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Anduril & Founders Fund’s Trae Stephens on Choosing Good Quests in the Age of AI | Ep. 35

Trae Stephens is a Partner at Founders Fund. He is also Co-founder and Executive Chairman of Anduril, a defense tech 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 led teams focused on growth in the intelligence/defense space as well as international expansion. He was also an integral part of the product team, leading the design and strategy for new product offerings. Prior to Palantir, Trae worked as a computational linguist building enterprise solutions to Arabic/Persian name matching and data enrichment within the United States Intelligence community. He began his career working in the office of then Congressman Rob Portman and in the Political Affairs Office at the Embassy of Afghanistan in Washington, D.C. immediately following the installation of Hamid Karzai’s transitional government. We covered: - Hard tech and the future of warfare - AI morality and “good quests” - How Anduril scales manufacturing - Founders Fund’s investing philosophy - Contrarianism and concentration - The ethics of autonomy and national defense Timestamps: (0:00) Intro (0:35) Choosing good quests in the AI era (7:35) Ethics behind solving certain problems (11:29) Working with regulators (16:54) What’s left to prove at Anduril (18:32) Anduril, SpaceX, and Tesla at scale (22:30) The future of warfare (24:48) Juggling Anduril and Founders Fund (29:07) A system that rewards going deep (31:21) What’s made Founders Fund great (37:30) The king-making strategy in VC (40:26) Concentrating in the winners (43:55) Where there’s alpha in the market (47:22) Theological revival in traditional faith More on Trae: https://foundersfund.com/ https://x.com/traestephens More on Jack: https://www.altcap.com/ https://x.com/jaltma https://linktr.ee/uncappedpod Email: friends@uncappedpod.com

Trae StephensguestJack Altmanhost
Dec 3, 202552mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:35

    Intro

    1. TS

      I always tell defense tech companies this, it's like, this is not the Field of Dreams. If you build it, they do not come. That's not how it works. Like, if you build a perpetual motion machine, and the point of the perpetual motion machine is, like, powering forward operating bases, you go to the Department of War, and you say, "I have built you a perpetual motion machine, and I will sell it to you for a million dollars." They would, "Okay, we're gonna bid this out to market, and we're gonna give Lockheed Martin a one hundred billion dollar contract [chuckles] to rebuild, from white paper, your perpetual motion machine." That's how it works.

    2. JA

      [upbeat music] Trae, I'm really happy to be doing this with you. Thanks for making time for it.

  2. 0:35 – 7:35

    Choosing good quests in the AI era

    1. TS

      Great to be here.

    2. JA

      I wanna start with, uh, you wrote a blog post a couple years ago, I think, Good Hard Quests or good-- Choose Good Quests.

    3. TS

      Mm-hmm.

    4. JA

      That really stuck with me, and I think in many ways, we're in a moment in time right now where people are sort of grappling with, like, what that means in the world of AI. And I think both because of, like, the technology itself, which, like, creates all these, like, weird, "What does it mean to be human? What part of the experience actually matters?" It, like, creates, like, a lot of odd questions. Then you also get these, like, gold rush dynamics, where, like, money's flowing, and you can start a company quickly, and there's, like, a lot of get-rich-quick ideas. And so I think for a lot of reasons, this blog post is, like, super relevant right now. And I'd just be curious to hear how you think about this concept of, like, choosing good quests, like, when we're in the middle of something like AI.

    5. TS

      Yeah, you know, I think the, the distorting characteristics of AI have less to do with the ability to do interesting, hard things, and it has much more to do with how easy it is to do uninteresting, un-hard things. Um, you know, there's the, the constant conversation that comes up about, like, the first company to a billion-dollar valuation with one employee. It is possible to do that, but what that means is that all of these people that are coming out of college or, or that have aspirations to be founders, you know, they're doing like whiteboard founding.

    6. JA

      Yeah.

    7. TS

      They're walking up to a whiteboard. They're writing down a hundred different ideas. Many of them are just, like, using the, you know-

    8. JA

      Yeah

    9. TS

      ... LLM APIs, uh, to do some highly specific task or something like that, and then as they enter the market, there's, you know, dozens of competitors, and it, it's kind of like a, a battle to the death in, like, a really highly consensus category. And that's kind of what I would say is the opposite of a good quest. Like, going into something because you can, trying to generate wealth as your primary motivation, not super interesting. It's sort of akin to, like, a celebrity starting a tequila company-

    10. JA

      Mm-hmm

    11. TS

      ... where they're just monetizing their own personal brand.

    12. JA

      One of the sort of frames I've heard just talking to founders about how they think about this is that we're, like, in a moment where there are a lot of ideas that both seem good and are good as a result of kind of, like, there's a big new technology, and so you have a lot of these, like, blue ocean areas, which are, like, you know, kind of rare to have that.

    13. TS

      Mm-hmm.

    14. JA

      And so then you have all these people thinking, "Well, yeah, like, it's kind of consensus, but no one's done it yet 'cause, like, the 'why now?' just happened."

    15. TS

      Mm-hmm.

    16. JA

      And so I see people grappling with that, and they're like, "It's not exactly bad for anybody. It's, like, a thing that ought to exist, but to your point, there's, like, nineteen of them going at the same time."

    17. TS

      Mm-hmm.

    18. JA

      It's a weird sort of dynamic.

    19. TS

      Yeah, and, you know, maybe some of these things are worth building, and people are gonna make a bunch of money on it, and that's not bad in and of itself. The, the question is, like, an opportunity cost question in my mind. It's like, for our most talented people, you know, if you think of, like, every person in the tech ecosystem as, like, a Dungeons and Dragons character, and they have, like, a skill set, and they have ratings for different characteristics, if we take all of our level one hundred players, and we put them on AI slop-

    20. JA

      Yeah

    21. TS

      ... companies, what does that mean for all of the things that aren't being done at the same time? I would really like our level one hundred wizards to be fabricating semiconductors or, you know, something that's gonna move the needle for humanity. And so it has sort of this distracting distortion effect rather than necessarily being bad.

