Erik Prince on Blackwater's origins, the future of PMCs, and why Europe still isn't serious about defense

Prince in the studio. Why don't we bring him in? Eric, how you doing? There he is. What's happening? Welcome to the stream, gentlemen. How are you? We're great. How are you? Great to have you. How are you? Thank you.

Um why don't uh I don't know if you need any introduction, but uh why don't you give an introduction uh for those that that may be unfamiliar. uh born in Michigan uh served in the Navy for a while and built a business called Blackwater which was a defense services firm, a private military contractor if you will.

I sold that in 210 and I've done some things in um resource investing upstream in mining and uh exploration and I still uh I help governments from time to time with large intractable problems and uh started a company just over three years ago called Unplugged which is a standalone independent phone outside of the Google and Apple universe.

It's really kind of an an answer to surveillance capitalism. Mhm. What was the first dollar of revenue for Blackwater? Like how do you get that business off the ground? Uh so SEAL teams, special operations units, because of the gun culture in America have gone to private facilities really since the 70s.

Some, you know, some champion shooter that's running a shooting school somewhere. And no one had done that on an industrial scale. And so I knew coming out of the SEAL teams, I knew what the teams needed.

and I built the largest facility of its kind in the world within an hour drive of Norfick Naval Base and all the SEAL teams and military concentration that's there.

And actually our first customer was from the West Coast, a West Coast SEAL team, but um yeah, we we built ourselves into becoming a indispensable part of the trainup of military units.

And then when uh Coline High School happened, that terrible high school shooting, you had dozens of police departments that responded and didn't do very well because it took them hours to clear the building and people bled out that should have been cared for.

And so we ended up building a big mockup called Are You Ready High School where we could train thousands of SWAT officers how to respond to those kind of disasters in process with all the sounds and lights and role players and screaming and um and that was very effective.

And then with the USS Cole Navy ship was blown up in Yemen by a suicide boat. The Navy realized that well the the sailors that were guarding that ship were holding largely unloaded weapons that they never fired before because the Navy thought it was too dangerous to train with live guns.

And so we ended up training a 100,000 sailors. That was really our first big defense contract. Interesting. And then and then when 911 happens obviously the demand signal for security and training and aviation and uh you know operating in difficult places was our specialty. How do those contracts actually work?

We're familiar with the defense tech pipeline.

A lot of defense tech startups right now maybe they're drilled they're building counter UAS drone systems and the typical path is they get some SBIR money then they move to program of record they start scaling up manufacturing but for what you're doing I imagine that the contracts are structured differently.

How do you project revenue? How do you think about ongoing relationships with the DoD and making sure that the customer is satisfied for a long time? Uh it's a much shorter flash to bang uh in terms of uh demand signal.

A customer would come and say I need this kind of airlift in this part of the world uh move this many tons.

um need to be able to fly on night vision goggles and operate under this level of uh of FAA or not scrutiny and we would bid it about 98% of our revenue was competitively bid and I look at at the same time I was building Blackwater I took over my dad's original business which made diecast machines a big you know heavy machine tool business and I took that through a lean transformation process really based on the Toyota production system and you lowering the cycle time of large quantities of steel and other work in process.

And so as I'm laying out Blackwater, I kind of thought about it like a like a factory. And what does a military do? It recruits, vets, equipss, trains, deploys, and supports people to do a job at a difficult place. That's what we did.

And because we were a training facility to start with, we could back into the recruiting and the vetting. We had our own in-house uh doctors and psychologists for all the psych screening tests, our own supply, obviously an enormous and impressive armory.

Uh what is the what do you think the the PMC of the future looks like? Right, you have warfare is changing. We have autonomous systems now. A lot of the new capabilities being brought online are, you know, drone based.

I imagine your sort of vision of of how you counter that uh probably ends up looking like a mirror to some degree, but but I'm curious. Uh I'm sure you've thought about it more than anyone else. Uh yeah. Well, you look back in history, the contractors on the battlefield have always been there.

And if you were laying siege to a city in Europe a thousand years ago, the people you contracted for, the PMC's would have been the guys building the trebuchets or the battering rams, which was at that point the most sophisticated system, mechanical system on the battlefield.

Um, now those that cutting edge, bleeding edge technology is obviously in the drone and autonomous space. And yes, you're right.

the the private sector can adapt and operate so much faster including in the cyber space as well that the that is how you deliver significant punch above your weight by having a few people that do those systems very very well.

