The Drone Company Quietly Taking Over Delivery

Hello and welcome back to TWIST. My name is Alex, and when I was but a humble young boy, I read a book called the Bible. And one thing that it talked about was manna coming down from heaven. Well, as it turns out, there's a company out there in the world of startups that is using that name because they are also bringing down goods from the sky called Manna. It's a drone delivery company based originally out of Ireland that is growing quickly, raising a lot of money, and proving that the future really is not evenly distributed. I didn't know enough about this company, so I'm really glad to bring it to you. So please join me in welcoming to the show, it's Bobby Healy. Bobby, how you doing?

Ew, it's a pleasure to be here. Thanks for having me.

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Well, so because we started in Europe, so we're kind of the Ryanair of this industry, we think. And being based in Ireland, we're pretty below the radar. It takes years to get a business like this or a tech stack like this operationally clean and ready to launch. So we haven't even tried in the United States up until now. And now is the time because of the regulatory environment. So the reason you haven't heard of us is because we haven't been looking to be found. And now we are, we've raised a lot of capital, we're doing a lot of deliveries, like 300,000 and counting, and now we're all in on USA. So it's time for us to start talking to folks and kind of educating everyone around what's important in the industry, which is unit economics in our view. And so, and here we are and you're gonna see and hear a lot more from us.

Yeah, we're gonna dive into economics in a second, but I wanna talk about how the business is structured in terms of how it operates kind of on the ground and in the sky. One thing that Manna does talk a lot about is the speed of its deliveries. You guys talk about deliveries being as quick as 3 minutes, which is insane and awesome, but I'm curious about how that works. So how do you guys have the drones kind of provisioned inside of a city or community that you operate in currently? And is this a higher capex requirement to have the ability to reach people so quickly? Because I would presume you would need more drone depots in more places than kind of one centralized hub.

Yeah, so we have in a city, take a city example. So you look at Dublin, for example, or Tulsa, big city, very dense, about half a million suburban households. And we would have one central depot in the middle of the city and all the aircraft live there. And at night they all migrate back there. They get their maintenance inspection. If they're due a maintenance inspection, they'll get maintenance work done. And then every morning, all our drones fly out to various different locations around the city. And they'll sit on pads there waiting for business. They'll migrate dynamically across those pads. So think of it as a, not terribly unlike a Waymo where the cars will be migrating around the city, in their case to charge, in our case to get maintenance. And you go where the action is. So the really nice thing about food delivery is you get about 20 minutes notice that the product needs to be moved because the prep time is about 20 minutes for hamburger and fries. So that is the time when, if we don't have an aircraft at that location, we'll send one there ready to pick up the delivery. So there's that structural kind of insight that you have with drones that you don't have with other things. It's really useful.

So sticking to the food case here, because I think that's what everyone kind of immediately thinks about when they consider drone deliveries, talk to me about the linkage between customer orders, delivery platforms, and how that plugs into MANA. Because I can see this working economically several different ways. So I'm curious about how you get that information early and then also how that kind of interfaces in a business sense with those providers.

Yeah, so we've contracted with all of the big players, so DoorDash, Uber Eats, in Europe, Just Eat, Deliveroo, and so on. And so they bring the orders to us. We get them via API. It goes to the restaurant. They get told to prepare the product. We get told, and we acknowledge that we can fly that product at that time from that location. So all that happens, the consumer. Interestingly, in Europe now, Just Eat, for example, defaults to drone delivery. They don't default to road-based delivery. So you actually have to work harder to choose road-based delivery. That's a big statement, I think, to how good and how much better drone delivery is.

And that would be in markets where Manna is accessible.

Where we are. Yeah, yeah, exactly. If they hit our API, if we reply, yes, we can do that, then the consumer will be given drone delivery as number one option.

Yeah.

You know, I have spent a reasonable amount of time in Europe, but I am most certainly an American. And when I think about the suburban American world, I'm thinking about lawns that are relatively large, kind of flat spaces where you could land things. My experiences in Europe, they tend to be slightly more dense living environments. So how does that translate for drone deliveries? Because I can see it working here with our big old backyards, but I'm not sure it's the same setup.

It's much harder here. So we yet to find a house we can't deliver to. So that's a good thing. And Dublin and Helsinki are extremely dense. Helsinki's 90% apartments. Dublin is really dense, but we can deliver onto a trampoline and we frequently do. Fun fact, 15% of suburban gardens have a trampoline in them. So we only need about 2 meters wide, flat, inanimate area on which we can deliver. And so in suburban context, we don't have a problem. The real trick is actually delivering in high winds. So we deliver from pretty high up and we put the bag down. The GPS positioning is one thing, right? You know where you are accurately, but getting the bag where you know the bag needs to be is about flight dynamics and stuff like that. So you couldn't build a business like this in a more difficult place than Ireland because we're in Ireland.

Famous for a windy place.

Windy. Windy, rainy, everything. We get 4 seasons a day. So we're— and we've nailed— like, we're 97% available in Irish weather, which means we're 800% available in any other country, normal country. So we're well battle-hardened, I would say.

And the proof is kind of in the numbers. Now, you mentioned 300,000 deliveries. When I was reading through your Series B announcement, $50 million announced, it's start of April of this year, you guys have said 250,000 deliveries. So what's the current pace? Is it over 100,000 a month now? I'm trying to just figure out how quickly you're growing.

