Founders' Big Bets: Rebuilding America's Industrial Base from Factories to Mines

The inseparable link between a nation's defense capability and its broader industrial base has become starkly clear. Decades of outsourcing and the 'hollowing out' of the US industrial base have led to tangible consequences on the battlefield for American soldiers and allies. This situation has served as a 'wakeup call' for the United States, highlighting the urgent need to rebuild domestic production capabilities.

The current environment is characterized by a confluence of geopolitical factors, evolving capital markets, and a growing entrepreneurial base. Founders are now actively choosing to build in this ecosystem, recognizing not only its importance for national security but also its potential to create valuable companies.

This year's focus on American dynamism emphasizes an end-to-end perspective, encompassing everything from raw material extraction to factory production and the final end system. This comprehensive approach is critical for ensuring a robust domestic supply chain.

Historically, the federal government played a primary role in developing transformative technologies such as the internet and nuclear energy. Today, a significant shift is occurring, with private industry and private capital increasingly becoming the driving force behind new industrial developments.

This shift means that while many of these markets still serve federal government needs, the industrial base being built—whether down the supply chain or as end systems—inherently possesses multiple use cases. This 'dual-use' nature means that innovations for defense systems can also be applied to commercial products, from cars to future toys.

A compelling example of this evolution is DJI in China, which began by building consumer drones before recognizing and expanding into large markets for public safety and national defense. This demonstrates how initial private sector innovation can lead to broader applications across different industries.

Building 'first-of-a-kind' industrial facilities, such as a new Printed Circuit Board (PCB) fabrication plant in the United States, is an extremely expensive endeavor for startups, particularly regarding machinery and initial capital expenditure (capex). Commercial markets often cannot justify these upfront costs for unproven ventures.

The federal government, particularly the Department of Defense, is actively working to rebuild the industrial base by changing the unit economics for these companies. They are willing to pay costs that a consumer or commercial market wouldn't, effectively subsidizing early capex investments.

This government support allows companies to install more machines and scale production. This, in turn, helps these ventures achieve financial viability and eventually reach a scale where they can serve commercial markets, extending beyond defense applications to products like robots and hearing aids that also require PCB boards.

Mariana Minerals exemplifies a new approach to industrial production by owning the entire value chain in the mining sector. This includes everything from asset acquisition and development to mining, operation, and refining, ultimately selling a final commodity product in the market.

The founders recognized that existing players in the mining industry were not adopting technology quickly enough to make a significant impact. By controlling the entire process, Mariana Minerals can integrate software and artificial intelligence at every stage, capturing end-to-end data to optimize operations and capture the full value of their new technology.

Unlike the digital world, where a single AI product might offer a broad solution, optimizing physical industries such as factories or mines requires a deep understanding of complex processes. Success comes from improving 15 to 20 different operational nodes, not from a single 'silver bullet' solution.

While AI is a phenomenal tool that can be applied in the physical world, its current capabilities do not extend to physically manipulating components. As one speaker noted, 'The reality is AI cannot turn a wrench yet,' though it may at some point in the future. Progress in areas like robotic models and autonomy is bringing us closer, but the nuance is critical.

Companies like Hrien, which builds factories, and Mariana Minerals, which owns and operates mines, understand that true innovation in the physical world involves fundamentally rethinking and changing the assets themselves, rather than simply applying a shiny new AI product. This requires a first-principles perspective on every process node, questioning methods that have been in place for a century.

Modern systems companies are increasingly adopting a 'design for manufacturing' mantra from the outset, a lesson learned from companies like Tesla and SpaceX. This approach prioritizes efficient and rapid production from the initial design phase, rather than treating manufacturing as an afterthought.

This philosophy enables quicker prototyping and sets up components in a way that facilitates faster rate production. The ultimate goal is to move beyond theoretical exercises to real-world production, with massive facilities in places like Ohio and Baltimore preparing to produce thousands, tens of thousands, and even hundreds of thousands of systems in the near future.

This marks a significant departure from historical practices where the buyer and user of defense systems were often disconnected, leading to complex and disjointed decision-making processes. The new mantra emphasizes practical, scalable production from the ground up.

Founders in critical minerals and energy sectors face extreme physical and cultural challenges. For instance, Turner, CEO of Mariana Minerals, travels to remote locations globally that lack basic infrastructure like cell service or electricity, physically engaging with the raw earth.

This work often requires spending weeks and months away from family. The cultural landscape for engaging with suppliers in these industries is also vastly different and often 'tougher' than that of typical software startups, requiring different negotiation and collaboration skills.

These founders are often described as 'missionary founders,' driven by the sheer scale and importance of the problems they are solving, despite the brutal physical and logistical demands of their work. They are building tangible physical infrastructure, not just digital products.

A fundamental shift in the American industrial landscape is that companies building in defense, energy, and manufacturing are no longer just 'important' to the fabric of America; they can now become the most valuable companies globally. This distinction is significant, as it aligns national importance with economic incentive.

Historically, sectors like mining, defense, and energy were large but not always economically attractive for ambitious young talent. However, the successes of companies like Palantir, Anduril, and SpaceX have demonstrated that building in these categories can lead to very large and profitable businesses.

Currently, hardware companies that build physical products comprise the majority of the top ten most valuable companies in the world, indicating a full circle moment in economic trends.

