Carly Fiorina

Interview With Senate Candidate Carly Fiorina: "The Nation With The Best Brain Power Wins"

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On Friday, I caught up with Carly Fiorina by phone for 30 minutes while she was in between stump speeches in her campaign for U.S. Senate for the state of California. We covered a lot of ground, including the new competition in the Republican primary from Tom Campbell who recently bowed out of the governor’s race, the need to cut spending, grow the economy, rethink government contracting, China, H1B visas, the burdens of Sarbanes-Oxley on small companies, and how technology can help women in the workforce. “In this day and age where it’s all about brain power,” says Fiorina, “the nation with the best brain power wins.”

The last time we interviewed her, she was John McCain’s “Victory Chairman” (a prematurely presumptuous title). Even though she is behind in the polls right now, she is very confident she can win the primary and ultimately knock Democrat Barbara Boxer out of the Senate. She talks a lot about cutting government spending. One good idea she proposes: “Let’s put every agency budget up on the internet for everybody to see. People would be outraged at how their money is being spent.”

Fiorina also thinks the Sarbanes-Oxley financial rules for publicly traded companies need to be revisited: “I think Sarbanes-Oxley is an example of the dangers of a rush to legislation in an emotional moment. . . . I absolutely believe that new businesses, smaller businesses shouldn’t have to comply with the full scope of Sarbanes-Oxley, and I think there’s no question that Sarbanes-Oxley has had a chilling effect on companies’ decisions to list here as opposed to perhaps listing on other exchanges around the world

You can listen to the entire interview or read the transcript below:

Transcript courtesy of PhoneTag

Mr. ERICK SCHONFELD (Co-editor, TechCrunch): OK, great. Erick Schonfeld with TechCrunch and I’m speaking with Carly Fiorina, who is running for Senate in the State of California. And as many of our readers know, she was also the CEO of Hewlett-Packard for a long time. Carly, welcome to TechCrunch.

Ms. CARLY FIORINA (Former CEO, Hewlett-Packard): Thank you, Erick. It’s great to be with you.

Mr. SCHONFELD: So, let’s just talk a little bit about what’s been happening in the race just the past few days. A new entrant has come in, Tom Campbell, who was running for governor, decided not to run for governor, and now he’s running against you for the Republican primary in the Senate. How is that shaking things up?

Ms. FIORINA: Well, it certainly doesn’t change our strategy. We’re going to continue to talk to the voters of California about the issues they care about most, which are jobs and out of control federal spending, and stay focused on Barbara Boxer’s record. It doesn’t change the fact that I’m the strongest candidate who can win both the primary and the general. Tom Campbell certainly has high name ID because he’s run for so many offices so many times. And I think, you know, Republican primary voters will be interested to learn some of his positions like, for example, the fact that he believes the way to close the California budget deficit is to raise the gasoline tax by 32 cents a gallon.

Mr. SCHONFELD: And the way that you believe to close the budget deficit is what?

Ms. FIORINA: Cut spending. You know, government bureaucrats and professional career politicians always believe that the way to close a budget deficit is to tax more. And they come up with these terribly difficult choices like, if we don’t tax people more, we have to cut teachers or cut firemen. The truth is the one thing they will never consider is actually cutting spending. And there’s plenty of spending to be cut. I think it’s what voters are angry about because businesses and families cut their spending all the time in tough times.

Mr. SCHONFELD: Mm hmm.
Ms. FIORINA: So, the way to get the deficit under control at a national level is to do two things: grow the economy and cut spending.

Mr. SCHONFELD: OK. Let’s deal with those one at a time. How do you propose to do both of those things maybe in a way that the career politicians haven’t thought about or it’s in their DNA to do?

Ms. FIORINA: Well, let’s start with cutting spending. Let me just give you a very common sense argument. If you have a line of business – I know this as a CEO – or if you have a teenager – I know this as a parent – who have a spending problem, what do you do? You quit giving them money. So, the first thing we need to do is stop raising taxes, whatever they are. And that’s why I signed the taxpayer protection pledge the day I announced my candidacy. We have to have the discipline to say “No” and “No” seems to be a word that professional politicians don’t use very often. No, you don’t get any more of our money.

