The Future of Drone Warfare

0:00The industrial capacity of China is fearsome. Being able to deploy highly autonomous AI -driven drones at scale is still a domain that we can win in. I think the technologies that matter most of the future of war are right there and front of us. Living a modern conflict becomes basically like a software writing fight. It will be the pace of deployment that is the make or break for militaries around the world. The game theory here is just as simple and obvious as it can be. Unless we find a way for industry and government to work together, we will find ourselves in a very tough situation. Will Durant once said, quote, war is one of the constants of history, unquote.

0:47And while the presence of war has not changed, the way it's conducted has. It is technology, whether steel, gunpowder, radio, GPS, or nuclear weapons, which have defined conflicts over the era. And while the images of tanks or machine guns dominate the visuals we have of war, these are not the decisive technologies of the future. And here's the thing, the future of warfare isn't coming, it's already here. It's fought in the skies over Ukraine, Israel, and beyond by AI -empowered drones. These drones have become a crucial weapon of war, with asymmetric capability where a handful of drones costing hundreds or thousands of dollars can disable equipment like tanks or aircraft that cost orders of magnitude more.

1:31We're literally off by like three orders of magnitude. Within a few short years, drones have gone from a reconnaissance tool to one that ensures aerial and battlefield dominance. The Army with more drones has a decisive advantage. So, with China dominating about 80 % of the global drone market, what does that say about our national security in the growing power competition? Why have we fallen so far behind and what will it take to build up our domestic drone industry? Plus, where should autonomy play a role in military decision making when lives are literally on the line? In today's episode recorded live at our third annual American Dynamism Summit in the of Washington, D .C., A -16Z's Senior National Security Advisor, Matt Kronin, sits down with two people who have been thinking about these questions and building solutions, dating all the way back to when this industry was full of hobbyists.

2:21That is Ryan Seng, co -founder and CEO of Shield AI, and Adam Brie, co -founder and CEO of Skydo. Shield has been building intelligence systems like AI -powered fighter pilots and drones since 2015, While SkyDio has been manufacturing drones for use in the battlefield since 2014, and today is the largest US drone manufacturer by volume. So who will command the skies in the years to come? Listen in to find out. As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund.

3:04Please note that A16Z and its affiliates may also maintain investments in the company's discussed in this podcast. For more details including a link to our investments, please see A16Z .com slash Disclosures.

3:21We're here to chat about drones, autonomy and great power complex. Now both of you have started incredibly successful and innovative drone -focused companies. At the same time, both of you started when the industry was truly nascent. It was seen as a field for hobbyists rather than something that could actually shape the future of warfare. So what led you to be interested in this field and to spend so much of your time, blood -swedding tears on this now incredibly important industry? I had started and sold the company to Qualcomm, and I've always been somebody that has had an intense passion to compete, fight, win at whatever I was doing.

3:59And in my last year of Qualcomm was there for about four years. I didn't have that fire in the belly that I had had throughout my life. And so I started thinking about what it was that would really motivate me not for the next five years, but for the next 50. And I decided that if I could find the intersection of three things, a noble mission, the chance to work with extraordinary people and a chance to define the possible. I'd have that fire in the belly and my brother went on to become a Navy SEAL, a totally different track in life and he was getting ready to go to business school. I encouraged him to think about what he wanted to do in life.

4:32And he came into me with the idea of bringing the bus to what was going on and the autonomous driving sector to the mission of protecting service members and civilians. He felt like if somebody would do that, it would have brought home a lot of his friends safely to their families and he felt like it would be a pillar for the future of American military dominance. I thought it was an extraordinary mission. I told you earlier, I thought it was a stupid business. And so I wished him luck and suggested that he come up with a better business to make mission impact. But seals are very persistent people.

