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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of The Odd Lots Podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 4: Tracy, you know my Twitter handle at the store.

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Speaker 3: I'm vaguely familiar with it.

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Speaker 4: Yeah, I always mentioned do you know how where I

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Speaker 4: got it from?

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Speaker 3: Oh, that's a good question. I know you had it

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Speaker 3: when you first started writing about the market, and I

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Speaker 3: know you've said at various points in time that you

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Speaker 3: kind of regret using it.

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Speaker 2: Is that right when I joined Twitter in like two

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Speaker 2: thousand and eight, and like, I didn't think it was

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Speaker 2: going to be like a very big deal for any reason.

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Speaker 2: It was just the name of my old blog at

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Speaker 2: the time, and that was the name when we you know,

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Speaker 2: people just did like, yeah, screen names.

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Speaker 4: It was just the name of a blog. The name

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Speaker 4: means nothing to me.

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Speaker 2: But before I was ever a journalist or even thought

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Speaker 2: that I would get into journalism professionally, you know, I

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Speaker 2: had this blog, The Stalwart.

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Speaker 3: You know, if you thought Twitter wasn't going to be

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Speaker 3: that serious, I feel like you could have chosen a

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Speaker 3: much worse name, that's true, than the Stalwart.

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Speaker 2: But anyway, I had this blog, the Stalwart dot com.

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Speaker 2: It was actually I had a co author on it

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Speaker 2: who went to do great things anyway, you know how

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Speaker 2: like we sometimes tweeted like, Hey, we're going to be

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Speaker 2: in subcity. Who wants to get a drink? I was

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Speaker 2: visiting San Francisco in like two thousand and six and

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Speaker 2: I posted a thing and I think I ate about

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Speaker 2: two hundred readers of my blog, and I said, does

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Speaker 2: anyone want to get a dim summ in San Francisco?

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Speaker 4: And I got two people responded and show up.

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Speaker 3: That's I mean, that's not a terrible two hundred.

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Speaker 4: Yeah, that's right. It's not bad at all.

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Speaker 2: But anyway, one of those people who actually showed up

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Speaker 2: to get dim sum and a few friends of mine

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Speaker 2: showed up, is going to be coming on the podcast today.

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Speaker 4: One of those two.

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Speaker 3: See, it's about quality, not quantity each other.

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Speaker 4: That's right.

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Speaker 3: So the two people that showed up are useful.

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Speaker 4: To you, that's right. So I went on.

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Speaker 2: I stayed in media and I did you know, the

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Speaker 2: blogging and casting and journalism thing, and another became the

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Speaker 2: CTO of one of the hottest companies in the entire world.

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Speaker 2: And so, you know, some interesting people at that lunch

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Speaker 2: in China Town and.

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Speaker 3: What did you tell him over dim SiZ I don't remember.

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Speaker 2: I don't remember. Anyway, this is a very sort of

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Speaker 2: inward facing intro. But to sort of zoom forward, you know,

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Speaker 2: we've wanted to do more on defense in the year

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Speaker 2: twenty twenty five and how we spend money, et cetera. Anyway,

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Speaker 2: and it turns out that this person, this guy who

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Speaker 2: came to dim Sum in two thousand and six, is

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Speaker 2: a great person to talk about defense because he recently

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Speaker 2: wrote a piece called the Defense Reformation eighteen thesies about

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Speaker 2: how we currently spend money on defense in this country

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Speaker 2: and why the way we do it is insufficient for

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Speaker 2: this new world, especially with all of these geopolitical attentions.

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Speaker 2: Of course, he works for a company that might benefit

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Speaker 2: from a change in how we do spending on defense.

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Speaker 2: We're going to be speaking with I'm Sunkar. He is

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Speaker 2: the CTO of Palenteer, one of the hottest companies in

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Speaker 2: the world, but which I'm still trying to wrap my

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Speaker 2: head around exactly what they do. But we're maybe going

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Speaker 2: to learn that and how they or Sham specifically in

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Speaker 2: visions changing how we do defense and how Palenteer could

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Speaker 2: play a role in it. So, Cham, thank you so

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Speaker 2: much for coming on odd Lots. It's nice to talk

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Speaker 2: to you again after almost twenty years.

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Speaker 5: It's a pleasure to be on. Yeah, it's great to

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Speaker 5: hear you again.

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Speaker 2: Okay, here's a question. So, like I watched these videos

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Speaker 2: on YouTube about Pallenteer products and it looks very like

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Speaker 2: sort of like Minority Report.

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Speaker 4: Where it's like these like big walls.

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Speaker 2: Of screens and they like zoom in on something and

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Speaker 2: they're like, oh, and here's an asset in the South

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Speaker 2: China Sea and why are these ships here? And like

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Speaker 2: someone's like, look up, is that really what you guys sell?

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Speaker 2: Like is it really this minority report? Not, I know

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Speaker 2: it's not Minority Report like pre crime, but these sort

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Speaker 2: of like visualizations like give me like the sort of

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Speaker 2: like what does Palenteer actually sell?

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Speaker 6: Well, the cynical way to think about Palenteers that it

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Speaker 6: took something as sexy as James Bond to motivate engineers

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Speaker 6: to work on a promise boring as data integration. But

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Speaker 6: I do think that is the seminal problem. It's not

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Speaker 6: that we don't have this information, it's that we don't

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Speaker 6: have it in a way that we can easily access

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Speaker 6: it to make a decision. I like saying, you know,

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Speaker 6: maybe ten years ago, the idea that data was the

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Speaker 6: new oil became very popularized. I strongly disagree with that.

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Speaker 6: I think data is the new snake oil. It's not

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Speaker 6: inherently valuable. What really matters are the decisions we as

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Speaker 6: humans make, and am I making a better decision? Am

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Speaker 6: I getting into a continuous learning loop of how I

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Speaker 6: will make that decision better tomorrow? That is something that

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Speaker 6: Colonel John Boyd would recognize as the Uda Loup, the

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Speaker 6: Observed orient Decide Act, a piece of trade craft he

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Speaker 6: developed to beat big fighters in dogfighting. But it's really

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Speaker 6: like the human decision making process and how we see

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Speaker 6: ourselves and win as a consequence of being better at

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Speaker 6: it than our competitors in the commercial sector or our

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Speaker 6: adversaries in the military space.

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Speaker 3: So Joe mentioned that we want to do more on defense,

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Speaker 3: and it is a difficult topic to sort of wrap

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Speaker 3: your head around because the defense industry is sprawling in

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Speaker 3: many ways, so neither of us know that much about it.

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Speaker 3: But one thing I do know is defense is an

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Speaker 3: industry that is characterized by Monopsony. Oh, do we still

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Speaker 3: have the monopsy Clason.

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Speaker 4: Yeah, we're going to put a sound effect here.

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Speaker 3: Monopsony Clackson, Okay, Monopsony. So there's one big buyer for

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Speaker 3: defense equipment and services, which is the government, and if

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Speaker 3: you are a defense contractor, you are basically only pitching

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Speaker 3: to the government. If you fail to convince the government,

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Speaker 3: It's not like you can turn around and sell missiles

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Speaker 3: to the private market, at least hopefully not. How did

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Speaker 3: pal Andeer actually break into this particular space and why

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Speaker 3: did you decide to do it, because you know, it

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Speaker 3: seems like a pretty binary bet in some respects.

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Speaker 6: I mean, first of all, I love the fact that

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Speaker 6: people listening to this podcast know INNI oh yeah.

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Speaker 5: Thesis is that is.

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Speaker 6: The root of what ails us in terms of defense.

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Speaker 6: But you're exactly right, it is what makes this market

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Speaker 6: so challenging. I mean, look, no great company is principally

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Speaker 6: created to make money. You have a mission, a purpose.

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Speaker 6: We wanted to work on hard problems in national security.

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Speaker 6: When we came together to work on these problems, it

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Speaker 6: was before there was like a political tinge to working

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Speaker 6: on defense. It was actually people just thought we were

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Speaker 6: wasting our life, like maybe you should self sofered banks.

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Speaker 5: Wouldn't that be a better business.

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Speaker 6: Later, maybe ten years after that, it became somehow highly

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Speaker 6: unpopular in Taboo to work on prompts of national security,

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Speaker 6: And now it's become in vogue, which I think is great.

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Speaker 6: It's really a call back to a prior era. You know,

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Speaker 6: the birth of Silicon Valley was absolutely the Face program

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Speaker 6: and defense and missiles. Lockeed made those missiles in Sunnyvale,

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Speaker 6: in the heart of Silicon Valley. Who was the largest

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Speaker 6: employer in the fifties in the Silicon Valley. So to

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Speaker 6: your question of how did we break in very painfully,

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Speaker 6: is the honest answer that all of our adoption was

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Speaker 6: driven from the field backwards. Monopoly is strongest in DC.

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Speaker 6: It's where the opinion of a single buyer really matters.

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Speaker 6: But the closer you get to soldiers in harms Way,

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Speaker 6: people who are actually doing things, the more you start

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Speaker 6: to approximate something looks like a market. People have heterogeneous

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Speaker 6: ideas of what they need. They're able to express their

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Speaker 6: opinion of this is better than that. They may not

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Speaker 6: have the resource or the buying power to actually affect

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Speaker 6: that economically, but it starts with the very beginning of

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Speaker 6: a demand signal that actually, there is something better, there

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Speaker 6: is something else that we would like out there, and

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Speaker 6: then you're doing battle with the bureaucracy every day. When

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Speaker 6: we first started the business, I thought our competition would

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Speaker 6: be the existing defense players.

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Speaker 5: I could not have been more wrong.

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Speaker 6: Our competition was the program of record, as they call it.

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Speaker 6: It was the government program that thought it had a

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Speaker 6: monopoly on providing a capability in a certain area. And

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Speaker 6: if you challenge that monopoly in any way, they view

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Speaker 6: it as their job to disquish you, to crush you.

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Speaker 6: And in this system that we've built up, the defense

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Speaker 6: primes are just essentially yes men to the monopsonists. You know,

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Speaker 6: their job is to do whatever the monoposinists asked for.

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Speaker 6: And I think this is an important phenomenon because it's

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Speaker 6: not how it always was.

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Speaker 5: We can look at the present.

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Speaker 6: Moment, which is very much an outgrowth of having won

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Speaker 6: the Cold War. It's something we've built up without pure

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Speaker 6: competitors as a nation since the nineties. But when we

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Speaker 6: were at our best in World War Two, in the

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Speaker 6: early Cold War, it looked very different. Our services competed

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Speaker 6: against each other all the time. Today we think about

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Speaker 6: it as the Air Force's Minuteman as the intercontinental ballistic missile,

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Speaker 6: but the Army and the Navy they put in their

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Speaker 6: own competing efforts. It's really that the Minuteman won that

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Speaker 6: great free market competition for having the best product. When

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Speaker 6: we were building submarine launch ballistic missiles, Admiral Raybourne had

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Speaker 6: four competing programs running concurrently. And so the consequence of

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Speaker 6: the monopsony is not that there isn't competition within the

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Speaker 6: industrial base. It's actually that there isn't competition within government.

