The future of defense manufacturing with Anduril CEO Brian Schimpf

Josh Wolfe:
Brian, awesome to be with you. I want to talk about two trajectories. Trajectory one is the trajectory of Anduril, of the team formation of the company, of the start with an initial product and a vision for a broad platform of products. And trajectory two is the trajectory of projectiles that I believe are defining modern warfare which are missiles, missile defense. And so we'll get to that and some of the cutting edge technologies that you're developing for both offense and defensive capabilities. Let's start with the trajectory of the company. Seven years ago, a group of you come together as co-founders and you are CEO. Give me that founding moment with you and Palmer, and Trey, and Matt and crew and what that was like.

Brian Schimpf:
So we had been talking for years about the idea how there needed to be a new defense company in the space, that there needed to be a new defense prime. And that kind of the realities of the world, all the macro forces, all the inventions that's happening in Silicon Valley, the way you build modern software, the need for lower costs, more autonomous systems. These were all just major shifts that had occurred that were just not being seen in the defense space. So we believe there was this opportunity to actually do something big, something different and be a next generation prime. And that was a pretty wild idea at the time. So 2017 I was at Palantir, we were getting protested all the time. It was very controversial to work on anything national security, and the conventional wisdom at the time was you do a single product, that's what you do as a company. Focus.
And the idea that we would have, this sort of broad portfolio of products was just kind of like a weird concept I think for a lot of VCs at the time. It didn't make a lot of sense. That wasn't what people were doing. It wasn't a SaaS company. How do you even price this? And so, for us at the time it seemed kind of obvious, this is the nature of what you needed in defense. We had worked a lot at Palantir, seeing what was there and Palmer had brilliant ideas and the technology we needed to pull together. But it seemed fairly obvious to us. Fast-forward seven years later, the pace that we've been able to move, I think surprised even us. When you compare it to how long it took SpaceX or Palantir to get to different revenue mile markers, it took five, 10 years in before you started to see real traction.
With us, I think within the first, I don't know, what was it? Year and a half, two years, we were about two years in. We had our first quarter billion dollar program of record moving very, very fast. And so I think everyone was just kind of surprised at how much appetite there was to do something differently in this space. Today we're like 4,000 people, a year ago we weren't making autonomous fighter jets this year we are. We've just been able to accomplish a huge amount of stuff and I think a lot of it is just due to the macro environment. It's like tech has changed, the world is in the most geopolitically unstable place it has been in our lifetimes. And the need and the urgency around solving some of these problems a different way, I just haven't seen this much pull in my lifetime around working in national security.

Josh Wolfe:
One of the visceral things that I remember, 2019, Peter Thiel and I are at the Reagan National Defense Forum with you and Palmer and Trey and a handful of others were on a panel, and Palmer's in his classic get up and his wine shirt and his cargo pants and his flip-flops. And I remember the feeling when people there, it was almost like that Gandhi quote, like first they laugh at you then they fight you and then you win. And now so many of those people want to be part of the integral team and it's quite incredible change. But what was it? Was it the fact that the technology was superior and we started to win and people want to be associated with winners? But what was that catalyst when you felt as leaders, CEO of the company, that it went from being not taken seriously by people until it was so taken seriously that it couldn't be ignored?

Brian Schimpf:
Yeah, I really think this started to shift over the last, really about 12, 18 months was really when things kicked over. And there was a couple of different things. So I think probably the biggest single mover was we were in a competition against Lockheed Martin, Boeing, Northrop, and then us in General Atomics were awarded the ability to build this autonomous fighter jet program. And it's one of the Air Force's top priorities. And that they saw and understood that we could do things cheaper on a faster schedule, we could produce differently. That we were showing up with ideas of how this could be different and that they took that bet. That has kind of catalyzed a major shift. We've seen it with working on counter drone systems, so we invest our own capital to build this surface-to-air counter drone missile. Nobody else would've done that.
Nobody has a weapons program just kind of on the hope that the US government's going to buy it on the other side. But we knew it was a need. We knew it needed to be solved. We listened to the department on what their priorities were and we just kind of ran to the sound of gunfire. And nobody else was really doing that. Nobody's showing up with ideas of how it can be different, how you could incentivize and get better results out of the industrial base, different ways of producing, different ways of thinking about software. And I think that's the part that's so unique, is we think deeply around not just what's going to make us successful, but what the department actually needs to do to be successful.

