Closing Bell - Manifest Space: AI & Autonomous Warfighting with Shield AI Co-Founder & President Brandon Tseng 1/2/24

Episode Date: January 2, 2025

Shield AI has had a big year: the $2.8 billion startup’s AI technology was used to autonomously fly F16 fighter jets, rescue Israeli hostages, and detect Russian missile systems in Ukraine. Brandon Tseng, the company’s co-founder & president says a military transformation is occurring, and that international forces are moving faster than the U.S. in adopting new technologies. Tseng joined Morgan Brennan last month from the Reagan Nation Defense Forum to discuss the future of warfare, a new collaboration with Palantir, and what he’d like to see from the incoming Trump administration.

Shield AI had a big 2024. The defense tech startup equipped F-16 fighter jets with its AI pilot to dogfight autonomously, even flying the Air Force Secretary in one last May. The tech was also used in a quadcopter to help rescue Israeli hostages. And the company's own autonomous aircraft, the VBAT, was deployed by Ukrainian special forces to jam communications and find Russian missile systems. Brendan Tsang, Shield AI's co-founder, president, and chief growth officer, says a global military transformation is occurring

and that international forces may be moving faster than the U.S. in adopting new technologies. I actually would draw the parallel to the compute industry where the United States went from desktops to laptops to mobile computers. Much of the developing world, they skipped desktops, they skipped laptops, they went straight to your mobile phone. You're seeing that with the defense analogy. You're seeing that with our allies. The United States, we went from fighter jets and aircraft carriers to reapers and predators. And now we're moving to this world of intelligent, affordable drones, whether they're air, land or sea drones. A lot of countries, they don't have this legacy military force structure and they're going

straight to the intelligent, affordable drones in the same way these countries went straight to mobile phones. In an interview at the Reagan National Defense Forum last month, the former Navy SEAL shared his thoughts about working with the Pentagon and what he'd like to see from the incoming Trump administration. It's a lot like what Henry Ford used to say. If I asked people what they wanted, they'd be asking for faster horses. One of the challenges with the DOD is they've been asking quite literally, like you can see it's like this aircraft is faster than this aircraft. They've been asking for faster horses. And so they need to get out of that

mentality, out of that paradigm. They need to tell industry what the problems are and then have industry innovate and solve to those problems. On this episode, Shield AI Tsang discusses the future of warfare, a new collaboration with Palantir, and whether an IPO could be in the cards for the $2.8 billion startup. I'm Morgan Brennan, and this is Manifest Space. Our mission at Shield AI is to protect service members and civilians with artificially intelligent systems. In pursuit of this mission, we are building the world's best AI pilot. The easiest way to think about an AI pilot is self-driving technology for unmanned systems. Why is that important? It enables unmanned systems to fly

or maneuver without GPS, without communications. It also enables the concept of swarming. And so we've put this AI pilot on a quadcopter to go inside buildings ahead of clearance forces. That's been used in Syria, Iraq, Afghanistan, most recently used in Israel to rescue hostages. We have put the AI pilot on an F-16, where we've enabled these F-16s to completely, autonomously dogfight and maneuver. And most recently, the Secretary of the Air Force

flew in our AI pilot at F-16 back in May. And then we put the AI pilot on an aircraft we make, which is the VBAT. It's 120-pound vertical takeoff launch and land aircraft. It does the mission of Group 5 unmanned systems. These are $40 million, $100 million systems at 140th the cost. And that was most recently used in Ukraine by Ukrainian special operations forces, flew 100 kilometers, GPS was jammed, communications was jammed, found Russian surface-to-air missile systems. The Ukrainians called in rocket strikes on it and blew up some strategic assets. So that's the core of what we do. It's an exciting time to be in the defense tech ecosystem. And that's all this year? And

that is, that's all this year, yes. Wow, so, okay, so where's the biggest opportunity right now initially then? I think the biggest opportunity is in autonomy, writ large, and that's what our company focuses on. It is autonomy, autonomy, autonomy. We are trying to, Shield AI, one of the big things we're doing

