How Global Security, AI, and Geopolitics Are Reshaping The Investment Landscape

Summary

The Tony Robbins Channel – Episode Summary

Episode: How Global Security, AI, and Geopolitics Are Reshaping The Investment Landscape
Date: April 8, 2026
Host: Tony Robbins (with guest hosts Mark Wade and others)
Guests:

• Michael Chertoff (Former U.S. Secretary of Homeland Security, co-founder of The Chertoff Group)
• Chad Sweet (Former Chief of Staff at DHS, co-founder of The Chertoff Group)

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Main Theme

This episode explores how global security challenges, advancements in artificial intelligence (AI), and shifting geopolitical realities are fundamentally reworking the risks, opportunities, and strategies in the investment landscape. Drawing on the guests’ real-world experience in high-stakes national security, Tony Robbins and his co-hosts lead a discussion focused on the critical connections between risk management in government, the private sector, business leadership, technology, and investment.

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Key Discussion Points & Insights

1. Lessons from High-Stakes Security Leadership

Organized Crime & Post-9/11 Paradigms

• Michael Chertoff reflects on leading large criminal prosecutions, notably against organized crime (La Cosa Nostra), and drawing analogies to counterterrorism: “We took a holistic approach...tried to find vulnerabilities that could allow us to take down the entire enterprise. That turns out to be not a bad model for what we did years later with terrorism.” (02:46–04:09)
• Post-9/11, the US government grappled with coordinating across agencies that had historically hoarded information—changing this required legal, operational, and cultural shifts.
  • Notable anecdote: “The hardest thing for me as chief was...at any point in the day...I would get paged...and we’d have to make a call whether to wake up the secretary or not. Even after doing that, you learn there’s no such thing as perfect information. You’re going to have the fog of war no matter what.” (15:17)

Building Interagency Collaboration & “Connecting the Dots”

• The need for real-time, holistic intelligence gathering, such as the creation of the National Operations Center, which integrated federal, state, and local agencies (15:17–18:47).
• Chad Sweet emphasizes: “Before 9/11, it was like having a football team with no quarterback. Everybody was running their own play.” (17:06)

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2. The Value and Limits of Risk Management

Risk Elimination vs. Risk Acceptance

• Chertoff: “Risk elimination is usually not a possibility...What you got to find is a level of risk that you think is reasonably acceptable...but doesn’t impede ordinary existence.” (24:57)
• Parallel drawn between terrorism, pandemic management, and parenting: “You can’t eliminate the risks of things happening to [your children].” (26:04)

3.4 Ounces: A Memorable Example

• The “3.4-ounce rule” for liquids on airplanes originated from experimenting to determine an acceptable level of risk after a major terrorism plot was foiled (24:57–26:04).
• Mark Wade comments: “You have to bring down the risk level to a level that you can live with and ultimately that you feel like is not going to keep you literally locked in a closet with bubble wrap all over you. But you have to be willing to go out and take some risk...” (66:04)

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3. Private Sector Security, Geopolitics & Investment Strategy

The Chertoff Group’s Mission

• Both Chertoff and Sweet left high-profile roles for a shared vision: to bring integrated, holistic risk management from government to business and investment.
• Chertoff: “The private sector was not going to be a bystander anymore; they're going to need to have security and resilience policies...because although the government could do a very good job...they’re not going to be perfect.” (31:39)

The Collapse of the “Post-WWII Peace Dividend”

• Chad Sweet: “The post-World War II order is now crumbling...the spike that we’re seeing in security spending is now not a short-term blip. This is a structural rewiring of the global risk architecture. Think of it like a global operating system.” (36:03)

Security Spending Now Outstrips AI Spending

• Sweet compares global security (defense and commercial) spend—now $2.7 trillion/year—to an estimated $600 billion/year AI/data center capital expenditure:
  • “We’re talking about 2.7 trillion, so over four times the AI opportunity. It’s a proven business model where the customers must buy because the alternative is extinction.” (37:26)

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4. Where the Money Is Going: The “Four-Layer Cake”

Chad Sweet’s Framework for Security Investment:

1. Traditional Defense Primes – Billions in conventional weapons, response to renewed threats (e.g., Germany boosting defense spending to 5% GDP; Japan, Australia, etc.) (39:36)
2. High-Tech Innovators – Dual-use, disruptive companies like Anduril and Saronic building AI-integrated systems (41:43)
3. “Picks & Shovels” – Companies supplying hardware, consumables, advanced materials, and the software backbone for defense platforms
4. Dual-Use Commercial Technologies – Cybersecurity costs alone are in the trillions; technologies serve both military and Fortune 500 firms.

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5. AI, Cybersecurity, and the New Risk Reality

• “Everyone is enamored with the AI and data center trade, but...security is four times bigger. One is a highly speculative, volatile, unproven model on ROI. The other is a sector...where the customers must buy...because the alternative is extinction.” (37:26–38:32)

• Increasing convergence between geopolitical and commercial risk:

  • Chad Sweet notes: “For the first time in the history of war...Iran targeted three AWS data centers...those were supplying intelligence for the war effort...they accomplished [what they couldn’t do with cyber] using kinetic missiles.” (59:53)
  • The “death of the commercial safety zone” means private companies now face direct physical threats if they play key roles in global conflicts.

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6. What Investors & Leaders Should Look For

Attributes for Investment—The X Factor

• Chad Sweet: “Start with integrity...Behavior matters. If a company provides security to the government but is sloppy about their own security—major red flag.” (47:23)
• Emphasis on dual-use adaptability; entrepreneurs must be able to serve both military and commercial clients.

Stakeholder Value

• Michael Chertoff: “It’s not enough to simply hit targets in terms of revenue...You also have to make sure you’re investing in your employees and motivating them and that you’re providing real value for your customers. That’s what’s going to sustain and build the business...” (50:50)

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7. Talent & Innovation: A “Patriotic Renaissance” in Silicon Valley

• Post-9/11 and in the face of renewed global threats, a wave of entrepreneurial “patriotism” drives some of the best technical talent into defense and security startups.
• Chad Sweet: “When Silicon Valley and Washington work together, great things can happen...We’re seeing a renaissance...where Silicon Valley entrepreneurs want to take their solutions and be part of higher purpose and wanting to defend not only the United States, but the world.” (54:23)

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8. Frameworks for Risk in a New Era

Resilience Over Perimeter Security

• Chertoff: “You can’t eliminate risk...you’ve got to be prepared to accept a certain amount of risk, but you’ve got to be kind of cold-eyed about understanding what is acceptable and what is not...” (63:18)
• Sweet: “Risk equals threat times vulnerability times consequence. A lot of people spend a ton of time focusing on the T without thinking about the C, meaning they're wasting time on threats that don't have high consequence and they're neglecting the threats that do...” (63:58)

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Notable Quotes & Memorable Moments

• On the post-9/11 transition:
  “Before 9/11, it was like having a football team with no quarterback. Everybody was running their own play.” – Chad Sweet (17:06)

• On risk decisions:
  “Risk elimination is usually not a possibility...Find a level of risk that you think is reasonably acceptable.” – Michael Chertoff (24:57)

• On the security sector v. AI hype:
  “We’re talking about 2.7 trillion, so over four times the AI opportunity. It’s a proven business model where the customers must buy because the alternative is extinction.” – Chad Sweet (37:26)

