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The capitalist approach is messy but you
have you have dynamism on your side.

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Just come back to the big picture thing.

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Is America in aggregate a force for good
in the world? Is it important for the

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world that America succeed? Is it
important that American values, Western

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values are preeminent of the world?
Is it important that the world not devolve

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into a complete Soviet communism
everywhere? The other direction is

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literally fighting everything about
our culture, everything about our history,

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everything about our system. And the

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fact that it has appeal is like a weird

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psychological defect some people have.

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They just always want central control.

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They always think it's better.

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>> And by the way, it routinely doesn't
work. Like it like routinely fails

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because the world is too dynamic
and that's not nearly a fast enough

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iteration cycle. >> The thing
that people want is exactly

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what we named the category. How do we
build American dynamism? How do we build

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Silicon Valley in our own country?

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>> Geopolitically, we entered a new era.

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We're in this exciting moment in time
where both the need and the demand for

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new technologies is greater
than it's ever been.

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>> The creator of the concept of the
five-year plan was of course Joseph

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Stalin. Like it it was literally it was

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literally the Soviet Union run as 5-year
plans. I'll bend a little bit. He comes

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from the People's Republic of Berkeley.

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Um the old model of World War II era,

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mass machinery and mass men to win wars.

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Like those days are long over. This should
play greatly to America's benefit

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if we unleash our strength with
flexibility, innovation, creativity,

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dynamism, uh, and apply that into
the battlefield of the future. Like, we we

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really ought to win if
we're really able to do that.

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I thought we'd start with a bit of a
opener. I want to ask Ben and Mark to

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tell us about the moment when we got
conviction that this was worth creating

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its own category fund around. Ben,
do you want to take the first step?

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>> Yeah. Well, I would say that, you know,

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Mark and I kind of always were of the

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view in an abstract sense that um we had

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to integrate the, you know, American

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business and uh American defense back

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together because we were falling behind.

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we we kind of knew the companies that we

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were investing in and we knew the
companies that uh we were buying um you

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know missiles and aircraft carriers
from and like they weren't of the same

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caliber in terms of the where they were

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on the technology curve and so we knew

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it was a kind of a a national security

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problem for the country. Um, but we

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didn't, you know, we didn't have a a

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plan. And then, as I recall,

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David, um, said, you know, there's this

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woman, Katherine Bole, who I want
to recruit, and she has this very, very

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good idea. Can you guys talk to her
about it? And that's when she uh said,

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"Look, we should call it American
Dynamism and we should build this

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thing." And it was a very easy sale for

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us, I would just say. Yeah.
And maybe I could just take take a

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step back. Um, so um, uh, some of you
on this call are too young to remember

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this, but um, you know, there was an
earlier era in Silicon Valley. Um, uh,

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and it actually wasn't that long ago.

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Um, and Ben and I were both, you know,
lucky enough and maybe of the right

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generation to be part of it, which was,
uh, you know, Silicon Valley and the

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United States, let's say,
the the mission of the United States as a

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country. Um, and then, you know, sort of
the submissions of of, uh, you know, not

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just economic and technological success,
but also, you know, military success. uh

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and intelligence success um and you know
our ability to you know propagate our

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our you know our our way of life you
know not just in in the country but but

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around the world um you know there had
actually been like a fairly tight degree

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of of of integration of cooperation
and if you actually trace the history of

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Silicon Valley back before even before
World War II there was there was a lot

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of the original uh defense uh technology
work that happened in in Northern

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California where we sit today um and then
you know for sure through you know

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from the ' 50s through to the I would
say to the '90s um you know it's just it

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was just taken as given that this, you
know, this was, you know, this was sort

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of inherently an alliance. Um, you know,
with a with a shared with a shared

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American mission. Um, and so, you know,
many many great American tech companies,

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you know, including all all the big
names, um, from the ' 50s through the

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'90s all had, you know, very big
government businesses, defense

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businesses, you know, were very
important to the to the to the national

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mission. And then, you know, Ben and I
in the ' 90s, you know, we when we built

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our company, Netscape, like that that
was always front and center for us.

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>> Uh, my my first uh uh sales call to the
Pentagon was in 1994. Um when I I don't

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think I actually owned a suit yet. Um

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and uh and uh you know so 31 years ago

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um and um you know our our company
Netcape ended up being a major supplier

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uh of technology to the to >> Yeah.
Actually both Mark and I had for

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years top secret clearance um
because of those those deals.

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>> Yeah. So we you know we've been working
in you know we we we were working in

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Pentagon and and and in you know related
agencies for you know for a very on the

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civilian side also for for a very
long time. and we just sort of you know

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considered it kind of natural um and um
and you know I'm really proud of the

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work that we did there and it turned
out to be a very big part of our business

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also um and then extended over time
to also governments outside the US that

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were American allies um and so for us
this was always very natural and I think

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this was even everything I'm saying
is almost like non-controversial up until

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probably the 2000s um uh and then um you

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know then basically for you know for the
last 15 or 20 years you know by the way

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for a variety of reasons including
you know reasons that people feel very

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strongly about we could talk about for
a long time but you just a much greater

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degree of contention and you know
escalating in some cases to just

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outright hostility you know kind
of developed you know and I would say in

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most directions from from from Silicon
Valley let's say large components of

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Silicon Valley not not all but you know
significant you know companies for sure

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you know hostility towards uh DC um and
hostility towards you know any sense of

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national mission national purpose um
and then um you know and you know quite

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frankly that feeling was quickly
reciprocated by Washington uh you know

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back back to uh back to Silicon Valley
and there's plenty of people from

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Washington in the last 20 years who've
made a point uh of how much they you

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know they they hate us. And so it just
it felt like we kind of to me it felt

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like we entered this kind of you know
deevolutionary spiral uh over the course

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of the last 15 or 20 years. It probably
been I think you you might maybe you'd

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agree at sort of the the peak hostility
disconnection was maybe in the late

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2010s early 2020s.

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>> Yeah. I think the Google Maven project

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was kind of a watershed moment where,

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you know, people had to take sides um

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just kind of intellectually.

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>> Uh you know, when Google pulled uh they

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won a government contract um for kind
of I think it was AI to be used in kind of

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drone technology or something like that.

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And then uh they basically pulled out of

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the contract um due to a protest from uh

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you know a bunch of their employees.

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>> Yeah. And not just and I think you
confirm like not not just like a mild

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protest but like visceral emotional

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>> Oh like yeah it
was like a a revolt from

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I remember Sundar described it to me a

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revolt from the international AI

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community. Um and so it it was pretty

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wild uh and and certainly unprecedented.

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>> Yeah. And so so you know I think
there sort of things sort of bottomed out

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there and then you know I think you know
some of us and obviously you know there

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are new companies that have played a big
role here but you know some of us like

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Ben and I who were involved in this in
the old days you know it was kind of a

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chance for us to kind of take stock
of you know where things were how things

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had gotten that bad what went wrong and
then you know start to you know at least

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try to figure out kind of how to fix it.

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Um, and so anyway, so that's why like I
was so enthusiastic when David and then

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Katherine, you know, devel developed
these ideas uh and and you know,

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developed this new mission for the firm.

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Um, like I I you know, I I I thought
it was just like an absolutely fantastic

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idea at the start and and and still do.

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And but but I just wanted to go through
that which is it's it's like a there's a

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back to the future component of it,
right? Which is like it is like what

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we're doing and what others are doing
in this space. It is new and bold and

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exciting and different and very
different than the the norm 5 years ago.

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Um and and that's all real uh and but
at the same time there is a historical

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resonance which which is it's also
a return to the original values uh of

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Silicon Valley which is something I
I find to be you know just incredibly

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positive uh and important to be a part of.

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>> Yeah. And two two
footnotes to that that

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that I think are important. One is um it

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actually started uh with uh the

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universities. So, professor uh Frank

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Turman and and William Shockley who were

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developing these technologies and um
to support the war effort you know

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basically encouraged their students to

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not pursue PhDs and spin out and build

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companies to support the uh the country.

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So, which is an ironic turn because

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those same uh those same universities

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kind of spawn the ideas uh I would say

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that led to their revolt at Google. Um

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and then the other footnote is Google

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has definitely since Google/Alphabet has
reversed their position and now do work

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uh with the US government and the
defense department. So um we're in a

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happy place there. And just
to tie the threads together,

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can we spend just a couple minutes
explaining the uh why things went wrong?

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what are some of the headline reasons um

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that the hostility developed um so that

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we can then get back to the present and
uh and describe what changed. I want to

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hear from Katherine I think
in particular on this because she she was

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both an observer and a participant in it
you know for the last for the last like

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decade plus. Um like I don't know like I

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start by saying like look there are
like I would say serious and legitimate

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differences um in uh in philosophy
and worldview. Um I just I happen to watch

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I'm watching a lot of movies with my my
10-year-old and we've watched the movie

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Real Genius last night. It's a movie
in 1985 actually made by our good friend

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Brian Graaser. It's just like an one
of my favorite movies. incredible movie,

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but it it was sort of an art it's sort
of an artifact in the postvietnam era um

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in which, you know, spoiler alert, the
kids in the movie are going to basically

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a thinly disguised version of MIT and
they're working on lasers and they they

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discovered to their enormous horror that
they're working on a weapon. Um and the

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and the sort of assumption in the movie
is if you're working on a weapon, you're

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evil. Um and they don't even like pause
for a moment to like ask the question of

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like, well actually could this actually
be like super helpful or like you know

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is this how does this fit into strategy
or whatever. they just immediately like

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we got to like and so and so it was like
there was like it was like of a moment

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you know sort of very much like of a
moment post post Vietnam if the military

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was evil you know in general um and so
you know there's been some of that in

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the ecosystem you know for for a long
time by the way you know Ben mentioned

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Stanford the pioneering role of Stanford
in all of this Stanford was actually

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forced in the 1970s to devest all
of their military R&D and any R&D that

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touched the military into something
called the Stanford Research Institute

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so so you know there there was this you
know many top American universities you

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know forever for for basically since
Vietnam have not allowed like ROC or

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like you know intelligence agency
recruiting happening on campus and so

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there's there's like a 60s kind
of dimension of this post post Vietnam

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thing and then in the last you know 15
years I think it just all got kind of

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wrapped up in the broader kind of national
political drama you know of our

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of our time and you know basically
people feeling like they have to take

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sides in all kinds of political issues
um and then I would say beyond that

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feeling like political issues aren't
just political issues they're like fully

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moral issues and that you're immoral if
you're on the other side and so I I And

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you know, and by the way, there's also
like a post Iraq, you know, component to

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it, which is, you know, can we really
trust the system that took us into Iraq,

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you know, which obviously had, you know,
big impact on our on our on our national

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politics. And so that that stuff just
kind of snowballed in the valley uh

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leading into the, you know, what Ben
described um in the in in the late

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2010s. Um you know, and I think there's
a variety of different responses you

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could have to that. One is, you know,
you could say like, you know, you

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believe that the postvietnam generation
or the post Iraq mentality is the

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correct mentality. And there's lots of
points of view views that you could have

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on that. Um I I just think like in the
fullness like in the heat of the moment

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I think it's very easy to get wrapped up
in like the specific let's say you know

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politics and morality of a specific
situation. I would just come back to the

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kind of the big picture thing right
which is like is America in aggregate a

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force for good in the world like is it
important for the world that America

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succeed? Um is it important that um
you know that that that that you know

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broadly speaking American values western
values you know are kind of preeminent

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in the world. Is it important um you
know that the world not you know devolve

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into a you know totalitar you know it
was important during the in the 20th

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century cold war that the world not
devolve into a complete Soviet communism

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everywhere you know I don't think any of
us want to see a world in which you know

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we end up with kind of the same scenario
with like Chinese communism um and so I

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I think you can just kind of have these
kind of big big big picture views um of

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the importance of the of the overall
thing. I think you can also just say you

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can have a lot of respect for the men
and women in uniform, you know, who put

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their lives on the line every day
protecting and defending us. And, you

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know, it's I think it's a pretty
reasonable stance to say that they

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deserve to be supported um you know,
by by their by their, you know, fellow

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countrymen like us. Um yeah, and and
then you you could just also have the

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view of like, yeah, I mean, look, we
as the cliche goes, we live in a society,

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right? and and and part of the society
is is is that uh you know the government

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is is going to be uh have certain
capabilities and it's going to be you

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know better if they're better and worse
worse worse if they're worse and so so I

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anyway I just think like those that sort
of broader view just kind of I think got

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was getting increasingly washed out
by some very specific heated political

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topics I think by the way I think now
is a good time for a lot of you know for a

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lot of us for a lot of people you know
really kind of take stock of this you

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know as maybe some of the superheated
you know kind of emotions of the last

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you know eight years maybe are fading
a little right now. Um, and you know, some

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people are are kind of saying, well,
actually, we, you know, need to think

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about what the next 30 years looks like,
and we want it to work in a different way.

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>> I I'll add two points to that because
I think Mark's point on culture um plays a

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huge role in this. Uh, but there's
there's two things I I've noticed um

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since moving to the valley. I moved
to the valley in 2014, but I moved from

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Washington DC. And one of the things
that I noticed when I moved is that in

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if you are in Washington DC, you ride
the metro. Metro stops at the Pentagon.

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every time you ride the metro, you see
men and women in uniform going to work.

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So, it is a daily part of life that
national security issues like when when

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people talk about technology
in Washington, they're talking about

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aerospace, they're talking about defense.
I mean, they're talking about

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the companies that they see every day,
the billboards for, which are very

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different than the billboards you see on
on, you know, in in Silicon Valley. So I

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think that's that's a huge part of it
is just culturally people are very

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accustomed to national security missions
and needs and people in uniform in

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Washington DC and there's none of that
in Silicon Valley. Um like you you could

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go a decade in Silicon Valley without
seeing a person in uniform. And so I

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think that's that's a part of it.
But to Mark's point on on culture, I I've

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always said that I think the social
network had probably the greatest

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influence of the 2010s in terms of being

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a defining movie of what technology means.
And when you look at sort of the

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the kind of Bob Noise generation
of working with your hands, building the

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physical world, where those engineers
came from versus the story of a Harvard

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dorm room that inspired generations
of college students who were studying

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computer science in their dorm um
to come to Silicon Valley, those are two

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very different populations and they
symbolize two very different things. And

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so what what I think is is is
interesting is probably like the 2010s

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were really solidified by this sort of

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Harvardesque social network culture that

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is totally different than the culture
of people who are building you know

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satellites or building any anything
in the physical world and and we really

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didn't start talking about how those
people are necessary for Silicon Valley

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technology until Mark's essay it's time

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to build until 2010 until we didn't have
enough PPE for co and so I I think it

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was really just sort of the kind
of almost the logical 180 to what have we

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done here? Like we're we're not
all Harvard grads uh building in the

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application layer when we should
be thinking about the things that we

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actually need in the physical world.

