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

You're watching TVPN. It is Thursday, March 27, 2025. We are live from the temple of technology, the fortress of finance, the capital. Capital. This show starts now. We got a great show for you day, folks. It's defense day. Let's hear Jordy. Defense. Defense. Defense. Defense wins championships. And we're breaking it down today on TPP and live talking to a bunch of people in the defense world, Delian, Acs, AJ from Hermeus. We got a bunch more folks coming in that's starting in half an hour. We're going to give you a, a little brief overview of what's going on in the news in tech broadly, talking about tariffs, talking about what Pat Gelsinger is up to now that he's out of intel. And then we'll take you through some history of defense tech, how he got here, and then we'll talk to the builders that are actually doing it, the good stuff. So let's take it with the news first. First, I noticed you are, you could say you're verticalizing orange today.

I'm going big. I'm going long orange.

I'm going long orange. I'm going long.

I want to go on record. I'm shorting. It's March 27, 2025.

I'm.

Yep.

And it's, it's downhill from here in many ways.

You could say that slop is like the most important word of the year. But that is also a top signal for the word overall. It's going to get overused. It's going to get applied with a broad brush. But very fascinating time on the Internet yesterday, obviously there was eventually a backlash to all the giblification, all the gab going out.

I think people have lords cleaned up yesterday.

They did. I posted one that was just framed from Oppenheimer. Giblified 30k likes. Jordy had another 25k or something on morning routine. Morning routine. Just take the viral meme, make it Ghibli. And it was easy money on EC money. Elon bucks for flowing.

I can't wait for the payouts. There's, there's this sense maybe for people that aren't in the creator revenue sharing program that the payouts are big. They are not.

They're not.

We could maybe pay for a week's supply of Saratoga water.

Yep.

With the ex payout from this entire month.

But it was a fun day. I think, I think a lot of the criticisms were correct that, you know, this, this is a degradation of aesthetics in some way. It's a collapse of aesthetics. It's this all consuming meme. Everyone was obsessed. The exact same image, exact same look. And it was a little odd. But you know, it was a, it was a very peaceful time on Axe yesterday. There was no politics, no wars, no fighting. It was just people posting anime, having fun.

Haskell in the chat says Lisan Al Ghibli.

Ghibli. Yes, of course, of course. And so I'm sure we'll dig into that more. I want to hear from Midjourney. I want to hear from David Holz. I also want to hear about more of the tech that went into developing that model. How narrowly is it trained on Studio Ghibli type content? Will there be a legal battle? Want to know? Was this truly just an algorithm change or was there more scaling applied to this? Is this. The model is clearly better. I don't think anyone debates that. Is it better because of scale? Did they, did they spend more money on the training run or is this a, you know, an algorithmic improvement? So interesting to dig into. I'm sure we'll talk to a lot of folks. We have Christabel Valenzuela coming on in a few weeks, founder of Runway, which does AI video generation. I'm sure he'll have a lot of commentary on this and we'll try and cover this as the story continues to develop. But the story that is developing today is new Trump tariffs, where things stand from the Wall Street Journal giving a little roundup here. Canada and Mexico got a 25% import tariff on goods took effect March 4 with an exception for for energy products and potash, which received a 10% tariff. A little bit more critical.

What is potash?

You look that up, I think it's.

An industrial fertilizer, potassium containing salts that are mined and manufactured. It's used as a fertilizer. It's a key nutrient for plants. So bad news for the potash industry.

Didn't get the domestic potash industry, you mean because the domestic, the US Domestic potash industry, they want the highest tariff possible. But there's a smaller tariff, 10% on on potash and energy, 25% on goods. Trump administration later suspended those tariffs until April 2 on autos and all other goods that are eligible for duty free trade under the US Mexico, Canada Agreement or usmca. Many goods entering the US don't comply with USMCA and are therefore subject to the new tariffs. Canada responded by placing tariffs on $21 billion in U.S. imports, including fruits, vegetables, appliances and liquor. Canada also said it would tariff an additional 20 billion of US goods in response to Trump's steel and aluminum tariffs. So a little bit of trade war on. And then the big news today is that President Trump, on March 26, that was yesterday, announced that he would impose a 25% tariff on global automotive imports to the U.S. that's all cars that are made internationally. Doesn't matter if it's a BMW or a Han Chinese ev. Like, that's the brand Han.

Oh, really?

Yeah.

Even though Han is like, yes, yes, yes.

It's the most dominant ethnicity in China. The. One of the.

That's cool. That's like calling your bank bank of America.

Yeah, basically. Yeah. And of course, Huawei also does Huawei or Big Alpha.

There's a lot of somebody making a political podcast called Podcast of America.

Podcast of Pod Save America. Pod Save America.

But just the Podcast of America.

Yeah, like bank of America. I like that. It's good. And so auto stocks have been in turmoil since this happened. And. And then, of course, there are also tariffs on China. That has been the big focus of the trade war. On February 3, the Trump administration imposed an extra 10% tariff on goods from China. On top of those various tariffs levied during. During the Biden and Trump and first Trump administrations, China retaliated with a 25% tariff on U.S. coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and other products. That all took effect February 10th. And then on March 3rd, Trump again hiked tariffs on Chinese goods by an additional 10. China again retaliated with tariffs that took effect on March 10, including 15% on US chicken, wheat, corn, cotton, 10% on sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products. So they are taxing our food and we are taxing their manufactured goods, basically. There's also some reciprocal, reciprocal tariffs going on over in Europe, in the eu. But you know what they aren't raising tariffs on? I didn't see mentioned at all in there? Swiss watches.

That's right.

So head on over to bezel shop. Over 23,500 luxury watches, fully authenticated in house by Bezel's team of experts. Great time. Because a lot of things, if you buy something before the tariff comes in, the price goes up. You know, like the. The free market will reward you for that.

That's right.

You know, some people that pay attention to these tariffs, they trade them with size. On Wall street, they're running massive hedge funds. Some other guys are just buying Rolex Daytonas and FP Jordans, hoping that tax tariffs hit and they strike it rich. Many ways to make a buck around here. Always a bull market somewhere. Well, that's right. Speaking of luxury goods, Ferrari is set to raise prices on some models in response to US Tariffs. This is the big question. Who really pays? The External Revenue Service is. Is levying tariffs. Will the foreign countries pass that through to the consumer by raising prices? In the case of Ferrari, it certainly seems like they are. They're raising a. They're seeing a maximum 10% price increase on the Purosangue, which is their SUV. And the Dolce Cilindri, the 12.

That was pretty good. Normally you really botched those, but I'm proud of you.

I'm working on my Italian accent. Yeah, yeah. The 12 cylindri, which. Very controversial car. I think it's beautiful. Not many people agree with me.

It's the wheels, John.

It's the wheels. Oh, I always thought it was the front. The front hood, that black stripe, which is also a design element in the F80.

The wheels on the. Do they go round and round are just. They go round and round, but they're very bad.

Oh, okay. I didn't know that. Well, I mean, I mean, I'm still partial to the. To the rear engine Ferraris, the SB3, even the SF90, the 296, I think those are all fantastic cars, but in terms of, you know, what does Ferrari really do? Well, front engine, V12s and the Dolce Trelandry is still in the game, but it's 10% more expensive now, so.

And pinch those pennies. Ferrari was already having issues with pricing people. It seems that the true market value of a. Of a lot of new Ferraris is simply less than what Ferrari is charging.

Yes.

And so having to increase prices and. And pass those on to, you know, basically pass the. The tariff cost onto consumers.

Yep.

Is not going to have a positive impact on sales.

So we've covered this before. Ferrari's changed their strategy. They are producing a lot more cars, and there has been a glut of these models that were formerly very special, like the SF90. It's a, what, 600, $800,000 car. Used to be, when there was a $600,000 Ferrari, you really needed to know someone to get one. You need to be on a list. You had to be invited to buy it. Now you can just kind of pick one of those up. And the folks who did pick them up have taken a lot of depreciation on the chin with that one. And also, just from a design standpoint, the SF96, they look pret similar stories.

Of people buying SF90s, you know, putting up a lot of equity and then still being down underwater in the red.

Yep.

Like it's very rough having to pay to to sell their car.

Well, the good News is the 296, the SF90 and the Roma will all remain unchanged in price regardless of the import date. This implies that Ferrari will cover the cost of any duties due on such models imported to the US after the April 2 deadline.

