The Anduril Thesis

28:57And eventually they just said, sorry, the military is trying to get us to break the laws of physics and we just can't do it. No one can do it. It's impossible. because their incentive is take as long as you possibly can, make it as expensive as humanly possible, build everything from scratch, and get this fat fee on top of that of a much bigger number. Then you have the Andrel team comes along and they say, well, look, you don't need to reinvent sensors and cameras and batteries from scratch. There are some very effective tools in the commercial market. Let's get cameras and sensors and batteries and build a pack and put it on a stick and stick it out on the southern border and stuff.

29:36And their first customer, if I remember correctly, it wasn't even the government. It was a private ranch owner who wanted to monitor because there was drug traffickers coming across his land. And so originally it was a private citizen just paying to put up these towers so they could demonstrate it. But eventually, Homeland Security and stuff, they became a large customer of the Sentry Tower. And it was dramatically cheaper than anything that this prime was trying to do. It didn't have to cost billions of dollars because Anduril was incentivized to make it as cheap as possible, as quickly as possible, as effective as possible, and then go and sell that prepackaged capability rather than trying to convince the government that they should pay them a billion dollars to play around with a possibility of a product.

30:18So the Century Tower was the first product that they went after. Can you talk about the early days of Anduril and how the team got together? I was really fortunate. I don't know how this happened. but we went over to Anderle and we spent the day there and I was able to interview four of the co-founders, Matt Grimm, Trey Stevens, Palmer Luckey, and Brian Schimpf. And it was amazing. It was so much fun. We did like literally everything. And so I got a little piece of history from each and every one of them. But to your point and to your research too, so what is the outside lens of how things got together and the climate around that?

30:57So one of the things that is the most fascinating of like walking through the history is it really is like It's like a deep vein of rich mythology that like the deeper you go the more impressive it is and so one of the things you find out is that Palmer has been thinking about defense since he was in high school. So while he was in high school He volunteered at a lab where they were basically doing research around how to use virtual reality to help soldiers deal with PTSD. So like a combination of his of his loves of like VR, but also like military technology that goes back as far as like pre-Oculus days, there was some basis there.

31:37Then there is this other vein of history, which is so Palmer is one of the younger of the four. But the other three, I think, were all in high school during 9-11. And Trey Stevens talks about that the most of like that was that awoke something inside of him of like he saw he saw what happened and he said I need to do something to be of service to my country and so when he joined the intelligence community uh and like went to he like wanted to go to Georgetown deliberately like um went to work for as a as a spook um like he wanted to do that because of that sort of like early sort of patriotism he said he had a James Bond dream and then all of a sudden he was trapped in a cubicle in a basement.

32:14That's right. So like every each of the founders have these sort of early days exposure that like, you know, spark the passion. And the real linchpin is so so Trey was at Founders Fund. Founders Fund had invested in Oculus. There was an event that Founders Fund threw where they invited Palmer to come. Palmer and Trey met and they were talking. And I think the first idea that they batted back and forth was how could we build a force field and that was the first naturally could we have and eventually it evolved into like somebody needs to build a real life stark industries and there's other inspirations of like palmer i can't remember the character's name but there's a an anime character who was like a he's like a billionaire um and he like played he's like a like builds video games with the money that he he made as an arms dealer and so palmer is like reverse he's right he did it backwards so he's like literally like inspired by that you know guy i think he has like a dragon like um uh jet that he drives around and so like flies around and stuff like so there's all these like little passion projects there's all these little like um sort of passion threads throughout each of their history but the way that they come together is very much after um palmer gets fired from facebook he says okay I'm going to start another company.

33:38There's a handful of things, and this is a deeper mythology of like there's a bunch of random stuff that Palmer thought about doing, but building a new Defense Prime of Stark Industries was at the top of his list. And so he called up Trey and said, we should do this. So you have Trey, who is the sort of like Palantir thread, where he pulls Matt, who he sees as sort of the operational excellence genius, and Brian, who is the engineering you know mad scientist and then palmer pulls joseph who's the other co-founder who was an engineer at oculus and i think is the only of the five co-founders who actually served in the military and so they all come together from their sort of prior experiences and the story is that they get some chick-fil-a they have a bad google slides and they sit down with a handful of people that they've met from their past basically recruiting uh lunch to try and lay out exactly what they're going to do.

34:32And this, I think, is where they have this sort of famous experience of they lay out, there's five things. I'm not going to remember all of them, but there's five things that they laid out to say, these are some of the things that we could do. And two, and the kind of like are good bookends for Anduril's current sort of product portfolio. So one was perimeter security on a stick is how they described it. And it was literally what became the century towers where they said, you know, camera and sensors and battery and stick it out there and stuff. So that was their first commercial product. But another one of the projects was, I think, like VR for the Warfighter.

35:06And at the time, in 2017, when they were getting started, Microsoft is actually competing for an IVAS contract. I think it's like the integrated visual augmentation service or something for the, basically, AR for warfighters. Palmer desperately wanted to go compete for it because he's been, you know, he's been doing Oculus. It's right there. Defense and VR perfectly suited together. And some of his early investors convinced him that you need to bide your time. Like that's a thing that is going to be a big thing to chew on. And it's going to take everything we can to compete for that versus like the rapid iteration process we need to engage in.

35:42And so he let it go. Microsoft got this project, did pretty poorly for several, several years. And then a year ago, Microsoft basically admitted defeat to some extent and the government said we're going to recompete the contract and anduril first as a potential partner to microsoft and then eventually took over a 22 billion dollar ivass contract which has now become their eagle eye product which is this like ballistic shell helmet uh augmented vision which is like there's crazy videos of of uh use cases of like with a combination of like the the ar and a ghost drone flying overhead you can literally see through walls.

36:21Like if there's somebody coming back through this thing, the drone knows where they are. It can display that visually as they're moving from behind the wall and stuff. And so like that, that sort of product portfolio has expanded dramatically in large part because from day one, they were not, it was not about one individual product. It was not about one individual platform. It was about this software defined hardware enabled web of products that can all work together and focus on capabilities that they're trying to enable. Could you walk through the timeline of the products and how they developed?

36:56Because they have quite the list of products now. It was so much fun to go see all of them too. Well, fun fact, do you know what their actual first... They never commercialized it, but their first product they ever built and prototyped was? It was called Century, but it wasn't the tower. It was an autonomous firefighting tank that would roll into a forest fire. and could deploy like fire suppression and so they might actually save people and stuff. And that was the original product, was just trying to figure out like what was something they could do with autonomy, be able to feel a contract. And what is funny about the way that the product evolved is like you can kind of see these early days of like them throwing a lot of stuff at the wall.

