Matt Grimm, Co-Founder @Anduril: How a Trump Administration Changes the Defence Industry | E1224

Intro (0s)

• Sha Maguire previously stated that Iran is the greatest evil, but a differing opinion is that China is the greatest evil due to its approach to human rights, ongoing genocide of the Uygher population, and restrictions on free speech, political assembly, and religious freedom, which are antithetical to Western values on human life and human rights (14s).
• There is a strong opinion that TikTok should be banned in the US, with a suggested timeline of "yesterday" or "years ago" (29s).
• Matt Grimm is excited to be on the show and is looking forward to the discussion (52s).

Post-Election Reflections (54s)

• The recent US election has concluded, with President Trump being reelected to his second term, and the results of congressional and Senate races are being finalized (55s).
• As a lifelong Democrat who has supported various Democratic candidates, including Kamala, Hillary Clinton, and Adam Schiff, the outcome of the election was not personally desired (1m13s).
• Despite personal feelings, there is potential for Anduril and the defense sector at large in the new Administration, with a new approach to innovation, funding, and defense programs (1m42s).
• Anduril is an apolitical company that focuses on its mission to bring the best technology to the defense sector, regardless of the party in control of the White House or Congress (2m9s).
• The company's day-to-day operations are not affected by the election outcome, but externally, perceptions and politics play a role, and Anduril must navigate and influence these factors (2m28s).
• It is believed that Anduril will thrive under any Administration, having succeeded under both President Biden and President Trump, and the company's success is not heavily dependent on the party in power (2m49s).
• Anduril is excited about the potential for new appointees in the Administration who bring different mindsets to defense procurement, recognizing the need for change and a new approach to funding and contracting (3m1s).
• The company is optimistic about policy approaches that could be implemented by the new Administration, including a return to capitalism in the defense sector, rebuilding the American industrial base, and relying less on Cost Plus contracts (3m21s).

China-Taiwan Relations (3m37s)

• A new Trump Administration may bring changes to the US foreign policy, particularly with regards to China and Taiwan, although it's too early to predict the exact changes (3m47s).
• The US should recognize the emerging conflict around freedom, democracy, and citizens' rights, which are not applicable to Mainland China or Russia, and take a new approach to address this threat (4m18s).
• The US should reduce its reliance on China and bring back jobs and industries to America and its allies, as depending on China in the long run is a dicey position (4m38s).
• The ambition and vision for China to invade Taiwan are there, but it depends on the West and its allies' position in defending Taiwan (4m52s).
• The speaker was personally sanctioned by China for selling missiles to Taiwan, along with his co-founder Brian Schimpf and other executives, which indicates China's ambition and position on the issue (4m57s).
• The sanctions notice from China was seen as a posturing and PR message, but also as a sign that the company is doing something right and an indication of China's ambitions regarding Taiwan (6m34s).
• The US attempts to bring back semiconductor manufacturing to the US soil have to be successful, and it is likely that they will be (6m56s).
• The TSMC plant in Arizona is showing promising results, with yields slightly outperforming those of their Taiwan factories, which could be a positive development for the US in terms of reducing reliance on foreign manufacturing (6m59s).
• Despite this, the threat from China is still considered complex, with many supply chains, especially at the tier 2, 3, and 4 levels, still relying on Chinese processing, refining, and manufacturing (7m12s).
• The supply chain is described as a pyramid, with tier 1 suppliers being the closest to the final product, and tier 2, 3, and 4 suppliers being further down the chain, often relying on Chinese raw materials and processing (7m54s).
• Rare Earth minerals and elements, such as magnets, are crucial components in many technologies, including motors and silicon chips, and are often sourced from China (8m9s).
• A cold war or hot war with China would require the West to have stockpiled or developed its own supply chains for these critical components to avoid disruptions (9m2s).
• Potential triggers for a cold war escalating into a hot war include North Korea becoming more aggressive, a Chinese invasion of Taiwan, Russian expansionism in Eastern Europe, and restrictions on freedom of navigation in the South China Sea (9m19s).
• The importance of deterrence through strength is emphasized, with the goal of equipping Western militaries with the best possible technology to prevent or prepare for a potential hot war (10m3s).
• The goal is to make the cost of escalating into a hot war prohibitively expensive for enemies or opponents, which is the idea and vision behind the company's founding and what it is building towards (10m19s)
• The Russia-Ukraine conflict is mentioned as an example of this concept (10m31s)

How Will the Russia-Ukraine Conflict Evolve? (10m32s)

