Ep 165: Shyam Sankar on a Defense Reformation
Shyam Sankar, Chief Technology Officer and Executive Vice President of Palantir Technologies
Aaron MacLean:
At the end of the Cold War, the Department of Defense famously hosted a "Last Supper" for defense contractors in which these contractors were told that there would be lean years ahead, and that it was time to consolidate. Well, how has that worked out, and how do we get our war fighting tools back into shape for the fights to come? I have one of America's sharpest thinkers, and leaders on these and other problems with me today Shyam Sankar.
Aaron MacLean:
For more, follow School of War on YouTube, Instagram, Substack, and Twitter. And feel free to follow me on Twitter at Aaron B. MacLean. Hi, I'm Aaron McLean, thanks for joining School of War. I'm delighted to welcome to the show today, Shyam Sankar, he is the Chief Technology Officer, and executive vice president of Palantir Technologies. He's an author and commentator on defense and defense tech issues. Shyam, thank you so much for joining the show.
Shyam Sankar:
Thanks for having me, Aaron.
Aaron MacLean:
So if my information is correct, you are employee number 13 at Palantir. Tell me how you came on to Palantir's radar, how Palantir came onto your radar, and how your two stories got intertangled?
Shyam Sankar:
Yeah, that's right. I was lucky number 13. I joined about 19 years ago. And really in late 2005, I heard about a group of a handful of people who wanted to work on issues in national security. And YouTube was a fledgling startup, still independent, and you could look around and you could say, "What am I going to spend my life on in the Valley?" I'm a technologist by trade, and I believe in the power of technology, but I didn't want to build another web calendar app that somehow made the world a worse place. And really, once I met these folks, once I saw what they were working on, I would much rather have failed working on something of national import, than have succeeded on working on exactly the wrong things. And I think that was something that was deeply said into... I was a college student during 9/11.
I tried to drop out and join CIA, I think they had many people trying to do that, and so that didn't quite work out. But even before that, my family came to this country as refugees fleeing violence from Nigeria. My parents almost lost their lives to an armed robbery. And dad raised us with a deep understanding of the counterfactual, but for the grace of this nation, he'd be dead in the ditch in Lagos. And so finding some opportunity to give back was always something important to me.
Aaron MacLean:
For the lay listener who probably aware of Palantir, and that it does stuff involving computers and defense. By the way, this would've characterized me say 10 years ago, like Marine Infantry Officer Aaron. Maybe you've seen clips of Alex Karp delivering mic dropping moments at various conventions and events, but you're not really sure what the heck this company does, for that kind of audience what does Palantir do?
Shyam Sankar:
Well today, our business, 50% of what we do is commercial. We build every Chrysler car, every Airbus airframe, every HD Hyundai ship. And the other 50% of what we do is we work with the US and her allies on issues of freedom. I think about it as freedom and prosperity. The two sides of our business, and they're actually more related in deeper ways that I think we can unpack as we go through the conversation here. But it starts with this fundamental premise of, I don't know, you look around the world today, you could say we have a legitimation crisis. Why do doors fall off planes? Why do we not believe fundamentally in the institution's public or private and their competency? And that's very different than the world we had coming out of World War II. Our fundamental diagnosis for this is that a big part of the problem is that the C-suite, our leaders have been given a steering wheel that is actually a prop from the Jungle Cruise ride in Disneyland.
It's not actually connected to anything, and they're diligently trying to steer us in certain directions, but actually there's a fundamental and deep failure that the factory floor is not connected to the boardroom, these mark-to-market moments happen during crisis. You recognize people spent tens of billions of dollars on their supply chains in the lead-up to COVID-19, and they all fell over like paper tigers within two weeks. And you listen to the CEOs in their earnings calls during COVID, they would talk about how technology had saved them and what were they talking about? Zoom and Teams. What a damning indictment of the software industrial complex, that it couldn't produce anything that actually met its moment in this crisis.
And so we wanted to build a company that imagined this stuff backwards. Instead of thinking about how do I build a company principally based on how sellable is my software, I need to define it in a very tight box. I need to really think about what do the buyers want? How about we build software that actually matters? Let's work backwards from the problems they exist, which means you're not going to think of the great ideas eating strawberries in Palo Alto. You got to be on the fire cells of Djibouti, and the factory floors of Detroit, empirically understanding what does not work? Why does it not work? What does that mean about the software that needs to exist and go build that. And really that was I joined as a 13 employee to build what we later called the four deployed engineering team, a heterodox methodology of doing product development in the field.
