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“My goal for the rest of this talk is to find something to say that someone will ask about later today or tomorrow, ‘Can you believe Trae said that?'”
Last night , for an eventide host by StrictlyVC , this editor model down with Trae Stephens , a former government intelligence analyst turned former Palantir employee turn investor at Founders Fund , where Stephens has co - founded two companies of his own . One of these isAnduril , the buzzy defense technical school company that is now valued at $ 8.4 billion by its investor . The other isSol , which make a single - intention , $ 350headsetthat weighs about the same as a couple of shades and is focused forthright on reading , a second like a wearable Kindle . ( Having put on the pair that Stephens brought to the event , I straight off wanted one of my own , though there ’s a 15,000 - person waitlist right now , says Stephens . )
We spent the first one-half of our chat talking primarily about Founders Fund , kicking off the conversation by talking about how Founders Fund secern itself from other firms ( display board seats are rarified , it does n’t allow money for follow - on investments , consensus is largely a no - no ) .
We also talked about a former colleague who manages to get a lot of closet ( Stephens rightly ribbed me for sing about him during our own conversation ) , whether Founders Fund has business organization that Elon Musk is stretching himself too slight ( it has stakes in numerous Musk company ) , and what happens to another portfolio fellowship , OpenAI , if it loses too much endowment now that it has lease its employees trade some portion of their share at an$86 billionvaluation .
The 2d half of our conversation center on Anduril , and here ’s where Stephens really illumine up . It ’s not surprising . Stephens lives in San Francisco but drop much of each day overseeing large swaths of the outfit ’s operations in Costa Mesa , California . Anduril is also very much on the rise right now forobvious reasons .
If you ’d rather take in the lecture , you’re able to catch it below . For those of you who prefer reading , what follow is much of that conversation , edited lightly for duration .
Keith Rabois , who recently rejoined Khosla Ventures , was describe to have been “ bear on out ” of Founders Fund after a falling - out with colleagues . Can you utter a bit about what happened ?
At Founders Fund , everyone has their own style . And one of the benefits that really comes down from Peter [ Thiel ] from the showtime , when we were first establish around 20 twelvemonth ago , is that everyone should run their own scheme . I do strategy in a unlike mode than [ colleague ] Brian [ Singerman ] does venture . It ’s different than the manner that Napoleon [ Ta ] — who runs our growth fund — does venture , and that ’s good , because we get different flavour that we would n’t otherwise get by having people executing these dissimilar strategies . Keith had a very different strategy . He had a very specific strategy that was very hands - on , very in use , and I think Khosla is a very good fit for that … and I ’m really happy that he find a place where he feels like he has a team that can back him up in that carrying out .
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You ’ve talked in the past about Founders Fund not want to back founders who involve a lot of hand - holding …
The idealistic pillowcase for a VC is you have a founder who is going to be really good at running their own job , and there ’s some unique boundary that you could allow for to help them . The realism is that that ’s normally not the type . Usually the investor who think they ’re the most value added are the most annoying and difficult to plow with . The more a VC says , “ I ’m going to add value , ” the more you should hear them say , “ I ’m belong to annoy the ever - populate crap out of you for the rest of the time that I ’m on the cap table . ” If we conceive that we — Founders Fund — are necessary to make the business organization work , we should be investing in ourselves , not the founder .
I find it interesting that so much ink was spilled when Keith run to Miami , and again when he moved back to the Bay Area in a part - time content . the great unwashed thought Founders Fund had moved to Florida , but you ’ve told me the bulk of the house remains in the Bay Area .
The vast absolute majority of the team is still in San Francisco … Even when I join Founders Fund 10 years ago , it was really a Bay Area game . Silicon Valley was still the dominant force . I think if you look at stock five , which is the one I participate at Founders Fund , something like 60 % to 70 % of our investments were Bay Area companies . If you look at fund seven , which is the last vintage , the majority of the fellowship were not in the Bay Area . So whatever citizenry thought about Founders Fund relocating to Miami , that was never the case . The theme was that if things are geographically parcel out , we should have people who are near to the other things that are interesting .
Keith enjoin something earlier today at the [ nearby ] Upfront Summit about beginner in the Bay Area being relatively work-shy and not willing to work nine to nine on weekday or on Saturdays . What do you think about that and , also , do you intend founder should be working those hours ?
