Inside Anduril HQ: Trae Stephens on Anduril’s Origin, Peter Thiel, & Palantir DNA

0:00Well, you know that I'm Sam and Jack's little brother, right? What? When we started Anvil in 2017 as kind of the pariah of Silicon Valley. People will think about us as like a hardware company, but the core of everything that we do is actually software. Our interview with Alex Karp when we were walking around the office at Palantir. He's got to keep moving, right? Exactly. Can't sit down. Once you mentioned that, I've been thinking that the whole time. I'm like, I don't know if I even feel comfortable in this chair. Three of the co-founders were from Palantir, and then a bunch of our early team were from places like Tesla and SpaceX where there was already a lot of government intersect.

0:32From day one in Andruil we were starting from where Palantir was in year 10. Defense as a sector is multi-domain and so you have things under the sea, things on the surface of the sea, ground vehicles, aerial vehicles, and space. The Andruil strategy is we want to cover the whole gamut. The most annoying lesson I've learned from Peter Thiel is that he's always right. When he talks you need to take it very seriously.

1:03Trey Stevens. Good to be here. How's it going? Welcome to Sorcery. Thank you. Thanks for having me at Anderil. It's a much cooler place than most places in Silicon Valley. No, it's really cool. I remember I was meeting with David Ulovich like a couple of years ago and we were talking about another like hard tech, defense tech company down here. I'm not going to name names, but I was really excited about it. And he was like, Molly, that's not cool. You need to go to Anderle. And now that I'm here, I'm like, okay, I get it. Although, to be fair, this weekend, you did interview Dan Wright from Armada in front of an F-117A, which is pretty cool as well.

1:39It's pretty cool. Yeah. We don't have an F-117 here, but we do have a lot of other cool stuff. Close, right? Yeah, pretty close, pretty close. I mean, you're building the future F-117s. That's right. We've got the Fury, although you can't really see it. It's just downstairs, but yeah. Well, it's great. I talked to a couple people in preparation of this, Dan Wright being one of them, Moritz, Eric from Altimeter, Jack Altman, who you were just on his podcast. Well, you know that I'm Sam and Jack's little brother, right? What? Yeah. No, I'm not. It's just a joke. Oh, okay. I was like, okay. It could be a cousin.

2:21Could be. You never know. That's cool. Very overt. I'm gonna have to like actually look through their family lineage. So you recently just had Pete Hegseth here. We just got back from the Reagan National Defense Forum. I want to know what is the current state of the defense wave and where are we in the technology of war? Yeah, I mean, there's a lot going on in defense tech these days, which is kind of crazy thinking back to when we started Anvil in 2017 as kind of the pariah of Silicon Valley. It was not something people were doing. It was incredibly unpopular. and now all of a sudden there's like almost nothing as popular.

2:56Maybe AI slop enterprise SaaS companies are slightly more popular, but, you know, Defense Tech is right up there. So I think there's a tremendous opportunity given the kind of cultural waves shifting inside of the department where they're really interested in engaging with innovative companies. And Andruil had the unique privilege really of, you know, being there at the very beginning and kind of shepherding that wave to where we are today. And what was that like having Pete Hegseth here? I mean, it's fun. Secretary Hegseth is, you know, he's incredibly charismatic. He understands the problems that are going on right now.

3:32And he really gets kind of where Anderil fits into that equation. So not only, you know, the secretary, but also his entire senior leadership was here. And so being able to interact with Undersecretary Duffy, Undersecretary Michael, General Counsel, You know, it was a really cool opportunity not only for, you know, Anduril's founders, but also the entire team who got to all interact with him during that day as well. It's exciting. So I want to talk about the origin of Anduril. I hear there's some story about 007 that you're very close with that I need to hear more about. Yeah, so I was a senior in high school when 9-11 happened and ended up going to college specifically trying to go to the end of the intelligence community.

4:14So after four years at Georgetown, I got a job in the IC and had this expectation that I was going to show up and somebody was going to throw me the keys to an Aston Martin and I was going to have a watch with laser beams. And instead, I sat in a cubicle in a windowless concrete basement with two other people who didn't work. They just sat around and talked about sports, like local area sports all the time. And so my James Bond dream was completely untrue. and then about two and a half years in I bailed and went to Palantir and it was like the first time that I had exposure to like really crazy visionary people who wanted to change the way that we were doing things inside the defense intelligence national security apparatus and so it's kind of cool now in a position where we are where I don't know for if you saw Top Gun Maverick but you know basically the the bad guy general says like you're a dinosaur Tom Cruise the future is autonomy and it's like wow they're actually talking about Anduril now it's like a full circle moment.