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Speaker 4: How did that work? It's not intuitive to me.

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Speaker 2: And like you know, you say, there's not competition within

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Speaker 2: govern even within many large corporations. Even in the private sector,

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Speaker 2: you don't often see that phenomenon in which say, different

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Speaker 2: offices within a company are competing against each other in

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Speaker 2: terms of what they're buying and who bought the better

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Speaker 2: technology and then went out. I'm sure it happens to

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Speaker 2: some extent, but buying large, even at a private corporation,

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Speaker 2: procurement decisions are corporate wide. For certain types of products.

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Speaker 2: There's like you know, there might be a teams company

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Speaker 2: and there might be a Slack company, there might be

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Speaker 2: a company that uses AWS, and there might be a

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Speaker 2: company that uses Google.

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Speaker 4: Cloud, et cetera.

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Speaker 2: Talk more about how, as you say, at least at

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Speaker 2: one point, there could be within the defense overall competition

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Speaker 2: over technology development.

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Speaker 6: And these things are dialectical where you can think about

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Speaker 6: it as like if we were always duplicating efforts and competing,

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Speaker 6: that somehow seems really inefficient. On the other extreme, which

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Speaker 6: is where we tend to find ourselves, if implication is

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Speaker 6: viewed as taboo and inherently bad and something that we

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Speaker 6: always need unitary efforts around, that's also really bad. Now

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Speaker 6: these modalities skewed towards So if you're in this sort

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Speaker 6: of hey, we should have a unitary effort, we should

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Speaker 6: all just pick Slack or teams.

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Speaker 5: Something like that.

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Speaker 6: That makes a lot of sense for something that's in

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Speaker 6: the one to end phase. It's functionally a commodity. There's

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Speaker 6: value to standardization. You're not expecting a lot of innovation.

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Speaker 6: On the other end, where you're dealing with zero one problem,

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Speaker 6: where there's fundamental uncertainty, a lot of innovation is needed.

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Speaker 6: Innovation is fundamentally messy and chaotic, and trying to wrap

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Speaker 6: it with all this process just means that you don't

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Speaker 6: get the innovation at all. Then the lack of competition

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Speaker 6: and the lack of competing ideas heterodox approaches means that

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Speaker 6: you lose I think one of the most important responsibilities

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Speaker 6: of a leader is to grant and revoke monopolies within

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Speaker 6: your institution. Look, I'm calling the shot. I'm saying this

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Speaker 6: is the blessed way. I have high conviction and the

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Speaker 6: people and the approach, and we're all moving out. We're

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Speaker 6: putting all of our wood behind the sero. On the

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Speaker 6: other end, it's like there's fundamental uncertainty here. I'd like

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Speaker 6: to fund three teams to go after this in different ways,

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Speaker 6: and I will have to manage that as we go

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Speaker 6: through to figure out what is the answer going to be?

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Speaker 3: Okay, So on this note, as you point out, there's

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Speaker 3: a lack of competition within the government, maybe a lack

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Speaker 3: of creativity. There's a tendency to be very bureaucratic, and

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Speaker 3: of course one of the things we hear a lot

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Speaker 3: is that the government can be very slow in its

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Speaker 3: processes and it's not very good at like changing course

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Speaker 3: when that is needed. Because there's always the sprawling, infinite

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Speaker 3: number of stakeholders and all these boxes that you need

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Speaker 3: to check and things like that, and all of that combined,

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Speaker 3: I imagine, can make for a somewhat frustrating customer. If

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Speaker 3: you're a defense company. I mean, if you're a defense company,

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Speaker 3: the government is your customer. The government is certainly palenteer's customer.

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Speaker 3: How could they be basically a better customer.

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Speaker 5: By having more buyers?

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Speaker 6: You know, how can we start to approximate something that

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Speaker 6: looks closer to the free market. So I think defense

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Speaker 6: is one of these interesting places where it's the only

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Speaker 6: place I know of where we disaggregate supply and demand.

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Speaker 6: You think about that, the integration of supply and demand,

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Speaker 6: the sales and operation planning process. It's the beating heart

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Speaker 6: of most companies or institutions in defense. You have the services,

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Speaker 6: the Air Force, the Navy, and Marines, etc. They're responsible

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Speaker 6: for manning, training, and equipping. This is the supply side.

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Speaker 6: They produce the things that people are going to need.

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Speaker 6: On the demand side, you have what we call the

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Speaker 6: combatant commanders. We have thirteen geographic and functional combatant commands

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Speaker 6: that they actually do the war fighting.

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Speaker 5: If something happens in China.

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Speaker 6: It is the Indo Pacific command that we'll have to

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Speaker 6: do that fighting, and they will use the supply that's

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Speaker 6: been provided by the services to do that. But they

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Speaker 6: don't really have a say and what is being produced,

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Speaker 6: what the supply would be, what their opinions are. I mean,

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Speaker 6: it's a very indirect sort of say. And I think

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Speaker 6: this disaggregation ends up being one of the major bugs

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Speaker 6: in our system. So you have thirteen buyers essentially. Now,

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Speaker 6: I'm not sure you should ask these folks who have

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Speaker 6: three to five year horizons to go build you an

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Speaker 6: aircraft carrier. But I do think ninety five percent of

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Speaker 6: the things that we need to fight and win fall

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Speaker 6: within a time horizon envelope. They're going to care about

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Speaker 6: and wear their feedback and their heterogeneous needs. I'm not

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Speaker 6: sure why each of them should need exactly the same thing.

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Speaker 6: There's so much output to be had by capturing what

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Speaker 6: is different about them and how you make that work

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Speaker 6: for each of them, rather than averaging alder requirements out

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Speaker 6: for the sake of efficiency but at a loss of effectiveness.

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Speaker 2: The US hasn't fought a war against a really powerful

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Speaker 2: adversary in a long time. There are certainly wars that

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Speaker 2: we've fought that have been frustrating outcomes from the US perspective,

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Speaker 2: but not necessarily because we were technically outmatched. I understand

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Speaker 2: like you make these points, and obviously you make these

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Speaker 2: points in part because you think it will benefit your company.

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Speaker 2: How do you establish that we're not doing it? Well,

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Speaker 2: it seems like we still have an incredibly powerful military.

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Speaker 2: What is the evidence that there's actually something wrong with

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Speaker 2: the existing system.

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Speaker 5: Well, I think we need.

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Speaker 6: To look at the world around us here, So I'd

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Speaker 6: say that empirically we've lost to Terrence as the West.

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Speaker 6: You know, if you go back to roughly twenty fourteen,

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Speaker 6: Crimea was annexed by the Russians, the Sprattley Islands were militarized,

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Speaker 6: Aroan got shockingly close to getting the bomb, and certain

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Speaker 6: policy enabled them to get and continue to get much closer.

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Speaker 6: I think that a decade ago we lost to Terrence,

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Speaker 6: and that's really accelerated. We've seen that we've had a

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Speaker 6: pogram in Israel. We now have North Korean soldiers dying

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Speaker 6: in Ukraine, and we have unprecedented Phase zero gravestone operations

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Speaker 6: in the South China Sea, not to mention suddenly undersea

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Speaker 6: cables keep getting cut and snapping, so that there's this

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Speaker 6: sense in which people aren't afraid of us anymore, and

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Speaker 6: that the whole point of defense is not to fight

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Speaker 6: the war, it's to be so strong that you're deterring conflict.

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Speaker 5: And I feel like.

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Speaker 2: But just to push back, yeah, but just to push

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Speaker 2: back on this for a second, Like, how do you

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Speaker 2: establish that this lack of deterrence as you perceive it

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Speaker 2: has something to do with where we are technologically along

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Speaker 2: the state of the art versus domestic US politics, in

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Speaker 2: the appetite after the Iraq War, after Afghanistan, et cetera.

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Speaker 2: This sort of like appetite to be active and involved

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Speaker 2: in all of these different places. Because we're talking technology,

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Speaker 2: we're talking weapon systems. But another aspect of the sort

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Speaker 2: of perceived lack of deterrence could just be about American

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Speaker 2: appetite to exert our might.

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Speaker 6: I do think it's multi factorial. I don't think I

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Speaker 6: would discount that to zero there. But let's think about

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Speaker 6: this just in terms of the cost of air defense.

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Speaker 6: If you're using a two million dollar missile to shoot

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Speaker 6: down a two thousand dollars that'd be general, it's more

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Speaker 6: like a two hundred dollars drone.

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Speaker 5: You have a problem.

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Speaker 6: And if it takes you two years to make each

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Speaker 6: one of those missiles, you have a bigger problem. And

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Speaker 6: so I think our adversaries can sense the ways in

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Speaker 6: which we have, you know, and then that then feeds

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Speaker 6: into political will. I'm not sure these things are entirely disaggregatable.

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Speaker 3: Since Joe brought up political will or political appetite, this

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Speaker 3: is one of the other things I wanted to ask you.

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Speaker 3: But you know, if you talk about the government maybe

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Speaker 3: changing its ways, being more experimental in the way it

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Speaker 3: does things, encouraging competition, there's a risk involved in that, right,

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Speaker 3: which is, at some point, if something doesn't work, then

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Speaker 3: someone in Congress is going to have to stand up

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Speaker 3: and explain why the government quote wasted I don't know,

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Speaker 3: ten billion dollars on a program that didn't actually work out.

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Speaker 3: How do you actually like go about I guess it

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Speaker 3: encouraging like the culture, or changing the options around what

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Speaker 3: constitutes success and failure.

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Speaker 6: I think you put your hand right on the issue here,

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Speaker 6: which is how did we get here? You know, if

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Speaker 6: we go back to the early Cold War, our industrial

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Speaker 6: base looked very different. It was an American industrial base,

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Speaker 6: not a defense industrial base. Chrysler made cars and missiles.

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Speaker 6: Ford made satellites until nineteen ninety, not that long ago.

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Speaker 6: General Mills, the Cereal Company, used everything they learned about

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Speaker 6: processing cereal in their mechanics division to make torpedoes, artillery,

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Speaker 6: and inertial guidance systems, every camera, car and cereal box Americans.