• The Russia-Ukraine conflict is a pressing and important topic in Europe, with its future development uncertain (10m34s).
• A possible outcome of the conflict could be a negotiated settlement, such as a Dayton-like agreement, within the next year (10m47s).
• This settlement might involve Russia annexing a portion of eastern Ukraine, roughly along the current line of conflict, leading to a de-escalation of the war and a focus on rebuilding (10m57s).
• The possibility of a resolution being reached under the Trump administration is uncertain, despite Trump's claims that he could have ended the conflict quickly (11m14s).
• Political statements like Trump's are easy to make but difficult to put into practice, making it unclear whether he will be able to bring the two parties together and form a resolution (11m22s).
• Despite the uncertainty, there is optimism that a resolution can be found, but its success will depend on the complexities of the situation (11m28s).

Israeli–Palestinian conflict (11m34s)

• The Israeli-Palestinian conflict is a tragic and pressing issue, with riots and protests occurring regularly, including outside the speaker's apartment in London (11m34s).
• The conflict is seen as a result of the Palestinian side's actions, including invading and abducting neighbors, and ultimately murdering civilian hostages (12m7s).
• The response from Israel is not seen as wrong, and the speaker personally stands with them, as well as the company, in their stance (12m39s).
• The position is that a country cannot be expected to sit idly by while its neighbors lob missiles over the border, hitting civilian targets, and stage hostile invasions (12m51s).
• War is tragic and has terrible outcomes, but it is also seen as a necessary response to deter further violence and protect citizens (13m6s).
• The ideal situation is to have a strong deterrent, such as a large stockpile of weapons, that never has to be used, in order to prevent war and promote peace (13m28s).
• The company's goal is to provide a kind of insurance premium to governments, helping to deter war and promote stability (13m31s).

How Are Software & Autonomy Transforming Defense? (13m35s)

• The integration of the latest technology, software, and autonomy is transforming the defense industry, with a focus on optimizing production, field support, maintenance, and understanding the battlefield landscape through the use of AI and data fusion, as seen in the Lattis operating system (13m48s).
• The Lattis operating system brings together and fuses data from various sources, including individual soldiers, planes, satellites, submarines, and missiles, to provide a live, real-time view of the battlefield for soldiers and commanders (14m24s).
• When developing new products, the focus is on identifying existing gaps in the market and creating innovative solutions that address these needs, rather than simply following five-year vision documents (14m58s).
• The defense sector has traditionally lagged behind in software development, but the application of software-first and AI-driven principles is expected to drive innovation in the industry (15m29s).
• The idea that the entirety of the Pentagon turns over every four years is a misconception, as while political leaders and appointees may change, the underlying personnel and bureaucracy remain relatively stable (16m15s).
• To lead the way in defense technology, it's essential to prioritize innovation and show what technology can do, rather than simply following government vision documents or product roadmaps (16m4s).
• The long-term vision documents written by military officers and civil servants within organizations like the Navy or Air Force do hold for where they want to see the capabilities of these organizations go in the next five years, 10 years, or decade (16m59s).
• The pace of innovation, especially in software, is consistently underestimated, and nobody would have predicted the massive wave of AI and AI applications hitting the market even as recent as three years ago (17m19s).
• There's a middle ground between inventing and having an idea for a new capability and aligning it with where the Pentagon wants to take the capability, as some parts of the organization are meant for doing futuristic and expansive types of things (17m46s).
• One angle is to pitch an idea to the Pentagon and convince them, while the other angle is to just do it, which is part of the strength of having raised a good amount of venture capital money and having broad freedom on what to do with that money (18m23s).
• With this freedom, it's possible to build a new capability, such as a new type of missile, drone, or submarine, and then show it to the Pentagon, rather than just pitching a PowerPoint slide (18m32s).
• This approach can shortcut the traditional process of pitching an idea and then designing it, and instead, show a working prototype and how it can be used with existing systems (19m1s).
• Government buying organizations may not always understand new technologies like AI, but it's not fair to say they largely don't know what AI is, and it's essential to approach them with respect and not underestimate their intelligence and intellect (19m30s).
• As Silicon Valley entrepreneurs, there's a tendency to underestimate the worldview of government buying organizations, but it's essential to recognize that it's their job to make informed decisions about new technologies (19m52s).
• The Department of Defense (DOD) bureaucrats and procurement officers have a different job and incentive structure compared to venture capitalists, which affects their risk-taking and decision-making when it comes to investing in new companies and technologies (20m16s).
• Procurement officers have to prioritize putting essential tools and supplies, such as bullets, food, and medical kits, into the hands of soldiers in harm's way, rather than taking risks on new and unproven technologies (21m11s).
• The current incentive mechanism for procurement officers needs to be changed to encourage more innovation and risk-taking, but it's also important to understand the different worldview and reward scheme that they operate under (21m41s).
• To successfully bring new technologies, such as AI, to the DOD, entrepreneurs and investors need to understand the procurement officers' perspective and translate the benefits of their technology into terms that resonate with them (22m7s).
• Implementing new technologies in the Enterprise, including the DOD, can be extremely challenging and requires a lot of work to bridge the gap between purchase and implementation (22m38s).
• Many AI entrepreneurs underestimate the difficulty of implementing their technology in the Enterprise and overestimate the potential for transformation, highlighting the need for a more nuanced understanding of the challenges involved (22m44s).

