The Morning Download: VC Pioneer Vinod Khosla Says CIOs Are Well Positioned to Lead Technological Change - CIO Journal.

Good morning, CIOs. Well, it happened. The WSJ CIO Network has come and gone, bringing together dozens of speakers and members for a day and a half of discussions about changing technology, digital business, diversity and security. And it would seem that the last several decades of digital disruption are the beginning of something even larger.

“Over the course of 50 years we will completely reinvent society,” said Vinod Khosla, who co-founded Sun Microsystems and later established Khosla Ventures. “In the next 20 years, technology will be about everything … making hamburgers, 3-D printing buildings … There will be opportunity.”

The CIO will be well positioned to capture that opportunity, according to Mr. Khosla. “I am very bullish on the role of the CIO. Technology is driving change and the CIO is best positioned to lead. No one else is qualified,” he said.

Automation will invert the supply chain, according to Mr. Khosla. “We won’t manufacture in China. Robot labor will be $3 an hour and the supply chain will be three days, not six months,” he said. “This will drive inequality. Capitalism will have to change … Education will not solve it. Capitalism will have to adjust to democracy so people are not left behind.”

The Morning Download: VC Pioneer Vinod Khosla Says CIOs Are Well Positioned to Lead Technological Change - CIO Journal.
Alexis Ohanian, right, co-founder of Reddit and Initialized Capital, speaks with The Wall Street Journal’s Steven Rosenbush at the WSJ CIO Network annual meeting in San Francisco, March 6, 2018.
Nikki Ritcher Photography

Alexis Ohanian’s VC firm invests in crypto trading platform. Initialized Capital, the venture-capital firm co-founded by Alexis Ohanian, has led a $2.1 million investment in a startup cryptocurrency trading platform, DDEX. “With blockchain technology evolving rapidly, the challenges facing decentralized exchanges are quickly fading away,” Mr. Ohanian said in a statement. “DDEX now has the team, experience and resources to create a high functioning decentralized exchange at the perfect time.”


The Morning Download: VC Pioneer Vinod Khosla Says CIOs Are Well Positioned to Lead Technological Change - CIO Journal.
Nikki Ritcher Photography


Khosla finds success through failure (and so can CIOs). Not all of Vinod Khosla’s venture bets have panned out. “Without taking a risk, you can’t drive new things,” he said. “You’re going to be resigned to mediocrity.”

Who’s winning the next-gen chip race? How has China become such a formidable competitor? The answer: lots of venture capital and plenty of young, eager talent, including many entrepreneurs, said Winston Ma Wenyan, director of China Investment Corporation. So what does the US need to do to keep up? “Keep on trucking,” said Daniel Goldin, founder and CEO of KnuEdge Inc. “To say we’re going to sit and worry what China is doing and look at the money being spent is of no value in my mind.”

Federal IT playing ‘catch up’ with private sector. The infrastructure and “plumbing” that underlies everything needs to get up to pace with the private sector, said Chris Liddell, assistant to the President and Director of the American Technology Council. The federal government still doesn’t have cloud email in place at every agency, he said.

‘Moon shot’ projects aim to solve problems. Traditional infrastructure development is slow because it moves in a linear way, from feasibility studies, to regulatory compliance, to development and construction, said Rob Lloyd, CEO of Virgin Hyperloop One. The Hyperloop project has moved faster by emphasizing the problem it will solve, he said.

The new arms race. All major countries are probing each other’s digital boundaries, said Mikko Hypponen, chief research officer at F-Secure. “We spent the last 60 years in a nuclear arms race. We’ll spend the next 60 years in a cyber arms race. ”

What’s it like to be married to Serena Williams? Here’s Reddit Co-Founder Alexis Ohanian: “Amazing. It’s really great. It’s very humbling and awesome and I used to delude myself into thinking I was the hardest working person I knew.”

Blockchain will reduce jobs. The cost of trust is evident in New York skyscrapers filled with accountants reconciling one company’s records with another, said Michael Casey, senior advisor, digital currency initiative MIT Media Lab. Blockchain “resolves that challenge,” he said.

AI adoption is like ‘early days of cloud.’ Giant tech firms are currently dominating the AI market, but companies can identify their data needs and what gives them a competitive advantage, said Box Inc. Aaron Levie. Like the early days of cloud computing, he added, many firms make the mistake that they believe they need to build out their own AI capabitiles, including infrastructure, and that can cause delays in implementation.

