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 He shares insights on shifting from outdated cost-plus contracts to a more innovative firm-fixed pricing model.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

Defense Industry Slowdown

The defense industry, once a hotbed of innovation, has slowed down due to increased bureaucracy and cost controls.
This shift has created an opportunity for new players with modern software approaches to challenge the established order.

ADVICE

Finding Early Adopters

Find early adopters within the government who have urgent needs and are willing to take risks on new approaches.
Focus on building technology and helping to develop policy changes that enable different acquisition and contracting strategies.

ANECDOTE

Anduril's Drone Focus

Anduril's focus on drones stemmed from the need for a software platform that could solve various DoD problems.
This platform, called Lattice, applies computer vision and sensor fusion to understand the world and automate simple tasks.

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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