Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of The Odd Lots Podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 4: Tracy, you know my Twitter handle at the store.
Speaker 3: I'm vaguely familiar with it.
Speaker 4: Yeah, I always mentioned do you know how where I
Speaker 4: got it from?
Speaker 3: Oh, that's a good question. I know you had it
Speaker 3: when you first started writing about the market, and I
Speaker 3: know you've said at various points in time that you
Speaker 3: kind of regret using it.
Speaker 2: Is that right when I joined Twitter in like two
Speaker 2: thousand and eight, and like, I didn't think it was
Speaker 2: going to be like a very big deal for any reason.
Speaker 2: It was just the name of my old blog at
Speaker 2: the time, and that was the name when we you know,
Speaker 2: people just did like, yeah, screen names.
Speaker 4: It was just the name of a blog. The name
Speaker 4: means nothing to me.
Speaker 2: But before I was ever a journalist or even thought
Speaker 2: that I would get into journalism professionally, you know, I
Speaker 2: had this blog, The Stalwart.
Speaker 3: You know, if you thought Twitter wasn't going to be
Speaker 3: that serious, I feel like you could have chosen a
Speaker 3: much worse name, that's true, than the Stalwart.
Speaker 2: But anyway, I had this blog, the Stalwart dot com.
Speaker 2: It was actually I had a co author on it
Speaker 2: who went to do great things anyway, you know how
Speaker 2: like we sometimes tweeted like, Hey, we're going to be
Speaker 2: in subcity. Who wants to get a drink? I was
Speaker 2: visiting San Francisco in like two thousand and six and
Speaker 2: I posted a thing and I think I ate about
Speaker 2: two hundred readers of my blog, and I said, does
Speaker 2: anyone want to get a dim summ in San Francisco?
Speaker 4: And I got two people responded and show up.
Speaker 3: That's I mean, that's not a terrible two hundred.
Speaker 4: Yeah, that's right. It's not bad at all.
Speaker 2: But anyway, one of those people who actually showed up
Speaker 2: to get dim sum and a few friends of mine
Speaker 2: showed up, is going to be coming on the podcast today.
Speaker 4: One of those two.
Speaker 3: See, it's about quality, not quantity each other.
Speaker 4: That's right.
Speaker 3: So the two people that showed up are useful.
Speaker 4: To you, that's right. So I went on.
Speaker 2: I stayed in media and I did you know, the
Speaker 2: blogging and casting and journalism thing, and another became the
Speaker 2: CTO of one of the hottest companies in the entire world.
Speaker 2: And so, you know, some interesting people at that lunch
Speaker 2: in China Town and.
Speaker 3: What did you tell him over dim SiZ I don't remember.
Speaker 2: I don't remember. Anyway, this is a very sort of
Speaker 2: inward facing intro. But to sort of zoom forward, you know,
Speaker 2: we've wanted to do more on defense in the year
Speaker 2: twenty twenty five and how we spend money, et cetera. Anyway,
Speaker 2: and it turns out that this person, this guy who
Speaker 2: came to dim Sum in two thousand and six, is
Speaker 2: a great person to talk about defense because he recently
Speaker 2: wrote a piece called the Defense Reformation eighteen thesies about
Speaker 2: how we currently spend money on defense in this country
Speaker 2: and why the way we do it is insufficient for
Speaker 2: this new world, especially with all of these geopolitical attentions.
Speaker 2: Of course, he works for a company that might benefit
Speaker 2: from a change in how we do spending on defense.
Speaker 2: We're going to be speaking with I'm Sunkar. He is
Speaker 2: the CTO of Palenteer, one of the hottest companies in
Speaker 2: the world, but which I'm still trying to wrap my
Speaker 2: head around exactly what they do. But we're maybe going
Speaker 2: to learn that and how they or Sham specifically in
Speaker 2: visions changing how we do defense and how Palenteer could
Speaker 2: play a role in it. So, Cham, thank you so
Speaker 2: much for coming on odd Lots. It's nice to talk
Speaker 2: to you again after almost twenty years.
Speaker 5: It's a pleasure to be on. Yeah, it's great to
Speaker 5: hear you again.
Speaker 2: Okay, here's a question. So, like I watched these videos
Speaker 2: on YouTube about Pallenteer products and it looks very like
Speaker 2: sort of like Minority Report.
Speaker 4: Where it's like these like big walls.
Speaker 2: Of screens and they like zoom in on something and
Speaker 2: they're like, oh, and here's an asset in the South
Speaker 2: China Sea and why are these ships here? And like
Speaker 2: someone's like, look up, is that really what you guys sell?
Speaker 2: Like is it really this minority report? Not, I know
Speaker 2: it's not Minority Report like pre crime, but these sort
Speaker 2: of like visualizations like give me like the sort of
Speaker 2: like what does Palenteer actually sell?
Speaker 6: Well, the cynical way to think about Palenteers that it
Speaker 6: took something as sexy as James Bond to motivate engineers
Speaker 6: to work on a promise boring as data integration. But
Speaker 6: I do think that is the seminal problem. It's not
Speaker 6: that we don't have this information, it's that we don't
Speaker 6: have it in a way that we can easily access
Speaker 6: it to make a decision. I like saying, you know,
Speaker 6: maybe ten years ago, the idea that data was the
Speaker 6: new oil became very popularized. I strongly disagree with that.
Speaker 6: I think data is the new snake oil. It's not
Speaker 6: inherently valuable. What really matters are the decisions we as
Speaker 6: humans make, and am I making a better decision? Am
Speaker 6: I getting into a continuous learning loop of how I
Speaker 6: will make that decision better tomorrow? That is something that
Speaker 6: Colonel John Boyd would recognize as the Uda Loup, the
Speaker 6: Observed orient Decide Act, a piece of trade craft he
Speaker 6: developed to beat big fighters in dogfighting. But it's really
Speaker 6: like the human decision making process and how we see
Speaker 6: ourselves and win as a consequence of being better at
Speaker 6: it than our competitors in the commercial sector or our
Speaker 6: adversaries in the military space.
Speaker 3: So Joe mentioned that we want to do more on defense,
Speaker 3: and it is a difficult topic to sort of wrap
Speaker 3: your head around because the defense industry is sprawling in
Speaker 3: many ways, so neither of us know that much about it.
Speaker 3: But one thing I do know is defense is an
Speaker 3: industry that is characterized by Monopsony. Oh, do we still
Speaker 3: have the monopsy Clason.
Speaker 4: Yeah, we're going to put a sound effect here.
Speaker 3: Monopsony Clackson, Okay, Monopsony. So there's one big buyer for
Speaker 3: defense equipment and services, which is the government, and if
Speaker 3: you are a defense contractor, you are basically only pitching
Speaker 3: to the government. If you fail to convince the government,
Speaker 3: It's not like you can turn around and sell missiles
Speaker 3: to the private market, at least hopefully not. How did
Speaker 3: pal Andeer actually break into this particular space and why
Speaker 3: did you decide to do it, because you know, it
Speaker 3: seems like a pretty binary bet in some respects.
