Chair Emeritus, Caltech Board of Trustees
DAVID ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It is Saturday, October 29th, 2022. I am delighted and privileged to be here with Kent Kresa. Kent, thank you so much for joining me today.
KENT KRESA: Delighted to be here.
ZIERLER: What a great place for us to be in Santa Barbara at a Board retreat, and I'm so happy for this opportunity. Kent, if we can, just to start off, you're involved in so many areas. Currently, now, what are some of the most important affiliations that you have and job titles that you might have currently?
KRESA: I'm on the Caltech Board. I'm a Trustee. I'm an Advisor to MIT's provost for MIT Lincoln Laboratory. I'm Chairman of a committee which does an oversight of Lincoln Laboratory for MIT. I've been doing that for 15 years or so. I was formerly at Lincoln Lab many years ago, but I'm not sure that's the reason I got this assignment, but I do that. I'm still on several for-profit boards. I've been involved in a company that's on the Nasdaq, which is MannKind Corporation, which was originally done by Al Mann, who was a very good friend of mine. He asked me to be on an earlier board, and I was on that. That company was sold. He asked me to get on this one. I did, just because I was a friend, and it's very interesting. Then when he passed away, they asked me to be chairman. I was sort of an extremist at the time. I stayed on. I've been on it way too long. I finally have advised them that I no longer want to be chairman anymore, and I'm struck down, but I'm still on the board, and run one of the committees. I do that. I'm on another board, which is private, which is a very high-tech company that does defense work; a very high number of PhD kind of people; a fascinating technical company with great output, and growing like mad, and just a lot of fun to be involved in. I'm on another board, which came out of my activity with Fluor Corporation. I was on that board for many years. They had bought a small company called NuScale, which is in nuclear energy, a new way to do nuclear energy, a nuclear energy company.
ZIERLER: Is this fusion technology?
KRESA: No, this is light water, but it's with a different kind of generator, which is small and can be produced in a factory, which has the most unique property. It has a very small keep-out range, well within a quarter of a mile. Whereas regular nuclear plants require tens of miles of getting permission or of everybody in the world, including the local jurisdictions, counties, cities, to even be there, and protection and all that, with the great worry about what can happen, this thing will be controlled. All potential problems of any meltdowns are measured within hundreds of feet. Theoretically, if you happen to own a particular piece of land which today has a coal plant on it, you obviously could put one of these on, and totally control it without having to get anybody's permission because it's certified by—and this is now totally certified. The system took $1 billion in 10 years to get through the certification. But it is certified now, and the US government's very behind it and pushing it. This company just went public, and Fluor asked me to hang around the company after I left their board because they wanted to have some senior person look at it for them and just give them a sense that it's still going on. It's been great, and I gave them nothing but positives, and it's worked out 10 years into the process. It's now about to be a real company, and it's on the New York Stock Exchange, and doing well. I'm on that company. Then I'm on a series of other things: the Music Center of Los Angeles, which I've been involved with for many, many years. I'm on the Petersen Automotive board, which is another fun thing that I happen to enjoy.
ZIERLER: What does Petersen do?
KRESA: Are you living in California or not?
ZIERLER: I do, yeah.
KRESA: The Petersen Automotive Museum is considered—
ZIERLER: Oh, yes.
KRESA: —the best auto museum in the world at this point, and it's a fascinating place. I got asked to go on the board, not because I am a car collector, but I knew several of the principal people that were involved in the last evolution of making it really good. I chided all these people that just having a museum for old cars was going to go out of vogue, and that they had to somehow be modern enough to entice next generations to care about what transportation's going to be about, and it had to be about more than old cars. Medium cars and fast cars are things that young people like, so that's one dimension, but also to worry about where is transportation going. How is it going to change? It may actually become flying or it may be other things, but they have to stay modern. They asked me to be on the board to make sure they didn't get themselves—all the people that were principally on the board were into old cars, and love all of that, and collect, and do all that.
ZIERLER: You were going to provide some forward thinking on this?
KRESA: I was going to provide a different thinking, not necessarily forward but to make sure that they kept their eye on the fact that for the museum to be really successful, it has to be current. It has to be something that next generations want to be involved in, or else it'll die with the present generation, with kids getting much less interested in cars, per se. But they're still interested in transportation. They're still interested in getting places. They're still interested in what that future's going to be. That's why I'm on board. It doesn't mean that we are dramatically away from the car business. I've gotten to happen to love some of the old cars as we get into the business, particularly, and I'm interested in the very fast cars there as well. In my history, I was involved with cars a lot when I was involved with GM. What else am I doing now? Philanthropy. I have a general bent that the principal objective is to give back for kids, and to hopefully create the best technology and the best future things to evolve. The difficult thing for new technology is to go through the valley of death from the idea to the evolution of something that could be real, and to try to help in that process. I'm involved in a lot of new start-ups and things of that sort. I stand with all of that.
ZIERLER: Institutionally, what are the partners that you have in the philanthropic world? Who do you work with in order to give and support this kind of work?
KRESA: I'm involved with a start-up firm where we do new starts to mostly universities, a lot at Caltech actually but probably all over the country. We give money mostly to universities, to professors or students at universities. I found that there are subsets of people at universities that really care about this, and that want to somehow get an idea into a product, and to turn it into something. These people are probably the closest manifestation to really get it to happen as opposed to the scientist that just has a great idea, develops a great paper, and so forth, and doesn't really have any interest to take it to the next step to try to make it practical in any sensible way. I'm more interested in seeing things happen and convert, for example, and so to get involved with people that way. It takes a different bent. We have a lot of very entrepreneurial people at Caltech, but the faculty is divided into those that love it and those that have no interest in doing it. The ones that love it, they somehow drive their postdocs and their other people to get involved in the process to make sure that they get IP, that they get enough patents that there's hopefully some protection if it actually starts to work, that it isn't immediately taken over by everybody else and, therefore, they're not going to get any benefit. The world will get benefit, necessarily, but they won't. But the ones that really care, work at it, and get IP. When we look as a group, when we look at funding something, we always try to see, well, which of the people who think about all this, who have enough of the entrepreneurial skills to get it started, who are willing to listen, where they don't have the right people to be willing to give up CEO-ship or leadership or get a chief financial person that can help them put the things together, or get with HR people that can get the people they need, all the things that they don't have necessarily as being a professor to help them be successful, because there is this period that these great ideas just die in rapid fashion because they can't get to the next step. I really enjoy being involved with trying to help that happen, and it's kind of fun. It's fun to see new things potentially happen. I do that with a group. It's called Kairos. You've probably heard of Kairos.
ZIERLER: Yeah, yeah.
KRESA: I'm one of the owners of Kairos, along with—do you know Jim Demetriades at all?
ZIERLER: I know the name, sure.
KRESA: Jim's the guiding light of that. But I have fun. I do that. I stay involved with the cultural aspects of the city. I'm much less involved in any politics.
ZIERLER: That's by design?
KRESA: Yes, it's by design because I don't think I can contribute. There's nothing I can do, and it's getting harder.
ZIERLER: You mean because of how polarized things are?
KRESA: Yes. Things are polarized. I don't know quite how to fix it. I got very involved about 10 years ago trying to help with K-12 education. I was convinced that along with Eli Broad, who was another very good friend, and we were working really hard on the project, on the process. I was involved on the Broad Foundation with him. He put $100 million dollars into the game, and all he got was a black eye. He did wonderful things, and he just got beat up as being a rich man trying to take over education. He was being framed by that by all the unions.
ZIERLER: That was not obviously his motivation at all?
KRESA: No, it was totally not his motivation, but the system took over. There are still some people doing wonderful things, but it's very hard. I've seen a lot of money thrown at this problem, with not a lot of progress. Progress in some schools, and it has worked, and I think we have a lot better idea of what the right processes are, but the political systems, the unions, it isn't going to happen. At least, I don't see how to get it to happen. Rather than spend my last decade or two, whatever I have left, doing things that will do nothing but make me pissed off, I'd rather spend time at things that I enjoy doing, which hopefully will make some value.
ZIERLER: Kent, just at a high level, as you've alluded, you're a very busy man still at a time when you could be retired and not busy at all. What are your motivations, both in philanthropy and in business and in higher education? What gives you such pleasure in providing this advice, and being as involved as you are?
KRESA: I love seeing outputs. I like seeing having some positive thing that will work. This this idea of being able to solve some section of the energy problem, I believe that nuclear energy—I'd love to have fusion. It would be wonderful.
ZIERLER: That's a game changer?
KRESA: Yeah. But I started funding fusion when I was at ARPA 50 years ago, and we were 20 years away.
ZIERLER: It's still 20 years away. [laugh]
KRESA: Today, we're 20 years away. I'm all for people wanting to do that, and when it comes, it's going to be great. It will change, dramatically change the world and everything we need to do. But nuclear power is here. It can be and is absolutely esse…there is no other mechanism that I know that can do it the way nuclear energy can. The systems that we have developed to date do have some serious negative pressures with respect to accidents. The number of accidents are trivial compared to the fear that people have of them.
ZIERLER: Chernobyl looms large?
KRESA: Yeah, I know. But the number of people that are totally—let's take the outside number of 100,000 people. We kill that many in the United States every year on the road. I haven't heard anyone talk about stopping cars, ever.
KRESA: [laugh] Is the energy problem of the world a bigger problem than driving on the street? Yet, the fear is there. People don't want it, and so it's been relegated to the trash pile. This particular thing we're doing is safe, and it's been determined safe. The same criteria that all other nuclear systems have been subjugated to, this system is subjugated to, and everyone agrees it's not a problem. If a 747 full of fuel hits this facility, and blows it up, and it totally melts down, it'll never run again, and it'll be an awful problem. But it'll affect with potential radiation to a quarter of a mile. That's it. You'll have to take the quarter of a mile, and you'll have to put some concrete over it. But it's not going to kill anybody, except for the people that were around it when the thing hit it. It's not going to be a problem. If it is a solution, if it helps, and if we can get people back to think about using nuclear energy which is around, and how to do it, we could generate lots, and it's a lot better than fossil fuel.
ZIERLER: And a lot better than other renewables, like solar and wind, the reliability?
KRESA: With respect to the amount of area you need, and the energy, and the money you have to put into it, and so forth, there are—I don't want to be negative about solar and wind. I think that some of that's great too. This will kill a lot less birds than wind will, and solar has its own problems of what it does to the land.
ZIERLER: Sure, rare-earth materials, and all of that.
KRESA: There's all of that too. It's a solution that is here. I hope I'm going to help try and turn it into a real business. If it gets going, once it takes off, it'll do well. There are parts of the world that see this is a godsend to them, and they're very interested in it, more so than the United States, although the United States is now seriously thinking about it in places where they're talking about carbon taxes, because it's all about money. As soon as you add carbon tax, then this becomes a hugely less expensive system than any other system you want to do because even natural gas is only half as good as petroleum. It's a winner. We're seeing the northern states starting to plan for doing some of this, the northwestern states. Whether it'll happen all over the country, I don't know, because, again, there's this fear or there's negatives about nuclear power, which has been built into a fear of the nuclear thing. But if the rest of the world, particularly, if Africa goes this route, and places that have nothing go this route, if they all start burning coal, it doesn't matter where we put the carbon in the atmosphere. It's going to be in our atmosphere. It hardly matters if we build them in Africa or in the US.
ZIERLER: Kent, what about defense contracting and national security issues, either formally or informally, are you involved in those worlds at all currently?
KRESA: I'm involved in this one company, which is a defense contractor; very high security things.
ZIERLER: Do you maintain a clearance?
KRESA: Yes, a full clearance. I use that actually for Caltech as well—
ZIERLER: With JPL?
KRESA: —and JPL. I do retain my clearances. I stay involve with Northrop. I have no formal ties to them.
ZIERLER: Does the emeritus designation mean that you're more involved than you otherwise might be?
KRESA: I had been for many years until the last couple of years. In the last couple of years, the board has decided that they don't want to be involved with the former chairman and president. They had us all on various little contracts, so we keep our clearances and so forth. But they wanted to get rid of that, so they fired us all. But I still get called by people, and I go in, and I talk to them, and they invite me to things, and I stay involved. But I don't have any direct thing. I stay involved with Lincoln, and I stay involved with that. They've got a lot of classified work. But I'm not doing anything in the industry, other than on the board of this one company.
ZIERLER: Kent, in this new revivified Cold War that we find ourselves in, or whatever we want to call it, defense contracting, they are producing weapons systems that are relevant in a real way, not just in a hypothetical way. What are some of the challenges and opportunities in defense contracting right now, as we're looking at the Russian threat, as we're looking at a resurgent China and the way that they're projecting their power in the Pacific Rim?
KRESA: The challenges are that it costs a lot of money, and the US is spending money like water, so how much more we can add to defense along with giving for everything else that we seem to want to spend, and someday the bank could break. There's always going to be some sort of financial pressures on the defense. The opportunities are that the technology base is very good. There's a lot of positive things that we can do. There's a lot of new things happening. We got surprised in hypersonics, that the Soviets were as good as they were and doing as much as they were. We've put a lot of energy on that, and I think we're doing well. We have a lot of activity in cyber defense. I don't know the detail. I'm not totally cleared on a lot of it, so I can't say, but I do believe we're as good as anyone. But that doesn't help because the third-best person could take out the United States in a minute. Yes, we can take out a country in a half a minute, but it hardly matters if you take the whole country out. It's a scary business, and the world is woefully prepared for what can happen. The efficiency of the West is based on utilizing more information to make the efficiency of our system better. We do that and, as we do that, we get a higher density of everything. Just-in-time becomes a bigger part of it. Every one of those dimensions makes us more susceptible to a bigger problem if we disrupt the total information structure, which keeps us all alive. If we had a major outage, if half of the East Coast was taken down, we'd kill most of the people. They'd never get out. They would die. They'd starve to death. They'd start shooting each other. I don't know what would happen, but it would be very bad because there would be nowhere to go. There would be no food. There would be no nothing. There would be no way [laugh] to get anything anywhere. We said, "Well, I'll walk out." You're not going to walk out. You're going to die in place, or you're going to run for a while until you run out of thing, and the young are going to eat the old, until it all goes away. It's a horrible Armageddon, and it is made worse each day that we improve the efficiency of our country.
ZIERLER: That's a tough challenge.
ZIERLER: Kent, in terms of your leadership at Northrop, the long tail of what you accomplished, both on the technological side and the policy, the government relations side, what have you seen since you stepped down that has come to fruition that has given you satisfaction?
KRESA: Everything. I would say, the vision of the company has gone exactly in the direction that I saw. I put a lot of energy into ethics, and I think the people have been fantastic. I'm a dotting grandfather in what these people did. The concept of getting away from the idea of major primes bidding on contracts together because they each had unique capabilities is a great idea, but it's expensive because you take the overhead structures of all these companies. My view was the more you can in a single company create the capability to do the whole job, you can bid it at a much lower rate. Northrop did that for the first time on the B-21 bomber, and won. I give them great kudos. They did a fabulous job, and they keep on winning. They're doing really very well. I'm a doting grandfather with respect to the company. I think they're fabulous people, and I'm really thrilled with the fact that the ethical values have never changed. It's just a fabulous company, and its reputation is terrific.
ZIERLER: Kent, your emphasis on the ethical values, as I'm sure you've heard this pernicious and cynical idea of there being a war machine in this country where it's the defense contractors who are angling for war because that's good for business. What is the most effective counter to this assertion or assumption that we see come both from the far left and the far right?
KRESA: It isn't war that drives the defense contractor. It's like assured mutual destruction. Nobody wants to fire all those missiles and to do all that. But the fact that we have the capability to do it makes it not happen. You might argue that when one side gets a new capability, which needs to be countered, that's good for the industry because if you don't have the counter, it creates an unassured possibility of destruction, and you can't allow that to occur. I would say that maybe the industry is—by creating the next thing that can allow you to win just extends the problem. But I don't know how to. I believe you have to have a strong position in defense to ensure that you won't ever go to war. I don't think any anyone wants to—maybe the bullet manufacturer, the guy who with the expendable, but it's trivial. In terms of the total industry, it's nothing. The amount of expendables is small. Although, with the missiles that we build today, they're expensive, so if you start dropping lots of missiles, that's expensive. But bombs are probably 0.001% of the budget.
ZIERLER: Kent, you express dismay about political polarization as it relates to education. What about political polarization as it relates to national security? Where are your concerns in that realm?
KRESA: There's people that believe that we should break up alliances. We should worry only about America, and not worry about the rest of the world. These debates have gone on for hundreds of years. To the extent that we have a sense of wanting to pull ourselves into our borders as opposed to be a leader of the free world, that's an enormously polarized situation. It's no different than the way people say, "Let's get rid of the police or let's increase the police." You want to get rid of the police if the police are beating up on you. But when things are going wrong, you want the police. I don't quite know how to do it, and I don't think anyone really rationally wants to really get rid of defense. They may believe there's inefficiency or it's too expensive. But my sense is you need a strong defense in order to be able to survive in this world. It would be nice if the whole world would pay their full share, but they don't. They view that certain people should pay more, and we need to pay, so we're paying. Just like rich people in a country, people feel they ought to pay more, and they actually do, although people don't think they're paying enough. I don't really sense there's a big anti-defense movement anywhere, compared to what it was during Vietnam or during other periods of my life. People seem to feel that there are evil things out there. They certainly believe Russia is evil. They are looking at China is evil, and that's being drummed into people now in great gobs. Clearly, the Chinese are emerging as the great power they've always been. They were muffled for 200 years, so we may think of China as this little player that's just getting bigger. But they were always big. [laugh] They've been through four cycles or five cycles of being the leader. They're convinced they're coming back, and they're going to be a big player, and they are going to be.
ZIERLER: Are you concerned that we are not going to be able to manage that rivalry peacefully with China?
KRESA: I think we will manage it peacefully, the same way we managed it with Russia. There was a Cold War. There's going to be some sort of a cool war with China that looks like it's emerging.
ZIERLER: But, economically, we're so much more intertwined with China.
KRESA: That's right. I say it's a cool war. I don't see a cold war in the sense that we are in totally different camps, but I don't know. It's not going to be good. They're very bright people, and the rhetoric levels are very different with the Chinese and with the Russians, at least the way I've sensed it. The Chinese have written down their rise and fall many times. They kind of understand it.
ZIERLER: They have a long perspective on history.
KRESA: They have a long perspective, much more. We're this little upstart. We think we're the big guy.
ZIERLER: [laugh] Two hundred and some odd years is a blip in history.
KRESA: Yeah, it's a blip. It hasn't even made it on their first page.
ZIERLER: Kent, I want to turn to some perspectives from you on higher education. By education, you're an MIT man through and through. By service and philanthropy, you're a Caltech man. More recently, you've served in this advisory role, as you mentioned, back at MIT. You have a very unique perspective on the MIT way of doing things, and the Caltech way of doing things, the rivalry and the partnership. I wonder if you could share some of your overall thoughts on what each institution represents. What are their unique spheres? Where are those opportunities for collaboration?
KRESA: I think they're very similar. They're more similar than they're apart, in everything. The rivalry is students' rivalry, other than faculty rivalry at the classic sense of who is the very best or where are they going to get the best people, and how are they going to keep and maintain their positions, and so forth. But they're very similar. One of my particularly at Caltech is when Caltech boasts too much about their leadership position, I talk to them about MIT. I've done it a couple times at MIT to make them clear that there is a place on the West Coast that does pretty well too. It helps because there's an opportunity for each to feel that they are by far the best and they have the greatest whatever, blah, blah, blah. The answer is they both have it. All I keep on saying to both of them is, "Thank God, America has both you guys." What a wonderful thing to both be in the United States, and you add such richness to the abilities of the country. Everyone will then, "Yeah, you're right. You're right." You can't really bitch about either one. They're both spectacular, and they work together. They had a shotgun marriage to get the—what is it?
KRESA: —LIGO together, and that has worked well, and they're both doing very well with it, and do exciting things. On a technical basis, the people talk, and are friends, and deal with each other. MIT is bigger and has a broader reach on a lot of things. Caltech sort of has a real focus on science in certain things, and really is great. MIT doesn't have a JPL.
ZIERLER: Lincoln Labs is not their JPL? That's not a fair analog?
KRESA: No, but I would say that MIT has Lincoln Laboratories, which is a dynamo in terms of electronics and LSI and next-generation sensors and what have you. They're both amazing places doing different things.
ZIERLER: Kent, it's such an ecumenical answer, and I appreciate that. If we could put a fine point on it, given the depth of your relations with both institutions at different points in your life, if we can imagine a fantastical scenario, there's a football game between MIT and Caltech, how conflicted are you in terms of who you're rooting for?
KRESA: I'm totally conflicted.
ZIERLER: [laugh] OK.
KRESA: I didn't get involved with Caltech until I came out here. I don't know if Bobby Inman ever told you but he was one of the—
ZIERLER: The TRW connection?
KRESA: No. I knew him in the government. We were colleagues. He was higher up in the government than I was.
ZIERLER: At what stage? Where were you?
KRESA: I was at ARPA.
ZIERLER: Oh, I see.
KRESA: I was at ARPA at the time. He was at the CIA when I first met him. We were doing things.
ZIERLER: This was in the early '80s, the Reagan administration?
KRESA: No, I was '70s.
ZIERLER: He was at CIA. Reagan brought him to CIA. He was NSA for Carter.
KRESA: It was NSA. He was at NSA, or he was the head of—they had another office where they combined it all where he had them both. I forget what the title was. But he had a role across everything, which had DIA.
ZIERLER: Yeah, he had DIA.
KRESA: I knew him then. After I got out of the government—was it Northrop?
ZIERLER: Was it Northrop that brought you to California?
KRESA: Yeah. I left the government and came to Northrop. I came from the government to Northrop. But I've known him for many, many years. He and Si Ramo were two mentors that I hardly—they somehow knew me before I knew them. I got involved with both of them in my career, and they're both unbelievable human beings. Si's gone, but he was phenomenal guy.
ZIERLER: Your affiliation, the origin story of your work with Caltech, it's primarily about both those personal connections and geography, the fact that you were here in Southern California?
KRESA: Yes, it was. It was purely geography. I was on an advisory board, I don't even remember what it was, at MIT. I don't know. I wasn't president at Northrop then. I was at a lower level. I don't remember what year it was. At the time, I just couldn't deal with spending that much time going to Boston. A one-hour meeting is a two-day deal.
ZIERLER: No Zoom in those days. [laugh]
KRESA: I didn't have the time. I tried to fit it in with Washington, but it was just a lot of effort, so I finally just couldn't do it. This was a freebie, and I didn't feel I had the time. Then I was doing things in my job. It wasn't Bobby that called me but another friend who was on the board. It was Anderson from North American who was on the board, Bob Anderson. Bob called me, and said, "You have any interest in Caltech?" "I don't know. I think so."
ZIERLER: Now, I wanted to ask, did you think about, I mean, working in national security, being on the East Coast, did you know about Caltech? Did it register with you?
KRESA: It registered but not largely. I thought about Caltech momentarily in my thinking about colleges, but it was too far away. If you remember in those—
ZIERLER: You're a New Yorker.
KRESA: I was a New Yorker, and those were the days that it was an all-day trip with a stop in Chicago or somewhere to get to California. The idea of that just—
ZIERLER: That was too far?
KRESA: I just eliminated that from my thinking, and Boston was—
ZIERLER: You had MIT right there?
KRESA: There were a lot of schools on the East Coast that I looked at. But MIT was certainly my preferred choice that I eventually went to. I didn't really think about it particularly for many years other than it was a great place, and I knew about JPL. I knew about it, and I'd go to California every now and then, but it wasn't on my radar. I didn't have any business necessarily, and I didn't have any involvement with them.
ZIERLER: Now, how did you know Bob Anderson?
KRESA: I knew him socially, but he was North American, and he was Rockwell, and I was Northrop. We were rivals in a sense. I don't remember how I really knew him. I did know him through, oh, I guess, we were both in the AIA association at the time. I did know him but I don't remember how. God, that was so many years ago. I don't know how I got to know him. But I remember him talking to me about it. They had technical discussions, and there's a lot of really good people, and blah, blah, blah. I went and talked to some people at Caltech, and thought it was great because there I could be involved with a great institution. It was technical. Their GALCIT organization, I knew.
ZIERLER: Now, at that point in your life, were you already sort of involved in the board world—
ZIERLER: —or was this sort of a new foray for you?
KRESA: It was early. I wasn't on any boards at that point. When I joined, I was younger then. I don't remember how old I was. I don't remember. They must know what year I came in.
ZIERLER: Let's see. We could probably figure it out. How long had you been at Northrop before Bob gave you that call?
KRESA: I'm trying.
ZIERLER: Like a few years or a decade?
KRESA: I don't know. I don't remember. I'll ask Cathy [Light]. How long have I been on the board? I don't know. But I've been on it for 25 years, 20 years or something. I've been on it a long time.
ZIERLER: That was attractive to you at that point, getting involved?
KRESA: Yeah, it was attractive to me because I could do the thing in an afternoon. I could leave work. Traffic was a lot better in those days.
ZIERLER: Yeah. [laugh]
KRESA: I could leave work, go over and have a meeting, and maybe have dinner. It all seemed reasonable, and they were very good people, interesting people. They always had technical discussions, and it was a lot of fun. I got involved. Actually, at the time, before I got involved, I talked to people at MIT, and said, "Hey, what does all this mean?" I remember all this rivalry. They said, "That's bullshit."
KRESA: They told me to forget it.
ZIERLER: Kent, has it been valuable, when you first joined the board, just in terms of your own career at Northrop to see the cutting edge in an academic institution in things relating to aerospace engineering and fluid dynamics? Was that an asset to you professionally?
KRESA: Not really. I knew what was going on. But the difference between what I was doing or what we were doing at Northrop, and the kind of work that was going on here, they're working on stuff that was going to happen 15 years from now. We were working on the stuff that was happening then. It was the intellectual stimulation that I liked the most. Very smart guys on a very good board, and I thought the professors were great. I got involved in a couple of the oversight committees to review the department reviews. I found it fascinating. I didn't really have an academic bent at that point, but I found it very interesting, and I got to know the people, and I really liked them.
ZIERLER: Was JPL always in your portfolio?
KRESA: JPL was a great place that everybody in the aerospace industry knew about. I didn't necessarily have any work with them. I was doing aeronautical things more than I was doing space things at that time. But the people were great, and we knew about it, and to learn about what was going on up there was always fun because they were doing the next-generation whatever, satellites, or what have you, a great sense of work, and great things. That I found fascinating. I got to know the people, but I didn't get involved business-wise. Once I became president and CEO then, of course, there was the issue of students, and always trying to get good people from Caltech to be involved with us, and so forth, so I got more involved. But when I started, I was down more in the weeds in the game.
ZIERLER: Kent, a question about sort of looking at Caltech's Board of Trustees or directors in a wide historical angle. If you were to write a book based on your 25 or so years, what would the chapters look like? What are the narrative stops and starts of the Caltech board over the years? How would you look at that?
KRESA: You mean, over the years, recognizing it hasn't changed over time?
ZIERLER: Yeah, either by virtue of changing Caltech presidents or the chair of the board, what have been some of the real narrative breaks over the years? Would you emphasize continuity?
KRESA: I would almost say there aren't a lot of breaks. As far as the people on the board, I found them fabulous, wonderful people; all walks of life; all kinds of capabilities. I've always found the board structure and meetings and what have you is very good. I haven't been one of the people. I haven't been an agitator, myself. There's been a lot of continuity of the whole thing. I would say continuity. It's governed more by continuity than not. Even though there's been some of this—I don't know—I don't want to call it divisiveness but concern about the board, it's much less than on other boards, where there can be screaming sessions for whatever set of reasons. I've been on a lot of boards. [laugh] Some of them are not nearly as interesting or as collegial as this one.
ZIERLER: Because you have so much experience in both areas, what are the key functional differences in serving on a nonprofit, a board for higher education as opposed to in the for-profit world? What are the different functions that a director sitting on the board has?
KRESA: One is that there's so much of the higher education board, which you really have nothing to deal with, which has to do with what all the faculty are doing, and whether they're going to get tenure. The management of the organization, other than the president, is out of your reach as a board member. Whereas if you're on a corporate board, you're looking at the whole thing. If there's certain issues, you may get into it. If there are divisions that are doing poorly, you can get into it. But you don't have that feeling. There's nobody coming down, and saying, "My god, we've got to get into the physics department, and fire all those guys."
KRESA: It's not your responsibility, so it's very different in that. As far as worrying about the finances and the fiduciary responsibility, that the thing can continue, and what kind of backlog you've got, or what kind of endowment you have, and all of the financial aspects of it, many of that's the same. The audit function, and making sure that everything is being done right, that your taxes are being paid, and that you don't have any legal battles going, and how big are they, and what are the implications of them? Are there problems there? Or people die. We've had people commit suicide, and what does that mean? Is there something we need to deal with associated with that? There are differences, but I would say that the higher education issue is much easier than a corporate board. On a corporate board, you're worrying about quarterly activity as well as the long-term future of the company. Both [laugh] are totally essential that they've got to both be good. You have a much lower tolerance for waiting and seeing, and trying to think about the problems, and how fast can they be solved, etc.? You have a little more time in the university setting than you do in the corporate setting.
ZIERLER: If the metrics are so clear in a corporate setting, what's the share? What are the productivity rates? What are those similar metrics in higher education? What are the data points that you're looking at at a place like Caltech to know overall if it's on the right track or not?
KRESA: There's several that you want to look at. One is how are you doing with your people? If you're losing good people who are going or leaving in either organization, you know you got a problem because if good people are leaving, there's a reason. Something's wrong with your organization. If you have budgets, and you're constantly overspending the budgets, or you can't keep things on the right track, there's always a problem. If there are legal problems, you can see those, then depending on what they are, what are the implications? There are many similar—both are businesses, and both have to operate as good businesses.
ZIERLER: Who's the customer though for Caltech? How do you look at it in that regard?
KRESA: The interesting thing, the customer for Caltech, in a major way is, the United States government, both for the research, which is an enormous piece of what keeps the business going, and JPL. You'd say the students are the customer but they're really not. If you had people leaving, you would then have to go, "What is going on that is changing that?" But when you have one in 40 applicants you choose, that says that is not where your problem is. If your staff is leaving, if your professors are leaving and if your staff are leaving, then you know you have some fundamental problems in the organization. But if they're not, and you don't have students, you don't have a massive organizational failure that everybody's unhappy, and so forth. But you have a customer called the United States government, and it is huge. For us, because we are so much associated with research, either JPL or on campus, if they change the rules [laugh], or if they're really unhappy with you in some fundamental way, the budget of the organization could dramatically change overnight. You do worry about the government.