5:03My brother is no exception and sort of long story short. I started to spend more time with him learning about the challenges and I was just shocked by the scope of the problem and how little was being done about it. And I've been proud and humbled every day for the last 10 years to have an opportunity to contribute to a mission that I think is so important. Incredible. One glad seals are persistent in general. And I You're right. You're along in this important mission. Yes. What about you? Yes. We come at this from very different places. First thing, I think that shield deserves just enormous credit for 10 plus years ago, recognizing the need and the opportunity for what we now think of as defense tech at a time when that really did not exist.

5:42And people thought they were crazy for even trying candidly. I don't think we get that same kind of credit. So I grew up flying radio control airplanes. I've basically been doing grown stuff my whole life. And that led me to be a grad student at MIT in the late 2000s, early 2010s, when you could basically take radio control airplanes and put computers and sensors on them and write software to get them to do smart stuff. So I really became obsessed with trying to build AI systems that could fly better than people could. And I wasn't thinking so much about applications at the time, but in 2013, 2014, my lab made and I started to look out and see there were interesting things starting to happen with small, like quadcopters.

6:18and we felt like the applications and implications of the technology could be enormous, but needing to have an expert pilot there flying, it was just sort of a fundamental restriction. So the big bet that we made when we started SkyDio was that AI and autonomy built into a small like quadcopter was gonna be very powerful for a wide range of industries. And the government and enterprise applications were always part of the vision, but we explicitly decided to start with a consumer product because we thought that something like light, integrated, easy to use would be a really good platform for this other stuff.

6:48And for me personally, when I was in grad school, I was wrestling with, you know, I love this technology. I wonder if I want to keep working on it. I'm like, I'm going to have to go work for a defense contractor. I deeply believe in like the mission of the US military, but the idea of working at a traditional defense contractor was very unappealing to me. And so we started with a consumer product and it's reflective of kind of the trajectory of the space that very quickly, you know, like 2018, 2019 time frame, and I think to the credit of the US military, they realized that these small lights, civilian quadcopters had enormous value on the battlefield and the technology from consumer to enterprise to military is so tight that in the span of a year, basically, we won our program of record, the Army Shore Range Reconnaissance Program, and I think it was officially announced in 2021, but it really started in 2018 -2019.

7:34And that was the beginning for us of expanding to serve a much broader set of markets. Adam was also part of my early story. I don't know if you know this atom, but I read all of your papers. We've learned a lot since then, but it was the foundation. Good stuff. I mean, look, a lot of the ideas that we use at ScadiOK came from the research community, some of the research that we had done, some of the other folks had done. Incredible. One of the things I think is most shocked many and fascinated military strategists is how drones have reshaped the nature of warfare in the past, decades, in the past three years.

8:06This has been huge proliferation. far more mass being brought to the battlefield via drones. And it's enabling much more distributed, decentralized, and lethal force structures. Anybody running around in a truck can pop out with a drone that might go a thousand onical miles or a collection of drones that might go a thousand onical miles and hit who knows what far off into the distance. There used to be much more concentration of forces, dependence on large, exquisite assets to deliver capabilities. So it's been just a complete transformation. And the world has seen a lot of that unfold in the conflict in Ukraine.

8:44I think one of the major questions is, how can the United States and her allies adopt those lessons? Because the things that we're doing have a lot of merit. It has been a four structure that's dominated in the last several decades. But our adversaries have spent a long time thinking about how to counter what we're doing. And I think that it's going to be important for us to think about how we can embrace 100 times more systems to empower our service members to be lethal and effective to come home safely to their families and I think drones in many ways of the future of war. Absolutely. And Adam, one of the things particularly shocks those observing the Ukraine topic in particular is you would see as writers are referring to a say a commercial quadcopter like a Scotio in some instances they'll go and take out an exquisite system like a tank.

9:30Two or three of those packed their sufficient munitions could cripple a large armored vehicle. So how have you seen that sort of shift impact how military looks at dual use commercial drones? To be honest, I think that's a question that the US military has not fully digested yet. And one of the realities of drones is that it just creates this massive asymmetry, right? A system that costs a few thousand dollars can take out a system that costs a few million dollars. And I don't think we fully grappled with that yet, to be honest. I think that we're seeing evidence of this in Ukraine and the Ukrainians largely out of necessity and really just incredibly impressive ingenuity They have a broad array of ground robots are drones air drones Sea drones.

