0:00

Those two movies

0:02

are so freaking good. Yeah.

0:05

It's so shocking how good Maverick

0:08

is. So many years later in such

0:10

a different environment

0:12

and then like delayed due to coronavirus.

0:14

Well the funniest thing is when it was delayed for whatever

0:17

years during coronavirus, the fighter

0:20

that Maverick is in is an F-18

0:22

Hornet, the Boeing plane. And by the time

0:24

the movie gets released, it's basically discontinued.

0:27

Within a couple of years, that's when they end of life the

0:29

F-18 Hornet for the Navy.

0:32

Did you catch the Lockheed thing

0:34

in Maverick? The skunk on

0:36

the tail of the plane? Oh yeah. On

0:38

the Mach 10

0:40

Dark Star aircraft. The

0:43

Mach 10 Dark Star. Oh

0:45

God. All right, let's do it. All right,

0:47

let's do this. Who

0:48

got the truth? Is it you? Is it

0:51

you? Is it you? Who got the truth now?

0:53

Is it you? Is it you? Is

0:55

it you? Is it you? Is it you?

0:58

Is it you? Sit me down, say

1:00

it straight, another story

1:02

on the way. Who got

1:04

the truth?

1:05

Welcome to season 12, episode 5

1:08

of Acquired, the podcast about great technology

1:10

companies and the stories and playbooks behind

1:12

them. I'm Ben Gilbert. I'm David Rosenthal.

1:15

And we are your hosts. Today's

1:17

episode is on a critical piece of

1:19

American infrastructure, Lockheed

1:22

Martin. They are the nation's largest

1:24

defense contractor.

1:25

They're actually the federal government's largest contractor,

1:28

period.

1:29

The American taxpayers pay Lockheed

1:31

Martin around $50 billion a year.

1:35

And just to state this early and clearly,

1:38

Lockheed Martin makes, among other things,

1:41

killing machines.

1:42

The company is, of course, critical to defending

1:44

the American way of life. And

1:47

most of these things they make, fortunately, are

1:49

used as deterrents to keep peace.

1:51

But we should not mince words. They make

1:53

weapons synonymous with phrases like overwhelming

1:56

force and air superiority.

1:58

You may feel, and probably should feel

2:00

conflicted as you learn about this company.

2:03

There are really no easy answers to

2:05

the question, is what they make right

2:07

or good? And that's why

2:10

we entrust the decision to use their products

2:12

to the office of the President of the United

2:14

States.

2:15

But this company's history is absolutely fascinating.

2:18

There's stories of hardcore engineering, daring

2:20

innovators, and it's frankly just inspiring.

2:23

Yeah, going back and learning all this and soaking

2:26

in the history of the times

2:28

when Lockheed was really forged

2:31

gave me at least a whole new perspective

2:34

on this killing machines and deterrence

2:36

question. To tell the full

2:39

story of Lockheed and Lockheed

2:41

Martin and all the predecessor companies that came

2:43

before it, because I think it's like 17

2:46

companies all merged together at this point,

2:48

would probably require a full season of acquired, so we're

2:50

not going to do that. Instead, we're going to focus

2:52

on two interwoven stories

2:55

from Lockheed, not Martin, but Lockheed's

2:57

golden eras.

2:59

And the first of those stories

3:01

is the famous Skunk Works. The second one,

3:03

I'm not going to say what it is, so we don't spoil it just

3:05

yet, but as a teaser, it's

3:08

unbelievable and is directly

3:10

tied in to the birth of Silicon Valley.

3:13

So if you're in the tech world and you think Lockheed Martin

3:15

and Defense and fighter planes doesn't

3:17

apply to me, think again, because

3:20

pretty much everything you do came

3:22

out of this. So I can't wait to tell

3:24

it.

3:25

Quite the teaser, David.

3:27

Well, listeners, this episode was selected by

3:29

Acquired LPs. So if you

3:31

want to help pick an episode for next season, you can

3:33

become an Acquired Limited partner, come closer

3:35

to the show in other ways, including a private Zoom

3:38

call with us every month or two for

3:40

all the LPs.

3:41

You can join anytime at acquired.fm

3:44

slash LP.

3:45

If you want more from David and I, you should check

3:47

out our interview show, ACQ2. Our

3:50

last episode was on the topic of how generative

3:52

AI can be valuable specifically

3:54

to B2B SaaS companies and

3:57

probably more importantly, where it cannot.

3:59

And listeners, you can just search ACQ2

4:02

anywhere podcasts are found. We've got

4:04

some awesome interviews coming up, too. ACQ2

4:06

is on fire. Yep.

4:08

Join the Slack, Acquire.fm slash Slack.

4:10

We'll be discussing this episode there

4:13

afterwards. And without further ado, David,

4:15

take us in. And listeners, as always, this

4:17

show is not investment advice. David and I may have

4:19

investments in the companies we discuss. And this show

4:22

is for informational

4:23

and entertainment purposes only. So

4:25

for many of you listening, one thing you may

4:27

not know that I didn't really know till we started the research

4:30

is that the company that eventually became

4:32

Lockheed Martin today

4:34

was two companies. It was Lockheed

4:37

and Martin Marietta. And there was a huge

4:39

merger in 1995. Lockheed

4:43

was actually the second Lockheed

4:45

company, or really maybe the third. The

4:47

first Lockheed company was founded

4:49

in 1912 by one Alan Lockheed.

4:53

But if you were to look at the spelling of his name,

4:56

it would look like Loghead. L-O-U-G-H-E-A-D.

5:00

Yes. But it was pronounced Lockheed because it is

5:02

Scottish like lock, like Loch Ness, Loch

5:04

Heed, not Loghead.

5:06

He eventually changed his name to Lockheed

5:09

and the name of the second company to Lockheed

5:11

to avoid mispronunciations. Which is great.

5:13

He didn't just rename Lockheed the company. He's

5:15

like, yeah, I'm actually going to change my own name spelling

5:18

to match it.

5:19

Yes. So great. So he

5:21

started the first company with his brother, Malcolm.

5:24

And they were more or less contemporaries of the Wright

5:26

brothers.

5:27

It was based in San Francisco, of all

5:29

places. And it was mostly kind of a tourist

5:32

attraction. They had one plane, they had Model

5:34

G, and they flew tourists around

5:36

over the bay and evangelized this new

5:39

flying technology.

5:40

It had a bunch of ups and downs. Malcolm

5:43

leaves the company and goes to Detroit to

5:45

seek his fortune in the automobile industry,

5:48

where he invented the

5:50

modern hydraulic brake

5:52

system for automobiles. So every time you press

5:54

the brake in your cars, you're using

5:57

Malcolm Lockheed's technology. No

5:59

way.

5:59

Yeah, super cool. They also end

6:02

up hiring into this first Lockheed company,

6:04

one John Northrop. That

6:06

name might ring some bells to help them design

6:08

their future airplanes. John would

6:11

go on to be a co-founder with Alan of

6:13

the second Lockheed company, then

6:15

leave to strike out on his own where he founded the

6:17

Avion Corporation. That gets acquired by

6:19

Douglas and becomes a big part of Douglas.

6:22

Douglas, of course, is now part of Boeing. And

6:24

then after that, John, as you might imagine, founded,

6:27

you guessed it, Northrop, which is now Northrop

6:29

Grumman.

6:29

So this one dude was responsible

6:32

for founding or playing a major role in three

6:34

of the remaining five defense

6:36

prime contractors today.

6:38

But anyway, the first Lockheed company goes

6:40

under. They start the second one a few years later.

6:43

They have some success with the Vega

6:45

airplane. People might be familiar with that. It becomes

6:47

a favorite of Amelia Earhart and

6:50

Wiley Post, famous early aviators.

6:53

It becomes successful, this second Lockheed company.

6:55

They end up selling it to a consortium

6:57

of Detroit auto moguls, maybe

7:00

through the relationships from Malcolm or something, that

7:02

have formed the quote unquote Detroit Aircraft

7:04

Corporation or the DAC.

7:07

This is including Charles Kettering, the founder of Delco

7:09

and head of research at GM as part of this. You

7:12

may know Memorial Sloan Kettering. Exactly,

7:15

same dude. So the idea was they were gonna build the

7:17

General Motors of the Air.

7:19

There was just one problem with that is that aviation

7:22

did not become a consumer industry

7:24

like the automobile industry.

7:27

Alan Lockheed departs at this point

7:29

in time and is

7:30

kind of tangentially involved, but

7:32

this company that to this day bears his name

7:34

after this point in time, he doesn't really have a lot of impact

7:37

on. Now, shortly after this maybe

7:39

hair brained GM of the Air idea

7:42

comes together and Lockheed gets sold to

7:44

the Detroit Aircraft Corporation, the

7:46

stock market crash of 1929 and the Great Depression

7:48

happens and DAC predictably goes

7:51

bankrupt. They sell off the Lockheed

7:53

division, which is actually still fairly profitable

7:56

out of bankruptcy to an entrepreneurial

7:58

young businessman named. Robert Gross.

8:01

And this is really the founding of the modern Lockheed.

8:04

And the craziest thing, this price that

8:06

he bought it for, $40,000, was so low that Alan Lockheed

8:12

actually considered bidding to

8:14

buy his company back when they had it on the auction

8:16

block. And his considered bid

8:18

was $50,000, but he thought that

8:20

is so low that it might be insulting. There's no way

8:22

they'd ever sell it. So he didn't actually bid, and

8:25

the winning bid was $10,000 less. So

8:29

amazing. When

8:30

everything you know of Lockheed today got

8:32

bought out of bankruptcy for $40,000, it's

8:34

crazy.

8:35

So under Robert Gross

8:38

and his brother, Cortland, who gets involved, they

8:40

really are the ones who turned Lockheed into the great

8:43

company it became. So before

8:45

World War Two, during the 30s,

8:47

Lockheed builds the famous Electra

8:50

airplane, which is absolutely

8:52

iconic. This is the plane that Amelia Earhart

8:54

disappears in,

8:56

perhaps even more timelessly. This

8:58

is the plane at the very, very

9:00

famous scene at the end of the movie Casablanca

9:03

when Rick puts Ilse on the plane

9:05

with Victor to escape the Nazis and says,

9:08

here's looking at you, kid. That plane

9:10

is an Electra, I believe an Electra Jr.

9:13

And listeners, you know this plane.

9:15

It's one of those romantic early aircrafts

9:17

that were always sort of perched up at an angle where

9:20

if you saw it standing still on a

9:22

runway, it looked like it could just take off at any

9:24

moment. Oh, absolutely beautiful.

9:27

The Electra and Casablanca

9:29

brings us to the first core

9:31

part of our story, which is World War

9:34

Two, which transforms everything.

9:37

And a man named Clarence Kelly Johnson,

9:40

who started the famous Lockheed Skunk

9:43

Works division.

9:44

And this is great because

9:45

before I started the research, I was loosely

9:48

aware that Lockheed had the first Skunk

9:50

Works. Now it's become almost

9:52

like Kleenex when someone says Skunk Works. Oh,

9:54

we're going to start a little Skunk Works division.

9:56

And like, it was not a thing until

9:59

Kelly Johnson.

9:59

started The Skunk Works. So

10:02

there's a wonderful book. There are a bunch of

10:04

wonderful books around Lockheed, but a book

10:06

titled Skunk Works that was written by Ben

10:08

Rich, who was Kelly's second in command for

10:11

a long time at Skunk Works and then took it over when Kelly

10:13

retired.

10:14

And this book is like the top

10:16

gun of historical autobiographies.

10:18

You read it and you were just fired up. It

10:21

is amazing what these people did.

10:23

It's top gun for engineers. Yes, it's

10:26

so great. I also highly recommend

10:28

a book called Beyond the Horizons, which is

10:31

hard to find and most people don't know about, by Walter

10:33

Boyne. And that is an amazing history of

10:35

Lockheed during all these eras that we're going to talk about.

10:38

David, that's so mean. You're recommending an out of print

10:40

book to people. We keep doing this. This

10:44

one I think I only paid like 40 bucks for on Amazon.

10:47

So it's not quite like Taste of Luxury

10:49

and LVMH, which I think that's now like

10:52

three, four, or $5,000. Oh, yeah. No,

10:54

we definitely spiked the price.

10:57

So we did. All right. So who is

10:59

this Kelly Johnson? He's basically the Shigeru Miyamoto

11:02

of airplane design. His

11:04

nickname is Kelly because when he

11:07

was in grade school growing up in Michigan,

11:09

his real name was Clarence. An older boy

11:12

called him Clara on the schoolyard

11:14

and

11:15

Johnson attacked

11:17

him so viciously that he broke

11:19

this kid's leg.

11:21

And so after that, all of his schoolmates never

11:23

called him Clarence or Clara again and they nicknamed

11:25

him Kelly.

11:26

OK, so not Clara, but why Kelly? There

11:28

was some character of Kelly, kind

11:30

of an Irish tough guy that they

11:32

named him after. That really was his

11:35

personality. So after every skunk

11:37

works test flight for the rest of his tenure

11:39

running skunk works, they throw a big party

11:42

and Kelly would challenge anyone,

11:44

all comers to an arm wrestling match. And

11:46

even when he was like 60 years old, he

11:48

was still beating people. You should Google

11:51

a picture of this dude. He is just a

11:54

1930s man's man at his finest. And maybe

11:56

the best airplane designer ever to live. That

11:58

is Kelly Johnson.