How Would Matt Design a Structure of Incentives to Encourage Risk-Taking? (23m14s)

• To create a structure of incentives that encourages risk-taking mindsets in the Department of Defense, it is essential to appreciate the urgency of the problems facing the West, particularly with regards to China and Russia (23m33s).
• Bringing capitalism back to the defense sector is crucial, as the current approach is often compared to communism, with a focus on Cost Plus style Contracting that can lead to a lack of competition and innovation (24m0s).
• Cost Plus Contracting should be significantly reduced, and more projects should be moved to firm fixed price contracts, which would incentivize contractors to work more efficiently and reduce costs (24m59s).
• The current Cost Plus Contracting system allows contractors to charge the government for their costs, plus a fixed margin, which can lead to a lack of incentive to reduce costs or increase efficiency (25m10s).
• This approach can result in contractors taking more time to complete projects, as they are incentivized to work by the hour, rather than by a firm fixed price (25m53s).
• The existing Prime contractors in the defense industry have little incentive to make their products cheaper or faster, as their profit margins are driven by the high costs they can charge (26m17s).
• The stock performance of the top five defense primes in the US has wildly outperformed the S&P 500, which may be due to the incentives in place in the current contracting system (26m41s).
• Northrop Grumman has had a total compounded annual shareholder return of over 20% over the last 15 years, with Lockheed and Boeing following closely at around 15%, surpassing the S&P 500's 11.6% total compounded annual return during the same period (26m52s).
• The defense industry's Cost Plus structure, which includes a firm fixed margin of around 8-10%, incentivizes companies to bundle overhead costs into the initial contract price and then take a markup, resulting in significant free cash flow (27m32s).
• Defense primes have become skilled at incorporating corporate costs, such as HR, finance, and IT infrastructure, into the initial contract price, allowing them to perform financially well despite the seemingly restrictive Cost Plus structure (27m50s).
• Lockheed Martin spent $6 billion on stock buybacks in 2023, four times the amount spent on internal research and development (IRAD), highlighting the industry's focus on shareholder returns over innovation (28m30s).
• The current incentive structure within government procurement rewards this behavior, leading to a lack of investment in research and development and resulting in technology that is two or three generations behind the current state-of-the-art (29m1s).
• The procurement process can take upwards of 15-20 years from the initial requirements document to full fielding of a system, which is longer than many Silicon Valley companies have been in existence (29m57s).
• A new approach to contracts is proposed, one that stops funding the current system and instead incentivizes innovation and the development of cutting-edge technology (29m10s).
• The type of equipment needed in a conflict can be drastically changed by the terrain and geography of a climate, as seen in Afghanistan and the early days of the Iraq War where American soldiers were initially sent into conflict in soft-sided Humvees that were vulnerable to bullets. (30m16s)
• Over the course of 20 years in conflicts in Iraq and Afghanistan, innovations and developments were made, such as the creation of mine-resistant vehicles and the addition of armor to Humvees, which transformed the equipment used. (30m41s)
• The cycle of innovation and development in the defense industry can be lengthy, with 6-12 month cycles being very hard to achieve due to logistical and supply chain challenges, and a 2-3 year cycle being more believable. (30m59s)
• Architecting products to be modular, upgrade-friendly, and designed around a software mentality can help shorten the life cycle of products, similar to how Tesla approaches their fleet of cars with over-the-air updates. (31m31s)
• A software-first approach to product design can help achieve shorter life cycles, but 6-12 month cycles may still be challenging to achieve, especially considering the 10-year IPO cycle. (31m58s)

Does the Defense Market Challenge the Winner-Take-All Model? (32m5s)

