WEBVTT - Andruil co-founder Trae Stephens Talks Innovating in an Age of War 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.960 --> 0:00:09.479 I've been looking forward to this a lot. 0:00:09.880 --> 0:00:11.640 You and I talk often, yes. 0:00:11.560 --> 0:00:14.239 But it's always it's always pretty fast and on a 0:00:14.280 --> 0:00:18.880 specific piece of news. But you are the executive chair 0:00:18.920 --> 0:00:22.200 of ANDERILL and then you have this complete even split 0:00:22.280 --> 0:00:25.360 with being one of the twelve investing partners at Founders Fund, 0:00:25.560 --> 0:00:30.080 and we probably get to talk about the Founder's Fund 0:00:30.080 --> 0:00:32.040 part a little bit less, I'd say, so we'll try 0:00:32.080 --> 0:00:33.279 and do an even split with this. 0:00:34.280 --> 0:00:36.440 You're you're a busy guy, you know. 0:00:37.000 --> 0:00:40.120 I think the stated intention of our conversation was to 0:00:40.360 --> 0:00:43.720 probably talk about defense technology in the in the current 0:00:43.760 --> 0:00:48.080 context of the war in Iran, to start with their 0:00:50.440 --> 0:00:52.960 and explaining the basics of what ANDERI is. You know, 0:00:53.040 --> 0:00:56.360 what role has ANDILL played to date in that conflict 0:00:57.360 --> 0:01:02.640 or not, and what the current role of ANDERILL is 0:01:02.720 --> 0:01:06.479 part of the defense apparatus of this nation. I think 0:01:06.520 --> 0:01:07.960 that's a big question. 0:01:07.720 --> 0:01:09.119 For you to to kick us off. Wey all sit 0:01:09.160 --> 0:01:11.200 back to you take it away. That's that's really mean. 0:01:12.440 --> 0:01:16.839 Yeah, So when we started annual nine years ago almost 0:01:16.920 --> 0:01:20.959 exactly actually June sixth, yes, twenty seventeen, so we're coming 0:01:21.040 --> 0:01:24.240 up on nine years. The idea was that, you know, 0:01:24.280 --> 0:01:29.360 we had this, we have this defense ecosystem that's dominated 0:01:29.480 --> 0:01:33.240 by a handful five or six large defense companies that 0:01:33.280 --> 0:01:36.120 have been you know, kind of a consolidation of the 0:01:36.280 --> 0:01:38.840 entire defense industry that existed during the Cold War, and 0:01:39.000 --> 0:01:40.000 the capabilities that. 0:01:39.920 --> 0:01:41.160 We have are really incredible. 0:01:41.280 --> 0:01:45.040 I mean, we have these amazing exquisite defense systems like 0:01:45.400 --> 0:01:48.000 you know, four class aircraft carriers and joint the Joint 0:01:48.000 --> 0:01:51.680 Strike Fighter, the F thirty five, the Patriot missile. These 0:01:51.720 --> 0:01:56.720 platforms take decades to develop, build, and hundreds and hundreds 0:01:56.760 --> 0:01:59.840 of billions of dollars just to sustain. So for example, 0:01:59.840 --> 0:02:02.960 like Patriot missile, which was initially developed in nineteen sixty nine, 0:02:03.240 --> 0:02:05.960 this is like kind of the krem De la Creme 0:02:06.120 --> 0:02:10.200 of interceptors for counter air capabilities. You know, this is 0:02:10.280 --> 0:02:13.600 like a it's a seventy year old system at this point. 0:02:14.040 --> 0:02:17.400 Every missile costs millions of dollars literally, like between two 0:02:17.480 --> 0:02:21.359 and a quarter to five million dollars per unit basis, 0:02:21.800 --> 0:02:24.200 and these were built to shoot down MiG twenty nine. 0:02:24.480 --> 0:02:26.280 You know, when you're shooting at an airplane that costs 0:02:26.280 --> 0:02:28.200 tens of millions of dollars you can afford to shoot 0:02:28.200 --> 0:02:30.920 a three million dollar missile to do that. This is 0:02:30.960 --> 0:02:34.560 not the nature of threats as they exist today. And 0:02:34.680 --> 0:02:37.040 so ANDROWL when we came on the scene, our goal 0:02:37.280 --> 