Article Summary:

Anduril, a technology defense company founded by an early creator of virtual reality, is an illustrative example of the extent to which Silicon Valley is assimilating into the political and defense establishment in the United States.

Anduril builds swarm drones, virtual border security systems and is part of a group of companies deploying private sector led expertise in A.I. into US defence department programs such as 'Project Maven.'

Founded in 2017, Anduril is projected to be worth over $4 billion by the end of 2021. The sourced article below provides background on the founding of Anduril, it's relationship with Peter Thiel's Palantir and the wider contemporary influence of the 'paypal mafia.' It examines the braoder trends shaping private-public sector collaboration on the US Third Offset strategy.

Facts & Figures: Assimilating Silicon Valley into Tech Industry

Within the United States, an asymmetry in R&D spending and access to talent is leading to an increasingly deep and sophisticated partnership between global corporations and the Department of Defense (DOD).

The military industrial complex is merging with the private sector in what could be described as an “innovation production complex.” In 2019 the National Defense Authorization Act (NDAA) increased funding for AI defense technologies from $16 million to $92.1 million, a 589% increase[1]. In September of 2018, DARPA announced a $2 billion campaign over five years to advance state of the art research in AI[2]. The ‘American AI Initiative’ signed by President Trump in February 2019 elevated the development of AI as a national security priority[3]. In short, a growing proportion of state capital is being redirected to a non-state affiliated innovation complex. With reference to the military in particular the majority of these efforts appear to have a single pre-eminent focal point in mind: battlefield autonomy, powered and made possible by advances in AI.

In short, a growing proportion of state capital is being redirected to a non-state affiliated innovation complex.

Often cited examples of this collaboration include the Pentagon’s Algorithmic Warfare Cross-Functional Team, or ‘Project Maven’, designed to enhance DOD integration of big data and machine learning practices through collaboration with companies such as Google[4]. Microsoft was awarded the Joint Enterprise Defense Infrastructure (JEDI) with the US government after providing Azure cloud services to the Immigration and Customs Enforcement Agency (ICE)[5]. Amazon, which provides ‘Rekognition’ face recognition technology to the US government, is currently suing the DOD over the tendering process after failing to be awarded the $10 billion JEDI contract[6].

A complex synergistic relationship in which the US military and Silicon Valley learn from each other has formed. After initiatives such as Project Maven received significant media attention in the United States and around the world, Leung observes that corporations that are less visible and less sensitive to public opinion will facilitate state access to commercial technology[7]. Examples include Booz Allen Hamilton, CISCO, Raytehon and more recently Anduril[8].

Andril: Swarm Drones & AI Border Security

Anduril’s founder, Palmer Luckey, played an instrumental role in developing and popularising the technology found in commercial virtual reality kits, selling the technology to Facebook for $2.3 billion in March 2014.[9]

Luckey left Facebook in 2017, to found Anduril with ex-members of the Oculus team and senior executives of Palantir, a US software company founded by Peter Thiel, himself the former co-founder of Paypal[10].

Luckey left Facebook in 2017, to found Anduril with ex-members of the Oculus team and senior executives of Palantir, a US software company founded by Peter Thiel, himself the former co-founder of Paypal

Palantir began providing advanced data analytics to US and UK Intelligence Communities, and other federal agencies, as early as 2003, and went public on the New York Stock exchange on 20th September 2020[11]. Thiel remains notable within Silicon Valley as a member of what would be dubbed the “pay-pal mafia”; a cohort of entrepreneurs that includes Tesla and SpaceX CEO Elon Musk, that would become legendary for their commercial success and influence within the US technology industry relative to their size in numbers[12]. Both Thiel, Luckey and Musk built bridges with the Republican Party in a sector that otherwise donates heavily to the Democratic Party[13].

In July of 2018 a venture capital (VC) fund founded by Thiel led a $41 million investment round in Anduril industries[14]. In July of 2020, a further $200 million was invested in Anduril by VC firm Andreessen Horowitz, leading to a market valuation of about $1 billion at that time[15]. Less than one year later, by June of 2021, a conservative valuation stands at $4 billion. A combination of access to strategic technologies, capital and collaboration with the security sector explain the exponential growth of Anduril - a company which at the time of writing, is less than five years old.

A combination of access to strategic technologies, capital and collaboration with the security sector explain the exponential growth of Anduril - a company which at the time of writing, is less than five years old.

In September a story in WIRED covered how “a swarm of Ghost 4s, controlled by a single person on the ground, can perform reconnaissance missions like searching for enemy weapons or soldiers" [16] Outlining a “prototype military drone stuffed with artificial intelligence” the article quotes Lucky as saying that the drones “can carry a range of payloads, including systems capable of jamming enemy communications or an infrared laser to direct weapons at a target,” although the drones have not yet been fitted with weapons [17] Noting that the Pentagon is “keen to court tech firms and talent” the article concludes with a quotation from Luckey which states “We’re usually building things that the government wants, but does not necessarily believe can be built” and that “If we believe something can exist, we just make it as fast as we can[18]."

