Watching spaces x catch a starship booster versus watching, you know S L S tune out to the launch fed by twenty billion dollars of pop. If that doesn't make the point between the difference between high speed innovation done by crazy people versus process driven innovation that listen gets us there but not when your adversary Operating at starships be.

Steve blank is a series entrepreneur who has been building in silicon valley since the late one thousand and seventy. He's a stand for professor, one of the most famous authors in the innovation world these days. He spending a more time in national defense.

He studied the D, O, D, and the pentagon had been involved in national defense for decades. He has some cca zy new bold ideas that's about him. I'm joe lonza.

Welcome to the american optimists. It's an honor to have Steve blank with us here today. Steve?

Thanks for joining. Thanks for having me, joe.

to Steve, your serial entrepreneur. Are you an author of various things, including four to the epiphany that the lean started movement was tied to? And these days you are professor at stanford and founder of the is called the gordian not center for national security innovation.

amazing. Let's hear about your background a little bit of first. Steve, for everyone, after serving in the air force, you lend your first job, I think is one thousand nine hundred and seventy eight in silicon valley and identical systems .

lab without bill Perry. S S.

That's a cool first boss tells about the electronic systems lab and how L I held in the cold world.

where you guys doing there. Well, you know, Perry, ga. Had managed a lab at what was called G, T. And G, T, by souvent, ia, basically working on electron account measures for the U. S. Government, and then got pissed off and did to start up in the one thousand nine hundred and sixty, basically to do, oh, backbend, the national means of technical verification, which is ultimately overhead systems to intercept kilometre.

But he was the first company ever to use computers for second um and by this time bill peery had become C I S consultant and signals and kilometres of international PS edd land was cited sult for imagery so between Perry and land they they have the technology covered um and party partners with the first set of C A science and technology division but willen and came up with a really set of interesting things but I remember when I interviewed to build in a really interesting take. He said, you know, when I became a choice of doing the right thing for the government or make an money, we always defaulted to doing the right thing for the government I have for you know and arrest my career. Um the other thing he did was he model the company after A U I package culture, which was the golf standard at the time except said the hp, only the executive had stock in and he changed that everybody, including the lower, which you included me, got equating in the company, which was pretty amazing because I had bought by T R W.

That's an amazing do no one I love that I was always something a palter at other companies. I work on the fence where if you you be the good guys mean you're doing the right thing for the government, not the right thing to make to make money. And you don't always see that are especially in the legacy companies these days.

Unfortunately, you you spend the next few decades. He was a serial sperm found. And what we're so the technologies that you .

help to build deployed. Well, I did two semiconductor companies. I would never say I knew anything about semiconductors. Uh, when was the start of got zilog confederate to the intel in the early days microprocessors and then another with a junior professor from stony burka just started at stanford named john hennessy um and had became mixed computers and john was john was amazing then and and of course as trank record is presented to is pretty well known. But um IT IT was pretty interesting going up against intel which basically created an an apple um in h microprocessors which obviously come back to bike them in the country in today.

Tell our listers what myth was john hanny overseas? Ys, an amazing meana delayed great things as president. And ford, would you guys .

build together? Tell us a little different way to build the computer architecture on a microprocessor, instructions at computers, which basically said you can have a minimum number of instructions, number one, but most importantly, uh, almost all of those instructions would execute in one cycle, which theoretically would make them faster than the existing kind of closed architectures.

And they were clues back then because they we're kind of developed in peace parts in the layers and you know yeah added features such um and so we went head intel and um andy groups crushed us. But I was like, that was a great learning experience. So I did two semi conductor companies.

We did a supercomputer company. I still know what r one half is. And Victor scale start of time was teaching salespeople supercomputer architecture. Um let's see what else I do I did in a Price software company which my last one copy path any um I did a video game company which reminded me, never do a company where your customers are fourteen year old.

The video games is hard. What was the enterprise of a company? Where are you selling enterprises .

basically kind of the first you know back in the nineties of enterprise of are was client server um and so we were one of the first companies pick up on the internet and realized that the browser um IT would be a much more efficient interface and more importantly, architecture. And so we built a three components in a lot tool, a data ing tool in a campaign manager.

And IT was essentially the beginning of c rm, though tom siebel did a much Better job. And in positioning and marketing IT, we call the enterprise marketing automation or something E M A. And he came up with C R. But IT was the same thing when we were um we were essentially the same type of company for a while. Um and that went public in september sixteen and ninety nine and I retired on september fifteen and ninety .

ninety nine. Why is man? You did OK there.

I have A T shirt that says the luckiest man on earth number two hundred and forty eight.

So i'm not confused. I have a few friends, Steve, who just keep trying to build things and they're smart and they push in. And I think the way lock works is that if you're smart, you keep trying really hard. You're gonna lucky you .

and show up a lot. I you know that old line about, you know, half the game is showing up. But and and at least throughout my career, I did a lot of showing up.

