“When you're investing in perfect markets, what you get is beta, right? If the market goes up, everybody does well, but no one's really generating any alpha. Defense is still broken.”
How I Invest with David Weisburd · Startups & Venture · August 2026
Weisburd had asked for the best economic reason to invest in defense tech. Chapman gives the patriotic answer first and then the mercenary one, having spent the previous stretch describing how procurement split into two organisations that did not talk to each other. His pitch is not that the sector is growing but that it is dysfunctional, and that the dysfunction is where the returns live.
Transcript
…gate one. There's one team that's then managing them from gate one to gate two to gate three. And so you're not having that sort of disorganization happen in the army in quite the same way as it used to. And I think we're starting to see that across the other services. So I'm cautiously optimistic.
What's the best economic reason to invest into defense tech?
…and national security right now. As we talked about, sort of the world order is changing dramatically. And if you want the outcome of that process to be positive for yourself and your kids as an American, I think it makes sense to be putting money to work in this space right now. It doesn't hurt that there's a lot of alpha to be had here. So talk about all the reasons why this market is broken. When you're investing in perfect markets, what you get is beta, right? If the market goes up, everybody does well, but no one's really generating any alpha. Defense is still broken. I mean, it's not as broken as it was five years ago, but that means if you understand how to navigate it, there's still real alpha to be found in this market. So that's one of the reasons to be investing in this space. If you understand it, there's real money to be made. The other reason is the market size, right? So $2 trillion, roughly, let's say, between U.S. allies and partners, defense and…
No one that I've talked to, whether in the space or outside of the space, believes that defense budgets are going down over the next decade. I've never heard anyone take thunder. It's
crazy to say we might have a $1.5 trillion defense budget, but I think to put that in perspective, I want to say that'll be like 3.5%, 4% of GDP. I mean, during the Cold War, I think we topped out at like 9% of GDP for defense spending. Towards the end of the Cold War, it was like 6% or 7%. So…
Old warfare versus new warfare and new technologies. That's right. What's the strongest ethical argument for investing in defense tech?
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