• The defense industry market is not structured for a "winner-take-all" scenario, where one company dominates the market, due to its size and the nature of government spending, which will always be scattered among multiple companies (32m5s).
• The market is gigantic, with the US spending around $880 billion on defense in 2024, the UK spending around $73 billion, and EU member countries spending almost $300 billion, making it a long-enduring and impactful market (33m20s).
• The total addressable market for defense spending is over a trillion dollars, but not all of it goes into technology, with a significant portion allocated to salaries, healthcare, and other expenses (33m47s).
• Defense spending has remained relatively flat and grown predictably over Republican and Democratic administrations, as well as in the UK, indicating a reliable sector for investment (34m23s).
• The company Anduril aims to become the sixth prime contractor alongside established companies like Boeing and Northrop, with plenty of opportunities for growth and innovation in the market (34m56s).
• The US spends around 8-8.5% of its defense budget compared to the UK, raising questions about whether the US is spending too much or the UK is spending too little (35m25s).
• The current defense spending is too low, and it should be closer to 2.5-3% of GDP, as committed by NATO, with a suggested increase of 50% more than that, and the spending should be more efficient (35m33s).
• The UK's current defense spending is about 2% of its GDP, which is around $10 billion, and it should be increased (35m52s).
• Trump's suggestion that the EU should spend more on defense and the US should spend less is considered correct (36m4s).
• The five major defense contractors, also known as the "five primes," are not investing enough in R&D and are instead doing buybacks, which could be seen as a threat to their style of technology development and production (36m16s).
• The "five primes" might view Anduril's approach to technology development as a threat, particularly the cost-plus versus firm-fixed mindset, which has led some of them to walk away from firm-fixed contracts due to the risk involved (36m30s).
• There is a possibility of nationalization of different providers, with Anduril being mentioned as an example in the US (37m21s).

Will Nations Favor Domestic Defense Providers? (37m27s)

• Many countries, including those in Europe, Australia, and the UK, favor purchasing defense technology from local companies, rather than directly from US-based companies like Anduril in California, due to sovereignty concerns and the desire to spend taxpayer dollars within their own countries (37m29s).
• To address this, Anduril has invested in teams, engineers, and production capacities in these countries, allowing them to manufacture and deploy UK variants of their products, supporting local economies and meeting local standards (38m11s).
• This approach involves taking core intellectual property and localizing it to work with existing platforms and standards in each country, requiring some customization (38m25s).
• Anduril allocates a significant percentage of its budget to research and development, estimated to be around 60-70%, which is a huge number compared to traditional defense industry primes (39m15s).
• The company reinvests all of its revenue into future growth and programs, despite being a growth-stage startup with negative earnings (39m29s).
• Anduril has learned from the experiences of incumbent defense companies, particularly in terms of the importance of impacting the appropriations and legislative processes, and having a voice heard in policy approaches (40m10s).
• The company also recognizes the importance of logistics and fielding in the defense industry, which is different from the software industry, where upgrades can be easily deployed remotely (40m49s).
• Anduril has learned from its experiences and acknowledges that there is still much to learn, particularly in appealing to patriotic individuals who want to work in the National Defense sector and influence its development (41m8s).
• The company has done a good job in hiring a large number of employees, establishing multiple offices and production factories, and creating a sense of mission and vision among its staff, which is an aspect that other companies can learn from (41m41s).
• However, it's essential to differentiate between two types of mentalities: ambitious AI software engineers and production assembly line fielding training personnel, as they are distinct groups with different needs and motivations (42m5s).
• One thing Anduril wishes it had done differently is taking a stronger corporate position on remote work, as the company's default in-office-first approach has been challenging to maintain, especially during the COVID-19 pandemic (42m42s).
• The company acknowledges that running a hardware company in a fully remote capacity is nearly impossible, and it should have been more definitive in its stance on remote work earlier on (43m1s).
• Anduril's co-founder wishes the company had taken a more definitive stance on remote work, as it has been harder to get the core group back together after the pandemic and the subsequent distribution of employees around the country (43m35s).
• One decision the co-founder wishes they had made differently was attempting to nonlinearly scale the company's support functions, such as business systems, HR, and IT operations teams, about a year and a half ago (44m4s).
• The idea of utilizing AI and automation to improve cost margins by condensing the G&A (General and Administrative) segment of spend seems logical, but it can be challenging to implement in practice, especially for a hardware company like Anduril. (44m44s)
• The decision to condense the G&A segment initially hampered the company's growth and was a long-term strategic mistake, particularly in two areas: Business Systems and another unspecified area. (45m20s)
• The quote from Elon Musk about the extreme difficulty of scaling production of new technology highlights the challenges of running a big hardware company, including unappreciated aspects such as Supply Chain management, procurement management, and sales and operations planning. (45m40s)
• The company underestimated the importance of investing in headcount and platform spend to build a unified operating system, which is now being addressed through the development of Arsenal OS. (47m12s)
• In retrospect, it would have been beneficial to make massive investments in headcount and platform spend two years ago, which would have put the company in a stronger position now. (47m24s)

