Defense Tech, Startups, and More with John Coogan – The Hermeus Podcast 20

Yeah. Okay. This is good.

Okay. Yeah. So the first time that I met you was on Twitter.

Yep.

And it was because I was hanging out with Trey Stevens at Founders Fund, and I told him this, you know, joke slash, it's like half joke I'm actually obsessed with it, was that if I was president for a day, I would recommission the SR71, and I would use it to just fly everywhere, because I think it would just make such a statement as an American leader to be like, oh, the queen died. I'm there today. I'm there in 90 minutes, and I'm on site paying my respects. And that's how America does it. It's not, oh, we're not coming in two weeks. We're coming today. Whenever there's a, you know, global summit or something, you're there for the day. And then you back home with your kids, family values, you know, you could just espouse all the great American things. And so I had tweeted something with a picture of the SR71 saying, We got to bring this thing back. And you were like, hermes is doing it. We're working on it.

Oh, yeah, I remember that, actually. That's good.

Yeah, yeah, it got a ton of. It got a ton of likes. And you were there, and I was like, oh, this guy is working on this. Like, I wonder how real this is.

It's not bullshit.

And then. And then I start following up, and then I take the whole tour, and lo and behold, it's not bullshit.

Here we are. Well, a couple years ago is, I guess, more bullshit than it is now. It's every day it's less like that, and that's. And then we're doing our jobs. I don't know if that's the case.

There are some days. There she is.

So anyway, we have our cold open. Should I introduce myself?

Yeah, please do.

So I'm John Coogan. I'm an entrepreneur in residence at Founders Fund, and I have a YouTube channel where I talk about defense technology and startups and making a video about Hermeus. So that's why I'm here. Thanks for hosting me.

Awesome.

AJ Skyler.

Natalie. Director of People. I know we didn't really introduce ourselves, but. Yeah, very nice to meet you.

Always good to meet someone directly on a podcast. Yeah, exactly.

Natalie. When we were doing the interview, Natalie was the technical recruiter that we were the first hire. Yeah. Yeah. Well, yeah, it's like the first non technical hire, so.

Yeah. That is wild. I feel like a lot of people put that off and then it just like, it creates this like death spiral of like, I like doing engineering, I hate hiring, so I don't want to hire. And then all of a sudden it's like, okay, now I'm so overloaded that I need to just stop doing all the cool, important stuff for like an entire month and like catch up on hiring.

The only reason that we made that good decision is because we made the exact opposite decision in the previous company and ended up in that death spiral.

Reading too many resumes. And I said, I can't, I can't just be going through resumes every day. I have like technical things to do. So they hired me.

Yeah, I mean, second time founders, like it really does. You just learn so many hard won lessons and hard.

Oh yeah. Well, we're now, we're now well beyond the scope of what we built before. So it's all, it's all new again. And yeah, it only, it only gets harder. It only gets harder.

Yep, yep. But more reward.

Steaks get higher and things get better, so. Well, John, we'd love to hear a little bit about you, your background, what you do and what brought you to this day and age.

Yeah, so prior to Founders Fund, I started two companies. One was straight out of college, this protein shake company called Soylent. We sold this meal replacement shake on the Internet. Basically, like before e commerce startups were really popular and it was basically just like a complete, you know, solving a problem that we needed. So we were trying. I was originally part of a team that was a bunch of Georgia Tech engineers. They were trying to build a wireless network and doing all this like electrical engineering essentially, and going through yc, running out of money, looking at the bank balance dwindling, dwindling, dwindling. We paid our rent a year in advance, we owned our laptops, and we basically just had an Internet bill. But then we had to buy food. And so running out of money, trying to eat as cheaply as possible. So we start putting together protein shakes and start selling them online, basically.

So you guys actually made the company of Obama?

Yeah, yeah, yeah, yeah, yeah. Basically, Basically. I think Paul Graham called it the biggest pivot in YC history. Not the greatest pivot, not the best pivot, but the biggest because we went from a wireless networking, electrical engineering company to a food company.

But it's a pretty substantial one.

Yeah, yeah, yeah. But it worked out, raised a bunch of money and then we sold that company just a couple months ago.

Actually, you probably had this question a million times, but like, what was it? Just Watching the movie or like, like what led to the name, you know? Or did you actually just grind up people?

So the. So I'd heard of the movie. I think I'd seen the movie. But there was a book that preceded the movie. And in the book it's a little bit more like Utopian instead of dystopian. And so my co founder, who kind of came up with the whole idea, he was prototyping stuff. And I was like, this is ridiculous. Like, why are we making a food product? It doesn't matter if we're out of shape. We don't need to be healthy. We're just trying to write code, man. And then as soon as he told me the name, I was like, we need to sell this. This is a genius name. It's such a good troll. Like, what other company would have, like some weird cannibal joke in their name? It's like really dark, but it was just perfect for like, the rough.

Right.

Customer. Where we were selling to, like, these.

Silicon Valley contrarians that are just like, I'm different.

Exactly.

I'm not like the other girls.

People with blood. Boys.

Yeah, yeah, basically, yeah. I mean, we were, you know, in Silicon Valley in the HBO intro, there's a Soylent truck there right next to the thing.

That's pretty sweet. We haven't broken into pop culture yet, so we got some work to do there.

