A quick recap of some, but certainly not all, of Palmer Luckey’s more notable activities in 2019:
• Got married and livestreamed the ceremony using virtual reality technology;
• Took Irvine’s Blizzard Entertainment to task (via Twitter) for their heavy-handed actions against a professional gamer supporting protesters in Hong Kong, had earlier suggested local employees cut by the software giant come work for his firm;
• Appeared at length on CNBC during one of the better-performing days for the stock market, racking up a huge amount of free press for his company;
• Spoke at Simi Valley’s Reagan National Defense Forum alongside Amazon’s Jeff Bezos and other notables, was “the only attendee wearing sandals and shorts,” noted a Washington Post story, and;
• Capped a Business Journal Excellence in Entrepreneurship award thank-you speech in March by throwing shade at Silicon Valley, saying that area’s “weather is worse, the people are worse, the costs are worse,” than in OC.
In between those headline-making events, Luckey also conducted a little business.
His Irvine-based startup Anduril Industries, which makes high-tech surveillance systems, as well as other AI-powered military technology and products, is quickly gaining a reputation as one that can successfully challenge defense stalwarts such as Lockheed, Raytheon and Northrop Grumman.
$1B Valuation
That message is catching on with customers—users of Anduril technology now are reported to include a number of homeland security and and military agencies, both in the U.S. and abroad—and investors.
“The military’s already the vast majority of our business,” Luckey said.
Anduril, formed just three years ago, in September secured $127 million in a seed funding round—its backers include Andreessen Horowitz and Founders Fund—putting its valuation in the $1 billion range.
It’s the fastest an area technology company has achieved unicorn status in some six years, when another Luckey-founded company, virtual reality headset-maker Oculus VR, vaulted past the $1 billion mark in a matter of years and was snapped up by Facebook for about $3 billion.
Luckey in late 2018 was quoted as stating there have been no new defense companies worth more than $1 billion created since the end of the Cold War. It took him less than three years to change that with Anduril.
Luckey’s successful second act in OC via Anduril has earned the 27-year-old our nod as Business Person of the Year in the technology sector.
Silicon Valley’s Loss …
Luckey sold his Oculus VR virtual reality company to Facebook in 2014. The sale of Oculus vaulted Luckey’s wealth to a figure the Business Journal estimates about $800 million.
After an unhappy time in Silicon Valley post-sale—“I used to work for Facebook. But I was fired,” he said at March’s Business Journal Entrepreneurship event—returned to Orange County to found Anduril in 2017.
Among other offerings, the new company aims to create a high-tech virtual wall as an alternative for, or complement to, President Trump’s physical wall along the border with Mexico.
Luckey says he’s shaking up the traditional U.S. defense contracting industry with his system, which can detect and identify motion within a 2-mile radius.
The company’s boarder-protection system, called Lattice, uses radar sensor-clad surveillance towers, drones, virtual reality technology, cameras, artificial intelligence and computer vision to monitor large areas.
He says traditional U.S. contractors are lacking in those types of areas, though Anduril’s real competition when it comes to his small and nimble startup is China’s technology sector.
Big defense firms “aren’t the bad guys” that Anduril is up against, Luckey said.
“In this case the real Goliath is the Chinese technology industry,” Luckey says. “Those are the people that we’re really competing against, and kind of struggling to keep up with. They’re the people who are making technology that directly compares to what we’re doing.”
Luckey says he expects the U.S. military to use the company’s systems on the battlefield. Among other technologies, the company is reportedly developing attack drones that can knock enemy robotic fliers out of the skies.
Different This Time
The high-tech space of Homeland Security has been trodden before, most notably by Boeing’s attempts to create the SBINet virtual border wall. The U.S. government canceled its role in the troubled program nine years ago.
This time is different, says Luckey.
“We can have a perfect picture of everything that is coming across the U.S. border,” he told CNBC in November. “We have a perfect picture of every vehicle, every person, every drone. Maybe not perfect maybe just 99% right, but hey that’s a lot better than what’s out there right now in a lot of these places.”
The system is being tested along part of the U.S.-Mexico border to prevent unauthorized entry into the country.
Elsewhere, Anduril’s tech will be helping to protect four U.S. Marine bases.
The contract, reportedly worth $13.5 million, covers “autonomous surveillance counter-intrusion capability” at two bases in Japan, one in Hawaii, and one in Yuma, Ariz., near the U.S.-Mexico border.
New HQ
Anduril last year moved into a recently renovated building along Jamboree Road, near the airport.
The company has about 160 employees, with the “vast majority” based in Orange County according to Luckey; its website lists nearly another 30 openings, both for software and hardware-related jobs.
“Orange County’s a good place to be. It’s a good place to hire. It’s a good place to recruit people,” Luckey told the Business Journal on the last day of 2019. “If you want to import people from all over the country, Orange County is the ticket.”
“I have fun here, and it’s a lot easier to convince other people to have fun here, too.”
What’s Next for Luckey, Anduril
The Business Journal caught up with Palmer Luckey on New Year’s Eve, just as he was heading off to festivities after taking one of his helicopters for a spin. Here are some of his thoughts on the direction of his Irvine-based defense and border protection startup Anduril Industries.
On China
While he wants Anduril to challenge the U.S. defense establishment’s dominance in cutting-edge areas, the real target is the “Chinese technology industry.”
U.S. defense companies are “just really good at building things that we’ve always been good at building—fighter jets, aircraft carriers and submarines. Those aren’t the tools that are going to win the next war alone.”
Anduril’s Products
Anduril plows money back into R&D. “We’re going to keep doing that for a very long time. We develop a lot of technology totally on our own dime. And it’s ready to be sold to the government. By the time that we’re selling, it’s a working system, not just a white paper or a concept.”
“The military’s already the vast majority of our business,” Luckey said, though “politically right now border security gets a lot of attention” in the press because of the situation on the U.S. southern border with Mexico.
2020 Plans
“Things are going pretty good. Still hiring, still selling.”
Anduril counts about 160 employees, with the “vast majority” based in Orange County; more hirings are planned.
“We’re having fun, doing cool stuff and making money. It doesn’t get much better than that.”
— Kevin Costelloe
