January 29, 2024 • 25 mins
Palmer Luckey, once synonymous with the virtual reality revolution through the Oculus Rift, catapulted into tech stardom when Facebook acquired Oculus for an astonishing $2 billion. This pivotal moment not only validated VR's potential as the next major computing platform but also marked a turning point in Luckey's career. His journey from crafting immersive digital worlds to influencing tangible, real-world outcomes began here, setting the stage for an unexpected pivot towards a sector far removed from gaming and entertainment: defense.
Transitioning from virtual reality to the defense industry, Luckey embarked on a new venture, founding Anduril Industries. This shift was motivated by a desire to innovate within a sector known for its resistance to change, leveraging cutting-edge technology to address modern security challenges. Anduril's inception represented a bold move into a domain dominated by longstanding giants, with Luckey aiming to infuse the agility and innovation of Silicon Valley into the traditionally conservative defense industry.
Anduril Industries stands as a testament to this vision, actively dismantling the traditional cost-plus model that has long governed defense procurement. By adopting a tech-driven approach, Anduril is navigating the "Valley of Death" – the daunting gap between prototype development and full-scale production that many defense startups face. Through strategic investments in autonomous systems and AI, Anduril is not just surviving this transitional phase but thriving, offering scalable, efficient solutions that promise to reshape the landscape of global defense, signaling a new era where technology drives strategy, and innovation ensures security.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jed Tabernero (00:00):
In 2012, the virtual reality landscape was
forever altered with theintroduction of a pioneering
headset, marking the rise of VRinto mainstream consciousness.
Facebook has acquired virtualreality headset maker Oculus VR
for two billion dollars.
Facebook CEO Mark Zuckerbergsaid the deal reflected his
belief that virtual realitycould be the next major
(00:21):
computing platform after mobile
Palmer Luckey, the architect of the shift, has
since pivoted from digitalescapism to a domain where
technology's impact isunequivocal and immediate.
Defense.
So Andrall is trying to be theworld's next major defense
contractor.
Today's episode of Things Have Changed podcast
delves into and real industries.
(00:43):
A company at an intersection oftechnology and defense, far
removed from the conventionalstartup focus on apps and
enterprise software.
Anduril is redefining defense bybringing cutting edge technology
like the cloud, end to endsoftware and AI at the fraction
of the cost in thistraditionally rigid sector.
Lucky Palmer (01:04):
I specifically got into this business because I
wanted to change the way thatthe military buys technology.
Jed Tabernero (01:10):
Join us as we dive into how Anduril is proving
that the pen Is mightier thanthe sword, especially when it's
used to code.
Shikher Bhandary (01:56):
Having been in tech for such a long time,
right, both of us, Jed, you andI, working in it, now talking
about it on Things Have Changed,there's one key theme, the holy
grail, that overrideseverything, and that is to build
an ecosystem.
Everyone wants to build anecosystem.
(02:18):
You can go ahead and name top,top companies in the world,
Apple, Amazon, Microsoft,Google.
The one thing that they share isan ecosystem.
Great ecosystem is when there'sa seamless integration between
the hardware and the software.
(02:40):
That's the holy grail.
Let's take Apple, for example,you know, we, we talk about
Apple a lot and there's a reasonbecause they've kind of
perfected this ecosystem play.
On the hardware side, they havethe iPhone, iPad, MacBooks,
great hardware, you know, latestchips, fast processing,
lightweight, aesthetically verypleasing, all of that, checks
(03:04):
all the boxes.
On the software side, they havethe macOS, seamless, very nice
UI, you have iMessages, you canback up your iPhotos into your
iCloud, you can listen to musicon iTunes, so everything is in
this ecosystem.
You have the hardware and thesoftware on the hardware side,
(03:24):
you make incredible margins andon the software side, you take,
you take a cut of alltransactions on, um, the app
store.
Right.
Another example.
Um, and one that I don't thinkwe talk a lot about and we don't
give credit where it's due atleast, uh, with Tesla, you know,
(03:46):
they have the cars.
And which other car manufacturercan, can push out software
updates to the car through thecloud?
Jed Tabernero (03:56):
I mean, they're starting to do that, but you
know, they got it from somewhereand Tesla was, was one of those
people, dude, every time I plugin my car, there's an update.
You know what I mean?
So it's, we've gotten to a placewhere our cars are now simply
like our iPhones and Mac books,where we have to spend like
maybe 20, 30 minutes, justupdating it.
And we know that it's going tobe better.
Shikher Bhandary (04:17):
There are so many things that can now be
controlled because there are somuch data.
There's so many sensors on thecar.
Right?
So this ecosystem is whateveryone's striving for.
And one example which connectsthe company that we're talking
about today, the startup, to oneof the big, big tech companies
(04:38):
is Anduro.
But I'm not talking about thatfor now.
Let's talk about virtualreality.
So there's a reason why Facebookdecided to get into the virtual
reality game.
It's because Facebook has alwaysbeen a software play.
They had the software componentof Instagram, Whatsapp, Facebook
(05:00):
locked down.
But they were still paying thethe tax of the hardware.
They didn't own the hardware.
And that's why they reallywanted.
To get onto the next wave ofcomputing, which was virtual
reality, which was supposedlyvirtual reality.
