TBPN - 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.comPolymarket - https://polymarket.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 at TPPN. It is Thursday, March 27th, 2025. We are live from the Temple of Technology, the Fortress of Finance, the Capitol, Capital. This show starts now. We've got a great show for you today, folks. It's Defense Day. Let's hear, Jordi. Defense, Defense, Defense, Defense wins championships, and we're breaking it down today on TPPN live, talking to a bunch of people in the defense world. Delian, ACS, AJ from Hermius. We got a bunch more folks coming in. That's starting at half an hour. We're going to give you a little brief overview of what's going on in the news in 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 can say you're verticalizing orange today. I'm going big. I'm going long orange. I'm going long green. I'm shorting. 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 giblification, all the Ghibis going out.

But the Slop lords cleaned up yesterday. They did. I posted one that was just a frame from Oppenheimer, giblified, 30K likes. Jordy had another 25K or something on morning routine. Just take the viral meme, make it Ghibli, and it was easy money on X. 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. We could maybe pay for a weak supply of Saratoga water with the X payout from this. entire month. But it was a fun day. I think a lot of the criticisms were correct that you know this 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 you know 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 Lisan al-Gy believe they. Ghibli, yes, of course, of course. And so I'm sure we'll dig into that more. I want to hear from mid-jurney. I want to hear from David Holes. I also want to 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 want to 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 Cristobel 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 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 domestic potash industry, you mean? Because the domestic, the U.S. domestic potash industry, they want the highest tariff fossil. Yeah, 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 U.S.-Mexico-Canada agreement or USMCA. Many goods entering the U.S. don't comply with U.S.MCA and are therefore subject to the new tariffs. Canada responded by placing tariffs on $21 billion in U.S. imports, including fruits, vegetables, appliances, and liquor. Canada also said it would tariff an additional 20 billion of U.S. 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% tariff on global automotive imports to the U.S. that's all cars that are made internationally. It doesn't matter if it's a BMW or a Han Chinese EV. That's the brand, Han. Oh, really? Yeah. Even though Han is like an ethnic designation. It's the most dominant ethnicity in China.

The one of the- That's cool. That's like calling your bank Bank of America. Yeah, basically. And of course, Huawei also. Does Huawei or? Big Alpha. There's a lot of these.

Somebody making a political podcast called Podcasts of America. America. Podcasts. Well, the Pod Save America. But just the podcast of America. Yeah, like Banking America. I like that.

It's good. And so, auto stocks have been in turmoil since this happened. And then, of course, there are also tariffs on China. That has been the big focus of the trade war on February 3rd. The Trump administration imposed an extra 10% tariff on goods from China on top of those various tariffs levied during the Biden and Trump. first Trump administrations, China retaliated with a 25% tariff on U.S. 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 U.S. 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. And so head on over to Bezell, shop over 23,500 luxury watches, fully authenticated in-house by Bezell's team of experts.

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 Daytona's and F.P. Jorns, hoping that tax tariffs hit and they strike it rich. Many ways to make a buck around here. Always a bull market somewhere. That's right. 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 Pura Sangue, which is their SUV. And the doche-chilendiary. That was pretty good. Normally you really botched those, but I'm proud of you. I'm working on my Italian accent.

Yeah. Yeah, the 12-cylindry, 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 F-80. The wheels on the 12th-chelanderie are just, they go round and round, but they're very bad. Oh, okay.

I didn't know that. I mean. 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 Dolce Chilindry is still in the game, but it's 10% more expensive now. And Pinched those pennies. 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. Yes. And so having to increase prices and passes on to, you know, basically pass the tariff cost onto consumers is not going to 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 SF90. It's a, what, $600,000, $800,000 car. Used to be when there was a $600,000 Ferrari, you were. really needed to know someone to get one. You need to be on a list. You ought 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 SF90s, they look pretty similar. The stories of people buying SF 90s, you know, putting up a lot of equity and then still being down underwater. In the red. Yep. 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 U.S. after the April 2nd deadline. So it's truly an external revenue service event. Yep. You said you wanted to hear it for something? Well, let's hear it for the Ferrari management, for taking one for the U.S. consumer.

No, thanks. The U.S. consumer is undefeated. Yep, they really are. Anyway, you know who drives for Ferrari? Charles Leclair. And you know what bed he sleeps on an AIDS sleep, baby. There we go. He's an AIDS Sleep brand ambassador.

And today we're telling you about eight sleep nights that feel your best days. Turn any bed into the ultimate sleeping experience. Go to 8Sleep.com slash TBPN. Just do it. Just do it. Code TBPN, $350 off. And you can compete with John and I. We both been putting up big numbers.

I woke up at 4 a.m. But I still put up a big number last night. Something like 90, 94. And once you get really into it, you can go deeper. We're learning this. We're going to dive into this later. But 8 Sleep does a bunch of other analytics. They don't just give you a sleep score and tell you how long you slept.

They check your heart rate and your heart rate variability, your HRV. As well as your breath rate. And so you can compete with your rival on those metrics as well. It's not just about who slept longer. It's also about who's putting up big numbers. across the board. There's always a bull market somewhere in your health. Always bull market somewhere.

We got to hang on Zoom a bit with Mavi and Alexandra over at the 8Sleep 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 I mean, 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 to 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. Okay. 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 is 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. But 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, and chip manufacturer, Taiwan semiconductor manufacturing TSM. setting the pace. And so the whole market and the big power law companies were all saying you got to be a peer play until you're trying to do two things at once. You're neither Nvidia. You're not Nvidia and you're also not TSM. So you're falling behind. Everyone was

saying, hey, just go peer play. He didn't, he chose not to do that. And eventually they said, hey, we want to try a different CEO. But the new CEO, Lip Bhutan, is signaling that maybe he's story, maybe he's staying the course and maybe not splitting up. 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, you know, I was thinking if he wants to just get a couple deals under his belt, maybe he takes a, you know, he's, you know, this is his first time really being a VC.

He should call Sequan. He's been very active. Exactly. The last couple months. Yeah, maybe Seekwon could be like his junior partner. So yeah, just like, or venture partners. Or send me deals. Honestly, Sequin, at least over the last two months, is getting into the higher profile

companies, the companies that have 10x the demand for their equity. So it's possible that, you know, they could, I'm sure they could both learn a thing or two from return. So hopefully he, like Sequin, gets into Ramp. Of course, you know, ramp. Time is money, save both. Easy use corporate cards, bill payments, accounting, and a whole lot more, all in one plays.

And as Seiquant says, keep your team focused on the game, not expenses. I love that. It's great. Boom. 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. 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. Let's hear 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, the $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. Oh, yeah. of their time as, you know, companies, right, with, you know, trade wars, tariffs, you know,

all this crazy stuff happening. And it's almost like they need to kind of thread the needle on making sure that, you know, 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 great 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 TVPN. 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 going to have a ton of great founders on, a 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 want to know at what point did they decide to call it defense tech versus offense tech, because 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. Because it was just like, yeah, it's the guys who we handle war. It is a better. But 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 Camphabere line. And they were decimating our bombers. They had something called the Messerschmits 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 back.

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, actually it's fine. Talk about this 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 anyways. And 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 going to use our best scientists at universities to build defense tech and FDR approves it in 10 minutes. Talk about like founder mode. It's like really, really great. So this creates the NDRC, the National Defense Research Committee in 1940. And they work on the bomb, which you know from Oppenheimer, but they also work on radar. And so the Office of Science Research and Development in 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 tinfoil. But it's just chopped up tinfoil. But if you chop the tinfoil 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 chambers were high frequency transmitters that overwhelm enemy radar. You just in so much signal that they get confused. And this contributed to major successes of bombing raids like Operation Gamora in 19, in 19, in 1943. Now, the radio research lab gets disbanded in 1946, and they needed something new. So Termin 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 was all pre-transistor, but it led to all of Silicon Valley. basically. So then you go on to the 50s. So we'll go decade by decade. That was the 40s. In the 50s, DARPA obviously speeds up. This is all because of Sputnik, October 4th, 1957. It was the, 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, 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 was like, 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. It was the Ghibli moment of space for the Cold War.

And so the Soviet Union took huge World War two casualties, but they were strong in tech. And Sam Raber and 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 going to happen, but Americans were scared because they didn't know. And the solution was, we responded with the Vanguard TV three 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. There were a bunch of different projects going on. They're like, we need to consolidate this. We're going to, President Eisenhower says, put it all under the advanced research projects agency. We're going to create a new agency.

It's called ARPA. Eventually becomes DARPA. And DARPA is like legendary. They create the internet through ARPA net. They create stealth aircraft, GPS, drones, and even self-driving cars originally came out of DARPA. And so it was been a great, you know, like farm team for tech for a long time. 1960s, we got to talk about skunk works. McInty was at DARPA himself for, I think, a year and a half.

That's right. So 1960s, SkunkWorks, the DOD was 36% of all R&D spending, not in the U.S., 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. SkunkWorks marked a shift into proper research and development being done at companies. And so Skunkworks 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 goes into the 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 U2 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 19, 92, just started flying.

Just to show you like the pace of things. Like the F-35 took 30 years and they did the like the pace of play around the SR 71 was like insane. So the U2 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. 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 bitcoins say, like, what happened in 1970, that whole thing. And so there's a lot of different reasons for this. Economics, the bitcoins 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 $1 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. Like if you're a really smart person in the 70s, like you build a tech company or like a software company and you'll make a lot of money. You're not going to 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 segmentation in the form of globalization. Henry Kissinger just went to China, opened up that relationship post-Cold War.

U.S. 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 going to 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.

the World Trade Organization 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 wanna spend like $20 of every hundred

that I pay into the taxes on like defense. Doesn't make sense. We're not at war. Like we let's just invest in other stuff. Tax cuts, health care, 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 U.S. doesn't need so many defense companies. They were like 50 at the time.

And so Secretary of Defense, Leslie Aspen. Let's be clear, those 50 also had, but they also had thousands and thousands of tiny subcontractors. 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've got to cost. We expect defense companies to go out of business. There's dozens of mergers.

Hughes Electronics and McDonnell Douglas has ceased 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 North of Grumman. Then, of course, there's the war on tear, a wake-up call. You get Palantir. It was really tough to get started, but in QTEL steps up. The CIA funds, the VC farm of the CIA funds. Palantier, and they actually had to sue the government to allow them to win an army contract,

and they won. And then interestingly, SpaceX used the same lawyer to sue the government, because again, there was like, okay, is this... You've got to have that lawyer on. Yeah. Yeah, he might actually do it. I'm connected, so maybe we should reach out to him. 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. The first crude ISS flight happens in 2020.

And there's the SpaceX lawsuit, of course. And so there's a bunch of key moments here. Ash Carter creates the Defense Innovation Unit. Eric Schmidt is the inaugural chairman of the defense innovation board. And Trey Stevens, he founds and a role. 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 we're like, hey, we're just going to 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 Anderrol right after that. But it's a funny story. And that caused like a cascade. 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, you know, maybe it's a couple thousand companies a year that raise like anything close to like traditional venture capital. and imagine doing that when 95% imagine raising when 95% of the funds just say like, I think you're smart, I like what you're doing, it's good for the country,

but you still can't. I legally can't. And they can go and ask for individual exceptions, but it just becomes much more complicated and it's easier to just say, no, we're not going to do this. Yeah, totally. Well, we got Delian 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 for the factory floor. So I moved downstairs.

I like it. It's a beautiful background. Proof of work. Nothing in the background is ITAR control. Fantastic. In the one place. So unfortunately, it's the least interesting view of the factory floor.

We got a nice logo back there. It's great. Yeah, exactly. I was just given a little bit of a history of kind of how we got here in the evolution of defense tech. 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 a time period, in order to start, a successful company in like defense aerospace thing that basically worked with the government. You both had to be a billionaire co-founder and you had to be willing to sue the U.S. government in order to, you know, have any success. And so, you know, both SpaceX and Palantir in the 2010-12 time period, basically have to sue the government in order to win contracts.

2015 to call it roughly 2019. We're going to sue our customers. The playbook is like, we're going to sue our only customer. That doesn't apply anywhere else. You don't hear about like, oh, yeah, like the. you know, this E2B SaaS company had to sue Nike to get them to use their SaaS products. Yeah, we really want to, we really want Ramp to sponsor us. We're going to sue them.

