Investing Billions - E439: Ethan Thornton: The 22-Year-Old Building a $3.7 Billion Defense Company

Episode Date: October 7, 2026

What if the future of warfare is determined by who can innovate faster, not who can spend more? Ethan Thornton is the Founder and CEO of Mach Industries, a defense technology company he started after dropping out of MIT. We break down how Mach went from experimenting with roughly 20 technologies to becoming a multibillion-dollar company, why Ethan believes asymmetric technology is reshaping modern warfare, and how Pentagon procurement is evolving. We also discuss China and Taiwan, lessons from Ukraine, autonomous warfare, recruiting exceptional talent, taking risk, and why Ethan believes great founders should empower their teams rather than make every decision themselves.

The only risk in my mind and my team's mind early on was that we weren't able to get it done. Dropping out of college, it's not that much of a risk. The risk is that we aren't able to go and build what the world needs. Everyone thinks I was terrified to drop out. No, I'm terrified of what happens if we lose. I'd known I wanted to work on it since I was 16. So when I went to MIT, I'd actually already patented a lot of the designs for a lot of the things I thought would be asymmetric. For me, America is the greatest country on Earth.

And I want to make sure that we have asymmetric technology to put. We started the year at 470 million. Right now we're at 3.4.7 billion. We're in this Cold War with China. It may turn into a hot war. Where are we in relationship with China? And how do you even quantify the relative military strength of the two countries?

So before starting Mach, you were really a student of history learning about modern warfare. What does Ukraine teach us about modern warfare? One, it teaches us that people find out of war. People fighting for what is right in the world can stand up very, very, very well and can fight for years to an evil power that looks to suppress their rights. Second, it proves the asymmetry of military technology, which I think we've forgotten for a long time. You mentioned asymmetric warfare. What's the clearest example of asymmetric warfare today in 2026?

The thing about asymmetric warfare is that it's always changing around power law. technologies. Asymmetric warfare by nature is sort of just the Pareto edge of technology as relates to a given fight. And so it's changed, right? Asymmetry early in the war was them adopting traditional Western singers and javelins incredibly well. Asymmetry in Ukraine, the thing the Ukrainians don't do incredibly well as they out-innovate. They don't necessarily have better engineering. They don't have a bigger industrial capacity. They push forward and maintain that Pareto edge. And because of that, they're able to punch significantly above their weight class. And so, I mean, I can predict what the next one is.

That's kind of my job. That's what we do as a company. And so, I mean, look at our product line. The stratosphere is incredibly asymmetric. Hypersonics, when at scale, will be incredibly asymmetric. But it's actually really hard to find these things. Like if you would have said two years ago, what is the next asymmetric thing? It would have been pretty difficult.

I've actually been working on the stratosphere since I was in high school. I'm incredibly passionate about that being something that will give the West. And when I say the West, I mean the U.S. and it's allies asymmetry. But asymmetry is a fleeting thing, right? The tech on the front edge of that curve changes all the time. And so you have to actually innovate to push super hard. And right now, that is deep strike. That is the Ukrainian's ability to go and pick off Russian infrastructure.

Now, the Russians are doing it right back. And so that's really the scary stage of the fight. Fast forward today, Mock Industries is a multi-billion dollar company. How did you go from an MIT drop? out to running this Unicorn company? I can't take much credit for it, honestly. It's all about finding excellent people and empowering them to do their jobs. I think you've got to know what you want to build.

And for us, that is asymmetric technology for people fighting for their rights. You are a 19-year-old, and you decided to start a defense company. How did you go from idea to consumption? I'd known I wanted to work on it since I was 16. So when I went to MIT, I'd actually already patented a lot of the designs for a lot of the things I thought would be asymmetric. It wasn't really a bull, to be honest with you. It was a push. Like, I think it's incredibly important that we as a country are able to help our allies.

There's a quote I like, America's greatness comes from our goodness. If America ever ceased to be good, America will cease to be great. And for me, America is the greatest country on Earth. And I want to make sure that we have asymmetric technology to punch above our weight class, especially given that we can't out manufacture trying to write down. So that's the mandate of the company. And earlier you mentioned that you can't take all the credit from building mock. You had this team. How did you convince people to join you in this extremely ambitious project? One, I told them that the chances of success were actually relatively small. So Ashton, one of my best

friends who played football with me, and I sat down. And we actually wrote a paper with each other or one pageer about what Bach need to go and do. And we looked at it and we said, yeah, we need to go and do this. It's going to be hard. It's unlikely we're going to be successful. But that's true buying from people is whenever the mission is actually important enough to risk things. Spencer, two of my Air Force Ratsy buddies dropped out with me along the way. Spencer actually ended up going into the Air Force and so helped us build a lot of our first products.

I had a buddy Dan, he still works with the company. He's actually one of our build engineers on Pike. I'd say that the through line for all of it is, look, money's super, super important. But money comes when you focus on the right thing. And for us, helping the right thing is shipping asymmetric technology to help the wealth. When you set out to start mock industry, was asymmetric warfare, the core thesis was a specific technology? How did you get started? It was.

And look, something I still get flak for. In the early days, we actually worked on like 20 products. Like, we didn't have confidence in what the Pentagon would buy. And so we ran it like a lap. And we ended up prototyping a bunch of things. of different things. I can rattle them off if you're curious. What were you working? MIT has something called IEP.

It's a month-long period where everyone gets off of school. And so we all got together in a small like 1,200 square foot shop. And we built a quadcopter, Ashton built a quadcopter that flew that were planned on power of hydrogen. And so built an hydrogen gun, we went and built, and this was a dumb one, but an afterburning EDF, wouldn't build some aluminum fuel stuff, when built an electrolyte. both a smaller quadcopter. We built a big fixed wing.