Speaker 6: I mean, first of all, I love the fact that
Speaker 6: people listening to this podcast know INNI oh yeah.
Speaker 5: Thesis is that is.
Speaker 6: The root of what ails us in terms of defense.
Speaker 6: But you're exactly right, it is what makes this market
Speaker 6: so challenging. I mean, look, no great company is principally
Speaker 6: created to make money. You have a mission, a purpose.
Speaker 6: We wanted to work on hard problems in national security.
Speaker 6: When we came together to work on these problems, it
Speaker 6: was before there was like a political tinge to working
Speaker 6: on defense. It was actually people just thought we were
Speaker 6: wasting our life, like maybe you should self sofered banks.
Speaker 5: Wouldn't that be a better business.
Speaker 6: Later, maybe ten years after that, it became somehow highly
Speaker 6: unpopular in Taboo to work on prompts of national security,
Speaker 6: And now it's become in vogue, which I think is great.
Speaker 6: It's really a call back to a prior era. You know,
Speaker 6: the birth of Silicon Valley was absolutely the Face program
Speaker 6: and defense and missiles. Lockeed made those missiles in Sunnyvale,
Speaker 6: in the heart of Silicon Valley. Who was the largest
Speaker 6: employer in the fifties in the Silicon Valley. So to
Speaker 6: your question of how did we break in very painfully,
Speaker 6: is the honest answer that all of our adoption was
Speaker 6: driven from the field backwards. Monopoly is strongest in DC.
Speaker 6: It's where the opinion of a single buyer really matters.
Speaker 6: But the closer you get to soldiers in harms Way,
Speaker 6: people who are actually doing things, the more you start
Speaker 6: to approximate something looks like a market. People have heterogeneous
Speaker 6: ideas of what they need. They're able to express their
Speaker 6: opinion of this is better than that. They may not
Speaker 6: have the resource or the buying power to actually affect
Speaker 6: that economically, but it starts with the very beginning of
Speaker 6: a demand signal that actually, there is something better, there
Speaker 6: is something else that we would like out there, and
Speaker 6: then you're doing battle with the bureaucracy every day. When
Speaker 6: we first started the business, I thought our competition would
Speaker 6: be the existing defense players.
Speaker 5: I could not have been more wrong.
Speaker 6: Our competition was the program of record, as they call it.
Speaker 6: It was the government program that thought it had a
Speaker 6: monopoly on providing a capability in a certain area. And
Speaker 6: if you challenge that monopoly in any way, they view
Speaker 6: it as their job to disquish you, to crush you.
Speaker 6: And in this system that we've built up, the defense
Speaker 6: primes are just essentially yes men to the monopsonists. You know,
Speaker 6: their job is to do whatever the monoposinists asked for.
Speaker 6: And I think this is an important phenomenon because it's
Speaker 6: not how it always was.
Speaker 5: We can look at the present.
Speaker 6: Moment, which is very much an outgrowth of having won
Speaker 6: the Cold War. It's something we've built up without pure
Speaker 6: competitors as a nation since the nineties. But when we
Speaker 6: were at our best in World War Two, in the
Speaker 6: early Cold War, it looked very different. Our services competed
Speaker 6: against each other all the time. Today we think about
Speaker 6: it as the Air Force's Minuteman as the intercontinental ballistic missile,
Speaker 6: but the Army and the Navy they put in their
Speaker 6: own competing efforts. It's really that the Minuteman won that
Speaker 6: great free market competition for having the best product. When
Speaker 6: we were building submarine launch ballistic missiles, Admiral Raybourne had
Speaker 6: four competing programs running concurrently. And so the consequence of
Speaker 6: the monopsony is not that there isn't competition within the
Speaker 6: industrial base. It's actually that there isn't competition within government.
Speaker 4: How did that work? It's not intuitive to me.
Speaker 2: And like you know, you say, there's not competition within
Speaker 2: govern even within many large corporations. Even in the private sector,
Speaker 2: you don't often see that phenomenon in which say, different
Speaker 2: offices within a company are competing against each other in
Speaker 2: terms of what they're buying and who bought the better
Speaker 2: technology and then went out. I'm sure it happens to
Speaker 2: some extent, but buying large, even at a private corporation,
Speaker 2: procurement decisions are corporate wide. For certain types of products.
Speaker 2: There's like you know, there might be a teams company
Speaker 2: and there might be a Slack company, there might be
Speaker 2: a company that uses AWS, and there might be a
Speaker 2: company that uses Google.
Speaker 4: Cloud, et cetera.
Speaker 2: Talk more about how, as you say, at least at
Speaker 2: one point, there could be within the defense overall competition
Speaker 2: over technology development.
Speaker 6: And these things are dialectical where you can think about
Speaker 6: it as like if we were always duplicating efforts and competing,
Speaker 6: that somehow seems really inefficient. On the other extreme, which
Speaker 6: is where we tend to find ourselves, if implication is
Speaker 6: viewed as taboo and inherently bad and something that we
Speaker 6: always need unitary efforts around, that's also really bad. Now
Speaker 6: these modalities skewed towards So if you're in this sort
Speaker 6: of hey, we should have a unitary effort, we should
Speaker 6: all just pick Slack or teams.
Speaker 5: Something like that.
Speaker 6: That makes a lot of sense for something that's in
Speaker 6: the one to end phase. It's functionally a commodity. There's
Speaker 6: value to standardization. You're not expecting a lot of innovation.
Speaker 6: On the other end, where you're dealing with zero one problem,
Speaker 6: where there's fundamental uncertainty, a lot of innovation is needed.
Speaker 6: Innovation is fundamentally messy and chaotic, and trying to wrap
Speaker 6: it with all this process just means that you don't
Speaker 6: get the innovation at all. Then the lack of competition
Speaker 6: and the lack of competing ideas heterodox approaches means that
Speaker 6: you lose I think one of the most important responsibilities
Speaker 6: of a leader is to grant and revoke monopolies within
Speaker 6: your institution. Look, I'm calling the shot. I'm saying this
Speaker 6: is the blessed way. I have high conviction and the
Speaker 6: people and the approach, and we're all moving out. We're
Speaker 6: putting all of our wood behind the sero. On the
Speaker 6: other end, it's like there's fundamental uncertainty here. I'd like
Speaker 6: to fund three teams to go after this in different ways,
Speaker 6: and I will have to manage that as we go
Speaker 6: through to figure out what is the answer going to be?
Speaker 3: Okay, So on this note, as you point out, there's
Speaker 3: a lack of competition within the government, maybe a lack
Speaker 3: of creativity. There's a tendency to be very bureaucratic, and
Speaker 3: of course one of the things we hear a lot
Speaker 3: is that the government can be very slow in its
Speaker 3: processes and it's not very good at like changing course
Speaker 3: when that is needed. Because there's always the sprawling, infinite
Speaker 3: number of stakeholders and all these boxes that you need
Speaker 3: to check and things like that, and all of that combined,
Speaker 3: I imagine, can make for a somewhat frustrating customer. If
Speaker 3: you're a defense company. I mean, if you're a defense company,
Speaker 3: the government is your customer. The government is certainly palenteer's customer.
