--:-- Host: The fact that this movement moved faster than any of us anticipated says something about the organic nature of founders wanting to build in the physical world.
--:-- Katherine Boyle: There is no negative way to interpret American dynamism. That's about improving the state of education, of housing, of defense, of energy. It's all these things that are the cornerstones and building blocks.
--:-- David Ulevitch: It was shocking to Silicon Valley. It was not shocking to Washington.
--:-- Katherine Boyle: What would happen to our supply chain? What are all the shipping and logistics issues that would be created? What would be the energy impact?
--:-- David Ulevitch: A lot of people say there's going to be a war for space, but I think it's important people recognize there's going to be a war in space. That work has to start today. It can't start 20 years from now. It has to start now.
--:-- Katherine Boyle: A lot of our companies are focused on the fight of the future, not the one happening today.
--:-- Host: The United States of America has embodied excellence for centuries. Whether it was the Wright brothers taking flight in 1903, or the invention of the transistor in 1947. How about the moon landing in 1969? Or the birth of the internet in 1984? All of these humanity-shaping innovations were built on American soil. So when did it become taboo to believe in America?
--:-- Well, three years ago, a16z general partner Katherine Boyle wrote a thesis called *Building American Dynamism*. Like few others at the time, Katherine's words were unafraid. She discussed America's apathy toward progress and the country's institutional failure. But equally, that decline did not need to be our destiny.
--:-- In coining the term American dynamism, Katherine said, quote, "It's the recognition that seemingly insurmountable problems in our society, from national security and public safety to housing and education, demand solutions that aren't simply incremental changes that perpetuate the status quo. These problems demand solutions from builders, and it's never been more vital that startups tackle these serious American problems." End quote.
--:-- So today, for the first time ever, you'll get to hear Katherine and her partner in crime, a16z general partner David Ulevitch, discuss the origins of this thesis, which quickly led to a meme and now is a $600 million dedicated fund. So why was American dynamism controversial in the first place? And what will it take to bring Washington and Silicon Valley back together? Plus, how dynamic is America in today's great power competition? And where are we the furthest behind?
--:-- In this episode, we tie these questions together by discussing the third generation of our American Dynamism 50 list, a compilation of top companies building toward the national interest with a focus of this year's list on the Indo-Pacific. If you'd like to check out the full list of 50 companies from all over our country, head on over to a16z.com/AD50. And of course, we'll include a link in our show notes. Okay, let's get started.
--:-- Host: So it's been about three years since the term, the thesis, American Dynamism came to be. Tell us more about the origins and where we've come since then.
--:-- Katherine Boyle: Do you and I constantly reflect on this? Because I am the eternal optimist, early stage investor, only see roses. And if you had told me three years ago that we would be where we are today as a thesis, as a fund, as a group of founders who are building the national interest, I wouldn't have believed you. There's just no way that anyone could have predicted how quickly this movement took hold.
--:-- People inside of Andreessen Horowitz know that I have this little framework for how I describe the sort of meme magic of Andreessen Horowitz. And I say we always go from thesis to meme to product. I would have assumed that sort of meme cycle of putting out something that's a really well-thought, serious piece of, "This is our thesis, this is where we're going to focus," seeing the broader community meme it and allow it to evolve with the help of founders and engineers – I thought that would take 10 years. I thought we'd be sitting here in 10 years saying, "Okay, we have a fund, it's incredible that American dynamism is something that every fund is taking seriously."
--:-- The fact that we've done it in three and the fact that this movement moved faster than any of us anticipated says something about the organic nature of founders wanting to build in the physical world, coupled with things like the war in Ukraine. We launched the thesis three weeks before Russia invaded Ukraine in 2022. There were a number of factors – the combination of the founders, the moment, the capital – really saying this is something that is needed. And it resonated across the board.
--:-- David Ulevitch: Yeah, I think it's happened faster than either one of us ever expected. All of the demand pools that Katherine just mentioned were there. The world needed this. America needed this. People needed change. And they wanted people to start building for things that mattered.
--:-- But I think there was a supply side change as well. All the engineers and founders were hungry for doing something that was more meaningful. They wanted to tackle bigger problems. They saw things like SpaceX starting to really happen – launch was happening. And this idea that that could be made real seemed much more tangible than ever before. People watched what happened with Tesla. Remember, it started with the Roadster, but then all of a sudden it became commonplace. A supercharging network was created.