It actually ended up looking a lot like a shot head as we designed it. As we actually, for that month, we worked on a bunch of different things because it was unclear what the Pentagon would buy. But in the process of that, we got good at building things. And then we were able to go out to the Pentagon with something more than a slide deck and say, hey, what do y'all actually want to dig in on? And we got traction based on that. And then over time, we kind of earned the right to hone our focus.

Over time, we actually were able to aggregate the capital, to aggregate the team, and most importantly, to earn trust with government to work on the things that are truly asymmetric for the world. To me, those are the things that help deter China from taking Taiwan, but in the process, can help the Ukrainians win, can help defend the Taiwanese and can help make sure American warfighters have to get it works. This episode is presented by Juniper Square, the operations partner for private markets. I spoke to Jake Chapman from Mark and several other defense investors and the CEO of Castilian. And they talked to me about how the Pentagon is really evolving their strategy in terms of how they go about procuring the next generation of defense technologies.

How did that affect you? And did you see that evolve as you were building mock? One, Jake's an incredible guy. He invest in RC round way back in the day. Look, it's changed. That's changed massively. Frankly, I think it's just gotten better. Now, there's still a lot of change to make happen, but I'll tell you a story. When I first pitched one of our products glide to the Army, they said, hey, this is an incredible thing. We'll roll this into our 2035 plant. And now the way this business works is they show up and they say, hey, we need you to build something. What do you want to build? What can help? And then you have this discussion. You align on what you want to build and then you move out. And that's incredible. It's very necessary right now. It's very, very necessary. We see that our munitions. or stockpiles are diminished. And we talk about it all the time,

but it sounds somewhat detached. I mean, think about Austin contacts as a country in Iran, shooting a significant portion of our munitions in a handful of weeks. Now, that's not to say the Iran war isn't a war worth fighting, I believe it is, but it highlights the fact that war wasn't a near-peer, all-out conflict. And if it's going to take us many years to rebuild from that, we do have a real issue.

And so the nice thing is the pentagons, one, they're getting faster. Two, they're getting more objective in terms of what technology will actually help folks succeed. And three, they're getting a lot more collaborative. And that's great. And it's kind of non-optional right now as a country because we do need to rebuild our stockpiles. We do need to rebuild our defense industrial base. But yeah, I'd say they've gotten better, those three things. Now, I expect that to continue.

I'm very excited. One, it's good for our business. Two, it's good for the American people. Because I also have a fundamental belief that we can actually spend significantly less on procurement if we buy the right thing. Like the nice thing about things that are asymmetric is they're asymmetrically cheap. Now what I'll tell you is asymmetry for us means more ability to actually manufacture the thing with fewer technicians, with fewer operators, with fewer machines. That's what I mean by asymmetry. Now along the way, when you focus on that, things do become cheaper and I am very confident that if we continue this focus as a country,

we'll actually get to a spot where we have significant and greater financial efficiency. But asymmetry actually in context, what we need to be building as a company and what we need to be buying as a country means the ability to punch above our weight class with our industrial base relative to China. I'm very curious because it seems like only a decade ago,

maybe even shorter time frame, everything was cost plus. So you had defense contractors that their margin, their overall profit would go up as they spent more and more money on the product. So it was just complete adverse incentive. And today you have these companies like Mock with this asymmetric warfare

with very cost-effective weapons that are being sold to the government. How did that change so quickly? 100%. Look, cost-plus contracting is another form of socialism. And that's as clear as I can put it. When you give companies a socialist incentive for decades, it's actually not like they want to perform badly.

To survive, they actually have to charge the Pentagon more for things that don't make sense. I love looking at incentives to understand outcomes. And when you look at the incentives of Cox plus contracting, it's actually not surprising how we got here. It's uncomfortable to say you need to be deeply capitalistic to shipgrade technology. But the thing America continues to do incredibly well is to find the next stage of tech. And 40 years ago, we did have a bigger industrial base in China. we did have better, like, technology on state of the art things than China. Now, a big thing we have is a asymmetry.

And that's why our venture capital markets are incredibly important. That's why it's actually a very exciting thing to see retail investors getting involved in tech companies as they IPO. Now, we need to be careful because technology is incredibly difficult to predict and you can get booms and busts. But the history is a story of breakthroughs in technology. And frankly, most of those breakthroughs have come from that. like we lived in the iron age for a while. We're in the silicon age now.

Iron age was defined by people first making sorts. The silicon age was defined by Bell Labs first inventing the transistor. And so for us as a company and as a country, I guess what I'm saying to make it super clear is we need to bet on asymmetric technology inside and outside defense. Right now, I deeply believe that the asymmetric tech bets that need to be made are in defense. Cost plus contracting from an incentive structure is tout. runs counter to developing excellent new technology.

It runs counter to risk. It runs counter to good incentives for companies to actually go out and innovate. That's not a surprising thing. That's why SpaceX won. You actually need to make it a more capitalistic system. It's not uncomfortable because you have to deal with the fact that the defense contractors are motivated by money. But capitalism works better than communism. It's really proven that's out many, many times throughout history.

And so the thing that probably makes me most excited on the government side is that they're thinking deeply about the problem and saying, you know what? For a fixed price, this trust works better. Our products will be cheaper. They'll be more capable. That will be more reliable for the warfighter. And then in the act, we're going to get a lot deeper pockets involved. And so that's what you see now.

That's why you see such a surge in defense tax spending from investors on the VC side. And I'm sure, sometimes in the next year or two on the public side. You mentioned China. We're in this Cold War with China and may turn into a hot war. I think there's a 12% chance that China invades Taiwan one way or another by the end of next year. Where are we in relationship with China and how do you even quantify the relative military strength of the two countries? For sure. It's actually kind of a fool's errand, I think, to deeply try and predict military strength or when China will invade Taiwan.