Yeah, yeah. Exactly. Exactly. And so it gives you a sense of like how difficult it wasn't 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? Yeah.

You had to be a billionaire and you had to be willing to sue your customer. That's crazy. And then in, you know, so 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 pursue them. And so then, you know, Palm or lucky, you know, sort of starts and roll. 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 U.S. government is ready to work with, you know, startups. And so you no longer have to be a billionaire suing the government. You no longer have to be a billionaire. At this point, you can just be friends with a billionaire. And that's sort of close enough to, you know, you're having the appropriate level of power and wealth you'll 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. They're like, you know, billionaires that sued the government. Now it's billionaires. Now it's friends of billionaires. Let's take the logical leap. And high school students can now start defense companies that raise, you know, $100 million.

And that's obviously a logical reason 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, fomoed in and like 23 and got over my skis. And I'm back to, you know, back to AI. Just skiing. They're back to skiing. They're back to just skiing, not being over their skis on the defensive. Yeah, I mean, I think I heard you guys talk to this when I, you know, sort of hoped on. But back when Andrew started in the 2017 time period, a significant amount of the investors that now all talk about defense literally had it in their LPA of the three things that they weren't allowed to invest into was gambling porn and defect. 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, you know, yolo'd in, their LPs are like, fuck off. Like, we don't want you doing this again. You were clearly terrible at it. You had no idea what you're doing. We're just putting it, like, back into vice pies. And so no investing in your port and defense, as far as we're concerned.

They're the same thing. Like, leave that to Only Fans and Founders fund to figure that out. That's great. Well, the reason I wanted to have you on mostly was to kind of restate and restart the debate around the continuing resolution. We put out a clip from you. we got a lot of text messages. I got a couple essays delivered to me. A lot of chat GPT stuff coming my way.

Can't say I read it all. But I said I will ask Delian about it again next week. So can you restate your thesis on what's going on with a continuing resolution and just the overall DOD budget and what it means for defense tech companies? And then what's been the pushback? What have the good response has been and what has been like the cope? Yeah, which is funny is like, Like I see so much of it as like purecropium, like if you look at the people that are closing the biggest use of defense contracts, you know, Tim Hughes and, you know, sort of SpaceX.

You know, Mac Graham, Trey Stevens, et cetera, that whole crew at, you know, uh, Anroll. You know, Sean Sancred Poundt Poundt here. Somehow none of those people, you know, some critiqued, you know, sort of my framing of it. I admit my tweet was a little more pithy, but it was funny seeing something like Pritink's like, you just didn't watch the clip. Like, yes, my tweet was like an attempted summary of it. I basically like, you know, was a bit hyperbolic in saying that like there are no net new starts. there are going to be some that are potentially allowed, but it all still predate, you know, it needs to be paralleled to the original basically, you know, congressional, you know, and House and Senate, you know, sort of bills in the past, you know, sort of late February.

So, you know, some of the critiques came in from some of these, I think more junior companies that have a little bit, you know, sort of rose-colored glasses on how they think this process is going to go in that, yes, it points to, you know, allowing that type of reprogramming. And at the same time, you're seeing, like, in a continuing resolution year, going win the F-47 contract. And so I think they have this view of, like, oh, man, you know, now's this 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 in 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, basically FBI SAS, we should deorbit it. 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 lapped a little bit. He also got his wrist lap 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 that Elon's been on this rampage against human-raded 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-rading fighter jets. Like, you think your fucking thing that's like a mediocre copycat of Anderol 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,

and 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 East that is in the continuing resolution.

It's like how that's going to be interpreted both by the warfighter and by like Congress that ultimately is going to, you know, sort of go, you know, approve the like, you know, sort of reprogramming and then the, you know, budget, you know, reconciliation, you know, those sounds. Anyways, more than I can go into. do there, but it was like lots of copium and all the sophisticated players didn't say anything.

Do you think that there's going to be a lot of like sort of potentially wasted talent coming out of this era of defense investing where people want to be founders so bad, but they would actually be potentially much more successful going into Anderil and like working on a specific product and just leveraging, you know, the entire platform that they've built and, you know, the sales channel, everything like that and the sort of like Silicon Valley ethos of like everybody. is like aspiring to be a founder. You know, because I think probably at least the three of us and many other people, like the Anderol of Anderol as Anderol is sort of like, you know, probably going to play out, right?

The Andro will probably be Andrel rather than a different company, you know. Yeah. But, but yeah, do you see. Except for Anderle of bears, I think bear domestication is very important. And I think that is a white space that Anderle's weak on. We're announcing Kugan's new incubation. Yes. Ready to go.

Co-founding with some Ruskis. Yes. Those guys know how to handle their bears. We're domesticating bears, and you're going to be able to ride them like horses, and we'll also make small ones, and they'll be like teddy bears for your kids. It'll be great. Yeah. You know, Keith used to always talk about how one of the things I felt like I learned from him

was that some of the best companies are actually founded in some of these more like recessionary periods where it's not hot to be a founder. You think that it's like a lot easier to aggregate talent. Like I think about that even, you know, sort of with Vardaa today. 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 the founding team, which is like we refuse to be on the founding team and said, split up at all race and 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 thrown 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 Anderol almost certainly was successful. Like everybody that like showed to go work at Androl from 2017 to 2022 before the like all the Ukraine war was like choosing

a very contrary and field to work on. Nobody else is going to be go funding those people to be either starting companies anytime. So they agreed a bunch of talent where it's like, okay, yeah, now defense is hot, but Andrews is already offered to 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 just take a taxi or take an Uber over to Sandhill 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,

you know, call your shot. I'm going to 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, are you trying to make some new quantum computing chip? And it's like, okay, like you can have the big idea. And that doesn't and you can put together a lot of capital and people and work really hard on it. And like you're not always going to get there. Whereas software, at least you can ship the product. It might not work.

Dude, it feels like it's like literally like you describe my edge basically in like the investing in this sphere where it's like, look, I think there's a amount of like, I'm decent at the founder, read macro or whatever. for a bunch of people can do that. The one thing that I do that I think is 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 walk the line. I like, you know, go and I talk to like the technician doing assembly.

I talk to the thermal engineer during the thermal model. I talked to like mechanisms engineer, structures engineer, software, engineer, firmware, et cetera. And just like, you can, you know, I'm not saying that I'm a world class engineer in all of those categories or anything like that. But I have enough of a surface level understanding from the words we do here.

That can kind of gauge, like, is this person at like the Varda quality bar? And like, you know, it doesn't have to be that 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 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's failing nonstop, $100 million isn't necessarily going to be the thing that solves the problem. Like they've already. and got cultural rot to the level that it's like basically to be impossible to backtrack. But there's so many people they 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 wait product engineering relative to like, you know, our CEO, Peter, right? He's obviously probably more on the opposite end of like, you know, thinks that people over rotate on that. And I probably am one of the people that sometimes does.

But in this field, it's definitely, I think, saved us from some, you know, sort of investments where like, you know, we debated making a series A investment. Then you watch the companies, like, they have like six projects in a row fail. Now, people are for some reason rescuing those companies and still giving them $100 million bucks. But like at some point, I'm like, how long does that go for? I was literally texting me with our colleague John Luda yesterday. He was like, he was like, text me these like three or four companies like, like,

God, scale like crazy. Like it must be like doing 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 of record. Like they're scaling. Like they're really good at hiring.

but like, you know, but like not necessarily good people. So like hiring bad people is not a like, somehow people like use headcount scale as a proxy for like sex to the company. I'm like, I don't know that that's like a thing one should be focused on. So yeah, I think there's going to be some tough reconciliation that happens, you know, in course the next year or two where it's like there's going to be like, you know, 50 to 60 percent of this field, which is going to have to die off or get acquired from pennies on a 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, okay, is there a two times better team that's like doing this exact thing? The other thing is, like, I've seen, you know, I've made a number of, I think, smart investments in this space, and I'm sure, like, just sort of hard tech broadly, and I'm sure, like,

some that will zero out. 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 this investor like, 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 like nothing happened. And so like you're now getting like the sort of luck of getting to take a shot on this company and like 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 going to wait and see kind of what happens. So anyway, can we move on to the Cygnus spacecraft? Can you break down? I'd never even heard this word term before. Can you give me a little bit of history and then what's going on with the news? Yeah, I mean, I brought 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, you know, bring them back down. This past week, it was revealed that the Cygnus spacecraft, which is a spacecraft, I'm pretty sure, made by Northrop Grumman, that originally was awarded basically commercial cargo contract via SACs. 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. It's like food, water, et cetera, to the international space station.

It generally perform, you know, so 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 its things. And then it just, like, burned up in orbit. So it's like the epitome of just old school, you know, sort of airspace. 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 ISAS via north of Grumman now is yet again going over to SpaceX. And so it's just like one of these moments where it's like if SpaceX does not exist right now, like the United States would neither have like Boeing able to take crew to the ISIS nor would

have North of Grumman able to take, you know, basically cargo to the ISAS. And so it's like, you know, without SpaceX, the astronauts would not only be stranded, but also starving. What do you mean by dropped? They dropped it. Does that mean drop the program or physically dropped it? No, no, no. They like physically dropped it.

Like spacecraft like, like fell. It just fell. Yeah, had an accident. Like you're not supposed to. A little oopsie. A little oopsie in the space factory. Like how much like, you know, the pulley could hold and they fucking dropped it.

I hope we're going to, is there like security camera footage we can find somehow? Like, I think that Northrop is going to try and control that real tight, avoid anybody. We got to call our friends over the CIA. NSA, the deep state, you know, really get them to fork that over. We need the blooper.

We need the blooper reel. We've seen the SpaceX crashes. I need to see the pod dropping crashing. We, you know, we drop our spacecraft, but, you know, we do it on purpose, right? That was the one that we dropped from space back down to the ground. But that was on purpose. Wow. I have not been to Varda HQ recently.

It looks like you have a lot more equipment. That is filling up. Congratulations. We are packed in like sardines. We've got, you know, that's the one that I just showed you. The first one that landed last year, second one laid in an Australian two weeks ago, and it's out in an air show. Third one's currently up in orbit. Fourth and fifth are off the side of me right now.

So, yeah, this place is, yeah, turning into an operation. Yeah. Real operation. Do 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 Jerich-Isohn. Momentum seems to be building for Jared Isaacman to be. come NASA administrator. What are the dynamics? What should we be reading into this? RFK got confirmed. This is a similar process. And what does this mean? 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 he's been a phenomenal like for doing our right shift for payments, you know, sort of mega company. But then also

is like putting his own capital and real 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 space walked out. I saw that, you know, live stream from, I'm forgetting the exact time, but it's like, that was him. That was him. Jared. No way. I did. Literally like, he's the first private citizen to like fucking go out into the vacuum of space and like periods out of the space. They walked live streaming so we could run. Yeah. Exactly. Exactly. So, you know, hopefully we get to space run one day. Exactly. Okay. So yeah. So yeah. So what's my? Super legit. You know what I mean? Like he is literally, you know, a like,

like privately himself sponsored at not, you know, putting his real like, life on the line. That mission could have gone poorly, could have died on it, et cetera. And he obviously he didn't. So really beloved. But he is like affiliated, you know, for sure with Elon since like, you know, his entire Polaris, you know, sort of a set of missions was all contracted with SpaceX. He obviously has done a ton of press with Elon, et cetera. So when Elon made this, you know, sort of comment around wanting to basically deorbit the ISS sooner than the original plan. So the current plan is basically out of the decade. Elon was pushing for like, let's just deorbit 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 where 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, for that via, you know, basically Ted Cruz, you know, sort of the senator from Texas that is the, you know, senior chair of the House, sorry, the Senate Science Committee, which basically controls the NASA budget and is also, you know, 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 had to see like a bunch of governors, you know, and other senators basically say, hey, Cruz, we really like Jared Eisenhower, a bunch of space senators. I have to like, you know, sort of send Cruz letter. He's finally relented and okay, it said, fine, I will set a date. But I want Jared Isaacman, you know, sort of coming out and explicitly saying that he's in support of the ISIS going through the end of the decade in support of these commercial space stations.

