal government.

And so that we're about seven thousand of those probitionary employers who were removed in about seventeen thousand people who were ultimately riffed, you know, reductions and forced as a result of restructings. So I say that number one, not to I want to be totally clear with your listeners, not to make light of any of this. Obviously those are real people with real jobs and real families and stuff.

But the numbers, again, you know, kind of I think bear out what we tried to do in the government, which is tell people that things were changing, tell people that you know, we do have a different view as to what, you know, we think the federal government should be doing, and give people an opportunity to voluntarily say, okay, this is not what I signed up for, which is a very noble thing to do, and say, you know,

it's time for me to go do something different. So ninety two and a half percent of the people who left the government did so because they decided, you know, this wasn't an environment they wanted to be in. So that being said, now, look I totally agree with you, which is we have to demonstrate to the people that are there and to the people who are coming in that you know, we obviously care about them and that

we think they do valuable work. And I think that's the case for the vast fast majority of people there do great work, like any organization. Yes, there are some people who are not doing great work, and we have a system that makes it very hard to hold them accountable. We're going to try to fix that. But look, that's true of any organization. So I don't think it doesn't make sense that kind of demean the broad federal government

based upon the work of a few. But we have to do that, and we also have to be honest and transparent with our people, which I believe very strongly, and is Look, we can't be all things to all people, Like we're running two trillion dollars deficits. That's not sustainable. And so look, we've got to be smarter. We have to use technology to find ways to improve efficiency. We have to think about if we're doing twenty things, are all twenty of them still required? Do they still add value?

Because ultimately we're stewards of the taxpayer dollars, Like this is not our money we're spending, and so I think it's incumbent upon everybody. And this is the message that I'm trying to get across to my team and to the rest of the government. Is efficiency doesn't mean just cutting cost. Efficiency means are you thinking about delivering a better service but doing so you know, at or below. So like what you do today, because you're thinking about

organizational changes, you're thinking about technology. Like to me, that is just like quite frankly required of anybody in any organization to do. And so that to me is like what I'm trying to convey to people. And yes, that means that there may be some jobs that are impacted because of technology, but those things are going to happen, whether you know kind of you know, we want them

to happen or not. The question is do we actually set up the workforce and do training and do all the kinds of things we need to do to make sure that people have opportunities in light of what is a very very rapidly changing, you know, technological market.

I guess, guiding for safety. Are there any sort of like institutional guardrails that you're putting in so that the government doesn't actually end up breaking things?

Any everybody I've talked to in government and luckily we've had lots of kind of impact on making change ear on, everybody is like, we can't do that because of X, right, And the answer is either because like it's statutory and the honest answers when you dig and dig and dig the realities it's not statutory, Like we've built up this like urban myth over time that something is statutory, or as I mentioned, because like I'm terrified that I'm gonna

get a GAO report, an inspector General report, or a congressional inquiry. And like, we we have built such a compliance culture that we are just literally like unable to do anything that actually is kind of modern and you know, forward thinking in terms of government. And so this is what I'm this is what I'm trying to do. And as I told you guys from the beginning, like, yes, this is not the private sector. We're not going to take crazy risks. We're not going to like go like

put everything on black, you know, in the casino. But we can have a rational conversation, which is okay, like what are the risks we're taking and what's the upside. So if you'll give me a minute, let me give you a very very tangible example for your listeners. So I mentioned to you that we handle retirement services and it's a very manual process, and so like it takes us a really long time to get people formally retired. So you quit from you know, you retire from the

government on September thirtieth. In the current process, you know, it takes sixty ninety one hundred and twenty days sometimes for you to actually get a check because we have this ridiculous, manually paper process that takes forever to for us to calculate what are you actually entitled to and to make sure you're getting the right money and all

that stuff. So that's a huge burden on retire reach. Right, You've been getting a paycheck every two weeks for the last forty years, and now I'm going to tell you, like sorry, like go manage your cash flow some other way while I'm doing this, Like, that's terrible in my mind, and it's a complete disservice and completely disrespectful to people

