The military tech start-ups that threaten the giant defence companies
The name HMS Enterprise is a proud one in the Royal Navy. Fourteen warships have borne it. The 12th HMS Enterprise served throughout World War Two, in the Battle of the Atlantic, the Norway campaign, the Battle of Biscay and at D-Day.
The 13th was in service when the TV series Star Trek became popular. To this day, the idea of a ship named Enterprise suggests futuristic high technology. That’s ironic, because quite recently a journalist visiting today’s HMS Enterprise was amazed to find that her Defence Information Infrastructure equipment, used to handle secret information, included computers running Microsoft Windows 2000 software.
This, sadly, was by no means unusual. All British military IT tends to be many years behind the civilian state of the art. Nobody knows this better than Rear Admiral Alex Burton. In 2017, he was Commander UK Maritime Forces, Britain’s top seagoing admiral. “Today we are once again facing state-level adversaries, Russia and China,” he told The Daily Telegraph. “Our forces cannot possibly match these adversaries in terms of quantity. We must achieve superiority by greater quality.”
The obvious route to quality is spending more money, but this isn’t an option. The ongoing five-yearly defence and security review is more likely to deliver budget cuts than increases.
According to Burton, a more realistic answer is better software, delivered much faster. This, in his view, means looking beyond the Ministry of Defence’s usual IT and cyber vendors, established defence primes like BAE, Airbus or Thales.
Burton joined Rebellion Defence, a software start-up. The company aims to solve defence and security problems using artificial intelligence.
AI could potentially pick out enemy submarines from sonar pictures and spot hostile drone swarms in radar or thermal imagery. It could cope with the floods of data from modern platforms and sensors quickly and affordably. Oliver Lewis, Rebellion co-founder, argues that it’s unreasonable to expect normal defence companies to deliver this sort of technology. “In fairness, most of the major defence primes did start out doing something extremely well,” he says. “They typically began in aerospace. But nowadays, they also do shipbuilding, armoured vehicles, logistics, communications, command and control; they try to do everything, and many things they don’t do very well. We only do one thing: software.”
Another criticism of normal defence procurement is that the Pentagon or MoD are usually expected to bear the costs and risks of developing new equipment. This is not only expensive, it means that getting a new project under way can take a very long time.
The new wave of venture-backed start-ups argue they can short-circuit this process. “Our superpower, being backed by ‘patient capital’, is that development costs and risks are borne entirely by us,” says Lewis.
One successful example is the Predator armed drone, originally developed in the US at maker General Atomics’ expense.
Another company aiming to take this route is Anduril Industries, the latest venture from 27-year-old Palmer Luckey. His virtual reality company Oculus was bought by Facebook in 2014 for $3bn (£2.3bn). Brian Schimpf, Anduril co-founder, came from Palantir Technologies. Palantir’s data-trawling software is used by US intelligence agencies, the financial industry and the NHS Covid-tracking project, among others. Both Anduril and Palantir have substantial backing from tech billionaire Peter Thiel.
“At Anduril, we take bets ourselves on what defence users will need,” says Paul Hollingshead, EMEA chief. “We take it to maybe 80pc done and then work with the user and iterate rapidly.”
Anduril’s core offering is an AI software suite called Lattice, but the company is also very willing to make hardware which works with Lattice. Anduril produces solar-powered scanner towers used to detect illegal immigrants on the Mexican border and an interceptor drone called Anvil.
The company has also worked with Britain’s Royal Marine Commandos, among others, on its man-portable Ghost spy-drone. Ghost, again thanks to Lattice, flies itself and finds things out without requiring constant supervision from the troops using it.
“It’s a software-led approach, though,” says Hollingshead. “Our hardware is largely put together from off-the-shelf components for the purpose of feeding Lattice.”
Both Anduril and Rebellion openly aim to bring the methods of Silicon Valley into the defence world. They see software as the real product, not just something that makes a piece of hardware work.
Both want to sell their software the way Big Tech likes to sell it: as a service where the customer pays a regular subscription to use an evolving technology that remains owned by the contractor. “It’s the only way for defence to get and sustain the qualitative advantage that’s needed,” argues Burton. “We retain the intellectual property. Unashamedly.”
“It is a cultural journey for defence customers,” admits Rebellion’s Lewis. “One that will take years. But if we’re ever going to solve this fascinating problem, where armed forces people usually have more advanced technology at home than at work, it’s necessary.”
The big venture investors of the tech world obviously think the concept has merit. Anduril closed a C series funding round in July which valued it at $1.9bn. Rebellion isn’t disclosing numbers, but its “patient” backers have deep pockets too.
Other start-ups are also looking to bring advanced civilian technologies into the defence/security market: British examples include Oxford Quantum Computers, Utterberry and biologically inspired design group Animal Dynamics.
But it remains to be seen whether anything will change. The British MoD alone, far smaller than the Pentagon, has already committed £2bn of funds to its new Tempest super-fighter project, which expects soon to employ 2,500 people and may deliver hardware at some point in the 2030s. It shows every sign of being another interminable procurement disaster like the Typhoon before it and the Tornado before that.
These numbers, compared to those of Anduril and Rebellion with their combined total of fewer than 400 employees, to serve both the US and UK, probably give a good indication of just how far the MoD has yet to go on its cultural journey.