I'm curious where you've got about 12%. Holly market. I mean, yeah, the first section is it's 12%. I think that's probably about right. I'll tell you, I mean, no one really knows what they're going to invade. It's diplomacy between Togi and Trump and whoever we elect in 28. I'll tell you that a lot of the war games don't look great for our ability to defend Taiwan. Also tell you, Taiwan is really important for two reasons. And both are deeply true. First of all, the Taiwanese people, they want to be Taiwanese. They do not want to be Chinese. Second of all, as we think about AI, It is an uncomfortable truth that most of our leading edge chips come out of the SMC. So this is why we say deterrence is company and not winning. If that war starts, the U.S. will be faced with an uncomfortable question of, do you go and defend Taiwan? Do you get involved in a hot-connected conflict? Or do you stand back? And that's the question we've been asking ourselves forever. This whole China-Taiwan thing is obviously not new whatsoever.

And frankly, I don't know and I don't think any of us know. I didn't even think Trump and G know what this looks like. World leaders constantly reassess the state of the chess port. And so if it happens next year, I think the war games that we run as a country don't look good. That is why deterrence is so incredibly important. We've been able to achieve deterrence. I don't know what happens in 28, 29, 30. All I know is that the U.S. does need to build excellent asymmetric warfighting technology

if we want a chance of deterrent. Because look, on the first, On the Taiwanese people and on the folks from countries around the world that would have to pick up arms and go and fight, deterrence is that is kind of the only option if you don't want to avoid massive loss of life. On the second, the uncomfortable truth is if that war starts, TSM is going to be blown up. And the U.S. and China will lose access to advance notes. As much as we want the Chips Act to succeed, we're a long ways from in-houseing. FAPs on cutting-edge notes. And so that's probably the next thing you go and work on.

I'd say for us, though, the focus is to ship asymmetric war fighting technology that deters a war with China. The gain theory between China and U.S., the reason it's 12% and not 25% or 30% is because it's essentially mutually assured destruction at this point. Neither China nor the U.S. could deal with the reality where there's no TSM and there's no chips, so there's kind of this mutually assured destruction there that is undervalued. Absolutely. Yeah, but the Chips Act is in a race against China's ability to stand up fabs. And this is why TerraFab is so incredibly important for the world.

So yes, there is some level of mutually assured destruction. It's always a dangerous position to count on mutually assured destruction whenever your conventional weapons are deeply behind. And I don't know if we're behind, but I will tell you that China's procurement system moves faster than ours. I'll tell you their industrial base is significantly large than ours. I'll tell you they have significantly more. drones deployed in Ukraine. And so unfortunately, right now, the status quo belief, it would be easy to believe that kind of would be able to win a conventional war of Taiwan. And so yes, you're exactly right on the deterrence base. Nuclear deterrence, deterrence over chips, deterrence and the fact

that we're still giant trade partners with each other. Those are incredibly important pieces of deterrence. But we do need to rebuild conventional. Because when you count too much on deterrence between two countries, you get a bunch of proxy wars. Like the Cold War, is a story of proxy war in Korea, proxy war in Vietnam. Proxy wars around the world. And so, yes, there is deterrence, but deterrence doesn't mean that there won't be fronts elsewhere. There's a front in the minds of the American people

with TikTok and with other platforms. There's going to be several fronts that open up if we don't reestablish conventional warfare. And by conventional, I mean drones, like asymmetric conventional warfare. The nice thing about shipping drones to the U.S. partners is if we can arm Taiwan themselves if we can arm Japan, if we can arm South Korea, if we can arm Australia,

and do so in a way that there's obviously positive some with them, we can avoid proxy wars. And that's an incredible thing. So my dream for for unmanned systems is a world where you have the same level of deterrence we've had on the strategic side with nuclear, for many decades, you can actually achieve tactical through drones. And if Russia had to do it all over again, knowing what they know now about how asymmetric unmanned systems are,

I don't think they would have invaded. And so that's actually the best path to me is actually arming our allies directly and indirectly and having them build stuff themselves that gives them their own form deterred. And then, yeah, as far as China's game theory goes, it's obviously incredibly complex. 12% is probably pretty accurate, but it's important to remember those who are just polymarketing numbers and that's really one decision maker at the table and that's G. Their game theory is, yeah, we have trade deterrence. We have deterrence with chips.

on has been somewhat successfully adopting this Porkybond strategy for years. And we do have nuclear deterrents. But I don't think we have good enough cyber deterrence yet. I think we need to work on that. We don't yet have good enough conventional warfare deterrence. And so I would say we're in a cold war

with China right now. I think we're afraid to admit it. I think fronts will unfortunately continue to open up if we can't arm our allies with asymmetric conventional technology. So I hope that answer makes sense. I'm Happy to break down any specific piece of it. Maybe you could talk about the through line between the Chinese and the U.S. Cold War and these other fronts like Russia, Ukraine, like Iran, U.S. and Israel.

Those fronts are more loosely connected than the proxy wars we saw during the first Cold War with USSR. But it's similar things. And Ukraine, Russia, obviously Russia has its own intentions. It's not that different to World War II. where Japan and Germany were actually not close allies until sort of they became close allies getting their ambitions. With Iran, I think it's pretty clear that the Iranians were suppressing their own people to an incredible extent.

We often ask the wrong questions about a conflict. I would say Iran, the conflict of Iran might not have been focused, but it was a good war to fight if we were able to find it cleanly, which we actually generally have. It's important to remember the fact that Iran killed tens of thousands of their own protesters. I'll say the through line is that during the first Cold War, during the Cold War with the U.S. and the USSR, it was a lot more closely connected. It was very, very clear that it was battles between basically communism and capitalism.

I'd say now it's more so authoritarianism and democracy. But it's similar things, right? It's the U.S. generally actually being on the side of people that are fighting for their liberty against countries that are generally significantly more totalitarian. And so those are the fronts that have looked. Look, history is always hard to decipher. And reading history, it's always fun to think about yourself in the shoes that the people make in the decisions.

