Isegoria

Anduril is a rare, paradoxical creation, Mario Gabriele argues: a defense contractor that moves like a startup, a software business disguised as a seller of hardware, and a weapons manufacturer, in pursuit of peace:

Anduril is a company that few in Silicon Valley thought needed to exist. Because of the foresight of Trae Stephens and Palmer Luckey, America and its allies have a software-first defense provider capable of impacting current conflicts.

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Before joining Palantir in 2008, Stephens had spent time at the offices of Ohio congressman Rob Portman and the Afghan embassy in Washington D.C. His public sector work seemed to skew towards the technical, with Stephens “building enterprise solutions to Arabic/Persian name matching” for the Intelligence community. Stephens used and bolstered this experience as part of his six-year stint at Palantir.

While venture capital rarely draws from defense backgrounds, there is an exception: Founders Fund. Established by Peter Thiel, Ken Howery, and Luke Nosek in 2005, Founders Fund holds a unique position at the nexus of Silicon Valley and Washington D.C, thanks to Thiel’s co-founding of Palantir and particular geopolitical worldview. The firm was early to back SpaceX (one of the few recent startups to secure meaningful governmental contracts), while Ken Howery went on to serve as ambassador to Sweden during Donald Trump’s presidency.

Stephens was a neat fit at Founders Fund, as was his mission to find the next great defense business. SpaceX and Palantir had made significant impacts, but they were the rarest of exceptions. By and large, venture-backed startups had failed to disrupt the established patterns of the public sector in general and military in particular. Stephens was hopeful a new generation of entrepreneurs would change that.

Despite his best efforts, Stephens came up empty-handed. “I didn’t find anything,” he said. With the benefit of hindsight, the investor noted there wasn’t a business he had overlooked: “There was nothing to miss. It turns out there wasn’t a next Palantir or SpaceX.”

Though Stephens didn’t find a ready-made defense startup during this period, he did meet a founder who would play a starring role in Anduril’s creation: Palmer Luckey.

A year before Stephens started his venture career, Luckey set out to raise a Series A for his virtual-reality startup, Oculus. He found a willing partner in Founders Fund, who became the company’s “first institutional investor,” per Stephens.

It took little time for that faith to pay off. By March the following year, Facebook announced it had acquired Oculus for approximately $2 billion in a mix of cash and stock. Barely twenty years old, Luckey was suddenly a wealthy man.

Around the time of that acquisition, Stephens and Luckey got to know one another, discovering themselves to be somewhat kindred spirits. “He was super interested in national security,” Stephens said of Luckey. That fascination pre-dated Luckey’s creation of Oculus. Indeed, while working at Bravemind, an organization that uses VR to treat veterans with PTSD, Luckey first created a prototype of his revolutionary headset.

For the next three years, Stephens and Luckey stayed in touch. By 2017, much had changed for them both. In March of that year, Facebook fired Luckey, a decision he claimed was politically motivated, catalyzed by a $10,000 donation he had made to pro-Trump “shitposting” organization, Nimble America.

Meanwhile, Stephens had reached an impasse in his search for a modern defense prime contractor (a “prime”). It was increasingly clear that if he wanted such an organization to emerge, he would have to build it himself. He made his pitch to Luckey, explaining the status quo as he saw it. In particular, Stephens saw two major shifts to which America’s military had failed to adapt:

1. The shift to software. Defense technology had traditionally been hardware first. Stephens was confident that future wars would be defined by software that worked in concert with intelligent devices and machinery.
2. The brain-drain. In previous eras, the military could reliably attract the best technical talent. Historic minds like John von Neumann lent their abilities to branches of the armed forces. That is no longer the case. Today, many of the best technologists work at companies like Google and Meta. “We’re not in a position where our best and brightest are working on national security,” Stephens said.

Luckey was impressed with Stephens’ diagnosis and proposed cure. “He was super excited about it,” the investor recalled. The two began work on the company that would come to be called “Anduril.” As with many Thiel-affiliated entities (see: Palantir, Valar, Mithril), the business took its moniker from Lord of the Rings. In Tolkien’s books, “Andúril” is the name of a mythical sword which means “Flame of the West” in elven tongue.

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On June 6, 2017, Anduril’s founders officially set to work on its first product: a sentry tower that leverages artificial intelligence to monitor border crossings. “It was totally Palmer’s idea,” Stephens said, noting that Luckey had sketched prototypes before Anduril had gotten off the ground. It can take years for a defense contractor to ship a new product; Anduril had its sentry tower in the field within six months.

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Despite the unpopularity of its work, Anduril kept shipping. It followed the sentry tower with sensors, drones, and autonomous submarines. Though these products represented hardware innovations, the heartbeat of Anduril’s work was its orchestrating software system, Lattice.

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The software system acts as a command hub, pulling in information from sensors, drones, and other field assets. Using artificial intelligence and computer vision, Lattice constructs a live, detailed view of a battlefield, accessible via computer, tablet, or VR headset. Critically, Lattice is built such that it can sync with assets made by other companies. It is an open system that seeks to play nicely with third parties.

In addition to intuitively presenting important information, Lattice streamlines decision-making. It does so by offering potential next moves. For example, if a field sensor identifies an enemy drone, it will show up on Lattice along with a prompt to intercept it. In the push of a button, an operative can decide to send an asset to meet and disable it.

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