Pod Insights Summation with Auren Hoffman Glenn Youngkin on governing like a CEO, the AI power crisis, and why every operator should run for office About this episode Glenn Youngkin was the 74th Governor of Virginia. Before politics, he spent nearly 25 years at The Carlyle Group, one of the largest private equity firms in the world, where he rose to co-CEO. During his four-year term, Virginia generated $10B in surplus revenue, delivered $9B in tax relief, attracted $156B in capital investment, and became one of the first states in the country to mandate cell-phone-free classrooms. In this episode of Summation, Glenn and Auren discuss: Why every Virginia st...
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Auren Hoffman? Hello fellow data nerds. My guest today is Glenn Youngkin. Glenn served as the 74th governor of Virginia after spending nearly 25 years at Carlyle Group, one of the largest private equity firms in the world, where he rose to co-CEO. Glenn, welcome to Summation.
0:16 Speaker 01 Arun, great to be with you. So fun to be on Summation with you. And this is gonna be a fun conversation, so I really look forward to it.
0:23 Auren Hoffman? I'm really looking forward to it as well. Now, okay, you were at Carlyle for 25 years doing buyouts, et cetera, restructuring companies. What are some of like the non-obvious lessons that translate into running a state?
0:37 Speaker 01 Well, first of all, I never dreamed I'd be running a state. Let's just start there. You know, I grew up as a kid in a very typical American family. My dad lost his job twice while we were growing up and I went to college on a basketball scholarship and was in the job of a lifetime. This was a dream job when I had a chance to rise up through Carlyle after 22 years and get a chance to serve as co-CEO for a few years. And so this idea that I would go serve 8.8 million Virginians as governor was not top of the list. Let me be, let me be real. And so when I had a chance to step in to lead
1:19 Speaker 01 and we ran in 2021 and I think shocked a lot of people by winning, I just brought a whole different perspective to the job. And let's be serious, the job is the chief executive officer for the state. It is a chief executive job. And so oftentimes, people think, oh, you have to be a lawyer or you have to have been in the legislature in order to serve as governor in the executive branch. And the reality is, I feel it's the exact opposite. I think you need experience leading organizations. You need business experience, understanding.
1:57 Speaker 01 What a P and L and a balance sheet and a cash flow statement are. But you know, some of the, some of the really important skills that I think business leaders bring are how to set vision and then how to organize and build teams, how to then devise a strategy and then to go execute. And I think so many people forget that, that the main request from voters is to deliver results. Do what you say you're going to do. And we just brought a whole different philosophy to serving Virginians as governor. And that was one of setting vision, setting a, setting a course, building a great team,
2:40 Speaker 01 and then executing like crazy and delivering results that I think exceeded everybody's expectations from economic development, from transforming behavioral health to uplifting the educational system so that we could in fact, lead the nation again in education as opposed to trail to making communities safe, to running government more efficiently. Goodness gracious, we had, we had $10 billion of surplus revenue that enabled us to have $9 billion of tax relief, but also record investments across critical areas of the state. And so, you know, my big takeaway is that coming from the business community and in particularly the private equity community where we do this kind of stuff all the time,
3:22 Speaker 01 it was the most amazing training for a job that otherwise many people seem to, seem to address from a legislative standpoint as opposed to an executive standpoint.
3:32 Auren Hoffman? Oftentimes you hear about, okay, we should draft the CEO into politics. Like in the eighties, it was like, let's get Lee Iacocca in and run him for president. And you know, you hear a lot of these nowadays about like Jamie Dimon, Howard Schultz has thought, or at least flirted with running for president before. Like, would we be better off if more CEOs went into politics? Or do you think like we're at the right mix right now?
3:59 Speaker 01 No, I think we are wholly understaffed.
4:03 Auren Hoffman? Okay.
4:03 Speaker 01 In the world of public service with people who understand how to run organizations, how to lead. And that is something that I've been working really hard to try to address. Everywhere I go, every group I speak with, I always tell everyone that when you go through your midlife crisis, like I did, run for office. Run for office. The water is fine. It's extraordinary. I've never felt more purposeful in my life, other than when I found my faith and when my wife said yes, when I asked her to marry me. But it is an extraordinary opportunity to serve and you can get a ton done.
4:42 Speaker 01 You know, and I had divided government for all four years and yet we got a ton done because I believe we brought this business minded approach to government and drove results, which is what our voters demanded.
4:57 Auren Hoffman? One of the interesting things about Virginia as opposed to a lot of other states is that the governor cannot run for reelection. You're kind of limited to that one term. Maybe people come back later and run, but you can't run, you can't be consecutive. In some ways, it's like both a feature and a bug. The feature is, okay, well, I just have to like get stuff done. Like I've not, I don't have to worry about my, my, my running for reelection. The bug, of course, is that you're kind of a lame dunk right when you show up. Like where, where do you feel like, where do you feel like it helped you that rule? Where do you feel like that might have hurt?
5:30 Speaker 01 Well, let me begin with the fact that this is, this is a long-term impact from our founders and particularly Thomas Jefferson, who, who did not want to have an executive branch that was permanent. And therefore Virginia has honored this from the beginning of time and it is part of Virginia.
