Founders Fund’s Trae Stephens

Auren Hoffman (00:00.746) Hello, fellow data nerds. guest today is Trae Stevens. Trae is a partner at Founders Fund and co-founder and current executive chairman at Anduril. Trae, welcome to World of DaaS. Great to see you as well. Now, what does like a new modern day defense company look like or what should it look

Trae Stephens (00:10.968) Hey Aaron, good to see you.

Trae Stephens (00:22.968) You know, there's probably a lot of different things that could look like you. saw over the last 20 years, what happened with SpaceX, which is, you know, a space launch company satellites as well. And then you have a company like Palantir that's all about data infrastructure that has a huge business in defense and intelligence. And Andral is kind of a very different form of company in this space. We're focused on software defined hardware enabled major weapons programs. So everything from

surveillance and reconnaissance to kinetics to autonomous systems on undersea, on the surface of the sea, on the ground, in the air and in space. I think the biggest lever that you'll see out of the defense technology space is really about how to create products that are leveraging private capital rather than taxpayer capital to develop capabilities and then sell them at

lower costs than the alternative of doing like an in-house build inside the government, which is the way that these things have been done for the last 60, 70 years.

Auren Hoffman (01:25.718) one of things to those three companies is that they're all, even though they may have some very good people in the DC area, almost all like the executives and the product people are based outside the DC area. Is that where you think more and more of these companies will be going in the future?

Trae Stephens (01:45.654) Yeah, I mean, there's all of these companies have a large presence in Washington, DC. know, at Palantir, yeah, at Palantir, our second largest office over the entire history of the company was in DC. That's probably not the case at SpaceX anymore, given Brownsville, but it's probably the third largest office for SpaceX. And it's definitely the second largest for Andrel as well. There is some engineering work that has always happened in DC at these companies.

Auren Hoffman (01:49.622) Of course, yeah, that the salad and service, yeah.

Trae Stephens (02:13.742) But the core engineering research and development capability is back at headquarters generally. I think that, you know, the reason for this is largely cultural. I think there are talented engineers that are based in the beltway. They're just trapped inside of a bureaucracy that doesn't value them in the same way that they're valued in a traditional kind of Silicon Valley company. And I don't mean Silicon Valley geographically, mean, culturally Silicon Valley. And so I wouldn't...

Auren Hoffman (02:33.269) Yeah.

Trae Stephens (02:42.764) anticipate that that would change. I don't think you're going to see like.

Auren Hoffman (02:44.596) mean, a lot, a lot of the defense primes like that you have to clock in and clock out. Like everybody actually has to time keep, which is like, I don't know, it just seems very much of a nanny state thing. And maybe there's a reason for that or something, but just like, I just, I wouldn't want to work out that company like just for that one reason.

Trae Stephens (02:57.048) Totally.

Trae Stephens (03:02.924) Yeah, we had this, this was like a major thing that we tried to work out culturally at Palantir in the early days is when you have bodies on contracts, you do have to timekeep and submit your hours and things like that. And we had to figure out processes and machinery inside of the company.

to abstract that away from the engineers who were morally offended by the idea that they needed to do that. Yeah, exactly. So that was like a real thing that we had to deal with at Palantir back in the day.

Auren Hoffman (03:26.708) Right, right, they would just quit if that happened.

Auren Hoffman (03:32.598) Now, if you think of Palantir, SpaceX and Anderil, one of the other things they all have in common is they're all founded by billionaires. And I don't know what we're thinking about. if we're long term want to want to be great society and have great defense, I don't know that all of our great defense companies are going to be able to be founded by billionaires. Or maybe that will be the case. What do you think? How do you think that is going to be the case going forward?

Trae Stephens (03:58.796) Yeah, no, don't think that's random chance. I think it is actually kind of a bug in the system that is what it is, unfortunately.

Auren Hoffman (04:07.606) And by the way, I don't think it's just the billionaire. also that they were rock stars. The founders are these famous people that I imagine generals want to meet. so maybe they're able to, maybe it wasn't just the money, but it's the fact that they are fame and they're known for being these creative individuals that was able to get them through the very hard early stages of procurement.

Trae Stephens (04:12.867) Mm-hmm.

Trae Stephens (04:34.338) Yeah, I mean, you've nailed it. I mean, this is one of two things that I think that brings. The first thing that the billionaire founder brings is it makes it much easier to raise capital for better or for worse. And you need a lot of money. know, both Palantir and SpaceX took over five years to get to 10 million in revenue. These are like things that, you really, you really need to have some sort of capital advantage. But then to your point, the second major advantage is that, you know, members of Congress want to meet you.

Auren Hoffman (04:43.668) Yes, for sure. Yeah. Yeah. And you need a lot of money to make these things happen.

Auren Hoffman (04:52.438) Jeez, that's crazy. Yeah.

Trae Stephens (05:03.782) it's much easier to score meetings with the people that are moving the money around in the system. And that is definitely an early advantage. In the Andrel case, we were the fastest since the Korean War to go from company standup to a program of record inside the federal government. It was just over two years. And the craziest aspect of this is that me, Palmer, and Brian actually met with

the customer, the person that signed off on that program of record three days into the company. And so that's the sort of advantage that you get from having the billionaire co-founder and people that had experience in the space before is that you're not playing the like, how many degrees separated from Kevin Bacon do I need to get to the person, the decision maker? Exactly, exactly.

Auren Hoffman (05:38.975) wow, okay.

Auren Hoffman (05:46.165) Yeah.

Auren Hoffman (05:52.896) Right. Like, like who would not want to meet Palmer lucky? Like, of course you want to meet him. Like, I mean, he's just like, amazing. Right. So that's like, but like the, but the Palmer lucky before he was Palmer lucky, or the, must before he was yellow must like, they're going to have a very hard time starting something in defense world. Or do think it's still possible? It just like, they just have to deal with the more difficult things that they have to deal with.

Trae Stephens (06:19.564) I think it's possible. It's certainly like being able to stand on the shoulders of the companies that have gone before you is really helpful. You know, I think our run at Anduril was largely predicated by lessons learned from SpaceX and Palantir. And that was a huge asset.

Auren Hoffman (06:26.037) Yep.

Auren Hoffman (06:35.392) And now we have three and then it's just a little bit easier to have the fourth once you have three.

Trae Stephens (06:39.662) Exactly. But at the same time, you well know, category investing is tough. Like if you were a space investor and you didn't invest in SpaceX, you probably lost money. If you're a crypto investor and you didn't invest in Coinbase, you probably lost money. If you're a social media investor, you didn't invest in Facebook, you probably lost money. And so I think there is a bit of a weird dynamic going on in the marketplace right now where people have this belief that like, oh, defense tech is wide open. Like you're going to build 20 Palantir's and

Auren Hoffman (06:44.779) Yeah.

Auren Hoffman (06:48.81) That's right.

Yep.

