Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TPPN. It is Thursday, 03/27/2025. We are live from the Temple Of Technology, the Fortress Of Finance, the capital capital. This show starts now. We got a great show for you today, folks.
Speaker 1:It's defense day. Let's hear Jordy. Defense. Defense. Defense wins championships, and we're breaking it down today on TPPN live talking to a bunch of people in the defense world.
Speaker 1:Deleon, ACS, AJ from Hermes. We got a bunch more folks coming in. That's starting in half an hour. We're gonna give you a little brief overview of what's going on in the news in tech broadly, talking about tariffs, talking about what Pat Gelsinger is up to now that he's out of intel, and then we'll take you through some history of defense tech, how he got here, and then we'll talk to the builders that are actually doing it, the good stuff. So let's take it with the news first.
Speaker 1:First, I noticed you are you could say you're verticalizing orange today.
Speaker 2:I'm going big. I'm going long orange.
Speaker 1:I'm going long shorting.
Speaker 2:I wanna go on record. I'm shorting. It's 03/27/2025. I'm short. Peak.
Speaker 2:Yep. And it's, it's downhill from here.
Speaker 1:Many ways you could say that slop is, like, the most important word of the year, but that is also a top signal for the word overall. It's gonna get overused. It's gonna get applied with a broad brush. But, very fascinating time on the Internet yesterday. Obviously, there was eventually a backlash to all the giblification, all the gibbs going out.
Speaker 2:And But the slop boards cleaned up yesterday.
Speaker 1:They did. I posted, one that was just and I was framed from Oppenheimer, Gibbified, 30 k likes. Jordy had another 25 k or something on
Speaker 2:Morning routine.
Speaker 1:Morning routine. Just take the viral meme, make it Ghibli, and it was easy money on Easy money. Because Elon bucks were
Speaker 2:flowing I can't wait for the payouts. There's there's this sense maybe Yep. For people that aren't in the creator revenue sharing program that the payouts are big. They are not.
Speaker 1:They're not.
Speaker 2:We could maybe pay for a week's supply of Saratoga water
Speaker 1:Yep.
Speaker 2:With the x payout
Speaker 1:Yeah.
Speaker 2:From this entire month.
Speaker 1:But it was a fun day. I think I think a lot of the criticisms were correct that, you know, this this is a degradation of aesthetics in some way. It's a collapse of aesthetics. It's this all consuming meme. Everyone was obsessed with the exact same image, exact same look, and it was a little odd.
Speaker 1:But, you know, it was a it was a very peaceful time on x yesterday. There was no politics, no wars, no fighting. It was just, people posting anime. Yep. Having fun.
Speaker 2:Haskell in the chat says Lisan al Ghibli. Ghibli. Yes. Of course.
Speaker 1:Of course. And so, I'm sure we'll dig into that more. I wanna hear from Midjourney. I wanna hear from David Holes. I also wanna hear about more of the tech that went into developing that model.
Speaker 1:How narrowly is it trained on Studio Ghibli type content? Will there be a legal battle there? I also wanna know, was this truly just an algorithm change, or was there more scaling applied to this? Is this the model's clearly better. I don't think anyone debates that.
Speaker 1:Is it better because of scale? Did they did they spend more money on the training run, or is this a, you know, an algorithmic improvement? So interesting to dig into. I'm sure we'll talk to a lot of folks. We have Cristobal Valenzuela coming on in a few weeks, founder of Runway, which does AI video generation.
Speaker 1:I'm sure he'll have a lot of commentary on this, and we'll try and cover this as the story continues to develop. But the story that is developing today is new Trump tariffs, where things stand from The Wall Street Journal. Giving a little roundup here. Canada and Mexico got a 25% import tariff on goods. Took effect March 4 with an exception for for energy products and potash, which received a 10% tariff.
Speaker 1:A little bit more critical. What
Speaker 2:is Potash. Potash.
Speaker 1:You look that up. I think it's an industrial fertilizer.
Speaker 2:Potassium containing salts that are mined and manufactured. It's used as a fertilizer. It's a key nutrient for plants. So bad news for the potash industry.
Speaker 1:Didn't get the oh, the the domestic potash industry, you mean? Because the domestic The US domestic potash industry, they want the highest tariff possible. Yeah. Yeah. They But there there's a smaller tariff, 10 on on potash and energy, 25% on goods.
Speaker 1:Trump administration later suspended those tariffs until April 2 on autos and all other goods that are eligible for duty free trade under The US Mexico Canada agreement or USMCA. Many goods entering The US don't comply with USMCA and are therefore subject to the new tariffs. Canada responded by placing tariffs on $21,000,000,000 in US imports, including fruits, vegetables, appliances, and liquor. Canada also said it would tariff an additional 20,000,000,000 of US goods in response to Trump's steel and aluminum tariffs. So a little bit of trade war going on.
Speaker 1:And then the big news today is that president Trump on March 26, that was yesterday, announced that he would impose 25% tariff on global automotive imports to The US. That's all cars that are made, internationally. Doesn't matter if it's a BMW or Han Chinese EV. Like, that's the brand, Han.
Speaker 2:Oh, really? Yeah. Even though Han is Yes. Yes.
Speaker 1:It's most dominant ethnicity in China. The one of the That's cool.
Speaker 2:That's like calling your bank Bank of America.
Speaker 1:Yeah. Basically. Yeah. And of course, Huawei also or is Huawei or
Speaker 2:Big Alpha There's a lot of news. Somebody making a political podcast called Podcast of America.
Speaker 1:Podcast of
Speaker 2:America. But just the podcast of
Speaker 1:America. Yeah. Like Bank of America. I like that. It's good.
Speaker 1:And so auto stocks have been in turmoil since this happened. And and then, of course, there are also tariffs on China. That has been the big focus of the trade war. On February 3, the Trump administration imposed a extra 10% tariff on goods from China on top of those various tariffs levied during during the Biden and Trump first Trump administrations. China retaliated with a 25% tariff on US coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and other products.
Speaker 1:That all took effect February 10. And then on March 3, Trump again hiked tariffs on Chinese goods by an additional 10%. China again retaliated with tariffs that took effect on March 10, including 15% on US chicken, wheat, corn, cotton, 10% on sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products. So they are taxing our food, and we are taxing their, like, manufactured goods, basically. There's also some reciprocal tariffs going on over in Europe in in the EU.
Speaker 1:But you know what they aren't raising tariffs on? I didn't see mentioned at all in there. Swiss watches.
Speaker 2:That's right.
Speaker 1:And so head on over to Bezel. Shop over 23,500 luxury watches, fully authenticated in house by Bezel's team of experts.
Speaker 2:That's right.
Speaker 1:Time. Because a lot of things, if you buy something before the tariff comes in, the price goes up, You know? It like, the the the free market will reward you for that.
Speaker 2:That's right.
Speaker 1:There's you you some people that pay attention to these tariffs, they trade them with size on Wall Street. They're running massive hedge funds. Some other guys are just buying Rolex Daytonas and F. P. Jorns hoping that tax tariffs hit and they strike it rich.
Speaker 1:Many ways to make a buck around here. Always a bull market somewhere. Well
Speaker 2:That's right.
Speaker 1:Speaking of luxury goods, Ferrari is is set to raise prices on some models in response to US tariffs. This is the big question. Who really pays? The external revenue service is is levying tariffs. Will the foreign come countries pass that through to the consumer by raising prices?
Speaker 1:In the case of Ferrari, it certainly seems like they are. They're raising it. They're seeing a maximum 10% price increase on the Purosangue, which is their SUV, and the Dolce Cylindri,
Speaker 2:the 12 good. Normally, you really boxed those, but I'm proud of you.
Speaker 1:I'm working on my Italian accent.
Speaker 2:Yeah.
Speaker 1:Yeah. The 12 cylinder, which very controversial car. I think it's beautiful. Not many people agree with me.
Speaker 2:It's the wheels, John.
Speaker 1:It's the wheels. Oh. I always thought it was the front hood, that black stripe, which is also a design element in the f 80. The wheels on the Do they go round and round?
Speaker 2:Are just they go round and round, but they're very bad.
Speaker 1:Oh, okay. I didn't know that.
Speaker 2:Well I mean
Speaker 1:I mean, I'm still partial to the to the rear engine Ferraris, the s p three, even the s f 90, the two nine six. I think those are all fantastic cars. But, in terms of, you know, what does Ferrari really do well? Front engine V12s and the Dolce Trelendri is still in the game. But it's 10% more expensive now.
Speaker 1:Pinch those pennies.
Speaker 2:Ferrari was already having issues with pricing. People Mhmm. It seems that the true market value of a of a lot of new Ferraris is simply less than what Ferrari is charging. Yes. And so having to increase prices and and pass those on to con you know, basically pass the the tariff cost onto consumers Yep.
Speaker 2:Is not gonna have a positive impact on sales.
Speaker 1:And so we've covered this before. Ferrari has changed their strategy. They are producing a lot more cars, and there has been a glut of these models that were formerly very special, like the s f 90. It's a, what, 608 hundred thousand dollar car. Used to be when there was a $600,000 Ferrari.
Speaker 1:You really needed to know someone to get one. You need to be on a list that you had to be invited to buy it. Now you can just kinda pick one of those up, And the folks who did pick them up have taken a lot of depreciation on the chin with that one. And also just from a design standpoint, the SF ninety two and six, they look pretty similar.
Speaker 2:Stories of people buying SF nineties, you know, putting up a lot of equity Oh, yeah. And then still being down Underwater. In the red.
Speaker 1:Yep. Like It's very
Speaker 2:rough. Having to pay to to sell their car.
Speaker 1:Well, the good news is the two nine six, the SF 90, and the Roma will all remain unchanged in price regardless of the import date. This implies that Ferrari will cover the cost of any duties due on such models imported to The US after the April 2 deadline. Let's hear it. Truly an external revenue service event.
Speaker 2:Yep.
Speaker 1:Well, you said you wanted to hear it for someone?
Speaker 2:Well, let's hear it for the Ferrari management for taking one Yeah. For The US consumer.
Speaker 1:Oh, thanks.
Speaker 2:US consumer is undefeated.
Speaker 1:Yep. They they really are. Anyway, you know who drives for Ferrari?
Speaker 2:Charles Leclerc. And you know what bed
Speaker 1:he sleeps on. He sleeps on an Eight
Speaker 2:Sleep There we go.
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Speaker 2:Just do it. Just do it. Code TBPN, $350 off. And you can compete with with John and I. We've both been putting up big numbers.
Speaker 1:I I woke up at 4AM, but I still put up a big number last night. Something like ninety, ninety four.
Speaker 2:And We were hanging
Speaker 1:with really into it, you can go deeper. We are learning this. We're gonna we're gonna dive into this later, but Eight Sleep does a bunch of other analytics. They don't just give you a sleep score and tell you how long you slept. They check your heart rate and your heart rate variability, your HRV.
Speaker 2:As your breath rate.
Speaker 1:And your breath rate. And so you can compete with your rival on those metrics as well. It's not just about who slept longer. It's also about who's putting up big numbers in HR across the board. There's always a bull market somewhere in
Speaker 2:your market somewhere. We we got to hang on Zoom a bit with Mavi and Alexandra over at the Eight Sleep team this morning, which is fun. We got some cool stuff cooking. But back to the show.
Speaker 1:So Pat Gelsinger, former Intel CEO, absolute legend.
Speaker 2:He's an absolute dog, John.
Speaker 1:He was he's out at Intel, and he's in to a venture capital firm. Little personnel news going on. He is joining the venture firm Playground Global as a general partner with a focus on semiconductors and other investments that lie somewhere between the improbable and the impossible. I like it. He's really going long shots.
Speaker 1:I I love this. I I've I was thinking about this the other day that, you know, there are funds that have gone all in on defense tech, or they've gone all in on crypto, or they've gone all in on AI. And I would love to see a fund burn the ships and just go really, really hard on we're gonna figure out how to make money in semiconductors. And we have a lot of money, and we think this is important. We think it's an important mission.
Speaker 1:And so that's what we're gonna figure out. And it sounds like that's what Gelsinger's gonna do. And Yep. I mean, he's a legend. He's been in the industry forever.
Speaker 1:And he would be probably a fantastic board member. I I mean, I don't I don't know exactly how good he is at startup governance, but I imagine he'd be very knowledgeable and to be someone who you would want as an advisor.
Speaker 2:I'm over here on LinkedIn where he's putting up some big numbers. He hasn't shared this news yet, by the way. So it's breaking news.
Speaker 1:Okay.
Speaker 2:He calls himself an electrical engineering expert with four decades of technology experience.
Speaker 1:Just a couple decades.
Speaker 2:But I love that he's leading with his expertise. Gotta be cracked to go on a run like he did. And excited to have him on the show at some point.
Speaker 1:He started brief stint at VMware, the Intel veteran, came back home to the chip giant in 2021, this time as CEO with a mandate to revive the company's prospects and rebuild its technological prowess amid market share losses and highly publicized delays for its most advanced chips. His turn but his but his turnaround strategy focused both on designing and manufacturing chips, which was controversial. Remember, a lot of people were saying Intel should split those two businesses up, become two different companies. This round ran counter to the direction that the industry had taken over previous several decades with rivals like AI chip designer, NVIDIA, and chip manufacturer to Taiwan Semiconductor Manufacturing, TSMC, setting the pace. And so the whole market and the big power law companies were all saying, you gotta be a pure play.
Speaker 1:Intel, you're trying to do two things at once. You're you're neither NVIDIA. You're not NVIDIA, and you're also not TSMC. So you're falling falling behind. Everyone was saying, hey.
Speaker 1:Just go pure play. He didn't he chose not to do that, and eventually, they said, hey. We wanna try a different CEO. But the new CEO, Lip Bu Tan, is signaling that maybe his story, maybe he's staying the course and maybe not splitting up intel, but we'll see. He could just be saying that because internal politics, and he wants to really get the playbook lined up before he rolls it out.
Speaker 1:So, I'm sure we'll be talking to more folks about intel in the coming weeks. Stay tuned. But, you know, I was thinking if he if he wants to just get a couple deals under his belt, maybe he takes a you know, he's you know, this is his first time really being a VC.
Speaker 2:Call Saquon. Saquon. He's been very active Exactly. The last couple months.
Speaker 1:Yeah. Maybe Saquon could be like his his junior partner. Yeah. Just like or venture partner.
Speaker 2:Or Honestly, Saquon, at least over the last two months, is getting into the higher profile companies, companies that have 10x the demand Yep. For for their equity. So it's possible that, you know, they could I'm I'm sure they could both learn a thing or two from time. So,
Speaker 1:hopefully, he, he, like Saquon, gets into Ramp. Of course, you know Ramp. Time is money. Save both. Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 2:And as Saquon says, keep your team focused on the game, not expenses.
Speaker 1:I love that. It's great. Boom. Let's move on to, some news in The Wall Street Journal about Flexport. Ryan Peterson's a good friend.
Speaker 1:He's been on the show. This, this article is kinda deep diving into their, their profitability and revenue. The title is freight startups Flexport misses profitability target. We're gonna give you the details and then give you our take. So, Peterson said too much of the company's 5,200,000 square feet of warehouse space spread across five buildings went unfilled last year.
Speaker 1:He said demand for fulfillment service is rebounding, and he expects that Flexport will be quite profitable by the end of twenty twenty five.
Speaker 2:So So that's the real story here, folks.
Speaker 1:Here for Ryan. He's been working really hard on this.
Speaker 2:Billions of revenue and $20.25 profitability. If we were writing this headline, we would have led with that.
Speaker 1:Yeah. Exactly. Exactly. Yeah. So in 2023, FlexSport did 1,600,000,000.0 in revenue.
Speaker 1:Last year, they did 2,100,000,000.0, still growing. And, of course, Ryan actually rotated out, hired a CEO, and then went back into the CEO seat, put the company back in founder mode, made a bunch of hard decisions.
Speaker 2:Taking like four or five flights a day.
Speaker 1:Yeah. You I mean, you've seen him. He called in from Texas because he's traveling like He is he is doing everything necessary to make this company work and successful. And an interesting thing where more than I possibly can.
Speaker 2:Yeah, Flexport is in this position where many of Flexport's customers have gone through the craziest last six months Oh, of their time as companies, right, with trade wars, tariffs, all this crazy stuff happening. And it's almost like they need to kind of thread the needle on making sure that, you know, they're building a great business, but also not putting too much pressure on their customers who are already seeing their costs rise in various ways.
Speaker 1:Yeah. I mean, last time I was talking to Ryan, he's on all these flights. I was telling him, like, hey. When you're traveling, you really gotta book a wander. You should find your happy place.
Speaker 1:You could book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. I remember you
Speaker 2:saying that word for word.
Speaker 1:Yeah. I was saying it's a vacation home, but better go to wander.com. Use code t v p n. And so, check it out. Let's, let's run through a little bit.
Speaker 1:So so we're doing defense day today. We're taking you through, defense tech, trying to give you a tour of what's happening in the industry. We're gonna have a ton of great founders on, couple investors as well. But I wanted to run through a little bit of history on how we got to this point in defense tech. And so I gave a talk.
Speaker 2:I wanna know at what point did they decide to call it defense tech versus offense tech? Because that would have been
Speaker 1:It is the time for offense. Well, you know that the Department of Defense used to be called the Department of War. Yeah. Because it was just like, yeah, it's the guys who we handle war.
Speaker 2:It is a better
Speaker 1:But, we we've toned it down now. We're focused on defense because defense wins championships, of course. And it really all this whole idea of, like, before, you can't call, like, the civil war, like, defense technology really because they weren't using electronics back then. Yeah. World War two was the first electronic war.
Speaker 1:And so this all started during the Blitz in 1940. The Germans were bombing Britain, and there were these series of radars called the Camhoebert line, and they were decimating our bombers. They had something called the Messerschmitts two sixty two, and it was really a war of technology. We build a radar system. They build a bomber to bomb the radar system.
Speaker 1:There was radio systems and then counter radar systems and all these different things
Speaker 2:going lore. My great grandpa was shot down twice. Twice. I I hit a in a a he was the rear Yeah. Gunner in a b 52, sort of long range bombers.
Speaker 1:Wasn't his dying wish not to mention that on a podcast?
Speaker 2:No. He said
Speaker 1:He said, actually, it's fine.
Speaker 2:Talk about this forever to the loudest, you know, in the loudest possible way to the most number of people.
Speaker 1:It's legendary to survive too.
Speaker 2:To survive too. And then he was redeploying to the Pacific to, be a fighter pilot when the war ended. But Yep. Anyways
Speaker 1:And so, so the solution was Vannevar Bush, the science legend. I think he worked alongside Oppenheimer. And this was the first time that there was, like, this really combination between civilian scientists and military efforts. And this is, a continuing theme throughout the the evolution of defense tech. So, there's he brings this one page memo to FDR outlining a plan.
Speaker 1:Hey. We're gonna use our best scientists at universities to, to build defense tech, and FDR approves it in ten minutes. Talk about, like, founder mode. Like, it's, like, really, really great. So this creates the n r d, the NDRC, the National Defense Research Committee, in 1940, and they work on the bomb, which you know from Oppenheimer, but they also work on radar.
Speaker 1:And so, the Office of Science Research and Development, nineteen forty one, Bush is the director. In 1942, the Harvard Radio Research Lab starts government spending on defense tech. And Bush was a thesis adviser to Fred Terman, and Fred Terman is known as, like, the real father of Silicon Valley because he runs the Harvard Radio Research Lab. They create over a 50 anti radar devices, and they're pivotal in disrupting German radar capabilities. There's a whole bunch of different things.
Speaker 1:They invent chaff, like the literally just aluminum foil that is cut to half the wavelength of the radar. So it's, like, barely tack in my opinion, but it's, like, still there's math to calculate how you cut the tinfoil. But it's just chopped up tinfoil. But if you chop the tinfoil at a certain size, it messes with the radar. And so that's when you see planes throwing out just aluminum foil.
Speaker 1:The reason is because it disrupts the radar. Right? Carpet jammers were high frequency transmitters that overwhelm enemy radar. You just send so much signal that they get confused. And this contri this contributed to major successes of bombing raids like Operation Gomorrah in '19 in 1930 in 1943.
Speaker 1:Now the radio research lab gets disbanded in 1946, and they needed something new. So Terman goes to Stanford, and he brings ideas from Harvard over to the West Coast. He's the dean of the school of engineering, and this is the formation of the Stanford Industrial Park, which created Varian Associates, Hewlett Packard, General Electric, Lockheed Martin. They all had offices there. And so it was this crazy inter interface between science and and business, basically.
Speaker 1:And this is all pretransistor, but it led to but it led to, like, all of Silicon Valley, basically. So then you go on to the fifties. So we'll go decade decade by decade. That was the forties. In the fifties, DARPA obviously speeds up.
Speaker 1:This is all because of Sputnik. 10/04/1957, It was the Sputnik moment of
Speaker 2:Sputnik.
Speaker 1:The Cold War. Yeah. Okay. Exactly. It was just a radio satellite, but it could hold payloads.
Speaker 1:And so all of a sudden, everyone's thinking, wait. If they can put up a radio satellite, they can put up a bomb, so we gotta be able to do that. And so Sputnik's a huge deal. The New York Times published 279 articles about it in one month. It's, like, crazy.
Speaker 1:The the It's like, jeez. Wall to wall coverage. It was crazy. It was like a the Sputnik moment really was real. Yeah.
Speaker 1:And so the Cold War was heating up.
Speaker 2:The ghibli moment.
Speaker 1:Yeah. The ghibli moment of
Speaker 2:It was the ghibli moment of space Yeah. Or the Cold War.
Speaker 1:And so, the The Soviet Union took huge World War two casualties, but they were strong in tech. And Sam Rayburn, the speaker of the house of representatives at the time said that the people of The United States have been humiliated. They're disturbed, and they're unhappy. The CIA actually knew that Sputnik was gonna happen, but Americans were scared because they didn't know. And the solution was, we responded with the Vanguard TV three launch two months later, but that crashed.
Speaker 1:And then Explorer one worked in 1958. So the pace of play was really fast. Sputnik, 1957. Explorer one in '58, smaller, but it goes deeper into space, so we got that superlative. Now there's too many conflicting rocket projects.
Speaker 1:Like, the army had one. I think the CIA had one. Like, there were a bunch of different projects going on. They're like, we need to consolidate this. We're gonna president Eisenhower says, put it all under the advanced research projects agency.
Speaker 1:We're gonna create a new agency. It's called ARPA, eventually becomes DARPA. And and DARPA is, like, legendary. They create the Internet through ARPANET. They create stealth aircraft, GPS, drones, and even self driving cars originally came out of DARPA.
Speaker 1:And so it has been a great, you know, like, farm team for tech for a long time. Nineteen sixties, we gotta talk about Skunk Works.
Speaker 2:McGuire was at at DARPA himself for, I think, a year and a half.
Speaker 1:That's right. So nineteen sixties, Skunk Works. The DOD was 36% of all r and d spending, not in The US, in the world. The DOD was spending so much on r and d, really, like, tech race. And so, Harvard Radio Research Lab and DARPA were very government driven.
Speaker 1:Skunkworks marked a shift into proper research and development being done at companies. And so Skunkworks is all led by Kelly Johnson. He's designing planes at age 12. At age 23, he goes to work at Lockheed as a tool designer. He's super confident.
Speaker 1:He tells he goes into the chief designer just chief design engineer at Lockheed and just, and just says, hey. Our our best aircraft, it's flawed. I'm gonna go fix it, and then give me a wind tunnel, and he does it. And so then he designs the Hudson bomber, the model 14. It's more maneuverable, important in World War two.
