What’s next for European defense autonomy

Danny Crichton:
Hey, it's Danny Crichton and this is the Riskgaming Podcast by Lux Capital. We spend a lot of time on this podcast talking about American security, whether it's Anduril or some of the new primes, the old primes, shipbuilding, terrorism, whatever the case may be. We don't spend a lot of time though talking about Europe, but over the last couple of years since Putin's invasion of Ukraine, European defense has become ground zero for both US investors, European investors, and technologists all around the world.
I wanted to go deeper into this, and so I decided to bring on my good friend Eric Schlesinger onto the program today. He's a general partner of 201 Ventures, a European seed fund focused on the defense sector based in Madrid. We're going to talk about European defense, the war in Ukraine, how different companies focus on different countries as they focus on shipbuilding, aerospace, hypersonics, military equipment, et cetera. Then we're going to talk about wood, because Eric is super interested about forests and that's super important to the European story, so let's dive in with Eric Schlesinger of 201 Ventures.
Eric, welcome to the show.

Eric Slesinger :
Thanks, Danny. Excited to be here.

Danny Crichton:
You and I have been friends a long, long time. It's actually, I don't want to calculate because that scares me. My birthday is this month and so it frightens me and it gets very depressing, but we've known each other a long time. We both have the shared interest around European defense, European sovereignty, nation state development. We're in the middle of 2025. A lot of stuff has happened in this world. If you look back two, three years ago, it was a dead world. I'm thinking pre-Ukraine February 2022. Now, it seems like there's been a huge title shift from investments in defense nation. States are talking about this. You have France, England. At the same time, it feels like we're hitting the middle wall. People have been very excited. A lot of investments coming in. A lot of American investors have shown up into the defense industry, but now is like what's next? And so I'm curious because you're on the ground, you're all across the continent. What are you seeing live from your point of view?

Eric Slesinger :
Danny, by the way, I remember what sparked the connection. Originally we were both in a, and this is relevant for this, we were both in a virtual RISC-V conference.

Danny Crichton:
Oh, is that where it was?

Eric Slesinger :
Yeah.

Danny Crichton:
Was this back when I was covering semiconductors?

Eric Slesinger :
I think it was.

Danny Crichton:
Yeah, those were good days, although RISC-V is still around.

Eric Slesinger :
It is still around.

Danny Crichton:
It's still kicking, still doing well.

Eric Slesinger :
It is still around, and that was right around the time when the foundation had moved from the US to Switzerland to appease the sponsors in East Asia. That's what it brought us together. But to your question, I think you're right in the assessment that right now the boat is pointing right into the wind. I would say there's a couple of trends that have come out of that. First, there's a time lag. There's a phase shift here in Europe of the things that are happening in the US and the exuberance or attitudes of both founders and investors and government customers is phase shifted here in Europe a little bit. And so it seems consistently like all of the big changes in the US on this, whether that is founders choosing to build in defense. Let's isolate Andrew for just the sake of that argument because I think Palmer was especially early there. So that's one thing that's shifted.
The second thing is the investor appetite for that, and then the third thing, piece of the puzzle of course is the government customers that are buying and willing to be the customers of first resort. That I would probably describe mostly as the shift from dual use to defense first and defense only companies. Point number one, phase shift on timing on than here in Europe, and that phase shift plays out in really interesting ways. There's lessons learned from the US that European founders are building into their companies. Things like being really early to hire government relations expertise rather than wait for the customer to come to you.
There's things that in European founders are watching happen in the US and doing differently. Example of that, a lot of the M&A heavy capital intensive plays in the US, I think European founders are asking if there's enough ground support for that to actually work in Europe. Are there enough acquisition targets? Is there enough capital to be formed to be able to do that strategy? I think that's going to be a little bit different. And then secondly, there's just fundamental differences that time shift has illuminated. The main one being there's not a single buyer here. You do not just buy from Ursula von der Leyen in Brussels. That's not how it works. She may sit at the table and try [inaudible 00:04:18].

Danny Crichton:
We strongly write a strongly worded letter. It's funny you're bringing this up because I was actually going to ask you about the buyer situation, right? So on one hand, I mean people always say the Pentagon is the only buyer in the United States, and that's both true and not true. You have COCOMs, you have a lot of different buyers in the universe that is the Pentagon, and so there's one set of rules that applies to everyone, so you know how to interact with those organizations even though there are different independent buyers. But in Europe, my understanding is there's not one set of rules, there's not one set of demands, which to me is either a positive or negative. The positive being if you find a customer, even in a smaller nation, you can get that contract and get it done. On the flip side, obviously you can't get to scale as easily and therefore you need government relations much earlier than maybe you need in the United States.

