The Companies Changing Warfare Forever: Palantir & Anduril Execs on Drones, AI & the Future of War

Thank you guys for being here. What's up? How are you guys doing? You're having us. You're great. Okay. Did it be here too? You guys are friends, right? You guys go back all like a long time. Very long time. Tell us how you guys know each other.

“Palantir, Andrew, what's the connection in the history?”

Well, I'll start. You can feel in all the gaps. I feel like I know the story you're going to tell and it's going to be very uncomfortable. Every few years, a new ad channel opens before the market catches on. That's axon.au right now. The AI ad platform behind one of the biggest runs in tech with

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median of 35 seconds. Businesses are profitably spending hundreds of thousands of dollars a day on it. And most advertisers don't even know it exists yet. The window is open at axon.au/all-in. So, Tre, I think, you know, in the early days of Palantir, I was roaming around giving demos, anyone who could possibly want to see them. Tre was working in an Intel agency and happened to see one of these demos. And he should tell you his version of it, his side of it, his frustration

with bureaucracy. But I think he realized, like, hey, this might be really cool. Maybe I should leave the hellhole I'm in in the basement of this building, getting nothing done, talking about sports with other people to go join this crusade. So Tre reached out and applied. He made a big faux pas. He came all the way to Palo Alto and he wore a full-on suit, tie, cufflinks, CIA, cufflinks. Coming to interview with, I don't know, we probably 20 people who wore T-shirts and, you know,

second hand me down close. And you know, he was intercepted in the lobby by a receptionist who

really cared about him and told him to get ditched the tie and tried to dress down and done screwed up too bad. But we loved him immediately and he helped us build the the government business. So this was that Palantir, you were there employee 13, 2006. Yeah, it's a business pretty early on. Yeah, I came in in early 2008. But there were still, you know, 25, 30 people at that point pretty tall. And Peter kind of incubated it was involved at the beginning where I Peter

Tiel maybe could just recap because I know a lot of folks know the history of Palantir. But just kind of like the early stand-up of Palantir and how things got going during that era with that small group. How you guys kind of figured out how to build the business. Yeah, it was one of these things that was kind of a slow start. It was there was a real idea amongst the the five co-founders, including Peter that, you know, it's kind of insane to live in a world post 9/11 where people are

“arguing about what's more important, privacy or security, like aren't they both really important?”

And who is actually spending time pushing out the efficient frontier for any amount of given security, you should have more privacy than you had before or any amount of given privacy, you should have more security. And this sort of changing the dialectic there was really the entire impetus of what we started with. And now there's a technical approach that follows from that, there's an approach to privacy and celebrities that are around that. But really, we started

as a business that was pretty my oppositely focused on solving a handful of prompts and counterterrorism for a handful of institutions in the world. Let me start by asking a question that I think is important to ask particularly for a broad audience. And for the two of you to frame your personal philosophical views is war good. There's a lot of conversation about there is a military industrial complex that has an incentive for war. What's your view, your philosophical motivation,

for why you do what you do, what your view is of war and defense and the work that your business is kind of pursue? Well, anyone who's been to war would tell you that war is awful, war is bad,

categorically bad. That doesn't mean it's always avoidable. And that there are people who will

“want to use might to make right to define a set of rules. And you have to be in a position to”

protect your people and your interests accordingly. At the end of the day, it's all about deterrence. You don't want to go to war, but you want to be prepared so that if you do have to go to war, that you will win decisively and quickly, I've never met a general that has said, you know what I really want to do today? I want to make phone calls, letting parents know that their children have died in combat. Nobody wants to do that. And I think that that's really the goal of everything

we were working on at Palantir is what we're working on at Androle, which is make it unthinkable to your adversaries that they should ever challenge you. Why do you think it became taboo and became so negative particularly in Silicon Valley that building a defense company or company building technology to service the defense sector was viewed with such disdain and was an untouchable sector for so long? I think it's a beautiful consequence. And I mean, ironically of kind of the peaceful

world that we lived in, the origin story of Silicon Valley is actually defense. Lockheed was the largest employer in Silicon Valley in the 1950s. The corona spice satellites were built there. So in a world that was gripped by the threat of the Soviet Union, you know, you had a very different

kind of a view of globalism that it's all going to be great that we exist beyond the confines

of our country. These things were viewed much more cynically and the threats didn't seem very real. And I think you could even backtest this through the moment where Silicon Valley kind of really woke up and realized, hey, maybe these things are real or when the Russian tanks roll across to your crane border. You know, as when they realize, there are a lot of Ukrainian Eastern Europeans, a lot of people who were affected by that in Silicon Valley who started to realize that maybe there's a more nuanced

issue here than just simple, the simple Eisenhower quote of the military industrial complex. I think many of the people who were protesting Silicon Valley's involvement in working on national security priorities were the exact same people that had Ukraine flag in bio. So there's clearly just like a policy mismatch. We're an understanding mismatch. The other thing that I would mention is that these large tech companies, unlike many epic prior, were global technology

companies. They didn't necessarily view themselves as American. And so if you go and you look at,

“you know, where these protests came from, you have to keep in mind that a lot of the signatures”

that they had on these protests were not coming from US citizens. And so there's like a global character in those companies that probably was not the case during the Cold War. Do you think that's changed recently? I mean, to Shoms Point, I think that there's just an increased awareness of the complexity of the geopolitical situation. And I think it's certainly a lot less controversial work on these topics than it was in 2017, 2018. You know, it's a 20-year

overnight success, right? And Andrewals now reportedly raising money at a $60 billion valuation,

just landed a $20 billion army contract. Palentiers today's worth $400 billion. The flip side of what I just said is that some people are saying that Silicon Valley is taking over defense and Silicon Valley is the next story of the American war machine. This has become sort of a popular narrative. Can you just respond a little bit to kind of where we were coming out of World War 2 from a defense industry perspective, where we find ourselves where Silicon Valley seems to be

a center of this today. You know, the industrial base that won World War 2 and the early Cold War was not a defense industrial base. It was an American industrial base. You know, Chrysler made the minute man, ICBM. They were the prime contractor on it. And they make mini-man. So missiles in mini-man. General Mills, the serial company had a mechanics division. Everything they learned doing R&D to process grains, they actually used the built torpedoes in inertial guidance systems,

board-built satellites until 1990. So the entire economy was invested not only in pro-economic prosperity, but also underwriting the freedom that allowed us to have economic prosperity. It's really a consequence of the end of the Cold War. So when the Berlin Wall still stood in 1989, only 6% of spending on major weapon systems went to pure-play defense specialists. 94% of it went to what I call as dual-purpose companies. You know, yeah, a missile

is single use. It's not a dual-use product. You're not going to buy it a Walmart, but that actually these companies were invested in both parts of this. That finger today is E6% goes to defense

“specialists. So we have a very different structure of the U.S. economy as a result. And I think it”

leads to very perverse narratives of what would it be like to mobile. If things got really bad, we'll just flip a switch and our auto factories will magically turn into enabling us to provide for our defense and security. And I think a cold-eyed look at history is it took 18 months to do that. We actually started ramping up to provide this stuff for allies for the brits and the Soviets and the context of World War II. And that we've actually missed some of those signals today. When

when Ukraine went through 10 years of production in 10 weeks of fighting, that probably should have been a five-alarm fire that we got the fundamental calculus on deterrence wrong. We thought the

stockpile was going to deter our adversaries. It was always the factory. It was the ability to

generate and regenerate the stockpile. Well, let's look at where we are today. So in terms of defense readiness, relative to our adversaries, 10,000 to one drone production gap versus China 223X

“shipbuilding capacity disadvantaged. And I think you've said a 2027 Taiwan window of danger.”