So yeah, they paid huge sums tomake sure they have the
(05:23):
ecosystem of both the hardwareand the software aspect locked
down for the next 20 yearsbecause Apple won the previous
20.
Jed Tabernero (05:31):
Yeah.
In the story of VR becoming likea household name, like we
mentioned in the intro, thatcompany who made it really,
really popular.
Was the Oculus Rift and thenMeta made this huge shift,
right?
I think we talked about that aton in the last two years where
Meta was like, look, VR is thefuture.
(05:54):
So we are going towards VR.
They've literally changed theirname to Meta, right?
In the last two years.
And so VR became kind of a hugepart of that story.
And so I think it was, I don'tknow, 2017 or something when
Facebook bought Oculus, thecompany.
Right for 2 billion, dude.
(06:15):
Palmer lucky who had sold Oculusto face gets his 2 billion and
doesn't go by five islands and,you know, change his life
forever and doesn't do anything.
Stay, stay as quiet, right?
He moves.
Into an industry that waslargely untouched from Silicon
Valley world.
Now where we're seeing it in thenews, that startups are coming
(06:37):
into defense.
And this was the wholeconversation we had in the last
episode.
If you haven't listened to it,check it out.
Um, it's where we talk about theshift of Silicon Valley, having
a stronger relationship, um,with the defense industry,
right.
With traditional militaries.
And so this company, um, wasfounded by Palmer lucky.
(06:59):
Andrew industries, the, thetheme of our conversation today,
and very similar to what she wastalking about earlier on, um,
the ecosystem of, of apple andhow they've made such a, an
amazing product, right?
One, the last 15 years, whateverwe're looking at Andrew today is
one of those companies who isstriving for this type of
(07:22):
business model.
Right.
Okay.
For our tech enthusiasts here,you're probably thinking, okay,
this is nothing new techcompanies come up with this all
the time.
This is, this is their walledgarden.
You know, this is the placewhere kind of startups really
are striving for today.
But this is entirely differentbecause this is defense.
(07:42):
We talked in the last episodeabout how complex kind of the
procurement systems are of thedefense industry, right?
The whole cost plus methodologywhere we'll spend whatever we
want.
You'll compensate us on on thebasis of that.
And then we get a cut
Shikher Bhandary (07:58):
Cash money.
Jed Tabernero (07:59):
money.
Exactly.
These conglomerates be makingmoney, man.
So it's kind of yeah.
It's a very different space toenter for them.
And dude, now that you mentionedApple, something just came to my
mind, right?
I just bought a DJI for, okay,that's a drone for everybody
who's not familiar.
(08:20):
That is under the ecosystem ofDJI.
Shikher Bhandary (08:25):
Ah, interesting.
Jed Tabernero (08:27):
Wonderful stuff, dude.
Wonderful stuff because DJI, youknow, they deal with drones.
It's a company that originatedfrom China.
The American consumer cannot getenough of it, dude.
We buy so much drones on ayearly basis now.
And can you imagine this?
Like before we thought aboutdrones as a military
(08:48):
application, okay.
There were consumer dronespopping up left and right shitty
ones.
Okay.
If you go to amazon.
com and type drones, you'll seea bunch of like shitty drones,
but DJI is a clear winner in thespace of drones, right?
Non military applications, justconsumer friendly drones.
Shikher Bhandary (09:07):
Big drone guy.
Jed's
Jed Tabernero (09:09):
I'm a big drone guy.
I'm a big drone
Shikher Bhandary (09:11):
Uh, he, when he, before he goes to bed and
this is, I'm not even joking.
He just puts on these videos.
Actually, they are really,really fun to watch.
And it's just these drones thatare flying through different
landscapes, mountains,waterfalls.
It's stunning.
It's stunning.
But yeah, he puts himself tosleep with these videos.
(09:32):
So yes, he is a big drone guy.
Jed Tabernero (09:34):
And I've loved the DJI ecosystem using the
drone.
And it just proves to you thatlike, that's a step towards, you
know, maybe some defenseapplications.
Shikher Bhandary (09:45):
I mean, things still traditionally rely on like
radio.
You know, and a lot of it ismanned.
So the interesting thesis hereis global defense has moved from
like having a ton of people tomore about data collection of
data Knowing what's happening atall times across your border and
(10:06):
across the different states.
So it's more about Being aware,having these drones and sensors
that can compile all that data.
And you have like one ecosystemthat, that manages this data.
Think of it like the, you know,the iOS, the Apple OS, right?
It's like the, the brains behindyour entire iPhone.
(10:29):
The startup is aiming to be thatwhere they not only have a
software platform that serves asa command center.
Right, to coordinate autonomousdevices, autonomous robots,
drones, underwater submarines.
They've done it in a way suchthat the software is super user
friendly and the hardware syncsalmost seamlessly with the
(10:53):
software system.
Jed Tabernero (10:55):
Yeah, no.
And you know, just a nod to thedata thing, you know, data is
King.
What can you do with a ton ofdata?
Right.
Where does it become helpful tohave a shit ton of data?
Well, makes it easier for us tomake decisions, right?