Eric Slesinger :
Yeah, exactly. The idea of racking and stacking your target countries, every defense tech founder in Europe is doing this. Everyone's different. You've seen one and you've seen one, and the strategy you might take to win a program with the Navy in the UK is going to be very different from the strategy to win a program with the army in France, polar opposite probably, and that is a lesson that you either recruit in early on and so you can just skip the learning and you have someone that's done it before. I would argue that the talent pool of that go-to-market expertise in Europe is fairly limited, or you take a few cycles to learn it and those cycles could be accelerated by VC money or something else, but it's still going to take a few cycles.
Then there's another strategy which I think is a really interesting one, and Europe is particularly well suited for, which is go after the tails. This is one that a couple companies I've seen are executing very well, which is go after companies and ministries of defense that do not need to buy a Mercedes. They are very happy with the Honda Accord, and they're going to use a bunch of them, or maybe a Toyota Hilux is probably a better example actually.

Danny Crichton:
This is the Germans who are very against Mercedes.

Eric Slesinger :
Yeah.

Danny Crichton:
Yeah.

Eric Slesinger :
There's going to just be a lot of Hiluxes on the field there and that for the right company is a great strategy, works in Europe. We're going to I think, see increasingly on the continent in Africa, most likely in Southeast Asia. The key of course is finding the buyers that are aligned with the European founders value sets, ensuring democratic norms, all that kind of stuff. Let's put that as table stakes, but the actual selling strategy of going to the long tail of that buyer curve is smart because you can cobble together quite a sizable top line through that, and your competition in those countries is way smaller.

Danny Crichton:
Let me ask you, I mean you're talking about ranking and stacking, and obviously different companies obviously have different solutions, different products on the market, so there's an obvious ranking and stacking if you're building hypersonics versus an aircraft versus something for ground warfare, whatever the case may be. But I'm curious from a stacking and ranking of countries, does everyone come to the same conclusions that these ones are at the top, these ones are at the bottom, or do you see across your portfolio of seed companies, do people really go all over the place? There's just different benefits depending on what you do or what access networks you have, and so those lists are very divergent.

Eric Slesinger :
There's a couple centers of gravity depending on the technology and depending on the time to development. One example on one end of it would be something like hypersonics, where right now Germany is an amazing place for that because you've got a lot of infrastructure for sounding rockets and static test fires and launch facilities and all of the downstream that goes from that, that comes from that. And by the way, you have a German government that is very willing and excited to be the first funder of this type of technology. So that's one side.
Then what's emerged right now has been different gravitational pulls to different regions for different things. For example, Nordics right now are attracting a lot of maritime activity and because of that a lot of maritime companies. Denmark, Sweden, Norway to some extent, Finland are pulling in really great maritime founders and they're using their country's natural resources and regions to help these founders test to get them in the water way faster than they would otherwise. Then you've got countries that I would categorize as access countries, those that others are looking towards to see what's happening. The UK is a really good example of this where you and I have talked about the UK budgets are difficult to-

Danny Crichton:
What a British way to put it. Mighty, it's a difficult budget.

Eric Slesinger :
It's a challenging environment. Even with that, everyone is going after UK procurement because a lot of people are looking at what the UK is buying, and in Europe there's increasingly companies that are setting up R&D centers in areas south and west of London for example, and hiring hundreds of physicians at each because there's strong engineering talent that has been not well served by traditional UK companies, and there of course is a political strategy to have to play in the same way that the F-35 is going to have contractors in every state in the US.
France has its own ecosystem, as you well know. It's quite unique, always has been, I think probably always will be in that the French ecosystem will always champion French companies first. As an investor, that can create some issues when it comes to exit because your buyer set is going to be limited. There are some recent examples in France where the exit scenario was capped. A company was more or less strongly encouraged to sell to a French buyer probably at the expense of shareholder value, and French founders are very much advantaged there. Being a foreign founder in France is doing it on hard mode, that's for sure. Then you've got a couple countries that are laggards. Spain is really behind.

Danny Crichton:
I'm sorry to hear that.

Eric Slesinger :
Famously behind. Even though Spain would be an amazing place to test things like hypersonics, the interior of Spain is the most sparsely populated place in Europe and has good conditions for it. You can set up a wind tunnel here, and yet the Spanish government is more aligned with other countries than many of its European allies even.

Danny Crichton:
Well, I mean I know in Spain, your telco has just bought hallway equipment all up and down. I think it's an exclusive license essentially, so enjoy your hallway equipment over there.

Eric Slesinger :
First year free, so any good luck if you're getting wiretapped in Spain right now because the first listeners will not be in Spain, they will be in Beijing.