0:02:41.320 was to figure out ways that we can introduce software 0:02:41.440 --> 0:02:45.399 autonomy on the production side of the house as well 0:02:45.440 --> 0:02:48.080 as on the kill train the tactical side of the house, 0:02:48.480 --> 0:02:51.760 to massively reduce the cost of engaging with a modern 0:02:51.800 --> 0:02:54.600 threat profile. And so when you look at something like 0:02:54.600 --> 0:02:56.960 the war in Iran, most of the threats that we're 0:02:56.960 --> 0:03:02.800 seeing are low flying cruise cruise missiles or shah heads, 0:03:02.840 --> 0:03:05.919 which is sort of like a loitering munition. These are 0:03:06.240 --> 0:03:09.680 you know, generally pretty slow, but they're you know, mobile. 0:03:09.760 --> 0:03:10.920 Dynamically controlled. 0:03:11.840 --> 0:03:14.280 You don't want to shoot a three million dollar cruise 0:03:14.280 --> 0:03:18.240 missile at a two hundred thousand dollars weapon. The economic 0:03:18.280 --> 0:03:21.440 trade off is bad. And so you know, we originally 0:03:21.440 --> 0:03:24.840 started working entirely in kind of the surveillance reconnaissance space, 0:03:25.600 --> 0:03:28.600 and now the kind of plurality of a lot of 0:03:28.600 --> 0:03:31.280 our work is actually related to air defense, lowering the 0:03:31.320 --> 0:03:34.560 cost of engaging with threats that are incoming to not 0:03:34.639 --> 0:03:36.960 only the United States but also our allies and partners 0:03:37.000 --> 0:03:38.680 in the regions around the world where these threats are 0:03:38.720 --> 0:03:39.240 most present. 0:03:40.040 --> 0:03:42.840 It's an interesting point on not just the United States, 0:03:43.000 --> 0:03:48.960 because there are deployment spander real technology in the golf 0:03:49.000 --> 0:03:54.080 as an example, you yourself, you know you have been 0:03:54.120 --> 0:03:57.160 and will go very soon to the Middle East. How 0:03:57.200 --> 0:04:02.080 does that work in practice? Being an American company that 0:04:02.240 --> 0:04:07.720 serves the US military and the Department of Defense, but 0:04:07.840 --> 0:04:12.280 also allies, you know, you must spend a lot of 0:04:12.320 --> 0:04:17.799 time meeting with the defense apparatus and governments of other nations. 0:04:18.000 --> 0:04:19.919 Right, Yeah, I would say it's like one of the 0:04:19.920 --> 0:04:23.159 most common questions we get on ethics. These are important 0:04:23.200 --> 0:04:26.640 questions from new employees, younger people that are, you know, 0:04:26.720 --> 0:04:30.160 talking about joining. You know, they'll lean forward very dramatically 0:04:30.200 --> 0:04:32.160 and say, how do you make decisions about where we 0:04:32.200 --> 0:04:34.480 sell our capabilities? And I'm like, well, it turns out 0:04:34.760 --> 0:04:37.120 there's this whole thing called foreign military sales. So actually 0:04:37.120 --> 0:04:40.719 the United States government decides where things get sold. 0:04:41.200 --> 0:04:42.599 So those are very clear rules. 0:04:42.640 --> 0:04:45.120 It's not like I'm making a decision about like, oh, 0:04:45.160 --> 0:04:47.880 I really think we shouldn't sell to this country. It's like, yeah, 0:04:47.960 --> 0:04:50.960 the government has already kind of predecided that that's the case. 0:04:51.800 --> 0:04:55.080 But yes, you know, it is important for US foreign 0:04:55.120 --> 0:04:59.000 policy in a bipartisan ways. This is not a partisan issue. 