Pod Insights Equity Podcast How much ‘government efficiency’ will Elon Musk be able to pull off? About this episode While the idea that the government “should be run like a business,” is by no means a new one, with Elon Musk in charge of government efficiency, it's worth taking a closer look at whether business principles can be applied to government.
Today on Equity, Rebecca Bellan is discussing the intersection of tech, business and politics with Columbia Business School Professor Michael Morris. Morris is also the author of Tribal, how the cultural instincts that divide us could help bring us together, a nominee for the 2024 Financial Times Business Book of the Year award.
Listen to the full episode to hear more about:
How Musk and Vivek Ramaswamy's new initiative plans to save $2 trillion in government spending.
The impact of other tech leaders joining government and the potential for these leaders to influence decisions on crypto and AI regulation.
What challenges lie ahead for startups bringing innovation to the military. Spoiler: higher costs of error and slower logistics chains are on the list.
Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes here.
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Anthony Ha? This episode of Equity is brought to you by Schneider Electric. Schneider Electric, advancing energy tech.
0:17 Rebecca Bellan? Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. I'm Rebecca Bellan and this is our Wednesday episode where we home in on a trend in the tech world and dive deep. I'm sure most of you listening have heard some version of the phrase, "The government should be run like a business." And with Elon Musk in charge of government efficiency, it's worth taking a closer look at what that actually means and whether business principles can be applied to government. Here to discuss the intersection of tech, business and politics is Columbia Business School professor, Michael Morris. Michael is also the author of Tribal: How the Cultural Instincts That Divide Us Could Help Bring Us Together, a book that, at the time of this recording, was shortlisted for the Financial Times Business Book of the Year Award. Michael, welcome to the show.
0:59 Speaker 02 Thanks so much for having me.
1:00 Rebecca Bellan? Thanks so much for joining us. Tell us a little bit about your background. You've got 20 years at Columbia Business School, but before that, you were at Stanford, right?
1:07 Speaker 02 Yes, I was at Stanford Business School from the early 90s to the early 90s before coming back to New York City where I'm from. And so I have some familiarity with the startup world in that part of the country and the ecosystem of investors and founders and advisors that I am sure make up a big part of your audience. And I should point out that I am Michael Morris, not Michael Moritz, because that sometimes has been a point of confusion.
1:35 Rebecca Bellan? Well, thank you for pointing that out. M-O-R-R-I-S. And yeah, I'm sure you were happy to get back to New York City where I'm also based and from. So you are also part of a group of behavioral scientists known for advising presidential campaigns, is that correct?
1:48 Speaker 02 That's correct, yes. The Coalition of Behavioral Scientists. We try to operate below the radar, but usually there's a one or two stories about us get out every election.
1:59 Rebecca Bellan? And so, you know, one of the things that we had decided to talk about with you today is the intersection of the tech world with government in this election. Specifically, we're looking at Elon Musk, Vivek Ramaswamy, and their new DOGE initiative. Wondering if you could just speak a little bit about that high level, what you take away from that.
2:20 Speaker 02 Well, I, like many people, am very excited to have brilliant people like Elon Musk and Vivek Ramaswamy involved in government and advising the current campaign, which I think can use, can use some brilliance. But I also would say that it doesn't take a genius to see that there are some inefficiencies in government spending. And the challenge is not spotting those inefficiencies. The challenge is the procedure of changing government, which is a different kind of challenge than the ones that Vivek and Elon have primarily
3:04 Speaker 02 faced. Although they both have done a lot of different things and compared to most entrepreneurs have a very broad range. So I'm grateful that they're willing to be involved. I'm not optimistic that they will be able to meet their goal. I think that they've stated a goal of saving something like $2 trillion, and it seems over optimistic to me.
3:25 Rebecca Bellan? Why does it seem over optimistic to you? I mean, aside from the fact that they're an advisory board and that a lot of things will have to go through Congress, or maybe that is your reason?