5:52 Speaker 01 And it is both a real benefit and it has some real drawbacks. The benefit is you are focused. Listen, I came to work every single day, one, with a spring in my step, but two, with, with the undeniable demand for everyone to go. Pace matters. And I don't care whether you're a one-term governor or two, or you have unlimited terms. Pace matters in everything. The, the greatest, greatest detriment to success is going slow. And in this case, in my term, it was, it was reinforced by the fact that I had four years to try to get eight years of work done, and I think we delivered even more than that.
6:33 Speaker 01 I think one of the challenges is just, there's always turnover. And turnover is really, really rough, particularly in a very large organization like state governments. I mean, we have 110,000 state workers. About half of those work for the universities and the hospitals and those kinds of things. But half of them work directly for the executive branch. And you got to get everybody lined up. You got to get them working in, in, in the same direction, using the same kinds of language in order to understand how to deliver success. We introduced a bunch of new tools and it works.
7:15 Speaker 01 And the issue is if the next governor isn't doing the same kinds of stuff, then all of a sudden, the effectiveness and the efficiency, which we demonstrated, is really compromised. And rapid turnover just is not a great thing for an organization. And so that's why we work so hard in order to embed so much of our operating philosophy. You know, at the heart of it was I came in and I went and visited every agency and every department. And what I quickly realized is that there were no goals. There was nothing being measured. And as a result, there was no way to judge whether we were accomplishing our objectives or not. And so we put in an OKR system right out of the box.
7:59 Speaker 01 And we set objectives. We figured out what we were going to measure and we had rapid feedback for the entire. State government organization. And there was huge resistance at the beginning. And then leadership began to understand that as they were running their agency or their department, they had a, they had real guideposts on what success looks like. And when they were behind, we were able to recalibrate with more resources and support. And when they were ahead, we were able to celebrate and then set even more challenging aspirations. And by the time we were done, every meeting had, had an OKR session in it. And we were able to really demonstrate that when you set objectives and deliver them,
8:42 Speaker 01 you get these massive, what I call from tos. Where'd you start and where'd you finish? And in an organization where you don't have bonuses and you don't have stock options, celebrating success is the primary motivator for making sure that people are all really pulling, pulling hard on the, or the same direction. You can teach state government to work faster, to work smarter. And you got to do it by being fully engaged, giving them the tools and letting people who are really talented, but may not have ever been enabled in this way, do the job, but also holding them accountable for doing it.
9:20 Auren Hoffman? I want to come back to governing in a second, but just going back to your career, uh, running private equity firm. When, when you started, it was almost like, it was almost still kind of like barbarians at the gate era, still kind of leveraged buyout. And then it evolves to something just much, much broader. You know, you, you see private equity firms buying insurance companies. You see private credit. You see all these other things that have changed over those years. How do you see like, how, how did you like navigate that market change over time?
9:53 Speaker 01 Well, you've seen it as well from your perspective, which is private capital.
9:59 Speaker 01 Has become the most efficient way to bring capital to great ideas, to value creation, and then to unlock that connection between capital and ideas and allow it to do what America does best, which is to innovate and to grow a system that creates jobs and, by the way, rewards that capital. That is the most efficient system in the world, and private capital has become, I believe, the most efficient enabler in that because the public markets have become really tough.
10:37 Speaker 01 I mean, how many, how many high-growth companies are opting to stay out of the public markets because of the distractions that come with it and staying in the private markets because today there's huge quantities of private capital that are willing to allow these entrepreneurial businesses to grow well beyond what they used to be able to do in private capital. So when I was growing up at Carlyle, we saw this happening, and we saw many opportunities to bring the basic building blocks of private equity, which was finding really good companies that could become great companies, and this basic idea of how do you create a business
11:20 Speaker 01 plan around a company and then drive execution and see value creation, see better companies, see higher employment. How do we do that across a whole, a whole bunch of asset classes? And, and we've seen it happen. Venture capital has grown an extraordinary amount, growth capital, of course, more mature business, private capital, the, the kinds of lending products that have come with it. And yeah, those products are seeing some scrutiny right now. And I think that's part of, part of private capital is to make sure that we are constantly delivering for our investors and delivering what we promise. And that's what we did at Carlyle for 25 years.
11:59 Speaker 01 I continue to see that the, the lessons from the evolution of private capital develop into more, even more efficient access to capital for the best ideas in the nation.
12:12 Auren Hoffman? Most of the other big boys in, in private equity were, were based in New York. Carlyle is this weird thing where it's kind of based in DC. In some ways, you could see that being like this huge advantage. In some ways, you could see it as being like a disadvantage. Like where would you from just from the location aspect of it, like, how did you navigate that?
12:35 Speaker 01 Carlisle started when our founders decided they wanted to be in Washington DC and not in New York for a whole host of reasons. And it ended up being an advantage for a long time. From a talent recruitment standpoint, we just had a different offering. But as the firm grew, we also grew our presence all over the world.
12:57 Auren Hoffman? Well, you had to grow everywhere.
12:58 Speaker 01 Yeah. And so it became very much an international business with with global representation. And I, you know, I don't know today, I've been, I've been out of the firm for, for nearly six years. But, you know, there's offices everywhere. And I think the New York presence is, is just as big or bigger than the Washington DC presence. I think one of the great enablers of that was, was culture and a common language, how we do things, the kinds of inputs and criteria that are used for making investment decisions. And that's part of what I brought with me when I went into state government, which is we've got to come up with common language to help everyone pull on the oar the same
13:41 Speaker 01 direction. And that was part of, you know, setting objectives, measuring them, using a business planning approach to tackle the toughest, toughest issues. And again, I repeat, I think, I think my experience in business and private equity prepared me in the most unique way to serve as governor.