    22. JA

      This kind of happened during, like, crypto booms. You know, like, when people just sort of, like, get lost and sort of like, "Oh, my God, there's so much money being made here," that it's very, it's very tempting.

    23. TS

      Mm-hmm.

    24. JA

      And you get a lot of people that go there.

    25. TS

      Yeah, and then over time, that kind of w- worked itself out in crypto, I would say, but it's less clear that that's what would happen in the AI moment.

    26. JA

      There's also a genre with AI where it's less this area of, like, it's a straightforward thing with twenty companies working on the same problem. But there are these types of AI companies that I think, like, get close to people's sense of, like, where are the moral boundaries? Like, what does it mean to be human? And, you know, like, I think there's these things that people have a lot of very negative, visceral reactions to. You know, I recently saw, like, you know, a post about a company that sort of brings sort of like, you know-... deceased loved ones to sort of life in some kind of form. And on one hand, you're like, "I guess that kinda makes sense. That could be comforting for people." On another hand, like, there was a lot of kind of, you know, sort of like a visceral disgust reaction a lot of people were having, that it sort of, like, crossed a line for people. How do you think about these things that sort of, like, uh, that feel bad on first glance but are sort of exploring the edges? Like, are those quests that are good that look bad, or w- how do you know?

    27. TS

      The key question with companies like this, which there's, like, literally a Black Mirror episode that exists about this topic of bringing back deceased loved ones. Um, I lost my dad in 2013 to Alzheimer's, and, you know, I would love to talk to my dad. That would be awesome. Like, every time I buy a car, it's like-

    28. JA

      Yeah

    29. TS

      ... "Who do I talk to?" [chuckles] I end up talking to, like, my co-founders at Anduril about it.

    30. JA

      Mm-hmm.

  3. 7:35 – 11:29

    Ethics behind solving certain problems

    1. JA

      resources? How would you think about, like, there's a one category of, like, company idea that's like, "Let's bring back deceased loved ones," where you're like, "Ooh, that's weird. I don't know what to make of that, but it's new and it's weird," and like, there, there's that. And then there's, like, maybe a category that, like, m- more or less everybody would agree is bad, and, you know, like, there's things that you could probably profit off of that just, like, are not unclear like that but are d- like, definitively bad. Do you have any way that you think about sort of like what ought to be explored, even if it feels uncomfortable?

    2. TS

      Well, yeah, I mean, I traditionally have thought about this as, like, on a two-by-two matrix, where you have, like, feels bad, feels good on one axis and then is good, is bad on the other. Like, everyone kind of a- agrees in the diagonal of feels good is good. It's like do-gooder stuff, ed tech, health tech, whatever.

    3. JA

      Yeah.

    4. TS

      That's, like, super obvious. And then the feels bad is bad, like, things that are illegal-

    5. JA

      Yep

    6. TS

      ... like murder, theft-

    7. JA

      Yep

    8. TS

      ... cheating, whatever.

    9. JA

      We agree.

    10. TS

      Yeah, we can all kind of agree on that. It's the other diagonal that's interesting.

    11. JA

      Yeah.

    12. TS

      Um, and the feels bad is good, I would argue, is kind of where Anduril lives. It's this duty and responsibility, like, things that you have to do, not because you want to glorify those things, but because they're really important-

    13. JA

      The duty

    14. TS

      ... for a functioning society. Um, that's like everything from disciplining children to law and order inside of a society or defense of a nation or something like that. Then you have that other category, the, the quadrant of, uh, feels good, is bad, and this is, like, sort of the edgy stuff that you're talking about, like gambling-

    15. JA

      Yeah

    16. TS

      ... pornography, sort of what I would call like hedonism. Um, and there's always arguments you can make about a libertarian society, like we should allow people, you know, free expression. We should allow drug use to some s- to some extent. But then you can also look at the negative impacts on a society of these things and have to make hard decisions about how you're going to build policies, um, around whether or not these things sh- should exist. Because they, a lot of them are highly addictive, and, like, that, those can be really good businesses.

    17. JA

      And is policy basically the only answer to that quadrant? People are gonna build companies that they can build that are profitable within the rules, and the vices are always-

    18. TS

      Yeah

    19. JA

      ... gonna make money.

    20. TS

      100%. Yeah, I mean, you could look at the most extreme example of this is, like, if fentanyl was legal in the United States, there would be a massive company-

    21. JA

      Yeah

    22. TS

      ... that just, like, sold very low-cost fentanyl to-

    23. JA

      For sure. It'd be a huge company.

    24. TS

      It would be a huge company.

    25. JA

      Yeah.

    26. TS

      So yeah, policy is probably the only way that you can really address those problems.

    27. JA

      Yeah, and then, you know, it's interesting, like, some of the things that look like gambling, you know, d- you don't know whether things are in the really bad quadrant, or actually they're in the sort of like new exploratory quadrant. Like, prediction markets, like I was talking to Vlad-

    28. TS

      Mm

    29. JA

      ... you know, on Uncapped recently, and he's, like, making good points about how the prediction markets actually also allow you to, like, bet on specific things that are narrow.

    30. TS

      Mm-hmm.

  4. 11:29 – 16:54

    Working with regulators

    1. JA

      you're working with, you're working with DC a lot at this point through Anduril. I mean, I guess, implicit in what you're saying is the right way for regulation to go is, like, let the technology develop to some degree, and then start regulating once you're observing things, right?

    2. TS

      Mm-hmm.

    3. JA

      How has that played out for, like, Anduril? Like, what is that sort of experience like? 'Cause you- obviously there's a ton of regulation going on there. What is the way, like, a new Prime should- like, ought to get built?

    4. TS

      Yeah, I mean, uh, luckily, like, defense policy is the most bipartisan-

    5. JA

      Mm-hmm

    6. TS

      ... of really any category. Which is funny, 'cause in Silicon Valley, most people wouldn't think of it that way. They'd be like, "Wow, this is really edgy stuff."

