The Companies Changing Warfare Forever: Palantir & Anduril Execs on Drones, AI & the Future of War

(0:00) Friedberg Intros Palantir's Shyam Sankar and Anduril's Trae Stephens (0:56) Palantir Origins: CIA Analyst Joins 20-Person Startup (2:54) War, Deterrence & Silicon Valley's Defense Tech Taboo (8:39) US vs China: Drone Gap, Shipbuilding & 2027 Taiwan Threat (12:27) Anduril's Arsenal-1 Factory & Fixing US Munitions Supply Chain (41:48) Autonomous Weapons, AI Decision-Making & Future of War (47:15) Anthropic vs Pentagon: Ethics of AI in Combat (50:39) Palantir Surveillance State Claims (55:57) Anti-Defense Culture Origins: Vietnam, Snowden & Foreign Influence Axon.ai — AppLovin's AI advertising platform reaches over a billion daily active users across mobile games. Full-screen video ads with a 35-second median watch time. Advertisers are profitably spending hundreds of thousands of dollars a day and advertiser access is still in closed beta. The window is open at https://axon.ai/allin. https://axon.ai/allin Follow Trae: https://x.com/traestephens Follow Shyam: https://x.com/ssankar Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Friedberg?

  Trey Stevens, Shyam Sankar, welcome to the All In Podcast at the Hill and Valley Forum. Thank you guys for being here. What's up? How are you guys doing?

• 0:06Speaker 01

  Thanks for having us.

• 0:07David Friedberg?

  Good, great.

• 0:07Speaker 02

  Good to be here too.

• 0:08David Friedberg?

  You guys are friends, right? You guys go back, like, a long time?

• 0:12Speaker 02

  A really long time.

• 0:14David Friedberg?

  Okay, tell us how you guys know each other. Palantir, Anduril, what's the connection and the history?

• 0:19Speaker 01

  Well, I'll start. You can fill in all the gaps.

• 0:21Speaker 02

  I feel like I know the story you're gonna tell, and it's gonna be very uncomfortable.

• 0:29David Friedberg?

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• 0:55Speaker 01

  So Trey, I think, you know, in the early days of Palantir, I was roaming around, giving demos to anyone who could possibly want to see them. Trey was working in an intel agency and happened to see one of these demos, and he should tell you his version of it, his side of it, his frustration with bureaucracy. But I think he realized, like, hey, this might be really cool. Maybe I should leave the hellhole I'm in, in the basement of this building, getting nothing done, talking about sports with other people, to go join this crusade. So Trey reached out and applied. He made a big faux pas. He came all the way to Palo Alto, and he wore a full-on suit, tie, cufflinks, CIA cufflinks, mind you, coming to interview with, I don't know, we were probably 20 people, you know,

• 1:40Speaker 01

  who wore t-shirts and, you know, second-hand me-down clothes. And, you know, he was intercepted in the lobby by a receptionist who really cared about him and told him to ditch the tie and try to dress down and don't screw it up too bad. But we loved him immediately, and he helped us build the government business.

• 1:57David Friedberg?

  So this was at Palantir. You were their employee 13, 2006.

• 2:01Speaker 01

  Yeah.

• 2:01David Friedberg?

  So this was pretty early on.

• 2:03Speaker 02

  Yeah, I came in in early 2008, but there were still, you know, 25, 30 people at that point.

• 2:09David Friedberg?

  Pretty small. And Peter kind of incubated it, was involved at the beginning, right? Peter Thiel? Maybe you could just recap, because I know a lot of folks know the history of Palantir, but just kind of like the early stand-up of Palantir and how things got going during that era with that small group, how you guys kind of figured out how to build the business?

• 2:25Speaker 01

  Yeah, it was one of these things that was kind of a slow start. There was a real idea amongst the five co-founders, including Peter, that, you know, it's kind of insane to live in a world post 9/11 where people are arguing about what's more important, privacy or security? Like, aren't they both really important? And who is actually spending time pushing out the efficient frontier? For any amount of given security, you should have more privacy than you had before, or any amount of given privacy, you should have more security. And this sort of changing the dialectic there was really the entire impetus of what we started with. And now there's a technical approach that falls from that. There's an approach to privacy and similarities that are around that. But really, we started as a business that was pretty myopically focused on solving a handful of problems in counterterrorism for a handful of institutions in the world.

• 3:10David Friedberg?

  Let me start by asking a question that I think is important to ask, particularly for a broad audience, and for the two of you to frame your personal philosophical views. Is war good? There's a lot of conversation about, there is a military-industrial complex that has an incentive for war. What's your view, your philosophical motivation for why you do what you do, what your view is of war and defense and the work that your business has kind of pursued?

• 3:37Speaker 01

  Well, anyone who's been to war would tell you that war is awful. War is bad, categorically bad. That doesn't mean it's always avoidable. And that, you know, there are people who will want to use might to make right, to define a set of rules. And you have to be in a position to protect your people and your interests accordingly.

• 3:58Speaker 02

  At the end of the day, it's all about deterrence. You don't want to go to war, but you want to be prepared so that if you do have to go to war, that you will win decisively and quickly. I've never met a general that has said, "You know what I really want to do today? I want to make phone calls letting parents know that their children have died in combat." Nobody wants to do that. And I think that that's really the goal of everything we were working on at Palantir. It's what we're working on at Anduril, which is make it unthinkable to your adversaries that they should ever challenge you.

• 4:26David Friedberg?

  Why do you think it became taboo and became so negative, particularly in Silicon Valley, that building a defense company or a company building technology to service the defense sector was viewed with such disdain and was an untouchable sector for so long?

• 4:41Speaker 01

  I think it's a beautiful consequence, and I mean it unironically, of the peaceful world that we lived in. The origin story of Silicon Valley is actually defense. Lockheed was the largest employer in Silicon Valley in the 1950s. The Corona spy satellites were built there. So in a world that was gripped by the threat of the Soviet Union, you had a very different posture in Silicon Valley. But in a world post the end of the Cold War, the end of history, kind of a view of globalism that it's all going to be great, that we exist beyond the confines of our country, these things were viewed much more cynically, and the threats didn't seem very real. And I think you could even backtest this through the moment where Silicon Valley really woke up and realized, "Hey, maybe these things are real," or when the Russian tanks rolled

• 5:26Speaker 01

  across the Ukraine border. It's when they realized, and there are a lot of Ukrainian, Eastern Europeans, a lot of people who were affected by that in Silicon Valley, who started to realize that maybe there's a more nuanced issue here than just the simple Eisenhower quote of the military-industrial complex.

• 5:42Speaker 02

  I think many of the people who were protesting Silicon Valley's involvement in working on national security priorities were the exact same people that had Ukraine flag in bio. So there's clearly just a policy mismatch or an understanding mismatch. The other thing that I would mention is that these large tech companies, unlike many epics prior, were global technology companies. They didn't necessarily view themselves as American. And so if you go and you look at where these protests came from, you have to keep in mind that a lot of the signatures that they had on these protests were not coming from US citizens. And so there's a global character to those companies that probably was not the case during the Cold War.

• 6:23David Friedberg?

  Do you think that's changed recently?

• 6:25Speaker 02

  I mean, to Shams' point, I think that there's just an increased awareness of the complexity of the geopolitical situation. And I think it's certainly a lot less controversial work on these topics than it was in 2017, 2018.

• 6:38David Friedberg?

  You know, it's a 20-year overnight success, right? And Anduril is now reportedly raising money at a $60 billion valuation, just landed a $20 billion Army contract. Palantir today is worth $400 billion. The flip side of what I just said is that some people are saying that Silicon Valley is taking over defense and Silicon Valley is the next story of the American war machine. This has become sort of a popular narrative. Can you just respond a little bit to kind of where we were coming out of World War II from a defense industry perspective, where we find ourselves, where Silicon Valley seems to be at the center of this today?

• 7:17Speaker 01

  You know, the industrial base that won World War II and the early Cold War was not a defense industrial base. It was an American industrial base. You know, Chrysler made the Minuteman ICBM. There was a prime contract on it and they make minivans, so missiles and minivans. General Mills, the cereal company, had a mechanics division. Everything they learned doing R and D to process grains, they actually used to build torpedoes and inertial guidance systems, forward-built satellites until 1990. So the entire economy was invested not only in economic prosperity, but also underwriting the freedom that allowed us to have economic prosperity. It's really a consequence of the end of the Cold War. So when the Berlin Wall still stood in 1989, only 6% of spending on major weapon systems went to pure-play defense specialists. 94% of it went to what I call as dual-purpose companies.