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Speaker 6: Bot was actually subsidizing our national security. So the breath

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Speaker 6: of the investments, the commercial R and D investments we

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Speaker 6: were making, we could actually use to have price, performance

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Speaker 6: and capability improvements in defense. And that really changed. It

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Speaker 6: changed very slowly in the seventies and eighties because actually

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Speaker 6: the monoposist was not a great customer. People realized we

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Speaker 6: should try to sell off these defense businesses. It's too bureaucratic,

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Speaker 6: it's too slow. Then it changed all at once. In

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Speaker 6: nineteen ninety three, there was this famous dinner at the

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Speaker 6: Pentagon called the Last Supper. We had won the Cold War,

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Speaker 6: the country wanted a peace dividend. We slashed defense spending

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Speaker 6: sixty seven percent, So for every dollar we're spending before,

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Speaker 6: we were only going to spend thirty three cents and

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Speaker 6: this led to a massive consolidation in defense. We went

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Speaker 6: from fifty one prime contractors down to five today. And

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Speaker 6: you know, the consequence most folks see in this is

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Speaker 6: that this consolidation led to a lack of competition inside

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Speaker 6: the industrial base, less choices. I think that happened, but

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Speaker 6: I don't think that's the high order bit. The high

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Speaker 6: arder bit is that this consolidation bred conformity. This was

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Speaker 6: the real beginning of the financialization of defense, of founderless

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Speaker 6: companies that were principally run for the shareholder. They really

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Speaker 6: thought about the return on capital, what's happening this quarter?

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Speaker 6: And that plays into the hands of the monopsinists. You're

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Speaker 6: not going to behave like Elon. You don't have the

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Speaker 6: grand vision of getting to Mars and as a consequence

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Speaker 6: of doing so, reducing launch costs by ninety percent. And

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Speaker 6: that's not what it was because we think about it

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Speaker 6: as North of Grumman today, but it was Jack Northrope

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Speaker 6: Androy Grumman, Lockeed Martin was the Lockheed brothers, and separately

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Speaker 6: it was Glenn Martin. We had a very different kind

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Speaker 6: of structure of founder driven American capitalism. That meant that

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Speaker 6: people were investing in big ideas with bold ambitions. That

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Speaker 6: is I think really important to understanding how we've kind

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Speaker 6: of so when the Berlin Wall fell, only six percent

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Speaker 6: of major weapons systems spending went to defense specialists. The

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Speaker 6: rest went to what I call as dual purpose companies,

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Speaker 6: the Chryslers of the world, the general mills of the world.

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Speaker 6: Today that number is eighty six percent. So we have

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Speaker 6: taken our defense industrial base. We've put them on the

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Speaker 6: Glopgos Island. They're serving this one custom of the monopsonist.

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Speaker 6: They're largely deprived of market signal from the competitive and

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Speaker 6: dynamic commercial markets, and they've evolved in certain ways. And

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Speaker 6: if you bring them to the mainland, you know, the

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Speaker 6: wolves will eat the giant tortoises. And that's not what

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Speaker 6: the Chinese industrial base looks like. Chinese primes only get

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Speaker 6: twenty seven percent of their revenue from the PLA. The

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Speaker 6: rest comes from US, as silly Patsy's buying cheap crap

401
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Speaker 6: on Amazon, it comes from commercial So every now camera, cereal,

402
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Speaker 6: box and car we're buying might be subsidizing lethality against

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Speaker 6: US soldiers.

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Speaker 2: I get this point, but to me, this also speaks

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Speaker 2: to a different dimension, because if this is the story,

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Speaker 2: then it can't really just be about decisions made at

407
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Speaker 2: the Pentagon to winnow down the number of official suppliers,

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Speaker 2: because this is really an economy wide story, right setting

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Speaker 2: aside defense, you know, a company like General Mills is

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Speaker 2: in twenty twenty five not going to devote much of

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Speaker 2: its internal attention to you know, milling machinery, which is

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Speaker 2: I see on Google's what got transformed into a warplan

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Speaker 2: that would there would be some other company that they

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Speaker 2: would contract out like this phenomenon. Would you call it

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Speaker 2: financialization or specialization or prioritizing shareholders being good at one

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Speaker 2: thing that you sort of like optimize. This is an

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Speaker 2: economy wide phenomenon, but there must be some root of

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Speaker 2: it that can't be explained in a change of defense policy,

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Speaker 2: because we truly see it across the board, lots of

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Speaker 2: US great US companies in Nvidia, for example, choosing not

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Speaker 2: to focus on the low margin manufacturing aspect of semiconductors.

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Speaker 2: This is an economy wide phenomenon where companies shed these capabilities.

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Speaker 6: I think that's right, and you don't need everyone to

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Speaker 6: be participating in it, but you could look at you know,

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Speaker 6: counter was the first defense company to enter the S

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Speaker 6: and P five hundred and forty six years, not from

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Speaker 6: mergers or spinouts. And I think that looks much more

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Speaker 6: like the sclerotic European capital markets than dynamic US capital markets.

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Speaker 6: So I think that tells you something about the rate

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Speaker 6: at which we are creating new ideas, new companies in

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Speaker 6: the innovation that's happening here now a little bit more

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Speaker 6: directly to Tracy's point on how do we avoid, you know,

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Speaker 6: getting hauled in front of Congress. I'm not sure you

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Speaker 6: avoid that, but I think the risk aversion plays. So

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Speaker 6: we built the Pentagon in sixteen months. Kelly Johnson, the

436
00:22:01,119 --> 00:22:03,159
Speaker 6: founder of skunk Works at Lockeed, he built the U

437
00:22:03,160 --> 00:22:05,800
Speaker 6: two spy plane in thirteen months. You know, he built

438
00:22:05,800 --> 00:22:08,360
Speaker 6: forty one airframes in his entire career, which today you're

439
00:22:08,440 --> 00:22:09,200
Speaker 6: lucky if you work on.

440
00:22:09,119 --> 00:22:11,600
Speaker 5: A third of an airframe in your career. So there's

441
00:22:11,600 --> 00:22:13,760
Speaker 5: a sense in which we did have these really great people.

442
00:22:13,880 --> 00:22:16,080
Speaker 5: We bet on them. Not everything they did worked out.

443
00:22:16,560 --> 00:22:18,639
Speaker 6: I love this story of Admiral Raybourn, who was building

444
00:22:18,640 --> 00:22:21,840
Speaker 6: the submarine launch ballistic missile, the Polaris. You know, Congress

445
00:22:21,880 --> 00:22:24,800
Speaker 6: is breathing down his neck. Other admirals were breathing down

446
00:22:24,840 --> 00:22:25,120
Speaker 6: his neck.

447
00:22:25,119 --> 00:22:26,399
Speaker 5: Hey, when is it going to work? Give me the

448
00:22:26,520 --> 00:22:28,840
Speaker 5: like Gant chart of Gan charts, show me the project plan.

449
00:22:29,240 --> 00:22:31,440
Speaker 5: Are you managing this? We're spending a lot of money

450
00:22:31,440 --> 00:22:31,719
Speaker 5: on this.

451
00:22:32,320 --> 00:22:35,880
Speaker 6: And he came up with the latest in decision analysis techniques.

452
00:22:35,920 --> 00:22:39,159
Speaker 6: He used Monty Carlo simulation. It's called perk peert. You

453
00:22:39,160 --> 00:22:41,720
Speaker 6: can research this and it produced the Gan chart of

454
00:22:41,760 --> 00:22:44,439
Speaker 6: Gan charts, and Congress was happy and the admirals were happy.

455
00:22:44,680 --> 00:22:47,000
Speaker 5: But it was all a smokescreen. What he actually did.

456
00:22:47,040 --> 00:22:49,960
Speaker 6: He created this total fiction of Gant charts so that

457
00:22:50,000 --> 00:22:52,040
Speaker 6: he could protect the engineers, so that they could actually

458
00:22:52,119 --> 00:22:53,720
Speaker 6: just do the work. He didn't know when it was

459
00:22:53,760 --> 00:22:55,120
Speaker 6: going to work or how it was going to work.

460
00:22:55,320 --> 00:22:57,840
Speaker 6: But this is the reality of zero to one that

461
00:22:58,119 --> 00:23:01,840
Speaker 6: actually you're doing this messy innovative process, and if you

462
00:23:01,880 --> 00:23:04,240
Speaker 6: try to wrap it in so much process that you

463
00:23:04,800 --> 00:23:07,959
Speaker 6: eliminate all the risks, you can't cut off one end

464
00:23:08,119 --> 00:23:10,359
Speaker 6: of the taiale of distribution of outcomes, like all the

465
00:23:10,400 --> 00:23:12,920
Speaker 6: bad things, without cutting off the good end too. So

466
00:23:12,960 --> 00:23:16,439
Speaker 6: you're locking yourself into a system that's driving mediocrity and

467
00:23:16,520 --> 00:23:19,439
Speaker 6: One of my favorite examples to illustrate this is David Packard,

468
00:23:19,480 --> 00:23:21,919
Speaker 6: co founder of HP. He was the Deputy Secretary of

469
00:23:21,920 --> 00:23:24,440
Speaker 6: Defense the one period of time in the seventies he

470
00:23:24,720 --> 00:23:27,680
Speaker 6: came up with a simple set of rules to improve

471
00:23:27,760 --> 00:23:31,360
Speaker 6: acquisition called the DoD five thousand series seven pages.

472
00:23:31,560 --> 00:23:32,200
Speaker 5: Pretty small.

473
00:23:32,640 --> 00:23:37,240
Speaker 6: Today that five thousand series has turned into two thousand pages. Wow,

474
00:23:37,240 --> 00:23:40,360
Speaker 6: that is an eleven percent compounded growth rate of barnacles

475
00:23:40,359 --> 00:23:43,040
Speaker 6: of bureaucracy. People love to look at the five thousand

476
00:23:43,080 --> 00:23:45,120
Speaker 6: series and they complain, look what Packard did to us,

477
00:23:45,280 --> 00:23:47,119
Speaker 6: you know, but we did this to ourselves. And we

478
00:23:47,200 --> 00:23:49,240
Speaker 6: do this because when anything goes wrong, we need to

479
00:23:49,240 --> 00:23:51,040
Speaker 6: come up with a new rule of how it will

480
00:23:51,040 --> 00:23:53,679
Speaker 6: never go wrong again, which all we're really doing is

481
00:23:53,680 --> 00:23:55,480
Speaker 6: coming up with rules to make sure nothing can go

482
00:23:55,560 --> 00:23:56,000
Speaker 6: right again.

483
00:23:57,040 --> 00:24:00,360
Speaker 3: I'm a sucker for alliteration, but barnacles of bureaucers use

484
00:24:00,560 --> 00:24:04,360
Speaker 3: is a nice phone just to drill down on this point.