    7. JA

      Yeah.

    8. TS

      But then the National Defense Authorization Act passes with a super majority.

    9. JA

      For sure.

    10. TS

      Like, it's, like, the only bill that passes. [chuckles]

    11. JA

      I mean, I, I do always think that, like, if people think it's partisan, but, like, at the end of the day, like, people are reasonable in government, and everybody wants a safe country.

    12. TS

      Yes, exactly.

    13. JA

      Like, which is one thing I very much appreciate.

    14. TS

      Yeah. There's, there's not a whole lot of-

    15. JA

      No

    16. TS

      ... partisan debate on these topics.

    17. JA

      Yeah.

    18. TS

      But that also means that they're usually way out ahead of regulations. Like m- a lot of the existing law on the books around autonomy and artificial intelligence actually started-

    19. JA

      Mm

    20. TS

      ... in the defense community. There have been commissions on studying the- how AI is going to be leveraged in active warfare. Um, you know, we've had sy- autonomous systems for decades. The- there's a turret system called CIWS, uh, Close-In Support for Naval Vessels, um, that is basically like a, you know, a, a machine gun that, uh, shoots inbound threats to, to vessels-

    21. JA

      Mm

    22. TS

      ... to ships. Um, and there's no human controlling this, aiming at the aerial targets or anything. It's just, it identifies a threat, you say, "Engage the threat," and then CIWS takes over and will shoot down the missile or the aircraft or whatever it is. So, like, autonomy has existed for a long time. The law behind how that stuff is, is supposed to be u-utilized has existed, you know, inside of the defense community throughout that entire period. So I think, you know, Anduril has the benefit of kind of being on the edge of that and helping our lawmakers make decisions about how we're going to leverage these new technologies, um, but i- not in a way that's, like, defensive. There's not a conversation that we're having, there's, like, a, a really toxic debate going on about these things, 'cause a lot of that law has been bubbling for a while.

    23. JA

      Mm. You were talking about how, like, you know, Anduril in many ways is in the, like, seems bad is good quadrant, but, you know, obviously, government didn't feel that way about it. Like, government seems good is good. Maybe in, like, Silicon Valley, it was, you know, in the other quadrant.

    24. TS

      Mm.

    25. JA

      Like, what was your experience? I think this is, like, maybe flipped now, but, like, five, six years ago, maybe, like, the tone was different, and so, like, were you sort of, like, having to convince a lot of people in Silicon Valley that, like, actually this is a good thing?

    26. TS

      Yeah, I mean, you probably remember Google pulled out of a federal contract, uh, called Project Maven.

    27. JA

      Mm-hmm.

    28. TS

      Um, and there was thousands of people signed a letter, uh, criticizing the- their employer-

    29. JA

      Yeah

    30. TS

      ... for supporting this. Um, and it was kind of a cultural moment where it was really not okay, um, to be working with the Defense Department. You know, there, there's some, like, partisan reasons for this. Like, you know, at the time, Trump was president. I think people were mostly upset about Trump being president, rather than any particular, um, like, specific policy that was being employed. But Anduril never really encountered any of those headwinds in Washington. All of those headwinds were, like, recruiting conversations.

  5. 16:54 – 18:32

    What’s left to prove at Anduril

    1. JA

      need to do, like, from where it is now to, like, getting to, you know, the scale that you want to be to? It seems like from, you know, at least the outside, you've, you have de-risked and proven so much, but I'm sure there's still, like, a lot in front of you to, like, get up to the size and scale that, like, you know, you could be operating at. So, like, what's now?

    2. TS

      Yeah, it's all about production. That's, like, the end of the day is that we've gone from building dozens of things to hundreds of things, to thousands of things, and now we need to make tens of thousands of things. Uh, and the only way that you can do that is by developing a muscle around manufacturing that most venture-backed startups-

    3. JA

      Yeah

    4. TS

      ... don't have. That's not how we think about building things.

    5. JA

      Yeah.

    6. TS

      And so if you look at the way that, like, a contract manufacturer, like, so, like, a Flextronics works, where, you know, a company comes to them and says, "We have a design. We have some sense of design for manufacturing, how this is gonna be built." And then Flextronics figures out how to do that at massive scale, how to reduce cost. They work directly with the engineers at the company to design for manufacturing. That's kind of what we need to do at this point.

    7. JA

      Yeah.

    8. TS

      We need to get to the point where we are building at scale, and that means that we're making design decisions when we build things that are enabling scaling up to tens of thousands of units.

    9. JA

      Yeah.

    10. TS

      So, uh, last year, we announced that we're, uh, building out a facility in Ohio, uh, that we're calling Arsenal One, which is a, uh... Over the next few years, will be a five-million-square-foot manufacturing campus. Um, the first, about eight hundred thousand square feet, will come online in the first quarter of 2026. Um, and, you know, we're building out that team-

    11. JA

      Yeah

    12. TS

      ... and starting to kind of take very seriously the challenges that are going to be a big part of scaling from where we are now to that

  6. 18:32 – 22:30

    Anduril, SpaceX, and Tesla at scale

    1. TS

      point.

    2. JA

      It seems like Tesla and SpaceX are, like, couple of the only companies that have, like, really done this at scale.

    3. TS

      Yep.

    4. JA

      I mean, we should talk about SpaceX a little bit 'cause obviously you guys are close, but can you, like, explain why it is so hard? Like, what is, what, what are the capabilities that are s- like, extremely hard to acquire to, like, produce cars at scale or m- military equipment at scale, rockets at scale? Like, can you, like, you know, articulate why it's so hard to do twenty thousand instead of two hundred?

    5. TS

      There are people that could do it better than I can, but I'll do my best. [chuckles]

    6. JA

      Yeah.