14:01 Auren Hoffman? In normal companies, normal public companies, it's extremely rare to see co-CEOs. But in private equity, it is much more common. Obviously, you, you had a co-CEO, we've seen them at KKR, we've seen them in other companies over, over time. How does this work in private equity? And, and why is it, why is it kind of like a more of common in private equity than it is in, in, in like the, in the rest of the, of the world?
14:30 Speaker 01 Well, the private equity model, and I think it's the same in all of the private asset classes from venture capital, growth capital, all the way up through, you know, into into real estate investing. So much of it depends on a collaborative decision-making process with investment committees, with committees that debate. And oftentimes, people take the counter view purposely to make sure that all the issues are being pushed around. And so that's where the industry comes from. And in my experience, where we moved from having three co-founders to two co-CEOs, I mean, it worked really well. Chu Sung Lee
15:13 Speaker 01 and I worked well together. We had a rhythm that I think is really important. We spoke every morning in order to clear what we were working on.
15:21 Auren Hoffman? You intentionally just have like a conversation every single morning?
15:24 Speaker 01 You bet. You know, part of, part of working together and leading is to make sure you have, you have established rhythms that force you to say, well, there's nothing for us to talk about today. Or listen, you know, there's seven things we got to talk about. And here they are. And oh, by the way, here's, you know, here's a situation where this particular person is trying to, you know, mom said this, dad said this to us. Let's make sure we're on the same page. We don't let that happen. Because of course, that happens. It's human nature. And, and so, you know, we actually had a heck of a run. I mean, we, we, we restructured the public company nature of the Carlyle Group and turned
16:03 Speaker 01 it into a very transparent C corporation. We watched the portfolio during COVID perform extraordinarily well and managed that really hard. And we were very proud of the fact that Carlyle's portfolio performed so well during, during the pandemic. We made some really, really important acquisitions that grew the firm from, from acquiring Alpinvest and, and I think becoming the leader in secondaries in the world. To the insurance acquisitions that were made, to getting deep in the energy and power business, growing the real estate business. And so these were, and the credit business as well at the time, you know, these were really important steps that I think put
16:44 Speaker 01 the firm in an incredibly good space. And you know, that's part of why, when I felt called to step out and run for governor, that I felt so confident that the firm was in great shape and, and I was able to step out very quickly, effectively retire and, and go run for governor. And that was because I felt like Q and I did a great job together.
17:09 Auren Hoffman? One of the other kind of like big changes over the last couple of decades is these rise of sovereign wealth funds and also the sophistication of those funds. They used to just kind of just be like, almost like, you know, pejoratively like dumb money. And then they became like very, very sophisticated, almost themselves, big private equity firms themselves, doing deals, managing money in a very different way. How, how did that change the industry?
17:36 Speaker 01 Well, the first thing that it changed was the fact that there was now a great set of partners to, to do things with. And these partners were attracting some of the best talent in the industry. They had some capabilities that a lot of the private equity firms didn't have, which was to own things for a really long time.
17:59 Auren Hoffman? They have very long time durations, right?
18:01 Speaker 01 Yeah, really long time durations. And, and then finally, and I think this is, you know, really important is it did expand, again, the capital base available for great ideas. And so, yeah, the sovereign wealth funds, and you know, you just look at the success of the Canadian sovereign wealth funds during this time period, I think has been reflective of all of that. I think it was, it was, it was a good thing that enabled more capital to get to great ideas in a more efficient way.
18:29 Auren Hoffman? Now, that kind of traditional LPs were these pension funds. And now we're seeing that a lot of these pension funds are in somewhat of a crisis mode. A lot of them are underfunded. What is the future of some of these pension funds?
18:44 Speaker 01 The pension funds construct.
18:48 Speaker 01 Has one, I think, been undermined over the years because every time a pension fund gets fully funded, then politicians usually go and reduce contributions because they try to go get money anywhere they can.
19:01 Auren Hoffman? Yeah.
19:02 Speaker 01 And I firmly believe that the pension plans are doing everything they can to meet their obligations. And that means they need to be, they need to be left alone and be allowed to do that and to get politics out of anything to do with these pension plans. And that means politics from elected politicians and it means politics from, from literally all of these noisy advocates who try to get politicians involved in order to, to, to influence the decision-making of these pension plans.
19:35 Auren Hoffman? Or don't invest in, you know, this type of defense company for this reason or something like that, or.
19:41 Speaker 01 Or don't invest in anything that touches carbon.
19:44 Auren Hoffman? Right, right, right, right.
19:45 Speaker 01 And move all of your investments to, to things that qualify as green. And we know, we know that that has not worked out. And, and so part of this is having great professionals lead these, uh, these critical retirement systems. I mean, in Virginia, the Virginia retirement system is run by an incredible set of investors. I did as governor, get to appoint part of the oversight board, um, but it is independent. It's run independent. I was really proud while I was governor, we were actually able to make top up contributions because we were running surpluses that were so big into the pension plan, um, and into the obligations for medical benefits that also exist.