Everything computes, says HPE CEO. In edge computing, the business advantage isn’t any single thing, said Antonio Neri, president and chief executive of Hewlett Packard Enterprise. “Everything we do in our lives today computes. That’s the reality.”

The cost of quantum. Microsoft Corp. CTO Kevin Scott said we’re still a few years out before IT chiefs are going to be building applications on quantum computers. “They are unbelievably expensive and difficult to maintain,” Mr. Scott said. Maja Matari, professor of computer science and vice dean for research, University of Southern California, said her group spends tens of thousands of dollars per month just to cool it, which most people aren’t too happy about.

Hiring diversity to attract the best talent. Companies need to develop an environment that attracts the best and most diverse talent to compete. “You think about hiring the best people, and that means casting a wide net,” said Joelle Emerson, found and CEO of Paradigm. “Investing in diversity now and having a strategy is going to be very important in the future,” she said.

Firms need to commit to tech. Companies and their IT leaders need to be prepared to commit to technology and innovative capabilities to compete in today’s market, said Ben Fried, chief information officer of Google Inc. “We have to think about an agile organization,” said Vijay Gurbaxani, professor of computer science at the University of California, “and you have to be a leader.”

For complete coverage, see the WSJ CIO Network live blog.


The Morning Download: VC Pioneer Vinod Khosla Says CIOs Are Well Positioned to Lead Technological Change - CIO Journal.
Keith Speers of the U.S. Postal Inspection Service tracked down a scammer who employed 300 phantom accomplices.

The new ID theft: Millions of credit applicants who don’t exist. Synthetic-identity fraud is one of the fastest growing forms of identity theft—and the hardest to spot and combat, the Journal’s Peter Rudegeair and AnnaMaria Andriotis report. Scammers use phony names and unused Social Security numbers to secure debt, a crime that exposes a vulnerability in the U.S.’s credit-checking system. “It seemed too easy.”

BlackBerry brings patent case against Facebook, WhatsApp and Instagram. BlackBerry Ltd. claimed in a lawsuit Tuesday that Facebook Inc. and its WhatsApp and Instagram units have infringed its patents and swiped intellectual property from its BlackBerry Messenger technology, the WSJ’s David George-Cosh reports. In its 117-page court filing in U.S. federal court in Los Angeles, the company says the defendants “creating mobile messaging applications that co-opt BlackBerry’s innovations.”

S&P Global buys startup in artificial-intelligence push. S&P Global Inc. said it will buy technology startup Kensho Technologies—its second investment in the artificial intelligence space this year, the Journal’s Gunjan Banerji reports. The deal is the latest sign of Wall Street embracing AI. Almost one-fifth of banks and financial services companies financed by Greenwich Associates have implemented AI into their businesses, according to an October report by the research firm.

China wants tech darlings to list at home. The Chinese government is considering plans that would allow shares in technology giants such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd. to trade back home. The WSJ’s Chao Deng and Liza Lin report that such a move that could raise the profile of the country’s tightly controlled capital markets.

A pioneer in real estate blockchain emerges in Europe. Lantmäteriet, Sweden’s nearly 400-year-old land mapping and registration authority is likely to become one of the first government organizations to test using blockchain for conducting property sales, the WSJ’s Shefali Anand reports.

New tech centers sprout in Europe. Technology and related companies are fueling 20% of the office space demand in small capital cities like Lisbon, Vilnius in Lithuania and Tallin in Estonia, brokerage firms tell the WSJ’s Shefali Anand. Leasing is equally strong in second-tier cities such as Barcelona, Edinburgh, and Krakow in Poland that are becoming popular in the tech industry for their lower rents and access to tech talent.


Gary Cohn will resign from the White House after 14 months serving as President Donald Trump’s top economic adviser, he said Tuesday. (WSJ)

President Trump defended his planned tariffs following criticism from allies including the European Union. (WSJ)

Smith & Wesson’s parent company said Tuesday that it was wary of adding “smart-gun” technology to its weapons. (WSJ)

Pharmacy chain CVS plans to sell about $44 billion of bonds as soon as Tuesday to help pay for its $69 billion acquisition of health insurer Aetna. (WSJ)

The Morning Download is edited by Tom Loftus and cues up the most important news in business technology every weekday morning. You can get The Morning Download emailed to you each weekday morning by clicking