37:41But Lattice was this consistent through point in everything that they did. And so the reason that they talked about, even though like everybody kind of knows the drone or the munitions or the submarines or whatever. And the real core product is a couple of people talk about it different ways. So DARPA has this great phrase where they describe it as like mosaic warfare of like pulling all these things together. Chris Brose talks about it as a military Internet of Things, like having all these sort of edge devices we've woven together. but basically it very much is this like hub and spoke model of lattice as a ai sensor fusion driven brain and then the goal is across every domain and every capability and every force level how can you plug as many assets into that brain as possible so you start with lattice one of the advantages is you can start with just monitoring like it's just we just need to get information into the system and so sentry becomes the first product and it's a sensor that can pull everything in but still lattice is there to be able to identify and say hey this this looks like this kind of person versus this is a known thing this is a dangerous thing this is a normal this is just a fox like whatever right so there's actual intelligence there from the sensors you start to expand out into uavs you're getting into actual flight it's still a lot about data gathering and so they have like a quadcopter that they built and i think you saw i remember in your video you You saw the early prototype pieces of it with Matt and stuff.

39:15Again, it's a very similar idea of it's just about gathering information, but to do it from different angles and with different flexibilities. So you have a quadcopter, you have a ghost drone, just larger, sort of longer distance drone. And then eventually you start to get into counter-drone systems. And so you have systems that not only do you want to just go observe, you actually want to be able to intercept a drone. going back to the like throwing Ferraris at Frisbees the goal is for that to be ideally with not a multi-million dollar asset taking out a$20 ,000 you know Walmart drone or whatever and so they start to get into some of these like floider ammunition so Altius is a product that they bought and it's basically like a tube launched drone that can sort of circle identify and then engage with a drone to take it out and then you quickly see them expand into okay we have capabilities we have sensors we have um you know monitoring and stuff like that we're aerial but now you get into like actual munitions you have things like roadrunner which is a payload carrying asset that can that can destroy different uh threats and stuff you start to get into this like you have the originally they had a sentry tower that was like near the ocean eventually you deepen the sentry product suite into the sentry seabed which is like a sensor on the bottom of the ocean and you can talk to whales you can talk to whales which is the ideal use case I think is like number one get them on our side.

40:38So you start to expand out into all these different and then you get into things like dive like their dive line of autonomous undersea vehicles and stuff and now increasingly what is most impressive is that what started as very much a sort of like product suite of adjacencies of like these are all things that will augment a lot of existing assets. We're now getting into potentially like asset replacements. So there's things that we can do instead. So they have like Copperhead is a torpedo product and it can replace existing torpedoes, but it is also autonomous. So you have this ability to be able to effectively loiter, you know, under undersea, identify targets and things, and then be able to engage.

41:25But you also have, I'd say like probably their crowning product today, I think there's a lot of things that are on the come that are that are going to blow people away. But I think that Fury is this very impressive capability because it is effectively an autonomous fighter jet. Like it is. And one of the things that is most important about that is that being a fighter pilot is one of the most difficult, dangerous jobs. Also, by the way, most of America is completely removed from the military and like the industrial complex around that they don't actually understand the training, the day-to-day, the actual combat that goes into being a fighter pilot.

42:09You're literally dodging missiles in active war zones. And that's true of the majority of technology-enabled roles in the military. So like you look at, so Fury as an example, it's not only replacing in some cases because there are some missions that we no longer need to send pilots into danger. We can do it autonomously. But there are some cases where you still want human judgment and speed and perspective. But you can extend a pilot's capability with a small sort of set of furies that can go out and they can go further and identify danger. They can observe things. They can engage in a way that doesn't put the pilot at risk.

42:47Like that's a capability. But even things like just monitoring, right? We've had drones for a long time. But when you think about like a drone's capabilities, if you were to try and do something like send up a drone, have it go, you know, a couple miles distance, observe a target, identify where weak points are, where there are sort of things to be aware of, and come back and report on that information, that could take a room full of a dozen people having to switch between, you know, several dozen different screens and messaging people. Chris Brose talks about this in the kill chain where he's seen these distracted, stressed out, exhausted individuals who have to constantly be trying to say, okay, well, this is the data point I need here.

43:30I need to send it to this person because that's potentially going to control the messaging to the force that's engaging here or whatever. That's not a good, that is not going to lead to ideal outcomes. And so autonomy introduces this incredible capability where we are going to do the things we have to do, whether we like it or not, we need to do those things. This way ensures that the outcome is very likely higher quality and puts significantly fewer people at risk in the process. Sorcery 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 US.

44:05Nearly 40 % of startups bail 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 is designed to 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. With same day and even same hour liquidity, access your funds anytime. Companies like Scale LAI, DoorDash, Service Titan, HIMSS, Anthropic, Flexport, Robinhood, and Plaid.

44:48Trust and use Brex. Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. Turing is training the next generation of AI with tasks that require real expertise and real-world judgment. That's why companies like NVIDIA, Anthropic, Salesforce, and Gemini partner with Turing. Turing builds realistic reinforcement learning environments and data systems based on real operational traces. The kind of infrastructure Frontier Labs need to train superintelligence. Visit Turing.com slash S-O-U-R-C-E-R-Y. So I'm curious, I've had people wonder which parts, and I don't know if you know this information or not, but which parts of these products are actively ready to use?

45:40Which ones are actually ready to be deployed? The biggest proof point of Anduril's capabilities is you look at in Ukraine. Palmer says that Anduril has had products on the ground in Ukraine basically since day one. They were over there pretty quickly deploying assets and stuff like that. I think that one of the things that is most important to understand about Anduril's go-to-market is that what you're doing is trying to enable specific capabilities for both the U.S. forces and our allies, right? And so you look at things like ghost sharks in Australia. So Anderil went to Australia, set up a factory specifically for production of dive assets, these autonomous undersea vehicles.

46:31and they specifically set up shop to produce those because australia represents so there's this um so acus is the like sort of collaborative group of like australia uk us like that collaborative force australia is sort of like the the tip of the spear for that effort because they are right They're in the Pacific, close to China. Taiwan is nearby. Their need for an undersea capability is the strongest. And so you go set up shop in Australia. And so that contract that they have, I think it's a multi-billion dollar contract at this point, if I remember correctly. But it's like a massive contract with the Australian government, maybe a couple hundred million.

47:16But the whole point is to be able to build things there where they are most needed. And there it is getting fielded significantly, right? Where it's like, this is a capability that we need today. There's a handful of examples of that where there's a very specific need. So probably the century tower is the other example of like, it's not only now on borders, but it's also things like military bases throughout the globe. You have century towers protecting those military bases. So there is a spectrum, a curve, adoption curve, of capabilities that Anduril has. Like what can they capably do? Then there is what can Anduril capably do that also matches a near-term need.

