I recently sat down with Ethan Thornton, the 22-year-old defense tech prodigy and CEO of Mach Industries, to talk about an existential issue: how the US can stop China from taking over Taiwan—and, more broadly, the critical role of the US government in improving its weapons procurement system.
“Ethan Thornton” is not yet a household name, but in VC and defense tech circles he’s known as the next phenomenon in defense tech. He dropped out of MIT as a freshman to start Mach Industries on the conviction that America needed to innovate much more rapidly in unmanned systems. He quickly raised $85 million (!), and Mach has in just a few years (!!!) developed a fascinating suite of weapons, built a factory, and signed contracts with the DOD, etc.
I’ve gotten to know Ethan well over the last year, and he reminds me a lot of Palmer Luckey—whom I am also a huge fan of—in his combination of brilliance, wide-ranging knowledge, and patriotism. (Though they have totally different personalities.)
I decided to interview Ethan on my podcast, Power Hour—which I record only when I think I have a supremely important person to interview—because I think he has absolutely vital insights about the threat of a Chinese invasion of Taiwan and how to deter it.
Even though I am not a national security expert, I do consider myself an expert at identifying good, sincere thinkers, and I want those who follow my work (especially political leaders) to be aware of Ethan’s recommendations on how to deter China.
To make the ideas we cover more shareable, I’ve written a “Summary for Policymakers” and followed it with a transcript of the interview.
Summary for policymakers
Here are my notes from several conversations I’ve had with Ethan, including the interview shared here. I am not a military expert, so I cannot share these ideas with the same confidence I share my own analyses with. But I find them compelling and encourage our government and defense industry to engage with them.
The US would likely lose a military conflict with China in Taiwan and other crucial areas in the Pacific—even though we spend far more money than China does.
We face a vastly underrated economic threat (not to mention human rights) if we cannot deter China from seizing Taiwan.
China has published plans to have military readiness for a Taiwan invasion by 2027.
We depend on Taiwan for almost all high-performance semi-conductors, which are at the base of all modern industry.
Taiwan had made clear as a deterrent that it’s prepared to destroy its semiconductor facilities in the event of an invasion, but China’s increasing semiconductor manufacturing makes the threat worse for the US than China.
It’s now an open secret that the US loses most or all of its wargames in a conflict with China over Taiwan, Japan, or South Korea.
How our Navy loses to China: If we can get our ships to the Pacific, we’ll quickly run out of ammo, but the more likely scenario is that our ships—including aircraft carriers—mostly don’t get there thanks to unmanned systems and hypersonics.
How our Air Force loses to China: The Air Force has limited planes and even more limited munitions, but the increasingly bigger problem is the planes won’t take off thanks to China’s hypersonic missiles and other unmanned systems that can destroy available runways in the Pacific.
How our Army loses to China: The Army is still planning to rely on tanks, rifles, and the fighting styles of the 2010s, even though Ukraine has shown ground wars depend on drones and other mobile, decentralized, difficult-to-target assets. Example: Ukraine is actually refusing to bring gifted M1 Abrams tanks to the front line as they would be quickly destroyed by drones.
The US’s failure to have an unequivocally superior military to China is not a funding issue, given that the US spends some 3 times on defense what China does. It’s an issue of how money is spent.
US weapons procurement has been fundamentally stagnant for 30 years while war has rapidly evolved based on unmanned systems.
The US’s extreme military vulnerability to China is due to us mostly spending money on the wrong things given how war has evolved. We’re still basically procuring the same weapons we were 30 years ago.
The most important evolution in warfighting is unmanned systems, which are powerful but cheap and thus scalable and decentralizable.
Large numbers of unmanned weapons distributed widely make large, expensive, centralized assets increasingly vulnerable (non-survivable).
Large numbers of unmanned weapons distributed widely are hard to counter since just some of them need to survive in order to inflict huge damage.
Yet our trillion-dollar defense budget is largely spent on manned systems that are very unlikely to survive a real conflict.
Even insofar as the US is procuring unmanned systems, its rate of evolution is way too slow. Unmanned systems evolve like consumer electronics, yet we have long procurement cycles (more than 5 times slower than China’s).
To address the China threat we need to take advantage of our innovativeness to create stockpile of superior, strategic unmanned weapons systems that will deter them.
We cannot win a protracted war against China, given their superiority in manufacturing, and we don’t want such a war. But we can and want to deter them from attacking Taiwan, which controls the high-performance semiconductors our economy depends on.
Our big advantage is over China that we are better at innovating than China due to our political system and culture. They can make things at much larger scales, but we are much better at inventing new things.
The US’s superior innovation ability means that we can make superior weapons with huge cost-performance asymmetry compared to China’s.
These weapons need to be Strategic: can cripple China’s ability to wage war. (Ethan elaborates)
Given the time it takes to make weapons systems and the speed at which wars now start and end, we need to create a large stockpile of unmanned weapons systems—think tends of thousands—to deter China. If government procures weapons using standards of cost-effectiveness this can be done very cheaply.
Government weapons spending must move as quickly as possible toward the standards of cost-effectiveness, scalability, and survivability.
Big picture, US weapons spending and procurement needs explicit standards to decide what to invest in.
Fundamentally the standard of weapons procurement must be cost-effectiveness: How much does it cost to have a given amount of effect in the expected environment?
Part of cost-effectiveness is scalability: We need to be able to produce sufficient units now and in an ongoing conflict.
Part of cost-effectiveness is survivability: Our weapons systems need to be able to by pass or handle enemy interference, which most legacy systems can’t.
If government can start allocating even $10 billion by these standards we can afford to build the stockpile superior unmanned weapons systems that will deter China from invading Taiwan.
Transcript
Outline
Summary for policymakers
Why you should listen to Ethan Thornton
The US is set to lose a military conflict with China
Warfare is fundamentally changing to unmanned warfare
Our procurement system is not set up for unmanned warfare
US assets can gain survivability through cost asymmetry
The need to stockpile weapons
The proper standards for military procurement of weapons systems
The need to be able to test weapons much faster
A roadmap for improving government procurement of weapons systems
The need to take the China threat very seriously
We are all on the same team
Why you should listen to Ethan Thornton
Alex Epstein:
Welcome to Power Hour, I’m Alex Epstein. I’ll explain the factory environment in a second. Those who are longtime listeners or viewers know that I do this show incredibly rarely. I was looking through past episodes and in the last three years, I’ve had all of two interviews.
One was with Peter Thiel over some important disagreements I thought we had about energy as well as agreements. And then the other was with Chip Roy and Josh Brecheen, who were in my view, the two representatives most responsible for cutting tens of billions of dollars of solar and wind subsidies.
So, very high bar for this show to do these interviews. And today, we definitely meet it. I’m going to be talking to one of the people I think is right now one of the most important people in the country, literally, and about one of the most important topics, which is the security of our country.
The guest is Ethan Thornton of Mach Industries. Ethan is one of the entrepreneurs in the emerging defense tech space. This is a space that was sort of brought to my attention by another person I like a lot, Palmer Luckey, another actually Orange County person. And Palmer was one of the first to really make defense tech cool. Now it’s cool again, which is good. And a lot of smart people are going to it.
And another incredibly smart person is Ethan. Ethan, you probably haven’t heard of him, but if you have, he’s known as one of these prodigies. He dropped out of MIT very quickly. He quickly raised $85 million, not the kind of normal thing that you do as a young person. And at 22, he’s already developing weapons, making deals with the U.S. military, impressing a lot of people, et cetera, et cetera.
Now, we could do a whole podcast or many podcasts with Ethan focusing on him as an entrepreneur. And I think he’s an amazing entrepreneur. We’ve become friends. I love discussing entrepreneurial stuff with him. But to me, the most important thing that I want to share in terms of Ethan is I think he just has really, really important and high conviction views about what’s going wrong with our national defense and what policies can fix it.
And he and I have been having a series of discussions recently and I’ve been trying to just understand defense as well as I possibly can. And his ideas—of course, I’m not an expert in this space—but I’m a pretty good judge of people and ideas, and his ideas make a ton of sense to me. And I just feel like it’s crucial for people who follow my work, including—fortunately, lots and lots of politicians are aware of my work—I really wanted them to get exposed to Ethan.