As we add bases now, as we add one base for us, right, is about roughly about 100,000 deliveries annually. And we've added another 10 bases now already here in Ireland. They won't be as productive as US bases. and we have about 40 bases contracted in the United States. So we're aiming, rough target, about 2 million annualized deliveries by the end of '26. We don't know what our target is for the end of '27, depends on how end of '26 goes. But the whole industry is there, it's kind of ourselves, Zipline, Google, Amazon, we're all throttling up at the same time because of that regulatory kind of change that's happened. And so for us, we can do that with our eyes closed. We could do 10 million deliveries with our eyes closed. It's a matter for us now of just eating the elephant one bite at a time. And I think the whole industry is moving to a point now where capital is going to drive pace. It's no longer regulatory uncertainty or tech or any of those things, product market fit, all those things. And for us at least, the difference is I mean, I think it's fair to say all of the great companies that are doing this are ready to scale and already scaling. The difference with us is we're margin positive already. We already make money on nearly every delivery we do. The only deliveries we don't make money on are the loss leaders, like a pint of milk, a liter of milk, whatever. Those are the ones that get people in the door. But we're actually quite a strong margin already on a per-flight basis. And our locations that we open up are profitable. Already.

So when I order Uber Eats here in, uh, my current hometown of Providence, Rhode Island, I often pay slightly higher food prices. I pay a black box of service fees and other things. I pay a delivery fee and then I pay a tip. How does my economics change from the consumer perspective when I'm using one of your drones versus paying, uh, Bob to drive around in his Camry?

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So I think the way consumers and, and restaurants for that matter should look at this is we're going to drive the marginal cost of drone delivery down to about 20 cents per delivery. And by the end of this year, our marginal cost— sorry, our marginal cost is already a fraction of what it costs a road-based delivery. And by the end of this year, we'll likely be in the kind of $1 to $2 marginal cost territory. And so the way the consumer should think about this is, well, look, if everything's gone robotic and automated now and digital, why would I need to consider the cost of the $15 cost plus tip that it takes a guy in a car or a motorbike, whatever it is. So the question is, where does that value go? Who pockets that difference? I think the consumer will definitely pocket some of it. I think the restaurant could pocket some of it. And I think the aggregators are going to do great too. And the other thing is, don't only think about cost. Cost is a given in this case. Think about our NPS, right? Our NPS, the last 5 years we've been flying, is high 80s, early 90s, net promoter score. That's a higher NPS than Apple have or any of the best companies in the world. World have. And it's not because we're geniuses, it's because the mode of a flying robot carrying your product and getting hot French fries, a hot coffee, not melted ice cream delivered to your back garden in 3 minutes, that it just gets people so excited about buying stuff that you're naturally going to be much happier. And that floats all boats, right? That means that consumers will order more, aggregators will be happy, businesses will be happy, everyone wins.

I mean, if I could order food from around my town and pay closer to restaurant prices and get it faster and hotter, I'm paying less for a better service, which means my usage will go through the roof. Yeah, I mean, and I'm already— I've got young kids, so like there's been many a night when I'm like ordering something at night because I forgot to eat dinner, you know? So this is super pertinent to my needs. The capital point you made is very interesting to me. It sounds like if you solve the demand side and the getting things down side from drones and getting them up to drones, then all you do need then is capital to build out operations, buy more drones, and land more partnerships. So $50 million in Series B, it's a lot of money. But I do know that some of your competitors in the US are raising 9-figure rounds in the $600, $800 million range. So do you guys have enough capital to compete if capital has become kind of the bottleneck to growth as you've described it?

Yeah, capital's never been a bottleneck for us. You know, we have never been ready to scale the business yet. Our costs are a fraction of anyone else's, so as we scale, we'll actually generate cash. So our locations, a location we roll out with, say, 10 aircraft is contribution positive day one because we get high demand from aggregators. And then, so it's producing cash, it pays itself off in somewhere between 7 and 12 months depending on utilization. So we will use debt for a lot of our growth, and we'll, of course, use equity as well. So we're match ready. We're fit and ready. So we're not going to need as much capital as anybody else, and that should allow us to scale much more quickly. But as I said, I don't think any of the players in this industry are going to be constrained for capital. Because we started where we started, our costs are a tenth of what it costs to do the same thing in the United States. That's just labor cost. So that advantage goes away when we scale operation in the USA. But as I said, having contribution-positive economics even on low utilization means that we can be very, very efficient with capital.

I feel like we buried the lead a little bit here, which is the drones that you're using to actually pull off these deliveries, because it seems that if you're going to have such strong contribution margins from recently deployed drones, they must be super durable, they must be super good at all the things. So talk to me about the drones that you're using and also what they bring to the business apart from just kind of the core mechanics of delivery.

Excellent question, 'cause that really gets to the real function here. One of our drones does 75,000 deliveries in its lifetime. So that's the first thing. The maintenance cycle is we're less than half a percent maintenance downtime per aircraft. And that half a percent is what, actually adds to cost because you've got to scale a maintenance organization. So we've been using the same design aircraft for over 5 years. So it's tested, it's just simple as hell, and it's a really low cost of ownership. So 75,000 flights over the life means that it's just, I mean, the capital cost is inconsequential to the actual revenue it generates. But even more important is the maintenance cost, the actual cost of ownership into every flight that we fly is tiny. So we think like a low-cost airline, we do not think think like Tesla or SpaceX or any of those guys. We think like Ryanair or Southwest when they were good. That's, that's really what's going to be the winner in this business. It's going to be low-cost airline mentality.

I, I, I agree with everything you just said, especially the point that Southwest used to be good and is now not. I never wanted Diet Coke United, thank you very much. I wanted Southwest, which I used to have.

Complexity as well, connecting flights, all this stuff that they layered on, all makes sense if you're looking to grow, but Relentless focus on cost and operational efficiency is what will win in this space. It ain't cool or sexy or any of that stuff. It's going to be absolutely obsession with unit cost and efficiency, assuming that you have safety right.

