Quantum Systems CEO Florian Seibel: ‘Having a dictator has advantages’

0:02Hello and welcome to the Sifted podcast, the show where we help you get to know the brightest and boldest people and companies in Europe's startup ecosystem. I'm Amy, Sifted's editor and your host. And today I'm joined by Florian Siebel, co-founder and co-CEO of one of Europe's most talked about defense tech companies, German autonomous drone startup Quantum Systems. Florian spent 16 years in the German armed forces as a helicopter pilot before founding Quantum Systems a decade ago. The company began making drones for agriculture before moving into dual use military drones and began to really catch investors' attention after Russia's full-scale invasion of Ukraine.

0:39In May this year, it raised an€160 million Series C funding round led by London-based investor Balderton Capital, and it hit the coveted unicorn status. Today, we'll talk about the business of drones, what the next 10 years might look like for quantum systems, and how much of a pain in the arse or not it is working with governments. Florian, welcome to the show. Hi, great. Thank you for having me. Excited. It's great to have you here. I've heard a lot about you. So, Florian, before Ukraine, I think most civilians like me, and I'm sure many listeners, thought that drones were just this kind of thing that annoying teenagers played with in beautiful, natural spots to take nice pictures.

1:22But now they're obviously an incredibly important part of most armed forces operations and plans for the future. if we wind back the clock to 2015 what gave you the feeling that things were moving in this direction you know i think quantum is not a classical startup in the sense of you know four guys sit together and discuss you know what could we do how can we fund it and then how can we make a big company and scale it as fast as possible so quantum is very tech driven the founders basically what brought us into drones was flying RC models, radio-controlled models. So basically, that's what every drone is built around.

2:05The core is a radio-controlled airplane, and then you put a lot of technology and autonomy and compute power on it. But in the end, it's a flying toy. So we met over our hobby, which is flying RC models and working in the basement of our homes on technical problems that were exciting to solve, which is the combination of a helicopter and a fixed-wing airplane, which basically got us started. And then, you know, after we solved the problem, we were like, okay, is there somebody out there who needs that? So it's the other way around. And we were really struggling in the first years to find our market because it was done bottom up and not top down coming from a problem.

2:52And obviously, there are a lot of problems that we can solve with it, but it was not clear when we started. It started out of a hobby. And most of your revenue these days comes from military drones. Who are you actually selling those to and what are their primary use cases? So that's correct. I mean, right now, I would say we're a global company with roughly 700 employees across the United States. We have an office in Los Angeles. We have one in Australia. We have the headquarter here in Germany. We have about 200 people in Kiev to support our Ukraine operations. That basically gave us access to different markets and different governments around the world.

3:35So we sell to all of these countries, but of course we also do sell to Ukraine. So, you know, becoming an international drone manufacturer, drone player, go where your customers are, was essential for our success, I would say. And the plan is to increase our presence in more countries across Europe, across the world, to become the dominant drone player. And I think that's something the Western hemisphere, the Western world, what we need. I mean, when I look to China and how they're pushing robotics, I think they just had the Olympics in robotics last weekend. And there was some media attention on this here in Europe.

4:12And basically, everybody was laughing at China on, you know, how awkward and, you know, how not like humans, these robots still behave. And, you know, how stupid China is to have this competition of having Olympics of robots that play soccer. And it looks like it looks very awkward and very technical and not like humans at all. But I think we should look at it from a side of, you know, we have laughed at China many times on their automotive industry and solar industry. And then a few years later, they come back and they have outperformed us. And so I think we really have to wake up and invest heavily in topics like robotics and automation.

4:55And so this is where quantum is playing. And that's where I see my role now, not only being a European dual use drone manufacturer that is helping Ukraine to fight off Russia by providing aerial intelligence. But I see it as a broader topic now, building a category defining European champion in robotics and automation because it's clear for me that the future is unmanned. I mean, we have all these AI agents now, and eventually they will all run on great hardware that does something. And so if we do not speed up here and back this with really big money and funding, we are probably going to miss out on the next evolution on a tech trend.

5:38And so we are super happy that Baldurton, London based, as you mentioned, sees it the same way and really joined us and is backing us on becoming that category defining champion. And for anyone, I guess, who's kind of struggling to picture this future where drones and robotics and, you know, autonomous things are such a big deal. What use cases do you think these things will expand to, both civilian and military? And how big and how significant do you believe this industry is going to become? Yeah, so I think there's basically unlimited use cases. And let me try to break it up and explain you where I think this will go.

6:20I mean, we started as a company that was doing aerial intelligence in the context of precision farming. The idea was to reduce fertilizer and pesticides and water control, irrigation control by providing detailed aerial images to farmers. Did not really work out because, you know, you can do a lot with satellite data. But also we were up against some big players like Monsanto and Bayer that have zero interest that farmers reduce their fertilizer because obviously they make money selling it to the farmers. So that was not set up for success. So we went into dual use, which brought us into defense.

