"Building the Base" - an in-depth series of conversations with top entrepreneurs, innovators, and leaders from tech, financial, industrial, and public sectors.
Our special guests provide their unique perspectives on a broad selection of topics such as: shaping our future national security industrial base, the impact of disruptive technologies, how new startups can increasingly contribute to national security, and practical tips on leadership and personal development whether in government or the private sector.
Building the Base is hosted by Lauren Bedula, is Managing Director and National Security Technology Practice Lead at Beacon Global Strategies, and the Honorable Jim "Hondo" Geurts who retired from performing the duties of the Under Secretary of the Navy and was the former Assistant Secretary of the Navy for Research, Development & Acquisition and Acquisition Executive at United States Special Operations Command.
Lauren Bedula 02:25
Welcome back to Building the Base. Lauren Bedula, here with Hondo Geurts, and we’re so excited to have Brian Schimpf with us today. Brian is a co-founder and CEO of Anduril Industries -- and it was a big week for Anduril. So, I'm excited to get into your most recent round -- such a milestone. Brian previously was director of engineering at Palantir. So, I know we've talked about Palantir quite a bit on our show -- two examples of disruptive tech companies breaking into the defense market. Brian was also founder and leader of the Cornell University Autonomous Vehicle Research Program to stimulate talent and academia as a role in all of this as well. So, thanks so much, Brian, for joining us.
Brian Schimpf 03:27
Hey, I am happy to be here. Thank you very much. Very excited.
Hondo Geurts 03:33
So, Brian, other than your “substandard” education at Cornell -- since I'm a Lehigh guy myself -- you've had quite an interesting journey getting to this point and getting involved in national security. I don't know if that was something of interest to you all along or where you got into it. Give us a little bit of the story of how you got to be here, your background, and what's driving you to be somewhat fighting uphill being a tech company trying to support DOD.
Brian Schimpf 04:07
So, I have been the type of person that's been writing code since I was 12. I'm an engineer through and through -- I love it. I love building things. I love building interesting tech. So, when the school, Cornell, did self-driving cars and was sponsored by DARPA, it was kind of an interesting experience of how a US government entity can really kick off a whole field. If you look back at it, nobody thought that was possible. We got to look at the progression of technology through that. It literally was not possible the first time they did the first race they went through and the DARPA Grand Challenge with the desert race. Cars went maybe two miles, and people didn't know if this was a failure. This is never going to work. Next time, you had several teams finish the 100-mile desert race. You do it again a couple years later, and you got six teams finish a core five-hour urban race -- which is wildly harder than anything that had been done before. So, in the period of about seven years, you went from an industrial base research base that could not do even what is now considered a relatively simple thing to solving, at a prototype level, what was considered a very, very hard problem. That was inspiring. It was amazing to see progress move so quickly. When you get a lot of smart people able to hack on a problem, you just see what people could do. It was really impressive. From there, I ended up landing at Palantir around 2007. I was sort of a pre-collapse, tech guy. For me, it was just so exciting to get into a Silicon Valley environment. It was so exciting that you had all these incredibly hungry people that were unlocked to just be able to drive and go and do something interesting. So, it was just an incredible place - it started there, right out of school very young people had desire and aptitude to do management and ended up running a lot of our deployed engineering work there. Then ended up taking over product overall across commercial and government work. And it was just an awesome journey for about 10 years. I think it is hard for people to anticipate the amount of learning that you cram into a relatively short tenure at a startup. You go through every level of scale, you must reinvent every one of your structures, how you operate, how your organization works, every time you double in size, which happens a lot, but at a startup. So it was just an incredible learning experience of not just how to build these modern software and data products, but how to build a company. And doing that I ended up getting a lot of exposure to the mission side, as well. So I worked a lot with the intelligence community and Defense Department. And there is no group of people that is more passionate about what they do, while also living and operating in one of the most difficult environments to get things done. They're the people who stay in defense, love defense, and it is hard not to be infected by that degree of passion and drive for the mission. That was just incredibly important to me these problems matter, these people care, and what you do really makes a difference. And then the engineer nerd in me loves the degree to which you have such an interesting, challenging set of problems. And beauty is, in a lot of ways, the ultimate early adopter on these advanced technologies, right? It's not always fast, we always wish it could be better, we always wish they would take things sooner. But nobody else is seriously talking about putting autonomous systems into operational environments. Nobody else is really thinking about how to push the use of AI into these things? I wish it was faster; we all do. But there it is a massive behemoth that actually does do these things. Bob Work said something that really stuck with me, which was that the Defense Department, more than any other organization, has reinvented itself over its history. When you look back at how much it has changed, and how fast it can pivot around these things. Most companies just actually die, they don't change. The Defense Department has to and it does, and it's not as fast as we want. But moving 2 million people to get around a new problem turns out to take a little bit of time. It's just a super exciting place to be. When we founded Android, there was sort of no question we are defense only that is what we do. We are going to work on defense weapon systems. That is what we want to do. A lot of investors like fine commercial applications, it's important to have a commercial angle. Nope, we're not interested in that. We are a defense company. That is what we're working on. So it's been a super exciting journey. We've been at it about five years now. You know, it's been going very, very well. We've been able to build and field a lot of technology in that time, which is our measure of success. Are we getting stuff out to the field? We don't care about prototypes. We just want to get stuff out to the field. That's our success.
