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- [00:01]
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- [00:46]
Ed Elson
Welcome to the Prof. G Markets Founder Series. I'm Ed Elson. For decades, the defence industry was dominated by a small group of legacy contractors. Companies like Northrop Grumman, Lockheed Martin and bo. They built the aircraft, missiles and weapons systems that defined American defense. And for years, Silicon Valley largely stayed away. That is starting to change. A new generation of defense startups is challenging those incumbents competing for Pentagon contracts with a software first approach and building AI powered systems designed for modern warfare. And their systems are being used today on battlefields in both Iran and Ukraine. So we wanted to speak with one of the founders leading that transformation about how AI is reshaping the defense industry, where we should draw the line when it comes to automating warfare and what it means to entrust America's national defense to a new generation of technology companies. Here is my conversation with Brian Schimpf, co founder and CEO of Andura. Brian, thank you so much for joining me on the show. It's great to see you.
- [01:57]
Brian Schimpf
Thanks for having me on.
- [01:58]
Ed Elson
So you are the CEO and the co founder of what I think people would agree is one of the more controversial startups in America. I eventually want to get to how you think about Anduril's role in national security, in geopolitics and technology. But before we do that, let's just rewind the clock to June of 2017. You and a handful of founders, including Palmer Luckey, who people may know as the founder of Oculus. You have an idea for a defense tech company. Tell us the origin story of Andrea.
- [02:37]
Brian Schimpf
So several of the co founders. So Matt Grimm, Trey Stevens, we'd been longtime friends and had worked together for quite some time. And then Trey had left to go do investing, working at Founders Fund, looking for a defense company to invest in. And at the time, right, this was 2015, 2016, nobody was touching defense in Silicon Valley. And so we'd been Talking for years about doing this idea of, you know, bringing the best in Silicon Valley technology to the Pentagon. And, you know, it seemed like something that was, you know, some massive opportunity, massive impact on the mission side and just nobody was willing to touch it. And so when Palmer was out of Facebook, he was like, all right, let's go. And we've gotten to know him over the years as well. And so it kind of was this very unique opportunity in terms of the team, the size and the ambition of what we were trying to do. And the fact that just nobody would do was just too controversial at the time was actually, I think, a huge advantage for us in terms of being able to work on this problem.
- [03:49]
Ed Elson
Why did you guys want to do it? Why did you guys want to go to that place that many investors and technology founders didn't want to go to?
- [03:57]
Brian Schimpf
So I spent probably about a decade working around the national security space. And when you big part of the motivation is when you meet these folks working on these problems, they are true believers in what they are doing. The mission is very visceral to them, very real. And providing these soldiers, sailors, airmen with the right capabilities just felt like something that the idea of just not doing it and saying, too bad, you just get what you get. It just didn't make sense to me. And I think my other view of this has been the goal of the company is deterrence. The goal of the company is to not get into a conflict. So why do people get into these wars they think they're going to win? The history of warfare is often these things are, you know, very. Whatever your political aims were at the beginning, it's often quite unsatisfying. You don't quite get where you wanted to go. And so military power, you know, the idea is you want to make it clear what the outcome of these conflicts will be. You want to make it clear that, you know, use of force probably will not succeed and that we want to provide our allies in the United States with the best capability possible to make that very clear. So 2017, it was a very different time, right? We just had not had significant large scale conflict in a very long time. And so it was sort of hard for people to get their head around that this could be an issue. Fast forward nine years, it's a different world, right? We've got multiple hot wars in Europe or we've got kind of Russia, Ukraine. We've got everything going on in the Gulf, which has been persistent and will be for a long time. For better or for worse, India and Pakistan, Cambodia and Thailand, lots of kind of aggression in the South China Sea. It's a very different time. And I think the understanding that hard power is a backstop for all the other peace and stability that you want is I think, becoming more clear to folks.
- [05:59]
Ed Elson
I want to get to that in a moment. But just thinking about those sort of those early years when you were just starting up, I mean, part of the big idea was we're going to take the Silicon Valley ethos and the Silicon Valley culture and we're going to bring it to the national defense conversation. And I think that the, on the one hand, the great thing about that is that this is where all of the futuristic thinking is happening. This is where the technology is being built. On the other hand, the criticism of Silicon Valley has been this move fast and break things mentality that was, you know, popularized at Facebook, which a lot of people say kind of works because these legacy institutions, they move too slowly, they're too sluggish. But when it comes to weapons, you know, lethal devices, some would argue that that's not something that we should be bringing that ethos and that culture and mentality to. What is your response to those concerns and how did you think about that in the early days of Anduril?
