They ran tea shops and podcasts. Now they're in the arms trade.

Toru Tokushige, CEO of Terra Drone. Noriko Hayashi for BI

In early May 2025, Toru Tokushige was alone in his Tokyo office when the general came knocking. It was the Golden Week, Japan's biggest holiday, and everyone else was on vacation.

Manabu Shimamoto, a retired major general, had come to implore the 56-year-old CEO of Terra Drone to help secure Japan's future. Their country desperately lacked drones , Shimamoto explained. Small drones. Cheap drones. Drones that could literally fly off the production line. Drones that could swarm and kill .

Tokushige, whose publicly listed drone company has been entirely civilian since its inception in 2016, had spent years researching the military side of the industry. Thrice he'd looked into the market, and thrice had chosen not to pursue. It was too complex, too archaic, with too much red tape. But now the defense ministry was calling for new companies to enter the fray. Japan had Russia, North Korea, and China to contend with . The military needed someone who could work faster than the traditional big defense firms like Mitsubishi and Kawasaki, Shimamoto told him — someone willing to take the risk.

By the end of their three-hour meeting, Tokushige tells me, he'd decided he was going to become a defense contractor . He just had to figure out how.

"It's dramatically changed in terms of the landscape of engagement, the landscape of opportunities, compared to 10 years ago," says Jerry McGinn, director of the Center for the Industrial Base for the think tank Center for Strategic and International Studies. A decade ago, he says, most defense startups could only get a foot in the door through a select few grants and programs. Now, military agencies are setting up offices in Silicon Valley and other tech hubs, hosting pitch days for entrepreneurs, and offering incubator programs for promising startups . In December 2024, the Department of Defense launched the Expedited Research Innovation System, an initiative that invites startups to submit 7-minute pitch videos to the military. At least 153 companies have since been vetted and introduced to the government, says Jennifer Thabet, director for the Defense Advanced Related Projects Agency's small business programs office.

Tokushige says his startup's "minimum goal" is to become the top interceptor drone maker in Japan. Noriko Hayashi for BI

"If you don't cast a wide net and take a bunch of small bets to figure out what's going to pay off, you are going to be missing opportunities," Thabet says. "No longer can we afford to take calculated risks. We have to swing big."

Attitudes toward working in the defense industry have also dramatically shifted.

Before the Ukraine War broke out, it was more acceptable for a tech entrepreneur "to run a porn site than to work in defense." "If you asked me 10 years ago what I thought of when I heard 'defense contractor,' I'd have pictured a shady arms dealer," says Anastasis Leonidou, a former tea shop owner who now sells portable batteries to the UK military.

Before the Ukraine War broke out, it was more acceptable for a tech entrepreneur in Sweden "to run a porn site than to work in defense," says the Stockholm-based Karl Rosander, who previously founded a podcasting platform and now sells interceptor drones . "Now, actually, when you tell people you work in defense, you get a hug."

I spoke to five veteran business owners in Europe, Asia, and the US with no prior experience in military contracting who are now pivoting their careers to build defense firms. They say the industry is slow and plodding, and believe they can still make it big, banking on the move-fast-and-break-things ethos that led to their success in previous ventures.

Tokushige describes himself as a born rebel against traditional Japan. The son of a steelworker from the rural town of Yanai, he spent his early life studying to become an engineer at the local chemical plant — then defied his father's wishes upon graduating in 1996 to start a finance career in Osaka. Five years later, he moved to Arizona in 2001 to pursue an MBA .

That choice turned out to be his biggest regret. The internet began its meteoric rise just then, and Tokushige still grieves over having missed it while in school. He became obsessed with avoiding the same FOMO sting, and worked for several years at a Silicon Valley startup, then returned to Japan to found the electric-bike company Terra Motors in 2010. Then, predicting a coming age of robotics, he launched Terra Drone in 2016; it's now listed on the Tokyo Stock Exchange with 650 employees and a market capitalization of $800 million. To catch the electric car craze, he founded Terra Charge after the COVID-19 pandemic.

Now, he's confident that the business of war is the next world-changing trend.

But he also knew that waiting a year for tender requirements from the Japanese military would kill any chance of momentum for Terra Drone. "Such a passive way of doing business," Tokushige tells me of the bureaucracy he faced. "It's not good."

Drone warfare evolves in months, if not weeks. A nation at peace builds its defense industry on theory, he surmised. He needed one that was built on war.

"Japan needs its own Elon Musk," reads a slide in Tokushige's corporate deck, "and I intend to be that person." Noriko Hayashi for BI

Tokushige first arrived in Lviv in Western Ukraine under a gloomy mid-September sky. His aim was to attend a defense conference at the local soccer stadium, run by Ukraine's Brave1 startup incubator . For security reasons, he was told the location on the day the conference started.

"I was the only Asian guy there," he says. On his own — none of his staff would risk entering a wartorn country at the time — the CEO set up a booth and swapped business cards with 136 companies. He was amazed at the blistering pace of Ukraine's drone industry compared to back home. The locals produced millions of drones a year, while J...

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