0:04:59.040 --> 0:05:01.360 In a bipartisan way is important. It's important for US 0:05:01.400 --> 0:05:06.680 foreign policy to provide capabilities to our allies to make 0:05:06.720 --> 0:05:10.280 sure that they are fully integrated into our joint operations, 0:05:10.360 --> 0:05:12.839 which is really important, but also that they have the 0:05:12.839 --> 0:05:17.280 capabilities to defend themselves utilizing US production that may or 0:05:17.320 --> 0:05:19.640 may not exist in many of these countries, like they 0:05:19.680 --> 0:05:23.440 don't you know, our allies, many of them are not 0:05:23.560 --> 0:05:26.880 going to fund and build a fifth generation fighter plane 0:05:26.880 --> 0:05:29.599 on their own, nor are they going to develop really 0:05:29.640 --> 0:05:32.320 complex multimillion dollar missile counter. 0:05:32.200 --> 0:05:33.160 Air missile systems. 0:05:33.520 --> 0:05:35.880 And so this is a role that we play in 0:05:35.920 --> 0:05:39.080 the ecosystem is to go out and say, you know too, 0:05:39.160 --> 0:05:43.520 countries like Ukraine or like you know, the United Arab 0:05:43.520 --> 0:05:47.480 Emirates or Saudi Arabia or Katar, Hey, the United States 0:05:47.520 --> 0:05:50.039 has the capability. We want you to have that capability 0:05:50.040 --> 0:05:52.760 as well. And this is how we're thinking about the 0:05:52.800 --> 0:05:56.279 cost curve for deploying these capabilities and kind of the 0:05:56.360 --> 0:05:58.920 layered approach that you can take to reducing the cost 0:05:59.320 --> 0:06:03.040 per intersect or whatever it is. Now. The tricky thing 0:06:03.080 --> 0:06:05.120 about all this is that, you know, there's a big 0:06:05.120 --> 0:06:08.880 difference between being a startup that is designing and developing 0:06:08.920 --> 0:06:11.400 a capability, which is great and there's a lot of 0:06:11.560 --> 0:06:14.040 really interesting efforts that are having there and being a 0:06:14.080 --> 0:06:17.840 producer of those capabilities. And this has really been the 0:06:17.920 --> 0:06:20.120 name of the game for ANDRAL over the last few years, 0:06:20.600 --> 0:06:23.200 is transitioning out out of just being like a really 0:06:23.200 --> 0:06:27.000 innovative technology company and focusing almost all of our effort 0:06:27.120 --> 0:06:29.600 on how do we produce at scale in a way 0:06:29.640 --> 0:06:31.920 that allows us to not only supply the US customer, 0:06:31.960 --> 0:06:35.120 which is our primary customer, but also be supportive of 0:06:35.160 --> 0:06:38.440 that foreign policy mission and supplying those same capabilities abroad. 0:06:38.520 --> 0:06:40.680 So this is really about manufacturing and production more than 0:06:40.720 --> 0:06:41.400 almost any. 0:06:41.200 --> 0:06:43.880 That takes us to Ohio. Right, So, in January of 0:06:43.920 --> 0:06:47.160 twenty twenty five, you guys phone me and said, come 0:06:47.200 --> 0:06:51.719 to Ohio. This is where our next facility will be. 0:06:51.800 --> 0:06:55.479 Arsenal one. Remind me there's a reason there's a one 0:06:55.560 --> 0:06:57.520 next to it. We should get to that in a second. 0:06:57.640 --> 0:07:03.360 But FoST forward present day production is underway. You built 0:07:03.360 --> 0:07:08.800 that place incredibly quickly. What is it doing why Ohio? 0:07:08.920 --> 0:07:12.160 I think, why did you settle on that state and 0:07:12.720 --> 0:07:13.840 that specific location. 0:07:14.600 --> 0:07:17.920 Yeah, I mean again, transitioning from a startup where you're 0:07:17.960 --> 0:07:21.400 hiring a bunch of very well compensated you know, software 0:07:21.440 --> 0:07:24.320 engineers and things like that to build things, to a 0:07:24.360 --> 0:07:28.160 world where we're producing with you know, a very different 0:07:28.240 --> 0:07:30.080 type of labor force, that a very different type of 0:07:30.080 --> 0:07:33.640 skill set that's required. We recognize that we needed to 0:07:33.960 --> 0:07:35.520 go to a place where we were going to have 0:07:35.560 --> 0:07:39.360 the ability to scale like our footprint, literally, that there 0:07:39.440 --> 0:07:42.560 was going to be enough workforce, skilled labor that had 0:07:42.640 --> 0:07:47.560 manufacturing experience to fill out that footprint, and in a 0:07:47.600 --> 0:07:50.760 place that we felt like we could get the the 0:07:50.920 --> 0:07:54.520 on the ground support from the local government, from the 0:07:54.560 --> 0:07:58.440 economic development organizations to do this as rapidly as we 0:07:58.480 --> 0:07:59.239 possibly could. 