The Pentagon's AI Plan + Behind the Anthropic Fight — With Under Secretary of War Emil Michael

17:00Big Technology Podcast Host:And so the uses that we've talked about right now are largely, when we talk about LLMs in this world, largely their chatbot uses. Or I put them in the chatbot bucket, right? You have information, you synthesize the information, you get something that saves you time to make a decision. But now the AI industry is moving towards agents, right? Which is like the word connotes letting the AI take some action for you.

17:29Emil Michael:do you have a plan for agents here?

17:32Big Technology Podcast Host:Is that where this goes?

17:33Emil Michael:I think that not for things that require human judgment. No. I mean, again, you have to have an end point where it ends with human oversight and human discretion on the most consequential decisions, right? But you could imagine scenarios like I described with a drum swarm coming in at a military base at night and how do you deal with that? But again, that's not an agent use case per se. That's like a visual discrimination or discernment use case. And maybe you have a directed energy laser that could take them down and it's a lot cheaper than the alternative, a lot safer, a lot less collateral damage.

18:14Emil Michael:But in terms of agents, we've had some agent pilots at our enterprise level. Remember I was talking about the enterprise corporate level. just to do the mundane things we have to do every day. But those things are not sort of where we're at at the warfighting level.

18:28Big Technology Podcast Host:Okay, so if I'm hearing you right, basically the plan here is not to automate warfare. No. But the question is here, if you have your adversary who's doing that, let's say you're in a direct conflict, I mean, maybe it won't be China. Can you really afford to sit still and do it by the book? Because that's the worry, right? Is that these capabilities are out there, they're integrated, and it becomes tempting to like go into, let's say a Maven smart system and say LM is getting me 99 % of the way there, just finish it off.

18:58Emil Michael:No, and I'll tell you why. Not that I'm advocating for. I understand. I'll tell you why. Number one, that's the reason that US has to be AI dominant. So we're never facing a position where the counterforce AI is better than our AI and therefore we have to face those choices at all. Secondarily, people confuse automation with some sort of automated army, right? Automation, as I described to you in the drone example, what about an automated mine sweeping or mine detection operation? There's no human underwater that you want to find the mines. There's no human involved at all, but there's an action you want to take to do that.

19:42Emil Michael:Well, everyone would say, like, well, we don't want mines on our shores. Sounds like a good idea. or there's a missile coming at you and you want to take it down from space, like Golden Dome, like we've talked about. How do you do that, right? You have to do that in 90 seconds from when it's launched. So those kinds of things in the most extreme circumstances, you want humans to be able to rely on some automation capabilities. But in terms of mobilizing a whole army or a whole fleet of jets or a whole fleet of suites, that's not in anyone's mind. And we've written that there's a 35-page directive at the DOD that talks about human oversight and how we manage these systems, and we're constantly updating that and making sure we have the right controls on it.

20:23Big Technology Podcast Host:Yeah, one more thing about LMs. One thing that I heard is that they could be useful potentially in being another layer of data on top of strikes before they happen. So, for instance, the school in Manab, Iran, where there was markings outside of playground and hopscotch outside, maybe an LM in the future, if something like that becomes a target can be like basically flag it and say hey maybe don't don't shoot here

20:50Emil Michael:yeah this is the point i was trying to make with the driverless cars is like if a driverless car ends up detecting a jaywalker better than a human isn't that a better option um so when i say it it's there to augment human decision it could be on the front end or on the back end which is check and make sure this is um something that that we want to go after or hear warning signs it works both ways. But ultimately, humans have to make the decision. That's the end state. How that decision is contributed to, I think, LLMs, especially the ones that are trained on visual, you know, Google has your Nest Cams, it has YouTube, has a lot of human movement.

21:32Emil Michael:All these things have different data sets that they're trained with to some degree that are proprietary, could be very valuable. So that's why LLMs, I think, is going to go away as a term because they're not large language models only. They're visual, they're going to be used for robotics, they're going to be used for a lot of things.

