Palantir's field traction gave Anduril a faster path into defense

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 20:43

   Well, I'm going to throw you under the bus a little bit on this. It was not obvious in the beginning that this is going to work. I can't tell you how many meetings even we had together where we walk out and be like, this is not going to work. This is very bad. we were not welcome with open arms. Early days of Palantir. Yeah. Early days, mid days, maybe even late days. Famously, we had to sue our customer just for the right to compete. That's the strength of the monopsony. And really, I'd say our entire business was validated from the field backwards. It was in DC, the doors were closed to us. No one wanted to interact with us. We're the monopsony strongest at the margin in the field where people are saying like, well, I'm on this deployment. I'm on this rotation. And there is more free market system. Like what I'm being given doesn't work. I'd like to come home. How do I like bend

2. 21:33

   the rules, figure out how to get the software I need? That allowed us to empirically show, you know, create facts on the ground that this stuff worked. It was a long road to hoe. I think this is part of why it took 20 years to kind of get to this sort of point here. And yeah, I think that a lot of those lessons that were learned were not only like educational for Anduril, but it also created a precedence that already existed by the time that we showed up where we didn't have to go through all of those same growing pains. So, you know, what took Palantir, I guess, probably about five years to get to 10 million annually in revenue. We did that in 22 months. But I don't think that was a credit to Andrel. I think it was mostly a credit to me, Matt, and Brian lived the five years at Palantir. Five years plus 22 months.

3. 22:14

   Exactly. And so we kind of had a bit of a cheat code, but I don't think it's like culturally shifted to the point where it's like actually just easy to do this now. It's not like the government has fixed all of their problems. I think it's just that there's enough people out there who have seen it that understand how to make it work, that you can work within the system rather than, as Shyam said, trying to constantly fight from the outside in.

4. 22:35

   Was there a view at that time in these years building Palantir where you saw an opportunity in hardware? Is that kind of the motivation for Anduril, that we've got software, but there's more to do and hardware could be reinvented and we could build systems? I mean, help us understand the connection. Yeah, in the very early days, actually, I came by to pitch Shom before we officially started the company. And I think part of that pitch was we said, we know how hard software is. We don't want to do that again. We believe hardware would be less hard. And I think we ended up being right from like a getting going perspective. But yeah, it's just, you know, the government doesn't know how to think about the value that's created by software. Maybe you feel like they're a little bit better now, but it was really hard in the early days of Palantir to

5. 23:19

   convince them to think about it as anything other than lines of code, for example, or some like metrics that anyone that works in tech knows doesn't matter. But for hardware, they know there's a bill of materials. In fact, the government made stuff for a long time. During the Cold War, there were literally ammunition factories that were owned and operated by the United States government. So they can kind of go through a spreadsheet and say, okay, I know how much it costs for you to build this. I know how much margin I'm comfortable paying you.

6. 23:46

   And it's a much easier, you know, crossing of the Rubicon. With software, it never felt like that. Yeah, it's still very hard. I mean, people want to pay for software and government on a cost plus basis, which doesn't make any sense if you think about the R&D.