• On threat shifts:
  “The death of the commercial safety zone misconception is a good thing. It means that...everyone now knows that...they cannot rely on the U.S. government or our allies alone.” – Chad Sweet (59:53)

• On talent and purpose:
  “We’re seeing a renaissance...where Silicon Valley entrepreneurs want to take their solutions and be part of higher purpose and wanting to defend not only the United States, but the world.” – Chad Sweet (54:23)

• On living in a risky world:
  “You can’t eliminate the risks of things happening to [your children]. It’s not possible.” – Podcast Host (26:04)

• On investment discipline:
  “Rule number one is don’t lose money...Rule number two is go back and refer to rule number one. And number three is make sure you invest only in something you understand and in people you trust that have integrity.” – Chad Sweet (47:23)

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Timestamps for Important Segments

• 00:10–02:46: Chertoff recounts 2006 UK airline bombing plot and government response.
• 02:46–05:08: Holistic approach to prosecuting organized crime and lessons for counterterrorism.
• 12:08–15:17: Coordination challenges post-9/11; creation of National Operations Center.
• 17:06: Football team analogy—pre- versus post-9/11 security coordination.
• 24:48–26:04: 3.4-ounce rule, risk acceptance, and implications for everyday life/COVID policy.
• 31:39–32:46: Private sector’s new security responsibilities; the mission of The Chertoff Group.
• 36:03–38:32: Security sector spending dwarfs AI spending; urgent global shifts.
• 39:36–45:04: “Four-layer cake” of defense and security sector spending and technological change.
• 47:23–50:50: What to look for in people and companies—values, integrity, dual-use focus.
• 54:23–58:37: Why Silicon Valley is embracing security and defense entrepreneurship again.
• 59:08–62:55: Underappreciated risks—rise of kinetic attacks on commercial targets.
• 63:18–66:04: Final thoughts—resilience, risk frameworks, and living with uncertainty.

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Summary Takeaways

• Risk cannot be eliminated; it must be intelligently managed. Both at a national and individual level, total safety is an illusion—leaders must balance consequence, vulnerability, and threat.
• Security spending is now structurally embedded and vastly outpaces current AI excitement. Defense, cybersecurity, and resilience are enduring necessities for both states and enterprises.
• Investors must understand both the technology and the integrity of the people leading companies, especially in defense and cybersecurity, where stakes and consequences are high.
• The boundary between commercial and military targets is disappearing: companies with strategic roles are now in the crosshairs of hostile states.
• A new generation of entrepreneurs, inspired by both profit and purpose, is revitalizing the defense and security sector—often bringing Silicon Valley innovation and culture with them.
• True leadership in this era means building resilient organizations—those able to absorb shocks, adapt, and turn adversity into advantage.

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Transcript

[Mark Wade]

Most people, when they see uncertainty, they react to the headline. Real insight comes from experience, especially from people who have to make decisions when the stakes are high and the information is incomplete.

[Michael Chertoff]

In the summer of 2006, I got a call the British were uncovering a plot to blow up between 10 and 12 airliners that would have been incomparable to a 911 in magnitude.

[Mark Wade]

Michael Chertoff served the United States Secretary of Homeland Security during a period when the country was rethinking how it approached risk. Security, security and being prepared. In a post 911 world, the domains

[Michael Chertoff]

of conflict have expanded. We see it now with the Straits of Hormuz.

[Podcast Host]

You've got what happened down in Venezuela, you've got everything with Iran, there's the China question, there's the Russia question.

[Chad Sweet]

Any commercial enterprise assisting the Israelis or the United States government will also now be targets. They listed out Hewlett Packard, Cisco, Google.

[Mark Wade]

Chad Sweet served as Chief of Staff helping translate decisions into action.

[Chad Sweet]

Risk equals threat times vulnerability times consequence. A lot of people spend a ton of time on threats that don't have high consequence.

[Podcast Host]

Fast forward, you guys decide to start the Chertoff Group.

[Chad Sweet]

We both felt a passion for security.

[Michael Chertoff]

Risk elimination is usually not a possibility.

[Podcast Host]

I've got four young children and thinking about the world that they're growing up in, you can't eliminate the risks of things happening to them. It's not possible.

[Mark Wade]

What is it that many people are underestimating and that you would counsel them in order to be able to protect?

[Michael Chertoff]

What is important to remember where we face today is everyone is enamored with

[Chad Sweet]

the AI and data center trade. But we're talking about 2.7 trillion. It's a proven business model where the customers must buy because the alternative is extinction.

[Mark Wade]

What is especially interesting is what they've done since then. They built the Chertoff Group and now they apply those same lessons to how organizations think about risk and resilience. So the question we want to explore is this. What do people who have operated inside real world crisis understand about risk, decision making and leadership that others may not? And how do those lessons carry over into business, into investing and how do we lead organizations today? With that, I'd like to bring in my co host today, Mark Wade.

[Podcast Host]

Great to be here.

[Mark Wade]

Glad you're here and welcome our guests, Secretary Michael Chertoff and. And Chad Sweet. Secretary. Before Homeland Security, you were a federal prosecutor in New York working on organized crime. Quite a different experience. I'm sure you played a very key role in taking down the Mafia. There have been many documentaries and movies about that time period. But can you explain for us, you know, what that world was actually like? Why was that so difficult? And what made it such a challenge to do something that nobody'd been able to do really before?

[Michael Chertoff]

Well, organized crime had been a target of prosecution for many years, but it was usually based on a single crime or a single episode. And what we did with respect to what was called the Commission case, which was a case against the board of directors of American La Cosa Nostra, is we took a holistic approach. We looked end to end at the way they operated and tried to find vulnerabilities that could allow us to take down the entire enterprise. So it was really escalating from an episodic, focused prosecution to an enterprise focused prosecution. That, by the way, turns out to be not a bad model for what we did years later with terrorism. So we took together assembling wiretaps and other kinds of surveillance, physical surveillance, witnesses, laboratory work, for example, with respect to a homicide. All of that was assembled, and we had to put it into a narrative where the pieces fit together and were able to communicate to the jury a story that had a beginning and a potential ending so they could really grasp it. And that worked out very well. Everybody wound up getting convicted and getting 100 years or more in prison.

[Mark Wade]

So, yeah, that's a lot, and that's obviously a huge victory. If I could maybe parrot this back to you a little bit, make sure I'm following you effectively. You had to create a spiderweb of connecting all of these dots and bringing them into the center in order to be able to have a thesis and to be able to come up with a case that was obviously going to be successful in the court. Is that a good way to look at it?

[Michael Chertoff]

Yeah, it's a good way to look at it. What we did is we assembled a lot of individual acts and episodes of criminal behavior and found unifying threads. And then we were able to get a couple of witnesses who explained at an enterprise level, the way La Cosa Nostra worked. These were people who had been convicted and they had turned state's evidence. So we were able to then fit the pieces together, but also explain why they fit in a certain way based upon the experience the witnesses had being part of La Cosa Nostra.

[Chad Sweet]

Wow.

[Mark Wade]

It's amazing because I keep thinking about, you know, an NCIS or those where they have the boards and they have all the strings that tie together. And obviously that's a world that you lived and actually executed on in order to be able to prosecute those cases and to think about how that ties into the war against terrorism. You know, it's a. It's a really amazing process of seeing what's not always there by just pulling the threads together, if you will.

