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Pacifism to Pragmatism: Silicon Valley's Defense Awakening
Silicon Valley went from pixels to patriots. How did we go from only ~$100 million invested in defense tech in 2010 to corporate logos painted blue & yellow with ~$8 billion invested by 2023?
Good morning Earthlings 👽️🖖
Oh boy, do we have a spicy edition for you today: why investing in defense tech is an absolute necessity for Western civilization, and how Silicon Valley shamed and ignored defense technology for years before pivoting completely. We went from ~$100 million invested in aerospace and defense in 2010 all the way to corporate logos being painted blue and yellow with nearly $8 billion in venture capital injected into defense by 2022. It’s a fascinating turn of events. Russia’s invasion of Ukraine was the moment when many pacifist technologists and go-with-the-wind media outlets realized that large-scale war was actually possible in the 21st century. We hadn’t seen any sort of global conflict to this degree since the Cold War. TechCrunch’s early 2023 piece, Silicon Valley Goes to War, marks a key moment when mainstream coverage and public sentiment officially cozied up to defense technology.
But the sentiment was anything but “cozy” just two years ago—heck, the public sentiment was borderline adversarial.
We'll draw extensively for the rest of this piece from industry veterans that have much more credibility than a mere observer like myself. Trae Stephens’ The Ethics of Defense Technology Development: An Investor’s Perspective and The Business of War is the Business of Deterrence both present the idea that punitive deterrence is a powerful means to avoid war. As a co-founder of Anduril, Trae also dives into the journey of building a new defense prime and what it takes to sell to government agencies (South Park Commons podcast). Palmer Lucky, the founder of Oculus and co-founder of Anduril also had some fascinating takes on Bloomberg Live and The Hill & Valley podcast about the history of Silicon Valley’s (lack of) interest in the defense industry. Trae and Palmer have been voicing these sentiments for years (and now over a decade)—and built a few billion-dollar companies in the process.
If you don’t want to spend 10 hours reading and listening to defense leaders talk shop, you can sit back and grab your morning cup of Joe—and we’ll get right into it.
We invest in defense to deter war
Advancements in defense technology that result in punitive deterrence of violent actors are a means to avoid deadly war. Potentially, it’s the best and most time-tested approach for peace, according to The Ethics of Defense Technology. “For most of modern history, the threat of punishment imposed by one or more sovereigns for violations of that sovereignty, or grievous offense to moral or international law and norms, has served as a deterrent against bad action,” writes Trae Stephens in the article. Nuclear weapons and mutually assured destruction is one of the most notable examples of this idea. Punitive deterrence is manifested in terms of cost for the aggressor: defensive technologies like counter-cruise missiles increase the cost of conflict by making it significantly harder to inflict violence on your allies without being caught or suffering significant losses in the process.
If you want to protect yourself from physical assault, you must know how to fight. If you want to live free, you must prepare to shoulder responsibility. And if you want peace, you must prepare for war—to ultimately deter it in the first place.
Let’s outline these ideas very clearly:
If war is actually happening, “we need more investment in technology that confines warfare to combatants and reduces harm to civilian populations and property, not less.”
The primary function of a nation is to ensure the safety and security of its citizens and sovereignty.
Countries with superior military technology have historically been better positioned to deter potential adversaries from initiating conflict.
If you can agree with some or all of the above, it’s worth noting that over the past couple of decades, public opinion has seemingly lost sight of these ideas completely. A moral worldview claiming that investing and even participating in advancing defense technology is a moral evil started taking shape in the 2000s—some say even earlier. But it makes some sense as well. After the Cold War and America’s forever wars, there was an understandable distaste for global conflict characterized by recent experiences of failed nation-building, unmet aspirations for globalization, and the rise of populism. This distaste ultimately affected the dollars flowing into defense technology, and public opinion of defense morphed into a binary moral worldview: you can participate in the “business of war” and its deadly consequences, or you can abstain completely from its terror.
Palmer Lucky recalls that in the early and mid-2010s, investor sentiment for defense tech was “some mix between indifference and scorn”, with the indifferent folks claiming that we live at the end of history where there's not going to be any more conflict and where global economic entanglement precludes any kind of large-scale warfare in the future—thus, defense tech is just a waste of time. The scornful folks on the other side were saying that any use of force is wrong and that working on defense tech is morally evil.
