Days after winning the November election, Joe Biden announced the names of those staffing his transition. Big Tech landed prominent spots. Among the hundreds of personnel on the agency review teams serving the president-elect, there was one from Uber, two from Amazon, and one from Google. And then there were two people from Rebellion Defense, a shadowy defense startup.
The announcement sent Washington insiders scrambling to look up the company. No major defense contractors appeared on the list. “It’s sure odd that a year-old startup like Rebellion winds up with two employees serving on a presidential transition team,” Ken Glueck, the executive vice president of the tech company Oracle, told me.
What is Rebellion Defense? With a Star Wars allusion as its name, this firm is not your typical contractor. Rebellion launched in the summer of 2019 to craft artificial-intelligence (AI) software for the defense industry. Trade publications gushed about how innovative it was. It quickly raised $63 million, with the conspicuous backing of its board member Eric Schmidt. Schmidt is best known as the former CEO of Google, but he’s also a billionaire investor and an influential consultant to key government bodies.
Schmidt serves as chairman of an advisory board to the White House and Congress called the National Security Commission on Artificial Intelligence. From official positions, he has advocated for the Defense Department and intelligence agencies to adopt more machine-learning technology. Meanwhile, as a venture capitalist, he has invested millions of dollars in more than a half-dozen national-security startups that sell those very technologies back to the government.
Government watchdogs consider those dual roles a conflict of interest. “He’s got many, many financial incentives to ensure that the Department of Defense and other federal agencies adopt AI aggressively,” said John Davisson, senior counsel for the nonprofit Electronic Privacy Information Center.
The Biden administration will need to tread carefully to avoid Big Tech taking over functions of government. Early in Obama’s presidency, Google representatives attended more than one White House meeting a week, leading some to jokingly call the administration Google.gov. More than 250 Google employees moved back and forth between the company and government during the Obama years. Schmidt is now poised to have even more sway within the new White House.
GOOGLE RAPIDLY GREW in the ’90s. Its board hired Eric Schmidt as CEO in 2001 to offer a businessman’s edge to the startup’s eccentric founders. Schmidt, a top executive at early tech stalwarts Sun Microsystems and Novell, served in that role for a decade. He then became executive chairman of Google’s new parent company, Alphabet, as the highly valuable, publicly traded search engine giant expanded into new fields, like artificial intelligence and national security.
Schmidt personifies the bonds between tech and government. He was a frequent visitor to the Obama White House and sent strategy memos to presidential candidate Hillary Clinton. When Obama’s healthcare.gov website overheated, the administration brought him in to clean up the mess. In November 2016, Schmidt wore a “staff” badge at Clinton’s election-night party.
ROMUALD MEIGNEUX/SIPA
Eric Schmidt in 2018
For Schmidt, the big prize was the national-security sector. In the 1960s and ’70s, the Defense Department was by far the largest investor in research and development nationwide. The internet, of course, was at first a military platform. But by the 1990s, the Defense Department was spending more money on big weapons systems than on innovating the next big thing. The CIA and NSA had, through research conduits, provided seed money to Google in the early ’90s, but soon the latest innovations were coming from Silicon Valley to government, not the other way around. By 2003, Google was selling technology to the NSA to help it sort through a barrage of data, in a project that came with Google tech support.
The Pentagon and intelligence agencies had fallen behind. Part of it had to do with the rigidity of the defense bureaucracy, the difficulty of bringing in outside talent from tech companies, and the convoluted processes of government contracting that privilege massive defense companies. All the while, the private sector was outspending the Defense Department almost 5 to 1 on new research.
Eight days after Obama was sworn in, he brought on Schmidt to offer an outsider’s view on how to run defense operations more like a tech company. Obama’s final defense secretary, Ash Carter, created a position for Schmidt on the Defense Innovation Board, which was pushing for what was mainstream in the private sector, but seen as radical in government offices—that the Defense Department needed new software. Carter and Schmidt jointly selected the other advisers.
Schmidt, then the executive chairman of Google’s parent company, had suddenly obtained unprecedented access to political leadership and global military operations. He traveled to some 100 military installations worldwide, where he was quick to point out the Pentagon’s technological limitations. By the end of Obama’s second term, Schmidt had gathered a huge amount of influence within national-security circles. Lt. Gen. Jack Shanahan, the founding head of the Pentagon’s newly formed Joint Artificial Intelligence Center, told me that Schmidt was “a mentor to us.”