[Podcast Host]

Well, Mr. Secretary, you were only the second individual to serve as Secretary of Homeland Security after the department was formed following the attacks on September 11th. And Chad, you were his chief of staff. So welcome to the conversation. Now, can you. Can you take us back maybe, Mr. Secretary, first on what that was like, being in a relatively new government agency at such a pivotal point in time. You know, pressure was very high. Really, you have the whole eyeballs of the world looking at you, and you have a path forward that's very unclear. Still a lot of unknowns, probably more unknowns than known. What was that like?

[Michael Chertoff]

Well, let me step back and give you some background, which is important to understand. So, in 2001, in the spring or the actually kind of early summer, I was confirmed as the head of the Criminal division at the US Department of Justice. In those days, there was no Homeland Security. If there was a terrorist attack, it would be the responsibility of the Department of Justice to respond, in particular, the criminal agencies. So on September 11, I was driving into my office, I had the car phone on, and my deputy was on the phone and said, you know, a plane just hit the World Trade center. And like a lot of people, I assume some small plane got turned around and hit the tower. But as I continued to drive and speak to him, he said, a second plane hit. Watching the news, a second plane hit the World Trade Center. And I said, this is not an accident. So we met in the Department of Justice and walked over to the command center at the FBI, which was the operational hub of any response to terrorism. And there I met an old friend, the now late Robert Mueller, who had just become FBI director within a couple of weeks before. And as we began to be briefed, I had heard about the plane that hit the Pentagon, and we heard about the plane that was taken down before it could hit a target. We didn't know for a while how that happened. And then we learned eventually it was the passengers who took control of the plane and crashed it. But Basically, during that 24 hours and the subsequent days and weeks, it was about building on the run a response capability to terrorism. And that meant being able to identify the terrorists, being able to harden those targets that were likely to be vulnerable, and beginning to start to think about what a response would be. So When I came into the Department of homeland security in 2005, I think the reason I was selected and. And the background that was most helpful was my having been literally on the front line leading the response to 911 during the weeks and months after that terrible event occurred.

[Podcast Host]

Yeah, I believe it. Chad, how about you? What was your perspective? What was going on at the time?

[Chad Sweet]

Yeah, at the time for me, I actually happened to have. I had been in the CIA and I had left and was on Wall Street. And in the morning of 911 at Goldman Sachs, we were literally at 8:30 we'd started a call. And at that time it was the largest raid defense in U.S. history. It was a $58 billion raid defense for AT&T against Comcast, who was RA rating them for cable assets. And the first plane hit shortly after the start of the call. And the rest is history. And it was one of those things that was just so profoundly moving for all of us in the country. And I think for our generation, it was really our moment to consider stepping up and answering the call. So I ended up. I got outreach from my old friends in the agency as well as others. And I didn't go in right away. I had to think about it. But I did leave, decide to leave, ultimately Wall street to answer that call and was privileged to be able to join the Secretary in the largest reorganization of the US Government since the formation of the Department of Defense, which interestingly, was almost exactly 60 years before. So if you think about it, the attacks of 911 happened in 2001. The World War II, Pearl harbor happened in 1941. So 60 years difference. One was a surprise attack, it killed almost 3,000Americans. The other one was a surprise attack that killed almost 3,000Americans. And if you look at it, you know, the government looked at it after the attack to learn lessons. And in both cases, there was a feeling, if you looked at the evidence, there was a failure to connect the dots. There was a failure to fuse data. And so the agency that I had previously served in, the CIA, is C and CIA is Central Intelligence Agency. It was created in the aftermath of that first horrific attack in Pearl harbor to try to fuse and connect all the data within the US Government to hopefully prevent any kind of attack that could have been prevented by not connecting the dots. And unfortunately, 60 years later, we. We saw that there was sclerotic buildup of siloing of information that wasn't being fully shared. So one of the key missions that the Secretary had, as he stood up on the shoulders of Secretary Ridge as well. How do we create culture that basically promotes information sharing so that we never have another surprise attack like Pearl harbor or 9 11.

[Podcast Host]

I'm thinking about that vision that the Secretary had and the way the department must have been operating. As Chief of Staff, it's largely your job to take that vision, take the decisions that are made by the leaders in government and execute on them, operationalize them. So maybe walk us through. You know, once you guys were in the seat in 2006, once you're. Once you're established, what were the main initiatives and how did you think about taking that vision and putting it into practice? Namely, the way you described that sclerotic, you know, that regimentation maybe that wasn't facilitating all that information. How did you. How did you break that up, that scar tissue,

[Michael Chertoff]

Rob? Again, some of it was changing the rules of the road and the laws. You know, part of the reason there had been fragmentation prior to 911 was because, for example, there was a rigid separation between the intelligence gathering function of the government and the law enforcement function. And just to give you an example of this, the day after 9 11, somebody told me when I was at the Department of Justice, I better go read a report that had come in some months before from an agent who was part of the intelligence apparatus at the FBI. And the agent had written in saying, I've identified someone we need to interview as a law enforcement matter. He's come here from France, doesn't really speak English, he's taking flying lessons in Oklahoma, but he didn't stay around to show how to land the plane. And that makes me wonder what he really came here for. And I hope we don't have someone who's going to try to blow up the World Trade Center. Now, this had been written weeks before this actually happened, but because of the rigidity of the separation between intelligence and law enforcement, nobody acted on it. And that was a great object lesson in the importance of connecting the dots and not allowing the process to become an impedance as opposed to an assistance.

[Mark Wade]

When you think about situations like that, and obviously every situation's different, but you're dealing with less information, not a complete full picture. And going back to the spiderweb analogy of trying to be able to pull all these threads together into a hypothesis or a thesis, as you were dealing with the reorganization and getting agencies to basically talk to each other, et cetera, how did you navigate that and get them to be able to say, look, we need all of the pieces of the spider web to come together? I mean, was that through just, you know, mandating it. Was it through just, you know, specific. You mentioned law changes and rule changes, that kind of thing. But how did you change that culture to be able to do that other than just the nobody wanting it to happen again, so to speak?

[Michael Chertoff]

Well, we did have the benefit of having the wind at our back in the sense that people remembered what had happened and so rhetorically, nobody objected to the fact that we needed to connect the dots up. But you do run into a tendency of people to hoard their information. And so we had to build processes where we were regularly in contact with each other and where, for example, the senior leadership like myself or Chad or people at the top of the department pyramid were constantly interacting with the various unit chiefs of the actual operational elements to make sure they were coming together and responding to questions. Chad, you were very much involved in this. Yeah, yeah.

