a16z Podcast - What is American Dynamism?

Episode Date: March 4, 2024

American Dynamism. A term coined by a16z General Partner, Katherine Boyle, two years ago, when she and David Ulevitch founded the firm's American Dynamism investing practice.Beyond a sector or movement, American Dynamism embodies innovation, community, and a unique philosophy touching every facet of American life.In this episode, we hear from 10 voices, including policymakers, founders, and funders, as they share what American Dynamism means to them. They discuss the critical technologies shaping the future and the challenges on the path to the next decade of dynamism. Stay tuned for more exclusive conversations from a16z's second annual American Dynamism Summit in Washington, D.C. Resources: Find Dr. Kathryn Huff on Twitter: https://twitter.com/katyhuffFind Nand Mulchandani on Twitter: https://twitter.com/nandmulchandaniFind Doug Beck and the DIU on Twitter: https://twitter.com/diu_xFind Mitch Lee on Twitter: https://twitter.com/dontmitchFind Ian Cinnamon on Twitter: https://twitter.com/IanCinnamonFind Doug Bernauer and Radiant on Twitter: https://twitter.com/radiantnuclearFind Chris Bennett on Twitter: https://twitter.com/8ennettFind Mike Slagh on Twitter: https://twitter.com/MikeSlaghFind Rahul Sidhu on Twitter: https://twitter.com/rahoolsidooFind Wyatt Smith on Twitter: https://twitter.com/wyatt_h_smithLearn more about American Dynamism: https://a16z.com/american-dynamism Stay Updated: Find a16z on Twitter: https://twitter.com/a16zFind a16z on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://twitter.com/stephsmithioPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

American dynamism. American dynamism. American dynamism. American dynamism. American dynamism. American dynamism. American dynamism. American dynamism.

American dynamism. American dynamism. American dynamism. A term coined by A16C general partner, Catherine Boyle, just two years ago, when she and David Ulovich founded the firm's American Dynamism investing practice. But since then, the term has truly taken on a life of its own. To some, it's a community of builders.

To others, it's a spirit grounded in innovation. And some others might even call it a movement. In the words of Catherine herself, American dynamism is not a sector. It doesn't fit neatly into one vertical or portfolio. It is a philosophy that encompasses nearly every aspect of American life and leadership. She goes on to say that the American dynamism practice invest in founders and companies that support the national interest.

So that's more than just aerospace and defense. It's also public safety, education, housing, supply chain, industrials, and manufacturing. And last month, A16Z held its second annual American Dynamism Summit in the heart of Washington, D.C. Hundreds of policymakers, founders, and funders showed up not only to celebrate our national interest, but also to have the hard conversations around what it'll really take to continue building for America. And while we can't wait to share some of these exclusive conversations with you soon, first we wanted to share this compilation of 10 voices coming together to share what American dynamism means to them. They also discuss what critical technologies they're watching along the way,

and of course, what might stand in the way of the next decade of dynamism. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16C fund. Please note that A16Z and its affiliates may also maintain investments

in the companies discussed in this podcast. For more details, including a link to our investments, please see A16C.com slash disclosures. All right, first, let's meet some of these founders building across space, education, public safety, energy, and more. My name is Rahul Sadu. I'm co-founder and CEO of Airdone. AirDome allows police and fire departments to send drones directly to 911 calls anywhere in their city in 90 seconds or less. My name is Ian Settamintamint, CEO and co-finder of Apex.

Apex is a spacecraft manufacturer company, so we built something called the satellite bus, which is the core set of components that are required for any human-made object to operate and function in space. I'm Wyatt Smith, founder and CEO at Upsmith. I've spent on a mission to combat America's skilled worker shortage. We build technology to help expand more forced productivity for employers and create meaningful opportunities to flourish for a new generation of builders. I'm Doug Bernauer, CEO and co-founder of Radiant. Radiant is a nuclear startup developing technology to mass-produce nuclear reactors

in a factory, 50 units a year that can be deployed anywhere in the world, and serve as resilient backup power, or prime power. I'm Chris Bennett. I'm the CEO co-founder of winter school. We help individuals start home-based

child care programs. My name is Mitch Lee and I'm the co-founder and CEO of ARC. Arc makes high-performance electric watercraft and our mission

is to electrify everything on the water. We will introduce a few more voices from here, but let's kick things off with the ultimate question. What is American Dynamism?