Yeah, yeah, yeah, yeah. It'll get there. But then, yeah, five years go by at that company. We've scaled that go. Going into retail, the company was running very well. So then me, my co founder and two other guys from the early team broke off and started the second company called Lucy, with the goal of helping people quit smoking. So we saw that one of my co founders was quitting smoking and just a lot of our friends were vaping and we knew that there were going to be people that wanted to quit. Nicorette wasn't really doing the job for a lot of people. They kind of saw it as more of a medicine. So we. We thought we could kind of create a new nicotine gum, new nicotine products to try and help people get off of, like, the hardcore stuff like cigarettes. And so that business has been going for the hardcore stuff. I mean, it will kill you pretty quickly. 50% of people who smoke die from it. It's insane. The stat is.

But they look cool.

They do look cool.

They look super, super cool.

I mean, they have something to do with their hands. Like, I don't know what to do with my hands. Sometimes in Social situations.

I wouldn't be surprised if we see a resurgence in smoking just because it's going to be so countercultural again. Because vaping was cool for like one year and then it became really lame. And so people are going to come back to that eventually. Hopefully. Hopefully they'll take all the carcinogens out of them or something by then. Who knows.

So what, what are some of the like crazy lessons that you learned in, you know, building two companies?

I mean there's a bunch, I think the big one that I've kind of been like sitting with right recently is that for the first company there's a ton of like, you basically have like execution risk and market risk. And if you think about, you know, a vc, when they're talking to you, they're trying to say like, okay, is this team talented? And then two, are they going after like a worthwhile problem? And you hear about this all the time where it's like, oh, we got like, you know, 25 MIT PhDs and like X people from Apple and SpaceX and all this stuff. But like they're building something that like no one wants. And so it's terrible. When you're a first time entrepreneur, that's actually not that bad of a situation to be in because you'll fail really fast. You'll, you'll bring something to market. Everyone say that's really stupid. The dangerous part is when the first time entrepreneurs come from this crazy pedigree. They raise millions and millions or billions of dollars and they build something that no one wants and then they just get like stranded and they've just lit all this money on fire and they spent like 10 years building something that no one wants. You probably know some companies, the second time you no longer have like execution risk. Like the first time there's always the risk that you have a good market, you're going after something hot, but you just mess it up. Because you're a first time entrepreneur. Second time you're probably capable of like building a company, but there's still that like market risk. And so what the painful thing about the second time entrepreneur is that you can be good, you can be good enough at business to build a functioning business that makes some profit, but it can just be not a good venture exit because you're, you're, you know how to hire people, you know how to run the books, you know how to make sure that you're making some money. But then, oh, turns out that there's no mop, there's no monopoly power to accrue in this market or you won't have, you know, some network effect or some economy of scale or this isn't actually that big of a market. And so you've spent five, 10 years grinding and then you have something that kind of looks like a lifestyle business and not really that great, and you have a bunch of investors and you kind of eaten up by your cap table and then you get kind of screwed. So I think the biggest thing is like, you got to pay your dues as the entrepreneur and kind of stumble around, make a bunch of mistakes, generally learn enough to get good at execution and then be super thoughtful about going after the correct market that can actually really, really scale. That's kind of how I'm thinking about it.

Yeah.

Interesting.

You have a third one in you third startup.

Yeah.

Well, it's weird because right now I'm running this YouTube channel and it's kind of turned into a lifestyle business. Like, like, I think, I think it's probably going to make like a whopping six figures of revenue this year. But, but it's like, it's like, so that's like extremely small from a venture perspective. But it's like I don't have any investors and like, it's just a very different thing. But I have a couple of employees and it's like, it's kind of fun because it's running as this like, very, very efficient business. Like, all the numbers pencil out very well, but on a very, very small scale. And I don't really think that there's like, like a venture opportunity there, but it has been fun kind of flexing that muscle of like, oh, okay, this is an LLC that actually acts as a business. And it's kind of fun, but I definitely do want to do something bigger.

Yeah. One of our advisors, Mitch Free, from the early days, he was one of the founders of Manufacturing.com and founded some other stuff and then most recently started Machine shop and was just like, basically doing what he loved. And now I'm like, I can see it. You know, it's like, because I don't think I got another one in me. And I was like, we have to make this work because I don't think I can do it. I just want to like, vibe out and like, do what I'm good at. Be good at my job again. Be beautiful.

Yeah.

So how did you get into defense tech? Like, where did that interest come from?

Yeah, I'm trying to think of the first video. I, I, I think the, I think the story was, I, I was Bored during COVID started a YouTube channel. Just because during COVID there were no more, you know, VC happy hours. There were no social events. It was just me and my wife hanging out. I was not doing a lot of zoom happy hours.

They were bad. They were very bad.