Aaron MacLean:
You're not just a commentator on these issues, but as listeners can probably tell from your answer just there, you're an impassioned commentator on this issue or set of issues. A lot of your work, and the work of some of your collaborators can be founded at firstbreakfast.com, and we'll get into why it's named that here in a second. Or maybe you just will directly as a response to this question. When you look at the defense sector, when you look at the Pentagon, and the way the Pentagon buys stuff for America's soldiers, sailors, airman's, marines, guardians now to use. Big picture what has gone so wrong that we are at the situation where as you very vividly put it it's like the Disney ride. For me, it's the Millennium Falcon ride, which I recently did, which is a lot of fun. But I'm pretty sure as much as it seemed like I was steering the Millennium Falcon, I probably wasn't. I suspect there were actually multiple cockpits in that complex, even though it looked like I was specifically selected to fly the Millennium Falcon.
Shyam Sankar:
I think it goes a long way back. I think one of the hard things about the department's role in trying to buy and acquire these capabilities is that it is a monopsinist. It is the sole buyer for the vast majority of things wants to buy. There's not really a market for aircraft carriers. There's not really a market for many of the weapon systems we want to buy. And when you're a monopsinist, it's really hard, everything is your responsibility. You don't get to benefit from Steve Jobs thinking of the iPhone, you have to think of the iPhone. And that is a ungodly burden, and I think we understand in this country, we believe at some fundamental level in free markets, or you don't. And so how are you going to structure this chaotic, messy innovation that often seems wasteful and duplicative? How are you going to get that, which is what we believe.
It's like empirically our wealth, our prosperity has been powered by this. And I think the failure of the Soviet Union was powered by their central planning. But if you really look at the Department of Defense, it does use central planning. It has to fight it, it has a five-year process for them. It's this idea that actually top-down, we're going to be able to allocate resources, make these decisions, we're going to push towards... It's a human aesthetic. The Soviets aren't unique. I think there's a whole cadre of humanity that prefers the unitary effort aesthetic. We should just have one effort, put our weight behind it and do that, that would all be great if it was actually noble what you were even going to build. But when we were at our best as a country, when we were building ICBMs, we had every service competing. The minuteman wasn't a birthright for the Air Force.
All of the services put in their hat in the ring, they were fighting each other to see who could make the best ICBM. When Admiral Raborn was building the submarine launch ballistic missile, he himself had four concurrent competing programs underneath them. The Polaris was not the birthright winner, but look at today. The F35 was always going to be the fifth generation fighter. We didn't think maybe we need a 35, 36, 37. Maybe we should go to the legacy platforms and say, "You know what you're not legacy. Here's a little bit of money so you can get me to cancel these new programs." And how do we start to approximate the forces that we need, competition. We look at the last Supper and the conventional critique of the Last Supper, this dinner in 1993 in the Pentagon where we said, "We need a piece dividend. We can't spend as much as we have been spending. We're going to cut it by 67%. Not all of you 51 defense primes are going to survive." Now we have five.
We look at the great consequence of that conventionally as we lost competition in industrial base. I don't think that's right. Sure, let's have more competition in industrial base. What we really lost is this consolidation, it bred conformity. It drove out the crazy founders, the innovative engineers. It was the beginning of the financialization of defense. And as a consequence, you just don't have as much crazy, which I think defines the vibrant US economy. A stat I'll give you, which I always love. Mario Draghi just issued a paving critique of European competitiveness. He was the former European Central Bank president and prime minister of Italy. In the last 50 years, Europe has created zero companies from scratch worth a 100 billion Euro or more.
In the last 50 years America has created all of her one trillion Euro companies from scratch. So the performance of these two economies, it couldn't be any more different. And then when you look at European capitalism is essentially categorized by the same actors, who have been around for hundreds of years with essentially very comfortable positions. And if you look at American capitalism, it's very dynamic, it's often founder driven. You have big personalities, and when I look at the industrial base when it was working, today we think about it as Northrop Grumman, but it was Jack Northrop and Leroy Grumman. It wasn't Lockheed Martin, it was Glenn Martin. And we would look at that today and say, Elon and SpaceX that makes perfect sense. Elon has delivered a thousand X price performance on launch. And I think this is, maybe capitalism doesn't work that well. Only founder driven capitalism works that well, and of all the nations in the world to appreciate that, we understand founders are special. There's a reason we call them the founding Fathers.
