Why Defense Tech Is the Next $100B Venture Opportunity | Josh Wolfe & Terry Monis

All right. Hello, everyone. It's a really exciting talk for me. I've known Josh Wolfe for a while. I kind of think he's one of the most brilliant guys I know, not just investor brilliance. And then Terry Fadell has invested in Lux for what, the last 15 years or so?

Right about 15 years.

Yeah.

Which makes him the smarter one.

Yeah. Well, I mean, you're both brilliant. How's that? All right, let's, let's get started with just very simply, let's define defense tech. Josh Wolfe, you're probably a very early VC investor in the space. We're going to get to Anduril. You were invested in the seed round in 2017, which we love to hear about that, your thesis at the time. But let's start just kind of defining the space because it's not as simple as just making wars—

war drones, right? Yeah. Look, the history of venture capital itself goes back arguably to what was defense tech. Sunnyvale, California did not have anything, and then Lockheed came and created hundreds of thousands of jobs. The first IPO in tech in the Valley was Varian Semiconductor, which was really focused on the trajectory of missiles and, and projectiles. So the roots of venture capital itself were defense tech. It was basically serving the United States Army and military. Fast forward. Most of the engineering and all of these things through biotech, personal computers, mobile, internet, it shifted into all consumer-focused. Probably about 15, 18 years ago, our first investments in what would be considered dual-use, things that were commercial off-the-shelf technologies that also might have applicability for defense. It wasn't really until, and a lot of stuff was signal intelligence or intel community-facing, CIA, DIA, et cetera. It wasn't until Anduril where we were faced as a partnership with both the opportunity and the moral equation, are we comfortable investing in something that will be involved in a kill chain? That you're putting money behind something that will actually cause somebody to die. And that was a very complicated decision to make. It was around the same time that basically Google was having employees walk out in protest of something called Project Maven, which was taking all of the aerial and drone imagery data, and they were saying, we don't want to work on this. And at the same time, you had Microsoft taking a position, no, we're an American company, we're going to work on this. And so you started to have this other ethical divide of, was this a moral thing to do? We, Founders Fund, and a handful of other VCs decided, not only is it moral, it is imperative. And that became sort of the basis. Short answer to your question, though, is it is air, land, sea, cyber, everything that is involved in providing a warfighter, which is primarily a government entity and an allied government entity, with the ability to project power.

Yeah. So, Terry, as an allocator, do you find it as imperative to make these sorts of investors in venture, you know what I mean? And so investments in venture firms that actually have that sort of view as Josh Wolfe and Lux have?

Yeah, sure. So, you know, we have a pretty nice defense tech portfolio through our VC funds today, but we didn't wake up one day or, you know, it wasn't 10 years ago or 15 years ago and decided we have to have defense tech in our portfolios. We were seeking out venture capital managers that did hard things. We tend to invest with more of a value orientation, and we looked at all the crazy things going on in early-stage VC, and everyone's jumping into consumer technologies and, you know, social media and all of these things in the cloud, and valuations were sky-high. So we decided to look for places that were unloved, where there was less capital flowing into those spaces. And it just happened to be those are the spaces that were, you know, it was deep tech, it was hardware, it was nuclear, it was these material sciences. And like I said, we didn't intend to have a defense tech portfolio, but that's where all these technologies wound up being very, very relevant. And that's how we met Josh Wolfe back then. Today we have a kind of a broader view of defense tech. Now it's a— we actually have a strategy in, in terms of how we implement it into new client portfolios. And it's, it's actually pretty broad. It's not just defense tech like the Andurils and the SpaceXes of the world. Um, it's broader. It's more of a national security, um, strategy. So it's, it's pretty wide. It's, it's energy security. It is biotech, because biotech is a huge part of national security, and Josh Wolfe is actually pretty active in that as well. But getting in today, it's actually— I don't know if you want to talk about the risks of the space now, but we view it as a pretty risky time to get invested into defense technology, because there, for a lot of these companies, there's a double halo effect of being in defense tech, which is the hot thing, and it should be the hot thing, because our national security strategy has been reoriented towards modernization, which will benefit all these companies. However, there's also a halo around AI, and a lot of these defense tech companies also are AI companies, and so valuations have become sky high. So in order to kind of combat that going forward, we're taking more of a diversified approach. We want some people who are doing incubation, so you get in really early stage and where valuation is less relevant, some mid-stage stuff, and then some late-stage growth stuff. So we're, you know, we have a broader view of defense tech. It's more of a national security strategy versus just—