We’re in Mach Industries, that’s his company, which he’s the founder and CEO of. We’re in the factory. I thought that would be appropriate. Anyway, without further ado, Ethan Thornton, welcome to Power Hour.
Ethan Thornton:
Thanks for having me on. I’m excited to be here.
Alex Epstein:
All right. We’re going to dive deep into policy ideas, but let’s just give a little bit of background on you. And in particular, I want to understand and I want the listeners to understand, why is it that you dropped out of school?
Because, you became one of these Thiel Fellows, that’s actually how we met at one of Peter Thiel’s Christmas parties where I think they invite the Thiel Fellows every year. These are the young people who at least take off some of college and I think they get $50,000 a year for two years and a lot of really interesting people, but I don’t think it was your plan to just be a very, very young entrepreneur.
So I’m very curious for people to know about that journey, because I think it captures the sense of urgency you have right now.
Ethan Thornton:
Yeah, absolutely. I mean, I never actually really imagined myself starting a company. In high school though, I got pretty obsessed with how quickly defense is changing, how quickly this changeover to unmanned systems is occurring. I went to MIT to study aerospace engineering and I thought the trend would take a while to play out.
As I was going into college, the war in Ukraine started, and it became very immediately clear that this is not a trend that will take decades to play out. This is a trend that’s happening right now actively in front of us. And I think it’s probably the single biggest handover that’s happened in military history: this change from weapons that have to be piloted to weapons that can pilot themselves.
The act of removing a pilot from these systems and being able to put in extremely low-cost pieces of silicon that can go and control these vehicles radically changes the way wars are fought. Changes offensive systems, changes defensive systems, completely changes the paradigm.
And these are always very, very important times for a country. Anytime a changeover like this happens, it’s the countries that can move quickly to develop and field this technology that maintain a military edge. And when I was at MIT, I pretty immediately got concerned that America is not doing that quick enough.
Alex Epstein:
You’re a freshman at this point, right?
Ethan Thornton:
I was. I was. I actually dropped out during my first semester, which again, I had really no desire to do, certainly no plan to do, but we have to get this right as a country. We cannot afford to get behind the curve on this changeover in military technology. And so I think as many people as possible should be working on these problems.
At the time that I dropped out, we really had no funding, no team. It was pretty slim odds, but I figured the upside of—so, my track, I was on Air Force ROTC Scholarship. I wanted to go serve, but I figured the upside if this goes well, which at that time was a pretty narrow chance, it’s a big thing to go and try to do—
Alex Epstein:
Did you have some odds in your mind?
Ethan Thornton:
I figured it was one in a couple hundred thousand that it worked.
Alex Epstein:
One in a couple hundred thousand!
Ethan Thornton:
Yeah, but you’d rather take the risk and make the jump and know that you’ve done everything you can to fix what needs to be fixed and build what needs to be built for the US. And so that was about two and a half years ago.
Since then, things have picked up a lot. We have a few hundred employees now. Standing in the factory, we have a few systems that are pretty late stage in development, contracts with the DOD. I think the odds are certainly a lot better than they were then, but there’s still so much work to do as a country.
It’s not just going to be us as a company. It’s going to take everyone working incredibly, incredibly hard to fix the problems that exist. And then more importantly, even if there weren’t problems, to make sure that in this massive changeover that’s happening right now, that the US wins in this era of unmanned warfare.
The US is set to lose a military conflict with China
Alex Epstein:
Gotcha. I’m just looking at my notes about what we’ve discussed. And the first thing I want to bring up, which I think will help put this unmanned thing in context, is the idea that as of now, the US would very likely lose a military conflict with China as far as in crucial areas in the Pacific like Taiwan, Japan, South Korea, and this is despite the fact that we spend way more money than we do. Break that down for me.
Ethan Thornton:
Yeah, absolutely. The thing is China has specifically architected their military to combat US influence in the region. At the same time that they’ve made it very, very clear that they have intentions to increase their influence in the region, likely to include an invasion of some sort of Taiwan.
And so I think this is the singular thing that we should spend a lot of time thinking about is the fact that we live in a chipspace economy and Taiwan overwhelmingly produces the world’s advanced semiconductors. China, as many of us know, has set a goal for military readiness to invade Taiwan by 2027. A world—
Alex Epstein:
So, 11 months and a few weeks.
Ethan Thornton:
Yes. A world in which that happens is terrifying. I mean, it’s equivalent to the Soviet Union taking 95% of the world’s oil in 1965. We can’t allow that to happen as a country.
And we’ve worked really hard to try and fix this problem. You can track the CHIPS Act, you can track the amount we’ve invested into advanced sub five nanometer semiconductor technologies. The thing is though, we’re just not getting there, specifically not getting there on a 2027 timeline.
And so as I see it, if the US wants to maintain its global standing, we have to have access to semiconductors. A world in which the US doesn’t have access to advanced semiconductors is in a world in which we can’t, I mean, we can’t run our economy. It goes into everything we use.
And so I think we need to be arming our allies. I think we need to be taking this very, very serious. And we can break down how we got into this position—
Alex Epstein:
Well, I want to understand the position better. Let’s just start off with, say, if it’s a Pacific conflict, we’re going to need a Navy. I mean, one thing I’ve heard, and there’s been various reports of this in different ways, is that when we have war games in these situations, we lose very, very consistently in the case of a Taiwan conflict or that kind of thing. What happens to the Navy?
Ethan Thornton:
Yeah, absolutely. I’d say the biggest problem is—there are a few big problems. One is just production scale. China specifically from a naval context is just outproducing the US right now. It’s kind of a tired statistic at this point, but it was released about a year ago. They outproduced us on shipping tonnage by 232 times. That’s the first thing. Second thing—
Alex Epstein:
What’s the scope of that? What does that apply to?
Ethan Thornton:
If the U.S. can build one ton of ships—
Alex Epstein:
This is literally building ships?
Ethan Thornton:
Yes.
Alex Epstein:
Gotcha.
Ethan Thornton:
—232 times what the US can build, which is pretty staggering. That’s one thing. The next thing is China’s specifically architected therefore to be able to neutralize our Navy. Deep, deep, deep investments specifically into missiles, hypersonics and ballistic missiles and other things that make it very, very difficult for us to get these assets that we count on having in the fight into the area.
And so the thing is, fighting in their backyard is very, very challenging. The INDOPACOM problem is very much a problem of logistics.
Alex Epstein:
Just explain, for people, what INDOPACOM means.
Ethan Thornton:
Indo-Pacific region. INDOPACOM is basically the group that controls a potential fight or any fight that happens in the Indo-Pacific region. But it’s a tyranny of distance problem. How do you get things into the fight, specifically when you have an adversary that has structured their force to be able to take out logistics, to be able to take out ships getting into the fight?
You have to launch most aircraft from aircraft carriers, naval aircraft. And if you can’t get your aircraft carriers close to the fight because of hypersonics and other things, it’s a very, very difficult war to fight. And so China has largely structured their force to combat our traditional force, is the first problem.
The next problem is just production scale. We have struggled to ramp production as a country, and there’s a lot you can look at here, but right now China massively outproduces us. And in these war games—
Alex Epstein:
This is broader than just ships. This is munitions—
Ethan Thornton:
Munitions, think cruise missiles, think air-to-air missiles, specifically munitions. In these war games, we run out of ammunition in a matter of days. And that’s assuming we can even get those munitions into the fight. There’s sort of several layers to this challenge that make it incredibly difficult.
Warfare is fundamentally changing to unmanned warfare
Alex Epstein:
The thing that struck me most is just it seems increasingly likely that we can’t actually get there because if we’re talking about World War II or something like that, yeah, we can bring aircraft carriers, we can do other kinds of things. But from what I’ve seen and heard from you, those things can be stopped pretty easily.
I mean, there are these massive targets and they have ways of getting at those targets. It’s very hard for us to preserve this massive infrastructure and take it all the way across the world.
Ethan Thornton:
Absolutely. I mean, I think the trend of warfare for the next few decades is going to be decentralization. Offensive strikes have become significantly easier. It’s easier to gather data on where targets are. It’s much easier to communicate with offensive systems.