47:58Then there is what can Anduril do that matches a longer-term need, where it may not be a thing. So for example, on the munition side, they're rapidly spinning up. so like Arsenal 1, they're going to be building like theories in Ohio, right? They did that on time and under budget. That's right. Actually ahead of schedule and under budget. Same thing I think with the Go Sharks, right? Yeah. I remember Palmer tweeted about when's the last time you saw somebody on time and under budget, right? Like they've done it a couple times. But a lot of those things are not necessarily things that you are actively deploying in live combat zones.

48:34They are things that you have to build arsenals for in order to, in the future, engage in specific conflicts. I think that's the thing that people misunderstand, is that these large contracts, these large dollar amounts, these large builds that Anderil is doing, it is not always because we're going to build a batch of drones and send immediately to Ukraine for deployment. It is that we're trying to build these sort of depots. And I think the other thing to understand is that we are sort of staring down the barrel of a large, a potential large scale conflict with China. And when you look at the existing munitions that we have, for example, if we were to engage in a large scale conflict, I think it's something like 11 days.

49:17Like we would run out of munitions in 11 days. Yeah. So we don't, and we wouldn't have the capability to rebuild them, right? Or in war games, I mean, we have been effectively losing war games when they model the scenario of U.S. versus China since, I think like 2015, the U.S. loses those war games. And a big part of that is because our naval assets are at risk, right? Where it's like we could get the, you know, I think it's like half of our naval fleet could be destroyed within the first couple months of a large-scale conflict with China. And it would take us 25 years to rebuild just to get back to where we were.

49:52So our shipbuilding capacity doesn't exist. Our munitions capacity doesn't exist. Meanwhile, every ship in China is regulated to also be dual use. That's right. And really, everything in China is regulated to be dual use. Because military civil fusion means anything you build, we immediately get to weave into the military. which is I think it's important to acknowledge that the U.S. maintains that that you know freedom and ability. Trey talks about this a lot of like I'm grateful to live in a country where if a certain company or certain individuals don't want to work with the military or don't want to work on military projects great I'm glad that they have that freedom but pacifism really is a privilege of the protected like there is somebody else who is willing to do those things and build those capabilities to protect our right to say, I don't want to be involved in that.

50:47And that's fine. China does not afford that right to its citizens and its companies. Yeah. I think he, in our interview, he said, pacifism couldn't exist without a monopoly on violence. So to dig back into Seabed Century a bit more and even dive, what are the biggest misconceptions about undersea warfare? And I know Palmer is really interested in, what is it? Subterranean. Subterranean warfare. But let's just talk about the sea first. So what's going on there and why is that so critical? It is all about surface area, right? So how much surface area you have represents the sort of threat vector of a specific domain.

51:32And so when you think about like aerial has a certain amount of volume, when Palmer talks about you know subterranean warfare whatever it is actually probably the I think it's the um it is the largest domain outside of space um but it is largely you know un-traversable today like several people are working on that including Anderil much to the surprise I don't know if you have heard this story but there was a story of Palmer talking about subterranean warfare and the the marketing person at Anderil was there it was like to the to the journalist was like, just to be clear, we're not working on that.

52:05And Palmer was like, oh no, we are. We've been working on some stuff. So even Andrel is working on it. But the ocean is the largest surface area that is addressable outside of space. And one of the reasons that it is so important is that it is one of the highest friction domains to engage in, right? So it's very easy when you have sort of a large land space. There's a million different ways that you can monitor that. Satellites and sensors and radar and everything. The ocean is really difficult to be able to navigate and understand and make sense of where everything is, and it's just really freaking big, so it's really difficult to pinpoint things.

52:43Even if you can identify and articulate them, it's really difficult to identify. The second reason that the ocean is so important is because this is probably another aspect that most people don't appreciate, is that there are massive undersea data cables. Originally, a lot of these, if I remember correctly, were invented and created by Bell Labs. So go back to this massive industrial capacity in the 50s and 60s and stuff. They literally invented this way to be able to digitally connect different parts of the world. But today, I mean, it's literally, the numbers feel so stupid that it is like, I always feel like I'm getting them wrong.

53:25but I think it's something like$10 trillion a day, maybe an hour. There's massive amounts of transactional data and volumes and information and everything transacting across these cables that are just sitting at the bottom of the ocean. And a lot of them run up through the Baltics. They're literally just exposed for Russia to do what they will with them. And if you wanted to interrupt the global economy, taking out some of those cables is a pretty effective way to do it. You could literally knock out transportation, energy grids, data transfer, satellite communications. There's so many aspects of the global economy you could just knock out.

54:06And so you have to understand that it's not just individual assets where, yeah, we want to be careful of enemies or less than friendlies who have submarines or whatever. We also want to understand those. But we have to map a massive volume of the ocean surface to be able to protect those assets. And so a combination of Anduril's products in the sort of ocean fairing realm come together for that defense. So starting with the sentry towers that they had that were sort of proximity to the ocean, now they have these seabed sentries that are just an incredible, like when you think about difficult environments to build a product for, candidly, in some cases, the ocean is actually harder to build for than space because space has a lot of just like neutralizing effects, right?

54:55It's just there. And as long as it's maintained, it can be maintained. You have satellites that have been in orbit since the 60s, whereas the ocean is relentless in how hard it is to field an asset there. So these seabed sentries are incredible products. They also generate a significantly difficult to achieve level of insight to be able to understand what's going on. And then in terms of like what you do as a result of that information, so the entire dive line of products, so some of them are for monitoring, but increasingly they have munitions variants of their dive products, so it can carry weapons.

55:36And they have things like, so Barracuda is a sort of like small autonomous underwater vehicle that you can maneuver and and can be munitions carrying but then also copperheads are their torpedo products and so they have munitions variants so they can they can do things with and then just recently so this is what's awesome about anduril both as like a cultural artifact and as like a massive products company is that the last couple of product announcements they've made they've made with um uh anime like yeah like prototype videos. And actually, I don't know if you knew this, but they, in the last two of their videos, they have teased future products at the end of their videos.

56:16So they had, I think if I remember correctly, the first one was for Fury. And at the end of the Fury video, it basically showed them like the camera panning under the ocean. And you had these sort of like products that were moving, but you didn't know what they were, and then it cut away. And then, you know, whatever, six, nine months later, they announced the Copperhead products. And so that was what was So the video for the Copperhead product literally picked up where that video ended. And so it shows these Copperhead munitions moving around, and they can be navigated by, you know, deployed from a DiveXL, and then they can loiter and stuff.