Relationship to Regret (47m30s)

• Regret is a natural part of life, and it's impossible to have no regrets; there's a difference between sorrowful regret and introspective reflective regret (47m36s).
• Being introspective and self-critical can be beneficial, but it can also have a negative impact on culture, as it can create an environment where nothing is ever good enough (48m11s).
• High-performing teams can thrive in this environment, but it's not suitable for all teams (48m25s).
• It's possible to celebrate achievements and aim higher for the next time, as these two things aren't mutually exclusive (48m59s).
• The culture of naval-gazing and self-puffery can be detrimental, as it can lead to complacency and a false sense of being the best (49m12s).
• Having a mindset of continuous improvement can be applied to all aspects of a company, from facilities to technology development, and it's essential to learn from mistakes and make changes accordingly (49m45s).
• The idea that a good decision today is better than a perfect decision tomorrow is often hyperbolic, and it's essential to consider the context and the potential benefits of waiting for new information (50m16s).
• Overanalyzing and over-collecting data can lead to worse decisions, and it's often better to make a quick decision, learn from it, and adjust course as needed (50m42s).
• Anduril has raised around $4-5 billion in funding, with debt included (51m13s).

Fundraise Process (51m22s)

• The fundraising process has changed over the years, with the investor profile also evolving (51m23s).
• In the early days, Trey was exclusively in charge of running the fundraising processes, with Palmer, Matt, Brian, or key engineers occasionally meeting with investors to address questions and concerns (51m37s).
• Matt managed the back-office process, including collecting signatures, completing legal documents, and handling the mechanics of fundraising, while Trey handled the framing, pricing, and structure of the fundraising efforts (51m56s).
• In recent years, the CFO, Bobic, has taken over the fundraising process, including the latest debt round, and has done an incredible job (52m13s).
• The company has had some wasted rounds and individual R&D efforts that did not go as planned, but with the benefit of hindsight, they would not have done things differently in terms of the overall amount of money raised (52m30s).
• There have been a few internal R&D efforts that did not pan out, but the company has learned from these experiences and applied the lessons to new products (52m58s).
• The company does not believe they could have achieved the same results with half as much money, and instead thinks they should have raised more and moved faster (53m16s).

Managing the Impact of Secondaries (53m23s)

• A founder mentioned that one of the hardest things they face is the two classes of citizens within their company: those who take secondaries and those who haven't, with the original employees feeling they deserve more. (53m24s)
• Anduril has a lot of investors through different SPVs and family offices, but it's difficult to determine how many of them are legitimate, as some individuals may claim to be investors after investing through an SPV with multiple investors. (53m45s)
• There's a fair amount of noise in the secondary market, with some SPVs being created for the sole purpose of investing in other SPVs, leading to a lack of transparency and accurate information. (54m10s)
• The secondary market can be chaotic, with some individuals engaging in "scummy behavior," such as SPV brokers operating with limited information and spreading misinformation to investors. (56m14s)
• Anduril has never approached an SPV broker with detailed financials or management team interviews, and instead, these brokers operate off of limited and often inaccurate information. (56m35s)
• The company's founder believes in providing employees with the freedom to make choices about their shares, including taking secondaries, as it can improve their quality of life and make them more committed to the company. (54m34s)
• Anduril has had relatively low participation rates in structured tenders, with around 30% of eligible shares being sold, which is seen as a positive sign that employees are excited and long-term focused. (55m44s)
• Some investors in companies like Anduril, SpaceX, or OpenAI may be desperate or uninformed, leading them to invest without fully understanding the fee structures or carried interest, resulting in them paying steep premiums and layered fees for potentially misrepresented investments (57m2s).
• These investors may be misled by Special Purpose Vehicles (SPVs) that misrepresent their access to shares or investment vehicles, which can be considered a financial crime (57m53s).
• Misrepresentations can include false claims of direct access to primary shares or specific investment rounds, such as the second close of Anduril's Series F round, which may not exist (58m14s).
• The owners of companies like Anduril may not be entirely responsible for controlling such misrepresentations or fraud, as some level of fraud is inevitable, but they can control who has direct access to the company's capitalization table, strategy, and financials (58m43s).
• Despite efforts to control the situation, some investors may still be misled into funding fraudulent activities, such as investing in an SPV that claims to own shares in a company like SpaceX or Anduril, but actually funds something else (59m10s).
• The owners of companies like Anduril can only control who has direct access to the company's information and cannot entirely prevent fraud or misrepresentations (59m31s).