485
00:24:04,560 --> 00:24:09,000
Speaker 3: Palenteer has both military and commercial clients. Can you walk

486
00:24:09,040 --> 00:24:13,679
Speaker 3: us through what the differences are in as much granularity

487
00:24:13,800 --> 00:24:18,240
Speaker 3: as you know possible between designing a product for commercial

488
00:24:18,280 --> 00:24:23,080
Speaker 3: client versus designing something for the governments, Like, how do

489
00:24:23,200 --> 00:24:25,880
Speaker 3: those contracts actually come into being, and how do they

490
00:24:25,920 --> 00:24:26,960
Speaker 3: differ from each other.

491
00:24:27,400 --> 00:24:29,640
Speaker 6: Well, one of our headerdox takes, which you can see

492
00:24:29,640 --> 00:24:32,040
Speaker 6: in the line of argument I'm pursuing here, is that

493
00:24:32,119 --> 00:24:35,159
Speaker 6: it shouldn't be that different. And what has made it

494
00:24:35,200 --> 00:24:37,480
Speaker 6: hard for us is we're not designing what we do

495
00:24:37,560 --> 00:24:41,200
Speaker 6: to spect that either the commercial company or the government

496
00:24:41,200 --> 00:24:43,639
Speaker 6: are asking us. We have our own opinion of what

497
00:24:43,720 --> 00:24:45,440
Speaker 6: ought to exist to solve the problem.

498
00:24:45,760 --> 00:24:47,480
Speaker 5: If you don't think it solves the problem, you shouldn't

499
00:24:47,480 --> 00:24:47,760
Speaker 5: buy it.

500
00:24:47,800 --> 00:24:50,480
Speaker 6: But allow us to pursue our opinion, leveraging all the

501
00:24:50,520 --> 00:24:53,040
Speaker 6: stimulus that we have out there in the market and

502
00:24:53,119 --> 00:24:55,159
Speaker 6: to deliver the innovation to you as a consequence of

503
00:24:55,200 --> 00:24:57,359
Speaker 6: doing so. And you know, we would think of this

504
00:24:57,400 --> 00:24:59,040
Speaker 6: is so simple. You go to the Apple store and

505
00:24:59,040 --> 00:25:00,480
Speaker 6: if you like the iPhone, you by it. If you

506
00:25:00,480 --> 00:25:02,320
Speaker 6: don't like the iPhone and you don't buy it. And

507
00:25:02,359 --> 00:25:03,960
Speaker 6: of course that's not how the government likes to think

508
00:25:03,960 --> 00:25:05,800
Speaker 6: of it. They want to come up with a requirements

509
00:25:05,840 --> 00:25:08,439
Speaker 6: document that lists out everything they think they're going to

510
00:25:08,480 --> 00:25:10,960
Speaker 6: need and then have essentially what is a fiction writing

511
00:25:11,000 --> 00:25:13,400
Speaker 6: contest for you to respond to that and say whether

512
00:25:13,440 --> 00:25:15,159
Speaker 6: you can build those things and a what price you

513
00:25:15,200 --> 00:25:16,119
Speaker 6: can build those things?

514
00:25:16,760 --> 00:25:18,680
Speaker 5: And then through that process.

515
00:25:18,320 --> 00:25:20,200
Speaker 6: You're making a decision of who's going to actually then

516
00:25:20,320 --> 00:25:23,880
Speaker 6: go build those things. And I think you're transferring all

517
00:25:23,960 --> 00:25:26,400
Speaker 6: the risk to the taxpayer by doing so, the taxpayer

518
00:25:26,440 --> 00:25:28,840
Speaker 6: has to fund the development. The taxpayer is betting that

519
00:25:28,840 --> 00:25:32,200
Speaker 6: the government got all the requirements right, and the history

520
00:25:32,200 --> 00:25:35,040
Speaker 6: would suggest that's not a great bet. You know, there's

521
00:25:35,040 --> 00:25:37,400
Speaker 6: a reason we believe in the free market. Instead, why

522
00:25:37,400 --> 00:25:39,600
Speaker 6: wouldn't you transfer the risk to a private company, let

523
00:25:39,600 --> 00:25:40,640
Speaker 6: me build it on balance sheet.

524
00:25:40,680 --> 00:25:42,320
Speaker 5: If you don't like it, I go out of business.

525
00:25:42,560 --> 00:25:45,879
Speaker 6: But if you do like it, there's opportunity there. And

526
00:25:45,920 --> 00:25:47,640
Speaker 6: I was able to do that with much less risk

527
00:25:47,760 --> 00:25:48,640
Speaker 6: to the taxpayer.

528
00:25:49,040 --> 00:25:51,600
Speaker 3: But just to play devil's advocate for a second, there

529
00:25:51,600 --> 00:25:55,320
Speaker 3: are reasons that the government might have specific requirements that

530
00:25:55,359 --> 00:25:58,800
Speaker 3: a commercial company doesn't. You know, the government might have

531
00:25:59,200 --> 00:26:02,399
Speaker 3: more stringent rule rus around something like data privacy, something

532
00:26:02,520 --> 00:26:07,240
Speaker 3: like that. Is it really possible to standardize products across

533
00:26:07,800 --> 00:26:11,880
Speaker 3: commercial businesses that might be sensitive in one way or another,

534
00:26:12,040 --> 00:26:16,840
Speaker 3: but military operations that are extremely sensitive.

535
00:26:17,359 --> 00:26:19,640
Speaker 6: I mean I would say we're an existence proof that's possible.

536
00:26:19,880 --> 00:26:22,520
Speaker 6: That's like essentially my technical risk to manage of like

537
00:26:22,680 --> 00:26:25,399
Speaker 6: where do I enable the government to plug in things

538
00:26:25,400 --> 00:26:26,840
Speaker 6: that they need to build a plug in that are

539
00:26:26,840 --> 00:26:28,960
Speaker 6: in fact government unique, but how do I have the

540
00:26:29,000 --> 00:26:32,040
Speaker 6: greatest possible common baseline. One of my favorite examples of

541
00:26:32,080 --> 00:26:34,920
Speaker 6: this is Operation Warp Speed and the supply chain for

542
00:26:34,960 --> 00:26:37,720
Speaker 6: the vaccine. We were able to build that supply chain

543
00:26:37,760 --> 00:26:41,320
Speaker 6: in two weeks for General Purna because we had built

544
00:26:41,480 --> 00:26:46,080
Speaker 6: a similar digital twin for BP to optimize hydrocarbon production

545
00:26:46,160 --> 00:26:48,920
Speaker 6: two years prior. There's no way we could have met

546
00:26:48,960 --> 00:26:51,159
Speaker 6: the moment of need for the nation had we not

547
00:26:51,320 --> 00:26:57,120
Speaker 6: had this broad, diverse commercial stimulus across fifty different industries.

548
00:27:10,359 --> 00:27:12,600
Speaker 2: Talk to us about what specifically yourself, because you're not

549
00:27:12,720 --> 00:27:16,920
Speaker 2: selling missiles, et cetera. You're a software company. I also

550
00:27:16,960 --> 00:27:19,160
Speaker 2: know I think you've probably worked with them for a while,

551
00:27:19,160 --> 00:27:21,159
Speaker 2: but obviously at the end of last year there was

552
00:27:21,240 --> 00:27:26,000
Speaker 2: some announcement where you're working with Andreill Palmer Lucky's company.

553
00:27:26,440 --> 00:27:30,400
Speaker 2: What in your vision is the DoD buying more from

554
00:27:30,440 --> 00:27:33,359
Speaker 2: you years from now than they are today, And talk

555
00:27:33,400 --> 00:27:35,639
Speaker 2: to us about like some of like what the what

556
00:27:35,720 --> 00:27:36,840
Speaker 2: the pitch is in.

557
00:27:36,800 --> 00:27:38,960
Speaker 6: The commercial world, you call it a value chain from

558
00:27:39,000 --> 00:27:41,080
Speaker 6: the hand of your supplier to the hand of your customer.

559
00:27:41,280 --> 00:27:43,200
Speaker 6: But you can think of this as a series of

560
00:27:43,240 --> 00:27:46,080
Speaker 6: decisions that create dependencies on the ones that are downstreaming.

561
00:27:46,200 --> 00:27:49,119
Speaker 6: So you know, you go from procuring things to producing

562
00:27:49,160 --> 00:27:51,919
Speaker 6: things to pricing those things with customers. Simple example of

563
00:27:51,960 --> 00:27:54,160
Speaker 6: the value in the military, you call that a kill

564
00:27:54,240 --> 00:27:57,479
Speaker 6: chain from sensor to shooter, but it's literally the same thing.

565
00:27:57,480 --> 00:27:58,320
Speaker 5: It's a decision chain.

566
00:27:58,359 --> 00:28:00,480
Speaker 6: Maybe if you thought about it more generally, and every

567
00:28:00,480 --> 00:28:02,560
Speaker 6: one of those decisions, you want to make faster than

568
00:28:02,600 --> 00:28:04,600
Speaker 6: your competitors, and you want to make them better than

569
00:28:04,600 --> 00:28:05,879
Speaker 6: your competitors.

570
00:28:05,720 --> 00:28:07,480
Speaker 5: And the way to do that is with AI.

571
00:28:07,760 --> 00:28:11,560
Speaker 6: So we provide an AI decision making platform that spans

572
00:28:11,560 --> 00:28:14,320
Speaker 6: the breadth of your enterprise that allows you to get

573
00:28:14,400 --> 00:28:17,400
Speaker 6: better and better, faster and faster. And so we don't

574
00:28:17,440 --> 00:28:19,040
Speaker 6: make the hardware, but we make the end you're talking

575
00:28:19,040 --> 00:28:19,480
Speaker 6: about on.

576
00:28:19,480 --> 00:28:22,200
Speaker 2: The battlefield, you're talking about software that when you say

577
00:28:22,280 --> 00:28:25,520
Speaker 2: make a decision better than your competitor, it means you're

578
00:28:25,640 --> 00:28:30,359
Speaker 2: selling software that you say, on the battlefield allows some

579
00:28:30,720 --> 00:28:32,840
Speaker 2: entity to fire better than their competitor.

580
00:28:33,200 --> 00:28:33,640
Speaker 5: That's right.

581
00:28:34,320 --> 00:28:36,879
Speaker 6: Or in the commercial world, allows Airbus to build aircraft

582
00:28:37,160 --> 00:28:40,440
Speaker 6: more effectively, or Chrysler to build cars better, or ht

583
00:28:40,480 --> 00:28:41,560
Speaker 6: Hundi to build ships better.