7:02And now the beautiful thing about being in defense is obviously we can help Ukraine and we can learn a lot from it. And we can also make some money off of it, which basically raises interest from the investors again, which allows us to invest more into research and R &D, which allows us to prepare for the markets to come once we have solved these topics that Europe is currently facing. And, you know, once the world is set up for peace again, I think we will see use cases like drone first responder, DFR in the U.S. That's, you know, how can drones help to be the first at an accident site? And, you know, the average, I think a police car takes like 11 or 22 minutes, depends on where you are in the U.S.

7:49until you have a police officer on site. So a drone could speed there within a few minutes and get a live video stream into the police car that is going on onto the scene. There are use cases, linear infrastructure, monitoring pipelines. I think we will see a revival of agriculture use cases because those are challenging topics. And those are topics we have to face in order to solve climate change. We have a growing world population. We have limited resources. So we need to optimize that. We might see drones delivering stuff, but I'm not the biggest fan of these drone cargo delivery use cases.

8:33I think we see more drones in a context of public safety and security topics. And then again, industry production, obviously, robots that help you to get your cores and household done. And so, you know, quantum started in the domain of air. We're in the process of acquiring and going into other domains, land vehicles, maritime is our topics that we're looking at. And they're all connected very closely because what you need to solve, you know, in the air is a three-dimensional problem of going from one point to the other without hitting something and navigating there. And the same as when you go underwater, right?

9:13It's just a different element, but the same rules basically apply and the same technology in a way can be used. All these systems that we operate, they all connect into one software suite that we are launching now, which we called the name Mosaic, that connects all these unmanned assets and elements. And so I cannot like to the last degree tell you what the future will look like in 10 years, but for sure I can tell you it's unmanned and we want to play a big role and part in that. So you mentioned maritime drones being like an area of focus. And I saw a job ad on your site that says you plan to have over 100 maritime experts on the team within a year.

9:56But that's also an area a bunch of your competitors are moving into, isn't it? Why is there kind of this uptick of interest in maritime drones at the moment? I mean, North Sea, we have seen how Russia is sabotaging some of these underwater sea cables and so on. So I think having maritime assets, unmanned assets, you know, even though Europe is going to spend a lot more money on defense now, definitely going into unmanned could save a lot of money because these assets tend to be less expensive. You don't have to put a crew on them and you can send them into very hostile environments where you maybe not want to send people to.

10:38Why is maritime so interesting? I think to build that dominant player and be attractive to DODs, I think we have seen a big fragmentation of the defense market and, you know, a lot of different softwares, a lot of different hardware players. We have Army, we have Air Force, we have Navy. But in the end, you know, what we should try to have is one overarching architecture that allows us to manage all of these assets. And there's no difference if it's Air Force or Marine or Army. It's the defense forces of a country, right? And I think we are missing out on optimizing that by breaking that up into different domains, which has a historical reason.

11:24Obviously, there was the cavalry that were using horses that had nothing to do with the Navy. But now we're talking about unmanned assets that have a lot in common, like we discussed before. So why not bring all of this together and optimize it? And I mean, there is no operation that is just using Air Force or Army, or it's always a combination of these forces. Okay, so as you mentioned, you're also rolling out software now, which will enable users to control a flock of drones. And I guess, as you say, maybe work across these different areas of specialism. Were there any other reasons you decided to move from being a pure hardware player into hardware and software?

12:08I think it's a logical next step. You know, we also obviously while you evolve and while you grow, you learn and you learn that, you know, we learned that hardware is very hard and it's very rewarding. But also, you know, in the end, you do not want to be the company that didn't make it because you were missing out on maybe also working on software topics. I do believe that the category you're defining, companies in the future are companies that combine great hardware with great software. I think the time of just software disrupting the world and are over, that's a strong statement. And let me explain to you why I see it like that.

12:50Look at companies like Apple or look at companies like Tesla or SpaceX or Android. role. It's all great hardware, but obviously you need also great software that connects very tightly to the hardware to optimize and get the most out of your hardware. So looking at that and seeing how we could open up also different revenue streams, not only selling hardware once, but also have subscription models and get paid for all the upgrades you do, building great hardware that is software-defined so that the hardware you deploy, you send out to your customers, is not outdated after a few months or years.

13:28You can only do that by making them software-defined. And so the logical step was, you know, if we go in different domains, why don't we make sure that we are the commanding layer and we also open it up to others, right? We are in discussion with the German government of how can we have other companies and give them access to Mosaic, not locking them out. But I think it's essential that the government is basically responsible to define that and ask for that, because I don't think it's very helpful that we have a multitude of software solutions that the customer asks that have to work together all the time seamlessly.

