# Shyam Sankar - Chief Technology Officer of Palantir: The Future of Warfare | SRS #190 Markdown copy of https://realalpha.app/v/DTG393KqOGc/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. Shyam Sankar argues that U.S. deterrence depends on rebuilding industry and giving military operators faster, software-driven decision tools. - Show: The Shawn Ryan Show - Hosts: [Shawn Ryan](https://realalpha.app/people/shawn-ryan/) - Guest: [Shyam Sankar](https://realalpha.app/builders/shyam-sankar/) is Chief Technology Officer of Palantir Technologies. - Published: Apr 10, 2025 - Length: 2 h 21 m ## The best minutes - [2:11:36](https://realalpha.app/v/DTG393KqOGc/?t=7896) [AI helps insurers price more of the business they want](https://realalpha.app/s/ai-helps-insurers-price-more-of-the-business-they-want/) (3 min) - [1:21:35](https://realalpha.app/v/DTG393KqOGc/?t=4895) [Deterrence depends on the ability to produce weapons](https://realalpha.app/s/deterrence-depends-on-the-ability-to-produce-weapons/) (4 min) ## Also worth watching - [1:15:14](https://realalpha.app/v/DTG393KqOGc/?t=4514) [Defense procurement pushed commercial companies out of the market](https://realalpha.app/s/defense-procurement-pushed-commercial-companies-out-of-the/) (5 min) - [1:55:17](https://realalpha.app/v/DTG393KqOGc/?t=6917) [Longer assignments let top military talent compound expertise](https://realalpha.app/s/longer-assignments-let-top-military-talent-compound/) (4 min) Skip the sponsor reads, the family-and-college backstory, and the reverse-opium-war discussion. ## Summary Shyam Sankar is Palantir Technologies’ chief technology officer and its 13th hire. He has spent more than 20 years building software and AI for government and private-sector partners, and joined Palantir after working at the international money-transfer startup Zoom. Shyam Sankar argues that institutions work better when leaders can see operational reality and software connects decisions to frontline work. He says Palantir integrates siloed data and enforces access rules in software so organizations can act faster. Sankar urges the U.S. to rebuild manufacturing and defense production, arguing that the ability to replenish weapons deters conflict more than stockpiles alone. He also calls for experienced military personnel, technically capable forces and AI-enabled tools, with acquisition rules tied to mission success. ### Minute by minute - [3:50](https://realalpha.app/v/DTG393KqOGc/?t=230) **Quantum risk and a builder’s path.** Sankar says quantum computing could break legacy encryption and accelerate the military’s decision cycle, though he notes that the timing is uncertain. He traced his own path from a family that left Nigeria after an armed robbery to programming in high school, working at a startup after arriving at Stanford, and eventually joining Palantir. - [49:23](https://realalpha.app/v/DTG393KqOGc/?t=2963) **Institutions need operational feedback.** Sankar says leaders often lack a clear view of frontline work, so their decisions are disconnected from results. He cites $11 billion spent on California high-speed rail and 1,600 feet of track, arguing that funding alone does not deliver outcomes. He supports efforts to expose institutional failures and says he expected market volatility after the new tariffs but had confidence in the team. - [1:08:13](https://realalpha.app/v/DTG393KqOGc/?t=4093) **Industrial capacity underpins deterrence.** Sankar says reindustrialization requires faster permitting, lower energy costs and investment across energy sources, including nuclear. He cites China’s shipbuilding capacity as 250 times that of the U.S. and argues that commercial shipbuilding could help expand defense production. He also says government procurement and industry consolidation weakened commercial participation and founder-led innovation among U.S. defense suppliers. - [1:19:19](https://realalpha.app/v/DTG393KqOGc/?t=4759) **Defense production must scale.** Sankar points to more than $120 billion in private capital deployed for national security over three years as a sign that founders are returning to defense. He cites a Ukrainian field test where Shield AI’s drone continued to operate in a jammed environment, and argues that deterrence depends on producing munitions quickly, not only stockpiling them. On the border, he cites a decline from roughly 2,000 daily getaways to fewer than 80. - [1:32:29](https://realalpha.app/v/DTG393KqOGc/?t=5549) **Reindustrialization needs skilled builders.** Sankar calls fentanyl precursor shipments from China through Mexico a reverse opium war and says at least 100,000 Americans die from it each year. He proposes a new Operation Paperclip to attract skilled manufacturers and entrepreneurs to the U.S., while investing in founders already here. He favors more vertically integrated production and says H-1B should attract exceptional talent, while acknowledging that the program has also been abused to hire cheaper labor. - [1:41:49](https://realalpha.app/v/DTG393KqOGc/?t=6109) **Power demand can spur new supply.** Sankar distinguishes commercial fusion, which he says is not yet available, from fission, a proven technology. He expects demand from AI data centers to spur behind-the-meter power projects, including small modular reactors, and to help drive permitting reform and grid upgrades. He says new power providers could pressure utilities to innovate. - [1:49:17](https://realalpha.app/v/DTG393KqOGc/?t=6557) **Autonomy reshapes force design.** Sankar says warfare will still reward faster decision cycles, but autonomous drones shorten them and may require new rules for who can authorize their use. He expects troops to need more technical proficiency and argues that AI can make the very best personnel far more effective. He cites an exercise where technology reduced an Army division’s command footprint from more than 400 people to 26. - [2:04:46](https://realalpha.app/v/DTG393KqOGc/?t=7486) **Software should shape hardware.** Sankar describes Palantir’s Titan as a satellite ground station on wheels for long-range precision fires, built with industry partners. He argues that defense platforms should be designed around the software, computing and mission they need to support, rather than adding software after the hardware is fixed. He applies the same approach to autonomous vessels and other military systems. - [2:11:36](https://realalpha.app/v/DTG393KqOGc/?t=7896) **AI value comes from deployment.** Sankar says fears of a near-term Skynet scenario are overblown and argues that the main challenge is implementing AI effectively. He cites AIG using 85 Palantir-built agents to cut insurance underwriting from three weeks to one hour and assess more customer requests. On acquisition, he argues that requirements must serve mission success, recalling discussion of a $10 skateboard helmet and an issued helmet described as heavy and uncomfortable. ## Transcript The Shawn Ryan Show, hosted by Shawn Ryan, with Shyam Sankar. Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. Where the podcast’s audio and the video part ways, some times are a minute or so off. [0:05](https://realalpha.app/v/DTG393KqOGc/?t=5) That's true. But it's going to make the very best person superhuman. Hot news right now is, you know, the tariffs just came out yesterday. I'm just curious, what are your thoughts on that? 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. Are you serious? So Operation Paperclip was our covert action to bring the very best scientists from Nazi Germany to the U.S. to enable our defense program, in particular our rocket and space program. How worried do we need to be about China? Shamsankar, welcome to the show, man. [0:46](https://realalpha.app/v/DTG393KqOGc/?t=46) Great to be here. Thanks for having me, Sean. Yeah, my pleasure. We had Joe on, what, maybe four months ago-ish, and man, I'm just fascinated with what you guys are doing over at Palantir, and 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. you. But everybody starts off with an introduction here. So Shamsankar, Chief Technology Officer and Employee Number 13 of Palantir Technologies. B.S. in Electrical and Computer Engineering from Cornell University and an M.S. in Management Science and Engineering from Stanford University. [1:32](https://realalpha.app/v/DTG393KqOGc/?t=92) 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 Reformation is your manifesto, which you can read at 18thesis.com. 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 that's a great quote man but um 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. [2:33](https://realalpha.app/v/DTG393KqOGc/?t=153) 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. No, thank you for having me. I'm just really grateful for everything this country has given us. Me too. Me too. But everybody gets a gift. amazing sleek gummy bears made here in the usa legal in all 50 states there's no funny business in it it's just candy of course they probably will be illegal here when rfk gets going because uh you know it's got all the bad shit in them but i love it but they taste good so and then one other thing before we get in the weeds i've got a patreon account uh patreon that 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 kid. She's like, get all these people out of the house. And then now we're building a new studio. It's going to be about three and a half times the size of this one. It should be done in about three months. 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. Will the massive capacities of quantum [3:56](https://realalpha.app/v/DTG393KqOGc/?t=236) quantum computers influence the balance of power once they're leveraged as offensive tools? Yes, absolutely. Quantum, quantum surprise, 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 OODA loop. And what is quantum's implication on how quickly you're going to go through John Boyd's Observe, Orient, Decide, Act, OODA loop? I think it has exponential implications on that. 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? 