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>> Yeah. If I could
just Katherine, I think

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it's a good point. I just I'll add one
kind of personal component to that which

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is Bob of course grew up in rural Iowa
um and was sort of that world, you know,

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kind of World War II contemporaneous
generation. Um you know, he undoubtedly

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knew many uh servicemen and women.
you know, he he undoubtedly knew many, you

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know, he and his family undoubtedly knew
many soldiers who went to war and didn't

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come back um and others who came back
wounded. Um and um and you know, I grew

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up in rural Wisconsin. I actually
grew up in rural Wisconsin kind of post

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Vietnam. And you know, kind of very
similar thing like if you look at where

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the sort of war fighters in the American
military come from, it's it's you know,

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it's sort of the center of the country
in a lot of cases. And so if you grew up

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in one of those environments, it's just
it's like it's yeah, it's just like an

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integrated you just realize that this
is an integrated part of your society. Um

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yeah, and then uh yeah, maybe maybe I
I come from a little bit more of that

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background and then I'll I'll I'll tease
I'll tease Ben a little bit. He comes

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from of course the polar opposite uh the

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People's Republic of Berkeley. Um in

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which I'm guessing probably the uniforms
you saw people walking around in your

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youth were not camouflaged. They were

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somewhat something else. Um

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that that is definitely true. Although

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although you know I ended up um

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I ended up knowing a few people who did
go to the so you know probably because I

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00:16:34,320 --> 00:16:37,517
played on the football team I ended up
knowing a few people who did go to the

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service and I mean I think that's one of

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the things that always um struck me as

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00:16:45,360 --> 00:16:47,997
incorrect. I I I'll just say about the

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00:16:48,080 --> 00:16:51,037
kind of anti you know we're not going to

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sell stuff to the US military and so

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00:16:52,880 --> 00:16:57,117
forth. That's like, well, so here are

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00:16:57,200 --> 00:17:00,157
friends of ours who are risking their

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00:17:00,240 --> 00:17:03,357
lives to protect us, and we're not going

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00:17:03,440 --> 00:17:07,357
to make sure they have the best, safest

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uh equipment and technology available,

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00:17:11,040 --> 00:17:14,077
like, and that's your moral position.

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Like, that always struck me as very

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00:17:16,000 --> 00:17:19,517
weird, but you know.

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00:17:19,600 --> 00:17:24,717
>> Yeah. Um I remember a few months
ago Paul Graham was trying to critique

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00:17:24,800 --> 00:17:28,557
Palunteer I think for sort
of involvement in some sort of military

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00:17:28,640 --> 00:17:31,837
activ. >> Yeah. Yeah.
um is just indicative of

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00:17:31,920 --> 00:17:36,637
kind of uh you know web 2010's insults
that that don't work anymore because the

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00:17:36,720 --> 00:17:40,557
culture has changed so much such that you
know within just a few years Palmer

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00:17:40,640 --> 00:17:43,437
could be uh you know you know uh

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00:17:43,520 --> 00:17:47,757
negatively impacted or you know let go
from from meta for sort of uh political

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00:17:47,840 --> 00:17:51,917
contributions to the to the wrong side
um or presumably the wrong side and now

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00:17:52,000 --> 00:17:55,597
is is a hero for for his work in saving
American defense. It's just indicative

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00:17:55,680 --> 00:17:59,277
of how much the culture has changed
the last few years. Yeah, it it turned out

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00:17:59,360 --> 00:18:03,277
I'll I'll just bash the counter
arguments for a moment. Um uh having

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00:18:03,360 --> 00:18:07,437
been trying to be fair earlier, I I'll
be totally unfair. Like a a lot of the

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00:18:07,520 --> 00:18:11,277
arguments against like they're very
thinly substantive. They're they're

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00:18:11,360 --> 00:18:13,997
emotional in nature and very thinly
substantive. And so my favorite story,

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00:18:14,080 --> 00:18:17,517
Eric, of your your example was there
was there was a big pro there was a big

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00:18:17,600 --> 00:18:19,197
protest against tech companies working

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00:18:19,280 --> 00:18:22,237
um uh with ICE um in in the in the early

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00:18:22,320 --> 00:18:26,557
in the first Trump term in uh 2016 2017
and there's sort of this revolt where a

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00:18:26,640 --> 00:18:29,197
a bunch of tech CEOs kind of did this kind
of berry posturing thing where they

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00:18:29,280 --> 00:18:31,757
said of course we're never going to work
with those horrible people you know who

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00:18:31,840 --> 00:18:34,957
are you know trying to deal with like
all you know everything on the border.

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00:18:35,040 --> 00:18:38,237
Um uh and and I remember actually
a friend of mine was running one of this

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00:18:38,320 --> 00:18:41,517
kind of you know at the time one
of the most like culturally advanced

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00:18:41,600 --> 00:18:45,437
technologically advanced coolest tech
companies in San Francisco and uh you

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00:18:45,520 --> 00:18:47,917
know they they had a they had a contract
you know they had their their services

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00:18:48,000 --> 00:18:50,317
used by ICE along with you know
thousands of other organizations um and

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00:18:50,400 --> 00:18:53,037
and you know his employees did the big
you know kind of outrage how can we

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00:18:53,120 --> 00:18:57,277
possibly do this um and so he actually
went out this is I think 2017 he went

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00:18:57,360 --> 00:19:00,717
out like during the heat when it was
maximum level heat intensity of that of

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00:19:00,800 --> 00:19:04,317
that time um and he went out and actually
got a former director actually

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00:19:04,400 --> 00:19:07,197
he got a guy who had actually been
in the Obama administration is basically

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00:19:07,280 --> 00:19:09,837
the head of head of border the head
of the border security and the Obama

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00:19:09,920 --> 00:19:12,557
administration to basically come in and
give an hourlong seminar at the company

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00:19:12,640 --> 00:19:15,277
and just explain like here's what's
actually involved at the border here are

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00:19:15,360 --> 00:19:17,997
all the things that make it complicated
here's all the stuff involving you know

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00:19:18,080 --> 00:19:21,277
not just you know not not not just
people coming across but also children

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00:19:21,360 --> 00:19:24,557
and and and you know sex trafficking and
like you know drugs and like all all the

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00:19:24,640 --> 00:19:27,997
other aspects of it and he and he was he
came in to do an hourong talk and you

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00:19:28,080 --> 00:19:33,437
know and the entire company was invited
and you know three people showed up

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00:19:33,520 --> 00:19:36,797
right and so like I think that,
you know, that that level of emotionality

355
00:19:36,880 --> 00:19:40,237
like it had its moment. And I and I
think it's just it's just over now. And

356
00:19:40,320 --> 00:19:43,037
I think we we we and, you know,
hopefully, you know, hopefully we and

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00:19:43,120 --> 00:19:45,677
hopefully a lot of others are are just
kind of, you know, back back to back,

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00:19:45,760 --> 00:19:48,397
you know, in a lot of ways back
to basics, back to fundamentals. These

359
00:19:48,480 --> 00:19:50,957
missions actually really do, you know,
independent of the political mood of the

360
00:19:51,040 --> 00:19:53,757
moment. These issues these these these
issues matter. These people matter.

361
00:19:53,840 --> 00:19:56,877
These organizations matter
and they deserve to be supported.

362
00:19:56,960 --> 00:20:00,077
>> Okay, cool. We've we've heard Ben
Mark's perspective on the on the origin of

363
00:20:00,160 --> 00:20:03,037
American dynamism. uh do you
and Katherine let's uh let's hear it from

364
00:20:03,120 --> 00:20:07,837
from your p perspective >>
when I joined the firm in 2018

365
00:20:07,920 --> 00:20:11,197
uh you know you have to remember what
time that was what era was in Silicon

366
00:20:11,280 --> 00:20:15,197
Valley I think Silicon Valley lost
its way as we've discussed in terms of

367
00:20:15,280 --> 00:20:19,197
focusing on defense um focusing
on really hard problems you know hardware

368
00:20:19,280 --> 00:20:21,677
was not in vogue um the intersection of

369
00:20:21,760 --> 00:20:26,957
software and advanced advanced hardware
was not was not popular um and about a

370
00:20:27,040 --> 00:20:30,877
year after I joined Mark asked me if I
wanted to meet Palmer Lucky who is the

371
00:20:30,960 --> 00:20:34,397
founder of Anderoll. I think Mark
was skeptical that our firm would be

372
00:20:34,480 --> 00:20:35,757
interested in a deal like that for a

373
00:20:35,840 --> 00:20:38,637
variety of reasons. Um, but I went down

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00:20:38,720 --> 00:20:43,357
to uh Costa Mesa to their office.
They had just unveiled their their new

375
00:20:43,440 --> 00:20:46,877
office, which is no longer their new
office. It's now their old office. Um,

376
00:20:46,960 --> 00:20:49,917
and when I was there, you know, like we
we had fallen in love with the company.

377
00:20:50,000 --> 00:20:52,397
We thought it was amazing what they were
doing. When I was there, actually, I met

378
00:20:52,480 --> 00:20:56,317
Katherine. Um, she wanted to lead
the series B when she was at General

379
00:20:56,400 --> 00:20:58,317
Catalyst. I wanted to lead the series B.

380
00:20:58,400 --> 00:21:02,317
We ended up splitting it. Um, so we >>
wasn't the best first meeting. I'll put

381
00:21:02,400 --> 00:21:05,517
it that way. >> That That's true.
That's true. Um, I'll

382
00:21:05,600 --> 00:21:09,197
let you decide how much of that you want
to share. But we basically started out,

383
00:21:09,280 --> 00:21:13,277
I think, with uh, not knowing each other
at all, competing to win a deal, having

384
00:21:13,360 --> 00:21:16,637
to split it. I think one of the worst
things I did was that I actually had

385
00:21:16,720 --> 00:21:20,877
not, she had done so much work for the
series B. She had done all the diligence

386
00:21:20,960 --> 00:21:23,517
work. She had done notes. She actually
helped the company prepare for the

387
00:21:23,600 --> 00:21:27,437
series B. I had not done that work.
And I think to add insult to injury of

388
00:21:27,520 --> 00:21:30,957
having to split the deal, I then asked
her for her notes. Um, so I could write

389
00:21:31,040 --> 00:21:34,957
write our memo, which is really probably
uh, one of the more embarrassing.

390
00:21:35,040 --> 00:21:37,437
>> I sent them because because
I because I'm a good soldier.

391
00:21:37,520 --> 00:21:39,597
>> You are you are good.
Yeah. Yeah. It was

392
00:21:39,680 --> 00:21:42,957
it was a brutal way I think to meet.
But I respected Katherine. That's the

393
00:21:43,040 --> 00:21:47,437
important part. The important part is I
respected Katherine. Um, and we both uh

394
00:21:47,520 --> 00:21:49,917
thought Andrew was a great company. U a

395
00:21:50,000 --> 00:21:54,717
couple years later uh, and I I then
continued to follow all of Katherine's

396
00:21:54,800 --> 00:21:58,077
writings. she was really she used
different terminology at the time but

397
00:21:58,160 --> 00:22:01,517
eventually she came up with the
terminology of American dynamism. Um I

398
00:22:01,600 --> 00:22:04,237
thought that was a perfect uh phrase. Um

399
00:22:04,320 --> 00:22:08,477
I then in in 2021 I think uh invested in

400
00:22:08,560 --> 00:22:12,717
flock safety. Um that was at a time
where Black Lives Matters was a big

401
00:22:12,800 --> 00:22:16,877
movement. Um people thought the idea of
funding public safety and supporting the

402
00:22:16,960 --> 00:22:20,157
police was not so cool in Silicon Valley.
But we knew that when we talked

403
00:22:20,240 --> 00:22:23,597
to people um who actually were customers
of Flock Safety and people in the

404
00:22:23,680 --> 00:22:26,477
communities, they loved it. And I just
thought this was the highest and best

405
00:22:26,560 --> 00:22:30,477
use of my time. It's the time I wanted
to spend. Um at that point, Katherine

406
00:22:30,560 --> 00:22:35,197
Katherine uh she was really writing
more and more about this idea um and the

407
00:22:35,280 --> 00:22:39,277
importance in investing these areas
critical to the national interest. Um

408
00:22:39,360 --> 00:22:43,677
and I reached out to her with with Mark
and Ben's support and said, "Hey, um I

409
00:22:43,760 --> 00:22:47,277
think you we should join forces.
We should make this uh a full-fledged

410
00:22:47,360 --> 00:22:51,357
effort. we will make this a long-term
commitment. We'll raise money. We'll

411
00:22:51,440 --> 00:22:55,437
raise a fund. The firm is totally behind
it. Um I think she didn't believe me at

412
00:22:55,520 --> 00:22:59,277
first. She can she can give her version
of it, but then she came around to it.

413
00:22:59,360 --> 00:23:03,277
Uh and at the end of 2021, she joined
the firm and uh we launched the American

414
00:23:03,360 --> 00:23:07,437
Dynamis practice and it's been uh as they
say up and to the right ever since.

415
00:23:07,520 --> 00:23:11,837
>> Can I give another part that we've
never told to you that is actually

416
00:23:11,920 --> 00:23:13,197
>> it's really for you to tell.

417
00:23:13,280 --> 00:23:15,117
>> You you could tell me.
We'll we'll we'll

418
00:23:15,200 --> 00:23:17,197
cut it if it's if it's uh inappropriate.

419
00:23:17,280 --> 00:23:20,317
But we'll give another part of the story
that we've never told which is who the

420
00:23:20,400 --> 00:23:23,117
actual matchmaker was for Du and I

421
00:23:23,200 --> 00:23:26,637
because until a single moment we had

422
00:23:26,720 --> 00:23:31,437
always been competing and you know I I
I had sort of secretly been like I wish I

423
00:23:31,520 --> 00:23:34,237
wish you would just stop looking
at these companies. It actually is flock

424
00:23:34,320 --> 00:23:37,277
safety. Garrett Langley called me um

425
00:23:37,360 --> 00:23:41,757
very late like 11:30 at night um right
before his process was about to kick off

426
00:23:41,840 --> 00:23:45,917
and he said I have terrible terrible news.
Great news for me but terrible

427
00:23:46,000 --> 00:23:49,517
news for you. Uh David flew out and
wouldn't let me leave the restaurant and

428
00:23:49,600 --> 00:23:53,917
made me sign a term sheet and I'm not
going to be running a process anymore.

