riceMost of the Any student of 20th-century warfare will sound familiar with the Western military equipment used in Ukraine: surface-to-air missiles, anti-tank weapons, rocket launchers and howitzers. But Ukraine uses Western information technology, including artificial intelligence (AI) and autonomous surveillance systems, have also had a powerful, if less visible, impact on the Russian military. Commercial suppliers provide satellites, sensors, drones and software to the Ukrainian military. These products provide reams of battlefield data that are condensed into applications to help soldiers on the ground target the enemy. One U.S. defense official applauded them as “the Uber of artillery.”
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Behind this new type of warfare are some of the most unconventional ideas in American tech. Everyone knows Elon Musk, whose rocket company SpaceX uses Starlink satellites for Ukrainian service (although he has now restricted access from the battlefield). Your columnist recently met two other iconoclastic entrepreneurs.One of them is Palmer Luckey, 30, who in 2017 co-founded Anduril, which makes surveillance towers, drones, unmanned submarines and artificial intelligenceThe drive system that supports them is called Lattice. Wearing his signature flip-flops, Hawaiian shirt, and goatee, he’s an atypical defense contractor (Tony Stark, Marvel’s gizmo “Iron Man,” comes to mind). However, the startup is already upending the traditional U.S. military procurement model. During its short life, it won contracts in the US and Australia. It provides Ukraine with an autonomous system. It last raised money in December at a valuation of $8.5 billion.
The other is Alex Karp, an eccentric Ph.D. with hair mopped like Einstein. (Mr. Karp was once economistparent company. ) Palantir, whose Denver-based software company builds digital infrastructure to help clients manage vast amounts of data, whether it’s about security threats, healthcare systems or factory productivity. Like SpaceX, it has blazed the trail for civilian military enterprise since he co-founded it 20 years ago. He made bold claims. Palantir has changed the way Ukraine’s military targets its enemies and even the nature of counterterrorism, he said. He credits its software with saving millions of lives during the covid-19 pandemic. That might not be all gospel (his description to British journalists while staring at Schumpeter — “bad teeth, difficult problems” — was only half right).However, there is no doubt that Palantir is supporting Ukraine on the ground and as part of its NATOinformation network. The company’s market capitalization rose to $21 billion on Feb. 13, when the company reported its first quarterly earnings and Mr Karp hinted that his company could be a takeover target.
Both are cut from similar cloth. They are traitors to Silicon Valley. They criticized Big Tech for abandoning its historical ties to U.S. defense agencies. They lament the rapid pace of China’s military-civil fusion, which they see as a potential threat to the West. They are more or less related to right-wing venture capitalist Peter Thiel. Mr. Thiel is chairman of Palantir and his Founders Fund was an early backer of Anduril (both names reflect his love for JRR Tolkien). For some, it makes them feel creepy. Still, both use different business models, underscoring how rigid the traditional system of “prime” defense contracting has become. They offer interesting options.
Like prime contractors, Anduril only sells to military customers. But unlike defense giants like Lockheed Martin and Northrop Grumman, it does all of its research and development in parallel (R&Man) at your own risk. Mr. Luckey is a born innovator. As a teenager, he invented the Oculus virtual reality headset, which he later sold to Facebook for $3 billion. Join him as he tours the arsenal of airborne and subsea equipment on display at Anduril’s Southern California headquarters, and his eccentricity in explaining the gizmos is almost irresistible.
His business acumen is equally astute. He and his top executives don’t have time for the Pentagon’s traditional “cost-plus” procurement system. While that may be necessary for big programs like fighter jets and aircraft carriers, overall it distorts incentives and creates a risk-averse, expensive and slow-moving defense giant, they said. Instead of waiting for government contracts, Anduril creates what it thinks the defense sector needs, and uses iterative manufacturing and a lean supply chain to produce products quickly and relatively cheaply.
very intense competition. Anduril prefers the intense competition of “shootouts” that the Department of Defense (ManoMan) to test commercial products against each other. It has a high success rate. In 2020, it won a big contract to supply surveillance towers on the U.S.-Mexico border.Last year, it changed from ManoMan Provides autonomous counter-drone systems. It is building bus-sized underwater vehicles to patrol Australian waters. Despite Mr Luckey’s “America first” reform spirit, he has no doubts that he wants Anduril to become a profitable conglomerate.
king of slings
Palantir has initially begun to achieve this status, but with a “dual-use” business model. It works for both private clients and governments (though only those that are friendly to the US). Whether on the battlefield or in business, its software cuts through thicker and thicker fogs of data to enable rapid decision-making. Other dual-use companies are increasingly winning defense contracts.The Pentagon’s Defense Innovation Unit was created in 2015 to support a dramatic increase in the use of commercial technologies such as artificial intelligenceautonomous, and integrated systems to accelerate response to global threats.
Ukraine is a good testing ground. It’s also a good metaphor. Tech David’s struggle against the US military giant is no different than a tech-backed Ukrainian army battling the mighty Russians. ■
Read more from our global business columnist Schumpeter:
What would Joseph Schumpeter think of Apple? (February 9)
China’s BYD Is Surpassing Tesla As The Extraordinary Automaker (Feb. 2)
How will Satya Nadella handle Microsoft’s ChatGPT moment? (January 25)
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