When I think about Ryanair and other kind of like ultra-low-cost providers, what I think about them is like, and I don't even mean this in a rude way, Bobby, but kind of the commoditization of air travel. And so when you're talking about, you know, the importance of efficiency and so forth, to me it sounds like you kind of imagine that in time there's going to be quite a lot of companies that can offer drone-based delivery. So you're going to win not by being the flashiest, your Tesla example, but instead just being downright the most efficient. So really the right example is it's not really— wow, it's pretty solid.

It's a commodity product, Alex. It's commodity product. Like I said, people aren't buying drone delivery, they're buying a hamburger or a burrito. Our customers do not care that they're getting it by drone delivery anymore. They're just buying a burrito. So therefore, your marginal cost of getting that product to the customer needs to be lower than the road-based equivalent or you're not winning. And then once we're all there, then it's going to be not a race to the bottom, but Warren Buffett said in a commodity market, he with the best cost base will win, right? So, you know, there's lots of truck drivers in the world with lots of small logistics companies, but Amazon are crushing it because of scale and the efficiency of their network, those reinforcing the kind of network effect of a large logistics network. So therefore, if you concentrate and provide a dense network of delivery drones and you already have lower costs, nobody is going to touch you on competition.

I want to get to your US expansion next, but I'm curious about the getting set up in a new area. Question. I've talked to a lot of self-driving companies, Wabi and Waymo and everybody, and there's different approaches to mapping and trying to understand the world that you're operating in when you have a self-driving vehicle. Now, clearly, of course, drones are up in the sky, very different, but you probably still need to know, like, for my house, if I order, where is my backyard? Where are the trees? So what, what is, what does the time and investment look like to prepare to go to, let's say, Tulsa?

Yeah, big fat zero. Nothing. Nothing. So here's what happens. We sign a location, a bit of real estate, the roof of a restaurant or their car park. We put aircraft on the ground, we plug in our unit, the charging system, and it's done. You can literally straight away start ordering through DoorDash or Uber Eats when that happens or through our own ordering app. And if you as a consumer order with us, the the first time we've seen you, we'll ask you to verify your address. We'll show you a picture of your house and you'll say, yes, that's where it is. And that's it, done. We'll automatically select the location to deliver onto in batch, and then we'll fly there to deliver the product. Then the aircraft takes over and decides itself if that's a safe area to deliver or not. So it'll detect children underneath or obstacles, anything like that. And if there's anything in the way, the aircraft will just bring the product home, won't deliver. And if there's nothing in the way, it'll deliver. It's all fully automated.

What would it cost, and hear me out, for me to bribe you to bring this to where I live sooner than you're currently planning?

Because Rhode Island's full of Irish people, so we can be there very quickly. So we're focused right now, rest of this year, on Oklahoma and Texas. That's all we're going to do. But '27, we have really ambitious plans for '27. And as I said, a lot of it will be determined on what we can achieve in '26, but we're supremely confident that we're going to absolutely knock it out of the park. And we see ourselves being the leader in the United States not too much time from now. Won't be this year, but we can definitely be there next year.

I believe it. So let's talk about the US. You mentioned that the regulations have either changed or become clear in a way that's opened up the door for you guys to expand here in the States. Talk to me about that progression. And I'm curious about the regulatory differential between, let's say, broader Europe and the States.

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So, uh, there's an executive order about 12 months ago now, um, from the administration that says America wants to gain drone dominance, right? And that's in response to geopolitics. That was the trigger because if you had asked me more than a year ago, I would've said USA is nearly in last place and Europe is, China's leading, then it's Europe and then it's USA. And that's now upside down. Now the USA is the world leader in readiness to scale this technology thanks to a new administrator in the FAA and an executive order. So what we've seen and is witnessed by the growth of everyone in the USA is USA is open for business in this technology. And finally, we've reached the point where And we just got 4 new locations approved in the USA. It took 30 days. That would've taken years before. And we've seen in our friends, you know, our frenemies that are over there, same thing. It's just absolutely nothing in the way of scaling this industry. And so behind that, there's the old Part 135 regs, the Part 107 regs, and the upcoming Part 108 regs. And all of these are progressions towards an endpoint of unlimited scale. 135 and 107 have not been really fit for purpose because of the overheads associated with them.

Yeah.

And now with 108, we see the perfect set of regulations to scale the industry.

So to me, just talking to you, I'm actually more excited than I've ever been about this industry and its growth because it feels like you've really solved all the problems and you know how you're going to finance it and it's positive unit economics and your drone technology is sorted out. How long until I can call one of your drones to my house, not just for a delivery, but to put in, I don't know, like some soup that I made and send it to a friend of mine? Because to me, why not? Like, why can't I use this also for my career?

In my original business plan 8 years ago for this business, when I wrote the notes, the next use or the next wave of this after we democratized access for restaurants and aggregators to get delivery, it was then, peer-to-peer delivery, right? So you could be baking delicious cakes or cookies in your house and you can make a living out of it and you can suddenly reach 400,000 customers with an automated delivery system that costs peanuts. And so that is in my list of things to do. It's just, you know, like I said, how do you eat the elephant? One bite at a time. There's 92 million suburban homes in the United States that we want to get to and build a meaningful commercial relationship with over the next 5 years. So I think you will get that peer-to-peer delivery you're asking for, but it'll come sometime after the first wave of growth that we all go through.

Yeah, I was thinking about it as peer-to-peer. Like, let's say that some other parent needs a pacifier or a particular medicine or whatever. I can just send it to them without having to deal with car seats.