And then arguably, most importantly, we haven’t even really seen this trend play out to a great degree in these war games yet. These offensive deep strike systems, unmanned systems are becoming very, very prolific. I mean, you can look at Operation Spiderweb in Ukraine. Those were quads launched from in-country, in Russia, that destroyed a significant amount of Russian, basically, strategic air power.
And so you’ve got all these different means that offensive strike has become so easy, which makes it so difficult to defend centralized infrastructure. And centralized infrastructure can be ships, centralized infrastructure can be runways, centralized infrastructure can be fuel depots, whatever it is.
It’s become so much easier to do offensive deep strike that we have to be investing in assets that are more decentralized, that are more difficult to strike, that are more numerous. And so one of the issues is China has largely architected their force around neutralizing our centralized assets.
Alex Epstein:
Yeah. I just want to push on this a little bit more because from discussions I’ve had with you and thinking about it seems quite dire from what you call centralized infrastructure, even large infrastructure. You’re talking about aircraft carriers, these different planes.
I mean, isn’t it true that there’s high probability and increasing probability that using different kinds—whether hypersonics or using just having swarms of drones and this kind of thing—they can take out aircraft carriers, they can take out our planes before we launch them. They can take out our runways, which we need to take off. Is it to that extent?
Ethan Thornton:
Absolutely. I mean, I think specifically for air power, a variable that is becoming increasingly relevant is ground threat environment. And this is what the Russians learned through Operation Spiderweb is not only do you have to contend with survivability of your aircraft once they’re in the air, you have to contend with survivability of getting them off the runway.
Provided your runway has survived the opening salvos of a strike. Because you also have to think about how few runways are within the first and second island chain. It’s a pretty finite number.
Alex Epstein:
One of the things that keeps coming up and what you’re talking about is this issue of unmanned systems. And it seems like we’re, in terms of what we’re procuring, we’re—I mean, there’s this issue of, can we scale what we’re producing enough, but it seems even more fundamentally, we’re often just not producing the right things.
And so the way I’ve written this down in my notes is that US weapons procurement has been fundamentally stagnant for 30 years while war has rapidly evolved based on an unmanned system. Is that accurate?
Ethan Thornton:
I think it is. And I mean, that’s a controversial thing for me to say, but I mean, that’s why I started the company, that’s why I’m doing this work. That’s why a lot of us are doing this work, is warfare is so fundamentally changing right now. Entering the era of autonomous systems, the way wars are fought will shift. I mean, you can look at that—
Alex Epstein:
How much of it is autonomous and how much is unmanned?
Ethan Thornton:
Generally similar. I mean, you’ve got systems that control themselves and then you’ve got systems that are remotely piloted. It’ll end up being a mix of both, likely moving more into systems that control themselves over time. But the big thing is that you don’t have a pilot in the cockpit.
And so this just enables wildly different fighting styles that are already having massive impact, for the record. If we look at the war in Ukraine, Ukraine doesn’t really have a Navy. They’ve used unmanned systems to largely neutralize Russia in the Black Sea. Russia is one of the largest Navies on Earth.
You can look at how well the Ukrainians have held off a larger force in a ground war. You can look at the fact—I forget the exact number and I’m sure it changes every day, but 80 plus percent of operations right now happening in the ground war in Ukraine are either led by or completely conducted by unmanned systems. That’s another huge thing you can point to.
I keep bringing it up, but you can point to Operation Spiderweb and these other things. You can look at the fact that the Ukrainians the other day shot down a Russian aircraft with a missile launch from an unmanned surface vessel. The way these wars are fought is changing so rapidly.
And for good reason, that I’m actually generally supportive of, we have a big bureaucracy to control munitions, basically procurement, right? This is something you should be very careful with. It’s important to be very deliberate in the way you buy things, but it’s not changing nearly as quickly as warfare is. And so there’s this very scary scenario you run into where the pace of change in warfare outruns the pace of change in your procurement system. And this is a less controversial thing to say. I mean—
Our procurement system is not set up for unmanned warfare
Alex Epstein:
Well, it seems like that’s already happened. It’s happened, I mean, there’s this issue of even shifting significantly, but then even if we shift—it seems like there’s the issue of just shifting fundamentally direction, but then even once you shift direction because you’re dealing with these smaller systems that are evolving at a much faster rate, like I think you’ve told me it’s more like consumer electronics than military stuff, then there’s still a question of are we going to iterate quickly enough and is our procurement going to iterate quickly enough or is it going to have these very long timetables that aren’t as relevant anymore?
Ethan Thornton:
Absolutely. I mean, there are a lot of things to pick apart there. Yeah, the first is that the way the market should look is fundamentally different. Our current procurement system is set up to buy something like an F-35.
You write requirements as the military. You go through a very, very long and lengthy down select process. You actually build a program of record around these things and then you cut a cost plus contract, essentially, that last decades.
Alex Epstein:
Cost plus, I think most people know, but just you get paid for how much you spend. I mean, you’re planning to spend a certain amount and then you get some guaranteed profit margin on top of that.
Ethan Thornton:
For sure. And that’s its own conversation to have. There are good reasons that that was put in place in the first place. You’re basically trying to create efficiency for the taxpayer and not have defense companies gouging massive profits out of the taxpayer. That said, it kills innovation and it kills any incentive for a company to innovate on cost structure.
Your profit is directly tied to how much you spend. As a company, you don’t have that much incentive to spend less. And so all these things make some semblance of sense when you’re buying an F-35. It is very rare that you build a joint strike fighter across the services. You’re spending, I think we spent 1.7 trillion on the F-35. You can afford to take a while to deliberate on that decision. What’s happening right now in warfare though, if you look at Ukraine, these systems are changing every two or three weeks. All the time.
And I keep pointing to Ukraine. You can point to the Houthis in the Red Sea, you can point to events happening in Thailand right now. There are a lot of different areas where this is starting to occur. I think Ukraine’s the most relevant because it’s kind of the hottest near pure conflict that’s happening right now, so it’s an interesting lens into what these future conflicts will look like, but it absolutely has to resemble something like the consumer electronics or automotive industry where it’s actually company-led, innovation-led, coming with new ideas of how to do these systems.
You have to be able to procure very, very quickly, and then you have to be able to adapt quickly. The thing about the consumer electronic or automotive industry is a company very, very, very rarely makes the same system two years in a row. They’re constantly changing these things and pushing software even more quickly than that, pushing software every few weeks.
And so I think that’s one of the really important trends that we have to see. That’s going to be challenging. I mean, it’s rethinking the entire way you do procurement, but you just cannot buy unmanned systems on a year’s long timeline. It won’t work.
US assets can gain survivability through cost asymmetry
Alex Epstein:
And so it seems like there are these elements where they’re generally kind of smaller, cheaper, and you have the advantage of you can produce them on a larger scale, so you don’t need all of them to work, and then you can also distribute them and launch them from a lot of different places.
So, offensively, you have this swarm of things coming from different places, and that’s hard for somebody to grapple with, and only some percentage of them need to be successful.
Ethan Thornton:
Absolutely. You have to almost rethink the way wars are fought. Instead of purely optimizing survivability—which is different than reliability. We have to have reliable systems. If a war fighter sets up to fire something, it better fire.
But right now, the way survivability is generally considered is that, if we have a B21, that B21 is purely survivable on some metric. I think what has to happen is we have to start considering cost as a means of reaching survivability. So if I have assets that cost $5,000 a piece, they cost $1 million a piece to shoot down, that asset might not be purely survivable in its own sake, but if I put up thousands of them and you cannot afford to shoot them down, that asset is suddenly survivable.
And so yes, absolutely. You start to think of quantity as a key metric in survivability and actually getting assets through. It’s a beautiful thing, because you hit manufacturing efficiency very, very quickly. It is very inefficient to be manufacturing hundreds, even thousands of things.
When we look at the goods we interact with on a day-to-day basis, those are typically manufactured at the scale of hundreds of thousands to millions, so you get into automated production, you get into efficiencies of scale, you actually start to build out a good supply chain.
There are lots of advantages of basically taking the same capability, the same effect down range, and breaking it into hundreds of smaller assets delivering that capability. You have more survivability, because there’s more you have to shoot down. You have more, basically, obfuscation at launch. You can’t take out one place that’s about to launch this thing. Like you said, that’s much harder to contend with if you’re dealing with decentralized launch, and then your manufacturing actually becomes a lot cheaper, because now you can start dealing with automation and mass production, and all these other things.
