Emil Michael: Iran, Anthropic and the Future of AI at the Pentagon

We're faced with the biggest military build up in history. We're trending toward artificial general intelligence, a substrate, a layer, something that'll touch everything. But we're way behind an AI at the department. You are a CTO for the Department of War. How do you take stock of where those priorities are? When I took the role, we had 14 critical priorities, areas. We got them down to six, and there were the places where I thought we had the greatest opportunity for change and for growth. There has been an incredibly public discussion about commercial AI models being used in the Pentagon. What has changed in this latest discussion? I had a holy cow moment because there were things well beyond what you've been hearing in the press in the last couple of weeks. When Emil Michael was confirmed as Under Secretary of Defense for Research and Engineering, he took inventory. What he found was a department with 14 critical technology priorities. Most unchanged for nearly a decade, written in a language so vague, no one could act on them. He cut the list to six. Applied AI went to the top. Within 90 days, 1.2 million of the department's 3 million personnel had used some form of AI. When he started, that number was 80,000. The more urgent problem was what he found inside existing contracts. AI models baked into the most sensitive commands in the US military. Under terms that could shut the software off, mid-operation. A company's internal values document he argues cannot be the governing authority for American command and control. This conversation with Emil Michael, Under Secretary of Defense for Research and Engineering, and Acting Director of the Defense Innovation Unit, was recorded at the A-16Z American Dynamism Summit in Washington, D.C. Thank you for being with us. I know every week is very busy for you, but it feels like this past week has probably been the most publicly busy for you. Thanks for joining us. My pleasure. Good to be here. Look, we're going to talk about Anthropic AI and Defense, but I think we want to talk first a little bit about you, how you got into this seat. This is not your first tour of duty and government. You have decided to be a public servant before and for a long time. For half this room that comes from the technology side, they know you as an incredibly accomplished Silicon Valley executive, highly sought after, very successful. Let's start with what pulled you into public service? How did it start? Why do it? And why take on this role now? After my first company, Tell Me Network, we had this speech recognition software, we sold to Microsoft, in '07, I needed a break from text. I applied to this White House Fellowship program, which was super cool, Colin Palo, Donald, Chairman of Joint Chiefs of Staff, General Cain had done it. It was just a cool program. It was a year nonpartisan program. And I got selected, which was awesome. And I got assigned to Robert Gates, who was the Secretary of Defense of the time. So I got to spend time in Afghanistan, Iraq, Pakistan. I got a passion for that world. And it was so new to me. And I said, someday I'll come back when I'm ready to really go. And then President Trump got elected. And I was like, wow, this is a moment where you have a disruptor at the top. And I got to see Joe, Secretary of Excess. And that meant all the problems I'd seen, there'd be a clearer way to solve them. And you could see by the pace we're moving at, the executive orders, critical minerals, new tech, new entrance, the pace is incredible relative to what it was before. So I'm excited to be there. Awesome. Well, why don't you talk to us a little bit about that you have been outspoken that the Department of War cannot operate at peacetime speed. This is kind of like our retail founders, you can be a wartime CEO or a peacetime CEO. What does peacetime speed mean? What is the problem with it? And what does winning look like? What is moving with urgency look like peacetime speed started after the Cold War was over at the Department of War. And I guess there's some famous event called the last supper where the leaders at the Pentagon said to industry, hey, there's not going to be a lot more buying of weapons systems or innovation. So y'all should consolidate and slow down your growth basically and become dividend payers and stock buybackers. And that lasted for a long time. And then the industry consolidated down to four or five primes. So then we're faced with the biggest military build up in history in China starting in the mid 2000s 2010. And we didn't catch up. So all of a sudden we've outsourced a lot of our key domestic production on many different areas. Whether it's critical minerals, batteries, a lot of the splichen stuff. And then you look up and you're like, holy cow, we've got a lot of catching up to do. So war time speed is ensuring that we're re-domesticating the critical things we need for national strength. And we are moving out on that. We have exquisite capabilities. We've got a lead in so many areas, but we have to make sure that we're self reliant in key areas. And so we're running as hard as we can on that. It was amazing to me. We work with a company called Skydeo and they were sanctioned by China. And we usually hear stories about how companies are sanctioned by the United States from doing business here. But actually if you're a company that's an important company, you need sanctioned by China. You can no longer buy motors or batteries or other really key things that primarily come from China. It stinks. And if those products make it into the defense procurement cycle and we can't get them anymore, it's a huge problem. So we've learned in our practice that it's not just the defense industrial base, but also all those precursors. So talk to us a little bit about as you stepped into the role, you are a CTO for the Department of War. How do you prioritize? How do you figure out? I mean, if you read the news, it feels like there's an endless list of things that we need to catch up on. I went and ticked the role in May. It was sworn in. But did the inventory like any new leader would do and we had 14 critical priority areas in this role. And my predecessors had 10 and then someone added four. So they're 14 and they hadn't changed in nearly a decade. So I get to look at them and say, OK, well, why are these critical? And by the way, who can remember 14 things when you're trying to motivate a workforce? And what is an