To some, it means American dynamism is about optimism. American dynamism is about utilizing America's best asset, which is our ability to develop new breakthrough technologies. American dynamism is being unapologetically proud of what we are capable of doing in America. But for some, there's also a personal side to the fuel behind American dynamism.

Here is Rahul from Arab Dome. American dynamism, I think, probably means a lot of things to a lot of different people. I come from an immigrant family. So my father and my mother came here right before I was born from India with the idea that they're going to build a better life in America than they could anywhere else. They came with little to no money. We grew up at Harbor City and in Los Angeles area. And originally my dad went to a couple of universities and learned how to be an engineer.

And then they went into business together and built a business. And then eventually amassed a bit of a property portfolio to be able to provide me and my family a great life. And to me, American dynamism is enabling anyone who wants to come to America to be able to do something just like that to solve problems in their communities and be rewarded equally for those problems. Now here is Mike's law. Mike is a U.S. Navy veteran of eight years and he's the founder of shift.org and previous co-founder of troop swap, which is now ID.Me. Here's Mike's take on American dynamism. I think there's so much power in narratives. It's one of these new narratives that's really taken the nation by a storm, and I think that it speaks directly to a whole new group of founders and folks that want to build for America, want to essentially protect Western values, want to see liberal democracy thrive.

It really speaks directly to them and says, hey, we need you. We need people that have subject matter expertise in health care and education and defense. And so I think that's been this powerful driver for essentially either a new group of founders that maybe they didn't think of themselves as somebody's going to build the next great technology startup. But also, I think this is probably one of the most amazing trends to witness in real time is you've got all these really accomplished name brand second and third time founders. And now there's a chance to be really mission driven and get out something that matters and feel like you're part of something that's bigger than yourself.

But it's not just founders embracing American dynamism. Here is Doug Beck. He's the director of the Defense Innovation Unit within the Department of Defense. And here's his take on American Dynamism. What I think about most is us taking the incredible lessons of what built the Silicon Valley that I kind of grew up in professionally. This collaboration between the public sector,

the private sector, both the founders and the funders, which was always part of Silicon Valley and academia at the very cutting edge of thought, brought those things together against a true imperative of national security, first during World War II and then during the Cold War, that coming together of Americans from all those different disciplines is what built Silicon Valley in the first place and created this unbelievable asset that leads the technology for the whole world. And American dynamism now is about harnessing that same sense, that same energy, bringing it together now against the incredible challenges that we continue to face.

The challenges to the international system upon which we all rely and coming together across again the public sector, private sector, and academia with our allies and partners in order to support and defend that international system with the next iteration of American dynamism at the speed and scale that's required to meet those future challenges and to do it our way, that American way, not the way of our adversaries. Look, there's clearly a lot of excitement around American dynamism. But what are the most inspiring examples from these builders who are closest to the metal? Ian Cinnamon from Apex Space. Oh, there are too many to count. But what I would say is specifically within the space industry, the best example is seeing this new organization that only emerged several years ago called the Space Development Agency.

It's part of the United States Space Force. They have spent over $10 billion in the last couple of years. on spacecraft acquisitions, building a new proliferated warfighter suite of satellites in space that gives the warfighter communication capabilities, observation capabilities, and so much more. Seeing the United States push forward technology,

push around standard acquisition processes to be able to launch dozens and eventually hundreds and eventually thousands of these satellites into orbit to build the U.S.'s own constellation is incredible. And I love seeing all that momentum. I love seeing both the established defense industrial base providing those spacecraft, but also newer companies playing in that fold. Doug Bernauer now works on nuclear energy.