    7. TS

      Um, I mean, the Tesla example is a good one. Like, the, the skill set that was required to build the first Roadster, like, how... You can spend basically an infinite amount of money. You know, you can be highly exquisite in your approach to every problem-

    8. JA

      Yeah

    9. TS

      ... that you're trying to solve. Very different than we're gonna make a million cars.

    10. JA

      [chuckles]

    11. TS

      And, like, if we're gonna make a million cars, what is the most efficient way to weld door panels? What's the most efficient way to acquire the materials that we need to manufacture batteries?

    12. JA

      Yeah.

    13. TS

      Um-

    14. JA

      Actually, you know, it's like when you say, like, a million cars, you're like: "Okay, like, how many is that a day?" And then you're like, "Geez-"

    15. TS

      It's crazy.

    16. JA

      "... like, thousands a day."

    17. TS

      Like, the scale-

    18. JA

      Yeah

    19. TS

      ... is just absolutely crazy.

    20. JA

      Yeah.

    21. TS

      It's just a different mentality-

    22. JA

      Yeah

    23. TS

      ... that you need i- internally to do that. Um, SpaceX is a little different because it's still-

    24. JA

      Yes

    25. TS

      ... highly exquisite aerospace-

    26. JA

      Yeah

    27. TS

      ... kind of stuff.

    28. JA

      Yeah.

    29. TS

      Um, but even in that case, you see that, you know, Elon and team has, uh, they've verticalized the supply chain.

    30. JA

      Yes.

  7. 22:30 – 24:48

    The future of warfare

    1. JA

      fun. It seems to me like space warfare is actually gonna be, like, super important. Is there, like, a sense that you have that, like, as time goes on, more and more of the way war is gonna happen between countries will happen, like-... maybe without people on land? Will a lot of it be in space? Like, what's the future of, like, the way that, like, powers are going to struggle?

    2. TS

      Yeah, I mean, space is going to be really important, um, without a doubt. But all of- like, every domain is going to have its own version of low-cost autonomy. The era of putting five thousand people on a fifteen billion dollar aircraft carrier and using that for force projection is over. Like-

    3. JA

      Yeah

    4. TS

      ... you know, you can fire a, you know, single-digit millions hypersonic carrier killer missile and take that asset out. It's like you really, that's not the way that you're gonna do that.

    5. JA

      Yeah.

    6. TS

      And so you need-

    7. JA

      Are aircraft carriers still important?

    8. TS

      I mean, not in great power conflicts. Maybe they're important from, like, a logistics perspective, but because of this, like, cost calculus, it's, it's-

    9. JA

      It's crazy, 'cause not that long ago, they were, like, these, just machines of dominance, right?

    10. TS

      Well, I, I think in the, in the types of conflicts we were engaging in, in, you know, the era of counterterrorism or something-

    11. JA

      Mm

    12. TS

      ... very different. Like, the, the non-state actors, terrorist organizations, they're not going to be taking out aircraft carriers-

    13. JA

      Yeah

    14. TS

      ... by and large.

    15. JA

      Yeah.

    16. TS

      That is, it's, it's just, like, a different kind of risk calculus.

    17. JA

      So what'll it be now? Like, w- will we have, like, a lot le- like, human, human-to-human combat's gonna go down, I assume.

    18. TS

      Well, human-to-human combat has been going down for a while. I mean, you look at the, the exception to that, of course, is, like, in a conflict, like, u- between Ukraine and Russia, you still have a lot of casualties, like, a lot of casualties. I don't think people-

    19. JA

      That's like crazy-

    20. TS

      ... most people fully recognize just how many casualties there have been in that conflict. But the way that the United States Armed Forces has been engaging internationally is very heavily driven by Special Forces, which I think is going to be the case for a long time. You're going to have highly trained, highly skilled operators that do super risky missions and things like that, but most of the other engagement is very likely going to be autonomy.

    21. JA

      Yeah.

    22. TS

      It's, like, low-cost undersea, low-cost surface vessels, low-cost ground vehicles, low-cost aerial vehicles, um, and doing that in a way that takes the human out of the dir- dullest, dirtiest, most dangerous jobs.

    23. JA

      Yeah.

    24. TS

      Um, and, and empowers our ability to execute a strategy in a way that reduces potential for casualties and loss of human life.

    25. JA

      So

  8. 24:48 – 29:07

    Juggling Anduril and Founders Fund

    1. JA

      I just was thinking as we're talking, I'm like, you know, talking to an Anduril founder, but, like, we're also, like, we're here at Founders Fund. Like, you're an investor, too, and so you really are doing both th- you know, both things at once-

    2. TS

      Yeah

    3. JA

      ... but, like, really doing both things at once. And, you know, many people at Founders Fund do it that way. What's, like, the ethos for you, maybe for Founders Fund in general, but I guess just for you? Like, what is this sort of, like, founder/investor hi- like, do you think about it? Does it matter, or are you just doing what feels, you know, most important at any given time? Like, what's the... what is the mindset behind the way that you work like this?

    4. TS

      Yeah, it really is the latter, just kind of doing whatever feels the most important at that, at that moment. I didn't start Anduril because I was like, "Man, I really wanna be a slashie," like a, an actor-model [chuckles] from Zoolander. "I really wanna do investor-operator."

    5. JA

      Yeah.

    6. TS

      That was not, that was not my thought process. I didn't even think that was an option. Um, I had been looking for, you know, what it... We did- we're large investors in Palantir and SpaceX. The question is, is there another one that we should be looking for? I had been kind of poking around, didn't find anything, and went back to the team, and I said, "What I really think we need is a software-defined but hardware-enabled defense prime rather than just, like, a software company like Palantir." Um, and I was like, "Oh, it's gonna be really hard. SpaceX and Palantir were both founded by billionaires. I'm not really sure how-

    7. JA

      Mm-hmm

    8. TS

      ... this company is going to exist, but if it does exist, we will know about it, 'cause it's gonna have to be pretty high profile." Um, and to my surprise, the team was like, "Well, who better to do it? [chuckles] You should just go and build the team to do that."