11:59

And we. the stories about him, he

12:01

could intuit the answer to difficult

12:05

math problems in his head. And not just math problems,

12:07

but like physics problems and applying

12:09

Bernoulli's principle in his head and

12:11

come up with an answer that was 5% off

12:14

from the actual answer. And someone else would go spend

12:16

hours and hours and hours with pencil and paper and

12:18

slide roll to come to basically the same number. The

12:21

quote from his first boss, Lockheed's

12:23

chief engineer at the time,

12:24

Kelly would become the chief engineer, but

12:26

his boss at the time, Hall Hibbard, would say, that

12:29

guy can see the air.

12:32

So Kelly ends up winning the Collier

12:34

trophy twice, one of only two people to

12:36

do so in history. The Collier trophy is the equivalent

12:39

of like the Oscar for best picture. It's

12:41

the best airplane design of the year. He

12:43

wins it twice. He ends up being bestowed

12:45

the Presidential Medal of Freedom by Lyndon Johnson,

12:47

leader in his career.

12:49

He is a true American hero.

12:51

So he ends up joining Lockheed right

12:53

out of the University of Michigan engineering school. I'm

12:56

sorry, University of Michigan, you know, Ohio State,

12:58

sorry then. In 1933, at 23 years old, and Kelly is

13:04

really one of the, if not the principal

13:06

engineer that designs and builds the Electra.

13:08

So he becomes the star of Lockheed's then only

13:11

six person aviation

13:14

design and engineering department. There were six people

13:16

that were making these things

13:18

crazy. And he does basically everything

13:20

himself, engineering, designing, testing,

13:22

even flight testing. There's this amazing

13:25

quote in Skunk Works. This is Ben

13:27

Rich talking.

13:28

Kelly once said that unless he

13:30

had the hell scared out of him at least once a

13:32

year in a cockpit, he wouldn't have the proper

13:34

perspective to design airplanes. So

13:38

great. Okay. So the start of World War II rolls

13:40

around. And the first thing that Kelly

13:43

and Lockheed do is they adapt the

13:45

Electra into a bombing vehicle

13:47

called the Hudson. And even before the

13:49

US enters the war, the British

13:52

Royal Air Force ends up buying about 3000 of these

13:55

Hudson's from Lockheed.

13:57

Yeah. This is a thing that was,

13:59

I.

13:59

opening to me doing the research, Lockheed's

14:02

big customer in World War Two before

14:04

the US enters was Britain's Royal

14:06

Air Force. They were a way bigger customer

14:08

than the US was for many, many years.

14:11

So then once the US enters

14:13

the war and as they're gearing up to enter the war, Kelly

14:17

designs the amazing P-38

14:20

Lightning fighter, which was

14:22

the US's elite, fastest,

14:25

most maneuverable aircraft during

14:27

World War Two. They made over 10,000 of

14:30

them during the war and all of

14:32

the top aces in the US Army

14:35

Air Corps flew them. It was the plane

14:37

that shot down the transport that was carrying

14:40

Japanese Admiral Yamamoto,

14:41

the guy who had kind of masterminded

14:43

and overseen the Pearl Harbor attack. This

14:46

is a legendary airplane.

14:48

Side note, I will say last week, partly

14:51

in preparation for recording this, but partly because it's

14:53

something that I've always wanted to do, I went to Pearl

14:55

Harbor and there is truly

14:59

nothing like

15:00

being there and experiencing that. Growing

15:02

up in America, we basically haven't

15:05

had attacks on our soil. It's 9-11 and Pearl

15:07

Harbor period. So it's a very

15:09

unusual thing to see in

15:11

your own country, the remnants of

15:13

an attack and being over the sunken USS

15:16

Arizona from the Japanese bombing, it's

15:19

harrowing and heavy. But I think that that's

15:21

an experience I'd recommend to anyone. Okay,

15:24

so

15:25

that was kind of Lockheed and Kelly during

15:27

the war. Fast forward now to kind of the waning

15:29

days of World War Two, end of 1944 into 1945. It's

15:34

pretty clear that America and the Allies are

15:36

going to win the war at this point in time,

15:39

but it's also becoming evident that

15:41

there are two big

15:43

problems that are emerging.

15:45

One very immediate and

15:48

one sort of longer term.

15:50

The immediate problem is that in

15:52

the skies over Europe, in

15:54

the air theater of the European front,

15:58

a new technology is a appearing

16:00

on the German side. Jet-powered

16:03

fighter planes have

16:06

begun to pop up. And we're not

16:08

a military history podcast, save this for hardcore

16:10

history in Dan Carlin, but my understanding

16:12

of this is that the German jet fighters

16:15

entered the war too late to

16:17

make a difference, but if they had entered service

16:19

earlier,

16:20

it would have been a big problem. So

16:23

the US and the Allies, they're like, oh

16:26

crap, we need to step up our game and get

16:28

a jet fleet in service for us ASAP.

16:31

And for anyone who's not an av geek out

16:33

there or an aviation geek, it's worth knowing

16:36

going from a prop airplane

16:39

to a jet airplane is not just incremental.

16:41

It's an entirely different technology. You may have

16:43

heard the phrase, if you've looked into this before, suck,

16:46

squeeze, bang, blow. It is

16:48

a completely transformative process

16:50

of how the engine uses the

16:52

air in order to create thrust

16:55

that is much more sophisticated than just

16:57

a propeller.

16:58

My understanding is the engines that airplanes were

17:00

flying before then, even the P-38, as

17:02

sophisticated as it was, were basically

17:05

automobile internal combustion engines.

17:07

Totally.

17:08

So we're observing overseas

17:11

our enemy has a completely new

17:13

technology that we have not tamed and mastered

17:15

yet.

17:16

We're at a disadvantage. So that's one problem,

17:18

and we're going to focus on that first. The other problem

17:20

to put a pin in for later, and we start

17:22

to get worried that our ally, the

17:25

Russians and the Soviets,

17:27

our relationship with them might not

17:29

be quite what we think it is. And

17:31

we might have to address that in the coming decades. So

17:34

keep that in the back of your mind as we go along here. But

17:36

let's start with the jet problem.

17:39

So

17:40

the German plane that had started appearing in the skies

17:42

over Europe was the

17:44

Messerschmitt ME 262, nicknamed

17:47

the Swallow. And it was the

17:49

world's first operational jet-powered

17:52

aircraft. It flew close to 550 miles an hour, which

17:55

is over 100 miles an hour faster

17:57

than any allied plane, including the light

17:59

P-38.

18:01

So the US government turns to, of course, the

18:03

very best person for the job to start the

18:06

US jet fighter program,

18:08

Kelly Johnson and Lockheed.

18:10

And they tell him, go make us a

18:12

jet fighter as soon as possible

18:15

and by any means necessary.

18:17

And when we say as soon as possible,

18:19

we want to prototype in 180 days with

18:22

the spec that it must go faster than the

18:25

German swallow. So at least 600

18:27

miles an hour. You need to pull out all the

18:29

stops, bypass any red tape,

18:31

do absolutely anything

18:34

necessary to make this happen.

18:36

And for those tracking along at home, 600

18:39

miles per hour, not quite the speed of sound,

18:41

not quite Mach 1, but approaching that something

18:43

like 80 ish percent to Mach.

18:46

So Johnson hand picks 23

18:51

of Lockheed's very

18:54

best engineers and designers and

18:56

about 30 of the best shop

18:58

people, the people that actually build the

19:00

airplanes. And get this, he

19:03

rents a literal circus

19:06

tent to house them in

19:08

the parking lot next to a plastics

19:10

factory that is nearby to Lockheed's

19:13

headquarters in Burbank, California.

19:16

And it is because of this that the

19:19

name skunk works is

19:22

born because of the outdoor nature

19:24

in the tent and the smell coming

19:26

from this plastics factory. At

19:28

the time, there was a very popular comic strip

19:30

called Little Abner and a character

19:33

in this comic strip had a

19:35

outdoor moonshine still making

19:38

bootlegged prohibition era alcohol. And

19:41

this still in the comic strip was called

19:43

the skunk works.

19:44

I think it was called the skunk works. That's right.

19:46

The skunk works with an O and eventually

19:49

the publisher of Little Abner sues

19:51

Lockheed over using skunk works. So

19:53

they changed it to skunk works.

19:55

So in this circus tent

19:57

in a parking lot, Kelly

20:00

and this super elite team

20:02

from Lockheed build the

20:04

first

20:05

prototype US fighter jet

20:07

named the Lulu Bell

20:09

in 143 days

20:13

start to finish. This is just

20:15

wild for years. The

20:18

US had been working on this technology and

20:20

they hadn't gotten it operationalized. The Germans

20:22

beat them to it. And then in 143 days,

20:26

Kelly and Lockheed go from zero to

20:29

flying

20:30

prototype. Wow. Crazy.

20:33

What a testament to him and to this organization

20:36

in the circus tent that he has built the

20:38

skunk works. Seriously.

20:41

So this 180 day thing

20:43

is a very interesting constraint

20:45

placed on them. And it means that they

20:48

immediately need to go to an

20:50

acquired axiom that we've talked about forever.

20:53

Don't do something that's not your core competency.

20:55

AKA doesn't make the beer taste better or make

20:58

the plane fly faster. Exactly. And

21:00

outsource everything else. And if you only have 180 days to

21:03

do it, you are not going to become

21:05

an engine manufacturing company. You are going to look

21:07

around and say, okay, which of my allies

21:10

has the capability

21:11

to just give me an engine? So

21:13

they find this British company, Halford,

21:15

and they take the Halford H1B

21:18

goblin engine. And that is what they

21:20

put in this prototype.

21:22

Yes. This prototype, the Lulu Bell, would

21:24

go on to become the P80 shooting

21:26

star. Lockheed would ultimately make

21:28

about 2000 of them. And while

21:30

they weren't really used in World War II, because the war ended,

21:33

they would be used in Korea and it would be the first

21:36

jet fighter plane in the US military.

21:38

You raise a really important point though, that we didn't

21:41

cover earlier about Lockheed and

21:43

skunk works.

21:44

They are not engine manufacturers.

21:47

All of the engines that were going into the planes before,

21:49

during, since, they're getting from other

21:51

companies.

21:53

And that is true across the aerospace industry. That's

21:55

interesting that the value chain evolved this way, where basically

21:58

no aircraft manufacturers to the

21:59

this day make their own engines. In commercial,

22:02

you've got Rolls Royce, GE, but

22:04

every single one of these Lockheed planes, the engines

22:07

are made by someone else. Yeah, very

22:09

different from how the automobile industry evolved,

22:11

where obviously Ford and GM

22:14

and whatnot, they're making their own engines.

22:16

So this amazing feat, building

22:20

what becomes the P-80 shooting star and the

22:22

US's first jet fighter plane in

22:24

less than six months, this is

22:26

the beginning of Skunk Works. And

22:29

Kelly realizes, hey,

22:30

this is something pretty special here. So

22:32

I want to read a little quote from the Skunk Works

22:35

book. That primitive Skunk

22:37

Works operation set the standards

22:39

for what followed. The project was highly

22:42

secret, very high priority, and

22:44

time was of the essence. The

22:46

Air Corps had cooperated to meet all of

22:48

Kelly's needs and then got out

22:51

of his way. And boy, did they

22:53

deliver.

22:54

So the P-80 would eventually give way to

22:56

the F-104 Starfighter, which was

22:59

another invention from Kelly and the team. Kelly

23:01

would win the Collier trophy for this.

23:03

So after the war,

23:06

Kelly says, hey, this is special. We should

23:08

keep this going. And the Gross Brothers and

23:10

Lockheed's management agree. And

23:13

they say, yes, you can keep this quote

23:15

unquote Skunk Works division going,

23:18

as long as it doesn't take too

23:20

much money

23:21

and it doesn't distract from your duties in

23:23

the rest of the company as now

23:25

the new chief engineer. So Kelly is both

23:27

the chief engineer of all of Lockheed and

23:29

running Skunk Works at the same time.

23:31

It's insane.

23:33

This not taking too much money thing

23:35

does become a core tenant of the Skunk Works operation,

23:37

because you can sort of get around

23:40

management's ire and management's need

23:42

to report to shareholders and things like that if

23:45

you're doing amazing things and pulling rabbits out

23:47

of hats. And when it's not

23:50

going well, you're not a huge burden.

23:52

Yeah. So I'm going to read a little more from Skunk

23:54

Works here. So Kelly and his handful of bright

23:56

young designers that he selected took over

23:59

some empty space.

23:59

in building 82. This

24:02

is a building on the Lockheed

24:05

campus, which is right next to

24:07

the Burbank Municipal Airport.

24:10

It's an unmarked building. Literally, like this is a commercial

24:12

airport that

24:13

average people are taking off of every

24:15

single day. So

24:17

that it continues. Those guys brainstormed,

24:19

what if questions about the future needs

24:21

of commercial and military aircraft. And if

24:24

one of their ideas resulted in a contract to

24:26

build an experimental prototype, Kelly would

24:28

borrow the best people he could find in the

24:30

main plant to get the job done. That

24:32

way the overhead was kept low and the

24:34

financial risks to the company stayed small.

24:37

His small group were all young and high spirited

24:40

who thought nothing of working out of a phone booth

24:42

if necessary as long as they were designing

24:45

and building

24:46

airplanes.