Lauren Bedula 08:57
What's it like as one of the first really significant companies or players venture-backed focus on defense? We've had some players with a commercial but interesting passion for defense. But Andrew is kind of unique in that sense. And I'm curious about boundaries to enter the market, but I'm also interested in what it’s like going up against the traditional defense industrial base, which has deep roots in the market.
Brian Schimpf 09:23
Part of our belief was that there was this blend of how our commercial industry has kind of evolved, its thinking on how you develop, build and deploy products, both on how do you utilize software in this, but then also, how can you think about, you know, rapidly bringing things to market getting prototypes and iterating. Early that the Defense Department was really in need of? So, you know, a lot of our belief was we could get to technology out there faster. And that would be an extremely welcome, you know, dimension to this, and that commercial industry could de risk and absorb were most of the technical risks on a lot of classes of products. I don't think you're going to see a major change probably shouldn't, in terms of like how we build in by aircraft carriers and bombers, like those are very bespoke, or requirements, written custom assets. We could argue about what could be better here and all that, but it's not going to get a whole lot different than what it is. Well, there's a huge class of capabilities. And you really saw SpaceX prove this - no one would have thought 20 years ago that you could have had a private company make space launch, or put out the largest constellation of satellites, I think people were doubting Starlink was even physically possible. And they went from operating zero satellites to offering the most by, I think, two orders of magnitude in 12 months, right. And so the the pace at which you've been able to see commercial industry can move fast, and the different model on things that were historically only possible with the Defense Department's large capital investments, it is wild, right, it is very wild. And I think this is going to continue. So, you know, building nearly any type of autonomous or unmanned platform, I think you could largely move that to a commercial industry. Show me something you've got here, and I'm going to be a buyer. I'm not going to nickel and dime you with cost plus stuff. I will do it for a fixed price; you got a good product, we buy it, we can reproduce new ones every two to five years. I think the same thing can be true for missiles and weapons, I think this would substantially change how we think about the supply base, if suddenly now your profit and loss was determined by how many you can sell? And if you are getting to market with the right concepts, I think that'll solve the innovation problem. Looking at refreshing Stinger every 25 years seems to be the wrong model. At this point, we can build a next generation Stinger in a very quick timeframe. If commercial industry knew, in five years, there's going to be another recompute and another lie, and you can win. If you build a better product at a better price, they would do it. It is not so much capital that they wouldn't do it. So, I think there's a lot of these relatively straightforward kind of economic models where you build where you can sell into the government that apply way broader than, you know, kind of the things that are kind of nibbling at the edges on innovation today. So, I don't think anyone believes you're going to build software in the DOD, the way you build a carrier, I think that is well proven to be a horrible idea. You know, we had GPS. But I think there's a huge array of capabilities, that now this model can work with that were historically the province of just purely the transplants. So that's our belief. That's our thesis. And I think we've been starting to see that to be true. The other side of this is, it's not just like, how do you do all these innovative things with new ways of using software? How do you take advantage of AI? That's all good, right? We should do that. I just know, Brennan is coming. It's table stakes, you have to do that to next generation systems. The interesting dimension now is going to really look at how do you do manufacturing, and production in a totally new way. So, this should look closer to Tesla. There's a lot of instinct companies; the CEO of Amazon's consumer business is now going and looking at how to build a modern manufacturing machine in the US. There's a huge emphasis on how we really modernize US production to manufacturing capacity, and the same thing is going to have to be true for defense. So that's another huge area we started to focus on, what is production going to look like? So, the reception has been very positive. Again, the Defense Department takes its time. But I have not seen any closed doors and said we're not interested in what you're doing. It's just a question of when and how can we buy it when we have all these other commitments that we've kind of locked ourselves into for a long time?