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. [4:48](https://realalpha.app/v/DTG393KqOGc/?t=288) 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 communication is their ability to decrypt that will be near instantaneous. So it has huge implications there. But then for your ability going forward now, 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? How close are we to that? [5:26](https://realalpha.app/v/DTG393KqOGc/?t=326) 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. Who else is working on it in the world? The Chinese. 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 my father did your father did so my father was the last of nine children in a single he was born in a single room mud hut in the south of India and his siblings all helped him get to college you know and India had its own version still does have its own version of DEI so he was not allowed he was 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 um and he was sleeping after he graduated from pharmacy school he was sleeping literally under the kitchen table of one of his brothers and his my his sister-in-law brother's wife got kind of tired of having around the house so found him a job in nigeria he was 23 at the time uh and so he you know young man excited about adventure uh he went to nigeria as a pharmacist to build the first pharmaceutical [6:54](https://realalpha.app/v/DTG393KqOGc/?t=414) 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 probably born seven years after he'd been living in Nigeria. My mom went back to India to have me. And then I came back to Nigeria as soon as I was old enough to travel. So 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 the operation. And so it was a little bit of an inside job of people who worked there, who did this. They... [7:38](https://realalpha.app/v/DTG393KqOGc/?t=458) decapitated the dog. 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 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. My mom ran an open kitchen. 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. 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 LA, a friend that he grew up with in this, in this village, moved to LA and he was selling knickknacks to theme parks. He went from pharmaceutical manufacturing to selling knickknacks in the States. So this friend was like, you know, there's this place Orlando. I live in LA. There's this place Orlando. All the theme parks are moving there. I need someone I can trust there. And that's how we ended up in Orlando selling knickknacks to theme parks, which was fantastic. You know, [9:00](https://realalpha.app/v/DTG393KqOGc/?t=540) for me, it was fantastic. My afterschool 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. So, I thought that was normal. I didn't quite realize that, you know, what a unique experience it was. Now, there were some downsides to this. 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 Tamu, you know, it's like everything that went wrong, that was a free close I got to have. But it was also really a privilege to grow up in the shadow of the Space Coast. You know, Orlando is 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 scientific progress, American prosperity, what we can do collectively when we put our mind to it. [10:00](https://realalpha.app/v/DTG393KqOGc/?t=600) Wow. Well, what kind of stuff were you, I mean, your dad's your hero, correct? He is my hero, yeah. Is he still with us today? He passed away in 21. I'm sorry to hear that. Sorry to hear that. So you grew up, I mean, you're an entrepreneur. When did the entrepreneurial mindset kind of kick in for you? 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 I worked at his pharmacy in Orlando as a child in high school. I started programming 11th grade. I started programming professionally and kept doing that. [10:46](https://realalpha.app/v/DTG393KqOGc/?t=646) 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 these sorts of efforts. And I knew that ultimately I wanted to be part of creating something new, you know, being part of an early founding team. And really, the reason I went from Cornell to Stanford in 2003 can be hard to remember, but even Google didn't recruit on the Cornell campus. Most of my technical classmates, unfortunately, went into consulting and banking. You know, there'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. [11:33](https://realalpha.app/v/DTG393KqOGc/?t=693) 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 Roboy, who are founding members of the PayPal Mafia, and that's how I kind of got started in that world. Man, it seems like all you guys know each other pretty well, you, and how did you meet Joe? 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. [12:10](https://realalpha.app/v/DTG393KqOGc/?t=730) 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. Joe Kidding. So he put me in touch with Joe. And Joe hired me. That's how I got started. Wow. I love talking to him, man. He's such a fascinating guy. So what was Palantir at the start, at the beginning? 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? [13:01](https://realalpha.app/v/DTG393KqOGc/?t=781) And it's like, too. who us as engineers said 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 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. [13:39](https://realalpha.app/v/DTG393KqOGc/?t=819) You know, one of the proudest operations that we were involved in was defeating an ISIS cell in Iraq that had a downed U.S. 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 uh hopefully you you have friends at each of these 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 and you're not gonna 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 wow i mean so what even after interviewing joe i'm still i'm i'm still trying to figure out what i mean what palantir does and and 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 Yeah. [15:03](https://realalpha.app/v/DTG393KqOGc/?t=903) 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. Okay. 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 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... [15:44](https://realalpha.app/v/DTG393KqOGc/?t=944) 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 principle, not just the human, but I as the principle, like what's my model for this? What are the questions I want to ask? 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. Are you serious? It takes three weeks to get an inventory. Until we got involved, it took three weeks to answer that question. [16:18](https://realalpha.app/v/DTG393KqOGc/?t=978) 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 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 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. [16:47](https://realalpha.app/v/DTG393KqOGc/?t=1007) 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. 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. You know, people have been running around saying data is a new oil. data's the new oil. I think data's 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 out-compete your competitor in the commercial world or your adversary in the defense world. Chronic migraine is 15 or more headache days a month, each lasting four hours or more. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine before they start. [17:55](https://realalpha.app/v/DTG393KqOGc/?t=1075) It's not for those with 14 or fewer headache days a month. It prevents, on average, 8 to 9 headache days a month versus 6 to 7 for placebo. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection, causing serious symptoms. Allerge your doctor right away as difficulty swallowing, speaking, breathing, eye problems, or muscle weakness can be signs of a life-threatening condition. 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Palmolive's most powerful formula removes up to 99.9% of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. 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 what kind of data are you guys feeding volunteer to to make those type of decisions and to speed the process up so the to me like just for example so i'm a former seal i hear that and i'm 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 it so the decision seems fairly, I mean, obvious in my opinion. So the decision is leading up to the point where you realize that's what they're trying to do, right? So 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 [20:21](https://realalpha.app/v/DTG393KqOGc/?t=1221) 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 SIGINT 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 things that lead to the conclusion, we've got a problem here and we've got a tight timeline to act. Holy shit. So it's, so basically, so am I right if I say I'd be contractor for the agency, operator for the Navy SEALs, I, I. [21:08](https://realalpha.app/v/DTG393KqOGc/?t=1268) saw how inefficient government communication is just within u.s stuff cia fbi dea mill 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 that likely going to happen? It's like shining. It's like turning on the light on the battle space, 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 customer so that no one's providing us all of this data. [21:57](https://realalpha.app/v/DTG393KqOGc/?t=1317) The government has the data. Great. But it's just sitting there. It's in the dark. It's hard to see all of this information. It's overwhelming. Great. 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 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. So can I make that fast enough that you get to why does this matter? And is this a threat or is this irrelevant? That's the first part. The second part of it that's really important is because 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 [23:00](https://realalpha.app/v/DTG393KqOGc/?t=1380) 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 into control. You know, 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. 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? [23:41](https://realalpha.app/v/DTG393KqOGc/?t=1421) Well, you know, it was really hard because none of us had worked in government. None of us had clearances. We would go to D.C. 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. 