Identifying the defense industrial base as "rotted out," Mock Industries is taking a bottom-up approach. Instead of just building platforms, it vertically integrates to produce high-performance subsystems (radars, engines) and sells them to other primes, aiming to fix the entire ecosystem.
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Major US tech-industrial companies like SpaceX are forced to vertically integrate not as a strategic choice, but out of necessity. This reveals a critical national infrastructure gap: the absence of a multi-tiered ecosystem of specialized component suppliers that thrives in places like China.
The push to build defense systems in America reveals that critical sub-components, like rocket motors or high-powered amplifiers, are no longer manufactured domestically at scale. This forces new defense companies to vertically integrate and build their own factories, essentially rebuilding parts of the industrial base themselves.
The Under Secretary of War's primary job is not just to fund technology, but to actively cultivate an ecosystem of new defense contractors. The stated goal is to create five more major companies capable of challenging established primes like Lockheed Martin, fostering competition and bringing new capabilities into the defense sector.
The US defense industry's error was creating a separate, "exquisite" industrial base. The solution is designing weapons that can be built using existing, scalable commercial manufacturing techniques, mirroring the successful approach used during World War II.
The era of large prime contractors owning an entire system is ending. The companies that will win are those who are highly interoperable, collaborate with other vendors, and integrate best-of-breed capabilities with a low-ego approach, focusing on delivering a mission capability rather than a standalone widget.
The current conception of the defense industrial base focuses on large primes like L3 and General Atomics. However, 98% of US manufacturing is done by small businesses that are not integrated into the defense supply chain. A key investment would be creating a pathway to bring these smaller, agile companies into the fold.
The most likely exit for a defense startup isn't necessarily being acquired by a large contractor. By developing a capability that can be adopted across multiple service branches (e.g., Navy, Army, Marine Corps), a startup can significantly expand its market. This "joint solution" approach creates more runway and strategic options.
Zipline had to build its own components because the market only offered two extremes: cheap, unreliable consumer drone parts or prohibitively expensive military-grade systems. This "automotive grade" gap for reliable, cost-effective components forced them to vertically integrate to achieve their performance and cost goals.
Traditional defense primes are coupled to customer requirements and won't self-fund speculative projects. "Neo primes" like Epirus operate like product companies, investing their own capital to address military capability gaps, proving out new technologies, and then selling the finished solution.
The go-to-market strategy for defense startups has evolved. While the first wave (e.g., Anduril) had to compete directly with incumbents, the 'Defense 2.0' cohort can grow much faster. They act as suppliers and partners to legacy prime contractors, who are now actively seeking to integrate their advanced technology.
