Better Tools, Bigger Companies

Toolmakers are closer to what I’d categorize as actual deep tech. They are solving deeply technical problems in order to give humanity fundamentally new capabilities. They’re often the ones pushing the exponential curves. A company developing a new type of semiconductor, new materials, or more efficient solar cells might fit into this category.

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Toolmakers operate at the very bleeding edge, coming up with brand new science and technology, with a primary focus on the science and technology themselves.

Techno-Industrials start with the challenge they want to solve, and use every tool at their disposal, including some at the cutting edge and even some that they have to create themselves, to s... See more

Other industries, though, are matter industries .

Think energy or agriculture. These things are necessarily physical. Electricity requires electrons. Digital food doesn’t fill bellies.

For the past few decades, as software has eaten the world, entrepreneurs and incumbents alike have attempted to fix these industries with software. They’ve made them m... See more

Instead of designing slightly better versions of old products – not better enough to displace incumbents – or fixing inefficiencies with software, entrepreneurs are designing radically better vertically integrated systems from the ground up with cutting edge hardware and software.

They’re mixing and matching whatever tools are needed to get the job... See more

The more and better tools, the bigger and harder challenges builders can address with them.

Analogizing the current era in tech with the recent, software-dominated era is a mistake.

A much better analogy would be the Second Industrial Revolution in America, the Gilded Age when entrepreneurs built businesses using every new technological tool at their disposal to pull humanity to a new level of prosperity and became unbelievably rich in th... See more

The right lesson to take from Anduril is that it’s possible to build very big businesses by applying a suite of cutting edge tools and processes to the right bottlenecks in large, seemingly impenetrable industries.

And thanks to the power law, there will be one really big winner in each industry:

Defense, like all technology sectors, is ruled by the

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Techno-Industrials are addressing larger markets than most software companies can.

They use whichever tools they need to provide better solutions to key bottlenecks with better unit economics than incumbents.

They are more capital efficient than most investors expect.

And they have to be more strategically sound than the average software company.

B... See more