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

Episode Date: March 27, 2025

TBPN.com is made possible by:Ramp - https://ramp.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(03:34) - Trump Vehicle Tariffs (07:28) - Ferrari to Raise Prices (11:51) - Pat Gelsinger Joins VC (15:35) - Flexport Misses Profitability Target (17:52) - Defense Tech History Deep Dive (31:15) - Delian Asparouhov (01:03:02) - Steven Simoni (01:16:54) - AJ Piplica (01:31:57) - Connor Love (02:00:58) - Chris Power (02:17:03) - Aaron Slodov (02:32:10) - Dhruva Rajendra (02:46:36) - Cameron McCord

You're watching TBPN. It is Thursday, March 27th, 2025. We are live from the Temple of Technology, the fortress of finance, the capital of capital. This show starts now. We got a great show for you today, folks. It's Defense Day. Let's hear it, Jordy. Defense, defense, defense. Defense wins championships and we're breaking it down today on TBPN Live talking to a bunch of people in the defense world. Deleon, ACS, AJ from Hermia's, we got a bunch more folks coming in. That's starting in half an hour. We're gonna give you a little brief overview

of what's going on in the news and tech broadly, talking about tariffs, talking about what Pat Gelsinger is up to now that he's out of Intel, and then we'll take you through some history of defense tech, how we got here, and then we'll talk to the builders that are actually doing the good stuff. So, let's take it with the news first. First, I noticed you are, you could say you're verticalizing orange today.

I'm going big. I'm going long orange. I'm going long orange. I'm going long green. I want to go on record. I'm shorting. It's March 27th, 2025. I'm shorting. And it's downhill from here. In many ways you could say that slop is like the most important word of the year, but that is also a top signal for the word overall. It's going to get overused. It's going to get applied with a broad brush.

But very fascinating time on the internet yesterday. Obviously, there was eventually a backlash to all the gibblification, all the gibblies going out. But the swap boards cleaned up yesterday. They did. I posted one that was just a frame from Oppenheimer, gibblified, 30k likes. Jordy had another 25k or something on morning routine.

Morning routine. Just take the viral meme, make it Ghibli, and it was easy money on Axe. Those Elon bucks were flowing. I can't wait for the payouts. There's this sense maybe for people that aren't in the creator revenue sharing program that the payouts are big. They are not. They're not. that the payouts are big, they are not. They're not. We could maybe pay for a week's supply of Saratoga water with the ex-payout from this entire month. But it was a fun day. I think a lot of the criticisms were correct

that this is a degradation of aesthetics in some way. It's a collapse of aesthetics. It's this all-consuming meme, everyone was obsessed with the exact same image, exact same look, and it was a little odd. But it was a very peaceful time on X yesterday. There was no politics, no wars, no fighting. It was just people posting anime, having fun.

Haskell in the chat says, Lisanne, I'll give you the thing. Give me, yes, of course, of course. And so I'm sure we'll dig into that more. I wanna hear from Mid Journey, I wanna hear from David Holes. I also wanna hear about more of the tech that went into developing that model.

How narrowly is it trained on Studio Ghibli type content? Will there be a legal battle there? I also wanna know, was this truly just an algorithm change, or was there more scaling applied to this? The model's clearly better, don't think anyone debates that. Is it better because of scale? Did they spend more money on the training run, or is this an algorithmic improvement? So interesting to dig into, I'm sure we'll talk to a lot of folks.

We have Christabel Valenzuela coming on in a few weeks, founder of Runway, which does AI video generation. I'm sure he'll have a lot of commentary on this and we'll try and cover this as the story continues to develop. But the story that is developing today is new Trump tariffs, where things stand from the Wall Street Journal. Giving a little roundup here, Canada and Mexico got a 25% import tariff on goods, took effect March 4th with an exception

for energy products and potash, which received a 10% tariff, a little bit more critical. What is potash? You look that up. I think it's an industrial fertilizer. Potassium containing salts that are mined and manufactured. It's used as a fertilizer. It's a key nutrient for plants so bad news for the potash

Industry didn't get the the domestic potash industry you mean because the domestic the US domestic potash industry They want the highest tariff possible. Yeah, but there's a smaller tariff, 10% on potash and energy, 25% on goods. Trump administration later suspended those tariffs until April 2nd on autos and all other goods that are eligible for duty-free trade under the US-Mexico-Canada agreement or USMCA. Many goods entering the US don't comply with USMCA and are therefore subject to the new tariffs. Canada responded by placing tariffs on 21 billion dollars in US imports including fruits, vegetables, appliances and liquor. Canada also said it would tariff an additional 20 billion of US goods in response to Trump's steel and aluminum tariffs.

So a little bit of trade war going on. And then the big news today is that President Trump on March 26th, that was yesterday, announced that he would impose a 25 percent tariff on global automotive imports to the US That's all cars that are made internationally doesn't matter if it's a BMW or Han Chinese Evie like that's the brand Han. Oh really? Yeah, even though Han is like yes Yes, yes, it's the most dominant ethnicity in China the one That's cool. That's like calling your bank Bank of America.

Yeah, basically. Yeah. And of course, Huawei also. Is Huawei or- Big Alpha and somebody making a political podcast called Podcast of America. Podcast of- We have Podsave America.

Podsave America. But just the podcast of America. Yeah, like Bank of America. I like that, it's good. And so auto stocks have been in turmoil since this happened. And and then of course, there are also tariffs on China that has been the big focus of the trade war. On February 3, the Trump administration imposed an extra 10% tariff on goods from China

on top of those various tariffs levied during during the Biden and Trump and first Trump administrations China retaliated with a 25% tariff on US coal and liquefied natural gas and a 10% tariff on crude oil agricultural machinery and other products that all took effect February 10th and then on March 3rd Trump again hiked tariffs on Chinese goods by an additional 10% China again retaliated with tariffs that took effect on March 10th, including 15% on US chicken, wheat, corn, cotton, 10% on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products. So they are taxing our food and we are taxing their manufactured goods basically. There's also some reciprocal tariffs going on over in Europe and in the EU. But

you know what they aren't raising tariffs on? I didn't see mentioned at all in there, Swiss watches. That's right. So head on over to Bezel, shop over 23,500 luxury watches, fully authenticated in-house by Bezel's team of experts. That's right. Great time because a lot of things, if you buy something before the tariff comes in, the price goes up,

you know, like the free market will reward you for that. That's right. You know, some people that pay attention to these tariffs, they trade them with size on Wall Street. They're running massive hedge funds. Some other guys are just buying Rolex Daytonas and FP Journes, hoping that tariffs hit and they strike it rich.

Many ways to make a buck around here. Always a bull market somewhere. Well, speaking of luxury goods, Ferrari is set to raise prices on some models in response to U.S. tariffs. This is the big question, who really pays? The external revenue service is levying tariffs. Will the foreign countries pass that through

to the consumer by raising prices in the case of Ferrari It certainly seems like they are they're raising it They're seeing a maximum 10% price increase on the pure sangue which is their SUV and the Dolce Cilindri I'm working on my Italian accent. Yeah. Yeah the the 12-cylinder, which very controversial car. I think it's beautiful. Not many people agree with me. It's the wheels, John. It's the wheels.

Oh, I always thought it was the front hood, that black stripe, which is also a design element in the F80. The wheels on the 12-cylinder are just, they go round and round, but they're very bad. Oh, okay, I didn't know that. I mean, I'm still partial to the rear engine Ferraris, the SB3, even the SF90, the 296,

I think those are all fantastic cars, but in terms of what does Ferrari really do well, front engine V12s and the Dottier Trilindri is still in the game, but it's 10% more expensive now. And Ferrari was already having issues with pricing, people. It seems that the true market value of a lot of new Ferraris is simply less than what Ferrari is charging.

And so having to increase prices and pass those on to, basically pass the tariff cost onto consumers is not gonna have a positive impact on sales. And so we've covered this before, Ferraris changed their strategy, they are producing a lot more cars, and there has been a glut of these models that were formerly very special like the SF 90

It's a what 600 800 thousand dollar car used to be when there was a 600 thousand dollar ferrari You really needed to know someone to get one You need to be on a list that you had to be invited to buy it Now you can just kind of pick one of those up and the folks who did pick them up have Taken a lot of depreciation on the chin with that one And also just from a design standpoint the SF92 and 6 they look pretty similar. The stories of people buying SF90s you know putting up a lot of equity and still being down underwater in the red. Yep like it's very rough. Having to pay

to sell their car. Well the good news is the 296 the SF90 and the Roma will all remain unchanged in price, regardless of the import date. This implies that Ferrari will cover the cost of any duties due on such models imported to the US after the April 2nd deadline. Let's hear it. So it's truly an external revenue service event.

Yep. You said you wanted to hear it for someone? Well, let's hear it for the Ferrari management for taking one for the US consumer. Thanks. US consumer is undefeated. Yep, they really are. Anyway, you know who drives for Ferrari?

Charles Leclerc. And you know what bed he sleeps on? He sleeps on an AID Sleep, baby. There we go. True. He's an AID Sleep brand ambassador, and today we're telling you about 8 Sleep nights that fuel your best days.

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We got to hang on Zoom a bit with Mavi and Alexandra over at the 8 Sleep team this morning, which is fun, we got some cool stuff cooking. But back to the show. So Pat Gelsinger, former Intel CEO, absolute legend. He's an absolute dog, John. He's out at Intel and he's in to a venture capital firm. Little personnel news going on.

He is joining the venture firm Playground Global as a general partner with a focus on semiconductors and other investments that lie somewhere between the improbable and the impossible. I like it, he's really going long shots. I love this, I was thinking about this the other day that there are funds that have gone all in on defense tech or they've gone all in on crypto

or they've gone all in on AI. And I would love to see a fund burn the ships and just go really really hard on we're going to figure out how to make money in semiconductors and we have a lot of money and we think this is important we think it's an important mission and so that's what we're going to figure out and it sounds like that's what Gelsinger is going to do and yeah I, he's a legend, he's been in the industry forever and he would be probably a fantastic board member. I mean, I don't know exactly how good he is

at startup governance, but I imagine he'd be very knowledgeable and he'd be someone who you would want as an advisor. I'm over here on LinkedIn where he's putting up some big numbers. He hasn't shared this news yet, by the way, so it's breaking news. He calls himself an electrical engineering expert with four decades of technology experience.

Just a couple decades. But I love that he's leading with his expertise. Got to be cracked to go on a run like he did. And excited to have him on the show at some point. He started a brief stint at VMware. The Intel veteran came back home to the chip giant in 2021, this time as CEO with a mandate to revive the company's prospects

and rebuild its technological prowess amid market share losses and highly publicized delays for its most advanced chips. His turnaround strategy focused both on designing and manufacturing chips, which was controversial. Remember, a lot of people were saying Intel should split those two businesses up, become two different companies.

This ran counter to the direction that the industry had taken over previous several decades with rivals like AI chip designer, Nvidia, and chip manufacturer, Taiwan Semiconductor Manufacturing, TSMC, setting the pace. And so the whole market and the big power law companies were all saying, you gotta be a pure play, Intel, you're trying to do two things at once,

you're neither Nvidia, you're not Nvidia, and you're also not TSMC, so you're falling behind. Everyone was saying, hey, just go pure play. He didn't, he chose not to do that, and eventually they said, hey, we wanna try a different CEO, but the new CEO, Lit Butan, is signaling that maybe he's staying the course and maybe not splitting up Intel.

But we'll see. He could just be saying that because internal politics and he wants to really get the playbook lined up before he rolls it out. So I'm sure we'll be talking to more folks about Intel in the coming weeks. Stay tuned. But I was thinking if he wants to just get a couple

of deals under his belt, maybe he takes a, this is his first time really being a VC. Sequon. Sequon. He's been very active. Exactly. Over the last couple of months. Yeah, maybe Sequon could be like his junior partner.

Yeah, just like, or venture partner. Or send me deals. Honestly, Sequon, at least over the last two months, is getting into the higher profile companies, companies that have 10x the demand for their equity. So it's possible that, you know, I'm sure they could both learn a thing or two from each other. So hopefully he, like Sequon, gets into ramp.

