The Clean Network’s Momentum and Secret Sauce

Washington Times headline read “U.S. scored ‘5G trifecta’ in competition with China” The execution of the crucial onshoring of TSMC’s semiconductors, the critical locking down of advanced semiconductors from Huawei and strategic rolling out the innovative Clean Path strategy put Huawei immediately on the defensive. This trifecta of accomplishments served as the launchpad for Krach’s Clean Network team and will safeguard the security of America’s technological assets for years to come.

First, Krach’s team partnered with the Commerce Department to secure an historic announcement from TSMC (Taiwan Semiconductor Manufacturing Company) that it will build the world’s most advanced five-nanometer chip fabrication facility in Arizona. This not only represents the largest onshoring in American history but a quantum leap forward in securing the semiconductor supply chain and 5G security for the United States and its partners. It ensures that the chips powering everything from smartphones, to 5G base stations, to advanced artificial intelligence will be “Made in America.”

The decision by one of the world’s largest manufacturers of semiconductors to build a $12 billion plant in Arizona is a “game-changer” for the U.S. high-tech industry and for national security in the competition against China, according to the Washington Times. The New York Times called a win for the Trump administration, which has called for building up U.S. manufacturing capabilities and has criticized the fragility of a tech supply chain heavily centered in China.

Second, the State Department successfully launched its 5G Clean Path initiative, three weeks prior, which requires all 5G data entering or exiting facilities to transit only through trusted equipment, and never through from untrusted vendors such as Huawei and ZTE. The 5G Trifecta announcement marked the beginning of the Clean Path the roll out to other U.S. federal agencies, companies, and other nations.

Many industry leading companies and countries like Japan, Albania and Taiwan have already adopted the Clean Path and Poland Prime Minister Morawiecki called on all countries and companies, especially the Europeans, to adopt a Clean Path to secure their 5G networks. It is expected that the U.S. Department of Defense will require a Clean Path for its military bases and U.S. Ambassador to NATO Kay Bailey Hutchison has called for a 5G Clean NATO Network with a Clean Path feeding into its military bases.

The genius behind Krach team’s Clean Path stratagem was raising the cost for the telco operators who were contemplating Huawei 5G by creating a critical mass of network traffic from their customers that required that all sources feeding into it had to run on only trusted equipment.

Third, by teaming up with the Commerce Department again Krach’s State Department team succeeded in expanding the Foreign Direct Product Rule to prevent Huawei from dodging U.S. export controls.  Six months before, Senate Democratic Leader Chuck Schumer (D-NY) and Senator Tom Cotton (R-AR) sent a bipartisan letter to President Trump because they were concerned about Commerce Department saying it would issue quite a few licenses to allow U.S. firms to conduct business with Huawei. They were joined on the letter by over a dozen Senators on both sides of the aisle.

This third prong of the 5G Trifecta prevents advanced technology from falling into the hands of Huawei and the Chinese Communist Party. It would block Huawei’s access to advanced semiconductors required for 5G and sophisticated smartphones. It would be so successful that Huawei was forced to sell their smartphone business used with 5G, six months later.

The execution of the crucial onshoring of TSMC’s semiconductors, locking down on Huawei’s advanced semiconductors and the global roll out of the Clean Path stratagem, is why May 15, 2020 will be remembered as the day Huawei was put on the defensive. Because of the 5G Trifecta “the surveillance state” was now back peddling and the Clean Network team was playing offense and would not let go of the ball.

The alignment around the Clean Network is about countries and companies choosing freedom versus authoritarianism. Huawei along with its CCP appendages—like cloud and apps and cables—create the Orwellian big brother state which extends the great one-way China firewall, where data comes in but not out and, reciprocally, propaganda goes out, but the truth doesn’t come in. The full set of Clean Network initiatives includes: 

Clean Carrier: To ensure untrusted People’s Republic of China (PRC) carriers are not connected with telecommunications networks. Such companies pose a danger to national security and should not provide international telecommunications services to and from the United States.

Clean Store: To remove untrusted applications from mobile app stores. PRC apps threaten privacy, proliferate viruses, and disinformation. Personal and business information must be protected from exploitation and theft for the CCP’s benefit. India has already banned 106 Chinese apps.

Clean Apps: To prevent untrusted PRC smartphone manufacturers from pre-installing or downloading trusted applications on their apps store. Huawei is trading on the reputations of leading companies and should remove their apps from Huawei’s store to ensure not partnering with a human rights abuser.

Clean Cloud: To prevent U.S. citizens’ most sensitive personal information and our businesses’ most valuable intellectual property from being stored and processed on cloud-based systems accessible to our foreign adversaries through companies such as Alibaba, Baidu, and Tencent.

Clean Cable: To ensure the undersea cables connecting our country to the global internet are not subverted for intelligence gathering by the PRC at hyper scale. We will also work with foreign partners to ensure that undersea cables around the world aren’t similarly subject to compromise.

Clean Path: To secure data traveling on 5G networks into diplomatic facilities overseas and ensure it only passes through clean equipment from trusted providers. This protects against access by Chinese companies, which are obliged to hand over data and information to the state without any controls.

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  On September 30, 2020, Krach and EU Commissioner Thierry Breton issued a joint statement on the synergies between the Clean Network and the EU 5G Clean Toolbox, stating that the Toolbox meets defined criteria for being part of the Clean Network.

• They also sought ways to further advance U.S.-EU digital cooperation and secure technology supply chains. They stated that this is essential to protect peoples’ personal data, companies’ intellectual property, and national security. According to their discussions, both the Clean Network program and the 5G Toolbox share the same goal of developing, deploying, and commercializing 5G networks based on the principles of free competition, transparency, and the rule of law. Under Secretary Keith Krach and Commissioner Thierry Breton urged stakeholders to carefully weigh the long-term impact of allowing “high-risk suppliers” access – directly or indirectly – to their 5G networks when building their telecommunications infrastructure and services.
  