Speaker 1:The jet powered Messerschmitt two two two sixty two that obliterated us in World War two. So he's fighting against that. They wind up building the u two spy plane, which you're probably familiar with. That one gets shot down, and but it's a recon plane that can fly at 70,000 feet. Lockheed wasn't invited to submit a proposal.
Speaker 1:They get money from the CIA. There's, like, this crazy story where Kelly Johnson goes to a cafe in Georgetown, meets the CIA, gets 30,000,000 in funding, like, basically in a black bag. The initial bid for the f 35 was in 1992. It just started flying. Just to show you, like, the pace of things, like, the f 35 took thirty years, and they did the the like, the pace of play around the s r 71 was, like, insane.
Speaker 1:So the u two was great, but Francis Gary Powers got shot down by a Soviet Soviet surface to air missile, and they needed something faster, supersonic. And so then they build the s r 71. It goes over 2,000 miles per hour. It just outruns missiles. It doesn't have, like, missile defense or chaff or anything.
Speaker 1:It's just like, I'm faster than a missile. So I'm good. Then, of course, the moon landing happens in 1969, and this is the peak of NASA in some ways like the last hurrah. Then, of course, we go into, like, the decline. In in nineteen seventies, there's this like, this is when stagnation starts.
Speaker 1:This is, the teal thesis. All the Bitcoiners say, like, what happened in 1970, that whole thing. And so there's a lot of different reasons for this economics. The Bitcoiners say, like, the it's the broken dollar gold link. Politics, people say this is when overregulation started.
Speaker 1:It became harder to build in the real world because of nuclear scares. Everything needs to be approved. The FDA is charging 1,000,000,000 per new drug. Nuclear plants cost billions, and laws change while they're building. And technology, like, there's just the allure of software opportunities.
Speaker 1:Like, if you're a really smart person in the seventies, like, you build a tech company or, like, a software company
Speaker 2:Yeah.
Speaker 1:And you'll make a lot of money. You're not gonna go into hard stuff. So that's kind of what's going on in the seventies. Then the eighties, there's, like, this fake solution to stagnation in the form of globalization. Henry Kissinger just went to China, opened up that relationship post Cold War.
Speaker 1:US manufacturing employment actually peaked in June of nineteen seventy nine at 22% of total nonfarm employment. By 2019, that share had fallen to 9%. So America basically said, hey. We can just do manufacturing elsewhere. And, obviously, we're seeing that come back to bite us now, and we're gonna talk to some folks that are bringing it back.
Speaker 1:But, this was the idea of, like, the multinational corporation. America was good at bits. It's only rational to to prioritize that. And, of course, this is all capped with China's rise. They joined the World Trade Organization in '20 in 02/2001.
Speaker 1:And, of course, there's been a lot of problems with the China relationship over the last, few decades. In the nineteen nineties, the end of the Cold War happens, December 1991, and there's a desire for a peace dividend. Like, the the American taxpayer is just saying, like, hey. Maybe I don't wanna spend, like, $20 of every hundred that I pay into the taxes in on, like, defense. It doesn't make sense.
Speaker 1:We're not at war. Like, we let's just let's just invest in other stuff. Tax cuts, health care, education. And this was this was bipartisan, by way. Yeah.
Speaker 1:Dick Cheney said, because we now face neither a global threat nor a hostile new nondemocratic power dominating a region critical to our interest, we have the opportunity to meet our requirements at lower levels and at lower costs. So everyone was on board with this. Now the source of the problem was that, the this all leads up to the the Last Supper turning point. The Pentagon says The US doesn't need so many defense companies. There were, like, 50 at the time.
Speaker 1:And so secretary of defense, Leslie Aspen
Speaker 2:clear those 50 They consolidate. Had but they also had thousands and thousands of tiny subcontractors.
Speaker 1:Tons. Tons. It was a massive, massive organization. Yeah. And so William Perry brings all the defense tech companies together in the fall of nineteen ninety three.
Speaker 1:He encourages mergers, says you gotta cut cost. We expect defense companies to go out of business. There's dozens of mergers. Hughes Electronics and McDonnell Douglas has ceased to exist. General Electric and Chrysler sold their defense subsidiaries.
Speaker 1:At one point, the industry was shedding a thousand jobs a day, and it was the Francis Fukuyama idea idea of the end of history. There will be no more war now that we're in the era of capitalism. There used to be 50 defense primes. Now there's just five. Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman.
Speaker 1:Then, of course, there's the war on terror, a wake up call. You get Palantir. It was really tough to get started, but into In Q Tel steps up. The CIA funds the VC farm of the CIA funds, Palantir. And they actually had to sue the government to allow them to to win an army contract and they won.
Speaker 1:And then interestingly, SpaceX used the same lawyer to sue Crazy. The government because again, there was like, okay, is this You
Speaker 2:gotta have that lawyer on. Yeah.
Speaker 1:Yeah. He might actually do it. I I I'm connected, so maybe we should reach out to him. Then, of course, in '20 in the twenty tens, you can think of it as, like, Space Race two point o. The story is really, like, SpaceX growing.
Speaker 1:There's that SpaceX law lawsuit. But the twenty tens are the era of of SpaceX. Like, 2010, it's the first Falcon nine flight. Twenty twelve, the first commercial ISS resupply. Twenty fifteen, the first orbital rocket landing.
Speaker 1:Twenty sixteen, the first drone ship landing. The first crewed ISS flight happens in 2020. And there's the spacesuit the the SpaceX lawsuit, of course. And so there's a bunch of key moments here. Ash Carter creates the Defense Innovation Unit.
Speaker 1:Eric Schmidt is the inaugural chairman of the the Defense Innovation Board. And Trey Stevens founds Anderol, and he also changes the LP agreement at Founders Fund to allow for defense investing in weapons, basically. Yeah. And they just went to their LPs and were like, hey. We're just going to remove this one clause.
Speaker 1:Don't worry about it. We don't really have any plans. Then the first investment that they made was Xander all right after that. But it's a funny story. And that caused a cascade in Silicon Valley where every firm can now invest in defense tech.
Speaker 2:And even two years ago
Speaker 4:Yeah.
Speaker 2:A lot of firms still had these sort of LP agreements that did not allow them to make defense investments, period. Yep. In the same way that Founders Fund at one point had it. And and what that just meant is if you had, it's already hard enough to raise money. Right?
Speaker 2:Yep. And there's only a few you know, maybe it's a couple thousand companies a year that raise, like, anything close to, like, traditional venture capital. Yep. And imagine doing that when 95% imagine raising when 95% of the funds just say, like, I think you're smart. I I like what you're doing.
Speaker 2:It's good for the country, but you I still can't do legally can't. Yep. And they they can go and ask for individual exceptions, but it just becomes much more complicated, and it's easier to just say, like, no. We're not gonna do this.
Speaker 1:Yeah. Totally. Well, we got Delian in the house. Welcome to the temple of technology.
Speaker 2:He's back.
Speaker 1:How you doing?
Speaker 5:Oh, yeah. Delta v. And I heard today was the day where we were all supposed to call him from the factory floor. So I Oh, yeah. The rumors starting around.
Speaker 1:I like it. It's a beautiful background. Proof of
Speaker 3:work. Proof of work.
Speaker 5:Nothing in the background is ITAR control that Fantastic. In one place. So, unfortunately, it's the least interesting view of the background.
Speaker 6:We got
Speaker 1:a nice logo back there. It's great.
Speaker 5:Yeah. Exactly.
Speaker 1:I was just given a little bit of a history of kind of how we got here in the evolution of defense tech. Can you walk me through kind of like I literally just ended it, like, 2020. How have you experienced it? How would you explain to someone that's kind of just, like, generally aware of venture? Like, how did we get to this particular mix of firms and companies and strategies in defense tech investing?
Speaker 5:Yeah. I'll use a funny analogy, to describe the various generations of Defense Tech and how it's evolved over time. If you look at the basically 02/2003 through 02/2015, call it, time period, in order to start a successful company in, like, defense aerospace thing to basically work with the government, You both had to be a billionaire cofounder, and you had to be willing to sue the US government in order to, you know, have any success. And so, you know, both SpaceX and Palantir in the 02/2010 through '12 time period basically had to sue the government in order to win contracts. Twenty fifteen to call it roughly 2019.
Speaker 2:Gonna sue our customers. The playbook is, like, we're gonna sue our only customer.
Speaker 1:Anywhere else. You don't hear about, like, oh, yeah. Like, the you you know, the c the this b to b SaaS company had to sue Nike to get them to use their SaaS products.
Speaker 2:We really wanna we really want Ramp to sponsor us. We're gonna
Speaker 1:sue them. Yeah.
Speaker 5:Yeah. Exactly. Exactly. And so it gives you a sense of, like, how difficult it was. It's crazy.
Speaker 5:Only people that could afford to sue their customers and still be alive as a business and, like, you know, get to the other side of it were literally billionaires. Right? So you had to be a billionaire, and you had to be willing to sue your customer. That's crazy. And then in, you know, sort of 2015 through 2020, at that point, you no longer have to be a billionaire and sue your customers.
Speaker 5:You can, at that point, just be a billionaire. So it's still, like, very hard, but you no longer have to sue them and so then be a Palmer Lockheed, you know, sort of starts and or all. And then, you know, call it from 2020 to 2022, my one liner is like, now we're finally standing on the shoulders of giants. These guys have broken down the barriers, the DOD, and, you know, generally, US government is ready to work with, you know, startups. And so you no longer have to be a billionaire suing the government.
Speaker 5:You no longer have to be a billionaire. At this point, you can just be friends with a billionaire, and that's sort of close enough to, you know, you you have the appropriate level of power and wealth to be able to do that. And so people like me, who are just, you know, merely lowly friends and billionaires, are finally able to start companies. And now in 2022, people extrapolated that trend all the way down. They're like, you know, billionaires that sue the government.
Speaker 5:Now it's billionaires. Now it's friends and billionaires. Let's take the logical leap, and high school students can now start, defense companies that raise, you know, a hundred million dollars. And that's obviously a logical conclusion of that trend.
Speaker 2:Yeah. What what do you right now, it seems like every every investor that's online is like, yeah. I do defense. Yeah. Yeah.
Speaker 2:I'm you know, I dabble. I dabble. I'm a I'm I'm a patriot. Right? But but is that still the case where the average VC in ten years is like, yeah.
Speaker 2:Do defense, or is it the average VC is like, yeah. I kinda, you know, FOMO'd in in, like, 2023 and got over my skis. And I'm back to
Speaker 1:I'm just just just just skiing. Just skiing.
Speaker 2:Skiing and AI.
Speaker 5:They're they're back to skiing.
Speaker 1:They're back to just skiing, not being over their skis on the defensive. Yeah.
Speaker 5:I mean, I think I I think I heard you guys talk to this when I, know, sort of hopped on. But, you know, back when Androle started in the, you know, sort of 2017 time period, a significant amount of the investors that now all talk about defense literally had it in their LPA of, you know, the three things that they weren't allowed to invest into was gambling, porn, and the bet. And it was, like, put as one of those top three effectively, like, vices. It was in, like, the vice clause. Yeah.
Speaker 5:I think it's pretty likely that, you know, over the next decade, some of those LPAs end up going back to having defense in the vice clause. You know? And all these people that, you know, YOLO ed in, their LPs are like, fuck off. Like, we don't want you doing this again. You were clearly terrible that you had no idea what you're doing.
Speaker 5:We're just putting it, like, back in the vice clause, and so no investment in porting defense as far as we're concerned. They're the same thing. Like, leave that to OnlyFans and Founders Fund. I can figure that out.
Speaker 1:That's great. I well, I the the reason I wanted to have you on mostly was to kind of restate and restart the debate around the continuing resolution. We put out a clip from you. We got a lot of text messages. I got a couple essays delivered to me.
Speaker 1:A lot of chat GPT stuff coming my way. Can't say I read it all, but, I I I said I will ask Deleon about it again next week. So can you restate your thesis on what's going on with the continuing resolution and just the overall DOD budget and what it means for defense tech companies? And then what's been the pushback? What's what have the good response has been, and what has been, like, the cope?
Speaker 5:Yeah. What's funny is, like, I see so much of it is, like, pure. Like, if you look at the people that are closing the biggest, you know, some defense contracts, you know, Tim Hughes at, you know, sort of SpaceX, you know, Matt Graham, Trey Stevens, etcetera, that whole crew at, you know, You know, Sean Sankar at Palantir. Somehow, none of those people, you know, critiqued, you know, sort of my framing of it. Bet my tweet was a little more pithy, but it was funny seeing some of the critiques where was like, you just didn't watch the clip.
Speaker 5:Like, yes, my tweet was, like, an attempted summary of it. I basically, like, you know, was a bit hyperbolic in saying that, like, there are no net new starts. There are going to be some that are potentially allowed, but it also kinda you know, it needs to be paralleled to the original, basically, you know, congressional, you know, and house and senate use of bills that are passed in use of late February. So, you know, some of the critiques came in from some of these, I think, more junior companies that have a little bit, you know, sort of rose colored glasses on how they think this process is going to go in that, yes, it points to, you know, allowing that type of reprogramming. And at the same time, you're seeing, like, in a continuing resolution year going with that four to seven contract.
Speaker 5:And so I think they have this view of, like, oh, man. You know, now's the time where I can, like you know, all the rules are scrapped. We can totally, you know, go reprogram everything. And I'm like, is some flexibility there, but also, like, look at what happens when people get a little over their skis. Like, one of the topics that I sent you, Kugen, was, like, around the NASA administrator.
Speaker 5:It's obviously more on the civil space side than defense side, but, like, you know, Elon tweeted out, like, you know, they see FBI assess. We should deorbit it. You know, I don't want that up in space anymore. That shouldn't be a NASA priority. And, like, yeah, he got his, like, you know, sort of wrist slapped a little bit.
Speaker 5:He also got his wrist slapped when he, like, went to the secretary of the air force, and then two hours later, you know, the f 47, you know, based in contract, I don't know. It's even though Elon's been on this rampage against some human rated fighter jets for a long time. So it's like, look. Like, even Elon isn't able to convince the air force that we we shouldn't have human rated fighter jets. Like, you think your fucking thing that's like a mediocre copycat of androle is somehow gonna convince them that they should spend, like, you know, money on your fucking Ponzi coin?
Speaker 5:Like, probably not. Like, I think there's a lot of copion, that's going on there. So it's like and people are, like, trying to cite these, like, super it's like, look. I read the CR. Like, I know the section that's in there.
Speaker 5:What matters is not, like, the exact legalese that is in the continuing resolution. It's, like, how that's going to be interpreted both by the warfighter and by, like, congress that ultimately is gonna, you know, sort of go, you know, approve the, like, you know, sort of reprogramming and then the, you know, you know, budget, you know, reconciliation, you know, sort of, you know, the old South. Anyways, I have more than I can go into there but it's like Yeah. Lots of copium and all the sophisticated players didn't say anything.
Speaker 2:Do you think that there's a lot gonna be a lot of like sort of potentially wasted talent coming out of this era of defense investing where people wanna be founders so bad, but they would actually be potentially much more successful going into Andoril and like working on a specific product and and just leveraging, you know, the entire platform that they've built and, the the sales channel, everything like that and the sort of like Silicon Valley ethos of like everybody is like aspiring to be a founder. It it it you know, because I think probably at least the three of us and many other people like Anderol of Anderol is Anderol is sort of like, you know, probably gonna play out. Right? Can see The Anderol of
Speaker 5:Boats will probably be Anderol rather than a different company. You know?
Speaker 2:Yeah. But, but, yeah, do do you see
Speaker 1:Except for Androl of bears. I think bear domestication is very important, and I think that is a white space that Androl's weak on. And so
Speaker 5:We're announcing Kugen's new incubation.
Speaker 1:Yes.
Speaker 5:Ready to go. Co founding with some rooskies. Yes. These guys know how to handle their bears.
Speaker 1:We're domesticating bears, and you're gonna be able to ride them like horses. And we'll also make small ones, and they'll be like teddy bears for your kids.
Speaker 7:Yeah. It'll be great.
Speaker 5:Yeah. You know, Keith used to always talk about how one of things I thought I learned from him was that some of the best companies are actually founded in some of these more, like, recessionary periods where it's not hot to be a founder. He said it's, like, a lot easier to aggregate talent. Like, I think about that even using with Varda today. Like, I'm very glad that we put together our founding team in 02/2020 because a bunch of those people in theory today, if we were, like, trying to put together the founding team, would just, like, refuse to be on the founding team instead, split up and all raise their own pieces of capital.
Speaker 5:And so it's like I I would imagine that it's, like, incredibly hard to be an early stage founder today trying to recruit super talented people because the super talented, even, like, 22 year old Stanford kids are getting, like, 10,000,000 thrown at them. Like, the current, like, seed seed ecosystem for all things like frontier tech, AI, etcetera, is, like, in such a crazy bubble right now. And that actually just makes it really hard for generational companies to be founded. Like, a part of why Anderol almost certainly was successful is, like, everybody that, like, showed the work with Anderol from 2017 to 2022 before the, like, called the Ukraine war was, like Yeah. Shooting a very contrarian field to work on.
Speaker 5:Nobody else is gonna be go funding those people to be, you know, sort of starting companies anytime soon. And so they aggregate a bunch of talent where it's like, okay. Yeah. Now defense is hot, but Andro's already off into the races.
Speaker 1:We were talking about this with, like, the year Facebook came out of Harvard. Like, I think it was the one of the only start And so if you were like, I want to work at a startup, and you went to Stanford or Harvard, it was like, well, Facebook's kind of the only game in town. And now it's like, you just take a taxi or take an Uber over to Sandhill Road, and you got $10,000,000, like, week.
Speaker 2:Well, the other thing is Yeah. Is we've been trained for twenty years this sort of, like, dream big.
Speaker 6:Yep.
Speaker 2:You know, call your shot. I'm gonna build this amazing CRM. And then you can, like, put together a team, and you can build the amazing CRM, You
Speaker 6:guys can
Speaker 2:do it. But the thing in hard tech, the challenge is like you run into like physics and you run into all these challenges where it's like, oh, you're trying to make some new quantum computing chip and it's like, okay, like you can have the big idea and that doesn't,
Speaker 5:A bunch of people can do that. The one thing that I do that I think is, like, relatively unique is, like, for all of my category investments that sit in the world of, like, hardware, difficult thing that they're doing, etcetera, I just I walk the line. I, like, you know, go and I talk to, like, the technician doing assembly. I talk to the thermal engineer doing the thermal model. I talk to, like, you know, mechanisms engineer, structures engineer, software engineer, firmware, etcetera.
Speaker 5:And just, like, you can you know, I'm not saying that I'm a world class engineer in all of those categories or anything like that, but I have enough of a surface level understanding from the work that we do here that I can kind of gauge, like, this person at, like, the Varda Quality Bar, like, you know, doesn't have to be that, like, literally everybody in Tampa is. But if, like, half the people are looking kinda like schmucks, it's like, well, you can only, like, you know, sell a story for so long. At some point, you have to, like, deliver hardware to a customer that works. And so it's been fascinating to me to watch investors honing up, like, hundred plus million dollars to companies that are, like, consistently having hardware fail out in the field where it's like, what do you think is gonna happen here? Like, know, if you've given them $50,000,000 and their hardware is failing nonstop, a hundred million dollars isn't necessarily gonna be the thing that solves the problem.
Speaker 5:Like, they've already got cultural rot to the level that it's, basically gonna be impossible to backtrack. Yeah. But there are so many people that, like, just don't even have the capability to diligence that. And, you know, I'm not you know, I think sometimes I admit that I can over rotate to, like, you know you know, I'm probably on, like when I think about amounts that I await product engineering relative to, like, you know, our CEO, Peter. Right?
Speaker 5:He's obviously probably more on the opposite end of, like, you know, things that people over rotate on that, and I probably am one of the people that sometimes does. But in this field, it's definitely, I think, saved us some from some, you know, sort of investments where, like, you know, we debated making a series a investment and then you watch the company. It's like they have, like, six projects in a row fail. Now people are, for some reason, rescuing those companies and still giving them a hundred million bucks. But, like, at some point, I'm like, how long does that go for?
Speaker 5:Was literally texting with our colleague, John Luda, yesterday. I was just like he was, like, texting me with, like, three or four companies. How can I scale it like crazy? Like, it must they're doing really well. Right?
Speaker 5:And I'm like, no. Like, every satellite that they've sent up is failing. They haven't closed any contracts. Like, I don't see any passive program of record. Like, they're scaling like, they're really good at hiring, but, like, you know, but, like, not necessarily good people.
Speaker 5:So, like, hiring bad people is not a like, somehow people, like, use headcount scale as a proxy for, like, the success of the company. Like, I don't know that that's, like, a thing one should be focused on. So, yeah, I I think it's gonna be that some tough reconciliation that happens, you know, in the course of the next year or two where it's like, there's gonna be, like, you know, 50 to 60% of this field that's just gonna have to die off or get acquired for pennies on a dollar.
Speaker 2:Yeah. The other the other thing that's funny, people love to roast, like, market maps. Right? Like, the joke is like, alright. If there's a market map, you're too late.
Speaker 2:But then the market maps, like, actually provide like, if you're an investor, you should really understand the market that you're investing in so that when a company comes to you and you think it's a smart team and you're excited about it, you actually understand like, okay, is there a two times better team that's like doing this exact thing? The other thing is like, I've seen, you know, I've made a number of I think smart investments in this space and I'm sure like just sort of hard tech broadly and I'm sure like some that will zero But I, I try to pay attention to like, you, you really have to pension it. It's not all about like, oh, a tier one is doing this. It's like, is somebody that's been doing robotics investing for twenty years and has like, is on their seventh fund, are they doing this? Because they've seen it all.
Speaker 2:Right? And you have to ask yourself as an investor like, why do I have the right to even have an allocation in this company? And and a lot of times, if you're coming into this space and you're making some of those net new investments, you that company has been seen by all the specialist funds and like not like nothing happened. And so like you're now getting like the the sort of luck of getting to take a shot on this company when, a bunch of people that have invested in other similar winners have already said, yeah. It's not for us or, you know, we're gonna wait and see kinda what happens.
Speaker 2:So
Speaker 1:Anyway, can we move on to the Cygnus spacecraft? Can you break down? I I'd never even heard this word term before. Can you give me a little bit of history and then what's going on with the news?
Speaker 5:Yeah. I mean, I brought it up because I think it was, like, two weeks ago that we chatted about, like, the, you know, astronauts being stranded and then, you know, sort of SpaceX going to, you know, bring them, back down. This past week, it was revealed that the Cygnus spacecraft, which is a spacecraft, I'm pretty sure, made by Norfolk Grumman that originally was awarded, basically, commercial cargo contract to the ISS. This is, like, back in, like, two thousand ten, eleven. It was basically you had Cargo Dragon, which was done by SpaceX, and then the Cygnus spacecraft done by Northrop Grumman Mhmm.
Speaker 5:To basically deliver cargoes, like, water, etcetera, to the International Space Station. It generally performed, you know, strategically well. It's kind of a crazy vehicle, and then it's only onetime use. Like, it doesn't even have, like, a heat shield or any way to, like, come back to it. So you literally, like, ship it up the ISS.
Speaker 5:It docks, dropped off its things, and then it just, like, burns up in orbit. So it's, like, the epitome of just old school, you know, sort of airspace. They didn't even, like, attempt to make it economical from the, like, design phase, but, like, it's, you know, delivered plenty of cargo to the ISS at this point. This past week, they dropped it. And so NASA was like, look.