Danny Crichton:
Yes. Well, look, we're on American equipment here and with Salt Typhoon, we're being wiretapped anyway, et cetera. I think your point is really valid though. I mean, I think centers of gravity is the right way to think about it. These centers of excellence, no company as far as I am concerned is really pan-European. People focus on home bases, they focus on areas where the talent is located, where there's traditional industry that maybe has, to your point about the United Kingdom, you are looking at an industry that thousands of people were employed by defense companies have been laid off, they've had a struggle over the years. That can include BAE and others that have reset and if you can take advantage of that talent you already have built-in political support for building that talent into good companies, there's a luck that goes right there.
I think the big question I have then is how do you think about, you're a historian like me and we love the past and we love the future and we've bonded over that drinks over the years, but the question I always have is how do you balance traditional warfare? Places where Europe has traditionally been very superior to the rest of the world for hundreds of years with all these new forms of warfare from autonomous drones to cyber security? We're making a joke about hallway, but I mean Salt Typhoon is just an extraordinary skill set that I'm not sure Europe has been able to match either on the defense or offensive side, and so how do you think about new domain space? I can keep listening to them, but versus those traditional domains that a lot of what you just were talking about.

Eric Slesinger :
Europe in my opinion is ground zero for where these new domains will be competed. You've covered the gray zone warfare on this podcast in the past with things like agricultural war and that sort of thing. Part of the thesis of the fund I run is specifically to study and identify and analyze and try to invest within these gray zones. I am absolutely convinced that Europe is the site of some of the most serious gray zone and hybrid competition and warfare for the next 10 to 20 years. The ground has been prepared, and what I mean by that is even though Europe has been on paper somewhat cohesive for the last, let's say post-Marshall plan on the long scale of things, the traditional rivalries, the traditional tensions, the reason there still is not the type of strength on trade even within Europe that there should be is because there are still long, long, long, long competition and long memory here in Europe for things that have been happening for centuries much longer than the US has even been alive as a country.
And so to me, that lack of cohesion, and I would call it the lack of for a long time, saying you were patriotic in Europe, was nearly a dog whistle for the darker sides of previous European patriotism, and that's crazy for me. I would consider myself a patriotic American. I'm also a European citizen, I would consider myself a patriotic European citizen. It's weird to me that saying you're patriotic for the European project is sometimes hard for people to say. That lets the competing powers of this crazy zone competition and democracy on one side, authoritarianism on the other side, that's very clear in my mind, it lets them pull the fabric and stretch it and create these holes where the gray zone competition can [inaudible 00:13:54]. Sorry, that's a really winding long explanation for why I think it's right for this.
One of the areas that I spent a lot of time looking at is the Arctic and Europe is really well positioned to both understand and steward the Arctic into the next couple decades of competition. Some fun history because I think it's worth mentioning, things like Greenland and the US and Denmark's long history of co-opetition, in Greenland are really just evolutions of a relationship that's been happening for a long time today. What we're seeing in the news with Trump and Eric Trump and all of the rhetoric and trips to nuke and all these other things, that is not new. The US has, since pre-World War II, been involved in Greenland. Post-World War II, the US famously built a camp under the ice called Camp Century, and by the way, man, what a time to be an Army Corps of Engineers engineer.

Danny Crichton:
Yes. Right.

Eric Slesinger :
Can you imagine your job? Okay, so the Army Corps of Engineers today is figuring out beam loading diagrams for bridges and they're doing really important stuff.

Danny Crichton:
Right.

Eric Slesinger :
The Army Corps of Engineers in the 1950s was digging ice tunnels and putting portable nuclear reactors in Greenland.

Danny Crichton:
Right.

Eric Slesinger :
They are not the same.

Danny Crichton:
Yes.

Eric Slesinger :
And it's really worth mentioning because all of these things are happening. Look up Camp Century and then you'll go down a really interesting rabbit hole for Project Iceworm, or Operation Iceworm, which was the Camp Century was the cover for this much bigger project to put a bunch of nuclear tipped missiles in Greenland to have medium range missiles against the Soviet Union. Camp Century was about 100 miles, I want to say east of Thule Air Base, which is now known as Pituffik, which is the US's northernmost air force base on the west coast of Greenland, and a bunch of engineers in the late, I think it was late '50s, early '60s, were tunneling into the ice and they set up a portable nuclear reactor and we're talking about this kind of energy today and Idaho National Lab is running experiments today to reboot this. We were doing it in the '50s.