High level, we spend more than any other nation on defense. How ready are we? And how long we'll take us? Well, our joint force is the best in the world. And so, you know, I think we have to couch the alarmism and commentary in that context here. But I think if you look at like the rate of change, our adversaries are moving very quickly. If you just look at the empirical loss of deterrence, you had the annexation of Crimea in 2014, the militarization of the Spratly Islands in

15, Iran with breakout capability to get the bomb in 17. You've had a pogrom in Israel. You have the Houthi's holding trade hostage and the Red Sea, not to mention the present conflict. So when you look at that, you how can you not feel that deterrence is eroding? To trace earlier a point of having capabilities that are so scary that picking a fight isn't worth it. And people are investing

you know, you can't keep shooting $2 million interceptors at $20,000 drones and have that

“math work very long. I think the second part, like, why does it matter that we lost the American”

industrial base and have a defense industrial basis? You lose volume. You lose the R&D stimulus to come up with creative ideas, like using the methodology of building a bathtub to build the next generation low cost cruise missile. And you get stuck in these platforms that are absolutely

eye-wateringly amazing, but are $2 million a pop. And you just can't produce them at the scale,

right? With the speed that you really need to. Right? And Tray, you've talked about this. You wrote an article, "No Solvency, No Security." Just share with us your view on the importance of this industrial base and what it takes for us to have strong defense requisite in a strong manufacturing industrial base. I mean, we really kind of sent most of these capabilities away during the last 30 years of globalization, and that gutted entire communities in the United States. You know,

I mentioned in this article that just in my immediate family, like grandparents, aunts, uncles, I have family members that worked at GM, at Ford, at Frigidair, at National Cash Register, at Arm Coast Steel, every single one of these factories in Ohio close. Not a single one still exists. And they all have different places they've gone around the world. But one of the things we're doing

with Andrewl right now is we're building out of 5 million square foot factory campus in Columbus,

Ohio. And we have the benefit of going back and tapping into that knowledge base that exists that's under-employed at the moment, because the factories that kept them busy for many, many years

“are closed. And I think this is the story all over America. Like if you think about the at-scale”

manufacturing for a new company started in this century, in the 2000s, there's really only one that comes to mind, just Tesla. That's it. And so we haven't really built any muscle around new manufacturing capacity. And I think that as you spin things up to Shoms Point, we don't have the ability to do that quickly, because we've atrophied massively by turning all this away globally. So I think readiness is a real problem. And we have to start investing ahead of the, you know,

conflict being being there. Because you can't just start at the moment that it's absolutely needed. Tell us about the arsenal one. And then the manufacturing behind it. And then I want to just understand a little bit about, is this product lead or production capacity lead? Do we need to make selections and have capital committed to bringing product to market before we start to build out the base or is there an alternative way to get ready? Arsenal one is the factory campus that

“we're building in Columbus. The operating system for that, the Arsenal platform is really intended”

to reduce the cost, the overhead that's required to automate and, you know, handle these processes in the most efficient way possible. So there's like kind of the software layer that's behind that. We're actually working with Palantir, the Foundry platform on some of these programs as well. And the idea behind this is that you wanted to be as modular as possible. If we build out the factory campus, and when we said, we're just going to build theories here or we're just going to build road

runners here, we're just going to build Barracudas here. That provides a tremendous limitation in the moment of a conflict to be able to be responsive to the demand for specific things that are relevant to that conflict. And so we're kind of thinking about this more like contract manufacturers, think about building assembly capacity, where they say, yeah, we make, you know, this VR headset for Facebook, we make this VR headset for Samsung, we make this VR headset for Apple,

we build a skill set around building optic systems, but we're going to build a bunch of them. And we're going to be much more effective at doing that by hitting the network of scale, get lower costs on all the individual parts. You're going to build out a supply chain to work through that. That's roughly what we're doing in this case. As we're saying, like a contract manufacturer, we want to be able to pivot on a dime into ramping up production of road runners

if we need road runners or ramping up production of Barracudas if we need Barracudas. The counter example of this, of course, is what we saw in the early days of Ukraine, where what they really

wanted was more stingers and javelins. The problem is is that once we burned through our inventory

and the warehouse, the stingers and javelins, the assembly line to build singers and javelins didn't exist, all the people that worked on those assembly lines were retired. And so the primes were literally calling people out of retirement to come back and teach them how to build stingers and javelins again. And so these are the problems that we're trying to avoid by the design of the factory as an initial concept. Who funds it? So is there a government contract that supports

the production of these facilities and our multiple companies going to be able to afford to to stand these up to make these investments or is this just going to end up being an enderall because you've got most of the capital and you guys are going to roll these facilities out?

from the primes who are basically responding to things as requirements directly from their customer.

So they're not really investing a whole lot forward of the capability. And roll on the other hand, we're doing all of this as private R&D investment and then we're selling the outcome, the output of that as a product. So this is fundamentally a different business model. But I do think that there's a tremendous amount of capital that's required to pull this off as a new intrant to the space. I don't think that the market is going to support 100 new primes.

There's something like that. I'm hopeful that it's not just an arrow. I think it would be healthy if there was more competition in the space. But you know, being able to raise that amount of

“capital or hire the people that you need to actually pull it off, this is not like building a”

an normal tech company. It's not just the development of a product. There's a lot that goes into

this. Trace point might seem kind of obvious or simple, particularly to an audience that's largely

coming from tech or Silicon Valley. But that's not how defense works. People don't build products. People build to a spec that the government says, this is what I want to buy and then you kind of say, yes, you have to think about defense as a monopsony where there's a single buyer for the thing. And that constitutes an enormous amount of power in the buyer, whether they're a writer wrong. And if you look at the history of defense innovation, typically the monopsony is wrong.

You know, it was Churchill as the head of the Royal Navy who built the tank because the British Army was not smart enough to realize that in the next battle, having horses was not going to work. So, every one of these innovations is kind of an act of heresy. There's a founder like figure who is so committed pathologically to a different heretical concept. They see it through and only in combat

or only when it meets the moment is it actually validated. Now, a grave threat like the Soviet Union

is a sort of forcing function that allows you to innovate. When we were building ICBMs, we had eight competing programs. Today, in peacetime, that would be viewed facily as wasteful. Why should you have eight competing things? Why can't you just pick the right one and put, you know, spend the last sort, put all your wood behind one arrow. And of course, that kind of turns it's back on our fundamental belief in America on the free market that there's a

competition of ideas, there's fundamental uncertainty, there's quality, it's like variance in the quality of the execution and that you need this competition. And it's not just principally competition amongst the primes or new entrants. It's also competition inside of government.

