Technology and Defense: Future Prospects Under Trump Administration

Technology startups will thrive under new defense procurement models that reward efficiency and innovation.

### The Future of Defense: Insights on Leadership, Innovation, and the Role of Startups
* 🗳 The recent election outcome has sparked reflections on the next four years, particularly from a Trump supporter who has **backed him since 2016** and even **encouraged his presidential run in 2011**.
* 🤝 The supporter expressed admiration for Trump's vice presidential pick, J.D. Vance, noting his **incredible capabilities** and alignment with the need for **defense spending reform**.
* 🔍 Highlighting Trump's unique involvement in defense procurement, the supporter emphasized the importance of **aligning defense spending with efficiency and innovation**, aiming to **reduce costs while enhancing military capabilities**.
* 💡 Transitioning to defense contracting, the supporter criticized the current **cost-plus contracting model**, arguing it **incentivizes inefficiency and higher costs**, advocating for a shift towards **performance-based contracts** that reward **successful outcomes**.
* 📈 The rise of new defense startups is seen as a positive trend, with the supporter noting that these companies are benefiting from the **changing landscape** and are better positioned to **deliver innovative solutions**.
* 🏆 In contrast, established companies that fail to take responsibility for their shortcomings may struggle, as the defense sector becomes **increasingly competitive and aligned with private sector practices**.
* 🌍 The nonpartisan nature of defense innovation was highlighted, with the supporter noting that both **Republican and Democratic leadership** can contribute to a **strong military** and **support allies globally**.
* 🚀 Lastly, the conversation touched on Elon Musk's multifaceted role in technology and politics, with the supporter expressing **confidence in Musk's ability to manage various ventures** while contributing to advancements in **defense and space exploration**.

I want to keep it focused on technology. But I'd also like to invite you to start just to give you a reaction to the outcome of the election and I guess reflect your sentiments about the next four years. Well, I think it was obvious to most people who have been paying attention to what people are paying attention to. I know that that's contentious. A lot of people thought it was going to be close. I didn't think it was. Of course, I'm biased. I've been a Trump supporter for a long time. I supported him in 2016. I support him in 2020. I actually wrote a letter to him while I was in college in 2011 telling him that he should run for president. So I've been a fan of the Master, The Art of the Deal for a long time. It's nice to see it finally. And also a big fan of his pick in J.D.

Vance for vice president. He's done an incredible job. Everyone else has got to see that. But I've known JD for a while and he's an incredible, incredible person. But I remember my reaction on kind of the more business side. The defense side is it's great to have someone inbound who is deeply, I guess, deeply aligned with the idea that we need to be spending less on defense while still getting more that we need do a better job of procuring the defense tools that protect our country. Trump famously got involved in the nitty-gritty of some of our aircraft carrier design and some of that procurement of Air Force One. To see that level of involvement from a president is pretty rare and I think an indicator of his priorities. You wrote a letter to the guy back in 2011. Who knows whether that inspired his run. Palmer You're close, of course, with the VP elect as well. Are you talking about anyone to be the defense secretary?

If you got anyone there? Would you like anyone in particular? Look, I've got opinions. I'm in touch with the transition team. Of course, I know a lot of people who are involved with the transition, have known them for a long time in many cases. I've heard a few names thrown around for a potential secretary of defense, but also for the many roles that are in, you know, maybe not the secretary level. They don't get quite as discussed on shows like yours, but still very, very important. So, you know what? I don't want to throw any names out there because I would be happy with all. There's not there's not a single name that I'm heard that I'm unhappy with. And I have to I have to play nice and and not a not, not, not, not say, oh, well, I'd prefer this guy or that guy. All of the names that I've seen are

people who do an incredible job. Thank you. Palmer and Drill has spent years working with the Department of Defense as right. And I don't want you to reflect too much on the experience that has been, but maybe you could talk us through the changes you think are needed in that department structurally in terms of how government does business with private enterprise like Andrew? Sure. Look, I got into the defense space after I sold my first company, Oculus, to Facebook for a few billion dollars. Was working on VR there for a few years before I got fired. And the reason I got into national security is because I wanted to save taxpayers hundreds of billions of dollars a year by making tens of billions of dollars a year. And I think that that can be done by encouraging the creation of defense products companies that use their own money to decide what to build, how to build it when it's done, and then have skin in the game.