Danny Crichton:
And now we're trying to launch a nuclear reactor on the moon. Based on the announcement this week from Sean Duffy, the acting, I think acting, I don't think it was confirmed yet, administrator of NASA, the joke in my circles has been, can we just build one on earth? We don't have to go that far. How about outside DC anywhere you want. We will take it. We'll do it anywhere. But isn't that the challenge? To me, this is, I'm not a big fan of the word decadence for a whole host of reasons. It's squishy, but isn't there a sense of, Europe has been a laggard here. It's not focused on its defense. For a long time. The Balkan Wars were in the '90s. It played a role. Different countries played roles within Afghanistan and Iraq depending on where they were politically, but over the last 20 years was an era of peace. The big issues were border security, border control, particularly around the Mediterranean, Libya, trying to protect some of the security on Europe's edges. It got activated obviously three years ago with Putin's invasion of Ukraine.
But to me, the challenge here is there's been no competition, right? Gray Zone has not triggered the sense of, look, we need to dig ice tunnels and I realize that's the United States, but dig ice tunnels, we've got to protect ourselves as this massive infrastructure that has to go and it's existential. If we don't do this, we are going to fail, which means we can't have 20 years of permitting and investigations of walrus tusks in order to figure out whether this works, they're just going to get it done. That's when we started this with this sort of question of 2025, we're three years in, I feel like there's this big rush and I think of Germany was going to have a big jump on its budget, which they passed ultimately, and that was a fight. There was an election. Now it seems to be much more in the mainstream.
We've seen a reset in the UK budget, although they're struggling under the fact that there's just no money and you're just constrained in a lot of ways. France is going through, not a debt crisis, but at six point a half percent GDP percentage budget deficit per year or it's in a really bad position. There's not this sense of, at least from what I am seeing, the sense of God, this is existential. You have to solve it, it has to be solved now. You cannot wait 5, 10, 20 years because it's just around the corner. I mean, do you feel that that's changing or is that just my American disposition of lazy Europeans are all sauntering nude on the side of the Seine? And I'm not saying I don't enjoy it. I do that as a tourist, but it's neither here nor there.

Eric Slesinger :
Among the people I get my energy from and contribute ideas to, it is changing. I think-

Danny Crichton:
The nudists on the sand, which is clean by the way, they clean it up. You can swim in the Seine.

Eric Slesinger :
That's right.

Danny Crichton:
You can't do that on the East River.

Eric Slesinger :
Yeah, minimal-

Danny Crichton:
You'll die.

Eric Slesinger :
Almost zero bacteria, yeah.

Danny Crichton:
Yeah.

Eric Slesinger :
The fact is though is that the majority of Europe is not the people I hang out with and the founders that I try to support the majority of Europe is still saying, and here in Spain especially where I lived, they're like, "Whoa, whoa, whoa, whoa, whoa. What happened to the welfare state? I thought the trade was we're going to have security and protection from our friends in the US and therefore we can spend more on welfare and social programs and that kind of thing. Why are we going 180, let alone 90 degrees against that?"
I don't know if this is reducing it too much, but as a kid who remembers 9/11 so vividly, I still do think that the US' collective trauma from all the events that preceded the global war on terror is a big part of the US understanding the current push that's happening with more global competition vis-a-vis China and Europe's relative peacetime. That's relative, right? Not forgetting obviously what's happening today in Ukraine, what happened in the nineties in the Balkans and other things, the relative peacetime of countries like Spain, which hasn't really seen much violence since the Spanish Civil War saved for a couple of terrorist attacks in the early 2000s and in the north with ETA, but for speaking like large scale death and injury, that has led to this really this valid among the populations of Europe are really questioning and a validity to this idea that this is not how we should spend our high taxes.
With that sorry state of affairs laid out. The reason I'm encouraged, at least, and the founders I talked to is the things you mentioned, the debt break being released in Germany, the stronger position of countries like Sweden that are finally saying, "Yeah, okay, forget this neutrality. We're going to join Europe, we're going to join NATO, we're going to put the whole Swedish machine against this," which is a more centrally organized machine than many people realize, and it's quite a powerful one. That makes a difference.
For the first time in a long time, the idea that why in the world does Europe have 17 different battle tanks and the US has one, why should we accept that and why should we accept the fact that a 155 shell is not equivalent to another 155 shell? They're not made equal. That's crazy. They should be, obviously. That is being challenged. It is being understood in decision-makers and government. I think that right now what's happening, the reason why we started this by saying are we in the doldrums a little bit after the initial pop is that we're entering the phase from the smaller innovation contracts to the much larger programs of record. And while that transition happens, it's going to feel slow, it's going to feel stagnant.
But what I'm seeing at least is that there are founders and companies being set up for success, and working really hard and there are government customers in the opposite side of that table that are ready to actually get those larger contracts going. Famous last words, but I think what we're going to see in a couple of years is the fruits of those larger contracts. It's going to challenge the European primes. It's going to show the governments that are very used to dealing almost exclusively with national primes that there is another world. If you sit in Copenhagen or if you sit in Stockholm, the idea of buying a solution from Berlin or from Warsaw is an exciting one, not a scary one anymore.

