Emil Michael: The Department of War Is Moving Faster Than Silicon Valley on AI | The a16z Show

We're faced with the biggest military buildup in history. We're trending toward artificial general intelligence, a substrate, a layer, something that'll touch everything. But we're way behind in AI at the department.

You are CTO for the Department of War. How do you take stock of where those priorities are?

When I took the role, we had 14 critical priority areas. We got them down to 6, and they were the places where I thought we had the greatest opportunity for change and for growth and impact.

There has been an incredibly public discussion about commercial AI models being used in the Pentagon. What has changed in this latest discussion?

I had a holy cow moment because there were things well beyond what you've been hearing in the press in the last couple of weeks.

All right, thank you for being with us. I know every week is very busy for you, but it feels like this past week has probably been the most publicly busy for you. So thanks for joining us.

My pleasure. Good to be here.

Look, we're going to talk about Anthropic, AI, and defense, but I think we want to talk first a little bit about you, how you got into this seat. This is not your first tour of duty in government. You have decided to be a public servant before and for a long time. You know, for half this room that comes from the technology side, they know you as an incredibly accomplished Silicon Valley executive, highly sought after, very successful. Let's start with what pulled you into public service? How did it start, and why do it, and why take on this role now?

After my first company, TellMe Networks, we had this speech recognition software we sold to Microsoft in '07. I kind of needed a break from tech, so I applied to this White House fellowship program, which was super cool. Colin Powell had done it. Chairman of Joint Chiefs of Staff, Admiral General Kane had done it. It was just a cool program. It was a year nonpartisan program, and I got selected, which was awesome. And I got assigned to Robert Gates, who was the Secretary of Defense at the time. So I got to spend time in Afghanistan, Iraq, Pakistan. I got a passion for for that world, and it was so new to me. And I said, someday I'll come back when I'm ready to to really go. And then Then President Trump got elected, and I was like, wow, this, this is a moment where just, you know, you have a disruptor at the top. He chose Secretary Hegseth, and that meant all the problems I'd seen, you know, there'd be a clearer way to solve them. And you could see by the pace we're moving at, the executive orders, critical minerals, new tech, new entrants, the pace is incredible relative to what it was before. So I'm excited to be there.

Awesome. Well, why don't you talk to us a little bit about that? You have been outspoken that the department of war cannot operate at peacetime speed. This is kind of like how we tell founders, you can be a wartime CEO or a peacetime CEO. What does peacetime speed mean? What is the problem with it? And what does winning look like? What does moving with urgency look like?

Well, peacetime speed, started after the Cold War was over at the Department of War. I guess there was some famous event called the Last Supper where the leaders at the Pentagon said to industry, hey, there's not going to be a lot more buying of weapons systems or innovation, so you all should consolidate and slow down your growth basically and become dividend payers and stock buybackers. And that lasted for a long time, and then the industry consolidated down to 4 or 5 primes. So then we're faced with the biggest military buildup in history in China starting in the mid-2000s, like 2010, and we didn't catch up. So all of a sudden, we've outsourced a lot of our key domestic production. on many different areas, whether it's critical minerals, batteries, some of the supply, a lot of the supply chain stuff. And then you look up and you're like, holy cow, we've got a lot of catching up to do. So wartime speed is ensuring that we're redomesticating the critical things we need for national strength. And we are moving out on that. We have exquisite capabilities. We have a lead in so many areas, But we have to make sure that we're self-reliant in key areas. And so we're running as hard as we can on that.

It was amazing to me. We work with a company called Skydio, and they were sanctioned by China. And we usually hear stories about how companies are sanctioned by the United States from doing business here. But actually, if you're a company that's an important company and you get sanctioned by China, you can no longer buy motors or batteries or other really key things that primarily come from China. It stinks. And if those products make it into the defense procurement cycle and we can't get them anymore, it's a huge, huge problem. So, you know, we've learned in our practice that it's not just the defense industrial base, but also all those precursors.

Yeah.

So talk to us a little bit about as you stepped into the role, you are CTO for the Department of War. How do you prioritize? How do you take stock of where those priorities are? How do you figure out— I mean, you know, if you read the news, it feels like there's an endless list of things that we need to catch up on.