• 8:02Speaker 01

  You know, yeah, a missile is single-use. It's not a dual-use product, you're not going to buy it at Walmart. But that actually, these companies were invested in both parts of this. That figure today is 86% goes to defense specialists. So we have a very different structure of the US economy as a result, and I think it leads to very... perverse narratives of what would it be like to mobile if things got really bad? We'll just flip a switch and our auto factories will magically turn into enabling us provide for our defense and security. And I think a cold eyed look at history is it took 18 months to do that. We actually started ramping up to provide this stuff for our allies, for the Brits and the Soviets in the context of World War II. And that we've actually missed some of those signals today.

• 8:44Speaker 01

  When Ukraine went through 10 years of production and 10 weeks of fighting, that probably should have been a five alarm fire that we got the fundamental calculus on deterrence wrong. We thought the stockpile was going to deter our adversaries. It was always the factory. It was the ability to generate and regenerate the stockpile.

• 8:59David Friedberg?

  Well, let's look at where we are today. So in terms of defense readiness relative to our adversaries, 10,000 to one drone production gap versus China 223x shipbuilding capacity disadvantage. And I think you've said a 2027 Taiwan window of danger. High level, we spend more than any other nation on defense. How ready are we? And how long will it take us?

• 9:25Speaker 01

  Well, our joint force is the best in the world. And so, you know, I think we have to couch the alarmism and commentary in that context here. But I think if you look at like the rate of change, our adversaries are moving very quickly. If you just look at the empirical loss of deterrence, you had the annexation of Crimea in 2014, the militarization of the Spratly Islands in 15, Iran with breakout capability to get the bomb in 17. You've had a pogrom in Israel. You have the Houthis holding trade hostage in the Red Sea, not to mention the present conflict. So when you look at that, you've, how can you not feel that deterrence is eroding? To Trey's earlier point of having capabilities that are so scary that picking a fight isn't worth it. And people are investing significantly on the low end of the mix. Our high end is still unquestionably amazing.

• 10:08Speaker 01

  But, you know, you can't keep shooting $2 million interceptors at $20,000 drones and have that math work very long. I think the second part, like, why does it matter that we lost the American industrial base and have a defense industrial bases? You lose volume, you lose the R and D stimulus to come up with creative ideas like using the methodology of building a bathtub to build the next generation low cost cruise missile, right? And you get stuck in these platforms that are absolutely eye-wateringly amazing, but are $2 million a pop. And you just can't produce them at the scale or with the speed that you really need to.

• 10:39David Friedberg?

  Right. And Trey, you've talked about this. You wrote an article, "No Solvency, No Security." Just share with us your view on the importance of this industrial base and what it takes for us to have strong defense requisite in a strong manufacturing industrial base.

• 10:53Speaker 02

  I mean, we really kind of sent most of these capabilities away during the last 30 years of globalization. And that gutted entire communities in the United States. You know, I mentioned in this article that just in my immediate family, like grandparents, aunts, uncles. I have family members that worked at GM, at Ford, at Frigidaire, at National Cash Register, at Armco Steel. Every single one of these factories in Ohio, closed. Not a single one still exists. And they all have different places they've gone around the world. But, you know, one of the things we're doing with Anduril right now is we're building out a 5 billion square foot factory campus in Columbus, Ohio. And we have the benefit of going back and tapping into that knowledge base that exists

• 11:36Speaker 02

  that's underemployed at the moment because the factories that kept them busy for many, many years are closed. And I think this is the story all over America. Like, if you think about the at-scale manufacturing for a new company started in this century, in the 2000s, there's really only one that comes to mind, just Tesla. That's it. And so we haven't really built any muscle around new manufacturing capacity. And I think that as you spin things up, to Shams' point, we don't have the ability to do that quickly because we've atrophied massively by turning all this away globally. So I think readiness is a real problem.

• 12:18Speaker 02

  And we have to start investing ahead of the, you know, conflict being there. Because you can't just start at the moment that it's absolutely needed.

• 12:27David Friedberg?

  Tell us about the arsenal one and then the manufacturing behind it.

• 12:31Speaker 02

  Yep.

• 12:31David Friedberg?

  And then I want to just understand a little bit about, is this product-led or production-capacity-led? Do we need to make selections and have capital committed to bringing product to market before we start to build out the base? Or is there an alternative way to get ready?

• 12:45Speaker 02

  Arsenal One is our, the factory campus that we're building in Columbus. The operating system for that, the Arsenal platform, is really intended to reduce the the cost, the overhead that's required to automate and, you know, handle these processes in the most efficient way possible. So there's like kind of the software layer that sits behind that. We're actually working with Palantir, the Foundry platform, on some of these programs as well. And the idea behind this is that you want it to be as modular as possible. If we build out the factory campus, and we said, "We're just going to build Furies here," or "We're just going to build Roadrunners here," "We're just going to build Barracudas here," that provides a tremendous limitation in the moment of a conflict, to be able to be responsive to the demand for specific things that are

• 13:30Speaker 02

  relevant to that conflict. And so we're kind of thinking about this more like contract manufacturers think about building assembly capacity, where they say, "Yeah, we make, you know, this VR headset for Facebook, we make this VR headset for Samsung, we make this VR headset for Apple. We build a skillset around building optic systems, but we're going to build a bunch of them. And we're going to be much more effective at doing that by hitting the network of scale, you know, get lower costs on all the individual parts. You're going to build out a supply chain to work through that." That's roughly what we're doing in this case, is we're saying, "Like a contractor manufacturer, we want to be able to pivot on a dime into ramping up production of Roadrunners if we need Roadrunners, or ramping up production of Barracudas if we need Barracudas."

• 14:15Speaker 02

  The counter example to this, of course, is what we saw in the early days of Ukraine, where what they really wanted was more Stingers and Javelins. The problem is, is that we, once we burned through our inventory in the warehouses of Stingers and Javelins, the assembly line to build Stingers and Javelins didn't exist. All the people that worked on those assembly lines were retired. And so the primes were literally calling people out of retirement to come back and teach them how to build Stingers and Javelins again. And so these are problems that we're trying to avoid by the design of the factory as an initial concept.

• 14:48David Friedberg?

  Who funds it? So is there a government contract that supports the production of these facilities? And are multiple companies going to be able to afford to stand these up, to make these investments? Or is this just going to end up being an androll because you've got most of the capital and you guys are going to roll these facilities out? And how do we make this kind of a national interest?

• 15:05Speaker 02

  Well, our business model is definitely very different from the primes who are basically responding to things as requirements directly from their customers. So they're not really investing a whole lot forward of the capability. Anduril, on the other hand, we're doing all of this as private R and D investment, and then we're selling the outcome, the output of that as a product. So this is fundamentally a different business model. But I do think that there's a tremendous amount of capital that's required to pull this off as a new entrant to the space. I don't think that the market is going to support 100 new primes or something like that. I'm hopeful that it's not just Anduril. I think it would be healthy if there was more competition in the space. But, you know, being able to raise that amount of capital, hire the people that you need to actually pull it off. This is

• 15:50Speaker 02

  not, it's not like building a normal tech company. It's not just the development of a product. It's, you know, there's a lot that goes into this.

• 15:58Speaker 01

  Trey's point might seem kind of obvious or simple, particularly to an audience that's largely coming from tech or Silicon Valley, but that's not how defense works. People don't build products. People build to a spec that the government says, this is what I want to buy. And then you kind of say, yes. You know, you have to think about defense as a monopsony, where there's a single buyer for the thing. And that concentrates an enormous amount of power in the buyer, whether they're right or wrong. And if you look at the history of defense innovation, typically the monopsony is wrong. You know, it was Churchill as the head of the Royal Navy who built the tank, because the British Army was not smart enough to realize that in the next battle, having horses was not going to work. So every one of these innovations is kind of an act of heresy. There's a founder-like figure who is so committed pathologically to a different heretical concept, they see it through and

• 16:43Speaker 01

  only in combat, or only when it meets the moment is it actually validated. Now, a grave threat, like the Soviet Union, is a sort of forcing function that allows you to innovate. When we were building ICBMs, we had eight competing programs. Today, in peacetime, that would be viewed fastly as wasteful. Why should you have eight competing things? Why can't you just pick the right one and put, you know, spend less or put all your wood behind one arrow? And of course, that kind of turns us back on our fundamental belief in America on the free market, that there's a competition of ideas, there's fundamental uncertainty, there's quality, like variance in the quality of the execution, and that you need this competition. And it's not just principally competition amongst the primes or new entrants, it's also competition inside of government.