I'm sure a ton of our listenersalso work in a corporate space
where you understand now metricsare key to understanding how
(11:17):
progress goes, how much you cando with what another thing that
has come from the advent ofdata, a shit ton of data is AI.
AI can then use this datamanipulated to kind of
understand how to respond tocertain situations, you know,
and as we evolve by collectingmore of these data points,
(11:39):
understanding the users better,which is, you know, maybe
traditional defense users,militaries, you know, to
understand how that space kindof works better.
AI is now being used in thatspace to innovate on these
things that you learn AI, right?
So there is now an active rolethat AI plays in defense and in
(12:00):
military applications, which Ithink is something that's
completely, you know, it'ssomething that's coming also
from the tech industry.
We're starting to see a lot ofAI applications.
You see all these VCs onlyinvesting in AI centered
companies.
You know, we're seeing that inthat space and now we're seeing
it as well in the defenseindustry.
Shikher Bhandary (12:19):
Jed and I, we talk about satellites a lot.
You know, the whole Starlinkthing, reusability is such a
big, big aspect of what madeSpaceX the company that it is
today.
They send rockets, a sizableportion of that rocket actually
comes back.
and lands safely.
(12:39):
That itself was, is saving closeto 95 percent of the cost of
building that rocket, becausenow you can use it again and
again.
And Angirol has taken that samemindset of reusability to drive
costs significantly lower.
(13:01):
Um, so their products, you know,they, they came in, we were
talking about the softwareaspect, right?
The lattice, um, ecosystem, uh,which is what their product,
which is their software product,but they have hardware products,
which are, which are makingwaves.
Right now, they have one whichis called the Roadrunner.
It was, it had a big reveal.
(13:23):
Um, and the defense industry hasnot seen anything like this.
Right.
And it's a big, big advancementto traditional defense systems
where it's just one and done.
Right.
It's just used once and it'sdone.
But this, you know, this is morelike for surveillance to
intercept transport.
Right.
And it can be safely recovered.
(13:45):
And it sits in a box.
Such that you can transport itand, um, rapidly launch it as
well at near zero cost.
So they are aspect, they arethinking behind it is, Hey, we
need to be a lot more agile inthis new, always on high data
(14:06):
world.
So what better than a reusable?
autonomous air vehicle.
While I was doing my studies,uh, in mechanical engineering, I
was working at a startup, whichwas designing underwater
autonomous vehicles.
So I used to do the, the CADdesign for it.
So the 3d design
Jed Tabernero (14:27):
UAVs.
Shikher Bhandary (14:28):
UAVs, underwater autonomous vehicles,
this product.
Dive LD from Andural is 3dprinted and it's not only for
defense, it's for exploration.
So like seafloor mapping, deepwater surveys, inspection, which
is actually the use case that,uh, the startup I was working
on, we're trying to lean into.
Jed Tabernero (14:49):
It's kind of crazy how all of this
information is public and thesecompanies are trying to get into
this space where we can sharethese things, you know, with the
public talking about liketraditional defense differences
in our previous episode, we kindof covered a ton of like, why is
this industry, um, having such adifficult time innovating and
(15:11):
why prices are so insane?
Why the military spends so muchmoney.
Anderle is, is one of thesecompanies.
That are trying to, to changethat defense industry
perspective.
And one of the things I'd pointout is in the previous episode,
we talked about how DOD releasedthis report, right?
Every year they release thisreport about what are they going
(15:31):
to do differently?
You know, what kind of stuff ischanging?
And one of the things that theyhad a nod to end of 2022 and
2023 was that, Hey, we need tobe more conscious.
About spending, we need to bemore conscious about, um, how
we're innovating in this space,you know, because we spend a
ton, we spend a ton of money onthese things and taxpayers are
(15:53):
not, not having it.
Right.
So Andrew comes in with thisthesis and says, also, we're
going to make sure that we'redesigned from a business
perspective, completelydifferently than, um, a
traditional Boeing, atraditional Northrop Grumman.
They're defined so differently,they're attacking the problem
(16:14):
from this concept called, um,valley of death.
This is basically, it's a periodof time in the defense industry
where you create a prototype,And you're basically roadshowing
this prototype until you get toproduction into full scale
production, right?
(16:35):
This is the time the governmentkind of goes through all the
approvals.
There are some regulatoryhurdles that you got to go
through.
It's called the valley of deathbecause a lot of companies, they
don't have enough capital to bealive and awake during this
time.
So they typically die off.
Right.
And then all these biggerconglomerates are going to be
coming in to, to kind of takethose contracts because they're
(16:56):
the ones who can stay alive forthat long.
Andrew does not like this model.
It tackles it from thatperspective saying, Hey, listen,
we want to bridge the gapbetween prototype development
and government procurement.
When the government actuallymakes a decision, Tate, make
this right.
Streamline that path.
Um, from deployment and adoptionby the military.
(17:19):
So it's kind of, it's kind ofthe big difference where Andrew
comes in and operates like a bigtech company.
Like we were pointing outearlier.
Right.
Um, and getting away from thecost plus procurement more into
a money ball military style.
Right.
And this is where the businessmodel comes in will be really
interesting to see, because shewas pointing out, look, software
(17:42):
is the center of this story.
Lattice.
It's a software name, right?
Single operated by lattice.