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. [24:14](https://realalpha.app/v/DTG393KqOGc/?t=1454) 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 a renegade analyst. And I think she's been a prior guest of yours, actually, Sarah Adams. No kidding. Yeah, so Sarah Adams. So In-Q-Tel 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. [25:05](https://realalpha.app/v/DTG393KqOGc/?t=1505) I think she was like maybe like a GS-12, 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 deep state, the IT people got wind 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 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 it grew into all these other it was always about defense I mean I'm very happy we have a commercial business it powers a lot of innovation and frankly a lot of the things we learn in commercial we're able to bring over to give the government decisive advantages you know we're able to amortize the R&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 [26:22](https://realalpha.app/v/DTG393KqOGc/?t=1582) 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. Wow. What was the I mean, what was the pushback from when you're saying the deep state was trying to pipe it down a little bit? 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 reason by analogy. So I recently met someone who was in Kwajalein, and I think it was 2014, when SpaceX was launching their early rockets. You know, Elon was one launch. He had three failures, and he was one launch away from losing the whole business. [27:03](https://realalpha.app/v/DTG393KqOGc/?t=1623) 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. The 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 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 what's the first derivative? How quickly are they improving? How good is that team? [27:38](https://realalpha.app/v/DTG393KqOGc/?t=1658) And that is the world's best team, right? And look what's possible now. 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 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. [28:25](https://realalpha.app/v/DTG393KqOGc/?t=1705) Look, I always wear a tie now. I've learned my lesson, but I think we lost the plot. Like, the substance is the code, not the quality of my tie. It's the quality of the code. 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 there there was there was there's a lot of pushback there's a lot of kind of fake partnerships you know like hey let's let's bring you in for some small tiny amount of work share that will actually 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, the way that the government's structured, you have these program offices and they have the perfect five-year, 10-year plan. [29:35](https://realalpha.app/v/DTG393KqOGc/?t=1775) 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, they wanted to reject us. And so if you really look at the early days of Palantir, all of our adoption was driven from the field back. 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. Our first deployment was with Tent Group as they took over CGSOTF 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 he 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 uh and that's what happened we just drove all our stuff over there flew over for two weeks the crusty warrant 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. You were over there. I didn't go on that trip. But [30:50](https://realalpha.app/v/DTG393KqOGc/?t=1850) 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 their first guys on the ground in Balad. But you've been over there. Yeah. What was that like for you? It was eye-opening. I mean, most of my time I spent at Leatherneck, so in Helmand, working with the Marines. Nice place. Yeah, I've been there. Dicey spot. What year? That was 2012, or 2011. No shit. I was there around that time. Interesting. What was, tell me about it. How did that experience go for you? I mean, we would have these, it's like a cup of motivation undersells it. [31:38](https://realalpha.app/v/DTG393KqOGc/?t=1898) 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 do it. 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 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 [32:44](https://realalpha.app/v/DTG393KqOGc/?t=1964) makes them more likely to come back as a team together. And it's also, by the way, how you say, you know 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 man i love that way of thinking i mean i i think like that just doing the podcast which but uh you know it 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 and to not go by the typical road map that everybody expects you and wants you to follow and And you guys, like, nailed it. [33:52](https://realalpha.app/v/DTG393KqOGc/?t=2032) Nailed it. Well, you know, 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 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 they come on fire cells of Djibouti and the factory floor of Detroit, where you can see firsthand what's happening and not. And that's all of the inspiration, all of the creativity. It comes from that environment. And 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 [35:00](https://realalpha.app/v/DTG393KqOGc/?t=2100) because 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 is there so much fraud in our government system? We should be looking really hard at this. 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 inside that box. Does it work? Does it matter? What could you change that it worked better tomorrow? You know, and are you impatient enough to go drive that change? And a lot of that comes down to institutionalizing rebellion. You know, there was nothing that headquarters was going to tell our engineers in the field that would make them better 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 that 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 we're an artist [36:11](https://realalpha.app/v/DTG393KqOGc/?t=2171) 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 best work. Interesting. You guys, Palantir sued the government towards the beginning, correct? Yeah. In 2016, we sued the army because we were unable to compete on their army intel program. So the story is like all these units, as they would deploy, they would request Palantir. [37:00](https://realalpha.app/v/DTG393KqOGc/?t=2220) the reason they had to request Palantir is there was an army program of record as the government calls it called DSIGS and DSIGS A was you know it was the blessed system that was supposed to do army intel except it didn't really work 26 billion dollars many years of development and you would honestly find it you know 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. And we were there on the ground. We were highly responsive. And all we wanted was the opportunity. [37:36](https://realalpha.app/v/DTG393KqOGc/?t=2256) So this program was coming up for a recompete, and we wanted to compete to win it. The way the Army structured it precluded us from competing. 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. There's a law from 1994 called the 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 as a philosophy, we'd rather tie our investments to the thing the commercial world is adopted because it means, you know, it probably works. [38:20](https://realalpha.app/v/DTG393KqOGc/?t=2300) It's been de-risked. 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 uh it went to appeal we won on appeal so it's a very very strong precedent but i think that 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 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 awns for Palantir. [39:02](https://realalpha.app/v/DTG393KqOGc/?t=2342) So when his life was on the line, he knew what he wanted to back. Wow. Wow. What are some other – I mean, how often were you guys going overseas? Constantly. Working with the warfighters. Yeah, constantly. 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 get 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 their forward locked. [39:46](https://realalpha.app/v/DTG393KqOGc/?t=2386) they would take their laptops to do key leader engagements where like all 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 you can't do at 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 who 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. [40:22](https://realalpha.app/v/DTG393KqOGc/?t=2422) 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. Any close calls when you were over there? 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. Right on, man. Right on. You know, volunteer sounds like one of the main philosophies is founders first or founder-driven. [41:04](https://realalpha.app/v/DTG393KqOGc/?t=2464) and what does that mean? Yeah. I think one of the, we could all, 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. Whether it's a company or a country, there is no playbook. It really comes down to human discretion, human decision-making, bold leadership, people with the right ideas. And so certainly in our history, it comes from one of our founders, Peter. It's called the Founders Fund. 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 in Europe. Europe has created zero companies in the last 50 years from scratch that are worth more than $100 billion. Zero. [42:20](https://realalpha.app/v/DTG393KqOGc/?t=2540) 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 more than just, did you found a company? It's really amazing. mentality, a personality. When you think about Bill Knudsen and how he mobilized us for World War II and built the arsenal of democracy, he's got a founder personality, or Admiral Rickover. [42:55](https://realalpha.app/v/DTG393KqOGc/?t=2575) You know, this guy, born in a Polish shuttle, came here when I think when he was six years old, short man, short stature, feisty. He was so hated at the U.S. Naval Academy, they've actually torn his picture out of the yearbook. Zumwalt said when he was CNO, the Navy has three enemies, the Soviet Union, the Air Force, and Hyman Rickover, one of his own. But he built the nuclear navy. And that was really, by total happenstance after World War II, he went to visit Oak Ridge and he realized, holy crap, this could power an entirely 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, 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 Kranz, 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. 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 [44:15](https://realalpha.app/v/DTG393KqOGc/?t=2655) thrive. And those people are in government. I think the reason JSOC was one of the first places to adopt us is you got a lot of founder personalities in JSOC. That's how that institution works. That's what happens on the ground. 