“And there were originally, I think, or at one point, 51 major defense contractors and just for the”

audience to understand, they reduced down to roughly five or six primes. That's the term prime is one of these prime contractors and then make sub-contract out to other companies to develop componentry parts. My understanding in Andrewl was to do exactly this, build a product, show up with something that's cheaper, better, faster, and actually competes on the merits rather than be caught in this kind of prime landscape. And that worked clearly. But over time, there seems to be a

lot of capital concentrating into the new primes. You guys, you guys, SpaceX, open AI, maybe one or two others is the landscape going to emerge that we're going to just look like the same old way of operating where we have a handful of primes that all have these trusted relationships with the government agencies. Or how do we kind of create that competitive environment to continue to drive innovation and make things affordable for the US government and the taxpayer going for it?

Well, just like in an interview tray in my new book on this, like just like venture, there's going to be a parallel here. So one of the grave mistakes we've made as we think about innovation, which is resulted in essentially innovation theater, is this idea that you're going to just peanut butter spread around the capital you have for innovation that every company is going to get roughly the same amount. It's not enough to hit scale. It doesn't reflect actually

the relative performance differences. Because there's an authentic parallel curve, like any venture capitalist would realize that your biggest winters are going to return your whole fund. There's something authentic here as well, which is like, yeah, you may have 10 bets, but at some point you're going to have to get smart about concentrating down on the things that are actually working. Yeah, I mean, this is a kind of a great point about any category. It's like if you're a space

tech investor and you didn't invest in SpaceX, you probably lost money. If you're a crypto infrastructure investor and you didn't invest in Coinbase, probably lost money. If you're a social media investor and you didn't invest in Facebook, you probably lost money. And yet for some reason, capital allocators have a very short memory. They don't have the ability to go back to the prior boom cycle and say, oh wait, I remember what happened that last time we had to concentrate capital

“down to the winner. And I think that this isn't any different. So what was the motivator”

then for change in the construction of the landscape of defense contracting? Was it software that takes us from the old primes to the new primes? Is that really what kind of triggered this consolidation? So in 93, having won the Cold War in 91, or I think more accurately, the Soviets lost the Cold War. You know, by 93, we expected as a nation a kind of peace dividend. We don't have an adversary now. We should be able to spend less on defense.

And the department had this famous dinner where they brought 15 of the 51 primes together and

You have our permission to consolidate. Some of you are going to go out of business. Some of you

“should try to make a commercial business, which didn't really work. And that's what led down to five.”

It was actually there was going to be, we were going to go from five to four in 99, the Justice Department put their foot down and said, we're not going to let Lockheed in north of consolidate. Right. And then today, so the change over what gave you guys the window, what gave you guys the window to build the business that you've built? I mean, what did you see early on 20 years ago and continued forward in the hardware side that made you say, this is, this is the moment.

Is it software that enabled this? Well, I'm going to throw you under the bus a little bit on guest. It was not obvious in the beginning. This is going to work. I can't tell you how many meetings even we had together where we walk out and be like, this is not going to work. This is very bad. We were not welcomed with open arms. You know, early days, early days, mid days, maybe late days, you know, famously we had to sue our customer just for the right to compete. That's the strength

of the monopsony, right? And really, I'd say our entire business was validated from the field backwards, right? It was in DC that the doors were closed to us, no one wanted to interact with us, the where the monopsony strongest at the margin in the field where people are saying, well, I'm on this deployment. I'm on this rotation and there is more free market system like what

“I'm being given doesn't work. I'd like to come home. How do I like bend the rules?”

Figure out how to get the software I need. That allowed us to empirically show, you know, create facts on the ground that this stuff worked. It was a long road to ho. I think this is part of why it took 20 years to kind of get to this sort of point here. Yeah, I think that a lot of those lessons that were learned, we're not only like educational for Android, but it also created a precedence that already existed by the time that we showed up where we didn't have to go through

all of those same growing pains. So, you know, what took Palantir, I guess, probably about five years

to get to 10 million annually in revenue, we did that in 22 months. But I don't think that was

a credit to Andrew. I think it was mostly a credit to me, Matt and Brian lived the five years of balance here five years plus 22 months. Yeah, exactly. And so we kind of had a bit of a cheat code, but yeah, I don't think it's like culturally shifted to the point where it's like actually just easy to do this now. It's not like the government has fixed all of their problems. I think it's just that there's enough people out there who have seen it that understand how to make it work,

that you can work within the system rather than, as Shom said, trying to constantly fight from the outside end. Was there a view at that time in the easier as building Palantir where you saw an opportunity in hardware? Is that kind of the motivation for Andrew that we've got software, but there's more to do and hardware could be reinvented and we could build systems. I mean, help us understand the connection. Yeah, in the very early days, actually I came by to pitch Shom

before we officially started the company. And I think part of that pitch was we said, we know how hard software is. We don't want to do that again. We believe hard will be less hard. And I think we ended up being right from like a getting going perspective. But yeah, it's just, you know, the government doesn't know how to think about the value that's created by software. Maybe you feel like they're a little bit better now, but it was really hard in the early days of

Palantir to convince them to think about it as anything other than lines of code, for example, or some like metrics that anyone that works in tech knows doesn't matter. But for hardware, they know there's a bill of materials. The, in fact, the government made stuff for a long time. During the Cold War, there were literally ammunition factories that were owned and operated by the United States government. So they can kind of go through a spreadsheet and say, okay,

I know how much it costs for you to build this. I know how much margin I'm comfortable paying you. And it's a much easier, you know, crossing over the Rubicon. We're software,

it never felt like that. Yeah, it's still very hard. I mean, people want to pay for software

and government on a cost-plus basis, which doesn't make any sense. If you think about the R&D that you put into software, like the marginal price you're paying is a small fraction of the R&D where advertising across commercial and government customers. And I think maybe trades, it's worth telling the story of how when you got to found a fund, you were looking for defense companies to invest in and hitting so many dry holes is part of what led to the idea.

Yeah, yeah, I mean, I have no, I had, maybe still don't have any interest in venture capital.

“And so when Peter asked me to come over to found a fund, the only thing I knew to do was just”

to look at the category of things I felt like I understood pretty well, which was Guptech. And so I, incidentally, you can look up who bids on federal contracts. And so I pulled that list and then at the time I was using Crunchbase. And then I just started outbounding to companies

that were bidding on federal contracts. And I met with hundreds of companies in the first three

years that I was at Founders Fund. We may end it up making one investment in KDM, which was renamed to Expansion acquired by Palo Alto Networks. But otherwise, that was it. There was nothing else. And even like looking in retrospect, like we didn't miss anything. There was just nothing worth investing in. It turns out, no one was building in this category. And so I went back

a next-gen prime that builds hardware, but it's software defined and hardware enabled rather than being hardware defined and software enabled. And to my surprise, the team was like, yeah, sounds like