--:-- I think people just recognized, "Hey, wait a minute, I don't need to be optimizing ad clicks." That's fine if they want to do that, but instead they can really spend their time building things that they feel really proud about, that really serve an important mission. Even in some of the origins where some of the AD companies started, it was after Google bailed out of Project Maven. People in Silicon Valley were really trying to figure out what was important, how do I want to spend my time. Those early seeds blossomed into what Katherine now coined as the American dynamism practice. Even though the practice and the fund came a little bit later, there were lots of seeds that had been planted as early as 2018. I think you're seeing a crescendo that had gained momentum, and then we were able to really capitalize on that. I actually still think we're just in the earliest innings.
--:-- Host: Completely. Can I just ask about that in particular? The note about the fact that there was a period of time where many technologists were not just careful with supporting the national interest but actually in some cases actively against it. They weren't able to support some of the initiatives that now, quite frankly, the Overton window has changed and now they're not just willing but jumping to support those things. But you mentioned memes, Katherine. The term American dynamism – did this idea of supporting the national interest need a rebranding? And how effective was something like American dynamism, which is so compelling, what role did that play?
--:-- Katherine Boyle: You said something interesting: "Did it need a rebranding?" There was no brand. There was no concept. The idea of building for the national interest when we said it was extremely controversial even three years ago. The reason why I think people were stunned was partially because of the name, because we actually said the word "America." For decades, it was very taboo to say you were building only for one country. Tech was by its nature global. You build software, you want to see it go completely international.
--:-- The idea that you would say, "No, actually there are companies that by law can't sell to other countries. And we have an entire regulatory regime around how those companies are built, who they can work with, who our allies are. And we need to respect that. We actually need to build a practice because those companies are going to be the next phase of innovation." Today it's seen as an obvious thesis. But even a couple years ago that was seen as, "Are you crazy? Are our limited partners going to get behind that? Are engineers going to want to say they're building for the national interest?"
--:-- The language that we used was very specific because it signified a specific type of company that is highly regulated, that builds in the physical world, that has to worry about the status of their engineers and whether they can get top secret clearances. We named it dynamism, which is so important to the actual thing that we are building. But the fact that we said "America," I do think was shocking. I still think it shocks people. But when you actually look at the companies and how they're building, they're working with the different states that they operate in. They're selling to various levels of government and they understand the seriousness of building a company like that where the language actually does matter.
--:-- Host: Can you comment on that from the perspective of it being controversial when it first came out? Obviously you take a firm like a16z. We do have LPs. We do have other funds even within the firm. Can you talk a little bit more about that inception period and the reaction within the industry?
--:-- David Ulevitch: It's always been funny to Katherine and I when we think about the occasional criticisms we would hear. People sometimes would say, "American dynamism, it doesn't mean anything." But obviously it means something because it's galvanized the whole movement. And they would say, "It's just this marketing thing." And I would say to myself, "Wait a minute, what company doesn't have marketing? What enterprise software company is not going to have a marketing team or a marketing department? Who doesn't put together marketing materials to explain what they're about, what they stand for, what they do?" You say it like it's a pejorative, but what kind of idiot would run a company without marketing? If we went to a board meeting and a company said, "We're getting rid of marketing," that's not happening.
--:-- The mental gymnastics that people now go through to avoid saying "American dynamism" when they really want to say it. We have competitors that go to incredible lengths to come up with alternative phrasing to not say American dynamism – "industrial revolution," "resilience." Those are all good words, but they're all encompassed by American dynamism.
--:-- The other thing about American dynamism was just so clear early on that it's only positive. It only has a positive connotation. There is no negative way to interpret American dynamism. It doesn't mean that the rest of the world has to be conquered or suffers. All it says is that we want to promote American dynamism. People can hear that and say, "That's about improving the state of education, of housing, of defense, of energy. It's all these things that are the cornerstones and building blocks."
--:-- There wasn't as much criticism. People just brushed it aside like any new thing, or they didn't want to acknowledge how good of an idea it was. But because it was such a good idea and it really resonated with the builders and the founders, it galvanized this overwhelming momentum. Like Katherine says, the meme takes hold quickly. Good ideas do spread virally very fast.
--:-- With our LPs, even today, there is still a little bit of an effort to convince them it's not just about defense. Defense is an important part of it, but it's not just about defense. Now, three years in, they recognize that things like public safety, which they had never really imagined as being part of American dynamism, are now increasingly important cornerstones of what we're doing.
--:-- Katherine Boyle: One thing I'll add to what you just said: it was shocking to Silicon Valley. It was not shocking to Washington. I think that's also really important. The term American dynamism is a term that you would hear in D.C. in all sorts of contexts to refer to the innovation they care about. It was not surprising at all to Washington. I actually think it was embraced immediately. But that goes to show you the gulf between how D.C. views innovation and how Silicon Valley views innovation, and how in some ways this practice wants to push those two worlds closer together.
