Mar 23, 2026 · 57m · news
99% of Drone Companies Will Die & Why Anduril’s Products Aren’t an Ethics Debate | Matthew Steckman · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, host Harry Stebbings interviews Matthew Steckman, President and CBO of Anduril Industries, to explore the unique go-to-market strategies, manufacturing innovations, and capital structures required to build a multi-billion dollar defense technology prime.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 21.5% of the talking time here. How this is scored →
Harry as informed peer 3.7 Guest teaching 5.7 Guest disagreement 2.3 Harry pushing back 3.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 36:53 Rejection of conflict-profiteering premise
Steckman directly rejects Harry's provocative question about war being good for business, calling it the wrong view and cautioning against myopic focus on active conflicts.
Hardest push from Harry ▶ 45:15 Challenge on capital strategy and M&AHarry forcefully pushes back on Steckman's capital conservatism, demanding to know why Anduril does not exploit sky-high market demand to raise billions and buy out overvalued startups.
Biggest teaching moment ▶ 10:24 Demystifying the $20B defense contractSteckman dismantles public and host misconceptions regarding Anduril's $20B contract headline, re-educating Harry that it acts as a streamlined credit card spending limit rather than guaranteed cash.
Harry holds his own ▶ 41:32 Host corrects market valuation multiplesHarry leverages his venture capital expertise to correct Steckman's conservative estimate of private defense multiples, pointing out that deals are trading at upwards of 200x forward revenue.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Georgetown Bond and Anduril's Founding Team | 2 | 3 | 1 | 1 | Harry opens with casual banter and questions provided by Anduril insiders regarding college memories and early team dynamics. Steckman explains that defense startups require a tight blend of insider procurement knowledge and outsider technical entropy. | |
| The Role of GTM and Procurement in Defense Startups | 3 | 5 | 2 | 2 | Harry asks how investors should evaluate defense go-to-market teams. Steckman educates him on how defense acquisition requires 12 distinct disciplines and why looking for past major program capturers is a flawed strategy due to sheer scarcity. | |
| Tech Hubris and the Reality of Addressable Market in Defense | 2 | 7 | 2 | 2 | Harry openly admits he does not understand European drone pitches and defers to Matt Grimm. Steckman breaks down the two major traps in defense tech: hubris about existing 1960s inventions and overestimating addressable market size. | |
| Geographic Realities: Why Defense Startups Must Win in the US | 3 | 8 | 3 | 3 | Harry asks whether European defense companies can succeed without US sales and inquires about Anduril's headline $20B contract. Steckman corrects public misconceptions, explaining the contract is essentially an IDIQ credit card limit rather than an upfront cash injection. | |
| Anduril's Flexible Business Model and Defense-as-a-Service | 3 | 6 | 1 | 2 | Steckman explains how Anduril packages software into hardware appliances or Defense-as-a-Service to navigate rigid government budgetary 'colors of money'. Harry asks about operational friction, and Steckman details the difficulty of managing predictability across hundreds of minor contracts. | |
| Offensive Cyber and the Doctrine of Asymmetric Warfare | 2 | 8 | 2 | 2 | Steckman reflects on missing the offensive cyber wave earlier in Anduril's lifecycle. He provides a detailed overview of asymmetric non-kinetic warfare doctrines and the geopolitical challenges of attribution and escalation. | |
| Anduril's Horizontal Strategy and the Drone Monopoly Question | 4 | 6 | 3 | 6 | Harry directly challenges Steckman on why Anduril would bother entering offensive cyber when seven years behind competitors. Steckman reframes Anduril's strategy around its horizontal software layer, Lattice, which can be adapted across multiple domain verticals. | |
| Capital Allocation: Tiger Teams and the Lily Pad Strategy | 5 | 5 | 1 | 3 | Harry frames capital allocation in venture terms. Steckman breaks down Anduril's internal tiger teams, lily-pad contracting strategy, and internal investment committee process for scaling product funding. | |
| The Barracuda Family: Redesigning Missile Manufacturing | 3 | 7 | 1 | 2 | Steckman highlights the Barracuda missile line as their most successful bet, explaining how re-engineering airframes to use commercial manufacturing like bathtubs allows flexible demand elasticity during active global conflicts. | |
| Margins, Scale, and Government Contracting Realities | 4 | 7 | 3 | 4 | Harry questions why high-volume missile products yield lower gross margins, expecting classical economies of scale. Steckman clarifies customer pricing expectations in government contracting and articulates Anduril's ethical alignment with democratic institutions. | |
| Conflict Economics and Anduril's Role in Active Theaters | 3 | 7 | 5 | 3 | Harry asks if active war is great for defense business. Steckman rejects the premise as myopic, arguing long-term defense sustainability requires multi-decade planning rather than short-term conflict exploitation. | |