    9. JA

      Yeah.

    10. TS

      Um, so it was kind of accidental, but then, like, from a day-to-day perspective, my chief of staff is awesome. She's been with me for the last two years here. Um, we just kind of divide and conquer, and she sets the priorities for, you know, here are the Anduril things that really have to happen today. Here are the Founders Fund things that really have to happen today, um, and we context switch a lot.

    11. JA

      One of the things that I, I would find probably interesting in your shoes is the relationships with Palantir, SpaceX, you know, Anduril, like, they're so deep-

    12. TS

      Mm-hmm

    13. JA

      ... that, you know, you're also, like, out, you know, you might be meeting a seed or Series A or B company or whatever, and you've also got these relationships where you can and do just continue investing in these companies that you are helping build, you know very well. You have crazy close relationships. So, like, how do you internally think about comparing deploying more capital in these things, where you're spending tons of time, you know everything, versus, like, you meet a new company the regular VC way?

    14. TS

      I still love the kind of curiosity that venture capital brings to the table. Like, I, I love learning about new things. There's energy that I get from the VC side of things that is super fun. You know, one of the things that I noticed... I've been in venture now for just about 12 years. One of the first things I noticed when I joined Founders Fund is that VCs make for incredible dinner table conversations, because we know, like, six inches of depth-

    15. JA

      Yeah

    16. TS

      ... across the widest possible breadth of, of sectors.

    17. JA

      Totally.

    18. TS

      But I also found that to be, like, sort of boring over time, uh, and Anduril has been an amazing antidote to that.

    19. JA

      Yeah.

    20. TS

      So it's like I can go a mile deep, and then I can come out and [chuckles] and do the six inches of depth thing again.

    21. JA

      There's actually a funny thing with these podcasts where I will... You know, the, like, a, an accomplished CEO who's just succeeded wildly, that has a smaller TAM audience than a VC, who can just talk about a bunch of things, which I sort of get. Like, as a listener or just as, like, a dinner guest, I understand that, but I think the really interesting meat usually is deep somewhere.

    22. TS

      Totally, yeah. I m- I mean, this is the most remarkable thing about a person like Elon, is that-

    23. JA

      He's deep in so many places-

    24. TS

      He's deep-

    25. JA

      Broad and deep

    26. TS

      ... in so many places. [chuckles] Yeah.

    27. JA

      Yeah.

    28. TS

      And the closer that I've... And I'm not Elon, and I'll never be Elon, but the closer I've gotten to that, as I've gotten deep in, like, multiple things, I've r- really respected and appreciated-

    29. JA

      You see how hard it is

    30. TS

      ... even more-

  9. 29:07 – 31:21

    A system that rewards going deep

    1. JA

      that something that is, like, cultural to Founders Fund? Since obviously, like, you know, there's a lot of other companies that get, like, built by partners here. Is there something about the attraction to people that have depth in them that, like, is that necessary at Founders Fund?

    2. TS

      Well, you know, I, I think that the, the name of the fund can be interpreted in two ways. You know, why are, why are we called Founders Fund? The, the most straightforward way that most people think is what you just said, which is that we- we're, like, founders. Like, most of us, or at least many of us, have started companies before. We kind of have an operational engagement with the world that a lot of other more finance-oriented VCs don't have. The real answer to the question is that we're a fund for founders, which means that if we believe that we could run a company better than a founder, like, we want a board seat, we wanna help you, we wanna give all the strategic guidance-

    3. JA

      Yeah

    4. TS

      ... like, we would probably just start the companies ourselves. But we're investing in these companies because we believe that the founder is the right person to run that specific business.

    5. JA

      Yeah.

    6. TS

      And so it kind of works in both ways. Um, but I do think because of that second piece, because we are not trying to get super operationally hands-on with our portfolio, it means that we have-

    7. JA

      Time

    8. TS

      ... time and space-

    9. JA

      Yeah

    10. TS

      ... and, and the permission from the fund to go and explore the things that we think are most interesting. So you end up with, you know, Scott Nolan starting a nuclear fuels company, General Matter-

    11. JA

      Yeah

    12. TS

      ... Deliana Sperohov starting Varda Hypersonics, and, uh, it, you know, in-space manufacturing company. Peter started Palantir. I started Anduril. There's no intentional incubation strategy. It's literally just the output, the, the exhaust-

    13. JA

      Yeah

    14. TS

      ... of a system that rewards and incentivizes people on going deep.

    15. JA

      You must have companies that are asking for things, though, from the team, of course. Like, even without board seats, I'm sure people are still asking for time.

    16. TS

      Oh, yeah. We are very good at being reactively-

    17. JA

      Yeah

    18. TS

      ... supportive.

    19. JA

      Right.

    20. TS

      Um-

    21. JA

      Like, some calls pick up right away, I'm sure, and-

    22. TS

      Totally.

    23. JA

      Yeah.

    24. TS

      Totally. We're the, we're the first people to go out, make introductions-

    25. JA

      Yeah

    26. TS

      ... help with business strategy, help with pricing. Whatever it is, we're the- we're very-

    27. JA

      Yes

    28. TS

      ... engaged at that level, but, you know, we don't want board seats.

    29. JA

      Totally.

    30. TS

      Like, we're not, we don't have twenty board seats, like a lot of VCs. I think I have, like, four board seats right now.

  10. 31:21 – 37:30

    What’s made Founders Fund great

    1. JA

      the investing itself has just been, like, extremely good, and I'd be curious if you could try to pick apart or point to some of the things that have mattered for that. Maybe I'll start by prompting with what I have sort of observed that seems particularly good. One is, like, the ability to concentrate over and over again in aggressive ways within a fund, across a fund. Um, that seems very important. There's obviously, um, calling trends early and, like, not hopping into things that are already hot, but, like, doing things before they're hot. There seems to be something about, like, the way the partnership operates and, like, the type of dynamics that you have with one another and how ideas get debated. But I'm curious, like, you're obviously living it. Like, what would you point to as the things that have made Founders Fund as high-performance as it has been?

