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00:00I've been looking forward to this a lot. You and I talk often, but it's always pretty fast and on
00:06a specific piece of news.
00:07But you are the executive chair of Anderil, and then you have this complete even split with being one of
00:15the 12 investing partners at Founders Fund.
00:17And we probably get to talk about the Founders Fund part a little bit less, I'd say.
00:23So we'll try and do an even split with this. You're a busy guy.
00:27You know, I think the stated intention of our conversation was to probably talk about defense technology in the current
00:35context of the war in Iran.
00:38To start with there, and explaining the basics of what Anderil is, you know, what role has Anderil played to
00:46date in that conflict or not?
00:50And what is the current role of Anderil as part of the defense apparatus of this nation?
00:58I think that's a big question for you to kick us off with. I'll sit back and you take it
01:02away.
01:02That's really meaty.
01:04Yeah, so when we started Anderil nine years ago, almost exactly, actually, June 6th of 2017, so we're coming up
01:13on nine years,
01:14the idea was that, you know, we have this defense ecosystem that's dominated by a handful, five or six large
01:24defense companies
01:25that have been, you know, kind of a consolidation of the entire defense industry that existed during the Cold War.
01:30And the capabilities that we have are really incredible.
01:33I mean, we have these amazing, exquisite defense systems like, you know, four-class aircraft carriers
01:39and the Joint Strike Fighter, the F-35, the Patriot missile.
01:43These platforms take decades to develop, build, and hundreds and hundreds of billions of dollars to sustain.
01:51So, for example, like a Patriot missile, which was initially developed in 1969,
01:54this is, like, kind of the creme de la creme of interceptors for counter-air capabilities.
02:01You know, this is like a, it's a 70-year-old system at this point.
02:06Every missile costs millions of dollars, literally, like, between two and a quarter to five million dollars.
02:11On a per-unit basis.
02:12Per-unit basis.
02:13And these were built to shoot down MiG-29s.
02:16You know, when you're shooting at an airplane that costs tens of millions of dollars,
02:19you can afford to shoot a $3 million missile to do that.
02:22This is not the nature of threats as they exist today.
02:26And so, Anderil, when we came on the scene, our goal was to figure out ways that we can introduce
02:32software autonomy
02:35on the production side of the house, as well as on the kill chain, the tactical side of the house,
02:40to massively reduce the cost of engaging with a modern threat profile.
02:45And so, when you look at something like the war in Iran,
02:47most of the threats that we're seeing are low-flying cruise missiles or Shaheads,
02:55which is sort of like a loitering munition.
02:57These are, you know, generally pretty slow, but they're, you know, mobile, dynamically controlled.
03:03You don't want to shoot a $3 million cruise missile at a $200,000 weapon.
03:09The economic trade-off is bad.
03:11And so, you know, we originally started working entirely in kind of the surveillance reconnaissance space,
03:17and now the kind of plurality of a lot of our work is actually related to air defense,
03:23lowering the cost of engaging with threats that are incoming to not only the United States,
03:27but also our allies and partners in the regions around the world where these threats are most present.
03:31That's an interesting point on not just the United States,
03:35because there are deployments, Vanderbilt Technology, in the Gulf, as an example.
03:43You yourself, you know, you have been and will go very soon to the Middle East.
03:48How does that work in practice, being an American company that serves the U.S. military
03:56and the Department of Defense, but also allies?
04:02You know, you must spend a lot of time meeting with the defense apparatus and governments of other nations.
04:10Right. Yeah, I would say it's like one of the most common questions we get on ethics.
04:14These are important questions from new employees, younger people that are, you know, talking about joining.
04:20You know, they'll lean forward very dramatically and say,
04:22how do you make decisions about where we sell our capabilities?
04:25And I'm like, well, it turns out there's this whole thing called foreign military sales.
04:28Actually, the United States government decides where our things get sold.
04:33So those are very clear rules.
04:35It's not like I'm making a decision about, like, oh, I really think we shouldn't sell to this country.
04:39It's like, yeah, the government has already kind of pre-decided that that's the case.
04:43But, yes, you know, it is important for U.S. foreign policy in a bipartisan way.
04:49This is not a partisan issue.
04:51In a bipartisan way, it's important for U.S. foreign policy to provide capabilities to our allies to make sure
04:59that they are fully integrated into our joint operations,
05:02which is really important, but also that they have the capabilities to defend themselves utilizing U.S. production that may
05:09or may not exist in many of these countries.
