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Big Tech’s Reluctance for Military Work Boosts Anduril

Anduril Industries founder Palmer Luckey says big tech companies steer clear of U.S. military innovation projects due to a wariness of China coupled with financial and PR reasons.

That’s proven to be fortuitous for the Irvine-based defense and border protection company, which in less than three years has amassed a valuation approaching $2 billion thanks to a series of big military and national security contract wins that more established tech firms in Silicon Valley and elsewhere have shied away from.

Anduril makes a mix of both software and hardware-focused products, ranging from AI-driven programs that when used in tandem with its sentry towers can remotely monitor large areas like military bases and the U.S.-Mexico border, to next-generation drones that provide surveillance and other functions.

The company says it aims to exploit “breakthroughs in consumer and commercial technology to radically evolve our defense capabilities,” and prides itself on bringing new products to market in a matter of weeks or months, rather than years, as is the case with more established defense contractors.

It’s a labor of love for Luckey, who previously founded virtual reality firm Oculus VR before launching Anduril in 2017. He has been among the tech industry’s more outspoken supporters, and willing partners, of the American military.

He has also been a backer of outgoing President Donald Trump, and hosted a fundraiser for him at his Lido Isle home prior to the election.

Anduril in July raised $200 million in a new funding round, almost doubling the company’s valuation to $1.9 billion.

Thoughts on China

The Anduril founder said during a large web-focused conference this month that big tech companies resist working with the U.S. Defense Department on military innovations largely because they fear doing so would anger China and prevent them from making money there.

“China has done an incredible job of using the blocking of access to their markets as a tool to get the culture of western democracies to subvert itself to China,” Luckey said.

“They don’t have to come after us militarily. They don’t have to cut our networks.”

For anyone who thinks this is an exaggeration of consequences from Chinese backlash, Luckey said there’s been “companies dropped and blocked in China for far less. You say the word ‘Taiwan’ and that’s it; it’s over for you.”

He said big tech’s wealth is “wound up with China,” and the companies don’t want to do anything to upset Chinese leadership or risk being blocked from that market, either presently or in the future.

The Anduril founder’s remarks were made during the Web Summit conference earlier this month; the normally in-person event was held virtually this year and was reported to have more than 100,000 online attendees.

Luckey has often commented on the challenges posed by China’s government and the country’s tech industry. He told the Business Journal at the end of last year: “Those are the people that we’re really competing against and kind of struggling to keep up with.”

Employees Scapegoated

At the Web Summit, Luckey also challenged the notion that employee concerns keep big tech companies away from military work.

“A lot of companies have financial and PR incentives to stay out of military work, so they’re happy to use those employees as a scapegoat to say, ‘We’re listening to our employees,’ which contributes to this idea that workers of Silicon Valley and other tech hubs are universally opposed to this idea,” Luckey said.

Basing Anduril in Orange County has helped the company attract more talent than would be the case up north, he has said in prior talks.

Busy Year

Anduril’s won several large military contracts the past year.

The startup was among 15 companies awarded Air Force contracts that could be worth up to $950 million each to develop a sensor-based system across all branches of the military, the Defense Department said in September.

Anduril has been rapidly expanding and has set up shop in Boston and London in addition to Irvine, Seattle and Washington, D.C.

It currently lists nearly 100 open positions, primarily in Irvine and most of them engineering and systems-related jobs.

Luckey, 28, founded Oculus VR, a virtual reality headset developer that started in 2012. He sold the then Irvine-based firm to Facebook in 2014 for about $3 billion before starting Anduril.

Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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