Let’s turn back the calendar to 2018 when a letter was circulating inside Google and had garnered more than 3,100 employee signatures to stop Project Maven—a military drone program that used AI to interpret video images and could be used to improve the targeting of drone strikes. For perspective, this represents just ~3% of the Google employee base at the time, meaning ~97% of employees were either indifferent to participate in a simple one-click survey or sat on the other side of the argument completely. However, the media coverage of the letter reflected a deep scorn for defense work which, at that time, was morally proper to emphasize publicly.
Also in 2018, mainstream media reported that Microsoft got “embroiled” in an internal “controversy” when it was revealed that it had a $19.4 million contract with Immigration and Customs Enforcement (ICE) for data processing and AI capabilities, leading to employee protests. To be specific, these ~100 protesting employees represent just 0.07% of Microsoft’s employee base at the time. Microsoft claimed that the services it provided did not involve any facial recognition capabilities, but this incident was emblematic of the media posturing and public tension that existed when discussing tech’s involvement within defense and national security.
Let’s get back to the numbers: a survey conducted between late 2019 and early 2020 at Georgetown University found that less than a quarter of AI professionals view Pentagon work in a negative light, and 78% consider it a positive or neutral. While mainstream media would have you think otherwise, it doesn’t seem to be the case.
Unfortunately, the media covered defense stories as if it was evil for tech companies to work with government agencies—agencies that are formed to serve the national interest. Palmer Lucky wants you to imagine this alternate history: it’s the lead-up to World War II and all of America’s most innovative tech companies like Westinghouse and General Electric refuse to work with the Department of Defense (DOD) claiming, “Oh, well you see, Imperial Japan is a huge revenue opportunity for our investors and so we can't really take sides here.” It sounds absurd. And that’s because it is—a similar sentiment occurred for much of the 2010s—just replace “Japan” with “China.”
History has shown that those who lead in new defense technologies set the ethical norms and standards that ultimately govern those technologies. It was the U.S. that decided to drop two atomic bombs on Hiroshima and Nagasaki in 1945. Going further back in time, it was the Romans that pushed advancements in siege warfare, developing technologies like battering rams, siege towers, and the Testudo (Tortoise) formation to protect soldiers from incoming arrows. It was also the Romans that had the luxury of dictating tactical and ethical norms like offering terms of surrender before a siege and having the power to avoid unnecessary destruction.
Those who lead from behind will be subject to the norms of those who lead in front through technological advancement:
“In debating the value of our investment in defense technologies, we cannot ignore the fact that if we allow others to build these technologies while we stand idle, we will lose the power to regulate their use, we will allow aggressive autocratic regimes to take the lead, we will voluntarily limit our power to deter harmful conduct (including genocide, repression, and interference with international norms), and we will cede to the most belligerent and authoritarian states the power to impose insidious legal and moral standards on the US and its allies without consequence.”
Trae Stephens, Co-Founder of Anduril and Partner at Founders Fund
Follow the money
For many technologists and venture capitalists, shying away from defense tech was an easy line to tow when the world seemed insulted by war and when the public backlash for “funding a war machine” was almost guaranteed. Many people across the world didn’t believe another large-scale war was possible, but again, the co-founders of Anduril have long argued that war occurs when deterrence is not strong enough:
“Since Russia invaded Ukraine in February 2022, the United States and allied countries have moved swiftly to supply the Ukrainians with the tools and weapons they need to defend their freedom and independence. But, if the Ukrainians had an arsenal of HIMARs, Howitzers, surface-to-air missiles, loitering munitions, and anti-radiation missiles in December of 2021, it is hard to believe the conflict would have even started. Putin invaded Ukraine because he believed he could win.
The Ukraine conflict is a useful reminder that hard power capabilities are critical to deterring adversarial aggression. A key purpose of defense departments is to provide military power strong enough to preserve peace by deterring war.”
Trae Stephens, Co-Founder of Anduril and Partner at Founders Fund
Flash forward to 2023 and investor demand for allocations in defense startups is red-hot.