14:12Because then the industry will just be spending time making sure all these different software layers work together all the time. So why not have one overarching software that makes sure this works? So I understand it's the goal that say the German government might buy Mosaic as their kind of operating system for, you know, in the idle scenario, their Navy, their armed forces, their Air Force, and they would use a bunch of quantum systems drones, but they might also use ones from your competitors and they'd all plug into the same thing. Correct. And they pay a fixed fee per year so that this is open and they own basically the core of it.

14:55But I think the government is really bad in building the software themselves. We have seen it. I think that's the part of the industry. But for sure, the government should make sure that it stays open and that we connect everybody into it. And then I think they will profit a lot from it. And in the end, you know, I think competition is good. I'm not saying we should be the only hardware provider here. I think having competition, having others that challenge you, that come up with new ideas, keep you moving. I mean, and perfect example for this is Ukraine. You know, we went there three years ago, we were quite successful in the first year and year two, nothing worked because GPS was blocked, communication was impossible.

15:37Russia brought all their jammers and an electronic warfare game was stepped up. You know, Had we decided not to compete there and really give it a try by going into Ukraine, building a team on ground, having local software development, we probably would have failed. So competing and in that situation, it was competing on the battlefield even accelerates you more. But if you compete on your home market, it's good. It's good for the customer. It's good for the product. And in the end, it's good for your own company because you will evolve. You will stay agile. You have to. In other ways, you just become big and lazy.

16:15And at one point you get disrupted. And so I enjoy having competition. I've had kind of criticisms or comments at lots of events and things where people say any drone maker who doesn't have a team in Ukraine or doesn't have a kind of like presence there, you know, is just kind of not as good. Do you think that's true? And if so, what is it particularly about having a team, having Ukrainian developers that makes such a difference? I think it's a decision that if you don't take it, if you're not in Ukraine, you do not exist as a manufacturer. And there's several reasons. I mean, maybe not the most obvious one was getting stuff into Ukraine is fairly easy.

17:04They're obviously very grateful for everything that we sent them. But, you know, getting stuff out of Ukraine is much worse for updates, for maintenance. So having a team on site helps to expedite the process of repair and maintenance. That was one reason why it was a good decision to go there. The second is the mindset, the mindset of the locals. But also, you know, in year three, they work 24-7. There's no weekend in Ukraine. Obviously, you cannot run a German company. And we also have to face it that there is peace here in Germany and you cannot run quantum Germany as you can run quantum Ukraine.

17:45But what we see is that having, you know, these local employees in Kiev, they start building relations with people inside Quantum Headquarter here in Germany. And people suddenly start realizing, oh, I don't do this. So it's in the media or Florian can talk about it. I do that for a person that sits on the other end of my email. And there's a person behind it that I help. And there's a lot of travel between the two companies. We love Ukrainians coming here, engineers. We have a lot of people from Quantum that got curious and did go to Ukraine. And suddenly it becomes very personal for them to help and gives them a meaning.

18:27And we just not built the unmanned future that Florian puts out there as a vision. There's real value behind and they are very grateful for what we do. So I think that was the biggest game changer for Quantum, that the mindset of what Ukraine is facing and how they tackle it was, I think, unlocking potential here in Germany that I would have not expected. Because I think one of the problems we have in Europe is the complacency. It's all good. We go on vacation three times a year. We have flat screen TVs. We can order stuff online. It's here the next day. I mean, we kind of like really optimized ourselves.

19:06But I think it's really rewarding to have a bigger goal that you work towards than just optimizing your time off. And so, yeah, for me, I'm very grateful for what we can do there. A quick one from me. The Sifted Summit is back. This October, join a whole load of Europe's smartest founders, investors and operators, along with its very best tech journalists, for two days of expertly moderated and thought-provoking conversations and extremely valuable networking. This year, we've got hundreds of stellar speakers, including Sequoia's Luciano Alexandru, Gusto's Timo Bolt, Seedcamp's Reshma Sohoni, Granola's Chris Pedregal, and Visionary's Club's Judith Dada, and we're expecting 3 ,000 attendees.

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20:40What is the lifespan of a drone? And can you give us a sense of how much does one cost at the moment? Yeah, that's a good question because, I mean, there's different categories of drone. You have the categories of FPV, first-person view drones, that are the ones that you control with the goggles, that carry explosives, that destroy stuff. And then what Quantum does is we have, they're called ISR drones, intelligence, surveillance, and reconnaissance. They're much bigger. They fly much, much longer, like three, four hours, long distances, 30, 40, 50 kilometers. And we provide basically target information for artillery or FPV operators.