But that wasn't always the case. I spent 12 years at SpaceX, so I always go back home. I think a great example is the Starlink satellites, over 5,000 deployed in the last five years. I think communications and energy are the two things that humanity will keep reinventing over and over again. that really leads to new eras of technology development. And while Mitch now works on electric boats, a majority of his founding team also comes from SpaceX. I think the shining example of this is SpaceX

and what they have been able to accomplish in terms of reducing the cost of getting one pound of material into space by using reusable rockets and doing that by rethinking the challenge of getting to space for first principles. And we try to do the same thing at art. A lot of our team comes from SpaceX, and we are definitely focused on how do we bring the marine industry, which is decades kind of behind in terms of technology,

into the modern era using batteries and electric power trainings and all of the modern advances in the automotive industry. But SpaceX was not the only company setting the example. Mike's Law of Shift.org on Palantir's role in our defense ecosystem. The defense innovation ecosystem in getting the actual best technology to the Warfighter hasn't really been ready or prime to scale up until right now. One of the leading drivers and sort of paving the way for hundreds of new companies, you can't look at many of these companies today and trace some of the origins back to Palantir. They did something that

cut against the grain that wasn't investable by a bunch of BCs back in 2003. And many of the founders of the next wave of great defense technology companies have roots and origin stories in Palantir. certainly see that with some of the people who are building Andrel right now. And that's sort of the next wave. I think you see this opportunity starting to open up where, and I think one of the reasons why defense feels like an investable category is partially certainly driven by current events. And this actually looks like a whole new sector that has traditionally been dominated by slow moving incumbents with incentives to essentially drive up the cost with really low, margin services. Now there's this opportunity to essentially translate all these areas of super low-margin services into high-margin software that's delivered at a lower cost to the taxpayer. Now, in the last few decades, we saw how exponentials like Morris Law, decreasing launch costs, and unlocks in biological sequencing have resulted in a flurry of technologies. But today,

we're also seeing many other exponential technologies inflect. So let's hear what technologies this group thinks will play the biggest role in defining the next decade of dynamism. To set the stage, we've got NANDM Mulsandani. Nand, by the way, was the first ever chief technology officer at the CIA. And here's what technologies he's paying attention to. Having had a 25-year career in emerging tech

and in startups, the idea of bringing that energy and focus from startups to government, military, and intelligence work is the, new concept of American dynamism. We track 11 to 15 different emerging tech areas at the agency. And what's exciting about it is every single one of those areas is absolutely red-hot with new innovation, new startups, and companies. And I feel it's going to have a huge impact on what we do in national security. And just by definition, emerging tech means they're going to

be surprises and advances that come out of nowhere that are going to surprise us. I think each of them is at a different level of maturity. And so things like AI or biotech, I think, are ones that are probably going to surprise us the most in the short term. But there's exciting stuff happening everywhere. Fusion, space, nuclear, I think all 11 or 15 of these areas. I think we're doing incredible work in all of them. Look forward to all the exciting things coming out of them. Now back to Ian Cinnamon.

It really comes down to the combination of different technologies. It's not just about how do we onshore more manufacturing. to the US. It's not just about how we're using design for manufacturing principles to build these spacecraft at scale. And it's not just about the software that we're doing to ensure that all the different components are interoperable. It really is the combination of all three of those. And bringing those together is what lets companies like Apex actually operate the pace and scale that we're trying to achieve. We're also seeing really important inflections in energy. And luckily, Dr. Catherine Huff spent time with us breaking down what she's

seeing there. I'm the Assistant Secretary for Nuclear Energy in the United States Department of Energy, which means I oversee our nation's research and development programs around civil nuclear power. I think we're seeing a lot of companies take apart business models and project strategies and reinvent them in a more agile, modern way to build no technology like nuclear power in cooler and quicker manners. I think meeting the moment. moment is going to take some real creativity. And we're seeing that in advanced reactors that involve all kinds of salt, metal, gaseous coolants and fuels that are dissolved in those liquids or made a teeny tiny tristructural isotropic coated particles. Those innovations are going to

