Defense Tech Day, Delian Asparouhov, Dhruva Rajendra, Steven Simoni, Chris Power, Aaron Slodov, AJ Piplica, Connor Love, Cameron McCord

27:35And this was bipartisan, by the way. Dick Cheney said, because we now face neither a global threat nor a hostile non-democratic power dominating a region critical to our interests, we have the opportunity to meet our requirements at lower levels and at lower costs. So everyone was on board with this. Now, the source of the problem was that this all leads up to the Last Supper turning point. The Pentagon says the U.S. doesn't need so many defense companies. There were like 50 at the time. And so Secretary of Defense Leslie Aspen. Let's be clear, those 50 also had, but they also had thousands and thousands of tiny subcontractors.

28:12Oh, yeah, tons, tons. It was a massive, massive organization. And so William Perry brings all the defense tech companies together in the fall of 1993. He encourages mergers, says you've got to cut costs. We expect defense companies to go out of business. There's dozens of mergers. Hughes Electronics and McDonnell Douglas ceased to exist. General Electric and Chrysler sold their defense subsidiaries. At one point, the industry was shedding 1 ,000 jobs a day, and it was the Francis Fukuyama idea of the end of history. There will be no more war now that we're in the era of capitalism. There used to be 50 defense primes.

28:46Now there's just five. Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman. Then, of course, there's the war on terror, a wake-up call. You get Palantir. It was really tough to get started, but In-Q-Tel steps up. The CIA funds the VC farm of the CIA funds Palantir. And they actually had to sue the government to allow them to win an army contract. And they won. And then, interestingly, SpaceX used the same lawyer to sue the government. Because, again, there was like, okay, is this? You've got to have that lawyer on. Yeah. Yeah, he might actually do it. I'm connected, so maybe we should reach out to him.

29:24Then, of course, in the 2010s, you can think of it as like Space Race 2.0. The story is really like SpaceX growing. There's that SpaceX lawsuit. But the 2010s are the era of SpaceX. Like 2010, it's the first Falcon 9 flight. 2012, the first commercial ISS resupply. 2015, the first orbital rocket landing. 2016, the first drone ship landing. The first crewed ISS flight happens in 2020. And there's the SpaceX lawsuit, of course. And so there's a bunch of key moments here. Ash Carter creates the Defense Innovation Unit. Eric Schmidt is the inaugural chairman of the Defense Innovation Board. And Trey Stevens founds Anderle.

30:05And he also changes the LP agreement at Founders Fund to allow for defense investing in weapons, basically. And they just went to their LPs and were like, hey, we're just going to remove this one clause. Don't worry about it. We don't really have any plans. And then like the first, the first investment that they made was Anderle right after that. But it's a funny story. And, and, and that caused like a cascade in Silicon Valley where every firm can now invest in, in defense tech. And even two years ago, a lot of firms still had these sort of LP agreements that did not allow them to make defense investments, period.

30:38Yep. In the same way that Founders Fund at one point had it. And what that just meant is if you had, it's already hard enough to raise money, right? Yep. there's only a few, you know, maybe it's a couple thousand companies a year that raise like anything close to like traditional venture capital. And imagine doing that when 95%, imagine raising when 95 % of the funds just say like, I think you're smart, I like what you're doing, it's good for the country, but you still can't. I legally can't do it. I legally can't. And they can go and ask for individual exceptions, but it just becomes much more complicated and it's easier to just say like, no, we're not gonna do this.

31:14Yeah, totally. Well, we got Delian in the house. Welcome to the Temple of Technology. He's back. How are you doing? Oh, yeah. Delta V. And I heard today was the day where we were all supposed to call for the factory floor. So I moved downstairs. Oh, yeah. The rumor's gotten around. I like it. It's a beautiful background. Proof of work. Proof of work. Nothing in the background is ITAR control. That's fantastic. It's in one place. So unfortunately, it's the least interesting view of the factory floor. We got a nice logo back there. It's great. Yeah, exactly. I was just given a little bit of a history of kind of how we got here in the evolution of defense tech.

31:44Can you walk me through kind of like, I literally just ended it like 2020. How have you experienced it? How would you explain to someone that's kind of just like generally aware of venture? Like, how did we get to this particular mix of firms and companies and strategies in defense tech investing? Yeah, I'll use a funny analogy to describe the various generations of defense tech and how it's evolved over time. If you look at the basically 2003 through 2015, call it time period, in order to start a successful company in like defense aerospace thing that basically worked with the government, you both had to be a billionaire co-founder and you had to be willing to sue the U.S.

32:31government in order to have any success. And so, you know, both SpaceX and Palumteer in the 2010 through 12 time period basically had to sue the government in order to win contracts. 2015 to call it roughly 2019. We're going to sue our customers. The playbook is like, we're going to sue our only customer. That doesn't apply anywhere else. You don't hear about like, oh yeah, like the, you know, this B2B SaaS company had to sue Nike to get them to use their SaaS product. Yeah, we really want to, we really want Ramp to sponsor us. We're going to sue them. So we're going to sue them. Yeah, yeah, yeah.

33:02Exactly, exactly. And so it gives you a sense of like how difficult it was to be the only people that could afford to sue their customers and still be alive as a business and like, you know, get to the other side of it. We're literally billionaires, right? You had to be a billionaire. You had to be willing to sue your customer. And then in 2015 through 2020, at that point, you no longer have to be a billionaire and sue your customers. You can at that point just be a billionaire. So it's still like very hard, but you no longer have to sue them. And so then, you know, problem, we're lucky, you know, so it starts and roll.

33:29And then, you know, call it from 2020 to 2022. My one-liner is like, now we're finally standing on the shoulders of giants. These guys have broken down the barriers, the DOD, and, you know, generally the U.S. government is ready to work with startups. And so you no longer have to be a billionaire suing the government. You no longer have to be a billionaire. At this point, you can just be friends with a billionaire. And that's sort of close enough to, you know, you're having the appropriate level of power and wealth. You really do that. And so people like me who are just, you know, merely lonely friends of billionaires are finally able to start companies.

33:58And now in 2022, people extrapolated that trend all the way down. They're like, you know, billionaires that sued the government. Now it's billionaires. Now it's friends of billionaires. Let's take the logical leap and high school students can now start a defense company that raise you know a hundred million dollars and that's obviously a logical conclusion of that trend uh what what do you right now it seems like every every investor that's online is like yeah i do defense yeah yeah you know i dabble i dabble i'm a patriot right but but is that still the case where the average vc in 10 years is like yeah i do defense or is it the average vc is like yeah i kind of you know FOMO'd in in 2023 and got over my skis.

34:39And I'm back to AI slog. Just skiing. Skiing and AI slog. They're back to skiing. They're back to just skiing, not being over their skis on the defensive end. Yeah, I think I heard you guys talk about this when I sort of hopped on. But back when Andrel started in the 2017 time period, a significant amount of the investors that now all talk about defense literally had it in their LPA of the three things that they weren't allowed to invest into was gambling, porn, and defense. and it was like put as one of those top three effectively like vices it was in like the vice clause um i think it's pretty likely that you know over the next decade some of those lpas end up going back to having defense in the vice clause um you know and all these people that you know yolo'd in their lps are like fuck off like we don't want you doing this again you were clearly terrible that you had no idea what you're doing we're just putting it like back in the vice clause and so no investing report in defense as far as we're concerned they're the same thing Like leave that to OnlyFans and Founders Fund to figure that out.

35:35That's great. Well, the reason I wanted to have you on mostly was to kind of restate and restart the debate around the continuing resolution. We put out a clip from you. We got a lot of text messages. I got a couple essays delivered to me. A lot of chat GPT stuff coming my way. Can't say I read it all. But I said I will ask Delian about it again next week. So can you restate your thesis on what's going on with the continuing resolution and just the overall DOD budget and what it means for defense tech companies? And then what's been the pushback? What have the good responses been and what has been like the cope?

36:15Yeah, what's funny is like I see so much of it as like pure copium. Like if you look at the people that are closing the biggest use of defense contracts, you know, Tim Hughes, you know, sort of SpaceX, you know, Matt Graham, Trey Stevens, et cetera, that whole crew, you know, Andrel. you know, Shamsankar Pound here. Somehow, none of those people, you know, sort of my framing of it. I admit my tweet was a little more pithy, but it was funny seeing some of the critiques. I was like, you just didn't watch the clip. Like, yes, my tweet was like an attempted summary of it. I basically like, you know, was a bit hyperbolic in saying that there are no net new starts.

36:45There are going to be some that are potentially allowed, but it all still, you know, it needs to be paralleled to the original basically, you know, Congressional, you know, and House and Senate, you know, sort of bills that were passed in sort of late February. So, you know, some of the critiques came in from some of these, I think, more junior companies that have a little bit, you know, sort of rose-colored glasses on how they think this process is going to go, in that, yes, it points to, you know, allowing that type of reprogramming. And at the same time, you're seeing like in a continuing resolution year going when the F-47 contract.

37:18And so I think They have this view of like, oh, man, now's the time where I can like, you know, all the rules are scrapped. We can totally go reprogram everything. And I'm like, there is some flexibility there. But also like look at what happens when people get a little over their skis. Like one of the topics that I sent you, Koogan, was like around the NASA administrator. It's obviously more on the civil space side than the defense side. But like, you know, Elon tweeted out like, you know, they see FBIS, we should deorbit it. You know, I don't want that up in space anymore. That shouldn't be a NASA priority.

37:45And like, yeah, he got his like, you know, sort of wrist slapped a little bit. He also got a wrist slap when he like went to the secretary of the Air Force. And then two hours later, you know, the F-47, you know, based on contract that announced, even though Elon had been on this rampage against just human rated fighter jets for a long time. So it's like, look, like even Elon isn't able to convince the Air Force that we shouldn't have human rated fighter jets. Like you think your fucking thing that's like a mediocre copycat of Andrel is somehow going to convince them that they should spend like, you know, money on your fucking Ponzi coin?

38:11Like probably not. Like I think there's a lot of copian that's going on there. So it's like, if you were trying to cite these like, it's like, look, I read the CR. Like, I know the section that's in there. What matters is not like the exact legal lease that is in the continuing resolution. It's like how that's going to be interpreted both by the warfighter and by like Congress that ultimately is going to, you know, sort of go, you know, approve the like, you know, sort of reprogramming and then the, you know, budget reconciliation, you know, sort of, you know, the old south. Anyways, more than I can go into there, but it is like lots of copium and all the sophisticated players didn't say anything.

38:45Do you think that there's going to be a lot of potentially wasted talent coming out of this era of defense investing where people want to be founders so bad, but they would actually be potentially much more successful going into Anduril and working on a specific product and just leveraging the entire platform that they've built and the sales channel, everything like that, and the Silicon Valley ethos of everybody is aspiring to be a founder? uh it you know because i think probably at least the three of us and many other people like the anduril of anduril is anduril is sort of like you know uh uh probably gonna play out right um will probably be anduril rather than a different company you know yeah but uh but yeah do you see except for anduril of bears bear domestication is very important and i think that is a white space that Andrew is weak on.

39:40We're announcing Coogan's new incubation. Yes. Ready to go. Co-founding with some Ruskies. Yes. These guys know how to handle their bears. We're domesticating bears and you're going to be able to ride them like horses and we'll also make small ones and they'll be like teddy bears for your kids. It'll be great. Yeah. You know, Keith used to always talk about how one of the things I felt like I learned from him was that some of the best companies are actually founded in some of these more like recessionary periods where it's not hot to be a founder. I think that it's like a lot easier to aggregate talent like i think about that even you said with bardo today like i'm very glad that we put together our founding team in 2020 because a bunch of those people in theory today if we were like trying to put together that founding team would just like refuse to be on the founding team instead split up and all raise their own pieces of capital and so it's like i i would imagine that it's like incredibly hard to be an early stage founder today trying to recruit super talented people because the super talented even like 22 year old sanford kids are getting like 10 million thrown at them.

40:33Like the current like VCEC ecosystem for all things like frontier tech, AI, etc. is like in such a crazy bubble right now. And that actually just makes it really hard for generational companies to be founded. Like a part of why Anderil almost certainly was successful is like everybody that like chose to go work at Anderil from 2017 to 2022 before the like call the Ukraine war was like choosing a very contrarian field to work on. Nobody else is going to be go funding those people to be, you know, sort of starting companies anytime soon. And so they aggregated a bunch of talent where it's like, okay, yeah now defense is hot but andrew is already off into the races we were talking about this with like the year facebook came out of harvard like i think it was the one of the only startups and so if you're like i want to work at a startup and you went to stanford or harvard it was like well facebook's kind of the only game in town and now it's like you want just take a taxi or take an uber over to sandhill road and you got 10 million dollars like next week well the other thing is we've been trained for 20 years this sort of like dream big yep you know call your shot i'm gonna build this amazing crm and then you can like put together a team and you can build the amazing crm but the thing in hard tech the challenge is like you run into like physics and you run into all these challenges where it's like you're trying to make some new quantum computing chip and it's like okay like you can have the big idea and that doesn't and you can put together a lot of capital and people and work really hard on it and like you're not always going to get there whereas software at least you can ship the product it might not work dude this it feels like it's like literally like you described my edge basically and like the investing in this sphere where it's like look i think there's some amount of like i'm decent at the founder read macro whatever a bunch of people can do that the one thing that i do that i think is like relatively unique is like for all my category investments that sit in the world of like hardware difficult thing that they're doing etc i just i walk the line i like you know go and i talk to like the technician doing assembly i I talk to the thermal engineer during the thermal model.

42:23I talk to mechanisms engineer, structures engineer, software engineer, firmware, et cetera. And just like, you can, you know, I'm not saying that I'm a world-class engineer in all of those categories or anything like that, but I have enough of a surface level understanding from the words that you do here that I can kind of gauge like, is this person at like the Varda quality bar? Like, you know, it doesn't have to be that like literally everybody you can't ever is, but if like half the people are looking kind of like schmucks, it's like, well, you can only like, you know, sell a story for so long.

42:47At some point, you have to like deliver hardware to a customer that works. And so it's been fascinating to me to watch investors honing up like a hundred plus million dollars to companies that are like consistently having hardware fail out in the field where it's like, what do you think is going to happen here? Like, you know, if you've given them$50 million and the hardware is failing nonstop, a hundred million dollars isn't necessarily going to be the thing that solves the problem. Like they've already got cultural rot to the level that it's like basically going to be impossible to backtrack.

43:11But there's so many people that like just don't even have the capability to diligence that. And I think sometimes I admit that I can over rotate to like, you know, I'm probably on like when I think about amounts that I weight product engineering relative to like, you know, our CEO, Peter, right? He's obviously probably more on the opposite end of like, you know, thinks that people over rotate on that. And I probably am one of the people that sometimes does. But in this field, it's definitely, I think, saved us from some sort of investments where like, you know, we debated making a series A investment.

43:39And then you watch the companies like they have like six projects in a row fail. Now, people are for some reason rescuing those companies and still giving them$100 million bucks. But at some point, I'm like, how long does that go for? I was literally texting me with our colleague John Luda yesterday. He was texting me three or four companies like, God, scaling like crazy. It must be going really well. And I'm like, no, every satellite that they've sent up is failing. They haven't closed any contracts. I don't see any pass to program of record. They're scaling. They're really good at hiring, but not necessarily good people.

44:09so like hiring bad people is not a like somehow people like use headcount scale as a proxy for like the sex of the company i'm like i don't know that that's like a thing one should be focused on so yeah i think there's gonna be some tough reconciliation that happens you know in the course of the next year or two where it's like there's gonna be like you know 50 to 60 percent of this field which is gonna have to die off or get acquired for pennies on a dollar yeah the other the other thing that's funny people love to roast like market maps right like the joke is like all right if there's a market map you're too late but then the market maps like actually provide like if you're an investor you should really understand the market that you're investing in so that when a company comes to you and you think it's a smart team and you're excited about it you actually understand like okay is there a a two times better team that's like doing this exact thing the other thing is like i i i've seen uh you know i've made a number of i think smart investments in this space and i'm sure like just sort of hard tech broadly and i'm sure like some that will zero out.

45:06But I try to pay attention to like, you really have to pension. It's not all about like, oh, a tier one is doing this. It's like, is somebody that's been doing robotics investing for 20 years and has like, is on their seventh fund. Are they doing this? Because they've seen it all. Right. And you have to ask yourself as an investor, like, why do I have the right to even have an allocation in this company? And, and a lot of times if you're coming into this space and you're making some of those net new investments, that company has been seen by all the specialist funds and like nothing happened. And so like you're now getting like the sort of luck of getting to take a shot on this company when like a bunch of people that have invested in other similar winners have already said, yeah, it's not for us.