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 Ironman 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. And it's these founder personalities that push that reinvention, who see what could be and see what is broken and close that gap. [45:09](https://realalpha.app/v/DTG393KqOGc/?t=2709) So it's enabling that. Yeah. 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? So Operation Paperclip was our covert action to bring the very best scientists from Nazi Germany to the U.S. 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. [45:48](https://realalpha.app/v/DTG393KqOGc/?t=2748) 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 programs. One was Operation Paperclip and the other one was called FIAT. FIAT was this idea that we don't need these dirty scientists. Let's just steal the scientific papers. [46:27](https://realalpha.app/v/DTG393KqOGc/?t=2787) 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 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? [47:04](https://realalpha.app/v/DTG393KqOGc/?t=2824) 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 viz, low profile? And, you know, we built a whole space industry in Huntsville, Alabama, around Werner Von Braun and his colleagues. Wow. Wow. That's awesome. Well, you know, I had something that I ran across that I think a lot of people are fearful of. [47:50](https://realalpha.app/v/DTG393KqOGc/?t=2870) What is it? It's predictive policing software. You guys are involved in that. We don't do predictive policing. we've it's it's widely believed publicly we do we don't and it has probably the most scary name possible i think a better way of thinking about it is is the projects I've seen and been close to, 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 a.m. on weekends when the temperature is pleasant enough for people to be outside roaming around. [48:30](https://realalpha.app/v/DTG393KqOGc/?t=2910) Okay, it might be nice to have a cop on that block, make the presence known to deter any bad actors and behavior and 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 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. This person got killed. Okay, well, the family of the person that got killed, 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. [49:21](https://realalpha.app/v/DTG393KqOGc/?t=2961) Okay, so this is kind of similar to what you guys are doing, just in a different outfit. And it's Once again, it's sifting through data and telling you where to allocate resources. Yeah. Interesting. Interesting. Well, let's get into, you talked a lot about the bureaucracy in America and the challenges that it caused you guys to overcome. What do you think is wrong in America today? What I think is wrong writ large with the world is that, 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. [50:05](https://realalpha.app/v/DTG393KqOGc/?t=3005) 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 the job is to make sure the steering wheel doesn't actually work and 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. [50:37](https://realalpha.app/v/DTG393KqOGc/?t=3037) 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? [51:05](https://realalpha.app/v/DTG393KqOGc/?t=3065) 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. The 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. 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. [51:37](https://realalpha.app/v/DTG393KqOGc/?t=3097) 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 about 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. 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. [52:12](https://realalpha.app/v/DTG393KqOGc/?t=3132) 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. Chronic migraine is 15 or more headache days a month, each lasting four hours or more. [52:43](https://realalpha.app/v/DTG393KqOGc/?t=3163) Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine before they start. It's not for those with 14 or fewer headache days a month. It prevents, on average, 8 to 9 headache days a month versus 6 to 7 for placebo. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. Allerge your doctor right away as difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition. 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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 DATMA 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 at Skunkworks he's the founder of Skunkworks he he could build 41 airframes in his career he could build the U-2 in 13 months do you see this changing 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 [55:06](https://realalpha.app/v/DTG393KqOGc/?t=3306) parts of the world economy that are working look like this the parts that don't you see it with when 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 you have people who are are the NBA athletes of technology walking around, kind of realizing like, oh, that's a seventh grade basketball team over there. And, you know, people who can call balls and strikes and conversely 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. [55:36](https://realalpha.app/v/DTG393KqOGc/?t=3336) 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. Why do you think there is so much pushback on that? What are they scared of? We're going to save money. Things are going to become more efficient. I don't understand. I do not understand the pushback. 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 and it's it's um 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 the subconscious undertone of the pushback um and then people this you know it's like the best engineers are like i said with hyman rick over he was hated by the navy but he was a national treasure and can you hold that contradiction that 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 so it's ego it's all ego [56:54](https://realalpha.app/v/DTG393KqOGc/?t=3414) So, what a shame, man. 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 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 they're a national treasure. How long ago could we have done this, do you think? 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. [57:30](https://realalpha.app/v/DTG393KqOGc/?t=3450) And you still see the amount of pushback that there is. 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. 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 in 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 actually cares about the outcome. [58:06](https://realalpha.app/v/DTG393KqOGc/?t=3486) 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? Are you worried about that at all? I'm not. I think there will be some volatility. 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 you have to decide, is the rebuttal presumption going to be we're going to lean in and try what the founder is saying? 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 or not and I think no great things are accomplished that way you know it's too slow the OODA loop's too long takes too long to bring everyone along so I'm in [59:16](https://realalpha.app/v/DTG393KqOGc/?t=3556) a suspension of disbelief mode a lot of people worry the price I'm worried prices are going to go up on everything i mean but and i would say scott besant is a very smart human very smart macro trader you know part part of an elite world there's 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 okay you know back to Palantir. What other countries are you guys working with? Well, the U.S. and our allies is really our focus. So, you know, we have most of Western European intelligence organizations use our software. You know, some of that is, look, they're subscale in many ways, so I don't want to call it philanthropy. [1:00:05](https://realalpha.app/v/DTG393KqOGc/?t=3605) But it's the right thing to do. After the Bataclan massacre, we volunteered to help the French out massively. And 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 it's not at the level of the U.S. industrial base. And so 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 lethal. to protect my nation uh and so i think we're really happy with with that level of work here um australia uh japan you know the u.s and our allies 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? I think 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 that 29 and 30 and just keep making it harder and harder and too risky for the CCP to do anything. [1:01:25](https://realalpha.app/v/DTG393KqOGc/?t=3685) 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. And how exact, could you be a little more descriptive on how would we do that? 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. [1:02:00](https://realalpha.app/v/DTG393KqOGc/?t=3720) 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 do. 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 make sure that the level of unpredictability that we're creating... that battle space means that we stay in competition and never get to crisis or conflict how i mean how how dependent are we on taiwan for semiconductors and chips and all these type of things for the leading edge very and i think that's the important part of our head 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. You know, we probably have two weeks of pharmaceutical supplies. Most of these pharmaceuticals are made in the upstream ingredients, the APIs are made in China. You know, 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 [1:03:12](https://realalpha.app/v/DTG393KqOGc/?t=3792) adversary. Yeah. I mean, China is a topic that we just continuously discuss here. So, I mean, how how worried do we need to be about china i think it seems like they just have us in all these different areas they're they're manufacturing you mentioned pharmaceuticals damn near it seems like i mean it seems like our whole supply chain comes from there and you know then there's the they're involved with the the the drug the drug trafficking coming out of mexico The first opium war, as I call it, yeah. I mean, they're buying up all our land. They're investing in our country. I mean, where are they? [1:03:54](https://realalpha.app/v/DTG393KqOGc/?t=3834) Are we behind China? I think we do not yet have clarity of the threat amongst the American people. The national security community 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 America's 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. [1:04:34](https://realalpha.app/v/DTG393KqOGc/?t=3874) If you look at the essential Chinese propaganda, which we kind of imposed on ourselves with their ascendancy into the World Trade Organization, 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 already lost the competition. But I think 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 designed to obfuscate the fact that we are competing every single day and viciously. [1:05:10](https://realalpha.app/v/DTG393KqOGc/?t=3910) And that's the clarity that we need as the American people to realize we're in a competition. Today, it's an economic competition. 