Of course, you know ramp. Time is money, save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more, all in one place. And as Saquon says, keep your team focused on the game, not expenses. I love that, it's great.

Let's move on to some news in the Wall Street Journal about Flexport. Ryan Peterson's a good friend, he's been on the show. This article is kind of deep diving into their profitability and revenue. The title is, Freight Startup Flexport Misses Profitability Target. We're going to give you the details and then give you our take. So, Peterson said, too much of the company's 5.2 million square feet of warehouse space spread across five buildings went unfilled last year. He said demand for fulfillment service is rebounding and he expects that

Flexport will be quite profitable by the end of 2025. So that's the real story here folks. It's here for Ryan. He's been working really hard on this. Billions of revenue and 2025 profitability. If we were writing this headline, we would have led with that. Yeah, exactly. Exactly. Yeah. So in 2023, Flexport did 1.6 billion in revenue. Last year, they did 2.1 billion, still growing. And of course, Ryan actually rotated out, hired a CEO, and then went back into the CEO seat, put the company back in founder mode, made a bunch of hard decisions.

Taking like four or five flights a day. Yeah, I mean, you've seen him. He called in from Texas, because he's traveling like crazy. He is doing everything necessary to make this company work and successful. And it's an interesting thing where...

More than I possibly can. Yeah, Flexport is in this position where many of Flexport's customers have gone through the craziest last six months of their time as companies, right, with trade wars, tariffs, all this crazy stuff happening. And it's almost like they need to kind of thread the needle on making sure that they're

building a great business, but also not putting too much pressure on their customers who are already seeing their costs rise in various ways. Yeah, I mean, last time I was talking to Ryan, he's on all these flights. I was telling him, like, hey, when you're traveling, you really got to book a wander. You should find your happy place.

You could book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service. I remember you saying that word for word. Yeah, I was saying, it's a vacation home, but better go to Wander.com, use code TBPN. And so, check it out. Let's run through a little bit.

So we're doing Defense Day today. We're taking you through Defense Tech, trying to give you a tour of what's happening in the industry we're gonna have a ton of great founders on, couple investors as well. But I wanted to run through a little bit of history on how we got to this point in Defense Tech. And so I gave a talk.

I wanna know at what point did they decide to call it defense tech versus offense tech? Cause that would have been it is the time for offense. Well, you know that the department of defense used to be called the department of war. Yeah.

Cause it was just like, yeah, it's the guys who we handle war is a better, but we we've toned it down now. We're focused on defense because defense wins championships of course. And it really all this whole idea of like, before you can't call like the Civil War like defense technology really, because they weren't using electronics back then.

World War II was the first electronic war. And so this all started during the Blitz in 1940. The Germans were bombing Britain and there were these series of radars called the Kamhuber Line and they were decimating our bombers. They had something called the Messerschmitts 262 and it was really a war of technology. We'd build a radar system, they'd build a bomber to bomb the radar system, there was

radio systems and then counter radar systems and all these different things going on. Crazy lore, my great grandpa was shot down twice in a, he was the rear gunner in a B-52, sort of long range bombers. Wasn't his dying wish not to mention that on a podcast? No, he said, he said, actually it's fine. Talk about this forever. Talk about it forever.

To the loudest, you know, in the loudest possible way to the most number of people. It's legendary to survive to. Survive to, and then he was redeploying to the Pacific to be a fighter pilot when the war ended. But yeah, anyways, and so, so the solution was Vannevar Bush, the science legend. I think he worked alongside Oppenheimer. And this was the first time that there was like this really combination between civilian scientists and military efforts. And this is like a continuing theme throughout the evolution of defense tech. So he brings this one page memo to FDR outlining a plan. Hey, we're gonna use our best scientists at universities to build defense tech and FDR approves it in 10 minutes. Talk about like founder mode, like it's like really,

really great. So this creates the NDRC, the National Defense Research Committee in 1940, and they work on the BOM, which you know from Oppenheimer, but they also work on radar. And so the Office of Science, Research, and Development, 1941, Bush is the director. In 1942, the Harvard Radio Research Lab

starts government spending on defense tech. And Bush was a thesis advisor to Fred Terman, and Fred Terman is known as like the real father of Silicon Valley, because he runs the Harvard Radio Research Lab. They create over 150 anti-radar devices, and they're pivotal in disrupting German radar capabilities.

There's a whole bunch of different things. They invent chaff, like the literally just aluminum foil that is cut to half the wavelength of the radar. So it's like barely tech in my opinion, but it's like still there's math to calculate how you cut the tin foil, but it's just chopped up tin foil. But if you chop the tin foil at a certain size, it messes with the radar.

And so that's when you see planes throwing out just aluminum foil. The reason is because it disrupts the radar, right? Carpet jammers or high frequency transmitters that overwhelm enemy radar. You just send so much signal that they get confused. And this contributed to major successes of bombing raids like Operation Gamora in 1943.

Now the radio research lab gets disbanded in 1946 and they needed something new. So Terman goes to Stanford and he brings ideas from Harvard over to the West Coast. He's the Dean of the School of Engineering and this is the formation of the Stanford Industrial Park which created Varian Associates, Hewlett-Packard, General Electric, Lockheed Martin, they all had offices there and so it was this crazy interface between science and business basically. And this is all pre-transistor but it led to like all of Silicon Valley basically.

So then you go into the fifties. So we'll go decade by decade. That was the forties. In the fifties, DARPA obviously speeds up. This is all because of Sputnik, October 4th, 1957. It was the Sputnik moment of the Cold War. Yeah. Okay.

Exactly. It was just a radio satellite, but it could hold payloads. And so all of a sudden everyone's thinking, wait, if they can put up a radio satellite, but it could hold payloads. And so all of a sudden everyone's thinking, wait, if they can put up a radio satellite, they can put up a bomb. So we got to be able to do that. And so Sputnik's a huge deal. The New York Times published 279 articles about it in one month. It's like crazy. It was like total wall to wall coverage. It was crazy. It was like the Sputnik moment really was real. And so the Cold War was heating up. The Ghibli moment.

Yeah, the Ghibli moment of the Cold War. It was the Ghibli moment of space. Yeah. Or the Cold War. And so the Soviet Union took huge World War II casualties, but they were strong in tech. And Sam Rayburn, the speaker of the House of Representatives at the time, said that the people of the United States have been humiliated. They're disturbed and they're unhappy. The CIA actually knew that Sputnik was gonna happen,

but Americans were scared because they didn't know. And the solution was we responded with the Vanguard TV3, launched two months later, but that crashed. And then Explorer 1 worked in 1958. So the pace of play was really fast. Sputnik, 1957, Explorer 1 in 58, smaller, but it goes deeper into space. So we got that superlative.

Now there's too many conflicting rocket projects, like the army had one, I think the CIA had one, like there were a bunch of different projects going on. They're like, we need to consolidate this. We're gonna, President Eisenhower says, put it all under the Advanced Research Projects Agency. We're gonna create a new agency. It's called ARPA, eventually becomes DARPA.

And DARPA is legendary. They create the internet through ARPANET. They create stealth aircraft, GPS, drones, and even self-driving cars originally came out of DARPA. And so it has been a great farm team for tech for a long time. 1960s, we got to talk about Skunk Works. Sean McGuire was at DARPA himself for I think a year and a half.

That's right. So 1960s, Skunk Works, the DoD was 36% of all R&D spending, not in the US, in the world. The DoD was spending so much on R&D, really like tech race. And so Harvard Radio Research Lab and DARPA were very government driven. Skunk Works marked a shift into proper research and development being done at companies. And so Skunk Works is all led by Kelly Johnson. He's designing planes at age 12 at age 23.

He goes to work at Lockheed as a tool designer. He's super confident. He tells he goes into the chief designer, chief design engineer at Lockheed and just says, hey, our best aircraft, it's flawed. I'm going to go fix it and give me a wind tunnel. And he does it. And so then he designs the Hudson bomber, the Model 14. It's more maneuverable, important in World War II. The jet-powered Messerschmitt 262 that obliterated us in World War II.

So he's fighting against that. They wind up building the U-2 spy plane, which you're probably familiar with. That one gets shot down. But it's a recon plane that can fly at 70,000 feet. Lockheed wasn't invited to submit a proposal. They get money from the CIA. There's like this crazy story where Kelly Johnson goes to a cafe in Georgetown, meets the CIA, gets 30 million in funding, like basically in a black bag. The initial bid for the F-35 was in 1992, just started flying.

Just to show you the pace of things, the F-35 took 30 years and they did the pace of play around the SR-71 was insane. So the U-2 was great, but Francis Gary Powers got shot down by a Soviet surface-to-air missile and they needed something faster, supersonic, and so then they built the SR-71. It goes over 2,000 miles per hour

It just outruns missiles. It doesn't have like missile defense or chaff or anything. It's just like I'm faster than a missile So I'm good. Then of course the moon landing happens in 1969 and this is the peak of NASA in some ways like the last hurrah and then of course we go into like the decline in 1970s there's this like this is when stagnation starts. This is like the teal thesis. All the Bitcoiners say like what happened in 1970, that whole thing. And so there's a lot of different reasons for this. Economics, the Bitcoiners say like

it's the broken dollar gold link. Politics, people say this is when overregulation started. It became harder to build in the real world because of nuclear scares. Everything needs to be approved. The FDA is charging one billion per new drug. Nuclear plants cost billions and laws change while they're building.

And technology, there's just the allure of software opportunities. If you're a really smart person in the 70s, you build a tech company or a software company and you'll make a lot of money, you're not gonna go into hard stuff. So that's kind of what's going on in the 70s. Then the 80s, there's like this fake solution

to seg nation in the form of globalization. Henry Kissinger just went to China, opened up that relationship post-Cold War. US manufacturing employment actually peaked in June of 1979 at 22% of total non-farm employment. By 2019, that share had fallen to 9%. So America basically said hey we can just do manufacturing elsewhere and obviously we're seeing that come back to

bite us now and we're gonna talk to some folks that are bringing it back but this was the idea of like the multinational corporation America was good at bits it's only rational to prioritize that and of course this is all capped with China's rise they joined the World Trade Organization in 20 in 2001 and of course this is all capped with China's rise they joined the World Trade Organization in 20 in 2001 and of course there's been a lot of problems with the China relationship over the last few decades in the 1990s the end of the Cold War happens December 1991 and there's a desire for a peace dividend like the American taxpayer is just saying like hey maybe I don't want to spend like $20 of every 100

that I pay into the taxes on like defense. It doesn't make sense. We're not at war. Like, let's just invest in other stuff. Tax cuts, healthcare, education. And 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 US doesn't need so many defense companies, there were like 50 at the time.

And so Secretary of Defense Leslie Aspin. Let's be clear, those 50 also had, but they also had thousands and thousands of tiny subcontractors. Oh 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 gotta cut costs. We expect defense companies to go out of business there's dozens of mergers Hughes electronics and McDonald Douglas a cease to exist General Electric and Chrysler sold their defense subsidiaries at one point the industry was shedding a thousand 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 now 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 into in QTEL 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 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 gotta have that lawyer on. Yeah, yeah he might actually do it.

I'm connected so maybe we should reach out to him. Then 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 2016 the first drone ship landing the first crude ISS flight happens in 2020 and there's the space suit this is 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 he founds and oral and 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 gonna like remove this one clause, like don't worry about it, like we don't really have any plans. And then like the first investment that they made was Anderol right after that. It's a funny story.

And that caused like a cascade in Silicon Valley where every firm can now invest 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 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? There's only a few, at one point had it and what that just meant is if you had,

it's already hard enough to raise money, right? There's only a few, maybe it's a couple thousand companies a year that raise anything close to traditional venture capital and imagine doing that when 95%, imagine raising when 95% of the funds just say, 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. Yeah. 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. Yeah, totally. Well, we got Deleon in the house.