3:33 Speaker 02 Well, several reasons. I mean, one is history. You know, we can look at many previous initiatives by very talented people trying to accomplish the same goal. There was the RIGO, Reinventing Government Initiative by Al Gore and his team. Before that, there was the Grace Commission under Ronald Reagan. And these were teams of people who had business experience and government experience and who worked very long and hard. And it's difficult to point to anything that either of them accomplished, really. Why is that? Well, the majority of the federal budget is safety net programs. You know, what the government
4:17 Speaker 02 does best and most is writing paychecks to vulnerable Americans, whether they're the aged veterans, people with disabilities.
4:28 Speaker 02 That is something that very few administrations are willing to touch and where it's very hard to get through the procedures, the approvals needed to touch them. That's, I think, about 60% of the budget. And then you have defense, and it requires a lot of political courage to cut the defense budget. That usually doesn't end up happening. And you have what's left, maybe 15% that is not either safety net programs, defense, or interest, you know, on the deficit. And that 15% does not total to the $2 trillion
5:08 Speaker 02 goal, last time I checked. So it's very hard to reach the levels that have been talked about without, you know, killing some sacred cows.
5:17 Rebecca Bellan? Yeah. And, you know, they've both spoken a lot about, you know, cutting government workers. There's too much bloat. There's too many people who aren't, you know, doing enough work. It seems like, I mean, despite the fact that there's plenty of statistics that actually show that, you know, actually, the number of federal government workers haven't really increased that much over the years. But it seems kind of like this tech company ethos of, I mean, we've just seen a couple of years' worth of mass layoffs across the tech world, all in the name of efficiency. So it seems like kind of taking that mindset and trying to apply it to government. What do you think?
5:51 Speaker 02 I think you're right. I mean, I think the clearest analogy in my mind, and I think in most people's minds, is what Elon Musk did with Twitter, you know, now X. That was a startup that had become maybe bloated with lots of people doing things that were, you know, orthogonal to the basic technical product, right? There were a lot of people in content checking and that sort of thing. And Elon bought it and thought that it was losing its way. And I think a lot of people would agree with him, that Twitter, now X, served a very important purpose in maintaining discourse, you know, across the political spectrum, and that it was starting to do that less well because of all of the layers
6:36 Speaker 02 of bureaucracy. So great. But you know, even though that had become a somewhat bloated corporation, people who were employees of Twitter still had a kind of startup ethos where a person could say to them, either work really intensely night and day, or you're going to be fired. And that was more or less part of the implicit contract that they understood and that was feasible, given their employment contracts. Now, for government workers, there's a different implicit contract, and there are very different rules and laws and procedures that need to be followed in firing people. And for a lot of government workers, the cost of keeping them on is a lot less than the lawsuits
7:19 Speaker 02 that will ensue if they are fired in a peremptory way. So I think that, um, you know, I'm sad to say, but that's true of universities as well. You know, people keep their jobs because it's cheaper to keep them than the lawsuit if you fire them. So I think that the analogy between the Department of Education or the Department of Health and Human Services and Twitter is a strained analogy. It's not quite the same ballgame. So I mean, nothing bad can come out of having smart people look at government with a fresh perspective and think about better ways that things can be done. But, you know, history doesn't provide much cause for optimism about what will actually happen.
8:02 Speaker 02 And they've cited some recent Supreme Court rulings that they think empower them to make changes in a way that weren't possible before. But I don't think their interpretation of those rulings is shared by everyone. So it may just end up going to the courts in a way that-
8:21 Rebecca Bellan? Which rulings are you talking about in particular?
8:24 Speaker 02 I don't have them on the top of my tongue. I would have to look at a news story, but there is a news story today about it. They have pointed to decisions in West Virginia versus the EPA in 2022, and in Loper Bright Enterprises versus Remondo earlier this year, both of which seem to limit federal agencies' regulatory authority. But many experts believe they are misinterpreting the decisions, and they think that these decisions could make it actually harder to overturn existing rules.
8:59 Rebecca Bellan? Yeah. So in the process of trying to do this kind of top down shakeup, it's actually like, this isn't actually a business. There are different sets of stakeholders. There are different incentive structures. It could just create a lot more mess in the long run is kind of what you're saying.