Imagine the marketplace you could build. Imagine the marketplace you could build on top of this where you've got 1 million people living in the city that can literally connect with each other with a 5-minute flight, they can deliver anything to each other. Now, there's obviously other considerations to think about with that, but if you think with, with an innocent lens, that's going to really power the local economy like a way that's never been seen before. And so whereas now we, we all live on gigantic Amazon fulfillment centers and they make their logistics scale serve that really well, with drones and robotics, you have this new ability to really do localized, hyper-localized stuff that's even cheaper than these giant networks. So, you know, it's difficult to imagine what other things you could do with it. There's so many options here.

But I think the ability for people to build a business on top of the infra you're building is incredibly interesting and underexplored when we think about drone deliveries, because I think you're right, people do think about them as burgers and fries now.

We have that already, Alex. We've got, for example, one ice pop, I don't know if you got ice lollies, you would call them, Small little business.

Popsicles, we call them here. Yeah.

Popsicles, right? So we got a small little indie popsicle maker, family business. They got their factory out in their back garden and in the summer they're selling thousands of ice pops a day through our system, delivering straight to households. So that's already happening, what you're talking about. We're just doing it in a selective way. It's not really peer-to-peer. It's a small business to everybody else, but it's already happening.

You are going to have to have some really interesting regulations on, uh, keeping people in the future of P2P product from not sending cocaine through the drones. Yeah, I feel like it's gonna be—

that's kind of what I was chuckling. Yeah, yeah, 100%. You know, that's the thing with robots, is robots don't ask questions, right? Um, so, so that'll be a factor, but it's, it's not something right now we're preoccupied with.

All right, uh, last question for me is, uh, the job growth thing. So when I was just going back through your Series B announcement from a couple weeks ago, you guys talked about growing from 170 people to over 570. And, you know, it's interesting because when I think about technology companies today, everyone's talking about, you know, static team size, letting people go. So really kind of encouraging to see that you're very into hiring humans. But is that because of the unique elements of your business needing to have these drone depots and maintenance and so forth, or are you just a bit more human positive than some other technology leaders that I talked to?

We love humans. I love humans. Uh, so the truth is we're pivoting from, or migrating from, being a pure technology company where we have about 200 folks in Dublin to being an operational airline, essentially. And with that comes all this overhead of maintenance, just all the operation. You have to clean bird crap off your motors. There's stuff that humans just, you need humans for. So most of our people we'll hire will be the ops people that just operate everything. And then the other big thing is we're moving manufacturing to the United States.

—Oh, interesting. OK.

Yeah, so that's a big deal, right? So in as much as we can, we want to have a US-only supply chain for our aircraft that are in the USA. So that will mean a lot of heads. Probably of the 400 people that we've budgeted for this particular phase of business, probably about 300 of them will be in Oklahoma.

Well, shout out to the Oklahoma economy. The Okies.

Up the Okies.

Yeah. Flat, central, probably not too hard. I mean, it's kind of the Phoenix of the South.

You're struggling for good things to say. It's a great place. I love it. I mean, there's so much diversity all over the USA. It's a wild, crazy place, I will admit. Oh, yeah. But so is Texas. So is the USA. That's what's great about it. And I'm moving there, so it's going to be even better.

Yeah, no, we'll take any— America is a big place. We got a lot of space. Come on down. But Bobby, I think that people should now understand what you're doing, and I think they're going to hear a lot more from you guys in the next, I guess, you know, 9 to 21 months, kind of through the end of this year, through the end of next year. So, uh, if people want to learn more, what's the website? And, uh, do you want to shout out a job you're looking to fill here in the US that the right person might be listening to?

So the website is mana.aero, uh, A-E-R-O, and it's a fun website. And then the job is everything but mechanical engineering, key electrical engineering, software, obviously in the USA, particularly head of manufacturing. So that's the a hard one to fill. So somebody to lead our manufacturing efforts over there. Um, everything else is all engineering stuff.

All right, and I do really want to thank you for your commitment to— when you open your first Northeast hub, it'll be in Providence, Rhode Island. You heard it here first, folks.

It's a contract. It's the deal. Yeah.

No, Bobby, an absolute treat, and, um, I hope everything goes as well as you think because I'm very lazy and like to stay home.

So thank you very much for making my— very much.

Today we're going to war. No, we're not going to get into a tank. We're not going to get into ship. I'm not going to fly off an aircraft carrier. Instead, we're going to talk about the use of drones in war and where they do well and where they don't do well. One issue we've seen across the Ukrainian battlefield after the Russian invasion is that there's a lot of GPS jamming going on. That means if you depended on using GPS to fly your drones to where they're supposed to go, you might have a bad time. Drones sometimes even go off course, landing in the wrong country, which is a big problem in international relations. But one thing that we can do is improve the ability of drones to fly without GPS. And that brings us to today's guest, which is a company called Theseus. They are building a system that allows drones to fly without needing satellites to tell them where they are at. Apparently it uses Google Maps and a camera. Sounds very simple. To tell us more about it, Ian Laffey is here. Ian, how you doing?

I'm doing great, Alex. Thanks for having me.

Oh, dude, an absolute pleasure. And, um, normally it doesn't matter where our guests are calling in from because startups are a global game and people travel, but, uh, tell me where you're at and why. If you can. Yeah, I'm, I'm here in Kyiv.

I've been here for a couple of weeks and will be here for several more. Just flying our system with a bunch of different people, partnering with drone companies and doing fun stuff.

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We're going to talk about what you have built and why, but can you just give me the, the snapshot of the drone industry in Ukraine? Clearly at the forefront of drone technology, now helping countries around the Middle East defend themselves. But what's it like to be in the, uh, in the mix?