45:49Or like, you know, we're going to wait and see kind of what happens. So anyway, can we move on to the Cygnus spacecraft? Can you break down? I'd never even heard this word term before. Can you give me a little bit of history and then what's going on with the news. Yeah, I mean, I brought it up because I think it was like two weeks ago that we chatted about astronauts being stranded and then SpaceX going to bring them back down. This past week, it was revealed that the Cygnus spacecraft, which is a spacecraft, I'm pretty sure, made by Northrop Grumman, that originally was awarded basically a commercial cargo contract, the ISAC.

46:23So this was back in 2010-11. It was basically you had Cargo Dragon, which was done by SpaceX, and then the Cygnus spacecraft done by Northrop Grumman. to basically deliver cargo, so like food, water, etc., to the International Space Station. It generally performs, you know, well, it's kind of a crazy vehicle in that it's only one-time use. Like, it doesn't even have, like, a shield or any way to, like, come back to it. So you literally, like, ship it up to the ISS. It drops off its things, and then it just, like, burns up in orbit. So it's, like, the epitome of just old-school, you know, sort of aerospace.

46:50They didn't even, like, attempt to make it economical from the, like, fundamental design phase. But, like, it's, you know, delivered plenty of cargo to the ISS at this point. This past week, they dropped it. And so NASA was like, look, yes, this has been tested, et cetera, but we don't know what happened in the drop. We need to basically send this thing back and run it through a full testing campaign and make sure that it's okay. And so that means that that cargo that previously was supposed to be delivered to the ISS via Northrop Grumman now is yet again going over to SpaceX. And so it's just like one of these moments where it's like if SpaceX does not exist right now, like the United States would neither have Boeing able to take crew to the ISS nor would it have Northrop Grumman able to take, you know, basically cargo to the ISS.

47:27And so it's like, you know, without SpaceX, the astronauts would not only be stranded, but also starving. What do you mean they dropped? They dropped it. Does that mean drop the program or physically dropped it? No, no, no. They like physically dropped it. Like the spacecraft like fell. It just fell. Yeah, it fell. Had an accident. You're not supposed to. A little oopsie. A little oopsie in the space factory. I'm like how much like, you know, the pulley could hold and they fucking dropped it. Wow. I hope we're getting, is there like security camera footage we can find somehow? I think that Northrop is going to try and control that real tight and avoid anybody seeing that.

48:00We've got to call our friends over at the CIA, NSA, the deep state, really get them to fork that over. We need the blooper reel. We need the blooper reel. We've seen the SpaceX crashes. I need to see the pod dropping and crashing. We drop our spacecraft, but we do it on purpose, right? That was the one that we dropped from space back down to the ground, but that was on purpose. Wow. I have not been to Varda HQ recently. It looks like you have a lot more equipment. that is filling up congratulations we are uh packed in like sardines we've got you know that's the one that i just showed you is the first one that landed last year second one later in australia two weeks ago and it's out at an air show third one's currently up in orbit fourth and fifth are off to the side of me right now so yeah this place is uh yeah turning into an operation yeah real operation you have a follow-up i have another one after go for it i i want to cover in the maybe the last five minutes uh like slop as a trend oh yeah that'd be fun generally but uh yeah let's close out with the space stuff and then we'll go on that.

48:56I want to know more about Jarek Isaacman. Momentum seems to be building for Jared Isaacman to become NASA administrator. What are the dynamics? What should we be reading into this? RFK got confirmed. This is a similar process. And what does this mean? What's the vibe around him generally? Yeah. I mean, Jared is definitely really beloved by the space community, ourselves included. It's really awesome to have somebody that has been a phenomenal entrepreneur, a right shift for payments you know sort of mega company but then also it's like putting his own capital and literally life on the line by like paying for his own you know basically space missions with spacex and then he's the first private astronauts to ever do a spacewalk i don't think i saw that you know live stream from i'm forgetting the exact time but it's like that was him sometime that was him no way he like i did literally like he's the first private citizen to like fucking go out into the vacuum with space and like he routes out of the space streaming so we could run yeah exactly Exactly.

49:47Yeah. So, you know, hopefully we get to space run one day. Yeah, yeah, yeah. Exactly. Okay. So yeah, yeah. Super legit. You know what I mean? Like he is literally, you know, a like, like privately himself sponsored astronaut, you know, putting his real life on the line. That mission could have gone poorly, could have died on it, et cetera. And you're like, yeah, obviously he is and didn't. So really beloved. But he is like affiliated, you know, for sure with Elon since like, you know, his entire Polaris, you know, sort of a set of missions was all contracted with SpaceX. He obviously has done a ton of press with Elon, et cetera.

50:18So when Elon made this sort of comment around wanting to basically de-orbit the ISS sooner than the original plan. So the current plan is basically out of a decade. Elon was pushing for like, let's just de-orbit it next year. Now, I assume from his perspective, it's, you know, hey, I don't really see the value of this program. We should use that budget for, you know, sort of pushing straight to Mars. You know, what's the point of sort of these like human rated stations, both run by the government, or these private ones? And there was a bit of a slap on the wrist for that via basically Ted Cruz, sort of the senator from Texas that is the senior chair of the House, sorry, the Senate Science Committee, which basically controls the NASA budget and is also basically responsible for sort of voting and confirming the schedule for the NASA administration.

50:59confirmation, basically stalled, right? Like he refused to actually set a date for the NASA administrator. So now you've had to see like a bunch of governors, you know, and other senators basically say, hey, Cruz, we really like Jared Isaacman, a bunch of space entrepreneurs, like like, you know, sort of send Cruz's letter. He's finally relented and okay, he said, fine, I will set a date. But I want Jared Isaacman, you know, sort of coming out and explicitly saying that he's in support of the ISIS going through the end of the decade in support of these commercial space stations. And so why is, you know, sort of Cruz in support of that?

51:28It's because, you know, the Johnson Space Center, which is where the vast majority of the like terrestrial jobs that support the space station are is in, you know, Texas and it's a district and it's, you know, sort of his constituents. And so, you know, you're starting to just see these tensions of like, you know, look, yeah, you've got like tech's greatest leaders at like the helm of the government, but that doesn't mean that there's going to be some like, not going to be some antibodies that like, you know, prevent people from getting exactly, you know, sort of what they want done. And so this is all more like the civil space side of things, but I think has a lot of parallels to what everybody's thinking about in defense where it's like look i'm again gonna point out it's like you know elon is phenomenally successful super powerful rich etc but like there are you know antibodies and balances of power built into the u.s government and like ted cruz is clearly you know showing that he can like swing his dick around a little bit and say like yeah like you know you want to fuck with my iss like i'm gonna fuck with your administrator and you know i'm gonna delay his confirmation hearing and i'm gonna bump it out until like it sounds like it might not be until like may at this point and then that does have like a real operational effect in nasa where it's just like look like you know there's like this nasa re-authorization bill which basically sets nasa's budget for the next like you know sort of uh you know five to seven years that's kind of stalled out because there's no administrator you know none of the like major you know sort of program leads are making huge swings right now while they're waiting for the administrator so it's like nasa's kind of frozen right and it says like downstream operational effects this may slow down our ability to like get more lunar missions you know sort of booked actually figure out what the mars program you know sort of looks like and so it's just like a reminder to people that like you know us in tech have to always remember that like there are also jobs that senator cruz is He's going to be making sure to stick around, too.

52:58Follow up. I mean, the ISS budget is$3 billion a year. Crazy idea. We get a couple of our buddies together, make it into a casino or something. Like, could we not privatize this thing? You know, Jed McCaleb, Mr. Crypto, you know, sort of man is trying to, you know, put crypto money to use and turn into a space station. And I kind of see crypto, in my opinion, is basically just gambling. So, you know, he's basically already making it. You know, all he needs to do is, you know, maybe it's not. crafts tables but it's uh you know a couple coinbase servers up there that are uh you know getting you hooked right into the you know sort of live stream of trading shit well i guess you can't really roll dice in zero g because the dice never fall well yeah if aliens are ever going to come and assimilate on earth we should have a like a space casino where they could kind of like learn the american way of life like an lsi election here because if the culture shock if they came here and they have to know how to gamble if they're going to integrate for sure they would just like probably kill us all exactly like you guys like i don't even know what you guys are doing oh that's our planetary defense we just get aliens hooked on gambling they become total degenerates they're mortgaging their home planet in order to be able to afford it and we're like actually you thought you were coming to conquer us but sorry we're sending our bookies uh back break all your kneecaps and take it yeah you know that's maybe the best planetary defense who needs asteroid deflection you've got uh space casinos yeah we got five minutes which big uh What's your take on yesterday?

54:20I was joking around earlier. I said it. In hindsight, Sputnik really was the Ghibli moment of the Cold War. But yesterday felt like a big moment. John and I had a couple of posts go pretty viral and break containment. And people still were quoting them and being like, all right, guys, stop joking around with me. Who's got the filter app? So it still feels like there's people out there that don't know. They didn't know that it was OpenAI, like ChatGPT. they're just like oh there must be a new app out there that does this yeah yeah well what's your reaction are you long i i'm personally i'm short the word slop but i'm long the underlying trend but i'd love to hear your take uh you know i'm going to relate it back to defense which is you know sort of marker maps are no good focus on a long tail winner there's like a whole fucking set of like a hundred like ai image generation companies that all just got you know fucking Sherlock by open AI and are going to be totally irrelevant because like they've got the biggest brand and know they have the best technology.

55:19Good luck catching up when you're like, you know, sort of losing on both angles. I think you're going to see this stuff get implemented into Hollywood like ASAP. I mean, there's like a whole set of things where you can like, look, there's going to for sure still be like human fine details. There's things that it's not perfect at it probably never will be like quite perfect at it. But if you want to start like throwing together like rough draft, vision board, et cetera, and then what you end up seeing is like the equivalent of like you know that there's you know sort of now you know sort of two um you know two engineers can build like a billion dollar you know ai company like two animators and a director can like make the next pixar film basically because like you know they have so much you know sort of leverage and so it's like bullish for open ai and also bullish for jason carmen right yes but you just don't want to be in the middle but it's like short all the dudes that just invested like 500 million dollars into like these like slop companies basically and it's just like good fucking luck and it's the same thing with defense it's like you know bullish on anderal yeah bullish on the war fighter that gets new tools totally don't recommend being anywhere in between those two yep exactly don't get stuck in the middle the barbell don't get this out in the messy the sloppy middle as we like to call it it's uh you know the the white lotus uh you know sort of reference there is uh be careful of the sloppy middle between the brothers oh i haven't watched the latest episode so i i but i i've heard enough that i get it and it's not good yeah you can skip that one white lotus is funny because white lotus is funny because like it starts the season it's like kind of relaxing because it's like these resort settings yeah you're just hanging out and you're like oh it's just like i relate to these people in different ways and like and then it's like oh it just gets so dark like episode by episode i want nothing to do with any of these people yeah what what you know so so somebody that launched an image generation tool uh is like mike uh spizer over at sutter hill ventures like they've done didn't they do like snowflakes they like they're like they're like the goats of incubations and in many ways comes out with an image generation tool what do you like what do you do at this point obviously not even just speaking directly to him but there's like mid-journey and there's a lot of other players and uh it just feels like maybe there is no edge and distribution you know relating back last week is not in the conversation because they haven't raised money true it's like true you know they're they're dependent they raise money every day from their customers i guess i guess but just like but the other so the funny thing is is we talked on the show last week about a pt quote around like you need basically distribution for a monopoly and you can get a monopoly from product but you can also get a monopoly from just distribution just distribution and so it is the but like do you think these you know image generation models should be rethinking their life and future plans and the game is lost?

58:00Or is there going to be, if you just lean in, let's say like, you know, set up shop here in Hollywood and just work with all the studios and say like, you spend billions a year. What would you do if you were actually running a$50 million series B stage image generation company?

58:44Yeah, I mean, look, this is very tough of mine. sort of elephants and like these like big tech companies are both very sophisticated, like have great engineering, but also massive, right? Like, I mean, again, just look at like what SpaceX is doing with Starship and like, you know, stomping out a bunch of, you know, other sort of mice in there, the elephant, what Andrew is doing, stomping out a bunch of mice. It's like, it's not an easy time to be like a mid-stage company that's trying to dart around all these major players that are like, not like old school incumbents that are moving slowly, but like are led by Sam Altman and like, you know, are really pushing the fold.

59:12And so, yeah, tactically, like if I was in Mike's choose, I think it's like, look, the consumer play, that just seems basically impossible to catch up on. It's like, this is kind of good enough for any consumer app, right? It's not good enough to immediately go make a feature-length film, but it's good enough for any consumer to send a photo to their wife, basically, and they already have the winning consumer brand. So don't even try to do that. Go where the elephant isn't even headed, dart in the opposite direction. I think, yeah, it would go heavy on enterprise, build up studio relationships, try and convince them, hey, look, if you start using, sort of chat GPT, et cetera, for this stuff, they're going to use you for training data we're going to make like proprietary models that like you know fine-tuned to your own aesthetic and like this specific film that you're working on and we'll make sure the data only stays basically like in-house right like you just need to like just constantly be thinking about like yeah what is your you know sort of angle that is super unique but also those are like all really constrained tams relative to like the thing that you know i think open ai is you know going off and capturing it's out yeah i mean i really love mike and i think he's a phenomenal entrepreneur but like i also don't envy like i can guarantee you he was fucking up late last night and you know is grinding today with his like you know exec team to figure out like what their you know sort of approach is in light of like you know this new world and that's what's so crazy about like tech accelerationism all this stuff happening is like dude like this stuff like i felt like when i was in the valley in like 2014 like happened over the course of like 18 month periods and it's like dude this stuff like it feels like literally every month now we have like crazy new capabilities that come online that massively disrupt how to build like a series b company versus in 2014 that new technology is disrupting like a late stage series b company like didn't honestly happen that often like never happened you kind of had like your stable growth like even at Vardo and the stuff that we do is like super hard long time frame etc like I feel like we actually like literally need to be nimble on our feet on like a month-by-month basis between like the changes of DOD priorities congressional priority what other space companies are doing how supply chains are maturing what the fuck China's you know sort of doing it's like god man it's such a dynamic world and you know they're like you know wealth accrues to the you know sort of riches so good to be Peter good to be Sam you know I don't yeah I don't envy myself for uh spiser we were joking around you know a lot of early stage founders will like time a release to try to catalyze a fundraise and it just felt like there was a world where sam was like all right team like we know ghibli will go viral like just make sure that this is perfect everything else can you know everything else doesn't have to be perfect but like we need to take over the timeline we need to go mainstream this day i'm closing the round on monday like just go go also google had just launched something that most people think is like competitive but the product is just buried in AI studio.

1:01:41And it was going to break containment and it was going to be a Google story. And Sam was just like, not today. I love it. And then maybe he paid that one influencer to make the photo of his wife and get that to go viral. All I'm saying is it was just a little too convenient. We need to get a tinfoil hat over on your side. Yeah, we got it. We got it right here. The exciting thing, bring it back to hard tech and defense, is we need better science fiction. We need the next generation of science fiction. And if we can open source that and everybody can create inspiring visions of the future. Someone has a good idea and they can instantiate it.

1:02:12You shouldn't need$200 million to imagine the future and convey that idea. And that seems like the biggest opportunity to take away if you're not. Even if it's a little sloppy right now, the art will come. Anyways, great to see you. Thanks for stopping by. Good luck with the rest of your day. Later, boys. See you. Later, the rest of the day. You too. Always a fun time. All right, we got Steve Simone himself. Is he in the building? He is in Florida right now. Or should we talk about public.com investing for those who take it seriously? Because they got multi-asset investing, industry-leading yields.

1:02:46They're trusted by millions. Get on public. Public earns high marks for ease of use and investment selection. They got stocks, bonds, treasuries, options. Download the app. They got great charts. They got great graphs. They got great functionality, folks. Boom. And now we got a great guest. We got Steve Simone, the man himself. How you doing, Steve? What up, Florida man? Florida Steve. Oh my God. Florida man. What's up, guys? He's in Florida today. He's not actually a Florida man. But it's great to have you. Look at me. Yeah, thanks, guys. Thanks for having me on. It's an honor to be here. So describe the company in exactly three words.

