#190 Shyam Sankar - Chief Technology Officer of Palantir: The Future of Warfare

Shyam Sankar is the Chief Technology Officer at Palantir Technologies. A builder at heart, he’s spent over 20 years designing and deploying cutting-edge software and AI for both government and private sector partners. As Palantir’s 13th hire, Shyam helped take the company from scrappy startup to S&P 500 powerhouse. A relentless opponent of inefficiency and red tape, Shyam has made it his mission to overhaul the institutions holding America back—starting with the government. His focus? The Defense Reformation: a bold effort to transform how the U. S. military buys, builds, and fights so we can win—and keep winning. Shawn Ryan Show Sponsors: https://roka.com - use code SRS https://tryarmra.com/SRS https://BetterHelp.com/SRS https://Blackbuffalo.com https://boncharge.com/SRS https://MeetFabric.com/SHAWN https://ShawnLikesGold.com | 855-936-GOLD https://Helixsleep.com/SRS https://hexclad.com/SRS https://hillsdale.edu/SRS https://PatriotMobile.com/SRS | 972-PATRIOT https://prizepicks.onelink.me/LME0/SRS Download the app today and use code SRS https://RocketMoney.com/SRS Shyam Sankar Links: X - https://x.com/ssankar Substack - https://www.shyamsankar.com LinkedIn - https://www.linkedin.com/in/shyamsankar On The Defense Reformation - https://18theses.com First Breakfast - https://www.firstbreakfast.com Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  College football is back. So Hilton called to me, the superstition concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching band wake up call at 5:55 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for the stay.

• 0:31Speaker 01

  This episode is brought to you by Born in Roma Fragrances by Valentino Beauty, the iconic fragrance duo. Donna Born in Roma Eau de Parfum is a feminine fragrance featuring juicy black currant, central jasmine, woody cashmerin, and warm vanilla. Its masculine counterpart, Womo Born in Roma Eau de Toilette, has notes of fresh violet leaf, aromatic sage, green vetiver, spicy ginger, and mineral salt. Shop at mazies.com.

• 1:00Speaker 02

  With AI and the AI revolution, people think, oh, it's going to make the median person better. That's true. But it's going to make the very best person superhuman.

• 1:10Shawn Ryan?

  Hot news right now is, you know, the tariffs just came out yesterday. I'm just curious, what are your thoughts on that?

• 1:15Speaker 02

  When Rocketman was rattling his saber in 2017, the Army wanted to answer the question, how many tanks are there in the Army? That is a three-week data call.

• 1:23Shawn Ryan?

  Are you serious?

• 1:24Speaker 02

  So Operation Paperclip was our covert action to bring the very best scientists from Nazi Germany to the US to enable our defense program, in particular, our rocket and space program.

• 1:36Shawn Ryan?

  How worried do we need to be about China?

• 1:44Shawn Ryan?

  Shyam Sankar, welcome to the show, man. Great to be here. Thanks for having me, Sean. Yeah, my pleasure. We had Joe on, what, maybe four months ago-ish? And, uh, man, I'm just fascinated with what you guys are doing over at Ballantir. And, uh, it is just, I'm super excited about this interview, and I want to dive more into that. And you've got a hell of a life story, so I'm really excited to do this. Thank you for coming. Thank you. But, uh, everybody starts off with an introduction here, so...

• 2:17Shawn Ryan?

  Shamsankar, Chief Technology Officer and employee number 13 of Palantir Technologies. BS in Electrical and Computer Engineering from Cornell University and an MS in Management Science and Engineering from Stanford University. Spent over two decades building and delivering disruptive software and AI solutions for the government and the private sector. Widely known as the sworn enemy of slowness and slayer of bureaucracy. I love that. Dedicated your career to upending institutions that are failing American people, starting with the government. The Defense Reformations is your manifesto, which you can read at 18theses.com.

• 3:00Shawn Ryan?

  Your goal is to fix the way our military buys weapons and wages war so that America can always win. And you have a quote that I really like. "My parents' journey showed me that America is not a place where everything is perfect, but is a place where anything is possible." Love that quote, man. But, you know, I just have, I got a ton of respect for you. I mean, from where you've grown up, which we'll dive into, to where you are today, and it's just, it's fascinating, and I think it brings a lot of hope. I mean, you've earned everything that you've accomplished, and I just, I absolutely love these type of stories. So, once again, thank you for being here.

• 3:42Speaker 02

  No, thank you for having me. I'm just, I'm just really grateful for everything this country has given us.

• 3:47Shawn Ryan?

  Me too, me too. But, everybody gets a gift.

• 3:51Speaker 02

  Amazing.

• 3:53Shawn Ryan?

  Gummy bears made here in the USA, legal in all 50 states. There's no funny business in us, just candy. Of course, they probably will be illegal here when RFK gets going, because, you know, it's got all the bad shit in them, but they taste good, so. And then, one other thing before we get in the weeds, I've got a Patreon account, Patreon, a lot of these guys have been with us since the very beginning, when I was doing this thing in my attic. Then we moved here, wife kicked me out because we had a, we had a kid, she's like, get all these people out of the house. And, and then now we're building, we're building a new studio, it's going to be about three and a half times the size of this one, should be done in about three months.

• 4:37Shawn Ryan?

  You'll have to come back and see it, but... One of the things I do is I give them the opportunity to ask each and every guest a question. So this is from Kevin O'Malley.

• 4:50Shawn Ryan?

  Will the massive capacities of quantum computers influence the balance of power once they're leveraged as offensive tools?

• 4:58Speaker 02

  Yes, absolutely. Quantum, quantum's a prize, staying ahead of it, understanding its implications. One way of thinking about it is there's nothing new under the sun. There's just the Oodaloop. And what is quantum's implication on how quickly you're going to go through John Boyd's observe, orient, decide, act, Oodaloop? I think it has exponential implications on that.

• 5:20Shawn Ryan?

  What exactly is quantum computing? I hear it all the time. It sounds scary. I mean, is it just really, really fast? I mean, what is it?

• 5:29Speaker 02

  I think that it's really, like, millions of times faster is the way to think about it. It's like you can compute, it uses quantum mechanics to do the computation, and you're able to compute enormous permutations and combinations of things at incredible speed. The most obvious implication is it breaks all of our legacy encryption. So your ability to communicate securely and to the extent anyone has been storing historical encrypted communications, their ability to decrypt that

• 5:56Shawn Ryan?

  Oh, boy.

• 5:57Speaker 02

  will be near instantaneous. So it has huge implications there. But then for your ability going forward now, like, you're going to have to adopt that so you have quantum proof, quantum encryption that works. But then I think there's even more implications beyond that. The encryption is the first thing that we have to worry about. The next thing is, how are we going to employ this for decision advantage?

• 6:18Shawn Ryan?

  How close are we to that?

• 6:20Speaker 02

  Well, that's kind of an open question. I think really smart people I know keep saying we're really close, but really smart people in the 60s thought we were 10 years away from AI. So we'll have to see.

• 6:33Shawn Ryan?

  Who else is working on it in the world?

• 6:35Speaker 02

  The Chinese.

• 6:37Shawn Ryan?

  Great, great. Well, we're going to talk a lot about China in the interview, too. But getting into the interview, I mean, you grew up in a mud hut in India. So...

• 6:52Speaker 02

  My father did. Your father did. Yeah. So my father was the the last of nine children in a single, he grew up, he was born in a single room mud hut in in the south of India. And his his his siblings all helped him get to college. You know, and India had its own version, still does have its own version of D E I there. So he was not allowed, he's a very smart man, but he wasn't allowed to go to med school. He couldn't get a slot. But he became a pharmacist. That's like the next best thing for him. And he was sleeping after he graduated from pharmacy school, he was sleeping literally under the kitchen table of one of his brothers. Geez. And his my his sister in law, brother's wife, got kind of tired of having him around the house. So found him a job in Nigeria. He was 23 at the time.

• 7:37Speaker 02

  And so he, you know, young man, excited about adventure. He he went to Nigeria as a pharmacist to build the first pharmaceutical manufacturing facility in all of Africa. Until then, all the drugs were imported. And so he did really well for himself at a very young age. I was born, he, I was probably born seven years after he'd been living in Nigeria. My my mom went back to India to have me. And then I came back to Nigeria as soon as, you know, as soon as I was old enough to travel. So I really, my first three or so years of my life, I was in Nigeria. But the reason that came to an end, we had a horrible armed robbery in the house, which we lived across the street from the manufacturing facility, where all of the cash was kept from from the operation.

• 8:21Speaker 02

  And so it was a little bit of an inside job of people who worked there, who who did this. They decapitated the dog. They threatened, they pistol whipped dad, they threatened to execute him. They threatened my mom. I was a child and really I was just excited to have visitors, you know, you can't control a child. I was just excited to have visitors in the middle of the night. Dad was only spared because one of the five armed robbers was a regular at, my mom ran an open kitchen. Anyone, anyone who worked at the facility, anyone who was help, anyone from the surrounding area, they could always come and eat Indian food that mom would make. And so this guy was a regular and he just, you know, he just made sure they didn't kill us. Wow.

• 9:02Speaker 02

  And so we left all of our earthly possessions behind and had to find a place to resettle. Dad had a friend who somehow, just, you know, the, how life works, had moved to L A, a friend that he grew up with in this, in this village, moved to L A and he was selling knickknacks to theme parks.

• 9:21Shawn Ryan?

  He went from pharmaceutical manufacturing to selling knickknacks in the States.

• 9:25Speaker 02

  So this friend was like, you know, there's this place Orlando. I'm, I live in LA. There's this place Orlando. All the theme parks are moving there. I need someone I can trust there. Uh, and that's how we ended up in Orlando, selling knickknacks to theme parks. Um, which was fantastic, you know, for me, it was fantastic. My after school care program was really mom would pick me up from school. We'd go to SeaWorld so she could restock the shelves. And I'd be, you know, petting the stingrays. Uh, so I, I thought that was normal. I didn't, I didn't quite realize that, you know, what a, what a unique experience it was. Now there were some downsides to this. Uh, you know, some of the knickknacks we sold were T-shirts and I was, until I was old enough to read, I was dressed in all of the T-shirt misprints. It didn't say Shamu. It would say like,

• 10:07Speaker 02

  Tamu, you know, it's like everything that went wrong, that was free clothes I got to have. Um, but it was also really a privilege to grow up in the shadow of the Space Coast. You know, Orlando's really, it's close enough that in elementary school you would file out to the courtyard to watch the shuttle launch. You would wake up Saturday mornings to a double sonic boom of the shuttle re-entering. And it gave you a visceral sense of, um, scientific progress, American prosperity, what we can do collectively when we, when we put our mind to it.

• 10:37Shawn Ryan?

  Wow. Well, what kind of stuff were you, I mean, your dad's your hero, correct?

• 10:41Speaker 02

  He is my hero. Yeah.

• 10:42Shawn Ryan?

  Is he still with us today?

• 10:43Speaker 02

  Passed away in 21.

• 10:44Shawn Ryan?

  I'm sorry to hear that. Sorry to hear that.

• 10:48Shawn Ryan?

  So you grew up, I mean, you're an entrepreneur. When did the entrepreneurial mindset kind of kick in for you?

• 10:56Speaker 02

  Uh, at a pretty early age, because my dad, in some sense, you could say was also an entrepreneur and he was always encouraging me to think about these things. And, um, I, I worked at his pharmacy in Orlando as, as a child, um, in, in high school. Um, I started programming, uh, 11th grade. I started programming professionally and, and kept doing that. I tried, I actually dropped out of Cornell for a hot minute there to build a company and try to get going with it. But I've always been dabbling in, in these sorts of efforts and I knew that ultimately I wanted to be part of creating something new, you know, being part of, of, of an early founding team. And really, the reason I went from Cornell to Stanford in 2003, it can be hard to remember,

• 11:40Speaker 02

  but even Google didn't recruit on the Cornell campus. Most of my technical classmates unfortunately went into consulting and banking. You know, it's nothing wrong with it, but it's not the same thing as creating. And so I had to find some way, some mechanism to get to the West Coast, to be with a bunch of other people who really thought of building as the primary purpose of their life's mission. So within two months of being at Stanford, I had a full-time job as the fifth employee at a startup called Zoom with an X that did international money transfer. It was seed-funded by Peter Thiel, and my interviews were with Roloff Botha and Keith Raboy, who are founding members of the PayPal mafia. And that's how I kind of got started in that world.

• 12:22Shawn Ryan?

  Man, that's... It seems like all you guys know each other pretty well. You and how did you meet Joe?

• 12:29Speaker 02

  So I had been working at Zoom for almost three years, and one of the colleagues I was working with said, you know, there's this company that just sounds perfect for you. It's a small group of people. At the time, it was 12 people. And my freshman room dorm mate at Stanford is one of the co-founders.

• 12:45Shawn Ryan?

  No kidding?

• 12:46Speaker 02

  So he put me in touch with Joe, and Joe hired me. That's how I got started.

• 12:51Shawn Ryan?

  Wow. That's... I love talking to him, man. He's like such a fascinating guy. But so what was Palantir at the start, at the beginning?

• 13:03Speaker 02

  It was honestly something much smaller. I mean, it was still ambitious in the sense that this group of folks wanted to work on problems to help a handful of institutions in the world with counterterrorism. And we had this idea that in the, you know, the discourse, if we can remember what it was like immediately post 9/11, it was really, the political discourse was something like, what matters more, security or privacy? And it's like, to us as engineers, that sounded stupid. Like, don't both of those things matter? And so, you know, politicians, they debate, where should you be on the efficient frontier? Should we trade off this to have more of this or whatever? But engineers, they build things so you can have more of both. And so who's going to build the actual technology that allows us to protect the data

• 13:46Speaker 02

  so that we can maximize what we can share, so that there's never going to be dots that we can't connect again, and do so in a way that the American people have confidence in and can believe in. And recognizing that a solution that was really going to do that would have to span countries. You know, one of the proudest operations that we were involved in was defeating an ISIS cell in Iraq that had a downed US drone that they were going to load with explosives and bring to a hospital, explode it, and then blame it on the coalition. And to solve that problem, it required intel from the Danes, the Americans, and the Brits. You know, and how does that work historically? Hopefully, you have friends at each of these

• 14:30Speaker 02

  services, and you're all going to share information, and it gets through the foreign disclosure process, and, you know, everything in that methodology is set up so that we lose. You're not going to be able to do it fast enough to intervene. But, you know, our technology enabled that to happen, machine to machine, in a way that, before they could get the drone out of their garage, they were gone.

• 14:50Shawn Ryan?

  Wow. I mean, so what, even after interviewing Joe, I'm still, I'm still trying to figure out what, I mean, what Palantir does and how it deciphers all that information. I mean, just a couple. You guys are in anti-money laundering, rail, energy, defense, insurance, semiconductors, utilities, retail. I mean, there's got to be a list of at least 30 things.

• 15:15Speaker 02

  Yeah. Well, yeah, at this point, so we do much more than counterterrorism, as you're pointing out. The business, there's two sides of it. There's the government side and the commercial side.

• 15:23Shawn Ryan?

  Okay.