It's significantly harder for it. And I won't try to predict it, but it's totalitarianism versus democracy. It's the U.S. actually generally being on the side right now, the people fighting for their liberty. Even if we're having to get engaged in conflicts for that, intended purpose. And now I think it's important to realize that when you read history, nothing happens for one reason. It's all interconnected. And so you've got the capital portion, you've got the political portion, you've got the technological portion. Right now, the technological portion is very deeply coupled to social media. It's deeply coupled to chips.

It's still deeply coupled to oil. And if you think deeply about those three things, you can do a better job, at least, to predicting history. Now, I won't sit and say that I know, when China will invade Taiwan or if they won't debate Taiwan. But I am confident that we are in a cold war with China and that we're not admitting it to ourselves. And yeah, we need to win. Like, democracy needs to beat totalitarianism. So I know I'm going deep. I know this isn't the typical kind of VC-C-Conder podcast. I do think it's really important that we talk about history, that we talk about the mission. The mission doesn't stand at odds with capital because capitalism is, I believe the best incentive structure to develop technology. Just to tie cost plus with asymmetric warfare,

it was a terrible system a decade ago where it would take tens of millions of dollars to sometimes procure the most, like I think there's a famous like bathroom that costs like a million dollars. And there's all these means that are actually true. You could look at in the public records. But today we have $10,000 drones taking out $50 million military equipment. Now cost plus, is not only inefficient and bloated and expensive to taxpayer, it's no longer sustainable. It always was, is what I'll say. Like, end of history narratives are incredibly dangerous.

After we beat USSR in a Cold War, we thought that it was the end of history as a country. And so we actually got somewhat complacent. We talked a lot about the last supper of defense contracting. Tell me about that. We pulled hundreds of defense contractors into a room. He said, you know what? We can't keep you all alive.

So I need you to create these conglomerations, and we're going to start feeding you cost plus contracts so that regardless of what happens you stay a lot. And the thing about building technology is it's incredibly hard. You have to be willing to take risks. You have to be willing to think asymmetrically. You have to build teams that do the same. And then when you win, you need to get asymmetrically more capital

to feed back into it. And that's why capitalism works. Where we are today, we need to invert it. Right? We need companies that are willing to take risks with the government. on products that are asymmetric. We need companies that are able to develop things with asymmetrical release capital.

And in the process, you do define the next technology. And I think the through line throughout history is that technology is incredibly important. And so that usually shows in defense first. I can tell a few stories. I mean, we going into World War II, we had battleships, and we're deeply convinced that battleships,

which had been the thing for 50 years, were going to be what was important. and then when Pearl Harbor happened and all our battleships got sunk, we switched to aircraft carriers. But when you think about a battleship and an aircraft carrier, it's very easy to realize that the battleship is a slow-moving big thing.

An aircraft carrier is a slow-moving big thing, but has planes that can go out and drop bombs and engage in dog fights. Now, fortunately, at that point, as a country, we had an excellent industrial base. I still think we do, by the way. I want to be super clear that I'm not a fatalist. I am incredibly convinced

that capitalism and democracy are the right tools to build technology, I'm incredibly convinced the technology is what will win. But yeah, the battleships got sunk and we had to switch aircraft carriers, and we had to rent production of aircraft carriers. And that's not a new thing. I mean, that happened between cavalry and tanks, right? That happened between muskets and rifles.

That's the story of the history of defense. And we're living through one of those periods. It's not the end of history. We are having somewhat of a philosophical discussion, but I think it's so critical as investors, when you look at a space, you have to understand the context, you have to understand the last supper, you have to understand the evolution, what happened the last 10 years, how Ukraine. I don't think you could be a good investor without understanding the context within which you're investing.

And then obviously you have to underwrite individual companies and individual investments, but I think it's so critical to understand the frame of where you're investor. Absolutely, especially if you want to invest in technology. Like, it was very unclear that, like, Elon, when he, like, rolled up the DC with, with a Falcon Juan, why the hell are we building rockets right now? It was like a $5 billion tam. I think it's hard as humans for us to understand Jevin's paradox. It's like, okay, $5 billion tam.

Your goal is to make it two orders magnitude cheaper. Got a $50 million max tan? Well, no. He went and he made the technology asymmetrically cheaper. And the act, he's built an incredible, incredible business. One thing I've learned from talking to hundreds of investors is that great investment firms aren't built on investment returns alone. The firms then during.

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Mock, you had these 20 prototypes and now you really focus on the Viper and other products in the pipeline. But how did you get to the Viper and double click on that technology? We build some products that are insanely asymmetric. So we do wargaming. You have war gaming software.

We look at that. We talk to people who do that themselves. Some things just work in war gaming software. Now, war gaming software is never going to be perfect. Mike Tyson quote, everyone has a plan until they get punched in the mouth. But the thing about deterrence is it is a game of war gaming. I expect to continue working on for a while. But it's going to be a big deal.

We have some products that are less asymmetric, and it's funny. When something is less asymmetric, it's more mainstream. And so it's our asymmetric products that take longest to get to market. Blind Stratis are the most there. I'd say Dart and Biper are somewhere in the middle. Dart is our basically, it's what we deeply believe will be one of, if not the most important, missiles to take out future drones, not shawheads, not quadcopters, the actual drones that are bypassed Russian defenses right now, the actual drones that are bypassing Ukrainian defenses.

And then on Viper, this is one of those drones. And so for us as a company, we take some bets that are less kind of skate to where the puck is headed. Those tend to be the best revenue bets. And then we use those to fund some things like the stratosphere that we're deeply convinced will be incredibly important. And in the process of being important, we'll make money for the company to fund further bets. Does that make sense? One thing that I've learned from talking to hundreds of investors, founders, and business leaders is that planning for the future isn't just about growing assets. It's also about protecting the people who matter most.