When they fail, they lose money. When they succeed, they make money. I think the set of incentives that you see in a lot of defense contracting today, defense procurement today, cost-plus contracting, where you're paid for your fixed time and materials and a fixed percentage of profit on top, it rewards exactly the wrong things. You make more money by making things more expensive, you make more plus by having more cost. And that manifests in the form of programs that go too long, programs that are too expensive, components that are more expensive than need be because it's really the only way to make more money on it. And in fact, in some cases, they make more money with things that break frequently than not. So I think what we really need is companies that are aligned with the way that we do business in the rest of our economy. You build a good product, you sell it, you make money. So in terms of contracting, if we see a

shakeup, will you benefit? The smaller startups benefit a little bit more than they have been? Who the winners? Who are the losers, do you think? Common. Well, I think the winners are going to be us, particularly two things. I think it's going to be a lot of these new startups that are springing up in the wake of Android success. I often say that other defense startups have raised a lot more money off my success than I have, which I'm fine with. And I've raised billions, but I've seen their pitch decks. They're saying, Hey, and Earl did it. The D.O.D. is moving with this. People understand that this is a viable business model. I think another beneficiary is going to be companies that have been around for a long time that are very, very competent, that know how to get things done, that know how to write a budget, that know how to build a team.

They know how to build a product. The companies that suffer are going to be the ones that try to shunt responsibility for their failures over and over and over again onto the taxpayer. I think they're the ones who are going to struggle. And I don't want to make this sound like it's just a Trump thing. This is a nonpartisan idea. I mean, Andrew has been around for about eight years now. We did well under Trump in his first administration, and we did even better under Biden in his administration. I think we're going to do even better now. The defense space is one of the few that is, I think, actually successfully remained pretty nonpartisan, and that's aligned with Andrew all to you know, I'm a Republican, obviously, I'm the founder of Andrew. But our CEO, Brian Jim, is a Democrat. He's fundraised for Pamela. He's done fundraisers for other Democrat politicians.

The idea that the United States military should have the strongest military in the world, and that we should defend our allies around the world, not just with our military, but especially giving them the tools that they need to defend themselves. It's a pretty nonpartisan idea. Palmer has the election of Donald Trump caused Andrew to adjust or change planning for China and allies like Taiwan? Oh, I don't think so. Mostly because I was certain he was going to win. I think it was already baked in. Okay. And one thing I'm fascinated by, and just bear with me on this one, Elon Musk. Okay. There's an association between the two. The great unknown is whether Musk will hold a formal or informal role in some government department. But I guess what's your assumption and planning on how much attention he can keep? Trump focused on defense space and what you kind of think it will actually lead.

to. Do you see what I mean? I think that Elon has outperformed every reasonable expectation, and I was one of the people, I have to admit, that didn't believe that he could successfully work on Twitter and SpaceX and Tesla and SolarCity and Neuralink and politics and everything else and Diablo for top 20 ranked all at the same time. It was. But he's done it. And so on the one hand, it's easy to say, oh, man, I think it's going to be really hard for him to do all of that. And also, you know, keep this administration maybe focused on things like space making humanity and multi-planetary species and extrasolar species eventually. But you know what? Everyone who's ever bet against Elon has come away crying. So I think I'm probably just going to have to say, yeah, I bet he's going to do it somehow. Somehow he's going to do it.

Safety and Defense Under Trump 2.0

Welcome to the Bloomberg Technology YouTube channel. Subscribe for original series and mini-docs on game-changing technologies, profiles on innovators, live conversations with experts, and breaking technology news & analysis from Bloomberg TV.

Bloomberg Technology

Reflections on the Election and Trump's Impact

The speaker, a long-time Trump supporter, expresses satisfaction with the election outcome and Trump's pick of J.

They appreciate Trump's hands-on approach to defense procurement and his focus on spending less while still ensuring the country's protection.

The speaker's long-standing support for Trump includes writing a letter in 2011 encouraging him to run for president.

Insights on the Transition Team and Defense Department Changes

The speaker is in touch with the transition team and has heard various names for key roles, including the secretary of defense, but is happy with all the candidates mentioned.

They have a background in the defense space and aim to save taxpayers' money by encouraging the creation of defense product companies with their own funding.

The speaker believes that having these companies invest in their projects will lead to more effective and efficient defense solutions.

Issues with Defense Contracting Incentives

Defense contracting's cost-plus model rewards companies for making things more expensive, leading to longer and costlier programs.

This incentive structure can result in more frequent breakdowns and higher costs for components.

The upcoming shakeup in contracting may benefit new startups and competent, long-established companies.

Nonpartisan Approach to Defense and Military Support

The companies that will struggle are those that repeatedly shift responsibility for their failures onto taxpayers.

The defense space has remained nonpartisan, with leadership from both Republican and Democrat backgrounds.

The United States' military should have a strong presence globally, providing allies with the tools they need for self-defense, a concept that is fundamentally nonpartisan.

Elon Musk has exceeded expectations by successfully managing multiple high-profile ventures simultaneously, including Twitter, SpaceX, Tesla, SolarCity, Neuralink, and politics.

Despite skepticism about his ability to juggle so many responsibilities, he has consistently proven his doubters wrong.

The speaker expresses confidence that Musk will continue to achieve his ambitious goals, including making humanity a multi-planetary species.