Yeah, and Josh, that seems like your take also. So when you think about like, sort of these investment paradigms that have happened throughout your career. Um, is this one of the most important? And then how do you think about it from the way you are allocating, you know, a percentage of the funds that, that you are managing? Because it's something I'm assuming that has grown over the last 15 years or so. Um, and just give us a sense for that, how you think about that.

Uh, about a third of what we do is aerospace and defense, so air, land, sea, space, subsea, cyber. Uh, another third is biotech and, and med devices and robotic surgery and healthcare. And then the final third is what we call for technology, which is more defined by what we don't do. Very little, if anything, in internet, social media, mobile, where they're crowded areas. To Terry's point, and the very same thing that he looks for in managers, we're looking for in sectors, which is that there's a scarcity of capital, which is usually the number one predictor of returns. If you have an abundance of capital, higher valuations. Higher valuations, lower future expected returns. So at the time when we were all investing early in defense tech, going back 7, 8, 9 years, there wasn't a lot of capital. There was us and maybe 3 firms. Now, there are dedicated pools of capital that are forming. And so this is an interesting thing because there is, in sort of a dialectical way, both a clear fundamental case for defense, and that is the fact that we saw a sovereign invade another sovereign 3.5 years ago. You've got Ukraine, Russia, you've got Israel, Gaza, Israel versus 7 other fronts. You've got China, Taiwan, you've got the African continent and the Sahel and Maghreb with violent extremists. The world is not a kumbaya safe place, and you need good people with better technologies willing to effectively commit violence to protect democracy, freedom, ideals, and values that we have against bad people that ideally have inferior technology. And that really is the nature of humanity and warfare. It would be great if it wasn't, but there is a constant arms race between offense, defense, counteroffense, et cetera, in every domain. The flip side of that is the very realization of that that led to the creation of Anduril. When Anduril started, it was a sub-$60 million valuation. The most recent financing had about 6x oversubscription, nearly $10 billion of demand for $2.5 billion round at a $28.5 billion pre-money valuation, $30 billion post. That's doing $2 billion of top-line revenue, a real business in a 7-year-old company. Everybody else in the defense tech world is looking and saying, well, we're going to comp to Anduril. And the reality is you end up with 1 or 2 or 3 leaders, but the vast majority of companies are sort of pretenders. In the venture world, you have a lot of what I would call defense dilettantes, people that were suddenly in like SaaS that are now sort of doing these side quests into defense and trying to reposition themselves. That's one piece that is adding to more capital chasing too few great companies. The second piece, which is very interesting, is a moral layer that fund-to-funds might provide. Terry can analyze, and ICG, who are incredible partners to any fund and to clients, their ability to synthesize and figure out who's for real and who's full of shit and where should we be investing is very valuable. Funds of funds might come in and say, you know, you're an endowment or a foundation, and maybe you don't feel comfortable investing in defense tech because you don't feel invest— comfortable investing in a kill chain. But if you invest in a fund of funds that's investing in managers, that you're sort of 2, 3 layers removed, and that itself is going to lead to new formations of pools of capital. So I typically am directionally right, but often wrong about the timing. I don't know if it's going to be 2 years, 4 years, 5 years, but we will see a bubble in defense tech. You will see frauds, you will see just total failures, and you just need to stay in the leading companies, which today are the likes of the Palantirs, SpaceXes, and Drills. One last thing, Palantir itself, and I'm friends with Karp and I think that he's great, uh, I don't know about the current valuation on the public side, but there's a meta piece of information in that, which is the demand for something like Palantir today is so high. Now partially it could be because of the vibe zeitgeist of hearing Karp talk about the sort of counterwoke stuff. But the other piece of it is people are looking for a pure play next-gen defense prime that is not Lockheed Martin, Boeing, L3, etc. And I think you're seeing the valuation drive up because there's a paucity today of new issues that people can invest in. As these companies like Anduril and etc. start to go public, you will see that change.