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the all-in-one way for business owners to take payments, book appointments, man and staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. It's actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Check out is fast, receipts are instant, and sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for the them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are,

in store, online, on your phone, or even at pop-ups, and everything stay synced in real-time. You could track sales, manage inventory, book appointments, and see reports instantly, whether you're in your shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing, so your best customers keep coming back. And right now, you can get up to $200 off Square hardware when you sign up at Square.com slash go slash how I invest. That's SQU-A-R-E.com

slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. It's such a good and obvious point, which is what is the point of weapons? The point of weapons is to win against an enemy, and that enemy is war gaming against you.

There's a game theory here. And it's essentially there's a set amount of economic damage that both sides could take. And if you could asymmetrically push that towards your advantage, you will win that war. We have a times think about war as a battlefield between humans. Today, it's really a battlefield between technology and costs. It absolutely is.

It always has been in many ways. The human element is still just as important. It's just kind of moved up this deck. It's technology, it's production, and it is the people and how much they want to fight. And that is why Ukraine has done so well. The thing that's not alarming is just different now is that we're saying drone-on-gross engagement. I mean, for the first time ever the other day, we saw drone boats actually shooting machine guns at each other. That's crazy.

That was a direct machine-on-machine conflict. And folks have been saying we'll see robot-on-robot conflict for a while. We're already seeing it. It's here. And the only near-peer conflict happening right now, which is what I would qualify Russia and Ukraine as with Ukraine getting a lot of our best tech, frankly building in many cases, potentially in most cases, better tech than we have. I said earlier, it's a canary in the coal mine for where this tech is headed. That doesn't mean that it's not so important for the Ukrainians. That also means that given that the Ukrainians are the ones fighting for their liberty, they're actually innovating better.

But yeah, it's a canary in the coal mine. Like we're saying machine-on-machine engagements, 90-plus percent of the Ukrainians are. operations are done either entirely by on man systems or primarily by on grand systems. And that's going to be the way of the world. And so, look, weapons are just tools. And you want to make sure that the people that are on the side of liberty have access to those tools. You want to make sure those tools work for the people who stand up to risk their lives for our country, for what is right in the world. If you were to take an aerial view on what's going on between Russia and Ukraine in terms of the front line, and you just zoomed in,

What would you see today? I spent some time there. It's hard to know unless you're there. Like the only people that really, oh, given how fast tech is changing are the ones who are actually fighting. My answer, though, is that you see a lot of close end engagements. So you see basically a band where artillery and where quadcopters destroys basically anything that moves. You can't really go in that band is a person. And so they have autonomous vehicles they send in.

You then have kind of behind that logistics. you see folks launching longer strike drones. These are kind of mid-strike. So you're electrically powered in many cases, drones. That's an interesting area because you've got basically what are called ISR, information surveillance or reconnaissance, unmanned systems, aircraft, basically just going and collecting photos.

And when they see something, Ukrainians or the Russians will go and send a medium strike. And then, frankly, the VE power law part of the war right now is what's happening in the deep strike. And that's folks a thousand miles away saying, you know what, if we hit this specific valve on our refinery, if we hit this specific high voltage power transformer, this will have this economic impact. And so, yeah, I guess it's important to ask which portion of the warfare, which portion of the war?

And so to answer very clearly, it's a very complex thing. Those are kind of the three main strata. The most important of those things is the deep strike. that is strategic air power applied at scale with precision. That's something that we've been talking about since World War II that is actually finally coming into light at a scale that is shutting down the Russian infrastructure. It will go on to shut down electrical infrastructure.

And now that's a conflict bet. But when you think deeply from first principles about what happens when people can send something for $20,000 and go and shut down a refinery for a year. I don't know if you've seen the video, the Ukrainians, and this is my prediction of what happened, but the Ukrainians sent a deep strike drone into Russia. And you can actually see one of the Russians shooting what's called a man pad, which is a shoulder-launched surface air missile. They actually missed the drone and they hit their own giant oil storage drum and it detonates.

And that's going to take years to repair. And so that's the most important part of the war. I'm happy to ask any, answer any questions. I don't think that we're going to go back to the power law portion being what is happening in front. Now, the thing I will say is on the front. That is where most of the people are fighting. That is where most the Ukrainians are stepping up and using drugs.

This is where the podcopters are incredibly important. But the thing that the Ukrainians know and that the Russians know will truly impact that war is deep strike. And you've used this term power law to explain. these deep strikes that have this huge effect on the war. If I can explain it super cleanly, like, let's say there's a factory that makes 100,000 drones a year, and there are many of those factories throughout Ukraine. Let's say those drones need one specific part that comes from one factory.

If you can strike thousands of miles away and you can take out the power transformer, which right now in Russia is a really, really hard thing to get back. If you can take that out and you can shut down that line, that drone factory that makes 100,000 drones, year. It doesn't matter. Like, they can go and assemble the drone. They literally won't have the part. There's a great book on this. It's called the bottom mafia. The folks who understand strategic air power that in saying that this is going to happen since World War II. It is frightening, but fortunately, I know the Ukrainians have defined each of these eras and have generally one each time,

but it is frightening. The thing is that that strategic air power is finally playing out at a scale where you can shut down a country's grid, you can shut down their all infrastructure. And That's what the Ukrainians are currently doing to Russia. That's what the Russians are starting to do back to Ukraine. And it's going to be a really, really, really important thing to watch. We talk about all these different battle fronts. One of the, I guess, domestic battle fronts is the war for talent. How do you recruit the best and brightest that have the chance to work at Golden Sachs or McKinsey or choose X, Y, Z tech company?