1:03:22I've heard it described as gun on truck. Is that accurate? That's true. AI robot gun. Okay, there we go. AI robot gun. Shooting down drone swarms. If I see a light show with a dragon swarming towards me, I call you. you're gonna throw a hail of gunfire at it and take out all of them you know well it's more precision you know we're sniping these drones we're not just throwing bullets in the sky you know it's precise okay precision well i always love talking to steve uh a while back he was in la and we like were we're i forget there was something i think it was like actually the weekend that all in summit was happening because steve's raised a couple rounds from craft now one of which he is announcing today and i and we just had this awesome meeting where i was like you gotta think bigger you gotta think bigger you were that guy yeah i was i was like the got it you gotta think bigger guy jordy is the jordy you're the ultimate hype man you made me think bigger bro you made me think bigger that's great well speaking of bigger yeah yeah let's announce the big round news today oh yes today we just announced our 30 million dollar series a led by craft ventures um again they didn't give up the seed they're back you know maybe they'll do the be we'll see we'll keep it going you know keep it going keep it going ride your winners it's in the all-in intro yeah let your winners ride and sax is uh true as word but i gotta ask you guys how much does it cost to like get my logo on the ticker symbol at the bottom like is that you're gonna have to wait till the b you're gonna have to wait till the b buddy i'm sorry is that a series a company is tough yeah yeah yeah i can i know but we can talk about it we can talk about a rough sense of your balance sheet but you're here you got your face you got your face here and that's and that's worth prices a thousand how much did wander pay for that back there is that we're not we can't get it we can't disclose we're not we're very against building in public yeah because uh and it's not it's not because of like the flex culture any of that it's specifically because of our near peer adversaries copying us if if the ccp got a hold of how the business really works they could clone this show and then it would just be a total cold war arms race for the best and most aggressive daily podcast tech.

1:05:30Yeah, I mean, the CCP is a big threat. I mean, why we started ACS is because, you know, we're at a manufacturing deficit with China and we need to do something about it. So that's why we, you know, are making these gun turrets to be able to shoot down their drones. Talk about, yeah, just talk about the process. We were talking with Delian earlier. There's this phenomenon within startups broadly where there's a culture of having a big vision and fully believing it yourself and assembling people and talent. And then sometimes you have this vision and then it ends up being exceptionally difficult to actually execute.

1:06:04You're working in this case with the... So for those that don't know, Steve sold his last company to DoorDash, had a great exit, and then basically brought together, did it round two with his co-founder. And so you had that intense trust with your co-founder. You also were in the military yourself. So maybe give like kind of the full background on you guys together all the way back to the Navy days. So the company is called Allen Control System, named after Luke Allen, our CTO. And, you know, we have a proprietary control system. That's why, you know, that's the name just right on the nose. But we met in the Navy.

1:06:39The name, too, is very cool. Steve was like, everybody's calling their stuff like Lord of the Rings. Like, what's the most boomer tagline that's going to basically like sound like it's been around for decades already? And I think it's working. I really like the counter positioning. You got a counter position. That's all marketing, baby. No, so we met in the Navy. We were nuclear engineers in the U.S. Navy. Met like 16 years ago. And, you know, then we moved out to San Francisco as one does tries to start startups. I had a couple that failed. And then the one we sold to DoorDash. And now this is our technically my fourth startup.

1:07:12It's a way of life. You know, it's a journey. I've been doing this for about 11, 10 years now. So cool. Yeah. And then coming together, like give the, you know, companies two and a half, two years old now? Yeah, two and a half. Yeah. Well, look, it takes to build a complex precision robotics product. It takes about three years, like from whiteboard to like really good product. So like we're almost, you know, there on that journey. But when we started it, right when we sold the company to DoorDash, Putin actually invaded Ukraine the same week when the deal closed. And we were reading articles about Ukrainians shooting guns in the air at drones.

1:07:45And, you know, Luke called me up and was like, this is a really good robotics problem. You know, we should start looking at this. And when we kind of surveyed the landscape of the industry of like, you know, interceptors and electronic warfare and microwave technology and lasers and all these other counter drone measures. But didn't see a lot of like really precision applications around using guns and ammo, which, you know, guns and ammo are widely available in the military. So we thought this is a really good idea. Went after it. How's it been? uh you guys spend a lot of time on the range like actually shooting down drones uh talk about kind of how this maybe company's been different to the last one which was you know in a totally different you know vertical and you were probably comfortably in san francisco now now you guys uh you know spend a lot of time just out in the field uh getting the boots dirty yeah getting the boots dirty um wait say that again that's the question just how's the culture different now that you're out of an office.

1:08:43You're not in a cubicle all day. Oh, you know, I'll tell you, I, for me, it's like, I feel most at home in the startup life, you know, as the companies get bigger and scale, it changes things. But in the early days, it's the most fun. Actually, Luke and I always joke, like when you first start a company, the first couple months are the most fun when you have no customers. Because then once you start getting customers and you have responsibilities, you have to, you know, deliver their requirements, make, you know, have great customer service and all that. So in the very early, early days, You have to cherish those moments.

1:09:12But then as, you know, it's a life cycle. So as you scale up, things get different, you become different and the whole company changes. But, you know, right now it's still at a fun size, around 34 people still enjoying getting out of like the main corporate office and, you know, doing our thing. I mean, Delian said this on the show before, like, you know, the Anderil of Anderil that is Anderil and maybe Anderil's the power law winner. I'm going to do all this stuff. How you've obviously counter-positioned with the name. You didn't pick another name from Lord of the Rings. Thank God. But how are you thinking about how the product fits into the defense tech ecosystem?

1:09:45Palantir has their AIP program. They're openly planning to work with other companies and develop partnerships. Is there a world where this plugs into Lattice and you let Anderil take the kind of the AI connective tissue and you're a partner? Or are you really just trying to grow and add so many more products? Where does the long term go from here? Yeah, our product, you know, so autonomous guns are when they hit the battlefield, they're going to change a lot of the battlefield economics. So, you know, a lot of these like more expensive interceptor products or, you know, some of the, you know, big laser beams or, you know, missiles and stuff like autonomous guns are going to, you know, put a lot of downward pressure on products like that, I think.

1:10:26So I think we're pretty well positioned from a product strategy perspective. But where we actually mostly focus our time is you see all these autonomous vehicle companies, USBs, companies like Sironic, a bunch of USBs, makers, these unmanned surface vehicles, and then you got like the land ones like an Overland or for Terra, there's a number of these. And so all of these autonomous vehicles need an autonomous payload. Sure. And so we're positioning ourselves, we're mostly focused on great partnerships with companies like these positioning our product there. And then you know, kind of bundling, you know, that you make money via bundling in the game.

1:10:57Makes sense. Yeah, makes sense. Talk about competing, you know, a lot of your competitors are these sort of old slow moving, you know, I'm thinking about like, the Ryan Mattals of the world, right? It's probably fun being a team of 34, you know, competing against some of these giants. Yeah. Oh, go ahead. Sorry. No, I interrupted you. I was gonna say, it's the lag on the Zoom, but I was gonna say, yeah, like Ryan Mattal, Kongsberg, you know, a lot of, I don't know if a lot of the listeners know this, but in the gun turret market, so these are called remote weapon stations, in the RWS market, a lot of the providers are foreign.

1:11:33So the U.S. buys a lot of their stuff, most of it from companies that aren't based in the U.S. So from this standpoint, we're kind of bringing this back home. It's a new American startup building new modern age remote weapon stations. And so I think we're pretty well positioned there from a congressional standpoint, too, because a lot of people in Congress didn't even really realize that, that these slower dinosaurs are actually not even U.S. companies that are doing this for us. What's the vibe on the ground in the D.C. area right now? You obviously have an office out there. Is it chaos or people are running around?

1:12:09Just to set the table, we've been talking about the continuing resolution. There's a lot of questions about if DOD budgets aren't increasing, will there be net new projects, new programs of record? Obviously, chaos can be a ladder and an opportunity for new companies. And it can also be a consolidation force for the ones who already have programs. what's your take? I think the well, if you look at what like Doge is doing and stuff, I think it's, you know, sending shockwaves to the DoD. And I do think that they're trying to cut things that they don't want anymore. And then they have a carve out list and Secretary Hegseth has this like list of like 14 technology fields that he's not wanting to make cuts to.

1:12:48Luckily, counter small drone is one of those. So we're not impacted really by that. Now, obviously, for the FY25 bill, we were somewhat impacted because they didn't do a bill. And so that's like I think Adelian was on you saying talking about that so I don't need to rehash it but basically that does put some pressure on some startups for us it wasn't too big of an issue because you know most of our stuff is in 26 and beyond but I can see if you were really banking on that that could be tough what are you hiring for right now what kind of people are you looking to recruit into the team you got 30 million of fresh capital I imagine a lot of that will be going to bright technologists engineers you know if you're a computer vision engineer and this is like one of the most fun computer vision problems to work on i would say of the different parts of our product you got the vision system to detect stuff you have the fire control to track and shoot and you have all the hardware and the mechanical stuff the vision part is one of the most challenging parts and so we're looking for you know people coming out of universities that really love this problem they want to see if they want to try to find small drones moving against cluttered backgrounds.

1:13:56And so, you know, we're always looking for that kind of talent, but, you know, across the whole engineering spectrum, we're looking for everyone, but I would say this is a dream job for a computer vision engineer. Makes sense. Amazing. Yeah. I, on computer vision, is the job getting easier with new models? I mean, we just saw an amazing demo yesterday from open AI. It seems like computers are generally getting better at doing stuff with images. I would hope that that benefits not just memes and anime, but also self-driving cars and also what you do. Is there a bridge from that tech and what's going on there in terms of scaling and improving the underlying models to what you do?

1:14:36Or are you just kind of like, hey, we got open CV and it's enough? Yeah, I mean, we're a little bit on the cutting edge of, you know, we're trying to see a very small drone like a DJI Mavic on a cluttered background moving very quickly. it's not the same exact application as some of the stuff they're doing in self-driving we're trying to put a bullet through this drone too, to be honest and so that's another novel use case, and so we need a little bit more out of the computer vision than industry is really providing so we're on the bleeding edge of some of the research around this obviously I would love to just ride the wave and be able to use what's already built and what these guys are all doing but it doesn't quite exactly work for what we're doing so yeah, there's a little bit of like researchy stuff there that we're working on yeah when you think about the opportunity to go work at in computer vision at acs where they're you're like you know getting like i've seen a lot of the videos and you guys have some of these videos like you know public on your youtube channel and stuff like that but you know getting to work on something where you're actually taking a gun and like taking a drone out of uh out of the sky the alternative is like you could go work at you know some high profile you know humanoid robotic companies that are just like you know looking at the laundry or whatever and like you gotta give the robots guns you gotta give the robots guns this is what makes it fun yeah and all our only request is get some unitary robots at some point and just put some bullets in them yeah i know i want to have them running over the hilltop like a army of unitary robots and then bullfrog sniping them all headshotting them all oh my god no i want to see here's the other challenge 360 noscopes three yeah 360 noscopes on the turret i want to see that that would be viral for sure wait the sweet oh you guys will you guys do like sweep sniping you know that from hailing to do that oh yeah yeah yeah yeah yeah oh yeah you can do that i think jd vance did that a lot i think he played a lot of okay awesome awesome crazy well thanks for stopping by this is fantastic congratulations i'm gonna play a quick song for you on the way out i'm going all in yeah you got that congratulations to you the team and sax great one yeah congrats to sax that's fantastic well we got aj peplica coming in the temple of technology from hermias he's coming in in just a second are you familiar with this company very cool building a supersonic plane and their goal has been to build one plane per year and we'll hear the full breakdown from him he's here he's in the factory boom with the hat the hat welcome to the show how you doing i'm good how are y 'all doing good john good to see you yeah good to see you again uh you're still in uh atlanta yep yep that's right here at the factory still wearing this stupid hat i love it do you have like a rule is it like you're not taking the hat off until you know plain floss yeah so i uh i i well i i wore it one day because i was making fun of one of my co-founders who wore a fedora out out in the field we were testing the airplane i was like yeah you look silly i got a hat i can I can look even sillier.

1:17:28And then I was like, I want to do something until we fly. And not everybody can grow a beard. Not everybody can grow their hair up. But anybody can wear a hat. So I'm like, all right, I'll wear this silly hat until we fly, which is actually one of my favorite hats. Really great friend gave it to me a long, long time ago. It looks good. Whatever. So I had to make sure that it doesn't get Marie Kondo'd out of my house. I have to wear it once a year. So I'd always incorporate it into my Halloween costume. Little did I know I'd be wearing it for six months now. but uh so now now i hate it um and uh nobody else has worn hats every single day that lasted for about three days um so yeah when we uh when we fly our first airplane uh as soon as it lands we're gonna i'm gonna stick this thing on a stake behind the airplane and burn it in the afterburner and i'll do something with the ashes but there we go amazing that's amazing i want to hear a little little backstory on the company little company update i want to hear your take on the f-47 and the dod can sit continuing resolution but let's just start with the overview of the company and where you guys are at.

1:18:27Sure. So yeah, at Hermia, we build very fast airplanes and we build them fast. So a long-term vision of the business has been to radically accelerate air travel with Mach 5 aircraft, so hypersonic passenger aircraft. But as we build the technology along the way, deliver products that solve some really pressing national security challenges here in the near term, that build us a strong growing financial foundation and kind of give us the right to go, you know, try for that really long-term future of, you know, adding a couple percentage points to global GDP. The company is about six years old now.

1:18:59We've done a ton of development on the propulsion systems, engines necessary for these kinds of vehicles. Now, over the past couple of years, as you mentioned, we've been starting to get into our aircraft development cadence. A lot of the blood here comes from SpaceX. The way that we've designed our program for how you build fast airplanes is to build a lot of prototypes and build them on a very fast cadence. Really bringing iterative development to aircraft for the first time in a very, very long time. So that's resulted in us being able to develop our first aircraft from setting requirements to being ready to fly, minus the FAA, so here's the hat still, but ready to fly in about 15 months, which, as far as I've found, is like the fastest jet aircraft development in about 50 years.

1:19:45So this is like back to the Kelly Johnson's Concord days. That's fantastic. That's insane. Right away, my first question is you're going from zero to real product in 15 months. That's intense speed even for somebody building a robust CRM. You guys got to do something a bit more. You got to be a bit more than just robust if you're going to fly something through the air. But where do you even start with this? like is there is there like effectively like open source kind of like designs information schematics etc that you can kind of pull from to like pull forward that development timeline or is it just like it's actually chat gpt i'd like yeah yeah blueprint for one blueprint please we're a grok company here oh yeah yeah no like the the place that you start is fundamental physics that's it um like there's there's plenty of stuff in the supply chain where you can you can you can by parts and components and things where you don't have to reinvent the wheel.

1:20:44But if you are not starting with the fundamental understanding the problem and simplifying it as much as possible, there's no way you'll ever meet a timeline like that. So really simplifying the problem, making the problem a little dumber than you, so that you're not trying to outsmart it. You're only doing the things that really go to answer the questions that you're trying to answer, which for us, for this first airplane, isn't like, can we build a hypersonic airplane? It's, can we build an airplane? and can we do it fast enough to support this development cadence? So like this quarter horse Mark one, which is the first aircraft, it really only has to do like two things, take off and land.

1:21:19That's it. And we've, you know, we've learned a ton already that we've already integrated into like how we're building the second aircraft. So our second aircraft quarter horse Mark two is supersonic. So it's, you can probably hear it being put together literally right behind me. So that, that one should be ready to fly later this year, probably early fourth quarter, which is super exciting. Can you give a quick overview of the actual tech, ramjet, scramjet, all this mumbo jumbo? Can you break it down? What you're doing? So we don't use scramjets here. It's all ramjets. So it's literally the simplest propulsion concepts that there is out there for everything propulsion.

1:21:56Like when you're in aerospace engineering school and you're learning through all these different engine types, the very first one you start with is a ramjet because there's no moving parts. It's just compression, add fuel, burn it, exhaust through a nozzle, generate thrust. Those engines can't really run efficiently until you get up to somewhere between Mach 2.5 and Mach 3, so you have to use a gas turbine engine turbofan to get up there. So we've put those two types of engines together into a single engine. We've demonstrated that on the ground, transitioning from a pre-cooled, after-burning turbojet to a pure ramjet, and then back again.

1:22:30And so we have an engine capable of doing that. And now it's a matter of iterating through the aircraft side to be able to do that in the air. You talked a little bit about FAA sort of approval delay that cycle. Was there ever a possibility or is this even something that you would consider to say, like, you know, the FAA is going to take a long time? Why don't we just ship our plane to some other country that will approve it quickly? SpaceX do Kwajalein. Yeah, because there's a nuclear company out of El Segundo that like in the Philippines. The Philippines, yeah. And I was just sort of wondering, is there something you could do there to kind of like, you're building so quickly, ideally you could test quickly and not get held up.

1:23:13Greenland, Antarctica, Moon. Yeah, I think we'd have to be incorporated in a different country fully to be able to do that. So that has other implications. But yeah, like even if we took the aircraft to, you know, Australia or, you know, Kwajalein or somewhere out there, we're still an American company. So we're still under the jurisdiction of the FAA, even though we're some other country. And, you know, and the reason for the reason for that is because, like, yes, other countries have their own versions of the FAA. You know, there's an international body called ICAO. But generally, since the U.S.