That's something that we're still the US DoD procurement swamp is still truly not learning from fast enough is you go from idea to prototype to field testing in combat on in Ukraine in a matter of days or weeks and you get a buy decision from a customer that needs it. That same process in the US takes years.

And so the obsolescence of ideas is so quick that we are missing uh and so that that speed of advancement is obsolescing I would say hundreds of billions of dollars of past procurement decisions now and and we're diluting ourselves if we think we're we're fat, dumb, and happy just because we've spent trillions of dollars over the last 25 years in stuff.

Buying stuff does not equate to buying capacity. Yeah, that makes sense. Have you been happy to see the the Army's recent modernization efforts? They actually came on our show and and talked about it for 30 minutes a couple weeks ago. Seems like they are extremely motivated. Yeah.

And I imagine on your side these are maybe things that you've been pushing for for coming up on a couple decades now. But what was your read on it? Yeah, I I sorry I didn't see their specific comments, but I I know there's certainly trying to be a refocus on le on merit and lethality and not all the other distractions.

I would go as stream as extreme as it would sound.

I would push the purchase decisions of a lot of the next generation equipment down to the division or even brigade commanders instead of effectively what we have now is a socialist monolith buying apparatus of these PEOs through a few verticals back in Washington with enormous headquarter staffs.

And I I lauded the guys that are trying to reform the Pentagon. But the fact is you have 800,000 Pentagon civilians. If they cut that number to 200,000, now we're getting somewhere because you have so much dead wood that it literally blocks any kind of the speed or innovation.

And when I say devolve purchasing decisions, yes, that will come with with supply chain chaos. You're right. I want that. I want the 25th Infantry Division based in Hawaii, which is probably never going to go to war alongside the First Armored Division based in Texas.

I want them I want I want them to buy and adapt current drone tech that's that to their unique needs of the theaters they're operating in and let the best ideas float to the top. So then the Pentagon buys makes a much much bigger buy across it.

if they bought 10 or 15 systems that are okay but they don't really like the speed of advancement of obsolescence as we were talking about uh almost necessitates that kind of trial and error. Have you been happy that uh the startup world is is you know firmly pro uh defense tech investing these days?

Uh is there enough new investment happening or is it is it already too much? What's your read on on on just how much investment activity there's been in defense tech? I am I am happy to see defense tech uh money flowing into those spaces. I think there's a lot of great ideas.

My worry is that for the Silicon Valley crowd which is used to spending and investing at a pretty high burn rate um of overhead because they're used to finding somebody that will buy their stuff because they have thousands or millions of early adopters. You don't have that in the Pentagon.

You have basically four buying verticals. Army, Navy, Air Force, Marines, and maybe a little bit from SOCOM and a little bit from CIA, but that's it.

And so that that however optimistic or aggressive their um acceleration of purchasing timelines, it's not near what those defense tech investors are going to be used for used to. And so the the amount of overhead burn time they have to plan for is probably three to four times what they're thinking it is.

And so I worry that there's a lot of great ideas that are going to wither on the vine. Almost like planting a planting a seed in really shallow soil. Until you get roots to where they can get to water, you're screwed. Yeah. What's been your experience with uh the capital markets generally throughout your career?

Have you ever worked with venture capital? Has private equity played a role? Uh is there can debt be used to finance uh some of these problems that we're trying to solve? Like h how have you interfaced with the capital markets? And where has it kind of fallen short in your mind?

Well, I had a uh I had the luxury I because of my father's success, I was able to self- finance Blackwater. Sure. And after the initial trunch of capital, I think it was six million to start the whole thing. Buy the land, build the facility, uh we didn't have a huge capex load until the aircraft purchases started. Mhm.

But we went from one leased aircraft to 73 aircraft that we owned in six years. Wow. All self- financed. No other equity. We got a a working line, a revolver. Mh. and and that worked. Um, I really don't like partners. I don't like PE. I don't like boards. I I don't like any of it.

I'm kind of a unilateral person that way. And so, I'm not the I'm not the I'm not the right one to ask about that. Yeah, that's fine. Uh, what was your pitch when you were scaling the team and hiring people?