is trying to enable other companies to develop autonomy in the same way that we have and that's a major initiative for us but if you look at the way that militaries are transforming and this is something that i'm going to be talking to a lot of the congressional folks here and a lot of the senior dod officials and the defense executives that are here this evening and tomorrow it is going to be about this transformation of the military, going from a world of very expensive, very exquisite, very vulnerable assets. These are fighter jets, these are aircraft carriers, these are tanks, to a world that is dominated by affordable, distributed, autonomous, intelligent systems. And so that's the world the military is moving towards you see that already happening in ukraine you see that happening in the red sea with the way

the houthis are engaging the united states you see that happening in taiwan in the indo-paycom area of operation but we have to move to a world where, yes, we're still gonna have a few expensive, exquisite systems. They have their place. You still need your fighter jets. You still need, you know, a handful of aircraft carriers, but you need many, many, many, many more drones. When I meet with international militaries, I tell them, look, instead of buying 20 helicopters

or 20 fighter jets, think about buying four helicopters or four fighter jets and spending the rest of your budget on intelligent drones, intelligent autonomous drones. That's where the world's moving towards. The fact that you just brought up meeting with allies and international militaries and having that conversation, do you think they're adopting that strategy more quickly and implementing it more quickly than the U.S. is? That's a fantastic question and the answer is in many ways yes. I actually would draw the parallel to the compute industry where the United States went from desktops to laptops to mobile computers.

Much of the developing world, they skipped desktops, they skipped laptops, they went straight to your mobile phone. You're seeing that with the defense analogy. You're seeing that with our allies. The United States, we went from fighter jets and aircraft carriers to reapers and predators. And now we're moving to this world of intelligent, affordable drones, whether they're air, land or sea drones. A lot of countries, they don't have this legacy military force structure, and they're going straight to the intelligent, affordable drones in the same way these countries went straight

to mobile phones. This is a conversation, this is a theme that is already emerging out of this conference and has been emerging over the last couple of weeks, particularly in light of President-elect Trump getting ready and assembling his administration and so many people from Silicon Valley, the investing world, the moment where you see true reform and you see true mass adoption of some of these software and hardware combined capabilities? I'm just as optimistic as the next person around, you know, what the administration is saying, how they're thinking about the world. But I tell everybody it's really easy to say, oh, we need to go do X, Y and Z. The hard part is execution. And what I'm bullish on and, you know, when I look at someone like Elon Musk or Vivek Ramaswamy is those guys have been operators.

And so they recognize how hard it is. And so it's more than just a talking point. They actually know that you have to follow through. So while I agree the administration that's incoming is saying like things that I think are music to a lot of people's ears from the defense tech world, from the investing community and stuff that us as Americans should be excited about, it's going to play out in the execution, and that's what matters the most. And so that's what I hope leaders don't lose sight of. You can say all the right things, all the smart things,

but what matters at the end of the day is going out there and executing. I want to go back to something you mentioned. That was the fact that the Air Force secretary flew in an autonomously enabled F-16. It was shield AI technology in the cockpit. What does it take to see that happen on a widespread level? And I ask that knowing how fierce the debate has been on roads, right, with autonomous driving. So what does it look like for autonomous flying? Yeah. Fantastic question. Again, just on a technical aspect, there's a big difference between self-driving cars and self-flying airplanes.

Self-driving cars, there are trillions of edge case scenarios. You don't have that many edge case scenarios when you're in the air. Why is that? There's far less obstacles. You have three dimensions of maneuver. Your ability to sense things is actually further when you're talking about radars, right, up in the sky, you can see much, much further than you can with a camera or a lidar on a car. And so from a technical aspect, there's a very material difference between a self-driving airplane and a self-driving car, and I would claim that the level of investment to achieve a self-driving airplane

from a technology perspective is far less than what's required achieve a self-driving airplane from a technology perspective is far less than what's required for a self-driving car simply because of those trillions of edge cases that you have to deal with in a vehicle now at the same time self-driving airplanes they have their own set of special uh requirements and that's mainly around safety of flight certification and being able to validate uh you know your systems and maintain high levels of quality assurance when you're doing that. Our work for the F-16, on the F-16 program alongside DARPA, the Air Force, and others, it was nominated for the Collier Trophy, which is given to the greatest achievement for

astronautics or aeronautics in a given year. We lost to some NASA asteroid mining effort, which, you know, that's fine and fantastic, good for them. But it was great to be recognized. I mean, that was a pretty cool project in and of itself, not for nothing. But what people don't realize is it wasn't about the AI pilot flying the F-16 against the human pilot at F-16, which was the Collier Trophy nomination. It was about doing it in a safe, certifiable way. That was what the technological breakthroughs were. Is the technology

ready for prime time? Oh, the technology is absolutely ready for prime time. It is truly a matter of how fast our government, our military want to put the pedal to the metal and make it happen. You just announced just here ahead of this conference this week, a partnership with Palantir. What does that enable? Palantir has been a great partner of ours. We've been working with each other for a long time. One of our board members comes from that organization.