| M&A, Valuation Bubbles, and Opportunities in Space Tech | 8 | 3 | 4 | 7 | Steckman claims VC-backed defense startups are overpriced at 10-14x forward revenue. Harry counters forcefully with first-hand venture data showing deals closing at over 200x forward revenue, asserting his expertise on current market multiples. | |
| Managing Ego: Competition, Helsing, and the "Arms Dealer" Persona | 6 | 4 | 4 | 8 | Harry pushes Steckman on why Anduril does not raise billions more at inflated valuations to buy out competitors. Steckman defends conservative capital management and explains why public market scrutiny is necessary to build long-term trust in defense. | |
| Navigating the Product J-Curve in Defense Tech | 4 | 6 | 1 | 3 | Harry asks about readiness for an IPO. Steckman details the product J-curve in defense, explaining that only 5 of their 20 product lines are currently cash-flow positive rate production programs. | |
| Embracing Failure: The $40 Million Stepping Stone to Autonomous Jets | 3 | 4 | 2 | 2 | Steckman recounts a $40 million early failure in aerial systems that was necessary to build their autonomous jet program. The interview wraps up with quickfire career advice and playful banter on founding team personalities. |
Statements from this episode (36)
Steckman: Defense tech companies require a large US presence to survive
“You basically can't have a defense company if you don't have a large US business.”
Steckman: Few military drone programs generate enough revenue for standalone businesses
“There are very few drone programs that would create a material enough amount of revenue to actually create a real business.”
Steckman: Anduril's leadership team remains unchanged since founding
“There's kind of some magic in the fact that it's the same leadership team today as it was when we started the company.”
Steckman: Defense tech success requires blending commercial tech outsiders and industry insiders
“Founding teams, one of the most important things in, in defense is some of them can be outsiders and, you know, brilliant technologists and thinkers. It does take a lot of inside knowledge and I think that one of the things we got right and keep getting right …”
Steckman: Defense startups fail if they lack any of 12 core disciplines
“The challenge becomes in defense that if you're missing any of the 12 different types of disciplines it takes to really capture a large program, you will fail.”
Steckman: Defense startups cannot require prior experience winning large government programs
“There aren't actually a lot of big programs in government, and so one of the things you don't need to necessarily look for, I think what you would, in a traditional hiring process, you would look for someone who has demonstrated the ability to Capture a large …”
Steckman: Tech hubris leads defense startups to reinvent existing solutions
“There's too much hubris, I think, in the technology market that you know, as high tech people, we can do everything better than everybody else. I think that causes some companies to think they have an idea that isn't actually an idea because it already exists,…”
Steckman: A single large contract does not equal an enduring defense company
“I think there's in many cases an overestimation of addressable market, where like actually what ultimately they're going after is a very small sliver of a problem which Might materialize in a single large contract, but a single large contract is not an endurin…”
Steckman: United States accounts for 50% of total global defense spending
“50% of defense spending is in the US and 50% is in the rest of the world.”
Steckman: Anduril's $20B government contract contains no upfront obligated funds
“Think about this as like a credit card limit. So the government has said up to twenty billion dollars they can spend on a class of Andurl's commercial technology. There's no obligated money”
Anduril's First Major Contract Was Defense-as-a-Service for US Special Forces
“And actually one of our first major contracts was with US special forces for all of their counter UAS systems. That started as an as a service contract where they weren't buying hardware. They weren't buying software. They were literally buying a service that …”
Steckman: Anduril missed offensive cyber warfare seven years ago but will enter
“We should have moved into that seven years ago and been the first in it. We weren't big enough probably to really even understand it seven years ago, but like in hindsight, it was kind of obvious. You know, we'll, we'll probably try and play some catch up here…”
Steckman: Defense startups must win one of two major government programs to survive
“So in every technology class in defense, there's probably one, sometimes two actual programs that if you capture them, you have a business. And if you don't, you have no business.”
Steckman: Anduril operates 20 distinct P&L business units
“We have 20 different P&Ls at the company all that are going after different parts of the defense apparatus that take a lot of these fundamental Technologies that we build and kind of piece them together in different ways.”