Speaker 5:Like, yes. This has been tested, etcetera, but, like, we don't know what happened in the drop. We need to basically send this thing back and run it through a full testing campaign and make sure that it's okay. And so that means that that cargo that previously is supposed to be delivered to the ISS via North North of Grumman now is yet again going over to SpaceX. And so it's just, like, one of these moments where it's like, if SpaceX does not exist right now, like, States would neither have, like, Boeing able to take crew to the ISS nor would it have Northrop Grumman able to take, you know, basically cargo to the ISS.
Speaker 5:And so it's like, you know, without SpaceX, the astronauts would not allow only be stranded, but also starving.
Speaker 3:What do you
Speaker 1:mean by dropped? They dropped it? Does that mean drop I hope we're gonna I do is there, like, security camera footage we can find somehow? Like I don't think that Northrop
Speaker 5:is gonna try and control that real tight, avoid anybody's
Speaker 1:We gotta call our friends over at the CIA, NSA, the deep state, you know, really get them to to fork that over. Because that's We need the blooper reel. We need the reel. We've seen the SpaceX crashes. I need to see the pod dropping crashing.
Speaker 5:We, you know, we drop our spacecraft, but, you know, we do it on purpose. Right? That was the one that, we dropped from space back down to the ground, but that was on purpose.
Speaker 1:Wow. I have not been to Varda HQ recently. It looks like you have a lot more equipment. That is filling up. Congratulations.
Speaker 5:We are, packed in like sardines. We've got yeah. That's the one that I just showed you. It's the first one that landed last year. Second one landed in Australia Two Weeks ago, and it's out at an air show.
Speaker 5:Third one's currently up and over a bit. Fourth and fifth are off the side of me right now. So, yeah, this place is, yeah, turning into an operation.
Speaker 1:Yeah. Real operation. You have a follow-up? I have I have another one after.
Speaker 2:Go for it. I I I wanna cover in the maybe the last five minutes Okay. Like, slop as a trend.
Speaker 1:Oh, yeah. That that'd be fun, generally. But, yeah. Let let's close out with the space stuff, then we'll go
Speaker 6:on that.
Speaker 1:I wanna know more about, Jerich Isaacman. Momentum seems to be building for Jerich Isaacman to become NASA administrator. What are the dynamics? What should we be reading into this? RFK got confirmed.
Speaker 1:Is this a similar process? Like, when and what does this mean? Like, what's the vibe around him generally?
Speaker 5:Yeah. I mean, Jared is definitely, like, really beloved by the space community, you know, ourselves included. Like, it's really awesome to have somebody that is they're phenomenal. Like, we're doing our right shift for payments, you know, sort of mega company, but then also is, like, putting his own capital and literally life on the line by, like, paying for his own, you know, basically, space missions with SpaceX. And then he's the first private astronaut to ever do a spacewalk.
Speaker 5:I don't know you guys saw that, you know, livestream from I'm forgetting the exact time, but it like
Speaker 1:That was him?
Speaker 5:Sometime. That was him, Jared.
Speaker 1:No way. He, like I did see.
Speaker 5:Literally, like, he's the first private citizen to, like, fucking go out into the vacuum of space and, like, pee rats out of
Speaker 8:the spacecraft looking at us.
Speaker 2:Live streaming so we could run.
Speaker 5:Yeah. Exactly. Exactly. So, you know,
Speaker 1:hopefully, he gets
Speaker 5:space run one day. Exactly. Okay.
Speaker 1:Yeah. It's like so what's the vibe?
Speaker 5:Super legit. You know what I mean? Like, he literally, you know, a, like like, privately himself sponsored astronaut, you know, putting his real, like, life on the line. That mission could have gone poorly, could have died on it, etcetera. And he, like, obviously, he is who did it.
Speaker 5:So really beloved. But he is, like, affiliated, you know, for sure with Elon since, like, you know, his entire Polaris, you know, sort of set of missions was all contracted with SpaceX. He obviously has done a ton of press with Elon, etcetera. So when Elon made this, you know, sort of comment around wanting to basically, deorbit the ISS sooner than their original plan. So the current plan is basically out of the decade.
Speaker 5:Elon was pushing for, like, let's just deorbit it next year. Now I assume from his perspective, it's, you know, hey. I don't really see the value of this program. We should use that budget for, you know, sort of pushing straight to Mars. You know, what's the point of, you know, sort of these, like, human rated stations both run by the government or these private ones?
Speaker 5:And there was a bit of a slap on the wrist, you know, for that via, you know, basically, Cruz, you know, sort of the senator from Texas that is the, you know, senior chair of the house I'm sorry, the senate science committee, which basically controls the NASA budget and is also, you know, basically responsible for, you know, sort of voting and confirming the schedule for the NASA administration basically stalled. Right? Like, he refused to actually set a date for the NASA administrator. So now you've had to see, like, a bunch of governors, you know, and other senators basically say, hey, Cruz. We really like Jared Eisenfant.
Speaker 5:A bunch of states entrepreneurs. I feel like you guys should've sent Cruz's letter. He's finally relented and, okay, said, fine. I will set a date, but I want Jared Isaacman, you know, sort of coming out and explicitly saying that he's in support of the ISS going through the end of the decade in support of these commercial space stations. And so why is, you know, sort of crews in support of that?
Speaker 5:It's because, you know, the Johnson Space Center, which is where the vast majority of the, like, terrestrial jobs that support the space station are, is in, you know, Texas, and it's in a district, and it's, you know, sort of hits constituents. And so, you know, you're starting to just see these tensions of, you know, look. Yeah. You've got, like, tech's greatest leaders at, like, the helm of the government, but that doesn't mean that there's gonna be some, like not going to be some antibodies that, like, you know, prevent people from getting exactly, you know, sort of what they want done. And so this is all more, like, the civil space side
Speaker 4:of things, but I think
Speaker 5:it has a of parallels to what everybody's thinking about in defense where it's like, look. I I wanna get a point down. It's like, you know, Elon is phenomenally successful, super powerful, rich, etcetera. But, like, there are, you know, antibodies and balances of power built into the US government. And, like, Ted Cruz is clearly, you know, showing that he can, like, swing a dick around a little bit and say, like, yeah.
Speaker 5:Like, you know, you wanna fuck with my ISS? Like, I'm gonna fuck with your administrator, and, you know, I'm gonna delay his confirmation hearing, and I'm gonna bump it out until, like, it sounds like it might not be until, like, May at this point. And then that does have, like, a real operational effect in NASA where it's just like, look. Like, you know, there's, like, this NASA reauthorization bill, which basically sets NASA's budget for the next, like, you know, sort of, you know, five to seven years. That's kinda stalled out because there's no administrator.
Speaker 5:You know, none of the, like, major, you know, sort of program leads are making huge swings right now while they're waiting for the administrator. So it's like NASA's kind of frozen. Right? And this has, like, downstream operational effects. This may slow down our ability to, like, get more lunar missions, you know, sort of book, actually figure out what the Mars program, you know, sort of looks like.
Speaker 5:And so it's just like a reminder to people that, like, you know, us and tech have to always remember that, like, there are also jobs that Senator Cruz is gonna be, you know,
Speaker 6:sort of,
Speaker 5:you know, making sure to stick around too.
Speaker 1:Follow-up. I mean, the ISS budget is, 3,000,000,000 a year. Crazy idea. We get a couple of our buddies together, make it into a casino or something. Like, could we not privatize this thing?
Speaker 5:You know, Jed McCaleb, mister crypto, you know, sort of man is, trying to, you know, put, you know, crypto money to use and turn into a state space station. I kinda see crypto, in my opinion, is basically just gambling. So Okay. You know, he's basically already making it. You know?
Speaker 5:He's, you know, all he needs to do is you know, maybe it's not a craps tables, but it's, you know, couple Coinbase servers up there that are, you know, getting you hooked right into the, you know, sort of livestream of trading shitcoins.
Speaker 1:I guess you can't really roll dice in zero g because the dice never fall. For sure.
Speaker 2:They would just, like, probably kill us all. Exactly. Like, you guys, like, I don't even know what you guys are doing.
Speaker 5:Oh, that's our planetary defense. We just get the aliens hooked on gambling.
Speaker 1:Hooked on gambling.
Speaker 5:Degenerates. Yep. They're mortgaging their home planet in order to be able to get the people
Speaker 9:aboard it.
Speaker 5:Would like, actually, you thought you were coming to conquer us, but sorry. We're sending our bookies, back over your plan. Mustn't break all your kneecaps and take it. So Exactly. That's maybe the best planetary defense team.
Speaker 5:We need to ask for a deflection. You've got, space casinos.
Speaker 1:Yeah. We got five minutes. What you got?
Speaker 2:Big. What's your take on yesterday? I I was joking around earlier. I said it in hindsight, Sputnik really was the ghibli moment of the cold war. But yesterday felt like a big moment.
Speaker 2:It just I I did John and I had a couple posts go pretty viral and break containment, and people still were quoting them and being like, alright, guys. Like, stop joking around with me. Like, who's got the filter app? So it still feels like there's people out there
Speaker 1:that don't know that it was OpenAI, like ChatGPT. They're just like, oh, there must be a new app out there that does this.
Speaker 9:Yeah.
Speaker 1:And Yeah. Very funny.
Speaker 2:What's your reaction? Are are you long I I I'm personally I'm short the word slop, but I'm long the underlying underlying trend, but I'd love to hear your take.
Speaker 5:You know, I'm gonna relate it back to defense, which is, you know, sort of marker maps are no good. Focus on a long tail winner. There's, like, a whole fucking set of, like, a hundred, like, AI image generation companies that all just got, you know, fucking Sherlocked by OpenAI and are gonna be totally irrelevant because, like, they've got the biggest brand and now they have the best technology. Good luck catching up when you're, like, you know, sort of losing on both angles. I think you're gonna see this stuff get implemented into Hollywood, like, ASAP.
Speaker 5:I mean, there's, like, a whole set of things where you can, like, look. There's gonna, for sure, still be, like, human fine details. There's things that it's not perfect at or probably never will be, like, quite perfect at. But if you wanna start, like, throwing together, like, rough draft, vision board, etcetera. Storyboard.
Speaker 5:And then what you end up seeing is, like, the equivalent of, like, you know, that there's, you know, sort of now, you know, sort of two, you know, two engineers can build, a billion dollar, you know, AI company. Like, two animators and a director can, like, make the next Pixar film, basically, because, like, you know, they have so much, you know, sort of leverage. And
Speaker 9:so Yeah.
Speaker 1:It's, like, bullish for OpenAI and also bullish for Jason Carmen. Right? Yes. You just don't wanna be in the middle.
Speaker 5:Yeah. But it's, like, short to all the dudes that just invested, like, $500,000,000 into, like, these, like, slot companies, basically, and it's like, good fucking luck. And it's the same thing with defense. It's, like, you know, bullish on Andoril. Yep.
Speaker 5:Bullish on the warfighter that gets new tools. Totally. Recommend being anywhere in between those Yep.
Speaker 1:Exactly. Don't get stuck in the middle. The barbell.
Speaker 5:Don't get this out of the messy the sloppy middle as we like to call it.
Speaker 1:The sloppy middle.
Speaker 5:It's, you know, the the the white lotus, you know, sort of reference there is be careful of the sloppy middle between the brothers.
Speaker 1:Oh, I haven't watched the latest episodes. I I but I I've heard enough that I get it, and then it's not good.
Speaker 2:Yeah. You can skip that one. White Lotus White Lotus is funny. You could White Lotus is funny because, like, it starts the season. It's like kind of relaxing because it's like these resort settings.
Speaker 1:Yeah. You're just hanging out.
Speaker 2:You're like, oh, it's just like I relate to these people in different ways and like and then it's like, oh, it just gets so dark, like, episode by episode.
Speaker 1:I want nothing to do with any of these people.
Speaker 2:Yeah. What what you know, so so somebody that launched an image generation tool is like Mike Spizer over at Sutter Hill Ventures. Like, they've done didn't they do like Palo Alto? They they like they they're like the goats of of incubations in in many ways. Comes out with an image generation tool.
Speaker 2:What do you like, what do you do at this point? Obviously, not even just speaking directly to him, but there's like mid journey and there's a lot of other players and it just feels like maybe there is no edge and distribution. You know, relating back last week Mid journey
Speaker 1:is not in the conversation because they haven't raised money. True. So it's like True.
Speaker 2:You know? They're they're dependent. They raise money every day from their customers.
Speaker 1:I guess. I guess. But just like
Speaker 2:the other So the funny thing is we talked on the show last week about a PT quote around like you need basically distribution for a monopoly and you can get a monopoly from product but you can also get a monopoly from Just distribution. Just distribution. And so it is the But like, do you think these, you know, image generation models should be rethinking their life and and future plans and and the game is lost? Or is there gonna be, if you just lean in, let's say, like, you know, set up shop here in Hollywood and just work with all the studios and say, like, you spend billions a year
Speaker 1:What would you do if you were actually running a $50,000,000 series b stage image generation company?
Speaker 5:Yeah. I mean, look. This is very top of mind. Like, I literally met up with Mike, I think it was, like, two weeks ago to, like, talk about, you know, what he was, you know, sort of working on. And I'm like, I'm a huge fan of Mike's.
Speaker 5:We've worked together on, you know, sort of handful of things. Obviously, he's, crushed it with Snowflake. He's, like, clearly one of the Valley's, you know, sort of best incubator, entrepreneurs, investors, you know, you know, execs, leaders, etcetera. But, like, yeah, like, I don't envy being in that position. But, you know, I think you're seeing this in a bunch of different fields where it's like, you know, you've got the, you know, sort of, you know, mice that are trying to jart around the, you know, sort of elephants and, like, these, like, big tech companies are both very sophisticated, like, have great engineering, but are also massive.
Speaker 5:Right? Like, I mean, again, look at, like, what SpaceX is doing with Starship and, like, you know, stomping out a bunch of, you know, other, you know, of mice in there, the elephant, what Andrew is doing, stomping out a bunch of mice. It's like, it's not an easy time to be, like, a mid stage company that's trying to dart around all these major players that are, like, not, like, old school incumbents that are moving slowly, but, like, are led by Sam Altman and, like, you know, are really pushing the fold. And so, yeah, tactically, like, if I was in Mike's shoes, I think it's like, look. The, like, consumer play, that just seems basically impossible to catch up on.
Speaker 5:It's like Mhmm. This is kind of good enough for any consumer app. Right? Like, it's not good enough to, like, immediately go make a feature length film, but it's good enough for any consumer to, like, you know, send a photo, you know, to their wife, basically. Yeah.
Speaker 5:And they already have the winning consumer brand. So don't even try to do that. Go where the mat you know, the elephant isn't even headed, dart in the opposite direction. I think, yeah, go, like, heavy on enterprise, build up studio relationships, try and convince them, you know, sort of, hey. Look.
Speaker 5:If you start using, you know, sort of ChatGPT, etcetera, for this stuff, they're gonna use you for training data. We're gonna make, like, proprietary models that, like, you know, fine tune to your own aesthetic and, like, this specific film that you're working on, and we'll make sure the data only stays basically, like, in house. Right? Like, you just need to, like, just constantly be thinking about, like, yeah, what is your, you know, sort of angle that is super unique? But, also, those are, like, all really constrained TAMs relative to, like, the thing that, know, I think OpenAI is, you know, going off and capturing.
Speaker 5:So yeah. I mean, I I really love Mike, and I think he's a phenomenal entrepreneur, but, like, I also don't envy. Like, I can guarantee you he was fucking up late last night and, you know, is grinding today with his, like, you know, exact team to figure out, like, what their, you know, sort of approach is in light of, like, you know, this new world. And that's what's so crazy about, like, accelerationism, all this stuff happening is, dude, like, this stuff, like, I felt like when I was in the Valley in, like, 2014, like, happened over the course of, like, eighteen month periods. And it's, dude, this stuff, like, it feels like literally every month now, we have, like, crazy new capabilities that come online that massively disrupt how to build, like, a series b company versus 2014, that new technology is disrupting, like, a late stage series b company, like, didn't honestly happen.
Speaker 5:That often. Like, never happened. You kind of had, like, your stable growth. Like, when it's part of it, it's something we do is, like, super hard, long time frame, etcetera. Like, I feel like we actually, like, literally need to be nimble on our feet on, like, a month by month basis between, like, the changes of DOD priorities, congressional priority, what other space companies are doing, how supply chains are maturing, what the fuck China's doing.
Speaker 5:It's like, god, man. It's such a dynamic world. And, you know, they're, like, you know, wealth accrues to the, you know, sort of riches. So good to be Peter. Good to be Sam.
Speaker 1:You know?
Speaker 5:I don't I don't mean myself or, Spicer.
Speaker 2:We were joking around. You know, a lot of early stage founders will, like, time a release to try to catalyze a fundraise and it just feel it felt like there was a world where Sam was like, alright, team. Like, we know Ghibli will go viral. Like, just make sure that this is perfect. Everything else can you know, everything else doesn't have to be perfect, but, like, we need to take over the timeline.
Speaker 2:We need to go mainstream this day. I'm closing the round on Monday. Like, just go go
Speaker 1:Google had just launched something that most people think is, like, competitive, but the product is just buried in AI Studio. And, like, it was, like, it was gonna break containment, and it was gonna be a Google story. And Sam was just like, not today. I love it.
Speaker 5:Yeah. And then maybe he paid that one influencer to make the, like, photo of his wife and, like, you know, get that to go viral. All I'm saying is, like, it was
Speaker 1:just, like,
Speaker 5:a little too convenient that
Speaker 1:we're hire hostess. On your side.
Speaker 2:Yeah. We got it. We got it right here. Yep. For weather.
Speaker 2:The exciting thing, bring it back to hard imagine the future I agree. And like convey that idea. And that seems like the biggest opportunity to take away if you're not Even
Speaker 1:if it's a little sloppy right now, the the art will come.
Speaker 2:Yep. Anyways, great to see you.
Speaker 1:Thanks for stopping by. Good luck with the rest of day.
Speaker 5:Later, boys. Later. You. Enjoy the rest of the day.
Speaker 2:You too.
Speaker 1:Always a fun
Speaker 2:Alright. We got
Speaker 1:We got back to back to back to back to back to back calls. Is he in the building?
Speaker 2:He is in Florida right now.
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Speaker 2:Boom. And now
Speaker 1:We got a great guest.
Speaker 4:Got
Speaker 2:Steve Simone, the man himself. How you doing, Steve? What up, Florida man? Florida Steve.
Speaker 6:Florida man. What's up, guys?
Speaker 2:He's in Florida today. He's not actually a Florida man. But, it's great to
Speaker 4:have you.
Speaker 6:Yeah. Look at me. Yeah. Thanks, guys. Thanks for having me on.
Speaker 6:It's an it's an honor to be here.
Speaker 1:So describe the company in three in exactly three words. I've heard it described as gun on truck. Is that accurate?
Speaker 2:Yes. That's true. That's true.
Speaker 6:AI AI robot gun.
Speaker 2:Okay. There we go. Robot gun.
Speaker 1:Shooting down drone swarms. If I see a a light show with a dragon swarming towards me, I call you. You're gonna throw a hail of gunfire at it and take out all of them. Is that
Speaker 6:what you're You know, we're we're we're it's more precision. You know? We're sniping these drones. We're not just throwing bullets in the sky. You know?
Speaker 6:It's precise.
Speaker 1:Okay.
Speaker 2:Nice. Precision. Well, I always loved talking to Steve. A while back, he was in LA. Yeah.
Speaker 2:We, like, were we were I forget. There was something I think it was, like, actually the weekend that All In Summit was happening because Steve's raised a couple rounds from Craft now, one of which he is announcing today. And I and we just had this awesome meeting where I was like, you gotta think bigger. You gotta think bigger.
Speaker 1:You were that guy?
Speaker 2:Yeah. I was the guy. I was like, the gotta you gotta think bigger guy.
Speaker 6:Now, Jordy is the Jordy, you're the ultimate hype man. You you made me think bigger, bro. You made me think
Speaker 1:bigger. Great. It. Well, speaking of bigger
Speaker 2:Yeah. Talk about the news today.
Speaker 6:Oh, yes. Today, we just announced our $30,000,000 series a led by Craft Ventures. Let's go. Again, they did give out the seed. Back to the a.
Speaker 6:You know, maybe they'll do the b. We'll see. We'll keep it going. You know?
Speaker 1:Keep it going.
Speaker 2:Keep it going.
Speaker 1:Ride your winners. It's in the all in intro.
Speaker 5:Yeah. Your put it.
Speaker 1:Let your winners ride, and Saks is, Trudeau's word.
Speaker 6:But I gotta ask you guys. How much does it cost to, like, get my logo on the ticker symbol at the bottom? Like, is that
Speaker 2:Oh, you're gonna to wait till the b. You're gonna have
Speaker 1:to wait till
Speaker 2:the b, buddy. I'm sorry.
Speaker 1:Is that is series a company I can tough.
Speaker 2:Yeah. Yeah. Yeah. I can I know? Yeah.
Speaker 1:But we can talk about it. We can talk about it.
Speaker 5:I have a
Speaker 2:rough sense of your balance sheet. But you're here. You got your face you got your face here. That's and that's worth prices.
Speaker 6:Thousand dollars. How much did Wander pay for that back there?
Speaker 2:Does that We're not we can't get any specifics.
Speaker 1:We're not we're very against building in public.
Speaker 5:Yeah.
Speaker 1:Yeah. Yeah. And and it's not it's not because of, like, the flex culture or any of that. It's specifically because of our near peer adversaries copying us. If if the CCP got ahold of how the business really works, they could clone this show, and then it would be a total cold war arms race for Yeah.
Speaker 1:The best and, most aggressive daily podcast tech.
Speaker 6:CCP is a big threat. I mean, why we started ACS is because, you know, we're at a manufacturing deficit with China, and we need to do something about it. So that's why we, you know, are making these gun turrets to be able to shoot down their drones.
Speaker 2:Talk about, yeah. Just talk about the process. We we were talking with Deleon earlier. There's this phenomena within startups broadly where there's a culture of having a big vision and fully believing it yourself and assembling people and talent and then sometimes you you have this vision and then it ends up being exceptionally difficult to actually execute. You're working in this case with the, so for those that don't know, Steve sold his last company to DoorDash, had a great exit and then, you know, basically brought together, did it, you know, round two with his co founder.
Speaker 2:And so you had that like intense trust with your with your co founder. You also were in the military yourself. So maybe maybe give, like, kind of the full background on
Speaker 7:It'd be great.
Speaker 2:On you guys together all the way back to Yeah. I'm sorry. The Navy days.
Speaker 6:So the company's called Allen Control System named after Luke Allen, our CTO. And, you know, we have a proprietary control system. That's why, you know, that's the name, just right on the nose.
Speaker 9:And also
Speaker 5:the name we met a Navy.
Speaker 2:The name too is very cool. Steve was like, everybody's calling their stuff like Lord of the Rings. Like, what's the most boomer tagline that's gonna basically, like, sound like it's been around for decades already? And I think it's working. I I really like the counter positioning.
Speaker 6:Yeah. You got a counter position. That's all marketing, baby. No. So we we met in the navy.
Speaker 6:We were nuclear engineers in the US navy. We met, like, sixteen years ago. And, you know, then we moved out to San Francisco as one does, tries to start startups. I had a couple that failed, and then the one we sold to DoorDash. And now this is our technically, my fourth startup.
Speaker 6:It's a way of life. Know? It's a journey. I've been doing this for about eleven ten years now. So Very cool.
Speaker 2:Yeah. And then coming together, like, give the you know, the company's two and a half, two years old now.
Speaker 6:It's about Two and a half. Yeah. Well, look. It takes to build a complex precision robotics product, it takes about three years, like, from whiteboard to, like, really good products. So, like, we're almost, you know, there on that journey.
