The Next Era of Warfare is Here

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Welcome to the Profy Markets founder series. I'm Ed Elson. For decades, the defense industry was dominated by a small group of legacy contractors. Companies like Northrup Grman, Lockheed Martin and Boeing. They built the aircraft, missiles and weapon systems that defined American defense. And for years, Silicon Valley largely stayed away. That is starting to change. A new generation of defense startups is challenging those incumbents, competing for Pentagon contracts with a software first approach and building AI powered systems designed for modern warfare. And their systems are being used today on battlefields in both Iran and Ukraine. So, we wanted to speak with one of the founders leading that transformation about how AI is reshaping the defense industry, where we should draw the line when it comes to automating warfare and what it means to entrust America's national defense to a new generation of technology companies. Here is my conversation with Brian Shy, co-founder and CEO of Andrew. Brian, thank you so much for joining me on the show. It's great to see you.

>> Thanks for having me on.

>> So, you are the CEO and the co-founder of what I think people would agree is one of the more controversial startups um in America. I eventually want to get to how you think about Andreel's role in national security, in geopolitics and technology. But before we do that, let's just rewind the clock to June of 2017. You and a handful of uh founders including Palmer Lucky who people may know was the founder of Oculus. Um, you have an idea for a defense tech company. Tell us the origin story of Andrea.

>> So several of the co-founders, so Matt Grim, Trey Stevens, uh we had been longtime friends and had worked together for quite some time. And then uh Trey had left to go do uh investing working at Founders Fund looking for a defense company to invest in. And at the time, right, this was 2015, 2016, nobody was touching defense in Silicon Valley. Um, and so we'd been talking for years about doing this idea of, you know, bringing the best in Silicon Valley technology to the Pentagon. And you know it it seemed like a you know something that was you know a massive opportunity uh massive impact on the mission side uh and and just nobody was willing to touch it. And so when Palmer was out of Facebook he was like all right let's let's go. And we gotten to know him over the years as well. Um, and so it kind of you know was this very unique opportunity in terms of the team, the size and the ambition of what we were trying to do. Uh, and and the fact that just nobody would do it. Uh, it was just too controversial at the time was uh actually I think a huge advantage for us in terms of being able to work on this problem.

>> Why did you guys want to do it? Why did you guys want to go to that place that many investors and technology founders didn't want to go to?

So I spent probably about a decade working around the national security space and when you big part of the motivation is when you meet these folks working on this these problems they are true believers in what they are doing. The mission is very visceral to them, very real. And providing these, you know, soldiers, sailors, airmen with the right capabilities just felt like something that, you know, it the idea of just not doing it and saying too bad, you know, like you just get what you get. It just didn't make sense to me. Uh, and I think my other view of this has been uh, you know, the goal of the company is deterrence, right? Like the goal of the company is to not get into a conflict. So, you know, why do people get into these wars, right? They they think they're going to win, right? And and the the history of warfare is often these things are, you know, very whatever your political aims were at the beginning, it's often quite unsatisfying. You don't quite get where you wanted to go. Uh, and so military power, you know, the idea is you want to make it clear what the outcome of these conflicts will be. You want to make it clear that, you know, use of force probably will not succeed. Uh, and that we want to provide our allies in the United States with the best capability possible to make that very clear. So 2017 it was a very different time right we just had not had significant large-scale conflict in a very long time and so it was sort of hard for people to get their head around that this you know this could be an issue. Fast forward, you know, nine years, it's a different world, right? We've got multiple hot wars in Europe, uh, or we've got, you know, kind of Russia Ukraine. Uh, we've got everything going on in the Gulf, which has been persistent and, you know, will be for a long time, for better, for worse. India and Pakistan, Cambodia, and Thailand, lots of uh, you know, kind of aggression in the South China Sea. Like, it's a very different time. Uh, and and I think the understanding that hard power is a backs stop for all the other peace and stability that you want is I think becoming more clear to folks.

>> I want to get to that in a moment, but just thinking about those sort of those early years when you were just starting up. I mean, part of the big idea was we're going to take the Silicon Valley ethos and the Silicon Valley culture and we're going to bring it to the national defense conversation. Um, and I think that the on the one hand the great thing about that is that this is where all of the futuristic thinking is happening. This is where the technology is being built. On the other hand, the criticism of Silicon Valley has been this move fast and break things mentality that was, you know, popularized at Facebook, which a lot of people say kind of works because these legacy institutions, they move too slowly. They're too sluggish. But when it comes to weapons, you know, lethal devices, some would argue that that's not something that we should be bringing that ethos and that culture and mentality to. What is your response to those concerns and how did you think about that in the early days of Andrew?