Josh Wolfe:
Well, let's talk about that because one of the things that is distinguished and or from some of the prior primes, we've gone from 50 down to five. And people complain that they are sclerotic and bureaucratic and slow moving. And mostly it has accrued to their advantage to be like that. But along comes Anduril and all of a sudden the speed with which you are ideating, the speed with which you are producing and delivering and not waiting for these cost plus contracts, it's just a game changer. And it hearkens back to really the World War II war building effort. What is it when you are thinking about going from an initial set of products where you're assembling for Customs and Border Patrol and the Sentry Towers, into now autonomous copilots of fighter jets? That is just so expansive and broad. Is that the technical team that you were able to develop? Talk us through the ideation from the initial product into this very broad suite of things of air, land, sea space, subsea and beyond?

Brian Schimpf:
Yeah. So well, one something cross-cutting is we have a software core we call Lattice. And the idea is... This is how Silicon Valley builds software now, we think of kind of broad platforms that could be useful across a huge array of things, because the tech world has realized how expensive, how difficult these things are to build, how rare they are but also how powerful they are. If you actually have this, the number of problems you can solve, the number of areas you can tap into is massive. So this idea of building this general software platform was kind of cross-cutting with everything we do. And there we really focus on all the systems we have have a huge number of sensors on them. They have to make sense of the world, they have to process it. We use all sorts of different AI techniques to do that.
And then the other end of it is we're building robotic systems. They've got to interact with the real world. So how do we actually then go out and plan how an aircraft flies and it's got to manage hundreds of decisions, manage am I going to be seen by the adversary? Where do I point my sensors? I've got to get the best advantage to take this shot. All those things have to be taken into account. That's a very hard thing for a human pilot to do. So codifying that into software becomes really, really key. I can essentially scale this out to a broad number of humans on these very sophisticated things that are becoming increasingly scarce, and warfare is getting increasingly complex. So we've had this sort of vision of this consistent software platform across everything, and that's been a huge enabler for us. The other kind of through line with all this is we really focus on these autonomous uncrewed systems.
We're not really doing anything with manned platforms, we're not going to make an F35. We're not going to make a tank with people in it, it's not what we're going to do. And that's enabled us to basically think about where can we make this cheaper? Where can we tap into a different supply base? How can we re-conceptualize the design to make it easier to manufacture and really make it kind of software enabled from day one? So how do I make everything sort of software programmable, software controllable? And these are things that just permeate every single thing we're doing. The reality though is in defense, you aren't going to get a single product winner. It's just you can't build a big enough successful enough company. And honestly, you're not moving the needle on the national security mission by having one product. We want to have as big an impact as we can on the military strength of the US. That's going to require getting into sensors, that's going to require getting into weapons, that requires getting into aircraft and subsea platforms just all over the place space.
But when we move into it's always with a lens towards, if there isn't an aspect of cheaper, higher quantity, smarter, more autonomous, it's probably not interesting for us. We're not going to work on super exquisite stuff.

Josh Wolfe:
Let's talk about the dimension of speed and then I also want to go into our acquisition strategies between organic growth and what has been a series of very successful, I believe now six acquisitions. Let's start with the first with speed. Why does it take the big primes so long to iterate, whereas the speed with which you are introducing new products and delivering them just seems to be absolutely a contrast?

Brian Schimpf:
Yeah, so the primes are often a product of the government incentive structure they live in. They're living in a world where everything is the government processes, they write requirements and they put it out to bid. They're bidding to spec. Then they go through a very sequential design prototype test, then get to mission test. So when you look at that whole cycle, that's like a 10 to 15 year cycle. A fast weapons program for the US military is 12 years. That is considered record speed to get something new and introduced in that timeframe.

