Building Defense Technologies to Protect Democracies | Torsten Reil, Helsing

22:59There are quick fixes. You just have to have a few very aggressive companies that point out that everyone else is basically mailing it in. And I think a lot of people are. Me and Daniel talked about this, this idea of like how many prime movers are there in the world? You know, the people that are inventing the technology that we're all using, creating the companies, you know, power laws roll everything around us. And it's just like, it's not that many. and if you just have a handful, like you literally can change the trajectory of an entire country, entire world, whatever the case may be. When you raised the 100 million though, where did you see like your entrance into doing this?

23:29Was the idea is like, hey, we're going to, what you just said, it's like cheap, simple hardware and then all the innovation comes in software. Is that the way you thought about it? Actually, the biggest insight came, and I think it came from Gunnberg when we said we're just going to go for programs of record, which back then as a small company was almost impossible and was extremely risky. Explain what a program of record is. So a program of record is a program that is an official government program that's in the budget that is usually quite large and where you ideally want to be the prime. So you have the direct relationship with the government rather than working as a subcontractor through another company.

24:06And that's extremely hard to break into. And the reason most companies didn't do it back then was because, you know, you got funding and you needed to generate some revenues and some proof points you know reasonably quickly and that's almost impossible to do with a program of record because it takes so long um to get one and to qualify for one but because we had the 100 million we thought okay well now we can take those risks and if the first two or three don't work that we go for we still have enough money left and we felt it's the only way to build a defense company reasonably quickly and so we we applied for a big program of record for the eurofighter electronic warfare upgrade what is that in Germany so this is the electronic warfare capabilities are essentially essentially around detecting radars detecting you know the types of radars in this case anti-aircraft radars that you know try to take you down detecting their intent etc and the situation had become you know more difficult for Europe because a lot of those radars had become software defined which means that they basically are shape-shifting and so the old approaches didn't really work anymore and we We came in with an AI-based approach, deep learning-based approach that kind of recovered that ability to interpret those radars.

25:14And it was a big technology jump, and we managed to win that program of record together with our partner Saab against a lot of other consortia. And we were the dark horse, but we ended up winning it. How big was the probability? I don't know, but there was a high probability that we'd fail, but we went for it because we thought we can afford to because we have enough money in the bank. And this happened after two years and four months of founding the company. I think we became the fastest to go from founding to program off record. How much of like your previous work, like Oxford, stuff you were doing in Natural Motion, did you bring into Helsing?

25:48A lot of it was the, I think, team building and fundraising and maybe prioritization pattern recognition that I had from Natural Motion. where I, when I sold the company, where I left the company, I was reasonably pleased with myself. I thought, you know, this all went quite well in the end, but it was only in the kind of two or three years afterwards where I started to reflect on some of the things, you know, I'd done and how I'd built the company, especially when I started to angel invest. I realized I actually screwed up a lot of things at Natural Motion that I should have done better. I didn't deal with performance management the way I should have.

26:21I definitely didn't take hiring serious enough, just the kind of general hiring of great engineers. And they also didn't think enough about how to, you know, think about your leadership team, how you grow your leadership team, how you bring the right executives in at the right time. And it kind of worked at Natural Motion, but we probably could have done a lot of things better. And so a lot of that, I think, pattern recognition, we were able to use at Natural Motion, and particularly in the first few years. But it's also true now that Helsing is now at a point where it's kind of uncharted territory for me as well.

26:56The company is a lot bigger. I think we're about 1 ,300 people, much bigger than Natural Motion ever was. And so we have to now kind of think through things either from first principles or by working with people who have already built big companies like Daniel. And then the other part is we were lucky that we had as three founders very three different skillsets. I had already started a company and sold it. I think I knew how to fundraise. Gunnberg was very close to the various forces, to the military, also understood the processes, political processes really well. And Niklas's background was on the AI and engineering side, which is what we really needed to, first of all, win this kind of contract.

27:37That was the reason I asked that question. It's like, well, how the hell do you go from founding to program a record faster than anybody else? Like, how did you even know you could solve this problem of… It was just the feeling, I think, and particularly Niklas and Gunnberg, you know, pushed that. Gunnberg, I think, had a strong conviction that this was a really worthwhile program of record for us to have. And Niklas had an intuition as to how we could do it differently to anyone else. Where did Niklas get that intuition? I don't know. I think it's just, I mean, he'd already been in this space with his previous company.

28:08So he already had a feeling. What was his previous company doing? It was solving AI problems for legacy primes. And so he already had a feeling for this kind of thing. And then if you combine that with Gunnberg's insight as to what programs of record worked. It honestly became the blueprint how we approach pretty much everything now. We try to find programs of record that are large, where we have a feeling that we can contribute something to it that's differentiated. That's basically our lens. Can you give me an example of that? Well, another example is the autonomous fighter jet that we are building right now.

28:41It's called CA1 Europa. And we went into it and invested a lot of money into it, knowing that Europe didn't have anything like it. and that we felt this is going to be a big category and that we could contribute something to it. And the reason for that was we started almost like a science experiment. We have a great chief scientist, Antoine Bord, who joined us from Meta where he ran a co-headed Facebook AI research. And we set ourselves a task two years ago to create a superhuman fighter pilot for beyond visual range combat. So the kind of combat that's... Hold on, you've got to slow this down.

29:16Superhuman, say that thing again? It's a superhuman fighter pilot. Superhuman fighter pilot, but there's no pilot in there? No, it's an AI. It's a neural network. Okay. And it's for beyond visual range, so the most advanced type of air combat. It's essentially chess in the sky. You have, you know, the planes, usually it's two versus two, quite far away from each other. It's a fighter jets, and they use radar. They use different types of radar. They switch the radar on, off. They use missiles, obviously. You have to go offensive, defensive. You have to try to bleed off energy of missiles that are following you.