Well, when I took the role in May, I was sworn in, I did the inventory like any new leader would do, and we had 14 critical priority areas in this role. My predecessors had 10 and then someone added 4, so there are 14 and they hadn't changed in nearly a decade. I get to look at them and say, well, why are these critical? By the way, who can remember 14 things when you're trying to motivate a workforce? And what is an integrated network systems of systems? You know, they were sort of technobabble. So I said, well, let's study and say what's really important. And we got them down to 6, and they were the places where I thought we had the greatest opportunity for change and for growth and impact on our combat power and for our industrial base. And that was the starting point. And applied AI was number one. So then we moved the Chief Digital and AI Office into my group, and we were able to run extremely fast with that because we're way behind in AI at the department. And we know it's penetrating the rest of the world so dramatically, so quickly. And our adversaries were also using it for lots of different purposes because They have less trust in their command and control, so they want to use computers to sort of eliminate human decision-making. We want to enhance human decision-making. So that's been a priority, and we've kind of, in 90 days, I think we've had 1.2 million of the 3 million people at the department use some form of AI. That number was 80,000 before I started.

Incredible.

Yeah.

Let's talk a little bit more about why it's important to have advanced AI capabilities? Maybe some people would say, well, we've been really good at being a world power without all this AI capability. Why is it important? Can't we just focus on making missiles and stuff?

Well, AI can help make missiles if it can help you solve physics problems, material science problems, aerodynamics problems or opportunities. But we split up the AI sort of, efforts into 3 areas, like enterprise corporate use cases, like any big organization would do for efficiency purposes. And that's just normal, like, goodness. Everyone's happier when you could do mundane tasks faster. And then intelligence purposes, which is, you know, we collect an enormous amount of intelligence. We have huge repositories of data at the department that's sitting there siloed unused. Imagine decades of satellite imagery that you could use to train a model and get insights and then use that to do anomaly detection so you could find out what's happening. So you take a human analyst and you increase their throughput by 1,000. And then for warfighting, warfighting, they talk about is like a big part of it is logistics. How do you plan logistics and find assets and do wargaming? plan operations and do simulations and so on. So there's a lot of really important use cases that we could, we could benefit from.

Yeah, I think we, you know, we are the beneficiaries of startups that pitch us their ideas all the time. And because it's American Dynamism, we hear about companies that say, look, we're going to really, you know, we're going to save 15% of the Pentagon's fuel budget through logistics by using AI. We're going to figure out how do you move the troops and the equipment and the vehicles in the most efficient way in a contested environment. These are all amazing, incredible use cases.

Totally.

Look, in the last week, there has been an incredibly public discussion about commercial AI models being used in the Pentagon, including Anthropic, being used inside the department. In the old software days, and I'm going to really be in the old software days before even SaaS, people would just buy software and then the customer would use it. however they want. What has changed in this latest discussion? What has come up? What are the issues? I assume most people in this room have been following along, so I think it's safe to assume there's a baseline understanding. But what have become the key issues and why did they come up now?

Well, they came up now because as I started to look at the contracts that had been written during the last administration for the use of AI, I had a holy cow moment because there were things not well beyond what you've been hearing in the press in the last couple weeks. Things like you couldn't move a satellite, you couldn't plan, you know, an operation, couldn't plan it, not use AI to execute it.

Right.

If it would potentially lead to a kinetic strike or something. Dozens of restrictions. And yet these AI sort of models were baked into some of the most sensitive and important places in the US military where we do exercise combat power. Central Command now, that's sort of area of responsibilities Iran, or Indo-PACOM, whose area of responsibility is China, or SOUTHCOM, which is Venezuela and South America, were all using this model. And there was no 2 vendors. It was a vendor-locked situation with terms that, in theory, if the model was designed to turn off when you violated the terms, could just stop in the middle of an operation and put lives at risk. So, that was the one moment I was like, okay, we have to fix this and clean this up while we're deploying this in the department. So, that raised all these issues. And then second, after the Maduro raid, one of the primary vendor for this had raised the question, senior exec, about whether their software was used during the Maduro raid, which is one of the most successful military operations of our lifetime.

Incredible.

Truly an incredible operation. And that sort of—

Yeah. It's been a bad few months for the enemies of America.

It has been. And I got to meet the guys who did that. The lead helicopter guy who got them out of Levant was a truly outstanding American. I mean, he was shot and kept his cool, didn't tell anyone he was shot so that the first landing team could land and didn't freak it out. And it could have blown the whole operation. So the courage was incredible. And when a company says to you, hey, was our software used there? Because we're not sure we'd like that. Chill goes up your spine. It's like you're at a coffee shop and some stranger is like, hey, I saw your kid at school yesterday playing kickball. And you're like, who are you?

Right.

You know, what? So that set off a series of events of, whoa, are we single-threaded on a vendor who's concerned about how we're using their software after the most successful military raid and the terms of service do not comport with the future world, we've got to get other partners in here and we've got to move. If you think about AI as like what we're trending toward, AGI, artificial general intelligence, a substrate, a layer, something that'll touch everything, like the internet touched everything or the telecommunications network touched everything, then to tell the users of that substrate of technology, You can't use it for legal things, things that have come through the democratic system, laws passed by Congress, executed by the executive branch. In the military, which is the most sensitive part of the US government, because our job is to be the strength department to protect Americans, you do have a moment of truth there, like we've had, which is this technology, if we're losing using it lawfully, the substrate, has to be our choice. It can't, the software, the soul, someone's soul of their model, their constitution, which is not the US Constitution, can't be dictating our command and control environment and telling generals and warfighters what to do and not do.