584
00:28:42,480 --> 00:28:44,360
Speaker 3: There's one other thing I wanted to ask you. I

585
00:28:44,360 --> 00:28:47,000
Speaker 3: guess this is very top of mind for everyone at

586
00:28:47,000 --> 00:28:49,840
Speaker 3: the moment, but the Trump administration, there's been a lot

587
00:28:49,840 --> 00:28:55,560
Speaker 3: of rhetoric from Trump about shrinking the military industrial complex,

588
00:28:55,600 --> 00:28:57,960
Speaker 3: which I presume you know. There aren't a lot of

589
00:28:58,000 --> 00:29:01,200
Speaker 3: specifics here, but I presume it means eliminating waste and

590
00:29:02,280 --> 00:29:07,000
Speaker 3: also reducing the overall amount of money that's allocated to

591
00:29:07,040 --> 00:29:10,080
Speaker 3: the military in the form of government subsidies or whatever else.

592
00:29:10,560 --> 00:29:15,240
Speaker 3: How does that square with your vision of revolutionizing the

593
00:29:15,280 --> 00:29:16,160
Speaker 3: Defense Department.

594
00:29:16,840 --> 00:29:17,960
Speaker 5: I think it's pretty congruent.

595
00:29:18,080 --> 00:29:19,960
Speaker 6: I mean, if you thought about the eight hundred and

596
00:29:20,000 --> 00:29:22,560
Speaker 6: eighty billion that we're spending a year, what percentage of

597
00:29:22,560 --> 00:29:26,040
Speaker 6: it do you think we're spending efficaciously to deter our adversaries.

598
00:29:26,200 --> 00:29:28,960
Speaker 5: We could all come up with different numbers, but largely people.

599
00:29:28,760 --> 00:29:31,120
Speaker 6: Would agree there are a lot of legacy things we're

600
00:29:31,120 --> 00:29:34,280
Speaker 6: spending them on. Some of those are because Congress wants

601
00:29:34,280 --> 00:29:36,040
Speaker 6: to protect certain programs, some of them are because the

602
00:29:36,120 --> 00:29:38,000
Speaker 6: services want to protect Curain program Some of them just

603
00:29:38,000 --> 00:29:40,280
Speaker 6: because we haven't yet realized they're not going to meet

604
00:29:40,280 --> 00:29:43,920
Speaker 6: their moment, so I think we could be substantially more efficient.

605
00:29:43,920 --> 00:29:45,760
Speaker 6: We should be thinking about this as an acid allocation

606
00:29:45,880 --> 00:29:49,880
Speaker 6: problem of the capital we have, how is it allocated

607
00:29:49,920 --> 00:29:52,760
Speaker 6: against the problems and the threats that we face, and

608
00:29:53,040 --> 00:29:54,800
Speaker 6: is it kind of the same allocation it was thirty

609
00:29:54,880 --> 00:29:55,400
Speaker 6: years ago?

610
00:29:55,760 --> 00:29:56,560
Speaker 5: How much of that have.

611
00:29:56,560 --> 00:29:59,600
Speaker 6: We retooled and regeared towards the future fight that we're

612
00:29:59,640 --> 00:30:01,320
Speaker 6: likely to a you.

613
00:30:01,280 --> 00:30:04,000
Speaker 2: Know, we did an episode recently someone we've had on

614
00:30:04,040 --> 00:30:07,880
Speaker 2: the podcast a couple of times, Jennifer Palka, talk about software,

615
00:30:07,960 --> 00:30:10,440
Speaker 2: and you know, we were talking about DOGE.

616
00:30:10,240 --> 00:30:13,280
Speaker 4: And this idea that like it's one thing to.

617
00:30:13,360 --> 00:30:18,360
Speaker 2: Identify a problem of government procurement or government operation, it's

618
00:30:18,360 --> 00:30:21,960
Speaker 2: another thing to actually do it. And doing it is

619
00:30:22,080 --> 00:30:26,600
Speaker 2: probably some combination of changing rules that are written down somewhere,

620
00:30:26,960 --> 00:30:30,479
Speaker 2: maybe in Congress, maybe not, maybe bureaucratic rules, and then

621
00:30:30,480 --> 00:30:33,640
Speaker 2: they're sort of like the cultural change too, and that's

622
00:30:33,680 --> 00:30:36,200
Speaker 2: also extremely difficult, and sometimes maybe you just need like

623
00:30:36,240 --> 00:30:38,760
Speaker 2: a sort of bully type who is like very aggressive

624
00:30:38,880 --> 00:30:42,520
Speaker 2: to change. When you think about your vision for intra

625
00:30:42,920 --> 00:30:46,880
Speaker 2: DoD competition or bringing more of that, how much of

626
00:30:46,920 --> 00:30:50,800
Speaker 2: that is changing rules versus changing culture, And how do

627
00:30:50,840 --> 00:30:54,960
Speaker 2: you think about sort of like we're adopting Cham's eighteen theses,

628
00:30:55,440 --> 00:30:57,240
Speaker 2: what does that actually look like in practice?

629
00:30:57,720 --> 00:30:59,960
Speaker 6: Yeah, so I think a lot of it is culture.

630
00:31:00,280 --> 00:31:03,240
Speaker 6: I might call it leadership if we think about Hymen Rickover. So,

631
00:31:03,280 --> 00:31:05,600
Speaker 6: Admiral Ricover built the nuclear Navy. You know, he was

632
00:31:05,640 --> 00:31:08,920
Speaker 6: a five foot tall, pretty middling to bottom of class

633
00:31:09,040 --> 00:31:12,720
Speaker 6: US Navy academy grad didn't even drive a warship. But

634
00:31:12,920 --> 00:31:15,920
Speaker 6: after World War Two, by happemstance, he got to go

635
00:31:15,960 --> 00:31:19,360
Speaker 6: see the remnants of the Manhattan Project and realized, holy cow,

636
00:31:19,400 --> 00:31:22,840
Speaker 6: we could be building nuclear powered submarines and warships with this.

637
00:31:23,600 --> 00:31:28,000
Speaker 6: Admiral Ricover was in place leading that effort for thirty years.

638
00:31:28,680 --> 00:31:31,320
Speaker 6: He was protected by Congress. He was a notoriously difficult

639
00:31:31,440 --> 00:31:33,720
Speaker 6: human to deal with. Admiral Zombwald, who was the Chief

640
00:31:33,760 --> 00:31:36,360
Speaker 6: of Naval Operations, basically the senior most Navy person, said,

641
00:31:36,360 --> 00:31:38,920
Speaker 6: you know, the Navy has three enemies, the Soviet Union,

642
00:31:39,040 --> 00:31:42,160
Speaker 6: the Air Force, and Hymen Rickover. So you can see

643
00:31:42,160 --> 00:31:44,480
Speaker 6: how difficult this human must have been. But he was

644
00:31:44,600 --> 00:31:47,400
Speaker 6: a genius. And I think there's no stimulation of the

645
00:31:47,400 --> 00:31:49,320
Speaker 6: world where we said what if we had only Ricover

646
00:31:49,360 --> 00:31:50,680
Speaker 6: for three years, or what if we had him for

647
00:31:50,680 --> 00:31:51,280
Speaker 6: ten years?

648
00:31:51,720 --> 00:31:53,640
Speaker 5: Like our nuclear navy is one of our.

649
00:31:53,560 --> 00:31:56,720
Speaker 6: Last remaining asymmetric advantages, and he built it in the

650
00:31:56,720 --> 00:31:57,720
Speaker 6: fifties and sixties.

651
00:31:58,320 --> 00:31:59,320
Speaker 5: It's truly spectacular.

652
00:31:59,320 --> 00:32:00,760
Speaker 6: And I think if we go back and look at

653
00:32:00,760 --> 00:32:03,680
Speaker 6: our history here Kelly Johnson building forty air frames, including

654
00:32:03,720 --> 00:32:06,080
Speaker 6: the SR seventy one, John Boyd.

655
00:32:05,880 --> 00:32:06,960
Speaker 5: We call it the F sixteen.

656
00:32:07,040 --> 00:32:09,560
Speaker 6: Maybe more accurately, we should call it John Boyd's plane.

657
00:32:09,840 --> 00:32:11,840
Speaker 6: We call it the Apollo program. Maybe we should call

658
00:32:11,880 --> 00:32:15,160
Speaker 6: it Gene Krantz's program. There's this beautiful humility in this

659
00:32:15,280 --> 00:32:18,360
Speaker 6: kind of Midwestern sensibility we have in America that we

660
00:32:18,440 --> 00:32:20,760
Speaker 6: think of the program as not being defined by a

661
00:32:20,800 --> 00:32:23,880
Speaker 6: single person, but oftentimes it really is. And so to

662
00:32:23,920 --> 00:32:26,840
Speaker 6: the point of culture and leadership ever since the Goldwater

663
00:32:26,920 --> 00:32:30,480
Speaker 6: Nickel reform of I think eighty six, where we prioritize

664
00:32:30,480 --> 00:32:32,760
Speaker 6: this sense of jointness. You know, we want people to

665
00:32:32,840 --> 00:32:34,640
Speaker 6: rotate every two or three years. We want them to

666
00:32:34,680 --> 00:32:37,560
Speaker 6: have lots of different experiences to fill out their BINGO cards.

667
00:32:37,720 --> 00:32:40,200
Speaker 6: It's been very hard to have actually the deep time

668
00:32:40,240 --> 00:32:42,320
Speaker 6: and space that's required to be in a role long

669
00:32:42,440 --> 00:32:44,880
Speaker 6: enough not only to make mistakes, but to learn from

670
00:32:44,920 --> 00:32:48,320
Speaker 6: those stakes so that you can ultimately succeed in delivering

671
00:32:48,360 --> 00:32:49,440
Speaker 6: cutting edge technology.

672
00:32:49,560 --> 00:32:52,040
Speaker 2: You know, I like the idea like, oh, there was

673
00:32:52,080 --> 00:32:55,120
Speaker 2: this guy Kelly Johnson, he made forty one planes, etc.

674
00:32:55,520 --> 00:32:57,680
Speaker 2: And why can't we get back to that where like

675
00:32:57,720 --> 00:32:59,760
Speaker 2: someone is just some like visionary and they like build

676
00:32:59,760 --> 00:33:02,640
Speaker 2: all the stuff. On the other hand, like, it's clear

677
00:33:02,760 --> 00:33:07,440
Speaker 2: that like objectively, airplanes must have been much simpler in

678
00:33:07,600 --> 00:33:11,040
Speaker 2: some sense because we know the right brothers, for example.

679
00:33:10,680 --> 00:33:12,400
Speaker 4: Invented and that was just two of them.