- [07:01]
Brian Schimpf
I think a lot of the meta lesson from Silicon Valley from the last 20 years has been going faster is more important than thinking. You have relatively few decisions you can't iterate your way out of, and just the speed of learning trumps any sort of quality of thought you had up front. That's just not true in certainly a hardware world and especially in a defense world. So in a hardware world, you make these decisions around what you're going to build, how it's designed. We gotta ship a product that survives for 10, 15 years, turns on and works. It's gotta work in just incredibly difficult conditions. And the cost of iteration in a hardware world is quite high, right? Both in terms of actual dollars out the door, but just timeline, right? Like if you've got parts that take three to six months of lead time, you don't get to that many iterations before you want to ship. And so the quality of thought, the foresight you have to have around these things, the level of engineering and analysis is quite different. And even as you extend that down into the software side, when you start talking about safety critical systems controlling an aircraft, it's a different type of coding, it's a different type of operating. And so we've tried to blend the cultures as effectively as we can now one of the pieces is that being rigorous, being disciplined is not the same thing as going incredibly slow. You can still do this efficiently, right? Like Elon has proved this out in a number of different cases. You know, I think we've proved this out in a number of different cases is that you can do that engineering quite rapidly. You can do your homework, you can really assess, you know, are these systems going to work and have a rigorous, you know, kind of testing and evaluation process. But that doesn't have to be 10 years long, right? That can be, you know, kind of measured in a much shorter duration in months. And so, you know, we've, we've tried to blend the two cultures as effectively as we can, and I think we've done quite a good job with it. But we kind of reject the idea that this has to be a slow
- [09:05]
Ed Elson
and lethargic industry just so that everyone knows what kinds of products you guys are making and manufacturing. I mean, you started with surveillance systems, then you get into kind of autonomous software, underwater vehicles, drones. I mean, take us through the evolution of Anduril's technology and what is it that has made your product so compelling to clients like, you know, the Pentagon, Department of Defense, basically the government. What has been the timeline of that technology?
- [09:35]
Brian Schimpf
So we started out working on a lot of things around border security. And this is one of the first areas we worked on where when we started out, we believe that modern technology, particularly, you know, computer vision, sensor fusion, how you would network all these systems together, would give the ability to make what is effectively a long range nest camera, right? Like it tells you, hey, here is a person walking or an animal or a. And gives that awareness to border security, border patrol officers, so they know what is going on. And this has been used, you know, we have maybe two thirds of the southern border covered now. It's been extensively deployed, it's working quite well. And it's just providing that awareness of what is actually happening. You know, we've had a huge amount of support on this, you know, over the years. And you know, from there we extended into counter drone technology. So this was things like, you know, great, we've got this technology that can detect things on the ground. How do we upgrade the radar, upgrade the cameras, add in some additional sensors so we can very robustly identify and track any drone incursions that are happening. And then it got to how do we defeat those? So we worked on a variety of jamming systems and surface to air missiles. So we have, you know, both kind of low end versions of this with our Anvil system which deal with, you know, kind of quadcopter threats through to higher end versions that deal with, you know, some of the Iranian drones you're seeing today. And then we've really expanded, you know, from there. It was a lot of autonomous platforms. So this was everything from smaller drones into, you know, we did a co development program with the Royal Australian Navy, make a school bus size autonomous submarine. We won a competition to do a loyal wingman fighter jet. So this is something we, you know, beat out Lockheed, Northrop and Boeing. So us in General Atomics are building the Air Force's next generation autonomous loyal wingman. It's incredibly cool project going really, really well. That was kind of a turning point for us where then we're proven on these high end programs, we could design and build aircraft, we could do the autonomy software to power it. You know, we've built up a number of sensors over time and since then we've seen a huge expansion in what we're doing. Everything from space through to, you know, a very large portfolio of missiles and a variety of weapons. Which you know, I think was timed with the realization of some of the production challenges that are in the existing industrial base. We really just kind of expanded out year over year on the sets of problems we're working on. And I think, you know, there's a couple of cross cutting things. So one is from that software layer we've really thought about what does the future of this look like. You are going to have thousands of systems on the battlefield, be it sensors, surveillance drones, strike munitions, soldiers, you name it. The battlefield in the future is much more distributed, much more complex, with a huge amount of information flowing in. So we built our Lattice software to network everything together, to fuse all that information, to apply AI and machine learning at the edge. And that's worked incredibly well. So now when we start a new program, you can bring to bear a huge suite of sophisticated technologies that make these systems very, very smart. And I think the second part of this is we've really focused by necessity on just execution and delivery. I think one of the most scarce things really in any industry, but especially in defense, is just do what you say you're going to do, like actually just delivering and doing what you said on time, on budget. That's quite rare. And we have a track record of standing behind that. When we sign up for something, we make it work, we make it go. And I think that reputation has served us well and our pattern of delivering very well. Really what has accelerated us over the years. And now we're moving into a phase where we've won all these programs, we've built them all, built all these systems. We're really seeing massive ramp in production and manufacturing scale. And that's, that's the sort of current era we're entering into.
- [13:45]
Ed Elson
Just looking at the financials Today, you did $2.2 billion in revenue last year, targeting $4.3 billion this year, so almost doubling. And as you say, as you said earlier, this is coinciding with a very different and seemingly more unstable world where we have an increase in conflict in the Middle east, in Israel, in Iran, we have the conflict in Ukraine. And it does seem as though, you know, when the world becomes less stable, anduril's business improves. And so I'd be curious to hear how you think about this dynamic. Does it concern you? Does it create, I don't know, some personal conflicts and business conflicts that you kind of win when the world gets worse in some ways?
