(machine roaring)
- [Host] In November, the defense startup Anduril Industries
released its latest autonomous weapons systems, Roadrunner
and Roadrunner-M.
(bombs exploding)
The Roadrunners join Anduril's suite
of AI-powered unmanned products
that are shaking up the defense industry.
(machine roaring)
Since it was launched in 2017,
Anduril has found success as a defense department contractor
selling autonomous vehicles
and the software that powers them.
Today, the startup's technology is being used across
multiple branches of the US Military,
and in both the Ukraine-Russia and Israel-Gaza conflicts.
The company was recently valued at $8.48 billion.
Anduril was created to help build a new type of military
to meet the demands of a changing battlefield.
- We are in a position where over the last decades,
we have built the wrong things.
- We need a different kind of US military
and a different approach to military power.
- Anduril I think, is a healthy revolution
for the defense industry.
(soft music)
- So this is Fury.
It's an unmanned combat aircraft that is able
to work in collaboration with manned fighters,
with other manned aircraft to hugely push out the range
that we can engage targets at without putting
people at risk.
That's kind of one of the coolest things about autonomous
systems, not necessarily the fact that they can think faster
or do better than a person,
but they can also just throw away their lives.
- [Host] Anduril's founder Palmer Luckey
is among the more polarizing figures in the tech industry.
- My name is Palmer Luckey
and I'm a virtual reality enthusiast,
and the designer of the Rift.
- [Host] Luckey first found success when his virtual reality
company, Oculus, was acquired by Facebook
for more than $2 billion.
But in 2017, Luckey was ousted from Facebook
after a tumultuous tenure.
(soft music)
- Let me just show you very quickly
what our software looks like.
This is an example of what we think
it's a pretty intuitive interface.
- [Host] The foundation of Anduril
is Lattice a software platform
that serves as a command center of sorts,
allowing a single human operator to control
and coordinate multiple autonomous robots, be they a drone,
a sub, or a mobile sentry.
- What you're gonna see at the bottom is essentially all the
different assets that are a part of the team,
and then you're gonna see a graphical display
that looks very similar to a lot of the software
that we might use in everyday life,
where there's a map in the background.
You're gonna see multiple vehicles on that software,
and each of them, you kind of know
what role they're playing.
Engineers are designing our software, much like the people
who design the kinds of software
that goes on our cell phones or on an iPad.
It's meant to be very, very user friendly,
hardware focused defense companies.
That hasn't been the approached.
- The US military likes to buy things.
The whole contract mechanism is set up to buy things.
And just now, I think generationally, culturally,
they're starting to catch up to the idea
that a software package can be just as powerful
as the thing that it comes in.
- [Host] But Anduril's Tech isn't the only thing
that sets it apart.
The startup is also pursuing a business model
that borrows a lot of inspiration from the tech world.
- The way that the traditional defense,
really large defense companies are set up when they take
risk, the market actually frowns upon that risk being taken.
We are designed completely differently as a company.
We are designed like a high-tech company,
the set of investors that we have,
and ultimately, hopefully, when we're a public company,
it is expected that we take risk on.
- [Host] Anduril says it's taking bigger risks
because it's betting
that the way we fight wars is changing rapidly.
- What we're dealing with right now is a disruption created
by technology created by the threats that we're facing.
- [Host] Anduril's Chief Strategy Officer Christian Brose,
likens this alternative
to the Moneyball system described in Michael Lewis's
book of the same name.
- You guys are talking the same old nonsense.
We got to think differently.
- [Host] In "Moneyball," the Oakland A's attempt
to put together a baseball club on a budget
by employing computer-generated analysis
to draft its players.
- Similar to baseball.
You have to come up with a strategy that is low-cost,
that's going to allow you to build an affordable,
sort of scalable approach that's going to be successful.
For military terms,
it's not relying upon traditional military systems,
that come in very small quantities,
that are rather large, very expensive, very exquisite,
hard to produce, hard to replace, very manned,
going the opposite direction, and relying on larger
and larger quantities of smaller, lower-cost,
more autonomous military systems
that you can produce very quickly,
you can replace very quickly.
- Anduril I think, recognized that there was a gap in
what some of the big primes were doing
and sought to fill that gap.
Thinking differently about defense is something that's hard
to do if you've been very successful working in your
particular way of thinking about defense.
That's part of why Anduril is so interesting
as an alternative mechanism.
- [Host] Since the end of the Cold War,
America's defense industry has undergone
considerable consolidation.
In the 1990s,
the US relied on 51 primary contractors.
Today, that number is just five.
Lockheed Martin, Boeing, RTX Corporation, Northrop Grumman,
and General Dynamics.
According to a 2022 DOD report,
fewer contractors has stifled innovation
and undermined price competition.
- We live in a world where 80% of weapons procurement goes
to just five companies.
- [Host] One of the biggest issues is cost-plus contracts.
- Meaning they're paid for time, materials, workforce,
and then a fixed percentage of profit on top.
Because that profit is a plus, a lot
of vendors are incentivized for the cost portion
to be as large as possible as well.
They can often make more money when something
takes longer than it was supposed to.
They can often make more money when they sell a solution
that's more expensive rather than a solution
that's less expensive.
And this wouldn't be a huge problem if there
was real competition.
- [Host] Anduril is carving out an alternative pathway
to secure DOD contracts by buying up smaller startups
and small to medium sized businesses.
- So when Anduril looks at buying companies,
we typically want to buy companies
that are quite far along building something
that is differentiated, that is far ahead of what we have,
and that would be difficult for us to catch up with.
And so what it really comes down to is do they have
something that will become much more valuable when paired
with our core product, which is Lattice AI,
can autonomy make this thing
that they're making into a much more powerful product?
And that's been the basis of all of our acquisitions so far.
- [Host] Today, Defense contractors produce small numbers
of large, expensive, heavily manned
hard to produce weapons systems.
The so-called Moneyball Military
that companies like Anduril are working toward
will be made up
of large numbers of smaller, lower cost autonomous systems.
- I don't think that Anduril will ever be able
to completely replace one of the prime contractors.
What they do is very specific and very well honed.
We, unfortunately, are in a very uncertain world
where great power competition is a potential.
It's happening right now,
and that great power conflict is a potential
that we all have to deal with.
And in that kind of world,
the prime contractors are gonna be necessary
to build those huge defense systems.
- The large primes are struggling
to do things the way Anduril does
because they're publicly traded companies
with an existing investor class that invested in them
to be a certain type of company.
At the same time, I hope they do get there.
I think that maybe they're not gonna get
quite to where Anduril is.
But I think that we could get to a future
where defense companies are spending more on developing
their own products than the government is.
I think that's a positive world.
(upbeat music)