Alex Epstein:
It’s interesting, because the survivability thing seems like, yes, in a sense, you can’t think about it as “Every unit needs to survive,” so in some sense, the unmanned systems have a different standard for survivability, because there’s more of them. But isn’t it also true that, because these things exist offensively, the survivability of conventional assets is actually very low?
Ethan Thornton:
Very, very low. Yes, absolutely.
Alex Epstein:
So it’s not as if the conventional infrastructure can now meet this high standard of survivability. It seems like nothing can.
Ethan Thornton:
Absolutely, absolutely. Yes. I am of the view that, within the next few years, maybe decade max, it will be extremely, extremely challenging, if it’s even possible, to guarantee that a single asset on the battlefield is survivable, because of how much easier it’s becoming to get data on that asset, to figure out where that asset is, and to direct hundreds or thousands of assets against it.
Yeah, we’re seeing this time when traditional legacy systems are becoming far less survivable, and the only way to combat that is decentralizing our own systems, such that you gain survivability through, basically, cost asymmetry.
Alex Epstein:
One example I think you brought up in the past is tanks. Is it true that to the point where we’re trying to give, or some people have tried to give Ukraine tanks, and they’re just refusing them?
Ethan Thornton:
The survivability of tanks has generally decreased radically at the front lines, and that’s partially because of sensing, right? The number of cameras up in the air has increased by orders of magnitude, and so it’s much easier to see these things, and then, with $400 quadcopters, you can go and destroy a $1 to $2 million piece of military equipment.
I think the quad versus tank case study is the clearest form of how this unmanned warfare is—
Alex Epstein:
How much does a tank cost?
Ethan Thornton:
It depends on the tank. I don’t know the exact cost—
Alex Epstein:
A lot more than a $400 quadcopter.
Ethan Thornton:
Yes, yes.
Alex Epstein:
Yeah, so it’s very striking to just—this might be common knowledge to some people, but to me, it’s just very striking to think about so many of the assumptions that have been built in, that once we’re valid assumptions in terms of what a good fighting force looks like, and we’re spending something like $1 trillion a year, and we tend to think, “Well, we should just spend as much as we can,” but we can literally be spending money on things that, even though they’re beautiful and they’re impressive and the people running them are admirable, they’re functionally useless in a lot of the conflicts we would be at.
Ethan Thornton:
Absolutely. That’s the silver lining here, is I think we can achieve the same effects down range with significantly less spending, and more importantly, with significantly less risk to our war fighter. That is really what success looks like here.
And a lot of the cost of these systems, our systems and other friends in the space, you can go and buy literally hundreds of thousands of these systems for similar costs to singular assets. A Viper costs 2, 3,000 times less than many manned fighter jets.
Alex Epstein:
Viper is something you guys make.
Ethan Thornton:
Yes, it is. I think we can radically increase spending efficiency on these systems, and then, moreover, I think there’s a general apprehension—there always is in a bureaucracy, to change forms of the way we do things. Apologies for the factory noise, by the way.
Alex Epstein:
It’s okay, it’s a real factory.
Ethan Thornton:
There’s always going to be apprehension, but I actually think this is very exciting for the war fighter to have more capable weapons, and then more importantly, to have the ability to increase safety by taking the human further from conflict. Which is not, by the way, me saying that we’ll ever have conflicts without human involvement, but generally I think that the trend is increasingly relying on unmanned systems.
Alex Epstein:
In terms of addressing the China threat, which if you can deal with that, you can deal with a lot of other things, I have in my notes that to address the China threat, we need to take advantage of our innovativeness to create a stockpile of superior strategic unmanned weapon systems that will deter them.
And I just want to highlight, for me, it’s the innovativeness that you’ve highlighted to me before is crucial. You think we can out-innovate them, it seems true that we cannot out-manufacture them anytime soon. We’re not going to beat them on volume.
Ethan Thornton:
Yeah. Yeah, absolutely. I think we are all in agreement that we need to have military power as a great superpower, in excess of China. As we look at that problem, we’re not going to out-manufacture China.
I would like to see a world, in the next decade or two, where our industrial base is larger than China’s, but that is not the case today, so as we look at that, as we look at basically creating deterrence against China, I do think innovation is the thing that America singularly has done very, very, very well.
Alex Epstein:
Militarily, yet?
Ethan Thornton:
Yeah, 100%. If you look at the work Skunk Works did, America ushered in the age of strategic airpower, America ushered in the age of stealth strategic airpower. America has historically invented things very, very well. China has taken a lot of those inventions and blitz scaled manufacturing, specifically in the last few decades.
And so, that actually really favors America right now. Warfare is changing so rapidly. I don’t care how good you are at making tanks. You can go and make 100,000 tanks and it’ll cost you hundreds of millions of dollars. If we invent the quadcopter that can neutralize the tank for 400 bucks, you created dollar-to-dollar, basically, efficiencies over China that outweigh their manufacturing efficiencies.
Warfare is changing incredibly quickly. For the record, we’re just seeing the tip of the iceberg on unmanned warfare. The work that’s happening in Ukraine right now is incredibly impressive, but we’re a few years into what I think will take decades to fully play out.
What that means is there’s a lot of runway for America to look at the future of warfare, select the assets that actually create asymmetry, make them first, and achieve an offset through that. And I think that’s, by far, the best way to create deterrence, because we don’t have the manufacturing horsepower to make more of it.
If we’re making a vanilla cruise missile and China’s making a vanilla cruise missile, they’ll out-manufacture us on that every single time, and so what America has to lean into is changing more quickly and creating asymmetry by inventing these new trends of conflict, creating these new technologies that create deterrence on the battlefield.
The other thing, we don’t want to fight China. No one wants to see war happen, so the aim absolutely undeniably has to be deterrence through military strength. We have to go back to, frankly, what we did during the Cold War, to innovating very, very quickly to create these asymmetries that they can’t catch up on.
Alex Epstein:
The cause for hope here is we already do this in a lot of other realms in terms of out-innovating China.
Ethan Thornton:
Absolutely.
The need to stockpile weapons
Alex Epstein:
We’ll talk in a second about how the funding model can change, how the procurement model can change, but one thing I want to highlight is, in my notes that I made just talking to you, is this issue of a stockpile.
In order to deter, let’s say, there need to—leaving aside what the exact composition of the weapons is—you need a bunch of them ready. It can’t be China is about to invade Taiwan and then we start a big ramp up, because it’s probably too late.
Ethan Thornton:
Yeah, absolutely. It takes years to build an industrial base, so I think there’s this view that we’ll have tens of great systems that we maybe make like a thousand of these systems, and then we have factories, the lights are out on the factories, no one works in the factories, but the factories are, theoretically, ready to ramp manufacturing.
That’s just not the way it works. You don’t train technicians in 12 hours to start mass-producing things. You don’t create scalable supply chains in a week when a conflict actually starts. If we want unmanned systems at all, unfortunately, we have to stockpile.
You have to produce things if you want an industrial base ready to produce things. You can stockpile efficiently, you can design these systems to be modular—because there are things that change a lot, there are things that don’t change a lot.
Physics don’t change, aerodynamics don’t change, propulsion mechanisms don’t change. The things that are changing constantly are autonomy, are basically, P&T, like position, navigation, timing, communications, sensors. These things change a lot, so design your systems to be modular, so that you’re not throwing them away in six months when the state of warfare changes.
But you have to stockpile if you want to be ready. The other reason you have to stockpile is these wars happen very, very, very quickly. I think the big trend of the 21st century is going to be that these wars are, basically, decided from the moment they start and occur with extreme, extreme speed.
That is the thing about deep-strike weapons that is, frankly, very, very terrifying, is if an adversary is able to—it’s, frankly, similar to nuclear deterrence in certain ways. If you’re able to cripple someone’s command and control infrastructure, if you’re able to stop someone’s fighting force from getting into the fight, the war is over.
Alex Epstein:
But a little bit less damaging way of doing it.
Ethan Thornton:
Certainly, certainly significantly less damaging. Hopefully, significantly less damaging specifically for civilians, but it’s, generally, the same effect that if—you can’t count on doing what we did during World War II, which, the war starts and you have two or three years to start getting into production. If the war starts, odds are powers shut down, odds are running water stops.