429
00:23:54,000 --> 00:23:57,037
And I said Garrett, how could you do this?
I've been you know like not I

430
00:23:57,120 --> 00:23:59,997
wasn't like how could you do I was like
happy for you but I'm like Garrett you

431
00:24:00,080 --> 00:24:03,437
know I wanted to be part of your process
and he said well I think the right

432
00:24:03,520 --> 00:24:05,757
solution and I told David this is that

433
00:24:05,840 --> 00:24:10,557
you guys should just join
forces and you should join and

434
00:24:10,640 --> 00:24:12,637
then I kid you not two minutes later

435
00:24:12,720 --> 00:24:16,157
David calls me um and says hey like we

436
00:24:16,240 --> 00:24:20,237
haven't we haven't had a meal we should
we should grab a meal um and so I sort

437
00:24:20,320 --> 00:24:22,157
of knew what was what was cooking but I

438
00:24:22,240 --> 00:24:24,397
am forever grateful I think for Garrett

439
00:24:24,480 --> 00:24:28,157
Langley um kind of trying to to smooth

440
00:24:28,240 --> 00:24:32,397
things over and kind of thread the needle
very gracefully for himself. Um,

441
00:24:32,480 --> 00:24:35,277
saying, "Well, why don't you just join
Andrea and Norwoods and that way we can

442
00:24:35,360 --> 00:24:39,277
all work together." He >> he's
an amazing CEO. There's one other

443
00:24:39,360 --> 00:24:42,397
funny part about that fundraising round,
which has never happened to me in any

444
00:24:42,480 --> 00:24:45,597
other, this is just sort of a
nonsequittor, but another investor who

445
00:24:45,680 --> 00:24:49,277
was really excited about that round and
not excited about that phone call wrote

446
00:24:49,360 --> 00:24:51,677
me this crazy email. I won't say who it

447
00:24:51,760 --> 00:24:56,637
was. Um, but one of his reasons about
why he should then get into the round um

448
00:24:56,720 --> 00:25:00,317
was that he had already printed out the
term sheet. And I was like, well, I also

449
00:25:00,400 --> 00:25:03,837
own a printer. Like I don't like what
is what does printing out the term sheet

450
00:25:03,920 --> 00:25:08,317
have to do with anything?
>> Or had some some very upset people who

451
00:25:08,400 --> 00:25:12,797
were hanging around the hoop um who
didn't fly out to Atlanta um the the day

452
00:25:12,880 --> 00:25:17,517
before he started u which is a very
strong um reminder to all of us. Get on

453
00:25:17,600 --> 00:25:21,117
the plane and fly out before
the process starts. to totally

454
00:25:21,200 --> 00:25:24,717
>> and don't let them leave until the term
she designed. I like that pro pro move

455
00:25:24,800 --> 00:25:28,077
to you. The um so let's segue into you

456
00:25:28,160 --> 00:25:32,317
started American Dynamism and I'm
curious cuz people had this perception

457
00:25:32,400 --> 00:25:36,717
that you know hardware is very hard
it's very capital intensive margins are

458
00:25:36,800 --> 00:25:41,117
worse. It it takes a long time to to get
returns if they ever do. How should

459
00:25:41,200 --> 00:25:44,717
people think about this category from an
investment perspective given some of the

460
00:25:44,800 --> 00:25:48,317
preconceived notions that people people
had about the category? There's a bunch

461
00:25:48,400 --> 00:25:51,837
of different ways to build a hardware
company. Um I think if you look at a lot

462
00:25:51,920 --> 00:25:55,917
of the American Dynamism companies, at
least the early um sort of innings of of

463
00:25:56,000 --> 00:25:59,277
where they started, a lot of them were
using off-the-shelf commodity hardware

464
00:25:59,360 --> 00:26:01,517
with really advanced software. Um so

465
00:26:01,600 --> 00:26:03,837
Flock Safety was basically a camera um a

466
00:26:03,920 --> 00:26:06,877
cell phone camera in a box um with with

467
00:26:06,960 --> 00:26:11,197
power to it um and an LTE connection.
If you look at some of the early Androll

468
00:26:11,280 --> 00:26:15,517
work, it was largely commodity optics,
commodity hardware, commodity, you know,

469
00:26:15,600 --> 00:26:18,557
um, parts that they were able to turn
into things like the Sentry tower. Um,

470
00:26:18,640 --> 00:26:21,997
and then over time, those things have
gotten more sophisticated. But a lot of

471
00:26:22,080 --> 00:26:26,637
the companies we invest in, their early
versions, um, are really more commodity

472
00:26:26,720 --> 00:26:28,077
hardware they're able to put together.

473
00:26:28,160 --> 00:26:31,277
And then I think the unique thing
and the the the key thing is that we're at

474
00:26:31,360 --> 00:26:34,317
this moment where you can then pair
that with advanced software that drives

475
00:26:34,400 --> 00:26:37,437
things like computer vision, autonomy,

476
00:26:37,520 --> 00:26:42,077
um, etc. And I think that that that
is why this is the moment in time where

477
00:26:42,160 --> 00:26:45,597
hardware makes a lot more sense.
The other thing is that the customers that

478
00:26:45,680 --> 00:26:49,597
they're serving, it's not like you have
to build your hardware for the Christmas

479
00:26:49,680 --> 00:26:51,357
um gifting season where you only have

480
00:26:51,440 --> 00:26:54,637
one shot to make 80% of your sales. Um

481
00:26:54,720 --> 00:26:57,517
when you do government uh hardware or

482
00:26:57,600 --> 00:27:00,797
hardware for uh for the Pentagon um or

483
00:27:00,880 --> 00:27:04,877
across enterprises, it's a much
different um sales cycle and process.

484
00:27:04,960 --> 00:27:09,757
you can better manage your inventory and
your pacing and your hardware spend. Um,

485
00:27:09,840 --> 00:27:12,877
and there's also just a lot more,
I would say, equipment financing available

486
00:27:12,960 --> 00:27:16,877
for the very large scale hardware
projects. Um, and so it really is just a

487
00:27:16,960 --> 00:27:19,837
different dynamic. And I think if you
understand that and you spend time in

488
00:27:19,920 --> 00:27:23,197
these categories, you recognize that
this is not the same thing as making

489
00:27:23,280 --> 00:27:27,117
like a consumer electronics toy, which
is a really almost like a hits business

490
00:27:27,200 --> 00:27:30,717
or, you know, if you have one major
issue and recall, it destroys the

491
00:27:30,800 --> 00:27:34,557
company. It's not it's not quite like
that. Do you let's go deeper on on

492
00:27:34,640 --> 00:27:37,837
energy. Where are you most excited
or where are we thinking about it from a

493
00:27:37,920 --> 00:27:41,757
from investment perspective? >> Yeah,
look, I I've said this many times.

494
00:27:41,840 --> 00:27:44,557
We we as a general society, as an

495
00:27:44,640 --> 00:27:49,197
economy, have an insatiable thirst for
for energy and for power. Um, and those

496
00:27:49,280 --> 00:27:51,277
are not exactly the same the same thing.

497
00:27:51,360 --> 00:27:54,317
Um, but we need power in order to run

498
00:27:54,400 --> 00:27:57,277
our AI compute loads. um we need base

499
00:27:57,360 --> 00:28:02,077
load power which means always on power
um to run our electrical our aging

500
00:28:02,160 --> 00:28:05,917
electrical grid that means we need
generation we need transmission and we

501
00:28:06,000 --> 00:28:10,477
need storage um and so again whether
it's electric vehicles whether it's AI

502
00:28:10,560 --> 00:28:14,397
compute it does it doesn't really matter
what what the reason is we know that

503
00:28:14,480 --> 00:28:19,197
there's just absolute demand from the
consumer side to have more and more

504
00:28:19,280 --> 00:28:23,437
electricity in the system and more and
more power generation um and so I think

505
00:28:23,520 --> 00:28:25,837
what we look for is where are there just

506
00:28:25,920 --> 00:28:28,797
massive ways to create um and generate

507
00:28:28,880 --> 00:28:32,477
energy that is uh transposable, that is

508
00:28:32,560 --> 00:28:36,957
transmittable, that can be modular, that
can be mobile. Um and so we've made two

509
00:28:37,040 --> 00:28:39,437
investments in the energy space. Um

510
00:28:39,520 --> 00:28:41,997
exowatt is one, radiant nuclear is the

511
00:28:42,080 --> 00:28:45,277
other. Um we know that those are two um

512
00:28:45,360 --> 00:28:47,437
power power generation systems. One uses

513
00:28:47,520 --> 00:28:51,037
the sun, one uses nuclear uh energy um

514
00:28:51,120 --> 00:28:55,917
to create reliable um power systems. And
so we're very excited about it. Um, and

515
00:28:56,000 --> 00:29:00,317
we we certainly I think would make more
investments. But we the last the last

516
00:29:00,400 --> 00:29:02,957
thing I would say is that there's been
multiple studies that we we've seen

517
00:29:03,040 --> 00:29:07,357
shared around over the years that when
you pour more and more energy into an

518
00:29:07,440 --> 00:29:12,077
economy, you get economic growth.
And that's been true um in all of modern

519
00:29:12,160 --> 00:29:15,597
history. Uh, and I think that's
going to be true today as well.

520
00:29:15,680 --> 00:29:20,477
>> Yeah. Gen, I I want to segue
to aerospace. There's there's a lot going

521
00:29:20,560 --> 00:29:23,917
on in in terms, you know, space
manufacturing, uh, hypersonics,

522
00:29:24,000 --> 00:29:27,837
responsive launch. Where are we making
making bets where are we most excited to

523
00:29:27,920 --> 00:29:30,557
to make more? >> Yeah.
So, I think the thing that's

524
00:29:30,640 --> 00:29:34,157
really changed about aerospace that I
think we're we're incredibly excited

525
00:29:34,240 --> 00:29:38,317
about is it used to be that everyone had
to vertically integrate. Um, and sort of

526
00:29:38,400 --> 00:29:42,477
space 1.0 was was very much categorized
with companies taking the SpaceX model.

527
00:29:42,560 --> 00:29:46,397
You will build everything yourself.
Um, it might take 10 years to get to space

528
00:29:46,480 --> 00:29:51,677
and that's okay. uh that is not the case
anymore. Uh we you know we we were one

529
00:29:51,760 --> 00:29:55,357
of the earliest investors in a company
called Apex Space. I believe they are

530
00:29:55,440 --> 00:29:57,117
the fastest company to get from clean

531
00:29:57,200 --> 00:30:00,557
sheet design to orbit in 13 months

532
00:30:00,640 --> 00:30:04,957
>> um in in history. Um which is which
is pretty incredible. Um but they had a

533
00:30:05,040 --> 00:30:08,477
different view which is that we only
want to make the satellite bus. Um, and

534
00:30:08,560 --> 00:30:12,637
if we can figure out ways to make the
satellite bus cheaper, more efficiently,

535
00:30:12,720 --> 00:30:15,277
and and work with all of the the legacy

536
00:30:15,360 --> 00:30:20,077
primes and the new primes, um, to put
their payloads into space, um, that will

537
00:30:20,160 --> 00:30:23,117
be far more efficient for these
companies that are building, um,

538
00:30:23,200 --> 00:30:26,797
different types of of payloads.
And I think that thesis has been has been

539
00:30:26,880 --> 00:30:30,557
largely correct. Um, they've been able
to work with um, you know, some of the

540
00:30:30,640 --> 00:30:35,277
the most kind of legendary, I would say,
um, you know, legacy companies, um, but

541
00:30:35,360 --> 00:30:38,717
also the the emerging ones. they, you
know, they they um Andrew flew on their

542
00:30:38,800 --> 00:30:42,157
first flight. Um so I think there
there's there's something to be said

543
00:30:42,240 --> 00:30:45,757
about sort of deconstructing
the vertical integration process in space.

544
00:30:45,840 --> 00:30:49,117
That's been very um novel in space 2.0.

545
00:30:49,200 --> 00:30:51,117
We're also investors in Northwood space.

546
00:30:51,200 --> 00:30:54,557
Um it's building ground stations. Um
you know, that's a that's a problem that

547
00:30:54,640 --> 00:30:57,837
hasn't been tackled in a in a in a very
long time. We do not have enough ground

548
00:30:57,920 --> 00:31:01,197
stations to get data back to Earth
as quickly as we need to. And given that

549
00:31:01,280 --> 00:31:05,277
low Earth orbit has just been,
I would say, you know, saturated um by by

550
00:31:05,360 --> 00:31:08,477
payloads in the last several years,
particularly because the cost of launch

551
00:31:08,560 --> 00:31:11,037
has come down and because SpaceX has put

552
00:31:11,120 --> 00:31:15,357
85% of all mass into orbit, um we we do

553
00:31:15,440 --> 00:31:19,277
need more comms. We do need um
an ability to be able to to have

554
00:31:19,360 --> 00:31:23,117
communication and downlink to from lower
Earth orbit in particular to to ground

555
00:31:23,200 --> 00:31:26,557
stations. So these companies, I think,
are attacking very important parts of

556
00:31:26,640 --> 00:31:30,477
the problem, but they're also kind
of deconstructing the problem of space,

557
00:31:30,560 --> 00:31:34,637
which used to be build it all yourself,
build it in house. Um, which was, of

558
00:31:34,720 --> 00:31:37,517
course, the reason why SpaceX has been
so successful. But we're sort of seeing

559
00:31:37,600 --> 00:31:41,437
this unbundling um with the the emerging
companies that are doing parts of the

560
00:31:41,520 --> 00:31:46,397
stack that that maybe SpaceX and some
of the legacy players um haven't innovated

561
00:31:46,480 --> 00:31:48,397
in or don't see as the priority.

562
00:31:48,480 --> 00:31:52,157
>> That's a that's a good overview.
I I want to segue to defense which is bas

563
00:31:52,240 --> 00:31:57,117
you you both know know about um maybe
Katherine we we'll start with you

564
00:31:57,200 --> 00:32:00,317
similarly where are we excited where
have we made bets where are we looking

565
00:32:00,400 --> 00:32:02,717
to to make more or what
have we seen change

566
00:32:02,800 --> 00:32:06,477
>> I mean the the thing that's really
exciting about defense is for the first

567
00:32:06,560 --> 00:32:08,877
time you have sort of this I would say

568
00:32:08,960 --> 00:32:11,677
almost a golden triangle of the customer

569
00:32:11,760 --> 00:32:14,717
is desperate and moving very fast and

570
00:32:14,800 --> 00:32:19,197
and the customer isn't just the Pentagon
it's also Congress uh do you and I and

571
00:32:19,280 --> 00:32:23,437
and Mark, we're were just in Washington
um talking to to senators and and

572
00:32:23,520 --> 00:32:28,077
members of members of the House who were
very engaged on this year's NDAA. Um how

573
00:32:28,160 --> 00:32:32,317
do we fix some of the core problems with
procurement? And I think that it it you

574
00:32:32,400 --> 00:32:36,397
know, I've never been so hopeful um
about these minor changes in procurement

575
00:32:36,480 --> 00:32:40,877
reform having a dramatic impact on all
of the defense ecosystem. So not just,

576
00:32:40,960 --> 00:32:43,757
you know, not just our companies,
not just even little tech, but I think it

577
00:32:43,840 --> 00:32:47,117
will have a dramatic impact on improving
research and development even in the

578
00:32:47,200 --> 00:32:50,397
primes. So, so there's there's something
to be said of, you know, the last 10

579
00:32:50,480 --> 00:32:53,117
years we've been saying the same thing
over and over and over again, which is

580
00:32:53,200 --> 00:32:57,437
we need more competition. We need, you
know, modern software and Silicon Valley

581
00:32:57,520 --> 00:33:00,637
engineering to be brought into the
Pentagon. And now you're actually seeing

582
00:33:00,720 --> 00:33:03,677
it and you're seeing everyone say the
same thing. But the other things that I

583
00:33:03,760 --> 00:33:07,197
think have really changed in the last 10
years and particularly since we started

584
00:33:07,280 --> 00:33:12,237
uh the AD fund is one, the the downstream
capital requirement that used

585
00:33:12,320 --> 00:33:16,157
to be sort of the thing that made
investors very nervous. It's there.

586
00:33:16,240 --> 00:33:19,197
downstream capital has never been more
excited to invest in these these hard

587
00:33:19,280 --> 00:33:22,637
tech companies, American Dynamism
companies. And so the sort of messy

588
00:33:22,720 --> 00:33:25,757
middle that used to exist where
companies had to sort of float through

589
00:33:25,840 --> 00:33:27,677
or hope that they would get contracts.