But he also mentioned thehardware components that we
just, we just talked about,right?
And real strategy is buying uptiny defense companies that may
already have a product thatcould compliment lattices
capabilities.
(18:03):
So that that's, yeah, that'ssomething I just, I just learned
out of just reading through, um,you know, how Andrew operates
and they are buying up tinydefense companies that have a
hardware component to it andthey see, okay, does, does
lattice play into this hardwareproduct?
Right.
Can we extend this hardwareproducts capabilities by
(18:23):
gathering the right data, bygiving the right inputs, right?
Like this is very interesting.
And I called it money ballmilitary because you know, if
you haven't read the book or, orwatched a show, um, watch the
movie money ball, you should.
Very interesting.
They're on a budget and they'retrying to make a baseball team.
Right.
Similar to this company.
Um, and they're on a budget andthey're trying to create the
(18:46):
most efficient defensecapabilities out there.
Crazy.
Shikher Bhandary (18:50):
Yeah.
And I mean, they've seen so muchexcitement from VCs and
investors.
They raised, I think more moneythan any other startup in 2022.
This could be a trend.
Like we mentioned in theprevious episode, there are so
many gaps in the procurementcycle, the efficiency gaps that
(19:12):
tech looks at and thinks, Hey,this is another trillion dollar
opportunity.
We should jump into this.
What is the future of defenselook like?
So, I mean, the future of techis AI.
So you can just imagine, um, youknow, bad actors using those
open source AI platforms, uh,and algorithms to do harm,
right?
So you need to be prepared evenon the defense side.
(19:35):
Now, we have to mention thatthere are concerns that not
everything should be AI becausethe people that even work in
this industry.
fail to understand why certainthings are done or certain
decisions are made.
So I think there needs to be acareful review and due diligence
done to make sure that this isdone correctly and humanely.
Jed Tabernero (19:59):
It's a good point, man.
That's a good point.
Cause I think as we get intokind of this world where AI is
used in even military anddefense, um, applications, we
need to be really careful aboutreviewing these algorithms,
making sure, you know, that theyalign with kind of our values.
It's not lost on the DOD, Iguess we've seen some
documentation around ourresearch about reviewing these
(20:22):
algorithms, making sure that,you know, it's not, it doesn't
have some like super evil, um,underlying cause or goal, right?
So there are ways where you canhave this type of greater,
greater scrutiny and regulationaround it.
And companies like Anduril isthat's out there.
Right.
They're constantly scrutinizedby these things.
(20:43):
Um, and hopefully that, thatcontinues, um, while the
shifting power dynamics happenwithin this defense industry,
right.
Is that we can hold them moreaccountable than the incumbents
were before.
A part of that as well as, youknow, one of, um, lucky Palmer,
Lucky's goals is that he wantsto be a publicly traded company.
(21:05):
Right.
Andrew wants to be, because justlike any other massive company,
the government's not worried toomuch about the financials of
publicly traded companies,because they're subject to
scrutiny from external auditors,right?
They have that public practicethemselves.
So, you know, just making sure.
That they get into a space wherethey're constantly audited,
(21:26):
they're beholden tostakeholders, um, you know,
makes it a more promising,promising, uh, venture for the
government.
Um, so what is, what is defensebasically look like going
forward, right?
We're talking about this, thisregulation and how things are
changing in the space and how wehave to be careful, you know,
what are the major themes thatwe're seeing?
(21:47):
Well.
This is basic, but this is athings have changed theme as
well.
Is that ton of robots cominginto the space?
Ton of robots with AI as one ofthe major focuses in this space.
And so the defense industry,yes, I think we've expected this
before that there's like a tonof labs creating AIs and
creating robots for the futureof defense, right?
(22:10):
Right now we're seeing it.
We're seeing it in action,right?
We're seeing MIT labs come upwith robots that are completely
autonomous, um, servingdifferent types of purposes and
industry.
And this may extend to differenttypes of industry as well,
right?
Another major theme I want topoint out really is like speed,
dude, we've never been in aplace.
Where we could come up withmilitary applications that will
(22:32):
be faster.
I have to point out, although wementioned all this stuff about
procurement and about how Andrewis going to change the game for
procurement, there's still a tonof regulatory hurdles that they
have to get through, right?
Like it's not just because theycan come up with a product
faster that all of a suddenwe're going to have a completely
different procurement cycle forthe military.
(22:52):
It's not going to be that case.
Always military has to adjust.
Government has to adjust itspolicies to be able to procure
things that come from Andrew.
Right?
Because the traditional defenseindustries, they've also built a
wall around this industry thatrevolves around understanding
how to get out of the valley ofdeath, right?
(23:13):
It's not that simple.
So we're going to see this speedfactor, you know, slow down a
little bit.
Once we understand theregulatory hurdles, each one of
these companies have to gothrough.
So as we wrap up I think it'simportant for us to highlight
that the research that has goneinto this episode and the
previous episode about startupsin defense was actually pretty
(23:35):
uncomfortable.
Shikhar and I acknowledge thatit's really difficult to go into
topics like this.
When we started, things havechanged.
We wanted to highlight thechanges in industry tech place
in this industry.
This happens to be one of them.
Defense is one of thoseindustries that tech is touching
(23:57):
undeniably.