ZIERLER: Because, of course, you chaired the board, what are some of the unique responsibilities that the holder of that position has?
KRESA: If you want to think about it, you have the board responsibilities to maintain a well-run, well-organized, enthusiastic board. You have the whole organization, which you want to make sure is going in a positive direction. You want to make sure your customers are happy, so you have to ensure that the customer is positive. In many ways, that's no different than running a company. Being the chairman of a company board, different constituents you've got to worry about. But you've got to make sure things are running well. My philosophy on that is you can't do it. You as an individual can't do it. You have to be monitoring it. If you see things that are going wrong, you've got to figure out what it is that needs to be changed to get it running because if you decide you're going to do it, you're doomed. You must do it with an organization, and the organization must do it, period.
ZIERLER: How important is the interpersonal relationship between the board chair and the president of Caltech?
KRESA: I think it's important. I do think it's important. If it's not good, it is not good for the organization.
ZIERLER: What are the elements of a good relationship?
KRESA: Trust. I would say trust and respect. Liking them as a person is also a good thing, but I would say that isn't necessarily required but having respect for both on either side. If one doesn't respect the other, it will go south very quickly. But my philosophy on management is to find the very best people to do every job, and let them do it, and support them. As soon as they have the job, your job is to support them until they do something that you no longer can support them, in which case, they have to be replaced. You have to get somebody else. But you can never do their job. You can never decide to. God, you can never have a second-class person. You want to get everybody better than you are in every job around you.
ZIERLER: Is the chair uniquely tasked with recruiting new board members? Is that part of the responsibilities?
KRESA: No, it's not.
ZIERLER: Who does that?
KRESA: It's the committee. The nomination committee has that responsibility. They'll get other people on the board and so forth to say, "We'd love to get X and Y and Z, and so forth." Then they'll be a discussion, and they'll be brought up to the full board for decision. The president will meet with every candidate, and they'll have to pass muster with that person to be acceptable. I didn't require that I had to interview them, but I felt that the president needed to be comfortable.
ZIERLER: Is it by invitation only? If someone expresses an interest themselves in joining the board, will they be considered also?
KRESA: They may. I don't think that we would throw out anybody if they had interest. But they would be stacked up against all the other characteristics and the people that they have coming along, and find out what are all those desires that they want to have. But certainly, certain people have shown interest in the board. If they're people that kind of make sense for the board, I know some that have gotten in. There are others who have been invited because they brought some fabulous capabilities, sometimes unbelievable philanthropic possibilities, and so forth. But they've all got to be good people and, eventually, have to become real stewards of being positive about Caltech.
ZIERLER: Kent, if there are two overall profiles of a Caltech board member, one being somebody with an academic connection, a distinguished alumnus of Caltech, who has gone on to achieve eminence in their career—like a David Ho, for example—and then the other profile being someone who's achieved great success in the world of industry and business, but they have no personal connection to Caltech, what do each group bring to the table in terms of the overall effective management of the board and its help for Caltech?
KRESA: Two things. I think both are important. You've added in both cases that they are quality, capable, and have demonstrated the ability to do well in this world in some dimension. That, I think, is an important thing. Both of them are important, and it depends on how many. If you've got the most eminent lawyer that you could ever conceive of, but you have three lawyers on the board, that person isn't as important to get as somebody who's in the next-generation digital streaming world. We don't have anybody like that, except that we're training half the kids to be in that environment. We want that person on this board because we need that expertise. Let's say they're equally capable in terms of great people, but one of them we don't have much expertise on, then we'll bias to that person, because we want to get a broad set of expertise, particularly about the future. That's where our kids are. All the people we're educating are going to be in that. Everybody that comes on this board has made it in this world. We're training these kids for the next world. We need people who are pushing on that next world.
ZIERLER: We just came from the faculty research presentations.
KRESA: Yeah. [laugh]
ZIERLER: Besides that, infra-structurally, what opportunities do board members have to see what's actually going on at Caltech at the granular level, what the students, what the postdocs, what faculty, what they're doing? What are the ways that you can get a sense of what's happening on campus?
KRESA: Several ways. First, you have to show interest. You have to decide you want to do that. There are items. You can come to lectures that people are giving that you're always invited to. You can get involved with professors or particular professors in areas that you are particularly interested in. For my own case, I have funded professors and I have funded departments, so I get involved. They'll have me over to do whatever. I can learn what the professors, all his kids are doing, and I can find out what's happening in a department just by picking up the phone, and they'd be delighted. I would say that's the case of virtually any board member who wants to come. They can talk to anybody, and they'd be happy to do it. Now, you don't want to take the crazy condition so that the faculty and the students are constantly being bombarded with putting on shows and tells for the board or any outside group. You'd want to do it sparingly. There are times that they're on display, no matter what, for whatever set of reasons, and so there's lots of opportunities to it. Plus, there's things that happen at the board meetings where they'll have research things, or we'll meet with graduate students, or we'll meet with undergraduates. We'll have lunch with them. They come to dinner, or what have you, and you will have an opportunity to talk to people, and so forth. I think any board member can get all they want; more than they want.
ZIERLER: Kent, as you know, we're just coming off a fantastically successful breakthrough campaign. The next one will be upon us soon enough. What have been some of the big takeaways over your time on the board for the way Caltech has made the case to inspire people to give and support what they're doing?
KRESA: First, I would say that our campaigns have—there's always been one or two huge donations of people who get hyper-inspired or have the money, and just love to want to be involved, which is great. I think the faculty does a very good job of thinking through how to present an idea of a new thing that they want to do, which gets people's enthusiasm up. The warp and woof of how you get the $10,000 from the individual, and how you do all of the things that add up to a lot of the money at the bottom layer, I don't know the details of that. But there's all kinds of little things that get done that help that process. The big things seem to pop up in the strangest ways. People just come out of the woodwork, or a board member just says, "I just want to do X," and, next thing we know, there's a $300 million gift being given—generally, a lot of board members. The board has been extremely important for those who really are excited about Caltech, to not just support them but to go over the moon. We've had a lot of those.
ZIERLER: In this new gilded age where, almost every day, it seems like there are more people joining the ranks of the billionaires' club, what is the right balance for Caltech between pursuing the mega wealthy who can write a check, and that's the whole campaign right there, versus the more grassroots approach for the people who can write $10,000, $15,000?
KRESA: I don't know. I'm the wrong one to ask. Ask Dexter about that one. That's a 64—you probably want them both. If there's an excited billionaire there, everybody wants to talk to them, no matter what; no matter when. You can't say, "Well, we only need three. We got our two." If the third one comes along, and they're really interested in X, you want to talk to them if they're really interested in you. I don't think you ever have enough of the multi billionaires. To the extent that you get known internationally, now, there have been cases. MIT got in this huge problem with—what's his name, the guy that committed suicide in the cell?
KRESA: Yeah. He was funding the Media Lab for a big amount of money because, apparently, they knew about some aspects of that, and they still kept on getting the money. The money was more important than the issue, and that didn't go over well with a lot of the faculty, and it backfired. You've got to worry about that a little bit.
ZIERLER: There's a vetting that needs to happen?
KRESA: There needs to be a vetting of where the money's coming from.
ZIERLER: Kent, what about strategically for fundraising? What aspects are about simply keeping the lights on, and what aspects are about the next generation funding this research 50 years down the line, setting the groundwork now? How do you think about those things?
KRESA: I think about the fundraising should virtually all be about the future. Keeping the lights on is supposed to be what you do, and your organization should be designed to do that. Now, if it turns out you don't have enough to give all of the tuition grants that you need, and you need a separate fund for that, you've got to go fundraise for that. But running the operation as a thing, and making sure that the government gives you enough for the overheads of the various things you want to do, and things like that, that's got to be a fundamental business. If you need to cut corners, and to do it, and to figure out how to do it, that's fundamental work, as far as I'm certain. We shouldn't be fundraising for that. We shouldn't be fundraising to make sure that the faculty should have 30% more salary. We want to be fundraising to go to that next level, whatever that is, to make those new things happen. That fundraising can be classic fundraising, or it could be partnering with other major operations and companies, and whatever it may do, to make that next break. Now, every time you do one of those things, you get new buildings, you get new faculty, you pay for a lot of students, you pay for a lot of grad students, you pay for a lot of things, so it always helps. If you get one of those, it helps. There are some downsides in that the government's right analysis of how they pay things, they only pay for research space. The fact that you have halls, and you've got bathrooms, that's part of your cost. When you put a new building in, it isn't free. But, at the same time, you're getting it for very [laugh], very little money because most of it's getting paid for by some grant.
ZIERLER: Kent, for you personally, in your own generosity to Caltech, if I may play devil's advocate, you're the guy writing the big check. Shouldn't you want a say in how it's used? In other words, what's the motivation for you in giving in an unstructured way? Why do it?
KRESA: I have given money in unstructured ways and in structured ways, so I've done both. I give it in unstructured ways because I believe the organization can make decisions on how to fund this, to use this money in the betterment of the organization, which I happen to think very positively about.
ZIERLER: There's no concern on your part?
KRESA: There's no concern on my part. I give some money which has strings on it if I want to see some aspect of things to be done that I feel is important.
ZIERLER: What would be an example of that?
KRESA: Lynn and I, my wife, have given money to fund the research activity for all the robots and the unmanned stuff that is going on. I happen to be a big fan of that. It gives the head of that an opportunity to have a fund where he can get things started that he doesn't have any research money for. My view is that's great. That's a start fund for good things. I like that to happen.
ZIERLER: That was a personal passion of yours? You had a directed vision?
KRESA: Yeah. By the way, I've done that both here and at MIT. They both have fabulous operations to do it. I funded both.
ZIERLER: What's been most enjoyable in seeing the fruition of this support at Caltech?
KRESA: Lots of young people are very, very engaged, and it's rejuvenated the aeronautics business. Aeronautics started to get somewhat old. Even after the space thing, it became pretty straight. Now, there's this whole new thing, which is robotics and unmanned vehicles, and little things that do all kinds of wonderful things. There are all kinds of young people wanting to—students doing all kinds of great things. It's a new direction for the activity. Both MIT and Caltech are very appreciative of it. Both departments, both aeronautical departments have boomed because of both. They're both doing well, and they're oversubscribed at this point, which is great.
ZIERLER: Now, the unstructured support, the gift, did you determine that it would go to PMA, or it was just, "Here's funds"?
KRESA: I did determine that it went to PMA, but I wanted to give unstructured money, and I wanted to know what sets of opportunities were available. It turns out that—
ZIERLER: Were you inspired by astronomy and astrophysics?
KRESA: Let me say this. The engineering one had already been taken, or else I would've done engineering.
ZIERLER: OK. I was going to say. [laugh]
KRESA: I would've done engineering had it been available, but it had already been funded by my wife [laugh]—
KRESA: —before we were married.
ZIERLER: No better competition. [laugh]
KRESA: Yeah. That one was off the table. PMA was something very close to me. Astronomy, the space stuff, all of the activity that they do was very close to me.
ZIERLER: It captured your imagination? You love that stuff?
KRESA: Right. I said, "That's great. Do it there."
ZIERLER: I've heard it directly from people like Tom Soifer, just having a list of dream projects, and just being able to do them because of this. What has been most enjoyable to you as you've seen the afterlife of this gift in astronomy, in astrophysics?
KRESA: I can't really say I can point to a specific project.
ZIERLER: It's about flexibility?
KRESA: It's really about flexibility, and the fact that it gives the staff this—they're all so happy about it, the freedom to not have to write the next proposal to get the little—this is to start somebody, and to let people get started on a new project. I view it as it's fine. It's unstructured. It could have been the endowment. I could have done it through the endowment just as easily. But I thought this was more fun, and it gave instant satisfaction to a bunch of faculty.
ZIERLER: Kent, to bring the board story right up to the present, thank goodness, it looks like COVID hopefully is mostly behind us. We're meeting in person again. What new opportunities after those years, couple of years meeting over Zoom, the social isolation, what new directions might the board be considering now, operationally or structurally, just because hopefully this is a new post-COVID era that we find ourselves in?
KRESA: I don't know of new directions for the board. It's really new directions. Where is Caltech going? I don't really view it as a new direction for the board. I view it as what new directions will—there are some new things that are going to be very important that are just starting. The quantum lab is now just taking off, and you want to see that maturing, and you want to see some output, and you want to see some new great things come out of that. The work that has been put into worrying about climate change, there's a huge new life been put in that by one of our board members, who just blew us all away with an enormous gift. There'll be a new building. There'll be a new sense of purpose for that business. I think we're all anxious to see positive things there. There's a new interaction with the—what the hell? I can't remember the name of the organization. But there's an organization that's coming to California that will be coming to Pasadena that's going to be right next door to us, which we're renting in the space to build a large building, which will allow for a whole new set of interactions with a new bunch of researchers. I'm still very positive about start-ups. There'd been some great innovative work to create a cadre of innovation where it will allow new companies to start and to hopefully mature that will be close to campus in Pasadena so that we can have the same kind of thing that happens around Stanford. We certainly have the capability now. I've been involved with Kairos, and we do that with these guys. But I'd like to see more of it.
ZIERLER: The system of tech transfer at Caltech is healthy? It's working well?
KRESA: It seems to be, yes. Yes.
ZIERLER: The entrepreneurial spirit, it's only growing, as you've seen it?
KRESA: I think it's only growing. It's interesting that there's a subset of professors who are absolute entrepreneurs, and seem to sort of develop one new idea and a new company every couple of years, and some never have no interest in it whatsoever.
ZIERLER: There's a place for both, of course?
KRESA: There's a place for both.
ZIERLER: Kent, the last topic I want to touch on for today, before we go on to our next discussion later on, it's really one about how you see the world, your personal perspective. If we look at engineering and business as the two key areas of your career and your accomplishments, just in terms of your life trajectory, in terms of your family background, are you more of an engineer that went into business, or are you more of a businessman, and engineering was that machine for you to go into entrepreneurialism and the world of business?
KRESA: If you would ask me this when I was 18 to 20, I would've said I was going to be an engineer. When you asked me that at 30, it was clearly that I was more interested in business.
KRESA: Yeah. I would say that my horizons changed when I went into the government, and I was at ARPA. I was strictly an engineer at the time. I became much more involved in the system and the vision of what things could be common at a much larger scale than even the engineering of something. I viewed engineering as an important way to get there. But what was required was much, much broader than just the engineering. That was sort of the time I changed, when I went to the government.
ZIERLER: Last question for today, just building on that idea. How has your dual expertise in business and engineering been mutually valuable? In other words, what is an engineer's perspective that's so useful in business decisions, and in what way as a business leader do you need that engineering perspective in order to make sure that the bottom line is being met?
KRESA: It's called a bullshit filter.
ZIERLER: [laugh] For both?
ZIERLER: [laugh] I love it. [laugh]
KRESA: You can ask enough questions in whatever being asked, even though you don't understand the subject, by having a reasonably good engineering discipline to know when you're getting shit. It's absolutely the most important thing I ever learned.
ZIERLER: Because there's truth at the bottom of both, whether it's an engineering problem or a business challenge?
KRESA: Yeah. By asking in different ways, you will be able to get the sense of how rational that answer is, and whether the people know what they're talking about or they don't. That comes from engineering testing; testing the solution you think you have is constantly being tested by something. When you get into management, you're hearing what people are telling you, and saying this, that, and the other. You have to test it. Many of the tests that you'll do, you'll get answers that don't help you because you're not that close to it. If you keep on asking, you'll get some that will absolutely—you know the answer, and you sometimes get the weirdest answers back, and then you test some more. After a while, you can tell this guy doesn't know what they're talking about.
ZIERLER: This filter you're referring to, there's a timelessness to this?
ZIERLER: It's true today? It was true at the beginning of your career?
KRESA: Absolutely. What the engineering helped me with always was the ability to decide how much I can trust what I've been told.
ZIERLER: Kent, this has been a terrific conversation. I want to thank you for spending this time with me. Next time, let's go back to New York. I want to hear about your family—
ZIERLER: —how it all got started.
[End of Recording]
ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It's Tuesday, November 8th, 2022. It is great to be back with Kent Kresa. Kent, thank you so much for joining me again.
KRESA: It's good to be here.
ZIERLER: Kent, in our first discussion, we did a terrific tour, wide-angle lens of your approach and achievements in philanthropy, in business, in higher education. Today, let's go all the way back to the beginning. I want to learn about your family. That brings you back to where you are now, New York. How many generations back does your family go in New York?
KRESA: Really, only one. My mother is a transplant from New England. My father came from Germany, and he immigrated here with his family as a teenager after World War I. They met in New York City. This was where they set up their lives, and lived here all their lives as a married couple.
ZIERLER: Did your mother's family in New England, did they go back many generations in America?
KRESA: Yes. They went back to the Mayflower. If you want to think about it, they had great pride in being part of that whole thing. It's interesting, when my daughter got very interested in doing all the background on the family, and was able to trace it all the way back through the Mayflower, back to England. As she was thinking of going to college, she decided this would be a fun thing to explain to everything that she was really a daughter of the American Revolution. In virtually everywhere they went, that was the kiss of death.
KRESA: She stopped talking about it. It was so funny.
ZIERLER: Now, do you have a view into your father's family in Germany, where they came from, what they did?
KRESA: Yeah, a bit. It's a very complicated story in the sense that my father was an illegitimate child of a wealthy—I don't know. He was a manufacturer of things in Germany. It was a tryst between a maid and him. The baby in those days, when you had a lot of money, they just managed all that. He was taken by a family who didn't have a lot of money, which was the Kresa family. By the way, the original name was K-R-E-S-J-A, Kresja. He was brought up by that family. He did not know that he was not part of that, that he really came from somewhere else, until he was a grown man. His mother told him before she died that he was really this other person's, and he was adopted, in a sense. It's a complicated situation. But he was a Kresa all his life, and he grew up in that family. His father from the Kresa family, Kresja family, was an artisan. He worked in Meissen, which is right outside of Dresden, and was involved in the painting of Dresden porcelain, and did all kinds of the very complicated portraitures and so forth that were done on large urns and large things for very wealthy people, and kings and queens, what have you.
They immigrated to the United States between World War I and World War II. I forget. I don't remember the date, although, somewhere—and my daughter has all the records. She's a nut, as I said, on keeping all that information. They came through Ellis Island, the classic way, and I have all that information—well, she does—of when they immigrated. Went to Milwaukee. They had some family that had immigrated to Milwaukee, which was a very German-oriented town. I don't know what my grandfather did when he was there. I never knew either my grandfather or my grandmother. I never met them. But my father, eventually, his passion was music, and he eventually immigrated to New York City where the action was, became very involved, became very successful, and went to work for Irving Berlin in that period.
ZIERLER: Now, did your father have formal musical training, or this was more a natural talent?
KRESA: It was actually a natural talent. I would almost claim he was an idiot savant in music, and he was unbelievably good at it. He could do unbelievable things. If you just gave him a piano, you could sit him down, he could do anything. You could give him three notes. He could write you a symphony right on the spot. We'd do that at parties to get people to really excited. But he was really very, very talented at the piano. Worked at Berlin's initially as an arranger. In the big days—this was in the '30s—they had very large numbers of musicians who would write musical—take and do an orchestration of one of their songs. If you are a reasonably well-known band, they would do it because that's the way they propagated their music. They'd get it to a band, the band would play it, and so forth. If you had two tubas and three horns and a violin, and you wanted a particular song done, they would be able to somehow cobble what you had in your band to sound reasonably good, and they'd write an arrangement for that band. That was what the game was. Over the years, my father moved up the organization, eventually became Berlin's principal arranger, and got involved with the development of all of his songs, all of his writings, and everything, and was almost synonymous with Berlin in everything they did. He became the general manager of the business for years, and was with him until Berlin died.
ZIERLER: Now, Kent, you said your parents met in New York. How did your mom get to New York?
KRESA: My mom was—she had gone to the Boston Conservatory of Music. She was a serious singer. Wanted to be an opera singer, I think. Didn't quite make that. In the days after she graduated, essentially, had a girls' band. She played a couple of instruments, and she had an all-girls band, which is a big deal in the '30s. There were lots of them. That's the way she made money. She happened to go in to Irving Berlin to get some arrangements, met my father, and the next thing was history. They met and fell in love, and they created a life, and then they got married. After my sister was born—I had a sister that was born three years before I was—she stopped doing anything professionally, and she became a housewife. Although, later in life—and I don't know exactly when—when I was a very small boy, she became a music teacher, and she was a music teacher, mostly a voice teacher, and was involved for years as a voice teacher in New York. That was her gig. I was always around music, always. A part of that scene was part of my upbringing.
ZIERLER: Now, did this rub off on you? Music is obviously in the family. Did you become a musician at all?
KRESA: I did a little bit. As a young child, they were very anxious for me to learn piano, to do all that. I hated it. They finally realized that I was never going to be a great pianist—
KRESA: —and let me go out and play baseball instead of hanging around the piano. But when I went to high school, I picked up the clarinet. I played clarinet for lots of years, never seriously. I never got involved in bands or never went anywhere with it other than in school, in the orchestra and the bands, and so forth. But I'm better playing the stereo, but I'm very involved musically. I still get involved with opera. My family was very big in that, and it was very important that I was educated with music as a part of my background. I started going to the opera when I was probably 6 or 7, and it was all part of my whole upbringing to be involved with music, mostly classical music.
ZIERLER: Now, what neighborhood were your parents in when you were born?
KRESA: When I was born, they lived in Elmhurst on Long Island. But, very quickly, they bought a house at Bayside, and that's where I really grew up. I have no knowledge of anything in Elmhurst. That was very early. I think I was born there, and I lived there maybe the first year or so of my life.
ZIERLER: Was your father's career, was he financially stable? Did he make a good living?
KRESA: Yes, a very good living. He was financially stable. He was more financially stable than emotionally stable. [laugh] He did fine. He did OK. He was very much involved in the scene and, of course, he was involved in the Broadway scene and the music of the era. Berlin in the '40s and '50s was the classic music of the time, and Berlin was a big player, and so he was a big player, and worrying about getting the stars, and putting big shows together, and all that. He was just very involved in all of that also.
ZIERLER: Kent, you would've been very young, but do you have a sense of how the music scene and nightlife in New York was affected by World War II?
KRESA: No. I was very young. My only recollection of the war was the fact that my uncle was in the war and went off the war. There was a period, a very serious period, where they were talking about locking up all German males of his age and younger, but he was still in the age bracket where he could be a spy. They were, as they did on the West Coast, rounding up people on the East Coast. Berlin had a lot to do with him not that happening. I remember it was a very traumatic period with my family worrying about if he was going to have to be interred, and what that would mean. But Berlin was a big enough guy. He made that not happen.
ZIERLER: Now, what kind of schools did you go to, growing up? Public schools?
KRESA: Public, all public.
ZIERLER: Were you always interested in engineering and building and tinkering, those kinds of things?
KRESA: Yeah, I was interested in tinkering from probably when I was very young. I always loved building things, and because my father was this artist person with music, he couldn't hit a hammer without hitting his thumb.
KRESA: He did nothing. He couldn't put up a picture. He couldn't do anything. I don't know if he could but he never. He was never involved. At a very early age, I became the handyman to do everything. Whatever I could physically do that I was old enough to do, it seems to me I did. I was always involved mechanically with the house, and doing whatever had to be done, and figuring out what needed to be done, and so forth. That was my role, but I had no one else in the family that was interested or capable.
ZIERLER: Kent, what about on the business side of things? Did you have an entrepreneurial streak when you were a kid, at all?
KRESA: Yes, very much so. I was very much an entrepreneur. I was always doing something, selling something, making something, and trying to make something happen, and make money, yes.
ZIERLER: Tell me about the high school you went to. Was it a big school?
KRESA: It was reasonably big. It was Bayside High School, which is a large high school, the only high school in the city of Bayside. I don't remember how many but it was probably several hundred or multiple hundreds in each class. It's under 4,000. But I would say it was two to four thousand in the thing. It was a good thing. They had AP classes. They had a really good thing. The New York system at the time was the envy of education. We had regents. We had the exams. We had some exams like English, where you had to do four years, and you got one shot at an exam at the end of four years of English. You had your math exams at each, whatever, trigonometry or geometry or whatever it was, whatever that would be, a one-year exam maybe. But this was a serious business. I remember it was not hard. I didn't have to work in high school for grades, but I did well and enjoyed it. But there was always that issue of you got to do well on the exams, and they were important. They made a difference on what you were going to do for college.
ZIERLER: Now, when it was time to start thinking about college, were you focused specifically on technical schools?
KRESA: Yes. By then, I wanted to fly airplanes. I was very into airplanes. I was involved with the Civil Air Patrol, which was a thing for young people to get involved with airplanes. I really wanted to fly. That was my big thing. My father was a pilot. He flew Piper Cubs, so I flew with him a lot as a young person, and it really was fun. My dream was, of course, to do that, and I wanted to go to college. I wanted to learn about airplanes, not necessarily to be an aeronautical engineer, although I felt clearly I wanted to be an engineer. I gravitated to engineering schools. I was in New York, which said that I was interested mostly in—we didn't have a lot of money. We had enough to get—of course, at that age, I thought I was ultimately rich. I had no sense of anything. Life was good. Life was always good. But I certainly didn't think of, well, maybe I ought to go to Europe or I ought to flit out to California or whatever. Those were not an idea that I had. It was which could you get to that was easy? I was looking at the schools on the East Coast, and mostly RPI and MIT, and I guess I looked New York, NYU. But I didn't really want to stay in New York. I wanted to go somewhere else. The two most important, where I really sort of thought I wanted to go was RPI or MIT, and I think MIT was my first choice.
ZIERLER: Did you do well? Did you do well in high school? Were you at the top of your class to get into MIT?
KRESA: I wasn't at the top of my class. I don't know where I was in the class, but I certainly was in the top 10%. I don't know. I wasn't number one or number two, but I was certainly somewhere near the top. It probably was easier to get into MIT in those days than it is today. In those days, of course, they said, "You got to take these exams, and they're coming up on Saturday." "Oh, OK. Do I have to do it? How many do I have to take?" It was a pain in the ass, frankly. For some of the schools, I went virtually all day taking exams. There were some morning exams, and then there were all these other exams that you had to take in the afternoon, and I thought it was an enormous waste of my time. But I had to do it because it was required of these schools to get through these entrance exams. But there was no preparation. There was no nothing. I just went to the exam, and took it. I don't know of anybody that studied or had anybody help you. I can remember my daughter going. It was the biggest harangue to just how many years, and this and that, and we'll take the trial exams, and we'll do this. It was like this is crazy. But there was none of that. I just took it.
ZIERLER: Kent, when you got to MIT, of course, this is the height of the Cold War. I'm curious if things like the Arms Race or Sputnik, if that really registered with you as an undergraduate.
KRESA: Yes, it did. But I would say the thing that registered the most was I wanted to fly, and so my hope was when I went to MIT was to get into the Air Force ROTC program set up to be a pilot. I'd taken aeronautical engineering, and was all headed into all that trajectory to do all that until I went and took the exam to become a pilot, and failed with red-green color blindness. They told me that I'd never fly for the Air Force, but wouldn't I really like to be a navigator? I said, "No, I'm [laugh] not interested in being a navigator." I said, "I'll just go to college," and that's what I did.
ZIERLER: Did you have any interaction with Lincoln Labs as an undergraduate?
KRESA: No, not as an undergraduate.
ZIERLER: I'm curious, just to foreshadow, when you became aware that defense contracting was an industry.
KRESA: I think I certainly knew that when I went to aeronautical. I was in the aero department. I don't know exactly when I learned about it being an industry. But, certainly, guys that built planes were mostly military airplanes, and I knew that. I was drawing airplanes from the time I was a kid. I was building stick models of airplanes that were mostly military aircraft, so I certainly understood that the military business was where airplanes were. There were a few commercial airplanes but not many. They were starting. There was a commercial business at the time. But the DC-6 was just coming online, if you look back to those days. I knew that there was a large business, and the military was an important part of it.
ZIERLER: Kent, tell me about the aeronautics curriculum. How much of your time was spent just doing physics and math before the engineering?
KRESA: The first couple of years was basics: physics, math, chemistry. Really, a fundamental background in engineering and science is certainly the first year. I recall there was nothing. In fact, you didn't really go into aeronautical engineering until your second year. You didn't declare. I don't remember exactly how many courses that you got that were uniquely aeronautical type, but it certainly didn't start until your sophomore year. By the time you were a junior or senior, you're practically dominated by such core classes of control theory or aerodynamics or fluid dynamics or some damn thing, which was more associated with aeronautics.
ZIERLER: What kind of shop work did you have as an undergrad? Did you have the opportunity to build stuff?
KRESA: Not a lot, no, not at school. I didn't build a lot. For my undergraduate thesis, I had to build stuff to finish it. But I didn't really do a lot. There were people. If you were in propulsion or you were in some things, you were probably more involved. But I was more into control theory at that point in my life, and that was mostly all mathematics and things of that sort.
ZIERLER: Kent, for the summers as an undergrad, did you go back home to New York or did you stay on campus?
KRESA: No, I went back to New York. The first year, I continued the job that I had when I was a senior and junior, which was I was a yachtsman for the Bayside Yacht Club, and I drove people around to their boats on a launch. That was the job. It was a great job. But for my sophomore year, I went to work in a company that was an engineering company. It wasn't aerospace engineering. But it was very interesting, the first time, and they put me in the research department to help out. I used my hands a lot, and learned the grubby business of doing testing and so forth. It was a very interesting and very exciting business. I thought it was really nice, so that's what I did.
ZIERLER: Would you say that—?
