Jenson Vliss - CoFounder at Ibiss Industries

Welcome to another Founder Wisdom podcast. We have Jensen Vliss with us. Jensen is a COO and co-founder at Ibis Industries, interesting company that serve mostly, I would say, the defense sector, right? And Jensen's definitely going to do a better job at explaining it, but it's precision assemblies delivered smarter. So Jensen, welcome to the podcast.

Thank you.

Tell us a bit more about yourself and what you're up to.

Yeah, thanks, Charles. Appreciate it. IBIS was founded last March, so we're about a year and a half old, by myself and my co-founder Sam Lynch. He stems from background in military weapons building, testing, SpaceX, Anduril, all that cool type of aerospace rocket engines defense stuff from a manufacturing perspective. So leading teams, my whole background is like more operations, sales, project management, and Formula 1 and manufacturing and kind of high-end performance. So my background stems primarily in Europe as well. I'm from Southern California, moved to Germany and Austria, worked there for about a decade, moved back home, met Sam, and then we formed IBIS. There's tons of needs. So what we do primarily is help other companies build what it is that they need built, right? So whether it's a 2-man show trying to get their first prototype together and tested, we're there for them, right? Whether it's a company like SpaceX or whoever, right, that's made 1,000 of something and they need help building, you know, 100 or 200, we're there for them as well. So that's called low-rate to like high-rate, high-throughput manufacturing, and we're there for all of it. So our company is set up to support everything from design for manufacturing, helping people understand how to design their products so it can be manufactured, right, all the way up to— Full-rate series production. I think our biggest contract right now is for like 16,000 of something over the next 5 months. So really diverse project band. We're at 20 people now, completely bootstrapped. So we founded it and seeded it ourselves, and we've seen some pretty great growth over the last 16 months, primarily defense, aerospace, robotics. all that new wave tech, hard technology. So you can say most of our companies live by the software-defined, hardware-enabled type products, like, you know, super sophisticated products that have to be built. There are— there is hardware involved that needs to be considered, whether it flies, drives, is submersive under the water, whatever, ground stations, satellites. hardware and building is definitely a part of all of this. So we're there to serve that community. A lot of manufacturing knowledge has been lost from the United States and North America and the West over the last 30 years. I'm not saying anything new right now. However, trying to bring it back, trying to support that process and doing our part there. So really excited. We get to meet and work with tons of cool people, tons of cool founders, tons of cool companies building great products. Really diverse staff. So we're working everything— products that go to space, that stay on the ground, everything in between. So really excited. We have some pretty interesting in-house technology as well, which enables us to deliver on all of this quicker and more efficiently than other companies might be able to. So everything— we try and automate as much as we can, whether it's anything from digital processes like quoting, cost calculations, things like this, all the way to actual line-side automation tools that either we buy in or we build internally. So we're definitely a fan of understanding how we can make everything more efficient through automation and taking that approach first, right, when approaching new challenges and problems. So yeah, that's a little bit about, uh, IBIS. IBIS is a bird, as you can see behind me. That's a very attractive bird beak. Big, big bird. And they're all over the world. The legend goes that in chaos, when chaos erupts, they're the last bird to leave and then the first bird to return to start building again. So that's kind of the messaging behind that, is we hang in there till the last punch and then we're the first to get back at it. So it's a little bit about us, a little bit about the company, customers we serve, what we're trying to solve for.

I love it, dude. Okay. Was the first thesis like Sam is basically a genius and he could get paid way more than his salary at Anduril? Was that like the basic and obviously a need, right? From all these new defense companies. I mean, you see like one YC Founder Week, right? Nowadays go found their own defense companies, but it feels like most of them are software nerds and they don't have experience building hard tech, hard technology. So what was the thesis there? Because you guys are not trying to be another Anduril. Maybe you are later on. Like, I'm trying to get the master plan here.

