# Bloomberg Tech Screentime Special

An episode of [Bloomberg Tech](https://invisiblenetwork.ai/podcast/1611767434), 2 Oct 2026, 44 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/41764a4f-fc64-4e11-89ba-ae7c0030ab5e/a0c61dd8-5a9d-4ffe-86f3-b4d7010fc9b5/audio.mp3?utm_source=Podcast&in_playlist=9caafc41-289c-4115-995d-ae7c0030ab75

Bloomberg’s Ed Ludlow is live in LA for Bloomberg Screentime 2026, speaking with tech leaders and media entrepreneurs. Suno CEO Mikey Shulman discusses how AI is expanding — rather than simply disrupting — the music industry, Promise CEO George Strompolos and Luma AI COO Caroline Ingeborn talk about AI's growing role in filmmaking, and Vermillio CEO Dan Neely dives into the debate around AI and creators' rights. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
[0:04] Speaker 2: Podcasts. Radio.
[0:06] Speaker 3: News.
[0:13] Speaker 1: Bloomberg Tech is live from the heart of Silicon Valley
[0:17] Speaker 1: with Ed Ludlow in San Francisco.
[0:25] Speaker 4: Welcome to a special edition of Bloomberg Tech, live from
[0:29] Speaker 4: Skunk Works, Lockheed Martin's advanced aircraft development facility in Southern California.
[0:34] Speaker 2: Today, we go all in on defense tech and.
[0:36] Speaker 4: Discuss with some of the biggest names in this booming industry,
[0:39] Speaker 4: from the conflict in Iran and competition with China to
[0:42] Speaker 4: working with the U.S. government, AI's role. in the future
[0:47] Speaker 4: of warfare. We start with one of the most profound
[0:49] Speaker 4: changes for the defense tech industry, how it's doing business
[0:53] Speaker 4: with the Pentagon. It used to be that defense companies
[0:56] Speaker 4: competed for contracts based on requirements set by the government. Now,
[1:01] Speaker 4: Lockheed Martin's CEO, Jim Tyclair, wants to pitch that technology
[1:05] Speaker 4: before the U.S. government comes asking. I sat down with
[1:08] Speaker 4: him to discuss.
[1:08] Speaker 2: That and much more. Typically, the U.S.
[1:12] Speaker 5: Government would set requirements or the armed services would set
[1:15] Speaker 5: requirements and say, well, I want a new plane that
[1:19] Speaker 5: goes this speed at this altitude, can carry this much
[1:22] Speaker 5: equipment and weapons, whatever. And here's a 500-page set of
[1:27] Speaker 5: requirements that.
[1:27] Speaker 1: We've identified that we want you to design to.
[1:31] Speaker 5: Two or three of us would get, companies would get
[1:34] Speaker 5: requests for information.
[1:35] Speaker 1: Can you do this? What are these requirements going to
[1:39] Speaker 1: take to create? What's it going to cost?
[1:42] Speaker 5: And then there'd be a bunch of input back from industry,
[1:45] Speaker 5: and then there'd be a request for a proposal. Okay,
[1:46] Speaker 5: who really wants to step up and try to do this?
[1:49] Speaker 5: Very well-defined, extremely well-defined requirement set. And then there'd be
[1:55] Speaker 5: two or three bidders. It'd be down selected to one,
[1:57] Speaker 5: usually the lowest-cost provider who was technically qualified would get
[2:00] Speaker 5: the job.
[2:01] Speaker 1: And then it would take years to actually create that capability.
[2:05] Speaker 1: What is different now.
[2:07] Speaker 5: Is that the current– leadership in the Pentagon has decided
[2:12] Speaker 5: to take the straitjacket off the companies, which allows us
[2:15] Speaker 5: to take the straitjackets off of our engineers and scientists,
[2:18] Speaker 5: to allow us to be flexible, to propose solutions, to
[2:21] Speaker 5: do prototypes, to go out, we go out in the field,
[2:24] Speaker 5: and the field could be the Pacific Ocean, of course,
[2:26] Speaker 5: for us, And we test prototypes on actual ships with
[2:30] Speaker 5: sailors that are stationed on the ships running the prototype
[2:34] Speaker 5: to see if it works. And so then we'll come
[2:36] Speaker 5: back with that or an Army test range like Yuma
[2:38] Speaker 5: Proving Ground. We actually shot some of our JAGA missiles
[2:42] Speaker 5: out of our Grizzly launcher and showed the Army and
[2:46] Speaker 5: had their people operate it.
[2:48] Speaker 1: It worked. So we have this integration capability now.
[2:52] Speaker 5: The straitjacket's off the companies and the industry, and we
[2:56] Speaker 5: welcome the new entrants. We welcome the startups because we
[2:58] Speaker 5: want that creativity so we can learn from it. And
[3:01] Speaker 5: so if we see somebody can do like Fordham, a
[3:03] Speaker 5: better capability at a certain size and shape and cost
[3:07] Speaker 5: than we can, we want to bring that in really quickly.
[3:10] Speaker 1: So we welcome those investors. We welcome that talent.
[3:14] Speaker 5: We welcome that technology because we want to integrate it
[3:16] Speaker 5: into our mission sets.
[3:18] Speaker 1: And again, we can be the subcontractor too.
[3:20] Speaker 5: If someone else has got a better mission profile solution
[3:24] Speaker 5: than we do, we would love to put the F-35
[3:27] Speaker 5: into that profile.
[3:28] Speaker 1: So this can go both ways, actually, Ed.
[3:31] Speaker 4: Jim, what is Lockheed Martin's AI strategy? How core is
[3:35] Speaker 4: AI to that technology roadmap?
[3:39] Speaker 5: It's very fundamental to the company and everything that we're doing.
[3:44] Speaker 5: Our chief engineer, when I started the company in management
[3:47] Speaker 5: six years ago, said AI is really critical. And, of course,
[3:50] Speaker 5: to ask for budget to invest in our own AI
[3:54] Speaker 5: containerized instance where we would not be going using data
[3:59] Speaker 5: sets off the Internet. We would not be using models
[4:02] Speaker 5: and then feeding our information back into the system where
[4:05] Speaker 5: we would have a basically a controlled environment for our
[4:10] Speaker 5: AI workloads. And one of our partners, again, in the
[4:14] Speaker 5: technology space has been Jensen Wong. Back in 2000, 2001,
[4:18] Speaker 5: where hardly anyone maybe had heard of NVIDIA, if you
[4:21] Speaker 5: weren't a gamer, we were teamed with NVIDIA to get GPUs.
[4:26] Speaker 5: And that relationship continues today. So we have our own GPUs.
[4:31] Speaker 5: We have our own platforms.
[4:32] Speaker 1: We host.
[4:34] Speaker 5: AI models on our own platforms and on our own GPUs.
[4:39] Speaker 5: We use only data that we've generated or we get
[4:42] Speaker 5: from the U.S. government, and then we can create AI-driven
[4:45] Speaker 5: solutions to those many of those mission sets that we
[4:48] Speaker 5: just talked about a little bit earlier.
[4:50] Speaker 4: That was my exclusive conversation with Lockheed Martin's CEO, Jim Ticlac.
[4:53] Speaker 4: You can find the full video online, Bloomberg.com and on YouTube.
[4:58] Speaker 4: For more than 80 years, Lockheed Martin Skunk Works has
[5:01] Speaker 4: helped define the cutting edge of American air power. We
[5:04] Speaker 4: are live from that storied operation with actually its former leader,
[5:08] Speaker 4: OJ Sanchez, who now runs Lockheed Martin's $ 30 billion plus
[5:12] Speaker 4: aeronautics business. And I think we should start Skunk Works.