- [14:35]
Brian Schimpf
Well, I think the question is how do you stabilize the world? And you know, from our perspective, you know, you have a lot of different trends occurring. You know, one, there's a technology change, right? So you've got the ability for nations, you know, historically making like a cruise missile was something or ballistic missile, that was something very few nation states can do. The degree to which that has proliferated is massive. Right. You see what Iran has done, the number of other nations who have access to this technology, it's, you know, highly destabilizing. You've got the ability to do ubiquitous space based surveillance and a relatively low price point. Right. And so nations are able to understand everything that's going on. And you know, obviously you've seen with Ukraine the rise in drone warfare and sort of these, you know, smart systems makes it very, very a dangerous time. Right. So the technology shift has radically shifted. Warfare adversaries are going to see that as an advantage while our allies have not yet caught up, don't know how to defend it. And then the other side of this is you have a shift in US posture where for a very long time the US was so dominant, so clearly ahead on military technology, that the idea that you could even try something, you know, combined with a fairly interventionist US policy meant that if anyone started conflicts, the US would come in, stabilize the system and say, no, we are not doing this right. And so there was sort of this Pax Americana period, was a very long time. We relied on it in all sorts of subtle ways that you're starting to See erode. I think people forget that before World War II, you couldn't ship anything on the high seas. It was just piracy. It was madness. The US Navy and the allied navies stabilized the system to give us this period of global trade and prosperity that we've all been benefiting from. So the question with this is not are we profiteering off the war side? It is about stabilizing the world order so that our allies have the right capabilities, abilities to deter a conflict. Right. So we just did a weapons deal with, with Poland to provide them with strike capabilities. They're not going to shoot first, right? Like, they're not going to antagonize Russia. But them being unprepared to counter a Russian attack, that seems like it would encourage Putin to attack more. And so you just got to make the consequence of these, you know, aggressive actions very, very clear. And our belief is everyone in the world is wrestling with this problem right now. How do they stabilize? How do they make clear to their neighbors that these attacks won't work? How do they build the right defensive capabilities as well as the right threat of offensive capabilities that will cause everyone to not attempt belligerent action as thinking it might work.
- [17:21]
Ed Elson
I'd be curious to get your views on what you think changed, how we went from this period of relative stability to now. What actually Jamie Dimon has recently come out and said is the most unstable period the world has seen since World War II. That was his view. One, do you agree with that? And two, if so, what has been the difference maker? Is it a political problem? Is it a technology problem? Why are we living in such an unstable world?
- [17:54]
Brian Schimpf
I do agree. When you just look at it from any dimension, the number of regional conflicts, the number of simultaneous threats going on, this is very different. And you have to look all the way back to around World War I period to find this rate of regional conflicts. So I do think it is a very precarious period in time. The reasons for this are hard to say. My best thesis on this is I think it is the combination of the technology shift with the political shift. But I suspect it is probably more skewed towards the political shift, which is Russia both expected that they would. I think they underestimated the technology change when they attacked Ukraine. Right. Like everyone, New York Times, everyone believed that Russia was going to roll through Kyiv in three days. Right. Like it was headline, that was the consensus. So I think they underestimated the technology shift here on the sort of defense side. But the political side, I think they believed that the west would not have the appetite to intervene. And I think this was a combination of US posture, the where kind of Europe and NATO had gotten very comfortable, very believing that these conflicts weren't going to occur, had under invested in defense for a long time and had truly become quite reliant on the US in this regard. And so I think most nations, because they were able to rely on the US for so long, had atrophied their defense apparatus. And I do think that creates the conditions where a more aggressive umbilicose neighbor can take strategies to undermine their neighbors where they want to for their political ends. And the consequences don't seem that severe. And so I think that's probably the biggest shift that has occurred, which is the belief that they can succeed at these things or that through military or covert action they can accomplish, they can undermine the concept of NATO. They can tear lines into, tear seams into the allied construct. You know, they've been doing this in the information space with no consequence. Right. By the way, no consequence for a very long time and now are pushing the limits of what is possible on the military side.
- [20:27]
Ed Elson
What is possible at this point because we're now on this frontier of drone technology, which seems to be playing an outsized role on the global stage at this point. I hear about it all the time, autonomous weapons and of course, AI, artificial intelligence. I mean, what are we contending with here? What does the next era of warfare actually look like and what should we be worried about to that end?
- [20:58]
Brian Schimpf
There's a lot of different dimensions to this and there's a lot of ways to group it. You know, you've kind of got, when you look at Ukraine and Russia, the small drones were largely changing what the, you know, kind of assault, counter assault. So like sort of for that military infantry, you know, kind of army infantry sort of scenario that, that's a world that not many people want to even imagine right now. Right. And so I think the, the reality is it's quite clear that, you know, with kind of short range drones, the efficacy of sort of a military invasion, like an army invasion is, is, is quite low. Right. Like for, for a well defended adversary and the cost of building that defense isn't isn't that high. So I think that's like dramatically changed the equation where if like, you know, historically it was sort of the rule of thumb was 3 to 1, you know, on the attack side, to the defender side in terms of manpower and equipment, you probably need not only like 100 to 1. Right. And it's sort of just so costly and so obviously costly. That was a strategy that maybe sort of closed for quite a while. So then, you know, what we've been seeing is a lot more of what, you know, I would sort of call like long range strike. So this is the ability to use missiles to inflict a level of destruction on your adversary. And what are they targeting? A lot of the theory before was sort of attrition of military equipment, right? So I win a military conflict by taking out my adversary's military. That's not what's happening in Iran. Iran is targeting the economic infrastructure. They closed the Strait of Hormuz most visibly. They struck data centers, they struck oil and gas refineries. And they understood that creating that economic pressure, that is what's going to cause the most sort of political capitulation on certainly the western side. But you see Ukraine doing this to Russia as well, where Ukraine started doing long range strike against oil and gas reserves and refineries. They're taking out the airfields and the supply chain in the rear, and they're striking all the way into Moscow to make it a much more challenging political problem for Putin to argue that this is working and that the defense is working and is this really worth it? And so this sort of category of long range strike is, I think the area that we'll see over the next several decades is the preponderance of sort of where militaries kind of turn on this for thinking about how to force that political outcome. And so that, that drives a lot of investment into long range weapons and then into the defenses of those as well. And so there's, there's a whole lot of consequences that play out from there. But I think the fundamental challenge, you know, that I think we're hearing from a lot of nations where we're talking with is now you have a whole of country defense problem where your adversary gets to choose when they're shooting, you know, 100 rounds at one facility. And you have to defend everywhere in your country simultaneously against those hundred rounds. And you won't know where they're going to come and when they're going to come. That is a very hard math problem as the defender. And so I think this is the biggest risk on this. Then you have all these other sort of, you know, kind of spiderweb style attacks where you covertly sneak in large amounts of drones to do, you know, kind of a different form of this strike against, you know, kind of infrastructure in the rear. But this is where I think a lot of warfare trends which is really looking at. If war is meant to effectuate a political end, this sort of approach seems to be the most effective at changing the calculus.