5:17In the midst of all of this there's obviously a lot of excitement there's increased competition on the private side public side have it has its own bottlenecks I'm curious where do you think defense tech stands for the competitive state? Defense as a sector is multi-domain and so So you have things under the sea, things on the surface of the sea, ground vehicles, aerial vehicles, and space. And kind of all of those domains are critical for the Department of War to have dominance in. And so, you know, the annual strategy is to go multi-domain. We don't have like a niche approach to delivering autonomy or attribability in any single domain.

6:00We want to cover the whole gamut. And this is the way that traditionally defense companies have done work. You know, this is the way Lockheed Martin, Arthur Grumman, this is how they do their work as well. And we believe that there's a lot of shared autonomy components that can cut across all of those domains that give us an interesting competitive advantage. And you see, like, in Silicon Valley even, companies that are being started that are attacking each of those layers as well. And, you know, we welcome the competition. We think it's really great to have more companies in the space that are, you know, moving away from kind of the semi-communist, centrally planned economy way that the department has been doing business for really the last 30 plus years.

6:41I recently had Bradley Tusk on the podcast, and he's all about the regulatory environment, political advisement. He thinks that the recent investments in private sector companies from the government is somewhat, someone might say, communist strategy. Do you think that? What do you think about the investments in Intel and MP materials from the government standpoint? We have to be competitive on a global stage, and there's an argument that the government needs to get involved in order to make that work. China is playing a subsidization game with all of their domestic national champions. And they're also running a very effective 40-chest strategy with the Belt and Road Initiative, which has put the United States and our allies and partners in a weakened position since they've devised that.

7:30I don't know if you've had the opportunity to read the 100-year marathon. It's a brilliant book and basically talks about how Chinese culture has taken a very different approach to Western culture in the way that they are seeking dominance. You know, we have a tendency to show our strength at every stage, whereas the Chinese strategy for a long time was, you know, bide time, don't show your strength, and then once you're at a position of dominance, you can strike. And this has been the success of Belt and Road, is that they've gone out and they've done this to the point where, you know, they're now threatening us for global power dominance, which is really important for our ability to set standards and be global leaders and enforce ethical pathways of deterring conflict.

8:16And so I think the strategy that the government is taking, you could criticize the very specific aspects of it, like should we have taken ownership and intel as part of a social security strategy or something like that. You could criticize the specifics of that, but we have to secure raw materials. We have to maintain access to cutting-edge semiconductors. You know, there's all of these things that we have to do, and I'm glad that the Department of Commerce, Secretary Lutnik, and others are thinking critically about how to make that work. In American Affairs, you wrote, the factory is really the weapon.

8:50Right. Could you share more about that? Yeah. You know, for decades and decades, the United States was the global manufacturing powerhouse. I mean, we had the ability during World War II to outproduce our adversaries. And you had companies like Ford that turned over their production lines to build bombers for the Allied war effort. Fast forward to the last 30 years, the fall of the Soviet Union, we've atrophied massively in our manufacturing chops. We offshored a lot of manufacturing work to lower cost labor locations like China. and not only did they soak up a lot of that manufacturing capacity, but they also developed advanced tooling and know-how to build the things that we use every day, whether it's the microphones that we're wearing today or the iPhones that are in our pockets.

9:40And so at this point, even if there was complete labor cost parity, we still don't have the ability to just magically reshore a lot of these critical components that are going to be important to the next 50 or 100 years. And so, you know, we're in this place where we really need to re-industrialize. It's incredibly important. It's incredibly important culturally, geopolitically, strategically. And, you know, this is what Anderil is really focused on right now, is bringing back our ability to not build hundreds of things or thousands of things, but tens of thousands of things or hundreds of thousands of things efficiently, scalably, and to do it in a way that enables us to retain that magazine inventory advantage against our adversary.