[5:17] Speaker 4: You led this team, this culture, this place for some time,
[5:21] Speaker 4: and you still work so closely with them.
[5:23] Speaker 2: Where are we? What goes on here?
[5:26] Speaker 1: Well, first, welcome to Skunk Works.
[5:28] Speaker 6: So I hope your team is enjoying the mystery and
[5:30] Speaker 6: the magic that is here. And Skunk Works, as you mentioned,
[5:33] Speaker 6: for 80 years, has existed for the purpose of delivering
[5:37] Speaker 6: on urgent national security objectives. And so where we are
[5:40] Speaker 6: is continuing that mission, which matters to all of us.
[5:43] Speaker 6: And in this moment, Like we've heard, nations need us
[5:46] Speaker 6: to go faster. They need us to be able to
[5:48] Speaker 6: bring capabilities to the fight and to deterrence with speed
[5:51] Speaker 6: and with an interoperability purpose that only Skunk Works has
[5:54] Speaker 6: really delivered on in the past. And so we're excited
[5:57] Speaker 6: about what Skunk Works contributes.
[5:58] Speaker 4: There's so much familiarity with F-35, right? From the American public,
[6:01] Speaker 4: the world, a manned fighter. But Vectis is the autonomous craft,
[6:07] Speaker 4: the basic idea born out of Skunk Works. How does
[6:11] Speaker 4: that work? Being, you know, an idea... to capability deployment?
[6:16] Speaker 6: So core to delivering on those security objectives are knowing
[6:20] Speaker 6: what our customers need well ahead of time. What we've done, F-35,
[6:24] Speaker 6: as you know, was actually invented here in Skunkworth. It
[6:26] Speaker 6: was delivered and now it's being produced in the bigger aeronautics. Vectis,
[6:29] Speaker 6: very similar, comes from a long DNA of drone technology
[6:33] Speaker 6: development that we did starting in the 60s all the
[6:36] Speaker 6: way till now and what it's going to do on that.
[6:37] Speaker 4: Point sorry to interrupt of course in the 60s there
[6:40] Speaker 4: was work on drones what we.
[6:42] Speaker 6: Yes it's a great skunk work story if you go
[6:44] Speaker 6: back and look in the past like many skunk work
[6:45] Speaker 6: stories the u.s and the soviet union signed a treaty
[6:49] Speaker 6: that said we won't fly manned flights over one another
[6:51] Speaker 6: country Immediately the CIA came to Skunk Works and said,
[6:54] Speaker 6: we need to fly over that country. And out of
[6:57] Speaker 6: that was born, out of that in the 60s was
[6:59] Speaker 6: born the D-21, flew 2,000 miles an hour as a
[7:02] Speaker 6: drone in the 60s, and now that heritage we find
[7:05] Speaker 6: behind us in.
[7:06] Speaker 1: The Lockheed Martin Vectus.
[7:08] Speaker 6: And so Vectus is bringing together both the ability to
[7:11] Speaker 6: design and develop advanced hardware with advanced capabilities in the
[7:15] Speaker 6: software and open architecture that's going to come alongside the
[7:18] Speaker 6: F-35 and create the future of air dominance.
[7:20] Speaker 4: You know, This is being internally funded, Vectis. But is
[7:24] Speaker 4: Vectis the next big franchise, the next big aeronautic franchise
[7:28] Speaker 4: for the company, irrespective of whether there's a human... in
[7:32] Speaker 4: that platform or not.
[7:33] Speaker 2: There isn't.
[7:34] Speaker 1: Yeah, that's right.
[7:34] Speaker 6: So what Vectis represents is us understanding our customers' problems
[7:38] Speaker 6: and the challenges that we're going to see in our
[7:40] Speaker 6: dominance and getting ahead of that. We like to say
[7:42] Speaker 6: here at Skunk Works, only one miracle per program. And
[7:46] Speaker 6: the reality is that we have to burn down those
[7:48] Speaker 6: miracles in order to land at a program like Vectis.
[7:50] Speaker 6: So while it appears new to the public, we've been
[7:53] Speaker 6: working on the pieces of that. So as far as
[7:55] Speaker 6: the franchise goes... We've invested in the technologies that will
[7:58] Speaker 6: build this incredible CCA for a long time, and now
[8:02] Speaker 6: we're getting out ahead of requirements, listening to the global
[8:05] Speaker 6: demand for these, and we see that capability in this lethal, survivable,
[8:09] Speaker 6: adaptable airplane that we're building to come alongside the incredible
[8:15] Speaker 6: work that the fifth-generation platforms, both the F-22 and the F-35,
[8:18] Speaker 6: have proven valuable.
[8:20] Speaker 2: How much does a program like that cost? What does
[8:23] Speaker 2: it take in dollar terms?
[8:24] Speaker 6: Well, I will tell you it takes incredible commitment. And
[8:26] Speaker 6: so at Lockheed Martin, we're committed to invest ahead in
[8:30] Speaker 6: order to be able to deliver on these solutions. And
[8:33] Speaker 6: so while the exact numbers are less important than the commitment,
[8:36] Speaker 6: every day we are focused on those things that we
[8:41] Speaker 6: think will matter the most. And listening to the global
[8:45] Speaker 6: need for this capability is We're investing to make sure
[8:48] Speaker 6: it's ready.
[8:49] Speaker 4: The reason I ask you about the next truly major
[8:52] Speaker 4: aeronautics franchise, if you think about the next generation US
[8:55] Speaker 4: aircraft programs, several of them have gone to some of
[8:58] Speaker 4: your rivals. Is Vectis the response to that? Or is
[9:03] Speaker 4: it in isolation? It is something different to the F-35
[9:06] Speaker 4: program entirely.
[9:09] Speaker 6: So what I see for the future of air dominance
[9:12] Speaker 6: is actually not a singular platform. It's about the family
[9:16] Speaker 6: of systems and platforms that are going to be able
[9:18] Speaker 6: to connect across domains, from space, through the air, down
[9:22] Speaker 6: to the sea, to all the shooters. And so Vectis
[9:25] Speaker 6: is not in response to any particular competition. What it is,
[9:28] Speaker 6: is it's the realization of what's going to be required
[9:31] Speaker 6: to deter fight and win in the future. And so
[9:34] Speaker 6: I believe that what you're seeing behind you is where
[9:37] Speaker 6: we're going to start adding capability to that family of systems.
[9:41] Speaker 6: And programs like the F-35, a lot of people don't realize,
[9:44] Speaker 6: there's 1,350 F-35s out in the world already today.
[9:47] Speaker 1: They're in combat. That fleet is growing at about 160.
[9:50] Speaker 5: U.S.
[9:50] Speaker 2: And allies.
[9:51] Speaker 7: U.S.
[9:51] Speaker 1: And allies.
[9:52] Speaker 6: That fleet is growing at about 160 a year. When
[9:55] Speaker 6: we add the capabilities like Vectis, we've shown that Vectis
[9:59] Speaker 6: can be controlled by a single F-35, as many as eight.
[10:04] Speaker 6: As many as eight Vectis by a single one. Imagine
[10:06] Speaker 6: the mass and scale of a program like that. So yes,
[10:09] Speaker 6: we do see this future family of systems underpinned by
[10:13] Speaker 6: the fifth generation airplanes we have and augmented by capabilities
[10:16] Speaker 6: like Vectis.