Trae Stephens (07:06.21) That just flies in the face of everything that we've learned about the parallel nature of venture capital over the last 50 years. I just don't expect that that will be the case. will, you know, the more competitive the environment gets, the higher the prices for these companies get bid up, the harder it is for venture investors to make returns and everything is just going to be a race to the bottom. So I'm not really sure that from a category perspective, it becoming slightly easier is necessarily the boon that everyone thinks it is.

Auren Hoffman (07:35.722) Now for a company like Andro, because it's really, it really is about defense. Like it has to sell to the government. The government is the main customer. But you could, you could reimagine a Palantir where the first customer is JP Morgan. And then like over time, like it sells, it sells more to the, to the defense and national security type customer. you know, you can match like a.

Trae Stephens (07:44.206) Mm.

Auren Hoffman (08:00.456) or you can like Snowflake is doing now, right? Where Snowflake probably sells into to the national security customer today. Can you like if you if you saw a company that was trying to sell into both, would you just say don't do it? Just sell in the one first and get to 100 million in revenue and then try to sell into the other or what would be your advice to a company?

Trae Stephens (08:15.084) BLEH

Trae Stephens (08:21.569) I mean, both Palantir and SpaceX, an enormous chunk of their business is commercial. At Palantir, it's about 50-50, I think, from a revenue perspective.

Auren Hoffman (08:26.336) Correct.

today, but it it started off much more B2G, right? Or no? Yeah. Yeah.

Trae Stephens (08:34.822) It did, yeah, which is where I was going with this. I think you can choose your adventure at the beginning. You're either like hard commercial or hard government. But trying to mix the two of them is not generally a great idea. You know, one kind of crazy story that I'll tell that was a bit of a research project for me a few years back is I was trying to understand where this term dual use came from. You know, it gets thrown around a lot in government circles. You know, there's like entire

Auren Hoffman (08:42.879) Yep.

Trae Stephens (09:01.238) acquisitions programs that are focused on acquiring dual use technologies. if you go back to during the Cold War, you'll find that this term was only used in reference to nuclear technology transfer. Like they would talk about it as like, nuclear has a dual use. It has a power usage and it has the weapons program usage. And it wasn't, that was it. That was the only appearance that it made a congressional record.

famously in the summer of 1994, there was this, kind of seminal event in defense history that has become colloquially known as the last supper. Yeah. And the last supper is where secretary of defense pulled together all the CEOs of the defense companies and said, the cold war is over. Spending is going to go down, consolidate or die and basically challenged them to go out and merge and become more efficient. so October of that year, so just a few months after the last supper, you started seeing the youth.

Auren Hoffman (09:35.156) like the last supper. Yeah.

Trae Stephens (09:57.708) the term dual use getting thrown around a lot. Like it started appearing in congressional record, but used in a different way. It was being used as a defense for all other applications, commercial and defense applications for all sorts of technologies. And my hypothesis, given the increase in usage of that over the last now 30 years, is that the defense crimes have run a masterful campaign. They've said, we're going to do our part.

we will consolidate so there's only five or six of us that can win these major weapons acquisition programs. But the agreement that we're asking for from the Pentagon is don't let anyone else come to the table. so dual use is a pejorative. It's the defense prime's way of saying, these are people that can sell this vendors on our contracts, but they cannot compete. And you saw how that came up with SpaceX with being blocked from bidding on national security launch programs by ULA.

Auren Hoffman (10:36.426) Yep.

Trae Stephens (10:52.972) And it came up with Palantir with the distributed common ground system contract with the army where they were saying, look, Palantir, maybe it's a dual use capability. It can't win a major program. And so I try to always remind people like, you know, dual use is not real. Like if you are a seed stage or a series A company and you're running around saying like, I'm a dual use capability. I equally selling to federal as I am to, you know, commercial use cases with oil and gas companies or whatever. You have been hoodwinked.

Auren Hoffman (11:03.113) Yeah, yeah, yeah.

Trae Stephens (11:21.614) The primes have done what they've wanted to do, which is prevent you from being a credible threat to them on their cash cows. So, Anduril is not doing that. Anduril is, we will look more like Lockheed Martin than we will Palantir or SpaceX. We're gonna have 97 plus percent of our business government, and we are going directly at these major defense acquisition programs, head to head against the traditional players in the industry.

Auren Hoffman (11:48.81) Now, why does like Department of Defense outsource like almost everything? Like I get like the super high tech stuff like and, or all like, you got to go buy that. Like that's not something you're going to build internally, but like they like, they have all these contractors that are like cooks. they pay contractors to buy ammunition for them. like, why do they do like, why do they like it's historically you'd have like cooks in the army or you'd have somebody in the army who like knows how to buy ammunition. Like not everybody is a, is like a.

shoot guns in the army like they do other stuff but seems like the army really wants to outsource everything except the people that shoot.

Trae Stephens (12:27.628) Yeah, and you know, this wasn't always the case. Like the government literally used to own and operate munitions factories. That was like part of our history.

Auren Hoffman (12:34.366) Right, right. It still kind of technically does in a weird way, right? Like they still own a bunch of factories. I don't know if they operate them, but they do own a bunch of factories around the country. Yeah.

Trae Stephens (12:41.408) Yeah. Yeah, there's, not to mention like test ranges and the labs are building like actually like the kinetic payloads for missiles and stuff like that. But yeah, I think, you know, there's just like this complete change where during the Cold War, there was this realization that things weren't being run super efficiently.

Auren Hoffman (12:52.661) Yep.

Trae Stephens (13:04.557) And they decided to shift as much as possible to these cost plus contracts because they felt like they were being extorted by industry. So if they could just agree on like a fixed margin on top of whatever the cost of a program was, well, surely that would make us more efficient. Now what it didn't do is it didn't protect against the deterioration of the incentive structure where now things, you know, there are always cost overruns and time overruns because the incentive structure that you've set up rewards.

Auren Hoffman (13:30.496) Yeah.

Trae Stephens (13:33.442) that behavior.

Auren Hoffman (13:34.582) Yeah, the cost plus is just like stupid. Like I don't, I don't understand. I understand like the reason why they did it, but I don't understand the reason why they've kept.

Trae Stephens (13:43.95) Well, at this point, feel like it's very, very hard to change. These are huge publicly traded companies. Their investors have a clear expectation for how they're supposed to be doing their business, the margins that they should be getting off of these programs, how they do accounting on these programs. If you were to snap your fingers and say, lucky Martin, I need you to go from 1.5 % revenue IRAD spending to 20 % IRAD spending.

and then do everything from fixed. Like how would that work in the public markets? Like there would just be no understanding of how that would happen.

Auren Hoffman (14:17.238) Yeah. But I mean, but if you think of like the, like, so right now, like department of defense, they'll go hire a 25 year old consultant from Booz Allen, who doesn't live in the DC area to maybe they live in Chicago or something. And they fly them to the DC area every week. They put them up in a hotel. Um, and then that person helps them buy ammunition or whatever that person does.

And I'm sure it's a smart person, but they could just hire that person. And so they're probably paying all in like 1.2 million a year for that person. They could hire a very smart person for a lot less than 1.2 million a year, especially a 25 year old. Now I understand like part of the reason that they do it is they could now they can fire them and they can hire at will and they could do all these things that they don't, maybe they don't have the flexibility of doing in the normal government, but why don't we just like give them the flexibility and then they could just.

you know, do what they want and not have to pay 1.2 million a person.