So sumer of consumer hardware within a maceral company. It's the seven conductors, consumer stuff workstations before they were pcs at such a um so i've got a pretty broad view of the deep tech and and interesting tech in different markets. And something about you're making .

me a little jealous. I've started a couple dozen companies and six from lucky uniforms, but I think you've done more different variety of things and I have which is pretty rare. So that's pretty crazy .

crew background, but it's a portion of who has the bigger house.

joe. Well, texas, the houses are bit. Come on. I say you give a popular lecture called the secret history of still on valley.

Where are all this automobile culture come from? And why is IT unique to that region? I think you could talk Better than anyone, you in the middle this for so long.

like why that place, how that work. Well, list, I describe that. But I probably first tell you why I decided to do that is you mentioned earlier my my first career was in the air force, but I was in electronic warfare and electronic intelligence during van.

Am and E W was a big deal ban, because we were flying lots of plants and using them over a pretty tough, what we will now call a 2AD system about earthy and am russian provided surface air missiles and rather guided triple a。 And and I got pretty intimidating, familiar with that system. And then I joined A S L.

Bill Perry. And now it's, you know, thirty years later, but it's kind of feels like a book end. So that kind of stuck in my head o always asking, you know, even one was the air force. How do we know how what the and what frequencies and what's the radar order of battle life if we look at like, you know early warning rather and then local rather and then surface, they are missile and and I always kept asking these questions and even when I was in E S L and those customers actually didn't like you asking questions.

But um I was always curious about how do we know what we were building and why um and so I started thinking about how we learn this stuff and I turned out that the history of V W in electronic warfare started in world war two in long history, that I talk about the secret history um but the real question for me always was, well, who started this um and how do I get started? And IT turned out there was a single professor stanford named for d termine was part of vanities, s bush. Office of science, research and development.

And O S R N D is, as some of your listeners and viewers know, basically was a Brant moved by the U. S. Only country who did this in world two, that outsource advanced technology to professors.

That is, the whenever bush went to roseville before the war started and said, world war two is coming, it's going to be a technology war and big idea. Our army and navy, ill equipped to actually build advanced technology and know nothing about physics. I mean, they will do respect to what was all in our back then.

Not really. I mean the word pockets of innovation. And he said, I think crazy. He said, scientists should be building advanced weapons, and of course, that has an army and navy left and rose vela brief. And so they stood up.

Something called the S R N deep were all the advanced weapons systems, whether they were radar, electronic warfare, rockets and a small physics program that started in berkeley and others and ended up over her russian argosy. All were run by civilians. Um it's amazing.

And one.

those programs was run by fred termin from stanford. When termin came back from world bar two, he basically took all his lab managers and set up in an advanced electronics .

and microwave group at seven. And he is the one .

who introduced billion dave of fuel back as well. He kind dly professor .

whose dog took from engineering. Building is time for I think there's anymore on is there?

Because I think this really should be here's the punch line. So i'm thinking about all these connections, but I had a written story, and I get my first office at stanford in the terminal engineering. amazing.

And and I thought there was a finger of god foining to me to tell me, to tell me that he was someone needed to tell the story about the connection of the D O, D. And intelligence community where innovation, entrepreneurship came at stanford, because all research universities in the united states during the cold war worked on military weapons systems. But IT was only stanford were back by then.

The terminal was the provos. Who pointed the university outworks. All other universities were focused in words, your great, the best career path could be A A professor turman said. Your best career, if you were working in microwaves or electrics of time, was to take your technology and leave the campus and actually starts something that could be sold to uh, contractors of crimes .

or or eventually. I think stanford, as a newer university trying to compete, was a little more .

tired to the real world. And some some computers with dorms which most of the professors don't don't like to hear. But but as you know, is probably the most accurate description in the school.

That is a lot of entrepreneurs on there. It's interesting because we talk about the government working with stanford then, and I was really impressed me how they work together and how they push things forward. And and you during the space race, even the cold war IT seems like the government, the universities were often times even a decade to ahead of the private sector in today, and often times some some areas as the opposite, especially the government, the opposite.

What's your take? I think you're right. It's hard to remember.

But you know, the largest purchase of electronics in the fifties and sixties was the U. S. government. There really was no commercial market at scale.

In fact, first large customers for integrated circuits from fairchild, the semicon doctor, which was one of the early chip companies, weren't not only for the Apollo guiding systems but for the mini man to um guidance system, which had actually kept them in business because they could charge an exorbitant ont of money. But that shifted when we went to a consumer products and pcs in in the U. S. The amount of dollars being spent by PC companies and others just far succeeded. What the military.

the market just became much more important than the free market. Cy vers, the government to be part of you think.