Josh Wolfe:
I remember by the way, when Tony Thomas, one of our venture partners who used to run SOCOM sent me out to the Pacific, embedded me there. I came back, I did an out briefing in the Pentagon and I said, "If I was an adversary, the number one thing that I would do is basically take that character from office space with the red stapler, and just put him in charge of everything because I would just want to slow the system down and put as much friction as possible."

Brian Schimpf:
Yeah. This is the old OSS how to sabotage an organization, everything needs to be reviewed by committee. We got to re-examine this decision. Look, it's a pretty effective way to do it. So for us it's like, okay, well, we have incentive just to get products out fast. So we're investing off balance sheet. We want to get these things out. We don't make any money until it actually works. That's a pretty good incentive to start with. And then I think we've embraced a lot of the Silicon Valley DNA around these things, which is we just are empowering very smart engineers to just go out and crush problems. We're not so risk averse that we have to double check everyone's work. We want to set up all these processes to slow everything down to ensure nothing goes wrong. But a lot of the primes, they feel like they have more to lose than to gain by moving fast.
You crash a drone with a Boeing logo on it, it's quite bad at this point. But I think you can overcome that. Elon has overcome that. He has celebrated the failures. He has celebrated the ability to just move fast and show what is possible on this. So I think there's a way to jump to the other side of this. But there's so many examples of this where we are working on this extra large autonomous underwater vehicle. We did it as a co-development program with the Royal Australian Navy where we worked together to figure out, hey, what's the right requirements? What specs do we actually need to build this to? We tapped into different commercial suppliers. We're working with a company that makes batteries for F1 cars. It's great. There's a whole lot of industry out there you can work with to make this go fast.
We were able to go from napkin sketch to first halls in the water about 18 months. The equivalent US program has been going on for about 10 years, has just now the first halls in the water. We already have substantially more time in the water than they do. And I think it's just because there all these crazy requirements put on it, there's sort of not a lot of incentive to make it go faster. All these things just end up creating drag in the system. And so our number one thing is we just got to get product out fast. And so finding those customers and those problems where they have that sense of urgency, they need to win now, not in five years from now but now. That has enabled us to go. And I think we've been able to find these customers that just need results. They just need results.

Josh Wolfe:
Testament to your leadership style as CEO and something you mentioned before, 4,000 employees. We've got 40 people here at Lux, and at times that feels to me unmanageable. The incremental person, I want to make sure I know their name and their spouse and all those kinds of things. 4,000 people is very serious in just a handful of years. You started in Orange County, we now have offices in how many places?

Brian Schimpf:
Probably about a dozen.

Josh Wolfe:
Okay. And some of that is organic, some of it is acquisition. But talk about how you manage 4,000 people and what the through line has been to keep up that speed, the innovation, avoid the bureaucracy and have this sort of differentiated culture.

Brian Schimpf:
So I think we have a bit of a structural advantage where we have so many products we're working on in so many diverse business areas, that each of those teams can be a small organization. That team can actually still be very agile, very nimble. And so we've been able our choices every time there's a problem, every time there's an issue that shows up, that isn't an opportunity for more process to second guess and double check their homework. It is a learning opportunity for those leaders to get better and fix their organization. And so we're just sort of always doubling down on more autonomy, more local control. How do we speed up decision making by just getting middle management out of the way? And that I think has really worked. We just try to empower these pretty logical groups to just run their strategy, execute well, and then we just minimize the amount of overhead we put on them. But then also take advantage of the fact that, look, we have a lot more access now on government relations.
We have a lot more brand, we have a lot more resources in terms of the test facilities and security and all these things. And so finding that balance of all the good things you get with scale, but then still keeping like when I got to just go deliver a product, that team they're the only ones that are contributing to that. Nobody else is helping.

Josh Wolfe:
We talked also on this theme of trajectory very early on of Henry Singleton and Teledyne and doing smart acquisitions. Talk a little bit about the strategy of acquisitions and how that has progressed both in size, scope, adjacent capabilities, and then of course geographies.