Literally, you have huge lapses in infrastructure that make it impossible to mass manufacture, so you have to stockpile to some degree.
Alex Epstein:
Then that, of course, leads to this question of what to stockpile, and my understanding of how this stuff often works is, obviously, you’ve got lots of different defense contractors, you now have your own company. And people are doing some combination of making some case that their thing is the best and then there’s a lot of lobbying and other stuff that I probably—if I knew how it all worked, I probably wouldn’t approve of every element of how it works at all.
What I’m interested in and what you’ve helped me think through is, what are objective standards that the government can hold things to? Because it doesn’t do me any good to say, “Well, hey, tell me how great your thing is.” What I care about, I like you, I hope you succeed, but I don’t really care about any given company, but we’re trying to defend the country, and I think this has been your attitude too. It’s not about Mach.
Ethan Thornton:
Yep.
The proper standards for military procurement of weapons systems
Alex Epstein:
And you’d be happy if somebody did something 10 times better and defended the country. You’ve got other things you can do. What standards can the military use for procurement? And let’s think first, blue sky.
This is such a beast that it cannot be changed overnight, we’ll talk about near-term things, but just overall, when politicians are thinking about this, when reformers are thinking about this, what standards should they apply for, “Hey, we should evaluate potential weapons systems by these standards”?
Ethan Thornton:
Such a good question.
Alex Epstein:
All right, thank you.
Ethan Thornton:
I think there are a few things. One, you have to have extreme clarity about the fight that you’re preparing for. The assets you buy for urban warfare are very, very different than the assets you buy from naval warfare. So this is where we have to have very clear top-down policy around the problems worth procuring on net systems for.
I can say, for Mach, we’ve chosen very much to build against the China threat in context of Taiwan. I see that as the pacing threat, it’s the threat that singularly threatens the Western way of life, that threatens, basically, American dominance on the global stage, in a way that is extremely, extremely concerning for the future of democracy.
That’s the first thing. Let’s be clear about what assets we’re looking to buy to do what, so if we’re talking the Naval War, if we’re talking war with China, I think you then have to look at, what goals are you trying to achieve, right? The key goal, with respect to China, is how do you stop a Chinese invasion of Taiwan?
This is where it gets really complex, because you can see a full gambit of ways that that conflict can potentially play out. You’ve got full Cold War, you’ve got full hot war, you’ve got some version of gray-zone conflict, and then you’ve got—
Alex Epstein:
Some version of what?
Ethan Thornton:
Gray-zone conflict.
Alex Epstein:
Gray zone, gotcha.
Ethan Thornton:
Right. We’re generally seeing some element of this right now. I don’t know if you’re tracking, but over New Year’s, it basically encircled Taiwan and did live fire drills to practice what an invasion would look like.
If I’m betting what the future looks like, I think those events escalate, escalate, escalate, and you don’t actually see a massive kinetic war, you just see a very gradual—have you ever heard of the boiling frog analogy?
Alex Epstein:
Yeah, yeah.
Ethan Thornton:
They use it all the time. Anyway, I’m saying things that 95% of people probably already know, but you have to build for the full range of solutions. For me, I think the assets we need are ones that you can actually get into the fight. You have to contend with the fact that, in the early hours of a potential conflict, any sort of potential conflict, China has the ability to take out centralized infrastructure, so you’re likely not getting aircraft carriers close.
Alex Epstein:
Centralized infrastructure anywhere?
Ethan Thornton:
No, anywhere within first, maybe second island chain, so within a few hundred to a few thousand miles of the theater. I think the first thing you need is focus on what it means to have survivable assets. Assets that actually survive that first—
Alex Epstein:
Okay, survivability has to be one of the standards?
Ethan Thornton:
Survivability has to be one of the standards. I think the next one of the standards has to be manufacturability. Is this something that, in the next 12 months, we can credibly get into true manufacturing scale on?
Not hundreds of systems, not thousands of systems, tens of thousands of systems—because that is what it will take to actually meaningfully change the CCP’s calculus on this. You’ve got survivability, I think survivability through cost asymmetry. Basically—
Alex Epstein:
Sorry, say that again.
Ethan Thornton:
Survivability through cost asymmetry. Having something that you can put into the fight that is orders of magnitude more expensive to kill than it is to put into the fight.
Second is scale. You have to have enough of these to actually make a difference. I don’t care how good something is, if you can only make two or three of it, it’s not going to meaningfully change the state of affairs.
I think the third is performance. What does this thing actually do downrange? And this is a whole broader conversation, probably not a conversation for a podcast, but what is the actual mission set that you’re trying to achieve?
I think a lot of the issues with procurement of unmanned systems is that we go out to buy things, because they look cool and sound cool. We don’t actually think that much about the effects they have downrange. What are you actually using these things against and how does that change the calculus of an adversary?
For me, if I’m answering that question first on, “What we should buy?” I think these things should be relatively low-cost. I think under $1 million is the threshold for survivability. I think you should be able to employ them from a range of conditions, pre-positioned on the first and second island chain, as well as in allies. Japan, Taiwan, these countries.
And then I think you need the ability to stop, basically, a blockade, so you have to have anti-ship munitions, you have to have the ability to deny China air superiority. Basically, the way our air force typically fights is these pulses of energy. Between those pulses, you have to be able to, basically, have effects that stop China from gaining air superiority and then, to some degree, you have to be able to hold Chinese, basically, critical assets at risk in some way.
I think those are the three categories that become the most important, and I think we need to go in very quickly, in the next 12 to 18 months, acquire tens of thousands of these systems if we want true military deterrence against Taiwan.
Now, the silver lining here is that this is actually not an insanely cost-prohibitive thing to do. You could go and do this with fractions of a percent of the DOD’s budget, and it’s actually pretty bipartisan right now to push towards defense acquisition reform, to push towards procuring systems that actually work downrange. That’s something the war fighter is obviously very, very well-behind, something both parties are behind.
It’s pretty clear, at this point, that we need to change the way we fight for this new era of conflict that we see coming. And then, in terms of the way the DOD should actually be procuring these systems, that’s more of the elephant to go and eat. I think a few things are very important.
I think the first thing is real clarity of requirements and the ability for companies to write their own requirements. If you want to truly innovate, you have to create a system where people can go and get outside capital, build something, and show up to the Pentagon with it, and be taken serious very quickly.
You have to keep in mind, most of this capital isn’t ultra long-term capital. You have a year, maybe two years to be taken serious. Otherwise, the company sinks. If you want innovation, companies have to be able to have their own ideas, take it to the Pentagon, and then get requirements written around that capability once it exists. I think that’s the first.
I think the second one is much more clarity around funding, clarity around where the DOD is spending money, more money, frankly, just being spent on unmanned systems. It’s still a fraction of what it needs to be.
And then the final and most important is testing. It’s actually shockingly difficult to get test range access, and a lot of these competitions, you’re procuring systems that haven’t actually been tested in the relevant environment yet.
It is a bit staggering to think about Ukraine, and there are a number of companies that have flown in Ukraine, but when we look at that conflict, it’s pretty devoid of US-made unmanned systems being deployed at scale. There are not thousands of US systems that have been deployed in any of these theaters.
I think for several reasons, that’s a shame. One, it’s an ally that we should be supporting more in this fight. Two, it’s a missed opportunity to develop our technology to be ready. Every day that goes by that we aren’t learning more from that conflict, we are losing, basically, time in this preparation for unmanned warfare.
The need to be able to test weapons much faster
Alex Epstein:
There’s obviously testing in the field, but how do you fix other kinds of testing, like testing in the US?
Ethan Thornton:
I think more cohesion between the FAA and DOD. I think the DOD should—and for the record, a lot of what I’m saying right now, the DoD is working very hard to fix. I’m sure a lot of what I’m saying right now, there are people listening that are like, “Yes, of course, we’ve been talking about this for a year or two years,” but I do think it’s important to keep reinforcing it.
I mean, it’s, in many cases, a year plus wait time to test things. I’ll give you an example. We have an asset that we drop from very high altitudes saying 50,000 plus feet. And we’ve, in the time that we’ve been developing this platform, only been able to test in that environment once or twice. And so that’s extremely, extremely challenging.