20:30 Speaker 01 And this is just part of the responsibility of government, but the first step of it is to get out of the way and let real professionals run these things.
20:38 Auren Hoffman? Now, going to actually governing, you were one really the first, kind of leading the first state to get like the phone-free classroom. And this was like one of the big initiatives at the time. In a country that really can't agree on almost anything, is that something like we can all agree on? Or it seems like kind of an obvious move that is just taking a very long time to happen?
21:02 Speaker 01 I look back at four years and people always ask me, what's going to be the most impactful thing that you did during your four years? And I firmly believe it's the full body of work that we did from economic development to transforming behavioral education, to making our communities safer, to making sure government runs better, to re-establishing Virginia as the leader in excellence in education. But I have to say, the long-term impact of creating cell phone-free education, I think will impact generations upon generations to come. And the truth here is that academic performance, the mental
21:45 Speaker 01 health of the students, along with disruptions, and candidly, the safety of the students in the classroom was really, really damaged by the constant presence of cell phones and social media in the classrooms and in the school environment at whole. And so this step for us in Virginia was, I think, incredibly important step. We were leading, we were kind of out there at the beginning. I think it was Sarah Huckabee Sanders in Arkansas and me that really put forth the big push out of the box to get cell phones out of schools.
22:26 Speaker 01 And I think what we're going to see going forward is academic performance increase substantially. I mean, listen, you cannot have notifications going off two, three, four hundred times a day in the classroom and expect students to be able to concentrate and learn. You also can't have all of the detrimental impacts that social media has on the young brain and expect that our children are going to be mentally healthy. And finally, the vast majority of drug deals that were happening in schools and all of the cyberbullying, I mean, it just created an environment that was unsafe in schools. And so I think this is a giant step for us.
23:09 Speaker 01 It doesn't relieve parents their responsibility to be deeply engaged with their children's social media activity. And that's why I am constantly, constantly encouraging, if not demanding, that parents accept and exercise their rights, their rights as a parent to be fully engaged in their kids' lives, but also strongly encouraging and working with all of the social media platforms to step up their efforts to be proactive, which I think many of them are doing, in order to protect kids. This is hugely important. It's something that must be done. And I do believe one of the first steps of that was getting cell phones out of schools
23:54 Speaker 01 in Virginia.
23:55 Auren Hoffman? One of the biggest, maybe the biggest driver of the economy right now is AI. And there's this tension in communities between, you know, creating jobs, et cetera, and building new data centers. How should communities, how did you navigate that in Virginia? And how should communities be navigating those things?
24:14 Speaker 01 We first start with the imperative of winning the AI race and recognizing that China versus the United States is a race we can't afford to lose. And on top of that, there are real benefits in winning AI. I mean, listen, I was just with some folks last week talking about the drug development capability that AI brings and allowing us to, all of a sudden, step function change the kinds of medical breakthroughs in order to make America healthier. I mean, this is really big time stuff. Of course, one of the challenges is we don't have no power.
24:58 Speaker 01 And as we build data centers, we do not have enough power. So much of that is the ill-fated decision that was made to decommission baseload power around the country. It was it was one of the dumbest decisions that has ever been made.
25:14 Auren Hoffman? Nuclear and other types of things.
25:15 Speaker 01 Nuclear and nuclear and gas and and a lot of coal plants that are that need to be maintained. They're cleaner today and we can have an all of the above approach, which which of course incorporates renewables, nuclear, carbon based. It needs to be reliable and affordable and yes, increasingly clean. And we can do this. I think the decisions that were made over the last 10 years were incredibly short sighted, misinformed, and have put America at a great disadvantage. So we've got to solve that. And that's why Virginia was driving so hard in an all of the above, all American approach that included advancing nuclear power as fast as we can.
26:00 Speaker 01 But at the heart of this is the infrastructure that needs to be built. And it needs to be built in the power sector and it needs to be built in the data manufacturing sector. And that's data centers. And I do believe that the data center community really did allow the narrative to be driven in a way that is misguided and misinterpreted. Because the data center community could have jumped out in front and said, hey, listen, we understand if this is putting massive demands on the power, the power grid. And we are going to step up and take on that responsibility proportionally so that Joe Sixpack ratepayer doesn't
26:44 Speaker 01 have to bear the cost of what this is. I signed, working with the data center coalition, a bill last year that enabled our regulatory body to create these these hybrid rate structures to put the right proportion, to put the right amount of expense into the heavy data users.
27:04 Speaker 01 Rate structure in order to address this. The second thing that I think has really been misunderstood is the amount of job creation that comes from data centers. And it's easy to say that they're investing billions of dollars in hiring 1,000 people, but what's missed is the enormous ecosystem that comes around it. And that's where so much of the job creation has come in Virginia over the last four years, which is the power supply equipment, the heating and cooling equipment, the racks and stacks, the service infrastructure that all goes around, not only the initial build of a data center, but the routine maintenance and upgrades and servicing and the huge every
27:46 Speaker 01 three to four years capital investment that comes with them. And so states are competing for this and rightly so, because it is a big economic contributor. I mean, Loudoun County gets in excess of 25% of their county tax base from the data center community, which is keeping real estate taxes down. It's building fire stations and schools. And I mean, this is exactly what the big tax base is all about.
28:13 Auren Hoffman? They have some of the best schools in the world based on, based on some of these things.
