Primes
topic on 6 shows · 9 statements across 7 episodes
American Optimist 
My First Million 
Invest Like the Best 
Sourcery 
the a16z Podcast 
TBPN
9 statements about Primes, every show
Sankar: Traditional defense primes have 9% margins and trade under 2x revenue
“These are crappy businesses. You know, they have like nine percent operating margins or something. It's, they're not, they're the value to like less than two times revenue.”
Sankar: Cost-plus government contracting eliminates risk and suppresses innovation
“The primes are just downstream of the consequence of the incentives the government gives, and I think the worst incentive is cost plus contracting. Your upside is, is capitated. You're not supposed to take any risk. The government basically pays for your R&D, …”
Ulevitch: Federal R&D overhead gives defense primes a monopoly over startups
“So that fifty million dollars comes with a ton of overhead of auditing, accounting, tons of oversight, and as a taxpayer, that feels totally appropriate, but it's so burdensome for a small company. It's almost impossible for these small companies to cope with …”
Asparouhov: Defense reconciliation funding largely serves legacy primes over startups
“Like a significant amount of that reconciliation package has a bunch of line items that are currently only possibly be served by traditional defense contractors and like the primes.”
Yudis: Defense prime contractors face the same software problems as commercial automakers
“Actually, the primes, broadly speaking, have the same problems that the commercial side has.”
Lowery: Traditional defense primes invest minimal internal R&D outside DOD programs
“Everything they do is tethered to, kind of, direction from the DOD, and so they do very little, like, internal commercial innovation. There isn't a lot of internal research and development dollars spent on pure innovation that isn't tethered to a DARPA or some…”
Lowery: Only single-digit billions of DoD budget are flexibly reprogrammable
“What people don't say that when you boil it down to what actually is reprogrammable, it's a tiny fraction of that. It's like, I think the army has maybe a hundred and fifty million, a billion, I'm sorry, a hundred and fifty billion dollars or less to do anythi…”
Schimpf: Traditional defense primes refuse firm fixed-price contracts after heavy losses
“Actually a lot of the primes right now are saying they will not do firm fixed price. Contracts anymore because they've often taken a significant loss on most of the programs that they're doing with this.”