21:48Big Technology Podcast Host:Yeah, and that's the general side of the whole AI part. That's right. Let's talk about drones briefly. You brought up a few times, I feel like it's worth discussing since it's part of your remit. Very interesting uses of drones in Ukraine right now. And we saw, I think, unprecedented uses of drones in the Iran war. Different use cases, One is an air war. One is a ground war. What are the main things that you've learned watching this in action? And how do you think it changes, again, the way fighting might happen?

22:18Emil Michael:Yeah, two different—you're right to point out two different scenarios. So in Russia, Ukraine, you have a battle over territory. And so that battle over territory where the lines are drawn means that with the drone warfare, the robots are the front line and the humans are back. and the idea is, well, why risk a human going in front if you could send a machine first and see if you could fight it that way? Still a lot of destruction, death there, that's obviously sad and unnecessary, but I don't know how much more there would be if you had a Civil War-style thing where you have humans on humans. In Iran, the drones, I think the lesson from that is that the imbalance of costs, right?

23:07Emil Michael:You have a cheap drone going against very expensive targets. Right, and also millions of dollars to shoot one of those things down. And to protect your exquisite targets on your side against a very cheap drone, you have to use expensive countermeasures. And so the lesson there is how do you turn the dial from, Maybe we should have more mass attributable weapons like drones or counter drones that are affordable so that the cost ratios are similar as opposed to a country that can afford cheaper stuff being able to threaten expensive assets on our side. And for me, that's been a big push in this department, which is how do I bring, we call it mass-intuitable weapons that are not exquisite, that can be delivered quickly, that are designed to manufacture for manufacturability, that are cheap, that you can afford to lose, as opposed to the big stuff that we build that takes 10 years to build that costs billions of dollars.

24:10Emil Michael:Yeah.

24:11Big Technology Podcast Host:So let's tackle both of the ways that the U.S. is working to head off these threats. Let's start with this, the bigger drones. shall we say. So there's a program here, Lucas, right? Low cost,$30 ,000 a pop. You can send them out. And do they crash into the other drones? I mean, what's the point of, or do they do the same thing that the drones do?

24:32Emil Michael:They have the same, the idea is that the Shahid drones that the Iranians had, a one, we call it a one-way attack drone, long distance can go fast, but cheap to manufacture. These are sort of that. And they could do a lot of things. They could be defensive, take out other drones, or they're going to be offensive. And they're designed to be cheap to manufacture. If you lose a couple, you're okay, right? Just from a financial standpoint. And, you know, they're using the same way in theory.

25:07Big Technology Podcast Host:Are we working with Ukrainians on this project? I mean, there was like some headlines that the Ukrainians offered to help. We turned them down. And now what's the story there?

25:17Emil Michael:You know, there's two levels of this. This is sort of the grand sort of United States-Ukraine relationship, but we just launched our drone dominance program, and I think there was two Ukrainian companies in it. Okay. We're going to be like, you know, onshore manufacturing here and take some of the learnings with them here to help us with our kind of smaller drone, you know, scenario. And so we're sort of agnostic to that, but we want to divest of supply chains from adversaries. So that is one of the requirements is that the drones that we use at the drone dominance program don't have a dependency on adversaries.

25:57Big Technology Podcast Host:Okay. And that touches on the smaller drones are the ones that are being used in the land war, the DGI style drones. Yeah. First person view. Right. Exactly. You know, China has been putting on these displays, epic displays of, you know, the drone art in the sky.

26:16Emil Michael:Or swarms. Drone swarms.

26:18Big Technology Podcast Host:right to call it what they are what they are and you know at a you know at first look it's like man like china is really innovating on fireworks but then you realize this is completely a military

26:29Emil Michael:simulation could be um i mean i think that's the scenario that uh that you know i've tried to explain i do think it's it's it's something that these ai companies understand what's explained to them and you could say like you see that drone art display that you saw imagine those were armed drones and imagine that they were communicating with each other and they could therefore you know form and reform in ways against your defenses how do you defend against those and where and depending on where where you are you may have a fully defendable garrison let's say but let's say it's it's it's a small military base let's say it's over the border how do you deal with these things And that's like something, it's a new challenge that wasn't present or we were, at least wasn't, we weren't thinking about before the Ukraine-Russia war.