I think the most interesting thing about the drone industry here is, uh, how competitive it is, how much of a free market it is. So I think when you look at defense in general in the US, um, and the way that we procure things, uh, like, we, we, we are at war now, but the wars that we are at and the wars that we go into are much different from the war here. And here you have like a front line, you have a, a place where thousands and thousands and thousands of people are fighting every day, and, uh, the technology needs to work there, and it's very easy to get it out there. And so I think that that really lends itself to, you know, you hear a lot about scrappy startups, but also just like much faster iteration cycles, because you can take something and actually know if it works on the order of like days instead of, you know, many, many, many months to years.

You're not doing as much testing in the lab versus deploying on the field. So you have a pretty quick information feedback loop on how the technology works and what's doing well and what's not doing well. I guess that's a real benefit to the improvement of drone technology. Terrible circumstances, but at least we're making some progress. How fast is the, the drone versus drone technology race advancing? Because I know that also, you know, of course, Russia uses a lot of drones and Ukraine uses a lot of drones. So is it, um, something where you can kind of see one side pull ahead and the other side catch up and back and forth like that?

Yeah, I think the big advantage that Ukraine has is, uh, Starlink. So they, they have access to Starlink and Russia doesn't have access to Starlink. Um, you're seeing more AI drones coming out of Ukraine than you're seeing out of Russia. Um, I think Russia clearly has an advantage in the, call it like, Lucas-type, you know, Shahed-type drones. Um, they produce like hundreds of them every day. Um, and yeah, I mean, it's, it's definitely, it's definitely constantly changing. Um, it, it seems like a situation where there's, there, there are no winners, right? There's only losers. Um, yeah. Yeah, it, it doesn't seem like anybody is kind of breaking away, um, as, as far as, as that goes.

So Starlink is a great segue into kind of what your company does. Now, when I think about connectivity, I'm familiar with how GPS works, and I know that there's other GPS equivalents from other nations and blocs around the world, uh, and we also now have, for the first time really in human history, functional satellite internet across a large amount of the planet. So tell me about the connectivity issues that drones are having in Ukraine, and then walk me from there into how your technology plugs the resulting gaps.

The interesting thing when you look at Starlink, right, is it's— it's very modern. Uh, it's got this— these panels, and they're, they're very directional, and that's not how GPS works at all. Um, you have these geostationary satellites that have been around for uh, decades, and they're very, very low power. And, um, and, and they're also in like known frequencies. And so what that means is it's very, very easy to basically shout over them with a different radio, and, and then you end up jamming them. Uh, and, and so what you see here is jamming across the whole spectrum. You know, there's a radio spectrum, um, and you can cover different parts of it with different amounts of power. Uh, and GPS is kind of just a band where if you let it go without being jammed, it's just so devastating in terms of precision-guided munitions and your ability to collect information and ISR that it's basically an absolute necessity to jam GPS. And so you see that just universally jammed in addition to communication links being jammed, different links in different places at different times. And so what we do is we kind of circumvent the whole problem of radio Uh, like you said, um, at the beginning, or maybe in the preamble before we started, like, it's, it's a camera and there's satellite maps on board and it tells the drone where it is. Uh, and we've spent a, a lot of time training an algorithm that's able to look at very old, very out-of-date, very bad satellite maps, uh, and very bad camera imagery and still figure out where it is, uh, given all of those circumstances.

So the way that I understand this, Ian, is that if you have a topographical map and a camera, you can essentially look out through the camera, see what you see, compare it to the map, and then get a reasonable understanding of where you are. Uh, but to me, that does not sound incredibly precise. Now with GPS, when I'm in New York City, it can tell which corner at an intersection that I'm at. So it's it's incredibly precise and quick. So how much fidelity do we lose by going to your system? And to be clear, I understand that it's the only one that works. So like, I'm not trying to be unkind, but I'm just curious about how well we can do compared to the GPS that people listening to this probably already know and understand.

It's a great question. GPS is amazing. And I think what's really interesting about this is you've had these kinds of solutions for, you know, decades. If you look at something like a Tomahawk missile, right, like that has, uh, that has a laser rangefinder and a really good topo map, and it can figure out where it is. Um, really what we see ourselves as doing is like taking that from like, yeah, government-level, um, maps and, and a really nice rangefinder onto, you know, like a $25 camera off Amazon and very low-resolution maps. Um, and so to answer your question, yeah, the answer is not very precise. So we advertise 30-meter median accuracy, um, and that is enough to get you from A to B, but it's not enough to tell you where you are on a, on a street corner. Um, but that's kind of also something that's like, uh, pretty important to us once you start getting into higher levels of precision. You know, there's, there's a lot more considerations around that kind of technology.

So 30 meters sounds like a lot, but actually I don't think it is because— and I don't mean to be kind of crass about this, but some drones go boom and I wouldn't want to be 30 meters away from one of them doing so. So I presume there is a margin for error in— Yes. Targeting. Yeah.

The, the going boom is not, you know, it's, it's not really like a, the, the core focus for us. Um, what we're focused on is, is getting, uh, drone from A to B over very long ranges, um, and over very complicated environments. So if you need to fly a drone for 600 kilometers, um, you know, in a straight line over fields and still know where you are, uh, we can help you with that. But it, you know, it, it, that kind of, um, like last mile targeting and like, uh, strike capability has just not been a focus for us.

So I think then that we should better understand what that use case is you're describing. When do I need to send a drone in a straight line for 6 hours? And to be clear, I'm exposing my lack of operational knowledge of drone warfare here, but that's not a circumstance that I kind of expected unless you're going deep into an enemy country, for example.