0:07:59.480 --> 0:08:02.040 You know, well as well, I know Ohio. 0:08:02.080 --> 0:08:04.520 Well, it didn't help. I want to be clear, I'm 0:08:04.560 --> 0:08:07.760 from Ohio. Originally, when we narrowed it down to our 0:08:07.840 --> 0:08:11.280 last three locations, I sort of recused myself from the 0:08:11.320 --> 0:08:14.040 process because I'm like, man, if we pick Ohio, everyone's 0:08:14.080 --> 0:08:16.480 gonna think I put my thumb on the scale. And 0:08:16.520 --> 0:08:18.520 then at the launch event that you were at Governor 0:08:18.600 --> 0:08:20.440 Dwine got up and he said, first off, I'd like 0:08:20.480 --> 0:08:22.920 to thank Trey's mom, And I was like, oh. 0:08:22.880 --> 0:08:25.280 Man, you're blowing the whole narrative here. 0:08:27.880 --> 0:08:32.920 But yeah, I think Ohio is this incredible place for manufacturing. 0:08:33.000 --> 0:08:36.000 You know, has a long, long history of manufacturing. Just 0:08:36.040 --> 0:08:41.599 in my family alone, between my uncles and my grandparents, grandfathers, 0:08:42.559 --> 0:08:46.800 we have worked at Ford General Motors, Frigid Air, National 0:08:46.880 --> 0:08:52.400 Cash Register, Luxury Exotica. I mean, there's a tremendous history 0:08:52.400 --> 0:08:56.160 of manufacturing, but much of that evaporated. You know, we 0:08:56.240 --> 0:08:59.800 had a sort of a bipartisan policy around globalization for decades, 0:09:00.280 --> 0:09:03.080 and it's really easy from sitting on the coast, whether 0:09:03.120 --> 0:09:04.920 you're in New York or San Francisco, to kind of 0:09:04.960 --> 0:09:07.120 forget about what happened in the middle of the country 0:09:07.320 --> 0:09:11.120 during that twenty thirty year run starting in the early nineties. 0:09:11.600 --> 0:09:13.840 But every single one of those companies that I just 0:09:13.920 --> 0:09:18.559 mentioned no longer has factories in Ohio, and there's a 0:09:18.600 --> 0:09:21.040 lot of people that have been fighting for their lives 0:09:21.080 --> 0:09:24.600 to find employment and some of that's coming back now. 0:09:24.600 --> 0:09:27.040 I think Dwine's administration has done a great job of 0:09:27.520 --> 0:09:30.840 incentivizing companies like in Dual to come in to build 0:09:31.120 --> 0:09:33.880 new factory campuses. So it's kind of like kind of 0:09:33.920 --> 0:09:37.200 catching back up. There's some wind in the sales, and 0:09:37.440 --> 0:09:39.240 you know, we're really excited for what we're going to 0:09:39.280 --> 0:09:39.960 be able to do there. 0:09:40.320 --> 0:09:43.680 And Real has had growth in lots of different ways, 0:09:43.720 --> 0:09:47.320 right the valuation that you've grown the company to, but 0:09:47.440 --> 0:09:52.160 also the footprint with short on time. So I want 0:09:52.200 --> 0:09:55.360 to just address the Arsenal one thing. It indicates that 0:09:55.400 --> 0:09:57.320 there is going to be an Arsenal two and an 0:09:57.440 --> 0:10:00.520 Arsenal three. Is that in the United State or is 0:10:00.559 --> 0:10:02.960 it time now where Anderil says, okay, well, if we're 0:10:03.360 --> 0:10:08.360 serving Western allies, we should maybe manufacture locally to where 0:10:08.400 --> 0:10:09.640 our technology is deployed. 