• 17:25David Friedberg?

  And there were originally, I think, or at one point, 51 major defense contractors. And just for the audience to understand, they reduced down to roughly five or six primes. That's the term prime is one of these prime contractors and then make subcontract out to other companies to develop componentry parts. My understanding in Anduril was to do exactly this, build a product, show up with something that's cheaper, better, faster, and actually competes on the merits rather than be caught in this kind of prime landscape. And that worked clearly, but over time, there seems to be a lot of capital concentrating into the new primes. You guys, you guys, SpaceX, OpenAI, maybe one or two others. Is the landscape going to emerge that we're going to just look like the same old way

• 18:10David Friedberg?

  of operating where we have a handful of primes that all have these trusted relationships with the government agencies? Or how do we kind of create that competitive environment to continue to drive innovation and make things affordable for the US government and the taxpayer going forward?

• 18:24Speaker 01

  Well, just like, and I interviewed Trey in my new book on this, like, just like venture, there's going to be a power law here. So one of the grave mistakes we've made as we think about innovation, which has resulted in essentially innovation theater, is this idea that you're going to just peanut butter spread around the capital you have for innovation, that, you know, every company is going to get roughly the same amount. It's not enough to hit scale. It doesn't reflect actually the relative performance differences because there's an authentic power law curve, like any venture capitalist would realize that, you know, your biggest winners are going to return your whole fund. There's something authentic here as well, which is like, yeah, you may have 10 bets, but at some point, you're going to have to get smart about concentrating down on the things that are actually working.

• 19:02Speaker 02

  Yeah, I mean, this is a kind of a great point about any category. It's like, if you're a space tech investor and you didn't invest in SpaceX, you probably lost money. If you're a crypto infrastructure investor and you didn't invest in Coinbase, you probably lost money. If you're a social media investor and you didn't invest in Facebook, you probably lost money. And yet, for some reason, capital allocators have a very short memory. They don't have the ability to go back to the prior boom cycle and say, oh, wait, I remember what happened that last time. We had to concentrate capital down to the winner. And I think that this isn't any

• 19:34David Friedberg?

  So what was the motivator then for change in the construction of the landscape of defense contracting? Was it software that takes us from the old primes to the new primes? Is that really what kind of triggered this?

• 19:46Speaker 01

  Consolidation. So in 93, having won the Cold War in 91, or I think more accurately, the Soviets lost the Cold War. You know, by 93, we expected as a nation, a kind of peace dividend. We don't have an adversary now. We should be able to spend less on defense. And the department had this famous dinner where they brought 15 of the 51 primes together and said, this is going to happen. The budget's going to get slashed. We're not going to save you guys. You have our permission to consolidate. Some of you are going to go out of business. Some of you should try to make a commercial business, which didn't really work. And that's what led down to five. It was actually, there was going to be, we were going to go from five to four. In 99, the Justice Department put their foot down and said, we're not going to let Lockheed and Northrop consolidate.

• 20:25David Friedberg?

  Right. And then today, so the changeover, what gave you guys the window? What gave you guys the window to build the business that you've built? I mean, what did you see early on 20 years ago and continued forward in the hardware side? That made you say, this is, this is the moment. Is it software that enabled this?

• 20:43Speaker 02

  Well, I'm going to throw you under the bus a little bit on this. It was not obvious in the beginning that this was going to work.

• 20:50Speaker 02

  I can't tell you how many meetings even we had together where we walk out and be like, this is not going to work. This is very bad.

• 20:58Speaker 01

  We were not welcome with open arms.

• 21:00David Friedberg?

  Early days of Palantir.

• 21:01Speaker 01

  Yeah, early days, mid days, maybe even late days. You know, famously, we had to sue our customer just for the right to compete. Yeah, that's the strength of the monopsony, right? And, and really, I'd say our, our entire business was validated from the field backwards, right? It was in DC that we, the doors were closed to us. No one wanted to interact with us. The way that we're the monopsony strongest at the margin in the field where people are saying like, well, I'm on this deployment. I'm on this rotation and I, I, there is more free market system. Like what I'm being given doesn't work. I'd like to come home. How do I like bend the rules, figure out how to get the software I need? That allowed us to empirically show, you know, create facts on the ground that this stuff worked. It was a long road to hoe. I think this is part of why it took 20 years to kind of get to this sort of point here.

• 21:45Speaker 02

  And yeah, I think that a lot of those lessons that were learned were not only like educational for Anduril, but it also created a precedence that already existed by the time that we showed up, where we didn't have to go through all of those same growing pains. So, you know, what took Palantir, I guess probably about five years to get to 10 million annually in revenue, we did that in 22 months. But I don't think that was a credit to Anduril. I think it was mostly a credit to me, Matt and Brian lived the five years of Palantir. Five years plus 22 months. Yeah, exactly. And so we kind of had a bit of a cheat code, but yeah, I don't think it's like culturally shifted to the point where it's like actually just easy to do this now. It's not like the government has fixed all of their problems. I think it's just that there's enough people out there who have seen it that understand how to make

• 22:29Speaker 02

  it work, that you can work within the system rather than, as Shom said, trying to constantly fight from the outside in.

• 22:35David Friedberg?

  Was there a view at that time, in these years of building Palantir, where you saw an opportunity in hardware? Is that kind of the motivation for Anduril? That we've got software, but there's more to do and hardware could be reinvented and we could build systems? I mean, help us understand the connection.

• 22:49Speaker 02

  Yeah, in the very early days, actually, I came by to pitch, Shom, before we officially started the company. And I think part of that pitch was we said, we know how hard software is. We don't want to do that again. We believe hardware would be less hard. And I think we ended up being right from like a getting going perspective. But yeah, it's just, you know, the government doesn't know how to think about the value that's created by software. Maybe you feel like they're a little bit better now, but it was really hard in the early days of Palantir to convince them to think about it as anything other than lines of code, for example, or some like metrics that anyone that works in tech knows doesn't matter. But for hardware, they know. There's a bill of materials. In fact, the government made stuff for a long time. During the Cold War, there were literally

• 23:34Speaker 02

  ammunition factories that were owned and operated by the United States government. So they can kind of go through a spreadsheet and say, okay, I know how much it costs for you to build this. I know how much margin. I'm comfortable paying you. And it's a much easier, you know, crossing of the Rubicon. With software, it never felt like that.

• 23:52Speaker 01

  Yeah, it's still very hard. I mean, people want to pay for software and government on a cost plus basis, which doesn't make any sense if you think about the R and D that you put into software, like the marginal price you're paying is a small fraction of the R and D we're amortizing across commercial and government customers. And I think maybe Trey, it's worth telling the story of how when you got to Founders Fund, you were looking for defense companies to invest in and hitting so many dry holes is part of what led to the idea.

• 24:18Speaker 02

  Yeah, I mean, I have no, I had, maybe still don't have any interest in venture capital. And so when Peter asked me to come over to Founders Fund, the only thing I knew to do was just to look at the category of things I felt like I understood pretty well, which was GovTech. And so I, incidentally, you can look up who bids on federal contracts. And so I pulled that list and then at the time I was using Crunchbase. And then I just started outbounding to companies that were bidding on federal contracts. And I met with hundreds of companies in the first three years that I was at Founders Fund. We may ended up making one investment in KDM, which was renamed Expanse and acquired by Palo Alto Networks. But otherwise, that was it. There was nothing else. And even like looking in retrospect, like we didn't miss anything.

• 25:00Speaker 02

  There was just nothing worth investing in. It turns out, no one was building in this category. And so I went back to the Founders Fund investment team and said, man, I feel like someone should be building a next gen Prime that builds hardware, but it's software defined and hardware enabled, rather than being hardware defined and software enabled. And to my surprise, the team was like, yeah, it sounds like you're probably the guy that would know that that's the gap. And I don't know, maybe you should start a company. And I'm like, oh, no, you guys hired me to work on the investment team at Founders Fund. Like, yeah, that's fine. You can, you can do that, too. It's all good. So, yeah, it was kind of an accidental founding in many ways.