28:17 Speaker 01 They do. So this is a moment for us, one, to get out of the fact-free zone and get in the fact-full zone and understand that, that the opposition to data centers, which I understand, I understand that some folks don't want them right next to their house. And I understand that there have been concerns about power utilization and I understand there's been some concerns about water. We got to address all of this, which I think is readily addressable, but not miss the trick here, which is we must have the data center infrastructure in order to win the AI race. And second of all, states are competing and they're either going to come to Virginia or they're going to go someplace else. And that investment is going to benefit those citizens wherever it goes.
29:00 Speaker 01 My final big point here always is this needs to be a local decision and localities need to decide. And, and if Fairfax County in Virginia decides they don't want data centers, but you go down the road and, and find that there are rural counties that want them, want the tax base, then that should be allowed to happen. And that's most important because we want our citizens' voices to be best reflected by their local elected officials.
29:27 Auren Hoffman? You mentioned the baseload energy. One of the interesting things about a data center is that the energy that it needs is fairly consistent throughout the day. Whereas if you think of a home, it's very, very variable. It's a factory even could be quite variable. Usually it's not like all on 24 hours a day. But the data center is like actually quite predictable 24 hours a day and it really does need that baseload to kind of help it going.
30:00 Speaker 01 Yeah, it does. And that's why the terrible decisions that were made in order to decommissioned baseload power have left regions of this country, Virginia being in one of the big power regions that is seeing real challenges in order to cover its baseload needs. And that's just because baseload power was decommissioned and replaced with intermediate power or intermittent power and it can't do the job. And therefore, we've got to build baseload power and that comes in the form of gas, it comes in the form of nuclear, it comes in the form of reopening
30:42 Speaker 01 and recommissioning some facilities that were closed. We're seeing that happening in the nuclear world right now because this baseload power gap is huge and it's only growing. You know, one of the, I think the silliest decisions that has been made, which was decommissioning baseload power, was rested on the complete failure to plan. When I came in as governor, I was shocked that forecasts that were being used for power demand had zero growth in power demand across the Commonwealth of Virginia. And yet, we had, we had an effort that was going on to electrify everything.
31:26 Speaker 01 We had a moribund economy and we were starting to really grow it. And on top of that, we for the first time saw more people moving into Virginia than moving away. So of course our power demand was going to increase. And yet, all of the decisions were being made to to meet this zero growth power demand. And that's what we've seen across the entire country. And now we've got, I mean, a hundred gigawatts worth of gaps in places that we're going to have to get built over the next five to 10 years. And that's just going to be an extraordinary effort. The good thing is that we've got, I think, real bipartisan understanding that you have to go build these things. And we've got capital that's flowing into it.
32:08 Speaker 01 And the demand that's being driven by AI and by data center investment is providing an extraordinary amount of money, unprecedented amount of money, in order to build this infrastructure, including power generation and transmission.
32:24 Auren Hoffman? What do you speak of AI? What are you excited about on the AI front to make government or serving citizens better?
32:32 Speaker 01 Well, I I signed, I think, one of the first executive orders back in 2023 to get Virginia moving in AI. And my executive order had had three big pieces to it. Number one is we recognize that that this is both an accelerator and a brake. And we just wanted to develop policy guidelines on how we were going to use it in core areas. But second of all, we needed to start using it. And so let's create beta tests. Let's create opportunities for us to incorporate AI in what we're doing and to see how it can transform the way that government serves our citizens.
33:16 Speaker 01 And finally, let's establish a leading group of thinkers to help guide us through this. And that that evolved into a next executive order that said, this is working. And let's go ahead and use AI in every agency and department and make sure that we're course. Complying with our standards, but let's get moving and make government more efficient and make it more responsive. And I believe that put Virginia in a position to responsibly develop AI within government. I mean, one of my, one of my most appreciative moments was when I was first elected, I signed an executive order to streamline out 25% of our regulations to get rid of red tape
34:00 Speaker 01 to make Virginia faster and easier to do business in and easier to be a citizen in. And we worked for over three years and we got 25% of Virginia's regulations streamlined. And then I said, well, no, I want 35%. And everybody asked the question, how are you going to do that? And, and I said, let's go get, let's go get some, some really innovative AI thinkers here and what we can do. We, we brought in a company called Vulcan Technologies, a startup out of, out of Austin, Texas. And, and we worked with them for about three or four weeks and said, hey, let's go and see what we can do in order to bring your capabilities to do this faster and better. And lo and behold, within a few weeks, they came back and said, we think we can get another 15% out.
34:45 Speaker 01 And that now what I laughed about was, I said, wait a minute, we worked for three years to get 25% out and you're going to work over the next six months and you're going to get another 15% out? And they even might've said 20. And I said, where were you guys three years ago? And they said, well, in high school. I mean, this is, this is what the capabilities today present and they're evolving rapidly. And lo and behold, before we were done, seven months, eight months later, we'd gotten another 10% of regulations in the Commonwealth of Virginia streamlined. I believe making Virginia at the time, one of the most business friendly states, but also the most responsive to our citizens.
35:23 Auren Hoffman? Now, a lot of these backend systems in government, whether it's federal government or state government are, are still written in cobal. It's true for like banks too, right? Um, now in some ways like that was a, that was a, that was a huge bug just a few years ago. Now AI can kind of go in there, it can rewrite it all, it could move it much quicker than it was before. Is that, are we gonna see just a transformation on these like, kinda like the guts and the backend systems in government?
