Pod Insights The Prof G Pod with Scott Galloway Russia’s Invasion of Ukraine and the Role of Intelligence — with Shane Harris About this episode Shane Harris, an intelligence and national security reporter at The Washington Post, joins Scott to discuss the roles of intelligence, sanctions, and cyber attacks as they relate to Russia’s attack on Ukraine. Follow Shane on Twitter, @shaneharris.
Scott opens with his thoughts on what down rounds mean for overvalued companies — especially those that haven’t experienced a bear market before.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:19 Scott Galloway? Episode 142. In 1942, a few baller people were born, including Muhammad Ali, actually a hero of mine, Jimi Hendrix, Aretha Franklin, Paul McCartney, Barbra Streisand, and Martin Scorsese. True story, when I was a kid, my mom would play "Over and Over", "Guilty", featuring Barbra Streisand and Barry Gibb. And our relationship survived. Papa, can you give me a fucking gun? Go, go, go!
1:55 Scott Galloway? Welcome to the 142nd episode of the Prof G Pod. In today's episode, we speak with Shane Harris, an intelligence and national security reporter of The Washington Post. He's also the author of two books, including At War: The Rise of the Military Internet Complex. With Shane, we discuss the Russian invasion of Ukraine and learn how intelligence sanctions and cyber attacks are influencing the situation. Okay, what's happening? Jesus Christ, what isn't happening? Well, aside from the full-scale war occurring in Europe, we're going to focus on what appears to be the inklings of a bear market. That's a nice distraction. Let's talk about things that don't matter. By the way, if you're looking at your screen and that's the worst thing in your life, you're doing okay. The last big swing in the market followed the 2008 meltdown.
2:37 Scott Galloway? For the tech sector, that downturn was merely a speed bump, not a tractor-trailer pileup. We need to venture back to the turn of the millennium for a deep cyclical transition in tech, the year 2000, where we saw record venture funding, record quit rates, day trading frenzies, and a mass tech movement that promised a better society. Sound familiar? For two decades, the script, lighting, and backdrop have all centered around one narrative: Grow. Grow at any cost. More raising, hiring, building, the fun parts of running a company. There's really no way, short of having experienced it, to appreciate how violently things can turn and how quickly they can turn. I've been on this ride. It's nauseating, and though it's lightning fast, it feels as if it will never end.
3:22 Scott Galloway? Leverage shifts from ideas and founders to capital and investors. Again, let me repeat that. Leverage shifts from ideas and founders to capital and investors. Power is the medium through which this conflict plays out. Power on the cap table and on the board to determine the exit and who gets liquidity when. Dilution becomes punishing as capital becomes more expensive. Companies are forced to raise money at a valuation below that of their prior round, the so-called dreaded down round.
3:51 Scott Galloway? But they really have no choice because they've built these machines that burn and need fuel. So investors take bigger and bigger chunks while founders' shares dwindle, or the previous investors who don't invest their prorata see their stakes diluted pretty expeditiously. And three financing rounds from 1999 to 2002, my ownership in Red Envelope, a company I founded in 1997 with my partner from business school, Leanne Chaplin, was reduced or diminished from 30% to 6%. That happened in about 24 or 36 months. So what happens next? Boards correctly ask management to construct a plan that acknowledges the new reality, which is Latin for "we need you to fire people." There'll be a bunch of sober memos talking about how entrepreneurs got out ahead of themselves, despite the
4:36 Scott Galloway? fact what was really happening in most boardrooms was the venture capitalists who have several bets on the board want the next unicorn and encourage their entrepreneurs to be crazier and crazier. Over the past three decades, I estimate that I've personally hired about 400 people, maybe more, and fired probably personally 100. It's always awful, and it never gets easier. As a matter of fact, I never want to be a CEO again because I just don't want to have to be put in a position of having to fire people. Because part of being a leader in any organization means at some point, I don't care who you are, Google laid off a bunch of people at one point. If you're going to do the right thing for your stakeholders and you're going to embrace this wonderful thing called capitalism,
5:21 Scott Galloway? one of the cruel truths of capitalism is you can't reward the winners without punishing the losers. And that's not to say that people that get laid off or fired are the losers, but they're just on the wrong side oftentimes of timing. It's happened at almost every company I've been involved in. It just there, you have a down cycle, you got out ahead of your skis, whatever it might be. Founders rarely get fired, but you should expect to see a rise in announcements or an increase in announcements about how thrilled these 30-something wonderkins are to have the wisdom of a new CEO who the board... Quite frankly, is forced in above them. Expect to see the share of late-stage startups that are founder-led drop significantly by the end of this year. I think we've hit peak founder, hit peak founder with Adam Newman.