And the rate of innovation because the rate of competition in the in in the consumer space was much faster than the the need of innovation side. Um because the soviet union in the united states in the cold war both have their same bureaucratic kind of processes, which are kind of equal out even though each country was trying to do an offset strategy. The the the other. So consumers space basically dominated. And and by the way， that didn't matter until the last ten years ago because inside of um F F R D C S federally funded research labs and and our prime contractors and and service weapons lapse, we still have the most advanced technology for to deter win a war, whether they were drones or hypersonic or overheads.

So know whatever those know things in space where battle star lactic s that fired billion of dollars is such a um but that changed about a decade or two ago, as you know and and good number real listeners now all of a sudden all those things that were owned quite mary by the deal d unc are now commercial products and half of them being made in china and here's here's the rob and and you live this with plentier. Unfortunately, our acquisition system is still stuck in the system where all that technology was owned by the primes are internally to the D O. D system.

Yeah and we still haven't kept up with the fact that there is a huge Peter Smith match between how the government acquires and what's outside you know the the way I describe IT as china Operates and also the speed um on a good day of china Operates like silk valley. And if we're really lucky on the same day that the od is Operating like general motors, um that's just not a fair but fair process. No, this is is obviously bothers me a lot.

When we started plentier was pretty obviously that point to those paying attention that the silicon valley software tech culture had got ten way ahead of the government in a way that I just IT was probably already getting ahead in the eighties and nineties. But I feel like IT to still value with with obviously that the wave and they don't that wave just pushed just so far ahead that IT was almost comical how far behind the government was.

So was up to me, if not like pounds. That was a genius thing. That started was just very hard, just but IT, but IT IT was obvious. And then but the hardware side has become more shocking to me in the last ten years. Obviously, when we back to under the beginning and started building on the harbour side was partially because that does seem like the government also got behind that area, which hadn't been, you know, before.

And and here's the rock, is that none of this would matter if we didn't have an adversary that um doesn't have and didn't have the legacy that we had and didn't have the coin Operated congress as we had.

Um and and so you end up we're competing with someone who's Operating with a different original design in different clock speed and figured out how a few civilian and and the military together in a way that the does a whole nation approach to national security. We just not got our own way. I think we're coming to the conclusion through york help and and uh others that we can't keep going on like this.

You know the observation and then then um what you move on is that we have world class people on world class organizations in the D D N I C. Unfortunately there for a world that no longer is this. It's it's a big idea. I mean, if if you would agree were in a crisis, you would say, huh, in a crisis, why are we appointing the same people we would have appointed when we were in the crisis or why do we have the same organizations that we had when execution at a at a reasonable slow pace? You know and and I think IT came um you know if if civilians didn't understand this, watching SpaceX catch a start, a starship booster and versus watching, you know S L S tuned out to the launch, fed, you know at twenty billion dollars of pop, if that doesn't make the point between the difference between high speed innovation done by crazy people versus process driven innovation that listen gets us there but not when your reverse is Operating at starship .

speed um does make sense. The thing that really gets me and I see this in so many areas of our country is is not just that things are like fifty percent more expensive or twice more expensive, or literally spending ten to one hundred times more for the same old results, which is becomes a problem.

And so I want ask you, obviously, if you found the world in not center financial sturry innovation, you have served on the pending confers business sport as you're involved in this world, there's widespread agreement and dc on some of the chAllenges of china and the need to innovate more rapidly. I think it's obvious, right? If people see that, like where's the convention? Was dm wrong? Where would you push the department to be more bold? Like like what's something controversial that you do?

Say the here's what you have to do. Well, by the way, we talk about congress, you know it's your fault, uh, that some of its broken when you hired my gale er so so mike was the most cogent and leading advocate.

Mike house got swatted by by a people on the far right. I believe I A really tough time of last couple years. So I think I think the problem in our society is very tough to be a politician right now. I think there's really nasty forces that they encourage people to get out.

Sad he the most understand problem potently have. But but i'll tell you um a couple of ideas. You know I also set on the navy science and technology board and um world class people you know dedicated focus on the navy and and these boards historically come up with world class incremental solutions.

Let's give autonomy another hundred million dollars yeah well guys, you know how much is a how much is let alone a fourth class Carrier? Fourteen billion way. I, but how much is a strike group? great.

yeah. And we're to give hundred million more. Tony y, have we thought about like what the Operating concept should be when we have a hybrid fleet? Then where those dollars come?

Dogs come from me with ironic. exactly. That's the problem where?

But if you think about IT, no, there are not. Because the D O D budget right now, here is the other problem. Number one of the D O D budget is thought of as zero.

Some game, yes, but as if I if I want to have a put a couple billion dollars into an autonomous fleet, um well where is I can come from? You know my ship building budget is only x um so problem one is the D O D budget is thought of as a zero. Some game that's a massive mistake. Um we've not engaged the whole of nation and figuring out who should build things.