590
00:33:27,760 --> 00:33:31,277
Now there's capital to subsidize which
is I think is really important. And

591
00:33:31,360 --> 00:33:36,237
that's led to so many different founders
leaving the Andurals and the SpaceX's

592
00:33:36,320 --> 00:33:39,357
and the extraord you know they they've
sort of graduated with the blessing of

593
00:33:39,440 --> 00:33:43,517
of of their of their teams and they're
building things that are that are novel

594
00:33:43,600 --> 00:33:47,517
in the physical world. taking
the the methodology of how they learned

595
00:33:47,600 --> 00:33:49,677
manufacturing from SpaceX or taking the

596
00:33:49,760 --> 00:33:54,797
manufacturing methodologies they learned
um or pioneered at Anderol and and and

597
00:33:54,880 --> 00:33:57,517
you know and and doing them in in
different ways doing them for different

598
00:33:57,600 --> 00:34:00,877
things sometimes not even in defense.
I mean I love pointing out um another

599
00:34:00,960 --> 00:34:02,957
energy company that we invested in base

600
00:34:03,040 --> 00:34:06,237
power u you know the the the founder CTO

601
00:34:06,320 --> 00:34:08,797
of of that company led at manufacturing

602
00:34:08,880 --> 00:34:13,357
at at Andreal for years and so it's
they they learn they learn the process or

603
00:34:13,440 --> 00:34:17,757
build the process in house in in one
area in one sector and then they move to

604
00:34:17,840 --> 00:34:21,597
something that's that's that's adjacent
but not necessarily the same and so I

605
00:34:21,680 --> 00:34:25,997
think defense is really benefiting from
just years of people learning from the

606
00:34:26,080 --> 00:34:29,597
school of Elon Musk and then building
these new companies for very kind of I

607
00:34:29,680 --> 00:34:33,757
would say specific use cases. Um and
they're finally sort of awake and saying

608
00:34:33,840 --> 00:34:36,397
hey we will we will write you a contract.
So I think it's only going to

609
00:34:36,480 --> 00:34:40,397
get better. I keep saying I mean yes
we're early stage but um and and very

610
00:34:40,480 --> 00:34:43,197
optimistic. I think there's never been
a better time to start a defense company.

611
00:34:43,280 --> 00:34:45,997
I just think I think that the the
floodgates are opening and we're going

612
00:34:46,080 --> 00:34:50,237
to just see just incredible pace
of innovation um with startups that are

613
00:34:50,320 --> 00:34:54,797
starting today. >> It's um
yeah it's amazing the the the

614
00:34:54,880 --> 00:34:57,117
founders that have emerged from from
those two companies as you mentioned.

615
00:34:57,200 --> 00:35:00,957
You know, we did this episode a few
weeks ago about uh how Apple built China

616
00:35:01,040 --> 00:35:05,357
and how the expertise that uh that people
who went to work on Apple go, you

617
00:35:05,440 --> 00:35:07,997
know, um translated into other
industries and maybe there'll be

618
00:35:08,080 --> 00:35:12,637
something someday around like how Ander
SpaceX rebuilt America to some degree in

619
00:35:12,720 --> 00:35:15,437
terms of all the expertise that was
developed there and how they went on to

620
00:35:15,520 --> 00:35:18,877
go and build uh you know, other
tremendous companies. Yeah, I mean I do

621
00:35:18,960 --> 00:35:22,397
think that the legacy of SpaceX, yes,
everything they've built and done is

622
00:35:22,480 --> 00:35:25,597
important, but the the manufacturing
processes that people have learned at

623
00:35:25,680 --> 00:35:29,437
SpaceX is going to be carrying America
forward for generations. Uh when you

624
00:35:29,520 --> 00:35:33,677
think how tens of thousands of people
of engineers have left SpaceX and gone on

625
00:35:33,760 --> 00:35:37,117
to other companies and pioneered new
ways of building and the manufacturing

626
00:35:37,200 --> 00:35:41,197
process in particular is is what was
novel and different. The factory is the

627
00:35:41,280 --> 00:35:46,077
product of how how Elon built across
Tesla and SpaceX. So I think the the in

628
00:35:46,160 --> 00:35:49,917
some ways it can't be overstated just
how important um that company is for for

629
00:35:50,000 --> 00:35:51,437
a number of different domains.

630
00:35:51,520 --> 00:35:55,997
>> Yeah. And and a lot of people thought
that the the legacy incumbents sort of

631
00:35:56,080 --> 00:35:57,997
their lobbying arms were just so

632
00:35:58,080 --> 00:36:00,557
powerful that it' be just very difficult

633
00:36:00,640 --> 00:36:03,677
for um you know for startups to break in

634
00:36:03,760 --> 00:36:05,677
against the against their the primes.

635
00:36:05,760 --> 00:36:10,317
What um what changed? Obviously you know
the sort of the need has been there for

636
00:36:10,400 --> 00:36:13,597
a while. Did it just come to a breaking
point at some point or or what really

637
00:36:13,680 --> 00:36:16,157
sort of, you know,
created this opportunity?

638
00:36:16,240 --> 00:36:18,237
>> Well, we always say
SpaceX and Palanteer

639
00:36:18,320 --> 00:36:19,517
walked so that everyone else could run.

640
00:36:19,600 --> 00:36:22,717
And I would, it's maybe unfair to say
that they walked, but both of them had

641
00:36:22,800 --> 00:36:27,597
to sue the government. Um um so so
you know, those are those are two early

642
00:36:27,680 --> 00:36:31,997
companies, extremely early, right? These
are the companies that wereed in 2002

643
00:36:32,080 --> 00:36:35,837
2003. Um so I think
in some ways they had to

644
00:36:35,920 --> 00:36:39,597
do the very very difficult work
of educating the government, educating

645
00:36:39,680 --> 00:36:42,157
themselves, right? Explaining why it is

646
00:36:42,240 --> 00:36:46,717
so important. Um but I think you know
that now 20 years on from from those

647
00:36:46,800 --> 00:36:51,197
companies founding we just see
an extraordinary amount of I I think

648
00:36:51,280 --> 00:36:54,637
alignment um that we've never seen before.
One because the the kind of you

649
00:36:54,720 --> 00:36:59,357
know stakes have changed in 2002 no one
was worried about China. In 2012 no one

650
00:36:59,440 --> 00:37:01,837
was worried about China, right? So
there there's something that I think has

651
00:37:01,920 --> 00:37:05,677
changed in terms of nearpeer adversaries
as well that people are now waking up

652
00:37:05,760 --> 00:37:09,597
and saying okay like we we we you know
we can't let our own procurement process

653
00:37:09,680 --> 00:37:12,957
be the thing that stops us from actually
fielding these technologies and

654
00:37:13,040 --> 00:37:15,597
producing them in mass.
>> I think that's right. I think on the

655
00:37:15,680 --> 00:37:19,037
adversary basis we now have a much
healthier respect for China as an

656
00:37:19,120 --> 00:37:23,037
adversary particularly on their
production capability but I think the

657
00:37:23,120 --> 00:37:24,477
product has also changed. I think the

658
00:37:24,560 --> 00:37:28,157
war in Ukraine really um put a very very

659
00:37:28,240 --> 00:37:33,437
bright light on how our exquisite large
platforms are not uh going to be the

660
00:37:33,520 --> 00:37:35,037
platforms for the fight of the future.

661
00:37:35,120 --> 00:37:38,557
And we needed new we needed new products.
You know, when when Andreal

662
00:37:38,640 --> 00:37:42,797
talks about rebuilding the arsenal
of democracy, they're talking about not

663
00:37:42,880 --> 00:37:46,637
doing it with new aircraft carriers. are
talking about with the tradable systems

664
00:37:46,720 --> 00:37:49,677
um with you know swarms of drones uh

665
00:37:49,760 --> 00:37:54,557
with with new kinds of autonomous uh
submersibles and other vehicles and so

666
00:37:54,640 --> 00:37:58,237
it really is a different product and I
think the government has woken up in in

667
00:37:58,320 --> 00:38:02,157
many ways to that need and they are now
working through the procurement reforms

668
00:38:02,240 --> 00:38:06,477
a lot of a lot of the the work that
Katherine and I and Mark and and and Ben

669
00:38:06,560 --> 00:38:09,997
and others do inside the firm
in Washington is to really drive some of

670
00:38:10,080 --> 00:38:13,917
these reforms which will benefit um
ultimately will benefit America but will

671
00:38:14,000 --> 00:38:17,597
benefit at all companies but you know
in addition to the companies we work with

672
00:38:17,680 --> 00:38:20,557
um but the product has changed and I
think the customer recognizes they need

673
00:38:20,640 --> 00:38:23,437
a different product which is going
to come from from a different place.

674
00:38:23,520 --> 00:38:26,957
>> Is there anything more we want to say
on on Ukraine and h how that sort of

675
00:38:27,040 --> 00:38:30,477
changed the investment landscape or did
you sort of say the main thing you

676
00:38:30,560 --> 00:38:34,877
wanted to say? You know, one one other
thing I would add is that um and and

677
00:38:34,960 --> 00:38:38,237
you've seen this actually, you know,
when JD Vance went and gave a speech in

678
00:38:38,320 --> 00:38:41,597
Europe, I think at the Munich Security
Conference, he really said like it's

679
00:38:41,680 --> 00:38:45,997
time for Europe to step up and start
spending money on defense again. Um and

680
00:38:46,080 --> 00:38:49,597
you know, while the reaction in in the
press was like negative, how could he do

681
00:38:49,680 --> 00:38:52,557
this? How could you do this to our
friend and our allies and and like

682
00:38:52,640 --> 00:38:56,957
whatever, the reality was like a lot
of a lot of the uh politicians in Europe

683
00:38:57,040 --> 00:39:00,637
said, "Okay, wait, wait a minute.
This is actually probably true." And uh

684
00:39:00,720 --> 00:39:05,277
almost every major country in Europe
has made a commitment to double or more

685
00:39:05,360 --> 00:39:09,997
their spending their GDP level of spend
on on defense. And that spend is

686
00:39:10,080 --> 00:39:13,837
ultimately going to go there. There
aren't enough incumbents in Europe to

687
00:39:13,920 --> 00:39:17,277
have to have all that money go
to companies in Europe. So it's a huge

688
00:39:17,360 --> 00:39:21,757
opportunity for um their strongest ally,
which is the United States, for the

689
00:39:21,840 --> 00:39:25,917
companies here to actually go and increase
their business uh overseas. And

690
00:39:26,000 --> 00:39:29,517
so I think there's just broadly a ton of
opportunity. Um, and you're going to see

691
00:39:29,600 --> 00:39:31,197
that and I think look, the fight in the

692
00:39:31,280 --> 00:39:34,797
Ukraine obviously has has caused the uh

693
00:39:34,880 --> 00:39:39,037
the all the countries in NATO and you
know all of Western Europe to wake up

694
00:39:39,120 --> 00:39:43,037
and recognize that they have to change
their posture when it comes to defense.

695
00:39:43,120 --> 00:39:45,997
The we've been talking about energy,
we've been talking about aerospace,

696
00:39:46,080 --> 00:39:49,837
we've been talking about defense.
What what's next in terms of where are we

697
00:39:49,920 --> 00:39:53,597
excited to invest or where
are the opportunities? Do you

698
00:39:53,680 --> 00:39:57,357
>> Yeah. Well, I think a couple things
I would say. One is that sometimes people

699
00:39:57,440 --> 00:40:01,357
think the categories that we invest
in are just totally desperate and and it's

700
00:40:01,440 --> 00:40:05,357
like oh we like we like them and so
they think like okay yeah it's space it's

701
00:40:05,440 --> 00:40:09,597
defense it's energy but actually um
these categories are often much more

702
00:40:09,680 --> 00:40:11,917
interrelated than people people realize.

703
00:40:12,000 --> 00:40:13,997
You cannot have strong national security

704
00:40:14,080 --> 00:40:19,117
without a reliable uh energy grid
and electrical grid. Um you cannot have

705
00:40:19,200 --> 00:40:22,317
obviously strong national security
without strong defense. You can't have

706
00:40:22,400 --> 00:40:26,957
that without strong communications
which requires space uh satellites and

707
00:40:27,040 --> 00:40:30,317
satellite communications and space
domain awareness. Um and so these things

708
00:40:30,400 --> 00:40:34,237
are much more interrelated than people
realize. Um we obviously have other

709
00:40:34,320 --> 00:40:37,757
investments in areas that we say
as Katherine often puts it serve the

710
00:40:37,840 --> 00:40:41,757
national interest. So we have
investments in education. We have a

711
00:40:41,840 --> 00:40:45,917
massive portfolio in public safety.
Um that you know every definition of the

712
00:40:46,000 --> 00:40:49,117
American dream that somebody would come
up with would include the idea of living

713
00:40:49,200 --> 00:40:52,637
in a safe community. So, we have
a massive um I think we're probably the

714
00:40:52,720 --> 00:40:54,637
largest public safety venture investors

715
00:40:54,720 --> 00:40:57,197
uh in the country um if not if not the

716
00:40:57,280 --> 00:41:02,317
world. Um and I think as you look to the
future, I mean, everyone has their own

717
00:41:02,400 --> 00:41:05,757
view of what the the future will will
look like for American dynamism, but I

718
00:41:05,840 --> 00:41:08,717
think we you'll see us increasingly
shift left. That's why we look at

719
00:41:08,800 --> 00:41:13,597
minerals and uh we look at critical
critical minerals and and mining. um we

720
00:41:13,680 --> 00:41:17,277
look at manufacturing and the supply
chain and the criticality of the supply

721
00:41:17,360 --> 00:41:21,677
chain and the ability to get
the important uh precursor ingredients we

722
00:41:21,760 --> 00:41:26,477
need for manufacturing um in the event
of a conflict. Uh and so I think I think

723
00:41:26,560 --> 00:41:28,797
those are some areas
that I'm excited about.

724
00:41:28,880 --> 00:41:33,597
>> Yeah, I'll echo that you know I I joke
that I just love production companies um

725
00:41:33,680 --> 00:41:37,117
and that it you know you're now actually
seeing large companies say we're moving

726
00:41:37,200 --> 00:41:39,757
back our manufacturing back to the USA.

727
00:41:39,840 --> 00:41:42,637
Um, I just think there's never been
a better time to to really focus on

728
00:41:42,720 --> 00:41:44,957
components, um, and to focus on sort of

729
00:41:45,040 --> 00:41:47,517
like the the like almost like the dumb

730
00:41:47,600 --> 00:41:52,317
parts, um, the dumb hardware that's
needed for a war of mass. And so, I

731
00:41:52,400 --> 00:41:55,517
think we're we're taking serious
looks at a lot of companies that have

732
00:41:55,600 --> 00:41:59,117
interesting thesis on how you do that
in bulk. Obviously, Hadrien was an early

733
00:41:59,200 --> 00:42:03,277
company um you know that that really
focused on how do you build a factory of

734
00:42:03,360 --> 00:42:06,797
the future but I think a lot of learnings
over the last several years of

735
00:42:06,880 --> 00:42:11,197
how you how you really automate
factories to build for um you know

736
00:42:11,280 --> 00:42:14,477
whether whether it's exquisite systems
or sort of dumb parts all will be

737
00:42:14,560 --> 00:42:17,517
necessary in a war of mass and so I
think we're we're taking all of that

738
00:42:17,600 --> 00:42:21,277
very seriously. You mentioned al also
education which isn't always a category

739
00:42:21,360 --> 00:42:25,357
that people uh you know uh sort of tie
to American dynamism. Katherine I know

740
00:42:25,440 --> 00:42:28,557
we've done Odyssey. What has been a sort
of our our thesis in terms of where

741
00:42:28,640 --> 00:42:30,877
we're excited there? >> Well,
what's what's exciting about

742
00:42:30,960 --> 00:42:32,717
Odyssey? I'll give a an overview there.

743
00:42:32,800 --> 00:42:35,837
That was an early education company
that saw the sea change happening at the

744
00:42:35,920 --> 00:42:40,717
state level um around education saving
accounts. Um so in the same way that you

745
00:42:40,800 --> 00:42:43,837
have a health savings account through
your employer that you can then put

746
00:42:43,920 --> 00:42:46,397
forward towards health care of any kind.