27:19Emil Michael:So what is the answer?

27:21Big Technology Podcast Host:Like is the U.S. working on the defense side of that and on the offensive side?

27:24Emil Michael:Both. Okay. All the time, right? We, you know, drone dominance has both elements to it. We have a counter UAS, counter unmanned systems task force that's looking at everything from lasers, directed energy, which is one of my critical priority areas. to how do you do electronic warfare on these things to take them down. They're all run in some way. So there's lots of different measures and countermeasures. That's what makes this time in the department so interesting. The nature of warfare is changing. Technology is getting more capable. The actual ability to access technology is becoming cheaper.

28:01Emil Michael:The need to have these systems interoperate is never greater because what is a drone swarm? It's a set of interoperable drones that work together and you could see them in the sky like you're talking about, and you could imagine what their military utility might be. So the tech problems there are super interesting, right? Right. They're hard, but they're interesting.

28:21Big Technology Podcast Host:Now, briefly on the cyber warfare side of things,

28:24Emil Michael:I imagine AI could really impact that side of warfare. It seems so. It seems that models that are trained on code can learn vulnerabilities in code. is what these companies are saying. And that presents risk and opportunity. But, yeah, I mean, they're obviously, you know, what you've heard in the news yourself and it's been released about the cyber capabilities that are almost here, are certainly going to come from every frontier model company. At some point, it's certainly going to be, you know, try to be distilled by the adversaries, are going to be the next wave of innovation from these companies.

29:13Emil Michael:Okay.

29:13Big Technology Podcast Host:So it's clear, I think, from the beginning of our conversation that AI is becoming critical in what the Pentagon does. It's helping synthesize information in some areas, it's helping with targeting. Clearly, you need it for drones, and you also need it if this is going to be a new cybersecurity front. So I want to talk about how you pick the AI vendors. So We're going to talk about the situation with Anthropic and then a few other topics when we come back right after this. I've interviewed a lot of great tech founders on this show. And one surprisingly universal challenge comes up again and again, finding the right domain name.

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32:54Emil Michael:Well, I would say this, which is they were the first to aggressively try to provide service to the government after the Biden administration's executive order about AI. Because they were, and again, you see this in the marketplace too. OpenAI was more focused on the consumer with ChatGPT and the subscriptions. XAI sort of hadn't been started really until 18, 24 months ago. And then Google was also focused more on the consumer. They were focused more on enterprise. When I say enterprise, I mean enterprise writ large, an enterprise like the Department of War or an enterprise like a big company. And so they were naturally started sooner here.

33:42Emil Michael:And I think there's a certain portion of people at all these companies that all now have a government division that are all going to start, you know, understanding the vernacular a little bit. And we can have conversations like you and I were having about what are the meaning of some of these advancing capabilities of the world. But, you know, from a culture standpoint, I think we think about, you know, we live in the bureaucracy of what we have to do every day to innovate and to reform. And I think the image that they might have, and this is not unique to them, of the Department of War or the administration, is that we don't have the safeguards that we do, that we're not paying attention to sort of the risks.

34:32Emil Michael:We are, if not more so than most Americans would understand that we do. Because of the procedures that have built up over decades and decades of being careful and smart about what we do. And so that culture clash to the extent is what we call a lack of understanding, a lack of confidence, lack of trust in us and our ability to do things in a way that's consistent with our values as a country and the laws that are passed. And that's, I guess, how I would describe the difference.

35:01Big Technology Podcast Host:Okay. And just to recap what's happened between the Pentagon and Anthropic recently. They were in Maven's smart system, like we discussed. there were all these provisions in the contract that the team here didn't like. So there was a renegotiation. It almost came together, but there were two things that Anthropic wanted to include in the contract, a provision against mass surveillance, a provision against autonomous warfare. And ultimately, there was not an agreement there. Right.