Hondo Geurts 13:48
That's an excellent point. I think sometimes technology companies are people interested in technology get enamored with the technology, not the use case that it enables. I had an old SOCOM commander used to say, I don't need the most advanced technology, I just need the most useful. This idea that the DoD struggles with the huge embedded fixed infrastructure costs. And we get in this mindset that it all must be capital intensive. It must take billions of dollars to start up, and there's certainly some elements of that, but I'm really interested in how do you modernize what industry is right? We think of industrial but we think of it in World War II terms. Where do you think opportunities lie for the department to incentivize that? We already brought up a couple of ideas, but if we really were to supercharges and really start thinking about it, we are on a fixed schedule. Time is the thing, it's fixed, everything else is variable. What were the first three things you'd love the DOD to do to help solve it?
Brian Schimpf 15:05
So, I think time is exactly the right way to think about this. If you constrain this in the way this translates to is how you write. So we're not going to take on a program with a five year engineering timelines. And we're going to buy what works in the next 12 months, and then we're going to buy again in the next 12 months after that. If you start thinking about the areas where I can buy things are closer to how I buy iPhones or computers are, I don't have a 30-year sustainment costs where it is more economic to replace than to upgrade. That's a huge span of capabilities. Anything under about $10 million, it's probably better just to replace the upgrade on all. And you know, that's a large number. But duty terms, that's not a large number. The reality is, “if you get in this mindset of give me what you have today, and then I'm going to tell you what I'm going to buy again in a year,” and will motivate a massive amount of response to this. I think the other piece of this is on the contracting front. The presumption should be that we are doing everything firm, fixed price, and we're not going to argue over margins and things. We're going to look at value for money when there's multiple people coming back, and then allow companies to get this how every other business in the world works. Allow companies to take that margin they make and reinvest in new capabilities that they actually want to bring forward and use their best ideas around it. Say “Hey, this is what we're buying, there's going to be opportunities every year for real consistent purchases.” That is huge. But once you've locked it in and said, “Yep, this is the only thing we're buying for the next 10 years,” the innovation in that area stops, why would I continue to invest in that area, when I know there's no chance that I'm going to get anything at scale? Changing that buying behavior is the single most important thing that DOD can do. There's a monopolistic environment, there's one buyer, they control the market through how they buy. A lot of these things with strategic capital and stuff like that. They're interesting if applied correctly. There's no shortage of venture capital; this year, there will be something like $11 billion of venture capital put into defense in aerospace. That is a lot of money. That is probably on the order of 20 times more than anyone is making on revenue in this space. But there's a lot of money flowing into this space. There's no shortage of capital. Now, where I think these things can get interesting is either non-dilutive sources where you're capitalizing very defense specific facilities. It'd be hard to get a loan from a bank on a weapons production facility. Not exactly a lot they can repo that for, it's so nice. So, I think there's a lot of areas where there's creative financing strategies and investment strategies that can supercharge for capital, where there is capital intensive nature, to building up and facilitating these things. You know, that's something that's very interesting to us where we can kind of offset, spend the venture money on R&D, and new product development, and then find creative ways to do less expensive ways of financing things for all those facility needs. That's super interesting. I think there's a lot of good leverage, the DOD can pull on this, from a policy perspective, how they spend money, how they allocate money. The number one thing is that they literally did one thing in a predictable way, and allow new entrants to come in with something better and be surprised. Because the lifecycle and fielding costs are just going down for a lot of these systems, it can be way cheaper deployed.
Lauren Bedula 18:39
That's a topic that has come up on our show at the DOD. You get the sense that they don't need to be a good investor, just be a good customer. That's a good opportunity for me to bring up the news from yesterday, the General announced that there was an almost one and a half billion-dollar investment in the company. I'd love to give our listeners a sense of your take on investors' appetite. You mentioned it, there's a lot of interest in investing in defense related technologies. What's it been like for you the fundraising process? And have you seen that change over the past few years to since you founded?