29:51You have to have a feeling for when you can re-engage. It's extremely complex. It almost looks like ballet. It's quite beautiful to watch, actually, when you look at tactical views. And we've been told by pilots, active pilots, that this is the kind of last bastion of air combat. You know, nothing will ever replace the intuition that a human has in the sky to read the situation, to have a feeling for, you know, how to engage, what types of, you know, weapons to use. And that turns out to be bullshit. You know, it actually, the AI is much, much better. And the reason is that it's able to explore the search space much more efficiently than, you know, a human can.

30:33Because a human learns it from a textbook and, you know, in flight school, but they can't explore the search space. And so we use the same approaches basically as, you know, DeepMind used as well for AlphaGo and AlphaStar using reinforcement learning. And we have an extremely high-performance simulator that runs 25 ,000 times real-time speed. And that allows us to explore the search space with reinforcement learning much, much more efficiently. And that now means that we can train a neural network to be better than an active fighter pilot. like we regularly fly against Eurofighter pilots, for example, or Rafale pilots or Gripen pilots.

31:14So you're running tests with your autonomous fighter jet against a human powered pilot? So we used to do it in simulation only. First, it was only our simulation and we won. Then it was, you know, an official simulator, but from a, of a, of a, you know, of a big prime. And then last year we flew a real fighter jet and we flew the Saab Gripen over the Baltic Sea. I'm going to say we, our AI did, and took full control of the plane in air combat against another Gripen, which was human controlled. And so we flew three air combat scenarios above the Baltic Sea and proved at that point. And this, by the way, was also the point where we realized actually there's something bigger happening.

32:01where this actually works, and it works in the real world. And so we developed a system, we called it Centaur, and it's now able to work in swarms as well, by the way, not just two versus two. Wait, swarms of fighter jets now. Yeah. Not swarms of drones, now we've moved on. Swarms of fighter jets, yeah. It scales really well, and it's extremely powerful, and that gave us the conviction that crude manned fighter jets were going to be very difficult to deploy in the future because you'll end up facing these swarms of autonomous fighter jets with superhuman capabilities. And it's not science fiction.

32:38One observation of what's happening at the moment, not just in defense AI, but AI in general, is that things happen faster than you think. You know, back in the old days, like 10 years ago or so, everything was always five years away. That was always kind of the number that people used. It's about five years away, whether it's kind of a particular medical breakthrough or maybe a robotics breakthrough. That's now all shrunk. The five years usually ended up being seven to 10 years, by the way, same as two autonomous driving. It's now the exact opposite. When you think something is five years away, it's actually usually now two years away.

33:09And so something has changed and we felt that with Centaur as well. It's like we were thinking that we couldn't believe how well this worked. And still to this day, I always feel it feels a bit like science fiction. But that gave us the conviction that we needed to be in this space. And to be in this space because it's so slow usually to work with primes, Like we could have partnered with the prime and asked, do you want to do an autonomous fighter jet? We provide the AI, you provide, you know, the jet. It would have taken too long. So we decided to acquire an aircraft manufacturer outside Munich, our outside Munich, with its own runway hangars and full aircraft manufacturing capabilities and build our own fighter jet, which is now called the CA-1, and then put Centaur on it as the core technology component.

33:53And so that's going to fly for the first time next year. And, you know, we want to show that you can really leapfrog everyone in this category. We were having this conversation, me, you and Michael Dell were talking about this at Dell's house a few months ago. You told us about this acquisition. And then Michael's like, can we come see it? And I was like, I'll come with you, but I don't want you to shoot down Michael's plane as we're coming in. But you told us about this funny regulation where even though it's going to be an autonomous fighter jet, don't you still have to have a guy in it? So eventually, no.

34:28But right now, yes. I mean, so we don't have the, I think, the advantage of the Mojave Desert, for example, where you can fly those planes and be completely autonomous. Because if it crashes, it doesn't really matter. You know, it crashes into sand. If you, you know, crashed where we fly, you crash over built up Bavaria. which is not ideal. So we have a human that's optionally in the plane for the first prototypes. Eventually, that's going to change, obviously. And the pilot is a safety pilot, the same way you'd have safety drivers for the early rollouts of Waymo and other companies. The fact that you have dysregulation at the moment and you need a person that has to change the design of what it looks like, correct?

35:11No, we found a way to accommodate it without changing the design. It's the same system. By the way, it's another example of where you can, you know, beat on the EU or Europe or, in this case, Germany for having regulations. But you just find a way to deal with it. And this is the way to deal with it. You just have a pilot sitting in there like this. Is he in the back? Where is he? No, they're in the front. Okay, so what you just described, that's very interesting. You said it's like chess in the sky and then you said it was ballet. So the way you see the short-term future is the same way it's essentially going to be immoral.

35:45I want to get into like the morality, the way you look at the morality of like what you're building. The way it would be immoral to send a human into the battlefield because you're going to get swarmed by drones. It's going to be immoral to send a pilot into the sky. Is it the same? Yeah, it's the same thing. I mean, there are two reasons. A, it's more powerful to use autonomous systems. They will just be superior because the AI is just smarter than humans for this use case. And secondly, as a result, it will be immoral to send someone out because you have to assume that the other side will eventually have those systems as well.

36:14Can you explain, like how you view like the morality of what you're building and how you may view the other people's interpretation of you know essentially the banning to creating new weapons or creating new defense like you've thought a lot about this i kind of just want like a what's in your mind like a complete overview of like how you think about the morality of building the company you're building the underlying goal has to be that you minimize the lives lost in general and ideally you get it down to zero. And the way to get lives lost down to zero is to not have any kind of conflict at all.

36:47And that's why deterrence is so important. And this is also where, I mean, this is a very old, obviously, argument, but it still comes up all the time is that people don't understand that you have to be able to deter in order to not be a target that looks valuable or achievable for the other side. And we set up the company to deter. We never set it up, honestly, to have the systems deployed at scale in Ukraine, which is what we have right now, will do it, obviously, because we'll have to do it and it needs to make a contribution. But the idea in general is to avoid conflict altogether. And you do that by being able to deter, by having a credible posture that makes the cost calculus on the other side such that they don't want to attack because it'll be too devastating for them.

