Lockheed Martin
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Those two movies are so freaking good. Yeah, it's so shocking how good mark is so many years later in such a different environment. And then, like, delayed due to Carry out of virus.

Well, the funny is what I was delayed for whatever years during corona virus. The fighter that magic is in is an F A T horn at the boeing plane. And by the time the movie gets released, it's basically discontinued within a couple years. That's when the end of life, the F A teen hornet for the navy. Yeah, did you catch the lucky thing in marc thus got got the .

tail of the plane.

Oh yeah. On the mark ten dark star aircraft and .

dark star, oh, right. Let's do IT. Let's do this.

Busy, you wait, you wait, you who? Easy you, easy you with you, let me down. Come to twelve. Episode five of .

acquired the podcast about great technology companies and the stories and played books behind them. I'm then gilbert David rosenthal, and we are your hosts. Today's episode is on a critical piece of american infrastructure.

Lockheed Martin. They are the nation's largest defense contractor. There actually the federal government's largest contractor period.

The american taxpayers pay lucky Martin around fifty billion dollars a year. And just to state this early and clearly, lucky Martin makes, among other things, killing machines. The company is, of course, critical to defending the american way of life.

And most of these things they make, fortunately, are used as deterrence to keep peace. But we should not means words. They make weapons anonymous with phrases like overwhelming force and air superiority. You may feel, and probably should feel conflicted as you learn about this company.

There are really no easy answers to the question, is what they make, right or good? And that's why we entrust the decision to use their products to the office of the president of the united states. But this company is history is absolutely fascinating. There's stories of hard core engineering, daring innovators and it's Frankly just inspiring.

Yeah going back and learning all this and soaking in the history of the times when lucky I was really forged gave me at least a whole new perspective on this killing machines and deterrence question to tell the full story of lucky and lucky Martin. And all the predecessor companies that came before IT because I think it's like seventeen companies all merged together at this point would probably require a full season of required.

So we're not going to do that. Instead, we're gonna focus on two interwoven in stories from lucky, not Martin, but lackeys goldens. And the first of those stories is the famous skunk works.

The second one, i'm not onna, say what IT is. So we don't spoil IT just yet. But as a tier, it's unbelievable and is directly tied in to the birth of silicon valley. So if you're in the tech world and you think lucky Martin and defense fighter planes doesn't apply to think again because pretty much everything you do came out of this. So I can't wait to tell IT who .

quite a teeth, or David, well, listeners, this episode was selected by acquired lp. s. So if you want to help pick an episode for next season, you can become an acquired limited partner. Come closer to the show in other other ways, including a private zoom call with us every month or two for all the lps you can join anytime at a quire D F M slash lp. If you want more from David night, you should check out our interview show ACQ2， our last episode as s on the topic of how generate A I can be valuable specifically to B2B sas com panies, and probably more importantly, where IT cannot and listers, you can just search A C Q to anywhere podcasts are found.

We've got some awesome interviews coming up to a to is on fire.

Yep, join the slack. Acquired D, F, F, M, slash, slack weather will be discussing this episode there afterwards without further do David take us in and listeners, as always, the show is not investment vice day, and I may have investments in the companies we discuss. And the show is for informational and entertainment purposes is only .

so for many of you listening. One thing you may not know, that I didn't really know till we started the research, is that the company that eventually became lucky, Martin, today was two companies. IT was lucky and Martin marieta.

And there is a huge merger. In one thousand ninety five, lucky was actually the second lucky company, or really maybe the third. The first lucky company was founded in nineteen twelve by one Allen lucky. But if you were a luck at the spelling of his name.

IT would look like a log head. L O U G H E A D.

yes, but I was pronounce lucky because I was Scottish, like luck, like lukas d, not log head. He eventually changed his name too lucky, and the name of the second company, too lucky. To avoid this pronunciations.

which is great. He didn't just remove lucky the company. He's like, yeah actually to change my own name selling to yes.

so great. So he started the first company with his brother malcom, and they were more or less contemporary of the right brothers. IT was based in san Francesco of all places, and I was mostly kind of notorious attraction.

They had one playing the model, and they flew tourists around over the bay of Angela zed, this new flying technology. D add a bunch ups and downs. Malcom leaves the company and goes to detroit to seek his fortune in the automobile industry, where he invented the modern hydro lic brake system for automobile. So every time you press the break in your cars, you're using malm lucky technology.

No way. yeah.

Super cool. They also end up hiring into this first lucky company. won.

John north. rip. yeah. They might ring some bells to help them design their future airplanes. John would go on to be a cofounder with Allen of the second lucky company, then leave to strike out on his own, where he found that the avian corporation, they gets acquired by Douglas and becomes a big part of Douglas. Duggle, of course, is now part of bowing.

And then after that, john, as you might imagine, founded, you guessed, IT north up, which is now north of gramm. So this one due is responsible for founding or playing a major role in three of the remaining five defense prime contractor, ors today. But anyway, the first lucky company goes under.

They start the second one. A few years later, we have some success with the vega airplane. People might be familiar with that.

IT becomes a favorite of a million air heart and widely post famous early aviators. IT becomes successful this second lucky company. They end up selling IT to a concert of detract.

Auto moguls may, through the relationships from welcome or something that have formed the quote, quote, detroit aircraft corporation, or the D. A. C.

This is including Charles kettering, the founder of delco and head of research at G. M. Is part of this, you may know, memorial slow kettling ing.

Exactly same dude. So the idea is they were going to a build the general motors of the air. There was just one problem with that is that aviation did not become a consumer industry like the ottawa a industry.

Alan lucky departs at this pointing time and is kind of ten gently involved. But this company that to the stay bears his name after this point time, he doesn't really have a lot of impact on. Now certainly after this, maybe hairbrained G M of the air idea comes together, and lucky get sold to the detroit aircraft CoOperation, the stock market crash of nineteen twenty nine and the great depression happens.

And D A C predictably goes bank pt. They sell off the lucky division, which is actually still fairly profitable, out of bankrupcy, to an entrepreneurial g business man, Robert gross. And this is really the founding .

of the modern lucky. And the crazy thing, this Price that he bought IT for 4 thousand dollars was so low that alan lucky d actually considered bidding to buy his company back when they had IT on the auction block。 And his considered bid was fifty thousand dollars.

But he thought that is so low that I might be insulting. There's no way they ever sell IT. So he didn't actually bid and the winning did was ten thousand dollars less so big.

But everything you've know of lucky today got bought out of bankrupcy for forty thousand dollars. It's crazy. So under rabbit growth and his brother courtland, who gets involved, they really are the ones who turn lucky into the great company.

IT became so before world war two. During the thirties, lucky builds the famous elector airplane, which is absolutely iconic. This is the plane that a media air heart disappears in, perhaps even more timelessly.

This is the plane at the very, very famous scene at the end of the movie kasb lanka. When rick puts elsa on the plane with Victor to escape, the not sees and says, here's looking at you, kid. That plane is an elector, I believe, an electorate .

jor and listeners, you know, this plane is one of those romantic early aircraft that were always sort of purchase up at an angle where, if you saw IT standing still on a runway, IT looked like he could just take .

off at any moment. Absolutely beautiful. The electra and kasba brings us to the first core part of our story, which is world war two, which transforms everything. And a man named clarence Kelly Johnson, who started the famous lucky skunk division.

And this is great, because before I started the research, I was loosely aware that lucky d had the first skunk works. Now it's become almost like clean ex when someone says gun quarks are ready to start old gun quarks division. And like IT was not a thing until Kelly john started the skunk works.

So there's a wonderful book. There are bunch of wonderful books are unlucky. But a book titled skunk works that was written by ben rich, who was Kelly, is second in command for a long time at Scott ks, and then took IT over when Kelly retired.

And this book is like the top gun of historical autobiography. You read that and you are just fired up. IT is unawares ing what these people did.

It's top gun for engineers.

Yes, it's so great. I also highly recommend a book called beyond the horizons, which is hard to find the most people don't know about by walter boy and then is an amazing history of lucky during all these areas that we're gona talk about.

David, that so mean, you're recommending an out of print .

books to people if we keep doing this. Ah this one I think I only paid like forty bucks for on amazon and so it's not quite like taste luxury and L V H which I think that an three, four, five thousand dollars .

oh yeah now we definitely Spike the Price.

So we did. Ait, so who is this called Johnson? He's basically the segal meo moto of airplane design. His nickname is Kelly, because when he was in grade school growing up in michigan, his really was clients.

An older boy called him clara on the school yard, and Johnson attacked him so viciously that he broke his kid's leg. And so after that, all of the school mates never called him class. Are clare I get? And they nickem him Kelly?

Okay, so not clear. But why? Kelly.

there are some character of Kelly, kind of an irish tough guy, that they named him after. That really was his personalities. So after every sqn quirks test fully for the rest of his tenure, running scum corks, they throw a big party, and Kelly would chAllenge anyone, all commerce to an ARM restful match. And even when he was, like, sixty years old, he was still beating people.

You should google a picture of this dude. He is just a nineteen thirties man's man that is finest and .

maybe the best airplane designer ever to live. That is Kelly Johnson.

And when you hear the stories about him, he could intuit the answer to difficult math problems in his head, and not just math problems, but like physics problems, and applying burn newly principle in his head, and come up with an answer that was five percent off from the actual answer. And someone else would go spend hours and hours and hours with pencil and paper and slide rule to come to basically the same number.

The quote from his first boss, lucky's chief engineer. At the time, Kelly would become the chief engineer, but is boss of the time how hyper would say that guy can see the air. So Kelly ends up winning the collier trophy twice, one of only two people to do so in history.

The collier trophy is the equivalent of, like the Oscar for best picture, is the best air playing design of the year. He wins at twice. He ends up being the stop the presidential metal of freedom by london Johnson later in his career.

He is a true american hero, so he ends up joining lucky right out of the university of michigan engineering school, ms. In one thousand nine thirty three, at twenty three years old. And Kelly is really one of the, if not the, principal engineer that designs and builds the elector.

So he becomes the star of lucky. Then only six person, aviation design engineering department. There were six people that were making these things crazy, and he does basically everything himself, engineering, designing, testing, even flight testing.

There's this amazing quote, hint, kn. corks. This has been rich talking.

Kelly once said that unless he had the hell scared out of him at least once a year in a cockpit, he wouldn't have the proper perspective to design airplanes. So great. okay.

So the start of world war two roles around. And the first thing that Kelly and lucky do is they adapt the elector into a bombing vehicle called the hudson en. And even before the U. S. Enters the war, the british royal air force ends up buying about three thousand of these hudson's from rocket.

Yeah, this is a thing that was I opening to me doing the research lucky's. Big customer. And world war two, before the us.

Enters, was britain's royal air force. They were a way bigger customer than the U. S. Was for many, many years.

So then once the U. S. Enters the war, and as they're gearing up to enter the war, Kelly designs the amazing p thirty eight lighting fighter, which was the us.

Is elite ite fastest, most manuvers able aircraft during world war two. They made over ten thousand of them during the war, and all of the top bases in the U. S.

Army ir core flew them. IT was the plane that shut down the transport that was Carrying japanese amoral yama moto, the guy who had kind of master minded and overseen the perl harbor attack. This is a legendary airport.

Side note, I will say, last week, partly and preparation for recording this, but partly because of something that I ve always wanted to do, I went to Pearl harbor. And there is truly nothing like being there in experiencing that growing up in america. We basically haven't had attacks on our soil.

It's nine eleven and perl harbor period. So it's a very unusual thing to see in your own country the response of an attack and being over the sunk in U. S S.

Arizona from the japanese bombing hero wing and heavy. But I think that that's an experience i'd recommend to anyone. Okay.

so that was kind of lucky ed and Kelly during the war. Fast forward. Now the kind of the winning days of our bar to end of nineteen forty four to nineteen forty five, it's pretty clear that amErica and the allies are going to win the war at this point in time.

But it's also becoming evidence that there are two big problems that are emerging, one very immediate and one sort of longer term. The immediate problem is that in the skies over europe, in the air theatre of the european front, a new technology is appearing. On the german side, jet powered fighter plains have began to pop up.

And we're not a military history podcast saved this for hard core history in dank Carolin. But my understanding of this is that the german jet fighters entered the war too late to make a difference. But if they had entered service earlier, IT would have been a big problem.

So the U. S. The allies go crap. We need to step up our gaming, get a jet fleet in service for us, A, S, A, P.

and everyone who's not an f geek out there, an aviation geek, it's worth knowing. Going from a prop airplane to a jet airplane is not just incremental. It's an entirely different technology. You may have heard the phrase, if you've this before. So squeeze, bang, blow, IT is a completely transformative process of how the engine uses the air in order to create thrust that is much more sophisticated than just a propeller.

My understanding is the engines that airplanes were flying before, then even the p third eight, as sophisticated as IT was, we're basically automobile internal caption s totally.

So we're observing overseas. Our enemy has a completely new technology that we have not tatem ed and masters yet word a disadvantage.

So that's one problem. I'm not going to focus on that first. The other problem to put up in in for a later, we start to get worried that our ally, the russians and the soviets, our relationship with them might not be quite what we think that is.

We might have to address that in the coming decades. So keep that on your back, your mind as we go along here. But let's start with the jet problem.

So the german plane that had started appearing in the skies over europe was the measure met M. E two sixty two, nicknamed the swallow. And IT was the world's first Operational jet powered aircraft.

IT flew close to five hundred and fifty miles hour, which is over a hundred miles an hour faster than any I play, including the lightning p. Thirty eight. So the U.

S. Government turns to, of course, the very best person for the job to start the U. S. Jet fighter program, Kelly Johnson and lucky, and they tell him, go make us a jet fighter as soon as possible and by any means necessary. And when we say as soon as possible, we want a prototype in one hundred and eighty days with the speck that IT must go faster than the german swallow. So at least six hundred miles an hour, you need to pull out all the stops by, pass any red tape, do absolutely anything necessary to make this happen.

And for those tracking along at home, six hundred miles per hour, not quite the speed of sound, not quite mock one, but approaching that something like E D ih percent to mark.

yeah. So Johnson handpick, twenty three of luck kids, very best engineers and designers, and about thirty of the best shop people, the people that actually build the airplanes and get this, he rents a literal circus tent to house them in the parking lot next to a plastics factory that is nearby to rockets headquarters in burbank, california.

And IT is because of this, that the name Scott kirks is born because of the outdoor nature in the tent and the smell coming from this plastics factory. At the time, there was a very popular comic trip called little abner. And a character in this comic trip had A A outdoor moonshine still make a bootlegs prohibition alcohol. And this, still in the coming trip, was called the skunk works.

I think that was called the chords.

That's right. The skunk works with, and eventually the publisher of little avenir so lucky over using sn quirks. So they changed IT to sn corks.

So in this circumstance, in a parking lot, Kelly and this super Ellie team from lucky build the first prototype U. S. Fighter jet named the luu bell in one hundred and forty three days.

Start to finish. This is just wild. For years, the U. S.

Had been working on this technology, and they hadn't gotten IT, Operationalize. ed. The german beat them to IT.

And then in one hundred and forty three days, Kelly, an lucky go, from zero to flying prototype. Wow, crazy. What a testiment to him. And to this organization, in the search stent that he has built, the skunk works seriously.

So this hot and eighty day thing is a very interesting constraint placed on them, and that means that they immediately need to go to an acquired axim that we ve talked about forever. Don't do something that's not your core competency.

A K, A doesn't make the beer taste Better or make the plane fly faster, exactly.

and outsource everything else. And if you only have one hundred ninety days to do IT, you are not going to become an engine manufacturing company. You are going to look around and say, okay, which of my allies has the capability to just give me an engine? So they find this british company, halford, and they take the health h one b goblin engine, and that is what they put in this prototype.

Yes, this product type, the little bell, would go on to become the P. A T. Shooting star. Lucky would ultimately make about two thousand of them.

And while they weren't really used in world war two because the war ended, they would be used in korea, and that would be the first jet fighter play in the U. S. military.

You raise a really important point tho that we didn't cover earlier about lucky and skunk works. They are not engine manufacturer. All of the engines that we're going into the planes before daring since they're getting from other companies.

that is true across the area s space industry. That's interesting that the value chain of all this way, where basically no aircraft manufacturers to this day make their own engines and commercial, you've got rolls, rose, G, E, but every single one of these lucky planes, the engines are made by someone else.

A very different from how the automobile industry evolved. Wear like obviously ford in G, M. And what they're making their own entrance.

Yep, so this amazing feet building, what becomes the P A D. Shooting star and the U. S.

Is first jett fighter plane in less than six months. This is the beginning of scum quarks. And Kelly realizes, hey, this is something pretty special here.

So I want to read A A quote from the concrete book that primitive sn quirk Operation set. The standards for what followed. The project was highly secret, very high priority, and time is of the essence. The air core had CoOperated to meet all of kell's needs and then got out of his way, and boy did they deliver.

So the P. A D would eventually give way to the f one of four star fighter, which was another invention from Kelly in the team. Kelly would win the color or trophy for this.

So after the war, Kelly says, hey, this is special. We should keep this going and the gross brothers and lucky, its management agree and they say, yes, you can keep this corton quote skunk works division going as long as IT doesn't take too much money. And IT doesn't distract from your duties in the rest of the company is now the new chief engineer. So Kelly is both the chief engineer of all of life and running skunk x at the safe time.

It's insane. This not taking too much money thing does become a core tenet of the gun works Operation because you can sort of get around managements ire and managements need a report to shareholders and things like that. If you're doing amazing things in pulling rabbits out of hats and when it's not going well.

you're not a huge burden. Yeah so and read a little more from skin corks here. So Kelly and his handful of bright Young designers that he selected took over some empty space in building eighty two. This is a building on the lucky campus, which is right next to the burbank municipal airport. It's an unmarked building, literally, like this is a commercial airport that average people are taking off of every single day so that he uses those guys brainstormed.

What if questions about the future needs of commercial and military aircraft, and if one of their ideas resulted in a contract to build an experimental prototype, Kelly would borrow the best people he could find in the main plant to get the job done. That way, the overhead was kept low and the financial risks to the company stayed small. His small group were all Young and high spirit who thought nothing of working out of a phone booth, if necessary, as long as they were designing and building airplanes.

All that matter to Kelly was our proximity to the production floor. A stones threat was too far away. He wanted us, the engineers and designers, only steps away from the shop workers to make quick structural or parts changes.

Yes, I love this. I think this is a huge learning, keeping your designers as close as possible to production. So the game of telephone is as short as possible and is incredibly valuable.

And having the designers being able to games up at their desk and see like literally the way things are being manufacturer. So they can say, oh, that looked in the diagram. But in practice, you have to bring this big thing around over here. Maybe we can make that Better than next time we design. It's just such a great key inside.

The other thing on the small number of people, this gets to the gun works rules and Kelly created this incredible document, fourteen rules that will link to in the show notes ah the third of which I mean they're all incredible, the third of which really applies here. And I quote, the number of people having any connection with the project must be restricted in an almost vicious manner. Use a small number of good people, ten percent to twenty five percent, compared to the so called Normal systems.