10:23And so I think that's really what I was saying with the factory is the weapon because without the factory, you have no weapons. Yeah. In previous wars, World War I, World War II, the United States had to utilize non-traditional weapons factories to create weapons. So are you doing everything here internally, or are you also outsourcing and finding different ways to manufacture? We have a lot of manufacturing partners. Obviously, we're not building every subcomponent of everything that we're building. So we're working with other vendors, we're working with other machine shops, we're working with other manufacturers, and then we're pulling it all together generally in our own facilities.

11:01But in the first quarter of next year, we'll be opening our soon-to-be 5 million square foot factory campus called Arsenal One just outside of Columbus, Ohio, which is where we'll start ramping up our collaborative combat aircraft to the autonomous fighter plane production. And we have other facilities around the country. We have shipyards. We have loitering munition assembly that's happening in Atlanta, Georgia. We do some stuff right here in Costa Mesa at our headquarters. So I imagine that there will be multiple factories across not just the United States, but across allied and partner nations as well, where we're ramping that manufacturing muscle at the same time.

11:39What was it like to open up Arsenal One? I know it's under development, but choosing Ohio, where you're from, what was that like? Yeah, at some point when we got down to like the final three states, I realized that the bias was going to look really bad to the company. So I just kind of sat back and I'm like, you know what, I don't want to push this. I think Ohio is great. Obviously, as a native Ohioan, I thought it would be awesome to land there. The reality is that when it comes down to just a competition for, you know, where we were going to end up doing this. And that was some combination of facilities, the access to utility scale, you know, power, water, things like that, as well as a labor force that could scale with us as we grew out to that five million square feet.

12:22Ohio just had the most competitive opportunity or offer for us. So we kind of natively ended up going there. You know, when we did the ribbon cutting earlier this year, I brought my mom with me since she's just she lives right down the road. And, you know, having her meet the governor and having the governor thank her as if somehow she was the one that convinced us to go to Ohio was somewhat entertaining. Opening something so large like that, does this feel real? I mean, primes have existed for a very long time, but you're known as the new prime. So how does that physicality feel? Well, I'm certainly experiencing the realness of it with all the LinkedIn messages from my high school classmates that I haven't heard from in 20 years that are now looking for jobs.

13:05so it feels pretty real. Now I mean one of the cool things to remember is that Ohio is the birthplace of aviation and so in some ways it's like you're starting with the Wright Flyer and then coming back with fully autonomous fighter plans to be built you know less than an hour drive away from where the Wright Brothers were building the first airplane and so there's a tremendous history GE Aviation, GE Aircraft where they build the jet engines is also right down the street about an hour away from where we're setting up the factory. So it's a cool kind of cultural moment, I think, not only for us and what we're trying to deliver to the department, but also to the state of Ohio.

13:44It's interesting because when the company was started, like you said, it was seen as a pariah. You kind of, I would say, got a lot of support for a while, but now it seems like there's some backlash coming back. So what do you think people get wrong about Anderil and what do you want to correct? Well, I tend to not really think about what the media says. I'm not super concerned about, you know, the Wall Street Journal or Reuters or whatever. Like, honestly, they just looked kind of silly talking about, you know, crashes during test flights. It's like, that's what happens, guys. That's what happens when you move fast.

14:17If you're not crashing when you're testing, you're not testing very hard. So I'm not really concerned about that. I think, like, broadly across the defense industry, this is a pattern that you saw happen with both Palantir and SpaceX as well is that the big players, the primes, they don't really pay attention at all until their lunch is being eaten. And then the moment they realize their lunch is being eaten they're gonna get more aggressive. And so that was always our expectation. I'm under no illusions that you know we're going to be gladly welcomed with you know a big hug or something by by the companies we're competing with.

14:53As far as like what people get wrong about Anduril, I think that people will think about us as like a hardware company where we're building all of these big systems, many of which you can probably see in the background of the camera here. But the core of everything that we do is actually software. And that was the original idea for the company when Matt, Brian, Palmer, Joe, and I started talking about building this company. It was always, we want to build a software-defined and hardware enabled defense company rather than a hardware defined and software enabled company. And so most of the people that are sitting around in this office today are running software, actually.