24:47

All that mattered to Kelly was our proximity

24:50

to the production floor. A

24:52

stone's throw was too far away. Kelly

24:54

wanted us, the engineers and designers, only

24:57

steps away from the shop workers to

24:59

make quick structural or parts changes.

25:02

Yes, I love this. I think

25:04

this is a huge learning,

25:06

keeping your designers as close

25:08

as possible to production. So the game of

25:11

telephone is as short as possible and

25:13

is incredibly valuable. And having the

25:15

designers being able to glance up at their desk and

25:17

see like literally the way things are being manufactured

25:20

so they can say, oh, that looked good in the

25:22

diagram, but in practice, you have to bring this

25:24

big thing around over here. Maybe we can make that

25:26

better the next time we design it. It's just

25:29

such a great key insight. The

25:31

other thing on the small number of people, this

25:33

gets to the Skunk Works rules.

25:36

And Kelly created this incredible

25:38

document, 14 rules that

25:40

we'll link to in the show notes. Oh, yeah. The

25:42

third of which I mean, they're all incredible. The third of

25:44

which really applies here.

25:46

And I quote,

25:47

the number of people having any connection

25:50

with the project must be restricted

25:52

in an almost vicious manner. Use

25:54

a small number of good people 10 percent

25:57

to 25 percent compared to the so-called

25:59

These

26:01

people should all be together, all of them

26:03

building relationships, collaborating, working

26:05

together to produce the very best product. And

26:08

you see this in products in the future too. The iPhone,

26:10

the iPod, I mean you read the stories about the early teams

26:12

there are six, eight, ten people. They're

26:15

all full stack. So there's these unicorns

26:17

that cross disciplines and they're 10x, 100x engineers.

26:21

So you really only need a handful

26:23

of really good people.

26:25

So I think it's worth going through a

26:27

bunch of Kelly's rules.

26:29

But first,

26:30

we have one of our very favorite acquired

26:33

companies to tell you about. Yes, Vanta.

26:35

And we have something all new to share

26:38

this time. Of course, you know by now that

26:40

Vanta enables companies to generate more

26:42

revenue by getting their compliance certifications. And

26:45

of course, you also know it's amazing for startups

26:47

since it's the fastest and easiest way to get SOC 2,

26:50

ISO 2701, and other

26:52

certifications that as a small startup, you just would

26:54

not otherwise have the resources for. But

26:57

today, we want to talk about why Vanta

27:00

is also

27:00

the best security compliance platform

27:02

as you hit hyper growth and scale

27:05

your company into a larger enterprise.

27:07

Yes, Vanta now has a tremendous

27:10

amount of customization to meet your increasingly

27:12

complex security needs. If you're already

27:15

a larger company and in the past you maybe showed

27:17

Vanta to your compliance department and heard, oh, we

27:19

already have a process in place. We can't

27:21

integrate this. Now, even if you

27:23

already have a SOC 2, Vanta makes maintaining

27:26

your compliance way more efficient

27:28

and robust. For example, just last week

27:30

they launched vendor risk management.

27:33

Take, for example, oh, I don't know, the aircraft

27:35

industry where you have tons of subcontractors

27:37

that are working. You don't know what risks they have. You

27:39

need to know this. This allows your company

27:42

to quickly understand the security posture

27:44

of the vendors that you are choosing in

27:46

a standardized way that cuts down on security review time.

27:49

This is awesome. Yeah. And

27:51

on the customization front, they

27:52

also now enable custom

27:54

frameworks built around your custom

27:57

security controls and policies. Of

27:59

course, that's all. Also, in addition to the fact that with Vanta,

28:01

you don't just become compliant once, you

28:04

stay compliant with real-time data

28:06

pulled from all your systems, and you

28:08

get a Vanta Trust Page report to prove

28:11

it.

28:11

So whether you're an early-stage startup or a large

28:13

enterprise, demonstrating trust with Vanta

28:15

is a no-brainer. We have a brand new offer

28:18

from them for the first time in the company's

28:20

history. If you click the link in the show notes

28:22

or go to vanta.com slash acquired, you get a free

28:25

trial. And if you decide that you love it,

28:27

you will also get $1,000 off when you become a paying customer

28:31

since Vanta loves Acquired.

28:33

So to get both of those, remember, click the link in the show

28:36

notes, go to vanta.com slash acquired

28:38

and our thanks to Vanta. All

28:40

right, David, so what makes Skunk Works

28:42

work? Well, to start, all

28:45

that mattered, literally the only

28:47

thing

28:48

that matters is rapid delivery

28:51

of superior products. And

28:53

that was driven by the expedient requirements

28:56

of World War II, literally

28:58

saving America and the free world. And

29:01

then the Cold War, which is going to come in in a big

29:03

way in a second here.

29:04

Listeners might be thinking,

29:06

isn't all that matters in any

29:09

business rapid delivery of superior

29:11

products? Like why is this new

29:14

and unique and different?

29:15

The reality though, is that that's almost never

29:18

the case. There's politics, there's

29:20

personalities. And you rarely

29:22

have an existential threat that

29:25

you must cut through all the red tape.

29:27

It's like Operation Warp Speed, the way that we got the vaccines

29:29

as fast as we did. If the world is

29:31

on the line, what can you do away

29:34

with in your processes and which people

29:36

can you hand select to solve it?

29:39

Competition and existential competition

29:41

kind of has a way of bringing out the best in people.

29:44

So Ben, you already talked about rule three. I want to... Did

29:46

we pick the same ones? I'm so curious. We

29:49

got 14 to pick from. Let's see, let's pick

29:51

three that we're going to highlight here. We already talked about

29:53

number three. What are your others?

29:55

The next one I want to talk about is

29:57

the Skunk Works manager must be delegated

29:59

practically

29:59

complete control of his program

30:02

in all aspects.

30:04

Yeah. I mean, this is like the auteur theory.

30:06

Like you have to have a single person's

30:09

vision and the buck stopping with a single

30:11

person who has ultimate control

30:14

and isn't a squeezed middle manager. He's

30:16

the program manager for any given

30:18

program that they're working on, any new aircraft. And

30:21

also, he's the guy flying to Washington to

30:23

interface with the government. It's not like he's

30:26

dealing with the engineers and then calling the sales force

30:28

and being like, hey, can you go to a steak dinner with our

30:30

guy in Washington? No, it's Kelly.

30:33

And at its most productive

30:34

Skunk Works, I think, was about

30:36

maybe 50 designers and engineers

30:39

and maybe 100 machinists and shop

30:41

people. This is not a large organization.

30:43

It's crazy. My last one is

30:46

the last one of the rules. Yes, this is

30:48

one of mine too. Because only a few people

30:51

will be used in engineering and most

30:53

other areas. Ways must

30:55

be provided to reward good

30:57

performance by pay, not

31:00

based on number of personnel supervised.

31:02

So Kelly has a quote about this in the book.

31:04

In the main plant,

31:06

they give raises on the basis of the more

31:08

people supervised. I give raises

31:10

to the guy who supervises the least. That

31:13

means he's doing more and taking more responsibility.

31:16

But most executives don't think like that

31:18

at all. They're empire builders.

31:20

This is so important. Yep,

31:23

totally agree. And in fact, it's thinking

31:25

like a capitalist too. I mean, it's really like,

31:27

how can we achieve the most with the least, not

31:30

how can we achieve a fixed amount with a fixed

31:32

margin?

31:33

So there's one more thing that isn't

31:35

in any of the rules, because I think it's just sort

31:37

of a implicit, unspoken assumption.

31:40

All of this only works if the

31:42

small group of people that you've brought together

31:45

are

31:45

highly motivated. And

31:48

I think the reason this was taken for granted for all of

31:50

Skunk Works' heyday was,

31:52

hey, the mission here is preserving

31:54

your life and the lives of your loved ones

31:57

and America from losing

31:59

world war II.

31:59

or two and then having nuclear bombs

32:02

dropped on it by the Soviet Union. You don't

32:04

really need a lot of extra cajoling or motivation

32:06

here.

32:07

Totally. And you got to think back. This was

32:09

a time where American superiority was not

32:11

guaranteed. I think we have a

32:13

reasonable amount of complacency today.

32:16

Americans feel very secure. Sure, they're enemies,

32:18

but are we going to be fine? Totally. We

32:21

don't need to think about this that much. We can decide

32:23

to prioritize other things and have

32:25

passions and say, yeah,

32:27

other people can take care of the national good because

32:30

we'll be fine either way. That was not the

32:32

belief at the time. No, there's this great

32:35

quote in Skunk Works where Ben Rich tells

32:37

the story of his first day in Skunk

32:39

Works where he's shown the U-2 prototype. We're

32:42

going to talk all about the U-2 in a minute here. But

32:44

literally day one, he's shown the prototype of this top

32:47

highly classified, highly secret

32:49

airplane that nobody

32:50

can know about. He says, the

32:52

full weight of government secrecy

32:55

fell on me like a sack of cement that day

32:57

inside Kelly Johnson's guarded domain.

33:00

Learning an absolutely momentous national

33:03

security secret just took my breath

33:05

away and I left work bursting

33:07

with both pride and energy to

33:09

be on the inside of a project so

33:12

special and closely held, but also

33:14

nervous about the burdens it

33:16

would impose on my life. This

33:18

is exactly to your point. With great

33:20

power comes great responsibility

33:23

here. Yup.

33:25

Okay, so what are the machines

33:27

that sort of unfold from here? Yeah, all right.

33:30

So a minute ago, I was talking about the two problems that

33:32

America and its allies have at the end

33:34

of World War II. One was the jets. Skunk

33:36

Works addresses that with the P-80

33:38

shooting star. The other problem is, yeah,

33:41

we're going to win this war, but

33:43

there's a whole new war that's just about to start.

33:46

Yeah, and the war we're coming out of is World War

33:48

II, but of course the Cold War against the Russians

33:50

is just starting. And this is so

33:52

hard for us to process today, but

33:55

doing the research, I really felt it.

33:57

I think for a lot of people.

34:00

the stakes and the

34:02

pressure and the worry about

34:04

the Cold War was greater than

34:06

World War II.

34:08

Yeah, that's a great point. When the Americans entered

34:10

World War II, we had reason to believe

34:12

that we could come in and win.

34:15

The Cold War, I think to the American

34:17

psyche, felt very different. I

34:20

think we had good reason to believe

34:22

we were not going to win.

34:23

So right after the war, Churchill

34:25

comes to America and gives his famous Iron Curtain

34:27

speech in Fulton, Missouri, that an Iron Curtain

34:30

has descended over Europe in the form of

34:32

the Soviet Union. And then before

34:35

the end of the decade, I didn't really realize the

34:37

timeline on this. In August 1949, the

34:40

Soviet Union detonates its first nuclear

34:42

bomb.

34:43

And nobody believed that

34:46

they were going to have the bomb that

34:48

quickly or that powerfully. And not

34:50

only did they have the bomb, but

34:53

whether this was real or not or positioning,

34:56

people really believe that

34:58

the Soviets and Khrushchev's intention

35:01

is to use the bomb against America.

35:04

If they ever believe that they could do

35:06

so without fear of retaliation,

35:08

that they could knock us out first, that they would

35:11

do

35:11

a first strike and use nuclear

35:14

weapons on America.

35:15

And this kicks off the Cold War arms

35:17

race. And people probably know and learn about mutually

35:20

assured destruction and deterrence. This

35:22

really was the policy

35:25

of the military and the American government, that

35:27

we need to have capabilities to

35:30

deter the Soviet Union from launching

35:32

a first nuclear strike against us by

35:35

being able to guarantee

35:37

and have them know that we guarantee that if

35:39

they do so, we will destroy

35:41

them. So they can't do this because

35:44

if they do, they will be destroyed. That

35:46

was the whole policy. And that's like a really scary

35:48

place to be.

35:50

This is like

35:51

if somebody over there in the Kremlin

35:53

decides one day that they think

35:55

they can win, we're all going to die.

35:58

Right.

35:59

There was a national

36:02

poll

36:03

that asked the question,

36:05

what do you think you are most likely

36:07

to die from?

36:08

And over half of America

36:12

responded that they thought they were most

36:14

likely to die in thermonuclear war

36:17

above any other cause. Let that sink

36:19

in. Over half of the country thought

36:21

they were going to die in nuclear war. Horrifying.

36:25

And so in a war of perception, intelligence

36:28

is paramount.

36:29

Bingo. It is the most important

36:31

thing. Even more important than your

36:34

ability to strike and

36:36

wage war is your ability to know

36:38

what the current state of the opponent's ability

36:41

is to strike and wage war.

36:44

So that means that the battleground is no longer

36:46

the use of weapons,

36:48

but the intelligence about the existence

36:50

and positioning of weapons. And

36:53

nobody is

36:54

better suited than

36:56

Skunkworks

36:57

to be the US government and military's

37:00

primary sounds cliche to say,

37:03

but sword and shield during this war.

37:05

Yes. So this brings us to the

37:07

U2 spy plane.

37:09

And this plane serves such an important

37:11

purpose that ended up being

37:14

brought into service in 1955 and

37:17

was only decommissioned in 1989. Yeah,

37:21

incredible.

37:22

Now there are many airplane programs

37:24

that have 10, 20, 25 year timeframes. For

37:28

very different reasons. Yes, that we will

37:30

talk about in the military industrial complex. But

37:33

the U2 was basically the first time

37:35

that America found a plane that it could use

37:37

for a long time and wasn't rapidly replaced

37:39

by the next best thing.