6:05 Scott Galloway? We just didn't realize it yet. What'll be interesting is the battles between boards and founders who have managed to garner a dual-class share or supervoting shares. But anyways, so if you go to the websites of various venture capital firms, it sounds as if they are literally the Oprah and Jesus here, not to love the poor, but to love entrepreneurs. Right? We believe, we were true believers in entrepreneurs before anyone else, or developing lifelong relationships with entrepreneurs. When I was an entrepreneur, I found that venture capitalists, and I've worked with a ton of venture capitalists, but the most powerful ones really threw their weight around and were rapacious and weren't this sort of loving, gentle, caring person that's being depicted on the websites of venture capital firms.
6:50 Scott Galloway? I had a venture capital firm essentially use the money from my company that I had founded to hire investigators to try and dig up dirt on me when I accused the venture capitalists on our board of using our company as a dumping ground for the failed products of his portfolio companies. I mean, it could get pretty tough, pretty fast. And I haven't found, I've worked with some wonderful venture capitalists at Mavron, at Activant, at General Catalyst, really good people, take very seriously their relationships, err on the side of generosity, but be clear, the most famous venture capitalists in the world, I have found, generally speaking, to be rapacious. And I think we're about to see those fangs and those claws come out, because when it's
7:33 Scott Galloway? up and to the right, everyone can be nice to each other. But it'll be interesting to see how this new generation of entrepreneurs that have known nothing but a bull market respond to this type of conflict and anxiety that happens when you experience the kind of the dreaded down round. What else can we expect? A host of illusionist tricks that will be deployed to obscure what's actually happening. In the private markets, deals will be structured so the headline valuation stays high, but the terms such as liquidity preference, control mechanisms and deal structures will radically change the economics and governance. The next step, euthanasia for a lot of firms. Expect to see a lot of unicorns bought for undisclosed amounts, pennies on the dollar. The deals will be presented as strategic, but they'll really be aqua hires.
8:17 Scott Galloway? The best talent gets new options on more viable equity in the acquirer and the lawyers pick through the patent portfolio and everything else gets quietly shut down. And it's sort of peace with honor, if you will. So expect, I would imagine there's a partner right now at Andreessen Horowitz calling his or her portfolio or Web3 portfolio company and saying, wouldn't it be great to have this social audio platform called Clubhouse, which is synergistic to your efforts? Keep in mind, supposedly the last round at Clubhouse was at $4 billion. So that isn't even a down round. That's going to be, that's going to be a meltdown. It'll be really interesting to see how they try and position that somehow as not a total train wreck.
9:00 Scott Galloway? So if we zoom out, what's happening this, the tail wagging the dog here, or in fact the dog wagging the tail, is the public equity markets for these types of companies has gotten crushed. Of the 60 odd venture-backed tech IPOs of 2021, I think 54 are underwater. I mean, you've seen companies off 80 and 90%. Not only shitty companies like Robinhood or Rent the Runway, but good companies like Roku or Moderna. These are really good companies, but anything that felt like it was banking too much on the future, that had gotten way over its skis, that had registered enormous gains off of what seemed to be irrational multiples on revenues, much less earnings, because
9:43 Scott Galloway? the majority of them didn't have earnings, has just been taken to the woodshed and is off 80 to 90%. Does that present a buying opportunity? It probably does. I just got off, I just did a presentation to the folks at Roku. And when I think about Roku, which I think their stock is off 70-plus percent, it's very strategic. It controls distribution, and that is, it's the number one streaming hardware device and controls the end distribution, which neither Disney or Netflix have. And whereas when it was at 70 or 80 billion in market cap, now it's, I think, 18 or 19, it becomes a viable acquisition candidate for a lot of companies, including Netflix and Disney, that probably see merit to greater control of their distribution, such that
10:26 Scott Galloway? they're not at the whims of cable companies, or whoever gets in front of them, or Android or iOS, or what have you. But a lot of companies, I think a lot of portfolio managers are looking at this entire generation of newbies and saying that have been crushed. Let's sort through the wreckage and see what we find here. So, on a more personal level, what's all the learning behind this? What if you're a part of a company that's going through a down round, a lot of anxiety, a lot of stress, looking at your options, which maybe yesterday were worth X, or a few months ago were worth X, and now are worth zero? And also, maybe some of the fear that you might get laid off, or questioning whether you picked the right company, and all the navel gazing that'll happen. And I think it's going to be especially hard on young people that are under...
