And you may not like it.
Elon Musk wants to cancel the F-35, and get rid of manned combat aircraft generally, and rely more on drones. Let’s unpack that, because this is now about much more than one opinionated squillionaire, but about an opinionated squillionaire who seems to be surgically attached to the President-elect.
First of all, what’s a drone? The Teledyne FLIR Black Hornet, which weighs as much as a decent burger, or the 40-ton, Mach 2.5 Tupolev Tu-123, which caused no end of confusion in the 70s because nobody knew it existed, and people thought the radar tracks were MiG-25s? Both are drones, as are all points in between and on either side (like the billion-dollar monster called QUARTZ), so we might need to get specific.
Second, Tech Bros don’t know everything. If you have not looked lately at the Urban Air Mobility (UAM) biz, I advise you to do so. Short form: since the craze for electric vertical takeoff and landing (eVTOL) vehicles (whisking you quietly from your office to your home at a traffic-free 120 knots for an Uber-like fare) started about seven years ago, investors have spaffed double-digit billions up the wall, and despite tons of pretty CGI videos, nobody has flown a 25-mile roundtrip on one charge, even without a payload. Batteries are not up to the job, which these smart people should have foreseen. But hey, let’s put these guys in charge of the entire military.
Third, the military has been using unmanned combat aircraft since one of them chased my Mum out of the bathtub at the Red Lion in Basingstoke in the summer of 1944. She called it a flying bomb, but today people would call it a one-way attack (OWA) drone. Conceptually, the cheap-as-chips steel-and-wood V-1 was remarkably close to what Ukraine is throwing at Russia.
Fourth, there is something in airpower called “reach”, combining range and speed. Range and speed have been fundamental to the military use of flight since before there was any military use of flight – read H.G. Wells’ The War In The Air, 1908 – and small electric drones can’t deliver it. They are a hell of a factor inside artillery range and allow infantry to kill tanks. They are irrelevant in WestPac except as a payload.
Fifth, I doubt that Musk knows all of the above. But let’s talk about why that means the cube root of not very much.
Peter Thiel is in the Musk circle and has more understanding of military needs. He founded Palantir in 2003, focusing on the analysis and fusion of intelligence information, and is also a funder of Anduril (clearly the use of Tolkien names is hobbit-forming, I may register Wormtongue Advisory LLC yet) which is pitching and selling low-cost cruise missiles (neoV-1s), solid rocket motors and drones. There seem to be some good ideas and good people in Anduril, but the strategy is more than weapons.
Thiel and Anduril co-founder Palmer Luckey – central casting couldn’t have created a better name for a Tech Bro – want to “reboot” the defense enterprise. It is, ostensibly, a quasi-religious exercise, as witness the 18 Theses that Palantir’s CTO Shyam Sankar nailed to the Pentagon’s door five days before the Presidential election. The goal is to change the defense industry beyond recognition – because, they argue, we are in a war and losing it.
Around 2014, Russia annexed Crimea, China militarized the Spratly Islands in the South China Sea, and Iran was allowed to pursue the bomb. A decade later, we have had more than 300 attacks on U.S. bases by Iran, 1,200 people slaughtered in a pogrom in Israel, an estimated 1 million casualties in brutal combat in Ukraine, and an unprecedented tempo of CCP phase zero operations in the Taiwan Straits.
This is a hot Cold War II. The West has empirically lost deterrence. We must respond to this emergency to regain it.
Right or wrong, you want to know how to lose this argument? By saying that everything in the military-industrial-congressional complex (MICC) is just fine, totally tickety-boo, is how.
Musk can take aim at the F-35 because from his viewpoint it’s a fat target. You know my history with the F-35 and that I’ve been right about most of it. It does indeed embody most of what’s wrong with defense acquisition – not just what was bad during the Cold War but got worse after it. You can argue with the details [You would be wrong. – Ed.] but the ugly fact is that LockMart and the JPO are not delivering combat-ready aircraft today, 23 years after contract award.
Change is coming to the MICC, one way or another, and resolutely defending F-35, rather than accepting that vital lessons must be learned, is a path to nowhere. A defense enterprise that once led the development of technology, and brought us jet travel, microwave ovens, and GPS, now needs to accommodate itself to a different world. For example, one where defense-unique needs such as force application (killing people and breaking their stuff) adopts the technology of small, cheap and intelligent.
It may be too late for some. The question is not whether things will change, but how. And we have a pretty good idea of who’s going to make those decisions.
Flashback to Peter Thiel and January 6, 2021. At the end of that day we knew three things: Trump was the presumptive Republican candidate in 2024, Mike Pence would not be his running-mate, and it was (on an actuarial basis) questionable whether Trump would complete a second term. Weeks later, Thiel dropped a crushing $15 million into a midterm Senate race for JD Vance, almost guaranteeing a win that would anoint Vance as a credible VP candidate.
JD duly became the VP candidate, now VP-elect. His chance of being POTUS before 2028? As TS-cleared MICC people say when a conversation veers in the wrong direction, that’s a discussion for a different forum. But my assessment is that nobody should or would have disregarded the possibility, and that Thiel and Musk certainly didn’t.
At the same time, it’s hard to see the Trump administration’s defense leadership as an intellectual powerhouse. Even if Pete Hegseth does not get confirmed as SecDef, his nomination sends a clear message: social issues matter, more than command, technological or management experience. If the White House gets converted to the Tech Bros’ reformatory zeal, that’s the path the Pentagon will obediently take.
Back to the eVTOL caper, and how the world of venture capitalism works. (I heartily recommend Emmanuel Maggiori‘s Siliconned to anyone who wants to learn a bit about VC-world.) For a VC to make bank on a start-up, it’s not necessary for it to make a profit or even deliver a product or service. The VC cashes out when the startup is sold or goes public, because the new investors see emerging products and a market opportunity.
If the reboot-defense crew can direct the Pentagon, they can create their own markets. Current major acquisitions get cancelled or truncated, freeing up billions in annual funding streams at a time. That money can be redirected to new initiatives. Drones. Mass-produced missiles, from anti-armor weapons to long-range hypersonic systems. Missile defense – Trump’s “beautiful Iron Dome”.
And it’s not about what the Pentagon buys, but how it does it. Rebooting defense means switching to a VC mode for procurement, with General Atomics’ drone business as a model. No more cost-plus, a much greater role for non-public investment, and a much greater scope for positive margins than playing by the MICC monopsony rules. As long as startups can get money, they may have the upper hand in that market, unencumbered by old factories tethered to votes, or the bureaucracy needed to engage the government’s slow-grinding gears.
A case in point: Anduril’s heavy investment in solid rocket motors. Not so much making them more powerful as making them in less time at lower cost. The business has been a backwater for a long time, with little growth visible, and much of the business at a subcontractor level. But the moment that the White House unveils a plan for national missile defense, the prospective market for solids goes through the roof, and so does Anduril’s valuation – without signing a single contract, let alone building hardware.
But what if the new ideas and initiatives aren’t the right ones? Perhaps formation drone displays don’t translate into cunning tactics, or unmanned air vehicles don’t need to look like small manned airplanes, any more than most robotic tasks call for humanoid robots. Or missile defense may continue to be a losing cost-imposition battle against uploading MIRVs and decoys on offensive weapons.
The answer: from a VC viewpoint, it doesn’t matter. By the time we know whether the reboot was a good idea or not, the VCs will have cashed out and invested in the next new thing. Or they’ve done a runner to their New Zealand bunkers and left us lowly Orcs to clean up. Because if there’s one thing that we should remember about the Reformation that started with another set of theses 500 years ago: it got really, really messy.