Trae Stephens (15:20.277) Yeah, I mean, it's certainly hard to like create some sort of arbitrary justification for why they're doing things the way they're doing, because I think most people would agree that it's broken. the Booz Allen side of things, the crazy thing is, did you know they are the largest, they hold the largest AI contract across the entire federal government. Booz Allen, not OpenAI, not Palantir, Booz Allen Hamilton.

Auren Hoffman (15:37.814) Yeah, it's crazy. yeah, yeah, yeah. And there are, there's no amazing AI person that's going to go work for Booz Allen. I'm sorry. I mean, like I know some nice people at work, but like I've never met like a great AI person who's like, yeah, I'm going to work for Booz Allen. Like there are zero, there are zero great AI people at Booz Allen. I know someone's going to sue this podcast for me saying that, but I will go on record and be very, very confident that there's no great AI people who work at that company.

Trae Stephens (15:45.823) No, of course not.

Trae Stephens (16:05.108) No, it's actually funny. We hired a lot of people out of Booz Allen at Palantir back in the day, including my co-founder at Andrew, Matt Graham. And we used to say that Booz is a great first job. And the best way to find really talented people to hire for Palantir was find people who were super smart and realized how dumb it was to work at Booz Allen. And so, you know, if they're there from

Auren Hoffman (16:29.844) Right, but if they're there for more than a few years, probably, it's too late. Yeah.

Trae Stephens (16:34.104) This is actually the same thing with officers. A five-year contract in the military as an officer, you should end as a captain. If you go through the wickets and you progress and get promoted, you should end those five years as a captain. In some ways, if you leave as a major, it means you stayed after five years, which is like, well, why did you do that? What was motivating you to extend your contract beyond five years?

Auren Hoffman (17:01.226) That one I understand more because there are certain things you can do in the army that you can't do anywhere else in the world. mean, there are certain so there's like they have a, you know, they're so so if you really care about, so I could understand someone staying all the way to general because they really a dedicated public servant. Who is a different example? Like, I just don't understand that. Yeah. Yeah.

Trae Stephens (17:21.966) I mean, that is a very generous explanation. I started my career in the intelligence community. And I think if I had stayed there for six years instead of two and a half, I would have walked away with a very different culture about my expectations. Once you've been living in a system and you become indoctrinating the system, it's really tough to break out and change your expectations around performance and things like that. when we hire people out of the military, our general

Auren Hoffman (17:42.326) Yeah, that's true.

Trae Stephens (17:51.596) kind of guidance is the captains are going to be your best option. That's like the highest talent because they stayed exactly as long as they needed to. And then they realized that there was something that was broken that they really cared about going and fixing in the private sector.

Auren Hoffman (17:56.233) Okay.

Auren Hoffman (18:05.746) Okay. Well, you know, I have hired a decent number of captains in my life. didn't realize this and they all actually were really good. It's a point. know, yeah, yeah, it's, actually a good point. That's pretty interesting. Now that on the geopolitics war, like it seems like the foreign policy establishment, at least this is my opinion. I don't want to put words in your mouth has gotten most of the very big things wrong over the last 25 years. Maybe you got a lot of little things, right? But the big things.

Trae Stephens (18:11.694) Yeah, I'm telling you it's a bit of a shortcut. It's a bit of a shortcut.

Auren Hoffman (18:35.658) you Iraq and some of other stuff wrong. first of all, do you agree with that? And if you do agree, like, why is it the case? Like these are smart people. Like, why is that the case?

Trae Stephens (18:48.202) I think they're pretty idiosyncratic. I'm not sure that there's a single thing that led to these individual cases going wrong. Obviously, we had to do something in response to 9-11. I'm not sure that occupying entire nations in the Middle East was the right approach. But I think the mission alignment with what we were trying to do by eradicating the state-sponsored terrorism was

the right instinct. just obviously didn't play out as we probably would have expected it to. I think a lot of what causes these things to happen is a misunderstanding of what our role in the world should look like and an incredibly volatile, intentionally volatile political environment where you're constantly flipping back and forth between parties. You have political appointees that

Realistically probably only end up spending two or three years in their role. We have no long-term plan. And I think if you went in kind of the way that China has done with, know, it's more of a marathon than a sprint and they've laid out kind of a mini decades plan for where they want to be. And when you have that sort of articulated strategy and you have pretty consistent leadership, my guess is that it's easier to, you know,

go out and achieve some sort of longer term goal. I'm not saying that that's what we should be aspiring to. I actually think the democratic system is much better.

Auren Hoffman (20:20.0) But even if you just say like the Bush years, which was like somewhat of a consistent government with a consistent goal and et cetera, over those eight years, it seemed like they got a lot of things wrong. And then when they even did those things, they prosecuted them wrong too. So it's like, in the two by two, you want to have like good strategy versus bad. But if you have bad strategy, at least you want to have good execution, not bad, right? And I think they had like bad and bad in many cases.

Trae Stephens (20:37.539) Yeah.

Trae Stephens (20:43.374) Yeah, the mission accomplished banner was definitely misplaced. But no, I actually think that the George W. Bush administration, they really believed what they were doing was the right thing. They really believed that people deserved to have democratic institutions and to experience Western views on freedom.

Auren Hoffman (20:49.407) Yeah, yeah.

Auren Hoffman (20:56.274) Of course I did. Yeah, yeah, yeah.

Auren Hoffman (21:05.568) They were Wilsonian at the core. Yeah. Yeah.

Trae Stephens (21:07.726) Totally. And I think the real challenge with that is that I think we all learned during that time period that you can't, you know, fast track the enlightenment. you know, we had 500 years of enlightenment. No, there was no exactly, exactly.

Auren Hoffman (21:17.748) Yeah. There was no Thomas Jefferson there and Alexander Hamilton and stuff. Is it our hubris? Is it that we're getting lobbied by different internal and external forces that move us into these positions? Why do we make these?

Mistakes. And by the way, they're there because we're so big it is they're all recoverable. if a, if a smaller, more fragile company, a country made these mistakes, like the whole country would topple for us. It's like, you know, it's just like a little blip. It was like a one week news cycle when we pulled out of Afghanistan.

Trae Stephens (22:02.124) Yeah, yeah, No, it's a good question. I definitely think that, you know, hubris has a role to play with that. And I think a lot of times that gets kind of wrapped in with, you know, question about our role on a global sphere, given, you know, the power dynamics that have at least the power dynamics that existed since the end of the Cold War, obviously, there's like a very new paradigm emerging with the rise of China. But I think there were people that, you know, not to riff on

a great movie from 20 years ago, Team America World Police. But I think that there are a lot of people that actually thought like, yeah, maybe we should be Team America World Police. Like we want, you know, to maximize justice and freedom in the world. And when we see injustice, like we should go tamp it down. You could still today in 2025 make a credible argument for why that's the case. Obviously, the current administration is kind of drawing a line and saying we are not Team America World Police.