56:50And then what happened in this video is you saw all of these assets moving towards the target under the water, and then the camera panned up above water, and you saw the slight hint of an above-water vehicle, and then it cuts away, right? Now, just this week, we've gotten, Andurl's announced a partnership with Hyundai, where they are officially starting to build autonomous surface vehicles. And so starting to compete with folks like Asuronic and stuff like that, where it's like, it's literally, it goes back to this idea of mosaic warfare, of a military internet of things, of you want every domain, every surface, every force level to have some relevant asset that you can weave into this network of potential responses that somebody could control and command.

57:35Wow. Okay. Key takeaways. Don't mess with the undersea cables. So I want to weave back in to the history. I mean, you studied 100 years of history. That must have taken a really long time. But one of the key parts that you took out of that was throughout these generations and these waves, these founders are often paired with Mavericks. And so can you walk through some of those and how that then relates to current day? So this is a concept that I would say I didn't, it's not unique to us, but it is expanded in the book and sort of hinted at in, really where it's originally hinted at is in the kill chain in Chris Brose's book.

58:22And the example that they give is, I think Bernard Schriever is the guy who was basically put in charge of inventing intercontinental ballistic missiles, like ICBMs, which was a thing that we absolutely did not know how to do. This was a missile that needed to travel basically across the entire planet within a matter of minutes, carrying munitions in a targeted way. It was a very difficult technical lift to pull off. And as they are building ICBMs, President Eisenhower is this military maverick. So if you think about Shriver as this sort of founder-style builder, there's a lot of obstacles to working with the government and building such a complicated thing.

59:05It's expensive. It's complex. You have to experiment. It's dangerous. And so Eisenhower ran a lot of interference to make sure that they had the assets and the resources that they need. So this sort of like one-to-one pairing of people who are doing hard things and military mavericks who are protecting and enabling their ability to execute, that has been a very important capability throughout the history of sort of military innovation in the U.S. You look back at modernizing the Navy. William Moffat, I think was his name, and he had President Hoover. You had Ben Rich, we've talked about at Skunk Works.

59:40He had Richard Bissell, I think was his name, who was working for the CIA and basically made the U-2 spy plane possible. So you have a lot of these things that, if left to bureaucracy, probably would have never gotten off the drawing board. But because you have these military mavericks who are willing to enable people to innovate, that's where things actually get. And there's a, so Anduril, I think, introduces the founder DNA, where you didn't have a lot of people who were building truly innovative products for defense use cases. And you had a lot of traditional primes, but they are mired in this sort of, you know, broken system of inefficiency and whatever.

1:00:20So you don't really have founder level energy. So Anduril brings that founder level energy. What is awesome is that you had a generation of people who would have been willing military mavericks. You had these sort of prophets of urgency. In the 80s and 90s and early 2000s, you had different admirals and military leaders who were saying, warfare is going to change. It is going to start to look like this sort of high volume, low cost, you know, style of conflict. It's going to be significantly more intelligent. It's going and we have a lot of hubris and we're building these big assets that are not going to be able to carry their weight.

1:00:57And you have people saying that just nobody was listening. Nobody's doing anything about it. So those people would have been military mavericks if they had had either institutional buy in or founder level innovation solving the problems. Because one of the problems, too, with complaining and trying to send up a flare is that if you don't then have a solution, it's difficult to rally people. And also, you didn't have a lot of urgency because you didn't have China rising as a great power potential conflict and stuff like that. So today you have both Anderil as bringing the founder energy. You have great power conflict sort of rearing its head.

1:01:29But importantly, you have people in the military, there's countless people that the Anduril team would point to as saying, these are the individuals who have been really valuable compatriots, unlocking the things that we need to actually adopt these capabilities. A really good example of this that I have just read and I watched a bunch of podcasts on was Shom's book Mobilize on Hyman Rickover. And his point being that Hyman Rickover was kind of the key pioneer behind the nuclear submarine. And it took a lot of fighting and founder mentality and backing up against people that are, you know, he was also a strong willed person and had a strong personality.

1:02:14But it was kind of the same kind of fight of working against a system and then also, you know, being innovative ahead of your time when everyone's kind of telling you no, but doing it otherwise. And then he also had the point of similar to the same theme that America is actually not this. I hope this doesn't get bleeped out in like YouTube, but it's not the worry of inflicted homicide. it's that the U.S. is more vulnerable to suicide of itself just because we keep shooting ourselves in the foot with these things. And again, I don't know, I might have to take that out because YouTube kind of sucks, but I thought that Shum's book, Mobilize, was quite good and had a really nice perspective on that.

1:03:01There's actually, I don't know, this might go filter into the bleeped out part, but that concept comes from an Abraham Lincoln quote where he says, if even all of the greatest army in the world was to form against us with a Bonaparte at its head and the treasures of the world funding it, none of them could take a drink of water from the Mississippi or whatever. None of them could cross the Alleghenies. None of them could have an impact on the U.S. because the U.S. has such a unique in history and in geography and nation states such a unique capability that it is very different. The U.S. has a lot of unfair advantages.

1:03:42And so what Lincoln says is if we are to die, we are to die by suicide, where it will be our own undoing that we fail to generate the capabilities that we need to be successful. Yeah. I guess bringing it back to today, we are in the throes of like an amazingly progressive new administration. and one of those being the Department of War. We've now rebranded and we're the Department of War. So I've had the opportunity to interview Undersecretary of Department of War for Research and Development, the CTO, lots of titles there, Emil Michael. And I think one of the most amazing things talking to him about this was how he is rethinking that organization entirely.

1:04:25Like he's collapsing unnecessary parts of it, streamlining it, making sure that there's not 14 billion levels of bureaucracy that were just focused on the main critical points. He even put out a critical interest areas where he's going through different categories. He's him and Pegseth are actually going to these new sites of all these competitors. Like people say we're in a defense bubble. Well, turns out it's kind of like a good thing because we're at a point where we're looking for automakers and new people to be making missiles, to be helping supply the military complex. But I think that while there is a lot of doom around our positioning and like how it all led up to this point, like thank God we had this kind of renaissance in defense tech because there are new entrants.

1:05:15There are people that have been working in the military for a while who are now taking the technological bend to it and are working with whether it is VCs, different kinds of funding things, using their expertise, their on-field experience, and creating this new generation of companies. So, I mean, there is a long tail of companies that have received these government contracts, whether it is Palantir, which has gotten a lot of them, Anderl, Saronic, I just did a series at Skydio. There is a long tail of these companies. And then there's also a long tail of these new generational companies that are trying to build off of an American supply chain versus ones that do rely on adversarial nations, whether it is China, which, you know, that does touch a lot of things.

1:06:02But, I mean, to your point, I mean, you also research all of this. So what kind of companies and what other broader themes are you seeing within the tech ecosystem? I think that one of the most important things is that the DOD starts, the Department of War starts to put up real legitimate adoption of specific solutions. And because I do think that the defense bubble that we're in is very timely, very important. There's a great book called Boom by Bern Hobart. It's good. Very good book. And it talks about this idea of like, these bubbles are necessary to fund innovation. And that is true. There is also though, a lot of sort of huckster speculators.