1:23:43has pretty much always been the leader in aviation and technology and especially coming to the commercial side, everybody just kind of defers to what the FAA does. So it kind of just trickles back to them at the end of the day as well. You talked a little bit about your technology one day being able to increase global GDP. I assume that if you can just move stuff around the world faster, move people and products around the world faster, that will just sort of accelerate growth. But could you extrapolate that on that a little bit? Yeah, I mean, it's a historical trend that you can see in a number of different things over the course of human history where you've accelerated the rate of transportation within a network.

1:24:22and that has increased trade. So, trade and cost, and therefore distance, are proportional to each other. The unit that's used in these types of analyses is called economic distance. It's a mix of actual distance and cost and time and all of those things wrapped into a single metric. So, if you can shrink the economic distance between two economies, you will increase the trade between them. It's a gravity model. So like you have two bodies, the closer you bring them together, the stronger the force of gravity is. So trade is like gravity in this case. Can you talk a little bit about your reaction to the F-47 program?

1:25:05Boeing won a $20 billion contract for the sixth gen fighter. It's a nod. The design is a nod to the P-47 fighter. And there's competition between the major primes, but I'm sure you have some insight into what's going on here. Can you break it down? Yeah, I certainly have no inside behind closed doors. So I guess I can I guess I can make up whatever I want. But I think from from the outside, you know, I think, you know, it's it's it's clearly a capability that the U.S. Air Force really thinks that we need to solve some some really, really tough challenges. You know, when you look at what the Air Force is tasked to do and maintain air superiority, basically globally, all the places where we have interests.

1:25:49And one of the most important one of those places is, you know, in the Pacific and maintaining freedom of navigation. We're already I mean, we're seeing how that's going in, you know, in the Middle East right now. We all got a nice inside look to some of that this week. But it's a it's a really hard problem. You know, the distances are really long. and you know our current fleets of fighters be they 4th gen 5th or gen you know they really don't have the legs to cover the kind of ground that's that's required out there so you know I would not be surprised if this aircraft was significantly larger than than what we've seen before increased range those kinds of things that's just kind of the nature of the problem that's out there but I don't feels low to me since I in the in my mind it's like F-35 it's a trillion dollar program is this one of those yeah i mean this is this is like the start just for the the emd phase engineering um manufacturing development so it's like it's like the r d phase like so you built a prototype now like go turn that prototype this is like the chat gpt prompt phase right do these companies get so big that there's just like you know massively massive variance in terms of like competency right because like over the last couple years i think a lot of people that I know are like, oh, I don't want to fly on this like, you know, Boeing jet.

1:27:09I'm going to go like take this flight with an Airbus or whatever. But like clearly the government has like confidence in Boeing. Is that just like the norm for all these contractors once they get to a certain scale? Like there's certain teams that are just like highly competent and sort of at the forefront of some of this stuff and other teams that just have, you know, maybe leadership issues or, you know more cultural issues etc yeah I mean I think each each of the primes have their advanced development groups you know Lockheed S Conquer X Boeing has Phantom works you know Northrop has their own and so forth they kind of do these early stage development programs that that precede production but frankly I think all of them have like really grown like pretty old and sclerotic to to use a Trey Stevens term.

1:27:58The evidence of that is how long it has taken to develop new aircraft in the modern day. There's this chart that I absolutely love. It's a timeline on the bottom, and then how many years from program start to initial operational capability for aircraft from 1945 through 20, 2005 to 2010, something like that. So between 1945 and 1975, the average time to bring a new aircraft from the beginning of the program into an operational capability was five years. And then since 1975, that duration has gone up linearly to the point where I think the F-35 was like a 25 year program. and even even this one you know the next generation air dominance uh fighter is already like 10 12 years into its program like sure we flew a prototype five years ago um but that was that was maybe already it's like the opposite of the 100 million dollar arr graph where it just keeps getting shorter and shorter it's like exactly it's exactly the opposite in airplanes and so like it's too bad this all changed in 1975 like it's blatantly obvious where the knee and the curve is so you know what happened in 1975 kelly johnson retired from skunk works literally just one guy you can't you can't make this stuff up so uh yeah like the f-117 happened like five years after that so that was like ben rich and and his group so like very much you know still of that of that culture but um you know uh iterative development like the way that spacex develops rockets now the way that we're building airplanes here now this like one aircraft per year cadence we haven't done that in in decades and the result is the development timelines for um you know solving hard problems they just they just go out and to the right and then you stack on top of that cost type contracting and incentives and all those kinds of things and um you know the uh a lack of you know like founder-led companies building fighter jets today um that uh that happens yeah no that's a really great point uh do you have a last question is there camaraderie in this sort of supersonic uh it's a bitter rivalry i've been trying to get boom to do a foot race with you we're gonna find out who has the faster plane i want to find out who the faster founder is break it down so i'm i'm finally having knee surgery okay to fix my acl okay it's specifically for this reason so i can run this race this is why i'm doing it so anyway for those who don't know blake sholl is over at boom also building hypersonic technology very different application very different path very different scale company and stuff but uh but i i love the idea of there being like serious drama in this space and like we can track it day by day oh what's aj doing are you on blake's team or aj's team i think it'd be great for the industry overall like it's good for the industry overall exactly like hey we just we just want to fly at hypersonic speeds yeah like we are we want to be able to do every application i want to see t-shirts just random normies are wearing like hermius merch because they're so invested in the drama like straight up vanderpump rules level like People Magazine, paparazzi photos of you anytime you go outside.

1:31:03This is my dream for what tech can be. Yeah, yeah, well, I mean, we got a little bit of a race, right? So boom flew supersonic this year, and we're building an airplane right behind me that hopes to do the same. Well, good luck. I mean, I'm rooting for both of you, but I'm especially rooting for you. We just won a pod. We have a pretty fast pace at the show, but we're not hypersonic yet. Not yet. And being able to do this show from the air with you, would do that do an interview in the future yes there you go plane would just be fantastic incredible so thank you for coming on yeah always welcome thanks so much for having me guys appreciate it have a great rest of your day you too see ya i love uh how everybody's just calling in from the floor oh yeah it's fantastic uh well speaking of love our next guest is connor love connor love they named they named love after connor did his family create love yeah they productized They productized it.

1:31:55IP. They made their money in love. They made their money in love. There he is. Hey! You did it, Connor. What up? Hi, guys. I mean, I wanted the chatter to go on. I feel like I'm on Sports Talk Radio, you know? You are. Long-time listener, first-time caller, right? Yeah. Well, good to have you here. No, it's great to have you. You had a thoughtful comment. I just said, come on the show. You were like, I'm game. Let's do it. So here we are. Well, let's start with that thoughtful comment. I mean, first, introduce yourself, break down who you are. Yeah, of course. Yeah. No, happy to. I help lead our national security and defense investments here at Lightspeed.

1:32:25I've been here for five years. I used to sit on that side of the table, actually served in the military for about a part of the decade. So, yeah, excited to chat. I think there's a lot of spice. I mean, love Dallian to death, but let's get into it. And set the table for us on size, scale of Lightspeed, and then is Defense Tech its own fund, or are you just making investments? Yeah, obviously. So, you know, history at Silicon Valley Firm, been around for 25 years. I mean, we talk about ourselves like a platform. So we'll write a million-dollar check early or we'll deploy a billion dollars late.

1:32:57So have the full kind of stack platform, obviously based here in Silicon Valley, but have offices in reach globally. I sit on the Frontier Tech team. So myself, Ravi and Ravi Raj and Taggart really invest in what we call Frontier Tech. What I lead a lot of is all our national security, all of our defense stuff. And it comes out of the same core funds. So it's not a separate thing where we have to deploy$500 million a year in this. It's really kind of up to the team and up to how we see the ecosystem. Cool. That's very helpful. Let's go to the drama. You and Delian. Break it down. Before the drama, I'd love that, you know, we were actually talking with Delian how, you know, the last two years, a lot of VCs, you know, went amended their LP agreements and said, well, actually, I fancy myself a bit of a defense investor myself.

1:33:47You know, I think we all did that. I did that as an angel, right? I've got my bets. Everybody realized it was cool to be a patriot. Do you think that do you think that it's are there real blind spots for investors that don't have military backgrounds? We just had Steve Simone on the show from Allen Control Systems. He was a nuclear engineer in the Navy. Like that clearly sort of informs how he thinks. How much of an edge do you think you have? Because you actually have have, you know, lived on the customer side. I mean, like most things in life, if you haven't lived and breathed the problem, it's really hard to roll up your sleeve and understand what's real and what isn't.

1:34:26I think the thing that's quite obvious, though, is the fundamental pace of change of technology is happening so quickly that even what I was talking about 10 years ago. And, you know, I sat out in the Pacific kind of before the Pacific was cool. I wrote a million memos about hypersonics and space-based systems. And I worked directly for the kind of the four-star command of the Pacific. and like we were talking about basic shit back then. Like we just didn't have enough mass and system. So I do think there's this clear edge of understanding who the customer is. More importantly, like, you know, the crazy thing about defense tech that I think not a lot of people realize is there's really not the concept of product-led growth.

1:35:05Like you can't just dog food something with a customer and then all of a sudden the colonel or the general out in the Pacific is like, great, I'm gonna buy$100 million this thing. I mean, it's not how it works. I mean, Congress has to say we have program offices. We have this complexity of just utter chaos that makes this really hard. So, you know, long story short, it definitely gives me an edge. I just think things are evolving so quickly that, you know, again, the edge isn't enough. Like, you know, you need to get lucky a hundred times. I mean, what does Trey say all the time? Like they got kicked in the face for what, seven years straight at Andruil before coming today.

1:35:39So it's not easy. Like to be clear, I'm not pounding the drum that like there's going to be a hundred Andruils. Like, I hate to break it to you. There's not. There's going to be a lot of investors who are going to lose their shirts. There's going to be a lot of entrepreneurs who are going to try and fail. But as the cold blooded American who served and been on that side of it, like this is all not good for us. More people building new technology to get in the hands of warfighters. The question is, like, as we as a DoD, are we going to get out of our own way and buy the right stuff at the right timeline?

1:36:09Yeah, I was always bullish on that with the hard tech. even if it was a bubble it's like it's so much better than some of the other tech booms where yeah like it falls out and then what were what are your durable skills just like chilling meme coins and that's what you're going to do next it's like at least if you like you know graduated college went to work for some hard tech company it fails but you learned like system design like welding like you know dod like you learned so much of these like tangible skills like at the very least like okay yeah the vc dollars they didn't just go all the facebook They went into buying manufacturing capacity.

1:36:41Maybe that manufacturing capacity didn't produce profit. So it's got to get rolled into other stuff. But at least we have more machines in America. So I was always like, there could be like a piece dividend from a bubble, even if there is a bubble and there's a washout. Anyway, do you have a next question or you want to move on to the continuing resolution? Yeah, let's get into that. So yeah, can you start by like breaking down just how you processed the information and the news around the continuing resolution, maybe restate what you feel like is going on and then your take on it. Well, and I think this is, you know, I won't get too in the weeds, but I think this is really important to fundamentally understand how Congress and how our Department of Defense spends money.

1:37:24And I think like people just read the headlines, the defense news, and they're like, ah, Elon's cutting budget, ah, continuing resolution. And yet all these companies are being funded, like what's going on? Like there's this clear misalignment. I think the reality sits actually a bit more nuanced than that. And when you look at how the Department of Defense spends money and Congress allocates money, we pass this thing called the National Defense Authorization Act. And this is literally the president, Congress, both sides of Congress sit down and they say, what are our needs? What are requirements?

1:37:53And then what they do is they pass a law very clearly that says, here are the budget tables. Here are the things that we're going to be spending money on. And it's this like, you know, I give the Andrew guys a ton of credit here. Like, you know, it's rocket science and literally what you're building, but it's not rocket science to figure out what the federal government actually wants. Like we publish these things called J books every year. We pass laws. And so historically, if Congress and government works the way it's supposed to work every year, we have this new national defense, you know, authorization act that gives the department of defense a budget table to say, Hey, air force, here's a hundred million dollars, go buy space lasers.

1:38:30And when that happens, you get this really predictable nature of what's going to be bought, when it's going to be bought and the quantity. The problem is when you have disruption, like we have right now, like politically in the government and you can't pass an NDA. And let's be honest, like this has happened a lot in the past. You know, you do this thing called a continuing resolution and a continuing resolution, just as Dallian said, is this like blanket bandaid where you just set an arbitrary period of time in the future and you say, hey, just keep the thing going. Let's keep the thing afloat.

1:39:00Let's kick the can down the road. And it's just like, let's be clear, like this is not bad. Like this is not good. Like not how a functioning government should run. But I think the nuance here, and this is like what gets me so giddy. And like to Delian's point, like, yeah, like the Matt Stackmans of the world and, you know, those guys aren't like tweeting at him saying like you're wrong. It's because like those guys who really understand what's happening and how to sell the government, they're actually texting their co-founders and they're sprinting at shit right now. And that's what's happening.

1:39:30So this continuing resolution, the nuance here that happened is again, like, you know, go read the section, go read the bill yourself. But effectively, the rule was changed where you're allowed for new starts. And new starts is just what it sounds like. It means that you can start a new program and allocate money towards something new. And again, like there's also a ton of bad in there. There's rescissions. There's like, hey, you can no longer have$100 million for space-based lasers. You can now just have 90. But where the like, and I made this like, there are sharks and there are menows in your budget happening right now, is the sharks, the guys like Brian Hargis, he's done this at SpaceX, and is at Castilian now, like the Stackmans, and the list goes on and on.

1:40:13What they're doing right now is they're looking at each of these new rescinded budget lines, each of these new minimum lines that Congress has gone back and forth on the CR. And they're going to those program offices and they're saying, hey, maybe you don't need 90 million, maybe you need 80. And the nuance here, why this is important is each one of these new budget lines are theoretically, and the key word is theoretically, allowed to be moved around now. And so what I'm seeing in my signal chats, in my discussions with both people in government and those, what I would define as like tier one founders and go-getters is like, holy shit, like there's, there's 200, there's$300 million that, you know, again, it's a big F right now, but there's a lot of money being moved around.

1:40:54And so when I made that comment and when I look at, you know, kind of this brooch of probably, like there's so much disruption and there's so much variation of what could happen one way or the other is like, I actually think you're going to see one of two things happen this year. You're going to see a small amount of companies and, and, and timing like anything in venture and, and starting a company is really important here. If you're in the right spot of the kind of growth journey with your product, and again, like this is the beautiful thing about hard tech, your product doesn't do what it says it can do.

1:41:24Like who cares? Like, you know, move on type thing. And that's the beauty where the chickens are all going to come out to roost for all of us at some point. But again, I just think there's so much in your money up for grabs that I think by the end of the year, and hold me to this, you're going to see one, two, three companies that will get, I mean, high hundreds of millions of dollars of in-year revenue grabbed for real production, real OT contracts that has never happened before in a CR or non-CR. Very cool. I got a bunch of follow-up questions. It feels like the United States does our defense budgeting and planning.

1:42:02We're like building in public. And we joke about this all the time, building in public for most people, sure, share maybe some progress, get excited on the timeline a little bit, but generally like you're just sort of inviting like, you know, unwanted attention. You're saying the CIA's black budget should be 100 % of tax revenue essentially? Yeah, but no, no. I like that. No, but like how does China approach all this stuff? Like I have no idea and maybe you don't either, but maybe you have insight. Like it seems like they wouldn't be like, yeah, we're going to just like air our dirty laundry out here and like be like, well, we, you know, we're going to tell, yeah.

1:42:34Is that, is it, you know, break, break it down. Yeah, I mean, at a high level, what we have working against us is, for better or for worse, the Chinese government is pumping an insane amount of state and federal dollars towards these critical technologies. Like, yeah, there's a VC ecosystem that exists, obviously, but like it is in, you know, like nothing in compared to the amount of money that China as a state entity is putting behind everything from rocket watch systems to missiles to autonomous systems to AI ecosystem. And, you know, what you don't have, obviously, in the United States is you don't have this massive kind of call it industrial complex where it's like, yeah, you know, we have this thing called SIBERS, these small business innovation research grants that like are two, three, four million dollars that help people get off the ground.

1:43:20So there's this huge like parody of just R &D spend that is happening. And when it's coming from the government, it might not be efficient, but it's so large in a way where you're just able to fail 500 times. And like, you know, it's not like the VC fund goes out of business. And, you know, it's like the government will keep existing and keep pumping dollars into it. I think the edge we have here, because I'm an optimistic cold-blooded American as opposed to a doomer and gloomer, is I actually think the competitive ecosystem we have, and I've told this to everyone in government who listen to me, and again, this might be controversial, but like we need to stop funding a single SIBR in our DOD and in our federal government.