• 15:24Speaker 02

  So, and it's about 50/50, which is unusual, I think, for reasons we'll maybe get into later. But the commercial side, it's 50 different industries: energy and mining, insurance, pharmaceuticals. And the government side, most of what we're well-known for is defense and intelligence, absolutely. That's, that's two-thirds of the business. But also, health, the IRS, tax fraud, you know, Justice Department, you know, helping these organizations run themselves better. And what the technology really does, you can think about it as like An operating system for an organization. It allows you to actually see yourself. It's shocking how hard this is. How do I have access to all of the data that's in my enterprise in a way that I as a human think about it? I as the principal, not just the human, but I as the principal, like, what's my model for this? What are the questions I want to ask?

• 16:09Speaker 02

  Simple example, when Rocketman was rattling his saber in 2017 in North Korea, the army wanted to answer the question, how many tanks are there in the army? That is a three-week data call.

• 16:20Shawn Ryan?

  Are you serious? It takes three weeks to get an inventory.

• 16:24Speaker 02

  Until we got involved, it took three weeks to answer that question. Because there is no canonical representation of a tank. And what do you mean by tank? Do you mean the ones that are ready or not ready? So the way you would do it is you would, you would send down the data call to all of the units. They'd go check out the motor pool, they'd come back with the answer. And so there's no living, breathing canonical record that continues to flow through this. We've built these systems. The army is older than the country, right? Like, we've built these systems, it's like archaeology when you go back there and try to look at this. It's not how you would do it today, but that's our extant reality. It's, we have to deal with this messiness. Sometimes, you know, the cynical way to think about Palantir is it took something as sexy as James Bond to motivate engineers to work on a problem as boring as data integration. But that is the starting point.

• 17:07Speaker 02

  If you can't see yourself, if you can't integrate all your data, like, you're just always chasing your tail. Then on top of that, we make powerful interfaces for decision-making. One of the contrarian quips I have is that data is not the new oil. That, you know, people have been running around saying data is the new oil, data is the new oil. I think data is the new snake oil. There's nothing inherently valuable about data. It's only valuable if you can use it to make a decision. So that it's about decision advantage. So how do I leverage this data I've now integrated? So that you can make a better decision, you can see further in the future, that you can outcompete your competitor in the commercial world or your adversary in the defense world.

• 17:47Speaker 04

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• 18:16Speaker 00

  College football is back. So Hilton called to me, the superstition concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching band wake up call at 5:55 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for the stay.

• 18:46Shawn Ryan?

  So, I mean, just for example, the downed drone that ISIS was going to move into a hospital and blow it up, and blame it on us. I mean, what kind of data are you guys feeding

• 19:01Shawn Ryan?

  Valenteer to make those type of decisions and to speed the process up?

• 19:06Speaker 02

  So, the-

• 19:07Shawn Ryan?

  Like, just for example. So, I'm a former SEAL. I hear that and I think, "Okay, well, let's go raid the compound where they're doing that, kill all the bad guys and recover the drone." And so the decision seems fairly, I mean, obvious, in my opinion. So what-

• 19:26Speaker 02

  The decision is leading up to the point where you realize that's what they're trying to do. Right?

• 19:30Shawn Ryan?

  Okay.

• 19:30Speaker 02

  How do I integrate the human reporting that I have that tells me what might be going on? Now, keep in mind that one part of the reporting is in this country, one part of the reporting is in that country. You know, who's willing to share what? Who even knows that sharing it is going to lead to a mission-critical outcome that saves lives? So how do you start to automate more of that? How do you help them piece those things together? How do you combine the technical collection you have with this too? So, maybe you have- That helps you understand this, helps you understand that this reporting is correlated to other cells that you actually care about, where you have intercepts that tell you something. How do I use my historic FMV footage, observations of that compound that helped me piece together more, more things that lead to the conclusion, we've got a problem here and we've got a tight timeline to act.

• 20:14Shawn Ryan?

  Holy shit. So it's, so basically, so am I right if I say,

• 20:19Shawn Ryan?

  I mean, contractor for the agency, operator for the Navy SEALs, I saw how inefficient government communication is, just within US stuff, CIA, FBI, DEA, mil, all these, all these different organizations, all, I mean, it's a disaster trying to talk to each other. And so basically this takes all the information, so all these entities are feeding Palantir the information and then Palantir basically, what, what disseminates, or not disseminate, but processes the information and gives you the probability of what is likely going to happen?

• 20:58Speaker 02

  It's like shining, it's like turning on the light on the battlespace, the things that you couldn't see before you could see now. Now, some important, might seem slightly technocratic, but we're providing the software to the government customers. And no one's providing us all of this data.

• 21:10Shawn Ryan?

  Okay.

• 21:11Speaker 02

  The government has the data, great, but it's just sitting there. It's, it's, it's in the dark. It's hard to see all of this information. It's, it's overwhelming. Great. How do, how do we get the spotlight to highlight the things that actually matter? How do I get to ask the next question? So here's, here's something that's risky. Okay, what are the next 10 questions you're going to want? Can you even answer those 10 questions in 10 seconds? Or is that going to take you 10 weeks? If it takes you 10 weeks, you're not even going to bother answering those questions. All right. So can I make that fast enough that you get to, why does this matter? And is this a threat? Or is this irrelevant?

• 21:42Speaker 02

  That's, that's the first part of it. The second part of it that's really important is because, you know, why is this information sharing so hard? Well, there are lots of rules and regulations. People have different authorities, different things can be shared. The way we enforce that today is with humans. Which is crazy, which is why it's slow and inefficient and you miss things. We replace that enforcement with software. The software ensures no one can see anything they're not allowed to see. The software ensures under the right conditions for information sharing, the right pieces of information flow from one agency to the other. So by automating that flow, it means that you kind of have a hive mind. The entire government can operate competently because you're actually able to see everything you're allowed to see as opposed to, well, we have humans who are gatekeeping us along the way, just slowing everything down, which always, when you have humans, it always devolves

• 22:27Speaker 02

  into control.

• 22:31Speaker 02

  It's not, the mission gets obfuscated by, well, we do this job, they do that job, and the interpersonal factors get in the way.

• 22:39Shawn Ryan?

  Wow. So what was it at the beginning you guys were doing? Back when you were employee number, when you came on as employee number 13?

• 22:47Speaker 02

  Well, you know, it was, it was really hard because none of us had worked in government. None of us had clearances. We, we would go to DC, we'd literally carry our Pelican case with a projector. I mean, talk about state of technology. You couldn't even rely on a projector being in the government conference room. You had to bring your own projector to make sure you could actually show the customers what you were building. And we were really eliciting feedback for them, like, okay, I built this, you know, and we don't know your workflow, but based on your reactions, I'm going to go away and code that night and come back tomorrow and show you something new. And we had to do all this kind of notionally to begin with on low side synthetic data until we got to a threshold of conviction. And that threshold of conviction, I mean, almost to the point, it started because of

• 23:29Speaker 02

  a renegade analyst, and I think she's, she's been a prior guest of yours, actually, Sarah Adams.

• 23:34Shawn Ryan?

  No kidding?

• 23:35Speaker 02

  Yeah, so Sarah Adams, so Incutel brought a fresh, bright-eyed, bushy-tailed cohort of CIA analysts out to the West Coast. We were maybe 20 people at the time. We were one of the stops along the way. And she saw the demo and she's like, I need this. Why don't we have this? In fact, I joined this organization because I thought I'd be having James Bond technology. And somehow I have WordPerfect and Lotus Notes, you know, and she organized a day on her own. I think she was like, maybe like a GS12, you know, on her own, she organized a day of three meetings where more than 200 analysts came to see this thing. At some point, the, uh, the deep state, the IT people got wind

• 24:17Speaker 02

  of this and came to this meeting, trying to shut it down, trying to dampen the excitement. But they were, you know, the analysts were just in revolt. Like, why can't we have a pilot? Why can't we try this out? And that broke the floodgates open for us. So years, I probably did 300 demonstrations and meetings trying to get a single pilot. And that one day, she made it all happen.

• 24:40Shawn Ryan?

  I'm gonna have to talk to her about that. She's been holding out on me. Um, wow. So you, so you guys were in defense tech at the very beginning and then grew into all these other...

• 24:50Speaker 02

  It was always about defense. I mean, I'm, I'm very happy we have a commercial business. It, it powers a lot of innovation. And frankly, a lot of the things we learned, learned in commercial, we're able to bring over to give the government decisive advantages. You know, we're able to amortize the R and D. Ideas that BP or Avis have make the army better. That's one way of thinking about it. But we really started because we cared about the government mission. And we honestly would not have built a commercial business, except for the fact that the government was so slow and so hard that we were going to go broke if we just stuck by being purely a government company.

• 25:23Shawn Ryan?

  Wow. What was the, I mean, what was the pushback from when you, when you're saying the deep state was trying to pipe it down a little bit?

• 25:31Speaker 02

  A desire to build all this stuff themselves. We don't need this. We don't need these outsiders. You know, they don't know our stuff. I'll give you, I'll reason by analogy. So I, I recently met someone who was in Quadulane, and I think it was 2014, when SpaceX was launching their early rockets. You know, Elon was one launch, he had four, he had three failures and he was one launch away from losing the whole business. And he said, you know, I was there and the SpaceX facility is right next to the Boeing facility. And you go to the SpaceX facility. And you compare it to the Boeing. Boeing facility is like a clean room. You're wearing a bunny suit. It looks so sophisticated. SpaceX, it's open air, parts on a table, things are rusting, and you're just like, these guys are never going to make it. You

• 26:15Speaker 02

  know, like this, they don't know what they're doing. But you fundamentally misunderstood what was happening there. It's not where are they today? It's how, what's the first derivative? How quickly are they improving? How good is that team? And that is, that is the world's best team, right? And look what's possible now, you know, like our launch capability is unmatched. And the price performance that Elon is able to deliver. When I was a kid growing up, shuttle, it used to cost $50,000 per kilogram to get to orbit. With Starship Heavy reuse, it'll be 10 to 20 bucks. I mean, it's just orders of magnitude difference, right? And I think there was something like that in the early days for us, which is, this seems like a joke. Who are these kids running around in shorts? You know, I remember one

• 26:58Speaker 02

  early meeting I had in the Pentagon, I didn't wear a tie. I mean, I wore a suit, everything except for a tie. First 30 minutes of the meeting, I just got dressed down for how disrespectful it was to show up without a tie. Look, I always wear a tie now. I've learned my lesson. But I think we, we, we lost the plot. Like, the substance is the code, not the quality of my tie, it's the quality of the code.

• 27:19Shawn Ryan?

  Wow. Do you guys, even still to this day, but let's, let's, let's stick at the beginning right now. I mean, you've really disrupted, I feel like you've really disrupted the military industrial complex, the legacy companies, Lockheed Martin, Boeing, Raytheon, insert whoever, you know, I mean, was there a lot of pushback from them?

• 27:42Speaker 02

  There, there was. There was, there's a lot of pushback. There's a lot of, um, kind of fake partnerships, you know, like, hey, let's, um, let's bring you in for some small, tiny amount of work share that will actually be zero. We don't really need you, is the vibe. But I would say in fairness, when we first started, we thought the primes would be our big competitors. What I didn't realize is actually the government was our big competitor. You know, when the way that the government structured. You have these program offices and they have the perfect five-year, ten-year plan. They kind of just want to lock in their plan. And we were a threat that disrupted all of their well-laid plans. Instead of adopting us, you know, they wanted to reject us.

• 28:26Speaker 02

  And so if you really look at the early days of Palantir, all of our adoption was driven from the field back. You know, so all of our attempts to get people in DC really interested in what we're doing, it was in benefit of hindsight, was wasted time. You know, our first deployment was with 10th Group as they took over Siege of Sodif AP in Balad. And it's because the commander, the Colonel, it's just like, three days before deploying, he called us up. We had been showing him our software. He's like, well, I don't know, like, I don't buy things. I'm a warfighter, I don't buy things. And three days before you're going, he just had that feeling like, I need this. Like, if you guys come, drive for Carson, palletize your, I'll palletize your servers and I'll give you four seats. And that's what happened. We just drove all our stuff over there, flew over.

• 29:10Speaker 02

  For two weeks, the Krusty Worn officers were like, why do I have to find housing for these 22-year-olds? You know, two weeks. But after that, we earned our keep. They're like, I know why they're here.

• 29:21Shawn Ryan?

  You were over there?

• 29:22Speaker 02

  I didn't go on that trip, but Matt Grimm, who is one of the co-founders of Andrel, was working for me at the time. He went over on that trip. Greg Barbaccia, who's now the federal government CIO, he was one of our first guys on the ground in Balad.

• 29:36Shawn Ryan?

  But you've been over there?

• 29:37Speaker 02

  Yeah.

• 29:38Shawn Ryan?

  What was that like for you?

• 29:40Speaker 02

  It was eye-opening. I mean, I, most of my time I spent at Leatherneck, so in Helmand, working with the Marines.

• 29:45Shawn Ryan?

  Nice place. I've been there.

• 29:47Speaker 02

  Dicey spot.

• 29:49Shawn Ryan?

  What year?

• 29:50Speaker 02

  That was 2012, or 2011, 2011.

• 29:53Shawn Ryan?

  No shit. I was there around that time. Interesting. What was, so tell me about it. How did that experience go for you?

• 30:03Speaker 02

  I mean, we, we would have these... It's like a cup of motivation undersells it. It's like a water tank of motivation. You know, you have these people, they come back from mission. They tell you what happened. They tell you their ideas, their feature requests. And you just have unbounded energy to code right there. You're just in a plywood little setup writing code. And okay, I'm going to have something better for you for tomorrow. And you just do that again and again, that the whole product development lifecycle. That was really, I was the first forward deployed engineer at Palantir, which investors hated because they thought it was a service business. Not how you're supposed to do software. Everything about it was wrong to them. But it was so clearly right for our users. You know, of course, you need the person who actually knows how to build the product

• 30:46Speaker 02

  sitting forward in the tent with the people doing the work. So you can observe not what people in headquarters think the software needs to be, but the empirical reality on the front of what is missing? What could make this person more successful on the next mission than the prior mission? And if you do that for long enough, you just build this deep understanding of everything that's broken in the world. Everything that sucks about their experience. Everything that makes them more likely to come back as a team together. And it's also, by the way, how you say, you know,

• 31:18Speaker 02

  there's lots of jobs coders can take. But you know, this is, it is an addiction to the motivation. You know, your sense of purpose is unbounded.

• 31:28Shawn Ryan?

  Man, I love that way of thinking. I mean, I think like that just doing the podcast, which, but you know, I just, and I find whatever, whatever sector I'm operating in, business, military, I mean, there's just, there's always this box that they want you to think inside of. And people say, think outside of the box. I just, I think what box? There is no box to think of. And so I'm always looking for ways to innovate this and to not go by the typical roadmap that everybody expects you and wants you to follow. And you guys like.

• 32:11Speaker 02

  Nailed it. Nailed it. Well, I, you know, to, to take credit away from us and give it to our customers. I think, you know, first of all, this kernel is absorbing a lot of risk by kind of bending some, I wouldn't say breaking, but bending some rules and going against the system. And that was the beginning of a much longer fight as that became successful. More and more people, you know, the first thing they do when they would deploy would put in an urgent operational need statement to get Palantir because what they had wasn't working. And, um, you know, some of those people did suffer career consequences for doing the right thing and, and doing that. And you, you knew you had to deliver for them. Um, but, but the other part of it is, is really without their partnership. It's like the good ideas don't come eating strawberries in Palo Alto, right?