“you're probably the guy that would know that that's the gap. And I don't know, maybe you should”

start a company. And I'm like, oh no, you guys hired me to work on the investment team at Founders Fund. So like, yeah, that's fine. You can do that, too. It's all good. So yeah, it's kind of an accidental founding in many ways. The capital requirement for hardware business are notably higher. If you didn't have the success, you had building the manufacturing facility you're building. And I'm assuming all the R&D cycles are longer and require more capital to get to a point of product. Does it make sense

for venture capital to be the funder of the next-gen of hardware defense tech companies? How does the economics and the capital markets out of order to take here? So I think if you back up a little bit, if you look at fair child, if you look at integrated circuits in 1968, 96% of all integrated circuits sold were sold to the Apollo program. There was effectively an option. There was one buyer for this thing. But Bob Nois who was at Piotr out at the time in co-inventor of the transistor,

he was so maniacally committed to a future that semiconductors and integrated circuits would be in

everything that he never let more than 4% of his R&D be paid for by the government. He was going to

like why should I have some PM tell me what my R&D wrote now? I invented the thing. So he kept executing that. And that's he so he chased Moore's law mercilessly. And that meant in the 80s when the government needed precision-guided munitions for a saltbreaker to compete against the Soviets, we had the price performance we needed. So this idea that, you know, when you get stuck inside the government loop of what they want, you never hit the price performance. By the way, there's a good

modern analogy, which is Jensen and Nvidia, right, 93 graphics chips, sold them as an OE almost like an OE untiped solution until here we are. The one that speaks to my heart as a child who grew up in the shadow of the Space Coast is Shuttle. Shuttle is a, it's beautiful, but it's $50,000 a kilogram to get to orbit. Starship heavy reuse will be under 20 bucks a kilogram. You know, and there's no way that you will achieve that vision if you're in a cost-plus world. Because every day you're

actually deleting your costs, which means you'd be deleting your profit instead of deleting your cost, turning that into margin that you can provide a better price performance on and keep writing that curved out. Right. Although, to be fair, SpaceX sued their customer in the Air Force on the basis of the exact same federal procurement law at that pallenture did. And so, you know, even with that massive cost, costing down, they were in the same position as pallenture in the early days.

Yeah. Let's go back to the venture capital. At this conference that we're at, there's dozens of VCs now,

“this is clearly become a hot space, as defined by your successes. What's going to happen?”

So these VCs are plowing money into hundreds of defense tech companies from drones to satellites, to weapons systems, to software tools. How does it's going to play out over the next couple of years as a venture investor with your knowledge about Andrew? I remember when I first got my offer letter from, from pallenture. There, we had this kind of high low mix of salary versus equity compensation. And it gave three examples of how much your equity at your, that was on your offer,

would be worth it different valuations. It was, I think it was one, five and ten, maybe, or one, five and twenty, something like that. And I remember talking to people around the company, they're like,

twenty. That's ridiculous. We're never going to be worth twenty billion dollars.

And, you know, I feel like now, it's like people are going out and they're like, our seed round would be priced at twenty billion dollars. So I think there's, there's been a big shift in just like the way that people think about these things. Some of that is good, some of

“it's bad. I think on the good side, they're, you know, they're able to look at companies like”

pallenture like SpaceX like Andrew and say, there is actually a path to success. This isn't like an impossible market to innovate in. But at the same time, you know, there's, there's a real tension around a amount of capital raised in the valuations that are being applied to these rounds that add a tremendous amount of risk to the company that doesn't have to exist. You know, there's this favorite, there's this famous scene from HBO Silicon Valley where CEO gets fired

for kind of underperformance on the plan that they had presented and Richard Hendrix, the main character, says, you know, you could have raised less than a lower price. They said,

what do you mean? No, never told me. I can raise less than a lower price. And I think that's

ultimately what my advice to these companies is, is like, look, your product might be awesome, seems like you're building a good team. I like the vision for what you're doing in the mission. But you can also raise less at a lower price. And I think that avoids, you know, playing chicken ultimately with trying to hit numbers that frankly don't even make sense. One of the things that we've been focused on in the end world that I think maps back to our experience of Palantra actually

is climbing down the multiples tree with every round. We never want to go and raise the next round

is down pretty significantly from the series G. And we're not doing that because investors

“wouldn't be willing to pay higher multiples. We're doing that because I believe the discipline”

is really, really important, especially heading into a, you know, medium-term IPO.

Emil Michael talked about this $200 billion of capital he wants to deploy.

It's been reported he's hiring bankers to help him deploy it. To counter your point, if there's a lot of capital flowing from the monopsony, if there's a, you know, a big market that's growing aggressively. You've got a $200 billion term to go after now. Shouldn't that justify the venture capital coming in, maybe even justify going at a higher price? Is this department of war investment activity really going to kind of change the landscape and increase more venture capital

flow? I think it's, it's going to help out tremendously. First of all, I love the nickname that this team has, which is deal team six. So, you know, I'd be honored to be part of that team. But I, I think even if you look back at the titanium supply chain in the 50s, 60s, it was, it was bootstrap by the Air Force in a similar way where this strategically injected capital down the supply chain

“to enable the aerospace industry to be created. So, I think there's a tremendous opportunity”

with the office of strategic capital to think about what are the structural bottlenecks in the production. You can have a lot of drone companies and they're all going to bottleneck on brushless motors. There's going to be certain key parts of the supply chain that we don't have enough capacity to produce here in the US and they're going to need a bolus of investment. And just like integrated circuits, the first customer is going to be less economical than the end customer. So, I think that's

one part. Then the other story that I love is where we really screw this up. The drone is an American birthright, Abe Creme and the Predator. We built it General Atomics. But of course, then the government gotten away. The government said, hey, a drone is a flying missile. This thing needs to be iTar controlled. Also, the FAA got in the way and said, no beyond line of sight operations. So, you basically killed the domestic drone market. There's a counterfactual world where General Atomics had a consumer

some citrary called DJI. And the consumer drone market was entirely owned by the US and it provided for economic prosperity for America and wrote us down the price production curve that we could be using these things in innovation for national security as well. What's the next market where you're worried that's going to happen? I have a lot of markets. So, I mean, we're talking a lot about weapons of war here. I'm worried about things that go beyond weapons of war that affect our

will to fight. Pharmaceuticals is one that's close to my heart. My father was a pharmacist and

one of the things he always wanted me to work on was bringing pharmaceutical production back home.

80% of APIs for generic drugs are produced by China. What do you think the American people are going to think when they have to choose between defending the free world, defending American sovereignty, and their five-year-old dying of an ear infection that we would have thought of this trivially curable? So, I think there are these things where we've just imbibed the globalist vision that, hey, we'll do the innovation. They'll do the production

without realizing that innovation is a consequence of productivity. Probably to put it in terms that the tech community would really understand is like, what motivated Google to do the research in 2017 behind the paper attention is all you need? A desire for a 3% incremental improvement in Google translate. You cannot think of something more now leading to something more revolutionary. And we've seeded all of those opportunities to realize and harness that innovation. Now, if we

stick with pharmaceuticals, there's a reason 50% of all clinical trials in clinical trials are happening in China and not in the US. Do you have a view on a technology or product that's developed in the US that we're at risk of getting regulated or we kind of go on in the right direction at this moment? I would say the semiconductor is actually really interesting when back to your point about Fairchild is that we were the home of the semiconductor industry for many, many years. And once

TSMC got, I had a seam in Taiwan, they ran away with it. And rather than investing in a domestic competitor, there are all sorts of reasons for this so we could spend hours talking about, we basically just allowed that to happen somewhere else. And now we're in a position where almost no amount of money is going to fix this problem for a certainly on a time line of relevance as it pertains to the risk that Taiwan has in 2027. So I would say that's like another really big one.

