Matt Grimm
Appearances
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So I think there's a whole world of innovation that's going to come from really bringing these kind of software-first, AI-driven kind of principles into the defense sector that's traditionally lagged, especially on software.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah. So I think a couple of things. I think, first of all, it's a slight misnomer and a slight misunderstanding that the whole personnel changes over every four years. That's just fundamentally untrue. The political leaders at the top and some of the political appointees at the top, yes, those do tend to change with administrations. And sometimes they change more often.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I mean, there's like an average tenure of something like two and a half years for a lot of these positions. We had a prime minister that didn't last longer than a cabbage. Yeah, pretty famously on a Twitter feed, right? Yeah. See, if you use these lights with the cabbage, it ages faster, right? So does she.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Good joke. Yeah. So I think there's like a slight misunderstanding that like, oh, the entirety of the Pentagon turns over every four years. It's just fundamentally not true. And same here in MOD Maine on Whitehall. It doesn't turn over with every administration end to end.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So I think that these longer term vision documents written by military officers and civil servants within these organizations like largely do hold for where they want to see the capabilities of the Navy or the Air Force go in the next five years, the next 10 years, the next decade. But to your point,
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, we consistently, even in the technology sector, we consistently underestimate the pace of innovation and we consistently underestimate the pace at which software especially is going to continue to rapidly kind of develop and accelerate.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So I think that there is a middle ground because if we invent and have an idea for some sort of crazy out of the box left field construct, and then we come to the Pentagon and say, hey, we think you should do X. And if X completely and totally doesn't align even at all with where they want to take the capability, it can be kind of a hard sell.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So that's one angle is that we can just kind of go pitch something, convince them and go that way. The other angle we can take is we can just do it. And I think that this is part of our strength where we've raised a pretty good amount of venture capital money. We have incredible broad freedom on what we can do with that money.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So if we have an idea of a new capability, a new type of missile, a new type of drone, a new type of submarine, we can just go do that. And then show them. Yeah.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
and say beyond just like, oh, hey, here's a PowerPoint slide, which is what they've been pitched for the last 40 years of how this new potential thing, if you fund me, if you give me that money on a cost plus basis, surely I can hire enough engineers and I can design this for you. Here's my PowerPoint slide of what it would look like.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
We can shortcut all of that and just say like, hey, so we've built a couple and I can come out to my test range. I'll be glad to show you how they work. Here's how they talk to the other systems you have. Here's how they talk to the planes you already have. Here's how they talk to the drones you already have. We think this is pretty compelling. It's what's called a con op in our business.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Here's a pretty kind of compelling con op how you'd use this technology.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
No, I don't think it's totally fair. I think there's a worldview piece here that we as Silicon Valley kind of entrepreneurs tend to underestimate where it is our jobs. Literally, it is your job literally to go meet the most brilliant, adventurous, entrepreneurial, creative folks on the planet. That's your job.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And then pick which ones of them you want to invest in, which ones of them you think have the best opportunity to go make their vision a reality. Of course, that is not the job of a DOD bureaucrat and a procurement officer. That's fundamentally not the job. And you also have to think about a kind of a risk reward kind of incentive system that they're operating under.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
There's a perception and an understanding problem that has to happen here. So from the perspective of a procurement officer, if they take a flyer, they take a bet like you do on a prospective new company, and then that company totally implodes, for you as a venture capitalist, do you think like, ah, yeah, well, that's like 80% of my companies that are probably going to fail.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I'm hoping for the other 10% to return my money. And I'm hoping for 10% of them to be big home runs and return the fund. That's your business of a power law business. That's not the business of a procurement official. They have to put... technology and tools and weapons and bullets in the hands of soldiers in harm's way every day.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So when someone comes along and is like, I have a genius idea about AI. For them, they're thinking, yeah, okay, maybe that sounds pretty crazy, but I've kind of got to just put bullets in the hands of my soldiers. So do we need to change the incentive mechanism? 100% we do. We absolutely do. So there's just like... How do you do that?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think it's like, it's kind of pithy to be like, they're all just idiots. It's like, no, they're not. They're not. They're just operating under a different incentive structure, a different reward scheme, a different kind of careerist kind of mentality that for those of us in Silicon Valley, entrepreneurs and VCs and investors alike. It's just a fundamentally different kind of worldview.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So I think what you have to do is understand where they're coming from and then translate to them, okay, here I have this core technology. Here's how it could actually impact the lives and the capabilities of your soldiers in conflict. Here's how we'd field it. Let me show that to you. Let me do the work that's often pretty painful.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And you talk to a lot of enterprise entrepreneurs and enterprise investors. It's like, There's a headline that makes sense. You're like, oh, bringing X innovation to the enterprise. And then when you actually get into the weeds of enterprise implementation, it's really hard. Really, really, really hard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And even closed, understood.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I mean, you talk to plenty of entrepreneurs who come in here and say like, oh, AI is totally going to transform ex-corporate infrastructure, totally going to transform accounting. We won't need accountants anymore. I've heard that pitch a couple of times. And you're like, really?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
First of all, would appreciate the urgency of the problem. Over the last, call it decade, the governments of the West have largely gotten complacent to what we view as the major geopolitical strategic problems facing the West, especially vis-a-vis China, and to a slightly lesser extent, Russia. So appreciating the urgency, I think, is point number one.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Point number two, I would say, is bringing capitalism back to the defense sector. My former boss and now friend and mentor, Sham Sankar Palantir, who you've had on the show, he's been on a tear lately talking about this. And he had this tweet that I think perfectly encapsulates it, where he said that everyone, including Russia and China, have given up on communism, except Cuba and the DOD.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And it's like, that's kind of the mentality, right? It's like a mentality of a cost plus style contracting. We'll get to that in a second, where ultimately a competitive win, a better technology, a better approach doesn't always necessarily win out.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And like, oftentimes there are different incentives at play that lead to a little bit more of a kind of communistic or socialistic approach to the defense sector that I think is fundamentally bad and is ultimately squeezing out kind of the crazy entrepreneurs and the crazy inventors from working in the sector.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So the third point that I would change would be way less cost plus contracting, way, way, way less cost plus contracting, moving many more things to firm fixed price, and then being comfortable with- Just for those that don't understand, what is cost plus contracting? Oh, man. So if you've... spend any time around lawyers or accountants or folks of that type that bill by the hour.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So what happens on these large defense procurements is that one of these prime contractors will come in and they will pitch a PowerPoint slide about how they would do something. And then they hire engineers to build to that vision. Then they bill those engineers to the government at an hourly rate with a fixed margin. So that's a cost plus. So it costs us this.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
There's a fixed margin on top of that. And then they charge that back to the government up to the limit of the particular program budget. So what ends up happening, and it's like, I started with lawyers and accountants for a reason, is like when you incentivize someone to work by the hour, it will take more time.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And when you incentivize somebody to work by a firm fixed price, it'll go a whole lot shorter. So it's like if you take those fundamental incentives and then you extrapolate that to the entirety of the industry, there's actually not a lot of incentive