Investor interest has grown tremendously over the last three years, with nearly $8 billion of venture capital flowing to aerospace and defense startups last year—up from just $1.4 billion in 2018, according to the analytics firm PitchBook. Some key deals in recent months include Anduril’s $1.4 billion Series E; Shield AI’s $225 million Series E; and Vannevar Labs’ $75 million Series B. Virginia-based HawkEye 360 just closed $58 million in new funding, the latest sign that investor appetite for defense startups is nowhere close to slowing down. HawkEye operates a constellation of 21 satellites currently in low Earth orbit that collect geolocated radio frequency emissions, including those from radar systems and VHF marine radios. The startup then sells that juicy intelligence to a suite of defense and commercial customers.
Such investor demand was not always the case. One look at the chart below will tell you all you need to know:
In fact, many venture firms were prohibited by their LP agreements from investing in weapons. Since the early 2000s, you had a movement of people who felt that working on defense technologies was taboo and morally wrong.
In mid-2021, Phil Wagner put the history of this sentiment into words quite simply:
“During the last presidential administration, a handful of colleagues questioned whether serving the military was consistent with our mission of helping the world move better. Over the past few years, this stigma toward military work has roiled some of the largest companies in Silicon Valley, sometimes leading to contract cancellations, non-renewal pledges and a noticeable chilling effect toward work involving the United States military.”
The funny thing is that American VCs have been fairly active in the Chinese market. Last year, $36.5 billion of American dollars flooded into China-based investments—up significantly from the $25.1 billion in 2020, but still below the recent high it reached in 2018, the data shows.
While a significant portion of those investments went to Chinese AI and biosciences startups, it’s nonetheless representative of the sentiment and incentives that drive which startups gets funded. Defense only became sexy when it was politically and morally sound to even consider touching, while American investors have been investing heavily in our largest strategic adversary for years.
Corporate moral handwaving aside, it’s clear that global antagonism is threatening the stability of North America—we’re seeing the United States industrial machine rotting from the inside out due to bloat and lethargy. As a result, the Silicon Valley mentality has returned to its defense roots, embracing the role that venture startups can play in maintaining America’s military dominance and technological supremacy around the world.
From Pixels to Patriots: the new era of America’s prosperity
Beyond defense, this is really a story about rebuilding America. Patriotism is back baby!! Startups serving the national interest are being founded and funded more and more every day. For too long, our intelligent technologists focused their energy on optimizing ads and conversion funnels, but the tides are a-changin’, and we’re entering an era where solving very hard problems for the national interest is finally here. It’s hard to develop new things that solve deep societal problems, and it’s even harder to do it when navigating bureaucratic hierarchies that move slowly, shy away from risk, and have entrenched interests.
But that doesn’t mean those problems can’t be solved. The sentiment toward building America into a global powerhouse should never be lost. Everyone can feel it.
“If you believe in democracy, democracy demands a sword,” a16z general partner David Ulevitch said in an interview with TechCrunch. And America will be where it is forged. You can see it happening right now:
We have venture capital funds like a16z’s American Dynamism practice led by David Ulevitch and Katherine Boyle, Founder’s Fund, and Lux Capital that are funding entrepreneurs building for the national interest, mainly in the world of atoms—energy, defense, manufacturing, housing, transportation, energy, etc.
We have books like J. Storrs Hall, Where Is My Flying Car?, prompting discussion about the state of humanity’s technological (lack of) progress in the world of atoms. It seems that many of our problems boil down to “making energy too cheap to meter,” a great piece by Benjamin Reinhardt.
We have companies like Varda Space Industries manufacturing drugs in space and becoming the first of many startups unlocking what we will one day refer to as the “space economy.”
We even have beautiful philosophies like Effective Accelerationism embracing the acceleration of the universe's thermodynamic drive toward complexity, intelligence, and technological evolution beyond biological constraints.
And we have companies like Hadrian, a precision manufacturing startup founded by Chris Power, that’s on a mission to rebuild American manufacturing into a well-oiled machine. Fresh off a $90 million Series A financing round, their factories are “abstract” in that they’re not set up for a single product, but are adaptable to accommodate different products as needed. To top it off, Anduril and Hadrian are linking arms in a strategic partnership with Hadrian tasked to supply and craft precision parts for Anduril’s autonomous defense suite.
Well, if you made it this far, I hope you enjoyed the rollercoaster from frustration to fired-up optimism about the future of defense technology and the next cohort of deep-tech startups. We here at Earthlings simply want to uplift the founders and companies building a more resilient America—and building a world that our children can inhibit with pride.
That’s it today, friends.
As always, thank you so much for reading! 🧑🚀