These people should all be together, all of them building relationships, collaborating, working together to produce the very best product.

And you see this in products in the future to the iphone, the ipod. And and you read the stories about the early teams. There are six, eight, ten people.

They're all full stack. So there is these unicorns that cross disciplines and their tax hundred x engineers. So you really only need a handful of really good people. okay. Listeners, now is a great time to tell you about long time friend of the show service now.

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Yep, so learn how you can put A I agents to work for your people by clicking the link in the show notes or going to service. Now, docotor ash, A I dash agents are right, David. So what makes gunk works.

work well. To start, all that mattered, literally, the only thing that matters is rapid delivery of superior products. And that was driven by the expedient requirements of world war two, literally saving amErica in the free world, and then the cold war, which is going to come in in a big way in the second year.

Listeners might be thinking, isn't all that matters in any business rapid delivery of superior products? Like why is this new and unique and different? The reality that is that that almost never the case. There is politics, personalities.

well, and you rarely have a existent al threat that you must cut through all the red tape. It's like Operation work speed the way that we got the vaccines as fast as we did. If the world is on the line, what can you do away with in your processes and which people can you hand select to solve .

IT competition and existent al competition? China has a way of bringing out the best in people. So then already talk about rule three.

I did we pick the same ones, and so I we have fourteen to pick from. Let's see. Let's pick three that we're going to highlight here. We already talked about number three, what are your others?

The next I want to talk about is the skunk works manager must be delegated practically complete control of his program in all aspects. Yeah.

I mean, this is like the author theory, like you have to have a single person's vision and the buck stopping with a single person who has ultimate control and is in a squeeze. Medal manager, he is the program manager for any given program that they are working on any new aircraft. And also he's the guy flying a washington to interface with the government. It's not like he's dealing with the engineers and then call the sales force being like, hey, can you go to a steak dinner with our guy washington? It's Kelly.

And yet its most productive slunk works, I think, was about maybe fifty designers and engineers and maybe a hundred machinists and shot people like this is not a large organization. It's crazy. My last one is the last one of the rules.

Yes, this is one of mind. Two, because only a few people will be used in engineering, and most other areas, ways must be provided to reward good performance by pay, not based on number of personnel supervise. So Kelly has a quote about this in the book.

In the main plant, they give raises on the basis of the more people supervised. I give raises to the guy who supervises the least. That means he's doing more and taking more responsibility.

But most executives don't think like that at all. Their empire builders. This is so important. Yep.

totally agree. And in fact, it's thinking like a capitalist too. I mean, it's really like how can we achieve the most with the least, not how can we achieve a fixed amount .

with a fixed margin. So this one more thing that isn't in any of the rules because I think it's just sort of a implicit, unspoken assumption. All of this only works if the small group of people that you ve brought together are highly motivated. I think the reason this was taken for granted for, like all of schunk k heyday was, you know, hey, the mission here is preserving your life and the lives of your loved ones and amErica from losing world war two and then, you know, having nuclear bombs dropped ed, on IT by the soviet union. You don't really need a lot of extra coding motivation here totally.

And you gotten, think back, this was a time where american superiority was not guaranteed. I think we have a reasonable vt of complacency today. Americans feel very secure, sure their enemies, but are we onna be fine totally.

We don't need to think about this that much. We can decide to prioritize other things and have passions and say, yeah, other people can take care of the national good because like you will be be fine either way. That was not the belief at the time.

No, there's this great quote in gun corks were been rich tells the story of his first day in sqn quirks where he's shown the youtube prototype ork. Talk about the youtube in a minute here, but literally day one is shown the prototype of this top highly classified, highly secret airplay and that nobody can know about.

He says the full weight of government secrecy fell on me like a sack of cement that day inside Kelly Johnsons guarded domain, learning an absolutely momentous national security secret just took my breath away. And I left work, bursting with both pride and energy to be on the inside of a project so special and closely held, but also nervous about the burdens IT would impose on my life. This is exactly here for, you know, with great power comes great responsibility here. You.

okay. So what are the machines that sort of unfold from here?

yeah. So a minute goes talking about the two problems that america, the allies have at the end, world war two. One was the jets.

Sn quirk addresses that with the P A D shooting star. The other problem is, yeah, we're going to win this war, but there's a whole new war. It's just about to start.

yeah. And the war are coming out of his world war two. But of course, the cold war against the russian s is just starting.

and this is so hard for us to process today. By doing the research, I really felt IT. I think for a lot of people, the stakes and the pressure and the worry about the cold war was greater than world war two.

Yeah, that's a great point. When the americans entered world war two, we had reason to believe that we could come in and win the cold war. I think to the american psych felt very different.

I think we had good reason to believe we were not gonna in. So right after the war, churl comes to america, gives his famous as iron curtain speech and falt missouri, that an iron curtain has descended over europe in the form of the soviet union. And then before the end of the decade, I didn't really realize the time mine on this in the August nineteen and forty nine, the soviet union detonated first nuclear bottom, and nobody believed that they were gona have the bomb that quickly or that powerfully. And not only did they have the bomb, but whether this was real or not are positioning.

People really believe that the soviets and crust chavez intention is to use the bomb against amErica if they ever believe that they could do so without fear of retaliation, that they could knock yourself first, that they would do a first strike and use nuclear weapons on america. And this kicks off the cold war arms race. And people probably know and learn about mutually assured destruction and deterrence.

This really was the policy of the military and the american government that we need to have capabilities to deter the soviet union from launching a first nuclear strike against us by being able to guarantee and have them know that we guarantee that if they do so, we will destroy them so they can't to do this, because if they do, they will be destroyed. That was the whole policy. And that's like a really scary place to be.

This is like if somebody over there in the kremlin decides one day that they think they can win, we're all gonna die, right? In one thousand nine and fifty five, there was a national poll that asked the question, what do you think you are most likely to die from? And over half of amErica responded that they thought they were most likely to die in thermo nuclear war.

Wow, above any other cause. Let that thinking. Over half of the country thought they were gonna die in nuclear war.

horrifying. And so in a world perception, intelligence is paramount.

Bingo IT is the most important thing. Even more important than your ability to strike and wage war is your ability to know what the current state of the opponents ability is to strike and wage war. So that means that the background is no longer the use of weapons, but the intelligence about the existence and positioning of weapons.

And nobody is Better suited then schunk quarks to be the U. S. Government and military primary sounds cliche to say, but sort and shield during this war.

yes. So this brings us to the youtube spy plane, and this plane serves such an important purpose that ended up being brought in the service in one thousand hundred and fifty five and was only decommissioned in nineteen eighty nine.

Yeah, incredible.

Now there are many airplane programs that have ten, twenty, twenty five years time frames for very different reasons, yes, that we will talk about in the military industrial complex. But the youtube was basically the first time that amErica found a plane that I could use for a long time and wasn't rapidly replaced by the next best thing.

okay. So that would be really great if, you know, you could fly a plane in over russian, take pictures and .

understand all .

this because there's no satellites yet to. But you can just fly a play in the russian and do that. It's a close country. The russian is onna.

Shoot you down if you do IT. We're not technically at war. So we would violate international trees to go into their air space. We would start the war by doing that.

exactly. So the first thing is fly. It's got the news now.

China is doing this now. The first thing we try is unman spy balloons. We send balloons over russia.

Failed weather experiments. yeah. Failed weather experiments, yeah. That fails on many fronts, including actually returning usable photos of soviet nuclear installations. So really, IT becomes clear that what's required is an entirely new type of airplane that can either do one of two things in, ideally, both fly over russia stealthily and undetected by rate ark, or two, fly high enough or fast enough that they can't shoot down.

even if they IT just got works being the ambitious organza that they are tries for option one. And we don't Frankly know very much about what russia's capabilities are. So we're pretty sure that we can build some airplane that flies high enough that their radar systems won't detect us. And great. So let's do that.

Yeah, great. So this is interesting. What government agency contracts them to do.

This is not the military. We're in the spy game now. It's not the army, not the navy, not the air force.

It's the C. I. A. They're building their own air capabilities. And all of the work that's count works does here and for many years come as for the CIA, yep. So what exactly is the chAllenge that scum quirks has laid out in front of them for designing this new spell? E, well, at the time, the maximum altitude that airplanes flu was about forty thousand feet.

The U. S. Thought that the soviet is best interceptor fighter aircraft could get two, about forty five thousand feet.

yep. And we also thought that their radar wouldn't function above like fifty five thousand, right?

We like our as long as we clear sixty five thousand, we should be higher than their rather can even detect and certainly higher than their fighters could come get us right.

So the C. I is back for sn. Corks for the youtube is to fly at seventy thousand feet. Now there are couple problems with that. One is that Normal jet fuel doesn't work at that altitude.

You know, that altitude, the pressure, the temperature, everything about the environment, you're getting to be closer to space than you are to Normal earth atmosphere, and things start going wrong. So that one, they actually subcontract with shell oil to make a new formulation of jeff fuel that does work up there. So you know that problem solved. Problem number two is may be a little bigger, and that is that humans cannot survive at that altitude.

So certainly you need to pressurized cabin. But if something were to happen and you needed to be out of the cabin, you know, called no air ba ba ba.

yeah, I don't know the technical details. I think even the cabin pressurization technology that existed then was not onna cut IT at seventy thousand feet.

So you basically need a space suit.

exactly. Some of this technology came from like diving suits and some other things that came before this. But I think this was the big coming together of the technology that created the space suit.

And that's what they put these pilots in. wow. So lucky ID and scut quirks win the contract from the C.

I. A. They start working on this plane in sometime in one thousand nine hundred .

and fifty three, incredibly top secret. We wouldn't reveal the fact that this existed to the russians, our own people, for years and years and years.

I mean, this was like the quote from earlier that we read from being rich when he started working on this project day one and saw the prototype. And that hit him like a saca cement. You know how important this? what? So skunk works completely and delivers the plane by july one thousand fifty five.

So like a year and a half, and for a total project cost of three and a half million dollars, that's an m that is not A B. A year and half and three and a half million dollars for one of the most important products and pieces of technology in american history. astounding. This is what gun quirks is capable of.

So they're flying higher than any plane is ever filmed before they're using a different type. A few old people are flying in space suits for the first time. Feels like to be a reconnaissance aircraft. You would also need one other key component in order to achieve the mission of spying on the enemy.

Yeah, to take photos, you need a camera indeed.

And you would need an all new type of camera, with all new type of lens capable of taking photographs of something seventy thousand feet away from you through, you know, a whole bunch of atmosphere. Gosh, if only the U. S. Had someone who was just incredible at this sort of pioneering optics technology.

Indeed, the U. S. did. And that was doctor Edwin land. And the polar company subcontracted and created all that.

Actually, I believe IT was Edward himself that helped convince president ison Howard even pursue this project in the first place. He's like, we can build the camera that can do this. If we can get the airplane bill, we can do this project.

This blew my mind, is so cool to see the intersections of different innovators throughout history. I mean, Edward is the man who inspired Steve jobs, and he's building the youtube camera .

is just way we are going to have a lot more attack. And silicon valley and apple stuff that's gonna come up here in just a little bit. So they build the plane.

You got to test this thing. They're not going to roll IT on the runway in burbank and take off ah you know just head for the soviet union. He got ta test IT and I know it's got to be secret of what not and remember Kelly Johnson, one of his big principles is like we test our products. You, the government don't test our products.

We test our products. And we should be clear, this youtube spy .

plane looks crazy. IT has a hundred .

foot wingspan. Yeah, this thing, if you sight taking off, you would be like, okay, i've seen airplanes. That thing is completely different. So it's not like they could disguise IT. Like you need to figure out somewhere on the united states where there's basically nobody, so that you can test this thing.

This is so good. The smile our faces is like, you can see us, but IT is stretching out of the room here. Yeah, you can't just paint this thing like a school bus and pretended something else.

So they need to find a suitable test shape. They go scouting all across the western us. And kind of remote areas. Kelly Johnson is sort of like sam walton and his prop, plain scouting out for, you know, walmart locations fly in sideways and .

then they get an idea. And that idea is, where is a place where even if there were people before, there are sure aren't people now, because nobody in their right mind would want to be anywhere close to where we just tested our nuclear bombs. And they go, oh, as long as we figure out that it's safe, that would be a perfect place for us to test this airplane.

So they find a dry lake bed in nevada called groom lake. And there's quote and Kelly Johnson here about this in the book. We flew over IT, and within thirty seconds you knew that this was the place.

IT was right by a dry lake man alive. We looked at that lake, and we all looked at each other. He was another Edwards, like about their first space. So we wheeled around, landed on that lake, taxi up to one end of IT. IT was a perfect natural landing field, as smooth as a billion table, without anything being done to IT.

How in is IT that this is where we were testing nukes? I actually do not understand how there was not radiation poisoning and I I don't fully understand the half life and all that needs to be done. But like how is that safe? Yeah.

it's insane. And not only where the recently nuclear tests happening right nearby, I believe that nuclear testing continued right nearby while they're using this site grim league to test the you two one hundred percent is .

the crazier thing they had to like sometimes take some time between the most recent nuclear test. And when they wanted to go fly because these sites are like twelve miles away from each other or something pretty close. If your curious listeners, there's a great documentary on amazon called secrets in the sky, the untold story of schunk works that has a bunch of footage of all this, wow.

So listening, if you haven't caught on already, the location that we are .

talking about, the test in the middle of desert nuclear.

some really strange looking flying aircraft, this is area of fifty one. Skunk works creates area fifty one. And of course.

there's rumors of u. fs. there. They want to keep everyone away.

For the people who they can't keep away, they're going to see some really weird flying stuff. S, of course, the rumors are going. It's all goodness for skin works. This cover is great.

Oh, it's even Better than that. I can remember which plain or when this was. But at one point time there, one of the test plates crashed, and you have the pilot is survived. Somebody saw he was wearing a space you nobody do with a space. You was, of course, looked like a freak alien.

right? IT would be another ten years before we would have the mood missions.

yep. And so farty amazing. Yeah, it's all gunn quirks in the youtube wow. And then the black burden, everything else we going to get into later in the story, all happening out of area .

of fifty one, the prep work that the pilot had to go through before getting on these planes, two or nuts, they needed to breathe pure oxygen for two hours to remove all the nitrogen from their blood in case they had to eject because of these. These are test pilots on a super experimental aircraft. They were often ejecting, or they were often, you know, things went wrong in these test yeah.

a bunch of people died doing this like we should say.

yeah, I mean, a great sacrifice to bring this program and subsequent gun works programs into the world. But basically what was happening as if you didn't breathe pure oxygen for two hours, you could get the bends. You know, anyone who sooper dived and you can't fly right afterwards from ejecting. And so it's like, well, if you managed to get out of the aircraft before IT crashed, then that could kill you. So you needed to make sure that this sort of oxinate of your blood and getting rid of all the nitrogen made IT, so that if you did need to eject, then you would survive this as well.

Yeah, crazy. okay. So they test the youtube at area a fifty one.

So great they get IT up and running and an active service as an Operational spygate e, pretty much the world's first, at least of this type within a year. The first soviet union overflight happens on july forth 15， six. Of course.

IT was, of course, this is so interesting. There is a whole bunch of things that when they take like they don't know it's going to happen. Is the thing going to work at the soviet gona see us like we're going to learn so much here? You can't script this stuff. The soviets tracked IT on radar, even at seventy thousand feet.

The whole way, the whole way.

right from IT takes off the whole flight path to russia. They knew everything that we were doing.

We were super wrong about their radar. They didn't just have low altitude radar. They were capable of radar that could see straight up in the space wherever we were flying. They were gna see us. Yeah.

which we had no idea a way. Do we learn this as part of IT? So here's what funny we know that they see that from take off.

They track the youtube the whole way. This whole top secret program like, oh no, it's busted. They see IT, but IT turns out they can't hit IT.

So you know a whole bunch of fighter jets scramble and the fighter jets, they can't get up that hight so they can intercept IT. They launch surface ed to air missiles. The missile can hit anything that hide up. So the youtube just fly along the track in the whole way. This plays flying along behind IT.

and they can do anything. But at least we get the intel now in the U. S. That, okay, they can see up here. And so it's probably just a matter of time before they're capable of shooting something down up here too.

Yes, but here's what's so interesting. Remember this, this whole war I got is fascinating. It's a war, but it's not a war. It's a war of perception. So in that fleet we get incredible photographic observation evidence, and we would fly so many missions over russia for the next few years, getting this incredible intelligence.

The soviet never saying anything, because if they were to say anything and say that they tracked us and do IT, then they would be admitting that they were powerless st to stop IT this war of perception. Like it's so crazy, the incentives and motivations here. But IT makes sense. They're not gonna anything and reveal the program. So IT remains top secret because if they did, their sort of position and posture of strength would be compromised.

And neither country really wants to be at war or both maintaining this. Uh, we're not at war, and we're not gone to tell you that we're preparing for if we need to be. But of course, we're gonna a do whatever we can to understand the best about our enemy or not an enemy. Other countries that we're not at all .

with adversary, right? And I actually think there, maybe, you know, military historians that understand this Better than us. But I think this was actually an optimal outcome for the U.

S. Because remember, just like you are saying that nobody actually wants to go to war here, the goal is for both sides to keep each other in check. And so this, the youtube in these recovery ics missions become a major chess piece for us on our side of the board to keep the soviet in check. We like this state, I think, that they know about IT, but nobody talks about IT.

The other crazy thing is, this camera is incredible. If you look at photos taken by the youtube spy plane, IT is remarkable. What in the mid fifties, this thing was capable of taking from seventy thousand five, the engineering .

all around that went into, this is just great. And you could do a whole podcast, just develop the technical aspects of the engineering advances.

And IT basically works. They find a whole bunch of nuclear test sites. They find where missiles are kept.

We basically have a real time count of the soviet union warreth ads, the soviet union fighter jets, the capabilities that they have with the radar because of painting our airplanes. So we now know that that exists. Mission accomplished in states on this thing.

you we talked earlier about cost of for the three and half million dollars. No, I think you could make an analogy to make the purchase in terms of like best deals that the united states government ever got relative to like the benefit to america.

This is, are you the last great deal they got from lucky?

Well, though there's some more that we're going to talk about a minute. So this all continues. We fly dozens, maybe hundreds, of youtube missions over the next few years.

The russians are constantly trying to shoot them down. They fail. Nobody says anything. And then on may first one thousand nine hundred sixty, ironically, on may day, we launched the youtube programme on july forth and IT ends at least over the soviet union.

On may day thousand nine hundred and sixty, the soviets finally have developed a missile that can reach seventy thousand feet with accurate, and they shoot down a youtube. This was the first time in history that a ground to air missile had shut down an airplane. Hi, I didn't realize that.