0:10:10.080 --> 0:10:11.160 I think it's both. 0:10:11.280 --> 0:10:14.800 Actually, you know, Arsenal one is primarily going to be 0:10:14.840 --> 0:10:18.760 focused on production of Fury, which is our collaborative combat aircraft, 0:10:18.840 --> 0:10:20.440 basically an autonomous fighter plane. 0:10:21.160 --> 0:10:22.200 Initial units will be. 0:10:22.280 --> 0:10:24.600 Rolling off the line this summer, so that production is 0:10:24.600 --> 0:10:27.120 already underway in the first eight hundred thousand square feet 0:10:27.160 --> 0:10:32.400 that we have up and running. Later this year, we're 0:10:32.440 --> 0:10:34.400 going to start doing Barracuda, which is our low cost 0:10:34.480 --> 0:10:38.080 cruise missile and Roadrunner, which is our reusable interceptor missile. 0:10:38.120 --> 0:10:41.280 Both of those will start coming out of Arsenal one 0:10:41.320 --> 0:10:44.000 in Ohio as well. But you know, there are other 0:10:45.160 --> 0:10:47.120 factories that are going to come online. Some of those 0:10:47.160 --> 0:10:51.240 are domestic shipyards that we're building out. There could be 0:10:51.280 --> 0:10:53.360 additional production facilities in the United States. Right now, we 0:10:53.400 --> 0:10:56.560 have sixteen production facilities across the United States, which some 0:10:56.600 --> 0:10:58.840 of those are being consolidated back into that Ohio for print. 0:10:59.320 --> 0:11:02.280 But to your point, internationally, you know, we're the United 0:11:02.320 --> 0:11:04.080 States is not the only country that has a national 0:11:04.080 --> 0:11:07.200 prosperity agenda. Obviously, all of these countries want to see 0:11:07.320 --> 0:11:12.840 increased investment in their you know, local economy, and so 0:11:13.040 --> 0:11:15.360 we feel very aligned in making sure that as we 0:11:15.400 --> 0:11:18.280 go in and we do some of these larger deals 0:11:18.400 --> 0:11:21.760 to bring those capabilities to bear with our allies and partners, 0:11:21.800 --> 0:11:24.800 we want to build that local production piece to feedback 0:11:24.840 --> 0:11:26.440 into their economic growth as well. 0:11:26.800 --> 0:11:30.800 Final on Andreilks who probably spent more time on Android 0:11:30.800 --> 0:11:34.920 than I expected. But a lot of people that know 0:11:35.040 --> 0:11:40.319 andreill they know Palmer Lucky. You know, you're the executive chair, 0:11:40.360 --> 0:11:43.400 Palmer's CTO, the co founder. There are other co founders 0:11:43.640 --> 0:11:46.520 and then Brian is the CEO, and I mean this 0:11:46.600 --> 0:11:50.720 with massive respects, but I guess Brian until quite recently 0:11:50.720 --> 0:11:55.240 got less of the limelight. How does it work between 0:11:55.480 --> 0:11:58.600 the three of you and Matt and others that are 0:11:58.679 --> 0:12:03.439 running the company. How do you divide responsibility and decisions? 0:12:04.480 --> 0:12:07.679 Yeah, you know, Andrew, because of the way that we 0:12:07.720 --> 0:12:10.840 approach our business. We have many business lines. We have 0:12:11.200 --> 0:12:14.600 dozens of skews different products that we sell, and almost 0:12:14.640 --> 0:12:17.280 every single one of those is a scaled startup in 0:12:17.320 --> 0:12:19.400 its own right, and so there's no way that this 0:12:19.440 --> 0:12:22.800 company could be run with a kind of a very 0:12:22.880 --> 0:12:27.840 light or thin executive team. We've focused really intentionally on 0:12:28.320 --> 0:12:31.320 building as deep of a bench as we can and 0:12:31.360 --> 0:12:34.920 that has been honestly the most important asset to the 0:12:34.960 --> 0:12:38.320 company since the very beginning. So across the four co founders, 0:12:38.960 --> 0:12:42.719 we've kind of divided the world up into pieces, and 0:12:42.920 --> 0:12:46.280 we each have different chunks of accountability. You know, Palmer 