Let's hear it.

So it's truly an external revenue service event.

Yep.

Well, you said you wanted to hear it for someone.

Well, let's hear it for the Ferrari management for taking one for the US Consumer. US consumer is undefeated.

Yep. They really are. Anyway, you know who drives for Ferrari?

Charles leclaire.

And you know what sleeps on an eight sleep?

There we go.

He's an eight sleep brand ambassador. And today we're telling you about eight sleep nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Go to 8sleep.com tvpn. Just do it. Just do it.

Code tvpn $350 off and you can compete with John and I. We've both been putting up big numbers.

I Woke up at 4am But I still put up a big number last night, something like 90, 94.

We were hanging.

Once you get really into it, you can go deeper. We're learning this. We're going to dive into this later. But eight sleep does a bunch of other analytics. They don't just give you a sleep score and tell you how long you slept. They to check your heart rate and your heart rate variability, your HRV as well as your breath rate and your breath rate. And so you can compete with your rival on those metrics as well. It's not just about who slept longer. It's also about who's putting up big numbers in HR across the board. There's always a bull market somewhere in.

Your always bull market somewhere. We we got to hang on. Zoom a bit with Mavi and Alexandra over at the eight sleep team this morning, which is fun. We got some cool stuff cooking. But back to the show.

So Pat Gelsinger, former Intel CEO, absolute legend.

He's an absolute dog.

John, he was. He's out at intel and he's in to a venture capital firm. Little personnel news going on. He is joining the venture firm Playground Global as a general partner with a focus on semiconductors and other investments that lie somewhere between the improbable and the impossible. I like it, he's really going long shots. I, I love this. I was thinking about this the other day that, you know, there are funds that have gone all in on defense tech, or they've gone all in on crypto, or they've gone all in on AI. And I would love to see a fund burn the ships and just go really, really hard on. We're going to figure out how to make money in semiconductors and we have a lot of money and we think this is important, we think it's an important mission. And so that's what we're going to figure out. And it sounds like that's what Gelsinger is going to do. And I mean, he's a legend. He's been in the industry forever and he would be probably a fantastic board member. I mean, I don't know exactly how good he is at startup governance, but I imagine he'd be very knowledgeable and he'd be someone who you would want as an advisor.

So I'm over here on LinkedIn where he's putting up some big numbers. He hasn't shared this news yet, by the way, so it's, it's breaking news.

Okay.

He calls himself an electrical engineering expert with four decades of technology experience. A couple decades, but I love that he's leading with his expertise. Got to be cracked to go on a run like he did and excited to have him on the show.

At some point, he started a brief stint at VMware. The intel veteran came back home to the chip giant in 2021, this time as CEO with a mandate to revive the company's prospects and rebuild its technological prowess amid market share losses and highly publicized delays for its most advanced chips. His turn. But his. But his turnaround strategy focused both on designing and manufacturing chips, which was controversial. Remember, a lot of people were saying intel should split those two businesses up, become two different companies. This round ran counter to the direction that the industry had taken over previous several decades, with rivals like AI chip designer Nvidia and chip manufacturer Taiwan Semiconductor manufacturing TSMC setting the pace. And so the whole market and the big power law companies were all saying, you gotta be a pure play Intel. You're trying to do two things at once. You're. You're neither Nvidia, you're not Nvidia, and you're also not tsmc. So you're following, falling behind. Everyone was saying, hey, just go. Pure play. He didn't, he chose not to do that. And eventually they said, hey, we want to try a different CEO. But the new CEO Lip Bhutan is signaling that maybe he's story, maybe he's staying the course and maybe not splitting up intel, but we'll see. He could just be saying that because internal politics and he wants to really get the playbook lined up before he rolls it out. So I'm sure we'll be talking to more folks about intel in the coming weeks. Stay tuned. But you know, I was thinking if he, if he wants to just get a couple deals under his belt, maybe he takes a, you know, he's, you know, this is first time really being a vc.

Saquon, he's been very active.

Exactly.

A couple months.

Yeah. Maybe Saquon could be like his, his junior partner. Yeah, just like. Or venture partner or send me deals.

Honestly, Saquon, Saquon at least over the last two months is getting into the higher profile companies, companies that have 10x the demand for, for their equity. So it's possible that, you know, they could, I'm sure they could both learn a thing or two from.

So hopefully he likes Acorn, gets into ramp. Of course, you know, ramp time is money save. Both easy use, corporate cards, bill payments, accounting and a whole lot more all in one place.

And as Saquon says, keep your team focused on the game, not expenses.

I love that. It's great. Let's move on to some news in the Wall Street Journal about Flexport. Ryan Peterson's a good friend. He's been on the show. This, this article is kind of deep diving into their, their profitability and revenue. The title is Freight Startup Flexport misses Profitability Target. We're going to give you the details and then give you our take. So Peterson said too much of the company's 5.2 million square feet of warehouse space spread across five buildings went unfilled last year. He said demand for fulfillment service is rebounding and he expects that Flexport will be quite profitable by the end of 2025.

So, so that's the real story here, folks.

Ryan, he working really hard on this.

Billions of revenue and 2025 profitability. If we were writing this headline, we would have led with that.

Yeah, exactly. Exactly. Yeah. So in 2023, Flexport did 1.6 billion in revenue. Last year they did 2.1 billion. Still growing. And of course, Ryan actually rotated out, hired a CEO and then went back into the CEO seat, put the company back in founder mode, made a bunch of hard decisions, taken like four or.

Five flights a day.

Yeah, I mean you've seen him. He called in from Texas because he's traveling like crazy. He is. He is doing everything necessary to make this company work and successful.

And it's an interesting thing where more.

Than I possibly can.

Yeah. Flexport is in this position where flex. Many of Flexport's customers have gone through the craziest last six months of their time. As, you know, companies right. With, you know, trade wars, tariffs, you know, all this crazy stuff happening. And it's almost like they need to kind of thread the needle on making sure that, you know, they're building a great business, but also not putting too much pressure on their customers who are already seeing their costs rise in various ways.

Yeah, I mean, last time I was talking to Ryan, he's on all these flights, I was telling him, like, hey, when you're traveling, you really got to book a wander. You should find your happy place. You could book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and 247 concierge service.

I remember you saying that word for word.

Yeah, I was saying it's a vacation home, but better go to wander.com, use code TVPN. And so check it out. Let's run through a little bit. So we're doing Defense Day today. We're taking you through defense tech, trying to give you a tour of what's happening in the industry. We're gonna have a ton of great founders on, a couple investors as well. But I wanted to run through a little bit of history on how we got to this point in defense tech. And so I gave a talk.

I want to know at what point did they decide to call it defense tech versus offense tech? Because that would have been.

It is the time for offense. Well, you know that the Department of Defense used to be called the Department of War.

Yeah.

Because it was just like. Yeah, it's the guys who we handle war.

It is a better.

But we've toned it down. Now we're focused on defense because defense wins championships, of course. And it really all this whole idea of like before, you can't call like the Civil War, like defense technology. Really? Because they weren't using electronics back then. Yeah, World War II was the first electronic war. And so this all started during the Blitz in 1940. The Germans were bombing Britain and there were these series of radars called the camhuber Line. And they were decimating our bombers. They had something called the Messerschmitts 262. And it was really a war of technology. We'd build a radar system, they build a bomber to bomb the radar system. There was Radio systems and then counter radar systems and all these different things.

Crazy lore. My great grandpa was shot down twice in a, in a, in a, he was the rear gunner in a B52 sort of long range bombers.

Wasn't his dying wish not to mention that on a podcast?

No, he said, actually it's fine. Talk about this, talk about it forever. To the loudest, you know, in the loudest possible way to the most number of people.

It's legendary. To survive.

To survive too. And then he was redeploying to the Pacific to be a fighter pilot when the war ended.