747
00:42:46,480 --> 00:42:50,317
Um this was a view um by a lot of states
that that people should be able to opt

748
00:42:50,400 --> 00:42:52,877
out of the public school system,
particularly parents that want to

749
00:42:52,960 --> 00:42:57,037
homeschool or that want to have sort of
a hybrid uh method of learning for their

750
00:42:57,120 --> 00:43:00,637
children. Um and this became very
popular during co um because it was sort

751
00:43:00,720 --> 00:43:03,517
of there weren't enough schools,
there weren't enough, you know, a lot of

752
00:43:03,600 --> 00:43:06,797
people had moved around the country
and and and homeschooling and sort of

753
00:43:06,880 --> 00:43:09,917
alternative learning became very popular.
But now you're seeing, you

754
00:43:10,000 --> 00:43:12,397
know, uh, states like Texas pass a

755
00:43:12,480 --> 00:43:17,517
universal ESA where any parent can opt
their their child out of out of the the

756
00:43:17,600 --> 00:43:21,037
public school system and receive cash
from the state. And that cash has to be

757
00:43:21,120 --> 00:43:24,157
transferred and regulated somehow and
ensured that that's actually being spent

758
00:43:24,240 --> 00:43:27,997
on education. And so Odyssey is building
the the financial rails to do that

759
00:43:28,080 --> 00:43:30,957
tracking to make sure that parents
get the the cash that they deserve from

760
00:43:31,040 --> 00:43:32,957
these state programs um and can put

761
00:43:33,040 --> 00:43:38,157
forward to to any program that is, you
know, approved by by the state um based

762
00:43:38,240 --> 00:43:40,957
on their bylaws. And I think you're
just seeing more and more experimentation

763
00:43:41,040 --> 00:43:44,717
with with K- through2 education. One,
because it's necessary, right? There's

764
00:43:44,800 --> 00:43:48,317
there's more and more, I would say,
special needs kids or kids that have

765
00:43:48,400 --> 00:43:51,997
different um learning capacities,
and people are realizing that one-on-one

766
00:43:52,080 --> 00:43:54,637
tutoring can support that. Um, and so I

767
00:43:54,720 --> 00:43:59,197
think you're you're seeing, you know,
a variety of different um, methods of of

768
00:43:59,280 --> 00:44:01,837
learning and they have to be, you know,
supported by different types of

769
00:44:01,920 --> 00:44:06,157
technology. Um, we're also obviously
looking at how AI and and one-on-one

770
00:44:06,240 --> 00:44:09,677
tutoring can can support these
initiatives. I think we're just going to

771
00:44:09,760 --> 00:44:13,997
see so many changes to K through2
education um over the next decade um

772
00:44:14,080 --> 00:44:17,597
enabled by not only technology but also
just this kind of I would say this this

773
00:44:17,680 --> 00:44:22,157
sea change that happened because of co
um which is realizing that that parents

774
00:44:22,240 --> 00:44:25,117
are sometimes best equipped to make
the decisions about how their how their

775
00:44:25,200 --> 00:44:27,597
children are going to learn.
>> We've talked about the categories we're

776
00:44:27,680 --> 00:44:31,837
excited about investing in. Is there any
for AD entrepreneurs listening to this?

777
00:44:31,920 --> 00:44:35,997
Are there any requests for startups that
you particularly want to see that people

778
00:44:36,080 --> 00:44:39,997
yet haven't yet done um as much or as
well as they should have across any of

779
00:44:40,080 --> 00:44:42,637
these categories? >> I have
one I feel like I'm a broken

780
00:44:42,720 --> 00:44:46,637
record um with my request which
is offensive space. Uh I think everyone

781
00:44:46,720 --> 00:44:49,997
looks to the past conflict and says oh
well we look at what happened in Ukraine

782
00:44:50,080 --> 00:44:53,757
and that's what we should build.
I actually think there's very few um

783
00:44:53,840 --> 00:44:58,557
lessons from Ukraine that are going to be
relevant in the future war. Candidly,

784
00:44:58,640 --> 00:45:01,277
I think that the future war,
the infrastructure that we already have in

785
00:45:01,360 --> 00:45:05,437
low low Earth orbit will be
exceptionally important. Um, and we have

786
00:45:05,520 --> 00:45:08,397
to figure out ways to protect what
we're building in low Earth orbit in

787
00:45:08,480 --> 00:45:12,077
particular. And so I think anything to do
with offenses of space um both on the

788
00:45:12,160 --> 00:45:15,757
software side and the hardware side,
we're we're very excited about.

789
00:45:15,840 --> 00:45:19,037
>> Yeah. You've mentioned that the how do
you phrase it? It's the war is not going

790
00:45:19,120 --> 00:45:21,597
to be about space. It's going
to be in space or something.

791
00:45:21,680 --> 00:45:25,037
>> Yes. Yeah. No, I I very much believe
that and it's because we already have so

792
00:45:25,120 --> 00:45:28,957
much important infrastructure. Like
what when when we visited I was fortunate

793
00:45:29,040 --> 00:45:32,877
enough to go to the the border
of Ukraine with some um US officials and

794
00:45:32,960 --> 00:45:36,397
and and operators on the ground and every
time I talked to to people on the

795
00:45:36,480 --> 00:45:39,117
ground and asked them what's the most
important piece of technology that you

796
00:45:39,200 --> 00:45:41,677
use, they all said Starlink. Um and of

797
00:45:41,760 --> 00:45:43,997
course Starlink is in low Earth orbit.

798
00:45:44,080 --> 00:45:47,597
It's not um something that necessarily
you would you would need to to target

799
00:45:47,680 --> 00:45:50,477
low Earth orbit and able to take out
that infrastructure. And so, you know,

800
00:45:50,560 --> 00:45:55,037
obviously SpaceX is a very um
sophisticated company. Um but but I

801
00:45:55,120 --> 00:45:58,717
think anything to do with offensive
space capabilities that can shore up

802
00:45:58,800 --> 00:46:02,397
what the US government needs given given
where the next conflict will be uh I

803
00:46:02,480 --> 00:46:07,037
think is extremely important. I want
to zoom out and also talk about how we

804
00:46:07,120 --> 00:46:10,557
think about American dynamism in the
context of our international efforts

805
00:46:10,640 --> 00:46:13,757
because you mentioned you know and for
different uh different spaces but also

806
00:46:13,840 --> 00:46:16,157
countries are trying to build their own
version of it and of course Andrew's

807
00:46:16,240 --> 00:46:20,877
also you know working internationally
as well but um maybe Katherine we'll start

808
00:46:20,960 --> 00:46:25,517
with you how do you sort of think about
uh American dynamism but also and I'll

809
00:46:25,600 --> 00:46:29,517
pass it to Ben as we're building
our international efforts uh our American

810
00:46:29,600 --> 00:46:33,517
allies. Well, I I think
you know Ben Ben has

811
00:46:33,600 --> 00:46:36,797
always said every time and I I I won't
put words in your mouth, Ben, but every

812
00:46:36,880 --> 00:46:40,637
time that he travels, I mean, the the
thing that people want is exactly what

813
00:46:40,720 --> 00:46:44,397
we named the category, which is how do
we build American dynamism? How do we

814
00:46:44,480 --> 00:46:48,397
build Silicon Valley in our own country,
right? Like how do how do we build

815
00:46:48,480 --> 00:46:51,357
national resilience? How do how do
we think about, you know, future of

816
00:46:51,440 --> 00:46:55,517
manufacturing? What are the things
that are going to supercharge our own um

817
00:46:55,600 --> 00:47:00,317
economy? And I think the the thing that
that by calling it American dynamism and

818
00:47:00,400 --> 00:47:03,517
by talking about how important it is to be
building in the physical world, I I

819
00:47:03,600 --> 00:47:06,797
think we kind of captured a few things
that are really important to to every

820
00:47:06,880 --> 00:47:10,317
nation state. One is, you know,
we always point to the fact that 25 years

821
00:47:10,400 --> 00:47:12,877
ago, if you looked at the market cap um

822
00:47:12,960 --> 00:47:14,637
of the largest 10 companies in the

823
00:47:14,720 --> 00:47:17,517
world, 25 years ago, uh three of the top

824
00:47:17,600 --> 00:47:22,157
10 were American tech companies.
Now that is nine of the top 10 25 years

825
00:47:22,240 --> 00:47:24,477
later. So Silicon Valley has truly I

826
00:47:24,560 --> 00:47:29,997
think transformed with software um you
know the the the size and scale of how

827
00:47:30,080 --> 00:47:31,277
large you can build these companies.

828
00:47:31,360 --> 00:47:34,637
Many of the companies that are now
in the top 10 in terms of of market cap

829
00:47:34,720 --> 00:47:38,717
didn't even exist in 2000. Um,
so I think that's something where other

830
00:47:38,800 --> 00:47:42,157
nations look at what Silicon Valley can
build, whether it's hardware, software,

831
00:47:42,240 --> 00:47:44,397
whether it's, you know, companies that
are building in the physical world and

832
00:47:44,480 --> 00:47:47,597
say we want to bring this to our own
country. How do we do that? And the

833
00:47:47,680 --> 00:47:51,517
spirit of American dynamism
is recognizing that it's not just uh, you

834
00:47:51,600 --> 00:47:55,917
know, an economic zone in a silo.
It's not just um pure software. Like the

835
00:47:56,000 --> 00:47:59,277
companies that are that are really
having the impact of that scale are

836
00:47:59,360 --> 00:48:02,317
building the physical world and they're
interfacing with governments not only in

837
00:48:02,400 --> 00:48:05,117
the US, but they're interfacing with
governments around the world. And in

838
00:48:05,200 --> 00:48:09,517
order to build, you know, many many more
of those companies, um, we we have to

839
00:48:09,600 --> 00:48:12,797
have sort of a game plan of of how you
interface with with regulators, with

840
00:48:12,880 --> 00:48:17,117
governments, um,
and with the international community.

841
00:48:17,200 --> 00:48:19,757
And >> Ben, what would you add to that?

842
00:48:19,840 --> 00:48:22,717
>> Yeah, I think that um, you know,

843
00:48:22,800 --> 00:48:25,117
geopolitically we we've kind of entered

844
00:48:25,200 --> 00:48:28,157
a new era. Uh and so if you kind of go

845
00:48:28,240 --> 00:48:30,717
back, you know, post World War II, we

846
00:48:30,800 --> 00:48:34,157
had kind of um bombed our big

847
00:48:34,240 --> 00:48:39,197
manufacturing competitors, you know,
Japan and and Germany uh kind of out of

848
00:48:39,280 --> 00:48:40,877
existence or out of the game for a while

849
00:48:40,960 --> 00:48:43,437
and America became the the just the

850
00:48:43,520 --> 00:48:46,317
dominant economic power uh in the world

851
00:48:46,400 --> 00:48:49,117
for for decades. And as a result, we

852
00:48:49,200 --> 00:48:52,397
could be um team America world police uh

853
00:48:52,480 --> 00:48:56,637
and just kind of, you know,
provide defense to everybody. And our our

854
00:48:56,720 --> 00:49:01,757
strategy was kind of like it's actually
not only do we not, you know, we don't

855
00:49:01,840 --> 00:49:05,037
need other countries to defend themselves.
If they were to do so, it

856
00:49:05,120 --> 00:49:09,117
might be dangerous. And so we kind of uh
station our troops all over the world.

857
00:49:09,200 --> 00:49:11,677
And we built this massive military. Um

858
00:49:11,760 --> 00:49:14,957
fast forward to 2025, we're $ 38

859
00:49:15,040 --> 00:49:17,997
trillion in debt. Um and you know

860
00:49:18,080 --> 00:49:21,837
there's a very uh competitive superpower

861
00:49:21,920 --> 00:49:25,757
um economically in China uh who has a I

862
00:49:25,840 --> 00:49:30,157
I I would just say a very different idea
about the way the world should work and

863
00:49:30,240 --> 00:49:31,917
the way their society should work than

864
00:49:32,000 --> 00:49:34,717
than we do. And so now we're in a

865
00:49:34,800 --> 00:49:38,157
position where allies matter a lot. Um,

866
00:49:38,240 --> 00:49:40,397
and not only do allies matter, but we

867
00:49:40,480 --> 00:49:43,517
need them to uh to be able to defend

868
00:49:43,600 --> 00:49:45,757
themselves and to work with us to kind

869
00:49:45,840 --> 00:49:50,477
of defend our values, our kind of way of

870
00:49:50,560 --> 00:49:54,877
life, our view of freedom. Um, and you
know, what it means to kind of be a

871
00:49:54,960 --> 00:49:56,717
citizen.

872
00:49:56,800 --> 00:49:59,997
And you know as a result of that uh you

873
00:50:00,080 --> 00:50:02,317
know American dynamism does need to kind

874
00:50:02,400 --> 00:50:04,557
of extend out beyond America to our

875
00:50:04,640 --> 00:50:07,597
allies because you know if they are

876
00:50:07,680 --> 00:50:09,757
providing their own defense um and they

877
00:50:09,840 --> 00:50:11,917
are allied with us then they need these

878
00:50:12,000 --> 00:50:15,037
same kinds of uh technologies and uh and

879
00:50:15,120 --> 00:50:19,437
products and so you know it's just part
of the overall mission that I think we

880
00:50:19,520 --> 00:50:23,037
have to pursue. It also makes
the economics for these companies work

881
00:50:23,120 --> 00:50:26,797
better if there are kind of a larger
market for them. going to deeper on on

882
00:50:26,880 --> 00:50:30,957
China, it seems like a lot of the
cultural embracing of American dynamism

883
00:50:31,040 --> 00:50:34,477
stems from some of the realities that
Katherine mentioned like like Ukraine,

884
00:50:34,560 --> 00:50:38,157
like COVID and and of course sort of
this great power conflict with with with

885
00:50:38,240 --> 00:50:42,477
China and people realizing the the
urgency of of uh and need to to prepare

886
00:50:42,560 --> 00:50:46,557
for it and it seems to inspire a lot uh
you know some of the American dynamism

887
00:50:46,640 --> 00:50:48,637
um f focus and and and where we invest.

888
00:50:48,720 --> 00:50:53,197
So maybe let's just briefly take
stock on what are the areas in which uh

889
00:50:53,280 --> 00:50:57,997
they're ahead, what what are our unique
advantages and how does that inform uh

890
00:50:58,080 --> 00:51:01,517
sort of where we're thinking for for
American dynamism. Katherine, do you

891
00:51:01,600 --> 00:51:03,597
want to take initial step? >> Sure.