Uh, I mean, I've heard the narrative that uh that the money's better when you transition into private military work, but uh was there more to it than that, or is that narrative kind of overblown? Um, talk about building the team throughout your career?

that was it was it became a significant um vorticy a real center of gravity of being able to pull talent because um yeah you know seuite talent I I never gave away equity in the business because it was dangerous it was volatile and I paid I paid extremely well I paid very competitive bonuses and then would bonus two three to five times base at the end of the Mhm.

So it was effectively a big profit share and maybe that's not as tax efficient or whatever but um the people liked it. The guys that you know our ideal staffing then was somebody that spent time in a special operations or a military unit.

Uh not a career, not usually a full career, no colonels, no generals ever um intentionally because they had spent so much time. This is take note DoD or venture capital startups, people that spend 20 and 30 years in the military tend to get stuck in that way of thinking. Mh.

And so they can't think of just finding a a unconventional, different, cheaper, better, faster way to do something because that's just the way it has always been.

Um the um but our pitch to people was and especially for the guys deploying was you get to do what you're really good at and we will pay you very well for that every day you're in the hot zone. The day you leave their pay goes to zero. So we really our our pay for deployed guys is really more like paying a rough neck.

A guy that's going to a rig they're busting their ass for 60 to 90 days and they're off the rig. They're relaxing. they're going to the beach in Thailand or or managing their family farm or whatever.

But they get to do they get to maximize their marshall skills whether it's fly a helicopter on night vision goggles at rooftop level at night or a a sniper, a instructor or whatever that might be.

they get to maximize that skill set and uh and get paid for it without the nonsense and [ __ ] and the layers of of stupidity that sometimes goes to the military.

In in in this like onboarding process as you're hiring, was there a story that you found yourself coming back to and telling uh people that would join the organization to highlight heroism or sacrifice? like what what was the defining story that you like to tell to kind of characterize the work?

Well, I guess there's two. One happened to me uh when I was speaking at the National War College in Washington. So, there's 300 colonels that are training to become generals. And they had me come in and talk about what we were doing as a PMC in the battle space.

And uh at the end of it, this colonel came up to me and he had just been in brigade command.

So in command of about 4,000 people in Baghdad and he said, 'I want you to know that at you know at the top of the dashboards of his people in Baghdad's Humvees were the Blackwater call signs and frequencies because that those guys knew that if they ever got in trouble, the Blackwater guys would come for them.

No bureaucracy, no nonsense. And uh that was a I was happy to hear that. That's exactly the guidance I gave my people was the good Samaritan rule applies. If you see a friend in need, go help them out. And uh and they did that above and beyond way too often.

And then I remember um at the change of command for Admiral Eric Olsen, who was the first SEAL fourstar ever and a friend and a great guy. um a another SEAL admiral uh who was in charge of all special operations in Europe and Africa came up to me and he gave me a bear hug and he said, "Uh, thanks.

You guys really saved our bacon last week and you have um it was some really sporty flying. " I said, "That's why we have very sporty pilots. " And what had happened is a so there was a army special forces team active duty training up in Mali. This is before the coup and the jihad, all the rest.

And their tents were staked down and a big wind, okay? They called a shamal wind came through and it basically picked up the tent and tossed it with guys inside and it killed one, broke another guy's back, another guy's uh limb, trashed all their comm gear, and it gave another guy massive internal bleeding.

That was the guy that was in danger. It actually picked our aircraft up off of its moorings, damaged the landing gear and the wing tip and uh our satcom was the only thing that was working in the aircraft. So they called the other aircraft which was a thousand miles away and we're in the [ __ ] and we need medevac.

Uh and the shamal winds were still going and now it's getting to to nightfall and at that point the DoD would not let us fly in that area with night vision goggles even though we'd requested it. But that's okay. Okay, our pilots came anyway and they landed on a single set of headlights in the desert at night.

Now, if you've ever flown over the desert, you see how utterly dark it is. And so to land on a single set of headlights is extraordinary and extremely dangerous. Wow.

And they landed and our medic, our 18, our former 18 Delta medic was strapped into the back and he gets all these wounded guys on board and he starts to work on this guy who's now his blood pressure has gone to like 50 over nothing because he's gone through every bit of liquid and he works him for the next 36 hours keeping him alive.

Now the guy's body was distended because they couldn't figure out where the internal bleed was. They get him back to Aagadoo and he goes way beyond protocol to save his life at at personal licensing risk to the guys, you know, to himself.

