Frontier Tech Investing

April 10, 2025

Friends,

I am excited to share this interview with Patrick Blumenthal, the Founder of Anomaly Fund.  I got to know Patrick after the collapse of Silicon Valley Bank when he hosted me on his New Frontier podcast.  I subsequently invested in his first Anomaly Fund and have enjoyed watching him invest in a wide range of “frontier tech” startups, including a hypersonic weapons company and an AI-first computer animated design platform.

Patrick has an eclectic background centered around startups and venture, along with a strong passion for geopolitics and technology.  He is very active in Twitter, with an offbeat sense of humor: @PatrickJBlum.  He is a unique thinker, which comes across strongly in this interview.

Yesterday, Patrick announced the launch of his next Anomaly Fund.  You can learn more here.

Enjoy!

Best Regards,

William C. Martin

PS – Please tentatively save the date, Thursday, October 2nd, for our 4th Annual Fall Conference in NYC.  More details soon!

 

Topics in this Issue of An Entrepreneur’s Perspective:

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Interview with Patrick Blumenthal, Founder of Anomaly Fund:

Why don’t you share a bit about your background?

I grew up on the East Coast and made my way to San Francisco right after high school to work on my first startup, somehow finding myself in a co-living house with about 15 other people, where I slept on a mattress in my friend’s room.

My journey afterwards took me through a wide variety of projects and startups, including On Deck — working on their early-stage founder fellowship; Hercules Capital where I made my first investments in frontier tech; and Village Global — a pre-seed fund backed by Bill Gates, Jeff Bezos, Mark Zuckerberg, and others. I started Anomaly Fund last year to continue investing in frontier tech.

You’re running Anomaly Fund now, which I’m proud to be an investor in.  What was your thesis for the fund?

Every generation declares the end of history, only to watch history forcefully reassert itself. The 1990s promised liberal democracy’s permanent triumph; the 2010s promised software’s frictionless dominance. Both eras have ended. Our thesis begins with this recognition: prosperity doesn’t end crises — it manufactures new ones. The next decade will bring chaos that venture-backed innovation must solve, but in ways fundamentally different from the previous decade.

Frontier tech companies demand entirely different talent networks, expertise, contracts, and customers than SaaS businesses did. Yet paradoxically, they follow the same evolutionary pattern that made software so capital-efficient. Just as AWS and Stripe created shared infrastructure that dramatically lowered barriers to scaling software companies, specialized platforms now emerge for physical technology development. Functions that government agencies once monopolized — satellite launches, intelligence analysis, materials testing — now operate through private companies like SpaceX, Palantir, Anduril, and dozens of specialized infrastructure providers.

This transformation systematically collapses both the cost and timeline of building frontier tech, enabling ideas previously too uneconomical to pursue. Founders no longer need to vertically integrate everything; they leverage these specialized platforms at each stage of development. This infrastructure shift creates a rare competitive advantage for investors who can navigate both deeply technical domains and the emerging ecosystem of specialized service providers.

You’ve also been building New Frontier over the last couple of years.  Tell us about that.

New Frontier began as a podcast but evolved into a storytelling vehicle for frontier technologies that often struggle to communicate their importance to the wider world. It’s also a creative outlet for me — I personally design everything from merch and posters, to pitch decks and websites. I’ve also become deeply involved in recruiting early talent for my portfolio companies.

The name deliberately echoes Kennedy’s “New Frontier” speech, which paired visionary ambition with a clear-eyed call to action. Kennedy understood that progress isn’t inevitable — it requires deliberate effort against formidable obstacles. Today we face a similar inflection point between decline and difficult renewal.

What made Kennedy’s approach remarkable was his ability to transform a highly technical pursuit into a shared cultural mission. When he visited NASA, he reportedly asked a janitor what he did there. The man replied, “I’m helping put a man on the moon.” That’s the essence of what we’re trying to achieve.