They have their own reasons for believing that, their own philosophies. But I believe that because we have this political system that shifts very rapidly, both in Congress and in the judiciary and in the presidency, you get this crazy vacillation between these core philosophical foreign policy ideas. Does that increase the rate at which we make mistakes?

decrease the likelihood of explosion into total war. I don't know, maybe that is kind of a stop on the system as well.

Auren Hoffman (23:36.886) What is the if we think of our big kind of like the big thing that we're I assume that everyone is worried about in national security is this kind of like great power conflict between the US and China. These are near peers. They're they're a very smart adversary. How do we how do we build the resilience and the defense without

tripping it over into a hot war.

Trae Stephens (24:09.29) Yeah. Well, mean, the core concept that is what we've been working on at Anduril and what we believe deeply philosophically is in deterrence. you want, as Reagan said, you want to have peace to strength. If we have such a monumental advantage technologically, militarily, in theory, it would be really unwise for our adversaries to test that advantage. And I think we've seen like the longest stretch of

Auren Hoffman (24:33.301) Yes.

Trae Stephens (24:37.966) relative peace since the end of the Cold War. And I think that was largely the cause of the United States having this kind of monopoly on power in the world. That said, I think the other part of this is that we've kind of agreed as a culture and society that these like threshold conflicts are somehow more acceptable.

As long as you have a conflict that runs over many, years and is much lower intensity and doesn't trigger us into nuclear conflict that like maybe somehow that's better. I think if you look at the data.

Auren Hoffman (25:12.854) Essentially, it's really about the, and I would say in the US, it's also about the body count, right? So as long the body count is relatively quote unquote low and quote unquote acceptable, and there's not as many people complaining about it, and we don't have to do a draft, all these other types of things too, I imagine are part of it too. Yeah.

Trae Stephens (25:33.774) I think that's sort of the case, but not as much as you would expect because the body counts get really high in these threshold conflicts. I think probably close to a million people at this point have lost their lives in Ukraine. The casualty count is really high and it runs for multiple years. Obviously, we're seeing what's happening in Israel and Gaza.

Auren Hoffman (25:56.36) Yeah, I guess in the from the US sense, they care about like the US casualty, right? Yeah, yeah, yeah.

Trae Stephens (26:01.72) Yeah, I mean, certainly like no one wants to write letters home to mothers and fathers of US service members that are caught in combat. I guess the question, Arn, you're obviously really familiar with this is that René Girard, the philosopher that developed memetic theory, he actually pointed this out as like a real problem. Like, it turns out that these sorts of threshold conflicts are memetic violence. It's like, you know, we're just in these kind of like locked into

you know, not, no one wanting to cross the line and it leads to these like massive body counts over time. and actually probably if you were going to strike and you were going to, you know, compete, with certainty, you would actually just go total war from the first moment and into the conflict as quickly as possible. and the, the theory would be that you would actually keep the loss of life much lower.

then it would be if you let that conflict run over a long period of time. Peter Thiel talks about this in Zero to One as well in a business context. think it's Chapter Four. He says, if you're going to compete, decisively and win as quickly as possible. And I think that's like how you break down and short circuit the mimetic rivalry that ends up being far more violent in the long term.

Auren Hoffman (27:21.236) Yeah, I guess.

I guess the flip side of that would be, let's say there's an 80 % chance that you end it quickly, but there's the 20 % chance that it's a hundred X worse or something. Like, are you willing to take that? Yeah. Yeah. Yeah, exactly. And so these, and then you never know like how these things end up. Like it seems like the, I don't know if I trust the,

Trae Stephens (27:40.716) Right, if it leads to nuclear war, then that's a bad gambit. But I guess that's always the question.

Auren Hoffman (27:54.634) decision makers in the US government to make that call to go all in because I feel like it could if it spirals out of control, could spiral out very, very, very badly.

Trae Stephens (28:06.41) Right. But then you have the question of like, is the way that we've supported Ukraine just at all? Like we haven't given them the capabilities they needed. We've given them the old stuff from the Cold War inventory. We've prolonged the war, but we haven't given them what they would need to decisively end it. there are questions on the like more moral side on both of this debate. not, and I'm not sure I have like. Yeah. Yeah. It's not a need to answer. That's true.

Auren Hoffman (28:22.72) Totally. Yeah. That's right. That's right. I don't know what the right answer is, but I don't know that it's an easy answer. Yeah. Yeah. That's interesting. Now, the now, you know, one of the goals of the enderall is to reduce the cost of engagement, right? High cost of engagement is it makes it hard to react harder to make decisions, but

There are like, they're both like these flip sides of a lower cost of engagement world, right?

Trae Stephens (28:56.782) Yeah, mean, the reality is, if we got into a hot conflict with a great power, we would run out of munitions in a week, like gone. And we've built these capabilities.

Auren Hoffman (29:07.21) Crazy.

Auren Hoffman (29:11.062) By the way, have like friends in the military who like they they barely are able to shoot rounds like in practice, like they're not allowed to do that because both because the rounds are way more expensive than they should be. And there's a limited number.

Trae Stephens (29:16.94) Yeah, yeah, totally.

Trae Stephens (29:25.826) That's right. And we've built these capabilities that are incredibly exquisite. They are incredibly custom. They have really complicated supply chains. And what that means is that our partner nations, like Saudi Arabia, for example, is fighting this kind of ongoing conflict with the Houthis. They've got stuff being shot into their sovereign territory and creating havoc on a daily basis. And we cannot sell them enough Patriot missiles.

Like they literally have to go to other partner nations and try to buy their inventory of Patriot missiles. And then you see situations like Ukraine where we deplete not only the available inventory, we also deplete our own inventory of the capabilities that we're sending them in order to support the war effort with no ability to actually resupply. Like the Primes are literally calling people out of retirement to rebuild assembly lines to make some of these capabilities.

Auren Hoffman (30:21.782) I've actually dived into some of these ways that we make shells in the United States and stuff like that. I mean, it's very archaic and sometimes it hasn't changed in like 100 years.

Trae Stephens (30:34.414) That's right. Yeah. I mean, we're still using incredibly antiquated manufacturing processes. This is one of the things that we spend a lot of time on at Anduril is like, we want to leverage commercial supply chains to the extent possible. If you look at something like our Sentry Tower, which was the first product that we use to defend military bases as well as national borders, basically everything on the Sentry Tower is a commercial product. Like the radar is a commercial product, the camera.

the solar panels, the battery systems, the power management systems, the tower itself, like everything is a commercial product. And because of that, we have options as well. It's like if one of our solar panel vendors, know, craps the bed, we can always go and get another one. We can go to a different optical system if we need to, so on and so forth. And, you know, I think this is like, you know, not the way that these things are traditionally done, but...

Auren Hoffman (31:16.234) Yeah.

