Closing Bell - Manifest Space: Self-Driving for Defense with Forterra CEO Josh Araujo and Chief Growth Officer Scott Sanders 2/20/25

Episode Date: February 20, 2025

Forterra is in the business of autonomous vehicles…but not for the everyday driver. The startup has developed self-driving capabilities for defense and industrial customers, now announcing a production contract with the U.S. Marines to make Oshkosh’s Rogue Fire vehicles autonomous. CEO Josh Araujo and Chief Growth Officer Scott Sanders join Morgan Brennan to discuss its partnerships with defense contractors, taking soldiers and Marines out of harms way, and how the company’s technology can be used beyond the battlefield.

Forterra is in the business of self-driving vehicles. The startup has developed capabilities for defense and industrial customers, including a recently announced production contract with the U.S. Marines to help make Oshkosh's Rogue Fires vehicle autonomous. CEO Josh Araujo says Forterra has a two-fold mission, taking soldiers and Marines out of harm's way and making them more lethal and effective on the battlefield. We do this in a couple of different ways, mainly by integrating hardware, software, compute, sensors,

to enable those Marines and soldiers to do remote missions from more protected locations and control more than one vehicle or one system from a remote location. And the core to how we do that is through our self-driving software. So this is software that we've battle tested. It's been deployed in Afghanistan. We've really done this in a lot of different environments and contexts. And it's currently fielded with Marines today and soldiers and in production on several programs. As defense budgets face pressure, companies like Forterra are focused on helping the military do more with less. Having a dual-use technology that can be used by both commercial customers and the government helps enable that.

The tech itself could also mean fewer humans ultimately need it. Chief Growth Officer Scott Sanders gives the example of a test mission that was recently conducted. A mission that normally would have taken four or five people to complete was done with one. They were able to deploy several vehicles with either zero or one people tasking them. And when you start to expand that scale, when you think about robotic fires platforms, if you want to mass fires and you need humans to do it, you need to scale a lot of humans with those missiles and those sensors. And the minute you can go and have one person do that and task 10 or 15 platforms, you no longer need to have a military to match man for man our competitors, which we

just can't do. And so it really changes our ability to project power at a lower cost and take people out of those positions where they are naturally going to be targets in the battlefield. Forterra is partnering with defense prime contractors and working directly with the military. It's also bringing the tech to ports and logistics facilities. I'm Morgan Brennan, and Scott Sanders, the Chief Growth Officer of Forterra. Gentlemen, it's great to be speaking with you today. Thanks for taking the time. Yeah, our pleasure. So let's start at the beginning. What is Forterra? What are you guys working on? Yes, I mean, Forterra's mission, really, what we're passionate about is taking

soldiers and Marines out of harm's way. Scott and I both serve. We still have friends. I have a little cousin that's in the Marines right now in an armored vehicle. And we're really passionate about, one, taking them out of harm's way and two, making them more lethal and effective on the battlefield. You know, I think we do this in a couple of different ways, mainly by integrating hardware, software, compute sensors to enable those Marines and soldiers to do remote missions from more protected locations and control more than one vehicle or one system from a remote location. And the core to how we do that is through our self-driving software. So this is software that we've battle tested.

It's been deployed in Afghanistan. We've really done this in a lot of different environments and contexts. And it's currently fielded with Marines today and soldiers and in production and on several programs. So we're really excited about the opportunity it brings to really impacting those warfighters. If you look at a lot of the investments in defense technology over the last several years, it's really been on the air, you know, sea domain, but really not the ground. And that's where really most of our troops and warfighters are today. And it's really getting that technology in their hands. And so you just mentioned production contracts. So Scott, break those down for me. Yeah, we just signed a production contract with the Marine Corps on a

program called Rogue Fires, which is an autonomous or self-driving missile carrier that enables the Marines to project a lot of force across Indo-PACOM and deter aggression in the area. And it's the first of its kind, and we're really excited about it. Really because the ability to put low-cost, attributable systems forward with significantly less people is a thing that we actually haven't been able to do in the ground domain. Interesting. The fact that it's with the Marines, I don't want to start some trouble here, but the fact that we're seeing this adoption of this technology by the Marines, I would have, to be honest, I would have expected to hear that it was the U.S. Army that was leaning into this first. What does that say about how we're seeing adoption of autonomy across the different services? Well, I think given the Marines were the I think the only branch that passed an audit,