• 25:38David Friedberg?

  The capital requirements for hardware business are notably higher. If you didn't have the success you had building the manufacturing facility you're building, and I'm assuming all the R and D cycles are longer and require more capital to get to a point of product, does it make sense for venture capital to be the funder of the next gen of hardware defense tech companies? How does the economics and the capital markets?

• 26:00Speaker 01

  I'll give a take here. And then, so I think if you back up a little bit, if you look at Fairchild, if you look at Integrated Circuits in 1968, 96% of all Integrated Circuits sold were sold to the Apollo program. There was effectively a monopoly. There was one buyer for this thing. But Bob Noyce, who was that failed child at the time and co-inventor of the transistor, he was so maniacally committed to a future that semiconductors, integrated circuits would be in everything, that he never let more than 4% of his R&D be paid for by the government. He was going to be like, why should I have some PM tell me what my R&D roadmap? I invented the thing. So he kept executing that. And that's he, so he chased Moore's law mercilessly. And that meant in the eighties, when the government needed precision-guided munitions for Assault Breaker to compete against the Soviets, we had the price performance we

• 26:45Speaker 01

  needed. So this idea that, you know, because when you get stuck inside the government loop of what they want, you never hit the price performance.

• 26:52David Friedberg?

  By the way, there's a good modern analogy, which is Jensen and Nvidia, right? 93 graphics chips, sold them as an almost like an OEM-type solution until here we are.

• 27:02Speaker 01

  The one that speaks to my heart as a child who grew up in the shadow of the Space Coast is Shuttle. You know, Shuttle is beautiful, but it's $50,000 a kilogram to get to orbit. Starship-heavy reuse will be under 20 bucks a kilogram, you know? And there's no way that you will achieve that vision if you're in a cost-plus world, because every day you're actually deleting your costs, which means you'd be deleting your profit. Instead of deleting your costs, turning that into margin that you can provide a better price performance on and keep writing that curve down.

• 27:28David Friedberg?

  Right.

• 27:29Speaker 02

  Although, to be fair, SpaceX sued their customer in the Air Force on the basis of the exact same federal procurement law that Palantir did. And so, you know, even with that massive costs costing down, they were in the same position as Palantir was in the early days.

• 27:45David Friedberg?

  Yeah. Let's go back to the venture capital. At this conference that we're at, there's dozens of VCs now. This has clearly become a hot space as defined by your successes. What's going to happen? So these VCs are plowing money into hundreds of defense tech companies from drones to satellites to weapon systems to software tools. How is this going to play out over the next couple of years as a venture investor with your knowledge about Anduril?

• 28:09Speaker 02

  I remember when I first got my offer letter from Palantir. We had this kind of high-low mix of salary versus equity compensation. And it gave three examples of how much your equity that was on your offer would be worth at different valuations. It was, I think it was 1, 5, and 10 maybe, or 1, 5, and 20, something like that. And I remember talking to people around the company, they're like, 20, that's ridiculous. We're never going to be worth $20 billion. And I feel like now it's like people are going out and they're like, our seed round will be priced at $20 billion. So I think there's been a big shift in just like the way that people think about these things.

• 28:51Speaker 02

  Some of that is good, some of it's bad. I think on the good side, they're able to look at companies like Palantir, like SpaceX, like Anduril and say, there is actually a path to success. This isn't like an impossible market to innovate in. But at the same time, there's a real tension around amount of capital raised and the valuations that are being applied to these rounds that add a tremendous amount of risk to the company that doesn't have to exist. You know, there's this famous scene from HBO's Silicon Valley where a CEO gets fired for kind of underperformance on the plan that they had presented. And Richard Hendricks, the main character, says, you know, you could have raised less at a lower price. And he said, what do you mean? No one ever told me I could raise less at a lower price.

• 29:35Speaker 02

  And I think that's ultimately what my advice to these companies is. It's like, look, your product might be awesome, seems like you're building a good team. I like the vision for what you're doing and the mission, but you can also raise less at a lower price. And I think that avoids playing chicken ultimately with trying to hit numbers that frankly don't even make sense. One of the things that we've been focused on at Anduril that I think maps back to our experience at Palantir actually is climbing down the multiples tree with every round. We never want to go and raise the next round at a higher revenue multiple than the prior round. And even the Series H that you mentioned before is down pretty significantly from the Series G. And we're not doing that because investors wouldn't be willing to pay higher multiples.

• 30:21Speaker 02

  We're doing that because I believe the discipline is really, really important, especially heading into a medium-term IPO.

• 30:27David Friedberg?

  Emil Michael talked about this $200 billion of capital he wants to deploy. It's been reported he's hiring bankers to help him deploy it. To counter your point, if there's a lot of capital flowing from the monopsony, if there's a, you know, a big market that's growing aggressively, you've got a $200 billion TAM to go after now, shouldn't that justify the venture capital coming in, maybe even justify going at a higher price? Is this Department of War investment activity really going to kind of change the landscape and increase more venture capital flow?

• 30:55Speaker 01

  I think it's going to help out tremendously. First of all, I love the nickname that this team has, which is Deal Team Six. So, you know, I'd be honored to be part of that team. But I think even if you look back at the titanium supply chain in the 50s, 60s, it was bootstrapped by the Air Force in a similar way, where they strategically injected capital down the supply chain to enable the aerospace industry to be created. So I think there's a tremendous opportunity with the Office of Strategic Capital to think about what are the structural bottlenecks in the production? You can have a lot of drone companies, and they're all going to bottleneck on brushless motors. There's going to be certain key parts of the supply chain that we don't have enough capacity to produce here in the US, and they're going to need a bolus of investment. And just like integrated circuits, the first customer is going to be less economical than the end customer. So I think that's one part.

• 31:38Speaker 01

  Then the other story that I love is where we really screwed this up. The drone is an American birthright. Abe Karim and the Predator, we built it, General Atomics. But of course, then the government got in the way. The government said, hey, a drone is a flying missile. This thing needs to be ITAR-controlled. Also, the FAA got in the way and said, no beyond line of sight operations. Right? So you basically killed the domestic drone market. There is a counterfactual world where General Atomics had a consumer subsidiary called DJI, and the consumer drone market was entirely owned by the US, and it provided for economic prosperity for America and wrote us down the price production curve that we could be using these things in innovation for national security as well.

• 32:17David Friedberg?

  What's the next market where you're worried that's going to happen?

• 32:20Speaker 01

  I have a lot of markets. So, I mean, we're talking a lot about weapons of war here. I'm worried about things that go beyond weapons of war that affect our will to fight. Pharmaceuticals is one that's close to my heart. My father was a pharmacist, and one of the things he always wanted me to work on was bringing pharmaceutical production back home. 80% of APIs for generic drugs are produced by China. What do you think the American people are going to think when they have to choose between defending the free world, defending American sovereignty, and their five-year-old dying of an ear infection that we would have thought of as trivially curable? So I think there are these things where we've just imbibed the globalist vision that, hey, we'll do the innovation, they'll do the production, without realizing that innovation is a consequence of productivity. Probably to put it in terms that the tech community would really understand is like,

• 33:03Speaker 01

  what motivated Google to do the research in 2017 behind the paper, attention is all you need? A desire for a 3% incremental improvement in Google Translate. You cannot think of something more banal leading to something more revolutionary. And we've seeded all of those opportunities to realize and harness that innovation. Now, if we stick with pharmaceuticals, there's a reason 50% of all clinical trials, new clinical trials are happening in China and not in the US.

• 33:28David Friedberg?

  Do you have a view on a technology or product that's developed in the US that we're at risk of getting regulated out and we're, are we kind of going in the right direction at this moment?

• 33:37Speaker 02

  I would say that semiconductors is actually a really interesting one. Back to your point about Fairchild is that, you know, we were the home of the semiconductor industry for many, many years. And, you know, once TSMC got, you know, ahead of steam in Taiwan, they kind of ran away with it. And we didn't, rather than investing in a domestic competitor, there are all sorts of reasons for this that we could spend hours talking about, we basically just allowed that to happen somewhere else. And now we're in a position where almost no amount of money is going to fix this problem for us, certainly on a timeline of relevance as it pertains to the risks that Taiwan has in 2027. So I would say that's like another really big one.