integrated network systems of systems? They were sort of techno babble. So I said, well, let's study and say what's really important. And we got them down to six. And there were the places where I thought we had the greatest opportunity for change and for growth and impact on our combat power and for our industrial base. And that was a starting point. And applied AI was number one. So then we moved the Chief Digital and AI office into my group and we were able to run extremely fast with that because we're way behind an AI at the department. And we know it's penetrating the rest of the world so dramatically so quickly. And our adversaries were also using it for lots of different purposes because they have less trust in their command and control. So they want to use computers to sort of eliminate human decision making. We want to enhance human decision making. So that's been a priority and we've kind of in 90 days. I think we've had 1.2 million of the 3 million people at the department use some form of AI. That was that number was 80,000 before I started incredible. Let's talk a little bit more about why it's important to have advanced AI capabilities. Maybe some people would say, well, we've been really good at, you know, being a world power without all this AI capability. Why is it important? Can't we just focus on like making missiles and stuff? Well, I can help make missiles if you help you solve physics problems, material science problems, aerodynamics problems or opportunities. But we split up the AI sort of efforts in the three areas like enterprise corporate use cases like any big organization would do for efficiency purposes. And that's just normal that goodness, everyone's happier when you could do mundane tasks faster. And then intelligence purposes, which is we collect the enormous amount of intelligence. We have huge repositories of data at the department that's sitting there siloed unused. Imagine decades of satellite imagery that you could use to train a model and get insights and then use that to do anomaly detections. You could find out what's happening. So you take a human analyst and you increased their throughput by a thousand. And then for war fighting, we're fighting to talk about as big part of it as logistics. How do you plan logistics and find assets and two war gaming and plan operations and simulations and so on. So there's a lot of really important use cases that we could benefit from. Yeah, I think we are the beneficiaries of startups that pitch us their ideas all the time. And because it's American dynamism, we hear about companies that say, look, we're going to say 15% of the Pentagon's fuel budget through logistics by using AI. We're going to figure out how do you move the troops and the equipment and the vehicles in the most efficient way in a contested environment. So amazing amazing incredible use cases. So look, in the last week, there has been an incredibly public discussion about commercial AI models being used in the Pentagon, including anthropic, being used inside the department. You know, in the old software days, and I'm going to really be in the old software days before even SAS, people would just buy software and then the customer would use it. However, they want what has changed in this latest discussion, what has come up, what are the issues. I assume most people in this room have been following along. So we should, I think it's safe to assume there's a baseline understanding. But what have become the key issues, and why did they come up now? Well, they came up now because. As I started to look at the contracts that had been written during the last administration for the use of AI, I had a whole holy cow moment because there were things, not well beyond what you've been hearing in the press in the last couple of weeks, things like you couldn't move a satellite, you couldn't plan an operation, couldn't plan it, not use AI to execute it if it would potentially lead to a kinetic strike or something, dozens of restrictions. And yet, these AI models were baked into some of the most sensitive and important places in the US military where we do exercise combat power, central command now that's sort of air of responsibilities around, or Indo-Pay Combo air of responsibilities China or South Com, which is the Venezuela and South America, we're all using this model and there was no two vendors, it was a vendor lock situation with terms that in theory, if the model was designed to turn off when you violated the terms, could just stop in the middle of that operation and put lives at risk. So that was the one moment, I was like, okay, we have to fix this and clean this up while we're deploying this into the department. So that raised all these issues and then second, after the Maduro raid, one of the primary vendor for this had raised the question, senior exec, about whether their software was used during the Maduro raid, which is one of the most successful military operations of our lifetime, like truly an incredible operation. And that sort of surrealist, yeah. It's been a bad few months for the enemies of America. It has been, and I get to meet the guys who did that, the lead helicopter guy who got the Mellivano, it was truly outstanding American. I mean, he was shot and kept his cool, didn't tell anyone shots so that the first landing team could land and it didn't freak it out and it could have blown all operations of the courage was incredible. And when a company says, hey, was our software used there because we're not sure we'd like that. Chill goes up your spine. It's like you're at a coffee shop and some strangers are like, hey, so your kid at school, yesterday playing cake ball and you're like, who are you? What? So that set off a series of events of, whoa, are we single threaded on a vendor who's concerned about how we're using the software after the most successful military raid? And the terms of service do not comport with the future world. We've got to get other partners in here and we've got to move. And if you think about AI is like what we're trending toward AGA artificial general intelligence, a substrate, a layer, something that'll touch everything like the internet touch everything or the telecommunications network touch everything. And to tell the users of that substrate of technology, you can't use it for legal things. Things that have come through the democratic system, laws passed by Congress, executed by executive branch in the military, which is the most sensitive part of the US