The Startups Rebuilding American Industry | The AD50

SZ DJI Technology Co.

• Erin Price-Wright · Andreessen Horowitz (a16z)Bullish

  DJI's drone-to-defense path made it the world's largest robot producer and a leader in physical AI hardware.

  DJI started with consumer drones, then recognized a large public-safety and defense market and built high-scale drone production. A drone motor is very similar to a robot actuator, which Erin calls the hardest part of building a robot. Through that defense business, DJI became the world's leading producer of hardware for the next wave of physical AI, both consumer and industrial. Erin uses this as evidence that military-to-civilian technology and process knowledge transfer works.

  “now the folks behind DJI are now the largest producers of robots in the world because what is very similar to a drone motor is a robot actuator, which is the hardest part of building a robot.”at 6:22

Mariana Minerals

• Erin Price-Wright · Andreessen Horowitz (a16z)Bullish

  Mariana Minerals owns the copper value chain end to end to capture the value of its new mining technology.

  Erin argues existing mining players won't adopt new technology fast enough to move the needle, so Mariana chose to own the whole chain. It acquires the asset, develops it, mines and operates it, refines the material itself across multiple minerals, and sells the final commodity. Owning the process lets it capture the value of the technology it brings. Connor adds that software at every stage captures data that feeds back into redesigning how the operation plans, mines and refines. Elena identifies Mariana as an AD portfolio company.

  “the existing players in the mining industry just were not gonna pick up technology fast enough for it to really make a difference... And they also recognize that they wanted to actually own the entire value chain to be able to really put their money where their mouth was and capture the end value of the new technology they were bringing.”at 10:48

Hadrian Automation

• Erin Price-Wright · Andreessen Horowitz (a16z)Bullish

  Hadrian's software-driven, first-principles factory approach shows how software can transform physical production.

  Erin calls Hadrian a perfect example of using software in physical production. Connor adds that making a part involves 15 to 20 steps, from quoting and ordering to making, inspecting and transferring it. Hadrian's founder built factories from a fresh slate. That allows every node in the process to be examined from first principles, asking whether a process used for a century is the right one. Software captures data at each stage and feeds it back into the process.

  “the beautiful thing when you kind of either start from a fresh slate like Chris has in building his factories... you can look at every single node from a first principles perspective”at 13:11

Anduril Industries

Across the shows: 2 speakers in other episodes, 0 bullish and 1 bearish calls, past 30 days

• Connor Love · Andreessen Horowitz (a16z)Bullish

  Anduril's new Ohio and Baltimore factories will soon produce thousands to hundreds of thousands of systems.

  Connor points to Anduril's facilities in Ohio and, more recently, Baltimore on the East Coast. He calls them massive facilities that will, on a very soon timeline, produce thousands, tens of thousands, or hopefully hundreds of thousands of systems. He says America hasn't produced at that scale in a long time, and that this is no longer a theoretical exercise but real production coming off lines.

  “go look at what [Anduril has] built in Ohio and now on the East Coast in Baltimore... Huge facilities that are, at some point, in a very soon timeline, gonna be producing thousands, tens of thousands, hopefully hundreds of thousands of systems.”at 17:27

Manufacturing & industrial policy

• Erin Price-Wright · Andreessen Horowitz (a16z)

  AI tools let line technicians reconfigure production lines in minutes instead of months and hundreds of thousands of dollars.

  Low-mix, high-volume US manufacturing is hard to automate because changing a line is expensive. Erin says technicians who understand the physical process, not software engineers, now have software tools to reprogram and reconfigure lines on the fly. Previously a reconfiguration needed a system integrator, taking three months and hundreds of thousands of dollars. She says a manufacturing engineer using Claude can do it in about twenty minutes, which she calls a real game changer across portfolio companies.

  “is now able to use these tools to reprogram and reconfigure their manufacturing lines on the fly... It takes three months and hundreds of thousands of dollars to reconfigure a line for a new setup. You can have a manufacturing engineer use Claude and do that in, you know, twenty minutes.”at 15:29

• Erin Price-Wright · Andreessen Horowitz (a16z)

  New US PCB makers have sharply cut defect rates, so a portfolio customer now passes 70-90% of boards.

  Three years ago, a portfolio company ordered twice the PCB boards it needed because it expected to scrap about half for quality failures from its supplier. Startups then emerged to rebuild PCB manufacturing in the US with software and modern technology, offering faster, cheaper and better output. The same company now buys from new suppliers and keeps 70 to 90 percent of boards passing quality tests. Erin argues the value of close co-development with end customers is underestimated.

  “would order two times the number of PCB boards... they assumed that they would [throw] 50% of them away for quality issues... now that same company buys you know, PCBs from new suppliers and, you know, they're keeping 70, 80, 90% passing quality tests.”at 31:26

• Connor Love · Andreessen Horowitz (a16z)

  A new middle layer of supplier co-engineers will redesign subcomponents for next-generation end systems.