• 34:16David Friedberg?

  Getting back to defense, how does the hardware and software fit together in this, you know, kind of emerging war technology landscape? You guys are building software, you're building hardware. Like, help us understand a little bit about what the systems of war look like in the decades ahead.

• 34:31Speaker 01

  Well, I think the starting premise would be where does it give us an advantage? And, you know, we had the first offset, which was nuclear weapons. The second offset, precision-guided munitions and stealth. Really, the third offset is decision advantage. How can we outthink and outexecute the adversary? That's where these things fit together. That's like the thesis of even having them to begin with. And I think the reality is that there's kind of a messy overlap of these things. Like, all innovation is messy and chaotic and maybe... The department suffers at times because it tries to have a framework-based approach. Like, we're gonna have MOSA, Modular Open Standards Architecture, something like that. You know, it's like, we're going to avoid all of the pain and messiness by having some sort of process. But in reality, the process always destroys all of the innovation.

• 35:14Speaker 01

  And so, there's obviously a very tight thesis where these things need to coexist and build off one another. They need to be interoperable. But you have to earn that. You have to earn that opinion in the exercises, in the tests, in the evaluation, in combat, would be my humble suggestion.

• 35:30David Friedberg?

  Do you think that, outside of what Anduril's building, there's actions that this administration should be taking, or that the private market should be taking, to solve this hardware manufacturing and capacity gap that we have right now?

• 35:46Speaker 01

  My view is they're actually taking a lot of actions. Not all of them have come to see the day of light here, but, you know, even something as simple as reimagining munitions and drones as consumables. They're not things that you build and then stock on a shelf. They're things that you, at the time of ordering them, you already have an exercise test plan where you plan to expend them, which means that you're gonna have to replenish them, which means there's a demand signal to industry to keep going. And a buying cycle that means that you can buy the next generation, rather than having the old generation. And I think this department sees that in a very clear-eyed way and is doing the yeoman's work of like stitching that through, through all the services, all the portfolio acquisition executives, to the point of not believing in process. They've moved from a world where you have a very rigid, "Hey, I said I was gonna buy X of Y and I can't change my mind",

• 36:31Speaker 01

  to a world where there's more autonomy and authority for the people who are buying things to say, "I told you I was gonna buy something that accomplished this goal. I can change my mind about how I'm going to accomplish this goal", which, you know, can you imagine trying to run any private sector business without that degree of autonomy and flexibility in your decision-making?

• 36:48Speaker 02

  To echo Shams' point about what the administration is doing, there are a bunch of swings that they're taking. It wasn't that long ago that in the Obama administration, there was kind of the Solyndra failure, where they invested in this solar panel company, it ended up being a bad investment for the US taxpayer. But now, the Office of Strategic Capital is taking a really hard look at critical minerals. They're looking at refining of minerals, and they're engaging directly with the private sector to come alongside them in doing deals to get offtake agreements on these things. So I think there is some really clever thinking going on. And then, in addition to that, I think the procurement process is sort of up for revision constantly. And Ash Carter started pulling a lot of these

• 37:29Speaker 02

  threads during the Obama administration. That was the third offset initiative. But we're in a world today where there's kind of a renewed vigor around being asked, private industry being asked, "What do you need? Tell us what you need to be changed about the way that we do business in order to streamline this and make it go faster." So I think there's a lot of positive momentum.

• 37:48David Friedberg?

  Do you guys think these changes have been institutionalized, or are they political party dependent? If the Republicans lose the midterms, and there's a Democrat president in 2028, do you think that there's a reversion to the old way of operating that's going to have some political influence and change things? Or do you think we've really changed how things are running in the government here?

• 38:10Speaker 02

  I don't think it's political, but I think it's people. So you can go back to, again, Ash Carter, Democratic administration, highly focused on fixing these problems. The current Trump administration, highly focused on fixing these problems. And there are a lot of people that were in the middle of that, that didn't prioritize this. It didn't rise to the top of the stack. And so I think, we always think of the bureaucracy as being a political infrastructure, or an institution, or bureaucracy. I actually just think, at the end of the day, it's about leadership. It's just, do we have the right people that understand the set of the problems that we're facing?

• 38:47Speaker 01

  I couldn't agree more. I mean, I call them heretics and heroes. Like you, you know, the entropy of the bureaucracy is always towards some sort of sclerosis. It doesn't, it's not a political statement. It just is what bureaucracy does. When David Packard, who's probably the last major technology co-founder who served in the Department of Defense, when he came up with the 5,000 series on acquisition, which today we view as just sclerotic BS that's, that's tied us down. Well, he, his document was seven pages long. In the, in the years between when he wrote that and now it's 2,000 pages. So did he really screw us or did just the entropy take hold? And there was no strong leadership in between to go do the bushwhacking and mow the lawn and, and make the right decisions. Now, you know, this, this administration's blown up

• 39:27Speaker 01

  J-SIDS, which is kind of one of these insane bureaucratic processes. Like, can you just take a, forget a scalpel, take a machete and start clearing the jungle and re-earn some of these lessons as you go through it? If you look at Kelly Johnson, who was the founder of Skunk Works, he built 41 airframes in his career, including the SR71, still the fastest buying manned aircraft, and, and the U2, which we still fly. Like, you look at his rules, one of his rules was, he had to play defense to keep the government bureaucrats out of his program. And I think you could, you know, okay, it's not, it's not a critique of government. You could think of big corporations. When the big corporations bureaucracy gets into the innovation, folks, the innovation stops.

• 40:04Speaker 02

  And the heretics and heroes were really founders.

• 40:07Speaker 01

  They were founders.

• 40:07Speaker 02

  It's like, from a tech perspective, that's exactly what they were. Like, to the Kelly Johnson point, the U2 did not start as a US military aircraft, because they didn't want it. He ended up going through the intelligence community to get his start there. And, and it was kind of finding the right person that was willing to take the risk to do the thing, rather than relying on the system or the institution to do that. This is the same with Benny Shriver, with ICBMs, Admiral Rickover with the Nuclear Navy. It used to be about people. But today, if you were to go to the Pentagon and say, who's responsible for the F-35? I'm not sure they even know. Who is responsible for the F-35? We're, we're building systems by, by committee, rather than trusting the founders and people who are the ones who do it.

• 40:50David Friedberg?

  There's like a proclamation. It's so great. It's, this X, Y, or Z project is built in all 50 states. Like, the objective is, it's, it's being the money Being spread around versus like how do you achieve the objective?

• 41:00Speaker 02

  The F-35 has components manufactured in 400 congressional districts.

• 41:04David Friedberg?

  Right.

• 41:04Speaker 02

  I mean, that's like, that's a political project.

• 41:07David Friedberg?

  We had this A B test with SLS and Starship, right? Like SLS, they had to have subs in all 50 states, but this A B test has been played out.

• 41:15Speaker 01

  I do think there's something about the kind of Calvinist spirit of America that sometimes gets us to misunderstand. You know, we call it the Apollo program, but it was probably, it's really the Gene Krantz program. You know, it's the F-16, but it's really John Boyd's plane. And, and there's like a humility where we'd never want to call it, you know, you wouldn't call it, although maybe the nuclear navy, we kind of do call it Rick Over's Navy. But there's an element of like, it's obviously both things. It's bigger than the person, but actually the starting conditions require the founder figure.

• 41:43David Friedberg?

  So tell me about where we are in the state of readiness. You know, we highlighted some of the statistics, but if you guys were to think about what we need to accomplish, the infrastructure we need to stand up to have production lines that can be turned on to support munitions capacity for conflict in, you know, pick your region. Let's say more than one region around the world. And the U S needs to sustain those conflicts to defend the United States. How far are we from being ready based on what's going on in the investments that are being made today? Across the sector.

• 42:17Speaker 01

  I think the way I think about it is if you thought about this as a spear, the tip of the spear is incredibly sharp. The shaft of the spear needs a lot of work here. You know, the Department of Defense, such a big organization, it's structurally, supply and demand is not integrated. You know, the, the demand side is the real world events that happen in the combatant commands. The, the supply side are what the services and the industrial base built, the man, train and equip, and how you're actually producing that material. And the ability to drive consensus, which is really the beating heart of any private sector company of like, how does supply and demand come together? What's our view of it? Is, is kind of managed with, with great difficulty in the Pentagon. And your ability, your agility to respond to scenarios is, is.

