Former Google CEO Eric Schmidt-Funded Rebellion Defense Struggles After Loss of Founders
By Thomas Brewster, Sarah Emerson, and David Jeans
Ahead of an all-hands meeting in March of this year, hundreds of Rebellion Defense employees had been anticipating good news. There’d been a major military contract in the works for months, and the $1 billion AI startup’s leadership had assured them it was all but secured. Potentially worth tens of millions of dollars, the deal with the Department of Defense was expected to unlock a new round of funding for Rebellion and solidify its reputation as one of the Pentagon’s biggest allies in the sprint to win the AI arms race.
Rebellion had hired dozens of engineers and other experts to work on the product: a tactical threat awareness tool, or “TTA,” that would use AI to make battlefield decisions. The tool, which Rebellion was trying to sell to the Under Secretary of Defense for Research and Engineering, according to two sources, was core to the company’s mission of modernizing warfare with sophisticated software, a vision that had attracted millions in investment from the likes of former Google CEO Eric Schmidt and media mogul James Murdoch.
But when CEO Chris Lynch — a tech entrepreneur-turned-Pentagon executive — faced staff at Rebellion’s Washington, D.C. headquarters in March, it was to deliver bad news: They hadn’t won the contract. The following month, approximately 90 employees, many who had recently joined, were laid off. By September, Lynch was gone as well, as were Rebellion’s U.K. operations.
“To our knowledge, this contract has still not been awarded today,” Rebellion spokesperson Gia DeHart told Forbes in a statement, characterizing it as an “example of the innovation adoption challenges faced by startups seeking to do business with the U.S. Department of Defense.”
Launched in 2019, Rebellion very quickly became one of the highest profile defense tech companies around. But its ascent is difficult to track. It had little proven record as a government contractor and never secured a large commercial market. “I just thought: they are a billion dollar company, they have to have [a core product], it’s probably just top secret,” a former Rebellion employee told Forbes. “By the time I got into the company, people were like, well, we don’t really have one.”
And now it didn’t have that expected DoD contract, either.
While Rebellion presented a veneer of success and influence, with frequent visits from military brass to its flashy offices in D.C. and London, interviews with 18 former employees and advisors to the company, and public contracts reviewed by Forbes, suggest that it overwhelmingly benefitted from aspirational, investor-induced hype.
As CEO and cofounder, Lynch brought an outsider’s chutzpah to the mission of bringing AI to the military-industrial complex
Earlier this year, Lynch had painted rosy projections for 2023 to some employees and the board, varying from $50 million to almost $100 million in total contract value, according to three former staff. The actual figure, these people said, was closer to $20 million. Multiple sources in position to know told Forbes that Lynch’s departure “to tackle new endeavors,” as he put it, was engineered by a board tired of his overstated financial speculations and failures to land key contracts.
Meanwhile, after it spent $430,000 lobbying the federal government on AI matters according to 2022 and 2023 disclosures, government procurement records show Rebellion has received just $7.2 million from publicly listed contracts this year. In 2022, that number was $6.2 million. (Not all of its federal contracts may be public; Rebellion declined to comment on the scope of its government deals.)
“Rebellion was built to tackle some of the most audacious challenges for the defense of our country and allies, and that vision is more important now than ever before,” Lynch told Forbes in an email. “At the start of the year, I stepped down from Rebellion after 4.5 years of building. I was ready for incredible new leadership to scale the next phase of the company.”
Responding to a detailed list of questions about Rebellion’s revenue, contracts, management issues, Rebellion declined to share financial figures or comment on personnel matters. Spokesperson DeHart would say only that the company had reported a 50 percent jump in its annual contract value this year. “Like most defense start-ups, we had wins and losses as we worked to find product-market fit,” she said in an emailed statement. “Over the last six months, the company took a series of deliberate steps to adapt and refine our strategy to ensure long-term sustainability.”
Incoming Rebellion CEO Ben FitzGerald, an investor and former executive chairman tapped for the new role earlier this week, conceded to Forbes that the company had faced a “number of management challenges,” along with “acquisition challenges that plague the Department of Defense.” But he said “Rebellion has since right-sized our business, and we have an incredible team in place.”
A Pentagon spokesperson declined to comment on the Department of Defense’s relationship with Rebellion.
Rebellion Defense co-founder and former CEO, Chris Lynch.
Andrew Harrer/Bloomberg
As CEO and cofounder, Lynch brought an outsider’s chutzpah to the mission of bringing AI to the military-industrial complex. “I’ve run into so many people in my life who want to tell me about how we should be doing other things than working in defense, or investors who believe that we shouldn’t be starting companies in defense,” Lynch told Forbes in a 2022 interview. “And it’s chicken shit.”