who are retired with the government. So we have a process in the Retirement Services thing called interim pay right, which is as the name sounds, right, The idea is, okay, can we get you some money on an interim basis that may not be one hundred percent accurate, but at least helps bridge this gap between you when you retire and when you get your actual annuity check. Okay. So going into and then the couple this with we've got this massive You know, we have had a lot of

exits in government. So the three hundred and seventeen thousand I mentioned, not all of those are retirees, but like on average people, we have about one hundred to one hundred and fifty thousand exits a year, so we're you know, more than double the number. So and as a result, there's more than double the number of retirees that are happening. So you've got this terrible papal process like massive volumes, and we're just going to make life miserable for all

these people who can't get money. So I asked the team. I said, okay, how many people go through interim pay today? This is kind of pre are change, and it's about like percent of people. And I was like, well, what's the problem. Layer like, well, that's how we've always done it, so you know, again, part of the answer was statutory,

which it's not statutory. And they're like, well, there's huge risk to the system because if we pay somebody more and then they die between the time we paid them their interim payment and we get their actual annuity, there may not be any assets left into the estate, and so we might compromise the fidelity of the trust fund. Okay, Now keep in mind, this is a one point two trillion dollar trust fund that is actually cashful, a positive.

So among trust funds for retirement. It's actually fairy rare. But we earned two and a half percent on government treasuries a year, which is horrendously bad because we're only allowed to invest in government treasuries but not with Spain. That it's actually still pet cashul the positive and fully

funded like almost in any any circumstance. So we finally went through the math, and I said, let's go through the math, and let's assume, you know, we get it wrong x amount of time and all this sudden stuff. And we did a bunch of math, and I said, look, if we're wrong one hundred percent of the time, it could cost us a couple million dollars over payments at

one point two trillion dollars trust fund. But we can shrink from ninety to one hundred and twenty days the time somebody gets a payment to either zero to seven days if we put more people through this interim pay process. So in my mind, like this is just the most obvious thing to do, and we are doing it by

the way we decided to do it. But like it's a great example, at least in my mind, of where we have so ingrained in the culture that risk, any kind of risk is bad without actually people being willing to have the conversation to say, Okay, like what is the cost of that risk relative to the upside opportunity

that that taking that risk entails. And I'm perfectly happy, you know, I told them, I said, look, you don't need to protect me if it turns out some congress person wants to yell at me because like, I took a modicum of risk in order to like make you know, hundreds of thousands of retirees lives better and not have to like take loans out after they've given their career service to the federal government. Like, I'm totally fine defending that.

I think that's a perfectly rational answer. So that, to me is the issue.

jaws drop when you see it. On the other hand, the impact so far on the economy or the real world is sort of muted. It maybe is like you might have, given the capabilities, you might have expected more

more revolutionary change. And his thesis that he put forth was like, we're really not going to see that sort of meaningful, impactful diffusion of the tech until we have organizations that to some extent are built ground up from AI that you know, yes, you can maybe get some productivity gains here and there by putting AI into some existing workflow, but that the real breakthroughs will come from whether it's companies or so forth, that are truly AI

native from day one. I'm curious, you know, when you think about you know, again going back to the VC world, A, does this feel intuitive to you that the real deployers will be AI native And then does that have any implications for like, we're not going to have a revolution, I guess hopefully at the at the federal level, are not going to have a complete destruction and starting over. Does that have any implications then for thinking about how AI will be diffused within federal processes?