Palantir is a company I've long admired. It saved my life when I was a Navy SEAL in 2013. It gave us the intelligence information that we needed to make the right decisions so that I could inform commanders what to do. And so it's been, you know, I've been really excited to be working with those guys, that company. It's an amazing culture. For us, when we look at the work that we're doing with Palantir, you're talking about a global intelligence operational picture that has a massive amount of data. And for Shield AI, we are working with edge autonomy,

systems that are operating on the edge, conducting missions completely autonomously. And so our systems, when you feed them with data that is coming from a global intelligence picture, they can better react, they can better maneuver on the battlefield at not just the tactical level but the operational and the strategic level. And then when you think about those systems, our systems then are feeding back Palantir's

intelligence and operational picture. And so it's this great synergistic effect of bringing two great products, two great technologies together. That's what I'm most excited about. How do you see this landscape? I've had these conversations before with others within, I'll call the defense tech startup community about striking these types of partnerships and basically essentially standing up what I would call sort of a new school defense industrial base. And maybe

it's a commercial industrial base with a defense element to it. Do you think that's changing as well? And we should be paying closer attention to not only the companies and the capabilities that are coming to market and going into the military, but also how they're getting there? Yeah, I absolutely think you have to pay attention to the companies and how they're getting there? Yeah, I absolutely think you have to pay attention to the companies and how they're getting into the market. And this is something that I've, one, I've worked a lot with senior defense officials, with congressional officials on. If they want to see more of it, if they want to not only double but triple,

quadruple down 10x the amount of innovation that can be coming into our military that needs to get to the warfighter. At the core of it, you have to have federal acquisition reform. And so something I testified in front of the House Armed Services Committee last month was this need to move away from a requirements-based acquisition system to a problem-solution-based acquisition system. I don't want you to tell me, to dictate requirements to me. I don't want to hear that thou shall fly

for 1,000 miles per hour or fly for eight hours. What I want to hear is what is your problem? Tell me about your problem. I as the entrepreneur, as the technology company, I want to innovate, I want to come up with a solution and I want your input as to whether you think it's a good solution or not. I tell people, look, there was never a requirement for SpaceX to land a rocket, but what SpaceX recognized was the fundamental problem was cost

of launch to access space. And so they realized that, okay, that's the fundamental problem, what's the best way to solve that problem? Let's actually build a rocket that can land. NASA, the DOD, Space Force never had a requirement saying we need a rocket that can land. And so I tell people it's a lot like what Henry Ford used to say. If I asked people what they wanted, they'd be asking for faster horses. One of the challenges with the DOD is they've been asking quite literally, like you can see it's like this aircraft is faster than this aircraft. They've been asking for faster horses. And so they need to get out of that mentality, out of that paradigm. They need to tell industry what the problems are and then have

industry innovate and solve to those problems. And that's what I think about problem acquisition, problem-based acquisition is about and why we need federal acquisition reform. Okay. Final question for you. What's the long-term plan for Shield AI? You're going to take the company public, thinking about it a different way? I'll tell you fundamentally at the end of the day, and this is truthfully what I just care about, is building a great company, building great products and delivering to the warfighter and doing that at scale and increasingly levels of scale. And so, you know, what that looks like over the next several years, who's to say what it looks like? Certainly have a fiduciary duty to our shareholders, to our board members, to our investors. But at the same time, what I

focus on day in, day out is fulfilling that mission and doing so at more and more scale. Investors do seem to be pretty excited about this mission that you're fulfilling now. I'm excited too. It is exciting. Yes, I agree. So it's an exciting space to be in. Well, Brandon, appreciate the time. Thank you so much.

That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.