Getting back to defense, how does the hardware and software fit together in this, you know, kind of emerging war technology landscape? You guys are building software, you're building hardware, like help us understand a little bit about what the systems of war look like in the decades ahead.

“Well, I think the, the starting premise would be where does it give us an advantage?”

And, you know, we had the first offset, which was nuclear weapons, the second offset, precision guided munitions, and stealth. Really, the third offset is decision advantage. How can we outthink and out execute the adversary? That's where these things fit together.

That's like the thesis of even having them to begin with. And I think the reality is that

there's kind of a messy overlap of these things. Like all innovation is messy and chaotic. And maybe the department suffers at times because it tries to have a framework-based approach. Like we're going to have Mosa, modular, open standards, architecture, or something like that. You know, it's like we're going to avoid all of the pain and messiness by having some sort of process.

And so there's obviously a very tight thesis where these things need to co-exist and

“build off one another. They need to be interoperable. But you have to earn that.”

You have to earn that opinion in the exercises and the tests and the evaluation and combat would be my humble suggestion. Do you think that outside of what Andrew's building, there's actions that this administration should be taking or that the private market should be taking to solve this hardware manufacturing and capacity gap that we have right now? My view is they're actually taking a lot of actions. Not all of them have come to see the

day of light here. But even something is simple as reimagining munitions and drones as consumables. They're not things that you build and then stock on a shelf. They're things that you at the time of ordering them. You already have an exercise test plan where you plan to expend them. Which means that you're going to have to replenish them. Which means there's a demand signal to industry to keep going. And a buying cycle that means that you can buy the next generation,

rather than having the old generation. And I think this department sees that in a very clear-eyed way and is doing the human's work of like stitching that through through all the services, all the portfolio acquisition executives. To the point of not believing in process, they've moved from a world where you have a very rigid, hey, I'd said I was going to buy X of Y. And I can't change my mind to a world where there's more autonomy and authority for the people

who are buying things to say, I told you I was going to buy something that accomplished this goal. I can change my mind about how I'm going to accomplish this goal. Which, you know, can you imagine trying to run any private sector business without that degree of autonomy and flexibility in your decision-making? To Echo Shom's point about what the administration is doing. There are a bunch of swings that they're taking. It wasn't that long ago

that in the Obama administration there was kind of the cylinder failure where they invested in this solar panel company ended up being a bad investment for the US taxpayer. But now the

office of strategic capital is taking a really hard look at critical minerals. They're looking at

you know, refining of minerals. And they're engaging directly with the private sector to come alongside them and doing deals to get off-take agreements on these things. So I think there is some really clever thinking going on. And then in addition to that, I think the procurement process is sort of up for revision constantly. And Ash Carter started pulling a lot of these threads during the Obama administration. That was a third offset initiative. But you know, we're in a

world today where there's kind of a renewed vigor around being asked, private industry,

“being asked, what do you need? Like tell us what you need to be changed about the way that we do”

business in order to streamline this and make it go faster. So I think there's a lot of positive momentum. Do you guys think these changes have been institutionalized or are they political party dependent? If the Republicans lose the midterms and there's a Democrat president in 2028, do you think that there's a reversion to the old way of operating that's going to have some political influence and change things? Or do you think we've really changed how things are

running in the government? I don't think it's political, but I think it's people. So you can go back to, again, Ash Carter, Democratic administration, highly focused on fixing these problems. The current Trump administration, highly focused on fixing these problems. And you know, there are a lot of people that live that were in the middle of that that didn't prioritize this.

It wasn't, you know, it didn't rise to the top of the stack. And so I think we always think of like

the bureaucracy as being a political infrastructure or an institution or, you know, bureaucracy. I actually just think, at the end of the day, it's about leadership. It's just, do we have the right people that understand the set of the problems that we're facing? I couldn't agree more. I mean, I call them heretics in heroes. Like, you know, the entropy of the bureaucracy is always towards some sort of sclerosis. It doesn't, it's not a political statement. It's just is what bureaucracy

does. When David Packard, who's probably the last major technology co-founder who served in the Department of Defense, when he came up with the 5,000 series on acquisition, which today we view as just sclerotic BS that's tied us down. Well, his document was seven pages long. In the years between when he wrote that and now it's 2000 pages. So did he really screw us or did just the entropy take hold? And there was no strong leadership in between to go do the bushwhacking and mow the

lawn and and make the right decisions. Now, you know, this, this administration's blown up jacits, which is kind of one of these insane bureaucratic processes. Like, can you just take a, forget a scalpel, take a machete, and start clearing the jungle and re-earn some of these lessons as you go through it. If you look at Kelly Johnson, who was the founder of Skunkworks, he built 41 airframes in his career, including the SR-71, still the fastest-flying manned aircraft,

and the U2, which we still fly. Like, you look at his rules. One of his rules was,

“he had to play defense to keep the government bureaucrats out of his program. And I think you could,”

you know, okay, it's not, it's not a critique of government. You could think of big corporations. When the big corporations bureaucracy gets into the innovation folks, the innovation stops. And the heretics and heroes were really founders. They were, it's like, from a tech perspective, that's exactly what they were. Like, the two, the Kelly Johnson point, the U2, did not start

community to get his start there. And it was kind of finding the right person that was willing to

take the risk to do the thing, rather than relying on the system or the institution to do that. This is the same with Benny Shriver with ICBMs, Admiral Rickover with the Nuclear Navy. It used to be about people. But today, if you were to go to the Pentagon and say,

“who's responsible for the F-35? I'm not sure they even know. Who is responsible for the F-35?”

We're building systems by, by committee, rather than trusting the founders and people. There's like a proclamation. It's so great. It's this X, Y, or Z project is built in all 50 states. It's like the objective, is it's it's it's being the money's being spread around for the F-35. How do you achieve the objective? The F-35 has components manufacturing of 400 congressional districts. Right. I mean, that's like, that's a political project. We had this AB test with SLS and Starship, right? Like

SLS had to have subs and all 50 states. But this AB test has been played out. I do think there's something about the kind of Calvinist spirit of America that sometimes gets us to misunderstand. You know, we call it the Apollo program. But it was probably, it's really the GeneCrans program. You know, it's the F-16, but it's really John Boyd's plane. And there's like a humility where

we'd never want to call it, you know, you wouldn't call it, although maybe the Nuclear Navy,

we kind of do call it Rickover's Navy. But there's an element of, like, it's obviously both things. It's bigger than the person, but actually the starting conditions require the founder figure. So, tell me about where we are in the state of readiness. You know, we highlighted some of the statistics. But if you guys were to think about what we need to accomplish, the infrastructure we need to stand up to have production lines that can be turned on to support munitions, capacity

for conflict in, you know, pick your region. Let's say more than one region around the world. And the U.S. needs to sustain those conflicts to defend the United States. How far are we from being ready based on what's going on in the investments that are being made today? Across the sector.