they're very disciplined with how they you know, how they allocate resources, how they deploy forces. And they look at it as a way to how do we most effectively accomplish the mission, which is really, you know, be that stand in force and endopaycom. And the only way to do that when they think about the logic of it is I can either recruit more Marines or I can put fully remote self-driving systems out there that can connect those missions with the same size of force. So like I think Marines are forward thinking, even though we tend to write with crayons and eat crayons sometimes. But, you know, really leaning forward and how do we fight the future fight and really how do we deter the next fight, I think, is the key thinking here. And the Army is right along with them. We're doing a lot of work with the Army. I think they're really the pioneers in self-driving technology back in the early 2000s. And we're going to see a lot of these new vehicle programs come into, you know,

you know, come into fielding. I think we look at most of the vehicles in the U.S. military, there's about 380,000 of them, orders of magnitude more than there are planes or ships. And most of these vehicles were in operation when I was in 20 years ago. So we really need to refresh, you know, that fleet and really get it connected to the battlefield, enable it with the latest and greatest technology, and really give those warfighters, those 18 to 24-year-olds that are doing the heavy lifting and the really hard work, give them the best technology we can. How does this work in terms of your technology actually making it to the battlefield, and how quickly does that happen? I think the unique part about Rogue

in particular is that it's in partnership with a defense prime. You see a lot of early defense tech companies coming out and kind of hating on the legacy players in this space. And we think that the right way to project power is, sure, you need to be able to have drones and small boats and things like that. But there's no one in the defense tech space building large combat vehicles. And so we look at our mission at Florterra is how do we work with those primes and enable their vehicles to be more capable

and leverage their experience in building large platforms like the Oshkosh PLS behind me and that no one really has a direct replacement for today. And so we can take these legacy systems and increase their lethality and capability in partnership with the Oshkoshes of the world, which I think is the only way to do this. I think we do it a couple of two different ways. One is take these legacy vehicles and really enable them through retrofits, putting autonomous systems that can bolt on in the field, low cost,

and then enable those missions out of the box. And then as these new vehicle programs, you know, go into production, really installing those systems on the production line more tightly integrated, so that those future platforms are enabled from the outset with that technology. It's interesting, we talked so much about robo taxis and self driving tech on roads here in the US and is 2025 going to be the year where, you know, that happens in a bigger, more meaningful way? And certainly we're seeing it, you know, start to spread to more cities

with more commercial companies or private companies doing this. But what are the lessons learned as this gets deployed on the battlefield and in non-civilian ways? I think the biggest one for us is, you know, Waymo is interesting because you can get it and you can drive it. It's going to take you from point A to point B. That application of the fence

space really isn't as interesting. You need to do something. You need to move logistics across the battlefield. It needs to be shipping containers or fuel or ammunition, or it needs to move a sensor or a weapon system into a position that a human would normally have to go do and put them at risk. And so we look at it as self-driving is kind of the base thing that you have to do. But really the problem set is how do you integrate all those platforms together so that you create an effect that creates deterrence? And I think it's just a very different mission set in that regard. I want to go back to something that you guys said before, and that was the fact that, you know, you are partnering with established players, especially when we are talking about some of these, you know, big combat vehicles that have been in production for a while. How does it speak to how this landscape is evolving and developing when we do talk about something like defense tech. And I ask that because I think there seems to be this sense out there, at least among investors,

public and private, that it's the legacy defense primes, defense players, and it's the new guys that are coming in and doing things more quickly and are maybe technologists coming out of Silicon Valley, et cetera. But the point you raise is the fact that actually the lines are blurring and there's going to be a lot of working together and it's not so black and white. I just want to get your thoughts on that, especially in a week where we saw President Trump talking about possibly cutting defense spending. And there is so much focus on disrupting the Defense Department, I guess, overall. Well, I think it's coming at it from an entirely different approach.

So, I mean, we deploy the same technology in commercial applications. And there you have customers that are very, they're looking at the bottom line. They're looking at how, is this technology going to save me money? And I think being in that environment helps hone our approach and when we look at you know dod customers and and defense customers they're also going to be under budget pressures how do we do more with less uh and i think when we look at you know autonomy self-driving you know interconnected uh deployed systems you know there's actually opportunity to take costs out of those systems do more cheaply more effectively uh bring more firepower and force

to bear at a much lower price point. And so what we bring working with those prime partners is a, is kind of a different view. We have this entire commercial market. We've developed the system to be, you know, we've thought about it from a, from a product perspective and how do we address multiple markets? I think when you look at the most effective cases of deploying technology to warfighters has been in technologies that have real dual-use applications at scale. And really, that's the key for us is we are bringing this autonomy, this self-driving capability, and this interconnected capability in conjunction with these primes. These primes have been doing a certain way with DoD and how they've operated. And I think as that changes, we're going to help work with them to really adjust to the new mindset.