Danny Crichton:
Well, I think what's interesting here is I see the market much more competitive than in the United States. In the United States, we have five incumbent primes. They're very expensive, they're the Cadillac, they're the Ferrari. They really get really expensive at some point where the Ferrari nomenclature is probably accurate to describe them, and you have these new burgeoning people who are trying to disrupt the incumbent or would be the prime example obviously. I think what's interesting is Europe is you both have Europe or European periphery companies. I think of the Bayrak 2 and the Bayrak 2 TB2 drone that's coming out of Turkey. The Turkish arms industry is doing very, very well and Turkey's on the periphery, kind of in, kind of out.
Then you have companies like Hanwha in South Korea that have come in signing massive, massive deals. I think three alone just this year, both oceans, aerospace and tanks. So billions of billions of Polish defense dollars going into South Korean hardware. That's a mix of I think South Korean manufacturing and then Polish local manufacturing to finish it and bring it together. The price of these to your earlier point is so much more competitive than the US.
And so one of the interesting, I guess optimal points or optimism points is, yes, the budgets are smaller, but the Europeans understand that and they're having to balance against welfare. And so suddenly, the Pentagon's budget is a trillion dollars of jobs welfare across 435 congressional districts in 50 states. In Europe, people are saying, "Look, we have a welfare state. We want to fund that directly. We don't need the defense necessarily to fund a welfare state. We have a welfare state. It's amazing." And so you have a little bit more of focus of cost efficiency, trying to get the best bang for the buck.
I do think that, I don't want to exaggerate, but the Pentagon does not get bang for the buck. I can imagine a world in which even though the budgets are smaller, ultimately the final effectiveness and the lethality of the force that you're getting on the other side of that may actually be quite competitive. We can't get rid of any program in the United States, the littoral combat where pick these programs that the military asked to go away and they will not go away. I feel like that just doesn't have, the constraints of Europe protect you a little bit from that sort of model.

Eric Slesinger :
Yeah, Europe has unbundled it. It is an unbundled pricing model here where you do not have to figure out what percentage of this defense contract is a jobs program. Jobs programs are already taken care of by jobs programs, and a defense program is just a defense program, and that clarity is nice. I think there's also a real pride, a real pride in exquisitely crafted engineering product for few euros as possible.
I don't know if that comes from the high craftsmanship, French luxury industry or from something else, but there's real pride of that in Europe of the focus on craft and value that you will be able to much more easily pick a la carte from Europe. Whereas in the US, you have to do a prix fixe menu to get your whole meal. I am of the position that I think a lot of people want to buy a la carte right now, the things you mentioned with the South Korean cooperation is really interesting. I think Europe still has a huge edge on things like shipbuilding. Everyone sleeps on European shipbuilding. This is the cradle of shipbuilding. It is. Europe is really-

Danny Crichton:
The triumphs of Greece crossing the Aegean Sea.

Eric Slesinger :
Yeah.

Danny Crichton:
I played Civilization V, VI. Well actually, III or IV. I'm dating myself. I actually think I played Civilization II, but let's not remember. I told you we're not going to remember that it's my birthday this month, so let's just not get into that.

Eric Slesinger :
But if you were designed, I mean, okay, let's say you were to design a game of Europe, right? Europe has shown time and time again that, I mean the Venetian arsenal is a perfect example of this where it has perfected the method here on what has now become a manufacturing line, and it did it way early, and it did it to a degree that it was sustained for quite a long time at a massive, massive, massive scale. I am very optimistic actually in things like shipbuilding right now obviously are in vogue in the US because it's a glaring beeping red light that it's an issue. And meanwhile, the Finns are just hammering away in the Helsinki shipyard to build new icebreakers with partnership from experts in countries like South Korea. Other shipyards in Europe are ramping back up. The Italians in Trieste have never lost this art and the skill. I do think that that is going to be a place where Europe can still win, and this is another one of those centers of gravity.

Danny Crichton:
Well, I can tell you, I will shit on American shipbuilding all day long, so we can always open that conversation up at some time. I'm a little surprised, I mean, I guess I don't think of, I'm so focused on the commercial tonnage statistic. You look at China's, China's selling 55%, 60%. Korea is 30, and Japan and vaguely the US is somewhere else and we build one ship every seven years in this country, and so some of the statistics are pretty bleak. We're building aircraft carriers faster these days, I think with Gerald R. Ford class. But I do think to your point, there is this long historical legacy you have talent, and I always just go back to the talent piece, which is we lost talent in the United States. We just don't know how to build.
And most of the time, we don't lack for coast, we don't lack for littoral spots to host shipyards. You can go literally to the Navy Yard here in New York, which is in Brooklyn, which is now a fancy startup hub. Very, very pretty full redevelopment project, but this was the shipyard of the world at the time. I mean, we won the Atlantic Theater from New York and we won the Pacific Theater from San Francisco in Oakland. We literally have employer-sponsored healthcare thanks to Kaiser and the shipyards in Oakland, and that's where it comes from. That's the history of healthcare in the United States is shipyard workers in World War II turning out ship after ship after ship after ship, they're getting injured and there had to be some system of protecting them. We have lost that skill, and I think generationally we've lost it, and so it's very, very hard to regenerate. My sense is Europe has more of those skills latent, it's been underutilized, and so it's much more easy to bounce back if people are still walking around with this in their minds versus not.