--:-- It certainly wasn't controversial in Washington. When we go to D.C., it is exceptionally embraced. People are so excited that Silicon Valley is building for these categories. From day one, the people in Washington got it. It was more of a surprise for the people in Silicon Valley, many of whom still had funds that were operating in China. Now I don't think it's a surprise for anyone. I think everyone gets the thesis and is on board with the message.
--:-- David Ulevitch: There were so many other terms that people would try to use before American dynamism that either made no sense or didn't capture it. Forget about the fact that they didn't galvanize a lot of excitement, but "deep tech," "frontier tech," "hard tech." What does "hard tech" mean? Lots of things are hard. What does "deep tech" mean? We never used those terms because they just never made any sense. And they also were just boring, stupid terms. They weren't galvanizing, that's for sure.
--:-- Host: Maybe one thing to clarify for folks, because I think you called it out. A lot of people associate American dynamism specifically with defense and maybe aerospace. But there's so much more to that story. I'd love for either one of you to clarify: what are the other areas of American dynamism? How do you view the overarching nature of supporting the national interest?
--:-- David Ulevitch: Anybody that thinks that they're building in the national interest can take a really broad lens as to what that means. We welcome those people. As Katherine will say, the tent is big and we welcome anybody into that tent. It doesn't mean we're going to be investing in all those areas. But if somebody is working in areas of education, agriculture, manufacturing, material sciences, battery sciences, different kinds of chemistry and chemicals that are really critical to our national and industrial supply chain, energy – we have this insatiable thirst for energy in this country – all these things are part of American dynamism.
--:-- Defense is obviously a part of it, and the manufacturing base, and the entire defense industrial base and supply chain that goes along with it. Logistics, trucking – there's all these things that people underestimate the impact that technology can have in these categories. All these things have such a positive and beneficial impact on America. Healthcare and education, those things are just key parts of what people think of as part of the American dream.
--:-- Katherine Boyle: I always say, if there's an executive department in Washington that exists to regulate or oversee an industry, that is likely American dynamism. So think Department of Energy, Department of Defense, Department of State, FBI. We see public safety as a huge component of American dynamism. It really is these categories where there's strong civic interest, where Americans say, "This is why we have a government. These are the services that government is supposed to support us on."
--:-- As DU said, it's a very wide array of places that we cover, but the real fundamental reason why we built a fund and a practice is because these companies sell in very different ways than all of the other companies in our portfolio. This is something that DU and I saw in the early days before we even had a practice. These one-off companies had extraordinary business models – whether it's something like Anduril or SpaceX or Flock Safety, they're all very different – but government is their core customer and they have to figure out how to work with their core customer in a very bespoke way.
--:-- In D.C., they have what they call federal practices. What does a federal practice look like? You've never heard that word in Silicon Valley. I often say D.C. got what we were doing a lot earlier than the people in Silicon Valley. But now it's just an obvious thing. Of course there's all these companies that want to work with government. They're going to need different types of operating teams. They're going to need a different go-to-market motion. They're going to have to understand this weird term called "government affairs." These companies operate very differently.
--:-- Host: I want to pivot to talking about the American Dynamism 50 and talk about some of those companies that are building toward the national interest. This is the third year of the AD50, and every year you've chosen to shift its focus and talk about something specific. This year, it is the Indo-Pacific. Can we just start there? For some folks, that question might be less obvious. Can you speak to why this year's AD50 is focused on the Indo-Pacific?
--:-- David Ulevitch: It's a good call out that every year we sit around and say, "What is the big story of American dynamism for the year?" Last year, we really focused on the intersection of artificial intelligence and American dynamism. We've been very focused on investing in that trend, but also we've seen a lot of robotics companies.
--:-- This year, we really said, "What is the commonality between our portfolio? What are our companies talking about?" What has really been the focus, not only in Washington, but also of our companies, is this sort of Indo-Pacific, but Taiwan. That is the thing they are talking about. That is the thing they are preparing for.
--:-- We looked through our portfolio. It actually came up because I was fortunate enough to go with a group in government to the border of Ukraine. One of the things when I came back, I looked at our portfolio and I said, "We've really been investing more for the fight of the future." To use David's term, a lot of our companies are focused on the fight of the future, not the one happening today. When we sat down and looked at our portfolio, we were overwhelmed with just how many companies are really focused on this five to ten year out view of what the world could look like versus what's happening on the ground today. We really wanted to highlight that in the companies that we chose this year.
