Before the age of 20, American tech maverick Palmer Luckey had started his first company, Oculus VR, transforming the virtual reality game. A billionaire by his early 20s – and still not yet 30 years old – his attention has turned to building a defence manufacturing capability that will see Western liberal democracies through potential future conflicts. His defence manufacturing outfit, Anduril, has set up quarters in Australia for R&D and manufacturing of export articles. On a recent visit to Sydney, he sat down with Edward Cranswick to talk through his game plan.
“I’m an American, and a very proud American, but we’re not known for a swift approvals process for exporting defence articles,” Palmer Luckey – the US tech wizard who created the Oculus Rift VR headset in his late teens, was a billionaire by his early 20s, and is now changing the game in defence manufacturing with Anduril Industries – told Manufacturers’ Monthly on a recent visit to Australia.
Luckey, who has a passion for the preservation of liberal democracies over and against threats from military powers like China, is on a mission to advance US and allied military capability with state-of-the-art technology; bringing to bear the best in manufacturing thinking and practice in an area that he says has been given insufficient attention for too many years.
And that’s why he’s been in Australia, on business to shake up not only the defence manufacturing space, but to potentially change the course of future world conflict.
“The American approvals process is particularly ill-suited to a company like Anduril, where we’re always making new versions and adding new capabilities to our defence equipment,” Luckey said.
“If we were to be exporting everything from the US, we might be waiting a year or two every time we have a new product to be able to get it out there. In Australia, by contrast, I think there’s a much stronger desire to be able to quickly manufacture things and export them, not just for defence reasons, but also for economic prosperity reasons.”
By setting up an R&D and manufacturing base in Sydney, Anduril is supporting its partnership with the Australian Defence Force for an AU $140 million co-funded program to design and develop its extra-large autonomous undersea vehicles (XL-AUVs).
Three prototype XL-AUVs will be delivered to the Royal Australian Navy over three years, with a manufacture-ready vehicle at the end of 2025.
the Royal Australian Navy over three years
“The goal is not just to build these vehicles for the Australian Navy, but also to build them for our allied export partners – countries like Taiwan and Japan, as well as those in Europe,” Luckey said.
But it’s not just for regulatory or approvals reasons that Luckey chose Australia to be Anduril’s new manufacturing hub.
“Another key reason is that – despite Australia having a pretty small population relative to the US – it has a very skilled technology workforce. We’re not just making vehicles here, we’re not just manufacturing. We’ll also be designing subsystems, designing sensors, and designing a lot of the software here in Australia.
“I’d also add that because Australia is an enormous place with a sparse population, it’s a perfect fit for what Anduril does – which is to develop technology that allows autonomous handling of moment-to-moment management.”
One of Anduril’s missions is to build AI that allows one person to manage dozens of different robotic systems, he said, which minimises the use of manpower in military and defence contexts.
“Honestly, in the United States, we have a large enough population that we can afford to simply throw more people at the problem,” Luckey noted. “Australia doesn’t really have that option. You guys can’t just make your military 10 times bigger if you need to, even in the middle of a conflict. This means that, philosophically speaking, the Australian Defence Forces are very much aligned with what we’re doing.
“Our choice to set up base in Sydney is about much more than geography. I find that people in Australian tech understand defence issues intuitively – they understand that defence is one of the most important things you can work on.”
From virtual reality to defence manufacturing
Palmer Luckey is only 29 years old – but has crammed an extraordinary amount of innovation and creativity into fewer than three decades.
Home-schooled till 15, a college dropout by 18, he was living out of a camper trailer when he started his first company.
“Before I started Anduril, I started a company called Oculus VR when I was 19,” he said. “We made virtual reality headsets. And even though we were a really scrappy operation in the early days, we did some incredible things. We built virtual reality headsets that were cheaper than anyone had ever seen before, while still being very high quality. I mean, we were making headsets for $300 that were better than those competitors sold for $30,000.”
In his early 20s Luckey sold Oculus VR to Facebook for US$3 billion and subsequently worked a few years as an executive for the social media giant.
“It was during this period that I became interested in defence technology, as I realised China and Russia were both developing pretty advanced defence systems and that the United States defence apparatus – our major contractors – did not have the talent to beat them in areas like artificial intelligence or sensor fusion.”
He also realised that large tech companies in the US would not be part of the solution in closing this gap, as their manufacturing bases were all in China.
“There’s never been a point in United States history where our most innovative technology companies refused to work with the US military,” Luckey said. “That’s never happened. Imagine if in World War II our greatest technological assets had said they weren’t going to help, because they thought imperial Japan was too big of a business opportunity? That’s actually the position we’re in today. Many big players can’t upset the Chinese Communist Party because 95 per cent of their manufacturing is in China.
“It’s not a matter of right-or-wrong for them. It’s a matter of survival. If they upset China by helping the US military, they will simply cease to exist.”
This motivated Luckey, a proud American patriot and enthusiast for liberal democracies across the globe, to stop thinking about video games and start thinking about defence.
“I got into the defence space so that I could steal people from these companies that are very technologically advanced, but aren’t working on anything important, and put them to work on things that really do matter. Like preserving democracy, like preserving the Western way of life. I think that’s why we’ve been able to find so many people that want to work with us. Anduril has about 1300 people now – so there are at least 1300 people who agree with me.”
Australian manufacturing talent
Luckey noted that another advantage to locating Anduril’s manufacturing hub in Sydney is the fact that Australia has a strong pool of talented people from which to draw.