37:41

Okay, so it would be really great if you

37:43

could fly a plane over Russia and take

37:45

pictures and understand all this. Because there's no satellites

37:47

yet. Oh, are there satellites? We'll

37:50

talk about that a little later. But you can't just fly

37:52

a plane into Russia and do that. It's a closed country.

37:55

The Russians are going to shoot you down if you do it. We're not

37:57

technically at war, so it would violate

37:59

international.

37:59

treaties to go into their airspace, we

38:02

would start the war by doing that. Exactly.

38:04

So the first thing, it's funny, it's kind of in the news now,

38:07

China's doing this now, the first thing we

38:09

try is unmanned spy balloons. We

38:11

send balloons over Russia. Failed weather experiments.

38:14

Yeah, failed weather experiments. That fails

38:16

on many fronts, including actually

38:19

returning usable photos of Soviet

38:21

nuclear installations.

38:23

So

38:24

really it becomes clear that what's required

38:27

is an entirely new type

38:29

of airplane that can either do

38:31

one of two things and ideally both.

38:33

Fly over Russia stealthily

38:36

and undetected by radar,

38:38

or two, fly high enough or

38:40

fast enough that they can't shoot it down even if they

38:42

do. At Soskogworks, being the ambitious

38:44

organization that they are, tries for option one,

38:47

and we don't frankly know very

38:49

much about what Russia's capabilities are. So

38:51

we're pretty sure that we can

38:54

build some airplane that flies high

38:56

enough that their radar systems

38:58

won't detect us. And great,

39:00

so let's do that. Yeah, great.

39:02

So this is interesting. What government

39:05

agency contracts them to do this?

39:07

It's not the military. We're in the spy game

39:09

now. It's not the army, not the Navy, not the

39:11

Air Force. It's the CIA. They

39:14

are building their own air

39:16

capabilities and all of the work that

39:18

Ssogworks does here and for many years to come is

39:20

for the CIA.

39:22

So what exactly is the challenge

39:25

that Ssogworks has laid out in front

39:27

of them for designing this new spy plane?

39:30

Well

39:30

at the time, the maximum altitude

39:32

that airplanes flew was about 40,000 feet.

39:36

The US thought that the Soviets' best

39:38

interceptor fighter aircraft could

39:41

get to about 45,000 feet.

39:43

Yeah, and we also thought that their radar

39:45

wouldn't function above like 55,000, right? We

39:48

were like, all right, as long as we clear 65,000, we should be higher than their

39:50

radar

39:51

could

39:53

even detect and certainly higher than

39:55

their fighters could come get us. Right.

39:58

So the CIA's spec for...

39:59

gunk works for the U2 is

40:02

to fly at 70,000 feet.

40:04

Now, there are a couple problems

40:06

with that.

40:07

One is that normal jet

40:10

fuel doesn't work at that altitude.

40:12

At that altitude, the pressure,

40:15

the temperature, everything

40:17

about the environment, you're getting to be closer

40:20

to space than you are to normal Earth

40:22

atmosphere, and things start going wrong. So

40:25

that one, they actually subcontract with

40:27

shell oil to make a new formulation

40:30

of jet fuel that does work up there. So

40:32

that problem is solved.

40:34

Problem number two is maybe a little bigger,

40:36

and that is that humans cannot survive

40:39

at that altitude.

40:40

So certainly you need a pressurized cabin,

40:43

but if something were to happen and you needed to be out

40:45

of the cabin, cold,

40:47

no air, blah, blah, blah. Yeah, and I

40:49

don't know the technical details, but

40:51

I think even the cabin pressurization technology

40:54

that existed then was not going to cut

40:56

it at 70,000 feet.

40:58

So you basically need a spacesuit.

41:01

Exactly. Some of this technology

41:03

came from diving suits and some other things that

41:05

came before this, but I think

41:07

this was the big coming together of the

41:09

technology that created the

41:11

spacesuit, and that's what they put these pilots

41:14

in.

41:14

Wow. So

41:16

Lockheed and Skunk Works win

41:18

the contract from the CIA.

41:20

They start working on this plane sometime

41:23

in 1953. Incredibly

41:25

top secret.

41:26

We wouldn't reveal the fact that this existed

41:29

to the Russians, our own people, for years and

41:31

years and years. I mean, this is like the quote

41:33

from earlier that we read from Ben Rich when he started

41:35

working on this project day one and saw

41:38

the prototype, and then it hit him like a sack

41:40

of cement, how important this was.

41:43

So Skunk Works completes

41:46

and delivers the plane

41:48

by July, 1955. So

41:50

like a year and a half, and for a total

41:53

project cost

41:55

of three and a half million dollars.

41:57

That's an M. That is not a B. A

41:59

year and a half. and three and a half million dollars

42:02

for one of the most important

42:05

products and pieces of technology

42:07

in American history.

42:09

Astounding! This is what Skunk Works

42:11

is capable of.

42:12

So they're flying higher than any plane has ever

42:14

flown before, they're using a different type of fuel, people

42:17

are flying in spacesuits for the first time.

42:19

Feels like to be a reconnaissance aircraft

42:21

you would also need one other key

42:24

component in order to

42:26

achieve the mission of spying

42:29

on the enemy. Yeah, to take photos you

42:31

need a camera.

42:32

Indeed, and you would need an all new

42:35

type of camera with all new type of lens

42:38

capable of taking photographs of something 70,000

42:41

feet away from you through, you

42:44

know, a whole bunch of atmosphere.

42:46

Gosh,

42:47

if only the US had someone who was just

42:50

incredible at this sort of pioneering

42:53

optics technology.

42:54

Indeed the US did and that was Dr. Edwin

42:57

Land and the Polaroid company

42:59

who subcontracted and created all of that. And actually

43:02

I believe it was Edwin Land himself

43:05

that helped convince President Eisenhower

43:07

to even pursue this project in the first place. He

43:09

was like, we can build the camera that can do this,

43:12

if we can get the airplane built,

43:14

we can do this project. This blew

43:16

my mind, it's so cool to see the intersections

43:19

of different innovators throughout history.

43:21

I mean Edwin Land is the man who inspired Steve

43:23

Jobs and he's building the U2's

43:27

camera. Oh, just wait, we are going to have a lot

43:29

more tech in Silicon Valley and

43:31

Apple stuff that's going to come up here

43:34

in just a little bit.

43:35

So they built the plane, you

43:38

got to test this thing.

43:39

They're not going to roll it on the runway in Burbank

43:41

and take off and, you know, just head for

43:43

the Soviet Union. You got to test it and

43:46

you know, it's got to be secret of whatnot.

43:48

And remember, Kelly Johnson, one of his big principles

43:50

is like, we test our products. You,

43:52

the government, don't test our products, we test our products. And

43:55

we should be clear, this U2 spy plane looks

43:57

crazy.

43:59

Yeah, this thing, if you

44:02

saw it taking off, you would be like,

44:04

okay, I've seen airplanes. That thing is completely

44:07

different. So it's not like they could disguise

44:10

it. Like you need to figure out somewhere in the

44:12

United States where there's basically nobody

44:15

so that you can test this thing. Oh,

44:17

this is so fun. Oh, the smile on our

44:19

faces is like, you

44:21

can't see us, but it is stretching out of the room

44:23

here.

44:24

Yeah. You can't just paint this

44:26

thing like a school bus and pretend it's something

44:27

else. So they need to find a suitable test site. They go

44:29

scouting all across the Western US

44:32

and kind of remote areas. Kelly Johnson

44:34

is sort of like Sam Walton and his prop plane

44:36

scouting out for, you know, Walmart locations

44:39

flying sideways. And then they get an idea.

44:42

And that idea is where

44:44

is a place where even

44:47

if there were people before, there

44:49

sure aren't people now because

44:52

nobody in their right mind would

44:54

want to be anywhere close to

44:56

where we just tested our nuclear

44:59

bombs. And

45:01

they go, oh,

45:03

as long as we figure out that it's safe,

45:05

that would be a perfect place for

45:07

us to test this airplane.

45:09

So they find a dry lake bed in Nevada

45:12

called Groom Lake. And there's

45:14

a quote from Kelly Johnson here about this

45:17

in the book. We flew over it and within 30

45:19

seconds you knew that this was the place.

45:22

It was right by a dry lake, man alive.

45:24

We looked at that lake and we all looked at each

45:27

other. It was another Edwards, like Edwards Air

45:29

Force Base. So we wheeled around, landed

45:32

on that lake, taxied up to one end of

45:34

it. It was a perfect natural landing

45:36

field, as smooth as a billiard

45:38

table without anything being done to it.

45:41

How insane is it that this

45:43

is where we were testing nukes?

45:46

I actually do not understand how

45:48

there was not radiation poisoning. And

45:51

I don't fully understand the half-life and all

45:53

that needs to be done. But like,

45:54

how is that safe? Yeah,

45:56

it's insane. And not only were there recently

45:59

nuclear tests.

45:59

happening right nearby, I

46:01

believe that nuclear testing

46:04

continued right nearby while they're

46:06

using this site, Groom Lake, to

46:09

test the U2. 100%, it's

46:11

the craziest thing. They had to sometimes take

46:13

some time between the most recent

46:16

nuclear test and when they wanted to

46:18

go fly, because these sites are like, I don't

46:20

know, 12 miles away from each other or something pretty

46:23

close. If you're curious listeners, there's this

46:25

great documentary on Amazon called

46:28

Secrets in the Sky, the untold story

46:30

of Skunk Works that has a bunch of footage

46:32

of all of this. Wow.

46:33

So listeners, if you haven't caught on already,

46:36

the location that we are talking

46:38

about. A Nevada test site

46:40

in the middle of the desert. Nuclear,

46:43

some really strange looking flying aircraft.

46:46

This is Area 51. Skunk

46:49

Works creates Area 51.

46:52

And of course there's rumors of UFOs

46:55

there. They want to keep everyone away. For

46:57

the people who they can't keep away, they're going

46:59

to see some really weird flying stuff. So

47:01

of course the rumors are going to start. It's

47:03

all goodness for Skunk Works. This cover is

47:05

great. It's even better than that.

47:08

I can't remember which plane or when this

47:10

was, but at one point in time, one

47:12

of the test flights crashed and the

47:15

pilot survived and somebody saw

47:17

him. He was wearing a spacesuit. Nobody

47:19

knew what a spacesuit was. Of course he looked like a

47:21

freaking alien. Right. Maybe

47:23

another 10 years before we would have the

47:25

moon missions.

47:27

Yeah. It's so funny. Amazing.

47:30

Yeah. It's all

47:33

Skunk Works and the U2. Wow. And

47:36

then the Blackbird and everything else we're going to get into

47:38

later in the story. All happening out of Area 51.

47:41

The prep work that the pilots had to go through

47:43

before getting on these planes too were nuts. They

47:45

needed to breathe pure oxygen for two

47:48

hours to remove all the nitrogen from

47:50

their blood in case they

47:52

had to eject. Because remember these are test pilots

47:54

on a super experimental aircraft. They were

47:56

often ejecting or they were often, you

47:59

know, things went wrong.

47:59

wrong in these tests. Yeah, a bunch of people died

48:02

doing this, like we should say. Yeah,

48:04

I mean, a great sacrifice to bring

48:06

this program and subsequent Skunk Works programs

48:09

into the world. But

48:10

basically what was happening is if you

48:13

didn't breathe pure oxygen for two hours, you

48:15

could get the bends for anyone who

48:17

scuba-dived and you can't fly right afterwards from

48:20

ejecting. And so it's like, well,

48:22

if you managed to get out of the aircraft before

48:25

it crashed, then that could kill

48:27

you. So you needed to make sure that this

48:30

oxygenating of your blood and getting rid of all the nitrogen

48:32

made it so that if you did need to eject, then

48:34

you would survive this as well. Yeah,

48:37

crazy.

48:38

OK, so they test the U2 at

48:40

Area 51. So great. They

48:42

get it up and running. And in active service

48:45

as an operational spy plane,

48:47

pretty much the world's first, at least

48:49

of this type, within a year, the

48:52

first Soviet Union overflight

48:54

happens on July 4, 1956. Of

48:59

course it was. Of course it was July 4. Now,

49:01

this is so interesting. There's a whole bunch

49:04

of things that happen when they take out, like, they don't know what's going to

49:06

happen. Is this thing going to work? Are the Soviets going to see us?

49:08

We're going to learn so much here.

49:10

You can't script this stuff. The Soviets

49:13

tracked it on radar,

49:14

even at 70,000 feet. The whole

49:16

way. The whole way. Right from it takes off

49:19

the whole flight path through Russia. They

49:21

knew everything that we were doing.

49:24

We were super wrong about their

49:26

radar. They didn't just have low altitude

49:28

radar. They were capable of radar

49:31

that could see straight up into

49:33

space. Wherever we were flying, they were going to see

49:35

us. Yeah, which we had no idea. So we

49:37

learned this as part of it.

49:38

So here's what's funny. We know

49:40

that they see it from takeoff. They track the

49:43

U2 the whole way. This whole top secret program, like, oh,

49:45

no, it's busted.

49:46

They see it. But it turns out they

49:49

can't hit it. So a whole

49:51

bunch of fighter jets scramble. And the fighter jets, they

49:53

can't get up that high. So they can't intercept it. They

49:56

launch surface to air missiles. The missiles can't

49:59

hit anything. high up. So the

50:01

U-2 just flies along, they're tracking it

50:03

the whole way, there's planes flying along

50:05

behind it, and they can't do anything. But at least

50:07

we get the intel now in the U.S. that, okay,

50:10

they can see up here, and so it's

50:12

probably just a matter of time before they're

50:14

capable of shooting something down up here

50:17

too.