Steckman: Only one drone startup will ultimately win the market
“There'll be one that wins, right? It's going to be really hard to pick it, I think is the problem. Like, but there will definitely be one winner.”
Steckman: Government contract success relies on finding a single internal champion
“All of these things can be characterized by Like a singular champion on the other side of the table that gets it, that believes in it, that wants to shepherd it. Actually you mentioned Shyam. He talks a lot about this kind of like heroism. Like it actually com…”
Steckman: Defense hardware must use commercial supply chains over legacy defense manufacturing
“We have to be able to build something that takes advantage of commercial supply and commercial manufacturing techniques as opposed to aerospace and defense supply and technique.”
Steckman: Anduril builds cruise missile airframes like bathtubs using contract manufacturers
“The cruise missile we build, the actual airframe is built like you build a bathtub. And so we can take advantage of tons of contract manufacturers in the United States that can actually build a bathtub, right?”
Steckman: Anduril maintains 40% plus gross margin across its portfolio
“As a business, we run a sort of 40% plus gross margin across the board.”
Steckman: Defense founders must defer ethical rules to democratically elected governments
“If you work in defense, and if you start a defense company, your moral compass tends to be pretty clear on this question, which is, we have a democratically elected set of governments that represent the US, the Alliance, NATO, all of the countries participatin…”
Steckman: Anduril is developing missile systems targeted for 2035 deployment
“Where I'm building missile systems that might only field in 2035, right?”
Steckman: Defense startups myopically focused on the Ukraine war will fail
“If those companies are myopically focused on that conflict, they will not have a business coming out the other end.”
Anduril Supplies Key Air Defense Systems Countering Shahed Drones
“We're one of the principal systems to defend against that threat in the Middle East.”
Steckman: High Multiples Keep VC Defense Tech Startups Unaffordable for Anduril
“There are lots of VC companies I would love to buy if I had an unlimited checkbook, but right now the multiples today are, they put it out of reach for us.”
Steckman: Anduril is valued at 10 to 14 times forward revenue
“I think we're like, what? 10 or 14 X forward. Something like that.”
Steckman: Anduril intends to target defense space market gap below SpaceX
“It's a huge open hole, I think, in the market that is something we definitely would run at.”
Steckman: Legacy defense primes get paid to fix mistakes, unlike Anduril
“A lot of our competitors, the really big ones, if they make a mistake, They get paid to fix it. I think if we make a mistake, we lose money, and we lose contracts, so.”
Steckman: Public status brings unique trust in national security sector
“When you are a public company, there is an additional level of trust That is afforded to you that you don't have when you're a private company.”
Steckman: Anduril is a couple of years away from an IPO
“Still a couple of years out, but we're close. We're in the window.”
Steckman: Only a quarter of Anduril's 20 products are cash-flow positive
“So I mentioned we have 20 products and only about a quarter of those are in any kind of rate production and throwing money back to the business. Everything else is in low rate or development, meaning they're losing money.”
Anduril halves traditional defense product development time to 3-5 years
“So in defense, typically in a traditional Sort of product curve at seven to 10 years. We're doing it in three to five, which is kind of part of the magic of the company, and the thing we've become known, known for with our customers is, like, you're effectivel…”
Anduril took 24 months from concept to fielding Roadrunner
“Roadrunner was, I think, 24 months from, like, a back of a napkin drawing to a fielded system.”
Steckman: Anduril spent over $100M developing Roadrunner before generating revenue
“So Roadrunner is a moderately sized air defense kinetic intercept system. And that's, you're over a hundred million easily before you're generating revenue.”
Steckman: Anduril spent up to $40M on a failed early aerial project
“We tried to early on build a pretty sophisticated aerial system. We didn't have the core building blocks. We didn't have the core team. I think we were twenty million or forty million in before we kind of realized that it was a scrap.”
Steckman: Autonomous systems will eventually replace every single military mission
“I believe that that is true in the long run. I also believe that we're not even close to where a lot of people think we are on it. Like I think we're still in the early days on, on tons of this tech. But as time goes to infinity, like absolutely every single m…”
Steckman: Palmer Luckey's brand is uniquely valuable for establishing trust in defense
“I do. Unequivocally. In defense, anything highly regulated, right? Every single thing is a headwind. And so the main thing you do to cut through headwind is you try and establish trust relationships with people who matter. I think Palmer is an N of one when it…”