Enjoy that. So I was like, okay, if I can just be loud on the Internet and put myself out there, I'm going to meet people, have interesting conversations. Like, I put out this tweet and we meet on Twitter, like, this stuff happens and just kind of creating this serendipity. So I started talking about things that were interesting, my lessons from fundraising and stuff. Like, I had a friend who was raising money and wanted me to give him some advice. So I just turned that into a series of videos. It was like my conversations with him, essentially. And then I'd tell some stories about my entrepreneurial experience, but I don't really like talking about myself and my business and stuff. And there also just aren't that many stories. So you start talking about other interesting things in tech. And a few of the early videos I'd made were kind of breaking down some of the early debates that Peter Thiel had had with Eric Schmidt about stagnation and some of the his thoughts. And then just over time, I started highlighting like, oh, what's the cool company of the week? And like, one week, Ryan Peterson was touring the LA ports because there was a massive traffic jam at the LA port system and no one could get anything shipped. And he was running this amazing company, Flexport. So I do a video about him and his story building Flexport. And oh, by the way, that's a founders fund company. And then, oh, what's the, you know, Varda Delian like, took over Twitter one week when he launched that company because it was so weird that this guy is making this space manufacturing company. So I do a video on that. And then all of that kind of was. It was just complete happenstance. But it just kept being more and more founders fund companies because they were doing really cool things. I made a video about Palmer Luckey and his journey through Oculus, just because it literally fits the hero's journey perfectly. Like, he starts this company, he's this wonderkid, and then he gets fired, and then he builds the comes back and it's the greatest comeback story ever. And so, you know, I'd been talking about these founders fund companies, and then they reached out to me and were like, hey, why don't you come be an eir here? And you know what the thing that Founders Fund really does well is defense tech. Since they'd done Palantir, SpaceX and Anduril all were either incubations or they led the seed round in SpaceX's case. And they're all super, super critical to those success of those companies. And those companies have come to kind of define the defense tech space as we know it today. And so when I came in, I was like, hey, there's a bunch of things that I could do while I'm here to help Founders Fund out. I could, like, I could start, you know, I could interview every, every founder in the portfolio or I could talk about, you know, you know, I could interview all the partners and do, you know, something about, you know, who the, who the team is? And they were like, look, we really want to focus on defense tech. We really like, you know, just highlighting the companies that we worked with, so why don't you go like, talk about that? And I was like, yeah, that sounds really awesome and I want to do that anyway. So it just worked out really well. And so for the last couple months, I've been interviewing a bunch of people at Anduril. I did a video about Palantir and I've done some videos about just older defense tech stuff. I looked at how the big tech companies like Apple, Google and Microsoft have all worked with the military in various capacities. And that's just been fascinating to look into because that's part of the narrative. Why companies like you exist is that a lot of the traditional tech companies that we know, they don't really work with the military effectively. And so that's kind of the, the need for a new generation of defense tech companies. And it was just a really awesome theme to, to focus on for a couple months. So that's.

Yeah, I think it's really starting to break out. I was just looking today at the national security 100 that Silicon Valley defense group put out. I was a little bit mad about where we were in the list, but.

I was very mad.

Sorry. It's fine.

It was stacking.

Yeah, it was ranked.

Keep stacking the chips.

Yeah, it's like, are you kidding me?

Like 53 something? 56. Not even the top half. That's wild. Wild. I was, you know, the first thing I did was like, what is the algorithm?

Oh, yeah, yeah. Well, it's a lot of. It's driven by how much you've raised. That's what I've discovered. I didn't do many math, but this is all feelings, not facts. But yeah, so it was how much you've raised. But then there are some that I'm like, what are we doing here? It should be by scale of contract if we're going to really play that game. Oh yeah, that's true.

Yeah. Revenue is the first thing that came into my head of like.

Yeah, I mean, a lot of the stuff's like, not even public and it's really hard to rank startups because. Yeah, you just wind up with all these weird fake metrics. You can never get to.

Like, if their, if their goal was to motivate us, mission accomplished, you did it.

Yeah, as, as you like, since you've interviewed so many founders, a lot of folks that have worked at startups and built startups, like, is there a key indicator or a couple that you think early on, if you identify, hey, this company will be successful?

I mean, it's hard. I think there's a bunch of different factors that go into it. Obviously there's like, you know, technical expertise. I mean, one thing about that's interesting about Hermeus is like, it's for engineers, people who really know their stuff, good technical backgrounds and obviously like loose pedigree from good schools and good organizations like SpaceX and whatnot. But yeah, I mean, a lot of it's just like kind of understanding the, this, this like how to start this, how to kick start this engine of growth. Like you guys have seen seem to have done a good job with like, you know, raise a little bit of money, build an engine, test it, get a contract, raise more money and it's just kind of like repeat that cycle. And a lot of founders just like, they get stuck on one and they don't never really figure out how to like create this engine of growth. Like, you know, Jeff Bezos talks about this at Amazon. Wildly different business because it's like, sell books and then they get more money and then they can sell, you know, CDs and DVDs and then they can get more stuff and pretty soon they're selling pharmaceuticals and pretty much everything. But kind of understanding like what your flywheel is and being able to articulate that, that seems really important. On the other side, there's just like, there's just like the stuff I like about founders and I think that there's this new trend where founders are finally learning that they don't necessarily need to be completely filtered and like corporate and. And I mean, that's one thing that I really enjoyed about listening to. The first podcast episode with you guys was like, it was just like, I'm in the room with four founders who are just hanging out and talking about their business. It was like very. It felt very unfiltered. It felt like it didn't go through committee to see, oh, can we say this? Can we say that it was really great and I feel like we should.

Probably have a committee at some point.

No, no, no, no. Don't get the committee because, you know, it's not necessary because. Does Palmer Luckey have a committee? Clearly not. Clearly he just says whatever he wants on Twitter whenever he wants, and it hasn't affected him. And I think there's this new. There's this new world we're kind of living in where, like that hypersensitive culture where you need to constantly be walking on eggshells. Like, it's kind of going away. Like, I think people kind of got sick of like, the constant, like, oh, like Palmer said something rude to someone who's a journalist and like, we need to do.

Palmer hung out with Jason Calacanis for a little while. That blew up.

Yeah, yeah, yeah, yeah. It just like, be yourself.