35:32Emil Michael:Although I would say the following, which is just sort of clear the provisions that were in the contracts that ultimately serve the department of war said you can't use it for planning kinetic actions you can't use it to develop weapon systems so all the science engineering aerodynamics all those were the original stipulations they agreed to throw that out uh but but they but it took three months examples, hand-holding examples to say, well, what about this example? You can't run a department of 3 million people by exception. You have to have, especially if you think about AI as an intelligence layer, they've applied to many things from aerodynamics and physics and math to synthesizing information to anomaly detection, whatever.

36:25Emil Michael:And we run hospitals, we run schools, We run weapon systems, run defensive systems to protect against all these kinds of things. So to go by exception and try to say, well, how about this scenario? How about this scenario? It became not tenable and took a long time to get there. And that's where you started to say, like, are they aligned with our mission here? And then the idea that autonomous weapons were an issue was sort of, I think, more marketing than anything. because we have our own policy before they showed up that talks about that. And we affirmed that we will have human oversight on all decisions militarily that are made using their AI.

37:11Emil Michael:So what else can you do? You're like, we affirm human oversight. We have these directives ready. We have the laws. And eventually they agreed that there was no problem there, but they marketed it as an issue that we were disputing at the end, which is odd. On domestic affairs, we are not a domestic law enforcement agency. We do not have authorities to do domestic mass surveillance. So it was sort of like you have Congress that passes laws, the National Security Act of 1947, the FISA Act, all the civil liberties that are enshrined in law and in the Constitution. And I said, affirmed, we will follow all those laws and all future laws.

37:53Emil Michael:and all the authorities were granted and not granted, right? We're not the FBI. We're not Homeland Security. But again, that wasn't enough. They wanted us to rewrite the law because they thought Congress was just behind. They weren't understanding that new tech allowed new capabilities. But again, it's not our mission. We don't have the authority to do it.

38:14Big Technology Podcast Host:Okay, but here's the thing, right? And so eventually the contract was ripped up. They called it off, yeah. Right. And I think deciding not to work together makes complete sense if you have a value misalignment. But then the Pentagon took it a step further, deemed anthropic a supply chain risk. And that one I'm a little bit puzzled by because if you were so close to being willing to work with them, if they agreed to all lawful uses of the technology being used by the Pentagon, then how could they end up being a supply chain risk, which basically means that the Pentagon won't work with them, any government contractors can't work with them.

38:53Big Technology Podcast Host:And the administration took it a step further and said no government agency should work with them.

38:58Emil Michael:Well, I'll speak to what Department of War cares about in our supply chain. If Lockheed Martin builds a weapon for me, and they're using a technology to help them do some of these science-oriented things, physics, aerodynamics, and so on. and the vendor has expressed an unwillingness to want that to be part of the use case, well, then what am I getting in that system that's eventually going to come upstream to our war fighters? I don't know. What if they decide to change their red lines? What if the model hallucinates because its values are like, we don't want to cause this to be used in a kinetic way?

39:41Emil Michael:Those were the things currently in the contract. So you worry about the downstream implications of that on everything that leads to protecting the warfighter and defending the country. And so it is a legit worry if their alignment with our mission is not real.

40:00Big Technology Podcast Host:But then you also limit yourself in a way to some of the capabilities they might have. I mean, if you think about Mythos, we talked about cyber warfare. Mythos is their new model. It's in preview. There's a project called Glasswing that has a bunch of entities that have come together and they're trying it. And one of the things about Glasswing and about this Mythos model is that it is convincingly good at cybersecurity and cyber attacks. This is from the AI Security Institute. This week, we conducted cyber valuations of Claude Mythos preview and found that it is the first model to complete an AISI cyber range end to end, which means it's a 32 step corporate network attack from initial reconnaissance to full network takeover.