Brian Schimpf 19:15
When we started, it was very controversial what we were doing on a lot of dimensions. So, when we started, we were working on border security. And one of our founders was very notorious in Silicon Valley. And we're saying going around saying, we're going to work on weapons systems. This was crazy. We had to be very careful how we said it. We were trying to explain why this was important to really justify it. And that time has shifted 180 degrees. There's no debate that hard power deterrence matters at this point. There's no debate around this anymore. Ukraine has shifted so you can choose not to engage in it. You can choose to say this is not an area I want to work in my career. I would think it's probably the most uncontroversial position in America, that we have to support our allies with hard power deterrence, like there is no question. And that has been a huge shift. The other side of this is we and others have had a fair bit of success and figuring out how do you structure a company. How do you sell? How do you get a business model to work? There have been positive winds coming from DOD, we have found people who are willing to take a chance on new companies, kind of really look at novel ways of doing this. There is a real proven track record at this point, these things can move can scale and good thing. It's not going to be for every company, right? This is a hard skill, you know, these markets you have to break into, but the tone and attitude around this has shifted tremendously. I think it is a sea change. We've been a very lucky recipient of how that has played out. So yeah, we've had a fantastic time with fundraising, investors, all our insider investors doubled down. And we brought on several new investors. It was a real vote of confidence.
Hondo Geurts 21:12
For a while, we thought we could separate prosperity and security. And I think that shifting, so you're seeing a lot of companies now, either trying to add a defense arm or trying to do defensive start. One of the challenges that I see is teaching technology-based companies how to sell to the government. They want to sell the technology, the government's looking for solutions. What advice would you give other startups that were, you know, the Palantir is of 20 years ago, or the animals of five years ago if you're wanting to get into this market? You think you have unique technology? What's the lesson learned you'd share about how to best sell into those pension security market?
Brian Schimpf 22:00
I think you put it exactly right. The government buys solutions and capabilities; they do not buy technology when the government is saying we're going to be the integrator. Everyone who's listening to this knows what the track record is on that success rate, it is not great. And the government acknowledges anyone who's been an acquisition long enough. Just notice if the answer is government's going to integrate across these 10 vendors. Try again, right? Like it doesn't really work. So they need to buy capabilities. So your question is, if you have good technology, you have to find a way to sell it and package it as a solution that can be working with channel partners, other vendors that do this, integrators. That can work, but it can be slow. So, our belief from the beginning was that it is very hard to scale your business at the pace you want, unless you control the narrative around what you are doing, why your technology enables such a different way of operating. And probably even more importantly, get that real time feedback on how your technology does or doesn't solve these problems in adaptive. Because a lot of this is we have some idea of what's going to work and then we just go and “hey, we got this idea, is this crazy? Is this going to work?” And mostly people are like, that's crazy, it's not going to work. But here's the interesting parts of it, that we own it in dialect and find the parts that are actually really valuable nuggets. And if you don't have that cycle, to be able to rapidly adapt and develop these ideas with your customers, it's very hard. So, I think for most companies who are looking to add DoD as a market segment, probably going to work your channel partner, it's probably going to be slow. And once you get there, it's a fantastic customer, they pay forever, life is good. But it does take time. If you want to go fast, if you want to really make a dent in this, you've got to own that end relationship with your customers, you got to drive it from their mission problems to deeply understand that, right? If you were not coming in and saying what your problem is that you're trying to solve. What is challenging for you, looking back to how your technology can do it, you're not going to succeed, you're not going to go fast. That is really what they need is help thinking through how to solve this differently, not just responding to RFPs.
Lauren Bedula 24:07
So, we mentioned that to the commercial market. But you're not just focused on the US government, you have a strong international business as well. And something talked about our show often is the private sector navigating globalization, push and now thinking about globalization. So which countries do we partner with which are safe for our listeners to take your international strategy?