• 32:55Speaker 02

  They come on the fire cells of Djibouti and the factory floor of Detroit where you can, you can see firsthand what's happening and not. And that's all of the inspiration, all of the creativity. It, it comes from that environment. Um, and, you know, I, I think now this methodology has become more commonplace. People talk about forward deployed engineering, companies are building around it. And I think it's great because I, I would say a critique of the software industrial complex is if software is so great, why does nothing seem to work? Why are doors falling off planes? Why do our, why, why is it, you know, why is there so much fraud in our, in our government system? Like we, we should be looking really hard at this and, and I think it's because we've just been doing it wrong. We haven't been holding ourselves accountable to the primacy of winning. It doesn't matter what box of software you thought you were going to make everyone living

• 33:39Speaker 02

  inside that box. Does it work? Doesn't matter. What, what could you change that it worked better tomorrow? You know, and, and are you impatient enough to go drive that change? And a, a lot of that comes down to, um, institutionalizing rebellion. You know, there was nothing that headquarters was going to tell our engineers in the field that would make them better at, at, at coming up with the next feature. Like that was going to come out of their own crazy creative ideas being really right next to the problem. So my job is to support them in doing that to the greatest extent possible as we continue to build the company. So the, the machine doesn't crush them, the machine encourages them. And that, that's led to this philosophy at Palantir that we are not a factory.

• 34:20Speaker 02

  We're an artist colony. Like, my job is to find Dali and Monet and don't do stupid things like yell at Monet to paint more like Dali. Like, each of these people are unique artists. And my job is to get out of their way, make sure other people stay out of their way, provide as much room as possible and, and help them, you know, just like an artist. It's not like every piece of art is better than the last one. You go through waves and cycles and just create the environment that allows them to do their, their best work.

• 34:47Shawn Ryan?

  Interesting. Um, you guys, Palantir sued the government towards the beginning, correct?

• 34:54Speaker 02

  Yeah, in 2016, we sued the army because we were unable to compete on their army intel program. So the, the story is like, all these units, as they would deploy, they would, they would request Palantir. The reason they had to request Palantir is there was an army program of record, as the government calls it, called DCSigs. And DCSigs A was, you know, it was the blessed system that was supposed to do army intel. Except it didn't really work. Twenty-six billion dollars, many years of development. And you would honestly find it, you know, when, when the generals came, people would turn it on and pretend like it worked. But it was a paperweight to them. They would just, you know, store, it was just sitting there collecting dust.

• 35:35Speaker 02

  And we were there on the ground. We were highly responsive. And all we wanted was the opportunity. So this program was coming up for recompete. And we wanted to compete to win it. The way the army structured it precluded us from competing. It, it basically said, "You have to custom build a product and turn over all your IP to us, or you're not even allowed to compete." Which is illegal, it turns out, which is why we sued. That there's, there's, there's a law from 1994 called the, uh, commercial item preference. That if a commercial product exists, the government is not allowed to go custom develop something because that's risky, probably going to cost you a lot more. And, um, as a philosophy, we'd rather tie our investments to think the commercial world is adopted because it means,

• 36:19Speaker 02

  you know, it probably works, it's been de-risked, the hyper-competitive free markets are voting on and providing the stimulus to keep making it better. It's going to be cheaper. So we sued them. It went to appeal. We won on appeal. So it's a very, very strong precedent. But I think the key lesson from that really is like how hard it is to change just the momentum in the bureaucracy. And one of my favorite anecdotes is there was a contractor working on this legacy D6A system in his civilian job, but he was a reservist. He got flipped to active duty and deployed to Afghanistan. The first thing he did when he hit the ground was put in an ons for Palantir. So when his life was on the line, he knew what he wanted to back.

• 37:04Shawn Ryan?

  Wow. Wow. What are some other, I mean, how often are you guys going overseas?

• 37:10Speaker 02

  Constantly.

• 37:11Shawn Ryan?

  Working with the world fighters?

• 37:12Speaker 02

  Yeah, constantly. Like we would, we were in Iraq and Afghanistan throughout the conflict, supporting users. We were working with coalition as well, with UK special forces, other places, Philippines, Djibouti, supporting, you know, ODAs. We'd get on the, on the little, I don't know what you call it, the conveyor belt of flights that would go visit the forward operating bases and make sure folks had what they needed, make sure that they're forward locked. They would take their laptops to do key leader engagements where like all of the intel was really coming back. And when you're alone and unafraid and disconnected, like this was, this was your brain. This is how you were coordinating things. A lot of the value was doing our part.

• 37:55Speaker 02

  Can't do it all, but doing our part to change that, the nature of the conflict from being 17 one-year-long wars to really creating continuity. Like some of the, you know, you'll have Marines that tell you like there are Marines alive today because of the simple fact that we could look back at past deployments and realize every time prior teams landed at this HLZ, they got bombed to shit. You know, it was always an ambush. And just being able to see things that we couldn't know because we weren't there on the ground, we as in the current team, but being able to learn from the history and the experience of everyone else who's been here before us made us smarter and more lethal and more survivable.

• 38:30Shawn Ryan?

  Any close calls when you were over there?

• 38:32Speaker 02

  Not for me personally. Some of our teams definitely were under mortar attack and, you know, a few convoys that took some fire, but fortunately for us, no one got hurt.

• 38:42Shawn Ryan?

  Right on, man. Right on. You know, Palantir, it sounds like one of the, one of the main philosophies is founders first or founder, founder driven. What does that mean?

• 38:54Speaker 02

  Yeah.

• 38:57Speaker 02

  I think one of the, we could all, we could, we could start by what does it not mean? You know, I think, why do doors fall off airplanes? Why do we have this legitimation crisis for our institutions? This is the sense that the institutions we have aren't kind of working. And I think it's because they're stuck in manager mode. There's this idea that there's a playbook. And if you just follow the process, you know, everything will work. Everything will be well managed. My experience is it's all well managed into the ground. You know, whether it's a company or a country, there is no playbook. You know, it really comes down to, to human discretion, human decision making, bold leadership, people with the right ideas. And so certainly in our history, and it comes, it comes from one of our founders, Peter, it's called the Founder's Fund.

• 39:42Speaker 02

  The whole idea is that really the value creation engine comes from the founder personality. And the most dynamic parts of our economy are led by founders. You could look at this by, in Europe, Europe has created zero companies in the last 50 years from scratch that are worth more than a hundred billion dollars. Zero. We've created all of our trillion dollar companies in America from scratch in the last 50 years because of founders. And of all countries in the world, we know there's something special about founders. There's a reason we call them the founding fathers. You know, this is a unique legacy of America that we should really be leaning into and embracing. And it's, it's more than just, did you found a company? It's really a mentality, a personality.

• 40:27Speaker 02

  When you think about Bill Nudson and how he mobilized us for World War II and built the arsenal of democracy, he's got a founder personality. Or Admiral Rickover. You know, this guy, born in a Polish shuttle, came here, I think when he was six years old, short man, short stature, feisty. He was so hated at the US Naval Academy, they've actually torn his picture out of the, out of the yearbook. Zumwalt said, when he was CNO, the Navy has three enemies: Soviet Union, the Air Force, and Hyman Rickover, one of his own. But he built the nuclear navy. You know, and that was really, he, by total happenstance, after World War II, he went to visit Oak Ridge and he realized, holy crap, this could, this could power an entire, entirely

• 41:08Speaker 02

  different regime of sea power here and could give us the ability to keep our subs underwater more than an hour. Those diesel subs back then, you know, it's kind of laughable when we kind of think about it. But he did that. He was a four-star animal for 30 years. And we kept him in place and he built one of our last remaining asymmetric advantages. That's a founder personality. Gene Krantz, who built the Apollo program, Kelly Johnson, who built 41 airframes in his life, including the U-2, which we still fly, and the OX cart, and the SR-71. You know, these people did incredible things. And that's the promise of America. We have these people who do incredible things. Don't squash them. Don't crush them. Let their innovation thrive.

• 41:50Speaker 02

  And those people are in government. I think the reason JSOC was one of the first places to adopt us is you've got a lot of founder personalities in JSOC. That's how that institution works. That's what happens on the ground. You know, they are entrepreneurs in a different domain. And so then for us, it's like, great, when you have someone who has the creativity and the vision, I can build a software Iron Man suit around them. I know how to make them 100 times more lethal or effective in the business context than otherwise. When you have a manager who's just trying to follow the rules, you know, maybe you can make them 10% better. And you're just, you're kind of just rearranging the deck chairs on the Titanic. There's this constant need for reinvention, right? Like, we can't rest on our laurels.

• 42:32Speaker 02

  And it's these founder personalities that push that reinvention, who see what could be and see what is broken and close that gap.

• 42:39Shawn Ryan?

  So it's enabling that?

• 42:41Speaker 02

  Yeah.

• 42:41Shawn Ryan?

  Love that. You know, you brought up the nuclear program in World War II. And I heard you downstairs talking a little bit about Operation Paperclip. That's something I've just been fascinated to hear about, and I haven't had the time to dive into. What was that?

• 42:56Speaker 02

  So Operation Paperclip was our covert action to bring the very best scientists from Nazi Germany to the US to enable our defense program, in particular, our rocket and space program. You can think about how hard that would be. These were our sworn enemies. These were horrible people. They did horrible things. They absolutely did. But they were, without exception, the world leaders in this capability. And they could either fall into the hands of the Soviets, and that would only create more problems. Or we could bring them here, hold our nose, and figure out how to rehabilitate them and use that for our own economic prosperity and national advantage and security. And we did that. But I think what's really instructive about Operation Paperclip is there was two competing

• 43:41Speaker 02

  programs. One was Operation Paperclip, and the other one was called FIA. FIA was this idea that, oh, we don't need these dirty scientists. Let's just steal the scientific papers. Let's take the technical documents, and we'll be able to learn from the documents alone. It was a catastrophic failure. It turns out there is something special about the human, separate and apart from just what they wrote down on a piece of paper, that there's more to replicating these things than, you know, math. There is something about the human mind that's really relevant here. And it underscores this point around the founders and the primacy of people, which I think is one of our greatest national resources as a country, the primacy of our people. How did we get them? Do you know anything about that?

• 44:26Speaker 02

  CIA operation. The reason it was called Paperclip is like, that's how we told... So they would come in through the front door through State Department, which obviously would screen out Nazis. So you had to have some sort of cover, some sort of ability to do it. And we would have these files, and we would resettle them. This is how Huntsville got started. Hey, where can we put these people? Where it'll be a little low-vis, low-profile. And, you know, we built a whole space industry in Huntsville, Alabama, around Werner-Wan Braun and his colleagues. Wow. Wow. That's awesome.

• 45:01Shawn Ryan?

  Well, you know, I had something that I ran across that I think a lot of people are fearful of. What is it? It's predictive policing software. Are you, you guys are involved in that?

• 45:14Speaker 02

  We don't do predictive policing. We've, it's widely believed publicly we do, but we don't. And it has probably the most scary name possible.

• 45:23Shawn Ryan?

  Mm-hmm.

• 45:23Speaker 02

  I think a better way of thinking about it is, um, the projects I've seen and been, been close to, it's, it's about resource allocation. So where should I pre-position police to deter violence? You know, it might be nice, like, we look at the historic data. We see there's a lot of stabbings at this Jack in the Box at 2:00 a.m. on weekends, when the temperature is pleasant enough for people to be outside roaming around. Okay, it might be nice to have a cop on that block, make the presence known, deter any bad actors and behavior. And, um, that's been, that's been effective, where it's been possible. I think the branding of it has been really detrimental, but there is

• 46:04Speaker 02

  a clear correlation between the presence of policing and deterring violence. The other aspect of it too is just understanding, particularly with gang violence, it's usually a cycle of retribution.

• 46:18Speaker 02

  This person got killed, okay, well, the, the family of the person that got killed, their, their, their gang knows who did it, there's going to be retaliation. So if you can figure out ahead of time, these relationships, you can have presence there to suppress the ability for retaliation to happen without consequence, which then hopefully gives time and space to quiet down the violence.

• 46:39Shawn Ryan?

  Okay, so this is, this is kind of similar to what you guys are doing, just in a different outfit. And it's, it's, it's, once again, it's, it's sifting through data and telling you where to allocate resources.

• 46:50Speaker 02

  Yeah.

• 46:51Shawn Ryan?

  Interesting, interesting. Well, let's get into, you talked a lot about the bureaucracy in America and the, and the challenges that it, it, it caused you to guys, you guys to overcome. What, what do you think's wrong in America today?

• 47:07Speaker 02

  What I think is wrong writ large with the world is that, um...

• 47:13Speaker 02

  Let's just steel man it. The C-suite, the executives of these agencies or these companies, they have a steering wheel. They're trying to steer the ship. They're trying really hard, really diligently. But what they don't know is that steering wheel is like a prop from the Jungle Cruise Ride in Disneyland. It's not connected to anything. And then the people on the factory floor, metaphorical or actual factory floor, they look up and they say, how can my leadership be so dumb? Like, how can they not see what's actually happening here? And then you have all the layers in between. Part of their job is to make sure the steering wheel doesn't actually work. And they're controlling and massaging the information as it goes from one place to another. So you can't see yourself if you're at the top. And then you have this sort of nihilism.

• 47:58Speaker 02

  It breeds this nihilism, like nothing works, we should tear it all down, you know? And sometimes that's the answer. But also, you have to kind of wake up, there has to be some force waking up, trying to make these institutions actually functional. And that's what we see our software doing. It's actually creating a steering wheel for the C-suite that is connected directly to the people who do the work. And that gives you a basis to understand what is happening? How do I, you know, when I provide steering input, is it actually going to result in changes? How do I iterate on my policy and my strategy? When I have a question, like how many tanks are in the army? I should know that in three seconds. And that lets me know, do I need more or not? You know, and I can move on to the next problem, next problem. If I have to wait three weeks to answer that, you can just see how the whole system just gets gunked up. Nothing actually works.

• 48:43Speaker 02

  You don't understand that the quality on assembly of doors is not working, and therefore we're going to have problems. And, you know, small problems that can be solved become big problems that people will struggle to solve. This breeds a legitimation crisis. Like, the legitimacy of our institutions is based on the fact that they work. How do you spend $11 billion on high-speed rail in California and have 1,600 feet of track that goes nowhere? With a government institution that's really proud of how many jobs they created by doing this. You compare that to SpaceX. They've only spent $9.6 billion, and they put more than 300 rockets into orbit. Or, you know, we spent $40 billion on rural broadband and have no rural broadband.

• 49:26Speaker 02

  We've spent $80 billion on electric chargers, and I think we had like eight. You know, so there's something wrong. Part of the disease that we're facing... Is this idea that all you need to do is cut a check? Like, money will just solve the problem. You know, money enables the founder personalities. Money enables people to do the work. It's the front end of enabling the work. And it's the back end, it's the reward for having done the work. But someone's got to do the work, and you've got to be really good at doing the work. And that's like, that's art, that's craft. You know, it's not a commodity, it's not mindless, you don't just outsource it. And we need people to be proud of that and our efficacy in doing that.