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
the existing prime contractors to make the plane cheaper or faster fundamentally not the incentive what they're incentivized to do given that their profit margins are ultimately driven by how high they can drive the cost up because they get a firm fixed margin on top of that cost then you get the behavior that you incentivize and i think like if you look at some of the statistics and some of the performance of these companies honestly it's kind of hard to blame them it
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Genuinely is. Like the stock performance of the top five defense primes in the U.S. is wildly outperforms the S&P 500. I have the statistics right here. I wrote them down.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah. So Northrop Grumman over the last 15 years has had a total compounded annual shareholder return of just over 20%. Lockheed and Boeing are just behind them at about 15%. The S&P 500 over the exact same time period has an 11.6% total compounded annual return.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, I'm enjoying the light bulb going off. What's happening is that the incentive structure within the Pentagon, within the procurement office, has said like, This is how we prefer to do business because we don't want to have our companies make too much money. So this firm fixed margin is something like 8%, 9%, 10%, thereabouts, depending on the particular contract.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So that's how they've structured many of their large procurements, including the F-35, including large submarine programs, have all been designed under this kind of cost plus type structure.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So what the defense primes have gotten very good at is they've gotten very good at figuring out ways to take their overhead kind of corporate costs, including their buildings, including their HR departments, their finance departments, their legal departments, kind of all of these, their IT infrastructure, all of that, bundling that into that cost framework.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
number on the beginning part of the equation, then taking that firm fixed kind of price margin markup on top of that, such that that free cash flow that comes off of that contract, actually pretty free. So then the companies perform financially very well, including some wild stats about stock buybacks and dividends.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Like last year alone, Lockheed Martin, the 2023 numbers, Lockheed Martin spent $6 billion on stock buybacks, They only spent $1.5 billion on IRAD, which is called internal R&D, their own at-risk funding of research and development. They spent four times the amount of money on stock buybacks than they did on at-risk research and development. That's wild. That's wild.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
That's completely upside down from how any technology company, how any software company, how any Silicon Valley-type company operates. But I don't understand that. And the reason that they're doing that is... Because that's the incentive structure that exists within government procurement and is rewarding that kind of behavior.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So what I'm trying to propose in a new administration, kind of a new worldview, a new approach to these contracts is like stop funding that. It's not working. Like you're not getting the best technology in the hands of soldiers. But fundamentally what you are getting is you are getting technology that is two or three generations behind technology.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Because by the time you go from a requirements document to a PowerPoint proposal document, to hiring the engineers, to developing the thing on a cost plus basis, which takes exactly as long as you think it would, very long time, and then into a fielding and then ultimately into a support mechanism for that whole procurement, by definition, you're operating on requirements that are a decade, 15 years old.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
There are two or three cycles behind where the current state of the art is.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, so it can be upwards of 15, 20 years to go from first requirements document to full fielding of a system, which is way longer than most Silicon Valley companies have been alive. A wild amount of time. I'm really enjoying your face right now.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
No, I mean, if you remember in the early days of the Iraq War, we sent American soldiers and British soldiers into conflict in Iraq in soft-sided Humvees where they were just like bullets coming through the canvas on the side. We were equipped for a different kind of conflict.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And then over the course of the 20 years that we were in both of those conflicts, we innovated and developed these MRAPs, these kind of mine-resistant vehicles. We put armor on all of the Humvees. We totally transformed. We had a lot of like IED defeat equipment.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Six to 12 months would be very hard. I think a two, three year cycle is extremely believable, especially if you architect your products to be pretty modular.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
If you architect your products to be upgrade friendly, design your products around a software kind of mentality where you can, thinking similarly to how Tesla approaches their fleet of cars with their over the air updates, pushing pretty frequently.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Like if you take a software first approach to a lot of the products, yeah, I think you can get a lot shorter than a five, 10, 15, 20 year kind of life cycle. But
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I don't think there will ever be a venture style dynamic of a winner take all. I don't think this is a situation of like Google versus Yahoo, where one is the obvious dominant winner by 10x and then there's the other rands. I don't think that's going to be anywhere close to the case in overall defense spending. So Kind of goes against that thesis, sure.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
The inverse of that is that it is a gigantic market and it is a long enduring market. I have a couple of stats here to throw at you. In 2024 alone, US is spending about $880 billion on defense. The UK is spending about $73 billion more. The EU member countries are spending almost $300 billion on top of that. Australia is spending $45 billion on top of that.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And that's before we start talking about other partner nations like Japan or like Taiwan or Middle Eastern allies or any of that. That's purely just looking at like this year's spending. It's like over a trillion, almost a trillion five in spending. Big number. My point is just that this isn't a kind of new emerging sort of like... oh, I wonder what that growth sector is going to look like.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
It's not that at all. It's a big, enduring, very reliable sector. The other thing I would say, kind of bringing it back around to the political positioning where we started the conversation, is that defense spending has largely remained fairly flat and kind of grown pretty predictably, almost linearly over Republican administrations, Democratic administrations, same in the UK for what it's worth.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So from a perspective of like, do we think our customers will be there buying important technology in five years? Of course they will be. So yeah, I think there's a couple of pieces. One is like, I don't see it as a true winner take all. I don't see it as like Lockheed, Boeing, Northrop, Raytheon, et cetera. We're going to take all of them down. I don't see that at all.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
73.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
73. 73.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
UK spending too little by a wide order of magnitude. What should it be? Closer to the 2.5%, 3% of GDP that everyone's committed that they should be spending on NATO. It should be, my guess is like 50% higher than that. More importantly than a particular dollar amount, they should be spending it more efficiently. And the UK, like the US, is not.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Your comment, not mine.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
They would consider our approach to technology development to be a threat to their style of technology development and their style of production. Yes. I don't think they view us as Andral. It's ourselves. I don't think they're thinking of us every morning. I do think they view cost plus versus firm fixed mindset as being particularly impactful to them.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Oh, we already do. We already do, yeah, for sure. And there's an agenda within each of these countries, within Australia, within UK, this isn't anything particularly new.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
The British government, like the US government, or like the Australian government, wouldn't be comfortable taking British taxpayer dollars and funneling them straight to Andorra US in California to buy new kit or new technology or new drones or new missiles. So one of the strategic moves we have made is to invest in
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