35:52 Speaker 01 We can hope so, but, but my experience was that the, that the apparatus of, I'm gonna call it government IT, to, to use a really dated term because it's all dated, is not prepared for this yet. So we came in and the first thing I heard is we went around and visited with every agency and depart, and department is, there's a huge technical deficit, huge technical debt that's been built up. We have systems that are really old. I mean, the DMV, which is the second largest interaction with citizens, the, the, the motor vehicles department, still runs off of a mainframe that's 30 years
36:32 Speaker 01 old, that was built and maintained by IBM, who doesn't maintain it anymore. I mean, that's what we were dealing with. But what we also found was that the capabilities in state government were not capable of driving the kinds of implementation and transformation for two big reasons. One, there had been this basic belief that everything has to have an enterprise system. And therefore, what was procured was big system that was managed by a system integrator. And candidly, they never hit budgets, they never delivered what we wanted them to do. And I just constantly spent most of my cabinet meetings on Monday mornings talking about failed
37:16 Speaker 01 or delayed or overruns in IT projects. And then finally, and this is not meant to be demeaning, but the talent base in state government just wasn't ready to deal with this massive acceleration and evolution in technical capabilities. And so you had people who were coming in pitching things that were, you know, basically selling water to wine. And the, the procurement apparatus was not in place to procure it correctly and administer it. And so what we did was change a lot of that. We went from, we went from ERP based IT strategies to agile.
38:00 Speaker 01 Let's deliver pieces. Let's make sure that we are delivering results. I did put on our cabinet agenda every Monday, IT projects. And we brought senior resources to bear cabinet level resources. But we also changed out a lot of the CIOs. We had a centralized organization in state government that could run this stuff and provide the kinds of expertise that was necessary. And we saw massive acceleration in delivery and results. And yet we still sit here today with the DMV in Virginia runoff of a 30-year-old mainframe system, although that procurement is in process and that should change.
38:41 Speaker 01 But state government is just not prepared to run at the front of the pack on any of this stuff. I have to say, my takeaway, though, is that the AI evolution can really, really help here. But we need to make sure that we have the capabilities inside government in order to use it. We do need safeguards. I firmly believe that people have to see things before massive decisions are made in state government. And that all can be put in place, I believe, and take advantage of what's evolving in AI so that we can have a transformation of capabilities that will deliver for citizens.
39:21 Auren Hoffman? Speaking of personnel, like if you think of like a general counsel's office in government or something, 100% of the leaders like passed the bar exam, they're lawyers, they're practicing lawyers. Maybe now they're in management, but they know how to be lawyers, essentially. They're good lawyers. One of my friends became CIO of a huge department in federal government. And he looked at his 300 leaders in his organization. And he said, zero of the 300 had ever coded ever in their life. And they were all fine people, but they just somehow ended up in the leadership there.
40:02 Auren Hoffman? How can we somehow professionalize IT in a way where it's actually important, as important as any other kind of thing in government you would expect, like general counsel's office or et cetera?
40:15 Speaker 01 It's a huge issue. When we started this discussion, I talked about the role of a governor as chief executive. And part of that is building teams and putting together talent. And this issue is giant because you think through the billions, tens of billions, hundreds of billions that is being spent on IT, on technical capabilities in state government, not to mention federal government. And yet, we don't have a workforce that has really been trained adequately or with the skills in order to manage it.
40:53 Auren Hoffman? And by the way, in his case, like they were, they were spending billions of dollars on companies like Accenture. And so their goal was to manage Accenture, but he didn't feel like they had the ability to manage the contractor in the right way.
41:08 Speaker 01 Yeah, it's just the truth. And that's why, one, the centralized capability that we created in Virginia, which is affectionately called VIDA, the Virginia Information Technology Agency, was a place where we were able to attract real talent. Because they were part of a technologically advancing unleashed organization to drive this. And by the way, we changed the pay scale so that we could actually bring in people who could do these jobs. It's still very hard to hire them. Again, we don't have stock options and we didn't have bonuses. But it gave us a chance to attract talent and then put talent in an organization that was technology oriented.
41:50 Speaker 01 And then we basically projected that capability across state government. And that was critical in order to bring a kind of sophistication to this. Because otherwise, as I said earlier, you end up with these integrators.
42:06 Speaker 01 Telling people what they're gonna do and their counterparts in in contract management unable to really hold them accountable other than to yell and scream at them. And that is no way to run a railroad. And so this is one of our biggest challenges. I believe that's why AI can be a great addition to managing these projects and managing these these big integration needs. Because once again, we're going to be able to augment the skill sets with real capabilities that are moving at the speed of light. And that's really exciting.
42:47 Auren Hoffman? Now, you had a ton of successes, Governor, a lot of accomplishments. What is the one thing you wish you were able to accomplish that kind of keeps you up at night? Oh, I wish I was able to get this over the line, but I was not able to do it.
43:01 Speaker 01 Well, unfortunately, there's not one. And part of part of my experience, particularly during a four year period where we always had divided government, was that we did an enormous amount through executive effort, setting objectives, building business plans, and redefining the way the executive branch delivers. And we did a ton of that.
43:26 Auren Hoffman? And those can get undone by the next governor or something.