- [24:43]
Ed Elson
We'll be right back.
- [24:54]
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- [26:07]
Ed Elson
We're back with Brian Schimpf. One interesting political dispute that kind of emerged this year was this fallout between Anthropic and the US Government. The anthropic said that they would not allow the military to use their AI for mass domestic surveillance and for fully autonomous weapons. Those were their two kind of no gos red lines. It caused a rift and now they're dealing with the consequences of that. I mean, Anduril sits at a very interesting place in this debate because you are building weapons, building defense technology, and also using AI to accomplish those objectives. So how did you think about that debate and what are your views on Anduril's role in using AI for those objectives for autonomous weapons which could be used for lethal means?
- [27:05]
Brian Schimpf
My view is these are very complex, nuanced policy questions and that writing two sentences into a contract does not actually lead to a disciplined policy debate weighing out all the competing objectives. Nor was there even an understanding of the wide body of policy that already exists within the US Government around control of these technologies. So take something like the lethal autonomous weapons. We've had lethal autonomous weapons since probably the 1970s. You look at the battleships we have, there's this Aegis combat system on there and that system has been able to go in full automatic mode for a very long time. You have an inbound threat and you don't have a lot of time to respond. You can have the ship do the work of determining is this a hostile or a civilian or a friendly military aircraft and then appropriately taking the response on that. You know, there's obviously risk there. But people have been more comfortable on the defensive side for a lot of good reasons because time is of the essence and you know, you are by and large being attacked. So that, you know, that is one category we've had and that technology's gotten better over time. We've had this with torpedoes or anti radiation missiles. So an anti radiation missile you send out and you say, here's a geographic area and if something is emitting like a Russian radar, then that is a legitimate military target within that area. And so we've had this notion of you can delegate kind of the limited decision making to machines in a bounded way for a very long time. And I think that's realistically the framework of how this has to work. But importantly with that there's a human agency that exists, you know, so the US government has always had this policy which is that humans are accountable for the use of force in a battlefield. You send an anti radiation missile out and it picks the wrong thing that that's on the command. That is a, you should have known what that weapon was going to do, how it's selected, and were you safe to employ that weapon in that context. That has been the underlying framework that the US and our allies have had, which is this is fundamentally about human accountability. At the end of the day, you want your weapons to know exactly what they're going to do, how they are going to make decisions and what bounds you put on them. So the debate really boils down to should you use AI to get more precise, more accurate, more discriminating, or should you go with older generation technologies that are, you know, dumber? Right. To me, the ethical imperative is to make the smartest, most discriminating weapons you can and do it in a way that is responsible based on where the technology is. And that's everything I've heard from the US Government as well. They're not interested in a, you know, fully automatic AI, runs World War 3, Skynet scenario that's not even on the table. What they're interested in is how do we make these systems more precise, more targeted, more discriminating. And the US has led the way for decades in looking at this question of how do you employ weapons in the most accurate and precise way with the least collateral damage? And that is something they have spent tens of hundreds of billions of dollars investing into when our adversaries like Russia are just happy to use dumb bombs. And that is a big difference. So to me, the imperative is really how do we the best technology to make these things as precise and limited as we can. The alternative seems just wildly crass that you believe they should have dumber things that are less safe to use.
- [30:45]
Ed Elson
I guess the argument from Anthropic's end would be we just don't want to be in this business. We just don't want to be part of the defense industry because we're interested in using AI for different problems. And their argument would be, maybe we shouldn't be punished for electing to make that decision. So that's the first piece that I'd be interested to get your views on. And then second, you bring up a really important point about accountability, that at the end of the day, we're going to use technologies. What matters most is that humans are ultimately accountable for the decisions that they make in using those technologies. And I think to what's happened in the Iran conflict so far. And the headline that immediately, immediately comes to mind for me is the drone strike that hit one of the schools in Iran and killed over a hundred children. And it seems, based on the reporting that that was the U.S. government. And the president has been asked about this, and he kind of says, we're looking into it. We don't really know. Seeming to sort of shirk the accountability for what was a devastating decision ultimately. So I guess I've asked two very big questions, and maybe I'll just start with that second one on that accountability issue. How do you solve for that?