Aaron MacLean:
There's a lot in there, and I want to take it piece by piece. You have this great essay, screed, polemic, the 18 thesis which can be found online. This is a recent production. The whole thing is worth a read, but I have in front of me this graphic that you have that depicts the post Last Supper consolidation. It's super compelling and it drives its point home. And I'll just read one sublist. So you've got G Fort Worth, Sanders Associates, GE Aerospace Business, Martin Marietta, Gould, GDSpace Systems, Honeywell, Fairchild, Weston Systems, Laurel, Goodyear, Aerospace, BDM International, Libroscope, LTV, IBM Federal Systems, Unix, ComSat. I think I'm actually missing one. But anyway, point is all of those, and I think one more are today just lucky, they're just lucky. One enormous corporation that your case is separate from these maladies. You started making the case for competition there.
Let's extend that out. Actually, let's flip it. Let's flip it to the competition amongst buyers breaking the monopsony where you have in your vision different services competing. I've read you, maybe it's in this essay in the 18 Theses calling for combatant commanders potentially, or combatant commands to be able to compete and be purchasers essentially. If you look at this from the semi religious perspective of jointness, where the point is to reduce inefficiency, to simplify, to bring into better coordination, things that would otherwise be ill coordinated. You could make a case that what you're saying is insane. You're saying I should have multiple services, which from this point of view maybe don't even really need to exist at all. Maybe we should be moving to some unified bureaucratic structure, these services are historical artifacts. You're telling me that you want to empower them to run around and all buy the same thing from different people. How wasteful to the taxpayer is that, tell me why that obvious response to your point is wrong.
Shyam Sankar:
It's dialectical. So efficiency only matters once you've achieved effectiveness, and you have to understand that the process of going from zero to one of creating something, of driving innovation is very different than the process of going from one to N. So when McNamara brought his practices in the 60s to the Department of Defense from Ford, here's how you managed for it. Well, Ford had unlimited demand, literally every car they made there was a buyer. For the sorts of techniques you come up with drive towards efficiency there. Efficiency is actually the only thing that mattered for Ford where you had unlimited demand.
If we counterfactually imagine a different market scenario, where actually you had to think about, "How do I build a new car that someone's going to even want to buy? How do I get a Tesla to market? How do I create a new category?" That methodology will kill you because the reality of innovation is that it is messy and chaotic, and any attempt to get from zero to one through process will fail. That is part of our legitimacy crisis with our large mature institutions, they can't reinvent themselves. They've been praying so long at the altar of process, that they've forgotten what innovation actually looks like.
Aaron MacLean:
Yeah, this is the thought I'm having for the first time inspired by your commentary here today. It's never occurred to me quite this way before I'm curious to know if you agree, because you're sort of pushing on an open door with me in this critique. And you have a lot of friends in Washington just not enough at present to actually push the thing over. But the core problem is that we have this centrally planned monopsony as you put it, that does what it does, okay, and does a lot of things very, very badly. The core problem is that at the same time, our entire defense strategy, since at least the 2nd World War, has been premised on a qualitative edge, a technological advantage, really a series of technological advantages constantly staying ahead, if anything, lapping our competitors such that we can get away with economies and other spaces.
So first nukes, then precision and reconnaissance and so forth, and now we're all looking the next thing. So we're trying to combine a defense strategy that is deeply, deeply, it requires technological advantage to succeed, otherwise we got to rethink how we're doing things in a way that I don't think we're comfortable doing. With an acquisition process that in your account, it's basically designed to make real innovation, or at least innovation at the pace you need impossible. Is that roughly where you are?
Shyam Sankar:
Yeah, that's roughly correct. I think one of the problems here to keep with the religious theme is the great schism that happened. So if we look at the structure of our economy, World War II, early Cold War. At the fall of the Berlin Wall only 6% of spending for major weapon systems went to defense specialists, what we would consider today as traditionals. The 94% went to what I call dual purpose companies. I think too much is said about dual use, not enough is said about dual purpose. Chrysler used to build cars and missiles.