Welcome to the temple of technology. He's back. How you doing? Oh yeah, Delta V. And I heard today was the day where we were all supposed to call him from the factory floor. So I moved downstairs. Oh yeah, the rumor's gotten around. I the day where we were all supposed to call from the factory floor So I oh, yeah

I like it. I'm beautiful back proof of work Nothing in the background is I tar control that's in one place. So unfortunately, it's the least interesting view of the factory We got a nice logo back there. It's great I was just given a little bit of a history of kind of how we got here in the evolution of defense tech of a history of kind of how we got here in the evolution of defense tech. Um, can you walk me through kind of like, I literally just ended at 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 and 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 US government in order to you know have any success and so you know both SpaceX and Palantir in

the 2010 through 12 time period basically have to sue the government in order to win contracts 2015 to call it roughly 2019. We're gonna sue our customers. Yeah. The playbook is like, we're gonna sue our only customer. That doesn't apply anywhere else. You don't hear about like, oh yeah, like the, you know, this E2B SaaS company had to sue Nike to get them to use their SaaS products.

Yeah, we really want to, we really want Ram to sponsor us. We're gonna sue them. So we're gonna sue them, yeah. Exactly, exactly. And so it gives you a sense of like how difficult it was. 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 see 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 the problem we're lucky, you know, sort of starts and or all. And 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 US 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 having the appropriate little power and wealth, you're able to do that. And so people like me, who are just, you know, merely lowly friends and billionaires

are finally able to start companies. And now in 2022, people extrapolated that trend all the way down there, like, you know, billionaires that sue the government, now it's billionaires, now it's friends and billionaires, let it's friends of billionaires. Let's take the logical leap and high school students can now start defense companies that raise $100 million. That's obviously a logical conclusion of that trend. Yeah.

What do you, right now it seems like 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 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 like 2023 and got over my skis. And I'm back to, you know, back to AI's clock. Just skiing. Skiing and AI's clock. They're back to skiing. They're back to just skiing, not being over their skis on the defense. Yeah. I mean, I think, I think I heard you guys talk to this one night, you know,

sort of hopped on, but, um, you know, back when Andrew started in the VHR 2017 time period, a significant amount of the investors that now all talk about defense and literally had it in their LTA of, you know, the three things that they weren't allowed to invest into was gambling, porn and the fact. And it was like put as one of those top three effectively like vices, it was in like their vice clause.

I think it's pretty likely that over the next decade, some of those LPAs end up going back to having defense in the vice clause, and all these people that yoloed in, their LPs are like, fuck off, we don't want you doing this. Again, you were clearly terrible at it, you had no idea what you were doing. We're just putting it like back in the vice-pros. And so no investing reporting defense

as far as we're concerned, they're the same thing. Like me, that's only fans and founders fun. I'm figuring that out. That's great. I, well, I, 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's what have the good Responses been and what has been like the cope?

Yeah, which funny is like I see so much of it is like pure copium Like if you look at the people that are closing the biggest use of defense contracts, you know, Tim Hughes it Yes, or SpaceX, you know, Graham, Trey Stevens, et cetera, that whole crew at Androl, Sham Sankar at Pound here. Somehow none of those people critiqued my framing of it. I admit my tweet was a little more pithy, but it was funny seeing some of the critiques where I was like, Hughes didn't watch the clip.

Yes, my tweet was like an attempted summary of it. I basically was a bit hyperbolic in saying there are no net new starts. There are going to be some that are potentially allowed, but it all still needs to be paralleled to the original congressional and House and Senate bills that were passed in late February. So some of the critiques came in from some of these, I think, more junior companies that have a little bit 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. And so I think they have this view of like, oh, man, you know, now's the time where I can like, you know, all the rules are scrapped, we can totally, you know, 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, Fugen, 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 FBI sass, we should deorbit it. You know, I don't want that up in space anymore. That shouldn't be a NASA priority. And like, yeah, he got his like, you know, sort of wrist slap a little bit. He also got his 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's been on this rampage against it, it was 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 Androl is somehow going to convince them that they should spend like you know money on your fucking Ponzi coin? Like probably not. Like I think there's a lot of copian that's going on there. So it's like if people are like trying to cite these like stupid 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 war fighter and by like Congress that ultimately is gonna sort of go up through

the like sort of reprogramming and then the budget reconciliation sort of 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. Do you think that there's gonna be a lot of like sort of potentially wasted talent coming out of this era of defense investing where people wanna be founders so bad,

but they would actually be potentially much more successful going into Anderil and like working on a specific product and just leveraging the entire platform that they've built and the sales channel, everything like that, and the sort of like Silicon Valley ethos of like everybody is aspiring to be a founder. Because I think probably

at least the three of us and many other people like the androal of androal is androal is sort of like probably going to play out, right? I can say that I'm not- The anderol of goats will probably be anderol rather than a different company, you know? Yeah, but yeah, do you see- Except for anderol of bears, bear domestication's very important

and I think that is a white space that anderol's weak on. And so- We'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 gonna 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 thought 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 because then it's like a lot easier to aggregate talent. Like I think about that even using with Varta 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 when it's had split up at all, raged their own pieces of capital. And so it's like, 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 to run at them, like the current like, conceived seed 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 Anderl almost certainly was successful is like everybody that like showed to go work at Anderl from 2017 to 2022 before the like, all 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 either 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 Anderl is already off into the races. We were talking about this with like the year Facebook came out of Harvard, like I think it And so they aggregated a bunch of talent where it's like, okay, yeah, now defense is hot, but Andrew's 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 were 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 Sand Hill Road and you got $10 million 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. You can actually do it. 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 gonna get there. Whereas software, at least you can ship the product.

It might not work. Dude, this feels like it's like literally like, you described my edge basically and like the investing in this sphere where it's like, look, described my edge basically and like the investing in this sphere where it's like, look, I think there's some out of like I'm decent at the founder, we need 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 of my category investments that sit in the world of like hardware, difficult thing that they're doing, et cetera. I just, I walked the line. I like, you know, go and I talked to like the technician doing assembly. I talked to the thermal engineer, to the thermal model. I talked to like, you know, mechanisms engineer,

structures engineer, software engineer, firmware, et cetera. And just like, you can, you know, I talked to the thermal engineer during the thermal model, I talked to like, mechanisms, engineer, structures, engineering, software, engineering, firmware, etc. 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 work that you hear that I can kind of gauge like, in this person at like the Varta quality bar, like, you know, doesn't have to be like literally everybody in Tampa 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. At some point, you have to like deliver hardware to customer that works. And so it's been fascinating to me to watch investors honing up like 100 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 gonna be the thing that's solving the problem.

Like they've already got cultural rot to the level that it's like basically gonna be impossible to backtrack. But there's so many people that like just don't even have the capability to diligence that. And you know, I'm not, you know, I think sometimes I admit that I can over rotate to like, you know, I'm probably on like, when I think about amount 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 some from some, you know Sort of investments were like, you know, we debated making a series a investment and then you watch the company It's like they have like six projects in a row fail Now people are for some reason rescuing those companies and so giving them 100 million bucks. But like at some point I'm like, how long does that go for? I was literally texting with our colleague John Luton yesterday. I was just like, he was like, text me these like three or four companies

like crazy like, like going really well. Right. And I'm like, no, like every satellite that they've sent up is failing. They haven't closed any contracts. Like, I don't see any past the program or record. They're really good at hiring, but not necessarily good people. Hiring bad people is not a... Somehow people use headcount scale as a proxy for a successful company. I don't know that that's a thing one should be focused on. Yeah, I think there's going to be some tough reconciliation that happens in the course

of the next year or two where there's going to there's gonna be like, yeah, 50 to 60% of this field which is gonna have to die off or get acquired for pennies on dollar. Yeah, 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, OK, is there a a two times better team that's doing this exact thing?

The other thing is like I've seen 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. But I try to pay attention to like you really have to a 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, why do I have the right to even have an allocation in this company? 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 nothing happened. And so you're now getting the sort of luck of getting to take a shot on this company

when a bunch of people that have invested in other similar winners have already said, yeah, it's not for us or like, you know, we're gonna 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 like the astronauts being stranded 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 like the astronauts being stranded and then you know sort of SpaceX going to bring them back down. This past week it was revealed that the Cygnus spacecraft, which is a spacecraft and pretty sure made by Norfolk Grumman, that originally was awarded basically commercial cargo contract for the ISACs. This was like back in like 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 perform you know so well it's kind of a crazy vehicle and 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 the ice acid dock dropped off 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.

They 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, like, yes, this has been tested, et cetera, but like, 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 is supposed to be delivered to the ISS via Northrop Grumman now is yet again going over to SpaceX. And so it's just one of these moments where it's like, if SpaceX does not exist right now, the United States would neither have Boeing able to take crew to the ISS nor would have Northrop Grumman able to take, you know, basically cargo to the ISS. And so it's like, you know, uh, without SpaceX,

the astronauts would not only be stranded, but also starving. What do you mean dropped? They dropped it. Does that mean drop the program or physically dropped? No, no, no, they like physically dropped it like spacecraft like, like fell. It just fell. Had an accident. You're not supposed to... A little oopsie. A little oopsie in the space.

I'm like how much like, you know, the pulley could hold and they fucking dropped it. Wow. I hope we're gonna... Is there like security camera footage we can find somehow? I think that no one's gonna try to control that real tight and avoid anybody seeing that. We gotta call our friends over at the CIA, NSA, the Deep State, you know, really get them to fork that over. We need the blooper reel.

We've seen the SpaceX crashes. I need to see the pod dropping, 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 Varta HQ recently. It looks like you have a lot more equipment that is filling up, congratulations. We are packed in like sardines. We've got, that's the one that I just showed you is the first one that landed last year. Second one landed 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 turning into an operation. Yeah. Real operation. You have a follow up? I have another one after.

Go for it. I want to cover in maybe the last five minutes, like, slop as a trend. Oh, yeah, that'd be fun, generally. But yeah, let's close out with the space stuff, and then we'll go on that. I want to know more about Jerrick 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, is this a similar process? Like, and what does this mean? Like what's the vibe around him generally? Yeah, I mean, Jared is definitely like really beloved by the space community, you know, ourselves included.

Like it's really awesome to have somebody that is phenomenal entrepreneur, 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 ever do a spacewalk. I don't think I saw that, you know, live stream from I'm bringing the exact time. But it's like, that was him. That was him. Jared, I like literally like he's the first private citizen to like go out into the vacuum with space and like peer out of the space. He walked live streaming so we could run. Yeah. Exactly. Exactly.

So hopefully we get to space run one day. Exactly. OK. So yeah, so what's the vibe? Super legit. You know what I mean? He is literally a privately himself-sponsored astronaut putting his real life on the line.

That mission could have gone poorly, could have died on it, et cetera. And obviously he's sort of didn't. So really beloved, but he is affiliated for sure with Elon since his entire Polaris set of missions was all contracted with SpaceX. He obviously has done a ton of press with Elon, et cetera. So when Elon made this sort of comment around wanting

to basically deorbit the ISS sooner than the original plan. So the current plan is basically at the end of the 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, you know, sort of these like human rated stations, both run by the government, toward these private ones. And there was a bit of a slap on the wrist, you know, forward back via, you know, basically Ted Cruz, you know, sort of the senator from slap on the wrist, you know, for back via basically Ted Cruz, you know, sort of the Senator from Texas that is the, you know,

senior chair of the House, I'm sorry, the Senate Science Committee, which basically controls the NASA budget and is also basically responsible for, you know, sort of voting and confirming the schedule for the NASA Administrative Confirmation, basically stalled, right? Like he refused to actually set a date

for the NASA Administrator. So now you've 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 Isakman, a bunch of space entrepreneurs, I could like, you know, sort of send Cruz a letter. He's finally relented and okay, he said, fine, I will set a date, but I want Jared Isakman, you know, sort of coming out and explicitly saying that he's in support of the ISS 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? It'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 in the 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, like, I'm going to point out, it's like, you know,

you honest, phenomenally successful, super powerful, rich, etc. But like, there are, you know, antibodies and balances of power built into the US government and like, Ted Cruz is clearly showing that he can like, swing a dick around a little bit and say like, yeah, like, you know, you want to fuck with my ISS, like, I'm going to fuck with your administrator. And you know, I'm going to delay his confirmation hearing. And I'm going to 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 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, 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 this has like downstream operational effects. This may slow down our ability to like get more lunar missions, you know, sort of both actually to like get more lunar missions, you know, sort of book 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 going to be, you know, sort of, you know, making sure it's stick around to follow up. I mean, the ISS budget is a 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 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. He's, you know, all he needs to do is, you know, maybe it's not a crap staples, but it's, you know, a couple of Coinbase servers up there that are, you know, he's basically already making it. You know, he's, you know, all he needs to do is, you know, maybe it's not a craps tables, but it's a, you know, a couple of Coinbase servers up there that are, you know,

getting you hooked right into the, you know, sort of live stream of trading chip. Well, I guess you can't really roll dice in zero G cause the dice never fall. Well, yeah, if aliens are ever going to come and assimilate on earth, we should have a, like a, a space casino where they could kind of like learn the American way of life.