You know, back to the topic of, of radios, uh, right, is, is like, um, to maintain communication with a drone is, uh, difficult in a jammed environment. And so if you want to go and you want to take pictures of things and, and fly around and stream video back, or go and record data over someplace, um, without getting jammed and be able to go complete that mission and then come home or, you know, go fly that mission and then stream data back over Starlink the whole time. Um, these are things that we, we help with. Um, and I, I would just say, uh, that is, uh, generally like this stuff that we like to, to talk about and focus on is, is kind of those capabilities.

My understanding is that Starlink is actually pretty difficult to jam.

Is that correct, Ian? Yeah, it's just like a physics problem. Um, they, they have a highly directional antenna, uh, and it's, uh, it, it makes it much more difficult to, uh, to jam that, that kind of phased array.

So in time, do you think that we get smaller and smaller satellite internet receivers à la Starlink or whatever from, you know, Blue Origin or from the EU or whatever? And does that, does that dramatically change the state of drone warfare, or do you think that we're still going to need GPS replacements, uh, without kind of real-time satellite connectivity, uh, to ensure that we can keep doing the drone operations that we need to get done?

I think you said kind of two things there, and, and the first, definitely, like, you're, you're just gonna see, um, you know, you're gonna see Starlink direct-to-cell, you're gonna see like a tiny little chip that connects your phone, uh, your phone or your drone to a satellite, um, from anywhere in the world where SpaceX lets you do that. Um, the, the thing that I would say there is, is that, um, you know, communications and positioning are kind of two different things. So like, you think about your iPhone, you have an LTE network that lets you call people and, you know, look at Twitter, and then you have the GPS which lets you, you know, you combine that with the LTE to then use Google Maps or to find where you are in the woods. Um, and so, you know, it's, it's kind of two separate things. The other thing I'd say that's super interesting with Starlink, and I think this was something that we always viewed as like a risk for our business, but it's been interesting to see them move in the opposite direction, is Starlink actually— because it's satellites flying around, they know where the satellites are— like, you can position off of Starlink. And so a lot of people, um, in Ukraine as well as in the US had begun to use Starlink panels, uh, and use a positioning feature that's already in them to fly their drones. Um, and they're You know, there's some pros and cons to that over Vision, uh, but I think this goes live in about 7 days. It may be like 9 days, but, um, Starlink has basically just like completely, uh, blocked that capability or made it like so inaccurate that, you know, it's, it's maybe like 50 kilometers precise. Okay. Unless you pay them a bunch of money for like military Starlink, uh, contract. And so Um, you know, that, that's just not really the domain that we operate in. Um, for me, like the point of a drone is, is that it's cheap. Um, and we in the US and other places have like really great technology. Like I think you're always going to need great aircraft, but, um, there's, there's a certain value that you get to making something just like dirt, dirt, dirt cheap and making millions of them.

Well, I mean, that's why using a camera and maps is incredibly cheap. As you said, you can buy some of that stuff off of Amazon. So tell me about the company's product itself and the fact that it can work on— I think you guys say pretty much any drone. I would love to better understand how it attaches and also what does it cost to get one of these onto a drone today?

Yeah. So we right now what we have is— so we started off, I guess I'll back up. Sure. We started off with this box. And you put this box onto the bottom of a drone and it plugs in and it pretends to be GPS. Um, and there's actually like a bunch of people that do, uh, similar stuff. There weren't really when we, when we started, but there's a bunch. Um, and what we found with that is that it kind of sucks for a bunch of technical reasons I won't get into. And so what we realized is that, um, you can actually just pull the software out of that and design it in such a way that A, you can run it on basically any computer, so you don't need a GPU, you don't need anything fancy. You can run it on like a $65 Raspberry Pi. Um, and then also building in just a variety of cameras, so thermal cameras, um, electro-optical, or just like regular cameras, um, and supporting all of those things out of the box. And so, um, for us, that's kind of been the evolution of a product is like we still sell that as physical hardware, but then also offering that to customers who they themselves have really developed supply chains. They already have the compute on board. They have the ability to go and buy these systems. And it's like, you know, very open book. I mean, I'll even say it here on the podcast, right? It's like it's a camera and a Raspberry Pi and an SD card, right? Like there's no secret sauce.

Don't give away the secret sauce. I mean, Yeah, I think I could probably actually put those together over a weekend with enough Claude credits, you know.

I, I think you could definitely put it together. Yeah, it's, it's, um, the hardware is, um, it basically needs to be a commodity. And, and honestly, like, the, the whole thing needs to commodify because these things just need to get cheaper and cheaper and cheaper. Um, and this has been kind of something that I, I've been thinking about a lot is like You know, position, uh, position as a product, it's like, you don't need to build a differentiated positioning product. You need to build a really good positioning product and deliver it at a lower cost basis and a higher scale.

This reminds me a little bit of like the automotive industry, because one thing that someone told me who works in robotics is that, you know, if you make a component for automotive, they're going to grind you down on cost. And they're also going to demand that it works for like 200,000 miles being bounced around in a hot temperature. So they just want simple, high-performance, cheap. And it sounds like that kind of maps to what we need for our drones. But Ian, it sounds like then the company Theseus has become much more a software company than a combined hardware and software company.