I read that. I like, wow, I guess maybe the technology is exist in where war two, the korean war. And so this was major historical moment in so many ways, amErica and the CIA and the government, the president, they're like.

okay, right? What do we do? America's posture as we were ever there.

But we know now that the motivation for russia not to talk about IT now is gone. Now they can position this says like, hey, we're so strong that we can keep people out. We expect them to say something right away. Couple weeks go by, they say nothing. Quite surprising.

All we know is we've lost contact with our pilot and we didn't see them come back in land. So we presume that they shut down our pilot, but they're not saying anything we don't really know.

And we presume that if this plane was shut down, as we think probably the pilot was killed having shoot down a plane from seventy thousand feet, right? Profit, the pilot was killed. Well.

that's fall miles in the air.

Yeah, no, the pilot was not killed. The pilots name was Francis gary power, pilot powers. If you know anything about U. S. History, you probably know his name, and you probably know that he oraculous sly did survive and was captured and interrogated and probably tortured by the russians, and that this was the revealing of the youtube program.

So what happens? Turns out that there was a big summer in paris scheduled for later in may, between ice and hour and cruise. F and cruise chief announced on the eve of the summit that they have capture an american pilot.

They have captured this new plane, that the us. Has been illegally and in a provocator manner, flying over soviet air space. They have defended their country and shouted down. And this create huge mess, is on how our first denies this and then admits IT, when we realized that, like, oh, shoot this pilot stall alive, he's confessed, like, all of this is a disaster. yeah.

So, but I guess they .

probably was a path where this could have LED escalation. Fortunately, IT not. But that does mean that the youtube program, at least over russia, is done.

We don't fly anymore, you too, over russia, we can. If we were to do IT at this point, we know they can see us. They now can talk about that. They can see us, and they can shoot us down like IT would equally toward. If we kept doing this, we have to stop.

The youtube becomes quite useful for other locations around the globe, but not over the U. S. S. R. itself.

This, there was a huge, huge problem. This was the most important thing in the war, and now it's gone, right? We now have no way to take photos of military sites in russia because we can fly planes over there anymore, right?

What blind? What do we do?

What do we do? Well, the world would not know until nineteen ninety five when this would all become declassified under the clinton administration, but that was only true for about three months, thanks to another super secretive lucky division that figured out another way for us to take pictures .

of the soviet union. And this listener's is where if you've red gun quarks or watch documentary about scum works, what we're about to talk about is not in any of those. This is a completely separate story that takes place in a different place in california.

That is a detour from mark kn. Cork story. And will will be back because, my god, this gun works.

Do some incredible things after the youtube. But before we do that, we want to take you to northern california. And the origins of silicon valley and lock needs participation in that.

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Yep, so if you want cutting edge cyber security solutions, backed by a twenty four, seven team of experts who monitor, investigate and respond to threats with precision head on over to hunches dot com slash required, or click the link in the show. Notes are huge. Thanks to hunt us. Okay, David d, so I had forgotten about this story. I knew a little bit of IT from watching Steve blanks great talk, maybe five, eight years ago, the secret history of silicon valley, but you sort of found the last twenty minutes and then just dug in like a splinter on this particular moment in history and how IT is all tied into rocky Martin. So where are we go on?

Yeah well and is even less than known than that. Only certain versions of that talk that Steve has given contain the lucky story because so much of IT has only recently been declassified, a lot of IT even after he first started giving this talk. So what really turned me on to this with some of the chapters in beyond the horizons, even though that book was written in the late nineties, I started dig in, and then I started watching some youtube videos with some of the people involved in this. I was like, oh my god, there is this incredible story here that we don't realize.

Yes, in typical David rosen doll fashion, you sent me a note the other day and said, you have to listen to this starting at eight minutes and fifty seconds. And i'm like, what is this? And I click, and it's a guy at a podium with a terrible recording set up from the eyes. Tripoli silicon valley history video. So industry association, this thing has one hundred and twenty four views after being posted seven years ago.

incredible.

This stuff is buried.

I honestly can't believe. And i'm so glad that we get to tell you here, right, what's up the context? So if we rewind back to world war two, one thing we kind of mention here now as we are talking about the youtube and the russians tracking IT on rather, but we didn't talk about doing well or two, was the importance of radar.

Now, so much of world war two was an air war, both in europe and then especially in the pacific, and the development of both radar and anti radar technologies was paramount in the war efforts. Yes, there is lots of land based fighting and tanks in all that stuff. But where were I was the first real airball.

And obviously that importance of rate are continued into the cold war, just like we were talking about with youtube flights. Now during wilber two, where was all of the U. S.

And allied radar work and research being done? IT was primarily being done out of two institutions in boston, M, I, T, with the radiation laboratory or the red lab, and harvard, with the harvard radio research laboratory. Now here's what's interesting.

Neither of these two labs that M, I, T and harvard existed before the war. The government directed M, I, T, and harvard to set them up as part of the war effort. They didn't exist before.

And then M, I, T. And harvard, very fortunately for california and silicon valley, shut them down after the world. Now, IT turns out that the head of the harvard lab was a professor named Frederick.

Termin might ring some bells for people, especially people who went to stanford. Turman was probably the world's leading expert on radio engineering and also vacuum tubes and early computing. Except termin wasn't actually a harvard professor. Termin was a stanford professor. He was just on loan to harvard during the war years because that's where the government set up the radio lives.

And the government allocated millions and millions of dollars of funding to harvard ni IT and something like fifty thousand dollars to stanford. All of the funding for this was harvard N. I, T.

yes, they assembled all of the world's experts. And termine was arguably one of, if not the leading world expert in radio engineering. Assemble, LED them there in boston, are guessing cambridge at harvard.

And M, I, T, cambridge residents. We get mad at us if we say boston. So after the war, turman comes back to stanford because harvard shut down the lab.

He comes back to stanford, and he does three things. First, he recruits away all of the best people that he worked with, the harvard dio lab from universities all over the country. He recruits them to stanford.

and he gives them ten years immediately. Yes, he's like, I want to make this deal as sweet as possible for you because I want to will stanford into existence as an engineering institution.

Yes, of the highest daughter. So that's what too soon after he gets back to stanford, he becomes the provost of the entire university. And as provost, he completely changes the way tech transfer is done at stanford.

Know where the university has. As good of a tech transfer policy is stanford. There are notoriously friendly. Yes, notoriously friendly. And everywhere else, including harvard, M, I T friends involved, are notoriously unfriendly and hard to work with.

The classic story is stanford owned one percent of google that spin out, which ended up making them an ungodly dly amount of money because of how big google. And that if that were at other universities, they would have said, fifty percent is what we need to keep for three percent is what we need to keep. And they would a smother the innovation before I could .

become commercially viable. Now, I saw that in the back of my mind, knew this because I had watch the blanks talk many years ago, but I kind of forgotten. I just thought is like, oh, well, that's because stanford and silicon value like we get IT, we're spar. Not that we're smarter, but there's this attitude of if you're in silicon valley even to this day, you like, yeah, we get how the culture works here and like the east coast .

doesn't get IT as if this somehow existed. Oppor, because I was just in the water and came from nowhere.

not at all, as all things determine. And world war two and his experience at the radio lab, when he becomes provocative, he's still a super devoted patric. He knows how important this work is that he was doing, Robert. And he knows it's just as, if not more important during the cold war. So what he does is he encourages students and professors to leave stanford and go set up companies and work for defense firms and work for the military, not to make money, but to be like in the nation's service.

Take the research, and the people who are doing the research out, start a brand new company. He would try to help you find funding, which at that point, venture capable didn't exist. So he was introducing youtube customers who can sort of preorder from you to fund your research. And he basically believe that a commercial ecosystem leads to more innovation than one that is purely happening in academia and thus could Better serve the needs of the nation.

Customers.

customer.

customer, hang under that though for one second.

if you were doing all of this ten years before, the university would have looked at you and said, what do you do IT?

You're encouraging the stuff to go away from us. That would I. Instead, what stanford, that becomes the best thing you can do for your career because in terminals, mind is the best thing you can do for your country.

Okay, so that I was number two. Number three, he off a big part of the stanford campus. Now, if you've ever been the stanford campus, my god, I was so lucky to spend two years there.

It's like paved in gold. It's literally shanna law. They have so much land is the most beautiful, like I delic place in the world.

And like, eighty percent of the land is still undeveloped yeah they .

own like all the way out to the ocean, I think like it's crazy. So he carves off a part of the stanford campus and develops IT to be leased out as commercial space to corporations and the government to come, people to start, companies, companies to come, to build, to participate on this ecosystem. All right, there on campus, it's initially called the stanford industrial park.

Today it's called the stanford research park. IT still exists. If you've ever been there.

It's basically all of the office buildings up and down page mill road in palo alto. So it's H P in heel a packet t talk about that in a minute. It's text less landlord today it's the m where it's where iraqi park was.

It's where next was and Steve jobs, it's where facebooks office was for a while. This is where their nose was, my god. So you might be like this thing, like, well, this is cool.

Maybe I knew this stuff. Maybe I did. This is really fun. Silicon valley history. What does this have to do with lucky? Well, one of the very first tenants of stanford industrial park.

Then you are talking about customers, customer who will go on to become the single largest employer in the area in proto silicon valley by a huge margin, was a new secret division of lucky. This blew my mind. The secret division is called the lacked missile systems division, later to be renny, ed, the lucky missile and space company. And what L, M, C, lucky missiles and space company did honestly think, like IT is bigger impact to the country, to the world, and certainly on business, to lucky and to sick valley and skulk quarks. This story is of a scale I know we've ever really told on acquired.

There are a lot of gun works devoted, David, that is quite the assertion to say that this is a bigger deal.

Well, let's talk about IT listeners. You can judge. They pattern themselves after skunk arks and took so many of the gun cork's management principles up to silicon valley.

I was reading scum works. So like, oh yeah, so many these principles. They sounds like silicon valley principles.

Will there is a way for that? okay? So lucky makes the decision to start this new missile systems division in one thousand and fifty four.

But IT becomes so much more than that. Obviously, this is also a top secret stuff, just like skun quarks. So just like gun quarks, they set up the new missile division in burbank, also in an unmarked building. They literally just copy past skunkworks right there in burbank.

And so IT starts in .

southern california. A IT does. But there's two problems without first, it's kind of unreal ty for a big company like lucky to have not one but two super secret unmarked divisions right there on the main campus.

You there aren't proposed to know about each other or anything else going on like you start getting into weird territory quickly. But it's important that the missiles division did start there because they took, as I said, a lot of suncor's management practices. The bigger problem is that IT turns out that building missiles s is a very different discipline then building airplanes because unlike airplanes, you don't have a pilot in the missile.

So you need missile guidance systems. And that means that you need later and you need computing. And those two things are not what something california is good at, but you know what's really good at those things. Fred turman up at stanford, and everybody that he's recruiting, literally the best minds in the world at all of that who are now at stanford and who are now being encouraged to go spin out and start companies who might just be subcontractors to a big missile system that .

attract the bill. Um interesting. And this is cool. This is a part of the research that you did that I don't know much about.

Yeah, this is a great. So the next year, in one thousand hundred and fifty five, lucky moves the missile systems division out of burbank and up on a one to the stanford industrial park. The very same, same ford industrial park, their fred term just carvel out of the stanford campus and developed on page mail road.

And lucky becomes one of the very first and biggest tenants of the stanford now research park and is still there to this day. wow. Now they can actually do everything they want to do on the stand for canvas.

You're not gonna build a missile and test IT on the stand for canvas. So lucky, pretty quickly after they establish themselves in paleo, they also buy two hundred and seventy five actors just down the road in Sunny fail. And they build a huge campus there, one hundred and thirty seven buildings. So when lucky buys this, the population of Sunny vail is less than ten thousand people. What lucky built Sunny vail?

I didn't realize that. wow. So how many people would eventually work in Sunny villa? lucky.

So by the end of the decade, in one thousand nine hundred and fifty nine, just four years later, lucky missile systems employees almost twenty thousand people in palo to and Sunny vail. And a few years later, by mid sixties, they would employ thirty thousand people. This makes lucky by far the largest employer in this brand new proto silicon valley.

And I remember I just said lucky built SONY. You think of Sunny y body, yahoo, intel and all that. cisco. There was none of that lucky built IT. So hua packet d was the largest tech company, computing company, a silicon valley company.

At the time, hua and packet d were students of fred termine, and fred encouraged them to spend out start hua packet d. They were the largest new tech company. They only had three thousand people.

One, two, three. Lucky, he had thirty thousand people. Wow.

oh my god, it's fine. sorry. I knew at least as of two thousand and nine that the lucky campus and Sunny ville was large. Because when I was turning at cisco, I went on a run one morning and I was just sort of like expLoring around, and I ran into rocket campus and I got chased down by a security guard who's like, you can t just run in here and I D my headphones in. I thought us in big trouble.

Yeah, they had this huge structure called the blue cube that has since been dissembled. It's not there anymore. But if you need a like big hanger, you're gna build missiles IT and the end building a lot more. The medals were .

going to talk about. And you mention they need radio and they need computing. Computing basically wasn't a thing yet. I mean, shocky co invented the transistor just a few years before started shocky semiconductor in one thousand nine hundred and fifty five time.

As lucky is coming to silicon valley, right?

Of course, shocking is a predecessor to fair child and me conductor, which is a predecessor to intel. So like we've got terminals, radio background, but there really weren't any people with compute experience yet that was all happening can currently all around them in Sunnyvale, in palo alto.

So we talk about this a lunch actually on the first seca capital episode when we were telling down valentine story. And at the time when we were telling the story, we like, oh, you know, done. He was so legendary before he started skua.

He was the head of sales at fairchild semiconductor and the head of sales at national semiconductor. And we started gloss over that. We were like, yeah, you know, he was mostly selling to defense companies. Well, who do you think he was selling to?

I mean, he was selling to defense company.

Now he was also selling around the country to other defense contractors too. Lucky wasn't the only company that was working on missile, but I think they were the only one that was working on missile in silicon valley. wow. And by god, did they buy A A lot of product out of all these startups and all of these silicon startups that are coming out of stanford and coming out of shocky and just getting sprung up right there and sick valley.

I can't believe that there were ten times more employees at locky in silicon valley than at H. P. In the late fifties.

Yes, IT is totally instead. And so many people came through lucky in the silicon valley, including one. Jerry was iac, who moved himself in his Young family out to this new silicon valley to become an engineer at lucky missile and space company.

That's right. Was is dead. The reason that Steve was in a go up in silicon valley is directly because of lucky mark.

Oh, that is awesome. No lucky, no laws. And silicon valley, no apple.

No apple. crazy.

Now to mention, there's a really interesting point here, which is you wouldn't have this open commercial spirit to silicon valley without termin and without the belief that the right thing for amErica was for all these companies to become companies instead of academic research or spread around and other parts of the country that creates the silicon valley ethos and creates silicon valley as the place where that ethos would thrive.

And it's worth pointing out for people who don't spend a lot of time in the the area, this has absolutely nothing to do with some friends. Go nowadays. Is that sort of this big blended soup of companies that have officers in both places and you can drive or take the tikal train between them? Yeah, that's a recent phenomenon. 3DS， O is a completely different universe at this point that is in zero part responsible for the growth of silicon valley.

yeah. And before this time, before the fifties, there was no silicon. IT was called the valley of hearts delight that was the named for IT. IT wasn't .

silicon valley, huh?

wild. okay. So what was lucky actually doing there? We talked about them working on inner content, all bliss c missile, I C P M and missiles defense systems.

I think they really did continue to work on that. But there were two projects that this new division of lackey took on that really change history. And both of them together became, for lucky at least, and the parent company, by far, the biggest driver of profits for the coming decades.

And really, as will see this division and not sunk ks, this division kept lucky life. Lucky would have absolutely died without this division. So whether these projects, one went up to space, as perhaps is obvious than we four shadowed, and literally is in the name of the company, the lucky missile and space corporation, and the other one went down under the oceans.

So let's talk about that one first, because I think that happened first chron logically. So submarines had obviously been a thing since world war two. And even before that, back to world war one, there's lots of advantages to submarines during wartime.

The healthy, they can basically travel anywhere in the world. You can stay hidden for a long periods of time, especially once nuclear sub ines are developed that can stay under water for months at a time. Self powered. They're both a great offensive and a great defensive weapon during periods of active war. But during the cold war, they're kinds useless.

Because if you wanted to have a chest piece in position to strike a land based target, if you could even do that at all with the submarines, you gotto get the submarines pretty down, close to the land, which means close to russia, which means they know you're there. And that's a provocation, unless somebody could maybe somehow figure out a way to fire an inner conventional ballistic missile out of a summary and go up into, you know, the air and in the face and and hit A A and face target far, far away. Now this seems crazy. It's hard enough to make this happen from the ground. You're talking about doing this from the sea with all the like waves and the lack of stability, no way this could happen.

This thing has to thrust through air after IT, thus through water.

Oh, what? You're making the leap already that you would fire IT underwater at first when the navy contracts lucky to work on this in one thousand nine hundred and fifty five to build the navy's fleet ballistic missile system. Is F, B M the ideas? They're gonna e these things from the surface of the ocean, the submarine to rise the bed in water, fire off a mysql from the deck of a ship or a surface submarines.

You could imagine another issue, which is these things have rockets on them, so you have to not destroy the launch pad, which is the submarine full of american humans, while launching IT.

Yeah, this is a big chAllenge. The reason that I was worth trying was that if you could create a naval based in a continent, nuclear strike capability IT completely changes the strategic landscape of deterrence and first strike for a second strike in retaliation. So what we were really afraid of, we thought the soviet would pursue a frustrated policy if they felt they were able to.

The way that they would do that is if they felt that they could, in that first strike, knock out all of our nuclear capabilities, if they could target all of our land base, I, C, B, M, incapacity them, then we will be incapable of responding with a second strike. And then they could blow up our city somewhat. Not now. If all the sudden you have a mobile naval based missile system, will that completely changes the chest ort?

It's quite a deterrent.

quite the deterrent. You can now pretty much guarantee, as long as you can keep a fleet of nuclear submarines Operating at all times. That you can take them out and they can move around and be anywhere.

And so if you launch a strike, they're gona launch right back. And first strike is now off the table. This is a huge strategic win.

If you could put this actually Operational in practice. The other medium, if you will, location that could change the dimension, too, for doing this would, of course, be space. If you had nuclear missile up in space, that also changes the dimension. And this, among many, many reasons, is why when the soviet union launches Spark c in the space in october nineteen fifty 7， even though spotty neck itself was far from having nuclear I C B M capabilities, the soviet is getting to space first to was truly terrifying.

I can't imagine how disconcerting IT is in an era that, you know, now there are tens of thousands of satellites tes orbiting the year all the time when that was a brand new thing. When you could look up at night if you could see spt, nick, and you're like all my god, that thing any day now I could have a new aimed at us, right?

okay. So back to the sea, IT turned out, like we are talking about a minute ago, the firing I, C, B, M from the deck of a surfaced ship beat a submarines or otherwise. Bad idea, basically impossible, but firing missiles from under the ocean was dewy.

