Defense tech history: from WWII radar to DARPA to the Last Supper consolidation and SpaceX's rise

Summary

Defense technology emerged as a distinct category during World War II when electronic warfare—radar, counter-radar systems, radio jamming—became the decisive layer of combat. The British Kammhuber Line of radar networks decimated German bombers. The Germans responded with the Messerschmitt 262 jet fighter. This action-reaction cycle established a pattern that would repeat: build a system, watch it get defeated, build something faster.

Vannevar Bush and Oppenheimer pioneered the model that still governs defense tech today by merging civilian scientists with military objectives. In 1940, Bush sent FDR a one-page memo proposing that universities build defense technology. FDR approved it in 10 minutes, creating the NDRC, which later became the Office of Scientific Research and Development. The Harvard Radio Research Lab, led by Fred Terman, invented over 150 anti-radar devices including chaff—aluminum foil cut to half the wavelength of enemy radar. Operation Gomorra in 1943 proved the concept at scale.

When the radio lab disbanded in 1946, Terman moved to Stanford as dean of engineering and created the Stanford Industrial Park, attracting Varian Associates, Hewlett-Packard, Lockheed, and General Electric. This interface between academic research and defense contracting became the template for Silicon Valley.

Sputnik's launch on October 4, 1957, triggered immediate panic. A simple radio satellite that could hold payloads meant the Soviets could theoretically launch nuclear weapons from space. The New York Times published 279 articles about it in a month. President Eisenhower consolidated the fractured rocket programs run by the Army, CIA, and others into a single agency: ARPA, later DARPA. DARPA became the source for transformative technologies—the internet, stealth aircraft, GPS, drones, and self-driving cars all originated there.

By the 1960s, the Department of Defense was spending 36% of all R&D dollars globally. Lockheed's Skunk Works, run by Kelly Johnson, shifted the model from government labs to private industry. Johnson designed the U-2 spy plane at 70,000 feet, then the SR-71 Blackbird, which flew at over 2,000 mph—fast enough to outrun missiles. These programs moved with extraordinary velocity from concept to operational deployment.

The 1970s brought stagnation. The dollar-gold link broke, regulation ballooned, and software offered a faster path to wealth for smart engineers. Hard tech atrophied. The 1980s globalized the problem. U.S. manufacturing employment peaked in June 1979 at 22% of non-farm employment. By 2019, that share had fallen to 9%. America outsourced manufacturing, betting it could focus on higher-value work. China joined the WTO in 2001, and the relationship deteriorated from there.

The consolidation came in 1993. The Cold War had ended in December 1991. Defense Secretary William Perry called defense companies together and said the Pentagon did not need 50 prime contractors anymore. Cut costs or merge. The resulting wave of consolidation produced what remains today: five primes including Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman. At its peak, the industry shed a thousand jobs a day. Francis Fukuyama's end of history thesis seemed to justify it.

Then 9/11 happened. Palantir, founded by Peter Thiel and others, struggled to get funding until the CIA's venture arm backed it. Even then, Palantir had to sue the government to win an Army contract. SpaceX later used the same playbook and the same lawyer to challenge what looked like a rigged procurement system. Both companies broke through by forcing the system to compete.

The 2010s became Space Race 2.0. SpaceX's milestones map the disruption: first Falcon 9 flight in 2010, first commercial ISS resupply in 2012, first orbital rocket landing in 2015, first drone ship landing in 2016, first crewed ISS flight in 2020. Ash Carter created the Defense Innovation Unit. Eric Schmidt chaired the Defense Innovation Board. Trey Stephens of Founders Fund changed his LP agreements to allow defense investing by removing a single clause that prohibited weapons investment. The LPs did not object. The first investment was Anduril. That single move cascaded through Silicon Valley. Every major fund suddenly had the option to invest in defense tech, where two years prior many still carried LP restrictions against it. If 95% of venture funds say they like what a founder is doing but their LPs will not allow it, founders either chase exceptions or give up. The removal of that structural barrier unlocked a new generation of defense startups.