Shikher Bhandary (23:58):
Yeah.
And also we have a slate ofincredible founder episodes
coming up next founders basedout of France.
building incredible newtelecommunication applications,
as well as our first guestreturning to Things Have
Changed, talking about theirexpansion, the startup's
(24:18):
expansion to a differentcontinent.
So yeah, super interesting,super exciting to be a THC
listener.
And as always, stay curious.
The information and opinionsexpressed in this episode are
for informational purposes only.
And are not intended asfinancial investment or
professional advice.
(24:39):
Always consult with a qualifiedprofessional before making any
decisions based on the conceptprovided.
Neither the podcast, nor iscreators are responsible for any
actions taken as a result oflistening to this episode.
In 2012, the virtual reality landscape was
forever altered with theintroduction of a pioneering
headset, marking the rise of VRinto mainstream consciousness.
Facebook has acquired virtualreality headset maker Oculus VR
for two billion dollars.
Facebook CEO Mark Zuckerbergsaid the deal reflected his
belief that virtual realitycould be the next major
(00:21):
computing platform after mobile
Palmer Luckey, the architect of the shift, has
since pivoted from digitalescapism to a domain where
technology's impact isunequivocal and immediate.
Defense.
So Andrall is trying to be theworld's next major defense
contractor.
Today's episode of Things Have Changed podcast
delves into and real industries.
(00:43):
A company at an intersection oftechnology and defense, far
removed from the conventionalstartup focus on apps and
enterprise software.
Anduril is redefining defense bybringing cutting edge technology
like the cloud, end to endsoftware and AI at the fraction
of the cost in thistraditionally rigid sector.
Lucky Palmer (01:04):
I specifically got into this business because I
wanted to change the way thatthe military buys technology.
Jed Tabernero (01:10):
Join us as we dive into how Anduril is proving
that the pen Is mightier thanthe sword, especially when it's
used to code.
Shikher Bhandary (01:56):
Having been in tech for such a long time,
right, both of us, Jed, you andI, working in it, now talking
about it on Things Have Changed,there's one key theme, the holy
grail, that overrideseverything, and that is to build
an ecosystem.
Everyone wants to build anecosystem.
(02:18):
You can go ahead and name top,top companies in the world,
Apple, Amazon, Microsoft,Google.
The one thing that they share isan ecosystem.
Great ecosystem is when there'sa seamless integration between
the hardware and the software.
(02:40):
That's the holy grail.
Let's take Apple, for example,you know, we, we talk about
Apple a lot and there's a reasonbecause they've kind of
perfected this ecosystem play.
On the hardware side, they havethe iPhone, iPad, MacBooks,
great hardware, you know, latestchips, fast processing,
lightweight, aesthetically verypleasing, all of that, checks
(03:04):
all the boxes.
On the software side, they havethe macOS, seamless, very nice
UI, you have iMessages, you canback up your iPhotos into your
iCloud, you can listen to musicon iTunes, so everything is in
this ecosystem.
You have the hardware and thesoftware on the hardware side,
(03:24):
you make incredible margins andon the software side, you take,
you take a cut of alltransactions on, um, the app
store.
Right.
Another example.
Um, and one that I don't thinkwe talk a lot about and we don't
give credit where it's due atleast, uh, with Tesla, you know,
(03:46):
they have the cars.
And which other car manufacturercan, can push out software
updates to the car through thecloud?
Jed Tabernero (03:56):
I mean, they're starting to do that, but you
know, they got it from somewhereand Tesla was, was one of those
people, dude, every time I plugin my car, there's an update.
You know what I mean?
So it's, we've gotten to a placewhere our cars are now simply
like our iPhones and Mac books,where we have to spend like
maybe 20, 30 minutes, justupdating it.
And we know that it's going tobe better.
Shikher Bhandary (04:17):
There are so many things that can now be
controlled because there are somuch data.
There's so many sensors on thecar.
Right?
So this ecosystem is whateveryone's striving for.
And one example which connectsthe company that we're talking
about today, the startup, to oneof the big, big tech companies
(04:38):
is Anduro.
But I'm not talking about thatfor now.
Let's talk about virtualreality.
So there's a reason why Facebookdecided to get into the virtual
reality game.
It's because Facebook has alwaysbeen a software play.
They had the software componentof Instagram, Whatsapp, Facebook
(05:00):
locked down.
But they were still paying thethe tax of the hardware.
They didn't own the hardware.
And that's why they reallywanted.
To get onto the next wave ofcomputing, which was virtual
reality, which was supposedlyvirtual reality.
So yeah, they paid huge sums tomake sure they have the
(05:23):
ecosystem of both the hardwareand the software aspect locked
down for the next 20 yearsbecause Apple won the previous
20.
Jed Tabernero (05:31):
Yeah.
In the story of VR becoming likea household name, like we
mentioned in the intro, thatcompany who made it really,
really popular.
Was the Oculus Rift and thenMeta made this huge shift,
right?
I think we talked about that aton in the last two years where
Meta was like, look, VR is thefuture.
(05:54):
So we are going towards VR.
They've literally changed theirname to Meta, right?
In the last two years.
And so VR became kind of a hugepart of that story.
