What It Takes to Build a Generational Company | Anduril’s Trae Stephens
Founder quality becomes more important as startups become easier to build.
Trae Stephens, co-founder of Anduril and partner at Founders Fund, has spent years backing founders with strong conviction, including most recently at Roadrunner.
He shares why too much capital too early can hurt startups, and why the best companies are built by teams with complementary strengths.
Guest: Trae Stephens, co-founder, Anduril and Partner, Founders Fund
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The Companies Changing Warfare Forever: Palantir & Anduril Execs on Drones, AI & the Future of War
(0:00) Friedberg Intros Palantir's Shyam Sankar and Anduril's Trae Stephens
(0:56) Palantir Origins: CIA Analyst Joins 20-Person Startup
(2:54) War, Deterrence & Silicon Valley's Defense Tech Taboo
(8:39) US vs China: Drone Gap, Shipbuilding & 2027 Taiwan Threat
(12:27) Anduril's Arsenal-1 Factory & Fixing US Munitions Supply Chain
(41:48) Autonomous Weapons, AI Decision-Making & Future of War
(47:15) Anthropic vs Pentagon: Ethics of AI in Combat
(50:39) Palantir Surveillance State Claims
(55:57) Anti-Defense Culture Origins: Vietnam, Snowden & Foreign Influence
Axon.ai — AppLovin's AI advertising platform reaches over a billion daily active users across mobile games. Full-screen video ads with a 35-second median watch time. Advertisers are profitably spending hundreds of thousands of dollars a day and advertiser access is still in closed beta. The window is open at https://axon.ai/allin.
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20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything
Trae Stephens is a Partner at Founders Fund, one of the world's leading funds where he has worked with some of the best and backed the likes of Palmer Luckey with Oculus and Ryan Peterson @ Flexport since the very early days. Trae is also Co-founder and Executive Chairman of Anduril Industries, a defense technology company focused on autonomous systems, and Co-founder of Sol, a next-generation wearable e-reader. Previously, Trae was an early employee at Palantir Technologies, where he was also an integral part of the product team, leading the design and strategy for new product offerings.
In Today's Episode with Trae Stephens We Discuss:
1. From Hustling into Georgetown to Peter Thiel Ushering You into VC:
What is Trae's story of how he got into Georgetown University, despite being rejected the first time?
How did Trae make his way into the world of VC? How did Peter Thiel recruit him to Founders Fund?
What advice did Brian Singerman give Trae in his first week in VC? Why is it so important?
2. How the Best Venture Firm in the World Invests:
Decision-Making Process: Why do Founders Fund not have partner meetings? What is the investment decision-making process? Why does more process lead to mediocre outcomes?
Competitive Deals: Why does Trae believe the most competitive deals are always the worst? What do Founders Fund do to specifically avoid the "herd mentality"?
Upside Maximisation: Why does no one at Founders Fund care about "downside protection"? How do the team approach scenario planning and upside maximisation?
3. Do VCs Really Add Value:
Why does Trae think putting VCs on a board for "value add" is total BS?
Are there any cases in which Trae believes the VC can really move the needle for a company?
Why does Trae believe venture would be better if it were just operator investors?
Why does Trae believe platform approaches to VC value add is BS?
4. The Future of VC: Who and How to Win:
How did being an operator at the same time as investing, make Trae a better investor?
Why does Trae believe that vertical investing is BS and generalised is better?
How does Trae favour; market, product and people? Will Trae back a founder when he hates the idea?
What have been Trae's biggest lessons from his biggest hits and biggest misses in 10 years?
Trae Stephens - Find Good Quests - [Invest Like the Best, EP.319]
My guest this week is Trae Stephens. Trae is a partner at Founders Fund and co-founder and Executive Chairman of Anduril. Trae’s philosophy can be boiled down to finding good quests, which has led him to investing in businesses that work closely with the government on societally important issues. Clearly, that extends to co-founding Anduril and I would highly recommend listening to my Business Breakdowns episode on Anduril if you haven’t already. In this conversation, we discuss the importance of lobbyists, why the high-tech defense firms of the past became stale, and how he hunts for disagreeableness in founders. Please enjoy my conversation with Trae Stephens.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
Listen to Founders Podcast
Founders Episode 136 - Estee Lauder
Founders Episode 288 - Ralph Lauren
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Show Notes
[00:03:17] - [First question] - Why Trae thinks most high-margin businesses are bad for society
[00:04:28] - What would he change to impact energy technology most if he were in charge
[00:06:18] - His investing focus on dynamism and mission-driven tech companies
[00:09:42] - Analyzing why relatively few people strive to make society-level advancements
[00:11:35] - What he’s done as a parent to enable his kids to develop passions
[00:12:41] - The most noteworthy adventures in his career
[00:14:41] - Founding Anduril and what it taught him about the tech industry
[00:18:40] - The cutting-edge of defense technologies today
[00:21:29] - What Shyam Sankar of Palantir taught him about defense tech
[00:23:34] - Why some of the biggest defense tech companies have stopped innovating
[00:28:29] - What he and Anduril have learned about sales and scaling in the public sector
[00:35:22] - His take on Peter Thiel’s notion that competition should be avoided
[00:38:24] - The importance of being psychologically disagreeable when building a start-up
[00:39:54] - The origin story that stands out the most from companies he has interviewed
[00:41:12] - How he developed an investor mindset on his unorthodox path to the venture world
[00:43:57] - What he has learned from playing supporting roles and aligning with great leaders
[00:46:11] - Important but uncommon lessons about entrepreneurship
[00:48:21] - Venture investing lessons he’s learned from Lauren Gross
[00:50:00] - His first VR project and aspirations for the future of VR
[00:54:50] - The role of religion and spirituality in his business philosophies
[00:59:13] - Why he tries to capitalize on morality as opposed to sin
[01:03:57] - The kindest thing anyone has ever done for him
Welcome to AI Warfare
AI isn’t just changing search. It’s changing national security, too. Today, Kara talks to Trae’ Stephens, the co-founder and Executive Chairman of Anduril, about how the growing defense tech industry is using the power of AI and the speed of Silicon Valley to challenge “beltway bandits” like Lockheed Martin and Raytheon. They discuss drones in Ukraine, the ethics of “smart walls” along the US-Mexico border and, yes, those balloons.
Thoughts? Questions? Email us on@voxmedia.com or find us Kara and Nayeema on Twitter @karaswisher and @nayeema.
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Episode 16 - Trae Stephens and Brian Schimpf
This week I talk to Trae Stephens and Brian Schimpf from Anduril Industries, an AI defense contractor, about the current state of AI research and deployment for national security, including how the US stacks up against China. We also talked about the resistance among US engineers to work on defense applications and whether that hobbles the US in the global AI arms race.
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