teams and engineers and production capacities in each of these countries, including the UK, so that UK taxpayer dollars get spent within the UK to manufacture UK variants of a particular product that we make. We will see this in every country.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So the thesis is basically taking core IP and then localizing it to work with, you know, your radio standards, your existing platforms like helicopters or planes or drones or warships or whatever that requires like a little bit of customization, that it's just a slightly different platform, slightly different technology.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So we adapt it into the UK standard and then manufacture it here, deploy it here, support it here, field it here with British citizens based here in England. Like sovereignty agenda is what
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
would call it what percent of your budget is r d our budget yeah i'm just wondering comparatively to the one and a half percent of one of your primes yeah we spend i'd have to get you the firm number the number i'm gonna i'm gonna throw out it's gonna be range wise is it like 10 15 oh no no no no it's like 60 70 huge number Andrew, we're doing very well financially.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
This year, revenue's off the charts. And then we reinvest every single nickel of that right back into future growth. We're still evident negative, as you'd expect for a growth stage startup like us. But we spend a massive percent of our revenue.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
This is the venture capital. community, of course we do. Everyone who has come before us, of course.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, I think a few things. There's a political piece of this that I think we have a lot of lessons to learn on impacting the appropriations process, impacting the legislative process, having our voice heard in different kind of policy approaches coming out of Congress and coming out of the Pentagon. I think there's a lot of lessons to be learned there.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think there are good lessons to be learned, especially on what in our business was referred to as MRO is essentially the long logistics tail that comes with deploying one of these products. Unlike a Silicon Valley software company where you hit upgrade on the cloud servers and then, whoa, all your customers have a new version.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Just fundamentally not how our business works where we have soldiers using our products deployed all over the world and you can't just click a button and magically upgrade everything. You can... upgrade some here, upgrade some here, upgrade some here. There's a real kind of logistics and fielding piece there. But as of today, they're better at than we are. I think we have a lot to learn there.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And then the last piece that I think is kind of an interesting one and might get us to some other interesting conversation topics. I think they've done a really good job at appealing to a patriotic current and influencing folks who want to come work and defend their country and be patriotic and influence the national defense sector and encouraging them to come work on these problems.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think they've done a really good job. They hire a lot of people. They have a lot of employees. They have a lot of offices. They have a lot of production factories. They have a lot of folks who work there who believe a mission and a vision. And I think there's something to be taken from that.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think they have done a, I think you kind of have to bifurcate a little bit, right? Because there's a, like an ambitious AI software engineer type of mentality. And then there's a production assembly line fielding training type of mentality or different people. Yeah, they have in a certain category. And I think that's where we have some learnings to take.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
What have you not done that you wish you had done? Oh, man. My joke comment is that if I only make two mistakes before lunch, it's a good day. So it's like... There's a lot of things I would, I think a couple of things. I think taking a stronger corporate position on remote work, a frequent topic within your podcast and your world. You wish you'd said no to it?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Wish we'd taken a more definitive negative stance, yes.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I wouldn't say laissez-faire. No, we have a default in-office first kind of approach. But we, especially through COVID and then through kind of the spreading of people with COVID and then trying to get people back, it has been harder for us to get that kind of core group back together. I wish you'd been more definitive.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I wish I'd been more definitive, yeah, in the earlier days of that kind of evolution. What did you do that you wish you hadn't done? Oh man, again, a lot. There's a few things I would say here. First thing is we made a, I made a conscious decision a little over a year ago, a year and a half ago, to attempt to non-linearly scale our GNA support functions.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So things like our business systems team that does our internal tooling, our HR team, our people business partners kind of support their managers in their organization, our IT operations team, our facilities team. And what we were trying to achieve is we were trying to achieve a nonlinear kind of return on those types of heads. Like, can we build in automation? Can we utilize AI?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Can we take a different kind of approach than a traditional
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
type of company that ultimately will get to a like a stronger kind of cost margin profile if we can kind of condense that gna segment of the spend that was just a decision why um i mean it seems highly logical it seems logical and it sounds on paper uh it sounds like a kind of thing that a um a mckinsey consultant would tell you on paper to the condensed spend
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
In particular, on two areas, it really kind of hampered our growth and was a long-term strategic mistake. Looking back, I wish we hadn't done this. First is on the business systems side. And this kind of gets to one of my favorite quotes. I literally have this printed on my wall in my office. It's the Elon quote about production. I want to get the quote right. I have it written. It's the...
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Extreme difficulty of scaling production of new technology is not well understood. It's 1000% to 10,000% harder than making a few prototypes. And the machine that makes the machine is really the genius and is really the hard part of getting full systems into production. What that means is...
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
There's a lot of guts to running a company, a big hardware company like us that are completely unappreciated by the average, certainly venture capitalist or investor, let alone the public, that goes into supply chain management, procurement management, the sales and operations planning, which gets into literally the guts of how many fasteners should I buy? How many brackets should I buy?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
How many sensors should I buy? Into the Kind of pipeline planning. This is sort of the whole CRM side of things into the backend financial engine that kind of makes all of that work that ultimately your auditors have to interact with to stamp an audit at the end of the year. Was it obvious that this was a mistake? It's obvious now. It wasn't obvious at the time. Not at the time it wasn't, no.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So like what we should have done at the time is take a big swing and say, we're going to make massive investments in ultimately headcount and then platform spend, kind of the tools that those folks build, to build a unified kind of operating system here. We're doing that now. We announced this publicly. It's called Arsenal OS.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Like we've hired a whole bunch of heads, but in retrospect, like I should have done that two years ago and we'd be in a much stronger position now. How do you think about your relationship to Rugrat? Oh, man. I think that anybody who tells you they have no regrets is lying and they're trying to put on a face. They're trying to pretend.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think there's a difference between sorrowful regret and introspective, reflective regret. I'm incredibly introspective. I'm incredibly self-critical. I like to joke around and roll that I'm our harshest critic. And I actually view it as part of my job to be continually pushing to do better, to go faster, to be more perfectionist.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, sure. You can do both. It is very possible to have a customer demo go very well and have the customer walk away and be like, man, that was great. I'm really excited. Like, look forward to meeting next week, talking about pricing and next steps. Ah, this is really great. Thanks for taking the time. And they walk out and they close the door, get in the car and drive away.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And to turn around and be like, whew. all right, great job team. Let's talk about the three things we can do better next time. Like that's absolutely totally doable. You can both celebrate your achievements and your successes and aim higher and better next time. Those things aren't mutually exclusive.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I think if anything, and this tends to happen a lot in the Valley and certainly amongst VC world is like a navel gazing at like how amazing you are and a self puffery of like, ah, we're the best. Like, first of all, like hubris kills everybody in the long run. So you can't have that. And second of all is just objectively false.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Like in any individual circumstance, you are always misplaying things. To wit, like I guarantee at the end of this, I'm going to listen to this interview no less than four times making notes of different tacks I could have take or different points I should have made or different arguments I could have gone down and less because I'm neurotic more because the next time I want to do better.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think there's a couple of interesting things here. For me personally, I'm a Democrat. I've been a lifelong Democrat. I've supported Democrats my entire life. I donated to Kamala. I donated to Hillary Clinton, donated to a number of House Democratic races, Senate Democratic races, recently hosted a fundraiser for now Senator-elect Adam Schiff of California.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I think that like you can take that mindset, you can take that approach. And bring that to everything from our facilities to our IT stack to our recruiting process. Literally everything as a company, we should be in a position where we say like, okay, great, we achieved that milestone. What can we do better next time? What's the learning? What should we change?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