- [32:14]
Brian Schimpf
Maybe starting with the first. I think Anthropic actually does work with the US Government extensively. They were the first ones leaning in. They have extensive work with the intelligence community, with the department well before this came out. I think their concerns on, you know, use of these technologies in a way that the technology is not quite ready to be responsibly used is legitimate. But then I think the way you engage in that is actually working through those policy questions, being highly involved and steering the government away from things where they're not technologists, right? Like they're policymakers, they're war fighters. They need technologists to tell them what can and cannot be done and how can the technology get there in a way that is responsible and reinforce the values and norms we have. And so I think in reality, they were working with the US Government, continue to do a lot of work with us and several others. And I think they are actually kind of very mindful of providing the US and allies with the best technologies possible. So I think what went wrong was probably more a matter of personalities, trust, and, you know, style of engagement to get to the outcome on this. And, you know, that I get these things are hard, they're very complicated topics, and it's very tricky to work through. You know, maybe on the second question, you know, the US Actually has put out several different detailed things on what went wrong in that, you know, mistakenly attacking a school where they had multiple different databases. Some of them had marked it as a school. There was some older ones where the IRGC had used that as a command and control center in the past. And so this is where I think using technologies like AI to be able to coalesce all that information, to be able to have the most up to date information, are massively impactful. Where when you think about the sheer volume of things that the US Was doing leading into that strike where they did something like 10 times the number of strikes that they did in the Gulf War within the first month, they executed like a thousand of these in a day. And for each one of those, they have a process by which they validate that the intelligence indicates that this is a target and that there is, you know, collateral damage assessment and, you know, all these, you know, kind of legal factors. One of the only militaries in the world, by the way, that does that or cares to do that. Right. I don't think Iran is running that calculus. Every time they take a shot and they have gone through and traced through what went wrong and what's happening now, I'm not going to sit here and say how Trump presents these things is the most measured way. Of course it's not. It's President Trump. Right. That is the reality. But the US Military as an institution has gone through and traced through why this happened, what went wrong, and how do they fix this in the future. That is a sense of accountability on this. That I think is what we're looking for. There will be mistakes. War is terrible. Again, this is why you do not want to get into war. You want to create the deterrence in advance. And the reality is these things are having that discipline to actually improve how you do this and investigate what went wrong. That is something that I think the US Leads the way on.
- [35:44]
Ed Elson
I Think those are really great points. And. But what it also points to is the more advanced that this defense technology becomes, the more lethal and destructive it has the potential to be. Which basically means that whoever is in charge has increasing amounts of responsibility and accountability that they have to be responsible for. And that puts you in a very interesting place because you are the CEO of one of the companies that is powering this defense technology revolution, which essentially means that you have incredible amounts of power and responsibility resting on your shoulders, as do many of the leaders in government who are deploying your technology. How do you think about that level of responsibility? Like, what does it mean to you and how do you think about it for leaders in government as well?
- [36:47]
Brian Schimpf
You do not want tech bros making policy. Nobody voted for me, Nobody gets to vote me out, right? Like that. That is an important construct to remember, which is like, if someone disagrees, you know, I bet, you know, would the majority of Americans think that the US Government should have anthropic technology? Probably that they get to vote on that? Absolutely not. Right. And so that seems to me to be actually an important construct to remember, which is we live in a democratic society where these policy decisions, where these things about how use of force is done or what we prioritize in the country on any sort of domestic. These are political questions that we settle through voting and that we settle through elected representatives. And that my responsibility as a technologist is to provide technology that works to inform the elected officials on what it can and cannot do, how best to use this, how they should refine their policies to have effective use, where that new frontier is. That is a deeply held obligation that I feel I have, which is to build things that even despite what their process and system wants, is the right thing to build. We see this all the time where, you know, we'll get requirements on, you know, a weapon or something like that. And we're like, these are insufficient for what you need, right? Like, you need to deal with this GPS denied navigation better, or it needs to be more resilient against these conditions. You know, these are areas where we'll lean ahead and try to put in, you know, kind of the pieces necessary. And that's often a very positively received conversation, which is, you know, the state of technology has moved. Here's how you should think about this. And so, you know, our job is engagement. It's informing. It's getting them the right information to make the right decisions, and it's providing the best technologies that can be used responsibly. And ultimately the use of those technologies. That is what the elect, that is what the voting process is for. That's what the democratic process is for. And you know, I take very seriously that nobody gets to vote for me.
- [38:59]
Ed Elson
I think this brings up an interesting question about the sort of the separation of the private sector and the public sector, which has become more of a debate this year as the government has started to take stakes in some companies. OpenAI has been floating that maybe the government should take a stake in them. It's been floated for a lot of companies and interestingly we looked at the prediction markets which say that there is a decent chance, 23% chance that the US government might take a stake in Anduril. I guess my question is, what do you make of those odds? Is there any merit to them? And what are your views on the government taking stakes in private companies in general?
- [39:43]
Brian Schimpf
So I think the US Government participating in the most impressive wealth creation engine that has ever been constructed on the planet feels like probably a good idea. Where things like Trump accounts and kind of some of these other investment based things that allow Americans on a broad basis to participate in this can get us out of a lot of these challenges we have in the long run around kind of Social Security and a lot of these very challenging fiscal situations. That seems directionally like a very good idea. Now this is a new thing, right? So then as new things happen in our messy political process, it's complicated, right? Where there's a lot of different attempts, often a little bit ham fisted at first. And fumbling the way through that policy debate is a tricky situation. And so that's the messy political process we live in. That's the reality of it. So do I think all of these will be the idealized final form?
- [40:48]
Engine Advertiser
No.
- [40:49]
Brian Schimpf
Do I think directionally having Americans participate in the wealth creation seems like a very good idea?