• 43:00Speaker 01

  Weak. That's where we can have a lot more precision because if you can start changing your mind and saying, actually, I thought I needed X Barracudas, but now I need Y Barracudas and Z Furies. How quickly does that take to percolate through the supply base? Instead, we get locked into these like, hey, we've made a decision. The decision really can't be revisited. And then you start, over time, the entropy is like, hey, I have an unexpected bill. Let's just take a little bit of money away from these programs. And everything starts getting down to minimum rate production, which is this idea of what can I produce to just keep the line open, which is not deterrence. That's how we frog boiled our way here. And this is where my idea of like, you got to tie this into consumption. Like, everything you're building, particularly on the munitions side, needs to be consumable

• 43:42Speaker 01

  such that you know you're going to replenish it, such that the primes and the neoprimes all have the demand signal they need to keep going and have a reason to produce them cheaper in order to make more money. My most contrarian idea is like, the cynical view that like, you have the military industrial complex and they're just in it to make money. Well, it's kind of a crappy business. Like, you know, these companies trade at like, less than two times revenue. The problem is, it's not profitable enough, actually.

• 44:05David Friedberg?

  But Trey, Sean said in the past, we have eight days of munitions on hand for a major conflict with China versus 800 days needed. How far away do you think we are to having the supply chain built and the production capacity built to meet that objective?

• 44:21Speaker 02

  Well, I mean, one of the other things Sean just said in this conversation is that there's a high-low mix question as well. Like, there are exquisite systems that are like, the multimillion dollar interceptor missiles. And then you have, you know, dumb munitions, things like bombs that are being dropped and things like that. And it's not the same across that entire stack. You know, there are some munitions that are woefully undersupplied, and we have very low readiness on. And there are others where I actually feel pretty good. From an annual perspective, you know, we're looking at ramping as fast as we can. We just opened Arsenal yesterday to start producing Furies. And, you know, looking out over the next 18 months, we're not taking our foot off the gas. And yet, there's still a run rate capacity that we're running into as we ramp. Like, it just takes

• 45:05Speaker 02

  time to get all these lines stood up. So, you know, if we were to start today... With unlimited cash, I think over the next eighteen months as a country, we could get to the point where we were on track for having a sustainable industrial base. But we're not going to do that. We're going to trickle it out over time and and I think that unless there's real political leadership that steps up to drive this forward, we will likely be in a similar situation for a long time. And so I think we really need to take advantage of this specific moment where there's clearly urgency that is understood by leadership across the administration.

• 45:42David Friedberg?

  How much of the spear is autonomous systems? Is everything going autonomous? Is it just drones or is there on the ground autonomous?

• 45:50Speaker 02

  Right now, well, I would actually argue that like

• 45:53David Friedberg?

  If you were to build for the eighteen month out.

• 45:56Speaker 02

  Yeah, I mean, the wars of today are fought with the weapons of yesterday. That's like just a fundamental truth. And some of our weapons of yesterday are awesome, like B twos are incredible. The bombs that we dropped last summer in Iran, incredible. Like, these are very high-tech exquisite systems. Patriot missiles, incredible. They're very performant. They hit their targets almost every time. I mean, these are great systems. The problem is is that they're incredibly expensive and we can't resupply. Like, we're just, we're way behind the eight ball on that. And so, you know, thinking about the wars of the future, it means that we need to start building these attributable mass systems today so that they're in inventory to be used for those conflicts.

• 46:38Speaker 02

  There are a number of andro systems that are at a readiness level, at a level of deployment, that they're active and being used in combat today. But it's still a very small percentage of the way that the wars are being waged. Over, you know, the next five to ten years, that high-low mix is going to have to shift massively. I mean, this is just like clearly evident in Ukraine. It's clearly evident in Iran. And I think the department is making steps to ensuring that they have a better divide of low-cost attributable systems and those high-cost exquisite systems. But, you know, as I said, it's going to take political leadership to get there. But we have the ability to do it.

• 47:18David Friedberg?

  The reason I ask is I want to talk a little bit about the ethics of technology to war, the anthropic run-in with the Department of War recently. And I think you guys have both talked publicly about this. But Anthropic refused to let its Claude model be used in Maven without human oversight constraints. This is what's been reported, what Emil Michael has said. And the Pentagon labeled them a supply chain risk. Both AI and generally autonomous systems beg the question, what role should humans have and who should have the right to play that role of hitting the kill switch? What's your view on the role of the technology vendor to the Department of War and where you guys draw your line on what your responsibilities are with respect to ethics?

• 48:04Speaker 02

  Well, my view on my responsibility to ethics is a slightly different question than my belief in democracy, which is a different thing. So maybe starting on the democracy point. I believe that the people of America have elected representatives to make really hard decisions about how we engage in combat. Full stop. Fully autonomous weapons are not new. We've had autonomous systems in operation like SeaWiz, which is deployed on naval vessels that shoots down aerial threats fully autonomously. You don't have time to make decisions about, you know, incoming missiles or threats to your ship. You just have to shoot it down. So that's what SeaWiz does. Now, SeaWiz has accountability in the system. There's a person

• 48:46Speaker 02

  on that boat that is responsible for whatever actions that weapon system takes. And I believe that this is the future of autonomous systems, is that just like any other system, whether it's a soldier carrying a gun, they are accountable for what happens with that gun, or, you know, the captain of a naval vessel, they are responsible for what happens with that SeaWiz. All of your autonomous systems are going to have accountability baked in. Now, ethically, how do I think about this? You know, I believe that, you know, what Sean was saying about the first offset, the second offset, and the third offset is, you know, we have, we, as a society, went from like rocks and sticks to, you know, knives, to guns, to bombs. And

• 49:27Speaker 02

  then in, you know, World War II, we kind of plateaued with nuclear weapons. And we all looked around at each other and we said, wow. That's pretty crazy. I don't think we want to make more and more powerful nuclear weapons forever. And so actually, our engagement in combat has come back down the chain. We're, you know, precision-guided weapons, we're shooting non-explosive missiles into windows of apartment buildings, avoiding casualties, unintended casualties. And I think that's really the goal. And if you look at AI as the command center for making better decisions with better precision, with better discrimination, with less civilian casualties.

• 50:08Speaker 02

  This is good. It's actually ethically far improved from just dropping dumb bombs on areas of cities to eliminate military facilities. So I don't think abstention from participating in the building of technology for national security is a morally neutral decision. You are making a moral decision when you decide to abstain. And I am making a moral decision as a private citizen, building a company in this space, that I believe that this is ethically just, and I trust in our democracy to deploy those tools with the interests of the American people at heart.

• 50:39David Friedberg?

  There's a lot that's said about Palantir enabling a surveillance state. We had the All In Summit in September. Alex Karp, your CEO, spoke, and there was a protest group outside protesting Palantir powering a surveillance state. I just want to give you a chance to respond to that, number one. And number two, if you saw that Palantir's tools were being used in an illegal way, where's the responsibility for Palantir as a technology vendor in addressing those concerns?

• 51:05Speaker 01

  It's almost hard to respond to because it's very unclear what surveillance people think we're doing. You know, there's just like a broad, almost maybe an outgrowth of Terminator fear around technology.

• 51:15David Friedberg?

  And I want to get into that cultural question next. I think it's like very important to understand.

• 51:18Speaker 01

  We don't collect data. We don't have any data. It'd be like accusing Excel of being a surveillance tool, right? It's like, this is a way of bringing your own data that you have lawful authorities to collect together to make decisions. Sounds a lot like Excel. But it's, you know, because we are unabashedly patriotic and serve the US military, I think people have a kind of colored view of these things.

• 51:40Speaker 02

  I would argue that it's actually Excel with cell by cell. With much more security. Way more security.

• 51:47Speaker 01

  You know, it'd be, as Karp says, it's the most insane platform in the world to try to do something illegal in because you are going to be caught. You know, like that was part of the idea of how do you enhance privacy and security? How do you build more civil liberties protections in it? How do you have a normative view that enables a democracy to say, these are laws and rules? The system will enforce it. We're not just relying on people happening to do the correct thing. So that's one piece of it. The other piece of it, to come back to this broader point, is that the need for epistemic humility, like one of the, to the point of we have elected officials, they are accountable for these policy decisions. I think at the limit, it's actually kind of indefensible to have a perspective other than lawful use. Because if you are salami slicing the policy, that's actually tyranny by tech bro.

