Here’s Jeff Jordan on the a16z podcast:
Back when I was at Disney I started in the strategic planning group, and one of the tasks I was responsible for was building the annual five-year plan. And it was a shitload of work. I don’t know if Disney still does a five-year plan. Of all the 40 portfolio companies I support, not one does anything longer than an annual budget and that’s largely just for financial planning and performance management purposes. It’s every day or week you are constantly revising based on new assumptions, new information. That’s different.
Another difference, I think in the industrial economy, you get the 3 beer companies and four petroleum companies. Technology is winner take all against your direct competitors but not your ecosystem.
The Department of Defense should wake up and listen when business leaders say that no one does a five-year budget plan anymore. Revisions may happen on a daily or weekly basis. Yet DoD still attempts to run itself in this rigid industrial era way (called the PPBE process) when the broader economy has moved on, putting it at odds with the very companies it is trying to entice to accelerate defense innovation.
Yet there are some companies that are pouring private capital into the defense sector like Palantir, Anduril, and Shield AI. What Jordan said on the winner-take-all nature of technology, however, made me think that Palantir might win the ecosystem of DoD’s operating system. Because it’s not really a coherent program of record or anything, Palantir is still losing a lot of money and they don’t look like a major threat to the big prime contractors. But if Palantir embeds itself successfully, it will figure out how to monetize as DoD slowly shifts to software-centric operations.
*DoD’s Future Years Defense Program (FYDP) is an essential element of the PPBE process. It used to be called the “Five Year Force Structure and Financial Plan”.
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