Defense tech is winner-takes-all, according to Andruil’s president.
Anduril has quickly become a market leader, spawning a venture capital frenzy. The industry is also notoriously competitive, with companies duking it out for lucrative government contracts.
On the “20VC” podcast, President and Chief Business Officer Matthew Steckman described the company’s strategy. They’d need to win in key product categories, he said — and maybe monopolize them.
Every defense product category has one big or two big programs, Steckman said. He used the example of small drones, for which there are “very few” programs that would create enough revenue to maintain a business.
“If you capture them, you have a business, and if you don’t, you have no business,” Steckman said of these programs.
Defense tech companies must shoot for the moon, he said. It’s this “addressable market question” that most companies in the sector get wrong, he said.
“You have to create a monopoly,” Steckman said. “We knew that.”
Anduril’s strategy, then, was to create strong underlying technology that could keep them competitive in multiple markets. The company calls this Lattice, the tech that consumes data, interprets it, and then manipulates robots around it, he said.
Those technologies apply to 20 different markets, Steckman said, each “different parts of the defense apparatus.”
It’s clearly paid off. The company is reportedly raising its next round at a valuation of $60 billion. Some venture capitalists with FOMO are paying premiums for their shares. One compared it to buying Taylor Swift tickets.
Want to work there? Your best way in might be winning a drone-racing competition. In April, the company will reward one winner with a job and a $500,000 check.
After Steckman posited his theory of monopolization in defense tech, host Harry Stebbings asked: Why, then, are there so many drone companies?
“There will definitely be one winner,” Steckman said. “The challenge for investors is actually figuring out which one it is.”
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