I mean, you understand and and I I know some your listeners do that um the largest satellite manufacturer is not north or permanent or lockey or boy in space x have a factory that makes us at scale and a scale uni maginness that would to make people giggle or you know go like, no, please stop smoking top inside the pagan there's no way you can make two thousand. Put up six thousand what we up to sixty five, five hundred. I mean, that's insane.

But wait minute, how much did that cost? The government is not that you want didn't get any money. But no, I mean that's the as the paperwork budget that north government nor that's a loving budget got.

So my point is, is how come as a strategy, we haven't engaged and and put incentives to private equity and enough just ventured apple but private equity at scale to be investing tens or hundreds of billions of dollars in the new things that we need and what is tax breaks or whatever? And and the reason why, by the way, is do you know what the only economists we have in the deal deal are the ones working at the cape? You know, the with the Green ice ates and whatever, IT IT took two random guys, Jason raking in a former, to come up with a billion dollar on authority office to capital.

How can we don't have twenty five economists thinking about crazy things? And so so that's one big idea, is how do we engage the whole of nation and and and by by the way, we should have understood that when russia appointed an economist, this they head the defense department, not a general. Um you know, the light both went on for them.

China's been Operating, civil military refused for fifteen years. We should have figured this out as well. Ash Carter understood.

This is why I stood up D I U um that the integration of of all pieces of society. The second part is, you know D I U has been a defense innovation. You has been a great science experiment now reporting to the. Sector has a billion dollar budget. Hopefully that doesn't go away.

Number one is you know we should at minimum probably ten x or twenty exit, but it's essentially a shadow R N A that IT is high issues department but quicker, but there is no equivalent for uh acquisition that is there is we don't have a rapid acquisition budget. Everything goes through the palm and the P B. There's the massively complex just image. We throw fifty billion dollars in A D I, U for acquisition theyll.

Be very entertaining for one. The big things we're trying to convince people as well, Steve, is that maybe not having them an opposition, having multiple buyers that you can have competition because I think that you would have .

one buyers shame the other buyers you well, so so the other piece of this is why do we have the combat commands, have the authority to kind of buy from that new opposition for anything less than five or and that is if it's going to be a trigger combat and command sion able to buy from that group. So you asked, what kind of crazy idea is that we could come up with rather than let's add another couple hundred million dollars, make people happy.

But so i'm onna push back to you here at first. I D not to put you on the spot, but you know the you guys have been added for decades. There's now a whole set of VC now Operating in the space that followed you guys.

A, B, C um but we don't speak with one voice that is every smart V C has a lobbied and some of the bigger companies like lunch er and Andrew have their own the babies. But there were you all of washington and we talk with individual voices about our line. Im, so maybe in our space, but so I can get out. Defense hasn't spoken in as a group and I don't mean as a group saying g we need more money.

But as a group coming up with the set of ideas that just like I articulated, and my suggestion back to you is I can't think of anybody Better to get a bunch of defense VC and some creative folks from Andrew parenting in a room for a day and say, if we could reorganize the D, O, D, what we what we hand has can ask for language for the N, D, A, A, what would we want? Um you know, I find myself doing this, but then realized, you know, congress comes out visits. We bitch about X, A, Y, and they go back and all they heard was bitch, bitch, bitch. Individual, right? yeah? no.

And and I think there are some groups that are the pride could be Better organized. It's a fair push bag. I think there are some groups that are saying, what are the high level frameworks? Of course, those ways we work together.

So name, this is inappropriate to say. But the primes have different incentives. Sometimes, sometimes they have a simple incentives, us and some things, but sometimes they have different incentives in us on the innovation sites.

So for example, the law, they wanted defend some more the innovation things, because they didn't like the fact that was disrupting them. And a bunch of us got together. There was a very big Victory.

And we kept IT funding. We introduced people running D I, U. To the people in the senate and various aci had known before.

And we were able to keep the funding and even increase IT because I was obvious that was working for the country. And so there are ways in which will come defend and push these things forward. I think you're write.

They're some bolder things around, like you said, giving more acquisition money and parallel talking about to me. And I love to see a to see competition. You know, in my view, if you only have one buyer, then the buyer could do something as fifty times is expensive, but quote and quote, safe and mediocre, and then get away.

If he had two buyers and they knew there's a good chance the other one was going to do the thing to shame them, then they might also take take the risk. Cannot look stupid, right? So I think I think there are things like that. We should be really get pretty gether to push. And I know some of us been pushing IT a little bit together, but you you're probably right, there's ways we going to and really.

他 提成 you should joke， to be honest. I want to like, you know, push on you a bit. You are kind of A, A, A, A leading light in in the space.

