This Is A MASSIVE Investment Opportunity For The Next Decade

0:00Anthony Pompliano:Hello, everyone. Today, we've got a very special treat. We've got Eric Brock, who's the CEO of Ondes. Now, Ondes is a very interesting company in the drone and autonomy space. They basically are trying to figure out how do we use new technology, both on the battlefield and at home to mitigate risks. Now, the reason why I wanted to talk to Eric is because I recently bought stock in his company after doing a bunch of research, because I believe that drone technology and autonomy on the battlefield are two trends that are going to have a decade plus long run here. And so bringing Eric on to explain what the business is, what the risks are, how exactly he's building this thing.

0:30Anthony Pompliano:I'm very excited for all of you to hear his understanding of what the opportunity here is. So here's my conversation with Eric Brock. We're live today from the desk of Anthony Pompliano.

0:50Anthony Pompliano:Before we get into today's episode, I need your help. This conversation with Eric is going to be exquisite, A +, but I need you to hit the subscribe button so more people can watch it. Hit the subscribe button and let's get into this conversation with Eric. Eric, thanks for taking the time to do this. I thought a great place to start is let's talk about the drone market in general. Obviously, there has been a rapid rise in both the use of drones, the need to prevent the threat of drones and a rise of autonomy when it comes to the battlefield. And we're seeing this play out right now in the Iran conflict, most notably.

1:18Anthony Pompliano:How do you think about it as somebody who's been building in this space and thinking about this space for a long time? Is this a validation point for all this technology or do you have some concerns maybe as to how this is all developing?

1:29Eric Brock:Great place to start. And why don't I just say, firstly, thank you for having me on the program. So yeah, so let's talk about the drone market. The drone market is massive. It's in the tens, if not hundreds of billions of dollars. And when I talk about drones, I'm talking about aerial platforms. I'm talking about ground robots. I'm talking about things that float in the water, USVs. I'm talking about all the critical components that need to come together to make these systems scalable in the field so our customers can deploy them for great effect. And the fact of the matter is these markets have been huge forever.

2:05Eric Brock:But at the same time, we haven't penetrated those markets because this technology is complex. It's deep technology. It's the integration of software and hardware. Getting a drone to fly, getting it to do it safely, reliably, and then getting it to do something useful takes a lot of time, energy, talent, capital. And that's what you've seen in the industry up in, I'd say, for the last 10 plus years. And of course, Andes has been part of that. So now as the technology has been maturing, and we're seeing that all day long, the military is really accelerating that because of the critical capabilities and the value it brings.

2:40Eric Brock:You know, we're starting to see investors say, oh, wow, there's an adoption curve. But you have to remember, we've just scratched the surface and we're just coming out now proving that these technologies are useful and reliable. So what does that mean? It means the market is in the first inning of a multi-year, probably a decade-long adoption curve. And this is a market that's going to be very similar to a lot of the markets that your investors over time have been involved in, going back to the personal computer, say the cloud, social media, and so forth. And that informs our strategy, right? What we're trying to do is kind of take that leadership.

3:16Eric Brock:What we're doing actually, I'll emphasize this, this is important context. We're moving from developing the technology platforms, which has largely been venture funded, to an adoption cycle, which is growth capital. And that's where Otis is trying to play and create competitive advantage.

3:31Anthony Pompliano:Now, I am a new shareholder of the company. And as I was doing research, I was very, I think, impressed by and thought it was very smart, the strategy in which you guys are employing here. And maybe I can tell you what my take was and then you kind of correct me as I describe it. But essentially, I look at your business and it seems like you've got a lot of cash, somewhere around a billion and a half dollars or so of cash. And rather than go and build a team that is full of engineers and, you know, aeronautical experts and kind of, you know, the people who would go build drones or autonomous systems, it seems much more like you are coming at this from having built an M &A team and a business development team.

4:07Anthony Pompliano:And then you are just rolling up the industry, getting all of these technologies on your platform. And then you are going and using that business development team to go sell into whether it's corporate or military and government contracts. Is that like a fair way to think about your business?

4:20Eric Brock:Yeah, you're right. But I'll put some finer points on that because we're not I don't like to use the term roll up. And I don't even like to use the term consolidation, although that's certainly the vision we see. What we're building is a scalable operating platform. And I think that's a critical need for this market. So getting back to my last comment, we have spent 10 plus years doing foundational work to develop these complex technologies. Along the way, we've created many hundreds of drone companies, again, air, ground, all the stuff that has to come together for the drone economy to scale.