0:12:46.320 --> 0:12:49.160 is incredibly talented at what Palmer does? You know the 0:12:49.200 --> 0:12:52.760 Palmer Show, as many people who have interacted with Palmer. Now, 0:12:53.679 --> 0:12:56.680 Brian is naturally more introverted, but he is the boss, 0:12:57.240 --> 0:13:00.520 he is the chief executive officer, His say is the 0:13:00.520 --> 0:13:04.840 final say and it is actually required. Really Palmer and 0:13:04.880 --> 0:13:07.320 I pushing him out the door a little bit to say, look, 0:13:07.360 --> 0:13:10.840 you need to be out engaging because his natural tendency 0:13:10.880 --> 0:13:13.760 as an engineer. He's the most brilliant software engineer I've 0:13:13.760 --> 0:13:18.560 ever worked with in my career. His you know, personal 0:13:18.640 --> 0:13:20.520 preference would be I just want to sit back and 0:13:20.559 --> 0:13:22.640 work with the SVPs that run the product lines. But 0:13:22.720 --> 0:13:24.400 I think it's really important to get him out there. 0:13:25.200 --> 0:13:27.560 And you know Matt Grimmer, our other co founder who's 0:13:27.559 --> 0:13:31.559 the COO, he runs the entire operational side of the business, 0:13:31.800 --> 0:13:35.360 and you know that is an incredibly hard job. There's 0:13:35.400 --> 0:13:37.720 no way I would want to do that, but I 0:13:37.720 --> 0:13:40.960 think having those really clear swim lanes is really important. 0:13:41.120 --> 0:13:45.760 You trade to this fascinating job of evenly splitting your 0:13:45.760 --> 0:13:49.360 time between Anderill and being one of the investing partners 0:13:49.360 --> 0:13:50.959 that found has Que a much better job than I've done. 0:13:50.960 --> 0:13:54.360 I've done three quarters of this on Anderill. But in 0:13:54.400 --> 0:13:57.120 the time we have left, what is that like for 0:13:57.160 --> 0:13:59.800 you at being one of the investing partners that found 0:13:59.880 --> 0:14:04.360 is Fund and just straight away in a firm that's 0:14:04.440 --> 0:14:08.240 preparing to be one of the big beneficiaries of an 0:14:08.240 --> 0:14:09.559 IPO of SpaceX. 0:14:10.600 --> 0:14:13.400 Yeah, you know, I think there's all sorts of different 0:14:13.440 --> 0:14:15.880 ways you can approach venture capital. I think for some 0:14:15.920 --> 0:14:18.640 people they really want to focus on kind of growth 0:14:18.679 --> 0:14:21.600 and doing diligence. There's other people that are pure intuition 0:14:21.920 --> 0:14:26.160 that are just like you know, measuring founders to make 0:14:26.200 --> 0:14:30.520 early early stage bets. The kind of strategic slice that 0:14:30.560 --> 0:14:32.760 I've found that works best for me given my own 0:14:32.760 --> 0:14:36.520 personality is I'm an operator at my core, Like I'm 0:14:36.600 --> 0:14:39.600 much more comfortable working at a startup than i am 0:14:39.640 --> 0:14:42.920 working at an investment firm. But that's actually a really 0:14:42.920 --> 0:14:48.160 interesting lens into the startup market because I have exposure 0:14:48.240 --> 0:14:51.480 every day to what software are we using that works, 0:14:52.160 --> 0:14:54.840 what are the strategic challenges that we're encountering as it 0:14:54.880 --> 0:14:57.760 pertains to the rise of AI, Like, these are questions 0:14:57.800 --> 0:14:59.920 that I'm dealing with on a company level, and so 0:15:00.000 --> 0:15:02.400 so when I have the ability to interact with other startups, 0:15:02.640 --> 0:15:05.440 I think I have the ability to kind of identify 0:15:05.600 --> 0:15:08.280 areas where wow, that would actually be really helpful or 0:15:08.640 --> 0:15:11.160 I've seen three or four other things that approach this 0:15:11.240 --> 0:15:12.840 in a way that I that I think is better. 0:15:12.880 --> 0:15:15.880 So you know, everyone has their own set of advantages. 