Ford built satellites until 1990. General Mills had a mechanics division because they had to build machinery to process cereal. That mechanics division made torpedoes in artillery. When Pontiac took over the production of the Oerlikon 20 millimeter anti-aircraft gun during World War II from the Army's organic industrial base, they reduced production time from three and a half hours per unit to 15 minutes.
Now, they did that not because they were smarter humans, they weren't, I bet the same talented people on both sides there because they could leverage everything they learned about mass-producing cars to mass produce weapons. And so this schism has slowly, it's led us to put our defense industrial base on the Galapagos Islands, exquisite exotic creatures that really can exist nowhere else, the things we build are quite special, but it comes at quite a cost that you're not going to be able to produce a lot of them. You're not able to leverage any of the tangential commercial R&D knowledge and experience to make the defense industrial base better.
At some point in time, every camera, car and cereal box Americans bought was subsidizing national security in the lethality of our service members. And unfortunately, China has really learned from this playbook. If you look at Chinese primes today, only 27% of their revenue comes from the PLA, the rest comes from us as patsy's buying cheap crap on Amazon. Now we are subsidizing lethality against US service members.
Aaron MacLean:
Talk me through how it works. If you want to buy something at the Pentagon, let's pick a simple example, and I'll fictionalize it a bit, because I know there are actually recent real handgun examples. Let's say you want to buy a new handgun, the old M9 Beretta, it seems a little clunky. It seems like we deserve something better, it's the 21st century. So today is day one, year one, and you're somebody with authority and you've decided, "We're going to start the process of buying a new Handgun." What happens next? A reasonable person who has no idea how this works might say, "Well, gosh, there's lots of people out there who make handguns. You go pick the one you like or maybe ask for something fancy, and see if it comes your way and just buy the thing." I take it's not quite that straightforward.
Shyam Sankar:
We've come up with a Byzantine structure really, everything that has gone wrong we've tried to create a new rule for, and we have of course a duty to make sure we're spending our money well. So this process leads us to something that looks like first, let's have a validated requirement. Let's write down everything that it is that we think we need. And that structurally tends to lead to bloat. First of all, there's just the fundamental uncertainty of do you even know you need this or not? And are all these requirements equally valuable? But okay, so we're going through the process. We're writing up our requirements document, it has to be validated. This itself could be a multi-year process. If you go really fast, maybe it's half a year, but typically it's multi-year. Then you're going to get that requirement is turned over from the warfighters to the acquisition community.
They're going to develop an acquisition strategy. They're going to go figure out the resources they need to actually buy this and fund the program, and try to model what it'll take over time. Then you're going to start executing your strategy. This has led to a world where it takes two decades to field new weapon systems and it's all very slow. And I think what we're starting to realize is it's also maybe wrong. Obviously, the world has changed tremendously in two decades by the time you figured this out. And because it takes so long, you go through this a few cycles, what incentive are you creating for the warfighter? Well, man, this is my one shot at writing this requirements document. I got to get every bell and whistle in there possible. These things are so slow that I got to make it super special, and it's actually, it leads to a pathology that increases the likelihood of failure.
And if you think about the software world, obviously atoms are harder than software, but if you think about the software world, the companies that do the best are the ones that ship changes the most frequently. So you actually want to be buying continuously in small tranches that allow you to learn what you need, adjust it, and create incentives for both competition in the industrial base, and the ability for the warfighter to refine their understanding. I don't actually need this, or how do I engage in the tradeoffs of if I let go of this requirement, I could have twice as much it have the price, that doesn't exist today.
It's just such a serialized process that you're unable to manage the tradeoffs along the way. Now let's go to a hardware example SpaceX, they co-locate their R&D engineers on the factory floor. These are two different functions, designing the product, making the product. But the reason they do that is there is obviously a feedback loop, and if you're going to make a ton of these star links, or you're going to make a ton of these rockets, that feedback loop means the next increment can be better, and better, and better.
You want to get into that process of continuous improvement that today's system really deprives us of. It's one of my big reflections in Ukraine. So the obvious three lessons we could be taking from Ukraine, the first is you can't expend 10 years of production in 10 weeks and think you got it right. I think it shows us that we fundamentally confused the stockpile as the deterrent, it was always the ability to produce the stockpile.
