Amid a burgeoning arms race with China, an expert is warning the Pentagon is set up like an outdated Detroit automaker, while China is modernized like a Silicon Valley startup.
"China is organized like Silicon Valley," Gordian Knot Center for National Security Innovation at Stanford University co-founder Steve Blank told The Wall Street Journal. "That's not a fair fight.
"If you don't see 10 new names in the next three years, we're failing to actually integrate commercial technology into the DOD," he added. "That's the ultimate test."
The Defense Department is seeking to tap into private capital to spur innovation and production to bolster the ranks for U.S. arms makers, which have become limited and overly reliant on government contracts.
China is more advanced on some key weaponry, from drones to hypersonic missiles, and is pumping up to $1 trillion into its public-private structure to stay ahead of the U.S., past and present Pentagon officials told the Journal.
A Biden administration Pentagon budget plan is requesting $115 million for a new Office of Strategic Capital to help non-arms makers get in the business to bolstering U.S. military arms production.
All this comes as Silicon Valley Bank and its venture capitalist clients got stuck in a liquidity crisis that ultimately forced the Biden administration to guarantee deposits that are over the $250,000 covered by the FDIC. That would have directly impacted access to capital for the U.S. defense production.
"It was a very close call," Strider Technologies Inc. co-founder Eric Levesque, co-founder of Strider Technologies Inc., told the Journal. "Sigh of relief."
The collapse of Silicon Valley Bank would have had a direct impact on weapons production by causing "immediate problems in the current supply chain," former director of the Pentagon's Defense Innovation Unit Mike Brown told the Journal.
The dangers of a destablized world and struggling economies are making defense the best bet in business and investment now, according to the report.
"You really can't deploy capital into crypto anymore, you really can't deploy capital into e-commerce anymore," venture-capital Founders Fund partner Trae Stephens told the Journal.
"Where am I going to deploy capital? Well, there is a recession-proof category, it's defense."
The Pentagon is a popular destination for startups.
"It's the younger, innovative companies that are dominating the cyber, AI, software spaces," America's Frontier Fund CEO Gilman Louie told the Journal.
While war is modern and utilizing technology Silicon Valley can provide, particularly in the way of artificial intelligence and quantum computing, there is a kinetic war going on in Ukraine, which is deleting U.S. weapons stockpile, experts warn.
"The tech bros aren't helping us that much in Ukraine," Pentagon acquisition chief Dr. Bill LaPlante has said, which he expounded on to the Journal.
"What I was really referring to are the kind of aspirational, often-elusive technology capabilities that have not yet developed on a time frame that'll impact the battlefield in Ukraine," he added.
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