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• 51:06Speaker 02

  You know, you think about these, like, I think the counterfactual, if you just say, like, we didn't have Hyman Rickover, we had someone else, or we did, we had DOPMA back then, and we rotated people in and out of driving the nuclear navy every two or three years, we wouldn't have, it wouldn't have worked. And so when we look at so many of things, why does the F-35, we conceived of it in the mid-'90s, and it's just kind of working now? Why should it take 30 years when Kelly Johnson could build, as a single human, that Skunk Works, he's the founder of Skunk Works, he could build 41 airframes in his career, he could build the U-2 in 13 months?

• 51:45Shawn Ryan?

  Do you see this changing?

• 51:47Speaker 02

  I do. I mean, the reason I've been writing about it is that I'm wildly optimistic that we're on the verge of changing it. I feel like it's a little bit like a ketchup bottle. You know, you shake it, you shake it, you shake it, nothing comes out, and then it comes out all at once. Like, this has been building, and people can kind of feel this subconsciously. They can see it in the parts of the American economy that are working, which frankly are the only parts of the economy. You know, look at Europe, nothing's actually working over there. So like, the parts of the world economy that are working look like this, the parts that don't. You see it with, when Doge goes to DC, like, there's a lot of noise, certainly from the other side around Doge. But it's been amazing. You know, you have people who are the NBA athletes of technology, walking around, kind of realizing like, oh, that's

• 52:30Speaker 02

  a seventh grade basketball team over there. And, you know, people who can call balls and strikes. And conversely, you can be like, that person in government is a genius. Like, they're not empowered. We need to empower. This is the person who actually knows the right answers. We pull that, you know, Doge has the ability to make those calls, and to do so with taste, right? And that realignment is profoundly needed.

• 52:54Shawn Ryan?

  Why do you, I mean, why do you think there is so much pushback on that? What are they scared of? I mean, this sounds, it just, I mean, we're gonna save money, things are gonna become more efficient. I don't understand, I do not understand the pushback.

• 53:09Speaker 02

  It's not supposed to work this way. We were following the playbook. We had a playbook, you know, there's a system. It's this, it's this belief in process over outcomes, you know, it's like, and it's, it's profane to have to blow up all the process, and to believe that everything that we believed in the past didn't actually work, or that there would be another way of organizing yourself that would be superior and would work better. And I think that's the subconscious undertone of the pushback. And then people, this, you know, it's like, the best engineers are, like I said with Hyman Rickover, he was hated by the Navy, but he was a national treasure. And can you hold that contradiction that,

• 53:50Speaker 02

  okay, yes, the engineer said something that hurt your feelings, but they're right? Can you hold that contradiction? Like, are you optimizing the, because if you care about the outcome, that's easy to get over. It's like, yeah, you're right.

• 54:02Shawn Ryan?

  So it's ego. It's all ego.

• 54:06Shawn Ryan?

  What a shame, man.

• 54:09Speaker 02

  I think the results will speak for themselves. You know, and I've seen this so many times. Once the bureaucracy gets out the way, you can you can often solve these problems inside of 30 days. So, and I think that's the I know those guys, that's what they're focused on every day, which is just delivering results, keeping their head down, delivering results. And, you know, I think it's they're a national treasure.

• 54:27Shawn Ryan?

  How long ago could we have done this, do you think?

• 54:31Speaker 02

  Uh, from a technical perspective, we could have done it 30 years ago. I think from a political will perspective, it took President Trump's political will and the mandate that he got with the election in order to make it happen. And you still see the amount of pushback that there is.

• 54:45Shawn Ryan?

  Yeah, it's insane. I mean, I just, like I said, I just, I don't understand it. It just, it just seems like it's better for everybody if we do this. And there's just, I mean, people are just screaming on the rooftops about it.

• 54:57Speaker 02

  And to tie it back to Founder Mode, my own support for President Trump is, you know, when I had a three hour dinner with him and the presence of a few other folks, and what I felt profoundly was a founder personality. This is a person who was going to throw away the manager playbook, who actually had an intuitive understanding of the things that were broken and what to do about them. Was going to make contrarian calls and and actually cares about the outcome.

• 55:20Shawn Ryan?

  I mean, speaking of President Trump, I mean, hot news right now is, you know, the tariffs just came out yesterday. I'm just curious, what are your thoughts on that?

• 55:30Speaker 02

  Um.

• 55:31Shawn Ryan?

  You worried about that at all?

• 55:34Speaker 02

  I'm I'm not. I think there will be some volatility. Well, I've been I've been looking at the markets, kind of thinking about how much of this is the market reacting to the playbook? It's like prophylaxis. Before the pain is even felt, they're like, but we take as an axiomatic given from our economic theory that this is a bad thing versus empirically, it's already resulted in badness. I think there's going to be some chop between here and there. But the ultimate thing about the founder playbook, it's not that founders are always right, but it's that they are first intuitionally driven and then often can only fully explain their intuition over time. And so there's you have to decide, um, is the rebuttal presumption going to be, we're going to lean in and try what the founder is saying?

• 56:19Speaker 02

  Or are we going to resist every step? Do I, is the burden of proof such that I will not take any action until I perfectly understand everything?

• 56:26Shawn Ryan?

  Hmm.

• 56:26Speaker 02

  Or not? And I think no great things are accomplished that way. You know, it's too slow, the Oodaloop's too long, takes too long to bring everyone along. So I'm in a suspension of disbelief mode.

• 56:37Shawn Ryan?

  A lot of people worry the price, I'm worried the prices are going to go up on everything, I mean.

• 56:43Shawn Ryan?

  But.

• 56:45Speaker 02

  And I would say Scott Bassant is a very smart human, very smart macro trader, you know, part, part of an elite, is probably like on the order of 10 people in the world like him or a current Treasury Secretary. And, um, you know, I, I basically, it comes down to confidence in the team. I have a lot of confidence in the team.

• 57:05Shawn Ryan?

  Okay. You know, back to Palantir, what, what other countries are you guys working with?

• 57:10Speaker 02

  Well, the US and our allies is really our focus. So, you know, we have most of Western European and, uh, intelligence organizations, uh, use our software.

• 57:21Speaker 02

  You know, some of that is, look, they're subscale in many ways, so I don't want to call it philanthropy, but it's, it's the right thing to do. Um, after the Bataclan massacre, we, uh, volunteered to help the French out massively. Um, and they took, I think that was actually kind of a mark to market moment of, we need the help. A lot of these European countries have their own indigenous industrial base, which they're very proud of, but is, is not the level of, of the US industrial base. Uh, and so there's a, you know, there's always a conflation of what part of my industrial base is a jobs program and what part is supposed to provide deterrence and lethality to protect my nation. Uh, and so I think we're really happy with, with that level of work here.

• 58:02Speaker 02

  Um, Australia, uh, Japan, you know, the, the US and our allies.

• 58:07Shawn Ryan?

  What do you think about, I mean, a lot of stuff going on in Taiwan right now? How, how important is it? Should we even get involved in that?

• 58:18Speaker 02

  I think the way, the way I think about it is that we want to make Any sort of kinetic or even non-kinetic economic action against Taiwan too risky for our counterparts in China. We want to push out. If the Davidson window ends at 27, our goal is to make that 28, then make it 29 and 30, and just keep making it harder and harder and too risky for the CCP to do anything. That's the optimality. And I think it plays to a sort of, you need, that's the primacy of winning. It's a mindset that's like, we're not trying to solve the problem, we're trying to make sure they can't move on Taiwan.

• 59:00Shawn Ryan?

  And how exact, could you be a little more descriptive on how would we do that?

• 59:05Speaker 02

  We have to make it not survivable or unpredictable of what the outcome is going to be. And I think the way the CCP works, the amount of certainty they're going to need is pretty high for an operation. And we need, if they know exactly what we're going to do, they're going to figure out a counter plan. They're the best at long-range planning. They have a 50-year plan, and it's actually really well thought through, and they're good at that. But I think the fundamental American strength, like why I think we'll win in the end, is that we're crazy. We don't know what we're going to, when we get punched in the face, we don't even know what we're going to do, so how could they? And so I think we have to kind of bring that craziness left of the balloon going up and

• 59:50Speaker 02

  make sure that the level of unpredictability that we're creating in that battle space means that we stay in competition and never get to crisis or conflict.

• 1:00:01Shawn Ryan?

  How, I mean, how dependent are we on Taiwan for semiconductors and chips and all these type of things?

• 1:00:10Speaker 02

  Where the leading edge vary. And I think that's the important part of our hedge strategy. We have to, you know, I heard that Intel and TSMC are announcing a new joint venture. We need to bring, this is part of the broader need for re-industrializing the nation. We are, we probably have two weeks of pharmaceutical supplies. Most of these pharmaceuticals are made, and the upstream ingredients, the APIs, are made in China. Like, if we just start going through the things we need to ensure our American prosperity, too many of them are in the hands of our lethal adversary.

• 1:00:42Shawn Ryan?

  Yeah, China is a topic that we just continuously discuss here. So I mean, how worried do we need to be about China? It seems like they just have us in all these different areas. They're manufacturing. You mentioned pharmaceuticals. Damn near, it seems like, it seems like our whole supply chain comes from there. And, you know, then there's the, they're involved with the drug, the drug trafficking coming out of Mexico.

• 1:01:11Speaker 02

  Yeah, the Verso P M War, as I call it, yeah.

• 1:01:13Shawn Ryan?

  I mean, they're buying up all our land. They're investing in our country. I mean,

• 1:01:22Shawn Ryan?

  where are they? How, how, are we behind China?

• 1:01:25Speaker 02

  I think we are, we do not yet have clarity of the threat amongst the American people. The national security community has, has, is not confused. They understand it is the priority threat. But, and I think part of this might just come down to our media and our culture. What was the last movie you saw that showed that America is the good guy and the CCP is the bad guy? You know, when I was a child, even the Worldwide Wrestling Federation had the Iron Sheik. We had the Iranians as the back, that was the heel, right? There was a USSR heel. We had a very clear sense of who our adversaries were and that we were competing every day. If you look at the essential Chinese propaganda, which we kind of imposed on ourselves with their ascendancy into the World Trade Organization,

• 1:02:10Speaker 02

  it, it, it's taken two forms. One is, we're so weak, there's nothing to worry about here, we're so weak. The other is, we've already won. There's nothing to worry about here because you've, you've already lost the competition. But I think these, these two lines of propaganda, even though they seem contradictory, they have one thing in common, which is saying, we're not competing. Because either we're irrelevant, or we've already won. But it was, it was designed to obfuscate the fact that we are competing every single day and viciously. And that's the clarity that we need as the American people to realize that we're in a competition. Today, it's an economic competition. Let's, let's do everything we can to make sure it remains only an economic competition that requires us to invest in deterrence. You know, the Chinese were kind of surprised that we did

• 1:02:55Speaker 02

  nothing when they militarized the Spratly Islands, after telling us to our face that they were not going to do it. And so, and this is the part where I think their miscalculus comes in because the the sort of midwestern, we positive sum, we're fair people, you know, we seek peace. So we'll take you at your word and we'll treat you well, but at some point you'll break that. And then, you know, as one admiral once told me, then the American oodle loop comes out, you know, observe, overreact, destroy, apologize. And so how do we, how do we manage this so that we are actually conveying and managing the threat appropriately?

• 1:03:36Shawn Ryan?

  I mean, you know, just where do you, where do we even start? I mean, we have all these politicians that have businesses over there. I've rattled off a bunch of other stuff that we're involved in. I mean, what would happen? Where do we start? What would happen if they just cut our supply chain? I mean.

• 1:03:54Speaker 02

  Well, right now.

• 1:03:56Shawn Ryan?

  It would be really bad.

• 1:03:57Speaker 02

  It would be very bad. And I mean, right now, it would also be very bad for them. And so they're, they're, what are they doing? You know, they're trying to produce their own indigenous chips, their own GPUs. They want their own Nvidia. We've curtailed their access. Of course, they're getting around sanction evasion. They're buying from Malaysia, buying from Singapore, but, but we've made it hard for them. We're creating dilemmas and problems. So they're trying to make themselves self-sufficient. We need to be investing in the same things along strategic areas. It can include our allies. Sometimes I worry that friend shoring is like a half measure. It's kind of an easy out. Like, yes, I'm not trying to exclude our allies from being part of the solution here,

• 1:04:38Speaker 02

  but everything that we can make at home in America, we should make at home in America. Now, the pathing really matters. When we were mobilizing for World War II, we took Bill Nudson, a Danish emigre, direct commissioned him a three-star general, and he was in charge of war mobilization. He had a lot of room and a lot of flexibility. And FDR actually put him in charge as a civilian in thirty-eight, I think, is when it happened. In thirty-eight, we have to remember, there was not consensus in America that we should be involved in this European matter. You know, the strong sense of, we gotta do this, we gotta, we should be isolationist here. There was conflicting views. But what FDR realized is, it takes time to build factories. Like, I need an option. Like, maybe we should be isolationist. But what I definitely don't want to do is be isolationist because the

• 1:05:22Speaker 02

  cupboard is bare. So how do we mobilize so that we can provide credible deterrent? And I think this is not about wartime mobilization, it's about mobilizing so that there is not a war. And that is really mobilizing our reindustrialization. And that was kind of a term, I've been talking about this for five years now, but back then, it seemed like a far-off fantasy. People thought it was a little crazy. This term has entered the mainstream. You will see it on Fox News. Reindustrialization is a theme. There are serious people who are investing serious capital to do this. When we get the American private capital markets behind this, which is starting to happen, it's going to be unstoppable.

• 1:05:59Shawn Ryan?

  I mean, how, there's just so many sectors, though, to build. I mean, pharmaceuticals, chips, all these, I mean, just everyday products. I mean, how are we, or are we incentivizing entrepreneurs to start to build these factories?

• 1:06:19Speaker 02

  And to the point of confidence in your team, they're thinking about that. I've heard proposals that are around changing the depreciation and amortization schedule for factories and investments. So how do I use the financial math to encourage the capital markets to view these things differently? Fundamental deregulation. How do we change NEPA? How do we change the regulation permitting processes so that it doesn't take you four years of waiting for a bureaucrat to tell you that you didn't dot the right i or cross the right t, but four minutes to get the approval to go? This is what unleashing American energy is about. What does a factory run on? Like, the cost of energy is a material input to everything, right? It is the first input into all the goods and services we buy. You bring the cost of energy down, it is a massive deflationary force, and...

• 1:07:04Speaker 02

  We are the largest energy producer in the world. Like, the resources we have, we need to just get out of our own way on this and not have a regressive mindset around like, oh, you know, using energy is bad. Actually, the basis of modern civilization is energy, and the more energy you use, the better your standard of living is, the more things are possible. And I feel like that's not a contrarian thing to say anymore. You would have had pitchforks and protests if you said that five years ago. And now people are like, yeah, well, obviously, that's true. How do we get after that? You see the tech community investing in things like fusion and fission and small modular reactors and people who recognize the reason to be super optimistic, particularly on energy,

• 1:07:46Speaker 02

  is that the AI companies are going to be crippled if they're not able to have the energy that's needed to run their AI, which means they are investing in it themselves off their own balance sheet. They're not waiting for a utility to do this or that. They're going to be building energy production behind the meter. Wow. It's not even going to the grid. It's like captive energy for their data center. And a lot of that is just the bureaucratic BS of how long does it take? You know, Oracle was just talking about how one state utility company was saying, oh, we could get you this energy in the 2030s. 2030s? You know, it's like, we should be talking, we need to measure everything in months. This is really the core thing that's going to solve our problems is being impatient.