    2. TS

      If you divided this into, um, access, evaluation, uh, of companies-

    3. JA

      Yeah

    4. TS

      ... and, like, follow-on-

    5. JA

      Yeah

    6. TS

      ... there, there's probably an answer in each of those categories. On the access front, it's like, I've been here twelve years. The fund has been around for twenty years. Most of the access edge that we have happened before my time.

    7. JA

      Mm-hmm.

    8. TS

      You know, it's like the PayPal Mafia coming together, Peter's brand.

    9. JA

      Yeah.

    10. TS

      There's, like, a long history of people leaving storied VC funds to start their own firms and stuff like that. Like, I have literally zero interest in doing that. I am just riding the wave-

    11. JA

      Yeah

    12. TS

      ... of Peter Thiel's genius. [chuckles]

    13. JA

      [chuckles]

    14. TS

      That's awesome.

    15. JA

      That's awesome. I love it.

    16. TS

      It's, it's a, it's a great strategy. [chuckles]

    17. JA

      That's, that's true.

    18. TS

      So that, that's, like, that edge.

    19. JA

      That's good.

    20. TS

      Uh, the middle one on evaluation, I think that, like, you know, this is also sort of a, a Peter culture thing, which is open debate. There are no sacred cows. Um, hierarchy doesn't exist. It's like, you know, whether it's me, Peter, Napoleon, which are, like, the GP or the newest person into the fund, we want everyone to be f- fighting and advocating for what they believe we should be investing in. Um, and because of that, you get this really vibrant culture of debate. You know, it's not like a single hegemonic figure coming in and-

    21. JA

      Yeah

    22. TS

      ... you know, beating down the junior people-

    23. JA

      Yeah

    24. TS

      ... and telling them how to do things.

    25. JA

      A friend of mine who used to work here was saying that, like, somebody asked him if, like, the fact that people like to debate hard was, like, one of the tough things in partner meeting, and he's like: No, that was, like, amazing, was like, there was enough trust and respect between people to, like, fight it out for real.

    26. TS

      Totally. I mean, this-

    27. JA

      Which I think doesn't exist at, like, a lot of places.

    28. TS

      One of the, one of the most shocking things to me when I first joined, um... I, I had worked with Peter for a while, uh, when I was at Palantir. I was at Palantir for six years before I came here, but I kind of had this expectation that Peter would be this sort of immovable, intellectual force.

    29. JA

      Yeah.

    30. TS

      Uh, and actually, that's not-

  11. 37:30 – 40:26

    The king-making strategy in VC

    1. JA

      in at all on, like, high-brand VC king-making as a thing? And I'm sort of asking this from the perspective of, I think a lot of other brands that are sort of in your same echelon smartly sometimes use, like, what I would see as kind of like, not... I don't want to say, this sounds negative. I was gonna say king-making tactics, which sounds negative. I don't mean it that way. But like, where I see a decision, where I'm like, "I think what they're doing is calculating that if by doing this round-

    2. TS

      Mm-hmm

    3. JA

      ... this company's gonna do well." And I'm like, I'm guessing that was the conversation that's happening, and I think it is sometimes true. But I'm curious if that's ever how you think about it, or are you just like, "We don't buy into that"? 'Cause, like, I don't see Founders Fund flexing its brand and stature in these sort of dynamics the way that I think you could, and I wonder if that's because there's, like, a distaste for it, or if it's because you think it doesn't work.

    4. TS

      Going back to the point about consensus competitive businesses is that because we don't do a whole lot of those, we're in less of a position to do the king-making thing-

    5. JA

      Mm-hmm

    6. TS

      ... than a firm would be that's going directly at, like, crowded enterprise SaaS categories or something. Um, so that's kind of half the answer to the question. The other half of the answer is, we have debates about this all the time [chuckles] internally. You know, I, uh, published a blog post a, a couple of months ago about kamikaze rounds-

    7. JA

      Hmm

    8. TS

      ... uh, which is basically what I would call, like, king making, where, like, a venture fund comes in, and they're like, "I, you know, I, I want to invest this huge check, 100, 200, $500 million into the company."

    9. JA

      Yeah.

    10. TS

      And obviously, in order for that to be, like, minimally dilutive, that means that you're gonna have to accept a valuation that's way higher than the current status for the business. And founders can very easily be convinced to take huge checks at high valuations.

    11. JA

      Yes.

    12. TS

      Um, but that's like, you know, an anchor around your neck that oftentimes destroys companies. Uh, and there's countless examples of these, and it's always funny, like, publicly talking about kamikaze rounds. People will ask for names, and it's like the, the community's so small, it's like-

    13. JA

      Yeah, mm

    14. TS

      ... do I really want to burn relationships-

    15. JA

      Of course

    16. TS

      ... by naming names? But everyone knows who I'm talking about when I say that this happens. There's this sort of view that it's the VC's fault, that, like, the VC is mispricing, and the company has no responsibility. But, like, as a founder, you're accountable for ensuring the long-term viability of your business, and capital raising is part of that strategy that you have to roll out. And so, you know, uh, y- there's, there's a kind of a conversation that you have to have with companies as they're going through this process. It's like, yes, you could take more money at a higher price. You could also take less money at a lower price, and that might actually be the better decision for you as a company. You know, this was famously trolled in the HBO show Silicon Valley, where this guy's company failed, and-

    17. JA

      Mm-hmm

    18. TS

      ... uh, the protagonist was talking to him over drinks at a bar, and he was like: "Yeah, you could have raised less." And he was like, "No one told me I could have [chuckles] "-

    19. JA

      He's like, "What?"

    20. TS

      Yeah. [chuckles]

    21. JA

      I remember. [chuckles] Yeah.

    22. TS

      So I, I think king making, in some cases, especially in highly competitive markets, might actually work. Um, but there's tremendous downside risk as well.

