Unlike software, where customer acquisition is the main risk, the primary diligence question for transformative hardware is technical feasibility. If a team can prove they can build the product (e.g., a cheaper missile system), the market demand is often a given, simplifying the investment thesis.

Luckey reveals that Anduril prioritized institutional engagement over engineering in its early days, initially hiring more lawyers and lobbyists. The biggest challenge wasn't building the technology, but convincing the Department of Defense and political stakeholders to believe in a new procurement model, proving that shaping the system is a prerequisite for success.

The government's procurement process often defaults to bidding out projects to established players like Lockheed Martin, even if a startup presents a breakthrough. Success requires navigating this bureaucratic reality, not just superior engineering.

Unlike traditional tech, founders in the American Dynamism space often succeed because of their deep, first-hand understanding of the customer (e.g., government, military). Many have prior service, hold security clearances, or have sold to government before. This "customer intimacy" allows them to speak the language and navigate complex procurement, a crucial advantage.

The defense tech sector is experiencing a perfect storm. This 'golden triangle' consists of: 1) Desperate customers in the Pentagon and Congress seeking innovation, 2) A wave of experienced founders graduating from successful firms like SpaceX and Anduril, and 3) Abundant downstream capital ready to fund growth.

Marketing a defense company is fundamentally different from marketing a consumer product. Instead of a broad "one-to-all" campaign targeting millions of customers, defense marketing is a "one-to-few," hyper-targeted effort aimed at a small group of influential government decision-makers who could all fit in a single conference room.

The venture capital mantra that "hardware is hard" is outdated for the American Dynamism category. Startups in this space mitigate risk by integrating off-the-shelf commodity hardware with sophisticated software. This avoids the high capital costs and unpredictable sales cycles of consumer electronics.

Unlike mass manufacturers, defense tech requires flexibility for a high mix of low-volume products. Anduril addresses this by creating a core platform of reusable software, hardware, and sensor components, enabling fast development and deployment of new systems without starting from scratch.