Brian Schimpf:
Yeah, so we've done about six. What has been consistently the pattern for us is picking up businesses when we believe we can grow them very, very fast, where we can shave off two or three years. So we see some opportunity in the market where big program decisions, decade long program decisions are going to be made. We find a company that has a great product that has been delivering well in that space, but they don't have those benefits of scale. They don't have that ability to be seen as the company that can prime it to be able to mobilize congressional support and DOD support against these things. Or they don't have the software or the sensors or all these other things you need, or the production to be able to actually scale these things and deliver a holistic solution. So we've been able to basically pick off these companies where timing's right, there's a real market opportunity and we believe we can put them on overdrive. And that's been consistently the pattern.
I think several of them were very, very good, but one that really stood out was we acquired this company Dive Technologies in Boston. They had built this autonomous underwater vehicle. And even before the acquisition was closed, we went to the Royal Australian Navy and said, "Hey, we have this idea to build with you this big school bus-sized underwater vehicle." And it went from who the hell is Anduril or I've never heard of you, to signed $100 million code development deal four months. And then we'll be in production on that probably mid-next year. And that's about a three-year turnaround from acquisition to full-scale, multi-billion-dollar program. So we've just been able to turn these things and I think with the brand, with the credibility, the ability to actually deliver on the promises, we've been able to turn these things just into growth machines very, very quickly. So that's really how we look at it, which is we can be price disciplined, we can actually just pick up great companies and we can grow them. And we're just very much in that mindset of how do we just keep growing our share and just deliver great technologies?

Josh Wolfe:
Not revealing too much inside baseball, but Dive was one of the companies that had come to pitch us as an independent venture. And I remember saying, "I thought that technology was great, but as a standalone venture versus being part of Anduril, it was in their rational self-interest." Become an equity holder in Anduril and it's going to be a far bigger rocket ship and you're going to have far more resources and scale than you will as an independent company. And I think we as an investor in a large investor in Anduril often struggle with that, is should we fund something or is it much better that this be a tuck and acquisition for Anduril given the growing scale you have? Let's talk now a shift from the trajectory of the company to the trajectory of these projectiles, which I believe is one of not the but one of the key defining things of modern militaries, which are missiles.
You're seeing it in Russia, Ukraine, you're seeing it in Iran, in Israel, Gaza, Lebanon, Hezbollah, the Houthis. Most of the threat vectors today are people going from, if I was to go back through time, our sort of ancestral primate projectiles of people throwing rocks to throwing spears to guns and trench warfare to missiles, and that constant evolution of just basically throwing things in the air to destroy an enemy or their capabilities. Let's talk about missile, missile defense counter UAS and the systems that you're developing.

Brian Schimpf:
So I agree this is one of the key technology shifts where you look back, call it early 2000s, the states that could actually have the technology to even do long-range strikes, to do long-range engagements, that was really short. It was probably like what the top 10 militaries had any sort of long-range missiles of any capacity. And so it was kind of viewed as a fairly high-end technology. Today the Iranians are supplying this to everyone. It's relatively cheap and easy to build low-cost drones. These can go hundreds of miles and strike things at huge ranges. And so you've really massively shifted where you can be safe, what they can put at risk and how you operate. It's pushed everyone back substantially. And the other side of this is the US has had air superiority and hasn't had this threat of long-range strike for so long, that we've really atrophied on a lot of our missile defense capabilities.
We've invested into things that were like the high-end threats like Patriot, like I want to take out long-range ballistic missiles, the state-level threats. But this ability to deal with these sorts of low-grade, high-volume threats has just not been a threat that the US has seen. You look at this in Ukraine, the data on this is just wild where low-cost suicide boats have taken out a third of the Black Sea fleet and rendered the other two thirds of it effectively useless and having to stay way back in a way that they're not even relevant to the fight at this point. You've got, I think Russia has deployed something like 8,000 of the Iranian Shahed drones against Ukraine over about a two-year period. And that's not counting their other conventional missiles as well. So the scale of this is just sort of absolutely massive. So they've taken out tanks, tanks are irrelevant. Just like you don't want to be an armor at this point, it seems like a really bad time.
So it's just totally shifted the calculus of warfare on this stuff. So for us, we've got kind of two things that we're investing in that front. So one is counter-drone tech. This is a hard problem on a couple of different stages. You got to detect and track them. That's hard. There's some flying 50 feet off the ground, that's very tiny. Man, that is a hard thing to find.