680
00:33:12,760 --> 00:33:17,840
Speaker 2: It is inconceivable today on any scale the two individuals

681
00:33:18,240 --> 00:33:21,600
Speaker 2: could go into a barn and build an airplane. I mean, so,

682
00:33:21,760 --> 00:33:24,720
Speaker 2: like I get this story that like cultural change, et cetera.

683
00:33:24,760 --> 00:33:29,600
Speaker 2: But just the sheer technological complexity of the cutting edge

684
00:33:29,680 --> 00:33:33,880
Speaker 2: technology doesn't that just sort of like make some of

685
00:33:33,920 --> 00:33:36,160
Speaker 2: these stories impossible to replicate today?

686
00:33:36,960 --> 00:33:39,920
Speaker 6: My counterpoint would be SpaceX Elon can build a starship

687
00:33:39,960 --> 00:33:42,080
Speaker 6: faster than the FA can give them launch approval.

688
00:33:42,480 --> 00:33:44,040
Speaker 5: What they've done in the last fifteen years.

689
00:33:44,040 --> 00:33:45,960
Speaker 6: When I grew up in the shadow of the space coast,

690
00:33:46,040 --> 00:33:48,080
Speaker 6: I used to wake up to the double sonic booms

691
00:33:48,120 --> 00:33:51,440
Speaker 6: of the Shuttle re entering for landing at Kennedy. The

692
00:33:51,440 --> 00:33:53,800
Speaker 6: Shuttle was amazing. It inspired me in so many ways

693
00:33:53,800 --> 00:33:57,000
Speaker 6: to follow, you know, stem But the launch cost was

694
00:33:57,040 --> 00:34:01,240
Speaker 6: fifty thousand dollars a kilogram to orbit. With starship heavy reuse,

695
00:34:01,280 --> 00:34:03,640
Speaker 6: we're looking at ten to twenty dollars. I'm not missing

696
00:34:03,640 --> 00:34:06,240
Speaker 6: any zeros there ten to twenty dollars, and we were

697
00:34:06,280 --> 00:34:08,920
Speaker 6: stuck on a linear cost curve between twenty thousand dollars

698
00:34:08,960 --> 00:34:12,680
Speaker 6: and fifty thousand dollars until SpaceX came around. And I

699
00:34:12,680 --> 00:34:14,719
Speaker 6: think the timelines they've done this, and people would say

700
00:34:14,760 --> 00:34:17,080
Speaker 6: that's not possible. It's within a small lifespan of someone

701
00:34:17,120 --> 00:34:19,319
Speaker 6: working on these rockets, and it's largely been the same

702
00:34:19,360 --> 00:34:21,840
Speaker 6: people who've been leading these efforts since the very beginning.

703
00:34:22,280 --> 00:34:25,160
Speaker 6: So I think when we take new approaches, we can

704
00:34:25,200 --> 00:34:27,279
Speaker 6: still do these things. We can still do these things

705
00:34:27,360 --> 00:34:30,760
Speaker 6: very fast. I think one of America's great strengths.

706
00:34:30,800 --> 00:34:31,640
Speaker 5: If we were.

707
00:34:31,400 --> 00:34:34,120
Speaker 6: Literally at war, we would throw all these rule books

708
00:34:34,160 --> 00:34:37,279
Speaker 6: away and we would just be entrepreneurs again. We'd be

709
00:34:37,360 --> 00:34:39,520
Speaker 6: very innovative, and we'd be very focused on the primacy

710
00:34:39,560 --> 00:34:42,680
Speaker 6: of winning. But the sort of sclerosis that sets in

711
00:34:42,719 --> 00:34:45,680
Speaker 6: with peace. Time of following all these rules without a

712
00:34:45,719 --> 00:34:48,080
Speaker 6: critical eye towards which rules are making us better and

713
00:34:48,080 --> 00:34:51,520
Speaker 6: which ones are making us worse, you accumulate them. John

714
00:34:51,560 --> 00:34:53,719
Speaker 6: Boyd I used him as an example. He never made

715
00:34:53,719 --> 00:34:56,960
Speaker 6: it past colonel because he was so difficult, he was unpromotable.

716
00:34:57,520 --> 00:34:59,520
Speaker 6: We tend to give credit to someone like John Boyd

717
00:34:59,520 --> 00:35:00,000
Speaker 6: as we should.

718
00:35:00,560 --> 00:35:01,360
Speaker 5: What we don't give.

719
00:35:01,280 --> 00:35:03,400
Speaker 6: Enough credit to is the three star Air Force general

720
00:35:03,400 --> 00:35:06,080
Speaker 6: that protected Boyd his entire career. There was the talent,

721
00:35:06,160 --> 00:35:08,320
Speaker 6: but there was also the talent manager who understood that

722
00:35:08,320 --> 00:35:10,359
Speaker 6: there was something special here and it was worth going

723
00:35:10,400 --> 00:35:12,560
Speaker 6: out of their way to protect this person. The same

724
00:35:12,640 --> 00:35:14,640
Speaker 6: is true for Rickover. He didn't survive on his own.

725
00:35:14,680 --> 00:35:17,440
Speaker 6: Congress deserves a lot of credit for protecting him. So

726
00:35:17,560 --> 00:35:21,080
Speaker 6: many admirals, so many civil political appointees tried to get

727
00:35:21,120 --> 00:35:24,320
Speaker 6: him fired, and no one succeeded until Layman in the eighties.

728
00:35:24,360 --> 00:35:26,520
Speaker 6: And arguably Layman succeeded for the right reasons.

729
00:35:27,680 --> 00:35:30,200
Speaker 3: I'm glad you brought up SpaceX, because you know, you're

730
00:35:30,239 --> 00:35:35,320
Speaker 3: talking about encouraging commercial companies to do more defense stuff

731
00:35:35,320 --> 00:35:38,120
Speaker 3: and the sort of co mingling and the benefits that

732
00:35:38,160 --> 00:35:40,080
Speaker 3: would come with that. But a lot of people would

733
00:35:40,080 --> 00:35:44,200
Speaker 3: look at SpaceX and say, well, it's kind of worrying

734
00:35:44,480 --> 00:35:48,120
Speaker 3: that we have a commercial company which is now dominant

735
00:35:48,360 --> 00:35:51,800
Speaker 3: in US space exploration. Or they might look at Starlink

736
00:35:51,880 --> 00:35:54,920
Speaker 3: and say, like, oh wait, a second Elon Musk owns

737
00:35:55,000 --> 00:35:58,920
Speaker 3: all these really important satellites, and maybe that's not ideal

738
00:35:59,120 --> 00:36:03,440
Speaker 3: for the US. Maybe the US government wants more diversification

739
00:36:03,800 --> 00:36:10,040
Speaker 3: in its suppliers of extremely important infrastructure and technology. How

740
00:36:10,040 --> 00:36:12,960
Speaker 3: do you ensure, you know, as more commercial companies come

741
00:36:13,080 --> 00:36:17,200
Speaker 3: into the space theoretically, how do you sort of deal

742
00:36:17,320 --> 00:36:19,279
Speaker 3: with those types of concerns.

743
00:36:20,000 --> 00:36:22,400
Speaker 6: Well, I think one of the great strengths of America

744
00:36:22,520 --> 00:36:24,120
Speaker 6: is our skepticism towards power.

745
00:36:24,520 --> 00:36:27,200
Speaker 5: So here we are. We've reduced launch costs from fifty.

746
00:36:27,000 --> 00:36:29,400
Speaker 6: Thousand dollars a kilogram to ten dollars a kilogram, but

747
00:36:29,400 --> 00:36:31,279
Speaker 6: we're still worried about the cumulation of power, and I

748
00:36:31,280 --> 00:36:33,440
Speaker 6: think we should be. But the on the other hand,

749
00:36:33,440 --> 00:36:36,319
Speaker 6: to look at that without acknowledging the massive effectiveness, like

750
00:36:36,560 --> 00:36:40,480
Speaker 6: our assured access to space exists because of SpaceX, our

751
00:36:40,520 --> 00:36:43,680
Speaker 6: dominance in this category, it has become a national security strength.

752
00:36:43,719 --> 00:36:44,399
Speaker 5: So I think we have to.

753
00:36:44,360 --> 00:36:49,359
Speaker 6: Recognize that We've gotten this massive, outsize, nonlinear benefit, and

754
00:36:49,440 --> 00:36:50,240
Speaker 6: we have these concerns.

755
00:36:50,280 --> 00:36:52,160
Speaker 5: And the way to address these concerns is have more options,

756
00:36:52,200 --> 00:36:52,760
Speaker 5: more competition.

757
00:36:52,800 --> 00:36:55,160
Speaker 6: We need more people who could achieve launch costs that

758
00:36:55,200 --> 00:36:58,400
Speaker 6: are actually competitive. You know, when the alternative is Boeing

759
00:36:58,520 --> 00:37:01,759
Speaker 6: in the star liner, that's not a real alternative.

760
00:37:02,760 --> 00:37:06,560
Speaker 2: What should we be watching for with the new administration?

761
00:37:06,840 --> 00:37:10,040
Speaker 2: Obviously we have the new head of the dd IT,

762
00:37:10,160 --> 00:37:13,880
Speaker 2: he says, in the months ahead, who are either the

763
00:37:13,960 --> 00:37:18,520
Speaker 2: individuals or bureaus or whatever where we like, Oh, something

764
00:37:18,680 --> 00:37:22,720
Speaker 2: is meaningfully changing here in terms of how we buy defense.

765
00:37:23,440 --> 00:37:24,160
Speaker 5: It's a good question.

766
00:37:24,239 --> 00:37:26,040
Speaker 6: I mean, I have a lot of confidence in the

767
00:37:26,040 --> 00:37:29,000
Speaker 6: incoming team here, Folks like Emil Michael really coming from

768
00:37:29,000 --> 00:37:32,760
Speaker 6: the tech industry, leading RNE, folks like Steve Finberg who've

769
00:37:32,760 --> 00:37:35,840
Speaker 6: been in around many of these challenges in defense in

770
00:37:35,880 --> 00:37:37,799
Speaker 6: the defense industry for a long period of time on

771
00:37:37,840 --> 00:37:40,800
Speaker 6: the private side at SERBS. So that gives me a

772
00:37:40,840 --> 00:37:43,400
Speaker 6: great degree of confidence that these folks actually understand what

773
00:37:43,400 --> 00:37:46,000
Speaker 6: the problems are and that there is a need to

774
00:37:46,040 --> 00:37:49,080
Speaker 6: fundamentally change how we approach these things. I don't expect

775
00:37:49,120 --> 00:37:52,279
Speaker 6: it to be perceived as being wildly discontinuous because the

776
00:37:52,360 --> 00:37:55,239
Speaker 6: answer is not to get rid of America's primes, like

777
00:37:55,360 --> 00:37:56,640
Speaker 6: America needs her primes.