40:46Big Technology Podcast Host:We estimate it would take human experts 20 hours to complete. So you're saying it's an AI cyber weapon, automated? Autonomous cyber weapon. Here's the thing. I'm encouraging the use, but I'm saying that you talked about the drones that are meant to hit other drones. Wouldn't you want this tool at this disposal? I mean, there's an argument to be made, and I'm curious to hear what you think about it, that you sort of put yourself in a corner when you're not taking these capabilities and using the ones that you want.

41:15Emil Michael:The original sin was in the past administration choosing one AI provider and having no options. Because it is a gargantuan effort to get these software things onto classified networks. A lot of complexity to do that because they're secure networks. This isn't AWS cloud for consumers. So the original sin was not having more than one provider. so that you had more options. But I also believe if you talk to every other of these frontier AI companies, they're going to have similar capabilities. But they don't yet. But, you know, if you were to use that, yeah, but they will soon. Like if you look at the distillation attacks that our adversaries are using based on our models, how long do they take to show up in DeepSeq or any of these other things?

42:11Emil Michael:After a couple of months. Yes. So if you think about those timelines, you're just thinking about the timelines. And we'll never sacrifice capability for national security or anything. So I think we're cognizant of what's happening, and we're working with every model company, and we feel good about our posture there.

42:32Big Technology Podcast Host:The other thing that people say about this, and I'd be curious to get your thoughts on it, is that you can look at the history of companies that have been deemed supply chain risk to the Pentagon. It's very rare if unprecedented for a company like Anthropic to be banned that way. So why do you think it rise to the level? And do you think it merits this fairly unprecedented action?

42:55Emil Michael:Well, I mean, on one hand, you can't say that they have this cyber nuclear bomb. And yet we shouldn't be worried about how those capabilities enter and remain in our supply chain. Those two things are inconsistent, right? And I'm not blaming you. I'm just saying that if you believe they're going to cause 40 percent unemployment, if you believe that these things have a capability that you put 50 ,000 geniuses in a data center, they're going to coerce the world. that could create bio and chem weapons. Of course, the Department of War is going to want to understand and constrain those things so that they don't do something unintended on our side.

43:43Emil Michael:So these companies are talking about their things in apocalyptic terms, which make it necessary for us to judge the management teams, judge their actions, look at the terms of service, understand how they fit in our supply chain. This technology is like nothing we've ever seen. So you can't compare it to, you know, a chip from a foreign chip manufacturer that gets put in the supply chain. This is a whole different thing because of just what you said is the power of what they're saying it's going to do. The disruption might cause an American life. And we don't if someone developed a nuclear bomb in their in their garage, you don't think we'd have anything to say about it.

44:23Emil Michael:Of course, we would. Or a biological weapon or any of these things. So I think those are things that heighten the awareness that we have of what these models can do and where they're going.

44:34Big Technology Podcast Host:Okay. I just want to talk about this one more level, which is a practical level, which is, and you've mentioned this in interviews before, that Anthropics models were hosted on Amazon's cloud, their government cloud. And so they upload the weights to the model, and then you use it through Amazon. So let's just take the Lockheed example. If Lockheed is designing some systems and Claude is baked in there, Claude, I mean, Anthropic wouldn't have the capability to turn that off if it's hosted somewhere else. Maybe upgrade it, and in which case you flip them out, but to turn it off, they don't really have that capability.

45:16Emil Michael:No, I mean, I think where you understand how this technology works better than most, how many the upgrade cycles for these things are now compressing to now three-ish months right so every three months you have a new set of uh model weights a new set of guardrails a new set of uh bugs the way the model behaves the way it hallucinates or doesn't hallucinate um the way it does refusals where it refuses to answer certain questions and there's this important anecdote which was written about, which was, anthropocis also serving the Centers for Disease Control. And so you have some scientists going there and learning about pathogens.

46:01Emil Michael:And they assumed that was a bad actor. And it took them, they refused to undo that refusal. But that was the off-the-shelf model. Where was it? Sure, it was the off-the-shelf model, but what's to stop that from being the next model? We don't know. So the point is, to have a reliable partner, you have to have alignment on these issues, which is we have a national security mission. We want to use it for all lawful use cases. In HHS's case, it would be all lawful use cases, and it's lawful for HHS to be doing pathogen research. Totally. Right? So if that's - You would hope that that's what they're doing.

