Matt Grimm

Point number two, I would say, is bringing capitalism back to the defense sector. My former boss and now friend and mentor, Sham Sankar Palantir, who you've had on the show, he's been on a tear lately talking about this. And he had this tweet that I think perfectly encapsulates it, where he said that everyone, including Russia and China, have given up on communism, except Cuba and the DOD.

And it's like, that's kind of the mentality, right? It's like a mentality of a cost plus style contracting. We'll get to that in a second, where ultimately a competitive win, a better technology, a better approach doesn't always necessarily win out.

And it's like, that's kind of the mentality, right? It's like a mentality of a cost plus style contracting. We'll get to that in a second, where ultimately a competitive win, a better technology, a better approach doesn't always necessarily win out.

And it's like, that's kind of the mentality, right? It's like a mentality of a cost plus style contracting. We'll get to that in a second, where ultimately a competitive win, a better technology, a better approach doesn't always necessarily win out.

And like, oftentimes there are different incentives at play that lead to a little bit more of a kind of communistic or socialistic approach to the defense sector that I think is fundamentally bad and is ultimately squeezing out kind of the crazy entrepreneurs and the crazy inventors from working in the sector.

And like, oftentimes there are different incentives at play that lead to a little bit more of a kind of communistic or socialistic approach to the defense sector that I think is fundamentally bad and is ultimately squeezing out kind of the crazy entrepreneurs and the crazy inventors from working in the sector.

And like, oftentimes there are different incentives at play that lead to a little bit more of a kind of communistic or socialistic approach to the defense sector that I think is fundamentally bad and is ultimately squeezing out kind of the crazy entrepreneurs and the crazy inventors from working in the sector.

So the third point that I would change would be way less cost plus contracting, way, way, way less cost plus contracting, moving many more things to firm fixed price, and then being comfortable with- Just for those that don't understand, what is cost plus contracting? Oh, man. So if you've... spend any time around lawyers or accountants or folks of that type that bill by the hour.

So the third point that I would change would be way less cost plus contracting, way, way, way less cost plus contracting, moving many more things to firm fixed price, and then being comfortable with- Just for those that don't understand, what is cost plus contracting? Oh, man. So if you've... spend any time around lawyers or accountants or folks of that type that bill by the hour.

So the third point that I would change would be way less cost plus contracting, way, way, way less cost plus contracting, moving many more things to firm fixed price, and then being comfortable with- Just for those that don't understand, what is cost plus contracting? Oh, man. So if you've... spend any time around lawyers or accountants or folks of that type that bill by the hour.

So what happens on these large defense procurements is that one of these prime contractors will come in and they will pitch a PowerPoint slide about how they would do something. And then they hire engineers to build to that vision. Then they bill those engineers to the government at an hourly rate with a fixed margin. So that's a cost plus. So it costs us this.

So what happens on these large defense procurements is that one of these prime contractors will come in and they will pitch a PowerPoint slide about how they would do something. And then they hire engineers to build to that vision. Then they bill those engineers to the government at an hourly rate with a fixed margin. So that's a cost plus. So it costs us this.

So what happens on these large defense procurements is that one of these prime contractors will come in and they will pitch a PowerPoint slide about how they would do something. And then they hire engineers to build to that vision. Then they bill those engineers to the government at an hourly rate with a fixed margin. So that's a cost plus. So it costs us this.

There's a fixed margin on top of that. And then they charge that back to the government up to the limit of the particular program budget. So what ends up happening, and it's like, I started with lawyers and accountants for a reason, is like when you incentivize someone to work by the hour, it will take more time.

There's a fixed margin on top of that. And then they charge that back to the government up to the limit of the particular program budget. So what ends up happening, and it's like, I started with lawyers and accountants for a reason, is like when you incentivize someone to work by the hour, it will take more time.

There's a fixed margin on top of that. And then they charge that back to the government up to the limit of the particular program budget. So what ends up happening, and it's like, I started with lawyers and accountants for a reason, is like when you incentivize someone to work by the hour, it will take more time.

And when you incentivize somebody to work by a firm fixed price, it'll go a whole lot shorter. So it's like if you take those fundamental incentives and then you extrapolate that to the entirety of the industry, there's actually not a lot of incentive

And when you incentivize somebody to work by a firm fixed price, it'll go a whole lot shorter. So it's like if you take those fundamental incentives and then you extrapolate that to the entirety of the industry, there's actually not a lot of incentive

And when you incentivize somebody to work by a firm fixed price, it'll go a whole lot shorter. So it's like if you take those fundamental incentives and then you extrapolate that to the entirety of the industry, there's actually not a lot of incentive

the existing prime contractors to make the plane cheaper or faster fundamentally not the incentive what they're incentivized to do given that their profit margins are ultimately driven by how high they can drive the cost up because they get a firm fixed margin on top of that cost then you get the behavior that you incentivize and i think like if you look at some of the statistics and some of the performance of these companies honestly it's kind of hard to blame them it