“You’ve got a uniquely capable group of people in Australia,” Luckey said. “There are two ways in which this is evident: very specialised domain expertise – like maritime engineering – and doing boat construction, building antifouling materials and things like that.”
He said that because so much Australian industry is along the coast or coast-related, compared with the US – which has people distributed more evenly throughout the country – it has fostered much local talent in maritime engineering and related fields.
“Separately, there are people who are working in Australia in areas that don’t necessarily seem defence-related, but are in actual fact quite applicable,” Luckey said. “We hire a lot of people from Snapchat, people who build photo filters and the like, because it turns out that many of the same AI algorithm techniques they’re using to build toys are the same things you need to build a computer vision system that can detect surface- to-air missile launchers that have been camouflaged in the woods.
“Australia has a lot of people like this – people who are in the tech industry, building things that have nothing to do with defence, but their skills and their minds are just as applicable to defence problems.”
Securing future defence manufacturing capability
Once Luckey became more engaged with defence issues – and aware of the disparity between the manufacturing capabilities of liberal democracies versus strategic competitors like China – he determined that a key goal of Anduril would be to secure the manufacturing and supply chain integrity of the company.
“We need to ensure we’re able to make things without relying on materials or manufacturing capability that’s trapped in China,” Luckey said. “Look, I’ve made a lot of stuff in China. The Oculus Rift VR headsets I made were all manufactured in China – so I get it’s not easy to do without them, as there are lots of things where it’s cheaper or easier to have them made over there. But, at Anduril, we’ve just completely bypassed that ¬– completely eliminated China from our supply chain.
“And it’s not just from the components you would expect – like imaging sensors and processing chips – but also for things like rubber gaskets, fasteners, and paint. Everything made in China is completely out of our supply chain, because the last thing you want when dealing in defence articles is to be figuring out how to get alternate suppliers in the middle of a conflict – or an embargo or sanction situation.”
He said that Anduril has been encouraging companies they work with to do the same thing, whether in Australia or Europe or the US.
“The problem is that we’ve shifted most of our manufacturing capacity over to China, and we’re going to have to fix that – at least to some degree ¬– if we want to be responsible for our own destiny in terms of manufacturing defence articles.”
The offshoring of manufacturing capability in the US has gone hand- in-glove with a diminution – or mis- allocation – of intellectual capital, moving as it has from defence functions into other domains, Luckey believes.
“I can’t speak to the case in Australia, but in the United States one of the problems we have is that so many of our smartest kids are opting for finance and sales instead of defence – because that’s where a lot of money can be made. And those are people who in the past would have wanted to go into aerospace or manufacturing.”
The US has created an economy where the incentive structure is all muddled up, he said.
“Because we’ve shipped all of our manufacturing to China, why would anybody want to go to school to learn how to be a manufacturing process engineer?” he asked. “There are people who do it, of course, because they’re passionate about it. But, on the other hand, there are a lot of people who instead decide to go into finance or law – who might be better suited to and more profitable for the country – in defence.
“A lot of aerospace companies in the US used to be very cool and, therefore, attract our best people. But now defence is considered to be the home of very slow, very boring jobs; where you’ll get to work on one project for 10 years – and maybe it will ship, maybe it won’t.”
Home-schooled as he was – and a college drop-out – Luckey wears as a badge of honour the fact that no job at Anduril requires a college or university degree.
“It’s something I’ve pushed very strongly since the start of the company,” he said. “We only look at what people have done – what their capabilities are; not whether or not they have a piece of paper that says they’re good at something. What I’ve always wanted to see are people’s projects. What have they done at home? What have they done in their garage? What have people done on their own time when they weren’t being forced to do it by a teacher?
“We’ve hired a lot of people who would never have gotten hired at other companies for want of a formal education. It’s those companies that have lost out, and Anduril that has benefited. It’s an approach that we’ll continue to make hay out of in Australia – and it presents terrific opportunities for latent manufacturing talent down under.”
Looking ahead
Manufacturers’ Monthly asked Luckey what is in store for Anduril Australia over the next five years. What is the five-year plan?
“The five-year plan is to grow in Australia from where we are today – 40 people – up into the hundreds of people,” he said. “I don’t think we’ll hit thousands within five years, but if you consider the fact that Anduril has a workforce of 1300 people within five-and-a-half years of its beginning – that’s a pretty breakneck growth rate.”
According to a public statement by David Goodrich, OAM, Exec Chairman and CEO of Anduril Australia, while extra- large autonomous undersea vehicles are the primary focus for now – the company’s sights are set far higher than underwater.
“XL–AUVs are only the beginning,” Goodrich said. “We’ve got plans to become a major player in the thriving defence industrial base in Australia, working together with Australian industry partners and contributing to Australia becoming a leading exporter of cutting- edge autonomous capability to the rest of the world.”
Closing out our interview, Luckey summed up his ambitions for Anduril Australia:
“Within five years, I’m confident we’ll be employing hundreds of people in Australia who are designing very high- end payload systems; designing very cool propulsion and energy storage systems, and manufacturing large numbers not only of submarines, but also air vehicle and ground systems.
“Within five years I’d also like to be doing some cool stuff in the space area here too. We probably won’t be that far along in five years – because I’m afraid space seems to move slowly in every country,” Palmer Luckey said.
“But we’ll see.”