And so I think it was, I don'tknow, 2017 or something when
Facebook bought Oculus, thecompany.
Right for 2 billion, dude.
(06:15):
Palmer lucky who had sold Oculusto face gets his 2 billion and
doesn't go by five islands and,you know, change his life
forever and doesn't do anything.
Stay, stay as quiet, right?
He moves.
Into an industry that waslargely untouched from Silicon
Valley world.
Now where we're seeing it in thenews, that startups are coming
(06:37):
into defense.
And this was the wholeconversation we had in the last
episode.
If you haven't listened to it,check it out.
Um, it's where we talk about theshift of Silicon Valley, having
a stronger relationship, um,with the defense industry,
right.
With traditional militaries.
And so this company, um, wasfounded by Palmer lucky.
(06:59):
Andrew industries, the, thetheme of our conversation today,
and very similar to what she wastalking about earlier on, um,
the ecosystem of, of apple andhow they've made such a, an
amazing product, right?
One, the last 15 years, whateverwe're looking at Andrew today is
one of those companies who isstriving for this type of
(07:22):
business model.
Right.
Okay.
For our tech enthusiasts here,you're probably thinking, okay,
this is nothing new techcompanies come up with this all
the time.
This is, this is their walledgarden.
You know, this is the placewhere kind of startups really
are striving for today.
But this is entirely differentbecause this is defense.
(07:42):
We talked in the last episodeabout how complex kind of the
procurement systems are of thedefense industry, right?
The whole cost plus methodologywhere we'll spend whatever we
want.
You'll compensate us on on thebasis of that.
And then we get a cut
Shikher Bhandary (07:58):
Cash money.
Jed Tabernero (07:59):
money.
Exactly.
These conglomerates be makingmoney, man.
So it's kind of yeah.
It's a very different space toenter for them.
And dude, now that you mentionedApple, something just came to my
mind, right?
I just bought a DJI for, okay,that's a drone for everybody
who's not familiar.
(08:20):
That is under the ecosystem ofDJI.
Shikher Bhandary (08:25):
Ah, interesting.
Jed Tabernero (08:27):
Wonderful stuff, dude.
Wonderful stuff because DJI, youknow, they deal with drones.
It's a company that originatedfrom China.
The American consumer cannot getenough of it, dude.
We buy so much drones on ayearly basis now.
And can you imagine this?
Like before we thought aboutdrones as a military
(08:48):
application, okay.
There were consumer dronespopping up left and right shitty
ones.
Okay.
If you go to amazon.
com and type drones, you'll seea bunch of like shitty drones,
but DJI is a clear winner in thespace of drones, right?
Non military applications, justconsumer friendly drones.
Shikher Bhandary (09:07):
Big drone guy.
Jed's
Jed Tabernero (09:09):
I'm a big drone guy.
I'm a big drone
Shikher Bhandary (09:11):
Uh, he, when he, before he goes to bed and
this is, I'm not even joking.
He just puts on these videos.
Actually, they are really,really fun to watch.
And it's just these drones thatare flying through different
landscapes, mountains,waterfalls.
It's stunning.
It's stunning.
But yeah, he puts himself tosleep with these videos.
(09:32):
So yes, he is a big drone guy.
Jed Tabernero (09:34):
And I've loved the DJI ecosystem using the
drone.
And it just proves to you thatlike, that's a step towards, you
know, maybe some defenseapplications.
Shikher Bhandary (09:45):
I mean, things still traditionally rely on like
radio.
You know, and a lot of it ismanned.
So the interesting thesis hereis global defense has moved from
like having a ton of people tomore about data collection of
data Knowing what's happening atall times across your border and
(10:06):
across the different states.
So it's more about Being aware,having these drones and sensors
that can compile all that data.
And you have like one ecosystemthat, that manages this data.
Think of it like the, you know,the iOS, the Apple OS, right?
It's like the, the brains behindyour entire iPhone.
(10:29):
The startup is aiming to be thatwhere they not only have a
software platform that serves asa command center.
Right, to coordinate autonomousdevices, autonomous robots,
drones, underwater submarines.
They've done it in a way suchthat the software is super user
friendly and the hardware syncsalmost seamlessly with the
(10:53):
software system.
Jed Tabernero (10:55):
Yeah, no.
And you know, just a nod to thedata thing, you know, data is
King.
What can you do with a ton ofdata?
Right.
Where does it become helpful tohave a shit ton of data?
Well, makes it easier for us tomake decisions, right?
I'm sure a ton of our listenersalso work in a corporate space
where you understand now metricsare key to understanding how
(11:17):
progress goes, how much you cando with what another thing that
has come from the advent ofdata, a shit ton of data is AI.
AI can then use this datamanipulated to kind of
understand how to respond tocertain situations, you know,
and as we evolve by collectingmore of these data points,
(11:39):
understanding the users better,which is, you know, maybe
traditional defense users,militaries, you know, to
understand how that space kindof works better.
AI is now being used in thatspace to innovate on these
things that you learn AI, right?
So there is now an active rolethat AI plays in defense and in
(12:00):
military applications, which Ithink is something that's
completely, you know, it'ssomething that's coming also
from the tech industry.
We're starting to see a lot ofAI applications.
You see all these VCs onlyinvesting in AI centered
companies.