21:22So those systems, they're more costly. We're talking hundreds thousands of euros versus a few thousands for the FPVs. But the lifespan of an FPV obviously is one mission. The lifespan of a quantum vector is several hundred, if not thousands of missions. So we have systems that have clocked more than a thousand missions in Ukraine. So it justifies the price of the system because when you break it down to the price per mission, obviously, it also comes down to more like in the area of$1 ,000 because they carry higher resolution sensors, more expensive data links. And obviously, they're much, much bigger and more complex to build and produce and operate.

22:04And do they reach the end of their use because they get like shot down or something or because the hardware starts, I don't know, breaking or the software becomes obsolete? so we as i said we try to update the software quite frequently we do not see a lot of losses that are related to hardware failure we do see an increasing number of losses from counter drone systems so our drones get attacked by russian counter drone systems so that's like really a dogfight we have incoming fpv drones that basically hunt our drones even though we fly very high Sometimes we do get detected. But this has started, again, another optimization game on how do we detect incoming counter drones and how do we evade them and have maneuvers that basically outperform them.

22:57So it's a constant evolve. And if you are not ready to face it and if you do not go all in on it, you will not exist in a few months anymore. So that's the big plus that Quantum got out of being the first Western drone company in Ukraine, where others just pitched to their investors that they're shipping stuff to Ukraine. But that's basically where it ends normally in a big warehouse and it does not get used. But I'm not going to talk bad about our competitors. We speak for us and increasing numbers that they're asking now for 2026 speak for themselves. So I think we're one of the few companies that really is reliable and is seen as an enhancement of their portfolio and not just another drone system that was sent to Ukraine.

23:47Because I think, to be fair and honest, you know, it's not the job of Ukraine to kind of like sort through the zoo of drones. They get provided and identify the systems that are working. That's not fair. That's a war and it's not a sandbox or a playground for Western drone companies to see what works and what doesn't. Maybe that was the case in the beginning, but those times are over, right? I mean, it's really about life or death for Ukraine and sending them equipment that does not work or just helps to satisfy your investors. It's on the back of Ukraine. That's disgusting. And what's, I mean, obviously, we all want the war to end.

24:28But what does that then mean for quantum systems? I mean, you've spoken quite powerfully about how actually being in that situation and having that, you know, real competitor being Russia to kind of keep matching with is like the most amazing kind of stimulus for innovation. How will you go about, I guess, replicating that or keeping that up when hopefully some of these conflicts end? Yeah, very good question. I think, you know, it's about security guarantees. It's about monitoring, again, borders. It's about making sure that this does not happen again, which requires, again, intelligence and surveillance, probably more than strike elements, because it's not an active war anymore.

25:10So it's more about intelligence. So I think there is a place for quantum. Also, you know, a lot of people with a lot of experience in drone operation will come back from the front lines that, you know, once they recover and there will be a lot of trauma. But I think those are people that, you know, are also going to need jobs in the drone industry and then they have relevant experience there. And we will welcome them with open doors to work with us and share their experience. And then again, you know, there's other topics coming up, Taiwan. So we're heavily in discussion with Taiwan. We're helping them prepare what hopefully will not happen, a full-scale invasion of China into Taiwan.

25:50It will also involve a lot of drones on both sides, I guess. So unfortunately, I think once Ukraine is solved, that does not mean peace will break out over the world. But as I said, we are working also on other topics like drone first responders, automation, drone in a box solutions, multi-domain software. I think Europe needs to rearm. Europe needs to become much more sovereign. And that will not be done once Ukraine is done. I think that's a task for the next decade to do so. and unmanned systems will play a pivotal role in it. And you, I mean, you mentioned this already, but you've won, you know, programs of records, these kind of contracts with governments, America, Colombia, Ukraine, Australia, Germany, Spain.

26:36What does it take to get one of those signed off? And what, I guess, improvement progress in that process have you seen over the past few years? So I think what really helps is being transparent and open what you can and what you cannot do and accomplish. I think if you would ask any of our customers, they would probably tell you it's very refreshing to see Quantum act as a player between the incumbents and legacy manufacturers and drone players. You know, we go there. We even opened in the case of Australia. We went all in. We opened up a facility. We signed a seven-year rental contract without having a contract in Australia.

27:22So no corporate legacy player would do that, right? Because from a risk mitigation strategy, legal would never sign that off, taking seven years of rental payment for a program you did not win. But the Australian customer was so impressed that they said, yeah, if they do that, they really believe in this and they believe in themselves. And finally, we got rewarded with a contract. And we have done the same in other countries. And we go there, we speak their language, we are in their time zone. And, you know, Israeli companies and U.S. companies normally don't do that, right? They just work with a local company to bring the technology into the country.