“I think the way I think about it is, if you thought about this as a spear, the tip of the spear”

is incredibly sharp. The shaft of the spear needs a lot of work here. The Department of Defense such a big organization, it's structurally supplying demand is not integrated. You know, the demand side is a real-world event that happened at the combat and commands, the supply side are what the service is in the industrial base built, the man trained in equipment, how you're actually producing that material. And the ability to drive consensus, which is really the beating heart of any

private sector company of like how to supply and demand come together. What's a review of it is kind of managed with with great difficulty in the Pentagon. And your ability, your agility to respond to scenarios is weak. That's that's where we can have a lot more precision because if you can start changing your mind and saying, actually, I thought I needed X barricutas, but now I need Y barricutas and Z furries, how quickly does that take to percolate through the supply base.

You know, instead we get locked into these like, hey, we've made a decision, the decision really can't be revisited. And then you start over time, the entropy is like, hey, I need to, I have an unexpected bill. Let's just take a little bit of money away from these programs and everything starts getting down to minimum rate production, which is this idea of what can I produce to

“just keep the line open, which is not deterrent. That's how we frog boiled our way here.”

And that this is where my idea of like you've got to tie this into consumption. Like everything you're building, particularly on the munitions side needs to be consumable, such that you know you're going to replenish it, such that the primes and the neoprimes all have the demand signal they need to keep going and have a reason to produce them cheaper in order to make more money. My most contrarian ideas, like the cynical view that like you have the military industrial complex

and they're just in it to make money, well, this is kind of a crappy business. Like, you know,

these companies trade it like less than two times revenue. The problem is it's not profitable enough,

actually. But, Craig, Trump said in the past, we have eight days of munitions on hand for a major conflict with China versus 800 days needed. How far away do you think we are to having the supply chain built and the production capacity built to meet that objective? Well, I mean, one of the other things, Sean, just said in this conversation is that there's a high-low mixed question as well, like there are exquisite systems that are like the multi-million dollar interceptor missiles,

and then you have, you know, dumb munitions, things like bombs that are being dropped in things like that. And it's not the same across that entire stack. You know, there's some munitions that are woefully under supplied and we have very low readiness on and there are others where I actually feel pretty good. From an annual perspective, you know, we're looking at ramping as fast as we can. We just opened arsenal yesterday to start producing theories and, you know, looking out over the

next 18 months. We're not taking our foot off the gas and yet there's still a run rate capacity that we're running into as we ramp. Like, it just takes time to get all these lines stood up. So, you know, if we were to start today with unlimited cash, I think over the next 18 months as a country, we could get to the point where we were on track for having a sustainable industrial base.

unless there's real political leadership that steps up to drive this forward, we will likely

“be in a similar situation for a long time. And so, I think we really need to take advantage of this”

specific moment where there's clearly urgency that is understood by, by leadership across the administration. How much of the spear is autonomous systems? Is everything going autonomous? Is it just drones or is there on the ground autonomous? Right now. Well, I would actually argue that like if you were to build for the 18 month out. Yeah, I mean, the words of today are fought with the weapons of yesterday. That's like just a fundamental truth. And some of our weapons of yesterday are awesome.

Like, B2s are incredible. The bombs that we dropped last summer in Iran, incredible. Like, these are very high-tech exquisite systems. Patriot missiles, incredible. They're very performant. They hit

their targets almost every time. I mean, these are great systems. The problem is that they're

incredibly expensive, and we can't resupply. Like, we're just way behind the ape all on that. And so, you know, thinking about the words of the future, it means that we need to start building these attributable mass systems today, so that they're in inventory to be used for those complex. There are a number of annual systems that are at a readiness level, at a level of deployment, that they're active and being used in combat today. But it's still a very small percentage of

the way that the wars are being wedged. Over, you know, the next five to 10 years, that high-low mix is going to have to shift massively. I mean, this is just like clearly evident

“in Ukraine. It's clearly evident in Iran. And I think the department is making steps to”

ensuring that they have a better divide of low-cost, detritable systems and those high-cost exquisite systems. But, you know, as I said, it's going to take political leadership to get there. But we have the ability to do it. The reason I ask is I want to talk a little bit about the ethics of technology toward the anthropic run-in with the department of war recently. And I think you guys have both talked publicly about this. But anthropic refused to let its clawed model be used

in Maven without human oversight constraints. This is what's been reported with a meal Michael has said. And the Pentagon labeled them a supply chain risk. Both AI and generally autonomous systems beg the question, what role should humans have and who should have the right to play that role of hitting the kill switch? What's your view on the role of the technology vendor to the department of war and where you guys draw your line on what your responsibilities are with respect to ethics?

Well, my view on my responsibility to ethics is a slightly different question than my belief in democracy, which is a different thing. So maybe starting on the democracy point, I believe that the people of America have elected representatives to make really hard decisions about how we engage in combat. Full stop, fully autonomous weapons are not new. We've had autonomous systems in operation, like seaways, which is deployed on naval vessels that shoots down aerial threats, fully

autonomously. You don't have time to make decisions about incoming missiles or threats to your

“ship, you just have to shoot it down. So that's what seaways does. Now, seaways has accountability”

in the system. There's a person on that boat that is responsible for whatever actions that weapon system takes. And I believe that this is the future of autonomous systems, is that just like any other system, whether it's a soldier carrying a gun, they are accountable for what happens with that gun or the captain of a naval vessel. They are responsible for what happens with that seaways. All of your autonomous systems are going to have accountability baked in. Now, ethically, how do I

think about this? I believe that what Sean was saying about the first offset, the second offset, and the third offset, is we as a society went from rocks and sticks to knives, to guns, to bombs, and then where we're too, we kind of plateaued with nuclear weapons. And we all looked around at each other and we said, wow, that's pretty crazy. I don't think we want to make

more more powerful nuclear weapons forever. And so actually our engagement in combat has come back

down the chain. We're, you know, precision guided weapons. We're shooting non-explosive missiles into windows of apartment buildings, avoiding casualties, unintended casualties. And I think that's really the goal. And if you look at AI as the command center for making better decisions with better precision, with better discrimination, with less civilian casualties, this is good. It's actually ethically far improved from just dropping dumb bombs on areas of cities to eliminate

military facilities. So I don't think abstention from participating in the building of technology

to abstain. And I am making a moral decision as a private citizen building a company in this space

“that I believe that this is ethically just. And I trust in our democracy to deploy those tools”

with the interests of the American people at heart. There's a lot that said about Palantir enabling a surveillance state. We have the all insummit in September, Alex Carp, your CEO spoke. And there's a protest group outside protesting, Palantir powering a surveillance state. I just want to give you a chance to respond to that number one. And number two, if you saw that Palantir's tools were being used in an illegal way, where's the responsibility for Palantir as a technology vendor

in addressing those concerns? It's almost hard to respond to because it's very unclear what surveillance people think we're doing. There's just a broad, almost-moving outgrowth of Terminator fear around technology. And I want to get into that cultural question next. I think it's like very important to understand. We don't collect data. We don't have any data. It would be like it'd be like accusing Excel of being a surveillance tool. It's like this is a way of bringing

your own data that you have lawful authorities to collect together to make decisions. Sounds a lot like Excel. But it's because we are unabashedly patriotic and serve the U.S. military,