That's right. So, first of all, I think you just shared a bunch of backstory and information that, you know, has not been readily found, I think, by reading the news and following along. Although, probably a lot of people in this room could have guessed, but it's nice to hear that part of the impetus for this and the catalyst for this discussion was originally about making sure that you have ways to use this capability that fit in with our democratic norms. And you mentioned that we have a constitution and they have a constitution. It's kind of crazy that a company even has a constitution. There's not that many companies, I think, that have their own corporate values.

Corporate values, yes. Constitution, no.

Corporate culture, corporate values, for sure. I don't know how many have a term that they say, this is our constitution, especially when there's often a revolving door of executives at companies. Who knows what they'll think tomorrow? So talk a little bit about the role of democratic oversight, elected leadership that guides the process that we have in this country for deploying AI capabilities for national security, for defense.

Yeah, so when it comes to American civil liberties, there's a very robust debate historically, especially after 9/11 and Foreign Intelligence Surveillance Act, the National Security Act of 1947, all these acts where the government has tried to balance civil liberties. And the good news has been like robust debate on it. And maybe those laws and rules haven't been updated yet, and maybe they should be. But if we don't trust that process, and we're like, well, the laws are behind the tech, so I'm going to make a decision that impacts 3 million people in the department, and then 350 million people in the country, you don't get to do that.

Right.

If you believe in the system. If you don't believe in the system, as imperfect as it is, then what do you believe in? Then you're taking upon yourself to kind of be God, and that's not something that I want. Even though I'm a small government, free market person, you still have to have— the government has to have a monopoly on violence to protect its country. America is just an idea, but it's also a nation. And it can only protect it to protect the people if we have the best tools and use them lawfully. And Congress is responsible for dictating that law, and we're responsible for writing regulations on that law. And, you know, we've got 40-page internal directives that have been there for years about autonomous weaponry, and we're looking at Ukraine and Russia and seeing what's happening there. And then we're looking at the Chinese stealing American models, taking the guardrails off, and potentially using those against us. So am I going to have my arm tied behind my back against the same model that has been stolen by the adversary? It's sort of— you get into Orwellian sort of situations where it's hard to have anyone make sense of it and sort of be on the other side of that question.

Yeah, absolutely. I think the point about our adversaries is well made. They are not having this debate. They are full steam ahead. How do we— was there anything more you want to share about where we are today in the AI debate discussion? Is this put to bed or is there a long road ahead?

I think there's still work to do. It's interesting, you have 4 companies that you could call frontier companies, and then you have this Major League Baseball roster of researchers, like 1,000, who they're trading amongst themselves. who, if you ask the leaders of these companies, are so incredibly valuable that it's a very strange dynamic. 4 companies, 1,000 sort of researchers who everyone feels are vital. And how do we work with that dynamic where we have enough companies engaged with us so that I'm never single-threaded again, which is a terrible gift that the last administration handed us? So, we have multiple avenues who are interested in national security, who are patriotic, very much like the 2018 Maven where Google didn't want to bid on the contract. Now, Google is a great partner. And so, I'd hope some of the newer companies would learn from what Google did, which is they didn't want to serve the government because they had employee mob issues, but now they're one of the government's best partners.

We see the Google Project Maven moment in 2018, in many ways as a galvanizing moment to actually wake up a lot of founders and builders and say, hey, wait a minute, I actually do want the government to have the best technology and best capabilities. I do want to build. I mean, that, you know, I would say if you fast forward, that gave rise to the American Dynamism Movement. We provided a landing zone for a lot of those founders that said, wait, I don't agree with the protesters at Google. I want first responders and, you know, the men and women who defend our country to have the best technologies and capabilities. And Whenever someone asks me these questions, I always remind them, look, Project Maven was used to make sure that we didn't leave anyone behind in Afghanistan. That's literally the technology that was used, and it was public. Did you want to leave someone behind? What's the alternative? And so I think that this will also be a galvanizing moment. I certainly hope it will be for a whole other set of founders that are excited to support their country. and the people that serve the government. Let's talk about the Department of War structurally inside, things that need to change, you know, in order to make sure that you have the best capabilities, best technology, and you get them out in the field. You know, we saw on the news, I won't ask you about it directly because you probably can't even answer, but, you know, we saw photos in the news of what looks like new technology, new capabilities, but what is changing culturally and structurally inside the Department of War? Obviously, it starts with bringing in people that understand technology like you, but what is changing to actually enable the Department of War to modernize?