[10:18] Speaker 4: Project Meridian is the big news item for your industry.
[10:21] Speaker 4: In simple terms, Secretary Hegseth is signing a 120-day effort
[10:27] Speaker 4: to do the same thing you've kind of pitched, get
[10:29] Speaker 4: ahead of the threat, come with proposals. Elon Musk is involved.
[10:34] Speaker 4: Andrew Osborne-Malucky is involved. Your response to it, your interpretation
[10:38] Speaker 4: of it, it seems similar to what you say you're doing.
[10:42] Speaker 1: I love it.
[10:43] Speaker 6: I appreciate the leadership that Secretary Hegseth has at looking
[10:46] Speaker 6: through Project Meridian at the changing nature of warfare, what
[10:50] Speaker 6: we should see and learn from conflicts we have and
[10:53] Speaker 6: how we best prepare for the future. So here at
[10:55] Speaker 6: Lockheed Martin, we are always in that posture, looking ahead.
[10:59] Speaker 6: And what Project Meridian will do, we talk about that
[11:01] Speaker 6: big tent. We, of course, I'm in and out of
[11:04] Speaker 6: the Pentagon every week sometimes. And so we work directly
[11:07] Speaker 6: with the Department of War as well as the agencies
[11:10] Speaker 6: to help envision this. Meridian's going to help open up
[11:13] Speaker 6: that tent to enable others. And here at Skunk Works
[11:16] Speaker 6: and across all our Lockheed Martin organizations, if we find
[11:19] Speaker 6: something in that, we'll pull that into that bigger tent
[11:21] Speaker 6: and then help deliver capabilities for the future.
[11:23] Speaker 4: This is a question I got for you from the
[11:24] Speaker 4: Bloomberg tech audience, the big tent. Let's say there's a
[11:27] Speaker 4: close air support mission. Vectis is involved. Again, there isn't
[11:31] Speaker 4: a set customer production contract yet. But how does that
[11:34] Speaker 4: work in real time? For the everyday person, what are
[11:36] Speaker 4: you talking about there?
[11:37] Speaker 2: So that's a great question.
[11:38] Speaker 6: So I used to get to fly these airplanes, so
[11:41] Speaker 6: I flew the F-22 in the past. And fifth-generation airplanes
[11:45] Speaker 6: like the F-22 and the F-35 have what's called sensor fusion,
[11:49] Speaker 6: where you can see the entirety of the battle space
[11:51] Speaker 6: right in front of you. And what you're usually limited
[11:54] Speaker 6: by is the ability to get others to see it
[11:56] Speaker 6: or to be able to have enough weapons or ability
[11:59] Speaker 6: to get to every place. What Vectis is going to
[12:02] Speaker 6: do in a situation like that is it's going to
[12:04] Speaker 6: extend that capability, that incredible capability, fusion and decision advantage
[12:09] Speaker 6: into actionable capabilities, whether that be an air-to-air mission, an
[12:13] Speaker 6: air-to-ground mission, or a sensing mission, the vectus accoutrement to
[12:18] Speaker 6: the F-35, F-22, or others is going to make everybody
[12:21] Speaker 6: better and enable that force of action to happen in
[12:24] Speaker 6: a much wider area of responsibility, which is going to
[12:28] Speaker 6: be a tremendous help to the warfighter.
[12:30] Speaker 4: Another curious news story, is NASA bringing back the SR-71?
[12:35] Speaker 2: Are you going to help them with that?
[12:37] Speaker 6: So the SR-71, for those who don't know, was also
[12:39] Speaker 6: invented in the Skunk Works.
[12:41] Speaker 7: It was.
[12:41] Speaker 6: And if you haven't seen it in a while, I'd
[12:43] Speaker 6: encourage you to go look. Incredible airplane, flew at unbelievable speeds.
[12:48] Speaker 6: And here at Skunk Works, 97% of the portfolio is classified.
[12:52] Speaker 6: And so I would love to see the SR-71 fly again.
[12:55] Speaker 6: We'll just have to wait and see what NASA.
[12:57] Speaker 2: Chooses to do.
[12:57] Speaker 4: Okay, well, Bloomberg Tech did a pretty good job being
[13:00] Speaker 4: able to get it into the building. But I appreciate
[13:02] Speaker 4: the classified nature of it. of a lot of what
[13:04] Speaker 4: goes on here. It's been fascinating to speak with you,
[13:07] Speaker 4: OJ Sanchez of Lockheed Martin. Thank you very much. And
[13:10] Speaker 4: thank you to the team for having us here. There's
[13:13] Speaker 4: a lot more to come. We're going to speak to
[13:14] Speaker 4: John Gruen, CEO of Fortin. That's a startup Lockheed has
[13:18] Speaker 4: backed twice.
[13:19] Speaker 2: They also work together. This is the big tent idea.
[13:22] Speaker 2: That's next. This is Bloomberg Tech.
[13:36] Speaker 4: Despite the growth of venture-backed defense tech firms, defense primes
[13:40] Speaker 4: still receive a third of U.S.
[13:42] Speaker 2: Military contracts.
[13:43] Speaker 4: These figures are from 2025, but it's held around that
[13:47] Speaker 4: rate for about 10 years. The primes, though, aren't ignoring
[13:50] Speaker 4: what these startups can offer and are increasingly partnering with them,
[13:55] Speaker 4: like when Lockheed needed a new radar system for a
[13:57] Speaker 4: new containerized launcher.
[14:00] Speaker 5: We also said, well, we need a mobile, relatively inexpensive
[14:04] Speaker 5: radar to go along with this amazing system. And one
[14:07] Speaker 5: of our venture investments called Fordham builds those kinds of radars.
[14:11] Speaker 5: And we put another $ 25 million into the company and said,
[14:15] Speaker 5: here's the mission. We need a radar with this weight,
[14:18] Speaker 5: this form factor.
[14:19] Speaker 1: This mobility, this battery life.
[14:21] Speaker 5: So again, if you think differently, like a technology company
[14:25] Speaker 5: would think, and constantly improve what you have, add the
[14:29] Speaker 5: new hardware when it's ready, you can continuously improve the
[14:33] Speaker 5: mission capability.
[14:34] Speaker 4: Fordham CEO John Gruen joins us now. And actually, the
[14:37] Speaker 4: breaking news of the last 24 hours is $ 50 million
[14:40] Speaker 4: Series B. Lockheed participated in that. That's a sizable round.
[14:46] Speaker 4: What do you need that capital for?
[14:49] Speaker 2: And congratulations. Thank you very much.
[14:51] Speaker 8: Really appreciate it. And we absolutely need it to continue
[14:55] Speaker 8: to scale. So we are doubling manufacturing this year. We
[15:00] Speaker 8: are doubling our bookings. We're adding 250% of floor space.
[15:06] Speaker 8: And all of that requires capital to do.
[15:09] Speaker 4: Okay, so let's go to the case study that Lockheed's CEO,
[15:12] Speaker 4: Jim Teichert, just outlined to me, right? They approach you.
[15:16] Speaker 4: They like your technology. How does that then work? The mission,
[15:20] Speaker 4: the plan.
