The closely watched defense and border protection startup, which has seen its valuation rocket to nearly $2 billion in its first three years of operation, said earlier this month it’s received a subcontract award from Palantir Technologies Inc. for the work related to a new high-tech targeting system the U.S. Army is building.
The army’s Tactical Intelligence Targeting Access Node, or TITAN program, aims to connect “sensors and shooters across the air, land, sea, space and cyberspace domains so they can share targeting data in seconds,” according to trade publication BreakingDefense.com.
Anduril, as part of the Palantir team, will design the hardware system in the initial phase for the modernization of the ground station that supports TITAN.
It said it would be bringing “critical modern solutions and emerging tech” to the Department of Defense, a department that it believes has often been slow to adapt emerging technologies from smaller contractors.
The company’s work “will incorporate data integration, fusion, processing, and analytic capabilities using AI (artificial intelligence) and ML (machine learning) to automate and assist the Army in shortening sensor-to-shooter timeline, Anduril said when announcing the partnership.
Or, as Luckey, the founder of virtual reality headset maker by Oculus VR, explained the project on Twitter following the announcement: “We are basically building a giant gaming PC with people living inside.”
Growth Potential
Financial terms of the Anduril subcontract were undisclosed, but the initial contract with Palantir was for $8.5 million, indicating that the Irvine-based startup will get a slice of that amount.
Palantir (NYSE: PLTR) said in mid-January the contract has a potential value of approximately $250 million over all four phases if it is selected to go further.
The results of the first phase of the competitive contract will be used by the Army to decide on awarding future phases of the work and eventual production of the ground station for the TITAN enterprise. Raytheon Intelligence & Space is also competing in the first phase.
Several other Anduril initiatives, including border monitoring technologies it has developed and installed along the U.S.-Mexico border, started with similarly small contracts but quickly ramped up in size after they were proven to be effective. The company’s been reported to have won or be in the running for contracts that could amount to several hundred million dollars’ worth of work since its inception.
Along with border surveillance, Anduril makes unmanned drones and related aerial systems, and is said to be working on cruise missile defense technologies.
Anduril already has plenty of financial and executive team ties to its partner in the project, Palantir, which was co-founded by tech billionaire Peter Thiel. He is a partner in the Founders Fund, which has invested in Anduril.
Several execs at Anduril, including co-founder and Chief Executive Brian Schimpf, are former Palantir employees.
In addition to Thiel’s Founders Fund, other investors in Anduril include General Catalyst and Andreessen Horowitz.
Pentagon Hire
Anduril now has 330 workers in Irvine, with a total of 400 companywide. It was advertising for almost 90 positions on its website as of March 8.
The company announced plans earlier this year to move to a new multi-building campus in Costa Mesa to accommodate its growth plans, and give its tech workers the space needed to build out and test its products.
The space at Costa Mesa’s The Press development will run some 640,000 square feet. It’s among the largest office leases in OC’s history.
Notable new hires include those with military ties.
This month, Anduril hired former senior Pentagon staffer Zachary Mears as a new strategy chief.
Links to Washington will be needed as the startup seeks to grab a piece of the huge defense domain now dominated by giants such as Raytheon, Northrop Grumman and Lockheed Martin.
There’s plenty of money to go around, with defense spending now reportedly heading to more than $700 billion a year.
Anduril, which maintains an office in Washington, said last September that Megan Milam has become the head of government relations, a newly created role. She previously worked for the Department of Defense, U.S. House Appropriations Committee and National Nuclear Security Administration.
Chief Strategy Officer Christian Brose, who works out of the company’s D.C. office, is also a former Senate Armed Services Committee staff director.
Mears previously served as chief of staff to the deputy defense secretary, among other Pentagon assignments.
“While there’s still work to do, I think Anduril offers a platform and approach that is at the core of what a defense prime contractor will look like in 10 to 15 years—the way it organizes, the way it marries software and hardware to deliver strategic and operational outcomes,” DefenseNews.com quoted him as saying.
Defense Hub
Anduril is the fastest-growing area defense firm, and ranked No. 15 on the Business Journal’s list of top aerospace and defense companies in OC by local employee count last year.
Anduril said in July it had raised $200 million in a new funding round, almost doubling the company’s valuation to $1.9 billion.
The 28-year-old Luckey sold Oculus to Facebook in 2014 for about $3 billion.
The young Orange County entrepreneur has made it clear he wants defense work while some Silicon Valley companies about 400 miles north have steered away from it.
Luckey told the Business Journal he is “leading the charge to turn this county into the defense technology hub of America.”
His company sees the need to upgrade U.S. defense capabilities.
Given China’s capabilities, the Pentagon “must recognize that advances in software, not hardware, will define the future of war,” Anduril executive chairman and Founders Fund partner Trae Stephens wrote in a company blog posting dated March 3.
“The military systems that won us the Cold War and fight the War on Terror will not win the conflicts of tomorrow.”