And lucky did IT with the help of silicon valley. So in december one thousand hundred and fifty five, the navy awards this contract to Lucy. The name of the project was polaris.

People might have heard of polar rs. missals. Just over four years later, after the contract is awarded in one nine hundred and sixty, the very first U.

S. Nuclear ballistic missiles equipped submarine set sale on its patrol. And everything we just talked about is Operationalize ed, equipped with lucky pyra, a one under sea fired nuclear warheads. Fully stic muscles could reach landais e targets up to twelve hundred noticed miles away from wherever the submarine was when he launched IT. And IT was all built out a silicon valley with many subcontractors all over the place.

right? I M assume lucky doesn't actually make the nuclear warheads right, like that was still happening in national labs at Sandy, all the places that were pie here during world.

Yeah, lucky did not make the submarines, nor did they make the nuclear warheads. I think a lot of this work was done out of sand, which we think amazon eh.

grandfather.

grandfather ahead of sanda, which was in new mexico, the military nuclear program, the division of the U. S. Overall nuclear program, I think was at almost, almost. But sandia was the military ARM of IT.

which weirdly lucky for many years, actually had a contract to manage sandia because there are someone sort of strange partnership that happens where the federal government, higher government contractors to .

manage national labs, yeah, to enable this strategic test piece. The key thing is the missile, nuclear submarine are they existed? Nuclear warheads are they existed? The chAllenge here was created a system by which you could launch a missiles from under the ocean out of .

a some marine man. I just got to say, IT is so fortunate and insane to me that neither side ever launched all the deterrence for all the scary things that could have come out of IT, all the itch trigger figures and everybody get close. IT never happened. That is a big applause to humanity that we could have done this, and no one did well.

This is one of the things that I mentioned at the top of the episode doing the research sort of changed my mind on the warm machine aspect of lucky and the military, the military industrial complex. But I think people really believe I, and I think there's a good chance this was reality. IT was building all of these systems and advancing all of this capability that prevented IT from being used. If we hadn't built this stuff, there is a good chance russia would.

We've done a first strike. Yeah, crazy. okay. So lucky IT, after four years, successfully, does the underwater I, C, B, M launch?

yes. And then that quickly leads to more successful programs and developing the technology further. The polis becomes the president is the next program. And then the trident, the trident missiles had a five thousand mile range and Carrier, hugely destructive nuclear payout.

Unbelievable.

terrifying are IT. So we just told this incredible story about L M S. C.

Taking silicon valley under the option this program we know polar arias president tried in for most people listening, especially if your american, these names aren't surprising to you. You've heard of these programs. You are aware that the U.

S, starting in the one thousand nine hundred and sixty, had nuclear submarines Carrying inner canon and all politics missile. Yep, IT was, if you think back to the kind of the test game, IT was in the government's best interest for the soviet to know that we had this. The point was deterrence.

In fact, we probably should have bragged about this.

even if IT wasn't real, right?

Maybe IT wasn't. Who knows we had inflate subs fit around that thought were nuclear.

May be it's all covered maybe? No, I don't think that was the king. Either way, you don't want to find out.

Speaking of covered, do you know about the things we did on top of the factories when we were building airplanes?

Oh yes. And disney was involved.

yeah, starting way back and rolled war two. But I think continuing after that in the burbank facilities at rocky, I know boeing in the seattle area, other places to built basically these burlap cities on top of factories that looked like suburbs, complete with three cars and trees and stuff, so that anybody who was creating a spy plane and flying overhead would mistake our manufacturing facilities for so ah .

I think I was in and also bombers if bomb ever made to the west coast, they won't know where to bomb. And i'm pretty sure that disney imagineering was involved in creating these sets like they made for disney.

It's crazy house. Sometimes it's in our best interest to make the adversary aware of our capabilities. And sometimes we want disguise capabilities. Really interesting.

super interesting. okay. So remember back when we pressed pause on the skunk ore story and moved up the state of california, up the coast to so can valley, we said that when gary powers and the youtube were shut down in may thousand, nine hundred and sixty, that supposedly this was the end of U.

S. Observation capabilities in the soviet union, and that IT was for about three months. But nobody do IT. Well, L M, S, C is the reason that we get our eyes back in the sky.

And you might know that eventually, after the youtube skunk works would create the next grade bie plane, the sr. Seventy one, which we will get to. But that wasn't for a little while. So this intelligence gap was filled by this secret, not very well known project.

I think a lot of people in the military who did know about this stuff, this is hermetically to say, because it's so beloved. But I think the blackboard was a decoy. We were getting everything we needed from space.

We just didn't want anybody to know about IT. And so everybody is now is like, all the blackboard is such a shame. The government shut IT down, you know, was never used to its potential. Canna never needed to be because of L, M, S, C.

And space. Wow, alright, i'm listening OK like hairs on my arms. So I don't get mad over here.

People are truly getting very mad. Here we go. So when you think about amErica and space in the U. S. Space program, you think, of course, about NASA.

german I and Apollo .

mercury Kennedy putting a man on the moon, all that amazing stuff, which for sure happened and was happening. All of that was basic science research. Nobody working on those programs, public observing IT like that would be crazy to think they're going to be actual applications in space anytime soon.

There's no infrastructure. These are science missions. This is research. And even, you know but nic, on the russian side was a research first.

I was like, the size of one, a boling bowler. I think I was a little big or, but like, I was very, very simple. IT was a long, long, long, long time before you went from those initial science missions to applications in space.

Or so everybody thought because in parallel, there was a secret U. S. Space program being run by lucky muscles in space corporation out of silicon valley. And in basically the same time frame as the initial nas missions, the initial mercury, think the first mission.

mercury gami pollo .

ah yeah basically concurrently with that, they got a fully Operational observational spy satellite system up in this space and functioning at the same time.

How did we launch them with nobody laid out?

There was a cover story for what these things were. I think IT was called the discovery program. I believe the cover story was that this was like life form research and space, like they were sending animals up to space, like monkeys to prepare for man, space place.

That was the government story. They may have sent some monkeys up there, but that was not the point. The point was to get these for contest satellites up to space. So the first program was called corona. I used to google about IT and read there's a great declassification document story that the government put out in nineteen eighty five when they declassified this stuff in the wikipedia page is pretty good.

Yeah, I download IT and I have IT over my computer. It's pret crazy. IT says secret. IT has the classification and then IT struck through, yeah, it's literally the document that was prepared in secret and then declassified.

I think what the C A A in the national rondine office does, I think they write these stories maybe qazi in real time, so that there's documentation of all this stuff. And then they stamp IT secret, and then IT never gets out until IT gets classified. Wow.

just amazing. But on the d class fiction website, which will linked to in sources, you can see a bunch of the pictures that the corona satellite took, including of the pentagon. So you can see like something, you know what that looks like, and you can see the level of felt that this nineteen fifty nine satellite got of that 啊。

Let's get to me OK. So the name corona, there are conflicting stories of whether IT comes from the corona type or or the corona type of r that apparently the pegana icio, the jian this program really liked will ever know. It's all a glasses fied.

So these satellite, like we've been looting to head cameras on them. The first one went up in August one thousand thousand nine hundred and sixty, was built in the years leading up to that by lmc, and then went up in August one thousand nine hundred and sixty. While everything else happening in space was, you know, research vessels.

This first corona satellite had a camera system on IT that was able to photograph any ground location that IT passed over in its orbit around the earth at a resolution as low as five feet. From space, these were filled m systems. Now the youtube camera system did have a higher resolution than that higher ground resolution.

But five feet was still plenty good. And more importantly, the corona system could take photos anywhere in the world on its orbit. And if you had multiple of the satellite up there, you could prety much blank at the earth, or at least everywhere you cared about pretty quickly, at basically any point in time.

You know, they're spending around the earth. Like, yes, you can do IT in real, real time, but like, IT doesn't take that long for the thing to fire around the earth and then fire around again, right? The very first coron emission, that very first satellite that went up in August one thousand nine hundred and sixty, produced greater photo coverage of the soviet union.

Then all of the previous youtube flights combined five years of Operating the youtube program. One, sadly, in one kind of month long mission. I think I was about a month before a decade orbit.

Decade got more than all of that. wow. No need to fly plane.

No need to worry about getting caught. No need to worry about the sophie knowing what was going on. No need to worry about being shut down. unbelievable.

There is a crazy stat. Over eight hundred thousand images would be taken by these satellite over the course of the program. They got an enormous amount of coverage.

Now you might be thinking, as you're listening, you know, oh, I know how satellite and satellite im works today. You got google maps, you got starling q blab, blah, a starling's communication. But like communication, yeah, how did they beam these images down from the grancy? These were not digital photography. This was film freaking photograph. So you got to get the film down from space is my point.

which they literally did. And how did they do IT?

They dropped IT OK.

So is the crazy thing they dropped from space, a canister with film minute. Mind you, they can't mess up and expose the film and ruin IT. This is very delicate film.

They drop IT in a canister from orbit. IT enters the atmosphere. And during all the heat and everything.

it's not like you just show IT out of the settle. They had retro rockets built into the film canisters to reaction eleri out of the orbit and move IT down to go into the atmosphere, right?

Because if you just drop IT out behind you, then IT stays in orbit, needs to decelerate its rotation velocity so that IT does move to the earth. And this is an a custom design canister called the film bucket that general electric design IT would separate and start falling to the earth after the incredible heat and violent action of moving through the atmosphere.

The heat shield that surrounds the vehicle is jetsons at around sixty thousand feet. So again, where the highest airplanes can start to fly and parachute would be deployed. So you've got this film canister.

This is my favourite. This is so good .

coming down with a parachute. The capsule is designed to be caught in media by a passing airplane towing a clock. The car grabs the parachute, and they use a winch to bring the film capsule into the airplane.

It's like the games in the r literally, they had a freak and see one thirty flying around with a big as cloud is snatched.

This thing out of the sky, unbelievable. You might say, what if the see one thirty, which, by the way, lucky, or a plane that still fires today, the see one thirty jay, what if the airplane misses IT? Seems like that's a pretty reasonable probability when the things falling from spacing you're trying to catch up with a moving object. IT can land at sea and there's sort of a self destruct mechanism where there's a sault plugged in the base that dissolves after exactly two days, which if that happens, then the film sinks forever to the bottom of the sea. So if the navy can't retrieve IT within forty eight hours, the sault sort of dissolves enough.

Because obviously, what would the biggest disaster be would be if somebody else, the russians, get their hands on this. And like, holy crap, somebody taken photos from space of us.

The whole thing is genius, crazy and absolutely insane. That had actually worked. I believe .

IT wasn't just one c one thirty, educate whole fleet of sea, one thirty, i'll flying around where they thought this .

thing was going to be. How else? I mean, when you have an satellite orbiting the earth that fast that I don't know what IT is, mock twenty something, it's pretty hard to predict exactly where your tiny film canister is. Gna come back and land.

And all this happened in nineteen and sixty, oh my god. So i'll told the corona sadi program and L, M, S, C also design the a gena rocket, which was the kind of upper stage rocket booster that the corona satellite and other satellite future satiate attached to.

And I think they sort of pioneer the concept of a second stage, like we need a first stage to get us up, and then we need a second stage to get us to a very particular orbit that we care a lot about being in.

So that system of the corona and the arga was the first spacecraft in history to do all of the following things, achieve a circular orbit. Achieve a polar orbit. Be stabilized on all three axes in orbit because you kind of needed to be stabilized if you're going to take photos at five, the resolution of the ground be controlled by a ground command. Return a man, made objects from space. Propel itself from one orbit to another.

By the way, they returned thirty nine thousand man made objects from space. They took two point one million feet, a film of photographs in thirty nine thousand cans.

I mean, any one of those things that I just mentioned, if this won a top secret black classified program for what three and a half decades, we will be all over the history books and as is like nobody knows about this .

stuff yeah it's the first obviously, mapping of earth from space is the first stereo optical data from space. It's the first reconnoisance program to fly one hundred missions at all, let alone one in space. I mean, this thing Operated .

for twelve years. Yes, crazy. We then lead to three follow up programs that we know, i'm sure many, many more.

But there are three follow on ones that L, M, S, C did that have been declassified so far, some of these only very recently. So the strategy of the program evolution over time followed the four stages that we know of. First IT was what they could see IT. That was currently just period.

Can we see the soviet union from space current approved that the next phase was, can we see IT well? And then the phase after that was, can we see IT all? And then the last phase, which is still lot of the last phases still classified, is see IT now.

So let's talk about all of corona, like we said was to see IT, get photos. But the photos read a worse resolution than what the youtube was able to in one thousand sixty three, only three years after the first corona satellite goes up, L, M, S, C. And the government launch the gambit program, this is the sea at well, so gambits max resolution still has not been declassified. We don't know how started what this thing launched in one thousand and sixty three, and IT is still classified how good IT was, but IT has been confirmed that the resolution was under two feet, which was Better than the youtube cameras.

Wow.

less than two feet from space in thousand nine hundred and six. Next was hex agon. Hexagon was the quote see at all program.

Now this is starting to eclipse a little bit my technical knowledge, and I think there's also just less known about this because a lot of this is still classified. I believe the xian satellite had longer orbit lifespans and had more film capacity before they decade. And so I think they were able to kind of like see more longer, I think, is what taxi gan was.

You basically would need larger format film with a wider angle lens if you don't want to increase your number of satellite. You.

i'm fuzz st on hax icon. Then in one thousand nine and seventy seven they launch cannon K E N N E N, which this is still like, very classified. Some of IT is out.

So I can, we can know a little bit about this. There actually was an incident in, I think, is twenty twenty when trump was president. He waited a no intelligence photo that was just like this incredible photo of the incredible resolution of something that happened somewhere moving around.

And he treated like, I see, like, IT isn't way you thought I like. And people went nuts. People believe it's never been confirmed that this photo was from the future version of the canon program.

Ha, so what is canon? Canon will see IT. now. It's the first real time, space based surveilLance system. I guess maybe the first real time surveilLance system period, I don't know.

By one thousand hundred and seventy seven, there were enough communication satellite up in the sky, and digital photography had come along far enough. The canon satellites are like what we think about the google that's like. It's real time. Digital photography beamed down via ground link, two stations in real time.

wow.

And lucky has to build their own digital workstations to, like, process these photos, to display them, to manipulate them. I think this might have been the first, or like really early digital photo processing manipulation workstations that were C. I. A.

I didn't know about any of this.

Yeah, lucky to build all this. So can rally.

wow. By the way, you keep saying google, there is a fun piece of trivia that i'm curious if you know do you know I think that was the code name, the original name for the coroner program?

Oh, key hall? Yes.

yes.

IT is one of the companies that google acquired that became GLE maps. Yes, different keyhole.

different keyhole. But i'm pretty sure keyhole ink, which became google maps, was named after this keyhole program very well.

Could be because that was one thousand nine ninety five when that was declassified. And i'm sure keyhole was started after that. Just super cool along the way. L M, S, C also does a lot of pioneering work in weather satellite, and they launched weather satellites because IT turns out that most of russia is under cloud cover most of the time. So they gotta know when, you know, the weather is gona be clear enough to look pretty awesome.

Well, that when you get into like all the ebs synthetic capture radar and all the other types of sensing that you have in satellite now that are not just the visible light spectrum on in order to get visibility of stuff on the ground, no.

rather the conditions. Yep, there part of the positioning satellite that the military puts up and that goes on to be uh opened up to uh, commercial use and that's the G P S system that we use today. And of course.

I'm sure L M S C is part of many, many other things in space that um we still live no idea about wow yeah one thing that we have a lot of idea about that they built that I had no idea till um researching all this. So know what out in the seventies says this is going along and will come back and talk A A little bit about this as we come back to skunk right here, the sec. But we're getting towards the end of the cold bar and this stuff is less urgent.

Lucky and L, C, start moving into non military applications, are trying to. But L, M, S, C gets a contract from NASA in builds the hubble telescope. Did you know that? I didn't know that.

And Martin, mariana, future Martin and lucky Martin built the large orange fuel tank for the space shuttle, which took the hubble telescope to space.

Different companies at the time, now the same company.

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Yeah, fanta is the perfect example of the quote that we talk about all the time here and acquired jeff basis, this idea that the company should only focus on what actually makes your beer taste Better. I E spend your time and resources only on what's actually gona move the needle figure product and your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers. IT plays a major role enabling revenue because customers and partners demand IT. But yet IT adds zero flavor to your actual product.

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two other things that I want to to talk about with L. M. S.

C, before we come back to the koa on sunk workin, the black bird and all that one, I think I eluted to this earlier. L, M, S, C, listeners, you be the judge. The stories that we've just told.

Is this more impact for to amErica in the world? Then what's concords was doing personally, I can't think yes, but no, maybe you can debate what is undebauched L M S C from a business standpoint. Within lucky became the crown dual of the company.

hua, which isn't true anymore or at least is not there the largest business today.

Well, I think at times in the sixties and seventies and eighties, L. M. S. C was the largest by revenue.

But almost see the whole time I was by far the most profitable vision within lucky. And at times when we will get into lucky fell on some really hard times. In the seventies, there were years where L.

M S C generated more than one hundred percent of the profits of lucky. So all of the rest of lucky gunn corks included was in the red, unprofitable, bleeding money. And L.

M. S C was keeping the company of float. wow. And if you think about IT, I guess one like just what they are developing in the scale of IT.

And these contracts are huge, both under the ocean and up in space to do what they're doing. It's different than building airplanes. And I included to this when I talking about it's a different talent set.

This is much more technology problems and computing problems that lmc is tackling here. Yes, they're building muscles. Yes, they're building rockets, all that. But the core value components of those rockets is computing and silicon and ultimately software. And as we talk about all the time on this show, like, well, that's really good margins, definitely Better margins than building airplanes.

So the status I have this is from beyond the horizons, which also is where a lot of the story of especially corona came from during the twelve year period from one thousand nine hundred and sixty, when corona first launched to one thousand nine hundred and seventy two. Lucky as a whole did twenty six billion in revenue over the twelve year period and just two hundred and fifty five million in total profit, not a high margin company. During that period.

L, M, S, C, accounted for over a third of that revenue and one hundred and twenty eight percent of the profit. So that's what I was talking about. Everything else in lucky lost money, or at least an aggregate lost money. And then during the early post cold war period, from one thousand and eighty three and nineteen ninety two, L, M, S, C, accounted for forty six percent of revenue, so growing percent of revenue and seventy two percent of profits during that ten year period.

Wow, IT really is a completely different company today, and I want to save why as we drift toward today and analysis on that. But that's crazy how big the L. S. C.

Business was at the time. I was a great business just from a business. So the other thing I want to talk about before we come back to gun works is L.

M. S. Is Operating principles in philosophy. And so much of that was built off the shoulder of skunk works.

And a lot of the guys in the youtube videos that I found talk about this, their philosophe, though they qualified into seven tenants. So Kelly had his fourteen rules. L, M, C.