9:12 Speaker 02 Yes, you know, that's what has happened in the past.
9:15 Rebecca Bellan? Yeah.
9:16 Speaker 02 Things quickly go to the courts. They quickly go to, in the best case scenario, a government appointed arbitrator. And none of that operates like the tech industry.
9:27 Rebecca Bellan? Right. Yeah. And you know, it is, it is of course, like, we are living in a world that's run by tech. So it's good to have smart business leaders, tech leaders involved in government, surely, and in advising policy. I think that obviously there's a lot of fear, certainly among other tech leaders. Sam Altman comes to mind, Reid Hoffman comes to mind, that there would be conflicts of interest with someone like Elon Musk at the helm. And, you know, not only because, I mean, I don't know how he's going to find the time, given all his other businesses, but yeah, given all his other businesses, he's got his hand in a lot of industries that he could potentially shape or benefit himself in, or at least that seems to be the fear.
10:07 Speaker 02 I don't, you know, I wouldn't want to be Elon Musk's chief of staff or personal assistant, trying to organize his calendar as CEO of at least four companies that are in different industries and very demanding. And then having 10 children, you know, I mean, you know, I don't know how he thinks he's going to find time for this, but he's obviously a brilliant guy who doesn't need very much sleep. I think that you're right, that there are potential conflicts of interest. That is not anything new, though. You know, we have seen many cabinet level officers in previous administrations who had long histories in particular industries that were regulated
10:50 Speaker 02 by the branch of government that they were serving in. So that's something that almost always exists to some extent.
10:58 Rebecca Bellan? But don't those people usually step down from their business roles when they take on a government role? I mean, again, granted, this is Elon Musk's is an advisory role, but.
11:06 Speaker 02 They usually step down, but that, that doesn't mean that they don't have interests in that area. They have family and friends. They sometimes own stock. They may be going back to that industry afterwards. So there are nominal things that can be done, but they don't really solve the problem.
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12:09 Rebecca Bellan? I wanted to switch gears a little bit. I mean, Elon obviously isn't the only member of the tech VC Silicon Valley world that is joining in the White House. We had last week the appointment of David Sacks as the AI and crypto czar. There's Jared Isaacman, who is a billionaire entrepreneur and private astronaut. He's going to be leading NASA. We've got Shri Ram Krishnan. He is leaving Andreessen Horowitz and rumored to be going to Doge. So yeah, this rise of, you know, a certain type of power, almost like new money forming up in government, what is, what does that tell you?
12:47 Speaker 02 Well, there are conflicts of interest, but these are by far the best appointments that Trump has made because these are people who have distinguished themselves in relevant fields and relevant industries, which, you know, you really can't say for RFK Jr., who is not a medical scientist, who has a sort of armchair interest in vaccines, but, you know, very selective in his knowledge and whose fame or prestige comes mostly from his family. So I think the tech industry is a great place to look for talent because it's where smart people distinguish themselves.
13:32 Speaker 02 You know, I applaud those appointments. I think the crypto world has been very excited about.
13:39 Speaker 02 The appointment, and I think that those are good appointments. Isaacson, I don't remember the companies that he's run. They may not have involved space, but he certainly has involved himself personally and become a a real expert on space and been willing to take personal risks. So, you know, I I respect his involvement in the space program and his interest in it. It seems it seems very genuine and very sustained. I think these are good appointments. It's, you know, it's hard to find someone who is truly an expert in something where there won't be some conflicts of interest. And I guess the where you were alluding earlier is that the people who may be most worried
14:20 Speaker 02 about this are the Sam Altman's of the world, who are in an industry that may be regulated and may feel that there is a personal rivalry that they have with these new overlords of the industry.
14:33 Rebecca Bellan? Well, there is a personal conflict, right? I mean, Elon Musk is suing Sam Altman, he's suing OpenAI for taking the company for profit instead of keeping it as a nonprofit. There's definitely beef between them and they are competitors, so.
