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The predator, page 2

By Barney Gimbel, writer
October 31, 2008: 6:44 AM ET

Blue outdid himself the following summer when he and Linden decided to fly a small plane over the Andes Mountains. It didn't matter that they didn't yet know how to fly. "Those were just details," Blue says with a wry smile.

That exploit, which was featured on the cover of Life magazine in 1957, laid the groundwork for the Blue brothers' future. After hearing that cocoa farming was a way to make money quickly, the brothers arranged financing to buy a slice of Nicaraguan jungle on the Caribbean coast, built an airstrip, and started planting.

While that venture failed, they had more success investing in sugar plantations, petroleum, and real estate. Neal was always looking for those straw hats. One morning in mid-1985 he read in the Wall Street Journal that Chevron (CVX, Fortune 500) was looking to sell some of the assets of newly acquired Gulf Oil. Sensing a bargain, he called Goldberg, his trusted advisor.

Soon Goldberg and the Blues flew to San Diego to look at an odd research entity that came with Gulf Oil. Founded as the nuclear think tank for General Dynamics (GD, Fortune 500), the unit, called General Atomics, had lost direction after being sold and resold to various oil companies. It built small nuclear reactors and pioneered a gas-cooled reactor for power generation - a technological coup but a commercial failure. The company also ran the country's largest fusion reactor.

"Neal was exceedingly unimpressed by it," says Goldberg. "But he was smart enough to spot it as a terrific real estate opportunity.... And he was smart enough to realize it might even be a place where he could do something with his ideas of transforming military doctrine."

Blue has long believed that when it comes to innovation, the military is almost always wrong. The armed forces are always buying overpriced technology designed for the last war. During his first days at General Atomics in 1986, Blue gathered the company's employees and laid out his vision: General Atomics would be remade in the image of the Hughes Aircraft Corp., back when its founder was still running it.

And like Howard Hughes, who often used his companies as vehicles for pursuing his obsessions, Blue soon announced that the company would begin research on his pet project: unmanned aerial vehicles. The company's employees, mostly engineers and nuclear physicists, were shocked.

Blue had originally conceived the aircraft as kamikaze strike weapons or as cheap cruise missiles, but after the Pentagon put out a call for an unmanned surveillance plane in 1993, Blue changed his mind. To execute his vision, he hired Tom Cassidy, a retired Navy admiral and commander of the service's elite Top Gun Academy. (When the producers of the Tom Cruise movie needed a gruff admiral for a bit part, they cast him.)

Cassidy's team stuck to off-the-shelf parts, using cameras made for traffic helicopters and a Bombardier engine originally designed for snowmobiles. He named it the Predator.

Air Force officials were initially unmoved: After all, many of them were former pilots - and no pilot has ever picked up a girl in a bar by bragging he flew a remote-controlled plane. More important, the Air Force was sinking hundreds of millions into a next-generation fighter jet, the F-22.

But the Predator was cheap (the original Predator cost a mere $10 million per plane) and scarily effective at providing intelligence. It was quiet and could fly for a full day at 25,000 feet, recording and relaying real-time video to commanders on the ground. Current versions even shoot Hellfire missiles.

Although the first Predator was launched during the mid-1990s Balkans conflict, it wasn't until the wars in Iraq and Afghanistan that military commanders integrated it into their arsenals.

"It is difficult," says Dyke Weatherington, the Pentagon's deputy director of unmanned warfare, "for us to keep up with the demand for these from the field."

While GA refuses to disclose its revenue or profits, the aeronautics business, which operates as a separate company, has sold more than $2.4 billion worth of drones and other equipment to the U.S. military in the past decade.

There are many sides of Neal Blue. There is the charming side he shows to reporters - military innovator, gutsy entrepreneur, and learned scholar. And there is the relentless side known only to his customers and the people who survive working for him.

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