    23. JA

      Yeah.

  12. 40:26 – 43:55

    Concentrating in the winners

    1. JA

      And what about on the concentrating part?

    2. TS

      Yeah, so that's, like, the third category. So, like, first category is access, second category is, you know, analysis, evaluation, and then that third category is the follow-on.

    3. JA

      One quick question there: Out of all of your dollars, how many... Like, uh, roughly speaking, what percentage are an initiation check versus, like, a full- Like, out of $100 that go out of the door-

    4. TS

      Mm

    5. JA

      ... like, how important is this third bucket?

    6. TS

      Well, we, we have a, a venture fund and a growth fund, whi- which is gonna be wildly different.

    7. JA

      Yeah.

    8. TS

      Obviously, like, the growth fund is writing massive checks right up front. In the venture fund, ideally, the top, call it, five or six companies in each vintage, in each venture fund-

    9. JA

      Yep

    10. TS

      ... um, should represent, like, middle-sized, double-digit millions of, or percentages, rather, of the fund. So, like, I want, like-

    11. JA

      Like, 50%

    12. TS

      ... 40, 50% of the fund, if we can, um, concentrated into our top positions.

    13. JA

      So that bucket's huge. It's, like, as important as the first bucket.

    14. TS

      Totally.

    15. JA

      Yeah.

    16. TS

      Yeah.

    17. JA

      Okay, so how do you do that?

    18. TS

      There's, like, the-... proactive version of this, and there's the non-proactive version. The, the proactive version of it is you have to constantly be asking yourself: What are the best companies we've invested in so far in this venture fund? And can we get out in front of an-another round, giving them more capital, figuring out some way to, to intentionally create concentration? That's, like, half of it. The other half of it is not not concentrating.

    19. JA

      Mm-hmm.

    20. TS

      And that's [chuckles] just, like, don't do a bunch of stupid single-digit million-dollar deals.

    21. JA

      Yeah. You're saying in the first place, or in the follow-ons of them?

    22. TS

      Both. If you have a billion-dollar venture fund, like Founders Fund... We-we've pretty consistently raised billion-dollar venture funds. Um, and you spend, you know, 10, 20- 10, 15, 20% of the fund writing seed checks, even a really well-performing seed fund of $100 million size, y- like, maybe you return your fund 1X. But, like, that- it's not really gonna move the needle. You need to write larger checks. That's kind of, like, the lesson. We really don't wanna be writing a bunch of 100K, 250K checks, especially because we now have a signaling anchor around those companies, that they're gonna come back, and they're gonna really need us to participate in order to raise their Series A. But in addition to that, if we go out and we write five, $10 million checks into Series A companies like we should be doing at, at, at that first bet, um, when they come back, and they're kind of mediocre performance, maybe, uh, some other VC came in with a really high price-

    23. JA

      Yeah

    24. TS

      ... are you coming in and doing an auto pro rata? I think that's, like, sort of the bias for the industry is, like, we should just do our pro rata if somebody else marks up the company. But there's this weird reverse correlation between, like, companies that need your signaling-

    25. JA

      Yeah

    26. TS

      ... and companies that tell- ask you to not invest your pro rata. It's like if a company asks you to not invest pro rata-

    27. JA

      That's weird

    28. TS

      ... you should be fighting for pro rata. [chuckles]

    29. JA

      Mm-hmm.

    30. TS

      But if a company comes to you and says, "I really need your"-

  13. 43:55 – 47:22

    Where there’s alpha in the market

    1. JA

      As you look around now, like late 2025, and you, like, see what's happening in the landscape around, and you've got, like, a lot of firms getting really, really big, you know, a lot of these things that we're talking about are things, you know, you've been saying for a lot of years, but now there's, you know, a lot of firms that I think are sort of starting to sort of mimetically, you know, think in similar ways, et cetera. But, you know, you've got a lot of interesting stuff going on, like hard tech is working really well with a lot of your companies. Obviously, not broadly speaking, but there's enough of that. There's a lot of really good AI stuff. And so when you kind of, like, smush it all together, I'm just kinda curious, like, where you think there's, like, alpha in venture right now.

    2. TS

      I think venture is just really hard. Um, the Founders Fund strategy has been stay true to our, uh, you know, our strategy, and if that means we go slow, and we deploy less quickly than everyone else in the space, fine.

    3. JA

      Yeah.

    4. TS

      Like, I'm, I'm not gonna stress about that. There are going to be good deals in every vintage. Like, you know, the... Even through the dot-com crash, it's like, if you were a Google investor-

    5. JA

      Yeah, you did great

    6. TS

      ... you're fine.

    7. JA

      Yeah.

    8. TS

      In the '08, '09 recession, if you're a Facebook investor, you're fine. Like, there's always gonna be, at a micro level, good deals. You just have to make sure you're in those deals and not get overly exuberant about chasing hype. Um, and given the long-term strategy of Founders Fund, we're kind of immunized against hype chasing.

    9. JA

      From the outside, I imagine Founders Fund is, like, a no-FOMO place.

    10. TS

      Mm-hmm.

    11. JA

      Whereas, like, I think most venture firms are, like, FOMO central.

    12. TS

      Yeah, we just- we don't do the momentum hype chasing.

    13. JA

      So, like, are you guys never like, "Oh, we passed on that round, and now Sequoia is doing..." Like, does that conversation just never happen here?

    14. TS

      Basically never, yeah.

    15. JA

      If somebody that you're pissed at them-

    16. TS

      I mean, there have been cases-

    17. JA

      Yeah

    18. TS

      ... where it's like your anti-portfolio or whatever, like, "I met with this company, and I wish I had invested." But, like, that actually happens very rarely.

    19. JA

      Yeah.

    20. TS

      There, there's not a whole lot of cases where-

    21. JA

      Yeah

    22. TS

      ... we, we feel a lot of regret about that.