Well, Secretary Hegseth says we're on an unstoppable battle against the bureaucracy. That's not the people, it's the bureaucracy that's built up over decades that prevents new companies with new technologies from getting their concept or their product deployed in the department. So, what I'm trying to do with the various tools I have is trying to create normal contracting processes, normal requirements performance requirements. So, for example, we used to do things like, here's the 1,000 requirements in our RFP. A vendor would sort of fill it out and say, yes, yes, yes, yes, yes, even if it was physically impossible, the physics didn't work.

Right.

Then we put them on a cost-plus contract, and they're like, oh, that didn't work out, and change order. Change order leads to another 3 years of development, another couple billion dollars. So we're trying to move it to simple requirements. I need a missile that goes this far in this environment with this payload, et cetera. You, industry, come to me with your ideas on how to do it, and then you got to fight with the bureaucracy. We'll pay for it.

Yeah.

And we'll buy it. and firm fixed price. If you make a better margin because you're able to economize, this is the Elon model and why he was so successful at SpaceX. Well, then everyone wins. The venture community is very comfortable with that model. You bet on winners. Not everyone's going to win, but cost-plus, endless development cycles doesn't work. We need faster development cycles. risk-sharing with industry, clear demand signals, simpler ways to do business. Those are the bureaucracies that every day I'm moving the debris out to try to make it happen.

That's good. You're like regulatory Moses. That's good. That to me is one of the most important things that's changed and it actually gets the founders fired up to build. What is it that the companies can do better to work with the government, to work with you, You've done this Arsenal of Freedom tour, you've visited a bunch of startups, but what is it that you need now that the government is saying we're ready to do business, we're going to make it easier to do business, we want the best capabilities? What do you need from the companies and the startups?

So we need companies to— this is just the one thing that primes have an advantage on is not the inventiveness, It's the production and manufacturing ability to scale what they do with what they've initially built. And I think the opportunity for startups is to take the great technologies and concepts, build up their muscle on how do you build a factory and produce these things at scale and do the quality testing and all that thing, all that kind of stuff. And so you do have to borrow from the old world to do that effectively, so you're not just reinventing the whole thing. And I think that's the next stage. And you're going to see companies start to cross that chasm here in the next 1 to 2 years, where they've demonstrated or they've foot faulted, but then they've hired the right people and they figured it out. And then that hopefully encourages a lot of other companies like, this can be done. And then venture capital dollars will continue to coalesce around this this marketplace, which I desperately want. So I think that's the thing to consider. And there are— the other thing, if I'm on your side, if I'm on the new entrant side, you could always find someone in the department of 3 million people say, man, this is great. I love it. I love you, man. I love your product. But money talks. So are they buying it? Are they testing it? Are they doing those— are they actually pulling you through the process because that's the best signal of are you actually successful because the culture there again is to never say no. And I've tried to move it to faster yeses, faster nos so that if you're a startup, and I felt this pain as a startup guy when you don't really know if you're getting a deal, I'd rather be told no so that I can either move on to the next partner, readjust my product strategy, do something. And that's what we're trying to move the culture too, and what I tell the young founders out there.

Awesome. Well, we're very appreciative of those efforts, and it's good for the taxpayer. Last question as we wrap up here. You have a good life, you're very successful. This is not a 9-to-5 job, I assume. You have a family, takes you away from your family. What would you say to people that are in the startup and tech side of the world who are thinking about spending time working with the government, supporting the government, And look at you as an inspiration and somebody whose shoes they would like to follow and steps they would like to follow?

Well, I think everyone can— most patriots figure out a way to give back, and there's lots of ways to give back. This was my way, which is I'm an immigrant. My first language was Arabic. I moved to this country. I get to Silicon Valley. I've seen some and been able to participate and build some of those interesting companies. around and it was the right time in my life to say like, okay, well, this is the way I'm going to serve my country. I wanted to have my kids see it so that they can see that our system doesn't come for free. They have to have builders, people who care, people who sacrifice to do it. Not to mention all the warfighters who sign up for the jobs that they sign up. This is the way I could sign up. Making sure that they feel that, for me, that's incredibly motivating. And I hope everyone else who's in the startup world finds their own moment to do that, if not in business, but after, in the right point in your career and all that, because we need more people to do that. Because we used to have government service as an honored profession, the Manhattan Project, the best scientists. Now industries has a lot of opportunities to really exercise your brain in those ways, but we can't forget that we need patriots to come do these things every now and again.

Well, thank you. We are so appreciative of the work you're doing, and thank you for being with us today. We know you are extraordinarily busy.

Thank you.