government because our job is to be the strength department to protect Americans. You do have a moment of truth there like we've had, which is this, this technology, if we're losing it lawfully, the substrate has to be our choice. It can't, the software, the soul, someone's soul of their model, their constitution, which is not the US constitution, can't be dictating our command and control environment and telling generals and war fighters what to do and not do. That's right. So, first of all, I think you just shared a bunch of backstory and information that has not been readily found, I think by reading the news and following along, although probably a lot of people in this room could have guessed, but it's nice to hear that part of the impetus for this and the catalyst for this discussion was originally about making sure that you have ways to use this capability that fit in with our democratic norms. You mentioned that we have a constitution and they have a constitution. It's kind of crazy that a company even has a constitution. There's not that many companies that have their own corporate values, yes, constitution. Right, no. Corporate culture, corporate values for sure. I don't know how many have a term that they say this is our constitution, especially when there's often a revolving door of executives at companies like who knows what they'll think tomorrow. Talk a little bit about the role of democratic oversight, elected leadership that sort of guides the process that we have in this country for deploying AI capabilities, for national security for defense. Yeah, so when it comes to American civil liberties, there's a very robust debate historically, especially after 9/11 and Foreign Intelligence Surveillance Act, the NASA Security Act 1947. All these acts where the government has tried to balance civil liberties and the good news has been like robust debate on it. Maybe those laws and rules haven't been updated yet, maybe they should be. But if we don't trust that process and we're like, well, the laws are behind the tech. So I'm going to make a decision that impacts 3 million people in the department and then 350 million people in the country. You don't get to do that, right? If you believe in the system, if you don't believe in the system as imperfect as it is, then then what do you believe in? Right? Then you're not, you're taken upon yourself to kind of be God and that's not something that I want, even though I'm a small government free market person, you still have to have the government has to have a monopoly on violence to protect its country. America is just as an idea, but it's also a nation. And it can only be protected to protect the people if we have the best tools and use them lawfully and Congress is responsible for dictating that law and we're responsible for writing regulations on that law. And you know, we've got 40 page internal directives that have been there for years about autonomous weaponry and we're looking at you creating Russia and seeing what's happening there. And then we're looking at the Chinese stealing American models taking the guard rails off and potentially using those against us. So am I going to have my arm tied behind my back against the same model that has been stolen by the adversary. It's sort of you get into or well in sort of situations where it's hard to have anyone make sense of it and sort of be on the other side of that question. Yeah, absolutely. I think the point about our adversaries as well may they are not having this debate. They're they are full steam ahead. How do we, was there anything more you want to share about where we are today in the AI? Well, where are we today in the AI debate discussion and like is this put to bed or are we is there a long road ahead? I think there's still there's still work to do. And essentially you have four companies that you could call frontier companies. And then you have the sort of major league baseball roster of researchers like a thousand who they're trading amongst themselves who if you ask the leaders of these companies are so incredibly valuable that it's a very strange dynamic for companies a thousand sort of researchers who who everyone feels are vital. And how do you how do we work with that dynamic where we have enough companies engaged with us. So I'm not never single threaded again, which is a terrible gift that the last administration handed us. So we have multiple avenues where international security, or patriotic very much like the 2018 Maven where where Google didn't want to bid on the on the contract. Now Google is a great partner. You know, and so I hope some of the newer companies will learn from what Google did, which is you know, they didn't want to serve the government because that employee mob issues. But now there's some one of the government's best partners. We see the Google project Maven moment in 2018 in many ways as a galvanizing moment to actually wake up a lot of founders and builders and say, Hey, wait a minute. I actually do want the government to have the best technology and best capabilities. I do want to build. I mean, that, you know, I would say if you fast forward that gave rise to the American dynamism movement. We provided a landing zone for a lot of those founders that said, Wait, I don't I don't agree with the protesters at Google. I want first responders and you know, the men and women who defend our country to have the best technique technologies and capabilities. And I always whenever, whenever someone asks me these questions, always remind them, look like project Maven was used to make sure that we didn't leave anyone behind in Afghanistan. Like that's literally what the technology that was used in this public and like, do you not, did you want to leave someone behind like, what's the alternative? And so I think that this will also be a galvanizing moment. I certainly hope it will be for a whole another set of founders that are excited to support their country and the people that serve the government. Let's talk about the Department of War structurally inside things that need to change, you know, in order to make sure that you have the best capabilities, best technology and you get them out in the field, you know, we saw on the news. I won't ask you about it directly because you probably can't even answer. But you know, we saw photos on the news of what looks like new new technology, new capabilities, but what is changing culturally and structurally inside the Department of War, you know, obviously it