Anduril CEO Describes Shift Toward Economic Targets in Modern Conflict, Notes Valuation Bubble and Supply Risks

Brian Schimpf, CEO of defense technology company Anduril, told attendees at Fortune’s Brainstorm Tech conference in Aspen on Monday that modern conflicts now focus on strangling economies rather than destroying military assets. S. and Israel conducted roughly ten times as many strikes in the first month of their recent conflict as occurred during the entire Gulf War.

He noted that the Strait of Hormuz remained blocked at the time of the conference, matching a prediction he made in March. Data centers, oil refineries, and shipping lanes have become primary targets, he said, because low-cost drones have reduced the cost of striking them.

“The economic warfare that is effectively the Strait of Hormuz, this is the new normal of what these conflicts are going to look like,” Schimpf said.

Schimpf pointed to supply-chain constraints. S. fired roughly 850 Tomahawk missiles in four weeks of conflict with Iran, while the Pentagon had been replenishing the stockpile at a rate of about 90 missiles per year.

Anduril is examining ways to secure long-term supplies of germanium, he said, amid China’s systematic acquisition of critical minerals including rare earth magnets and copper film suppliers. On valuations, Schimpf said some defense technology companies are raising funds at 50x or even 100x forward revenue.

“I do think there is a bit of a bubble,” he said, noting that in any hot category roughly 90 percent of returns accrue to the top two players.

Anduril raised a $5 billion Series H round at a $61 billion valuation in March, led by Thrive Capital and Andreessen Horowitz. Schimpf declined to provide a timeline for an initial public offering. Cofounder Trae Stephens told Fortune last week that he ideally sees the company going public in the next couple of years.

He said companies that go public while growth is slowing or more than two years from profitability tend to deliver poor three-year stock returns. Anduril checks at least one of those boxes, he said. The 25th Fortune Brainstorm Tech conference ran from June 8–10 in Aspen.

Fortune first convened the event in 2001.