If you’re a company spending tens of millions of dollars to develop a system for the DOD, and literally we’re happy to pay for the range access. We just need to work to get range access. And I know this is an issue. It’s a big issue for hypersonics.
It’s an issue anytime you’re testing jammers, it’s an issue anytime you’re testing radar. And so more US test locations, more willingness of the FAA to work with these companies. Again, it sounds super basic, but it’s so insanely painful if you’re a company that’s spending tens of millions of dollars on these assets trying to do right by the country and you literally can’t test them as you develop them.
Alex Epstein:
Yeah. One point I always think about with industry is just you want the smallest gap possible between idea and execution. It’s just so painful—and in part just because of the learning. So one thing is just the larger the gap, the slower things come into existence.
But then what people don’t get even more is just you don’t learn. I mean, it’s one of the reasons why nuclear energy is so backward. It’s just because it’s impossible. It’s becoming less impossible. It’s so difficult to even try it.
Ethan Thornton:
Yep.
Alex Epstein:
Versus other technologies and software, you don’t need any permission.
Ethan Thornton:
Yes.
Alex Epstein:
And you just see how different the innovation is and something where you can act quickly on the idea and where it takes a long time.
Ethan Thornton:
Yeah. If you want innovation, shorten feedback loops as much as you possibly can. It makes it easier to invest capital. It makes it easier to learn as a company.
How we can win against China with cost asymmetric weapons
Alex Epstein:
Yeah. So again, this is about policy, but I do think it’d be interesting for people to understand how you’re thinking about some of these specific strategic things. And we’ll go into some next steps for the government in general.
But whatever you want to share or what you can share in terms of—because what I think all the things you’re talking about, survivability, scalability, performance, it’s kind of like in energy, it’s about being cost-effective. In energy, we have affordability, reliability, versatility, and scalability, and here you have these.
What are your thoughts about, and you can talk about what you’re doing specifically, but in terms of what kinds of things are really going to meet those standards in the near term?
Ethan Thornton:
What kinds of systems, or?
Alex Epstein:
Yeah. Well, I mean, it’s probably related to what you’re building, but it’s just interesting to hear people think about—I think you have a tendency, you just kind of want to build what you think is the best thing, and then you’re going to try to figure out how to get it funded. So I’ve always found it interesting to just hear you talk about what kinds of weapons you think will be most effective.
Ethan Thornton:
For sure. So I think one, I’m a big fan of the air domain. I think with aerial vehicles, the reach you can have mixed with how difficult it is to currently intercept these things, creates a ton of asymmetry. So I mean, I’ll give you an example.
Alex Epstein:
Does the aerial domain, is that ground level to—like, 10 feet up to stratosphere?
Ethan Thornton:
Yeah. 10 feet up to 120,000 feet up. And I’ll give you an example here. I mean, I can’t talk a ton about a lot of the stuff we’re doing, but we have balloons that you can put a sensor on. And so this balloon will sit up at 70,000 feet with X sensor. It’s very, very, very difficult to shoot one of these balloons down.
And our new manufacturing process, we’ll be able to make thousands of these balloons a day. And so you put this balloon up for 10,000 bucks and an adversary has to shoot an S300, multi-hundred, several million dollar missile to shoot it down. That is asymmetry.
Alex Epstein:
Is it hard to shoot it down at that altitude?
Ethan Thornton:
It’s not hard. It’s expensive.
Alex Epstein:
It’s just expensive?
Ethan Thornton:
It’s expensive. And so you’ve got to launch a very, very large missile to go and do this thing. And you reach a point—
Alex Epstein:
So it’s interesting how much it’s like a cost asymmetry.
Ethan Thornton:
Yes.
Alex Epstein:
Just as a quick analogy, I’ve done jujitsu for a long time. And one of the interesting things in jujitsu is a lot of what happens is people often think it’s you have one magic move that’s going to defeat your opponent. But often when people are highly skilled, it’s about you having a lower work rate than them because you just sort of wear them down.
Ethan Thornton:
Yep.
Alex Epstein:
And then at a certain point, they become helpless. So it’s just interesting to see, oh yeah, it could be that even if they can counter your system, if the system could be way cheaper, then you can beat them that way.
Ethan Thornton:
That’s the whole game. That’s the whole game. I mean, it is all about dollar-to-dollar strategic impact. And so you think about war is actually more economic. And if I’m sending something that’s 10,000 bucks and you’re sending something that’s $2 million to shoot it down, I, over time, will win that war.
And this is what our adversaries are doing to us in many cases. I mean, you look at the Houthis in the Red Sea. We’re shooting multimillion dollar missiles at $30, $40,000 fixed-wing drones. And as a result, trade through the Red Sea has been very disrupted for the last few years because even the US versus the Houthis can’t make that economic math work out.
And so there’s nothing stopping the US from also doing that to our adversaries. And it’s very, very clear the types of systems you need to do this. And so yeah, I think you absolutely have to focus on dollar-to-dollar sort of strategic impact in either direction. So in the offensive and sensing direction, make your thing prohibitively expensive to shoot down, and then build an industrial base that allows you to make enough of them until you overwhelm an adversary’s more expensive systems.
And then where it gets hard, but is also equally important is on the defensive side, like architect systems that mean you’re not shooting $2 million missiles at $40,000 drones.
And so this is work we’re increasingly doing as a company as well. Tomorrow, I mean, I’m sure by the time this podcast is released, we’ll have announced our first defensive asset, but really the work we’re doing here is like, how do you get to a point where it is cheaper to shoot down an adversary’s offensive asset than it is for them to put it up in the first place?
Alex Epstein:
That seems like a hard problem based on what you’ve—
Ethan Thornton:
Very hard problem.
Alex Epstein:
Seems like it’s easier to get the economics in the other direction.
Ethan Thornton:
It is.
Alex Epstein:
Where it’s cheaper to attack than to defend.
Ethan Thornton:
It is. And so, I mean, the approach we’ve taken there, and this is a bit of a rabbit hole, but the approach we’ve taken there is terminal defense. So if you’re trying to shoot down the balloon 100 miles away, it’s going to be very, very expensive. But if you can create a kilometer dome over a certain asset you care a lot about, you suddenly are a lot close. But these are new architectures that have to be released. And so, until an adversary adopts these new fighting styles, you do have asymmetry.
Right now, there is not an adversarial system that would be able to intercept 100 Vipers cheaper than it is for us to put up 100 Vipers. Now, an adversary will develop that system probably in the next year or two, at which point we’ll have the next version of Viper out. And I’m sure our friends in the space will have their next versions of their system out.
And this is exactly what I’m talking about in terms of what it’s going to take to win against an adversary with a bigger industrial base is like, I don’t care how big your industrial base is. If I’m putting up something that costs 10,000 bucks, your thing costs 2 million bucks, I’m going to exceed your industrial capacity. By the time you develop the $10,000 system that shoots down my $10,000 system, I’ll be at the next system, and have asymmetry again.
So, our company motto is “forging the next offset.” Basically, how do you create an offset by constantly innovating on these things and creating this dollar-to-dollar, basically, strategic advantage?
Alex Epstein:
And what’s interesting about this is, I guess in normal consumer electronics, you’re doing two things. You’re trying to improve on your own thing with your best ideas, and then you’re trying to improve on your competitor. You’re trying to beat your competitor by just developing a better version of the same thing or even different thing.
This is, you’re doing that, but then you’re also literally finding the thing to destroy your product. And I think, before, you told me, you literally do this.
Ethan Thornton:
Yeah.
Alex Epstein:
You think about how do we destroy our own product.
Ethan Thornton:
I mean, that’s how we came up with Dart is by war gaming against Glide and Viper. And so you absolutely have to do that. And really, it’s a perpetual game of cat and mouse that is only accelerating. And the sad thing is right now the throttle on the speed of this innovation is not company innovation, it’s procurement by a lot. I’d say it actually takes probably 10 times longer to buy something right now than it takes to build it, which is extremely terrifying.
And that’s why the procurement discussion is so insanely important is that’s the bottleneck right now. But once we break through that, which I really think we will as a country, you’ve still got to obsess about this iteration loop. Offensive system, defensive system that defeats it, offensive system that defeats it.