Speaker 3: How could they be basically a better customer.
Speaker 5: By having more buyers?
Speaker 6: You know, how can we start to approximate something that
Speaker 6: looks closer to the free market. So I think defense
Speaker 6: is one of these interesting places where it's the only
Speaker 6: place I know of where we disaggregate supply and demand.
Speaker 6: You think about that, the integration of supply and demand,
Speaker 6: the sales and operation planning process. It's the beating heart
Speaker 6: of most companies or institutions in defense. You have the services,
Speaker 6: the Air Force, the Navy, and Marines, etc. They're responsible
Speaker 6: for manning, training, and equipping. This is the supply side.
Speaker 6: They produce the things that people are going to need.
Speaker 6: On the demand side, you have what we call the
Speaker 6: combatant commanders. We have thirteen geographic and functional combatant commands
Speaker 6: that they actually do the war fighting.
Speaker 5: If something happens in China.
Speaker 6: It is the Indo Pacific command that we'll have to
Speaker 6: do that fighting, and they will use the supply that's
Speaker 6: been provided by the services to do that. But they
Speaker 6: don't really have a say and what is being produced,
Speaker 6: what the supply would be, what their opinions are. I mean,
Speaker 6: it's a very indirect sort of say. And I think
Speaker 6: this disaggregation ends up being one of the major bugs
Speaker 6: in our system. So you have thirteen buyers essentially. Now,
Speaker 6: I'm not sure you should ask these folks who have
Speaker 6: three to five year horizons to go build you an
Speaker 6: aircraft carrier. But I do think ninety five percent of
Speaker 6: the things that we need to fight and win fall
Speaker 6: within a time horizon envelope. They're going to care about
Speaker 6: and wear their feedback and their heterogeneous needs. I'm not
Speaker 6: sure why each of them should need exactly the same thing.
Speaker 6: There's so much output to be had by capturing what
Speaker 6: is different about them and how you make that work
Speaker 6: for each of them, rather than averaging alder requirements out
Speaker 6: for the sake of efficiency but at a loss of effectiveness.
Speaker 2: The US hasn't fought a war against a really powerful
Speaker 2: adversary in a long time. There are certainly wars that
Speaker 2: we've fought that have been frustrating outcomes from the US perspective,
Speaker 2: but not necessarily because we were technically outmatched. I understand
Speaker 2: like you make these points, and obviously you make these
Speaker 2: points in part because you think it will benefit your company.
Speaker 2: How do you establish that we're not doing it? Well,
Speaker 2: it seems like we still have an incredibly powerful military.
Speaker 2: What is the evidence that there's actually something wrong with
Speaker 2: the existing system.
Speaker 5: Well, I think we need.
Speaker 6: To look at the world around us here, So I'd
Speaker 6: say that empirically we've lost to Terrence as the West.
Speaker 6: You know, if you go back to roughly twenty fourteen,
Speaker 6: Crimea was annexed by the Russians, the Sprattley Islands were militarized,
Speaker 6: Aroan got shockingly close to getting the bomb, and certain
Speaker 6: policy enabled them to get and continue to get much closer.
Speaker 6: I think that a decade ago we lost to Terrence,
Speaker 6: and that's really accelerated. We've seen that we've had a
Speaker 6: pogram in Israel. We now have North Korean soldiers dying
Speaker 6: in Ukraine, and we have unprecedented Phase zero gravestone operations
Speaker 6: in the South China Sea, not to mention suddenly undersea
Speaker 6: cables keep getting cut and snapping, so that there's this
Speaker 6: sense in which people aren't afraid of us anymore, and
Speaker 6: that the whole point of defense is not to fight
Speaker 6: the war, it's to be so strong that you're deterring conflict.
Speaker 5: And I feel like.
Speaker 2: But just to push back, yeah, but just to push
Speaker 2: back on this for a second, Like, how do you
Speaker 2: establish that this lack of deterrence as you perceive it
Speaker 2: has something to do with where we are technologically along
Speaker 2: the state of the art versus domestic US politics, in
Speaker 2: the appetite after the Iraq War, after Afghanistan, et cetera.
Speaker 2: This sort of like appetite to be active and involved
Speaker 2: in all of these different places. Because we're talking technology,
Speaker 2: we're talking weapon systems. But another aspect of the sort
Speaker 2: of perceived lack of deterrence could just be about American
Speaker 2: appetite to exert our might.
Speaker 6: I do think it's multi factorial. I don't think I
Speaker 6: would discount that to zero there. But let's think about
Speaker 6: this just in terms of the cost of air defense.
Speaker 6: If you're using a two million dollar missile to shoot
Speaker 6: down a two thousand dollars that'd be general, it's more
Speaker 6: like a two hundred dollars drone.
Speaker 5: You have a problem.
Speaker 6: And if it takes you two years to make each
Speaker 6: one of those missiles, you have a bigger problem. And
Speaker 6: so I think our adversaries can sense the ways in
Speaker 6: which we have, you know, and then that then feeds
Speaker 6: into political will. I'm not sure these things are entirely disaggregatable.
Speaker 3: Since Joe brought up political will or political appetite, this
Speaker 3: is one of the other things I wanted to ask you.
Speaker 3: But you know, if you talk about the government maybe
Speaker 3: changing its ways, being more experimental in the way it
Speaker 3: does things, encouraging competition, there's a risk involved in that, right,
Speaker 3: which is, at some point, if something doesn't work, then
Speaker 3: someone in Congress is going to have to stand up
Speaker 3: and explain why the government quote wasted I don't know,
Speaker 3: ten billion dollars on a program that didn't actually work out.
Speaker 3: How do you actually like go about I guess it
Speaker 3: encouraging like the culture, or changing the options around what
Speaker 3: constitutes success and failure.
Speaker 6: I think you put your hand right on the issue here,
Speaker 6: which is how did we get here? You know, if
Speaker 6: we go back to the early Cold War, our industrial
Speaker 6: base looked very different. It was an American industrial base,
Speaker 6: not a defense industrial base. Chrysler made cars and missiles.
Speaker 6: Ford made satellites until nineteen ninety, not that long ago.
Speaker 6: General Mills, the Cereal Company, used everything they learned about
Speaker 6: processing cereal in their mechanics division to make torpedoes, artillery,
Speaker 6: and inertial guidance systems, every camera, car and cereal box Americans.