• 1:08:29Speaker 02

  Like, we need to be thinking about what can we be doing now? What can get done? And that's what I love. The focus of this administration is very much, these are the things that must be delivered inside of this administration. That then changes how you think about solving these problems. It forces you to realize that the playbook and the process is totally screwed. It's never going to get there. It was never going to work anyways, but now it's just clear it's not going to deliver in the time. How do we reinvent ourselves in this moment to go make it work? What kind of energy should we be looking at? All types. Like, I mean, if you really look at, you know, we need more natural gas. We need to make investments in nuclear. It's going to take longer.

• 1:09:10Speaker 02

  We, sure, bring on more renewables, but look at the reliability around baseload, the variability, the battery storage, means that we need to be practical. So I'm not trying to favor one type over the other, but we're going to need more of all of these types of energy. Would you like to see more nuclear? Yes, I would. Why? I think, I think turning our back on the atom... Was one of the gravest mistakes for our rate of progress.

• 1:09:37Speaker 02

  Nuclear is largely expensive right now because we've regulated ourselves to death. The, the designs that we have are very safe. Hyman Rickover, when he was building the nuclear navy, his safety standards were set so high, higher than civilian safety standards. Because his litmus test was, my son will be in this sub. How safe does it have to be for my son to be in this sub?

• 1:10:04Speaker 02

  If you compare that to the Soviet submariners, they had to, for every six months they served, they had six months of rest in Sochi to regenerate their bone marrow because they were irradiated to all hell. You know, so there's a way of doing it. You get the right people, the right design, the right founder mode leadership. This stuff is safe and it's abundant and it's clean and we can get it at scale and you can build it in all sorts of places. And we got, we have to be thinking about this from a competitive advantage perspective. I'm not sure it's a perfectly linear extrapolation, but you know, in order for our shipbuilding to be competitive, you need more than just building government warships. Because to this point of, of a diversified R and D base, workforce that knows how to do these things, you need scale, right?

• 1:10:47Speaker 02

  As, as we all know, the one shipyard in China alone has more than all the shipbuilding capacity of all the US combined, right? They have 250 times the shipbuilding capacity that we do.

• 1:10:59Shawn Ryan?

  250 times?

• 1:11:01Speaker 02

  Yeah.

• 1:11:03Speaker 02

  I'm not sure that we need to match them, but we need to be able to produce ships. When we say we're going to have two subs a year, we need to have two subs a year, not 1.1.

• 1:11:11Shawn Ryan?

  You know, Palmer Lucky talked about this when I interviewed him. He said 250 times as well. And, but I am curious, what do those ships look like? Are they, are they an equivalent to? Something that we make or is it a shell that's basically a cargo ship? Would, do you have any insight on that?

• 1:11:31Speaker 02

  Uh, I think it's all of the above. So they're not building 250 times the number of warships. But the ability to produce commercial ships enables them to drive down the cost of producing the warships and enables them to produce the warships at a speed that's relevant to building their navy up to be big enough to keep us out of the theater or to create dilemmas and problems that we have to deal with. Uh, and so I think we should be thinking about how, what would be, this is a thought experiment, but what would be required for commercial shipping, ship construction in America to be competitive on the world stage? I think we have to take an asymmetric approach because, you know, if we're just doing labor versus labor, we're going to lose that.

• 1:12:13Speaker 02

  But if we say, actually, we're going to build the first commercial nuclear cargo fleet. It's going to have the lowest cost of operation. It's going to be able to be in service much longer and we're going to leverage the Navy's unique knowledge of how to do this in order to power this American prosperity. That's going to then drive, drive up the volume in shipyards, drive up the capital requirements and the ability to leverage capital markets to build new shipyards, bigger shipyards, to do the facilitization. Because right now, all that investment is on the American taxpayer. And that's why we struggle with it. Like, how much should the taxpayer keep dumping into these shipyards? The answer is always more, but, but we're getting less for our money every single time. And the way out of this problem is to realize that monopsony, the government as a sole buyer,

• 1:12:58Speaker 02

  is actually the problem. It's how we got into this problem to begin with.

• 1:13:03Speaker 02

  The world used to be very different when, when the Berlin Wall still stood, just came down. Only 6% of major weapons system spending went to defense specialists. The other 94% went to what I call as dual purpose companies. Too much is said about dual use. You know, a missile is single use. You know, you need Palmer to build lethal effects that only the government is the buyer of. But dual purpose, Chrysler used to build cars and missiles. Ford built satellites until 1990. General Mills, the cereal company, built torpedoes and inertial guidance systems and their mechanics division.

• 1:13:35Shawn Ryan?

  No shit?

• 1:13:37Speaker 02

  Everything they learned about building machinery to process cereal, they were able to, to leverage in the service of national security to make our warfighters more lethal. And what happened was that over time, the government became such a difficult buyer to work with. All sorts of esoteric rules that only matter for the government, all sorts of auditing, all sorts of bureaucracy, that people tried to figure out how to exit that business. Wow. And that started in the 70s. Boardroom started talking about it. It accelerated in the 80s. And then when the Last Supper happened in 1993, there was this dinner in the Pentagon. We used to have 51 major defense primes. Well, they got the 15 largest together. They had a dinner and they said, "We need a peace dividend.

• 1:14:22Speaker 02

  We've won the Cold War. We're going to slash defense spending. So for every dollar we used to spend, we're going to spend 33 cents, and it's going to happen all at once. You guys are not all going to survive. You have our permission to consolidate, to merge, to try to find commercial lines of business. Like, do what you need to do." And we let that happen until 1999, when we blocked the merger of Lockheed and Northrop. That was the last, we said, "Okay, this is too much." So we went from 51 down to five. The popular narrative- What are the five? Northrop, Lockheed, GD, Boeing, and Raytheon. The popular narrative is this is when we lost competition in the industrial base.

• 1:15:04Speaker 02

  51 down to five, you have less people to pick from. That definitely happened, but I don't think it's the dominant problem. The dominant problem is you lost, that is really that the consolidation bred conformity. You had companies that were, you know, almost like test tube babies, artificial mergers, no single unified culture. They became essentially like, almost like state-owned enterprises, extensions of the government, just doing the government's bidding. And there was not enough heresy, not enough crazy ideas that pushed the envelope, you know, not enough Kelly Johnsons of the world. Like, it drove out the founders. Founders cannot work in a conformist environment. They are heretics by their very nature.

• 1:15:47Speaker 02

  And it drove the founders to other industries like tech. The reason for immense optimism in this moment. So that 6% today is 86%. So the 6% that used to go to only defense specialists has ballooned into 86% that go to defense specialists. So these companies have very little commercial business. They are kind of on the Galapagos Islands. They've built specialist entities that only know how to sell and interact with the government. And this is part of our, and this is

• 1:16:14Shawn Ryan?

  So that's the key.

• 1:16:15Speaker 02

  That is

• 1:16:16Shawn Ryan?

  The key is to learn how to, how to sell and go through all the, all the red tape to sell to the government.

• 1:16:23Speaker 02

  You compare that to China. So in China, their, their primes, their equivalent of our big five, only 27% of their revenue comes from the PLA, the People's Liberation Army. The rest comes from commercial things they're, they're, they're selling. Unfortunately to us, so that cheap crap we're buying on Amazon is subsidizing lethality against, potentially valid against future US service members.

• 1:16:47Shawn Ryan?

  Wow. Wow.

• 1:16:53Shawn Ryan?

  That's just,

• 1:16:56Shawn Ryan?

  that's enraging.

• 1:16:58Speaker 02

  So let me, let me give you a cause for optimism. More than $120 billion of private capital has been deployed in the last three years in the service of national security, in the national interest. You know, the founders are back. Palmer Lucky is a archetypal example of this. You talk about a heretic, right? We have people who are hard headed, who are doing this more with a horizon that is beyond just what's going to happen this quarter. They have a vision of what they're trying to create in the world. And there are hundreds of them. And the department is open to working with them. There's a whole sea change, particularly with this administration of recognizing the need for this reformation. And so we're starting to embrace that. I think we should, to the point of the ketchup bottle, it is coming out all at once right now.

• 1:17:40Speaker 02

  It is the moment for us to, to seize the opportunity to, to fix ourselves.

• 1:17:44Shawn Ryan?

  What are some of the other companies we should be looking at other than Ballantir and, and Dural?

• 1:17:49Speaker 02

  Sironic and their unmanned, their, their, their USVs, the, some, the surface vessels. You have Epirus with anti-drone technology, counter CUAS, Shield AI.

• 1:18:02Shawn Ryan?

  What's Shield AI?

• 1:18:03Speaker 02

  Shield, Shield builds autonomous, autonomy for fighter, for fighter pilots. They flew the F-16 autonomously. They built the VBAT, which is a, a drone that is so far seems like the, the primary US made drone that is able to survive in the contested Russian EW environment in Ukraine. They, you know, to the point of, of just getting out of our own way. Like, how do the Ukrainians decide what drones to buy? They, they, once a quarter, they have a field test. They, they create a test range. They jam the crap out of the environment. Anyone who wants can show up, fly your stuff. If it, if it doesn't fall out of the sky, we might buy it. And S.H.I.E.L.D. showed up to one of these things and they were the only one who didn't fall out of the sky.

• 1:18:45Shawn Ryan?

  No kidding.

• 1:18:48Speaker 02

  No requirements document, no red tape, you know, the facts to the, this is the equivalent of forward deployed engineering. You, you go to where the problem is and neither works or it doesn't work. You know, you taste the steak, you either like it or you don't. I don't know, you know, if I had, if you had to write a requirements document of what is required in a steak that you're going to like, like it, it misses the essence of, I don't know. When I taste it, it either is great or it's not.

• 1:19:12Shawn Ryan?

  Yeah. Do you want to talk about Epirus a little bit? I love that company.

• 1:19:16Speaker 02

  Yeah, I love, I mean, I think it was, it was a great bet by Joe very early on to take an entirely different approach to this, this, this gallium-based semiconductor material to generate walls of energy that actually almost act like cyber effect. So unlike, it's not one-to-one where you're firing a munition against a, a single drone. You're really putting a wall of energy. So it doesn't matter if it's one drone or a thousand drones. It's going to have the efficacy of being able to stop them and block them.

• 1:19:43Shawn Ryan?

  Oh, so it's one wave. I thought these, I thought it was like simultaneously shooting out EMT pulses or whatever it is.

• 1:19:53Speaker 02

  No, yeah, it's putting up an entire wall of energy. And that is, you know, it's, it's a very clever approach to solve the problem. I think we're going to need defense in depth with an approach like this. When you think about the, the UAS problem, it is a massive offset that our adversaries have against us. You know, how many million dollar missiles can you shoot at $200 drones, even $2,000 drones? You're going to lose that equation. Um, and so, you know, we, we're going to need entirely different ways of thinking about this. Now this challenges, so there's a question of like, how quickly can the force adapt these things and recognizing that you're not going to have just one answer, that you're going to actually have to have a series of answers that mean that you're not afraid of putting your destroyers into a position to be relevant anymore. And, and that's, that's the greatest

• 1:20:36Speaker 02

  threat. So like, when I look at Ukraine, there are really three lessons I take away. And this is one of them. Like Ukrainians, people often look and say, wow, isn't it amazing that they sunk half the Russian Black Sea fleet, even though they don't have a navy? And I say, no, no, no, it's because they didn't have a navy. That's how they could conceive of an entirely different force structure that had sea dues, essentially, you know, these cheap explosive munition drones that were guidable with a Starlink. It's an entirely different conception of the problem that I think a big surface navy would have, could get there eventually, but it's not going to get there as quickly or as dynamically. That's one lesson. The second one is we should have realized we had a five-alarm fire when we went through

• 1:21:20Speaker 02

  10 years of 155 production in 10 weeks. And, you know, I think in World War II, we used to make like 500,000 shells a month. And now we're struggling to make roughly one-tenth that, 65,000 or so. You know, and we've had some time. Ukraine didn't happen last week. We've had some time. So what lessons can we take about what it's going to take to actually ramp up the industrial base as a consequence? And the lesson from that is that we got it wrong. We thought the stockpile was the deterrent. If we could go to our adversaries and say, look at how much stuff we have sitting on the stock, they'd be scared. It's not. The deterrent is your ability to produce the stockpile.

• 1:22:01Shawn Ryan?

  How fast you can make them.

• 1:22:03Speaker 02

  Yeah. And so we should never have cut down to minimum rate production. All these ideas that were really born out of an economic fantasy that we could spend way less and still have as much security. Look, I think it's reasonable for a democracy to debate, like, how much do we want to spend? But to believe you're not trading off security, like, we have to just account for all the trade-offs appropriately. And I think if we all understood, like, actually, we're going to change our spending profile, and it's going to mean that we're much less secure, we may have made different decisions along the way. So we shouldn't, you know, that is a hard-earned lesson, that the production, not the stockpile's deterrent, we shouldn't forget it. And it should shape everything. That's why you need something like an Andro. You need to be able to make 10,000 of these things, not 100.

• 1:22:45Speaker 02

  And when you think in your mind, oh, I'm only going to need 100, you start having all the bells and whistles. Like, how do we make this thing super exquisite, super fancy? It needs to do all these things. And I'm only going to have a few of them. So let's make it like a Swiss Army knife that can do everything. And then it turns out it takes eight years to build one of them. And they're ungodly expensive. And then in the moment of need, you realize, I actually need 10,000 of these. And so when you start realizing those trade offs, like, how can we cut production time by a down to one fifth? Like, it should take 20% as long to build these things. They should be affordable. So we can be able to build 100 times as many as we would historically have built. And now we have now we're back to deter.

• 1:23:26Shawn Ryan?

  Palantir is down in, you guys are working with the border too, right?

• 1:23:29Speaker 02

  That's right.

• 1:23:30Shawn Ryan?

  What are you guys doing down there?

• 1:23:31Speaker 02

  Yeah. So the work like that 10th Mountain is doing out of Fort Huachuca, the work that NORAD NorthCom does and a supporting border operations, SouthCom. So all of that is our maven, our AI driven operating system for the Defense Department. In addition to that, you know, we have a longstanding relationship with ICE, which actually started in 2011, when I think it was 2011, maybe 2010, when Jamie Zabata was assassinated in Mexico, who's an ICE agent, young 32 year old American. And we surged in to help them after we had been talked to the point of bureaucracy and and these crises, providing clarity, we had been talking to ICE for 12 months before that about starting to work with them who were stuck in in the bureaucracy of how does one procure these things? How does one buy

• 1:24:15Speaker 02

  these things? After that assassination, we got a call from one of the field agents, we were up and running in 11 hours.

• 1:24:22Shawn Ryan?

  Wow.