>> I think a lot of the the meta lesson from uh the Silicon Valley from the last 20 years has been uh going faster is more important than thinking, right? You you have relatively few decisions you can't iterate your way out of uh and you know just the speed of learning trumps any sort of quality of thought you had up front. Uh that that's just not true in certainly a hardware world and especially in a defense world. Uh so in a hardware world, you know, you make these decisions around what you're going to build, how it's designed, we got to ship a product that survives for 10, 15 years, turns on and works. Uh it's got to work in just incredibly difficult conditions. And the cost of iteration in a hardware world is is quite high, right? Both in terms of actual dollars out the door, but just timeline, right? Like you know, if you've got parts that take three to six months of lead time, you don't get to, you know, that many iterations before you want to ship. And so the quality of thought, the foresight you have to have around these things, the level of engineering and analysis is quite different, right? And even as you extend that down into the software side, when you start talking about safety critical systems controlling an aircraft, it's a different type of coding. It's a different type of operating. And so we've tried to blend the cultures as as effectively as we can. Now, one of the pieces is that being rigorous, being disciplined is not the same thing as going incredibly slow. Like it's just you can still do this efficiently, right? Like Elon has proved this out in a number of different cases. You know, I think we've proved this out in a number of different cases is that you can do that engineering quite rapidly. You can do your homework. You can really assess, you know, are these systems going to work and have a rigorous, you know, kind of testing and evaluation process. Um, but that doesn't have to be 10 years long, right? That can be, you know, kind of measured in a much shorter duration in months. And so, you know, we've we've tried to blend the two cultures as effectively as we can. And I think we've done quite a good job with it. Um, but, you know, we kind of reject the idea that this has to be a slow and lethargic industry.

>> Just so that everyone knows what kinds of products you guys are making and manufacturing. I mean, you started with surveillance systems, then you get into kind of autonomous software, underwater vehicles, drones. I mean, take us through like the evolution of Anderil's technology and what is it that has made your product so compelling to clients like you know the Pentagon, Department of Defense, basically the the government. What has been the timeline of that technology?

So we started out working on a lot of things around border security and this is one of the first areas we worked on where when we started out we believe that modern technology particularly you know computer vision uh sensor fusion how you would network all these systems together would give the ability to make what is effectively a long range nest camera right like it tells you hey here is a person walking or an animal or a car and gives that awareness to border security border patrol officers so they know what is going on and this has been used, you know, we have maybe twothirds of the southern border covered now. It's been extensively deployed. Uh, it's working quite well. Um, and it's just providing that awareness of of what is actually happening. You know, we've had a huge amount of support on this. Um, you know, over the years and you know the from there we extended into counter drone technology. So this was things like you know great we've got this technology that can detect things on the ground. How do we upgrade the radar, upgrade the cameras, add in some additional sensors so we can, you know, very robustly identify and track any drone incursions that that are happening. And then it got to how do we defeat those? So, we worked on a variety of um jamming systems and surfaceto-air uh missiles. So we have, you know, both kind of low-end versions of this with our anvil system which deal with, you know, kind of quadcopter threats through to higherend versions that deal with, you know, some of the Oranian drones you're seeing today. Um, and then we've really expanded, you know, from there it was a lot of autonomous platforms. So this was everything from smaller drones into, you know, we did a co-development program with the Royal Australian Navy, make a school bus size autonomous submarine. Uh, we won a competition to do a loyal wingman fighter jet. So this is something we you know beat out Locky, Northrup and Boeing. So us and General Atomics are building the Air Force's next generation autonomous loyal wingman. It's an incredibly cool project going really really well. That was kind of a turning point for us where then we're proven on these high-end programs. We could design and build aircraft. We could do the autonomy software to power it. Um, you know, we've built up a number of sensors over time and since then we've seen a huge expansion in what we're doing everything from space through to, you know, a very large portfolio of missiles uh and a variety of weapons um which you know I think was timed with the realization of some of the production challenges that are in the existing industrial base um we really just kind of expanded out year over year on the sets of problems we're working on and and I think you know there's a couple crosscutting things. So one is from that software layer, we've really thought about what does the future of this look like? You are going to have thousands of systems on the battlefield. Be it sensors, surveillance drones, strike munitions, soldiers, you name it. The battlefield in the future is much more distributed, much more complex with a huge amount of information flowing in. So we built our Lattis software to network everything together to fuse all that information uh to apply AI and machine learning at the edge and that's that's worked incredibly well. So now when we start a new program you can bring to bear a huge suite of sophisticated technologies that make these systems very very smart. Uh, and I think the second part of this is we've really focused by necessity on just execution and delivery. You know, I think one of the most scarce things really in indust any industry, but especially in defense, is you just do what you say you're going to do. Like actually just delivering and doing what you said on time on budget. Uh that's quite rare and we've have a track record of standing behind that. When we sign up for something, we make it work, we make it go. Uh, and I think that that reputation has has served us well. And our pattern of delivering very well has has really what has accelerated us uh over the years. And now we're moving into a phase where we've won all these programs, we've built them all built all these systems. Uh, we're really seeing you know massive ramp in production and manufacturing scale. And that's that's the sort of current era we're entering into.

>> Just looking at the financials today, you did $2.2 billion in revenue last year, targeting $4.3 billion this year. So almost doubling. And as you say, as you said earlier, this is coinciding with a very different and seemingly more unstable world where we have, you know, an increase in conflict in the Middle East, in Israel, in Iran, we have the conflict in Ukraine, and it does seem as though, you know, when the world becomes less stable, Anderil's business improves. And so I'd be curious to hear how you think about this dynamic. Does it concern you? Does it create I don't know some personal conflicts and business conflicts that you kind of win when the world gets worse in some ways?