37:36And that is the first thing. If you have to go into a conflict, You want to do it in such a way that you minimize the lives lost on your side. And again, this is where, especially right now, and it's going to get worse in the future, you need to use autonomy because you cannot send humans into tanks, in fighter jets, or even as infantry onto the field. That's the underlying theme. And then there's another category where you need to think about the way you deploy your software and what as a society, you know, we're happy with, with the deployment of your hardware and software in terms of autonomy.

38:14So are we okay for a machine to make a decision over life and death if it is more accurate than a human? Or do we say as a society, no, a machine should never make that decision? And these are legitimate conversations. It's no easy answer because people have different values on this. And the thing that worries me is that these discussions happened a lot when we started the company before the Ukrainian war. No one, in particular journalists, weren't interested in asking us about the capabilities and why we were doing things. Everyone always asked about killer robots and autonomy and our red lines and do we have a human in the loop, which we were always happy to answer.

38:53These weren't annoying questions. They're at the core of what we think about. Now, though, no one asks these questions anymore. And I'm not quite sure why, but no journalist ever asks those questions. You know, how are we thinking about the ethical side? We do a lot of this ourselves. We have ethics workshops. We have a lot of deployment guides for our technologies. We have to think very carefully about, you know, things like proliferation and a whole bunch of other things, but we have to do it out of an inner discipline. And journalists don't ask the questions anymore and the public doesn't either.

39:24I don't even understand the counter arguments that you receive. That's like, no, we should not have any new technology. It's like, well, humans are violent by nature. We've had war since we've existed. Yeah, but it is an interesting topic because we get this pushback as well, obviously, at Helsing. And we get pushback from people who say war is always bad. And of course, at some level, that makes sense. But again, if you have a situation where you are attacked, if you have a situation where there is an adversary that is building up capabilities, you need to be able to deter in order to avoid war.

40:00And then you need to be able to fight in order to then not lose lives, you know, unnecessary lives on your side. And like I said, we get a lot of pushback and it is often from well-meaning people. So it's not that like we hate people who have a problem with our mission. I disagree with the way they look at it. I think if you think it through from first principles, you need to have this kind of deterrence, but we don't kind of dislike people. It's like very often people who just want to have peace. It's just that we want to have peace too. We just think you have to achieve it by not letting a war happen and not being inviting to a war.

40:34But I think there's something interesting. It goes back to like your high conviction, the fact that you're extremely disagreeable. You're very comfortable taking like a counter position. Like you started this company when everybody else said, you know, it was very unpopular. Something that I asked Daniel about, and he said, he's like, he's a German building a defense company in a country whose entire post-war identity was never again. Yeah. Like you're also willing to cut across your cultural, like the culture expectations too. Yeah. And I think that's still the case in Germany. And, you know, we're set up as a European company.

41:06We have big offices in London and Paris and a bunch of other countries as well. But our biggest is in Munich, in Germany. And German society is a pacifist society. and it's taking a lot of, I think, facing reality right now, which is what's been happening in particular over the last couple of years or so, where I think Germans realized it hasn't been the end of conflict. There are now conflicts and they're coming closer and they might be coming even closer again. And it's very uncomfortable for a country that thought those times are over. But it's also the country now that has one of the most thriving new defense ecosystems, I would say, in the world now.

41:46So there is now a rethinking of some of those attitudes. And it's also the country that has, in absolute terms, probably now the biggest growing defense budget, going from 52 billion euros last year to originally, I think, 153 billion in 2029. I think it's gone up again to over 180 billion. And this is a large increase if you think about that. There won't be more soldiers, most likely. So most of the money is going to go on to new equipment spent. OK, so we go back to materials. Your whole thing is like the winner is going to be able to produce more materials than their adversary. So I still don't think I completely understand the way you think about achieving that goal.

42:23Is the hardware that you're manufacturing has to be as simple as possible and then you're offsetting all the innovation in software? Is that still the basic thesis? The idea is that you build hardware that is good enough and build it in such high numbers that you eventually have economies of scale, but also the ability to overcome any adversary just through pure mass. And the way you achieve that is that you need to be able to mass produce, you need to design to mass produce, but then crucially you need software to allow those systems to, first of all, be smart and be able to coordinate. But you ideally also absorb a lot of the complexity of the hardware that usually would be these exquisite systems that legacy primes will make into your software so you can make the hardware simpler.

43:11That means that your sensors are simpler and you regain a lot of the accuracy through very good AI algorithms. It might also be that your manufacturing tolerances are a little bit bigger and you regain a lot of the control and accuracy again through software that might recalibrate the system as it goes. And this is what we do. And that works extremely well, but you have to think it through as one unified system. And once you do that, you can go into mass manufacturing. So the HX2 is now a mass manufactured strike drone. And we had to go through all of those learnings in July and August last year, where we had to go from dozens of HX2s per month to a baseline of 1 ,000.

43:55And it can now surge to, in the small factory that we have, to 3 ,000 a month. And it's a completely different kettle of fish to producing just a few dozen. You have to think about your supply chain completely differently. obviously the way you design the drone quality control tracking every single step and so you have to learn this but once you've done this and you're able to produce in very large volumes you just have much more powerful systems because you can now overcome any adversary or target by you know having saturation attacks for example by sending more and more of these drones by having them highly coordinated and if necessary just produce more and more of these and drones are one example the same is true for fighter jets you want to build you know many hundreds of these fighter jets um same is true for um you know for other systems maritime systems it is going to be about being able to build these things in large numbers to design them so that they can be built in such numbers and to have the industrial capacity and the supply chain okay hold on though if we're talking about war materials you can never predict the the potential new adversary you might have in the future that means you guys have to be completely vertically integrated like if i'm country like or a continent let's say we're european it means i can't outsource some of this production to china or to america or to south america or anywhere else correct i wouldn't say any i mean with china yes that's true um um there's still allies that you can work with obviously and that we all work with um but there will be some areas and it depends on the sensitivities of particular countries where you want to be fully vertically integrated in that um country and you want to be having your entire supply chain in the country as well.