778
00:37:56,680 --> 00:37:58,280
Speaker 5: Like the things that Lockheed.

779
00:37:57,880 --> 00:38:01,399
Speaker 6: And Northrope and the other three of them are exquisite,

780
00:38:01,480 --> 00:38:05,839
Speaker 6: They are incredibly high tech. They're also low volume, and

781
00:38:06,320 --> 00:38:08,600
Speaker 6: they're not the entire solution. So it goes back to

782
00:38:08,600 --> 00:38:10,680
Speaker 6: this idea of ascid allocation, and I think that would

783
00:38:10,719 --> 00:38:13,160
Speaker 6: be the first thing that we would see as a

784
00:38:13,200 --> 00:38:16,000
Speaker 6: sign of change, which is a changing of how we're

785
00:38:16,000 --> 00:38:17,120
Speaker 6: allocating those assets.

786
00:38:17,320 --> 00:38:19,000
Speaker 5: I think a lot of the ideas.

787
00:38:18,560 --> 00:38:21,200
Speaker 6: That Senator Wicker has put forward in the Forged dec

788
00:38:21,560 --> 00:38:24,160
Speaker 6: where the first step is to cut red tape, is

789
00:38:24,239 --> 00:38:25,759
Speaker 6: a big part of this, which is, I think we

790
00:38:25,880 --> 00:38:28,080
Speaker 6: have all the talent in the world. This department is

791
00:38:28,120 --> 00:38:29,200
Speaker 6: extraordinarily talented.

792
00:38:29,200 --> 00:38:29,920
Speaker 5: We have the people.

793
00:38:30,320 --> 00:38:31,839
Speaker 6: We need to actually just put them in the role

794
00:38:31,920 --> 00:38:35,000
Speaker 6: and give them the discretion to actually execute these programs.

795
00:38:35,080 --> 00:38:37,600
Speaker 6: Understanding to Tracy's point earlier, some of these are going

796
00:38:37,680 --> 00:38:41,120
Speaker 6: to fail, probably in pretty spectacular ways, but some of

797
00:38:41,160 --> 00:38:44,040
Speaker 6: them are going to succeed in very spectacular ways, and

798
00:38:44,080 --> 00:38:46,759
Speaker 6: we just need a few of our asymmetric capabilities to

799
00:38:46,800 --> 00:38:48,760
Speaker 6: really work to preserve deterrence.

800
00:38:49,440 --> 00:38:52,800
Speaker 3: So I don't know if Elon Musk listens to this podcast,

801
00:38:52,840 --> 00:38:56,280
Speaker 3: but I do know that he sometimes reads tweets about

802
00:38:56,320 --> 00:38:59,239
Speaker 3: this podcast, or at least he did once and responded

803
00:38:59,239 --> 00:39:01,880
Speaker 3: to it. But what would be your big piece of

804
00:39:01,920 --> 00:39:04,959
Speaker 3: advice for DOGE as it sets out on the very

805
00:39:05,080 --> 00:39:09,440
Speaker 3: very large task of eliminating waste at the government. You

806
00:39:09,440 --> 00:39:11,600
Speaker 3: know there are sort of infinite ways you could do

807
00:39:11,680 --> 00:39:13,920
Speaker 3: this because the government is so sprawling.

808
00:39:14,440 --> 00:39:16,839
Speaker 6: Gosh, I mean, far be it for me to tell

809
00:39:16,960 --> 00:39:18,839
Speaker 6: DOGE how to do this. It seems like a group

810
00:39:18,880 --> 00:39:22,360
Speaker 6: of experts here. But my broad advice nineteen years crawling

811
00:39:22,400 --> 00:39:24,880
Speaker 6: through and fighting the bureaucracy and God, is that there

812
00:39:24,880 --> 00:39:27,560
Speaker 6: are two things that really matter. The first is that

813
00:39:27,640 --> 00:39:30,520
Speaker 6: we should push more decision making authority on what to

814
00:39:30,560 --> 00:39:32,560
Speaker 6: buy and how to buy these things to our combatant

815
00:39:32,560 --> 00:39:35,080
Speaker 6: commanders to introduce strategic competition.

816
00:39:35,560 --> 00:39:37,120
Speaker 5: You don't need to give them the entire budget.

817
00:39:37,120 --> 00:39:38,719
Speaker 6: I'm not sure they would succeed if they were given

818
00:39:38,719 --> 00:39:41,160
Speaker 6: the entire budget, But even having five percent of it

819
00:39:41,280 --> 00:39:44,279
Speaker 6: to express where they disagree with the market signals, or

820
00:39:44,320 --> 00:39:46,520
Speaker 6: to be able to decide which of the services are

821
00:39:46,520 --> 00:39:48,600
Speaker 6: going to build something for them, I think starts to

822
00:39:48,640 --> 00:39:51,880
Speaker 6: introduce the necessary vector for new entrants to get on

823
00:39:51,880 --> 00:39:55,400
Speaker 6: the field and new ideas to be tested in reality.

824
00:39:55,640 --> 00:39:57,840
Speaker 6: And the second part to that is a very concrete

825
00:39:57,880 --> 00:39:59,920
Speaker 6: way of how we could do that is we could

826
00:40:00,040 --> 00:40:03,560
Speaker 6: introduced this notion of competing programs more formally. You know,

827
00:40:03,600 --> 00:40:05,560
Speaker 6: we used to have it in formally, like I mentioned earlier,

828
00:40:05,640 --> 00:40:08,080
Speaker 6: how we had four competing programs for the submarine launch

829
00:40:08,080 --> 00:40:12,120
Speaker 6: ballistic missile. That does not happen today because that duplication.

830
00:40:11,800 --> 00:40:12,960
Speaker 5: Is viewed as heresy.

831
00:40:13,360 --> 00:40:16,720
Speaker 6: You know, that would be being irresponsible with tax payer money.

832
00:40:16,800 --> 00:40:19,440
Speaker 6: So before we even get started, we need to agree

833
00:40:19,600 --> 00:40:22,680
Speaker 6: x ante on a unitary effort. I'll give you a counterfaction.

834
00:40:23,000 --> 00:40:25,960
Speaker 6: Should we have had one F thirty five. You know,

835
00:40:25,960 --> 00:40:28,200
Speaker 6: we conceived of the F thirty five in the mid nineties,

836
00:40:28,640 --> 00:40:30,399
Speaker 6: and it was supposed to be all things to all people.

837
00:40:30,440 --> 00:40:32,680
Speaker 6: There was going to be a variant for the Marines

838
00:40:32,760 --> 00:40:35,560
Speaker 6: and the Navy and the air Force. And you know,

839
00:40:35,640 --> 00:40:38,040
Speaker 6: if we just have a single platform, it'll be Swiss

840
00:40:38,120 --> 00:40:41,200
Speaker 6: Army Knife of fighter jets. And now you know it

841
00:40:41,239 --> 00:40:44,880
Speaker 6: is it's pretty spectacular plane, but it's also thirty percent available,

842
00:40:44,880 --> 00:40:46,879
Speaker 6: and it's going to cost US two trillion dollars. Maybe

843
00:40:46,880 --> 00:40:49,640
Speaker 6: a counterfaction would have been, we're going to have an

844
00:40:49,719 --> 00:40:51,960
Speaker 6: F thirty five and F thirty six and F thirty seven,

845
00:40:52,520 --> 00:40:54,560
Speaker 6: and none of them have the birthright to win. And

846
00:40:54,640 --> 00:40:56,320
Speaker 6: in fact, we're going to go to the quote unquote

847
00:40:56,400 --> 00:40:59,240
Speaker 6: legacy platforms, the F eighteen, the F sixteen, the F fifteen,

848
00:40:59,239 --> 00:41:00,680
Speaker 6: and we're going to say, here's a little bit of

849
00:41:00,680 --> 00:41:03,600
Speaker 6: money for you guys to innovate and to actually be

850
00:41:03,719 --> 00:41:05,759
Speaker 6: so good that I decided I canceled the new programs,

851
00:41:06,200 --> 00:41:09,520
Speaker 6: but instead we said you're the old no more money

852
00:41:09,520 --> 00:41:12,040
Speaker 6: for you. Before the new thing even exists, we've already

853
00:41:12,080 --> 00:41:13,920
Speaker 6: told you that you're going to be sunset and we

854
00:41:13,920 --> 00:41:15,920
Speaker 6: don't have a bird in hand. And I think this

855
00:41:16,040 --> 00:41:18,880
Speaker 6: is one of the major things that slows down innovation.

856
00:41:18,960 --> 00:41:22,080
Speaker 6: So institutionalizing the concept of the competing PM, I think

857
00:41:22,160 --> 00:41:23,960
Speaker 6: is very important. I'll give you an anecdote from my

858
00:41:23,960 --> 00:41:27,480
Speaker 6: own experience. We were the software prime on a hardware project.

859
00:41:27,480 --> 00:41:31,279
Speaker 6: We were building a satellite ground station on wheels, and

860
00:41:31,640 --> 00:41:33,799
Speaker 6: in the midst of this competition, it was Palncer versus

861
00:41:33,840 --> 00:41:36,480
Speaker 6: Atheon and the teams that we had underneath us. In

862
00:41:36,520 --> 00:41:39,799
Speaker 6: the midst of this competition, chat GPT came out and

863
00:41:39,880 --> 00:41:41,239
Speaker 6: I thought, this is great. You know, this is a

864
00:41:41,360 --> 00:41:43,640
Speaker 6: very complicated piece of equipment. When my son is in

865
00:41:43,680 --> 00:41:45,880
Speaker 6: the back of this vehicle, I don't want him flipping

866
00:41:45,880 --> 00:41:47,720
Speaker 6: through a ten thousand page PDF manual.

867
00:41:47,760 --> 00:41:49,280
Speaker 5: I want him to be able to chat with the bot.

868
00:41:49,120 --> 00:41:51,520
Speaker 6: To figure out how to fix the vehicle or troubleshoot

869
00:41:51,560 --> 00:41:53,920
Speaker 6: any situation that he's in. And I went to the

870
00:41:53,920 --> 00:41:56,120
Speaker 6: PM and said, I'd like to give you this chatbot,

871
00:41:56,440 --> 00:41:58,080
Speaker 6: you know, for free. It's just going to be a

872
00:41:58,080 --> 00:42:00,719
Speaker 6: better product. And he said, there's no reques vironment for that.

873
00:42:01,200 --> 00:42:03,600
Speaker 6: Even though there's no I'm not asking for a resource.

874
00:42:03,920 --> 00:42:06,360
Speaker 6: You know, I guess the perceived possible risk for schedule.