46:37Big Technology Podcast Host:You would hope that's what they're doing.

46:39Emil Michael:So for someone to have made the judgment to turn that off, and they're like, oh, well, it was an old model, this, that, that's not how it has to work in the future. If you are truly an American company that's trying to protect Americans and do good things for Americans, the government has to be able to use this powerful tool to succeed in its mission. If I'm hamstrung by their choices, that's what gets in the command and control structure.

47:05Big Technology Podcast Host:But haven't you solved this to a degree? Because if you just have Claude, then I totally see it. But if you have Claude and Grok and OpenAI in there, then maybe if Claude makes an update you don't like, you let OpenAI run with the next iteration.

47:23Emil Michael:I mean, if we hadn't had made the original sin, I think you'd have had them competing for the government business. had they been competing for the government business, like in any non-monopolistic scenario, power would be balanced between customer and vendor. And eventually we'll have that. But we didn't have that. So then they could make those choices on their own.

47:48Big Technology Podcast Host:So I asked about the culture side of things in the beginning. And there's also this perception that, well, and I mean, I have a decent read on the government and a decent read on Anthropoc. They're definitely different cultures. And the other read on this is, okay, maybe there were some things that the government was uncomfortable about. But this really just came down to a culture clash where like even I think, wasn't it Pete Hegseth? And when he tweeted about Anthropoc said, you know, we're not going to let any woke company tell us what to do. is it possible that this is just a culture clash versus the bigger thing that it turned into no

48:31Emil Michael:because i mean i would tell um i would tell the anthropic guys that came to me this is independent politics i just care about having the best system for our war fighters why would i spend three months if it was a culture clash andrew rossurkin asked me the same thing on cbc he's like you just you know, you're not buddies with him or your buddies. It's like, I've never met any, I don't know these guys. I know the culture of Silicon Valley. So I did take a lot of time to try to explain as a transplant to the government, here's why this matters. Right. Here's some scenarios. And eventually we got to a point where it was just, they wanted control.

49:13Emil Michael:And you can't have control of the Department of War's actions and activities so long as they're legal and consistent with our guidelines.

49:22Big Technology Podcast Host:And so those on the outside who look at this and they say, okay, supply chain risk designation, no government agency can work with them. This is effectively the federal government attempting to destroy Anthropic because of a procurement dispute. I mean, destroy Anthropic does tripled in revenue in three months or tripled in valuation. They're doing okay. That's silly.

49:44Emil Michael:So it's silly because the percentage of revenue that we represent of any of these high-high companies is infinitesimal. It's just we don't want them in our supply chain. We don't want to use them. The president decided that he doesn't want the government to use them. There are great alternatives, and we're going to have to fix past mistakes by ensuring that those alternatives are available and have high confidence, if not more confidence, that these other models will be the same or better over time. Okay, last one on this. And thanks for answering all these.

50:16Big Technology Podcast Host:It's good to get your perspective. The judge in the case, or one of the judges in this case, because Anthropic is suing to have that designation removed, Judge Rita Lynn said, The Department of War's records show that it designated Anthropic as a supply chain risk because of its hostile manner through the press. Punishing Anthropic for bringing public scrutiny to the government's contracting position is classic illegal First Amendment retaliation. retaliation? Did it have anything to do with the press, the press strategy?

50:44Emil Michael:I mean, I shouldn't comment on a legal case, but I think the notion that a First Amendment claim is going to hold up would be shocking because that means that the government has no choice to make, right? If a vendor, any vendor says, I don't agree with your term, and they're like, well, that's why we're not going to hire you to do, you know, whatever kind of work we do, translation work at the Department of War, and that becomes a First Amendment claim, then it sort of would be so overreaching that it would be not workable. So I feel like that was a throwaway. But I will say that, you know, the thing that makes the Department of War different than most other agencies.

