00:36:56 · Trae Stephens
[00:36:56] S0: inference, basically. Yeah. Doing edge inference, doing, like, object detection, tracking at range in, like, desert environments with, you know, environmental distortion from temperature. Like, it was it was really hard, but it was doable in six months. There was no basic science. We... In fact, at the time, we we didn't even think we needed to build any of the components ourselves. It was just a hardware integration problem. We ended up having to do that, which is a fun story that I'll I'll tell. So pan tilt units is, in theory, should be the simplest part of the entire stack. It literally is just like a thing that moves the sensor payload. But it turns out that if the normal way that a pan tilt unit is operated is with a joystick, where it's just like you move until you see something, and then you stop. And you look at the thing. And if you miss, you just slew back a little bit a few degrees in the other direction until you you have target on. We had a computer doing all this. And so the pan tilt unit, we'd say, go 117 degrees. It would turn 116 degrees. It would just be like a few clicks off for some reason. Now you multiply that against 100 movements. Within an hour. You're no no longer even looking remotely close at the thing that the radar is telling you to slew to. So no one had built a pan tilt unit that needed to have the level of accuracy that we needed it to have because we were using a computer to control it. So we had to build our own Pantel unit. Super annoying. Wish we didn't have to do that. This is still the philosophy of the company today. We don't want to build hardware unless we need to build hardware. And we were able to get that deployed. The company was started in June. We had a test unit in September. We had first towers deployed in December. And then twenty two months from founding, we had a multi $100,000,000 program of record with the federal government to operate Sentry Towers. And that program is still running today. It's worth billions of dollars. We have hundreds and hundreds and hundreds of towers deployed at military bases, national borders, maritime environments, both in The US and abroad. And it's the best margin profile of any product in our entire portfolio, which is with maturity and you can tighten things up. That's the way that all of our products should work over time.
00:39:05 · Trae Stephens, Aditya Agarwal
But the key lesson from that is that we got to build the software that ended up being the brain that goes into everything else that we build. We could only do that because we had operational access, the customer trusted us, and we were able to continue iterating to make sure that it did exactly what we wanted it to do. [00:39:23] S1: In the spectrum of things that you could build, how do you do, in some ways, product selection or prioritization? And then similarly, you know, you've kinda talked about building the modern defense prime. I think there are five other, you know, kind of recognized primes. Right? Five or six. Do you think there's room for a bunch more? Like, can people go out and start kind of, like, new defense companies that can get to scale?
00:39:43 · Trae Stephens
[00:39:43] S0: Yeah. So, you know, the the five big defense primes are all household names. It's like Boeing, which actually does a lot of commercial as well, so their market cap is not entirely tied to defense. But Boeing, Lockheed Martin, Northrop Grumman, General Dynamics, and RTX, which used to be called Raytheon. These are huge companies, and they don't build a single thing. They build a bunch of things. In fact, they build general aviation aircraft. Like, they're they're building, you know, private jets. Private jets. Yeah. They're they're building elevators in the case of RTX. I mean, these are, you know, thousands of SKUs at every company. And so when we talk about building a modern defense prime, it's actually very different than how startups have been talking about this in the defense tech community. Because if you come in with, like, an idea where you're like, I'm gonna build, an unmanned surface vessel, or I'm going to build an electronic warfare platform, or something like that, that is a product, or it's a category of products. You don't get to $100 plus billion market cap with the Department of Defense building in a single category. And that was something that we had a lot of conviction around early on at Anduril is that we knew we needed to be multi domain, just like Lockheed is, just like Northrop is. And so the... I think the reality for a lot of defense tech companies that they haven't quite figured out yet is that all paths converge at Anduril. Even if the thing that you're building at first is not competitive with Anduril, you are going to end up competing with Anduril if you want your company to be worth a lot of money. And I'm not saying that I'm not okay with that. I'm totally fine with having competition. I'm just saying, like, if you believe that you're operating in free space
00:41:23 · Aditya Agarwal, Trae Stephens
[00:41:23] S1: Mhmm. [00:41:24] S0: It's just not true. There is no free space left in defense. Every major contract that we go after, we compete with Lockheed. We compete with Northrop. We compete with RTX. We compete with General Dynamics. We also have to work... We have to work with them in some cases. You know, we just announced a few weeks ago that we're building a massive submarine shipyard to build super modules for Virginia class submarines. We have to work with General Dynamics Electric Boat to make that happen. Did... When we started the company, did we think we're gonna build nuclear submarines? No. But in order to play in this ecosystem, you're gonna have to do all of this stuff over time. And so there's no such thing as like a niche domain defense tech company if your plan is to be a next generation prime. And and I think you just have to, like, really think about the implications of that. [00:42:10] S1: That's a pretty good answer. I will call it here. Trae, thank you for showing up with authenticity and kind of, like, relaying us with a bunch of your stories. You're always welcome back at SPC. Thank you so much. [00:42:20] S0: Thanks, guys. Appreciate it.