Speaker 6:But when we started it, right when we sold the company to DoorDash, Putin actually invaded Ukraine the same week when the deal closed. And we were reading articles about Ukrainians shooting guns in the air at drones. And, you know, Luke called me up and was like, this is a really good robotics problem. You know, we should start looking at this. And when we've kinda surveyed the landscape of the industry of, like, you know, interceptors and electronic warfare and microwave technology and lasers and all these other counter drone measures, but didn't see a lot of, like, really precision applications around using guns and ammo, which, you know, guns and ammo are widely available in the military.
Speaker 6:So we thought this is a really good idea. Went after it.
Speaker 2:How's it been? You guys spend a lot of time on the range, like, actually shooting down drones. Talk about kinda how this maybe company's been different to the last one, which was, you know, in a totally different, you know, vertical and you were probably comfortably in San Francisco. Now now you guys, you know, spend a lot of time just out in the field Getting the boots Yeah. Getting the boots dirty.
Speaker 6:Wait. Say that again? Just the question.
Speaker 1:Just how's the culture different now that you're out
Speaker 2:of the room?
Speaker 1:How's this Out of an office. You're not in a cubicle all day.
Speaker 6:Oh, you know, I'll tell you. I for me, it's like I feel most at home in the start up life. You know? As the companies get bigger and scale, it it changes things. But in the early days, it's the most fun.
Speaker 6:Actually, we Luke and I always joke, like, when you first start a company, the first couple months are the most fun when you have no customers. Because then once you, you know, start getting customers and you have responsibilities, you have to, you know, deliver their requirements, make you know, have great customer service and all that. So in the very early, early days, you have to cherish those moments. But then as you know, it's a life cycle. So as you scale up, things get different, you become different, and the the whole company changes.
Speaker 6:But, you know, right now, it's still at a fun size, around 34 people, still enjoying out getting out of, like, the main corporate office and, you know, doing our thing.
Speaker 1:I I mean, Delian said this on the show before, like, you know, the Andoril of Andoril that is Andoril, and maybe and Andoril's the power law winner. You're gonna do all this stuff. How you've obviously counterpositioned with a name. You didn't pick another name from Lord of the Rings. Thank god.
Speaker 1:But how are you thinking about how the product fits into the defense tech ecosystem? Palantir has their AIP program. They're openly planning to work with other companies and develop partnerships. Is there a world where this plugs into Lattice and you let Andoril take the kind of the the AI connective tissue and your and your partner? Or is are are you really just trying to grow and add so many or more products?
Speaker 1:Where does long term go from here?
Speaker 6:I Our our product know, so autonomous guns are when they hit the battle field, they're gonna change a lot of the battlefield economics. Mhmm. So, you know, a lot of these, like, more expensive interceptor products or, you know, some of the, you know, big laser beams or, you know, missiles and stuff. Like, autonomous guns are gonna, you you know, put a lot of downward pressure on products like that, I think. So I think we're pretty well positioned from a product strategy perspective.
Speaker 6:But where where we actually mostly focus our time is you see all these autonomous vehicle companies, USBs. Yeah. Like, there's companies like Ceyronic, bunch of USB makers, these unmanned surface vehicles, and then you got, like, the land ones like Overland or Fortera.
Speaker 5:There's a number
Speaker 6:of these. And so all of these autonomous vehicles need an autonomous payload. Sure. And so we're positioning ourselves. We're mostly focused on great partnerships with companies like these
Speaker 1:Mhmm.
Speaker 6:Positioning our product there and then, you know, kind of bundling. You know, that you make money via bundling in the game. Makes sense.
Speaker 2:Yeah. Makes sense. Talk about competing. You know, a lot of your competitors are these sort of old, slow moving, you know, I'm thinking about, like, the Ryan Mittals of the world. Right?
Speaker 2:Yeah. It's probably fun being a team of 34, you know, competing against some of these giants. Yeah.
Speaker 6:Oh, go ahead. Sorry.
Speaker 2:No. Go for
Speaker 6:I interrupted you.
Speaker 2:No. Go for it.
Speaker 6:I was gonna I was gonna say, it's the lag on the Zoom, but I was gonna say, yeah, like, Mittal, Kansberg, you know, a lot of I don't know
Speaker 10:if a lot a lot of
Speaker 6:your listeners know this, but in the in the gun turret market, so these are called remote weapon stations, in the RWS market, a lot of the providers are foreign. There so The US buys a lot of their stuff, most of it from, you know, companies that aren't based in The US. So from this standpoint, we're kinda bringing this back home. It's a new American startup building, you know, new modern age remote weapon stations. And so I think we're pretty well positioned there from, a congressional standpoint too because, like, a lot of people in congress didn't really realize that that these, like, slower dinosaurs are actually not even US companies that are doing this for us.
Speaker 2:What's what's the vibe on the ground in the DC area right now? You you obviously, like, you know, have an office out there. What what's you know, is it chaos or people are running around? I mean, there's there's the
Speaker 1:Just to set the table, we've been talking about the continuing resolution. There's a lot of questions about if DOD budgets aren't increasing, will there be net new projects, new programs of record? Obviously, it you know, chaos can be a ladder and an opportunity for new companies, and it can also be a consolidation force for the ones who already have programs. What what's your take?
Speaker 6:I think the, well, if you look at what, like, Doge is doing and stuff, I think it's, you know, sending shockwaves to the DOD. Mhmm. And I I do think that they're trying to cut things that they don't want anymore. And then they have a carve out list, and secretary has this, like, list of, like, 14 technology fields that he's not wanting to make cuts to. Luckily, counter small drone is one of those, so we're not impacted really by that.
Speaker 6:Now, obviously, for the f y '25 bill, we were somewhat impacted because they didn't do a bill. And so that's like I think, there Deli was on you saying talking about that, so I don't need to rehash it. But, basically, that that does put some pressure on some startups. For us, it wasn't too big of an issue because, you know, most of our stuff is in is in '26 and beyond. I I could see if you were really banking on that, that that could be tough.
Speaker 2:What are you hiring for right now? What kind of people are you looking to recruit into the team? You've got, 30,000,000 of fresh capital. I imagine lot of that will be going to bright technologists.
Speaker 7:Engine engineers, you know,
Speaker 6:if you're a computer vision engineer and this is, one of the most fun computer vision problems to work on, I would say of the different parts of our product, you got, like, the vision system to detect stuff. You have the fire control to track and shoot, and you have all the hardware and mechanical stuff. The vision part is one of the most challenging parts. And so we're looking for, you know, people coming out of universities that really love this problem. They wanna see it.
Speaker 6:They wanna try to find small drones moving against cluttered backgrounds. And so, you know, we're always looking for that kind of talent. But, you know, across the whole engineering spectrum, we're looking for everyone. But I would say this is a dream job for a computer vision engineer.
Speaker 1:Makes sense.
Speaker 2:Amazing.
Speaker 1:Yeah. I I on computer vision, is the job getting easier with new models? I mean, we just saw an amazing, demo yesterday from OpenAI. It seems like computers are generally getting better at doing stuff with images. I would hope that that benefits not just memes and anime, but also self driving cars and also what you do.
Speaker 1:Is there a bridge from that tech and what's going on there in terms of scaling and improving the underlying models to what you do, or are you just kind of like, hey. We got OpenCV, and it's enough.
Speaker 6:Yeah. I mean, we're a little bit on the cutting edge of you know, we're trying to see a very small drone like a DJI Mavic on a cluttered background moving very quickly. And so that it's not the same exact application as, like, in, you know, some of the stuff they're doing in self driving. Mhmm. Like, we're trying to put a bullet through this drone too, to be honest.
Speaker 6:And so, like, that's another kind of a novel use case. And so we need a little bit more out of the computer vision than, you know, industry is really providing. So we're we're on kind of the bleeding edge of some of the research around this. Obviously, I would love to just ride the wave and be able to use what's already built and what these guys are all doing, but it doesn't quite, you know, exactly work for what we're doing. So, yeah, there's there's a little bit of, like, research y stuff there that we're working on.
Speaker 2:Yeah. When you think about the opportunity to go work at com in computer vision at ACS where they're you're, like, you know, getting the like, I I've seen a lot of the videos, and you guys have some of these videos, like, you know, public on your YouTube channel and stuff like that. But, you know, getting to work on something where you're actually taking a gun and, like, taking a drone out of out of the sky. The alternative is like you could go work at, you know, some high profile, you know, humanoid robotic companies that are just like, you know, looking at the laundry or whatever. And like,
Speaker 1:you gotta give the robots guns. You gotta give the robots guns. This is what makes
Speaker 2:it fun. This is called And all our our our only request is get some unitary robots at some point and just put some bullets
Speaker 1:in Yeah.
Speaker 6:I know. I wanna have them running over the hilltop like a army of unitary robots and then bullfrog sniping them all, headshotting them all.
Speaker 1:No. I
Speaker 2:wanna see. Here's the other challenge, three sixty no scopes.
Speaker 1:Three yeah. Three sixty no scopes on the turret. I wanna see that. That would be viral
Speaker 2:for three sixty no
Speaker 3:scopes. Wait.
Speaker 6:The sweep oh, you guys you will you guys do, like, sweep sniping? You know that from Halo two? You already do that? Yeah. Oh, yeah.
Speaker 6:Yeah. Yeah. Sweep snipe? Yeah.
Speaker 1:Oh, yeah. You can do that.
Speaker 6:I think J. D. Vance did that a lot. I think he played a lot
Speaker 1:of him. Okay. Awesome. Awesome.
Speaker 2:Crazy lord.
Speaker 1:Well, thanks for stopping
Speaker 2:by. This is Congratulations. Congratulations. I'm gonna play a quick song for you on the way out.
Speaker 1:Yeah. You you got that
Speaker 5:on. Awesome.
Speaker 2:Here you go. Congratulations to you, the team, and Saks. Great one.
Speaker 1:Yeah. Congrats to Saks. That's fantastic. Well, we got AJ Piplica coming in the temple of technology from Hermes. He's coming in in just a second.
Speaker 1:Are you familiar with this company? Very cool. Building a supersonic plane. And their goal has been to build one plane per year. And we'll hear the full breakdown from him.
Speaker 1:He's here. He's in the factory. Home.
Speaker 2:With the hat.
Speaker 1:With the hat. Welcome to the show. How you doing?
Speaker 9:I'm good. How are y'all doing? Good, John. Good to see you.
Speaker 1:Yeah. Good to see you again. You're still in, Atlanta?
Speaker 9:Yep. Yep. That's right. Here at the factory. Fantastic.
Speaker 9:Still wearing this stupid hat.
Speaker 1:I love it. Do you have,
Speaker 2:like, a rule? Is it, like, you're not taking the hat off until, you know Play floss.
Speaker 9:Yeah. So I, I I well, I I wore it one day because I was making fun of one of my cofounders who wore a fedora out out in the field when we testing the airplane. I was like, yeah, you look silly. I got a hat. I can make I can look even sillier.
Speaker 9:And then I was like, I wanna do something, like, until we fly and, like, not everybody can grow a beard, not everybody can grow their hair out, but anybody can wear a hat.
Speaker 1:Okay.
Speaker 9:So I'm like, alright. I'll wear this, you know, I'll wear this silly hat until we fly, which is actually one of my favorite hats. Like, really great friend gave it to me a long long long time ago. It looks good. Whatever.
Speaker 9:So I I I like I I had to make sure that, like, it doesn't get Marie Kondo ed out of my house. I have to wear it, like, once a year, so I'd always incorporate it into my Halloween costume.
Speaker 2:Yeah.
Speaker 9:Yeah. Little did I know I'd be wearing it for, like, you know, six months now. But so now now I hate it, and nobody else has worn hats every single day. That that lasted for about three days. So, yeah, when we when we fly our first airplane, as soon as it lands, we're gonna I'm gonna stick this thing on a stake behind the airplane and burn it in the afterburner, and I'll do something with the ashes.
Speaker 6:But
Speaker 1:There we go. Amazing. That's amazing. I wanna hear, little little backstory on the company, little company update. I wanna hear your take on the f 47 and the DOD continuing resolution.
Speaker 1:But let's just start with the overview of the company and where you guys are at.
Speaker 9:Sure. So, yeah, at Hermes, we build very fast airplanes, and we build them fast. So, long term vision of the business has been to radically accelerate air travel with Mach five aircraft, so hypersonic, hypersonic passenger aircraft. But, as we build the technology along the way, deliver products that solve some really pressing national security challenges here in the near term that build us a strong growing financial foundation and kind of give us the right to go, you know, try for that that really long term future of, you know, adding a couple percentage points to global GDP. Company's about six years old now.
Speaker 9:We've, we've done a ton of development on the propulsion systems, the engines necessary for these kinds of vehicles. And now over the past couple years, as you mentioned, we've been starting to get into our aircraft development cadence. So a lot of the blood here comes from SpaceX. So the way that we've kind of designed our our program for how do you build fast airplanes is to build a lot of prototypes and and build them on a very fast cadence. So really bringing iterative development to aircraft for the first time in in a very, very long time.
Speaker 9:So that's resulted in us being able to develop our first aircraft from setting requirements to being ready to fly minus the FAA. So here's here's the hat still. But ready to fly in, in about fifteen months, which, as as far as I've found, is, the fastest jet aircraft development in about fifty years. So this is, like, back to the Kelly Johnson skunk work days. So fantastic.
Speaker 9:We've proven we can
Speaker 2:Right right away, my first question is you you're going from, you know, zero to a real product in fifteen months. That's intense speed even for somebody building like a a robust CRM. Right? You guys gotta do something a bit more just you gotta be a bit more than just robust. Right?
Speaker 2:If you're gonna like fly something through the air. Yeah. But, where do you even start with this? Like, is there is there like effectively like open source kind of like designs, information, schematics, etcetera, that you can pull from to pull forward that development timeline? Or is it just
Speaker 1:It's actually Chachi BT. One blueprint
Speaker 3:One blueprint
Speaker 1:for Sonic.
Speaker 9:We're a grok company here.
Speaker 1:Oh, yeah. Let's go.
Speaker 9:No. Like, the the place that you start is fundamental physics. That's it. Yeah. Like, there's there's plenty of stuff in the supply chain where you can you can you can buy parts and components and things where you don't have to reinvent the wheel.
Speaker 9:But if you are not starting with the fundamental, like, understanding the problem and simplifying it as much as possible, there's no way you'll ever meet a timeline like that. So, like, really simplifying the problem, making the problem a little dumber than you so that you're not trying to outsmart it, and you're only doing the things that really go to answer the questions that you're trying to answer, which for us for this first airplane isn't like, can we build a hypersonic airplane? It's can we build an airplane? Mhmm. And can we do it fast enough to support this development cadence?
Speaker 9:So, like, this, you know, Quarter Horse Mark one, which is the first aircraft, it really only has to do, like, two things, take off and land. That's it. Yeah. And we've, you know, we've learned a ton already that we've already integrated into, like, how we're building the second aircraft. So our second aircraft, Quarter Horse Mark two, is supersonic.
Speaker 9:So it's you can probably hear it being put together literally right behind me. Yeah. Amazing. So that, that one should be ready to fly, later this year, probably early fourth quarter, which is super exciting.
Speaker 1:Can you give a quick overview of the actual tech? Ramjet, scramjet, all this mumbo jumbo,
Speaker 9:can you break it down Yeah.
Speaker 1:What you're doing?
Speaker 9:Yeah. So we we don't use we don't use scramjets here. It's all ramjets. So it's like, it's literally the simplest propulsion concepts that that there is out there for everything propulsion, like when you when you're in aerospace engineering school and you're learning through all these different engine types, the very first one you start with is a is a ramjet because there's there's no moving parts. It's just compression, add fuel, burn it, exhaust through a nozzle, generate thrust.
Speaker 9:Mhmm. So those engines can't really run efficiently until you get up to somewhere between Mach two and a half and Mach three, so you have to use a gas turbine engine, turbojet, turbofan to get up there. So we've we've put those two types of engines together into a single engine. We've demonstrated that on the ground transitioning from a pre cooled after burning turbojet to a pure ramjet, and then back again. So we've we, you know, we have an engine, capable of doing that.
Speaker 9:And and now it's a matter of, iterating through the aircraft side, to, be able to do that in the air.
Speaker 2:You talked a little bit about FAA sort of approval delay that cycle. Was there ever a possibility or is this even something that you would consider to say, like, you know, the FAA is going to take a long time. Why don't we just ship our, you know, plane to some other country that will approve it quickly?
Speaker 1:Yeah. What about Did SpaceX do Kwajalein?
Speaker 2:Yeah. Because there's there's a there's a nuclear company out of El Segundo that, like, just In Thailand? In The Philippines.
Speaker 1:The Philippines. Yeah.
Speaker 2:And I I was just sort of wondering, there a similar something you could do there to kind of like you're building so quickly. Ideally, you could test quickly and not get held up by Antarctica Yeah.
Speaker 9:Moon. Yeah. I I think we'd have to be incorporated in a different country Okay. Fully to be able to do that. So that has that has other implications.
Speaker 9:But yeah. Like, even even if we took the aircraft to, you know, Australia or, you know, Kwajalein or somewhere out there, we're still an American company, so we're still under the jurisdiction of the FAA even though we're
Speaker 2:There you
Speaker 9:go. Interesting. Some other country and, you know, and the the reason for the reason for that is because, like, yes, countries have their own versions of the FAA. You know, there's an international body called IKO. But, generally, since The US has pretty much always been the leader in in aviation and technology and and, you know, especially come on the commercial side, everybody just kind of defers to what the FAA does, so it kind of just trickles back to them, at the end of the day as well.
Speaker 2:You talked a little bit about, your technology one day being able to, increase global GDP. I assume that if you can just move people and products around the world faster, that will just sort of accelerate growth. But could you extrapolate that on on that a little bit?
Speaker 9:Yeah. I mean, it's it's a historical trend that that you can you can see in a number of different things over the course of of human history where you've accelerated the the the rate of transportation within a a network, and that has increased trade. So trade trade and, like, cost and and therefore, like, distance are are proportional to each other. So if the the kind of unit that that's used in these type of analyses is is called economic distance. So it's a it's a mix of, like, actual distance and cost and time and all of those things kinda wrapped into a single metric.
Speaker 9:So if you can shrink the economic distance, you know, between two, economies, you will increase the trade between them. It's it's it's a gravity model. So, like, you have two bodies. The closer you bring them together, the stronger the force of gravity is. So trade is is like gravity in this in this case.
Speaker 1:So Can you talk a little bit about your reaction to the f 47 program? Boeing won a $20,000,000,000 contract for the sixth gen fighter. It's a nod. The design is a nod to the p 47 fighter, and there's there's competition between the major primes, but I'm sure you have, you know, some insight into what's going on here. Can you break it down?
Speaker 9:Yeah. I I I certainly have no insight behind closed doors. Of course.
Speaker 7:So I
Speaker 9:I guess I can I guess I can make up whatever I want? But, I I think from from the outside, you know, I think, you know, it's it's it's clearly a capability that, you know, the US Air Force, really thinks that we need, to solve some some really, really tough challenges. You know? When when you look at what the Air Force is tasked to do and maintain air superiority Mhmm. Basically globally, you know, all the places where where we have interests.
Speaker 9:And one of the most important one of those places is, you know, in The Pacific and maintaining freedom of navigation. We're already I mean, we're we're seeing how that's going in, you know, in in The Middle East right now. Yeah. We all got a a nice inside look to to some of that this week. But it's a it's a really hard problem.
Speaker 9:You know, the the distances are really long, and, you know, our our, you know, current fleets of fighters, be they fourth gen, fifth gen, you know, they they really don't have the legs to cover the kind of ground that's that's required out there. So, you know, I would not be surprised if if this aircraft was significantly larger than than what we've seen before, increased range, those kinds of things. That's just kind of the nature of the the problem that's out there. But
Speaker 1:I $2,020,000,000,000 feels low to me since I I in in in the in my mind, it's like f 35. It's a trillion dollar program. Is this one of those Yeah. I mean,
Speaker 9:this is this is, like, start up for the the EMD phase engineering Got it. And capturing development. So it's like it's like the r and d phase. Like, so you you built a prototype. Now, like, go turn that prototype
Speaker 1:into This the ChatGPT prompt phase. Right.
Speaker 2:Do companies get so big that there's just like, you know, massive variance in terms of like competency, right? Because like over the last couple of years, I think a lot of people that I know are like, I don't wanna fly on this like, you know, Boeing jet. I'm gonna go like take this flight with Airbus or But like clearly the government has like confidence in Boeing. Is that just like the norm for all these contractors once they get to a certain scale? Like there's certain teams that are just like highly competent and sort of at the forefront of some of this stuff and other teams that just have, you know, maybe leadership issues or, you know, more cultural issues, etcetera.
Speaker 9:Yeah. I mean, I I think each each of the primes have their advanced development groups. You know, Lockheed, Skunk Works, Boeing has Phantom Works. You know, Northrop has their own and and so forth. They kinda do these, you know, early stage development programs that, that precede production.
Speaker 9:But, frankly, I think all of them have, like, really grown, like, pretty old and and sclerotic, to to use a a Trey Stevens term. And I think the the evidence of that is, like, how long it has taken, to develop new aircraft in in the modern day. There's this this chart that I absolutely love. It's a timeline on the bottom and then how many years from, like, program start to initial operational capability for aircraft from 1945 through 2020 02/2005 to '10, something like that. So between 1945 and 1975, the average time for to bring a new aircraft from, like, the beginning of the program into an operational capability was five years.
Speaker 9:And then since 1975, that duration has gone up linearly to the point where I think the f 35 was, like, a twenty five year program. Yeah. And even even this one, you know, the next generation air dominance
Speaker 1:Yeah.
Speaker 9:Fighter is already, like, ten, twelve years into its program. Like, sure, we flew a prototype five years ago, but that was that was maybe already ten
Speaker 1:years on the program. Of the $100,000,000 ARR graph where it just keeps getting shorter and shorter. It's like the aircraft
Speaker 9:development a lot in airplanes. And so, like
Speaker 1:That's too bad.
Speaker 9:This all changed in 1975. Like, it's it's blatantly obvious where the knee and the curve is. So you know what happened in 1975? Kelly Johnson retired from Skunk Works.
Speaker 1:Literally just one guy.
Speaker 9:You can't you can't make this stuff up. So Wow. Yeah. Like, the f one seventeen happened, like, five years after that. So that was, Ben Rich and and his groups of, like, very much, you know, still of that of that culture.
Speaker 9:But, you know, iterative development, like the way that SpaceX develops rockets now, the way that we're building airplanes here now at this, like, one aircraft per year cadence, we haven't done that in in decades. And the result is the development timelines for, you know, solving hard problems. They just they just go out and and to the right. And then you you stack on top of that cost type contracting and incentives and all those kinds of things and, you know, the, lack of, you know, like, founder led companies building fighter jets today, that, that happens.
Speaker 1:Yeah. No. It's a really great point. Do you have a
Speaker 2:last question? Is there those out? Camaraderie in this sort of supersonic, you know, start up
Speaker 1:bit of rivalry. I've been trying to get Boom to do a foot race with you. We're gonna find out who has the fastest plane. I wanna find out who the faster founder is. Break it down.
Speaker 9:So I'm I'm finally having knee surgery
Speaker 3:Okay.
Speaker 9:To fix my ACL. Okay. It's specifically for this reason so I can run this race. This is why I'm
Speaker 1:doing it. So, anyway, for those who don't know, Blake Scholl is over at Boom, also building hypersonic technology. Very different application, very different path, very different scale company and stuff. But but I I love the idea of there being, like, serious drama in this space and, like, we can track it day by day. Oh, what's AJ doing?
Speaker 1:Are you on Blake's team or AJ's team? I think it'd great for the industry overall.