45:30There are other areas where you work with allies and I think that will continue and probably even grow. And then there are other areas where you say, no, we're actually, there's so many different suppliers. It doesn't really matter. We are kind of free to choose. But I feel like you would go more towards complete control. Like, I'm not talking about what you're doing now, but in the future, you're going to be running this company for the rest of your life. You just said, I'm not selling, right? This is my last company. This is my grand ambition. Yeah. So, like, would you not want to work towards an area where, like, you have complete control over everything?

46:02Yes, but you also want to work with allies. Like, there are many countries that you want to work together with and where you are stronger if you work together. There's some areas where, you know, specific countries have sensitivities around particular data, for example. The UK, for example, is very specific about what they're doing in maritime and understandably so, where you want to be, like, really just national. but then there are other areas where you work with allies. And you need to be able to dial it up and down. So what we're doing, we have this concept of a resilience factory where if a country wants to buy and build our hardware, they can do it on their own territory.

46:40We put a factory there and they can also build up their own supply chain to the point where they feel comfortable with and then buy from others. Explain how that partnership would work. So your technology manufactured in their factories on their soil. So we can run the factory, but we make sure it's on their soil. And we find a way to work together with them to also make sure that the supply chain is as national, as domestic as it needs to be. And again, the sensitivities in different countries are different. Some countries don't care at all. They just buy it from us and we can produce wherever.

47:12Others really care that it's built on their soil so that they have more control over it. Why do you call them resilience factories? Because we design them to be not this kind of one big factory. That is a very easy target for attacks. But actually, they can be distributed all over a continent or even else, or even beyond the ground, as is the case with us, so that they are harder to hit. You studied the Krupp family? No, I know of them, but I don't know in detail. There's a great book I'm going to send you. It's like 700 pages. I should do an episode on it for my other podcast founders. But they ran into this problem during World War II, where the Allies just found their centralized factories and just bombed the shit out of them.

47:49Yeah, I mean, by the way, this problem is completely underestimated right now. coming back to fighter jets again. So we have these exquisite fighter jets like the Eurofighter Rafale and a bunch of others, but they all need airfields. With the exception of the Gripen, they tend to use a neat airbases to take off and land. Those airbases are obvious targets, obviously, for an attack. And so if you look at something like the CA-1, our autonomous fighter jets is designed in such a way that it can take off from any kind of makeshift airstrip, which would be a road, an autobahn, a motorway, a highway, etc.

48:27Essentially adapting it to where you can't bomb. You're not going to bomb all the roads. You can't bomb all of it. Exactly. Okay. Yeah. And I think there is still, I think certain governments and militias are still in denial what actually is going to happen in our conflict. You know, in many cases, we won't be able to take off with our crew fighter jets anymore. So how do you go about trying to explain that to them? Like, how do you just make it obvious? Do you just do it through product demonstrations? Yeah, I mean, it's like with everything else, you do product demonstrations. You show what the capabilities are.

48:57We've done this a lot with drones. And then, to honestly everyone's credit, people do get it. I mean, it's like people complain about procurement is so slow and governments are so slow. Yes, but then when they do get it, it goes very fast. Like the large strike-down contracts that happened, happened really quickly with political support, with support of the procurement agency. and they went through all in record time. And now, if anything, I think that the companies are really under pressure to deliver all of this stuff really fast. So it's like we all complained about it in the past, but it's a bit of a legacy problem.

49:31I think procurement has got faster and the realization that these things have to happen is happening faster too. And there will be big autonomous fighter jet programs in Europe as well now. Two years ago, there was nothing. Even one year ago, there was nothing, but it's now happening. Something that just came to mind while you were speaking earlier is you're talking about how in the AI age, everything is going to happen faster. You think it's in five years, actually two, maybe two years, maybe two months. It might even be faster than even you suspect. So AI is making your products better, faster than you expected.

50:07Can AI also help manufacture and increase your manufacturing faster too? Yeah. Because if you're saying we're going to produce a couple thousand a month, I think, isn't China doing like 100 million drones a year or something like that? Not really. I mean, and Ukraine is building, I think, 2 million or so a year. But those are different types of drones. Yeah, of course. They're FPVs, they're quadcopters. And again, they have their role and they work, but they're much shorter range and they've got smaller payloads or explosives. Strike drones are much bigger. I mean, they're like this. How big is your strike zone?

50:37So the payload, for example, the explosive is 2 to 4 kilograms or even larger. and the range that it can fly is around 100 kilometers. And so it's quite a lot more than FPVs and they're used in different ways as well. Those numbers right now, like up to 3 ,000 a month, are really quite high for this kind of category. And you can scale it up even further. At the moment, honestly, the bottleneck isn't manufacturing speed. We can build them really fast. There will be a point though in the future where you want to be even more efficient and faster and then AI will play a role in manufacturing as well.

51:09At the moment, it's too early. It's because we're not limited at the moment. So wait, what is the bottleneck then? Honestly, the bottleneck right now is the big programs need to come. So the first ones are coming. We just closed a one billion framework contract in Germany, but they now need to come everywhere and then we can crank up manufacturing accordingly. What do you mean by everywhere? In the various countries because... In all the Western countries? Yeah. Okay. Yeah. There'll be some in Asia as well. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, the single most powerful pattern I have noticed is that successful people find value in unexpected places.

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52:22They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day and increase their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin. And you can do that by going to AppLovin.com. That's AppLovin.com. All right, I want to get into how you think about running the company. You mentioned earlier the mistake that you made with your previous company was not putting enough emphasis on talent and recruiting. What did you mean by that?

52:55When you build a company, you obviously try to hire good people. And every founder would always say, you know, the most important thing is talent and their people and they spend so much time on recruitment. But when you actually look at it in detail, and I include us there at Natural Motion previously as well, it is, I wouldn't say it's half us, but it isn't the most important thing. And I would argue that hiring and finding the right individuals, number one, and then secondly, curating that group of individuals and also moving people out is the most important thing in the company. And it is the reason why a company has great culture.