4:53Eric Brock:But we built technology platforms. We have not built businesses. And it's very difficult to build a drone business. And for us as, you know, as deployers of growth capital, you know, the technology risk, that cycle has already happened. It's not time, in my opinion, to start a new drone company. It's now time to make these operational. So what we're doing is building out the sales and marketing. If you have more than one revenue stream, multiple revenue streams to use that operating capital efficiently, you know, it's a much different financial model. That's something investors can back and actually, you know, see upside in, right?

5:28Eric Brock:Value creation. So again, sales and marketing supply chain, there's a supply chain. Scaling that is incredibly important, as you're well aware in this environment where we've gone through 20 plus years of really de-industrializing, and that's been well documented. We now have to address that with these critical technologies. This is a matter of national security. We can't do that with a cottage industry. So companies like Ondas need to aggregate these capabilities and then present ourselves to critical component suppliers, manufacturing partners, so we can get that scale, get lower unit economics, lower unit economics, which feed that financial model.

6:02Eric Brock:I can say the same thing about field services. If you have one drone, it might be the best drone in the world, but you can't staff the team and Andas can. So that creates the competitive advantages, but it's more than that. It's an essential need. And we're going to see a handful of companies like Andas emerge and it's important. But we do think we're kind of getting out front here in the financial model we've built around this is really powerful.

6:24Anthony Pompliano:Now, you guys recently announced a partnership with Palantir. Talk a little bit about your strategy of obviously you guys are going selling direct, but also you're partnering with some other big players in the industry.

6:34Eric Brock:Yeah, this is really critical and it comes at the right point and it makes all the sense in the world. So if you see what Andis has been doing as a consolidator, we've been building an aero portfolio. So we have ISR drones, we have strike drones, we have one-way effectors that are longer endurance, meaning they can go further distances. We have ground robots. We have a man-packable ground robot that was designed to go in tunnels. And of course, that's a new thing you have to defend against. If you're a military or even homeland security on borders, we've got wheeled robots, some small, some are large.

7:09Eric Brock:Some carry or multifunction, including having remote weapons stations. So you can put those out in the field and you can put the robots, the bots before the boots. Right. So so the soldiers are protected, you know, commanding this autonomous or unmanned equipment from the distance that they're safe. But as we're doing that counter drone platforms, we begin to integrate them into systems of systems. So the air and ground come together. And when you're doing that, you're really solving an important pain point for the customer. If we're just throwing, here's your dozens of drones, here's your ground robots, and we tell them to put it together, that's a big challenge.

7:45Eric Brock:It slows the market adoption curve. But to do that in a systems-to-systems way, bringing Palantir with their incredible capabilities on the Maven systems they have, which is the AI backbone for the US military, bringing the command and control capabilities so you can manage these nodes in the air and ground are all incredibly valuable. And we can do that at scale because Palantir has already been creating these markets and they really accelerate the technology solutions, but also the go-to-market, right? They're accelerating our program capture. So it's a fantastic partnership. We've been working really hard and we're meeting a need for the market in Palantir specifically.

8:25Anthony Pompliano:Now, when I think about who you're selling to, obviously you're selling to governments and you're selling to corporate clients. What I find fascinating is the government clients tend to be large contracts. They tend to be multi-year. They tend to be very good credit rating and they're going to pay you if you deliver what you're supposed to deliver. What about on the corporate side? What do those look like? I think people understand military contracts, but what about on the corporate?

8:47Eric Brock:The corporate side can be the same or can be different. So, and let me just emphasize, you're right, Anthony, we are a dual purpose company. Now, not every platform we have is going to be utilized by the military and homeland security and public safety and critical infrastructure. So, for example, we have a strike drone, the public, New York Police Department or LAPD, they're not using the strike drone anytime soon. But at the same time, we have counter drone technology. So you can protect military bases and borders. You can use the counter drone technologies on the battlefield in the front lines.

9:22Eric Brock:You also need to use these, you can deploy these at critical infrastructure locations and civilian infrastructure. So that's airports, that's maritime ports, that's data centers, it's oil refineries, and there's this countless number of critical locations. Population centers, stadiums, amusement parks, these all need to be protected. So the models change very often when you're selling to the Department of War and the armed services branches, they like to own and operate, right? So they're going to be buying, because this is a matter of national security, they're integrating sensitive technology.