• 1:24:22Speaker 02

  And we were a big part of responding to Operation Fallen Hero, is what that's called, and a longstanding relationship with them born out of of of doing right by these these service members after that. And now I think there's a much bigger role. There's of course, border, there's immigration, these are two sides. A lot has happened. I think, you know, a lot has improved on the border. We've gone down from roughly in the prior administration, 2,000 getaways a day to less than 80 a day now. So that border is getting sealed. And I think the bulk of the effort will turn to an immigration problem of how do we manage the illegals who are here and the deportation operations around that?

• 1:25:05Shawn Ryan?

  What do you think we should do about that?

• 1:25:07Speaker 02

  Well, I think we're starting in the right place. Anyone who is a violent offender.

• 1:25:11Shawn Ryan?

  Yeah.

• 1:25:13Speaker 02

  It's hard to understand. I saw a clip from JD that I thought was pretty good, which is it's hard to even understand what's on the other side of this. So why should we not be deporting gang members, violent offenders, people who have committed crimes, who have no right to be here? How is that in the interest of the American people? Now, I think it's a large-scale operation, just given what's actually happened here. Like, how are we going to do it? You know, if you think the numbers are between 10 and 20 million illegals, there's a question of how you actually are going to do that. How much treasure can you spend? How do you do this as efficiently as possible? And so I think, starting with precise information, that actually borrows a lot of the lessons that we have from the commercial side. You know, it's a value chain optimization. You know, okay, where do I have detention capacity?

• 1:25:58Speaker 02

  Where do I have logistics on flights? Like, how do I do this as efficiently as possible in a way that provides the most incremental lift to the American people? And I think that clearly starts with violent offenders and areas that matter.

• 1:26:11Shawn Ryan?

  What's working down there? I mean, getting into the nitty-gritty down on the border. I mean, how was it? How did we seal it off so fast?

• 1:26:21Speaker 02

  I think a lot of it is, I shouldn't say a lot. First, it's important that people realize we're taking the border seriously. That alone is a deterrent effect to trying to cross the border. So what do you think's going to happen on the other side? If the subtle messaging was, "Nothing, actually, just come", like, you basically have an open border. So now, like, "Oh, it's going to be really hard for you when you're on this side here, and you should be really worried that you might be deported at any single moment", it's like, "Well, maybe I shouldn't come." So that's one step. Two, I think designating the cartels. There's a supply chain behind helping people get here. Designating them as terrorist organizations has changed the calculus as well. It's kind of changed the economics for the bad actors and what they want to be involved with.

• 1:27:05Speaker 02

  So I think it's probably over-determined, like, there's a number of factors, but I wouldn't underestimate how important it is that people realize, like, "We're serious about this as a precondition."

• 1:27:14Shawn Ryan?

  Let's take a quick break.

• 1:27:16Speaker 02

  Sure.

• 1:27:16Shawn Ryan?

  When we come back, I want to talk about the future of warfare.

• 1:27:19Speaker 02

  Okay.

• 1:27:24Speaker 04

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• 1:27:52Speaker 00

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• 1:29:02Shawn Ryan?

  All right, we're back from the break. We're going to talk about the future of warfare, but I want to dive a little bit more into the reverse opium war. Can you go into that?

• 1:29:11Speaker 02

  Yeah. You know, so we had the opium war, where really, the Chinese felt like a lot of drugs were flooding into China. The reverse opium war is the Chinese are funding and enabling fentanyl precursors to be shipped to Mexico to then be funneled into our country. We lose at least 100,000 Americans to this war every year. You know, it is an ungodly casualty rate. And it's not just happening on its own. And...

• 1:29:45Speaker 02

  If this was, if we were losing even a fraction of this number of people to kinetic attacks, we would have a radically different posture to what's happening here. I think some of this is our own conflicted and I think retrograde feelings of is it the fault of the person who's using the drug, but you have to really step back and recognize the environment that's what is enabling all this to happen. It's a tragedy at a big scale. And I think obviously the cartels bear a lot of responsibility, but this, these precursors are coming from somewhere. And the Chinese have so much control of their economy. If they didn't want it to go, it wouldn't go. And I think they view it as part of their

• 1:30:28Speaker 02

  national interest to undermine us from the inside.

• 1:30:31Shawn Ryan?

  Wow. So how long ago was the opium war?

• 1:30:35Speaker 02

  Was that the 1800s?

• 1:30:38Shawn Ryan?

  Was that long ago?

• 1:30:40Speaker 02

  Yeah.

• 1:30:41Shawn Ryan?

  And what would, why were we doing it?

• 1:30:44Speaker 02

  It was just, it was expansion. You know, it was economic expansion where people were trying to trade with China at the time. You had the collapse of the historic dynasty, the beginning of the century of humiliation. And it was kind of an outgrowth of unbridled economic expansion. There was a market for it. I think it was largely the British that was supplying it. Maybe it was coming up from Afghanistan, as I recall. And it undermined the Chinese people. You know, you had lots of people who were addicted to opium. It undermined their productivity. And I think that's why it's the reverse opium war.

• 1:31:22Shawn Ryan?

  And we were pushing that?

• 1:31:23Speaker 02

  I think largely the British, but I think we were a part, a minor part of it.

• 1:31:27Shawn Ryan?

  Why? Why were we pushing it?

• 1:31:28Speaker 02

  I'm, I don't know.

• 1:31:30Shawn Ryan?

  And so, so this, this long later, I mean, this is, this is because of that?

• 1:31:39Speaker 02

  Yeah. Well, is it because of that? Or I think more it is an asymmetric way of weakening us. You know, it's an asymmetric way of doing it. It's pretty cheap. If you think about, like if you thought about cost per kill, it's pretty cheap. It disintegrates society, it weakens families, it causes a lot of trauma, it weakens our will. It distracts us from doing the things we need to do around our economic prosperity, around reindustrialization, around taking them seriously as a threat.

• 1:32:13Shawn Ryan?

  One other thing I want to get to before we go into the future of warfare is we were talking about Operation Paperclip later. And so just downstairs, I just had a thought. I mean, should we be doing that today?

• 1:32:25Speaker 02

  We should. I I've been trying to socialize this idea. And I think I don't know if we're at a point of having the political will. Operation Paperclip 2 should really be around reindustrialization. If you think about German Mittelstand companies, that's like these middle tier, high skilled manufacturing companies, you know, I think they're kind of somewhat lost in Germany today. You know, if you look at what happened in Germany, the big companies sold out the German economy to the Chinese, you know, BASF, big chemical company. Most of their factories now are in China, not in Germany. Volkswagen and the investments they've made in China. But that was never the perspective of the middle tier German

• 1:33:07Speaker 02

  manufacturer. Most of these companies are family owned. They're hundreds of years old and been in the family consistently. They're high skilled. It's not commodity stuff. High art, high trade. You know, maybe some of them want to move their manufacturing to America. Maybe we should enable that. Maybe there are, we should be basically, if you generalize this concept, you have entrepreneurs, highly skilled who make things that are not commodity, hard to make anywhere in the world, let alone here. And we can marry them up with the deepest richest capital markets in the world which exists in America. How do we help them build their business, create employment, and drive our national security by reindustrializing America?

• 1:33:51Shawn Ryan?

  Damn, I mean, who all would you, who else should we be targeting? Other than the Germans? Is there anybody that's making defense tech or or anything that we should be snagging up and bringing?

• 1:34:03Speaker 02

  I would, you know, you'd have to heavily vet them. But I think we should be thinking pretty seriously about disaffected Chinese that we can be pulling over. You get a little twofer for that, you know, weakening them and strengthening us. And then the surrounding areas like Taiwanese entrepreneurs, Japanese entrepreneurs, manufacturers, really. And then you have a belt of these folks in Europe, a little, some in France, a lot in Germany, maybe even a few of them, a little bit in Eastern Europe. But we should be taking the cream of the crop who are doing these things in new and novel ways and bringing them here. While the main effort should be investing in the founders who are here in the Area around El Segundo, where we have this revival of American manufacturing happening,

• 1:34:46Speaker 02

  doing it in different ways. And I think it's worth double clicking into that because, you know, the conventional view of efficient manufacturing is that you have this very distributed supply chain. Everyone makes one part and these supply chains go really deep. And what that's done is it's hauled out the knowledge from the buyer. So if you're, if you're at the top of the stack and you're building jet engines, you know, you don't even understand your supply chain. You just, you just think you're buying something. We've like, we've kind of retarded your mind in terms of how deeply you understand the product that you're building. You're just ordering parts and essentially assembling them. That's not what Elon did. You know, he vertically integrated. He builds the whole rocket engine himself. And that means he can control and reduce the number of parts. He can say, hey, you know, these three parts should be combined because it'll be more

• 1:35:31Speaker 02

  efficient. And that's how you get the asymmetric advantage and the leaps, the ability to innovate on these things. And so that's where I say, it's not that we're not good at making things in this country. It's that the old way of doing it is not competitive anymore. We need this new way, much more vertically integrated, much more creative. His R and D engineers at SpaceX sit on the factory floor of assembly. Usually, these are, these are, these are thought of as two totally different things. You have people who design the, the parts. You have people who assemble the parts, you know, but actually, if the engineers can see what's happening in assembly that's causing it to be slow, what's causing quality issues, it might change how you design the parts. And so how are they going to observe that if they're not physically sitting together? It sounds so simple, but it speaks to the

• 1:36:16Speaker 02

  cultural thing. And it's resonant with forward deployed engineering, right? So how do we leverage this like uniquely American perspective on doing these things to just get back to being the best in the world at doing it again?

• 1:36:26Shawn Ryan?

  And you're, you're starting this conversation. How are you doing that?

• 1:36:30Speaker 02

  Well, I'm, I'm talking to colleagues in the National Security Committee about it to see if, if there's a way of doing it. I'm also trying to just do it through the front door. Are there companies in particular where we can provide capital to reinvigorate it? The easy place to start is in the US. You have a lot of these mid-tier suppliers. They are actually family owned. The next generation maybe doesn't want to continue the business. Because the government has been such a promiscuous buyer, so unpredictable in demand, they haven't had the economic reason to invest in capitalizing their facilities to do much more. You know, there have been booming bus cycles around this. But if you can, if you can buy a bunch of these up and aggregate scale, particularly in a thematic line, where it's like, actually, these three parts are related,

• 1:37:13Speaker 02

  and I could actually make it one part, and I could deliver the part more cheaply, generate more value, he's like, how do you get the math to work out? But I think we could just start here and start filling in the holes that we have with capabilities and technologies from allies.

• 1:37:27Shawn Ryan?

  Yeah, you know, I mean, there was a lot of, lot of, was it the H1B visas? Lot of blowback, that was something I was scratching my head on for a long time, going like, I don't, I don't, I don't see what the problem is if we take the world's best and consolidate them here in our country. And, I mean, I mean, I mean, to be honest, you're an example of that, you know?

• 1:37:51Speaker 02

  I, I'll, I'll take both sides of that, because I, I feel like I really do, I, I have a view of it, which is, few people should argue with this idea of taking the world's best. But so much of the H1B program has also been abused to take average.

• 1:38:08Shawn Ryan?

  Mm-hmm.

• 1:38:09Speaker 02

  Right, and so then that kind of, you lose the moral high ground on the entirety of the program.

• 1:38:14Shawn Ryan?

  Gotcha.

• 1:38:14Speaker 02

  And so, yeah, like, you know, that's what's amazing about America, that we can continue to incorporate the world's best, who want to come here, who believe that America's a shining city on the hill, who want to assimilate, who want to be American. But we have to do so in a way that also is clear-eyed about our economic prosperity, that we're doing this in the service of the American people. It's, it's not just that we want them to come here and be prosperous. As a consequence of them being prosperous, they're creating jobs, they're creating innovation, they're creating economic security. And, and I think large swaths of the program are used by, by certain companies to essentially hire cheap labor they probably could have been hiring here, and should be hiring here. And so...

• 1:38:58Speaker 02

  You know, both things can be true. There have been abuses and we want the very best to be here.

• 1:39:03Shawn Ryan?

  Mm hmm, mm hmm. And then something else that you touched on that I wanted to dive in, fusion. What is fusion?

• 1:39:12Speaker 02

  Well, fusion, so fission is how do you split the atom?

• 1:39:15Shawn Ryan?

  Fission, excuse me.

• 1:39:16Speaker 02

  So, so fission, nuclear fission is how do you split the atom to generate power? Fusion is what our sun does, which is how do you like jam hydrogen molecules together to create helium? But in doing so, it also releases energy, huge amounts of energy. We don't have commercial grade fusion yet. That's, that's more R and D. But fission is a tried and true technology. All of our, all the nuclear that when we think about nuclear, we're really talking about fission. And we are experimenting with what's called small modular reactors. How do you go from what is it otherwise a huge $30 billion multi-decade power plant? And make these things smaller, more modular, they're essentially pre-assembled so you can put them where you need them.

• 1:40:01Speaker 02

  They require less infrastructure, substantially less time to build, and the designs are modern in a way that it's, it's default safe. You, you're not going, you, you don't have a risk of a meltdown. The physics just don't work the same way that these legacy old systems do. Which frankly, we've had the technology for, for a while, but because of our, I mean, understandable fear around it, we backed away from the atom. And it became politically, we just started investing in other things.

• 1:40:26Shawn Ryan?

  I mean, how, so you were saying that companies are basically producing their own power supplies. I mean, how far do you think this goes? Do you think that communities or even, even households will have their own power supply eventually?

• 1:40:43Speaker 02

  I think it'll be harder for households to do.

• 1:40:48Speaker 02

  I'm hoping that the tech company's enormous appetite for cheap power is going to provide the necessary demand stimulus to the economy to go build these things again and provide the necessary stimulus for the government to reform the permitting process so that we can be clear eyed and focused on the cost of power, the time it takes to build these things. But you're going to need, you know, talk about another industry that lacks founders. Like these, these public utilities are basically also run like state owned enterprises. Right. So where is that innovation going to come from? Well, it's going to come from the small modular reactor company or the non-traditional power provider who's behind the meter. That, that, that means that they're just providing their power directly to the, to this data center.

• 1:41:31Speaker 02

  You know, they're not trying to put it on the grid for everyone else to use. So there's like less regulation, less bureaucratic coordination as a consequence of doing that. But by doing that, eventually that power is going to be there. And any excess power, you're going to want to connect to the grid at some point. So that's, that's going to drive the stimulus to modernize the grid infrastructure as well. We've really under invested in the grid. We probably have a couple trillion dollars of investment we need to make, but we haven't been able to spin this chicken or egg thing. As we get economic value out of being hopefully the world leader in the application of AI, I think it will, it will make the other side of the equation clear of why these, why the modernization needs to happen.

• 1:42:11Shawn Ryan?

  I mean, you're, you're, I would love to see that happen, but I mean, what, what do you think the, I mean, you're going up against a big machine with the utilities and, and how, I mean, with all the lobbying that goes on and all that kind of stuff. I mean, how, how is that even possible?