Trae Stephens (31:31.53) Like if we can build our supply chain in that way at Andral, we should be able to move significantly more quickly and we should be able to ramp scaling and production faster as well. Another great example of this is our Barracuda missile that we launched a few, a few months ago now. The fuselage of the Barracuda missile is, it uses the same hot pressing production process as bath fittings, as bath tubs. And so we're not using some.

you know, crazy new technology to build it. like, no, we're just leveraging the way that industry has done these things that's killed for a long time. And making the system much more modular. So the, doesn't have, it's not quite the size of a bathtub. It's smaller than a bathtub. Yeah, no, but I mean, there are all sorts of lessons that you can learn from industry.

Auren Hoffman (32:10.964) I'm imagining these like bathtubs being like shot out, you know, with like a guy in it, being like,

Auren Hoffman (32:23.12) rubber duckies going everywhere. If you dropped a rubber duckie on people, people would freak out. They would probably just run away because they would have no idea what happened.

Trae Stephens (32:25.494) That would be incredible. Instead of dropping a munitions payload, it drops thousands of rubber becky's. It's very Dr. Fringe love. love it. But yeah, I think we want to go from thousands and thousands of independent parts to 10x smaller number and be able to do that so we can produce at scale.

Auren Hoffman (32:52.714) Just like Tesla has done in their own factories where just the number of parts has gone down dramatically.

Trae Stephens (32:54.786) Just like Tesla has done,

That's right. Yep. That's exactly, that's exactly what we should be working on.

Auren Hoffman (33:01.814) And that also helps with like any type of supply chain disruption, because just the chance that any one part is going to disrupt goes down if you have fewer parts, right?

Trae Stephens (33:12.628) Exactly right. Although that doesn't mean that we can be lackadaisical about supply chain. We have an entire team at Andral that's entirely focused on supply chain resilience. And we understand that that's obviously a very core part of getting the scale production story to work.

Auren Hoffman (33:18.068) You sure? Yeah.

Auren Hoffman (33:28.566) Now the, the, on the venture side, like founders fund really probably more than almost any other well-known firm has invested deeply in like hard tech. Um, and that includes things like hardware and some of these other types of things. Like, how do you guys think about that vis-a-vis, you know, how, how is that like a, just a counter positioning versus other venture firms, or is it just, or is it just really just cause it's more interesting? It's quarter of the philosophy.

I'm like, why, why is that evolved that way?

Trae Stephens (33:59.634) Yeah, I mean, there used to be this tagline on our website that said we wanted flying cars and instead we got 140 characters. I think this is like definitely, you know, built into the ethos of the firm. Part of this is just the kind of anti-competition idea.

Auren Hoffman (34:05.461) Yes.

Trae Stephens (34:14.924) that Peter has been preaching for the last 20 years. A lot of potentially interesting technology startups are in software categories where it would not be that difficult to build a direct competitor, which just leads to this sort of mimetic violence that happens in the marketplace. When you build hardware tech, it's much less likely that those things become highly competitive.

And so we have kind of a philosophical tendency towards that. That said, we're also like, you know, large investors and Palantir, Airbnb, Stripe, and a bunch of software companies. So we're certainly not focused on that as a category. Now, the other thing that's worth mentioning is that we have invested in a bunch of hard tech companies. One of the commonalities that we found between the success stories in the hard tech ecosystem is that for every incredibly talented tech

Auren Hoffman (34:51.018) Yeah, yep.

Trae Stephens (35:11.394) founder, you really need an incredibly talented business founder alongside. It's not sufficient to believe that it's the field of dreams and that if you just build the product, everyone will magically show up and it'll just be this massively successful thing. It is not sufficient. Someone's

Auren Hoffman (35:27.678) And you don't think that will they would be it can't be it's not the same person.

Trae Stephens (35:32.406) It's usually not the same person. It can be in some cases, know, people like Elon are uniquely talented and that they understand store. Yeah, exactly. But, but generally speaking, it is undervalued in hard tech companies to have someone that has a sense for, how to exactly, exactly. And so we try to make sure that that filter is cleared before we get terribly concentrated on the tech side of things.

Auren Hoffman (35:33.93) Okay.

Auren Hoffman (35:39.21) Yep. Yeah. Recall some brothers or something. Yeah.

Auren Hoffman (35:51.112) is commercially oriented. Yeah.

Auren Hoffman (36:02.536) Interesting. And I imagine the Hortek, like just the feedback loops are much longer, much harder to under, you know, like you can go year over year and have less understanding of how the company is progressing, what's going on. Whereas like in a SaaS company, it's like, it's kind of easy. look at net retention and your, your growth and like maybe one or two other metrics. And you have a really good sense of like how things are going at the

SaaS company, like what are you, is is the best way to do it? Just like really get diving into the product and seeing the product or, because how does one know if it takes four years to get like a big contract? like how does one know if things are progressing in right way?

Trae Stephens (36:47.109) Yeah, I mean, obviously on an absolute versus relative basis, it's kind of hard to define what a long time means. But I will will say this. The best hard tech companies tend to figure out a way

to commercialize milestones. So you look at like SpaceX, obviously their long-term goal is to send people to Mars, but that's not the only product. Like they're selling Falcon 9 launches, they're selling Falcon Heavy launches, they're they'll sell Starship, taking payload to space, like lowering the cost of sending a kilogram of mass to space. Same thing with, yeah, there's some connectivity through Starlink.

Auren Hoffman (37:14.325) Yep.

Auren Hoffman (37:22.282) Now they sell connectivity now, right? Starlink, yeah.

Trae Stephens (37:27.438) And then you have, you know, companies like Neuralink, obviously like getting to full scale human BCI is the long-term goal, but they're, you know, selling basically to people with chronic illnesses that solve some problems for them along the way. At Andral, you know, we just recently won a contract to build the collaborative combat aircraft, which is like a autonomous fighter plane. We didn't start by selling autonomous fighter planes. We started by selling sentry towers. you know, way, way easier to.

Auren Hoffman (37:50.004) Yeah, yep.

which are like just easier to get to market essentially. Yeah. So almost you have to, you have to under like the founders have to be smart enough where to get their first product a little bit lower ambition, a little higher percentage chance of being able to get it done.

Trae Stephens (37:57.42) get to like, you know.

Trae Stephens (38:10.318) Right. And everything you learn from those earlier stages is critical to the long-term goal. It's not that you're just like building something random to, you know, finance what you're actually building. It's like you're figuring out a way to commercialize every stage of development. Obviously there are some cases in which that's much harder, like nuclear fusion. Like, I'm not really sure how you would have like milestones commercialized along the way. But for most hard tech companies, you should be able to figure out. Yeah, there are some cases, but they're...

Auren Hoffman (38:14.6) Yes. Yep.

Auren Hoffman (38:29.098) Yeah.

Auren Hoffman (38:33.108) Yeah, sometimes in the bio, it's hard just you need like FDA approval or something.

Trae Stephens (38:39.8) There are many cases as well where it's just like a failure of imagination that leads to these companies requiring way too much capital and way too much time. It makes it difficult to leverage venture capital as an asset class to help you accomplish your goals.

Auren Hoffman (38:54.856) Now, now, founder's is now closing like a $3 billion fund, which seems just, you know, so gargantuan when one thinks about like the venture world, like, how do you think about like the, this money as an advantage as an investor?