Speaker 2:It's like, it's good for the industry overall. We're like, hey. We just we just wanna fly at hypersonic speeds. Yeah. Like, we are wanna be able to do every application.
Speaker 1:Like, wanna see T shirts just random normies are wearing, like, Hermes merch because they're so invested in the drama. Like, straight up Vanderpump rules level, like, People Magazine, paparazzi photos of you anytime you go outside. This is my dream for what tech can be.
Speaker 9:Yeah. Yeah. Well, I mean, we we got a little bit of a race. Right? So boom flew supersonic this year.
Speaker 9:Okay. And we're building an airplane right behind me that hopes to do the same.
Speaker 1:Well, good luck.
Speaker 2:I'm rooting for
Speaker 1:I mean, I'm rooting for both of you, but I'm I'm especially rooting
Speaker 2:for We just want a pod we we we have a pretty fast pace at the but we're not hypersonic yet.
Speaker 1:Not yet.
Speaker 2:And being able to do that do this show from the air with you, do the do an interview in the future. Yes. From a plane would
Speaker 1:just So
Speaker 2:thank you for coming on.
Speaker 5:Yeah. Always welcome. Thanks so much
Speaker 9:for having me, guys. Appreciate it.
Speaker 1:Yeah. Have a great rest of your day.
Speaker 9:You too. See you.
Speaker 2:I love, how everybody's just calling in from the floor. Oh, yeah. It's fantastic.
Speaker 1:Well, speaking of love, our next guest is Connor Love.
Speaker 2:Connor Love. They named they named Love after Connor.
Speaker 1:Did did his family create Love?
Speaker 2:Yeah. Is that is that true? They productized it. IP? They made their money in Love.
Speaker 1:They made their money in Love.
Speaker 2:There he is. Hey.
Speaker 1:How you doing, Connor?
Speaker 9:What up?
Speaker 3:Hi, guys. Mean, I wanted the chatter to go on. Feel like I'm on sports talk radio, you know? Long time listener, first talk, first time caller, right?
Speaker 1:Yeah. Well, good to have you here.
Speaker 2:That was great to have you. You had a thoughtful comment. I just said come on the show. You were like, I'm game. Let's do it.
Speaker 2:So here we are. Start
Speaker 1:with that thoughtful comment. I mean, first introduce yourself, break down who
Speaker 3:you are, but then Happy to. I I help lead our national security and defense investments here at Lightspeed. Been here for five years. Used to sit on that side of the table. Actually served in the military for a better part of the decade.
Speaker 3:So yeah, excited to chat. I think there's a lot of spice. I mean, love delving to death, but let's get into it.
Speaker 1:And and set the table for us on, like, size, scale of Lightspeed, and then is defense tech its own fund, are you just making investments?
Speaker 3:Yeah. Obviously. So so, you know, history at Silicon Valley firm, been around for twenty five years. I mean, we talk about our self like a platform. So we'll write, you know, a million dollar check early or we'll deploy a billion dollars late.
Speaker 3:So so have the full, you know, kind of stacked platform. Obviously, based here in in Silicon Valley, but have offices and reach, you know, globally. I sit on the frontier tech team. So myself, Ravi, and Ravi Raj, and and Taggart really invest in, you know, we call frontier tech. What I lead a lot of is all our national security, all of our defense stuff, and it comes out of the same core funds.
Speaker 3:So it's not a separate thing where we have to deploy $500,000,000 a year in this.
Speaker 1:Got it.
Speaker 3:It's it's it's really kind of up to the team and and up to how we see the ecosystem.
Speaker 1:Cool. That's very helpful. Yeah. Let's go to the drama. You you and Deleon.
Speaker 1:Break it down. No. No. Before before
Speaker 2:the drama, I love the you know, we were actually talking with Deleon how, you know, the last two years, a lot of VCs, you know, went, amended their LP agreements and said Yeah. Well, actually, fancy myself a bit of a defense investor myself. You know, think we all did that. I did that as an angel. Right?
Speaker 2:I've got my I've got my bets. Yeah. Everybody realized it was cool to be a patriot.
Speaker 10:Yep.
Speaker 2:Yeah. Do you think that do you think that it's are are there real blind spots for investors that don't have military backgrounds? We just had Steve Simone on the show from Allen Control Systems. Yeah. Was a nuclear engineer in the Navy.
Speaker 2:Like that clearly sort of informs how he thinks. How much of an edge do you think you have Yeah. Because you actually have have, you know, lived on the customer I
Speaker 3:mean, like like most things in life, if you haven't lived and breathed the problem, it's really hard to roll up your sleeve and understand like what's real and what isn't. I think the thing that's quite obvious though is the fundamental pace of change of technology is happening so quickly that even what I was talking about ten years ago, and you know, I I sat out in the Pacific kinda before the Pacific was cool. I wrote a million memos about hypersonics and space based systems, and I worked directly for the kinda the four star command of the Pacific. And, like, we were talking about basic shit back then. Like, we just didn't have enough mass on systems.
Speaker 3:So I do think there's this clear edge of understanding who the customer is. More importantly, you know, the the crazy thing about defense tech that I think a not a lot of people realize is there's really not the concept of product led growth. Like, you can't just dog food something with a customer, and then all of a sudden, the colonel or the general out in the Pacific is like, great. I'm gonna buy a hundred million dollars this thing. I mean, it's not how it works.
Speaker 3:I mean, congress has to say. We have program offices. We have this complexity of just utter chaos that makes this really hard. So, you know, long story short, it definitely gives me an edge. I just think things are evolving so quickly that, you know, again, the edge isn't enough.
Speaker 3:Like, you know, you need to get lucky a hundred times. I mean, what does Trey say all the time? Like, they got kicked in the face for what seven years straight at Andorold before coming today. So it's not easy. Like, to to be clear, I'm not pounding the drum that like, there's gonna be a hundred Andorals.
Speaker 3:Like, I hate to break it to you. There's not. There's gonna be a lot of investors who are gonna lose their shirts. There's gonna be a lot of entrepreneurs who are gonna try and fail. But as the cold blooded American who's that who served and been on that side of that, like, this is all not good for us.
Speaker 3:More people building new technology to get in the hands of war fighters. The question is, like, are as we as a DOD, are we gonna get out of our own way, and buy the right stuff at the right timeline?
Speaker 1:Yeah. I was I was always bullish on that with the hard tech. Even if it was a bubble, it's like it's so much better than some of the other tech booms where Yeah. You like, it falls out. And then what were what what are your durable skills just like chilling meme coins, and that's what you're gonna do next?
Speaker 1:It's like, at least if you, like, you know, graduated college, went to work for some hard tech company, it fails, but you learned, like, system design, like welding, like, you know, DOD. Like, you learn so much of these, like, tangible skills. Like, at the very least, like, okay. Yeah. The VC dollars, they didn't just go all to Facebook.
Speaker 1:They went into buying manufacturing capacity. Maybe that manufacturing capacity didn't produce profit, so it's gotta get rolled into other stuff. But at least we have more machines in America. So was always like, the the the there could be, like, a peace dividend from a bubble even if there is a bubble and there's a washout. Anyway, do have a next question, or you wanna move on to the continuing resolution?
Speaker 2:Just Yeah. Let's get into
Speaker 1:So so yeah. Can can you start by, like, breaking down just how you process the information and the news around the continuing resolution? Maybe restate what you feel like is going on and then your take on it.
Speaker 3:Well, and and I think this is you know, I won't get too in the weeds, but I think this is really important to fundamentally understand how congress and how our department defense spends money. And I think, like, people just read headlines, the defense news, and they're like, Elon's cutting budget, continuing resolution, and yet all these companies are being funded. What's going on? Like, there's this clear misalignment. I I think the reality sits actually a bit more nuanced than that.
Speaker 3:And when you look at how the Department of Defense spends money and and Congress allocates money, we we pass this thing called the National Defense Authorization Act. And this is literally the president, Congress, both sides of Congress sit down and they say, what are our needs? What are requirements? And then what they do is they they pass a law very clearly that says, here are the budget tables. Here are the things that we're gonna be spending money on.
Speaker 3:And it's this like, you know, I I I give it the Android guys a ton of credit here. Like, you know, it's it's it's rocket science and literally what you're building, but it's not rocket science to figure out what the federal government actually wants. Like, publish these things called J books every year. We pass laws. And so historically, if congress and government works the way it's supposed to work, every year, we have this new national defense, you know, authorization act that gives the Department of Defense a budget table to say, hey, Air Force.
Speaker 3:Here's a hundred million dollars. Go buy space lasers. And and when that happens, you get this really predictable nature of what's gonna be bought, when it's gonna be bought, and the quantity. The problem is when you have disruption like we have right now, like, politically in in in the government, and you can't pass it an NDA. And let's be honest, this has happened a lot in the past.
Speaker 3:You know, you do this thing called a continuing resolution. And a continuing resolution, just as Dalian said, is this, like, blanket Band Aid where you just set an arbitrary period of time in the future and you say, hey, just keep the thing going. Let's keep the thing afloat. Let's kick the can down the road. And this is like, let's be clear.
Speaker 3:Like, is not bad. Like, this is not good. Like, not how a functioning government should should should run. But I think the nuance here, and this is like what gets me so giddy and like to Deleon's point like, yeah, like the the the Matt Steckmans of the world and, you know, those guys aren't like tweeting at him saying like you're wrong. It's it's it's because like those guys who really understand what's happening and and how to sell the government, they're actually texting their cofounders and they're sprinting at shit right now.
Speaker 3:And that's what's happening. So this continuing resolution, the the nuance here that happened is, again, like, you know, go read the section, go read the bill yourself. But effectively, you the rule was changed where you're allowed for new starts. And new starts is just what it sounds like. It it means that you can start a new program and allocate, you know, money towards something new.
Speaker 3:And again, like, there's also a ton of bad in there. There's rescissions. There's like, hey. You can no longer have a hundred million dollars for space based lasers. You can now just have 90.
Speaker 3:But but where the like and I made this like, you know, there are there are sharks and there are Menos in this, you know, in your budget, you know, happening right now is the sharks, you know, the guys like Brian Hargis, you know, done this at SpaceX and is at Castilian now, you know, the the Stackmans and and and the list goes on and on. What they're doing right now is they're looking at each of these new rescinded budget lines, each of these new minimum lines that that congress has gone back and forth on the CR, and they're going to those program offices and they're saying, you know, hey, maybe you don't need 90,000,000, maybe you need 80. And and the nuance here of why this is important is each one of these new budget lines are theoretically, and the keyword is theoretically, allowed to be moved around now. And so what I'm seeing in my signal chats in my my discussions with both people in government and those what I would define as like tier one founders and go getters is like, holy shit. Like there's there's 200.
Speaker 3:There's $300,000,000 that, you know, again, it's a big f right now, but there's a lot of money being moved around. And so when I made that comment and when I look at, you know, kind of this broach of Broadly, like, there's so much disruption and there's so much variation of what could happen one way or the other. I actually think you're going to see one of two things happen this year. You're going see a small amount of companies and timing like anything in venture and starting a company is really important here. If you're in the right spot of the kind of growth journey with your product, and again, this is the beautiful thing about hard tech.
Speaker 3:Your product doesn't do what it says it can do, like who cares? Like, you know, move on type thing. And that's the beauty where the chickens are all gonna come out to roost for all of us at some point. But again, I just think there's so much in your money up for grabs that I think by the end of the year and hold me to this, you're gonna see one, two, three companies that will get, I mean, high hundreds of millions dollars of in your revenue grabbed for real production, real OT contracts that has never happened before in a CR or non CR.
Speaker 2:Fantastic. Very cool. I I got a bunch of follow-up questions. It feels like The United States does our defense budgeting and planning. We're like building in public.
Speaker 2:And like we joke about this all the time. Like building in public for most people, like sure, share maybe some progress. Like get excited on the timeline a little bit. But generally, like you're just sort of inviting like, know, unwanted You're saying the
Speaker 1:CIA's black budget should be 100% of tax revenue Yeah.
Speaker 2:Essentially? Yeah. But no, no.
Speaker 1:I like that.
Speaker 2:No. But like how does China approach all this stuff? Like I have no idea and maybe you don't either, but maybe you have insight. Like it it seems like they wouldn't be like, yeah, we're gonna just like air our dirty laundry out here and like be like, well, you know It's American. We're gonna tell yeah.
Speaker 2:Is that is it, know, break break it down.
Speaker 3:Yeah. I mean, at at a high level, what what we have working against us is for better or for worse, the Chinese government is pumping an insane amount of state and federal dollars towards these critical technologies. Like, yeah, there's a VC ecosystem that exists obviously, but like, it it is in, you know, like, there's nothing in compared to the amount of money that China as a state entity is putting behind everything from rocket launch systems to missiles to autonomous systems to AI ecosystem. And and, you know, what what you don't have, obviously, in The United States is you don't have this massive kind of call it industrial complex where it's like, yeah, we have this thing called SBIRS, the small business innovation research grants that like are $2.03, $4,000,000 that help people get off the ground. So there's this huge parody of just r and d spend that is happening and when it's coming from the government, it might not be efficient, but it's so large in a way where you're just able to fail 500 times and like, you know, it's not like the VC fund goes out of business and you know, it's like the government will keep existing and keep pumping dollars into it.
Speaker 3:I think the edge we have here because I'm an optimistic cold blooded American as opposed to a doomer and gloomer is I actually think the competitive ecosystem we have, and I've told this to everyone in government who listened to me, and again, this might be controversial, but like we need to stop funding a single CBR in our our DOD and in our federal government. And the reason I think that is like in a historic world, CBRs have been this thing to get a company off the ground to like, hey, I need some money to develop something. And it's like net good for like entrepreneurs and people. But now you have this wonderful thing called, you know, venture capital ecosystem who's now said, I'm actually really interested in the risk in this, and I I believe in your vision, I wanna back you. You actually get the right incentive alignment here where if we do our job right, and I say collectively, me, Deleon, you know, GC is quite the the the whole list of folks, then we're gonna be funding the right things that that, you know, have true technology behind them, have the right entrepreneurs and founders who get what they're doing.
Speaker 3:And so I would much rather take our system just to be totally blunt and honest than this Chinese like, let's pump trillions of dollars and they're doing that because I think this is more efficient. And I think the cream's gonna rise to the top of, like, you're gonna see again, not a hundred and rules. I hate to say it. But you're gonna see some pretty large companies that are that are solving real problems for the Department of Defense.
Speaker 1:There's you mentioned space lasers randomly. Yes, this ties
Speaker 2:into kind of a question I had which is within defense tech, there's technical risk and then there's distribution And it's almost like the distribution risk kind of weighs over the technical risk because even if you're building like, you know, autonomous submarine products, well then it's like, yeah, like you could build the amazing product. Maybe you would, you can't actually sell through. But the, on the tying off of the space lasers thing, because there's so much distribution risk, are we taking enough technical risk? Are we funding enough sort of like weird science fiction? Or is that better suited for Skunk Works and the government and, or I mean, I
Speaker 3:I actually think it's the right question and and it, you know, I'm biased obviously and I see how we do things at light speed. I I think about things in a spectrum of like, on one end of the spectrum, you have what I call like true science and technology risks. Like this is the like bits and atoms thing. Like if if a fusion reaction doesn't take place, like you don't have anything. Like there's nothing there.
Speaker 3:On the other end of the spectrum, have the the kind of commercial products that we know exist. Like we can get a car to drive. We can get a software system to kinda, you know, be a CRM or whatever. You know, it's like, you know, you have no you have arguably no tech risk on that end, but you have huge kind of product market fit, like customer go to market risk. I think the holy grail, and again, we take this approach at Lightspeed, is like, number one, like, you need to build a portfolio that's really thoughtful about the type of risk that you take.
Speaker 3:So on one end of the spectrum, I wouldn't take fully science and technology risk. On the other end of spectrum, you're not gonna have big enough outcomes if you're just making another CRM to or a software tool to apply to the to the government. The the sweet spot in my opinion is what I define as these like systems companies. And again, you know, Andrew, I'll use Andrew as an example here because everybody knows them. But it's like, you know, there's a clear software kind of component to what they do.
Speaker 3:They're going after end systems. They're building really hard shit. That's hard to do. There's there's a there's some physics kind of, you know, like barriers to kind of figure out. But the beauty is each new system you add as a systems company only makes that flywheel on go to market that you've secured, you know, before easier.
Speaker 3:Like, again, when you when you're a multiproduct company and, like, you know, Ceronix getting there now, like other, know, Casillion will get there eventually, you know, K2 and Space will get there too. Like, once you've made one sale and made one customer really happy, you show up with the next four or five, six different products and you have credibility, you have contract history, you have the ability to actually deliver and do what you said you would do. I mean, the dirty little secret that everyone knows about Andriel is like the acquisition machine that they are with like APP and Graham and Bobak and the team there is like, they're taking things that are cool pieces of technology and they're 10 a hundred x ing them. It's like, nobody else can do that. That is such a unique kind of ability as one of these systems companies.
Speaker 3:So I think if you're if you're a venture capitalist here, number one, like, I come go back to my statement before, you need to know what real problems are. If you don't know what real problems are and if you don't know where government is spending money, you're shit out of luck. You're just gonna be wandering and throwing money at the hot thing. But if you know where the pots of money are, if you know what the needs are, and you do this really balanced approach of some physics risk, you know, some, you know, kind of go to market risk, and then you just have a bunch of these systems companies that can get really, really big. I mean, again, I think that's how you return venture funds.
Speaker 3:I mean, that that's what I'm in the business. That's what we're in the business of doing at Lightspeed.
Speaker 2:Great. Great insights. Do you think there's our our show is oriented around venture, but in order for some of these, you know, venture backed companies to actually do what they need to do, they need to partner with a bunch of small businesses to actually produce, you know, everything from individual parts and things like it. Do you think there's an opportunity for, like, basically SMBs to pop up to service some of these venture backed companies that want to focus on the technical risk and selling, but then they have to produce a bunch of components as well. And they can't, you know, make 2,000 parts for a single, you know, missile.
Speaker 2:Right?
Speaker 3:Yeah. I mean, let's be clear and I'll actually be really blunt about this. I think how this entire ecosystem both from an entrepreneurial and a VC, you know, perspective, like defense tech, how this goes wrong is we actually cannot deliver on the systems that we are selling the government. I actually think the snowball of like accepting new tech while it's still small in the grand scheme of things of the budget, I do fundamentally believe that snowball has started to move. And so how we fail, to be clear, is that if we cannot produce at scale with efficiency in the scopes that we say they were gonna do it, and you know, for better or for worse, don't have an industrial base in The United States to solve that.
Speaker 3:Like we don't have, mean, the mom and pop shops are dying. I've visited them, you know, like, know, from Southern California initially, you go out into the kind of desert there and you know, it's like one guy after one guy after one. He's built like a $7,000,000 business doing this one thing over and over again. Those guys are dying. We do not have an industrial base to serve this.
Speaker 3:So the question and this is like the real big like, you know, people push me all the time. Like, how is this bubble gonna pop? Well, how is this gonna fail? It's if we if if companies like the systems companies can't find a way to vertically integrate themselves or they can't figure out a long tail supply chain of how to produce not just a couple hundreds of these systems, but a thousand, then I think we're we're in real deep doo doo and and you've been in the situation where you've oversold and under delivered, and you don't keep billion dollar contracts if you do that. So I think we have to.
Speaker 3:Like, can SMBs do it? I don't know. You know, maybe it's Chris at Hadrian. Like, maybe it's the the long tail defense techs. I mean, I I don't know.
Speaker 3:I mean, we'll we'll find out very very soon.
Speaker 1:Yeah. I was I was gonna ask about that. In terms of you know, there there's this meme of, like, you know, maybe it's very risky to directly compete with Andoril on a program that might they they might be launching, like, next month. Like, they launch very quickly. But what what is interesting to you?
Speaker 1:Where do you see the opportunities in hard tech but
Speaker 6:Yeah.
Speaker 1:Noncompetitive with Andoril? We talked to AJ and Hermes. I don't think Andoril has plans to work on a Mach five autonomous plane or passenger airliner. Hadrian, and Yeah. And even like a rainmaker.
Speaker 1:Like, you know, it's it it is like anterol hard tech coded, but it's so far field that it feels safe to work on. What would your advice be for the next generation of hard tech
Speaker 3:engineers? I mean I mean, again, like, I'll start with the same through line I said before. There's not gonna be a hundred Andorals. Like Andoril has a clear unique market positioning of how they build different products into their family of systems. Mhmm.
Speaker 3:I think the way to think about it both as an entrepreneur and as an investor is I I actually think about like unique fences you can draw around not just around like a technical product, you know, a system, but also a customer. And I think this is like really important when you know, if you don't understand how the DoD works, the Navy has all their different program offices that like some for underwater, some for surface, some for missiles. And and, you know, those program managers like they want their solution to build the better thing to then, you know, deliver better tools to the Navy. So if you can be unique enough and and part of this is like, yes, looking at what the large guys are doing like Andrew and SpaceX and and etcetera. You you need to be nuanced enough initially with your product that that you're you're showing up to the table with something new where it's like, well, you know, like, you know, Anvil is kind of doing that or or, know, Roadrunner's kind of that thing.
Speaker 3:So I might as well just buy that because, you know, Anvil has been already there. They're already in the room. Already have the need. But but I but I think the nuance here is like, if you can make a leap from a customer and a system to an adjacent enough thing where where, you know, Androil might be in the ecosystem, there's still a really massive opportunity to be built. I mean, Ceramic's a great example of that.
Speaker 3:Like, Cyronic is, like, off to the races now and building a bunch of autonomous boats, and, like, it's gonna be amazing to see what Dino does. But, like, you know, Andriel's underwater. Like, Andriel's building autonomous systems. And I do think there's a world where both of these companies actually work really well together. And, in this wonderful world where we're doing teaming and orchestration, a bunch of multiple autonomous systems, you want as many people orchestrating on the same platform as possible.
Speaker 3:I think the last thing I'll say is just like where this goes wrong. This goes wrong in a way where both Androil, but also these companies start to build kind of stovepipes around what they're doing. And and, you know, there's like there's like really basic examples like, you know, we we wanna get to a world where we have Skynet, where these systems are kind of talking to each other and playing out. If you don't allow your infrastructure, your software infrastructure to work with other things, then number one, like, you're creating a really adversarial environment with Andruil and other big guys. So in my opinion, like, working with Andruil as opposed to working against Andruil is is is the answer here.
Speaker 1:Mhmm. Jordy, what you got?
Speaker 2:This has all been great. I I don't think I have any I think that covered The one thing I was wondering how you're advising portfolio companies right now. We're in a sort of defense tech bubble. We've sort of aligned on that and it can be a good thing. And so there's definitely a push for companies to take advantage of that and say like Yeah.
Speaker 2:You have a short period of time potentially before, you know, there's a cooling off period and maybe there's less events investor interest and certain investors maintain long term conviction, but then certain others, you know, pull out or pull back. How are you advising portfolio companies on like, you need to move super quickly because Yeah. You know, there there are these sort of behemoths that are gonna be built in the next few years. But at the same time, you wanna be conservatives because if a contract, you if it takes you an extra year and a half to get a contract and then you run out of money like it just doesn't matter. So like how do you advise, you know Yeah.
Speaker 3:I'll actually take it one step further which is like, if you believe you're gonna win a contract in the near future and you don't make that decision to raise more capital now, you actually can't deliver on the contract. Like back to my comment of like, you gotta produce real things and if you don't have capital to build out the factory to build out all the testing infrastructure like you can't do it. So I I again like like most things it's a bit nuanced. I mean, the advice that I give portfolio companies is there becomes a terminal value or a value of your business that that you only have one one path to go, you know, and again, this number is maybe moving a little bit, but it's like the second you start to raise above 500,000,000, both early invest you know, maybe in early investors will get a good outcome. But but near term investors and and you as a company, like, you're either gonna be a public company or you're be bought for a private equity multiple.