Secondly, you have to begin to look deeply at how the money is currently being spent. Again, what I know from the real world, a world that maybe professional politicians have forgotten, in the real world, if there’s a billion dollars worth of spending that no one is accountable for, no one scrutinizes, that no one is responsible for ensuring that every dollar is spent wisely and well, then there’s hundreds of millions of dollars of waste. And so, we have to have the courage, the political courage and the will to say, we’re going to look at every dollar. And we’re going to determine whether that dollar is being spent wisely and well, and in fact, there’s half a trillion dollars worth of well-documented waste and abuse in the federal budget right now that no one is going after. In a way, I guess, I would say, a freeze that starts next year on a very tiny portion of the budget, which President Obama announced the other night, simply isn’t a serious effort. We ought to declare that federal spending and federal budgets need to be reduced, not we’re just going to freeze them in place after a historic increase was instituted in 2009.

Mr. SCHONFELD: Right. Well, let me throw out an idea at you. You know, one of the issues of spending is just the way the government contracts are given out and the whole process that’s around that. We recently ran an op-ed by a business school professor who suggested that just in the State of California, a lot of the IT projects could be done in a fraction of the cost if it was opened up to, you know, web entrepreneurs as opposed to some of the more traditional contractors that do government IT. And that same idea could be applied to the federal government as well. I was wondering, what do you think about this? You know, for instance, the State of California, I think, has a payment processing system that they put out the contract for $50 million and we had founders and CEOs in comments saying that, I’d do that for five million.

Ms. FIORINA: Yeah. Well, it’s a great idea. And it’s an example of the fact that we need to use technology much more broadly and more smartly in the federal government, and I do think that there are many politicians who really don’t understand technology. They don’t understand its power. And so, we’re trapped by these bureaucratic rules that have been in existence for a really long time. And we’re not taking advantage of the innovation that has come out of America. I embrace that idea. I also embrace the idea of, you know, let’s start with something really basic. Let’s put every agency budget up on the internet for everybody to see. People would be outraged at how their money is being spent. Of course, we ought to be using technology aggressively to both hold government more accountable and to make government more efficient.

Mr. SCHONFELD: Alright. Isn’t that being proposed or already being done, all these transparency initiatives that are going on in federal government or by the U.S. CIO currently?

Ms. FIORINA: Well, you know, not really. I mean, you may remember, there was a kerfuffle over the healthcare bill.

Mr. SCHONFELD: Mm hmm.

Ms. FIORINA: And folks said very reasonably, gee, people would really like to know what’s in that bill. And there was a discussion. Oh, you know, it’s going to take three weeks to upload it, which is ridiculous. Nobody understood the technology clearly. Of course, people ought to see that healthcare bill. You know, we permit comments by special interest groups by putting proposed regulation or legislation up on the internet or – see, why shouldn’t we do that with legislation?

Mr. SCHONFELD: Right.
Ms. FIORINA: Or an agency budget that’s spending American taxpayer dollars?

Mr. SCHONFELD: Right. Let me go through a few issues that I think are near and dear to the hearts of our readers. One that has been on the news lately is China and, with Google’s recent reevaluation of their, whether they’re going to continue operations in China or not, it sure raises a whole host of issues about whether companies, especially technology companies should continue to operate under the off auspices of that government when they’re perhaps helping with their censorship or even in some cases, like the case with Yahoo! a few years back where information they provided the government ended up with dissidents going to jail. So, what’s your position on how technology companies should engage or not engage with China and what should the government’s position be in supporting that?

Ms. FIORINA: Well, I want to separate two issues. One is the issue of censorship. But the other issue which is equally troubling is China’s ongoing and aggressive pirating of technology companies IP. They – and by the way, aggressive hacking of all kinds of databases in this country. Both are serious issues. China, of course, as a signatory of the WPO has an obligation to protect a company’s intellectual property. And in many real cases, it has not stepped up to that obligation. The Google case raises not only the issues of censorship but it also laid this – it highlighted the fact that China is relatively routinely engaging in hacking and the pirating of intellectual property. I believe that technology companies and the federal government have to be extremely aggressive with China about highlighting both sets of abuses and beginning serious conversations with China about how to end those abuses. But I would also say that realistically, China will respond much more effectively to a commercial discussion than they will to a human rights discussion. So, while Secretary Clinton is morally justified in pointing out the human rights violations, I think it will be more effective for the U.S. government and technology companies to engage in the commercial conversation about China’s continued flaunting of their obligations to protect intellectual property and the aggressive posture on our part to begin to prosecute and highlight their pirating of intellectual property.

Mr. SCHONFELD: Right. But once you – apparently, right, Google has been in China for years and you would think that they’ve been having those discussions and they came to a conclusion that those discussions were going nowhere and they had no other choice but to exit. So, I guess the question is talk gets you so far, but if the Chinese government doesn’t reciprocate on a commercial basis, then what do you do?