11:08 Scott Galloway? It's impossible not to think that the market's going up 10 or 20% a year isn't how it always is, to not think that isn't normal, given that when something happens, or continues to happen for 13 years, it is normal. Keep in mind, through economic history, on average, one out of every five years, we experience a drawdown of 20% or more in the Dow, and that just hasn't happened since 2009. So, there's been so many sanitary wipes used on the lives of the employees and founders of these hot startups, that they haven't developed a lot of immunities, or at least I don't think they have. I think they're going to be pretty shocked. I was in 2000. I was under the impression that when I raised money for an e-commerce incubator called BrandFarm, at a pre-money valuation of 35 and a post of 50...
11:51 Scott Galloway? And what in 2000, so that probably means, I don't know, 100 million in today's dollars, but basically off of a PowerPoint presentation and an agreement that I would work there for four years. So think about a PowerPoint presentation and a 34-year-old Scott agreeing to work somewhere for four years is worth 100 million dollars in today's dollars. The reality was, it wasn't. And the market very crisply, very crisply, pointed that out to me. Also, the thing that worries me about younger people is they are fond of this notion of bringing their full self to work, meaning that if work doesn't work out and your company isn't successful, or you aren't successful, or you get fired, that it's some sort of statement on you as a person, that it's a statement on your
12:33 Scott Galloway? full self. No, it's not. It's not. Your job and money are ink in your pen. They're really important, bust a move to economic security, but they're not your story. The other thing I'll tell you is that I've had companies go bankrupt. I've been kicked off of boards of the companies I've started. I've had my most important clients fire me. I mean, I've had shit go down, so to speak. And every time, what seemed to be kind of a devastating failure resulted in different doors opening. When I was kicked off the board of the company, I started Red Envelope and got into a war with the venture capitalists and lost my proxy battle. I thought, wow, this is really a low point. This is just awful. I felt sorry for myself. And then the following year, not one, but
13:17 Scott Galloway? a couple of different hedge funds said, okay, you're batshit crazy and aggressive, but we like the cut of your jib. We like your style of batshit crazy and aggressive, and we want you to help us go activist on a couple of our investments. And I ended up getting into activist investing for the better part of a decade, which was not only incredibly interesting and incredibly lucrative, but foot to my personality, being sort of like, being a kind of an angry asshole comes really naturally to me. And I think that's sort of a precondition of being an activist investor around the turn of the millennium. I would have never anticipated that getting into a war with my venture capitalist, Red Envelope, would result in kind of a new career as an activist investor. When companies
13:58 Scott Galloway? lay off people, it kind of means your human capital isn't working here. So while you're young, you want to get your human capital to somewhere where there will be a greater return. The worst thing that can happen to you, let me back up, the best thing that can happen to you is success. The next best thing is to fail fast. And that's to know right away that this isn't working and give you the opportunity and incentive to go somewhere else. The worst thing that can happen is you fail slowly. You fail slowly. And also, the one statement that has survived every experience for me and the majority of truisms in my life, I find I ultimately get dispelled. But the one thing that has provided tremendous comfort for me is knowing, knowing, nothing
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17:17 Scott Galloway? Welcome back. Here's our conversation with Shane Harris, a staff writer at The Washington Post covering intelligence and national security.
17:25 Scott Galloway? Shane, where does this podcast find you?
17:27 Speaker 02 Where am I now? I am actually in Washington DC at my house. I'm not too far from the Washington Post offices, but I'm home today.
17:34 Scott Galloway? Nice. So let's bust right into it. The news is obviously changing pretty quickly, and we want to note that we are recording this interview at 3 PM Eastern on Tuesday, March 1st. As we sit here right now, how would you describe the state of play in a global crisis?
17:52 Speaker 02 Boy, the situation is both extremely tense in Ukraine and gut-wrenching, I would say. The Ukrainians have put up, and by the Ukrainians, I mean not just the military, but individual Ukrainians, have put up a resistance that I think many US officials didn't expect, and I suspect that Vladimir Putin didn't either. But there is an overwhelming number of Russian military forces arrayed against them. Right now, as we're talking, there is a convoy of armored vehicles and troops heading towards Kyiv with every indication of laying siege to the capital of Ukraine. Already, we have seen bombing of civilian targets, the use of cluster bombs, really horrifying munitions. There have been reports of civilian dead.
18:36 Speaker 02 I think there are questions about whether war crimes investigations will be set up. You know, it is going slower than I think many predicted for Putin. I think people predicted maybe a lightning strike. But I would imagine that this war will ultimately end, at least as a tactical victory in his favor, possibly with really horrific numbers of casualties, particularly civilians.