Had seven tenets, and most of them are very similar to the concord rules. Will link to an image of them in the show notes. One of them, though, that I want to highlight and discuss that, to me stands out is different from Sunny irks is tenant number one. And that one is focus on a threat based need. And I get really .

interesting huh.

to me when I read that and thought about IT, that element is missing from skun corks and Kelly philosophy. And this is conjecture here. Like there's no Sunny k book about L M C.

So like we have very little information to go on. But if that really was ten ent number one for the company, I think you could maybe extrapolate that a little bit too. The market context is really important for what you're doing and don't lose sight of the market context for what you're building.

Kelly's philosophy of all that matters is rapid delivery of superior products. Nowhere in that statement is the room for the market. Well, who decides what's superior? Maybe a small number of people want this, but do a large number of people want this, like how important is this? Not obviously, what's conquer ks was doing was really important.

Also, they thought, I mean, if they knew about this robust spice satellite system, well.

this is the argument. Maybe IT wasn't that important. Maybe the blackboard was a decode.

Okay, we have not talked about the S R. Seventy one. Can you please take us back to the quarks? I'm like dying for my mock three airplanes and ribon engines here.

Uh, okay, let's do. But if that in mind, though, a threat based need, was there a threat place need for the S. R. Seventy one?

Maybe my computer wallpaper .

needs to exist. A need. There is a market need.

Was their threat face need? okay. So can quirks the greatest airplane ever built?

G. H, sure would be nice if we had a plane that couldn't be shut down.

So when gary powers to shut down in many thousand nine hundred sixty, of course, says you would expect the C I A N su N K works is already hard at work at the successor airplane to the youtube. Everybody believes this kind of of a miracle that they were able to fly for five years like they did. They knew that this day was coming when the russians would be able to do IT down.

So as we talked about, the youtube primary defense, as IT so happened, wasn't intentional. But as IT happened in practice, was how higher flu IT was. Obviously, checkup on rate are seven thousand fee.

Yep, it's not like you could evade enemy fighters or missiles in this thing. I had one hundred foot wingspan IT turned like a school bus IT was how high flu. And then all of a sudden that was no longer defensible.

So it's not very fast. And IT doesn't fly high enough to evade missiles. So kind of useless.

So if you remember back to the original spec for the program, there were three sort of vectors that were possible for how you could Operate a program like this. One was fly high enough. That's what the youtube ultimately did. There was also the fly, so that I can be seen by rather stealthy, will come back to that in a few minutes here. And then thirty .

make IT goes so fast that even if they do fire at you, IT just falls behind and then explodes miles behind your incredibly faster airplane.

P, so, uh.

that's the path they took if you can't vate them out. runtime. Yep.

it's like the sonic the head talk of airplanes. So this program, if you know anything about the sr seventy one blackbird he like, that's the air force airplane. We're talking about the C I A here.

The bike ride was not A C I A airplane. The program that the blackboard ultimately came out of was the eight twelve oxcart. This was essentially the same airplane will talk about the differences in a minute. But this was the CIA contract that they had come works working on. And I was just the goal, make this thing so fast that whether they see IT or not, they're not going to .

ot IT out the sky. IT has an even Better camera, I think, also designed by Edwin land. And IT can get these incredible photos flying really.

really fast. yep. And to be able to avoid surface to air missile, that basically meant that the speaks for this thing were that I had to go mock three or fast now to out run any, you know, muscles.

I had to do that without piloted. There had to be humans in this thing. Faster than mark three is faster than two thousand miles an hour.

If you fire a rifle, that bullet doesn't go mark three. If you're standing on the ground and you pick up a rifle and you shoot IT and an S R, seventy one flies over your head, the S. R seventy one will beat the bullet.

yeah. IT goes about two thirds of a mile every second.

This thing also is not very good at turning, as you imagine. So there's a fun stat about the S. R seventy one.

IT cannot turn around in the state of ohio. It's turn radius to change direction by one hundred and eighty degrees is a wider turn than the state of ohio. H, it's decommissioning mission.

Just to show off how fast I ever went was one hour and five minutes from L. A. To dc for .

being placed in the national and space museum.

coast to coast in an hour.

wow. And I remember being a kid looking at this thing like, well, why don't we commercial that? Like, you can commercialize this? Then you've got to be in a space .

suit to fly this totally IT flies at eighty four thousand feet up, looks black to you straight, basically looks black to you. You can see the curator of the earth. You can't navigate really by earth based landMarks, because the earth based landMarks are moving by you too fast.

So the best you can do is be like the rockies are in front of me. The rockies are behind me, and that's not terribly useful. So they had to invent a new navigational guide system that sits on the the plane, r to d to style, look like an astronomy c from star wars to navigate by the stars. So great. I mean, IT is like fifty concurrent miracles that went into making this thing possible.

And hopefully this is obvious. But just to make the point again, you know, some of you might be sitting there being like what you just told me about, how the sister company L M S C did all this amazing stuff in space. He go a lot faster than that to get the space and what not like. Yeah, you don't have humans on there. So pilots got to fly this tag.

And these are rocket engines, they are jet engines that they figured out how to make go mock three p.

okay. So when sunk works, and Kelly and bender and everybody sit down to work on this, the current state of the art fastest plan at the time. This is late one thousand and fifties when they start working on.

This is the mcDonald Douglas f four phantom, which is able to hit just over muck two with its after burners on, so not sustained, like when you punched the afterburners IT can barely touch market to. And the f 4 itself was only a bit faster than the skunk works built。 F one of four star fighter that that you mentioned earlier, which was the first collier trophy that Kelly Johnson one.

So the idea that you are gna achieve cruising speeds like sustained above mark three, this a big piece to buy off here. Only a handful of planes have ever been able to do this since, and i'm pretty sure no other plane has been able to do this. A cruise speed without engaging after burners.

IT is still to this day, unless they're classified programmes. We don't know about the highest and festive humans have ever flown without rocket propulsion.

yes. okay. So how are you gonna do this? The only way you can do this in a jet powered plane is to essentially design something that can run with after burners on all the time.

Like after burners. They're just burners. It's how the thing goes to do that.

U, A, required a tremendous amount of fuel. N, B, you also produce heat in doing so. That's like rocket level proportions.

The skin of the airplane gets to five hundred degrees fare in height. The area near the engines on the airfare itself gets obols to a thousand.

yes. And the engines, I think, inside the engines get to close to three thousand degrees, I believe. So they had to build the whole plane out of titanium to a make this work.

which was a metal that no one had ever built a plane out of before.

This is really funning. There wasn't enough titanium in the united states to build all these blackbirds, or brought titanium that they could easily source. There happen to be mind somewhere else with a bunch of titanium. So the government and lucky set up a bunch dummy corporations in europe.

like european incorporated dummy corporations.

yes. And they sourced a large amount of the titanium that goes into the blackbirds, the eight, twelve and then the black birds out of the soviet union. Uh too party.

And by the way, you can't machine titanium with regular tools.

right?

Titanium is so hard that IT will damage your tools. So they had two machine new tools for the blackboard itself out of titanium in order to manufactured the titanium plane.

Feel it's like a diamond cutting facility or something totally.

And I think traditional materials like aluminum would lose its strength around three hundred degrees. So like you actually need a different material, otherwise the whole plane would just dissolve when I got that fast. amazing.

So there's another funny thing here, which is metal expands when IT gets hot. And Normally your airplane materials don't get that hot because you're not going that fast. So it's fine if the medal expands a little bit except when it's getting this hot, the panels, the skin of the airplane is going expand quite a bit.

So that means if the expand, all, you have to leave a lot of room. So how do you leave room? So what they wanted to do is fit together really snug while the plane is flying, which means the panels have to fit together a canna loose when the planes not flying.

Then you telling me that the blackbird had panel gaps.

the black bird had panel gaps. And to add insult to injury, there a variety of reasons they decided not to have custom fuel tanks. They literally just made the skin of the aircraft, the fuel tank itself. He didn't needs to multiple. You needed IT to be light.

and you needed a lot of fuel in there.

right? And so when I was on the ground, after you fuel IT up, because there is gaps in the fuel tank, IT would just leak fuel while I was sitting on the ground. So to solve this problem, they went to shell and had a custom fuel created for IT that was not flame able on the ground, like you could smoke a cigarette next to IT. IT wouldn't burst into flames because after you feel the thing before I took off, it's just GTA leak fuel all over the target. God.

this is, what are the reasons why this is maybe spoiling and a little bit to flash forward, therefore, is hate IT Operating these things? Yeah, I think I cost, I think, three hundred million dollars a year just to maintain these things. These were beasts from hell in every sense of that phrase, the good and the bad.

Yeah, okay. So that some of the materials chAllenges. Another problem was on the engines. So the most advanced jet engines in the world at the time was the patent with me, j 48。 And I believe actually they weren't even able to get the j 48 in the first eight， twelve, and then only later in the blackbirds that they put IT in.

And we should tell people the blackbird, the S R seven one, was the two seeder air force version of the single seeder eight twelve .

C I A airplane. Yep, so even the j fifty eighth couldn't produce nearly enough thrust on their own to get to and sustain the mark three plus speeds that they needed to have speak. In fact, at least according to bend rich in gun works, they could only produce about twenty five percent of the thrust required.

So bin leads a team that engineers the Spike inlet system. So if you're looking at a blackboard and you look at their engines, they've got these like coins in front, these Spikes, these big Spikes. I mean, i'm sure everybody listening has seen a photo of black board.

If you live in seattle, go to the museum of flight. There's a handful of these at various museums. Ms, around the country.

You owe IT to yourself if you have not seen one of these things in person. Um it's just one of the most amazing objects ever created .

ever but these cos what they do.

So the engines get the thing up and then once it's happen here, the cons expand and retract first, sucked in and then compress, and then super heat, massive amount of that. They then mix with fuel in the engines and ignite. Essentially, this is the world's most bad as super charger ever could.

These things are super charges that what they are, the Spike system is a super charger for the engines. IT provides three quarters of the thrust needed to get to mock three plus and sustainable. Val, obviously.

davao fan boy, this thing is really easy to feel good about this airplane, because IT also never Carried guns. IT only Carried cameras. You couldn't .

shoot bullett out of IT because it's faster than .

the but they did consider, I think Kelly in the skun quark team were really advocating to build a tactical aircraft that was based on this obama, and that never happened. So every version of the S R seventy one or their early prototypes of the ark Angel or the CIA spye, there are only ever that .

as airplanes that Carry cameras and fast. Yeah, so fortunately, you know, scot works in the C I. I had started working on the a twelve of oxcart before gary powers was shut down.

IT takes believe quite a while to engineering this beast. They start test flying IT in April one thousand sixty two, of course, that area 11。 Where else they going to do this once they start test flying IT?

That's when the air force finally gets interested in the project and is like a, we want our version of this in that how the blackbird comes about a fun little bit atterby. A within the air force and the pentagon. The project originally was called the R S 的 one。 Yes, not the S R.

And the S R seventy one is strategic words. But I ended up being backwards.

yeah. So fully IT happened because president london Johnson actually announced to the existence of this thing in a national speech. And a during the speech he calls at the sr.

Seventy one instead of the R S. There is sub speculation that he wasn't, that he messed up and made a mistake, but that his speech writer wanted IT to be called the sr. Seventy one and intentionally modified the speech.

Who knows what is relevant, though post called for politics become a huge thing here or so. Once Johnson says this, nobody is willing to contradict the president. So skunk x has to go.

And like we do all of their documentation for the whole dam thing. You can imagine Kelly john's reaction to this. yeah.

So the first official flight of the blackbird happens on december twenty second, one thousand and sixty four IT reaches a top speed of mark three point four. go. The airplane wins Kelly, his second color trophy.

I mean, stuck to this day. People lose their minds over this thing. It's stunning.

IT, I believe, has never been shot down. There were some accidents in test piloting, but he has never been hit by an enemy. I think IT took four years to ever even be detected by radar for the first time all the way until one nine hundred and sixty eight.

IT has played roles in surveilLance in vietnam, korea, arab is is real conflict in the seventies. obviously. U. S, S R.

the stuff you can find out there on the internet, obviously nobody really knows. But supposedly, according to internet, lower, over four thousand missiles have been shot at blackbirds, and one of .

them have ever hit IT is just such an awesome bad as thing to say. The way that we're going to get around getting shot down is just to be faster than the missiles and be right about that.

It's especially also when you know as you know, the highest levels of the government, it's kind of all the decoy. Anyway, you're getting what you need from other sources.

man. So this is a good time to talk about that. You keep saying that I had no idea until you brought that up what an hour ago. I think you're right.

yeah. Well, he's one area where i'm wrong. I do think that statement is mostly right, but you could argue with that and people do and did in that satellites are not real time. You know when they are coming, you know when they're about to fly over.

If you need to instantly get somewhere that maybe you don't have the right orbit coverage for or where there's a dynamic situation, if an enemy knows that a satellite is flying over IT and doing reconnoisance, they know when the satellite is gonna ly over so they could hide stuff during those times. If you need full flexibility, you need a blackbird. So IT does have a use. It's not like it's useless. But unlike the you too, which was everything, it's more of a nitto use case here.

So the blackboard d doesn't fly. Today, civilians are unaware of something that has flown faster. There is a crazy stat.

A little is trivia about the S. R. Seventy one. And this really puts in the context how really this was and how strange IT is that we've had nothing faster sense. The sr. Seventy one first flight was closer to the right brothers then today.

yeah. Why there?

It's totally wild. And I mean, this whole thing was built with slide rules. I had a very controversial tweet.

Get a community noted where I said that I was before the invention of the dust top calculator. It's like mostly true. There's technicalities to IT. But you know, Kelly, an team basically did this thing independently of computers and calculators and figured out all the unbelievable ero dynamism stuff about IT. Of course, there's also is the first delf airplane. I mean, that's the other thing that we didn't talk about is the reason the thing wasn't detected on radar for four years because they figured out how to fly and start to evade radar. 也 now I don't .

know the details of stills with the blackbird。 I imagine a big part of was the height was the altitude in the speed of IT.

It's not that I don't think it's more around the shape because radar will just go on impeded out in the space. There's famous stories detecting where people's rate our transmittals are by bouncing them off the moon and figuring out the patterns of bouncing off the moon IT more. I think that the sr seventy ones bottom was one of the first airplanes with a flat bottom rather than a rounded fuselage.

And so imagine i'm shooting a set of waves at a around sphere in front of me. Well, some of those waves are gonna ounce back, because some of that fear is exactly perpendicular to me, broadcasting that there is one particular point that's exactly canna tell the radius of the thing by how i'm detecting waves that are bouncing back at me. But if it's all flat, there is only one very specific angle for which I can shoot waves at IT, where I am perfectly perpendicular.

And every other angle that I should read all at IT, it's going to bounced off and not come back to me. As a transmitter, you would need transmitters coding all over the earth to figure out where all those waves are bounding. And so by making the bottom flat, they made IT so that if IT was truly flat, then there's only one exact moment in time that a given radar transmitter is useful.

Uh, that's cool. They also did a whole bunch of work around. Making the rivets exactly flush with the skin. So I basically didn't have a whole bunch of rounded parts that could risk bouncing ing rear waves back at the transmit or .

receiver per cool. Keep in mind for a minute from now that idea of flat services and planes and reader planes, not airplanes, plains like a flat plane, the surfaces, okay, to close out on this amazing airplane have busy and said that a lot of ways it's hugely expecting ve to build these things. Thirty three million dollars per plane, which was a lot of that in played style, cost more, but a lot.

And then as I said, three hundred million dollars a year just to keep them Operational and run the program. He couldn't use IT as a fighter. Obama, who is only reconciled. It's not super popular with the military and the air force. They can not like IT as an Operational plane.

right? It's a lusty airplane.

Yes, it's not a daily driver. Let's put IT out in one thousand nine hundred and seventy, the pentagon councils further orders, and they order sqn quarks to destroy all of the titanium tool ling for IT so that no more can never be built. Assume that, so that IT doesn't fall in the enemy he ends or something like that.

And it's like we're serious about telling you were done ordering these things and we don't want political maneuvering to spend the backup. So we're going to be prohibitively expensive for you or for anyone to ever think about starting the program back up. Yep.

the existing ones do stay in service. But obviously, this is like a big sn quarks revenue. They are not producing these things anymore on the back of that Sunny arks has to do layoffs.

Gun quarks division, after the contract is cancelled in one thousand nine seventy two, two years later, lucky and skunk works lose the bidding for the f sixteen fighter. General dynamics wins that, ironically, the later lucky, right before the merger with lucky Martin would acquire general dynamics fighter play in business. So IT does come back into lucky and IT is still .

they call IT out in their earnings like today. They're still selling off sixteen today.

So here's what's interesting about this contract in luck head and scorch losing IT. This is an example, I think of to that first tenant from L M S. C of threat based need and real need, need.

Maybe you want to adapt that. Kelly Johnson, as amazing and a genius, says he is, is a very stubborn man. And the stated purpose, the air forces goals with the f sixty, was to have a cheap fighter.

I didn't need the best. I needed to be cheap, and that they can make a lot of, and they could use them all over the world. That's not Kelly.

M. O. And so he and gunk works bidding on this project. They kept trying to give the air force what they didn't want, and they lost IT like the idea of Sunny ks are losing a contract.

This is crazy. And in particular, he didn't really want to play ball the way the government was trying to bid out the contract. He looked at the requirements.

He said, this is stupid. I'm gona design you in our plane. That I think meets the needs of how this will be used in the field, rather than what these technical specification say here.

And over the long run, he was right. As the program evolved, the backs s actually changed to what Kelly decided to build. There are prototype airplane to do, but the prototype they produced was not in spec for the original of sixteen requirements.

And by this point in time, to bring some context back of where the country was, we're now basically post vietnam war. The color is for sure going on, but it's not the same level of urgency in america's binds as IT was back in the fifties.

Not to mention all military muscle is very unpopular in america. And so any politicians who are seeking to sort of expand the might and budget and projectiles ity of the military are facing a lot of resistance at home. And that is probably a good thing for our society that that was happening. And at the same time, IT made Kelly kind of a rec.

Yeah, totally. And this is not a chAllenge that L. M. S. C, at least with the corona project, had to face because nobody do about IT.

right? So this is .

a really bad time for lucky. This is the period like we are talking about at the end of the MC chapter, where it's alma see that keeps the company afloat.

Kelly retires.

Kelly retires bedr ich takes over as head of gun Scott quarks is doing layoff s lucky really stupidly decides to try to get back into the commercial aviation business.

L ten eleven.

They make the l 1 eleven， which by all accounts was a great airplane, but turns into a disaster project. They're trying to compete with boeing and mcDonald's glas s. here.

The D C, ten, I think was the mcDonald's glas competitor.

lucky partners with rolls rice to make the engines right. As rolls rice goes bankrupt, gets nationalized by the U. K. government.

