Foreign states — including China, Russia, and Saudi Arabia — procure intellectual property (IP) developed in America via venture capital (VC) operations, explained entrepreneur Jim Phillips, CEO of NANOMECH and founder of QuSHELL, in a Friday interview on SiriusXM’s Breitbart News Tonight with hosts Rebecca Mansour and special guest host Rick Manning.
Manning introduced Philips as a personal friend, listing some of his professional history, saying, “[Jim Phillips] was involved in an executive or founding role in places like Motorola Skytel, a whole variety of different companies that were at the cutting edge of technology at the time. He’s credited with being instrumental in launching things like instant messaging, cable modems, PCS fixed cellular, [and] machine-to-machine-to-machine communications.”
The rate of technological innovation is accelerating exponentially, explained Phillips.
“It’s a great time to be alive,” Phillips said. “Technology has advanced so much. I would say it’s probably going to go down as the ‘Machine Century.’ … I’d recommend everybody get into some type of STEM education, it’s going to be incredibly important over the next 50 [and] 100 years. We’ve got to realize that inventions over this past century — the chips, software, storage, especially the Internet — have created an accelerated innovation revolution like we’ve never seen before.”
Phillips added, “More is going to be invented in the next five years than in the history of mankind, and that’s going to compound. That’s just going to continue to happen. So, while it’s a great time to be alive, we’re also — as a country — incredibly vulnerable right now. We’re at war like we’ve never been. It’s just not bombs. People don’t see it. We have a thing called cyberwarfare with a country called China and other countries that’s just phenomenal.”
“We have competitors [and] adversaries like China and Russia,” continued Phillips, “and they are dying to get into the lead. China has said they want to take over America. Right now, they’re growing three times faster than we are. Before long, their GDP will be greater than ours, and people can’t even fathom what that means [for the future]. To that extent, we have to protect our intellectual property. People don’t realize … 60 to 65 percent of the GDP valuation is based on intellectual property. We’re having it stolen, just non-stop. You hear about it in the news, but you don’t hear a lot about how to prevent it.”
“In one of my companies, for instance, I walk in, [the] FBI’s all over, and they say, ‘You’re the second most-hit firewall in the United States by China,'” recalled Phillips. “I didn’t even know it, and they said, ‘By the way, we’re going to have problems even protecting you. You’re going to have to go into logbooks to protect your science and your technology.”
China employs tens of thousands of hackers as part of its mission to displace the United States and broader West, said Phillips.
“[FBI told me] they’ve got 40,000 to 50,000 armed — literally — in-uniform hackers that are coming up against you,” stated Phillips, “and there are other countries out there, too.”
“Tech transfer commercialization,” explained Phillips, is a term describing foreign acquisition of IP — either via theft or procurement — originally owned or held by American individuals or businesses. “It’s $600 billion to a trillion dollars a year we’re losing as a country,” said Philips of America’s IP losses. “The companies that are suffering the most are not these huge companies that have incredible firewalls and [security] systems, but they’re the ones that create 90 percent of jobs in America: small companies. And these companies don’t necessarily have the funds to create these triple-firewalls and things like that to stop all this IP from being taken.”
Technological innovations developed by universities and associated research laboratories are also being targeted by China and other foreign states for IP theft, Phillips said, and continued, “America innovates. China steals manufacturers and monetizes, and you’re not seeing the manufacturing in the United States. We’ve lost over 150,000 manufacturers just in the last few years.”
China also steals technology not yet patented by American developers, Phillips added. “China is going to patent your technology, America’s technology, the taxpayer’s technology, before we even get a chance to do that. So we’re losing all this through both theft and cyberwarfare, and through our tech transfer commercialization systems which are … very weak.”
Phillips echoed retired Air Force Brig. Gen. Robert Spalding’s call for a nationalized industrial policy involving investments in research and development to protect domestic innovations from foreign adversaries.
“Great projects and great programs can’t find federal funding,” lamented Phillips, “but we’re up against huge countries that are much bigger than we are and have much more money than we [have], that have state-run companies. So, we invent solar [power technology], and the next thing you know, they own solar [power technology] because they’ll put twenty billion [dollars] against maybe what comes to a few hundred million [dollars], over here. We don’t want to be state-owned companies, but at the end of the day we’re going to have to have public-private partnerships. We’re going to have to have ways to get money to our incredible innovations that are coming down and get them tech transferred and commercialized as fast as possible.”
Phillips continued, “We invented electric cars and lithium-ion [technology], all that, and it’s all gone. We’re buying it now from the Chinese even though we invented it. And they even end up getting our patents on these things, so it’s really a war. It’s a terrible situation. We have billions and trillions and stake, and most importantly, our leadership as the lead democratic nation in the world is at stake. We have to move very, very fast.”
Foreign states deploy venture capital to acquire American innovations, concluded Phillips. “It’s mostly international companies, and if they don’t invest on the front-end, they come in and they come in and they take over the companies. … We’re letting our best manufacturers literally be consumed, one way or the other, even through the VC system. I love venture capital, but VCs, about 60-75 percent of VCs are owned now by Russia, China, Saudi Arabia. It’s incredible what’s happened just over the last ten years. We’ve got to stop that. … Saudi Arabia is now the largest single funding source for U.S. start-ups.”
“You think you’ve got an American investor or a VC … and the next thing you know, you’ve got a Russian on your board or perhaps a proxy from China or wherever,” Phillips warned. “If they can’t steal it, they try to invade, and they try to invade through these manufacturers. I’ve seen it first-hand. There are a lot of ways — Jason Bourne-type ways — where they get into these manufacturers — our best manufacturers.”
The government “must do more” to stop foreign acquisition of U.S.-based IP, advised Phillips, highlighting the role of the Committee on Foreign Investment in the United States (CFIUS) in protecting America’s national interest in this dimension.
Breitbart News Tonight broadcasts live on SiriusXM Patriot channel 125 weeknights from 9:00 p.m. to midnight Eastern or 6:00 p.m. to 9:00 p.m. Pacific.
Follow Robert Kraychik on Twitter @rkraychik.