- [40:56]
Ed Elson
Do you not feel concerned about sort of the crossover of sort of mixing government with private industry? I mean, if the point which I agree with is you want elected to be doing what you're doing, but if the idea is that Anduril were to become sort of in some sense more part of the government, more part of the administration, more connected to this, to Washington, that maybe you are starting to have a say in the way that weapons are deployed, in the way that our policy is carried out, and that the lines between those two sectors start to be blurred, does that concern you at all?
- [41:38]
Brian Schimpf
Well, I don't know why equity states wouldn't do that. A lot of countries like Norway and Singapore have extensive southern wealth funds that don't seem to make the private CEOs somehow decision makers in the government. I think the reality is there's ways to create even separation in that where you get the economic benefits and the population benefits from it without interfering in the separation of these things. The US has had a significant tradition and being very clear and then reinforced through multiple case laws around how private institutions and governmental powers flow and how those things work. And you can't have governmental powers as a private institute. Just doesn't work that way. Right. And so I think that's a good thing. And I don't see any evidence that's changing. Right. Like, nobody calls me when it's like, you know, hey, we're thinking about going into Venezuela. That's not how it works.
- [42:36]
Ed Elson
But it seems that that has, in some of the reporting that that is how it's gone. I mean, what we know is that with Iran, at least, that there was a call to, like, Jared Kushner as an example. And maybe we could say that he's part of the government, but not really. He wasn't really elected in. He's more sort of this informal advisor. It does seem to me that that is in a lot of ways how this administration is operating, that you do make a call and you have someone kind of make the call. That's at least what he said about Kushner.
- [43:09]
Brian Schimpf
You know, I can't speak to exactly how that went down, but I can tell you, having seen both Democrat and Republican administration, there are a lot of senior advisors, There are a lot of people who the elected officials appoint in to provide them good counsel and to work on their behalf. Like that is a extremely common pattern. Right. And when you look at the Biden White House, the vast majority of policymakers there on National Security, Committee on Domestic Policy, these were not elected officials. They were people the elected officials appointed that they felt resonated with their policy views and how they operated. That's how it works. Right. In Congress. There is hundreds of staffers there that do a lot of the legwork around advising on how these laws should be written, drafted. I think the healthy version of this is there is a good dialogue with industry and with experts and with academics and economists and, you know, the business community and the finance community to understand what is actually happening, what is the impact of if we did policy A versus policy B, you know, what would. What would be the impact of these things? You know, and then as we look at it from the defense industry side, you know, a legitimate conversation is what can you produce, what can you actually scale up? Right. Like how, you know, in having that ability to have meaningful conversations around the trade offs of how we could accomplish these sort of shared policy goals, that's quite normal and healthy in all administrations. So I think a well functioning government actually has deep connection with kind of the civilian sector and they should. Right. And then if we believe that those the way it's operating is not in accordance with the laws and statutes that we have, then that should be something that's reflected at the voting booth and reflected through the courts and through Congress. Right. And that's the system we have.
- [45:07]
Ed Elson
We'll be right back.
- [45:17]
Engine Advertiser
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- [46:29]
Ed Elson
We're back with Brian Schimpf. I know you're a CEO, you're a founder, you're not a policymaker. But when you look at US policy on autonomous weapons, when you look at the rules and regulations around how we are using artificial intelligence, I mean, AI policy has become such an important debate, especially this year. Is there any sense in which you think anything is wrong? Or are there parts of our policy and our legislation that you think are really going well, that are working, that are correct? What do you see as sort of the future of policy when it comes to AI and its impact on national defense?
- [47:09]
Brian Schimpf
So I think the AI side, you know, everyone's wrestling with what is a Incredibly complex and rapidly moving environment. And that's not, you know, when you look at, you know, something like the safety work, right? And you know, how can you ensure these models are safe? The US Government has gotten very good at sort of, you know, kind of a proceduralism and actually I don't know that it's a bad thing, right? Where you know, we want the system to be predictable, fair and disciplined, doesn't always mean it's fast, doesn't always mean it's the most logical, optimal outcome. But a fair and consistent application of the rules and policies in place and the regulations, that feels like kind of what you want from your government system. Now you connect that with the AI side and this is a much more complex question where there's still fundamental research to be done on how to make these things safe to assess if they're safe. I think some of the, I think Demis put out a post yesterday on how to think about kind of a industry, government collaboration on this, where there's still fundamental research to be done, where kind of an industry organization can be involved in assessment and advisory like we've seen at other kind of industries. And it's worked well with a clear governmental role to enforce rules, set rules, and take the guidance provided by this industry organization into account. But ultimately the government entity is responsible for application of those rules. That feels to me like pretty sane, right? Like, you know, kind of the government can do what it does well. You know, these sort of private institutions can do what they do well, which is sort of more fast moving and agile and exploratory, while, you know, we still have that mechanism of political accountability. So you think about this on the defense side and you know, I think a similar sort of notion applies where you have a clear industry responsibility, which is understanding how the tech can be employed, helping with test and evaluation and you know, really thinking through are these systems actually working to spec. Right. And the way it's been specified of what it has to do, industry needs to be a participant in figuring out how to assess that, how to get there. You know, can this really work and help evolve those specifications? And the government side has to evaluate, is that true? You know, where do we want these sort of decision making frameworks, how do we want accountability to flow? They have to own a lot of the policy decisions on these things. And I think when you look at these policy side questions, particularly in defense, many of them are already settled, right? And then so then you have new technologies that kind of change the scope or reach by which you could do these things. But, you know, I think from a fundamental question, you know, we've, you know, historically have answered this question on lethal autonomous weapons. We're willing to do it within very defined bounds. Great. Now you can debate, what are those bounds? How does technology change those bounds? Should we, you know, should we assess this differently? You know, those are very reasonable policy debates to have where we've, you know, kind of set policy frameworks around the impact and the safety and the risk and then the technology now changes, maybe where you set those limits. But fundamentally it's still the same ethical
- [50:30]
Ed Elson
framework, just given your seat in the national security ecosystem. When you look at what's happening with Russia, when you look at the Iran conflict, China, nuclear weapons, AI, what do you see as sort of the biggest threats to stability and to peace in 2026? What keeps you up at night?