19:00 Scott Galloway? So help us understand the military component of this. Does, has, knowing that they're rolling in, has that helped us or helped, I shouldn't say us, helped Ukrainian forces plan for the defense? Will, it feels like the momentum is moving against Russia and that you saw Germany decide to send anti-tank armaments. And it feels as if there's more to come. Is there a chance that there'll be enough support in the form of actual arms and cash that could get to Ukrainian forces that could perhaps repel? Or is this just a kind of a fait accompli that we're just waiting for when Russian forces take control of Kiev and the other major cities?
19:45 Speaker 02 I mean, I think there's certainly a chance. And I mean, I think that the chance would be not so much that the Ukrainians would be able to overwhelm and defeat the Russians, more that they would make it so costly in terms of casualties and the political cost for Russia that perhaps Russia would, you know, I'm not gonna say they withdraw, but they might give up trying to take, you know, the capital and just go for the eastern provinces of Ukraine, which they could certainly take and hold. Key to this is gonna be both, as you said, the Ukrainians having a sense of what's coming for them, you know, and that comes down to intelligence and imagery and things that the US and the allies can share with Ukrainian military and say, look, they're heading this way, they're coming down this road.
20:28 Speaker 02 But also then the weapons to give them to actually go meet that convoy and attack it. You know, the Ukrainians don't have an air force that's capable of just going over and bombing it, you know, to smithereens. The United States could do that, probably. But, so this is gonna really come down to how quickly those munitions and those weapons can get in and how long Ukrainian forces can hold out. And I mean, and I don't want to say I'm predicting that Russia will absolutely win. I think if you were just looking at the numbers of it and just the overwhelming force they can apply, you would have to give the Russian military the upper hand in this campaign.
21:03 Scott Galloway? Okay, so Russia, let's assume, let's do some scenario planning around. Russia takes Kiev. Does it turn into Afghanistan where it's just a series of terrorist attacks? I mean, then what? Or is it they replace the government and mission accomplished? What, what happens post? Let's assume Russia gets at least physical control of the major cities and the communications. What happens then?
21:27 Speaker 02 I think the first thing you could expect to see, if they, if they did physically get control and they're not in a situation where it's neighborhood by neighborhood and there are insurgent groups or guerrilla groups roving around, but that they really rested control. You could imagine them either capturing or killing President Zelensky and his aides, or President Zelensky and his aides fleeing to a safer location, let's say maybe Lviv in the West, and trying to run a government in exile. But then Russia essentially installing a kind of a puppet regime. And we know that they, from intelligence reports, that they had allegedly been planning to do that even before the war began. So that's one. The second then becomes how do they effectively hold the whole country?
22:10 Speaker 02 And there is where already in, you know, talking to intelligence officials and my sources, there is an expectation that if there were a kind of protracted Afghanistan-type scenario in which Russia was trying to hold this unruly country, the United States would be, I think, more than happy to fund insurgent forces and to be covertly funneling arms and money to those groups. That's something the CIA is actually pretty good at, and they have experience doing that against the Soviets. So this is a target in this scenario that they know well, not necessarily maybe in an urban environment like Ukraine would offer in some places. The question has always been for Russia, not whether it would be able to topple the government in Kiev or physically mount an invasion.
22:55 Speaker 02 I think the most analysts said that, yeah, they can do that. The question was always can they hold on to the country? And that was a much dicier proposition. If that's where they find themselves in some weeks or a few months from now after a bloody campaign, then you're going to see this switching into a kind of, you know, a situation like what they experienced in Afghanistan, or frankly, what the United States experienced in Afghanistan as well and in Iraq.
23:18 Scott Galloway? But do you think there's a same level of, I don't know what you would call it, insurgent activity, IEDs everywhere, just this constant level of anxiety for the occupying force or the invaders, whatever, however you want to term them? I mean, it's as if neither Russia nor America learn. Is this, would it be as bad or worse?
23:40 Speaker 02 I think it could be pretty bad, actually. I mean, then I base that on looking at the resolve of the Ukrainian people. And we've seen this, and we should be careful not to maybe overstate it, because we're, obviously, we're seeing social media posts, and we're seeing cable news stories and stories in the paper that are highlighting people who are very committed to repelling this Russian invasion right now. But let's just presume for the sake of argument that that kind of spirit lives on, and that the Ukrainian people dedicate themselves to forming a resistance. I mean, we've seen resistances before. You could imagine, perhaps, a kind of a situation where there are IED attacks, where the Russians
24:22 Speaker 02 are kind of besieged by these different forces, maybe some of whom actually go and can organize in safer places in the country, maybe in the West. Yeah, I can imagine a scenario like that. And not that anyone in the United States is wishing for it, but if it does play out that way, you know, the CIA and our special operations forces have experience both funding those kinds of insurgencies and having to fight them. And that's going to be very important knowledge.
