Anduril Industries: Get Luckey in the arms race
If you’re searching for a sector that’s begging to be disrupted, you could hardly do better than the US defence industry. An oligopoly of contractors has been feeding at this giant trough for decades, sitting back and waiting for the Pentagon to issue contracts that they fulfil on a cost-plus basis, a system that has contributed to the US defence budget hitting a chunky $842bn this year.
Silicon Valley has a long history of refusing to go anywhere near the military-industrial complex, but that has changed as conflicts have sprung up in Ukraine and the Middle East, and the threats posed by Russia and China look ever more real. Anduril is one of a few start-ups that are breaking into the oligopoly, selling a variety of autonomous defence and weapons systems that incorporate AI.
It was founded in 2017 by Palmer Luckey, who made his name by selling the virtual reality headset Oculus to Facebook for $2bn at the age of 21.
Luckey is not shy about his ambitions for the company, predicting in its early days that it would “save Western civilisation”, and its first contract was to provide AI-enabled surveillance towers along the Mexican border. He believes the next generation of military technology will be driven by software engineering and computing, and that Anduril can develop new technologies far faster and more cost-effectively than with the traditional procurement model. With investments from Andreessen Horowitz and Peter Thiel’s Founders Fund, Anduril is starting to change the landscape.
Trump Media & Technology Group: Untrue and antisocial
TMTG is the parent company of Truth Social, the social media network founded in 2021 by that humble devotee of facts, Donald Trump. It claims to be building the future of media and technology, and describes itself as a uniting force for freedom of expression, involving no political discrimination, cancelling cancel culture and standing up to big tech.
It has certainly attracted investor attention since it started trading under the ticker symbol DJT, the initials of the big man himself.
It bounded ahead in its first days of trading to a valuation north of $13bn, which is not too shabby for a company that lost $49m in the first nine months of 2023 on revenues of a mere $3.4m. This gives the former, and possibly future, president a paper gain of around $5bn, which might be a drop in the ocean compared with how rich he says he is, but which should at least cover his legal fees and fines for a year or two.
All this enthusiasm values the company at an impressive 2,000 times annual revenue, which will be a lot to live up to compared with Nvidia, which is leading the AI revolution on a valuation of 38 times sales.
There remains a strong suspicion that the hype is not being driven as much by the pinstriped professionals of Wall Street but more by punters with outsized collections of MAGA leisurewear day-trading from the comfort and safety of their basements. To the outside observer, TMTG looks about as likely to succeed as a Trump presidential campaign, but look what happened in 2016.
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