So years of trying to get things down to the minimum lines, and affordability, and shutting production down because you're like, "Look what I have in the stockpile." That was a mistake, a huge mistake. That would then lead to a kind of sense of, "Well, do I need to design these weapons so they have a thirty-year shelf life. If I recognize that the deterrent is my ability to produce them, what if they had a three-year or five-year shelf life, and I just constantly use them because I'm going to constantly be making them?" That would lead to cheaper munitions.
The second one, the second major conclusion I have from reflecting on Ukraine is drone obsolescence life cycle is two to six weeks. So you a new drone, it's going to be jammed. So the only question is not what does your weapon do today, it's how adaptable is your weapon? What is your ability to change how it behaves and functions? So you could have the most exquisite thing in the world, and it'll be irrelevant in a few months. And that seems highly problematic as we start thinking about the conflicts that we're going to be in, how much of our exercises and practice, it's not about what does the weapon do today, but can our uniformed service members can our industrial base upgrade our weapon to meet a changing environment and condition? And the third one is a real argument for new platforms, why you need more competition?
People love saying that the Ukrainians sunk half the Russian Black Sea fleet, even though they don't have a Navy, despite not having any of that. And I think, no, no, you got it right, it's because they didn't have a Navy that they sunk half the Black Sea fleet. And so how do we motivate ourselves to experiment with new force employment concepts with entirely new systems, where we're not so wedded to the legacy that we can't actually go experiment? And that's where I think you need competition because it's very hard to ask someone to do both things simultaneously. You need to leverage the fundamental human incentives. And really this idea, my lived experience with this, I was in a major competition on a platform with a big prime. It was a team effort. The two of us were going at it. We had one program manager, and we had all these soldier touch points.
In the midst of this competition, we had the ChatGPT moment. Wow, look at this miracle of technology. It's come out, it's obviously not in any requirements document, no one's conceived of it before. But I'm thinking to myself, "Man, when my son's in the back of this thing, "I want him chatting with the chatbot about how to maintain this asset, not flipping through a 10,000 page PDF manual." And I offered the PM a free upgrade, no resource, no risk to schedule that would deliver this chatbot. There was no interest because there was no upside for them. So it's just a clear, and they're doing their job. It's not actually they are following the incentives that we are giving them. So it's not a critique of this human, it's a critique of the system. They do not wake up thinking, "My job is to deter she." It's, "My job is to deliver this program with the least amount of risk. And I don't see how this does anything here. Even though it's more capability, it's maybe the same risk or why do this?"
But I tell you, a counterfactual. If you had two program managers, one that was assigned to us, one that was assigned to our competition, they would've said yes. They would've said "Yes, let's go murder that other team. At the next shoulder touch point, we're going to show it with something better, something that's more awesome." And I think that there's a fundamental reality in that, that we as Americans will wake up to murder the bureaucrat one corridor down every single day, and that is going to force us to get better every single day. And I say that as a proxy for the US commercial market. Why are we so innovative? That's what our companies are doing to each other every single day.
Aaron MacLean:
When you sit there with Roger Wicker who's been here on the show, or Lloyd Austin or their staffs, and you run this idea of why don't we have multiple program managers buy them, what do they say? What's their response? What's the response from the establishment as it is?
Shyam Sankar:
Well, so I'd say there's probably maybe slightly less than half, but it's close to half of people who think this is a great idea, but let's steal man the pushback. The pushback is often, "That sounds duplicative. We can't afford that. It sounds like it's going to require a lot more resource." And I think this comes down to your fundamental view of technology. Is technology something that is deflationary? Is it going to make you better, faster, cheaper or not? And I think implicitly, the folks who are coming with the pushback their lived experience, because we've had this exotic Galapagos Island industrial base, is that costs rise faster than inflation. I can't really imagine a world where competition brings down prices in a meaningful way more than just a few percentile here or there, but transformationally, and that's where I like to point to SpaceX. When I was a kid watching shuttle launches, that was $50,000 a kilo to orbit with Starship heavy reuse it's going to be 10 to 20 bucks. I'm not missing any zeros there.