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 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 sort of Midwestern, we positive some, we're fair people. You know, we seek peace. So, we'll take you at your word and we'll treat you well. [1:05:47](https://realalpha.app/v/DTG393KqOGc/?t=3947) But at some point, you'll break that. And then, you know, as one admiral once told me, then the American OODA loop comes out, you know, observe, overreact, destroy, apologize. And so how do we manage this so that we are actually conveying and managing the threat appropriately? I mean, you know, 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, it would be really bad. It would be very bad. [1:06:30](https://realalpha.app/v/DTG393KqOGc/?t=3990) And I mean, right now, it would also be very bad for them. And so what are they doing? 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 sanctioned evasion. They're buying it from Malaysia, buying it from Singapore, 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. [1:07:05](https://realalpha.app/v/DTG393KqOGc/?t=4025) It's kind of an easy out. Like, yes, I'm not trying to exclude our allies from being part of the solution here, 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 Knudsen, 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 38, I think is when it happened. In 38, we have to remember there was not consensus in America that we should be involved in this European matter. The strong sense of we got to do this, we should be isolationist here. There's conflicting views. [1:07:44](https://realalpha.app/v/DTG393KqOGc/?t=4064) But what FDR realized is it takes time to build factories. I need an option. Maybe we should be isolationist. But what I definitely don't want to do is be isolationist because the cupboard is bear. 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 re-industrialization. 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. Re-industrialization 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. I mean, 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. [1:08:51](https://realalpha.app/v/DTG393KqOGc/?t=4131) 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 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, 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. [1:09:57](https://realalpha.app/v/DTG393KqOGc/?t=4197) 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, 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? [1:10:41](https://realalpha.app/v/DTG393KqOGc/?t=4241) 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 the core thing that's going to solve our problems is being impatient 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. [1:11:20](https://realalpha.app/v/DTG393KqOGc/?t=4280) 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 on 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. Sure, bring on more renewables But look at the irreliability 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 these types of energy Would you like to see more nuclear? [1:11:59](https://realalpha.app/v/DTG393KqOGc/?t=4319) Yes, I would Why? I think turning our back on the atom Was one of the gravest mistakes for our rate of progress you know 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? If you compare that to the Soviet submariners, 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. [1:12:46](https://realalpha.app/v/DTG393KqOGc/?t=4366) 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 have to be thinking about this from a competitive advantage perspective. I'm not sure it's a perfectly linear extrapolation, but in order for our shipbuilding to be competitive, you need more than just building government warships. Because to this point of a diversified R&D base, a workforce that knows how to do these things, you need scale, right? As we all know, the one shipyard in China alone has more than all the shipbuilding capacity of all the US combined. [1:13:27](https://realalpha.app/v/DTG393KqOGc/?t=4407) They have 250 times the shipbuilding capacity that we do. 250 times. Yeah. 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. You know, Palmer Luckey talked about this when I interviewed him. He said 250 times as well. But I am curious, what do those ships look like? Are they an equivalent to something that we make, or is it a shell that's basically a cargo ship? Do you have any insight on that? 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. And so I think we should be thinking about how, what would be required, 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, if we're just doing labor versus labor, we're going to lose that. But if we say, actually, [1:14:46](https://realalpha.app/v/DTG393KqOGc/?t=4486) 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 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 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, is actually the problem. That's how we got into this problem to begin with. The world used to be very different when the Berlin Wall still stood, just came down. Only 6% of major weapon system spending went to defense specialists. [1:15:43](https://realalpha.app/v/DTG393KqOGc/?t=4543) 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 [1:16:05](https://realalpha.app/v/DTG393KqOGc/?t=4565) **Shyam Sankar:** guidance systems in their mechanics division. No shit. Everything they learned about building machinery to process cereal, they were able to leverage in the service of national security to make our warfighters more lethal. And what happened was that over time, the government [1:16:23](https://realalpha.app/v/DTG393KqOGc/?t=4583) 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. 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. 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? [1:17:22](https://realalpha.app/v/DTG393KqOGc/?t=4642) Northrop, Lockheed, GD, Boeing. and Raytheon. The popular narrative is this is when we lost competition in the industrial base. 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 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, not enough Kelly Johnsons of the world. [1:18:11](https://realalpha.app/v/DTG393KqOGc/?t=4691) It drove out the founders. Founders cannot work in a conformist environment. They are heretics by their very nature and 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- So that's the key. The key is to learn how to sell and go through all the red tape to sell to the government. [1:18:54](https://realalpha.app/v/DTG393KqOGc/?t=4734) You compare that to China. So in China, 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 selling, unfortunately to us. So that cheap crap we're buying on Amazon is subsidizing lethality against potential lethality against future U.S. service members. Wow. Wow. That's just, that's enraging. So 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. [1:19:42](https://realalpha.app/v/DTG393KqOGc/?t=4782) Palmer Luckey is an archetypal example of this. You talk about a heretic, right? We have people who are hardheaded, 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, and it is the moment for us to seize the opportunity to fix ourselves. [1:20:16](https://realalpha.app/v/DTG393KqOGc/?t=4816) What are some of the other companies we should be looking at, other than Ballantir and Andurl? Sironic and their unmanned, their USVs, the surface vessels, You have Epirus with anti-drone technology, counter-CUAS, SHIELD AI. What's SHIELD AI? SHIELD builds autonomy for fighter pilots. They flew the F-16 autonomously. They built the VBAT, which is a drone that is so far seems like the primary US-made drone that is able to survive in the contested Russian EW environment in Ukraine. they you know and 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 shield showed up to one of these things and they were the only one who didn't fall out of the sky no kidding 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 either 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, [1:21:33](https://realalpha.app/v/DTG393KqOGc/?t=4893) 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 misses the essence of, I don't know when I tasted it, either it's greater, it's not. Yeah. Do you want to talk about Epirus a little bit? I love that company. Yeah, I love, I mean, I think it was a great bet by Joe very early on to take an entirely different approach to this gallium-based semiconductor material to generate walls of energy that actually almost act like cyber effects. So it's not one-to-one where you're firing a munition against 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 oh so it's one wave i thought these i thought it was like simultaneously shooting out emt pulses or whatever it is no yeah it's putting up an entire wall of energy And that is, you know, it's a very clever approach to solve the problem. [1:22:31](https://realalpha.app/v/DTG393KqOGc/?t=4951) I think we're going to need defense in depth with an approach like this. When you think about 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. And so, you know, 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 that's the greatest threat. So like when I look at Ukraine, there are really three lessons I take away. And this is one of them. Like the 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 dews, essentially, you know, these cheap explosive munition drones that were guideable [1:23:35](https://realalpha.app/v/DTG393KqOGc/?t=5015) 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 10 years of 155 production in 10 weeks. And 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. 