KRESA: Then I went off. I decided to do the co-op course, which allowed you to get six months of experience and still graduate in four years. I thought, boy, this is really great. I'll get a job, and I'll learn about the industry, and wouldn't it be great? It was an amazing experience. I was accepted at Boeing, and I went out to Seattle, and I worked there for a summer, my junior to senior year that summer, and then the first semester I worked. I worked a summer and another four months at Boeing in the wind tunnel department, which was absolutely spectacular. I had a fantastic experience. But I came away from it saying, "I'm out of here." If this is engineering, I don't want any part of it, because I had a great job, I really did, in the wind tunnel, which was very, very varied work, very exciting, all kinds of new things. We were doing hypersonic flow on the Dyna-Soar missile, which was under contract at that point. I was able to get involved, and walk through the first jet airplane that was being produced, the 707. It was mind-blowing. But I also had an opportunity to see the acres of engineers. When you go to see an engineer, and you go into a room which is 500 feet by 500 feet, and if you want to go see A29, you find the A row and the 29 row, and you see four guys sitting around in a four desk put together with a phone in the middle, and everybody had a Friden calculator, and they're just going through numbers. I said, "I'm out of here." When I went back to MIT, I told the professors, "I'm out of here." I'm going over. I'm going to see if I can get into Harvard, and go to business school or do something because this is not the kind of life I want. This is just awful, if this is what an engineer is. They talked me out of it. They said, "Oh, that's the past. There's a new world here. It's all different. Things are happening different." Believe me, trust me, all the professors told me, "Just calm down. That's the old aeronautical engineering business. The new one is very different. It's with computers. It's with this and that." When I went to look for a job, they convinced me to stay, which I did. Then when I went to look for a job, I went to places that they told me were different, and then they were really different. It was very much like the digital era today in that the donuts were there in the morning. The coffee was always there in a pot. You had a private office. You had access to a computer, and you were doing things differently, and you were considered almost an executive. When I first went in, and they gave me my own office with—
KRESA: —all of this stuff, I said, "Wow, this is really great."
KRESA: They were right, and it turned out they were. I could go and get programs run on a 709 computer, which was the biggest computer in those days. IBM 709 I think was the one they had, and it was wonderful. I went there also because the company, which was Avco in Wilmington, which was just outside of Boston, allowed me to continue on at graduate school. I had been accepted to graduate school to stay at MIT, so I wanted to do that. They were one of the few people that would allow me to take off during the day to take classes, and continue my education, which I thought was fantastic, so I went there. That was the overriding reason I went there as opposed to other places. I got lots of offers. Everybody from MIT in that era was a superstar, and people were giving bonuses. It was amazing. It was a crazy time, just like the tech world today or 10 years ago.
ZIERLER: Kent, to go back to that initial revulsion you felt at what you realized old-school engineering was like, what do you think actually turned you off? Did it strike you as mundane? Did it strike you as antisocial? What was it for you?
KRESA: It was mundane. These guys were doing wing calculations that should be done in a computer, and each one had a Friden calculator and a set of numbers that they had to crunch from A to B. These guys were crunching numbers. They were a human computer, if you want to think about it, what I was seeing. But industry didn't have computers that could do virtually anything in those days. If you wanted to do a drag calculation on a complicated wing, you got a bunch of people that were grinding through the numbers. That was it. None of that's today. There isn't any of that done today. But that was a very important part of being able to build a particular airframe. You had to get it right, and they did it, and it was where these guys were. They had rooms and rooms and rooms of these guys doing this. They weren't doing any engineering. They were grinding numbers. I just thought what a waste. I cannot see myself getting involved in this. I knew that they were treating me really well in this wind tunnel environment, which was very different and very front-end-y and really very nice. They were being very nice to me, and all of that. But I knew that if I went to work there, that's where the engineers were. [laugh]
ZIERLER: Now, in the way that your professors talked you off the ledge, was that good advice they gave to stick with it because there was a new era coming?
KRESA: They said it was already here but that Boeing hadn't gotten there yet. They were saying, "Look, there are"—they knew. They were consulting for various people around the country. They knew that the world had changed and was rapidly changing as the digital computer world was happening. I went to work at Avco. I didn't know it because I wasn't cleared when I initially went there, but they were working on the reentry vehicles for ballistic missiles. They were at the high end. They had computers. They had all the schmaltz, and it was great. They were smart. I thought the people I met were really good. I started doing engineering immediately. When I first got there, they found I knew something about oscillatory characteristics at high altitude, and we started talking about it.
The next thing, they gave me the project. I didn't even know what the project was. I only worked there a year and a half because I went back to MIT to get my degree. But I found out later that what I was doing was I was doing the calculation of when we put the little chutes out on the packages that were coming out of the SAMOS vehicle, which were the first satellites that had cameras in them with film as opposed to a digital readout. Then when they'd come to a certain point, they'd pop these things off, put them on a chute, and they would get caught by helicopters. I was doing the dynamic characteristics of when they popped the chutes at very high altitude and would come down, and I was doing that analysis. I didn't know that until I left. I remember some guys came into my office, and they quizzed me on why I did this in this way and that way. I'm like, "Who are these guys?" They wouldn't really tell me what I was doing; why they wanted to know these things. It's funny, I finally found out later they were the boss. They were Lockheed. They were the guys that were building this thing, and "don't talk about it, blah, blah, blah." I said, "I'm doing something really that was leading-edge stuff." It was fun. It was good.
ZIERLER: Kent, I wonder if that initial experience really planted a seed in you about the importance of technology in engineering.
KRESA: I would say yes. I would say that it became even more important later when I got my next job, which was when I went to Lincoln. That really told me that there were people using sophisticated analysis to be able to get to answers. I thought that was terrific because that's what I learned to do at MIT. That's what engineering was: how to reduce things down to try to get an approximately correct answer for problems that are not completely known how to do, and then how do you integrate testing with analytics to get a better answer? But the funny thing was, MIT in those days required you to be on campus for at least six months in order to get a master's degree. I had to leave Avco after I had worked there a year and a half to go on campus to write a thesis and get my degree. I took a leave of absence from Avco, expecting that I was going to go back. I loved the job, and I loved the people. I really enjoyed everything about it. I went off to MIT to do my thing, and MIT was very nice. They gave me a job. They actually paid me some things to do some work. I did my thesis.
ZIERLER: Kent, what was your thesis on?
KRESA: I'm trying to remember. I don't even remember my master's degree thesis. I remember my engineering degree and my bachelor's, but I can't remember. I don't know. Oh, yes, I do. I don't know what I was trying to prove, but it was around the oscillatory characteristics of reentry vehicles as they come in. I don't even know why I did it, at this point, I really don't. But I remember when I was looking for a job, when I was going to graduate, giving a lecture on that somewhere. But I don't remember where it was. I don't know what it was. I don't remember. But, in any event, I went back to MIT and was there for six months to get my degree, and now I'm going to graduate, and I'm in big demand for everywhere. My view was I'm going to go back to Avco. But I kept on getting asked if I'd like to do this and that, and they're wining and dining me, and they're flying me to the West Coast and down to Florida and wherever. I'm having a great time, seeing the world, and it's wonderful, and I'm learning some things. A funny thing happened in this, and this is really crazy but it how the world flips. I now was getting my master's degree. For everybody except from Avco, where I just came, I was a guy who used to work there, and took a six-week leave of absence, got a degree, and I'm coming back. How much is that worth? Let's say the guy got a master's degree. We ought to give him a raise. How about 10%? Everybody else? I'm a guy with a master's degree with two years' experience. [laugh] On that curve, I'm worth 100% because I'm on another curve. Everybody else is offering me double what I was making at Avco. I explained to all the Avco people, "I really want to come back. You guys let me go to school. You did this. I think you guys are great. [laugh] I love you and all that."
They could not get their management—there was no way that they were going to make any exceptions because it was so outrageous that they couldn't do that. But everybody else in the whole industry took the industrial curve, and said, "Here's a guy with a master's degree and two years' experience. [laugh] That's what we pay him." I wasn't necessarily getting a big bump from anybody else, but the two years that I was getting experience for was the two—anyway, it was crazy. In the final analysis, the most interesting job that I had offered to me was from Lincoln, and I was in Boston still. There were a lot of positive reasons to stay there. But they offered me a fantastic job, so I took it, and that started a career at Lincoln, and staying at MIT.
ZIERLER: Kent, with all of this wining and dining, did you ever think even for a second about staying on for the PhD?
KRESA: That's a later part in my career, yes. I never really thought about it there because, at that point, I would've had to pay for it. I didn't have any money. I was broke. There's no way I was going to do that. I wanted to go back to work, and they were offering me these fantastic amounts of money, and so forth. At that point, I was anxious to get back to work, to start making money, to do exciting things. Lincoln offered me a great job, which was very research-y. For Lincoln, I was an anomaly in that I was an aeronautical engineer who knew how to build reentry vehicles, and what they're all about and so forth. They had a project for ARPA, which was to try to understand what are the characteristics of a vehicle that reenters the atmosphere by whatever means. Can you weigh it? How can you weigh it? How is energy transferred from the vehicle to observables of some sort, whether it goes into the gases, whether it's heating up and is therefore a thermal signature, whether it's just the dynamics of the drag on the vehicle which changes the dynamics and so forth based on weight? What are the things that you can measure that would make the difference?
Obviously, the thing they're worried about is how do you tell something weighs a lot from something that weighs a little, and the difference being one is a decoy and one is the real bomb? You'd like to know that because, at that point, everybody's now saying in ballistic missiles, "We're going to put decoys so that we give the defense a problem where they have to look at multiple objects, and what we'll do is saturate the system. If you send five reentry vehicles with 15 decoys, they've got 20 things to look at. They won't have 20 missiles defending that area. One of them going to get through, and they're going to die." That was the game. Lincoln, who was big in radar and optics and all that stuff, they got the research job called Project Defender, which was to look at that. They were doing experiments where they were trying to launch different vehicles with different ballistic characteristics, pointed, blunt, and so forth, where they knew the aerodynamics, simple things, where they were constant chemistry, where they were made out of the same material so you could see if you could learn things. But they had to have some people that knew how to build reentry vehicles. They hired me. This is the guy to build reentry vehicles. I didn't know how to build them, but I know how to design them, and I could do it. Right off the bat, I'm in the business that I was just in, in a little tiny facet. I'm the guy doing it. I would design a particular vehicle out of some constant material and so forth in a very simplistic form. Then we got to go have them made, and who would make them? The ballistic missile people would make them, so GE and Avco and the companies I used to work for, they're now my subcontractors. It was crazy. I went from a little fly in the ointment to I'm managing guys building these reentry vehicles for me, and we're launching them, and we're doing various things, and it was very exciting
ZIERLER: Kent, what year did you start at Lincoln?
KRESA: I don't remember. It was the year I got my master's, '59, so I think I got it in '61 or '62. I think it was '61. I don't remember. Whatever year that I got my master's degree is the year I started at Lincoln.
ZIERLER: Do you have a sense when Kennedy came into office and really the dawn of the space age, did that change things as far as you could tell?
KRESA: I wouldn't say it changed things in any way. The business was booming, and there were all kinds of things happening. The aeronautical side was going big, the space piece was growing at an enormous rate, and so it was just big. It was big before, and it was big after, so I wouldn't say I saw any quantum shift. Now, I wasn't high enough in the organization to worry, "My budget just went up by 35%." I wouldn't see that. I'm working down there. I got more work than I know what I'm doing. It was fine.
ZIERLER: Now, did you come in with clearances from Avco, or you got them at Lincoln?
KRESA: I don't remember if I was cleared at Avco. I don't remember. I certainly got cleared when I got to Lincoln. I don't remember when my first clearances came, interesting point, but I don't know.
ZIERLER: Did you have any interface with the DOD? Did you go down to Washington at
KRESA: No, not then. I started reporting things at major meetings, which the government sponsored, particularly ARPA. There were lots of meetings where they were talking about results. Defender was a huge program for ARPA at the time, and so I got involved in briefing a lot of people. But, generally, I started mostly giving things at symposia, and then later I got involved with individuals and so forth. But I couldn't tell you exactly when that happened. I got very involved with individuals when I went out to Kwajalein and worked out there then, because I was heading up the—I wouldn't call it the technical part but the interfaces, all the interfaces running the tests, and having interfaces with the service, and with Vandenberg when their launching, and all that stuff. I was very much involved with that.
ZIERLER: Kent, to go back to something we discussed in our first conversation, the opportunities you had to develop not only your engineering skills but your management and business skills, did you have those opportunities at Lincoln? Did you really grow in your role as a manager and as a businessman at Lincoln?
KRESA: In those early days, no. I was a staff member. Staff members at Lincoln are rather senior people, in any event, so you have lots of autonomy. But in terms of managing other people, I would say, no, I did not at that phase. But when I went out to Kwajalein, I did become a manager, so that's when it occurred.
ZIERLER: How long were you at Lincoln Labs?
KRESA: [laugh] As I recall, it was seven or eight years, again, the exact number is around that.
ZIERLER: I wonder if you were there long enough for when, during the Vietnam era, there were some protests and tensions around Lincoln Labs, if you saw that at the tail end.
KRESA: I saw that when I was at school when I was getting my master's degree, or maybe it was my engineering degree. I don't know when it was, but there was terrible dissension. As a matter of fact, I got so pissed off with MIT that after I got my last degree there, I didn't have anything to do with them for years because I was very upset with the tenor of what the professors were doing, trying to get out of all the military things. My sense was it was important, and it was part of my life. All of these guys are blowing it off, and saying, "It's horrible, and you shouldn't be involved, and we don't want to be involved with the Defense Department, etc." They did a lot of really stupid things at the time. They had this fabulous operation, which was actually part of the aero department, very much so. Doc Draper, who was the head of the aeronautic department when I was there, was the leader of Draper Laboratories who did all of the guidance work for all of the ballistic missiles in the Navy, and submarines. It was right off campus, just across the way. A lot of people worked there, and it was almost integral to the whole department, and so forth. The pressure was so great that they severed all connections. MIT severed all connections with the Draper Lab. I thought, "This is stupid. This is awful." I was so pissed off with all of them. I said, "I don't want to have anything to do with these guys. They're outrageous." Now, Lincoln was far enough away. There were some pressures. But it was sufficiently out-of-sight, out-of-mind that there was no real push to unseat Lincoln, that I know. What would I know? I was not high enough in the organization to be knowledgeable of any activity that might have gone on. But they seemed to be immune compared to the poor guys at Draper, who got tarred and feathered, and thrown out of the orbit.
ZIERLER: Kent, of course, all of these issues relate so closely to Vietnam. What were your politics in the 1960s? Did you support the war in Vietnam?
KRESA: Yes. I would say I did. I supported the government. I felt that I didn't know enough to know all the details, so I supported the people. Did I go in great detail to understand all that stuff? No, I was not politically minded or astute enough to do that. I was more interested in my own interests and career at the time to do it. I wouldn't say that I was swayed any way or not. But it seemed like a reasonable thing, and I thought what was going on in America was crazy, frankly. The young people that were protesting were a lot younger than I was at the time. Maybe this was later in my career. I don't remember exactly when it was. But the thing I got really mad about were the professors that should know better but that they didn't.
KRESA: Kent, I know you said that Lincoln Labs was somewhat isolated from all of these problems but, generally, did the political situation compel you to think about opportunities beyond Lincoln Labs?
KRESA: No. I was very involved. When I was at Lincoln, I was very involved with what was going on, and the projects seemed to be well supported, and I had more than gainful employment. I was working very hard to get things done, and worrying about the next test or the next thing that had to be done. I was more engrossed in that. I was not worried about a job.
ZIERLER: What were some of your most interesting projects at Lincoln? What do you remember?
KRESA: I remember building a whole series of reentry vehicles, which we launched down in—I can't think of the name of the place but it was down in Virginia on the coast. I can't think of the name of the town. These were small rockets, which we would launch up, and then a fire rockets back into the atmosphere so we could get the speeds that were associated with a typical trajectory of a ballistic missile coming from 4,000 miles or something, and making sure they work well. I was excited to make sure the damn things didn't break up or have problems. I had designed all these things, and they're one-shot deals. It was all very exciting, and they all worked well. It was a lot of fun. They're looking at them with multiple sensors, and so forth. That was a very important period of time. Then I got involved in doing the data analysis of that work, and that's really what got me to go to Kwajalein. I was doing data analysis on some of these vehicles that were coming back. I was in a team that did that, and they were looking for people who could do that same kind of stuff on the things that were being done in Kwajalein in the Marshalls that were looking at real vehicles coming in from Pacific Missile Range. they asked me if I wanted to go and do this there. In those days, it was at the end of the Earth. They had no communications. They had a ham radio that they could get working a few times a week if the atmosphere allowed. But it was in the middle of the Pacific, and it sounds like an exciting thing to do. I was married at the time, and my wife and I had spent our honeymoon in Hawaii. She wanted to know what's this place like? I said, "The only thing to say it's a tiny, little island in the Pacific. It's not like Hawaii in that it's big, but it has beautiful beaches like that and all." She said, "Oh, my god, I'd love it." I really didn't know the difference, to tell you the truth, between the two, and they were very different [laugh], but she consented to go. We went down there, and that got me off on another track also for Lincoln. That's where I really got involved in management, where I learned about it.
ZIERLER: Tell me about Kwajalein's mission. What did they do?
KRESA: The same thing that I was just saying, we were doing in Virginia, which is looking at reentry vehicles that we had generated. These were simple vehicles, a sphere that's made only of copper, so we could see what the characteristics of a sphere are made only of copper. When it's shedding its weight, what does the plasma look like, and what are the materials that are coming off, and how far back do they go, and all the kind of characteristics, trying to understand the fluid dynamics that are going on in this ablating environment with a vehicle going through the atmosphere. In Kwajalein, they're doing it with the real thing. These are vehicles that are coming in from Pacific Missile Range that are on Atlas and on Minuteman and whatever, to try and do the same thing and on real vehicles, which is to try to discriminate between RVs and decoys. Because this is in the middle of the Pacific, and the amount of data that was being recorded, Lincoln built for the government a series of very large radars and optical systems. We had a 707 filled with all kinds of other optical equipment, watching these events, taking pictures of all the crap that's coming down, and then looking at the decoys and the RV, and trying to make sense of what differences are these, what is the same and what's different and so forth, and trying to analyze the data, so that we could try and decide if we could discriminate between these two because it was very important. I was an analyst doing that kind of stuff in the US, so they asked me if I'd like to do that in Kwajalein. Because Kwajalein's so far away, they did all of the analysis right there. We had the largest computer that was then in existence, an IBM 7090. In its time, there were like 10 of them in the world, and we had one of them in Kwajalein. It was considered a very high priority defense project. I didn't know it was that high a priority when I went there.
But as I went there, I realized it was on the tour, the stopping tour of every political airplane that was going to Hong Kong to buy furniture for the wives and the senators and the congressmen that happens hundreds of times a year, which I also learned about in that period. They were interested in it as a technical thing, plus it was a good rationale, so they could go home and talk about all the wonderful things they did, and it wasn't just about shopping, which is hard to explain to their constituents back home. It became political in the sense that once every two weeks, there was a plane full of congressmen or senators or high-ranking DOD officials that would stop in Kwajalein, and want to be briefed on the latest shots that happened, and what was going on, and what are we learning. It was a serious activity. I started out as an analyst. But within a relatively short period of time, I got involved in management of the place, and management of the actual testing. That's when I really became manager. I had to see the bigger picture. I'd explain the bigger picture. I had to be nice to all of these visitors, etc. That's what I learned.
ZIERLER: Kent, the backdrop here, of course, is the Cold War and the Arms Race with the Soviets. What was this work? How was it responsive to those issues, to this power struggle?
KRESA: It was responsive in the sense, clearly, the fact that we were doing that work was already of great concern to the Soviets. The Soviets had trawlers off of Kwajalein all the time. They were monitoring us as much as we were monitoring them, and so they were very interested in it. We were doing at the same time the first work on a ballistic missile defense system, which was the Nike Zeus system, and Bell Labs was there doing that on the island. We had launches from the island all the time to simulate intercepting reentry vehicles and what have you, and all the work that you do in doing a ballistic missile. They went through two phases of that, and never built one, but one was canceled. But then they went to the next generation. All of that was going at Kwajalein. Kwajalein was this little, tiny island, which is a mile by half a mile wide, part of an atoll of islands. A lot of people knew where it was. The Soviets knew where it was, and the US knew where it was, and everybody showed up. We didn't brief the Soviets. We were certainly briefed on all that, and it was highly classified, and we had secure lines. But we were cut off from the world. We had no communications at the initial phase of that. We had nothing. There was no satellites, and there was none of that stuff. There was no phone, there was no radio, TV, nothing. You're out in the middle of nowhere, living on a desert island, where the rainstorms came by every now and then, fortunately, and left enough fresh water that you could survive the next day. That's what we did.
ZIERLER: [laugh] Kent, what were your living quarters like? I assume this was not opulent.
KRESA: It was not bad. You've got to realize that this was viewed as a very high-priority project, so we were coddled, if I were to say that. They built a city for a few people. Between the Nike Zeus project and the Lincoln project, there were probably 1,000 people total. That would be maybe 400 technical people that were doing the work, plus their families, which would include the wives and children of the families, and then they had to take care of them. First of all, you have to have a school system, so then there's a K. Did they have K–12? I think they had K–12; maybe K–8. I don't know. I don't remember. But they had that. Then everybody had to be entertained. There's no TV. There's six movie houses. They have to have a movie house so they play different movies at each one, and then kept on resupplying the movies. They had restaurants. They had obviously a large liquor store. They had obviously a nice food store. The thing to do was, of course, you're out in this gorgeous water, so they had every conceivable water sport. Sport fishing, sailing, scuba diving, high-speed waterskiing, you name it, they had it all. You'd go there, and they'd give you the keys to a boat, and you'd go use it.
We lived in trailers. Now, they came in, and put in hundreds of these trailers, which were like 50-feet by 12-feet wide, whatever they were. They were two-bedroom homes that came complete with everything in them, air conditioning, and what have you. We lived in those. They had some houses as well, which some people lived in with large families. If they had a large family, they got more. For a small family, you got one of these little things. They were lovely. They were air-conditioned and capable. You didn't have much to do. They had a thing called trouble desk where if something went wrong, you'd pick up the phone, and you'd say, "The plumbing isn't working, or I need flowers in the front of the house, or I need whatever." They saluted, and people came and did whatever you needed. It was sort of living. This is not bad. This is not a bad way to live. That's what happened. Of course, it was one of these things if you're a young technical person, it was an exciting business to be involved in. It was very lucrative in the sense that they had a deal where if you stayed out of the country for 510 days out of—I don't know—a year and a half, there were no taxes, so it was tax-free. They gave us a per diem, and we lived totally on the per diem. My entire wages, which were tax-free from state and local and government taxes, was a bonus that you could take home when you left. For most of the people that I went there with, that was the next step that allowed people to buy a home when they got back. By the way, while you're there, it was a ball. Aside from working very, very hard, which we did it, the rest of the time, since there was no TV, there was partying. The partying was almost nonstop. [laugh]
ZIERLER: [laugh] Kent, what did your day-to-day look like? How much were you in the office? How much were you out in the field?
KRESA: There was no out in the field. We lived on an island that was a mile long and a half a mile wide. We bicycled to the airport either in a rainstorm or a nice day. It didn't matter. We'd get on a DC-3. We would fly for 25 or 30 minutes, and go up the atoll chain to another island called Roi-Namur, where all of the Lincoln Laboratory radars were. We'd work there all day. If we had a test, generally, the test came at night because they wanted the background to be dark. If we had a test that night, we'd stay until the tests were over. It could be all night. It could be over at midnight, or it could be 4:00 in the morning, or it could be scrubbed, and then you'd go home, or you'd stay there. But that was the day, and the offices were there, and you worked every day in your office. Again, for the beginning part, we had virtually no outside communication. During tests, they had radio communications generally with airplanes that were strung across the Pacific that allowed you to have communications. Eventually, they got a satellite up, and then it all became easy. Today you go there, they have full-time TV, and you can dial up a phone number. I can call Kwajalein from my cell phone now, but not then.
ZIERLER: Kent, as you mentioned, this was really your first taste of real management experience. What was the reporting structure like on the island? Who did you report to? Who reported to you?
KRESA: I had a small staff that directly reported to me. I reported to a manager who was the head of all operations for Lincoln on Kwajalein, who reported to the bosses back in Massachusetts. But I had informal interaction with all of the leadership of the radars and optics activities, and so forth. We were all equal. By the way, all of these peer managers were all the about the same age, where, today, we would probably never be considered to have as much responsibility as we had in those days. I was 25 or so, and the others, all guys, were also the same age, and we were doing enormously complex things and had major responsibilities. Then we interfaced with the people on the island, the military who were on the island that had to do approve things. If you had to set up certain protocols, or had VIPs coming, there were security issues, and there were various things that had to be done. There was a lot of interfacing at, we'll call them, equal levels. But in terms of reporting, I reported to one Lincoln Laboratory person. Then we had, of course, the people in ARPA who were very interested, and I reported to them a lot because I was running the tests. They wanted to know how did it go? They would get to me minutes after it happened because I was the guy on the communications back to the States..
ZIERLER: The funding came from Lincoln, or it came from DOD?
KRESA: It came from DOD through Lincoln.
ZIERLER: Technically, you were reporting to Lincoln Labs?
KRESA: Yes, I was a Lincoln Lab employee.
ZIERLER: When you went to Kwajalein, your affiliation basically stayed the same?
KRESA: I was an employee of Lincoln. We were all employees of Lincoln.
ZIERLER: How often would you travel back to the States? Would you go to D.C.? Would you go back to Boston?
KRESA: I did that once in the 18 months. It was too far. We had people that would come out. The leadership of Lincoln would come out every now and then to see how things were going. This was a very important project for Lincoln, so they would be there. People would come visit us, but we didn't go there. You've got to realize it was a flight of about 14 hours from Hawaii. Then if you want to go from Hawaii back to Boston or DC, it would be another 14 or 15 hours. To say, "I'd like you to come to Washington to talk about this" just wasn't practical.
KRESA: You're there. This is a long way away from civilization.
ZIERLER: Your wife was happy to go. Did she enjoy the 18 months?
KRESA: Absolutely. We had a mind-blowingly exciting time as two young people. It was beautiful, and it was exciting, and there were lots of things to do. We had the ability to take a couple of vacation trips to Hawaii. The Navy and the Air Force had airplanes coming through all the time. If you had vacation time, and wanted to, you could get on that airplane, and go wherever they were going if they had open seats, and then it was your responsibility to get back somehow. You'd get to Hawaii. You could always get a flight down from Hawaii. It sounds easy, but these are generally very long flights on piston airplanes and the Pacific is really large.
KRESA: Each one of these is a 20-hour venture, so it's not so easy. But it was a lot of fun. The Scuba diving was the best I'd ever done. I'm thinking, I did this for my first diving and, for the rest of my life, I never had diving as good, ever.
ZIERLER: Kent, maybe it's a silly question, but why does this work need to take place on this tiny island in the middle of the Pacific?
KRESA: It's because it was where the reentry vehicles entered the atmosphere and where you had to take the data. Kwajalein was the only place we could target and have control and see what was going on. The US was testing Minuteman Missiles from Vandenburg and testing new reentry vehicles, new decoys, and all kinds of things. It had to be there to ensure that the Russians couldn't recover the debris because we controlled the Atoll. There is a ship, which went where the Soviets tested, and you could do that, but that is really hard work, where you were out on that boat for six months, going crazy. At least at Kwajalein, we had a place to live. That was the main reason. Today that island still does that same kind of work, but there's virtually nobody there because everything is now connected back to the laboratory. They can run the radars. They run everything directly from Massachusetts. There are a few technicians there to make sure they keep things well-greased, and if something breaks, they can fix it. But there's virtually none of the technical staff. There's no technical work being done there at all.
ZIERLER: Kent, on that point, how did you communicate with the mainland? This is obviously before the internet. Was it all satellite phone?
KRESA: There was no satellite phone. It was a ham radio. They would get the ham radio up. I think they had people at Wake and in Hawaii, and then they would get to the West Coast, and they would then communicate by phone from the West Coast. They would try to set that up a link every day so you had some sort of communication, and then they put security on it if necessary. It was hard. But there wasn't a lot of communication.
ZIERLER: Thinking about ARPA in the late 1960s, do you recall, was anybody talking about what ultimately would become the internet?
KRESA: I was there in the mid-60, so I can say we never really thought of the internet in the way it evolved. But the guys who were doing that were in the office next door. It was being done for a different set of reasons, all very interesting and all very important. The internet part of it just came out as a side benefit.
ZIERLER: Were you aware of any counterintelligence measures? I assume the Soviets were very interested in learning what was happening on this island.
KRESA: Sure, yeah. There were people that were worrying about that. We had Army intelligence people that were tracking various things, and doing whatever. I wasn't cleared for that, so I don't know. But there were always worries about that. We had security. We had some ability to do things in a secure way, as secure as we thought it was. Who the hell knows? We did a lot of classified work there. But, again, we were doing it all. We were doing all of the analysis and so forth right there. We had the computers. We had the best computer in the world. We had people coming out from Lincoln to use the computers there. They would come out to run some of their programs because they couldn't get time on the computers at home.
ZIERLER: That's amazing. [laugh] Kent, in the grand sweep of history, in what ways did this work really move the ball forward in reentry technology?
KRESA: I would say that it probably convinced people that a ballistic missile defense system, the building one, was premature even though guys wanted to do it, and there were maybe some wanting to do it for political reasons. But it wouldn't work. We would have a false sense of security, which would not have worked because it was so hard, and we were able to demonstrate how hard discrimination was. I can say that today we know how to do it but it's because we have the processing speed to make decisions in real time, which allows us to do things that we just had no ability to do 20 years earlier. It was this daunting task. But I think the fact that we did fundamental research that showed how hard it was and why it wouldn't work, that we didn't go forward with many of the anti-ballistic systems. It's a negative result in a funny way but a very good one that we would've wasted billions, trillions, doing systems which would've given us a false sense of security. Maybe, that we could even decided we can launch a weapon, and remain safe [laugh], and we weren't.
ZIERLER: On that point, I know it's outside of your field, but given this conclusion about a false sense of security, how do you think this research affected US military doctrine in the nuclear area?
KRESA: I think, in a way, we had a great understanding that our ballistic missile threat to the Soviet Union would be taken as that. They would not believe there's any security, and they put a defense system in that it wouldn't work, and they knew it, and we knew it. So assured mutual destruction was real, and nobody would ever back off from that, which was good. It's reality. If somebody had somehow said, "We can do it," when we really couldn't, it could have created a situation on either side, which could create a different environment, and it could have had a bad outcome.
ZIERLER: In a way, this research really contributed to stability between the Americans and the Soviets?