43:29 Speaker 01 And they can get undone in a variety of ways. And not all of them require executive orders. Some of them do, but most of them don't. It's just the way we do things. And if someone isn't demanding the same kinds of operational excellence, then it's going to wither on the vine and we're going to revert back to, we'll watch Virginia revert back to to bad management. But with that said, I constantly believe that the hyper-partisanship sometimes gets in the way of doing the common sense right thing. And let me just take, let me just take economic development. At the heart of a state and its success is its ability to grow opportunity, to bring
44:14 Speaker 01 companies that Are going to invest to grow jobs, to build supply chains that that are multipliers to the dollar that any big company invests. And in order to do that, you've got to build, of course, all the building blocks. You've got to have great education. You've got to have sites that are ready. You have to have, you have to have talent, training and development that's focused on the right places. You have to have the right organization to go get them. And we overhauled how we did all of that. But you also have to have an environment that people want to work and live in. And I firmly believe that government that can run surplus after surplus after surplus, like we did in Virginia, $10 billion of surplus revenue during my four years, which enabled us
44:59 Speaker 01 to have record investment in education and law enforcement and healthcare, I mean, across everything, and still have $9 billion in tax relief, is providing the kind of government that people want. And yet, we need to go ahead and solidify tax reduction. We were able to permanently increase the standard deduction. We doubled it. We were able to remove the grocery tax at the state level. We were able to eliminate taxes on our veterans, retirement up to $40,000. These are great, great, great things. But rates have to come down. Rates have to come down for all Virginians, because we're competing every day. Income tax rates have to come down.
45:43 Auren Hoffman? Yeah, so because so many of these like super talented people are moving to Tennessee, they're moving to Texas, they're moving to Florida, they're moving to the zero tax, even even places like Pennsylvania, which is a lot lower tax. Now, in the in the in the DC area, Virginia is definitely the lower one. It's a lot lower than DC. It's a lot lower than Maryland. But it has a lot of competition.
46:06 Speaker 01 It does. And and I think this is something that not everybody fully appreciates, particularly a lot of elected leaders at the state level, which is we compete every day. We compete for families. We compete for businesses. We compete for jobs. And if you want to compete, you better compete to win. And if you've got a suboptimal offering, higher taxes, more regulations, bad for business laws, you're gonna lose. And they're gonna go to Tennessee, North Carolina, South Carolina, Georgia, Florida, Texas. I mean, this is the SEC in economic development. I mean, these guys, these guys are winning everything. I mean, there are basically 10 states in the
46:47 Speaker 01 United States of America that are driving the vast majority of job growth, driving the vast majority of economic growth. And by the way, those are the states that are getting the vast majority of population movements. And so you're either one of those states, or you're not. And that's why we need to make sure that we're competing. And when we can, when we can run a state like we did that provides surplus revenue every year, we should permanently reduce income taxes. A very particular Virginia thing is we've got to work to get rid of this car tax in the Commonwealth of Virginia. We've just got to get it done.
47:25 Auren Hoffman? Very expensive, actually, the car tax.
47:27 Speaker 01 Expensive and it drives.
47:28 Auren Hoffman? That was the one thing I noticed when I moved here. I didn't know about that. I was like, oh, wow, I'm paying this big car tax. It's kind of interesting. And it's quite regressive, too.
47:35 Speaker 01 Yeah, and I had, I had every year proposals to provide substantial car tax relief. And we should, because, again, someone moves here and they have a choice. They can go to Tennessee, or North Carolina, or someplace else, and have great jobs, and they don't have a car tax, they don't have income tax, or a lower income tax, they actually have lower regulations for their business. And that is all the kind of decision criteria that goes into either having a winning state or a losing state. What I worry about right now, and I don't, I'm not gonna be hyper political, but unfortunately, the new administration
48:14 Speaker 01 is not maintaining the business-friendly profile that we had. And that's already starting to hurt. And it just shows you that this can flip on a dime, where we had, we had the most business-friendly state in America, we had $156 billion of capital investment that came to the state while I was, while I was governor, we had record job growth, and as a result, we had record revenue, and 10 billion of it was surplus. And that can turn on a dime with bad policy decisions. And, and that's why I constantly, constantly reminding everybody, we've got to compete every day in every way we can, in order for Virginia to win.
48:54 Auren Hoffman? You were CEO of one of the most important companies. Then you were governor of one of the most important states. You're still a very young guy, still in your 50s. How, what is the next act? Like, how do you think about that as you're kind of like thinking about your arc?
49:12 Speaker 01 Well, I don't spend a lot of time worrying or thinking about it, to be honest. My, my time as governor was literally the, the most purposeful I've ever felt in my whole life. You know, I've said many times, other than my faith and my marriage and my kids, you know, this was a time that I felt like we were contributing every single day, seven days a week. I got out of bed with a, with just an absolute spring in my step. And that's really, really, really a moment of encouragement for other business people to get into public service. But it also reminds me that if there are opportunities to continue to serve, I am and I will.
49:55 Speaker 01 Listen, I'm, I'm a team player, big time. And right now, we're working hard on this redistricting amendment and asking people to vote no. I'll work hard this year in order to support Speaker Johnson and Leader Thune in their efforts to, I think critically, maintain our majorities so that we can continue to bring the, the legislative common sense that they're bringing. But, you know, for that, that's the 2026 program. I'm also involved in some, some business things and investing again, and that's really fun. And my whole purpose here is to, is to work on things that matter, to work on things that have impact. And that's what I'm going to continue to do.