>> Well, I think the question is how do you stabilize the world and uh, you know, from our perspective, you know, you you have a lot of different trends occurring. You know, one, there's a technology change, right? So you've got the ability for nations, you know, historically making like a cruise missile was something or ballistic missile that was something very few nation states can do. The degree to which that has proliferated is massive, right? You see what Iran has done, uh, the number of other nations who have access to this technology, it's, you know, highly destabilizing. Uh, you've got the ability to do ubiquitous space-based surveillance and a relatively low price point, right? And so nations are able to understand everything that's going on. Um, and you know, obviously you've seen with Ukraine the rise in drone warfare and sort of these you know smart uh systems makes it very very dangerous time right so the technology shift has radically shifted warfare uh adversaries are going to see that as an advantage while our allies have not yet caught up don't know how to defend it and then the other side of this is you have a shift in US posture where for a very long time the US was so dominant so clearly ahead on military technology that the idea that you could even try something, you know, combined with a fairly interventionist US policy meant that if anyone started conflicts, the US would come in, stabilize the system and say, "No, we are not doing this." Right? And so there was sort of this Pax Americana period was uh a very long time. Uh, we we relied on it in all sorts of subtle ways that you're starting to see a road, right? Like I think people forget that before World War II, you couldn't ship anything on the high seas. It was just piracy. It was madness. The US Navy and the Allied navies stabilized the system to give us this period of global trade and prosperity that we've all been benefiting from. So the question with this is not, you know, sort of uh, you know, are we profiting off the war side. It is about stabilizing the world order so that our allies have the right capabilities to deter a conflict. Right? So we just did a a weapons deal with with Poland to provide them with strike capabilities. They're not going to shoot first, right? Like they're not going to antagonize Russia, but them being unprepared to counter a Russian attack, that seems like it would encourage Putin to attack more. And so, you just got to make the consequence of these, you know, aggressive actions very, very clear. Uh, and our belief is everyone in the world is wrestling with this problem right now. How do they stabilize? How do they make clear to their neighbors that these attacks won't work? How do they build the right defensive capabilities as well as the right, you know, threat of offensive capabilities that will cause everyone to not attempt belligerent action as you know thinking it might work.

I'd be curious to get your views on what you think changed like how we went from this period of sort of relative stability to now what actually Jamie Diamond has recently come out and said is the most unstable period the world has seen since World War II. That was his view. One, do you agree with that? And and two, if so, what has been the difference maker? Is it a political problem? Is it a technology problem? Why are we living in such an unstable world?

>> I do agree when you just look at it from any dimension. The number of regional conflicts, you know, the number of uh simultaneous threats going on, this is very different, right? And it it is you have to look all the way back to around World War I period to find this rate of regional conflicts. Um, so I do think it is a very precarious period in time. You know, the reasons for this are are sort of hard to say. My my best thesis on this um is I think it is the combination of the technology shift with the political shift, but I I suspect it is probably more skewed towards the political shift, which is, you know, Russia both expected that they would uh I think they underestimated the technology change when they attacked Ukraine, right? Like everyone New York Times everyone believed that Russia was going to roll through Kev in 3 days right like it was head that was the consensus so I think they underestimated the technology shift here on the sort of defense side but the political side I think they believed that the West would not have the appetite to intervene uh and I think this was a combination of US posture the um where kind of Europe and NATO had gotten very comfortable very um believing that these conflicts weren't going to occur, had underinvested in defense for a long time and had had truly become quite reliant on the US in this regard. Um, and so I I think you know most nations because they were able to rely on the US for so long had atrophied their defense apparatus. Uh, and I do think that creates the conditions where you know a more aggressive ellose neighbor can take strategies to undermine uh their neighbors where they they want to for their political ends um with you know and the consequences don't seem that severe and so I I think that's probably the the biggest shift that has occurred which is you know the the belief that they can succeed at these things or that through you know military or you know covert action they can accomplish. They can undermine the concept of NATO. Uh, they can tear lines into, you know, tear seams into, you know, kind of the allied construct. Um, you know, they've been doing this in the information space with with no consequence, right? By the way, no consequence for a very long time. Uh, and now are are pushing the limits of what is possible on the military side.

>> What is possible at this point? Because we're now on this frontier of drone technology which seems to be playing an outsized role on the global stage at this point. I hear about it all the time. Autonomous weapons and of course AI, artificial intelligence. I mean, what are we contending with here? What does the next era of warfare actually look like? And what should we be worried about? To that end,

