To attract innovation, the DoD is shifting its procurement process. Instead of issuing rigid, 300-page requirement documents that favor incumbents, it now defines a problem and asks companies to propose their own novel solutions.

The Ukrainian conflict demonstrates the power of a fast, iterative cycle: deploy technology, see if it works, and adapt quickly. This agile approach, common in startups but alien to traditional defense, is essential for the U.S. to maintain its technological edge and avoid being outpaced.

The critical national security risk for the U.S. isn't failing to invent frontier AI, but failing to integrate it. Like the French who invented the tank but lost to Germany's superior "Blitzkrieg" doctrine, the U.S. could lose its lead through slow operational adoption by its military and intelligence agencies.

To overcome government buyers' distrust of AI, the Navy runs use-case-specific pilots, providing side-by-side evidence of performance improvements. By publicizing success stories—like a Marine saving 100 hours in a month—they build trust through data and create a Fear Of Missing Out (FOMO) effect that drives wider adoption.

Navy CTO Justin Fanelli advises founders to stop asking to be paid for their time and instead price their solutions based on the outcomes and value they deliver. This aligns incentives with the government buyer, rewards impact over effort, and demonstrates a modern, software-defined mindset.

Luckey reveals that Anduril prioritized institutional engagement over engineering in its early days, initially hiring more lawyers and lobbyists. The biggest challenge wasn't building the technology, but convincing the Department of Defense and political stakeholders to believe in a new procurement model, proving that shaping the system is a prerequisite for success.

The military lacks the "creative destruction" of the private sector and is constrained by rigid institutional boundaries. Real technological change, like AI adoption, can only happen when intense civilian leaders pair with open-minded military counterparts to form a powerful coalition for change.

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.

The Department of Defense (DoD) doesn't need a "wake-up call" about AI's importance; it needs to "get out of bed." The critical failure is not a lack of awareness but deep-seated institutional inertia that prevents the urgent action and implementation required to build capability.