How do you recruit the best and brightest to work at Mac? I tell them what we do in Washington. And the best and brightest are incredibly intelligent and they know what they want to do. When I recruit people who worked at SpaceX back in 2012, 2012, 2013, 2014, they described this feeling of just like loving their job, just needing to win. And I think that feeling comes from when three things are happening at the same time. One, when you know you're doing something that's important for the world, but that is also important for the people who live in the world, that is a mission. The more tangible that mission is, the more motivated you are. not everyone right now is motivated by a mission, but a lot of people, and specifically the people

we want to hire want to go and do the right thing. The second thing is you have to love your job. Like you actually have to be working on things you're passionate about with people that you, that are your friends in an environment that allows you to speak truth, that allows you to push really hard. You need to own, you need to give people ownership. You need to give people an empowerment. When they have ownership and empowerment, it's their job. That's an excellent feeling to know you run your thing. If you can be an entrepreneur within a company, if you have super clear ownership. And then the third thing is you need to give people sovereignty. Now, sovereignty in a capitalist system is capital. The reason equity is such an incredible tool is you can basically give people

asymmetric upside of financial sovereignty in the future. People do their best work. People love their job. The right people want to join. When you give them a mission that they truly believe it's tangible to them, that's tangible to their families, it's tangible to the country, that It's tangible to the people they shift the technology to. When they get the ownership in that job to actually set the direction, that's, I believe, where passion comes from, because you love the technology. It's something you're obsessed with.

You're also working with people who are obsessed with their thing who trust you. And then the third is when you can make money. And a lot of people actually don't care about money that much in the near term. And so basically my job is to make sure that those three things exist to the company. to prove that we're excellent as a company by shipping products that work for the warfighter and in the process making a company that, I mean, it's been a great year, right? We started the year at $470 million. Right now, we're $3.7 billion.

It is what it is. It's a great thing. We'll make money as a company. We'll make money doing the right things. And so the right people, the people I want to hire, they chase that. The thing you want and folks who join, the thing I want folks who join, and the thing the people I work next to want to be folks to join as folks who are empowered, as folks who are intrinsically motivated. And now you have to create a culture where that feels good for people.

But when you do that, the right people hear podcasts, the right people, go on the website, the right people think deeply about what's happening in the world, and they decide to step up and join. I actually think recruiting is kind of a misunderstood thing. You don't want to go and try to convince people. You just want to say what's right. You want to be completely open. You want to say, you know, let's go walk the factory. Come see the technology. And the right people, the right engineer will look at a viper and just be obsessed. They can't stop looking at it. The right person who you want selling the tech to the government, they get it.

They get it so that when they say this is the right thing, they really mean it. And so it's actually you want to set up negative filters so that you hire an intrinsically motivated people and the best negative filters just to say the things that are first principles, right? And that's how we've recruited. And I'm super super grateful for all the people who have stepped up and said, you know, I'll be a part of that. You're going to own it and drive it. There's this thin line between selling your vision and then also not overselling

where you don't have the people that are actually aligned and will be aligned for years to come. Yeah. You just want to be authentic, right? You want to say, you know what, come see the factory. We're confident that this is good for the world. We're confident that you'll love your job. And we're confident that your equity will be worth asymmetrically more in the future. You mentioned your company has grown almost 10x in terms of valuation to now over three

a half billion dollars you started six years after andrel and really the first neo prime and neo defense company how instrumental is that towards the success of ma you're right i mean i was look i was the seventh grader when andrew was founded and real helped a lot they got people motivated they're incredible at marketing and so they got people thinking about the right things i don't think about it much anymore to be honest with you like we sell jet engines we sell rock motors i hope we sell some of the to them. They make excellent software. I'd be happy to plug into their software if it makes sense for the warfighter and if it makes sense for our company. But it's not negative salt, right? Like in a world where you shoot six years of your production capacity in three weeks, it's so foolish to go and

compare a mock to Anderle. BCs love to think in terms of monopolies. What we realize working in defense is that the government's never going to let there be a monopoly. And so Enderl is an excellent company. I have a lot of friends who work at Anderl. To be honest with you, though, I just don't think about much. Like our job is to go and do the right thing for the warfighter. You mentioned media. Today, almost every CEO, every founder that I talk to thinks about themselves as a media personality, sees it as a big part of their recruiting. Do you see media being a defense company? Do you still see media as critical for your strategy? First of all, I'd say we are a defense company. Our job is to ship technology that defends liberty.

I actually think in the next two years, and I'll make some announcements about this in the next six months. Like, we're going to be banking a lot of stuff outside of defense. Media is important. I mean, I'm doing media right now. Now, I don't think media has to be flashy marketing material. I don't think it has to be paid ads. I'd rather spend my money developing excellent products. So media for me is, like, get up when given an opportunity.

And I really, really appreciate the opportunity, David, and just say what's right. And so, yeah, a lot about media in terms of thinking about what I want to do as a company. And then media for us is just any time someone wants to hear what we have to say, step up and say it. And I think the right people listen. We started the conversation talking about you're at MIT, you're a 19-year-old, you were concerned about the future of warfare and the future of the U.S. and allies. And you dropped out of this prestigious university to really pursue this mission. Since we chatted about a month and a half ago, I've been trying to really figure out

how do we create more Ethan's, what really drives him. How do you explain this gap between you being concerned, you taking agency around this issue and you going out and starting this very ambitious project? The only risk in my mind, in my team's mind early on was that we weren't able to get it done. Like, dropping out of college, it's not that much of a risk. Like the risk is that we aren't able to go and build what the world needs. Honestly, that's as clear as I can say it. Like everyone thinks I was like terrified to drop out. No, I'm terrified of what happens.

If we lose, I was scared to drop out. But we feel fear. And frankly, the balancing fear, the fear of being in pilot selection in 28 and being too late, China had invaded Taiwan in 26 or 25 or 24, that fear was bigger. And so a lot of us think about fear in the very short term, but fear is a relative thing. And frankly, my fear in life at the time, and this still is, is that, like, I actually don't take the risks. The riskiest thing to do in my mind would have been to state and been in college watching these things unfold and been in pilot training watching these things unfold. And so it wasn't a risk.

