Rebooting the Arsenal of Democracy and Fake CEOs

Rebooting the arsenal of democracy

AMERICA! LAND OF THE FREE! Only joking. Before people go “Who is this mad Republican/conservative war-mongering writer?” The story below is way cooler and more mindblowing than I ever knew and contains mentions of Oppenheimer, Jon von Neuman, the U2 spy plane, and Lord of the Rings.

What happened?

War.

In the last three years, we have witnessed the first major war on European soil since Hitler, and on October 7th a terrorist attack that threatened peace across the whole Middle East region.

The problem is that we weren’t and still aren’t ready. The US has already run out of 155mm rounds having sent over 1 million of them to Ukraine and we are using multi-million dollar missiles to shoot down Houthi drones in the Red Sea. The US Department of Defense, in every war games simulation they have run, has the US losing to China.

How did we get here? What does the future look like?

How did we get here?

We live in an era where most of the advancements in technology are coming from big tech companies in Silicon Valley. But it wasn’t always like this.

In 1960, the American Department of Defence was responsible for 36% of the world’s research and development. From 1945 to 1970, the US government was one of the greatest sources of innovation globally.

Oppenheimer pioneered the Manhattan Project, which took only 3 years and in doing so invented the MRI machine (as well as the small ability to harness atomic energy). NASA put a man on the moon in under a decade and the RAND corporation valued Jon von Neuman’s ideas so much that they paid him “to scribble down his morning thoughts whilst he was shaving”.

The US government could fund new projects, attract world-class talent, and rapidly get products to market, as did their contractors. Companies like Lockheed Martin had an off-shoot called Skunkworks where a team of “Skunks” would test, iterate, and launch new defense projects.

Skunkworks built America’s first fighter jet in 143 days. People struggle to plan weddings over a year but Skunkworks went from conception to working prototype in 143 days. This is the team also behind the U2 spy plane, the Blackbird, and the F-117 Nighthawk.

The partnership between the government and private companies was a force of nature.

However, in the late 50s, the government realised they were spending too much and so introduced new legislation that completely flipped the incentives of an entire industry. Cost-plus contracting (the government pays for all your costs, and then you earn a fixed % of profits) means companies compete for big cumbersome projects. Profits were capped and consolidation was inevitable.

In 1994, Ben Rich, a Skunkworks pioneer, wrote “In my forty years at Lockheed, I worked on twenty-seven different airplanes. Today’s young engineer will be lucky to build even one.”

The fall from grace was swift. In 1990, the government had 50+ defense contractors. Now, 80% of defense spending goes to 5, each of which spends less than 3% of its revenue on R&D.

What does the future look like?

We are left with a spider web of laws from the 1950s that are meant to incentivise the construction of innovative modern-day weaponry - but it has done the exact opposite. This has left us with more computing power in our phones than on the battlefield, and more AI tools on Instagram than on Aircraft carriers.

BUT

A new era of defense companies is being built, pioneered by Anduril Industries. Anduril works in a completely different way from other defense contractors.

It is a software-first company that builds products like a Silicon Valley start-up. It funds its projects and sells them off the shelf to governments. Unlike the current era of companies, if it fails or doesn’t work, they cease the project and move on. They test and iterate by deploying hardware and software to soldiers on the ground.

Anduril is Skunkworks 2.0: a defense company run more like Snapchat than Boeing.

Why does this matter?

There is an emerging era of threats that our countries don’t seem prepared to face. These are a set of problems that as a society we like to avoid thinking about, especially in Europe. We see tanks, ships, and guns as “government” problems and hope there is some big stash of James Bond gadgets stored away for a rainy day. But there isn’t.

Innovation is driven by a competitive marketplace of ideas such that it will be the entrepreneur of today who needs to conceptualise, build, and launch the weaponry of tomorrow, however uncomfortable it makes us feel.

We need to expand the area of innovation beyond mediation apps and social media and construct an entirely new landscape. One where we feel confident with the tools to protect ourselves and defend our values if that day comes.

The CEO who never existed

It’s January 5th and 2024 is looking like it’s already shaping up to be a wild year. First on the docket: The CEO of a $1.3 hedge fund who literally does not exist.

What happened?

The Guardian Australia released an investigative journalist piece that shows the CEO of a fund called HyperVerse was a giant ploy to trick investors to give the fund credibility.

The HyperVerse Fund burst onto the scene with promises of astronomical returns, innovative blockchain solutions, and a visionary leader at the helm. However, as the saying goes, "If it sounds too good to be true, it probably is." In the case of HyperVerse, it appears that this old adage holds more truth than many would like to admit.

At the heart of the HyperVerse Fund controversy is the revelation that its CEO a guy by the name of Steven Reece Lewis, does not exist. When he came on as CEO a presentation was given about his incredible background: studying at the University of Leeds and the University of Oxford, founding a company and selling it to Adobe (another unrealised Adobe M&A after our previous newsletter), working for Goldman Sachs and other impressive achievements. 

They did everything they could to make the fund seem credible, getting video endorsements from celebrities Chuck Norris, Lance Bass (c-list as best) and most surprisingly Steve Wozniack (the f*cking cofounder of Apple!!!). Now what Steve Wozniack is doing selling ‘cameos’ on the internet is certainly a different question, but all this fakery worked and tens of thousands of people signed up to burn, sorry I mean, invest their hard-earned money. 

Why does this matter?

On the face of it, it’s quite funny that a fake human was running this hedge fund. However, I think under the surface there is a more sinister and startling realisation. We’ve spoken in the past about AI girlfriends/boyfriends and again it’s quite funny on the surface (read that newsletter here). But the more fundamental question of identity comes to light; how can anyone prove who they are or who someone else is?

If someone creates an artificial clone of you and opens bank accounts, creates Facebook profiles, impersonates you on Zoom calls, or speaks to your doctor you can see how it gets scary very quickly.

It won’t be long until seeing someone in person with your own eyes is the only way to truly know you exist - the future is bright in many ways but also a little scary.

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