With help from Ben Shreckinger

Last week, we wrote about the Pentagon’s stuttering efforts to get better and faster at acquiring artificial intelligence and other cutting-edge technology. Seemingly every year the U.S. military launches new programs to up its tech game, and this year Congress is pushing it hard as well.

So where’s all the technology coming from?

That’s a whole other story, and one with its own version of the military-civilian culture clash.

The Pentagon’s immense budget is mainly spent on “prime contractors” — the huge established firms that supply the military’s more traditional hardware and software needs. Some of the newest generations of AI software systems, though, are built by startup-style companies that aren’t used to the Pentagon’s vast bureaucracy and slow decision-making.

The defense industry ecosystem has been shifting slowly. Since the days of Project Maven — the flagship AI effort that the Pentagon launched in 2017 — smaller vendors have grown to dominate the market for one-off AI service contracts from the DOD.

Their ranks include VC-funded startups like Anduril, which creates hardware and software for autonomous systems, and command and control interfaces; Shield AI, an Andreessen Horowitz-backed startup behind an AI pilot that enables swarms of drones and aircraft to operate autonomously; and Primer, which uses AI to analyze large datasets and generates reports comparable to a human analyst.

Behind these startups is a set of venture investors willing to guide them through the labyrinth of the Pentagon’s technology acquisition and deployment process.

Traditionally, VCs were more interested in the faster-moving (and less regulated) consumer-facing and B2B markets. But today, some venture capital investors are getting more comfortable with the federal defense space. The National Defense Industrial Association’s Arun Seraphin says VC interest in AI for the defense market has accelerated noticeably. The investors are “so much more serious now than they were anytime before,” he said. “It is incredible now, how many of them are even considering defense as a real marketplace.”

But the culture clash between Silicon Valley and the Pentagon is real. One aspect of the clash is a “velocity mismatch,” says Josh Wolfe, co-founder of Lux Capital, which backs defense AI companies Anduril and Applied Intuition, as well as open-source AI company Hugging Face. The Pentagon is “not as slow as the stereotypes, but the weight of bureaucracy and process is major molasses to motivated founders,” Wolfe said.

Many startup companies have struggled to break into the long, deep relationships that the Pentagon already has with its entrenched prime contractors. “If you build a perpetual motion machine, they are just as likely to go hire Lockheed Martin to build it from scratch than they are to buy it from you as it exists commercially,” said Trae Stephens, Anduril co-founder and chair, and a member of Founders Fund.

To crack those cozy relationships open, the big data analytics company Palantir sued the U.S. Army in 2016 over a government contract for an intelligence analysis system — a contract it eventually won in 2019. (Anduril, co-founded by Palantir alumni, is currently partnered with Palantir on phase 2 of an Army project to build a ground intelligence station enabled by AI and machine learning.)

Even for firms that get in the door, dealing with the DOD isn’t easy. For example, Heather Richman, a defense startup adviser who is one of the founders of the Defense Investor Network, said it was difficult to get private AI contractors access to the Pentagon’s data reservoirs for training their tech. “Like, hey. We have a tool you say you want. Let us teach it.” she said.

To help make the relationship work, investors like Richardson, Wolfe and Stephens have been networking in D.C., finding allies in Congress and helping young startups navigate the intricacies of the defense industrial complex.

“When we first started Anduril, I was out [in D.C.] a few days of every month,” said Stephens. “You need to be meeting on Capitol Hill. You need to be engaging with decision-makers at the agencies. You need to be talking to think tanks and other people that are influencing those policies. And over time, we just hired a lot of people,” he said. That list includes Christian Brose, former staff director for the Senate Armed Services Committee, now Anduril’s head of strategy, and Matthew Steckman, formerly Palantir’s head of business operations, now Anduril’s chief revenue officer.

Both Wolfe and Stephens also named some allies in Congress. “People like Mike Gallagher, veterans, they’ve been on the front line. They’re well-educated, they’re technologically savvy. They have friends and peers who have started companies. They get it, they see it,” Wolfe said, referring to Rep. Mike Gallagher (R-Wis.), chair of the House Select Committee on the Chinese Communist Party.

Gallagher’s role in the Hill is a reminder that defense isn’t just business as usual for tech firms: It’s an industry built on external conflict. The bipartisan U.S. concern about rival powers is a key driver of Washington’s interest. “The CCP or Russia is a galvanizing factor to get people to cooperate,” said Wolfe. Stephens concurred: “On a macro level, geopolitical conflict definitely forces people to think more seriously about how they will affect the battlefield and how that impacts the types of technology that the military believes that they’ll need,” Stephens said.

On a micro level, Stephens also said paranoia is a great predictor of a defense startup founder’s success. “In most sectors you want the founders to be irrationally optimistic,” Stephens said. But in the defense sector, founders need to “have the paranoia that’s required to go and hire lobbyists and spend too much time on Capitol Hill. Like you can’t just believe that your product is gonna be good enough, so you just win — because it doesn’t work like that.”

Most PACs strive to present their candidates as authentic. Yesterday, one decided to go artificial.

A super PAC supporting the presidential bid of Miami’s Republican mayor, Francis Suarez, unveiled an “interactive AI chatbot” of the candidate himself. The bot takes spoken questions from users and, in order to stay on message, responds by selecting from a set of pre-made videos of an AI-generated Suarez avatar speaking straight to “camera.”

Will AI Francis Suarez sweep voters off their feet?

Just like a real-life candidate, the chatbot took DFD’s questions and offered whatever answer it felt like giving, whether it was responsive or not (the jury is still out on whether this is a feature or a bug).

A question about why Suarez should be president conjured a 23-second video titled “Pardon Donald Trump.” Asking about the mayor’s policy on AI prompted a minute-long dialogue on the “Miami Model” that touted the city’s low unemployment but did not mention the nascent technology at all.

A question about the mayor’s stance on crypto, a technology he has embraced in office, did prompt an on-topic video titled “Bitcoin Mayor” that ended with the avatar declaring, “Suarez to the moon!”

Users who then click a button next to the chatbot that reads “The Bitcoin Mayor? More like the Bitcoin president!” are taken to a page where they can donate to SOS America PAC. — Ben Shreckinger

An op-ed in this week’s Sunday New York Times by tech writer Evgeny Morozov takes issue with Sam Hammond’s recent proposal in DFD/Politico Magazine to create a “Manhattan Project for AI Safety.”

Morozov argues that the promise of artificial general intelligence is tainted by its inability to address the shortcomings of free market capitalism and the technology’s compatibility with neoliberalism.

In that spirit, Morozov proposes an alternative to Hammond’s idea:

“Wouldn’t our quest for augmenting intelligence be far more effective” he writes, “if the government funded a Manhattan Project for culture and education and the institutions that nurture them instead?”— Ben Shreckinger

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Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Mohar Chatterjee ([email protected]); and Steve Heuser ([email protected]). Follow us @DigitalFuture on Twitter.

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