• 52:31Speaker 01

  You know, a small number of people are constraining the maneuver space of a democracy with no accountability to the populace. So I think that's a pretty challenging perspective. And we've been in this perspective, if you go back to how did the Soviets get the nuclear bomb? You know, there's really, there's two sources of treason. One was committed communists like Klaus Fuchs, who was, he was always a spy. But the other were people like Theodore Hall. He was one of the youngest scientists in the Manhattan Project at 18 years old. His brother Edward Hall built the Minuteman missiles. His brother was, you know, kind of a heretic and hero in my terms. But Theodore said, you know, I'm one of the best physicists in the world. I'm probably also one of the best geopolitical strategists in the world. And I think the only way to have world peace is if two countries have the bomb.

• 53:13Speaker 01

  So in 1944, Theodore Hall walked into the Soviet Trade Mission in New York and gave them critical secrets to the bomb. Now Theodore thought he was going to deliver world peace. Instead, every death from communism since 1949 is actually on his hands. And there's no accountability for that.

• 53:28Speaker 02

  Yeah, I think one of the other things that comes up in these, these conversations about powering the surveillance state is this belief that we have policies, but we don't actually want our civil servants to have the best technology to enforce those policies. And it's almost like a lack of belief in the institution of democracy. It's like, you know, traffic cameras, for example, it's like, man, I'm sort of libertarian in some ways. I don't love traffic cameras, but if traffic cameras say, I'm going to send a ticket to every single person that blows through this red light. I don't know, maybe we have to change the policy around red lights if you don't like that.

• 54:01Speaker 01

  I've gotten three speeding tickets in San Francisco.

• 54:03David Friedberg?

  Go from autonomous cameras in the last month.

• 54:05Speaker 02

  Well, they did ramp it up significantly, which is incredible that they're enforcing laws at all. If we're being honest.

• 54:11David Friedberg?

  Here's my ticket and then I'm literally watching the guy while I'm doing three miles over the speed limit. You know, take heroin needles out of his arm and put it on the floor next to elementary school.

• 54:20Speaker 02

  That's not a problem.

• 54:21David Friedberg?

  Probably fine. Yeah.

• 54:21Speaker 02

  But it's the same thing with like, you know, using tech, using tech for better enforcement of tax law or something like that. Like, do you, is what we're saying by criticizing what Palantir is doing, is what we're saying that we don't want our civil servants to have the best tools possible? Because you can have that position. I tend to think that that position is pretty morally bankrupt. But I guess you could have that position, but ultimately I think that's what it is.

• 54:45David Friedberg?

  So scenario play this for me because there's a public perception, I don't know how far reaching it is, that there's some tide corruption between government officials that use technology that's super advanced. That's hard for people to understand and the technology vendors, if you saw government agencies using your technology, either of you in illegal way that you knew broke the law. Do you report it?

• 55:04Speaker 02

  100%.

• 55:05Speaker 01

  Yeah, to the IG. There's an entire mechanism.

• 55:07Speaker 02

  Yeah, there is an IG in every agency.

• 55:09David Friedberg?

  Right. So can just, just explain that for a second. The inspector general, maybe.

• 55:13Speaker 01

  Yeah. So every agency has an inspector general who's an independent organization that you can provide anonymous or non anonymous complaints to. That then have the ability, the statutory ability to do an investigation in an unfettered way inside of that organization, whether it's the Department of War or housing and urban development, like literally every single agency. And this mechanism is used. I actually, you know, in this case, it was weaponized against one of my favorite heretics and heroes, Colonel Drew Kukor, who invented Maven, the founder of Maven. Really? But, you know, people would file complaints claiming that he was hiding illegal immigrants in his basement, a basement that he doesn't really have, you know? But, but all of those things were investigated. Naval Criminal Investigative Services went out to his house and actually looked into these things. So people take this incredibly seriously.

• 55:57David Friedberg?

  Where does the culture come from? The anti-defense tech alignment culture? Is it because of the peace era that we had and folks took for granted national security?

• 56:09Speaker 01

  I think the first schism was really during Vietnam, where people felt like they were lied to about the war. It drove a fundamental schism between academia and defense. And that we've never really healed from that schism. And so there's this, this, this kind of sense, this distrust that's, that's brewed there and kind of escalates into society. The second schism is like the number of people who are prior service or are connected to this community, who actually see these people as humans and have a fully informed mental model of how diligent they are, how the work actually gets done. What do these words actually mean? What is the process like? Is, is evaporated. So then their own fears fill how they think it happens. And it seems like maybe it's happening more in a cowboy way. Maybe it's happening in a way without oversight, that there is no such thing as doctrine.

• 56:53Speaker 01

  Like there is kind of a cartoon version of what's actually happening that I think you're unable to reconcile.

• 56:59Speaker 02

  Yeah, I think if you even look back at what happened with Snowden, you know, what was that 15 years ago now? Something like that. You know, that there was almost no discussion about the investigations that went into like, was the data collection actually abused? And the answer was like, basically not at all. There were like less than 12 documented cases where someone got access to data that they shouldn't have. And it was because of like technology errors, not because of the policies that were implemented. And so, you know, we can have disagreements about whether or not the intelligence community should have collected the data and stored it. But that was, that policy was renewed multiple times by multiple administrations, multiple political parties

• 57:41Speaker 02

  that had the majority in Congress over decades. And so apparently our elected representatives thought that it was important enough to keep in the system. So I think it ends up being this kind of weird policy discussion. But the second point that you make, I completely agree with about like the, the kind of distrust of the institution in, in creating the stories for themselves. I oftentimes go and do guest lectures at Stanford. I always try to ask, like, raise your hand if you have an immediate family member that serves in the military. No one ever raises their hand. It's crazy. Like, at Sanford, there are veterans that come in that go to the GSB and things like that. But in like the undergraduate undergraduate student population, it's incredibly rare for anyone to have

• 58:26Speaker 02

  any connection whatsoever in their immediate family to the military. And I think there's like, you know, some of this goes back to criticisms that people like JD Vance, the vice president, has made about, you know, elites in America and things like that. But there's just this incredible divide that has happened. And we're kind of losing touch with that kind of salt of the earth, middle of the country, you know, veteran community that I feel like was way more present during the Cold War and, you know, the World War II before that.

• 58:55David Friedberg?

  Do you think that there's any external influence that's driving this culture? Are there influences on social media?

• 59:01Speaker 02

  There absolutely are.

• 59:02David Friedberg?

  Ministry media? And maybe just talk about destabilization and the attack vectors. I've seen it in other areas of science. I don't want to spend time on this show talking about it, but there have been traces that I've found on external folks that want to destabilize American science and industry progress. And they create fear and they put out articles and then they go social and they become viral. And suddenly everyone believes it, even though it's not true. Do you see that? And have you actually kind of seen that in the sense of like attacking the tech companies that are now supporting American defense?

• 59:35Speaker 02

  A hundred percent. Even if you go back to, let's stick with Vietnam. The Soviets spent $7 billion in $2026 funding the peace movement, the anti-war protests. Now, there's obviously some, there is an organic element to it, but this is just dumping gasoline on the fire to sow division and discord. And I think in the present day, I think, you know, certainly we see it against Palantir where there's CCP money flowing to organizations that are protesting us for various domestic issues here. It's not isolated. It's broadly a successful strategy for our adversaries to sow division.

• 1:00:08David Friedberg?

  No one will believe it because no one wants to believe that they're being influenced.

• 1:00:12Speaker 02

  Right, but I think Sean's point is exactly right. It's like, it's actually a brilliant strategy. Like, good for them. They are not our friends, they're our adversaries. What would you do if you were in their shoes? It makes a ton of sense.

• 1:00:24Speaker 01

  Do we do that?

• 1:00:25Speaker 02

  I mean, look, we have all sorts of counterintelligence operations operating around.

• 1:00:29Speaker 01

  The modern art movement was really funded by the CIA to undermine the kind of Soviet control of art. You know, and it was broadly funded and it wasn't directed by CIA. But you can see how we have cultural values that we want to inculcate and spread.

• 1:00:45David Friedberg?