>> There's a lot of different dimensions to this and there's a lot of ways to group it. Um, you know, you've kind of got when you look at Ukraine and Russia, the small drones were largely changing what the, you know, kind of assault counter assault. So like sort of for that military infantry, you know, kind of army infantry sort of scenario that that's a world that not many people want to even imagine right now, right? And so I I think the the reality is it's quite clear that you know with kind of short range drones um the efficacy of sort of a military invasion like an army invasion is is is quite low right like for for a well-defended adversary and the cost of building that defense isn't isn't isn't isn't that high. Um, so I think that's like dramatically changed the equation where if like you know historically it was sort of the rule of thumb was 3 to one, you know, on the attack side to the defender side uh in terms of manpower and equipment, you probably need like a 100 to one, right? And it it's sort of just so costly and so obviously costly that was a strategy that maybe sort of closed for for quite a while. Uh so then you know what what we've been seeing is a lot more of uh what you know I would sort of call like long range strike. Uh so this is the ability to use missiles uh to inflict a level of you know destruction on your adversary and you what are they targeting? A lot of the theory before was sort of attrition of military equipment right? So I'll win a military conflict by taking out my adversaries military. That's not what's happening in Iran. Iran is targeting the economic infrastructure. They closed the straight of Hermuz most visibly. They struck data centers. They struck oil and gas refineries and they understood that creating that economic pressure that is what's going to cause the most you know sort of political capitulation on you know certainly the western side but you see Ukraine doing this to Russia as well where Ukraine started doing longrange strike against oil and gas uh you know reserves and refineries. Uh, they're taking out the airfields and the supply chain in the rear and they're striking all the way into Moscow to make it a much more challenging political problem for Putin to argue that this is working and that you know the defense is working and is this really worth it. Uh, and so this the sort of category of long-range strike is I think the the area that um we'll see over the next several decades is the preponderance of you know sort of where militaries kind of turn on this for thinking about you know how to um you know how to force that political outcome. Um, and so that that drives a lot of uh investment into long-range weapons and then into the defenses of those as well. Uh, and so there's there's a whole lot of consequences that play out from there. Uh, but I I think the fundamental challenge, you know, that I think we're hearing from a lot of nations we're we're talking with is now you have a whole of country defense problem where your adversary gets to choose when they're shooting, you know, 100 rounds at one facility and you have to defend everywhere in your country simultaneously against those 100 rounds and you won't know where they're going to come and when they're going to come. That is a very hard math problem as the defender. Uh, and so I I think this is the the biggest risk on this. Then you have all these other sort of, you know, kind of spiderweb style attacks where you covertly sneak in large amounts of drones to do, you know, kind of a different form of this uh strike against, you know, kind of infrastructure in the rear. Um, but this is where I think a lot of warfare trends, which is really looking at if war is meant to effectuate a political end, this sort of approach seems to be the most effective at uh changing the calculus.

>> We'll be right back.

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We're back with Brian Shy. One uh interesting political dispute that kind of emerged this year was this fallout between Anthropic and the US government. The anthropic said that they would not allow the military to use their AI for mass domestic surveillance and for fully autonomous weapons. Those were their two kind of no goes red lines. It caused a rift and you know now they're dealing with the consequences of that. I mean Andreel sits at a very interesting place in this debate because you are building weapons, building defense technology and also using AI uh to accomplish those objectives. So how did you think about that debate and what are your views on Andrew's role in using AI for those objectives for autonomous weapons which could be used uh for lethal means.

My view is these are very complex nuanced policy questions and that writing two sentences into a contract does not actually lead to a disciplined policy debate. Weighing out all the competing objectives. Nor was there even an understanding of the wide body of policy that already exists within the US government around control of these technologies. So take something like the the lethal autonomous weapons. We've had lethal autonomous weapons since probably the 1970s. Uh, you know, you look at the uh battleships we have, there's this Aegis combat system on there and that system has been able to go in full automatic mode for a very long time. You have an inbound threat and you don't have a lot of time to respond, you can have the ship do the work of determining is this a hostile uh or a civilian or a friendly military aircraft and then uh appropriately taking the response on that. You know, there's obviously risk there, but people have been more comfortable on the defensive side for a lot of good reasons because time is of the essence and you know, you are by and large being attacked. Um, so that you know that is one category we've had and that technology's gotten better over time. We've had this with torpedoes or anti-radiation missiles. So an anti-radiation missile you send out and you say here's a geographic area and if something is emitting like a Russian radar then that is a legitimate military target within that area. And so we've had this notion of um you can delegate kind of the the limited decision-m to machines in a bounded way for a very long time and I think that's realistically the framework of how this has to work. Um, but importantly with that there's a human agency that exists, you know, so the US government has always had this policy which is that humans are accountable for the use of force in a battlefield. You send an anti-radiation missile out and it picks the wrong thing. That that's on the command, right? That is a you should have known what that weapon was going to do, how it's selected, uh, and you know, were you safe to employ that weapon in that context. That has been the underlying framework that the US and our allies have had, which is this is fundamentally about human accountability at the end of the day. Uh, you want your weapons to know exactly what they are going to do, how they are going to make decisions, and what bounds you put on them. So the debate really boils down to, you know, should you use AI to get more precise, more accurate, more discriminating, or should you go with older generation technologies that are, you know, dumber? Right? It it to me the ethical imperative is to make the smartest, most discriminating weapons you can and do it in a way that is responsible based on where the technology is. And that's everything I've heard from the US government as well. They are not interested in a, you know, fully automatic AI runs World War III Skynet scenario. That's not even on the table. Um, what they are interested in is how do we make these systems more precise, more targeted, more discriminating. And the US has led the way for decades in looking at this question of how do you employ weapons in the most accurate and precise way with the least collateral damage. Uh, and that is something they have spent tens of hundreds of billions of dollars investing into. Uh, when you know our adversaries like Russia are just happy to use dumb bombs right and that's that is a big difference so to me the imperative is really how do we provide the best technology to make these things as you know precise and limited as we can um the alternative seems just wildly crass that you believe like they should have dumber things that are less safe to use.

>> I guess the argument from anthropics end would be we just don't want to be in this business we just don't want to be uh part of you know the defense industry because we're interested in using AI for different problems and their argument would be maybe you know we shouldn't be punished for electing to make that decision. So that's the first piece that I' I'd be interested to get your your views on. And then second, you you bring up a really important point about accountability that, you know, at the end of the day, we're going to use technologies and what what what matters most is that humans are ultimately accountable for the decisions that they make in using those technologies. And I think to what's happened in the Iran conflict so far and the the the headline that immediately comes to mind for me is the drone strike that hit one of the schools in Iran and killed over a 100 children. And it seems based on the reporting that that was the US government and the president has been asked about this and he kind of says we're looking into it. We don't we don't really know. Seeming to sort of sherk the accountability for what was a a a devastating decision ultimately. So I guess I've asked two very big questions. So maybe I'll just start with that second one on that accountability issue. How do you solve for that? Maybe starting with the first.