He opens him up on an operating table of this lousy Wagadugu Bkinaaso hospital and sure enough finds that the guy's spleen is ruptured. That's where the leak was.

And so he removes it, clamps it off, puts it in a Ziploc bag, puts the guy's organs back in, sews him up, and then finally the high dollar Air Force surgical ward finally arrives 12 hours later. Too little, too late.

But our guy our guy completely saved his life and he took massive personal risk to do that because his job is to be a medic. It's not to do surgery, but he did it anyway. And so that's in keeping with the attitude of having the right people with the right attitude and the right skill set uh with with it.

And we try to do intentbased leadership. Go forward and do good things and support the customer. Make sure the good guys win. And that was a good day. Incredible story. Great story.

I want to switch gears completely and ask you about a topic uh that I'm sure you spent some time thinking about, but AI safety uh that you might you might laugh a little bit about that, but I'm curious if you've worked with any uh if any groups kind of globally around this idea uh you know just sort of the idea of AI safety as AI systems advance.

Uh, you know, the labs talk about this quite a lot, the potential dangers of misaligned AI and the dangers of a adversarial government with with uh advanced AI. What uh what if anything have you uh are your thoughts on on that sort of very broad question?

Well, I guess um the first question comes back to who's Yes, I agree.

Those are all very concerning topics and undoubtedly there are hostile unfriendly governments that have done serious germ and biowarfare uh research and development that we're not aware about not not aware of but I even question our own government uh when I think it's legitimate questions to ask of NIH and the rest of those guys for the gain of function testing that they were doing and funding in China which ended up causing apparently uh the COVID debacle.

Um I'd say almost like the hypocratic oath, let's first do no harm and let's not spend money on dumb people that should not be doing that kind of research in the first place. Uh but you're right, it I'm I am certainly no AI expert. I'm probably more of a u I don't know what I'm an expert in, but I I a few things.

I it's safe to say that if if AI can be used for malign purposes and it will be it's going to be done or it will be done. So whether it's for um breaking passwords or uh or for targeted people I'm sure some some entities are well along in that development and uh and one should be careful. Yeah, that makes sense.

Um, I also wanted to ask you about there was uh some unfortunate news or at least it seemed unfortunate that Taiwan had decommissioned their last remaining nuclear reactor and are now completely dependent on imported uh natural gas. I'm sure you have some strong opinions around this.

Yeah, I find that extraordinarily stupid of them. And that's a DPP. I mean, look, the two political parties are the King tongue and the DPP. Mhm. The KMT is the one that's really much more pro- mainland CCP tilted. The DPP is just kind of a super green and a bit woke as a party.

Uh that they would carry through on this and turn off a nuclear power that was a nuclear plant that was not dependent on hydrocarbons coming from the Middle East is extraordinarily shortsighted.

uh it speaks to their uh disbelief, their lack of fully understanding that that we are not there to hold their hand and to guarantee their safety. Um I have advocated as loudly as I can that the only answer for deterrence there is an actual hope guard because that government is corrupted at many levels.

any weapon system of significant or strategic value is already been probably pre-registered to be hit with not one but probably five Chinese missiles. So whether it's an airplane, a submarine or whatever, the only thing that can inject uncertainty into an invader is a home guard.

Um in the same way that uh you know the American Revolution, there was only 3% of our population that took up arms to fight. If we found and in Taiwan that's 24ish million people so over 700,000. If we were allowed to recruit and train a home guard three to four weeks their military is largely useless.

Their reserve forces not so much. They don't. Their idea of combat training is far from what ours is. Um, but if you find the citizens that are willing, it injects a massive uncertainty into an invader's mind because the terrain itself, either super urban or mountainous jungle, uh, definitely favors the defender.

And if Xi Jinping and the CCP are going to go for it, they have to be quick. they they themselves cannot afford a long multi-year fight like you see in Ukraine because they depend on hydrocarbons and um even food for imports.

Uh switching gears a little bit again, I'm curious uh to get your thoughts on the European defense tech ecosystem broadly. I'm sure you've done a bunch of business out there over the years. there's been some renewed, you know, new kind of spending bills.

Ryan Matl has been ripping fantastic stock, but I don't know about the company and and and I guess there's just this overarching idea that uh America has and now every European country wants to kind of own their own defense stack and there's a lot of energy there.