So does that make you a supplier then to the primes? Is that the way to think about this? More of a partner. Partner, work very closely, very tightly integrate. I think when we look at, we're providing what's essentially what a human would otherwise be doing. We've got to be very close to that customer to understand how they operate uh work inside of their concept of operations and how they deploy those systems so we need to be very closely tied in with with that end user of that system but alongside shoulder to shoulder with that prime uh you know that traditional prime and then on the commercial side what what are your end markets? And I guess, how are you thinking about growth in either one of those buckets? Yeah, in the commercial space, we're very focused on the terminal tractor environment,

which is very similar to the military applications where it's got to work in driving snow, it has to work off road. The environments are very asymmetric in terms of, you know, there's not rules of the road that you have to follow or can follow. And so we partnered with Calmar, which is the largest producer of terminal tractor trucks, about a year and a half ago. And now we're focused on bringing that technology to their production lines so that customers in that space can just go order a truck. And, you know, it's less of a science experiment, more of a production capability. And it's one of the big bottlenecks in our supply chain. It's not just over the road, but it's how the over the road portion connects to distribution centers, ports,

and other logistics facilities that are out there. So when we talk about something like port automation, this is an example of it. Absolutely. And I think it's really along the lines of how do you improve that national resilience? We still view it as really almost a national security mission as well. And one that has a lot of synergies between the two. Being able to deploy technology in those environments, we're going to learn a lot more. We're going to collect a lot more data. That's going to make the systems that we put in the hands of a Marine, a Lance Corporal, a PFC that much more capable and vice versa. So we just see it as a way to really get more data, more reps that really serves both those markets that we see have a, you know, has a national security mission.

So what's the long-term plan or strategy or vision for the company then? Yeah, I mean, for our strategies, we want to be that leading provider of autonomous self-driving technology to both, you know, defense and commercial markets. I can continue to work with our with our customers to better enable their mission. That first step of, hey, we've got our first autonomous JLTV, self-driving JLTV out there. They're going to see a lot of sensors and payloads and helping to enable those customers to do, you know, those Marines and soldiers to be more effective in their missions.

And then on the commercial side, you know, really push the edges of what you can do once you have that technology fielded. One of my favorite things is origin story. So how did this company come together? Yeah, it's a very interesting origin story. Our founder, Alberto Lacaze, I would describe him as a quintessential Renaissance man that also had an interest in capability and autonomy.

So he was tinkering with neural networks and machine learning and LLMs back in the 90s and got pulled into the self-driving when it first started. This is the late 90s, early 2000s, and really had a mission of delivering this technology to help save people's lives. Worked at it for 20 years. Scott and I came on board in 2001 and really pivoted the company to more product focus and how do we get these things out at scale. And it's been a great experience working with uh you know the brilliant engineers that we have here that have you know our

senior engineers are on average a tenure of 12 to 15 years uh really developing this technology uh and then really building that team out to get it out to scale has been a great thing to see 2021 not 2001. yeah sorry 2021 yeah i was going to say, you guys have been working at this for a long time. Well, if it's 2021, it certainly speaks to the fact that this is technology that's been under development for a long time, but now all of a sudden we seem to be hitting a cadence where there's momentum and it's growing exponentially. Is that the way to think about it? Yeah, that's right. I mean, when I first interviewed with Alberto and he was walking me through the building and we had a TV screen up on the wall and it was showing a fully autonomous striker convoy going cross country at 30 miles an

hour. I said, that's amazing. You guys are automating strikers. He's like, well, that was actually in 2004, of which I was extremely enraged that this was not deployed when I was overseas at the time. So I think it's a combination of factors. It's, you know, this commercial self-driving boom that we've seen has really pulled the cost of those sensors and compute down pretty dramatically. And then on the flip side, just the threat environment, geopolitical environment, we have to do more with less and self-driving capability and autonomy is one way to do it. So it's a confluence of capabilities of the components and just a real demand. But, you know, our 20 year history in developing this technology and