Key Factors Made Anduril a Breakout Success (59m46s)

• Anduril's breakout success can be attributed to two key factors: unlocking latent patriotism within the technology and defense sector, and unlocking a significant amount of funding and investment in the sector, which had been historically lacking (59m47s).
• In the early 2000s and 2010s, the tech sector's momentum was not driven by patriotism, and the best and brightest were not interested in working in the defense sector (1h0m28s).
• Anduril has been able to tap into this latent talent and attract motivated, bright, and hardworking individuals to work on problems that are viewed as the most important in the world (1h0m56s).
• The company has also been able to unlock investor enthusiasm in the sector, which had been lacking, and align it with the latent patriotism in the tech talent base (1h1m51s).
• At its core, a company is made up of its people, and Anduril's success is due to its ability to attract incredibly smart, hardworking, and motivated talent to work on its problem set (1h2m11s).
• The company's focus is on creating a work environment where every individual, regardless of their background or identity, feels excited, accepted, motivated, and financially rewarded (1h3m20s).
• The company does not focus on hiring based on numbers or statistics, and its goal is to create a diverse and inclusive work environment (1h3m57s).
• Currently, about 18-20% of Anduril's employees are women, which is higher than the average venture portfolio, where less than 5% of CEOs are women (1h4m7s).

The Outlook for Venture Investments in Defense Companies (1h4m49s)

• The success of a defense company can be attributed to the composition of its leaders, who bring different skill sets such as execution, product development, fundraising, and government sales, which is often lacking in other defense companies (1h4m49s).
• There is a significant amount of spending in defense through venture investments, but many of these companies may struggle and eventually implode due to the complexity of the industry (1h5m21s).
• Venture investors should be aware that execution, delivery, and winning contracts in the defense industry is complicated and involves complex regulations, compliance, and accreditation (1h6m1s).
• To be successful, investors should spend time understanding the complexities of the appropriations process, budget process, and awarding and delivering of contracts (1h6m54s).
• Defense funds are being created, but they should be considered as a component of a diversified defense investment within a broader diversified portfolio, rather than a standalone asset class (1h7m6s).
• The speaker has a good relationship with Hing and hopes they succeed, and has discussed potential collaborations with them (1h7m22s).

Acquisition Strategy (1h7m36s)

• The company has been successful with acquisitions, which is atypical for a company of its age, with the thesis behind these acquisitions being that there are companies with brilliant products and interesting technologies that lack government relations, sales, and go-to-market engines or back-office capabilities, which the company can provide (1h8m3s).
• The company looks for startups with great products and technologies but struggling with sales, government relations, and back-office tasks, and then acquires them to provide the necessary support and drive growth (1h8m21s).
• An example of this approach is the acquisition of Dive Technologies, a company that makes robotic submarines, which was sold to the Royal Australian Navy, and the company had to set up a new office in Sydney to support the development program (1h9m2s).
• The company has taken a similar approach with other acquisitions, applying its go-to-market engine and expertise to the acquired companies' products and technologies (1h10m27s).
• Most of the company's acquisitions have not been venture-backed, but rather bootstrapped and ground-up started, which requires a different mentality (1h10m32s).
• The company's approach to acquisitions involves identifying companies with great products and technologies, but lacking in other areas, and then providing the necessary support to drive growth and success (1h8m6s).

Non-Obvious Habits Make Matt an “Execution Machine” (1h10m43s)

• Matt Grimm's non-obvious habits that make him an "execution machine" include being always on the move, constantly glued to his phone, and consistently making quick decisions and communicating them to empower others to execute (1h11m13s).
• He often works on two or three things at the same time, and his ability to multitask allows him to be efficient (1h11m28s).
• Grimm also emphasizes the importance of constantly learning by consuming various types of content, such as podcasts, audio books, and technical books, to expand his knowledge of the world and the tech and defense ecosystem (1h11m43s).
• He believes that having a good eye for talent and identifying individuals with a perfectionist mindset is crucial for success (1h12m4s).
• Grimm's daily routine includes waking up at 5:30, working out at the office gym, and spending time with his kids in the evening for story time and bedtime (1h12m15s).
• He does not get to see his kids in the morning due to his schedule, which is a sacrifice he acknowledges (1h12m22s).
• Grimm believes that it is impossible to have everything in life without making sacrifices, and he thinks that people who claim otherwise are lying (1h12m38s).
• One thing he has sacrificed and thinks about often is spending more time with his kids, as they are at a fun age and he does not get to spend much time with them (1h13m1s).