53:28And it's also the reason why a company is high-performant and it feels like it's light-footed. And Helsing feels that way, I think. It feels like it's a very fast, highly performing company that can adapt really quickly. And it is almost entirely because the talent density is so high. So if that's your kind of thesis, and it was our thesis, then you have to think how to solve it. And the two main factors, the first one is you need to hire well. So you need to build a machine that hires well and be able to monitor how it does it. And the second one, it needs to be able to curate as well. So you need to have a machine, a system, a set of processes that ideally are very easy that allow people to also manage people out when they don't work out.

54:14And what a lot of people don't, I think, appreciate is that these two are linked because it becomes much easier to move people out that are not a good fit for the company if you know your hiring pipeline is so good that that position will be filled almost immediately. then it becomes kind of a low opportunity cost thing. What happens instead in a lot of startups and probably also larger companies is that managers are hesitant to move people out of a company because A, it's always unpleasant, so you need to hold them accountable, but B, because they maybe rightly know that it will take nine months to fit that position again.

54:51And very often the argument, and many founders will be familiar with this, very often the argument of a manager will be, yeah, but if I fire this person now, then we won't be able to hit our deadline because at least they're going to get the job done somehow. Maybe a bit slower than they should. Maybe they create cultural problems. They have an attitude issue, but at least eventually they get the job done. And that's not good enough. So you need to always have enough pressure on the pipeline to be able to fill those positions quickly so that it becomes easier. And so what we did with Helsing at the beginning, because we knew this was going to be important, the first contract we ever signed, even before we founded the company, was with a third-party recruitment agency because we didn't have anything internal.

55:29We always wanted to start with pressure on the recruitment pipeline. And Gunber Niklas and I then spent easily the first year just reviewing the KPIs easily every week to see how our recruitment worked and always injected ourselves if it needed to be readjusted because the recruitment pipeline was so important. Building then the internal recruitment team was really important. And then building processes for how you manage performance was important as well. And the most important thing is a quarterly performance calibration review. And what we do there is we don't actually review the performance of all the individuals.

56:07We listen to the managers explain why they give their reports a certain rating. And then the manager is held accountable to that rating. So we ask them, you know, why did you give that person that kind of rating? And then we might say, well, that doesn't sound like a three. That sounds like a two. or does it sound like a three it sounds like a four and that allows us to make sure that the calibration that people have of what is good performance what does good look like is the same across the company and it also means that it's hard to hide if someone is an underperformer and you you give them a low rating the expectation is that you do something about it you either make sure that they become better and that's your task as a manager or if that's not possible then you find ways to part ways and this kind of accountability i think is really useful for a company to do that because it allows you to eventually scale up and have a general view of you know what is the benchmark that we're looking for and it also gives us a feeling for which managers try to protect the teams and which don't i got to pull something up do you remember um we were together we were racing cars in uh in sweden and luca ferrari was there yeah did you spend any time with him i don't i didn't know you need to or i'm not telling you what to do you You should.

57:20How about this? So we had this crazy lunch and Luca is a very, I like him a lot. And he's, but he's a very strange cat in the sense that like, I consider his, the way he runs company was like Galapagos Island of entrepreneurship because he didn't like look to other entrepreneurs. He doesn't really know much about entrepreneur history. When I talked to him, he doesn't really pay attention to anything. He's just like essentially like try to figure out how to run a company based on what he wanted to do. And so he's got a lot of very unique ideas, but I remember we had these notes and we were just going back and forth on WhatsApp.

57:48I was like, dude, I'm just going to type all the notes of the crazy shit that you said during this lunch, because you have some very interesting ideas on talent and specifically HR. And so he had this idea. These are some notes from this. You should spend some time with him. He goes, he talks about hiring. He says, we make it a science. He's talking about what he's doing at Bending Spoons. He has a team of 50 in HR, but they're all engineers. I've never heard of this before. And so what they do is they'll compare one, two, and three-year performance to signals from their CV. So we're, he's saying, Hey, you know, we think quality X is really important, but we're just guessing.

58:23So what we're going to do is say, we hired this person because of quality X. Well, what's their performance based on all the people we hire from quality X year 12 months out, 24 months out, 36 months out. And he says, they actually have developed like this algorithm of a hundred different signals of what they figure, like it's important for talent. And he's like, we have completely, we treat it as an engineering process. And then he says, we sent, remember he has all these different companies and he's like we centralize hiring and firing and he says talent managers are in charge of both uh entries so people coming into your company which you just described and access which you also just described and he's like people his whole thing was like you should have brilliant people in hr that most companies treat hr as it's like 100 like b c d players he's like no you should have the best people in hr because it's so important totally agree and i think this kind of investment taking it so seriously it's just it compounds over time because you just get the best people in.

59:15It carries a different culture and it becomes something that it will be, it's central to being successful eventually because especially if you can keep that muscle over time when you grow as a company, it's easy to lose it over time. And we always say kind of a company like Helsing has to shed its skin almost like every nine months and you have to rethink how you do your processes. Again, you have to rethink about how you grow, what kind of leadership you need. But if you can keep that kind of investment in making sure you have a great intake of people up It's super valuable. Are one of the co-founders having to approve every hire?

59:47How do you guys, how do you do this? We don't have to approve every hire. I think that's too difficult now. I think we do get involved in hiring. How, I'm going to argue with you since you like to argue. Yeah. You have how many employees? 1 ,300. Okay, it's not too difficult. Elon approved the first, personally approved the first 3 ,000 hires of SpaceX. Yeah. That's in one of the books, the biographies of SpaceX. Apparently, yeah. That's great. We don't do it that way. We have very good leadership that is able to make those decisions. It is true that sometimes we get pulled in for a second opinion.

1:00:15And it's also true that we get pulled in to interview people and sometimes to convince them to come into the company. And then for certain roles, we do a lot of the hiring ourselves. We spend a lot of time, the founders and executive team, on hiring. I want to hear more about this. Key positions, we will sometimes do end-to-end, end-to-end the hiring as founders. We'll do the search. We'll work together with search agencies. We work together with our network because they're so important that we want to get it right. And we know that if we get the right person, it'll be transformational for the company.