And so why is, you know, sort of cruising 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 a district and it's you know his constituent and so you know you're starting to just see these tensions of like you know look yeah you've got like tech's greatest leaders at like the helm of the government but that doesn't mean that there's going to be some like not going to be some antibodies that like you know prevent people from getting exactly you know sort of what they want done and so this is all more like the civil space side of things but I think has a lot of parallels

to what everybody's thinking about in defense where it's like look I'm going to point out it's like you know, Elon is phenomenally successful, super powerful, rich, et cetera. But like, there are, you know, antibodies and balances of power built into the U.S. government. And, like, Ted Cruz is clearly, you know, showing that he can, like, swing 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, look, like, you know, there's, like, there's, like, this NASA reauthorization 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, like, downstream operational effects. This may slow down our ability to like get more lunar missions, you know, sort of book. I should figure out with the MARTH program, you know, sort of looks like. And so it's just like a reminder to people that like, you know, us and tech have to always remember that like there are also jobs that Senator Cruz is going

to be, you know, making sure it stick around too. follow up. I mean, the ISS budget is $3 billion a year. Crazy idea. We get a couple of our buddies together make it into a casino or something. Like, could we not privatize this thing? You know, Jed McKalb, Mr. Crypto, you know, sort of man is trying to, you know, put, you know, 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 craps tables, but it's, you know, a couple of Coinbase servers up there that are getting you hooked right into the, you know, sort of live stream of trading shit wins. I guess you can't really roll dice in zero G because the dice never fall. Well, yeah, if aliens are ever going to come and assimilate on Earth, we should have

like a space casino where they could kind of like learn the American way of life. It's like an LSI. because if the culture shock, if they came here and they have to know how to gamble. If they're going to integrate for sure. They would just like probably kill us all. Exactly. You guys like, I don't even know what you guys are doing. Or that's our planetary defense.

We just get aliens, hooked on gambling. They become total degenerates. They're mortgaging their home planet in order to be able to get you to be able to forward it. And we're like, actually, you thought you were coming to conquer us, but sorry, we're sending our bookies back over your planet and break all your kneecaps and take it. You know, that's maybe the best planetary defense game. We need to asteroid deflection. You've got space casinos.

Yeah. We go five minutes. Big. What's your take on yesterday? I was joking around earlier. I said it. In hindsight, Sputnik really was the Ghibli moment of. the Cold War. But yesterday felt like a big moment. It just I did, John and I had a couple posts

to 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 open AI like chat GPT. They're just like, oh, there must be a new app out there that does this. Yeah. 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, you know, sort of mark of maps are no good, focus on a long tail winner. There's like a whole fucking set of like a hundred like AI image generation companies that all just got, you know, fucking surelocked by Open AI and are

going to be totally irrelevant because like they've got the biggest brand and know they have the best technology. Good luck catching up when you're like, you know, sort of losing on both angles. I think you're going to see this stuff implemented into Hollywood like ASAP. I mean there's like a whole set of things where you can like look there's going to for sure still be like human fine details. There's things that it's not perfect out of probably never will be like quite

perfect at but if you want to start like throwing together like rough draft vision board and then what you end up seeing is like the equivalent of like you know that there's you know sort of now you know sort of two 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. Yeah, it's like bullish for Open AI and also bullish for Jason Carmen, right? Yes. But you just don't want to be in the middle. But it's like short, all the dudes that just invested like $500 million into like these like slop companies basically. And it's just like good fucking luck. And it's like, you know, bullish on Anderall. Yeah. Bullish on the warfighter that gets new tools. Totally. Don't recommend being anywhere in between those two. Yep. Exactly. Don't get stuck in the middle. The barbell. You don't get this out in the messy. The sloppy middle, as we like to call it. The sloppy middle. It's, uh, 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 episode, but I've heard enough that I get it and it's not good. Yeah, you can skip that one. White Lotus is funny because, like, it starts the season. It's like kind of relaxing because it's like these resort

settings. Yeah, you're just hanging out of four seasons. It's just like, I relate to these people in different ways and like, and then it's like, oh, it just gets so dark, like, episode by episode. I want nothing to do with any these people. Yeah, what, you know, So somebody that launched an image generation tool is like Mike Spizer over at Sutter Hill Ventures. Like they've done, didn't they do like Palo Alto?

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

True. It's like, true. 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, is we talked on the show last week about a PT quote around like you need basically distribution for a monopoly and you can get a monopoly from product,

but you can also get a monopoly from just distribution. Just distribution. And so it is the, but like, do you think these. 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 you know set up shop here in Hollywood and just work with all the studios and say like you spend billions a year what would you do if you were actually running a 50 million dollar series B stage image generation company yeah I mean this is very top of mind like I literally met up with Mike I think it was like two weeks

ago to talk about, you know, what he was, you know, sort of working on. And I'm like, I'm a huge fan of mics. We've worked together on a, you know, sort of handful of things. Obviously, he's like crushed it with Snowflake. He's like, clearly one of the valleys, you know, sort of best incubator, entrepreneurs, investors, you know, execs leaders, et cetera. But like, yeah, like, I don't envy being in that position. But, you know, I think you're seeing this in a bunch of different fields where it's like, you know, you've got the, you know, sort of mice that are trying to dart around the, you know, sort of elephants. And like, these, like, big tech companies are both very sophisticated.

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, you know, sort of mice in there, the elephant, what Andrews doing, stomping out a bunch of mice. It's like, it's not an easy time to be like a midstage 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 blank film, but it's good enough for any consumer to like, you know, send a photo, you know, to their wife, basically. And they already have the winning consumer brands. So don't even try to do that. Go where the, you know, the elephant isn't even headed, dart to the opposite direction. I think, yeah, it would go like heavy on enterprise, build up studio relationships, trying to convince them, you know, sort of, hey, look, if you start using, you know, sort of chat GPT, etc. They're going to use you for training data.

We're going to make like proprietary models that like, you know, fine tuned to your own aesthetic and like this specific film that you're working on and we'll make sure the data only stays basically like in-house right like you just need to like just constantly be thinking about like yeah what is your you know sort of angle of it is super unique but also those are like all really constrained tams relative to like the thing that you know i think open ai is you know going off and capturing and 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

and like, you know, there's new world. And that's what's so crazy about like tech accelerationism, all this stuff happening is like, dude, like this stuff like I felt like when I was in the valley in like 2014, like happened over the course of like 18 months periods. And it's like, dude, this stuff like it feels like literally every month now. We have like crazy new capabilities that come online that massively disrupt how to build like a series B company. But since 2014, that new technology is disrupting like a late stage series B company like didn't honestly happen happen, you know, so that often, like, never happened. You kind of had, like, your stable growth.

Like, even in Vardo, and the stuff that we do is, like, super hard, long time frame, et cetera. Like, I feel like we actually, like, literally need to be nimble on our feet on, like, a month-five-month basis between, like, the changes of DOD priorities, congressional priority, what other space companies are doing, what the fuck China's, you know, so doing. It's like, God, man, it's such a dynamic world. And, you know, the, like, you know, wealth accrues to the, you know, sort of riches. So, good to be Peter, good to be Sam.

You know, I don't, I don't envy myself or Spizer. We were joking around. a lot of early stage founders will like time a release to try to catalyze a fundraise and it just felt like there was a world where sam was like our team like we know gibbley will go viral like just make sure that this is perfect everything else can you know everything else doesn't have to be perfect but like we need to take over the timeline we need to go mainstream this day i'm closing the round on monday like just go go also google had just launched something that most people think is like competitive but the product is just buried in ai studio and like it was like it was going to break containment

And it was going to be a Google story. And Sam was just like, not today. I love it. And then maybe he paid that one influencer to make the like photo of his wife and like, you know, get that to go viral. All I'm saying is like, it was just like 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. Yeah. The exciting thing, bring it back to hard tech and defense is like we need, 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 inspiring visions of someone has a good idea and they can instantiate it.

It's amazing. $200 million 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 having us. Good luck with the rest of you guys.

Later boys. Later, boys. See you. Always a fun. All right. We got. We got back to back to back to back to back to back to back to back to back to back to back calls.

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Download the app. They got great charts. They got great graphs. They got great functionality, folks. Boom. And now we got a great guest. We got Steve Simone, the man himself. What up, Florida, man.

Florida, Steve. Florida man. He's in Florida today. He's not actually a Florida man. But it's great to have you. Look at me. Yeah, thanks guys. Thanks, trying me on. It's an honor to be here. So describe the company in exactly three words. I've heard it described as gun on truck. Is that accurate? That's that's true. AI, AI robot gun. Okay, there we go. Shooting down drone swarms. If I see a light show with a dragon swarming towards me, I call you, you're going to throw a hail of gun. fire at it and take out all of them. You know, it's more precision. You know, we're sniping these drones. We're not just throwing bullets in the sky, you know.

It's precise. Okay. Precision. Well, I always love talking to Steve a while back. He was in L.A. And we like were, we're, I forget, there was something. I think it was like actually the weekend that All In Summit was happening because Steve's raised a couple rounds from Kraft 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? Yeah. I was like, I was like the guy. I was like, you got a big bigger guy. Now, he's the, Jordy,

you're the ultimate hype man. You made me think bigger, bro. You made me think bigger. That's great. Well, speaking of bigger. Yeah, yeah. Let's announce the big round. Talk about the news today.

Oh, yes. Today we just announced our $30 million series A led by craft ventures. Let's go. Again, they didn't give up the seed. They're back to a. You know, maybe they'll do the B. We'll see.

We'll keep it going. Keep it going. We'll keep it going. Ride your winners. It's in the all-in intro. Yeah. We're going all in. Let your winners ride and Sacks is true as word.

But I got to ask you guys, how much does it cost to get my logo on the ticker symbol at the bottom? You're going to have to wait till the B, buddy. I'm sorry. Series A company is tough. Yeah, yeah, yeah. I can. 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. You got your face here. And that's worth, you know, a thousand. I mean, how much did Wander pay for that back there? Is that like another company? We can't get into specifics. close. We're very against building in public.

Yeah, yeah. 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 the CCP got a hold of how the business really works, they could clone this show. And then it would just be a total Cold War arms race for the best and most aggressive daily podcast. 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, you know, making these gun turrets to be able to shoot down their drones. Talk about, yeah, just talk about the process.

We were talking with Delian earlier. There's this phenomena 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, sold his last company to DoorDash, had a great exit, and then, you know, basically brought together, did it, you know, round two with his co-founder. And so you had that, like, intense trust

with your, with your co-founder. You also were in the military yourself. So maybe, maybe give like kind of the full background on, 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, thus the name, just right on the note. knows. And also the name. 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 tagline that's going to basically like sound like it's been around for decades already? And I think it's working. I really like the counter positioning. You've got a counter position. That's all marketing, baby. No, so we met in the Navy. We were nuclear

engineers in the U.S. Navy met 16 years ago. And 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. at DoorDash. And now this is our, technically 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, you know, companies two and a half, two years old now. Yeah, two and a half. Yeah. Well, look, it takes to build a complex precision robotics product. It takes about three years, like from whiteboard to like really good product. So like we're almost, you know, there on that journey. But when we started it, right when we sold the company,

to Doordash Putin actually invaded Ukraine the same week when the deal closed. And we were reading articles about Ukrainian shooting guns in the air at drones. And, you know, Luke called me up and was like, this is a really good robotics problem. You know, we should start looking at this. And when we kind of surveyed the landscape of the industry of like, you know, interceptors and electronic warfare and microwave technology and lasers and all these other counter drone measures, but didn't see a lot of like really precision applications around using guns and ammo, which, you know, guns and ammo are widely available in the military.

So we thought this was 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, in a totally different, you know, vertical. And you were probably comfortably in San Francisco. Now you guys, you know, spend a lot of time just out in the field. Getting the boots dirty. Yeah, getting the boots dirty.

Wait, say that again. 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. You know, I'll tell you, for me, it's like I feel most at home in the startup life. You know, as the companies get bigger and scale, it changes things. But in the early days, it's the most fun. Actually, Luke and I always joke, like when you first start a company, the first couple months

are the most fun when you have no customers. Because then once you, you know, start getting customers and you have responsibilities, You have to, you know, deliver their requirements, make, you know, have great customer service and all of 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.