Alex Epstein:
But hopefully you set up the political infrastructure where it’s people like you and Palmer and others who are obsessing about—where innovators are obsessing about it—versus the government. I mean, the government just wants to create the political infrastructure so you have this ecosystem of different people trying to do these cost-effective things in terms of performance and scale and survivability.
Ethan Thornton:
Yeah. And the government only has to be a customer. The government doesn’t have to be altruistic. The government doesn’t have to help companies. If we want success here, the government needs to buy the best thing. They need to be obsessive about testing the right thing. They need to be very, very, very clear about what they want, but also willing to have their mind changed when the system that does what they want is different than they imagined it would be. But we’re not asking for help.
I actually think one of the big things that I would like to see shift is money away from initial prototype development and money towards end acquisition. America has incredible, incredible private capital markets.
When an idea is good, we’re very, very good at backing up the trucks and dumping a lot of money into it. I think the reason that that has not happened is because the government is just a very unclear, difficult customer right now. And so, yeah, I mean, there are a lot of this—
Alex Epstein:
Or it might be an easy customer for certain things that we don’t need.
Ethan Thornton:
I think it’s just a hard customer in any way. The primes, if they’re being completely honest about what they’re the best at, they’re the best at navigating the acquisition system. That is what they’ve specialized at. That is what they’ve architected their companies around. That is what they’re just fantastic at.
Alex Epstein:
Yeah.
Ethan Thornton:
And so, I mean, even the best companies in the space are just really, really good at dealing with what is a difficult market to enter—which I want to be very clear, this is not me saying that the people inside of the bureaucracy are bad.
I actually think most people—this is a relatively controversial take—I think the culture’s pretty good and I think people truly want to do what’s best and these seats, the system’s just not architected right now to support them, which is where reform comes in.
A roadmap for improving government procurement of weapons systems
Alex Epstein:
Yeah. So there’s this vision of, yeah, the system is really optimized for cost-effectiveness. It allows different, like if you say, “Hey, I’ve got this, whatever it is, a naval approach, a stratospheric approach, whatever,” you could say, “This is going to be way, way better for this purpose than anything else. And here’s the tests.” And of course, they’ve allowed you to test things quickly versus slowly.
That would be the fantasy because then that, which could be reality, because that unleashes the innovation and that’s going to lead to the rate of iteration that we need.
So let’s talk about, I think many people would say, “Well, good luck,” and particularly to me who’s totally new to this, to be like, “Well, good luck. None of this can be fixed, you’re naive, et cetera.” I don’t think you have that attitude given that you started a company with, in your mind, one against six figure odds, but let’s talk about next steps.
What are the things that the government could do incrementally? Because you mentioned you think the weapons needed, say for a China conflict are a very small percentage of the budget. What are the next steps the government can take if anyone is watching this, in government or influences government, to actually get us on track? Because it is existential. I mean, I think we could lose in a Taiwan conflict. It’s a real thing that could happen in the next couple of years.
Ethan Thornton:
Yep.
Alex Epstein:
And it seems like we could prevent it too.
Ethan Thornton:
Yeah, for sure. So I think, one, there are examples of wins here. The LUCAS program is very nascent, but I think—
Alex Epstein:
Okay, what’s the LUCAS program?
Ethan Thornton:
It’s a US attempt at basically manufacturing a piston-driven long-range strike drone. So, I don’t know if you’re familiar with the Iranian Shahed?
Alex Epstein:
I am slightly familiar, but the audience is not.
Ethan Thornton:
It’s the Russian drone with a propeller that’s a triangle that they send thousands a month at Ukraine. The US has not produced a system like that at scale. This group, called OUSW R&E stood up this program called LUCAS.
Alex Epstein:
What is that mean?
Ethan Thornton:
The acronym? Low-cost Unmanned Combat Assault System.
Alex Epstein:
Oh, I mean, no, the OSW R&E thing.
Ethan Thornton:
Oh, OUSW, Office of Undersecretary of War for Research and Engineering.
Alex Epstein:
Gotcha.
Ethan Thornton:
So it’s an office that sits under Secretary of War, basically responsible for research and engineering, setting the future course at the Pentagon. They don’t actually buy things themselves. They develop them and then pass them to the services for acquisition.
So one of their programs that I think is generally going to be a massive win is called LUCAS, where they’re going and building this first fixed-wing drone system, looking to build a very, very large number of these, and then looking to set that up is basically a platform for acquisition of further fixed-wing offensive drones.
Alex Epstein:
And are you guys involved in this?
Ethan Thornton:
We are. I probably shouldn’t say too much. We are. A number of companies are involved. I mean, that’s one of my favorite things about it is it’s very, very fast moving, and it’s a different slice of building an industrial base.
You’ve got different companies designing things, different companies manufacturing things. It’s generally very collaborative in a way that I think is quite beneficial. And so continuing to invest in this specific line and growing this line and using that line is basically the example of how to do things I think is very important.
Alex Epstein:
But it seems like the line, so it seems like the procurement here is maybe better, more pro-innovation, still seems like it’s kind of a narrow thing. It’s not like a general purpose procuring—
Ethan Thornton:
It’s not a general purpose.
Alex Epstein:
—the most cost-effective stuff.
Ethan Thornton:
But I think continuing to push on R&E specifically is a means of funneling funding, getting a contract mechanism, actually going and developing and testing things. They have very good test infrastructure at this point. And then working with the services to get adoption, I think is a good model for how things should be done.
Now, one of the key issues right now is our actual service structure is set up for kind of the older way of fighting. It’s actually not incredibly clear whether it’s the Army, the Air Force, or the Navy that employs something like Viper.
And so continuing to push for clarity at a service level of this is the part of the fight the Army owns, is the part of the fight the Air Force owns. And then similarly, one of the scary things, you traditionally have these things called PEOs, Program Executive Offices, that are in charge of buying a specific type of capability.
Those PEOs are architected to buy helicopters and to buy tanks and to buy rifles. They’re not architected to buy gliding vehicles. They’re not architected to buy vertical takeoff long-range strike assets. And so, reforming basically the way these PEOs are put together—
Alex Epstein:
By the way, vertical takeoff seems important in an era where it’s really easy to destroy runways.
Ethan Thornton:
Absolutely. I mean, that’s the big thing with Viper is we’ve worked to have a fighter jet that you don’t really need a runway for. We’ve been flying it for about a year now, getting into relatively late-stage development. I’m very excited about Viper as a platform.
Yeah, it’s an example. We’ve literally had conversations with senior officials that are like, “This is great. I want to buy this thing. I can’t figure out exactly which PEO this slots into.”
And so you end up just tripping up on this bureaucracy, which is why it’s important to have—I mean, LUCAS is a great example of cutting through that. I think the Replicator Initiative was and still is an awesome attempt at this. I think it’s—
Alex Epstein:
What’s the Replicator Initiative?
Ethan Thornton:
Similar attempt to funnel money for a handful of systems for mass procurement. I think, one, it wasn’t ambitious enough, I think. I mean, they set out to buy hundreds of systems. Hundreds of systems are great, but in a world where Ukraine and Russia are literally building millions of systems, it’s a drop in the bucket.
The way I see it, though, every time, it’s kind of a weird analogy, but you have these neurons branch to other neurons, and as the neurons start firing, these synaptic pathways grow strength, and it becomes easier to fire on them again. It’s a similar way, if you think about the bureaucracy as sort of this mess of different connections.
Every time one of these programs flows through, even if it’s small dollars, you build up these synaptic connections, and it becomes easier for the next program and the next program, and people get comfortable with the steps along the way.
And so I think it’s really important, even if the mission impact is relatively small from some of these first “big” unmanned system buys, to continue pushing that as a means of building the connective tissue throughout the building to get these things done. I think we should be leaning on the COCOMs harder.
Alex Epstein:
On the what?
Ethan Thornton:
Combatant Commands. I mean, they ultimately hold the plans for what these conflicts should look like. And so, I mean, even policy writers talking directly to the COCOMs to figure out what their plans are and what type of assets they actually want. And then Congressional adds, it’s a messy system.
I don’t know if on here you want to talk through the way basically the defense bill gets written, but individual members have the ability to radically influence—
Alex Epstein:
Yeah. Anything you think they should know. I mean, we’ll probably have some members of Congress listening to this.