1:00:47So Daniel also gets involved in our hiring. He just, you know, really played a very big role in hiring one of our most senior executives recently, which worked out really well. So we all chip in. It's so important to get the right people in. It is, again, it's the most important. But if somebody's in front of you, how do you actually know if they're good or not? So everyone, I think, has different methods. For me, I try to talk to them and I try to get a feeling for the person without a standard set of questions. I just try to find out whether a person is effortless. That's the probably most important characteristic I look for.

1:01:20Wait, what does effortless mean? It's like one of those things you can tell. If they don't try to impress, if you get a feeling they have deep knowledge of what they're talking about, and at the same time, they're still curious and have high agency. That's kind of the combination I look for. And that combined to me is effortlessness. And it doesn't, I don't think it takes that long to find it out. It takes in a conversation, maybe 10 minutes or so to get a good feeling for whether a person has this kind of effortlessness or not. That's what I look for. But I don't interview software engineers, for example.

1:01:55That wouldn't apply there. I mean, you're essentially, I would imagine, involved at the most key positions that you're trying to improve for. what can you what do you think is happening in these 10 minutes honestly i haven't thought about it um i don't know i just i just try to get a feeling for the person i don't reflect on these things that much to be honest i i just i i know it works for me and the only thing that matters for me is whether it whether the outcome is right so i i do look obviously at the statistics because if i kind of came in and i just kind of vibed the whole thing and everyone and kind of ended up being crap after six months obviously that wouldn't work but that's not the case and we you know, like all the senior positions are obviously interviewed by all the founders.

1:02:35And so we always have a kind of second and third opinion on it. But we tend to agree on people. I think we look for similar things. Sometimes you have to go into longer interviews and people do longer interviews with us as well. For me, it works better if I do short interviews and I just get a feeling for the person. Have there been examples where your initial intuition about a person has been proved wrong in Helsing in particular? Not at Helsing. but three times that natural motion, and I still know the names. And it still really annoys me why I didn't read it early enough. In all three cases, they were so good at faking the effortlessness and so good at coming up with fake facts that I didn't read through it.

1:03:19I heard you say something on Harry's podcast. Did you actually think there's a lot more exceptional people out there than other people believe, especially if you have a couple thousand employees? people's character and and and and also performance is not set in stone so quite often it's also a matter of in larger companies sometimes it might actually even be harder for people who have a 10x potential to to become a 10x person so it's a combination of things it's probably harder to keep just hiring 10 out of 10 people but also harder to develop them but it's still worth it i mean the the the power law in talent is is extreme and they're very few 10 out of 10 people but they make, I mean, it's a cliche, but we see this every day, they make a disproportionate difference to the company.

1:04:03So it is worth trying to find these people. And it is worth finding a way to give them a home in a company where they can really thrive. We try to do this very, very systematically at Helsing. And we make for, I think, hopefully for everyone, we create a great environment where they're surrounded by amazing people. But, you know, for the 10 out of tens, we go the extra mile. How do you do it systematically? Don't want to go into too much detail how we do it, but we create an environment where they can do their best work. And we make exceptions that we wouldn't always make for everyone because they are such big contributors to the company.

1:04:42And many of them now have contributed so much already. It's also a feeling of gratefulness, to be honest, to have a bunch of those key employees that have made a big difference. And you can point at the successes of the company and you always know that. I mean, obviously, it's all about talent because people make all of this stuff. Maybe in the future, it's more AI, but at the moment, it's still mainly people. And you can point at those people that made a difference to the company. And so I think we all feel a lot of gratefulness as well to those top individuals, to everyone in the company, obviously, but in particular to the ones that have turned a project from really difficult to, from red to green.

1:05:21that happens very often and it's quite often very small teams of specific individuals that make a big difference based on the conversations we had the way i would summarize your perspective on this because you talk about this a lot it's like talent density above everything else yeah i think it's the number one thing it's it's i i feel that culture comes from talent density it's we had a situation i don't know maybe it was 18 or 24 months ago so where we had a set of values um at helsing that we came up with at some point, I think in a workshop or so, and they were on our website and they were fine, I think.

1:05:53And then we had one of our get togethers where the whole company got together and a bunch of people came and said, we want to rewrite our values. We want to throw the old ones away. We know now what Helsing is about and we want to do it completely differently. And then, so at this get together, there was this workshop and I have to say I was dreading it because I didn't want to do another value session because I never liked them. and it was effortless. Like the team came up with their own values based on their experiences. And it wasn't one of those exercises where you kind of all contributed ideas.

1:06:28It was just kind of a mind melt and it was clear this is what it was going to be. And the top value was whatever it takes. And then everyone gave examples for why that was. Some had just come back, you know, from the frontline in Ukraine. Some had not slept for 48 hours. and done a whole bunch of things that are just amazing and impressive. And so that was one that came out of it. Another one that came out of it was the truth is in the field. Like it doesn't matter how much you claim that your system works, you know, in tests and government tests, et cetera. We found out it has to work in reality and in combat.

1:07:07And so the truth is in the field came out of that. And I was so impressed by the team. And I was kind of thinking, like, how do you, how did that part of the culture come about? And as far as I can tell, it came about because a bunch of really good people got together, really cared about this stuff, had initiative and thought about it. And then they came up with it. It was just that. I think just getting really good people together that have good chemistry. And when they sometimes maybe have the sparks flying, they can find a way to work together again. That's what creates culture. So you have this idea to start this European defense company.

1:07:41You have ideas for the products you want to build. You raise money. So then you go from the idea to now your products are actually being used in Ukraine for the first time. Do you remember the first time that you found out that your product was being used there? Where were you and then what that felt like? We knew from our team in the field. And I do, and everyone thinks differently about these things. I think, and I respect, I think, most attitudes towards it. I personally found it very difficult. I think it became a more serious company. And some of the kind of lightheartedness was gone a little bit.