[Chad Sweet]

I think if we look at that moment, I feel like that what the Secretary did in trying to make these decisions is bring together not only information from all parts of the government, but also from our state and local partners. Because when you're protecting the homeland, it's a whole of government effort and it's a state and local effort. So how do we do that? And he initiated what's called the noc, the National Operations center, which was a fusion and actually brought into DHS liaison officers from major city police, fire, ems. And it also connected the dots with what are called the Joint Terrorism task forces. They're JTTFs within the FBI. And what I loved about having the Secretary as our leader at that time is he came from doj. And as you guys know, sometimes there's friction. I was in the CIA. You know, the only people that we didn't like more than the KGB was the FBI. I mean, there was just a legitimate inter rivalry between these, you know, agencies and the government. It's, it's a natural thing that can happen. And because the Secretary had the DNA from doj, he had credibility with doj. And we were able to get the FBI to not only collaborate, but the Secretary also would at times push back when our own antibodies would try to duplicate things that the Bureau was doing. So, for example, there was a system that gather suspicious activity, reporting sars, the DHS trying to create a separate system from the FBI system. And the secretary squashed that and said, no, we're not doing that. They've already got it going. We're not going to reinvent the wheel and we're not going to get siloed again. And I Loved that because it was both as a taxpayer and I loved it. And I also loved it from a former intelligence officer perspective. It's just, it made sense. It was operationally efficient and all that came together in the noc. And at the end of the day, the hardest thing for me as his chief though was, you know, we were handling not only man made threats like terrorism, but natural disasters like hurricanes, fires, floods. So at any point in the day, back in the day when we had pagers, I would get paged in the middle of the night by the noc, the National Operations center, and we'd have to make a call whether to wake up the secretary or not. And that meant we had to create thresholds for what constituted different categories of crises. And at the end of the day, even after doing that, you learn very quickly there's no such thing as perfect information. You're going to have the fog of war no matter what. And sometimes things that look small at the beginning end up becoming much bigger later. So it really is a challenge. But I can say today, if you look back, pre 9 11, I came from where you guys are in Texas. I grew up in Beaumont playing football. Literally before 9 11, it was like having a football team with no quarterback. Everybody was running their own Play. There were 23 different agencies and our adversaries were taking advantage of that. They were exploiting the seams that came from independent agencies running independent plays. Today after 9 11, it's not perfect, but I think what the Secretary and President Bush did in really creating that foundation of information sharing and fusing everything from the local, state and federal level has really made the United States a much tougher target for our adversaries.

[Mark Wade]

Well, and that's, it's, it's great to hear that. And obviously we really appreciate, appreciate both of your efforts to be able to do it. I mean, it's, it's mind boggling for people sometimes to think about how it's now been over literally 25 years since we had 9 11, and there has not been a major, you know, situation on American soil of that magnitude. A lot of it is because of the work that y' all have done. And you should be very proud of that, and we're very grateful for that. You, you know, work.

[Chad Sweet]

Can I just make, please, can I provide just one data point to prove that point? You know, when I was in CIA, it was always hard to say, you know, is it working? And every day that we didn't have nuclear war with the Soviets was a good day. Right. But it's also hard to prove a negative. How do you prove that you contributed to that? Right. So one of the things you have to look at is what's going on outside the United States. And I'm proud to tell you that because of the efforts of President Bush, Secretary Chertoff, and frankly, it was a rare moment that we don't see here in Washington very often. It was a bipartisan effort on the Hill with Congress on both the Democrats and the Republicans coming together in a united way. And as a result of that, literally, if you look at the data from the National Counterterrorism center, all around the world, there were over 20,000 horrific deaths of innocent men, women and children. And they weren't just in remote cities like Jakarta or Bombay. They were also in London, Berlin, Madrid. And that tells you, if you look at the data, not one of those 20,000 deaths and casualties occurred inside the United States from the time that we left office. So I can say with fairly high confidence that it's not perfect. But I do think there's no doubt that the collective effort of both Democrats, Republicans, state officials, federal officials, the country coming together, and actually average citizens tipping us off when they saw things that look suspicious. We are a safer country today as a result of that, no doubt.

[Michael Chertoff]

Another thing I think it was helpful was again, our relations with our allies overseas were very, very important in having unified approach to detect and respond to terrorism. We wound up having regular meetings with myself, you know, the head of the British intelligence, European intelligence agencies and interior ministries, homeland security ministries. And the idea was to exchange information and operate in a coordinated way. But I will say we did have a few close calls. It wasn't just that after 9, 11, everything stopped. We had to be on our toes and there were a couple of times we had to respond quickly in order to stop something.

[Podcast Host]

Well, I'm actually kind of interested about that.

[Mark Wade]

I am very. Now you get. What can you say? So, yeah. What can you share?

[Podcast Host]

What, what, what? Like, I think, I think those near misses are, you know, I think there's great stories behind that. So share. Give us, give us a little bit.

[Michael Chertoff]

So in the, in this is public now. I mean, it's been public for a while. In the summer of 2006, I got a call from actually my counterpart in the United Kingdom, John Reed, who was the home Secretary, who said the British were uncovering a plot in London by people who were affiliated with Al Qaeda to blow up between 10 and 12 airliners leaving from Heathrow Airport headed to North America had that plot been carried out, it would have been comparable to a 9, 11 in magnitude. And what the plotters were going to do was take sports bottles of liquid and put a hypodermic needle and drain the liquid and then inject it with something that would be an explosive liquid that could then be detonated on airplanes. And they would bring these bottles in, get on airplanes and then blow the planes up. Now, we had to work very closely with the British because under their legal system, they needed to have certain specific kinds of proof to arrest the perpetrators. So we had to basically be able to be trusted by the British to keep the secrets until they could get to the point and that they could do the arrests. We, on the other hand, had to begin to immediately elevate our security because if they didn't manage to arrest everybody, we had to be able to make sure they weren't able to blow up an airplane. So that required us to balance both the need to maintain secrecy, but also the need to have enough people read into what was going on to develop countermeasures in order to prevent someone from executing the plot. Eventually what happened after a few weeks is the Pakistanis arrested one of the plotters in Pakistan. At that point, the British. And we understood it was no longer going to be a secret and they might pull the trigger on these bombings immediately. So we began the process of arresting them and then shutting down air traffic for a day. And the challenge then became, what do we do now with respect to this new weapon? Are we going to never let people bring any liquids on airplanes? And this is a question of risk management. How do you decide how to manage the risk so that you avoid any real risk of a disastrous occurrence, but at the same time, you don't make life impossible on a day to day basis for citizens. And so what we wound up doing is experimenting with different kinds of liquid explosives to see what is the amount below which it's probably not going to be able to do any real damage to a plane, and the amount above which it's too risky and we have to prevent people from taking it on.

[Podcast Host]

I have a guess.

[Michael Chertoff]

Carry on.

[Podcast Host]

I have a guess at the number.

[Mark Wade]

Yeah, 3.4 ounces.

[Michael Chertoff]

Well, we did a bunch of experiments blowing things up to get to that point and it's turned out to be to be the right thing. But there's a larger lesson here, which is risk elimination is usually not a possibility and it becomes too onerous and you wind up to use an expression, throwing the baby out with a bathwater. So what you got to Find is a level of risk that you think is reasonably acceptable, although not perfect, but doesn't so impede ordinary existence that it makes people miserable and it actually really winds up damaging the economy in our society. A good example of where this came up quite a bit was in Covid, when again, there had to be a balance between preventing people from being in situations where they might be communicable disease holders, but at the same time not locking everybody down indefinitely so nobody could go to work and kids could never go to school for years. So you had to balance and manage the risk.