So basically, yeah, Sam's a manufacturing guru. So that's something that adds immense value to what we do is the ability to dissect a manufacturing problem and be able to implement a plan from start to finish. So that absolutely is crazy valuable to our company. A lot of companies right now that use— a lot of companies fail because they can't scale or manufacture, right, at scale. So if you look at a lot of the hype around newly funded companies, right, they'll get a quick check for like $5 million, $10 million, $20 million, $50 million, and then they want to land their first contracts where they have to actually start delivering on like some serious scale. A lot of people have trouble turning that on and actually achieving a production rate and efficiency that earns them money, right? So as soon as the founder dollars or the venture dollars run out, it's hard to kind of really kick that into a self-sustaining entity. So we're learning manufacturing first, right? From IBIS's perspective, you know, we're starting with manufacturing. So right now we're helping all of our customers build. In the future, we absolutely have desire to build our own products, right? As soon as we see our assembly line wanting to get a little bit diversified, right? You know, in peaks and troughs in contract manufacturing, that happens. Why not just fill the low points with our own capacity, right, for our own demand and our own product? So that's something probably a few years out, so 3 to 5 years out. But in the meantime, we're absolutely excited and motivated to continue to help our customers get what they need, right?

Yeah, you're selling picks to miners, right? That's the current model, and it's certainly a nice cash cow. Did you guys raise capital for this yet, or?

No, not yet.

No?

Interesting. Potentially, potentially in the future. Um, until now we've been very, uh, fortunate with the ability to, uh, let's say not need to raise external capital and still overachieve our growth ambitions month over month.

You're the sales guy, right? Like you have huge experience in sales. I guess that's the part you own, right? So that's your little moat here.

Little bit of a moat. And, um, we're definitely aware of it. We've been, like I said, very fortunate with everyone in the industry that's trusted us so far with contracts that are larger than what typically is awarded to companies, you know, at our age, but definitely blessed. And so long we keep executing on them, we anticipate the need to postpone fundraising as far out as possible.

So, right, because you're 2 years in and you're already at $10 million ARR, something like that?

So we're under 2 years, we're at like just under 1.5, right? And definitely, definitely close to what you're saying. So yeah, absolutely, absolutely.

Okay, now help me understand that part. I'm in Angerill, right? And I'm building a submarine. Why would I outsource that part to you? Like, first I need to make sure I'm owning it all. I don't want you to create like a competitor a couple years down the line. Uh, so I'm getting— let's start with that. How do you get that settled down so that they're not like paranoid that you'll fucking steal their shit?

So we're, we're not, um, we're— we don't have design engineers in-house, right? So we're not, we're not designing, we're not, we're not building our own products. And, uh, that, that's not what we're after, right? We focus in building products for others. That's a completely different ballgame. And to answer your question, if companies do a great job and grow as fast as they can and as fast as they all want to, they can't build everything in-house. It simply— it doesn't make sense. Their overhead is too expensive. Their floor space is limited. The people they do have that can build should be building the prototypes and the next prototype and the next prototype and testing all of that.

Yeah.

And then once it gets to a contract that's awarded for production, You don't want to, let's say, bog down your in-house staff with kind of making the 50th, the 150th, the 2,000th of something, right? So that's, that's what it is. And a lot of companies also save the final integration and the final testing for in-house needs, right? That's where a lot of the secret sauce is. So in your example with the submarine, there's a ton of subsystems on a submarine that need to be built. Those could be delivered to the end customer. They could have their magic as far as putting it all together, commissioning, and then getting that submarine actually in the field and usable. That is where it becomes very complicated to replicate just by building individual subsystems, as an example.

Okay, so help me again repeat that part. Is it like, would I outsource the prototype to you, and would I outsource some parts of the prototype, or full?

So it really comes down to the size of your company, right? So very early companies, typically they try to do as much as they can in-house with the people they have for unit number 1. However, usually there's not the internal resources or knowledge in a young and small team to be able to get all of it done. There's usually people that own certain aspects, and then you really have to outsource, you know, building, manufacturing whatsoever. So with small companies, You typically outsource that role. And as you scale and get larger, you start to be building, you know, maybe a bit more in-house. And then you get to a point where you have to build hundreds and then it goes, okay, cool. We're still gonna build some things in-house, typically the very end. So when we finally put it all together, put the bow on it, test it. However, all of the different frames. So if you think of like a car, right? You have the suspension, the chassis, the engine, all of that. all these different types of things. Those can be all built by different people, right? And then it needs to be brought together and assembled together, right? And that's really where the knowledge lies for the company, is the designs themselves and how everything works together at the end. That's where no individual partner like us would ever get a glimpse into all of that knowledge and data. The little— the glimpses that we get for specific parts or subsystems is totally sufficient for us to build, to deliver, and not have nearly enough information to replicate it, right?