To get LSI electric. Because the culture shock, if they came here and they have to know how to gamble or sped integrate for sure, they would just like probably kill us all. Exactly. You guys like, I don't even know what you guys are doing. Oh, that's our planetary defense. We just get the aliens hooked on gambling. They become totally degenerates. They're mortgaging their home planet in order to be able to afford the big one before it. And we're like, actually, you thought you were coming to conquer us, but sorry, we're sending our bookies back to real planet Earth. We're gonna break all your kneecaps and take it. So, Dita, that's maybe the best planetary defense game.

Who needs Asteroid Deflection when you've got space casinos? Yeah, we've got five minutes. What's your take on yesterday? I was joking around earlier. In hindsight, Sputnik really was the Ghibli moment of the cold war. But yesterday felt like a big moment. It just, I did, 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,

like stop joking around with me. Like who's got the filter app. So it still feels like there's people out there. They didn't know that it was't know that I chat GBT. There's like oh there must be a new app out there that does this. Yeah. What's your reaction. Are you long. I'm personally I'm short the word slop but I'm long the underlying trend. But I'd love to hear your take. You know I'm going to relate it back to defense which is is sort of market maps are no good, focus on a long tail winner.

There's like a whole fucking set of like 100 like AI image generation companies that all just got fucking Sherlocked by OpenAI and are gonna be totally relevant because like they've got the biggest brand and know they have the best technology. Good luck catching up when you're like, you know, sort of losing on both angles.

I think you're gonna see this stuff implemented into Hollywood ASAP. I mean, there's a whole set of things where you can like, look, there's gonna for sure still be human fine details. There's things that it's not perfect at or probably never will be quite perfect at. But if you wanna start throwing together rough draft, vision boards, et cetera,

and then what you end up seeing is the equivalent of that there's now two engineers can build a billion, 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. You don't want to be in the middle, but it's like short, all the dudes that just invested like $500 million into like these like slop companies basically. And it's just like all the dues they 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 and or all yeah bullish on the warfighter that gets new tools totally don't recommend being anywhere in between 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's you know the the white lotus you know sort of reference there is be careful of the sloppy middle between the brothers Oh, I haven't watched the latest But I've heard enough that I get it and it's not yeah, you can skip that one White Lotus is funny because I get starts the season. It's like kind of relaxing because it's like these resort settings Yeah, you're just hanging out. 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.

Episode by episode. I want nothing to do with any of these people. Yeah, what, you know, so somebody that launched an image generation tool is like Mike Spicer over at Sutter Hill Ventures. Like they've done, didn't they do like Palo Alto? Snowflakes. They're like the goats of

incubations in many ways. Comes out with an image generation tool. What do you do at this point? Obviously not even just speaking directly to him, but there's mid-journey and there's a lot of other players and it just feels like maybe there is no edge and distribution. Relating back last week. Well, mid, there's a not in the conversation because they haven't raised money. True. It's like, you know. They're dependent.

They raise money every day from their customers. I guess. I guess. But just like in terms of the business. So the funny thing 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 distribution. Just distribution. And so it is the, but like, do you think these image generation models should be rethinking their life and future plans, and the game is lost? Or is there going to be, if you just lean in, let's say, like, set up shop here in Hollywood and just work 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 on filmmaking. What would you do if you were actually running a $50 million Series B stage image generation company? Yeah, I mean, look, this is very top of mind. Like, I literally met up with Mike, I think it was like two weeks ago, to like talk about, you know,

what he was, you know, sort of working on. And I'm like, I'm a huge fan of Mike's. We've worked together on a handful of things. Obviously, he's crushed it with Snowflake. He's clearly one of the valley's best incubator entrepreneurs, investors, execs, leaders, et cetera. But yeah, I don't envy being in that position. But I think you're seeing this in a bunch of different fields

where you've got the mice that are trying to dart around the, you know, 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. And so, yeah, tactically, like if I was in Mike's shoes, I think it's like, look, the

like 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? Like, it's not good enough to like immediately go make a feature like film, but it's good enough for any consumer to like, you know, 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, go like heavy on enterprise, build up studio relationships, try and convince them, you know, sort of, hey, look, if you start using, you know, sort of chat GPT, etc. 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 tune to your own aesthetic and like the specific film that you're working on, it will 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 going off and capturing it. So 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, exact team to figure out like, what their you know, sort of approaches in light of like, you know, this new world. And that's what's so crazy about like, tech acceleration is them all this stuff happening is like, dude, this stuff I felt like when I was in the Valley

in 2014 happened over the course of 18 month periods. And it's like, dude, this stuff, it feels like literally every month now, we have crazy new capabilities that come online that massively disrupt how to build a series B company. In 2014, that new technology is disrupting a late stage series B company. Did honestly happen to you so that often.

Never happened. You kind of had like your stable growth like you and Vardo and stuff that we do is like super hard long timeframes that are 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 doing it's like God man it's such a dynamic world. And, you know, the like, you know, wealth accrues to the rich of South.

Good to be Peter, good to be Sam. You know, I don't want to be myself or Spicer. 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, it 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, everything else doesn't have to be perfect. But we need to take over the timeline. We need to go mainstream this day. I'm closing the round on Monday. Just go, go, go. Well, also, Google had just launched something

that most people think is competitive. But the product is just buried in AI Studio. And 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. Yeah, 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. Yeah, for when though? Yeah, the exciting thing, bringing it back to hard tech and defense is like, we need better science fiction. We need the next generation of

science fiction and if we can kind of like open source that and everybody can create that just firing Someone has a good idea and they can you shouldn't need 200 million dollars to like imagine the future and like 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 Yeah, anyways great to see you. Thanks for 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. See you. You too. Always a fun time. All right, we got we got back to back to back to back to back to back calls.

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. They're trusted by millions. Get on public.com investing for those who take it seriously because they got multi-asset investing, industry leading yields, they'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. And we got a great guest. And now we got Steve Simone the man himself what up Florida man Florida man he's not actually a Florida man but it's great to have you yeah thanks guys thanks for having me on it's an honor to be here so

describe the company in three in exactly three words I've heard the company in exactly three words. I've heard it described as gun on truck. Is that accurate? That's right. AI, 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. Is that true? Well, you know, it's more precision. We're sniping these drones. We're not just throwing bullets in the sky. You know, it's precise. OK, precision. Well, I always love talking to Steve a while back.

He was in L.A. And we like we're 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 of 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 got to think bigger, you got to think bigger. You were that guy. I was like, I was like, you got it. You got to think bigger guy.

Now, Jordi is the Jordi are the ultimate hype man. You made me think bigger. You made me think bigger. That's what's bigger. Yeah. Yeah. Talk about the news today. Oh, yes. Today, we just announced our 30 million dollar series, a led by craft ventures You know, maybe they'll do the be we'll see we'll keep it going, you know, keep it going ride your winners

It's in the all-in intro Let your winners ride and Sax is true his word But I gotta ask you guys how much does it cost to to get my logo on the ticker symbol at the bottom? Like is that how much sponsorship dollars? You're gonna have to wait till the B buddy. I'm sorry. Is that, series A company is tough.

Yeah, yeah, yeah. I can't, I have a rough sense. But we can talk about it, we can talk about it. I have a rough sense of your balance sheet, but you're here, you got your face here. And that's worth, you know, a thousand sponsorships. How much should Wander pay for that back there? Does that we're not we can't get into specifics. 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 podcasting tech. Yeah, 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're making these gun turrets to be able to shoot down their drones. Talk about, yeah, just talk about the process. We were talking with Deleon 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. You'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 like 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's 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. The name too is very cool. Steve was like, everybody's calling their stuff like Lord of the Rings. Like what's the most boomer like, everybody's calling their stuff like Lord of the Rings. Like what's the most boomer tagline that's gonna basically like sound

like it's been around for decades already. And I think it's working. I really like the counter positioning. Yeah, you've got to counter position. That's all marketing baby. No, so we met in the Navy. We were nuclear engineers in the US 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 tentatively my fourth startup. It'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 or, you know, companies two and a half, two years old. Yeah, two and a half. Yeah. old. Yeah, two and a half. Yeah.

Well, it takes to build a complex precision robotics product. It takes about three years, like from whiteboard to really good products. So we're almost 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. And Luke called me up and was like, this is a really good robotics problem. We should start looking at this. And we kind of surveyed the landscape of the industry of like, 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 has it been? You guys spend a lot of time on the range, like actually shooting down drones. Talk about kind of how this maybe company's been different to the last one, which was, you know was in a totally different vertical and you were probably comfortably in San Francisco. Now you guys spend a lot of time just out in the field. Getting the boots dirty. Yeah, getting the boots dirty.

Wait, say that again. That's the question. Just how's the culture different now that you're out of the range actually. Out of an office, you're not in a cubicle all day. Oh, I'll tell you, for me, You're different now that you're out of the rim, actually. Out of an office. You're not in a cubicle all day. I'll tell you, for me, I feel most at home in the startup life. As the companies get bigger in scale, it changes things.

But in the early days, it's the most fun. Actually, Luke and I always joke, 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 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. But 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 out getting out of like the main corporate office and you know, doing our thing. people still enjoying out getting out of like the main corporate office and you know doing our thing. I mean Deleon said this on the show before like you know the andro of andro that is andro and maybe andro is the power law winner

you're gonna do all this stuff how you've obviously counter position 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? Palantir 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 or more products?

Where does the long-term go from here? Yeah, our product, so autonomous guns are, when they hit the battlefield, they're gonna change a lot of the battlefield economics. So a lot of these more expensive interceptor products or some of the big laser beams or missiles and stuff, autonomous guns are gonna put a lot of downward pressure on products like that, I think, so 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 Saronic, a bunch of USB makers, these unmanned surface vehicles, and then you got the land ones, like Overland or Fortera, there's a number of these. And so all of these autonomous vehicles

need an autonomous payload. 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, you make money via bundling in the game. Makes 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 Rheinmetall's 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, go for it. Interrupted you. No, go for it. I was going to, I was going to say, um, this is the lag on the zoom, but I was going to say, yeah, like Rheinmetall, Kongsberg, you know, a lot of, I don't know if a lot of listeners know this, but in the, in the zoom. But I was going to say, yeah, like Ryan Mittal, Kongsberg, you know, a lot of I don't know if a lot of

listeners know this, but in the in the gun turret market, so these are called remote weapon stations in the RWS market. A lot of the providers are foreign. So the US buys a lot of their stuff, most of it from, you know, companies that aren't based in the US. So from this standpoint, we're kind of bringing this back home. It's a new American startup building, you know, new modern age remote weapon stations. And so I think we're pretty well positioned there

from like a congressional standpoint too. Cause like a lot of people in Congress didn't even really realize that, that these like slower dinosaurs are actually not even US companies that are doing this for us. What's the vibe on the ground in the DC area right now? You obviously like, you know, have an office out there.