875
00:42:06,400 --> 00:42:07,560
Speaker 6: There's no incentive to do it.

876
00:42:07,600 --> 00:42:08,000
Speaker 5: Why do it.

877
00:42:08,000 --> 00:42:09,960
Speaker 6: I've already decided what it is we needed, and it's

878
00:42:10,000 --> 00:42:12,040
Speaker 6: not on it. Even though the world's changed around us,

879
00:42:12,040 --> 00:42:14,439
Speaker 6: even though the competition takes two years and two years

880
00:42:14,440 --> 00:42:17,719
Speaker 6: in infinite time and technology, let's not even consider it.

881
00:42:17,760 --> 00:42:19,960
Speaker 6: So by the time we're going to end up considering it,

882
00:42:19,960 --> 00:42:21,680
Speaker 6: it'll have been an obvious thing and we'll probably get

883
00:42:21,719 --> 00:42:23,520
Speaker 6: to it like ten years from now. But I'll give

884
00:42:23,560 --> 00:42:25,640
Speaker 6: you a counterfaction where what if there are two pms,

885
00:42:26,040 --> 00:42:28,759
Speaker 6: one for Palenteer, one for the raytheon team, and they

886
00:42:28,840 --> 00:42:30,879
Speaker 6: woke up every day thinking about how they were going

887
00:42:30,880 --> 00:42:34,480
Speaker 6: to destroy and humiliate and win the competition. I'm pretty

888
00:42:34,480 --> 00:42:36,880
Speaker 6: sure that PM would have said, absolutely, let's show up

889
00:42:36,920 --> 00:42:39,239
Speaker 6: to the next soldier touch point with this great capability.

890
00:42:39,440 --> 00:42:40,399
Speaker 5: I can't wait to win.

891
00:42:40,960 --> 00:42:43,640
Speaker 6: And I think if our only competing point is at

892
00:42:43,680 --> 00:42:46,600
Speaker 6: a period of great conflict in war, that's too little,

893
00:42:46,640 --> 00:42:49,319
Speaker 6: too late. We need to have many competitions amongst each

894
00:42:49,360 --> 00:42:52,320
Speaker 6: other all the time so that we're continuously innovating.

895
00:42:52,640 --> 00:42:55,719
Speaker 2: Chum Soundkar, Thank you so much, Really appreciate you coming

896
00:42:55,719 --> 00:42:58,480
Speaker 2: on on odd lotch and great to talk to you

897
00:42:58,560 --> 00:43:02,759
Speaker 2: again after all of these years on much heavier topics

898
00:43:02,920 --> 00:43:04,439
Speaker 2: than steam.

899
00:43:04,080 --> 00:43:06,399
Speaker 4: Buttons, which I think is what we talked about last time.

900
00:43:06,640 --> 00:43:07,680
Speaker 5: Well, thank you guys for having me.

901
00:43:20,400 --> 00:43:20,800
Speaker 4: Tracy.

902
00:43:20,920 --> 00:43:24,879
Speaker 2: I like to believe the idea that we could have

903
00:43:25,520 --> 00:43:29,279
Speaker 2: intra military competition like it's a nice it's a really

904
00:43:29,360 --> 00:43:30,280
Speaker 2: nice sounding idea.

905
00:43:30,480 --> 00:43:35,320
Speaker 3: Yes, intuitively sounds nice. I guess my reticence is slightly

906
00:43:35,600 --> 00:43:38,880
Speaker 3: you know, Okay, everyone can agree monopolies are bad, monopsony

907
00:43:39,040 --> 00:43:42,479
Speaker 3: is bad. But I guess my reticence is you brought

908
00:43:42,560 --> 00:43:46,920
Speaker 3: up the specialization point, right, Like the idea that companies

909
00:43:46,960 --> 00:43:50,279
Speaker 3: can get really good and efficient by doing one thing,

910
00:43:50,400 --> 00:43:54,239
Speaker 3: and maybe that one thing is developing ballistic missiles or

911
00:43:54,280 --> 00:43:57,680
Speaker 3: whatever like that exists in the world for a reason,

912
00:43:57,719 --> 00:43:59,920
Speaker 3: and there are lots of examples of that, and you know,

913
00:44:00,080 --> 00:44:04,520
Speaker 3: there are anti examples of that. Boeing does both military

914
00:44:04,719 --> 00:44:07,400
Speaker 3: and commercial, and I would say at the current moment

915
00:44:07,440 --> 00:44:12,080
Speaker 3: in time, Boeing has not been especially successful. So there's

916
00:44:12,160 --> 00:44:14,279
Speaker 3: that point, which I think is a good one. And

917
00:44:14,320 --> 00:44:18,160
Speaker 3: then the other concern I guess is the one around

918
00:44:18,600 --> 00:44:21,799
Speaker 3: you know, corporate dominance. Yeah, the idea that while you

919
00:44:21,840 --> 00:44:24,960
Speaker 3: bring more commercial players into the market for something that

920
00:44:25,080 --> 00:44:30,080
Speaker 3: is really essential, as Sham emphasized my time structure. Yeah,

921
00:44:30,120 --> 00:44:32,320
Speaker 3: there's a little bit of a tension there, a bigger

922
00:44:32,360 --> 00:44:34,040
Speaker 3: than a little bit, I should say.

923
00:44:34,160 --> 00:44:37,960
Speaker 2: No, absolutely, I do take his point at the end

924
00:44:38,000 --> 00:44:39,839
Speaker 2: that it would be nice. I mean, I think there

925
00:44:39,840 --> 00:44:42,040
Speaker 2: are a lot of points, but one is the idea,

926
00:44:42,200 --> 00:44:44,960
Speaker 2: like it probably makes sense that if you're going to

927
00:44:45,040 --> 00:44:49,319
Speaker 2: have competition, that means you're going to have failures, that

928
00:44:49,360 --> 00:44:51,680
Speaker 2: means you're going to have wasted public money. That it's

929
00:44:51,719 --> 00:44:54,759
Speaker 2: like a cultural thing that strikes me is like very difficult.

930
00:44:54,840 --> 00:44:58,120
Speaker 2: But obviously in the private sector, big winners emerge and

931
00:44:58,120 --> 00:45:00,360
Speaker 2: we don't usually talk that much about all of the

932
00:45:00,360 --> 00:45:02,719
Speaker 2: ones that were losers, but they had to be there.

933
00:45:03,120 --> 00:45:06,200
Speaker 2: It strikes me as you know, like a tremendously difficult task.

934
00:45:06,480 --> 00:45:09,000
Speaker 2: It also seems like it would be nice to have

935
00:45:09,160 --> 00:45:13,000
Speaker 2: like good sense of the state of our defense industry

936
00:45:13,160 --> 00:45:17,120
Speaker 2: and not suddenly discover various weaknesses at a time of

937
00:45:17,680 --> 00:45:21,239
Speaker 2: actual kinetic warfare or were being put to the test.

938
00:45:21,280 --> 00:45:23,600
Speaker 2: So I thought, anyway, we got to do way more

939
00:45:23,719 --> 00:45:26,000
Speaker 2: on this topic, and I appreciated that as a sort

940
00:45:26,000 --> 00:45:28,839
Speaker 2: of way into it, even obviously coming from a very

941
00:45:28,840 --> 00:45:30,400
Speaker 2: specific perspective.

942
00:45:30,000 --> 00:45:33,000
Speaker 3: A launchpad into the topic. But I do agree the

943
00:45:33,080 --> 00:45:36,160
Speaker 3: idea of being able to change course seems like a

944
00:45:36,239 --> 00:45:39,760
Speaker 3: really important one. And the story, you know, the example

945
00:45:39,800 --> 00:45:43,400
Speaker 3: he gave about rfq's growing from like twenty pages to

946
00:45:43,480 --> 00:45:46,480
Speaker 3: two thousand pages, that's something we hear over and over again.

947
00:45:46,680 --> 00:45:50,480
Speaker 2: I could also probably just listen to stories about you know,

948
00:45:50,640 --> 00:45:54,680
Speaker 2: random guys in Ohio building planes and the nineteen year.

949
00:45:54,600 --> 00:45:57,160
Speaker 3: You have truly reached Middle ages.

950
00:45:58,040 --> 00:46:01,480
Speaker 4: So Boomer, I'm so boomer with this. This is totally true.

951
00:46:01,600 --> 00:46:02,839
Speaker 3: All right, shall we leave it there.

952
00:46:02,920 --> 00:46:03,640
Speaker 4: Let's leave it there.

953
00:46:03,920 --> 00:46:06,719
Speaker 3: This has been another episode of the Odd Loots podcast.

954
00:46:06,800 --> 00:46:09,760
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

955
00:46:09,880 --> 00:46:12,880
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart.

956
00:46:13,160 --> 00:46:17,120
Speaker 2: Follow our guest hum Soundcar. He's at Ssundcar and you

957
00:46:17,120 --> 00:46:20,480
Speaker 2: can read his big thoughts about defense at the website

958
00:46:20,600 --> 00:46:24,879
Speaker 2: eighteen feces dot com. Follow our producers Carmen Rodriguez at

959
00:46:24,920 --> 00:46:28,600
Speaker 2: Carmen armand dash O Bennett at Dashbot and Killbrooks at Kilbrooks.

960
00:46:28,840 --> 00:46:31,480
Speaker 2: From our Oddlots content, go to Bloomberg dot com slash

961
00:46:31,520 --> 00:46:34,640
Speaker 2: odd Lots. We have transcripts of blog in a daily newsletter,

962
00:46:34,920 --> 00:46:37,040
Speaker 2: and you can chat about all of these topics twenty

963
00:46:37,040 --> 00:46:40,760
Speaker 2: four to seven in our discord Discord dot gg slash

964
00:46:40,840 --> 00:46:41,279
Speaker 2: od locks.

965
00:46:41,320 --> 00:46:43,160
Speaker 4: We have a defense channel, so go check it out.

966
00:46:43,440 --> 00:46:45,799
Speaker 3: And if you enjoy odd Lots, if you like it

967
00:46:45,840 --> 00:46:49,319
Speaker 3: when we try to learn about the defense industry, then

968
00:46:49,360 --> 00:46:53,360
Speaker 3: please leave us a positive review on your favorite podcast platform.

969
00:46:53,719 --> 00:46:56,600
Speaker 3: And remember, if you are a Bloomberg subscriber, you can

970
00:46:56,640 --> 00:47:00,279
Speaker 3: listen to all of our episodes absolutely ad free. All

971
00:47:00,320 --> 00:47:02,520
Speaker 3: you need to do is Find the Bloomberg channel on

972
00:47:02,680 --> 00:47:06,600
Speaker 3: Apple Podcasts and follow the instructions there. Thanks for listening.