Okay, so to come back to my autonomous submarine example, mini submarine, right? You would take the propeller, the rotor, right? And that's it. Like, I would just ask you to make it work and then send it to me so that it fits my spec for the full thing. Is that So there—

so, right. So in the very early days, if you're trying to figure it all out, you might have us do a little bit more than that, right? Understand how things all go together. But when you're at production and at full-rate production capability, you're right. If it's the propulsion system, right, that gets it spinning, there's definitely tons of mechanical components in there that need to be put together. We could deliver that as a subsystem to you. You have your rest of your submarine ready to go, and then you install it, commission it, test it, and then off it goes.

Got it. And let's take Andriel for an example. How do they manufacture at scale? What company do they outsource that to? I don't think they do it themselves. I don't think they have a Gigafactory, right?

Well, they're currently building one, actually. So they're investing millions in standing up facilities all over the country. The most publicized one is Arsenal One in Ohio. Vice President J.D. Vance had a large part in kind of getting that over the line, right? But that's amazing. And they want to build tons of their autonomous fighter jets there and everything. So, and if it's submarines, I think they are standing up companies in the South and definitely diversifying. But you have to think, There are— when you're talking about building thousands and thousands and thousands and thousands of things every year, every single part and component that goes into that can't be built within one wall. The amount of machinery, the amount of knowledge, the amount of components, inventory, you just can't manage that. You have to depend on partners downstream that can support all of these different needs. And typically what happens is what you do have in-house is the final assembly line. where you take a lot of these already pre-built systems and then put them together, test it, and get it off the line.

And talking a while about, uh, what IBIS has right now, do you have like a small manufacturing plant or is it more of a lab thing?

No, it's, it's definitely— it's got its, it's got its lab-ness, right, in respective sections. But, uh, we're actually 3xing our floor plan in about 2 months from now. We're getting into a much larger facility so we can even grow even further. But we have areas in the company that focus on development, right? Right now we've got an autonomous robot from a partner company of ours in our little development cell where we're working on a lot of the electrical engineering for them because what they built in, you know, 3 months, they realized that's not production ready. So they asked us to kind of get that a bit more professional for them. So we've got the lab area with that robot, we're working on it, we got our engineers on it. And then the rest of the company is definitely more production-looking and focused. The largest contract we have, I think I mentioned, is about 16,000 pieces of something. And this is where we have a dedicated assembly line where we have to hit hundreds of these completed parts a day. And you don't do that unless it's very step-by-step assembly production-oriented. So the cool part about what we do and what draws a lot of people to want to work with us is there is that variety. Right? Within 4 walls, you're able to go from that super low-rate, one-off development robot and then also explore all of the different challenges that come to that full-rate assembly production. And if you're not a manufacturing engineer or interested in it, it doesn't sound that interesting, but there are tons of people that are totally excited about these problems, myself included, where you're able to just get this diverse range and perspective on how to build all these different things for different needs, for different customers, right? So like customers that fly something to space is a completely different approach to building, data recording, cleanliness, tooling, everything than if it was like for like an agriculture autonomous robot tractor, which we've actually built in the past, where the company's like, I really don't care about anything being documented. I just want you to send me back something that'll roam around for 10 minutes and see how it goes. So These types of differences, challenges, cornering off, setting processes for everything, that's really exciting. That's what really motivates a lot of our staff and excites them to work for us.

And is there some scalability to this? Because yeah, it looks very exciting, sounds like chaos as well, especially to have like a young engineer touching on so many things. Obviously, I'm pretty sure you recruit superstars, but for example, would you take, I don't know, equity or rev share in some of your clients? Do you see that as a model to hyperscale?

So we've had discussions with clients about potentially— so colocation as an example. So to your point, we would be integrating into a facility that we are feeding directly into customer product lines. Right. And that could be definitely a rev share or some sort of model along those lines or an equity deal or something like this. We've had interest from customers to invest directly in us and just let us kind of continue to do what we want with like a minimum revenue true kind of fixed amount every year that they would kind of supplement us with. Um, the, the sky's the limit with this. However, at the moment, we haven't actually agreed to any sort of specific deal with anybody. We think we're a little bit too young for that, and, uh, the growth that we're experiencing is not needing any sort of, uh, agreements at this point. Uh, definitely 5 years from now, there's going to be much larger facilities, let's say all across the country, potentially Europe, where it is focusing on all of this regional manufacturing assembly support for all these different customers. There's people all over the world that need support in building, and if we're able to use knowledge share and best practices between our different facilities, it'll just make everyone much more competitive wherever we locate ourselves. So—

Yeah, I could also see For example, Angeril acquiring you guys or a client acquihiring you guys, is that in the grand scheme of things or do you want to scale this to the sky?