But yep, anyways, and so, so the solution was Vannevar Bush, the science legend. I think he worked alongside Oppenheimer and this was the first time that there was like this really combination between civilian scientists and military efforts. And this is like a continuing theme throughout the evolution of defense tech. So there's. He brings this one page memo to FDR outlining a plan. Hey, we're going to use our best scientists at universities to, to build defense tech. And FDR approves it in 10 minutes. Talk about like founder mode. Like it's like really, really great. So this creates the NRD, the NDRC, the National Defense Research Committee in 1940. And they work on the bomb, which you know from Oppenheimer, but they also work on radar. And so the Office of Science research and development, 1941, Bush is the director. In 1942, the Harvard Radio Research Lab starts government spending on defense tech. And Bush was a thesis adviser to Fred Terman. And Fred Terman is known as like the real father of Silicon Valley because he runs the Harvard Radio Research Lab. They create over 150 anti radar devices and they're pivotal in disrupting German radar capabilities. There's a whole bunch of different things they invent chaff like the literally just aluminum foil that is cut to half the wavelength of the radar. So it's like barely tech in my opinion. But it's like still there's math to calculate how you cut the tinfoil, but it's just chopped up tinfoil. But if you chop the tinfoil at a certain size, it messes with the radar. And so that's when you see planes throwing out just aluminum foil. The reason is because it disrupts the radar, right? Carpet jammers were high frequency transmitters that overwhelm enemy radar. You just send so much signal that they get confused. And this can. This contributed to major successes of bombing raids like Operation Gomorrah in 19, in 1930, in 1943. Now the Radio Research Lab gets disbanded in 1946 and they needed something new. So Terman goes to Stanford and he brings ideas from Harvard over to the West Coast. He's the dean of the school of Engineering. And this is the formation of the Stanford Industrial park, which created Varian Associates, Hewlett Packard, General Electric, Lockheed Martin, they all had offices there. And so it was this crazy interface between science and business, basically. And this is all pre transistor, but it led to. But it led to like all of Silicon Valley, basically. So then you go into the 50s. So we'll go decade by decade. That was the 40s in the 50s. DARPA obviously speeds up. This is all because of Sputnik. October 4, 1957. It's the. It was the Sputnik. It was the Sputnik moment of the Cold War. Yeah, okay, exactly. It was just a radio sailor satellite, but it could hold payloads. And so all of a sudden everyone's thinking, wait, if they can put up a radio satellite, they can put up a bomb. So we got to be able to do that. And so Sputnik's a huge deal. The New York Times published 279 articles about it in one month. It's like crazy. It was like total wall to wall coverage. It was crazy. It was like a. The Sputnik moment really was real. And so the Cold War was heating up.

Ghibli moment.

Yeah, the Ghibli moment of.

It was the Ghibli moment of space or the Cold War.

And so the Soviet Union took huge World War II casualties, but they were strong in tech. And Sam Rayburn, the Speaker of the House of Representatives at the time, said that the people of the United States have been humiliated. They're disturbed and they're unhappy. The CIA actually knew that Sputnik was going to happen, but Americans were scared because they didn't know. And the solution was, we responded with the Vanguard TV3 launch two months later, but that crashed. And then Explorer 1 worked in 1958, so the pace of play was really fast. Sputnik 1957, Explorer 1 in 58. Smaller, but it goes deeper into space. So we got that superlative. Now there's too many conflicting rocket projects. Like the army had one, I think the CIA had one. Like there were a bunch of different projects going on. They're like, we need to consolidate this. We're going to. President Eisenhower says, put it all under the Advanced Research Projects Agency. We're going to create a new agency. It's called arpa. Eventually becomes darpa. And And DARPA is like legendary. They create the Internet through arpanet, they create stealth aircraft, GPS drones and even self driving cars. Originally came out of darpa. And so it's been a great, you know, like farm team for tech for a long time. 1960s we got to talk about Skunk Works.

Maguire was at DARPA himself for I think a year and a half.

That's right. So 1960s skunk works. The DOD was 36% of all R&D spending. Not in the US in the world. The DOD was spending so much on R and D, really like tech race. And so Harvard Radio Research Lab and DARPA were very government driven. Skunk works marked a shift into proper research and development being done at companies. And so Skunk works is all led by Kelly Johnson. He's designing planes at age 12. At age 23 he goes to work at Lockheed as a tool designer. He's super confident. He tells, he goes into the chief designer, just chief design engineer at Lockheed and just, and just says hey, our best aircraft, it's flawed, I'm going to go fix it and give me a wind tunnel. And he does it and so that he designs the Hudson BOMBER, the Model 14, it's more maneuverable, important in World War II, the jet powered Messerschmitt to 262 that obliterated us in World War II. So he's fighting against that. They wind up building the U2 spy plane, which you're probably familiar with that one gets shot down, but it's a recon plane that can fly at 70,000ft. Lockheed wasn't invited to submit a proposal. They get money from the CIA. There's like this crazy story where Kelly Johnson goes to a cafe in Georgetown, meets the CIA, gets 30 million in funding, like basically in a black bag. The initial bid for the F35 was in 1992. Just started flying just to show you like the pace of things like the F35 took 30 years and they did the like the pace of play around the SR71 was like insane. So the U2 was great, but Francis Gary Powers got shot down by a Soviet Soviet surface to air missile and they needed something faster, supersonic. And so then they build the SR71. It goes over 2000 miles per hour. It just outruns missiles. It doesn't have like missile defense or chaff or anything. It's just like I'm faster than a missile so I'm good. Then of course the moon landing happens in 1969 and this is the peak of NASA in Some ways like the last hurrah. And then of course we go into like the decline. In 1970s there's this like this is when stagnation starts. This is like the teal thesis. All the bitcoiners say like what happened in 1970, that whole thing. And so there's a lot of different reasons for this. Economics. The bitcoiners say like it's the broken dollar gold link politics. People say this is when overregulation started. It became harder to build in the real world because of nuclear scares. Everything needs to be approved. The FDA is charging 1 billion per new drug. Nuclear plants cost billions. And laws change while they're building. And technology, like there's just the allure of software opportunities. Like if you're a really smart person in the 70s, like you build a tech company or like a software company and you'll make a lot of money, you're not going to go into hard stuff. So that's kind of what's going on in the 70s, then the 80s, there's like this fake solution to stagnation in the form of globalization. Henry Kissinger just went to China, opened up that relationship. Post Cold War US manufacturing employment actually peaked in June of 1979 at 22% of total non farm employment. By 2019 that share had fallen to 9%. So America basically said hey, we can just do manufacturing elsewhere. And obviously we're seeing that come back to bite us now and we're going to talk to some folks that are bringing it back. But this was the idea of like the multinational corporation. America was good at bits. It's only rational to prioritize that. And of course this is all capped with China's rise. They joined the World trade organization in 20 in 2001. And of course there's been a lot of problems with the China relationship over the last few decades. In the 1990s the end of the Cold War happens, December 1991 and there's a desire for a peace dividend. Like the American taxpayer is just saying like hey, maybe I don't want to spend like twenty dollars of every hundred that I pay into the taxes on like defense. It doesn't make sense. We're not at war. Like let's just, let's just invest in other stuff, tax cuts, health care, education. And this was, this was bipartisan by the way. Dick Cheney said because we now face neither a global threat nor a hostile non democratic power dominating a region critical to our interests, we have the opportunity to meet our requirements at lower levels. And at Lower costs. So everyone was on board with this. Now the source of the problem was that this all leads up to the Last supper turning point. The Pentagon says the U.S. doesn't need so many defense companies. There were like 50 at the time. And so Secretary of Defense Leslie Aspen.

Clear those 50 they consolidated had but they also had thousands and thousands of tiny subcontinent.

Oh yeah, tons, tons. It was a massive, massive organization. And so William Perry brings all the defense tech companies together in the fall of 1993. He encourages mergers, says you got to cut costs. We expect defense companies to go out of business. There's dozens of mergers. Hughes Electronics and McDonnell Douglas ceased to exist. General Electric and Chrysler sold their defense subsidiaries. At one point the industry was shedding a thousand jobs a day. And it was the Francis Fukuyama idea of the end of history, there will be no more war. Now that we're in the era of capitalism. There used to be 50 defense primes. Now there's Lockheed Martin, Raytheon, General Dynamics, Boeing and Northrop Grumman. Then of course there's the war on terror. A wake up call. You get Palantir. It was really tough to get started. But into in Q Tel steps up the CIA funds, the VC farm of the CIA funds Palantir. And they actually had to sue the government to allow them to, to win an army contract. And they won. And then interestingly SpaceX used the same lawyer to sue the government because again there was like okay, is this got.

To have that lawyer on?