[Podcast Host]

I feel like we could stop right there. I mean, that, that is like, that is so well stated. I was thinking, as you were talking, I was thinking like, this applies to obviously what we do in our business and we talk about the downside a lot of what we do. But I was thinking really more as a father of children, I've got four young children and thinking about like the world that they're growing up in and, and, and what are the, like, you don't want to, you can't eliminate the risks of things happening to them. It's not possible. But, but you want to be, you want to think about what are you exposing them to. And as we like to say, if you can live with the downside, then the upside takes care of itself. Okay, so let's fast forward now. You, you guys, you guys spent time in government, 2006, I think, to 2009, 2010 timeframe, obviously, administration changes. You see different leadership come in, et cetera. You guys decide to start the Chertoff Group. Right? And so, and you've been, you've been running it ever since. To today, talk to us about what you do with the Chertoff Group, why you formed it, a little bit of the history behind the firm that'll take us to really current events, which there's no shortage of things to get into here.

[Michael Chertoff]

Chad.

[Chad Sweet]

Yeah, the secretary was highly sought after at the end of the Bush administration. He could have gone to any law firm that he wanted for very lucrative stable pay. And instead, you know, he, like me, I could have gone back to Wall Street. We both felt a passion for security and we wanted to find a way to build a business around that. And I think we both stepped back and said, you know, just like, hopefully most good entrepreneurs, what's missing in the market today around that passion and I. One of the things we kind of sat down and did on the back of a napkin to plan it out was this concept of we wanted to be single Sector focused, just do one thing and try to do it really, really well. Second was we wanted to basically build full life cycle services around that sector focus. And we did it with a vision of taking what we felt was missing. And I told them about my experience at Goldman on Wall street where I was in the telecom, media and tech group. And there were oftentimes we had seen companies that we knew were going to be significant leaders and disruptors, but they were too small for Goldman fees. And so we basically stepped back and we had to let our, our competitors develop a relationship with them early and when we'd have to fight to get back in later. And I thought to myself, wouldn't it be great if we had some sort of affiliated relationship with a consulting firm where we could basically show them and support them in their organic growth phase and then be there in a pole position to win a mandate either for inorganic buy side or possibly ultimately the exit on the sell side through a merger or an ipo. And Goldman flirted with that idea at one time, but it never came to fruition because ultimately the partners at Goldman felt that you just couldn't combine the culture and the economic model of a consulting firm with an investment bank. And if you wanted to blend in private equity investing, which we, we knew we wanted to have both world class consulting advice for organic growth in our sector, we wanted to have inorganic advice for acquisitions and then we wanted to have growth capital available if a company needed it as well. And at the end of the day, we were told by a lot of my friends on Wall street like Goldman couldn't do it and you can't do it either. And I know you guys sit in Houston where MD Anderson tries to put an end to cancer, and one of their mottos is those who say something is impossible should get out of the way of those who are doing it. And I feel like the Secretary and I, when someone tells us you can't do a vision that you have, it just makes us want to do it more. And so I'm proud to say that here we sit today, here in Washington, a decade and a half later, having survived a global pandemic, multiple wars, multiple government shutdowns, the great financial crisis of 2009, and we're not just surviving, we're thriving. And so I do think the vision that we had, it wasn't an easy road. And as the Secretary knows, just like anything, a lot of the plans that we wrote down on paper had to give way to realities of the market because like Mike Tyson said, you Know, everybody's got a plan until you get punched in the face. And so we, we had to adjust when we got punched in the face a few times. But I, I do think the secretary has been a great partner because we both try to put our, our pride and our egos aside when we have to, to listen to the signal of the market. And that's, I think that's why our platform, it's very unique, but has thrived and survived through all this, this decade and a half of ups and downs.

[Mark Wade]

Well, one of the things that's really fascinating about that is there's a lot of very interesting lines of discussion we could go on. But I'd like to first talk about how, you know, Mr. Secretary, you obviously saw all of this inside of government and the challenges that were within the government, that were unique to government. But then you also recognize that there was a need in the private sector in collaboration in the world of defense and security. So was there a moment in time you saw? Like, there's, okay, here's a gap, we need to fill that gap. I mean, ultimately businesses just find a need, fill a need, and then get paid for doing that. That's really what obviously every business is doing. Was there a moment that led you to say, now's the time and this is the way to do it?

[Michael Chertoff]

Well, I don't know that there was a specific moment. I mean, obviously when my term ran out in government, because we had a changeover presidents, I wanted to continue to be involved and engaged with our national security because I realized this problem was not going away. And you know, if you're in a war, you feel a real commitment to the people you fought with and to what you were protecting. And so we wanted to continue that. And we recognized also that the private sector was not going to be a bystander anymore, that they were going to need to have security and resilience policies and programs because although the government could do a very good job in frustrating plots and attempting to round up terrorists, they're not going to be perfect. And that means you got to do a certain amount of self help. And part of that was also establishing relationships with government agencies to get the benefit of their intelligence and their advice again, to raise the walls that you have to surround and protect your people and your business.

[Podcast Host]

I'm interested to sort of get into the, the events of today and you guys obviously are serving a number of different clients and a number of different faculties. I feel like, Chad, every time I email you now, I get this, I get the Response of limited access to email, which means Chad's off somewhere in the world, you know, like doing God knows what, you know, there's, there's so much instability in the world and this is kind of an open ended question. So I'll let you guys take it wherever you want. Where, where do you think the most, the most pressing matters are for Americans to be thinking about and for investors to be thinking about as it relates to like current geopolitical events. You've got, obviously what happened down in Venezuela. You've got everything with Iran. There's the China question, there's the Russia question. You know, I mean, this is why I say we could go forever and ever here. So, you know, I'd be curious for, for what's top of mind for you guys and what's top of mind for the types of clients you're serving. What are they asking you?

[Michael Chertoff]

Well, I think, you know, I'll begin then. Chad, you can come in as well. I think that what is important to remember where we face today is that the domains of conflict have expanded and merged. You know, I remember years ago when we first got started doing security, people tend to look in a very siloed way at what the national security mission was. You know, there was kinetic activity like the army and the navy and the Air Force. There were scientific or technological issues, like for example, with biological warfare. After we were in office for a while, cybersecurity became more urgent as we began to see cyber attacks as a vector that could be used to undermine both government and private business. But I think what's happened even more recently is a recognition when you look at issues like supply chain, that everything, whether it be economic, security, whether it be health, all these things really are part of national security. And where there is a risk to one element of that, that risk may spill over onto other things. So now more than anything else, I think you need to have a strategic, holistic focus at what your vulnerabilities are, what your downsides are, if your vulnerabilities are exploited, and what are the tools and capabilities you need to bring to cover all the different domains that are functioning together as areas of conflict. And we see that now with supply chain issues, we see it now with the Straits of Hormuz, some of the issues in Latin America, all of these are issues that are not just limited to whether you're moving tanks or battleships, but have to do with moving economics, moving health, moving even culture. All these things become an issue. And as we develop new technologies, like for example, with artificial Intelligence that is also going to be an area of security concern that we're going to need to consider when we look at a holistic strategic view of our national security.

[Podcast Host]

Okay, now it's a podcast. We're talking about AI. Yeah.

