Jan 15, 2026 · 44m · no-priors
The Largest Untapped Market Inside U.S. Defense | Emil Michael
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Under Secretary of Defense Emil Michael joins No Priors to discuss modernizing the Pentagon by accelerating commercial technology adoption, overhauling procurement for startups, deploying enterprise AI, and hardening domestic industrial supply chains against near-peer geopolitical threats.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 23% of the talking time here. How this is scored →
The hosts as informed peer 4.5 Guest teaching 4.4 Guest disagreement 1.1 The hosts pushing back 1.2
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 24:55 Emil pushes back on software-only startup assumptions
Emil cautions founders that prototypes are insufficient, emphasizing that defense contracts require demonstrated scaled manufacturing rigor.
Hardest push from the hosts ▶ 41:10 Elad challenges OSC's focus on existing companiesElad directly pushes on Emil's explanation of OSC lending, arguing that capacity expansion should include funding new startup entrants alongside existing firms.
Biggest teaching moment ▶ 20:45 Explaining the legacy RFP barrier for startupsEmil educates listeners on how legacy 300-page specification RFPs structurally favored prime contractors over innovative startups.
The host holds their own ▶ 36:25 Elad analyzes non-market state subsidiesElad demonstrates economic expertise by explaining how adversary subsidies prevent free-market price discovery in critical minerals.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Preview: China's Buildup and Defense Disruption | 4 | 4 | 1 | 1 | Friendly introduction where Elad asks about the restructuring at the Pentagon, and Emil outlines the consolidation of DARPA, DIU, CDAO, and SCO under his purview. | |
| Bringing Silicon Valley Execution Speed to Federal Bureaucracy | 4 | 5 | 1 | 1 | Sarah and Elad ask about translating high-speed tech culture into government bureaucracy; Emil explains narrowing 14 critical technology areas down to six focused sprints. | |
| The Shift from Legacy Platforms to Autonomous Drones | 5 | 4 | 1 | 1 | Elad inquires about the procurement shift from legacy platforms like aircraft carriers to distributed autonomous drone swarms, prompting Emil to forecast budget reallocation. | |
| Cross-Service Prioritization Across the Military Branches | 4 | 5 | 1 | 1 | Sarah asks about cross-service prioritization and genai.mil; Emil details how a tiger team of tech veterans deployed enterprise AI across secure networks in 60 days. | |
| Three Pillars of the Pentagon's Applied AI Strategy | 4 | 5 | 1 | 1 | Elad asks for the structure of applied AI initiatives; Emil categorizes the strategy into enterprise workflows, multi-source intelligence fusion, and wargaming simulations. | |
| Five-to-Ten Year Vision: Embodied AI and Bureaucratic Automation | 4 | 4 | 1 | 1 | Elad asks for a 5-10 year AI outlook and Sarah asks about talent acquisition; Emil explains recruiting technologists through programs like US Tech Force and DOGE. | |
| The Arsenal of Freedom Tour and RFP Procurement Reform | 4 | 4 | 1 | 1 | Sarah asks about the Arsenal of Freedom tour; Emil explains moving away from 300-page RFP requirements toward problem-oriented proposals accessible to startups. | |
| Startup Guidance: Scaled Manufacturing and Defense Realities | 5 | 5 | 2 | 2 | Sarah and Emil discuss the realities of defense contracting; Emil emphasizes that software-hardware defense startups must master scaled manufacturing rather than just showing prototypes. | |
| Bridging the Defense Valley of Death with Strategic Capital | 5 | 5 | 1 | 1 | Elad asks about overcoming the defense acquisition budget lag; Emil explains using the Office of Strategic Capital's lending authority and DIU rapid contracting to bridge the Valley of Death. | |
| High-Demand Dual-Use Frontiers: Hypersonics, Drones, and Space | 4 | 4 | 1 | 1 | Elad asks about high-demand dual-use areas; Emil identifies hypersonics, GPS-denied navigation, and space-based defense systems as prime opportunities. | |
| Domestic Manufacturing, Critical Minerals, and Skilled Labor | 6 | 4 | 2 | 2 | Sarah and Elad push on automation, productivity, and non-market adversary subsidies; Emil agrees on foreign dumping while highlighting domestic workforce needs like welders. | |
| Hardening Brittle Supply Chains: From Germanium to Optics | 6 | 4 | 1 | 2 | Sarah references lattice materials and germanium sourcing in Montana; Elad suggests OSC loans should also fund new startups rather than only expanding incumbents. | |
| Contrasting Counter-Insurgency with Near-Peer Rivalry | 4 | 4 | 1 | 1 | Elad asks Emil to contrast his 2009 White House stint with today; Emil contrasts low-tech counter-insurgency with modern near-peer tech competition. |
Statements from this episode (30)
Michael: Department of War spends $150B per year on technology
“And the idea is to unify that across the department because we spend, you know, a hundred fifty billion dollars a year on tech in one way or another.”
Michael: DIU will increase focus on defense startups after Saronic success
“DIU's had some good success with Saronic and a bunch of other companies, and now it's, you know, we have, now it's time to do more of it, so it's more of a focus.”
Michael cuts Department of War critical tech areas from 14 to six
“So I cut them down to six after studying and I made it more action oriented. So we put sprints behind them like you would an engineering team.”
Michael: Department of War will not build proprietary foundation AI models
“The number one is applied AI. Because we're not building a foundation model at the DOW because there's being hundreds of billions of dollars being spent by the private sector on this. So how do I adapt or use what's being developed in the private sector and ap…”
Michael: Directed energy intercepts are far cheaper than missile defense against drones
“And now with all the drone warfare you see, it's much cheaper to take out drones with an energy zap Than it is to send a missile at another, at a drone, right? A five million dollar missile at a 50,000 dollar drone or something.”