Why did you just call up a bunch your friends for a weekend and and literally half a mount of the house and figure out if we could redraw the diagram to compete IT speed, what would IT look like, rather than how do I get another hundred million dollars or a couple billion dollars for action? Why that should still go on? I'm not suggesting we stop the lobby for individual interest, but collectively, we now know what's broken and we ought to use the imagination.

We used to build companies to rebuild the department of defense, national security. Um I think we have enough imagination to do that. And here's the insight.

The D O, D is built around execution, execution of processes and P, B, A and whatever silcon values built around the innovators who create new things that never existed before. Yeah and here's the rub. The executors never come up with innovation processes.

I mean, theyll do IT around the edges. And it's not that we don't innovate incrementally, but innovators at the same time hate coming up with process. process. I don't need email.

I think elon especially is like so not interested in process, but you're write the government government runs on process though.

so we have to fix the problem we're facing is both groups have a vendible m of zero winter section in in thinking about what radical reform would look like. And and i'm sorry to get us on the high horse, but but I think it's in common to the innovators to actually come back and say, no IT should look like this if we want to compete with china, russia, north korea ran whoever thought we like shoe net who seeks and I mean, yeah, I think people could find them on the map.

The whole thing is so one off right now to, if you right, I mean, a little day was on the phone with a congressman, two nike ago because I head the secret service is working with them to try to, like, do something to try to protect. I'm gonna who be, you can imagine, who's being threatened right now in our country after they want and and they needed some new technologies we have access to.

And it's it's kind of embarrassing mess like if you want try to do something confident quickly versus s do with the right way. So I think you're right. I think you're right way to come up with the framework. There's the thing I would say as I do think there's something about big trusted primes run well, that's very positive as well. I actually would like there to be seven, eight new primes that are really well right .

and trusted, you know. And the things you invested in certainly are on that path. You know, that classic consolidation diamant that shows all the primes we had in the twenty century ing down to. And when I SAT with Cathy S, I said, mam, all you need to do is visually visualized that diagram flip tzotz. That is, what we need to do is now generate a whole new set of those things ah and we could use some of the exorbitant illian of dollars were that we have on the end that list. In fact, my my line is, is that the goal ought to be that ten percent of the end that major defense acquisition programs on to have new entrance on them in in the next three years and if they don't were simply not rebuilding the national industrial base. Um you know we made a set of semi logical positions to consolidate with with the cold war was over in the end of history, etta, but we've not made the equal decisions other than a lot of word salad to actually put money to kind of recreate the ecosystem this time using private capital and and you know the equivalent to what rose bet in vancouver bush did in world war two in handing advances weapons systems to professors and universities would be handing advanced weapons systems designs to startups yeah if you really think about and and i'm not suggesting that, but that's the equivalent of what we did.

This is why I said the start want there to be new trusted prize of a sort that are kind of prevention ough. I do agree with your point is that you actually there's just probably listen, there's only two vy funds by doing this for a long time, but then there's probably fifteen new ones in the last several years. That's great.

And these are complex technologists. So I think you could take the top twenty, thirty, forty, whatever, don't be exclusive, a bunch of VC funds, take the top of becoming companies and include them in the planning, include them in the strategy, right? There's like there's a push back on doing that, but it's crazy because that is not because acid as a country is all these technologies and and they're not currently included.

Like if you tell me that you want to have this certain type of system in two thousand twenty nine and then then this can be a competition where a couple of us are going to get funded with the competition in twenty six. I get an invest right into that, and I build that back in the country. So so I have been coaching, I have been coaching a bunch people on all sides around these ideas. I think you're right, is Better. We all work together .

and try to push IT together. And because eventually, as much as trying to stiff farm all of this, your business model needs to change right in.

Some of them understand that right? Is certainly we would have Chris moran, a ockley, the roman and others and you know what they're defending, they are turf of, you know, even though even hunting the dangles understands that the days of only cares are going to go away, that they understand and minimum is going to be hybrid fleet. Yeah alright. So having some of them at least stood you at least offer what they what they're thinking because they'll try to kill you on case anyway. So so putting them in the room in any case, I don't mean to get us off track here because I know you want to talk about other stuff, but um I just want to point out you are the lightning rod for this industry and we want to act like IT already bring more friends you are to push.

I think you're thers nor in age should the early we could be doing Better in the valley. You know, I want to ask to ask people to growing up in self the valley, uh, no, especially two thousands of building things. Your book was obviously read by everyone. The force helps the epiphany and is kind of the intellectual backbone and leaving the started movement. And IT was always interesting because the obvious ly, a lot of important wasn't there for how law of value worked.