Yeah. I think that's the thing is like, there's a draw to authenticism. Like, authenticity. That's the word. And really it's not so much about like, oh, do you swear or do you do this stuff? It's like, it's more just like, are you saying what you actually think? Like, is it not a pre prescribed sound bite that you're trying to get out? And now at this point, we've said things enough times that we kind of have some sound bites, but like, it wasn't someone saying anointing the sound bite that now everyone has and people just. It creates some aversion. Like, people don't want to be around fakeness.

Yeah. There's probably some correlation with like, you know, being able to speak authentically and being a successful founder. I don't know, you could probably fake that. There's probably a lot of founders who are not building anything of value and are just able to riff. But, but, but I do think that it's. It's just like it's a new era of something that's like, very enjoyable to just actually being able to, you know, create kind of a personality around your company. Like, create a culture. Right.

When do you think that goes too far?

I don't know.

I mean, we've seen plenty of companies burn out when the culture goes too far. Like, we work is a good example. Right. Like, he was taking it, like, way too far and got kind of slapped. I don't know. It's. I, I mean, I think the, I think the, I don't know, I, like a lot of people were, for the last few years have been kind of like censoring themselves when like, maybe they didn't need to because like what they like their true beliefs weren't actually that controversial, I guess. And I don't know, there's, there's someone, there's someone. I forget who said this, but somebody said like, like there's a lot of people that complain about, about, you know, the limiting of free speech. And they do that not because they have anything controversial to say, but because they, they actually don't have anything interesting to say. So they want to tell you that they're being silenced because if you, if you, if you allowed them to speak freely, everyone would know how boring they were.

Ouch.

So, but, but, but, but I think for the vast majority of like just Silicon Valley founders who are actually building really cool things, like they can just speak freely, it's no big deal. And like nothing bad will happen. And people. And this is kind of like a new muscle that like that venture backed CEOs need to like FL Flex and founders need to like, like learn and it's happening. You can see it like Ryan Peterson is kind of doing this on Twitter now that I see. He's just kind of like having fun, making jokes and it's like no big deal. He's also out of Flexboard, so he can kind of like, you know, have a little bit more, you know, distance. But you know, I think there are plenty of CEOs. You see it with Zuck. He's, he's posting memes now and like having fun.

Yeah, you gotta be in on the biz.

Does he post them on Twitter?

I think he did. I think he posted like that Spider man meme of like, y' all been on threads?

Yeah, no, I've been threading it up a little bit. Just today. Yeah, it's a fake one.

It's a land grab, everyone. I got to be the first one.

The crypto bros started showing up and.

I was like, I don't know.

I don't know if this is for me anymore. But we're trying it out. We're seeing, we're seeing what it is. No, I think the place where you do can take it too far is actually once success starts happening and the like idiosyncrasies or even like the really toxic negative traits start being deified and like, that's when it starts getting bad. It's like if You've been authentic the whole time. And then success happens. People start being like, oh, let me pattern match to that thing that they are doing that is whack, completely whack. And then there's like less of a critical eye on it when it's just like, well, I mean, success. So like, I guess it's fine to just like smack your employees or whatever they're doing.

Yeah.

One guy got successful even though he's a drunk. And then we're like, everyone, we got to get drunk.

Like, no, no, absolutely not.

Yeah, yeah. You need some first principles thinking about this stuff.

Right.

Good time.

How do you think about the entrepreneur's brand? So you talked about like Ryan, for example, really bringing his voice to Twitter and sharing that. How do you think about building that for like early entrepreneurs who maybe have really never been in the public eye before and how important it is, how valuable it is.

Yeah, I think a lot of it comes down to like, you need to have a very clear goal of who your audience is because for some founders, they will be capital constrained. So their audience should be investors and so their brand should appeal to investors. And maybe that means, you know, I don't know, writing a Wall Street Journal op ed or something. If it's a public market company. Right. Like that's what a public company CEO would do to attract public, public investors probably, versus if you're an early stage company that's really constrained by recruiting. I don't know, being on GitHub or LinkedIn or Twitter or something could be a better outlet for that. And then there's still a solid infrastructure of just reporters and news media that can help tell the story. And so as long as one of the founders is just available and open to that and capable of kind of shepherding those projects to a good place, like it kind of happens naturally. I don't think every, like, I don't think every venture backed founder should be spending 50% of their time on their brand. Like, that's ridiculous. Right? It should be very much like an marketing branding startup. Exactly. Yeah. Yeah. If you're.

Yeah. If you have a bad brand. Wait, who did I just ask about that? Oh, it was like it was a recruiting AI company. And I asked him on the phone, I was like, do you guys use your own tool? They're like, well, it's not quite ready yet. And I'm like, okay, well when it is, that's probably a little bit of. Yeah, I was probably a little too intense, but yeah, yeah.

I mean, there's other people who use, who use their brand to, to attract customers. And obviously that makes the most sense if you're, you know, a consumer company. But it probably can work for, for business to business. I'm trying to think of like the, the best example, but with the government, I don't know how you actually do.

Think there's, there's quite a bit of value in leveraging those communication channels, like, be it LinkedIn or Twitter or whatever, when you're working with the DOD. I mean, we've had how many different instances where we're talking to a general officer and he's like, hey, my wife showed me this article on whatever last night and it was like, oh, what you guys are doing is really cool. We should talk more. And then we'll talk to people at conferences and they'll. It's very clear that they consume our LinkedIn feed, for example, because we'll see things that are only in that feed that'll come out. It's like, okay, well, now I know what you pay attention to and I know kind of how to message around certain things to you.