892
00:51:03,680 --> 00:51:06,877
>> Yeah. I mean, I thought the the
conversation that that you all had in

893
00:51:06,960 --> 00:51:08,797
the last episode with with Brian and

894
00:51:08,880 --> 00:51:11,597
Chris about what does it mean to to

895
00:51:11,680 --> 00:51:14,317
participate in wars of mass is one that

896
00:51:14,400 --> 00:51:18,637
Silicon Valley really hadn't thought
about uh until very recently. Um, you

897
00:51:18,720 --> 00:51:21,997
know, I if if you go to Washington,
there's all this talk now about what is

898
00:51:22,080 --> 00:51:25,437
what is known as a treatable systems,
which are systems where, you know,

899
00:51:25,520 --> 00:51:29,037
you're not spending millions
and millions of dollars building out

900
00:51:29,120 --> 00:51:33,277
exquisite systems that that only are are
usable once. You're you're building out,

901
00:51:33,360 --> 00:51:37,757
you know, very cheap drones, very cheap
hardware where if you lose them, that's

902
00:51:37,840 --> 00:51:41,517
okay. And because the and the reason
why that is so important um is because I

903
00:51:41,600 --> 00:51:44,477
think a lot of the the learnings
of Ukraine um if you have an exquisite

904
00:51:44,560 --> 00:51:47,037
system that was hundreds of millions
of dollars and it can be taken out with a

905
00:51:47,120 --> 00:51:51,757
thousand dollar drone uh that changes
the economics of war and it particularly

906
00:51:51,840 --> 00:51:56,397
changes the the economics of a war
of mass. Um so I'd encourage people to to

907
00:51:56,480 --> 00:52:00,317
kind of understand um the sort
of complexities of of why you know why it

908
00:52:00,400 --> 00:52:03,357
matters so much that we've exported
our manufacturing that we can't uh

909
00:52:03,440 --> 00:52:07,597
manufacture these attitudable systems
as cheaply and as quickly and in terms of

910
00:52:07,680 --> 00:52:11,757
as as as many um as say as say China
could. But I say there's there's two

911
00:52:11,840 --> 00:52:15,517
also there's two really important things
to take from the war in Ukraine which is

912
00:52:15,600 --> 00:52:20,237
that China has been supplying both sides
of that war. Um, when you look at sort

913
00:52:20,320 --> 00:52:23,597
of the drone warfare that is that has
come out of the trenches for the last 3

914
00:52:23,680 --> 00:52:27,037
years, you know, China is a is a supplier
in the same way that Russia is

915
00:52:27,120 --> 00:52:29,677
a supplier to to its own side. But that

916
00:52:29,760 --> 00:52:31,917
means that their their industrial bases

917
00:52:32,000 --> 00:52:36,717
have been built up in a way that the US
industrial base hasn't built up um in

918
00:52:36,800 --> 00:52:39,437
the past 3 years. And that's something
that I think a lot of our American

919
00:52:39,520 --> 00:52:42,797
dynamism companies are very cognizant of.
um that we're we're at a

920
00:52:42,880 --> 00:52:46,397
disadvantage because we haven't been
supplying just in time manufacturing to

921
00:52:46,480 --> 00:52:51,437
to the Ukrainians in the way that say um
you know Chinese parts um have been. And

922
00:52:51,520 --> 00:52:54,317
so that that's something we we very much
have to think about when we think about

923
00:52:54,400 --> 00:52:58,157
wars of mass is how quickly can we can
we start investing in our manufacturing

924
00:52:58,240 --> 00:53:01,517
base so that we can have this just
in time manufacturing and these attritable

925
00:53:01,600 --> 00:53:06,157
systems um to compete against a country
that that has been building for the last

926
00:53:06,240 --> 00:53:09,597
20 years. Mark, I'd like to hear your your

927
00:53:09,680 --> 00:53:13,917
thoughts on on on manufacturing. We were
talking offline a bit ago and about how,

928
00:53:14,000 --> 00:53:18,557
you know, people hope for the old
manufacturing jobs back and and how it's

929
00:53:18,640 --> 00:53:21,517
uh harder to to bring those back,
but there's an opportunity for for more

930
00:53:21,600 --> 00:53:25,037
advanced manufacturing. Why don't you
describe the opportunity you see it?

931
00:53:25,120 --> 00:53:29,197
>> Yeah, so I g I grew up in sort of
described as light manufacturing country

932
00:53:29,280 --> 00:53:33,597
um in Wisconsin. So we were adjacent
to Detroit um and we sort of viscerally

933
00:53:33,680 --> 00:53:37,277
experienced you know the decline and fall
of Detroit um you know but we were

934
00:53:37,360 --> 00:53:40,477
we were right in the middle of it but we
were kind of around the edges um and so

935
00:53:40,560 --> 00:53:44,397
you know been thinking about this you
know for for for a long time. Um, look,

936
00:53:44,480 --> 00:53:47,517
I think the the the sort of the sort
of great offshoring of manufacturing that

937
00:53:47,600 --> 00:53:49,997
happened over the last 40 years,
you know, happened as a result of of a set

938
00:53:50,080 --> 00:53:53,517
of policy issues, uh, a set of policy
decisions, like a set of explicit

939
00:53:53,600 --> 00:53:55,757
decisions that were made, and we could
we could we could spend a long time

940
00:53:55,840 --> 00:53:58,557
talking about, you know, those decisions,
but that, you know, it was it

941
00:53:58,640 --> 00:54:01,757
was it was a real set of decisions. Um,
there are a set of policy decisions that

942
00:54:01,840 --> 00:54:04,237
have to be made and and and are currently,
you know, some of them are in

943
00:54:04,320 --> 00:54:07,997
the works now. Um, you know, to kind
of uh to kind of reverse that. But, you

944
00:54:08,080 --> 00:54:11,597
know, kind of to your point, actually,
I'll I'll quote Heracitus. uh a man

945
00:54:11,680 --> 00:54:14,477
cannot uh step into the same river twice

946
00:54:14,560 --> 00:54:16,397
uh because it is not the same river and

947
00:54:16,480 --> 00:54:20,237
he is not the same man. Um right so

948
00:54:20,320 --> 00:54:23,757
what's not like even if you completely
cleaned up all the regulatory stuff and

949
00:54:23,840 --> 00:54:26,957
legal stuff which I think we should um
and you you you sort of corrected the

950
00:54:27,040 --> 00:54:30,157
incentives that drove everything out I
think what you're just not going to get

951
00:54:30,240 --> 00:54:32,317
practically is you're just you're not
going to get the old factories back and

952
00:54:32,400 --> 00:54:35,197
you're not getting the old jobs back
in the in the way that they were 40 years

953
00:54:35,280 --> 00:54:38,637
ago when they were lost. Um and the
reason you're not going to get that is

954
00:54:38,720 --> 00:54:40,877
it's actually several reasons.
one is that the nature of the products

955
00:54:40,960 --> 00:54:45,677
themselves have changed and I'll talk
about that a little bit. Um uh and by

956
00:54:45,760 --> 00:54:47,997
the way to the good that you know the
the things that are getting manufactured

957
00:54:48,080 --> 00:54:51,437
in the in in in the in the future
decades are much more complex and

958
00:54:51,520 --> 00:54:54,637
sophisticated and technologically you
know kind of infused and powered than

959
00:54:54,720 --> 00:54:57,997
than the things that that used to get
manufactured. So the products themselves

960
00:54:58,080 --> 00:55:01,197
have changed. Um the the methods
of manufacturing have changed. So there's

961
00:55:01,280 --> 00:55:04,637
you know a lot more a lot more robotics
and automation now than there was 30 or

962
00:55:04,720 --> 00:55:08,237
40 years ago. And then the jobs
themselves have changed. Um, and you

963
00:55:08,320 --> 00:55:10,957
know, look, if you go into like
a manufacturing plant in China and

964
00:55:11,040 --> 00:55:13,677
they're, you know, assembling phones or
whatever, like you're building bicycles,

965
00:55:13,760 --> 00:55:16,237
like you are going to see a lot
of people, you know, standing at an

966
00:55:16,320 --> 00:55:19,437
assembly line doing the same thing over
and over again for 10 hours. Um, and

967
00:55:19,520 --> 00:55:22,237
there was a component of that to the,
you know, manufacturing jobs that were

968
00:55:22,320 --> 00:55:23,837
lost, you know, 40 years ago in the US.

969
00:55:23,920 --> 00:55:28,237
But like, you're probably not going to get
the bicycle manufacturing plant back

970
00:55:28,320 --> 00:55:31,197
that's going to build bicycles the way
they existed 40 years ago, where the

971
00:55:31,280 --> 00:55:33,437
plant's going to work the same way it
were 40 years ago, and where the jobs

972
00:55:33,520 --> 00:55:36,557
are going to be the same as they were 40
years ago. And it's just like it's just

973
00:55:36,640 --> 00:55:40,237
like the the the level, you know,
it's one is it just is cheaper to do that

974
00:55:40,320 --> 00:55:43,757
overseas and then like that that's just
that that that's the backward-look view

975
00:55:43,840 --> 00:55:46,477
like that that's just that's not
necessarily the thing you want you want

976
00:55:46,560 --> 00:55:51,117
to get. What you would like in contrast,
right, would be something much better.

977
00:55:51,200 --> 00:55:53,437
And the better thing, let's just
take bicycles as an example. What you

978
00:55:53,520 --> 00:55:56,317
actually want is you you want to be
making electric bikes. You you want to

979
00:55:56,400 --> 00:55:59,677
be making ebikes, right, which are
much more sophisticated, right? physical

980
00:55:59,760 --> 00:56:02,717
artifacts that involve, you know,
batteries and computers and chips and,

981
00:56:02,800 --> 00:56:04,797
you know, you might want to have
all kinds of, you know, advanced

982
00:56:04,880 --> 00:56:08,637
capabilities in the bike just like
people have now in cars and motorcycles.

983
00:56:08,720 --> 00:56:12,157
Um, and and then um, you know, maybe,
by the way, maybe a bike that balances

984
00:56:12,240 --> 00:56:15,917
itself, right? Like, you know, things
like that, right? Um, so like a new kind

985
00:56:16,000 --> 00:56:19,277
of product that's much like
more sophisticated um, built in a

986
00:56:19,360 --> 00:56:22,317
manufacturing plant that is more
sophisticated, right? and has a much you

987
00:56:22,400 --> 00:56:25,997
know greater degree of automation where
you don't have human beings standing in

988
00:56:26,080 --> 00:56:29,997
line you know turning a you know turning
the same sphere every time for 10 hours

989
00:56:30,080 --> 00:56:33,197
but where what you have is a large
number of jobs that are kind of call

990
00:56:33,280 --> 00:56:36,557
them blue collar plus jobs and then and
then also you know white collar jobs and

991
00:56:36,640 --> 00:56:40,477
all the associated service jobs around
those um that are that are building and

992
00:56:40,560 --> 00:56:44,317
maintaining that new kind of plant
to build that new kind of thing um and and

993
00:56:44,400 --> 00:56:48,397
I think those job and by the way you
can see this if you visit a Tesla fac you

994
00:56:48,480 --> 00:56:51,757
know you go visit a Tesla factory today
you know you see this in action like you

995
00:56:51,840 --> 00:56:54,397
know this is how the world's leading
manufacturers actually actually do this

996
00:56:54,480 --> 00:56:58,637
like this is actually happening and so
I think what you can do is you can leap

997
00:56:58,720 --> 00:57:01,037
forward on the nature of the product
you're building you can leap forward on

998
00:57:01,120 --> 00:57:03,357
the nature of the plant that you're
building and you can you can leap

999
00:57:03,440 --> 00:57:07,117
forward and actually create much better
jobs right higher paying jobs higher

1000
00:57:07,200 --> 00:57:10,637
skilled jobs that are frankly a lot more
pleasant that are a lot more interesting

1001
00:57:10,720 --> 00:57:14,557
and so I I think you want to have like
the futuristic outlook on this and and

1002
00:57:14,640 --> 00:57:17,197
then if you pair that with the regulatory
reforms and you know you you

1003
00:57:17,280 --> 00:57:19,997
solve all the issues around energy
prices and natural resources and

1004
00:57:20,080 --> 00:57:21,437
everything else that need to solved.

1005
00:57:21,520 --> 00:57:26,637
Like I think that's the formula. Um and
by the way, if we don't do that, all of

1006
00:57:26,720 --> 00:57:30,077
those things are going to get made
in China, which does mean over time, not

1007
00:57:30,160 --> 00:57:33,117
just phones being made in China and not
just drones being made in China, but

1008
00:57:33,200 --> 00:57:38,237
also cars. Um and also, um uh uh and also
robots. Um you know, you know, the

1009
00:57:38,320 --> 00:57:40,397
great industry of the future that we
could spend a long time talking about is

1010
00:57:40,480 --> 00:57:43,997
going to be is going to be robots, right?
AI and mechanical form u which is

1011
00:57:44,080 --> 00:57:46,477
going to be, you know, I think the biggest
industry that's ever been built.

1012
00:57:46,560 --> 00:57:49,837
And you know, right now, by default,
China's set up to do that. You know,

1013
00:57:49,920 --> 00:57:52,877
like what an amazing story it would be
for America in the 21st century, which

1014
00:57:52,960 --> 00:57:56,077
is we re-industrialize not to build
the products of the past, but to build the

1015
00:57:56,160 --> 00:57:59,517
products of the future.
And I and I think that's the opportunity.

1016
00:57:59,600 --> 00:58:02,397
>> Let's go deeper there. Uh I want to ask
you the same question I asked Katherine

1017
00:58:02,480 --> 00:58:05,757
about our unique strengths relative
to to their unique strengths because I I

1018
00:58:05,840 --> 00:58:08,557
heard you say this framing in another
conversation which I really liked, which

1019
00:58:08,640 --> 00:58:12,637
is, you know, are we going to win by being
more like us or or more like them?

1020
00:58:12,720 --> 00:58:15,197
So why don't you uh flush
that out a little bit, Mark?

1021
00:58:15,280 --> 00:58:17,757
>> Yeah. So we actually had this fight,
this fight actually happened during the

1022
00:58:17,840 --> 00:58:20,637
during the first cold war with the
Soviet Union. Um, and there was just

1023
00:58:20,720 --> 00:58:23,997
this raging debate that started in the,
you know, 1920s, but like was fully

1024
00:58:24,080 --> 00:58:26,797
raging in the ' 50s, '60s, '7s,
including when I was growing up, which

1025
00:58:26,880 --> 00:58:31,437
is, you know, basically, you know,
democracy or dictatorship. Um, and then,

1026
00:58:31,520 --> 00:58:33,517
uh, uh, free markets or, uh, you know,

1027
00:58:33,600 --> 00:58:39,117
state directed capitalism. Um, you know,
or sort of state directed production. Um

1028
00:58:39,200 --> 00:58:41,757
and and you know this was a very real
debate and and one of the sort of little

1029
00:58:41,840 --> 00:58:44,797
fun facts of how kind of screwy
everything got in the 20th century was

1030
00:58:44,880 --> 00:58:48,237
America common American undergraduate
textbooks economics textbooks in the

1031
00:58:48,320 --> 00:58:52,717
1980s would stated as fact that communism
was a superior economic system

1032
00:58:52,800 --> 00:58:55,837
to capitalism and they they would have
these charts of projected growth rates

1033
00:58:55,920 --> 00:58:58,957
and they would show that it's purely
inevitable uh that communism was going

1034
00:58:59,040 --> 00:59:01,837
to outperform capitalism because it
was a better organized system right it had

1035
00:59:01,920 --> 00:59:05,197
it had top- down controls it didn't
have all this messy inefficiency of of of

1036
00:59:05,280 --> 00:59:09,277
free market capitalism um and So you
know they you a lot of sort of economic

1037
00:59:09,360 --> 00:59:12,237
experts in the US including ones with
like big newspaper columns and like big

1038
00:59:12,320 --> 00:59:16,157
media footprints you know were
basically selling the siren song of of of

1039
00:59:16,240 --> 00:59:19,597
communism all all the way through
the late 80 all through the late ' 80s and

1040
00:59:19,680 --> 00:59:22,157
and and the reason I say that is like
that that that debate was actually

1041
00:59:22,240 --> 00:59:25,437
happening all through that period which
is right are are you better off having a

1042
00:59:25,520 --> 00:59:29,197
Soviet style system where the state
directs production and if the state

1043
00:59:29,280 --> 00:59:32,957
decides that you need to build tanks
or planes or cars or anything else like

1044
00:59:33,040 --> 00:59:35,037
they're going to directly that's going
to happen it's going to happen with

1045
00:59:35,120 --> 00:59:37,037
maximum sort of centralized efficiency.