Yeah, it seems like there is definitely scarcity in the public markets, which is one of the reasons why I think you mentioned Palantir, which is trading at like 70 times sales. Normally you'd see that flip-flop between private valuations and public. Terry, speak to us a little bit. Obviously, we just talked about you've been invested in Lux for a while. What are some of the attributes you're looking at as you broaden out that sort of investment sort of thesis across the VC sector? What are you looking for in a manager?

Sure, sure. I think I'd like to start with the attributes that we're not looking for that we try to avoid. We've seen a ton of crossover investors, people that that did not invest in hard tech, did not invest in space tech or defense tech at all, and didn't invest in like these hard technologies to understand from just a technical perspective. But defense tech has a different risk to it as well that compounds everything, and that's that you're selling to the government for the most part. I think people really underappreciate how hard it is to sell into the government. Your customer is the Department of Defense. So first of all, you've got customer concentration risk, right? So you could be creating a product, you're taking the risk for it, you're not like one of the original primes that got paid to do R&D, New companies are paying for the R&D themselves and are taking the risk. They're taking product market risk, and the only market is really the Department of Defense. And you can kind of counter that with having dual-use technologies like Josh mentioned, but it is very difficult unless someone— unless you have as either an advisor or an operator in your VC firm that understands the procurement processes, that understand what the DOD directives are and what the initiatives are today to adopt new technology. It's really difficult. You have to have relationships as well. You can't, you can't downplay that. The Department of Defense is a massive bureaucracy and they are trying to do the right things. There are new programs that they're doing to, to enable new technology, to fund new companies, and to really deploy new technologies to the front line as quickly as possible. But it's a, it's a tanker and it's gonna take a long time to turn around. And a lot of companies will fail trying to sell into the DOD. So we're, we're looking for, for firms and funds that have those type of people, that expertise in-house. And really those that appreciate the difficulty of it, because I think people are seeing, you know, Palmer Luckey on 60 Minutes and they're seeing, you know, SpaceX, you know, at a $350 billion valuation and Palantir at whatever valuation that's at and think, oh, let me get in this. This is a trend. I need to catch this wave. And, you know, hopefully there's going to be a greater fool to take me out of this position later on. But the reality is a lot of these companies are going to fall on their face. Now, to counter that a little bit, though, it's a little bit akin to big pharma and small biotech. I think today, because you have the big 5 or 6 primes out there. If you— if some of the smaller primes are— maybe there's 8 or 9 of them. They have big balance sheets, they're profitable, and they're terrible at innovating. And big pharma and big biotech is very similar. They don't want to pay for R&D. They have huge balance sheets, and they're waiting for a lot of these smaller biotech companies to develop products, get them into FDA testing, and when the technology is proven, they can scoop them up and buy them out. So I think there will be some of that, and that will be a saving grace for some of these defense tech companies that are out there and the VCs that are invested with them. But, you know, it's— we're proceeding with caution and you have to have the right attributes and really appreciate the risk.