yes however i think that point is is kind of hyperbolic if the decision is truly genuinely tomorrow and there's new information that is coming today yeah waiting for tomorrow is better that's in practice it's not actually the point that the question is trying to get at the point that the question to get at is like over analyzing over data collecting driving to consensus amongst large committees
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
over many, many, many, many months, getting to a groupthink decision at the end, yeah, is always net worse than making a quick decision, seeing the impact of it, learning from it, and then maybe changing course, maybe changing tact completely. Yeah, almost always, delaying's worse. How much money have you raised to this point, give or take? give or take.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Short of debt, it would be about $4 billion. With debt, it'd be about $5 billion. Who runs the fundraise process? It's changed over the years. So in the early days, and this is because our investor profile has changed over the years too, and surely you have... the notes of who's led each round and who's participated in each round.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Should TikTok be banned in the US? 100% absolutely yesterday, if not years ago.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
In the early days, it was exclusively Trey who would run our fundraising processes, and he would put Palmer or me or Brian or some of our key engineers in front of investors at the right time to get to whatever questions they had or whatever their concerns were. But really, it was orchestrated by Trey. In the later years, the more recent years, that shifted to our CFO, Bobak, entirely done
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I mean, I think there are certainly individual R&D efforts. I don't think I would say, oh, we could have done this on half as much money. No, not at all. I mean, if anything, I think we should raise more and go faster.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah. How many of them are lying?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yep, yep. And there's a fair amount of kind of noise in the secondaries about an SPV of an SPV of an SPV.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So I have supported a lot of sort of left of center national security Dems through my career. So, of course, on a personal level, like, yeah, I wish the election had gone differently. That said, I think there's a lot of interesting potential for both Anduril and the defense sector writ large in a new administration.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
SpaceX had a similar thing. They still do have a similar thing, right?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Is it something you want to lock down? two sides of it. They're kind of conflicting. On the one side, I'm like, yeah, secondaries are a good thing. You want these folks to be able to have that freedom. And it's worth noting that every time we've done one of these structured tenders, we've had a relatively low participation rate in them.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Somewhere in the 30% range of the percent of shares that could have been sold, that were eligible to be sold, that folks actually did sell. So a fairly low blended average of folks who are selling their shares off, which I take as a great sign that employees are very excited and very long. The inverse of that is the chaos of the secondary market.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I think my reputation for hating the chaos of the secondary market is pretty bad. pretty well deserved. I think there's a lot of what I would describe as pretty scummy behavior that happens in the secondary markets where... What is this scummy behavior? So these SPV brokers, they are operating with very low information.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Like Andoril has never once ever approached an SPV broker and said, hey, here are detailed financials. Here's our detailed strategy. Let me avail our management team for different interviews or different kind of kind of sessions. They are operating off of a very limited set, basically headlines, which are almost always wrong.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And then turning around to investors who are either desperate or just kind of carefree and saying like, I got an opportunity to invest in Anduril or SpaceX or OpenAI or whatever other kind of hot company that they've been able to wiggle some access into. Here are a couple of headline numbers. A lot of those investors don't understand the fee structures that they're getting into.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
A lot of those investors don't understand even the structure of carried interest and what that looks like. And so what is fundamentally happening is you get a representation of bad numbers to
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
relatively unsophisticated investors on the other end who are paying pretty steep premiums to what we would describe as the fair market price with usually pretty ugly layered fees on that with, in some cases, pretty material misrepresentations. And we've seen some SPVs going around to folks who are fundamentally lying about what shares they have access to, what vehicles they're investing in.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
financial crime you're like misrepresenting 100 it is yeah 100 it is and when we've when we've seen it we've we've called folks out and said hey that's just not true the most classic of which is where someone says oh we have direct access to andro primary shares of their last round there was something going around recently of somebody who was like we have access to the second close of Andral series F raise and it's like the hell are you talking about there is no second close the round has been closed for four months this is
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think having a new approach, a new mindset, a new approach to innovation, a new approach to funding different defense programs could be pretty interesting. We'll see how things evolve. We'll see what control of the House and the Senate looks like. I think for Anduril going forward, I think there's a lot of things of bright future.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
done so if what you're saying is like you're buying shares from somebody who did invest okay then say that but that's not what they're saying what they're making it sound like is just a totally fundamentally different position to what extent is the onus not on you for that so if i take for example nicola at revolute yeah he has fucking controlled that cap table just watertight yep we've tried we've tried and to a
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I can't totally control – you certainly can't control fraud. Fraud is going to exist. And I can guarantee that someone out there believes that they invested in their former roommate's boyfriend's SPV and own SpaceX shares or Android or OpenAI or whatever else. And actually what they're doing is they're funding that guy's coke habit in the Bahamas or something. Guarantee that stuff's happening.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And it's like – Can't control that. What we can control is who has direct access to the cap table, who has direct access to Andral strategy, who has direct access to Andral financials. And beyond that, we kind of can't control some of it, to be honest.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, you can't tell me ahead of time. That would ruin the surprise. My answer would be twofold. I think first we have unlocked what was a kind of a latent patriotism within the technology and defense sector. I say latent because if you look at the momentum through the kind of the early 2000s into the 20-teens,
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The momentum in the tech sector amongst kind of the zeitgeist, amongst the employee kind of mindset was not one of patriotism. And to your question, you know, a half hour ago, whatever, like, are the best and brightest going to work at Lockheed, et cetera? Like, no, there was not an interest in working in the defense sector.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I think like Andrel has unlocked that kind of latent talent to wake up and come work on problems that we view as the most important problems facing the world right now. We've unlocked that. The other half of that kind of card there is also by unlocking an incredible amount of funding and investment into this sector that had also been historically kind of lacking for this kind of segment.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And to your point about like, well, isn't this a bad customer? Like I'm used to winner take all. That's a lot of investors. And that's a lot of kind of traditional VC style investing where you're thinking about the next ad tech company or the next social media platform or something. And like, cool, I get it. Fine. Power to you. That's not this sector.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
The other thing I would add here is that internal to Anderle, we're an apolitical company. We don't talk about personal politics inside the company.