0:15:16.040 --> 0:15:19.160 I feel like doing both in parallel has has been 0:15:19.560 --> 0:15:22.000 a great asset both to Founder's Fun and to endroll. 0:15:22.120 --> 0:15:22.720 Is there a. 0:15:22.800 --> 0:15:27.720 Founders Fund SpaceX thesis that an aggregate across the all 0:15:27.760 --> 0:15:30.000 the investing pot as you hold, or is there a 0:15:30.080 --> 0:15:31.960 tray thesis that you apply. 0:15:33.000 --> 0:15:35.560 I mean, we all have very different opinions on every 0:15:35.640 --> 0:15:36.640 portfolio company. 0:15:37.080 --> 0:15:39.360 We are a very debate driven culture. 0:15:40.040 --> 0:15:43.200 I think SpaceX is kind of a unique encapsulation in 0:15:43.240 --> 0:15:46.560 a microcosm of the way that Founder's Fund works because 0:15:46.600 --> 0:15:49.240 we invested very early, like around flight. 0:15:49.080 --> 0:15:51.320 Two okay two thousand and eight, or. 0:15:51.640 --> 0:15:53.960 It was way before my time, like six or seven 0:15:54.000 --> 0:15:57.080 years before I joined the fund, And at that time, 0:15:57.160 --> 0:15:59.360 obviously it would have been crazy to think about like, 0:15:59.800 --> 0:16:02.520 you know, know the Starlink as a part of the business. 0:16:02.640 --> 0:16:04.960 And even when we made this the you know, the 0:16:05.000 --> 0:16:07.480 Starlink era bets and SpaceX, it would have been very 0:16:07.480 --> 0:16:10.640 difficult to imagine how AI would have impacted you know, 0:16:10.800 --> 0:16:12.680 data centers in space and all these other things that 0:16:12.720 --> 0:16:14.680 are going on. And so now you know, you look 0:16:14.680 --> 0:16:17.480 at SpaceX and you're thinking like wow, like what is 0:16:17.560 --> 0:16:21.000 Elon and is in the team working on pertaining to 0:16:21.120 --> 0:16:24.960 like getting humanity, to being a Kardashev type two civilization. 0:16:25.600 --> 0:16:27.560 These are weren't the questions we were asking when we 0:16:27.560 --> 0:16:29.560 made the original investment, where it was like can we 0:16:29.560 --> 0:16:31.120 get a rocket into space. 0:16:31.520 --> 0:16:33.600 It's very different companies that that, so we have to. 0:16:33.560 --> 0:16:38.360 Like refresh in real time the FASIS refreshes. I mean, 0:16:38.520 --> 0:16:43.040 how much does the venture capital industry need this this IPO. 0:16:43.200 --> 0:16:46.720 I think what's interesting about the founders find investment not 0:16:46.800 --> 0:16:49.800 just how early it was, but when it continued. It 0:16:49.800 --> 0:16:53.640 was across several funds. You know, it's a big moment 0:16:53.720 --> 0:16:56.320 for the LPs as well. You know, how much are 0:16:56.320 --> 0:16:58.160 they kind of banking on this and weight have been 0:16:58.200 --> 0:16:58.800 waiting on this? 0:16:59.080 --> 0:16:59.600 Well, yeah, we have. 0:16:59.720 --> 0:17:03.240 We have SpaceX investment in almost every fund, both across 0:17:03.360 --> 0:17:05.600 our venture funds and our growth funds. So there's a 0:17:05.640 --> 0:17:08.080 ton of exposure for LPs that were with us since 0:17:08.119 --> 0:17:10.040 the very beginning and even the ones that joined us 0:17:10.119 --> 0:17:13.760 very recently. I think, you know, the core lesson that 0:17:14.000 --> 0:17:17.800 everyone has learned from this experience has never bet against Elon. 0:17:18.040 --> 0:17:19.080 It's just a bad idea. 0:17:20.119 --> 0:17:24.000 And you know, I think getting the opportunity for people 0:17:24.040 --> 0:17:26.400 to see liquidity that they've been hanging on to for 0:17:26.640 --> 0:17:30.719 eighteen plus years. Is a tremendous opportunity to see some 0:17:30.760 --> 0:17:33.600 of those gains and also reinvest those in you know, 0:17:33.600 --> 0:17:35.280 whatever the next SpaceX is going to. 0:17:35.280 --> 0:17:41.440 Be very quickly. The firm has twelve investing partners. Could 0:17:41.440 --> 0:17:44.440 you just explain how it works with Peter? And Peter 0:17:44.560 --> 0:17:47.440 right now is in Argentina, But like, does the firm 0:17:47.520 --> 0:17:50.199 do the classic Monday morning meeting thing? Does he zoom in? 0:17:50.240 --> 0:17:52.600 Are you constantly to twelve of you talking to each other? 