Like, dude, worst case, I could have like Don back to MIT. It wasn't that much of a risk. And I think people don't believe me when I say that. But that's how I felt. That's how I'll tell you a fun story. Because this is before you became a teal fellow. A lot of people think you became a teal fellow you dropped out. But you dropped out first, which is critical. The teal fellowship had. nothing to do with it, to be honest with you. I dropped out. I was already running the company. I got like 200K. I could go and dilute. I'm going to take the 100K-Teele fellowship. It's not dilute and I put it right back into the company and I got to work. It's a misunderstood portion of the story. Yeah, it wasn't that risky. And I think a lot of things in life just aren't that

risky. I'm a unique person. I want other people to take rest of like me. I'm very confident that there are people better than me that can go and start companies. I know there are better engineers than me who can join my company and get a ton of equity. I know they're better investors than I am out there who can identify when there is the right opportunity of a company that is going to call the ball and have the guts to just go and say, let's go and do that. And I want to work with those investors. And so, look, it's not that hard to take risks if you're a being wrong. And if you take risks on a multi-decade time horizon, I would so much rather when I'm laying down to die someday. So you know, I took the hard risks. And it was hard. Like, I love my friends from school.

I had a frat. I was playing football. I had a bunch of Air Force Rotsie buddies. I had to step away and like go and sleep on the ground for six months and in our office in Charlestown. But in the long term, that's actually the easier thing to do. And I feel better for it. Plenty of people describe building a company. It's painful. It's not painful. It's just hard. And when you do things for the right reasons, hard things feel good. So I hope that answers to a question. One story I'll tell you that that is an important part of the story, is we had like five or six interns for that month of IAP. It was just me for the semester because all my buddies went back to college. And then we got two houses and basically 40 MIT and Harvard kids.

I was a kid at the time. I'd say that. I still am a kid. I hope I can always call myself a kid. But we literally worked out of two houses. And one house was the hangout house. It was called Balcones. It's where we went and drank beer and had a cook out every Friday night.

And then one house was the workhouse. And there's some fun stories. There's this dude Matthew Garcia. This is like a weekend. And we had two full-time employees. He literally heard about the fact that we're working on this. This is middle of nowhere Austin. And he literally, I had heard about this guy because he and my mom had been on the same flight.

And he got flagged by the TSA for bringing Saul Rocket Motors aboard. They had mixed himself. They didn't let him on. This is back when he's going to MIT. But he comes and just knocks up at the door. And I say, hey, who are you? He says, oh, I'm Matthew Garcia. I heard this was happening.

I want to come work here. Like, okay, great. Do you want to join? And I shook his hand, and he was my roommate for the rest of the summer. Three of us shared a room in that house, and like 25 of us worked out of that house every day. We broke the AC because we're pulling too much power for our 3D printers. We test jet engines in the backyard. It was fun.

Like, if you're doing things for the right reasons with people you respect it. Even if it's a scary thing, it's actually fun. And so that's a long story. That's portions of the story I've never told before. If you could go back just before you started only three plus years ago, you could give yourself one-timeless piece of advice. What would that be? Find people you can trust and then empower them.

Yeah, look, I work hard. We all work hard. I got like three hours of sleep last night. That's the way it goes. I'm not complaining. I love it. But I own like one right now, probably one 450th of the output, the company. And so I think it's very easy to put yourself up on a pedestal as a founder.

and to say you have some special thing, I actually don't. The only two things in my job are to set what the mission is. To find generally how I want to go and accomplish it, I do choose all the products we choose to build as a company. I can name you most of the components, not on this podcast because I'd be an ITR violation. I care about the details, but one is my job to set the direction that is right for the world

that will make my investors money, that will make my employees money, that will make sure that the good people have the tools, in this case, the weapons. And then the other half of my job is to figure out who cares enough about that to go and do the hard thing. And when you find those people, to give them ownership in their job, to trust them to do that, to speak objectively to them in an environment where feedback is not a bad thing. Feedback is a deeply good thing.

I think it's been solely by HR corporate culture. It's necessary. Now, good feedback is technical. And it can happen with your lawyers. It can happen with your financiers. It can happen between some technician and me saying, hey, why did you go do this thing? When you do that, you achieve rigor as a company. your people work super, super hard.

I'm people. I work super hard because I exist in this environment. And then you get stuff done. And when you get stuff done for the right reasons, you make money, you get your mission done, and you ship awesome products that people want to work on. And so that's all I see my job as. I wish I had known that, frankly.

I've made a lot of mistakes in running the company. I think it's important to realize that I did start the company when I was 18 with my only real job I've ever had. I was an auto tech. back in Texas. So it took me a while to figure out what leadership met. I'll never know. I hope I never think I know. But yeah, find the people to trust, show them the mission and empower them. How do you square this empowering management style with this founder mode popularized by the CEO of Airbnb, which is you go and you get shit done? I think I misunderstood founder mode. I think when you

give people the ability to make their own decisions, you hold them accountable. You expect excellence. you're willing to dig into the details. Founder mode for me is knowing what my job is. That's my job and working incredibly aggressively on it. And we don't tolerate anything but excellence as a company. But founder mode is not jumping into the details and changing everything about your company. Founder mode is being super, super clear on setting the bar,

on finding people you trust. It's funny, I think we go through these hype cycles of business philosophy. We're very much in this founder mode style right now where people forget the epistemic humility is an important trait in founders, right? You need to be able to call when you're wrong. And you need to empower the people around you to call it when you're wrong. My dream for a culture is one where I can walk out into my manufacturing floor. And a technician can come up to me and say, you know what?

You're doing a shitty job as a CEO. You should do this, this, this and this. And he and I can sit down and I can say, this is why I'm doing this. This is why I'm doing this. This is why I'm doing this. And I'll convince him. And if I don't convince him, it means I'm probably doing their own. thing and my job for the people that work with me on the mission which is not my

mission is to create that level of transparency and trust because founder mode is important you have to have conviction you also can't destroy trust and people to hold you accountable and so it sounds like a balance it's really just not like be clear out about what you're good at develop that sharpen that over time power your people to give you objective feedback so that you know you're not going to drift Founder mode should be described, should be like first principles for an individual founder. So founder mode for Brian is different than founder mode for Elon.