05:11Like, they don't, you know, our allies, many of them, are not going to fund and build a fifth-generation
05:17fighter plane on their own,
05:19nor are they going to develop really complex, multimillion-dollar counter-air missile systems.
05:25And so this is a role that we play in the ecosystem is to go out and say, you know,
05:31to countries like Ukraine or, like, you know, the United Arab Emirates or Saudi Arabia or Qatar,
05:39hey, the United States has the capability.
05:40We want you to have that capability as well.
05:43And this is how we're thinking about the cost curve for deploying these capabilities
05:47and kind of the layered approach that you can take to reducing the cost per intercept or whatever it is.
05:53Now, the tricky thing about all this is that, you know, there's a big difference between being a startup that
05:59is designing and developing a capability,
06:02which is great, and there's a lot of really interesting efforts that are happening there,
06:05and being a producer of those capabilities.
06:08And this has really been the name of the game for Andrel over the last few years,
06:12is transitioning out of just being, like, a really innovative technology company
06:16and focusing almost all of our effort on how do we produce at scale
06:21in a way that allows us to not only supply the U.S. customer, which is our primary customer,
06:25but also be supportive of that foreign policy mission and supplying those same capabilities abroad.
06:30So this is really about manufacturing and production more than almost anything else.
06:33That takes us to Ohio, right?
06:35So in January of 2025, you guys phoned me and said, come to Ohio.
06:40This is where our next facility will be, Arsenal 1.
06:45Remind me, there's a reason there's a 1 next to it.
06:48We should get to that in a second.
06:50But fast forward present day, production is underway.
06:55You built that place incredibly quickly.
06:57What is it doing?
06:59And why Ohio, I think?
07:01Why did you settle on that state and that specific location?
07:06Yeah, I mean, again, transitioning from a startup where you're hiring a bunch of very well-compensated software engineers
07:14and things like that to build things to a world where we're producing with a very different type of labor
07:21force,
07:21a very different type of skill set that's required.
07:24We recognized that we needed to go to a place where we were going to have the ability to scale
07:28our footprint, literally.
07:30That there was going to be enough workforce, skilled labor, that had manufacturing experience to fill out that footprint.
07:38And in a place that we felt like we could get the on-the-ground support from the local government,
07:45from the economic development organizations to do this as rapidly as we possibly could.
07:51You know Ohio well as well.
07:53I know Ohio well.
07:54It didn't help.
07:55I want to be clear.
07:56I'm from Ohio originally.
07:58When we narrowed it down to our last three locations, I sort of recused myself from the process because I'm
08:04like,
08:04man, if we pick Ohio, everyone's going to think I put my thumb on the scale.
08:08And then at the launch event that you were at, Governor DeWine got up and he said,
08:11first off, I'd like to thank Trey's mom.
08:13And I was like, oh, man, you're blowing the whole narrative here.
08:20But, yeah, I think Ohio is this incredible place for manufacturing.
08:25You know, it has a long, long history in manufacturing, just in my family alone, between my uncles and my
08:32grandparents, grandfathers.
08:34We have worked at Ford, General Motors, Frigidaire, National Cash Register, Luxor Exotica.
08:42I mean, there's a tremendous history of manufacturing.
08:45But much of that evaporated.
08:48You know, we had a sort of a bipartisan policy around globalization for decades.
08:52And it's really easy from sitting on the coast, whether you're in New York or San Francisco,
08:56to kind of forget about what happened in the middle of the country during that 20, 30-year run starting
09:02in the early 90s.
09:03But every single one of those companies that I just mentioned no longer has factories in Ohio.
09:09And there's a lot of people that have been fighting for their lives to find employment.
09:15And some of that's coming back now.
09:17I think DeWine's administration has done a great job of incentivizing companies like Endural to come in to build new
09:23factory campuses.
09:24So it's kind of like catching back up.
09:27There's some wind in the sails.
09:29And, you know, we're really excited for what we're going to be able to do there.
09:32And Aril has had growth in lots of different ways, right?
09:36The valuation that you've grown the company to, but also the footprint.
09:41We're short on time.
09:43So I want to just address the Arsenal one thing.
09:46It indicates that there is going to be an Arsenal two and an Arsenal three.
09:50Is that in the United States?
09:52Or is it time now where Endural says, okay, well, if we are serving Western allies,
09:57we should maybe manufacture locally to where our technology is deployed?
10:02I think it's both, actually.
