From Sky to Space to Defense
The Convergence of Private Innovation in Two Sectors
While recently reading Ashlee Vance’s new book When the Heaven’s Went on Sale, I was struck by some of the strong parallels between the development of the New Space Economy and the more recently emerging defense technology sector.
First, if you haven’t picked up When the Heaven’s Went on Sale, you should. It’s great.
Next, I think the emergence of the two sectors relies on mavericks creating startups, VCs willingly funding those startups, but also the creation of an “innovation hub” from the government that helps foster the development of the sector.
Private Space Companies: A New Frontier of Innovation
Elon Musk and SpaceX are often (and generally speaking rightly) credited for initiating the era of private space industry. Musk pumped millions of dollars into the company after various attempts to hitch a ride to mars on government rockets failed. While SpaceX hasn’t yet made it to Mars, it has succeeded in dramatically reducing the cost of launch, offering access to many other companies (and the government as well), which has in turn allowed the creation of the New Space Economy.
Around the same time that SpaceX was making its first failed attempt to launch a Falcon-1 rocket, NASA appointed Pete Worden as the director of the Ames Research Center in Silicon Valley. From Vance’s book:
Even before the Falcon 1 flew into space, Worden had seen enough to know that a revolution had begun. He’d spent years banging on the military complex to think different and to piggyback on the glorious, constant improvements of consumer technology. Now it was obvious that the people who had designed our modern computers and software were intent on moving into aerospace and showing up the bureaucrats. Yes, the Silicon Valley types could perhaps be overconfident and cavalier at times, but they came with ambition, original thinking, and loads of money. Worden, then in his late fifties, thought that, like Musk, he could be an agent of change and play a major role in the movement as something of a go-between linking two worlds: Old Space and New Space. All he needed to do was find a place where he could combine his deep knowledge of space and the inner workings of the government with Silicon Valley’s speed and drive. As luck would have it, a job opened up at just such an idyllic location.
Worden transformed the then flagging center into a hub of innovation, creating partnerships with entrepreneurs in the valley, driving rapid change from within, dreaming big, moving fast, breaking things, and otherwise forcing change along the way.
One of Worden’s (and Ames Research Center’s) greatest contributions to the development of the New Space Economy was pooling talent, equipping them with experience and opportunities, and then turning them loose into the wild to create new companies. These companies include:
Astra
Planet Labs
Loft Orbital
Deneb Aerospace
Elysium Space
Xona Space Systems
Spire Global
Many many others, both focused on space and also companies focused closer to home (Earth)
The contributions of such an innovation center cannot be overstated and the Ames Research Center has created an outsized impact on the future of space exploration, research, colonization, and use.
Defense Startups: Disrupting the Status Quo
Defense Tech has seen a surge in activity over the past few years. I’ve covered this surge to some extent in other editions of Building our Defense, including some of the macroeconomic / geopolitical trends that have contributed to the rise of Defense Tech as well as an introduction to the “SHARPE” companies (a term sometimes used to describe Defense Tech startups that have achieved “unicorn” status or a $1 billion valuation—these companies include Shield AI, Hawkeye 360, Anduril, Rebellion Defense, Palantir (the only publicly traded SHARPE), and Epirus).
Similar to how SpaceX receives much credit for the New Space Economy, two of the SHARPEs—Palantir and Anduril—receive a lot of the credit for the momentum of the Defense Tech sector.
Palantir
Palantir Technologies is a data analytics and software company founded in 2003 by Peter Thiel, Alex Karp, Joe Lonsdale, Stephen Cohen, and Adi Tatarko. It specializes in developing software platforms for data integration, analysis, and intelligence applications. Palantir gained significant recognition for its work with the U.S. government, particularly in the defense and intelligence sectors. Here's an overview of what has made Palantir successful and its impact on the development of the defense technology sector:
Advanced Data Analytics: Palantir's software platforms, such as Palantir Gotham and Palantir Foundry, enable powerful data analysis and integration capabilities. They allow users to connect and analyze disparate data sources, uncover patterns, and gain valuable insights.