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. [1:24:17](https://realalpha.app/v/DTG393KqOGc/?t=5057) 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. [1:24:30](https://realalpha.app/v/DTG393KqOGc/?t=5070) **Shyam Sankar:** The deterrent is your ability to produce the stockpile. [1:24:33](https://realalpha.app/v/DTG393KqOGc/?t=5073) How fast you can make them. 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 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 gonna change our spending profile and it's gonna mean that we're much less secure, we may have made different decisions along the way. [1:25:04](https://realalpha.app/v/DTG393KqOGc/?t=5104) So we shouldn't, you know, that is a hard earned lesson that the production, not the stockpiles deterrent, we shouldn't forget it. And it should shape everything. That's why you need something like a Nandrill. You need to be able to make 10,000 of these things, not a hundred. And when you think in your mind, oh, I'm only gonna need a hundred, 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 a 10,000 of these. And so when you start realizing those trade-offs, like how can we cut production time down to one fifth? Like it should take 20% as long to build these things. It should be affordable so we can be able to build a hundred times as many as we would historically have built. And now we have, now we're back to deterrent palantir is down and you guys are working with the border too right that's right order what are you guys doing down there yeah so the work like that 10th mountain [1:26:14](https://realalpha.app/v/DTG393KqOGc/?t=5174) is doing out of fort huachuca uh the work that norad northcom does and a supporting border operations southcom so all of that is our our maven our ai driven operating system for the defense department uh in addition to that you know we have a long-standing relationship with ice which actually started in 2011 when, I think it was 2011, maybe 2010, when Jamie Zabata was assassinated in Mexico. He was an ICE agent, young 32-year-old American. And we surged in to help them after. We had been taught, to the point of bureaucracy and these crises, providing clarity, we had been talking to ICE for 12 months before that about starting to work with them. We were stuck in the bureaucracy of how does one procure these things? How does one buy these things? [1:26:57](https://realalpha.app/v/DTG393KqOGc/?t=5217) After that assassination, we got a call from one of the field agents. We were up and running in 11 hours. Wow. And we were a big part of responding to Operation Fallen Heroes, what that's called, and a longstanding relationship with them born out of doing right by 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 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. [1:27:36](https://realalpha.app/v/DTG393KqOGc/?t=5256) 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. What do you think we should do about that? Well, I think we're starting in the right place. Anyone who is a violent offender. Yeah. 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? [1:28:10](https://realalpha.app/v/DTG393KqOGc/?t=5290) Now I think it's a large scale operation just given what's actually happened here. How are we going to do it? 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, it's a value chain optimization. Okay, where do I have detention capacity? Where do I have logistics on flights? How do I do this as efficiently as possible in a way that provides the most incremental lift to the American people? [1:28:47](https://realalpha.app/v/DTG393KqOGc/?t=5327) And I think that clearly starts with violent offenders and areas that matter. What's working down there? I mean, getting into the nitty-gritty down on the border. I mean, how did we seal it off so fast? 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 is 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. [1:29:27](https://realalpha.app/v/DTG393KqOGc/?t=5367) 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. So I think it's probably overdetermined, 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. Let's take a quick break. Sure. When we come back, I want to talk about the future of warfare. [1:29:59](https://realalpha.app/v/DTG393KqOGc/?t=5399) Okay. Chronic migraine, 15 or more headache days a month, each lasting four hours or more. can make me feel like a spectator in my own life. Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine. 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Transcription by CastingWords Transcription by CastingWords Ask your doctor, visit BotoxChronicMigraine.com or call 1-800-BOTOX-CHRONIC-MIGRAINE. [1:32:42](https://realalpha.app/v/DTG393KqOGc/?t=5562) 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? 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. It is an ungodly casualty rate. And it's not just happening on its own. And 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. [1:33:26](https://realalpha.app/v/DTG393KqOGc/?t=5606) 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 these precursors are coming from somewhere. And the Chinese have so much control over their economy, if they didn't want it to go, it wouldn't go. And I think they view it as part of their national interest to undermine us from the inside. Wow. So, how long ago was the Opium War? [1:33:57](https://realalpha.app/v/DTG393KqOGc/?t=5637) Was that the 1800s? Was that long ago? Yeah. Why were we doing it? It was expansion. 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. It was 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 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. [1:34:32](https://realalpha.app/v/DTG393KqOGc/?t=5672) And we were pushing that. I think largely the British, but I think we were... part a minor part of it why why were we pushing it i'm i don't know and so so this this long later i mean this is this is because of that yeah well is it because of that or i think more it is an asymmetric way of of weakening us you know it's it's an asymmetric way of doing 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. [1:35:11](https://realalpha.app/v/DTG393KqOGc/?t=5711) 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? We should. 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 as 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. [1:35:50](https://realalpha.app/v/DTG393KqOGc/?t=5750) 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 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. stuff, high art, high trade. Maybe some of them want to move their manufacturing to America. Maybe we should enable that. 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 re-industrializing America damn I mean who all would you who all should we be targeting Is there anybody that's making defense tech or anything that we should be snagging up and bringing here? [1:37:00](https://realalpha.app/v/DTG393KqOGc/?t=5820) 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. 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, doing it in different ways. [1:37:44](https://realalpha.app/v/DTG393KqOGc/?t=5864) And I think it's worth double-clicking into that, because 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. But what that's done is it's hauled out the knowledge from the buyer. So if you're at the top of the stack and you're building jet engines, you don't even understand your supply chain. You just think you're buying something. 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. 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 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&d engineers at spacex sit on the factory floor of assembly usually these are these [1:38:50](https://realalpha.app/v/DTG393KqOGc/?t=5930) are thought of as two totally different things. You have people who design the parts. You have people who assemble the parts. 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 cultural thing. And it's resonant with forward deployed engineering, right? So how do we leverage this uniquely American perspective on doing these things to just get back to being the best in the world at doing it again. [1:39:22](https://realalpha.app/v/DTG393KqOGc/?t=5962) And you're starting this conversation. How are you doing that? Well, I'm talking to colleagues in the national security community about it to see 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 U.S. 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. [1:40:00](https://realalpha.app/v/DTG393KqOGc/?t=6000) You know, there have been boom and bust cycles around this. But 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 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. Yeah, you know, I mean, there was a lot of, was it the H-1B visas? A lot of blowback. That was something I was scratching my head on for a long time, going like, I don't see what the problem is if we take the world's best and consolidate them here in our country. [1:40:41](https://realalpha.app/v/DTG393KqOGc/?t=6041) And, I mean, to be honest, you're an example of that, you know? I'll take both sides of that because I feel like I really do – 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 H-1B program has also been abused to take average, right? And so then that kind of – you lose the moral high ground on the entirety of the program. Gotcha. 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 is a shining city on the hill, who want to assimilate, who want to be American. [1:41:24](https://realalpha.app/v/DTG393KqOGc/?t=6084) 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 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 I think large swaths of the program are used by certain companies to essentially hire cheap labor they probably could have been hiring here. It'd be hiring here. And so, you know, both things can be true. There have been abuses, and we want the very best to be here. [1:42:01](https://realalpha.app/v/DTG393KqOGc/?t=6121) And then something else that you touched on that I wanted to dive in, fusion. What is fusion? Well, fusion, so fission is how do you split the atom. Fission, excuse me. 