- [50:59]
Brian Schimpf
So for the next few years, the threat of being able to do kind of these strikes against your neighbor over the rapid escalation of that. There isn't kind of a theory of deterrence on that. So sort of one theory is if we have better defensive weapons than this will be mitigated. And I think every government has a responsibility to protect its citizens by providing the best defense it can against these types of attacks. But when you look at how this plays out, say like the Red Sea scenario where the US and allies very successfully mitigated Houthi attacks on commercial shipping, what did the Houthis do? They shot more. Right. Like it didn't actually work as a deterrence. And so I think the other side of this is you've got to think about what is going to be an effective deterrent. For better or for worse. Mutually Assured destruction was incredibly stabilizing. I think it was incredibly stabilizing. We didn't have a hot war between the US and Russia. It is miraculous and it was hairy in many scenarios. But I think ultimately if the consequences were smaller, the opportunity for escalation, for starting small and growing, it could lead to these outsized, terrible outcomes. And so I think there is a period where we don't have that theory right now of what this looks like for conventional weapons. The cost of kind of prosecuting these lower intensity conflicts seems relatively low. And that I think can lead to miscalculation, which can lead to escalation on these things. And so I think there needs to be a new theory of sort of, what does this look like? What is the bad outcome that happens if you start something small that. So you just don't start it like that is fundamentally what has to occur to get things back to a stabilized place.
- [52:56]
Ed Elson
Where does China sit in your list of threats? Because this has been, I mean, especially when it comes to AI, the concern seems to be about China and the comparisons have been made between AI and a nuclear weapon. And perhaps we are going down a similar path of mutually assured destruction, which to your point, might, might actually be a good thing. How do you think about China and the threats that they might pose?
- [53:28]
Brian Schimpf
You've got to contrast China under the prior leadership with the leadership of Xi Jinping, which is sort of ultranationalist, based around very aggressive posture internationally. It is highly interventionist in their economy. When you look at the actions that, that Xi takes is fundamentally about, you know, kind of preservation of the CCP and, you know, control, you know, zeroing out whole industries that, you know, he decides are no longer aligned with the goals of the prc. Demonstrating that, you know, economic prosperity isn't, you know, we take for granted in the west that sort of economic prosperity and rising boat, you know, like, like providing better standards of living. These are kind of the fundamental. If we were to take one priority that sort of Western politicians and things really rely on, it is fundamentally that we want to drive economic growth to provide better lives for people. And that's what the voters choose. It's just a very consistent sort of selection over time. You look at China, that's not what he optimizes on, right? Shutting down the whole economy during COVID really focused on control. That is a tough thing, I think for a lot of the people in a Western mindset to apply. He's a true believer in the CCP and in many ways his greatness in history. And that is a risky position to be in. So when I think about the challenges here is the issue that we would have a competitor that is technologically sophisticated and forces the US to get better economically and we share this economic high in wealth. I think a lot of people don't like losing, but I don't think that's fundamentally the issue. The issue is much more around is the form of leadership control and operating that the current Xi autocracy has. Is that what we want? I think for many the answer is no. For myself it is no. It does not seem like a good thing. And so I do think this does pose a real question which is it is not just about is the US Strong? It's just there is a real moral question to be answered around is that what you want in the world now? I think what is different compared to say The Cold War period. China is extremely sophisticated, extremely disciplined. They have moved up, up the stages from building out these sort of foundational manufacturing and resources through to making slightly more sophisticated things like owning whole industries like solar and a lot of the green, you know, a lot of these types of things. And then now moving into creating world class firms. Byd, all the work they're doing on AI, where they're moving on pharma, they have sort of systematically moved up that, that chain in a way that gives them massive economic leverage around the world. And one of the patterns I've seen in Europe and other places, the Europeans will be angry at the us they'll say this isn't how we're being treated, isn't fair. They will push back. The reality is they push back because they know they can. They don't push back on China despite knowing that they're getting a bad deal. They know that this is not fair. They know that they're just going to like, like this is a short term thing. Everyone knows this. But I think the difference is with the US you can say it, you can't say it against China. And is that the world we really want to live in? So I do think the stakes on this are quite high. I think the people have grown up with America as the superpower. I don't think they can even imagine what China as a superpower would be and how bad that would be. They view it as this upstart that. It's like, yeah, maybe I don't disagree with their leadership or how they operate, but who cares? They're kind of a sideshow. It's like them in charge is a very bad thing. And so particularly Xi in charge. And so I think the reality here is it's a very serious issue. They're extremely sophisticated and they have a very sort of aggressive posture to where I think they want their country to go and the prominence in the world.
- [57:57]
Ed Elson
Do you view part of Anduril's mission to prevent that from happening, to prevent China autocratic style governments from becoming a global superpower and from superseding the US as the global superpower?