Focus on Government Contracts: Palantir initially focused on government contracts, particularly in the defense and intelligence sectors. Its software platforms played a crucial role in handling and analyzing large and complex datasets for defense agencies, aiding in intelligence gathering, threat detection, and decision-making processes.
Seamless Data Integration: Palantir's technology excels in integrating various types of data, including structured and unstructured data, from multiple sources. This capability enables users to create comprehensive and actionable intelligence by connecting dots that might not be apparent with individual data silos.
Collaborative Analysis: Palantir's platforms promote collaborative analysis by allowing multiple users to work together on the same dataset. This feature enhances information sharing, coordination, and collective decision-making among defense and intelligence agencies.
Security and Privacy Measures: Palantir emphasizes robust security and privacy protocols to protect sensitive data. Its platforms offer granular access controls, data encryption, and auditing capabilities to ensure data protection in high-security environments.
Palantir's success and innovation have influenced the development of the defense technology sector in several ways:
Catalyst for Startups: Palantir's achievements have inspired and motivated entrepreneurs and technologists to explore opportunities in the defense technology space, leading to the emergence of various defense-focused startups.
Defense Innovation: By providing advanced analytics capabilities, Palantir has contributed to the evolution of defense technology, allowing defense agencies to harness data for improved decision-making, operational efficiency, and threat detection.
Public-Private Collaboration: Palantir's collaboration with government entities has highlighted the potential for public-private partnerships in the defense sector. It has encouraged further cooperation between defense agencies and private companies to leverage technological advancements and expertise.
Market Demand: Palantir's success in delivering effective defense solutions has generated increased market demand for similar technology. This demand has spurred the growth of the defense technology sector, attracting investment and fostering innovation.
Overall, Palantir's advanced data analytics capabilities, government contracts, and focus on security have made it successful in the defense technology sector. The company's impact lies in triggering the development of the sector, inspiring startups, fostering collaboration, and driving innovation in defense analytics and intelligence.
Anduril
Anduril Industries is a defense technology company founded in 2017 by Palmer Luckey, who is also known for co-founding Oculus VR. Anduril focuses on developing advanced technologies to enhance national security and defense capabilities. Here's an overview of what has made Anduril successful and its impact on triggering the development of the defense technology sector:
Integrated Defense Solutions: Anduril offers a range of integrated defense solutions that combine hardware, software, and artificial intelligence (AI) technologies. Their products include autonomous systems, perimeter security, and surveillance platforms designed to enhance situational awareness and defense capabilities.
Border and Perimeter Security: Anduril's technologies have been particularly effective in border and perimeter security applications. Their systems use sensors, AI, and machine learning algorithms to detect and track potential threats, providing real-time information to operators and decision-makers.
Scalable and Modular Approach: Anduril's products are designed to be scalable and modular, allowing for flexible deployment and customization based on specific defense requirements. This approach enables rapid deployment and adaptability to evolving defense scenarios.
Focus on User-Friendly Interfaces: Anduril emphasizes user-friendly interfaces and intuitive command and control systems. Their goal is to simplify complex defense technologies and make them accessible to a broader range of operators and users.
Emphasis on Collaboration: Anduril promotes collaboration and interoperability among different defense systems and agencies. Their technology platforms facilitate information sharing, coordination, and joint operations between various defense stakeholders.
Public-Private Partnerships: Anduril has actively pursued partnerships and collaborations with government entities, defense agencies, and other defense technology companies. These partnerships have allowed Anduril to leverage expertise, access additional resources, and align their technology development with defense requirements.
Impact on Defense Technology Sector: Anduril's success and innovation have had several impacts on the development of the defense technology sector:
Technological Advancement: Anduril's cutting-edge technologies, such as autonomous systems and AI-driven surveillance, have spurred advancements in the defense technology sector. Their focus on scalable and modular solutions has influenced the development of adaptable defense technologies.
Addressing Emerging Threats: Anduril's solutions have helped address emerging security challenges, such as border security and surveillance in complex operational environments. Their impact lies in providing effective tools for defense agencies to tackle evolving threats and enhance situational awareness.
Entrepreneurial Inspiration: Anduril's success, along with the profile of its founder, Palmer Luckey, has inspired other entrepreneurs and innovators to explore opportunities in the defense technology space. Their achievements have contributed to the growth of startups and increased interest in defense innovation.