24:49 Scott Galloway? There's a lot of reports coming out that there's been some real logistical mistakes made by our staff, made by the Russian army, and that there's a general sense that Ukrainian forces are putting up a surprisingly strong fight and resistance. Is your sense that that is an accurate depiction? My fear is that we romanticize it, and we take any small victory and we want to, it's sort of, you know, we have confirmation bias, or just a bias towards believing that it's a greater resistance than it is. Is there really, has the resistance been that shocking in terms of its success?
25:28 Speaker 02 I'd say it's been encouraging. I wouldn't say it was shocking. You know, the tactical missteps seem clearer now for the Russians. I mean, this initial kind of helicopter invasion that they mounted, I don't think they expected to have helicopters being shot down. They failed to take over key airfields and airports where they could have airlifted in troops and munitions. But they have a lot of people, right? They have a really big military. And frankly, you know, the Russians can throw a lot of young soldiers and possibly conscripts at this thing and let them get eaten up in the first wave and then just send a second wave. You know, I think that we should not be, you put it very well, given to be kind of a romanticized notion that, you know, aha, the Ukrainians
26:10 Speaker 02 are winning. I mean, they're scoring some really important victories right now. And I think that President Zelensky has done an extraordinary job of winning the information war. I mean, when you see stadiums full of soccer fans, you know, spontaneously erupting into cheers for Ukraine, when you see memes taking off on social media, I mean, he clearly has led his country in a very effective information war. But we shouldn't forget that the Russians just have numbers on their side. And it's a, it's a ferocious military that is, you know, targeting civilians as we speak. I mean, it's not guided by the same kinds of ethics and principles as, you know, as we might expect our own military to follow, and which usually does.
26:56 Scott Galloway? And what do you make of, or what pressure will come from within? We see video footage of protests in Russia. Do you think, do you think Putin, at this point, I imagine it's impossible to try and speculate what was running through Putin's mind. But do you think this is a surprise? And to what extent does Putin or anyone care when there are protests in St. Petersburg? You know, is that, do you think they didn't anticipate that sort of unrest at home? And will it have any effect?
27:26 Speaker 02 I think Putin cares a huge amount about protests and unrest at home. I've become persuaded by the theory that what really animates him in this and led him to invade Ukraine in the first place is not fear of NATO expansion. I think that it's a fear of the fact that Ukraine had a Kremlin-friendly government that was overthrown by popular democratic revolt in 2014. He was terrified of protests in Russia. He fears losing his own head and his own grip on power. And so I would expect that he would move very harshly to suppress political dissent and protests, as he has consistently for years in Russia.
28:08 Speaker 02 Already, we've seen reports on Russia trying to crack down the Russian government on social media and the information that's getting out to Russian citizens. I think Putin must know that he's got to keep the real story hidden from Russians as much as possible. I mean, good luck with that. It's not North Korea. It's not a completely information blackout society. So I think he cares a great deal about that. And I think he needs to be concerned as well about his inner circle of advisers and leaders and the oligarchs who are close to him. And you're starting to see, maybe, I don't want to overstate this, but certainly people, let me put it this way, in the intelligence community in the US are looking for where there are cracks and fissures in his kind of upper ranks right now, the people who
28:52 Speaker 02 are close to him. Can those relationships be exploited? What you might ultimately hope for if you're in the US side of this is convincing some of those people to overthrow him, to resist him. That might be a terrific outcome. So I think that, first, as I talk to, and the US government are looking very closely at that, as well as watching what's happening in the streets in Russia.
29:18 Scott Galloway? And I'll put forward a thesis and you tell me if what I'm saying makes sense or I'm smoking something, but I like to think that capitalism has extended connective tissue in and out of Russia and that the most powerful people, as indicated by their wealth, are feeling a lot of pain here, that the pushback, I'm on the board of a company that decided to kick off one of the board members who is backed by a Russian fund or an oligarch. You've seen a lot of internet, whether it's not letting Russian aircraft enter European airspace, oligarchs' yachts being tracked and not allowed to dock in certain places. Is there a certain, not soft power, but capitalist power that might have
30:03 Scott Galloway? a new form of influence on Russia? I mean, when Khrushchev went into Cuba, you know, the most powerful people were vacationing in Odessa, not at Disney World or in Aspen. They didn't give a shit. Now it feels like this is going to incur real pain on the quality of life of some of the wealthiest people in Russia. Will that have the impact that it might, or is that just wishful thinking?