1:06:46There are a lot of, you know, wannabes and fakes and stuff like that. there is also a lot of capital destruction. Even if there's legitimately earnest people who want to build for defense, they will be unsuccessful and there will be capital destruction in that. I think one of the most important things is that you build this ecosystem that can actually put up solutions and put points on the board and like prove out some of their solutions. One of the obstacles is you're talking about like cutting out a lot of bureaucracy. That is accurate, that that is a problem. And so there's a lot of streamlining you can do.

1:07:21But there's another thing to think about is like a lot of the large purchases and assets and things like aircraft carriers and stuff. I think there's one specific example where, I think it was like the F-35 or something, but it has components from 1 ,900 different vendors spread across 350 different congressional districts. That is not the most efficient way to build anything, right? There's no way that that is streamlined. And so one of the things I think that Anderil is leading the charge on is that you have to build not just capable products, you have to build capable supply chains. And when I think about what are the things that people need to enable to be able to fund this defense bubble, it's like, yes, it is great to have companies that want to be new defense primes.

1:08:07And if you are ambitious and strong-willed and you're effective at not only building product, but also selling into the government, the bummer of any limited conversation about annual is that there's so many things you can't talk about. But people like Matt Stekman, who's their CRO, is one of the most effective people at selling to the government, probably alive today. And people like that, if you have those people, yes, you can be a new defense prime. But there's not going to be 30 new defense primes. there's probably going to be a very small handful of companies that can check all the boxes you need to be able to do that obviously i think andrel can be one of them and there's maybe a few others but the vast majority down the down the sort of long tail is people who are building specific capabilities that can plug in like one of the things that uh paki mccormick talks a lot about this where andrel can be almost like an api into the department of war where it is they have this established ecosystem, there's a lot of examples of companies they've been able to acquire and then immediately plug into that system where the company independently would have never been able to get the same type of contracts and success and things like that.

1:09:13So there are going to be some companies that are building specialized capabilities that plug very well into the andurals and the sort of neo primes. But then the even longer tail is going to be people who are building supply chains, manufacturing capabilities, industrialization in general. And that is not going to come from defense alone. You have to build this dual use sort of industrial base. Because you look at the history of defense, every single time military superiority is front run by industrial superiority. We did that in World War II. The problem is now that China is doing that today.

1:09:48And if we are going to have any semblance of a chance to have any potential conflict, we have to have some commensurate industrial capability. It doesn't have to be exactly the saying we don't have to build the exact way they have built. We don't have to spend the next 30 years replicating their way of building. You look at Anduril as one comp for how we can build things significantly more efficiently. We have to do a ton more of that. Going back to World War II, when we were using different manufacturing facilities, automakers, serial makers, literally everything to help build up our capabilities.

1:10:23The thing is now with the Pentagon asking for that same call out, to your point of supply chains, those companies don't have the supply chains ready to fulfill any type of order of that capacity. But I want to go back to, so you did mention this one thing. Okay, so one of the parts of Andrel that I got exposed to was their talent density. It is so clear. And when I've been at many of these, I've been at so many defense forums and conferences at this point, whether it's Reindustrialize, which touches on it, the Reagan National Defense Forum, Hill and Valley as well. So I guess between all those conferences, there was one point that I guess I never considered before because I'm not in the throes of this.

1:11:13But Ross Fubini, who I had on for hot take, he is the founder, the founding partner of XYZ Ventures. He said at Hill and Valley, there's probably 40 people in the US that are capable of selling to the government. Like it is extremely hard. That is a clear bottleneck for lots of these companies and the ecosystem in general. Matt Steckman is one of those 40 people who's capable of selling to the government. He's very good at it. And Andrel has built out this world-class team of talent is there anybody else at anduril that like caught your eye when you were doing this research of like wow i can't believe they grabbed that person i think that one of the things that anduril does well is there's probably like two buckets of people that they that they pull from there's one is just a sort of like mission driven foundation of just sharp engineer right and Palmer talks about this of like the way to recruit really sharp people they were working in tech is to go to them and say hey probably the thing that you are working on does not really matter do you really want to be you know maybe you're making a ton of money but you're optimizing buttons and ad spend for massive platforms and stuff like is that what you want to do with your life and there's another one of our portfolio companies base power in Austin where they have a you know a campaign where it says don't tell your grandkids that all you did was B2B SaaS, right?

1:12:41Like there is this mission-driven inspiration that the sort of foundation layer people really resonate with. Then there's a second layer where I would describe it as like very strong capability. And so you look at like, and I can't remember his name, but Anderil in setting up Arsenal, they went and got the person who at Tesla built out the manufacturing, the head of manufacturing at Anderil came from Tesla, has seen this like streamlined experience and is applying the same logic to the way that they're building Arsenal. You look at, from a strategic perspective of like, what projects do you want to field at what time?

1:13:18You look at Chris Brose and his experience working with the Armed Forces Committee and stuff. Like those types of people, you're finding these real hotbeds of very specific types of knowledge and experience. And I think the reason that the Andrel team resonates with that kind of background is because that is the insight that they had, right? where you look at like Palmer's experience came from building hardware. He is very capable at that and can plug in that capability. But it's the same thing as like having a team that is largely coming from Palantir. I think even in your interview with Trey, he said this where Anderil on day one got to start where Palantir was in year 10.

1:13:57Like that level of experience and knowledge, that is the kind of like specialty that they had and resonated with. And so when they go to find people to plug into specific capabilities, Those are the type of people that they build. And I actually think that informs as well a lot of their acquisitions, where you look at the companies that they acquire. You're basically saying, who is somebody who, you know, are they an Android competitor? No. They are a specialist at a very specific type of capability or a very specific domain. And acquiring that and plugging that into the ecosystem resonates with their ability to understand, like, where is, what does quality, skill, and specialization look like?

1:14:35One of the things that I noticed when I interviewed four of the co-founders was the company itself, especially on Twitter, is known for hype and being cool and the vibes and all that. But they take this really seriously, as they should. I mean, it's a huge responsibility to one, be helping serve the military and armed services, but also to be preventing lives being lost, to make sure that any conflicts are actually very precise and very efficient. What were some of the misconceptions that you started to see the more you went deeper into the research? I would say you might be one of the most well-researched investors of theirs at this point?

1:15:22Well, I would say that, and it's a really good question, because I think that there are three buckets. If I had to take everything out of my head that I've learned about Anderola the last couple of years and put them into three buckets conceptually, the history is a core piece. We've talked a ton about that. The products and the process and product philosophy is a big piece. And we've talked a ton about that. The piece that we haven't talked as much about and that I think is one of the most important elements of understanding the company is the philosophical and almost spiritual element of trying to understand why.

