Thiel pal and venture capitalist eyed for 2nd highest post in Pentagon

According to WSJ, President-elect Donald Trump is eyeing Trae Stephens, a close affiliate of venture capitalist and Pentagon contractor Peter Thiel, as his incoming administration’s Deputy Secretary of Defense.

The deputy secretary, a position now held by Kathleen Hicks, is the second-highest-ranking civilian in the Pentagon, with the primary responsibility of “managing the defense budget and executing the priorities of the secretary of defense.”

A longtime partner at Thiel’s Founders Fund and co-founder and Executive Chairman at Anduril, a defense industry company with myriad government contracts, Stephens is an influential player at the intersection of venture capital and defense tech. To say that being in charge of the defense budget could pose a potential conflict of interest, would be an understatement.

Previously, he worked for Thiel’s Palantir Technologies, which for years has received contracts from across the federal spectrum, including the Department of Defense, FBI, and Department of Homeland Security.

Despite myriad controversial efforts behind ethically questionable military technologies like AI-powered military targeting, Anduril and Palantir are among defense tech’s cream of the crop thanks to VC funding, especially Thiel funding, with Palantir now reporting record profits and Anduril amassing a hefty $1.5 billion in Series F fundraising in August.

Striving for political influence in a perpetual quest for business-sustaining government contracts, Anduril has become a prominent Washington lobbyist, especially regarding AI regulations. Palantir has likewise secured positions in high places like the U.S.-China Economic Security and Review Commission, which advises lawmakers on the U.S.-China relationship. And now, the possible Stephens appointment represents the undeniable influence of defense tech, and especially venture capital-backed defense tech in Washington politics after years of work getting a seat at the table.

Zooming out, Peter Thiel, a serial funder of congressional campaigns, bankrolled fellow venture capitalist and now-VP elect J.D. Vance’s successful 2022 Senate Campaign in Ohio to the tune of $15 million — the most anyone has given to a Senate candidate. Thiel and Vance are in fact long term associates, where Thiel previously assisted Vance’s own venture capital career. Not to miss an opportunity, powerful members of tech's inner core jumped into action via Elon Musk’s Super PAC, America PAC, upon Vance’s VP-nomination, giving $200 million to the Trump campaign overall.

Through ventures like SpaceX, Elon Musk has himself become a prominent government contractor. Concerns mount that his emerging status as a “close confidant” of Trump and his own appointment as co-head of the newly-minted Department of Government Efficiency (DOGE) may materialize into major conflicts of interest.

Even if the Stephens nod doesn’t happen, the other possible Deputy Secretary of Defense pick, billionaire financier Stephen Feinberg, is just as much of an industry mainstay. The previous Trump administration’s intelligence advisory board head, Feinberg in the past owned once-prominent national security contractor DynCorp (now part of Amentum) and is the CEO of Cerberus Capital Management, which launched a defense-focused venture capital arm this year. A Feinberg spokesperson, however, said that he has not been offered a position.

As electronic warfare startup CX2 co-founder Nathan Mintz explained to Forbes, “the close relationships between (vice president-elect) Vance, Elon and the defense VC and startup ecosystem will create a huge opening for real defense acquisition reform and widening of the number of players.”