As board chair, Schmidt pushed the Obama administration to bring artificial intelligence, new software, and cloud computing into the department. He was “poking a finger in the secretary of defense’s chest saying, ‘You don’t get it. You don’t see what’s happening on the outside. AI is going to transform everything we do and you guys are stuck in the past,’” Shanahan said.
In 2017, Google won a $17 million contract from the Pentagon to examine drone footage using artificial intelligence, to enable drones to sift through potential targets with more precision. A year later, a dozen of the company’s employees resigned in protest. Schmidt had promoted Big Tech playing a bigger role in national security, and now his own engineers had embarrassed him. (He said he had played no role in getting Google the government contract.) Lt. Gen. Shanahan ran that initiative, which became known as Project Maven. In press reports, the word “controversial” was almost always tagged onto it.
Schmidt has been thoroughly bipartisan. He sat next to Steve Bannon at Trump’s first convening of tech executives, and soon advocated that the Trump administration do more with AI. In 2018, Congress in its annual military-funding bill established an independent commission on artificial intelligence that would operate out of the Pentagon and advise Congress. The board’s first chairperson was Eric Schmidt.
Once Schmidt joined the new National Security Commission on Artificial Intelligence, he started telling Congress to use AI in everything. “It’s kind of a shitshow,” said someone with knowledge of the commission’s day-to-day operations. Eager to proselytize AI, commissioners knew little about the complicated laws that apply to different agencies and departments. The person described the commission as “constantly on a gerbil wheel generating content that was useless.”
The commission, in what lends the appearance of conflict of interest, hosts its reports on Google Drive and uses Gmail as its email platform. A spokesperson informed me that the commission’s staff selected Google’s federally approved suite of office products “without any input” from Schmidt.
Vice Chair Bob Work said in a statement, “Collectively, the Commission members monitor for potential conflicts of interest at our meetings and ensure our conversations do not veer into improper discussions of particular commercial interests.”
“Schmidt wields a tremendous amount of power in this space, and we thought it was pretty alarming. It seemed like an obvious conflict of interest,” said Davisson, the lawyer with the privacy advocacy nonprofit EPIC. “It spoke to the strangeness of someone with so many financial entanglements chairing this commission.”
Each member of the commission submits an ethics disclosure. For most commissioners, these documents run between 7 and 11 pages; Schmidt’s financial disclosure is 38 pages long.
Even Schmidt himself, who declined to speak with the Prospect through spokespeople, has acknowledged that there can be confusion. In November 2019, he alluded to his potential conflicts when he moderated the commission’s first public event. “It’s a real tragedy we don’t wear hats anymore,” Schmidt joked as he gestured toward a top Google official and Lt. Gen. Shanahan sitting next to him. “I’m probably the only person who can say this in the entire world: I work with and for both of them.” Of course, as he tried to toggle between those two roles, it was clear that he was wearing no hat at all. It was impossible to tell on whose behalf he was speaking.
“There’s a general concern in the tech community of somehow the military-industrial complex using their stuff to kill people incorrectly, if you will,” Schmidt said.
As the three of them talked through the work Google had done for the Defense Department, Schmidt effectively used the government event to market Google’s services to the audience of defense and AI experts. He asked the general and the Google official to each explain how Project Maven, the drone program that had led to the resignation of Google engineers, was even more successful than the media had reported.
Schmidt left Alphabet in June 2019. He was increasingly out of step with his engineers’ views of defense work, a mismatch that he himself admitted. “There’s a general concern in the tech community of somehow the military-industrial complex using their stuff to kill people incorrectly, if you will,” Schmidt said.
He proposed a solution: Tech entrepreneurs should establish new companies to fulfill contracts for soldiers and spies. “My guess is what will happen is that there will be tech companies founded that are more in alignment with the mission and values of the military,” he said.
And he put that into practice. A month after retiring, Schmidt’s venture capital firm invested in Rebellion Defense.