50:17

Yes. But here's what's so interesting.

50:20

Remember this whole war, like, God, it's fascinating.

50:23

It's a war, but it's not a war. It's a war

50:25

of perception. So

50:27

in that flight, we get incredible

50:29

photographic observational evidence, and

50:31

we would fly so many missions

50:34

over Russia for the next few years getting this

50:36

incredible intelligence.

50:38

The Soviets never say anything, because

50:40

if they were to say anything and say

50:42

that they tracked us into it, then they

50:45

would be admitting that they were powerless

50:47

to stop it. This war of perception,

50:49

like, it's so crazy, the incentives

50:51

and motivations here, but it makes sense.

50:53

They're not going to say anything and reveal the program,

50:55

so it remains top secret,

50:57

because if they did, their sort of position

51:00

and posturing of strength would be compromised.

51:02

And neither country really wants to be at war,

51:04

so we're both maintaining this, we're

51:07

not at war, and we're not

51:09

going to tell you that we're preparing for if

51:11

we need to be, but of course we're going to do whatever

51:14

we can to understand the best

51:16

about our enemy, or not our enemy, other

51:18

countries that we're not at war with. Adversary.

51:22

Right. And I actually think there may be military

51:24

historians that

51:26

understand this better than us, but

51:28

I think this was actually an optimal

51:30

outcome for the US. Because,

51:34

remember, just like you were saying, Ben, nobody actually

51:36

wants to go to war here. The goal is

51:38

for both sides to keep each other in check, and

51:41

so this, the U-2 and these reconnaissance

51:43

missions, become a major chess piece

51:45

for us on our side of the board

51:47

to keep the Soviets in check. We

51:50

like this state, I think, that

51:52

they know about it,

51:53

but nobody talks about it.

51:55

The other crazy thing is, this camera is

51:57

incredible. If you look up photos taken

51:59

by

51:59

U-2 spy plane, it is remarkable

52:02

what in the mid-50s this thing was

52:04

capable of taking photographs of from 70,000 feet.

52:07

The engineering all around that went into this is

52:10

just incredible. You could do a whole podcast just about

52:13

the technical aspects of the engineering advances.

52:15

And it basically works. They find a whole bunch

52:18

of nuclear test sites. They find where missiles

52:20

are kept. We basically have a real-time

52:22

count of the Soviet

52:24

Union's warheads, the Soviet Union's

52:27

fighter jets, the capabilities that they

52:29

have with their radar because it's painting our

52:31

airplanes. So we now know that that

52:33

exists. Mission accomplished in spades on this thing.

52:36

We talked earlier about the cost of $3.5 million.

52:40

I think you could make an analogy to the Louisiana

52:42

Purchase in terms of best deals that

52:44

the United States government ever got

52:46

relative to the benefit to America. This

52:49

is huge. Arguably the last great deal they got from Lockheed

52:51

Martin. Well,

52:54

no, there's some more that we're going to talk about in a minute.

52:56

So this all continues. We

52:59

fly dozens, maybe hundreds of

53:01

U-2 missions over the next few years.

53:03

The Russians are constantly trying to shoot them down. They fail.

53:06

Nobody says anything.

53:07

And then

53:08

on May 1st, 1960, ironically

53:11

on May Day, we launched the U-2 program

53:13

on July 4th.

53:14

And it ends, at least over the Soviet Union.

53:17

On May

53:18

Day, 1960, the Soviets

53:20

finally have developed a missile

53:23

that can reach 70,000 feet with

53:25

accuracy and they shoot down a U-2.

53:28

This was the first time in history that

53:30

a ground to air missile had

53:33

shot down an airplane. I

53:35

didn't realize this. I read that. I was

53:37

like, oh, whoa. I guess maybe the technology didn't exist during World War

53:39

II, the Korean War. And so this was

53:41

a major historical moment in so many

53:43

ways. America

53:44

and the CIA and the government, the

53:46

president, they're like, okay. Right. What

53:49

do we do? America's posture is we were never there. Right.

53:51

So now that the motivation for Russia

53:54

not to talk about it now is gone. Now they

53:56

can position this as like, hey, we're

53:58

so strong that we.

53:59

We can keep people out.

54:01

We expect them to say something right away.

54:04

A couple of weeks go by. They say nothing.

54:07

Quite surprising. All we know is we've

54:09

lost contact with our pilot

54:11

and we didn't see them come back and land

54:14

so we presume that

54:16

they shot down our pilot but they're not saying anything.

54:19

But we don't really know. And we presume that

54:21

if this plane was shot down, as we think, probably

54:23

the pilot was killed. I mean, like,

54:26

you shoot down a plane from 70,000 feet. Right.

54:28

The pilot was killed.

54:30

Well... That's 14

54:32

miles in the air. Yeah.

54:35

No. The

54:37

pilot was not killed. The pilot's

54:40

name was Francis Gary Powers.

54:43

Pilot Powers. If you know anything about US history,

54:45

you probably know his name and you probably know

54:47

that he miraculously did survive and was

54:49

captured and interrogated and probably tortured

54:52

by the Russians and that this was

54:54

the revealing of the U2 program. So

54:57

what happens?

54:58

Turns out that there was a big summit in Paris

55:00

scheduled for later in May

55:03

between Eisenhower and Khrushchev. And

55:05

Khrushchev announces on the

55:08

eve of the summit

55:09

that they have captured an American pilot.

55:12

They have captured this new plane

55:14

that the US has been illegally and

55:17

in a provocateur manner flying

55:19

over Soviet airspace. They have

55:22

defended their country and shot it down and this creates

55:24

a huge mess. Eisenhower

55:27

first denies this and then admits

55:29

it when we realize that like, oh shoot, this pilot

55:32

is still alive. He's confessed

55:34

like, wow, this is a disaster.

55:36

Yeah.

55:37

So, but I guess there probably was a path where

55:39

this could have led to escalation. Fortunately

55:42

it does not.

55:43

But it does mean that the U2

55:45

program, at least over Russia is

55:48

done. We don't fly any more U2s

55:50

over Russia. We can't. I mean, if we were to

55:52

do it at this point, we know they can see us. They now

55:54

can talk about that they can see us and they can shoot

55:56

us down. Like it would escalate to war

55:59

if we kept doing this.

55:59

we have to stop. The U-2 becomes

56:02

quite useful for other locations around the globe,

56:04

but not over the USSR itself. This

56:06

though is a huge, huge problem. This was

56:09

the most important thing in the war, and now it's gone,

56:11

right?

56:12

We now have no way to take photos

56:15

of military sites in Russia because

56:17

we can't fly planes over there anymore, right?

56:20

We're blind. What do we do? What do we do? Well,

56:24

the world would not know until 1995, when

56:29

this would all become declassified

56:31

under the Clinton administration.

56:33

But that was only true for about three

56:36

months,

56:37

thanks to

56:38

another

56:39

super secretive

56:41

Lockheed division that

56:44

figured out another way for us to take pictures

56:46

of the Soviet Union. Yes. And

56:49

this, listeners, is where if you've

56:51

read Skunk Works or watched documentaries about Skunk

56:54

Works,

56:54

what we're about to talk about is not in any of

56:56

those. This is a completely separate story

56:59

that takes place in a different place in

57:01

California that is a detour from

57:03

our Skunk Works story. And we'll be back because

57:05

my god did Skunk Works do some incredible

57:08

things after the U-2. But

57:10

before we do that, we want to take you to

57:13

Northern California and the origins

57:15

of Silicon Valley and Lockheed's

57:17

participation in that. And

57:20

this is a great time to tell you about one of our other

57:22

favorite companies that is back as a sponsor

57:25

of season 12 is our good friends

57:27

at Tiny, the Berkshire Hathaway

57:30

of the internet.

57:31

Tiny, as you know, listeners, has built and acquired

57:33

the world's premier collection of wonderful

57:36

internet businesses. And this time

57:38

and this year is so great

57:41

for the Berkshire meeting and Tiny because just

57:43

like Berkshire, Tiny is now a public company.

57:46

They're a publicly traded holding company. We're so

57:48

happy for them. Yep.

57:50

And they really are becoming sort of the buyer

57:52

of choice for wonderful internet

57:54

businesses. I mean, there's a lot of people

57:57

who are talking about how great it is to buy

57:59

small companies. companies, and especially when

58:01

they're these profitable businesses with 30

58:03

to 40% operating margins.

58:05

Maybe they're doing 5, maybe they're doing 10 million in revenue.

58:08

There's a whole subcategory of Twitter devoted

58:10

to this. And I'm sort of watching

58:12

all these tweets and I'm like, okay, geniuses. Do you

58:15

remember what Andrew and Chris were talking about,

58:17

I don't know, a decade ago? And so Tiny

58:19

has sort of proved at this point

58:21

that they can do this very well, that they

58:23

can continue to compound capital, that they can let

58:26

these businesses grow and run. I mean, you think about

58:28

businesses like Dribble or

58:29

Pixel Union, Creative Market, 8020. The last 15

58:32

years,

58:33

Tiny has just

58:35

been

58:35

buying businesses. They've let

58:38

them run. They

58:39

empower their own independent managers

58:41

to run them, oftentimes the founders of the

58:43

business, but oftentimes professional CEOs

58:45

that they bring in to run them and take them to

58:47

kind of the next right stage of the company.

58:50

And what's great, especially now that Tiny is a

58:52

bigger scale and now being a public company,

58:54

they've always historically done this with bootstrapped

58:57

businesses, which they certainly still

58:59

do.

59:00

They now do it with venture-backed businesses

59:02

too, especially in this environment. There's

59:04

so many businesses over the last couple of years

59:06

that took VC dollars and kind

59:08

of no longer make sense in a VC portfolio.

59:11

And these companies used to be orphaned within

59:13

venture firms. It was really a

59:16

less than ideal situation, but Tiny can

59:18

now come in and acquire those companies and

59:20

has been doing that to great effect. Yep.

59:23

If you're evaluating your next fundraising round and you're

59:25

sort of looking at actually what your

59:27

business's natural growth rate is or natural

59:30

margin profile, and you're like, you know what? This

59:32

is not going to be a $10 billion

59:34

Uber style business. This is just a regular

59:37

good business on the internet.

59:39

I think you should talk to Tiny. It ends up being a

59:41

total win for everyone. And this is a product

59:43

that absolutely needs to exist in the market,

59:45

especially, especially in this

59:47

moment. Shoot them a note, hi at tiny.com

59:50

and just tell them that Ben and David sent you.

59:53

Okay, David. So I had forgotten

59:55

about this story. I knew a little bit

59:57

of it from watching Steve Blank's great.

59:59

talk maybe five, eight years

1:00:02

ago, the secret history of Silicon Valley.

1:00:04

But you sort of found the last 20 minutes

1:00:07

and then just dug in like a splinter

1:00:10

on this particular moment in history

1:00:13

and how it is all tied into Lockheed

1:00:15

Martin. So where are we going? Yeah. Well,

1:00:17

and it's even lesser known than that. Only certain

1:00:20

versions of that talk that Steve has given

1:00:22

contain the Lockheed story. So

1:00:25

much of it has only recently been declassified.

1:00:27

A lot of it, even after he first started giving

1:00:29

this

1:00:29

talk. So what really turned

1:00:32

me onto this was some of the chapters in

1:00:34

Beyond the Horizons, even though that book

1:00:36

was written in the late 90s. I started

1:00:38

digging in and then I started watching some YouTube

1:00:40

videos with some of the people involved in this. And I was

1:00:42

like, oh, my God,

1:00:44

there is this incredible story

1:00:47

here that we don't realize.

1:00:48

Yes. In typical David Rosenthal

1:00:50

fashion, you sent me a note the other day

1:00:53

and said you have to listen to this starting at

1:00:55

eight minutes and 50 seconds. And I was like, what is this?

1:00:57

And I click and it's a guy at a podium

1:01:00

with a terrible recording set up

1:01:03

from the IEEE Silicon Valley

1:01:05

History videos. So Industry Association.

1:01:07

This thing has 124 views after being posted seven years ago. Incredible.

1:01:14

This stuff is buried. I honestly

1:01:16

can't believe it. And I'm so glad that

1:01:18

we get to tell it here.

1:01:20

All right. Let's set the context. So

1:01:23

if we rewind back to World War Two, one

1:01:26

thing we kind of mentioned here now as

1:01:28

we were talking about the U-2 and the Russians tracking

1:01:30

it on radar, but we didn't talk about during

1:01:32

World War Two

1:01:34

was the importance of radar. Now,

1:01:37

so much of World War Two was an air

1:01:39

war, both in Europe and then especially

1:01:41

in the Pacific.

1:01:43

And the development of both radar

1:01:45

and anti-radar technologies was

1:01:47

paramount in the war efforts. Yes,

1:01:50

there was lots of land based fighting and tanks and

1:01:52

all that stuff. But World War Two was the first

1:01:54

real air war.

1:01:56

And obviously that importance of

1:01:58

radar continued into the cold.

1:01:59

War just like we were talking about with U2 flights.

1:02:03

Now during World War II, where

1:02:06

was all of the US and allied

1:02:08

radar work and research being done?