14:45 Speaker 02 And add that to the list of people who have to worry about vengeance, you know, retribution, vendettas.
14:54 Rebecca Bellan? Yes. Yeah, I guess that's exactly it. I mean, the problem is less that there's people who are business leaders who could potentially have conflicts of interest. It's more who those business leaders are, right? Elon Musk and Donald Trump are both people who have threatened people who, you know, stand against them, kind of demand some sort of loyalty among the people closest to them. And so I think that that's really the fear, is that there would be, as you say, retribution.
15:20 Speaker 02 Yeah, I think the problem with government is that the people you would want to occupy these positions are not interested in occupying these positions. Like, I would love to see Bill Gates as head of Health and Human Services or as head of NIH, because I I personally think of Bill Gates as a kind of enlightened dictator, right? You know, I think he he is very talented and he has. Maybe relentlessly utilitarian perspective, but it is consistent and transparent and efficiently executed. But I think Bill Gates feels like he can be more effective running a foundation. He may be right.
16:02 Speaker 02 I think someone like Al Gore, who was a very talented person, got frustrated with government and decided that he would be more effective in the world of foundations and the world of sitting on boards. You know, you don't get your dream person for these government appointments, unfortunately. You get the person who is willing to pay all the costs of having your reputation dragged through the mud in order to have either the power or the notoriety that comes with the government position.
16:31 Rebecca Bellan? Do you think that, just touching a little bit on how many tech billionaires have kind of, I mean, it's been a small group responsible for very large donations, right, to Trump? I mean, Elon Musk, I think, has been reported last week that he donated roughly 260 million to the America PAC, which, you know, supported the presidential election, which is making the largest donor in this election cycle. So is there some kind of reverse psychology here? I mean, certainly, you know, Trump likes people to be loyal to him. But do you think that a lot of these business executives and investors kind of see this as an opportunity to, they're making an investment in their own futures, they have, you know, their own ability to control him, right? And change the way he thinks about things, right?
17:13 Rebecca Bellan? Previously, Trump said crypto was a scam and it's dangerous, and now he's all for it.
17:17 Speaker 02 Maybe. I mean, I think that in defense of Donald Trump, I think he is relatively hard to manipulate because he is so mercurial in his positions. And he at least regards himself as needing financial help from nobody. And he is a single-term president. You know, it's this rare event of somebody going into the office without looking to be reelected. So I don't feel
17:49 Speaker 02 Too worried about that particular problem. Maybe I would feel better if I thought Donald Trump could be manipulated by these people.
18:00 Rebecca Bellan? I mean manipulated or, you know, just kind of swayed. I wouldn't call it manipulation necessarily, but swayed certainly. I mean, he has been called a populist, right? Someone who kind of goes with what, what at least he perceives the popular opinion to be. And if the people closest to him kind of say crypto, no AI regulation, things like that, then certainly he could be swayed towards that. I mean, you know, previously he was wanting to ban TikTok. Now he thinks we can't be blocking TikTok and technological innovation in general. So, yeah, I think obviously anyone's at liberty to change their mind based on getting new information.
18:33 Speaker 02 Yeah, and I, you know, there are different ways of lobbying different presidents. I think that the way to lobby Donald Trump is to be down at Mar-a-Lago, sitting next to him at every meal and being the last person to speak into his ear before some decision is required. And so I see some signs that Elon Musk is doing that, but I don't, I don't have a lot of trust from what I've seen in the first administration that Donald Trump will stick to positions after having been, you know, incented by people to take those positions. It looks a little bit like he is making his initial nominations in an almost symbolic
19:18 Speaker 02 way and that none of these initially nominated people from Gates, down the list, Kennedy, that it looks like maybe none of these people will actually be in, in the position. How long Elon Musk and Vivek Ramaswamy will be patient, you know, with an unclear mandate and unclear authority, you know, I'm not betting on it lasting the one year they say it will last and the one year doesn't sound like enough time to actually get anything done, even if it lasts that long. So I guess I'm not optimistic.