All told, we want to go into the whole history here, but the l ten eleven airliner project loses lucky two and a half billion dollars. And as we said a few minutes ago, this is not a super profitable company. They don't have two and a half billion dollars in other earnings to sitting around.

So got the losses here yeah. At the same time, lucky to also gets caught up in really nasty bribery scandals around the world. But these are nasty political scandals themselves. And basically, lucky comes out looking, at least to the american public, like kind of a corrupt arms dealer.

So what happens is, you know, lucky and lots of people would argue that this is just the way you needed to do business in foreign countries, are all as that blackey sold these weapons to in the medallion in japan. And in sara IT comes to light the lucky employees and contractors are paying bribes to political officials to win contracts. This actually brings down the japanese prime minister at the time.

Wh, this is a huge scandal in japan on the order of like water gate in the us. Huge scandal saga actually makes an okay game about IT called i'm sorry about the prime register, the time, like so much lucky. Also on the military side, kind of the main lucky divisions engage with a couple helicopter projects with the military, and then the c five galaxy transport playing.

Those projects go horribly. They have huge cost over runs. The c. Five, at least, I think, does ultimately become a good airplane, but cost way more than the initial biting.

All of this inspires that, especially post vietnam period, the american public starts to view the lucky he does. This corrupt vampire octopus military industrial complex is sucking on america. Things get real bad.

Lucky finances at the same time are so bad. They need a bail out from the government. So the government has to guarantee a two hundred and fifty million dollar alone, too lucky to keep them a float, mostly because of the l ten eleven disaster.

IT requires a vote of congress to do this. IT almost doesn't pass. This is a really bad.

I didn't realize how dark out there.

I got real, real dark. And again, I was only the profits from L, M, C. That keep the company from probably going under. So okay, we've mention stalled a few times here. Back to sn quirks.

There is one more great sn corks airplane and IT is under the administration of ben rich Kelly successor.

one last hora, at least for the traditional .

schork organization. So there is a math paper published in a russian journal around midd .

thousand and seventeen, right around this time.

which I think gets published because the russians don't really see anything of value. And there they don't really know exactly what these particular equations that are getting publish could be applied toward.

But somebody at the skunk works reads the paper and says, huh? I think all the ways that we've been thinking about trying to make an airplane stuff like the sr seventy one with flattening the bottom of little bit and trying to use particular materials and painting and stuff like that, I think is good. But if I apply these equations to make a stealth aircraft, then I think we can do something two orders of magnitude Better than anything we've done before. And I think we can make an airplane go from looking smaller than IT is like a bird on a radar .

to something like A B B on a that suncor k employee was then thirty six year old Dennis overhaul ser, who ah was a mathematician. And he, like he said, reads this paper and brings IT to ban rich, who just six months earlier had taken over from Kelly as head of sqn .

quirks and he's told, don't stick your neck out. No one's getting the crazy amount of rope that Kelly had so prepared to just be bloke's yes, man and we're going to use this. Conn works for branding and marketing, but we're not doing anything to nutty in your little .

shop over there and even killed himself. He's retired, but he stays on as an adviser so he's still has his fingers and every he's so disillusions at this point he tells them rich, he says, don't even pursue that. It's not worth the missiles are where the future is. Nobody's complaints anymore. Don't invest the money on this.

And in particular, because when you apply these equations to design an aircraft, the way you have to design IT makes IT incredibly not a odynerus. If IT works, IT will be a thing that is invisible on radar. But Kelly sort of looks at some of the early sketches of what you would have to do to make this thing on airplane, and basically things that's not an airplane that won't generate lift.

He's such an esthetic snob. He's like, that's not an airplane we can make IT. IT doesn't look beautiful.

And it's not just IT doesn't look beautiful, it's that there's like only a hint of berni in there. The way that is shaped is unclear that IT will generate enough lift to lift itself. Yes.

also correct. Or what I think the bigger problem was less about lift, although i'm sure that was a problem, but more about could you control IT? Yeah could you fly this thing?

So what's being proposed here is basically an enormous looking cockpit, this big global lar fuel age. And you can google the f one seventeen a.

The name is the nights .

k study wings. These two little super thin tall tail phs IT looks super unstable, and the whole thing has basically zero round surfaces on IT. It's fasted.

I mean, IT looks like a diamond. In fact, it's code name or I would say fly out. It's code name, but it's nickname internally was the hopeless diamond.

You know what this thing looks like if you are not already into Milly? Familiar with images of IT I actually think that looks really cool totally .

IT doesn't like a fly or fly and control ller way IT looks like you made an airplane like a paper airplane and then you put A. A rock on top of IT, and you are like .

trying to get that thing to fly to me. IT looks like the planes in the first star fox game for the super tender when in tandem and sixteen bit game developers during that generation, we're trying to make 3 games with sixteen， but hardware, and you didn't know enough processing power and political power to make rounded shapes. See how they have flat surfaces.

The big as triangles.

big triangle. That's what this thing looks like. A little looks like not a started four, a star fact, super intendo plain.

right? So benni decides that he wants to put his career on the line.

yeah, and take a risk and make this. So he goes to the air force. The air force says, well, you know, on the one hand of timing is good.

We actually also think still technology is worth pursuing. We have an active R, F, P. Out there.

We didn't come to you guys because sung quirks hasn't made a fighter plane in. God knows how long you guys just had layoffs. We don't like the blackboard.

Sorry, you guys are old news. And then rich a, he, like he said, he rides his career six months into the job. Pursuing at all, he risks IT even further. He goes back to lucky corporate and says, I want to pursue this and make a prototype anyway, without a research contract, we're going to fund this internally.

which this is not something that defense contractors do. No, we'll talk about this as we get in to play book. But it's not like a tech company where you do a bunch of forward looking R, N D, and then admit tize IT over a bunch of customers later you go bit on a contract, you get that contract and then you build the thing.

It's so funny. You are reading less so in the early history. But when you read about lucky today and the industry today, there's all this talk of the customer.

The customer. There is only one customer, the D O D. The D O D is the customer you like amazon, like all the empt c for the customer in the room, is not a metaphorical customer. IT is a specific customer.

No, it's like, what does the pentagon think, which is a good to about. They're unbelievably customer focused. Lucky Martin doesn't build stuff unless the U.

S. Government says i'll order IT, which means they don't to take a lot of risk. But on the other hand, they also don't get the upside from taking risk typically.

And this is how crazy this situation is. That is literally the opposite of what you just said. This is been ritters neck on the line.

This is gn quirks on the line. This is everything. So they go and they build a prototype.

It's nickname to the hopeless diamant. The code name is have a blue, A, J, V, E, B, L, U, E. And I mention all barring earlier, they make a model of this thing, a wooden model.

They put IT up on a pole. They tested in the radar range alongside the other prototypes for other contractors, for us health fighter that the pentagon has put out. And this thing is invisible.

The way that the air force inspectors come up with testing IT is they get a set of ball bearings of increasingly smaller diameter, and they attacked them to the nose cone of the wooden model at the radar range, and they see if you can detect the ball bearing or if it's blacked out by, like this massive plain model behind IT. And they can detect a ball bearing down to a diameter of an eighth of an inch. So the radar signature of this plane is less than an eight of an each sphere.

It's unbelievable. The thing is all flat surfaces. So IT basically bounced. The rate are everywhere, except for the transmitter receiver that is actually shooting the rare waves at IT. So will IT fly and can you control that are still up in questions. But we now know that IT is like, oh my god, rare, invisible.

So out of that, the dark course su n corks wins the contract to build the air forces dealt fighter. They do. They solve the chAllenges you just mention, and they solve them with computers for the first time, at least, that we do really the first time in gang works history.

The way you control this thing is with fly by wire, which i'd heard that term before. But fly by wire means that the plane systems are controlled by a computer, and when you move the controls as a pilot, you are not directly moving the mechanics. The computer decides how to translate your intentions into stabilized movements for the plan.

Power steering.

exactly. Well, yeah, it's even more than it's like doing all sorts of stuff that you have no idea right, to make IT do what you want to do.

right? I mean, it's to tesla. Basically it's abstracting away your inputs and doing the thing that is optimal based on what is pretty sure your inputs want IT to do.

So they win the contract. They started testing the thing at, of course, area of fifty one. And the self fighter really looks like alien space.

I don't blame all these people with the monoculture who are pretty sure there's aliens.

I don't blame him either. The air force starts taking delivery in one thousand nine and eighty three of the stealth fighter from scutching ks. They ultimately buy fifty nine of them of the f 1 seventy eight nightlights forty three million dollars each。 So that is two and a half billion dollars in revenue for a locky, a time when they desperately needed IT and scum works.

desperately needed IT. Huge win for the rich.

Huge win. The real combat debut for the nights hok is during the gulf, during Operation desert storm.

So that's what six years that they keep IT on, deployed where they have IT. But the U. S. Government is decided that we want to save IT. Well.

where are they? Onna use IT. We're not really fighting any words.

And this is a fighter. This isn't a reconnoisance plane. This is a fighter slash tactical strike plane.

Went against gun. Cork hasn't built one of those since. I guess what the one of four star fighter.

I think that's right. I mean, yeah, the f in f one seventeen is fighter. The S R seventy one was not an f plane.

So the plane is never really tested in combat of what I can do until Operation desert storm. And remember watching this life when this happened. I don't have you remember this, but I via, remember when this happened?

The first night of the war, Operation desert storm mean just a broadcast live to the world. The U. S. Air force completely knocks out all of baghdad defenses and infrastructure. And the way they do IT is with the nights x they .

came in under the dark of night. No one knew they were coming. They had a bunch, the high value targets.

And then these wars now tend to be these overwhelming force at the start. And then long, long, drawn out battles after that. But this set the stage for what the modern military engagement looks like. Yeah.

so a few quotes here. There are in gun cords, first from the secretary of the air force at the time we learnt that night, the first night of the gulf, for and for many nights after that. That stealth, combined with precision weapons, constitute ted, a quantum advance in air warfare.

Ever since where we're to, when radar, our systems, first came in to play air warfare. Planers thought that surprise attacks were rendered. No envoy, I thought, in terms of larger models to overwhelm m the enemy and get a few attack aircraft through to do damage. Now we again think at small numbers and in staging surprise, surgically precise rates.

And then another quote here from one of the pilots that flew that night to put IT in domestic terms, if baghdad had been washington, that first night, we knocked out their White house, the capital building, their pentagon, their C A, A, their FBI, and took out their telephone and telegraph facilities. We damaged Angeles airforce space, lingle and balling, and we punched big holes in all the key potomac river bridges. And that was just the first night.

So this thing is deadly. The nights hawk very much worked.

The nights hog flu, one percent of the air missions in desert storm, but accounted for forty percent of all damaged targets.

And so, well, this plane was a massive success for what I was intended to do. This is where I thought to want to stop glorifying some of the military might, the way that we did in the cold war, which was like, obviously, for deterrent. This is when the foreign policy sort of changes a little bit and away, where you're.

yeah, people are dying here yeah. This is the incredible paradox of this. The most overwhelming and terrifying weapon ever created, and weapons capabilities ever created was never used and was created so that I would never be used, right? It's fascinating. Yeah, don't ally. But here this stuff is used in a lot of people died for the f one.

seventeen, eight. Ten thousand people worked on the sale plane, the night hawk and kept the secret for twenty one year is until I was declassified.

Wow, crazy. Yeah, those is divorced. Setting value judgments here for the moment in terms of the airplane itself and lucky and duck quarks in the company, wild desert storm was, on the one hand, this great success story for the airplane.

There's also kind of the end that's the end of the cold war. Yes, there is no doubt after desert storm and all the other things that happened and the fallowing in the britain, well, by the earthly to midnight ties, it's done. And this success of the nightlights and success of the U. S. Military from the military time point during the gulf war, you know, that sets the conditions to bring us to the moderna and lucky today, which is not lucky, but Lucy Martin.

and boeing today, which is not boeing, but boeing in mcDonald's glas. And this incredible era of consolidation.

right and north of which is not north but north of grammar, and which very closely almost was part of lucky, but got blocked by the D. O.

J. yeah. And then you have racial and general dynamics which have eaten their fair share of all other competitors too.

So the gulf conflict, to think ends in ninety one, I believe, and IT becomes really obvious that the cobo era of arms build up in the us. Is over. And defense budgett I are gonna shrink massively.

And we need to start nuclear disarmament. We need to start destroying a lot of the nuclear warheads that we build, right?

And everybody in the industry knows that. And then I became super explicit. This is kind of an amazing events that happens in july of nineteen ninety three, the then deputy defense secretary, William Perry, calls the ceos of all the major prime defense contractors to a dinner in washington at which he explicitly tells them defense spending is going to shrink massively.

That, you know that and he instructs the city present that you all need to consolidate and start merging with one another. We, the defense department, are no longer going to be able to feed all the metaphorical mouth at this table. And the C.

E. O of the Martin mAriela, as soon to be lucky. Martin refers to this dinner tongue cheek as the last supper, and indeed was.

And this is an amazing event. Literally a government agency just told an industry what to do. This doesn't happen in america.

very explicit. And this was rumored for a long time. People were like that.

This really happen. The U. S. Government instructed these big companies to become anti competitive, to all emerge together. And this ninety ninety three thing really kicks off an error of international government policy around combining companies.

Yeah, which is very odd. American industry. And I think as we saw during the cold war era, amErica functions on competition and thrives in competition. And here the government is saying less competition.

And in part, they're basically saying, look, it's a acknowledgement that a lot of the times companies thrive because they're in growing markets. And this is now a shrinking marked. And so what do you do if you want to maintain america's military industrial base? But you know, for a fact, the market is shrinking this year and likely every year for the next decade or two.

Like what do you actually do? And so I think the intent here is to say we don't want to lose capability. We want the U.

S. To remain a country that has a whole bunch of people that know how to build this stuff. So if we needed is there, but you're gonna a put each other out of business because we just wouldn't have enough for you. So you need to like merge and get more efficient so we don't lose the muscle.

But you know you all have real businesses, real going concerns and this whole like so you don't lose the muscle thing that is unique on this episode versus any other episode because the government is an indifferent player in almost every episode of every company that we talk about. But in this one extremely interested party where IT is in the national interest, they are the customer, right? IT is in the national interest for us to maintain this capability or so that's the a policy.

yeah. So this sets off an amazing series of events kind of similar to uh, targeting back to the L V episode when levitan in what annecy merged, not because they liked each other or because there was a business reason they merged for like practicalities to avoid dying and getting taken over by hostel riders. In thousand nine hundred ninety three, lucky by general, the nomics fighter jet business that we are to talk about, sixteen business. And then in one thousand nine hundred ninety four, the big shoe drops, they announce a quote, merger of equals with Martin mariae that goes threw in one thousand and ninety five.

except they didn't merge everything about. There's two spinout ts of the lucky Martin combination. One is there's another set of things that mark mariya a does around minerals and mining. And so there is literally a Martin mary at a company that's publicly traded today that still exists, that's around mining raw materials.

Do you know this because you looked up the mine safety disclosures.

I was disappointed to see there were no mine safety disclosures and lucky Martin financials. There is another thing that spins out called l three communications, which is, oh yeah, the set of things that won't be combining into lucky marton. And this is actually become a fairly formidable competitor today.

There's the five big prime, lucky Martin, boeing, ratha, north gma and general dynamic. And l three is kind of growing, which is fairly unprecedented in this era of crimes. But you might be saying, what is the l 3？ Well, there were three els involved in creating this company. One of them was the investment bank .

that helped combine them with brothers. Yes.

Franklins, uh, Robert lepanto, a and lemon brothers are the ills.

So the assets, the demerge of lucky and Martin in january one thousand nine hundred ninety six, shortly after the big merger goes through. They then acquire the defense business from law for almost ten billion dollars. And then as we said a minute ago, in july one thousand eighty seven, they attempt to merge with north gram.

This is like lucky Martin, sort like .

looks to right, right. They misread the he leaves on that one. That merger gets announced to ever sign off the D O J blocks set, I assume with tasted approval from the D O D on that.

Yeah, I think that thing with a five big primes is they're all like very good at a certain bucket of things. And so if you start combining lucky and northrop, which are the two that really kind of like bit against each other at this point in history, and like the b two bammer and the b one, like there's often this face off between north of an locky, if you combine them, then you actually do way with our competition.

You would have been so fitting, right, given the north of was a cofounder, uh, lucking. But all the way back to the beginning of the episode. So the D O J backs that. But also in one thousand nine hundred ninety seven, going merges with mcDonald argles, the giant that IT is.

Now do you know why that happened? Oh, I do not. So we're going to talk here in a second about the f two program and the thirty five program will step over the after twenty two for the moment.

Just to hit this point for the J S F, the joint strike fighter f thirty five program. This is gonna be like the biggest ever military contract. And so it's really worth going for.

And there are three companies that are worth gun in for in the midi ties, there is lucky margin right after their combination. There is boeing and there is still independent mcDonald's. Douglas and mcDonald Douglas is eliminated from competition. So IT just comes down to boeing and lucky as the two findings within a month bowing. And alas, that is buying cda double .

is probably the end of doul's get eliminated.

exactly. This contract is so big and they were betting so heavily on IT that basically bowing a mcDonald Douglas after mda double losses kind of need to just combine and size up in order to be a formidable competitor or to lucky marketing going forward.

Do you know the size of the f thirty five joint strike fighter program? Like in terms of dollars.

I do IT is a thirty billion dollar D O D contract for three hundred and ninety eight airplanes just for the us. We'll talk about that a minute. IT was a prize worth going for.

So yeah, if you lose this contract, this is literally life, death. Where do you get this or not? right?

So losing this creates some extreme combination. And obviously.

this sets the state of a hand over to you in a minute to lead the discussion of all the dynamics around this, the military industrial complex and defense contractors today. The stage of a few quotes from our Augustine, who was C E O of mark mariana, with the merger happens, and dan tell up the C E O of lucky is the first C E O of the combined company. Dam came up through L, M, S, C, started there, worked in L.

M, C. For decades, and they became the see of lucky. He's the first CEO the combined company.

And the norm takes over for a few years after that one thousand nine hundred eighty seven. Norm is a character. He is a serious character.

He writes a hard business review article. I want to read a few quotes from this. Following the last supper, which he termed the last supper, IT became evident that there were only two potential survival strategies.

One was to move into new markets. His meeting commercial markets a difficult and time consuming option that has rarely succeeded. And as we talked about, definitely lucky, tried that in the seventies and failed, visible ably with the alten l eleven.

Other strategy entailed something almost is difficult. Increasing market share in existing markets during a period of severely declining businesses is a little dog about. And he says, here's what happen. He just lays IT all out here. Lucked soon purchased general dynamic air craft business and mark married to purchase general electrics era space business.

