Hard Tech and Hard Power
Discover more from Countdown Capital
Hard Tech and Hard Power
The importance of going from one to 100 in hard tech
By Ryan Li and Jai Malik
Most people assume that hard tech involves taking new technology from zero to one—from concept and/or R&D to initial commercialization. This is unsurprising, given that many of America’s best and brightest engineers are on a mission to usher in new paradigms of technology with untapped market potential. Whether it be asteroid mining, brain-computer interfaces, or new exoskeletons, the timeline to production for these projects is long but commercial demand is evident. These disruptive, breakthrough technology ventures are commonly referred to as “frontier tech.”
Although frontier tech is undoubtedly important for technological and societal advancement, it is only one piece of the hard tech puzzle. Less obvious is the process of taking a technology from one to 100—that is, from nascent commercialization to massive scale. This is, of course, not a novel concept in venture. Software companies are built entirely around scale and network effects. But, for hard tech companies, going from one to 100 is less frequently discussed because people often underestimate its difficulty. Since going from zero to one is such a large challenge to overcome, scaling past that point is often viewed as comparatively easier. For instance, if a space company is able to launch just one rocket, we expect launching ten rockets—a rapid decrease in cost and increase in frequency—to be within reach too.
In hard tech, the truth is that going from one to 100 is at least as tough as going from zero to one. Scale is not naturally built into hardware in the same way it is built into software. While the marginal cost of software is near zero and producing multiple copies of it is straightforward, the marginal cost of a complicated piece of hardware (e.g.,. a nuclear power plant) is certainly not and producing multiple copies of it quickly involves stiff operational challenges.
For example, manufacturers of the most complex forms of hard tech generally rely on multiple sources across their supply chains. However, each supplier is often hyper-specialized. As a testament to this fact, one report recently showed that 30 percent of suppliers are the sole eligible provider of a product for the Department of Defense. Therefore, if one supplier fails, the entire production process is at risk. This is one reason why vertical integration is often compelling for scaling hard tech companies and necessary for those companies focused on making a production process more reliable and efficient.
Moreover, scale in hard tech necessitates accelerating innovation. Copy-pasting can only bring down costs or increase speed so much. For example, SpaceX is arguably in the process of going from one to 100 (or 1,000). If the Falcon rockets were SpaceX’s successful demonstration of going from zero to one, Starship is SpaceX’s attempt to go from one to 100. While these vehicles are similar, Starship involves significantly improved rocket technology such as the Super Heavy booster, which is why Starship is still in development. If Starship launches, it will carry 10x more cargo into space while costing less to launch than Falcon 9. The implications of this scale are industry-altering, feasibly allowing for the relatively affordable construction of new space stations, lunar bases, and more (see Casey Handmer’s great piece on the topic). This is what happens when a company goes from one to 100 and beyond.
Going from one to 100 is also at least as important as going from zero to one. The most obvious reason why is that technology is only practically useful if supply can match demand. For example, if a space company were only able to launch one reusable rocket a year, it may enjoy healthy profits by reusing the same equipment from that one vehicle. However, it would not meaningfully affect the space industry at large since it would only be able to satisfy the needs of a small subset of its potential customer base.
A more urgent argument for the importance of going from one to 100 is that scale is necessary for hard tech to yield hard power. In geopolitics, hard power is the direct use of military and economic means to coerce other countries into taking particular actions. Beyond direct acts of war, hard power can also come from the threat of warfare. This is, of course, largely the role of nuclear weapons today. Nuclear weapons compel other countries into inaction against the nuclear state in question either under the threat of mutually assured destruction (in the case of other nuclear states) or complete annihilation (in the case of non-nuclear states). Hard power can also come from things that are not hard tech. For instance, the United States is able to freeze its adversaries’ assets thanks to its influence over the global financial system.
However, many types of hard power can only come from hard tech. For example, consider any form of military hard power, whether it be drones, jets, missiles, or space assets. In those cases, hard tech can only yield hard power when it exists at scale. It is not enough to know how to build jets and missiles but that we can consistently produce jets and missiles. Similarly, even if we developed a new missile that is an order of magnitude better than anything that currently exists, our adversaries may only care if we can eventually construct many of these missiles. In short, our ability to manufacture is directly linked to our ability to exert geopolitical influence; yet, we are beginning to see that our production prowess is no longer a guarantee.
In light of increasing geopolitical tensions, hard power is more important than ever. First, hard power can defend against many forms of softer power. Consider China’s Belt and Road Initiative (BRI), a massive global infrastructure project that leverages China’s industrial strength to unabashedly accrue soft power across the world. By accepting CCP assistance, these countries fall increasingly under the influence of Beijing. For example, Kenya’s Mombasa-Nairobi Standard Gauge Railway, its largest infrastructure project since independence, has been funded to the tune of $3B by China’s state road corporation. The same corporation is contracted to operate the rail line for at least five years, thus giving China control over a new crucial throughway in the country.
As Daniel Russel and Samuel Locklear write, it is not inevitable that Chinese influence will continue to grow in BRI countries. One of the most effective ways to out-wrestle Beijing’s soft power will be through military diplomacy, forming closer “military-to-military ties with concerned states.” This is only possible by investing in hard power: tools and technologies that will continue to make us the most compelling defense partner for developing nations.
Hard power at scale can also defend against other hard power. The United States’ aircraft carriers are some of its most important defense assets because there are so many of them. Whereas other countries like Russia and China can only project tactical air power in limited geographies, the U.S. and its eleven carriers can do the same across eleven separate sea-based geographies across the entire world. Hard power, particularly the type that arises from hard tech, is thus extremely important for geopolitical independence because it prevents other countries from being able to coerce us through military strength.
China is accruing hard power at an astounding rate because it is increasingly getting better at going from one to 100. For example, China is on track to build two new aircraft carriers by the end of the year, which is an extraordinarily rapid pace of industrial achievement. For comparison, the last American Nimitz class aircraft carrier, the USS George H.W. Bush, took over six years to complete. The RAND Corporation has also projected various combat scenarios between the U.S. and China that troublingly demonstrate China’s accelerating military competence.
American hard tech companies must take note. As of now, America is failing at many important “one to 100” tasks. For example, by April 2022, the army had given a quarter of its Raytheon Stinger missiles to Ukraine, and defense officials and Raytheon executives said restocking them could take several years. Even if the Stinger is ruthlessly effective in combat, it does not matter if we cannot rapidly produce these assets in times of need. Examples like these are particularly concerning because, historically, the exceptionalism of our industrial base lay in its ability to go from one to 100 with hard tech—despite the difficulties of doing so.
Whereas hard tech is a function of both innovation (zero to one) and scale (one to 100), hard power that comes from hard tech is primarily a function of scale. Thus, in light of our adversaries’ increasing strength, we must earn more hard power by investing in and building hard tech that scales. The goal is not just to support hard tech companies that can go from zero to one, but also companies that can go from one to 100. Only through this can we create a new industrial base and renew our military might: two of the necessary backbones for continued progress and prosperity in America.