So we're talking about a thousand X price performance improvement in roughly two decades, that's the power of... I just had a senior government person telling me the problem is now SpaceX has a monopoly on launch. I'm not sure it's a literal monopoly. I think they're so good at it that for that price it's very hard for other people to compete. But let's not forget that they earned it by dropping the price by a factor of a thousand. Think about what that implication is for our national security as a consequence, this is actually the market working. This is what we want to see. And sure, let's encourage more competition in the next generation. Why stop here? Let's get a factor of 10,000 and keep going, but we have to recognize how much we're getting from the commercial innovation that it's possible.
Aaron MacLean:
You made reference a few minutes ago to the Chinese defense sector, and made the point that perhaps ironically, given that they're literally a communist country, they embody more of the old pre-consolidation American system with companies that have multiple purposes, et cetera. Say more if you will. I don't know how much time you spend thinking about our counterparts there across the Pacific, but about how they go about these things given that there quite literally is a Chinese Communist Party, there is central planning. How does their acquisition system work at just at a little bit greater length than you alluded to before?
Shyam Sankar:
I'm not the world's expert on it, but I can tell you what I'm observing and what I see. So my quip about this is everyone has given up on communism, including the Chinese and the Russians except for Cuba and the D.O.D. And so if you look at even the Russians, they basically had two ministries of defense, they had the Wagner group and the M.O.D, that's competing programs right there. And so my push on that is not that you never eventually consolidate them as they clearly did, but that you need to be able to engage-
Aaron MacLean:
That's one way to put it. Yeah, they consolidated them. Sorry.
Shyam Sankar:
You need to be able to engage in periods of strategic competition that drive innovation. And so what I see with the Chinese is they know the weaknesses of their central planning and they're planning around that. So they will have multiple primes competing against each other, they are essentially having multiple competing efforts as well. It's part of their system and how they're going, and it's what I think we could be doing as a monopsony where there is going to be an aspect of central planning. The question is do you lean into it, or do you lean away from it, and try to approximate market forces wherever possible.
Aaron MacLean:
You have this interesting section of your commentary online at firstbreakfast.com, where you talk about heroic figures in the defense sector over the years. Some of these names will be familiar. We've talked about John Boyd on the show a couple of times. Hyman Rickover is a pretty well-known name. And then there are names that I will confess are pretty new to me. Abraham Karam was somebody whose story I did not know while I was preparing for this episode, Pierre-Esprit. Pick one or two, what are you trying to illustrate through this effort? What do you think is important about people like this? And then pick one or two, and tell us why they're models for how you think about what needs to be done.
Shyam Sankar:
The series is called Heretics and Heroes, and the heretic coming first is very intentional. It is because I'm trying to illustrate that we're going to create these capabilities because of great Americans of great, unique, singularly talented people that we empower to do that messy, chaotic process of innovation. Admiral Raborn, I'll tell you one story about this, which I think is very funny. So Admiral Rayburn understood this. He was building the submarine-launched ballistic missiles. Congress is breathing down his neck. The Navy was breathing down his neck, they wanted the perfect program plan. They wanted the Gantt chart of Gantt charts. And so he hired contractors to build PERT, P-E-R-T, which many people have heard of. He used the latest in decision sciences Monte Carlo simulation to give you the bounds of how long things would take. The reality is it was all a very clever smokescreen.
He was basically throwing BS data in front of these lawmakers and policymakers, so that he could create a shield of protection around the engineers who were doing the messy, chaotic, completely unplanned and unpredictable work so they wouldn't be bothered. Unfortunately, his program went so well in the end that people thought, "Wow, PERT is fantastic. Look at the results it delivered." And it was institutionalized, henceforth, all programs must use PERT. I think Raborn was probably too embarrassed to admit that it was a smokescreen in the immediate aftermath, so we institutionalized mediocrity as a consequence of this. Maybe we should praise him and blame him at the same time. But I think it highlights something special. We call it the Apollo program, but it would not exist without Gene Kranz. Kelly Johnson was a singularly talented aerospace engineer. We would recognize him in the valley today as a thousand X, hundred x engineer.