[Chad Sweet]

And I'll just, I'll just build on what the Secretary said, Mar, because I think what, what secretary is underscoring is unfortunately you just look around the world and you can see that the post World War II order is now crumbling. And it's just the reality that the peace dividend that we've all enjoyed for many decades is now no longer there. And I think the spike that we're seeing in security spending is now not a short term blip. This is a structural rewiring of the global risk architecture. Think of it like a global operating system. And what the Secretary is talking about is making the global operating system today is shifting from largely on the back of a hegemon, the United States with some of its allies, to now it's going to a multipolar world. And it's a world where we haven't seen this level of security spending both in the commercial and the government space ever. It reached a record $2.7 trillion in 2025. It's growing double the rate that it did 20 years ago. If you look at that spend, I want you to think about this. Everyone is enamored with the AI and data center trade theme. But think about it. If you aggregated the entire capex of every single hyperscaler, it's going to be about $600 billion. Now that's a huge number, let's be honest. But we're talking about 2.7 trillion, so over four times the AI opportunity. I can make a very strong case. If you're managing a portfolio, I think there's going to be enormous wealth creation in AI, but there's also going to be a lot of losers and a lot of folks that get destroyed. We know with a single tweet about Deep Sea we saw a 20% drop in one day in the valuations of AI stocks. So one is a highly speculative, volatile, unproven yet model on roi. The other is a sector that's anchored at a starting point of forex, the AI build out. And it's non discretionary. It's a proven business model where the customers must buy both on the corporate side and on the military side and the government side. Why? Because the alternative is extinction, Chad.

[Podcast Host]

So if you think about maybe a follow up question to that, just while we're Talking about some of these numbers. You got me thinking about it. You know, I've, I've mentioned this in the past in this podcast. My whole family's military. My dad was an infantry officer for 30 years and I have two active duty brothers today. I've followed this for a long time. I've seen this spending dynamic. You know, my dad, you know, actually his office was destroyed on September 11th in the Pentagon. Thank God he was out that day. But. Amen. Where, where is this spending going up? You're talking about this growth and like it's unprecedented level. So we've, we've been spending a lot of money in government on defense for a lot of reasons that make a lot of sense for history purposes. But, but there's a whole new world that's, that's developing here when it comes to like defense contracting and the types of companies that have started. So like maybe shed some light on where these new dollars are going, where they maybe haven't gone in the past. What's different today versus where it was maybe, you know, it's not necessarily 12 months ago because a lot of this actually started probably back in 2021. 2022.

[Michael Chertoff]

Yeah.

[Chad Sweet]

If you look at so starting with the Ukraine conflict, which is the first major land war since World War II. Think of it as a four layer cake. Like you've got the traditional defense prime spending which are predominantly on conventional weapon systems. And what's unique about that's not unique in terms of what it's doing, but it's the scale and magnitude. Why? Because Europe is woken up to the reality that they have a real threat on their doorstep with Russia and they, they have to be prepared to, to also defend themselves. So what does that mean? It means literally the world's third largest economy, Germany has not only agreed to meet its 2% GDP spending goal, but it's agreed to go higher at 5% and has a over. Germany alone has $100 billion, the military modernization fund. Why? Because Europe realizes that they've neglected their defense industrial base for multiple decades. So that's the first layer of the cake is this the primes and the conventional spending? We've seen the same thing in Japan is doubling the size of its defense budget. Australia just signed a multibillion dollar UK Australia pact together to build out their nuclear sub fleet. So we were seeing synchronized spending around the globe on this issue of the conventional build out. The second is if you look at the layer of what we call high tech innovators. So think of the, some of the Companies that are in. I know you guys like this theme and you've done a great job of helping your clients to access it. And you've got some exposure to companies like Anduril, companies like Sironic. These are what I'll call the next gen tech players. And they've come in with very effective, exciting, disruptive systems that embrace both AI and if you want to, we can kind of talk about some of those. But Saronic, for example, is an underwater unmanned vehicle system which right now we desperately need. In the scenario that we look at in the case of the Straits of Hormuz, it would have been nice frankly if the US military had embraced Saronic. We have a company called Thermahan that is complementary to Saronic to be able to handle the mine counter mission measure mission. Unfortunately, the Navy, to be candid, was a little slow in embracing that, the same way the Air Force was slow in embracing UAVs. But one of the maybe silver linings of the conflict in Iran and what we're witnessing in Ukraine is some of our military is waking up to the reality is that you need, you can't just put all your chips in the conventional weapon basket. You've got to be ready to diversify and embrace innovation, even if it's uncomfortable, even if it means the way that you've traditionally operated and how you got promoted is going to need to change. So that's the second layer of the cake are these new disruptive, innovative neotech companies. The third are what I'll call the picks and shovels, meaning the providers of that. So if you think about right now, we're using up a lot of the consumables, both traditional ammunition and things like the missiles that you see intercepting in Iran or Israel over the Iron Dome, et cetera, that's all consumable type munitions. The folks that make that need to have replenishment. So there's going to be a lot of just basic replenishment of artillery and munitions. And then the third is the, we'll call the other picks and shovels, which are, think of the new things that are supporting these advanced weapons systems. Some of it's the materials, so the advanced composites that are needed for hypersonic missiles or space and it's also things for stealth systems. In addition, you've got the whole backbone of all of this is becoming software defined. So today it's less about the steel and it's more about the software. And if you those are the brains behind the steel that's being applied in the Theater as kinetic kill techniques. And these are the software providers. The tech element of that is another really exciting piece of this private equity and I know that's a big focus of, of cas. It's uniquely suited for this because this is going to be a longer term transition and it's not really well suited for public capital because it's not going to be something that just is easy to do quarter by quarter. It's going to be much more of a multi decade transition which is also why it's such an exciting non cyclical opportunity for investors because it's going to be, as we said, the demand is up and to the right and it's done in a non cyclical way. It's not just in the military side though, Mark, it's also in the commercial side. If you look at cyber attack, costs are estimated to be this year around 10.5 to $10.7 trillion. If that were a country, it would be the third largest GDP in the world and it's not subject to recession. It is basically those types of costs are having to be protected against on the commercial side. So a lot of the technologies in this space and that four layer cake are dual use technologies that can be applied not only for military use cases, but also for commercial cases. And that's what we like to focus on too. We call it the digital Janus or the two faced approach where you're trying to meet the zero tolerance, zero risk requirement of a general who cannot fail in his mission and and you want to meet the requirement of the Fortune CEO who needs security at scale. So it's a really exciting sector to be in.

[Mark Wade]

Well, one of the most interesting things about it is you laid out an amazing case as to why it's four times bigger than the hyperscaler spend. It's obviously something that people don't really have a choice of whether or not they do or they don't. It's for their ultimate survival to be able to do it. But the other thing that I think people don't fully appreciate is that there's just not that many companies that are allowed to participate in the ecosystem because not everybody is allowed to do business with a government, whether it be in the United States or in Europe or one of our allies. And there's obviously all the security clearances that they have to go through. And then also not everybody's allowed to invest in those private companies. There's very specific criteria that somebody has to meet if they're going to be enabled to invest in those relationships in Those businesses that have the relationships that to be able to do business with the government and all of that is without question coming front and center. Because what is happening in, you know, in Iran, obviously there's been so many headlines the last couple of weeks about, you know, running out of Tomahawk missiles and obviously, you know, shooting down a $30,000 drone with a $3 million missile, that that math does not work. And so this technological change combined with the need for the revamping after decades of underspending it is just a tailwind that's as strong as I've seen in my 35 year career. But it's also confined to very few participants, which is why, you know, groups like yours and others that have connectivity to those relationships is such an important part of maximizing the opportunity to provide the capital to what people need. And I'm gonna, I'm gonna shift to that and say, you know, in this concept, we talk about technology, we talk about AI, we talk about autonomous, but at the core of it all is still people. So when y' all are evaluating people that you want to invest in, people that you want to work with, you know, what is it that really separates those that are those that are going to win from those that you have less confidence in? Doesn't mean they're not going to win. But what is it that you look for that is that X factor, if you will, that gives you confidence?