10:15They're building them in an incredible rate. They're iterating very quickly and it's very scrappy The US military may not be subject to the same kind of constraints that the Ukrainians are But I think that we need to understand that the possibility for that asymmetry is real like the possibility of building very low -cost systems that are very capable and capable of delivering strikes or capable of maintaining surveillance is very real and our adversaries are likely to take advantage of it. That's a journey that we still need to go on to some extent. There's still quite a bit of inertia and momentum in our military and I know what your experience has been towards like larger, more traditional exquisite systems.

10:49I think that is starting to pivot, but that's a real question for us for the future. There's a phrase used in the military context often, it's that quantity has a quality all its own. And there is an incredible disparity between what our chief adversary, the people sort of China can produce in a month for drones, whether it's going to be formal military style drones or dual use commercial drones. And that scale, I think a lot of people are wondering what that means in order to deter future conflict or God forbid, where there would be a conflict in Taiwan straight or elsewhere. Madam, would you mind just talking about the sort of differences in scale, just roughly speaking, between the production capabilities of both countries and why that is, particularly on a regulatory basis.

11:33So I mentioned I grew up playing radio control airplanes. So basically all radio control airplanes were made in China in the 90s and 2000s. And nobody was singing too hard about that. That didn't seem... Still are, right? They probably still are. Yeah. And that didn't seem like a national security issue at the time. Yeah. But if you think about what it drone is, it's basically like the combination of radio control airplane type stuff, motors and consumer electronics. A lot of the same stuff that goes into a phone. And as a country, we basically outsource manufacturing to China. And I think that that was a series of policy decisions, expediency on the part of business.

12:07That was a mistake from a military standpoint, because one of the major themes is that the gap between kind of civilian technology and consumer technology and military technology is closing in many of these domains. The general manufacturing capacity in China for low -cost, capable compute systems, which are really now becoming robotic systems, not just drones, but other kinds of robots, is substantial. It's a whole ecosystem, and it's not about cost either. At this point, it's really about technical expertise, build capacity in terms of all the different things that it takes to mold and machine, and build PCBs, the circuit boards, and place components on them.

12:47So I don't think this is something that we can solve overnight. The ultimate thing in TBD on if this is attainable, I always say like wherever they're building iPhones, they're going to have a really good ecosystem for building drones and other kinds of electronics. And so the real prize is can we bring that level of scale manufacturing back to the US? I don't know if we can, to be honest, but I think it's worth a shot. And from the outset as a company, we've been manufacturing our drones in the US. And I would say that when we started doing that in 2016, it felt like we were swimming upstream into like a fast -flowing river.

13:19I would say that like we're maybe starting to get some like signs of tailwinds, especially with the new administration, which is cause for optimism. But I think this is one that we just can't give up on because robots are gonna become more and more important. They're gonna be using the same kind of ingredients from consumer electronics and other kinds of relatively low cost systems. Cars are going in this direction as well. Cars are starting to look more like laptops and phones in terms of the components that are in them. This is a combination of industry and policy and all of us working together.

13:49I think there's cause for optimism over the last couple years. There's still a lot of work to do, but I don't think it's an insurmountable hill for us. I've got a, I guess, good news, bad news, take. I think the bad news, you sort of led with it. The industrial capacity of China is fearsome. And try as we might, I think that's going to be a very difficult thing to close out in one year or even a decade. And I'm an optimist and always like to believe that there's a way, but it is a substantial gap. And I think we're sort of approaching to use a rocket term, a max Q moment from a national security perspective where we're undergoing a force transformation.

14:24Huge technology changes our effort, things like AI are coming into play. We've got an adversary that's becoming extremely wealthy, huge industrial capacity, also investing massively, and their military capabilities. And so the question then becomes what's the right play? And I think that history has shown, World War I, World War II, the A -NAM tremendous amounts of mass were brought to the battlefield. field. And in some cases, despite tremendous amounts of mass being brought to sections of the battlefield, it just turned in to grind it out, war of attrition, without a lot of movement on either side.