What's, is it chaos or people are running around? I mean, there's the- Just 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 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. Luckily, counter small drone is one of those. So we're not impacted really by that. Now, obviously for the

FY 25 bill, we were somewhat impacted because they didn't do a bill. And so that's like, I think Delyan was on you were 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 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've got 30 million fresh capital. I imagine a lot of that will be going to bright, uh, 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've got the division system to detect stuff. You have the fire control to track and shoot. Um, 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 people coming out of universities that really love this problem. They want to try to find small drones moving against cluttered backgrounds. And so we're always looking for that kind of talent. But 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, on computer vision, is the job getting easier with new models?

I mean, we just saw an amazing demo yesterday from OpenAI. 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? Or 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, 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 kind of a 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 kind of 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 in computer vision at ACS, where you're like it. I've seen a lot of the videos, and you guys have some of these videos public on your YouTube channel and stuff like that. But getting to work on something where you're actually taking a gun and taking a drone out of the sky. The alternative is you could go work

at some high profile humanoid robotic companies that are just looking at the laundry or whatever. It's my favorite company. You've got to give the robots guns. you've got to give the robots guns. You've got to 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 hill top, like a unitry robots and then bullfrog sniping them all, headshotting them all. Oh, like, you know, I want to see. Here's the other challenge, 360 no scopes. Yeah, 360 no scopes on the turret. I want to see that. That would be viral for sure. Wait, the sweep, you guys do like sweep sniping?

You know that from Hailing to your OG that? Oh yeah, yeah, yeah. Sweep sniping, yeah. Oh yeah, you can do that. I think JD Vance did that a lot. I think he played a lot of headshots. Okay, awesome, awesome. Crazy lore.

Well, thanks for stopping by. This is fantastic. Congratulations. Congratulations. I'm gonna play a quick song games. Awesome. Crazy Lord. Well, thanks, yourself. This is fantastic. Congratulations. I'm going to play a quick song for you on the way out. I'm going all in. You got that? Awesome. There you go.

Congratulations to you, the team, and Saks. Great one. Yeah, congrats to Saks. That's fantastic. Well, we got AJ Peplica coming in, the Temple of Technology from Hermes. 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 fact room with the hat the hat. Well, how you doing? I'm good. How are y'all doing?

Good John. Good to see you. Yeah. Good to see you again You're still in Atlanta Yep. Yep. That's right here 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, yeah Well, I wore it one day because I was making fun of one of my co-founders who wore fedora out in the field We're testing the airplane. I was like, yeah, you look silly. I got a hat I can make I can look even sillier and then I was like I Want to do something like until we fly and like not everybody can grow a beard not everybody can grow their hair up

But anybody can wear a hat. Okay. I'm like, alright, I'll wear this You know, I'll wear this silly hat until we fly which is actually one of my favorite hats like really great friend gave it To me a long long long time ago And it looks good whatever so I like I had to make sure that like it doesn't get Marie condoed out of my house I have to wear like once a year, so I'd always incorporate into my Halloween costume Yeah, little did I know I'd be wearing it for like you know six months now, but so now now I hate it and Nobody else has worn hats every single day. That lasted for about three days. So yeah, when we fly our first airplane,

as soon as it lands, 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. There we go. That's amazing. I wanna hear a little backstory on the company, little company update. I wanna hear your take on the F-47

and the DOD continuing resolution. But let's just start with the overview of the company and where you guys are at sure So yeah Hermes we build very fast airplanes and we build them fast So long-term vision of the business has been to radically accelerate air travel with Mach 5 aircraft. So hypersonic hypersonic passenger aircraft But as we build the technology along the way deliver products It's all some really pressing national security challenges here in the near term. They 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's about six years old now.

We've done a ton of development on the propulsion systems, engines necessary for these kinds of vehicles. And now, over the past couple years, as you mentioned, we've been starting to get into our aircraft development cadence. We've done a ton of development on the propulsion systems, engines necessary for these kinds of vehicles. And now, over the past couple of years, as you mentioned, we've been starting to get into our aircraft development cadence. So a lot of the blood here comes from SpaceX. So the way that we've kind of designed our program for how do you build fast airplanes is to build a lot of prototypes and build them on a very fast cadence. So 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. So this is like back to the Kelly Johnson's Concord days.

So we can. 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 like a robust CRM. You guys got to do something a bit more, just you gotta be a bit more than just robust, right, if you're gonna like fly something through the air.

But where do you even start with this? Like is there like effectively like open source kind of like designs, information, schematics, et cetera, that you can kind of pull from to like pull forward that development timeline or is is it just like from scratch? It's actually chachi-biti. One blueprint for hypersonics. We're a grok company here.

Oh, OK. No, the place that you start is fundamental physics. That's it. There's plenty of stuff in the supply chain where you can buy parts and components and things where you don't have to reinvent the wheel. But if you are not starting with the fundamental, like understanding the problem and simplifying it as much as possible, there's no way you'll ever meet a timeline like that.

So like really simplifying the problem, making the problem a little dumber than you so that you're not trying to outsmart it and 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, you know quarter horse mark one, which is the first aircraft It really only has to do like two things take off and land. That's it And we've uh, 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 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? Yeah. So we don't use Scramjets here. It's all Ramjets. So it's like, it's literally the simplest propulsion concepts that there is out there for everything propulsion. Like 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. So 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, turbojet, 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. 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, just is in the Philippines. And I 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 Yeah, yeah, I think we'd have to be incorporated in a different country fully to be able to do that So that has that has other implications, but yeah like even 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 IKO. But generally, since the US has pretty much always been the leader in aviation and technology and especially come the commercial side, everybody just kind of differs 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 and that has increased trade. So trade and cost and therefore distance are proportional to each other. So the unit that's used in these types of analyses is called economic distance. So 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, um, you know, between two, uh, economies, um, you will increase the trade between them. It's,

it's, 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, in this case. Can you talk a little bit about your reaction to the F program Boeing won a 20 billion dollar contract for the sixth gen fighter it's a nod the design is a nod to the p47 fighter and There's there's competition between the major primes, but I'm sure you have you know 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

make up whatever I want. But I think from the outside, you know, I think, you know, it's clearly a capability that, you know, the US Air Force really thinks that we need to solve some really, really tough challenges. You know, when you look at what the Air Force is tasked to do, you maintain air superiority, basically globally, basically globally in all the places where we have interests. And one of the most important one of those places is in the Pacific and maintaining freedom of navigation. We're already, I mean, we're seeing how that's going in the Middle East right now. We all got a nice inside look to some of that this week. But it's a really hard

problem. The distances are really long and our current fleets of fighters, be they 4th gen, 5th or gen, they really don't have the legs to cover the kind of ground that's required out there. So I would not be surprised if this aircraft was significantly larger 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... Twenty million feels low to me since I... In my mind, it's like F-35, it's a trillion dollar program.

Is this one of those things where you think it's like the startup? Yeah, I mean, this is like the start for the the emd phase engineering manufacturing development so it's like it's like the rnd phase like so you built a prototype now like Go turn that prototype. This is like the chat gpt prompt phase, right? These companies get Do these companies get so big that there's just like, you know massively massive variants in terms of like competency, right? Because like over the last couple years, I think a lot of people that I know are like, I don't want to fly on this, like, you know, Boeing jet.

I'm going to go like take this flight with the Airbus or whatever. But like clearly the government has like confidence in in Boeing. Is that 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 maybe leadership issues or more cultural issues, et cetera. Yeah, I mean, I think each of the primes

have their advanced development groups. You know, Lockheed, S-Kunk Works, Boeing, S-Phantom Works, Northrop, S-Auron, and so forth that kind of do these early stage development programs that proceed production. But frankly, I think all of them have really grown pretty old and sclerotic, to use a Trey Stevens term. And I think the evidence of that is how long it has taken to develop a 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 the program start to initial operational capability for aircraft from 1945 through 2005 to 2010, something like that. So between 1945 and 1975, the average time to bring a new aircraft from like 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 this one, you know, the next-generation air dominance fighter is already like Ten twelve years into its program like sure we flew a prototype five years ago But that was that was maybe already

Of the 100 million dollar ARR graph where it just keeps getting shorter and shorter. It's like It's exactly the opposite in airplanes and so like 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 skunkworks Literally just one guy you can't make this stuff up so 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 very much still of that culture. But you know, 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 decades. And the result is the development timelines for solving hard problems. They just go out and to the right. And then you stack on top of that cost type contracting and incentives and all these kinds of things. And the lack of founder led companies building fighter jets today, that happens. Yeah, no, that's a really great point.

Do you have a last question? Is there camaraderie in this sort of supersonic startup world? It's a bitter rivalry. I've been trying to get Boom to do a foot race with you. We're going to find out who has the faster plane. I want to find out who the faster founder is. Break it down. So I'm finally having knee surgery to fix my ACL.

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 Scholl is over at boom also building hypersonic technology very different application very different path very different scale company and stuff but But 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. It's good for the industry overall. Exactly.

Hey, we just want to fly at hypersonic speeds. Yeah. We want to be able to do it in every application. I want to see t-shirts just random normies are wearing, like, Hermia's merch because they're so invested in the drama. Straight up Vanderpump rules level, like People magazine, paparazzi photos of you anytime you go outside.

This is my dream for what tech can be Yeah, yeah. Well, I mean we got a little bit of a race, right? So boom supersonic this year And we're building an airplane right behind me that hopes to do the same. Well, good luck We just want to pod we we we have a pretty fast pace at the show, but we're not hypersonic Yeah. Not yet. And being able to do this show from the air with you, do an interview in the future. Yes. From the plane would just be incredible. So thank you for coming on.

Always welcome. Thanks so much for having me, guys. Appreciate it. Cheers. Have a great rest of your day. You too. See you. I love how everybody's just calling in from the floor.

Oh, yeah. It's fantastic. Well, speaking of love, our next guest is Connor Love. Connor Love. They named Love after Connor. Did his family create Love? Yeah. They productized it.

They productized it. IP. They made their money in love. They made their money in love. There he is. Hey! How you doing, Connor? What up?

Hey 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 What up? Yeah, guys. I mean, I wanted the chatter to go on. I feel like I'm on Sport Stock Radio, you know? You are. Longtime listener, first time caller, right? Yeah. Well, good to have you here. 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. I've been here for five years. I used to sit on that side of the table, actually served in the military for a better part of the decade. So yeah, excited to chat. I think there's a lot of spice.

I mean, love Delian to death, but let's get into it. And set the table for us on size, scale of Lightspeed, and then is defense- Of course....tablet its own own fund or are you just making the investment? Yeah, obviously so 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, you know a million dollar check early or we'll deploy a billion dollars late So so have the full, you know 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, 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 Deleon, break it down. No, before the drama, I'd love, we were actually talking with Deleon how the last two years, a lot of VCs went and amended their LP agreements and said,

well, actually, I fancy myself a bit of a defense investor myself. You know, I think we all did that. I did that as an angel. Right. I've got my 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 Alan Control Systems.

He was a nuclear engineer in the Navy. That clearly sort of informs how he thinks. How much of an edge do you think you have because you actually have 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. I 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 on 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. 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 going to buy $100 million this thing. It's not how it works. Congress has to say, we have program offices, we have this complexity of just utter chaos that makes this really hard. Long story short, it definitely gives me an edge. I just think things are evolving so quickly. Again, the edge isn't enough. You need to get lucky 100 times.

What does Trey say all the time? They got kicked in the face for what, seven years straight at Anderold before coming today? So it's not easy. To be clear, I'm not pounding the drum that there's going to be 100 Anderolds. I hate to break it to you. There's not easy. Like to be clear, I'm not pounding the drum that like there's gonna be a hundred and rules. Like I hate to break it to you. There's not, there's gonna be a lot of investors who are gonna lose their shirts. There's gonna be a lot of entrepreneurs

who are gonna try and fail. But as the cold blooded American who served and been on that side of the, like this is all that good for us. More people building new technology to get into the hands of war fighters. 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?