Trae Stephens (39:12.054) Yeah, I mean, we have a growth fund and a venture fund. So we're currently investing out of a billion dollar, excuse me, a billion dollar venture fund. And we just raised growth fund three, which is three and a half billion dollar growth fund. You know, I think like, there are a lot of really interesting growth deals out there. Obviously, companies are staying private longer. There's a there's enough capital in the private markets that there's continued interest in doing that. And we can write bigger and bigger checks, more concentrated checks to acquire.

Auren Hoffman (39:14.207) Yes.

Trae Stephens (39:40.012) more ownership prior to the company going out to the markets and having some sort of liquidity. You know, I think the advantage really there is that, you know, the founders know that we're in it for the long term with them. The economics of growth don't affect our ability to deploy additional capital into businesses over time. And that strategy has worked really well. The vast majority of our growth fund deals are like concentrating into our existing portfolio rather than new investments outside of the venture fund.

But at the same time, it is really important for us to have a venture fund as well. We're not just writing checks in the mature growth stage companies. We are still doing seed series A, series B investments. And that's kind of the top of funnel in many ways for concentrating that capital at a later stage.

Auren Hoffman (40:27.72) And like, can imagine like in some ways it could be in competing because it's like, okay, well, at one point there's like a $10 million check that someone could write another point. There's like a $200 million check. And, and so, you know, it's like, well, it's like, wow, it's much easier for me just to write the 200 million. Like, how does one like think about that internally? Like, do you, how do you set up the dynamics where that $10 million check is still so valued?

Trae Stephens (40:54.875) Yeah, mean, well, first off, it's like there's a kind of a gray line for where a check would come on a venture rather than growth. know, yeah, I mean, we're all a team, but there are a handful of people that are very growth focused. And then the rest of the fund is very venture focused. And our expectations on returns are different between those two funds. You know, obviously, like venture capital is a power law, particularly at the early stage.

Auren Hoffman (41:02.112) That's right. Good point. Yeah. And there's some partners just in one versus the other or something. Yeah.

Auren Hoffman (41:22.571) Yep.

Trae Stephens (41:23.042) We have to have a credible belief that every investment we make is going to have the opportunity to return the entirety of the fund. In the growth fund, we're not underwriting to a 10x multiple or anything like that. So you have just a different understanding of what targets you're looking at as you're evaluating deals at different stages.

Auren Hoffman (41:34.133) Yep.

Auren Hoffman (41:43.082) Now, most people know you as this really deep thinker about venture capital, about national security, about defense tech. I also know you as someone who thinks a lot about love and family. And you wrote this piece recently talking about how technology might be destroying marriage. How do you think about technology in the world of dating and modern relationships?

Trae Stephens (42:08.927) Yeah, I had this kind of realization a few years ago that, you know, coming out of COVID, there was this expectation that we would reestablish community and everyone would be like so happy to be out, you know, interacting and personally with other people. And it didn't really happen. And we still have this loneliness epidemic that's ravaging Western society.

and, you know, there's certain, I started seeing data that was coming out of the online dating companies, about, know, what types of people are getting right swipes, what types of people are getting messages. and then you look at like some of the most heinous, violent events that are happening in our society around mass shootings and stuff. And very often these people are, you know, they're incels. They're incredibly lonely people who feel like they have no community, who've been rejected by, their

you know, desired sexual partners, whatever it might be. you know, in a hundred, a hundred years ago or whatever, like people tended to pair off in local communities. like, you know, you have people in your school or your church or your Elks club or whatever. And, you know, people were matching because they, maybe they weren't the most attractive, but people thought that they were the kindest or the smartest or the funniest or the most charming. and when I go back and look at the small

Auren Hoffman (43:16.438) Yeah.

Trae Stephens (43:30.838) rural town that I grew up in in Ohio, I was honestly shocked leaving high school to find out all of the people from my high school that weren't in the same social networks in my high school, they ended up getting married. And it was because they had tiles. They were like, there's connectivity that existed. That kind of local maxima way of pairing off worked, has worked in human society for thousands of years. But now we're in this really weird paradigm. Exactly. Yeah.

Auren Hoffman (43:44.435) Yeah.

Auren Hoffman (43:54.752) Yeah, most people like marry people within a couple of miles of them. Yeah.

Trae Stephens (43:59.188) this new paradigm that we finding ourselves in is we've increased the, the, the dating pool by a lot, by like entire geographies. It's much easier to get around. So people can drive or fly, short distances, in with relative ease. And, know, I think what, what's happened is that it's created this belief that there's always someone better out there. and when you always believe that there's someone better out there.

There's no issue with just like going and experiencing as many people as you possibly can and being indecisive and getting stuck in this loop, this doom loop of loneliness. And I don't think this is good for humanity. And the solve that technology has been looking at, because I think this is like pretty well understood at this point. People understand that this has been bad for humanity. The solve is AI girlfriends, which is like, it's not how do we

get people back to connectivity, like, well, we can't do the connectivity thing anymore. And so we should solve it by giving them a person that will love, affirm, and acknowledge them in all ways without any challenge for the rest of their lives. But that's also not what real relationship is. Real relationship has conflict. It has emotion. It has drama. And I think that we're losing part of our humanity by not figuring out how to really invest in bringing people back.

to intimate community with one another.

Auren Hoffman (45:28.106) But what is the solve just that like we need more like communities, whether it's, you know, people going to church together or people coming together over some sort of other kind of in person, like some sort of other shared thing that's bigger than themself. Is that the solve?

Trae Stephens (45:47.892) I mean, there's a bunch of different technology versions of this solve. know, there are the kind of local social stuff, which trying to match people together to go out and grab coffee when they like fortuitously realize that they're close to someone else. I think there's like the non-technology solves to this. Like what you said is like people, should just go to church. I don't think people realize just how good

uh, the community is from religious, uh, experience. Um, it's, actually an incredible unifier. Um, you know, even just like the more secular version of this is like go out to a bar on a Friday and talk to a bunch of people and see what happens. I don't know. Maybe, maybe that works. I know for sure that has worked for a lot of people that find themselves in healthy marriages today. On the technology side, I think it's like asking ourselves tough questions about how to address some of the kind of core.

shallowness that exists in social networks. Like if you look at the right versus left swiping on dating apps, for men in particular, it's like very height oriented. Where like basically all of the people that are 6'2 or over are getting lots and lots of positive feedback. And anyone that's shorter than, shorter than that particular like shorter than 5'8 is just, they're getting nothing. Like there's just no positive feedback at all.

Auren Hoffman (47:09.814) Mm hmm. Which is so silly because it's like of all the things like you're going to you're like, I understand, you might want to discriminate against someone for a lot of reasons and stuff like that. But like, I know, height just doesn't seem motion. It doesn't seem like it would be my top 10. I don't know. Like, yeah, yeah.

Trae Stephens (47:11.008) this

Trae Stephens (47:27.02) Well, mean, you're speaking like the man that you are, Arn. I think if you asked most women, they would probably disagree with that. There is something about height in men that's very primal for women. I don't really know what it is, but...

