WSJ x a16z: The Next 25 Years of Defense Innovation
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What is the main topic discussed in this episode?
I think the world has changed. I think people realize that we're in a new reality. Our view is investing in sort of ahead of what is the next theater, what is the thing that we need to be investing in in the next 10 years, is that the next war is actually going to be fought in space. A couple years ago, if I had said I invested in a hypersonic weapon company in Silicon Valley, I think I would have been kicked out of the room. And in 2023, when we invested in Andrees and Horowitz, there was not a peep out of people thinking that this was terrible. Technology is the backbone of what makes America strong, of what is the envy of the world. And if we don't apply that to our national security and our national interest, we lose a lot of that competitive nature.
This is something that I think is going to define the next 25 years of innovation in Silicon Valley.
In 1956, Lockheed Martin had six times as many employees in Silicon Valley as HP Defense Investment built the region. Then the pendulum swung to software, and by twenty seventeen. Google employees were walking out rather than work with the Department of Defense. Three weeks after A6TZ announced its American dynamism practice in January 2022, Russia invaded Ukraine.
Why did saying “America” out loud shock Silicon Valley in 2022?
That changed everything. SpaceX and Palantir alumni started founding companies focused on the national interest, autonomous surface vessels, hypersonic weapons, attritable systems built cheaply and mass-produced quickly. Now every venture firm in Silicon Valley is investing in defense. The question is whether this represents a lasting category of innovation or a one-time thesis. In this episode, we share a recording from WSJ Invest Live, where Barron's editor at large, Andy Serwer, speaks with Catherine Boyle, general partner at A16Z, about why this moment will define the next 25 years of Silicon Valley.
So tell us about the American dynamism practice at Andreessen Horowitz, which is one of the world's most prominent VC firms, and what does it mean?
Sure. So four years ago I joined Andreessen Horowitz. Um, and it was a very simple thesis. Uh it was instead of building a practice around a new type of technology, say AI, or around a customer set, a go-to-market set, uh, enterprise or consumer, what if we built a practice around a very simple mission, which is companies that support the national interest? Um, and at the time when we announced it, we announced it actually in January of 2022. We had been investing a lot in these categories. Before I had been investing, my partner David Yulovich, who was already at the firm, had been investing in companies like Andorl and Shield AI and SpaceX. And when we announced that we were starting this practice and actually going to dedicate capital to it, Silicon Valley was really stunned.
I mean, it was it was shocking. And the fact that we said America out loud was even more shocking. I think people were stunned because the view that technology is always global, the sort of the dominant view inside of Silicon Valley at the time. And four years later, here we are, actually three weeks after we announced it Russia invaded Ukraine. And I'd say that was the moment that sort of changed everything about investing in defense, investing in aerospace, sort of these categories where If you're in Washington DC or if you're in other, you know, parts of the country. That's what you think of when you hear the word technology. But in Silicon Valley, that was not something that was that was really done at the time.
And so we say four years later, you know, here we are, I'd say every venture firm in Silicon Valley is investing in these categories. They're not afraid of aerospace anymore. We had some big SpaceX news yesterday, obviously, that I think people are now attuned to. But it really, you know, when you think at the last decade of technology, investing in hardware, investing In physical, physical goods, investing in things that support the national interest that most Americans think of when they think about critical technologies was just not in vogue in Silicon Valley.
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