Josh Wolfe:
At speeds of,

Brian Schimpf:
At speeds of 100s of miles an hour, you don't have a lot of time to react. These things are obscured by terrain. All of this is just very, very hard detection tracking problem. Then you've got to be able to affect them. And so this can be, I want to jam them, I want to confuse them with electronic warfare or this can be, I want to strike them. So how do I actually shoot them out of the sky? We've invested in all of the above where Lattice really helps in that detection, tracking fusion, how do I pull that battlefield picture together? We've invested in a variety of sensors there. And then we've done electronic warfare systems where we're doing kind of novel jamming technologies where we'll use RF machine learning to identify novel signals to be able to react very, very quickly. So a lot of this is just the pace that you are seeing is now weeks as they're changing these signals on the drones.
And then we've done a lot on the kinetic side as well. So one of the things we worked on, again, this was just funded off of our on balance sheet, we saw where the threat was going. I think we're not at the full combination of this yet. I think over the next five years it's going to get much worse where they move to jet-powered faster Iranian drones. We built this technology we called Roadrunner. It's like basically a vertical takeoff and landing. It looks like a mini fighter jet. It can go off, take out, you can kind of orbit. And then once you decide you want to engage a threat that'll go out, you can blow it up. Or if you don't, come back and land. Lands like a Falcon 9 rocket. Super cool, we have that deployed throughout the Middle East. We're getting this deployed with all the services right now and it's scaling quite quickly.
And that was an example of just leaning in on where we thought threat was going. We just had a buyer who said, "Yeah, I'd buy the first 50." Helped us through certification, that's really all we had to go on and it's been incredibly successful for us.

Josh Wolfe:
And this is an example of software to do the tracking and lock in and then ultimately mass on mass.

Brian Schimpf:
That's right ...a physical target

Josh Wolfe:
When you look at the strategy, whether Iran on their attacks on Israel or China, thinking about its potential offense in Taiwan and just generally in the Pacific Rim, the idea of attritable systems like what you're talking about. Large-scale, relatively cheap saturating a particular adversary's ability to defend itself. I think it's something like for every 14 missiles that are fired at ages to destroy, 28 immediately get fired back, but the 15th is the one that can effectively kill you. That's a very complicated, as you said, sort of new calculus of warfare. What are some of the non-obvious orthogonal approaches that technology might be used here?

Brian Schimpf:
Yeah. So I think there's been three big kind of technology shifts that have made most of the legacy approaches very, very hard to execute. So one is basically what you pointed out is long-range weapons are now proliferated, you can be struck anywhere. There's sort of no sanctuary anymore. You look at the plans for where the aircraft carriers going to be in a Taiwan scenario, it's like thousands of miles away. It's just so unsafe. The Chinese have invested in these long-range carrier killer weapons. Second is just absolutely ubiquitous sensing. So again, there's no sanctuary. You can be found anywhere. It is very hard to hide. Even things like stealth are becoming increasingly challenged with the types of technologies, particularly that the Chinese are investing in. And third is the ability to ubiquitously network all this information together. You can actually get a comprehensive picture of the battle space across many, many systems simultaneously.
So you combine all these things, you're down to this world where it's like, okay, you can't really hide anymore. It is very hard to maneuver and you can be kind of struck anywhere. Well, that drives you down this conclusion that, okay, well one, I got to have that strategy too. I've got to have the mass and the ability to engage. But it pushes me away from these few high-value targets like big ships, things like that. And it pushes you away from this sort of way we've viewed defense in the past, which is, okay, I'll have these high-value targets but then I can shoot them down with these missiles incoming. Well, if you're a ship, you're a destroyer in the South China Sea and you're expending your entire magazine just to end yourself, why are you there? What's the point? You're there to shoot something?
It's like you shot everything just to defend yourself. So it's like these things become very, very challenged very quickly when you have these high-value targets. And it pushes you just to disperse everything, I need mass, I need quantity. These are uneconomic targets to go after now. There's no reason that you would target these things or just the volume is so high, you can't attrit it away. And that's sort of the belief we've had on this, which is all these things drive you to more mass, more scale, make it so confusing, so overwhelming for your adversary that they can't even economically defend themselves anymore. And I think that's where this goes. That feels to me like a lot of the inevitable conclusion of a lot of this, which is you are just proliferating in quantity, you're proliferating in confusion. And you're twisting that network of sensors and ability to do this on its head where you're like, great, you can see everything. Good luck with 200,000 things. Tell me what you're going to do about that.
And so that's kind of the path we've been going down, which is like, okay, that's also much more affordable. It's much more scalable. It's much more resilient. You're not reliant on 11 aircraft carriers. We can actually have just the sheer quantity of systems we need to have. And the goal is to make it clear to the adversaries that it's just going to be so uncertain and so hard for you to win. Don't try anything.