really change the operations of nuclear power going forward. Dr. Huff was not the only one with energy, tough of mind. batteries and generally speaking electric power trains understanding how the electric grid operates ensuring we're not reliant on other countries for energy unsurprisingly another big topic was artificial intelligence here's Chris Bennett, Mike's Law and Rahul Sadou AI, holy moly

what AI is capable if I really don't think that we're really prepared for it and there's a lot of fear around AI but I think that it's pretty normal for folks to be afraid of emerging technologies, but, you know, on the other side of that fear, there's personally a lot of excitement. What we're going to be able to do with computers is going to really revolutionize the way we all live. And the way I think of it, it's just really important that we're constantly educating our leaders, educating people who are living in our different districts on the power of technology, the power AI, and helping folks see the positive sides of it, helping quell a lot

of the fear that exists there. The clearest use I see is a combination of video and AI. and using video and AI to understand what's going on in our classrooms, understand what sort of early interventions children need, understand what sort of coaching providers could benefit from, and using technology to capture that information and then also provide those suggestions later on. Yeah, I think I guess a lot of people talk about AI. I certainly feel strongly about that as well,

particularly I'm a data three. We're dealing with our own educational challenges at home and very much feeling like that there's parts of not just in my family, but broad spots of America where little kids are getting left behind. And so to think about a world where every kid can have their own private tutor who's endlessly patient and endlessly kind and wants to help them get up to speed, that's one of those things that you feel like we're at the cusp of a breakthrough, like a real meaningful like step function like step forward.

I think we're also in an interesting time from a technology standpoint where a lot of the solutions to solve for defense or public safety or energy. anything that's important to the American household are starting to come from shared threads, whether that's AI or below cost of compute, the ability for companies to be able to innovate more quickly and iterate more quickly. So I can't say it's one thing where I feel like,

oh, the next 10 years is just going to be about defense. I think that we're in a position where the underlying capabilities of being able to focus on things that are important to America are going to allow for many focuses to be able to go equally as far. Some of the other technologies that I say beyond AI is mapping back to what's happened

in the defense industry right now is you have an environment that's dominated by five really big incumbents. They essentially, you know, 80 cents on every dollar. The acquisition budget is going to go to one of these five crimes. And there's this entire set of capabilities that a company like an andrel or an eperis or a shield AI, like they're going to need to be able to deliver these capabilities to really reach the breadth and scale that is required to be a prime contractor for the United States Department of Defense. So that creates this awesome opportunity where there's actually not a hundred, but maybe a thousand companies to be started in these niche technical focus areas that, you know,

maybe they aren't. Venture scale or venture size TAM, at least today, to the naked eye as we look at them right now. But there are hundreds, if not over a thousand of these really small areas of capability, you know, the ability to sense underneath the ground, the ability to provide power to obscure bases all over the world to be able to communicate underwater. And there's a lot of these either technologies or capabilities that have been delivered essentially just a much, much higher cost than it takes to actually solve a real problem for a military end user. I served in the Navy

for a little while. I was in like a fairly technical career. And I think that one thing that's changed from the military end user perspective is I hated the software that we use. It was not consumer grade, it took, on average, we literally timed this at our unit, 40 minutes to start a computer and send one email. And so that's just as an example of, I'm pretty excited for like quantum to be here and sort of the next wave of AI, but I'm really excited is to see some of these really basic kind of stupid problems to be solved by some of the technologists that are coming into the space. What a great reminder. Even though artificial intelligence is top of mind, There are still so many simple problems across the country just waiting to be solved.

And that wasn't it. Throughout our conversations on the ground in D.C., we heard about so many other important opportunities, including... The intersection of software and hardware. Advanced reactors. Connectivity at the edge. Automated factories. And of course, our supply chain.