But IT always seemed to be prety different to me and how the defense sight of things worked, right? So it's kind of interesting talk to to you about the fence now because in some ways pantier was like a fat start up as was SpaceX, as was as was, uh, you know, and even Andrew l in some way. So a lot these defense things is like you can't quite do those things. Things starts up to you. How you think about IT to other principal still apply .

is a different well, what's really funny is, you know I of all things I use the space access an example of how you actually can build um fancy word is an ambidextrous organization and twenty dollar word that you use in universities to mean can you chew them and walk at the same time meaning and you execute know that is do continual processes and incremental innovation at the same time you could do crazy things in the same world organization and then of course, I think most people listened understand that space x is launching at a three launch pets to the candidate one and and that's an Operational excEllence.

Those falt and ines are pop in off what I would be my IT one hundred and twenty this year. Maybe we'll hit one hundred and forty four. But but in any case, they don't screw around.

There's there's a book and and that process needs to be fail safe. But when we look at starship, you know elan's model as we we're not alone and stuff up. We're not innovating and were not blooming them up fast enough.

We're not innovating fast enough. Different culture, different people, different risk k profiles. But the big idea is everybody understands thousand and nine pay your salary, but starship pay your pension and that innovation stuff that at the age will move to the core.

And they're not separate organizations even though they are. They're connected parzon fully. The learning is going back and forth. The D O, D actually does some of this by hacking their own system when we create black programs. So so if you want to a beat the bureaucracy, you have put in a skip for a sap program. Um and and if you've been in some of those, they do Operate with speed um does make sense that is we hack around system we have so come you you start up where is the first place you go you go to so come where you go to black program, where you go to C I A or somebody else when .

is still doing a lot what you talk about feeling fast and everything a different that's interest.

yes. And and so it's possible to build this in the D O. D. We've done that before. That is you need organizations that Operate the core, are an execution but are capable of actually creating innovation. And and the problem is, is that at the end of the day, it's a leadership. If you don't have a leadership that understands the difference between execution and innovation and I mean disruptive innovation, different clocks to be different people and whatever, you just tend to do the same things. And and who understood that bill barry understood that a secure as Carter understood that a secure, I would contend most of the rest were political opportunities who want to tell you innovation from like .

when we were innovating t for parenteau, we could we study a lot, obviously talk to a lot of people. And there were really two part. I say one part was like, we had a vision like, this is the correct answer.

You need these nodes that have danamon ontology es. They can, over time, they wanna let them to talk to each other between the U. S, between allies and you.

You need how this place for the does that integration and need to have the platform does collaboration. We always big, big vision. But then there was also, like every week or two, we would fly out to show people things that we get pushed back when we iterate.

So there was, I guess there was like an iteration of part of IT. But there was also just like this, like if you build that, they will come like conviction. We had and we just kept pushing and turned out to be right and take many years. That seems a different way to build a company. Other things related, you think about things as well.

know that that in fact, the myself pi is pushing that ball pill. And good. You guys were one of the few.

They got IT up the hill, but you were fighting against the system that wasn't design. So intake, radical innovation. And in the point I just made previously is we can actually get the D O, D.

Organized to do that. This goes all the way back to, you know, us getting together as a community and explaining to congress how we should organize this, and more importantly, who should be running these things. You right, doug back should not be running R, N, E.

Hyde shoes should not be running D, I. U. They're different people, different processes, different clock speed. If we could get that idea through, we need both. Yeah we need have an oh so imagine and or a dod that actually had that culture when you started to plunge. Er IT went have taken ten years.

I won't have any more of the company by time when we got there.

So so so I mean, one of the things we did six years ago was to start a conference and for to get the innovators and the senior readership in the D O. D. together. You call the radical conference out here my branch, and we're going have IT this week on wednesday and thursday. And so and here's the other part that silicon valley failed. So those senior leaders, we got admins and generals, we ve got the head of eight countries, joint chief s of staff out here, whatever they would then leave very, very little conference, and then they go visit individual companies and solve value. They're all scatter. And IT took me six years of running this before I went, why do we invite the companies here across a set of VS, in a set of areas? They've said, do you know there is no silicon valley, one defense trade show in the valley that when people come out and visit, or even for the region conference or something, why don't we all get together across all the port volume s and show our wares and law?

The best ones are still are still. And I also good to know where elsewhere in the country. But you are right, there are some important .

things right than the value to you to be seeing. So with the region conference, you've got all those folks.

Why isn't a traction in a building across this? I can't make an excuse is i'll got all asking to see.

I listen. IT took me six years of having all these and then going, where are you guys going? We're going to go visit or we're .

going to see this secret answer is, is that the very top companies are doing well, get into those like the thing anyway before.

But what senior leadership doesn't understand where those companies fit in the ecosystem unless we .

expose to the ecosystems .

to show just the airport folio, baby. But but, but i'm just pointing out that there's mutual interests of them seeing everything across the space. why? Because joe, think about IT. If it's just Andrew, then people could go, oh, we don't like that company. Those people pissed us off whatever now of a student, if they say, holy cow, there's an entire ecosystem out here and we're still buying stuff from lucky, the whole name, your favorite prime for a thousand x what these in in ten years, there's a whole system to choose from.