15:30Sorcery is brought to you by Brex, the financial stack trusted by more than 30 ,000 companies, including one in three venture backed startups in the U.S. Nearly 40 percent of startups fail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, chipping away at it with fees, Brex's designs help you spend smarter and move faster. Their all-in-one solution combines checking, treasury, and FDIC protection into one powerful account. You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one.

16:11With same day and even same hour liquidity, access your funds anytime. companies like scale ai doordash service titan hymns anthropic flexport robin hood and plaid trust and use brex start today at brex.com slash sorcery that's b-r-e-x.com slash sorcery in today's high-speed business world staying ahead means using the smartest tools possible including the powerful capabilities of artificial intelligence meet turing intelligence turing builds customizable AI systems designed to solve your mission critical challenges no matter your industry. From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable, and more effective.

16:55With Turing, discover how AI can accelerate your business growth. To learn more, visit Turing.com slash sorcery, spelt S-O-U-R-C-E-R-Y. That's Turing.com slash sorcery. We always had sort of an unfair advantage in that, you know, three of the co-founders were from Palantir. And then a bunch of our early team were from places like Tesla and SpaceX, where there was already a lot of government intersect. I spent six years at Palantir learning how to sell to the government, made every mistake you could possibly imagine. And so we didn't have to do that. And from day one in Andruil, we were starting from where Palantir was in year 10.

17:33And so kind of a great cheat code. What was your biggest lesson from Palantir? I mean, there are so many. I wouldn't say that there's any one. It's kind of like death by a thousand cuts. Like, you know, you have to hire a strong government relations team because your customer is not the budget appropriator. Like they're not the same. So you have to be able to work the administration. You have to be able to work Congress. You have to work political appointees in the department and the customer, the person that will be using the tech at the end of the day. And so you really have to understand that stack.

18:03You know, there's a long history in companies that are doing business with the department where they have these massive advisory boards of retired generals and things like that and it was just clear that that's never worked and so that was never really part of our strategy uh thankfully because these are lessons again learned from Palantir um I'm super grateful for you know the trailblazing that were was done by people like you know Elon, Gwynn and Tim at SpaceX and uh Karp, Shamm and uh Lonsdale and Aki and others at Palantir so I just feel really lucky to have been able to benefit and stand on the shoulders of those giants?

18:39One thing that was kind of the central focus of our interview with Alex Karp when we were walking around the office at Palantir. He's got to keep moving, right? Got to keep moving. Can't sit down. Once you mentioned that, I've been thinking that the whole time. I'm like, I don't know if I even feel comfortable in this chair. This is hard. But one of the things that was like core to our conversation was like moral and ethics around this. Christian Garrett, he's a big fan of you. We've done so many interviews with him at this point. He's great. But one of his questions he wanted me to ask you was about the Just War Theory and St.

19:15Augustine. So how does that play into all of this? I mean, since the very beginning, this was always a big part of the conversation that I was drawing the rest of the team into is, you know, Just War Theory, which was developed, you know, over a thousand years ago by St. Augustine talks about like how you engage in lethal defense activity in the most ethical way possible. And if you look back at like the course of all human civilization, you had this massive ramp up in lethality. So we started with like hitting each other with rocks. And then it was like, you know, at some point somebody is building and making a knife and then someone makes bow and arrow, and then you have catapults that could do like one-to-many destruction, trebuchets, and then you have the advent of gunpowder, so you have guns and simple bombs, and that just kept going up and up and up until the atomic bomb in 1945.

20:09And at that moment, I think humanity looked around at each other and they said, I don't think we want to do this, like global nuclear war is a pretty bad bet. And so from then until modern day, you see the climb back down the ladder. And so you had precision guided munitions. You see like some of the counterterrorism work we were doing was literally shooting non-explosive AIM-9X missiles into windows to take out individual targets without blowing up buildings, no collateral damage. We've become really, really good at being accurate. And so people are constantly talking about kind of the freak out of the intersection of AI and defense and autonomy.

20:49And what does that do from an ethics perspective? the goal is take humans out of dull, dirty, dangerous jobs. So we're not putting our, you know, men and women, brothers and sisters in horribly dangerous situations and become as accurate and precise as possible. And that's really what just war theory is all about. Principles of discrimination, principles of, you know, just cause, like how much, how good is the information? Do we know for sure that this action that we're going to take is actually going to address the problem that needs to be solved. So this is very, it's a big part of androal culture.