30:24 Speaker 02 I don't know if it will have an impact, but what I do know is that US officials and European officials are hoping that it has an impact, and that is precisely was one of the motivations for doing these sanctions. The people who are getting hit right now and whose assets are being frozen, and the children of some of them notably as well, who are being sanctioned now, these people have been on the wish list for a long time for people in the State Department, in the intelligence community, and in other intelligence services who I've talked to for years, saying, "Look, squeeze the people around Putin, the ones who he made rich, the ones that they are beholden to him. Go after them, go after
31:05 Speaker 02 their kids, cancel their student visas, seize the real estate in Beverly Hills that Russian oligarchs buy and put in the names of their 25-year-old sons and daughters working in LA." These are real stories and real people who have pressure points. And up to now, I would say Western governments have been pretty conservative in how they've gone after them. And I think now, the proverbial... Gloves are off and the hope is that you put enough pressure on that wealthy class of people around him. You take their money, you make it hard for them to have that lifestyle in the hopes that they revolt or come forward and switch sides and say more things that they know about Putin. This is, this is not, these sanctions are not merely
31:47 Speaker 02 punitive. They are that, but they are designed to have some kind of an effect. The United States will never say it's regime change, but you know, if you like that term, you know, I'm not sure, I'm not sure that I would resist that characterization.
32:01 Scott Galloway? In a recent interview you did with the Lawfare Podcast, you described, or you said that you've never seen US officials share this much intelligence ever before in the last two decades since you've been covering this space. Why do you think that's happened?
32:16 Speaker 02 The Biden administration made a policy call, beginning in last December, that they were not going to repeat what many people saw in 2014 as a mistake, where the intelligence community had lots of information about what Russia was really up to when it invaded Crimea in the south of Ukraine, particularly that, you know, the United States knew that those were Russian forces down there, even though the Russians tried to say, no, we don't know who these people are. They're just, you know, guys with guns and no insignia on their uniform. There were people who felt that the intelligence community should have called Russia out, that it shouldn't have been so maybe scared or reluctant to reveal classified information, which traditionally, intelligence agencies don't like to do it
33:01 Speaker 02 because they don't want to give away any information about the sources and the methods they use to collect that information. So they very jealously guard that stuff. At the same time, a lot of this information in the recent context, things like satellite photos of Russian forces massing at the border of Ukraine, commercial imaging companies were putting that stuff out. A lot of this stuff is in the open source. I think the Biden administration realized they had powerful intelligence capabilities. They knew a lot of stuff about what Russia was up to and that they were going to start releasing it selectively in the public through the press. With two goals in mind. One was to try and deter Putin, although I think that was always a bit of a long shot. But more to the point that they were going to create
33:44 Speaker 02 an information environment in which he could not operate with impunity. He couldn't just come out there and say, oh, I'm doing this because Ukraine's committing a genocide, or I don't know what you're talking about. These forces are here for military drills. They're not in attack formations. And essentially, you know, the United States called his bullshit over and over again by using disclosures of intelligence as just not a strategy I've ever seen a government deploy. It does seem like one, though, that is particularly well suited to the information environment in which we all live now. Right? Where you do have these pictures out there. You do have social media evidence and indications of what the Russians are doing. And the administration went further, you know, declassifying information about planning and intentions that while they didn't reveal the source of their information,
34:29 Speaker 02 was almost certainly coming from intercepted communications by the US, by its allies, and kind of sort of painting a picture of what Putin was up to. And, you know, from officials I've talked to, they feel good about this. They feel like they may have even rattled his cage quite a bit because those predictions about where he was going and what he was likely to do ended up being accurate. So you kind of get inside Putin's head a little bit and make him think that, you know, you don't really have any secrets. You can't just operate with, you know, kind of the veil of secrecy around you that you might have presumed that you once had.
35:03 Scott Galloway? We'll be right back.
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36:45 Scott Galloway? So your 2014 book, At War: The Rise of the Military Internet Complex, explored how the internet has become a major battleground between nations. What would you say is the state of play around cyber attacks and counterattacks between Russia and Ukraine and the US and other sort of proxy wars, if you will, using cyber?
37:10 Speaker 02 So far in the war, and this is something to be thankful for, I think, we haven't really seen devastating cyber attacks being launched. So we haven't seen Russia knocking out the power in a major city, turning the lights off. It has the capability to do that. It's done that in other places before. But we haven't seen them going after critical infrastructure. We've seen websites taken down, government ministry websites taken down, services at some banks online being disrupted for brief periods. But that's all just sort of more in the category of annoyance. That doesn't look like the kind of full-fledged cyber attack that you might expect Russia to have to have launched, which they still might.