Potentially, right? I mean, I think a lot of people, the most, you know, a big way to go about it is, hey, let's go to the moon. Let's set ourselves up to be able to scale this thing as big as it can get. And that is actually quite attractive for people to invest in, right? So if along the way, a sensible deal makes sense that, you know, aligns with our interests, our mission, and everything is, you know, groovy, then why not entertain that? However, at the moment, definitely setting the scale to how fast and how big can we get this thing without thinking about acquiring or kind of selling or anything like that.

Right, right. Let's talk about geopolitics for a moment. So US historically has spent like, yeah, trillions in defense, but it's been funneled to like 3 companies, right? Or something like that.

Sure.

So not spent super efficiently. I'm feeling nowadays like there's so many ambitious defense startups, right? So I feel that budget is better spent. I don't think that budget has increased necessarily, which is a good thing necessarily for defense so that the hegemony can remain in place? Nowadays we have Ukraine-Russia, we have conflicts in Iran, Israel vs. like their neighbors, right? Like, where do you see US going at that rate on a— from a defense perspective? Do you feel that we're sort of still in danger or we're good?

Well, I think that most people, if you If you take the last, let's say, 3 years and kind of the progression and ramp up in those conflicts you just mentioned, and kind of just on a very kind of focused out lens, you turn on the news, what percentage of the nightly news is covering some sort of conflict? Has that increased in the last 3 years or do you— it's absolutely increased, right? So it goes, okay, it's trending up. So I, whatever that means, you know, whatever the big actors behind the scenes are deciding and all of that, it's definitely at an uptick. When that happens, defense spending increases naturally. You're depleting more of your munitions and your stock that needs to get replenished, right? And then you're also wanting to participate and— excuse me— to plan for what may come next. So there's a lot of, let's say, thinking and talks amongst people that China-Taiwan could be something in the future. Where's Iran getting all of their funding from? NATO, I think two days ago Germany released a report saying that they blamed Russia for potentially trying to bomb the Leipzig airport in Germany, and Russia responded. Russia is making threats against the UK. Our our CIA chief just went to Moscow for some reason. You know, so there's a lot of kind of dust being kicked around, and any time that happens. the defense industry is usually taking a more, um, uh, a strong— a stronger position on, okay, we gotta prepare to be able to, you know, deliver more in case it's asked. And you see that. And to your question or your point regarding traditionally, has the defense budget been funneled down to a very key, uh, amount of companies, the answer to that is yes. And if you look over the last 2, 3 years with, uh, how the, the military and the defense budget and all of the new procedures coming into place regarding how they actually spend their money, it's been very much opened up, right? So there's a lot more ability and focus and engagement from smaller companies, up-and-coming technology companies, awards being provided and contracts being provided on more kind of looser terms, less barriers to entry, so to say. That was the typical moat for a lot of the big prime contractors is that they just figured out how to navigate the process the best, right? And they locked themselves into these defense programs and it effectively became— they became the only ones that could even qualify, right, if you go through all of the lists. So they're really loosening everything. More participants are coming in and you see a lot of venture capital funding going into these companies because they see that as well. There's a lot of opportunity coming up. So you factor that in. plus the diminishing ability of the US to produce things domestically. And then you get this kind of boom that I think we're entering into right now in domestic defense manufacturing, right?

Mm-hmm.

Which I think a lot of people are participating in right now and are very bullish in over the next 5 years. So assuming that tracks and that works out, IBIS is there to support wherever we're needed. And also outside of defense, there's a lot of very cool robotics companies that are up and coming, whether it's humanoid robotics or stationary robotics that can perform tasks. We're here to just help and just participate and build as much different types of things as possible. That's the goal.

Yeah, and I feel California, there's definitely been an uptick in defense founders, right? Seems like Palmer Luckey made it socially acceptable to launch defense companies and just others are following suit. We're not seeing the same in New York, right? And on the East Coast, I would say, for some reason, which I can point my finger to. The question is also like, at what point does this become warmongering and it's like getting profits from just like starting wars, right? How do you check yourself ethically to not cross that line?