Speaker 6: Bot was actually subsidizing our national security. So the breath
Speaker 6: of the investments, the commercial R and D investments we
Speaker 6: were making, we could actually use to have price, performance
Speaker 6: and capability improvements in defense. And that really changed. It
Speaker 6: changed very slowly in the seventies and eighties because actually
Speaker 6: the monoposist was not a great customer. People realized we
Speaker 6: should try to sell off these defense businesses. It's too bureaucratic,
Speaker 6: it's too slow. Then it changed all at once. In
Speaker 6: nineteen ninety three, there was this famous dinner at the
Speaker 6: Pentagon called the Last Supper. We had won the Cold War,
Speaker 6: the country wanted a peace dividend. We slashed defense spending
Speaker 6: sixty seven percent, So for every dollar we're spending before,
Speaker 6: we were only going to spend thirty three cents and
Speaker 6: this led to a massive consolidation in defense. We went
Speaker 6: from fifty one prime contractors down to five today. And
Speaker 6: you know, the consequence most folks see in this is
Speaker 6: that this consolidation led to a lack of competition inside
Speaker 6: the industrial base, less choices. I think that happened, but
Speaker 6: I don't think that's the high order bit. The high
Speaker 6: arder bit is that this consolidation bred conformity. This was
Speaker 6: the real beginning of the financialization of defense, of founderless
Speaker 6: companies that were principally run for the shareholder. They really
Speaker 6: thought about the return on capital, what's happening this quarter?
Speaker 6: And that plays into the hands of the monopsinists. You're
Speaker 6: not going to behave like Elon. You don't have the
Speaker 6: grand vision of getting to Mars and as a consequence
Speaker 6: of doing so, reducing launch costs by ninety percent. And
Speaker 6: that's not what it was because we think about it
Speaker 6: as North of Grumman today, but it was Jack Northrope
Speaker 6: Androy Grumman, Lockeed Martin was the Lockheed brothers, and separately
Speaker 6: it was Glenn Martin. We had a very different kind
Speaker 6: of structure of founder driven American capitalism. That meant that
Speaker 6: people were investing in big ideas with bold ambitions. That
Speaker 6: is I think really important to understanding how we've kind
Speaker 6: of so when the Berlin Wall fell, only six percent
Speaker 6: of major weapons systems spending went to defense specialists. The
Speaker 6: rest went to what I call as dual purpose companies,
Speaker 6: the Chryslers of the world, the general mills of the world.
Speaker 6: Today that number is eighty six percent. So we have
Speaker 6: taken our defense industrial base. We've put them on the
Speaker 6: Glopgos Island. They're serving this one custom of the monopsonist.
Speaker 6: They're largely deprived of market signal from the competitive and
Speaker 6: dynamic commercial markets, and they've evolved in certain ways. And
Speaker 6: if you bring them to the mainland, you know, the
Speaker 6: wolves will eat the giant tortoises. And that's not what
Speaker 6: the Chinese industrial base looks like. Chinese primes only get
Speaker 6: twenty seven percent of their revenue from the PLA. The
Speaker 6: rest comes from US, as silly Patsy's buying cheap crap
Speaker 6: on Amazon, it comes from commercial So every now camera, cereal,
Speaker 6: box and car we're buying might be subsidizing lethality against
Speaker 6: US soldiers.
Speaker 2: I get this point, but to me, this also speaks
Speaker 2: to a different dimension, because if this is the story,
Speaker 2: then it can't really just be about decisions made at
Speaker 2: the Pentagon to winnow down the number of official suppliers,
Speaker 2: because this is really an economy wide story, right setting
Speaker 2: aside defense, you know, a company like General Mills is
Speaker 2: in twenty twenty five not going to devote much of
Speaker 2: its internal attention to you know, milling machinery, which is
Speaker 2: I see on Google's what got transformed into a warplan
Speaker 2: that would there would be some other company that they
Speaker 2: would contract out like this phenomenon. Would you call it
Speaker 2: financialization or specialization or prioritizing shareholders being good at one
Speaker 2: thing that you sort of like optimize. This is an
Speaker 2: economy wide phenomenon, but there must be some root of
Speaker 2: it that can't be explained in a change of defense policy,
Speaker 2: because we truly see it across the board, lots of
Speaker 2: US great US companies in Nvidia, for example, choosing not
Speaker 2: to focus on the low margin manufacturing aspect of semiconductors.
Speaker 2: This is an economy wide phenomenon where companies shed these capabilities.
Speaker 6: I think that's right, and you don't need everyone to
Speaker 6: be participating in it, but you could look at you know,
Speaker 6: counter was the first defense company to enter the S
Speaker 6: and P five hundred and forty six years, not from
Speaker 6: mergers or spinouts. And I think that looks much more
Speaker 6: like the sclerotic European capital markets than dynamic US capital markets.
Speaker 6: So I think that tells you something about the rate
Speaker 6: at which we are creating new ideas, new companies in
Speaker 6: the innovation that's happening here now a little bit more
Speaker 6: directly to Tracy's point on how do we avoid, you know,
Speaker 6: getting hauled in front of Congress. I'm not sure you
Speaker 6: avoid that, but I think the risk aversion plays. So
Speaker 6: we built the Pentagon in sixteen months. Kelly Johnson, the
Speaker 6: founder of skunk Works at Lockeed, he built the U
Speaker 6: two spy plane in thirteen months. You know, he built
Speaker 6: forty one airframes in his entire career, which today you're
Speaker 6: lucky if you work on.
Speaker 5: A third of an airframe in your career. So there's
Speaker 5: a sense in which we did have these really great people.
Speaker 5: We bet on them. Not everything they did worked out.
Speaker 6: I love this story of Admiral Raybourn, who was building
Speaker 6: the submarine launch ballistic missile, the Polaris. You know, Congress
Speaker 6: is breathing down his neck. Other admirals were breathing down
Speaker 6: his neck.
Speaker 5: Hey, when is it going to work? Give me the
Speaker 5: like Gant chart of Gan charts, show me the project plan.
Speaker 5: Are you managing this? We're spending a lot of money
Speaker 5: on this.
Speaker 6: And he came up with the latest in decision analysis techniques.
Speaker 6: He used Monty Carlo simulation. It's called perk peert. You
Speaker 6: can research this and it produced the Gan chart of
Speaker 6: Gan charts, and Congress was happy and the admirals were happy.
Speaker 5: But it was all a smokescreen. What he actually did.
Speaker 6: He created this total fiction of Gant charts so that
Speaker 6: he could protect the engineers, so that they could actually
Speaker 6: just do the work. He didn't know when it was
Speaker 6: going to work or how it was going to work.
Speaker 6: But this is the reality of zero to one that
Speaker 6: actually you're doing this messy innovative process, and if you
Speaker 6: try to wrap it in so much process that you
Speaker 6: eliminate all the risks, you can't cut off one end
Speaker 6: of the taiale of distribution of outcomes, like all the
Speaker 6: bad things, without cutting off the good end too. So
Speaker 6: you're locking yourself into a system that's driving mediocrity and
Speaker 6: One of my favorite examples to illustrate this is David Packard,
Speaker 6: co founder of HP. He was the Deputy Secretary of
Speaker 6: Defense the one period of time in the seventies he
Speaker 6: came up with a simple set of rules to improve
Speaker 6: acquisition called the DoD five thousand series seven pages.
Speaker 5: Pretty small.