The anecdote provides an insight into the “build it and they will come” mantra of Silicon Valley. It also implies a laissez-faire free market approach, wherein the US government draws selectively from the most promising private sector technologies. A cursory analysis of the investor’s in Anduril, suggests a far more substantive relationship is taking place.

Pentagon Player One?

In July of 2019 the Washington Post reported that US Customs and Border Protection (CBP) had awarded Anduril a contract to build a five year “virtual border wall[19]” A earlier 2018 article in WIRED described the border wall technology as “a digital wall that is not a barrier so much as a web of all-seeing eyes, with intelligence to know what it sees,” profiling Anduril as “a venture-capital-infused outsider challenging the likes of Lockheed Martin and Northrop Grumman with their multibillion-dollar government contracts and strong establishment ties[20].”

Looking back on analysis from 2018, the depiction of Anduril as an notable outlier-upstart in a massive military industrial complex seemed accurate. In retrospect, it may have been unclear the extent to which commercially driven emerging technologies were becoming of overwhelming critical importance to the US Security Sector.

Looking back on analysis from 2018, the depiction of Anduril as an notable outlier-upstart in a massive military industrial complex seemed accurate. In retrospect, it may have been unclear the extent to which commercially driven emerging technologies were becoming of overwhelming critical importance to the US Security Sector. In 2019 the former chief of staff for Peter Theil would become Chief Technology Officer of the United States, and Deputy Assistant to the President at the White House Office of Science and Technology Policy[21].

Between July 2020 - Jan 2021, Michael Kratsios - an individual with no former government experience - was the fourth most senior individual at the Pentagon, and controls a budget of $60 billion as Acting Undersecretary of Defense for Research and Engineering[22]. A report observes that the under secretary called for “fewer regulations on tech” and “closer collaboration between Silicon Valley and the Department of Defense,” at the same time “testing 5G on military bases” and “leap-frogging the permits and partnerships that private companies like Verizon and AT&T have to navigate[23].”

Between July 2020 - Jan 2021, Michael Kratsios - an individual with no former government experience - was the fourth most senior individual at the Pentagon, and controls a budget of $60 billion as Acting Undersecretary of Defense for Research and Engineering

The rise of Anduril and the promotion of Kratsios did not occur in a vacuum. As early as 2017, an article in Politico noted that “at least three Pentagon officials close to Mattis, including his deputy chief of staff and a longtime confidante, either worked, lobbied or consulted for Palantir Technologies[24].”

As previously noted Elon Musk, a close former colleague of Thiel at Paypal, is today at the epicenter of US research and development in Space, through SpaceX, and is also the CEO of Tesla, which currently dominates the US electrical car market, and is competing globally in the race for automated transport and sustainable energy solutions.

United States competition in Space and in renewable energy is no longer being led by government programs, but by corporations and a Silicon Valley entrepreneur.

This is article is part of a wider research paper entitled "The Tony Stark Problem: Battlefield Autonomy and the Civilian Innovation Complex", by J.M. Lillywhite.

Bibliography

1. Ding, 2018 in Leung, J, 2019, p. 249 or see Schmidt, E. (2017). Eric Schmidt Keynote Address at the Center for a New American Security Artificial Intelligence and Global Security Summit. Retrieved from Center for a New American Security in Ibid, p. 276 ↩︎
2. Ibid ↩︎
3. Ibid, pp. 276-277 ↩︎
4. Ibid, p. 279 ↩︎
5. Leung, J, 2019, p. 289 ↩︎
6. Lyons, K, The Verge, Sept 2020 ↩︎
7. Ibid ↩︎
8. Ibid ↩︎
9. Benedictus, L., The Guardian, 2014 ↩︎
10. Levy, S., Bloomberg, 2018 ↩︎
11. Gregg, A & MacMillan, D., “Palantir goes public at $10 per share, ending 16 years of privately held secrecy.” Washington Post, 2020 ↩︎
12. Parrish, C., The Telegraph, 2014 ↩︎
13. Schleifer, T., in Recode, 2019 also see Nguyen, T., Politico, 2020 ↩︎
14. Mueller, M., LA Business Journal, July 2018 ↩︎
15. Levy, S., Bloomberg, 2018 ↩︎
16. Knight, W., Wired, 2020 ↩︎
17. Ibid ↩︎
18. Ibid ↩︎
19. Nick Miroff, Washington Post, 2020 ↩︎
20. Levy, S, WIRED, 2018 ↩︎
21. Gershgorn, D., OneZero, 2019 ↩︎
22. Ibid ↩︎
23. Ibid ↩︎
24. Klimas, J., and Bender, B, Politico, 2017 ↩︎