Eric Slesinger :
It does. I fear it's a couple things. So one, that population is aging. It really is. Look at the Mittelstand in Germany and the people who are working in those facilities. It's amazing work, but there is not the same regeneration of talent coming through the door from vocationals. It's not nearly enough. And two, my other fear is that we do things like plant a whole new forest of oak trees hoping that in 200 years we've got enough tall old growth trees for new masts for ships, just like the French did in the late 1600s. And then all of a sudden there's steel and you don't need those.
Europe I think in some ways falls into this where it's the ability to be a collective force right now, but maybe not the same willingness to think about how we actually can just look at what it's going to reinvent into by the time the resources come to fruition. That keeps me up at night. I don't know what that looks like today. If I did, I would support it, invest in it, find founders building it. I don't know what it looks like. I think it's hard, obviously, it's really, really hard to predict.

Danny Crichton:
You've been very obsessed with forests recently. You've brought it up multiple times, and you are stricken at night awake, eyes wide open, staring at the ceiling, thinking about forests and wood. I joked about triremes. We have moved on from the trireme and the Spanish caravel, but I get what you're saying, which is to me, this is a question of multi-domain. I think of less of, are tanks going to fundamentally change? Are they going to amount make of steel? Is it going to be some sort of fancy material? And I'm thinking of, I don't know, Fantastic Four, some sort of Marvel film and they're all going to have, I don't know what the materials are in the films. There are 37 of them, I don't know what's going on anymore, but I worry less about this and more of a, will tanks even matter in a world of autonomous warfare and drones that have amazing motors who have ridiculous ranges thanks to high quality battery technology?
I wrote about Northvolt, and I'm sure you followed the story as well of this amazing company over many years, was supposed to be the national, really the continental champion, we don't use that phrase a lot, but continental champion of Europe for batteries to compete with BYD and some of the larger Chinese and Japanese companies, and it went bankrupt in November last year. I don't know, I actually haven't followed the story in the last couple of months. Maybe the detritus and it's come through the bankruptcy and it's being reset and the captain, I don't actually know, but it seems to me like Europe is not going to have a battery champion. And so to your point, I guess it's less about, I don't know, pirogues and large sticks and going to steel and much more of a, well, steel won't matter in a world in which if Russia can produce 50,000 drones and just kamikaze them into your fleet, then does anything matter?

Eric Slesinger :
My fear is that, and the equivalent, and I do stay up thinking about trees, by the way.

Danny Crichton:
It's good. You got to walk around, you got to get lost in the forest every once in a while.

Eric Slesinger :
I'm an avid woodworker, I have a love for trees. I think in a different world I'd be an arborist or something. But the analogy of it that I think what keeps me up at night is thinking about are we investing and spending a lot of turns right now on a technology that is going to completely be wiped out and changed by just a change of doctrine? And that doctrine, I think is being rewritten on a daily basis based on advances in artificial intelligence. In many ways, doctrine has not changed that much militarily, it's just maybe the vehicles with which it's carried out have changed a little bit. The speed of it has changed a little bit, but the overall doctrine of things like air denial, of things like fundamentals of a recce strike complex, they haven't changed that much in 50 years. Yes, the offsets have bounced them along the borders a little.
The offsets have changed the way that the doctrine is carried out in terms of speed or force. I am really interested in seeing what doctrine is going to look like in 15 to 20 years once we really have our hands around AGI, once we have our hands around what it looks like to simulate a war before it's fought much more accurately. I think it's going to change doctrine around diplomacy, I think it's going to change doctrine around what it means to have a war fighting force in a country when it's definitely not going to have as many people in that. That's what keeps me up at night, and that's when I say we're planting forest right now that might lead to the French by the way, that finished the end of that story is that all those trees are just, it's what's going into French wine barrels is far from-

Danny Crichton:
I am the beneficiary of the overinvestment of defense technology having had multiple bottles of wine in the last couple weeks.

Eric Slesinger :
Yeah, so if you've been doing-

Danny Crichton:
Lots of writing going on.