Speaker 3:And and and I think the level of conviction that founders have internally on the ability to win real production contracts or the ability to deliver and get to a technology milestone should be that like internal like test of a founder of like, do I have line of sight to that? Do I believe that will happen? And if the answer is yes, then again, like you're gonna need the money, then I advise founders is like, let's take the swing. Like we're in this to build massive companies. I'm not in this to build a company that gets sold to Lockheed for parts like, you know, whatever.
Speaker 3:Maybe good outcome for a founder, but I I that's not what we all play for in this ecosystem. We wanna build generational companies and I wanna back generational founders. So it's really just that internal sense of like, alright. Like this is the product. We believe we're gonna win the product or we're gonna win the contract.
Speaker 3:So let's do it. And so it's, I don't know, you put your pillow down at your head on your pillow at night when you're a founder. And if you know, even all the risk and all the being punched in the stomach that there's true line of sight to to real production contract value, then raise the money. I think I think the time is right.
Speaker 1:Can you give me a little bit of a crash course on KPIs, multiples? Like, what stats are important for defense tech companies as they're growing? Obviously, in SaaS, we know triple triple double double double. We know ARR and churn. What are you looking at in the growth stage
Speaker 3:defense tech The geometry of defense tech, you know, company growth looks unlike anything else. Like, it it doesn't look like software. It doesn't look like consumer. Mhmm. What it looks like nine nine times out of 10, and there are some anomalies here.
Speaker 3:And I actually think they're gonna be some anomalies during this continued resolution. But nine times out of 10, you get this really small like super revenue. Like, don't have a system yet. I gotta develop the thing. I gotta go get someone to pay me for some small like $2.03 $45,000,000 R and D money and and as an investor in this ecosystem, I actually discount all that revenue to zero.
Speaker 3:I don't you know, whatever. It's not like we're applying multiples at the early stage, but you know, you see this like middling and then you see again this just stepwise change in improvement where, you know, people call it, people overuse the term, you know, program of record. You know, most times it's actually not a true program of record like, you know, it's actually either just a really large OT other than transactional authority or something like that. But then you see this stepwise change of like, okay, you got, you know, children dollars and then you got this massive kind of 203 hundred, $400,000,000 contract. And so the KPI that I always think about is like that there's a separate technical timeline of de risking your system and like it's our job as investors to roll up our sleeves and be like, is there real progress?
Speaker 3:Can we see this? Is there more testing like what's happening from iteration perspective? But then the holy grail is like and this is where you're either really smart as an investor or you're really dumb is, you know, you you make the the you lead with the preemptive term sheet. You make the investment actually right before that tick and right before that big production because the beauty is you win a 200 you win a $300,000,000 production contract. Yeah, maybe it's over a couple years, but like that's the base cash line of your business.
Speaker 3:And that's the like get out of jail free card of like, hey, now we're not using a ton of venture dollars to develop the next thing to build the next factory. So to me, it's like you you get that internal feeling of where we are like how close we are to those those programs and like, you know, it's it's it's not a clean, you know, oh, net dollar retention is this odd, you know, you're doubling year over year tripling year over year. You just gotta be nuanced and you gotta know what the hell, you know, program offices care about and and how they move.
Speaker 1:That makes a lot of sense.
Speaker 2:I've loved having you on.
Speaker 1:It was great. Thank you so much.
Speaker 3:This was Yeah, guys.
Speaker 2:Any any, you know, when you're when you're, next time you're putting $500,000,000 into a cool company, join with a Yeah. We'd love to have you both on.
Speaker 1:That'd be amazing.
Speaker 3:Yeah, guys. Well, appreciate it. Love what you guys are doing. Huge fan.
Speaker 1:Thanks so much.
Speaker 7:All right.
Speaker 3:Chat soon.
Speaker 2:Talk soon.
Speaker 3:Bye. Bye.
Speaker 1:And we got Chris Power coming on to the show next from Hadrian. He got a little mention in that neck in that earlier interview. Connor mentioned it.
Speaker 2:I'll be right back.
Speaker 1:And Jordy is taking a break. Well, we will be back in just a few minutes, folks. But in the meantime, let me tell you about Adquik. Adquik dot com. Out of home advertising made easy and measurable.
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Speaker 1:Send out a photographer, take some photos, get them on social media, put something funny on there. The Adquick team is really, really good at coming up with kind of like viral stunts. I mean, Mike Solana did a PirateWire's billboard for Adquick. They have a partnership together. And I think he got, like, a hundred thousand likes on x.
Speaker 1:I think Elon wound up retweeting it because it was a big milestone for the company. Put up moon should be a state right in, right in Times Square. And speaking of the moon, we got one of my good friends who's obsessed with the moon. Chris Power, welcome to the show. Jordy's slacking off.
Speaker 1:He's he's taking a break. He'll be back in a couple minutes, but good to have you. Welcome to the show.
Speaker 10:Thanks for having me. It's a pleasure to be in
Speaker 5:the capital of the capital.
Speaker 1:Thank you. Yeah. It's good to have you here. How has life been? You've been traveling.
Speaker 1:You were spotted on a flight to Washington DC A Couple Couple Weeks ago. The paparazzi caught you.
Speaker 2:Yeah. That was crazy.
Speaker 1:That yeah. That was crazy. I I didn't realize that there's so so many spies out there in Silicon Valley. But how was your trip to DC?
Speaker 10:It was incredible. Obviously, can't talk about most of it. Mhmm. Some of it's classified. Very impactful, especially with the new administration coming in, wants to fix American manufacturing and, you know, the vice president gave an incredibly rousing speech about reindustrialization at the inducing conference.
Speaker 10:So it was incredible. And, yeah, look, I I don't know who leaked that photo to you. I was a bit concerned whether it was a fan or, like, a communist spy tracking down all of Fintech founders, but, you know, you gotta be careful these days.
Speaker 1:Yeah. Yeah. You gotta be careful. Maybe wear, like, a full beard and glasses next time. Full disguise.
Speaker 2:I just gotta go out and say, think you have the coolest office of anybody that's been on the show so far.
Speaker 1:It's a fantastic office.
Speaker 2:What a one of you. Unless it's a green screen.
Speaker 1:It's not. I've been there.
Speaker 10:It's real. It's like green screen. Real factory.
Speaker 1:And a lot of a lot of machines working constantly. How are the lights today? I know that on the top of each one of those machines, there's a light. It can turn red. It can turn green.
Speaker 1:How are looking today?
Speaker 10:Very, very green, fellas.
Speaker 1:Very green,
Speaker 10:Just like just like the ramp logo. Everything's going on.
Speaker 1:Fantastic. That's good to hear. Well, anyway, you didn't even get a chance to, introduce yourself. Can you just give us, like, the high level pitch for Hadrian, what you're building, and where it's going?
Speaker 10:Yeah. So I'm Chris Power. Hadrian builds autonomous factories. So, you know, we deindustrialized the country from the seventies through the nineties and gave all our industrial power to China. And now the incredibly skilled workforce that does incredible technical things in high precision machining or costings are all aging out.
Speaker 10:So we really don't have an industrial base anymore. So our our mission is to reindustrialize The US by building highly automated factories that are, you know, as efficient as China with a lot more software robotics and a new manufacturing workforce.
Speaker 2:I see
Speaker 1:that the lights are on in that factory. We're trying to get to lights out factories. Is that the goal? Is that is that just Chinese propaganda when I hear them talk?
Speaker 10:We're we're we're we're lights out today. We run twenty four seven with a handful of really smart people running the fleet. The lights are on now because we're all here. Yeah. We're we're a twenty four seven, seven day a week operation.
Speaker 2:Wow. That's awesome. Can the robots save us? Right? It's a very scary time right now where China's producing a lot of robots that have can be used for a lot of things, you know, flying, you know, maybe over your kid's birthday party to get fun footage or they can, you know, be Kamikaze.
Speaker 2:Used in Kamikaze ways. But it feels like automation and advanced robotics led manufacturing is the only way that like, you said it yourself, maybe the only way that we really reindustrialize, we just don't have the sort of skilled labor force. But you're you're betting the the company on that. But but maybe kind of talk a little bit more about that specifically.
Speaker 10:Yeah. I mean, I'll go with our software and robotics is to make it so easy to be highly skilled that anyone can do it.
Speaker 1:Mhmm.
Speaker 10:And 100% of our workforce are people who've never set foot inside a factory before. They're just 10 times more productive because we're getting them superpowers with software robotics. Right? Mhmm. And I would you know, you guys are big fans of Formula One.
Speaker 10:So, like, a lot of what our software does is, you know, imagine if your son or daughter who was learning to drive a Tesla autopilot on an f one car that can just, you know
Speaker 1:Mhmm.
Speaker 10:Drive a McLaren very quickly without much training. That's kinda what our software does. And we really believe in using the best of software and robotics to give the new workforce 10 times more efficiency with superpowers, you know, versus, like, replacing them entirely. You know?
Speaker 2:Yeah. And so is this the same way? Like, to compare it to yesterday, anybody can can do, Ghibli Studio Ghibli animation. So, like, anybody should be able to make, like, you know, the the most, you know, advanced aerospace, you know, parts, etcetera?
Speaker 10:That's exactly right. That's exactly right. Yeah.
Speaker 2:Is is do you think we can get to the like, what was impactful yesterday is that over the past maybe a couple years, if you were really, really good at prompt engineering, you could you could kind of create some outputs like we were seeing yesterday. But the average person would go into these models and they wouldn't have any success. Right? They tried a couple of times and be like, this is slop. Are we still at the point today on the sort of manufacturing side and what you're doing where it's like, you need to be, like, actually, like, very, very good, but you're sort of aiming to get to that point where somebody can come in and just sort of, like, make make a part and and one shot it?
Speaker 10:I think 80% of our processes were at that point where we're in ghibli mode, one shot. There's some really deep digital manufacturing stuff that you still need an expert to do. So we're in the, like, software engineers ten times more productive land versus anyone can code, but I would say 80% of our factory is like anyone can code today.
Speaker 1:Are are there a the the specific programming language specific programming language is, like, CAM programming. Right? Isn't that it?
Speaker 10:Yeah.
Speaker 1:Is there is there, like, a are there LLMs that are good at that type of coding language? Like, there's no cursor for CAM that you're, like, on top of and just plugging in to speed things up? Speed things up?
Speaker 10:No. We so we we had to build that full stack ourselves.
Speaker 1:Okay.
Speaker 10:And the main reason is all of those digital manufacturing tools, which are super hard to use and you need to be an expert Mhmm. Generate basically terrible assembly code that the machines run on.
Speaker 1:Yep.
Speaker 10:But because American manufacturing is largely regulated in ITAR, there is no training data on
Speaker 1:the Internet. Yep.
Speaker 10:So the one of the reasons why our internal models actually work for manufacturing, you know, machine learning models is because we're the only ones with the labeled dataset because we're creating it daily in the factory. Yep. There is no stack overflow for manufacturing data. So none of the off the shelf models actually have ever been trained on any
Speaker 5:of this.
Speaker 2:Interesting. I imagine that every hard tech, defense tech, frontier tech founder eventually has to come through and kiss the ring, at your, at at your factory just because it's like, hey. You know, they're basically like, hey. We're gonna make we're gonna make prototypes, and then we're gonna go sell contracts, and then we're gonna eventually need to deliver on those. And, like, somebody's gotta make the parts.
Speaker 2:How many how many companies right now do you have that are like, they're going out there promising these big things and then, you know, at the end of the day, they're gonna come back to you and be like, okay, now we need to make this.
Speaker 1:The king thing is so funny
Speaker 2:because because I imagine you you work with some of the, like, you know, some of these are sort of more established companies. But then I'm sure, like, I'm sure there's, like, a hundred plus, you know, pretty exciting companies that are basically, like, in almost, like, in your pipeline where they're like, we're going to work with you. We just need to, like,
Speaker 1:prove that we can Someone's gotta make the parts for the f 47.
Speaker 10:Yeah. And and, you know, someone's gonna make the whole products as well. So, you know, I would say that for a large established customers, like, you know, we're making a lot of stuff for them. For a lot of the newer entrants or for new programs, we are becoming a, like, co prime where the DOD hey. Hey, John.
Speaker 10:You can definitely make 50 drones or 50 of this product, but we'd really love you to partner with Hadrian because we think they should build your Tesla Gigafactory for this product line. Mhmm. There's really this partnership's partnership's model of helping them prototype and then scale rapidly. Got it. But, yeah, we're like, you know, we can only build so many factories a year.
Speaker 10:So the waiting list of everyone wants a Hadrian factory to deploy their products at scale in The US is growing quite a lot, which we're very lucky.
Speaker 2:What do what do you think about, the classic Harvard MBA who's like, I'm gonna go buy this sort of SMB manufacturing shop that's, you know, putting up $5,000,000 of EBITDA, and they've done so for thirty years. So they're just gonna. Are they like buying like sort of an aging asset or or is it worth, is there sort of like value in sort of like understanding what they're doing and sort of upscaling it or
Speaker 1:The machine shop roll
Speaker 2:up idea. The machine shop roll ups of of the world.
Speaker 10:I I think in general, it's a terrible idea, and the main reason is is, like, you wanna run a factory. You gotta you gotta be leading the people, and you gotta have that credibility. And no master machinist or welder is gonna respect a kid who's got a suit in the Harvard MBA on coming and telling him what to do. I think it's a really tough gig. And is it also one
Speaker 2:those things where you wanna Chris actually
Speaker 1:tried to do this, like, and years ago.
Speaker 2:Yeah. But but is it also
Speaker 1:Before it was a trend.
Speaker 2:No. I imagine there's been so many advancements in everything from robotics to AI that you would want to just think about the factory. Like how would you build a factory today versus sort of buying this asset that's been operational for decades because we're having Druva on from deterrence later and he's got all these crazy stories where walking around these factory and there's an active machine being used that's from the forties, like the '19 Like it was working in World War II and we're still using it Keep
Speaker 1:using it.
Speaker 2:And so I imagine if you have the opportunity to partner with a new defense tech company and say, well, like, here's what's available now. Like, you don't have to go and try to take over some old factory.
Speaker 10:Yeah. And a a lot of the capital equipment in all of the naval facilities or, you know, everywhere in machine shops is, you know, somewhere between from the nineteen fifties to the nineteen eighties. And it's just impossible to automate it because often none of them have computers on them in the first place. So you really gotta you really gotta build these factories from scratch with new technology and new workforce.
Speaker 2:How do you think about, when you're setting up one of these new factories and and for companies that are in defense at all? Are are there the the actual machines themselves that then sit on the factory floor, I imagine a lot of the best ones are built and designed and manufacture you know, everything like in China. So how do you how do you think about sort of the supply chain for the autonomous factories that you guys are building and sort of, you know, figuring
Speaker 10:out It's a hard question that the country's got to answer. So the machinery market so we invented in air force invented CNC machine, and we no longer make CNC machines in The US. And I think you saw this article about, you know, Haas white labeling some China ones and selling to the Russians. But the main the main manufacturing markets where we buy from is China's number one. We don't buy for them because they got spyware all over this stuff.
Speaker 10:And then it's, you know, Germany, South Korea, Japan are the best machine makers. And it's kind of like the car market. You know, you can buy an Italian one and it behaves like an Alfa Romeo and it's really fast, but it's gonna it's you're gonna be in maintenance hell forever. The German ones are really stable and the, you know, the Korean ones are quite good. So, you know, if the balloon goes up with the conflict, you know, can we even buy the amount of capital equipment to put in the factories?
Speaker 10:Because we don't produce that capital equipment in The US anymore. So, you know, part of my job is grow super fast and buy all the CapEx from our from our allied partners and make sure it's in The US. But, yeah, we no longer make the underlying machines in the country.
Speaker 5:So can you
Speaker 1:talk, can you talk a little bit about the continuing resolution? You're not a company that's going directly for program of record, but, obviously, your faith is kind of tied to that. I mean, yeah. I know that you probably can, but, can you talk about, like, how did you interpret the news? There's been a lot of chatter about this is a bear case for the entire industry.
Speaker 1:Maybe there's, green shoots of opportunity. How are you processing, and what's your strategy?
Speaker 10:So we're we're in a really, like, lucky position where we're everyone's factory. So as long as we have enough customers who are winning and losing, like, we're we're growing at a rapid clip. Right? Mhmm. Because we're kind of the index of the market, right, which is a really lucky position to be.
Speaker 10:Yeah. We also partner with a select few companies, again, to COVID on these major programs that manufacturing is a real challenge. But for our core business, you know, if you're a small defense startup that they've got one big program of record and that gets gets delayed nine months, your burn rate's through the roof. You're canceling your ramp credit card. You know?
Speaker 10:You can't put ads on Adquick anymore.
Speaker 1:You're in
Speaker 10:a really tough position.
Speaker 2:No Eight Sleep? Brutal.
Speaker 10:No Eight Sleep.
Speaker 1:I mean, if you paid for it. Yeah. Eight Sleep's not leaving you.
Speaker 10:Trouble. For platform companies like ours where we're growing with many customers and sure some of them get delayed, like, it doesn't really affect us that much. And we're in a really good position where we can eat those long continuing resolution cycles because our core business is growing, like, 10 time you know, 10 x year on year. So it doesn't affect us as much. It's kind of like, you know, do you guys really care whether people watch movies on Netflix or Hulu?
Speaker 10:Because everyone's using AWS. We certainly don't. And we try not to have favorites. You know? Yeah.
Speaker 10:We'd we'd love to manufacture everything for everybody.
Speaker 2:What do what what does success look like, just purely from a you know, the the thing that comes to mind is, like, there was this meme that, like, 30% of venture dollars go to go to Meta. Right? I I I didn't think it was quite But is the future of Hadrian is like 30% of hard tech dollars just go straight to Hadrian is like is like obviously like if you're just if your job is to produce products Yep. Like, and you need a factory to do that, like, a huge part of the cog should be the factory. And then
Speaker 8:Yeah.
Speaker 10:I I think the most successful companies that are continuing to raise huge growth rounds are building faster and better with Hadrian. Mhmm. You know? And, yeah, I think 70% of all the deep tech dollars goes to, you know, there's some headcount for engineering, but a lot of it is producing prototypes and then scaling factories and components. So, yeah, we we believe that we will are quickly becoming the index of the market and, you know, everyone needs a Gigafactory.
Speaker 10:Right?
Speaker 2:That's right. What's going on? What's your thoughts on Europe broadly? We've covered the automotive market quite a lot on the show. Just, you know, Germany's kinda throwing in the towel.
Speaker 2:Some manufacture you know, sending their manufacturers, you know, it was even Porsche's setting up US manufacturing. I think it's a bit of a shame. Do they is there a world in which Hadrian, you know, helps kind of revitalize some of these, you know, the German in industrial economy just because maybe they they they they have this great industrial base, but then haven't maybe focused as much on on sort of core innovation around the factory?
Speaker 10:Yeah. So we have so much work to do here in The US that we'd love we'd love to support our allied partners in Europe and, you know, The Middle East and countries like Japan, reindustrialize as well, and they often have the same kind of core skilled labor problem. We've so much to work to do here, fixing the navy, fixing the issues production, helping our customers scale. I I think we'll get there in a year or two. I think, really, what you're seeing in Europe is two warring tribes.
Speaker 10:One is the people that, you know, set their energy policy based off the board by some 14 year old Swedish girl and gave all the leverage to Russian oil and gas. And then you've got your kind of Richard the Lionhearts. You know? It's like we need to re industrialize Europe. Let's go make our own fighter jets and drones and naval fleets.
Speaker 10:So I you know, it's it's it's good that the English are waking up in my opinion. We need we need everyone in the fight.
Speaker 1:Fantastic. Well, that's great place to wrap up. Thanks so much for coming on the show. We'll to have you back soon.
Speaker 2:Took way too long to get you on
Speaker 1:the show. I know. We we messed up. But this is a perfect day. You're a day.
Speaker 1:For this, And you've
Speaker 2:been busy.
Speaker 10:It's perfect day. I'm happy to happy to be at the capital of capital anytime and you know, God bless The United States Of America and you know, the financial system of The US economy. Thank you, gentlemen.
Speaker 2:Thanks. Just fantastic. Thanks for coming on. Great to see you. Bye.
Speaker 2:Early supporter. Yeah. And I'll always remember that.
Speaker 1:Yeah. He he texted once. He was like, I'm working out at the gym, and I'm just cracking up laughing about your holiday guide or something like that. We had a lot of fun. We're a lot more serious today.
Speaker 1:Still trying to inject some humor, but having a lot of fun with it. And we have another guest joining in just a minute. But, I mean, maybe we could run it back. Public.com, baby. We've already done the ad.
Speaker 1:We're doing another. We're doing Investing for those who take it seriously. Multi asset investing, industry leading yields that are trusted by millions, folks. Over on public.com. Ben Do we need to reduce the timeline, or do we have a guest?
Speaker 1:We have a guest in the temple of technology. Get another Welcome to the stream. How are doing, Aaron?
Speaker 2:There he is.
Speaker 4:Boys, how are you? How are you?
Speaker 1:We're great. I think if you turn your camera horizontally, we'll have a little bit better frame over here. Is that possible?
Speaker 2:That might be tough. He's on an iPhone. No.
Speaker 10:That looks great.
Speaker 2:There we go. Thank you.
Speaker 1:That looks great. That looks good. I don't know I don't know what you wanna show us, but we love that you're on the factory floor calling in on defense day at TVPN. What's new? Can you introduce yourself?
Speaker 1:What do you do? Where are you? Etcetera.
Speaker 4:Sure. Aaron Slodov, CEO of Atomic Industries, and we're, we're teaching AI how to do mass production here. We're we're in Detroit. Let me, can I turn my camera around?
Speaker 1:Yeah. You should. You can do anything on the phone. Yeah. There we go.
Speaker 4:Oh. Oh.
Speaker 1:There we go. Is that
Speaker 4:the Chetto? Yeah. This is the Chetto. This is a this is a very, very big boy. This machine is 18 feet tall.
Speaker 5:Okay. Wow.
Speaker 4:And right now, we're loading in, that job that's going there. We we can we can go down there, take a little walk. Cool. This is
Speaker 2:a great this is a great this is our just Detroit Correspondent. Yeah. Eric slowed off.
Speaker 4:From from the front lines.
Speaker 2:Why not? For anybody out there who gets motion sickness
Speaker 1:Yeah. Maybe go audio only right now.
Speaker 5:Behind me
Speaker 1:We we need to get you a gimbal.
Speaker 4:In these boxes right here, we've got a a huge production program going to the New York City, Subway Transit Authority. Mhmm. Lots of work happening obviously. Yeah. Re industrialized.
Speaker 4:Right?
Speaker 1:Cool.
Speaker 2:So So wait. You're doing the meme.
Speaker 5:You're doing the meme.
Speaker 4:I am doing the meme. I am doing the meme.
Speaker 1:You created the This
Speaker 4:this is a this is a very, large mill and drill machine Yep. That we use for mold making.
Speaker 6:Okay.
Speaker 4:It's not super apparent here, but, like, this is gonna be a mold for a drone, ultimately. Cool. Wow. And that thing is basically, like, blasting holes in the side of it so you can, like, drill in water channels and things like that to cool off the mold while it's running. Super interesting.
Speaker 4:And
Speaker 1:so you you were talking to me early. We we got coffee, like, years ago, and you're telling me about, like, if you need to make a lot of bumpers for cars, you need a mold for that. And so you make the mold, but the mold gets hot. And so you drill a bunch of holes in there so the heat dissipates. Is that still the playbook, or has it evolved a little bit?