15:00And we start to see some of that in the Russia -Ukraine conflict as well. Tremendous amounts of mass being brought to the battlefield, but frontlines that are extremely difficult to move. And I think a reason for that is there's a difference between mass and effect. And simply, the world is big. And targets are relatively small compared to the scale of the world, and it turns out that just throwing a bunch of mass down range can still be pretty hard to hit the things that matter. And where the United States has dominated over the last couple decades is the software prowess, the AI, the autonomy.

15:34And so I think that if we can combine the fantastic work that's going to re -industrialize the United States to build more mass, to build more capability, we have to do that. But if we can combine it with the software and autonomy capabilities, if we can close the utaloops so that we can push software updates at a moment's notice and make every ounce of charge every minute of flight time maximally effective, I think that's how it can compete. There's a second wave that hasn't really broken yet, which is really AI and autonomy. The vast majority of what's happening in Ukraine is still basically one -to -one.

16:10You've got these FPV pilots who are expert operators who are flying the thing or they're flying drones with very limited, pretty simple mission. Go to these coordinates and deliver a strike. And I think that we are going to see over the next decade another fundamental change as rather than having these drones animated by an operator on the ground or by like relatively simple algorithms on board, they become animated by really advanced autonomy and they can communicate with each other. The implications of that, I think, are probably going to be even more significant than the first step to just having these things be on man.

16:42and I do think that's an area where as a country, it plays more to our strengths. And you can't forget about the hardware and the manufacturing capacity. You need to be able to do that stuff, but winning on the AI front, I think is even more important. So, to ensure we dominate, to ensure we win, Vice President Vance just spoke a few moments ago at the American Dynasmus Summit, and he said our goal is to essentially remake the economy to fix that mistake that you guys were referencing earlier about we just off -short all of our manufacturing. We can't make things anymore. And there are leading members in Congress committed to that and also committed to defense procurement reform.

17:21So if you had an opportunity to sit down with anyone with leaders in the executive branch, leaders legislative branch, or anyone who'd be listening right now, those leaders or staffers for them, like if you just fix one or two really pivot points and if those were resolved, we could do so much more, either for drones particular, manufacturing generally, unleashing AI. What sort of recommendations would you give? Number one, I would ask that they continue to do what they've been doing, which is reinforce their belief and investments and the incredible people that sign up to serve. The one thing that I think we've got absolutely right is we have brilliant people that are brave.

17:59They believe in the values of this country and they just go and do extraordinary things. And it's been a privilege of mind to be able to meet them, my brother. Drume into that universe, and I just think it is such a gift to the nation that we have these people that are willing to do what they do. Now, we strive to contribute to make sure they can be as effective as possible to fight when the terror come home safely to their families. And to provide them the best possible tools, and look, what do I know? The administration has hard jobs, so let me put that disclaimer up front. I think the technologies that matter most of the future of war, that matter most of the future of this country and all of our allies around the world are right there in front of us.

18:38And I think the security challenge of our time is whether or not we can mobilize the bureaucracy to go reach out and pick up what's on the table. Everybody already knows is one of the most important capabilities of the future. And that is like taking and making real the large scale deployment and operationalization of autonomy technologies. If you look in the kind of space that we play which are small, light, quadcopters that weigh a few pounds that are sold for carried, the Ukrainians today are using these things at the rate of millions per year, literally millions per year. It's the primary method through which they're delivering strikes and surveilling the battlefield.

19:19The US military, I think, to their credit has programs generally pointed in this direction, but those programs are operating at the scale of thousands, like single digit thousands. So we're literally off by three orders of magnitude. I would argue relative to what evidence suggests the modern battlefield demands. There are similar trends in Israel as well. Israel has rapidly adopted these class of systems at substantial scale. And this is an area to the point about reindustrialization where military purchasing power makes a massive difference. The consumer civilian quantum market are measured in the scale of single digit billions.