37:52 Speaker 02 I mean, a siege of Kyiv with artillery shelling and those kinds of kinetic forces, you might also expect that they would do something like turn the lights off or cut off access to ATMs and to banks. You could see that happening. It just hasn't happened yet. Another dimension, of course, to this too, is if Russia, in retaliation for sanctions, starts launching cyber attacks on European countries or on the United States. This is where I start to get really worried that the war could actually escalate in ways that are very dangerous. Because while you wouldn't have NATO or American troops in Ukraine, if the Russians start
38:32 Speaker 02 attacking physical infrastructure in NATO member countries, are they attacking NATO countries? And does that then draw NATO and the allies into the conflict? I think you would expect certainly that those countries could retaliate against Russia in the cyber domain, maybe launch attacks on their infrastructure as well. But can that quickly escalate into a traditional shooting war? I mean, that's a big concern. So far, though, we have not seen the kind of aggressive cyber attacks by Russia that we might have expected in a conflict like this.
39:07 Scott Galloway? Does that indicate that Russia believes, and I want you to know, A, if you think this is, this is in fact reason for that reticence to conduct cyber attacks, and also if it's true, that our response could not only be equivalent but more devastating?
39:25 Speaker 02 That's possible, sure. I mean, again, we're getting into the area of like what's inside Putin's head. The Russians certainly know that our capability is formidable. We have signaled to them in some ways in the past, for instance, taking down portions of Russian infrastructure that they were using for online propaganda or things connected to election interference. So they know that we can kind of flip switches, if you like. And turn things on and off.
39:54 Speaker 02 I have to think that Putin knows that we would view any cyber attack on the United States as a provocation separate from anything he's doing in Ukraine. And does he really want to open up a front, another front in a war? So it's possible that he's being restrained here because he has his hands full fighting Ukraine. He doesn't need to also start getting into a cyber war with the United States at a moment when he has so extended himself militarily.
40:23 Scott Galloway? Let's talk a little bit about sanctions. So we've imposed some pretty harsh sanctions on Iran. And it hasn't, hasn't flipped their minds. I mean, aren't these, these sanctions feel good? And we'd like to think they're going to be really powerful. But can these in fact drive the Russian army from Ukraine?
40:42 Speaker 02 I mean, the unsatisfying answer is we'll have to see, right? I mean, the Iran example is a fair one because there we have used sanctions as a way of trying to influence policy and influence behavior. And arguably, it hasn't worked out the way many had hoped.
40:58 Speaker 02 And we haven't necessarily gone, we, I should say, you know, the United States and its European allies have not necessarily gone to the maximum level of sanctions, even with full blocking on everything that you saw in Iran.
41:10 Speaker 02 You know, there are indications, and I, and I stress this is indications. I mean, from intelligence reporting that Putin is outraged by the sanctions, that he is worried by them. Could that affect his thinking? Maybe. Would it really be enough for him to stop the campaign in Ukraine entirely? Just putting my analyst hat on for a second, and I'm not an analyst, but sure, I'll pretend to be one. I don't know. I don't think so. I mean, I think he has factored this in already. I mean, I think that he had to understand, because the Biden administration was explicit about this, that we were going to open up the entire arsenal of sanctions on him to include Swift, to include sanctions on oligarchs.
41:54 Speaker 02 I think a lot of people were surprised by the sanctions on the Russian Central Bank, which are, I mean, that's a big deal. Talking about, you know, possibly freezing up half a trillion dollars in currency held in other banks. So, yeah, I think that it could influence him. At the same time, he's had months, if not years, to think this through, and he's known for months that the sanctions would be punishing. And so I've got to think that he has gamed this out to some degree in his mind and has figured out what he's willing to tolerate.
42:31 Scott Galloway? So if you believe that everybody has a boss, that no one has unilateral decision-making authority over the medium and long term, what are the other nodes of power in Russia? Is it oligarchs? Is it KGB buddies? Who could bring to bear real influence? And maybe, and also, they might be very supportive of everything that's happened so far, but we see one person, and there's got to be more than that here.
43:00 Speaker 02 I think that the people in Russia around Putin who control, have the most power, really are the heads of the intelligence services. I mean, you know, the old kind of FSB coterie, and increasingly, the GRU groups, the military intelligence, the kind of people that Putin grew up with. I mean, Putin is an intelligence officer. I mean, he is a, he is an old Russian spy, kind of through and through. It is an animating part of his personality. There have been books written about this. You see it in the way that he has surrounded himself with old intelligence advisers and officers, people who have, some of them become very rich themselves.
43:39 Speaker 02 So there is this kind of establishment, this power security apparatus around him. Part of the issue, though, I think, is that some of them are probably also kind of imperial nostalgists, to borrow a phrase from Anne Applebaum, who also believe in the, you know, the lost glory of Russia, and may be with him on this campaign that he is waging. It's notable to me that prior to the war, both US and British intelligence assessments held that Putin was being poorly advised by a small coterie of advisers around him, that they were not being honest with him about how hard the war would be.