[15:22] Speaker 8: Yeah, it's been a great partnership with Lockheed Martin. It
[15:24] Speaker 8: started on the venture side. So we were earlier in
[15:28] Speaker 8: our stage and engaged with the venture team. They really
[15:32] Speaker 8: validated our core technologies and then enabled, once they had
[15:36] Speaker 8: done that and put a little venture money into us,
[15:39] Speaker 8: then we had exposure to the rest of the corporation
[15:43] Speaker 8: and were able to go find the right projects. projects
[15:46] Speaker 8: for our technology to be applicable to. And so over time,
[15:50] Speaker 8: that has grown and we've done a number of projects
[15:53] Speaker 8: and products that have real traction in the market. So
[15:56] Speaker 8: this current investment is really a reflection of that, of
[16:00] Speaker 8: the market traction of the capabilities of our integrated products.
[16:05] Speaker 4: You know, we're here in Skunk Works in the United States, California.
[16:09] Speaker 2: I appreciate that.
[16:10] Speaker 4: What's happening in Europe and Ukraine in the war in
[16:14] Speaker 4: Iran is you know, drones.
[16:17] Speaker 2: In warfare, that's the learning, I think.
[16:21] Speaker 4: You know, that's what I'm hearing from this Pentagon and
[16:24] Speaker 4: from Jim himself.
[16:27] Speaker 2: Where does Fortin fit in in that? Yeah, we're instrumental
[16:30] Speaker 2: in that.
[16:31] Speaker 8: So we've been in all of those war zones for
[16:34] Speaker 8: four to five years.
[16:36] Speaker 1: We have learned all those hard lessons.
[16:38] Speaker 8: And so we are very out in front and rapidly
[16:41] Speaker 8: developing the technologies and the products that are going to
[16:45] Speaker 8: be the forefront of warfare in the future.
[16:48] Speaker 4: Right, because that data that I shared, right, Bloomberg's Zoe
[16:50] Speaker 4: Thomas put that together, that's like the drone spending. Is
[16:53] Speaker 4: that different from counter drone spending? Like there's a distinction
[16:56] Speaker 4: in those roadmaps, right?
[16:58] Speaker 8: Yes, today drone and counter drone are different budget line
[17:02] Speaker 8: items typically and bought by different, customer sets. And so
[17:07] Speaker 8: it is a dynamic of the market and having to,
[17:11] Speaker 8: but it is a cat and mouse game in some sense.
[17:14] Speaker 8: So rapid development on the drone, threat, offensive side, you
[17:19] Speaker 8: have to be out in front on the defensive side.
[17:22] Speaker 8: And defensive typically means layers to be effective.
[17:26] Speaker 1: So it's not a one for one.
[17:27] Speaker 8: It's more, I need a layered solution of sensors and
[17:31] Speaker 8: effectors to to really be ready for any of those
[17:35] Speaker 8: dynamic threats.
[17:36] Speaker 2: You're an American company.
[17:38] Speaker 4: How are you able to do business with our Western allies,
[17:40] Speaker 4: with our NATO allies?
[17:42] Speaker 1: Partnerships.
[17:43] Speaker 8: So whether it's Lockheed Martin internationally.
[17:45] Speaker 2: That's the sales channel, basically.
[17:47] Speaker 1: Or some other partnerships.
[17:49] Speaker 8: Basically, any customer today, if you have a best of
[17:53] Speaker 8: breed product, if you have the right product, they will
[17:56] Speaker 8: buy it from you. And so we are definitely looking
[18:00] Speaker 8: to make sure that we have enduring partnerships around the
[18:02] Speaker 8: world that allow us to continue what we've built there.
[18:06] Speaker 8: But it really ends up being you've got to be
[18:09] Speaker 8: the best.
[18:10] Speaker 4: What happens next for you, John? What's your priority for
[18:13] Speaker 4: growing this company?
[18:14] Speaker 8: I think exactly that, staying out ahead. So staying out
[18:17] Speaker 8: ahead of the demand on the products. We have to
[18:21] Speaker 8: deliver scale that we've never done before. But then at
[18:24] Speaker 8: the same time, staying ahead of that offensive threat curve,
[18:28] Speaker 8: we've got to make sure we're taking the data, applying
[18:31] Speaker 8: it into our new products, and then having the partnerships
[18:34] Speaker 8: to deploy it out there at scale.
[18:36] Speaker 4: John Gruen, CEO of Fordham, just closed $ 50 million Series B.
[18:41] Speaker 4: Lockheed participate, but they also now extend that to technology,
[18:44] Speaker 4: working together on the mission.
[18:45] Speaker 2: Thank you very much indeed.
[18:47] Speaker 4: Coming up here at the Skunk Works, Lockheed Martin, California,
[18:51] Speaker 4: tech billionaires Elon Musk and Palmer Luckey may get a
[18:55] Speaker 4: say in the future of warfare.
[18:56] Speaker 2: We're going to explain that one next. This is Bloomberg Tech.
[19:06] Speaker 9: Thank you.
[19:17] Speaker 4: The Defense Department has tasked two of its biggest contractors
[19:20] Speaker 4: to lead an effort to study the future of warfare
[19:24] Speaker 4: and design weapons that American service members will need in
[19:27] Speaker 4: the years ahead.
[19:28] Speaker 2: The initiative is called Project Meridian, and.
[19:30] Speaker 4: It's going to be co-led by lucky Elon Musk and
[19:34] Speaker 4: former House Speaker Newt Gingrich. Bloomberg's Wendy Benjaminson is with me.
[19:38] Speaker 4: It was so interesting when this announcement was made. Can
[19:41] Speaker 4: you just explain the basic concept, Wendy?
[19:45] Speaker 7: Yes, I'll do my best. I mean, Defense Secretary Pete
[19:49] Speaker 7: Hegseth announced this as one of six initiatives he announced
[19:53] Speaker 7: in his State of the Force speech that he gave
[19:55] Speaker 7: on Wednesday to an audience of handpicked troops and then
[20:00] Speaker 7: was broadcast on the Pentagon's website. But it was... What
[20:07] Speaker 7: this is, supposedly, is a group of people led by
[20:11] Speaker 7: those three that you mentioned that will study over 120
[20:16] Speaker 7: days only, that's all they have for this, will study
[20:21] Speaker 7: what warfare will look like in the future, what tools
[20:25] Speaker 7: they need, what weapons they need, what vehicles they need.
[20:29] Speaker 7: What makes this particularly interesting is that Elon Musk and
[20:32] Speaker 7: Palmer Luckey are two of the biggest defense contractors in
[20:36] Speaker 7: They make a tremendous amount of money from the U.S.
[20:40] Speaker 7: taxpayer via the Pentagon, and now they are in charge
[20:44] Speaker 7: of deciding what tools the military will have. And I
[20:49] Speaker 7: can't imagine a world in which they don't profit from this.
[20:56] Speaker 4: Wendy, you and I have discussed, you know, the president's
[20:59] Speaker 4: proximity to CEOs, private industry. You noted that the 128
[21:04] Speaker 4: 20 day limit. I mean, what kind of access and
[21:07] Speaker 4: authority are Musk and Lucky going to actually have?
[21:11] Speaker 7: Well, they tweeted out photos today of the of those
[21:16] Speaker 7: three with Hegseth and the entire board meeting in the Pentagon.
[21:20] Speaker 7: These are not open to the public. I don't know
[21:23] Speaker 7: that we'll be able to get transcripts. We don't know
[21:27] Speaker 7: what they're going to.
[21:28] Speaker 10: Come up with.
[21:28] Speaker 7: They are clearly there working with civilian military officials. We
[21:33] Speaker 7: didn't see any, I don't think, military officials in the
[21:35] Speaker 7: room where there were some members of Congress. But the
[21:39] Speaker 7: 120 days is a limit because That's when the special
[21:42] Speaker 7: government employee status ends and they would actually have to
[21:46] Speaker 7: pay these guys, you know, a salary to be in it.