1:43:59And the reason I think that is like in a historic world, Sibbers have been this thing to get a company off the ground to like, hey, I need some money to develop something. And that's like net good for like entrepreneurs and people. But now you have this wonderful thing called, you know, venture capital ecosystem who's now said, hey, I'm actually really interested in the risk in this. And I believe in your vision. I want to back you. you actually get the right incentive alignment here, where if we do our job right, and I say collectively, like me, Delia, and GC, the whole list of folks, then we're going to be funding the right things that have true technology behind them, have the right entrepreneurs and founders who get what they're doing.

1:44:38And so I would much rather take our system, just to be totally blunt and honest, than this Chinese, like, let's pump trillions of dollars. And they're doing that because I think this is more efficient. And I think the cream's going to rise to the top of like you're going to see again not a hundred andurals i hate to say it but you're going to see some pretty large companies that are that are solving real problems for the department of defense there's you you mentioned space lasers randomly sorry is that like this ties into kind of a question i had which is uh within defense tech uh there's technical risk and then there's distribution risk and it's almost like the distribution risk kind of weighs over the technical risk because even if you're building like you know autonomous submarine products well then it's like yeah like you could build the amazing product maybe you would you can't actually sell through but the on the tying off of the space lasers thing like because there's so much distribution risk are we taking enough technical risk are we funding enough sort of like weird science fiction or is that better suited for skunk works in the government and or do we need to get weirder.

1:45:44I actually think it's the right question. And, you know, I'm biased, obviously, and I see how we do things at light speed. I think about things in a spectrum of like, on one end of the spectrum, you have what I call like true science and technology risk. Like this is the like bits and atoms thing. Like if a fusion reaction doesn't take place, like you don't have anything, like there's nothing there. On the other end of the spectrum, you have the kind of commercial products that we know exist. Like we can get a car to drive, we can get a software system to kind of, you know, be a CRM or whatever.

1:46:16You know, it's like, you know, you have no, you have arguably no tech risk on that end, but you have huge kind of product market fit, like customer go to market risk. I think the Holy grail. And again, we take this approach at Lightspeed is like, number one, like you need to build a portfolio that's really thoughtful about the type of risks that you take. So on one end of the spectrum, I wouldn't take fully science and technology risk. On the other end of the spectrum, you're not going to have big enough outcomes if you're just making another CRM or a software tool to apply to the government. The sweet spot, in my opinion, is what I define as these systems companies.

1:46:48And again, I'll use Andro as an example here because everybody knows them, but it's like there's a clear software kind of component to what they do. They're going after end systems. They're building really hard shit that's hard to do. There's some physics kind of, you know, like barriers to kind of figure out. But the beauty is each new system you add as a systems company only makes that flywheel on go-to-market that you've secured, you know, before easier. Like, again, when you're a multi-product company and like, you know, Ceronics getting there now, like other, you know, Castilian will get there eventually.

1:47:22You know, K2 in space will get there too. like once you've made one sale and made one customer really happy you show up with the next four or five six different products and you you know you have credibility you have contract history you have the ability to actually deliver and do what you said you would do i mean the dirty little secret that everyone knows about andrel is like the the the acquisition machine that they are with like app and grim and babak and the team there's like they're taking things that are cool pieces of technology and they're 10, 100 X in them. And it's like, nobody else can do that.

1:47:54That is such a unique kind of ability as one of these systems companies. So I think if you're, if you're a venture capitalist here, number one, like I go back to my statement before you need to know what real problems are. If you don't know what real problems are, and if you don't know where government is spending money, you're shit out of luck. You're just going to be wandering and throwing money at the hot thing. But if you know where the pots of money are, if you know what the needs are, and you do this really balanced approach of some physics risk, some kind of go-to-market risk, and then you just have a bunch of these systems companies that can get really, really big.

1:48:26I mean, again, I think that's how you return venture funds. I mean, that's what I'm in the business. That's what we're in the business of doing at Lightspeed. Great. Great insights. Do you think there's – our show is oriented around venture, but in order for some of these venture-backed companies to actually do what they need to do, They need to partner with a bunch of small businesses to actually produce everything from individual parts and things like it. Do you think there's an opportunity for basically SMBs to pop up to service some of these venture-backed companies that want to focus on the technical risk in selling, but then they have to produce a bunch of components as well, and they can't make 2 ,000 parts for a single missile, right?

1:49:09Yeah. I mean, let's be clear, and I'll actually be really blunt about this. I think how this entire ecosystem, both from an entrepreneur and a VC perspective, like defense tech, how this goes wrong is we actually cannot deliver on the systems that we are selling the government. I actually think the snowball of like accepting new tech, while it's still small in the grand scheme of things of the budget, I do fundamentally believe that snowball has started to move. And so how we fail, to be clear, is that if we cannot produce at scale with efficiency in the scopes that we say they're going to do it, and for better or for worse, we don't have an industrial base in the United States to solve that.

1:49:50Like, we don't have – I mean, the mom and pop shops are dying. I visited them. From Southern California initially, you go out into the kind of desert there, and it's like one guy after one guy after one guy. He's built like a$7 million business doing this one thing over and over again. Those guys are dying. We do not have an industrial base to serve this. So the question, and this is like the real big, like, you know, people push me all the time, like, how is this bubble going to pop? How is this going to fail? It's if we, if companies like those systems companies can't find a way to vertically integrate themselves, or they can't figure out a long tail supply chain of how to produce not just a couple hundreds of these systems, but a thousand, then I think we're in real deep doo-doo.

1:50:30And you've been in this situation where you've oversold and under delivered and you don't keep billion dollar contracts if you do that. So I think we have to. Like, can SMBs do it? I don't know. You know, maybe it's Chris at Hadrian. Like, maybe it's the long tail defense tax. I mean, I don't know. I mean, we'll find out very, very soon. Yeah, I was going to ask about that. But in terms of, you know, there's this meme of like, you know, maybe it's very risky to directly compete with Anduril on a program that might they they might be launching like next month. Like they launch very quickly. But what what is interesting to you?

1:51:04Where do you see the opportunities in hard tech, but non-competitive with Anduril? We talked to AJ at Hermeus. I don't think Anduril has plans to work on a Mach 5 autonomous plane or passenger airliner. Hadrian and even like a Rainmaker. Like, you know, it is like Anduril hard tech coded, but it's so far field that it feels safe to work on. What would your advice be for the next generation of hard tech airliners? Yeah, I mean, again, like I'll start with the same through line I said before. There's not going to be 100 Andurils. Like Andrel has a clear, unique market positioning of how they build different products into their family of systems.

1:51:41I think the way to think about it, both as an entrepreneur and as an investor, is I actually think about like unique fences you can draw around, not just around like a technical product, you know, a system, but also a customer. And I think this is like really important when, you know, if you don't understand how the DoD works, like the Navy has all their different program offices that like some for underwater, some for surface, some for missiles. And those program managers, they want their solution to build the better thing to then deliver better tools to the Navy. So if you can be unique enough, and part of this is like, yes, looking at what the large guys are doing like Andrew and SpaceX and et cetera, you need to be nuanced enough initially with your product that you're showing up to the table with something new where it's like, uh well you know like uh you know anvil is kind of doing that or or you know roadrunners kind of that thing so i might as well just buy that because you know andreel's been already there they're already in the room they already have the need but but i but i think the nuance here is like if you can make a leap from a customer and a system to an adjacent enough thing where you know andreel might be in the ecosystem um there's still a really massive opportunity to be built i mean Sironic's a great example of that.

1:52:57Sironic is off to the races now and building a bunch of autonomous boats. And it's going to be amazing to see what Dino does. But Androil's underwater. Androil's building autonomous systems. I do think there's a world where both of these companies actually work really well together. And in this wonderful world where we're doing teaming and orchestration, a bunch of multiple autonomous systems, you want as many people orchestrating on the same platform as possible. I think the last thing I'll say is just where this goes wrong. this goes wrong in a way where both Andruil but also these companies start to build kind of stove pipes around what they're doing and you know there's like really basic examples like you know we want to get to a world where we have Skynet where these systems are kind of talking to each other and playing out and if you don't allow your infrastructure your software infrastructure to work with other things then number one like you're creating a really adversarial environment with Andrel and other big guys.

1:53:51So in my opinion, like working with Andrel as opposed to working against Andrel is the answer here. Jordy, what you got? This has all been great. I don't think I have any, I think that covered, the one thing I was wondering how you're advising portfolio companies right now, we're in a sort of defense tech bubble. We've sort of aligned on that and it can be a good thing. And so there's definitely a push for companies to take advantage of that and say, like, you have a short period of time potentially before, you know, there's a cooling off period and maybe there's less investor interest and certain investors maintain long term conviction, but then certain others, you know, pull out or pull back.

1:54:37um how are you advising portfolio companies on like you need to move super quickly because you know there there are these sort of behemoths that are going to be built in the next few years but at the same time you want to be conservatives because if a contract if it takes you an extra year and a half to get a contract and then you run out of money like it just doesn't matter so like how do you advise you know i'll actually take it one step further which is like if you believe you're gonna win a contract in the near future and you don't make that decision to raise more capital now, you actually can't deliver on the contract.

1:55:09Like back to my comment of like, you got to produce real things. And if you don't have capital to build out the factory, to build out all the testing infrastructure, like you can't do it. So I, I, I, again, like, like most things, it's a bit nuanced. I mean, the, the advice that I give portfolio companies is there becomes a, a terminal value or a value of your business that, that you only have one, one path to go. And again, this number has made me moving a little bit, but it's like the second you start to raise above$500 million, maybe early investors will get a good outcome. But near-term investors and you as a company, you're either going to be a public company or you're going to be bought for a private equity multiple.

1:55:51And I think the level of conviction that founders have internally on the ability to win real production contracts or the ability to deliver and get to a technology milestone should be that like internal like test of a founder of like, do I have line of sight to that? Do I believe that will happen? And if the answer is yes, then again, like you're going to need the money, then I advise founders is like, let's take the swing. Like we're in this to build massive companies. I'm not in this to build a company that gets sold to Lockheed for parts, like, you know, whatever, maybe good outcome for a founder, but that's not what we all play for in this ecosystem.

1:56:27We want to build generational companies and I want to back generational founders. So it's really just that internal sense of like, all right, like this is the product. We believe we're going to win the product or we're going to win the contract. So let's do it. And so it's, I don't know, you put your pillow down, you know, head on your pillow at night when you're a founder. And if you know, even all the risk and all the being punched in the stomach, that there's true line of sight to real production contract value, then raise the money. I think the time is right. Can you give me a little bit of a crash course on KPIs, multiples, like what stats are important for defense tech companies as they're growing?

1:57:05Obviously in SaaS, we know triple, triple, double, double, double. We know ARR and churn. What are you looking at in the growth stage? I mean, the geometry of defense tech, you know, company growth looks unlike anything else. Like it doesn't look like software. It doesn't look like consumer. What it looks like nine times out of 10, and there are some anomalies here, And I actually think there are going to be some anomalies during this continuing resolution. But nine times out of 10, you get this really small, like, SIBR revenue. Like, I don't have a system yet. I got to develop the thing. I got to go get someone to pay me for some small, like, two, three, four, five million dollar R &D money.

1:57:42And as an investor in this ecosystem, I actually discount all that revenue to zero. I don't, you know, whatever. It's not like we're applying multiples at the early stage. But, you know, you see this, like, middling. And then you see, again, this just stepwise change and improvement where people overuse the term program of record. Most times it's actually not a true program of record. It's actually either just a really large OT other than transactional authority or something like that. But then you see this stepwise change of like, okay, you got children dollars, and then you got this massive kind of call it 200, 300,$400 million contract.

1:58:18And so the KPI that I always think about is like there's a separate technical timeline of de-risking your system. And like it's our job as investors to roll up our sleeves and be like, is there real progress? Can we see this? Is there more testing? Like what's happening from an iteration perspective? But then the holy grail is like, and this is where you're either really smart as an investor or you're really dumb, is, you know, you make the – you lead with the preemptive term sheet. You make the investment actually right before that tick and right before that big production. Because the beauty is you win a$200 million production contract.

1:58:55Yeah, maybe it's over a couple of years, but that's the base cash line of your business. And that's the get out of jail free card of like, hey, now we're not using a ton of venture dollars to develop the next thing to build the next factory. So to me, it's like you get that internal feeling of where we are, like how close we are to those programs. and like, you know, it's not a clean, you know, oh, net dollar retention is this. Oh, you know, you're doubling year over year, tripling year over year. You just gotta be nuanced and you gotta know what the hell, you know, program offices care about and how they move.

1:59:29That makes a lot of sense. I've loved having you on. It was great. Thank you so much. This was really fun. Yeah, guys. Any, you know, when you're, you know, next time you're putting$500 million into a cool company, join with the founder. we'd love to have you both on yeah guys well I appreciate it love what you guys are doing huge fan thanks so much alright chat soon talk soon bye and we got Chris Power coming out of the show next from Hadrian he got a little mention in that earlier interview Connor mentioned it I'll be right back and Jordy is taking a break Well, we will be back in just a few minutes, folks.

2:00:07But in the meantime, let me tell you about AdQuick. AdQuick.com, out-of-home advertising, made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only AdQuick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying across the globe. Go to AdQuick.com. Sign up, run a campaign, and get some beautiful billboards out there. Then take some photos, send out a photographer, take some photos, get them on social media, put something funny on there. The AdQuick team is really, really good at coming up with kind of like viral stunts. I mean, Mike Solana did a Pirate Wires billboard for AdQuick.

2:00:43They have a partnership together. And I think he got like 100 ,000 likes on X. I think Elon wound up retweeting it because it was a big milestone for the company. They put up Moon should be a state right in Times Square. And speaking of the Moon, we got one of my good friends who's obsessed with the Moon, Chris Power. Welcome to the show. So Jordy's slacking off. He's taking a break. He'll be back in a couple minutes, but good to have you. Welcome to the show. Thanks for having me. It's a pleasure to be at the Capitol of the Capitol. Thank you. Yeah, it's good to have you here. How has life been?

2:01:19You've been traveling. You were spotted on a flight to Washington, D.C. a couple weeks ago. The paparazzi caught you. Yeah, that was crazy. Yeah, that was crazy. I didn't realize that there were so many spies out there in Silicon Valley. But how was your trip to D.C.? It was incredible. Obviously can't talk about most of it. Some of it's classified very impactful, especially with the new administration coming in and wants to fix American manufacturing. And the vice president gave an incredibly rousing speech about re-industrialization at the fundraising conference. So it was incredible. And yeah, look, I don't know who leaked that photo to you.

2:01:52I was a bit concerned whether it was a fan or like a communist spy tracking down a little fence tech founders, but you know, you've got to be careful these days. Yeah. Yeah. You gotta be careful. Maybe wear like a full beard and glasses next time. full disguise. I just got to go out and say, I think you have the coolest office of anybody that's been on the show so far. It's a fantastic office. Unless it's a green screen. It's not. I've been there. It's real. It's not a green screen. Real factory. And a lot of machines working constantly. How are the lights today? I know that on the top of each one of those machines, there's a light.

2:02:22It can turn red. It can turn green. How are we looking today? Very, very green, fellas. Very green. That's great. Just like the ramp logo. Everything's going on. Fantastic. That's good to hear it. Well, anyway, you didn't even get a chance to introduce yourself. Can you just give us the high-level pitch for Hadrian, what you're building, and where it's going? Yes. I'm Chris Power. Hadrian builds autonomous factories. We de-industrialized the country from the 70s through the 90s and gave all our industrial power to China. Now, the incredibly skilled workforce that does incredible technical things in high-precision machining or castings are all aging out.

2:02:57We really don't have an industrial base anymore. Our mission is to re-industrialize the U.S. by building highly automated factories that are as efficient as China with a lot more software robotics and a new manufacturing workforce. I see that the lights are on in that factory. We're trying to get to lights out factories. Is that the goal? Is that just Chinese propaganda when I hear them? No, we're lights out today. We run 24-7 with a handful of really smart people running the fleet. The lights are on now because we're all here. We're 24-7, seven-day-a-week operation. Wow, that's awesome. Can the robots save us, right?

2:03:33It's a very scary time right now where China's producing a lot of robots that can be used for a lot of things, flying maybe over your kid's birthday party to get fun footage, or they can be used in kamikaze ways. But it feels like automation and advanced robotics-led manufacturing is the only way that, like you said it yourself maybe the only way that we really re-industrialize we just don't have this sort of skilled labor force but um you're you're betting that the company on that uh but uh but maybe kind of talk a little bit more about that specifically yeah i mean our goal with our software and robotics is to make it so easy to be highly skilled that anyone can do it um and 100 of our workforce are people who've never set foot inside a factory before they're just 10 times more productive because we're getting them superpowers with software and robotics, right?