Eric Slesinger :
Nice Bordeaux or Burgundy wine, you can thank Jean-Baptiste Colbert from the 1600s.

Danny Crichton:
I like the notes.

Eric Slesinger :
The doctrine thing is really interesting to me. I don't know what it's going to look like.

Danny Crichton:
I think that's what we try to do with a lot of the Riskgaming stuff. So when we do Riskgaming scenarios and we design them, develop them or just walk through how we would design or develop them. I mean that's what we're oftentimes trying to encapsulate, which is clearly the world is changing, there are new technologies coming together. Everything could change, nothing could change. It's not obvious. It's warfare in some ways hasn't changed at all in thousands of years. And not to go back to our old strategist friends, but the character of war versus the nature of war, and is this a fundamental essential difference or is this just a new sheep's clothing on what's traditional warfare?
To me, the thing that I worry about is actually less AI, which to me is just about speed and there's this arms race around you want to keep humans in the loop and safety and all this sort of stuff, but there's going to be this tension between competitors of if I can be just a little bit faster with a little less human in the loop, I'm always incentivized to move on. There's just classic game theory and I actually just don't find that very interesting because it's very obvious to me.
What I think is more interesting and less obvious is gray zone warfare, which is the way that we affect populaces or the polity is very different. So as an example in the podcast, we had Daniela Richterova last year on the podcast talking about Putin's gray zone warfare across Europe. And it's something like we're going to put coffins underneath the Eiffel Tower, remind people that death is imminent, and you can do this by paying people 50 bucks on Fiverr. You put up graffiti, you can sabotage a building. She has price points, we had it on the podcast, but she had price points of people were willing to burn down a building for 500 bucks. And to me, I think it's very easy in our world, we're surrounded by founders, we have brilliant AI founders all around us who are leading the charge here. And so I'm in these rooms and I'm like, "Wow, this is crazy. We're going to have super intelligence next year," and all this sort of stuff.
But to me, the stuff that actually is corrosive, the things that really change warfare are will people even want to fight? And for a couple million bucks. I mean, we're not talking trillions here, we're talking strategically thoughtful interventions where a couple bucks here, a couple bucks there, and suddenly instead of having 90% patriotic support for a tough war, tough conflict, you're at 20%. There's no support. Morale is low. And that worries me a lot because it's something that's very hard to compete against. And if you ask about gray zone warfare over in the DC world, it's still, everything's black and white still, right? There's hard physical and there's safety and defense, but we don't think about this kind of psychological, actually, you can mold, and I do think China, Russia and others have a much better facility of that because it's asymmetric and they have to fight asymmetrically.

Eric Slesinger :
I completely agree. I mean, let me give you some examples of what it looks like here just because it's getting so interesting and it's getting creative to the point where you just wonder what's going to come next. So the Russians were alleged to have messed with a Finnish water supply, and you can think. Let's, with that as the headline, unpack that a little bit. First of all, the fact that it was a headline means it doesn't really even matter if they did or not. The fact that people are questioning whether their water is safe to drink, which is one of very few things that no one really questions anymore if you live in a first world country, now the Finns are.

Danny Crichton:
You clearly have never met an RFK Jr. voter. You get that fluoride out of my tap water.

Eric Slesinger :
Yes, that's right.

Danny Crichton:
I'm kidding. Well, I'm not kidding, but yeah. Yeah, no, yes. Okay, so it's a little postmodern and this is actually what's very interesting, right? Empirically, it doesn't matter if it's safe or not. Now there's a question. Now I have a lack of trust in government. Are they providing me, oh, maybe it's not safe. Maybe it's not safe. They're intentionally trying to poison me, which is one thread. Another is they just aren't good at keeping it safe, so now I need to buy bottled water. Now I have this additional supply, additional cost that didn't exist before, a whole new set of logistics. And that could be done for 50 bucks.