• 1:42:29Speaker 02

  Step one is competition. You know, I like to quip, but at some fundamental level, you either believe in free markets or you don't. And especially when you look at the government having, you know, post-Cold War, like everyone has given up on communism, including the Russians and the Chinese, except for Cuba and the US government essentially. Like we have five year centralized plans and DoD, we call it the FIDIP. Like literally, we have a five year plan that looks very, very Soviet in terms of how we think the world's going to work. It's this centrally unplanned approach. So if we can start building stuff behind the grid, behind the, behind the meter. And if we can do the permitting reform that's necessary that this administration is focused

• 1:43:11Speaker 02

  on, it's going to enable new entrants to start creating power and reduce the monopoly that historically the utilities have had, which as a theory of change means like they have to react to this. So they're either going to slowly find themselves shriveling and shrinking, or they're going to reinvigorate themselves and show up to compete and be like, okay, these guys were the first movers and we can do it. There's kind of a theory of the economy that's actually at any given epoch, there's only maybe five to 10 live players. You know, founder-driven institutions, really innovative, they set the pace, they define what's possible, and the other companies in the economy are sort of memetically copying, they're imitating them. And that's okay, because it provides the necessary stimulus

• 1:43:54Speaker 02

  for the whole thing to kind of work. And I think the problem we found ourselves in, in the, let's say, the last 20 years is outside of tech largely, there have been no live players. These parts of the economy have kind of shrunk and shriveled and become, they're only dead players. And so the reinjection of some live players is how we'll reinvigorate this. Andrell is a live player for hardware defense primes, right? And the other primes have to respond to that. And that, if you're going to have hope in them, some of them may not, but the ones who want to survive are going to respond to that. Similarly, in utilities, the small modular reactor companies, the upstarts are going to be the live players that drive the change. And this, I feel like it's such an exciting time because you start

• 1:44:39Speaker 02

  to see the emergence of these live players. People are coming out of their shell and cocoon and, you know, you can point to things that are worth investing in. The capital markets are starting to see that, starting to put capital behind these founders. You know, it's a great time for the American revival.

• 1:44:57Shawn Ryan?

  Wouldn't the utility companies just buy the smaller companies and bury them?

• 1:45:02Speaker 02

  What usually happens is at first you just laugh at them. So we're in this phase of like, well, it's never going to work. You know, the fish is in water. The fish doesn't understand what, what could possibly be outside the water. So, you know, yeah, for the utility company and the rules they live by and the bureaucracy they've ensconced themselves in, it is never going to work. They couldn't do it today, you know, but these guys are throwing away the rulebook. They're not going to follow the same rules and subject themselves to the same bureaucracy and have the same slow decision-making process. They're going to do it differently. And once this starts working, they're going to have to respond. This is so, you know, three of the five Androl co-founders worked for me, you know, and, and they are world-class talent.

• 1:45:43Speaker 02

  In my interaction with some of the primes, you know, the, the, the thing they love to say is something like Androl's like the Dorados of defense. Androl's a fraud. And I was really scratching my head. It's like, why do they believe this? It's so obviously not true, just to be 100% clear. It's like, obviously not true. These guys are crushing it. And I, my conclusion was it's because they can't imagine of a different way of doing it. Therefore, if there's a company doing it a different way, it must be a fraud. It can't work. So, as Androl starts to just keep crushing it out there, they will realize there's a different way. They will have to realize there's a different way of doing it. They'll have to respond to these things. And that's, that's the reinvention stimulus that the economy needs.

• 1:46:28Shawn Ryan?

  Makes sense. Makes sense. All right. Let's move into the future of warfare. What's it look like?

• 1:46:34Speaker 02

  I think it both looks exactly like the past and completely different. So the part that's exactly like the past is I think that the kind of fundamentals of the OODA loop, that it is about decision advantage and speed, is the same thing. Those principles are not changing. The most valuable application of technology then is going to be towards that end. You know, so why is lethal autonomy so valuable? You could say we've had that for a while. If you're flying in a fighter jet, you know, it is your computer that is telling you that there is an enemy on your radar that you can't see. You're trusting the computer. That, that sounds like autonomy to me. And then when you release, when you press fire control there, the, the kind of terminal guidance is happening through an autonomous

• 1:47:19Speaker 02

  system, through the computer on, on the projectile. Okay, so now we're talking about, let's just start there. It's a difference of kind, I'm sorry, it's not a difference of kind, it's a difference of degree. We already have systems like this, we're just talking about supercharging it, doing substantially more with it. And what is the more? The more is a much shorter decision-making lifecycle at much greater scale. And you start to see that with these first-player FPV drones. I think the Russians are losing roughly 1,500 people a day to these little drones that Ukrainians are flying. So at some point- 1,500 people a day? Wow. It's tough. That's effective.

• 1:48:03Speaker 02

  So if you start thinking about that, it's like, well, that's the equivalent of small arms, really. It's like, part of the innovation now is, okay, this drone has become the equivalent of small arms. But doctrinally, and that's how the Ukrainians treat it. It's like, it's like the E3, E4, who has fire control on that weapon, right? But for us, you know, we're not at war, we haven't changed our doctrine, like, we would think of the fire, like, the authorities on that as something, the equivalent of a tomahawk, as like a cruise missile, right? It's gonna go way up the chain. And of course, if the balloon goes up, we'll throw all that away and we'll reinvent our doctrine, but I think we should be getting ahead of that now and start thinking about what are small arms now? Because they're not, it's not just your M4.

• 1:48:49Speaker 02

  So that's one piece of it. And then that, I think that also implies that the fighting force is gonna have to be more technical. They're not gonna have to be coders, but the responsibility, just like, you know, if you're going through Green Beret qualification, you learn everything about the gun, you know how to assemble it, disassemble it, well, they're gonna be, that level proficiency you're gonna need for a set of technical capabilities that are gonna be decisive on the battlespace. You know, and that, it's gonna extend to electronic warfare and cyber attacks and space-based access and communication. All the way to the end lethal effects. I do think we're going to have to invest in, and this is where you need the outside tech mentality in kind of an Apple-like experience here.

• 1:49:34Speaker 02

  You know, yesterday, when I was at Bragg, part of this capability exercise that General Bragg put on, talking to the different MOSs, you know, the special ops medic was like, my job is the best job, you know, the weapons officer, my job's the best. Well, the commo guy was like, my job is the worst job. When everything works, no one even knows I'm around. And the second thing stopped working, you know, it's all my fault. And what I saw in that was cognitive burden. Basically, like we, you know, how often does your internet go down at home? How often do you have to think about these things? Like, the amount of investment, your iPhone just kind of works.

• 1:50:11Speaker 02

  And we are doing a great disservice to these commo officers or NCOs by the burden we place on them to have to manage these things versus what our technology could actually be doing. So we have to redraw that front line so they can actually focus on the decisions that make the beer taste better, so to speak, that actually matter on the battle space, as opposed to the things that set the conditions so that you can even think about those things.

• 1:50:35Shawn Ryan?

  You know, I talked to Palmer a lot about this, too, and I'm just curious your thoughts. How much of the military right now is obsolete with all the new tech and all the autonomous vehicles and weaponry?

• 1:50:49Speaker 02

  I think it's, there's no doubt that a meaningful portion is. The question is, how do you know what that portion is? And I think there's a fair amount of good debate that needs to happen about that. You know, let's take the tank. Some people think the tank's obsolete. I'm not so sure the tank's obsolete. Maybe it's obsolete on the first island chain. You know, there's like, there's a question of what are the conditions around which you need these things? And how would you reinvent these, the hardware, to make it relevant? I view that as a productive competitive stimulus. Everyone who owns this platform should be thinking about, why is my platform still relevant? What they're, but what the kind of initial bureaucratic impulse is to say, is to not say why, but just to dig in and say, it is relevant. You just don't understand. I need to.

• 1:51:32Speaker 02

  Protect the program. I need to protect this rice bowl that I have. And maybe the tank of the future has to be different than the tank of the past. The way that we employ it may have to be different, or may not. But that's something that you have to earn that opinion. You have to prove that out. We don't have enough competing force structures. You know, it would be better if there was a group who was thinking about the future relevancy of the tank and a group trying to make the tank irrelevant. You know, and that's what I saw with the Ukrainians not having a navy, which is they could conceive of this completely differently. You know, maybe we should have a navy one and a navy two. It's a thought experiment. I wouldn't literally do it that way. But you can see how you need kind of these oppositional forces. There's a reason the tank was invented by the UK Royal Navy, not by the UK's land forces.

• 1:52:18Speaker 02

  Right? The tank was anathema to them. It was as heterodox to the platforms that they already had. And they viewed it as unnecessary and wrong. And can you imagine? They would have lost World War One without it.

• 1:52:30Shawn Ryan?

  What about personnel?

• 1:52:34Speaker 02

  I think that's probably one of the most important reforms. So that, first of all, the person is the program. So stop thinking about these programs as independent of, do you have the right human to lead this? And by the way, once you get the right human, don't let them leave. You know, we know this, where the most important things, like if you, the head of the nuclear reactor program in the Navy, it's an eight-year gig. As you, as you well know, most gigs in the military, they're like two to three years. There's a reason we made it an eight-year gig, because there's increasing returns to expertise and it's a highly complicated thing and you need continuity there. I actually think in reality, there's many more things that look like that where you need continuity. If you're in a role for two to three years, you don't even know you've made a mistake, let alone had the opportunity to learn from a mistake.

• 1:53:17Speaker 02

  When I think about the 19 years plus I've been at Punter, I have screwed so many things up. And I've had, you know, I've had the ability to learn from all those things to make it better and better. But it's just compounded over time. If you somehow had someone do my role where we were just swapping every two to three years, you know, I don't, I can't even imagine how much further behind we would have been.

• 1:53:38Shawn Ryan?

  Yeah.

• 1:53:38Speaker 02

  So I, that's one aspect of personnel. The second aspect is...

• 1:53:44Speaker 02

  With AI and the AI revolution, people think, oh, it's going to make the median person better. That's true. But it's going to make the very best person superhuman. And so in a lethal context, in defense context, that means that's the only thing that matters. Like, who are the very best people? How do we give them the decision advantage to win? And that, then, as a consequence, you have to think about who are your best people? I'll tell you, one of the combatant commands, I won't get into all the details, but one of the combatant commands, there is a major prior police officer, joined the service late, Army major, he does the work of 100 people. No shit, 100 people, kinetic strikes around the world that are being driven by his work. I don't think the military has ever been

• 1:54:27Speaker 02

  in a position where it's that asymmetric. And so that has a lot of consequences for your force structure and how you think about who should be in what role. What are you going to lose when that person rotates out? And then our ability, because the more we took... When I said earlier, Palash thinks of itself as an artist colony as opposed to a factory, we didn't talk about what is a factory. To me, a factory is a place where you have this linear progression, you have this chart. Here's the ladder you climb, here are the rules, here are the experiences, everything's mapped out. And that gives the human a lot of comfort, it gives the institution comforts, easy to understand what to do, you don't have to really think that hard about what comes next, or answer hard questions like, am I growing? Or any of these things that people have legitimate

• 1:55:09Speaker 02

  questions around. But what it does is deprives you of the sense of what is this human really good at? What are they world-class at? What is their superpowers? And how do I maximize that use for lethality? You can see that sort of thinking in JSOC, smaller community, more primacy to the outcomes that need to be driven, higher stakes. But the big machine loses that qualitative sense. And so I think that's going to be really important. When I think about the most important projects we've been involved with... They're really a handful of commanders who were so insightful. I think they might be offended to hear me describe them this way, but they are what we would call in Silicon Valley product managers. They are the people with the vision of what they need the software to do so that they can accomplish this thing in the world.

• 1:55:53Speaker 02

  And they would not see it as below them. Three-star, four-star generals, they would not see it as below them to sit there and critique your mocks of, and tell you these pixels are wrong. I need it to be like this. Because they recognize that what they're getting is an Iron Man suit, a software Iron Man suit that allows them to control the battle space. It's got to fit them perfectly. It's got to be, it's got to fit their mind. This is, they are in this context founder personalities, right? And as a consequence, they can get so much done. And I think so much goes wrong when you're trying to think about your software solution independent of the human who's going to be wielding it and operating it, the principal, the founder.

• 1:56:27Shawn Ryan?

  You know, I understand all that, but what I want to dive into as well is, I mean, with all these new autonomous vehicles and, like I said, when I, when I talked to Palmer, he was talking about basically putting an AI brain in a lot of the stuff that we already use, tanks, planes, subs, all that kind of stuff. And so, I mean, just for a tank, for example, I don't, I don't know a lot about tanks, but I mean, I would imagine, I think it takes what, right, three to five people to operate one? And so, when we put these, these AI brains in all of these vehicles and turn them into autonomous vehicles, I mean, how much of the military personnel is that going to cut out?

• 1:57:12Speaker 02

  I think it's, it's, one example of it, it'll cut out. It'll make you a much smaller, leaner fighting force, for sure. So let's just call it half. You can get, you know, you can, you can probably make everything half, half as big and as lethal or more lethal than before. There, there's so many things with tanks, like, how do you clear the range of fire? You know, the commander has to pop their head up, they have to somehow get on a phone and tell the other tanks, like when the soldiers are dismounting, you don't want to be in the field of fire, you know, that should all be software. No one should be picking up a phone, the tank should be able to communicate to the other tanks, and it's just like, that's just, so, once you start like unpacking the layers of how many things we're just covering down with human labor, you start to realize like,

• 1:57:57Speaker 02

  oh, this stuff's going to go away. And, and in fact, The humans are doing it slow. We're doing it the speed that humans can do it. And we make mistakes when we're doing it. And it has a huge training burden to do it. So how long does it take to even ramp people up changes? So I think it's going to be a pretty dramatic impact. You have to earn it, though. You have to kind of ship these innovations to the operating fighting force. And no one will be faster to adopt this than the fighting force. It makes them more survivable, more lethal. There was one project we did at NTC at Fort Irwin. The division was roaming around the desert. A division, big army formation. But using the latest technology, just like this,

• 1:58:41Speaker 02

  they were able to get their division footprint down to 26 people. So instead of the normal 400-plus people you need, a big jock, big screens, which means the enemy can see you, you're pretty immobile, you're not going to be survivable, you're going to be blown to smithereens. 26 people, the red team could not find them in the desert.

• 1:58:58Shawn Ryan?

  No kidding. You know, I don't want to come across like I think that's a bad thing. I think, I mean, I don't want my kids going to war. I've been there and I don't want them to have to do that. And so, I mean, I think it's a good thing. It's, I just, I'm just trying to wrap my head around, you know. I mean, I think there's 450,000 active duty in the army. I don't know how many of them are warfighters, but I mean, I would, I mean, would you need anybody in any of these vehicles?

• 1:59:28Speaker 02

  Well, you definitely want first contact to be made by entities that have no blood in their system, right? Like the front line of troops, but there's also the front line of robots. And that should be further front. And we need to be thinking about how we have less risk to force as a consequence and have improved mission outcomes by doing this. I do think, though, that the tail is where the immense opportunity is. So the tooth to tail here. So yes, it's going to make the tooth sharper and you're going to need fewer teeth. But the tail is enormous. You have more people in the acquisition corps than you do in the Marine Corps. And the human processes that we use to support all of this, it's both very latent and slow.