    23. JA

      Yeah, I mean, I think it, like, requires a whole lot of, like, different mindsets than in general. Like, I feel like, you know, just from talking to you, I can tell you also are not thinking in categories, whereas like most people are like, "Oh, that's a great category." Seems like you don't think that way at all.

    24. TS

      No, I don't think categories should exist. It's like once a category exists, it's too late. If you're a social media investor and you didn't invest in Facebook, probably lost money. If you're a space investor, and you didn't invest in SpaceX, probably lost money. You know, you wanna be in the first deal, not in the second, third, fourth one.

    25. JA

      Can you build contrarianism, or k- is all you can do shut off the mimesis?

    26. TS

      It's not even necessarily shutting off mimesis. It's more like being aware of mimesis is, is the important thing.

    27. JA

      Hmm.

    28. TS

      We always ask founders what the origin story for the business is. Like, that- that's like a really important indicator of mimetic kind of rivalry. It's like someone... They should have a, a reason for why they started the business.

    29. JA

      What does that story look like when it's good?

    30. TS

      Well, at a minimum, it's a story. [chuckles]

  14. 47:22 – 52:24

    Theological revival in traditional faith

    1. JA

      like, a good segue into, like, the last thing I wanna talk about, which is, um, just, like, a little bit of, like, your own-... story and just, like, getting into, like, you as a person a little bit, one of the things I really appreciate is, like, that you've been talking about, like, your, like, religious faith for, like, a long time, and I think that's been something that, like, I think probably a lot of people in tech, obviously by the numbers, a lot have. Not many people talk about it, or at least they haven't in the past. So, like, why is it something that you've wanted to talk about?

    2. TS

      Well, I think, like, the kind of weird thing about this is that I haven't been super intentional about it. It just so happens to come up all the time, and I'm not afraid to talk about it.

    3. JA

      And then it turns out that, like, a lot of people resonate with it-

    4. TS

      [chuckles]

    5. JA

      -because a lot of people-

    6. TS

      Yeah, and then, and then it comes up in conversation. There's been an interesting kind of shift that we've seen r- over the last ten years, but really even since COVID, um, where you're, you're starting to see this sort of, uh, theological revival, with people being much more interested in kind of traditional faith. I think part of that might just be, like, you know, we went through this decade-plus of, like, Burning Man spiritual kind of stuff, like Eastern mysticism, and a lot of people came out of that being like: "Man, I've done, like, 12 ayahuasca journeys, and I still have [chuckles] like a, a sense of emptiness." There's something about, like, the rootedness of, like, Judeo-Christian kind of, uh, beliefs that are really interesting to the, the current moment for one reason or another.

    7. JA

      Hmm.

    8. TS

      Um, and so I find that there are a lot of people that just come up to me and ask, like: "I heard that you're a Christian. Can you explain this to me?" You know, I- a lot of people traditionally in Silicon Valley think of Christians as sort of these backwards anti-intellectuals or something, and then they find out that, you know, me or Peter or, you know, someone that they otherwise respect intellectually is a Christian, and they're like, "Okay, this doesn't make any sense."

    9. JA

      Yeah.

    10. TS

      "I'm just curious. Like, let's talk about it." And so it ends up coming up all the time-

    11. JA

      It's sort of-

    12. TS

      Which is fine. [chuckles]

    13. JA

      It's actually... It's interesting you say that, 'cause, like, you know, you said Judeo-Christian, then for some reason, I'm like... I'm Jewish. I- for some reason, I feel like Judaism doesn't get that reaction from people-

    14. TS

      Hmm

    15. JA

      ... of the like, "Oh, is this, like, some backwards thing?"

    16. TS

      Hmm.

    17. JA

      Even though, like, there, there's a lot in co- you know, there's both the Bible-

    18. TS

      Mm-hmm, mm-hmm

    19. JA

      ... and everything like that. What is that? What do you think it is that has, like... Is that schism to do with the fact that, like, are the beliefs in Christianity, like, a bit more concrete in a certain way than, you know, in Judaism they're a bit more, like, floaty or something?

    20. TS

      Well, I think that there's probably much more of a cultural kind of part to Judaism that feels, like, less tethered to the theology. Whereas, like, that doesn't exist so much e- e- especially, like, in, you know, coastal America. Like, maybe in the, the Midwest or the South, there's, like, more of a cultural Christian expectation, um, but y- you know, if you're in tech in San Francisco, you have to actually believe [chuckles] -

    21. JA

      Totally

    22. TS

      ... in order to, to be outwardly talking about this stuff.

    23. JA

      Yeah.

    24. TS

      I, I think that's probably one difference. Maybe another difference is that, like, you know, we have less of an experience in the United States of Orthodox Judaism than maybe they do in Israel.

    25. JA

      Definitely.

    26. TS

      Um, but we have much more of an experience with Orthodox Christianity, and so we have more of, like, a, a cultural, societal, uh, kind of debate about the topics that, that exist. I'm sure if there were as many Orthodox Jews in America as there are Orthodox Christians, you would have a similar level of debate about the, the topics.

    27. JA

      I wonder if, like, Christianity somehow, like, ties in with the way that you think about your work at Anduril.

    28. TS

      Mm-hmm.

    29. JA

      Like, I would imagine that there's actually, like, quite a lot in terms of the way you'd think about, like, morality and what makes, you know, for, like, a just fight or not, and, you know, how to think about people's lives and the stack rank of ethics and things like that.

    30. TS

      Well, u- the entirety of just war tradition, which is, like, the, the root of the Western law of war, uh, like, u- treaties, NATO... Like, all of this stuff is rooted in just war theory, which is a tradition started by St. Augustine. It was all Christian intellectual thought from the very beginning. You know, we benefit a lot from the impact of Christianity on the development of the West. Um, and so, yeah, I think that informs a lot of it. That said, there's also a lot of debate theologically about these things inside of Christian circles. You know, like St. Augustine, Martin Luther-

Episode duration: 52:24

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