Speaker 6: Today that five thousand series has turned into two thousand pages. Wow,
Speaker 6: that is an eleven percent compounded growth rate of barnacles
Speaker 6: of bureaucracy. People love to look at the five thousand
Speaker 6: series and they complain, look what Packard did to us,
Speaker 6: you know, but we did this to ourselves. And we
Speaker 6: do this because when anything goes wrong, we need to
Speaker 6: come up with a new rule of how it will
Speaker 6: never go wrong again, which all we're really doing is
Speaker 6: coming up with rules to make sure nothing can go
Speaker 6: right again.
Speaker 3: I'm a sucker for alliteration, but barnacles of bureaucers use
Speaker 3: is a nice phone just to drill down on this point.
Speaker 3: Palenteer has both military and commercial clients. Can you walk
Speaker 3: us through what the differences are in as much granularity
Speaker 3: as you know possible between designing a product for commercial
Speaker 3: client versus designing something for the governments, Like, how do
Speaker 3: those contracts actually come into being, and how do they
Speaker 3: differ from each other.
Speaker 6: Well, one of our headerdox takes, which you can see
Speaker 6: in the line of argument I'm pursuing here, is that
Speaker 6: it shouldn't be that different. And what has made it
Speaker 6: hard for us is we're not designing what we do
Speaker 6: to spect that either the commercial company or the government
Speaker 6: are asking us. We have our own opinion of what
Speaker 6: ought to exist to solve the problem.
Speaker 5: If you don't think it solves the problem, you shouldn't
Speaker 5: buy it.
Speaker 6: But allow us to pursue our opinion, leveraging all the
Speaker 6: stimulus that we have out there in the market and
Speaker 6: to deliver the innovation to you as a consequence of
Speaker 6: doing so. And you know, we would think of this
Speaker 6: is so simple. You go to the Apple store and
Speaker 6: if you like the iPhone, you by it. If you
Speaker 6: don't like the iPhone and you don't buy it. And
Speaker 6: of course that's not how the government likes to think
Speaker 6: of it. They want to come up with a requirements
Speaker 6: document that lists out everything they think they're going to
Speaker 6: need and then have essentially what is a fiction writing
Speaker 6: contest for you to respond to that and say whether
Speaker 6: you can build those things and a what price you
Speaker 6: can build those things?
Speaker 5: And then through that process.
Speaker 6: You're making a decision of who's going to actually then
Speaker 6: go build those things. And I think you're transferring all
Speaker 6: the risk to the taxpayer by doing so, the taxpayer
Speaker 6: has to fund the development. The taxpayer is betting that
Speaker 6: the government got all the requirements right, and the history
Speaker 6: would suggest that's not a great bet. You know, there's
Speaker 6: a reason we believe in the free market. Instead, why
Speaker 6: wouldn't you transfer the risk to a private company, let
Speaker 6: me build it on balance sheet.
Speaker 5: If you don't like it, I go out of business.
Speaker 6: But if you do like it, there's opportunity there. And
Speaker 6: I was able to do that with much less risk
Speaker 6: to the taxpayer.
Speaker 3: But just to play devil's advocate for a second, there
Speaker 3: are reasons that the government might have specific requirements that
Speaker 3: a commercial company doesn't. You know, the government might have
Speaker 3: more stringent rule rus around something like data privacy, something
Speaker 3: like that. Is it really possible to standardize products across
Speaker 3: commercial businesses that might be sensitive in one way or another,
Speaker 3: but military operations that are extremely sensitive.
Speaker 6: I mean I would say we're an existence proof that's possible.
Speaker 6: That's like essentially my technical risk to manage of like
Speaker 6: where do I enable the government to plug in things
Speaker 6: that they need to build a plug in that are
Speaker 6: in fact government unique, but how do I have the
Speaker 6: greatest possible common baseline. One of my favorite examples of
Speaker 6: this is Operation Warp Speed and the supply chain for
Speaker 6: the vaccine. We were able to build that supply chain
Speaker 6: in two weeks for General Purna because we had built
Speaker 6: a similar digital twin for BP to optimize hydrocarbon production
Speaker 6: two years prior. There's no way we could have met
Speaker 6: the moment of need for the nation had we not
Speaker 6: had this broad, diverse commercial stimulus across fifty different industries.
Speaker 2: Talk to us about what specifically yourself, because you're not
Speaker 2: selling missiles, et cetera. You're a software company. I also
Speaker 2: know I think you've probably worked with them for a while,
Speaker 2: but obviously at the end of last year there was
Speaker 2: some announcement where you're working with Andreill Palmer Lucky's company.
Speaker 2: What in your vision is the DoD buying more from
Speaker 2: you years from now than they are today, And talk
Speaker 2: to us about like some of like what the what
Speaker 2: the pitch is in.
Speaker 6: The commercial world, you call it a value chain from
Speaker 6: the hand of your supplier to the hand of your customer.
Speaker 6: But you can think of this as a series of
Speaker 6: decisions that create dependencies on the ones that are downstreaming.
Speaker 6: So you know, you go from procuring things to producing
Speaker 6: things to pricing those things with customers. Simple example of
Speaker 6: the value in the military, you call that a kill
Speaker 6: chain from sensor to shooter, but it's literally the same thing.
Speaker 5: It's a decision chain.
Speaker 6: Maybe if you thought about it more generally, and every
Speaker 6: one of those decisions, you want to make faster than
Speaker 6: your competitors, and you want to make them better than
Speaker 6: your competitors.
Speaker 5: And the way to do that is with AI.
Speaker 6: So we provide an AI decision making platform that spans
Speaker 6: the breadth of your enterprise that allows you to get
Speaker 6: better and better, faster and faster. And so we don't
Speaker 6: make the hardware, but we make the end you're talking
Speaker 6: about on.
Speaker 2: The battlefield, you're talking about software that when you say
Speaker 2: make a decision better than your competitor, it means you're
Speaker 2: selling software that you say, on the battlefield allows some
Speaker 2: entity to fire better than their competitor.
Speaker 5: That's right.
Speaker 6: Or in the commercial world, allows Airbus to build aircraft
Speaker 6: more effectively, or Chrysler to build cars better, or ht
Speaker 6: Hundi to build ships better.
Speaker 3: There's one other thing I wanted to ask you. I
Speaker 3: guess this is very top of mind for everyone at
Speaker 3: the moment, but the Trump administration, there's been a lot
Speaker 3: of rhetoric from Trump about shrinking the military industrial complex,
Speaker 3: which I presume you know. There aren't a lot of
Speaker 3: specifics here, but I presume it means eliminating waste and
Speaker 3: also reducing the overall amount of money that's allocated to
Speaker 3: the military in the form of government subsidies or whatever else.
Speaker 3: How does that square with your vision of revolutionizing the
Speaker 3: Defense Department.
Speaker 5: I think it's pretty congruent.
Speaker 6: I mean, if you thought about the eight hundred and
Speaker 6: eighty billion that we're spending a year, what percentage of
Speaker 6: it do you think we're spending efficaciously to deter our adversaries.