Brian Schimpf 24:34
Yeah, so we have a certain advantage in that our international strategy is largely set by the US government. It's called ITAR. In a lot of ways, the way we view it is that we are fundamentally trying to align with US foreign policy. With US foreign policy, there's always allies, and then there's allies in the right context, and there's the do-nots, right and that guides you clearly, right? There's not a lot of you, and no kind of wiggle room on that. Everything we're doing is in concert with that US policy. I think things like orcas have the potential to accelerate a lot. The intelligence community begins a long time ago, we've got this five eyes Alliance, it's amazing, huge sharing. We need the same thing for defense, we need the sharing of information with our key allies, bringing them on board, co-developing capabilities, because this is one of the US biggest strengths is having: allies that will fight with us, but will support us have a more sophisticated approach to diplomacy and warfighting and all this stuff. So it's a huge part for us and is strategically important for the US. It's critically important for us, we recently did a deal with Australia to build Extra Large underwater vehicles. So these are going to be big school bus-sized vehicles, are going to be no joke. And the Australians have a real hunger to move out. Now they're smaller, they're more agile. As a result, there's sort of less steps in the process. But I mean, we went from conversation with them to four months later having contracts in place, and they're all we're going to first halls in the water within 18 months to start. So that is a very fast timeline, getting these things out. So, it's a really exciting group to work with. And part of it is that they really want to have a piece where we're building out a real Australian presence. We're putting engineering, they're putting manufacturing there, we're working with the Australian industrial base on this. And I think this is the forum this really has to take. So, there's going to be a flavor of this for us - we're exporting our kit. It's built here to allies. And that's great. And we absolutely will do that. A big part that's interesting to us is how we pull these partner countries in in a first class way, where we're building real capability with them in country. Their systems, as well as tying it in with the US capabilities, from how we think about technology, how we build it, the software layers, all of that must work together so that this is all kind of very compatible. So, it's been exciting, we are doubling down on international as much as we can. And a lot of those countries have a lot of urgency to move out solving some of these problems. But right now, it's been a fantastic relationship with Australia, great relationship with the UK, doing some great stuff, they're looking to really expand their Europe.
Hondo Geurts 27:26
Brian, we're here at the Reagan forum. And last year, with some fanfare there, number of the VCs announced, “if you don't get your act together, God, we're not sure the VCs are going to stay in this market.” I think your recent fundraiser may be an indicator. But you know, while I think there's a growing sense that you can separate security and prosperity, that doesn't mean VCs necessarily see the right market potential. They may understand why it's important, but they manage to the market potential. Do you view VCs as understanding better now? The wage though, structure of companies to sell into the government and this kind of a we're all going to leave in the year, if something doesn't change? And you sense we've kind of gotten past that? Or is that still an issue?
Brian Schimpf 28:26
I think that VCs have a better understanding of what the composition of these companies looks like, what do you need? And it's not just tech, it's government relations and sales. It's how you build these solutions. It's production. So, I think there's a much better understanding of pattern matching on that. Let's get there. And I think that is that is improved in terms of like, time running out kind of perspective. The reality with VC is, you know, it's like, what, what am I pressures? Like, what are the VCs put pressure on me? It's growth, it's top line growth. That's it. That's the thing. And you know, with that top line growth, the, that must continue. So, the numbers get large, and for all these companies, that is going to be the question. So, that must continue to materialize, we've shown it's possible. We believe we're going to keep doing it. We believe we're getting good reactions. But I think the key is it's not in five years going “hey, here's some modest scale.” It is very much about how do we get to production? How do we get things right? We've got a deep product pipeline, a lot of things that are coming out. And our bet is that these are going to get a warm response. We've been working with folks on how to buy and think about these capabilities differently. So I'm very optimistic. Obviously, venture capitalists are as well. But it is very important that the DoD sees that group. Not just for us, but for a lot of these companies. Again, if they act as a good buyer, if they're showing that things that get there, that they're willing to make the hard decisions on what they sacrifice and other ways to go after these capabilities that will accelerate these timelines. This is very doable, and I think you will see when the dollars get there, this will be good for the private as well. Like they will be incentivized to build in a different once it is a material amount of money that moves the needle for them, they will move, it will see this as a real market way of operating. And I think it will be quite healthy. So I don't think this is about just like startups succeeding. This is about reconfiguring the defense space with large respond to a different set of incentives that the department wants to see. “Bring me capability quickly, and I will buy it.” That is something that I think you will get a huge amount of market reaction to.
Hondo Geurts 30:53
Yeah, we talked in one of our earlier podcasts about the fact that DOD is the largest R&D budget ever might be a failure; the DOD needs to be had the largest procurement budget ever, as a way to close all of these elements. So Brian, I'm going to pivot a little bit on and let's talk talent, because you're not going to get explosive growth in those kind of returns, if you can execute. How are you guys dealing with the huge fundraisers and all the expectations of growth? How are you thinking about talent? How are you attracting it? Is it out there? Or do you have to steal it for somebody else? What's your sense on whether we have the talent to do this at scale across?