That's a good question. Um, a lot of, uh, a lot of products and a lot of things being built for defense are not necessarily things that explode, right? Could be surveillance or monitoring, anything like that. Yeah. However, however, nonetheless, um, At some point, you have to appreciate that sometimes the best defense or the best way to deter people is for them to not even want to engage. And in this, in this regard, having a big arsenal that is there, able to be used, might be sufficient to have someone think twice before even wanting to start something. So that's how the thinking goes. And if you think about it, like, at any moment anything can kick off and you need to be ready to respond. No matter your thoughts on war or defense or how things should be, how the world could be in a perfect situation, the world isn't perfect. However, if you want to be able to defend yourself against an enemy or a tyrant or something, you better be ready to defend yourself, right?

So yeah. It's like show your guns, but don't use them, right? It's like the threat should be enough. But I believe there's, yeah, the military doctrine is being rewritten as we spoke, right? If we check Ukraine, there's more like autonomous bots, right? Like killing one another.

Oh, yeah.

Cyber hacks is like the norm right now, right? Like hack the grid, disable the enemy from within. But most importantly, like run run disinformation campaigns, right? I believe like that is like the new thing in Israel, and we've seen Palestine as well. Like yeah, Hamas like retort with like mass fuckery campaigns, right? Like trying to shift the narrative, right? Because when you shift the narrative, you shift budget, right? And budget is like. is what determines like wars usually, it's money. It's like very much about money. And also obviously if it costs you $2 million to take a $1 million missile down, then you're fucked, right? So I guess it's very much an arms race, a real one, right? Like to create like the cheapest, fastest deployable technology possible.

Absolutely. And And you're right. I mean, I wouldn't limit propaganda to be just a recent phenomenon. I think that's maybe one of the oldest, you know, in the world is the ability to see one thing and then analyze it and understand how you should narrate that to affect different outcomes, right? And I think that's played by everybody in every situation, whether they're conscious of it or not across the planet. So that's like the oldest thing ever. But as far as, yeah, cheap, let's say cheap and mass-producible weapons, 100%. I mean, that's what we're seeing in Ukraine right now is the ability to need a $2 million Patriot missile or whatsoever, and just to deter a $30,000, you know, drone that's flying over and You do that over 3 years and you tally up how much the other side has spent on this, right? And how much their budget is. So tons of, tons of, even in the US right now, in the drone market, right? Even in California, but across the US, billions are being poured into the ability to start developing and producing these very low-cost, let's say sub-$10,000 drones at scale, 100,000, A million a year. This is what China is able to do, right? And they've demonstrated the ability to, in some cases, fund both sides, right, with their parts, right, to enable this. And the U.S. absolutely has to find a solution for that. If you look at naval vessels, right, ships are so expensive— millions, billions of dollars— and could be potentially taken out with a few hundred thousand dollars, you know, or however you want to Kind of whatever take you want, but how do you protect that, right? What do you need? And this is definitely an advantage for companies that have access to very low-cost goods. So the US needs to become cheaper, right? Whether they're able to produce things faster, cheaper, smarter whatsoever, less dependency on countries, right?

So last question, obvious question, where does automation come into this, right? We still need smart engineers for at the beginning of it, but where can— when will robots be actually smarter to handle the full manufacturing? Are we going to see something soon in which mass production is going to happen through robot production and manufacturing sector, or is that still 5, 10, 15 years in the future?

Yeah, I mean, depending on the industry, right? There's already industries out there that are what's called lights-out manufacturing. where you just leave the factory and it produces consistently, right? Very low maintenance and monitoring required from humans. Automotive has this to a certain degree. However, industries that require some change, right? So you can say the need to change the design every few months, it doesn't necessitate or it doesn't make sense for somebody to spend millions on an automation line if there's a high chance that something might change in the next few months, right? So to your question of like, when will the full-up automation be existing in any type of manufacturing scenario, not just these high-volume, high-throughput industries? I think that's a very interesting question that is being absolutely focused on by tons of venture capital right now. So many companies are being looked at and funded that are promising full autonomous robotic cells, humanoid robotics, and the like. So if you ask me, let's say—

Yeah.

3, 5 years from now, we'll start seeing a lot of industries which are currently not able to be done by robotics being done by robotics. And like, really, not just like videos and like people operating them from remote destinations, right? But actual like robot thinking for itself, coming to conclusions and manipulating things and stuff like that. So.

Love it, dude. Uh, where can people find out more about you and the company?

Yeah, go to our LinkedIn page, IBIS Industries. You'll see us, you'll see me, and you'll see our whole company. And, uh, we try and post regularly. So we're down here in Santa Ana, California today, opening up more locations in the future. And, uh, just absolute pleasure to be on your show.