Today’s frontier companies face this same challenge. Their work often involves complex technologies, but the underlying purpose must resonate broadly. The SR-71 Blackbird (the subject of the first shirt I designed) exemplifies this principle — you don’t need to understand compressor blade design to be captivated by what it represents. As Anomaly has grown, I’ve focused on helping our companies build cultures where technical breakthroughs connect to human imagination, because that connection is what ultimately drives recruitment, capital, and market adoption.

Can you highlight a company in the Anomaly portfolio that you’re excited about?

Allen Control Systems is designing turrets to defeat drone swarms. Steve and Luke had their last company acquired by DoorDash and previously worked together in Navy Nuclear on reactors.  They recently closed on a $30 million Series A round (https://fortune.com/2025/03/27/gun-turret-startup-allen-control-systems-series-a-venture-capital-defense-tech/).

The U.S. lags behind our adversaries in both offensive and defensive drone capabilities, and we need solutions immediately. Everyone has seen footage from Ukraine, but few grasp what’s coming both domestically and internationally. Current defense solutions fail in combat and present an unsustainable financial equation: a million-dollar missile shooting down a five-thousand-dollar drone.

When mass drone warfare arrives  —  and it will  —  we won’t have the luxury of a decade-long procurement cycle. History shows us that preventive investments always cost less than emergency responses, yet our institutions consistently fail to act until the bill comes due in human lives. But the companies that anticipated and solved these problems before they became headline news created immense value for their early believers. Whether it’s IED countermeasures in Iraq or pandemic preparedness during COVID, the pattern remains consistent: the warning signs always appeared visible to those who looked.

Byrne Hobart and Tobias Huber, authors of the new Stripe Press Book: “Boom: Bubbles and the End of Stagnation” are joining your next fund.  How has that impacted your investment approach?

The real bottleneck in frontier tech today isn’t insufficient venture dollars — it’s insufficient knowledge. Their book formalizes what I’ve observed repeatedly: technological discontinuities don’t emerge randomly but are engineered by small, focused teams with unified vision. This insight has anchored Anomaly’s approach from the beginning, which is why their research feels less like a new direction and more like scholarly validation of our existing thesis.

Through The Diff newsletter, Byrne has built an unparalleled map of how capital and talent migrate across industries as technological shifts occur. His writings have consistently identified inflection points months before they become obvious to markets—whether in supply chains, in the case of SVB, or infrastructure buildouts. This works as a force multiplier for our existing approach, connecting seemingly unrelated technical domains and revealing non-obvious investment opportunities at their intersection points.

Our collaboration feels frictionless precisely because we approach the same problems from complementary angles. When founders work with us, they get connections that translate directly into product breakthroughs, talent hires, and customer introductions that would rarely emerge in traditional venture relationships.

How do you think about sourcing deals?

We’ve built networks in places most venture capital doesn’t typically reach — laboratories, operator communities, and policymakers. Venture isn’t about attending different conferences; it’s about embedding ourselves in these esoteric ecosystems years before they produce venture-scale companies.

Byrne and Tobias joining Anomaly gives us access to The Diff and its 50,000+ technical and financial readers, which functions as both a bat signal for esoteric talent and an extension of our existing sourcing strategy. They will amplify our ability to identify founders at the intersection of previously disconnected fields. We often connect with founders months or years before they even launch their companies.

Even for deals that become competitive, this knowledge advantage has won us allocations. Founders consistently choose Anomaly because we understood technical nuances that other investors missed entirely. When a founder has spent years working on a breakthrough technology, they want investors who genuinely comprehend what makes it transformative, and who can uniquely position themselves to support their journey.

You’ve been to Ukraine multiple times during the war. What’s your take on the situation there?

The conversation about Ukraine has become less about Ukraine itself than about American anxieties and divisions, which I worry has caused us to act against our own interests. We could have one of the most effective forces in Europe — one that was expected to only last 3 days in this war — as a permanent ally, or we can hand it over to our adversary. We’re turning to isolationism at precisely the moment when consistent engagement is needed.