Ms. FIORINA: Yeah. See, I’m – well, I guess what I’m suggesting is that I am not sure that we are having a – I’m not sure that – let me rephrase that. I have seen no evidence that the administration or the federal government is engaged in concert with technology companies in having a commercial conversation about the pirating of intellectual property. And Hillary Clinton’s position that she took recently on this issue really focused on the human rights aspects of it only. And that is a conversation that’s unlikely to be effective with the Chinese government because they are not influenced by our view on human rights. They’re influenced by their assessment of their commercial self-interest.

Mr. SCHONFELD: All right. Let’s move on to another topic altogether, Sarbanes-Oxley. Did it go too far?

Ms. FIORINA: Erick, I’m really sorry. We’re going through a bad cell spot here and I can’t hear your (unintelligible).

Mr. SCHONFELD: I want to talk about Sarbanes-Oxley and whether it went too far and whether it is acting as a dampener on – especially on small growth companies, their willingness to go public these days. Or is that behind us and everyone sort of understands the new rules and it’s just the new kind of cost of doing business?

Ms. FIORINA: You know, I think Sarbanes-Oxley is an example of the dangers of a rush to legislation in an emotional moment. You know, as I recall, Sarbanes-Oxley passed 99 to 1 or something, and that would certainly qualify as the emotional moment. I actually think that for very large companies, Sarbanes-Oxley did some important things. It focused boards on understanding a company’s processes.

Mr. SCHONFELD: Mm hmm.

Ms. FIORINA: And I think there’s merit in that. But, one rule just doesn’t fit all, and in this rush, Sarbanes-Oxley to your point has been a applied broadly to every single public company. You know, Hewlett-Packard can afford to have their legal and accounting bills quadruple, which is basically what happened, to try and comply with Sarbanes-Oxley. But smaller companies can’t and so I absolutely believe that new businesses, smaller businesses shouldn’t have to comply with the full scope of Sarbanes-Oxley, and I think there’s no question that Sarbanes-Oxley has had a chilling effect on companies’ decisions to list here as opposed to perhaps listing on other exchanges around the world. So I think it’s got to be revisited. Is it a complete evil? No. But was it too broad, too intrusive for every single circumstance and every single company? Yes.

Mr. SCHONFELD: OK. What about – let’s move to immigration policy and the whole idea of H1B Visas and the quotas on their – many in Silicon Valley would like to see the H1B Visa quotas increased because they recruit a lot from countries like India and others where they get a lot of talent, as you know. And then there’s this whole idea also, it’s been floated, of a founder’s visa that will be a separate visa for people from other countries who come here to start companies, which would be a separate pool apart from the H1B Visa. What do you think about these ideas?

Ms. FIORINA: Well, I think it is always good to attract hardworking people from other countries to come here to build their dreams. I mean, this is, after all, a country that has benefited enormously from being the place people want to come. And, of course, we should make it – we should be welcoming and make it easier for tech entrepreneurs or for legal immigrants of any kind to come to this country temporarily on a visa or permanently as legal immigrants. It’s to our advantage. And the reality is that even if we completely fixed our education system, which is, of course, a huge priority and we’re falling further and further behind in basic skills like Math and Science and Engineering, even if we fixed that situation, we still will benefit from and need people with the ambition and the skills to contribute to our key industries.

Mr. SCHONFELD: Right. So, two more questions and I know you’ve got to go. But, one is just sort of the whole standoff in Congress between the Democrats and the Republicans. You know, one thing I think that did resonate with a lot of people from the State of the Union was when Obama said that people want things done, right? And that gridlock – he even said that the gridlock really isn’t popular on either side. But, yeah, that seems to be what’s happening, in the Senate particularly – especially with the numbers so close. So, even if you have all these great ideas, how are you going to resist the pressure, if you get elected, not to sort of toe the party line when there are things that can actually be done? Or what do you propose to do to end the gridlock and get legislation passed?

Ms. FIORINA: Well, first, if I am fortunate enough to be elected to the U.S. Senate, it won’t be a party that will have elected me. It will be the people of California. And the people of California expect me to get something done on their behalf. So, I think it starts with remembering who sent you to the job. Secondly, one of the absolute very first things I will do is sit down with Senator Diane Feinstein and talk about those areas where we can find common ground and where we can get something done for the people of California. And there are – I am well-aware because I know her well – places where we have common ground. For example, Senator Feinstein believes as I do that the terror trials ought to move out of New York. I think it is one of the things that Barbara Boxer is most notorious for. Barbara Boxer is an ideologue. Her voting record is one of someone who is ideologically driven and purely partisan and it’s why she hasn’t gotten anything done on behalf of the people of California. I’m not a career politician, I’m not an ideologue although I have core beliefs that are very important and that I hold strongly, and I’m being sent to Washington to get something done on behalf of the people of California not on behalf of a particular party or a particular partisan point of view.