You know, we're seeing that inthat space and now we're seeing
it as well in the defenseindustry.
Shikher Bhandary (12:19):
Jed and I, we talk about satellites a lot.
You know, the whole Starlinkthing, reusability is such a
big, big aspect of what madeSpaceX the company that it is
today.
They send rockets, a sizableportion of that rocket actually
comes back.
and lands safely.
(12:39):
That itself was, is saving closeto 95 percent of the cost of
building that rocket, becausenow you can use it again and
again.
And Angirol has taken that samemindset of reusability to drive
costs significantly lower.
(13:01):
Um, so their products, you know,they, they came in, we were
talking about the softwareaspect, right?
The lattice, um, ecosystem, uh,which is what their product,
which is their software product,but they have hardware products,
which are, which are makingwaves.
Right now, they have one whichis called the Roadrunner.
It was, it had a big reveal.
(13:23):
Um, and the defense industry hasnot seen anything like this.
Right.
And it's a big, big advancementto traditional defense systems
where it's just one and done.
Right.
It's just used once and it'sdone.
But this, you know, this is morelike for surveillance to
intercept transport.
Right.
And it can be safely recovered.
(13:45):
And it sits in a box.
Such that you can transport itand, um, rapidly launch it as
well at near zero cost.
So they are aspect, they arethinking behind it is, Hey, we
need to be a lot more agile inthis new, always on high data
(14:06):
world.
So what better than a reusable?
autonomous air vehicle.
While I was doing my studies,uh, in mechanical engineering, I
was working at a startup, whichwas designing underwater
autonomous vehicles.
So I used to do the, the CADdesign for it.
So the 3d design
Jed Tabernero (14:27):
UAVs.
Shikher Bhandary (14:28):
UAVs, underwater autonomous vehicles,
this product.
Dive LD from Andural is 3dprinted and it's not only for
defense, it's for exploration.
So like seafloor mapping, deepwater surveys, inspection, which
is actually the use case that,uh, the startup I was working
on, we're trying to lean into.
Jed Tabernero (14:49):
It's kind of crazy how all of this
information is public and thesecompanies are trying to get into
this space where we can sharethese things, you know, with the
public talking about liketraditional defense differences
in our previous episode, we kindof covered a ton of like, why is
this industry, um, having such adifficult time innovating and
(15:11):
why prices are so insane?
Why the military spends so muchmoney.
Anderle is, is one of thesecompanies.
That are trying to, to changethat defense industry
perspective.
And one of the things I'd pointout is in the previous episode,
we talked about how DOD releasedthis report, right?
Every year they release thisreport about what are they going
(15:31):
to do differently?
You know, what kind of stuff ischanging?
And one of the things that theyhad a nod to end of 2022 and
2023 was that, Hey, we need tobe more conscious.
About spending, we need to bemore conscious about, um, how
we're innovating in this space,you know, because we spend a
ton, we spend a ton of money onthese things and taxpayers are
(15:53):
not, not having it.
Right.
So Andrew comes in with thisthesis and says, also, we're
going to make sure that we'redesigned from a business
perspective, completelydifferently than, um, a
traditional Boeing, atraditional Northrop Grumman.
They're defined so differently,they're attacking the problem
(16:14):
from this concept called, um,valley of death.
This is basically, it's a periodof time in the defense industry
where you create a prototype,And you're basically roadshowing
this prototype until you get toproduction into full scale
production, right?
(16:35):
This is the time the governmentkind of goes through all the
approvals.
There are some regulatoryhurdles that you got to go
through.
It's called the valley of deathbecause a lot of companies, they
don't have enough capital to bealive and awake during this
time.
So they typically die off.
Right.
And then all these biggerconglomerates are going to be
coming in to, to kind of takethose contracts because they're
(16:56):
the ones who can stay alive forthat long.
Andrew does not like this model.
It tackles it from thatperspective saying, Hey, listen,
we want to bridge the gapbetween prototype development
and government procurement.
When the government actuallymakes a decision, Tate, make
this right.
Streamline that path.
Um, from deployment and adoptionby the military.
(17:19):
So it's kind of, it's kind ofthe big difference where Andrew
comes in and operates like a bigtech company.
Like we were pointing outearlier.
Right.
Um, and getting away from thecost plus procurement more into
a money ball military style.
Right.
And this is where the businessmodel comes in will be really
interesting to see, because shewas pointing out, look, software
(17:42):
is the center of this story.
Lattice.
It's a software name, right?
Single operated by lattice.
But he also mentioned thehardware components that we
just, we just talked about,right?
And real strategy is buying uptiny defense companies that may
already have a product thatcould compliment lattices
capabilities.
(18:03):
So that that's, yeah, that'ssomething I just, I just learned
out of just reading through, um,you know, how Andrew operates
and they are buying up tinydefense companies that have a
hardware component to it andthey see, okay, does, does
lattice play into this hardwareproduct?
Right.
Can we extend this hardwareproducts capabilities by
(18:23):
gathering the right data, bygiving the right inputs, right?
Like this is very interesting.
And I called it money ballmilitary because you know, if
you haven't read the book or, orwatched a show, um, watch the
movie money ball, you should.
Very interesting.
They're on a budget and they'retrying to make a baseball team.