Auren Hoffman (47:37.354) guess you're right, but it's just kind of funny. Like I can understand that like a long time ago when maybe you need to be defended or something. And, but like, it's like, what is it? The guy's five four. So what if you're the guy's five four and you're five five, like who cares? Like it's like, it's, usually not like you're, yeah, I understand if you're six feet tall, you need someone who's, who's, who's at least close to that. But if you're around the same height, like

cares. Like, I'll meet these like five one women and they're like, I need a guy over six feet. I'm like, why do need someone who's a foot taller than you? Like, it makes no sense.

Trae Stephens (48:08.142) You are striking at something primal that probably can't be explained. But this is like the type of thing that like, think technology should be able to help us with this. Like we can find ways to surface what makes people awesome. That isn't just tied into some like super shallow metrics. I don't know exactly what that is, but you know, I've seen their dating apps, like there's one called Keeper.

Auren Hoffman (48:24.756) Yeah, yeah.

Trae Stephens (48:35.214) We're not investors at Founders Phone, so I don't have to issue a disclaimer there. But the whole purpose of Keeper is finding a long term spouse. Their whole goal as a company is helping people get paired off and get married, which is just fundamentally different from an incentive structure than Tender or Hinge or whatever, where they are incentivized to keep people in the system for as long as possible.

Auren Hoffman (48:55.478) But how are you incentivized then? Like, how does it work? Because if they do a great, if they do the most amazing job in the world, they like start losing all their users, right?

Trae Stephens (49:03.34) I their whole life, I believe and I'm not the most up to date on this, but it's a success fee. It's a success fee. It's like you don't pay them anything until they get married. And then when they get married, you pay out like a real bounty. Yeah, exactly. Exactly.

Auren Hoffman (49:05.854) Yeah. Unless you get like, unless you get like paid every year they're married or something. That would be great. Like, okay. It's just a success fee.

Oh, okay. Like a huge amount of money or something like that. Yeah. Yeah. It should be like, yeah, like 10 grand a year every year you're married for the rest of your life or something. Inflation adjusted.

Trae Stephens (49:29.25) Well, I mean, this is the college tuition ISA thing, It's like, yeah, exactly.

Auren Hoffman (49:34.326) Totally. Yeah. Yeah. Yeah. I love it. Yeah. And I say for, for love. Yeah. Okay. Yeah. That's crazy. The, um, all right. Couple of personal questions. Um, you know, you're, you're, w we're starting to see more and more tech and business leaders that are becoming more open about, about their talking about their faith. Um, I would say 10 years ago, it was extremely rare. Um, and now it's more common, uh, to, hear that like.

Trae Stephens (49:39.255) Yep, exactly.

Auren Hoffman (50:02.262) What do you think is changing in the national conversation?

Trae Stephens (50:06.798) Well, I mean, we're still talking about really small numbers. think like the weekly church going attendance in San Francisco, the city of San Francisco is still like 5,000. So it's 800,000 people in the city, 5,000 that are weekly church going. I do think that there's like. Yeah, yeah, yeah.

Auren Hoffman (50:08.99) Yeah, still tiny numbers. Yeah.

Auren Hoffman (50:21.238) So you mean like non-Easter, non-Christmas kind of like average random Sunday type of thing? Yeah.

Trae Stephens (50:27.852) That's right. Yes. so I think that like the there is anecdotally there's something happening. You know, my wife and I lead this this Bible study that, you know, over 100 people show up to every Monday evening, which like I can't even imagine that happening five, six, seven years ago. You know, obviously this is all completely anecdotal. But my sense of that, you know, Silicon Valley went through this like weird, you know,

Eastern mysticism thing for a long time that became a trope even on the HBO show Silicon Valley, where it's like, you know, CEOs having like Buddhist monks tail them around for the days going on ayahuasca retreats. I think that people just found that like, you know, along with money, fame and power comes an emptiness, like a hole that is God shaped. And you can jam all sorts of stuff into that God shaped hole. You can jam psychedelics and mysticism and

ecumenicalism and all sorts of stuff, effective altruism, whatever it might be. But it actually doesn't, there's no stickiness to it. You just have that emptiness. It's not Lindy. And there's something about traditional, like Orthodox religious beliefs, particularly like Judeo-Christian that has, I don't want to say that it's like, know, people are

Auren Hoffman (51:27.03) Effective, effective algorithm. Yeah.

Auren Hoffman (51:33.556) Yeah, it's less, it's not Lindy for sure, right? Yeah.

Trae Stephens (51:53.586) coming to complete faith or anything like that in an instant, but I do think that there's something that's much stickier about traditions that have lasted for thousands of years that claim to have some sort of monopoly on truth. I think that people are way more curious about this than certainly I expected them to be when I first came to Silicon Valley 10, 11 years ago. It's been a really interesting thing to watch for sure.

Auren Hoffman (52:20.47) Cause in some ways, like there's two things that like literally every human I know is like every human I know is religious about something. They believe in something that they can't, that you can't really prove. that's bigger than themself. And again, it could be, it could be Christianity or it could be effective altruism, they believe they're, they're religious and deeply religious about something. And the second thing is that they have some sort of yearning for community. They may not be in a community, but they have a yearning for community. And then obviously like a traditional religion fits both.

Trae Stephens (52:27.34) Mm-hmm.

Auren Hoffman (52:50.752) types of things, but what's the bigger one? Is it the religious piece or the community piece that you think is so important to people?

Trae Stephens (52:58.738) Yeah, no, I think you're absolutely right that everyone is religious, or not they think they are. Atheism is a religion. It's a system of beliefs.

Auren Hoffman (53:05.824) Correct. Yeah, certainly. Especially the way people, you know, sometimes even like veganism can be religion. If you're evangelical about it, right?

Trae Stephens (53:15.224) Right, well and orthodox, like you have a set of rules and beliefs that you hold other people in your community to be accountable for.

Auren Hoffman (53:18.966) Yes, yeah. Yeah, and certainly communism has been a religion for the last 100 years.

Trae Stephens (53:26.806) Right. And in many cases, feel like the faith that people, especially really intelligent people, usually criticize people inside of traditional religious practices for having is not that different from faith in science, for example. It's like if you believe that the world emerged from nothing, you have just as much evidence for that as I have to believe that that's not the case. You have faith in some

Auren Hoffman (53:42.998) Correct. Yeah.

Auren Hoffman (53:49.878) Yeah

Trae Stephens (53:55.09) you know, system or process to deliver you the truth that you desire. And so I agree with you, like everyone is religious at the end of the day. On the community side of things, I think this is like one of the most beautiful parts of traditional religious expression is that there's this kind of deep, there's something deep inside of our souls that needs to be connected with people who share values with us. And it is an incredibly powerful way to build

a that is going to support you and that is going to be there to hold you accountable and to bring you along as you mature and you learn. And I do think that that is a really powerful aspect of people coming into these communities and finding that they are getting that hole filled with.