Yeah, yeah, he might actually do it. I'm connected, so maybe we should reach out to him. Then of course in 20, in the 2010s, you can think of it as like Space Race 2.0. The story is really like SpaceX growing. There's that SpaceX law lawsuit. But the 2010s are the era of SpaceX. Like 2010, it's the first Falcon 9 flight. 2012, the first commercial ISS resupply. 2015, the first orbital rocket landing. 2016, the first drone ship landing. The first crude ISS flight happens in 20. And there's the spacesuit. This is the SpaceX lawsuit of course. And so there's a bunch of key moments here. Ash Carter creates the Defense Innovation Unit. Eric Schmidt is the inaugural chairman of the Defense Innovation Board. And Trey Stevens founds and or. And he also changes the LP agreement at Founders Fund to allow for defense investing in weapons basically. And they just went to their LPs and were like hey, hey, we're just going to like remove this one clause. Like don't worry about it, like we don't really have any plans. And then like the first, the first investment that they made was and or right after that. But it's a funny story. And that caused like a cascade in Silicon Valley where every firm can now invest in defense tech.

And even two years ago a lot of firms still had these sort of LP agreements that did not allow them to make defense investments, period. In the same way that Founders Fund at one point had it. And what that just meant is if you had. It's already hard enough to raise money. Right. There's only a few that, you know, maybe it's a couple thousand companies a year that raise like anything close to like traditional venture capital. And imagine doing that when 95%. Imagine raising when 95% of the funds just say like, I think you're smart, I like what you're doing, it's good for the country. But you.

I legally can't.

Legally can't.

Yeah.

And they, they can go and ask for individual exceptions, but it just becomes much more complicated and it's easier to just say like, no, we're not going to do this.

Yeah, totally. Well, we got Delian in the house. Welcome to the temple of technology.

He's back.

How you doing?

Oh yeah, Delta V. And I heard.

Today was the day where we were.

All supposed to call him from the factory floor, so.

Oh yeah, move downstairs around. I like it. Beautiful background, proof of work.

Nothing in the background is itar control one place. So unfortunately it's the least interesting view of the factory.

We got a nice logo back there. It's great. I was just given a little bit of a history of, of kind of how we got here in the evolution of defense tech. Can you walk me through kind of like I literally just ended it like 2020. How have you experienced it? How would you explain to someone that's kind of just like generally aware of venture like how did we get to this particular mix of firms and companies and strategies in defense tech investing?

Yeah. I'll use a funny analogy to describe the various generations of defense tech and how it's evolved over time. If you look at the basically 2003 through 2015, call it time period. In order to start a successful company in like defense aerospace thing that basically worked with the government, you both had to be a billionaire co founder and you had to be willing to sue the US Government in order to have any success. And so, you know, both SpaceX and Palantir in the 2010 through 12 time period basically have to sue the Government in order to win contracts. 2015, to call it roughly 2019.

We're going to sue our customers. Yeah, the playbook is like, we're going to sue our.

Only.

That doesn't apply anywhere else. You don't hear about like, oh, yeah, like the, you know, the, this B2B SAS company had to sue Nike to get them to use their SaaS products.

Yeah, we really want to. We really want RAMP to sponsor us.

So we're going to sue them. Yeah, exactly.

And so it gives you of, like.

How difficult it was.

The only people that could afford to sue their customers and still be alive as a business and like, you know, get to the other side of it. We're literally billionaires. Right? You had to be a billionaire. You had to be willing to sue your customer. And then in, you know, so 2015 through 2020, at that point, you no longer have to be a billionaire and sue your customers. You can at that point just be a billionaire. So it's still like, very hard, but you no longer just sue them. And so then, you know, Palmer Lucky, you know, sort of starts and then you call it from 2020 to 2022. My one liner is like, now we're finally standing on the shoulders of giants. These guys have broken down the barriers. The DOD and, you know, generally the US Government is ready to work with startups. And so you no longer have to be a billionaire suing the government. You no longer have to be a billionaire. At this point, you can just be friends with a billionaire. And that's sort of close enough to, you know, you have the appropriate level of power and wealth to be able to do that. And so people like me, who are just, you know, merely lowly friends of billionaires are finally able to start companies. And now in 2022, people extrapolated that trend all the way down. They're like, you know, billionaires that sued the government. Now it's billionaires. Now it's friends of billionaires. Let's take the logical leap. And high school students can now start defense companies that raise, you know, $100 million. And that's obviously a logical reason of that trend.

Yeah.

What, what do you. Right now, it seems like every, every investor that's online is like, yeah, I do defense. Yeah, yeah. You know, I dabble, I dabble, I dabble. I'm, I'm a patriot.

Right.

But, but is that still the case where the average VC in 10 years is like, yeah, defense? Or is it the average VC is like, yeah, I kind of, you know, fomoed in and like 20 degrees and got over my skis and I'm back to just skiing. Just skiing, Skiing and AI.

They're back to skiing.

They're back to just skiing, not being over their skis. On the defensive.

Yeah, I mean, I think. I think I heard you guys talk to this when I, you know, sort of hopped on. But, you know, back when Andre started in the 2017 time period, a significant amount of the investors that now all talk about defense literally had it in their LPA of, you know, the three things that they weren't allowed to invest into was gambling, porn and defect. And it was like, put as one of those top three effectively, like vices. It was in like the vice clause. I think it's pretty likely that, you know, over the next decade, some of those LPAs end up going back to having defense in the vice clause, you know, and all these people that, you know, YOLO'd in their LPs are like, fuck off. Like, we don't want you doing this again. You were clearly terrible at it. You had no idea what you're doing. We're just putting it like back in the vice clause. And so no investing report in defense, as far as we're concerned, they're the same thing. Like, leave that to OnlyFans and Founders Fund. Figure that out.

That's great. Well, the reason I wanted to have you on mostly was to kind of restate and restart the debate around the continuing resolution. We put out a clip from you. We got a lot of text messages, I got a couple essays delivered to me. A lot of chatgpt stuff coming my way. Can't say I read it all, but I said I will ask Delian about it again next week. So can you restate your thesis on what's going on with the continuing resolution and just the overall DoD budget and what it means for defense tech companies? And then what's been the pushback? What's. What have the good responses been and what has been like the cope.

Yeah, what's funny is like, I see so much of it is like pure copium. Like if you look at the people that are closing the biggest use of defense contracts, you know, Tim Hughes at sort of SpaceX, you know, Matt Graham, Trey Stevens, et cetera, that whole crew at, you know, Andrew, you know, Sham, soundcrab Pound here, Somehow none of those people critiqued sort of my framing of it. I admit my tweet was a little more pithy, but it was funny seeing some of the critiques where I was like, you just didn't watch the clip. Like, yes, my tweet was like an attempted summary of it. I basically like, you know, was a bit hyperbolic in saying that there are no net new starts. There are going to be some that are potentially allowed, but it all still needs to be paralleled to the original basically Congressional and House and Senate sort of bills that are passed and sort of late, late February. So, you know, some of the critiques came in from some of these, I think more junior companies that have a little bit, you know, sort of rose colored glasses on how they think this process is going to go in that yes, it points to, you know, allowing that type of reprogramming and at the same time you're seeing like in a continuing resolution year going win the F47 contract. And so I think they have this view of like, oh man, you know, now's the time where I can like, you know, all the rules are scrapped. We can totally, you know, go reprogram everything. And I'm like, there is some flexibility there, but also look at what happens when people get a little over their skis. Like one of the topics that I sent you, fugin was around the NASA administrator. It's obviously more on the civil space side than defense side. But Elon tweeted out, basically, FBI says we should deorbit it. I don't want that up in space anymore. That shouldn't be a NASA priority. And yeah, he got his wrist slapped a little bit. He also got his wrist slap when he went to the Secretary of the Air force. And then two hours later the F47 based on contract on announcements. Even though Elon's been on this rampage against, you know, sort of human rated fighter jets for a long time. So it's like, look, like even Elon isn't able to convince the Air Force that we shouldn't have human rated fighter jets. Like you think your fucking thing that's like a mediocre copycat of Android is somehow going to convince them that they should spend like, you know, money on your fucking Ponzi coin? Like probably not. Like, I think there's a lot of copium that's going on there. So it's like people are like trying to cite these like stupid. It's like, look, I read the cr. I know the section that's in there. What matters is not like the exact legal lease that is in the continuing resolution. It's like how that's going to be interpreted both by the war fighter and by like Congress that ultimately is going to sort of go approve the like, you know, sort of reprogramming and then the, you know, budget reconciliation sort of, you know, bills. So anyways, more than I can go into there. But it was like lots of copium and all the sophisticated players didn't say anything.