“I think people have a kind of color view of these things. I would argue that it's actually”

Excel with cell by cells. It's the most insane platform in the world to try to do something illegal and because you are going to be caught. That was part of the idea of how do you enhance privacy and security? How do you build more civil liberties protections? How do you have a normative view that enables a democracy to say these are laws and rules? The system will enforce it. We're not just relying on people happening to do the correct thing. So that's one piece of the

other piece of it to come back to this broader point is that the need for epistemic humility. Like one of the, to the point of we have elected officials, they are accountable for these policy decisions. I think, at the limit, it's actually kind of indefensible to have a perspective other than lawful use because if you are salami-solicing the policy, that's actually tyranny by Tecbro. You know, a small number of people are constraining the maneuver space of a democracy with no

accountability to the populace. So I think that's a pretty challenging perspective. And we've been in this perspective, if you go back to how did the Soviets get the nuclear bomb? There's really

there's two sources of treason. One was committed communists like Klaus Fuchs, who was always a spy,

but the other were people like Theodore Hall. He was one of the youngest scientists in the Manhattan Project at 18 years old. His brother Edward Hall built the Miniman missiles. Brother was, you know, kind of a heretic and hero in my terms. But Theodore said, you know, I'm one of the best physicists in the world. I'm probably also one of the best geopolitical strategists in the world. And I think the only way to have a world peace is if two countries have the bomb. So in 1944, Theodore Hall walked into

the Soviet trade mission in New York and gave them critical secrets to the bomb. Now, Theodore thought he was going to liberal world peace. Instead, every death from communism since 1949 is actually on his hands. And there's no accountability for that. Yeah, I think one of the other things that comes up in these these conversations about powering the surveillance state is this belief that we have policies, but we don't actually want our civil servants to have the best technology

to enforce those policies. And it's almost like a lack of belief in the institution of democracy. It's like, you know, traffic cameras, for example. It's like, man, I'm sort of libertarian in some ways. I don't love traffic cameras, but if traffic cameras say, I'm going to send a ticket to every single person that blows through this red light. I don't know. Maybe we have to change the policy around red light. So if you don't like that, we're cutting three speeding tickets in San Francisco

from autonomous cameras in the last month. Well, they did ramp it up significantly, which is

incredible that they're enforcing walls at all if we're being honest. I mean, like, you might

take it. And then I'm literally watching McIntyre while I'm doing three miles over the speed limit, you know, take care when needles out of his arm and put it on the floor. That's the problem. Elementary school. That's a lot of relief. Yeah. But it's the same thing with like, you know, using tech for better enforcement of tax law or something like that. Like, do you is what we're saying by criticizing what pallet you're doing is what we're saying that we don't want our civil

servants to have the best tools possible. Because you can have that position. I tend to think that that position is pretty morally bankrupt. But I guess you could have that position. But ultimately,

“I think that's what it is. So scenario play this for me because there's a public perception.”

I don't know how far reaching it is that there's some kind of corruption between government officials that use technology, the super advanced that's hard for people to understand and the technology vendors. If you saw government agencies using your technology, either of you in illegal way that you knew broke the law, do you report it? 100%. Yeah, the entire mechanism.

Yeah, there is an IG and every agency. Right. So can just just explain that for a second.

The inspector general, maybe. Yeah. So every agency has an inspector general who's an independent organization that you can provide anonymous or non-anonymous complaints to, that then have the ability,

it's the Department of War or housing and urban development, like literally every single agency. And this mechanism is used. I actually, in this case, it was weaponized against one of my favorite heretics and heroes, Colonel Drew Kukur who invented Maven, the founder of Maven, really, but people would file complaints claiming that he was hiding illegal immigrants in his basement, a basement that he doesn't really have. But all of those things were investigated,

enable criminal investigative services went out to his house and actually looked into these things. So people take this incredibly seriously. Where does the culture come from? The anti-defense tech alignment culture is it because of the piece, Sarah, that we had and folks took for granted

“national security? I think the first schism was really during Vietnam, where people felt like”

they were lied to about the war. It drove a fundamental schism between academia and defense.

And that we've never really healed from that schism. And so this kind of sense, this distrust,

that's that's brood there and kind of escalates your society. The second schism is like the number of people who are prior service or are connected to this community who actually see these people as humans and have a fully informed mental model of how diligent they are, how the work actually gets done. What do these words actually mean? What does the process like is evaporated? So then their own fears fill how they think it happens. And it seems like maybe it's happening

more in a cowboy way. Maybe it's happening in a way without oversight that there is no such thing as doctrine. It's kind of a cartoon version of what's actually happening that I think you're unable to reconcile. Yeah, I think if you even look back at what happened with Snowden what was that 15 years ago now? Something like that. There was almost no discussion about the investigations that went into like, was the data collection actually abused? And the answer was

like basically not at all. There were like less than 12 documented cases where someone got accessed it that they shouldn't have. And it was because of like technology errors, not because of the policies that were implemented. And so we can have disagreements about whether or not the intelligence community should have collected the data and stored it. But that policy was renewed multiple times by multiple administrations, multiple political parties that had the majority in Congress

over decades. And so apparently our elected representatives thought that it was important enough to

“keep in the system. So I think it ends up being this kind of weird policy discussion. But the”

second point that you make, I completely agree with about like the kind of distrust of the institution in creating the stories from themselves. Oftentimes go and do, I guess lecture is it's Sanford.

And I always try to ask like raise your hand if you have an immediate family member that serves

in the military. No one ever raises their hand. It's crazy. Like at Sanford there are veterans that come in that go to the GSB and things like that. But in like the undergraduate student population, it's incredibly rare for anyone to have any connection whatsoever in their immediate family to the military. And I think there's like, you know, some of this goes back to criticisms that people like JD events, the vice president has made about, you know, elites in America and things

like that. But there's just this incredible divide that has happened. And we're kind of losing touch with that kind of salt of the earth, middle of the country, you know, better in community that I feel like was way more present during the Cold War and, you know, the war were two before that.

“Do you think that there's any external influence that's driving this culture?”

Are there influences on social media, in social media, and maybe just talk about destabilization and the attack vectors? I've seen it in other areas of science. I don't want to spend time on this show talking about it, but there have been traces that I've found on external folks that want to destabilize American science and industry progress and they create fear and they put out articles and then they go social and they become viral and suddenly everyone believes it, even though it's not true.

Do you see that and have you actually kind of seen that in the sense of like attacking the tech companies that are now supporting American defense? 100%. Even if you go back to, let's stick with

Vietnam, the Soviets spent $7 billion in 2026 funding the peace movement, the anti-war protest.

Now there's obviously some, there isn't organic element to it, but this is just dumping gasoline on the fire to so division and discord. And I think in the present day, I think, you know, certainly we see it against powder where there's CCP money flowing to organizations that are protesting us for various domestic issues here. It's not isolated. It's broadly a successful strategy for adversaries to sow division. No one will believe it because no one wants to believe that they're

being influenced. Right, but I think Shawn's point is exactly right. It's like, it's actually a brilliant strategy. Like, good for them. They are not our friends. They're adversaries. What would you do if you were in their shoes? It makes a ton of sense. Do we do that? I mean, look, we have all sorts

the CIA to undermine the kind of Soviet control of art. You know, and it was, it was broadly

funded and it wasn't, it wasn't directed by CIA, but you can see how we have cultural values that we want to inculcate and spread. Do you think we have a shot at recasting the defense industry,

“the tech industry that's addressing defense and aligning it with a notion of patriotism?”