2:04:31And I would, you know, you guys are big fans of Formula One. So like a lot of what our software does is, you know, imagine if your son or daughter who was learning to drive that Tesla autopilot on an F1 car, they can just, you know, drive a McLaren very quickly without much training. That's kind of what our software does. And we really believe in using the best of software and robotics to give the new workforce 10 times more efficiency with superpowers, you know, versus like replacing them entirely, you know? Yeah. And so is this the same way, like, uh, to compare it to yesterday, anybody can, can do, uh, Ghibli studio Ghibli animation.

2:05:06So like anybody should be able to make like, you know, the, the most, you know, advanced aerospace, you know, parts, et cetera. That's exactly right. That's exactly right. Yeah. Um, uh, is, is, do you think we can get to the, like what was impactful yesterday is that over the past maybe a couple years if you were really really good at prompt engineering you could uh you could kind of create some outputs like we were seeing yesterday but the average person would go into these models and they wouldn't have any success right they tried a couple times and be like this is slop are we still at the point today on the sort of manufacturing side and what you're doing where it's like you need to be like actually like very very good but you're sort of aiming to get to that point where somebody can come in and just sort of like make make a part and one shot it i think 80 of our processes were at that point where we're in ghibli mode one shot uh there's some really deep digital manufacturing stuff that you still need an expert to do so we're in the like software engineer is 10 times more productive land versus anyone can code but i would say 80 of our factory is like anyone can code today are are there a the the specific programming language is like cam programming right isn't that it yeah um is there is there like a are there llms that are good at that type of coding language like there's no cursor for cam that you're like on top of and just plugging in to speed things up no so we had to build that full stack ourselves okay um and the main reason is all of those digital manufacturing tools which are super hard to use and you need to be an expert generate basically terrible assembly code that the machines run on yep um but because american manufacturing is largely regulated in itar there is no training data on the web yep so uh the one of the reasons why our internal models actually work for manufacturing you know machine learning models is because we're the only ones with the label data set because we're creating it daily in the factory there is no stack overflow for manufacturing data so none of the off-the-shelf models actually have ever been trained on any of this interesting uh i imagine that every hard tech defense tech frontier tech founder eventually has to come through and kiss the ring uh at your uh at your factory just because it's like hey they're basically like hey we're gonna make we're gonna make prototypes and then we're gonna go sell contracts and then we're gonna eventually need to deliver on those and like somebody's got to make the parts uh how many how many companies right now do you have that are like they're going out there promising these big things and then you know at the end of the day they're going to come back to you and be like okay now we need to make this is that like because i imagine you you you work with some of like some of these sort of more established companies but then i'm sure like i'm sure there's like a hundred plus you know pretty exciting companies that are basically like in almost like in your pipeline where they're like we're going to work with you we just need to like prove that we can someone's got to make the parts for the f47 yeah and you know someone's going to make the whole products as well so you know i would say that for a large established customers like you know we're making a lot of stuff for them for a lot of the newer entrants are for new programs.

2:08:06We are becoming a like co-prime where the DoD, Hey, Hey John, uh, you can definitely make 50 drones or 50 of this product, but we'd really love you to partner with Hadrian because we think they should build your Tesla gigafactory for this product line. There's really this partnerships model of helping them prototype and then scale rapidly. Uh, but yeah, we're like, you know, we can only build so many factories a year. So the waiting list of, uh, everyone wants a Hadrian factory to deploy their products at scale in the U.S. is growing quite a lot, which we're very lucky. What do you think about the classic Harvard MBA who's like, I'm going to go buy this sort of SMB manufacturing shop that's putting up$5 million of EBITDA and they've done so for 30 years.

2:08:48So they're just going to, are they like buying like sort of an aging asset or is it worth, is there sort of like value in sort of like understanding what they're doing and sort of upscaling it or adding the machine shop roll-ups of the world i think in general it's a terrible idea and the main reason is is like you want to run a factory you gotta you gotta be leading the people and you gotta have that credibility and no master machinist or welder is gonna respect a kid who's got a suit and a harvard mba oncoming and telling him what to do um i think it's a really tough gig um is it also one of those things where you want to chris actually tried to do this like years and years ago yeah but is it also before it was a trend no i imagine there's been so many advancements and everything from robotics to ai that you would want to just think about the factory like how would you build a factory today versus sort of buying this asset that's been operational for decades because we're having um druva on from deterrence later and he's got all these crazy stories we're walking around these factory floors and there's an active machine being used that's from the 40s, like the 1940s, like it was working in World War II and we're still using it today.

2:09:56And so I imagine if you have the opportunity to partner with a new defense tech company and say, well, like, here's what's available now. Like, you don't have to go and try to take over some old factory. Yeah. And a lot of the capital equipment in all the naval facilities or, you know, everywhere in machine shops is, you know, somewhere between from the 1950s to the 1980s. And it's just impossible to automate it because often none of them have computers on them in the first place. So you really got to build these factories from scratch with new technology and new workforce. How do you think about when you're setting up one of these new factories and for companies that are in defense at all, are there the actual machines themselves that then sit on the factory floor?

2:10:41I imagine a lot of the best ones are built and designed and manufactured, everything like in China. So how do you think about sort of the supply chain for the autonomous factories that you guys are building and sort of, you know, it's a very hard question that the country's got to answer. So the machinery market, so we invented an Air Force invented CNC machine. And we no longer make CNC machines in the US. And I think you saw this article about, you know, Haas white labeling some China ones and selling to the Russians. But the main manufacturing markets where we buy from is China's number one, we don't buy for them because they got spyware all over this stuff.

2:11:17And then it's, you know, Germany, South Korea, japan are the best machine makers and it's kind of like the car market you know you can buy an italian one and it behaves like an alfa romeo and it's really fast but it's gonna it's you're gonna be in maintenance hell forever the german ones are really stable and the korean ones are quite good so you know if the balloon goes up with the conflict uh you know can we even buy the amount of capital equipment to put in the factories because we don't produce that capital equipment in the us anymore so you know part of my job is grow super fast and buy all the capex from our from our allied partners and make sure it's in the US.

2:11:49But yeah, we no longer make the underlying machines in the country. Can you talk a little bit about the continuing resolution? You're not a company that's going directly for a program of record, but obviously your fate is kind of tied to that. I mean, yeah, I know that you probably can, but can you talk about like, how did you interpret the news? There's been a lot of chatter about this is a bear case for the entire industry. Maybe There's green shoots of opportunity. How are you processing it? What's your strategy? So we're in a really lucky position where we're everyone's factory. So as long as we have enough customers who are winning and losing, like we're growing at a rapid clip, right?

2:12:29Because we're kind of the index of the market, right? Which is a really lucky position to be. We also partner with a select few companies, again, to co-bid on these major programs that manufacturing is a real challenge. But for our core business, you know, if you're a small defense startup that they've got one big program of record and that gets delayed nine months, your burn rate's through the roof. You're canceling your ramp credit card. You know, you can't put ads on AdQuick anymore. You're in a really tough position. No aid sleep? Brutal. No aid sleep. I mean, if you paid for it, aid sleep's not leaving you.

2:13:00For larger companies like Andrel, you know, they're working on 10 programs at once. If a couple of them get delayed, it's not a huge issue. I think Dellian's absolutely right about like if you're a startup and you're bidding on one and that revenue cycle blows out nine months, you're in real trouble. For platform companies like ours where we're growing with many customers and sure some of them get delayed, like it doesn't really affect us that much. And we're in a really good position where we can eat those long continuing resolution cycles because our core business is growing like 10x year on year.

2:13:30um so it doesn't affect us as much it's kind of like you know do you guys really care whether people watch movies on netflix or hulu because everyone's using aws we certainly don't and we try not to have favorites you know yeah we'd love to manufacture everything for everybody what uh what does success look like uh just purely from a you know the thing that comes to mind is like there was this meme that like 30 of venture dollars go to go to meta right i don't think it was quite true but is the future of hadrian it's like 30 of hard tech dollars just go straight to hadrian is like it's like obviously like if you're just if your job is to produce products like and you need a factory to do that like a huge part of the cog should be the factory and then yeah i think the most successful companies that are continuing to raise huge growth rounds are building faster and better with hadrian um you know and uh yeah i think 70 of all the deep tech dollars goes to, you know, there's some headcount for engineering, but a lot of it is producing prototypes and then scaling factories and components.

2:14:32So yeah, we believe that we will quickly becoming the index of the market. And, you know, everyone needs a gigafactory, right? That's right. What's going on? What's your thoughts on Europe broadly? We've covered the automotive market quite a lot on the show. Just, you know, Germany's kind of thrown in the towel, some manufacturing, you know, sending their manufacturers, you know, it was even Porsche setting up U.S. manufacturing. I think it's a bit of a shame. Do they, is there a world in which Hadrian, you know, helps kind of revitalize some of these, you know, the German industrial economy, just because maybe they have this great industrial base, but then haven't maybe focused as much on sort of core innovation around the factory?

2:15:17Yeah. So we have so much work to do here in the US that we'd love we'd love to support our allied partners in Europe and the you know the Middle East and countries like Japan re-industrialize as well and they often have the same kind of core skilled labor problem we've got so much to work to do here fixing the Navy fixing munitions production helping our customers scale but I think we'll get there in a year or two I think really what you're seeing in Europe is two warring tribes one is the people that uh you know set their energy policy based off the poor advice of a 14 year old Swedish girl and gave all the leverage to Russian oil and gas.

2:15:49And then you've got, you're kind of Richard, the lion hearts, you know, it's like, we need to re-industrialize Europe. Let's go make our own fighter jets and drones and naval fleets. So, uh, I, you know, it's, it's, it's good that the English are waking up in my opinion. We need, we need everyone in the fight. Fantastic. Well, that's a great place to wrap up. Thanks so much for coming on the show. We'll have to have you back soon. It took way too long to get you on the show. I know, I know we messed up, but this is the perfect day. It was a great day for this. And you've been busy. It's a perfect day.

2:16:13I'm happy to, uh, happy to be at the capital of capital anytime and uh you know god bless the united states of america and uh you know the financial system of the u.s economy thank you gentlemen just fantastic thanks for coming on great to see you bye uh early supporter yeah and i'll always remember that yeah he texted me once he was like i'm working out at the gym and i'm just cracking up laughing about your holiday guide or something like that uh we had a lot of fun we're a lot more serious today still trying to inject some humor but having a lot of fun with it and we have another guest joining in just a minute it.

2:16:45But I mean, maybe we could run it back. Public.com, baby. We've already done the ad. We're doing another. Investing for those who take it seriously. Multi-asset investing. Industry leading yields. They're trusted by millions, folks. Get over on public.com. Do we need to do some timeline or do we have a guest? We have a guest in the Temple of Technology. Welcome to the stream. How are you doing, Aaron? There he is. Boys, how are you? How are you? We're great. I think if you turn your camera horizontally, we'll have a little bit better frame over here. Is that possible? That might be tough. He's on an iPhone.

2:17:18No, that looks great. Thank you. That looks great. I don't know what you want to show us, but we love that you're on the factory floor calling in on Defense Day at TVPN. What's new? Can you introduce yourself? What do you do? Where are you? Et cetera. Sure. Aaron Slodob, CEO of Atomic Industries. And we're teaching AI how to do mass production here. um we're we're in detroit uh let me uh can i turn my camera around you should you can do anything on the phone yeah there we go oh there we go all right so yeah this is the chetto this is uh this is a very very big boy this machine is 18 feet tall okay and right now we're loading in uh that job that's going there we can go down there take a little walk cool this is great this is a Detroit correspondent.

2:18:12Yeah. Aaron slowed off. From the front lines. Why not? For anybody out there who gets motion sickness. Yeah. Maybe go audio only right now. Behind me. We need to get you a gimbal. In these boxes right here, we've got a huge production program going to the New York City Subway Transit Authority. Lots of work happening, obviously. Re-industrialized, right? Cool. So wait, you're doing the meme. You're doing the meme. I am doing the meme. I am doing the meme. You created the meme. This is a very, very large mill and drill machine that we use for mold making. It's not super apparent here, but this is going to be a mold for a drone ultimately.

2:18:58Cool. Wow. And that thing is basically blasting holes in the side of it to drill in water channels and things like that to cool off the mold while it's running. Super interesting. And so you were talking to me earlier. we got coffee like years ago and you're telling me about like if you need to make a lot of bumpers for cars you need a mold for that and so you make the mold but the mold gets hot and so you drill a bunch of holes in there so the heat dissipates is that still the playbook or has it evolved a little bit yeah i mean basically what we were trying to prove out in the early days is like our mastery over mold making right and so like part of mass production is being able to make a mold for something you know as fast as you can and doing it really well and obviously this is like the domain of trades people uh it takes hundreds or thousands of hours to actually engineer one of these things and you know you have to build it too so uh ultimately what we're trying to do is teach a computer how to actually engineer these things in like minutes um instead of you know weeks and months and then have it flow through the factory more efficiently than it ever has been able to And then, yeah, once you actually put the mold into a production setting, it runs more efficiently, too, because it's physics optimized.

2:20:10So you can squeeze out way higher efficiency from these things when they're running. So here's one of the programs running right now. We've got some parts here. You can check this out. Wow. I have no idea what those are, but they look cool. Yeah, yeah. Have you ever done any microphones, mic stands, any national security critical stuff, podcasting equipment? Yeah, it's all national security, all ITAR all the time. I do have a question about how you actually generate the designs that then you manufacture. How much is physics-based solver deterministic computing versus more like AI generative, non-deterministic?

2:20:54And then on the AI side, are you getting into reinforcement learning or is this just like, let's get a big pool of data and train like it's an LLM? Yeah. So basically what we're doing is kind of similar to how self-driving cars were built a long time ago. So you do have to have kind of like numerical solvers that characterize a physics problem pretty well. And then once you dial that in, you can start using it to seed a model to do something. And then obviously you have a factory to help you like close the loop on, on the prediction ability. Right. So the idea here is that, you know, with the solvers and kind of like the models that we build on top of this, you have a factory that generates all this awesome data.

2:21:36All ultimately are trying to do is just like predict the physics of a mold and the design of it as fast as you can. So in terms of like LLMs and how they play a part in this stuff, it's, it'll become more apparent over time, I think, but you know, on the physics-based side uh very little yeah and then like in terms of like coordination and uh i think like execution um of said designs and kind of like factory operations it's huge um a lot of that stuff can be really great like you know agentically for helping you know the efficiency here yeah there's a little bit of like uh when all you have is a hammer everything looks like a nail syndrome with the llm stuff right now where people are like let's just stuff it in everything and it's like there are other there are other algorithms in fact that might be useful and uh and that's okay it's you don't need to be embarrassed yeah i imagine when you guys are you know in the customer development process like you're oftentimes there we go that's the poop uh machine poop uh i imagine you're competing with with with kind of companies in in china for on some of these parts like a lot of like you know when you hear about like the chinese manufacturing culture it's like respond bond really quickly to emails, like get pricing over, you know, be clear.

2:22:52This is Chinese New Year. It's yeah. Don't even think about doing anything around that. But but like, is that something like do you respect their game when it comes to just like being like really fast, really clear, like focusing on cost reduction, scale, et cetera? Like, do you think we can learn from them? I think that, yeah, there's there's an interesting story there, right, which is like the grit, the grit part of it. And so I do think that like if you're highly motivated and incentivized to actually win as much work as you can, you're going to do whatever you can to do that. Right. And so like a lot of American like high mix manufacturing is let me just take a look at this job and see if I'm going to make enough money off of it before I actually even like talk to you.

2:23:35So I think this is another really interesting domain of like what software and technology will do for American manufacturing, right? It's like absorbing a lot of that complexity, being able to like quote jobs for different types of manufacturing processes, like instantaneously. This is like our superpower is innovation, right? Like figure out how to do that stuff and then you can work around that stuff, right? I don't think there's a shortage of grit here, but we've been forced into a back alley of the value chain where we have to take a lot of high margin stuff because somebody else is out there doing it for cheaper.

2:24:09So, yeah, I think this is kind of like where we have to focus. I had kind of a hot take a while back and I wanted to run it by you. I was saying like maybe the secret to China's dominance in electric vehicles now and drones like actually goes back to the Happy Meal toy. and the fact that America can't make something as simple as a Happy Meal toy in America is a problem that might actually be worth solving. But how does that hot take resonate with you? Do we need to be able to make Happy Meal toys in America? Yeah. I mean, a lot of people don't want to do like commoditized classic stuff like that, because it's not going to make them enough money.