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And thus through the 2000s and then into the 20 teens, investors weren't investing in this area. And I think that like we were able to both unlock that investor enthusiasm and then pivot that into unlocking this latent kind of patriotism in the tech talent base and be able to align the two of those on this mission set.
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And ultimately, like at its absolute core, I know this is going to sound cheesy, but like at its absolute core, like a company is made up of their people. If we can get the most motivated, the brightest, the hardest working talent to work on these problems, then we will get good results.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Ultimately, I'm a little nervous about a lot of these companies kind of getting over their skis and then getting one or two fundraisers under them and then realizing it's a lot harder than it looks on paper and ultimately struggling and probably imploding.
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We kind of subscribe to the Brian Armstrong, Coinbase kind of philosophy of we're here for a mission, and our mission at Anderle is to bring the best technology to the defense sector, period, regardless of who's in the White House, regardless of what party is in control of Congress. So for us internally, it doesn't really matter to the day-to-day life.
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You should know that the Andoril of X is going to be Andoril. Your best bet is probably buying as many Andoril shares as you can. Beyond that, I think what you should know is that execution and delivery and actually winning these contracts, winning these long-term programs of record is incredibly important.
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incredibly complicated and fraught with incredibly complex regulations, compliance, accreditation. Like there's this whole world of very messy kind of back office stuff that is admittedly not sexy. It admittedly doesn't make great headlines, but saying like, we've got a new missile. It's going to be great. Like cool does not a successful missile program make. And there's a huge gap there.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So as a, as a new investor to the
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segment first of all i would say you're unlikely to drive venture style returns by being kind of consensus but like beyond that truly spend the time to appreciate the complexities of the appropriations process the budget process the awarding and winning and supporting and delivering of these because we're seeing like defense funds being created yeah and i'm like this is not an asset class in itself to generally no no you agree with me i agree absolutely
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
As a component of a diversified defense sort of investment within a broader diversified portfolio. Hopefully it makes sense. Absolutely.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
We love them. Good relationship with them. I hope they succeed. We've talked with them a couple of times about potential collaborations. We'll see where they end up.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Absolutely. I think in your business, your mandate is to find the brightest folks working on the most emerging problems that aren't going to see market for two years, three years, five years, and aren't going to be successes until 10 years. And I think fundamentally what that means is you should be closest to where I'm turning into like old guy advice guy over here.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
You should be closest to where the nexus of that talent is. And I think ultimately in the technology sector, this isn't to say that there aren't exceptions. Of course there are. I can't wait for the tweet responses, but like.
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The highest concentration of talent working on what I think is going to be the next generation of problems that the world faces and the next generation of generational segment defining companies, a lot of them are in California, man.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
But externally, of course, perceptions are what they are. So yeah, we have to play the political game and influence where we can.
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I think it's finding its way, finding its way back. I do think venture lost its way and in pursuit of that early fad, that next that next kind of quick trend, that next quick pop. And of course, everybody like and I get the incentives. I totally get the incentives, you know, being in the
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the sexiest company that helps you raise the next fund, that helps you get the next logo on your page, that helps you generate kind of the LP enthusiasm. I totally get the dynamics, but nonetheless, I think that the enduring companies, the companies with real moats that I think are going to be around for a long time, ultimately have
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Implicit in your question is a assumption that VCs and investors will use the same templates from prior investments on to new investments, which VCs are generally pretty smart. They're generally pretty well-educated. They're generally able to learn new things pretty quickly, else they wouldn't succeed in venture. They wouldn't get to partner status. I think we're going to see a different mindset.
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I think some of them are going to be good at it. A lot of them won't. It's just like any other kind of evolution in the Valley, any other kind of evolution in the sector. So I think it's going to be tough times for some of them. But overall, I'm optimistic. Overall, I'm excited for all the money pouring into the sector.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I don't think they will, but okay.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Hands down, absolutely every time. Why? It's literally in the name of the fund. Their job is to make bets on the people. And throughout their history, this is demonstrated with their relationship with Andoril as well, demonstrated with their relationship with me personally. They are a ride or die, stand by their founders kind of organization. A lot of VCs will say that they are.
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Better, I think, is doing a lot of work in that line. I think we were going to succeed under either. Like we've succeeded under President Biden. We succeeded under President Trump before that. So I don't think there's a massive difference to Andrew. Mostly what we're excited about in a new administration is
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
A lot of VCs will make that claim. And then actually when push comes to shove, they're not. Can you share an anecdote of when they have done a ride or die for you?
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
they have gone to bat for us in numerous times with vcs who were either uncomfortable with the and these are these are in the early days you know post ukraine all of this has changed uh in the early days when people were very uncomfortable with the ethics of defense especially in a trump administration if you remember at the time like trump just won it was very kind
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controversial in the valley, at least. And there was this like, can we trust them? What about defense? We don't know. There's like this ethical kind of quandary that a lot of VCs are struggling with. And Singerman himself personally, multiple times went to bat for us and said, you're absolutely insane. These are good folks with good ethics and good morals.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And this is absolutely technology the world needs. You have to get involved. and has personally gone to bat for us and helped us. So that means a lot to us, to stand by us. Any list of top tier VCs, et cetera, people that publish the list that doesn't include Founders Fund at the top is a laughable list.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I have changed my mind on the importance of business systems and nitty gritty weeds of business systems integrating together, leading to an effective manufacturing process.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
What did you work on today? I'm like, oh, yeah, Salesforce APIs.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Biggest lesson from Peter is that there's no alpha in consensus. Peter is famously a contrarian, etc. The point is not to be disagreeable. It's not at all the point. The point is that if everyone agrees, if the consensus is X, then there's no alpha in X because by definition, you were just going to perform exactly as well as literally everybody else is.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So the alpha, the actual interesting signal, the investable signal, the differentiated signal is in being contrarian. And it's very easy to say that. It's very easy to read that. It's very easy to be like, oh, yeah, I totally get it.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think I would not be investing in defense at some of the valuations that these early stage companies are pulling down, because I think there's a sort of a view of a venture return in some of these companies I think is going to be pretty hard to achieve.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
are new appointees who bring different mindsets to defense procurement, like a different kind of approach, a recognition that the status quo is not acceptable, a new approach to funding, a new approach to contracting, seeing more urgency, more ambition, kind of the return of capitalism to the defense sector, which has been sorely missing for decades.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I don't think so. I think Andro's underpriced today.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
14 billion in the last round.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think really what it takes is full-scale production, massive-scale production of robot planes, robot subs, more drones, more missiles, more everything. And we've got a lot of building, a lot of investment to make there. But I think that's really what it's going to take. And then really just continued operational excellence and continued delivery.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
It's very Joe Rogan of you. Robo dogs color me skeptical. Robot on robot warfare I think is pretty likely. I think we're kind of already seeing it.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
If that's how you think the future of warfare will play out, then no, it's not a fair fight. I don't think that's how the future of warfare is going to play out. How does the future of warfare play out? We're seeing this in the conflict in Azerbaijan in 2020. I think we're seeing it play out in Ukraine right now.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And I think we're seeing it play out with Iranian missiles that they're lobbing at Israel from Western Iran. The way it's playing out right now, you think about it as like, as like a kind of an indigenous kind of like local tribal kind of warfare. That's not what it is. What it is, is that these countries, these adversaries can make these drones in massive quantities for incredibly cheaply.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Iranian Shahed missile, one of the missiles they mostly use.