--:-- The other thing that has shifted us toward what is happening in Taiwan and what could be the ramifications for the United States and her allies: we have a company that makes drones. It's an American-made drone manufacturer. Most of their parts and components come from the United States. But they have a battery that comes from China. They sold some drones to an organization in Taiwan, and they got sanctioned by China. They were no longer allowed to buy batteries from China. Obviously, that company figured out some alternative path to get batteries from another country. That's okay, although it's difficult because a lot of batteries are manufactured in China.
--:-- That moment really made me say, "Hey, wait a minute. This isn't just about getting ready for the next kinetic fight with a near peer or exact peer adversary. It's really about understanding what are all the different components and things that would be affected if we actually got into a major conflict in the Indo-Pacific region." What would happen to our supply chain? What do we get – motors, actuators, components – that we need for all the things that go into our manufacturing base, our defense industrial base? What are all the shipping and logistics issues that would be created? What would be the energy impact if we lost our ability to trade and bring in goods from the entire region, not just from China, but from Vietnam, from the Philippines?
--:-- What are all the things that would change if we actually got into a kinetic fight in the Indo-Pacific region? Do the old platform carrier groups work where we can bring a flotilla around an aircraft carrier of destroyers and have a week to get ready for a fight? Or do we need a thousand drones that are autonomous in a swarm? Do we need to rethink the way submersibles work and the way that unmanned surface vessels work?
--:-- When we saw a little taste of this in Ukraine, this is the moment in time to start asking those questions and say, "What are the companies that are going to matter if we get into a real conflict?" Hopefully we never do. But if we do, what are the things that are going to matter most? This is just the beginning. I think you'll expect us to spend more time thinking about the fight of the future, not just from a kinetic lens, from an actual armed conflicts lens. But what does it really mean if our supply chain lines got disrupted? We got a taste of this during COVID, but what happens when it really freezes and really paralyzes? How does America respond? How do we get ready? And what are the opportunities for our companies?
--:-- Host: Yeah, what does it mean to be really prepared? At the outset of the AD50, you actually paint this scenario. To your point, hopefully this never happens, but you say this is not an abstract risk. The PRC is engaged in the largest peacetime military buildup since World War II with an industrial advantage in warships, drones, and other weapons of war. It has spent years pressuring the U.S. and its allies, attacking civilian vessels, cutting undersea cables, and engaging in simulated war games just miles from Taiwan's shores. It is an expansionist power preparing for war. So if this is true, how do we prepare? And also, maybe, how prepared are we today?
--:-- Katherine Boyle: It's not abstract. As you mentioned, our companies are getting sanctioned. It is in some ways surreal to work with great founders that are finding out that they're sanctioned by China. It is a very real risk. But the thing that should be hopeful for us is that this is why the American dynamism practice exists. Five years ago, people didn't see that this was an actual reality. We now have a generation of founders who have started building and are meeting the demands.
--:-- The AD50 list, which I encourage everyone to read because I think it answers your question very deeply, shows what all of these companies across different sectors are doing and how they are going to help prepare. I think what we hope people take away from this list is that there's a lot of sometimes hysteria about, "It's terrifying that we're not more prepared" or "It's terrifying that this could potentially happen." And here are 50 companies that have been working on this, putting their head down, building in the physical world, doing the hard thing day in and day out, recruiting talent to this mission. We should be celebrating that they were early and right.
--:-- Host: Let's jump in there. What are the categories that you would maybe break down as really critical to us being prepared? And then maybe let's talk about some of those companies in each of the categories.
--:-- David Ulevitch: Our view, which is shared by many people in the government, is that having overwhelming capabilities is the best deterrence and the best defense. That means making sure from a kinetic capability: do we have the most advanced missiles? Do we have hypersonic capabilities? Do we have the most advanced electronic warfare capabilities? Can we navigate in contested communications environments? Do we have total space domain awareness? Do we have complete superiority in the space domain?
--:-- I think people kind of laughed a little bit in Trump's first term when he created the Space Force. They had the Star Trek uniforms. But people don't understand that wasn't early. Maybe it was on time. If anything, it was late. The space domain is one of the most important domains as we think about the fight of the future and what that looks like.
--:-- I think cybersecurity – not just cybersecurity for enterprises and for individuals, but cybersecurity for our entire industrial manufacturing base. All these machines and systems and industrial control systems we have – the water treatment plants, the electrical grid, the utility. Cybersecurity for that entire domain is critically important. We've now connected all these things, whether it's on warships and the naval fleet, whether it's in the Air Force and in the air, or if it's just how we actually live our lives in the United States. All these things are now internet connected, internet controlled, internet monitored. There are a lot more cybersecurity companies today that are completely focused on an entirely new threat surface around the defense industrial base that needs to be protected, the utility and energy grid in the United States.
