Trae Stephens - Find Good Quests - [Invest Like the Best, EP.319]
Invest Like the Best Podcast Notes Key Takeaways Many of the high-margin software businesses have no impact on society, and sometimes can even have a negative impact on society Founders in the dynamism category are creating teams that are mission-oriented and interested in more than just making money; they want to build techno-optimist solutions for strategically important problems It is important for society’s best players to choose good questsIt is best to lean into your passions and overinvest in them We must encourage people to be “spikey” instead of only encouraging them to be “well-rounded” In his early days at Founder Fund, Trae was looking to invest in a 21st-century reboot of Lockheed Martin; it did not exist, so he started it If a company is going to work, each team member must leverage their own superpower to achieve the company’s audacious goal The adversary must know that Anduril’s product will prevent their offensive from happening and that the defensive cost to prevent it is far lower than the offensive cost to launch it “The DoD has done a really good job at creating theater around their innovation efforts.” – Trae Stephens The big defense primes are effectively government agencies that respond to the incentives presented to them Mimetic desire is the primary motivation for conflict in society because we are all going after the scarce resources that other people want Working and learning about an industry in a supporting role is 100x better than graduate schoolThe first question that Trae Stephens asks in every pitch meeting is: “What is the origin story of this business?”Ask yourself what you are uniquely suited to do to contribute to a greater goodWe lose the wonders of virtue when we rely on ourselves as the source of all truth Read the full notes @ podcastnotes.orgMy guest this week is Trae Stephens. Trae is a partner at Founders Fund and co-founder and Executive Chairman of Anduril. Trae’s philosophy can be boiled down to finding good quests, which has led him to investing in businesses that work closely with the government on societally important issues. Clearly, that extends to co-founding Anduril and I would highly recommend listening to my Business Breakdowns episode on Anduril if you haven’t already. In this conversation, we discuss the importance of lobbyists, why the high-tech defense firms of the past became stale, and how he hunts for disagreeableness in founders. Please enjoy my conversation with Trae Stephens. For the full show notes, transcript, and links to mentioned content, check out the episode page here. Listen to Founders Podcast Founders Episode 136 - Estee Lauder Founders Episode 288 - Ralph Lauren ----- This episode is brought to you by Tegus, the modern research platform for leading investors. 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Follow us on Twitter: @patrick_oshag | @JoinColossus Show Notes [00:03:17] - [First question] - Why Trae thinks most high-margin businesses are bad for society [00:04:28] - What would he change to impact energy technology most if he were in charge [00:06:18] - His investing focus on dynamism and mission-driven tech companies [00:09:42] - Analyzing why relatively few people strive to make society-level advancements [00:11:35] - What he’s done as a parent to enable his kids to develop passions [00:12:41] - The most noteworthy adventures in his career [00:14:41] - Founding Anduril and what it taught him about the tech industry [00:18:40] - The cutting-edge of defense technologies today [00:21:29] - What Shyam Sankar of Palantir taught him about defense tech [00:23:34] - Why some of the biggest defense tech companies have stopped innovating [00:28:29] - What he and Anduril have learned about sales and scaling in the public sector [00:32:12] - Where lobbyists and decision makers play in to defense tech business models [00:35:22] - His take on Peter Thiel’s notion that competition should be avoided [00:38:24] - The importance of being psychologically disagreeable when building a start-up [00:39:54] - The origin story that stands out the most from companies he has interviewed [00:41:12] - How he developed an investor mindset on his unorthodox path to the venture world [00:43:57] - What he has learned from playing supporting roles and aligning with great leaders [00:46:11] - Important but uncommon lessons about entrepreneurship [00:48:21] - Venture investing lessons he’s learned from Lauren Gross [00:50:00] - His first VR project and aspirations for the future of VR [00:54:50] - The role of religion and spirituality in his business philosophies [00:59:13] - Why he tries to capitalize on morality as opposed to sin [01:03:57] - The kindest thing anyone has ever done for him