Critics are crying foul over the First Son's sudden windfalls in defense tech, but if you strip away the political noise, having the commander-in-chief mandate your product is simply a highly effective macro strategy.
The haters are out in full force this week. The mainstream financial press is in a predictable uproar over the news that Donald Trump Jr. and his partner Omeed Malik have posted staggering 200 percent returns at their fledgling investment firm in just a few short months. The critics are throwing around tired phrases like regulatory capture, insider trading, and looting the federal treasury. But unpopular opinion: if you actually look at the term sheets, Don Jr.’s A.I. and defense windfalls are a triumph of sound fundamentals.
Let me be clear. In this economy, generating a 3x multiple in less than a fiscal quarter takes incredible discipline. You have to identify secular tailwinds before the broader market prices them in. And what is a stronger secular tailwind than knowing exactly which experimental defense technologies your father is about to mandate the Pentagon purchase by executive order? That isn't corruption. That is just having a high-conviction thesis and the operational stamina to execute on it during Sunday family dinners.
I was at a polo match in Wellington last weekend with a few LPs, and the mood was incredibly bullish. We were discussing how difficult it has become to achieve true product-market fit in the crowded A.I. sector. But Don Jr. and Malik have solved this. They realized that the ultimate "product" is a bloated, unproven generative A.I. platform, and the ultimate "market" is a captive Department of Defense that has been implicitly instructed to award you a sole-source federal contract if the generals want to avoid a mean social media post. That is the kind of disruptive, zero-to-one thinking I look for in a fund manager.
The traditional venture capital model is broken. For years, firms wasted time on technical due diligence, code reviews, and market sizing. Trump Jr.’s firm has streamlined this bloated process by simply bypassing the open market entirely. Why spend six months analyzing a defense startup’s drone propulsion systems when you can just check if the CEO has recently purchased a suite of rooms at a Trump property? It’s a brilliant operational pivot that drastically reduces customer acquisition costs.
A lot of traditional analysts are struggling to model this kind of growth, but we are advising our clients that having the commander-in-chief’s bloodline on your cap table is essentially just a very aggressive moat.
We need to stop punishing success in this country. When a fledgling firm correctly anticipates that the U.S. military will suddenly develop an urgent, multimillion-dollar need for the exact autonomous targeting software they bought equity in three weeks prior, we should be studying their pitch decks, not launching congressional inquiries. The best founders I know are already adapting to this new paradigm. They aren't wasting capital on R&D; they are aggressively pivoting their resources into golf memberships and retaining Malik as a strategic advisor.
At the end of the day, alpha is alpha. You can sit on the sidelines complaining about the death of the meritocracy, or you can adjust your risk models to account for the fact that the invisible hand of the free market is now just the President's eldest son pointing at things he wants to own. I, for one, am updating my guidance. If you are a founder who can't figure out how to be biologically related to the executive branch, you simply aren't hungry enough.