Brian Schimpf 31:39
I like to break it into a couple of categories, like where's your talent pools coming from for a couple of key areas. For us, it's roughly broken into kind of software talent. You can in aerospace design, traditional defense design, subsea design, and the manufacturing and production. And those are coming from three different industries where they are the best of this, right, so software is coming from Silicon Valley, a big town. The conditions have never been more favorable in our tenure as a company for hiring people in that world. 2023 is going to be a rough year for a lot of tech companies, they massively over grew during COVID. And I think the rates that they were seeing, the business grows at outpaced that would headcount. So they're in this very bloated, difficult position. So there is just not the same competition, fight for that for the next like year or two, that I think should be very, very talented, very, very positive. But even before that, we were having a fantastic time recruiting because there's a number of people who do want to work on this mission, that value the impact and really want to solve these problems that is really motivating. We found people who are diehard about what we're doing; there's a reason we're out there saying we build weapons systems, we build defense technology, like, we do not shy away from it - this is something we are extremely aggressive about talking about. And that is to make it very clear to people like we do, you are here for the mission, this is a serious mission. And don't come if you're not committed to this mission. This is not a two year stop on your career. This is a serious commitment, national security. This is like you're working in defense. So we've had a fantastic time recruiting in that. From the attraction of the mission, that's probably been the most competitive area for us historically. The production side, I think, is also largely going to come from modern manufacturing companies, it’s going to come from the Tesla's and the SpaceX’s in this modern automotive honoring contract manufacturing. These are the areas that are going to think about, how do we apply modern digital approaches to this and really think about automation in the factories? How do we have very reconfigurable production lines that can scale to all sorts of things we need to do? That's the type of stuff that I think it's going to be a very different way of thinking about production, as this has historically been done, which is very much a design for automation design for manufacturing question: How do I minimize the complexities and make this IKEA-simple? That is a different approach than we've seen in the defense space, where it is much more high skill tradesmen historically, a lot of these things, which is great, but it's hurting us right now. It's killing us. We can't keep those people trained and employed, and that's wrecking the shipyards and all these things. So, thinking about these lower costs, simpler assemblies, how can we make this as dead simple as possible? That's going to come from a lot of these modern commercial worlds. And then finally, on that design and advanced hardware product that has largely been defense space. That has been where we're attracting people. There are folks who are looking to build things at a much faster pace. We're looking to work on a lot of different systems. And for all of the most seasoned people, a lot of these companies, they might get to work on one or two aircraft in their career. You know, “Come work with us. Get that in your first year.” It's a very different pace and way of operating and there has been little attraction to it. And the other piece of this is we're trying to stay as lean as possible. This is something we've been very successful at getting very small, efficient teams able to crank through and get these things together and think about how we're building in a very kind of component driven way a lot of what doesn't work as successfully as many F 117s. The key to aerospace design and performance is controls, ending gear, and all the stuff. Take what works. So, we're trying to think in a similar way, how can you know, beauty needs a variety and constant refresh of the systems? How can you make that as cheap and simple as possible. And we get folks are really excited about that. So, you know, it's a different way of thinking, we're trying to kind of pull laterally from all these different industries who have really thought about these problems in novel ways and pull them together and take fresh books. So, it's not just coming from defense pulling in folks from everywhere, but we do need those defense-experienced people. There's a knowledge, and there’s a set of concerns on this, so we hire a lot of vets, I feel like 25%. So, we have people that really know what these systems are going to be used for. How they would fight with them, what they would use them for; it's a huge benefit.
Lauren Bedula 36:22
I was going to ask about the economic outlook and later hierarchy about it. But what I heard you say is your team is as lean as possible, but you're not having trouble with talent and recruiting like some big tech players are. And the government is a great customer in an economic downturn, and I think you're seeing that and are well-positioned to move with that. So, I'll ask something else instead, which is Russia's attack on Ukraine. I saw some of your colleagues were out there quickly on the ground. Can you tell our listeners a little bit about how Android reacted to that?
