Pentagon Criticized for ‘Spray and Pray’ Approach to Innovation

A prominent tech leader says the Defense Department’s investment strategy hampers its ability to compete with China on military innovation.

Tech leader Trae Stephens says the Pentagon’s "spray and pray" investment strategy won't pay off. (Staff/AFP/Getty Images)
Tech leader Trae Stephens says the Pentagon’s "spray and pray" investment strategy won't pay off. (Staff/AFP/Getty Images)

A prominent tech leader with strong ties to the U.S. Department of Defense says the Pentagon needs to overhaul its investment strategy if it hopes to keep pace with China in integrating artificial intelligence and other cutting-edge technologies into its defense systems.

Trae Stephens, a partner at the venture capital firm Founders Fund and the chairman of the tech company Anduril Industries, said the Pentagon tends to make small investments in a large number of commercial tech projects, a strategy he calls “spray and pray.”

“Let’s say you have a $100 million innovation fund. Right now the basic U.S. strategy is: We will write 400 $250,000 checks because we don’t want to be in the business of picking winners,” Stephens said in a recent interview with Foreign Policy.

The problem with the Defense Department’s strategy, he said, is that very few of these small-dollar pilot programs actually make it into production. From a financial perspective, $250,000 is not enough money to attract the kind of venture capital funding that can sustain a small start-up.

China’s investment approach, by contrast, is far more concentrated. With more money behind them, the chosen companies can then attract private investment.

“The Chinese strategy is: Let’s for example take that same $100 million innovation fund—they would maybe write four $25 million checks,” Stephens said. “Venture capitalism is more likely to invest if they feel there is meaningful and recurring revenue.”

Stephens’s company, Anduril, is involved in Project Maven, the Pentagon’s flagship artificial intelligence program. He served on President Donald Trump’s defense transition team after the 2016 election.

At the Association of the U.S. Army’s annual conference last week, Stephens appeared on a panel alongside some of the military’s biggest proponents of innovation, including Army Futures Command chief Gen. John Murray, Army Undersecretary Ryan McCarthy, and Bruce Jette, the assistant secretary of the Army for acquisition, logistics, and technology.

Murray touted the establishment of Army Futures Command, a new modernization effort that boasts lofty goals of leveraging innovation in the private sector, and said the group plans to partner with a number of tech companies on experimental pilot programs.

“In many ways, Army Futures Command is a start-up in itself, so we are trying to cast a very wide net,” Murray said during a press conference at the event.

But Stephens said this strategy is bad for business. Moving away from the “spray and pray” model to a concentrated approach will help build U.S. businesses that can compete and win against the traditional major defense contractors, he stressed.

“Development certainly comes with risk, but not nearly as much risk as not moving or moving too slowly. Our adversaries will take advantage of our slowness,” Stephens said during the event. “We simply can’t afford to lose the upper hand in this battle.”

Stephens began his career in the U.S. intelligence community before joining Palantir Technologies, PayPal billionaire Peter Thiel’s secretive data mining company, in 2008. As a partner at Founders Fund, which he joined in 2014, he set out to find the next Palantir or SpaceX—companies with a Silicon Valley ethic that want to work on national security problems.

Stephens was shocked to find so little interest from software talent in the commercial world in working with the Pentagon. He met with hundreds of companies but made just one investment.

Anduril, which Stephens co-founded with Oculus founder Palmer Luckey in 2017, was born out of this failed effort. Infused with venture capital, Anduril’s goal is to become a major tech start-up that builds products specifically for the defense industry, challenging established industry players like Northrop Grumman and Lockheed Martin for major defense contracts.

“The origin of Anduril was: How do we build a company that will allow us to recruit and retain people that are interested in working on these autonomous systems and artificial intelligence category problems for national security?” Stephens said.

Anduril focuses on the application of autonomy and artificial intelligence on the front lines of operations. At the company’s core is a surveillance system called Lattice, which can take the form of a stationary tower, an unmanned aircraft, or a vehicle. Lattice’s high-end sensors autonomously survey an area several miles wide and alert operators to any changes in the environment.

“For example, if a car drives into that circle, [Lattice] is able to say, ‘There’s a car,’ and create a track and demonstrate the bearing and velocity of that track over time,” Stephens explained.

Lattice is particularly relevant for perimeter security around critical infrastructure such as U.S. military bases, nuclear waste facilities, oil refineries, or even game reserves.

Most controversially, Anduril is working with the U.S. government to detect unauthorized crossings at the Mexican border.

Stephens contrasted Anduril with SenseTime, a Chinese technology company specializing in artificial intelligence and facial recognition that is working with Beijing on mass surveillance. SenseTime’s work has recently raised questions about whether China is using mass-surveillance technology to track activists and oppress minorities.

“We are not doing facial recognition, we’re not doing ethnicity recognition, we’re not doing any of that,” Stephens said.

In partnering with the tech industry, China has another advantage over the United States, Stephens said. As an authoritarian regime, Beijing can conscript its best talent into working on national security issues. The U.S. government does not have that luxury.

“It’s just a lot more appealing to a top graduate of a computer science program to go [work for industry] than to go and work in the basement of a windowless building that’s associated with the Pentagon,” Stephens said. “That is becoming a major strategic disadvantage to us at this point.”

Lara Seligman is a staff writer at Foreign Policy. Twitter: @laraseligman