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

I can probably be Andrew rather than a different company, you know.

Yeah, but, but yeah, do you see?

Except for Anderil of bears, bear domestication is very important and I think that is a white space that Andrew's weak on.

And so we're announcing Coogan's new incubation.

Yes.

Ready to go. Co founding with some Ruskies.

Yes.

Those guys know how to handle their bears.

We're domesticating bears and you're gonna be able to ride them like horses. And we'll also make small ones and they'll be like teddy bears for your kids. It'll be great.

Yeah.

You know, Keith used to always talk about how one of the things I felt like I learned from him was that some of the best companies are actually founded in some of these more like recessionary periods where it's not hot to be a founder because then it's like a lot easier to aggregate talent. Like I think about that even you said with Vardo today, like, I'm very glad that we put together our founding team in 2020 because a bunch of those people, in theory today, if we were like trying to put together the founding team, would just like refuse to be on the founding team, split up and all raise their own pieces of capital. And so it's like I, I would imagine that it's like incredibly hard to be an early stage founder today trying to recruit super talented people because the super talented, even like 22 year old Stanford kids are getting like 10 million thrown at them. Like the current like ecosystem for all things like frontier tech, AI, et cetera is like in such a crazy bubble right now. And that actually just makes it really hard for generational companies to be founded. Like a part of why Anduril almost certainly was successful. Everybody that chose to go work at Andorra from 2017 to 2022, before the call the Ukraine war, was choosing a very contrarian field to work on. Nobody else is going to be go funding those people to be sort of starting companies anytime soon. And so they aggregated a bunch of talent where it's like, okay, yeah, now defense is hot, but Andrew's already off into the races.

We were talking about this with the year Facebook came out of Harvard. I think it was one of the only startup. And so if you were like, I want to work at a startup and you went to Stanford or Harvard, it was like, well, Facebook's kind of the only game in town. And now it's like you just take a taxi or take an Uber over to Sandhill Road and you got $10 million like next week.

Well, the other thing is we've been trained for 20 years. This sort of like dream big. Yep, you know, call your shot. I'm gonna build this amazing CRM and then you can like put together a team and you can build the amazing CRM.

You guys can do it.

But the thing in hard tech, the challenge is like you run into like physics, run into all these challenges where it's like you're trying to make some new quantum computing chip and it's like, okay, like you can have the big idea and that doesn't and you can put together a lot of capital and people and work really hard on it and like you're not always going to get there. Whereas software, at least you can ship the product. It might not work.

Dude, this feels like it's like literally like you described my edge basically and like the investing in this sphere where it's like, look, I think there's some amount of like, I'm decent at the founder, Reed, macro, whatever, a bunch of people can do that. The one thing that I do that I think is relatively unique is for all of my category investments that sit in the world of hardware, difficult thing that they're doing, et cetera. I walk the line, I go and I talk to the technician doing assembly, I talk to the thermal engineer doing the thermal model, I talk to mechanisms engineer, structures engineer, software engineer, firmware, et cetera. And just like you can. I'm not saying that I'm a world class engineer in all of those categories or anything like that, but I have enough of a Surface level understanding from the work that we do here that can kind of gauge like, like this person at like the Varda quality bar. Like, you know, doesn't have to be that like literally everybody in tamper is. But if like half the people are looking kind of like schmucks, it's like, well, you can only like, you know, sell a story for so long. At some point you have to like deliver hardware to customer that works. And so it's been fascinating to me to watch investors honey up like 100/million dollars to companies that are like consistently having hardware fail out in the field where it's like, what do you think is going to happen here? Like, you know, if you've given them $50 million and their hardware's failing nonstop, $100 million isn't necessarily going to be the thing that solves the problem. Like they've already got cultural rot to the level that it's like basically to be impossible to backtrack. But there are so many people that like just don't even have the capability to diligence that. And you know, I'm not, you know, I think sometimes I admit that I can over rotate to like, you know, you know, I'm probably on like when I think about amount that I weight product engineering relative to like, you know, our CEO Peter, right, He's obviously probably more on the opposite end of like, you know, thinks that people over rotate on that. And I probably am one of the people that sometimes does. But in this field it's definitely, I think saved us from some sort of investments where like we debated making a series A investment and then you watch the company, it's like they have like six projects in a row fail now. People are for some reason rescuing those companies and still giving them 100 million bucks. But like at some point I'm like, how long does that go for? I was literally texting with our colleague John Luden yesterday. I was just like he was like texting me these like three or four companies, like, hey, John, scaling like crazy. Like it must be doing really well, right? And I'm like, no. Every satellite that they've sent up is failing. They haven't closed any contracts. Like, like I don't see any pastor program of record. Like they're scaling like they're really good at hiring but like, you know, but like not necessarily good people. So like hiring bad people is not a, like if somehow people like use headcount scale as a proxy for like success of the company. I'm like, I don't know that that's like a thing one should be focused on. So, yeah, I think there's going to be some tough reconciliation that happens, you know, over the course of the next year or two where it's like, there's going to be like, you know, 50 to 60% of this field is just going to have to die off or get acquired for pennies on dollars.

Yeah, the other, the other thing that's funny. People love to roast, like, market maps, right? Like, the joke is like, all right, if there's a market map, you're too late. But then the market maps, like, actually provide. Like, if you're an investor, you should really understand the market that you're investing in so that when a company comes to you and you think it's a smart team and you're excited about it, you actually understand, like, okay, is there a, a two times better team that's like doing this exact thing? The other thing is, like, I've seen, you know, I've made a number of, I think, smart investments in this space and I'm sure, like just sort of hard tech broadly and I'm sure, like, some that will zero out. But I try to pay attention to, like, you really have to pension it. It's not all about like, oh, a tier one is doing this. It's like, is somebody that's been doing robotics investing for 20 years and has, like, is on their seventh fund, are they doing this? Because they've seen it all right? And you have to ask yourself as an investor, like, like, why do I have the right to even have an allocation in this company? And a lot of times, if you're coming into this space and you're making some of those net new investments, that company has been seen by all the specialist funds and nothing happened. And so you're now getting the sort of luck of getting to take a shot on this company when a bunch of people that have invested in other similar winners have already said, yeah, it's not for us, or we're going to wait and see what happens.

So anyway, can we move on to the Cygnus spacecraft? Can you break down. I'd never even heard this word term before. Can you give me a little bit of history and then what's going on with the news?

Yeah, I mean, I brought up because I think it was like two weeks ago that we chatted about like the astronauts being stranded and then, you know, sort of SpaceX going to, you know, bring them back down. This past week it was revealed that the Cygnus Spacecraft, which is a spacecraft and I'm pretty sure made by Northrop Grumman that originally was awarded basically commercial Cargo contract, the ISS. This was like back in like 2010, 11, it was basically you had cargo Dragon, which was done by SpaceX and then the Cygnus spacecraft done by Northrop Grumman to basically deliver cargo so like food, water, et cetera, to the International Space Station. It generally performed well. It's kind of a crazy vehicle and that it's only one time use. Like it doesn't even have like a heat shield or any way to like come back to Earth. So you literally like ship it up the ice as it docks, dropped off its things and then it just like burns up in orbit. So it's like, like the epitome of just old school sort of aerospace. They didn't even like attempt to make it economical from the fundamental design phase. But like it's, you know, delivered plenty of cargo to the ISS at this point, this past week they dropped it. And so NASA was like, look like yes, this has been tested, et cetera, but like we don't know what happened in the drop. We need to basically send this thing back and run it through a full testing campaign and make sure that it's okay. And so that means that that cargo that previously supposed to be delivered to the ISS via Northrop north of Grumman now is yet again going over to SpaceX. And so it's just like one of these moments where it's like if SpaceX did not exist right now, like the United States would neither have like Boeing able to take crew to the iss, nor would it have Northrop Grumman able to take you know, basically Cargo to the ISS. And so it's like, you know, without SpaceX, the astronauts would not only be stranded, but also starving.

What do you mean by dropped? They dropped it. Does that mean drop the program or physically drop it?

No, no, no, they like physically dropped it. Like spacecraft like might be fell.

It just fell. Yeah, had an accident.

You're not supposed to.

A little oopsie. A little oopsie in the space.

How much like you know, the pulley could hold and they dropped it.

I hope we're gonna. Is there like security camera footage we can find somehow? Like Northrop is gonna try and control.

