Kyle Harrison's 300-page 'Anduril Thesis' argues century of defense-industrial history defines the company

Speaker 1: This is the covering. We'll create a content Ouroboros here.

Speaker 3: I'm not sure. We'll just keep it going someday. I don't know. We'll see.

Speaker 1: Anyway, thank you so much for taking time talk to Good

Speaker 2: to see you, Mike.

Speaker 3: Thanks for

Speaker 2: the update.

Speaker 1: We'll talk to you soon.

Speaker 3: Have a

Speaker 2: good one.

Speaker 3: I'll see you soon.

Speaker 1: Bye. We're running late, but we got Kyle Harrison in the waiting room. Let's bring him into the TBPN Ultra Dome. He wrote a book about the Andoril thesis, 300 pages of defense tech lore history knowledge. You know what's more valuable than any of these cars up here in the Hollywood Hills knowledge? And you wrote a book. Tell us about it. What was the process? What was the thesis of the book, the Andoril thesis?

Speaker 9: It was an incredible experience. I would say I think the thing that I came to appreciate the most was everybody talks about Andoril like it's just any other company. All these high growth companies that are are defined by an awesome team chasing a big idea, Market turns out to be bigger than you possibly expect. You know, Ben Horowitz has to tell Databricks that they're undersigning themselves at 10,000,000,000. It's a 100,000,000,000. It's 200,000,000,000.

Speaker 1: Yep.

Speaker 9: Like, those stories are very common. Yep. The Andoril story is so underappreciated because it is counter positioned to there's like over almost a hundred years of military, geopolitical, industrial history

Speaker 1: Yep.

Speaker 9: That really define the company that people just they just they don't know. Like, they think about, oh, this is an interesting strategic choice, it's like, no. This is actually because of things, decisions that people made in the fifties and sixties that we literally have to do things this way. That was the biggest takeaway.

Speaker 1: Yeah. I feel like Shamsankar at Palantir with the first breakfast has done a good job shining a light on the Last Supper. So Mhmm. Many people in tech are familiar with that sort of key moment of industry consolidation that led us to this moment. Were there any anecdotes or historical stories that you discovered that were more under the radar, more, like, less discussed as, like, you know, the the the the founding moments of this whole journey?

Speaker 9: The biggest appreciation that I got was for this sort of, like, dual pairing of people pushing forward a specific project. In The Kill Chain, which is Chris Brose, who now is the kind of co president and chief strategy officer at Antero, but at the time was coming off the Armed Services Committee. He wrote this book, The Kill Chain. He talks about this idea of, like, military mavericks.

Speaker 1: Yeah.

Speaker 9: And I kind of combined this with this kind of founder founder mode energy that people bring. And so you have this, like, founder plus military maverick pairing, where you have folks like the the team so Bernard Treiber, I think is the name of the guy, who basically led the team inventing ICBMs.

Speaker 3: Mhmm.

Speaker 9: He absolutely needed Eisenhower as his kind of military maverick Sure. To, like, pair that effort. Yeah. There's countless stories of this, the modernization of the Navy. There's all these different things that were like, that one two punch was kind of required. Once you get away from, like you know, at one point, the DOD was 36% of global R and D Yeah. They had a pretty good handle on the cutting edge. Once you've the further away you get from that, the more you need founder mode people digging in to figure out the solution. Sure. And and it's heartbreaking because you see these, like, countless examples of, like, profits of urgency throughout time, where, like, once we lost that that sort of, like, desire for founders to come in and solve problems, you have all these people who are, like, throughout the eighties and nineties and early two thousands, they're releasing reports and and writing white papers and talking about how, hey. This is gonna be a problem. Warfare is changing. China's going to school on how we do conflict, and that's problematic. And none of them had sort of founders to be able to come solve problems because no one was willing to pay attention to the actual problems, and so we lost that pairing.

Speaker 1: There's reports of Vanderbilt raising a new round, $60,000,000,000 potentially. Is this book a financial thesis? Is this financial advice? Is this something that investors, potential investors, maybe future investors Yeah.

Speaker 2: There's four chapters dedicated to price targets.

Speaker 1: Price targets,

Speaker 9: multiples, cash For entertainment purposes only right across the right across the no this is this this does not constitute financial advice

Speaker 1: Okay.

Speaker 9: Entertainment purposes only. You know what's crazy is, I think, if I remember correctly, in secondary markets, if if there is any secondary volume that that Androil's founders haven't already gone to war on

Speaker 1: Yeah.

Speaker 9: I heard somebody say that it was like a 100,000,000,000 indication. Like, even just tracking, like, what people are willing to pay because of Matt Grimm's war, there may be no no supply for the demand, but the demand is priced at a 100,000,000,000. So it's not, you know, where where the new round ends up, whatever, the appetite continues.

Speaker 1: Sequel. Sequel. The annual financial thesis. Let's go.

Speaker 9: That's right.

Speaker 2: This is investment advice. Anderil's been very very acquisitive. And it feels like the some of the most, like, meaningful innovation and, like, founder mode behavior in the last twenty years has come out of, like, Ukraine and what what they've been doing to basically figure out how to, like, innovate and create these, like, r and d loops around drone warfare. Like, do you any any I don't I don't know if you can make predictions, but, like, does Andoril end up buying any of these companies? Is that is that have you have you uncovered anything on that front? Is that even is that even a possibility? It just feels like they've done some very impressive work to, protect their their country and, a lot of it seems relatively aligned to Andriel's own efforts.