Brian Schimpf 36:56
The initial approach was: "what can we get out there now that can move the needle/” To be honest, I think a lot of our stuff is in product pipeline with a couple of capabilities and can move the needle if we try to get those out there quick. Firstly, they'll interface with DW environment, how these things work, we've come back done a ton of work to improve these things get a refresh to figure out what they really need and try to listen. And we're really trying to drive new engagement and how you how you partner with these countries to help them figure out what works. This plays a huge counter, in fighting every day, they have every vendor in the world saying my stuff works, just take my stuff and the US will pay the bill, they say “Oh, it didn't work.” Then they come back with the US timelines; two years $50 million to five years during wartime, that is not an acceptable answer. We don't want to do that; we're not going to waste their time. So anything we're going to show up with, we want to stand and be able to modify handset and get it dialed in for their mission needs. So that's really what we've been focusing on, we're not going to waste their time, we want to get a kit that works. And on the US’ side, I feel for a lot as well, where we’ve got these defensive clubs, coordination pieces and export coordination pieces, and they don't know what kit works or not. They’re just going to go with the brand name things and find the winners. It is a hard problem to solve. How do I know what's going to work? Test it out quickly. And if it doesn't work, get it out of there and get something else in that’s an improvement. So, for us, we want the type of thing that companies go for. But if we're going to do this, we're going to commit to figure out how we can deploy with them, improve it and dial it in. And that's our goal. So, what can we learn here to help them be effective? So, we're quite a ways along on that. There’s a lot more to come there.
Hondo Geurts 38:57
We joked a little bit at the start of your Cornell versus Lehigh heritage. What's your experience, either in the academic setting, working with government or now shifting to the future industrial base? How do these academic institutions best play as we shift to this kind of new age, industrial life? Where's your part? Is it the same, is it different? What would your take be?
Brian Schimpf 39:28
I studied Industrial Engineering, and there was very little industrial engineering and the industrial engineering curriculum, it was all operations research, financial math, and optimization . So, it's this weird finance degree, like an Applied Math Finance thing. But I went out of my way to take classes on supply chain and inventory management and all these things and there was not a lot going on at the time on this. So, if you are going into an MBA program and business programs; things you said you did manufacturing, that wouldn't be the lamest thing. In the last 20 years, nobody would care. A lot of high talent, people are going into things like China. I've seen some really promising turns on this, MIT is looking at how to invest in this from the business school on down or looking at advanced manufacturing? And how can they have manufacturing Executive Programs? There's an awakening, these matters. Finding these places where you can actually look at becoming centers of excellence on how to do these advanced technologies, what sort of business models look like, modern like real theory of study and how this is going to work for America? The answer is not going to be copying China, the answer will not be that it will be an innovation approach, it will be we have new technology, we're doing things differently, we're doing things better. But it's the only way the American system will work. We're not going to pay people Chinese labor rates; you're not going to win that. So, the key has to be a technical business approach of how you're going to innovate. There's a ton of things academia can do on this, looking at studies where their centers of excellence in the US what methods are really working? How can you actually approach this from a commercial base perspective? I think one of the really interesting questions is, there's a large US commercial manufacturing contract manufacturing base, how can the DoD better utilize that, like did Ely will be 5% of their capacity, that is perfect. Because that means more time, there is a lot of excess capacity. And these guys have the volume of capital flows and kind of margin coming in, to constantly be in great investing in the best processes, the best techniques, all these things. So, I think there's a way of reimagining but then on the defense side, how we build and what these technologies look like to best take advantage of that commercial capacity that does exist, both in the US and allies. Because that has to be part of the answer, right? There's always going to be defensive specific components to this, they're not going to make solid rocket motors are not going to make warheads. That's not what they're going to do. They're not grinding germanium domes, but they can do nearly anything else. And that's something we really have to lean into the commercial base on. And I think academia has a huge role to play in thinking about that problem. How can we structure it and pull up great leaders that can make this?
Lauren Bedula 42:20
Brian, what you said that really stood out to me is your optimism about DoD evolution and looking at the history of that. Sometimes we've heard that the private sector is doing it better. But you're right, they'll fail. And so, we don't see those long stories as not evolving the private sector. So, I think that was an awesome method. Just hearing about your experience with investors and going against the odds on that front. Now, you're probably fighting them on how well Android is doing now. And I think losing out that model is going to stimulate other founders to follow in your footsteps. So, they take the time to tell you a story today.
Brian Schimpf 42:58
Thank you very much. I am extremely optimistic. When we started this, I was not sure this was going to be possible. But now I'm convinced that the Department of Defense is serious about this. It will take time. But I think the sense of urgency and need to win has motivated people in a way I haven't seen before. So, I am very optimistic. Thank you very much.