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it goes pretty slow it's just a drone they can make it for in the neighborhood of 50-ish thousand dollars and just incredibly cheap for for these missiles they'll either give them to the russians that then the russians will shoot them with the ukrainians or they'll just shoot them at israel from iran very cheap then it takes us a four million dollar patriot missile to intercept one of those or at best a million dollar ish uh irish missile that um made by saab those missiles
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way more expensive. So if you play out and you're like, what is their manufacturing capability of those $50,000 drones? Very, very, very, very high. And then, OK, we have to then launch either our own very expensive missiles, our own very expensive planes to then go fly up behind and shoot these things down. Ultimately, that kind of cost curve and that production curve is not in our favor.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And if you look at some of the kind of statistics out of Ukraine, I can send some of these to you after the show. They're incredibly scary of the amount of munitions that get expended in the first couple of weeks of one of these nation on nation conflicts.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And the US right now does not have the production capacity, nor does the UK, nor does Australia come to the West at large to make enough munitions to fully equip a prolonged nation on nation conflict. So if you think that the war looks like what it did in Afghanistan, then yeah, of course, drones and technology will make it kind of an imbalanced unfair fight.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
A rebuilding the American industrial base, relying on cost plus contracts less and turning to more firm fixed contracts, a whole number of different policy approaches that were pretty optimistic that a new administration is going to at least take some of that and put into practice.
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I don't think that's what it's going to look like though. I think what you're going to see is you're going to see Iranian agitators equipping those forces with these very cheap drones in large quantities.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
in a way that then like we simply can't afford to to defend ourselves from in the long run that's where it's going to get super interesting so our whole thesis is about driving down the cost and driving up the production rates of those various kind of defense mechanisms and munitions in order to get both keep up with and ultimately out compete sean mcguire said on the show with that in mind that iran is the greatest evil do you agree
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yes and no i think greatest evil probably yes most complex and difficult adversary for the west i would say no who is china hands down i think the mindset of the prc i think their approach to basic human rights i think they're conducting of an ongoing genocide with their weaker population.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yes and no. Who is? China. So if you think about the mindset of the PRC, I think their approach to basic human rights, I think they're conducting of an ongoing genocide. With their Uyghur population, I think their approach to free speech, to political assembly, to religious freedom are fundamentally antithetical to how the West values human life and how we think about human rights.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think their approach to free speech, to political assembly, to religious freedom are fundamentally antithetical to how the West values human life and how we think about human rights and what we're on this earth to ultimately do. Fundamentally antithetical. And I think if you look at
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
both the sheer populations, a very big country, you look at their production capacity a lot, you look at their control of the supply chains that we already talked about earlier, and then you put that together with what I view has been a pretty well demonstrated, at least ambition for empire building, whether that's through Belt and Road in Africa, whether that's through invading Taiwan.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
If you look at them increasing their influence on the global sphere,
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yep. Terrifying, isn't it? So I think to your question about, Sean, is it the most evil? Yeah, I think probably, but I think on a global competitive sort of long-term landscape, I think. Should TikTok be banned in the US? 100% absolutely yesterday, if not years ago. Because? Can you get Instagram in China? No. Yeah, end of debate. Is that the right approach? 100% it is.
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20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
No, I think it's more complex than that. I think it's that what you are mainstreaming into the central cortex of the American psyche, especially our youth, especially our teenagers, our college-age youth, you're mainlining a certain type of message to them.
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And I think like there are parallels where it's like if you look at what Twitter now X was pre and post Elon's purchasing, like it's a different tone. It's a different type of thing. They're promoting different content there or they would say not promoting some content. You can see in the zeitgeist how what content is getting promoted through different social media.
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You see the same thing on Instagram can affect the psyche of a population. And what we are willingly doing is we are willingly letting a strategic adversary control the knobs of
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on what gets mainlined into the psyche of our youth and if you don't think that that has long-term strategic implications for the motivation for the ambition for the direction of a country and man i don't know what to tell you but like if they're going to have their finger on the scale and on the knob control the knob of what's being consumed by the you know overwhelming majority of our of our citizens yeah we shouldn't want it
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What we would like to see happen is a recognition of and an acknowledgement of what we see as a pretty obvious and emerging conflict around freedom, around democracy, around the rights of citizens to have free speech, free assembly, and to have their voices heard in their own government. A philosophy that I would say does not apply to mainland China or to Russia for that matter as well.
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Your point, though, around traditional media bias and that messaging is 100% accurate. And I think the kind of the democratization of information, like, of course, there are pitfalls. Of course, there are challenges around bias. misinformation. I listened to your interview with Owen at Intercom and talking about free speech and what does it mean and all of that.
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It was a fascinating conversation, but I don't think, to answer your question concretely, I don't think it's overstated. If anything, I think it's understated.
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His side.
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I'm an American.
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Yeah. Who decides? Do you decide? Are you the arbiter of what was a funny joke that got a laugh versus an unfunny joke that got a boo?
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Who is that? Who elects that person?
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Are you proposing that we have a board that if you want to make a joke, you have to run your joke by the board? Comedy being famously susceptible to groupthink and group approval.
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go and say to that family it's a joke yeah that's not that's not what i'm saying at all what i'm saying is that like having a sort of preemptive control over what opinions what political positions what proposals are allowed to be said is an incredibly dangerous path to go down and uh and the who gets to decide is really at the core of this should that person who made that joke
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be allowed to make that joke? Absolutely, they should be allowed to make that joke. Does that mean there should be no consequences? Sure, there can be consequences. There can be reputational consequences. There can be lawsuits. There are liabilities. There are all sorts of things that can play out. My point is that it shouldn't be the job of the state to say, you are allowed to say this.