  Connor uses Boeing and Honeywell as an example. Boeing calls Honeywell for landing gear, and Honeywell keeps supplying a fifty-year-old design to spec because that is rational. But new end-system requirements and new materials mean the legacy subsystem no longer fits, and suppliers aren't positioned to change requirements. He expects a middle layer of supply companies to act as co-engineers with the end manufacturer. They will rethink and rebuild subcomponents, which he calls the manufacturing middle, a wave not seen in forty to fifty years.

  “I think what's gonna happen in the future is you're gonna have this middle layer of supply companies that will effectively be co engineers with the end OEM of rethinking not just what the end system can do... but the individual subcomponents will be rethought, will be reengineered, and will be rebuilt.”at 34:23

• Connor Love · Andreessen Horowitz (a16z)

  A new 'manufacturing middle' will emerge, with firms co-engineering design upstream instead of building to spec.

  Connor argues that the individual parts and components of the physical economy are about to change after forty or fifty years without a real shift. He expects a new wave of companies he calls the 'manufacturing middle' that co-engineer and push design and development upward in the supply chain, rather than just receiving specifications and building the same thing as before. He frames this as the creation of an 'American manufacturing asset class.' He distinguishes it from private equity, which buys factories, improves costs and sells them without changing what gets built. Connor also argues that new technology architectures let firms rethink the whole supply chain from the ground up, because the components of the old world do not carry over.

  “the individual parts and components will change, and I think that just hasn't happened in the last forty or fifty years... that will be co engineering and pushing design and development upward in the supply chain, as opposed to just being in receive mode”at 34:53

• Connor Love · Andreessen Horowitz (a16z)

  Building physical factories and infrastructure at scale takes years, so capital markets need patience.

  Connor argues that anything in the physical world takes time. Setting up a factory at a scale that affects power generation or military systems cannot be done by a few engineers working on screens. It requires physically moving dirt and understanding a supply chain in depth, which takes years. He says capital markets need some patience for this reason, even though he is optimistic that the build-out is happening.

  “anything in the physical world takes time. To set up a factory at a scale where really you either affect our power generation, or you affect our military systems... these things take years”at 46:09

• Connor Love · Andreessen Horowitz (a16z)

  Physical-world builders must bring host communities along; capital markets will eventually reward companies that do.

  Erin says that physical infrastructure like a data center, power plant or mine has a visible effect on the people nearby, so they need a say and a stake in it. Connor agrees that people need to feel participation and economic upside. He expects capital markets to solve this over the long term because companies will learn to bring communities along financially and economically. He cites AMCA partnering with small machine shops rather than cutting management, as a positive example. He also argues that much of the new build-out will physically sit in Middle America, which he sees as net good, and Erin adds that it reduces wealth concentration on the coasts. He notes that some bad examples have existed in tech.

  “companies will figure out how to bring communities along for the journey and make it financially and economically worth it.”at 47:48

Venture capital & startups

• Connor Love · Andreessen Horowitz (a16z)

  Physical-economy companies can now be among the world's most valuable, not just important for national safety.

  Connor says American dynamism companies were always important to national safety and daily life. What changed is that they can now be among the largest companies in the world. Erin cites Palantir, Anduril and SpaceX as proof that you can build a very large business in these categories. She notes that most of the world's top ten most valuable companies are now hardware companies. This is why ambitious founders are now choosing to build in these hard, physical categories.

  “the biggest thing that has changed in American dynamism land in the last few years is we always knew that the companies being built in this category were really important to the fabric of America... the biggest change is those companies weren't just the most important thing to us, now they can be the most valuable companies.”at 22:20

• Erin Price-Wright · Andreessen Horowitz (a16z)

  Engineers spinning out of Anduril, SpaceX and Tesla get captive customers, helping physical-world ecosystems grow.

  Erin says a strong way to start a company is to have people who have worked on the manufacturing floor find a supply chain or engineering problem they care about. These founders, who learned the problem at companies like Anduril, SpaceX or Tesla, can build a company to solve it more broadly. Because they come from inside the ecosystem, they have automatic access to a captive customer base. She compares this to YC companies selling to each other, which she says is how Silicon Valley was built: friends are tolerant and willing to outsource work that is not existential to them. She finds this pattern encouraging in physical-world supply chains.

  “the kind of lineage of founders that have sort of lived and breathed this on the manufacturing floor... I have, you know, automatic access to a customer base that's captive.”at 38:36

• Connor Love · Andreessen Horowitz (a16z)

  Capital markets have woken up to physical-world startups, committing hundreds of billions to trillions over a decade.

  Connor argues that the US has trillions of dollars of private capital in its capital markets, and that this capital naturally follows technology and production success. He contrasts the US with China because the US has no top-down industrial policy that directs money to chosen sectors. Money follows entrepreneurs and success, which he sees as a strength. The new element is that capital markets now treat the physical-world category as attractive. Venture firms, large banks and now private equity and large credit firms are all investing, which matters because physical systems like rockets and missiles need heavy capital. He expects this to fund things ahead of obvious demand and to keep going for a decade or more.

