Andruil Co-Founder Trae Stephens Talks Innovating in an Age of War

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Ed Ludlow** (0:07)
I've been looking forward to this a lot. You and I talk often, but it's always pretty fast and on a specific piece of news. But you are the executive chair of Anduril, and then you have this complete even split with being one of the 12 investing partners at Founders Fund. And we probably get to talk about the Founders Fund part a little bit less, I'd say. So we'll try and do an even split with this. You're a busy guy. I think the stated intention of our conversation was to probably talk about defense technology in the current context of the war in Iran.
To start with there, and explaining the basics of what Anduril is, what role has Anduril played to date in that conflict or not, and what is the current role of Anduril as part of the defense apparatus of this nation. I think that's a big question for you to kick us off with. I'll sit back and you take it away.

**SPEAKER_1** (1:10)
Thank you.

**Trae Stephens** (1:10)
That's really meaty. Yeah, so when we started Anduril nine years ago, almost exactly, actually, June 6th of 2017, so we're coming up on nine years, the idea was that we had this, we have this defense ecosystem that's dominated by a handful, five or six large defense companies that have been kind of a consolidation of the entire defense industry that existed during the Cold War. And the capabilities that we have are really incredible. I mean, we have these amazing, exquisite defense systems like, you know, four-class aircraft carriers and the Joint Strike Fighter, the F-35, the Patriot missile.
These platforms take decades to develop, build, and hundreds and hundreds of billions of dollars to sustain. So for example, like a Patriot missile, which was initially developed in 1969, this is like kind of the creme de la creme of interceptors for counter air capabilities. This is like a, it's a 70-year-old system. At this point, every missile costs millions of dollars, literally like between two and a quarter to five million dollars.

**Ed Ludlow** (2:19)
Per unit basis.

**Trae Stephens** (2:20)
Per unit basis. And these were built to shoot down MiG-29s. You know, when you're shooting at an airplane that costs tens of millions of dollars, you can afford to shoot a three million dollar missile to do that. This is not the nature of threats as they exist today.
And so Andruil, when we came on the scene, our goal was to figure out ways that we can introduce software, autonomy, on the production side of the house, as well as on the kill chain, the tactical side of the house, to massively reduce the cost of engaging with a modern threat profile. And so when you look at something like the war in Iran, most of the threats that we're seeing are low flying cruise missiles or Shaheds, which is sort of like a loitering munition.
These are generally pretty slow, but they're mobile, dynamically controlled.
You don't want to shoot a $3 million cruise missile at a $200,000 weapon. The economic tradeoff is bad. And so we originally started working entirely in the surveillance reconnaissance space, and now the plurality of a lot of our work is actually related to air defense, lowering the cost of engaging with threats that are incoming to not only the United States, but also our allies and partners in the regions around the world where these threats are most present.

**Ed Ludlow** (3:39)
There's an interesting point on not just the United States because there are deployments of Andruil technology in the Gulf as an example.
You yourself, you have been and will go very soon to the Middle East. How does that work in practice, being an American company that serves the US military and the Department of Defense, but also allies? You must spend a lot of time meeting with the defense apparatus and governments of other nations.

**Trae Stephens** (4:17)
Right. Yeah, I would say it's like one of the most common questions we get on ethics. These are important questions from new employees, younger people that are talking about joining. They'll lean forward very dramatically and say, how do you make decisions about where we sell our capabilities? And I'm like, well, it turns out there's this whole thing called foreign military sales. So actually, the United States government decides where things get sold. So those are very clear rules. It's not like I'm making a decision about like, oh, I really think we shouldn't sell to this country. It's like, yeah, the government has already kind of pre-decided that that's the case. But yes, it is important for US foreign policy in a bipartisan way.