1:02:11

It was primarily being done out

1:02:13

of two institutions in Boston, MIT

1:02:17

with the Radiation Laboratory or

1:02:19

the RAD Lab, and

1:02:22

Harvard with the Harvard Radio

1:02:25

Research Laboratory. Now here's what's

1:02:27

interesting.

1:02:28

Other of these two labs at MIT and

1:02:30

Harvard existed before the war. The government

1:02:33

directed MIT and Harvard

1:02:35

to set them up as part of the war effort.

1:02:37

They didn't exist before and then MIT

1:02:40

and Harvard, very fortunately

1:02:42

for California and Silicon Valley, shut them

1:02:44

down after the war.

1:02:47

Now it turns out that

1:02:49

the head of the Harvard Lab was

1:02:52

a professor named Frederick Terman.

1:02:55

That might ring some bells for people, especially people who went

1:02:57

to Stanford. Terman was

1:02:59

probably the world's leading expert

1:03:02

on radio engineering and also

1:03:04

vacuum tubes and early computing.

1:03:07

Except Terman

1:03:08

wasn't actually a Harvard professor.

1:03:12

Terman was a Stanford professor. He was

1:03:14

just on loan to Harvard during

1:03:16

the war years because that's where

1:03:18

the government set up

1:03:20

the radio labs. The government allocated

1:03:22

millions and millions of dollars of funding to Harvard

1:03:25

and MIT and something like $50,000 to Stanford. All

1:03:28

of the funding for this was Harvard and

1:03:30

MIT. Yes, they assembled all

1:03:33

of the world's experts and Terman was arguably

1:03:35

one of, if not the leading world expert

1:03:38

in radio engineering, assembled them there

1:03:40

in Boston, I

1:03:41

guess in Cambridge at Harvard and MIT.

1:03:44

Cambridge residents would get mad at us if we say Boston. After

1:03:47

the war, Terman comes back to

1:03:49

Stanford because Harvard shut down the lab. He

1:03:52

comes back to Stanford and he

1:03:54

does three things. First, he

1:03:57

recruits away all

1:03:58

of the best people.

1:03:59

that he worked with at the Harvard Radio

1:04:02

Lab from universities all over the country, he

1:04:04

recruits them to Stanford. And he gives them

1:04:07

tenure immediately. Yes.

1:04:09

He's like, I want to make this deal as sweet

1:04:11

as possible for you because I want to will

1:04:14

Stanford into existence as

1:04:16

an engineering institution.

1:04:18

Yes, of the highest order.

1:04:20

So that's one. Two,

1:04:22

soon after he gets back to Stanford, he becomes

1:04:25

the provost of the entire university.

1:04:28

And as provost, he

1:04:30

completely changes the way tech

1:04:32

transfer is done at Stanford. No

1:04:34

other university has as good of a tech

1:04:36

transfer policy as Stanford. They're notoriously

1:04:39

friendly. Yes, notoriously friendly and

1:04:41

everywhere else, including Harvard,

1:04:43

MIT, Princeton, blah, blah, blah, notoriously unfriendly

1:04:46

and hard to work with.

1:04:47

The classic story is Stanford

1:04:49

owned 1% of Google at spin out, which

1:04:52

ended up making them an ungodly

1:04:54

amount of money because of how big Google became.

1:04:56

And if that were at other universities, they would have

1:04:58

said 50% is what we need to keep,

1:05:01

or 33% is what we need to keep. And they would

1:05:03

have smothered the innovation before it could become

1:05:05

commercially viable. Now,

1:05:06

I sort of in the back of my mind knew

1:05:08

this because I had watched Steve Blank's talk

1:05:10

many years ago. But I kind of forgotten. I just

1:05:12

thought it was like, oh, well, that's because Stanford and

1:05:15

Silicon Valley, like, we get it. We're smart.

1:05:17

Not that we're smarter, but there's this attitude of, if

1:05:19

you're in Silicon Valley, even to this day, you're

1:05:21

like, yeah, we get how the culture works

1:05:23

here. And the East Coast doesn't get it. As

1:05:26

if this somehow existed a priori, because

1:05:28

it was just in the water and came from nowhere.

1:05:31

Not at all. It's all thanks to Terman

1:05:34

and World War II and his experience at the

1:05:36

Radiolab.

1:05:37

When he becomes provost, he's still

1:05:40

a super devoted patriot. He knows

1:05:42

how important

1:05:44

this work is that it was doing World War

1:05:46

II, and he knows it's just as if not more

1:05:48

important during the Cold War. So

1:05:50

what he does is he encourages

1:05:53

students and professors to leave Stanford

1:05:56

and go set up companies and work

1:05:58

for defense firms and work for the military.

1:06:00

not to make money, but to be

1:06:02

like in the nation's service. Take

1:06:05

the research and the people who are doing the research

1:06:07

out, start a brand new company.

1:06:10

He would try to help you find funding, which

1:06:12

at that point, venture capital didn't exist. So

1:06:14

he was introducing you to customers who could

1:06:16

sort of preorder from you to fund your research.

1:06:20

And he basically believed that a commercial

1:06:22

ecosystem leads to more innovation

1:06:25

than one that is purely happening in academia

1:06:28

and thus could better serve the

1:06:30

needs of the nation. Customers.

1:06:34

Customer. Customer. Hang

1:06:36

on to that thought for one second.

1:06:38

If you were doing all of this 10 years before,

1:06:40

the university would have looked at you and said, what are you doing?

1:06:43

You're encouraging this stuff to go away

1:06:45

from us. It would have been career suicide in

1:06:47

academia to do this.

1:06:49

Instead, at Stanford, it becomes the

1:06:51

best thing you can do for your career.

1:06:53

Because in Terman's mind, it's the best thing you can do

1:06:55

for your country.

1:06:57

Okay, so that was number two. Number

1:06:59

three,

1:07:00

he carves off a

1:07:02

big part of the Stanford campus. Now if you've ever been to

1:07:04

the Stanford campus,

1:07:06

my God, I was so lucky to spend two years there.

1:07:08

It's like paved in gold. It's literally Shangri-La. They

1:07:11

have so much land. It's the most

1:07:13

beautiful, like idyllic place in the world. And

1:07:15

like 80% of the land is still undeveloped. Yeah,

1:07:18

they own like all the way out to the ocean, I think, like it's crazy.

1:07:21

So he carves off a part of

1:07:23

the Stanford campus and develops

1:07:25

it

1:07:25

to be leased out as commercial

1:07:28

space to corporations and

1:07:30

the government

1:07:31

to come, people to start companies, companies to

1:07:33

come to build to participate on this ecosystem

1:07:36

all right there on campus. It's initially

1:07:38

called the Stanford Industrial Park.

1:07:41

Today, it's called the Stanford Research

1:07:43

Park. It still exists if you've ever been

1:07:45

there. It's basically all of the

1:07:48

office buildings up and down page mill road in

1:07:50

Palo Alto. So it's HP

1:07:53

and Hewlett Packard. We'll talk about that in a minute. It's

1:07:55

Tesla's landlord today. It's VMware. It's

1:07:58

where Xerox Park was. It's where Next was.

1:07:59

was in Steve Jobs. It's where Facebook's

1:08:02

office was for a while. This is where Theranos

1:08:04

was, my God. So

1:08:07

you might be listening like, well, this is cool. Maybe

1:08:09

I knew this stuff. Maybe I didn't. This is really fun. Silicon

1:08:11

Valley history. What does this have to do with

1:08:13

Lockheed?

1:08:14

Well, one of

1:08:17

the very first tenants

1:08:18

of Stanford Industrial Park,

1:08:20

then you were talking about customers, customer,

1:08:24

who would go on to become the

1:08:26

single largest employer

1:08:28

in the area, in Proto

1:08:30

Silicon Valley,

1:08:32

by a huge margin,

1:08:34

was a new secret division

1:08:38

of Lockheed. This blew

1:08:40

my mind. The secret division is called

1:08:42

the Lockheed Missile Systems

1:08:45

Division. Later to be renamed

1:08:48

the Lockheed Missiles and Space

1:08:50

Company.

1:08:51

And what

1:08:52

LMSC, Lockheed Missiles and Space

1:08:54

Company, did.

1:08:56

I honestly think it is bigger

1:08:58

impact to the country, to the world, and

1:09:00

certainly on business to Lockheed and

1:09:02

to Silicon Valley than Skunk Works. This story

1:09:05

is of a scale, I don't know,

1:09:07

that we've ever really told on acquired.

1:09:09

There are a lot of Skunk Works devotees, David.

1:09:11

That is quite the assertion to say that this

1:09:13

is a bigger deal.

1:09:15

Well, let's talk about it. Listeners, you can judge. They

1:09:17

patterned themselves after Skunk Works and took so

1:09:19

many of the Skunk Works management principles

1:09:22

up to Silicon Valley.

1:09:24

I was reading Skunk Works, I'm like, oh yeah, so

1:09:26

many of these principles, they sound like Silicon Valley

1:09:29

principles. Well, there's a reason for that.

1:09:31

Okay,

1:09:32

so Lockheed makes the decision to

1:09:34

start this new Missile Systems

1:09:36

Division in 1954.

1:09:39

But it becomes so much

1:09:41

more than that.

1:09:42

Obviously, this is also top secret stuff,

1:09:44

just like Skunk Works. So just

1:09:46

like Skunk Works, they set up the

1:09:49

new Missiles Division in Burbank,

1:09:51

also in an unmarked building. They literally just

1:09:53

copy-paste Skunk Works right there in Burbank.

1:09:56

And so it starts in Southern California. It

1:09:58

does. But...

1:10:00

There's two problems with that. First,

1:10:03

it's kind of unwieldy for a

1:10:05

big company like Lockheed

1:10:07

to have not one, but two super

1:10:09

secret unmarked divisions right

1:10:12

there on the main campus, you know, that aren't supposed

1:10:14

to know about each other or anything else going on. Like you start

1:10:16

getting into weird territory quickly.

1:10:19

But it's important that

1:10:20

the missiles division did start there because they

1:10:22

took, as I said, a lot of Skunk Works management

1:10:24

practices.

1:10:26

The bigger problem is that it

1:10:28

turns out that building missiles is

1:10:31

a very different discipline than

1:10:33

building airplanes. Because

1:10:36

unlike airplanes, you don't have a pilot in

1:10:39

the missiles. So you need missiles

1:10:41

guidance systems.

1:10:44

And that means that you need

1:10:46

radar and you need computing.

1:10:49

And those two things are not what Southern California

1:10:52

is good at. But you know what's

1:10:54

really good at those things?

1:10:56

Fred Terman

1:10:57

up at Stanford. And everybody

1:10:59

that he's recruited, literally the best minds in the world

1:11:01

at all of that, who are now at Stanford and

1:11:03

who are now being encouraged to go

1:11:06

spin out

1:11:06

and start companies who might just be subcontractors

1:11:09

to a big missile system that you're trying to

1:11:12

build. Interesting.

1:11:13

And this is cool. This is a part of the research that you did that

1:11:15

I don't know much about.

1:11:17

Yeah, this is great. So

1:11:19

the next year in 1955, Lockheed moves the

1:11:24

missile systems division out of

1:11:26

Burbank

1:11:27

and up 101 to the Stanford

1:11:29

industrial

1:11:31

park. The very same

1:11:33

Stanford industrial park that Fred Terman

1:11:36

just carved out of the Stanford campus and

1:11:38

developed on Page Mill Road. And

1:11:41

Lockheed becomes one of the very

1:11:43

first and biggest tenants of

1:11:46

the Stanford now research park and is still

1:11:48

there

1:11:49

to this day. Wow. Now,

1:11:51

they can't actually do everything they wanna do on

1:11:54

the Stanford campus. You're not gonna build a missile and

1:11:56

test it on the Stanford campus.

1:11:58

So Lockheed.

1:11:59

pretty quickly after they established

1:12:02

themselves in Palo Alto, they also

1:12:04

buy 275 acres just down the

1:12:07

road in Sunnyvale and they build

1:12:10

a huge campus there, 137 buildings.

1:12:12

So when Lockheed buys this, the

1:12:16

population of Sunnyvale is less than 10,000 people.

1:12:19

What? Lockheed built

1:12:21

Sunnyvale.

1:12:22

I didn't realize that. Wow.

1:12:25

So how many people would eventually work

1:12:28

in Sunnyvale at Lockheed?

1:12:29

So by the end of

1:12:31

the decade in 1959, just four

1:12:34

years later, Lockheed Missile

1:12:36

Systems employs almost 20,000 people

1:12:39

in Palo Alto and Sunnyvale. And

1:12:42

a few years later, by the mid 60s, they

1:12:44

would employ 30,000 people.

1:12:46

This makes Lockheed by

1:12:49

far the largest employer

1:12:52

in this brand new proto Silicon Valley.

1:12:54

I mean, remember, I just said Lockheed built Sunnyvale. You

1:12:56

think of Sunnyvale Silicon Valley today, like Yahoo

1:12:59

and Intel and all that Cisco, there was

1:13:01

none of that Lockheed built

1:13:03

it. So Hewlett

1:13:05

Packard was the largest tech

1:13:07

company computing company, Silicon

1:13:09

Valley company at the time. Hewlett

1:13:11

and Packard were students of Fred Terman

1:13:14

and Fred encouraged them to spin

1:13:16

out and start Hewlett Packard.

1:13:18

They were the largest new tech company.