Here is Mitch Lee. We are dependent on the supply chain that we have for the boats that we're producing. I get very excited about the class of companies coming up that help us make our manufacturing more efficient, help reduce the cost of the batteries that we're putting into our boats, help advance the frontier in terms of what electric motors are capable of. I get very excited about all of these opportunities upstream of where we're at right now, where you can improve our supply chain, you can improve our costs, You can make what we're doing increasingly possible and compelling from a customer experience.

There are a tremendous number of opportunities. Just wait for the right battle. And despite so much opportunity, unfortunately, none of this is a given. American dynamism is far from guaranteed. Here are some of the challenges that this critical group sees along the road ahead. Back to Mitch and Ian. There are no shortcuts in the type of work that we're doing. doing. You can't just from a very first design build something that is performant and electric and

low cost and competes. There are no shortcuts to do that on the very first try. The reality is you need to assemble an incredible team. You need to motivate that team with a compelling mission. And then you need to actually put in the work over the next years to go develop the core technology that enables what it is you're trying to go do. It took SpaceX many years to accomplish what they were doing. It has taken us several years to get to the product that we have in the market today. And I expect for the whole class of American dynamism companies, there are no shortcuts. This is hard work. It takes sweat equity in order to be able to accomplish what we want to accomplish. And it's still motivating nonetheless. Space is really hard, right? When you put an asset up

to space, it's usually a one-way trip. You're not able to go up there and fix it, so it really has to be right the first time. And coupling that perfection with the idea of we want to move faster and be more agile and take risk is something that is always very, very difficult. So specifically with American dynamism in the space industry, seeing that risk posture and that risk tolerance shift, not necessarily away from traditional risk-averse aerospace into this new space world, but the combination of the two and the meeting of the minds is going to be really critical. But also Wyatt Smith, Dr. Huff, Rahul Sadu, and Mike's Law remind us of how important it is to keep an eye on the right time horizon. Some of the biggest challenges to the future

of American dynamism is our own creativity. What we believe is possible. And allowing things that are more short-term or more divisive to block us from doing things that are hard and ambitious and important is the biggest internal challenge we need to overcome. I think especially in the context of nuclear power access to patient capital as we look towards big capital projects that last for 100 years, like nuclear power plants, that access to patient capital is critical to give a runway to those really important investments that are going to change the future of energy. Well, I think in the next decade, of course, capital is a challenge.

Right now, it feels like it's trending. the right direction to be able to focus on innovating within America. Politics, this might be a bit of a spicy take, but that's a challenge too. The wins of where the American consumer wants to focus their money or where the enterprise wants to focus their money tends to change potentially. Outcomes based on who wins the presidential election or what the sentiment is going into the midterms tends to affect that household feeling of not just how you feel inside about being patriotic intrinsically, but how willing you are.

to go around your neighborhood and be proud to be an American that day. And I think that we're in a position where that can be in flux, potentially, depending on some of these outcomes. And when there's a situation where it is in flux, I think it kind of puts the brakes. You know, it's a butterfly effect that affects American dynamism and investing in it, where if people aren't proud to solve problems for their country and be able to go out there and boast about solving those problems and go recruit for those problems and get money for those problems, that I think that can make a pretty big impact.

And I can't say that I've ever felt that there's still. I think another challenge, particularly with AI, but certainly nuclear and other technologies as well, is uninformed regulation or premature regulation, where you have to wonder, like, where are some of our policymakers getting their advice from? How do they understand what good looks like? Technology is so much more fluid today. So it is really hard to state in simple terms. It's really hard for folks. folks who aren't living and breathing and obsessed by it, just how fast things are moving. There are things that are possible today that weren't even possible six months ago. And so how do you stay current? That's a big challenge. And we're going to try to figure out, we have to figure out how to overcome that. Now that brings us right to our calls to action.