I'll give you one quick note on the structure which Terry spoke to. Sometimes that is the best structure for exits, an oligopolistic industry structure where you have 3 or 4 or 5 competitors that will compete for an asset, for a startup company, and they will end up paying a slightly irrational price, which is good for us in that competition because they can't afford to have one of their peers or competitors get it. What's very interesting is you go back 6 years ago, Peter Thiel and I, Reagan National Defense Forum, we're talking, it's the first time talking about defense tech. It's the first time that Palmer shows up here. Palmer is in his, if you know him, his classic Hawaiian shirt, his cargo pants, his flip-flops, and people are basically laughing at him. They're passing around images of him in his cosplay stuff, and they're not taking him seriously. What ensues over the next few years is literally like the Gandhi quote, first they laugh at you, Then they fight you, then they join you, then you win. My guess is between 2% and 5% of the people that were actually there at the Reagan National Defense Forum have since applied for a job at Anduril, seeing its trajectory and success. That same mindset of, oh, these small companies will never win, has permeated the defense industry rightly for 25, 30 years, because there just was no way for them to break in. You have these SBIRs, they're all performative, they're all BS. It doesn't really amount to like real contract wins. Now you have companies like Anduril that are basically winning big programs of record, hundreds of millions of dollars. They're also doing it overseas with our allies. We're seeing the exact same thing in different countries. You go to Israel, our first ever investments in Israel over the past 2 years were in 2 defense companies, one that's come out of stealth, one that's still in stealth, both focused on physical kinetic activity. In Israel, you've got IAI, Elbit, Rafael, that are basically the same 3 big primes, and they all look at the small companies and they're like, oh, these guys are so cute, they're never going to win. But you're starting to see breakthrough of those most dangerous words of this time is different. And it really is different. Yeah.

And that speaks to what you said. It could be 6 years or 6 months. It doesn't really matter in your opinion. Like there will be a bubble that forms and you hope that it kind of keeps going into the multiple years, especially when you make some of these early investments that you have. But let's just talk about the fact that, you know, we're looking around in the private markets. We've never seen valuations like this. You just mentioned Andrew was 8.5 times over, right, subscribed. And this is going to be a $100 billion private company. OpenAI just raised at $300 billion. How does that change the calculus? Because they're quickly going to be, at least in the defense space, larger market caps in the private market than the primes, right? So how do you think about that? Because again, it feels like there is a bubble building right now from a valuation standpoint.

If I may, just because defense technology is so hard, because it's so hard to sell into government, the procurement process is so long and painful sometimes, not many people are going to get that right, not many companies. The ones that do, it's going to be basically a winner-take-all environment. In my view, I don't know, Josh, you agree with that? Companies like Anduril are getting those valuations because there's not going to be many Andurils. Because once they have that access, once they have success, they know how to deal with the DOD and they have technology that works and proven. They're going to garner those, those valuations. So it's going to be winner take all, which could justify part of the valuation.

Now, one of the related things, which was a criticism that a lot of people have and a concern that I would say less sophisticated LPs had was, wow, these are really capital intensive areas. Don't you want to be in software where it's capital efficient? And the answer was no, because in those capital efficient areas you have no moat. You might get 50 competitors and then the odds of you picking one, if all things were equal, is 2%. If you have a situation where there's 3 or 4 or 5 competitors, at least your odds go from 2% to 20%. You have 10x higher probability, all things equal, let alone if you actually know the team or could be helpful. And so I do agree that the winner-takes-all phenomenon is something that if you actually look at some of the best software companies that have these giant valuations, they've raised billions of dollars to protect some of those positions. OpenAI obviously has raised billions of dollars. Whether that $300 billion plus valuation is sustainable, you know, TBD. If you look from their upticks from the $40 billion round to that, it actually wasn't as large as people think because there was a huge amount of employee stock options that were issued, and it's a much more complex structure. Anduril will have raised billions of dollars, but to justify a $100 billion valuation, you will have one or two of those companies. You will not have 20. So that's why when you were talking before about the bubble, the way to think about that space is there will be a winner takes all, there will be a long tail of failures, and you just have to be very discriminating. It's also, as these valuations get higher and higher, harder for venture investors to justify, because if we're trying to underwrite 10x in 5 years on an individual company and trying to get 3x+ cash-on-cash returns across a fund, it's hard to justify investing in those high valuations. We're very happy when the growth investors and the crossover investors are doing that. The very people that Terry might not be excited to invest in at a later stage, justifiably so. But that ecosystem of capital is there to provide for those valuation stages.

What about M&A? Have we seen any that's material? And do you expect to see more, especially as like, you the existing primes, as you call them, are really kind of starting to feel some pressure?