Josh Wolfe:
Now, the means for the very mass that you're talking about is manufacturing.

Brian Schimpf:
Yes.

Josh Wolfe:
And so we need manufacturing. One of the great things that Anduril has talked about is truly becoming or restoring the arsenal of democracy. Freedom is forged. Let's talk about manufacturing because it's what helped win the allies in World War I and II. And China seems to have an ability, whether it's Shipbuilding or missile or munitions that is far exceeding what we have seen atrophy. What are you guys doing about that?

Brian Schimpf:
Yeah, so let's take a look at stock of where the US is today, you look back to Cold War and nearly every company in America was participating in the defense industrial space. They were supplying components or they were building something in support of the US apparatus. Today there's very few companies and the companies supplying for defense generally aren't supplying competitively into the commercial space. It's just diverged. The standards have diverged, the customers have diverged. It's quite separate. So you're on this weird island of defense, exotic manufacturing that our contention doesn't have to really be the case. And then you look at a bunch of these other things that China has done, some of the estimates are China has 250 times the shipbuilding capacity of the United States at this point.
And that's probably a generous estimate to the US to be honest, it is not even close. You look at the war gaming of a China scenario, and we're down to eight days before we've depleted the key munitions for the US, which is just like a criminally low stockpile of weapons. We need to be at a zero to that. We are just way off. But even when we've tried to expand this, it just doesn't seem to work. And I think the reality is when we've looked at it, we have designed these sorts of luxury good items in defense. These are artisanal products that are often handmade. We never update the process by which we make, we're not taking in new suppliers. We're not constantly refreshing how we actually do it. And meanwhile, the automotive industry, companies like Tesla have just completely upended this. So when we look at this, our approach to this is number one, first and foremost is the design phase. If we're not actually designing things for manufacturing at day one, you just can't do it.
So we're working on this one missile, we call it Barracuda. It's something like 95% less tools in time to actually assemble this thing. We literally make the exterior fuselage in the same way that people make acrylic bathtubs. Just like this hot press acrylic. You're like, that is accessible everywhere. So a big part of this then is, okay, great, we've designed it well. Now we need to tap into a commercial supply base. These are the companies that in time of war are going to be able to scale with you. You're using maybe like 5% of their capacity. If we're at time of war, we can ramp that 20X. And there's a huge breadth of suppliers that can actually do this. And then the other piece that we've focused on is we're building out this large factory complex we call Arsenal. And so the idea here is we know that what we're going to build in 10 years is going to be wildly different than what we were building today. The volume's going to change. The mix is going to change. We can't operate with these big fixed infrastructure.
Everything has to be about being very adaptive, very flexible and making so that I can constantly evolve both the mix of products they're making. And then those products need to be able to refresh, change, modify every month. So having all of that set up so that we can just be constantly looking for new suppliers, new tech, really ramping, getting the quality where we need to be, getting the volume where we need to be, and having it just sort of ready to go is very, very key for us.