As a 22-year-old, he saw a 2D drawing of an aircraft and he went to his first job and he said, "This thing won't fly." And his boss, "You're so smart, why don't you fix it?" And he did. And this guy built 41 airframes in his lifetime. He built the SR-71, the U-2, which we still fly. He was not a fan of the F-35 at the end of his career. He said, "It doesn't make sense to have a army knife." And you can contrast that to many of the programs we have today, they have no founder, they have no father. They're a test tube baby made up through committee, a series of requirements. Hyman Rickover worked on nuclear reactor for 30 years. I don't think there's a counterfactual where you swap someone in and out of that place every two or three years, and you would've achieved the goal. And there's a reason that Naval Reactors is an eight-year gig. We even understand today that continuity and knowledge is really important to the leadership of these asymmetric capabilities that we have.
Aaron MacLean:
Let's switch from business to strategy for a second. And I want to ask you just a really broad question because obviously you're helping to steer this company now, but your background is as an engineer, as a software engineer, which is a world that I can't begin to understand how the things actually function. But my really big picture question for you is when you think about the battlefield, let's say 10 years out, maybe 20 years out at most, I don't want to ask you how should we be picturing that battlefield?
Maybe that's a little unfair though, maybe you have some tentative answers. I think I want to ask you, how should we begin the process of thinking about that? Because presumably that's part of your responsibility at Palantir is thinking about how to position the sorts of things you'll be providing that have impact 10 to 20 years out. And you have this technical background. How is war changing? How does your particular specialty in software engineering, how is that increasingly relevant and how does that relevance work? How do we even begin picturing these things? I think about the battlefield that I experienced some 15 years ago now, and how just different things that I've seen in Israel are today, or things I read about in Ukraine are today. And I could use some help thinking about how to think about the battlefield 15 years from now.
Shyam Sankar:
Well, I think maybe to answer this slightly, orthogonally technology is a tool for our commanders and our humans we could say, but we could focus in on the commander for a second, which doctrinally believes is the most important actor on the battlefield. And so you can think about this as an Iron Man suit for them physical, software, all this stuff is a lever. And so I think first you have to start with this deep understanding, which I think is still heterodox that technology people think somehow technology will make humans less relevant. Or they think technology will raise the capability of the median human, and it will. But it will make the most important human substantially more important. So small differences in the abilities of your humans are going to be magnified. And so then I think reorienting around this concept of this is an Iron Man suit for our commanders.
How do we get into the business as a technologist I hold myself accountable to the first derivative, what is my rate of improvement? It's not the capability I'm delivering today, how responsive can I be to what the commander is asking for tomorrow? And that's born out of the four deployed engineering methodology. Where did it start? When we were in Balad or in Bagram, people would go out on mission, they'd come back, they'd have feedback, they'd say this, this, and this. And while they sleeping we were coding, and they'd go out on the next mission with this, this and this, and they'd come back with more feedback. And so Boyd would recognize this as like, oh, this is the OODA loop. We're just tightening it up. I think in some way the future battles field is not different in character from the present one, which is whoever has the best OODA loop is going to win.
Now how are we going to achieve that? And yes, will the platforms be different? Will the technology be different? Yes, but you're not going to think of those things in DC doing just blue sky R&D projects. There's a role for that. You need to do that stuff. But where the rubber is going to meet the road is the folks who figure out how to employ those things with the greatest amount of efficacy. And that employment, when the world was moving slower, we could really silo these things, "Hey, there's a group of people over here doing research." And that's like, let's have a linearized technology readiness lifecycle thing. Let's TRL one to nine and as it graduates we'll move it through this process.
The digestion of that is way too slow, and the assumptions of how long it takes to mature things is not right. And so we need to really be co-locating, just like the SpaceX engineers are co-located on the factory floor. We need to co-locate the people who produce our weapons and our technology with the people who employ them, and create the partnership between them that, "You're the pit crew, understand our role." We're like, "We're not telling you how to fight the war. Our job is actually understand how you want to fight the war and give you that capability."
Aaron MacLean:
It's funny you laying that out actually makes me think that one thing that's then critical to understand, and act on is not a particularly cutting-edge insight at all. But if the role of technology is to make more powerful and to give more powerful tools, and that's to make more powerful commanders. And as you sort of put it like a smaller group of people, but there will still be people at the center of it, then the education of those people and the training of those people, and the preparation of them to operate in a world where all the traditional realities of war still apply, but in this fast-shifting technological environment, whereas you put it even today is just a few weeks in a cycle of drone technology on the battlefield in Ukraine.