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 more R&D. But fission is a tried and true technology. All the nuclear that, when we think about nuclear, we're really talking about fission. [1:42:40](https://realalpha.app/v/DTG393KqOGc/?t=6160) And we are experimenting with what's called small modular reactors. How do you go from what is 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. They require less infrastructure, substantially less time to build, and the designs are modern in a way that it's default safe. 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 a while, But because of our, I mean, understandable fear around it, we backed away from the atom. [1:43:19](https://realalpha.app/v/DTG393KqOGc/?t=6199) And it became politically, we just started investing in other things. I mean, 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 households will have their own power supply eventually? I think it'll be harder for households to do. 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. [1:44:05](https://realalpha.app/v/DTG393KqOGc/?t=6245) But you're going to need, you know, talk about another industry that lacks founders. These public utilities are basically also run like state-owned enterprises. 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 means that they're just providing their power directly to this data center. 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. [1:44:39](https://realalpha.app/v/DTG393KqOGc/?t=6279) And any excess power, you're going to want to connect to the grid at some point. So that's going to drive the stimulus to modernize the grid infrastructure as well. We've really underinvested in the grid. We probably have a couple trillion dollars of investment we need to make, but we haven't been able to spend 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 make the other side of the equation clear of why the modernization needs to happen. I mean, I would love to see that happen, but I mean, what do you think the – you're going up against a big machine with the utilities and how – I mean, with all the lobbying that goes on and all that kind of stuff, I mean, how is that even possible? [1:45:26](https://realalpha.app/v/DTG393KqOGc/?t=6326) Step one is competition. You know, I like to quip, 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 U.S. government, essentially. Like, we have five-year centralized plans. In 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 meter, and if we can do the permitting reform that's necessary that this administration is focused 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 they have to react to this. [1:46:18](https://realalpha.app/v/DTG393KqOGc/?t=6378) 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 mimetically copying, they're imitating them. and that's okay because it provides the necessary stimulus for the whole thing to kind of work. [1:46:52](https://realalpha.app/v/DTG393KqOGc/?t=6412) And I think the problem we found ourselves in, 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 re-injection of some live players is how we'll reinvigorate this. Andrel 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, reinvigorate 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. [1:47:33](https://realalpha.app/v/DTG393KqOGc/?t=6453) And I feel like it's such an exciting time because you start to see the emergence of these live players. People are coming out of their shell and cocoon, and you can point to things that are worth investing in. The capital markets are starting to see that. They're starting to put capital behind these founders. It's a great time for the American revival. I mean, wouldn't the utility companies just buy the smaller companies and bury them? 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 could possibly be outside the water. [1:48:09](https://realalpha.app/v/DTG393KqOGc/?t=6489) 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 rule book. 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. So, you know, three of the five Andrel co-founders worked for me, you know, and they are world-class talent. In my interaction with some of the primes, you know, the thing they love to say is something like, Andrel's like the Theranos of defense. [1:48:47](https://realalpha.app/v/DTG393KqOGc/?t=6527) Andrel'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% good. It's like, obviously not true. These guys are crushing it. And 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 Andrew 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. [1:49:24](https://realalpha.app/v/DTG393KqOGc/?t=6564) Makes sense. Makes sense. All right. Let's move into the future of warfare. What's it look like? 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 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 system through the computer on on the projectile okay so now we're talking about we just let's just start there it's a difference of kind I'm sorry it's not a difference of kindness 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 [1:50:35](https://realalpha.app/v/DTG393KqOGc/?t=6635) life cycle at much greater scale and you start to see that with these first first-player FPV drones. I think the Russians are losing roughly 1,500 people a day to these little drones that Ukrainians are flying. 1,500 people a day? Wow. It's tough. That's effective. 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 the E3, E4, who has fire control on that weapon. But for us, we're not at war. We haven't changed our doctrine. We would think of the authorities on that as something, the equivalent of a tomahawk, like a cruise missile. It's going to 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 um uh so so that's one piece of it and then that i think that also implies that the the fighting force is going to have to be more technical they're not going to have to be coders [1:51:49](https://realalpha.app/v/DTG393KqOGc/?t=6709) But the responsibility, just like, you know, if you're going through a Green Beret qualification, you learn everything about the gun, you know how to assemble it, disassemble it. Well, they're going to be that level of proficiency you're going to need for a set of technical capabilities that are going to be decisive on the battle space. You know, and that it's going to extend to electronic warfare and cyber attacks and space-based access and communication all the way through 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. [1:52:27](https://realalpha.app/v/DTG393KqOGc/?t=6747) You know, yesterday when I was at Bragg, part of this capability exercise that General Braga 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 is the best job. 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. [1:53:05](https://realalpha.app/v/DTG393KqOGc/?t=6785) 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 that can actually focus on the decisions that make the beer taste better, so to speak. The decisions 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. 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? [1:53:43](https://realalpha.app/v/DTG393KqOGc/?t=6823) I think 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 a question of what are the conditions around which you need these things? And how would you reinvent 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 protect the program. I need to protect this rice bowl that I have. [1:54:30](https://realalpha.app/v/DTG393KqOGc/?t=6870) 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 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 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 I without it. [1:55:23](https://realalpha.app/v/DTG393KqOGc/?t=6923) What about personnel? I think that's probably one of the most important reforms. 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. We know this. We're the most important things. The head of the nuclear reactor program in the Navy. It's an eight-year gig. 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. When I think about the 19 years plus I've been at Palantir, I have screwed so many things up and I've had the ability to learn from all those things to make it better and better. It's just compounded over time. If you somehow had someone do my role where we were just swapping every two to three years, I can't even imagine how much further [1:56:33](https://realalpha.app/v/DTG393KqOGc/?t=6993) behind we would have been. So that's one aspect of personnel. The second aspect is [1:56:40](https://realalpha.app/v/DTG393KqOGc/?t=7000) **Shyam Sankar:** 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. [1:56:51](https://realalpha.app/v/DTG393KqOGc/?t=7011) 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 uh i don't think the military has ever been in a position where it's that asymmetric and so that that has a lot of consequences for your for your for structure and how you think about who should be in what role what what are you going to lose when that person rotates out you know um and then our ability you know because the more we took when i said earlier palitzer thinks of itself as a 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. [1:57:52](https://realalpha.app/v/DTG393KqOGc/?t=7072) Here are the experiences. Everything's mapped out. And that gives the human a lot of comfort. It gives the institution comfort. It's 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 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. [1:58:27](https://realalpha.app/v/DTG393KqOGc/?t=7107) And so I think that's going to be really important. When I think about the most important projects we've been involved with, there are 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. 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 the principle. [1:59:24](https://realalpha.app/v/DTG393KqOGc/?t=7164) 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 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 know a lot about tanks, but I mean, I would imagine, I think it takes, what, probably three to five people to operate one. And so, when we put 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? [2:00:11](https://realalpha.app/v/DTG393KqOGc/?t=7211) 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'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 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 there no one should be picking 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 oh this stuff's going to go away and um and in fact the humans are doing it slow we're doing at 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 [2:01:19](https://realalpha.app/v/DTG393KqOGc/?t=7279) 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, division big big army formation but using the latest technology just like this 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. No kidding. [2:01:56](https://realalpha.app/v/DTG393KqOGc/?t=7316) You know, I don't want to come across like I think that's a bad thing. 