Yeah, yeah, yeah. I mean, I think there's a little bit of just like putting out enough exhaust so that you like, so that it feels like this company's alive. And that means like the LinkedIn feed doing the reporters when they come through and putting out social media content, just like updates, like, letting people know what's going on with the company. I mean, I also imagine that just doing more content with influencers in the military space would be really, really easy and like, high leverage for you. Like, I'm sure there's a lot of military guys that watch like, Grand Thumb. Do you ever watch that?

No.

You've seen that he's like a gun youtuber. I don't know if it'd be applicable or something, but, but like, he just gets like millions of views. Really, really entertaining videos about, like, guns. I don't even know if it would apply, but, like, just stuff like that where you could just see, okay, this person clearly has like a military audience, like, and they have a big audience. If we could do something like that, that'd be really cool. Like, freethink was good in that sense because, like, they have a very science focused and like technology focused, but I don't know how much they have like a military focus. There's probably other people in that world that talk about that. Oh, yeah, and Alex Hollings was a great example of that.

Yeah, that's, that's been super good.

I think his video got 10 times less views than the free Think video. I think it was like 3 million and 300k. But I imagine that the Alex Hollings piece got like, way more high value. Like, if you're sending it to someone who might actually be critical, be a decision maker in a contract sense, you probably want to send him the. The Sandbox Air Power piece as opposed to the three things, or maybe both.

I think there's another piece here because it's like a lot of what you were mentioning is direct and we do have to be kind of like super intentional about that. Both from like the company perspective, but also the individual perspective. There's lots of channels on the kind of direct routes, but like, to the point that Angie kind of alluded to, it's like some of the time the actual best route is like through someone's kids or like through like some neighbor or something like that. And there's like a very hard to quantify aspect of like the virality or even not like virality, but like these strange little streams that like, get to people where you kind of have to play both games. And maybe the right approach is like a little bit of a barbell there where you're spending most of your time on like the very direct things that you can, you know, be that are like tangible results. But at some point you just need to have a lot of people and then the things that work will double down and then they just self feedback on each other. And so I think, yeah, those have been the interesting ones of like, okay, well, yeah, it's like the daughter who says, I saw this on TikTok dad. Right? And it was a, you know, a lieutenant general or something. And like, those are the really weird ones.

Yeah, yeah, yeah, yeah. There's a bunch of weird, like, bank shot situations like with like Palantir. I made a video about them and I, like, I didn't realize until I started doing research, like, they've just become a total meme stock. And like, they have so many fans of the stock. Like, when I posted the video, there were tons of Twitter accounts that were like, look at this. Like, and like, if you're just a retail investor, like, you do not have access to Palantir, you cannot use that software. This is not something you can use. But like, I don't know that you would want to become like a meme stock when you go public that probably has more problems than it solves. But. But there just are a lot of different, like, audiences that you can be speaking to, whether it's you know, people that, you know, the actual customers or the investors or the employees or even just like the retail investor, I guess.

Yeah, there's. I mean, even the tinfoil. How crowd? Tinfoil hat crowd. There's a YouTube video that is. Is Palantir partnering with Hermeus?

Oh, really?

Yeah.

That's pretty sick. That's awesome. Are they.

I can neither confirm nor deny.

Let's keep the content going.

I want to come back to something you talked about earlier. So, you know the idea of risk from an investor's perspective being market risk, execution or team risk. I want to add the third axis on that in the world that we live in, which is deep tech, defense tech, which is technology risk.

These hate that. Well, try not to underwrite that.

The vast majority. Absolutely right. So, you know, in talking with many folks over the years, it's like VCs are willing to take one of those three. So if you're in the deep tech field, it better be tech risk because it cannot be the team and it cannot be the market, because if there was no tech risk, then you wouldn't be in a deep tech field to begin with.

Interesting. Yeah, I mean, I think you guys have actually done a pretty good job of removing as much of tech risk as possible.

That is our job.

So it doesn't feel like a science project. Like, there are lots of companies where it's a credible team in a credible market, but they're just doing some sort of fringe science project or there needs.

To be some fundamental breakthrough like this tech. Once we crack the battery energy density, then we can go to the moon on electric and it's like, oh, well.

God, could be five years, could be 50 years, and we just don't know. And VCs hate underwriting that. They're much more, much more, like, excited about, about. Can I get a read on this founder? I'm the people person, okay. I've assessed the team. I like them. I think that they have what it takes. And I know from a business perspective that if they can succeed, this will be a huge market.

How different was it when, you know, especially when you were more heavy into recruiting, but, like, the sense of people, like, asking and understanding that same question of, like, when people are trying to suss out whether they want to be at this company, you know, is it. Was it a technical risk thing? You know, like, how did they understand the technical risk and how did they see the way we were kind of telling that story?

I actually think it's more like people are more. More curious on how we're approaching it now than they were early. So I think early startups in the tech space attract a very particular type of person, which is just people that want to solve hard problems and get in early and figure it out where now people want to see a lot more or a lot clearer path to a product. So I would assume that it would be flipped, but I think it's actually like, early on, people are like, yeah, this sounds awesome. Let's get in. There are a lot more risk takers joining early stage startups than series B, series C and so on.

Was that. Did you see that within your two companies as well? Sort of like the profile of candidate kind of shifting over time? I would imagine so, to some extent, yeah.