I mean, Dellion said this on the show before, like, you know, the Anderl of Anderol that is Anderol. and maybe Anderil's the power law winner and going to do all this stuff. You've obviously counterpositioned 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 Anderle take the kind of the AI connective tissue and you're a partner? or is 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, you know, so autonomous guns are, when they hit the battlefield, they're going to change a lot of the battlefield economics. So, you know, a lot of these like more expensive interceptor products or, you know, some of the, you know, big laser beams or, you know, missiles and stuff, like,

autonomous guns are going to, you know, put a lot of downward pressure on products like that, I think. 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, USVs, companies like CERONIC, a bunch of USB makers, these unmanned surface vehicles. And then you got like the land ones like overland or for Terra. There's a number of these. And so all of these autonomous vehicles need an autonomous payload.

Sure. And so we're positioning ourselves. We're mostly focused on great partnerships with companies like these positioning our product there. And then, you know, kind of bundling. You know, you make money via bundling in the game. Makes sense. Yeah, it 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 uh the ryan mottalls of the world right uh it's probably fun being a team of 34 you know competing against some of these giants um yeah oh go ahead sorry no interrupted you no go for i was going to i was going to say um this the lag on the zoom but i was going to say yeah like ryan mottal consberg you know a lot of i don't know if a lot of lot of the listeners know this but in the gun turret market, so these are called remote weapon stations, in the RWS market, a lot of the providers are foreign. So the U.S. buys a lot of their stuff, most of it from, you know, companies that aren't based in the U.S. So from this standpoint, we're kind of bringing this back home. It's a new American startup, building, you know, new modern age,

remote weapon stations. And so I think we're pretty well positioned there from like a congressional standpoint, too, because like a lot of people in Congress didn't even really realize that, that these like slower dinosaurs are actually not even U.S. companies that are doing this for us. What's the vibe on the ground in the D.C. area right now? You obviously, like, you know, have an office out there. What's, you know, is it chaos or people running around? 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, you know, 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 Heggseth 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 FY25 bill, we were somewhat impacted because they didn't do a bill.

And so that's like, I think Dalyon 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, but 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 of fresh capital. I imagine a lot of that will be going to bright technologists. Engineers, you know, if you're a computer vision engineer, and this is like one of the most fun computer vision problems to work on, I would say of the different parts of our product, you've got the vision system to detect stuff, you have the fire control to track and shoot, and you have all the hardware and the mechanical stuff.

The vision part is one of the most challenging parts. And so we're looking for, you know, people coming out of universities that really love this problem. They want to see it. They want to try to find small drones moving against cluttered backgrounds. And so, you know, we're always looking for that kind of talent. But, you know, across the whole engineering spectrum, we're looking for everyone. But I would say this is a dream job for a computer vision engineer.

Makes sense. Amazing. Yeah, 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 meme. in 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 OpenCV and it's enough? Yeah, I mean, we're a little bit on the cutting edge of, you know, we're trying to see a very small drone, like a DJI and MAVIC on a cluttered background moving very quickly. It's not the same exact application as like, you know, some of the stuff they're doing in self-driving. like we're trying to put a bullet through this drone too to be honest and so like that's another kind of a novel use case and so we need a little bit more out of the computer vision than you know 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 you know exactly work for what we're doing so yeah there's 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, you know, getting, like, I've seen a lot of the videos and you guys have some of these videos like, like, you know, public on your YouTube channel and stuff like that. But, you know, getting to work on something where you're actually taking a gun and like taking a drone out of, out of the sky. The alternative is like you could go work at, you know, some high profile, you know,

humanoid robotic companies that are just like, you know, looking at the laundry or whatever. And like, you got to give the robots guns. You got to give the robots guns. This is what makes me fun. Yeah. And all our only requests is get some muniour. tree robots at some point and just put some bullets on them. Yeah. I know. I want to have them running over the hilltop like a army of unitary robots and then bullfrogs sniping them all.

Headshoting them all. Oh, my. No, here's the other challenge, 360 no scopes. Three, yeah, 360 noscopes. Our audience, our audience loves three 60 noscope. Wait, the sweet, you guys, would you guys do like sweep sniping? You know that from Haley to you do that?

Oh, yeah, yeah. Sweep snipe. Yeah. Oh, yeah. You can do that. I think J.D. Vance did that a lot. I think he played a lot. Okay, awesome.

Awesome. Crazy Lord. Well, thanks for stopping by. This is fantastic. Congratulations. I'm going to play a quick song for you on the way out. You got that. Awesome.

There you go. Congratulations to the team and Sacks. Great one. Yeah, congrats to Sacks. That's fantastic. Well, we got A.J. Pipplica coming in the Temple of Technology from Hermius. 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 he's here he's in the factory boom with the hat with the hat welcome to show how you doing i'm good how are you all doing good john good see you yeah good to see you again uh you're still in uh 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 play floss yeah so I uh well I I I wore it one day

because I was making fun of one of my co-founders who wore a fedora out in the field. We were a test in the airplane. I was like, yeah, you look silly. I got a hat. 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 up a beer. Not everybody can grow up with their hair up, but anybody can wear a hat. Okay.

So I'm like, all right, 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 time ago. It looks good. It looks good. I like it. I like, I had to make sure that, like, I had to make sure that, like, it doesn't get Marie Condoed out of my house. I have to wear it like once a year, so I'd always incorporate it into my

Halloween costume. Little did I know I'd be wearing it for like, you know, six months now. But so 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, we're going to, I'm going to 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 want to hear a little little backstory on the company, little company update. I want to hear your take on the F-47 and the DoD continue resolution. But let's just start with the overview of the company and where you guys are at. Sure. So yeah, at Hermias, 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 that solve some really pressing national security challenges here in the near term that build us a strong, growing financial foundation and kind of give us the right to go, you know, try for that really long-term future of, you know, adding a couple percentage points to global GDP. Companies 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 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 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 Day. So we've proven we can.

Right away, my first question is you're going from, you know, zero to a real product in 15 months. That's intense speed even for somebody building like a robust CRM, right? You guys got to do something a bit more, just you've got to be a bit more than just robust, right, if you're going to like fly something through the air. But where to even start with this? Like, is there, is there like effectively, 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 it just like from scratch? It's actually chat chit. I'd like one blueprint for a hypersonic. We're a groc company here. Oh yeah.

No, like the place that you start is fundamental physics. That's it. Like there's plenty of stuff in the supply chain where you can, 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 it 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 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 super sonic. So 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 scram jets here. It's all ram jets. So it's literally the simplest propulsion concepts that there is out there for air breathing 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 ram jet. 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 and a half. in 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, you know, plane out to some other country that will approve it quickly? Yeah, like, do quaduline? Yeah, because there's a, there's a nuclear company out of El Segundo that like just in the Philippines. The Philippines, yeah. And I was just sort of wondering, is there something you could do there to kind of like,

you're building so quickly, ideally you could test quickly and not get held up by. Yeah. Yeah, I think we'd have to be incorporated in a different country fully to be able to do that. So that has other implications. But yeah, like even if we took the aircraft to, you know, Australia or, you know, quaduline 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 that is because, like, yes, other countries have their own versions of the FAA.

You know, there's an international body called ICAO. But generally, since the U.S. has pretty much always been the leader in aviation and technology and, you know, especially coming the commercial side, everybody just kind of defers to what the FAA does. So it kind of just trickles back to them at the end of the day as well. You talked a little bit about your technology one day being able to increase global GDP. I assume that if you can just move stuff around the world faster, move people and products around the world faster, 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 like cost and therefore distance are proportional to each other. So if the kind of unit that's used in these type of analyses is called economic distance. So it's a mix of like actual distance and cost and time and all of those things kind of wrapped into a single metric. So if you can shrink the economic distance, you know, between two economies, you will increase the trade between them. It's a gravity model. So like you have two bodies. The closer you bring them together, the stronger the force of gravity is. So trade is like gravity in this case.

Can you talk a little bit about your reaction to the F-47 program? Boeing won a $20 billion contract for the 6-gen fighter. It's a nod. The design is a nod to the P-47 fighter. And there's competition between the major primes, but I'm sure you have some insight into what's going on here. Can you break it down? Yeah, I certainly have no insight behind closed doors.

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

But it's a really hard problem, you know, the distances are really long. And, you know, our, you know, current fleets of fighters, be they 4-Gen, 5th or gen, you know, they really don't have the legs to cover the kind of ground that's required out there. So, you know, I would not be surprised if this aircraft was significantly larger than, than what we've seen before, increased range, those kinds of things. That's just kind of the nature of the problem that's out there. But I don't... 20 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 program? Just for the EMD phase engineering manufacturing development. So it's like the R&D phase. So you built a prototype now, like, go turn that prototype into production. This is like the chat GPT prompt phase. Right. Do these companies get so big that there's just like, you know, massively, massive variance

in terms of like competency, right? Because like over the last couple years, I think a lot of people that I know are like, oh, I don't want to fly on this like, you know, Boeing jet. I'm going to go like take this flight with the airbus or whatever. But like clearly the government has like confidence in Boeing. Is that just like the norm for all these contractors once they get to a certain scale? Like there's certain teams that are just like highly competent. and sort of at the forefront of some of this stuff and other teams that just have, you know,

maybe leadership issues or, you know, more cultural issues, et cetera. Yeah, I mean, I think each of the primes have their advanced development groups, you know, Lockheediscunk Works, Boeing has Phantom Works, you know, North of Pezzarone and so forth that kind of do these, you know, early stage development programs that, that precede production. But frankly, I think all of them have, like, really grown, like, pretty old and sclerotic. to use a Tray Stevens term. And I think the evidence of that is like 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 like programs start to initial operational capability for aircraft from 1945 through 20, 2005 to 10, something like that. So between 1945 and 1975, the average time. for 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 twenty five-year program and even even this one you know the next generation air dominance fighter is already like 10 12 years into its program like sure we flew a prototype five years ago. But that was maybe already 10 years in the program. It's like the opposite of the $100 million

dollar ARR graph where it just keeps getting shorter and shorter. It's like, it's exactly. It's exactly the opposite in airplanes. And so like, it's too bad. This all changed in 1975. Like it's blatantly obvious where the knee and the curve is. So you know what happened in 1975? Kelly Johnson retired from Skunk Works. Literally just one guy. You can't make this stuff up. So, uh, yeah, like the F117 happened like five years after that. So that was like Ben Rich and his groups of like very much, you know, still of that of that culture. But, um, you know, uh, iterative development, like the way that SpaceX develops rockets now, the way that we're building airplanes here now at this like

one aircraft per year cadence, we haven't done that in decades. And the result is the development timelines for, um, solving hard problems. They just, they just go out and then to the right. And then you stack on top of that cost type contracting and incentives and all this kinds of things. and, you know, the lack of, you know, like, 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 start-up role? 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 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. I was like, it's good for the industry overall. Exactly. Like, hey, we just want to fly at hypersonic speeds.

Like we want to be able to do in every application. I want to see T-shirts just random normies are wearing like Hermius merch because they're so invested in the drama. Like straight up Vanderpump rules level like People magazine, paparazzi photos of you anytime you go outside. 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 for Supersonic this year. And we're building an airplane right behind me that hopes to do the same. Well, good luck. I'm rooting for you and everybody, but I'm especially rooting for us. We just want to pod. We have a pretty fast pace at the show, but we're not hypersonic yet. Not yet. And being able to do this show from the air with you, do an interview in the future.

Yes. There you go. From the plane would just be fantastic. Incredible. So thank you for coming on. Always welcome. Thanks so much for having me, guys. Appreciate it.

Yeah. 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 productize it. They made their money in love. They made their money in love. There is.

Hey! You hit it. What up? Guys. I mean, I wanted the chatter to go on. I feel like I'm on sports talk radio, you know? You are. Long-time listener, first time caller, right?