19:56 Rebecca Bellan? I mean, if we do take it out, I mean, these are businessmen, right? So they're going to be applying business principles to this really lofty goal. Are there any business principles that you've seen in your time that you think could actually overlap?
20:09 Speaker 02 Well, I mean. Yeah, they will be thinking about ways of making processes more efficient that businesses have implemented for decades. And they will say, why isn't this being done? Why hasn't this been done already? It's a no-brainer. And what I think they will realize is that the purpose of these government agencies is not to be efficient. The purpose is to employ, you know, veterans and to employ people with other needs.
20:44 Rebecca Bellan? Public service.
20:45 Speaker 02 And the purpose is to give citizens the feeling of having access to a social security office in their community, even if it all could be done on the internet. You know, if you've ever done jury duty recently, it's run in a completely inefficient way that wastes so much human hours. You know, you end up sitting in a room for a whole day with hundreds of people so that 12 people can be selected. And it's a tremendous waste of time, but it's run that way because that procedure gives a stronger feeling of justice than some more efficient procedures. So I think that much of what's done in government is nobody's trying to be efficient. That's not the primary goal.
21:24 Rebecca Bellan? Yeah. Can you imagine a world in which, I don't know if this is far-fetched, but I can imagine a world in which a lot of, you know, the people with these business interests, I imagine that a lot of them would like to see certain things that are handled by the government actually handled by the private sector, using this argument that we're just more efficient, right? We don't have the same bureaucratic red tape that the government does, right? And so you see, for example, in the space industry, SpaceX is, you know, leaps and bounds. It's really advancing the space industry, and that's commercial, that's private, right? Can you imagine that happening across other, you know, what are traditionally government sectors and kind of segueing into more private sector control?
22:01 Speaker 02 I can and I would, I would love to see it. I can recommend a book. In two days, I will learn whether my book wins business book of the year from the Financial Times. And one of the other finalists is a book called Unit X. And it's a very fascinating book because it is two people, and I'm not going to remember their names, who were charged to set up a kind of incubator to bring Silicon Valley technology to the Pentagon. The F-35, this plane that we're told is leaps and bounds beyond any other military technology, has a processor that is 10 times slower than your iPhone. And it has long been the case that, you know, military pilots bring along their, their civilian gadgets
22:45 Speaker 02 into the cockpit because it can do all kinds of things that their $10 billion plane can't do. And so they ran for a number of years, this agency that was trying to cut Pentagon red tape so that technology that has been, you know, distributed through many other industries could come into the military and keep our military somewhat up to date. But they hit all of the classic currents of active resistance. You know, the middle managers are invested in the status quo and they don't want change. And they are pretty good at undermining well-intentioned change initiatives. And so it's a fascinating book about the two people who tried to make this happen. And they had some successes and some not.
23:29 Speaker 02 But we've seen in Ukraine that there's a whole different paradigm right now in wars. These $200 drones are accomplishing things that $10 billion planes can't accomplish. And so there's such a strong need to break the inertia and the bureaucracy of the Pentagon. If they can do some of that, that would be a tremendous contribution. But it requires a lot of political courage to cut programs that generals are saying, you know, we need.
23:58 Rebecca Bellan? Well, I almost wonder if we would cut those programs, right? Like, there's so much spending that goes from the DOD into startups and new tech and everything. And military spending feels like one of those kind of special cases where, I mean, we're seeing a lot of VC investment into military tech right now. And we have covered actually a ton of dual use on equity previously, specifically investment in the form of the DOD. I do wonder if the DOD is going to be something that Elon and Vivek try to cut funding to, just given how thirsty, I would say, the investment community is today for dollars from the government to help fund new tech in defense applications.