1:15:58And when I talk about the mission-driven engineers, what is the mission? Because if the mission is build cool stuff and blow stuff up, that's not a mission, right? That's a neat trick. The mission revolves around conflict deterrence. And Trey talks a lot about just war theory, but there is this concept that the only way to effectively prevent conflict is to have the force capable of engaging in that conflict to begin with. If you wait and you say, we're pacifists, we're not going to do anything, we're not going to build anything, we're not going to build any capability, and then suddenly the enemy shows up on your door, you're done.

1:16:33Like, you don't have the choice, you don't have the freedom, the flexibility to be able to respond to that conflict on the day of. You have to be You have to be credibly building that deterrent effect very early on. And the reason that you do that is not because you love war. It's not because you love conflict and it's cool and you grew up playing Call of Duty or whatever. It is acknowledging the fact that innocent lives are lost when people who can do something don't do something. That idea of pacifism is a privilege of the protected. there has to be a group of people who are willing to protect those pacifists or else they'd no longer become pacifists, they'd become victims.

1:17:11The most critical aspect of conflict deterrence is that the only way to prevent this, I think it's called Thucydides trap, is this very old historian who basically it's this idea of like any time a rising power threatens a established power, it ends in large conflict, great power conflict. And when you look throughout history, there are 16 instances where that happened. Of those 16, 12 of them resulted in mass scale conflict. And we don't want that. We don't want that to happen. Anderle's entire ethos is this idea of presenting that capability not only to the U.S. to be able to say, we are capable of deterring conflict.

1:17:53It will be expensive and painful for you if you engage in conflict. But also for our allies, where we want to make them what Palmer calls prickly porcupines, where we want Taiwan to be prickly enough that China doesn't think it's worth it to step on them. And a lot of people who get angry about, you know, they call people like the team in Anderil warmongers and think that they want this. And even a misunderstanding about the military industrial complex inherently is that Palmer will say, you know, there's a line from that famous where military industrial complex comes from, this idea of every dollar we spend on munitions is a dollar we're not spending on education and preventing poverty and doing all these things.

1:18:34And Palmer doesn't, you know, as a person who is making money building those weapons, he's not standing there saying, well, but I really want to make more money, so let's make more munitions. He's saying, I completely agree. And so let's stop spending tens of hundreds of billions of dollars on weapons. Let's, you know, improve the efficiency curve of everything that we're doing, actually achieve the means that we need to actually achieve conflict deterrence in a profitable way, in an efficient way, so that we can reallocate a significant amount of our resources to things that make life worth protecting.

1:19:08That is inherently, every time you listen to an interview from any of the founders, there is that fundamental sort of hopefulness of like, they want to prevent those conflicts so that we can enjoy a life worth living. VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. View the portfolio at getvcx.com. That's getvcx.com. 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. Here'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.

1:19:57Publix 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, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1 % match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com slash sorcery.

1:20:33Paid for by Public Investing. Full disclosures in the description. Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling, and model orchestration. so your teams ship product, not plumbing. Mistral, Dropbox, and Drada already trust Merge and production. Start building at Merge.dev. Founders ship faster on Deal. Set up payroll for any country in minutes, hire anyone anywhere, and get visas handled fast so you stay focused on scaling. Deal takes care of onboarding, HR, IT, ER, benefits, and compliance so your team can grow without borders. It's why more than 37 ,000 fast-growing companies trust Deal to move fast.

1:21:12visit deel.com slash sorcery. That's deel.com slash S-O-U-R-C-E-R-Y. A track we haven't gone down yet is the funding history behind Anderil, and there's a lot of deep lore there. I mean, they're rumored and reported to have doubled their valuation from the last round. It was around 30 billion, and it's rumored that it's going to be around 60 billion now. Who knows when that announcements coming out um and if there is one but could you break us through bring us through the the funding history of andrel and when did you because i know your your firm contrary got in at a very interesting time so could you walk us through that and why it wasn't you know it might look entirely hypey and very obvious now but it wasn't that obvious in hindsight so i can speak very high level to like publicly kind of what's known and some of the details and stuff but like i think what's underappreciated is the story and evolution of the narrative.

1:22:13So you look back at when Anduril was first getting started. It was far from, even though Palmer had been a successful founder, had sold Oculus for two and a half billion, it was a very unpopular decision to work in defense in 2017 when they started. And there are stories of Palmer had a lot of engineers he'd worked with at Meta who said, hey, I think you were dealt unjustly, and whatever you build next, I'd love to follow you. And then he says, well, I'm building in defense. And then everybody ghosts him, right? Nobody wants to enact that. I can't remember if it was the series A or the series B, but Elod Gill led an early round.

1:22:53And I think there's a story of, I mean, he got, I think, like, maybe not death threats, but like, you know, very angry messages from people he considered friends saying this is how could you this is immoral what you're doing and there was things like Palmer went to give a talk at a university campus and he literally had to get security because people were threatening physical violence against him because they wanted to promote pacifism right there's there's all of this like deeply sort of anti-militarism thought process early on and so a lot of like the early investors if I remember correctly I think it was primarily founders fund and general catalysts were the main early investors of andrel i think andresen comes along a little bit later um we first invested i believe in series c and then we we have invested at least a little bit in every round since and um andrel as a company i would say the the vibe shifted hard in um you know 2022 around the time of uh the russian invasion of ukraine but what's interesting is there was this sort of like dip, like one, two punch dip, where the narrative was starting to shift, where people were acknowledging, man, like this is a large scale conflict.

1:24:06This is significant. This is not something we see very often, this type of conflict. And people are starting to wake up to the idea of like, well, wait, we don't want these types of conflicts to be happening. Well, at the same time in 2022, the broader market is collapsing, right? You sort of have this like post-ZERP hangover of stocks are plummeting and everybody's struggling. Everybody feels very painful. And Anderol even had around, around 2022, where it actually was, it was even despite this sort of, you know, Ukrainian conflict going on, it was difficult for them to raise at that period, right?

1:24:38You had some investors that had pulled out and promised to invest and things like that. And so there was this sort of like dip before a real takeoff. And And then Palmer calls the rest of 2022 his I told you so tour, where he literally gets to go around and say, listen, we have been saying this from the beginning. And what's crazy is, again, going back to like my most surprising experience studying the history. It is true across the board, even until very recently in 2017. I mean, even look back at like the 2014 Russian invasion of Crimea and stuff like there by no means was everybody saying, oh, yeah, no, we're good.