They, they definitively will, and they will buy what I think are going to be some of the shittier long-tail companies. So they will need some young engineers, they will need some cool products and programs. But what's interesting is you follow the talent, and the human capital is the first thing that goes, and the financial capital follows. But you follow the human capital. They are the people that went to Anduril early, they vested after 4 years. We've since done 2 spinouts of teams out of Anduril. Where we funded them. You're seeing the same thing, extraordinary talent out of SpaceX. We probably backed 6 teams out of SpaceX in the past few years. Most of those people do not, they dread the idea of selling to a Lockheed or a Boeing. It's like for them, we want to build a standalone public company, and the talent they're attracting is just extraordinary. Where you will see M&A, and I think of the $2 billion of revenue for Anduril, maybe a third to 40% of it was from acquisitions. They're going to use a combination of their stock currency, good structured, thoughtful deals and the ability to say, do you want to be on this rocket ship, which many people do, or do you want to sell to Lockheed and, you know, Boeing? And the answer is the former. So you will see M&A. It'll be from some of the rising upstarts.

I think another overlooked aspect of the environment today, I think there has to be increased collaboration between the newer, cooler tech startups that have all this great young talent and the primes, because the primes, one that, like I said before, I keep saying it, they know how to sell 'em to the DOD, but they also have extremely good manufacturing capacity and know-how. They know how to build things at scale and quickly sometimes. And with the, you know, with, with companies like Anduril and others, when the Defense Department adopts it, they'll adopt it in a big way and they're gonna have to deploy it eventually or build their stocks in a very big way. And they don't have, you know, young defense tech startups don't have the capacity to do that. So I foresee a lot of partnerships between the primes and these newer companies. So you can bring the new technology and combine it with the manufacturing capacity. So I think it's going to be a thing we'll see more and more of in the future.

That is, by the way, another big segment of defense tech, which is the reindustrialization of the defense base. A lot of people are looking at— in fact, we had a guy, Chris Power, and he originally was going to do a private equity roll-up.

Yep.

He was going to do a private equity roll-up of the 3,000 mom-and-pop shops that basically make like one key component since the Cold War. And, you know, they're good. Family-owned businesses, and they pass it on generationally. They literally do like one component. And he was like, you know what, forget it. This is like way too complicated. I'm going to build the machine that builds the machines. And he built a super high-tech factory to start taking the manufacturing market share from some of these small mom-and-pops. In some cases, they'll acquire some of these things, but otherwise, it's really high-tech manufacturing. This is particularly for shipbuilding in the US. And if you look at the defense budget, nearly a trillion dollars, about $67, $70 billion is going to be allocated just for new shipbuilding. We are massively outpaced by China. I mean, China— if anybody that lives in New York, you drive up here, you're passing the Intrepid. You know, the Intrepid amazingly took something like 18 months to build. The last giant aircraft carrier, which is going to be commissioned, which is the Kennedy, 14 years. Our ability to build ships is just horrific. And so there's not only the nature of what kinds of ships, you know, if you go to China, you've got 40 amphibious ships. Like, you think about the fleet that we're competing with in the Indo— in Indo-Pacom in the Pacific. Sam Paparo, who runs that, has described it as wanting to create a hellscape of, you know, drones and attritable systems. You've got 40 amphibious ships. You've got 50 subs, 200 surface combatants. You've got 3,000 jets, 4,000 UAS, 750 satellites, 200,000 mechanized infantry. This is like the game board of Risk. That you have to fight against, and they are massively outcompeting us in their ability to manufacture military material. Yeah.

So Terry, maybe you can speak to this a little bit. At the forefront of this kind of trade spat, if you will, with China is it's just come to the fore, rare earth materials, right? And if you think about the lessons that we've learned, at least, you know, from COVID or post-COVID about supply chains and as a matter of national security, like, do you worry about our dependence on China for so many of the components that go into the tech that these companies are building that you're investing in?