KRESA: I believe it did. I'm very proud of what I did. I spent a lot of time at this in my life, and I felt that it was worth doing, even though, during my period of it, we never solved it. We couldn't solve it. It was too hard with the tools we had to word with.
ZIERLER: Kent, the 18 months that you were there, was that a set term? In other words, did you know you'd be there for a year and a half, or that was open-ended?
KRESA: Everything was open-ended. Some people couldn't stand it, and left early. Some people loved it so much, they tried to stay. After a while, somehow they said, "Hey, we don't want you here anymore. You're going native." I was feeling that it was a wonderful thing to do, but I did want to get back to reality too. This was a wonderful thing to do. It's like being on vacation and, when you get towards the end of it, you start thinking about the rest of your life. Maybe you'd like to have another week but maybe not another year.
ZIERLER: Yeah. [laugh] What were your options when you started thinking about coming back?
KRESA: When I came back to the lab, I was very involved with the ARPA stuff, and I was much more of a manager, so I had a voice into ARPA on other things. I thought what I ought to go back and get my PhD. That's what I'll do. They said, "Great, we'll pay for it. We'll give you your salary, and you do it." Think about it. I was making a lot of money in those days, and they'll pay me my salary, and let me go get a PhD. Not a bad deal. That's what I went did. Very quickly, as I got back to the university, I got totally bored, depressingly bored. I somehow missed the excitement of making things happen.
It came to a head for me when in those days at MIT, you had to be fluent in two foreign languages and to be able to read technical papers in two foreign languages. I knew French a little bit from high school, and I could sort of get by. I was sort of doing that on my own to learn some of the technical jargon that I would need to do. But I could get the gist of things in French. I needed another language, and I thought, "I should do Russian. That's an important thing, but it's too hard." I said, "I'll take German." I started German. I'm in it for about a month and a half, and I'm taking German. I'm hating every moment. I'm wondering to myself, "Why? What am I doing? Why am I here?" I got to learn German so I can pass an exam so that I can get a check mark on reading technical German. I'll never read a technical journal in my life. I finally just got so depressed with the whole thing, I decided I wanted out.
ZIERLER: Kent, it begs the question though. Why did you think to go back to the PhD in the first place?
KRESA: Good question. I just thought it was the right thing to do. The senior people have all got their doctorate, and I should get mine, and I could do it, and it's being offered for free. It's a good thing to do, and I could do it because I'm not doing anything particularly important at that moment. It's a perfect moment to use a couple of years to do it, and I thought I could do it in two years. They were saying I could probably do it in two, maybe three, because I had a lot of work experience. It was not for me, and I learned that early. I went to the department head. They said, "You've got all the coursework. You've done all this stuff. We'll give you an engineer's degree, and you've got all the stuff with that. You do a small thesis, and you can get an engineer's degree. Don't just be here for nothing." That's what I did. I did a small thesis, and got my engineer's degree, and went back to Lincoln.
But because I was still in communication with the people at ARPA who knew me, they said, "Why don't you come down here? You'll really love it here. We're doing exciting things, and you can be involved, and you can direct some things." I thought, "Boy, that's a different thing to do." I eventually decided that's what I'd do. I went to work at ARPA, and that really changed the trajectory of my life in an enormous way. If I say are there three important and exciting buckets in my life, Kwajalein was one of them. It was exciting. It was a lot of fun. I met some of my favorite people in the world, and we're still friends 50 years later. We still see each other at least 2 times a year.. Then going to ARPA was another mind-blowing experience. Very exciting. You say, "Which one is the best?" I can't even say. The third one was going to Northrop. Who would've thought? People say, "What's the most exciting thing you ever did?" I cannot tell you which was the best, I can't.
ZIERLER: That's a good problem to have. [laugh]
KRESA: It is a fabulous problem.
ZIERLER: Kent, that's a great place to pick up for next time. Last question for today, just to set the stage, your career up to this point in the defense industry, did you feel the pull of Washington? Did you appreciate that in, some ways, ultimately, that's where the action was? Did you go to Washington with that spirit, to some degree?
KRESA: Yes. I certainly understood the importance of Washington. I really appreciated ARPA for what it was doing. They were doing technical things. They were inventing exciting things, right and left. The people that were there were mind-blowingly bright. It was a new way of doing Defense research. The days before were the OXRs and each service had their own, it was somewhat bureaucratic, and this was a totally non-bureaucratic structure of very smart people coming together for a couple of years, trying to do some things, doing unbelievable things. You were among a bunch of people that just excited you at all times.
ZIERLER: That's great. Next time, we'll pick up, Mr. Kresa goes to Washington.
[End of Recording]
ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It is Friday, November 11th, 2022. It is great to be back with Kent Kresa. Kent, once again, it's a great pleasure to be with you. Thank you so much.
KRESA: Always fun to do.
ZIERLER: Kent, today we're going to pick up in the late 1960s when you go to Washington to join ARPA. By way of background, I wonder if you can talk a little bit about how much you knew of ARPA from your vantage point at Lincoln Labs, its role in the research, its role in DOD, in overall policy. What was your appreciation of ARPA even before you joined?
KRESA: I certainly knew that ARPA was a new organization that had been formed after the failure of the US to win the Space Race. It was the decision to not just have the OXRs of the world do all the research for military things. They set up this independent organization in the Pentagon called ARPA, which were headed by scientific leaders, mostly from industry or from universities. I knew about it and, of course, I had been working in Project Defender for many years at Lincoln Laboratory. In fact, I started at Lincoln on that project. I'd worked for ARPA for some period of time. I was very involved in the Defender portion. Defender was a large piece of the original ARPA, but they did many other things. I knew them from there, and I knew what they were doing in the Defender business.
ZIERLER: What was your initial point of contact? Did you get recruited there? Did you express interest in joining? How did that work out?
KRESA: I got recruited by the people that knew me from Kwajalein because the ARPA people would come out to Kwajalein quite often. I was a point of contact, if you want to think about it that way. I'm not the only person that dealt with them but one of the people that did. I got to know many of these managers well. Most of them were service people. One of them was a guy by the name of Joe Kiernan. He was very influential. He actually was killed in Vietnam, and he was a fabulous guy, and clearly on his way to be a rock star and a general officer. He was the one I talked to as I was debating the issue of getting my degree. He was saying, "You ought to come down to ARPA, and you can take a leave of absence. We've started this process with universities." I was pretty early in that process, so I was one of the first few. You would take a leave of absence for a couple of years, and go down to ARPA, and do your thing, and then go back to your job. It sounded like, well, I'm footloose, fancy-free. I'm sort of not working on anything. I've been away from the lab now for some period of time. I was on Kwajalein. Now I'm back. I went back to get a degree. I really hadn't done anything at the lab for several years. I thought, "Hey, why not? I'll try that out, and it'll be kind of fun." It was another adventure.
ZIERLER: Kent, did you have all of the clearances you need? Were there new programs that you got read into at ARPA?
KRESA: Oh, sure, I got read into whatever. I had clearances for some of the work that I was doing in Defender, but everything is need-to-know. I don't know what level of clearance I had in those days. I don't remember, frankly.
ZIERLER: What was your initial work at ARPA? Where did you slot in?
KRESA: I went into the Defender program. I wasn't doing anything particularly with Lincoln. I frankly don't even remember what I started doing. It was probably having to do with some sort of technical work with fluid dynamics, or people doing development of codes that would do discrimination. I don't remember.
ZIERLER: What was the research and the work culture like at ARPA? Did it have this whiz kid feel about it?
KRESA: Absolutely. You were really an interface between the government and industry in some way. Industry would generally come in with proposals and ideas. You'd look at them if they were reasonable. If you got excited about it, you'd look at it, and you'd become an advocate. You'd start doing some fundamental work, maybe talk to your bosses, say, "Look, this makes some sense. We ought to give this guy a little money and see where he could take things." Then as it evolved, it could get bigger and bigger, and so forth. But you were not doing your own research. Very rarely did you create an idea. Although later in my career, I was developing my own concepts, and putting that out for a bid, and so forth. It was a technical filter that was put on ideas that people would come in and try to do. Sometimes very innovative. Sometimes quirky. You weren't really sure. Sometimes ideas that were abandoned by other agencies. That was OK. The whole concept was high risk, high reward. It's OK to fail.
If there's a neat idea, do some work. See if it pays out. If it looks good, give it some more money. If it doesn't pay out, kill it early. There was this entrepreneurial kind of attitude, and they were doing wonderful things. It turned out there were lots of ideas that were different than whatever the normal system was pushing, and this was the place to do it. Now, we did have a requirement that once we demonstrated something, we didn't keep on going. It had to transfer. You had to convince some service organization to fund it, and that was an important thing. The transition phase was very important, so you try to get service people involved early. We used the contracting capabilities of the different services. We'd generally give the money to organizations in a service who were the most logical recipient. They would have people involved, they would get enthused, or it would be a bad idea and it'd die. That was OK too. But it was this high risk, high reward. Let's go for these things. Let's try different ideas. It was just a lot of fun.
ZIERLER: Kent, a question about the overall political environment with the Nixon administration coming in, in 1969, talking about détente, talking about reduction in strategic nuclear arms. Did that filter down to your level? Did you feel those changes at ARPA?
KRESA: We did in a sense that we had to justify the ARPA budget every year it went to Congress as an independent budget. The Defense Department would decide how much they wanted to recommend. But that was just the start of the game. The game would then start in Congress, and either get plussed up or cut, depending on individual congressmen and senators and their views and their constituents, and the classic issues of working in government, which is a very different game than anywhere else I had worked.
ZIERLER: Kent, what were the politics like around the office at ARPA, particularly with the Vietnam War in the early 1970s, late 1960s? Did people talk about those kinds of things?
KRESA: ARPA was very involved in doing very advanced things in the Vietnamese War. ARPA did all the sensors that were along the Ho Chi Minh Trail. They developed Agent Orange. They did a lot of stuff. You could argue it's good or bad, but it was things that were important for the war effort. There was lots of energy, and that was in an organization called the Tactical Technology Office. That's an office I took over later. But when I first went there, they were doing lots of things for the Vietnamese War, and we had really phenomenal technical expertise. We had an organization called JASON, which you may or may not know the name.
KRESA: You probably do. The JASON Group was something that, you know, we got together to do special studies. We can do sensors now that could detect where people are. We can drop them in with parachutes. All that stuff, it all seemed mind-blowing. How could you do that? We were at the early fledgling stages of all of that stuff. It's a lot of innovative work that was going on across the board.
ZIERLER: Did you travel to Vietnam?
KRESA: I went to Korea. I went to a lot of other places, but I didn't go to Vietnam.
ZIERLER: Where else did you travel? What was relevant for your work?
KRESA: Again, it depended on the time. Initially, I was in Project Defender, which was basically a US operation. We had lots of contractors involved in the US, a lot on the West Coast, so I did a lot of travel to the West Coast. We had work in Hawaii where we were detecting part of the Pacific Missile Range and the instrumentation on that range. We had stuff all along. Of course, we had stuff at Kwajalein, so I'd go back to Kwajalein every now and then.
ZIERLER: What was the reporting structure at ARPA? Who did you report to?
KRESA: It depended. Starting off, it was Project Defender which was a large project in the in ARPA. It was run by a guy by the name of Charlie Hertzfeld, and he reported to the director of ARPA, and the director of ARPA reported to the DDR&E, which was the technical arm at that point. They didn't have many of the divisions that they now have in those days. Then he reported to the secretary, so not a lot of people between you and the secretary.
ZIERLER: Did you have any interface with Capitol Hill, the budgetary process, things like that?
KRESA: Yes. Initially, just as a program manager, you'd have the joy of answering all of their questions and requests that the staffers would send over. You'd be writing the same thing every year as they asked the same questions, and mostly constituent issues about, "What are you doing and why are we doing it? Why isn't it being done in my district?" "My company that's in my district feels X. I think it ought to be plussed up. Why aren't you doing that?" You're answering all kinds of questions. Later on, as I grew in the organization, then I'd testify for the projects and for the program and whatever you were doing. As a matter of fact, I would say, it was all very interesting and exciting to deal at that level. It was also highly frustrating. If you're a technical person, first of all, we had an organization in ARPA where we'd have to justify what we're doing and why are we doing it? Why is it the right thing to do? Why this and that?—with some very senior technical people. You'd get approved for a certain level of budget. Then going to Congress, you just threw that all out.
KRESA: It was the basis, I guess, but that's all it was. The reality of what the number would be would depend on how well you did or how well the lobbyists for the various companies that were doing whatever did to keep things alive or help kill things. It was quite a learning experience understanding the real way that Congress works. Frankly, it was the thing that finally convinced me I had to leave. I couldn't take one more cycle. It starts when the budget goes in, and it ends when you finally get your money. Now, every contractor is like this, frothing at the mouth for your money, so now you are the bad guy. "Why aren't I getting the money that I was promised?" You're frantically trying to get money out to people, and doing all the bureaucratic things that have to be done. There was a whole cycle. Then you get that done, and you're working on the next year's budget to start the whole thing over again. There was a technical part which was exciting. There was a bureaucratic part, which only increased in complexity. It finally convinced me that this was not what I want to do for my life. But everybody that I talk to today, they talk about "when I was in Washington" as the good old days, when it was so easy to do anything. I didn't think it was so easy to do things. But today it's an order of magnitude harder.
ZIERLER: Kent, without getting into any sensitive details, I'm curious what your interface was with the interagency intelligence operations. In other words, I assume ARPA needed to have some appreciation of Soviet capabilities. My question there is, would ARPA have a direct line to CIA, or would they go through DIA for that?
KRESA: We had direct lines to everybody. I worked directly with the Intelligence Community, and that's where I first met Bobby Inman.
ZIERLER: Oh, wow, OK. [laugh]
KRESA: He was in the Pentagon in an office. He was in the E-Ring, I think. I don't remember his office, but I met him, and we had many discussions as we did a lot of work for DIA, CIA, NSA, you name it. We would be doing front-end research for them, or naval intelligence, or you name it.
ZIERLER: Now, ARPA, of course, is famously where the internet was invented. Did you have an early window into those developments?
KRESA: Absolutely. The guys were a couple offices away. They were doing their thing. They were having their growing pains. There were difficulties doing things. Late, I don't know exactly at what point, but after they had it sort of going reasonably well, and they created a thing called the ARPANET, which was a rudimentary way to have a messaging system very much like the kinds we have today. ARPA had that, and they decided they wanted to see how good it was, so they insisted we use it. In those days, in order to do that, you'd carry around a 50-pound box, which was a teletypewriter that you put a phone line in, plugged in, just put in so you could get the digital tones, which were the way they sent out the ones and zeros. You had to carry it everywhere. If you went on a trip, you immediately had another 40-pound machine that you were carrying around with you so that you could communicate on the ARPANET.
KRESA: It didn't start out to be something that I loved, although it had all the direct connectivity. You could communicate anywhere in the world that there was a phone. It was very useful. We used it all the time. Then, of course, it kept on growing and growing. Eventually, after I left, it turned into the internet. But it was still perking along as the ARPANET.
ZIERLER: Kent, if you can give me a sense of your managerial rise at ARPA, at what level were you when you ultimately decided to leave? What were your management responsibilities circa 1974–1975?
KRESA: I was at that point the Director of the Tactical Technology Office. I was 33. I had a budget over a billion dollars. I had lots of responsibility. I had the equivalent ranking of a three-star general. It was in the civil service system. I was swinging. It was a great job. I knew everybody that was in the industry. Everybody coveted ARPA money because it was to do front-end things that allowed people to get new things started. I would meet with CEOs of major corporations all the time. It was a great job. Someone told me it's terrible to peak in your career when you're peaking your life at 35 or whatever. But my sense was the work was fabulous. Doing new things, and having them come to fruition, and being on the front end of a lot of neat things. You have this mantle on, which is the office you hold. It's that big checkbook that you've got and you can write a check when you feel that it would create something important. People would say, "You leave, and all of that goes away, and you'll be miserable." I just couldn't take another year at dealing with Congress. That was really it. I'd done it enough in that bureaucratic game. It was not particularly fun. I said I was going. I had already been there seven years, which was too long, frankly. The nominal times to serve were two years to three years. Lincoln had already told me that my leave of absence was canceled. They couldn't keep it going. I think that happened at about five years and I came to the conclusion that I'll never going back to Lincoln. My interests were very different. I was involved in much bigger ideas. Then I said, "I'm going to strike out, and get involved in industry, and see if I can make big things happen there."
ZIERLER: Kent, I can't help but ask, being in Washington in '73, '74, what was it like as the Watergate crisis unfolded, and people were wondering who was Deep Throat? What would Woodward and Bernstein publish next? What was that like?
KRESA: It was just a mystery. We probably knew we knew him, but we don't know who it was. With all political intrigue, there's intrigue. There was always intrigue in Washington, always. This was just one that bubbled up, that caught the president, and it was tragic in many ways. But it was a reality. I was happy that it didn't touch me, that's all.
ZIERLER: Were you political at all? Did you have strong feelings one way or the other about Nixon?
KRESA: No, I wasn't political. I think I was basically positive about Nixon, at what he was doing. I felt the opening of China was absolutely fabulous. The technical people that he had in the Pentagon were good. It was a 60-hour week for the entire time I was there. Everybody worked hard. There was no slacking off. It was a place of enormous dedication and discipline. It was a great place to be involved. It's just that a combination of being there for a long time, I had no political aspirations. If you wanted to move in the Pentagon or something, you had to have all of that. Then it would all get either started or stopped with the next administration. I really didn't want to do that. It wasn't me.
ZIERLER: Were you involved at all in the winding down of the Vietnam War?
KRESA: No. ARPA was building new things, new technology, new capabilities that could be used by our forces. At a certain point, the priority changed because we weren't going to do that anymore. But, no, we would take things to a demonstration, hand it off to the services, and at that point the services took it to make it into whatever system it was going to be. We didn't do it at ARPA. We were on to the next thing.
ZIERLER: Kent, what about SALT, and the concern over Russia, and the MIRV issue? Were you involved in that?
KRESA: Not really. That was a geopolitical issue. Again, we were very technical. I'd be working on the next missile or the next trigger for a bomb, or whatever the hell, the next element that would be important to make a quantum difference in our technical capability. It was really very separated from the political things. The ARPA that I was involved in didn't have any of that that I recall.
ZIERLER: Kent, as you mentioned earlier in our discussion today, you had a chance to really be entrepreneurial at ARPA. I wonder if that's what really planted a seed in terms of next steps for you.
KRESA: Maybe. I would say the thing that planted the seed the most was I got to be more and more interested in bigger concepts, not just to build a new widget, but what is the importance of some broader kind of capability such as a cyber war? There was a great concern about bugs and gas in those years, and what was all that going to mean, and how are we going to defend against it, huge issues that had to be addressed. We still hadn't solved how we were going to stop ballistic missiles, other than assured destruction of everybody. The global positioning satellite, for example, which nobody wanted because everybody had their own way to do navigation, and the Services felt that there was no reason to change. No one wanted to spend the money out of their budget to have to pay for a satellite system that was expensive. Yet, you'd look at it, and you'd say, "Oh, my god, if you had this, it could be enormously useful." Although, frankly, I had no concept at that point that we could get the cost down so low that it could be in everybody's phones. Come to think of it, we didn't even have a concept of cell phones in those days other than Dick Tracy's watch or get it cheap enough get it where you could have it on everybody's vehicle. But it was clearly important for the military, if they could have much more precision, and then the whole concept of precision weapons could be possible. I got very involved with precision weapons in my last few years there. I spent a lot of time on unmanned vehicles as well. I got involved in bigger and bigger issues of warfare, thinking about not a widget but a concept of how if you could go unmanned or have precision weapons, how that would change warfare. Instead of putting tons of bombs on a target, you'd just have to put pounds on a target. That would make such an enormous difference in the infrastructure. What does that mean? It means intelligence is more important. How are we going to get more intelligence? All of the technologies needed to support modern warfare that have evolved were things that I got involved in thinking about 50 years ago.
ZIERLER: Kent, did you have a good opportunity to survey the defense contracting industry from ARPA, not just Northrop, obviously, but did you have a good sense of all of the major players at that point?
KRESA: Absolutely. They were all competing. They were all coming to ARPA with ideas, doing things in one way or another. I had a reasonably good idea of what those guys were doing. Virtually every one of them had contracts with me somehow.
ZIERLER: Did Northrop strike you as uniquely impressive? Is that sort of part of the origin story for you?
KRESA: No. No, not really. They seemed good and had an active Research front end.. They were involved in high-energy lasers and things very advanced that a lot of companies, the major dispense contractors weren't involved in. I had a quirky view, which I have since come to realize is probably wrong. It worked out OK for me, but I wouldn't recommend for other people, and that is, I wanted to immediately move to a line position if I went to industry, and not a staff position. Most guys that go out of the government move into a staff position in a company. The people in the company say, "The job is so different than what you do in the government. You really have got to learn the ropes, and understand how the differences are before we want to give you responsibility for the bottom line." My view was I looked at that, and said, "I'll never get there. You have all of this connectivity to Congress, which they love. They'll use you for that and then, someday, throw you away." I saw a lot of that as well. I didn't want to do that. I said, "Look, I'll take my chances. I want to go with someone that's prepared to give me a line job." Northrop was the company that was willing to give me a very exciting line job.
ZIERLER: Kent, what does that phrase mean, "line job"?
KRESA: Bottom line responsibility for P&L, which means you sink or swim. But it's a daunting thing. For the first six months I was there, I had no idea if I'd make it. It is such a different political dynamic and work structure that learning how to do it is very hard if you just come from the government. You think about the government. Power is driven in the government by your ability to say no. If you say yes, you're not very important because everybody can blow by you with a piece of paper. You sign it, and you're finished in the process, so you are not a problem. if you're able to say no, and make it stick, the world recognizes you're a force. Before you know it, organizations are developing people and arguments and ways to get through your approval. The government structure is a mechanism to say no, and then eventually maneuver things in a way that you want so that you say a reluctant yes, and you move on. That is not in any way associated with the industrial system. In the industrial system, you have to have enough people on staff to be able to write good proposals, and to come forward with really good ideas, but not so much that the bottom line is impacted if you don't get the job. You have to statistically figure out how many jobs you're going to win, and how many you're going to lose, and you got to manage this thing in a real time basis. It's like juggling this huge set of data, which is all involved with people's lives and their careers. It's a very different game than working in the government, which is more of a game than a business, frankly. You see congressmen doing things and saying things that are outrageous. They have no concept of what they're doing, but they're just developing some mechanism for power, and it's their power. It's what their little office can do. You wonder what the hell does this have to do with anything? The answer is nothing. It doesn't have anything to do with anything except power. You can't do that in industry because you'll go broke. It's not the game. Learning the appropriate way to be effective as a manager in industry was probably the hardest and biggest lesson I had to learn. What most companies have allowed people do is to go into the company, and observe it, and be on the side of it, and watch it evolve, and then one day get a piece of it, and then hopefully you are equipped to make a positive contribution. I was stupid. I just said, "I want it, and I'm not coming unless I get it." Somebody finally said they'd give it to me and [laugh] I barely made it through, so to speak. But, it worked for me.
ZIERLER: Why Northrop? Did you choose Northrop specifically? Were there other defense contractors that were interesting to you also?
KRESA: Yeah. Northrop was the one that gave me line responsibility. It was to run their research enterprise, which was a multimillion-dollar business, which was a combination of corporate money, and money from the government, mostly through ARPA and other OFRs and so forth. I ran that. It was really a straightforward organization, and I learned a lot, but it was hard to learn. But it worked out OK, and Northrop was a good company. They were in the High energy Laser Research business. That was something that I had a lot to do with when I was at ARPA early on. I knew the Northrop people, and they were competent people. They were prepared to give me line responsibility and that really made the difference in my decision to go there.
ZIERLER: That was most important to you in terms of this challenge at that point in your career, what you wanted to prove?
ZIERLER: What does that say about you, not to put you on the psychologist's couch, but at this stage of your career, the fact that going sink or swim was so exciting to you?
KRESA: At that point in my career, I'm not sure why I felt it was so important, but at the present point in my career, I'm giving back in one way or another. That doesn't mean that I'm not involved in some exciting new technology new companies that could be huge and do wonderful things, but I now can help other people be more successful. I have a lot of knowledge, like dealing with the government, even though the government's changed a lot. It's much more bureaucratic than it used to be.
ZIERLER: Now, taking the job at Northrop, did that pull you out of Washington, or did you start at their Washington office?
KRESA: Pulled me out of Washington. I went to work in California, in Los Angeles, and I spent the rest of my time there. I've lived there longer than anywhere else.
ZIERLER: Was that part of the equation too, wanting to leave Washington?
KRESA: No, not particularly. I thought Washington was a wonderful city. But Washington is all about the government. At that point, I really didn't want to continue. Clearly, working for a defense contractor, Washington is always in your future, because that's where the money is. It's that way with universities. It's that way with everywhere, frankly, so you're always associated with it. But I didn't just want to be a Washington person.
ZIERLER: Did you ever consider, even for a second, a political career in D.C.? Was that attractive to you at any point?
KRESA: No. I'm a person that either likes to speak my mind the way I believe it, or I keep my mouth shut. The two are both important. In politics, you've got to keep your mouth open, and keep on going. These guys just check how the wind's blowing, and they decide that's their latest idea of who they are, and I hate it. I couldn't conceive of doing that. Every politician moves in real time, depending on the winds, and have ways of explaining all of their changes, which I view as somewhat immoral. But that's what it is. That's the game. That's what they do, and it's not me.
ZIERLER: Kent, what did you know of Los Angeles before you arrived? Had you spent time there? Did you have a good idea of where you wanted to live?
KRESA: No, I didn't really have any knowledge. I'd been there a lot, as a matter of fact, because there's a lot of the aerospace industry there, so I certainly went there a lot. But, no, I didn't really know it. It turned out that the centroid of the Northrop system was near Century City. They were in Beverly Hills when I started, and then they moved to Century City, which was right next door. I went out there at a time when Los Angeles was going through a crisis in bussing kids to school. I wanted to make sure that my daughter could go to a school in a nice neighborhood, and she wouldn't be bussed. There were about three places or four places that would not be part of the bussing structure. You could be in Beverly Hills, or you could be down on the Pales Verde Peninsula on the south side of Torrance, or you could be way out in the desert or somewhere, which would be different. Since the headquarters was in the LA area, and my job was at that point in Hawthorne, we moved to Palo Verdes I was only there a year, and I got moved so I didn't spend a lot of time there. But, anyway, it was a nice place, and a nice school district for my daughter, and so forth.
ZIERLER: Kent, set the scene for me your first few days at Northrop. What was it like?
KRESA: Hard to remember. [laugh] It was very similar to any other. You get to know a whole new group of people. I had to learn the business, which was very different than the government business, and get up on all the research and then decide where we were going to go after next-generation things. I talked to the various divisions at Northrop, and what they wanted to do. They frankly could care less about the research thing. They had their own stuff they wanted to do. I found out very early that there were politics in companies too. They had no idea why their senior management cared about having a research center. What they wanted was a little more money to do another proposal or build a new airplane or do something or do a guidance system or something. But the main thing was, what were the metrics that were going to be important to the company, and figure out what they were, and try to do well at .
ZIERLER: Besides those specific metrics, I'm curious what job skills you felt transferred well from ARPA, and what did you really have to learn on the fly at Northrop?
KRESA: I had to learn finance. I would say the thing that transferred the best is a bullshit filter. I talked about that before. But understanding the finance took a while. Fortunately, I had some good people that were running finance that could help me understand what the trades were. You've got to realize you either keep these X people around, and hope this business comes in, or lay them off, or move them, or do something. But if you don't do anything, you better have a strategy because if you're wrong, you're going to have a negative bottom line at the end of the year, and you're going to have to explain that. The whole game is much more tightly coupled than the government.
ZIERLER: Kent, is the original project one single thing to work on, or do you have a portfolio to manage?
KRESA: A big portfolio of all kinds of things.
ZIERLER: What were some of the main things you did in the early years?
KRESA: The single largest project was a high-energy laser activity, which they were developing. There were about three major players in the high-energy laser business of which Northrop was one of them, and that was important. We were doing some work in trying to kill the shockwave; some aerodynamics on aircraft wings, which would hopefully kill the shockwave that goes to the ground so you could get the noise abatement that people are looking for. There was a lot of research of that kind of stuff going on with the OXRs of the world. We had some electronics work. I hardly remember. It's been 50 years ago. There were projects of a few million dollars down to a few hundred thousand dollars. The big one was the laser business.
ZIERLER: What were the objectives of the laser project?
KRESA: To increase the power, to get the power density of the laser up to killing numbers at range, so multi-megawatt levels. Gas dynamic lasers were demonstrating that. Northrop was doing it in the blue-green, which was different than AVCO, which was doing it in the infrared, and others were doing in the visible. TRW was doing some in the visible. People were doing it differently.
ZIERLER: What would success look like on the laser project?
KRESA: Having some demonstrable power level so in that particular year or with a particular system. Some of it worked well; some of it didn't. Eventually, it all got canceled. The gas dynamic laser programs got canceled and is long gone. Now, solid-state lasers are being developed for weapons as well as communications. But Northrop got out of that some time ago.
ZIERLER: What was the problem? Did the technology, was it not feasible?
KRESA: It was probably too heavy, too expensive. The thought of putting it in an airplane became unmanageable. Very corrosive materials. It never quite panned out the way people wanted. They were thinking of ground-based systems initially and eventually shipboard systems. All of these had their own set of problems. But it was early in development. We also did a program called SEASAW, which was to do kill reentry vehicle penetrating the atmosphere with electrons, and protons. Again, the idea of shooting down ballistic missiles, with a speed of light killing device gives you a lot more time to decide what to shoot at vs launching a missile to fly out to intercept the target. The idea still has everyone enamored with the hope that you can do that because its time of flight is so short, but a real system has still got a ways to go.
ZIERLER: What was your interface with the military in your early years at Northrop?
KRESA: Very close, depending on what weapons system we were working on, or if it's technology. If it's a simple technology, it would be at one level. If it was a weapons system of some sort, it would be at much higher levels. You'd go from engineering people to general officers, chief of the Air Force.
ZIERLER: Would you travel frequently back to Washington for this work?
KRESA: This was now when I was at ARPA. You're thinking when I was at ARPA or when I was at Northrop?