--:-- The other thing is we need to be able to generate and transmit, move energy very rapidly and at massive scale. There are a lot of energy projects that I think are critically important to having robust and reliable defense in the United States and abroad, wherever we need to bring the fight.
--:-- Host: To your point about the fact that we can even call out 50 companies each year building towards these spaces versus maybe the perception that the everyday American has, which is that there's like a few primes and that's it. I think that's important to highlight, that there are numerous companies building these new capabilities and they should be household names.
--:-- David Ulevitch: Not only was it not hard to find 50 companies, there's way more companies. We can't possibly include them all. We actually could have made the AD250, but we just try to draw the line somewhere so that we think it's a great list. It is not the exhaustive canonical list.
--:-- Host: Katherine, do you want to talk about some of the defense companies?
--:-- Katherine Boyle: Yes, defense, but I also like to call out production. These companies are a little different when people think of the primes. What the primes are really falling behind on is how quickly and cheaply they can produce what's known as attributable systems. Instead of creating battleships and aircraft carriers, can you create small modular products – ASVs, autonomous surface vessels? Can you build the satellite bus very quickly? It used to be that if you wanted to put something in space, it would take you three to five years. Now it can take you less than three months.
--:-- The common theme among all of our defense companies is focus on modularity, focus on attributable systems, and focus on production. Everyone is familiar with the great work that Anduril is doing across a number of programs that are going to be very important for the region. We're also investors in Saronic, which is focused on maritime and attributable autonomous surface vessels that they've built in various sizes that have been very important to the U.S. Navy. We're investors in Apex, which is similarly building small modular buses that can be sent to low Earth orbit for various different types of payloads.
--:-- I like what David said about space domain awareness being important. A lot of people say there's going to be a war for space, but I think it's important people recognize there's going to be a war in space. When you have that much critical infrastructure in low Earth orbit, it will become a target. You have to be able to send up buses as quickly as possible with different types of payloads that can do monitoring, that can potentially take both offensive and defensive actions. Companies that are doing that and building these attributable systems for space will be even more important in the future. High volume production and focus on the attributable nature of a lot of these systems.
--:-- Host: It's encouraging for sure to see the 50 and, as you said, the many hundreds of companies building in this space. But I'd love to probe you on the question of if we're realistic, where are we furthest behind? And maybe another way to pose that question is: where would you like to see more founders working? Where would you like to see more investment going? Where would you say that there's a big enough gap that we need to fill?
--:-- Host: It's a good question. I think we've always shied away from giving the like requests for startups ideas to people because we just think the best founders come up with the best ideas and open our eyes to a huge gap or a huge opportunity. That said, we are at this really interesting technology moment where manufacturing is being reassured. AI is going to have just a tremendous impact on the way we think of technology, whether they're kinetic systems, whether they're targeting and guidance systems, whether they're autonomy systems. You're going to see robotics play just a massive role in manufacturing and driving rapid-scale manufacturing.
--:-- I think Elon made a comment once because he's working on a sort of humanoid robot where he thinks there might be three robots for every human on Earth. So I think that would put us somewhere between 22 and 30 billion robots. Let's say he's just off by half. Let's just say he's wrong by a factor of two, which I don't know, but that still will be 15 billion robots. That's a lot of robots. All those robots are going to need software, computer vision capabilities. They're going to need motors and actuators and all kinds of other components that need to be made. And if we are in a fight in the Indo-Pacific region, we're not going to get those motors and actuators from China. Shenzhen is like the capital of that kind of component. And so we need to have a really, really robust industrial supply chain to get those things.
--:-- Recently, I was with some government officials from Europe and they were asking, what can Europe do? There's no growth. There's all these issues in Europe. And she said, look, Europe has a huge opportunity. And there's countries like Germany that have always been leaders, whether it's in chemicals manufacturing, industrial manufacturing, automotive manufacturing. They have a real opportunity to be the center of the universe for the next industrial age that's robotic driven and AI driven. I think the United States has that same opportunity. I think our neighbors to the north and south have similar opportunities. I think there's opportunity everywhere, but people need to figure out what are the veins that they want to mine and really go after.
--:-- Sometimes if we really talk about all the areas of opportunity, it can make you quite cynical or despondent or think that we're totally screwed because everything is terrible, everything is wrong. We're so dependent on China from a supply chain standpoint. And yet we know that this is actually what America does her best. This is when people really get resourceful. They find ways to solve problems and build new companies. And I think we're starting to see the beginnings of that now. And I think we're going to see a lot more of that going forward.