At the end of the day, I see us as a reliability company. Like our job is to solve, uh, solve the problem of autonomy. So since, since we've started, um, Our goal has been to keep good guys from getting killed. And what that looks like to me is, is having less people on the battlefield where they can get killed. And the way that you do that is you make systems more autonomous, or you make the systems that are piloted by people able to be piloted from farther away from the dangerous places. And so in order to do that, you need to make those systems reliable. Because really the job of an operator in a combat zone is reliability. Humans are very good at solving, you know, problems that crop up on the fly. We have very high common sense. And so we kind of fill in the gaps in reliability in systems. And so how I see our company is, is that we take these systems that are pretty unreliable and, you know, you could say like janky or hacky and we make them more reliable. And so what that looks like today is, you know, the most, most foundational aspect of autonomy. Like, you can look at a drone that was made in like 2003, and before jamming, that had a higher level of autonomy to any drone that you're going to see in Ukraine flying up until maybe the last year or so. And so by just delivering the position to the drone, you're increasing the reliability of it and you're increasing that autonomy level back up to something that's, that's on par And then we see that as just like extending out farther and farther from there.

So essentially we got really far with drone technology when GPS worked, just generally speaking. And now that we are in a post-GPS era for warfare drones, we've had to essentially rebuild to get back to the level of autonomy that we had. Okay, well, that's difficult, but I'm glad we've gotten there. What can you tell me about progress in the Theseus technology? Because you guys have been at this now for a couple of years. You're in Ukraine, you're doing, I presume, testing of some sort. But how quickly does the technology improve and is it improving along an accuracy axis or more of a cost and reliability axis?

With accuracy, there's like, you know, just regulatory considerations. So that's not really like a priority for us. We actually don't want to make our system more accurate right now. That being said, yeah, just reliability and cost. I think you hit the nail on the head there. And it's really just a matter of like, I think even myself, like, I'll just speak for myself here. Like, it's, it's very, very, very, very, very, very different to like field a piece of technology in a war zone versus, um, not in a war zone. And, um, and so I, I think for us, you know, the first half of our, of our company's life has just been getting our product to even work well enough that it, it makes sense for somebody to use it. Um, and then the past year has been, oh, okay, we know that this works, we know that it works well, how do we go, how do we get this, um, you know, to to scale 1 million, and what are all the roadblocks that we need to knock down in order to, to do that?

How many drones a year does Ukraine need, and what do you think should be the capacity of the United States to manufacture drones? Because I know there's been a lot of talk about reindustrialization of the United States, building our manufacturing capacity back up, but it's hard for me to tell where I sit if that's a lot of people cosplaying in Bob the Builder hats, or if they're actually making, um, you know, real progress towards shovels in the ground?

I love all drone companies. Uh, they are our customers, so they're, uh, you know, uh, good things to say, uh, only. Um, so Ukraine right now is at like, I don't know, 6 to 8 million drones a year. Um, the, the US, we, we have this historic, uh, drone dominance program. Um, that is, uh, I, I think it's 300,000 drones over the next 2 years. Um, I, I've talked to, um, you know, the, the guy who runs that program, and what they've said, which I think is really good, is that the, the focus of that program is, um, yeah, it's to get the one-way attack drones. That's very important. But it's also, uh, kind of a shock to the supply chain to incentivize American companies to bring components out of China. Um, and I, I think that like everybody talks about this, so I'll try not to harp on it too much, but it is really, really surprising the level to which everything is made in China. And I'll just take one example, which is like a camera. You know, you can get a sensor that's made in Japan or Korea pretty easily, like the actual array of silicon that takes in the light. To get the lens made outside of China is more difficult. And then to get If you as like just a small business, not like a larger company, wanted to get the PCB that goes on the back of that sensor and get that made outside of Shenzhen, you basically can't do that without paying like 4 or 5, 6 times as much. And your options are just like so, so, so limited. Um, and I think you basically just see that across every level of the stack. And it's not— it's basically all these little load-bearing points where you, you rip one thing out and you go down like two levels of the supply chain, and then you realize, oh, actually this one very niche thing is only made in China.

Are American drone companies, both startup and from maybe even the primes, are they doing the work to reconstitute those supply lines here in the States, or for the foreseeable future, Ian, are we not going to be able to do enough in-nation manufacturing to kind of like supply our own drone components? I'm scared now.

I've been really impressed by what like the, the top American drone companies have, have been doing and how creative they get. And, and also like, I think, yeah, time is a factor and, and having demand is a factor, but you also realize like None of this, none of this stuff is that hard individually. Like in aggregate, it becomes basically impossible. But like that PCB example, it's like, okay, well, if you have this, if you have this demand, like you can put together PCBs in lots of places. You just have to get enough people together that they go, go to somebody in a, in a different country and they say, hey, we need this. The key thing that we need to figure out in our country is like, how do you have a real commercial industry around these microelectronics? Because you, you look at like the American industry in, you know, the '40s, '50s, it's like this heavy industry. You know, you mentioned the automobile industry. Um, that lends itself to these like very large systems. And we have a culture that lends itself to that. We have a culture also that lends itself to like information technology, right? Like we, we were, we were the country that first invented the filing cabinet. Just because we love information so much and like storing it. So then of course, when a computer comes out, like we just have this domestic demand for computers, but then you look at China and they've just been making all the world's stuff for so long that they have all of these smaller component manufacturers that serve a very large domestic market. And so now that we're seeing like war or defense change to bias towards small electronic components, and we're having to ask ourselves like, Oh, this, this has significantly more of an impact on, on the battlefield than we had thought 5 to 10 years ago. Just cheap, small electronic components. Like, what can we do in the US such that we are, you know, we have domestic demand at scale for cheap, small electronic components.

Do you know, um, that, that, uh, that project Cost Plus Drugs? It's essentially like, I think it's maybe it's Mark Cuban who's working on this. They seem to just make generic drugs in the US for a very low price. I feel like we need some billionaire to be like, I'm going to make the PCB base company and I'm going to make PCBs at cost and we're going to make no money. But if you need springs, PCBs, you know, carbon screws, whatever the fuck, we will make it. And then just like, just do it with an existing capital base because this is not impossible.