Speaker 5: We could all come up with different numbers, but largely people.
Speaker 6: Would agree there are a lot of legacy things we're
Speaker 6: spending them on. Some of those are because Congress wants
Speaker 6: to protect certain programs, some of them are because the
Speaker 6: services want to protect Curain program Some of them just
Speaker 6: because we haven't yet realized they're not going to meet
Speaker 6: their moment, so I think we could be substantially more efficient.
Speaker 6: We should be thinking about this as an acid allocation
Speaker 6: problem of the capital we have, how is it allocated
Speaker 6: against the problems and the threats that we face, and
Speaker 6: is it kind of the same allocation it was thirty
Speaker 6: years ago?
Speaker 5: How much of that have.
Speaker 6: We retooled and regeared towards the future fight that we're
Speaker 6: likely to a you.
Speaker 2: Know, we did an episode recently someone we've had on
Speaker 2: the podcast a couple of times, Jennifer Palka, talk about software,
Speaker 2: and you know, we were talking about DOGE.
Speaker 4: And this idea that like it's one thing to.
Speaker 2: Identify a problem of government procurement or government operation, it's
Speaker 2: another thing to actually do it. And doing it is
Speaker 2: probably some combination of changing rules that are written down somewhere,
Speaker 2: maybe in Congress, maybe not, maybe bureaucratic rules, and then
Speaker 2: they're sort of like the cultural change too, and that's
Speaker 2: also extremely difficult, and sometimes maybe you just need like
Speaker 2: a sort of bully type who is like very aggressive
Speaker 2: to change. When you think about your vision for intra
Speaker 2: DoD competition or bringing more of that, how much of
Speaker 2: that is changing rules versus changing culture, And how do
Speaker 2: you think about sort of like we're adopting Cham's eighteen theses,
Speaker 2: what does that actually look like in practice?
Speaker 6: Yeah, so I think a lot of it is culture.
Speaker 6: I might call it leadership if we think about Hymen Rickover. So,
Speaker 6: Admiral Ricover built the nuclear Navy. You know, he was
Speaker 6: a five foot tall, pretty middling to bottom of class
Speaker 6: US Navy academy grad didn't even drive a warship. But
Speaker 6: after World War Two, by happemstance, he got to go
Speaker 6: see the remnants of the Manhattan Project and realized, holy cow,
Speaker 6: we could be building nuclear powered submarines and warships with this.
Speaker 6: Admiral Ricover was in place leading that effort for thirty years.
Speaker 6: He was protected by Congress. He was a notoriously difficult
Speaker 6: human to deal with. Admiral Zombwald, who was the Chief
Speaker 6: of Naval Operations, basically the senior most Navy person, said,
Speaker 6: you know, the Navy has three enemies, the Soviet Union,
Speaker 6: the Air Force, and Hymen Rickover. So you can see
Speaker 6: how difficult this human must have been. But he was
Speaker 6: a genius. And I think there's no stimulation of the
Speaker 6: world where we said what if we had only Ricover
Speaker 6: for three years, or what if we had him for
Speaker 6: ten years?
Speaker 5: Like our nuclear navy is one of our.
Speaker 6: Last remaining asymmetric advantages, and he built it in the
Speaker 6: fifties and sixties.
Speaker 5: It's truly spectacular.
Speaker 6: And I think if we go back and look at
Speaker 6: our history here Kelly Johnson building forty air frames, including
Speaker 6: the SR seventy one, John Boyd.
Speaker 5: We call it the F sixteen.
Speaker 6: Maybe more accurately, we should call it John Boyd's plane.
Speaker 6: We call it the Apollo program. Maybe we should call
Speaker 6: it Gene Krantz's program. There's this beautiful humility in this
Speaker 6: kind of Midwestern sensibility we have in America that we
Speaker 6: think of the program as not being defined by a
Speaker 6: single person, but oftentimes it really is. And so to
Speaker 6: the point of culture and leadership ever since the Goldwater
Speaker 6: Nickel reform of I think eighty six, where we prioritize
Speaker 6: this sense of jointness. You know, we want people to
Speaker 6: rotate every two or three years. We want them to
Speaker 6: have lots of different experiences to fill out their BINGO cards.
Speaker 6: It's been very hard to have actually the deep time
Speaker 6: and space that's required to be in a role long
Speaker 6: enough not only to make mistakes, but to learn from
Speaker 6: those stakes so that you can ultimately succeed in delivering
Speaker 6: cutting edge technology.
Speaker 2: You know, I like the idea like, oh, there was
Speaker 2: this guy Kelly Johnson, he made forty one planes, etc.
Speaker 2: And why can't we get back to that where like
Speaker 2: someone is just some like visionary and they like build
Speaker 2: all the stuff. On the other hand, like, it's clear
Speaker 2: that like objectively, airplanes must have been much simpler in
Speaker 2: some sense because we know the right brothers, for example.
Speaker 4: Invented and that was just two of them.
Speaker 2: It is inconceivable today on any scale the two individuals
Speaker 2: could go into a barn and build an airplane. I mean, so,
Speaker 2: like I get this story that like cultural change, et cetera.
Speaker 2: But just the sheer technological complexity of the cutting edge
Speaker 2: technology doesn't that just sort of like make some of
Speaker 2: these stories impossible to replicate today?
Speaker 6: My counterpoint would be SpaceX Elon can build a starship
Speaker 6: faster than the FA can give them launch approval.
Speaker 5: What they've done in the last fifteen years.
Speaker 6: When I grew up in the shadow of the space coast,
Speaker 6: I used to wake up to the double sonic booms
Speaker 6: of the Shuttle re entering for landing at Kennedy. The
Speaker 6: Shuttle was amazing. It inspired me in so many ways
Speaker 6: to follow, you know, stem But the launch cost was
Speaker 6: fifty thousand dollars a kilogram to orbit. With starship heavy reuse,
Speaker 6: we're looking at ten to twenty dollars. I'm not missing
Speaker 6: any zeros there ten to twenty dollars, and we were
Speaker 6: stuck on a linear cost curve between twenty thousand dollars
Speaker 6: and fifty thousand dollars until SpaceX came around. And I
Speaker 6: think the timelines they've done this, and people would say
Speaker 6: that's not possible. It's within a small lifespan of someone
Speaker 6: working on these rockets, and it's largely been the same
Speaker 6: people who've been leading these efforts since the very beginning.
Speaker 6: So I think when we take new approaches, we can
Speaker 6: still do these things. We can still do these things
Speaker 6: very fast. I think one of America's great strengths.
Speaker 5: If we were.
Speaker 6: Literally at war, we would throw all these rule books
Speaker 6: away and we would just be entrepreneurs again. We'd be
Speaker 6: very innovative, and we'd be very focused on the primacy
Speaker 6: of winning. But the sort of sclerosis that sets in
Speaker 6: with peace. Time of following all these rules without a
Speaker 6: critical eye towards which rules are making us better and
Speaker 6: which ones are making us worse, you accumulate them. John
Speaker 6: Boyd I used him as an example. He never made
Speaker 6: it past colonel because he was so difficult, he was unpromotable.