24:36 Speaker 02 It's politically easier for them, given the rhetoric of the campaign, to go after the Department of Education, for example. But their skill sets may be more relevant to going after some other agencies, like the Department of Defense or some parts of NIH. NIH, I think, will be one of their targets. But the Department of Defense, I think that they would have to take a position of, we're not decreasing funding overall. We're just qualitatively changing the processes for innovation. But there are reasons why the military doesn't innovate as quickly as other things,
25:18 Speaker 02 because the costs of error are higher and the chain of logistics is slower. So even if somebody has a brilliant idea, sitting in Palo Alto, about how the war could be fought differently, it's a complicated process to implement that in a way that will work. I would love it if they can do some of that and they can kind of continue what was started with what was described in Unit X. But I hope they read that book, because it contains a lot of lessons about the currents that they will face. Bringing well-intentioned, brilliant people from the tech industry to talk to the ingrained Pentagon bureaucrats. It's not an easy marriage to make.
26:02 Rebecca Bellan? Yeah, and I do want to quickly just mention for our listeners, I imagine that Elon Musk will take a lot of his, you know, learnings of scaling Tesla, for example, into how to be more efficient at Doge. And, you know, he's got a bit of an algorithm and there's kind of five steps to that that I've reported on before. One is question every requirement. Two is delete every step in the process that you can. Three is simplify and optimize. Four is apply speed and maximize cycle time. And five, at the very end, automate it. So I'd be curious to see what, um, what kind of automation comes into government in the future.
26:37 Speaker 02 Yeah, I think that government has resisted automation in many of its domains. And sometimes that's because they want to create jobs. And sometimes that's because there are concerns like justice, which are independent of efficiency, you know? Take a very simple example, like ethnic profiling. That might be efficient in some cases, but it's not just, you know, so we don't do it. So there are concerns, independent of efficiency, that are constraining many of the government's operations.
27:16 Rebecca Bellan? Yeah, that's a very good point.
27:17 Speaker 02 I wanted to say that in my book, Tribal, I contrast two models for transformational change. One of them is what corresponds to, say, the grassroots strategy that, you know, activists might use in politics. And a group of employees can sometimes initiate a grassroots change that bubbles up and slowly changes the way a government department or a corporation operates. And there are many, many cases of that, of junior employees with a great idea and who slowly create a transformation. The other model is the shockwave model. And Jeffrey Sachs, my colleague at Columbia, is someone who has applied this model to making
28:00 Speaker 02 change in government. And the idea is that if you have the power and you have the mandate, you have the legitimacy to impose a sweeping change in policies all at once, you can sometimes Times, reset an equilibrium and create very quick change in the way that a turnaround artist might do in the corporate world. But that is usually something that only works when you're in a state of disaster, like you're in a country with hyperinflation, or you're in a country with a command economy that has clearly failed and there's an appetite for imposing a market solution. And so it has worked in countries like Poland, where there was this desire to return to Europe and come into a market solution.
28:45 Speaker 02 But it didn't work in Russia, and it didn't work because there wasn't the same legitimacy. You know, Western ideas didn't have the same legitimacy and people didn't buy into them and make the personal changes that they would have to make. And I think that, you know, there was enough of a mandate for Trump to be elected, but I don't know if there's a wide enough sense of discontent with government among the people involved in government for people to suffer the enormous displacement and discomfort of a kind of shockwave change.
29:18 Rebecca Bellan? Well said. Yeah, I'm really looking forward to reading your book. We're just about out of time. Where can our listeners find you online? And where can they read your book?
29:26 Speaker 02 You can learn about my book at its website, tribalbook.org, or you can just Google Tribal by Michael Morris and find it on Amazon. I have a website, michaelwmorris.com, where you can learn about me, my book, my research, some of the consulting work I do, which some of it is in government. I work on projects for the intelligence agencies. In the past, I've worked on Pentagon projects. I work in the tech industry. I work in the finance industry. Some of that can be found on my website if anybody is curious.
29:58 Rebecca Bellan? Amazing. Thank you so much. Thank you for your time. And to our listeners, you can find me, I'm on X, I'm on Threads, I'm on Blue Sky now. And you can find Equity at EquityPod. Talk to you all Friday.
30:10 Rebecca Bellan? Equity is produced by Teresa Loconsolo with editing by Kell. Bryce Durbin is our illustrator. And we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.
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