I mean, with like zero tech risk in either company. With the second company, we did have regulatory risk in the sense that, like, our products need to be approved by the fda, which is like a huge cumbersome. It's like getting a new cancer drug approved. It's a very opaque system. You have to, to like, submit all these like, filings and studies and then get results. And it's just a huge source of like, binary risk.

If you say yes, well, we have that one too. But just in the long term, like in the near term, less so in.

Terms of like certification regulatory risk.

Yeah. Faa, right? Yeah.

Okay.

Yeah. What's nice is that the DOD pays you for Stewie certification.

Where. Yeah, yeah, yeah.

You kind of have to put your own bill.

Yeah, yeah, yeah. It seems like. It seems like you have more of, like if you can get. If you can get through the DOD process.

Like it's. I mean, the incentives are aligned with the DoD, right? Because like, the DoD is the customer for the thing that they're certifying. So, like, if they didn't want to do it, then they wouldn't do it. Whereas the faa, they're just pure regulatory organization.

So there's not an incentive to enable.

Exactly as.

Well, not as obvious.

Well, I think so. I'd argue a little bit. I think in the commercial space world, Congress really got it right with the FAA because they really forced them to enable innovation. And that's like, that's changed so much over the past 20 years. But the airplane world is very different. The airplane world does not have that mandate from Congress.

It's because there's people on board, like, I can't hate on it too much. Like that makes sense. It's like the volume that, you know, most of commercial aviation is going through and for how safe it Is it's like incredible, incredible levels of safety. So they're doing something right.

I think that's really important because, like, with the fda, a lot of people don't know this, but they, they actually only recently got regulatory authority over nicotine and cigarettes. Yeah, this isn't. Obama passed the law that made the FDA have regulatory authority over cigarettes.

What was it before if it wasn't a food and it wasn't a drug?

Well, you know why? You know why?

Like, it was the fcc.

Yeah, it really was.

Wait, what? Oh, because of the commercials?

Yes, yes, yes, yes, yes. So that was the penalty. That was the penalty. During the master settlement agreement, after all the tobacco companies got their hands slapped, it was like, you guys can't advertise. And that was like the punishment. It wasn't, oh, now you have to test this and tell us what the cancer rates are or anything. It was like, no, you just can't talk about it. But this packaging, this label on your packaging, you can't advertise this. You can't buy billboards, you can't do TV ads. It was all fcc. But then obviously that made no sense. And then eventually the vape companies got like a loophole and they got around it because they said that they were like, you know, a recreational device, electronics device. Like, they, they pulled back from that. And so then.

Loopholes.

Yeah, amazing. So, so then in. Once Obama got elected, he passed the Family Smoking Control act, which gave the FDA authority over all tobacco derived products, so cigarettes, and that included vapes. But it took the FDA like almost 10 years to actually create the regulatory framework for approval of products. All of the cigarettes got grandfathered in. So they don't have to go through this approval process really. Like, they kind of have to with some smaller details, but it's like much less cumbersome because basically they're just like, look, the game's over. Like, everyone wants their cigarettes, it's fine, I guess, which is weird. But then new products, which is what Lucy is, have to go through this, this very, like, cumbersome process that was like, changing. Like, when we started the company, we thought that our regulatory filing would be. We started the company in 2016. We thought it'd be due in 2018. Then when Trump got elected, they moved it back to 2024, and then they moved it up to 2020, and it like went back and forth in the courts and like, all over this stuff. And like, there's just no regulatory infrastructure, there's no consultants. Like, there are a few, but, like, it's not as mature.

The ecosystem isn't there to support any sort of, like, stability or, like, roadmap.

Yeah, exactly. As opposed to, like, I'm sure with the faa, like, there's. There's like a track record of, like, you can go back and look at how was the SR71 certified? Let's. Let's talk to the engineers who worked on, you know, know, the latest plane to get certified. So there's like, a rich history and there's a lot of people and, like, a lot of sops of how things get done. But with the fda, it was like, definitely a new organization that they were spinning up. And then of course, like, Covid, like, completely, like, wreaked havoc on the organization since all the employees of the fda, like, moved over to Covid stuff.

Start smoking too, probably.

Yeah, it's wild, but yeah. Yeah.

Oh, man. So as an entrepreneur, how do you deal with that risk?

I mean, a lot of it's just, again, it's that, like, timing, getting that cycle right. Like, a big reason why that company got off the ground at all was because we were able to start the company before the regulations, like, fully went into effect, raise some money, actually get to market and start selling and proving out the, like, the lifetime value of the customer. What would it cost us to acquire a customer? Did smokers actually use this to quit effectively? Like, all of those different questions, we were able to answer those and effectively, like, test our product in the market and then bring that to the fda, but then also use that to raise money and create this, like, you know, economic engine that then can pay for the really expensive FDA applications. And so it was really, really cumbersome, but at the same time, it kind of closed the door behind us because a new company, and there are some people that are still trying to start companies in the space, but it's really, really, really hard because you now, if you're playing, if you're following the law, you basically can't sell any of your product before you get approved. So now you're running what is essentially like a deep tech company, and from a financial perspective, like, raising tens of millions of dollars. But at the end of the. At the end of the road, you have a consumer product, and who knows, maybe the consumer doesn't like it. Yeah, that's terrible. Right? Imagine if, like, imagine if you do all this and then there's like, oh, when. When you get done, there's going to be 25 other hypersonic planes, and actually it's going to be like the logo Color that matters the most, you know, or like, you know, a good thing.

We picked the right color.