That real tight, avoid anybody.

We gotta call our friends over at the CIA, nsa, the deep state, you know, really get them to, to fork that over. We need the blueberries super real. We've seen the SpaceX crashes. I need to see the pod dropping.

Crashing, we drop our spacecraft, but we do it on purpose, right? That was the one that we dropped from space back down to the ground. But that was on purpose.

Wow. I have not been to Varda HQ recently. It looks like you have a lot more equipment that is filling up. Congratulations.

We are packed in like sardines. That's the one that I just showed you is the first one that landed last year. Second one landed in Australia two weeks ago and it's out at an air show. Third one, what's currently up in orbit, fourth and fifth are off to the side of me right now. So yeah, this place is turning into an operation.

Yeah, real operation.

You have a follow up? I have another one after.

Go for it. I want to cover in maybe the last five minutes like slop as a trend.

Oh yeah, that'd be fun generally. But yeah, let's close out with the space stuff and then we'll go on that. I want to know more about Jericho Isaacman. Momentum seems to be building for Jared Isaacman to become NASA administrator. What are the dynamics? What should we be reading into this? RFK got confirmed. Is it a similar process and what does this mean? Like, what's the vibe around him generally?

Yeah, I mean, Jared is definitely like really beloved by the space community, you know, ourselves included. Like, it's really awesome to have somebody that is a phenomenal entrepreneur. Right. Shift for payments, you know, sort of mega company, but then also is like putting his own capital and life on the line by like paying for his own, you know, basically space missions with SpaceX and then he's the first private astronauts to ever do a spacewalk. I don't know if you guys saw that, you know, live stream from. I'm forgetting the exact time, but it's.

Like that was him sometime.

That was him. Jared.

No way.

I did literally like he's the first private citizen to like go out into the vacuum of space and like pee.

Your heads out of the space streaming. So we could run.

Exactly, exactly.

So, you know, hopefully we get a.

Space run one day. Exactly.

Okay.

So yeah, super legit, you know what I mean? Like he is literally, you know, a like, like privately himself sponsored astronaut, you know, putting his real like life on the line. That mission could have gone poorly, could have died on it, etc. And he like obviously is or did it so really beloved. But he is like affiliated, you know, for sure with Elon since like, you know, his entire Polaris, you know, sort of set of missions was all contracted with SpaceX. He obviously has done a ton of press with Elon, etc. So when Elon made this sort of comment around wanting to basically de orbit the ISS sooner than the original plan, so the current plan is basically out of the decade. Elon was pushing for like, let's just de orbit it next year. Now I assume from his perspective it's, you know, hey, I don't really see the value of this program. We should use that budget for sort of pushing straight to Mars. You know, what's the point of sort of these like human rated stations, both run by the government toward these private ones. And there was a bit of a slap on the wrist, you know, for that via, you know, basically Ted Cruz, you know, sort of the senator from Texas that is the senior chair of the House, sorry, the Senate Science Committee, which basically controls the NASA budget and is also basically responsible for sort of voting and confirming the schedule for the NASA ministry, confirmation basically stalled. Right. Like he refused to actually set a date for the NASA administrator. So now you've had to see like a bunch of governors, you know, and other senators basically say, hey Cruz, we really like Jared Eisenman a bunch of states on some words. I feel like you guys would have sent Cruz letter, he's finally relented and okay, said fine, I will set a date. But I want Jared Isaacman, you know, sort of coming out and explicitly saying that he's in support of the ISAs going through the end of the decade in support of these commercial space stations. And so why is sort of cruising support of that? It's because, you know, the Johnson Space center, which is where the vast majority of the like terrestrial jobs that support the space station are, is in, you know, Texas and it's his district and it's, you know, sort of his constituents. And so, you know, you're starting to just see these tensions of like, you know, look, yeah, you've got like tech's greatest leaders at like the helm of the government, but that doesn't mean that there's going to be some like, not going to be some antibodies that like, like, you know, prevent people from getting exactly, you know, sort of what they want done. And so this is all more in like the civil space side of things.

But I think has a lot of.

Parallels to what everybody's thinking about in defense where it's like, look again going to point out, it's like, you know, Elon is phenomenally successful, super powerful, rich, et cetera. But like there are, you know, antibodies and balances of power built into the US Government. And like, Ted Cruz is clearly showing that he can like swing his dick around a little bit and say like, yeah, like, you know, you want to fuck with my iss? Like I'm going to fuck with your administrator and, you know, I'm going to delay his confirmation hearings and I'm going to bump it out until like, it sounds like it might not be until like may at this point. And then that does have like a real operational effect in NASA where it's just like, look like, you know, there's like this NASA reauthorization bill which basically sets NASA's budget for the next like, you know, sort of, you know, five to seven years. That's kind of stalled out because there's no administrator. You know, none of the, like, major, you know, sort of program leads are making huge swings right now while they're waiting for the administrator. So it's like NASA's kind of frozen, right? And this has like downstream operational effects. This may slow down our ability to like, get more lunar missions, you know, sort of book actually figure out what the Mars program sort of looks like. And so it's just like a reminder to people that like, you know, us in tech have to always remember that, like, there are also jobs that Senator Cruz is going to be making sure to stick around too.

Follow up. I mean, the ISS budget is 3 billion a year. Crazy idea. We get a couple of our buddies together, make it into a casino or something. Like, could we not privatize this thing?

You know, Jed McCaleb, Mr. Crypto sort of man, is trying to, you know, put crypto money to use and turn into a space station. And I kind of see crypto, in my opinion, is basically just gambling. He's basically already making it. All he needs to do is. Maybe it's not craps tables, but it's a couple of coinbase servers up there that are getting you hooked right into the live stream of trading shitcoins.

I guess you can't really roll dice in zero G because the dice never fall.

Well, yeah, if aliens are ever going to come and assimilate on Earth, we should have a space casino where they could kind of learn the American way of life here.

Because gamble.

If the culture shock, if they came.

Here and they, they have to know.

How to gamble if they're going to integrate for sure they would just like probably kill us all.

Exactly.

Like you guys, like, I don't even know what you guys are doing or.

That'S our planetary defense. We just get the aliens hooked on gambling. They become total degenerates they're mortgaging their home planet in order. And we're like, actually, you thought you were coming to conquer us, but sorry, we're sending our bookies back over your planet. Break all your kneecaps and take it. So, you know, that's maybe the best planetary defense scheme. Who needs asteroid deflection when you've got space casinos?

We got five minutes. Which big.

What's your take on yesterday? I was joking around earlier. I said, in hindsight, Sputnik really was the Ghibli moment of the Cold War. But yesterday felt like a big moment. It just, I did. John and I had a couple posts go pretty viral and break containment and people still were quoting them and being like, all right, guys, like, stop joking around with me. Like, who's got the filter out app? So it still feels like there's people out there, they didn't know that it.

Was open AI like ChatGPT. They're just like, oh, there must be a new app out there that does this.

Yeah. What's your reaction? Are you long? I'm personally, I'm short the word slop, but I'm long the underlying trend. But I'd love to hear your take.

You know, I'm going to relate it back to defense, which is sort of Market maps are no good. Focus on the long tail winners. There's like a whole fucking set of like, like a hundred like AI image generation companies that all just got, you know, Sherlocked by OpenAI and are gonna be totally relevant because like they've got the biggest brand and now they have the best technology. Good luck catching up. When you're like, you know, sort of losing on both angles. I think you're gonna see this stuff get implemented into Hollywood like asap. I mean, there's like a whole set of things where you can like, look, there's gonna for sure still be like human fine details. There's things that it's not perfect at, it probably never will be like quite perfect at. But if you want to start like throwing together like rough draft vision boards, etc. And then what you end up seeing is like the equivalent of like, you know, that there's, you know, sort of now, you know, sort of two, you know, two engineers can build like a billion dollar AI company, like two animators and a director can like make the next Pixar film basically because like, you know, they have so much sort of leverage.

And so, yeah, it's like bullish for OpenAI and also bullish for Jason Carmen, right?

Yes.

But you just don't want to be in the middle.

But it's like, short. All the dudes that just invested like $500 million into like, these, like, slop companies, basically, and it's just like, good fucking luck. And it's the same thing with defense. It's like, you know, bullish on Anderal, bullish on the warfighter that gets new tools. Totally don't recommend being anywhere in between.