--:-- One area I'll highlight is the manufacturing area. And I think what should make people hopeful is a couple of years ago, there was a view in Silicon Valley that if you wanted to build anything to do with manufacturing, you needed to manufacture the product and you had to be a prime. And that actually was seen as somewhat adversarial to the traditional companies in Washington. And of course, that had to be the way that you would do it 10 years ago. Startups weren't working with these companies. And so Anduril had to pioneer that we are going to be a new prime. We have a number of companies in our portfolio that are manufacturing aerospace and defense parts, as in the case of Hadrian, where the factory is the actual product. They are building factories that are going to support the existing defense industrial base.
--:-- We're also investors in Senra, companies that are building wire harnesses, the things that actually go into these products that are very important for defense, and they can sell to both primes and new space and new defense. And so I think that's what's also exciting as you're seeing the focus on not just building the products and vertically integrating, which Silicon Valley is very good at, but you're also seeing these companies form that really want to be the backbone of the new defense industrial base. And they have figured out new ways to manufacture faster. They bring in software. So for people who are really looking at, okay, what can we do in manufacturing? How can we reassure? You have these companies that are really, I would say, doing a lot of R&D on this automation that you can bring to the factory floor. And that should be very exciting for people.
--:-- There's also kind of a vibe shift in Washington where companies that work in the manufacturing and industrial spaces or the chemical spaces, there's a lot of places in this country where it's very hard to open up a new factory, to start a new factory. There's all kinds of regulatories and restrictions and things that make it difficult to do the hard work that is required to build some of these kinds of facilities. You know, these are not just rocket fuel facilities, but even just basic industrial facilities and manufacturing facilities. And there's an appetite and I think an awareness in Washington. And it's even quite a bipartisan thing to recognize, look, we got to make it easier to allow founders and companies to build these kinds of facilities. We have to not allow too much red tape to get in the way of us opening up the new kinds of whether they're shipyards or manufacturing facilities that are desperately needed because that work has to start today. It can't start 20 years from now. It has to start now. And I think that that has been a major shift in Washington.
--:-- David Ulevitch: Completely. And maybe we can just touch on that directly. It sounded like you try to stay away from a wish list in terms of what you want founders to build because there's just so much opportunity. Maybe the same question going for the kind of regulatory action that you might like to see in Washington. Are there specific actions from the policy perspective that you would like to see that would take these 50 companies and many more and allow them to thrive and ignite the kind of innovation and bring in the kind of founders that you know exist in technology and otherwise into this sphere? Is there a wish list, especially now that we have a new administration?
--:-- Katherine Boyle: I think there's a very long wish list, but some of the basic ones are just like, look, there's lots of opportunities that the government wants solved. They just need to commit that, look, if someone's going to go after these problems, they're going to pick a winner and guarantee an outcome. We will happily fund the R&D efforts of our companies. And they don't have to say that we will guarantee it'll be this company. That's okay. We can take that risk. We think we can go find the best companies. But they sometimes need to say, look, if you go build a hypersonic missile at this price point, we will guarantee that we will buy a billion dollars worth of them. We will provide the greased wheels to enable facilities and manufacturing and factories to be built and created. I think the government can really be a partner and the regulators can really be enablers and not people that are putting up roadblocks and red tape. The regulators can really say, hey, look, these are the priorities and the projects that matter to the United States over the next 5, 10, 15, 20 years. And if you build them, we will commit to supporting them and buying them. And they will have a process that favors the best product and the best companies and not just the legacy incumbents.
--:-- David Ulevitch: I 100% agree with that. And D, you and I have now been going to Washington for a decade, right, saying the same thing over and over and over again. You don't have to have procurement reform. We're not Pollyannish. We don't think there needs to be a big thing. You already have the mechanisms to be able to award contracts to the companies that are producing the best products. You just need to use them. And I think I'm more convinced that there is a cultural problem inside the DoD. And the thing that I'm most hopeful about is that you're finally seeing people across the DoD, but particularly in Secretary Hegseth's confirmation hearing, he explicitly said we need new technologies to be in the hands of the warfighter. Hearing it at the highest level during a confirmation hearing, that that is going to be one of his priorities, makes me think that there is going to be a strong cultural change and that it's not just going to be lip service anymore. We need to actually use the authorities we have to be able to give the best companies contracts, to make them compete against each other, to use the beautiful system of capitalism that works in every other industry, aside from defense, right? And actually have these companies compete, best product wins, we buy a bunch of them, and that company is the one that's going to continue serving a contract. And we have not had that for decades. And that is why the budget has ballooned. I think now that you have DOGE, other initiatives, and particularly an administration that is focused on saving the taxpayer money, they're going to find that these companies are actually, that is their goal, to save the taxpayer money, to produce the best products, the cheapest, the fastest, and to make sure they get into the hands of the warfighter when needed.