Josh Wolfe:
Your names, you mentioned Barracuda, Anvil, Altius, Barracuda, Dive, Fury, Ghost, Sentry. These are all bad names. I just want to say that I think that whatever our next major program should be, should be called Fuzzy Bunny or something like absolutely ridiculous. Yeah, design. You mentioned design process, but there's an element of design that I find fascinating, which is when people always say what's going to be the Tesla or the Apple of defense? And uniformly everybody says, Anduril. There's an aspect of design and attention, which to me on the one hand is absolutely beautiful. Our products are stunningly beautiful. However, these are things that are going to explode and disappear and be a attrited. And so why the attention to putting beautiful things? This is like Steve Jobs purportedly used to make sure that the design of systems and components inside of a device that nobody would ever see were designed beautifully. Why do you put so much attention on design when these things are just going to blow up or disappear?

Brian Schimpf:
I think there's kind of three aspects we think about with this. So one, once you're actually paying attention to design, it also forces the engineers to take everything. There's just an aspect of you give a shit, you care. You're trying to make this a great product that you're proud of, that you really want to work on. That really matters. And so carrying that through every aspect of what we do, and it applies beyond just the industrial design. It's like how are you going to sustain it? How are you going to transport it? How is a soldier going to unload that and get that ready to go? So all these aspects of actually really giving a shit about how these systems are built, making it just an excellent experience overall. I think the second is that the brand side really does matter. And I think the ability to have something that people look at, that they affiliate with the types of products we would build, that they're excited about defense.
This isn't just a sleepy industry, but it's something that is important, that it matters, that you can be proud of. That applies to our employees, but it also implies to the soldiers and operators that are using this every day. They should have something they're excited about. They should feel like they have the best technology, that actually matters. Making the military cool really matters. And I think the third piece of this is look, at the end of the day the stuffs there's a theatrical aspect of projecting power, which is it looks like you have the best stuff. It looks like you are powerful. And that is important for the US military. It's like this generation of drones can't look like derpy drones. They've got to look as badass as F35s. Then people will be like, okay, that is actually something I can get behind. I'm excited about that.

Josh Wolfe:
Let's now talk about another trajectory where about a week after the election in 2024, and Trump has been elected president and he's starting to fill his cabinet. There's rumors that even your own Trey Stevens may be undersecretary of defense or something notable. Anduril seems well positioned. Against that backdrop of seemingly well positioned, you have a relatively stereotyped view that the foreign policy may be isolationist in one hand, but at the other hand quite hawkish in some elements. How do you reconcile that and how will it likely benefit or hurt Anduril?

Brian Schimpf:
Yeah. So look, we've done well in the first Trump administration. We did even better under Biden, and I think we're going to do very well in this Trump administration. And I think my take is a thing that Trump kind of got right before was it was about making America strong, but also making sure that we weren't the bag holder for everyone in the world. That people needed to take their defense seriously, that they needed to realize that the world still has a lot of bad actors. And that this is not a thing that the US will be there just blank check forever. I think that worked. You see a major uptick in defense spending worldwide. Japan has doubled their defense budget. Sweden's entering NATO. Poland has substantially increased their buying. Australia is taking this very, very seriously. So just-

Josh Wolfe:
Germany as well.

Brian Schimpf:
Germany as well. It's like nearly every country has substantially stepped up their belief that they have to actually take this problem seriously. Now, for the US I think a Trump administration wants America to be strong. That also means our allies need to be strong, and the US should be the first defense exporter of choice. We should have the best equipment, we should sell it to every one of our allies and we should be that arsenal for the world. That is absolutely something we can do. We are not there today. The allies, I've seen this shift in a major way in the last two years. There is a serious question of whether the US will be capable of delivering the weapons that they've even signed up to deliver. There are multi-year backlogs on getting Patriot missiles, F35s, like all of these things are so backlogged.
Taiwan has been asking for stingers for five years. They've ordered them, they're not showing up. And so there's a major, major issue which is we cannot produce as a country at the rate that the world needs right now. And that is a major failing. And so this is probably one of the most critical things that I think the Trump administration can get right, which is just lean into and solve a lot of these problems of how do we actually become the arsenal for the world? How do we become that kind of partner of choice for where they want to buy their technology from? It's good for America, it's good for our allies. And I think this is very solvable in a single administration.