1:08:18Because if you build a video games company or a SaaS company, you can be quite lighthearted about things and unserious. Yes, it's a commercial business, but you can be. It fits culturally. If you are deployed in what fundamentally is a sad thing, this kind of conflict and you contribute to it because you have to because you can think it through from first principles but in my opinion it's still sad that it happens. That makes it a serious, you know, changes the culture and we are, I think, very aware of it and that doesn't mean that we don't want to create the best systems. Of course we do and it doesn't mean that we're not super ambitious.

1:08:58We are but it is serious. It's very serious. We don't take it lightly. All right, so you've used the word deterrent multiple times throughout this conversation. So that means the best possible outcome for housing is nothing happens. Yeah, you don't want a conflict. And, you know, in general, obviously, the reason why you build capabilities is in order to avoid conflict, not to use them in a fight. Which this goes back to this dinner we had like two years ago, this argument we were having about this, the fact that war has been, you know, constant throughout human history. So like what actually has to take place in your mind for that outcome to actually happen where it's like, no, there is no more human conflict?

1:09:41I mean, that's a big question. I do think it's in human nature to have at least parts of the population that want to have conflict, that enjoy conflict, that want to, you know, increase their sphere of influence. Sometimes, you know, that is political. Sometimes it's geographical. Sometimes you just literally want to have more land around you. I think that is partly cultural, but it's also partly hardwired into a part, at least, of the population and will probably be genetic in a part of the population. In order for that not to dominate everything else, you need to make sure that the rest of the population is sufficiently protected so that it's too expensive to try and use force to take what you want.

1:10:25That's basically what it boils down to. And if you could eliminate, you know, the outliers, let's say, who really are that aggressive and want to use force, then, you know, I think forever you'd have peace. It's unlikely you can eliminate it. I think it's more likely that you have to contain them. And I think that's okay as long as you see it early enough that you have to contain them and you are able to look very prickly to them so that they don't attack. You mentioned your previous company a few times, and you said something when you guys were developing the autonomous fighter jet, that you used a very similar technique that Demis used to do AlphaBow.

1:11:03I just finished reading this biography of Demis. It's interesting to me that he got started. His first introduction to AI was through video games. Yours was too. Some of the best entrepreneurs come from gaming. What do you think it is about that? Yeah, and I think arguably Palmer Luckey did too. I'm certainly very close to the gaming industry. The gaming companies are complex to build because you marry art with technology and in many cases, especially console games, back in the day today, it's a bit different with some of the most, I would say sophisticated IT projects that you could think of.

1:11:38And at the same time, they had to have artistic value as well. and you had to accommodate people from all walks of life, like very focused software engineers with artists who just try to create something beautiful. And that is not dissimilar to what happens in the defense industry. Maybe a little bit less artistry, although that exists as well. But we have very different people that work on very complex systems that have very different cultural backgrounds and still need to work together to produce something amazing in the end. And I think that's one part. And maybe it's also exposure to defense through games.

1:12:15I don't know, a lot of games have a military theme. Maybe that's part of it as well. Do you explain the founding of your first company? Like what was happening in your life right before you started that one? I was studying in the UK and I was working on, in biology, I was working on systems, on simulations that simulated neural networks. In what year? The year was 1999. So you were working on simulating neural networks in 99? Yeah, using genetic algorithms. I was looking to optimize them to do something useful. Why were you interested in that to begin with? I liked complex systems. So I had just started a PhD in complex systems in biology, and neural networks are a complex system.

1:12:58And specifically the ones I looked at were fully recurrent neural networks. So ones that, you know, with the right weights could start to create spontaneous cyclic activity. Is that not what you just described on the fighter jet? Well, it has some similarity because the genetic algorithms have fallen out of favor as a search algorithm. And now it's almost entirely reinforcement learning. But you could theoretically also use genetic algorithms. So there's definitely some similarity. The network architectures are different. Back then, I based my network architectures on biological, what's called central pattern generators.

1:13:34So CPGs, they are the neural structures that create rhythmic movement for walking, for your heartbeat, and a bunch of other things. And so I tried to recreate one of these for walking using genetic algorithms and a neural network, a quite simple neural network, to optimize the weights. And in order to see whether it worked, I hooked it up to physically simulated creatures, very simple four-legged and then two-legged creatures. physics engines had just started back then with you know math engine and havoc and other companies and to my surprise it ended up working quite well so overnight i remember it's quite rare that you have these eureka moments but i had this thing set up overnight and those computers were very slow back then and then the next morning when i looked at the experiment i literally had this two-legged creature walk over the screen fully physically simulated you know did a bit more research in that area and then realized this was going to work very well and thought it's been out a company to use these things as virtual stuntmen in movie scenes.

1:14:37So if I go back to you at 99, did you have any inclination that one day you'd be a founder, an entrepreneur? No, not that much. What did that person in 99 think that they were going to do? I thought I was going to be a scientist. I wanted to stay in science and be a biologist and specifically do software and simulation work in biology. That's what I wanted to do. Okay. But then you have this eureka moment and your first thought is I'm going to start a company? It was my first thought. It took a little bit of time, but this was a time of the dot-com boom. 99 was an important point. Yeah. It was still, you know, it looked like you could do that kind of thing.

1:15:17And it was inspiring to see lots of other people start companies. And so I started Natural Motion and we first used it. uh you know we produced a software called endorphin that was used in in big hollywood movies like lord of the rings troy um spider-man harry potter and that was fun and great but um it didn't make much money uh because we only i think we charged 50 000 per license and they ended up kind of doing all of the scenes with them um and it was clear that the real value was going to be in using that technology for for games in in real time and uh rockstar games were one of our customers for the old tool, Endorphin, and they asked us, do you have a version that runs in real time on the upcoming consoles?