All told, our company comprises seventeen previously independent entities like independent until recent times as he's reading this, general dynamics standards, gold ocean systems, G E R O space, R C A R O space jiaji elector optical systems, good year ero space fair child western honeywell electromotive tics for d ero space, leper scope, IBM federal systems, unis defense, lucky mark married and later what a Franking company, as we've been alluding to, these were not very profitable entities. So lucky at the time of the merger, did thirteen billion in revenue and only four hundred and ninety two million in net income. Mark mario was slightly more profitable, did nine point four billion in revenue and four hundred and fifty million in net income. So both of these are like ten person or less net income margins.

Yeah and you basically have a situation where like all these contracts kind of go to all of the contractors, they just rotate around who's the prime on IT and the prime makes the most money and then and has the most sort of sway. And you don't want to be with the subcontractor, you'd rather be the prime contractor. But still, this current military industrial complex is very all five players are basically in on all the big contracts and the governments very aware of that, and the company is are all very aware of that. And the sort of reached the states.

So ben rich basically called .

IT in one thousand nine hundred and ninety two, when he was talking about this at the end of the gun workbook, about the end of the b two bomber program, which, by the way, the b two was kind of a make good when they gave that north gramme. This is the south bonner. Yeah, bio means that should have gone the lucky Martin.

They had the expertise from the f 17 nightclub。 I mean, this is the rocky side of the story, but they beat the b two and a lot of the early competitions. But the government still gave the award to north remain, because there is some particular plane that the government said north could manufacturer bunch of and then sell internationally and then change their mind.

And so the north sort of left hold the bag. And so is the depart of defense being like, all right, you can win this competition. And who knows, if any, these things are true.

That's lucky side of the story. But anyway, ben rights, under the current manufacturing arrangements for the b two, boeing makes the wings north. D, makes the cockpit, L, T, V, makes the bomb base and the back end of the b two airplane, in addition to four thousand subcontractors working on bits and pieces of everything else.

Because the tremendous costs involved. This is probably a blueprint for how big, expensive airplanes will be in the future. For Better. For worse, this peaceful ale manufacturing approach, rather than the skunk works way, will characterize large air space projects from now on. With many fewer projects, the government will have to spread the work around across an even broader horizon. What will happen to the efficiency, the quality and the decision making at a time of maximum belt tightening in aro space? Those are not just words, but may well represent the keys to a company's ability to survive you.

So I think that .

sort of one thousand nine ninety two band, reich publishing the skunk works book, then the last supper IT basically works the end of skun works. Sn quarks is still a term that is used to describe a part of lucky Martin, but is IT the works of the fifty, sixty, seventy? No, not at all.

It's a completely different thing. And airplanes are just not built by small teams in the sort of auto wa way, the way that they were in Kelly zero. So let's talk about some of these huge programs that these large fleet of plans that the U.

S. Government has bought in recent years. And we will start with the f twenty two. And this gives you a sense of how freaking long this time frames take.

So in nineteen eighty one, the air force identify a requirement for an advanced tactical fighter to replace the f fifteen eagle and the f sixteen fighting falcon. So that sort of kicks off this. We're gona need some future thing.

In nineteen eighty five, the initial order, and I don't know it's technically in order or how IT sort of changes over time, but the initial suda commitment is for the U. S. Government to buy seven hundred and fifty planes of what becomes the f twenty two raptor for forty four billion dollars in the total program cost.

Wow, that is revised down again. An airplane has not flown yet just before one thousand nine hundred and ninety seven to three hundred and thirty nine planes, that's going from seven thirty to three thirty nine for sixty two billion dollars in total program cost. That cost went up even though the number of planes traumatically went down to like half.

I was wondered. I was like, debt must speak there?

nope. Then the twenty two programmes over there was a big thing in the obama administration. Worry basically said, i'm a veta.

Anything that comes to my desk for any more rapid like we're done with. But it's not as good as that sounds. It's not as novel.

The final down from seven fifty to three thirty nine is one hundred and eighty seven planes delivered. They kept the sixty two billion dollar total program cost fixed. They managed to do that.

So each plane ends up costing three hundred and sixty million dollars if you amitie all the R N D. Against the very few airplanes that they ended up making. And I mean the f twenty two, much like the sr.

Seventy one, there is not much. We can complain about the plane. IT is a bad as plane.

In fact, for seafood here in seattle, the few years theyve had enough. Twenty two, IT is an unbelievable thing to see. Live IT performs manuvers that just look alien.

I mean, you just don't understand how the physics makes IT work. IT was all about air superiority. IT was all about speed. They took all of the stelle f lessons from the f one seventeen and put IT into a very fast air dominating airplane.

So the slept fighter, the nights hok, was angular and looked like a super intendo star fox plan because the computational ability to model IT at the time IT wasn't that you needed to have just flat surfaces. It's that you could have three dimensional rounded looking surfaces. You just needed to be able to model IT for the radar signature.

And computers weren't advances enough at the time to be able to build a three d model version of a radar health structure as they advanced. You are now able to do that in much the same way that in video games, you can now build life like looking three models out of the same polygons before. And so the saga, I think that was the model three arcade board, yep, that we talked about, that was part of the real 3d revolution。 In video games.

They used IT in the ark cabinet, right? These cutting edge Better than home consoles.

s vira racial virtual cop for to a fighter being the big one, where on that take, a code developed those boards .

with lucky 的 Martin in order to model the health airplanes。 Yes, unbelievable. That is insane.

So fun.

So what we can see here is that sort of the classic modern gun dog s pride, the wrong word program gonna ride, where there's a sensible total program cost for making a lot of airplanes. And then as there's more pressure on the budget over time and there's cutbacks that happen, you end up making less and less airplanes. And so it's really hard to tizz all the R N D.

cos. And because of the way that these contracts work, it's not the tech company that left holding the bag. It's up the contractor holding the bag.

It's total cost plus model. The company, the contractor lucky doesn't take any risk. And so who's holding the bag?

The governments just paying more for each airplane rather than, you know, you could imagine if if I was apple and I sunk ka billion dollars into developing the next grade device and that no one boat i'm i'm out a billion but in this scenario the governments like a look, I told you I pay that much, i'm paying that much. And unfortunately, I just can spread the R, N D across as many units. Wow.

it's the R N D, but also the tooling like we are talking about with the blackbird. totally. The infrastructure that you need to spend up to make a new airplane is a lot right.

following ben riches sort of Y I think this is how airplanes are going to be made in the future. This happens in forty six states.

They have twenty two is built in forty six states.

yes. And IT requires ninety five thousand jobs, which in some ways is good, gets good to employ people in other ways. The reason that some of these projects get funded is because IT creates these jobs. And the reason that is in forty six states is because that way, basically every member of congress is incentive to vote for IT.

You talking about pork barel politics?

exactly. So I think lucky has become world class at understanding where their bread is buttered. Yes, their customer is the U. S. government.

But the people approving their funding, or individual people, these members of congress who all want to get elected, and so lucky d spreads all these Operations around, they employed these people and members of congress of nothing more than creating jobs for their constituents. And they hate nothing more than participating in a vote that eliminate jobs. And so congress can come to be simplified to five hundred and thirty eight principal agent problems.

and contrast that with the team of, you know what, fifty engineers and one hundred machines that built the youtube. Yeah, of course, the f tony two is a much more advanced replying than the youtube, but the size of the engineering chAllenge relative to state of the art technology was a way less than the size of the youtube interring chAllen relative to state of the technology.

yep. So then there's the next program that comes along the f thirty five lightning ing to the joint strike fighter. And so you know, the mindset here is, well, we finally get IT.

We need to make a lot of these things if we're going to make a big investment, the government sort of pulls of resources and the dod sort of works across the ARM services, and they reach out to all of our allies, britain and others, and they say, what's like a common platform that we can develop so that we can get the best economies of scale out of this thing. That's the right thing for the american taxpayer. And so they come up with this idea for the f thirty five lighting two, and they're going to make three models.

And each of the models are for a different purpose. It's this incredible piece of technology. One of three models can actually angle its engine down and take off vertically using its engine to reposition.

I don't think they can use this in combat, but they can like use IT to move itself around on an aircraft Carrier and stuff like that. It's pretty incredible to watch videos of IT if you just go search on youtube. IT, interestingly, has a different aim and mentality than the f twenty two.

It's less about being sort of the fastest plain in the skies and much more about having the technology and the visibility to have the best information at all times. It's sort of looking to the future of information based warfare more than pure air superiority and speed. It's not all the way to like a drone future or a cyber security future.

But you can see IT drifting there, really intense communications between a whole squadroom of fighters, intense heads up displays with digital stuff for the pilot, in the cockpits and in their helmets. So it's sorry, like the most technology forward plain program ever. So when I say big, I mean really big in terms of the number of orders that are going to be placed, the initial order book is approximately three thousand airplanes worth the potential two hundred billion dollars for the total program cost.

Wow, in practice, it's kind of as pork barely as the f twenty two lucky won the contract. But you know it's subcontracted. It's peanut tred out to all the other big programs to the fuselage is north of gramm ba systems from the k makes the rear fuselage.

These pieces are shipped all over the globe before a final assembly. So we've sort of expanded IT, even from pork barrel in the us, to like which of our allies can participate in making this thing and thus benefiting in their area, too. So here's some of the stats from lock kids twenty twenty two and your report.

The USA f thirty five order is a thirty billion dollar order just from the U. S. Thirty billion dollars.

That's three hundred and ninety eight airplanes. That is seven hundred and fifty million dollars per airplane. The swiss have placed in order for six billion dollars for thirty six airplanes.

Finland, but sixty four. Germany, thirty five. Greece, twenty.

The check, twenty four. Canada, eighty eight. Poland, thirty two. Lucky Martin, this is an enormous win to win this program. And IT is among us and our allies the largest ever purchase anyone has ever made for any piece of defense .

equipment is just so clear listening to you talk about that and contrasting IT with everything we talked about in the story portion of the episode, this is a different world than the locky of robot I in the cold war and the military of world war two and the cold war. Like it's very unclear to me what the threat .

base need is here for this. Well, yeah, hopefully deterrence.

Well, I guess I don't know. I'm not a military strategy gist, but you know you mention Jones, Jones are the thing now there .

a lot cheaper yeah put a pin in that for the moment often is rounding out the national defense budget. Just to put all this in context of what. Lucky, the sort of represents here.

So our national defensive budget in the united states is eight hundred billion dollars as you expect that more than any other country in the world, it's three to four percent of our GDP we spend on defense. Interestingly, IT is down on a percentage basis of you think about like the percent of federal revenue spent on defense. Actually down back in the sixties, we spent half of our federal revenue on the military.

And in recent years, it's fluctuated between twelve and twenty percent. So I think that's a little bit of a counter narrative. People like to complain about how much money we spend on the military.

What I guess that is you, to the point, consolidation in the last, the government was clear, we're gonna spend a lot less. We're just going to spend IT in a much more concentrated fashion.

exactly. The military industrial congressional complex has really IT sounds like what happened in the banking system. We like suda nationalized a few companies.

There is this too big to fail entities that are like in CoOperation with the government. Neither can really exist without each other, and we just are okay with that. We say, okay, that's how the system works in, for Better, for worse, private industry and the government tied at the hip there.

So a few more stats on this. So I said in recent years, the government's D, O, D or defend spending is between twelve and twenty percent. The total U.

S. Government budget is six trillion dollars. So defense in there at eight hundred billion clocks in, is actually lower than social security, health care and income security.

He said. IT was three to four percent.

It's three to four percent of G D.

P.

uh, but it's twelve to twenty percent of the federal budget. So okay, we know that of the six trillion dollar budget, defense is less than social security, health care and income security. IT is more than medicare, education or transportation, just so people sort of know where I kind of sits there.

So of that eight hundred billion dollars, about half of the defense budget is spent on contractors like lucky Martin. And of that four hundred that spent on contractors, fifty billion goes to lockit. They are the single largest recipient of federal, the spending as a contractor. Full stop. Wow.

not even just defects across all companies.

across all companies. wow.

I knew they were the largest defense or but I didn't realize they were the largest government contractor.

period. Yeah lockey. Then boeing, then general dynamic and racial. And the north of the maxson, wow, you get to five before you can get to a health care. wow.

So you got that fifty .

billion that goes to a lucky y. Martin from the federal government. How much of their total revenue do you think that is?

It's like ninety percent. It's close that .

that tends to hover around seventy five percent. So uh, sixty six billion dollars was lucky's total revenue last year, of which fifty billion came from the U. S. Federal government.

Make sense. And I get the rest, I would seem to come from foreign governments, correct?

And yeah our allies because the u government basically has a roofer on anything and can put the kybosh on lucky exporting to anyone. It's not terribly profitable. Their net income margin is eight percent as we even sort of talking about the whole time, you can sort of like see the cost plus pricing right there at the bottom line of the company.

Lucky Martin makes a bunch of money and at the end, the only of eight percent. And that's basically contractually figured out. I think whenever one of these contracts gets bit out, the big defense contractor says i'm going to slap eight, nine, ten, nine percent on top of IT, and that's gonna the cost. And that is exactly why their financial statements look. The way they do is because that's exactly how the government decides to fund IT.

which we should probably talk a little bit about the rationally for that. I'm no expert in this, and we ably have an economist on A C Q two at some point time to talk about IT. But my understanding is that while warn buffet and charlie monkey heat cost plus contracts and in general, they set up terrible incentives, they are useful in cases where you don't know what the cost is gonna be, but it's a incredibly important investment to make.

And traditionally, that has been defense expenditure yet. Like we need the youtube, we don't know what cost is gonna be, but we needed to happen. Yes, we need the corona program. We don't know what the cost is going to be, but we needed to happen. And I think that is the rationality of how we got here.

But IT doesn't make sense when the governments buying more modern things like we're buying software as a service. Let's say i'm making slack and i'm selling that to the government. If the contract to procure something that looks like slack requires me that a bit on that a certain way and i'm using slack, there's lots of defense software you can sort of think about here plentier.

For example, how do you let the government put out a contract to bid on that structured a certain way when the way that you've decided to structure your company where you do R N D at front, you're willing to take on some of the risk, and then you want to sell something in amOrtize your R N D across all of your customers, the way that every tech company does in the way that you sort of get Operating leverage on your company that doesn't fit in these dragani cost plus contracts. In fact, what an insurance is, you cannot get Operating leverage on your company. No matter how large you scale, you will never have big fat gross margins that out run your fixed costs. It's like the opposite of whatever tech companies is trying to do.

right? This is sort of the great irony in the the government, together with lucky, really seated silicon valley. The modern silicon valley and the modern defense industry are in many ways kind of incompatible from a business model. First.

yeah, someone told us, as we were referring in, in researching the episode, that pantier figured out, that what they had to do was sell laptops to the government that came preloaded with their software so they could sell a physical thing that had a cost of good sold associated with IT, such that I could be bought in a cost plus way.

And now I think this is probably changing. And certainly, there are smart people in the government that recognize this in their pilot programs to be able to buy software and technology. But if you look at some of the most successful silicon valley style startups that are selling defense to the government in the whether its space acts or Andrea, others, yeah, they are selling hardware. They're not selling software solutions.

Yeah, they were in the first out of the first inning and trying to figure out had a self software to the department of defense.

which is sort of scary when you think about IT because, like I suspect you know, most acquired fans will not find this a controversial statement. But I think it's quite likely that modern warfare is gonna occur more in software than in hardware, just like the cold war occurred more and capabilities than .

actual fighting. Yeah and it's probably fair to say I didn't talk anyone at lucky. I'm not judging anyone who works at lucky. But I think the reputation in the industry is if you're a fantastic software engineer, you're probably gna go to a more interesting modern company. And that's why you see the anders of the world and the pent tears of the world kind of sucking up top talent that has this as a thing that the really passionate about working on .

yeah there is also a huge difference now versus certainly wallboard two, but also the cold board, the motivation of people who are going to work has gun quirks. They were doing IT out of patriotism for their country, like the clear and present threat of the cold war, was an extremely motivating factor. That's not there in the same way today. Very different time. We live in very.

very different for at least. There is a perception that is a very different time that we live in. I don't really know for sure if that is or not.

Well, this is so funny about this whole thing, the cobb. And now perception is reality. Nobody really knew then, and nobody really knows now what the reality of the threat is. But the perception is what drives people's behavior, and that's what drives the economy.

IT is in the government's interest for everyone to feel safe and secure. And so you can sort of rise above matho's hierarchy and do other other stuff with your life, like create, innovate and live happy, prosperous, enjoyable lives and go to work and do things that aren't for defense and drive the economy forward.

IT is also in the interest of the country to make everyone a little bit aware of how we have this incredible quality of life in the us. And I don't think we're indexed in that direction, even one percent. I think guys, you talk to people, there's a lot of reasonably a oblivious but well intention people who are like not willing to give the credence to america's incredible military of why we get to enjoy such charmed lives in this country.

And a lot of people that want to like go out of that. We live in this amazing, globalized, wonderful world where no one needs to think about the military at all. And you're like, do you live in this planet? I love peace as much as anyone. And that should be the goal and also the default state of humans.

Technology changes. Human nature doesn't right?

Unfortunately, there some set of people who want to, like, come and take your stuff. And in the same way that Prices set in a market by the person who is willing to pay the most, the need for security in the world is set by the person who's most willing to come take your stuff. And that's how much defense you need to have in order to stop them from coming and taking your stuff.

And hopefully, you don't need to get into armed conflict over IT. But I do generally feel that there is a disconnect between people who enjoy the way of life that we have that are unwilling to acknowledge why we have IT. And I think that is extremely different today than IT was .

sixty years ago. Yes, I totally agree with everything you're saying. I also think there's another layer to this, which is really a huge theme of this journey with the research in doing this episode for me with lucky.

And that is the competition and its impact on human behavior, probably for both the soviet union and the U. S. Although I am less equipped.

Talk about the soviet union. The fact of that competition LED to tremendous advances for society. I mean, all the things we just talked about, silicon value itself.

For god, six wouldn't have exist IT without this. So there is sort of a rational argument for having an adversary. Technology and society was pushed forward in amErica by the cold war and by lucked. As part of that, yes, well.

we've already done a bunch playbook stuff. So before we get into that formally qualified analysis section, just just talk about roque, the segments of lucky Martin today. So people understand what do today. We've talked about a lot of this stuff. There's erotics, which in theory contains sn corks so that f thirty five, f twenty two the old f sixteen the sea one thirty j hercules airlifted the f thirty five, I believe is the largest program generating twenty percent of all net sales .

across all segments ma.

it's sixty six percent of twenty twenty tu revenue in that ironic tics division. So like eron, odi s equals five thirty five. There's also missiles and fire control.

Then there's three rotary admission systems which contains helicopters, and they bought the course. I so IT contains the corsi, the other helicopter company. And then four is space, which includes the oi, an capo that's evolved over the decades.

And it's now part of nasas artists st. Moon program. IT also includes U L, A, which is the joint venture that we can talk about with boeing that was sort of forced upon both boeing and lucky Martin, where they both independently were developing launch capabilities for the U.