Yep, exactly. Don't get stuck in the middle the barbell.

Don't get set in the messy. The sloppy middle, as we like to call it.

Sloppy middle.

It's, you know, the White Lotus, you know, sort of reference there is. Be careful of the sloppy middle between the brothers.

Oh, I haven't watched the latest episode, so I. But I've heard enough that I get it and it's not good.

Yeah, you can skip that one. White Lotus is funny because. White Lotus is funny because, like, it starts the season. It's like, kind of relaxing because it's like these resort settings.

Yeah. You're just hanging out like, oh, it's.

Just like I relate to these people in different ways and like. And then it's like, oh, it just gets so dark, like episode by episode.

I want nothing to do with any of these people.

Yeah.

What?

What? You know, so. So somebody that launched an image generation tool is like Mike Spicer over at Sutter Hill Ventures. Like, they've done. Didn't they do like Powell Snowflakes? Like, they're like. They're like legit of incubations in many ways. Comes out with an image generation tool. What do you, like, what do you do at this point? Obviously not even just speaking directly to him, but there's like mid Journey and there's a lot of other players, and it just feels like maybe there is no edge and distribution, you know, relating.

Back last week is not in the conversation because they haven't raised much money.

True.

So it's like, true.

They're. They're dependent. They raise money every day from their customers.

I guess. I guess. But.

But the other. So the funny thing is, is we talked on the show last week about a PT quote around, like, you need basically distribution for a monopoly. And you can get a monopoly from product, but you can also get a monopoly from just distribution. Just distribution. And so it is the. But like, do you think these, you know, image generation models should be rethinking their life and future plans and the game is lost? Or is there going to be. If you just lean in, let's say, like you know, set up shop here in Hollywood and just work with all the studios and say like you spend billions a year.

What would you do if you were actually running a $50 million Series B stage image generation company?

Yeah, I mean look, this is very top of mind. Like I literally met up with Mike, I think it was like two weeks ago to like talk about, you know, what he was sort of working on. And I'm like, I'm a huge fan of Mike's. We've work together on a handful of things. Obviously he's like crushed it with Snowflake. He's clearly one of the Valley's sort of best incubator entrepreneurs, investors, execs, leaders, et cetera. But yeah, I don't envy being in that position. But I think you're seeing this in a bunch of different fields where it's like you've got the mice that are trying to dart around the elephants. And these big tech companies are both very sophisticated, have great engineering, but also massive. Again, just look at what SpaceX is doing with Starship and like, you know, stomping out a bunch of, you know, other, you know, sort of mice in there. The elephant, what Andrew's doing, stomping out a bunch of mice. It's like it's not an easy time to be like a mid stage company that's trying to dart around all these major players that are like, not like old school incumbents that are moving slowly but like are led by Sam Altman and like, you know, are really pushing the fold. And so yeah, tactically like if I was in Mike's shoes, I think it's like, look, the like consumer play that just seems basically impossible to catch up on. It's like this is kind of good enough for any consumer app, right? Like it's not good enough to like immediately go make a feature length film, but it's good enough for any consumer to like, you know, send a photo to their wife basically and they already have the winning consumer brand. So don't even try to do that. Go where the, you know, the elephant isn't even headed. Dart in the opposite direction I think. Yeah, go like heavy on enterprise, build up studio relationships, try and convince them, you know, sort of, hey, look, if you start using, you know, sort of chat GPT, is that it for the staff? They're going to use you for training data. We're going to make like proprietary models that like, you know, fine tune to your own aesthetic and like the specific film that you're working on and we'll make sure. The data only stage basically, like in house, right? Like, you just need to like, just constantly be thinking about like, yeah, what is your, you know, sort of angle that is super unique. But also those are like all really constrained tams relative to like the thing that, you know, I think OpenAI is, you know, going off and capturing. And so, yeah, I mean, I really love Mike and I think he's a phenomenal entrepreneur. But, like, I also don't envy, like, I can guarantee you he was fucking up late last night and, you know, is grinding today with his like, you know, exec team to figure out like, what their, you know, sort of approach is in light of like, you know, this new world. And that's what's so crazy about like, like tech accelerationism. All this stuff happening is like, dude, like this stuff, like I felt like when I was in the valley in like 2014, like, happened over the course of like 18 month periods. And it's like, dude, this stuff, like, it feels like literally every month now we have like crazy new capabilities that come online that massively disrupt how to build like a series B company versus in 2014, that new technology is disrupting like a late stage series B company. Like, didn't honestly happen that often. Like, never happened. You kind of had like your stable growth, like even at Bardo. And the stuff that we do is like super hard, long time frames, et cetera. Like, I feel like we actually like literally need to be nimble on our feet on like a month by month basis between like the changes of DoD priorities, congressional priority, what other space companies are doing, how supply chains are maturing, what the fuck China's, you know, sort of doing. It's like, God, man. It's such a dynamic world and, you know, the like, you know, wealth accrues to the, you know, sort of riches. So good to be Peter. Good to be Sam.

I don't myself or Spicer, we were joking around. You know, a lot of early stage founders will like, time a release to try to catalyze a fundraise and just feel. It felt like there was a world where Sam was like, all right, team, like, we know Ghibli will go viral. Like, just make sure that this is perfect. Everything else can, you know, everything else doesn't have to be perfect, but like, we need to take over the timeline. We need to go mainstream this day. I'm closing the round on Monday. Like, just go, go.

Also, Google had just launched something that most people think is like, competitive, but the product is just buried in AI studio And like, it was like it was going to break containment and it was going to be a Google story. And Sam was just like, not today. I love it.

Yeah.

Then maybe he paid that one influencer to make the like photo of his wife and like, you know, get that to go viral. All I'm saying is like, it was just like a little too convenient.

We need to get a tinfoil hat over on your side.

Yeah, we got it. We got it right here.

Yeah.

The exciting thing bringing it back to hard tech and defense is like we need, we need better science fiction. We need the, the next generation of science fiction. And if we can kind of like open source that and everybody can create.

Visions, someone has a good idea, they can.

You shouldn't need $200 million to like imagine the future and like convey that idea. And that seems like the biggest opportunity to take away. If you're not even if it's a.

Little sloppy right now, the, the art will come.

Yeah. Anyways, great to see you.

Thanks for stopping by. Good luck with the rest.

Later boys. Enjoy the rest of the day.

You too. Always fun. We got, we got back to back to back to back to back to back call himself. Is he in the building?

He is in Florida right now.

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Boom.

And now we got a great guest.

We got Steve Simone, the man himself. What up Florida man.

Florida.

He's in Florida today. He's not actually a Florida man, but it's great to have you.

Yeah, thanks guys. Thanks for having me on. It's an honor to be here.

So describe the company in three, in exactly three words. I've heard it described as gun on truck. Is that accurate?

That's, that's AI Robot gun.

Okay, there we go.

Robot gun shooting down drone swarms.

If I see a light show with a dragon swarming towards me, I call you. You're going to throw a hail of gunfire at it and take out all of them.

You know, we're. Well, it's more precision. You know, we're sniping these drones. We're not just throwing bullets in the sky. You know, it's precise.

Okay.

Precision. Well, I always love talking to Steve. A while back he was in LA and we like were. We were. I Forget. There was something. I think it was like actually the weekend that all in Summit was happening because Steve's raised a couple rounds from Kraft now. Won a couple, which he's announcing today. And I. And we just had this awesome meeting where I was like, you got to think bigger. You got to think bigger.

You were that guy.

Yeah, I was the. I was like the guy. You got to think bigger guy.

Jordy is the Jordy. You're the ultimate hype man. You.

You got.

You made me think bigger, bro. You made me think bigger.

Well, speaking of bigger, let's announce the.

Big round the news today.

Oh, yes. Today we just announced our $30 million Series A LED by Craft Ventures again. They didn't give out the seed. They're back at the A. You know, maybe they'll do the B. We'll see. We'll keep it going, you know, Keep.

It going, keep it going.

Ride your winners. It's in the all in intro. Let your winners ride. And Sacks is true to his word.

But I gotta ask you guys, how much does it cost to like, get my logo on the ticker symbol at the bottom?

You're gonna have to wait till the B. You're gonna have to wait till the B, buddy.

Yeah, I'm sorry. Series A company, tough.

Yeah, yeah, yeah.

But we can talk about it. We can talk about a rough sense.

Of your balance sheet, but you're here. You got your face. You got your face here.