0:17:52.760 --> 0:17:55.879 I think people there's still a mistique there about how 0:17:55.920 --> 0:17:56.720 it actually works. 0:17:57.000 --> 0:17:59.160 I'll be honest, there's still a mystique to me. I'm 0:17:59.200 --> 0:18:02.199 not really sure how Peter is. 0:18:02.440 --> 0:18:04.720 He's you know, an in of one. He is a 0:18:04.800 --> 0:18:10.080 very interesting personality. His location is always it's like a 0:18:10.119 --> 0:18:13.800 point of frequent conversation that I don't really understand because 0:18:13.840 --> 0:18:16.560 he's as accessible as he's always been regardless of where 0:18:16.560 --> 0:18:20.040 he is. You know, for anyone that's read his book 0:18:20.160 --> 0:18:21.840 zero to one, you can kind of imagine how that 0:18:21.880 --> 0:18:25.600 would translate to a venture fund. You know, they're Monday meetings, 0:18:25.640 --> 0:18:28.240 for example, we don't do Monday meetings why don't we 0:18:28.240 --> 0:18:28.960 do Monday meetings. 0:18:29.000 --> 0:18:30.040 It's not because we're lazy. 0:18:30.119 --> 0:18:34.280 It's because when you create a process, a tracking system 0:18:34.400 --> 0:18:36.480 for how you move something from step one to step 0:18:36.520 --> 0:18:39.280 two to step three, you end up making relative rather 0:18:39.320 --> 0:18:41.560 than absolute judgments. So you're like, well, this is the 0:18:41.600 --> 0:18:44.080 best company I met with this week, so I'm going 0:18:44.119 --> 0:18:46.360 to bring it to the partnership. And then they say like, well, 0:18:46.359 --> 0:18:49.080 this is the most interesting company that we have as 0:18:49.119 --> 0:18:50.960 a fund of seen this month. And so by the 0:18:50.960 --> 0:18:53.800 time it gets to the end of the process, you're like, well, 0:18:53.840 --> 0:18:56.080 it's made it this far. Maybe we write a small check, 0:18:57.240 --> 0:18:59.920 and there's just like not a lot of conviction that 0:19:00.080 --> 0:19:02.679 built into that. So we have created a ton of 0:19:02.680 --> 0:19:05.160 friction in the process of getting a deal through because 0:19:05.200 --> 0:19:08.000 we have no standing meetings. And so if you want 0:19:08.200 --> 0:19:10.000 an investment to be made, you have to go and 0:19:10.040 --> 0:19:11.720 wrangle all of the other. 0:19:11.520 --> 0:19:13.400 People that are required to get that deal. 0:19:13.200 --> 0:19:16.760 Done, and anyone with each other internally, with each other, 0:19:16.880 --> 0:19:19.960 and any one person can basically torpedo a deal. And 0:19:20.040 --> 0:19:22.400 so you have to go charging in as hard as 0:19:22.400 --> 0:19:25.560 you can with really high conviction. And what that means 0:19:25.600 --> 0:19:30.159 is that we make as a fund significantly fewer investments 0:19:30.200 --> 0:19:33.639 by number, not by dollar amount than any other venture 0:19:33.640 --> 0:19:36.840 fund of our size, but we're highly highly concentrated into 0:19:37.000 --> 0:19:39.040 the bets and the fund, so you know, call it 0:19:39.080 --> 0:19:41.679 forty percent of every fund is concentrated in just a 0:19:41.720 --> 0:19:45.800 couple of companies. And I think that really is because 0:19:45.840 --> 0:19:48.520 we've created an enormous amount of friction. It's just really 0:19:48.520 --> 0:19:49.640 hard to get anything done.