ZIERLER: No, when you were at Northrop.
KRESA: Yeah, I'd be back on the trail. That's where the money was coming from, so I'd be talking to the sponsors, and dealing with them.
ZIERLER: This idea, Kent, of having a sink or swim, what's your first memory of really swimming?
KRESA: My memory of really swimming was the next job I got. I was running the Lab for about a year. I think our budget was reasonably well-managed. I don't remember at this point. But a funny thing happened that a guy that was running another division was desperately wanted in a much larger division to be the deputy of that division. They just told him, "You're going to move to this other division." For whatever set of reasons, they chose me to run this small division. That was a hell of a move up for me, and now I was running a line division of the company. It was their so-called unmanned division, which was building mostly target drones for the Navy. But it also was building a lot of subassemblies for Boeing, and subassemblies for the aircraft division. It was a real business, doing subassemblies and prime business with the government. I got that job, and I had it for I don't remember how many years; maybe five or six years. It was a lot of fun, and I really got that business humming, and we got a lot of very exciting new contracts and put the place on the map. That really was the first I really knew how to run things, and it really went well.
ZIERLER: Kent, in terms of your established skill sets at this point in your career, given what a jump this was in terms of promotion, what do you think stood out to supervisors, the people who championed you at this point? Was it the engineering side? Was it the administrative, the budgetary, complete package? What do you think it was?
KRESA: It was the fact that we went from this sleepy idea of doing target drones, which are for missiles to shoot at, to a whole class of new systems that the military wanted to buy. They were just blown away by the fact that (a) anybody wanted that stuff, and (b) that they were clamoring to get new stuff from us. We were growing at a great clip. They noticed that. Everybody said, "That's great."
ZIERLER: What was so exciting about this new initiative? Why was it a game-changer?
KRESA: You mean, why was it a game-changer for me?
KRESA: We were able to think up with ideas for new systems, do a little development work, demonstrate sufficiently to get people in ARPA or one of the services willing to fund it, and start moving towards production .. The management of Northrop saw this little division becoming something much more than it used to be, and they liked that.
ZIERLER: What were the main sponsors of the division? Who was going to buy these products?
KRESA: The Navy, the Air Force, Marines were the main services. We did some work for ARPA. It was the early beginnings of what you'd say today is the unmanned world, all these little, small airplanes that do various things, that have sensors, that can see things, can do things. That's what we was doing.
ZIERLER: Was the word "drone" in use that early?
KRESA: Yeah. We were doing target drones. But we moved that out. Once you could navigate, once GPS became available, you could think about doing all kinds of things, and that's really what changed the game. We could always fly things by themselves, although most people didn't know that, but we could. You don't really need a pilot to fly an airplane. But once you had navigation, now it could fly itself where you wanted it to go. That was a big deal.
ZIERLER: Kent, talking about GPS being a game-changer, I'm curious if you ever crossed paths with Charlie Trimble at this point.
KRESA: I knew Charlie. I never really crossed paths with him at that point. I didn't meet him until I got on the board of Caltech. But Charlie was very instrumental in getting the cost down to the point that it became useful for a whole class of systems that no one ever thought you could get it to because of the cost point. But he did it.
ZIERLER: From a tactical level or even a strategic level, what was so exciting to the military branches about this new technology? What would that allow them to do?
KRESA: Tons of things. First, surveillance which was always of a great concern. We knew how to build miniature cameras. We've had that for a long time, and they got better and better. You could do surveillance. Then you could put weapons on it or turn the whole thing into a weapon. Just put a shaped charge on them, and kill a tank, or you name it. You could think of something you want to hit, either you'd like to discriminate something and hit it, so it could kill a tank or an APC, or you could surveil an area. You could detect various things that are going on. You could develop sensors that could do all kinds of crazy things.
ZIERLER: When the Soviets invaded Afghanistan, was Northrop involved in using some of this unmanned technology to figure out what they were doing?
KRESA: I would say probably not. The systems we were giving the Afghans were pretty crude at that point. A man controlled these weapons. We were working on systems that could fly and attack by themselves, the kind of stuff that's going on now.
ZIERLER: Kent, was Northrop at the leading edge of this technology? Were there other defense contractors that you were in a race with on this?
KRESA: Yeah, I would say a lot of people were in it. It was not Northrop alone. But several people were playing in the arena. Some people worked mostly into missiles. Some people put it into airplanes, some people put it into other kinds of systems. Some people just did detectors. Some people did guidance. But all this stuff was bubbling. I can't think of any one off the top of my head, but it was all bubbling along. It was early in that evolution of unmanned autonomous flying vehicles.
ZIERLER: Kent, an overall sort of management and leadership question, what was the value of having competition, the fact that other defense contractors were also working in the space? How did that improve Northrop's capabilities, it's desire to win out on these contracts?
KRESA: Competition is a fundamental part of the United States procurement system. It keeps everybody honest. When you don't have competition, there's no requirement to do better. It's whatever gets by. If you can own the space with nobody coming after you or worrying about anybody coming after you, there is no rationale whatsoever to improve. The competition demands that you keep innovating, that you're constantly striving to make it cheaper, better, do better things, whatever, because somebody else is out there working on similar to do it. Therefore, it drives the whole system to be at a better place.
ZIERLER: How long were you in this one particular position for, this big quantum leap in your promotion? That particular job, how long were you in it for?
KRESA: I'm trying to remember exactly. I have that data. I can get it. I have a list of when I did these various things. But it was about five or six years.
ZIERLER: Did you feel, even early on, to just a foreshadow of what you would achieve at Northrop, that this really put you on a path for executive leadership?
KRESA: I already felt that I had succeeded beyond my wildest imaginations by that point. The division was growing. I felt great about that. I love building new things, having an opportunity to make something bigger, win the next big job, and so forth. I don't know if I really coveted a bigger job, but bigger jobs came along.
ZIERLER: Kent, the Reagan administration, the ramping up of military spending, the overall budget, how did that affect you at Northrop?
KRESA: Probably the single most important thing was that The year that I left ARPA we did a project called Project Harvey, which was an idea to shape an aircraft so that it couldn't be seen by a radar. We gave four contracts to all the major aerospace companies. We called it Project Harvey because it's a rabbit you couldn't see. Out of that project, two players emerged, and then I left ARPA for NORTHROP. Because it was then in Northrop, I had no dealings on the program with ARPA. The program was quite successful however and both Northrop and Lockheed were awarded follow-on contracts. Both contractors' designs worked sufficiently well that the Defense Department in decided that they could develop a fighter that you couldn't see, that would be invisible to Soviets radar, which meant you could penetrate their aircraft defense system, and it would be very disruptive to the Soviets. Now, when we got to the very end proposing on the Stealth Fighter, the two years or so that I was not allowed to be involved with ARPA had elapsed.
They asked me to, and I think they even asked ARPA if I could sit in on their final dress rehearsal for the proposal, and they said yes. I was blown away by what Northrop had developed and what they were proposing. I got very involved in the stealth part of that activity with this program. I didn't have any responsibility for it but just as an advisor. We eventually lost that program to Lockheed, and they built the stealth fighter. The reason Northrop lost it is they thought our technology was so immature, it may not work. They said, "Holy smokes." It showed on the pole models that we could show low cross section at many observable angles. But could we really build a real airplane with those capabilities? Could we do the coatings that we had demonstrated? Could we really do this thing? They decided it's too risky, and the Lockheed design was a great airplane, so let's go with it. But then they sent out the head of the office that I used to have to a talk with me. He came, and we had lunch one day. He said that they really liked what we had done, and we had a very innovative proposal. They liked ARPA to keep on funding something with us to keep on developing that technology. The question is, what to do and, what kind of a program should it be? On the back of an envelope, we invented an idea which would stress the technology, and would be a very interesting thing to do, which was to develop an airplane that could carry a low probability of intercept radar, which was another technology that very exciting at the time. In a low probability radar you skip the frequencies around sufficiently that no interceptor gets enough energy to be able to detect it. But by coherently adding it up the signals you set it out, you get a full radar capability out of it. By developing a stealthy airplane that carries a low probability radar that can surveil the ground, you could conceive of that system being very near a battlefield and seeing everything going on, but it would not be detected by the enemy. This airplane would require stealth around 360 degrees. Now, that would stress the technology because the fighter only had stealth on the nose, plus or minus 30 degrees.
KRESA: In any event, we developed this idea to see if we could develop an airplane that could do that, that had stealthing capability at 360 degrees at all the way around and all that. We got funded for that program, and it was a highly classified program. It's only been unclassified recently, and it worked phenomenally well, and we demonstrated that you could actually do that. That really started the idea of an all-aspect bomber, and the B-2 happened. The Reagan administration wanted a much more capable bomber force. He built a whole bunch of additional B-1s, but he stopped building B-1s once they understood what a stealth bomber could do. Then they had a competition, which was for another bomber. Lockheed and Northrop competed again. But it wasn't a fair contest at that point because we had a capability that Lockheed didn't have. We won that contract, and that changed Northrop forever. Then, of course, it had its own problems. But it technically was an enormous success and has changed the fate of the company forever.
ZIERLER: Now, why? Why this project? Why did it have that level of impact on Northrop?
KRESA: It was a multibillion-dollar program, which was the biggest program Northrop had ever done, and it had legs into the future. It allowed us, as the program matured and the cash started flowing in, to become a principal player in the acquisition of other companies in the change in the industry when the Berlin wall came down. If we didn't have any of that money, we wouldn't have been able to. When I went there, we were like the 25th or 26th sized defense company. By the time I finished, we were number 2 or number 3. We had acquired all these other companies, and that made all the difference. That was all on the backs of the stealth bomber.
ZIERLER: Kent, historians love to debate this question about the extent to which Reagan ramped up military spending, specifically to exhaust the Soviets, to hasten the demise of the Soviet Union. I wonder if you thought about those things in the 1980s.
KRESA: Absolutely, and I would certainly be of that camp. He exhausted their capability to ever think that they could compete with us. They just got blown out. They could not keep up with the US that was then operating. If you recall, the stealth bomber was only one thing. The stealth bomber was so fundamentally disturbing to the Soviets because, I don't know if you remember, but they had spent billions building a defensive radar network around Russia, which they concluded was totally compromised. We could penetrate easily with the B-2 bomber. We didn't have to send missiles over. We didn't have to start a nuclear war. We could take them out conventionally if we had to. The fact that they had all these defenses and it was useless, and they had no counter. They had their own spies understanding kind of what we had, but they had no ability to take on that. [unrelated conversation] As you recall, Regan was talking about Star Wars Missile Defense System to shoot down Soviet missiles in the post boost phase prior to releasing their warheads at the same time. We're going to do the whole thing from space. Now, my view of that was it was crazy, and it would've bankrupted us as well, and it wouldn't have worked. But on top of the bomber, which did work, and which they did know was their demise, that would say that their ballistic missiles would be useless, in which case they had nothing. I'm sure they had a very bad night's sleep every night, trying to worry how they were going to be able to compete with this guy, because Reagan believed it. I think Reagan, at the end, believed it was operating. Not only wasn't it just an R&D idea pushed by technical people, his own people said it wouldn't work, but Regan believed it did and the Soviets weren't sure.
ZIERLER: Now, as you mentioned, SDI was crazy. I wonder if you can explain both from a technical and a budgetary level why SDI was so crazy.
KRESA: We didn't have the technology to be able to do the kinds of things that that was going to be needed. I probably could have gone to a long dissertation on that 10 years ago, but I don't think I'm prepared to do that today.
ZIERLER: But is the top-line story that the physicists were just getting ahead of themselves? Is that really what it's about?
KRESA: The top-line story was that one physicist was way ahead of himself.
KRESA: Yeah, Edward Teller. He just kept on telling Reagan, "Hey, this is easy. We got it." It was totally wrong. We didn't have the technology. We didn't have the lasers. All of that was just wild, but we had little pieces of it. I think he really believed it. I think Reagan really believed it. But if he didn't, and he was bluffing, it was the greatest bluff in the history of the world, and it worked.
ZIERLER: Kent, to follow your path to leadership at Northrop, was there anybody at the company that you would've considered a mentor or who took you under their wing?
KRESA: Several, yeah, initially, a fellow by the name of Don Hicks Don Hicks was senior vice president there for years. Eventually, he and Tom Jones had a big falling out over the F-20 airplane, which Tom wanted to build, and he thought was crazy. He finally quit, and went off, and became secretary of the Air Force. Then Frank Lynch, who ran one of the divisions was, in a way, a peer, but he was 20 years older than I was. He ran the electronics division, a much bigger division than I had. He eventually became president of the company, and he was a real mentor; terrific.
ZIERLER: What did you learn from him? What was so important about his mentorship?
KRESA: Wow. I don't know. How to temper the politics that may be going along with whatever technical, right or wrong, you may feel; how you blend all those things; how you try to trade all the various and sundry parameters you have at your disposal, both in how you set up a team and how you work through problems. He was just a very steady guy. I would say another important part of Frank Lynch was he was a huge advocate of ethics, and I became obsessed with teaching ethics, preaching ethics in business as fundamental to being able to be successful. I think a lot of that came from Frank.
ZIERLER: Kent, just a corporate governance question. The sequencing is you are named president in 1987, and then CEO in 1990?
ZIERLER: What are the differences in those titles and the responsibilities, and why would they not come at the same time?
KRESA: Because the CEO stayed on. [laugh] That was Tom Jones. Tom Jones never wanted to leave the company, and he probably would still be there if he was still alive.
KRESA: He would've died with his boots on. He was a brilliant guy, very complicated guy, capable but had a lot of flaws as well. I got the job as president because I went in and announced that I was leaving the company.
ZIERLER: That's one way to do it. [laugh]
KRESA: He probably would've stayed CEO forever. But it became clear to me that after three years, if he didn't leave, when they cleaned the house, I'd be cleaned house with them because I'd be Judas's bagman. I was the guy trying to clean everything up. We had lots of ethical problems in the company. I went to the board, and I said, "You've got to decide. Either he's got to go or I'll leave. That's it. [laugh] There's no question that I can go many other places. I've been offered other jobs. I will fail if I have to stay here under him because he's eventually going to get caught up in these legal things, and they'll insist to have a clean sweep, and I'll be viewed as his guy." The board, which was all his people, met and told me that, no, they wanted me to stay, and they were going to tell him. Tom called me the night before the board meeting—no, the day before, and I told him that I'm leaving. "Either you're going to step down or I'm going to leave the company." He said, "I hate to see you go because you're doing a great job, but I'm not leaving." I said, "You need to talk to your board because, I got to tell you, I think you're going to be surprised. The board has told me that you are going to be leaving." He said, "Oh, no, they're my guys, and all that." He called them all, and he called me back that night, and he said, "You've won. I've talked to them all, and they're going to vote me out." He was shocked. But he said, "Will you do one favor for me?" I said, "What?" "Will you let me propose you as my replacement?" I said, "Absolutely." That was the way it happened.
ZIERLER: Everyone wins, in a sense, that way?
KRESA: We were friends ever since.
ZIERLER: Kent, we'll pick up on our next discussion, I really want to get into more detail, when you take over. But just to set the stage, prior to 1987, where were you in the company, and was that really a quantum leap, or were you really next in line to be named president in 1987?
KRESA: The fact that I was next in line, or the only person in line, there was no other person. The board had a discussion with Tom. He was 72 or something at the time. They said, "You've got to have a succession plan. Who's in the succession?" When they went all through it, there was only one person. It was me. The board didn't like the fact that there was only one person in succession. He said, "I can solve that. I can take several of the people that report to Kent, and have them report directly to me, and I'll move Kent over." I had the group, I had the aircraft group, which had 80% of the company. He said, "I'll take two of the guys that run those two big divisions. I'll have them report to me. I'll give Kent a responsibility to run all the corporate things, and he can do HR and finance, and he'll be a senior vice president for that. Then they'll all report to me, and you'll see them all at the board." I viewed that as being fired. That's why I wound up getting an opportunity for another job, and I was leaving, because, from my view, it was clear that either Tom or the board had decided that they needed to look at someone else. They were all guys that worked for me that were now my peers, and so I was going to go somewhere else. But when I went in to say I was leaving, then that changed.
ZIERLER: Now, the ethics issues that you referred to, was this all internal stuff? Were there news stories that broke this information?
KRESA: Absolutely. We were considered a pariah company. We weren't nearly as bad as all the press we had. But Congress was down on us. A lot of it wrapped around selling the F-5 overseas, the F-20, the new plane that Tom wanted. He got involved with some sleazy people, and that was bad. We had various lawsuits against us from people who were whistleblowers and such. We had all kinds of crazy things happening in the company, and it was a mess. I spent the beginning of my time as a president, 50% of my time with lawyers dealing with lawsuits, and it was awful.
ZIERLER: Was part of your elevation the idea that you had a reputation as a straight shooter, that you were really not involved in some of these problems?
KRESA: No, I think my elevation got done because I was going to leave, and Tom absolutely didn't want me to leave. He just told the president that he was leaving that day, and I was taking his job. That's the way it essentially happened.
ZIERLER: [laugh] That's amazing. Kent, in our next discussion—
KRESA: The CEOs in those days had a different view of things.
ZIERLER: Right, that's right. Kent, in our next discussion, we'll pick all this up. We'll see what happens next.
[End of Recording]
ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It is Thursday, December 1st, 2022. It is great to be back with Kent Kresa. Kent, as always, it's wonderful to be with you. Thank you so much.
KRESA: Great to be here.
ZIERLER: Kent, we're going to pick up. We left off last time right when you took over at Northrop as president, and you were telling me a little bit about some of the reputational and legal challenges at that time. You mentioned how you spent, really, too much time almost with all the lawyers in the beginning. What was the strategy for you? What was the game plan to bring Northrop back to the company that you knew it could be?
KRESA: There was two. First was the majority, virtually everything that I could determine from the various and sundry lawsuits, the kinds of things that were being said were not true. There may be some modicum of truth to some of them and, to the extent that they were, either you had to live up to them or you had to take a legal strategy that would allow you to skirt by because it was not easily proven that it could be done. But the whole purpose was to get the company out of its present difficulties with its customers, which is a terrible place to be, where customers, namely the US government Services were very concerned about you. A lot of the things we were fighting; came from whistleblowers. It was the early phases of that whole whistleblower movement, so there were all kinds of things. There were people that thought things were going on, or maybe they could make money out of it. Who knows what the purposes all were? But there were agitators that would work on things. Every time that there'd be one, there'd be a huge explosion because there was a view in the government community that this was a rogue company, and there's got to be something there. Every time something would come up, it would become a big thing. It was a difficult time. There was the working on the legal side and having to deal with that as a major thing. The other was to ensure that we developed an ethical operation, which was driven from the top. I made it very clear that ethical operation was the only way that this company was going to operate.
If there were any shenanigans, any issues, we fired people. I personally fired people, and I did it to make sure that people understood that this was not tolerable; that the only way to go forward was to be very ethical. I would give lectures on it. I'd go around the whole company. I'd talk to people about it, talk to why it's important, it's the only way it's going to get done, etc. That's a multi-year kind of an activity. It's not clear to me how the culture had somehow felt that not operating that way was either acceptable or wanted. I don't know what the right word would be here. But it was not going to be the way that I was going to operate, and I wanted to make it clear that would not be the case. It was that two-pronged path that you had to deal with the reality of the lawsuits that you had, and there were many. I don't know the exact number. But probably at any given time, we had four or five that were going. [laugh] It felt like the way Trump must feel—
KRESA: —about that. There are multiple things going on. Each one has its own set of issues and people and problems and lawyers, and you name it. My day would be spent jumping from one to the other, depending on where it was, and whether we were in court, or if it was pre-court, and we were all trying to get information. It was an amazing amount of time to be spent on that kind of an issue, but it was absolutely required if the company was going to survive.
ZIERLER: Kent, beyond your own moral compass, I wonder to the degree Lincoln Labs provided you a benchmark for ethical behavior in the national security realm.
KRESA: I don't know, but I somehow fundamentally understood that it's the only way to operate. As soon as you get off that path, you're on such a slippery slope that there's no way to deal. We were dealing with technical issues so that you could be wrong. There are probabilistic issues that wrap around any decision that you make. But if you base it on, "This is the best thing to do," and there's a rationale, and it's based on the facts you have at the time, it may turn out to be wrong but that's not the same. I would say that one of the things I got from the government was an issue that it's OK to take risk. Risk is OK. Failure is OK. But the only thing that's not OK is having results that you know are wrong, in other words, that you've cooked the books in some way.. You're using data which is not right or you know is not right and so forth. I don't know where I got it. I was facing so much of this in the company that that I had to face it head on. In fact, it isn't a nice thing to have to deal with.
ZIERLER: Now, did Tom go quietly into the night once you had arranged the leadership issue?
ZIERLER: Were there allies either at DOD or up on Capitol Hill who recognized what you were doing, and really put the wind at your back to help set Northrop on the right course?
KRESA: I really don't know. I certainly have friends and did have friends in that period. Bobby Inman was one of them. [laugh] But it never was explicit. If there were issues that had to be dealt with, and I just sawed through them. There was never a time in dealing with the US government that you feel the wind is in your back.
KRESA: You're a customer. They're a tough customer. If you agreed to something in a contractual form, you had to live with it, and that was it. However that came out, you dealt with it. Every now and then, you get something canceled. The government itself is such a multi-headed operation. You can be dealing with your customer and they're fighting with their senior people on their budget compared to some other thing. Then there's this big group over in Washington on the other side of the river, who are making broad decisions about other things, how much money should be in the defense area in the first place, or it ought to be in my district as opposed to somebody else, and I get a deal cut with somebody for some other reason, having to do with things I have no idea about. Suddenly, your budget is halved or whatever. Then, at times, your budgets are doubled [laugh] for either good reasons or who knows why. The government is a very interesting, complicated customer. I found it over my life as a great place to do things with very ethical people in general. Even so, I had some people that did very unethical things in the government. It's hard to answer your question, I guess. [laugh] I found in general that the people working in the government are good people, and they work very hard.
ZIERLER: Do you have a sense, just in the chronology roughly, of when you started to turn the ship around? Was it when the lawsuits started dwindling? Was it the stock price? What were some of the feedback mechanisms you were looking at to know if what you were doing was on the right track?
KRESA: Certainly, when the lawsuit developments stopped, in other words, people coming forward with issues to management before going to the government. We had our own program for whistleblowers, and we would attempt fix a problem internally. The difficulty is when people would immediately go to the government with some problem they believe is absolutely true, get the government really excited about it, and then 40 FBI agents descend on your factory one morning, and you got to deal with it. Eventually it just started to go away. But I believe that was more about a sense of understanding that the organization would fix a problem once we knew the facts. If there was some bad thing going on, we wanted to know about it. There were people caring more about how the company fared. I would say that was the first real indication that things were moving right.
ZIERLER: Kent, November 11th, 1989, the fall of the Berlin Wall. Do you have a clear memory of that day and, in the grand scheme of things, what it meant geopolitically?
KRESA: When it happened, I was joyous. It was a fabulous thing. I felt elated that, somehow, we had been part of helping that happen. Certainly, the fact that the B-2 had been developed. I felt very honored and proud that we were part of it, that we had some important part of that story. At the same time, I knew that the defense budget would be affected, and so it was going to be a new world. In some sense, it was going to be a new world in what people would be thinking about what kind of world it was. I think the most important thing was to recognize that we would have to think about what were going to be the important programs that had to be done for the future. They'd be different because the major Cold War scenario was over, and I really thought it was over because the Soviet Union seemed to want it to be over. The wall coming down, for me, was more of a statement the Soviet Union had given up as opposed to our people had won. If they hadn't wanted to give up, there would've been a lot of dead people working on the wall. It was a fundamental change in the policy of the Soviet Union that this thing was over, and that the Reagan insistence that he could bury the Soviet Union because America had much greater technology and more capability, they could never catch us. He believed it, and he did it, and it was amazing. Everybody else tried different things, but it got into the psyche of the Soviets, and they finally concluded they had no way of doing it. It wasn't just the B-2. It was Star Wars. It was a bunch of things. But it was all around technical, brilliant ideas that were things the Soviets understood they had no capability to do.
ZIERLER: Kent, as happy as you are as an American to see the Soviet Union collapse, as an executive leading Northrop, did you understand that this would be simply negative in terms of Northrop's bottom dollar?
KRESA: Yes. I did understand we were going to go through some sort of retraction period. This wasn't the first one that the world had ever gone through. I had no sense of what was going to happen, and what programs would be hurt, and so forth. On that day, I didn't worry about that. I was very proud of a role that we had played in doing what the defense industry was supposed to do. There was going to be some fallout but such is life. We'll figure that out when it comes.
ZIERLER: I wonder if you have any insight into President Bush's national security team, and their expert job managing what could have been a crisis.
KRESA: I did. I knew the people, and I have to say that they managed it very well. The fact that they brought all of the senior executives of aerospace together, and said, "Look, guys, the budget's going to get a hell of a lot smaller, and we're going to give out much less money. We need a much smaller footprint of the defense industry than we have today. It's going to happen because the budgets over the next few years are going to be substantially smaller. We're asking for your help. You guys, everybody in this room, understand what's good in this industry, where the best stuff is, and you got to work hard to preserve that. If it's just based on what we do on the next procurement, based on our regs of what's going to be won or lost, we're going to make decisions based on the next procurement, and they're going to be things that survive, and it may not be the right thing for America. Would you guys recognize you understand it better than the government? Get on with the issue of rightsizing for America. It was a shock. [laugh] It was a shocking dinner. I don't think anybody enjoyed the dinner, because the message was very, very clear. But the fact that they did that said that they really understood that the best capability to rightsize the industry was the industry itself and not the government.
ZIERLER: Kent, when you become dual-hatted in 1990 as President and CEO of Northrop, how do we understand that? Is that a promotion? Is that a vote of confidence? Is that that Northrop is getting bigger, and you just need more responsibility? What does that all mean?
KRESA: Northrop, in most of its life, didn't have both a president and a CEO. They generally had a president when there was a concern about transition, a need to have a backstop for the leader. Tom Jones was president and CEO for 20 years or so, and he became CEO only with a president for a period when he got caught up in a legal issue over giving money to Lyndon Johnson directly. I would say that every CEO in the aerospace industry at that period did the same thing. There was nothing different. Unfortunately, the money, which was always given in cash, was able to be tracked. The bills were tracked to the Watergate break-in. His money, as opposed to Joe Blow's money [laugh], had a significance over everybody else's bribes, and he got caught up in it. Because of that, there was a view that he had to be fired, blah, blah. They should have fired him, under normal circumstances.
But the board, at that time, it was a different world. The ethics of everything was different. It got solved in a way by having a president. Tom Paine came in as the president of the company, who was an administrator from NASA, very ethical, very well-known, a technical guy, and he was president. But he never had any control of anything. Tom Jones ran the company, and there was an office of the president, and he'd show up at meetings. I hate to say it. It's like our vice presidents in America. It's what the president doesn't want to do, or figures out something to do, or go to a meeting, and have a picture taken. That was the role. But in terms of really being involved in doing anything, the answer was you do what the CEO wants you to do. That was what a president at Northrop did, although it was a statement of this is where the company's going if the CEO goes away. There was a statement about that, and no different than the US government. If somebody puts a bullet in the president, we know who the next one is.
ZIERLER: Now, I said dual-hatted. I really should have said tri-hatted because in 1990, you were also named Board Chairman. I wonder if you could just explain in terms of corporate culture what it all means for you to have all three of these titles in your portfolio.
KRESA: Again, it was the way that Northrop had run its business for 40 years that the CEO was also the chairman of the board. He was on the board, and then he was elected as the chairman by the board. In the aerospace industry, it was the norm. I don't know of any CEO of any of Hughes or Lockheed or anything else it wasn't also the chairman of the board. It's become culturally different today in a lot of companies, and still some companies carry on that tradition of having the CEO also the chairman. But the Europeans have always kept them separate. America, at least in the aerospace industry, it was always together. That was not, from a Northrop perspective, anything different. If you're a CEO, chances are you're going to be chairman. It could have been different, and it was different after me. For the guys that came after me, there was a sense that we've got to get more modern. It is the kind of thing, and we'll see how it all works, etc. It changed. But during my tenure, that's the way it was. When I had the two roles, I was the leader, and the statement was the board had confidence in the leadership, and didn't feel they had to have two. If the government knocked me off, they would figure that out later.
ZIERLER: Now, we discussed already how you understood it would be a new world with the fall of the Soviet Union. But right around this time in 1990, we have Saddam's invasion of Kuwait. I wonder if you recognized how this would be the beginning of a very different massive American involvement in a different region of the world.
KRESA: Yes. With the realization that the industry was going to go through a dramatic change, we did a very detailed study of what the defense world was going to be like, and it was probably the single-most important thing I did—I led—because out of it came a road map of what the company could and should do if it were to continue. You could use it, if you believe this is the way the world would go, looking at the pushes of technology, and the pulls of the world, which were changing. We believed new conflicts were going to be regionally based wars, and the big Cold War of two big guys with nuclear weapons and all that was going to be on the side, and not affect where military power would to be. We had a belief that we were going to see small wars in odd places, and that the technology push of digital computers would dominate weapons and tactics, and the ability to be very precise, to have guidance anywhere in the world would dominate warfare. You wouldn't have to drop enormous numbers of bombs. If you wanted to drop a bridge, you'd do it with a bomb, one bomb. You didn't need to send an armada of 75 airplanes over the bridge, and hope that one of them would hit.
The world was going to change dramatically in what we needed, and therefore what was going to be important? There were other issues. We knew at this point how important stealth was. It changed the game. If you can penetrate some guy's defenses, and he believes it, that makes an entirely different view of how he views his safety. But there's more than that. When you drop the bomb, somehow, if he's looking at you when the bombs come out, you're not too stealthy. The issue of countermeasures, the ability to survive if something's launched at somebody, so countermeasures and counter-countermeasures is going to be important. It's electronics and it's digital and it's a bunch of stuff that wasn't big in the past but was going to get huge. I had this vision that chemical warfare and biological warfare were going to be big and important, and we're going to have a thing which I dubbed cyber war. I said, "If you're going to do all this, connectivity is the critical issue. If you're connected, the main thing is to worry about disconnecting, and screwing that all up so nothing works. If you do that, you can win, so cyber war's going to be important." There was this whole map of important technologies—I call them push technologies—that were going to drive the industry. It was a set of pulls, which was what are the wars that we're going to have to fight? That was going to be the pull. The combination of those two things, what did it mean? What did Northrop have? What did Northrop not have? Could we play in that environment, or would we be better to be a seller? If we didn't have anything that was very great, maybe we should just run out all of the contracts we have, and turn out the lights, and return the money to the shareholders. All these options were on the table, and they had to be thought through.