We can debate the appropriate level of support, and argue about the mistakes of our support to-date, but these disagreements shouldn’t obscure fundamental truths: Ukraine seeks independence as a state, and Russia remains an adversary operating contrary to American interests. We can simultaneously have concerns about Europe’s level of commitment while still recognizing Ukraine’s sovereignty deserves protection in some form.

The simplest geopolitical truth remains that power vacuums don’t stay vacant. When America retreats from global leadership, other powers — often with value systems antithetical to our own — quickly fill the void. When we abandon engagement, we don’t gain safety; we merely defer the costs, which end up far exceeding what we initially ran away from.

How do you think the U.S. should handle China?  Should we be sanctioning them more?

We dangerously lag in establishing credible deterrence, with new headlines about China’s economic and military advances arriving daily. Our sanctions-first approach in recent years falls short of understanding how to create and maintain technological advantage.

Export controls and sanctions serve purposes, but history proves their insufficiency. During the Cold War, America gained its technological edge primarily by creating an innovation ecosystem that generated breakthroughs at unprecedented rates, not by restricting Soviet access to our technology.

Rather than focus exclusively on constraining China’s access to advanced technology, we should massively scale investment in our domestic innovation capacity. The CHIPS Act takes a step in this direction, but remains modest compared to the challenge.

Technological leadership doesn’t emerge from incremental improvements. It comes from making seemingly irrational bets on transformative technologies. The U.S. spent billions of precious wartime dollars on the Manhattan Project. At its peak, the space program absorbed over 2.5% of GDP. These investments not only achieved their primary objectives but also catalyzed entire industries.

The key difference today is that startups, not government agencies, must lead these national-scale projects. SpaceX builds rockets ten times faster and cheaper than NASA ever did. Startups — small, focused teams with the autonomy to move at competition’s pace — will drive the next Manhattan Projects. As national competition intensifies, countries that recognize and nurture this shift — accelerating innovation transfer from federal agencies to agile startups — will define the next decade’s technological landscape.

Finally, let’s talk AI. What’s ahead of us? What are you most excited about, and afraid of?

I think a lot of the conversation around AI has become unhelpfully polarized – either fixating on existential risk from artificial general intelligence or dismissing the technology’s transformative potential. Both perspectives miss what’s happening now, and the many ways it already helps us.

The immediate revolution isn’t AGI – it’s the automation of unglamorous tasks: converting messy PDFs into structured systems, automating operational processes, and transforming legacy workflows in previously automation-resistant industries. AI won’t restructure creative work first, but rather highly regulated sectors with massive documentation requirements: insurance, healthcare administration, and regulatory compliance. I’ve witnessed this transformation firsthand while implementing LLMs for private equity portfolio companies across regulated industries; firms now realize these technologies will drive an entirely new chapter in margin expansion where previous automation attempts failed.

In the short term, I worry less about sentient machines and more about bad actors misapplying current models. I worry more about scammers perfectly mimicking family members’ voices and deploying thousands of voice agents in a day, before society can develop immunity to these attacks. I worry about new malware that infects computers and uses LLMs to steal and reconstruct personal identities. Today’s deployed models already enable these dangers — no AGI required.

For the race ahead of us, I’m curious to see how the M&A aspect of foundational model companies plays out. In past tech cycles, companies logically acquired competitors to expand customer bases and obtain IP. When end users pivot overnight to the latest state-of-the-art model, what value remains in a competitor whose models perform even 10% worse than yours? Even top-notch talent won’t protect billions in capital from evaporating when valuations collapse due to technological obsolescence.

Overall, humans’ consistent ability to adapt gives me optimism. Previous technological revolutions ultimately created more jobs than they destroyed, though often in previously unimaginable forms. We haven’t even named the occupations that will define the 2040s.

The time between now and then though, for many reasons, will be chaotic and difficult.

Thank you and good luck!