Josh Wolfe:
Two last trajectories I want to talk about, the geopolitical threats that you see and the financial trajectory for Anduril itself. I see it as a badge of honor, you are now sanctioned by China, almost sanctioned by Russia, a handful of Anduril executives including one of your co-founders, Matt Grimm, also it being sanctioned. What is the implication? Has it impacted you or affected you personally in any way? And how do you see the trajectory of geopolitics against who our adversaries are or maybe in the coming years?

Brian Schimpf:
Well, my six-year old's learning about China in school, and she's like, "When can we visit China?" And I'm like, "Literally never." So I personally... And all my Chinese assets were seized which is-

Josh Wolfe:
I can't believe how many Chinese mansions you have there

Brian Schimpf:
Yeah, exactly. Well, zero now. It's a real tragedy. So on a personal level, honestly my view is it means we're doing something right. And that really came out of supplying loitering munitions and arms to Taiwan. And that was a thing we believe is right and we're going to do it, and we're very proud to do it. So in terms of geopolitics worldwide and where are these things are going right now, look, you've got a hot land war in Europe that feels very unclear how this resolves. And even if it does resolve, it feels like a temporary piece. There's no world that Putin doesn't continue trying this. It seems to work, and it seems very domestically popular. Massive instability in the Middle East, both kind of the Israel, Iran and everything else going on. But also the idea that you have basically extremists shutting down the Red Sea shipping, and an extremely difficult and expensive defensive operation to deal with that. That's a very real problem.
And then in South China Sea, you have China and the Philippines skirmishing constantly and there's a lot of potential flash points. I think also people underestimate on this isolationist question, most people couldn't pick out Taiwan on a map and certainly don't understand the sort of strategic importance of Taiwan. But the economic impact, the Taiwan invasion would be massive. Probably 30, 40% GDP hit worldwide depression. It is a massive economic choke point almost entirely because of the semiconductor industry. And so I think there's this view that we shouldn't fight other people's wars, but I certainly understand that. But we want to enable them to defend their own sovereignty for sure, that is the strategy of first resort. We have to provide them the weapons to do it, but I think understanding the impact and entangled interest with America is incredibly important. And we have to be the country that supports our allies and partners on these things.

Josh Wolfe:
Final thing, financial trajectory of the company. As we're recording this, Palantir, I believe has today surpassed Lockheed Martin in market capitalization, which was a very notable historic event. Something that again, people wouldn't have taken seriously that is now too serious to ignore. My own shorthand envelope, we have a lot of money invested with Anduril and we're very proud and patriotic shareholders. I believe that this will end up being sort of three to five billion dollars of top line with a 10 times multiple. And you're just simply looking at a 30, 50 billion public company in the next few years. Do you have a differing view, one that is more optimistic or less optimistic? And do you see that path between organic and acquisitions leading you there?

Brian Schimpf:
No, that feels very, very believable over the next couple of years. Just the growth rate we've seen has been just hard for me to believe how fast it's been growing. I think very few companies are just growing at the rate we are year over year on our baseline. It's just absolutely wild. So my view is very similar, which is there hasn't been a growth defense company. That is a weird thing for public markets to contemplate. There have only been dividend defense companies that are just optimizing on very predictable dividends and payouts. And so I think it's like Tesla, it's like Palantir in a lot of ways. There's these companies that kind of defy the norms of their market they're in, and I think we're the leading one on this right now. And so what we've seen on the investor side is just an incredible amount of demand, because I think just even over the last year, the success, the track record, almost the inevitability of what we're working on feels just much more clearer. It feels like it is going to happen.
We are going to succeed, we have to succeed. And it's just been a massive shift over the last year in terms of how we view ourselves, how we're viewed by the government and I think by the public. And it's been a very exciting time.

Josh Wolfe:
Brian, as a stakeholder in Anduril and as a stakeholder, as an American in our country, extremely grateful for your leadership style as CEO. Always good to be with you. Thank you.

Brian Schimpf:
Thank you very much. Appreciate it.

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