Two Unicorns in 35 Years
Luckey: It's very hard to raise money as a defense startup — even when you've recently sold a company for billions. In 35 years since the end of the Cold War, there have only been two unicorns in the defense space. Palantir and SpaceX. And SpaceX sort of doesn't count — that's actually a Mars company that happens to have the military as its largest customer. Both were founded by people who had just sold their previous companies for billions.
To put this in perspective — two unicorns in 35 years. In that same period you got two mattress unicorns, two dozen fast casual dining unicorns, 50 gaming unicorns, over 100 fintech unicorns, about 50 automotive unicorns, 150 biotech unicorns. Every other industry, even ones much smaller, had much larger-scale success.
Two defense unicorns in 35 years. Same number as mattress unicorns.
Smart People Stayed Away
Luckey: Smart investors don't want to invest in defense. Smart founders don't want to found defense companies. Smart employees don't have a financial reason to do it.
Most people I found in defense startups — they were doing it because they were passionate and patriotic. They certainly did not believe that was the way they were going to make the most money. Which is a problem if you're trying to attract really smart people.
Smart investors, smart founders, smart employees — none of them had a reason to be in defense.
Other Companies Raised More Off Our Success Than We Did
Luckey: We were the third defense unicorn. I think there are like seven new ones now. I often joke that other companies have raised a lot more money off our success than we have. And it's true.
We proved that this model works — you spend your own money, build a defense product, decide what to build and how to build it, and sell it to a government customer when you have a working technology. A lot of major VC firms are now making funds dedicated to defense.
Other companies have raised more money off our success than we have. And it's true.
Ukraine Changed Everything
Luckey: About half of it is because of Ukraine, the other half is because of our success. When I started Anduril five and a half years ago, I got a lot of heat — 'you're wasting your time, economic ties preclude any large-scale conflict, there's no reason for weapons' — all the way to 'you just want to kill people, weapons are inherently bad.'
After Ukraine, many of those people — friends and even enemies — reached out to say: I was wrong. I understand now that it is possible for weapons to play a positive role in the world.
After Ukraine, friends and even enemies reached out to say — I was wrong.