19:58That's like comparable. I would argue to what the military should be spending in this space. They're not spending anywhere close to that today for this class of system. And so I think that's a pretty obvious lever that has a bunch of benefits from a national security perspective. I mean, one, you're equipping our soldiers with modern relevant technology, but two, the purchasing power that the military can bring to bear there is significant enough to actually move the needle from an industrial -based standpoint for this class of technology that serves other markets. It's not just us, but like their companies in our space serve public safety and critical infrastructure inspection.

20:30And there's huge technology overlap between the products that you use to do that and the products that folks use on the battlefield. I think if you just went down all the quantities of everything and just added a zero behind all of them, and then of course there's a cost challenge and we have to figure out how to do that. Yeah, I mean, I think there's some things that you can delete and deleting those things is also painful. Well, maybe not. It's sometimes a zero in front of something. Yeah. I'm trying to decimal things. The big Z -Made. That's the trade -off it needs to be made, right? Like the...

20:59By legacy exquisite systems that cost hundreds of millions of dollars, some cases billions of dollars, there's a trade -off between one or two of something, or 10 ,000 or 100 ,000 or a million drones. And if you just look into the future, which of those things is going to be more powerful, I think, like, large quantities of AI -driven drones is... It's not the only thing that you need, but I think in many situations is the right answer. Let's dive into a little bit more. So as you both noted a few moments ago, the US military is starting around the 1980 -1990s, really went all in on highly expensive, exquisite systems, small numbers.

21:35And that worked fine for us. But our now near -here adversary, China developed an asymmetric military designed to counter that. So they have a carrier strike missile. So for a cost of, say, 100 million, they take out tens of billions if not more on our side. plus the horrible lives that we lost. So there's been a move within the DOD to counter the counter, to have a project replicator. Let's presume even if we move those decimal points. So all of a sudden, the older systems has less procurement, and then the newer systems have more dollars allotted to secure. China, some would argue, still have certain advantages, perhaps because they've had more time working on it, perhaps because they're more subsidized.

22:18One of them, people would argue, and I'm welcome you to say that this is wrong, will be in the area of swarm technology. So you can see the light shows over Shenzhen and other cities, for the Chinese New Year, where it is extraordinary shows, with hundreds of thousands of broke the Guinness World Record book again this year. Do we have that level of sophistication and why or why not? And what can we do to make sure that we not only achieve parity if we have not, but achieve superiority in that space? So this is an area that we're quite focused on. I mean, swarm is sort of one of these terms that can mean a lot of different things, right?

22:52And it's really like what task are you trying to accomplish? So when you see the drone light shows, they're 100 % reliant on GPS. So they're using GPS to figure out where they are and to position themselves precisely. And they're 100 % reliant on a comms link between all the drones all the time. And both of those technologies are basically irrelevant on the modern battlefield. field. It's very easy to jam GPS and comms is always contested. And so I think that those are representative of their ability to build a bunch of drones and get them into the air, which is certainly part of the equation.

23:25But from a core technology standpoint, they're less relevant for the things that I think would be impactful on the battlefield. And we have the great joy of competing against the leading Chinese drone company DJI in civilian markets that are unregulated, we're customers can buy everything. And our biggest advantage competing against them is AI and autonomy capability. The stuff that we've been able to build into our drones is far more advanced than what DJI has been able to do in terms of being able to sense the environment in real time, respond to it, automate complex tasks and missions, and the advantage that we have, I think, is reflective of our strengths as a country.

23:59We were talking about building on academic research. The technology of SkyDio is reflective of a lot of smart investments that the government has made over the years. So I think that being able to deploy highly autonomous as AI -driven drones at scale is still a domain that we can win in. And in my view, it's still up for grabs. And it is something that we're quite focused on as a company. Right, and your company has also invested heavily in autonomy. Yeah, so our investments on autonomy are kind of going back to one of my earlier statements. It's sort of predicated on this belief that to make mass effective, it has to be intelligent.