building it with warfighters, I think gives us, you know, really an advantage here. And this is a space that is really uncovered. Most everyone else is focused in different domains in the air, on the sea, in the land is one where we have a passion and two where we really see a real need for this technology. In terms of some of the examples of this technology, I mean, you touched on some of them, things like logistics and some of the mission sets, but I guess just to give me more examples

and make this more tangible, some of the ways that your technology is now poised to be deployed on the battlefields and what that means to how wars are going to be fought and conflicts are going to be carried out. Yeah, a great example of this was last week, actually. We were out with one of our special operations customers, and they had a small fleet of the small multipurposepurpose equipment transport the little green thing that keeps running around back on the test range over here and they planned an

entire mission from you know dozens of miles away didn't have direct you know comms to the vehicle planned it sent a mission they land the landed the platforms on the airfield they were seizing in this you know this fake mission um operators took control of them once they platforms on the airfield they were seizing in this fake mission. Operators took control of them once they were on the ground, tasked them to go do an electronic warfare mission. The operator got busy, flipped his screen up, went and did his mission, kicked the control back to the headquarters over a mix of Starlink and cell and data radio. Went and completed the mission, brought it back and, you know, completed the operation. And normally that would have taken four or five people to take in one vehicle, move it somewhere, do an action. And instead they were able to deploy

several vehicles with either zero or one people tasking them. And when you start to expand that scale, when you think about robotic fires platforms, if you want to mass fires and you need humans to do it, you need to scale a lot of humans with those missiles and those sensors. And the minute you can go and have one person do that and task 10 or 15 platforms, you no longer need to have a military to match man for man our competitors, which we just can't do. And so it really changes our ability to project power at a lower cost and take people out of those positions where they are naturally going to be targets in the battlefield. Yeah. And you see that the large vehicle behind Scott, I think that's a third mission set. It

was one of the ones that is probably the highest number of casualties in Iraq and Afghanistan is the logistic supply chains. They're exposed, they're vulnerable, but you need to move all that equipment and supplies and fuel out to the front lines. And that's typically where we're the most vulnerable, you know, vulnerable part of our forces. And so we can automate every part of that mission set where it makes sense. We can redeploy those forces to more effective high-level missions and then also do those missions from much more protected environments. We aren't putting people in harm's way where a robot is going to be the best, you know, the best thing to take first

contact with the enemy is going to be a robot, not a human. So you don't need to recruit as many people then. And when you start to talk about things like cutting defense dollars, that's one of the ways you can do it. Personnel? That's right. That and the cost of the system. I mean, the cab enclosure to armor a human is, you know, in one case, it's about a million dollars to put a armored cab over the, you know, that's more than the cost of the vehicle. And you think if that vehicle gets blown up, you now have multiple years of care for the individuals inside.

And you can take that entire expense out. You can put compute sensors on that vehicle, control it remotely, and project more capability out into the theater. So what would you like to see happen at this key moment where it does seem like bureaucracy is being reviewed, maybe slashed, cut, disruption is coming to federal government? What would you like to see in terms of changes to the contracting process and the fielding process and how new technologies like yours actually get where they need to go in a meaningful way more quickly? Yeah, I mean, I think we're on the right path. There's been a lot of change to defense acquisition strategy over the last 10 years. And I think all the tools are available for contracting officers and for program managers to buy efficient systems quickly. I think it's a, you know, how do you take more risk and deploy capability in a way that's not the same as building a helicopter or an F-35? If we're deploying platforms that cost hundreds of thousands of dollars, you can take more risk and deploy them and move quickly to adapt to ConOps.

I think that the program offices inside of the Army, like the RCV office that are doing this, which is a joint effort with DIU and the Pro-Man Executive Office for Combat Service and Combat Service Support, that are really trying to push that speed of relevance of how you get these things to humans faster. So I think the thing we would like to see is just more investment into that space,

whether it's autonomous boats, aircraft, ground vehicles. We can do a lot more with less, but the department needs to actually take the risk and go do that and try to change the way that we fight in practice before we have to go do it in real life. Yeah, I think everybody sees the urgency here to really get this stuff fielded. The soldiers see it, the Marines see it, everybody sees it.

And we're ready to move fast here. It's can the executives and officials in DOD also keep up on the contracting acquisition program side to move as quickly as we need to, to be prepared to deter the next not only be prepared. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.