2:24:48But I do think to your point, right like uh the amount of tribal knowledge and skill built around manufacturing something is what we've lost a lot of and so that's kind of the whole point of this is like recapturing it somehow like let's take the dying evaporating amount of skill that we have left and transferred into a machine and make people you know a hundred times more productive than they've ever been able to be so i think like this is a really hard problem because you're trying to teach a machine how to do some kind of like yeah crazy physics-based deterministic thing but ultimately if you if you have if you have like whoops uh if you have crazy skill mastery this is an experiment it looks fine there we go amazing uh yeah it's it's basically it's like it's all about like the mastery of skill that you have and how you transfer it around so in my in my opinion it's like i think the fastest way to do that is by trying to teach a computer how to do it um and then you know obviously think about how long it takes to train people to do this stuff it's like a decade like do we have a decade to sit around and wait right now no i mean no all right i want some uh yeah you are sideways by the way i want you are sideways that's better i want some hot takes how do you feel about good how do you feel about waymo uh you know buying cars uh from china oh Oh, they are?

2:26:11Yeah, they are. I didn't know this. They are. How do you feel? How does that make you feel? How does that make you feel? Yeah, you should have gone to Detroit. I know. You're in the capital of Motor City. Come on. They could have bought the whole town with like one dividend payment. Yeah, basically. I mean, that's kind of how I feel, honestly. But ultimately, I don't know. I used to work at Waymo like 15 years ago. It was crazy. Wow. And I've seen that company, you know, like grow over time. but it's uh yeah i mean it's a great product it's a great product and i you know i went to san francisco like a little tourist attraction to try to get in one finally and ride it after you know 15 years of not making it but um oh my goodness yeah this is no no you're sideways again uh can you talk a little bit about um just the on-ramp from our current education system Gen Z, Gen Alpha is coming up.

2:27:09How do we get folks to get excited about what you're doing, manufacturing, hard tech generally? And then is there a need to change? When I went to high school, there was no machine shop class. It just wasn't an option. And it feels like that took my whole class off the path of ever pursuing anything related to machine shops. Now, most of those people became like consultants and bankers and lawyers and doctors. But, you know, do we need to bring back machine shop? Do we need to do more in the college circuit? Or is it really just great memes, great conferences, and people will pivot at the last second after they've been studying CS for four years?

2:27:51Yeah, I think it's two things like incentive, obviously, right? There has to be a reason that you want to do something like this. So it's either going to be pay or the glory. And And the reason that I wanted to do this is because this is one of the hardest, you know, engineering and physics problems that like I can imagine. It's utterly insane how hard this is. And like, I think I'm probably one of the only people stupid enough to do something like this. But ultimately, I think the challenge of it is incredibly rewarding. You get to put your hands on steel. You get to get cut and bleed. It's awesome.

2:28:24But beyond that, right, like if you turn factories like this into a sci-fi future, like who's to say you can't pay somebody that works in here the same as they get as like an L5 at Google or something, right? Like if you're productive enough, I mean, it kind of speaks for itself. And like beyond that, I think also, you know, training wise, exposing people to this kind of stuff is ultra important. um being able to do factory tours right like our buddy zane uh that's we need to like have factory tours going on all the time but there's there's a transformation happening right from going from like the the dirty dangerous and dingy into like relatively you know neat and kind of modern but like there's another version behind this too um so i think like really jazzing people up about the opportunity in terms of like challenge and incentive um is kind of like the main thrust for this and then yeah there's memes but also i think a lot of like preeminent industrialists today could be beating that drum a lot more and you know there's super exciting companies to go work for um it's yeah it's a big party bag full of opportunity right now i want one last question more spicy fresh hot off the grill hot take uh from you before you leave and we'll have you on again because it's been great.

2:29:45We'll have you on with a stable camera too so you can see that handsome face. I had to walk around, right? We're going to get you a selfie stick straight from Shenzhen on Timu. A Timu selfie stick. The Timu selfie stick is in the mail. Timu gimbal. We expected in six weeks, but we paid$1 for it. Last question. Is there a world in the future where you got humanoid robots walking around that factory floor or are they unnecessary with the other forms of automation that you have going on? Yeah, I mean, I would love to. I think they could probably be pretty useful for, you know, little stuff that requires less precision and dexterity.

2:30:24But as that improves, obviously, probably some interesting work for them to do around here. But for now, it's like walking around the outside with like a machine gun. So there we go. I like the sound of that. Yeah, it actually sounds pretty good. give the robots guns yeah give the robots the robots guns yeah security detroit first baby let's go for sure uh aaron it's been fantastic having you on looking forward to the next one keep uh keep pounding the table it's working i think yeah good luck thank you guys i'll talk to you soon bye that was great and uh we're staying on manufacturing right deterrence druva yes can you break it down what does the company do uh i want to kind of let him break it down but uh but yeah deterrence is a company that i have been lucky to be involved with myself since months and months and months prior to incorporation so um druv is texting me right now robots needs guns well you know what else uh you know what else we need we need you to join the show um so let's get him in here uh but yeah uh deterrence is leveraging robotics to manufacture critical components for munitions starting with something called Primer.

2:31:44They're doing a number of other things at the moment. We can let him fully break it down. I got some breaking news. My mom is watching and she sent me a foghorn sound effect and said ran across this and thought of Jordy. No way. I'll have to send it over to you. You can add it to the soundboard. that's great so i think a lot of people are into the soundboard uh and let's bring on druva how you doing what's going on great to see you look at that hat that's a great hat on that's great i got my hat on yeah i heard i heard erin talking and i decided to bring the meme out of my backpack that's amazing uh can you do it quick so erin's doing the meme you're doing the meme pretty much everybody today is doing the re-industrialized meme i love it thank you for what for what you Yeah, it's half defense day, half re-industrialized day.

2:32:32Eventually, we'll split these out, but much like Intel. Well, it's important. And what Druva can talk about is how industrial capacity historically has been a deterrent. Yep. It's no longer a deterrent. But before we get into that, or maybe the US doesn't have the actual capacity to be an industrial deterrent anymore. But before we get into that, Druva, I know you very well, but introduce yourself for the show. Yep. Yeah, absolutely. Well, first off, I'm really appreciated to be here. It's been my dream since I was in high school to be on the Technology Brothers podcast. But yeah, deterrence, just to kind of keep it simple, we're making generalized robots that make energetics, which is a fancy way to say that we're making robots that make explosives.

2:33:17The mission of the company is to close the munitions gap with, we call them the near peer and peer adversaries that the U.S. has around the world. We started the company about a year ago. As Jordy mentioned, he was heavily involved in that kind of founding journey. Started the company with a couple other guys. Brian, who was my co-founder at a prior company we started called Latch, which was a hardware company that relied on a global supply chain. And Henry, who came over from Tesla and had experience building kind of factories around the world. and yeah we we we sort of started to dive in we heard the headlines of like you know the U.S.

2:33:50isn't able to produce munitions for Ukraine at sort of an acceptable cost and rate started to try to figure out why that was started to visit factories and ask people in the DIB like what they thought and you know we found a lot of technology there that was from the like 1930s and 40s so the last time America had to do a big build-up no you know and not a lot has changed frankly including like the people a lot of them who a lot of the people who work in these factories are multi generational so you know their grandparents are maybe the ones who started working on the machine and they're still there um so yeah we yeah talk about talk about the dynamic even in some of these legacy factories that are producing munitions that are sort of critical to u.s national security you we've like maybe called or facetimed at different points when you're like walking out of a building because you're like if a single match went off in that place like everybody would be toast like Like these sort of, and kind of leading off of that, maybe like, you know, how far behind some of these facilities are and then like, what are some of like this broader safety issues?

2:34:49Because that was a big kind of part of the genesis of the company as well. Yeah, safety is a big thing. I mean, just to start with that, you know, we've been really diving into the problem for the last, you know, it's called a couple of years. And roughly every two to three months, there is an explosion somewhere that unfortunately creates a fatality in the supply chain. And, you know, it's and so like we felt like that was sort of just like an unsustainable trajectory, especially as we sort of try to reenergize this industrial place. And, yeah, I FaceTimed you for some interesting places. I mean, I would say like safety standards.

2:35:22Some places do quite a good job. Others don't. It's like a little bit all over the map. But what's fascinating, too, is like a lot of people are borrowing not just like machines from the 1930s, 40s and 50s, but also like the safety protocols just haven't been updated to modern standards. And so to give you like a little bit more news, so like a lot of our team worked on like EV batteries at Tesla and Rivian and some other places. And so like when they go into these places, you know, a lot of EV batteries can in a lot of ways be more dangerous than some of the stuff we do because you walk into the wrong room, you will, you could inhale something that will like kill you.

2:35:55And so when they walk around, they're like, oh my goodness, I can't believe people are walking around with no PPE and this and that. Like, but that's just kind of how things are done. And it's worked. I mean, I guess the other side of it is it's like it's worked for quite a long time. So, you know, you know, in some ways you have to like respect the art a little bit. But yeah, there's definitely room for improvement. Yeah, I like that with your company, like it's so easy in defense tech or anything just to be like, we're going to be Anderle too. And you found like a very like it feels very niche.

2:36:26There's probably still a big vision at the end of the road. but you people forget that like before Anderil was Anderil, they were like the sensor tower company. Uh, and they were working, they had a small beachhead and then they grew from there. And that's how these things start. What have been the pros and cons of, of kind of putting yourself in a more niche box early on. And then when you're on the fundraising trail, hiring employees, pitching customers, how do you still tell that bigger picture story? yeah totally i mean like the the rough metaphor we sometimes use is that you know we're sort of like the shopify right so a lot of what we're doing is we're actually partnering with companies we're building these end weapon systems and munition systems and so when you look across the entire you know spend across the category if you will i think the army spends about 30 billion dollars on munitions the air force is like 100 when you go globally that number is obviously much bigger and so we're we're sort of like in some cases like 20 30 percent of that spend is basically energetic kind of stuff.

2:37:24So that's how we sort of tell like the market story. But I think from like a product story, when you're trying to hire talent, especially on the engineering side, what gets folks excited is we're sort of intersecting two kind of interesting disciplines, there are three maybe things. So which is always fun, two robotics. And then the third thing is like chemistry. So a lot of like I just like a lot of this chemistry is like super old. And so people don't really understand how it works. And that's part of why you'll see like people really resistant to change in this market. They're like, literally, if you make one tweak here, you might just blow your eyebrows off.

2:37:58We've met a lot of people who have not all their five fingers, let's say, doing this work. And anyway, so like, what we tell people is like, you're able, we're able to like, maybe work on some like, pretty hard core problems that will probably take 10 years to fully realize, I guess, right. And so people get excited about Yeah, the near term thing i like to tell the team internally like we have like a mission that is macro but like there's a lot of like micro things that seem to be happening right now in robotics ai and all these other places that you know we're hopefully able to lean into for the next couple decades here uh talk about the continuing resolution which has been kind of an ongoing topic and then what's what's uh what's been your strategy as a ceo of deterrence and kind of navigating that it's definitely been an interesting time to be in dc um i think this may be the most obvious thing that's been said all day uh well you've been you live in you live you like live in the dc area and you've been there for years so it's it's it's uh you've kind of lived it which is different than most people that are just kind of popping in for a week at a time or whatever yeah no totally and i also have encouraged some founders lately like especially if they're small not like an i mean andrel has a huge team here and stuff like that but folks who are smaller to spend time here because information is moving like pretty quickly like i've i've had things where i take like a meeting with one member and their staff and then across bump into someone we had met before and like get a completely different perspective on it um yeah look i mean like i think every defense tech company has you know roughly three four layers of stuff they think about right so they think about you know how do i message to my direct customers like the program office how do i message to the building which is the fancy word we use for the pentagon and how do we mention work on the hill i think what's unique in the last two to three months is like all three of those things seem to be moving And you've got this added component that the administration has some very specific things that they're trying to get done.

2:39:48And so like on the continuing resolution stuff, you know, what we've been doing is like it's, you know, there's money that can still move around. So like our customers still have money to spend. So we're in a fortunate spot where they're asking for the same thing. And we're sort of going to the same program offices for stuff that hasn't been expended yet. But I do think there's a lot of program offices out there, just like free advice to any startup who's listening that haven't spent all their dollars. It's just sometimes hard to find. Like you'll have to really burrow in there and you'll meet somebody who's like, oh, I got like$10 million to spend on manufacturing and I have no ideas.

2:40:21And you can, believe me, you can give them new ideas. That's great. So that's a component. Obviously, there's a reconciliation process that's happening right now. Now, those priorities, I think there's like four or five that have been sort of widely published. Those all seem to line up with what startups are doing. So again, my advice is just get in front of folks and tell your story. Do it directly, too. Don't always do it through a lobbyist or whatever, because no one's going to be better than a founder at telling their story. And then the last thing I'd say is like, you know, the administration's only been around for, what, 40, 50, 60 days or something like that.

2:40:56And so they've got some of the top level folks, but they haven't really put people in the seats at the bottom. So really getting close to your customer right now is important to help them think through like what they might do. And essentially their new management layer kind of pops in. So if you think of like all those undersecretaries and stuff like that, like a lot of them start, quote unquote, in the seat. So there's kind of an opportunity to be like a strategy shaper. So, you know, long wooded way of saying like chaos can be an accelerant for a startup. And like that's kind of the situation in DC right now.

2:41:23Do you have a follow up? Yeah, I have a more of like historical question. I was just going to ask for like, can you zoom out and just give me like the really basic, like explain like I'm five on energetics, primers, explosives. You said the army is spending something like 30 billion. My conception of what's going on abroad is like a hand grenade on a DJI drone. But like, like how does, how does your product actually get into a, you know, like a weapon system. And yeah, exactly. Like I, I'm thinking at the level of like, I'm seeing cartoon TNT right now, but I want to go deeper. Not far from the truth.

2:42:04All that, all that time I spent on Cartoon Network as a kid is finally playing off. Just avoid all the things with big red boxes on them or whatever. Yeah, exactly. So, I mean, energetic materials broadly, they're basically just a material that has like a high amount of sort of stored energy. And then when you apply something, you know, if you apply another sort of catalyst to it, it expends more energy. So that means like, so if you think of explosives, like fireworks, pyrotech stuff, propellants, like those all kind of fall into energetics. The specific stuff, I'll maybe start with primers, which is what we're starting with.

2:42:38So we're starting with primers for small caliber rounds. So actual like bullets in a rifle that a soldier would shoot. That's right. Got it. So we're inside the bullet. That's right. So standard bullet is four parts, right? So you've got the brass, which is what falls to your feet when you shoot it. The projectile, the little powder in there too. So again, growing up on Cartoon Network, I assume that like the gunpowder was the part that went boom or whatever. It's like not actually true. It's actually the primer. So the primer is in the back of the bullet. When the hammer hits it, it kind of pops.

2:43:12Like if you took the primer out and threw it at the ground, it's a bit like a cherry bomb. And so what it does is it creates a mini explosion in the bullet. and then it burns off the gunpowder to start an explosive train. And that's what shoots the bullet out, essentially like a little rocket, right? The way it's made today, and a lot of energetics, like the broad sort of steps that a lot of energetics are made, is you start with mixing some chemicals, right? So we take a bunch of chemical precursors and mix them together. In primers, those kind of come together, and they almost turn into like a doughy ball, if you will.

2:43:44That doughy ball is then passed to someone who is at kind of like an application station. These stations are typically in like clean rooms. So think like wetted floor, rubber boots, rubber gloves, all this kind of stuff. So you've got someone who's standing there all day and they're sort of rubbing up and down on these primers like that clay ball basically. It's somewhere between – it's a bit like Parmesan cheese on a cheese creator to the audience if you want to. That's helpful. Yeah. And then from there, there's like a – there's a pressing process that happens. So, you know, um, my, my co-founder Henry likes to say, it's like a lot of what we're doing is this is rubbing and smushing material.

2:44:21Um, but you want to do it in an even way, right? Cause you don't want one bullet to work and another bullet to not work, which sure come back to second, the last step, uh, obviously, you know, quality assurance. Right. So just making sure that it was applied in the right way to, to have the right, like performance characteristic. You'd be surprised. And there's a lot of stuff you can do with like computer vision here where before it was like a human, like looking at it and being like, all right, so much automation and now you know deterrence is basically able to leverage like yep yep and the thing that you know when druva you know first kind of like pitched me this sort of the high level vision for deterrence and we started talking about it what i thought was appealing is it felt like every defense tech company was going after these super sort of like sexy like oh we're gonna you know this sort of f47 like these sort of big programs with this futuristic tech and druva was basically like had been sort of touring these facilities and saying like i like look like yeah yeah more so like are we even doing the basics yeah sure sure like if you walk around these facilities in there if we were to get into a you know a real hot war and we're relying on machinery from the 40s to produce the basic bullets that we need to you know keep our warfighter less sexy but it's just as important yeah makes sense that's right and these markets are pretty big right Yeah, totally.