[Chad Sweet]

Well, I'll start. And secretary, please chime in. When we look at companies, you know, we were big fans. I went to Columbia University for a reason, because that's where Warren Buffett studied under Benjamin Graham. And one of the things that Buffett loves to teach, you know, rule number one is don't lose money, which I know you guys at Casino fundamentally embrace. Rule number two is go back and refer to rule number one. And number three is make sure you invest only in something you understand and in people you trust that have integrity. And I think you start with integrity. I think the, the reality is we have had situations in the government space of corruption, we've had situations of dishonest entrepreneurs. And so that's the first level test. And thankfully, because it's a small community, like you said, you can find out very quickly who's got a great reputation and who doesn't. The second, though is, let's say they're a newcomer. What we will look at too is behavior. So the same person that tries to skimp on, we literally will look at the spend of how much are they focusing on their own cybersecurity. If they're trying to provide a solution to the US Government, for example, if they talk a big game on providing only their solution to the government and they're not minding their own house in their own security posture, to us, that signals A, they're not practicing what they preach and then B, it does show that they're shortcoming. They're trying to take shortcuts on their spend that are going to create outsized risk for us as an investor. And so again, don't just take them at their word, look at their behavior. That's an old CIA technique and I think it applies to everybody that we do business with. And then the final part would be making sure that they embrace the Janus concept of the dual use case, meaning that they can't just be enamored with only one use case. They have to be prepared to make sure that the solution is useful in the commercial context as well as in the government mission. And why? Look at what's just happened with tsa, right? Where we have government shutdowns, we have partial shutdowns. And if you are solely reliant on, if you were somebody providing a solution to tsa, you would be in pain right now. But if you had a dual use capability, like many of the companies that are in your portfolio and in ours, you can ride through those troughs when they happen. And it's still worth being in the government space because once you get through these hiccups, you can't have a better counterparty credit risk than the US Government. And like you said, they're very sticky contracts. It's hard to be part of that club. And the beta on those cash flows ultimately ends up being lower over time with way more visibility multi year contracts that you just don't get in the commercial space. So that blended approach and Commitment to the Janus 2 face dual use approach is something that we need to see in the entrepreneur before we're going to pull the trigger. Invest.

[Mark Wade]

So Secretary, I'd love, I'd love for you to add to that, but I want to make sure that we come back and talk about the commercial aspect because I think a lot of people don't connect the dots there. But Secretary, you have obviously a very unique perspective as a former prosecutor and as obviously somebody who's worked with a whole lot of folks. So how do you help evaluate and what do you look for?

[Michael Chertoff]

Well, I, first of all, I agree with what Chad said about the importance of integrity and making sure we don't have people who are going to cut corners. And that's particularly important when you're dealing with the government. I would say, though, in general, I feel it's important that the management and the leadership of an enterprise have a commitment to provide value to stakeholders. Now, that's not just shareholders, that means employees, that means customers. So I feel strongly and on the boards I sit and I articulate this viewpoint that it's not enough to simply hit targets in terms of revenue or in terms of, you know, other kinds of business measures. You also have to make sure you're investing in your employees and motivating them and that you're providing real value for your customers, because in the long run, that's what's going to sustain and build the business as opposed to a kind of come in quick, grab whatever you can, and then dump everything else. So I, I that to me that that investment in stakeholders is an important part of my mattering map when it comes to investing.

[Podcast Host]

I have a question, given your guys long history in this security space, about the people. We're talking about leadership, we're talking about people, we're talking about culture. You guys have been active participants here for 25 years in various seats looking at what's going on, how has the tenor, the quality, the character of the entrepreneurs in the defense area, security area evolved over that time period? I hear a lot today about this resurgence that's happened in Silicon Valley of a remnant, so to speak, of folks who said, look, we're going to take this patriotic view that you described, Secretary, saying, hey, I, you spent from what, 2001 to 2009 fighting this war. You're like, I'm not done. The war's not over. Like, what, what else could I go do? It's interesting to sort of hear that now coming out of the Silicon Valley, you know, companies of the world. What are you guys seeing? What are these people like? What's the conversation for you all?

[Michael Chertoff]

You know, I think during the 90s, in the first part of, you know, well, during the 90s, until 2001, I think there was the kind of end of history view, you know, war is over, Soviet Union is dissolved, the US is triumphant. We don't need to really worry that much about defense anymore. Then we went into the post 911 situation, and then that did get a focus on certain kinds of technologies that particularly would be used for surveillance, for intelligence collection, for intelligence analysis. And I think that did attract entrepreneurs to getting into that area, partly because they were motivated by patriotism and partly because it looked like an opportunity. But more recently I think what has surprised people is the way in which the old fashioned concerns about being able to fight back against your adversaries have come back in full flower. And we've got adversaries all around the world now and we may have to fight multiple adversaries at the same time. And that puts a premium on certain kinds of technologies that had not been of great interest, I think before. So I think that to me is one of the major changes I've seen over the last several years.

[Chad Sweet]

Chad, I'll just add to that that we've seen this cycle where it's what I'll call it's been love hate relationship with Silicon Valley in Washington. And if you look at it, Silicon Valley, and I say this with all due respect, a lot of the major innovations that they will claim could not have happened had it not been for the government support. I'll give you a few quick examples. Number one, the whole backbone of the entire AI revolution is on the back of the semiconductor. The semiconductor never would have flourished and become an industry had it not been for the Department of Defense's investment in the Minuteman missile with Fairchild Semiconductor. And you look at the map of all the Fairchild Semiconductor alumni that they were the, they spread all over the valley and they're the ones that flourished and became intel, et cetera and Nvidia, et cetera. So you, you look at then just take the example of the Internet. You know, despite what Al Gore says, it was actually DARPA that eminent the Internet, which then again dual use was meant to be how we would remain able to communicate in a resilient if we had a nuclear attack, how we could actually have a communication system that could withstand that. And then it became this amazing source of incredible commercial wealth creation. Then you look at I love my Tesla and I love putting it in automatic drive mode. I know my relatives in Texas who have precision agro farming with their John Deere tractors that they put also in automatic drive mode. None of that could have happened if the United States military hadn't invested in precision guided munitions using geopolitical geopositioning satellites, gps. So over and over again it's actually been a synergistic relationship that's been massively not only wealth creation and incredibly profitable, but it's actually created really important use cases for the world that have been incredibly helpful for the good of mankind. And so when Silicon Valley and Washington work together, great things can happen. But we see it, there was one period on Project Maven when some of the Employees at Google boycotted. And then there became tension between Silicon Valley. I'm seeing the sector is seeing, Mark, what you described, which is a renaissance. We're seeing now an openness where Silicon Valley entrepreneurs want to take their solutions and be part of higher purpose and wanting to defend not only the United States, but the world. And we are seeing that where there's a great guy and maybe you could have him on your show at one point. His name is Arun Gupta. He's a partner from Carlisle and Columbia Capital Partners who then took his wealth and created a philanthropy called Noble Reach. And we are working with him as well, where he's written two books, teaches at Stanford. One's called Venture Meets Capital, sorry, Venture Meets Purpose. And the second is called Mission Generation. And these are case studies on how he's basically helping, you know, the top talent out of Stanford and other business schools to think about spending a portion of their career, not their whole career, but going into government and rotations. And I think what I'm finding we're in a dialogue with Shawn Cairncross is the White House cyber czar and other members of the government who want that talent welcome that talent. But right now, the federal workforce arrangements are not user friendly for that. So we're trying to embrace new concepts of how you can get rotations of this incredible private sector talent into government and then let them be able to go back out into use what they know, the way the Israelis do with unit 8200. Some of the best cyber entrepreneurs in the world, they go in to serve in the Israeli military and they have a social contract, understanding that they're not going to be prohibited from using the knowledge that they attained in their government service to then go and do exciting commercial cyber companies. We should be doing the same. We're not there yet, but I think through things like the Noble Reach foundation, we will get there. And those entrepreneurs all then are exciting because they want to come back and support the mission through the private sector.