Yeah, 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 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 graduated college, went to work for some hard tech company, it fails, but you learned system design, welding, you learned so much of these tangible skills. At the very least, okay, yeah, the VC dollars,

they didn't just go all the Facebook, they went into buying manufacturing capacity. Maybe that manufacturing capacity didn't produce profit, so it's gotta 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 wanna move on to the continuing resolution? Just to make it. 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, 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. And I think 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. What's going on? 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 passed this thing called the National Defense Authorization Act. And this is literally the president, When you look at how the Department of Defense spends money and Congress allocates money, we passed this thing called the National Defense Authorization Act. This is literally the president, Congress, both sides of Congress sit down and they say, what are our needs? What are our requirements? And 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. It's this like, I give the the Android 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,ization Act that gives the Department of Defense a budget table to say, hey, Air Force, here's $100 million. Go buy space lasers. And 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, this has happened 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 Dahlien 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, let's kick the can down the road. And this is 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 Dellian's point, like, yeah, like the, the, the, the step Matt Stackman's of the world and you know, those guys aren't like tweeting at him saying like, you're wrong. It's, it's, it's because like those guys who really understand what's happening and how to sell to government, they're actually texting their co-founders and they're sprinting that shit right now. And that's what's happening. So this continuing resolution,

the nuance here that happened is again, like 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, 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 minnows in this, in your budget happening right now, is the sharks. The guys like Brian Hargis, you know, has done this at SpaceX and is at Castilian now, like, you know, the, the, the, the stackmans and, and

then the list goes on and on. Um, what 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, you know, hey, maybe you don't need 90 million, maybe you need 80. And the nuance here of 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, 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 200, there's $300 million that,

again, it's a big F right now, but there's a lot of money being moved around. And so when I made that comment, and when I look at kind of this broach of prodly, there's so much disruption and there's so much variation of what could happen one way or the other. 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 timing like anything in venture 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. Who cares? Like, you know, move on type thing. And that's the beauty where the chickens

are all gonna 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 gonna 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, we're like building in public. And like we joke about this all the time, like building in public for most people, like sure, share maybe some progress, like get excited on the timeline a little bit. But generally like you're just sort of inviting like,

you know, unwanted attention or whatever. 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 gonna just like air our dirty laundry out of here and like be like, well, we, you know, it's America, yeah. Is 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, we you know, we have this thing called Sibbers, these small business innovation research grants that like are two, three, $4 million that help

people get off the ground. So 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 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 CBER in our DOD and in our federal government and the reason I think that is like in a historic world, Cibbers have been this thing to get a company off the ground to like, hey, I need some money to develop something. And it's like net good for like entrepreneurs and people. But now you have this wonderful thing called, 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 wanna back you. You actually get the right incentive alignment here, where if we do our job right, and I say collectively like me, you actually get the right incentive alignment here, where if we do our job right, and I say collectively like me, Deleon, 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. And 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 is going to rise to the top of like, you're going to see again, not a hundred and rules. I hate to say it, but you're going to see some pretty large companies that are solving real problems for the department of defense. There's you mentioned space lasers randomly. Sorry, is that like leaked? This ties into kind of a question I had, which is within defense tech, 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. Cause even if you're building like,

autonomous submarine products, well then it's like, yeah, like you could build the amazing product. Maybe you can't actually sell through. But 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 and the government

and, or do we need to get weird? I actually think it's the right question. And 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 risks. Like this is the like, bits and atoms thing.

Like if a fusion reaction doesn't take place, like you don't have anything. There's nothing there. On the other end of the spectrum, you have the kind of commercial products that we know exist. We can get a car to drive. We can get a software system to kind of be a CRM or whatever. It's like you have arguably no tech risk on that end, but you have huge kind of product market fit

customer go to market risk. I think the holy grail, and again we take this approach at light speed, is like number one like you need to build a portfolio that's really thoughtful about the type of risk 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 is what I define as these systems companies. And again, I'll use Andrel as an example here because everybody knows them, but there's

a clear software 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 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 before easier. Again, when you're a multi-product company and Sironics getting there now, like other, you know, Cassilien will get there eventually, K2 and Space will get there too. Once you've made one sale and made one customer really happy, you show up with an

X 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 Andral is like the, the, the, the acquisition machine that they are with like APP and Grimm and Bobak and the team, there's like, they're taking things that are cool pieces of technology and they're 10, 100Xing them.

And it's like, nobody else can do that. That is such a unique kind of ability as one of these systems companies. So I think 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. I 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's 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 wanna focus on the technical risk and selling, but then they have to produce a bunch of components as well, and they can't make 2000 parts for a single missile, right? Yeah, I mean, let's be clear, and I'll make sure to be really blunt about this. I think how this entire ecosystem, both from an entrepreneur and a VC perspective,

like DefenseTech, 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 this in the scopes that we say they were going to do it at scale with efficiency in the scopes that we say they were gonna do it. And for better, for worse, we don't have an industrial base in the United States

to solve that. Like 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's this going to fail? It's if we if 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 hundreds of these systems, but a thousand, then I think we're in real deep doo doo. And 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, Chris at Hadrian. Maybe it's the long tail defense tax. I don't know. We'll find out very soon. Yeah, I was gonna ask about that. In terms of, there's this meme of maybe it's very risky to directly compete with Anderil on a program that they might be launching next month. They launch very quickly.

But what is interesting to you? Where do you see the opportunities in hard tech, but non-competitive with Anderil? We talked to AJ at Hermes, I don't think Anderil has plans to work on a Mach 5 autonomous plane or passenger airliner, Hadrian, and even like a Rainmaker, like it is like Anderil 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 entrepreneurs? I mean, again, like I'll start with the same through line I said before, there's not gonna be a hundred Anderils. Like Anderil has a clear unique market positioning of how they build different products into their family of systems.

I think the way to think about it, both as an entrepreneur and as an investor, is I actually 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 you know those program managers like they want their solution to

build the better thing to then you know 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 Andro and SpaceX and etc. 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, well, you know, like, you know, Anvil is kind of doing that or, you know, Roadrunner's kind of that thing. So I might as well just buy that because, you know, Andro has been already there. They're already in the room. They already have the need. 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 Andrew might be in the ecosystem, there's still a really massive opportunity to be built. I mean, Sironic's a great example of that. Sironic 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 Andrew is underwater. Andrews building autonomous systems.

And I do think there's a world where both of these companies actually work really well together. And, you know, 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 like where this goes wrong. This goes wrong in a way where both Andrel, but also these companies, start to build kind of stovepipes around what they're doing.

And there's like really basic examples. Like, 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 Androel

and other big guys. So in my opinion, like working with Androel as opposed to working against Androel is the answer here. Jordy, what you got? This has all been great. I don't think I have any, I think that covered it. 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 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. How are you advising portfolio companies on like, you need to move super quickly because, you know, 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, it takes you an extra year and a half to get a contract and then you run out of money, it just doesn't matter. So how do you advise? Yeah, I'll actually take it one step further,

which is if you believe you're going to 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, like 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 again, like, like most things, it's a bit nuanced. I mean, the advice that I give portfolio companies is, there becomes a terminal value or value of your business

that you only have one path to go. And again, this number's maybe moving a little bit, but it's like, the second you start to raise above 500 million, both early investors will get a good outcome, but near-term investors and you as a company, you're either gonna be a public company or you're gonna be bought for a private equity multiple. And 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 internal 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, you're gonna need the money,

then I advise founders is like, let's take the swing. 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 whatever, maybe good outcome for a founder, but that's not what we all play for in this ecosystem. We 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, 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. Obviously in SaaS, we know triple, triple, double, double, double.

We know ARR and churn. What are you looking at in the growth stage to defense tech companies? I mean, the geometry of defense tech 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 gonna be some anomalies during this continued resolution, but nine times out of 10, you get this really small like, CBER revenue. Like, I don't have a system yet. I gotta develop the thing, I gotta go get someone to pay me for some small,

like two, three, four, five million dollar R&D money, and 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 see this like middling. And then you see, again, this just stepwise change and improvement

where people call it, people overuse the term program of record. You know, most times it's actually not a true program of record. Like, you know, 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 dollar contract. And 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 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, you win a $300 million production contract. Yeah, 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,

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 over year, tripling year over year. You just got to be nuanced and you got to know what the hell program offices care about and how they move. That makes a lot of sense. I've loved having you on. Yeah, this is great. Thank you so much. This is fun. This is really fun. Yeah, guys. Any, when you're, next time you're putting $500 million into a cool company, join with the founder. Yeah.

We'd love to have you both on. That guys well I appreciate it love what you guys are doing huge fans all right talk soon bye and we got Chris power coming out of the show next from Hadrian he got a little mention in that neck in that earlier interview Connor mentioned it I'll be right and Jordy is taking a break well we will be back in just a few minutes folks, but 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,

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at coming up with kind of like viral stunts. I mean, Mike Solana did a PirateWires billboard for AdQuick. They have a partnership together. And I think he got like 100,000 likes on X. did a pirate wires billboard for adquick they have a partnership together and he got like a hundred thousand likes on X I think Elon wound up retweeting it because it was a big milestone for the company put up moon should be a state right in 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.

Jordy Slack and off. He's he's taking a break. He'll be back in a couple of minutes, but good to have you. Welcome to the show. Thanks for having me. It's a pleasure to be in the capital capital. Thank you. Yeah, it's good to have you here. How has life been? You've been traveling.

You were spotted on a flight to Washington, D.C. a couple a couple of weeks ago, the paparazzi caught you. Yeah, that was crazy. Yeah, that was crazy. I didn't realize that there's so many spies out there in Silicon Valley, but how was your trip to DC? 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, wants to fix American manufacturing. And the vice president gave an incredibly rousing speech about re-industrialization at the Indoor Racing Conference. So it was incredible. And yeah, look, I don't know who leaked that photo to you. I was a bit concerned whether it was a fan

or like a communist spy tracking down a little defense tech founders, but you know, you gotta be careful these days. Yeah, yeah, you gotta be careful. Maybe wear like a full beard and glasses next time, full disguise. I just gotta 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. What about you? 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, it can turn red, it can turn green. How are we looking today? Very, very green, fellas. those machines, there's a light, it can turn red, it can turn green. How are we looking today? Very, very green fellas. Very green, that's good. Just like the ramp logo, everything's going on. Fantastic, that's good to hear. Well anyway, you didn't even get a chance

to introduce yourself. Can you just give us like the high level pitch for Hadrian, what you're building and where it's going? Yeah, so I'm Chris Power. Hadrian builds autonomous factories. So, you know, we de-industrialize the country from the 70s through the 90s and gave all our industrial power to China. And now the incredibly skilled workforce that does incredible technical things in high-precision

machining or castings are all aging out. So we really don't have an industrial base anymore. So our mission is to re-industrialize the US by building highly automated factories that are, you know are as efficient as China with a lot more software robotics and a new manufacturing workforce. Can- 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 talk about it? No, we're lights out today. We were on 24 seven with a handful of really smart people running the fleet. The lights are on now because we're 24 seven. Oh, you do. Handful of really smart people running the fleet. The lights are on now because we're all here. We're 24 seven seven day a week operation. Wow, that's awesome.

Can the robots save us? It's a very scary time right now. We're trying to producing a lot of robots that have can be used for a lot of things. Flying maybe over your kid's birthday party to get fun footage or they can be 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 the sort of skilled labor force. But you're betting that the company on that. But 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. And 100 percent of our workforce, people have 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? And 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 a 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 to compare it to yesterday, anybody can do a Ghibli animation, so like anybody should be able to make like the most advanced aerospace parts, et cetera?

That's exactly right. That's exactly right, yeah. Do you think we can get to the, like what was impactful yesterday is that over the past, maybe a couple of years, if you were really, really good at prompt engineering, 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 of 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

There's some really deep digital manufacturing stuff that you still need an expert to do So we're in the like software engineers 10 times more productive land versus anyone can code But I would say 80% of our factory is like anyone can code today. Are there the, the specific programming language is like cam programming, right? Isn't that it? Yeah. 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. 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. But because American manufacturing is largely regulated in high tire, there is no training data on the internet. So 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 a 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.