1:13:20

They only had 3000 people. 123. Lockheed had 30,000 people. Whoa.

1:13:22

Oh my

1:13:23

God. It's funny story. I

1:13:29

knew at least as of 2009, that

1:13:32

the Lockheed campus in Sunnyvale was large.

1:13:35

Because when I was interning at Cisco, I went

1:13:37

on a run one morning, and I was just sort of like exploring

1:13:39

around and I ran into Lockheed's

1:13:42

campus. And I got chased down by a security

1:13:45

guard who's like, well, you can't just run in here. And

1:13:47

I had my headphones in. I thought I was in big trouble.

1:13:50

Yeah. They had this huge structure called the

1:13:52

blue cube that has since been disassembled.

1:13:55

It's not there anymore, but you need

1:13:57

a big hanger

1:13:58

that you're going to build.

1:13:59

missiles it and they end up building a lot more than

1:14:02

missiles we're going to talk about.

1:14:03

And you mentioned they need radio and

1:14:05

they need computing. Computing basically

1:14:07

wasn't a thing yet. I mean Shockley co-invented

1:14:10

the transistor just a few years before, started

1:14:12

Shockley Semiconductor in 1955. The

1:14:15

same time as Lockheed is coming

1:14:17

to Silicon Valley. Right. And

1:14:19

of course Shockley is a predecessor to Fairchild

1:14:21

Semiconductor, which is a predecessor to Intel.

1:14:24

So like they've got Terman's

1:14:26

radio background, but there

1:14:28

really weren't any people with compute

1:14:31

experience yet. That was all happening concurrently

1:14:34

all around them in Sunnyvale and Palo Alto.

1:14:37

So we talked about this

1:14:39

a bunch actually on the first Sequoia

1:14:41

Capital episode when we were telling Don Valentine's

1:14:43

story. And at the time when we

1:14:45

were telling the story, we're like, Oh, you know, Don, he was

1:14:48

so legendary before he started Sequoia.

1:14:50

He was the head of sales at Fairchild Semiconductor

1:14:53

and the head of sales at National Semiconductor.

1:14:56

And we sort of glossed over to, we were like, yeah,

1:14:58

you know, he was mostly selling to defense companies.

1:15:01

Well, who do you think he was selling to?

1:15:04

I mean, he was selling to defense company.

1:15:07

Yes. Now he was also selling around

1:15:09

the country to other defense contractors too.

1:15:12

Lockheed wasn't the only company that was

1:15:14

working on missiles, but I think they

1:15:16

were the only one that was working on missiles in Silicon

1:15:18

Valley. Wow. And God did they

1:15:20

buy a lot of product

1:15:23

out of all these startups and all of these

1:15:25

Silicon startups that are coming out of

1:15:27

Stanford and coming out of Shockley and just

1:15:29

getting sprung up right there in Silicon Valley.

1:15:32

I can't believe that there

1:15:34

were 10 times more employees

1:15:37

at Lockheed in Silicon Valley

1:15:39

than at HP in the late 50s.

1:15:42

Yes, it is totally insane. And

1:15:45

so many people came through Lockheed

1:15:48

into Silicon Valley, including

1:15:51

one Jerry Wozniak

1:15:54

who moved himself and his young family

1:15:56

out to this new Silicon

1:15:59

Valley. Silicon Valley to become an

1:16:02

engineer at Lockheed

1:16:04

Missiles and Space Company. That's right.

1:16:07

Woz is dead. The reason that Steve

1:16:09

Wozniak grew up in Silicon Valley is

1:16:11

directly because of Lockheed

1:16:13

Martin. Oh, that is awesome. No

1:16:17

Lockheed, no Woz in Silicon Valley,

1:16:19

no Apple. No Apple. Crazy.

1:16:23

Not to mention, there's a really interesting

1:16:25

point here, which is you wouldn't have this open

1:16:29

commercial

1:16:31

spirit to Silicon

1:16:33

Valley without Terman

1:16:35

and without the belief that the right thing

1:16:37

for America was for all these companies

1:16:40

to become companies instead of academic research

1:16:43

or spread around in other parts of the country. It creates

1:16:45

the Silicon Valley ethos and creates Silicon

1:16:47

Valley as the place where that ethos

1:16:49

would thrive. And it's worth pointing out

1:16:52

for people who don't spend a lot of time in the Bay

1:16:54

Area, this has absolutely nothing

1:16:56

to do with San Francisco. Nowadays

1:16:58

it's sort of this big blended soup of companies

1:17:01

that have offices in both places and you can

1:17:03

drive or take the tech train between them. Yeah,

1:17:05

that's a recent phenomenon. San Francisco

1:17:08

is a completely different universe at this

1:17:10

point that is in zero part responsible

1:17:13

for the growth of Silicon Valley.

1:17:15

Yeah. And before this time, before the 50s,

1:17:18

there was no Silicon. It was called the Valley of

1:17:20

Hearts Delight. That was the name

1:17:22

for it. It wasn't Silicon Valley. Huh.

1:17:25

Wild. Okay.

1:17:27

So what was Lockheed actually doing

1:17:29

there? We talked about them working on intercontinental

1:17:31

ballistic missiles, ICBMs and missile

1:17:34

defense systems. I think they probably

1:17:36

did continue to work on

1:17:37

that. But there were two projects that this

1:17:40

new

1:17:41

division of Lockheed

1:17:42

took on that really

1:17:44

changed history

1:17:46

and both of them together became,

1:17:49

for Lockheed at least, and the parent

1:17:51

company, by far the biggest

1:17:54

driver of profits for

1:17:56

the coming decades. And really, as we'll see,

1:17:59

this division.

1:17:59

you know, not skunkworks, this division kept

1:18:02

Lockheed alive. Lockheed would have absolutely

1:18:05

died without this division.

1:18:07

So what were these projects? One went

1:18:11

up to space, as perhaps

1:18:13

is obvious, and we foreshadowed and literally

1:18:15

is in the name of the company, the Lockheed Missiles and

1:18:17

Space Corporation.

1:18:19

And the other one went down

1:18:22

under the oceans. So let's talk

1:18:24

about that one first, because I think it happened

1:18:27

first chronologically. So

1:18:30

submarines had

1:18:32

obviously been a thing since World War II and

1:18:34

even before that, back to World War I.

1:18:37

There's lots of advantages to submarines

1:18:39

during wartime. They're stealthy. They

1:18:42

can basically travel anywhere in the world. You

1:18:45

can stay hidden for long periods of time, especially

1:18:47

once nuclear submarines are developed that can stay

1:18:49

underwater for months at a time, self-powered.

1:18:53

They're both a great offensive and a great defensive

1:18:56

weapon during periods of active war.

1:18:59

But during the Cold War, they're kind of

1:19:01

useless, because

1:19:03

if you wanted to have a chess

1:19:05

piece in position to strike a land-based

1:19:08

target,

1:19:09

if you could even do that at all with a submarine,

1:19:11

you got to get the submarine pretty dang close to

1:19:13

the land, which means close to Russia, which

1:19:15

means they know you're there and that's a provocation.

1:19:19

Unless somebody

1:19:22

could maybe somehow figure out a

1:19:24

way to fire an intercontinental

1:19:27

ballistic missile out of a submarine

1:19:30

and go up into the air and into space

1:19:32

and then hit a land-based target far, far

1:19:34

away. Now, this seems crazy.

1:19:37

It's hard enough to make this happen from the

1:19:39

ground.

1:19:41

You're talking about doing this from the sea with

1:19:43

all the waves and the lack of stability.

1:19:46

No way this could happen. This thing has to thrust

1:19:48

through air after it thrusts through

1:19:50

water.

1:19:51

Oh, well, you're making the leap already

1:19:53

that you would fire it underwater at first

1:19:56

when the Navy contracts Lockheed to work

1:19:58

on this in 1950.

1:19:59

35 to build the Navy's

1:20:02

fleet ballistic missile system. It's FBM.

1:20:05

The idea is they're going to fire these things from the

1:20:07

surface of the ocean. The submarine's going to rise

1:20:09

up. They're going to stabilize it in

1:20:12

water and they're going to fire off a

1:20:14

missile from the deck of a ship or a surface

1:20:16

submarine. You could imagine another

1:20:18

issue, which is these things have rockets

1:20:20

on them. So you have to not destroy the

1:20:22

launch pad, which is the submarine full

1:20:25

of American humans while

1:20:27

launching it.

1:20:28

Yeah, this is a big challenge. The

1:20:30

reason

1:20:31

that it was worth trying

1:20:33

was that if you could

1:20:36

create a naval based intercontinental

1:20:40

nuclear strike capability,

1:20:42

it completely changes the strategic

1:20:45

landscape of deterrence and

1:20:47

first strike versus second strike and retaliation.

1:20:50

So what we were really

1:20:52

afraid of, we thought the Soviets

1:20:55

would pursue a first strike policy if

1:20:57

they felt they were able to.

1:21:00

The way that they would do that is if they

1:21:02

felt that they could in that first strike

1:21:04

knock out all of our

1:21:06

nuclear capabilities. If they could

1:21:09

target all of our land base

1:21:11

ICBMs,

1:21:13

incapacitate them, then we would be

1:21:15

incapable of responding

1:21:17

with a second strike and then they could blow up our cities

1:21:19

and whatnot.

1:21:21

Now,

1:21:22

if all of a sudden you have a mobile

1:21:24

naval based missile system,

1:21:27

well, that completely changes the chess board. It's quite the

1:21:29

deterrent.

1:21:30

Quite the deterrent. You can now pretty

1:21:33

much guarantee as long as you

1:21:35

can keep a fleet of nuclear submarines operating

1:21:37

at all times that you can't take

1:21:40

them out and they can move around and be

1:21:42

anywhere. And so if you launch a strike,

1:21:44

they're going to launch right back and

1:21:47

first strike is now off the table. This is a huge

1:21:50

strategic win if you could put this actually

1:21:53

operationally in practice.

1:21:55

The other medium, if you will,

1:21:57

location

1:21:59

that could change the dimension two for

1:22:01

doing this

1:22:02

would of course be space. If you had

1:22:04

nuclear missiles up in space, that also

1:22:06

changes the dimension. And this among many,

1:22:09

many reasons is why when

1:22:11

the Soviet Union launches Sputnik

1:22:14

into space in October 1957, even

1:22:17

though Sputnik itself was far from having

1:22:20

nuclear ICBM capabilities,

1:22:23

the Soviets getting to space first was truly

1:22:25

terrifying.

1:22:26

I can't imagine how disconcerting it is in an era

1:22:28

that,

1:22:29

you know, now there are tens of thousands of satellites

1:22:31

orbiting the earth all the time.

1:22:33

When that was a brand new thing, when you could look up at

1:22:35

night, if you could see Sputnik and you're like,

1:22:37

Oh my God, that thing any day now could have

1:22:39

a nuke aimed at us. Right.

1:22:42

Okay, so back to the sea. It turned

1:22:44

out like we were talking about a minute ago that firing

1:22:47

ICBMs from the deck of a surfaced

1:22:50

ship, be it a submarine or otherwise,

1:22:52

bad idea, basically impossible.

1:22:55

But firing missiles from under the

1:22:57

ocean was doable. And

1:23:00

Lockheed did it with the help of Silicon

1:23:02

Valley.

1:23:03

So in December 1955, the Navy awards

1:23:07

this contract to Lockheed.

1:23:09

The name of the project was Polaris.

1:23:12

People might've heard of Polaris missiles just

1:23:15

over four years later after the contract

1:23:17

is awarded in 1960.

1:23:18

The very first US

1:23:22

nuclear ballistic missile equipped submarine

1:23:24

sets sail on its patrol and everything we

1:23:26

just talked about

1:23:28

is operationalized equipped with Lockheed

1:23:31

Polaris A1

1:23:33

under sea fired nuclear

1:23:35

warheads. Ballistic missiles could

1:23:38

reach land based targets up to 1200 nautical

1:23:41

miles away from wherever the submarine

1:23:43

was when it launched it.

1:23:45

And it was all built out of Silicon

1:23:47

Valley

1:23:47

with many subcontractors all over the place. Right.

1:23:50

I'm assuming Lockheed doesn't actually make

1:23:53

the nuclear warheads, right? Like that

1:23:55

was still happening in national labs at Sandia

1:23:58

and all the places that were pioneers.

1:23:59

during World War II. Yeah,

1:24:02

Lockheed did not make the submarines, nor did they make

1:24:04

the

1:24:05

nuclear warheads. I think a

1:24:07

lot of this work was done out of Sandia, which

1:24:09

we talked about on the Amazon episode. Oh yeah,

1:24:12

Bezos' dad worked there, right? Grandfather,

1:24:14

Bezos' grandfather was the head of Sandia,

1:24:16

which was in New Mexico, the military

1:24:19

nuclear program,

1:24:21

the division of the US overall nuclear

1:24:23

program, I

1:24:25

think was out of Los Alamos, but Sandia

1:24:27

was the military arm of it.

1:24:29

Which weirdly, Lockheed for

1:24:32

many years actually had a contract to

1:24:34

manage Sandia, because there's some sort

1:24:36

of strange partnership that happens where the

1:24:38

federal government hires government contractors

1:24:40

to manage national labs. Yeah,

1:24:43

to enable this strategic

1:24:45

chess piece, the key thing is

1:24:47

the missiles. Nuclear submarines already

1:24:49

existed, nuclear warheads already existed.