REBELLION’S FOUNDERS MODELED the company after the specialized Pentagon unit where many of them had worked before leaving to start the new business enterprise. The unit was a small operation called the Defense Digital Service, which brought in software experts from companies for short tours of service. Schmidt was an early fan, and he told Congress in April 2018 that the unit should be expanded to hundreds of people.
Members of the Defense Digital Service saw themselves as a band of outsiders within the Pentagon. They even put a plaque that said “Rebel Alliance” on the unit’s door. Its first director was Chris Lynch, a techie from Seattle who had founded a number of forgettable startups, including a word-game app and a hot-or-not site called CelebHookup. Lynch failed upward into a competitive position in the U.S. Digital Service, an Obama initiative, and then quickly parlayed that into a newly fashioned role at the Pentagon. Lynch spoke quickly and deployed buzzy slogans. He went out of his way to lambaste Google engineers who didn’t want to work on killing machines.
Andrew Harrer/Bloomberg via Getty Images
Chris Lynch in 2016 when he was director of the Pentagon’s Defense Digital Service
Lynch continued to work for the Defense Digital Service during the Trump administration and was given responsibility for leading the Pentagon’s transition to a single cloud, the incredibly complex $10 billion JEDI program. (The JEDI contract ended up going to Microsoft, after Trump allegedly personally vetoed Amazon as a prime vendor.)
Now that he had learned how to navigate the Defense Department, Lynch set out to move into the private sector. He co-founded Rebellion Defense in 2019 with British counterpart Oliver Lewis and Nicole Camarillo, who was still working for the Pentagon. A pitch deck for investors touted “her present leadership role in U.S. Army Cyber Command.” The trio started calling around to venture capitalists for funding.
Rebellion would do what Google would not. The pitch seemed tailor-made for Eric Schmidt.
Rebellion called themselves “a modern day Manhattan Project.” They emphasized their recent knowledge of the Pentagon and Congress as a “substantial head start to the early-stage startups attempting to build products that are to be sold into government.” Their three initial labs would include using AI for the military and policing, protecting large data systems, and creating the ultimate antivirus system. Each one would be worth billions of dollars. “The mission of national defense must be the place to be in tech,” Rebellion’s founders wrote. “This is an unconstrained ‘Project Maven.’” Rebellion would do what Google would not. The pitch seemed tailor-made for Eric Schmidt.
One venture capitalist, who declined to be identified because he said he did not want to jeopardize existing relationships, said the pitch was weak. Rebellion wasn’t providing a new product. Its founders were selling their know-how of the Pentagon, their experience working on contracts on the inside, and their relationships with senior brass. “It was pretty obvious that this among other startups were designed to capture outstanding military and intelligence AI contractors,” the investor told me. “If you can offer a big hammer with the letters ‘AI’ on the side, they’ll hand you a bag of money.”
Rebellion positioned itself as devotees of scrappy Luke Skywalker, but its backers looked a lot more like Darth Vader. In 2019, the firm raised $63 million with help from a murderers’ row of venture capitalists, $13 million more than the founders had hoped to initially secure. The Founders Fund, co-founded by Trump ally Peter Thiel, chipped in. So did James Murdoch, son of the tabloid magnate, whose investment firm Lupa Systems has been buying up media outlets. Ted Schlein, a lesser-known name on Rebellion’s board, was perhaps even more influential. Schlein is a trustee of the CIA-backed venture capital firm In-Q-Tel, and brings in-depth knowledge of what spy agencies are investing in. And then there was the heaviest hitter of them all, Eric Schmidt.
Rebellion set up a website where it listed all of its key personnel. For board member Eric Schmidt, there was no bio. Instead, beside his photo there was a link that led directly to his profile on the Defense Innovation Board, the body advising Congress and the Pentagon on how to allocate resources toward the exact technology Rebellion was selling. It suggested that there was no firewall between Schmidt’s work for the government and the private sector. Soon, Schmidt would be dropping by the Rebellion office to chat.
Rebellion’s founders were selling their know-how of the Pentagon, their experience working on contracts on the inside, and their relationships with senior brass.
The company’s website had slogans to target national-security customers (“Rebellion Defense builds for the warfighter”) as well as ones that would resonate with Silicon Valley engineers (“Join the Rebellion”). Lynch even changed the greeting on his D.C. apartment’s call box to “We are the Rebellion.” (Rebellion Defense through a spokesperson declined to comment on the record or make staff available for interviews.)
