Investor and entrepreneur Klaus Hommels, founder of Lakestar, sees a new era of European defence spending and investment. His comment? That modern militaries need to start working like startup funders and that Key Performance Indicators or KPIs are now part of the conversation.
“This is the year of concentration and consolidation,” said Hommels at the Resilience Warsaw conference on April 15.
First, Hommels noted that the US Department of War is currently being run like a private market. After tapping financial experts from Goldman Sacs and JP Morgan, the organization chose a new set of “Neo-primes” including Andruil and Palantir.
This movement toward free-market thinking is now defining how Europe should look at defence investment. Interestingly, said Hommels, these European neo-primes like Helsing, Iceye, and Kraken are consolidating by buying smaller companies to fold into their defensive and manufacturing capabilities.
Further, the companies and their military sponsors are treating battlefield success like business statistics. For example, Ukraine is offering rewards for every Shahed drone shot down during the war. This focus on performance-based metrics is what will move slow-moving ministries into the 21st century.
“We need to introduce the cost-per-kill or cost for effect as a KPI,” said Hommels. “Then a military has no choice but to invest in new technology which is many times less expensive than the old technology.”
Hommels closed his talk by speaking about manufacturing and procurement. He sees needed improvement in three ares: visibility for successful companies, better incentives, and decentralized production. Instead of huge primes and slow ministries, he said, the future is in a free market that runs like a startup ecosystem.