--:-- Host: Katherine, you mentioned this gulf between San Francisco and Washington. And as you're speaking, I'm reflecting on the fact that so many technologists perhaps do gravitate towards the consumer sphere because there are clear rules to the game. There are clear things that if they compete, if they do the best, they win. And as you're talking about some of that reform, I also wonder what else we can do to incentivize technologists to participate in this space. Even within the 8050, we've mentioned Anduril and Palmer Luckey, previously from Oculus. We see a few other founders on the list. Robinhood co-founder Baiju Bhatt now creating Aetherflux. What else can we do here to get those kind of individuals participating in this road towards American dynamism?
--:-- Katherine Boyle: Honestly, I think there are so many people who want to build for this category. It is incredible to see people like Baiju say, hey, I built a massive, important company called Robinhood, and now I'm going to do something even harder. It is incredible to see that level of talent wanting to come into the sector. So I don't think we have a talent problem. I don't think we have a recruiting problem. I think if the government says, hey, we need X, Y, and Z, X, Y, and Z will be built faster than they can possibly imagine. The biggest problem is we need to procure the things that are built, the best products, and we need to be ruthless about what is the best. Not whatever company I've known for 50 years is the person I'm going to give the contract to, which is how Washington used to do business. And I think we are at this moment where enough people have realized that is not the best way to do business. We need to give it to the best companies and we need to be ruthless about the competition and make sure that the best companies are being awarded contracts. So I'm hopeful. 10 years in, I'm hopeful. I'm hopeful. This is the moment. Again, it's always roses to me, so maybe I'll be wrong on this, but I am very hopeful that we're finally going to see that.
--:-- Host: Let's also talk about geography. So something that I thought was interesting from this list is that we had 15 cities on it. The three cities that dominated were LA, San Francisco, and DC at 17, 13, and four companies respectively. Perhaps to some folks, you know, they hear us talking about DC and Silicon Valley. So perhaps those two cities are no surprise. But for those who maybe aren't familiar with the gundo, for example, why LA? Why has that become such a welcoming place for American dynamism companies or anything you'd call out there about how not just at the federal level, but the regional level can play a role in really fostering that kind of engagement.
--:-- David Ulevitch: Southern California and Los Angeles in particular have always been huge epicenters of both innovation, the defense industrial base, it's been the home to JPL. NASA's had a major presence there. And so there's always been a bunch of aerospace engineering history and just legacy there. And then Elon put SpaceX in El Segundo, which means all the talent that he started to aggregate came to that area. And so I think that's one of the reasons why LA tops the charts and El Segundo in particular. And then Southern California, Camp Pendleton is based there. Naval Air Station Miramar is there. San Diego has a major military presence across the Marines and the Navy. I think the Blue Angels are still based in San Diego. And so there's just been a huge ecosystem down there, which makes it a great place to build.
--:-- The other thing I would say is you need to know what an incredibly high bar for talent looks like. So if you worked at an Anduril or a SpaceX or a Palantir, you know what startup success looks like. You've been in a company where you get to work with the smartest people, working the longest hours, shipping the fastest, delivering just exceptional outcomes and exceptional results. But now a lot of those founders, they don't have to be in Silicon Valley. We're just finding more and more of those founders. Take Garrett from Fox Safety. He's based in Atlanta. He did Y Combinator almost a decade ago, but he's now based and built the company in Atlanta. And we're seeing more and more founders like that. In fact, Katherine mentioned Apex Space. Ian Cinnamon has spent time in Silicon Valley, but is now building Apex Space in the LA area. And he's doing that because the customers are there. There's a whole ecosystem developing there. And so the flywheel to build a real startup ecosystem is really happening there where there's talent. There's other startups and companies there. There's customers there. There's the ability to do manufacturing there. There's much more of an industrial ecosystem down there. And so they're right in the epicenter of where it's all happening.
--:-- Katherine Boyle: If I can make a prediction, I actually think we shouldn't sleep on Texas. Austin is really becoming a really interesting production and manufacturing hub. I think part of the reason for that is because of Elon and moving so many of the facilities for both Tesla to Austin. That has really changed the game in terms of the talent that's there. But if we're going to make predictions about 10 years from now, I think Austin will definitely be a manufacturing hub. And Texas in general will be a good place to build.