Speaker 6: We tend to give credit to someone like John Boyd
Speaker 6: as we should.
Speaker 5: What we don't give.
Speaker 6: Enough credit to is the three star Air Force general
Speaker 6: that protected Boyd his entire career. There was the talent,
Speaker 6: but there was also the talent manager who understood that
Speaker 6: there was something special here and it was worth going
Speaker 6: out of their way to protect this person. The same
Speaker 6: is true for Rickover. He didn't survive on his own.
Speaker 6: Congress deserves a lot of credit for protecting him. So
Speaker 6: many admirals, so many civil political appointees tried to get
Speaker 6: him fired, and no one succeeded until Layman in the eighties.
Speaker 6: And arguably Layman succeeded for the right reasons.
Speaker 3: I'm glad you brought up SpaceX, because you know, you're
Speaker 3: talking about encouraging commercial companies to do more defense stuff
Speaker 3: and the sort of co mingling and the benefits that
Speaker 3: would come with that. But a lot of people would
Speaker 3: look at SpaceX and say, well, it's kind of worrying
Speaker 3: that we have a commercial company which is now dominant
Speaker 3: in US space exploration. Or they might look at Starlink
Speaker 3: and say, like, oh wait, a second Elon Musk owns
Speaker 3: all these really important satellites, and maybe that's not ideal
Speaker 3: for the US. Maybe the US government wants more diversification
Speaker 3: in its suppliers of extremely important infrastructure and technology. How
Speaker 3: do you ensure, you know, as more commercial companies come
Speaker 3: into the space theoretically, how do you sort of deal
Speaker 3: with those types of concerns.
Speaker 6: Well, I think one of the great strengths of America
Speaker 6: is our skepticism towards power.
Speaker 5: So here we are. We've reduced launch costs from fifty.
Speaker 6: Thousand dollars a kilogram to ten dollars a kilogram, but
Speaker 6: we're still worried about the cumulation of power, and I
Speaker 6: think we should be. But the on the other hand,
Speaker 6: to look at that without acknowledging the massive effectiveness, like
Speaker 6: our assured access to space exists because of SpaceX, our
Speaker 6: dominance in this category, it has become a national security strength.
Speaker 5: So I think we have to.
Speaker 6: Recognize that We've gotten this massive, outsize, nonlinear benefit, and
Speaker 6: we have these concerns.
Speaker 5: And the way to address these concerns is have more options,
Speaker 5: more competition.
Speaker 6: We need more people who could achieve launch costs that
Speaker 6: are actually competitive. You know, when the alternative is Boeing
Speaker 6: in the star liner, that's not a real alternative.
Speaker 2: What should we be watching for with the new administration?
Speaker 2: Obviously we have the new head of the dd IT,
Speaker 2: he says, in the months ahead, who are either the
Speaker 2: individuals or bureaus or whatever where we like, Oh, something
Speaker 2: is meaningfully changing here in terms of how we buy defense.
Speaker 5: It's a good question.
Speaker 6: I mean, I have a lot of confidence in the
Speaker 6: incoming team here, Folks like Emil Michael really coming from
Speaker 6: the tech industry, leading RNE, folks like Steve Finberg who've
Speaker 6: been in around many of these challenges in defense in
Speaker 6: the defense industry for a long period of time on
Speaker 6: the private side at SERBS. So that gives me a
Speaker 6: great degree of confidence that these folks actually understand what
Speaker 6: the problems are and that there is a need to
Speaker 6: fundamentally change how we approach these things. I don't expect
Speaker 6: it to be perceived as being wildly discontinuous because the
Speaker 6: answer is not to get rid of America's primes, like
Speaker 6: America needs her primes.
Speaker 5: Like the things that Lockheed.
Speaker 6: And Northrope and the other three of them are exquisite,
Speaker 6: They are incredibly high tech. They're also low volume, and
Speaker 6: they're not the entire solution. So it goes back to
Speaker 6: this idea of ascid allocation, and I think that would
Speaker 6: be the first thing that we would see as a
Speaker 6: sign of change, which is a changing of how we're
Speaker 6: allocating those assets.
Speaker 5: I think a lot of the ideas.
Speaker 6: That Senator Wicker has put forward in the Forged dec
Speaker 6: where the first step is to cut red tape, is
Speaker 6: a big part of this, which is, I think we
Speaker 6: have all the talent in the world. This department is
Speaker 6: extraordinarily talented.
Speaker 5: We have the people.
Speaker 6: We need to actually just put them in the role
Speaker 6: and give them the discretion to actually execute these programs.
Speaker 6: Understanding to Tracy's point earlier, some of these are going
Speaker 6: to fail, probably in pretty spectacular ways, but some of
Speaker 6: them are going to succeed in very spectacular ways, and
Speaker 6: we just need a few of our asymmetric capabilities to
Speaker 6: really work to preserve deterrence.
Speaker 3: So I don't know if Elon Musk listens to this podcast,
Speaker 3: but I do know that he sometimes reads tweets about
Speaker 3: this podcast, or at least he did once and responded
Speaker 3: to it. But what would be your big piece of
Speaker 3: advice for DOGE as it sets out on the very
Speaker 3: very large task of eliminating waste at the government. You
Speaker 3: know there are sort of infinite ways you could do
Speaker 3: this because the government is so sprawling.
Speaker 6: Gosh, I mean, far be it for me to tell
Speaker 6: DOGE how to do this. It seems like a group
Speaker 6: of experts here. But my broad advice nineteen years crawling
Speaker 6: through and fighting the bureaucracy and God, is that there
Speaker 6: are two things that really matter. The first is that
Speaker 6: we should push more decision making authority on what to
Speaker 6: buy and how to buy these things to our combatant
Speaker 6: commanders to introduce strategic competition.
Speaker 5: You don't need to give them the entire budget.
Speaker 6: I'm not sure they would succeed if they were given
Speaker 6: the entire budget, But even having five percent of it
Speaker 6: to express where they disagree with the market signals, or
Speaker 6: to be able to decide which of the services are
Speaker 6: going to build something for them, I think starts to
Speaker 6: introduce the necessary vector for new entrants to get on
Speaker 6: the field and new ideas to be tested in reality.
Speaker 6: And the second part to that is a very concrete
Speaker 6: way of how we could do that is we could
Speaker 6: introduced this notion of competing programs more formally. You know,
Speaker 6: we used to have it in formally, like I mentioned earlier,
Speaker 6: how we had four competing programs for the submarine launch
Speaker 6: ballistic missile. That does not happen today because that duplication.
Speaker 5: Is viewed as heresy.
Speaker 6: You know, that would be being irresponsible with tax payer money.
Speaker 6: So before we even get started, we need to agree
Speaker 6: x ante on a unitary effort. I'll give you a counterfaction.
Speaker 6: Should we have had one F thirty five. You know,
Speaker 6: we conceived of the F thirty five in the mid nineties,
Speaker 6: and it was supposed to be all things to all people.