[21:49] Speaker 7: So they have just, you know, a few months to
[21:52] Speaker 7: come up with these new tools.
[21:58] Speaker 4: Bloomberg's Wendy Benjaminson out of Washington, D.C. Thank you very much. Okay,
[22:02] Speaker 4: Skunk Works. Coming up, we're going to discuss Lockheed's technology strategy,
[22:06] Speaker 4: also some of the investments that Lockheed has been making,
[22:10] Speaker 4: a conversation also about AI.
[22:11] Speaker 2: Dr.
[22:12] Speaker 4: Sarah Heiser, Senior Vice President of Technology and Strategic Innovation,
[22:16] Speaker 4: is the conversation we're having next.
[22:18] Speaker 2: It's so interesting. Lockheed's been talking to.
[22:20] Speaker 4: Jensen Wong at NVIDIA and using GPUs a long time.
[22:24] Speaker 4: We'll talk a little bit about that, too. This is
[22:27] Speaker 4: Bloomberg Tech.
[22:29] Speaker 9: We need to match.
[22:48] Speaker 5: The cost of the solution to the cost of the threat.
[22:53] Speaker 5: And it's well known, of course, that there were $ 4
[22:56] Speaker 5: million Patriot missiles used to shoot down maybe a $ 50, 000 drone.
[23:01] Speaker 1: Now, that's a bad exchange ratio.
[23:04] Speaker 5: But the other exchange ratio we have to consider here
[23:08] Speaker 5: is with what we have today in the stockpiles, What
[23:14] Speaker 5: is the tradeoff between letting that Shahed drone hit a
[23:19] Speaker 5: marine barracks in Qatar or to hit a factory or
[23:25] Speaker 5: an oil processing station in Saudi Arabia? So the tradeoff
[23:30] Speaker 5: is not just the cost of the items. It's the
[23:33] Speaker 5: cost of the damage done.
[23:37] Speaker 4: Welcome back to a special edition of Bloomberg Tech. That
[23:40] Speaker 4: was Lockheed CEO Jim Ticlett discussing one of the lessons
[23:43] Speaker 4: learned from the U.S.
[23:44] Speaker 2: War with Iran.
[23:45] Speaker 4: And he acknowledged that the industry is seeking cheaper, autonomous solutions.
[23:51] Speaker 4: That is not historically an area Lockheed has dominated, according
[23:55] Speaker 4: to data compiled by Bloomberg.
[23:58] Speaker 2: These are where.
[23:59] Speaker 4: The contracts are going, specifically in the drone segment in
[24:02] Speaker 4: the last two years. But Lockheed is pushing hard on innovation,
[24:07] Speaker 4: cost efficiency in terms of military options. This is about
[24:10] Speaker 4: the nexus of AI, autonomy, aerospace. The person reshaping that
[24:14] Speaker 4: roadmap is Dr. Sarah Heiser, Lockheed Senior Vice President of
[24:17] Speaker 4: Technology and Strategic Innovation. Thank you, Dr. Heiser, for being
[24:22] Speaker 4: with us and for having us here at Skunk Works.
[24:25] Speaker 9: Absolutely. Welcome, Ed. And it's an honor to be here.
[24:27] Speaker 10: There's no better place to talk about innovation and technology
[24:30] Speaker 10: than Skunk Works based on our legacy. And it's A
[24:33] Speaker 10: representation of the center of excellence and center of innovations
[24:36] Speaker 10: that we have across Lockheed.
[24:37] Speaker 2: And that's the work you're doing now.
[24:39] Speaker 9: Absolutely.
[24:40] Speaker 2: I want to get straight to the idea of AI, right?
[24:42] Speaker 4: What AI actually looks like within Lockheed and in terms
[24:46] Speaker 4: of the programs for next generation platforms as well.
[24:49] Speaker 9: Absolutely.
[24:50] Speaker 10: So we have chosen to be agnostic when it comes
[24:54] Speaker 10: to Frontier Labs. That's an intentional part of our strategy.
[24:57] Speaker 10: We see it a little bit like a horse race.
[24:59] Speaker 10: So we're unclear which model will play out in the
[25:02] Speaker 10: long term. And there are pros and cons to each.
[25:04] Speaker 10: Fun fact, we have 55 different large language models that
[25:08] Speaker 10: we're using to run Lockheed Martin. And to your point,
[25:12] Speaker 10: we use it for both internal business operations to achieve
[25:15] Speaker 10: efficiencies and and so forth, whether that's human resources, financial analysis.
[25:22] Speaker 10: but we also apply it for mission application. So we
[25:25] Speaker 10: have a bunch of fielded systems today, aircraft, missile systems,
[25:28] Speaker 10: et cetera. By using AI, we can extend them, make
[25:32] Speaker 10: them more reliable, and expand their efficacy.
[25:36] Speaker 4: You know, in the news cycle, the concern that's been
[25:38] Speaker 4: raised is about an agent misbehaving, and that's been largely
[25:42] Speaker 4: flagged in the cybersecurity context. But again, the American public
[25:47] Speaker 4: and the world, their fear would be, what if an
[25:49] Speaker 4: AI agent does something that does relate to weapon systems.
[25:54] Speaker 4: How do you keep that under control?
[25:56] Speaker 9: Well, we do take it seriously, first of all.
[25:59] Speaker 10: We've actually been working with AI and machine learning for
[26:02] Speaker 10: two decades. And that may raise a question of like, well,
[26:05] Speaker 10: why isn't it more ubiquitous? The logjam was around compute capability.
[26:10] Speaker 2: Isn't that amazing? It is.
[26:12] Speaker 10: And so we've overcome that in the last three to
[26:13] Speaker 10: five years with GPUs, TPUs coming online. But to your point,
[26:17] Speaker 10: because we've been working with it for so long, we
[26:20] Speaker 10: understand harnessing. But really critical to the way we go
[26:24] Speaker 10: about AI is the same way we go about, say,
[26:26] Speaker 10: a missile system or an aircraft. We put it through
[26:28] Speaker 10: rigorous testing, including corners of the box, so that we
[26:32] Speaker 10: understand its capability and to ensure the harnessing is sufficient.
[26:37] Speaker 9: So in the same way we would go through.
[26:40] Speaker 10: many hours of flight testing for an aircraft, we do
[26:43] Speaker 10: the same thing with AI before we deploy it and
[26:45] Speaker 10: then apply it.
[26:47] Speaker 4: How is AI changing the future of warfare? Where do
[26:50] Speaker 4: you think this will manifest most?
[26:53] Speaker 9: I think certainly in autonomy.
[26:54] Speaker 10: We're going to see a lot of advancement, specifically initially
[26:58] Speaker 10: with crewed, uncrewed teaming, and that gives us a lot
[27:01] Speaker 10: of advantage there.
[27:02] Speaker 2: And this is kind of what we're talking about with Vectis, right?
[27:03] Speaker 1: That's right.
[27:04] Speaker 4: The idea that Vectis is part of a mission that
[27:07] Speaker 4: could have different types of aircraft.
[27:09] Speaker 2: Absolutely.
