Anduril: Building the Future of Defense - [Business Breakdowns, EP. 59]

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May 25, 2022

Brian Schimpf, CEO and co-founder of Anduril, a pioneering defense tech company, digs into transforming the defense landscape. He shares insights on shifting from outdated cost-plus contracts to a more innovative firm-fixed pricing model. The conversation highlights the evolution of military tech with drone advancements and the need for ethical AI in defense. Schimpf also discusses navigating the complexities of government contracts, emphasizing agility and creativity in developing cutting-edge solutions for modern warfare.

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INSIGHT

Shift in Military Conflicts

Modern military conflicts are characterized by a shift towards smaller, more agile units using precision munitions and drones.
This trend necessitates a move away from traditional large-scale forces and expensive, specialized systems.

INSIGHT

The Future of Warfare

While machine-on-machine warfare is increasing, the ultimate goals of conflicts often involve political and territorial changes.
These objectives will likely still require human engagement and result in human suffering.

ANECDOTE

Ghost vs. Predator

Unlike the Predator drone, which requires a large crew to operate, Anduril's Ghost drone is designed for autonomous operation by small units.
This autonomy minimizes manpower and logistics complexity, crucial factors in modern military operations.

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Today, we are breaking down Anduril. Anduril builds high tech defense systems for the US Department of Defense and its allies. Crucially, it does so with speed that emanates from Silicon Valley. Founded in 2017 by Palmer Luckey, who previously built and sold Oculus to Facebook, Anduril has achieved the rare feat of challenging the established order in the defense industry.

To break down Anduril, I’m joined by the company’s CEO and co-founder, Brian Schimpf. We discuss the history of the defense industry, how Anduril’s business is counter positioned against the legacy cost-plus model, and what Brian has learned about selling to the DoD. Please enjoy this breakdown of Anduril.

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

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Show Notes

[00:02:52] - [First question] - The history of defense technology and the technological and competitive landscape when he set out to build Anduril

[00:08:22] - What the early experience was like when approaching the government and finding an early adopter

[00:12:44] - Necessity being the mother of invention when it came to developing drones

[00:16:37] - What it’s like to develop hardware and software products at the same time

[00:20:26] - How the defense business complex works economically and overview of the detailed cost plus model

[00:24:44] - The state of military technology and military conflict today writ large

[00:31:10] - Are we heading to a future where warfare is mostly machine against machine?

[00:33:34] - Comparing the ghost drone system to predator drones

[00:38:40] - Guiding principles as a firm and deciding on their product roadmap

[00:43:25] - An overview of their product lineup and what they’ve built so far

[00:48:13] - Having an open innovation policy to promote competition

[00:49:37] - The nuance of politics when it comes to building and running their business

[00:51:56] - Most difficult decisions he’s had to make through Anduril’s history

[00:53:51] - How he overcame Anduril’s lowest points and biggest challenges

[00:58:38] - Thoughts on effectively compounding hardware innovation

[01:02:23] - A moment he’s most proud of and regrets most in Anduril’s history

[01:04:20] - Lessons learned from observing Palantir and SpaceX

[01:08:37] - The kindest thing anyone has ever done for him