Yeah. Well, good to have you here. That was 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. But then, yeah. No, happy to. I help lead our national security and defense investments here at Lightspeed. I've been here for five years. You know, used to sit on that side of the table, actually served in the military for a better part of the decade. So, 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, like, size scale of Lightspeed and then is Defense Tech, like, its own fund? Or are you just making an investment? Yeah. obviously, so, you know, history in 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 have the full, you know, kind of stack platform, obviously based

here in Silicon Valley, but have offices in reach, you know, globally. I sit on the frontier tech team. So myself, Ravi and Ravi Raj and Taggart really invest in, you know, 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 fund. So it's not a separate thing where we have to deploy $500 million a year in this. It's really kind of up to the team and up to how we see the ecosystem. Cool. That's very helpful. Let's go to the drama. You and Delian, break it down. Before the drama, I'd love that, you know, we were actually talking with Delian how, you know, the last two years, a lot of VCs, you know, went, amended their LP agreements and said,

well, actually, I fancy myself a bit of a defense investor myself. You know, I think we all did that. I did that as an angel, right? I've got my bets. Everybody realized it was cool to be a patriot. Do you think that it's, are there real blind spots for investors that don't have military backgrounds? We just had Steve Simone on the show from Allen Control Systems. He was a nuclear engineer in the Navy, like that clearly sort of informs how he thinks. How much of an edge do you think you have because you actually have, you know, lived on the customer side? I mean, like most things in life, if you haven't lived and breathed the problem, it's really hard to roll up your sleeve and understand like 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 systems. 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 a lot of people realize is there's really not the concept of product-led growth. Like, 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. I mean, it's not how it works. I mean, Congress has to say, we have program offices, we have this complexity of just utter chaos that makes this really hard. So, you know, long story short, it definitely gives me an edge. I just think things are evolving so quickly that, you know, again, the edge isn't enough. Like, you know, you need to get lucky 100 times. I mean, what does Tray say all the time. Like, they got kicked in the face for, what, seven years straight at Anderold before coming today. So it's not easy. Like, to be clear, I'm not pounding the drum that, like, there's going to be 100 Andrels. Like, I hate to break it to you. There's not. There's going to be a lot of

investors who are going to lose their shirts. There's going to be a lot of entrepreneurs who are going to try and fail. But as the cold-blooded American who served and been on that side of that, like, this is all not good for us. More people building new technology to get into hands of warfighters. the question is like are 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 i was always bullish on that with the hard tech even if it was a bubble it's like it's so much better than some of the other tech booms where yeah like it falls out and then what were what what are your durable skills just like chilling meme coins and that's what you're going to do next it's like at least if you like you know graduated college went to

work for some hard tech company it fails but you learned like system design like well like you know, D.O.D. Like, you learn so much of these like tangible skills. Like, at the very least, like, okay, yeah, the VC dollars. They didn't just go all the Facebook. They went into buying manufacturing capacity. Maybe that manufacturing capacity didn't produce profit. So it's got to get rolled into other stuff. But at least we have more machines in America. So I was always like, there could be like a piece dividend from a bubble, even if there is a bubble and there's a washout. Anyway, do you have a next question or you want to move on to the continuing resolution? Yeah, let's get into that. So, yeah. Can you start by like breaking down just

how you processed the information and the news around the continuing resolution, maybe restate what you feel like is going on and then your take on it? Well, and I think this is, I won't get two 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 like people just read the headlines, the defense news, and they're like, uh, Elon's cutting budget, uh, continuing resolution. and yet all these companies are being funded, like, what's going on? Like, there's this clear misalignment.

I think the reality sits actually a bit more nuanced than that. And when you look at how the Department of Defense spends money and Congress allocates money, we pass this thing called the National Defense Authorization Act. And this is literally the president, Congress, both sides of Congress, sit down and they say, what are our needs, what are requirements? 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. And it's this like, you know, I give the Andrew guys a ton of credit here. Like, you know,

it's rocket science and literally what you're building, but it's not rocket science to figure out what the federal government actually wants. Like we publish these things called JBooks every year. We pass laws. And so historically, if Congress and government works the way it's supposed to work, every year we have this new National Defense, you know, authorization act that gives the Department Defense a budget table to say, hey, Air Force, here's $100 million, go buy space lasers. And 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 NDAA, 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 Delling 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 Delian's point, like, yeah, like the 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 because like those guys who really understand what's happening and how to sell the government, they're actually texting their co-founders and they're sprinting at shit right now. And that's what's happening. So this continuing resolution, the nuance here that happened is, again, like, you know, go read the section, go read the bill yourself. But effectively, the rule was changed where you're allowed for new starts. And new starts is just what it sounds like. It means that you can start a new program and allocate, you know, money towards something new. And again, like, there's also a ton of bad in there. There's recisions. 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, you know, there are sharks and there are menos in this, you know, in your budget, you know, happening right now is the sharks, you know, the guys like Brian Hargis, you know, has done this at SpaceX and is at Castilian now, like, you know, the stackmans and then the list goes on and on. 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. maybe you don't need 90 million, maybe you need 80. And in the nuance here of why this is important is each one of these new budget lines are theoretically, and the keyword is theoretically, allowed to be moved around now. And so what I'm seeing in my signal chats and 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 dollars that, you know, 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, you know, kind of this broach of probably, like, there's so much

disruption and there's so much variation of what could happen one way or the other is like, I actually think you're going to see one of two things happen this year. You're going to see a small amount of companies. And 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 can do, like, who cares, like, you know, move on type thing. And that's the beauty where the chickens are all going to come out to roost for all of us at some point. But again, I just think there's so much in-your money up for grabs that I think by the end of the year, and hold me to this,

you're going to see one, two, three companies that will get, I mean, high hundreds of millions 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 to 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. You're saying the CIA's black budgets should be 100% of tax revenue. Yeah. Yeah. But no, no.

I like that. No, but like how does China approach all this stuff? Like I have no idea. And maybe. Maybe you don't either, but maybe of insight. Like, it seems like they wouldn't be like, yeah, we're going to just like air our dirty laundry out here and be like, well, we, you know, we're going to tell, yeah. Is that, 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, there's 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 have this thing called Sibbers, these small business innovation research grants that like are two, three, four million dollars 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. 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 cibber in our, in our DOD,

and in our federal government. And the reason I think that is like, in an 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 that's like net good for like entrepreneurs and people. But now you have this wonderful thing called, you know, venture capital ecosystem who's now said, hey, I'm actually really interested in the risk in this. And I believe in your vision and I want to back you. You actually get the right incentive alignment here where if we do our job right and I say collectively like me, Delian, you know, GC is quite the whole list of folks, then we're going to be funding the right things that, you know, 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's going to rise to the top of like, you're going to see, again, not 100 Andrels, I hate to say it, but you're going to see some pretty large companies that are solving real problems for the department offense. You mentioned space lasers randomly. Sorry, is that like, this ties into kind of a question that 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, because even if

you're building like, you know, autonomous submarine products. Well, then it's like, yeah, like you could build the amazing product. Maybe you would, you can't actually sell through. But the, on the tying off of the space lasers thing, like, because there's so much distribution risk, are we taking enough technical risk? Are we funding enough sort of like weird science fiction? Or is that better suited for skunk works in the government and or do we need to get weird? I actually think it's the right question. And, you know, I'm biased, obviously, and I see how we do things at light speed. I think about things in a spectrum of like, on one end of the spectrum, you have what I call, like, true signs and technology risk. Like, this is the like bits and atoms thing. Like, if a fusion

reaction doesn't take place, like, you don't have anything. Like, there's nothing there. On the other end of the spectrum, you have the kind of commercial products that we know exists. Like, we can get a car to drive. We can get a software system to kind of, you know, be a C, or whatever, you know, it's like, you know, you have no, you have arguably no tech risk on that end, but you have huge kind of product market fit, like customer going 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 spectrum, you're not going to have big enough outcomes if you're just making another CRM to, or a software tool to apply to the government. the sweet spot in my opinion is what I define as these like systems companies and again like you know andrew use andrel's an example here because everybody knows them but it's like you know there's a clear software kind of component to what they do they're going after end systems they're building really hard shit that's hard to do there's there's some physics kind of you know like barriers to kind of figure out but the beauty is each new system you add as a systems company only makes that flywheel on go to market that you've secured, you know, before, easier.

Like, again, when you're a multi-product company and like, you know, seronics getting there now, like other, you know, Castilian will get there eventually, you know, K2 in space will get there too. Like, once you've made one sale and made one customer really happy, you show up with the next four, 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 Andrew is like the, the acquisition

machine that they are with like APP and Grimm and Babick and the team there's like they're taking things that are cool pieces of technology and they're 10, 100 X in them and it's like nobody else can do that. That is such a unique kind of ability as one of these systems companies. So I think if you're a venture capitals 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, you know, some, you know, 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 is doing at light speed. Great, great insights. Do you think there's, our shows oriented around venture, but in order for some of these, you know, venture-back companies to actually do what they need to do. They need to partner with a bunch of small businesses to actually produce, you know, everything from individual parts and things like it. Do you think there's an opportunity for like basically SMBs to pop up to service some of these venture-back companies that want to focus on the technical risk and selling,

but then they have to produce a bunch of components as well, and they can't, you know, make 2,000 parts for a single, you know, missile, right? Yeah. I mean, uh, Let's be clear, and I'll actually be really blunt about this. I think how this entire ecosystem, both from an entrepreneur and a VC perspective, like defense tech, how this goes wrong is we actually cannot deliver on the systems that we are selling the government. I actually think the snowball of accepting new tech, while it's still small in the grand scheme of things of the budget, I do fundamentally believe that snowball has started to move. And so how we fail, to be clear, is that if we cannot produce at scale,

with efficiency in the scopes that we say they were going to do it. And, you know, for better, for worse, like, 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, you know, like, you know, from Southern California initially, you go out into the kind of desert there. And, you know, it's like one guy after one guy after one. He's built like a $7 million business doing this one thing over and over again.

Those guys are dying. We do not have an industrial base to serve this. So the question, and this is like the real big, like, you know, People push me all the time, like, how is this bubble going to pop? How is this going to fail? If companies, like those systems companies, can't find a way to vertically integrate themselves or they can't figure out a long-tail supply chain of how to produce not just a couple hundreds of these systems, but a thousand, then I think we're in real deep doo-do. And you've been in the situation where you've oversold and under-delivered, and you don't keep billing-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-tailed defense tax. I mean, I don't know. I mean, we'll find out very soon. Yeah, I was going to ask about that.

In terms of, you know, there's this meme of like, you know, maybe it's very risky to directly compete with Anderrol on a program that might, they might be launching like next month. Like they launch very quickly. But what is interesting to you? Where do you see the opportunities in hard tech? but non-competitive with Anderl. We talked to AJ at Hermius.

I don't think Anderle has plans to work on a Mach 5 autonomous plane or passenger airliner, Hadrian and even like a rainmaker. Like, you know, it's, it is like Anderil hard tech coded, but it's so far afield that it feels safe to work on. What would your advice be for the next generation of hard-tenhamers? Yeah. I mean, again, like I'll start with the same through line I said before. There's not going to be 100 anderals.

like Andril 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 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 Andrew 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, or. or, you know, roadrunners kind of that thing.

So I might as well just buy that because, you know, Andrell's 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, you know, Andrel might be in the ecosystem. There's still a really massive opportunity to be built.

I mean, Seronics a great example of that. Like, Serronic is like off to the races now and building a bunch of autonomous boats. And, like, it's going to be amazing to see what Dino does. But, like, you know, Andril's underwater. Anderil is building autonomous systems. 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 Anderil but also these companies start to build kind of stove pipes around what they're doing. And, you know, there's like, there's like really basic examples. Like, you know, we want to get to a world where we have SkyNet where these systems are kind of talking to each other and playing out. And if you don't allow your infrastructure, your software infrastructure to work with other things, then number one, like you're creating a really adversarial environment with Andrew and other big guys. So, in my opinion, like working with Andrew as opposed to working against Andrew is the answer here. Corey, what you got? This has all been great.