S. government. This is especially preface x, or before space ex was as powerful as IT is today, the U. S. Needed to contract launched services from someone. And so lucky and boeing, we're both developing them that didn't go terribly well and they ended up asking for bailouts from the government.

And the government said, uh, can you too combine and lucky, Martin, boeing came back and said, are you kidding me with that guy? No discoveries hate each other. And so, but they agreed to do IT because they kind of had to. And so U L A is sort of this shock on wedding between the two companies.

which has we talked about on the space x episode, really open the door for space x to come in and compete totally.

And the reason they didn't go well was because in sort of the Price space ex era, there were all these companies that wanted to put stuff in space that all ended up going out of business. You think like teledesic, radium, a lot of bankrupt as. And so boeing had tooled up this huge factory.

Lucky had done this too. And so they were left holding the bag. And IT got really ugly. Bowering was caught trying to steal proprietary data from lucky. Martin, ultimately, this J, V has gone well.

U, L, A is going to two x their capacity to twenty five launches a year or which is way more than they used to do, but still way less than spacek over the next five years or so with this volcan rocket still more expensive than SpaceX. But you know, they started from big and convents rather than starting from a so it's just sort of a different disposition. Joint ventures are not permanent things and these companies kind of can't continue to be in business together.

So U, L, A, is up for sale. And it'll be very interesting to see if one company or the other ends up buying IT. But IT is an important part of nasas optimist program and others is moving forward is also important to amazon.

A whole bunch of the kuyper launches are happening on U. L. A.

Oh, interesting is that because this doesn't want to a launch on space x.

neither company will really like saying anything about that. Got to be something in there.

a billionaire competition?

yes. So those are the four segments, much like our SONY episode. And i'm pulling forward a playback thing here.

This is a pretty well diversified can glamr I mean, fighter jets? Are there bread and button at forty percent of overall revenue? But missiles and space are each seventeen percent, and roads, red emission systems are twenty six percent, and all of them are nine fourteen percent margins.

So they all are double digit percentage of revenue and double digit centage of profit. So congratulations, we've got a conglomerate, alright. Well, let's head into our analysis section and this will be to a pull together a lot of the strings that we've mentioned on this episode.

But cautious y like what are the real takeaway? And like, let's understand this business and this institution and what IT is in our world today to come to tie together some of the things we've teased dead over the course of history here. And again, few covey ts.

One, we know we did not tell the entire rocky Martin story, nor could we to. This is not a political or defense podcast. You can tell that i'm a conflicted person on this. Let's start our analysis section with power.

So what we do in this section is we analyze what is about a business that enables IT to achieve persistent differential return or to put in another way to be way more profitable than their closest competitor and do so sustainably. And this is adapted from a framework that hamilton hammer created in his book, seven powers. Seven are counter positioning as a start up versus an incoming scale economies across a broad customer base, switching costs VS other near competitors, network economies, process power, branding and cornered resource.

I was really smiling as you are defining that is persistent differential return versus their competitors because i'm not sure that lucky has difference of returns basis their competitors.

I don't know that there is really a market here yeah, and power kind of comes only in markets.

Yes, correct. For this, maybe it's more useful to talk about the prime contractor industry as a whole versus any specific player.

Will all the players have the same profit margins too?

I guess what was going with this is I think there's a corporate resource and process power that the prime contract of industry as a whole has the corner resources. They are the ones that get the prime contracts from the government. And then the process power, which I think probably is really legitimate, we talked to some folks in preparing for this.

They are incredible systems integrators at what they do. What did you say there? Four thousand or three thousand subcontractors for the f thirty five.

Something like that.

it's not took, orchestrate that and coordinate that into an airplane that does the things that that airplane does in practice, that's hard.

I can't believe it's not all made by the same company. The fusel rush is made by a different company. The wings. Are you freaking kidding me? And that thing works.

Didn't you say that different parts of the fus are made different company?

Yes, on different components.

Yep, there's definitely progress power and that you can just pick that up at a lucky and go put IT somewhere else and expect to function right there.

There is one hundred years of know how and fifty years of very well honed ways of engaging with the customer here, the customer again being the pedigree.

right? The customer, it's like big brother. The customer.

I think you're right that we should think about IT as the primes verses everyone else. IT really hard to become a new prime. Yeah, maybe impossible.

You know, plentier has sorted done IT. I guess Andrew is kinder doing IT. But these, I think are still pretty small scale compared to the big primes.

the fifty billion dollars of spend that the one customer has with the one company.

Yeah, it's really hard to break in to be a prime.

Yeah I mean, it's funny. Like lucky versus northrup, there's not counter positioning really. There is not scale economies because there's one and customer to advertise costs across, but you're actually not doing any fixed ed cost stuff.

Your customers absorbing all the fixed cost stuff too, switching costs, I guess. But every time there's a new program, they rebid IT out. And the governments typically excited to give IT to, not the incoming because they actually they want to rotate these programs around.

So fighter jett are typically not made by the same company two generations in a row. Although lucky Martin has sort of shown with the f twenty two and the f thirty five that they have won that I think you're write on process power broadly, but is like he marta's process versus north grants process. No branding, I don't think matters here really. I mean in cost plus contract and you're just actually not willing to pay more to one company than the other. So counted resource .

no not each other.

Yeah right. So there really isn't power yeah within the industry. But to the extent that you have already become one of these five, then together the five have powers verses new entrance.

which is so fn, either you really, I think, kind of nail IT at the beginning when you said this isn't a market, it's not a market. And I guess that obviously, it's not a market because there's only one customer. You can't really have a market when there's only one player .

on one side. Yeah, let's all I get for power.

Yeah, me too.

So as we drift in to playback, I think the lens I kind of anna take on this since we did so much analysis over the course of the episodes, what are the big takeaway like if I am really sitting here doing on all this, thinking about like what matters in this episode? One of the big ones is that lucky Martin has a dual purpose for existing.

There's all the Normal stakeholders involve customers, employees and shareholders that they want to produce value for. But there is the second thing where they exist for the good of amErica and its interests, which causes some interesting second order effects, and one being what is the optimal number of competitors in the space. The government tries to optimize this as a heavily interested party.

But before one hundred and ninety three, there were way too many competitors. After one thousand nine hundred ninety eight, they determined we don't want to have any fewer competitors. But it's sort of odd that there is a force that is not the market that is dictating how this plays out because that force, in this case, the U.

S. Government, is sort of in charge of all of our well being in a way where they don't trust the market will look out for that. And when I say that, I mean, if you left a free market to play out, what would happen is, a, you sell arms to our enemies, which the government doesn't want.

B, A bunch of companies would put each other at a business, and we might lose our industrial base. People would start outsourcing to other other countries. We would potentially lose capability if the government stopped buying IT for ten years. But we wanted IT ten years later .

when we got in a war. Oh, this almost happened, right? The government then let lucky go out of business in the one thousand seventies.

This was right as they can in satellite project. Who is getting going. We could not let lucky to go out of business because we .

needed that right. So our market cares a lot of problems like Price serving the best product to customers. You know, there are exceptions on all these things, but IT doesn't solve for making sure that amErica stays globally competitive. And so the government has to put their hair and on the scale and all these different ways in this market. For that reason, you well, globally .

competitive is not just take way to be a safe and globally dominant. If you put IT that way.

that's probably the right way to put in. There's a second thing here, which is we literally fund these companies to keep them alive so that they keep employees trained. Should we need the employees trained, which is like something that doesn't really exist in other markets.

which also is a huge part of the military side of this complex right?

Of the two million people employed by the military in the united states, do we need all two million of them today? No, it's to key people in reserve. Literally.

that's not a market driven organization nor I think, would anybody argue IT.

right? Yeah, this gets in the sort of the like arguments for and against the military industrial complex generally. So there is this like a keep the industrial base strong. It's good that we have this big spon because like we need to have lots people employed there and know all the stuff.

There's the second one, which is like it's literally a jobs program where you have congress people, as we mentioned earlier, voting affirmatively for things because IT puts jobs in their state. This is kind of the most pernicious ous argument of any of them for a pro big military industrial complex, and in particular in this book, that uni ble thread profits of war. The book basically just argues that this is all I massive mismatch, prison of funds and a whole bunch people acting in their own self interest and not for the country's self interest.

IT is as far to the side of the scale of, like the military industrial complex is bad and evil, uh, is the profits of four book.

right? So this is an expert from that book. The irony is that almost any other form of spending, from education to health care to mass transit to weather ized buildings, even a tax cut, create more jobs than military spending.

And that just falls on defiers, over and over again with these programs of twenty two in particular. As that book points out, this like IT creates lots of jobs. That argument continues to win the day this ninety five thousand people are required to build the f 2 ty five。 It's like good jobs for americans and like that is a terrible reason to fund something, right?

It's kind of i'm thinking about the recent period in tech companies in silicon valley that we are more sively exciting out of now where IT was all of our employee had count and capturing engineers and facebook had got knows how many people are working on oculus and like why you know, that was the equivalent of the f thirty five .

yeah my google sort of corner ing resources on really smart people despite the fact that they we're getting any economic output out of them, right? I mean, the biest argument against states all the way back to one thousand nine hundred and sixty one, in ice and hour's farewell address, he gave this sort of legendary military industrial complex speech cases in the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

Interesting my two things. One, I think that was maybe in part from observing what was happening in the soviet union, where the military and military spending over ran the whole rest of the economy. Clearly, as we're talking about here, yeah, I think this is a new ones issue.

And certainly a lot of degree of non market based dynamics are warranted here. But you can't let the military industrial complex get so big IT overruns the rest of the economy. That would not begin.

The other thing I was gna says, I think the end of that quoted speech, at least part of IT, is you ison how I sort of, I think very naively puts forth the solution is what is he say, like an engaged and vigan citizens populist, especially this day in age of things are so complex that kind of, well IT. Is the average person really gonna dive into the details of how the f thirty five program works. Like, no, right? That's not to get .

outcome either. If everyone's preoccupied and keeping an eye to make sure big, complex get to complexity, right? Yeah, there's another one i've been thinking about, which is a parallel to our space x episode, where, if you will remember, on the space x episode, we talked about and got that was a lifetime ago, three years, about how NASA prioritized safety over everything else. And so they took that to such an extreme where things could happen on a twenty year time span instead of a five year time span. And space x came in instead.

What if we do IT on a two year time span and we figure out how to be much more iteration in our development, and we're happy to explode some rockets, not with people on them, and you sort of take this, again, much more silicon valley approach to rapid oration, testing your own prototypes internally being okay, showing off your failures and gathering data from them, whether NASA couldn't do enough calculations before IT finally was willing to do something till let something go to a launch pad, and that would cause extreme delays, massive budget over runs. And at the end of the day, IT actually wasn't safer. That's the important thing here.

In one hundred and thirty year, whatever IT was space ut missions, there were two that were tragic loss of life calamities. And so you look at that really, that's actually not a great safety record. So maybe this isn't the right way to do IT.

Maybe calculating something to fifteen significant digits of unlikely to fail is not actually the best outcome. And IT sort of seems like the same thing in the military industrial complex where we're willing to sign a contract for airplanes that we get in twenty five years because there are these like big, huge productions. And it's just the opposite of the scum work's way of Operating where tester's prototypes do IT rapidly. Please start moving up and up and up, crash some planes in the desert. But overall, we're gonna get to the same outcome much faster on a much lower budget and maybe with equivalent or Better safety .

a hundred percent. Well, I can think of a Better place to talk about. And when I think I really like the takeaway, for me at least, and I hope for many people listening of this episode, and it's really like the hay day, glory days, whatever you want to call IT of lucky, both with skunk works and L M S C, of how these small skunk works type organizations achieved unbelievable unfathered things with a small number of people in an unrealistically tight time frame, with very constrained the resources.

And that mindset is certain ly, not the only way that you can achieve great things, but it's a really dam good way to do IT. And that mindset got injected into silicon valley by these people buy the military and by lucky. And it's just so funny that the military industrial complex has now become the opposite of that has become like you're talking about with nash again, there are many ways to succeed in different situations, call for different things. But like if you really need to or want to achieve something great, bordering on impossible, in a tight, bordering on a reasonable time frame, Kelly, fourteen laws and lmc, seven tenants are a pretty damn good .

way to do IT. That's so true. Otherwise, you get to this thing that norm Augustine said, how unbelievably expensive these things get if you do IT the non schunk works way.

And we just move into this larger and larger marash that we're sort of the direction we're basically going in, in these twenty five year programs. He says. In the year twenty fifty four, the entire defense budget will purchase just one aircraft. This aircraft will have to be shared between the air force and the navy three and a half days per week, except for leaper would IT will be made available to the .

marines for the extra day. He really is such a character.

truly. But the crazy st thing is much like more law. He accurately predicted the rate at which aircraft Prices would continue to grow, starting way back in one thousand hundred and eighty three, actually wasn't far off on the f thirty five on sort of his prediction on how expensive that would be on the cost curve to exactly your point, if you continue at current course and speed, we basically will have only billion dollar airplanes going forward. They'll be made by everybody.

There will be no new entrance. Invention will happen very slowly.

very slowly. When you look at lucky d mark as a business, they're going to do just fine for a long time. No doubt about IT.

They're incredibly protected, insulated business with an unbelievably welded to the customer. And the creative destruction cycle will happen on other frontiers. There will be some existential need to create something that these companies are bad at creating.

And the U. S. Government doesn't know how to buy from them. And the united ties will have to figure that out another way. And whether that's cybersecurity or whether that information warfare or whatever is whatever threatens the american way of life, I have pretty high confidence the american government will figure out some way to make sure that we prepare for that issue, whatever that issue is. And IT may may not be from one of these companies. And it's very likely that the skunk works mentality ends up solving more problems for our country, but probably not from the sunk work's division of locky.

Martin. And you know, I guess what is sort of hearting, at least as amErica is the capability to do this definitely still exist. IT just happened with vaccines for the current of virus.

totally. Yeah, Operation works. Speed is a great example of ripped down all the barriers and figure out how to do something even if there's some risk.

But you know, that's a good way to have put a thread kind of the back to the elesa ten number one that we talked about. So when you go in the story of focus on a threat based need, I maybe want to evolve some of my comments earlier about competition into that. Competition creates threats.

It's not always competition that leads to a threat. Human beings and organizations tend to perform at their best in response to threats. Otherwise, how you gonna be motivated to go to unreasonable extremes if you're not facing a threat?

Yeah, now I like that new ones.

which is kind of a eto to the playbook of lake. I certainly don't want to say artificially manufactured threats, but if you're building a company, certainly this exist start up you you have an implicit existent al threat all the time as a startup before you reach cash for a profitability, which is like you gotta make payroll and you got to like either get profitable or raise another round of funding or you're done.

Yeah, I think you're right. I think we're quickly sort of cheasing out. There is sort of like two different things here.

It's lucky, Martin, exists to ensure the amErica on this continues as we know today, current course and speed as protected IT as IT needs to be with the types of protections we need. great. We know where to get that.

And I have no doubt that will continue happening. And also there will be other motivations for people to form technical teams and accomplish great things. And like those are gna be four other threats and happened by other groups of people.

And I want to hear your thoughts on that. Maybe this is the place to leave IT rather than grading this time, let's come up with kind of take away. I'm curious what you think.

I like that a lot. It's probably a good thing that the nature of that motivation and the, uh, introduction of those threats to spur human genuine and creativity has moved for now, at least mostly out of the war arena. It's probably good that it's not threat of nuclear war that is motivating people to achieve great things.

Most people.

yeah yeah most people, at least right now, more sively, thankfully. And that mindset was directly transferred from lucky in the military in the silicon valley. That's how silicon valley Operates today.

And that's what makes IT special. And IT doesn't have to be because of threats of all. And it's a good thing that it's not all right.

I think that's the right place to leave .

IT even really car outs. Yeah, let's do IT my car. Vote is a fun one I was reminded of because my favorite video game history podcast, serious resident arc, is covering IT as their game right now.

I think I might have had this as a car val a couple years ago. The game near automata is a super fun game, and the series the resonant artists in the middle of is there video game story book club going through IT. It's about a really fun game to play and was kind of ahead of its time.

The sort of theme of the game is all about can machines think and feel and what does that look like? And like, oh, is like really thought provoking at the time. It's particularly thought provoking right now in our era of veto OpenAI and GPT in generate A I and all that. So it's really fun to revisit that along with the great president, our guys right now talking about the teams of that story.

nice. You'll have like a whole nitch of people that are listening to your car bouts fur video game, video game. Rex, i've two. One is something that didn't quite fit anywhere in this episode.

But if you love airplanes and you are excited about the seven one, you should google the sr seventy one blackbird speed chess story, the awesome story that i'm not going to spoil for you, but is about pilot jokes at their finest and a triumphant blackboard. It's a joy to read that takes like two minutes. I think you like IT will also link to put in the shown notes.

The second one I have is very, very boring. Carve out, but something I found surprising, ego long tools. E G O is the brand they make, effectively the tesla of lambs.

And growing up, I had like a big gas lamour, and you'd like polar court to start IT. And IT was loud and IT was smelly and IT was dirty, and I was like, gas. And these are battery powered lawn mower that are insanely powerful of a leaf flower also that last like thirty minutes off of just a battery.

Look at you. You're just becoming a dad.

I am finding some like very good cathartic. And I just on audio book and as a researching and acquired epo de and I go do lawn work for six hours and I find that to be like, currently gratifying to go away from the screen.

I've chosen to go the higher gardeners road.

You can, you will also have a two year old. So yes, that takes more of your time.

What end? The nature of a yard in the esco is a little different. I'm not sure i'm capable of maintaining my yard given everything that's back there. IT requires more technical expertise, more systems integration.

more systems immigration are right. Listeners, thank you so much for joining us. If you want to become an lp, we would love to have you help us pick more episodes like this one in the future, acquire data, FM, slash lp. And when I get back from a bircher, I think we'll a NLP call here in the next month or so. You should totally check out A Q 2， if you like, hearing us interview other people, I can assure you the next few interviews are going to be.

oh, they're gonna great.

even the ones that are alive now, the one we just did with jake, the one with of lock from Angel, is the one with David for retool. Fantastic cache with her company. Sam, ha, all like really fascine discussions. Look up A C Q two in any podcast player now that you don't with the episode com discuss IT with us, acquire that F M slash slack. We'd love to have you .

and particularly too, I think there's a good chance with this episode that will have a lot of newly acquired folks to listening. We unexpectedly ly had that in huge numbers with our LV episode, all sorts of new people coming in and experiencing required and listening to us for the first time. If you're doing that now here with this lucky episode, definitely go check out some of our other episodes on other industries.

And I just want a second weapon said, join the slack and come talk about IT with us. We love hearing from people, you know, we're obviously not in the defense industry. We love hearing from people who are televised your experiences, what it's like, what we got, we got wrong, and educate all the rest of us in the community too. Yeah.

seriously. All right. With a series we will see next time.

See next time. Easy, you busy, you busy, you who we get the true.