• 2:00:12Speaker 02

  It obfuscates indirectly, just because humans are touching and massaging the data, like what's actually going on. And we need to integrate that. When I think about the most important missing strategic asset to the US government from a deterrence perspective, it is an integrated view from the factory floor to the foxhole. And by that, I really mean, let's articulate the threats we care about under the timelines correct. These are the foxhole scenarios that matter to us. This is the national defense strategy. This is who we're trying to deter and when. And work that backwards to, based on what I'm spending and building, does any of that stuff matter? Will it be there in time? And I think the Department of Defense is the only institution I know of that has divided up supply and demand.

• 2:00:56Speaker 02

  The process of integrating supply and demand is usually the beating heart of a commercial company. This sales and operation planning process, people have different names for it. In the department, we ask the services to go build things. That's the supply side. And we ask the combatant commanders to do the warfighting. That's the demand side. They have to respond to real world defense. They don't really get that much of a vote in terms of what's happening here. We have a lot of control over what's happening here. We have ideas about the scenarios in the world we care about, making sure it don't happen. How do we integrate these things so that we understand, like, you know what? It actually would be better to buy a less capable weapon system we can make seven times faster at a lower price point, because the other stuff's not going to be ready in a time that's relevant to anyone, right?

• 2:01:39Speaker 02

  It's just running headless by doing this. And I think if you had that, it becomes the first way you can have meaningful conversations, like, yes, I know there are jobs in your district, but do you understand how you're actually going to sacrifice American prosperity? We are going to lose over 100 jobs in your district. And I think that becomes, now you've turned the tables on what is politically survivable.

• 2:02:01Shawn Ryan?

  With Palantir, Palantir, you guys aren't only in software. You also have vehicles you're making, the Titan, Tenebris. I mean, could you go into those a little bit?

• 2:02:12Speaker 02

  Yeah, the Titan truck is a satellite ground station on a wheel that's really, uh, wheels that's really about enabling long-range precision fires. So how can we do deep sensing of the battle space to enable, uh, precision fires of the enemy deep in their territory? What I think is really cool about the Titan program is that we were the first software company to win as a prime contractor. It is a physical thing. We still don't think of ourselves as a hardware company. Uh, we, we, we built a team of super friends of power horses, Androl, Northrop Grumman, uh, L3 Harris, Sierra Nevada. They're helping us build this thing. But what makes, you know, the truck in some sense is a commodity. What's

• 2:02:53Speaker 02

  in the shelter is what's doing the, the AI that's finding the enemy on the battle space using national technical means, using satellite communications, doing the processing, processing exploitation and dissemination onboard of this with a two-man crew. So very, very efficient. And enabling then the, the transmission to the gun line to actually go destroy and close with the enemy. Uh, and building this around the software first. What does the software need to do? That is our lethal capability. Then how do I make it as amazing for the warfighter as possible as a consequence? Rather than doing what we've done backwards so many times is we have this hardware platform and then we're constrained by what software

• 2:03:36Speaker 02

  can we put in there? And it's not good enough and it's not adaptable and there's not enough compute. You kind of designed it backwards. And this is one of the paradoxes. So if you're, if you're a true historical hardware company, you know, you can think about like building a house. If you're building a house, you got to build the foundation first. You are entirely limited by the foundation.

• 2:03:56Speaker 02

  Software is not like that. With software, you've got to build the kitchen first, and you build the rest of the house around the main thing. And now we're starting to see that culture enter into defense. That's what Tesla does, right? That's what SpaceX does. So in defense, we're starting to see that happen, where people are taking very sophisticated, the next generation of platforms, and they're starting with the software-first approach. What does this platform need to do? What are the threats? What do I need to be able to sense? What do I need to be able to affect? Can I even build that compute first? Which, by the way, goes pretty quickly. You can measure that in months, not years, certainly not decades. Once I get that right, now I have the constraints around what I can build my airframe, or my land vehicle, or my submersible around,

• 2:04:40Speaker 02

  because I know it can accomplish the essential mission that I need and has the capabilities to do it. And you don't end up in these situations, like with the frigate, where you buy the frigate, you make a bunch of changes along the way, and you realize it won't float. You know, like the whole thing is for naught, because you didn't start with the software-based approach.

• 2:04:56Shawn Ryan?

  Mm-hmm. What about the boat?

• 2:04:59Speaker 02

  Yeah, so the same

• 2:05:02Shawn Ryan?

  Tennerverse.

• 2:05:02Speaker 02

  The same concepts apply to surface vessels and submersibles, and to airframes, actually, where you're really thinking about what do I... Our big challenge in the Pacific is, how do we get inside the weapon engagement zone? The enemy's been able to really build up a lot of air defenses and hypersonics, and they can threaten and hold us at risk when we're inside of this engagement zone. We don't have sufficient defenses. So maybe we need to build a bunch of relatively attritable, but certainly autonomous, systems that don't have risk to force, that enable us to do the sensing we need to create the maneuver space we need. And so there, with Tennerverse, it's really about using commoditized approaches to building ships,

• 2:05:45Speaker 02

  so that we're not reliant on an industrial base that can't absorb more capacity, and adding the mission-specific payloads that are highly exquisite and highly classified and modular at the point of need. And using that as, you know, it's not just about this ship or this family of ships, but really a family of capabilities, whether it's space, air, sea, land, that give you this sort of software-defined approach to warfare.

• 2:06:13Shawn Ryan?

  Does anybody else have these type of technologies? Any adversaries?

• 2:06:18Speaker 02

  This is, you know, I think software is a unique American strength and it really comes down to culture because it's not about, look, there are smart people everywhere in the world, right? But think about it this way, there are zero Indian enterprise software companies that are competitive on the world stage. There are zero Chinese enterprise software companies. Europe only has a handful and they're, they're pretty legacy. So what is it about America that we have all this software expertise? And it's cultural. Sometimes people look at Silicon Valley and they think, maybe we imported this culture from India or Israel. We didn't. We imported it from Iowa. It came from Bob Noyce, who is the co-founder of Intel, the co-inventor of the transistor.

• 2:07:00Speaker 02

  It comes from a midwestern culture, a willingness to play positive sum games, open communication, transparency, a belief in working together. He brought that with him. The word open door policy, Noyce coined that. It's a Noyce-ism. And there, there's a way in which this Silicon Valley doesn't even understand how much we are the progeny of this Noyce and this Noycean culture. And that's really permeated so much of how we organize ourselves to be able to build software at a scale that is world beating by a long margin. Like the second best country in the world is Israel and they can build canoes, not aircraft gear. They can't get the culture of collaboration to scale to the, even close to the level that, that we can. This is why you see like most Israeli founders, when they found their second company, they

• 2:07:43Speaker 02

  moved to New York to start it because you're, you're just not going to get it, you're not going to get the big success that you want otherwise. And so then I think we should lean into that. Like you're not going to win the war by shooting bits at your adversary. At the end of the day, you have to bend metal, like hardware is a critical capability, but we should do it asymmetrically. Our hardware should be way smarter than our adversaries. That's something that we have the capability uniquely to do. Even when you think about DeepSeek, which, you know, we have this Chinese AI model, you can see two things from it. One,

• 2:08:15Speaker 02

  They couldn't have built that model without essentially distilling or stealing this from OpenAI. So you needed the requisite OpenAI investment. And then two, they did come up with a couple of very clever software optimizations, like novel innovative things that represent meaningful refinements on what's been happening here. But it is a refinement that as a precondition required. It's not a coincidence that all the frontier AI labs are within 50 miles, 50 mile radius in San Francisco, right? That density of talent and the culture that's required to organize around it is an American superiority.

• 2:08:52Shawn Ryan?

  What could go wrong with this stuff? I mean, could an adversary potentially hack into our hardware or software?

• 2:08:59Speaker 02

  As much as they could today. You know, I don't think, I don't think it changes the nature of the risks. The risks are the same. You know, we still have to care about cyber vulnerability and protecting ourselves and the adversaries will have those vulnerabilities as well. I think the biggest risk is really of inaction. This is why I was very frustrated around the, the constant AI safety conversations. Because one, I think it was grossly overdone. We're really far away from, if you understand the technology, like the Skynet fear is wildly overblown and almost like a conspiracy just to slow everything down. But the other thing is it's really about who's the best at implementing these things, right? You can think about AI supply and demand. The supply side is the model. These models, they took billions of

• 2:09:44Speaker 02

  dollars to build. They can write poetry. They can do all these things, but who cares? Like what's, where's the economic value or the decision advantage on the battle space? That's the demand side. So who's like leading the world at implementing these things? AIG just, just discussed at their investor day earlier this week, how they've used 85 AI agents built in Palantir to automate their insurance underwriting. So when you look at a solution like that, you could say, okay, it used to take three weeks, very manual, now it takes one hour. There's a huge labor savings there. But that's not actually what's valuable about it. What's valuable about it is they used to only be able to price roughly 10% of the customer requests because it was just too much work. Now they can price 100%. They can take the best and least risky assets and underwrite that business

• 2:10:29Speaker 02

  and leave the rest for their competitors. So you're actually saddling your competitors with risks they probably shouldn't be taking because you have a decision advantage in doing that. And so we need to be the best at implementing AI for economic value, whether that's on the battle space or in our companies. And I think there's a lot of promise in doing that right now. If you look at Europe, they're still a little bit, more than a little bit, they're asleep at the wheel, at the pace at which they're willing to move, the way they want to think about it, the consensus driving versus you feel it in the American commercial sector. People have rolled up their sleeves, they are getting in, they're experimenting, they're iterating. Like AI is just not something you can think your way through. It's something you have to have a lot of experience and as a consequence, develop expertise in.

• 2:11:14Shawn Ryan?

  Who else should we be watching out for other than China and the cartels?

• 2:11:18Speaker 02

  I think we should be thinking about the coalition China is able to build. You know, could Iran be nearly as successful as they are if the Chinese were not buying oil from them? You know, what role did China have in stepping in to support the Russian and Russian operations? Pretty substantial. You know, why are North Korean soldiers on the front lines in the Ukraine conflict? What is the trade that's happening? You know, North Korea's submarine fleet, they have a lot of submarines, I think on the order of 300, but they're all diesel, they're all loud, they're all legacy. You know, we have to make sure that there isn't proliferation of certain technologies that are going to make them harder to see that it might be sort of the deal, the trade that's happening behind the scenes here.

• 2:11:59Speaker 02

  So that we have this kind of coalition of adversaries, might be a weak coalition, they might have their own frictions between them, but I think at the root of it is the CCP trying to be the sole superpower in the world and undermine Western prosperity.

• 2:12:17Speaker 02

  And then they're going to have a coalition of folks who share that interest as well.

• 2:12:22Shawn Ryan?

  Are you worried about BRICS at all? Are you familiar with BRICS?

• 2:12:25Speaker 02

  Yeah. Yeah, I view that as an economic threat to our prosperity. Of course, you know, we have the exorbitant privilege, as sometimes it's called, of the dollar as a reserve currency. And we need to fight to maintain that. And the economic alliances that enable people to undermine that will weaken us.

• 2:12:49Shawn Ryan?

  Let's talk about wrapping up the interview here. The premise of winning. Defense Reformation Thesis Number Five: Only Requirement Is Winning.

• 2:13:00Speaker 02

  We have come up with the most Byzantine acquisition process you can possibly imagine, where you have to somehow generate a requirement of what it is that you want to buy. You were sharing with me that you bought a $10 skateboard helmet as your combat helmet when you went to war, because the other one was too heavy and uncomfortable, and it didn't work. It didn't work. So, you know, you have your set of requirements, what it is that you need to go out there and fight. And whatever was standard issue was just not it. And actually, yesterday at BRAG, soldiers were telling me they'd go out on a mission, come back with marks on their head, helmet's uncomfortable, it's crushing them. Well, one of the requirements

• 2:13:42Speaker 02

  for the legacy combat helmet was that it must be able to withstand a Humvee, one wheel of a Humvee being on top of it. Who decided that was the requirement? You know, how realistic is that as the end scenario? So what you get is an overly heavy helmet that is not comfortable and doesn't work, and probably costs a lot as missions happen. So this requirements process is divorced from the actual application. And I think we need to just remember, this requirements process is an approximation of what we think we need. The only thing that matters is winning. So can we work backwards from what it is that is actually winning? And where the requirements get in the way, recognize that was a suggestion. You know, get rid of that shit.

• 2:14:24Speaker 02

  Don't, don't, don't be so wedded to the playbook that you don't have the common sense God gave a goat. You know, when you need to bend the rule to do the right thing, you gotta do that. We've wrapped ourselves up around this stuff and it leads to, it leads to all sorts of programs that have met all the requirements and are irrelevant. We spend all sorts of national treasure on doing that. You know, this is where I, I feel like if you integrate the person is the program, you know, Hyman Rickover could decide his own requirements as he's building the sub. Gene Krantz could change what he thought he needed for Apollo as he's getting done. Or John Boyd on the F-16. Like, the original requirements document for the F-16 was seven pages. That's how condensed and, you know, as Mark Twain, Mark Twain has that quote, "I didn't

• 2:15:08Speaker 02

  have time to write you a short letter, so I wrote you a long one." When you get these 2,000-page requirements document, almost rebuttably, you should think this is, this is crap.

• 2:15:15Shawn Ryan?

  Mm-hmm.

• 2:15:16Speaker 02

  You know, why is this gonna work? No one's had the clarity of thought of what we really need and what's essential to getting this done.

• 2:15:24Shawn Ryan?

  You know, I love that you are going to brag and, and it sounds like you guys are kinda integrating in all over the place and, and, um, I mean, I, I wish I would've had that when I was in, you know, where we could just articulate what we needed and what we wanted and somebody like you guys could implement it and get it back to us. And how open is, I mean, I don't, I don't know if you guys are dealing, I'm sure you are, how open is Secretary Hegseth to, to making that happen?

• 2:15:53Speaker 02

  Incredibly open. I mean, I think he, to the point of common sense, like, this is a common sense administration. They completely recognize the, the value of dual-purpose companies. People are putting their own capital at risk to build things and, you know, if the customer doesn't like it, guess what? You're out your capital. You know, that's, that's a you problem. Like, but yeah, that's how American industry works. You show up, you invest, you build things, you lean in, you have conviction. And I, I think the new team completely understands the value of a commercial-first approach, understands the value of speed. We don't have time to lose. The idea that things should get cheaper over time, not more expensive over time. It, it's an opportunity to reimagine the industrial base and I think there's a tremendous amount of support.

• 2:16:33Shawn Ryan?

  Are you guys integrating in with law enforcement at all?

• 2:16:37Speaker 02

  Maybe on the border, law enforcement is not a market that we've historically focused on, just given how many there are, but I think Make America Safe again is a huge priority. So Justice Department, so federal law enforcement will be a focus for us as we turn to the next couple of years here, probably not state and locals.

• 2:16:59Shawn Ryan?

  Well, Sean, I think that pretty much wraps us up, unless there's anything I'm missing.

• 2:17:04Speaker 02

  No, I think we covered everything. Thank you, Sean.

• 2:17:06Shawn Ryan?

  Thank you. I really appreciate you coming.

• 2:17:07Speaker 02

  Yeah, ton of fun.

• 2:17:08Shawn Ryan?

  Fascinating, so.

• 2:17:09Speaker 02

  Thanks. Absolutely.