44:22 Speaker 02 I think that maybe they were believing their own misconceptions. So, you know, those are the power centers, though. And I think this is why officials now in the US are looking to see if there are any fissures in those groups. Maybe not necessarily, you know, just the pure oligarchs, you know, your kind of Roman Abramovich types or whatever in the popular imagination, the guys with the yachts and whatever, but really people running the security services or at high levels around him who do have a kind of control over the state. Those are meaningful levers to pull. You know, you also, of course, do have the people. And I don't necessarily mean, you know, people who would go out and end a popular uprising,
45:03 Speaker 02 but, you know, people who need to eat, who expect to be able to make a living, and who now are looking at their bank accounts and seeing that the ruble is worth, you know, astonishingly less than it was before this war began. He does ultimately, the boss, I mean, to some degree, he has to answer to the people. And he has seen violent uprising before, including in his own country. And I think he fears it in the future.
45:27 Scott Galloway? So, as we wrap up here, what are you paying attention to? What signals are you going to be tracking over the next few days or weeks?
45:36 Speaker 02 Well, definitely, of course, watching what happens in Kyiv, because I think that could tell us a lot about how the future of the war goes. I mean, how easy or hard is it for him there? Seeing any signs of daylight between himself and powerful oligarchs, not necessarily that he had government advisers around him. If you started seeing that kind of daylight, you might wonder if there was a coup. You know, what do average Russians in the streets think? Do you start to see more protests? What is the economic pinch actually start to look like? I mean, are we going to see people lining up at stores? Are we going to see runs on banks? Those kinds of things.
46:17 Speaker 02 And also, what I'm looking forward to see is, you know, how do the allies hold together? I mean, I think everyone has been very pleasantly surprised to see European countries in the US kind of on the same page, implementing strong sanctions. The Germans putting, you know, mothballing the Nord Stream 2 pipeline was a big deal, and not necessarily a guarantee, I think. At the same time, you know, I know from my own reporting that the Brits wanted to kick Russia off Swift entirely. And that's not where the Allies ended up. They kind of did targeted kicking or decoupling, if you want to use that word, of some banks. So it's, you know, I'm not, I don't want to say there's division among the Allies, but it's not completely cemented.
47:00 Speaker 02 And I wonder, you know, we're even seeing now some of the promises of jet fighters by some countries. I think the EU had promised some of those. Those are kind of being walked back a little bit. So I'll be watching to see if there's any hesitation or fissures like that within the ally bloc as well. And if their resolve gets tested.
47:21 Scott Galloway? And what advice do you have for people who want to help Ukraine?
47:26 Speaker 02 I think, you know, there are, certainly there are aid groups that have been set up. I don't have any that I would recommend per se. That's not quite my job. But there are, you know, there are, there's going to be a need for money. There's going to be a need for humanitarian aid. I do actually think that the social media campaigns make a difference because I think it shapes public opinion and perception and understanding. Probably a lot of people a week ago, couldn't necessarily tell you what the conflict was in Ukraine. And now, tens and tens of millions of people, maybe hundreds of millions around the world, look at this and say, yeah, Russia invaded without reason. It's neighbor and they're horrible and they're killing children. That builds a story and that matters a great deal.
48:11 Speaker 02 I wonder too, to what degree you're going to see people, in particular, maybe even young people or people with military training, going over to Ukraine and wanting to fight. I mean, this is reminiscent of like the Spanish Civil War, where people felt that there was a cause that was worth fighting and possibly dying for. I'm not, by any means, I'm not recommending that. I want to be clear. But I think that that is something to watch. You're already seeing some reports of people, British ex-special forces wanting to go to Ukraine, showing up. There's a kind of, there's a way that this conflict, because it seems so black and white. There is so clearly to many people's minds, an aggressor and a victim here.
48:53 Speaker 02 That it had, that kind of clarity has a kind of draw to it. And people want to help. They want to help with hashtags. They want to help by giving money. And some of them want to help by picking up a gun and fighting.
49:06 Scott Galloway? Shane Harris is a staff writer at The Washington Post covering intelligence and national security. Shane is also the author of two books, The Watchers: The Rise of America's Surveillance State and At War: The Rise of the Military Internet Complex. He joins us from his home in Washington, DC. Shane, thanks so much for your good work.
49:24 Speaker 02 Thank you very much. I really enjoyed the conversation. Thanks for having me.
49:31 Scott Galloway? Our producers are Caroline Shager and Drew Burrows. Claire Miller is our associate producer. Associate producer. Talk about a meaningless title change. Congratulations, Claire. You're welcome. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.
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