“For two decades, no Secretary of Defense even bothered to set foot in Silicon Valley…” In 2015, Ash Carter finally changed that. This was the beginning of a wave that launched a thousand defense startups.

In 2016, Raj Shah and Christopher Kirchoff took control of Defense Innovation Unit X (DIUx). Their mission was to bring the military into the modern era. Shah and Kirchoff tell the fascinating story in the book Unit X.

Embrace the Suck

When Shah and Kirchoff took over, many defense systems were ancient.

The fighter planes Shah flew in Iraq didn’t even have a map to show where he was. So he brought a tablet and strapped it to his leg!

It’s an insult to our soldiers to make them go to war with materiel like this. But Shah and Kirchoff were determined to change it.

From day one, the Pentagon and Congress did everything they could to kill Unit X. A Pentagon agency froze their credit cards so they couldn’t pay for travel.

The red tape came down to two things: turf battles and mindless rule following.

Many in Washington feared this new agency would take away their power. Others followed rules to the letter without considering the intent of Secretary Carter or the President.

This is a recurring problem in our government. We hew to mechanical systems of rules and don’t let people use their judgment.

What we need to do instead is put good people in charge, give them a goal and a budget, and tell them to use their best judgment.

Moving at Silicon Valley Speed

In time, Shah and Kirchoff managed to get some contracts out the door. Many were paid pilots. If the startup delivered a prototype, they’d get a bigger contract.

The key was to move fast. If Unit X took years to release money, startups would run out of runway in the meantime.

Crucially, a young analyst named Lauren Bailey found an obscure provision in the massive National Defense Authorization Act (NDAA). It allowed Unit X to sidestep the usual years long procurement process and do it in months.

This was the key to allowing the Pentagon to work with startups. Bailey might make an excellent Secretary of Defense some day!

Soon, Unit X was dispensing big sums to innovative young companies.

Capella Space got $10 million over 18 months for its satellite imaging systems. This cash came from hitting milestones, not just completing the final product.

Unit X’s budget ballooned, creating the wave of defense startups we see today.

Lessons for Startups

These days, if you’re making a product the DoD wants, you can get a contract in a timely fashion. Castelion, a hypersonic missile startup, got a military contract within months of raising their first venture capital.

Right now, the Pentagon is heavily focused on China, Taiwan, Russia and Ukraine. If you have a product that could help in those theaters, your chances of landing a contract should be better.

The DoD is also interested in AI systems to analyze conflicts. It’s wonderful that the world has seen fewer large scale wars in recent decades, but one side effect is that AI systems lack data about conflict.

World War II is incredibly well documented. The Nazi regime in particular had a way of recording everything.

If we could get that data into machine readable formats, new AI models might produce valuable insights. That’s a startup I’d love to see.

Wrap-Up

Years ago, the Pentagon was impossible to deal with. It would take them years to decide if they wanted to buy your product — time you don’t have.

Those days are over.

Shah and Kirchoff’s work will one day be viewed as a turning point for our military. They taught the DoD how to work with startups.

This lets our military get the newest and best technologies instead of whatever slop the Primes cook up.

If you’re an ambitious founder, I encourage you to make weapons that will keep our country safe. It’s one of the most important things you could do with your life.

And if you have something great, send me the deck!

More on tech:

What If ChatGPT Does It?

The Coolest Startups from YC W25: Part 2

Is Biotech Having its ChatGPT Moment?

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