E31: David Ulevitch on Creating the $1.776B A16Z American Dynamism Practice

Episode Summary

Executive Summary: David Ulevich frames American Dynamism as a category and movement built on hardware, defense, energy, space, public safety, and manufacturing. He argues America’s edge comes from ingenuity, willing regulators, and willingness to invest early in physical-world infrastructure, while Silicon Valley’s future requires tighter ties to government, allies, and real-world constraints.

Main Topics: American Dynamism as category design (Priority: 5/5): Ulevich explains how the term emerged to name a broader movement around frontier technology, replacing vague labels like deep tech or hard tech with a more compelling and actionable category. Why hardware and defense matter to U.S. dominance (Priority: 5/5): He traces his thesis to Cisco and competition with Huawei, arguing that hardware is foundational to national strength because the world is physical and supply chains are strategic. Investment approach and firm structure (Priority: 4/5): He rejects investment committees, favors partner-led conviction, and describes a concentrated but flexible model that supports long-term company building with large follow-on checks. Public safety, drones, and modern policing (Priority: 5/5): He argues that 911, first response, and law enforcement can be radically improved with translation, live video, GPS sharing, and drones that de-escalate and reduce risk. Regulation, DC, and reindustrialization (Priority: 4/5): He says startups need earlier engagement with Washington because regulation can determine success; he favors deregulation or incentive-based rules over bans. Global competition, especially China (Priority: 4/5): He frames China as strong in a few strategically chosen areas, but says the U.S. should compete through ingenuity, allied supply chains, and deterrence through superior capability. Founder lessons: talent, storytelling, and choosing your life (Priority: 4/5): Drawing from OpenDNS, Cisco, and venture investing, he stresses high talent bars, honest storytelling, strong references, and the agency to change course when work no longer fits.

Key Arguments: Hardware is essential to American technological dominance because software alone cannot win in the physical world. Defense, energy, space, and public safety are overlapping markets, not separate silos, and each supports national security. American Dynamism works as a category name because it is more inspiring and concrete than labels like deep tech or frontier tech. Government is unavoidable for startups in industrial, energy, and defense sectors, so founders should engage Washington early. Regulation should create incentives and performance thresholds, not blanket bans that kill innovation. Drones and computer vision can make public safety more objective, safer, and more equitable for communities that lack private security. China’s advantage comes from centralized execution and manufacturing depth; the U.S. must win through automation, allies, and ingenuity rather than copying Shenzhen. The best companies and founders are judged by references, domain expertise, and whether they attract exceptional talent. Founders should choose work they are genuinely interested in and remain open to pivots when the market tells them something different.

Data Points: AUM: $1.776 billion - Ulevich says the fund was intentionally sized to reach 1776 million in assets under management. Fund size growth: $660 million to $1.2 billion - He cites growth from the first fund to the second American Dynamism fund. Team size: about 10 people - He describes the American Dynamism team as three GPs plus roughly seven or eight investors. Series B timing: 2019 - He says he and Catherine joined forces around the time of the Series B of Anduril. Launch year: 2022 - The American Dynamism practice launched in 2022. Anduril workforce: more than 9,000 people - He notes Anduril’s growth and scale as validation of the thesis. Anduril factory footprint: massive factories across the United States - Used as an example of how defense-tech companies can scale physically. Public safety example: Prepared Network 911 - He cites real-time translation for emergency calls as an investment example. Drones in SF: car chases and thefts down significantly - He attributes reduced crime and fewer car chases in San Francisco partly to drones and flock cameras. Helicopter cost: tens of millions of dollars per year - He contrasts police helicopters with much cheaper drone response. Emergency call response: 911 - He proposes drones as first responders for 911 calls. Energy logistics cost: $200 a gallon - He describes fuel costs at forward operating bases as an example of why energy and defense are linked. Old defense-industrial base: 30 to 40 large defense firms - He says the U.S. once had many primes before consolidation into the current few. China-focused manufacturing example: DJI ecosystem - He uses DJI to illustrate vertical integration across motors, magnets, batteries, and supply chain. Founders investing period: 8 years - He says he has been a VC for eight years. OpenDNS customer pivot: consumer to enterprise - He explains that consumers wouldn’t pay for cybersecurity, but businesses would. Wedding anniversary: 2 years - He says he recently celebrated his second wedding anniversary. Child age: 14 months - He mentions having a young son.

Pivotal Quotes: "If you want America to have the best technology, hardware has to be a component of it." — David Ulevich: He explains why hardware became central to his investment thesis after working at Cisco and seeing supply-chain complexity firsthand. "The American dynamism is just like the American dream. It doesn't just exist in America. It exists everywhere." — David Ulevich: He argues the movement resonates globally and that other countries want the same innovation culture and entrepreneurial energy. "You choose this life." — David Ulevich: He cites advice that helped him leave Cisco and later tells founders they have agency to change course if they are unhappy.

Implications: The conversation signals a durable shift toward industrial, defense, energy, and public-safety investing, with founders needing more government fluency, deeper domain expertise, and better storytelling. It also suggests hardware-led venture firms will keep gaining influence as reindustrialization accelerates.