Right.
Similar to this company.
Um, and they're on a budget andthey're trying to create the
(18:46):
most efficient defensecapabilities out there.
Crazy.
Shikher Bhandary (18:50):
Yeah.
And I mean, they've seen so muchexcitement from VCs and
investors.
They raised, I think more moneythan any other startup in 2022.
This could be a trend.
Like we mentioned in theprevious episode, there are so
many gaps in the procurementcycle, the efficiency gaps that
(19:12):
tech looks at and thinks, Hey,this is another trillion dollar
opportunity.
We should jump into this.
What is the future of defenselook like?
So, I mean, the future of techis AI.
So you can just imagine, um, youknow, bad actors using those
open source AI platforms, uh,and algorithms to do harm,
right?
So you need to be prepared evenon the defense side.
(19:35):
Now, we have to mention thatthere are concerns that not
everything should be AI becausethe people that even work in
this industry.
fail to understand why certainthings are done or certain
decisions are made.
So I think there needs to be acareful review and due diligence
done to make sure that this isdone correctly and humanely.
Jed Tabernero (19:59):
It's a good point, man.
That's a good point.
Cause I think as we get intokind of this world where AI is
used in even military anddefense, um, applications, we
need to be really careful aboutreviewing these algorithms,
making sure, you know, that theyalign with kind of our values.
It's not lost on the DOD, Iguess we've seen some
documentation around ourresearch about reviewing these
(20:22):
algorithms, making sure that,you know, it's not, it doesn't
have some like super evil, um,underlying cause or goal, right?
So there are ways where you canhave this type of greater,
greater scrutiny and regulationaround it.
And companies like Anduril isthat's out there.
Right.
They're constantly scrutinizedby these things.
(20:43):
Um, and hopefully that, thatcontinues, um, while the
shifting power dynamics happenwithin this defense industry,
right.
Is that we can hold them moreaccountable than the incumbents
were before.
A part of that as well as, youknow, one of, um, lucky Palmer,
Lucky's goals is that he wantsto be a publicly traded company.
(21:05):
Right.
Andrew wants to be, because justlike any other massive company,
the government's not worried toomuch about the financials of
publicly traded companies,because they're subject to
scrutiny from external auditors,right?
They have that public practicethemselves.
So, you know, just making sure.
That they get into a space wherethey're constantly audited,
(21:26):
they're beholden tostakeholders, um, you know,
makes it a more promising,promising, uh, venture for the
government.
Um, so what is, what is defensebasically look like going
forward, right?
We're talking about this, thisregulation and how things are
changing in the space and how wehave to be careful, you know,
what are the major themes thatwe're seeing?
(21:47):
Well.
This is basic, but this is athings have changed theme as
well.
Is that ton of robots cominginto the space?
Ton of robots with AI as one ofthe major focuses in this space.
And so the defense industry,yes, I think we've expected this
before that there's like a tonof labs creating AIs and
creating robots for the futureof defense, right?
(22:10):
Right now we're seeing it.
We're seeing it in action,right?
We're seeing MIT labs come upwith robots that are completely
autonomous, um, servingdifferent types of purposes and
industry.
And this may extend to differenttypes of industry as well,
right?
Another major theme I want topoint out really is like speed,
dude, we've never been in aplace.
Where we could come up withmilitary applications that will
(22:32):
be faster.
I have to point out, although wementioned all this stuff about
procurement and about how Andrewis going to change the game for
procurement, there's still a tonof regulatory hurdles that they
have to get through, right?
Like it's not just because theycan come up with a product
faster that all of a suddenwe're going to have a completely
different procurement cycle forthe military.
(22:52):
It's not going to be that case.
Always military has to adjust.
Government has to adjust itspolicies to be able to procure
things that come from Andrew.
Right?
Because the traditional defenseindustries, they've also built a
wall around this industry thatrevolves around understanding
how to get out of the valley ofdeath, right?
(23:13):
It's not that simple.
So we're going to see this speedfactor, you know, slow down a
little bit.
Once we understand theregulatory hurdles, each one of
these companies have to gothrough.
So as we wrap up I think it'simportant for us to highlight
that the research that has goneinto this episode and the
previous episode about startupsin defense was actually pretty
(23:35):
uncomfortable.
Shikhar and I acknowledge thatit's really difficult to go into
topics like this.
When we started, things havechanged.
We wanted to highlight thechanges in industry tech place
in this industry.
This happens to be one of them.
Defense is one of thoseindustries that tech is touching
(23:57):
undeniably.
Shikher Bhandary (23:58):
Yeah.
And also we have a slate ofincredible founder episodes
coming up next founders basedout of France.
building incredible newtelecommunication applications,
as well as our first guestreturning to Things Have
Changed, talking about theirexpansion, the startup's
(24:18):
expansion to a differentcontinent.
So yeah, super interesting,super exciting to be a THC
listener.
And as always, stay curious.
The information and opinionsexpressed in this episode are
for informational purposes only.
And are not intended asfinancial investment or
professional advice.
(24:39):
Always consult with a qualifiedprofessional before making any
decisions based on the conceptprovided.
Neither the podcast, nor iscreators are responsible for any
actions taken as a result oflistening to this episode.
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