I think Enthropic actually does work with the US government extensively. They were the first ones leaning in. Uh, they have extensive work with the intelligence community with the department. Uh, well before this uh came out. I think their concerns on um, you know, use of these technologies in a way that the technology is not quite ready to be responsibly used is legitimate. But then I think the way you engage in that is actually working through those policy questions being highly involved and steering the government away from things where they're not technologists, right? Like they're policy makers, they're war fighters. They need technologists to tell them what can and cannot be done and how can the technology get there in a way that is responsible and reinforce the values and norms we have. Um, and so I I think in reality um they were working with the US government continue to do a lot of work with us and several others and you know I think they've um are actually you know kind of very mindful of providing the US and allies with the best technologies possible. So, you know, I I think what went wrong was probably more a matter of personalities, trust, uh, and, you know, a style of engagement to get to the outcome on this. Um, and and you know that I get these things are hard. They're very complicated topics. Uh, and, uh, is very tricky to work through. You know, maybe maybe on the the second question, um, you know, the US actually has put out several different detailed things on what went wrong uh in that, you know, uh, mistakenly attacking a school where they had multiple different databases. Some of them had marked it as a school. There was some older ones where the IRGC had used that as a command and control center in the past. Uh, and so you know this is where I think using technologies like AI to be able to coalesce all that information to be able to have the most up-to-date information are massively impactful where when you think about the sheer volume of things that the US was doing leading into that strike where they did something like 10 times the number of strikes um that they did in the Gulf War within the first month they executed like a thousand of these in a day and for each one of those they have a process by which They validate that the intelligence indicates that this is a target and that there is um, you know, collateral damage assessment and you know all these you know kind of legal factors. One of the only militaries in the world by the way that does that or cares to do that right? I don't think Iran is running that calculus every time they take a shot. Uh, and you know, they have gone through and traced through what went wrong and what's happening. Now, I'm not going to sit here and say like, you know, how Trump presents these things is, you know, the most uh measured way. Of course, it's not. It's it's President Trump, right? Like that that is the reality. Um, but the US military as an institution has gone through and traced through why this happened, what went wrong, and how do they fix this in the future. That is a sense of accountability on this that I think is what we're looking for. There will be mistakes. War is terrible. Again, this is why you do not want to get into war. You want to create the deterrence in advance. Um, and the the reality is these things are you know having that discipline to actually improve how you do this and investigate what went wrong that is something that I think the US leads the way on.

I think those are really great points and but what it also points to is the more advanced that this defense technology becomes, the more lethal and destructive it has the potential to be. Which basically means that whoever is in charge has increasing uh amounts of responsibility and accountability that they have to be responsible for. Um, and that puts you in a very interesting place because you are the CEO of one of the companies that is powering this defense technology revolution, which essentially means that you have incredible amounts of power and responsibility resting on your shoulders as do many of the leaders in government who are deploying your technology. How do you think about that level of responsibility? Like what does it mean to you and how do you think about it for leaders in government as well?

>> You do not want tech bros making policy. Nobody voted for me. Nobody gets to vote me out, right? Like that that is uh an important construct to remember which is like if someone disagrees uh you know I bet you know would the majority of Americans think that the US government should have anthropic technology probably they get to vote on that absolutely not right and so the uh that seems to me to be actually you know an important construct to remember which is you know we live in a democratic society where these policy decisions where these you things that you know about how use of force is done or you know what we prioritize in the country on any sort of domestic. These are political questions that we settle through voting, right? And that we settle through elected representatives and that my responsibility as a technologist is to provide technology that works to inform the elected officials on what it can and cannot do, how best to use this, uh how they should refine their policies to have, you know, effective use, where that new frontier is. That that is a deeply held obligation that I feel I have which is you know to build things that even despite what their process and system wants is the right thing to build right we see this all the time where you know we'll get requirements on you know a weapon or something like that and we're like these are insufficient for what you need right like you need to deal with this GPS denied navigation better or it needs to be more resilient against these conditions you know these are areas where we'll lean ahead and try to put in, you know, kind of the pieces necessary. And that's often a very positively received conversation, which is, you know, the state of technology has moved. Here's how you should think about this. Um, and so, you know, our job is engagement. It's informing. It's getting, you know, them the right information to make the right decisions. It's providing the best technologies that can be used responsibly. Um, and ultimately the use of those technologies, that is what the elect that is what the the voting process is for. That's what the democratic process is for. Um, and you know, I take very seriously that nobody gets to vote for me.

>> I think this brings up an interesting question about the sort of the separation of the private sector and the public sector, which has become more of a debate this year as the government has started to take stakes in some companies. Open AI has been floating that maybe the government should take a stake in in them. It's been floated for a lot of companies. And interestingly, we we looked at the prediction markets which say that there is a decent chance, 23% chance that the US government might take a stake in Andrew. Um, I guess my question is what do you make of those odds? Is there any merit to them? And what are your views on the government taking stakes in private companies in general?