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You are not allowed to say that. That has never in human history ended well.
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There'll be arguments. There'll be an argument in court. There'll be a jury that will decide whether it crossed into some threshold. And this isn't to say like that we have obviously different. approaches to freedom of speech in this country and in the US.
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But like there do exist a very well established set of laws and practices around what is and is not protected speech, whether it's parody, whether it's not like these laws do exist. My point is in the meta saying like this is an allowable opinion. This is an acceptable opinion versus it's not.
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an incredibly dangerous position to be in and you have to look no further than the debate and the dialogue around covid post kind of in those first few months around when the pandemic really took the world over and social media platforms google's the the mass media sort of mainstream television and radio wouldn't talk even a little bit about possible alternative theories uh it was wild totally wild in retrospect and like
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actually some of those alternative theories turned out to be true. That is a living example of where this kind of mindset goes sideways.
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So I think a new approach to seeing the emerging threat that's there and then reflecting on kind of the capitalistic and industrial base that relies on China right now and taking an approach that brings a lot of those jobs, a lot of that industry, a lot of that kind of tier two, tier three, lower down in the supply chain types of work back to America and our allies, because I think depending on China in the long run is kind of a dicey position to be.
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Yeah, I think there's a lot of interesting and very challenging structural issues facing Europe. And I think fundamentally, again, it's coming from a very, very American perspective. There's an ambition. There is a seeking and working towards a better, brighter future that feels to be almost kind of complacently lacking.
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from a large portion of europe and i know you said it yourself here in the uk as well and i think there's an there's an element of if we want a brighter future we have to build it and that spirit that drive i worry that europe's going to lost their lost their spark on that front what have we not discussed that we should have discussed or what question you not asked that you should be asked
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The one I'm not often asked about is impact. And you've talked a little bit about this with a couple of your other interviews. Impact of early life and childhood on one's psyche and one's approach to the world. We get asked all the time about kind of the usual questions of AI and ethics. And of course, you can't go through any media engagement without talking about President Trump.
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All of those things, those are pretty well trodden. But I really get asked about the other side, the personal side, the family side, the early childhood side.
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So I grew up in the Philadelphia suburbs and remember constant friction between my parents around money always. There's just never enough money. There's always instability. I don't want to make it paint a picture of some sort of Oliver Twist here kind of begging for food kind of situation.
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It wasn't that bleak, but I remember a consistent kind of friction around the direction of the family and whether there was enough money or where the next paycheck's coming from or whatever. whether we'd be able to make the bill payments. And I remember bill collectors. I remember like mortgage foreclosure notices.
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Like I remember a lot of that friction and then observing that friction on the relationship between my mother and my father. And I remember very clearly this moment of, you know, one of these kind of arguments that kind of went sideways. It got a little ugly. And I remember sitting in my room, I was like 14 and thinking like, not me. this is not going to be me. This is not going to be my family.
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This is not going to be my kids. Nope. Nope. Nope. That drove me through my early childhood career. That drove me through college. That drove me through my early career at Palantir. This motivation of just like, that is not going to be how I live my life with my kids. I'm going to be in a position where we're not worrying about those things. Does money make you happy? No, of course not. No.
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Anybody who tells you money makes them happy is lying.
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I think money buys you the opportunity to explore the world, to explore different interests, to have a different relationship to the world. Money in and of itself, no, of course that doesn't make you happy. You fill a swimming pool with cash and swim through it. That's not going to make you happy. What's going to make you happy is good relationships, good friends, good experiences.
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Yeah. Did money buy her?
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That's not true, and you know it.
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That might be true.
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I'll tell you an anecdote. Growing up, I had this fascination, still do, with fancy fast cars. I was one of those kids with the car posters on the walls, and my desktop background was a fancy Ferrari, et cetera. And I had this dream. I'm like, my dream car, you'll chuckle because it kind of sort of shows my ambition at the time. My dream car, an M3 coupe, this six-speed, really cool, like BMW M3.
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Do you think China will invade Taiwan? If America does its job and the West and our allies do their jobs, I think no. I think the ambition is there. I think the vision is there. I mean, I was personally sanctioned by China for selling missiles to Taiwan, as was my co-founder, Brian Schimpf.
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And it's kind of this like road car, but kind of a race car. And like, oh, I could use it, but also it's super fast, super cool. And I had this vision. And then early in my Palantir career, I saved up some money, sold a little bit of secondary, had some good cash. And I was like, oh yeah, I should... I'm going to get that car. And then I got it.
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And it was like, did this awesome experience of the European delivery, which I strongly encourage, by the way, it's really dope. And then got the car, went back, went back home. And I was like, okay, well, I guess I'm like, just back to work again, going out to dinner with my friends, I guess.
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And it was like that kind of realization that to your point, not quite cheated, disappointed, maybe it's like a better word where it was like, oh, this doesn't actually bring me happiness. This doesn't bring me contentment. This doesn't bring me fulfillment.
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What I think money does is I think it allows you some freedom to explore who you really are, what really makes you tick, what really brings you joy, what really is rewarding for you. And ultimately, like my quip about who do you spend your time with is like, that's really what life's about. And for me, granted, you know, you're about a decade younger than me.
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But like for me, like that's about my family and my kids. I don't know. It's different for every person. It's different in every geography. I'm not going to put a number to it. I mean, you could take $500,000 and go live in many parts of the world and live very well, living off the interest on that and be quite comfortable.
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And I know people who are quite comfortable living in a one-bedroom apartment and they surf every day. Like, that's totally fine. I just don't think there's a number at which it's like, that's the number. I don't think it's that simple. I think it's really about like, what is it that's rewarding for you?
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What is it that makes you happy, that drives you on kind of a more philosophical, spiritual level? Finding that is one of life's great challenges. And ultimately, my experience, at least, somewhat disconnected from the bank account balance.
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If failure was completely impossible, completely off, I'd repatriate all semiconductor fabrication. I'd start a company doing that.
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I think probably. We're all in this for the long haul. We're going to ring the bell one day and then we're going to build a massively successful publicly traded company. And like, yeah, it's probably my last. I'm getting old, getting tired.
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Yeah, thanks for having me. It's a pleasure.
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And it is pretty clear to me that if China is taking the position that arming Taiwan for their self-defense is an affront to the one China policy and then issuing direct international sanctions as a result of that, pretty clear to me where their ambition lies. Whether that results in an actual straight up invasion, I think depends largely on the West and our position in posturing to defend Taiwan.
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I was on the Peloton in the morning just writing and got a news alert from a Bloomberg story that said, Anderle and key executives sanctioned by China and thought, oh, hmm. And the story listed.