Mr. SCHONFELD: Mm hmm. OK, then finally, a question about your use of social media in this campaign. I just took a quick look at your Facebook page and your Twitter account. Seems like you have a lot more followers on Twitter, 234,000, versus Facebook, which is something around 3,000 or so fans. Are you focusing more on Twitter? Where are you getting the better – most bank for your buck?

Ms. FIORINA: Well, you know, I think those numbers may be more a reflection of how people are using the technology increasingly. We’ve seen really a pretty phenomenal growth, and our connection with people through these social networking sites and certainly Twitter has been hugely successful for us. So, I don’t think it’s a question of us focusing on one more than the other. I think it’s a question of how people tend to be attracted to sort of the short kinds of conversations that they see on Twitter. So that may be – I guess what I’m saying not very well is I think it’s more about the users and the voters than it is about us and our campaign. We want to reach out and use as many different mediums as possible and use technology aggressively and differently in some cases than it has been used in the past to try and reach as many people as possible.

Mr. SCHONFELD: Right. I put out a question 10 minutes before we started that I was going to be talking to you and asked if anyone has any questions for you. One woman on Twitter wants to know – she said, “Ask her why she thinks young women should be involved with technology.”

Ms. FIORINA: Well, what a great question. You know, I believe that technology is the great leveler. Technology permits anybody to play. And in some ways, I think technology – it’s not only a great tool for democratization, but it’s a great tool for eliminating prejudice and advancing meritocracies. So, I think women should be attracted to it for that reason. I also think that – and this applies to many other folks besides women, but I think technology now is a great community organizing building tool. You can find lots of people like you through technology, and women in particular like communities. And so, you know this, but stay-at-home moms, for example, are one of the more aggressive users of technology because of the communities that they find and form using technology.

Mr. SCHONFELD: Right. Which brings me to a question my wife asked. She wants to know what’s your opinion on what the government can or should do to make it easier for women with children to have more flexible options in terms of going back to work. And her point was really that – you have a job and then you have a child and then you go back to your job after a year or two and then you have these choices that are like, OK, I can work and not be with my kid and basically, I’m just paying the nanny for the child care, you know, or if I stay out of the work force for a year, then my job is gone and there is this untapped talent pool of women who are very talented and could really help the economy, but it’s just not worth it for them.

Ms. FIORINA: Yeah. Well, in fact, it’s such a great question because technology enables any job to be done anywhere at anytime and enables anybody to contribute. So, for example, technology, I believe, should be embraced aggressively by companies to permit flex time, to permit job sharing. When I was at Hewlett-Packard, we pushed forward a whole bunch of pretty pioneering flex time and job sharing programs because technology let us do it. So it’s totally possible to contribute meaningfully to a group meeting while a mom is on the soccer field watching her kid play. And in this day and age where it’s all about brain power, the nation with the best brain power wins, which is why education is so important. The company with the most innovative and best brain power wins, so why not use technology to bring all this additional brain power to bare and do it in a way that works for women who have children. It’s all possible with technology. You know…

Mr. SCHONFELD: Does the government have a role in making – in creating incentives for companies to adopt that kind of policy?

Ms. FIORINA: Well, I certainly think that government has a role in making sure that broadband is deployed aggressively and ubiquitously. I don’t think government should get into the business of legislating how companies deal with this issue because I think regulation and legislation always move so much more slowly than technology, that you create more problems with that approach than you solve. But if government can help motivate the broadband – the aggressive deployment of broadband so that technology is available and companies focus on their enlightened self-interest, which is to tap as much talent as possible, I think there’s a nexus there that can bring a lot of women into the work force in a productive and fun way.

Mr. SCHONFELD: OK. All right, well, this has been a great discussion. Is there anything we haven’t had a chance to touch upon that you’d like to share?

Ms. FIORINA: Well, you know, Erick, I hope that there’ll be many other opportunities to chat but unfortunately, I’m like two minutes away from a speech I have to give. So…

Mr. SCHONFELD: OK. OK, well, always a pleasure talking to you and thank you so much for taking the time.

Ms. FIORINA: Not at all. My pleasure as well, Erick. Thank you.

Mr. SCHONFELD: OK, bye.

Ms. FIORINA: Bye-bye.

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