I don't think I have any I think that covered The one thing I was wondering how you're advising portfolio companies right now We're in a sort of defense tech bubble We've sort of aligned on that And it can be a good thing And so there's

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 behemists 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 a year and a half to get a contract and then you run out of money, like it just doesn't matter. So, like, how do you advise, you know, I'll actually take it one step further, which is like, if you believe you're 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 most things,

it's a bit nuanced. I mean, the advice that I give portfolio companies is there becomes a a terminal value or a value of your business that you only have one path to go. And again, this number has made me moving a little bit, but it's like the second you start to raise above 500 million, both early investors, you know, maybe early investors will get a good outcome. But near-term investors and you as a company, like, you're either going to be a public company or are you going to 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 like internal

like test of a founder of like do I have line of sight to that? Do I believe that will happen? And if the answer is yes, and again, like you're going to need the money, then I advise founders is like, let's take the swing. Like we're in this to build massive companies. I'm not in this to build the company, they get sold to Lockheed for parts, like, you know, whatever, maybe good outcome for a founder, but that's not what we all play for in this ecosystem. 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. We're going to win the contract. So let's do it. And so it's, I don't know, you put your pillow down, you know,

head on your pillow at night when you're a founder. And if you know, even all the risk and all the being punched in the stomach, that there's true line of sight to real production contract value, then raise the money. I think the time is right. Can you give me a little bit of a crash course on KPI's 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 defense tech company?

I mean, the geometry of defense tech, you know, company growth looks unlike anything else. It doesn't look like software. It doesn't look like consumer. What it looks like nine times out of ten, and there are some anomalies here, and I actually think there are going to be some anomalies during this continuing resolution. But nine times out of ten, you get this really small, like, cyber revenue. Like, I don't have a system yet. I got to develop the thing.

I got to go get someone to pay me for some small like $2, $3, $4, $5 million 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 know, you see this like middling. And then you see, again, this just stepwise change in improvement where, you know, people call it, people overuse the term, you know, 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, you know, children dollars. And then you got this massive kind of call it $200, $300, $400 million. 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 iteration perspective? But then the holy grail is like, and this is where you're really smart as an investor or you're really dumb, is you know, you make the you lead with the preemptive term

sheet, you make the investment actually right before that tick and right before that big production. Because the beauty is you win a 200, you win a $300 million production contract. Yeah, maybe it's over a couple years. But like, that's the base cash line of your business. And that's the like, 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 it's it's it's not a clean you know a net dollar retention is this uh you know you're you're doubling year over year tripling year over year um you just got to be nuanced and you got to know what the hell

uh you know program offices care about and and how they move that makes a lot of sense i've loved having you on it was great thank you so much it was really yeah guys any any you know when you're when you're you know next time you're putting 500 million dollars into a cool company join with the founder yeah we'd love to have you both on that'd be amazing uh yeah yeah guys. Well, I appreciate it. I love what you guys are doing. Huge fan. Thanks so much. All right. All right. Talk soon. Bye. Bye. And we got Chris Power coming out of the show next from Hadrian. He got a little mention in that, 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 ad quick. AdQuick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home

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and I think he got like 100,000 likes on X. I think Elon wound up retweeting it because it was a big milestone for the company they put up. Moon should be a state right in time 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's slacking off.

He's taking a break. He'll be back in a couple minutes, but good to have you. Welcome to the show. Thanks for having me. It's a pleasure to be at the Capitol, the Capitol. 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 weeks ago, the paparazzi caught you. Yeah, that was crazy. Yeah, that was crazy. I didn't realize that there were so many spies out there in Silicon Valley. But how was your trip to D.C.? It was incredible. Obviously, can't talk about most of it. Some of it's classified, very impactful, especially with the new administration coming in, wants to fix American manufacturing. And, you know, the vice president gave an incredibly rousing speech about reindustrialization at the

fundraising 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 all the defense tech founders but you know you've got to be careful these days yeah yeah you got to be careful uh maybe wear like a full beard and glasses next time full disguise i just i just got to go out and say i think you have the coolest office of anybody that's been on the show so far it's a fantastic office what of 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. Very green.

That's great. Just like the ramp logo. Everything's going on. Fantastic. That's great to hear it. 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? Yes.

So, Chris Carrion builds autonomous factories. So, you know, we deindustrialize 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 U.S. by building highly automated factories that are, you know, as efficient as China with a lot more software robotics and a new manufacturing

workforce. I see that the lights are on in that factory. We're trying to get to lights out factories. Is that the goal? Is that just Chinese propaganda when I hear them talking about? No, we're we're lights out today. We run 24-7. Oh, you do. A handful of really smart people running the fleet. The lights are on now because we're all here. Yeah, we're 24-7, seven-day-a-week operation. Wow, that's awesome. Can the robots save us, right? It's a very scary time right now. We're China's producing a lot of robots that have, can be used. used for a lot of things, you know, flying, you know, maybe over your kid's birthday party to get fun footage or they can, you know, be...

Comic-Case. In kamikaze ways. But it feels like automation and advanced robotics-led manufacturing is the only way that, like, you said it yourself, maybe the only way that we really re-industrialize. We just don't have this sort of skilled labor force. But you're betting the company on that. 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% of our workforce of people have never set foot inside a factory before. They're just 10 times more productive because we're getting them superpowers with software 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 you're, son or daughter who was learning to drive, they had 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, can do Ghibli, studio Ghibli animation. So like anybody should be able to make like, you know, the most, you know, advanced aerospace, you know, parts, et cetera. That's exactly right. That's exactly right. Yeah. Is, is, do you think we can get to the, like, what was impactful yesterday is that over the past, maybe a couple years, if you were really, really good at prompt engineering, you could, you could kind of create some outputs like we were seeing yesterday, but the average person would go into these models and they wouldn't have any success, right? They tried a couple times and be like, this is slop.

Are we still at the point today on the sort of manufacturing side and what you're doing where it's like you need to be like actually like very, very good, but you're sort of aiming to get to that point where somebody can come in and just sort of like make make a part and one shot it? I think 80% of our processes were at that point where we're in Ghibli mode, one shot. There's some really deep digital manufacturing stuff that you still need an expert to do. So we're in the like software engineer is 10 times more productive land versus anyone can code. But I would say 80% of our factory is like anyone can code today.

Are there a, the specific programming language is like CAM programming, right? Isn't that it? Yeah. 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 ITAR, there is no training data on the internet. Yep. 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 the label data set because we're creating it daily in the factory. There is no stack overflow for manufacturing data. So none of the off-the-shelf models actually have ever been trained on any of this. Interesting.

I imagine that every hard tech, defense tech, frontier tech founder eventually has to come through and kiss the ring at your factory. Just because it's like, hey, they're basically like, hey, we're going to make prototypes and then we're going to go sell contracts. And then we're going to eventually need to deliver on those. And like, somebody's got to make the parts. how many companies right now do you have that are like they're going out there promising these big things and then at the end of the day they're going to come back to you and be like okay now we need to make this because i imagine you you you work with some of like some of these sort of more established companies but then i'm sure like i'm sure there's like a hundred plus you know pretty exciting companies

that are basically like in almost like in your pipeline where they're like we're going to work with you we just need to like prove that we can someone's got to make the parts for the f47 yeah and And, you know, someone's going to make the whole products as well. So, you know, I would say that for a large established customers, like, you know, we're making a lot of stuff for them. For a lot of the newer entrants 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 partnership's 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 U.S. is growing quite a lot, which we're very lucky. What do you think about the classic Harvard MBA who's like, I'm going to go buy this sort of S&B manufacturing shop that's, you know, putting up $5 million of EBIT 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 in sort of like understanding what they're doing and sort of upskilling it or

the machine shop roll-up idea? The machine shop roll-ups of the world. I think in general it's a terrible idea and the main reason is, is like you want to run a factory, you got to be leading the people and you've 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. Is it also one of those things where you want to, Chris actually, tried to do this like years and years ago. Yeah, but is it also... Before it was a trend.

No, I imagine there's been so many advancements and everything from robotics to AI that you would want to just think about the factory. Like, how would you build a factory today versus sort of buying this asset that's been operational for decades? Because we're having, um, Drewva on from deterrence 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 the 1940s.

It was working in World War II and we're still using it today. Keep using it. 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 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, you know, everything like in China.

So how do you think about sort of the supply chain for the autonomous factories that you guys are building and sort of, you know, figuring out. It's a very hard question that the country's got to answer. So the machinery market, so we invented in Air Force invented CNC machine. And we no longer make CNC machines in the US. And I think you saw this article about, you know, Haas, white labeling some China ones and selling to the Russians. But the main manufacturing markets where we buy from is China's number one.

We don't buy for them because they got spyware all over this stuff. 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 alpha-romo, and it's really fast, but it's going to, you're going to be in maintenance hell forever. And 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, from our allied partners and make sure it's in the US. But yeah, we no longer make the underlying machines in the country. Can you talk a little bit about the continuing resolution? You're not a company that's going directly for a program of record, but obviously your 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 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-bit 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. canceling your ramp credit card, you know, you can't put ads on ad quick anymore. You're in a really tough position. No aid sleep? Brutal. No, no. I mean, if you paid for it. Yeah.

Eight sleep's not leaving you. Yeah. For larger companies like Andrew, you know, they're working on 10 programs at once. So if a couple of them get delayed, it's not a huge issue. I think Delian's absolutely right about like if you're a startup and you're bidding on one and that revenue cycle blows out nine months, you're in real trouble. For platform companies like ours where we're growing with many customers and sure, some of them get delayed.

like it doesn't really affect us that much in a really good position where we can eat those long continuing resolution cycles because our core business is growing like 10 times you know 10x year on year um 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'd love to manufacture everything for everybody what it 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 i don't think it was quite true but is the future of hadrian it's like 30% of hard tech dollars just go straight to hadrian is like it's like

obviously like if you're just if your job is to produce products like and you need a factory to do that like a huge part of the cog should be the factory and then yeah i i think the most successful companies that are continuing to raise huge growth rounds are building faster and better with Adrian. 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 believe that we will quickly becoming the index at the market.

And, you know, everyone needs a gigafactory, right? That's right. What's going on? What's your thoughts on Europe broadly? You've covered the automotive market quite a lot on the show. Just, you know, Germany's kind of thrown in the towel, some manufacturing, you know, sending their manufacturers, you know, it was even Porsche's setting up U.S. manufacturing. I think it's a bit of a shame. Do they, is there a world in which Hadrian, you know, helps kind of revitalize some of these, you know, the German industrial economy just because maybe they, they, they have this great industrial base, but then I haven't maybe focused as much on, 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, you know, the Middle East and countries like Japan reindustrialize as well. And they often have the same kind of core skilled labor problem. We've got so much to work to do here, fixing the Navy, fixing munitions production, helping our customers scale. 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 are, you know, set their energy policy based off the. poor advice of a 14-year-old Swedish girl and gave all leverage to Russian oil and gas. And then you've got you kind of rich of the lion hearts. You know, it's like we need to re-industrialize Europe. Let's go make our own fighter jets and drones and naval fleets. So, you know, it's good that the English are waking up, in my opinion. We need everyone in the fight. Fantastic.

Well, that's a great place to wrap up. Thanks so much for coming on the show. It took way too long to get you on the show. I know. I know. We messed up. But this is the perfect day. You're busy.

It's a perfect day. I'm happy to be of the capital of capital. any time and God bless the United States of America and you know the financial system of the U.S. economy. Thank you gentlemen. It's just fantastic. Thanks for coming on. Great to see you. Bye. Early supporter. Yeah. And I'll always remember that. Yeah. He's always welcome. 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 dot com then do we need to do some timeline or do we have a guest we have a guest in the temple of technology welcome to the stream how 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. What's new? Can you introduce yourself? What do you

do? Where are you, et cetera? Sure. Aaron Sloat, CEO of Atomic Industries. And we're teaching AI how to do mass production here. We're in Detroit. it. Let me Can I turn my camera around? Yeah, you should. You can do anything on the phone. Yeah, there we go. Oh, there we go. All right. So, yeah, this is the Chetto. This is 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 slowed off. From the front lines.

Why not? For anybody out there who gets motion sickness. Yeah. Maybe go audio only right now. Behind me. We need to get your 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.

Reindustrialized, right? Cool. So wait, you're doing the meme. I am doing the meme. I am doing the meme. You created the meme. This is a very, very large mill and drill machine that we use for mold making. It's not super apparent here, but like this is going to be a mold for a drone ultimately.