Speaker 4:Yeah. I I mean, basically, what we were trying to prove out in the early days is, like, our mastery over mold making. Right? Sure. And so, like, part of mass production is being able to make a mold for something, you know, as fast as you can and doing it really well.
Speaker 4:And, obviously, this is, like, the domain of tradespeople. It takes hundreds or thousands of hours to actually engineer one of these things, and, you know, you have to build it too. So, ultimately, what we're trying to do is teach a computer how to actually engineer these things in, like, minutes, instead of, you know, weeks and months, and then have it flow through the factory more efficiently than it ever has been able to. And then, yeah, once you actually put the mold into a production setting, it runs more efficiently too because it's physics optimized. Yeah.
Speaker 4:So you can squeeze out way higher efficiency, from these things when they're running. So, like, here's here's a here's one of
Speaker 5:the programs running right now.
Speaker 4:We've got, you know, got some parts here. Can check this out. Wow. But I
Speaker 1:had no idea what those are,
Speaker 4:but they look cool. Yeah.
Speaker 2:Yeah. Do you do have you ever done any, like, microphones, mic stands, like, any national security critical stuff, podcasting equipment?
Speaker 4:Yeah. It's all all all national security, all ITAR all the time.
Speaker 1:Yeah. I I I do have a question about, like, how you actually generate the designs that then you manufacture. How much is, you know, physics based solver deterministic computing versus, more like AI generative, nondeterministic? And then on the AI side, are you getting into reinforcement learning, or is this just like, let's get a big pool of data and train like it's an LLM?
Speaker 4:Yeah. So, basically, what we're doing is kinda similar to how self driving cars were built a long time ago. So you do have to have kinda, like, numerical solvers that characterize a physics problem pretty well. And then once you dial that in, you can start using it to seed a model, to do something. And then, obviously, you have a factory to help you, like, close the loop on on the prediction ability.
Speaker 4:Right? So Yep. The idea here is that, you know, with the solvers and kind of, the models that we build on top of this, you have a factory that generates all this awesome data. All ultimately, what you're trying to do is just, like, predict the physics of a mold and the design of it as fast as you can. So in terms of, like, LLMs and how they play a part in this stuff, it's it'll become more apparent over time, I think.
Speaker 4:But, you know, on the physics based side, very little.
Speaker 1:Yeah.
Speaker 4:Of And then, like, in terms of, like, coordination and, I think, like, execution Mhmm. Of said designs and kind of, like, factory operations, it's huge. Yeah. A lot of that stuff can be really great, like, you know, for helping, you know, the efficiency here.
Speaker 1:Yeah. There's a little bit of, like, when all you have is a hammer, everything looks like a nail syndrome with the LLM stuff right now where people are like, let's just stuff it and everything. It's Slap the shot. Other there are other algorithms, in fact, that might be useful. And Yes.
Speaker 1:And that's okay.
Speaker 6:It's you don't need
Speaker 1:to be embarrassed. Yeah.
Speaker 2:I imagine when you guys are, you know, in the customer development process, like, you're oftentimes there we go. That's the poop.
Speaker 1:That's machine poop.
Speaker 2:I imagine you're competing with with with kind of companies in in China for on on some of these parts. Like, a lot of, like, you know, when when you hear about, like, the Chinese manufacturing culture, it's, like, respond really quickly to emails Yep. Like, pricing over, you know, be clear
Speaker 1:It's Chinese New Year.
Speaker 2:It's yeah. Don't don't even think about doing anything around that. But but, like, is that something, like, do you do you respect their game when it comes to just, like, being, like, really fast, really clear, like, focusing on cost reduction Yeah. Scale, etcetera? Like, do you think we can learn, from them?
Speaker 4:I think that, yeah, there's there's an interesting story there, right, which is like the grit, the grit part of it. And so I do think that, like, if you're highly motivated and incentivized to actually win as much work as you can, you're gonna do whatever you can to to do that. Right? And so, like, a lot of American, like, high mix manufacturing is, let me just take a look at this job and see if I'm gonna make enough money off of it before I actually even, like, talk to you. So I think this is, another really interesting domain of, like, what software and technology will do for American manufacturing.
Speaker 4:Right? It's, like, absorbing a lot of that complexity, being able to, like, quote jobs for different types of manufacturing processes, like, instantaneously. This is, like, our superpower is innovation. Right? Like Mhmm.
Speaker 4:Figure out how to do that stuff, and then you can work around that stuff. Right? Like, there's I don't think there's a shortage of grit here, but, like, we're we've been forced into, you know, a back alley of the value chain where we have to take a lot of high margin stuff because somebody else is out there doing it for cheaper. So, yeah, I think this is kinda, like, where we have to focus.
Speaker 1:I I had kind of a hot take a while back, and I wanted to run it by you. I I was saying, like, maybe the secret to China's dominance in electric vehicles now and drones, like, actually goes back to the Happy Meal toy. And the fact that America can't make something as simple as a Happy Meal toy in America is a problem that might actually be worth solving. But how does that hot take resonate with you? Do we need to be able to make Happy Meal toys in America?
Speaker 4:Yeah. I mean, a lot of people don't wanna do, like, commoditized classic stuff like that. Right? Because it's it's not gonna make them enough money. But I do think, to your point, right, like, the amount of tribal knowledge and skill built around manufacturing something is what we've lost a lot of.
Speaker 4:And so that's kinda the whole point of this is, like, recapturing it somehow. Like, let's take the dying, evaporating amount of skill that we have left and transfer it into a machine and make people, you know, a hundred times more productive than they've ever been able to be. So I think, like, this is a really hard problem because you're trying to teach a machine how to do some kinda, like, yeah, crazy physics based deterministic thing. But ultimately, if you if you have if you have like whoops. If you have crazy skill mastery
Speaker 1:over down now. Yeah. This is an experiment. It looks fine.
Speaker 8:It's There
Speaker 2:we go.
Speaker 4:Amazing. Yeah. It's it's basically it's like it's all about, like, the mastery of skill that you have and how you transfer it around. So Okay. My in my opinion, it's like, I think the fastest way to do that is by trying to teach a computer how to do it.
Speaker 4:And then, you know, obvious like, think about how long it takes to train people to do this stuff. It's like a decade. You like, do we have a decade to sit around and wait right now? No. I mean No.
Speaker 4:Alright. I want some
Speaker 1:Yeah. Yeah. You are sideways, by the way.
Speaker 2:I want you are sideways. No.
Speaker 1:That's that's better.
Speaker 2:I want some hot takes. How do you feel about Good. How do you feel about Waymo, you know, buying cars from China?
Speaker 1:Oh, they are?
Speaker 2:Yeah. They are. How do you feel? How does that make you feel?
Speaker 1:How does that make you feel? Yeah. You should've gone to Detroit.
Speaker 2:I know. I mean,
Speaker 1:you're in the capital of Motor City. Come on. They could've bought the whole town with, like, one one dividend payment.
Speaker 4:Yeah. Basically. I mean, that's kinda that's kinda how I feel, honestly. But, ultimately I don't know. I used to work at Waymo, like, fifteen years ago.
Speaker 4:Was crazy. Wow. And I've seen that company, you know, like, grow over time, but it's, yeah. I mean
Speaker 1:It's a great product.
Speaker 4:It's a great product, and I, you know, I went to San Francisco, like,
Speaker 5:a little tourist attraction to try
Speaker 4:to get in one finally and ride it after, you know, fifteen years of not making it. But, oh my goodness. Yeah. This is
Speaker 1:No. No. You're sideways again. Can you talk a little bit about, just the on ramp from our current education system, Gen z, Gen alpha's coming up? How what how do we get folks to get excited about what you're doing manufacturing hard tech generally?
Speaker 1:And then is there a need to change? Do we need to like, when I went to high school, like, there was no machine shop class. It just wasn't an option. And it feels like that took my whole class off the path of, like, ever pursuing anything related to machine shops. Now most of those people became, like, consultants and bankers and lawyers and doctors.
Speaker 1:But, you know, do we need to bring back machine shop? Do we need to do more in the college circuit? Or is it really just great memes, great conferences, and people will pivot at the last second after they've, been studying CS for four years?
Speaker 4:Yeah. I think it's two things. Like, incentive, obviously. Right? There has to be a reason that you wanna do something like this.
Speaker 4:So it's either gonna be pay or the glory. And the reason that I wanted to do this is because this is one of the hardest, you know, engineering and physics problems that, like, I can imagine. It's utterly insane how hard this is. And, like, I think I'm probably one of the only people stupid enough to do something like this. But, ultimately, I think the challenge of it is incredibly rewarding.
Speaker 4:You get to put your hands on steel. You get to get cut and bleed. It's awesome. But beyond that, right, like, if you turn factories like this into a sci fi future, like, who's to say you can't pay somebody that works in here the same as they get as, like, an l five at Google or something. Right?
Speaker 4:Like Mhmm. If you're productive enough, I mean, kinda speaks for itself. And, like, beyond that, I think also, you know, training wise, exposing people to this kind of stuff is ultra important. Being able to do factory tours. Right?
Speaker 4:Like, our buddy Zane, that's we need to, like, have factory tours going on all the time, but there's there's a transformation happening, right, from going from, like, the the dirty, dangerous, and dingy into, like, relatively, you know, neat and kinda modern. But, like, there's another version behind this too. So I think, like, really jazzing people up about the opportunity in terms of, like, challenge and incentive, is kind of, like, the main thrust for this. And then, yeah, there's memes, but also I think a lot of, like, preeminent industrialists today could be beating that drum a lot more. And, you know, there's super exciting companies to go work for.
Speaker 4:It's yeah. It's a big party bag full of opportunity right now.
Speaker 1:Want one Last question.
Speaker 2:More spicy, fresh, hot off the grill, hot take from you before you leave. And we'll have you on again because it's been great. We'll have you on with a stable camera too so you can see that handsome
Speaker 4:face. I had to walk around.
Speaker 1:Alright? We're gonna get you a selfie stick straight from Shenzhen
Speaker 2:onto you. It'll TeamView selfie stick.
Speaker 1:TeamView selfie stick is in the mail. TeamView We expected in six weeks, but we paid $1 for it.
Speaker 2:Last last question. Is there a world in the future where you got humanoid robots walking around that factory floor or Good question. Unnecessary with, the other forms of automation that you have going on?
Speaker 4:Yeah. I mean, I would love to. I think they could probably be pretty useful for, you know, little stuff that requires less precision and, dexterity. But as that improves, obviously, probably some interesting work for them to do around here. But for now, it's like walking around the outside with, like, a machine gun.
Speaker 4:So There we go.
Speaker 2:I like the sound of that.
Speaker 1:Yeah. That actually sounds pretty good.
Speaker 2:Give robots guns.
Speaker 1:Yeah. Give the
Speaker 2:robots Yeah. Security.
Speaker 4:Detroit First, baby. Let's go.
Speaker 1:For sure.
Speaker 2:Aaron, it's been fantastic having you on.
Speaker 1:This is awesome.
Speaker 2:Looking forward to the next one. Keep keep pounding the table. It's working, I think.
Speaker 4:Yeah. Good luck. Thank you, guys. Alright. Peace.
Speaker 2:Bye. Bye.
Speaker 1:That was great. And we're staying on manufacturing. Right? Deterrence, Druva?
Speaker 2:Yes.
Speaker 1:Can you break it down? What does the company do?
Speaker 2:I wanna kinda let him break it down. Okay. But but, yeah, Deterrence is a company that I have been lucky to be involved with myself since months and months and months prior to incorporation. So Drew is texting me right now, robots needs guns. Well, you know what else?
Speaker 2:You know what else we need? We need you to join the show, Drew. So let's get him in here. But, yeah, Deterrence is leveraging, robotics to manufacture critical components for munitions starting with something called primer. Yeah.
Speaker 2:And they're doing another a number of other things at the moment. So we can let him, you know, fully break it down. But
Speaker 1:I got some breaking news. My mom is watching, and she sent me a foghorn sound effect and said, ran across this and thought of Jordy. No way. Yeah. So I'll have to send it over to you.
Speaker 1:You can add it to the soundboard. That's great. Well, let's say there's a lot people are into the soundboard. And let's bring on Dhruva. How you doing?
Speaker 2:What's going on?
Speaker 1:Great to see you.
Speaker 2:Look at that hat. You
Speaker 1:got Aaron's hat on. That's great.
Speaker 8:I got my hat on. Yeah. I heard I heard Aaron talking and I decided to bring the meme out of my backpack.
Speaker 1:That's amazing. We can you
Speaker 2:Aaron's doing the meme. You're doing the meme. Pretty much everybody today is doing the re industrialized meme. I love it. Thank you for what what you do.
Speaker 1:Yeah, it's half defense day, half re industrialized day. Yeah. Eventually, we'll split these out. Much like
Speaker 2:Intel Both important. And what Dhruva can talk about is how industrial capacity historically has been a deterrent. Yep. It's no longer a deterrent. But before we get into that, or maybe like The US doesn't have like the actual capacity to be an industrial deterrent anymore.
Speaker 2:But before we get into that, Dhruva, I know you very well, but introduce yourself for the show. Yep.
Speaker 8:Yeah. Absolutely. Well, first off, I'm really appreciated to be here. It's been my dream since I was in high school to be on the Technology Brothers podcast. Yeah.
Speaker 8:But, yeah, deterrence, just to kinda keep it simple, we're making generalized robots that make energetics, which is a fancy way to say that we're making robots that make explosives. The mission of the company is to close the munitions gap with, we call them the near peer and peer adversaries that The US has around the world. We started the company about a year ago. As Jordy mentioned, he was heavily involved in that kind of founding journey. Started the company with a couple other guys, Brian, who is my cofounder at a prior company we started called Latch, which was a hardware company that relied on a global, supply chain, and Henry, who came over from Tesla and had experience building kind of factories around the world.
Speaker 8:And, yeah, we we we sort of started to dive in. We we heard the headlines of, like, you know, The US isn't able to produce munitions for Ukraine at sort of an acceptable cost and rate, started to try to figure out why that was, started to visit factories and ask people in the DIB, like, what they thought. And, you know, we found a lot of technology there that was from the, like, nineteen thirties and forties, so the last time America had to do a big buildup. No you know, and not a lot has changed, frankly, including, like, the people. A lot of them who a lot of the people who work in these factories are multigenerational.
Speaker 8:So, you know, their grandparents are maybe the ones who started working on the machine, and they're still there. So, yeah, we
Speaker 2:felt like Talk about talk about the dynamic even in some of these legacy factories that are producing munitions that are sort of critical to US national security. You're, we've like maybe called or FaceTimed at different points when you're like walking out of a building because you're like if a single match went off in that place like everybody would be toast like these sort of and and kind of leading off of that maybe like, you know, how how far behind some of these facilities are and then like, what are some of like this broader safety issues because that was a big kind of part of the the genesis of the company as well.
Speaker 8:Yeah. Safety is a big thing. I mean, just to start with that, you know, so we've been really diving into the problem for the last, you know, let's call it a couple of years. And roughly every two to three months, there's an explosion somewhere that unfortunately creates a fatality in the supply chain. And, you know, it's and so, like, we felt like that was sort of just, like, a unsustainable trajectory, especially as we sort of try to re reenergize this industrial place.
Speaker 8:And, yeah, I've I've FaceTimed you for some interesting places. I mean, I would say, like, safety standards. Some places do quite a good job. Others don't. It's, like, a little bit all over the map.
Speaker 8:But what's fascinating too is, like, a lot of people are borrowing not just, like, machines from the nineteen thirties, forties, and fifties, but also, like, the safety protocols just haven't been updated to modern standards. And so to give you, like, a little bit more nuance, so, like, a lot of our team, worked on, like, EV batteries at Tesla and Rivian and some other places. And so, like, when they go into these places, you know, a lot of EV batteries can, in a lot of ways, be more dangerous than some of the stuff we do because you walk into the wrong room, you will and you could inhale something that will, like, kill you. And so when they walk around, they're like, oh my goodness. I can't believe people are walking around with no PPE and this and that.
Speaker 8:Like but that's just kinda how things are done, and it's worked. I mean, I guess the the other side of it is it's like it's worked for quite a long time. So, you know, it it you know, in some ways, you have to, like, respect the art a little bit. But, yeah, there's definitely room for improvement.
Speaker 1:Yeah. I I I like that, with your company, like, it's so easy in defense tech or anything just to be like, we're gonna be Andoril too. And you found, like, a very, like it feels very niche. There's probably still a big vision at the end of the road, but you people forget that, like, before Andoril was Andoril, they were like, the sensor tower company, and they were working they they had a small beachhead, and then they grew from there. And that's how these things start.
Speaker 1:What have been the the pros and cons of of kinda putting yourself in a more niche box early on? And then when you're on the fundraising trail, hiring employees, pitching customers, how do you still tell that bigger picture story?
Speaker 8:Yeah. Totally. I mean, like, the the rough metaphor we sometimes use is that, you know, we're sort of like the Shopify. So a lot of what we're doing is we're actually partnering with companies. Yeah.
Speaker 8:We're building these end weapon systems and munition systems. And so when you look across the entire, you know, spend across the category, if you will, I think the army spends about $30,000,000,000 on munitions. Air force is, like, a hundred. When you go globally, that number is obviously much bigger. And so we're we're sort of, like, in some cases, like, 30% of that spend is basically energetic, kind of, stuff.
Speaker 8:So we that's how we sort of tell, like, call it, like, the the market story. But I think from, like, a product story, we're trying to hire talent, especially on the engineering side, what gets folks excited is we're sort of intersecting two kind of interesting discipline or three maybe things. So one which is always fun. Two, robotics. And then the third thing is, like, chemistry.
Speaker 8:So a lot of like, I just like a lot of this chemistry is, like, super old, and so people don't really understand how it works. And that's part of why you'll see, like, people really resistant to change in this market. They're like, literally, if you make one tweak here, you might just blow your eyebrows off. That's kinda thing. We see we've got a lot of people who have not all their five fingers, let's say,
Speaker 1:in doing
Speaker 8:doing this work. And, anyway, so, like, what we tell people is, like, you're able we're able to, like, maybe work on some, like, pretty hardcore problems that will probably take ten years to fully realize, I guess. Right? And so people get excited about, yeah, the near term thing. I I like to tell the team internally, like, we have, like, a mission that is macro, but, like, there's a lot of, like, micro things that seem to be happening right now in robotics, AI, and all these other places that, you know, we're hopefully able to lean into for the next couple decades here.
Speaker 2:Talk about the continuing resolution, which has been kind of an ongoing topic. And then what's what's, what's been your strategy as a CEO of Deterrence and kind of navigating that?
Speaker 8:It's definitely been an interesting time to be in DC. I think this may be the most obvious thing that's been said all day.
Speaker 2:Well, you've been lit you live in you live you like live in the DC and you've been there for years. So it's it's it's you you've kind of lived it which is different than most people that are just kinda popping in for a week at a time or whatever.
Speaker 8:Yeah. No. Totally. And I also have encouraged some founders lately, like, especially if they're small. Not like an I mean, Adderall has a huge team here and stuff like that, but folks who are smaller to spend time here because information is moving, like, pretty quickly.
Speaker 8:Like, I've I've had things where I take, like, a meeting with one member and their staff and then across, bump into someone we had met before and, like, get a completely different perspective on it. Yeah. Look. I mean, like, I think every defense tech company has, you know, roughly three, four layers of stuff they think about. Right?
Speaker 8:So they think about, you know, how do I message to my direct customers like the program office? How do I message to the building, which is the fancy word we use for the Pentagon? And how do we mention work on the hill? I think what's unique in the last two to three months is, like, all three of those things seem to be moving, and you've got this added component that the administration has some very specific things that they're trying to get done. And so, like, on the continuing resolution stuff, you know, what we've been doing is, like, it's, you know, there there's money that can still move around.
Speaker 8:So, like, our customers still have money to spend. So we're in a fortunate spot where they've they're asking for the same thing, and we're sort of going to the same, program offices for line for stuff that hasn't been expended yet. I do think there's a lot of program offices out there, just like free advice to any startup who's listening that haven't spent all their dollars. It's just sometimes hard to find. Like, you'll have to really burrow in there, you'll, you know, meet somebody who's like, oh, I got, like, $10,000,000 to spend on manufacturing, and I have no ideas.
Speaker 8:And you can believe me, you can give them new ideas. That's
Speaker 10:great.
Speaker 8:So that's a component. Obviously, the the there's a reconciliation process that's happening right now. Those priorities, I think there's, like, four or five that have been sort of widely published. Those all seem to line up with what startups are doing. So, again, my my advice is just get in front of folks and tell your story.
Speaker 8:Do it directly too. Don't always do it through a lobbyist or whatever because no one's gonna be better than a founder at telling their story. And then the last thing I'd say is, like, you know, it you know, the administration's only been around for, what, forty, fifty, sixty days or something like that. Mhmm. And so they've got some of the top level folks, but they haven't really put people in the seats at the bottom.
Speaker 8:So really getting close to your customer right now is important to help them think through, like, what they might do and essentially their new management layer kinda pops in. So if you think of, like, all those undersecretaries and stuff like that, like, lot of them start, quote unquote, in the seat. So there's kind of an opportunity to be like a strategy shaper. So, you know, long winded way of saying, like, chaos can be an accelerant for a startup, and, like, that's kind of the situation in DC right now.
Speaker 1:Do you have a follow-up?
Speaker 2:Yeah. I I have a more of, like, historical question.
Speaker 1:Yeah. I was just gonna ask for, like, can you zoom out and just give me, like, the really basic, like, explain like I'm five on energetics, primers, explosives. You said the army is spending something like 30,000,000,000. My conception of what's going on abroad is, like, a hand grenade on a DJI drone. But, like like, how does how does your product actually get into a, you know, like a weapon system?
Speaker 1:And and and Yeah. Yeah. Yeah. Totally. Exactly.
Speaker 1:Like, I I I'm thinking at the level of, like, I'm seeing cartoon TNT right now, but I wanna go deeper.
Speaker 8:Not not far from the truth. Okay. All the all that time I spent on Cartoon Network as a kid is finally playing off. Yeah. Just avoid all the things with big red boxes on them or whatever.
Speaker 1:Yeah. Yeah. Exactly. So
Speaker 8:so, I mean, energetic materials broadly, they're basically just a material that has, like, a high amount of sort of stored energy. And then when you apply some you know, if you apply another sort of catalyst to it Yep. It expends more energy. Yep. So that ex that mean, like so if you think of, explosives, like fireworks, pyro pyrotech stuff, propellants, like, those all kind of fall in energetics.
Speaker 8:The specific stuff, I'll maybe start with primers that is which is what we're starting with. So we're starting with primers for small caliber rounds.
Speaker 1:So actual, like, bullets in a rifle that an that a soldier would shoot?
Speaker 8:That's right. Got it. So So standard bullet. That's right. So standard bullet is four parts.
Speaker 8:Right? So you've got the brass, which is what falls to your, feet when you shoot it.
Speaker 1:Yep.
Speaker 8:The projectile, the little powder in there too. So, again, growing up on on Cartoon Network, I assume that, like, the gunpowder was the part that went boom or whatever. It's, like, not actually true. It's actually the primer. So the primer is in the back of the bullet.
Speaker 7:K.
Speaker 8:When, the hammer hits it, it kinda pops. Like, if you took the primer out and threw it at the ground, it's a bit like a cherry bomb. And so what it does is it creates a mini explosion in the bullet, and then it burns off the, gunpowder to start an explosive train, and that's what shoots the bullet out essentially like a a little rocket. Right?
Speaker 1:Yeah.
