00:02you can't credibly deter War without
00:06Superior technology and this has
00:08happened over and over not just in the
00:10United States and not even in modern
00:11history but going all the way back into
00:13ancient history unfortunately America's
00:15defense industrial base which one
00:16produced technology that was Far Beyond
00:19even what we imagined in science fiction
00:21has largely stopped innovating
00:23especially when it comes to systems that
00:25actually get field that actually get
00:26deployed they get out of the lab and
00:31and despite sending more money than ever
00:33on defense our military technology for
00:35the last few decades has largely stayed
00:37the same there's more AI in a John Deere
00:40tractor than there is in any system that
00:42the U.S DOD is Fielding there's better
00:45computer vision in your Snapchat app and
00:48until 2019 the United States says
00:50nuclear Arsenal was still operating off
00:53but at the same time China and Russia
00:55and other smaller states have sought to
00:58seek asymmetric Advantage by
00:59aggressively modernizing their Armed
01:01Forces taking advantage of technologies
01:03that were developed for the consumer
01:04sector that were developed for business
01:06applications and applying it to their
01:09military technology they've been
01:12spending their resources not just to
01:14outbuild this on things like ships or
01:16outbuilding us on the number of aircraft
01:18but also on things that are going to
01:20have an asymmetrical Advantage things
01:22like Jamar Communications link degrading
01:24the way that our current systems work
01:26and creating armies of cheap autonomous
01:28systems that are uniquely suited to
01:30going up against our very very expensive
01:33Exquisite systems that cost an enormous
01:34amount of money per shot and the result
01:36of this is that today in almost every
01:39war game that the United States
01:40simulates against China or their proxies
01:44the United States if we don't lose
01:46certainly end up in a very very bad
01:50and of course it wasn't always like this
01:51Silicon Valley itself was founded by
01:54Patriots who are pushing science and
01:56engineering forward specifically with a
01:58mind towards the national interests not
02:00just profit not just making money but
02:03also making sure that their country
02:04actually remained as it was so that you
02:07could have future economic growth War
02:09research and development was what turned
02:11futuristic dreams into household Staples
02:13personal Computing GPS the internet
02:16commercial air travel and so many more
02:18things were born of military investment
02:21that was later commercialized in in 1947
02:24half of Stanford's engineering budget
02:26came from the Department of Defense just
02:28think about how incredible that is that
02:30you'd have a university like Stanford
02:31would have so many of their Brilliant
02:33Minds focused on that to the point where
02:35it was the majority of the research and
02:37development that they were doing
02:39World War II in the 50s were really a
02:41golden age of this type of investment
02:43defense Innovation government efficiency
02:45applied to these types of Technologies
02:47we built the Pentagon in 16 months we
02:50completed the Manhattan Project in three
02:51years and we put a man on the moon in
02:53under a decade in the 50s alone we built
02:56five generations of fighter jets three
02:58generations of bombers two entirely
03:01different classes of aircraft carriers
03:02nuclear powered attack submarines and
03:05submarine launch ballistic missiles just
03:08and that's why in 1960 the Department of
03:10Defense accounted for 36 percent of all
03:13research and development in the entire
03:17but starting in the 1960s and moving
03:19into the decades that followed our
03:20defense industry became more focused on
03:23process than progress unlike many of our
03:26other industries that have continued to
03:27rapidly advance in recent decades
03:28defense companies are rarely asked to
03:31innovate as a matter of survival instead
03:34they build the specifications that
03:35instruct them what they are going to
03:38and because defense firms are reimbursed
03:40by taxpayers for every hour they work
03:41well before they built a working product
03:43they're incentivized to come up with
03:45things that cause work to be done rather
03:47than making things that actually work
03:50because of that we now have a defense
03:51industry that spends a measly one to
03:53four percent of Revenue on internal
03:55research and development irad and you
03:57can compare that to modern technology
03:59companies that need to move quickly that
04:00need to invest in their own products
04:02that need to build the things that they
04:04know are going to lead into the future
04:05on their own time spending as much as 20
04:0830 even 40 percent of their revenue on
04:11internal research and development Andrew
04:13is currently spending over 50 percent of
04:15our revenue on research and development
04:16so we're pretty great
04:20but the result of this disparity this
04:23result of this difference between how
04:24our private sector technology companies
04:27and our more defense focused companies
04:30work is that we have an aging and top 10
04:32heavy industry that moves very slowly
04:34because that's the incentive structure
04:36that they've been given uh it moves
04:38slowly because not that many people are
04:40actually chasing it and when I say not
04:42many I don't mean by people I mean by
04:44corporate entity there's certainly an
04:46enormous number of people working in
04:47those top three firms but the 10 largest
04:49defense companies in the United States
04:52account for over 80 percent of the
04:55industry's revenue I don't think there's
04:57really any other industry where you
04:58would see anything like that unless you
05:00chop into really really small slices and
05:02how you define it nearly two-thirds of
05:04major weapon system contracts in the
05:06United States have just one bidder one
05:08bidder means that nobody else is even
05:10trying to win the money how can you have
05:12competition and how can you have
05:14Innovation when you only have one
05:16company showing up to build something
05:18understandably most engineers and a lot
05:20of Founders in the United States don't
05:22want to work under these conditions
05:23Engineers want to see their code
05:24deployed they're robots in motion their
05:26products out in the world making an
05:28impact and they don't want to wait years
05:30or even decades for that to happen
05:35as a reminder this conversation was part
05:38of a16v's American dime wisdom Summit in
05:40Washington DC you can find the full
05:42library of videos from the event in
05:43November by going to a16z.com a dash
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