50:39 Speaker 01 But I tell you what, anybody out there who is thinking that they might want to get into public service, I'd, I'd encourage you first, talk to your family and particularly your spouse, but I'd encourage you to do it because come on in, the water is fine.
50:52 Auren Hoffman? And I mean, so many people I know that have thought about it and maybe did some investigation, like it's tough. There's, people go after your character. They may even go after your spouse and your family. It's a hard knuckle sport. And it's unlike anything else that's out there. And so so many people make the decision not to do it, but you have a very sunny disposition, which you don't always see in politics. It just seems like you are very much encouraging more people to go into the political life.
51:24 Speaker 01 Yeah, I am. I'm not I'm not trying to sugarcoat the challenges because they're real. But it's worth it. It's worth it. Listen, I stepped out of Carlisle and just made a clean break and committed myself to do whatever I could do in order to run a campaign that would be effective. We were incredibly blessed and won. And then we served for four years with everything we had, everything we had for four years. And my wife was absolutely amazing. I just think she was such an extraordinary first lady, championing fighting fentanyl and championing opportunities for women and girls and and championing behavioral health as
52:07 Speaker 01 as an area to drive to that's not a stigma, but it's a moment that we have to come come and meet people where they are. I mean, it was just awesome to see her do her work. And I just, once again, firmly believe that that this is what we are ultimately called to do, which is serve one another. Yes, there are some really tough aspects to it. It's it's nasty business, and I wish it wasn't, but it is. But that is far, far, far outweighed by the benefits. And I think the purpose of serving.
52:38 Auren Hoffman? Now, last question we ask all of our guests, what conventional wisdom or advice do you think is generally bad advice?
52:44 Speaker 01 Today, we have we have found ourselves in this this moment where we are stuck where we are. And there is real resistance to change. And a lot of that is because there's fear. There's fear. And so I am constantly telling everybody, run to the light.
53:04 Speaker 01 Do the, do the problem solving. Get into the fact full zone, but don't reject change out of fear. Let's make sure we understand with great facts where we're going and how we get there.
53:20 Auren Hoffman? And how do you do, because as humans, like we, I mean, we are afraid of change usually. Most humans are, that seems like a natural thing. It's scary change, even though change can, can often be good. How would you advise us to, or how would you devise a, a up and coming person to do that?
53:38 Speaker 01 But far more conversation and engagement and be part of it. And, and I think oftentimes we have change imposed upon us. And I do think that's part of the reason why there's so much resistance. And that's why we have to engage. And I want to go back to something we talked about earlier, which is, which is engaging with your communities, engaging with your workforce, engaging with your government officials is hugely important. And doing that while being fully informed allows you to be incredibly impactful and will help people make really good decisions.
54:19 Speaker 01 Part of our big challenge today is, I mean, I know life is hugely busy. And therefore everyone tries to synthesize down to the least, uh, the, the least amount of words or just a video, everything that's important. And I'm just encouraging everybody, um, do a little more work. Dig in, understand the opposing views, ask the question. I ask it all the time and every meeting. If someone is against this, why are they against it? And do their arguments, are they valid? And that is part of, I think, filling up the fact free zone and getting into the fact full zone. So that we as fully informed citizens can do what this country has enabled us to do,
55:03 Speaker 01 which is to be fully engaged. And, and that is what makes America the greatest country on the earth. I mean, this is the foundation of this nation, which is, which is a government that's of, for and by the people. And therefore we have to be fully engaged in order to play our part.
55:19 Auren Hoffman? When I was growing up, there was the saying, all politics is local. And it seems today, all politics is national. In some cases, all politics may even be international. Like, it's kind of moved up the stack in terms of like, how people perceive it. They follow the national stuff way more than they follow the local things. Most people don't know who their local... They might not even know who their mayor is, or their city councilperson, or those types of things. But they may be know like, literally everything tick by tick that our national politicians are doing. How do we get more involved if everything is so focused on the national?
55:56 Speaker 01 You have to make the effort. Because it's easy to be intellectually engaged in national, international. And it is harder to be engaged in local politics. And yet, I so fully agree that local politics, local decisions, local policies drive so much. You know, at the end of the day, the federal government sends a lot of money to the states, who in turn, send it to the localities. And decisions around the education of your children, the public safety in your community, the application of the behavioral health system in order to get people to help when
56:40 Speaker 01 and where they need it, which is now. All of those decisions are being made at the local and state level. And therefore, they are going to have a huge impact on your life. And therefore, I think that's warranted and demanded that people get more involved in what's happened locally.
56:56 Auren Hoffman? All right, this has been amazing. Thank you, Governor Glenn Youngkin, for joining us on Summation. This has been a super, super interesting. Really appreciate it.
57:04 Speaker 01 Great, thank you, and I just wish you a blessed day. And let's drive to it, as opposed to run away from it.
57:10 Auren Hoffman? One more thing before we go. I read a blog called Summation. It's the same as this podcast. The blog is about non-obvious idea sharing on business, talent, data, longevity, and random contrarian takes. If you like the conversations on this show, you'll probably like the blog. It's free. New content comes out twice a month. You could subscribe at orin.substack.com. That's orin.substack.com.
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