Industry Competition: Anduril's entrance into the defense technology sector has brought competition and innovation to the market. Their disruptive approach has challenged traditional defense contractors and encouraged further investment and R&D efforts in the sector.
Overall, Anduril's integrated defense solutions, emphasis on user-friendly interfaces, collaboration with government entities, and focus on addressing emerging threats have made them successful in the defense technology sector. Their impact lies in triggering technological advancements, inspiring entrepreneurial endeavors, fostering competition, and addressing critical defense challenges.
External Factors
Of course, the presence of a company is insufficient to change the course of a sector’s growth alone. Just as other factors have contributed to the growth of the New Space Economy (improved technologies, renewed ‘great power competition,’ etc), so too have external factors driven the growth in demand for defense startups. I’ve largely covered those factors in previous post describing a series of increasingly frequent inflection points. These inflection points have largely served as a wake-up call in the halls of power and across industry that we need to be investing in defense, which has led to the opening of spigots controlling the flow of money.
The Rise of Innovation Hubs
I highlighted the impact of Ames Research Center as an innovation hub on the growth of the New Space Economy. Something similar has happened in Defense.
In 2015, the Defense Innovation Unit (DIU) opened. The following year, the National Security Innovation Network stood up, under the DIU. In quick succession, each service created a similar innovation arm: AFWERX, NavalX, Army Applications Lab, etc.
These innovation hubs have been critical in fostering innovation, collaboration, and technology adoption within the military. They create pathways for startups to engage with the defense sector, helping startups access resources, gain insights, and deliver impactful solutions to address national security challenges. The hubs create opportunities for startups to collaborate with military stakeholders, participate in pilot programs, and access funding and contracting opportunities, while also providing guidance, mentorship, and support to those startups that are developing and refining technologies and products for defense. Finally, they serve as bridges between the startup community and the military, helping startups understand defense needs, requirements, and processes.
Innovation Hubs: Catalysts for Transformation
Innovation hubs have had a significant impact on both the space and defense sectors, driving technological advancements, fostering collaboration, and promoting the integration of commercial innovation into government operations. Here's a parallel between their impacts:
1. Fostering Innovation and Collaboration: In the Space Sector, inovation hubs, such as NASA's Ames Research Center, have provided a platform for collaboration between government agencies, private space companies, and academia. They have facilitated the exchange of ideas, resources, and expertise, leading to the development of groundbreaking technologies and missions. Similarly, innovation hubs like DIU, AFWERX, Army Applications Lab, and NavalX have fostered collaboration between the military, startups, industry, and academia. They serve as catalysts for innovative solutions by providing a collaborative environment where defense stakeholders and non-traditional contractors can work together to address defense challenges.
2. Integration of Commercial Innovation: Innovation hubs in the space sector, alongside the rise of private space companies like SpaceX and Planet Labs, have accelerated the integration of commercial innovation into space missions. This integration has led to more cost-effective, efficient, and scalable space technologies and services. In the defense sector, innovation hubs have facilitated the integration of commercial technologies and approaches into military operations. Startups and non-traditional defense contractors bring fresh perspectives and cutting-edge technologies, enabling the military to leverage advancements from outside the traditional defense industrial base.
3. Rapid Prototyping and Iterative Development: Innovation hubs in the space sector have supported rapid prototyping and iterative development processes. They enable quick testing, evaluation, and refinement of space technologies, reducing development timelines and accelerating the deployment of innovative solutions. Similarly, defense innovation hubs have embraced rapid prototyping and iterative development methodologies. They provide the infrastructure, resources, and expertise needed for startups and entrepreneurs to iterate on their solutions, leading to faster technology development and fielding.
4. Technology Transfer and Dual-Use Applications: Innovation hubs have facilitated technology transfer between space agencies and commercial entities. This exchange has not only fueled advancements in the space sector but has also resulted in dual-use technologies with applications in other industries such as telecommunications, Earth observation, and remote sensing. In the defense sector, innovation hubs have enabled technology transfer and the development of dual-use technologies. Startups and innovators working with defense organizations often find their solutions applicable to a wide range of sectors, such as cybersecurity, artificial intelligence, and advanced materials.