1:25:17with no more conflict. There was actively still conflict. People chose not to see it because they believed in their hubris. They thought it was just a matter of time until countries like Russia or even China would eventually acknowledge like, man, America is so great, this free market economy and whatever. They love us. Don't they want to be like us? Look at our culture and Hollywood and everything is great. And that hubris was very pervasive for a really long time. And the vibe shift, you know, didn't happen for a long time. And, you know, in 2017, you had Putin saying, whoever controls AI will control the world.

1:25:53And it's the same idea that in 2017, Andrel gets started and they're saying, listen, from day one. Acronym is AI. That's right. Andrel Industries. Like that, from day one, they acknowledge that that has to be, that autonomy and AI have to be front and center in any viable force solution. and that was not the popular conclusion post 2022 that has largely become the the conclusion is the acknowledging that conflict is increasing tensions in Taiwan are increasing and Iran is going to continue to be a struggle you know things in Venezuela whatever like there's going to be global conflict that's going to happen I think the next wave now that we have to deal with where the vibes will and and Palmer says this where he says listen like this is a point in time where people are acknowledging the value and importance of what we're doing, there will be ebbs and flows in that shift, right?

1:26:47And there's a lot of politicization of specific conflicts that make people not in favor of, you know, particular positions or allies that the U.S. may have or whatever, that increasingly we're going to have to deal with that, where there's going to be people who say we shouldn't be in the business of, you know, of conflict, of deterrence, of whatever, or we should just let it go. And because they don't like the politics of the underlying conflicts, but the problem with that is that you don't have that privilege to just say, because anybody who can do something who doesn't do something is ultimately responsible for the outcome if we don't do something that we were capable of doing.

1:27:24And if we rest on our laurels and we say, well, like we're just going to stay inefficient, that is the same as doing nothing. And we will be responsible for larger scale conflicts that will not only hurt human rights, that will not only hurt individual lives, but also economically, like you look at a conflict over Taiwan, I think people say it could be a$10 trillion hit to the global economy, like bigger than the financial crisis, COVID, anything. I think in some cases combined. There's so many reasons why we need to have effective deterrence that it's not a vibe that we can continue to ignore.

1:27:56A really good point of that is the conflicts for investors. For some people, they might not know, but investors have LPs. Sometimes those LPs, there are certain provisions, clauses within their LPAs where you can't invest into vice categories or war and that kind of thing. And so, like, back in the day, there were a handful of funds that could not invest into these companies because of those clauses. And I wonder how that, I mean, I think the vibes have shifted for sure. but not for everybody there are still a lot of firms when i was at so before contrary i was a partner at index ventures and index as far as i know still to this day has a clause where they can't invest in anything that is a weapon or could be used as a weapon and i remember they had investments in in companies like a drone company where they uniquely could have contracted a provision in the when they funded it saying you will never allow this to be armed with weapons and stuff.

1:28:57So they're actually, it's not only just we're going to avoid weapons, but we are going to exert influence over the companies that we invest in to make sure they also don't engage in weapons and defense cases. I think in this case, it was like a policing use case and stuff. So there are still definitely firms, even major firms that are not comfortable funding weapons. And I think candidly, I think that that is good. I think there should be people who remove themselves from this environment because I think either you are willing to do the work to weigh and measure the philosophical implications of what you're doing and acknowledge the weight of the burden that it is to engage in this type of technology and that I think more people would be suited better suited if they engaged with that philosophical debate but candidly I think that's true of most technology right like I think about that as well with like you look at like you know addictive social media or I mean, even like, you know, AI girlfriends and stuff of like having things that can be destructive to, you know, human psychology and stuff.

1:30:02Like everybody should be having more philosophical debates about the things that they are investing in. We don't have nearly enough philosophical debates about the implications. We just say, Hey, this is a hot technology and it looks like it's ripping and people really like it, or it has a big market for this or whatever. And it's just so blinders on big market. Let's do it. I think more people should have to embrace the the philosophical stick that they're picking up because there's consequences at the other end of that stick. Philosophy is back. Do you know one of the largest and hottest philosophers right now?

1:30:32I don't. It's Alex Karp. Attaboy. I had to pull that. To close out on the funding side of these things, one of my biggest surprises throughout all these conversations I've been having, I mean, I've been having conversations with people from all corners, whether it's in the admin, whether it's investors, founders, and off script too, like, I mean, I've been an investor my entire career. Like, that's the only way I think. And so, like, I've built up a book of all these different relationships, and now they're all kind of converging in this cool way. But so with Sorcery, like, this just happened to be a stance, and I have to make this, you know, I have to share this because they are a sponsor but when i was interviewing ben miller of vcx so they got their position in anduril way back when when people were trying to sell off their positions like they had there was an lp who didn't want to be a part of it it was like at this whole contention point and they sold off and they were like we'll take it like we're in and so now you can access like through the VCX fund on the public markets and all.

1:31:43And it's like this way, there's obviously this hype around private or public access, democratized access to private assets. That's an entirely different story. Like there's just so many different things of those now. But that was a story I didn't hear of because you think of these big hype-y companies as it's always like, it's always this clear cut narrative, but there's many twists and turns along the way that actually become really lucrative. So there's a really good quote from Chris Pike, I think, at Pace Capital, where he says, people want to not just be right, they also want to be clever.

1:32:24And so you look at these things that feel obvious, and you say, well, I don't want to do the same thing, right? Whereas a couple years ago, like buying Google would have been a pretty good decision to make, right? Like as they were sort of, people were thinking that it was like, ah, it's just like slow and steady wins the race, big hyperscaler or whatever. It's like, there was actually a lot of these sort of underappreciated tailwinds that would advantage the company in the long run. I think it is the same, but some of those are forced through negative narrative where you look at, so again, 2022, there's a great story of, I think it was Sequoia and Brookfield started a secondaries fund in like the heat of 2022's collapse.

1:33:04And they went around just buying saying, hey, there's a bunch of these companies that we think are just generational companies, but they're going through a hard time. People want to sell, they're freaking out about the market, the public markets are getting demolished and whatever. And so they went around and bought a bunch of positions in these companies. And turns out, But yeah, like these sort of momentary blips throughout a company's life are often not indicative of the success, the long-term success of a good business. And so I think that it's also one of the advantages of paying very close attention to a specific moment in time.

1:33:38Like a lot of people we were talking about, our good friend Leopold. Like there's some good people. Our good friend Leopold. Like making a ton of money off of just paying attention to like the underlying thing. and you have like memory chips, right? It's like that is a logical second, third order effect of the different things that we're focused on. But because you're paying attention to like the loudest and proudest, spiciest name current thing, you get distracted from the broader ecosystem of stuff that exists. And I think that's the same thing of like people are underappreciating a lot of the like second and third order effects from like a supply chain perspective around defense because they're so focused on, well, who's going to be the next Anderol?