It's different than founder mode for jobs. Jobs changed his founder mode over time too. Something we forget to mention, like he was an asshole. And then he got fired and he had to go and kind of find himself and find what founder mode meant for him. And he came back to Apple when he turned when a lot of the folks I work with actually worked with jobs in his last years at Apple. before and after he had camp to. He's actually a very kind dude. And that's when he did the best work.

And so I think it's easy to assume that founder mode is asshole Steve Jobs' mode. You have to have conviction, but you actually also have to make sure that people around you hold you accountable. And that's what founder mode means for me. I hope it means something else for other people. I think it really comes down to being world class at every position. If you're the founder and you have to do all the jobs, you don't have a scalable organization. But it is oftentimes sign that you have the wrong. person and job. Brian Chesky, the context within which he did founder mode, he had this layer

of bureaucracy that a bunch of people hired during the early 2000s. And he had all these people that were basically incompetent. And he needed to take over, at least temporarily take over their jobs and take the reins back because they have given up the reins. So I think it's really about world class product at every single part of the organization. And if you don't have that, you should actually fire the people, not necessarily do the job yourself. 100%. And I want to be super clear. And like when I talk about, needing the need is a is a is a is a leader to to have your people hold you accountable you need to hold them accountable too but that's a two-way door and if you think it's

one way then lose trust and respect incredibly quickly brian chesky's an incredible entrepreneur but it's hard to say that it was the right thing to do in that moment but you also have to realize that the bureaucracy get built over time i've had moments like this where you wake up and you're like oh stuff's not going great that's fine it's about moving out you do you can't lose trust in your people along the way he's saved his his company when he did that. But my job is to make sure I actually don't have that many moments where I have to switch in the founders. And that's how you can actually maintain stability over time. And I think that's one of the things Apple got incredibly right. That's why they were so innovative,

especially in the later late years of his life. Like Steve Jobs was a kind dude and kind of nice are not the same thing. My job is the founder is to be able to be kind to my people so that they're kind to me. And part of that is telling me and me telling them stuff they don't necessarily they want to hear for the sake of building an excellent team. Because my biggest goal, my biggest job is not to be able to make the decisions. Now, that doesn't mean I can't go into the details. I can go into the details with my engineers. I can go into the details with my lawyers.

I'm still figuring out the finance part. I'll be able to go into the detail, hopefully there in three to six months. But if I have to, I hold out veto rights at the company. But if I have to veto things too often, that actually means I'm doing a poor job building the team. For people that want to create this culture of just being direct, getting the most out of people, getting the most out of the CEO as well, what are some things to do and what are some things to not to? There are probably two important things to do. One, love getting feedback. Like, I just hire a CFO.

And one of, like, the best thing is on his, like, second week in a public meeting, I said something he didn't like and he put it before. And it was great. And he and I got into a discussion. in public. Second, you do have to understand what excellence looks like and you need to empower your people and you need to hold them accountable consistently when it's not excellent. It needs to go in both directions. It's important to think about what the word feedback actually means. Like, David, I'll give you an example. If you're driving your car and it's probably a testy at this point, but if it weren't, feedback is your eyes and ears. And if you're a leader, and you're a leader,

you're driving your car, you're a leader of that car in that moment, if someone blocks your steering wheel, you're going to be a bit frustrated. And so I actually think you have to have a craving for feedback, and you have to empower and frankly publicly reward people who give you feedback in public. Now, you can't be weak. You have to know what you think is right. And you have to be able to go into the details and have technical discussions. And so you have to get that right. You have to love getting feedback. You have to want feedback to love getting feedback. We have a fixed context

window. My context window is like one of 450th of the company. And so I have to love it when people come up to me. Give me that feedback. Now that feedback can't be ad hominin, right? It can't be, oh, so-and-so sucks. I'll be, hey, this specific glide part that this person does own, I think

this is going to cause glide to crash. And then on the other hand, you have to have confidence that you do know what your job is. And you need to know what your job. is. And as a CEO, as a chief executive officer, your job is not to make every decision. Your job is to build a team that can make those decisions excellent well. And then frankly, look out for them. Make sure they have capital. Make sure you look out for them by keeping the ship in the right direction. There's a funny thing, Scully said, the Apple dudes gave them shit for

for a while. At one hangout, he said, my job is CEO is I steer the boat. And right now, the boat has a hole in it. And I just have to keep steering it. You have to think deeply about like what's actually broken. That quote makes no sense. And so my job is to steer the boat. Now, when there's a hole, you have to patch that hole. But in the process of patching that hole, you have to look out for your people. Looking out for your people is being kind, by the way. It's not being nice. You have to develop trusted relationships across the company where I can walk up to that same 3D print technician. Say, hey, you know what? That part just kind of looks wrong. This is why I think it looks wrong. Now, you want them to be able to walk up to you and say,

hey, I think that you should have made this decision better. And when you do that, you can build a good team. Elon talks about this, which is essentially feedback, especially when you're working on a physical product, it will be given one way or another. It could be given to the human before the Falcon 9 is launched, or it could be given when it blows up. And it's just a matter of how quickly you escalate that,

and it could be a defensive measure as well. Absolutely. And one thing you are is the CEO is you're the culture center for your company. and if you don't love getting that feedback, your people won't love hearing it and they won't listen. And so Elon's right and that. Decisions end up working their way through in funny ways, right? It's clear as to an engineering.

It's clear as to someone designs a part wrong. The thing crashes. But it's true also that if a lawyer has one line wrong in a contract, that that contract might not be great. That's the scary thing, right? But that's why you need to build a team of excellence. And you can't be the only excellent person. at your org. Ethan, this has been an absolute masterclass. Thanks so much for jumping on.

Thank you so much for having me. I loved it, David.