- [58:15]
Brian Schimpf
I don't think that's fundamentally how we view our goal, I think, or our role in the equation. I think our view is we need to provide the US military and our allied militaries the best capability to take Chinese military action off the table. Right like that. That's what we need to do. And there's a lot of other considerations in this mix that we are not, you know, we don't have much to contribute on or not as contributing on via, you know, sort of we're not building foundation models. Right. You know, we're not, we're not in pharma. Right. We're not solving a lot of these economic policy question. There's a lot of these sort of bigger questions around US competitiveness and you know, sort of Western competitiveness. But fundamentally, I believe if the US and allies, you know, take, take the counter example, China can obviously, you know, say China could obviously invade Taiwan. Say China could obviously exert the, well throughout the South China Sea. And no one believed that they could challenge them or that the US would be there to backstop. I think China would do it more. I think they would do it more because it's probably be a pretty effective strategy. And so the, you know, just knowing that that would be the case leads to a totally different political conversation where if they can use hard power as the backstop to exert their will, well, it changes the negotiation you have on a diplomatic basis or an economic basis or anything else. And so, you know, providing the US and allies with the absolute best military that takes military, unilateral military action from China off the table, I feel like that is very much our responsibility, as much as we can contribute to it.
- [60:00]
Ed Elson
I want to start to wrap us up here with a couple final questions and I want to thank you for your, for your time. Just two stats I want to get your reactions to. So number one, VC funding for defense tech startups hit $19.8 billion in the first quarter of this year, which is a record high. It just blows previous years out of the water. And of course it'll probably continue to ramp up. And the second stat is that Trump has proposed a 1 1/2 trillion dollar defense budget which would increase our defense spending in America by 44%. Extraordinary numbers. What is your reaction to those numbers and what do they tell you about the state of the world on the VC side?
- [60:53]
Brian Schimpf
You know, I think when you look at the history of any of these, you know, kind of sector, you know, disruptions, the pattern's pretty consistent. Right. You know, you kind of see a couple of early winners, do quite well. They tend to be the winners in the long run. And then you see a whole lot of frenetic activity from the investing side kind of chasing that success. And do I think there will be a handful of successful companies besides us? Absolutely, I think there will be a few. But in most things in vc, it's like they're looking for the one or Two outsized performers accepting that many of these will fail. And that's sort of the reality. And so I think it is just quite hard to really succeed at scale in this business. The sheer complexity of what you have to do on manufacturing, on production, on hardware is just quite high. Right. And that is very hard. There's very few examples of that scaling in the US successfully. And you know, I think that's something where we're living right now and we're going to figure it out. But it's quite hard right on the 1 1/2 trillion dollar defense budget. You know, I think the, there's, there's sort of a lot of ways to interpret it, but when you look at what motivated much of it, it is, you know, kind of the threat from China combined with I think the realization that we need to do significant investment in next generation technologies, replenish our stockpiles. So we're at this tricky spot where we're both sustaining an expensive legacy military and that has to be sustained. So we have to be ready. We can't just divest to invest. That's a bad strategy with where the world is while we're going through a technological disruption with a new adversary that's extremely competent, who can produce at an immense scales. And we have significant depleted stockpiles from both conflicts we've entered into as the United States as well as supported allies. That is a precarious position to live in. It's one and a half right. Should it be 1.2, should be 1%? I don't know. That's a harder kind of question. And will get negotiated in Congress. But the threat side, the displacement we're under, the shift in the world I think is real. And I think you're seeing the amount of ramp worldwide on defense spending doubling, tripling a huge step up in defense spending worldwide. I think the reflection is that this is just actually quite a dangerous time. Our adversaries have been investing quietly for decades and the western militaries have in many ways behind in responding to that very real threat.
- [63:44]
Ed Elson
I introduced you, Brian, as the founder of one of the more controversial startups in America and the world. My final question, what is the biggest misconception about Andura? What do people get wrong about this company? And what do people perhaps get wrong about your industry?
- [64:03]
Brian Schimpf
I think it comes down to what is the point of what we're trying to do. And I think the sort of naive view is that this is war profiteering and that we want more war. And the reality is we do not. The reality is that the goal of investing in defense is you have it when you need it, but you hope you don't need it. And I think the thing that stands out to me about the American military leaders is they are the most cautious about the use of the military. They are advising to use it the least. And their view is this is a last resort and we share that view. And so I think that the reality is that to have peace, you prepare for war. And I think that has been true for thousands of years. And we are not yet in a time where that is gone.
- [65:02]
Ed Elson
Brian Schimpf is the co founder and CEO of Anduril. Brian, really appreciate your time. Thank you.
- [65:08]
Brian Schimpf
Thank you.
- [65:14]
Ed Elson
This episode was produced by Alison Weiss and engineered by Benjamin Spencer. Our research associates are Dan Shalon and Kristen o' Donoghue and our senior producer is Claire Miller. Thank you for listening to the Profg Market, its founder series. We'll see you next month with another founders story.
- [65:40]
Engine Advertiser
Support for the show comes from Engine. Here's the reality. The average business traveler spends 45 minutes booking a single trip on a legacy platform. But the companies winning right now aren't cutting travel, they're booking smarter. With Enjin, that booking time drops to as little as 2 1/2 minutes. And its AI powered personalization gets faster the more you use it. Multiply that across your team every trip, every year. That's not a perk. That's a competitive advantage. 37,000 businesses have joined Engine. Now it's your turn. Get $500 when your business signs up and starts traveling. @engine.com founders.