Speaker 9: Yeah. So there's a couple of pieces of the puzzle. So first, like, in terms of how acquisitive Andriel has already been, our, you know, our good friend, Paki McCormick, has described it well. Think that calling it an an API into the DOD Mhmm. Where Andoril is effectively enables this, like, plug in mechanism of somebody can go very deep into a very specific capability in a way that, like, like, companies like the the company that may dive like, it'd be very difficult for them to sort of become a standalone large company. Mhmm. But by being acquired by Andoril, immediately, they're able to plug in and get a $100,000,000 contract with the Australian Navy and and stuff like that. So I think like the acquisition muscle plugs in a lot of other stuff pretty capably. The second piece of that puzzle is I think that a lot of times we do a disservice like the venture capital industrial complex does a disservice by focusing everybody on this sort of like neo prime North Star of everybody needs to be the $10,000,000,000 20,000,000,000 50,000,000,000 $100,000,000,000 outcome. I think that there are a lot of opportunities for companies to be very, very good at a very specific thing capability and then to plug into some of these systems, whether it's through partnership or through acquisition. And what's funny, probably the most frustrating part about the book is we wrote it over the course of two years in part because we you know, it's it's difficult to sit down. We all have day jobs and stuff. But in part too because the world is constantly changing. Right? When we started when we originally sat down thinking about what would this would look like, you know, none of the things that happened in in Israel, like Ukraine was sort of just continuing to evolve, Venezuela happens, all these different conflicts happen over time. But then on top of that, Andoril as a company continues to ship. And so even six months ago, I would have said, what is the kind of like signal? And what's interesting is you look at some of their product launches. Some of these requisitioning some through partnership. But I don't if you guys have seen their like anime style No. Product launch videos. Right?

Speaker 1: Oh, great.

Speaker 9: So I don't know if everybody has noticed this, but the last two videos had teasers of their future products. So I think it was the video that where they talked about Furi. And then it was maybe Furi or the Barracuda. And then at the end of the video, it kind of went under the water and you started to see these assets moving, but then it cuts away and you don't know what it is. Couple months later, they they announced Copperhead, which is their, like, torpedo product. And that paired with Dive and stuff, then they have a video about that. And at the end, it pans above the water and you start to see this thing kind of come out of the corner of the shot and it cuts away. And then just, whatever it was, last week or so, Andrew will announce a partnership with Hyundai about building autonomous surface vessels, right? So it's like kind of going into all these different surface areas. I think that that is indicative of like where the signal is, is that whether it's through partnership, whether it's through acquisition, a lot of the stuff that's happening in Ukraine, what kind of exposing is that there is significant opportunity for like networked assets. And Anderil is absolutely has this mindset on becoming the the sort of networked everything. The military yeah. Military Internet of Things is what Chris Bros calls it.

Speaker 1: Where can people find the book?

Speaker 9: Amazon.com. Our own Jeff Bezos is hosting it for us. We're not in the book printing business so

Speaker 1: You're do an audiobook version of

Speaker 2: Oh, they print they have a print on demand.

Speaker 9: Yeah. It's sick. It's great. It's you put in the thing. It takes a lot

Speaker 2: of what

Speaker 1: I'm thinking, John? What you're thinking.

Speaker 9: It's pretty good. I'm

Speaker 2: telling you time what. To it's time to ship books.

Speaker 1: You gotta write a book about

Speaker 9: TBPN the novelization.

Speaker 2: We wanna make we wanna make ad supported business books. They're free. Yeah. But they come with ramp ads.

Speaker 1: Yep. That's great.

Speaker 10: You could you could yourself

Speaker 1: a good sign.

Speaker 3: It's as easy as it

Speaker 1: can be.

Speaker 2: Last question from my side. Do you have have we reached peak early stage defense tech investing boom? Has it already passed? Is it are we still on the app? Like, what what is your feeling at this point?

Speaker 9: I think that it is going to take to to take the air out of the balloon is gonna require some type of black swan. Hopefully hopefully micro swan micro black swan event. We

Speaker 3: don't want it to be too bad and Wait.

Speaker 2: Said to take the air out of the defense tech investing sales, you would need a black swan event. You're saying like World peace. We declare global peace.

Speaker 9: World peace. I think I think it's more about the capability. I think it's gonna take like either there is a company that has been highly valued, highly sought after, kind of held up as one of the golden children of the the neo defense industrial wave that just something

Speaker 1: things are just It's terrible.

Speaker 2: It's really bad.

Speaker 9: Oh, okay. Like something very bad happened. And so then investors start to say, oh crap. Wait. You're telling me not every company I invest in that does defense is gonna be the next and roll? I can't underwrite to every company. Maybe they're not 60,000,000,000, but at least they'll be 20,000,000,000. Like, if that underwriting muscle goes away

Speaker 3: Sure.

Speaker 9: You have a whole swath of carpetbagger VCs that suddenly get very panicked. Like, something like that happens.

Speaker 1: Social, there were a whole bunch of, like like, fifth wave social companies that didn't get the Instagram acquisition. They didn't get the WhatsApp acquisition. They raised a couple $100,000,000, and they just sort of burned it down and just went away and nothing really happened. And the VCs sort of woke up, and they're like, okay. We gotta be much more careful if we if we're investing in that category. So

Speaker 9: Yeah. Because I think it's like I think the problem is, like, there are sort of, like, three varieties of VCs are in and around, like, defense tech more broadly. And it's, the people who invest and get it and they're actively building understand the, like, moral implications of the types of technology they're investing in. Then there are still people who have said, we will not invest in weapons. We don't want to invest in defense, whatever. It's this middle ground tier that is problematic. It's these people who they have no real philosophical weight behind why they do what they do. They just see big number and pursue shiny object regardless of consequences.

Speaker 1: Line go up. Well, we hope that the line goes up on your book sales. Head over to amazon.com and buy The Andoril Thesis by Kyle Harrison of Contrary. Thank you so much for coming on the show. Can't wait to see soon.