1046
00:59:37,120 --> 00:59:39,757
it's going to happen with like
the entirety of natur you know the natural

1047
00:59:39,840 --> 00:59:43,197
resources lined up against it like
everything orchestrated you know in the

1048
00:59:43,280 --> 00:59:46,957
right way to be able to maximize
production um or are you going to have

1049
00:59:47,040 --> 00:59:51,117
the American system which you know has
aspects of you know communism here and

1050
00:59:51,200 --> 00:59:54,957
there u you know but it's much more you
know the pro argument much more dynamic

1051
00:59:55,040 --> 00:59:58,077
much more flexible um so are you going
to have in the American system are you

1052
00:59:58,160 --> 01:00:00,637
going to have a higher degree of sort
of independent action on the part of

1053
01:00:00,720 --> 01:00:03,917
individual capitalists indep you
know independent companies independent

1054
01:00:04,000 --> 01:00:07,117
technologists are you going to be
inventing a much broader range of new

1055
01:00:07,200 --> 01:00:09,437
technologies. Are you going to be
deploying those technologies in much

1056
01:00:09,520 --> 01:00:12,477
more creative ways? Um or you know,
are you going to be just like much much

1057
01:00:12,560 --> 01:00:15,117
faster on the innovation curve because
you've unleashed the the sort of

1058
01:00:15,200 --> 01:00:18,237
inherent creativity of all your people
rather than just like ordering them to

1059
01:00:18,320 --> 01:00:22,397
all stand in the line together. Um and
then you know the capitalist approach is

1060
01:00:22,480 --> 01:00:25,197
messy, right? And you know it has
boom bus cycles and it you know it has

1061
01:00:25,280 --> 01:00:27,917
companies go out of business and there's
like you know sometimes there's too much

1062
01:00:28,000 --> 01:00:31,277
competition and you know profits go
to zero and like you know you get into all

1063
01:00:31,360 --> 01:00:35,197
these kind of crazy crazy things but you
have you have dynamism on your side,

1064
01:00:35,280 --> 01:00:38,157
right? you you you've got you got
you got you got freedom, exploration,

1065
01:00:38,240 --> 01:00:41,277
creativity, innovation, uh uh free

1066
01:00:41,360 --> 01:00:46,157
market competition um and and dynamism
on your side. Um I think that question

1067
01:00:46,240 --> 01:00:48,077
was asked and answered in the 20th

1068
01:00:48,160 --> 01:00:51,037
century quite definitively. um you know

1069
01:00:51,120 --> 01:00:54,557
it is back today. um you know the new

1070
01:00:54,640 --> 01:00:58,317
you know the upcoming new mayor of you
know of uh New York City uh you know is

1071
01:00:58,400 --> 01:01:01,837
proposing government run grocery stores
right because there you know like it's

1072
01:01:01,920 --> 01:01:05,757
the exact same argument is back and and
there are you know people in you know

1073
01:01:05,840 --> 01:01:08,477
you know people in positions of great
power uh you know who still want to have

1074
01:01:08,560 --> 01:01:12,477
this argument u I think it's long
settled it does seem to be back um it is

1075
01:01:12,560 --> 01:01:14,957
coming back and I think it's
fundamentally the same thing and by the

1076
01:01:15,040 --> 01:01:18,157
way like it's not that the centralized
approach doesn't have certain advantages

1077
01:01:18,240 --> 01:01:21,197
like if you want to pump out you know
20 million tanks or something or if you

1078
01:01:21,280 --> 01:01:24,557
want to pump out you know a billion
phones There is something to a top down

1079
01:01:24,640 --> 01:01:27,997
centralized approach, right? I mean, you
know, every company within itself is it

1080
01:01:28,080 --> 01:01:30,397
is it, you know, is a form of a
dictatorship that does that. And so,

1081
01:01:30,480 --> 01:01:33,597
like, you know, there is some advantage,
you know, to China at being able to kind

1082
01:01:33,680 --> 01:01:34,957
of direct all the national resources.

1083
01:01:35,040 --> 01:01:38,557
And and there is something frustrating
being on the American side where like in

1084
01:01:38,640 --> 01:01:41,117
theory, you all share the same mission,
but in practice, you're too busy beating

1085
01:01:41,200 --> 01:01:44,877
each other's brains out, you know, to,
you know, to to ever get to the get to

1086
01:01:44,960 --> 01:01:48,237
the um, you know, in competition, ever
get to the shared purpose. Having said

1087
01:01:48,320 --> 01:01:52,477
that, like I I think we won Cold War I
by doing it our way. I think we win cold

1088
01:01:52,560 --> 01:01:56,397
war by doing it our way. Um, every time
somebody stands up and says we need to

1089
01:01:56,480 --> 01:01:59,757
get to be more like China, I always ask
the counter question, you know, where we

1090
01:01:59,840 --> 01:02:03,357
need like more state control, you know,
more top down, more direction, uh, more

1091
01:02:03,440 --> 01:02:05,997
planning and all these things, you know,
I always just ask the opposite question,

1092
01:02:06,080 --> 01:02:08,877
which is, well, no, actually, like what
if we take the opposite approach? What

1093
01:02:08,960 --> 01:02:12,477
if we become more like us, right?
And and and what if what if we lean even

1094
01:02:12,560 --> 01:02:15,597
harder into innovation and even harder
into creativity and even harder into

1095
01:02:15,680 --> 01:02:18,557
entrepreneurship? And isn't there so
much more that we could do if we if we

1096
01:02:18,640 --> 01:02:21,517
if we got to be more like us? And
obviously I think that's what we should

1097
01:02:21,600 --> 01:02:24,077
be doing. It is interesting that
that that debate is back though.

1098
01:02:24,160 --> 01:02:27,277
>> Mark sort of defined the the Chinese
system, but he also sort of defined one

1099
01:02:27,360 --> 01:02:31,757
of the major problems with procurement
which is that the the Department of War

1100
01:02:31,840 --> 01:02:35,997
makes its decisions about what weapons
it's going to buy on fiveyear cycles,

1101
01:02:36,080 --> 01:02:39,757
10-year production cycles, right?
And it's very difficult to to correct the

1102
01:02:39,840 --> 01:02:43,117
ship because of the way that we've
structured our procurement process going

1103
01:02:43,200 --> 01:02:47,117
back to going back to the 60s and the 70s.
So I think there is something about

1104
01:02:47,200 --> 01:02:50,797
the you know if you look at the last
25 years the second American century has

1105
01:02:50,880 --> 01:02:55,357
been a story of American dynamism
innovation creativity and how on a

1106
01:02:55,440 --> 01:02:59,037
global stage that has actually led us
from three companies in the top 10 to

1107
01:02:59,120 --> 01:03:01,997
nine companies in the top 10 that are
tech companies but the department of

1108
01:03:02,080 --> 01:03:05,517
defense really hasn't benefited from that.
It's the exact same companies that

1109
01:03:05,600 --> 01:03:09,677
were that were founded in some
founded in world just after World War I

1110
01:03:09,760 --> 01:03:13,837
solidified their dominance in World
War II and then you know mergers in the

1111
01:03:13,920 --> 01:03:17,357
1990s post the Cold War with this view
that we're post war we don't actually

1112
01:03:17,440 --> 01:03:19,197
have to worry about things anymore. So

1113
01:03:19,280 --> 01:03:21,597
there really is sort of I think a Soviet

1114
01:03:21,680 --> 01:03:26,317
style uh procurement system that's still
at work inside of the Department of War

1115
01:03:26,400 --> 01:03:28,877
and there's many good people
in Washington trying to change that to

1116
01:03:28,960 --> 01:03:31,837
allow for this American dynamism
to actually flow into the places that it

1117
01:03:31,920 --> 01:03:35,037
needs to exist. So it's actually just
a historical tweak which is if you I don't

1118
01:03:35,120 --> 01:03:37,197
know about DoD but if you work with big
companies a lot you know one of the

1119
01:03:37,280 --> 01:03:39,917
things you see is they have they they
often have fiveyear plans they have five

1120
01:03:40,000 --> 01:03:43,437
year planning cycles fiveyear strategies
and actually you know the creator of the

1121
01:03:43,520 --> 01:03:47,597
concept of the five-year plan
was of course Joseph Stalin

1122
01:03:47,680 --> 01:03:50,797
like it it was literally it
was literally the Soviet Union run as

1123
01:03:50,880 --> 01:03:55,437
five-year plans and actually in in the
between the 20 1920s 1950s that idea

1124
01:03:55,520 --> 01:03:58,237
actually mainstreamed itself into
Western society and into Western

1125
01:03:58,320 --> 01:04:00,237
business and has stuck there ever since.

1126
01:04:00,320 --> 01:04:03,197
Um, and and by the way, it routinely
doesn't work. Like it like routinely

1127
01:04:03,280 --> 01:04:04,637
fails because the world is too dynamic.

1128
01:04:04,720 --> 01:04:07,517
And, you know, that's that's not nearly
a fast enough, you know, iteration

1129
01:04:07,600 --> 01:04:11,037
cycle. Um, and yet people still stick
to the five-year plan thing. And it's just

1130
01:04:11,120 --> 01:04:13,517
it's like this it's like the, you know,
it's like Soviet communism out, you

1131
01:04:13,600 --> 01:04:16,557
know, the hand coming out of the grave,
you know, kind of still strangling our

1132
01:04:16,640 --> 01:04:19,197
ability to actually, you know, advance
and be able to, you know, get get our

1133
01:04:19,280 --> 01:04:23,757
jobs done. Um, yeah. And and look, like
just to double underline what Katherine

1134
01:04:23,840 --> 01:04:27,197
said, right, the battlefield itself
is changing, right? Um and so one of the

1135
01:04:27,280 --> 01:04:30,557
things that you see for example in the
in the Russia Ukraine conflict is an

1136
01:04:30,640 --> 01:04:33,197
incredibly high rate of iteration
the battlefield techniques and use of

1137
01:04:33,280 --> 01:04:35,997
technology on the battlefield you
know I mean I don't know whe they have

1138
01:04:36,080 --> 01:04:39,917
Katherine a 5day plan or something you
know in the Ukrainian military in terms

1139
01:04:40,000 --> 01:04:43,277
of how fast they adopt new technology
and adapt what they have um and and

1140
01:04:43,360 --> 01:04:45,117
that's what they need to be able
to fight and if they didn't have that

1141
01:04:45,200 --> 01:04:48,637
approach you know they would have lost
a long time ago um and and and by the way

1142
01:04:48,720 --> 01:04:52,077
the Russians are you know are trying
to match them on that um and so you know

1143
01:04:52,160 --> 01:04:56,957
the the the old model of World War II
era you know just simply mass um you

1144
01:04:57,040 --> 01:05:00,877
know mass machinery and mass men to win
wars like those days are long over. Um

1145
01:05:00,960 --> 01:05:03,517
you know even even when you have like
this very kind of contentious you know

1146
01:05:03,600 --> 01:05:06,157
even the modern version of trench
warfare still you still have this very

1147
01:05:06,240 --> 01:05:10,797
rapid iterative cycle time um and and if
and again this should play greatly to

1148
01:05:10,880 --> 01:05:13,917
America's benefit if we unleash
our strength which is if we take our

1149
01:05:14,000 --> 01:05:17,677
strength of flexibility innovation
creativity dynamism uh and apply that

1150
01:05:17,760 --> 01:05:20,237
into the battlefield of the future
like we we really ought to win if we're

1151
01:05:20,320 --> 01:05:24,877
really able to do that. Yeah, I I I
would just add to Mark's thinking um

1152
01:05:24,960 --> 01:05:26,717
that

1153
01:05:26,800 --> 01:05:29,837
going the other direction for the US is

1154
01:05:29,920 --> 01:05:33,357
literally fighting our everything about

1155
01:05:33,440 --> 01:05:37,837
our culture, everything about our history,
everything about our system.

1156
01:05:37,920 --> 01:05:40,157
And the fact that it has appeal is like

1157
01:05:40,240 --> 01:05:43,037
I think like a weird psychological

1158
01:05:43,120 --> 01:05:47,917
defect that some people have where
they're just they just always want

1159
01:05:48,000 --> 01:05:51,757
central control. Um and they always
think it's better. And this is, you

1160
01:05:51,840 --> 01:05:56,157
know, the a great investing strategy is
to if you see a company with a five-year

1161
01:05:56,240 --> 01:05:58,557
plan, short it. Um, and it works every

1162
01:05:58,640 --> 01:06:02,957
time. And yet they still do it. And I it

1163
01:06:03,040 --> 01:06:06,637
just comes it really has no basis in

1164
01:06:06,720 --> 01:06:10,797
anything. We saw this actually weirdly
in networking. You know, Mark and David

1165
01:06:10,880 --> 01:06:12,477
and I all come from the networking field

1166
01:06:12,560 --> 01:06:15,837
and when uh decentralized networks and

1167
01:06:15,920 --> 01:06:17,837
packet switching came, you know, people

1168
01:06:17,920 --> 01:06:20,957
fought it to the death. uh even after

1169
01:06:21,040 --> 01:06:23,437
Len Kleinrock like mathematically proved

1170
01:06:23,520 --> 01:06:28,077
it worked like people would still say it
would never work uh because you couldn't

1171
01:06:28,160 --> 01:06:32,317
control it and this and that and the third
and you know of course history has

1172
01:06:32,400 --> 01:06:37,357
has proven them all wrong but you know
it's not logical it is just like some

1173
01:06:37,440 --> 01:06:39,117
kind of brain defect that they have in

1174
01:06:39,200 --> 01:06:42,157
their psychology where they can't even

1175
01:06:42,240 --> 01:06:46,397
you know visualize the fact
that a system could work well that's

1176
01:06:46,480 --> 01:06:49,917
decentralized. Well,
I think we we see this over and

1177
01:06:50,000 --> 01:06:53,597
over again. I mean, I I even think about,
you know, there was like uh I'm

1178
01:06:53,680 --> 01:06:56,717
curious what Mark thinks, but like when
I think about Project Warp Speed, to me,

1179
01:06:56,800 --> 01:07:00,477
that was like promoting capitalism
at its best. We said like, you know, any

1180
01:07:00,560 --> 01:07:03,517
company that creates a vaccine like like
we will distribute it, the government

1181
01:07:03,600 --> 01:07:06,877
will distribute it. And then so it's not
that there's no role for government, but

1182
01:07:06,960 --> 01:07:10,317
they really step stepped aside and let
the private companies come up with a

1183
01:07:10,400 --> 01:07:13,757
vaccine, which happened much faster.
And we had, you know, depending on how you

1184
01:07:13,840 --> 01:07:17,197
count, we had three working vaccines
in a record-breaking time. I mean if you

1185
01:07:17,280 --> 01:07:20,477
look at what China did they they did
not have that and they were unsuccessful

1186
01:07:20,560 --> 01:07:24,477
because they weren't able to lean
on creativity and ingenuity. I think when

1187
01:07:24,560 --> 01:07:28,397
we look at defense you know some
of the defense reforms that we want to see

1188
01:07:28,480 --> 01:07:32,397
happen are things that actually push
more toward entrepreneurship not on past

1189
01:07:32,480 --> 01:07:36,237
performance but like what can you do
for me today? What can you deliver today?