As you know, it's a tougher one because there's like a certain bar where you really have to be really, really good to be good enough. And so defense for me is different, Steve, in other areas where it's like I know every area has like lots of failures, but I feel like I feeling it's only the top ten percent that are real. And a lot a lot of times in the ecosystem because because you actually to have a certain bar passed to know how to deploy and the addition is not working and you are really careful, we want want to expose them to lots of crap, I guess, is the trade off dialects there.

So we teach up a class call packing for defense, which john filler and I and peat neil started its now and sixty universities. And so a good number of students end up trying to sell to the dos and answers i'm kind of agreeing with you, but we could teach them how to do this.

And we do that is not just how to get to an MVP in a demo, the dog has more demos than anybody, but what's the go to market strategy of finding the color of money? Or how do you get A A requirement written for just your stuff for g, who's the sad that is, who actually has the existing contract? And do you think they're going to sit around waiting for you to come in? It's you can teach startups this as a process because the other mistake that goes on.

And so oni is thinking sales to the D O D, just simply complicated enterprise sales in the commercial market. And I like history ally. When when I hear that .

having done both, not very fair. I think you a lot of is them there. I had to think it's gonna of being six, seven, eight new primes that are like eighty percent of the new impact that matters.

Not not the super distorted thing that but but at the same time, IT was will probably buy about to those eventually into the big companies figuring out. But I I want to ask a little bit about two things. One other things is industrial policy.

You talk a lot about that, obviously tied to some of these things talking about here. I think you support the chips act and call for more policies like IT. I want to hand like one amErica and make sure we're doing the things we need to do to compete against our aba series. On the other hand, all very sketchy al of top down policy and central planning and dumb rules, they get put in place by your craters. I'm curiously, you trade that off policy you'd like to see.

So in a perfect world, which we try to run for the last fifty years, the market would decide where we put our money in. Yeah, mark smart is such a and so where did vcs put their money in social meeting? Was that in the national interest? We could argue, possibly not.

In fact, I would argue problem via only not. But why? Why did that happen? Well, the cooker s returns, the largest returns, such, what did china do? And by the way, if we didn't have a nation data adversary, that would just be fine and okay.

Who cares? The problem is were competing with people who have a different model, and their model has been focused on building things that are building up their national security state. And you know, to me, the the best example is so like how many new ships that were you putting in the water and hummy D D G or china putting in the water? And like great.

And wears our investment going in venture capital and private equity and what kind of incentives that we have. I think the chips act was the first you know, major piece of national industrial policy, which you mentioned the robe seventy five years, which simply was somebody looking at a map and going, huh? Where did all the advanced gic ships come from? Wow, china calls IT a province, right? That this might cause a proper, perhaps we should do something.

Oh, look, china is building up their cheap business. Oh, who's equipment or they are using, oh, they're using us. Why we put exports controls on.

Now to be fair, we ended up building a dam across half the river. Well, we put exports controls on the U. S. companies. Toko electron and and provide the other parts of the machinery don't have export controlled that was done well.

I think the very little theory makes sense. The governments very good of breaking things. I think for a long time, we couldn't build stuff because there wasn't enough female construction workers because of the di. There's just always comical kind of bad stuff they put in place with these things like is there is there way around that?

So so you just point IT out. I think something interesting is so. And now let me give you a discreet answer, your question about national industry position. To compete in a world that we live in, not the world that we want. We do need national industrial business, one tools.

We need to take this stupid craft, add a national industrial policy and and figure out what the goal, what's right? It's like we could decide that the goal is jobs or that the goal is D I. Or the goal something else that's not really national industrial policy and that's something else.

So so if we separate out the two, which is do we need to get indigenous ship manufacturing in the U. S. sure.

So we need to have a secure supply chain for for an industrial base for manufacturing short. What do we need to do that? And what incentives do we need to to to put in flex? I think we did a pretty good job of thinking about on a higher bit of we need chips um but I would probably agree with you, we've probably cluded IT up with things .

that really very well. More topic I want to ask about his AI. And this is investing because you're spend a lot time, I think, correctly talking about how all these things actually, no matter because we have a state every year, we have to you have to respond to IT our story.

But as interesting as last year after GPT four, you wrote the air researcher search, consider pausing to develops and garden. So interesting someone he and we got a stay ahead of our ever said. The other hand, you're actually worried enough to say we is consider posing. Do you still believe a pais prudent?

Where are you on this? You know, what's really interesting is I think of GPT and chat of A I is kind of a shiny object that really people are kind of like distracted by, you know, the nobel Prices that came out this year.