[27:09] Speaker 10: So you could have a piloted F-35 and it is
[27:13] Speaker 10: working in collaboration with the Vectus in that case. And
[27:17] Speaker 10: in another way, it is around interoperability. So right now
[27:20] Speaker 10: we have a lot of individual systems, whether that's Lockheed
[27:23] Speaker 10: Martin or our competitive mates within the defense industrial base,
[27:28] Speaker 10: and they all don't really talk to each other. So
[27:30] Speaker 10: having the right data layer to have interoperability between all
[27:34] Speaker 10: of those systems will be enabled by AI.
[27:35] Speaker 9: Take me back.
[27:37] Speaker 4: Deep into Skunk Works. Behind the wall behind you is
[27:41] Speaker 4: somewhere I can't go. It's all classified. But your teams,
[27:45] Speaker 4: the AI work that's actually happening here, what kind of
[27:49] Speaker 4: people are those? Where have they come from? Are they
[27:51] Speaker 4: from the world of research? Are they from the world
[27:54] Speaker 4: of defense? How have you built up the competence?
[27:57] Speaker 10: Yeah, so I mentioned we've worked on this for a
[27:59] Speaker 10: couple decades, but you have everything from, say, software engineers
[28:03] Speaker 10: to mechanical engineers to And they gain an expertise and
[28:06] Speaker 10: we expose them through testing and training. And so, you know,
[28:11] Speaker 10: I would say certainly almost all of them have technical
[28:13] Speaker 10: and science or engineering backgrounds.
[28:16] Speaker 9: But you don't necessarily have to be.
[28:17] Speaker 10: A software expert to have found yourself in the middle
[28:21] Speaker 10: of AI and applying it in, say, an autonomous systems.
[28:25] Speaker 2: Sarah, we've talked about how.
[28:28] Speaker 4: These sort of storied and fabled aircraft were born out
[28:32] Speaker 4: of Skunk Works since 1943.
[28:33] Speaker 2: Why is.
[28:36] Speaker 4: Skunk Works the best place for these leading talents in
[28:39] Speaker 4: AI to be working? Why not a different part of
[28:42] Speaker 4: Lockheed or like you do with Fortum, for example, just
[28:46] Speaker 4: work with an outside partner to do more of the
[28:50] Speaker 4: work there?
[28:51] Speaker 10: Yeah, I think that a lot of the folks who
[28:53] Speaker 10: work at Lockheed Martin and here at Skunk Works, we
[28:55] Speaker 10: like to see our innovative results integrated but ultimately scaled
[29:00] Speaker 10: and scaled at relevance so that we make an impact
[29:02] Speaker 10: to the nation and in some cases to the world.
[29:05] Speaker 10: And so when you work here, you're able to work
[29:07] Speaker 10: on those kind of things that scale of relevance. And
[29:10] Speaker 10: you mentioned like Fordham. We work with all kinds of
[29:13] Speaker 10: different companies. I think that's another really cool part of
[29:16] Speaker 10: working at Lockheed Martin is that we work beyond the
[29:19] Speaker 10: walls of Skunk Works and beyond the walls of Lockheed Martin.
[29:21] Speaker 10: So we work with venture companies. We work with large
[29:23] Speaker 10: commercial tech companies. And so it gives us lots of
[29:26] Speaker 10: opportunities to see different technologies as well as different types
[29:30] Speaker 10: of businesses.
[29:32] Speaker 4: There are other nascent technologies. Nascent, maybe you challenge me
[29:35] Speaker 4: on that, but let's take quantum, for example.
[29:38] Speaker 2: You know, in the world.
[29:40] Speaker 4: everyone sort of says, when is this moving beyond the
[29:42] Speaker 4: lab and research?
[29:44] Speaker 2: Think about what's at stake. with Lockheed.
[29:47] Speaker 4: Is quantum actually a useful technology to you to get
[29:51] Speaker 4: platforms deployed?
[29:52] Speaker 10: This past week, actually, we announced the Quantum Innovation Center.
[29:57] Speaker 10: And that is because we think we're on the cusp
[30:01] Speaker 10: of a next breakthrough around quantum. We're now seeing it
[30:04] Speaker 10: moving outside of the lab. And so for us, yes,
[30:07] Speaker 10: we are interested in quantum compute, and we'll leverage that
[30:10] Speaker 10: in the same way, like, say, we do with GPUs
[30:12] Speaker 10: and TPUs.
[30:13] Speaker 9: But specifically for.
[30:14] Speaker 10: National security, we're looking to use quantum for sensing, remote sensing,
[30:18] Speaker 10: secure comms, and position navigation and timing. And those are
[30:22] Speaker 10: all really kind of niche to national security. But what's
[30:25] Speaker 10: exciting is, to answer your question around the lab, next
[30:29] Speaker 10: year we plan to do demos, including some from space,
[30:32] Speaker 10: using quantum technologies.
[30:33] Speaker 4: Where is, which piece of emerging technology, where is Skunkworks
[30:39] Speaker 4: just ahead? The world underappreciates, but you're already on it.
[30:43] Speaker 9: I certainly think an autonomy is one of those. Autonomy
[30:46] Speaker 9: is not new to us.
[30:47] Speaker 10: And then the application of AI, both of those we've
[30:50] Speaker 10: been working on a long time. And because of that,
[30:53] Speaker 10: we have the foundation and the expertise, and we understand
[30:56] Speaker 10: the mission so that we can deliver a holistic solution.
[31:00] Speaker 2: Does the customer believe in that technology and in that expertise?
[31:03] Speaker 9: I think they do, and they rely on it every day.
[31:05] Speaker 4: You spend a lot of time, I guess, explaining to
[31:08] Speaker 4: them the benefit of AI.
[31:11] Speaker 1: Right.
[31:11] Speaker 9: I don't think we have to explain the benefit.
[31:13] Speaker 10: I think they know the benefit of AI, and they
[31:16] Speaker 10: have seen it employed in systems like Aegis, where we
[31:19] Speaker 10: have demonstrated that. And actually, I'll share right now that
[31:22] Speaker 10: we're working a project. As we advance the F-35, we're
[31:26] Speaker 10: bringing on even more advanced sensor capability. And we've discovered
[31:30] Speaker 10: some math and physics challenges, and we've actually reached out
[31:32] Speaker 10: to OpenAI. We all saw the headline that they were
[31:35] Speaker 10: able to overcome the math problem that researchers had.
[31:40] Speaker 9: Worked on for years. And we have some.
[31:42] Speaker 10: Math and physics challenges as we employ this next generation.
[31:45] Speaker 10: sensor capability on the F-35, and OpenAI is working next
[31:48] Speaker 10: to us to uncover some of those math and physics challenges.
[31:51] Speaker 4: And is that just that they're teams, or it's their
[31:53] Speaker 4: specific underlying model is the best solution there?
[31:56] Speaker 10: Their team is working right beside us. We are absolutely
[32:00] Speaker 10: working right beside each other.
[32:01] Speaker 2: Like embed with Skunk Works?
[32:02] Speaker 10: Yeah, OpenAI is working with F-35 team on this math
[32:06] Speaker 10: and physics challenge to see if we can uncover, overcome
[32:09] Speaker 10: that challenge that we've encountered as we advance our sensors.
[32:12] Speaker 2: Dr.
[32:12] Speaker 4: Sarah Heiser, Senior Vice President of Technology and Strategic Innovation
[32:16] Speaker 4: here at Lockheed Martin. And again, we are live inside
[32:19] Speaker 4: Skunk Works. Thank you very much indeed. We are live
[32:24] Speaker 4: in Skunk Works, the storied lab origin of so many
[32:31] Speaker 4: fabled aircraft. But there's a lot more to come up
[32:33] Speaker 4: in this show. The next conversation is with Divergent CEO,
[32:36] Speaker 4: Luca Singer, and he joins us next.