51:37Emil Michael:And I don't mean this to be dramatic, but we really do have lives on the line. And when people talk about government bureaucrats and them not caring, the people here, the career people, they care. They really care. They care about the warfighter. They care about the country. It's a really patriotic place. And it is very nonpartisan in the middle of the Pentagon. We have 3 million employees. And so that mission is very sensitive. So we are sensitive to the relationships we have with these companies because there's a lot of unpredictability in our business. So something happens in Iran and we need companies to move fast.

52:17Emil Michael:You have to have some trust with them. You have to have some shared values. You have to understand they have economic interests. And then we have to understand that our needs are going to change based on the threat environment. And so that kind of matters. So they could litigate in the public all they want. That's fine. But do we have alignment for real? When we get in the room and we are facing a conflict, are we aligned?

52:43Big Technology Podcast Host:So I was pretty impervious to that stuff. There's a website, genai.mil, that's available to the people in the military here. And interestingly, Google is in there. Gemini is in there. Yeah. And Google went through something similar, even somewhat more explosive, where the employees protested. And yet, here they are. They're working with the Pentagon again. I mean, forgive it to a degree. Could that happen with Anthropic?

53:10Emil Michael:I think so. I mean, I believe that when you combine, like, you know, if you fast forward from 2018 where the Google Maven thing happened to 2026, and you talk to people from Google who are involved in that, I think they regret it. And they regret it because it's probably the same reason. They didn't understand what we did here. And what we do here in this administration is going to carry forward to other administrations because we're at a crucible moment for AI. And that's going to be, could be an administration of either party. So whatever decisions they make, if for us it's non-partisan and it's for the future.

53:48Emil Michael:and I think and I hope that companies that went through that moment in 18 like Google kind of as they get more mature and more of an understanding of what it means to work with the government and understand us better get to a good spot. Hopefully sooner than eight years. Yeah, that did take a while. Yeah. But I will say Google's been an excellent partner before this Gen.AI got mill. They shifted in a big way. I mean the whole tech industry when I was there an Uber in 2016, 17. Wouldn't touch the stuff. Huh? It was just the employees and sort of, I won't call it a little bit of a mob mentality where employees had a lot of say over what their products and services were doing.

54:36Emil Michael:And senior leaders and founders were very sensitive to that. I think that sensitivity has gotten a little more balanced right now. If you don't want to go work at Palantir, don't go work at Palantir. There's a ton of other places. You don't want to work at Uber? Don't work at Uber. I think the balance is in a better place. And I think Silicon Valley, because of the fact that we're doing more outreach to them, there's more California companies, both Southern and Northern, are going to succeed here. Hopefully that knowledge transfer will happen faster.

55:04Big Technology Podcast Host:Let me bring up one more headline. There's a story this week that also says that you had some XAI stock. Do you have any SpaceX? Is that a conflict?

55:14Emil Michael:conflict i sold all my spacex okay and i recuse so what happens when you take one of these jobs you you show your whole sort of list to the office of government ethics non-partisan they go through it and they say we think these things are these things are red lines you sell your defense company stocks which didn't have much spacex was on the list so you have to sell that um and then depending on your role here's the things you have to sell that might be specific to your role. And then based on the kind of connection to that, you could recuse yourself from dealing with the company. So I just recused myself from dealing with XAI until I could sell.

55:51Emil Michael:And I was pretty active about it because I didn't have the AI portfolio until the fall. So I got the AI portfolio. I was like, hey, I'd like to be involved in this. I'd like to not recuse myself. They said, well, you have to sell. Great. Give me permission. Got permission, sold, was recused in the meantime.

56:07Big Technology Podcast Host:Okay.

56:07Emil Michael:Two more things I want to speak with you about.