I imagine that every hard tech, defense tech, frontier tech founder eventually has to come through and kiss the ring at your factory, just cause it's like, hey, they're basically like, hey, 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 to make the parts.

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. The key thing is so funny 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, but then I'm sure like, I'm sure there's like 100 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 win. Someone's gotta make the parts for the F47. Yeah. And you know, someone's gonna 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 or for new programs, we are becoming a like co-prime where the DOD, hey John, 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. But yeah, we're like, you know, we can only build so many factories a year. So the waiting list of everyone wants a Hadrian factory to deploy their products at scale in the US is growing quite a lot, which we're very lucky. What do you think about the classic Harvard MBA who's like, I'm gonna go buy

this sort of SMB manufacturing shop that's, you know, putting up $5 million of EBITDA and they've done so for 30 years. So 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 and sort of like understanding what they're doing and sort of upscaling it or machine shop roll up 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 got to be leading the people, and you got to have that credibility. And no master machinist or welder is going to respect a kid who's got a suit and a Harvard MBA on coming and telling him what to do. I think it's a really tough gig. And is it also one of those things where you want to- Chris actually tried to do this 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. How would you build a factory today versus buying this asset that's been operational for decades? Because we're having Druva on from deterrents later

and he's got all these crazy stories where 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. And 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 of 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, 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? I 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 figuring out? It's a very hard question that the country's got to answer. So the machinery market, so we invented, 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 so into 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. And 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 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 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 allied partners

and make sure it's in the US. But yeah, we no longer make the underlying machines in the country anymore. It's kinda great. 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 faith 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 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 rate, because 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 rates 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 eight sleep? Brutal. No eight sleep. I mean, if you've paid for it, eight sleep's not leaving you. For larger companies like Andral, 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 Deleon's absolutely right about if you're a startup and you're bidding on one and that revenue cycle blows out in 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, 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. 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. We love to manufacture everything for everybody. What does success look like? 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 is 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.

You know, and yeah, I think 70% of all the deep tech dollars goes to, you know, there's some head count for engineering, but a lot of it is producing prototypes and then scaling factories and components. So yeah, we, we believe that we will quickly becoming the index of the market. And you know, Everyone needs a gig of factory, right? That's right. Uh, what's going on? Uh, 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 many fact, you know sending their manufacturers You know, it was even Porsche is setting up US 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? Is there a world in which Hadrian helps revitalize some of these, 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?

Yeah, so we have so much work to do here in the US that we'd love to support our allied partners in Europe and the Middle East and countries like Japan re-industrialize as well. And they often have this same kind of core skilled labor problem. We've got so much to work to do here, fixing the Navy, fixing the issues production, helping our customers scale. 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, 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. And then you

got your 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 flights. So, you know, it's good that the English are waking up in my opinion, we need it. 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. But you're busy. You're busy. It was a great day for this. And you've been busy. It's a perfect day. I'm happy to be at the Capitol of Capital any time.

And God bless the United States of America and the financial system of the US economy. Thank you, gentlemen. It's just fantastic. Thanks for coming on. Great to see you. Bye. Early supporter. Yeah. Just fantastic. Thanks for coming on. Great to see you. Bye. Early supporter.

Yeah. 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. 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. But I mean, maybe we could run it back. Public.com, baby. We've already done the average. 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. Ben or Michael. Do we need to do some timeline or do we have a guest? We have a guest in the temple of technology. Can I get another? Welcome to the stream.

How 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. No, 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. Uh, what's new? Can you introduce yourself? What do you do? Where are you? Et cetera. Sure. Uh, Aaron's full of CEO of atomic

industries and, uh, we're, uh, we're teaching AI how to do mass production here. Um, we're, we're in Detroit. Uh, let me, uh, Let me turn my camera around. You should you can do anything on the phone. Yeah, there we go. Oh, all right. So yeah, this is the cheddo. This is a very, very big boy. This machine is 18 feet tall. Okay. And right now we're loading in that job that's going there. We can go down there, take a little walk. Cool.

This is great. This is our Detroit correspondent, Aaron Sloan. From the front lines. For anybody out there who gets motion sickness. 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. I am doing the meme. I am doing the meme. You created 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 gonna be a mold for a drone, ultimately. Cool, wow. And that thing is basically blasting holes in the side of it to drill in water channels and things like that that cool off the mold while it's running Super interesting and so you were talking to me early

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? I feel 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 trade people it takes hundreds or thousands of hours to actually engineer one of these things and you know, you have to build it too.

So ultimately what we're trying to do is teach a computer how to actually engineer these things in like minutes 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, 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. So you can squeeze out way higher efficiency from these things when they're running.

So like here's one of the programs running right now. We've got some parts here. You can check this out. But. 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. Yeah. I do have a question about how you actually generate the designs that then you manufacture. How much is, you know, physics based solver deterministic computing versus more like AI generative non deterministic and 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 the prediction ability. Right?

So the idea here is that, you know, with the solvers and kind of like the model that we build on top of this, you have a factory that generates all this awesome data. Ultimately, what we're 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'll become more apparent over time I think, but on the physics-based side, very little. And then in terms of coordination and I think like execution, 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. I imagine when you guys are in the customer development process, like you're oftentimes, there we go.

That's the poop. That's the machine poop. I imagine you're competing with companies in China on some of these parts. Like a lot of like, when you hear about like the Chinese manufacturing culture it's like respond really quickly to emails like get pricing over you know be clear like it's yeah don't don't even think about doing anything around that but but like is that something like do you do you respect their game when it comes to just like being like really fast really clear like focusing on cost reduction scale etc like do you think we can learn from them

um 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 gonna 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 gonna make enough money off of it before I actually even like talk to you. So 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?

Like, I don't think there's a shortage of grit here, but like we've been forced into, you know, 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. of grit here, but like we've been forced into, you know, 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. So 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, right? Because it's not going to make them enough money. But I do think to your point, right? Like 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 transfer it 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, if you have crazy skill mastery. I'm sorry, I'm down now. This is an experiment. It looks fine. There we go. Amazing.

Yeah, it's basically, it's all about the mastery of skill that you have and how you transfer it around. So in my opinion, I think the fastest way to do that is by trying to teach a computer how to do it. And then you know obviously think about how long it takes to train people to do this stuff. It's like a decade. Like we have a decade to sit around and wait right now. No I mean I know. All right. I want some. 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? You know buying cars

From China. Oh, they are yeah, they are they are How do you feel? How does that make you feel? Yeah, you should have gone to Detroit. I know you're in the capital Motor City Come on. They could have bought the whole town with like one one dividend payment Yeah Yeah, basically. I mean, that's kind of 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's crazy. And I've seen that company, you know, like grow over time. But it's, 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 sideways again. Uh, can you talk a little bit about, um, just the on ramp from our current education system, Gen Z, Gen Alphas coming up. How do we get folks to get excited about what you're doing, manufacturing, hard tech generally, and then is there a need to change?

Do we need to, like, when I went to high school, like 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 like 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. Yeah. 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 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. But beyond that, right? If you turn factories like this into a sci-fi future, who's to say you can't pay somebody that works in here the same as they get as an L5 at Google or something, right? If you're productive enough, I mean, it kind of speaks for itself. And beyond that, I think also, you know, training wise,

exposing people to this kind of stuff is ultra important. Being able to do factory tours, right? Like our buddy Zane, that's, we need to like have factory tours going on all the time, but there's a transformation happening, right? From going from like the dirty, dangerous and dingy into like relatively, you know, neat and kind of modern, but like there's another version behind this too.

So I think like really jazzing people up about the opportunity in terms of like challenge and incentives 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 there's super exciting companies to go work for. It's a big party bag full of opportunity right now.

I want one more spicy, fresh, hot off the grill hot take from you before you leave. And we'll have you on again because it's been great we'll have you on with a stable camera I had to walk around right? We're gonna get you a selfie stick straight from Shenzhen on Tmoo The Tmoo selfie stick is in the mail expected in six weeks but we paid one dollar 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 little stuff that requires less precision and dexterity. But 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 a machine gun. So.

Um. There we go. I like the sound of that. Yeah, that actually sounds pretty good. Give the robots guns. Yeah, give the robots guns. Give the robots guns. Yeah, security.

Detroit first, baby, let's go. For sure. Aaron it's been fantastic having you on. This is awesome. Looking forward to the next one. Keep keep pounding the table it's working I think. Yeah good luck. Thank you guys. I'll talk to you soon. See ya. Bye. That was great. And we're staying on manufacturing right? Deterrence? Druva? Yes. Can you break it down? What does the company do? I want to kind of let him break it down. 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 Druva is texting me right now, robots needs guns. Well, you know what else? You know what else we need? We need you to join the show, Drew. So let's get him in here. But yeah, Deterrence is leveraging robotics to manufacture critical components for munitions, starting with something called Primer,

and they're doing a number of other things at the moment so We can let him you know fully break it down but 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 Geordie. No way Yeah, I have to send it over to you. You can add it to the soundboard I think a lot of people are into the soundboard. And let's bring on Druva. How are you doing? What's going on? Great to see you. Look at that hat. You got Aaron's hat on. That's great. I got my hat on. Yeah. I heard Aaron talking and I decided to bring the meme out of my

backpack. That's amazing. Can you do a quick- Hey, well so Aaron'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 you do. Yeah, it's half defense day, half re-industrialized day. Eventually 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.

It's no longer a deterrent. But before we get into that, or maybe like 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 appreciative 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. The mission of the company is to close the munitions gap with, we call them the near peer and peer adversaries that the US 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 US is unable 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 D.I.B. like what they thought.

And, you know, we found a lot of technology there that was from the 1930s and 40s. So the last time America had to do a big build up. And not a lot has changed, frankly, including the people. A lot of the people who work in these factories are multi-generational. So their grandparents are maybe the ones who started working on the machine,

and they're still there. So yeah, we felt like we could get it. Talk about the dynamic even in some of these legacy factories that are producing munitions that are sort of critical to US national security. 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 these sort of and kind of leading off 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? Cause 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 in the problem for the last, you know, let's call it a couple of years, and roughly every two to three months,

there's an explosion somewhere that unfortunately creates a fatality in the supply chain. And so we felt like that was sort of just like an unsustainable trajectory, especially as we sort of try to re-energize this industrial place. And yeah, I've FaceTimed you for some interesting places. I mean, I would say like safety standards, some 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 and you could inhale something that will like kill you. And 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. 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 it you know in some ways you have to like respect of 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 gonna be and Earl too and you found like a very, like, it feels very niche. There'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, 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 rough metaphor we sometimes use is that, 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 weapons systems and munitions 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 a hundred 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 So we that's how we sort of tell like call it like the market story.

But I think from like a product store, we'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 or three maybe things. So one, which is always fun, two robotics. And then the third thing is like chemistry. So a lot of like, 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. We see we'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 to, we're able to like, maybe work on some like, pretty hardcore 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, and robotics, AI, and

all these other places that, you know, we're hopefully able to lean into for the next couple of decades here. Talk about the continuing resolution, which has been kind of an ongoing topic. And then 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.

I think this may be the most obvious thing that's been said all day. You live in the DC area and you've been there for years, so 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, Andrew 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 bring across bumping to someone we had met before and like get a completely different perspective on it.

Um, yeah, look, I mean I mean, I think every defense tech company has roughly three, four layers of stuff they think about. So they think about, 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 work on the Hill? I think what's unique in the last two to three months

is 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. And 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've 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. 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, I got like 10 million dollars to spend on manufacturing and I have no ideas and 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. 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 gonna be better than a founder telling their story. And then the last thing I'd say is like, the administration's only been around for what, 40, 50, 60 days or something like that. And 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 way away saying like, chaos can be an accelerant for a startup and like that's kind of the situation at DC right now. Do you have a follow-up? Yeah I have a more of like historical question. I was just gonna 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's spending something like 30 billion my conception of what's going on abroad is like a hand grenade on a DJI drone, but like how does your product actually get into a, you know, like a weapon system? And exactly like I'm thinking at the level of like, I'm seeing cartoon TNT right now, but I wanna go deeper. Not far from the truth. 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, 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. something you know if you apply another sort of catalyst to it it expends more energy yeah so that that means like so if you think of explosives like fireworks pyro pyrotech stuff propellants like those all kind of fall

in energetics the specific stuff I'll maybe start with primers that is which is what we're starting with so 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 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 assumed 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 like 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 allow you 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 a doughy ball ball, if you will. That doughy ball is then passed to someone who is at like, kind of like an application station.