The Secret to a Happy Marriage (1h13m18s)

• The secret to a happy marriage involves two key factors: choosing a life partner carefully and having clear communication about expectations, responsibilities, timelines, and goals (1h13m18s).
• Clear communication is essential in both personal and business relationships, as it helps prevent frustration and misunderstandings that can lead to major problems over time (1h14m10s).
• Not going to sleep angry is not always the best approach, as it can lead to unhealthy arguments that continue late into the night; instead, it's better to acknowledge the issue and agree to discuss it the next day (1h14m32s).
• Allowing issues to fester for weeks or months can drive real frustration and negatively impact a relationship, so it's essential to address problems in a timely manner (1h15m43s).
• The importance of being in close proximity to the nexus of talent in one's industry was emphasized, with the example of the technology sector in California having the highest concentration of talent working on next-generation problems and companies (1h16m44s).

Has Venture Lost Its Way by Focusing on the Wrong Markets? (1h17m8s)

• Venture capital has lost its way by focusing on the wrong markets, prioritizing quick trends and sexy companies over enduring companies with real technological innovations at their core (1h17m24s).
• The Lean Startup methodology has led to a focus on getting products to customers quickly, with an emphasis on SMB accounting tools, eCommerce optimization, and cart abandonment products (1h17m14s).
• The incentives in the venture capital industry, such as raising the next fund and generating LP enthusiasm, can drive investors to prioritize trendy companies over those with long-term potential (1h17m47s).
• Enduring companies with real technological innovations at their heart are more likely to be around for a long time and have a significant impact (1h18m1s).
• The clean tech sector's poor venture performance in 2005-2006 is an example of how a focus on the wrong markets can lead to significant losses for investors (1h18m12s).
• A new generation of investors is emerging, skilled in SAS investing, but may not be equipped to analyze and invest in companies with different capex structures, such as those in the defense industry (1h18m30s).
• Venture capitalists are generally smart and able to learn quickly, but may need to adapt to new investment templates and mindsets to succeed in new areas (1h19m5s).
• The shift in focus towards new areas, such as the defense industry, may be challenging for some investors, but overall, there is optimism and excitement for the enthusiasm and money pouring into these sectors (1h19m33s).

Quick-Fire Round (1h19m39s)