56:09Big Technology Podcast Host:I'll be quick as we come to a close. First of all, I think every time we have this conversation, a conversation like this, we have to talk about procurement. And it's like, I know I can tell half the audience is ready to go to sleep now, but it's really important the way that these services are bought because like the Pentagon budget, for instance, has been, I'll say inflated because some of the vendors have charged more than an arm and a leg for services. So talk a little bit about how you're working to reform the procurement process and why that's going to be good for people.

56:43Emil Michael:Yeah. So in the 80s, during the height of the Cold War, we had about 50 defense contractors, five zero, and they consolidated down to five. So that was one sort of dramatic reduction in the number of competitors for anything. And then we outsourced a lot of the core capabilities to other countries. So the supply chains got brittle. And China didn't have a military buildup until in 2010. So you put all these two things together and you said, wow, what was happening is we have a small number of competitors. They were taking less risk. So we were paying them for cost plus. And now some of this, and it's important for me to say this over the time I've asked this, some things are so speculative that no company can economically do that unless you're financing some of their R &D.

57:38Emil Michael:So there are things that are 10 years out, 15 years out, 20 years out that you have to do that. But because the nature of warfare is changing and because there's defense, the greatest VC boom in defense tech in a country's history and because you have founders like Palmer Luckey and all these folks who are willing to go into this business, um you've it's made us much more able to do business deals so right so sure or audience who's bored with procurement talking about business deals it's important we can now do deals where if you deliver a weapon and it works on time you get paid and if you don't you don't imagine that imagine that and guess what if you do it cheaper so you make a little bit more profit I'm okay with that.

58:29Emil Michael:Right? So there's a little bit more risk sharing there. And I think ultimately, especially for things that are easier to produce and quicker, they're not taking a huge R &D risk like you're inventing the next, you know, space shuttle that can land on the moon and be there for, you know, three years and build a base. Like all the things are, you know, very speculative, hard things. I think you'll see us moving a lot more toward business-oriented contracts, which is good for them and good for us. Definitely. And better for the taxpayer. Yeah, most importantly.

59:03Big Technology Podcast Host:I think we pay enough taxes

59:04Emil Michael:that we should know where it's going

59:06Big Technology Podcast Host:and hopefully it's not wasted. All right, I don't want to leave without asking you about the Pentagon Pizza Index. Are you aware that there are people tracking how much pizza is ordered near this building? We're at the Pentagon and they've used it to predict military action.

59:22Emil Michael:I've seen that on X. honestly i wouldn't have no idea where you get a pizza delivery to come into the pentagon because there's a specific papa john's no i i i'm not doubting that but i actually don't know if i went back to my office right now it's like how how would i order a pizza from outside to be

59:40Big Technology Podcast Host:delivered in i'd have no idea so you're not a believer in the pentagon pizza i'm not a believer in the pentagon pizza index we shouldn't take it seriously huh we shouldn't take it seriously

59:51Emil Michael:I'm not a believer in it because I literally don't know how you get any food delivered from the outside.

59:58Big Technology Podcast Host:This is the Pentagon. You're telling me the Pentagon can go to war with countries thousands of miles away, but it can't get pizzas in the building.

1:00:09Emil Michael:I'm sure there's a way someone could walk out to the edge of the Pentagon, receive a pizza, and bring it in.

1:00:15Big Technology Podcast Host:This place is the best logistics operation in the world.

1:00:18Emil Michael:There is – look, I don't know. What if someone's messing with it to mess with the prediction markets? I wouldn't put it past anybody. Okay. So therefore, it's inherently an unreliable measure in my view because it's easy to corrupt it. So the pizza around here. I think there is a pizza place or two inside the building that close at 5.

1:00:45Big Technology Podcast Host:That's why they look at the late night Papa John. Apparently. I'll leave it at that. Mr. Undersecretary. That was the last question. I wouldn't have guessed that.

1:00:54Emil Michael:My pleasure. All right. Thanks for coming all day, DC.

1:00:57Big Technology Podcast Host:My pleasure. Thanks for having us in person. Thanks, everybody, for listening and watching. You now know the secret to the Pentagon Pizza Index. We'll see you next time on Big Technology Podcast.

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