9:57Eric Brock:So they want to own and operate. We do have recurring revenue around systems maintenance and there's certain services we can provide, certainly sustainment. But when you go to, say, the private sector, commercial sector, Very often you're going to deploy that as a service. So those models do sort of blend at times and be specific. We have a lot of flexibility to go to the market in both ways. I will say this, Anthony, even on the system sales that we're targeting, again, it's a mixture of as a service in the system sale. That has very strong elements of recurring revenue and in high margins. And so if you think about the counter drone technologies, I'll drill down into that.

10:39Eric Brock:We have so many locations to protect. We can't look at this and say, OK, all of a sudden, now we know that there's threats from the air. We have to protect all these locations. We've matured the technology. Now we're going to deploy it. And over the next 12 or 18 months, all these locations are going to be protected. It's not there's just it's just too much to do. So we're going to be on a really a 10 year infrastructure build out. So for us, when we get captured business, whether it's going to be with the Department of War in the armed services branches or homeless security, public safety or commercial markets, civilian infrastructure, we're going to we capture the program, then we expand.

11:19Eric Brock:Right. So every year they're building out the infrastructure and obviously today prioritizing the most sensitive locations. But this is a this is a decade long investment cycle. And then as we deploy infrastructure, you have to maintain it, you have to service it, you have to upgrade it. And that's going to present all sorts of business opportunities for us to really serve the customers with their security needs.

11:42Anthony Pompliano:Talk a little bit about the defense capabilities. You've told me prior that there's this idea of like a net that can be used or you can actually take over a drone potentially and help land it or do like a soft kill. Explain some of these counter drone technologies.

11:57Eric Brock:Yeah, yeah, that's great. So we have defensive systems, we have security protecting critical locations and populations. We also have the offensive. But speaking specifically about the defensive capabilities, we have a platform of counter drone technologies that ranges from what I call soft, soft kill and soft, hard kill. essentially what we're doing is we're detecting the threat. So we have sensors that we've integrated into our solutions where we can find the threat in space because you can't defend what you can't find. And then, of course, on the mitigation with our Centrix platform, that's called Cyber over RF.

12:42Eric Brock:What we're able to do is identify the hostile drone or the rogue drone. And if it's crossing into some geofenced restricted area, we can actually override the encryption and capture that drone with an autopilot and take control of the autopilot. And then we're not actually dropping the drone from the sky, which we could just drop and you don't know where. We're actually taking it and then take control of it. We land it in a pre-designated spot. And then, of course, we have it for forensics. But that's the soft, soft kill. There's a massive market for that, particularly on U.S. soil. You don't want to drop things from the sky.

13:17Eric Brock:You don't want to blow up, you know, say at an NFL stadium if you don't have to. But the other system we have, because you need the counter drone technologies are all layered. I talked about sensors and detection. Also, the mitigation is layered. So there's going to be certain threats that the cyber over RF, which I just explained, are critical. Other systems will require a more kinetic system. And that is the iron drone platform we have. And that is an autonomous platform where we're going through our decision tree, right? is all AI enabled. It says, okay, this threat needs to be captured. And what we're doing is sending that drone out at a super fast speed.

13:54Eric Brock:It goes out and hunts the drone. And when it locates it, it sizes it up and then it captures it with a net. The net can have a parachute. And then the drone comes back. You can use it again. That meaning our interceptor drone. So that's a softer kill as opposed to going out. What you're seeing today, if you're turning on the news or getting on Twitter, as I know we all do, when you see what's going on in Iran, that is a different, that's a battlefield, right? That's where you get the full kinetic, you're getting Patriot missiles, you're getting these high speed interceptor drones that have warheads on them.

14:28Eric Brock:We do that as well. But this is not something that you're going to see widely deployed on US soil, you're going to be see the softer mitigation, the cyber over F net based systems. And that's where we're very well positioned.

14:39Anthony Pompliano:Talk a little bit about, obviously, the idea of mines in the ocean or in the Strait of Hermosa is very topical right now. But you guys have some technology, I think, that can go in the sea. You've got some technology that are like dogs that can go into a building, maybe before a SWAT team or a military unit. How do you think about those fitting in with what people think of as traditional drones that fly in the sky?