Really, really the issue is that you know google deep mind figured out how to do um um protein falling in a way that basically accelerated you know molecular biology probably by thirty years um we saw finally know the three structures of two hundred million proteins. Ah we had maybe self one hundred thousand of them or maybe twenty thousand of them. They want manually.

Um we're going to see the same thing in material sciences. We're going to see the same thing in in in other deep tech areas. The part that's concerning is, you know I don't know you've ever remember movie called the form bin project or all. There were some others in the one thousand nine hundred eighty when you connected very smart machines to weapons systems.

the terminator .

yeah terminator being for probably the extreme. But but you know the problem here is when we start doing that um and there's no men in the loop, you know and also when we start doing that and we have ethical boundaries but don't have ethical um but I should remind your listeners that both the U. S.

And the soviet union had dead hands on their S B. M systems. Yeah we have transmit radios on small part of man sleep.

That said, if our command and control is about to be shot out, the sky or the looking glasses are gone, you push your button and you launch, set a minimum en with the U. H, F. Radio that transmitted to go codes to the rest of the man.

Pretty terrifying. So to fight out those codes.

the sob union had the same thing called the that hand, and those were with human beings. Now just imagine connecting that to A A I system that wakes up one day and then says as well, you know, maybe, maybe I need to automatically push this button. So, you know everything we've done in in in science and technology, you has been A W at sort you know when we invented biotech and genetic engineer, uh, we took a pause 是 这 say how how dangerous could this speak in until vohu we managed not .

to kill ourselves。 Point on one hand. Obviously don't want the AI launching the nuclear weapons, and I want the AI being able to take over and talk as as obviously insane and scary if it's done wrong.

On the other hand, you know, for example, one of our companies, ironic, we're going to producing thousands of westernize vessels to compliment the fleet and we're teaching him how to use A I and like in the heat of a battle against a bunch of autonomous stuff from the other side, reacting in real time. They're onna want to be able to do certain things in real time with A I others SE you are to lose and so it's going to be like, well, we're more ethical. Lost the war because the tough, tough trade off, you have to make some trade and and in fact.

you know if your viewers haven't seen that the chinese demos of ten or fifteen thousand drones simultaneously synch online, zed in the air are just like, just imagine you're on a career.

Watching that in is what we're going to put our large magnetic shield in the careers I can start to. I can have a shield that goes out miles, this turns off all electrics, but we need something like that.

Or if we weren't putting all our assets on careers and maybe putting all her assets on a distributed some of each.

some of each, that's fair. I have to defend the Carriers for now, though I still talk on my small ships. Steve.

very good. That's that's why we need something more than a zero sump game in the D.

D. budget. IT is very, you're careful, so great, obviously serious. But there are just lots of risks.

Is I love yeah yeah. You know, the risks in a complicated society. Here you are compounding, know, our greatest fragile, you we take for granted all these things that keep us alive.

Food system is fragile or distribution system is fragile. All these things are. I was just going to add one more piece of fragility into a into a network.

Peculating can do that right? On the positive side, we did start american optimism to push back on cnc m and pessimism. I'm curiously why ye the innovation excite you for the future. What's going to make things .

Better than next ten, twenty years? Well, you know i've been looking looking to to live through the valley of when we were literally cutting rubi lift masks with an exact on nie and and in fact, processors when we maybe I think a couple of thousand you know transistors on a chip. And now we have like tens and maybe hundreds of billions and eventually trillions in my lifetime.

It's just been amazing. And you know my first half is actually I did stuff in my second half of my careers right now when you know how could do you teach um and so watching my students do amazing stuff, copeland space or students in my class band ver laps students, my ass, just a whole set of of people have gone off and done amazing things. It's just a great time to be life.

A I is gonna be one of those force multiples just like the net wise, just like microprocessors and computers. Um we're living through some amazing times and technology. The problem is, is we're also living through some amazing times and geopolitics, you know and in the middle of um you know we thought we were smart when we came up with the two plus three strains with matters and twenty eighteen.

But we haven't embraced the fact that our adversaries of like north again and our national security strategy hasn't worth so i'm you know i'm happy living through the technology shifts and am concerned that we really haven't been a smarter our episode playing the geopolitics. I mean, they've been playing everything. They've been Fostering division in the country.

We've been um coordinating efforts in regional wars. And I don't think we ve got the memo yet that they are not actually reading our national defense strategy and they're acting acting a little different or even than our plan. Yeah but but to answer your question, i'm optimistic there's not a Better place, Better time to be alive. Well, Steve.

having leaders like you help push the dog, help push us to make sure you know you to stay ahead of our series. And seeing all the innovation coming out of the tech world and even places like your classroom and stuff makes me more optimistic. So thank you for .

you're doing well. Thank you. Thank you for putting your money where your mouth is or your mouths where your money is. Other important job to .

get to see you.