2:45:37Look at the 155 shell. Just some of the subcomponents we've looked at, I mean, the contract size for the glue is like in the hundreds of millions, right? Not the thing. The glue, wow. The sealant, basically. Well, we've got to go shooting. Are there some good ranges out in D.C.? We've got to go out there and have a range day. The ranges in D.C. are funny because you look around and you're like, oh, you're really good. I wonder what you do for your day job. Oh, yeah, for sure, for sure. Well, maybe we can live stream it. Either way, we'll definitely have you back soon. congratulations on all the progress our dc correspondent yeah and we'll talk to you soon uh look forward to the next one thanks guys take care see ya cool i wanted to ask about the history uh we can do it another time just kind of sort of like the history of america's sort of industrial deterrence right this idea that you don't want to go to war with america because we will just out produce you and it's sort of flipped around and now yep china's in a sort of similar position But we got Cam coming in the temple of technology.

2:46:37Welcome to the show. How are you doing? What's going on? Good to be here. Yeah, thanks so much. I realized we were texting to meet up like years ago, and I'm glad that we finally got to make it happen. Could you do like just a quick intro on who you are, what your company does, just set the table for us? Yeah, awesome. I'm Cameron. I'm the CEO and one of the co-founders of Nominal. So we describe what we do is we're building software for continuous hardware tests. So we're all about helping people test and validate their hardware products faster. So I was just listening to you guys talking, we were very much like the unsexy, very, very important, very specific thing, which is helping people move faster.

2:47:19Can you give me a little bit of history and progress of the company? I know that there was a big fundraiser recently. How big is the company? When did it start? That type of stuff. Sure. Yeah. So we are, we just had our three-year-old, uh, yeah, our third birthday, um, as a company, we're about 55 people. Um, and yeah, I mean, our, our kind of like the origin story a lot was like, we have, you know, folks who, um, my former employer and roll, right? Like we had folks that come from and roll from SpaceX, from, uh, applied intuition companies like this that have seen, you know, everyone building this amazing, uh, you know, amazing tech.

2:47:53Uh, so often And the problem is actually the software that's just facilitating how people are organizing that data, you know, doing this. So, yeah. Yeah. And the recent fundraise? Did you break that up? So we announced it a little bit late. But, yeah, we did a Series A. We raised$20 million. It was led by General Catalyst. That was a year ago now, which is like times move quickly. So, yeah. So, yeah. I mean, what's the next milestone? is the program of record framework SBIR, then program of record. That's kind of like the meme pathway in defense tech. Does that apply here or do you have different customers?

2:48:31It's really interesting. Yeah. We actually think more in terms of like system of record. So, um, what that means for us is like, we work with organizations like TRMC. It's one maybe you haven't heard of, but test resource management center, right? So it's a OSD, uh, office secretary defense program, but they govern all of the like test infrastructure for the US. So if you're, you know, if you're a Hermeus, right, like you have to be working very closely with TRMC about how you're going to like, you know, define what it's like to test and validate a new hypersonic aircraft. For nominal, like that's our kind of like customer, that's our target.

2:49:04We want to get to the place where they, you know, they say, hey, everyone should be using nominal. Like this is the better way to sort of test and collaborate and do data. So for us, that's the end goal. Yeah. How hard is hardware? It seems like your job is to make building hardware quite a bit easier, if you can test more efficiently. I think people don't understand. They see a company raise hundreds of millions of dollars, and it doesn't work, or they struggle. You had so much money. You had such a great team. but it's like I feel like the average person doesn't appreciate just how hard it is to build a single like that just the engine of a rocket or a missile or whatever yeah so yeah it's so it's so true and I think like we um you know a lot of the value that we try to like provide for customers is um you know it's like you're doing so much if you're a hardware company like you have to you know you're doing all the production manufacturing you know iteration and often these teams, like they will hire software engineers and they have the daily decision of like, do I send those precious, very valuable software engineers to build the software that is like value additive to my software defined hardware product?

2:50:17If I'm, you know, if you're driven at deterrence, you're like, I want my software engineers building the like robotic, you know, systems to do energetics. I don't necessarily want them building, you know, data analysis and management and kind of like visualization infrastructure because it's already hard enough. And so our big bet, like the bet we are making is there's this massive re-industrialization movement. We are solving as a nation incrementally the different bottlenecks, whether it's rare earth materials, it's the supply chain, it's the production manufacturing, it's people actually building these systems.

2:50:49And so this rising tide, like where that condenses often is this very specific vertical slice of it, which is like I need to use software to test all those things before I field them and deploy them. and making this big bed like all that those trends um are going to really condense on like the area that nominal is trying to build in so can talk about your experience using maybe alternatives to nominal or just building the basically the product you know uh internally back at andrel like i i think a lot of you probably have the benefit where like your competitors to nominal now are like 40 years old yeah very like you know super super clunky like maybe don't even run on on mac os um yeah it's so true like we think about um you know the actual the sort of competitor phenomena like uh national instruments is a massive one like emerson siemens like those types of of technology so they they did this massive industrial software land grab you know 40 years ago um and they've not been innovated against since so they've like in this world like they established best and sweet and so there's huge network effects of like all of the different pieces of software you want for testing and validating a hardware thing.

2:51:58It's very annoying as an organization if you have to build the connectors between those. And I grabbed this territory and they've owned it since. What's happened in the last, I don't know, 15 years, and saw this at Andrel and other places, is the software world solved this problem for software. So continuous delivery, linking, testing, and operations and observability, like all the Datadog, Splunk, Grafana, you know, different pieces of technology like that. So what's been happening in the industry is people have been, you know, trying to basically use those to get rid of the old, you know, NI or Emerson type tools, but those don't work for a variety of reasons.

2:52:35And so with, you know, startups and scale-ups, I say we often replace someone trying to use, yeah, like a Grafana and a MATLAB and maybe some Python scripting analysis kind of holding all together, maybe like Databricks or something on the back end. pieces of technology that are good but they're not for this like industrial operations world and then at our the bigger you know the big five type type customers like it is a lot of that really really old software um that we're displacing do you even care to go after like the actual primes right now are you just happy to happy to just you know that you have hundreds of newly funded startups that are probably like desperately need your product and like probably like much faster to close yep no exactly it's i think we're in this like exciting we're basically in this inflection moment where we've been you know building and validating the product um and excitingly we asked the second product like i think to win big in this space like you you have to build multiple products across this sort of stack um so we've been doing that with this um these like startups and scale-ups um but now we're moving into these yeah larger larger customers now that it works well and you kind of add you know add zeros to the the contracts if they go well so yeah yeah i can imagine if if boeing is signing up for something that the uh what they'd be willing to pay for the software is like a pretty big number so no it's i mean on that like i think um yeah like a lot of the early conversations around like hey you'd be building this with an internal team and and paying you know you know engineering headcount to allocate against that um but for these big big programs like uh the value conversation is actually very interesting because it's like, hey, if I'm company X and I just want a 100 million, 200 million, $500 million program, I'm very willing, if nominal, I'm very willing to pay half a cent on that dollar or a cent on that dollar for a piece of test infrastructure that will manage cost performance schedule.

2:54:31That's the value discussions we're getting into now, which are very exciting. Can you talk a little bit about dual use? I mean, is, are we going to see like Ford Motor Company making cars with this? Like how, how, how, how niche are you and how does that expand over time? Yeah. I think in like the company building thing, it's like, we're trying to be really, really, really good at the thing that we are good at now. Um, and so we are, we're focused a lot on the, the A and D market, but on the B2B side and the direct to federal side, um, very dual use in that nature with companies that are doing aerospace.

2:55:03space. Um, but yeah, we work with, I mean, we work with, um, some of these like advanced nuclear, you know, companies, um, building micro reactors like, um, as well. So yeah, we're planning strategic flags. Um, you know, some of these robotic, like foundational robotic model companies, like they use normal as well. So I think we're kind of planning these flags in these other robotics, transportation energy, uh, as well. So. Very cool. Jordy, you have anything else? I don't have anything else. I'm just extremely, uh, bullish cause we just Scott, on you and what you're doing, just because every single person, it seems like, like either needs this or their customers need it.

2:55:40So I'm sure you're pretty busy. And I appreciate you taking the time. What are you guys hiring for right now across the whole company, I'm guessing? Yeah, hiring across the whole company. For us, it's like folks that understand software, but have done hardware is the sweet spot for us. So a lot of those customer customer success is like the old, you know, type, well, but we call it mission operations, but yeah, people that are people that want to go, you know, to one of these hardware companies and help like deploy the nominal software suite like that is, um, it's a very special skillset. Um, but if that's you, if you, uh, worked at a hardware company and, uh, and we're the software person there, you know, you are.

2:56:20Yeah. Do you, do you guys think you benefited from Palantir having so much success with the sort of forward deployed engineered model where it There used to be so much pushback against that, but now people are like, oh, it actually works. And I imagine you guys start building nominal and you have like some, you sort of have your platform, but then every company has some different implementation of it or different underlying sort of like use case for it. So you do maybe need to send an engineer there for like four weeks and just like actually build it out with them. Did they sort of give you guys, were they a catalyst?

2:56:53Yeah, absolutely. Jason, my co-founder and CTO was an early Palantir employee, worked on Foundry. And like, you know, we take a lot of that, that DNA. I think the key thing is like the ability to then productize those insights is key, right? At scale, you don't want to get too far in that. But like our folks are, we have them on six week rotations, essentially, where they'll go do like a customer, customer pump, customer stint, right? And then come back and get back in the main product org. And then it's like, what did you learn? Like, what did you learn from that customer? And like, what are we not thinking about?

2:57:22Because these 20 engineers are not spending customer time. And I think that's really, really key to kind of closing that. Yeah, that loop. Can you talk a little bit about international expansion? I know there's this big movement towards, you know, Europe is going to nationalize. They're going to want their own national champions. But I have to imagine that if you're deeper in the stack, deeper in the supply chain, that's just less of a priority for those governments. like it's less of a priority that, you know, steep in the supply chain. It's different. The difference between like buying a DJI drone and buying a GoPro that was manufactured in China, like people have different aesthetics around that.

2:58:01But how are you thinking about that? We're super bullish on international expansion. I think it's a thing that we we did for the first time. Like we have international customer. It's going very well. And so a European customer. And so I think we're excited to double down on that. And kind of the two, like one of the reasons is, you know, this going there and then like deploying the nominal software suite and sort of seeing like these folks are, generally speaking, like pretty enamored with the Andruil, the SpaceX way, the Palantir way of doing stuff. And so I actually think like there's even like kind of larger Delta in some ways where we can kind of like really wow them with our capability.

2:58:38And so that, yeah, we're super bullish on that. Australia is one where we're really excited to. That makes sense. We're just looking into the AUKUS broadly. They're on the aerospace thing, like a lot of interesting stuff there. And they're very advanced on CCA collaboration with the US and stuff. And so there's just a lot of interesting trends there that we can... Do you think... It's only a short flight. I'm sure you're over there back and forth every other week. Yeah, yeah, yeah. We've never asked anyone about this on the show, but I'm curious since you're just starting to go through this process.

2:59:07So a lot of the potential of some of these new AI tools is around like translation and real-time translation. And there's kind of a crazy scenario now where like you guys could sell to your product to a Spanish speaking country. And then you could have one of your engineers like, you know, real-time. Is that at all? Oh, like forward deployed engineers who don't speak the native language, but it doesn't matter anymore. A lot of engineers end up speaking English, but like, is that even a part of the calculus? Like, do you think people can go? Most engineers don't even speak English, only code. Yeah, yeah, yeah.

2:59:37Yeah, yeah, exactly. Yeah. No, I love the question. I've never been asked before. But I think it's like this initial international customer was like a predominantly conducted business in English. But I think it's like totally enables that. Yeah, I think it like absolutely does make that easier because there is an implementation sort of like phase and yeah, that would be a huge, yeah. Well, if you ever want to get into testing live stream infrastructure, we live stream three hours a day. We're always trying to improve the product. So we'll be the first customer. We'll be the first customer. We'll be your design partner on it.

3:00:09And you can bring a forward deployed engineer into the studio here. Yeah. They'll just like sit under the table. Sit right here. Yeah. Under the table. With all the wires here. There's so many wires. It's great having you on. I have no doubt that, yeah, next time you raise, come on the show, break it down or any other reason. It's great to have you. Yeah. Great to have you. Thanks so much. Cheers. We'll talk to you soon. Do you want to rip through some timeline? Get out of here in a couple of minutes. Give the fans what they want. i mean most of the timeline today is just endless ghibli back and forth which we kind of already covered i wanted let's do the david perel one yeah because we're gonna have him on the show next week he says the ghibli style memes are the beginning of something bigger the age of minimalism is over no longer is the internet stuck in the soulless valley of right angles and flat white backgrounds everything from anime to art deco is now just a clever prompt away a new kind of maximalism is here and it's here to stay which is why i post slop in my timeline uh live maximum maximal slop yeah it's great uh no i think it's i think it's totally like this take because there was a lot of there were a lot of takes that were just like pure bull uh it's amazing i i can't get enough ghibli's they're amazing i'm just posting all these getting all these likes then there were a lot of people who were just total backlash mode saying like oh this is terrible what would Hayao Miyazaki say, but now this is a more nuanced take.

3:01:39That's just like, it's almost normative, not positive. It's just saying, Hey, there's a change. And the internet's about to look different. I mean, there's maybe that's good. Maybe that's bad, but it's going to look different. There's so many, I feel like throughout my career, I've been lucky to be friends with a bunch of great designers. So when I have a funny idea, I can just sort of be like, Hey, like this would be funny if like, you know, you, you made this picture look like that, this 3d asset. I use Photoshop a lot to make these memes, but now it's way easier and way faster. And I saw it's so crazy.

3:02:09Even, even a month ago, I was thinking, you know what? I need to go on Fiverr, Upwork and just find somebody who's a good Photoshop designer that I can just send stuff to. And I don't need that anymore. Yeah. Uh, yeah, you can, you can move a lot faster. I saw, uh, Ashley Vance was posting these, uh, these memes that were like kind of giblified, but also making commentary on, he has this one that's like the big Greek horse chat and it's like Troy, I don't know if I can just show that. But basically, it's now layered where he's using the style but he's generating something that's commenting on a current news story.

3:02:53And it's just very interesting to see that it's now left the just, hey, take an iconic image and give it the filter and he's already using it to express a different commentary so much of creativity is just taking an idea from one place and applying it somewhere else mixing two ideas together changing things around and so uh ai just allows you to do that so efficiently yeah Well, honestly, there aren't that many other news stories here. uh uh arc agi 2 dropped uh if you've been following the ai benchmark why are you laughing i just saw this picture of jar jar binks oh the jar jar binks one is fantastic this is all time we got to zoom out a little bit yeah you got to zoom out okay so because it's a northrop grumman you want to read it are you gonna do the voice mesa is mesa is detecting threats like never before learn how recent combat ID enhancements are evolving mission.

3:03:53So Northrop Grumman has a program called M E S A M E S A. And of course that sounds like the way Jar Jar Binks starts every sentence in, uh, in the early star Wars movies. And so they just put Jar Jar Binks's face with the little caption and it's making it sound like Jar Jar Binks is, is talking about Northrop Grumman's program. oh man uh not not a native posting group the northrop guys uh it's a very different vibe at northrop from andrew this is like candidate for post of the week this might be this is such a good post i'm gonna put that in banger archive you really should um it's great the chat wants us to cover the fannie mae ipo that wall street journal is reporting on uh maybe we should probably cover tomorrow yeah that makes sense thank you uh for the suggestions yeah but uh this was a super fun day.

3:04:43This is great. I like these theme days. I want to do more of these. They're a little bit harder on the scheduling side, but I think it's well worth it to just have a conversation that flows from one to the next, a bunch of different people. Maybe we can layer in a debate at some point. I want to do an AI day. I want to do more of these defense days, maybe a crypto day even. Anything. Be very interesting. Anyway, thanks for watching. Thank you. Fantastic show. We will see you tomorrow. Thank you to our wonderful sponsors. Tomorrow is intellectual day. We got two authors, two Stripe Press authors already booked.

3:05:17We got Dorkesh Patel coming on. Coming tomorrow. And I think I'm going to send out emails to a bunch of other Stripe Press authors now and try and get stacked with the author day. Let's do it. I have the mind of a gold retriever, but I'm excited for it to be an intellectual mind. Tomorrow will be an intellectual day. We'll put on our thinking caps. Put on our thinking caps. Take off the tinfoil hat. Put on the thinking cap. I should pull up every guest with the tinfoil hat on, but don't comment on it. Don't comment on it. Thank you, everyone, for watching. Have a great rest of your Thursday. We will see you tomorrow.

3:05:56Goodbye.