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. 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, would you need anybody in any of these vehicles? 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. [2:02:37](https://realalpha.app/v/DTG393KqOGc/?t=7357) 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. 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 core 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. 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 U.S. 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. 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? You know, and I think the Department of Defense is the only [2:03:48](https://realalpha.app/v/DTG393KqOGc/?t=7428) institution I know of that has divided up supply and demand. You know, 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 war fighting. 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 don't happen. [2:04:23](https://realalpha.app/v/DTG393KqOGc/?t=7463) 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? It's just running headless by doing this. And I think if you had that, it becomes the first way you could 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. [2:04:51](https://realalpha.app/v/DTG393KqOGc/?t=7491) And I think that becomes, now you've turned the tables on what is politically survivable. With 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? Yeah, the Titan truck is a satellite ground station on wheels that's really about enabling long-range precision fires. So how can we do deep sensing of the battle space to enable 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. [2:05:31](https://realalpha.app/v/DTG393KqOGc/?t=7531) It is a physical thing. We still don't think of ourselves as a hardware company. We've built a team of super friends, of power horses, Andrel, Northrop Grumman, 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 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 on board of this with a two-man crew so very very efficient and enabling then the transmission to the gun line to actually go destroy and close with the enemy and building this around the software first. [2:06:18](https://realalpha.app/v/DTG393KqOGc/?t=7578) 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 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 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. [2:06:48](https://realalpha.app/v/DTG393KqOGc/?t=7608) You are entirely limited by the foundation. 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. 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? [2:07:21](https://realalpha.app/v/DTG393KqOGc/?t=7641) Can I even build that compute first, which, by the way, goes pretty quickly that you can measure that in months, not years, not 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, because I know it can accomplish the essential mission that I need and have 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 not because you didn't start with the software-based approach. [2:07:53](https://realalpha.app/v/DTG393KqOGc/?t=7673) What about the boat? Yeah. So 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? You know, the enemy has 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 attributable, 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. [2:08:35](https://realalpha.app/v/DTG393KqOGc/?t=7715) And so there with Tenebrose, it's really about using commoditized approaches to building ships so that we're not reliant on an industrial base that can 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. Does anybody else have these type of technologies? Any adversaries? This is, you know, I think software is a unique American strength. [2:09:18](https://realalpha.app/v/DTG393KqOGc/?t=7758) And it really comes down to culture. Because it's not about, look, they're 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 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. [2:09:57](https://realalpha.app/v/DTG393KqOGc/?t=7797) And 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 Noycism. 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. [2:10:32](https://realalpha.app/v/DTG393KqOGc/?t=7832) They can't get the culture of collaboration to scale even close to the level that we can. This is what you see like most Israeli founders, when they found their second company, they moved to New York to start it because 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 deep seek which you know we have this chinese ai model you can see two things from it one um 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, [2:11:38](https://realalpha.app/v/DTG393KqOGc/?t=7898) a 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. What could go wrong with this stuff? I mean, could an adversary potentially hack into our hardware and software as much as they could today you know i um 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 and protecting ourselves and the adversaries will have those vulnerabilities as well um i think the biggest risk is really of inaction this is 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. [2:12:37](https://realalpha.app/v/DTG393KqOGc/?t=7957) The supply side is the model. These models, they took billions of 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 [2:12:50](https://realalpha.app/v/DTG393KqOGc/?t=7970) **Shyam Sankar:** like leading the world at implementing these things. AIG 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, [2:13:05](https://realalpha.app/v/DTG393KqOGc/?t=7985) 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 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. [2:13:41](https://realalpha.app/v/DTG393KqOGc/?t=8021) 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. But 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. Who else should we be watching out for other than China and the cartels? [2:14:15](https://realalpha.app/v/DTG393KqOGc/?t=8055) 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? Chinese were not buying oil from them. What role did China have in stepping in to support the Russian and Russian operations? Pretty substantial. Why are North Korean soldiers on the front lines in the Ukraine conflict? What is the trade that's happening? 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. 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. So 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. And then they're going to have a coalition of folks who share that interest as well. Are you worried about BRICS at all? Are Are you familiar with BRICS? [2:15:22](https://realalpha.app/v/DTG393KqOGc/?t=8122) Yeah. Yeah, I view that as an economic threat to our prosperity. Of course, 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. Let's talk about wrapping up the interview here. the premise of winning defense reformation thesis number five only requirement is winning 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 ten dollar skateboard helmet as your combat helmet when you went to work because the other one was too heavy and uncomfortable and it didn't work. It didn't work. [2:16:21](https://realalpha.app/v/DTG393KqOGc/?t=8181) 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 Bragg, soldiers were telling me they'd go out on mission, come back with marks on their head, helmets uncomfortable, it's crushing them. Well, one of the requirements 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. [2:16:58](https://realalpha.app/v/DTG393KqOGc/?t=8218) 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. 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 got to do that. We've wrapped ourselves up around this stuff, and it leads to all sorts of programs that have met all the requirements and are irrelevant. [2:17:40](https://realalpha.app/v/DTG393KqOGc/?t=8260) We spend all sorts of national treasure on doing that. You know, this is where I feel like if you integrate the person as the program, you know, Hyman Rickover could decide his own requirements as he's building the sub. Gene Kranz could change what he thought he needed for Apollo's getting done. Or John Boyd on the F-16. The original requirements document for the F-16 was seven pages. That's how condensed and, you know, as Mark Twain has that quote, I didn't 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 crap. [2:18:12](https://realalpha.app/v/DTG393KqOGc/?t=8292) Why is this going to work? No one's had the clarity of thought of what we really need and what's essential to getting this done. You know, I love that you are going to brag and it sounds like you guys are kind of integrating in all over the place. And I mean, I wish I would have 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 know if you guys are dealing, I'm sure you are. How open is Secretary Hegseth to making that happen? Incredibly open. I mean, I think he, to the point of common sense, like this is a common sense administration. [2:18:54](https://realalpha.app/v/DTG393KqOGc/?t=8334) They completely recognize 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 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. 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's an opportunity to reimagine the industrial base, and I think there's a tremendous amount of support. Are you guys integrating in with law enforcement at all? [2:19:34](https://realalpha.app/v/DTG393KqOGc/?t=8374) 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 kind of couple years here. Probably not state and locals. Well, Sean, I think that pretty much wraps us up, unless there's anything I'm missing. No, I think we covered everything. Thank you, Sean. Thank you. I really appreciate you coming. It's a ton of fun. Fascinating. So, thank you. Absolutely.