  Do you think we have a shot at recasting the defense industry, the tech industry that's addressing defense, and aligning it with a notion of patriotism? And what is it going to take to make that happen?

• 1:00:58Speaker 02

  I don't know, maybe writing a book. Mobilize.

• 1:01:01David Friedberg?

  Oh yeah, you have a book.

• 1:01:02Speaker 01

  That's right, that's right. I'm trying to do exactly that. You know, look, if we look at a clear-eyed sense of the world and how much deterrence we've lost, you know, you could really say like, maybe World War III is already started. And 10 years from now, we'll look back and be able to perceive that. Right, and I think you don't need literally everyone to view this. But if you can create a more clear-eyed view of what's at stake here, not only for you, but for your children and their future, I think you can get people to show up and participate. And this has been America's story all the time, you know? And usually, when we start these things, we are the underdog. All periods of American greatness have started when we realized that we're the underdog. We were the 17th largest army in the world at the beginning of World War II. You know, and what did a ragtag bunch of farmers and random tradesmen have

• 1:01:47Speaker 01

  taking on the world's largest army in the British during the Revolutionary War? You know, and I think having some clarity about what's at stake, what the counterfactual is. It's so easy, when you're successful, to kind of let the nihilism grow and say like, look how imperfect we are. There's like, the self-loathing creeps in. And this is where I take, coming back to your point on the legitimacy of our institutions, like, should these institutions work? Do they deserve the best software? I mean, look, if they're public or private, you can't have doors falling off planes. You know, are government organizations need to provide the basic services they've signed up to do without fraud, without corruption in an efficient way? And the reason is not just an aesthetic, it's like, in the absence of that, it breeds nihilism. And the younger generations look at that and say, you know, we should just tear all of this down. And things will absolutely get worse in a world that looks like that. So.

• 1:02:33Speaker 01

  It's incumbent on us to wake up every day and fight for the legitimacy of these institutions, to make them more functioning.

• 1:02:38David Friedberg?

  America's story is never written. Every chapter seems to be a whole new arc, and we're in one right now. There's a rising socialist movement in the United States. Can you guys just comment on how much you think that that socialist movement, cast with whatever term they want to use, is going to affect our capacity for defense and resiliency going into the next decade, particularly as our adversaries are rising?

• 1:03:03Speaker 01

  Well, the argument I've always made is I think our greatest threat as a nation is not homicide, it's suicide. And it's in this vein. It's the internal discord, it's the division, it's the self-loathing, it's, you know, things like the socialist movement, which I think are symptomatic of this internal discord and ensuring opportunity for our people to the point of a functioning elite. If you were to go backwards and think about the root cause, like, maybe we don't have an elite that cares enough about the prosperity of the American people. And we've made decisions through globalization. We were told NAFTA was going to be a great thing, that actually, if you lost your job in manufacturing, why don't you just learn how to code? You know, there's a certain sort of callousness in that. And, you know, I'm not an unabashed free market, and I'm clearly not a communist, but there's

• 1:03:47Speaker 01

  a sense where the decision on the margin actually really does matter, and that comes down to leadership.

• 1:03:51Speaker 02

  I think one thing that makes me a little hopeful is that socialism literally doesn't work. And so, you know, you look at, you know, what happened in San Francisco even, where, you know, we elect Chesapeake Dean as the district attorney, and then we're like, oh, wow, this is not going well. Recall him. We have the Board of Education.

• 1:04:08David Friedberg?

  Rooted in a selling point of empathy, fundamentally.

• 1:04:12Speaker 02

  Yeah. What happened with the Board of Education getting recalled, you know, Daniel Lurie coming in as the mayor. You know, we felt like we kind of went into this valley and sort of hit rock bottom. But I do think that people eventually realize that it doesn't, it just fundamentally doesn't work.

• 1:04:26David Friedberg?

  Seattle and Washington State are likely going to lose a large number of their biggest employers, and as that happens, they'll come through on the other side, probably, it might take them seven to 10 years to get there.

• 1:04:37Speaker 02

  Yeah, it might be painful, and it might take them a long time, but I think they'll eventually come to their senses.

• 1:04:41David Friedberg?

  What do you two disagree on?

• 1:04:44Speaker 02

  That's a great question.

• 1:04:45Speaker 01

  Yeah.

• 1:04:45Speaker 02

  Um, we actually, I'll be honest, we bickered with each other quite a bit at Palantir. Um, and usually it was Sean being right about something and me taking a long time to come along to his point of view. Um, but, uh, yeah, I think, you know, any of these cultures that are like well functioning are rooted in debate. Um, and, you know, eventually.

• 1:05:06David Friedberg?

  But you're avoiding my question. Well, whether it's, whether it's actions or outlooks.

• 1:05:12Speaker 01

  Whether you should show up to your interview at a tech company in a suit.

• 1:05:16Speaker 02

  Yeah, well, no, I will say this because it actually is part of the story of Andro. I thought that it was a bad decision at Palantir to be as quiet as we were. I thought that we needed to get out there and tell the story so that there would be data that says things like what Sean said about like, we don't have any data. We are Excel. Um, and we had a very kind of quiet, reserved comms strategy. Um, and we went back and forth on that a lot. And when I started Andro, I was like, you know, all the positive things we learned about, uh, doing business with the government from Palantir, the one lesson that I learned that we didn't implement at Palantir is we're going to go out there and tell our story. Um, and I think that's worked for us incredibly well. And I'll be honest, I think Palantir has come along to my, my side of the, of that debate.

• 1:05:59David Friedberg?

  And last question, if we don't do things right, what does 2040 look like? And if we do do things right, what does 2040 look like? Economic and defense.

• 1:06:08Speaker 01

  Well, the, the economic part is, I think, the, the critical one because national security is not an end unto itself. It's a means to an end and that, that add end is economic prosperity, the prosperity of the American people. Um, I, you know, I think no country has done more to develop the world. Like, how did integrated circuits and microelectronics get to Southeast Asia? We sent them there. Yeah, we benefited in terms of trade there, but you know, like which other winner in a war, spent their own capital to rebuild the conquer, conquered, you know, in Japan and Germany. And, and now you have this stability as a result of it. So when I think about what could go wrong is you actually have a Chinese century that we never recover from, that literally everyone in the world is a vassal state to China. And might makes right in their sort of world, you know, and we, we shouldn't forget, it's like, it's very clear, even in the present moment, that for the CCP, it's.

• 1:06:53Speaker 01

  It's not enough for China to prosper. America must fall. That's an explicit part of the strategy. Look, it is a business decision if you want to buy American or Brazilian soybeans. I actually don't begrudge you one iota which decision you make there. It's an entirely different decision when you're smuggling agricultural funguses into the US so that we can't grow soybeans. That's the sort of zero sum frame that I think 2040 will look like if we get this wrong. And if we get it right, I think what we actually see is a massive reindustrialization of America, followed by the West. We see a thriving middle class, which I define qualitatively as a middle class that believes their children's future will be better than their future, which is something that I feel is a fundamental promise that's broken down over the last 30 years or so. And a belief in our institutions, once again.

• 1:07:35Speaker 02

  Yeah, no, completely agree with all those points. I think there's a big component here around education that we haven't talked about as well, where we figured out a way to educate and successfully enter our young people into a marketplace that needs them and that benefits from their services. And I think that we haven't quite nailed that. But I do think that the reindustrialization point of this is going to be kind of the central point of making sure that China's many, many decade Belt and Road strategy is not going to put us in a position where we literally just can't do anything.

• 1:08:09David Friedberg?

  Do we need military and industrial primacy? Or can we operate in a multipolar world where the US can share influence and economic prosperity with China, perhaps Russia, perhaps one or two other nation-states?

• 1:08:25Speaker 02

  Well, the challenge with not being the leader is that you don't get to set the terms of engagement. And so I think the benefit that we have had since really the end of World War II is that we've had the primary seat at the table to say, this is how we're going to do, you know, semiconductors. This is how we're going to do supply chain. This is how we're going to protect trade lanes. And I think the moment that you step back from that and someone else has all those incentives, you start playing the rules of their game and it doesn't stay multipolar for long.

• 1:08:54David Friedberg?

  Well, I really appreciate the two of you being here, Trey, Sean. Thank you, guys. This has been great.

• 1:08:59Speaker 01

  Thank you.

• 1:08:59David Friedberg?

  Thank you, guys.