[32:38] Speaker 2: This is Bloomberg Tech.
[33:01] Speaker 4: The Pentagon wants weapons built faster, cheaper, and at far
[33:05] Speaker 4: greater scale. Divergence bedding, advanced manufacturing can help. And it's
[33:09] Speaker 4: already working on it with Lockheed Martin, Skunk Works. New
[33:13] Speaker 4: ways to design and build aircrafts is the case study.
[33:16] Speaker 4: Divergent's CEO, Lucas Singer, is with us. This has been
[33:20] Speaker 4: a story for some time. Re-industrializing the defense industrial base,
[33:25] Speaker 4: bringing more things back to America, including the supply chain.
[33:28] Speaker 4: But you are doing the building bit, advanced manufacturing. Just
[33:32] Speaker 4: explain in practice how that works.
[33:34] Speaker 11: At Divergent, we're building the infrastructure layer. So we're thinking... Primes,
[33:40] Speaker 11: product companies, below that, there's a layer that has to
[33:44] Speaker 11: have the actual capability and capacity to manufacture. So full stop,
[33:49] Speaker 11: what we're building is that layer, that manufacturing layer. You
[33:52] Speaker 11: talk about reshoring, you talk about manufacturing capacity. We care
[33:56] Speaker 11: deeply about that. We agree we need more of it.
[33:59] Speaker 11: But not only more, but also new capabilities. So at Divergent,
[34:04] Speaker 11: what we're doing is building that next generation industrial base,
[34:07] Speaker 11: not only capacity, but also capability and advanced capability.
[34:12] Speaker 2: This is tricky, right?
[34:13] Speaker 4: You know, we keep saying a lot of what's around
[34:15] Speaker 4: us here is classified, but you also don't just work
[34:18] Speaker 4: with Lockheed. You work with many of their peers and competitors.
[34:22] Speaker 2: How do you manage that?
[34:23] Speaker 11: We see ourselves as a force multiplier. We never compete
[34:27] Speaker 11: as a prime. So in that sense.
[34:28] Speaker 10: Right.
[34:29] Speaker 2: You just manufacture. We manufacture.
[34:31] Speaker 11: And we partner with these businesses, though, because we end
[34:34] Speaker 11: up being their manufacturing partner, right?
[34:36] Speaker 2: A supplier.
[34:37] Speaker 11: But yes, we are doing a critical part. or an assembly,
[34:40] Speaker 11: say an airframe, in the case of Lockheed Martin. Now,
[34:43] Speaker 11: we want to see all of these programs succeed because
[34:46] Speaker 11: our warfighters, they need this hardware.
[34:48] Speaker 4: From a national security perspective as well, you have to
[34:51] Speaker 4: be very, very in control.
[34:53] Speaker 1: Yes, yes.
[34:54] Speaker 11: So we never lock up any of our customers' IP.
[34:57] Speaker 11: That stays with Lockheed. That stays with Raytheon.
[35:00] Speaker 2: But what we do.
[35:01] Speaker 11: is engineer that airframe and make sure that we're supplying
[35:04] Speaker 11: it on time, at the right quality level, and importantly,
[35:07] Speaker 11: at scale. And that last one is really part of
[35:09] Speaker 11: the missing factor, right? How many of these units can
[35:12] Speaker 11: you make per year for your customer? And that's where
[35:15] Speaker 11: Divergent shines. How much of this is about speed? You know,
[35:18] Speaker 11: if you think about the conclusions of Iran There were
[35:24] Speaker 11: everything ranging from munition supply to the types of technology,
[35:28] Speaker 11: but the net result is, as I said, the Pentagon
[35:30] Speaker 11: wants things faster and cheaper. I think speed is the
[35:33] Speaker 11: most important and speed with scale. So what is your
[35:36] Speaker 11: time to market? You get a new set of requirements,
[35:38] Speaker 11: new program. How quickly can you get in the air?
[35:41] Speaker 11: Then when can you field it? But also when you
[35:43] Speaker 11: learn a lesson, how can you adapt to it, right?
[35:46] Speaker 11: How can you change that requirement or mission set and
[35:48] Speaker 11: make a new piece of hardware?
[35:49] Speaker 2: How quickly does Divergent react to things like that? Incredibly quickly.
[35:52] Speaker 11: We can go from engineering inputs to flight ready vehicle
[35:57] Speaker 11: in under three months. We can have a critical design
[36:00] Speaker 11: in less than that, say two or three weeks. Wow.
[36:02] Speaker 11: And we've shown now with primes in the loop that
[36:04] Speaker 11: we can go from start to full rate production in
[36:08] Speaker 11: under a year. That's much, much faster than programs that
[36:11] Speaker 11: were taking five plus years to get to market.
[36:13] Speaker 4: Has this administration taken any action that has actually allowed
[36:18] Speaker 4: you to do that, to move faster, to scale what.
[36:22] Speaker 2: They want, right? This is something that they have shared
[36:24] Speaker 2: as a goal too.
[36:26] Speaker 1: Yes, yes.
[36:27] Speaker 11: They are completely mission aligned. And more than that, I'd
[36:30] Speaker 11: say they've been a driving force top down. And where
[36:33] Speaker 11: we really see it is we do advanced manufacturing, 3D
[36:36] Speaker 11: printing of metals. This is a better way, in our opinion,
[36:39] Speaker 11: to make a metal structure for most of these systems.
[36:41] Speaker 11: How can we qualify these at a high pace? That's
[36:44] Speaker 11: where the admin has said we need to have the
[36:47] Speaker 11: right process to bring in new technology, and we can't
[36:50] Speaker 11: get burdened. by too cautious of a wrist posture. So
[36:54] Speaker 11: we've seen the admins drive reports.
[36:55] Speaker 2: That seems like a.
[36:55] Speaker 4: Procurement issue, though, really, rather than, I mean, for example,
[37:01] Speaker 4: what about sort of cutting red tape?
[37:04] Speaker 11: I'd say part of that red tape is in accepting
[37:07] Speaker 11: new technologies because it is all about that demand signal, right?
[37:11] Speaker 11: If we get acceptance from the Air Force, the Navy,
[37:14] Speaker 11: the Army, other services... Then we will get demand signal
[37:17] Speaker 11: in on programs. That demand signal will drive investment into
[37:21] Speaker 11: new factories, and then we'll be producing at scale. So
[37:23] Speaker 11: for us, that's probably the biggest area where the admin
[37:26] Speaker 11: can help us.
[37:27] Speaker 4: We've been showing some of what Diversion does, right? Take
[37:31] Speaker 4: us inside your company.
[37:34] Speaker 2: How have you grown? What are your capital needs right now?
[37:37] Speaker 11: Yes, we've been around for over a decade now, and
[37:39] Speaker 11: we started with a simple thesis, which was product agnostic
[37:43] Speaker 11: manufacturing at low unit cost. So unpacking that, imagine a
[37:47] Speaker 11: factory that's flexible, can go from making a car part
[37:50] Speaker 11: to a defense part back to back, is digitally driven,
[37:53] Speaker 11: but it also has a low unit cost on both
[37:55] Speaker 11: of those items, right? That's never happened before. That was
[37:58] Speaker 11: our thesis. We spent six years building that platform. We
[38:01] Speaker 11: raised over a billion dollars into the business, have great
[38:05] Speaker 11: American investors that are defense focused, like Rochefort Management, have
[38:09] Speaker 11: some blue chip PE investors like Hedda Sophia, have great
[38:12] Speaker 11: strategic investors as well. And now for us, it's all
[38:15] Speaker 11: about building more factories. Long Beach is our second factory
[38:18] Speaker 11: that's coming online. There'll be 30,000 airframes of capacity per year.