I used to work for the government , where , when you speak publically , the goal is to say as many discussion as possible without say anything … It ’s just like the teacher from Charlie Brown . Keith is really good at allege thing that journalists call for about later . That ’s in reality good for Keith . He made us talk about him here onstage . He win . I cerebrate the realness is that there are n’t enough people in the world that say things that people retrieve that are deserving talking about later . My end for the rest of this talking is to find something to say that someone will call for about later today or tomorrow : “ Can you think Trae said that ? ”
I have a resolution to that , but that comes later ! OpenAI is a portfolio company ; you bought lowly share . It just manage another junior-grade sale . Its employees have made a lot of money ( presumptively ) from these sales agreement . Does that concern you ? Do you have a stance on when is too soon for employees to start selling parcel to investors ?
In tech , the rivalry for talent is really fierce , and companies require their employees to believe that their fairness has real pecuniary time value . Obviously it would be big if you said , “ you may sell 100 % of your vested equity , ” but at a fairly other stage , I conceive it ’s hunky-dory to say , “ You ’ve got 100,000 shares vested ; mayhap you may deal 5 % to 10 % of that in a caller - ease legal tender , so that when you ’re being compensate with fairness , that ’s real and that ’s part of your full comp package . ”
But the scale is so unlike . This is a company with an $ 86 billion valuation [ per these junior-grade buyers ] , so 5 % to 10 % is a lot .
I believe if you protrude seeing a performance degradation have-to doe with to people checking out because they have too much liquidity , then yeah , that becomes a pretty serious job . I have n’t seen that bump at OpenAI . I find like they are super mission - motivated to get to [ artificial general intelligence ] , and that ’s a really meaty mission .
You ’re also an investor in SpaceX. You ’re an investor in Neuralink . Are you also an investor in Boring Company ?
We ’re an investor in Boring Company .
Are you an investor in X ?
No . No , no , no , no . [ Laughs . ]
But you ’re in the line of work of Elon Musk , as I guess anyone who ’s an investor would want to be . Are you worried about him ? Are you worried about a breaking point ?
I ’m not personally concerned . Elon is one of the most unparalleled and generational talents that I guess I ’ll see for the rest of my spirit . There are always trade - offs . You go above a certain intelligence quotient point and the trade - offs become quite severe , and Elon has a set of swap - offs . He ’s incredibly acute . He will outwork anyone . He ’s superb . He ’s able to organise a lot of stuff in his brain . And there are give out to be other parts of life that suffer .
You are very involved in the day - to - day of Anduril , more than I realized . You ’ve build up these sovereign vessels and aircraft . You recently introduce the Roadrunner , a VTOL that can handle change cargo . Can you give us a curtain grower about what else you ’re working on ?
The nature of Anduril and what we ’re doing there is that the threat that we ’re facing globally is very different than it was in 2000 through 2020 , when we were spill about non - state actors : terrorist organizations , insurrectionist mathematical group , rogue states , thing like that . It look now more like a Cold War conflict against close - peer adversaries . And the way we engaged with with child power struggle during the Cold War was by building these really expensive , exquisite organization : nuclear baulk , aircraft carriers , multi - hundred - million - dollar aircraft projectile systems . [ But ] we find ourselves in these conflicts where our adversaries are designate up with these low - cost attritable systems : thing like a $ 100,000 Persian Shahed kamikaze bourdon or a $ 750,000 Turkish TB2 Bayraktar or elementary rockets and DJI drone with grenades attached to them with little gripper claws .
Our reaction to that has been historically to spud a $ 2.25 million Patriot missile at it , because that ’s what we have , that ’s what ’s in our stock list . But this is n’t a scalable solution for the future . So since we were establish , Anduril has looked at how [ we can ] reduce the cost of engagement , while also removing the human wheeler dealer , move out them from the terror of red ink of life … And these potentiality are not hardware capabilities largely . This is about autonomy , which is a software package job … so we wanted to make a company that ’s software system - defined and ironware - enable , so we ’re work these systems that are downcast cost and supplement the existing capacity to create a continued deterrent impact so that we deflect global battle .
I ’d understand a story recently where someone from one of the defense “ undercoat , ” as they ’re holler , rolled their eyes and say refutation technical school upstarts do n’t jazz enough yet about aggregative production . Is that a concern for you ?
Startupsdon’tknow how to do mint production . But flush also do n’t know how to do mass production . you may look at the Boeing 737 trouble if you want some grounds of that . We have no provision of Stingers , Javelins , HIMARS , GMLRS , Patriot missile — they ca n’t make them fast enough . And the reason is they built these supply chain and manufacturing facilities that are more like the manufacturing facilities of the Cold War .