Speaker 8:The way it's made today and allow you a lot of energetics, like the the broad sort of steps that a lot of energetics are made, is you start with mixing some chemicals. Right? So we take a bunch of chemical precursors and mix them together. In primers, those kinda come together and they almost turn into, a a doughy ball, if you will. That doughy ball is then passed to someone who is at, like, kind of, like, an application station.
Speaker 8:These stations are typically in, like, clean rooms. So think, like, wetted in, like, on steroids, like, wetted floor, rubber boots, rubber gloves, all this kind of stuff. So you've got someone who's standing there all day, and they're sort of rubbing up and down on these primers like that clay ball, basically. It's somewhere between it's it's a bit like Parmesan cheese on a cheese grater to the audience if you wanna Cool.
Speaker 1:That's helpful. Yeah.
Speaker 8:And then from there, there's like a there's a pressing process that happens. So, you know, my head my co founder Henry likes to say it's like a lot of what we're is this is rubbing and smooshing Yeah. Essentially material. But you wanna do it in an even way. Right?
Speaker 8:Because you don't want one bullet to work and another bullet to not work, which Sure. Come back to the second. The last step, obviously, you know, quality assurance. Right? So just making sure that it was applied in the right way to to have the right, like, performance characteristic.
Speaker 2:You'd lot of stuff you can do with, like, computer vision here where before it was like a human, like, looking at it and being like, alright. So much and now you, you know, deterrence is basically able to leverage
Speaker 1:like Yep, yep, makes And
Speaker 2:the thing that, you know, when, when Dhruva, you know, first kind of like pitched me this sort of the high level vision for deterrence and we started talking about it, what I thought was appealing is it felt like every defense tech company was going after these super sort of like sexy like, oh, we're gonna, you know, this sort of F-forty seven, like these sort of big programs with this futuristic tech and Druva was basically like had been sort of touring these facilities and saying like
Speaker 5:I like box.
Speaker 2:Yeah, yeah. More so like are we even doing the basics?
Speaker 1:Yeah, sure, sure.
Speaker 2:Like if you walk around these facilities in there, if we were to get into a real relying on machinery from the forties to produce Yep. Totally. The basic bullets that we need to
Speaker 1:Yeah.
Speaker 2:You know, keep our war fighter
Speaker 1:It's less sexy, but it's just as important. Yeah. Makes sense.
Speaker 10:That's right.
Speaker 8:And these markets are pretty big. Right?
Speaker 1:Yeah. Totally.
Speaker 5:Like, if you
Speaker 8:look at the $1.05 5 shell, like, just some of the subcomponents we've looked at, I mean, they're like the contract size for, like, this the glue is, like, in the hundreds of millions. Right?
Speaker 5:Wow. That's the thing. The glue. Wow.
Speaker 8:Let's see, like, basically.
Speaker 1:Well, we gotta go shooting. We we we are there some good ranges out in DC? We we we gotta go out there and have a have a Ranges in DC
Speaker 8:are funny because you look around and you're like, oh, you're really good. I wonder what you do for your dishes.
Speaker 1:For sure. For sure. Well well, maybe we can livestream it. Either way, we'll definitely have you back soon. Congratulations on all the
Speaker 2:Our DC Correspondent. And we'll talk to soon. Look forward to the next one.
Speaker 8:Thanks, guys. Take care.
Speaker 2:See you. Cool. I wanted to ask
Speaker 1:about the history.
Speaker 2:We can do it another time.
Speaker 1:Just kind
Speaker 2:of sort of like the history of America's sort of industrial deterrence. Right? This idea that like, you don't wanna go to war with America because we will just out produce you. Yep. And it sort of flipped around and now Yep.
Speaker 2:China's in a sort of similar position.
Speaker 1:We got Cam coming in the temple of technology. Welcome to the show. Boom. How are
Speaker 2:you doing? What's going on?
Speaker 7:Good to good to be here.
Speaker 1:Yeah. Thanks so much. I, you know, I realized we were texting to meet up, like, years ago, and I'm glad that we finally got to make it happen. Could you do, like, just a quick intro on who you are, what your company does to set the table for us?
Speaker 7:Yeah. Awesome. I'm Cameron. I'm the CEO and, one of the cofounders of Nominal. So we describe what we do is we're building software for continuous hardware test.
Speaker 7:So we're all about helping people test and validate their hardware products faster. So I was just I was just listening to you guys talking, like, we we're very much a, like, the unsexy, very, very important, you know, very specific thing, which is which is helping people move faster.
Speaker 1:Can you give me a little bit of, like, history and progress of the company? I know that there was a big fundraise recently. How big is the company? When did it start? That type of stuff.
Speaker 7:Sure. Yeah. So we are,
Speaker 10:we Sorry. It's cool.
Speaker 7:We just had our three year old. Yeah. Our third our third birthday, as a company. We're about 55 people.
Speaker 1:Cool.
Speaker 7:And, yeah, mean, our our kinda, like, the the origin story a lot was, like, we have, you know, folks who, my former employer, Andrew Roll. Right? Like, had folks that come from Andrew Roll, from SpaceX, from, Applied Intuition, companies like this that have seen, you know, everyone building this amazing, you know, amazing tech. Mhmm. And so often the problem is actually the software that's just facilitating how people are organizing that data, you know, doing this.
Speaker 7:So yeah. Yeah.
Speaker 1:And the recent fundraise? Did you break
Speaker 7:that down? We, we we, we announced it a little bit late, but, yeah, we we did a a series a. We raised 20,000,000. It was, led by General Catalyst. That was a year ago now, which is, like, god, times move quickly.
Speaker 7:So yeah.
Speaker 1:Yeah. Well so, yeah, I mean, what what what's the next milestone? Is the program of record framework SBIR then program of record, that's kind of like the meme pathway in defense tech? Does that apply here, or do you
Speaker 7:have any customers? It's really interesting. Yeah. We actually think more in terms of, like, system of record. So, what that means for us is, like, we work with organizations like TRMC.
Speaker 7:It's one maybe you haven't heard of, but TESS Resource Management Center. Right? So it's a OSD, officer secretary of defense program, but they govern all of the, like, test infrastructure for for The US. So, if you're, you know, if it's a if you're Hermes, right, like, you have to be working very closely with TRMC, about how you're gonna, like, you know, define what it's like to test and validate a new hypersonic aircraft. For Nominal, like, that's that's our kind of, like, customer.
Speaker 7:That's our target. We wanna get to the place where they, you know, they say, hey. Everyone should should be using Nominal. Like, this is the better way to sort of test and and collaborate, and do data. So for us, that's that's the end goal.
Speaker 2:Yeah. How hard is, hardware?
Speaker 1:Like, it seems
Speaker 2:like it seems like your your job is to make building hardware, like, quite a bit easier if you can Yeah. Test more efficiently. But, like, I think people don't understand, like, you know, they see a company raise hundreds of millions of dollars it doesn't work or, you know, they struggle and it's like, you had so much money, you had such a great team, but it's like, I feel like the average person doesn't appreciate just how hard it is to build a single, like, that just the engine of a rocket or a missile or whatever.
Speaker 7:Yeah. So yeah. It's so it's so true. And I think, like, we you know, a lot of the value that we try to, like, provide for customers is, you know, it's like, you're you're doing so much if you're a hardware company. Like, you have to you know, you're doing all the production manufacturing, you know, iteration.
Speaker 7:And often these teams, like, they will hire software engineers, and they have the daily decision of, like, do I send those precious, very valuable software engineers to build the software that is, like, value additive to my software defined hardware product? If I'm know, if you're Druva at deterrence, you're like, I want my software engineers building the, like, robotic, you know, systems to do energetics. I don't necessarily want them building, you know, data analysis and management and kinda, like, visualization infrastructure because it's already hard enough. And so our big bet like, the bet we are making is there's this massive reindustrialization movement. We are solving as a nation, incrementally the different bottlenecks, whether it's rare earth, you know, materials, it's the supply chain, it's the production manufacturing, it's people actually building these systems.
Speaker 7:And so this rising tide, like, where that condenses often is this this very specific vertical slice of it, which is like, I need to use software to test all those things before I feel them and deploy them. And making this big bet, like, all that those trends, are gonna really condense on, like, the area that nominal is trying to build in. So
Speaker 2:Can you talk about your experience using maybe alternatives to nominal or just building the basically the product, you know, internally back at Andriel? Like, I I think a lot of you probably have the benefit where, like, your competitors to nominal now are, like, 40 years old. Yeah. Very, like, you know, super super clunky. Like, maybe don't even run on on Mac Yep.
Speaker 2:OS. Really?
Speaker 7:Yeah. It's so true. Like, we think about, you know, the actual the sort of competitors' phenomena are like, National Instruments is a massive one, like, Emerson, Siemens, like, those types of of technologies. So they they did this massive industrial software land grab, you know, forty years ago, and they have not been innovated against since. So they've, like in this world, like, they established best in suite.
Speaker 7:And so there's huge network effects of, like, all of the different pieces of software you want for testing and and, you know, validating a hardware thing. Like, it's very annoying as an organization if you have to build the connectors between those. And I, you know, grab this territory, and they've owned it since. What's happened in the last, like, I don't know, fifteen years, and saw this at Andrew and other places is, the software world solved this problem for software. So continuous delivery, you know, linking, testing, and operations and observability, like all Datadog, Splunk, Grafana, you know, different pieces of technology like that.
Speaker 7:So it's been happening in the industry as people have been, you know, trying to basically use those to get rid of the old, you know, NI or Emerson type tools, but those don't work for a variety of reasons. And so with, you know, startups and scale ups, I'd say we often replace someone trying to use, yeah, like, a Grafana and a MATLAB and maybe some Python scripting analysis kinda holding altogether, maybe, like, Databricks or something on the back end. Pieces, you know, technology that are good, but they're not for this, like, industrial operations world. And then at our the bigger, you know, the big five type type customers, like, it is a lot of that really, really old software that we're displacing.
Speaker 2:Do you even care to go after, like, the actual primes right now? Or are you just happy to happy to just, you know, that you have hundreds of newly funded
Speaker 9:Yeah.
Speaker 2:Startups that are probably, like, desperately need your product and, like, probably, like, much faster to close?
Speaker 7:Yep. No. Exactly. It's think we're in this, like, exciting we're basically in this inflection moment where we've been, you know, building and validating the product, and I excitingly, we asked the second product. Like, I think to win big in this space, like, you you have to build multiple products across this sort of stack.
Speaker 7:So we've doing that with this, these, like, startups and scale ups. But now we're moving into these, yeah, larger larger customers now that it works well, you kind of add, you know, add zeros to the the contracts if they go well. So
Speaker 2:Yeah. Yeah. I can imagine if if Boeing is signing up for something that that the what they'd be willing to pay for the software is, like, a pretty big number.
Speaker 7:So No. It's I mean, on that, like, I think yeah. Like, a lot of the early conversations around, like, hey, you'd be building this with an internal team and and paying, you know you know, engineering headcount to allocate against that. But for these big big programs, like, the value conversation is actually very interesting because it's like, hey. I if I'm, you know, company x and I just want a hundred million, 2 hundred million, 5 hundred million dollar, like, program, I'm very willing, if nominal can make I'm very willing to pay, like, half a cent on that dollar or a cent on that dollar for a piece of, like, test infrastructure that will manage cost performance schedule.
Speaker 7:Like, that's the value discussions we we're getting into now, which are very exciting.
Speaker 2:So,
Speaker 1:yeah. Can you talk a little bit about dual use? I mean Yeah. Is are we gonna see, like, Ford Motor Company making cars with this? Like, I I how Yeah.
Speaker 1:How how how niche are you and how does that expand over time?
Speaker 7:Yeah. I think in, like, the company building thing, it's like we're trying to be really, really, really good at the thing that we are good at now. And so we're very we are we're focused a lot on the the a and d market, but on the b to b side and the direct to, you know, federal side. Mhmm. So very dual use in that nature
Speaker 2:Mhmm.
Speaker 7:Within companies that are doing Sure. But then, yeah, we work with I mean, we work with some of these, like, advanced nuclear, you know, companies Okay. Building micro reactors like as well. So, yeah, we're planning strategic flags, you know, some of these robotic, like, foundational robotic model companies, like, use NOML as well. So I think we're kinda planning these flags in these other robotics transportation energy, as well.
Speaker 7:So
Speaker 1:Very cool. Jordy, you have anything else?
Speaker 2:I don't anything have anything else. I'm just extremely bullish because we just got on on you and what you're doing just because every single person it seems like Yeah.
Speaker 1:Talked to today
Speaker 2:like either needs this or their customers need it. So I'm sure you're pretty busy. I appreciate you you taking the time. Who what are you what are you guys hiring for right now across across the whole company, I'm guessing? Or
Speaker 9:Yeah. Hiring across the whole hiring across the
Speaker 7:whole company. Like, for us, it's like, you know, folks that folks that understand software, but have done done hardware is like the sweet spot for us. So a lot of those customer customer success is, the old, you know, type well, but we call mission operations. But, yeah, people that are people that wanna go, you know, to one of these hardware companies and help, like, deploy the nominal software suite, like, that is, it's a very special skill set. Yeah.
Speaker 7:But if that's you, if you, worked at a hardware company and, and were the software person there, you know who you are.
Speaker 2:Yeah. Do you do you guys think you benefited from Palantir having so much success with the sort of forward deployed engineered model where it Oh. Used to be so much pushback now people are like, oh, it actually works. And I imagine you guys start building nominal and you have like some you you sort of have your platform, but then every company has some different implementation of it or different underlying sort of like use case for it. So you do maybe need to send an engineer there for like four weeks and just like actually build it out with them.
Speaker 2:Yep. Did they did they sort of give you guys were they a catalyst?
Speaker 7:Yeah. Absolutely. Jason, our the co founder and CTO is a was a early Palantir employee, worked on Foundry and, like, you know, we we take a lot of that that DNA. I think the key thing is, like, the ability to then productize those insights is key. Right?
Speaker 7:At scale, you don't wanna get too far on that. But, like, our our folks are we do we have them on six week rotations essentially where they'll go do, like, customer customer pump, customer stent, right, and then come back and get back in the main product org. And then it's like, what did you learn? Like, what did you learn from that customer? And, like, what are we not thinking about?
Speaker 7:Because these 20 engineers are not spending customer time. And I think that's really, really key to kind of closing that, yeah, that loop.
Speaker 1:Can you talk a little bit about international expansion? I know there's this big movement towards, you know, Europe is going to nationalize. They're gonna want their own national champions. But I have to imagine that if you're deeper in the stack, deeper in the supply chain, that's just less of a priority for, the those governments. Like, it's less of a priority that, you know, steepen the supply chain.
Speaker 1:Like, it's different the difference between, like, buying a DJI drone and buying a GoPro that was manufactured in China. Like, people have different aesthetics around that. Yeah. But, yeah, how are you thinking about that?
Speaker 7:We're super bullish on international expansion. I think it's a thing that we we did for the first time. Like, so we have international customer. Mhmm. It's going very well.
Speaker 7:And so, a European customer. And so I think we're excited to double down on that. And kind of the two like, one of the reasons is is, you know, just going there and then, like, deploying the nominal software suite and sort of seeing, like, these folks are, generally speaking, like, pretty enamored with the Androl, the SpaceX way, the Palantir way of doing stuff. And so I actually think, like, there's just is it even, like, kinda larger delta in some ways where we can kind of, like, really wow them with with our capability. And so that, yeah, we're super we're super bullish on that.
Speaker 7:Australia is one where we're really excited too. Like
Speaker 1:That makes sense.
Speaker 7:Just looking into the August broadly. Yep. They're on the aerospace thing,
Speaker 9:like, a lot
Speaker 7:of interesting, you know, stuff there, and they're advanced on CCA collaboration with US and stuff. And so there's just a lot of, like, interesting trends there that that we can, you
Speaker 1:know Yeah.
Speaker 2:Do you think It's
Speaker 1:only a short flight. I'm sure you're over there back and forth every other week.
Speaker 2:Yeah. Yeah. We've asked we've never asked anyone about this on the show, but I'm curious since you're just starting to go through this So a lot of the potential of some of these new AI tools is around like translation and real time translation. And there's kind of a crazy scenario now where like you guys could sell to your product to a Spanish speaking country and then you could have one of your engineers like, you know, real time. Is that
Speaker 1:Oh, like forward deployed engineers who don't speak the native language but it doesn't matter anymore.
Speaker 2:Lot of engineers end up speaking English but like is that even a part of the calculus? Like do you think
Speaker 1:Only most engineers don't even speak English, only code.
Speaker 2:Yeah. Yeah. Yeah.
Speaker 7:Yeah. Yeah. Exactly. Yeah. No.
Speaker 7:I love the question. I've I've never been asked before. But I think it's like this this initial international customer was, like, a predominantly, you know, conducted business in English, but I think it's, like, totally enables that. Yeah. I think it, like, absolutely does that make that easier because there is a, you know, there is an implementation sort of like in a phase and and yeah.
Speaker 7:That would be huge. Yeah. So
Speaker 2:Well, if you ever wanna get into testing livestream infrastructure, we livestream three hours a day. We're always trying to
Speaker 1:We're looking for the products. Yeah.
Speaker 4:We'll be
Speaker 5:the first customer.
Speaker 1:We'll be the first customer.
Speaker 2:We'll be your design partner on
Speaker 1:it. Yes. And you can bring a forward deployed engineer into the studio
Speaker 5:here. Yeah. Yeah. They'll just
Speaker 7:like they'll sit they'll just like sit
Speaker 1:under the Sit right here.
Speaker 9:Yeah. Yeah.
Speaker 2:Yeah. With all the wires. Yeah. There's so many wires. It's great having you on.
Speaker 5:I'll see
Speaker 2:I have no doubt that yet next time you raise, come on the show, break it down or or any other reason. It's great to have you.
Speaker 1:Yeah. Great to have you. Thanks so much. Cheers. We'll talk to you soon.
Speaker 1:Do you wanna rip through some timeline? Get out of here in a couple minutes. Give the fans what they want. I mean, most the timeline today is just endless Ghibli back and forth which we kind of already covered.
Speaker 2:I wanted let's do the David Perrell one.
Speaker 1:Yeah. Because he's gonna have a one on the show next week.
Speaker 2:He says, the Ghibli style memes are the beginning of something bigger. The age of minimalism is over. No longer is the internet stuck in the solace valley of right angles and flat white backgrounds. Everything from anime to art deco is now just a clever prompt away. A new kind of maximalism is here and it's here to stay, which is why I post slop in my timeline live
Speaker 1:Maximal somewhere on the show. Maximal slop. Yeah. It's great.
Speaker 2:No. I think it's I think it's totally
Speaker 1:I like what you're taking. There was a lot of there there were a lot of takes that were just like pure bull. It's amazing. I I can't get enough Ghiblis. They're amazing.
Speaker 1:I'm just posting all these, getting all these likes. Then there were a lot of people who were just total backlash mode saying, like, oh, this is terrible. What would Hayao Miyazaki say? But now this is a more nuanced take that's just like it's almost normative, not positive. It's just saying
Speaker 9:Yeah.
Speaker 1:Hey. There's a change, and the Internet's about to look different.
Speaker 2:I mean, there's
Speaker 1:so Maybe that's good, maybe that's bad, it's gonna look
Speaker 2:There's so many I feel like throughout my career, I've been lucky to be friends with a bunch of great designers. Yeah. When I have a funny idea, I can just sort of be like, hey, like, would be funny if like, you know, you you made this picture look that. Like this three d asset.
Speaker 1:I Photoshop
Speaker 3:a lot
Speaker 1:to make these memes but now it's like way easier and way faster. And I saw
Speaker 2:It's so crazy. Even a month ago, I was thinking, you know what, I need to go on Fiverr, Upwork and just find somebody who's a good Photoshop designer that I send stuff to and I don't need that anymore.
Speaker 1:Yeah. Yeah. You can you can move a lot faster. I saw Ashley Vance was posting these these memes that were like kind of giblified, but also making commentary on he has this one that's like the big Greek horse chat, and it's like Troy. I don't know if I can just show that.
Speaker 1:But, but, basically, you know, it's like it's now layered where he's using the style, but he's generating something that's commenting on a current news story. And it's just it's just very interesting to see that, like, it's now left the just, hey. Take an iconic image and give it the filter. And he's already using it to express a
Speaker 2:different So much of creativity is just taking an idea from one place and applying it somewhere else.
Speaker 1:Mixing two ideas together,
Speaker 2:changing things around. And so AI just allows you to do that so efficiently.
Speaker 1:Yeah. Well
Speaker 2:Honestly There aren't that there aren't that
Speaker 1:many other news stories here. Arc AGI two dropped if you've been following the AI benchmark. Why why are
Speaker 6:you laughing?
Speaker 2:I just saw this picture of Jar Jar Binks.
Speaker 1:Oh, the the Jar Jar Binks one is fantastic. This is
Speaker 2:all the time. We gotta zoom out a little bit.
Speaker 1:Yeah. You gotta zoom out. Okay.
Speaker 2:So Because it's a Northrop Grumman that's
Speaker 1:You wanna read it? Are you gonna do the voice?
Speaker 2:Mesa is Mesa?
Speaker 1:Mesa. Is detecting threats like never before. Learn how recent combat ID enhancements are evolving mission. So Northrop Grumman has a program called MESA, Mesa. And, of course, that sounds like the way Jar Jar Binks starts every sentence in in the early Star Wars movies.
Speaker 1:And so they just put Jar Jar Binks's face with the little caption, and it's making it sound like Jar Jar Binks is is talking in, about Northrop Grumman's program. The man, not not a native posting group, the Northrop guys. It's a very different vibe at Northrop from Anderall.
Speaker 2:This is, like, Canada for post of the week.
Speaker 1:This might be. This is such a good post.
Speaker 2:I'm gonna put that in banger archive.
Speaker 1:You really should.
Speaker 2:It's great. The chat wants us to cover the Fannie Mae IPO that Wall Street Journal's reporting on. Maybe tomorrow. Probably cover tomorrow.
Speaker 1:Yeah. That makes sense.
Speaker 2:Thank you for the suggestions. Yeah. But this was a super fun day. This is great.
Speaker 1:It's great to see you. Theme days. I wanna do more of these. They're a little bit harder on the scheduling side, but I think it's well worth it to just have a conversation that flows from one to the next, bunch of different people. Maybe we can layer in a debate at some point.
Speaker 1:I wanna do an AI day. I wanna do Yeah. You know, more of these defense days, maybe a crypto day even. Anything. Be very interesting.
Speaker 1:Anyway, thanks for watching.
Speaker 2:Thank you.
Speaker 1:Fantastic show. We will see you tomorrow.
Speaker 2:Thank you to our wonderful sponsors.
Speaker 1:Tomorrow is intellectual day. We got two authors, two Stripe Press authors Yeah. Let's see. Already booked. We got Dorcas Patel coming on.
Speaker 1:Coming tomorrow. And myself. And I I think I'm gonna send out emails to a bunch of other Stripe Press authors now and try and get get stacked with the with the author day.
Speaker 2:Let's do it. I have the mind of a golden retriever, but I am excited for it to be an intellectual mind.
Speaker 1:Tomorrow will be an intellectual day.
Speaker 2:Yeah.
Speaker 1:We'll put on our thinking We're
Speaker 2:thinking big.
Speaker 1:Put on our thinking caps. Take off the tinfoil hat.
Speaker 2:Put on
Speaker 1:the thinking cap.
Speaker 2:I I should pull the whole all every guest with the tinfoil hat on, but don't comment on it.
Speaker 1:Don't comment on it?
Speaker 2:Thank you everyone for watching. Have a great rest of your Thursday. We will see you
Speaker 1:tomorrow. Goodbye.