I had the opportunity to gather some experience in defense M&A myself, and I can honestly say that Anduril's success is remarkable, especially with their fast-growth strategy. If their relations with the DoD reduce the immense workload associated with approval processes and legal issues, it's an absolute cheat code in this industry. Thanks for sharing!

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Oct 5Liked by Packy McCormick

Really fascinating to read about the military purchase process. Like this real world angle you’re taking my guy.

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Great read. Anduril’s vision for the future is getting proved out in conflicts like Azerbaijan/Armenia and Russia/Ukraine. Having a lot of sophisticated but relatively inexpensive weapons is where militants can see asymmetry. Do you think a larger company (like of on the primes) could view Anduril as an acquisition target?

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Anduril seems focused on platforms, but what Ukraine has exposed is that the US and EU lack fundamental military industrial supply capacity.

Fancy drones and what not are great, but do not replace nor substitute for sheer volume of artillery shells, or anti air defense systems, or enough missiles to bombard Ukraine pretty much every day. It isn't even clear that the US has sufficient dumb aerial bombs and basic air to ground missiles to combat a peer adversary. In particular, it is clear that Russia alone is outproducing the US and EU today at least 6 to 1 in artillery shells - and that this ratio will only slightly contract even going forward to optimistic projections going into 2025.

Even disregarding the sheer numbers - the economics are also striking. The outproduction is not only in numbers but in cost. This article notes EU artillery shells cost from 2000 to 3300 euros in fully depreciated, low capacity peacetime terms: https://www.technology.org/2023/01/05/how-much-do-155-mm-artillery-rounds-cost-now-and-how-many-are-fired-in-ukraine/

The cost on the Russian side is a small fraction of this - well below adjusting for purchasing power parity differences.

Nor is this the only area: the Patriot Pac3 costs over $4 million per missile. Russian air defenses, much less the missiles that the Pac3 would be defending against, cost a tiny fraction.

Given this: is what Anduril doing truly critical to US or Western military strategy?

Creating ever more complex and expensive systems is exactly what the Western military industrial complex has been doing for the last 30+ years.

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