This new economic viability attracts the most ambitious founders of our generation, who are now willing to tackle these 'hard problems' because they know their efforts will be economically rewarding in addition to being impactful.

Building a new industrial base involves significant physical demands, including moving massive amounts of earth and hardware. Sites for these operations are often remote and difficult to access, requiring a hands-on approach and a readiness for physically demanding work.

A key lesson from military experience is that the 'physical world doesn't care about you,' emphasizing the need for extreme caution and respect for the environment when dealing with large-scale operations.

Site visits are essential to truly grasp the immense scale of manufacturing, mining, and assembly operations being undertaken. Founders and investors alike often don steel-toed boots to inspect these enormous facilities, reflecting the tangible nature of their work.

Many founders in this space also display their passion and national pride by featuring large American flags at their production sites, embodying a commitment that goes beyond mere economic opportunity and fosters strong team purpose.

The development and domestic production of military subcomponents, such as actuators, motors, valves, and switches, are creating a new industrial ecosystem with a significant multiplier effect. These are the same subsystems that will be vital for future robotic systems, including humanoids.

By focusing on building these components to high quality and competitive cost domestically, the United States can reduce its reliance on foreign manufacturing, particularly from China. This also makes other markets, which might not have been viable before, suddenly economically feasible.

The strategy involves investing heavily in the development of these subcomponents for military systems, which serves immediate security and deterrence needs. Subsequently, this investment will enable the standardization and availability of components necessary to fuel a broader wave of commercial robotics and advanced automation.

A profound structural change is occurring in how end-systems are being built across defense, aviation, and other industries. New systems companies, such as those developing advanced military platforms or new aircraft like Joby and Archer, are inherently demanding different input components.

The traditional procurement model, exemplified by Boeing's reliance on long-standing aerospace suppliers like Honeywell for legacy designs (e.g., a 50-year-old landing gear), is being challenged. While rational for established suppliers to prioritize existing, proven designs, these older components are often not optimized for modern requirements.

New end-systems necessitate different subcomponents because of advancements in materials and design principles. The problem arises when these 50-year-old subsystems, though still functional, lack the innovation to meet contemporary demands, leading to a need for entirely new designs and manufacturing processes.

Significant technological advancements, such as the transition of the US power grid from static mechanical systems to software-native, flexible architectures, are creating unprecedented opportunities to fundamentally redesign entire supply chains. When a new technology completely replaces an older one, it renders previous components obsolete.

This step change allows for an innovation of the entire architecture from the ground up, rather than merely reconfiguring existing parts. It provides the chance to implement new engineering decisions, leading to better cost efficiency, improved serviceability, and easier manufacturing. Once a company adopts these modernized components, there's typically no going back to older designs.

A new trend in manufacturing is being driven by founders emerging from established high-tech ecosystems like Anduril, SpaceX, and Tesla. These entrepreneurs identify specific 'pain points' in engineering or supply chains that they personally encountered.

This phenomenon mirrors the Y Combinator model, where startups often sell to other companies within their familiar ecosystem. In the 'physical world' ecosystem, these founders and engineering teams, having solved problems internally at their previous companies, now spin out to address these issues more broadly.

This lineage of founders has a built-in advantage: they know everyone in the ecosystem and have automatic access to a captive customer base of peers who are tolerant and understanding, and willing to collaborate even when things break. This fosters a supportive environment for building new industrial solutions.

Unlike countries with state-directed industrial policies, the United States operates without a top-down government mandate dictating specific investments. Instead, US capital markets naturally follow successful technology and production. This market-led approach is viewed positively, as money flows where entrepreneurship and success thrive.

A significant development is the reorientation of major financial institutions towards physical assets. For instance, JP Morgan has committed trillions of dollars to investing in the physical world, encompassing not just defense but also factories and other infrastructure.

This trend extends beyond venture capital, with private equity and credit firms increasingly entering the defense and manufacturing space. This expanded capital availability is crucial because companies building physical systems, like Falcon 9 rockets or Blackbird missiles, require substantial investment to establish production lines and infrastructure.

The defense ecosystem has experienced an unprecedented surge in funding, with more risk capital invested in the first half of 2026 than in the entirety of the previous year combined. This figure was also many times greater than the combined total of the year before that.

This influx of capital is effectively shortening the 'valley of death' for hardware startups, a historical challenge where companies struggled to secure government contracts to bridge the period of high capital expenditure needed for development. The support from capital markets is beginning to make this gap disappear.

The expansion of risk capital extends beyond defense into critical sectors such as energy, robotics, and critical minerals. This growing financial commitment from capital markets signals a strong belief in the long-term potential and necessity of rebuilding America's industrial capabilities over the next decade and beyond.

Unlike abstract software, physical infrastructure projects such as data centers, power plants, and mines have a direct and tangible impact on the local communities where they are built. For these projects to be sustainable and successful long-term, it is crucial that American society, particularly those living near these sites, feels like they are actively participating in and benefiting from the economic growth generated.

Software development often concentrated economic growth in a few urban centers, operating in a more virtual and siloed manner. Physical world projects, however, demand local engagement, as communities have a direct stake and say in developments that affect their environment and daily lives.

The capital markets are expected to play a vital role in ensuring this inclusive growth by incentivizing companies to partner with and empower local communities. Positive examples include startups like AMA, which collaborates with existing small machine shops rather than displacing them, thus creating shared economic prosperity beyond traditional elite pockets.