10:04You know, Arsenal one is primarily going to be focused on production of Fury,
10:08which is our collaborative combat aircraft, basically an autonomous fighter plane.
10:13Initial units will be rolling off the line this summer.
10:16So that production is already underway in the first 800,000 square feet that we have up and running.
10:23Later this year, we're going to start doing Barracuda, which is our low-cost cruise missile,
10:27and Roadrunner, which is our reusable interceptor missile.
10:30Both of those will start coming out of Arsenal one in Ohio as well.
10:35But, you know, there are other factories that are going to come online.
10:39Some of those are domestic shipyards that we're building out.
10:42There could be additional production facilities in the United States.
10:45Right now we have 16 production facilities across the United States,
10:48which some of those are being consolidated back into that Ohio footprint.
10:50But to your point, internationally, you know, the United States is not the only country that has a national prosperity
10:56agenda.
10:57Obviously, all of these countries want to see increased investment in their, you know, local economy.
11:04And so we feel very aligned in making sure that as we go in and we do some of these
11:08larger deals
11:10to bring those capabilities to bear with our allies and partners,
11:14we want to build that local production piece to feed back into their economic growth as well.
11:18Final one on Anderil, because we've probably spent more time on Anderil than I expected.
11:23But a lot of people that know Anderil, they know Palmer, lucky.
11:29You know, you're the executive chair.
11:32Palmer is CTO, the co-founder.
11:34There are other co-founders.
11:35And then Brian is the CEO.
11:37And I mean this with massive respect, but I guess Brian, until quite recently, got less of the limelight.
11:45How does it work between the three of you and Matt and others that are running the company?
11:51How do you divide responsibility and decisions?
11:56Yeah, you know, Anderil, because of the way that we approach our business, we have many business lines.
12:02We have dozens of SKUs, different products that we sell.
12:06And almost every single one of those is a scaled startup in its own right.
12:10And so there's no way that this company could be run with a kind of a very light or thin
12:16executive team.
12:17We've focused really intentionally on building as deep of a bench as we can.
12:23And that has been, honestly, the most important asset to the company since the very beginning.
12:28So across the four co-founders, we've kind of divided the world up into pieces.
12:34And we each have different chunks of accountability.
12:38You know, Palmer is incredibly talented at what Palmer does.
12:40You know, the Palmer show, as many people who have interacted with Palmer know.
12:45Brian is naturally more introverted, but he is the boss.
12:49Yeah.
12:49Like, he is the chief executive officer.
12:51His say is the final say.
12:53And it is actually required, really, Palmer and I pushing him out the door a little bit to say, look,
12:59you need to be out engaging.
13:01Because his natural tendency as an engineer, he's the most brilliant software engineer I've ever worked with in my career.
13:09His, you know, personal preference would be, I just want to sit back and work with the SVPs that run
13:14the product lines.
13:14But I think it's really important to get him out there.
13:17And, you know, Matt Grimm, our other co-founder who's the COO, he runs the entire operational side of the
13:23business.
13:23And, you know, that is an incredibly hard job.
13:27There's no way I would want to do that.
13:28But I think having those really clear swim lanes is really important.
13:33You, Trey, do this fascinating job of evenly splitting your time between Anderil and being one of the investing partners
13:41at Founders Fund.
13:42A much better job than I've done.
13:43I've done three quarters of this on Anderil.
13:45But in the time we have left, what is that like for you at being one of the investing partners
13:51at Founders Fund and just straight away in a firm that's preparing to be one of the big beneficiaries of
14:00an IPO of SpaceX?
14:02Yeah, you know, I think there's all sorts of different ways you can approach venture capital.
14:07I think for some people, they really want to focus on kind of growth and doing diligence.
14:12There's other people that are pure intuition that are just like, you know, measuring founders to make early, early stage
14:19bets.
14:20The kind of strategic slice that I've found that works best for me, given my own personality, is I'm an
14:27operator at my core.
14:28Like, I'm much more comfortable working at a startup than I am working at an investment firm.
14:33But that's actually a really interesting lens into the startup market because I have exposure every day to what software
14:42are we using that works?
14:44What are the strategic challenges that we're encountering as it pertains to the rise of AI?
14:48Like, these are questions that I'm dealing with on the company level.
14:51And so when I have the ability to interact with other startups, I think I have the ability to kind
14:56of identify areas where, wow, that would actually be really helpful.
15:00Or I've seen three or four other things that approach this in a way that I think is better.
15:05So, you know, everyone has their own set of advantages.