Ethan Thornton:
Yeah. And I don’t talk about Mach specifically here. I think we made that very, very clear. But in broad strokes, members have the ability, through Congressional adds or authorizations or appropriations, to radically influence—
Alex Epstein:
What do you mean Congressional adds?
Ethan Thornton:
It’s basically, I mean, without going into it too far, a member specifically on four committees, HACD, SACD, SAS, HASC can go and write an amendment into the defense bill to get X portion of money flowed into a certain program office for a certain program.
Alex Epstein:
Got it.
Ethan Thornton:
So this is not the way most money flows in the Pentagon, but it does create the ability for members who care a lot about getting this right to sit down and actually direct some portion of money towards a specific effort.
Alex Epstein:
And how specific is that? Is that like this by Anduril, this by Mach, does it need to be that specific or is it more conceptual than that?
Ethan Thornton:
It can be either. It can be either. I mean, obviously companies usually push for it to be pretty specific to them, but to the people I’m talking to, if you really think a capability needs to exist, if you go and talk to the COCOMs and they really, really want something, you can be broader. It’s not an easy process because the money then also has to flow through OMB, NSC.
It has to flow down into the building and actually find its way into a contract vehicle. But I do think Members have more agency than they’re typically given credit for in this process, and that is a good way to sort of short circuit the system and get things done very, very quickly, is to go and talk to the actual war fighters on the ground and push money over.
Alex Epstein:
Do they know how to do that? Or is there—
Ethan Thornton:
A lot of them do. A lot of them do. Yes.
The need to take the China threat very seriously
Alex Epstein:
All right. What else should, if anything, should the government know from your perspective?
Ethan Thornton:
These changes tend to happen very, very slow and then very, very fast. There are so many examples you can point to throughout history. I think a very clear one is going to World War II. Battleships were seen as the big, hot thing, because they had been historically. It’s very similar.
We have this new thing called the aircraft carrier that allows you to do deep strike better. You have basically more assets around because you can launch a bunch of dive bombers against a battleship. And literally in a matter of months, battleships went from being this incredible thing that we’re investing money on to tens of thousands of sailors around the world, not just in the US, sinking in battleships because we didn’t take the trend seriously enough.
And so, look, I think our military is incredibly, incredibly competent. I think the defense industrial base of 1990 was spectacular and we’re still counting on a lot of the assets that have been around since that phase of the defense industrial base.
But the debt of a bad military industrial base is paid off at some point. And if we don’t innovate fast enough ourselves, then at some point we’ll face the harsh reality that our systems are legacy and that they’re not ready for the next era of combat.
And so I think really, really taking the Taiwan threat seriously. Go and dig in on what it would mean if the US lost access to sub five nanometer semiconductors. Go and just sit and think about what it looks like to defend a centralized asset against hundreds of thousands of swarming drones.
Go and read the state of affairs in Ukraine and what these strikes actually look like and what it actually means at this point to fight a war against a near peer adversary.
And I think fortunately we’re in a democratic system. Every single one of us has a massive amount of agency to go and fix problems we see in the world. And so don’t take it from me, but go and research the problem. And if you agree on the magnitude of the problem facing us, go and do what you can to fix it.
Alex Epstein:
So, best-case scenario in terms of we switch weapons procurement as quickly to be cost-effective. How does it affect China and other conflicts? Worst-case scenario, status quo, how does it affect China and other conflicts?
Ethan Thornton:
So look, I think best-case scenario in the next 18 months, the military—well, the system allocates a few billion dollars to unmanned systems that very specifically are meant to deter China. These things are stockpiled and prepositioned around the theater. And you can very, very confidently say that if China tries a military invasion of Taiwan, then their assets will be sunk and shot out of the air.
And that creates a very, very difficult problem for China as they look to invade Taiwan. I think that’s best-case in the near term. And then I think what that sets up in the long term is the US during that sprint will build a military industrial base of hopefully a lot of companies that innovate, that are cost-effective, that actually come to the Pentagon with ideas about the way things should happen.
And we wake up 24 months from now and that system still exists and the taxpayer saves money. The war fighter goes with better kit and fortunately is in a better position and then we win in what will probably be a few decades of continuing innovation on unmanned systems.
I think worst-case is one in which we wake up in 18 months and China owns Taiwan through whatever means and the US doesn’t have access to advanced semiconductors and our economy largely stagnates relative to China’s. And I think that’s a very, very scary future of the world for a number of reasons.
Alex Epstein:
Awesome. Well, any final messages to our government or to our fellow Americans or the many people in the energy industry who will be listening to this?
We are all on the same team
Ethan Thornton:
Yeah. I think one, we’re all on the same team. I think these things can actually be very political and controversial very quickly in ways that they don’t need to be. We all very much want the same thing. We want a competent military that protects American sort of sovereignty and provides for life, liberty, and the pursuit of happiness.
And so, one, we’re all on the same team. I could not encourage discourse more deeply. I think we need to be talking about this like crazy. And I think nothing should be off limits in the discussion as we talk about what it will take to adapt these new styles of systems.
I think the timeline is much shorter than people give it credit for. I think there’s a world where we wake up in 15 months without access to advanced semiconductors. And if you want to move on a 15-month timeline, it’ll take me at least six months to get my factory running. And it’ll take at least that amount of time to build the number of systems necessary.
And so the timeline is not years. It’s barely even months at this point if we want to be ready. And I think we need to keep in mind the risk-return framework here.
Making a small pivot to unmanned systems with a small percent of our budget is not going to radically disrupt the way our government works. It’s not going to radically disrupt the military. The cost of doing this is actually quite low. The upside is incredibly high.
And I think what most people disagree about is how long this trend will take. I don’t think any of us will sit here and say that in a world 20 years from now where you have the ability to have $100 drones with multi-thousand mile ranges through different means and who actually have true autonomy—we know this is going to happen at some point.
And so there’s pain in being early, but there’s way less pain in being early than there is pain in being late. And so I think let’s all be on the same team, let’s encourage great discourse, and then let’s keep in mind the actual risk-reward framework on doing these things.
Alex Epstein:
I would say one thing that’s just awoken in me, I mean, I guess you’re 22 now, right? So you weren’t alive for 9/11. I’m sure you’ve heard a lot of people’s accounts. I mean, this was, for those of us, so I was 21 at the time. My father was actually in the Pentagon the day that it got hit. So there’s a period of time where you just don’t even know if you have a relative alive or not.
And then of course, this unbelievable thing, you see the World Trade Center and you know about it as a thing and then it’s not there. And that’s this wake-up call in any number of ways, but one of the ways is just that it’s you can feel safe and not be safe.
And one of the things is to recognize that we have the ability to conceptually understand problems in that we can understand how they’re going to be caused and play out even before they happen. And to me, what you’re explaining now, somebody can try to refute it and I will be very interested. I’ll be very happy if they refute you, but in terms of just the fundamental vulnerability of our legacy infrastructure to the kind of weapons that China’s developing to counter us and to unmanned systems in general, that just seems very clear cut.
That’s probably already the case and certainly will be the case is we’re in this advantageous position where, although we’re late, we’re not at the 9/11 stage—
Ethan Thornton:
For sure.
Alex Epstein:
—where it’s just a catastrophe and then a few people warned us about it and maybe they get a lot of media attention, but it’s not that great to be right about things and see the catastrophe.
So one of the things I’ve hoped that other people get that I’ve gotten is just the sense of urgency, which I can always feel when I’m with you and around people around you. It’s like, this is very real. All the causal factors are there. We don’t know exactly how they’ll play out, but this is a very real thing and so now is the time to take this seriously and to think in as logical a way as possible about how to counter it.
So people should challenge you and others on the problem and challenge you and others on the solution, but I would be shocked if there’s not a huge problem and if the solution doesn’t require a fundamental change in how we procure weapons. So grateful to you for bringing that to my attention, and I hope that this reaches a lot of people.
Ethan Thornton:
Yeah. Thanks for having me.
Alex Epstein:
All right, man. Good to see you.
Ethan Thornton:
You too.
“Energy Talking Points by Alex Epstein” is my free Substack newsletter designed to give as many people as possible access to concise, powerful, well-referenced talking points on the latest energy, environmental, and climate issues from a pro-human, pro-energy perspective.