And that thing is basically like blasting holes in the side of it to drill in water channels and things like that to cool off the mold while it's running. Super interesting. And so you were talking to me 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. Sure. And so like part of mass production is being able to make a mold for something, you know,

as fast as you can and doing it really well. And obviously this is like the domain of, trades people. It takes hundreds or thousands of hours to actually engineer one of these things. And 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, 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, you know, got some parts here. You can check this out. Wow. I have no idea what those are, but they look cool. Yeah, yeah. Have you ever done any, like, microphones, mic stands, like 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 like 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. 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 close the loop on the prediction ability, right?

So the idea here is that with the solvers and kind of like the models that we build on top of this, you have a factory that generates all its awesome data. Ultimately, what you're trying to do just like predict the physics of a mold and the design of it as fast as you can. So in terms of like LLMs and how they play a part in this stuff, it's, it'll become more apparent over time, I think, but you know, on the physics-based side, very little.

Yeah, of course. And then like in terms of like coordination and, I think like execution of said designs and kind of like factory operations, it's huge. 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 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 and everything. And it's like, there are other algorithms in fact that might be useful.

And that's okay. You don't need to be embarrassed. Yeah. I imagine when you guys are, you know, in the customer development process, like you're oftentimes, there we go. That's the poop. It's a machine poop. I imagine you're competing with with kind of companies in China for on some of these parts.

Like a lot of like, you know, when you hear about like the Chinese manufacturing culture, it's like respond really quickly to emails, like get pricing over, you know, be clear. This is Chinese New Year. It's, yeah, don't even think about doing anything around then. But, but like is that something like, do you respect their game when it comes to just like being like really fast, really clear, like, focusing on cost reduction scale, et cetera. Like, do you think we can learn from them? 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 going to do whatever you can to do that. Right. And so like a lot of American like high mix manufacturing is let me just take a look at this job and see if I'm going to make enough money off of it before I actually even like. talk to you. 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 this 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. 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 Hot Female 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 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 skill that we have left and transferred into a machine and make people, you know, a hundred times more productive than they've ever been able to be. So I think like this is a really hard problem because you're trying to teach a machine how to do some kind of like, yeah, crazy physics-based deterministic thing. But ultimately, if you have, if you have like, whoops, if you have crazy

skill mastery over. Yeah, now. This is an experiment. It looks fine. There we go. Amazing. Yeah. It's basically, it's like, it's all about, like, the mastery of skill that you have and how you transfer it around. So in my, in my opinion, it's like, I think the fastest way to do that is by trying to teach a computer how to do it. And then, you know, obviously, like, think about how long it takes to train people to do this stuff. It's like a decade. Like, do we have a decade to sit around and wait right now? No. I mean, we obviously.

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 there? 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, basically, I mean, that's kind of how I feel, honestly. But ultimately, I don't know, I used to work at Waymo like 15 years ago. crazy. And I've seen that company, you know, like grow over time, but it's, uh, yeah, I mean, it's a great product. It's a great product. And I, you know, I went to San Francisco, like a little tourist attraction to try to get in one finally and ride it after, you know, 15 years of not making it. But, um, oh my goodness. Yeah. This is. No, no, you're sideways again. Can you talk a little bit

about just the on-ramp from our current education system, Gen Z, Gen Alpha's 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? 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? Like, if you turn factories like this into a sci-fi future, like, who's to say you can't pay somebody that works in here the same as they get as like an L5 at Google or something, right? Like, if you're productive enough, I mean, kind of speaks for itself. And like, beyond that, I think also, you know, training-wise, exposing people to this kind of stuff is ultra-important. Being able to do factory tours, right? Like our buddy Zane, we need to like have factory tours going on all the time. But there's there's a transformation happening, right?

From going from like the 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 incentive is kind of like the main thrust for this. And then yeah, there's memes. but also I think a lot of like preeminent industrialists today could be beating that drum a lot more. And, you know, there's super exciting companies to go work for. It's, yeah, 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 too. so you can see that handsome face. I had to walk around, right? We're going to get you a selfie stick straight from Shenzhen. The Timu selfie stick. The Timu selfie stick is in the mail. I expected in six weeks, but we paid $1 for it.

Last question. Is there a world in the future where you got humanoid robots walking around that factory floor? Or are they unnecessary with the other forms of automation that you have going on? Yeah, I mean, I would love to. I think they could probably be pretty useful for, you know, little stuff that requires less precision and dexterity. 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 like a machine gun.

So, um, there we go. I like the sound of that. Yeah, it actually sounds pretty good. Give the robots guns. Yeah, give the robots. Yeah, security. A Detroit first, baby. Let's go.

For sure. Aaron, it's been fantastic having you on. Looking forward to the next one. Keep pounding the table. It's working, I think. Yeah, good luck. Thank you, guys. I'll talk to you soon.

Bye. That was great. And 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 Drew is texting me right now. Robots needs guns. Well, you know what else? You know what else? 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 fully break it down. I got some breaking news. My mom is watching and she sent me a foghorn sound effect and said, ran across this and thought of Jordi.

No way. Yeah. And so I'll have to send it over to you. You can add it to the soundboard. That's great. So I think a lot of people are into the soundboard. And let's bring on, Drewva. How are you doing?

What's going on? Great to see you. Look at that. That's a great. Oh, 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. So Aaron's doing the meme. You're doing the meme. Pretty much everybody today is doing the reindustrialized meme. I love it. Thank you for what you do. Yeah, it's half defense day, half reindustrialized day. Eventually we'll split these out, but much like Intel.

It's important. And what Drewa can talk about is how industrial capacity historically has been a deterrent. Yep. it's no longer a deterrent. But before we get into that, or maybe like the U.S. doesn't have like the actual capacity to be an industrial deterrent anymore. But before we get into that, Drouva, I know you very well, but introduce yourself for the show. Yep.

Yeah, absolutely. Well, first off, I'm really appreciated to be here. It's been my dream since I was in high school to be on the Technology Brothers podcast. But yeah, deterrence, just to kind of keep it simple, we're making generalized robots that make energetics, which is a fancy way to say that we're making robots that make explosives. The mission of the company is to close the munitions gap with, we call them, the near-peer and peer adversaries that the U.S. has around the world. We started the company about a year ago.

As Jordy mentioned, he was heavily involved in that kind of founding journey. Started a company with a couple other guys. Brian, who was my co-founder at a prior company who 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 built. kind of factories around the world. And yeah, 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 DIB like what they thought. And, you know, we found a lot of technology there that was from like 1930s and 40s. So the last time America had to do a big buildup. No, you know, and not a lot has changed, frankly, including like the people. A lot of them who, a lot of the people who work in these factories are multi-generational. So, you know, their grandparents are maybe the ones who started working on the machine and they're still there. So, yeah, we felt like, talk about, talk about the dynamic even in some of these legacy factories that are producing munitions that are sort of critical to U.S. national security. You, we've like maybe called or facetimed at different points when you're like walking out of a building because you're like if a single match went off in that place, like everybody would be toast.

like these sort of and kind of leading off of that maybe like you know how how far behind some of these facilities are and then like what are some of like this broader safety issues because that was a big kind of part of the 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 it's called 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 you know it's it's a like like 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 face-timed 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 new. 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 those stuff we do because you walk into the wrong room.

You will 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, in some ways you have to like respect to the art a little bit. But yeah, there's definitely improvement. Yeah, I like that with your company, like it's so easy in defense tech or anything just to be like, we're going to be Anderil 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 people forget that like before Anderle was Andrew, they were like the censor tower company. And they were working. They had a small beachhead. And then they grew from there. and that's how these things start. What have been the pros and cons of 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, you know, we're sort of like the Shopify right. So a lot of what we're doing is we're actually partnering with companies. We're building these end weapon systems and munition systems. And so when you look across the entire, you know, spend across the category, if you will,

I think the Army spends about $30 billion on munitions, the Air Force is like 100. When you go globally, that number is obviously much bigger. And so we're sort of like in some cases, like 20, 30 percent of that spend is basically energetic kind of stuff. So that's how we sort of tell like the market story. But I think from like a product story when you're trying to hire talent, especially on the engineering side, what gets folks excited is we're sort of intersecting two kind of interesting discipline, 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 I just like a lot of this chemistry is like super old. And so people don't really understand how it works. And that's part of why you'll see like people really resistant to change in this market. They're like literally if you make one tweak here, you might just blow your eyebrows off. 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, we're able to like maybe work on some like pretty hard for problems that we'll 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 decades here.

talk about the continuing resolution which has been kind of an ongoing topic and then what's what's what's uh what's been your strategy as a CEO of deterrence and kind of navigating that it's definitely been an interesting time to be in DC um I think this may be the obvious thing that's been said all day uh well you've been living you live you live you like live in the DC area and you've been there for years so it's it's it's uh you've kind of lived it which is different than most people that are just kind of popping in for a week at a time or whatever. Yeah, no, totally. And I also have encouraged some founders lately, like, especially if they're small,

not like, 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 that I think across bump into someone we had met before and, like, get a completely different perspective on it. Yeah, look, I mean, like, I think every defense tech company has, you know, roughly three, four layers of stuff they think about, right? So they think about, you know, how do I message to my

direct customers like the program office? How do I message to the building, which is the fancy word we use for the Pentagon? And how do we mention work on the hill? I think what's unique in the last two to three months is like all three of those things seem to be moving. And you've got this added component that the administration is 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'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 to spend on manufacturing. and I have no ideas, and believe me, you can give them new ideas. 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 going to be better than a founder telling their story. And then the last thing I'd say is like, you know, the administration's only been around for what, 40, 50, 60 days or something like that. 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. you know long way of 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 going to ask for like can you zoom out and just give me like the really basic like explain like i'm five on energetics primers explosives you said the army's spending something

like 30 billion my conception of what's going on abroad is like a hand grenade on a djai drone but like like how does your product actually get into a you know like a weapon system and yeah yeah exactly like i i'm thinking at the level of like i'm seeing cartoon tn t right now but i want to go deeper not far from the truth all that all that time i spent on cartoon network as a kid is finally playing off yeah just avoid all the things with big red boxes on them or whatever yeah exactly so i mean energetic materials broadly they're basically just a material that has like a high amount of sort of stored energy. And then when you apply something, you know, if you apply another sort of catalyst to it, it expends more energy.

Yep. So that means like, so if you think of explosives, like fireworks, pirate tech 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 we're inside the bullet. That's right. So standard bullet is four parts, right? So you've got the brass, which is what falls to your feet when you shoot it. Yep. Projectile. The little powder in there, too.

So again, growing up on Carty Network, I assume that, like, the gunpowder was the part that went boom or whatever. It's, like, not actually true. It's actually the primer. So the primer is in the back of the bullet. When the hammer hits it, it kind of pops. Like, if you took the primer out and threw it at the ground, it's a bit like a like a carry 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? Yeah. Way it's made today and a lot of energetics, like the broad sort of steps that a lot of energetics are made is you start with mixing some chemicals, right? So we take a bunch of chemical precursors and mix them together. In primers, those kind of come together, and they almost turn into like a doughy ball, if you will. That doughy balls then pass to someone who is at like kind of like an application station. These stations are typically in like clean rooms. So think like wedded, in like on Stitt, right, it's like wedded floor, rubber boots, rubber gloves, all this kind of stuff.

So you've got someone who's standing there all day and they're sort of rubbing up and down on these primers like that clay ball basically. It's somewhere between it's a bit like Parmesan cheese on cheese. The audience if you want to. That's helpful. Yeah. And then from there, there's like a there's a pressing process that happens so you know my head my cuff under henry likes to say it's like a lot of what we're doing is rubbing and smushing yeah 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 to have the right like performance characteristic you'd be surprised you can do with like computer vision here where before it was like a human like looking at it It makes sense. There's so much automation. And now, you know, deterrence is basically able to leverage. Yep, yep, yep.