Emil Michael: Russia-Ukraine casualties would be far higher without drone warfare
“Without the drone warfare in, in that area of the world, you probably would have seen way more human casualties. It's already devastating. It would have been way more devastating.”
Michael: Autonomous systems could consume 30% of defense budget within 10 years
“So, you know, in 10 years, it wouldn't surprise me if 20, 30% of the budget is, is, is spent on those kinds of systems.”
Michael: Tiger team launched GenAI.mil to 3 million personnel in 60 days
“I had some like Databricks engineers, former Databricks engineers, former Meta engineers, former AWS people, Tiger team, 60 days good, great collaboration from Gemini from Google's Gemini, who already works at Department of Warsets, some familiarity with our a…”
Michael: GenAI.mil reached over one million unique users in 30 days
“And we've had over a million people Unix use it in the last 30 days, which is kind of awesome. We've got one third of the enterprise on one model.”
Michael: Department of War deploying Gemini 3.0 and xAI's Grok
“Three point oh is coming in a couple of weeks. Then we're going to do Grok. With XAI and we'll see where we get to with the other two.”
Michael: Boston Dynamics made less AI progress than Tesla Optimus
“Which is why Boston Dynamics didn't make as much progress as Optimist did in the AI. You know, the things that started later on robotics just worked better because they were more AI infused.”
Michael: DoD Deployed DOGE Recruits to Build Defense AI Initiatives
“The talent they brought into every department could then be deployed on other projects like the AI action plan that we did with Gen AI. So, because they were already, like, Elon chose technically sophisticated people. There weren't all engineers, some were law…”
Michael: a16z's Scott Kupor Deployed US Tech Force for College Grads
“And then we have this U S tech force that, that Scott Kapoor from Andreessen Horowitz is deployed. And we were hoping to get thousands of people out of college for a two year stint, sort of make it you know, this is your service to the country as a technologis…”
Michael: US defense industrial base was unready for recent conflicts
“Defense industrial base sort of wasn't ready to provide what's necessary for the threat environment. And if you think about threat environment, what we've done in Iran, what we've done in Venezuela what we've done with the Houthis, like all just in one year, r…”
Michael: DoD is replacing 300-page RFPs with open problem statements
“We're going to change the way we buy the way we do RFPs. Even like we, for an RFP, it used to be, Here's a 300 page requirement document. Please fill it out and we'll decide if you win or lost. Now we say, well, here's our problem. We're trying to achieve this…”
Michael: China's military buildup is the largest in world history
“The buildup, the military buildup in China is the biggest military buildup in world history.”
Michael: US defense contractors consolidated from 50 in the 1980s to five
“In the eighties, there were 50 defense contractors, and they were, got merged, so there were only about five. Now.”
Michael: SpaceX, Anduril, and Palantir all sued the Pentagon for first contracts
“SpaceX and Anderil and Palantir all had to sue the Department of War for their first contract.”
Michael: Defense startups must prove scaled manufacturing capability beyond prototypes
“Mastering the production, the skilled manufacturing piece of it is the thing that startups who are selling to the Defense Department have to also prove, hire for, demonstrate competence in, and so on.”
Michael: Office of Strategic Capital has $200B at Treasuries plus 100bps
“I have the Office of Strategic Capital, which has two hundred billion dollars in lending authority low cost loans, and that both sends a demand signal to these companies that other private capital crowds around it, equity capital often, and it's, Low cost loan…”
Michael: DoD Completed Five Critical Minerals Deals in Four to Five Months
“And in the last, I don't know, four or five months, we've done five critical minerals deals, like really fast.”
Michael: DoD is Close to Making the Defense 'Valley of Death' Minimal
“So all these funding cycle mechanisms are a way to get at that valley of death. And I think we've got, we're really close to sort of pinching, pinching that. Into, to being very minimal if it exists at all.”
Emil Michael predicts major defense innovation in large, missile-like drones
“I think there's going to be, when you think about drones, not just the small drones, they just get the bigger and bigger drones that really look like long range missiles, if you will, to be innovation there.”
Emil Michael: Golden Dome is exploring intercepting targets from space
“For Golden Dome, which you've heard about, we're looking at how to take things out from space, which is a compelling, really complex, but interesting proposition.”
Emil Michael: AI foundation models and applications are sufficiently well-funded
“And then from an AI standpoint, you know, I feel like we're generally okay with the investment. I mean, there's so much money going in there that that's like a well-funded area, both the foundation models and the derivatives that are trying to do specific apps…”
Michael: 200 pharmaceuticals are on the US critical shortage list
“You know, there's 200 pharmaceuticals on the critical shortage list, because we're dependent on other
Countries.”
Michael: Shipbuilding welding jobs pay over six figures but lack workers
“I mean, the welding's jobs, we're trying to build ships here, can't find enough. And it's a job that pays six, more than six figures. In areas that are not high cost to live in.”
Michael: The US relies on China for drone brushless motors
“A brushless motor goes into a drone. We're dependent on China for brushless motors.”
Michael: The US does not manufacture fiber optic cables domestically
“I mean, you know, fiber optic cable, we don't make fiber optic cables in this country. Fiber optic, you know, basic fiber, which they're using in the Ukraine and Russia war to do drones because they're jamming and all that, and we use for telecom and all that.”
Michael: Office of Strategic Capital funds existing firms, not startups
“The Office of Strategic Capital is a little more proactive. They're going to say, we have this whole, I'm going to go find companies that already exist that do this. So it's not for startups because it's a lending facility, if you will. So they're looking for …”