1190
01:07:36,320 --> 01:07:40,477
Can we can we put out the demand signals
and then have you actually deliver it

1191
01:07:40,560 --> 01:07:44,717
against against those? Not look at what
you did 10 years ago, 20 years ago. you

1192
01:07:44,800 --> 01:07:49,277
know, the idea that there the government
currently puts out RSPs that that have a

1193
01:07:49,360 --> 01:07:52,957
criteria of what have you delivered
in the past, no matter if it was over

1194
01:07:53,040 --> 01:07:57,037
budget um or over time, but just what
what have you done in the past doesn't

1195
01:07:57,120 --> 01:08:01,437
uh doesn't lend toward leaning towards
startups and uh so some of the changes

1196
01:08:01,520 --> 01:08:04,637
we're pushing for I think will benefit
all companies and certainly will benefit

1197
01:08:04,720 --> 01:08:08,317
America and actually lean more
toward that idea of entrepreneurship

1198
01:08:08,400 --> 01:08:10,237
um and and to what we're best at.

1199
01:08:10,320 --> 01:08:14,717
>> Yeah. And an even uh kind of better
or an equally good example of that is you

1200
01:08:14,800 --> 01:08:16,637
know the whole chip industry in the US

1201
01:08:16,720 --> 01:08:19,757
kind of came out of uh the uh the the

1202
01:08:19,840 --> 01:08:23,197
the the race to get to the moon. Um

1203
01:08:23,280 --> 01:08:25,037
where the US government specified look

1204
01:08:25,120 --> 01:08:27,517
if you build a a chip with these

1205
01:08:27,600 --> 01:08:30,717
characteristics we'll buy it. Um and so

1206
01:08:30,800 --> 01:08:34,717
the government is can set rules can
create incentives can do a lot of good

1207
01:08:34,800 --> 01:08:37,037
things. Um but centrally controlling

1208
01:08:37,120 --> 01:08:39,997
everything uh tends not to work so well

1209
01:08:40,080 --> 01:08:44,397
at least for us.
>> So segueing more more concretely into

1210
01:08:44,480 --> 01:08:48,637
some American dynamism investment thesis.
Um do you why don't you share a

1211
01:08:48,720 --> 01:08:51,517
couple of the areas we're particularly
excited about or opportunities we're

1212
01:08:51,600 --> 01:08:54,237
looking at. >> Yeah,
I'll I'll start and then maybe

1213
01:08:54,320 --> 01:08:58,717
Katherine can jump in. Um I think energy
is a great one. We you know you can sort

1214
01:08:58,800 --> 01:09:02,717
of zoom in at any level you want. at a
macro level uh you know we've just seen

1215
01:09:02,800 --> 01:09:06,317
throughout history when you pour energy
into a system you get just tremendous

1216
01:09:06,400 --> 01:09:11,277
economic output economic growth um if
you look at where where we are today not

1217
01:09:11,360 --> 01:09:16,077
even looking forward we have this
insatiable thirst for for energy um

1218
01:09:16,160 --> 01:09:19,677
whether it's for AI compute or whether
it's for people switching to electric

1219
01:09:19,760 --> 01:09:24,157
vehicles um or even moving to systems
that are just electrified I mean even

1220
01:09:24,240 --> 01:09:27,917
the entire department of war has
multiple initiatives about moving toward

1221
01:09:28,000 --> 01:09:30,477
electrification um and so that This has

1222
01:09:30,560 --> 01:09:35,037
this this huge uh consequence
of creating opportunities for power

1223
01:09:35,120 --> 01:09:38,877
generation, power transmission, power
storage. And the question is are there

1224
01:09:38,960 --> 01:09:42,157
going to be opportunities that we think
are venture scale there? We think there

1225
01:09:42,240 --> 01:09:44,317
are. We've invested in nuclear power

1226
01:09:44,400 --> 01:09:49,437
companies, a company called Radiant
Nuclear. Um we've invested in uh Exolot.

1227
01:09:49,520 --> 01:09:53,357
Uh we've looked at lots of battery
technology companies. Um, and we might

1228
01:09:53,440 --> 01:09:55,837
just think there's great opportunities
here, but I mean, even just

1229
01:09:55,920 --> 01:09:59,837
pragmatically, you know, we we have
three companies now that are on China's

1230
01:09:59,920 --> 01:10:04,877
unreliable entities list, which
is an an amazingly named list, but they're

1231
01:10:04,960 --> 01:10:08,077
they're forbidden now from buying
batteries from China. So, it's like if

1232
01:10:08,160 --> 01:10:11,677
you care about the defense industrial
base, if you care about uh anything that

1233
01:10:11,760 --> 01:10:14,957
requires a battery, even consumer
electronics, like you need to have

1234
01:10:15,040 --> 01:10:18,877
battery capability in the United States
and or or amongst our allies, you need

1235
01:10:18,960 --> 01:10:22,077
to have there's a whole bunch of things
you need. And uh so we just think

1236
01:10:22,160 --> 01:10:26,397
there's exciting opportunities there
on on the energy side um in the same vein

1237
01:10:26,480 --> 01:10:30,397
if you start if you continue to shift
left uh you look at critical minerals

1238
01:10:30,480 --> 01:10:32,877
and whether it's magnets uh whether it's

1239
01:10:32,960 --> 01:10:34,557
motors whether it's copper for

1240
01:10:34,640 --> 01:10:38,317
manufacturing uh whether it's steel um

1241
01:10:38,400 --> 01:10:39,997
there there's all the all these areas

1242
01:10:40,080 --> 01:10:45,357
where you know software that are massive
massive economic um spend centers I mean

1243
01:10:45,440 --> 01:10:46,797
trillions of trillions of dollars is

1244
01:10:46,880 --> 01:10:50,557
spent in mining in construction uh in

1245
01:10:50,640 --> 01:10:53,757
manufacturing uh where software has

1246
01:10:53,840 --> 01:10:57,917
really not uh looked into these areas
like nobody's figured out can you really

1247
01:10:58,000 --> 01:11:02,237
apply uh advanced algorithms to figure
out how to do mining better. Um and

1248
01:11:02,320 --> 01:11:04,957
while that sounds like a quote that would
be like you know memeable of like

1249
01:11:05,040 --> 01:11:08,557
why that sounds so stupid it's actually
not stupid. There's pressure, there's

1250
01:11:08,640 --> 01:11:11,837
temperature, there's a lot of work
that goes into mining, not just in sight

1251
01:11:11,920 --> 01:11:13,517
selection, but actually in the process.

1252
01:11:13,600 --> 01:11:17,677
And these are areas where I think we
now see incredible talent shifting their

1253
01:11:17,760 --> 01:11:21,437
their eyes toward these areas. And,
you know, we we just think it's a great

1254
01:11:21,520 --> 01:11:23,757
opportunity and it will
ultimately be good for America.

1255
01:11:23,840 --> 01:11:26,477
>> If we go back to sort of our early
investments, you know, again,

1256
01:11:26,560 --> 01:11:30,477
investments like Ander and Shield AI
where we led the series A in 2016, we've

1257
01:11:30,560 --> 01:11:34,957
been around this space for a very long
time. Um, but those early companies,

1258
01:11:35,040 --> 01:11:38,957
they had no other choice but to be
what's known as the prime. They had to

1259
01:11:39,040 --> 01:11:41,277
compete against the legacy incumbents.

1260
01:11:41,360 --> 01:11:44,317
They had to try to get their own
contracts in working with the Department

1261
01:11:44,400 --> 01:11:48,477
of War. And it was a uphill battle
for them as they were the first. But what

1262
01:11:48,560 --> 01:11:51,757
we're seeing now from our our companies,
which you know, I I always refer to them

1263
01:11:51,840 --> 01:11:56,717
as sort of defense 2.0 or the ones that
really started around 2021 2022. These

1264
01:11:56,800 --> 01:12:00,317
companies are happy to work with the
existing legacy primes. I'd also say

1265
01:12:00,400 --> 01:12:03,597
that a lot of the industrial base is is
kind of waking up and recognizing that

1266
01:12:03,680 --> 01:12:06,877
they need to bring software. They
need to bring uh the best and brightest

1267
01:12:06,960 --> 01:12:10,077
engineers from Silicon Valley into what
they're offering government and they're

1268
01:12:10,160 --> 01:12:13,837
already on contracts. So, one of the
things that we've seen at least in in in

1269
01:12:13,920 --> 01:12:15,517
the kind of second cohort that's come

1270
01:12:15,600 --> 01:12:18,157
through American Dynamism Fund 1 is that

1271
01:12:18,240 --> 01:12:21,357
these companies can grow so much faster

1272
01:12:21,440 --> 01:12:26,077
and they have a much richer customer set
that they're supporting because of that.

1273
01:12:26,160 --> 01:12:29,197
Um, so I think that's something that's
sometimes lost on people is just how how

1274
01:12:29,280 --> 01:12:32,397
is it how is it possible that these
companies can can really be working with

1275
01:12:32,480 --> 01:12:36,237
the government this quickly. One, it's
because you have a a government now that

1276
01:12:36,320 --> 01:12:39,357
understands why they need to bring these
companies in from, you know, from from

1277
01:12:39,440 --> 01:12:43,037
Silicon Valley or other places that
really understand nextgen engineering.

1278
01:12:43,120 --> 01:12:46,797
But like the real reason is everyone's
sort of woken up to to the opportunity.

1279
01:12:46,880 --> 01:12:49,917
Um, and there's a lot of partnerships
that are happening among the legacy and

1280
01:12:50,000 --> 01:12:52,957
the new new players. And and they're
they're reaching, I would say,

1281
01:12:53,040 --> 01:12:56,877
extraordinary heights much earlier
in their trajectory than than the previous

1282
01:12:56,960 --> 01:13:02,077
generation of of space
and defense companies in 1.0.

1283
01:13:02,160 --> 01:13:05,917
>> I'd also say a lot of these founders
are coming from some of these version 1.0

1284
01:13:06,000 --> 01:13:10,397
companies. So, they've seen what success
looks like in these areas at least at

1285
01:13:10,480 --> 01:13:13,597
some level. I mean, if you come out of
SpaceX and you were there for, you know,

1286
01:13:13,680 --> 01:13:18,317
six, seven, eight years and you saw how
SpaceX got built, like you have a huge

1287
01:13:18,400 --> 01:13:22,397
head start in starting the next
American Dynamism company.

1288
01:13:22,480 --> 01:13:24,477
>> Yeah. To that you
mentioned some winners

1289
01:13:24,560 --> 01:13:28,317
in in the portfolio and and you know,
others like Ceronics and Apex and Bass

1290
01:13:28,400 --> 01:13:30,557
and Flock and and and and many others.

1291
01:13:30,640 --> 01:13:34,397
Um, as as they've emerged, what can we
and maybe gearing towards closing here,

1292
01:13:34,480 --> 01:13:38,477
what can you say about the founders and
the the types of founders that are that

1293
01:13:38,560 --> 01:13:42,077
are building these companies? uh maybe
what's interesting about sort of them

1294
01:13:42,160 --> 01:13:46,397
culturally or or philosophically
or or their backgrounds or or or what what

1295
01:13:46,480 --> 01:13:49,037
they're understanding that may maybe
others don't don't fully appreciate.

1296
01:13:49,120 --> 01:13:50,957
Katherine, what would you say?

1297
01:13:51,040 --> 01:13:53,597
>> Well, I'd say you know what what's
what we've always pointed to is that these

1298
01:13:53,680 --> 01:13:57,357
companies are built across America.
So Seronic is based in Austin, Flock is

1299
01:13:57,440 --> 01:14:01,757
based in Atlanta. And if you look at the
the founders, it it's not your typical

1300
01:14:01,840 --> 01:14:06,397
again to go back to the the Bob noise
uh Harvard dorm room comparison. It's not

1301
01:14:06,480 --> 01:14:10,397
your typical, you know, software
engineer coming out of a college dorm.

1302
01:14:10,480 --> 01:14:13,677
Like these are people, you know, the case
of of Dino at Seronic, you know, he

1303
01:14:13,760 --> 01:14:18,557
served in the Navy Seals enlisted for 11
years before going back to to school and

1304
01:14:18,640 --> 01:14:21,357
then and then founding companies and
learning private equity, right? So, it's

1305
01:14:21,440 --> 01:14:25,917
there there's something about being um
entrenched in what the customer needs

1306
01:14:26,000 --> 01:14:29,437
that I think is very specific
to American dynamism. A lot of the best

1307
01:14:29,520 --> 01:14:32,797
founders, you know, they've either sold
to the government before they, you know,

1308
01:14:32,880 --> 01:14:35,597
many of them have clearances before
they even start their company. They

1309
01:14:35,680 --> 01:14:38,957
understand um how to how to how
to really speak the language of the

1310
01:14:39,040 --> 01:14:41,757
customer, which I think is is very
important for this category. It's

1311
01:14:41,840 --> 01:14:44,877
something that we always, you know,
really look for when we're investing in

1312
01:14:44,960 --> 01:14:48,477
new companies is how deeply does
this founder understand the customer. And

1313
01:14:48,560 --> 01:14:51,437
it's very hard to understand
the customer if you've never served, if

1314
01:14:51,520 --> 01:14:55,037
you've never worked inside of government.
And so I'd say that's

1315
01:14:55,120 --> 01:14:58,637
actually something we very much test for
across these categories is how deeply do

1316
01:14:58,720 --> 01:15:00,797
you understand who you're selling to?

1317
01:15:00,880 --> 01:15:04,397
>> May maybe just gearing forward, um,
you know, we've we've covered the the past

1318
01:15:04,480 --> 01:15:06,237
and present of of American Dynamism.

1319
01:15:06,320 --> 01:15:10,157
What can you tell us about what
what we're looking forward to?

1320
01:15:10,240 --> 01:15:11,997
Yeah, I mean I think that we're in this

1321
01:15:12,080 --> 01:15:17,677
exciting moment in time where both
the the need and the demand uh for new

1322
01:15:17,760 --> 01:15:22,557
technologies whether it's in public
safety or or uh in in the department of

1323
01:15:22,640 --> 01:15:25,917
war uh or anywhere else in the
government or just anywhere across the

1324
01:15:26,000 --> 01:15:29,357
United States is greater than it's
ever been. We're also at this major

1325
01:15:29,440 --> 01:15:32,877
transformation moment. You know,
Mark mentioned I think robotics is AI

1326
01:15:32,960 --> 01:15:36,877
personified in physical form. Um I think
it's going to be extremely exciting. I

1327
01:15:36,960 --> 01:15:40,477
think it's a lot closer than people think.
Um, you know, if you've been in

1328
01:15:40,560 --> 01:15:44,237
San Francisco, got into a Whimo,
you already know that, um, autonomy and

1329
01:15:44,320 --> 01:15:49,757
self-driving cars is absolutely uh going
to be like the way forward. Um, we we

1330
01:15:49,840 --> 01:15:52,397
just see that there's we're just sort of,
you know, entering this incredible

1331
01:15:52,480 --> 01:15:54,317
moment in time where new technology is

1332
01:15:54,400 --> 01:15:56,957
meeting these very very legacy uh and

1333
01:15:57,040 --> 01:16:00,237
old uh uh categories and and I'm very

1334
01:16:00,320 --> 01:16:04,237
excited about where it's going. we see
more and more founders entering the area

1335
01:16:04,320 --> 01:16:06,637
uh across all these different domains.

1336
01:16:06,720 --> 01:16:10,077
Um and you know for us to me it's just

1337
01:16:10,160 --> 01:16:14,957
like this this we're just in the early
innings of America sort of on a major uh

1338
01:16:15,040 --> 01:16:18,717
comeback when it comes to introducing
new technology into these key areas. I

1339
01:16:18,800 --> 01:16:21,517
think it's pretty exciting.
>> That's uh sounds like a great place to

1340
01:16:21,600 --> 01:16:22,797
wrap. This is a great conversation on

1341
01:16:22,880 --> 01:16:28,760
the history and philosophy and the past,
present, future of American dynamism.