15:08I feel like doing both in parallel has been a great asset both to Founders Fund and to Anderil.
15:14Is there a Founders Fund SpaceX thesis that, in aggregate, across all the investing partners you hold, or is there
15:22a trade thesis that you apply?
15:24I mean, we all have very different opinions on every portfolio company.
15:28We are a very debate-driven culture.
15:32I think SpaceX is kind of a unique encapsulation and a microcosm of the way that Founders Fund works because
15:38we invested very early, like around Flight 2.
15:41Okay, 2008?
15:43It was way before my time, like six or seven years before I joined the fund.
15:48And at that time, obviously, it would have been crazy to think about, like, you know, the Starlink as a
15:54part of the business.
15:54And even when we made the, you know, the Starlink era bets in SpaceX, it would have been very difficult
16:00to imagine how AI would have impacted, you know, data centers in space and all these other things that are
16:05going on.
16:05And so now, you know, you look at SpaceX and you're thinking, like, wow, like, what is Elon and the
16:11team working on pertaining to, like, getting humanity to being a Kardashev Type 2 civilization?
16:17These weren't the questions we were asking when we made the original investment, where it was like, can we get
16:21a rocket into space?
16:23It's very different companies at that point.
16:25So you have to, like, refresh in real time.
16:27Constantly, yeah.
16:28The thesis refreshes.
16:30I mean, how much does the venture capital industry need this IPO?
16:35I think what's interesting about the Founders Fund investment is not just how early it was, but when it continued,
16:42it was across several funds.
16:43You know, it's a big moment for the LPs as well.
16:47You know, how much are they kind of banking on this and have been waiting on this?
16:51Well, yeah, we have a SpaceX investment in almost every fund, both across our venture funds and our growth funds.
16:57So there's a ton of exposure for LPs that were with us since the very beginning and even the ones
17:01that joined us very recently.
17:03I think, you know, the core lesson that everyone has learned from this experience is never bet against Elon.
17:10It's just a bad idea.
17:12And, you know, I think getting the opportunity for people to see liquidity that they've been hanging on to for
17:1818-plus years is a tremendous opportunity to see some of those gains and also reinvest those in, you know,
17:26whatever the next SpaceX is going to be.
17:28Very quickly, the firm has 12 investing partners.
17:33Could you just explain how it works with Peter?
17:36Peter right now is in Argentina, but, like, does the firm do the classic Monday morning meeting thing?
17:41Does he Zoom in?
17:42Are you constantly, the 12 of you, talking to each other?
17:45I think people, there's still a mystique there about how it actually works.
17:49I'll be honest.
17:49There's still a mystique to me.
17:51I'm not really sure how it works either.
17:53Peter is, you know, an in of one.
17:56He is a very interesting personality.
17:59His location is always, it's like a point of frequent conversation that I don't really understand because he's as accessible
18:07as he's always been, regardless of where he is.
18:10You know, for anyone that's read his book, Zero to One, you can kind of imagine how that would translate
18:14to a venture fund.
18:16You know, Monday meetings, for example.
18:18We don't do Monday meetings.
18:19Why don't we do Monday meetings?
18:21It's not because we're lazy.
18:22It's because when you create a process, a tracking system for how you move something from step one to step
18:28two to step three, you end up making relative rather than absolute judgments.
18:32So you're like, well, this is the best company I met with this week, so I'm going to bring it
18:36to the partnership.
18:37And then they say, like, well, this is the most interesting company that we as a fund have seen this
18:42month.
18:42And so by the time it gets to the end of the process, you're like, well, it's made it this
18:46far.
18:47Maybe we write a small check.
18:49And there's just, like, not a lot of conviction that's built into that.
18:53So we have created a ton of friction in the process of getting a deal through because we have no
18:57standing meetings.
18:58And so if you want an investment to be made, you have to go and wrangle all of the other
19:03people that are required to get that deal done.
19:06And you mean internally with each other?
19:07Internally with each other.
19:09And any one person can basically torpedo a deal.
19:11And so you have to go charging in as hard as you can with really high conviction.
19:16And what that means is that we make, as a fund, significantly fewer investments by number, not by dollar amount,
19:24than any other venture fund of our size.
19:26But we're highly, highly concentrated into the bets in the fund.
19:30So, you know, call it 40% of every fund is concentrated in just a couple of companies.
19:35And I think that really is because we've created an enormous amount of friction.
19:39It's just really hard to get anything done.
19:41And I think that really is because we've created an enormous amount of friction.
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