[38:22] Speaker 1: Long Beach? Yes.
[38:23] Speaker 7: Long Beach.
[38:24] Speaker 4: Hard decision to grow in California versus somewhere else in
[38:26] Speaker 4: this country?
[38:27] Speaker 11: Well, for us, we're going to grow in multiple states.
[38:30] Speaker 11: So luckily, that's not just a decision we need to
[38:32] Speaker 11: make once. But for Long Beach, that was customer locations.
[38:36] Speaker 11: That was engineering talent, and then actually the facility itself,
[38:39] Speaker 11: when we're doing these advanced processes, 400,000 square feet, we
[38:43] Speaker 11: can make 30,000 airframes per year, so it worked very
[38:46] Speaker 11: well for us.
[38:47] Speaker 2: Lucas, what's the permanence of this shift?
[38:49] Speaker 4: Instead of the primes reacting to times of war, is
[38:55] Speaker 4: it just fundamentally a change of how the business works?
[38:57] Speaker 1: Yes.
[38:58] Speaker 11: I think this is a long-lasting defense cycle. I think
[39:01] Speaker 11: we've seen what modern warfare needs in terms of new systems.
[39:05] Speaker 11: We've seen the price points that the department is asking
[39:08] Speaker 11: for for those new systems. We've seen competition come in
[39:11] Speaker 11: in terms of new players. So I think this is
[39:14] Speaker 11: a cycle that's here to stay. I think you're going
[39:16] Speaker 11: to see more innovation. You're going to see volumes go up,
[39:18] Speaker 11: prices go down. And for us, we view resilience as flexibility.
[39:22] Speaker 11: So being cross-industry allows us to take a choppy demand signal,
[39:26] Speaker 11: which at times defense is, especially in sustainment. and maintenance,
[39:30] Speaker 11: and make really good economics of it, which allows us
[39:33] Speaker 11: to deliver at a steady volume.
[39:35] Speaker 2: And at a good cost. Lucas Singer, Divergent CEO, thank
[39:39] Speaker 2: you very much.
[39:39] Speaker 11: Thank you.
[39:40] Speaker 2: Being with us here in Palmdale.
[39:42] Speaker 4: Okay, coming up in the program, Boeing beats out Northrop
[39:46] Speaker 4: to produce the Navy's Next, Top Gunfighter. We're going to
[39:51] Speaker 4: talk about what that means for this industry, the landscape,
[39:54] Speaker 4: and their businesses next. This is Bloomberg Tech.
[39:58] Speaker 7: Bloomberg Tech.
[40:14] Speaker 4: Earlier this week, the Pentagon announced Boeing beat Northrop to
[40:17] Speaker 4: produce the Navy's next top gunfighter jet, an award valued
[40:21] Speaker 4: more than $ 20 billion. Bloomberg Intelligence writing that, quote, Bloomberg Intelligence,
[40:35] Speaker 4: global head of aerospace and defense research.
[40:38] Speaker 2: George Ferguson is with us. Hey, I'm here in the skunk.
[40:41] Speaker 4: Works of Lockheed, but there's a lot happened this week.
[40:45] Speaker 4: Go to your thesis on this particular contract that Boeing's
[40:49] Speaker 4: come out on top on.
[40:51] Speaker 12: Yeah, so the thesis is that Boeing's fighter program, its franchise,
[40:56] Speaker 12: was traditionally pretty strong, but it had gone through some
[41:00] Speaker 12: rough years. It wasn't on the F-35. It was on
[41:04] Speaker 12: the F-22, but that was very limited production. But the
[41:07] Speaker 12: F-18 is the primary Navy strike fighter now, twin engine.
[41:11] Speaker 12: There's like 800 or 1,000 of those around. F-15 are
[41:14] Speaker 12: a very strong part of the franchise, too. Non-stealth, twin-engine fighter,
[41:19] Speaker 12: Mach 2.5. We see it used in the Middle East.
[41:22] Speaker 12: Very capable fighter. They're really lacking in sort of this
[41:26] Speaker 12: stealth technology because they weren't on a modern stealth fighter anymore.
[41:30] Speaker 12: And now the Pentagon has given them the two next
[41:34] Speaker 12: generation stealth fighters, the Air Superior Fighter, the F-47 for
[41:39] Speaker 12: the Air Force, and then handed.
[41:40] Speaker 1: Them as well the Navy fighters.
[41:42] Speaker 12: So, you know, really, it's I feel like their franchise
[41:47] Speaker 12: has gone from, you know, a lot of concern around
[41:50] Speaker 12: it to really in great position if they execute on
[41:54] Speaker 12: these programs.
[41:57] Speaker 4: You and I have talked about your research on Lockheed.
[42:00] Speaker 4: You know, I'm here at Skunk Works. You're bullish on
[42:03] Speaker 4: a growth story that's more about missiles than aircraft.
[42:06] Speaker 2: Just talk a little bit about that.
[42:08] Speaker 12: Yeah, I mean, I think missiles are super important right now, right?
[42:12] Speaker 12: We're seeing some of these really sophisticated munitions be.
[42:17] Speaker 1: In short order.
[42:17] Speaker 12: Actually, we just watched a drumbeat of orders go through Raytheon.
[42:23] Speaker 3: There's about $ 70- some billion of orders that flowed in the
[42:27] Speaker 3: last kind of month and a half. Lockheed as well
[42:31] Speaker 3: has gotten a number of those. These are the two
[42:33] Speaker 3: primary manufacturers of things like Patriot, things like THAAD, which
[42:39] Speaker 3: are super important to air defense in the modern age.
[42:42] Speaker 3: But honestly, the big programs are usually these fighter programs
[42:47] Speaker 3: and bomber programs.
[42:48] Speaker 12: They're worth a lot more money over the long run.
[42:50] Speaker 12: And so, look, I think Boeing did pretty well here recently.
[42:54] Speaker 11: Right.
[42:56] Speaker 4: George Ferguson from Bloomberg Intelligence. Thank you very much indeed.
[43:01] Speaker 4: That does it for this edition of Bloomberg Tech. We
[43:04] Speaker 4: are at the Skunk Works, Lockheed Martin's advanced facility. And
[43:10] Speaker 4: it's a story about a company that wants to transition
[43:12] Speaker 4: from being the world's biggest defense contractor to being the
[43:15] Speaker 4: biggest defense technology company in the world. And a part
[43:18] Speaker 4: of that has been how they're willing to work with others,
[43:20] Speaker 4: including rivals. We talked a lot about how they are
[43:23] Speaker 4: using AI. We talked a lot about autonomy. Recap all
[43:27] Speaker 4: of those conversations on the podcast. You guys know where
[43:30] Speaker 4: to find it on Bloomberg, also on iHeart, Apple, and
[43:33] Speaker 4: on Spotify. And out there as well is the big
[43:36] Speaker 4: conversation that we have with Lockheed Martin's CEO, Jim Ticlette,
[43:40] Speaker 4: which you can find again on Bloomberg.com and on YouTube.
[43:45] Speaker 4: Classified access, declassified, live from Skunk Works.
[43:49] Speaker 2: This was Bloomberg Tech.
[43:56] Speaker 11: Thank you.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.