1:24:52

The challenge here was create a system

1:24:54

by which you could launch a missile from under

1:24:57

the ocean out of a submarine. Man, I just

1:24:59

gotta say, it is so fortunate

1:25:01

and insane to me that

1:25:03

neither side ever launched.

1:25:06

All the deterrence

1:25:08

for all the scary things that could

1:25:10

have come out of it and all the itchy trigger fingers and everybody

1:25:13

getting close, it never happened.

1:25:15

That is a big applause

1:25:17

to humanity that we could have done

1:25:20

this and no one did.

1:25:21

Well, this is one of the things that I mentioned at the top

1:25:23

of the episode.

1:25:24

Doing this research sort of changed my mind

1:25:26

on

1:25:27

the war machine aspect of Lockheed

1:25:30

and the military and the military industrial complex.

1:25:33

But I think people really believed, and I think there's a good chance

1:25:35

this was reality, it was

1:25:37

building all of these systems and

1:25:39

advancing all of this capability that

1:25:42

prevented it from being used.

1:25:44

If we hadn't built this stuff, there's

1:25:46

a good chance Russia would have done a first strike.

1:25:49

Yeah, it's crazy.

1:25:51

Okay, so Lockheed after four years successfully

1:25:53

does the underwater ICBM

1:25:56

launch.

1:25:57

Yes, and then that quickly

1:25:59

leads. to more successor

1:26:02

programs and developing the technology further.

1:26:04

The Polaris becomes the

1:26:06

Poseidon is the next program, and then

1:26:08

the Trident. The Trident missiles

1:26:11

had a 5,000 mile range

1:26:14

and carry a

1:26:16

hugely destructive nuclear payload.

1:26:18

Unbelievable. Terrifying.

1:26:20

All right. So

1:26:22

we just told this incredible story about

1:26:25

LMSC taking

1:26:28

Silicon Valley

1:26:29

under the ocean.

1:26:31

This program, Polaris,

1:26:33

Poseidon, Trident, for most people listening,

1:26:36

especially if you're American,

1:26:38

these names aren't surprising to you. You've heard

1:26:40

of these programs. You are aware that

1:26:43

the US starting in the

1:26:45

1960s had nuclear

1:26:47

submarines carrying intercontinental

1:26:50

ballistic missiles. Yep.

1:26:52

It was, if you think back to the kind of

1:26:54

the chess game, it was in the

1:26:56

government's best interest for

1:26:59

the Soviets to know that we had

1:27:01

these. The point was deterrence.

1:27:04

In fact, we probably should have bragged about this

1:27:06

even if it wasn't real. Right. Maybe

1:27:08

it wasn't. Who knows? We

1:27:10

should have had inflatable subs floating around that we thought were nuclear.

1:27:13

Maybe it's all the cover. Maybe all the money that went into Silicon

1:27:15

Valley. No,

1:27:17

I don't think that was the case. Either way, you don't want

1:27:19

to find out. Speaking of cover, do you know about

1:27:22

the things we did on top of the factories

1:27:24

when we were building airplanes? Oh, yes.

1:27:27

And Disney was involved. Yeah.

1:27:29

Starting way back in World War II, but I think continuing

1:27:31

after that, in the Burbank facilities at

1:27:34

Lockheed,

1:27:34

I know Boeing in the Seattle area

1:27:36

and other places too, built basically

1:27:38

these burlap cities on

1:27:41

top of factories that looked

1:27:43

like suburbs, complete with 3D cars and

1:27:46

trees and stuff so that anybody

1:27:48

who was creating a spy plane and flying

1:27:50

overhead would mistake

1:27:52

our manufacturing facilities for

1:27:55

something innocuous. Yeah, I think it was spy planes and also

1:27:57

during World War II bombers.

1:27:59

never made it to the West Coast that they wouldn't know

1:28:02

where to bomb. I'm pretty

1:28:04

sure that Disney Imagineering was involved

1:28:06

in creating these sets like they made

1:28:08

for Disneyland.

1:28:10

It's crazy how sometimes it's in our

1:28:12

best interest to make

1:28:14

the adversary aware of our capabilities

1:28:17

and sometimes we want to disguise capabilities.

1:28:19

It's really interesting. Super interesting.

1:28:22

Okay, so if you remember back when

1:28:24

we pressed pause on the skunk work story and

1:28:27

moved up the state of California up the coast

1:28:29

to Silicon Valley,

1:28:31

we'd said that when

1:28:33

Gary Powers and the U2 was shut down in

1:28:35

May 1960 that supposedly

1:28:38

this was the end of US observational

1:28:41

capabilities in the Soviet

1:28:43

Union and that it was for about three

1:28:46

months, but nobody knew it. Well,

1:28:50

LMSC is the reason

1:28:52

that we got our

1:28:55

eyes back in the sky.

1:28:56

And you might know that eventually after

1:28:59

the U2, Skunk Works would

1:29:01

create the next great spy

1:29:03

plane, the SR-71, which we will get to,

1:29:05

but that wasn't for a little while. So this intelligence

1:29:08

gap was filled by this secret,

1:29:11

not very well-known project.

1:29:13

I think a lot of people in

1:29:15

the military who did know about this stuff,

1:29:18

this is heretical to say because it's so

1:29:20

beloved,

1:29:21

but I think the Blackbird was

1:29:24

a decoy. We were getting everything we needed

1:29:26

from space. We just didn't want anybody

1:29:28

to know about it.

1:29:29

And so everybody's now is like, oh, the Blackbird, it's

1:29:31

such a shame the government shut it down. It

1:29:34

was never used to its potential.

1:29:36

It kind of never needed to be because

1:29:38

of LMSC in space.

1:29:40

Whoa. All right, I'm listening. Okay.

1:29:43

You got a lot of hairs on my arms. Yeah, I know.

1:29:45

I'm getting mad over here. People are probably getting

1:29:47

very mad. Here we go.

1:29:50

So when you think about America

1:29:52

and space and the US space program,

1:29:54

you think of course about

1:29:56

NASA, Gemini and Apollo,

1:29:58

Mercury, Kennedy. putting a man on the moon,

1:30:02

all that amazing stuff, which

1:30:05

for sure happened and was happening. All

1:30:07

of that was basic

1:30:10

science research. Nobody

1:30:13

working on those programs, public

1:30:16

observing it, like

1:30:17

it would be crazy to think they were gonna be actual

1:30:20

applications in space anytime

1:30:23

soon.

1:30:24

There's no infrastructure, like these are science missions. This

1:30:26

is research. And even Sputnik

1:30:29

on the Russian side, Sputnik was

1:30:31

a research festival. It was like the size of, I don't know, like

1:30:34

a bowling ball. I think it was a little bigger, but like it

1:30:36

was

1:30:36

very, very simple. It was

1:30:39

a long, long,

1:30:41

long, long time before you went

1:30:43

from those initial science missions

1:30:46

to

1:30:46

applications in space,

1:30:49

or so everybody thought. Because

1:30:51

in parallel, there was a secret

1:30:54

US space program

1:30:56

being run by Lockheed Missiles

1:30:59

in Space Corporation

1:31:01

out of Silicon Valley. And

1:31:04

in basically the same

1:31:06

timeframe as the initial NASA

1:31:09

missions, the initial Mercury, I think

1:31:11

were the first missions. Mercury, Gemini,

1:31:13

Apollo, yep. Yeah, basically concurrently

1:31:15

with that, they got a fully

1:31:18

operational

1:31:20

observational spy satellite

1:31:22

system

1:31:24

up into space and functioning at the same

1:31:26

time.

1:31:26

How did we launch them with nobody

1:31:29

laid out? There was a cover story for what these

1:31:32

things were. I think it was called the Discoverer

1:31:34

program.

1:31:35

I believe the cover story was that this was like

1:31:38

life form research in space, like they

1:31:40

were sending animals up to space like monkeys

1:31:42

to prepare for manned space flight. That

1:31:44

was the cover story. They may have sent some monkeys

1:31:47

up there, but that was not the point. The

1:31:49

point was to get these reconnaissance satellites up

1:31:51

to space.

1:31:52

So the first program

1:31:55

was called Corona. And

1:31:57

you should Google about it and read. There's a great.

1:31:59

declassification document

1:32:02

story

1:32:02

that the government put out in 1995 when they declassified

1:32:06

this stuff and the Wikipedia page is pretty

1:32:08

good. Yeah,

1:32:09

I downloaded it and I have it open

1:32:11

my computer. It's pretty crazy. It

1:32:13

says secret. It has the classification on it

1:32:15

and then it's struck through. Yeah. It's literally

1:32:18

the document that was prepared in secret

1:32:20

and then declassified. I think what the

1:32:23

CIA and the National Reconnaissance Office does,

1:32:26

I think they write these stories, maybe

1:32:28

quasi in real time, so that there's documentation

1:32:31

of all this stuff and then they stamp it

1:32:33

secret and then it never gets out until it gets

1:32:35

declassified. Wow.

1:32:37

Just amazing. But on the declassification

1:32:39

website, which we'll link to in sources, you

1:32:42

can see a bunch of the pictures that

1:32:44

the corona satellite took, including

1:32:46

of the Pentagon. So you can see like something

1:32:49

you know what it looks like and you can see the level

1:32:51

of fidelity that this 1959 satellite

1:32:54

got of that.

1:32:56

Oh, let's get into it. Okay, so the name Corona.

1:32:58

There are conflicting stories of whether it comes from the

1:33:00

Corona typewriter or the Corona type

1:33:03

of cigar that apparently the Pentagon

1:33:06

official that championed this program really liked.

1:33:09

We'll never know. It's all classified. So

1:33:11

these satellites, like we've been alluding to, had

1:33:14

cameras on them.

1:33:15

The first one went up in August 1960. It

1:33:18

was built in the years leading up to

1:33:20

that by LMSC and then went up in August 1960.

1:33:24

While everything else happening in space was, you

1:33:26

know, research

1:33:27

vessels,

1:33:29

this first corona satellite had a camera

1:33:31

system on it

1:33:33

that

1:33:34

was able to photograph

1:33:36

any ground location that it

1:33:38

passed over in its orbit around the earth

1:33:41

at a resolution as low as

1:33:43

five feet

1:33:44

from space.

1:33:46

These were film systems. Now

1:33:49

the U2 camera system did

1:33:51

have a higher resolution than

1:33:54

that higher ground resolution,

1:33:56

but five feet was still

1:33:57

plenty good. And more important.

1:34:01

the corona system

1:34:02

could take photos anywhere

1:34:05

in the world on its orbit. And if

1:34:07

you had multiple of these satellites up there, you know, you could

1:34:09

pretty much blanket the earth or at least everywhere you

1:34:11

cared about

1:34:12

pretty quickly.

1:34:14

At basically any point in time, you know, they're

1:34:16

spinning around the earth. Like, yes, you can't do it

1:34:18

in real, real time, but like it doesn't take that long

1:34:20

for the thing to fly around the earth and then fly around again. Right.

1:34:24

The very first corona

1:34:26

mission, that very first satellite that went up

1:34:29

in August 1960,

1:34:30

produced greater photo coverage

1:34:33

of the Soviet Union than all

1:34:35

of the previous U2 flights combined. Five

1:34:38

years of operating the U2 program, one

1:34:41

satellite in one kind of

1:34:43

month long mission, I think it was about a month before

1:34:45

it decayed, the orbit decayed,

1:34:47

got more than all of that. Wow. No

1:34:49

need to fly a plane. No need to worry

1:34:51

about getting caught. No need to worry about the Soviets

1:34:53

knowing what was going on. No need to worry about

1:34:55

being shot down.

1:34:57

Unbelievable. There's a crazy stat over 800,000

1:35:01

images would be taken by these satellites

1:35:04

over the course of the program. They got an enormous

1:35:06

amount of coverage. Now,

1:35:08

you might be thinking as you're listening, you know, oh, I

1:35:10

know how satellites and satellite imagery works today.

1:35:13

You know, you got Google Maps, you got Starlink,

1:35:15

you know, blah, blah, blah, Starlink's communication.

1:35:17

But like communication. Yeah. How

1:35:19

did they beam these images down

1:35:22

from the ground? These were not digital

1:35:25

photography. This was film freaking

1:35:28

photograph. So you got to

1:35:30

get the film down from space is my point. Which

1:35:32

they literally did. And how

1:35:34

did they do it? They dropped it.

1:35:36

OK, so that's the craziest thing.

1:35:38

They dropped from

1:35:41

space a canister with film

1:35:43

in it.

1:35:43

Mind you, they can't mess up and expose

1:35:46

the film and ruin it. This is very delicate

1:35:48

film. They drop it in

1:35:50

a canister from orbit. It

1:35:53

enters the atmosphere and during all the heat

1:35:56

and everything. It's not like you just shove

1:35:58

it out of the saddle. They.

1:35:59

had retro rockets built into the

1:36:02

film canisters to

1:36:04

reaccelerate out of the orbit

1:36:06

and move it down to go into the atmosphere.

1:36:08

Right. Because if you just drop it out behind you, then it stays

1:36:11

in orbit. It needs to decelerate its rotational

1:36:13

velocity so that it does move closer to the

1:36:15

earth. It is in a custom designed canister

1:36:18

called the film bucket that General Electric

1:36:20

designed. It would separate

1:36:23

and start falling to the earth

1:36:25

after the incredible heat

1:36:28

and violent action of moving