Yeah, absolutely. I mean, look, no one wants a trade war. It's, you know, all else being equal, it will lower GDP. It will increase inflation in the near term. But when you take things to extremes and you try to, you know, game out scenarios of an all-out conflict with a great power adversary like China, who is near peer or near peer in their ability to compete with us. Yeah, I mean, we have a supply chain problem. We have a commodity problem, we have a manufacturing problem. If I look for the silver lining in the trade war that we have today, it could be that we are going to be reshoring, we're going to be building our industrial capacity, and perhaps loosening regulations around mining, because we do have deposits in the US, and our allies to the north have deposits, Canada. I don't know if they consider us an ally anymore, but it has to be solved. By the way, part of our national security strategy and the way we're going to build in portfolios going forward is, the early stage stuff and the mid-stage stuff, but also manufacturing capacity and traditional kind of private equity approaches, buying industrial assets that can be transformed into or already are being used for building out our defense capacity. There's also some really nice tax advantages because some of these things are in opportunity zones because they're in unloved places, right? There are places where, you know, NIMBY is not an issue and people, you know, there is a desire to develop those areas. So, We have to take— we're taking a broader approach to investing in it, which definitely includes manufacturing capacity.

Josh Wolfe, again, on leverage as it relates to a trade war, it seems like the Chinese have a bit of leverage here. For all the stats that you just gave us about their manufacturing capabilities that relates to their defense apparatus and what we need from them in that regard, how do you think about that and then the broader macro as far as investing in the space? Those seem like two big risks right now.

Well, you know, and I think we talked about this privately before, but, you know, Trump sort of had the approach of I hold all the cards and Xi Jinping was like, well, we make the cards. And so it was sort of a complicated scenario. Tara is absolutely right, not only on the degree of market share in the materials which could find substitutes in South America, Canada, Australia, elsewhere, but the refining capability is 90% in in China. So even MP Materials here, we've got domestic mines for— run by Litinsky. It still has to be refined in China. And so that capability doesn't exist here. So that is a big problem for materials and rare earths and magnets and actuators. And forgetting about another supply chain of robotics, which is another big wave. The answer, I think, is going to be friendshoring. So we're not going to be able to rebuild our ship industry here alone. We're going to need Norway. We're going to need South Korea, which has extraordinary capabilities. Thankfully, we are allies. But I think that there's going to be friendshoring where you're doing deals. I was a little bit more sanguine when the tariff chaos was happening because I always like to think about abundance and scarcity. When we were funding defense, the amount of dollars that were going in were scarce. We thought there was abundance of returns. That is going to change over time. But the abundance and scarcity with the tariffs was the number one thing that I heard from anybody, people that were heads of banks that were talking to lots of CEOs, large LPs. They're like, uncertainty, uncertainty, uncertainty. Big corporations are paralyzed with CapEx. People are paralyzed with capital allocation decisions. Countries are sitting trying to figure out what's going to happen. So if you have high degree of uncertainty, what's scarce is certainty. If you're South Korea and you have 1 or 2% market share in magnets or actuators or motors, do you think you're going to do a 10-year deal with this administration to not only have certainty, but to maybe get 4 or 8 or 12% market share and take it from China with guaranteed buying So I'm actually a little bit more sanguine about South Korea, Japan, Germany, India doing deals with the US in big ways. And I think that that will play in with the reshoring here to redevelop a defense industrial base. From the global macro, this is something where cost of capital, I'm convinced, is going to be rising for the next half decade or larger, regardless of what the 10-year is. In part, that's because in our world of venture, people say there's $300 billion of dry powder. I say that powder is not dry, it's wet. You have a lot of unproven, inexperienced firms that are under-reserved, and you're just going to have a lot of internal triage. The cost of capital generally, except for aerospace, defense, and AI, is rising very high. And many of these other sectors are sort of seeing valuations depressed. We are making investments globally in a punctuated way. Japan. I'm looking for India. We haven't done anything there yet. Two in Israel. We just stood up a new co in Cambridge in the UK. Focused on aerospace and defense. Just yesterday we were looking at something in Central Eastern Europe. So, so there's pockets of incredible technical talent that you will see punctuated investments made. And I think that's part of this sort of global defense ecosystem that we're very bullish on.