15:00Eric Brock:Yeah, sure. So this is certainly an area of interest for us. We haven't architected the mitigation yet in the water. And, you know, we do have relationships with folks who have. So we do see that as an area of investment for us. And let's see where we go. But when we're talking more broadly about, you know, the philosophy here and what we can bring to the marketplace in terms of capabilities around robotics, it is about, you know, taking the soldier off the front line. Let's look at Ukraine. And this has been well documented. That zero line in Ukraine is desolate now, right? We used to fight battles with tanks and guns.

15:40Eric Brock:And now the drone has had such a dramatic impact over the last two or three years. That zero line, there's 10 to 20 kilometers on either side of it. And the adversaries are pushed back to basically the distance of the drone. So however that quadcopter, that strike round, however long we can make that fly with either a wireless link or now fiber optics in battery life, that's how far everybody has to get apart. So what we're doing here is trying to protect the soldiers. But at some point, there's places where you actually have to go in. So take the war in Gaza, for example. That was a ground war, and that was done in urban combat.

16:25Eric Brock:And we're able to go into the tunnels of Gaza, the dangerous buildings, and put the robotic dog, we're putting wheeled robots into these environments. And we can do that and keep the soldiers back. So that's the boss before boots we talked about. All these trends are really just barely in the first inning. We're just starting to mature these technologies. What often happens in combat environments where you have the pressure war. This is a matter of securing our families, our loved ones. So that accelerates some of the work and some of the maturation, the hardening and the reliability of these sorts of systems.

17:01Eric Brock:And we've had the good fortune of being in those, I say good fortune, you know, from a business and capability, because what we do is critical. You know, we want to advance these technologies. We want to harden them. Of course, it's difficult for our families and we prefer peace, but our mission, our job is to mature these technologies and that's what we've done. So we look at our portfolio, Anthony, that's where we sit. We have operational technologies to fit all sorts of these use cases. And as you think about the water where we started, that's obviously an area of interest for us.

17:34Anthony Pompliano:Now, if I look at the actual financials of the business, you guys have put out some guidance of 2026 revenue is somewhere$170,$180 million in revenue. If I take the million and a half or so of cash that you have. It seems like the business is trading somewhere, depending on the stock price, 17 or 18 times, 2026 revenue. How do you think about where the sector goes and multiples and kind of the potential future growth of the business as you guys continue to execute your strategy and acquire more of these technologies?

18:02Eric Brock:Sure. So, yeah, terrific question. So, you know, we are investing and we've been very transparent and consistently, you know, in executing. We're doing what we said around the financial model, which is building a scale operating platform and bringing in battle-tested, mission-ready capabilities that can scale and grow faster on the on-desk platform than they would otherwise. In terms of investors, and what does that mean for math around our P &L and financial outlook and our value creation, how are we going to build more market cap? This is very important. So when the companies come in, we underwrite them at a certain level.

18:38Eric Brock:And again, they're going to be growing faster with Andos resources and also have a faster path to profitability. So our operating model, our financial model improves from an operating margin perspective. It's not just high growth rates. When you're thinking about Andos and our guidance, it's going to be very hard to use your traditional arithmetic. What was the last four quarters and how does that compare to the market capitalization? Same thing with, okay, what is the next 12 quarters or four quarters? How does that relate to the valuation? Because we have a lot of resources to deploy. We have$1.5 billion that's going to create a much bigger enterprise.

19:20Eric Brock:And we've already been doing that. So we've announced several acquisitions, just two this last week, and that is going to add significant revenue to that outlook we gave just in January. And so what you're going to see as you're moving through the year and into 2027 is the numbers we, and this is a very deliberate strategy, we de-risk this for investors. We de-risk this for ourselves. We have core growth. So everything that comes into the platform, into Andos, has these tailwinds around unmanned and autonomous systems adoption curves. So we're going to be growing that core at very healthy rates.

19:52Eric Brock:That's worth a high multiple. I think the market's going to give us a high multiple for that. I've seen this in other technology adoption cycles before. But it gets better because we have the wherewithal in this fragmented industry to acquire companies that are mature, have customers, and have revenue. And what that means is every time we're giving you an update every quarter, we should be doing better than we thought on the core, right? Because we can be conservative on our guidance, and then we'll add more. And these transactions are very accretive from a valuation standpoint. In the private markets, the multiples are not what you're going to see for a consolidator like Ondas.