But how do you think that the the landscape around defense in Europe is changing either on the the government side or the private sector? Uh the only country I see being serious about it at all is Poland. They have invested they have invested and built some real combat capability. Uh the Baltics have not yet.

Finland a bit. There's lots of talk about a big European defense uh extra spend. Germany has been atrocious. I don't know. I I think I think people have bid up Rhymatal because I I don't know that their earnings have been that spectacular. Their stock price has probably done great. Yeah.

But that's I hope that's a hope of future earnings. Sure. But um uh I just see a complete lack of seriousness of European political leaders uh to address their own defense and uh it's taking him a long time to wake up from this uh this hangover of of and lethargy.

That being said, that being said, the the most capable military in in Europe right now is the Ukrainian military. The lessons learned that they have are very significant. The drone tech is far and away the best.

Their ability to to fight against and to even conduct electronic warfare and even close air support in this environment is uh is leaps and bounds ahead of even what the US military is. So that's the military to learn from. Uh Ukraine does does have a corruption problem.

I hope sincerely that Trump is able to to get a ceasefire in place and to stop this killing because it's it's absolutely pointless. It's just Slavs killing Slavs at this point and it's it's nobody's going to advance. Um and you have a um a blend of old and new.

I mean, if you look at the pictures of the front there now, it's almost indistinguishable from the Battle of the S, right? artillery duels, static lines, bunkers, all the rest.

Now, the problem is somebody can fly an FPV into your bunker on the other side, but between tens of millions of landmines, which make armored breakthrough very difficult, it slows down any attack so that the FPVs and and artillery can get to it.

You're not going to see any kind of blitzkrieg, Hanserian maneuver warfare there um until some significantly different weapon systems come along. So look, Europe needs to get serious about it. They're far from it at this point. Yeah.

I I at home these conflicts have been raging for years, but they feel very abstract because in America you just kind of go about your day and go to the grocery store and things feel normal even though uh the the global tenor of great power competition and and uh even these more minor conflicts is growing every single day.

um between Ukraine, Russia, Israel, Palestine, India, Pakistan, uh Taiwan, China, what is the most where should the focus be right now? How should people stay up to speed? Um how do we get an even an idea of of where these conflicts are going? How should people um understand the nature and the risk associated?

Well, they can follow my podcast because I talk about these conflicts almost once a week. Okay, that's great. That's a great place to start. What's What's the name of the podcast? Let's plug it. It's uh it's Off leash with Eric Prince. Fantastic. Yeah. I got one last uh I got one last kind of question for you.

Uh the rumors that we've heard around how the whole Tik Tok debacle is being solved haven't given us a lot of hasn't gotten either of us excited. Uh, are are we the you think we're the laughingstock of China that we can't, you know, ban the the the Chinese AI brain rot app from our app store?

And and will you promise us that Tik Tok will not run on your phone? Uh, I don't think it's capable to run an unplugged phone. Uh, but now that you mention it, I will make sure that is the case. That's great.

Um, but yeah, any other color on the Tik Tok ban or just general relationships between China and the US with regard to technology and business, which is our focus here? Look, the Trump administration is still in the process of getting its people in the seats and getting those institutions organized.

Um, I think I mean what what the president just did today in showing video to Sir Ramaposa from from South Africa about the the ongoing murder and genocide of white farmers was absolutely fantastic. And it I even happier that Senator Secretary Rubio is right there supporting the president. Sorry about that.

uh that it's it is a different administration than we've seen in the past and I am happy to see those kind of issues being addressed. I wouldn't discount the tis tik tok thing being addressed properly this time since it wasn't the last you know the 45 administration. Yeah. Yeah, that makes sense.

Well, we're hoping for something good. Uh but thank you so much for joining us. This is a really fascinating conversation and fantastic stories really. Uh I mean just I was sitting back just like I'm listening to the podcast. I'm listening to you. It's great. Uh, but thank you so much for stopping by.

We'd love to have you back and we'll talk to you soon. Yeah. Cheers, Eric. Thanks for coming on. Cheers. Have a great rest of your day. Bye. Uh, next up we have surprise guest. Not on the announcement post that we put out on X, but we got Anthony Papliano. Good friend of mine.

Hung out with him in Miami a year or two ago. We talked YouTube. We talked all sorts of video essay stuff. And he's got a spa. He's got a spa now. and he's also launching a an asset manager with like a trillion