So I I think the US government participating in the one of you know the most impressive wealth creation engine that has ever been constructed on the planet feels like probably a good idea where you know things like Trump accounts and you know kind of some of these other investment based things that allow Americans on a broad basis to participate in this can get us out of a lot of these challenges we have in the long run around you know kind of social security and a lot of these very challenging fiscal situations that seems directionally like a very good idea. Now th this is a new thing, right? So then as new things happen uh you know in our messy political process uh it's complicated, right? Where there's a lot of different attempts uh often you know a little bit hamfisted at first and you know that in fumbling the way through that policy debate is is a tricky situation. Um, and so that's the messy political process we live in. That's the reality of it. So, do I think all of these will be, you know, the idealized final form? No. Uh, do I think directionally having Americans participate in the wealth creation? Seems like a very good idea.

>> Do you not feel concerned about sort of the crossover of sort of mixing government with private industry? I mean, if the the point which I agree with is, you know, you you you weren't elected to be doing what you're doing, but if the idea is that Andreel were to become sort of in some sense more part of the government, more part of the administration, more connected to this uh to Washington, that maybe you are starting to have a a say in the way that weapons are deployed, in the way that our policy is carried out and that the lines between those two sectors start to be blurred. Does that concern you at all?

>> Well, I don't know why equity states wouldn't do that. Right. A lot of countries like Norway and Singapore have extensive southern wealth funds that don't seem to uh make the private uh you know CEOs somehow decision makers in the government. Um, you know, I think the reality is there's ways to create even separation in that where you get the economic benefits and um, you know, the the population benefits from it uh without you know, kind of interfering in the separation of these things and you the US has had a significant tradition in being very clear and then reinforced through multiple case laws around you know how private institutions and governmental powers flow and how those things work and you can't have governmental powers as a private inst just doesn't work that way, right? And so I I think that's a good thing and I don't see any evidence that's changing, right? Like nobody calls me when it's like, you know, hey, we're thinking about going into Venezuela. That's not it's not how it works.

>> But it seems that that has in some of the reporting that that is how it's gone. I mean, what we know is that with Iran at least that there was a call to like Jared Kushner as an example and maybe we could say that he's part of the government, but not really. He wasn't really elected in. Is more sort of this informal adviser. It does seem to me that that is in a lot of ways how this administration is operating that you do make a call and you have someone kind of make the call. That's what at least what he said about about Kushner.

>> You know, I can't speak to exactly how that went down, but I can tell you having seen both Democrat and Republican administration, there are a lot of senior adviserss. Uh, there are a lot of people who the elected officials appoint in to provide them good counsel uh and to work on their you know behalf like that is a um extremely common pattern right and when you look at the Biden White House the vast majority of policy makers there on national security committee um on domestic policy these were not elected officials they were people the elected officials appointed that they felt resonated with their policy views and how they operated it's how it works right uh in Congress there is hundreds of staffers there that do a lot of the leg work around advising on um how you know these laws should be written drafted you know I think that the healthy version of this is there is a good dialogue with industry and with experts and with academics and economists and you know the business community and the finance community to understand what is actually happening what is the impact of if we did policy A versus policy B you know what would what would be uh the impact of these things, you know, and then as we look at it from the defense industry side, you know, a legitimate conversation is what can you produce? What can you actually scale up, right? Like how, you know, in in having that ability to have meaningful conversations around the trade-offs of how we could accomplish these sort of shared policy goals, that's that's quite normal and healthy uh in all administrations. So I think a well functioning government actually has deep connection with you know kind of the civilian sector and they should right and then you know if we believe that those um you know the way it's operating is not in accordance with the the laws and statutes that we have then that should be something that's reflected uh at the voting booth and reflected through the courts and through Congress right and and that's the system we have.

>> We'll be right back.

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We're back with Brian Shy. I know you're a CEO, you're a founder, you're not a policy maker, but when you look at US policy on autonomous weapons, when you look at the rules and regulations around how we are using artificial intelligence, I mean AI policy has become such an important debate especially this year. Is there any sense in which you think anything is wrong or are there parts of our policy and our legislation that you think are really going well that are working that are correct? What do you see as sort of the future of policy when it comes to AI and its impact on national defense?

So I think the AI side you know everyone's wrestling with what is a incredibly complex and rapidly moving environment and that's not you know when you look at um you know something like the safety work right and you know how can you ensure these models are safe the US government has gotten very good at sort of you know kind of a proceduralism and and actually I don't know that it's a bad thing right where you know we want the system to be predictable fair and you know disciplined doesn't always mean it's fast. Doesn't always mean it's the most logical optimal outcome, but a fair and consistent application of the rules and policies in place and the regulations like that feels feels like kind of what you want from your government system. Now, you connect that with the AI side and this is a much more complex question where there's still fundamental research to be done on how to make these things safe to assess if they're safe. I think some of the um I think Demis put out a a post yesterday on um you know how to uh think about you know kind of a industry government collaboration on this where there's still fundamental research to be done where you know kind of an industry organization can be involved in assessment and advisory like we've seen in other you know kind of industries and it's worked well with a clear governmental role to enforce rules set rules and you know take the uh the guidance provided by this industry organization into account, but ultimately the government entity is responsible for application of those rules. That that feels to me like pretty sane, right? Like you know kind of the government can do what it does well um you know these sort of private institutions can do what they do well which is sort of more fastmoving and agile and exploratory um while you know we still have that that mechanism of political accountability.