--:-- Host: Yeah. What is there to say about how these different cities, instead of being hostile as we have seen, some jurisdictions be to whether it's defense or technology overall, how should cities be thinking about welcoming these different companies? An example, obviously, is Anduril is building Arsenal One in Columbus, Ohio. We also saw all kinds of cities, as I mentioned, on the 8050, whether it's Cleveland or Denver. You mentioned Austin. We also saw Houston, Santa Barbara, right? It's very cool to see the distribution of these companies. And so I guess coming back to the question, how would you advise, whether it's a city council, whether it's someone at the state level, about thinking about how to bring in these companies and, again, not be hostile and instead figure out how to bring in this really valuable talent?
--:-- David Ulevitch: Well, there's sort of classical incentive packages that I think cities are well-equipped. You know, it's like they want to bring in these jobs so they'll compete against each other and they'll think about things like tax incentives and different opportunities like that. But I think sometimes cities overlook just the importance of having a ton of space and removing the red tape for these companies to be able to operate, companies be able to do the sort of experimentation and development and production they need. So I think in many ways, there's not like a one size fits all, but I would very much encourage all of the cities to meet with these companies, to meet with them early, and then say, what is the big thing that would change your mind about coming here? What is the thing that you are looking for? And really tailor and craft packages to bring these companies to their cities. I mean, what's great is we're seeing early stage companies have these bake-offs for their next facility or their next city that they're going to be building in. And cities are really good at that. Like they know that these jobs are important and these are high value jobs. So you don't have to be the size of an Anduril and you don't have to have that size of facility to really get a city excited. But I don't think it's one size fits all. Every company has different needs. So it really is taking the time to get to know these companies and figure out how you can be most helpful to them.
--:-- Host: As we close out. I'd love to hear both of your perspectives on just what you're most excited about, where the ball is moving in 2025.
--:-- Katherine Boyle: I mean, I'm most excited about just the pace of change and the pace of innovation, both on the government side and in our world. Every day feels like it's just so much change. It feels like we're in this accelerated timeline across all things, not just innovation, but culture, politics. Everything is accelerated and everything is heightened. And to me, that is the perfect time to start building. You want to catch that wave. You want to be part of something like that. You want to live in that timeline. And so I'm just enthused because I think we're going to see companies we never thought possible. I think we're going to see extraordinary founders say, I want to build in this space. And I'm just excited to work with them. And I think that what we thought might take, again, five, 10 years is going to take two. And we're already seeing that in our own portfolio. And so if you're on the fence about starting an American dynamism company today, I would say do it because two years from now, I think the acceleration and the pace that you will see in this category will be nothing short of extraordinary.
--:-- David Ulevitch: I'm always excited about the future, but I think that people just wildly underestimate the impact that AI is going to have. We have a nuclear power company, Radiant Nuclear. And so Radiant Nuclear is obviously, they have to go through a regulatory process and it's very paperwork heavy. And there are now multiple startups that are just using AI to better facilitate the regulatory process to help you understand where are you going through these different checklists and requirements for regulatory approval. We have a company we've looked at that helps facilitate foreign military sales, but using AI to navigate this massive, complex regulatory environment where you have to deal with classified information, who has access to classified information, dealing with who gets the information, how do you facilitate these foreign military sales? Things that are critical to the defense industrial base, but that are really being enabled and unlocked and accelerated by AI.
--:-- I think people still wildly underestimate the positive impact that AI is going to have across every industry, from defense to healthcare to manufacturing to transportation, logistics, energy, you name it. And I think for the first time, Washington is like, okay, we know we need to change. We want to make sure that America just has unrivaled superiority and is the greatest place on earth for people to live, where people want to build their businesses, build their lives. I think we underestimate how fast some of this is going to happen.
--:-- Katherine Boyle: Yeah. The vibe shift has been very real, and it's been amazing to see how quickly it's changed your point to you around AI. We'll have to direct folks to last year's AD50. I know a lot has changed since then in AI, but that gives folks a glimpse of all the ways that AI is impacting all the categories within American Dynamism. So we'll make sure to link to that and also this year's Indo-Pacific AD50. Thank you both so much for joining this podcast, but then also for all your building in American Dynamism.
--:-- David Ulevitch: Thank you.
--:-- Host: Thanks so much, Seth.
--:-- Host: All right, if you did make it this far, don't forget to go check out our full American Dynamism 50 list. Compilation of the top companies building toward the national interest, but this year's focus on the Indo-Pacific. Go check out the full list, which covers companies from all over the country at a16z.com slash AD50. You can also click the link in our show notes, including links to our prior two years of the AD50. All right, we'll see you next time.