[Mark Wade]

When you think about the companies that you work with, et cetera, you know, we talk a lot about risk here. You've talked about a lot, a lot about risk during this conversation. What is it that many people are underestimating, that they're just not paying enough attention to that they really should be, and that you would counsel them to be able to really be assertive, to take that by the horns, if you will, in order to be able to protect themselves?

[Michael Chertoff]

I would say geopolitical risk is perhaps still somewhat underestimated. And we see that now in terms of what's going on in the Middle East. But the ramifications of a breakdown of geopolitical order or geopolitical economic order can have real effect on performance of companies, both in terms of your ability to get critical supplies and what your market is looking for in terms of what benefits you're able to provide. So, I mean, you have to take a holistic look. It's not just a narrow question of the specifics of your business, but it's the entire background against which your business operates on a geopolitical basis.

[Chad Sweet]

The other thing I would say too, that's underappreciated is, and we are seeing it now, is previously there was this misconception when these geopolitical events happen that the commercial side is a safety zone. And what we're seeing is the death of that misperception. If you look at what just happened for the first time in history of war, we've seen, we've seen in the past Iran try to use cyber attacks against our infrastructure, both financial and otherwise, but we've not seen them use kinetic, meaning actual physical weapons against targets. What they did this time was, you may have seen, is they targeted two specific or, sorry, three specific AWS data centers, two of them in uae, one of them in Bahrain, because those were the data centers that were supplying the intelligence and other data analytics for the war effort. And it's rumored, and I don't know this for true, that there's the $1.7 billion Nimbus contract that supports the Israeli military is in one of those facilities. So they accomplished. They couldn't. The systems were very hardened on the cyber side. So they then went to the kinetic side and hit them with missiles. You may have seen yesterday there was an announcement from the Iranian Revolutionary Guard Corps stating that any commercial enterprise that is assisting the Israelis or the United States government and targeting Iranian officials who've been assassinated will also now be targets starting they literally said April 1st at 8am their time. So as of this morning, and they listed out Hewlett Packard, Cisco, Google, Palantir, etc. So, and you may have seen even in London, the Bank of America building a plot was foiled. That's linked to the Iranian Iranian terrorists as well, where they're targeting anybody that they conceive as having supported in a direct or indirect way the war effort. So this death of the commercial safety zone misconception is a good thing. It means that they now, everyone now knows that you've got to the US Government and our allies will help to try to disrupt plots like the one in London against Bank of America if we find out about them. But they can't rely on the U.S. government or our allies alone. They have to be prepared to also do their part in protecting their own enterprise and their own people. So I do think we're seeing now a greater appreciation of that among our client base. I think we've never seen a more openness to consider embracing new ways to manage this. And it's not something that can be eliminated. As the Secretary said, we're not one of those firms that says that you can never spend enough on security. We think you have to be thoughtful about it. You have to buy down risk in a very quantitative and thoughtful way. You can't eliminate it. But there's no question that those who make themselves a harder target than the next guy are going to be a lot safer than those who don't.

[Podcast Host]

As we move towards closing, wrapping up our time, you both have had the opportunity to see lots of different types of risks in the world. And I'd be interested in just hearing, in summary, maybe start with you, Mr. Secretary. What has shaped you most in how you see risk? What's most important to you when you're evaluating risk and uncertainty out there in your own life?

[Michael Chertoff]

I think what I realize is you can't eliminate risk and the understanding that in order to live a life which is gratifying, you've got to be prepared to accept a certain amount of risk, but you've got to be kind of cold eyed about understanding what is acceptable and what is not acceptable. And some of that depends on our own personal concerns. And you know, are we particularly focused on health? Are we focused on wanting to have the economic freedom and to travel? But I think it's about not only a personal decision, but an understanding of the way the world works in the current risk environment.

[Chad Sweet]

Chad, I'll just add the Secretary has really beat it into us and we've made it part of our methodology when we advise clients is to move away from this perimeter concept of security to actually resilience. And there's a great book some of your listeners may have read called Antifragile by the famous risk options trader Nassim Talib. And he basically talks about this idea that we're in a world where you can actually create commercial competitive advantage for yourself and your company. If you go from being somebody that's just reacting to threats around you to being proactive and assuming you're going to be disrupted, but then really practicing rehearsing Resilience. And so don't think of security as simply an expense that's constantly dragging you down. It can be actually flipped into an offenses differentiator in today's world. And I think the focus on resilience, what does that mean? The formula that we teach all of our clients and everybody should know this formula just the same way everyone needs to know the basic accounting formula of assets equals liabilities plus equity. The same is true in risk. Risk equals threat, T times vulnerability, V times consequence, C. And a lot of people spend a ton of time focusing on the T without thinking about the C, meaning they're wasting time on threats that don't have high consequence and they're neglecting the threats that do. And so you can't protect. You try to protect everything, you'll protect nothing. You have to focus on the high consequent risks and then the V. Don't try to have a perimeter approach. Assume vulnerability and make sure when the eliminate the. Minimize the V as much as you can, but be ready to be resilient when you are penetrated. That resiliency test is really what determines the winners from the losers. The ones that are truly anti fragile and can turn it into an offensive advantage.

[Mark Wade]

No, it's amazing because you know, I like to sometimes bring things down to something the audience will remember. What I will remember from this is 3.4 ounces. You have to bring down the risk level to a level that you can live with and ultimately that you feel like is not going to keep you literally locked in a closet with a bubble wrap all over you. But you have to be willing to go out and take some risk. But you want to make sure you quantify that. And Chad, the formula you just gave, and obviously Mr. Secretary, the comments that you've provided help give us a framework to be able to move forward. You know, Mark and I really want to thank you for joining us today for your insights and for all of our audience. If you'd like to watch more episodes just like this, you can go to Tony Robbins YouTube channel, you can go to Spotify, you can go to Apple, you can go anywhere the podcasts are played. And we'd love for you to participate in those other in those other episodes. And we look forward to seeing each of you very soon. Thank you very much, gentlemen.