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Favorite Books & Media

A User’s Guide to Restructuring the Global Trading System

This paper was written by Stephen Miran, the Chair of the White House Council of Economic Advisors, with the help of Zoltan Pozsar, who is a well-known former Credit Suisse strategist.  This “User’s Guide” looks at reforming the global trading system to bolster critical supply chains and put American industry on a more level playing field.  It looks at the impact of the U.S. dollar’s reserve currency status and looks at ways to manage currency valuations moving forward, while retaining the dollar’s reserve status.  It also explores the role of tariffs in helping to rebalance the system, both by reducing consumption (by making imports more expensive) and weakening exporters.

The paper also considers ideas like having countries under the U.S. security umbrella trade into very long duration U.S. Treasuries (the 100-year bond idea).  It also looks at the role of a sovereign wealth fund, which would enable the U.S. to sell dollars to buy foreign currencies, thus helping to manage currency prices.

There are many interesting ideas floating around right now, and it is critical to develop a framework for how to manage through this period.  In my mind, even though I agree that this rebalancing certainly needs to occur (to rebuild critical supply chains and restore working class jobs and families), it certainly looks like the USD will have reduced purchasing power in the future… and this process could get very sloppy if not thoughtfully managed.

https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf

 

All-In Podcast Interviews Scott Bessent

Beyond Scott Bessent’s usual lucid insights, he shared a number of notable datapoints in this podcast: 1) “Not revaluing the gold” (I don’t believe him); 2) Thinks adjusting the supplementary leverage ratio rule for banks could bring down Treasury yields by 30-70 bps; 3) Emphasized need to balance the speed of spending cuts and economic stability (wants to avoid tanking economy); 4) Advocated for a glidepath to 3% budget deficits by 2028; and 5) Said Fannie/Freddie stakes could be part of new sovereign wealth fund. 

The glidepath and supplementary leverage ratio comments should be constructive for both equities and bonds, with the latter providing visibility on a path to lower bond yields without necessarily needing a recession (which seems to be more consensus).

Also, this All-In Podcast with Commerce Secretary Howard Lutnik is a worthwhile listen: https://podcasts.apple.com/us/podcast/howard-lutnick-all-in-in-dc/id1502871393?i=1000700186434

Finally, Scott Bessent was also on Tucker Carlson in early April, and the interview is excellent: https://podcasts.apple.com/us/podcast/the-tucker-carlson-show/id1719657632?i=1000702246765

 

America in Transition: George Friedman on Trump’s First 50 Days

George Friedman, the founder of Stratfor, provides thoughtful analysis on the momentous change unleashed in Trump’s first 50 days.  He argues that recent change is like other key periods in American history (Jackson, Lincoln, FDR), and that the change is indicative that the U.S. system is alive and dynamic.  Interestingly, about halfway through the interview, Friedman, who also grew up in Queens, insightfully paints a picture of Trump’s Queens schoolyard negotiating techniques.  He also digs into Trump’s foreign policy strategies – including digging into rumors that Canada’s government has been partly compromised by the CCP (noted short seller, Marc Cohodes, also discussed Canada’s CCP problems in a recent podcast dedicated to the topic: https://x.com/jasonjamesbnn/status/1904878987131973892).

https://geopoliticalfutures.com/america-in-transition-george-friedman-on-trumps-first-50-days-pod/

 

The Essential Scalia

Scalia was an originalist who was appointed to the Supreme Court by Ronald Reagan. He was an important, eloquent, and often lone conservative voice on the Court for many years.  He was also well respected by both sides of the aisle. Although Scalia sadly passed in 2016, the pendulum has been swinging in his philosophical direction.  In my view, Scalia’s work provides the roadmap for many of the conservative arguments that we will hear at the Supreme Court over the coming year or two.  Notably, given the more conservative makeup of the Court in recent years, many of Scalia’s “original” arguments may likely prevail.  This book is comprehensive yet also simple enough to tackle and provides an excellent overview of Scalia’s thinking.

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A Selection of Recent Tweets from @RagingVentures:


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“I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” – Thomas Jefferson

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