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I literally thought, oh, wow, that's new. That's going to play weird. And it said, Anderle and three key executives. And I was like, hmm. which ones? And then open the story. It's like, oh, literally found out from a Bloomberg story. Pretty wild. Darling, we're not going to Beijing this summer. Exactly. And the sanctions notice, it was kind of a hilarious thing.
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The sanctions notice said, we're seizing your assets in China and preventing any entry into mainland China, Macau or Hong Kong, to which the obvious question is like, What assets? I've never been there. I'm not going to go there. I don't own any property there. Like, what the hell are we talking about? It's just this posturing kind of PR political message.
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Then for us, for like, seriously, for Andrew, like we interpret that both as a sign that like we're doing something right. Like if China is taking that kind of aggressive action towards us, like we see that as like, oh, well, we were kind of on the right path here. And then and then second, I think, is a pretty clear indication of at least their ambitions vis-a-vis Taiwan.
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I think it will be. We're already seeing the early results at the TSMC plant in Arizona that has some pretty good yields that are slightly outperforming the yields of their Taiwan factories. Of course, we'll see how that plays out in the longer run. But yeah.
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I think there's a complex question. I think that there's still a lot of supply chain, especially way down in the tier two, tier three, tier four levels of supply chain that still fundamentally rely on Chinese processing, Chinese refining, and Chinese manufacturing. What is that? I'm so sorry. I'm really naive. I'm a venture investor, so it's my job.
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But like tier two, tier three, tier four, what is that? So like when you buy a phone, inside the phone is a circuit board and then on that circuit board are some chips and then inside those chips are individual minerals, individual materials that go into making those chips, right? So like as you go further down in the supply chain, you get this kind of broader out pyramid
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And then in the business, you refer to that as your tier one suppliers or tier two suppliers, tier three suppliers, kind of going down into like how far down into the like actual raw metal coming out of the ground do you want to trace back your supply chain?
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Too much of that down in the pyramid of the supply chain depends on Chinese processing and Chinese mining, especially around rare earth minerals and rare earth elements, magnets, which means motors, a lot of the underlying components that go into silicon chips. A lot of that is still going through China. So if you think about
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kind of a cold war, which to me, I think it's pretty obvious that we're in, escalating into a hot war. And then you think about like, okay, well, every drone needs electric motors. Every missile needs semiconductors to help kind of control the flight dynamics and the aiming and the avionics and all of that.
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Far enough down that supply chain, you start looking at like, oh man, those individual resistors, those come from China. That individual fastener, that raw metal comes from China. So I think it's very, very, very hard in practice to actually completely divorce yourself from any Chinese influence on the supply chain whatsoever.
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Nonetheless, I think if a Cold War escalates to a hot war, we as the West writ large need to be in a position where we either have stockpiled enough to make it through a conflict Or we have developed, ideally, our own supply chains for those individual components. What would lead to a Cold War becoming a hot war? A few things that could happen. I think you could see North Korea get spicier.
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I think you could see an invasion of Taiwan that would get very spicy. I think you could see Russian expansionism vis-a-vis Ukraine kind of keep pushing into Eastern Europe. And I think it's a pretty hot topic in Europe these days. that would get pretty spicy and escalate.
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And then I also think freedom of movement of ships and commercial traffic through the South China Sea, like a massive amount of our livelihood depends on ships moving in and out of the South China Sea. So I think if you started to see freedom of navigation get compromised, that could pretty quickly escalate into a hot war.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
But vis-a-vis Andoril, what we see is we see that deterrence of long-term hot war conflict ultimately comes through strength and that there is a weakness begets hot wars.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
So from our perspective, we view it as we want to equip our military, the militaries of the UK, the West, our allies, Australia, et cetera, with the best possible technology to make the cost of escalating into a hot war for our enemies, for our opponents prohibitively expensive.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
My guess is that we see some sort of detente or some sort of negotiated settlement take place probably over the next year would be my guess. And if I had to bet, it looks something like Russia annexing a chunk of Eastern Ukraine more or less along the line of conflict where the line has, for better or worse, kind of held for the last year or so.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And then the war kind of deescalates and everybody goes back to rebuilding.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Yeah, political proclamations like that are easy to make on a campaign stage and hard in practice. We'll see. We'll see. I mean, I'm optimistic that he'll be able to find a resolution. I just I think in practice, it's actually pretty hard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
The whole thing's pretty tragic. If I were on the Palestinian side, I probably would rethink invading your neighbor and abducting and torturing and ultimately murdering civilian hostages. I think what we end up seeing is we end up seeing the ultimately kind of the near and total sort of conquering of Gaza.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And we end up seeing the Palestinian people like hopefully appreciating that terror and violence isn't the way forward for their society. Do you think Israel is wrong in their response? I don't at all, no. Absolutely not. Personally stand with them and we as a company do too. I think it's a pretty clear position to take.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
You know, you cannot expect a country to sit idly by while your neighbors lob missiles over the border into your cities, hitting apartment buildings, hitting shops, hitting homes, to say nothing of staging an actual hostile invasion over the border and massacring civilians. And you can't expect them to stand by and watch that happen and do nothing.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
War is not good for business. War is not good for humanity. What we want to do is deter war. What you want to do is to have a very big stockpile that you never have to fire. That's ideal.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
Oh, man, I think it's a totally transformative. I mean, I know you spend a lot of time on your podcast talking about AI as it applies to enterprise companies, as it applies to SaaS companies, as it applies to customer service, like all of these different verticals, all these different areas. Defense is no different. I think the future around AI is incredibly bright.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
There's a lot of opportunity to optimize everything from production to to field support, to maintenance, to understanding the landscape of what the battlefield looks like. That's really what we're doing with our Lattice operating system that's at the core of all of our products is trying to bring together and fuse all of this different data that's coming from
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
individual soldiers, from individual planes, from satellites, from submarines, from missiles, from every kind of sensor that you might have out there in a battle space, fuse that into one picture so that the soldiers and the commanders who are ultimately controlling the battle space have a live real-time view of what's happening out there.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
I think there's a tremendous amount of impact that this is going to have. So when we think about new products, we look at what is currently existing, what the five-year kind of program needs are. And like these documents are public. You can go find these documents, these kind of five-year vision documents with each of the services put together.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Anduril Co-Founder on How a Trump Administration Changes the Defence Industry | What Happens Between China vs Taiwan, Israel vs Palestine, Russia vs Ukraine | How Software Changes War & Why TikTok Should Be Banned with Matt Grimm
And you could say like, okay, well, what's currently there? What do we see as the missing gap? What do we think we can have that's kind of unique to the market here? And then let's go invent, let's go create.