Yeah, Terry, I was going to go there. So geographic opportunities outside of the US, is that something that as an allocator you're focused on? Just kind of broaden out the thesis and I'm suspecting valuations are a bit more reasonable outside the US.

Well, not in the public markets. If you've taken a look at European defense tech companies, valuations have skyrocketed very recently as a result of, you know, Trump forcing our European partners to spend more on defense and their realization that the US may not be there to back them up in a conflict with Russia. So they're building out their own defense capabilities, which is great, another silver lining in this kind of chaos that we've seen that, you know, during the Trump administration. But it's We're, we're not focusing on the public markets. We're focusing more on middle market private equity defense companies and some earlier stage. The problem is the market is thin. There are not many VCs out there focused on it. So if you can find a good one, you should really, really hang on to them. But going back to the macro for a second, macro is ultimately important. Um, and it's gonna, it's gonna lead to success and failure of a lot of defense tech companies because the DOD has a budget and the budget is set by Congress and Congress's ability to spend and desire to spend on new innovations and technologies is going to be based on the government's cost of capital. And, you know, the worse our fiscal situation gets in the US, and if interest rates continue to rise, there'll be a squeeze on the purse and defense budgets may not grow as fast as we'd like them to. And there may not be as much capital allocated to, you know, bringing on new technologies and procuring new technologies. So the macro is ultimately incredibly important for defense tech success.

I'll give 3 quick areas that I think people should be focusing on, which I think are going to be interesting over the next decade in the global macro as it relates to defense tech. One is IMEC, or I2U2. This corridor from India to UAE, through Saudi to Israel, up to Europe. There's going to be an enormous amount of infrastructure, telecommunications, military defense, shipping, manufacturing through that corridor as a counter Belt and Road Initiative amongst those countries for China and Russia in particular. So there's going to be a lot of investment. Some of it will be venture for tech. Some of it will be hardcore private equity and infrastructure. But that's an area to watch because there is a big global geopolitical demand to counter China and Russia Belt and Road Initiative across Northern Europe through this IMEC or I2U2, which stands for Israel, India, US, and UAE. Second domain, if I was SecDef or Secretary of State for the day, there would be two declarations that I would do. The first is a new Monroe Doctrine shoring up North America, Central America, South America. We've had way too much CCP infiltration into places that we basically treat as countries that we import coffee and go on vacation, everywhere from Honduras to Nicaragua, which is very bad, Jamaica, Costa Rica, places in some cases that don't even have standing armies. It's a big national risk, and we should be spending a lot of time and money there. The second thing, which I think is not on people's radar, and I've probably been talking about for about 8 years, documenting a lot of the news and the tidbits on this, is the Sahel and Maghreb in Africa. You have Russian mercenaries coming in, Wagner Group, you have China infrastructure propping up dictators. Then you have violent extremists that are coming from Afghanistan, Syria, Iraq that are Islamists who I think you are one terror event away being projected into Europe from that entire region, becoming our next Afghanistan. It will end up being, sadly or positively, a bullish thing for European defense and for US defense, but I think that those three regions are ones of opportunity and chaos that are coming.

Terry, just to finish out here, what would you leave some of the allocators here is kind of a thought that you've learned over the process. You seem to be an early investor and investors in the space. Just, just give us a sense of kind of where you are right now.

So 15 years ago, like I said before, we were looking for people doing hard things because hard things had lower valuations associated with them. The hard things today we think are probably quantum, directed energy, and basically quantum and directed energy are some of the things we're focused on right now. And I think Josh Wolfe has some views on that. Sorry, also energy. Energy independence, nuclear fusion is an exciting area that it's hard to do. It's expensive to do, and there are fewer dollars chasing it. So we're excited about those spots.

All right. We could have gone on for a while here, but I really appreciate Josh Wolfe, Terry Foss. Great conversation. And, you know, Josh Wolfe has been on a few podcasts, mine in particular. Go check out more of what he's got to say because I think he could do more than 30 minutes. Terry, thanks so much.

Thank you.