Out of it came a vision of what was important to do. With very detailed discussions with the board, we agreed that there were paths to go forward. You could start in this process of being a net acquirer of some of the stuff that was going to be important. As it became important, that was going to grow, and that was a good strategy. Then maybe at some future time, you'd sell, but that would have great value. It wasn't like it was an either-or, but maybe you should start on the path, and so that's what we did. We concluded that if we could do certain things, it would make a lot of sense. The most interesting was that there was this company Grumman, which was really at the end of its life building airplanes. They had failed to be able to pick up any new ones. They were the principal airplane builder for the Navy for many, many years. But they had lost the last big Navy contract to the F-18, which we were doing with the McDonnell Douglas There was no future airplane coming for a long time for the Navy, so they were off, doing other things. The other things that they were doing were spectacular. They were doing a mapping of the ground with radar with a program called JOINT STARS, which was a demonstrator for ARPA, which was used very successfully in the war in Kuwait. They had a complete picture of the entire war going on, and nobody had anything like it. They knew where every tank was and everything. It was a perfect testbed for this thing because they could see everything, and nobody had any countermeasures against it. It was unbelievable. They had other things. They had countermeasures. They looked like a perfect candidate to get involved with.
I spent probably eight months with them to talk about merging, a merger of equals. It made sense. They looked at it. They thought it was a good idea, and we agreed we were going to do it. Then they went quiet. Suddenly, they just went quiet, and we don't know what happened. Then, one day, they announced that they were being bought by Lockheed, and their board apparently got cold feet about a merger. I don't know what happened. I don't know the details of how it shifted from what we talked about. But, at that point, we were committed, we just said, "Let's go for it anyway." My first [laugh] acquisition for Northrop Grumman was an unfriendly takeover, which was the first in the industry. I had no desire to do it that way. But we'd come so far. It made all kinds of sense. It penciled out as a very good idea. Off we were going. That was the start of this thing. A hostile takeover was the first game.
ZIERLER: Now, are you in open competition with Lockheed at this point? What are the mechanics of the deal?
KRESA: The mechanics of the deal is that—I'll try to remember it all—Lockheed came forward, and the two of them just came together and made an announcement that they're selling to Lockheed for a certain price. Congratulations, it's all over. They're going to go do their thing. Then I just went in and put a bid in, which was a little higher. I said, "I'm going to take over Grumman for this price, and then it's a war." Then their board has a requirement to look at it. They can reject it, as they did. But what they at that point say is, "We've got a competition. We've already got a better deal for our shareholders. We're selling. Now, what does Lockheed want to do?" As I recall that, Lockheed never raised their price. They just said, "To hell with it." I don't know. I don't know how it happened that they became the acquirer because they were not totally committed to it in a way that would say, "I'll sweeten the pot, and let things go on."
Then there were other bids, and there was best and finals and all this crap that you do when you're in a bid for a company, and we were successful. We did pay more than Lockheed would've paid, and there was a break-up fee that Lockheed got that I had to pay. It was messy in that sense. I wasn't happy with the fact it really had started out to be a merger of equals, and now I had to own something. I wasn't on that path at that point. But we knew what it meant, and it made a lot of sense to us putting the technologies that they had amassed into our quiver. They had several of the things that we really wanted, and it had nothing to do with airplanes. Everybody thought, "Oh, it's two dying airplane companies trying to get together." [laugh] There was not even a single thought about that. In fact, the first things we sold were the aircraft manufacturing facilities in New York, which was their home. I became public enemy number one in New York, and I'm a New Yorker.
KRESA: It was really amazing. But then, as with all unfriendly mergers, they are friendly at the end. Once the deal settles down, and a deal's cut, then everybody smiles, and shakes hands, and you're off and running—and that occurred.
ZIERLER: What were some of the challenges, hostile takeover, even if it's friendly at the end, just in merging two corporate cultures?
KRESA: Daunting. I spent a lot of time trying to learn from other people about this, and what you want to do, and what you don't want to do, because most mergers fail in terms of the value that you create. I was very concerned about that, and I knew nothing about it when I started this thing. But this business was another world, a financial world, and more than finance. It's a whole bunch of things. Now, you're in this merger, and how do you make sure that what you just acquired stays around? It's all people. In the final analysis, it's people. Now that the merger is announced, everybody's nervous—everybody. Not only are the people that you're bringing from the acquired company nervous, but so are yours. I would say, the lectures that I give at business schools that people like the best are talking about how to do successful mergers, because most people don't understand it. There's a catchphrase that I use, which is "the first two letters of merger is me". What does this mean to me? You've got to be able to answer that in a positive way for everyone in the company you're acquiring and for everyone in your own company, because they all believe they don't know. They don't know if it's good or bad. But every headhunter who knows who the good people are, and who the bad people are, will talk to the good people, and say, "With all this uncertainty, this is a time to really think about this great opportunity I have for you at company Y." Every good person is being looked at, and if you don't deal with "what does it mean to me?" they're all gone. The only people that are left are the people that nobody called [laugh], and that's not the company you bought. That's the simple version. There's a lot of work behind that, but if you just remember that and get on with it. I built a whole philosophy and operation around making mergers successful. It's a serious business with a lot of people working hard, and when you do it right, it makes an enormous difference.
ZIERLER: How did you do it, Kent? How did you avoid that worst-case scenario of all the best people jumping ship?
KRESA: The first is you over-communicate. You, as the CEO, over-communicate. You enthusiastically talk about the new company. The new company is not the old company with something bolted on. It's a brand-new company with a new capability, because these two fabulous things are coming together. It's making something that didn't exist that'll blow the world apart. You don't realize how fantastic it's going to be [laugh] until we come together. You're going to be able to grow, and do things that you never ever were able to do before. Everybody was going, "Holy shit, what does that mean?" Immediately, you give people a vision that this is done purposefully. It makes enormous sense. It'll make you so much better than you were. You got to push that hard across the board, and your other managers must push it apart. Then you must have ground rules that this company is going to be based on the best people surviving, wherever you are in the company, and we're going to keep the best systems, and we're going to keep the best this, etc. There should be no rumors. Yes, we're going to integrate, and we're going to close some facilities. You're going to hear stories about this plant being closed, and that plant being closed. You know what? Both are being looked at. But until we get all the data, and make a decision, nothing is closing, and when we make the decision, I will tell you within 15 minutes when it's done. Don't worry about it. There's studies going on there. We will decide. Obviously, we've going to take certain things offline. But then everybody realizes, of course, they do. That's what's going to make it better. But you must have this. They must have this belief that the leadership of this thing is honestly going to tell us, and it's back to ethics.
ZIERLER: Kent, you explained at the tactical level why it was so important to acquire Grumman. But at the strategic level, why was it worth it for you? What did Grumman have that made Northrop Grumman into the company you envisioned you wanted it to become?
KRESA: It had many of the pieces that were on the chart that we didn't have. One thing it had, it had a small but capable information technology piece, which was doing what I'd call at that point highly classified IT of different types. It was part of this cyber worry I had. We had none of that. Tom Jones thought software was terrible, it would lead to all kinds of lawsuits, and it would be bad. He didn't want to have anything to do with the software, and so we had none—none that we could sell as our own. It had Joint Stars which was going to become a very big and important program, and I thought this was the beginning of that surveillance capability that would allow you to understand the world. They had a bunch of airplane programs that had legs—by "legs," they were going to last for a long time. I might point out that they're still building them [laugh] for the United States Navy. This was the ‘90s, so they're still going strong. There was that. Their countermeasures work was very good. We had very good countermeasures work, so I thought the two, putting them together would make us a very, very strong company. There was a lot of good stuff.. They were fundamentally based on Long Island, which is about as crazy a place to have a defense contractor as you could have. It's probably as crazy as having one in Los Angeles. But they had started moving to Florida, and their new plants were down there, all of which made sense. It was something that we were going to grow. Integrated properly, the company would be a lot stronger for the future because it had a lot of positive things that fit this vision that we had of the world changing, and what the government's going to need.
ZIERLER: Let's go back to Iraq, and Desert Storm. How well prepared was Northrop? How much did it have to pivot in terms of providing DOD with what it needed?
KRESA: I'm thinking about Northrop, and Desert Storm, we had a few things that were important. We had unmanned vehicles, which were basically target drones at the time, which were used in the initial assaults, and were very successful because they sent all these targets, making them look like they were aircraft. They had augmented systems aboard that made them appear on their defense radars as serious threat aircraft. They were just shooting like crazy all of their weapons. We came in with the real airplanes right behind them, and then took out the entire system. [laugh] We had an important first part of that war. We had airplanes. We weren't selling. It was what was used of ours. I think that was the most important single thing we did as a company that was uniquely driven by that war.
ZIERLER: Do you think President Bush made the right move not pursuing Saddam all the way to Baghdad, not making it a total war?
KRESA: I'm not a geopolitical person. That's something you'd ask Bobby [Inman], and he'd have a reason. I think that it stabilized the place immediately. When the thing was over, it was over, and the world calmed down, it looked more like it was from the beginning. As opposed going in and taking them out, what we did when we took them out, which created chaos because we totally missed the entirely different culture that existed in Iraq, and then we created this monster, which we lived with for years. Under that scenario, I would say, it was a brilliant move on his part to stop.
ZIERLER: We've talked about Northrop's relations within an American context. What about arms sales internationally? What did you do to develop Northrop Grumman's international profile?
KRESA: Certainly, we tried. Northrop itself was a very large player in the international marketplace because, prior to Reagan, there were no mainline fighters, US fighters allowed to be sold outside the United States. We had a fighter called the F-5, which was the renowned fighter everywhere else in the free world. We were big in every country that was important to America because we had the fighter system that they wanted. When Reagan came in, he said, "I want to give allies mainline fighters." That was the end of that. Everybody wanted the F-16. Nobody wanted the F-5 anymore. The world just changed on a dime from the moment that that decision was made. But we had a large presence internationally. I'd say that during my tenure, because we went into stealth, and we went into a lot of very highly classified things, we became much more of a domestic supplier than an international supplier. We were a big international supplier before that. Certainly, we tried to sell things internationally, and each one of them is a big deal. It's a very expensive and long campaign to get a sale internationally, but it's a good business if you can do it. The margins are high, and it's great. But it's hard compared to doing it in the US.
ZIERLER: Kent, you were certainly ahead of the curve in recognizing the import of cyber warfare. When did the rest of the industry and even the US government come to appreciate just what a significant part of the national security structure this would be?
KRESA: Just about when I retired.
ZIERLER: [laugh] Long curve?
KRESA: Yeah. I kept on acquiring black IT companies that were doing work in highly classified things. I believed that it was going to be important and, eventually, the government was going to have to spend a lot of money in that. It was all going to be classified, so whoever had the biggest bunch of classified tickets at that time was going to be the winner. Nobody else was doing it. I was doing it. When it happened, we became huge in that business. It turned out to be a great thing. It took a long time to develop. But, in fact, just before I retired, they're asking, "What did you do right, and what did you do wrong, and blah, blah, blah?" I talked about all the things I think I got right. I said, "The one thing I can't believe is that the cyber war thing has never evolved, and nor did chemical and biological weapons emerge the way I thought they would." They fortunately still haven't, although they could. But I think people worked very hard, particularly on biological weapons, to recognize how bad they are that nobody got into it in a big way.
ZIERLER: Was your concern with CBW primarily from non-state actors or more from rogue states like North Korea and Iran?
KRESA: In my day, the Soviet Union was the biggest player, and we were very concerned about them. We knew what they were doing. The whole issue was what can we do to stop it? The answer is: not much. The Soviet Union for years claimed they weren't doing anything, when we knew they were, and they were. You couldn't figure out why they were doing that. But they believed that somehow they would figure out a mechanism to be able to utilize this thing, and protect all their people, and be able to threaten everybody else. They never got that right. It always would've killed them just as easily as kill everybody else. It's not really a great weapon to deal with because once it's unleashed, it's like COVID-19. If you believe the Chinese released COVID-19 as a weapon against the West, just take a look at their country and what it's doing. [laugh] It's not a good strategy. [laugh]
ZIERLER: Kent, I'm sure you've heard some of the debates during the Clinton administration about the extent to which Clinton turned inward; that he was more isolationist than Bush would have been. Ultimately, do you think that was the right course for the United States after the end of the Cold War to focus more on domestic issues?
KRESA: Probably not as much as we did. I think the most brilliant thing that America ever did was after World War II was to bootstrap Europe and Japan back into the free world, and make them strong allies. What dividends that has paid the world and America, and you can't measure it.
ZIERLER: Meaning, was there a lost opportunity with Russia, and where we see Putin today?
KRESA: I think so. If we had done a similar thing with Russia—there were very bright people; very capable people—we wouldn't have this shit. I think the lesson that I learned from World War II is that the brilliance of what we did after the war made the difference. I'll contrast that with what we did in Iraq, and show that was absolutely the worst thing to do. What we created was chaos, and hate, and ISIS. We created everything, and we paid for it. We're still paying for it.
ZIERLER: Yeah. Kent, to 1994, when you're elected to the Board of Trustees at Caltech, what was the initial contact? Was this something that you were interested in? Did they reach out to you?
KRESA: They reached out to me. Now, I didn't know at the time that Bobby was the principal driver of that. But I got called by another board member, Bob Anderson, who was CEO at North American. I was very surprised. I didn't even know if I wanted to do it because in my history [laugh], there's a rivalry between MIT and Caltech. I wondered, "My god, what would that mean?" In terms of being involved with the people and with the technology and with the intellect of the organization, I clearly wanted to do it, but I thought, "Boy, am I going to be disloyal? What is that going to mean from MIT?" I talked to the president of MIT, and he said, "Oh, shit. That's all for the freshmen and the sophomores"—
KRESA: —"that like to have fun with all that stuff. We're all very close." By the way, there's still great rivalry between the two on a technical basis and, yet, just as there are in the aerospace industry. We compete with other major corporations but, at the same time, we understand each other, and we operate together, and so forth. There was this sense that it made sense to do that, and it made sense for me because I had been involved with MIT, not on their board but on some advisory stuff, and I finally couldn't take it. Boston was just too far to go for a freebie, for an afternoon. It had to be when I was going to Washington or coming back from Washington. It got very complicated to try and negotiate schedules, so I dropped my involvement with MIT, and missed not having that intellectual dialog. Here, I had an opportunity where I could do it at Pasadena, which was an hour away from my work. If there was a meeting in the afternoon, I could go after lunch and do it in the afternoon. It was fabulous. Eventually, I said yes. God, I'm still there. I can't believe it. It's been good. It's been a very nice involvement for me.
ZIERLER: What niche do you think you filled? It's one thing, of course, Bob Inman respects you so much. But what did Caltech need at that time for the Board of Trustees that your experience, your worldview could fill?
KRESA: I don't know. For one thing, I think I'm a pretty good manager. As I said, I have a keen sense of bullshit filtering, and I'd use that at the times when it needed it. I play another interesting role [laugh] with respect to Caltech, and that is when the hyperbole gets a little too much in how Caltech is sort of the world's best, and how they're the greatest, I'm the one who reminds them about MIT, or reminds them about others, and how grateful we are that both MIT and Caltech are in America. Then they all snap back. It's funny, and [laugh] everybody smiles. But when you get—and you do—you get very excited about your organization, and how you're the best, absolutely the best, and this, that, and the other.
ZIERLER: But you can be in a bubble? It's an echo chamber sometimes?
ZIERLER: Kent, when you joined, what is in your recollection? What were some of the key issues facing Caltech at that point?
KRESA: Oh my God. I'm not exactly sure when it happened, but it happened early in the time that I was there. We started failing at JPL on missions. We had two or three in a row, getting really serious. They asked me to chair a committee to look at JPL, and go through what their issues were, and so forth. It's a fabulous place, and it does wonderful things. But they also were very insular in the way they thought about how great they were. There were parts of them that had really needed to get modern. [laugh] Here's this aerospace guy telling him, "You're nowhere in this."
ZIERLER: Now, did you have much interface with JPL from Northrop Grumman's perspective?
KRESA: No. Very little. Northrop wasn't doing anything in space at that time. When we acquired TRW then, of course, there was a much closer relationship, although there was very little involvement with Northrop and TRW, and very little involvement between TRW and the lab, JPL. I'm not sure why, but they didn't like each other. I have a funny feeling, the principal reason is they're so close to each other that they were always robbing each other's people, and it rubbed. It's not something they liked, either one of them. That's healed a little bit. I think the fact that they're close and, therefore, they share people, senior people at times—I don't say "share them." They steal them—is a better statement. [laugh] It makes it harder. The principal contractor for JPL has been LOCKHEED in Denver. They're great, and they do a fabulous job. Northrop does as well. There were times I tried to get them together. I'm sure they do things they. But I think they respect each other. The Webb was a huge activity for TRW and then Northrop for years, and the Webb telescope. Thank God it worked. It was an enormous undertaking. The JPL people have great respect for the people that did that, and vice versa. They both know they're both world class, so it's good.
ZIERLER: Kent, besides Bob Inman, was there anyone else at Caltech that you had a relationship? For example, did you know Tom Everhart at all before joining?
KRESA: I knew him only peripherally. I knew Tom because I took his spot on the General Motors board when he went off General Motors, and so we interacted a little bit. Of course, we had a kinship when I came on the board. I think I came on the Caltech board before I went on the General Motors board, so he probably was there. That's probably the wrong statement. I don't remember the dates but, somehow, I remember knowing him a bit, and our connection was the GM connection.
ZIERLER: We talked about this a little bit before but, coming from your MIT perspective, MIT's is much larger. What were some of the ways that you saw Caltech could play to its strengths in its commitment to staying small?
KRESA: I have a slightly different view of it. Caltech is small, unless you add in JPL. It ain't so small when you do. There are other big science activities which they're involved in which, when you add those in, it isn't so small. The total number of disciplines that Caltech excels in is smaller than MIT. They don't have a business school, and there's certain things they don't do that MIT does. But in any given discipline, they have a cadre of collaborators, which is probably similar. [laugh] We talk about it as being different. It's a different size campus. The undergraduate department is enormously different. But once you get to the graduate side, MIT is probably a bit bigger, particularly because they have, a large presence in the biomedical area, MIT was substantially larger, although we're getting a lot bigger at Caltech now. But in the classic things of chemistry and physics and so forth, they have departments that are about the same size. [laugh] I look at more of them being similar than different. It's not part of the ethos of the organization, but it doesn't matter to me. It works for them. They have a great feeling. There is the ability for the faculty to get together and to communicate and to do things together. But I found that at MIT as well. If you go to the MIT Faculty Club at lunch, everybody's babbling and talking, and writing on napkins, and doing all the same stuff they do at Caltech. There's a lot of similarity between the two, except the undergraduate organization is huge compared to Caltech.
ZIERLER: Now, the chronology of your involvement in these things in 1994, were you already involved in the worlds of philanthropy, and serving on boards, or was Caltech in some ways your entrée to that world?
KRESA: No, I think I was involved in the Music Center here in LA. I've been involved in that for years. I still am. The United Way and other things that come along with being an executive , like World Affairs Council, those kind of things. No, I was involved in philanthropy.
ZIERLER: What were some of your perspectives on David Baltimore's presidency, and particularly his efforts to enhance life sciences, and all the buildings, the campaign during his presidency?
KRESA: He was an enormous scientific force in driving things. It was wonderful. The life science thing, clearly, life sciences being a very important thing in the '90s and in the early turn of the century, he was clearly a guy that guide that to happen, and it was great. There was an awful lot of money being spent on things for buildings, and so forth. We were dipping into the endowment.
ZIERLER: The endowment?
KRESA: The endowment, and we were probably dipping deeper than we should. There were people on the board who were very upset, saying, "We're going to go out of business. The business side of the thing, we can't constantly keep on eating our own seed corn." One of the things during my reign as chairman was to try and get us back to a much more reasonable financial structure so that we had the ability to survive for the long term. That was not something David enjoyed. He thought that had happened; that somehow, someone will take care of that. Get a few more Nobel Prizes, and get a few things to happen, and all that will get taken care of itself. It may be true [laugh] but it's a very daunting task for a board if you have fiduciary responsibility.
ZIERLER: It's a different way of running a private business than a university.
ZIERLER: Kent, in light of all of your personal financial support, all of your generosity for Caltech, do you have a specific memory of what first inspired you to give in the way that you have?
KRESA: No, not really. I've always felt and continue to feel that higher education is a very important thing to do, and research and doing things for the next generation, developing new capabilities is an important way to spend your money, if you have any extra. I have always been biased in a way to want to have higher education as part of my giving. Now, I knew I was going to be giving to MIT because that's my alma mate. My sense was that they're both fabulous, and therefore I should give to both, and that's what I'm doing.
ZIERLER: As we talked previously, there are so many different ways to give. You can endow professorships, you can do scholarships, building campaigns. What was most personally satisfying to you? How did you want to deploy your generosity?
KRESA: I've done it in two ways. One is to endow a professorship, which I did, and I did it at GALCIT, which is an aeronautical thing. Then the other is to give money, to leadership to be able to spend on ideas that may make a difference, that they think may make a difference. It's a free pot for smart people who have ideas that may generate really great things in the future. I've done that twice. I've done that in the department, and also at GALCIT in the unmanned area. That, I believe, is going to be very important. I have a love of the aeronautical space, if you want to think about it. There's an enormous excitement of young people on drones and on unmanned things, and it's created a whole new set of students going into this department. Aeronautics sort of went dead for a while. They really lost many of the bright kids. They're all going into information technology and into the biological environment because that's where they see the future. But, all of a sudden, this whole love of unmanned little vehicles and big vehicles has captured a set of young people. It was really a way for me to see a future for what I thought was important. As a kid, I did my thing in airplanes, and these people are going to do it in drones and unmanned things of all kinds. I've put research and, again, it's in a form where they can start new projects. Just give some people a few 100K or 100K and just let them get going, and you just got to think it's a good idea. You don't have to write a proposal, and that's great.
ZIERLER: Kent, returning back to the world of international affairs and national security, with the African Embassy bombings, the bombing of the USS Cole, even before September 11th, in the way that you had the strategic vision for what Northrop Grumman would become, was it well positioned for this new age of warfare, the Global War on Terror?
KRESA: Yes. It's positioned unbelievably today. There's been a few more acquisitions since I did the bulk of them, and the latest one's brilliant. They picked up the missile side. We're positioned as well or better than any of our peers, and it shows. [laugh] The growth of the company's been unbelievable. I don't know if I mentioned to you the growth. There are not a lot of people that can talk about that kind of growth. It's a 30-year growth at 18.8% per year. That's not a bad deal, and it's still going.
ZIERLER: Kent, the day everyone remembers, what was 9/11 like for you, and what did you realize it meant for Northrop Grumman?
KRESA: I was on the treadmill at my home when I was watching the one tower burn, and then I saw an airplane come around, and I said, "Oh, my god, there's a second airplane that's going to hit." It was at about the same level. I said, "It's going to hit it." At that point, there was a debate. What kind of airplane? Was it a small airplane or an accident? Then when I saw the second one, I knew this was a terror attack. I had no idea how big it was going to be or what it would be. But my concern at that moment was the company and all of the people, and were we under attack? Would we be taken out? What should I be doing about the people? I got off the treadmill and got dressed. It was early in the morning, but went to the headquarters, and went into a command center, and spent the day figuring out what to do. It was a very complicated and scary day for me. Now, other people were in the same boat, and for people in the government, it was worse. But my sense was that I was only thinking of how to get through the day without losing the lives of people from Northrop. That was my biggest concern.
ZIERLER: How was Northrop Grumman prepared to help the United States wage the Global War on Terror?
KRESA: We had lots of systems. The way it worked out, I can't point to any particular system that made a difference. But probably the evolution of the cyber world was real at that point, and we were very big in that, and the company's is still very big in that. I don't know how many thousands of people are working on that, it's all classified, so it's hard to pinpoint or talk about things very well. The fact that we're very much involved in the precision weapon business, and that makes an enormous difference. We're in the surveillance business in a big way, and surveillance is a very critical piece of the War on Terror. It's hard to talk about it directly. Much of it, I don't know because I'm not cleared anymore. There's lots going on. But the tools that we put together in terms of unmanned vehicles and surveillance and precision weapons and things of that sort are part of this new world and are going to continue to be part of it.
ZIERLER: Kent, would the acquisition of TRW, would that have happened absent 9/11, or was that really a response to the War on Terror?
KRESA: How can I say this? The acquisition of TRW was because the leadership of TRW didn't care about it, and I did. I believed they were an extremely important player in the defense industry. The leadership of TRW only cared about the automotive industry, and they were doing all of their acquisitions in automotive. The people that were here, that were in the defense side, were frustrated with their management. When we were smaller, and TRW was much bigger, I tried to merge, and convince their leadership to have automotive and defense, and that I take the defense piece because they didn't like it. I mean, we leave it in a combined company and call the whole thing TRW, and they could run the automotive and I run defense. They didn't like that at all. It kept on being no interest, no interest, no interest, and because TRW constantly played in the automotive space, their stock never went anywhere. Our stock rose, and we kept on acquiring other things, and we got bigger. At a certain point, we were big enough to buy them, and I did an unfriendly takeover, and it worked.
ZIERLER: What was so important about acquiring TRW? What did they add to the mix for Northrop Grumman?
KRESA: Probably the most important thing was they had in their defense sector a very high caliber of people. They had space, which was something important that we didn't have. They had other programs that were extremely important. But I would say the thing that constantly kept me most interested, they had great people, great systems analysis people. I would talk to Si Ramo, who was a good friend, and we'd get together at least once a month for lunch somewhere, and talk. We'd both be totally frustrated about how the company was being allowed to falter. I constantly kept at it, and was rebuffed many, many times. But when we got big enough, then I was big enough to take them on. I didn't want to have anything to do with the automotive. The interesting thing about that takeover was that everybody in the aerospace industry would love to have owned TRW. It was one of those things. But the automotive was such a huge piece of them, and nobody wanted to touch automotive. I don't know if you remember at the time, but they were very much involved with the brakes business, and they had hundreds of asbestos lawsuits, and it was getting more. The legal problems associated with being in the automotive industry just kept that business down. The stock market didn't like it. Nobody liked it because it looked like a treacherous place to lose a lot of money. The brilliant thing we did is I made a deal with Blackwell at the time we did the acquisition that they would buy it. When I'd buy the company, they would, at the same moment, buy the automotive. I had a large chunk of money. I would be a part owner, but they were the principal owner, so I could isolate myself from any of the asbestos issues. It turned out that they did very well with that business, and we made a fortune. [laugh] It worked out better than I thought, but it wasn't the reason that I did it with them. But it worked out well. It was great. Out of that, we wound up with the defense part of TRW. There's an interesting thing. Probably the happiest guy of the whole activity was Si Ramo. He just thought this was wonderful. When we had our first welcoming ceremony, which is something which was part of any welcoming of a new entity into Northrop Grumman, we had an all-hands meeting with the majority of the TRW people in California in a tent that was the biggest tent I'd ever seen in my life. I asked Si to speak. Most of the people only knew of him, and they never had seen him. But everybody knew he was one of the three people who made TRW. He got up on the stage, and he just said, "Hi. It's great." He said, "I don't know if you know who I am." Of course, everybody did. He said, "I'm Si Ramo. I'm the "R" in TRW."
KRESA: "But I'm so happy. I'm so happy, because there are three Rs in Northrop Grumman." [laugh]
KRESA: The place went crazy.
ZIERLER: That's great.
KRESA: It went crazy. It was a statement that he was totally committed to the new thing, and that it would be great for everybody. I'll tell you, he didn't have to say any more. It was done.
ZIERLER: Kent, was this success for you, was that sort of like a pinnacle move where you could start thinking about stepping down?
KRESA: Yes, I was in the process of stepping down. When I became CEO, I put in a requirement that senior officers—defined loosely as the top five—had to retire when they were 65. It didn't mean that they had to leave the company or stop working, but they would no longer be part of the top five at 65. I had a few people that had left over the years because that was the requirement. I did that because Tom Jones had no age requirement, and it screwed up the availability of able successors. I probably had the job because he never did have anything to insure succession. All the good people recognized that he would never leave, so they left earlier to go do other things. This was really a stupid way to run a company. It's important to have a good bench, and bring that bench along, and allow them to have a great hope, and eventually get down to a point when you have one or two or three people that make sense. At that point, you pick one and you lose two, but that's the way the game is. I put this age, 65. Now, it's coming up on my age, 65. The board's saying, "We don't want you to retire, and you don't have to go." I said, "I do have to. I'm the guy that did it. How can I ethically not retire if I'm the guy that forced everybody else to retire, and then I stay? What does that say? What does that mean?" I just committed that I'll go do something else, make other things happen.
ZIERLER: Kent, the last topic we'll cover for today's talk, just unwinding your time leading Northrop Grumman, what did that mean for you personally, and how did you work to ensure a smooth transition in light of all the success that Northrop Grumman has achieved since you stepped down?
KRESA: The most critical thing you got to do when you're going to step down is to pick a successor or to align a successor. It turned out that the board wanted me to pick a person or bring them my recommendation for a person. Who knows? If I brought some guy they didn't like, maybe they would've said no. But they asked me for the right thing to do. They felt that it was important that I should not only look at my inside guys—and I say "guys" because we didn't have any women at that point high enough up in the organization. Now, fortunately, the company has changed, and we now have a CEO who's a woman. They asked me to also look at outside people, and bring them two inside people, and two outside. It turns out I only had one inside person at the time because the second, the other person who was a potential candidate had figured out he wasn't the right guy, and had gone off to be Secretary of the Air Force sort of as his swan song kind of an idea. I had one left, and I had two outside candidates.