Yeah, there you go. Like, like, like with you guys, it's like if you get through it, like, you'll be the only one.

Like, there's an obvious there, there.

This is an n of 1.

Exactly. Situation. So it's just like a wildly different thing. Yeah, yeah, it's a lot of.

So let's go back in history a little bit. Let's talk about another, like, N of one organization that did probably some of the most amazing engineering in the history of the United States in the early days of Skunkworks. So the Kelly Johnson days, the Ben Rich days, what do you think was special about either or maybe the combination of those people that time that allow them to break speed records regularly, both in terms of the aircraft that were flying, but also the pace at which they developed them. What do you think was special also.

Before you hop in, Jer, just for the audience also to kind of talk to a little bit about the work and the research that you've done to anchor that opinion. It might be cool to point to some of that and you can plug your stuff if you want to.

I mean, everyone should go read Skunk Works. It's a great book about the development of the SR71 and all the amazing work that was done at Lockheed Skunk Works division. And I made a video kind of retelling that story in video form. And there's a bunch of great videos about the SR71 on YouTube. You can just go search it. But I mean, when I think about Kelly Johnson, I really just think of him as a maniac on a mission. Essentially. The thing that really sets him apart is just that he just essentially had complete control over his organization and just ran it with like, just would just knock down any blocker. And there was very little committee, very little overhead, and that allowed him to move very fast. And when you look at what's happened with SpaceX and the way Elon runs his company, there's a lot of, A lot of people would say it's like, it's too crazy. It's really hard to work there. And a lot of people burn out of that organization. But like, there's no. You can't deny that, like, he got results. And I think that's probably the key deciding, like the key reason why Skunk Works happened was because of Kelly Johnson's just maniacal drive. Not a lot of committees, not a lot of red tape. And it's hard to say how Much of that can be recreated in the. These days. We certainly hope it can. And like, I think that people kind of pulling the right lessons from the Elon playbook is pretty, pretty critical. But a lot of it just comes down to, I mean, at the time there was less oversight from the government, less. Less red tape. Now there's more. But there's also, you know, a pretty robust venture capital ecosystem that can kind of accelerate things and hopefully we get back to it. But I mean, those timelines are going to be hard for you to make match. It is pretty incredible. I mean, I think they delivered. Didn't they deliver?

Like, okay, well, I guess this interview's over. That kind of skepticism. We don't.

I mean, they delivered. I think they delivered like five SR71s for like less than $10 million a piece or something. And they did it like, they did it under time, under budget or something. It was like, incredible, probably.

Yeah. So I think the. The original contract from the CIA was $100 million, and adjusted to today's date, it's about a billion dollars. So, like, it's okay. Reasonable amount of money. And that was to deliver the first six aircraft. That was the A12. So the, like the predecessor 71. And if, if I, like, if I line up the milestones in that program, like, kind of when they hit. When they rolled out a ground prototype and when they rolled out their first aircraft and like, you know, when they went supersonic for the first time, when they achieved their max speed, I think we'll beat that.

You think you'll beat it?

I think we'll beat it. So far, we are ahead.

Yeah.

Yeah. If you lay it all out on a timeline.

Okay.

There's a chance.

That's amazing.

We also have a long way to go in terms of like, getting the team to work efficiently together. That will, I think, will really accelerate things. So we do have some unfair advantages comparing to them from back in the day, which is like, modern computation. We have, like, historically more data to even pull from. Even looking at empirical stuff. The materials that we're using are more readily available. We're not inventing alloys of titanium anymore. So there are things that are in our favor, but, you know, we don't have the same number of reps under our belt that that team had. So we still do have a lot of work to do internally to just like, getting that team to just be the one team, like, cohesive unit. Because, like, more than half the team, probably like two thirds of the team hasn't even been here. A year right now. And a lot of the processes are. We're going through for the first time. So I think, you know, will we beat them on the near term timelines? Yeah, we might start lagging a little bit, but I think once we actually get at pace and with the level of focus we can bring to this. Yeah, I think we're gonna.

You gotta hold yourself to that. I mean, if you can.

I'll put that hot take out there.

Yeah, if you can beat the speed record faster than they did. Yeah, that's great.

From company inception. Because if we want to talk from Skunk Works inception to breaking the speed record. Yeah, we'll definitely.

We got plenty of margin to that one.

True, true, true.

No, I think from, like, beginning of.

Program, programmatically, that's a tough one.

It is tough, but we're gonna do it.

You can do it. I love it.

Yeah.

Yeah, sure.

What have your impressions been here? I mean, you've been here for the day, came down, spent some time in New York, down with the family here, exploring Atlanta, and spent the day here at Hermeus. You know, obviously, like, we've talked a couple times and then kicked up over the past couple months. But what did you expect before you came here and what are you walking away with?

I mean, I think I expected. I expected more jargon and I expected more.

Less of a. I can bring more if you. I got more for you if you want.

You're the one who brought EIR to this conversation.

Entrepreneur in residence, silly.

The.