Overall, innovation hubs have played parallel roles in the space and defense sectors by fostering innovation, integrating commercial technologies, supporting rapid prototyping, and enabling technology transfer. These hubs act as critical bridges between government agencies, startups, industry, and academia, promoting collaboration and accelerating the development and adoption of cutting-edge technologies in both sectors.
These innovation hubs have been critical to the development of both sectors. The Space Tech sector might be a bit more mature than the Defense Tech, but both have benefitted greatly from these hubs, resulting in increased collaboration between government and private industry allowing for rapid advancement of technologies.
Lessons Learned and Shared Challenges
The rise of private space companies offers valuable lessons that are directly applicable to the defense sector. Here are some lessons learned:
1. Embrace Commercial Innovation: The defense sector can benefit from embracing commercial innovation and leveraging advancements made by non-traditional defense contractors. Similar to how private space companies have revolutionized the space industry with innovative technologies and approaches, the defense sector can actively seek out and integrate commercial solutions to enhance its capabilities.
2. Foster Public-Private Partnerships: Private space companies have successfully formed partnerships with government agencies, enabling collaboration and resource sharing. The defense sector can follow this example by fostering strong public-private partnerships, engaging startups, and leveraging their expertise and technologies to drive innovation and address defense challenges more efficiently.
3. Encourage Rapid Prototyping and Iterative Development: Private space companies emphasize rapid prototyping and iterative development to quickly test and refine their technologies. The defense sector can adopt this approach to accelerate technology development, shorten acquisition timelines, and iterate on solutions based on real-world feedback and operational needs.
4. Prioritize Cost-Effectiveness and Efficiency: Private space companies have demonstrated the importance of cost-effectiveness and efficiency in their operations. The defense sector can learn from their practices and strive to adopt innovative technologies and streamlined processes that maximize operational efficiency while minimizing costs.
5. Embrace New Business Models and Acquisition Strategies: The success of private space companies has often been driven by their adoption of new business models and acquisition strategies. Defense organizations can explore alternative acquisition methods, such as agile acquisition approaches and flexible contracting models, to foster innovation, attract startups, and streamline the procurement process.
6. Cultivate Entrepreneurial Culture and Talent: Private space companies have thrived by cultivating an entrepreneurial culture and attracting top talent from diverse backgrounds. The defense sector can prioritize fostering an environment that encourages innovation, risk-taking, and entrepreneurship. It can also develop initiatives to attract and retain talented individuals with diverse skill sets and experiences.
7. Promote Open Data Sharing and Collaboration: Private space companies have embraced open data sharing and collaboration, contributing to a more interconnected and collaborative space industry. The defense sector can adopt similar practices, promoting the sharing of non-sensitive data, best practices, and lessons learned to foster innovation and drive technological advancements.
8. Emphasize Agility and Adaptability: Private space companies have shown great agility and adaptability in responding to changing market dynamics and customer needs. The defense sector can learn to be more agile and adaptive, enabling faster decision-making, flexible procurement processes, and the ability to rapidly adopt emerging technologies and address evolving threats.
By incorporating these lessons learned from the rise of private space companies, the defense sector can harness the power of commercial innovation, foster collaboration, drive efficiency, and enhance its technological capabilities to meet evolving defense requirements effectively.
Conclusion
There are a lot of parallels to be drawn between the rise of the New Space Economy and the Defense Technology sector. Both have benefited tremendously from the creation of innovation hubs that increase the connectivity between government and private industry. These innovation hubs have accelerated knowledge and technology transfers between both sides and helped train cohorts of entrepreneurs that are changing both industries.
I suspect that we’ll see continued momentum in both space and defense over the next ten years. Hopefully, we’ll also see cross-pollination of ideas and technologies resulting in more synergies and collaboration between the two sectors. Space and Defense have always been closely tied, and leaders, founders, and operators in both sectors should strive to support one another in the future.
To that end, if you’re building in either Space or Defense, I’d love to hear from you! Please reach out, and of course,
Keep building!
Andrew