• NATO Deputy Secretary General Mircea Geoana noted that 25 NATO countries have committed to being Clean Countries. He emphasized the strategic importance of having a secure 5G Clean NATO Network, which is non-fractured, because, he said, “the Alliance is only as strong as its weakest link.” He also praised the U.S.-EU joint statement on the synergies between the Clean Network and the EU 5G Clean Toolbox.

In Krach’s efforts to get Germany on board, he started with the importance of Article 1 of German Basic Law which states that, “Human dignity shall be inviolable. To respect and protect it shall be the duty of all state authority.” The German publication, Handelsblatt, emphasizes that the Krach speaks the language of diplomacy, he does not threaten, but appeals to the conscience of the Germans.  He calls Huawei “the backbone of the Chinese police state” and holds the company jointly responsible for the persecution of minorities and critics of the regime. He expressed the hope that Germany would join the Clean Network and once again defend its high standards of trust.

“It’s good news…that Berlin soon will address the security risk posed by the Chinese telecom companies.”

—The Wall Street Journal, 10/4/2020

In his meetings with German executives, he encouraged them to, “learn from our mistakes in American industry.” Krach believes the U.S. gave up a staggering quantity of intellectual property to China, and fell victim to forced technology transfer, theft, deception, intimidation, and financial seduction. This is why I now tell my fellow global CEOs, “Corporate responsibility is national security.”

Krach says that during his 30 years as CEO in Silicon Valley, he has always admired Germany for implementing the top digital trust standards in the world for security, privacy, reliability, and quality. He encouraged German executives to rise up in defense of those standards. The implications on security are enormous as Germany’s economic and personal lives will flow over 5G networks.

Progress was evident as Germany, after initial resistance, committed to implementing the EU 5G Clean Toolbox. Krach reports Germany will be issuing regulations that will result in the exclusion of Huawei in their country, which is Europe’s largest market. Krach feels the tide turned for Germany because of three factors:

First, the European Union’s strong stance on implementing high-risk 5G suppliers stated in the Clean EU 5G Cybersecurity Toolbox provisions for telco operator’s boards of directors.

“Crucial to have a 5G Clean NATO Network which is non-fractured, because the Alliance is only as strong as its weakest link.”

— NATO Deputy Secretary General Geoana, 9/30/2020

Second, NATO’s concerns as reflected by Deputy Secretary General Geoana: “We can’t afford to have a fractured NATO because we need the 5G civilian networks in peacetime and war. We can’t afford to have some (countries) that have trusted vendors and some that have untrusted vendors.”

Third, Germany could see the momentum building around the world for the Clean Network.

Krach was asked in January 2019 before he was nominated as Under Secretary of State and just named The Harvard Business School 2019 Business Leader of the Year for his Transformational Leadership in Business, Technology, Education and Social Causes, how he would describe what a transformational leader is? 

He replied, “Transformational leader” isn’t a title or a credential. It is an array of actions, traits and values aligned to make a positive difference in people’s lives. Transformational leaders are principled, visionary leaders who can dream big dreams, challenge the status quo, motivate and empower diverse teams to tackle difficult challenges that inspire a noble mission to reinvent the future that makes the planet a better place for everyone.” 

According to Krach, “We face big challenges today with technologies changing our world at breakneck speeds and increasingly complex world problems. Democracies are under attack from authoritarian states today than at any other time in modern history. These challenges all cry out for principled, visionary leaders who can mobilize people to dream up innovative solutions and shape the future in ways that will benefit us all.”

This might make it sound like you’ve got to be doing something big to be a transformational leader, and that’s not true. We have big challenges ahead, and we need people to take them on. However, in the end, Krach believes that transformational leadership is for anyone with an honorable mission who wants to make a significant impact. Because everyone has a noble cause burning within them, it’s all about making a difference—a small difference, a big difference, but most importantly, a meaningful difference in other people’s lives.

Harvard Business School’s former faculty chair of Building New Businesses, Bruce Harreld described Keith Krach as “A category kingmaker, building four game-changing companies from robotics to engineering software to e-commerce to e-signature and digital transaction management.”

Krach has always generated significant shareholder value in the companies he built by creating categories based on trust and constructing viral networks. Even right before he went to run economic diplomacy for the United States, he started the Global Mentor Network which has become an overnight success. It looks like he has applied his transformational leadership skills once again. But this time in his role U.S. Under Secretary of State by spearheading another overnight success–the Clean Network.

Krach’s philosophy of building trusted networks has proved successful again and again. Krach used the same approach to build the Ariba Network, the DocuSign Global Trust Network, and the Global Mentor Network.

According to Krach, “We offered open platform solutions and were obsessed with ease of use, trust, growth, ecosystem of partners and market power. It was about being the leader leadership because everybody wants to go with the leader. We also knew, leadership is not defined by size it is defined by momentum. “Most important was to focus on a noble mission—profoundly impacting GDP per capita, while delivering fast, frictionless global commerce and improving the sustainability of our planet.

“The key to solidifying our dominant market leadership positions, we built extensive virtual networks. We followed 4 key principles to maximize viral effects by creating a series of industry, departmental, partner, governmental and international networks built on our open platform that was easy to use and trustworthy.”

The beauty of building a network is that it accelerates your path to leadership and being the leader brings tremendous advantages. It dramatically increases your ability to de-position your competition, to attract extraordinary talent and partners, draw investment, and deliver unprecedented customer value.

Network category creators experience much faster growth and receive much higher valuations from investors than companies bringing only incremental innovations to market. The objective of the game is to be the “Network King”—the company that dominates the market. These companies receive 80% of the resources and market capitalization.