“If you create opportunities, and don't pick winners, then there are no winners, and then the capital runs away, the founders that are interested in the market run away, and you end up right back where you started” - Trae Stephens

In this episode of the Building the Base podcast, hosts Lauren Bedula and Hondo Geurts interview Trae Stephens, the co-founder and chairman of Anduril. Stephens discusses his background in national security, his experience as a venture capitalist, and his vision for the future of the defense industry.

Get a unique perspective on the convergence of technology and national security along with Trae’s path from journalism to venture capital and the genesis of Anduril. He highlights the challenges and opportunities facing the defense industry, emphasizing the need for collaboration between government and tech companies to address evolving threats.

Key Takeaways:

The government needs to pick winners in the defense industry. Stephens argues that the government needs to be more selective in its funding of defense startups. By investing in a small number of companies with high potential, the government can help to create a more competitive and innovative defense market.

1. The government needs to move away from bespoke solutions. Stephens says that the government has been too focused on bespoke solutions, which are expensive and inefficient. He argues that the government should instead focus on investing in commercial off-the-shelf (COTS) solutions, which can provide similar capabilities at a much lower cost.
2. The government needs to do a better job of understanding software. Stephens says that the government has a poor understanding of software and its capabilities. This has led to the government making poor decisions about how to invest in software companies and how to use software in the defense industry.
3. The government needs to be more accountable for its decisions. Stephens argues that the government needs to be more accountable for the decisions it makes about defense spending. He says that the government should be held to the same standards as private sector companies when it comes to making decisions.
4. The future of the defense industry is bright. Stephens believes that the future of the defense industry is bright. He says that the government is making progress in its efforts to reform the defense industry. The defense industry will increasingly rely on commercial off-the-shelf solutions.