So you think about this on on the defense side and you know I think a similar sort of notion applies where you you have a clear industry responsibility which is understanding how the tech can be um employed helping with test and evaluation um and you know really thinking through are these systems actually working to spec right and and the way it's been specified of what it has to do. industry needs to be a participant in figuring out how to assess that, how to get there um you know can this really work and help evolve those specifications and then the government side has to evaluate is that true you know where do we want these sort of decision-m frameworks how do we want accountability to flow they have to own a lot of the the policy decisions on these things um and and I think when you look at these policy side questions particularly in defense many of them are already settled right and then so then you have new technologies that kind of change the scope or reach by which you could do these things. Um but you know I think from a uh fundamental question you know we've um you know historically have answered this question on lethal autonomous weapons. We're willing to do it within very defined bounds. Great. Now you can debate what are those bounds? How does technology change those bounds? Should we you know should we assess this differently? Um, you know, those are very reasonable policy debates to have where we've, you know, kind of set policy frameworks around the impact and the safety and the risk. Uh, and then the technology now changes maybe where you set those limits, but fundamentally it's still the same ethical framework.

Just given your seat in the national security ecosystem when you look at what's happening with Russia uh when you look at the Iran conflict China uh nuclear weapons AI what do you see as sort of the biggest threats to stability and to peace in 2026 what keeps you up at night so for the next few here's the threat of being able to do you know kind of these strikes against your neighbor over you know the rapid escalation of that there isn't kind of a theory of deterrence on that right so sort of one theory is if we have better defensive weapons then um this will be mitigated and I think every government has a responsibility to protect its citizens by providing the best defense it can against these types of attacks but when you look at how this plays out say like the red sea scenario where the US and allies very successfully mitigated Houthi attacks on commercial shipping. What did the Houthies do? They shot more, right? Like it it didn't actually work as a deterrence. Uh and so I I think the other side of this is you've got to think about what is going to be an effective deterrent. For better or for worse, mutually assured destruction was incredibly stabilizing. You know, I think it was incredibly stabilizing. we didn't have a hot war between uh the US and Russia that is it is like miraculous and you know it was hairy in many scenarios but I think ultimately you know if the consequences were smaller the opportunity for escalation for starting small and growing it could lead to these outsized terrible outcomes and so I think there there is a period where we don't have that theory right now of what this looks like for conventional weapon happens, the cost of kind of prosecuting these lower um intensity conflicts seems relatively low and that I think can lead to miscalculation which can lead to escalation on these things. And so I I I think there needs to be a new theory of you know sort of what does this look like? What is the bad outcome that happens if you start something small that so you just don't start it like that is fundamentally what what has to occur to get things back to a stabilized place.

Where does China sit in your list of threats? Because this has been I mean it's especially when it comes to AI, the concern seems to be about China and the comparisons have been made between AI and a nuclear weapon and perhaps we are going down a similar path of mutually assured destruction which to your point might actually be a good thing. um where do how do you think about China and the threats that they might pose?

>> You know, you you've got to contrast China under the prior leadership with um the leadership of Xihinping which is sort of ultraist um based around you know very aggressive posture internationally. You know it is uh highly interventionist in their economy. Um when you look at the actions that that G takes is fundamentally about you know kind of preservation of the CCP and you know control um you know zeroing out whole industries that you know he decides are no longer aligned with the goals of uh the PRC demonstrating that you know economic prosperity isn't you know we take for granted in the west that sort of economic prosperity and rising boat you know like providing better standards of living these are you know kind of the fundament mental if we were to take one priority that you know sort of western politicians and things really rely on it is it is fundamentally that we want to drive economic growth to provide better lives for people and that's what the voters choose you know it's just a very consistent sort of selection over time you look at China that's not what he optimizes on right shutting down the whole economy during co you know really focused on on control that is a that is a a tough thing I think for um a lot of the people in a western mindset to apply. He's a true believer in the CCP uh and in many ways his greatness in history. Uh and that is a risky position to be in. So when I and I think about the challenges here is the issue that we would have a competitor that is technologically sophisticated and forces the US to get better economically and we share this economic pie and wealth. I don't you know I don't I think a lot of people don't like losing but I don't think that's fundamentally the issue. The issue is much more around you know is the form of leadership control uh and operating that the current GI autocracy has is that what we want? I think for many the answer is no. For myself it is no. It does not seem like a good thing. Um and and so I do think this this does pose you know a real uh a real question which is it is not just about you know is the US strong it's just there is a real moral question to be answered around is that what you want in the world now I think what is different compared to you know like say the the cold war period China is extremely sophisticated extremely disciplined they have moved up you know the stages from um building out the sort of foundational uh manufacturing and resources through to you know making slightly more sophisticated things like owning whole industries like solar and a lot of the green you know a lot of these these types of things and then now moving into creating worldclass firms BYD all the work they're doing on AI um where they're moving on pharma um they have sort of systematically moved up that that chain in a way that gives them massive economic leverage uh around the world and one of the patterns I've seen, you know, in Europe and other places, the Europeans will be angry at the US. They'll say, "This isn't, you know, how we're being is treated isn't fair." Uh they will push back. The reality is they push back because they know they can. They don't push back on China despite knowing that they're getting a bad deal. H they know that this is not fair. They know that they're just going to like, you know, this is a short-term thing. um they know like everyone knows this but I think the difference is with the US you can say it, you can't say it against China and is that the world we really want to live in um so I do think the stakes on this are are quite high I think the people have you know kind of grown up with America as the superpower I don't think they can even imagine what China as a superpower would be and how bad that would be. uh they view it as this upstart that, you know, it's like, yeah, maybe I don't disagree with their leadership or how they operate, but who cares? They're kind of, you know, a sideshow. It's like them in charge is a very bad thing. And so, particularly Xi in charge. And so, I I think the the reality here is it's it's a very serious issue. Um they're extremely sophisticated. uh and they have a a very sort of aggressive posture to where I think they want their country to go and the prominence in the world.