Identifying those people, educating them, training them, that's just even more important somehow. And I don't even know how you go about for the technology piece in particular, I don't even know how you go about starting to think about that process of things for people who are on track to become senior commanders in the military. I'm not sure if it's in your purview to think about those things too, but that's my immediate takeaway from you for you saying that.
Shyam Sankar:
Well structurally, I wouldn't say I'm the best at systematizing things, but I think it starts with having identification. You mentioned the word identification. I think that's really important. It starts with there is an intrinsic capability that you're building a colonel around in training. And I'll even say my own experience there are commanders to look at technology and say, "Oh, that's where the nerds in the corner." And then their commanders will look at technology, and grab it and pull it in very close to them. They'll rearrange their jock floor so that they essentially have the tailors of the Iron Man suit in the right positions to give them the capabilities they need to win. And maybe that's generational. Maybe it's kind of attitudinal, I'm not quite sure. But I do think we should expect that technology will change our selection criteria for who are the right commanders going forward.
Aaron MacLean:
And another thing, I want to be respectful of your time here, so only a couple more questions, but another thing that this inspires me to ask is if the cycles are really this fast, and if anything we expect them to get faster, and then we have to think about the problem of how do you have commanders who can handle that and think about that. You just can't produce new hardware on that cycle, at least in the world we live in today or in any reasonable world, I can picture in 10 years. Hardware, new ships, even fancy small drone ships or whatever.
It's just going to take some time to put that thing together. But the software and things you can plug in and out of the hardware, smaller things presumably the software can be changed at the speed of which the humans and the software tools can change it. And the smaller things that can be plugged in and plugged out presumably can operate on a little bit of a faster turnaround than the larger platforms. So is this future battlefield one that is quite modular and quite software intensive?
Shyam Sankar:
Yeah, I think the future is software-defined. You're not going to shoot bits at your adversary at the end of the day we are talking about bending metal. You want the bending metal to be as unexquisite as possible because it can be done at mass, at scale, in a distributed way, and you want the software to be as exquisite as possible because it's what's adaptable, and you can compound on that.
And I think it also plays to a deep and profound American advantage, one that America actually tends to underestimate. We are the best at software by a yawning gap. The second best country is Israel, and their second best by quite a distance actually. Think about the fact that there are zero Indian or Chinese enterprise software companies that are competitive on the world stage. So why is that? It's obviously not IQ otherwise this would be more evenly distributed, maybe pro rata to population or something.
It's culture and culture is the hardest thing to replicate. And that culture, people look at the Valley and they sometimes think maybe we imported it from Israel or India. We imported it from Iowa. It came from Bob Noyce, the co-inventor of the transistor, the co-founder of Intel, the semiconductor company. And it's deeply rooted in Midwestern values. It's a willingness to play positive sum games. Bob Noyce, he coined the term open door policy. We don't recognize the degree to which actually all Silicon Valley culture is descendant from Noyce. And that is actually the hardest thing to replicate. If you're the Singaporeans and you come to Stanford or come to Silicon Valley, you're like, "Maybe I need a research university. Maybe I need venture capital like Sand Hill Road." These are all symptoms. Yes, they're enabling. You need those things, but the one thing you actually need is the one thing you're not going to want to copy.
You like your culture, you don't want to be Midwestern. And that's why it's so profoundly sticky for us. Now we shouldn't rest on our laurels on it. And I think one of the ways it allows us to build things of immense complexity. Like if you look at the Israelis culturally they can build canoes, they can't build aircraft carriers. And that's a culture I have immense respect for, so I don't mean that as taking a pot shot. But we can build these things at tremendous scale and complexity in this country. It's like 87% of all tech market cap in the world is American, that's not by coincidence.
Aaron MacLean:
Shyam Sankar, Chief Technology Officer and executive vice president of Palantir, you can find his commentary at firstbreakfast.com amongst other places. This has been a truly thought-provoking conversation. I have learned a lot, and I think I'll learn a lot just as I process things that you have said. And I really appreciate you making the time.
Shyam Sankar:
Thank you, Aaron.
Aaron MacLean:
This is a Nebulas Media production. Find us wherever you get your podcasts.