In addition to the major investors and the hoodie-wearing hacker types on their team, Rebellion also needed buttoned-up former executives from the Defense Department. Its business side was composed of “a permanent team of national defense bureaucracy hackers” and “government procurement experts”—people who were perfectly placed to snag highly coveted defense contracts. Bob Daigle has been the money man at the Pentagon. From 2017 to 2019, he served as the director of the Cost Assessment and Program Evaluation office, an office he had worked in at a senior level during the George W. Bush administration. Daigle’s job was to make sure every project was in budget, and now he was a founding executive of Rebellion. Tony Ierardi had been doing similar work for the Joint Chiefs of Staff. He retired as a lieutenant general in fall 2019 after almost four decades in the military and became the company’s chief of staff. (Like Schmidt, Daigle and Ierardi had time for another job, too. Both serve as consultants for Pallas Advisors, which Jim Mattis’s tech consigliere Sally Donnelly founded last year with a formidable roster of former top officials.) Another adviser to Rebellion, David Recordon, directed IT in the Obama White House and “modernized contracting strategies” for administration staff, according to his profile. Former Defense Secretary Ash Carter also advises the company.
The founders had told investors that they would “create a multi-billion dollar challenger to the global defense industry,” and by 2020, Rebellion was getting contracts and growing. It added an office in Seattle and expanded its presence in London, where it recently recruited the former chief of staff of the Ministry of Defense. “We’re hiring (a lot),” one staffer posted on LinkedIn in November. Rebellion has 85 employees listed on the social media platform—and 19 job openings. This was quite a leap for a startup.
Rebellion acts like a tech company. It emphasizes its jaunty culture, plays up the Star Wars references, and filmed an intentionally cheesy Christmas video where staffers each sing along to Mariah Carey. In actual fact, this is a defense company.
Government awards flow to Rebellion in part because the company sponsored high-profile research that says the government should use their products. For example, in 2020, Rebellion funded the Center for Strategic and International Studies to urge the defense sector to use more machine learning in collecting and analyzing intelligence—the exact products that Rebellion peddles. (A CSIS spokesperson said, “We stand behind the independence of our scholars and the quality of their analysis.”) Now, the people that Rebellion has been paying to write those think-tank reports are joining the Biden administration, too. The co-chair of that Rebellion-funded task force at CSIS was Avril Haines, now Biden’s director of national intelligence; its website listed Kathleen Hicks as a senior adviser, and Biden announced in December that she would be number two at the Pentagon.
SCHMIDT’S INFLUENCE is now assured within the Biden administration. In September, he was a featured speaker at a Biden campaign fundraiser with Michèle Flournoy, a former defense official who has been consulting for Schmidt’s philanthropy. Now, Schmidt is feeding the pipeline of those in national-security positions who will owe him their start in the business. Through his charitable organization Schmidt Futures and with the advice of former Obama officials at the consulting firm WestExec Advisors, he is launching an initiative to seed more tech talent into the Pentagon and intelligence agencies.
Rebellion’s future is secured in two ways—through contracts and connections. In November, it won what could grow into the company’s biggest award to date, a contract to create a single data-sharing network for the Air Force. And then there was the transition team announcement, where the company joined the big leagues of Amazon and Google.
A year before, in its initial pitch to investors, Rebellion had said, “Traction inside of the Department of Defense and its allies is the primary driver of success—mission matters.” Now, by their own terms, they’ve won.
“The fact that they got two people on the landing teams was eyebrow-raising to say the least,” said Luther Lowe, who runs Yelp’s public-policy efforts in Washington. (Yelp has been a persistent critic of Google, and by association Eric Schmidt.)
Victor Garcia, who lists his job as “engineering rebel,” helped coordinate the Department of Defense’s transition. Engineering manager David Holmes helped coordinate the Education Department and the Social Security Administration’s transition. In January, the Biden team also appointed David Recordon, who advised Rebellion at its inception, to the Office of Management and Administration as director of technology.
Here was Schmidt, on all sides of all transactions. If he needed to reach someone in the Biden administration, he had plenty of options for who to call.