One of the outside candidates was Ron Sugar, but he at that point I suggested him, he was at TRW. He was the chief financial officer of. But he was one of the two outside candidates. As the time went on, he quit TRW, and became president of Litton, and had a transition to be the CEO set up. It was a year or so, a year and a half that he'd be CEO. When we decided that we would attempt to acquire Litton, I thought, "This is a brilliant opportunity to bring in a guy that's one of the candidates that I have listed as my outside candidate and see how he works." I made it mandatory when we acquired Litton that he couldn't leave immediately. He had to stay six to nine months to help in the transition. He didn't really want to do that, but it was part of the deal. [laugh] Their board said, "Look, this is the right time to sell. It's the right thing, blah, blah, blah. I know you don't want to stay, but you're getting all this money anyway because we're being acquired, and that's your penance, and you're going to have to stay for six months." It was an opportunity to deal with him not only as an outsider, who I knew as an outside good guy, but I could deal with him comparatively against the internal candidate, who was excellent. Then he was the guy I finally chose. That's how it happened. I felt good about the transition because I knew the candidate well at that moment.
ZIERLER: Kent, did you want it to be a clean break? Did you want an emeritus status? Did you want to stay on the board? What were your options?
KRESA: I think the options could have been whatever I wanted. They wanted to make me emeritus, which is just a statement. I chose that. I did not want to be on the board. I've been on too many senior boards where the former chairman hangs around, or the former CEO hangs around on the board. It's hard for the board. It's hard for the person. It's not a good dynamic. My sense was I didn't want to do that. I felt that it was important to make a clean break. The CEO's the CEO. It's got to do well. The chairman, the boards, it's the board, and they got to work together. I'm gone. That's what I did and I went onto my next gig. My view was it wasn't the end of the world. It was just the end of this part of my life.
ZIERLER: Finally, Kent, last question for today. As you look to your life post Northrop Grumman, circa 2003, how well planned was that? In other words, did you know exactly what the next steps were going to be, or you woke up one day, and said, "Now it's time to figure that out?"
KRESA: It evolved. I had a plan, which I followed to some extent in terms of allowing myself to have times that I could work, and times that I could play, and to don't get to the point where I cobbled up my life with so many work things that every week there was a requirement to somehow do some work, which would never allow me to go anywhere or do anything for a month or so. I worked very hard at partitioning the world in a way which would allow me to have blocks of time available to do things I wanted to do. That's another lecture I give to a lot of people on when you're going to retire, on how to have a successful retirement, where you're happy with it, particularly people who are Type A, who want to keep on doing things. It's important to have time to do things that you really don't know what you're going to do. You can go off, and either travel or paint or who knows what, or start a new company if you want, but don't be so committed in what you decide to do. Then other things just happen. The world happens around you, and you must deal with it. I think it's worked well. It's still working well.
ZIERLER: Kent, on that note, in our next discussion, we'll pick up the story from 2003. We'll bring it right up to the present.
[End of Recording]
ZIERLER: This is David Zierler, Director of the Caltech Heritage Project. It is Friday, December 9th, 2022. It is terrific to be back once again with Kent Kresa. Kent, as always, it's my great pleasure to be with you. Thank you so much.
KRESA: Good to be with you too.
ZIERLER: Kent, today I want to start with a ripped from the headlines kind of question. I'm sure you saw all of the media attention relayed to the unveiling of the B-21 from Northrop Grumman. I wonder if that has a history that goes back to the time when you led Northrop Grumman, or at least it has an origin story that goes back that far.
KRESA: Stealth sort of emerged out of my life in a funny way. I was at ARPA when we did the very first developments. It was through my shop that we did the first contracts in what is now called Stealth Technology. I wasn't the directly involved, but someone in my organization was. The first contract was called Project Harvey, for the obvious reason that it was a large airplane that you couldn't see, and so it sounded like a good title. Northrop was one of the four or five contractors that were given a contract to do that, where we went as far as a pole tests.
ZIERLER: What does that mean? What is a pole test?
KRESA: A pole test is an airplane model that's developed with the right shape and the right materials, which is put it up on a pole in an anechoic chamber and illuminated by a radar to understand the return that radar will get from the model. The radar frequencies and the scale of the model are adjusted model a full-scale airplane flying against a specific radar of interest. From that, you learn what is the radar cross section of a full-scale airplane. I left ARPA during that period, and went to Northrop, and lost track of what was going on. It was a classified program. When you leave government service, you are barred to have any relationship to activities that were going on that were under your direction when you were in the government. This is to insure there is no conflict of interest between the parties. Eventually, Northrop was chosen, along with Lockheed, to bid on the Stealth fighter program, which was a follow on to the Harvey work. After a year or so when I was at Northrop, and I no longer had a requirement to totally do nothing with respect to Northrop in stealth, because I had done my penance of not being connected, Northrop management asked me if I would get involved. They were getting ready for their final submittal for the fighter program. As I read their proposal, I was blown away by how well they had done. They were doing extremely interesting new things that had not been tried before.
ZIERLER: Without getting into anything sensitive, Kent, what specifically impressed you?
KRESA: Their performance, the performance in being able to lower the radar cross section of a large airplane and essentially make it look like a small bird and their techniques worked over most of the angles that a radar would be presented with as the airplane flew by. Although quite good, they lost the bid to Lockheed. I wasn't involved in any of the deliberations. But a few months after that occurred, the manager who took over my job at ARPA, came out to see me, and talked about how good the design was. But it was viewed as risky compared to the Lockheed design, which was a more conventional approach to stealth, having to do with faceted surfaces like mirrors. In that the radar energy scatters off the airplane at preset angles but not back to the radar. This was successfully deployed in the SR-71 and U2 spy-plane in the 60s.
The Northrop system was much more sophisticated, having to do with the curvature, and the way the radar waves are allowed to flow across the surface without scattering back. I don't want to go into the details. But the technology seemed to be very exciting to the government, as they could think about getting all aspects stealth, namely, not just reduce the cross section on the nose but cover all angles including the rear of the aircraft. The government was interested in getting involved with Northrop to de-risk their technology. We had a luncheon to talk about what made sense, and out of that grew a program, which was sole-sourced to Northrop for another machine, which was highly classified but would look at stealth at 360 degrees around the airplane. That program has recently been declassified after about 15–20 years because was developed and worked. It was known as "the Whale" because it was a rather fat airplane that housed a side-looking radar, which was also low probability of intercept. The concept was to fly an airplane into enemy territory, and orbit there, looking at the ground the way the Joint Stars system worked, and look at what was happening in real time, the way that Joint STARS had done in the Middle East War but to do it in an area much closer to the battle, but, because of its stealth and LPI radar, it couldn't be seen or heard by the enemy. That was the concept. I won't talk about how well they did, but it obviously did well, and it became the basis of what people viewed as the next generation of stealth. It is the technology which grew into the B-2 bomber. There was another competition. The competition was between Northrop and Lockheed, and Northrop won that competition because they had this next-generation technology. I was involved in all of that. Just recently, they won the B 21, which was the next generation of the B-2. Of course, that just rolled out. There's a long history of stealth and bombers in my career.
ZIERLER: Kent, from your viewpoint, how does B-21 change the game? What is it able to accomplish that the B-2 cannot?
KRESA: The B-2 could accomplish a similar thing. I can't really talk in detail about the subtleties because they're highly classified, so I won't. But I can only say that bombers make a lot of sense in today's world, particularly stealthy bombers. The important thing about stealthy bombers is that you can disperse them, and you disperse them at long ranges, away from the enemy, and keep the enemy at risk. Now, that all depends on what's the range? What's the stealth? All those subtleties, every one of those parameters I can't talk about because it's highly classified.
ZIERLER: In general terms, of course, there's a history here that goes back to the Cold War where the strategic war was envisioned to be fought against the Soviet Union. How might that change things now if we're thinking about, heaven forbid, a strategic war with China?
KRESA: The concept of a triad is still very viable. Will it be more than a triad? The triad was viewed as ballistic missiles with nuclear weapons, submarines with nuclear weapons, and bombers with nuclear weapons. There's a new play, which is hypersonic weapons that can fly at low altitude and be on the enemy before they have much time to react. They don't fly a ballistic trajectory where you know where it's coming from, so you look for it. But maybe these weapons will come around the world the opposite direction, come in, or in directions and at altitudes and that you don't plan for. Let's say, the new Triad is probably going to four systems because hypersonics could be a fourth player. Now, the difficulty with the hypersonic system is that it's very inefficient in energy. You're really driving this thing enormously and, therefore, the payloads aren't necessarily very large, but they're still nuclear, and they keep enemy targets at risk. Northrop's a big player in this technology as well. They just won the development of the Air Force hypersonic missile jointly with Raytheon.
ZIERLER: Kent from the perspective of, for example, the Ministry of Defense in China, how might the B-21, this next-generation technology, serve as a deterrent effect, either in its expansion in the Pacific Rim or even in its desire one day to militarily reunite Taiwan with the mainland?
KRESA: There is lots of unknowns about the B-21, and they're being kept unknown. The issues are what's its range, what's its payload, and what's its stealth? Can we see it, or can't we? Where are they going to be based? There's a concern if you must tank them, in other words, you have to be at locations where they must add fuel before entrance into theater, are the tankers stealthy? We don't think so. Can you see the tanking activity going on? The secretary of defense in his comments at the B-21 unveiling sort of said, "We can base this thing anywhere, and we can hold you at risk anywhere from anywhere in the world. You'll never know where it's coming from." I'll just leave it at what the secretary of defense has said.
ZIERLER: Kent, let's now go back to the narrative in 2003. When you stepped down from Northrop Grumman, and you were thinking about the areas you wanted to be involved with, Bush 2's invasion of Iraq, did that affect you? Did that affect the kinds of boards you wanted to serve on, one way or the other?
KRESA: No. I purposefully did not get involved with companies that were in the defense sector, just because I had an allegiance to Northrop. Northrop had a broad involvement in things, strategic, and tactical, and across the board. It didn't appear to be that I should necessarily stay involved in that. I was interested in continuing to be involved in industry, and so I got involved in a lot of different companies in different ways. I loved the automotive industry. I got involved with the automotive industry when I was still working at Northrop. I got involved with Chrysler early on, as we talked. I almost wound up there, but that was a separate thing that didn't happen. When Chrysler was acquired by Daimler—actually, it was a considered a merger of equals even though it wasn't—I couldn't stay involved because they had a larger footprint in aerospace than Northrop at that point and it would have been a conflict of interest. I had to get off the board. A few years later, General Motors asked me to get involved with them. I was very interested, and I did that for many years, and then got involved when they were about to go into bankruptcy, and that I spent some time as Chairman. That's what I call my summer job at General Motors, taking them through bankruptcy as their chairman. It was, not something I really wanted to do, but it was very interesting, and it turned out great. That worked out well for me and well for the company.
ZIERLER: Kent, who were some of the key connections for your affiliation at The Carlyle Group?
KRESA: It was all the three principals. I knew them all. We had done business during the transformation of the industry. We did the first Vought acquisition together, and I sold them the aircraft structure segment of Northrop Grumman after the B-2 was finished, and we had put all Aircraft structures businesses together in one large operation. All the subcontracts from Northrop and , Vought and Grumman were all in one place, and it was tied up in a nice bow, and they were interested in being involved in that, and they acquired it I have nothing but admiration for what those guys did. But they were very interested in me getting involved on the boards of all of these different things they started owned. I had my own boards that I was doing, and I thought, "My god, I'll be working 24/7 again." We decided over time that this didn't make a lot of sense for me and them. I parted company with them. But were friends.
ZIERLER: In general terms, what role does The Carlyle Group play in the national security world, in the defense world?
KRESA: They play a role of being an acquirer of companies that sold, and then they also spin them when the market is right. They create value for their shareholders, and spin them to other people. They're nominally five-to-seven-year owners of assets. To the extent that they are interested in properties that are being sold in the defense industry, they were involved. I think they're much less involved today. They've spun off most of the things that they were involved in during the 80s and 90s. But they continue to be involved in other acquisitions, and they do a well.
ZIERLER: Kent, as you mentioned, you became more and more involved in the automotive industry. I wonder, to set the context for the financial crisis of 2008 and, ultimately, the Obama administration asking you to step in to lead GM, if you saw some of the structural challenges in the US automotive sector that had really nothing to do with the Wall Street collapse, if there were issues there that were exacerbated by what was happening on Wall Street but were not really the cause of it?
KRESA: There was no question that the General Motors management and Board understood in detail what was happening, and what needed to happen for the industry to survive. We were well on our way to solving all those problems. We had signed a dramatically different kind of a contract with the union six months before the financial crisis hit, which was able to be done by giving the medical care business of union employees back to the union, and we gave them a commitment of money, which we had put aside for that union medical activity. We gave them the money and the responsibility to do it. Now, the money that we gave them, both the union and we knew, was not enough to do the whole job. The reason that the business was failing was that the cost of labor with all of the various pieces that were involved was too great a burden. Constantly, the balance sheet got to the point where it was unsupportable and we had to sell of some asset to make ends meet. General Motors and Chrysler and Ford were supporting the medical structure of the state of Michigan, and because they paid for everything, everybody was just viewing it as an infinite pot of money to be able to do whatever needed to be done. It was always a joke that Viagra pills for the people in the union was paid for by the companies. That was a laughing part of it. But it was a problem that there was so much being spent in areas which weren't what I would call the baseline of keeping people healthy. But the whole panoply of things that needed to be done, if you needed a sex change or if you needed whatever, it was being paid for by the companies, and this couldn't go on. The prices were going up, but there was great pressure to keep it going. But the union understood, as we did, that the goose that laid the golden egg was about to die. There wasn't going to be enough money to do it. We made an arrangement with the union which they could sell to the union people as a good deal. Economically, they now would have the problem of scrunching down on how much they were going to be able to give to people. We all were high-fiving ourselves after we got this contract that we could survive now we had put medical payment back into the union's responsibility, and there was a certain amount we would pay for it and no more, and we could therefore survive.
Then what happened was that when the economic crisis hit, there was nobody buying cars, zero. The selling of cars was just a little piece of what was going on because all the money to develop that car, and get it ready for production, and order all the parts was all done. If you didn't sell them, you just had nothing but red ink all over the place because all the costs were already incurred. That's what happened to the automotive industry. It just stopped. There were no sales of cars in that period. Now, Ford was the only one that didn't go into bankruptcy of the three US manufacturers, and that was because they had borrowed against the company assets and had an enormous amount of money ready to restructure Ford the way that General Motors had already restructured its international business, and they were going to put it on single platforms, and do all the things that General Motors had already done. What happened is they hadn't done that yet, and they had cash. As the world collapsed, and the sales went to zero, GM and Chrysler faced bankrupt, Ford did not. They could be America's great car company that was not bankrupt and they pumped that for everything they could get. It allowed them to survive, and not go bankrupt. But both General Motors and Chrysler, they were bankrupt. Then the question was, who was going to bail GM and Chrysler out? The answer was, there was nobody that was going to bail them out, other than the US government, because the financial industry was broke. There was going to be no DIP financier, other than the US government, that could handle General Motors and/or Chrysler. Then the issue was, were they going to do it? There were those that said, "No, this is a free enterprise world. Let them go. Just let them go away." Then, of course, this all occurred under a Republican administration, under Bush. He said in the November timeframe, "I'm not going to decide this. I'm not going to be here. This is under a new administration. They're going to have to make the decision."
What he did was put enough cash, loan enough money for the two companies to survive until January 20. The first thing that the new president had to say on January 20 was whether these companies, either one or both, were going to survive or not, and whether the government would become a DIP financier. Everything just went to that moment with the decision of the new president. Obama decided that he couldn't take the heat of these companies going under, and it really was not the problem of the two companies it was that they were the basis of the underlying business of the subcontractor industry in the United States, so that if he let them fail, two weeks later, all of the automotive subcontractors would fail. Then guess what? Ford could no longer produce product because they would not get their parts from the supplier base. In three weeks, he would have the entire domestic auto industry of America shut down. The only car companies that would survive were the transplants, the foreigners, who were assembling in the US, and got their supplies, at least a substantial number of their supplies, from overseas in their own markets. They would over time get subcontractors in the US, but it would no longer be a US market. It would be over. All the design, manufacturer, and so forth would be foreign. It was just another variant to the shoe business. He decided he couldn't allow it. The number of people that would be out of work in a few weeks was daunting because the entire industry would go down, including Ford who was, at that point, being looked at as God's gift, the one that could make it. But it couldn't because it would fail on another reason, namely, it couldn't get any supplies from any of its subcontractors.
ZIERLER: Kent, just to zoom out, for the financial crisis as a whole, when this thing hit in 2008, from your perspective, your long career in business, who was asleep at the wheel? Who's fundamentally to blame for what happened?
KRESA: Lots of people are to blame. If you recall, there was a view that it shouldn't just be wealthy people that own houses. It should be everybody. There was a great push to float loans to people who had no basis of being able to pay back loans. Now, they didn't say it that way. But the reality was they just lowered the standards that they had for loans to buy houses, and it got to be crazy. Then there was a great push to sell houses. There are people buying houses. There are people that are investing or helping people invest, although the quality of the underlying groups making loans was of lower ability to pay them back. Then they were packaging these loans, and they were selling them into the market. They were garbage. They had 50% or 75% failures. All of this was happening in real time and, at a certain point, it just crashed. [laugh] There was no underpinning if there was any down flip because people were getting in homes for practically nothing. They looked at it as a hell of a good deal. When it all started to go south, they just walked away. There were all these loans, which had no value that were owned by people, and they all crashed. The whole system crashed. But the underlying reason was we want everybody to be in a home. It was a great hope to be able to make this wonderful thing happen for America. But, economically, it was not going to work. It was another bubble. We have bubbles all the time, and this was a bubble. But this was a bubble helping people get into homes. [laugh] It wasn't the guys with money that say, "I'm going to make millions." This was a bubble that was people trying to get into homes, and it didn't work. It couldn't work.
ZIERLER: You remember, of course, all the political debates about whether or not the US government should have done the bailout. Both from a moral perspective but also just for American security, did the Bush and then the Obama administrations make the right call?
KRESA: I think they made the right call on the auto industry because, in the final analysis, there's no question that the bailouts of General Motors and Chrysler probably didn't—the American public didn't get 100% of the money back in the actual deal. They probably got 95 cents on the dollar. But the economic value that was created was huge, in terms of the taxes paid, and all those people that worked, and all that. If you hadn't done it, and you had to deal with everyone out of work at the same time, the amount of money that was saved by allowing these people to get back in business and to produce cars as opposed to letting those sales be made by other countries is enormous. There's no question that the world thinks the economic value of keeping it going was more than worth it. Although, if you looked at the individual stock, and how much actually went in, there was a loss. If the Governments had kept the stocks till today, they would've made a lot of money. They sold it out earlier.
ZIERLER: Kent, do you have insight into who in the Obama administration tapped you to lead GM, who would that have been?
KRESA: Not really, not the actual deliberation. I can only infer that the decision was made that the CEO had to go, and so they needed a new chairman. He was chairman and CEO. They could immediately promote the President, which they did. But who was going to lead the company? Who was going to be the chairman? The only thing I can think of is they looked at the boards, and someone said, "We know this guy. He's been involved with the government a lot," and it made sense. But, as I understand the deal, Rick Wagoner, the CEO, went in to the government—I think it was Geithner at the time who was the head of the Treasury—on the fateful day, saying "What's going to happen?" He said, "We've made a decision. The president has decided that the good news is that the US Government is going to back General Motors and Chrysler as the DIP financier. The bad news for you is you're fired." He said, "Fine. I understand that you have to have that happen." He said, "The new head will be the president of the company. He'll be moved up to CEO, and the chairman of the board will be Kent Kresa, who's on your board. Call him, and tell him to call me as soon as you leave." Rick called me with the good/bad news and I called Geithner. When I protested to him that all this is rather sudden, he said, "I didn't want to call you ahead of time because I hadn't passed this news to the Wagoner, so I didn't want to have a discussion with you ahead of time." I was just told that this was it. I said, "I'm not sure I want to do this." In my view, I'd go from a winner in business to a loser. Now, it wasn't clear to me that we could ever get through a bankruptcy because this would be the largest bankruptcy in the history of the bankruptcy court, and it would probably take five years if you look at what normally happens in bankruptcies. He said, "Your name is in the documents. They're going to be announced tomorrow morning, so you are going to be it for the day. You may not be it for the day after, but that's what's going to be in the paper. That's what's being announced tomorrow."
ZIERLER: Did you feel like you were being stiff-armed?
KRESA: I was. There was no question. Then we had a GM board meeting immediately when that occurred, when we got the board together, and it was announced. Rick Wagoner told everybody what happened, and what was happening. Then everybody said, "You got to do it, Kent. We've been talking about trying to save this company. It's the best thing to do. You got to do it." I had no idea what it meant, or how much energy it was going to take, or how much work. I thought it'd be years, and I thought it had a high probability of failure because the system generally fails in these things. The way the deal was set up was that—and this was brilliant—we had talked to the government about the issue of bankruptcy.
Our view was that if you can't get out of bankruptcy in three months, you might as well just divide up the company because there'll be nothing left. That was the longest that there had ever been a strike in the industry where people barely were able to pull back, and get the thing to run again. The view was if you couldn't do it in a quarter or so, it wouldn't work. They said, "We think we can get it done, or we think there's a way to do it, and so forth." We had come in with some ideas early. We were trying to push to go through bankruptcy—the company and everybody—with ideas. We had come up with this idea of a way to do it, which was called a 360 bankruptcy, which is to divide the company into good things and bad things, and separate them,. If the judge will approve it, then you can just do that. You put the good assets in one, and the bad assets in another. Then with the bad assets, you just sell them over time, and the good ones can emerge and go forward. You put all the assets you need to have a healthy company in the good one like the good plants, the contracts of subcontractors and unions, etc., and all the things you don't want, like lawsuits, bad assets, old plants you want to get rid of, etc., into the bad one. It was a risky idea. It had never been done before. But it looked legal, and it's what we did. The government and the company worked well together. It was an amazing activity. I give two lectures on the circuit over time, and one of them is about how this whole thing worked, and how it all concluded in 40 days. It was brilliantly managed by the government under Steve Rattner. There were some hard points, which were not the hard points anybody thought would be hard but were [laugh] very funny, and tough to do. Then the things that we thought were hard turned out to be easy because the government put so many criteria out there that had to be satisfied that there was a narrow window for things to do. Either it was going to happen, or it wasn't. There were lots of guys agonizing and doing things.
The judge was magnificent. The judge who got this job, had the largest bankruptcy ever in the history of the world, and he sure as hell wasn't going to fail. He knew exactly what to do, and he stiff-armed all the lawyers who thought that this would be the way to make the most money that's ever been made in a bankruptcy, and he just took them out. Everybody was shocked with what happened. But it was amazing, and it all worked. It shows that if you really want to do something, you can get it done. But the thing that was the most difficult—if I were to say to you, "What do you think would be the most difficult thing?"—was to satisfy the dealers who were being thrown out. In other words, we had to rightsize the dealer network. But most dealers in America were giving cars to their senators and their congressmen for years. They each had the ear of a congressman and a senator. The ones that were being told that there was no future for them because, regionally, it made no sense, or they were only selling a few cars, whatever the reason would be, they didn't want to take that. They were all independent businesses. They weren't going to take it. Congress was trying to figure out how to make the auto industry not part of the bankruptcy laws. Each congressman was fighting for the rights of his one guy. These were huge negotiations over small dealerships. We solved the union problem in a week. That was over and done and easy. But [laugh] the union people really wanted to go to back to work. They understood how much they could make because they were told that they could only make the amount that was being made by the other unions, the non-union people in the South, and that was it. But it was a lot more money than they were making at McDonald's, so it was OK. They were prepared to settle, and they did settle. But the dealers [laugh], each one was a fight. Each dealer was a fight, and it was hell. It got involved with the government talking to each congressman and senator. It was amazing. We were not able to close nearly as many dealerships as we needed to. But it finally got done, but it was a slog.
ZIERLER: Kent, this extraordinary and intrusive level of involvement by the federal government, it just doesn't happen in capitalism. How did that affect your day-to-day in terms of who you were answering to, what the most important priorities were that might have been different from a career purely in the private sector where the government was not involved?
KRESA: I would say with respect to the bankruptcy activities, we were totally aligned. Whatever we felt we needed to do, they would listen to us. We would listen to them. The government is a multi-headed animal. There were things that had to be done because Congress got involved, and said, "It'll be X or Y." There were negotiations about that at the government level on what could be done there. Then it would come to us to try. Then we had to live with certain things. Many of those things that we had to live with were our great savior because the world knew, the unions knew that there were bounds. The negotiation bounds were set in very simple terms because there wasn't any really good way to go around that. It was helpful in many ways. What they said to the union, for example, was, "The union labor, when it comes out, you're not going to make any more than they're making in the south. That doesn't make any sense. You've been living where you're at $60 an hour, and they're at $45 an hour. But it's not going to be that way in the future. You're all going to be the same." There wasn't any way they could say, "No way, we're not going to do it." "Then you're not going to get out of bankruptcy, and you have no jobs." "Oh, I see." There was a very clear understanding that $45 was better than $10. If they didn't like it, it wasn't that they could remember the 60. It was 45 or nothing, so it was easy, so you could cut a deal. There was lots of discussion with the individual dealers because their view is they all had a set of franchise laws, which protected them on various things, and they didn't give a shit. They didn't care what the government was saying they had to do. The answer was no. It was a very, very complicated deal because we were pitting government ideas against state ideas. Eventually, we won some of those. That was a real tough negotiation to try to get that all right.
ZIERLER: Kent, in the government, in the White House, in the agencies, who were some of the key people that you worked with to help you steer the ship?
KRESA: The guy that was the car czar was the guy by the name of Steve Rattner. He was terrific. He was a banker from New York. There were things he could do. There's things he couldn't do. Of course, the secretary of the Treasury was very involved. The president wasn't really involved but Geithner was. I would say those two were the two principals. He had a little staff of about four people, all good people. This is the same thing that happens in the Pentagon. You worked 14–15 hours a day. You had a cold pizza for dinner in the basements of the treasury department. These are serious people, who work hard, who really care. You get involved and you just want to do it. Look, I had enough resource. I wasn't quibbling about what the hell I was getting paid. It didn't matter. It's like when you work on the board at Caltech. I send them money every year. They don't do anything for me. I'm doing it because I want them to be successful.
ZIERLER: Did you ever think that the whole thing might have fallen apart? Was GM in danger of really—?
KRESA: Absolutely, the whole thing was very fragile. The whole structure of the auto industry was in grave danger of going down. There were people that were saying that's what we ought to do. I didn't agree with it, and I thought it was important for America to keep that capability. There's a lot of great stuff that gets done there and continues to get done. If you look at the critical engineering talent that's gone in America and allowed the Chinese market to grow the way it has, it's all been American. General Motors is huge, and it has been huge in China. Everybody's there now, but GM was there very early and really was very important and instrumental in getting their automotive industry really humming. They're great now and so are we.
ZIERLER: What are you most proud of in being able to keep GM solvent?
KRESA: I was very, very happy that all worked out. There were a lot of jobs saved in America because of this and the industry continues to innovate. Look at Tesla and the other new car companies. Look at the explosion of people working on driverless cars and flying cars, with a healthy sub-contractor base here to support them. I've done a lot of crazy things like that, which just happened. I was chairman of another company called Avery Dennison, which is a company that makes sticky paper. That's their technology. It was their principal decision. It's the kind of stuff that you make name tags on, and that will adhere to anything but only lightly so you can take them off. That was their main product. It was based in Pasadena at the time, and I was on the board for many years. At a certain point, I was chairman and the CEO of the company was under investigation by the government. I don't remember what the issue was. The board thought, "There may be a problem here even if our investigation doesn't show any issue. We really have got to get prepared for a different outcome. If this guy gets indicted and convicted, the company has to be able to go on." They turned to me, and said, "Would you be interim CEO if that happens? If there's a trial, we'd have to put him on leave. Then you'd have to be CEO for a period until we know if the guy's convicted or not. If he's convicted, then he's off in jail, and we'll have to get a new CEO. But in the meantime, we need this interim situation." I didn't really want to do it, and I didn't think this guy was going to get convicted so agreed to do it.
It turned out he did get indicted. It was two years that he was in limbo. You never know what you get caught up in. If you're a part of a company, you have sort of a commitment to the company—at least I feel that way.
ZIERLER: Kent, what do you think this did in terms of GM's overall strategy to electrify its fleet? Did it modernize the company? Was Tesla already something for GM to start contending with that early?
KRESA: Yes. We were very much involved in electrification. GM had the first electric car out many years earlier. On the time that I was on the board, I was very positive about getting started in the electric business. They did the Volt, the V-O-L-T, while I was there, which is a brilliant machine. It's still my favorite electric car because it allows you to both be an electric car but also have no worry that you're going to run out of electric energy, and be stuck somewhere where you don't have a cord you can get to your car. That car was produced while I was still on the board. They have subsequently stopped producing the car, which I think is horrible. But the decision to stop the car was because they couldn't get any interest out of the dealership to sell the car because dealers don't like electric cars because there's little after-service. The dealers are only interested to sell cars because they want to capture you as a person who will be with them for a long period of time so you can do all the service with them. While they were selling the Volt, if you were in a dealership, and they had Volts there, and they had another car that was an equivalent or maybe even more expensive or had more fancy stuff on it, they would really try to move you to something other than the Volt. They'd convince you to buy something else—why? —because they wanted to own you for the future. If you bought the Volt, they'd never see you again. It became this machine that was a pariah. They couldn't really get the volumes up because nobody wanted to sell them.
How General Motors is going to deal with an electric fleet in a period when they have all the dealers? I don't know. They've got to solve that problem because dealers don't like them. If you notice, most electric car companies don't have dealers. They don't have dealers because they don't need dealers, and dealers don't want them because they don't have any value to them. There's a real mismatch between electric things and dealers. It's no different than what happened in the TV market. Forty years ago, you had TV dealers. You had certain people that sold TV sets, and they sold service contracts with them. You'd go buy your Zenith or your RCA or your whatever, your Sony, because, boy, they had a great machine and, boy, you could get service from these guys. The price was right, and it worked well. The service was a very important part of buying the TV set. Today that's all gone. There is no TV store anymore. They're all gone. They're commodities. You get them at Costco. You get them online. You buy them, and you plug them in, and there's no service contract. There's no nothing. That's TVs. Cars aren't quite there, but they're moving there to the point that there won't be that dealer relationship
ZIERLER: Kent, what was the timeline, not just in terms of when you were leading GM but when you felt like the US car industry was back, that it was on stable ground?