1:15:59And we said, kind of. And so then we started a long collaboration with Rockstar Games, who ended up using our technology in GTA 4, GTA 5, Redemption, and a whole range of other games. And then that company grew, and it grew faster than before, but it still didn't have the kind of takeoff, kind of lift off characteristics that I kind of was hoping for as a founder. You always kind of obviously hope for more of a hockey stick thing. And it felt like the kind of chess pieces were kind of drawing in and it was going to be hard to move. So we ended up saying like, we need to make games ourselves. And what you would now call vertically integrated, we didn't think about it that way.

1:16:41We felt like we were so inspired and learned so much from Rockstar Games that we thought, how hard can it be? It turns out to be quite hard, but it ended up working quite well and we acquired a games team did the first games the iphone came out and then we had a string of hit games on iphone and then a big breakthrough um which which was in a completely different area all of our previous games have been in characters because that was our technology and then there was one game that i really wanted to make because i was really into cars which was a drag racing game um so a car racing game without any steering and and And that became by far our biggest hit.

1:17:16It's called CSR Racing and became the biggest game of all time on iPhone at the time. And that gave us the hockey stick. Then it was liftoff for the company. And then it was off and it became a completely different experience. I feel there's like a theme connecting here. And I still don't have an understanding of this. So you'll see this in all these biographies that I read, right? So I'm reading one right now. This guy named Raymond Plank writes it when he's 90 years old. And he starts this company called Apache Corporation with$250 ,000 in 1954. by the time the book is published, you know, 50 years later, it's like a$30 billion company.

1:17:48And his insight was he was a tax planner and accountant. And some of the businesses that he was working for were these new American oil companies. And he realized there's these huge tax incentives that were taking place in America post-World War II. At the same time, you had tax benefits if you would invest in oil discoveries because the United States was trying to incentivize domestic oil production. and at the same time, because there's so much debt after World War II, they increased the top marginal tax rate to like 90%. And so the very wealthy people were trying to find ways to offset. And that was the original idea.

1:18:22Like he discovered Apache Corporation, which winds up being this massive oil and gas company because of the work that he was doing in tax planning and accounting for relatively small businesses. I feel there is some kind of connection between your first company and your second that I'm trying to get to. Am I just wrong on this? So I don't think it was that direct necessarily. One theme that I've always felt with everything I ended up doing, I think, is that I ended up doing something slightly different to maybe what the mainstream was. And part of the reason is I've never felt kind of part of the group, of the peer group.

1:18:54Like I never as a biologist, and I did a lot of biology and I loved it, but I never really felt like I was like part of the biology group. And that made it a little bit easier to do different things. That's why I ended up just doing software and simulation rather than go out into the field and watch animals and dissect animals. I never liked that stuff. I wanted to do something slightly different stuff. With gaming, I also never felt part of the gaming group and culture the same way. And as a result, I think we ended up doing quite different games. I remember the pricing for our games was very different to anyone else's.

1:19:26The pricing? Yeah, the first games that we made, we priced as low as we possibly could because we felt that we just maximized revenues that way. And everyone else in the games industry said, no, your game needs to have a value. Like your mobile game needs to be at least$5 so that people feel it has a value. And it never made sense to me because all I wanted to do was maximize revenues. And I felt like there was so much price elasticity that we could just go all the way down and people would spend overall, it would make much more money because we'd have much more people. So we sold our game for 99 cents, the cheapest that was possible.

1:19:59and then when free-to-play came, we were the first big free-to-play 3D game and we made it free and then charged money elsewhere. And that would have been much harder had we been part of the group. And I think a similar thing is also true for defense. It would be much harder for us to build Helsing if the founder backgrounds had already been in defense companies. Just much harder. It's easier to be an outsider. That maybe is a parallel. But then the other thing is like, I always try to do things that are different and sometimes cool. like I wanted to, like I really wanted to do the number one top grossing game in the world.

1:20:32I remember sitting, like standing in the shower at one point in the UK and thinking, I would like to do the number one top grossing game. It was just a goal. And with Helsing, I think we all want to build a company that has impact. So I think that's similar to it. You just kind of want to have those goals. You want to have a bit of a North Star and then go for it. Okay. I love that you use the word North Star. One other, I think probably the last thing I want to talk to you about today is I've heard you say this, essentially this criticism of like this LinkedIn or X commentary culture, that commentary is actually relatively worthless or completely worthless.

1:21:11What's your opinion on this and like, can you just expound on that? Yeah, I think commentary is entirely worthless and it has almost, it has no positive contribution. The only thing that it does is it, I think it drags some people down. so it has a net negative benefit and it obviously is encouraged through the way the social platforms are incentivizing contributors. So you're incentivized if you comment and particularly if you comment negatively but you're not incentivized to be a creator. And I don't complain about this because it is what it is and they should do what they want but I do think that creators are still somewhat undervalued and commentators are still overvalued because they get so much air time.

1:21:56And there are many of them now, I think even more than before. And it contributed to some of the European, I think, perceived malaise. You know, people talking themselves and each other down. I just said this the other day, and I was just in a car with someone who was actually, is a great entrepreneur, but he himself just kept on commenting on how bad certain things are. But there's no point in commenting about it. It creates zero value. You either do something about it or you don't talk about it. But if you don't do either, then I don't think it's a good contribution. Just commenting on negative stuff is not useful.

1:22:33What would your advice be to do then? Just to focus on building your company. I always think that you have a real privilege as a founder that you can make a difference. Depending on which sector you're in, you can make big differences in the way a society works. Arguably, all the social networks have made a massive difference, what better or what worse. All the AI companies are making a massive difference. Many health companies, I think defense companies are making a big difference too. And if you are a founder that is very ambitious and you're in one of those fields, you can change society and not many categories of people can do that.

1:23:06Politicians can as well. Certain types of other people can as well, sometimes even investors. But founders, I think, have the biggest lever. And that's also why you have so few founders, I think, on Twitter and other social platforms, because it's already very satisfying to do the stuff that you do. You don't then need to comment on how bad everything is. You just do your stuff and it has an impact. That's the perfect place, Dan. Thanks for making the time. Cool. Thank you. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders.

1:23:38For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. Thank you.