And the thing that, you know, when Drewva, you know, first kind of like pitched me this sort of the high level vision for deterrence, and we started talking about it, what I thought was appealing is it felt like every defense tech company was going after these super sort of like sexy like, oh, we're going to, you know, this sort of F-47, 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, well look like, yeah, yeah, more so like are we even doing the basics? Yeah, sure, sure, sure. Like if you walk around these facilities and 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, you know, keep our warfighters. 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. You look at the 155 shell, like just some of the sub components we've looked at. I mean, they're like the contract size for like the glue is like in the hundreds of millions, right? Not the thing. The glue, wow. That's incredible.

Well, we got to go shooting. Are there some good ranges out in D.C.? We got to go out there and have a show. The ranges in D.C. are funny because you look around and you're like, oh, you're really good. I wonder what you do for your day. Oh, yeah. For sure, for sure. Well, maybe we can live stream it.

Either way, we'll definitely have you back soon. Congratulations on all the progress. Our DC correspondent. Yeah. And we'll talk to you soon. Look forward to the next one. Thanks. Take care.

See, yeah. Cool. I wanted to ask about the history. We can do it another time. It's 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 outproduce you. And it's sort of flipped around. And now China's in a sort of similar position.

But we got, K. I'm 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 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 test. So we're all about helping people test.

invalidate their hardware products faster. So I was just listening to you guys talking. Like we were very much a, like the unsexy, very, very important, you know, very specific thing, which is 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. Sure. Yeah. So we are. We just had our three-year-old. Yeah. Our third birthday is a company. We're about 55 people.

Cool. And yeah, I mean, our kind of like the origin story lot was like we have, you know, folks who, my former employer, Anderl, right? Like we had folks that come from Anderl from SpaceX from applied intuition, companies like this that have seen, you know, everyone building this amazing, you know, amazing tech. So often the problem is actually the software that's just facilitating how people are organizing that data, you know, doing this. So yeah. Yeah. And the recent fundraise? Did you break that? 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 me quickly. So, yeah. Wow. So, yeah, I mean, what's the next milestone? Is the program of record framework, SBIR, then program of record? That's kind of like the meme pathway and defense tech. Does that apply here? Or do you have a different customer? 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 when maybe you haven't heard of, but test resource management center, right? So it's a OSD, uh, officer secretary defense program, but they govern all of the like test infrastructure for for the U.S. So, um, if you're, you know, if you're a hermious, right, like you have to be working very closely with TRMC, um, 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, you know, they say, hey, everyone should should be using nominal. Like, this is the better way to sort of test and collaborate due data. So for us, that's, that's the end goal. Yeah. How hard is, uh, hardware? It seems like, it seems like your, your job is to make building hardware, like, quite a bit easier if you can test efficiently. But like, I think people don't understand, like, you know, they see a company raise hundreds of millions of dollars and it doesn't work or, you know, they struggle and it's like, you had so much money, you had such a great team, but it's like, I feel like the average person doesn't appreciate just how hard it is to

build a single, like, just the engine of a rocket or a missile or whatever. Yeah, so. Yeah, it's so true. And I think like we, you know, a lot of the value that we try to, like, provide for customers is, you know, it's like you're doing so much if you're a hardware company. Like you have to, you know, you're doing all the production, manufacturing, you know, iteration. And often these teams, like, they will hire software engineers and they have the daily decision of like, do I send those precious, very valuable software engineers to build the software that is like value additive to my software defined hardware product? If I'm, you know, if you're at deterrence, you're like, I want my software engineers building the like robotic, you know, systems to do energetics. I don't necessarily want them building, you know, data analysis and management and kind of like visualization infrastructure because it's already hard enough. So our big bet, like the bet we are making is there's just massive reindustrialization movement.

We are solving as a nation incrementally the different bottlenecks, whether it's rare earth, you know, materials, it's the supply chain, it's the production manufacturing, it's people actually building these systems. And so this rising tide, like where that condenses often is this very specific vertical slice of it, which is like I need to use software to test all those things before I field them and deploy them. making this big bad, like all that, those trends are going to really condense on like the area that nominal is trying to build in. Can talk about your experience using maybe alternatives to nominal or just building that basically the product, you know, internally back at Anderol?

Like I think a lot of you probably have the benefit where like your competitor's phenomenal now are like 40 years old. Yeah. Yeah. like, you know, super, super clunky. Like, maybe don't even run on Mac OS. Yeah, it's so true. Like, we think about, you know, the actual, the sort of competitor's phenomenon, like national instruments is the massive one,

like Emerson, Siemens, like those types of technology. So they did this massive industrial software land grab, you know, 40 years ago. And they've not been innovated against since. So they've, like, in this world, like they established best and sweet. And so there's huge network effects of like, all of the different pieces of software you want for testing and, you know, validating a hardware thing. Like, it's very annoying as an organization if you have to build the connectors between those.

And I, you know, grab 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 Andril 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 data dogs, Splunk, or Fauna, you know. know, different pieces of technology like that. So what's been happening in the industry is people have been, you know, trying to basically use those to get rid of the old, you know,

N.I 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 data bricks or something on the back end, pieces of technology that are good, but they're not for this like industrial operations. world. And then at our, the bigger, you know, the big five type, type customers, like, it is a lot of that really, really old software that we're displacing. Do you even care to go after, like, the actual primes right now? Are you just happy to, happy to just, you know, that you have hundreds

of newly funded startups that are probably, like, desperately need your product and, like, probably, like, much faster to close? Yep. No, exactly. I think we're in this, like, exciting, we're basically in this inflection moment where we've been, you know, building and validating the product. And exciting, we asked the second product. Like, I think to win big in this space, like you have to build multiple products across this sort of stack. So we've been doing that with this, these like startups and scale ups. But now we're moving into these, yeah, larger, larger customers now that it works well.

And you kind of add, you know, add zeros to the contracts if they go well. Yeah, yeah. I can imagine if Boeing is signing up for something that, the, what they'd be willing to pay for the software is like a pretty big number. So no, it's, I mean, on that, like, I think, yeah, like a lot of the early conversations around like, hey, you'd be building this with an internal team and, and paying, you know, you know, engineering headcount to allocate against that. 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 $100 million, $200 million, $500 million, like program, I'm very willing, if nominal can 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. Can you talk a little bit about dual use? I mean, are we going to see like Ford Motor Company making cars with this? Like how niche are you and how does it 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. So we're focused a lot on the A&D market, but on the B-to-B side and the direct-to-fed, you know, 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, you know, companies. Oh, cool. Building microreactors, like, you live on fusion 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 they talk to today, like either needs this or their customers need it. So 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, hiring across the whole company. Like for us, it's like, you know, folks that, folks that understand software, but have done, done hardware is like the sweet spot for us. So a lot of those customer success is like the old type, well, but we call it mission operations. But yeah, people that are, people that want to go, you know, to one of these hardware companies and help, like, deploy the nominal software suite. Like that is, it's a very special skill set.

But if that's you, if you worked at a hardware company and we're the software person there, you know who you are yeah do you guys think you benefited from palanteer 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, our 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 on 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. 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 you know steep in the supply chain it's different the difference between like buying a DJI drone and buying a GoPro that was manufactured in China like people have different aesthetics around that but we how are you thinking about that we're super bullish on international expansion I think it's the thing that we um we did for the first time like so we have international customer um it's going very well and so um a European customer and so I think we're excited to double down on that and kind of the two like one of the

reasons is, you know, this going there and then like deploying the nominal software suite and sort of seeing like these folks are generally speaking, like pretty enamored with the Androl, the SpaceX way, the Palantir way of doing stuff. And so I actually think like there's just isn't even like kind of like kind of like 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. That makes sense. We're on the aerospace thing, like a lot of interesting 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, yeah, yeah. We've never asked anyone about this on the show. But I'm curious since you're just starting to go through this process. So a lot of the potential of some of these new AI tools is around like translation. and real-time translation,

and there's kind of a crazy scenario now where, like, you guys could sell to your product to a Spanish-speaking country, and then you could have one of your engineers, like, you know, real-time. Is that at all? Oh, like forward-deployed engineers who don't speak the native language,

but it doesn't matter anymore. A lot of engineers end up speaking English, but, like, is that even a part of the calculus? Like, do you think people could go? Most engineers don't even speak English, only code. Yeah, yeah, yeah, yeah, yeah, yeah, exactly, yeah. No, I love the question I've never been asked before. But I think it's like this,

this initial international customer was like a predominantly conducted business in English, but I think it's like totally enables that. Yeah, I think it like absolutely does make that easier because there is 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 stream three hours a day. We're always trying to. We're looking for the product. So we'll be the first customer.

We'll be your design partner on it. And you can bring a forward deployed engineer into the studio here. Yeah, they'll just like, they'll sit under the table. Sit right here. Yeah, under the table. With all the wires. Yeah, there's so many wires. It's great having you on.

I have no doubt that, yeah, next time you raise, come on the show, break it down or any other reason. It's great to have you. Yeah, great to have you. Thanks so much. Cheers. We'll talk to you soon. Do you want to rip through some timeline? Get out of here in a couple minutes.

Give the fans what they want. I mean, most of the timeline today is just endless Ghibli back. and forth, which we kind of already covered. I wanted, let's do the David Perel one. Yeah, because we're going to have him on the show next week. He says, the Ghibli style memes are the beginning of something bigger. The age of minimalism is over. No longer is the internet stuck in the soulless valley of right angles and flat white backgrounds.

Everything from anime to Art Deco is now just a clever prompt away. A new kind of maximalism is here and it's here to stay, which is why I post slop my timeline. live maximum slop yeah it's great no I think it's I think it's totally cool I like this take because there was a lot of there were a lot of takes that were just like pure bull

it's amazing I can't get enough ghiblies they're amazing I'm just posted in 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 that's just like it's almost normative, not positive.

It's just saying, hey, there's a change. And the internet's about to look different. I mean, there's so... Maybe that's good, maybe that's bad, but it's going to look different. There's so many... I feel like throughout my career, I've been lucky to be friends with a bunch of great designers. So when I have a funny idea, I can just sort of be like, hey, like, this would be funny if, like, you know, you made this picture look like that.

Totally, totally. This 3D asset. I use... 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 like kind of giblified, but also making commentary on, he has this one that's like the big Greek horse chat.

and it's like Troy, I don't know, let me just show that, but, but basically, you know, it's like, 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, it's just very interesting to see that, like, it's now left the just, hey, take an iconic image

and give it the filter. And he's already using it to express a different commentary. So much of creativity is just taking an idea from one place and applying it somewhere else. Mixing two ideas together, changing things around. And so AI just allows you to do that so efficiently. Yeah. Well, honestly, there aren't that many other news stories here.

Arc AGI2 dropped if you've been following the AI benchmark. Why are you laughing? I just saw this picture of Jar Jarjabings. Oh, the Jarjour Banks one is fantastic. This is all time. We've got to zoom out a little bit. Yeah, you got to zoom out. Because it's a Northrop Grumman.

You want to read it? Are you going to do the voice? Mesa is detecting threats like never before. Learn how recent combat ID enhancements are evolving mission. So Northrop Grumman has a program called M-E-S-A, M-E-S-A, M-A. And, of course, that sounds like the way Jar Jar J-Jar-Banks starts every sentence in the early Star Wars movies. And so they just put Jar J-Jar-R-Binks's face with the little caption and it's making it sound like Charger Banks is talking about Northrop Grumman's program.

Man, not a native posting group, the Northrop guys. It's a very different vibe at Northrop from Anderall. This is like candidate for posts of the week. This might be. This is such a good post. I would put that in Bangor Archive. You really should. It's great.

The chat wants us to cover the Fannie Mae IPO that Wall Street Journal is reporting on. At this point, we should probably cover it tomorrow. Yeah, that makes sense. Thank you for the suggestions. 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. Totally. To just have a conversation that flows from one to the next, a bunch of different people. Maybe we can layer in a debate at some point. I want to do an AI day. I want to do more of these defense days, maybe a crypto day even, anything. Yep.

Be very interesting. Anyway, thanks for watching. Thank you. 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 Dorcasht Patel coming on.

Coming tomorrow. And I think I'm going to send out emails to a bunch of other striped press authors now and try and get stacked with the author day. 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 the whole, all every guess with the tinfoil hat on, but don't comment on it. Don't comment on it. Thank you, everyone for watching. Have a great rest of your Thursday. We will see you tomorrow.

Goodbye.