• If given the opportunity to raise funds from one investor again, the preferred choice would be Founders Fund, due to their demonstrated history of supporting their founders and making bets on people, as seen in their relationship with Anduril and its founders (1h19m45s).
• Founders Fund has shown a "ride or die" commitment to Anduril, going to bat for the company in numerous instances, including when other VCs were uncomfortable with the ethics of defense, especially during the Trump Administration (1h20m25s).
• The Trump Administration's impact on the defense industry led to a period of uncertainty and controversy in the valley, with many VCs struggling with the ethics of defense, but Founders Fund stood by Anduril and its founders (1h20m43s).
• Over the last 12 months, there has been a change in perspective on the importance of business systems and the nitty-gritty details of integrating these systems to create an effective manufacturing process (1h21m31s).
• The complexities of business systems, including ERP integration and manufacturing processes, have been found to be crucial to the success of the company, and efforts are being made to correct past mistakes and improve these systems (1h22m26s).
• A new and exciting partnership is set to be announced in the coming weeks, which will likely have a significant impact on the company's future (1h22m47s).
• Working with Peter Thiel has provided valuable lessons, although the specific details of these lessons are not mentioned (1h23m9s).
• The biggest lesson from Peter is that there's no alpha in consensus, and being contrarian is key to finding investable signals, as consensus means performing exactly as well as everyone else, and the actual interesting signal is in being contrarian (1h23m14s).
• It's easy to say but hard to implement in practice, and if everyone sees defense as a very investable opportunity, it might not be the best time to invest in defense at some of the valuations that early-stage companies are pulling down (1h24m1s).
• Anduril is not overpriced today, but rather underpriced, with a valuation of $14 billion in the last round, and to reach $100 billion, the company needs to achieve full-scale production of robot planes, robot subs, drones, and missiles, along with continued operational excellence and delivery (1h24m26s).
• To become one of the top 10 defense contractors in the US, Anduril needs to achieve massive scale production and continued growth, which would put the company well within the top 10 if not top five of defense contractors in the US (1h24m38s).
• The future of war might involve robot-on-robot warfare, but it's unlikely to involve weaponized robo dogs with guns, and the actual future of warfare is more likely to involve local, tribal-like warfare with massive quantities of drones and missiles (1h25m20s).
• The conflict in Azerbaijan in 2020, the current situation in Ukraine, and Iranian missiles being lobbed at Israel from western Iran are examples of how the future of warfare is playing out, with adversaries making drones in massive quantities for relatively low costs (1h26m6s).
• Iranian Shahed missiles are incredibly cheap, costing around $50,000, and can be made in large quantities, making them a significant threat as they can be used by adversaries such as Russia and Iran against countries like Ukraine and Israel (1h26m43s).
• The cost of intercepting these missiles is high, with the US using $4 million Patriot missiles or $1 million Irish missiles, creating an unfavorable cost curve and production capacity for the West (1h27m7s).
• The US, UK, and Australia lack the production capacity to manufacture enough munitions for a prolonged nation-on-nation conflict, making it challenging to defend against cheap drones and missiles (1h27m59s).
• The use of cheap drones by adversaries like Iran could lead to an imbalance in conflicts, making it difficult for the West to afford defense against them in the long run (1h28m21s).
• The goal is to drive down the cost and increase the production rates of defense mechanisms and munitions to keep up with and outcompete adversaries (1h28m40s).
• Iran is considered a significant evil, but China is viewed as the most complex and difficult adversary for the West due to its approach to human rights, ongoing genocide, and control of supply chains (1h29m11s).
• China's values are fundamentally antithetical to those of the West, and its ambition for empire building, control of supply chains, and influence on the global sphere make it a significant threat (1h29m56s).
• China's control of African mineral supply, including cobalt, is also a concern, highlighting the need for the West to address these issues (1h30m11s).
• The West's lack of strategic expenditure on acquiring mineral supply chains is concerning, particularly with regards to Cobalt, as only a small percentage of people are aware of its importance and impact on global supply chains (1h30m23s).
• The issue at hand is not wealth inequality, but rather knowledge inequality, as a small percentage of people have access to critical information (1h30m40s).
• The idea of banning certain social media platforms in the US, such as Instagram, is not a simple solution, as it is a complex issue that requires careful consideration (1h31m7s).
• Mainstreaming certain messages into the American psyche, particularly among youth, can have long-term strategic implications for the country's motivation, ambition, and direction (1h31m30s).
• Allowing a strategic adversary to control the content promoted on social media can have significant consequences for a country's future (1h32m16s).
• Traditional media bias is a real issue, and the democratization of information has both benefits and challenges, including the spread of misinformation (1h33m7s).
• The extent of traditional media bias is not overstated, and it is a significant concern that requires attention (1h33m33s).
• The question of whether jokes can incite mass violence is complex and depends on individual perceptions of what is funny and what is not (1h33m48s).
• Deciding what constitutes a funny or unfunny joke is a subjective matter, and it is up to the nation, government, and police force to establish guidelines and regulations (1h34m7s).
• The concept of having a board to approve jokes before they can be made is not a viable solution, as comedy is often subjective and can be influenced by groupthink and group approval, and what one person finds funny, another might find offensive or inciting violence (1h34m13s).
• Having preemptive control over opinions, political positions, and proposals can be incredibly dangerous, and it's crucial to determine who gets to decide what is allowed to be said (1h35m3s).
• While there can be consequences for making jokes, such as reputational consequences, lawsuits, and liabilities, it shouldn't be the job of the state to decide what is allowed to be said (1h35m32s).
• The idea of an Arbiter of Justice deciding what is right or wrong is not a new concept, and it will ultimately be up to the courts and juries to decide whether a joke or statement has crossed a certain threshold (1h35m43s).
• The US has a well-established set of laws and practices around what is and isn't protected speech, and it's essential to be careful not to take an incredibly dangerous position by deciding what opinions are allowable or acceptable (1h36m4s).
• The debate around COVID-19 and the suppression of alternative theories on social media platforms and mainstream media is an example of how this kind of mindset can go sideways (1h36m25s).
• Europe is facing structural issues, and from an American perspective, it seems that there is a lack of ambition and a seeking of a better, brighter future in many European countries (1h37m16s).
• The UK is also experiencing similar issues, with a sense of complacency and a lack of drive towards a better future (1h37m41s).