Prior to Rebellion, Lynch was a Seattle-based tech entrepreneur whose ventures included Celebrity Hookup, a hot-or-not app and website for attractive famous people, gifting site Thoughtful and Sparkword, an iPhone word game. After getting a job with the U.S. Digital Service, he was later hired to lead a division within the Department of Defense called Defense Digital Service tasked with getting AI tech into the government at speed. There, he met Nicole Camarillo from the U.S. Army Cyber Command’s talent team.
When an employee revolt forced Google to stop supplying the Pentagon with AI tools that could label drone footage, Lynch and Camarillo saw an opportunity: if the tech giants wouldn’t supply the government with cutting-edge defense software, maybe they could.
In early 2019, the duo left their government roles to build Rebellion Defense, naming their new company after Star Wars’ Rebel Alliance. They linked up with a former U.K. Cabinet Office official, Oliver Lewis, who had been focused on transforming digital operations for the British civil service. He joined to lead a London Rebellion division with the goal of selling to the U.S. and U.K. simultaneously. According to the cofounders’ origin myth, the trio wrote down their “Rebellion Manifesto” in a coffee shop, defining “why we would be different and why this matters,” Lynch previously told Forbes. They landed on a mission to deliver AI technologies that “defended democracy, humanitarian values and the rule of law,” Lewis added. (Camarillo left the company earlier this year. She didn’t respond to a request for comment.)
Despite its original pan-Atlantic strategy, Rebellion’s U.S.-based leadership soon began to worry that its U.K. operations were a distraction from much larger revenue opportunities with the Pentagon
More than a dozen employees joined Lynch from the Pentagon. And his pitch seemed to land among defense leaders and Silicon Valley luminaries alike: the late former Defense Secretary Ash Carter advised the company and Schmidt, the former Google CEO, backed its $11 million seed round through the venture fund he cofounded, Innovation Endeavors; the founders described Schmidt as a “founding partner” in an op-ed. (Multiple former Rebellion employees and DoD staff said Schmidt was a largely unengaged investor. Schmidt declined to comment.)
As Rebellion touted contracts with the U.S. Air Force, U.S. Navy and U.K. Ministry of Defense, venture capital firm Kleiner Perkins led a $60 million series A funding round in April 2021, again joined by Schmidt’s Innovation Endeavors and other investors. Just months later, Insight Partners led a $225 million funding round that valued the company at $1 billion.
Key to its investor pitch at the time was a suite of mission-oriented tools, which included a product called Nova. An automated network bullet-proofing software, Nova also offered red team services to identify vulnerabilities and conduct recurring screenings to detect cybersecurity threats.
Despite its original pan-Atlantic strategy, Rebellion’s U.S.-based leadership soon began to worry that its U.K. operations were a distraction from much larger revenue opportunities with the Pentagon, two former employees told Forbes. In late 2022, Lewis, with Rebellion COO Bob Daigle and another executive named Alex Burton, conceived of a new company that they hoped would preserve Rebellion’s U.K. mission in the face of looming cuts, by absorbing its U.K. contracts and London team, two sources with knowledge of their plans told Forbes. Lewis approached an outside investor about the move, but when the board learned of his efforts to secure potential funding the project hit a wall, these sources added. He left Rebellion in November 2022 along with Daigle and Burton. Soon after, the company fired roughly half of its London office, according to multiple sources. The details surrounding Lewis’ departure have not been previously reported.
Daigle and Burton didn’t respond to requests for comment.
Rebellion appears eager to close out its chapter with Lynch, who remains one of the company’s largest shareholders. In a Dec. 18 press release announcing FitzGerald as its permanent CEO, the company noted that it had undergone “strategic restructuring” under interim CEO Barry Sowerwine, and had seen a fifty percent increase in annual revenue. It currently employs about 100 people and an investor, who wished to remain anonymous, told Forbes that it has “multiple years” of runway at its current operation. The U.S. Army recently extended a contract for Rebellion’s Nova product; government procurement records indicate the company received a $6 million payment as part of the contract.
Lynch, for his part, seems intent on remaining in the defense space, though it’s unclear how the veteran founder plans to reinvent himself. “As for me, I am focused on what comes next and how our military utilizes technology to overmatch adversaries today and tomorrow,” he told Forbes. “I can’t think of anything more important.”
This story has been updated to clarify certain functions of Nova and the extent of the softwares adoption.
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