To search at an analogy to this , when Tesla work out to build at monumental scale , they said , “ We need to build an autonomous factory from the land up to actually gain the need requirements for producing at a scummy toll and at the scale that we need to grow . ” And GM looked at that and they enounce , “ That ’s ridiculous . This companionship will never descale . ” And then five years later , it was discernible that they were just getting absolutely smoke . So I reckon the primes are saying this because it ’s the justificatory reaction that they would have to say these upstarts will never get it .
Anduril is test to build a Tesla . We ’re going to build a modular , sovereign factory that ’s going to be able to keep up with the demand that the customer is fox at us . It ’s a big bet , but we hired the bozo that did it at Tesla . His name isKeith Flynn . He ’s now our head of production .
I ’m sure you get take a quite a little about the danger of autonomous systems . Sam Altman , at one of these events , told meyears agothat it was among his biggest fears when it comes to AI . How do you think about that ?
Throughout the course of human story , we ’ve gotten more and more vehement . We start with , like , perforate each other and then come to each other with rocks and then eventually we figured out metal and we begin making sword and bow and arrows and spears , and then catapults and then finally we got to the advent of gunpowder . And then we started dropping bombs on each other , and then in the forties , we reached the point where we realise we had humanity - destroy capability in nuclear artillery . Then everyone kind of block up . And we fend around and we state , “ It would not be respectable to use nuclear artillery . We can all kind of agree we do n’t actually want to do this . ”
If you look at the curve of that red potential , it started coming down during the Cold War , where you had precision - guided munitions . If you ask to take out a target , [ the motion became ] can you shoot a missile through a windowpane and only take out the object that you ’re mean to take out ? We have much more serious about intelligence operation so we could be more accurate and more discriminating in the blast that we delivered . I cogitate autonomous organisation are the far compass of that . It ’s enounce , “ We desire to prevent the loss of human life sentence . What can we do to eliminate that , to the extent possible to be absolutely certain that when we take lethal natural process , we ’re doing it in the most responsible for room possible . ” …
Am I frightened of Terminator ? Sure , there ’s some potential hypothetical hereafter where the AGI becomes sentient and decides that we will be better off reach paper clip . We ’re not skinny to that right now . No one in the DoD or any of our ally and partner is talk about sentient AGI taking over the mankind and that being the goal of the DoD. But in 2016 , Vladimir Putin , in a speech to the Technical University of Moscow , say , “ He who controls AI control the cosmos , ” and so I cogitate we have to be very serious about recognizing that our adversaries are doing this . They ’re going to be building into this future tense . And their goal is to beat us to that . And if they beat us to it , I ’d be much more concerned about that Terminator reality than if we , in a democratic Western gild , are the ones that manipulate the edge .
verbalize of Putin , what is Anduril doing in Ukraine ?
We ’re deploy all over the cosmos in struggle zones , include Ukraine . You go into a conflict with the technology you already have , not with the engineering you hope to have in the future . So much of the applied science that the United States , the U.K. , and Germany sent over to Ukraine were Cold War era engineering science . We were post them thing that were sitting in warehouses that we need to get out of our inventory as quickly as possible . Anduril ’s goal , aside from supporting those conflicts , is to build up the capacity that we postulate to work up , to ascertain that the next clip there ’s a conflict , we have a big inventory of stuff that we can deploy very quickly to hold up our allies .
You ’re privy to conversations that we probably ca n’t imagine . What is in your survival outfit ? And is it in a bunker ?
I do have a bunker , I can confirm . What ’s in my survival outfit ? I do n’t call up I have any interesting ideas here . It ’s like , you desire nonperishables . You want a big provision of piddle . It might not hurt to have some shotguns . I do n’t bonk . Find your own bunker . It turns out you may buy Cold War earned run average projectile silos that make for cracking bunkers and there ’s one for sale right now in Kansas . I would further any of you [ in the audience ] that are concerned to checker it out .
You ’re obviously very passionate about this country . You exploit in government service . You work on with Peter Thiel , who has thrown his resource behind people who ’ve been elect to public role , including now , Ohio senator J.D. Vance . Will we ever see you run for for office ?
I ’m not in person defend to the idea , but my wife — who I enjoy very much — said she would disunite me if I ever ran for public office . So the answer is a strong no .