No, no. With other companies, it's been like pulling teeth to try and get, like, a narrative out of them and kind of understand, like, okay, what actually happened to make this company here. And you get like six different stories from everything you talk about. And there's actually a very cohesive narrative here, which is great for what I'm doing and also just, like, I don't know, maybe reassuring, but. But yeah, it's been. It's been very interesting hearing, like, as you walked me, I think you basically walked me around the facility in chronological order and you just showed me, this is the first engine, here's the second engine in the coming year, and then here's this next engine that we just bought and we're still working on, and it's going to be the next thing. And it was very, like, logical. And then everyone I talked to kind of was able to tie that to, oh, maybe they work in sales. Well, here are the government contracts that we lined up alongside those. Or. Or, oh, we worked on the funding Side, like, here's how the funding tied to those. So it's been, it's been very, very clear kind of the cycles that have happened at the company. And that's been just like, I don't know, just very, like, I, I, I came away. Like, I feel like I could tell the story of Hermes to anyone on the street, like, in two seconds. Because it's, like, very, very clear. It's not like, oh, you've been bouncing around from idea to idea, and there's been a bunch of pivots and there's a bunch of random stuff that doesn't really make sense other than the, Other than the Hamon story.

Yeah, that was, that's the one pivot. That was a very brief pivot. And the, you know, hot tub.

And the hot tub and the hot. Are you on the hot tub team?

Yeah.

Oh, yeah.

Someone.

Oh, man. Yeah, it's. I still find it pretty amazing that, like, the, like, rough bones of the plan that we came up with, like, in a few hours between when Skyler got a text that we needed to have a pitch ready the next day for our first investor pitch and when he was at a bar to putting it together, like, it's still pretty damn close.

There's a lot more detail. Like, I think that's where it's been more fleshed out, and that's where actually a lot of the difficulty has been. I think something that I'm especially. But, like, the entire team is allergic to is churn. And, like, as soon as we catch a whiff of it, it's just like, I can't sleep. And, like, it's all this. And so employee churn just. Yeah, just churn on. Like, how, like, where are we running? What direction? Are we wanting a misalignment? That sort of thing. And it, it runs away so incredibly fast. It sometimes can feel like one of those, like, squishy balls where you squish it and, like, something pops out and you try and push back in and it pops up somewhere else. Um, so it's like most of our time is complexity reduction. Like, almost all of it is like, okay, no, no, no, no. Not that, this and not that. And then even a lot of the time, we start running off, looking into shiny thing, and it's like, we just don't. The timelines are too aggressive. Everything is too hard. Everything is too easily added complexity that, that we just have to spend an inordinate amount of time on it. And so it's actually like, it became a feature because it's been such a bug.

Yeah. Yeah, we got to be Kelly Johnson.

Yeah, I mean. I mean, signed up for it. Now we have to do it.

Honestly, I think you should put that.

On the wall in here.

Let's do it.

Honestly, though, I think that's what's required to. To solve this technical problem. Like, this is that hard of a problem where, like, not just any engineering team off the street is going to be able to do this in any amount of time.

Time.

The complexity of the coupledness of the systems, the complexity of the sales process. It's not something you can just, you know, take a crack at with. With any group of people. It has to be like, the singular group of people in the world that can do this.

Yeah.

And that's what we have to prove.

The other. The other interesting takeaway from today was just, like, how thoughtful the process was to decompose.

The problem of, like, was a lot of. A lot of frustrating arguments.

And yeah, like, I was asking him, like, there's so many different steps that you could. Like just the individual, like, okay, if you want to get to, you know, humans in a plane going Mach 5, well, then take the humans out, and that reduces the complexity. And then, you know, do the static firing on the. On the. In the. In the test. In the test chamber and just kind of like breaking things down. And I even asked him like, well, did you think about doing an air launch version as like an interim? And they're like, oh, like, we did that at our last company.

Yeah, don't do that.

Don't. Don't do that. But. But it's like, at least you guys have the experience there. Yeah. So, like, really, really just like, it's like, it can be a little depressing to think so incrementally sometimes because you're like, oh, we're just working on, like, just an engine sitting on the floor or whatever. But, like, it's very clear that you've been very deliberate about the steps and been hitting those milestones, like, very regularly.

I think that's what has enabled the speed. So actually, the clarity has been the thing that allowed us to stay on schedule the most. Whenever there's ambiguity, then it's like it's a gas. It fills the volume. Right. And so, you know, by being very, very clear of, like, what does this thing need to do? It's. I mean, we're constantly asking ourselves that question. And even within. Even within the things that we've already decided, there's always like, are we sure we want to do this versus that does it go on the next one? Does it go on this one? Like that's constantly happening and I think that's. And, but those tight, those like conversations have to happen at a really tight rate so that you can actually continue progress too. So there's like always this like balance of at some point you just need to cut it and run. But we always need to be willing to say, are we being dumb here? Are we doing something stupid?

It's like too many incremental steps and you'll be going too slow, but not enough and you'll just get stuck building the exquisite system for two decades and get nowhere.

Yeah, I think where we kind of arrive to is effectively an airplane a year in terms of like new risk that we're going and buying down. And I don't think we've demonstrated that rate of like an airplane going after a new risk in this country in like multiple decades. I mean we're seeing it in the space world. SpaceX iterates on Starship quite quickly, at least on the ground. We'll see how quickly they can do it in the air. But again, that's a piece that is required to solve this hard of a technical problem. If you're not building that much hardware at that pace, testing it, learning and rolling those learnings in, you won't be able to buy down the unsafe certainty fast enough to deliver an airplane that could actually fly the mission.

Yeah, makes sense.

Yeah. Well, John, it's been fantastic having you here.

Thanks for having me.

You want to go ahead and like plug your YouTube channel?

Yeah, you can just find it John Coogan on YouTube. And yeah, there'll be an awesome Hermes video up soon.

Sweet. Can't wait.

Amazing.

Thanks for having me.

Thank you.