Every single one of these founders is busy at work on their mission. But there are also endless other missions just waiting to be pursued. So here is their call to action for fellow Americans. First up, Chris Bennett. How do we bring all American citizens along for the ride? With the advent of AI, with more adoption of technology, I think there's a good amount of fear around the folks who have less access to this technology are not involved in the creation of the technology,

are shareholders in the creation of the technology. And I think it's going to be really important for us to really be thoughtful around how do we continue to support Americans, especially those in need from a medical standpoint. or from a social standpoint or from an economic standpoint and continue to think about solutions that really incorporate everyone. Here's Wyatt Smith.

Right now across the United States, there are over one million openings in builder economy jobs. This is in construction. Roughly 12% of GDP is driven by manufacturing really the industrial backbone of our nation. At the same time, there's more than 15 million people who are languishing and often low income, low dignity, unskilled work. And so that matching problem

is one that technology can play a big role in helping us solve. In order to fill those roles, we need to create opportunities for people to be mobile and then ways for existing workers to be more productive. It's very important that we invest in opportunities for people to learn, to grow, to evolve, not just as children, but as adults, because that's how you create dynamism in an economy and the labor market to tackle the big challenges of the future.

Mike's law. If you have experience in education, if you have experience in defense, if you have experience in health care, there's never been a better time to start a company that attacks those problems directly. Like that subject matter expertise, it's earned. It's not something that you can read in a book or listen to a podcast or come to a couple of events. That's yours.

In finding the right folks to partner up on and make your vision, and like conversely for the folks who maybe you're a successful second or third time founder, an education or healthcare or defense, it's really important to you and you're going to take your A-plus technology game and go try to transform an industry that would mean a huge deal to America. Again, it's not something you can listen to a podcast about military vets talking about their jobs. You have to go in there and actually be with them and embed with them. The military specifically and the technology community that have so much to offer to each other. Mitch Lee. There's a lot of attention going to the software industry and the software as a service companies out there, they get a lot

of venture funding. But I think increasingly you're seeing this trend back to the physical world. That software is only as good as the chips that they're running on. Or the software enables self-driving capabilities in a car. The software enables you to go drive down your costs of manufacturing. And I get really excited as somebody that spent a lot of my career as a software, software engineer on this interplay between software and hardware. And I really throw out a call to action here for people in the software world to consider a role that ties them to the physical world. It's extremely motivating.

You're exposed to a diverse group of engineers that span not just software, but also hardware and manufacturing. And it's a mission that you can really get behind, that find that cause that you really care about. And finally, Rahul Sadu. I've been working in public safety for over 10 years, both as a police officer and firefighter, paramedic, and also working on companies in the space. And what I would hope for is that we can all figure out what it is that we share in common in terms of what we want from public safety, and that we can fall in love with a problem, which is we just want to keep our community safe, and that we can decide to disagree on a solution. But we're okay with investing time

and effort and money into finding solutions that could potentially keep our community safer with the idea that that's always going to be a better outcome than if we didn't do that. There are plenty of problems in America, just like there are in other countries. And I think that one of the things that makes America unique is that people come from other countries to come to America to solve some of those problems because the solution for those problems will benefit that individual or those teams, those families more than if they were to solve them elsewhere. We've built. alterable work system like that. And of course, there are things that we can solve domestically for people who are born in the United States. It doesn't have to be just immigrant families.

And I would urge everyone here to be proud of the fact that you can be an entrepreneur here. You can work on solving these problems. And when you have that rare opportunity to be able to solve a problem that directly impacts your community in a positive way, impacts the people that you work with, the people that you live with in a positive way, you are going to find that the reward can be often greater than just the resources you get from solving that problem. You'll be proud to go into work every day. It'll be easier to recruit people to join you in your mission, and you'll feel a lot more fulfilled at the end of the day. All right, that is all for now. I hope you're leaving this just as energized, thinking about all

the possibilities of what we can build together in America. And like I said, we will be back very soon with some incredible episodes directly from our A16 and Z American Dynamism Summit, featuring policymakers from the CIA, DOD, and Department of Energy, in addition to several founders paving the way every single day. We'll see you then.