  “the capital markets have woken up, and we're we're putting hundreds of billions of dollars, if not trillions of dollars, you know, towards this category for the next, you know, ten plus years.”at 43:34

Power demand & the grid

• Erin Price-Wright · Andreessen Horowitz (a16z)

  The grid faces a major shift from mechanical systems to software-native power electronics and battery storage.

  Erin argues the US is about to go through a large step change in how power is managed and transferred on the grid. The existing system was built with static, mechanical equipment deployed across the country in the 1970s and 1980s. It is being replaced by modern power electronics and battery storage architectures that are much more software-native and flexible. Because the replacement technology is completely different, she sees an opportunity to redesign the supply chain and the engineering behind it rather than reuse older components.

  “we're about to go through a huge step change in how we manage and transfer power on the grid, moving from a system of static and mechanical systems... to modern power electronics, battery storage, architectures, which are much more software native and flexible.”at 35:47

• Connor Love · Andreessen Horowitz (a16z)

  Even if US energy and defense demand undershoots forecasts, the demand cycle has started and will not reverse.

  Connor takes the pessimist's case that not all new energy and defense systems will be adopted, so energy demand will not rise fourfold. He argues this does not matter. Once the demand cycle starts moving in one direction, the snowball keeps rolling, and even delivering half the required build-out will not reverse it. He adds that rethinking systems from first principles usually brings better cost and efficiency, which makes the new equipment financially sensible to buy and easier to service and manufacture. He links this to the wave of demand from data centers, new factories and new build-outs.

  “I actually don't think it matters because I think once you start the snowball of the demand cycle moving in one way, even if you deliver half of that, you know, requirement You're not going back.”at 37:12

• Erin Price-Wright · Andreessen Horowitz (a16z)

  The US power buildout gap with China is a question of national will, not technology; capital will follow if we grow.

  Asked about the widely shared chart showing US power generation flat while China's rises, Erin argues the gap is not a technology problem. She says it requires national reflection on whether Americans want projects built and whether they want the country to grow. If the answer is yes, she believes the technology and capital will follow. Connor adds that this is 'an everything problem,' not just an energy one.

  “I don't think that is a technology problem... We need to do some soul searching about our will as an American people... And if we do, I think the technology and the capital will follow.”at 45:06

Robotics & autonomous vehicles

• Connor Love · Andreessen Horowitz (a16z)

  AI cannot turn a wrench yet, but physical-world AI will eventually arrive, and it needs deep process knowledge.

  Connor argues AI will be a strong tool in the physical world, but it cannot do physical tasks like turning a wrench yet. He says that is still far off, although robotic models and autonomy are getting closer. Physical-world success therefore requires a deep understanding of what a process looks like, and how to physically manipulate or change it. A shiny AI product alone won't do it. He later says AI will eventually be able to turn a wrench, enabled by the subsystems that defense supply chains are building.

  “AI will be a phenomenal tool that can be used in the physical world. The reality is AI cannot turn a wrench yet. It will at some point, but we're far off that”at 13:38

• Connor Love · Andreessen Horowitz (a16z)

  Defense-grade actuators, motors and valves will make a US robotics wave viable and reduce reliance on China.

  Connor notes that the US has few humanoid or robotics systems today. The subsystems needed for military systems, such as actuators, motors, valves and switches, are the same ones future robots will need. Building them to quality and cost standards makes other markets viable. He says a robotics company buying components today has roughly a 99% chance that most of its purchases come from China. Building these subsystems domestically would therefore reduce reliance on Chinese factories, which he calls net good for the industrial base.

  “when you think about the subsystems that go into some of our military systems, it's the exact same subsystems that are gonna go into the future robotic systems. It's the actuators, like it's the motors, it's the valves and switches”at 29:28

Defense

• Connor Love · Andreessen Horowitz (a16z)

  Private capital now funds defense systems ahead of government demand, shifting share toward neo-primes.

  Historically, primes waited for requirements, then built systems that were often technologically dated, so soldiers got less valuable products. Now the government signals needs and private capital funds builders to develop systems in advance. Connor cites Castelion's hypersonic missile: the government now contracts and buys, but the last three years of development were funded by venture capital and entrepreneurs taking the risk. He expects neo-primes and new companies to take a large share of the defense market from incumbent primes.

  “instead of sitting and waiting for the government to tell you what they want, the government signals and you see it, and you build in advance by using private capital, and that just has not happened in the history of defense.”at 19:51

• Erin Price-Wright · Andreessen Horowitz (a16z)

  Defense risk funding in H1 2026 exceeded all of last year, easing the valley-of-death funding gap.

  Erin says that in just the first half of 2026, more risk dollars went into the defense ecosystem than in all of last year combined. That was many times what went in during any previous full year. She argues this matters because defense startups have long faced a 'valley of death,' where they needed a government contract to carry them through the capital-intensive build-out stage. She says that gap is starting to disappear as capital markets and risk capital support defense companies, and that the trend is spreading to energy, robotics and critical minerals.

  “more risk dollars went into the defense ecosystem than all of last year combined... that's starting to disappear with the support of capital markets and risk capital, and that's certainly extending even beyond the defense ecosystem”at 43:50