KRESA: I would say once we came out of bankruptcy, my sense is we had another 20 to 30 years of stability in the industry, but it was going to change with electrification, in a different way. There's the manufacturer of the thing, and guys that design it. Then the dealer network sells it. That's going to change because the gasoline-structured thing is not compatible with the electric side. We're seeing a lot of new companies that are not having dealer structures, and they're in a much better position than the old guys who are stuck with having their dealerships. I don't know how they're going to solve that, or if they're ever going to solve it, because there's a lot of money associated with that dealership structure.
If you look at Tesla or all the other guys, they put a car in a shopping mall, and they sell them by email. They have a guy with an order book, and that's it. That is not the same structure that if you want to become a GM dealer, what you must invest. It's a very different business. When cars become driverless, I don't even know what the market is going to look like, and who the players are going to be, because when you go to such systems, the question would be, do you need to own one or do you just have fleets of them for hire? Do the fleets win out over the personal ownership? Do you have one in your garage? You don't need a garage if you own one because when you're not using it, it's out for everybody else using it, like an UBER. I think there'll be very few individually owned. It's going to be like the private jet market. Most private jets are owned by people, but they're leased out when they don't need them because there's an enormous investment in keeping that thing just sitting there for you in a hangar. The aerospace industry's easy because there you're building things for the government, and they're not going to make them available to other governments to use part-time, I don't think. But what's going to happen in the automotive industry? It's a new business model, and there will be guys that figure out new ways to structure it. Some of them will do well, and some of them will fail. That's the free market world. How people think through it over the next 20 years or 30 years is going to be important.
ZIERLER: Kent, given the intensity with which you worked for GM during this time, I wonder if that gave you any bandwidth to see what was happening at Caltech, how the Board of Trustees was a steady hand in the financial difficulties that Caltech was experiencing during the crisis?
KRESA: Certainly. Yes. I would say there's certainly parallels. They're different. But having a strong financial structure that you know what you're doing, you can weather difficult storms, is very important. The good news for Caltech is that the research that we do is very high-caliber and, therefore, salable to whomever, the US government, to other entities that want to invest in next-generation things. We're in a very good position because we're in the premier intellectual space, and that really makes the difference. The government can get out of the business of investing in things. Fortunately, they're still a very big player. But even if they weren't, we would do fine. It'll hurt. There's a hierarchy. If you go and get the best, there's always enough money around to support the top 20%. But if the bottom 80% goes away, that's a lot of the structure, the infrastructure of America. I don't think that'll happen. But Caltech is in great shape because we are in the top 20%.
ZIERLER: Who do you credit at Caltech? Was it Jean-Lou Chameau? Was it really him who made sure Caltech was stable during this time?
KRESA: Jean-Lou was a really good manager. He didn't come with the same educational credentials of many of the leadership that had come before him or after him. But he was a very, very good manager, and was perfect at the time. We really needed to worry about keeping the trains running on time. During my tenure, I was very concerned about that. There were some very serious investors in Caltech who were very worried about us spending way too much of the endowment as we went forward and tried to get that in balance to recognize that the physical plant has to be funded. We can't just build new buildings. We got to take care of the old buildings as well. We got to worry about the people, and salaries, and all of the things that make up what the structure is. Jean-Lou was good at that, and so I was very pleased with him being at the helm at the time that I was there. I was still interested in making sure we also needed to stay at the top. We were at the top already, so we had to stay there. One of the things we had to make sure we stayed there was to not have a financial crisis, that we had overburdened the system in some way that we couldn't recover. He was good at that. He really solved a lot of things.
ZIERLER: When Jean-Lou announced that he was stepping down, what was your reaction? I understood that it was a rather abrupt announcement.
KRESA: It was an abrupt announcement. He had never talked to me about it. I had stepped down just before him. My reason for stepping down was that we were going to go into a major campaign, and it was my—
ZIERLER: You mean you stepped down from board chair at Caltech?
ZIERLER: Yes, board chair at Caltech, because I felt that we needed to have a board chair who was going to be at the beginning, and stay through the thing, not quit in some point in the middle. I looked at it, and said, "Look, this is a 10-year deal. I've already been there eight." I don't know how many years it was. It was important. They wanted to kick it off that year. I said, "It's important to get a new chairman who is going to stay through the whole thing." I stepped down because it was the right thing to do
ZIERLER: Here you are. [laugh]
KRESA: Here I am. But I felt that it wasn't the right thing to do, and that there ought to be another person, and so that's what we did. But Jean-Lou did not confide in me about his move. I don't know why he didn't. I probably would've been very negative about him doing it, and maybe he knew that [laugh], and so he didn't want to talk to me about it. But it happened to David within weeks or months of him being the new chairman. That's really hard. He had to do a search, and all that, and it sort of came right at him. Anyway, it all worked out. It was fine.
ZIERLER: Kent, tell me about the development of the Kent and Joyce Kresa Leadership Chair in the division of PMA in 2014, how that came about.
KRESA: I wanted to continue investing at Caltech and I wanted to do something. I was more interested in having research done than having a building named after me. I had already done a faculty position in GALCIT at that point. Then the question is, OK, now we have this new campaign, what am I going to do for the campaign? This was one of the things we could do. This was money that was going to be available to a chair to be able to start research, and fund things that the chair felt were important. It was, I thought, a very interesting way to give money. It was no more than that. Similarly, when Lynn and I decided that we'd give money in a similar way for the unmanned vehicle business that's going on at GALCIT, they had already established this thing, but they were setting up a fund which would allow leadership to have money to be able to kick off new projects, we decided we'd do that.
ZIERLER: Did you play an advisory role or were you on any committees that led to the selection of Tom Rosenbaum as the next president of Caltech?
KRESA: I got involved very late. I was not in the main committee. I had done the one before that. I did the Jean-Lou search. But when they got close, I went to Chicago with some other people, and did have interviews with him and they wanted my idea of him at the time. But I was not involved in the committee.
ZIERLER: What were your impressions of Tom? Do you have any recollection of the vision that he shared for where Caltech should be headed?
KRESA: I thought he was very good. He had a good grasp of broad aspects of the President's job. He spoke eloquently. He was a good scientist and a good physicist. I knew that the faculty was positive towards him, and thought he would be terrific to bring in. His wife also came, and added value to the organization immediately as a professor. It was a twofer. He was a great guy to bring, so I was very positive.
ZIERLER: Kent, back on the political side of things, when Donald Trump became president, what were your thoughts at that time? What were your concerns? What were your hopes?
KRESA: I was quite concerned. I was not a fan, and I didn't vote for him. Although I'm a Republican, I didn't view him as a Republican. I viewed him as a person who joined on the Republican party for whatever set of reasons. I couldn't back his ethical behavior, and him as a human being. He was not the kind of person that I felt was right for the country. I was not positive. I was hoping that he would bring smart people around him that would give him good advice, that the system itself would do good things. I think he had some very good people around him, and I was bullish about that. But he chewed his people up very quickly. The stories that I hear of people that I know who worked for him, I'm just glad I never did because I wouldn't have lasted as long as they did. But it is what it is. He won. He's still hanging around for whatever set of reasons. He sufficiently poisoned so many people that I just don't know how I can vote for many of the people that are, quote, "Republicans," unquote, because they're hanging on to ideas and thoughts, and claiming things. Either they are stupid or are untrustworthy—untrustworthy because they don't believe in it, yet are sprouting things. Either one is grounds for not being able to vote for them. I'm sort of in a quandary for how to deal with these people. I can't vote for people that I believe are either totally stupid or immoral—I just can't. Some of these people are doing whatever they're doing, for their own reasons. But they don't have my vote.
ZIERLER: Kent, from the boards that you sat on during the Trump administration, and just your contacts in the defense contracting industry, how did companies like Lockheed and Northrop Grumman fare during those years, and Trump's very unique approach to arm sales with the Saudis, for example?
KRESA: I don't know. I'm not involved with any of the companies directly. I can say that with respect to Northrop, they've done very well. I'm not sure that Trump had anything to do with any of the things that they were doing. I don't know of any arms sales that would not have happened or would've happened one way or another. I'm not sure he understands technically what they do and how they work. I have no knowledge. He got very involved with Lockheed on the F-23, like, he was going to change how much they were going to sell for, and this, that, and the other. I can only say I feel sorry for the leadership that had to deal with all that. He doesn't know anything. Look, I'm not one of his fans, I'll tell you that.
ZIERLER: You must have been relieved when Joe Biden was elected, even if you would not normally have voted for him.
KRESA: I voted for him because I could not vote for Trump. I was delighted that he was the one who succeeded. He was a moderate guy who, hopefully, I had a hope, would try to keep things reasonable. He's a reasonable guy. He's got his own problems. I'll see who's in the campaigns in the future, and vote accordingly. But I'm not wildly a fan of his. But in terms of what I was dealt with, he was definitely a better choice than Trump—as is anybody.
ZIERLER: I wonder if, knowing so well the old Republican party, the party of Reagan, of Bush, does it even make sense to call this still the Republican party, or is it something else entirely?
KRESA: No, it's something. It's new. It's a different party with different people. The people that are aligned with Trump in no way, what I would say, have a Republican bent. I don't see the party as something that I espouse. The people who call themselves Republicans, if they ally with Trump, and believe in the big lie, I can't vote for them on the basis that I just stated. They're either totally ignorant, or they're willing to propagate a lie in public. I can't vote for a person that has either one of those characteristics.
ZIERLER: Kent, I'm curious, there have been very few leading figures in the world of corporate America who have come out publicly decrying what Donald Trump has done. I wonder if you can explain that. Just in terms of corporate responsibility, of having a conservative mindset, why haven't we seen more active CEOs decry what Trump has done in this country?
KRESA: I don't really know. I don't know why. They may believe that it will have a net impact on their business in some way, and therefore be counterproductive, and that saying nothing is a better solution. I can't really say. I can say that the only time I got involved in politics was the Senate race when—Dianne Feinstein ran..
ZIERLER: Dianne Feinstein?
KRESA: Dianne Feinstein, yeah. Dianne was up against a race with a guy, and I can't remember his name, but he was a real flake. He was doing reasonably well. He was totally negative about the defense industry. He wasn't really a bad guy particularly, but he certainly had no capability. Dianne was not doing well. She's a Democrat. I'm classically Republican. But I talked to all of the aerospace leadership in Southern California, and said, "Having this guy as a senator would be so bad for us. It's hard enough because we don't really get a lot of people supporting in California for aerospace. But with this guy, we won't have any senators if he's elected." Everybody agreed with me. We went out. We had a press conference where we talked her up, and said we were all supporting her. I got four of the CEOs of other companies to get behind her. She's never forgotten that. She has been a real fan of the aerospace industry in California over that period. That was her first election.
I got more shit for that from the Republican side of Washington. They just tore me up and down, and everybody else, for doing that; how horrible it was, and how we could possibly get behind that, and not support. I said, "You had a very bad candidate, and blah, blah, blah." But they didn't want to hear it. They swore at you. It's awful. Politics sucks. I don't like it. I don't try to deal with it. I would say most people try to stay away from it in industry. It's like when Disney went out, and said something about the laws in Florida, they practically castrated him, and now he's gone. It's not a career-enhancing thing. The point is, from my perspective, there's a point in time where it can be bad enough that it's worth the risk. But if it's not worth the risk, you don't want to stick your neck out. The trouble with politics is that's their game. If you're not honest, I don't know how you can decide you want to get Trump behind you and expect you're going to get any other rational people behind you. But each person makes their own calculation, I guess. It turned out OK to be for Dianne, but I took a lot of guff from Republicans.
ZIERLER: Kent, moving the conversation closer to the present, when COVID hit, and the pandemic meant that we all had to work remotely, for all of the boards that you sat on, all of your philanthropic endeavors, what were some of the challenges in just staying connected, and keeping tabs on what was happening so that you could provide the oversight that you needed to?
KRESA: Let me say that the evolution of Zoom, which occurred just a little bit before that, became the great savior of all meetings and all activity, frankly. It allowed, let's say, total connectivity of board stuff as good as in a boardroom. The only thing it missed is, as you brought new people that you didn't really know, you had to deal with how do you get to know those people? That is a problem, and you need to do that. But over a three-year period, the board could operate because we knew each other. We had been with each other. We understood enough about the individual to be able to do our business. I found that I was worried about how industry was going to be able to operate. Most industry didn't lose a beat. As a matter of fact, one of the most amazing things to me was in companies that have a lot of white-collar workers, I thought earned value would substantially go down over time. It didn't.
ZIERLER: What does that mean, Kent, the earned value?
KRESA: You're doing work for a business. You're an engineer, or you're a lawyer, or you're doing some writing stuff. Earned value is how much you get paid for a certain amount. It costs a certain amount to do, and you had a contract to do a certain amount of work for a certain amount of money. How well is that being earned over time? It depends on where a person claims they are. "I'm 40% finished, or I've done these tasks, which are measurable." Earned value is a way of measuring, as you go along, how effectively you're getting the work done. How is it getting done? Clearly, the person's getting paid, so we know time and money is the earn. How much have you earned for spending that much money? You're certainly getting paid for it and doing it, but how much have you earned? It was a great concern that during the pandemic, we would lose an awful lot. We didn't lose a beat. The difference of the people not traveling to work and therefore picking up that nominal two hours a day of travel, which was clearly zero earned value, and they were probably working during some of that, and they probably were doing laundry during some of it that was normally supposedly working. But when they added up the value of what they actually did over the total time, magically, we were doing better than when we were doing it the old way. This was true for highly classified things where people had to be in vaults. It's amazing. It's amazing that it worked as well as it has. Companies were able proceed and succeed during this period without dropping anything. Now, there are going to be some shakeouts in some things. But if we didn't have the kind of connectivity that we now have with Zoom and similar systems, we wouldn't be able to do that. It came at exactly the right time, the same way that getting the RNA vaccine at the same time is amazing. These things happen in a fabulous way to allow the world to continue.
ZIERLER: Kent, as US companies are now navigating the new normal of what it means to go to work, some corporate leaders, as you know, are insisting everybody back full-time, some companies have gone completely remote, and others have adopted a more hybrid approach. I wonder what your perspective on this is from the CEO's vantage point, from the C-suite perspective.
KRESA: From the C-suite perspective, I'd say we have multiple experiments going. In the next few years, we will see how they work out, and it will narrow down. We'll probably find some are better than others. Then the world will converge on whatever those things are. Each business has a little bit different thing. If you're building airplanes, somebody's got to be out there actually tightening the bolts and doing certain things. There are people that if you're dealing with people, we're finding that you can be much more remote dealing with people than we ever thought possible. I'd say we're in an experimental phase. We're in the early stages of what the new normal will be. We also have a workforce which feels much more empowered than they ever did before. They're taking their liberties in what it is they want to do. and how they want to work. Because we're at a point where we need more people to work, to be working, right now, I'd say it's skewing more towards what people want to do than demanding that they do certain things. It could very well be that demanding won't work, but we're going to see. Some companies are demanding people, as you said, demanding coming into work, and some are not. We'll see how it all works out. I don't know. I don't have to deal with that.
ZIERLER: [laugh] What about on campus, from the student perspective? What do you think? Your long associations with MIT, with Caltech, what is the best approach in higher education in terms of remote learning, in terms of living on campus, in terms of the student social experience? What are the most important things for institutes of higher education to consider?
KRESA: I would say the first thing for me to realize is that I'm of a different era than the kids that are going to school today. My experience is almost irrelevant with today's students because they are very conversed with all of the ways of getting information today that were never a part of my ability to do when I was going to school. I'll put that up front because I think for me, as a board member or as a person trying to advise, I want to first say that my advice sucks because I don't have the appropriate understanding of the youth of today. There are people that are much closer to it. Some are closer to it because they graduated 5 years ago, 10 years ago. They have a perspective that's much closer than my perspective. I just try to look at this now, at this point in my career. I try and I give more than the benefit of the doubt to the people in the way they want to do something. I believe that I still have a good bullshit filter, and I can tell something about that by asking enough questions, I will get enough answers that I will be able to discern some of those important characteristics about the individual. If they really are motivated and are convinced in the way they want to go, and have motivation, I want to let them go and do it. If they start to fail, then I want to be there to try to help them get back, and get out of the failure mode, and move in a new direction. But I certainly am not going to give them a direction on how to go because their life experiences and the world that they're in is so different than my experiences in that. But I certainly want to be there to allow failure, and to allow a person who fails to pick up and be successful. That's an important thing. Some people are afraid to fail. Failure is a fabulous way to learn. But you got to have the ability to have somebody around to help them get out of the failure. Maybe that's the best advice I can give them, is to be around when that happens. But I'm not going to help them in the first order.
ZIERLER: Kent, to bring the conversation right up to the present, and to return back to a topic we covered in our very first discussion at the board retreat, when Russia invaded Ukraine, and it became apparent that the United States would need to become involved in a resupply effort, that was really unprecedented, maybe even in the Cold War. In what ways structurally is the US defense contracting industry well prepared to replenish US stocks, and in what ways was it caught flat-footed simply because of the pace of the resupply effort?
KRESA: I'm not sure I can answer that. Our resupply effort was almost instantaneous, so there was nothing being built. It depended on what we had bought in the past, and what we could let them have that we didn't need. It's got a further wrinkle in that their equipment was mostly Russian, and we don't have a lot of Russian equipment, Russian spares, and things that would be needed to make that stuff work. It's a very complicated thing. I think that the resupply was this odd set of things where we were resupplying from countries that had Russian equipment that they could offload, and that we could somehow bring in more American equipment, and give them that stuff, and we give them more modern stuff or more American stuff—not necessarily more modern. It's a funny kind of a resupply. Now, there was a decision not to give them airplanes, and to do things like that. We are trying to give them Airplanes that, I guess, were Polish MiG Soviet aircraft that we would train, and we were going to give them F-16s. It's a rather complicated, unprecedented kind of resupply. I can only say that I look with great pride, in a sense, that they're able to do as well as they are. I think part of it is because they're smart people who are motivated—these are them directly—and they have been building equipment on their own, which is amazing.
I can also say—and I'll say it as an aside—one of the companies that I work with has had a contract with some very high-tech people that live there and that are in Kyiv. They have never missed a due date. These guys are operating and working on this contract that we have with them and have never missed a due date. This is high-tech stuff. Now, I understand they tell us that they're working from their basement, and they, every now and then, lose electricity, and have to use batteries to get things to go.. I'm delighted that we're resupplying. I think we want to continue to resupply. I think that they will become more and more westernized during this fight because the equipment's going to get westernized. We're going to train them more. We have people there doing this. The country was not considered a great democratic country before all this happened. They were viewed as one of the countries that had lots of graft and problems. [laugh] It was not a place that you really wanted to do business in very often. But having this war with the Soviet Union may have made this country turn into one of the great countries for the West. The graft and things may have gone away. If there was a lot of graft going on, I can't conceive of these guys being as successful as they are. The country itself may have pulled its own self up by its bootstraps and became committed to this idea of becoming a country that really warrants being an important player in the West. They're certainly smart enough. They have competent people.
ZIERLER: Kent, just an armchair's perspective, as you view all of Ukraine's success, its unlikely success against the Russians, what Western arms systems, weapon systems are you most impressed with? What's making a difference on the battlefield?
KRESA: Again, I don't have the data. But I would say they seem to be getting a lot of great intelligence on what to do, and what the actual state of the capabilities of the enemy are at any given point in time and space. I'm sure they're doing some of that themselves. I'm sure they're getting some of that from the allies. It's wonderful. The fact that a substantial number of the Soviet generals were killed is unbelievable. That's never happened in any war I know of. That's all intelligence. They knew where they were, and killed them. The fact that you can actually pinpoint the leadership and kill them is amazing. We've never either had the ability to do that to my knowledge. But in this war, if they used their phone to call home, they're a candidate to die, and they have died. They differentially said, "We got to kill somebody today. We'll kill the most senior people." They go out and get them. There aren't a lot of generals that are on the battlefield, and they don't work well unless they have high leadership. If there's no generals to be there, and they're only colonels, they're killing the colonels. Without senior leadership on the Russian side, they don't do well. I don't have any intelligence on it. But looking at what's happening, clearly, we're doing it in a way that's unprecedented. They're doing things that have never been done before. I don't know how they're doing it, but it's great.
ZIERLER: Kent, all the nuclear bluster coming out of Moscow, we haven't seen this since the Cuban Missile Crisis. Questions about NATO involvement, and escalation, and World War III, what aspects strike you as overheated, and where are you legitimately concerned?
KRESA: I'm legitimately concerned whenever it's being discussed because there's this sense that Putin could be put into a box where he has no way out, and he uses it. I don't know enough about him to know if he's crazy enough to do it. He claims he'll never do it. It's a madman's endgame strategy I don't know if he's a madman, or if it's an endgame, so I don't know if that's possible. But it's disturbing because it's an unbelievable escalation if it were to occur.. But does it mean that you won't prosecute what you're doing? The answer is no. You got to do that. If it comes to that, it will be really sad. We can't be turned off by the bluster, we can't.
ZIERLER: Kent, I'll ask you to predict the future, an impossible question. Ultimately, do you think the Russians will be beaten, and Ukraine will end up in NATO at some point in the future?
KRESA: Yes, I do, or there could be a negotiated settlement, and Ukraine will not be in NATO but will be whole. That could be a solution. If Russia's beaten, there will be leadership change in Russia soon. If he's smart, he'll figure at some way to get a negotiated settlement. The negotiated settlement will not have Ukraine in NATO. If I were him, I'd try to get to that settlement soon. But he may think he's got a way to go. I don't see how he can think he's got a way to go. If we get through the winter, and these guys make it—and it looks like they will. We haven't gotten to the really bad part. We're in some of it, and it's a really unbelievable campaign to cut off all the electricity and the power and the heat in the country, and these guys are going to take it. Look, Germany took it, and Russia took it in World War II. I think the world will take it. People will die. It'll be miserable. But it's not going to change the resolve, it's not. It never has. It never will. We bombed Germany into a pulp in World War II. They lived without anything for a year and a half. I don't think that's the solution.
ZIERLER: Kent, now that we've worked up to the present, we're even looking to the future. For the last part of this excellent series of discussions, I want to ask a few retrospective questions about your career and accomplishments. Then we'll end looking to the future. First, to go all the way back to Lincoln Labs, I wonder if you can reflect on what you learned there in terms of collegiality, in terms of engineering, in terms of business acumen that was really formative for what you would go on to accomplish, that stayed with you ever since.
KRESA: I would say that the really great thing about Lincoln was I learned that, first of all, it's a place of great excellence, and that excellence really has to be part of whatever you do. The other thing is that I learned that young people can do miraculous things. They're up to it. They're up to doing great things. The wonderful thing that I took away from Lincoln was the ability not only for myself to be able to perform probably above my expectation, but that's true of everybody else around. Therefore, let people go and do their very best. If it doesn't come up to what you need, then you deal with it. But don't early on make a decision that we got to double up or triple up on someone's idea because they're obviously not going to be able to bring it home. I found, over and over again, people could do miraculous things—not me—all around you. That was what was great. That could move the ball, and move very fast. I learned that at Lincoln because I got involved with some really exciting people who were really capable and could do fabulous things. I learned that at Northrop too. I can say being involved in some of the stealth projects that we did, you somehow get involved with a bunch of people who understand that it is impossible to do certain things. But they know unequivocally they're going to them. I don't know quite how to say it any differently than that. You somehow will look as a team and say, "We got to do X, Y, and Z, and we got to do it in a week." They say, "OK. Somehow, we're going to do it." We have no concept of how to do it at the time, and people are scratching their head. But we have to do it. Time and time again, it would get done. It's amazing. I don't know quite how to explain it. Yet, the team knew, somehow, even though we don't know how to do it, we're going to do it. I've been very fortunate to be involved with groups of people in my career where that's happened over and over. It's not one person. It has nothing to do with a single person. It has to do with the team and letting people who have expertise go and work their problem, and come back. They come back with solutions, and you work them. The sum is much greater than the individual parts, is where it happens. I've experienced that several times in my career. It's been magical, just magical.
ZIERLER: Kent, in light of your longstanding and deep connections, both with MIT and Caltech, and your perspective that somewhat de-emphasizes the differences between the institutions, their size, the rivalry, those things, in light of that, what are some of the commonalities that you've come to appreciate that make both Caltech and MIT so special and so important in the areas that they serve?
KRESA: It gets down to people, and it gets down to capability and excellence, and a desire for excellence, and an enormous number of Type A people that just know that they can get something to happen and that they can do it, and an enthusiasm to do things that are unknown at the time that they just work on them, and they can make them happen. You could see it in the staff and in a lot of the students. Students really work hard at both those places. They're more interested in the output than how many parties they can go to, or how well the football team's doing, or being involved in the college experience, and whatever that may mean. They somehow get sucked into being excited about having something happen, and they're being part of it, and they just give their all. You see that in the students, and you see that in the faculty. It's part of what I've seen a lot in winning teams. I think both of them have a lot of winning teams. Every now and then, you get involved with a group of people, that what you produce is greater than anybody in the team ever thought possible, and yet it happens. It's phenomenal.
ZIERLER: Kent, of course, one secret to the success of both schools is being a world-class destination. For example, top students in China still want to come to the United States. How does the United States retain its competitive edge in academia so that, in a generation, the next valedictorian out of a Shanghai high school will still want to come here, and not want to stay home in China?
KRESA: They're at that position today, and they need to keep there. The point is you don't have to reach for it. Whatever they're doing, they have to continue to do. Staying at the top of a research organization, it's hard because everybody wants to be at that position, everybody. At times, certain groups get there. You have to look at it sort of in an overall sense. How much is the total not getting? Because in any given field, there could be a hyper star, a hyper superstar at some other organization. The people at both Caltech and MIT are going to have people involved with that person as well, and working, and making things happen. If it's an important technical thing that has to get solved, they've probably got people involved. MIT's bigger and therefore more diverse in some areas that Caltech doesn't have as many, because it's a couple hundred faculty versus a thousand faculty. There's probably some areas that MIT has more areas, disciplines covered. But where they focus, where they both focus [laugh], they're dauntingly capable, which is great. As I say to virtually everybody, the important thing is that they're both in America. You said one of them is in Shanghai, and the other one is in America, and they're in competition. The competition we have going between MIT and Caltech is only good. It sharpens the capabilities of both. They're better because of their understanding of the capabilities of their peer organization, and it's good for them. They also do things together. They get forced together in certain cases. The gravity wave research that is going on, they got jammed together by the government. Each one wanted to do their own. It probably never would've happened. It wouldn't have happened by now, I'll tell you that. But look what they've done together,. Everybody got a Nobel Prize for it, and we're hearing gravity waves, so it's great.
ZIERLER: Kent, in reviewing your legacy at Northrop, and Northrop Grumman, there's both tangible and intangible ways of measuring your success, what you were able to accomplish. For both categories, what do you see as most significant?
KRESA: I would say two things. One is you just measure it by the value of the enterprise. That's what it's about. The value of the enterprise is amazing. I don't know. I think I told you the numbers. In the 30 years since we made Northrop Grumman, the return to shareholders has been 18-point-something per year for 30 years. There aren't a lot of organizations that can say that. The other thing that I really feel good about is I see the ethics of the people that work there, and the fact that they don't get into a lot of trouble. We don't have whistleblower things going on. I'm sure there's some. I'm sure there's some sexual harassment thing that's happened somewhere. There must be. But it's in general a very good place to work. Therefore, good people want to work there. That was something that I worked at when I was there because I felt there was a problem in Northrop when I got into the guts of the organization. I feel good about it because I see all these young people and what they do. I was there for the B-21 rollout. That was a fabulous event. All of these young people that, some of them, I only marginally knew, who have been at the company for 20 years, are long-term players. They're wonderful people, and they have great pride and capability in what they want to do. They have a lot of good people. Those are two legacies that are great for the shareholders and great for the people working there.
ZIERLER: Kent, in all of your philanthropic pursuits, all of the nonprofit boards that you sit on, what's given you the most satisfaction, just in terms of giving back?
KRESA: In a way, it's being able to stay involved and stay relevant on things that are going on, and where I can help, where I can see something that I can clearly help on, I can give my views. Sometimes, people listen—not all the time but some of the time. I'm delighted to stay involved in things that are relevant. There are a lot of people that I know that are retired. They're searching for something to do, to be relevant about. I don't have any of that problem. My problem is I'm overcommitted but enjoy it.
ZIERLER: Kent, precisely on that point, last question, looking to the future. Because you're overcommitted, because you're so engaged, what's left there for you to do? In other words, to contrast the way that you said, "My advice for undergraduate students today is largely irrelevant because there's so much distance between us," between your perspective, your areas of expertise, what are those situations, what are those areas where you feel your ongoing advice is still relevant, and you're excited to continue to give it? What's most important to you in that regard?
KRESA: I'm involved with a new cyber defense company, which has the hope of securing the internet so that it is hacker-free. If this works, it'll be a great capability. It'll make a lot of money for a lot of people, probably including me, although it's not really for me. It's wherever it goes. It'll go to some other foundation somewhere because I don't need it for myself. But it would be a wonderful thing to do because it's a great fear. The greatest fear I have is that the efficiency which America has been able to increase its capability by the fact that we are able to do things with information to make things much more efficient. Now, that has a danger that if you can disrupt that efficiency, and disrupt the communication that we get just-in-time products, and we have food distributed, and all that stuff, and just take that out, we have so many people living so close together that they will all die. They cannot survive because we don't have a way of feeding them. That could happen overnight. If it did, people don't even think about it, but it could be the total end of our society [in a very short period of time, with only the people out in the country surviving but all the cities dying. It's a very important thing that has to get solved, and I know a lot of people working on it, and it's a real big problem. But if what we're doing kind of works, people will never remember that I worked at Northrop.
ZIERLER: What's the timescale in order for this to come to fruition, if it works?
KRESA: Five years.
ZIERLER: OK. Kent, we'll check back then. We'll see what happens.
KRESA: If it happens, it'll probably be mature in 10 but it could be demonstrated in five. It's a question of people believing it enough, and accepting it, and it getting implemented. Those are all issues because there's politics associated with everything.
KRESA: But, first, it's got to be unequivocally demonstrated that it works, and we've got some first passes at that, and we've got more to do. But it's great.
ZIERLER: Kent, on that note, I want to thank you for spending this time with me. This has been an extraordinarily exciting and absorbing series of discussions, wonderful to have this for Caltech history, for American history. I want to thank you so much for doing this.