>> Do you view part of Andre's mission to prevent that from happening to prevent China autocratic style governments from becoming a global superpower and from superseding the US as the global superpower?

>> I don't think that's fundamentally how we view our goal. I think you know or our role in the equation. And I think our view is we need to provide the US military and our allied militaries the best capability to take Chinese military action off the table. Right? Like that that's what we need to do. And there's a lot of other considerations in this mix that we are not, you know, we don't have much to contribute on um or or not as contributing on via, you know, sort of we're not building foundation models, right? you know, we're not um we're not in pharma, right? We're not solving a lot of these economic policy questions. Um there's a lot of these sort of bigger uh questions around US competitiveness and you know, sort of western competitiveness. Um but fundamentally I believe if the US and allies you know take take the counter example China can obvious you know say China could obviously invade Taiwan say China could obviously exert the well throughout the South China Sea and no one believed that they could challenge them or that the US would be there to backs stop think China would do it more uh I think they would do it more because it's probably be a pretty effective strategy and so the um you know just knowing that that would be the case leads to a totally different political conversation. Or if they can use hard power as the backs stop to exert their will, well, it changes the negotiation you have on a diplomatic basis or an economic basis uh or anything else. And so, you know, providing the US and allies with the absolute best military that takes military unilateral military action from China off the table, I feel like that is very much our responsibility as much as we can contribute to it.

I want to start to wrap us up here with a couple final questions and I want to thank you for your for your time. Um, just two stats I want to get your reactions to. So, number one, VC funding for defense tech startups hit $19.8 billion in the first quarter of this year, which is a record high. It just blows blows previous years out of the water. And of course, uh, it'll probably continue to ramp up. And the second stat is that Trump has proposed a $1.5 trillion defense budget which would increase our defense spending in America by 44%. Extraordinary numbers. What is your reaction to those numbers and what do they tell you about the state of the world?

>> On the VC side? you know, I think when you look at the history of any of these, you know, kind of um sector um you know, disruptions, uh the pattern's pretty consistent, right? You know, you kind of see a couple of of early winners, uh do quite well. Um they tend to be the winners in the long run and then you see a whole lot of frenetic activity from the investing side kind of chasing uh that success. And you know, do I think there will be a handful of successful companies besides us? Absolutely. Like I think there will be a few. Um but you know, like in most things in VC, it's like they're looking for the one or two outsized performers accepting that uh you know, many of these will fail, right? And and that's sort of the reality. Um and so I think it is just quite hard to to really succeed at scale in this business. the sheer complexity of what you have to do on manufacturing on production on hardware is just quite high right and that is very hard there's very few examples of that scaling in the US successfully and you know I think that's something we're we're living right now and we're going to figure it out but but it's quite hard right on the on the $1.5 trillion defense budget you know I I think the there's there's sort of a lot of ways to interpret it um but when you look at what motiv motivated much of it. It is you know kind of the threat from China combined with um I think the you know realization that we need to do significant investment in next generation technologies replenish our stock piles. Um so we're at this tricky spot where we're both sustaining an expensive legacy military and that has to be sustained. So we have to be ready. We can't just divest to invest. That's a bad strategy with where the world is. um while we're going through a technological disruption with a new adversary that's extremely competent who can produce at an immense scales uh and we have you know significant depleted stock piles from both conflicts we've entered into as the United States as well as supported allies right like that is a that is a precarious position to live in is one and a half right should it be 1.2 two should be one person. I don't know, right? Like that that's a harder uh kind of question and will get negotiated in Congress. Um but the the threat side, the displacement we're under, um the shift in the world, I think is real, right? And um you know, and and I think you're seeing the amount of ramp worldwide on defense spending, you know, doubling, tripling, right? like a huge step up in defense spending worldwide. I think the reflection is that this is just actually quite a dangerous time. Our adversaries have been investing quietly for decades and the western militaries have you know in many ways behind in responding to that very real threat.

>> I introduced you Brian as the founder of one of the more controversial startups in America and the world. My final question, what is the biggest misconception about Andreel? What do people get wrong about this company and what do people perhaps get wrong about your industry?

>> I think it comes down to what is the point of what we're trying to do, right? And and I think the sort of naive view is that this is war profitering and that we want more war. And the reality is we do not. Uh the reality is that um you know the goal of you know investing in defense is you have it when you need it but you hope you don't need it. And I think the thing that stands out to me about the American military leaders is they are the most cautious about the use of the military. They are advising to use it the least. Um and and they their view is this is a last resort. Uh and and we share that view. And so I think that the um the reality is that you know to to have peace you prepare for war. And I think that has been true for thousands of years and we are not yet in a time where that is gone.

>> Brian Shimp is the co-founder and CEO of Anderil. Brian really appreciate your time. Thank you.

>> Thank you.

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