And what is it going to take to make that happen? I don't know, maybe writing a book. Oh, otherwise. Oh, yeah. You have a book. That's right. That's right. I'm trying to do exactly that. You know, look, if we look at it, clear-eyed sense of the world and how much a trend we've lost, you know, you could really say, like, maybe World War 3 is already started and 10 years from now we'll look back and be able to perceive that. Right. And I think you don't need literally

everyone to view this, but if you can create a more clear-eyed view of what's at stake here,

not only for you, but for your children and their future, I think you can get people to show

up and participate. And this has been America's story all the time. You know, and usually when we start these things, we are the underdog. All periods of American greatness have started when we realized that we're the underdog. We were the 17th largest army in the world at the beginning of World War II. You know, and what did a rag tag bunch of farmers and random tradesmen have

“taking on the world's largest army in the British during the Revolutionary War? You know, and I think”

having some clarity about what's at stake with the counterfactualists. It's so easy when you're successful to kind of let the Neilism grow and say, like, look how imperfect we are. There's like the self-loading creeps in. And this is where I take coming back to your point on the legitimacy of our institutions, like should these institutions work? Do they deserve the best software? I mean, look, if they're public or private, you can't have doors falling off planes. You know,

our government organizations need to provide the basic services they've signed up to do without fraud without corruption in an efficient way. And the reason is not just an aesthetic, it's like in the absence of that, it breeds Neilism. And the younger generations, look at that and say, you know, we should just tear all this down. And things will absolutely get worse in a world that looks like that. So it's incumbent on us to wake up every day and fight for the legitimacy of

these institutions to make them more functioning. America's story's never written. It's every chapter

seems to be a whole new arc. And we're in one right now. There's a rising socialist movement in the United States. Can you guys just comment on how much you think that that socialist movement cast with whatever term they want to use is going to affect our capacity for defense and resiliency going into the next decade, particularly as our adversaries are rising? Well, the argument I've always made is I think our greatest threat as a nation is not homicide. It's suicide. And it's in

this vein. It's the internal discord. It's the division. It's the self-loving. It's things like the socialist movement. I think our symptomatic of this internal discord. And ensuring opportunity for our people to the point of a functioning elite. If you were to go backwards and think about the root cause, like maybe we don't have an elite that cares enough about the prosperity of the American people. And we've made decisions through globalization. We were told NAFTA was going to be a

great thing that actually if you lost your job in manufacturing, why don't you just learn how to code? You know, there's a certain sort of callousness in that. And you know, I'm not an unabashed free marketer and I'm clearly not a communist. But there's a sense of the decision on the margin actually really does matter and that comes down to leadership. I think one thing that makes me a little hopeful is that socialism literally doesn't work. And so, you know, you look at, you know,

what happened in San Francisco even where, you know, we elect Chesa Bedine as the district attorney and then we're like, oh, wow, this is not going well. Recall him. We have the Board of Education. Rooted in a selling point of empathy. Yeah. Exactly. Yeah. What happened with the Board of Education getting recalled, you know, Dan O'Leary coming in as the mayor, you know, we felt like we kind of went into this valley and sort of hit rock bottom. But I do think that people eventually realize that

it doesn't, it just fundamentally doesn't work. Seattle, I'm watching the state are likely going to lose a large number of their biggest employers. And as that happens, they'll come through on the other side, probably might take them seven to 10 years to get there. Yeah, it might be painful and it might take them a long time, but I think they'll eventually come to their senses. What are you two disagree on? That's a great question. Yeah. We actually, all be honest,

we bickered with each other quite a bit at Palantir and usually it was shumping right about something and me taking a long time to come along to his point of view. But yeah, I think, you know, any of these cultures that are like well functioning are rooted in debate and, you know, eventually

“you're avoiding my question. Whether it's actions or outlooks, whether you should show up”

to your interview at a tech company in a suit. Yeah. Well, I will say this because it actually is part of the story of NREL. I thought that it was a bad decision at Palantir to be as quiet as we were. I thought that we needed to get out there and tell the story so that

We are Excel and we had a very kind of quiet reserve comm strategy and we went back and forth

on that a lot and when I started NREL, I was like, you know, all the positive things we learned about doing business with the government from Palantir, the one lesson that I learned that we

“didn't implement at Palantir is we're going to go out there and tell our story and I think that's”

worked for us incredibly well and I'll be honest. I think Palantir has come along to my side of that debate. And last question, if we don't do things right or does 2040 look like and if we do do things right or does 2040 look like economic and defense. Well, the economic part is I think

the critical one because national security is not an end unto itself. It's a means to an end and that

that end is economic prosperity and the prosperity of the American people. I think no country is done more to develop the world like how did integrated circuits and microelectronics get to Southeast Asia. We sent them there. Yeah, we benefited in terms of trade there but you know, like which other winner in a war spent their own capital to rebuild the conqueror, conqueror in Japan and Germany. And now you have this stability. There's this ultimate. So when I think about what could go wrong

is you actually have a Chinese century that we never recover from that literally everyone in the

world is a vassal state to China and might make right in their sort of world. You know, and

we shouldn't forget it's like it's very clear even in the present moment that for the CCP, it's not enough for China to prosper America must fall. That's an explicit part of the strategy. Look,

“it is a business decision. If you want to buy American or Brazilian soybeans, I actually don't”

begrudge you one Iota, which decision you make there. It's an entirely different decision when you're smuggling agricultural funguses into the US so that we can't grow soybeans. That's the sort of zero sum frame that I think 2040 will look like if we get this wrong. And if we get it right, I think what we actually see is a massive reindustrialization of America followed by the West. We see a thriving middle class which I define qualitatively as a middle class that believes their children's future will be

better than their future, which is something that I feel is a fundamental promise that's broken down over the last 30 years or so. And a belief in our institutions once again.

“Yeah, no, completely agree with all those points. I think there's a big component here around”

the education that we haven't talked about as well where we've figured out a way to educate and successfully enter our young people into a marketplace that needs them and that benefits from their services. And I think that we haven't quite nailed that, but I do think that the reindustrialization point of this is going to be kind of the central point of making sure that China's many, many decade built in road strategy is not going to put us in a position where we literally just can't do any.

Do we need military and industrial primacy or can we operate in a multi-polar world where the U.S. can share influence and economic prosperity with China, perhaps Russia, perhaps one or two other nation states? Well, the challenge with not being the leader is that you don't get to set the terms of engagement. And so I think the benefit that we have had since really the end of World War II is that we've had the primary seat at the table to say,

this is how we're going to do, you know, semiconductors, this is how we're going to do supply chain, this is how we're going to protect trade lands. And I think the moment that you step back from that and someone else has all those incentives, you start playing the rules of their game, and it doesn't stay multi-polar for long. Well, I really appreciate the two of you being here, Cree, Sean, thank you guys, this has been great. Thank you, thank you guys.