21:23We talk about these things internally a lot. And I think we would only do something that we fundamentally believe would be better, more just for humanity. Where do you get pushback on that? Well, I mean, there's a lot of pushback from, you know, people who don't necessarily understand why defense is important. You know, pacifism as an idea is only possible inside of a governing system with a monopoly on violence. Like you can't be a pacifist without a government monopoly on violence. That's just like not possible for humanity. And so I'm glad that people get to have these positions, these kind of anti-national security positions where they can sink down into their comfy couch with their hot chocolate and talk about pacifism because it means that someone out there is willing to risk their lives to protect their ability to be pacifists.

22:15So I'm all for it. Do you have any cultural commentary on what's going on in America right now? Peter Thiel put out that letter to Mark Zuckerberg in 2020 on the rise of pro-socialism. And we're seeing that in New York City with Mom Donnie. How do you think that bleeds into where culture is going? I know you're a little bit more outspoken on this, whether it relates to religion or the rise of social media and AI girlfriends and that kind of thing. But where do you see all this playing out with that? I think culture is really hard to predict. I mean, we've seen big shifts even in the last 10 years that I don't think I would have expected.

22:52You know, there's a lot of surveys that show that for the first time in modern civilization, you have more women or more men in the most recent generation in Gen Z going to church than women. It's like that has never happened before. Ten years ago, if you had asked me, like, do you think Gen Z will have a rising church attendance and it will be more men than women? I would have gotten that answer totally wrong. So I'm not sure that I would be able to predict this stuff necessarily. But I think, you know, you've probably seen the meme like, you know, hard times create serious men, serious man create easy.

23:27I think that's kind of the moment we're in is people realize that, man, being serious is very important. And there's more important stuff out there than monkey JPEGs and, you know, AI slop. And I think it's an opportunity for people to step into a good quest. And so I'm hopeful, at least, that we're in a moment of a transition from slop to good questing. And Anduril's amazing marketing definitely helps with that. It does, yeah. I mean, when we started the company, the idea was, how do you build an apple for defense rather than the traditional model? So if you were to ask a normal American citizen, who makes the F-16?

24:08They would probably know. they would be able to envision in their head what an F-16 looks like, they would have no idea who built it. It's just like not a not part of cultural knowledge. Our goal at Anderil is we want everything that we build, everything that you see to invoke Anderil, not just the product or the thing that it does, but who made it. And the reason that that's important is that it needs to serve as a halcyon call to people that you can build effective things, low cost things, attritable things, innovative things that are moving the needle for humanity and they can be beautiful and they can remind you of the grasping of human potential.

24:47And we've been really lucky that we've brought on an incredible team around this. Shannon Pryor who heads up our comms PR department, Jin Bucci who runs our design, Jeff Miller who runs marketing. I mean these are world class people who didn't come from defense, importantly. They came from automotive design and Snap. Jeff worked at Snap. Shannon worked at Hulu. I mean it's like we're pulling people from consumer businesses to build a consumer profile for a defense company and that's really never been done before. Sorcery is proudly sponsored by Carta. Carta is transforming the private marketplace, connecting founders, investors, and limited partners through software purpose-built for private capital.

25:29Trusted by more than 65 ,000 companies in over 160 countries. Carta's platform of software and services lays the groundwork so you can build, invest, and scale with confidence. Carta's fund administration platform supports over 9 ,000 funds and SPVs, representing nearly$185 billion in assets under management, with tools designed to enhance the strategic impact of fund CFOs. For more information, visit carta.com slash sorcery. That's C-A-R-T-A dot com slash S-O-U-R-C-E-R-Y. Some of you may not have heard this yet, but our sponsor Public just launched something called Generated Assets, and it brings AI into investing in a way I've honestly never seen before.

26:13Here's how it works. You type in an idea like AI-powered supply chain companies with positive free cash flow, or defense tech companies growing revenue over 25 % year over year. Publix AI then dispatches a swarm of agents that scan every single US stock, evaluates them, and instantly builds a custom index around your thesis. What really stands out is how clearly it explains why each stock is included. And before you invest, you can even backtest your idea against the S &P 500, so you're making decisions with real context, not just guessing. And beyond generated assets, Publix lets you invest in stocks, bonds, options, crypto, all in one place.