These stations are typically in like clean rooms. So think like, what did, in like on stator, it's like wetted floor, um, 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, it's a bit like parmesan cheese on the audience. If you want to. Yeah. And then from there, there's like a there's a pressing process that happens.

So, you know, my head, my co-founder Henry likes to say it's like a lot of what we're doing is rubbing and smushing material. But you want to do it in an even way, right? Because you don't want one bullet to work and another bullet to not work, which sure come back second, the last step, obviously, you know, quality assurance, right? So just making sure that it was applied in the right way to have the right like performance characteristic.

You'd be surprised if you can do with like computer vision here, where before it was like a human like looking at it, being like, all right, so much automation. And now, you know, deterrence is basically able to leverage like, And now, you know, deterrence is basically able to leverage. Yep, yep, yep. And the thing that, you know, when Druva first kind of like pitched me the 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. Sure. Like if you walk around these facilities in there, if we were to get into a,

you know, real hot war and we're relying on machinery from the 40s to produce the basic bullets that we need to keep our warfighters capable. It's less sexy, but it's just as important. Yeah. Makes sense. That's right. And these markets are pretty big, right? Yeah, totally.

If you look at the 155 shell, just some of the subcomponents we've looked at, the contract size for the glue is in the hundreds of millions, right? Not the thing. The glue, wow. That's the sealant basically. Well, we gotta go shooting. Are there some good ranges out in DC? We gotta go out there and have a range day.

Ranges in DC are funny, cause 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 way, we'll definitely have you back soon. Congratulations on all the progress. Our DC correspondent.

Yeah, and we'll talk to you soon. Look forward to the next one. Thanks guys, take care. See ya. Cool. I wanted to ask you about the history. 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 sort of flipped around. And now China's in a sort of similar position. But we got Cam coming in the temple of technology. Welcome to the show. How are you doing?

What's going on? Good to be here. Yeah, thanks so much. I realize 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 like we were very much like the unsexy, very, very important, you know, very specific thing, which is just helping people move faster. Can you give me a little bit of like history and progress of the company?

I know that there was a big fundraise recently. How big is the company? When did it start that type of stuff? Yeah. So we are, uh, 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 lot was like, we have folks who, um, my former employer, Andrew, right? Like we had folks that come from Andrew from SpaceX, from, uh, applied intuition companies like this that have seen, you know, everyone building this amazing, uh, you know, amazing tech. Uh,

so often the problem is actually the software that's just facilitating how people are organizing that data, um, you know, doing this. So yeah. Yeah. And the recent fundraise. Did you break that? So we, um, we, uh, we announced it a little bit late, but yeah, yeah. And the recent fundraise? Did you break that down? Yeah, 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, maybe, so yeah.

So yeah, I mean, what's the next milestone? Is the program of record framework SBIR, then program of record, thatIR, then program of record. That's kind of like the meme pathway and defense tech. Does that apply here or do you have customers? It's really interesting. Yeah, we actually think more in terms of like system of record.

So what that means for us is like we work with organizations like TRMC, that's one maybe you haven't heard of, but test resource management center, right? So it's a OSD, Office of Secretary of Defense program, but they govern all of the like test infrastructure for the U.S. So if you're, you know, if you're a Hermes, right, like you have to be working very closely with your MC 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, that's our kind of like customer. That's our target. We want to get to the place where 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 like quite a bit easier if you can test more efficiently. But I think people don't understand, they see a company raise hundreds of millions of dollars and it doesn't work or they struggle and it's like, you had so much money, you had such a great team,

but I feel like the average person doesn't appreciate just how hard it is to build a single, just the engine of a rocket or a missile or whatever. Yeah, it's so true. And I think a lot of the value that we try to provide for customers is it's like you're doing so much if you're a hardware company. You have to, you're doing all the production,

manufacturing, iteration. And often these teams, they will hire software engineers and they have the daily decision of, do I send those precious, very valuable software engineers to build the software that is value additive to my software-defined hardware product? If you're Druva at deterrence, you're like, I want my software engineers

building the robotic systems to do energetics. I don't necessarily want them building data analysis and management and visualization infrastructure because it's already hard enough. And so our big bet, 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 rare earth materials, it's the supply chain, it's the production manufacturing,

it's people actually building these systems. And so this rising tide, 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 fuel them and deploy them. Making this big bed, all those trends are gonna really condense on the area that nominal is trying to build in.

Can you talk about your experience using maybe alternative to nominal or just building basically the product internally back at Android? I think a lot of you probably have the benefit where your competitors to nominal now are 40 years old, super, super clunky, like maybe don't even run on on Mac OS.

Yeah, it's so true. Like we think about the actual sort of competitors, nominal like National Instruments is a massive one like Emerson, Siemens, like those types of technology. So they they did this massive industrial software land grab, you know, 40 40 years ago and they have not been innovated against since. So in this world, they established best in suite. And so there's huge network effects of all of the different pieces of software you want for testing and validating a hardware thing.

It'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 like, 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, you know, linking testing and operations and observability, like all the data dogs, Splunk, Grafana, different pieces of technology like that. So it's been happening in the industry as people have been 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. And 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 backend. Pieces of technology that are good, but they're not for this like industrial operations world. And then at the bigger, you know, the big five type customers, like it is a lot of that really, really old software that we're displacing. Do you even care to go after like the actual primes right now?

Or are you just happy to, happy to just, you know, 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 been building and validating the product. And excitingly, we asked the second product, I think, to win big in this space. You have to build multiple products across this sort of stack.

So we've been doing that with these startups and scale-ups. But now we're moving into these larger customers now that it works well. And you kind of add zeros to the contracts if they go well. So. Yeah, I can imagine if Boeing is signing up for something that what they'd be willing to pay for the software is like a pretty big number. So. No, it's like, I mean, on that, like I think, yeah, like a lot of the early conversations around like,

hey, you'd be building this with an internal team and paying, you know, engineering headcount to allocate against that. But for these big, big programs, like the value conversation is actually very interesting because it's like, hey, I, if I'm, you know, company X, and I just want a hundred million, 200 million, 500 million dollar like program, I'm very willing, if nominal committee, I'm very willing to pay like half a cent on that dollar or a cent on that dollar for a piece of like test infrastructure that will manage cost performance schedule. Like that's the value discussions we're getting into now, which are very exciting.

So yeah. Can you talk a little bit about dual use? I mean, yeah. 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.

And so we're focused a lot on the A&D market, but on the B2B side and the direct to federal side. So very dual use in that nature within companies that are doing aerospace. But yeah, we work with, I mean, we work with some of these like advanced nuclear companies building micro reactors like you as well. So yeah, we're planning strategic flags, you know, some of these robotic like foundational robotic model companies like they use normal as well. I think we're kind of planning these flags in these other robotics transportation energy

as well. Very cool. Jordy, you have anything else? I don't have anything else. I'm just extremely bullish because we just got on you and what you're doing, just because every single person, it seems like, we've talked to today, like either needs this or their customers need it.

So 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 sure you're pretty busy. 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 folks that understand software, but have done hardware is the sweet spot for us. So a lot of those customer success is the old type.

Well, but we call it mission operations. But yeah, people that want to go to one of these hardware companies and help deploy the nominal software suite, like that is, it's a very special skill set. But if that's you, if you worked at a hardware company and were the software person there, you know who you are. Yeah, do you guys think you benefited from Palantir

having so much success with the sort of forward deployed engineered model where it 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 did they sort of give you guys were they a catalyst? Yeah, 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 do, 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. Um, 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? Because these 20 engineers are not spending customer time. And I think that's really, really key to kind of closing that. Yeah, that leap. 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 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. But how are you thinking about that?

We're super bullish on international expansion. I think it's a thing that we did for the first time. So 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, one of the reasons is going there and then deploying the nominal software. Sweden sort of seeing these folks are, generally speaking, pretty enamored with the Android, the SpaceX way, the Palantir

way of doing stuff. And so I actually think like there's just isn't even like kind of larger Delta in some ways where we can kind of like really wow them with with our capability. And so that yeah, we're super we're super bullish on that. Australia is one where we're really excited to like the make sense the AUKUS broadly they're on the aerospace thing like a lot of interesting you know stuff there and they're very you know advanced on CCA collaboration with the US and stuff and so there's just a lot of like interesting trends there that we can you know do you think it's only a short

flight I'm sure you're over there back and forth every other week yeah you've never asked never asked anyone about this on the show, but I'm curious since you're just starting to go through this process. So a lot of the potential of some of these new AI tools is around translation and real-time translation. And there's kind of a crazy scenario now where you guys could sell your product to a Spanish-speaking country, and then you

could have one of your engineers real-time. Is that at all? Oh, like forward-de forward deployers who don't speak the native language but it doesn't matter a lot of engineers and speaking English but like is that even a part of the calculus like do you think only most engineers don't even speak English only code yeah yeah yeah yeah exactly yeah no I love the question I've never been asked before um but I think it's like this this initial you know national 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 a you know There is an implementation sort of like in a phase and yeah, that would be a huge yeah Well, if you ever want to get into testing live stream Infrastructure we live through three hours a day. We're always trying to improve the product. We're looking for the best. So we'll be the first customer. We'll be the first customer. We'll be your design partner on it. Yes. And 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. Yeah, yeah. With all the wires there. There's so many wires.

It's great having you on. I have no doubt that, yeah, next time you raise 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 minutes give the fans what they want? I mean most 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 is just endless Ghibli back and forth, which we kind of already covered. Let's do the David Perel one, because he's gonna be coming 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 live. One more on the show. Maximal slop. Yeah. It's great. No, I think it's totally cool. I like this take because there were a lot of takes

that were just like pure bull. It's amazing. 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 takes that were just like pure bull. It's amazing. I can't get enough gibblies. 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. 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 so. Maybe that's good. Maybe that's bad. It's just saying, hey, there's a change, and the internet's about to look different. Maybe that's good, maybe that's bad, but it's gonna 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, this would be funny if you made this picture look like that, make this 3D asset. I actually use Photoshop a lot to make these memes, but now it's like way easier and way faster. And I saw- And it's so crazy.

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. Yeah, you can move a lot faster. I saw Ashley Vance was posting these memes

that were kind of gib-lified, 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, and 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. So AI just allows you to do that so efficiently. Yeah. Well, honestly, there aren't that many other news stories here.

Arc AGI 2 dropped 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 that's- You want to read it? Are you going to do the voice? Mesa is- Mesa? Mesa is detecting threats like never before Learn how recent combat ID enhancements are evolving mission. So Northrop Grumman has a program called Mesa Mesa and of course that sounds like the way Jar Jar Binks starts every sentence in In the early Star Wars movies and so they just put Jar Jar Binks his face with

the little caption and it's making it sound like Jar Jar Binks is This is talking about Northrop Grumman's program. Oh man, not not a native posting group the Northrop guys It's a very different vibe at Northrop from Anderil. 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. It's great.

The chat wants us to cover the Fannie Mae IPO that Wall Street Journal's reporting on. At this point we should probably cover tomorrow. Yeah, that makes sense. Thank you for the suggestions. But this was a super fun day. This is great. It's great to see.

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, 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. 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. We got Dorkesh Patel coming on. Coming tomorrow. And I think I'm gonna send out emails to a bunch of other Twist Right press authors now and try and get stacked with the author day. That'd be great.

Let's do it. I have the mind of a golden retriever, but I'm excited for it to be an intellectual mind. Tomorrow will be an intellectual day. Yeah. 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, put on the thinking cap. I should pull the whole all every guest with the tin foil hat on but don't comment. Thank you everyone for watching. Have a great rest of your Thursday. We will see you tomorrow. Goodbye.