starts with bringing in people to understand technology. like you, but what is changing to actually enable the Department of War to modernize? Well Secretary Higgs S. says we're on an unstoppable battle against the bureaucracy. That's not the people. It's the bureaucracy that's built up over decades that prevents new companies with new technologies from getting their concept or their product deployed in the department. So what I'm trying to do with the various tools I have is trying to create normal contracting processes, normal requirements for requirements. So for example, we used to do things like here's the thousand requirements in our RFP, a vendor would sort of fill it out and say yes, yes, yes, yes, even if it was physically impossible, the physics didn't work. Then we put them on a cost plus contract and they're like, oh, that didn't work out and change order, change order, at least for another three years of development and another couple billion dollars. So we're trying to move it to simple requirements. I need a missile that goes this far in this environment with this payload, et cetera, you industry come in with your ideas and how to do it. And then you can fight war pay for it. Yeah. And we'll buy it and firm fix price. If you make a better margin because you're able to economize this is sort of the Elon model, why he was so successful, it's basic. Well, then everyone wins, right? And the venture community is sort of very comfortable with that model, right? You bet on winners, some are not everyone's going to win, but cost plus endless and list development cycles doesn't work. And so we need faster development cycles, risk sharing with industry, clear demand signals, simplicity business. And those are the kind of bureaucracies that like every day I'm moving the debris out to try to make it happen. That's good. Like regulatory Moses. So we that to me is one of the most important things that's changed and it actually gets the founders fired up to build. What is it that the companies can do better to work with the government to work with you? You know, you've done this arsenal of freedom tour, you've visited a bunch of startups. But what is it that you need now that the government is saying we're ready to do business, we're going to make it easier to do business, we want the best capabilities. What do you need from the companies and the startups? So when you companies to and this is this is just the one thing the prime is having advantage on is not the inventiveness. It's the production and manufacturing ability to scale what they do with what they've initially built. And I think the opportunity for startups is to take the great technologies and concepts, build up their muscle on how do you build a factory and produce these things at scale and do the quality testing and all that thing, all that kind of stuff. And so you do have to borrow from the old world to do that effectively so you're not just reinventing the whole thing. And I think that's the next stage and you're going to see companies start to cross that chasm here in the next one to two years where they've demonstrated or they've faulted but then they've hired the right people and they figured it out. And then that hope hopefully encourages a lot of other companies like this can be done. And then venture capital dollars will continue to coalesce around this this marketplace which I desperately want. So I think that's the thing to consider. And there are the other thing if I'm on your side, if I'm on the new entrance side, you could always find someone in department, three million people say, man, this is great. I love it. I love you, man. I love your product. But money talks. So are they buying it? Are they testing it? Are they doing those? Are they actually pushing you through the process? Because that's the best signal of your are you actually successful because the culture there again is to never say no. And I've tried to move it to faster yeses faster noes so that if you're a startup and I felt this pain as a startup guy when you don't really know if you're getting a deal, I'd rather be told no so that I can either move on to the next partner where it does my product strategy do something and and that's what we're trying to let move the culture to and what I tell you, the young founders out there. Awesome. We're very appreciative of those efforts and it's good for the taxpayer. Last question is we wrap up here. You know, you have you have a good life. You're very successful. This is not a nine to five job. I assume you have a family takes you away from your family. What would you say to people that are in the startup and tech side of the world who are thinking about spending time working with the government supporting the government and look at you as an inspiration in somebody who who shoes they would like to to follow and steps they would like to follow. Well, I think you know, everyone can most patriots figure out a way to get back and there's lots of ways to get back. This was my way, which is, you know, I mean, immigrant, my first language was Arabic. I moved this country. I get to Silicon Valley. I've seen some and been able to participate and build some of those interesting companies around and it was right time my life to say like, okay, well, this is the way I'm going to serve my country. I want to have my kids see it so that they can see that this, you know, our system doesn't come for free. The people, they have to have builders, people who care, people who sacrifice to do it. Not to mention all the board fighters who sign up for the jobs as they sign up. This is the way I could sign up and and, you know, put making sure that they feel that for me that's incredibly motivating and ever hope everyone else who's in the, the star of world finds their own moment to do that if not in business, but after and the right point in your career and all that because we deem more people to do that because we use have government service as an honored profession. The Manhattan Project, the best scientist. Now industry has a lot of opportunities to really exercise your brain and you know, in those ways, but we can't forget that we need patriots to kind of come do these kinds of things every now and again. Well, thank you. We are so appreciative of the work you're doing and thank you for being with us today. We know you are extraordinarily busy. Thank you. As a reminder, the content here is for informational purposes only. 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