Auren Hoffman (54:43.9) There's something about either like chanting or singing together that also like I still remember every day, you know, I'm old enough to remember every day in, in, you know, first grade, you know, I pledge allegiance to the flag of the, we all would get up and we'd all stand up and, and, I, you know, in first grade, I probably didn't even know what any of those things meant, but there was something like very communal that we're all doing it together in a way that was like, it felt very reassuring to me back then.

Trae Stephens (54:57.059) Mm-hmm.

Auren Hoffman (55:10.834) I assume like anything we were chanting and talking together and saying the same words together over and over again is like a very, it's very primal. It's very, it's really human to do that.

Trae Stephens (55:11.277) Yeah.

Trae Stephens (55:23.692) Yeah, I this is like the nature of the sacred. You see this emerge in like traditions all over the world. I think there's there's like a spirit orientation that happens in these community moments that they can really change people's lives for the better.

Auren Hoffman (55:39.402) Yeah, really cool. Now, a couple of other personal questions. You have mentioned that you have a doomsday bunker, like beyond the obvious, like, you know, food and water and stuff like what do you have in that? What do you have in the bunker? Like what's most important to keep?

Trae Stephens (55:56.878) I mean, my bunker is about as traditional bunker as possible. We did get like these really cool Murphy bunk beds. So it's like, you're not just like sleeping on cots. It's like they do fold out of the wall, which is pretty great. Definitely has an armory, which, you know, is a necessary part. And I think the like,

Auren Hoffman (56:06.235) yeah. awesome. Yeah.

Auren Hoffman (56:16.137) Very important, yeah.

Trae Stephens (56:20.842) Next version of this that people need to start thinking about now that these systems are much better than they have been historically is like, you can live a pretty modern lifestyle off the grid with battery systems and efficient solar. And so I think that's like something that if you're building a bunker, you should be thinking about is, you know, how do you make sure that everything that you have in that space can be run effectively off electricity? Cause you don't want to have reliance on natural gas or anything like that.

So I think that's a big part of it. But for us, when we did this, it wasn't just about the bunker. It was also about having a really great retreat for the entire family in a rural place because we live day to day in the middle of San Francisco. And that's really what we were optimizing for is, sure, we have this survivalist thing, but we also have a really cool house that me and my wife and my kids love spending time at.

Auren Hoffman (57:17.558) Alright, two last questions. We're ask all of our guests. What is a conspiracy theory that you believe?

Trae Stephens (57:22.786) Well, I mean, I think that the nature of most conspiracy theories is that it's pretty impossible for large organizations to be competent enough to maintain a conspiracy over a long period of time. So all the traditional stuff, I think is just completely ridiculous because the government is incompetent. I don't think that they could cover up the Kennedy assassination stuff. I don't think that they could cover up a fake moon landing. It is way more depressing.

Auren Hoffman (57:45.78) Yeah, in some ways, like it's almost like more depressing that the government can't do a conspiracy than it like then it could, right?

Trae Stephens (57:53.934) If the conspiracies were about like Peter Thiel, I would be like, okay, yeah, that's believable. He's incredibly confident and he could probably pull it off. But the federal government? Come on guys, that's ridiculous. I think most of the conspiracies that I find the most interesting are the ones about like really competent organizations like running long term campaigns that have geopolitical value. Like, I don't know, was Epstein a Mossad agent? That's an interesting question.

Auren Hoffman (58:03.712) You

Auren Hoffman (58:21.246) Right, right. Yeah, yeah. Yeah. Yeah. Right, right, right. Or, or, you know, you know, it it could be some sort of misdirection campaign or something like that. Okay. I don't want to have the, the pipeline because I own a train company or something, and I'm going to use other actors to help me do that. That, that, that would be like a

Trae Stephens (58:22.412) He definitely didn't kill himself, we all know that, but that's not a conspiracy.

Auren Hoffman (58:48.138) conspiracy that could be done by a smart actor or something.

Trae Stephens (58:52.128) Yeah, things on a smaller scale where there's less people involved for sure.

Auren Hoffman (58:55.646) Yeah. Okay. Last question. We ask all of our guests, what conventional wisdom or advice do you think is generally bad advice?

Trae Stephens (59:03.03) Yeah, you know, was kind of prepared for this one because I knew that you were going to ask it based on your other conversations. You know, I grew up, as I said before, in a rural public school in the middle of Ohio, and I wouldn't be where I am today without the help of a lot of people, like a lot of people that gave me their time and their attention when I didn't deserve it and I had no connectivity, I nothing to offer.

And I'm very, grateful for that. I think the conventional wisdom is shoot your shot, right? It's like, you know, go ask people for help, be forward. And I agree with that generally, but the contrarian take on this is there are limits. And I think some people have taken this advice to hustle and shoot your shot to an extreme that borders upon completely inappropriate.

And so if you're listening to listening to this and you're like, yeah, I'm gonna cold email The hundred people I want to talk to you on a daily basis or an hourly basis for the next year. You've gone too far If they haven't responded, they're probably not going to and you shouldn't turn into a stalker

Auren Hoffman (01:00:10.844) Hey

Auren Hoffman (01:00:15.67) Well, also in the co in some ways, they're in any type of exchange like that. They're it needs to go both ways. Right. Um, and so you, you, I would always give some advice like, what can you offer the other, and sometimes offering them is the good feeling of them helping you. Right. I'm sure there's some seventh grade teacher that helped you and they did it really because they were a good person and they really wanted to, they, they saw something in tray and they wanted to help.

Trae Stephens (01:00:25.312) Right.

Auren Hoffman (01:00:45.024) Trae become bigger than Trae thought Trae could be, and they gave you extra attention to help you along the way. But they got something out of it too, which was they got this great feeling of helping you as well. And same thing now, now you're a different Trae. So if someone wants to reach out to you today, they're probably trying to get you as their mentor. And then it's like, okay, what can they offer you? Maybe they can offer you, probably a 16 year old can offer you something.

Trae Stephens (01:00:57.166) Mm-hmm.

Auren Hoffman (01:01:14.122) depending on who they are. But what can, and I think they need to think that through. Okay, here's, I'm gonna bring this to the table. And so the exchange is gonna be, yeah, I'm gonna learn something from Trae, but Trae is gonna learn something from me and they're gonna be very happy they had this meeting with.

Trae Stephens (01:01:30.171) Yeah, no, that's great way putting it. And then if it doesn't work, if you don't get the response that you were hoping for, that's OK. Be gracious. Yeah, we've got to move on. Yep. It's like dating.

Auren Hoffman (01:01:38.324) Yeah, yeah, yeah, move on. Right, right. It's like dating. Yeah, yeah. Not everyone you date is going to be your spouse.

Trae Stephens (01:01:45.366) It's like dating if you're over six feet tall. When you have lots of options.

Auren Hoffman (01:01:47.574) All right. Well, thank you, Trae Stevens for joining us on World of DaaS. I follow you at Trae Stevens on X. I definitely encourage our listeners to engage with you. This has been a ton of fun. I really appreciate you coming onWorld of DaaS.

Trae Stephens (01:02:03.766) You bet. Thanks, Auren. Take care.