It's definitely not. And I think defense is like a great reason to focus on. I just, I do think, I don't know. I mean, I get very scared because I just don't think like, I don't think that there's that much of an incentive in our current commercial industry, like without a ton of protectionism for us to move toward like back towards manufacturing. Like there's, there's so many regulations against making stuff. So few people like we have like such a high labor cost that it's like, you know, and people talk about automation. I think that's like one way out. But it's like, you know, who is going to be the person that is putting together these, these tiny little components all day for $2 an hour? And how do we even compete against that? And so, like, I don't really have the answers to that. But it's, it's definitely like a huge problem, um, because I think we, we're just kind of waking up to the fact that like, uh, a lot of things that we have not invested in turn out to be like very, very important, um, in a, you know, global geopolitical arms race of sorts.

Yeah, this is why I think even, uh, us, you know, staunch no industrial policy folks are starting to go, well, what if we had a little bit of industrial policy? Just, yeah, just a dusting on top, you know? Because capitalism is, is amazing and such a great engine, but it does not always foresee national security needs. Well, we're also highly regulated, right?

Like, we, we have— so we, we have a minimum wage, we have environmental protections. Like, I'm not saying get rid of the minimum wage and like child labor and, and dump things into rivers, but like You know, you don't necessarily need more laws. Like a lot of it could be solved also by having less laws, but I don't think that there's a lot of demand from our population for that. Oh, zero. Yeah. Also, I would say like, I think we, we think about this, it's, it's en vogue in like Silicon Valley and like among people that, that make things to be talking about these issues, but like maybe this is a little pessimistic, but I just don't think that the average American like particularly cares, um, that much, uh, about, um, about a lot of these issues.

The average person only cares about what they've recently seen on television and what their friend told them. Like, we're not talking about— yeah, I mean, like, I don't know, I don't know if that brings me down. I mean, if, if we only do things that the average person cares about, we're not going to do much, but we will watch a lot of American Idol.

I guess I'm just saying, I don't know if you're going to see like broad popular support for like, you know, deregulating critical industries, because I think if anything, we're seeing like an increase in demand for regulation of critical industries like nuclear. Again, I don't know. You know, I think maybe people just spend a lot of time on Twitter, like everybody wants to deregulate nuclear, which I think is like a like, good, build more nuclear reactors. Like, that, that's kind of a new thing. But then, so, so that's thumbs up. But, you know, you also see like, uh, we want to regulate ourselves out of, out of AI. Um, and I, I think it's also like, yeah, I think America just has a lot of, um, we have a hard hand that we've been dealt, and I, I think we'll figure it out. But, you know, the thing that keeps me up at night is like, we, we allow ourselves to be exposed to all this information from every country in the world comes onto our internet and speaks to us in English and convinces our citizens of different things. And like, you know, I spent some time looking at like, what would it be like to like do propaganda on like behind the Chinese firewall? Like if I wanted to run, it's impossible. Like you just can't do it. But it's like well documented and very easy to, to influence the minds of, of Americans. And so I think that really works to our detriment.

I could talk to you about that issue and that set of issues for about 7 years, but for the sake of this interview, I'm going to loop us back to Theseus. This is not, sadly, the Ian and Alex Talk About the Future of Industrial Policy Hour. Um, so before I let you go, I'm really curious about your time at YC. You guys were, I believe, uh, the company said in a release, I think the first defense tech company to go through the famed accelerator. So just really quickly, how was that? And do you think that it would help the issues we're describing if there were like another like 50 Theseuses equivalent going through American accelerators to jumpstart these processes?

Yeah, I mean, I think it was great. I really have never experienced like a higher density of really talented, intelligent, like kind, uh, motivated people, um, than, than in YC. Um, and I think we had like, you know, Aaron is a really great group partner, Aaron Epstein, and just like it was a really great experience. Um, I, I think they've started to invest like way, way, way more, um, into defense. I have heard a thing that like with accelerators, they typically just follow what the founders are interested in. So I think there's just been an uptick, um, You know, for example, our company started out of a hackathon. Like, I didn't wake up one day and be like, oh, I want to start this company. It's just there's so many problems. Like, even to the conversation we were just having, like, I think you can look at the world and you can see these problems and feel like, oh, there's nothing I can do. Or you can just pick an issue and start working as hard as you can towards it. And so Luckily, I think you see a lot of companies, you know, coming out of the US and Silicon Valley now that, that are focused on, on kind of these key aspects of working in the national interest. I think it's already started happening. Do I think that there could be more of it? Yeah. But then also to the thing I was just saying, like, maybe also like commercially focused, not just defense focused because, we're not like— we're not Ukraine and we have a different problem set than, than they do and we're not actively being invaded.

Well, we are currently in a different region dealing with drones. So, you know, I don't think— look, no matter what you can say about America, we do get busy. You know, we have a history of being a busy nation. So I think there's a lot of A lot of places we get to play this technology. Ian, listen, thank you so much. What's the website? And I do hope that tonight you get some more sleep and that Russia does not bomb Kyiv as much so that way you can actually sleep. Yeah, thank you.

I appreciate it. It's theseus.us. T-H-E-S-E-U-S dot US.

Awesome. And I don't get to say this too often because I try to stay pretty much impartial with founders, but I hope you kick maximum ass and I hope the technology goes even better than you expect because I would like Ukraine to win and soon. Thank you for coming on.

Thanks. I appreciate it. Take care.