Eric Slesinger :
Yeah, exactly. And then let's go one more. Let's take the first derivative of this. Then you say, "Well, actually we didn't, but your newspaper is penetrated," and so then do you trust anything you read in that newspaper anymore? All of a sudden you have gone from a easy influence campaign on a water thing to then a much broader attack on the veracity of what you're seeing in the press. And then that starts to ask questions about the validity of the fourth estate in general. You said the right, it's asymmetric. It is such an asymmetric approach that you can explode it in all these different paths like threads you can take. And so if you are a creative director of this gray zone warfare, my God, you have a blank canvas right now to do really interesting stuff and you probably are going to get more eyeballs on it and get into more people's heads than you ever could before just because of how quickly information is proliferating and how easy it is to get an idea into the populace here.
This is going to continue, and it's going to be things like water. It's going to be weaponized migration. It's going to be, as you had on the podcast previously, and by the way, that weaponized migration is for folks who haven't seen it, these are on the borders of Belarus. It sounds so silly, but a fence being cut and all of a sudden pressure exerted on neighboring countries with very much the hand on the button in the middle of the negotiation at a diplomatic level to say, "Well, this could stop right now if you were to come around." It is going to be agricultural and food supply risk. It is going to be freedom of travel and freedom of movement in Europe. It is going to be financial freedom. Are you able to move your money around the European continent as you are used to today? And can you be confident in the system moving the money?
It is going to be things like alleged targeted health attacks where if you're a susceptible to this or that you have this or that genes, and by the way, this is very much probably more of an influence thing than an actual real world thing, but that gets into the psyche. And so I think right now people think when they think gray zone warfare, they think, oh, it's like a rigged campaign or a arson at a warehouse or an Ikea. Real story by the way, the Ikea one. Devastating by the way if you're, it's like, man, what a way to hit all of the 20 and 30 year olds at once. You've really put people in the world of hurt.

Danny Crichton:
That might be the only thing that actually triggers Gen Z to show up at the battle stations.

Eric Slesinger :
Yeah, pitchforks.

Danny Crichton:
The Ikea furniture is yes, but the pitchforks will come from Ikea. You'll first have to construct them with 25 parts with the little guy with the weird nose that's always in all of the brochures. I mean, look, I, was just reading, so Giuliano da Empoli, Italian political scientist, writes in French. He's one of my favorite political scientists. He has three books I've read. He has a whole bibliography, but one was called The Chaos Engineers in English, which is about Putin would be a good example but there are a number of these where, look, it's not just reducing trust, it's just creating chaos.
As democratic societies, we're already chaotic pretty much as built into the system, and so we actually do not have the ability to absorb a lot more chaos into the system. You can't respond to things fast enough. There's not consensus on what to do. So there's a water security crisis. You have the environmentalists are up in arms. You have the people who weren't trustworthy of the tap water in the first place, and so there's no way to build consensus and it actually creates division. And this is a specific political strategy.
His second book that I read was called The Wizard of the Kremlin, which is just exclusively about Putin and how he does this and his need for sign of security and stability at home by creating instability abroad and why that's so effective and how he does it on the edges of the Russian Empire. And then he has a new book that just came out a few weeks ago, which I happened to pick up at a French bookstore in London last week, which is called The Hour of the Predators.
But the big focus on that book is just the speed of action of political action that what people need in a world of which technology is moving faster is artificial intelligence allows you to make decisions quicker, is like you look at a debate in Congress, you look at the budget in France right now, and it's like, look, we're through multiple prime ministers. The budget hasn't been figured out because there's these fundamental questions and democracy is supposed to work, which is to say, "Look, these are big questions about what is the nation state? What is social welfare? How much should the state guarantee who's helped, who's not?" These are not decisions that should be made in an hour. Obviously, they should take some time and part of building consensus is I have my stake in it. I get to vote, I have a response. Unfortunately, you also live at a time when you can't take three years to figure out the budget, and that used to be true of Europe and less of the United States.
These days, even the Defense Department's budget in the United States is not a continuing resolution. We can't agree on what the defense budget to be. I think there's more and more competitors around the world that see these divisions and understand that, look, if we can just create less of a bipartisan must pass consensus around the Defense Department budget, which does not cost a lot of money, suddenly program costs go up because every prime needs to budget an extra 5, 10, 15, 20 percent of their budgets because we don't know if we're going to get paid this month, next month. We don't know if it's going to be on continuing resolutions, IOUs, programs have to pause for four months and they get to restart.
There's a lot of costs associated with that, and so I do think that he as a political scientist, but I think it's a good example of Europe and this tension abroad of how do you keep these systems that are robust, that are democratic, that offer people the ability to have feedback systematically into their government, their way of life at the same time are quick and responsive and they're saying, "Look, there's an emergency. We have to make a choice and we should all come together in a week." Have a big seminar where we all have a city on the hill, a mount, Boston style, 1755 or whatever, but then you have to have a boat and then you have to move on and go forward with it. That I worry quite a lot about. That's what keeps me up less about wood. Not a woodworker.

Eric Slesinger :
Talking about wood.

Danny Crichton:
You know what I worry about? I worry about the youth not drinking French red wine, which is the fastest declining alcohol sale in the world. It's down 96%. French old vine wine is dead. It's going away. If you like high tannin wine, drink it now, it won't be here in 50 years.

Eric Slesinger :
You heard it here first.

Danny Crichton:
Yeah, I heard it here first. All right. I have just spoken, spoken, spoken. Eric Schlesinger, thank you so much for joining us, we are up on time. I really, really appreciated you being here.

Eric Slesinger :
Thanks, Danny. That was fun.

‍