blame him. You know, when when we when we first when we first had movies, you know, actual like you know, moving pictures, they were just plays basically that people filmed, right, so like they weren't like producing them, they weren't new content. It was literally just we said, Wow, we have this cool thing called a camera. Let's film a play and

then go in a thing. Now it's obviously that's not that relevant to this conversation, but my point is just like we tend to go to these very common incremental use cases for things. And so look, I believe that if you look at any major fortune five hundred company, I guarantee you that every single board conversation is what the heck are you doing about AI? And how do I get three to five to seven percent greater EPs growth relative to last year because you can fix my

customer support problem or stuff like that. So I think that's what's happening right now. I do agree that, Yes, what often happens is then there will be a new generation of companies And we see this in the venture capital world too already. Which is the most obvious use cases that people did is there's a ton of companies who have customer support applications for AI, and there's a ton of companies who have you know, how do we

help lawyers read documents better using AI? And that's great and those companies are fantastic, but the real breakthrough is going to be yes, like when someone says, Okay, we're not just gonna make salesforce dot com more efficient, but like, we're just going to rethink customer relationship management with an AI first mentality, and like, the AI should know who

my customers are. It should anticipate what I want to do, and it should send me emails and texts and say, like, you haven't talked to this person in five weeks and I just saw that they you know, spoke at this conference and they talked about this, and you know you're not following up on it. So that's where we will get and I have no doubt we will get there, quite frankly. And look, I'm an optimist by nature. You have to be to be in the venture capital business.

But yes, I would agree with him generally. I think that's right. What does it mean for the federal government? Very simple, which is that if the private sector is incremental, the federal government's going to be like, you know, a hundred x incremental relative to a hundred x less incremental. I guess I would describe it, but that's in my mind. That's okay. Like, so again I've told everybody in my team,

I'm not asking you. I don't want you to go build like the twenty forty AI plan because we have no idea what the heck that's going to look like. That's a total waste of our time. What I want you to do is look at a process you do today and figure out can you use an AI tool to help you get three, five, ten percent greater performance

out of your organization? Right, So we do a ton of I'll give you very simple say, we do a ton of regulation writing obviously, because you know that's what we're ultimately in the business of government is producing regulation, and we're about to put out a regulation. We got forty thousand public comments on this regulation. We literally assigned each one of those forty thousand comments to a person

to read and to draft a response to. Now, to me, that's just insane, right, And I'm not saying that like the AI, we should just like the AI should do it. But like, clearly AI is very good at you know, summarization, at you know, helping people think about stuff like that's like,

that's all. If we did that, like, we would unleash so much creativity and opportunity to government if we just said, take the very basic stuff we're doing today and use your you know, companion, chat, GPT or XAI, whatever your favorite tool is, and just you know, eke out a little bit of productivity. So anyway, that's how I think about it. So, yes, the government is not gonna we're

not gonna transform government overnight. But what we're trying to do, and what the US Tech Force is trying to do, is can we get the right people in here who understand those things that we start to drive ourselves forward so we don't wake up five years from now and find that we're the last dinosaur basically, and you know the world has passed us by.

even know. And of course we're the government's a big Microsoft client. So we have my soft copilot for an individual user in government that's basically the state that is like the state of you know, kind of advanced automation basse. We literally have it on our laptops. Now for the development work that's happening. You're absolutely right, which is, Look, there are major security issues that we all have to

think about. Look, I'm a big believer as you can imagine an open source and certainly our firm entries in Horowitz. You know, you've seen Mark make lots of public comments about this. So I think the government will use open source and can appropriately do so. Clearly we're not going to use like the deep seat commercial version, but you know, so much of that stuff is open source, and if you bring it in you know, to your environment, and you make sure that you get the right security standards.

You know, there's tremendous value to develop on open source. But I would just just to give you a sense of where we are, I would say we're very very early in that journey in government.

crazy at any scale. I do think, you know, And this came up also in our conversations with Jennifer, and I believe it that there is a lot there is more to a career than pay, right, But I also think that's like a very real issue, especially when you're talking about the tech workforce specifically, where we know you could just make an absolute fortune, and in many cases you can make it a fortune as a very young person. You'll be in the right company at the right time,

and many overnight multimillionaires in Silicon Valley. So it's not just the late stage, although that's where it becomes the most obvious. I really the pay is a very tricky situation.