1:34:23And it's like, you can make a lot of money investing in things. Or like even I saw a story about, I don't remember what the specific stock was, but somebody had paid really close attention to the vendor of the ballistic shell for Anderol's Eagle Eye. And it was a publicly traded, small publicly traded manufacturing company. And paid attention and was like, hey, they've got this contract with Anderol. Like this is likely going to rip as this contract, I mean, it's a$22 billion contract. Like as they start to go into production, they're going to start ripping. and bought a ton of stock in that random little manufacturer.

1:34:52I think it was like a literally like a sub, it's like maybe like a hundred, $200 million market cap stock, like a very small company. And that stock has ripped because it's paying attention to what those second and third order effects are rather than getting caught up in like, what is the current thing? Like that's what bugs me about so much VC fodder of like the internet is real life and all that matters is the current thing. You pay attention to this thing and that's all. It's like, I think you get, you know, you miss a lot because you're missing out on the compounding nature of context, of gathering lots of context over time and being able to make decisions based on ecosystem instead of what's the hottest new AI lab for X or whatever.

1:35:33It leads a lot of people astray. Alpha, you heard it here first. So as we wrap up, another one of our sponsors that we love is Brex, and they're all about performance. Spending smarter, moving faster. Can you believe it? Crazy. I know. So after reading this book and writing this book, what are the key takeaways that you learn from Anderle's leadership and their ability to perform over and over again? When I reflect back on the last couple of years of feeling like I was just spending a lot of time with the Anderle founders, you know, indirectly of like hearing what they have to say and how they think about things and how they articulate things in different contexts.

1:36:19Throughout the book, we had, I think, over 500 individual sources that we've referenced a thousand plus times. But specifically, if you look at the dozen or so interviews with the founders, I went back and looked at transcripts of those things. There are, the word hope appears 44 different times. And there is this fundamental hopefulness in everything that Anderil, that the company builds and the mission behind the company is this idea that if we thought all hope was lost, we wouldn't be doing this. We're doing this because we continue to have hope. And I think that that speaks fundamentally to what a real mission is.

1:37:00Trey Stevens talks incredible essay about choosing good quests, talks about it all the time. I think that this speaks truth to what a good quest is. And it is not a specific product. It is not a specific solution. Even for Anderil, it is not defending a specific nation, right? It is not just making the U.S. capable of protecting itself. It is protecting a specific subset of ideals and values that represent this sort of idea of Western democracy and this idea of human rights, checks and balances, strong rule of law, those fundamental elements. You believe in those things, and so you want to defend those things, and you anchor your mission to that specific worldview and belief, right?

1:37:47The founders of Anderil believe that, believe that those ideals and values are worth defending, even if Anderil didn't exist. Even if they weren't making a dollar from it, they would continue to believe fundamentally in the hopefulness of protecting those values. And what is awesome is that that speaks directly to the name of the company of Anderil, the Flame of the West from Lord of the Rings. There is a quote from the Two Towers that's said by, I think, Faramir, who Tolkien even said he most resonates with. It's the character that he most feels a kinship with. And I'm paraphrasing, but what Faramir says is, I don't love the blade for its brightness or sharpness.

1:38:25I don't love the arrow for its swiftness or the warrior for his ferocity. I love only that which they defend. And that is fundamentally true of Anderil as a company, of Anderil's founders, of the mission that they engage in. And so every product decision, every hiring decision, every funding decision, every marketing decision, every aspect of the company comes back to this idea of what do we think will enable the protection of democracy most capably? That's what we want to do. Like that informs the product decision. People who go and try and chase a mission and they say that my quest is good because wouldn't product ABC be awesome?

1:39:04Like wouldn't it be sick if this product existed? and it's like that misses the fundamental worldview is that what you want is this underlying worldview that informs everything you do and Andrel has that. Wow, that's a really good answer. One of my favorite quotes of all time is hope is a good thing, maybe the best of things. Shawshank Redemption. This is great. Okay, so as we close out, this is just a simple question. It's not too difficult. What is your hottest take right now? My hottest take is that fewer people should be raising venture capital. Wow. Why? Which is deeply unself-serving of me as a venture capitalist.

1:39:47Are you seeing too many bad pitches? Is that why? I think that I'm seeing too many companies and too many people, going back to the mission, like too many people that want to build things, that venture capital is a very specific wedge. It's a very specific funding mechanism. And because it's so legible, as our friend Paki McCormick would say, it's so sexy and appealing, people overstretch to try and fit their round passion into the square hole of venture capital. And it's problematic. And I think the reason that venture capitalists allow it to happen is because we have a lot of capital, so much capital, that if anybody is willing to try and do something, we would like to be able to throw capital at that thing.

1:40:35The problem is that there is a large swath of companies that could be very good companies that are very bad venture-backed businesses. They would be very good businesses, full stop, but they are very bad venture-backed businesses. and more people should strive to really deeply understand the mechanism of venture capital and what that requires in terms of the size and scale of outcome and scale of growth and requirements of burn and velocity and ambition and being willing to say, hey, I have to want to build a$100 billion company because if I don't, it doesn't justify the VC appetite that I'm trying to stir up.

1:41:09There are a lot of better ways to build businesses. And that's fundamentally one of the reasons why I write my blog, investing 101 is to be able to articulate both the virtues but also the vices of venture capital and like why there are goods and bads and to help people be more informed because when I look at I mean even to stay in this conversation that we're having when I think about this sort of long tail ecosystem of re-industrialization more broadly there are a lot of great companies that can be really good venture-backed businesses even if they're not going to be neoprimes they can still be really great venture-backed businesses but there is a huge swath of businesses I have a friend who builds industrial scale metal shelves.

1:41:49That is their business, is that they build like the shelves you see in Costco. They build some of those, but they also build things like racks for Tesla to be able to hold different components of the cars and stuff like that, right? That guy is doing 17 million of revenue and 3 million of profit, and he owns the whole business, and he lives a great life, and we need more people like him to be able to do it. That would be a terrible venture-backed business because he's grown 3 % a year, give or take, for the last five, six years. It's not growing super fast, but he has a deep client base that he does very well with.

1:42:22And there's a lot of really great opportunities. More people should seek alternative ways of building great businesses because venture capital does not have a monopoly on great businesses. Interesting. Sounds like he might have a good supply chain. Indeed, he does. Could be some growth opportunities there. well kyle thank you so much for coming here on short notice giving me an advanced copy of the book and letting me read it in due time no i really appreciate all the time like seriously so much work has gone into this book and the research and i'm gonna definitely look up some of the sources because the books that you mentioned throughout the conversation were really interesting and I hope that writing this got you extra allocation.

1:43:11Thank you so much. Yeah, we just do it for the love of the game. Amazing. Well, thank you so much. Thank you. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today and don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.