Speaker 6: There was going to be a variant for the Marines
Speaker 6: and the Navy and the air Force. And you know,
Speaker 6: if we just have a single platform, it'll be Swiss
Speaker 6: Army Knife of fighter jets. And now you know it
Speaker 6: is it's pretty spectacular plane, but it's also thirty percent available,
Speaker 6: and it's going to cost US two trillion dollars. Maybe
Speaker 6: a counterfaction would have been, we're going to have an
Speaker 6: F thirty five and F thirty six and F thirty seven,
Speaker 6: and none of them have the birthright to win. And
Speaker 6: in fact, we're going to go to the quote unquote
Speaker 6: legacy platforms, the F eighteen, the F sixteen, the F fifteen,
Speaker 6: and we're going to say, here's a little bit of
Speaker 6: money for you guys to innovate and to actually be
Speaker 6: so good that I decided I canceled the new programs,
Speaker 6: but instead we said you're the old no more money
Speaker 6: for you. Before the new thing even exists, we've already
Speaker 6: told you that you're going to be sunset and we
Speaker 6: don't have a bird in hand. And I think this
Speaker 6: is one of the major things that slows down innovation.
Speaker 6: So institutionalizing the concept of the competing PM, I think
Speaker 6: is very important. I'll give you an anecdote from my
Speaker 6: own experience. We were the software prime on a hardware project.
Speaker 6: We were building a satellite ground station on wheels, and
Speaker 6: in the midst of this competition, it was Palncer versus
Speaker 6: Atheon and the teams that we had underneath us. In
Speaker 6: the midst of this competition, chat GPT came out and
Speaker 6: I thought, this is great. You know, this is a
Speaker 6: very complicated piece of equipment. When my son is in
Speaker 6: the back of this vehicle, I don't want him flipping
Speaker 6: through a ten thousand page PDF manual.
Speaker 5: I want him to be able to chat with the bot.
Speaker 6: To figure out how to fix the vehicle or troubleshoot
Speaker 6: any situation that he's in. And I went to the
Speaker 6: PM and said, I'd like to give you this chatbot,
Speaker 6: you know, for free. It's just going to be a
Speaker 6: better product. And he said, there's no reques vironment for that.
Speaker 6: Even though there's no I'm not asking for a resource.
Speaker 6: You know, I guess the perceived possible risk for schedule.
Speaker 6: There's no incentive to do it.
Speaker 5: Why do it.
Speaker 6: I've already decided what it is we needed, and it's
Speaker 6: not on it. Even though the world's changed around us,
Speaker 6: even though the competition takes two years and two years
Speaker 6: in infinite time and technology, let's not even consider it.
Speaker 6: So by the time we're going to end up considering it,
Speaker 6: it'll have been an obvious thing and we'll probably get
Speaker 6: to it like ten years from now. But I'll give
Speaker 6: you a counterfaction where what if there are two pms,
Speaker 6: one for Palenteer, one for the raytheon team, and they
Speaker 6: woke up every day thinking about how they were going
Speaker 6: to destroy and humiliate and win the competition. I'm pretty
Speaker 6: sure that PM would have said, absolutely, let's show up
Speaker 6: to the next soldier touch point with this great capability.
Speaker 5: I can't wait to win.
Speaker 6: And I think if our only competing point is at
Speaker 6: a period of great conflict in war, that's too little,
Speaker 6: too late. We need to have many competitions amongst each
Speaker 6: other all the time so that we're continuously innovating.
Speaker 2: Chum Soundkar, Thank you so much, Really appreciate you coming
Speaker 2: on on odd lotch and great to talk to you
Speaker 2: again after all of these years on much heavier topics
Speaker 2: than steam.
Speaker 4: Buttons, which I think is what we talked about last time.
Speaker 5: Well, thank you guys for having me.
Speaker 4: Tracy.
Speaker 2: I like to believe the idea that we could have
Speaker 2: intra military competition like it's a nice it's a really
Speaker 2: nice sounding idea.
Speaker 3: Yes, intuitively sounds nice. I guess my reticence is slightly
Speaker 3: you know, Okay, everyone can agree monopolies are bad, monopsony
Speaker 3: is bad. But I guess my reticence is you brought
Speaker 3: up the specialization point, right, Like the idea that companies
Speaker 3: can get really good and efficient by doing one thing,
Speaker 3: and maybe that one thing is developing ballistic missiles or
Speaker 3: whatever like that exists in the world for a reason,
Speaker 3: and there are lots of examples of that, and you know,
Speaker 3: there are anti examples of that. Boeing does both military
Speaker 3: and commercial, and I would say at the current moment
Speaker 3: in time, Boeing has not been especially successful. So there's
Speaker 3: that point, which I think is a good one. And
Speaker 3: then the other concern I guess is the one around
Speaker 3: you know, corporate dominance. Yeah, the idea that while you
Speaker 3: bring more commercial players into the market for something that
Speaker 3: is really essential, as Sham emphasized my time structure. Yeah,
Speaker 3: there's a little bit of a tension there, a bigger
Speaker 3: than a little bit, I should say.
Speaker 2: No, absolutely, I do take his point at the end
Speaker 2: that it would be nice. I mean, I think there
Speaker 2: are a lot of points, but one is the idea,
Speaker 2: like it probably makes sense that if you're going to
Speaker 2: have competition, that means you're going to have failures, that
Speaker 2: means you're going to have wasted public money. That it's
Speaker 2: like a cultural thing that strikes me is like very difficult.
Speaker 2: But obviously in the private sector, big winners emerge and
Speaker 2: we don't usually talk that much about all of the
Speaker 2: ones that were losers, but they had to be there.
Speaker 2: It strikes me as you know, like a tremendously difficult task.
Speaker 2: It also seems like it would be nice to have
Speaker 2: like good sense of the state of our defense industry
Speaker 2: and not suddenly discover various weaknesses at a time of
Speaker 2: actual kinetic warfare or were being put to the test.
Speaker 2: So I thought, anyway, we got to do way more
Speaker 2: on this topic, and I appreciated that as a sort
Speaker 2: of way into it, even obviously coming from a very
Speaker 2: specific perspective.
Speaker 3: A launchpad into the topic. But I do agree the
Speaker 3: idea of being able to change course seems like a
Speaker 3: really important one. And the story, you know, the example
Speaker 3: he gave about rfq's growing from like twenty pages to
Speaker 3: two thousand pages, that's something we hear over and over again.
Speaker 2: I could also probably just listen to stories about you know,
Speaker 2: random guys in Ohio building planes and the nineteen year.
Speaker 3: You have truly reached Middle ages.
Speaker 4: So Boomer, I'm so boomer with this. This is totally true.
Speaker 3: All right, shall we leave it there.
Speaker 4: Let's leave it there.
Speaker 3: This has been another episode of the Odd Loots podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest hum Soundcar. He's at Ssundcar and you
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Speaker 2: Carmen armand dash O Bennett at Dashbot and Killbrooks at Kilbrooks.
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