And that's. And that's worth prices. A thousand.

I mean, how much, how much did Wander pay for that back there? Is that company.

We can't get it.

We can't disclose. We're not, we're very against building in public.

Yeah, because.

And it's not, it's not because of like the flex culture or any of that. It's specifically because of our near peer adversaries copying us. If. If the CCP got a hold of how the business really works, they could clone this show. And then the Cold war arms race for the best and most aggressive daily.

Yeah, I mean, the CCP is a big threat. I mean, why we started ACS is because, you know, we're at a manufacturing deficit with China and we need to do something about it. So that's why we, you know, making these gun turrets to be able to shoot down their drones.

Talk about. Yeah, just talk about the process. We were talking with Delian earlier. There's this phenomena within startups broadly where there's a culture of having a big vision and fully believing it yourself and assembling people and talent. And then sometimes you, you have this vision and then it ends up being exceptionally difficult to actually execute. You're working in this case with the. So for those that don't know, Steve sold his last company to Doordash, had a great exit and then, you know, basically brought together, did it, you know, round two with his co founder. And so you had that like intense trust with your, with your co founder. You also were in the military yourself, so maybe, maybe give like kind of the full background on, on you guys together all the way back to the Navy days.

So the company's called Allen Control System, named after Luke Allen, our cto. And you know, we have a proprietary control system. That's why, you know, thus the name just right on the nose.

But and also the name too is very cool. Steve was like, everybody's calling their stuff like Lord of the Rings, like what's the most boomer tag wine. That's going to basically like sound like it's been around for decades already. And I think it's working. I really like the counter positioning.

Yeah, you've got a counter position. That's all marketing, baby.

No.

So we met in the Navy, we were nuclear engineers in the US Navy, met like 16 years ago and you know, then we moved out to San Francisco. As one does tries to start startups. I had a couple that failed and then the one we sold to Doordash and now this is our technically my fourth startup. It's a way of life, you know, it's a journey. I've been doing this for about 11, 10 years now. So.

Cool.

Yeah.

And then coming together like give the. Or you know, companies. Two and a half. Two years old.

Yeah, two and a half. Yeah. Well, look, it takes to build a complex precision robotics product. It takes about three years, like from whiteboard to like really good products. So like we're almost, you know, there on that journey. But when we started it, right when we sold the company to Doordash, Putin actually invaded Ukraine the same week when the deal closed. And we were reading articles about Ukrainians shooting guns in the air at drones and Luke called me up and was like, this is a really good robotics problem. We should start looking at this. And when we kind of surveyed the landscape of the industry of interceptors and electronic warfare and microwave technology and lasers and all these other counter drone measures, but didn't see a lot of really precision applications around using guns and ammo, which guns and ammo are widely available in the military. So we thought this is a really Good idea. Yeah, went after it.

How's it been? You guys spend a lot of time on the range, like actually shooting down drones. Talk about kind of how this maybe company's been different to the last one, which was in a totally different vertical and you were probably comfortably in San Francisco. Now you guys spend a lot of time just out in the field.

Getting the boots dirty.

Yeah, getting the boots dirty.

Wait, say that again. That is the question.

Just how's the culture different now that you're out of the range? Actually out of an office, you're not in a cubicle all day.

Oh, you know, I'll tell you, for me it's like I feel most at home in the startup life. You know, as the companies get bigger and scale it changes things. But in the early days it's the most fun. Actually Luke and I always joke like when you first start a company, the first couple months are the most fun when you have no customers because then once you start getting customers and you have responsibilities, you have to deliver their requirements, have great customer service and all that. So in the very early, early days you have to cherish those moments. But then as it's a life cycle, so as you scale up, things get different, you become different and the whole company changes. But right now it's still at a fun size. Around 34 people still enjoying getting out of the main corporate office and doing our thing.

I mean Delian said this on the show before, like, you know, the Anduril of Anduril. That is Anduril and maybe Andrew is the Power Law winner and going to do all this stuff how you've obviously counter positioned with the name. You didn't pick another name from Lord of the Rings, thank God. But how are you thinking about how the product fits into the defense tech ecosystem? Palantir has their AIP program. They're openly planning to work with other companies and develop partnerships. Is there a world where this plugs into Lattice and you let Anduril take the kind of the, the AI connective tissue and your, and your partner or is, are you really just trying to grow and add so many or more products? Where does long term go from here?

Yeah, our product, you know, so autonomous guns are when they hit the battlefield, they're going to change a lot of the battlefield economics. So you know, a lot of these like more expensive interceptor products or you know, some of the, you know, big laser beams or, or you know, missiles and stuff like autonomous guns are going to, you know, put a lot of downward pressure on products like that. I think so. I think we're pretty well positioned from a product strategy perspective. But where we actually mostly focus our time is you see all these autonomous vehicle companies, USVs, you got companies like Saronic, bunch of USV makers, these unmanned surface vehicles. And then you got like the land ones like Overland or Forterra, there's a number of these. And so all of these autonomous vehicles need an autonomous payload.

Sure.

And so we're positioning ourselves. We're mostly focused on great partnerships with companies like these, positioning our product there and then kind of bundling. You make money via bundling in the game.

Makes sense.

Yeah, it makes sense. Talk about competing. A lot of your competitors are these sort of old slow moving. I'm thinking about the Rheinmetalls of the world. Right. It's probably fun being a team of 34, competitive, competing against some of these giants.

Yeah. Oh, go ahead.

Sorry, no go.

Interrupted you.

No, go for it.

I was going to say this is the lag on the zoom, but I was going to say, yeah, like Rheinmetall Kongsberg. You know, a lot of. I don't know if a lot of you listeners know this, but in the gun turret market, so these are called remote weapon stations in the RWS market, a lot of the providers are foreign, so the US buys a lot of their stuff, most of it from, you know, companies that aren't based in the us so. So from this standpoint, we're kind of bringing this back home. It's a new American startup building new modern age remote weapon stations. And so I think we're pretty well positioned there from a congressional standpoint too, because a lot of people in Congress didn't even really realize that these slower dinosaurs are actually not even US companies that are doing this for us.

What's the vibe on the ground in the D.C. area right now? You obviously have an office out there. What's, you know, is it chaos or people running around?

I mean, just to set the table, we've been talking about the continuing resolution. There's a lot of Questions about if DoD budgets aren't increasing, will there be net new projects, new programs of record? Obviously, you know, chaos can be a ladder and an opportunity for new companies, and it can also be a consolidation force for the ones who already have programs. What's your take?

I think the. Well, if you look at what Doge is doing and stuff, I think it's sending shockwaves to the dod and I do think that they're trying to cut things that they don't want anymore and Then they have a carve out list and Secretary Hegseth has this list of 14 technology fields that he's not wanting to make cuts to. Luckily counter small drone is one of those. So we're not impacted really by that. Now Obviously for the FY25 bill, we were somewhat impacted because they didn't do a bill. And so that's like, I think Dalian was on, you were saying, talking about that. So I don't need to rehash it. But basically that does put some pressure on some startups. For us, it wasn't too big of an issue because most of our stuff is in 26 and beyond. But I could see if you were really banking on that, that could be tough.

What are you hiring for right now? What kind of people are you looking to recruit into the team? You got 30 million of fresh capital. I imagine a lot of that will be going to bright technologists, engineers.

You know, if you're a computer vision engineer, and this is like one of the most fun computer vision problems to work on, I would say of the different parts of our product, you got the vision system to detect stuff, you have the fire control to track and shoot and you have all the hardware and the mechanical stuff. The vision part is one of the most challenging parts. And so we're looking for, you know, people coming out of universities that really love this problem. They want to try to find small drones moving against cluttered backgrounds. And so we're always looking for that kind of talent. But across the whole engineering spectrum, we're looking for everyone. But I would say this is a dream job for a computer vision engineer.

Makes sense.

Amazing.

Yeah. On computer vision, is the job getting easier with new models? I mean, we just saw an amazing demo yesterday from OpenAI. It seems like, like computers are generally getting better at doing stuff with images. I would hope that that benefits not just memes and anime, but also self driving cars and also what you do. Is there a bridge from that tech and what's going on there in terms of scaling and improving the underlying models to what you do? Or are you just kind of like, hey, we got OpenCV and it's enough?

Yeah, I mean we're a little bit on the cutting edge of, of, you know, we're trying to see a very small drone, like a Dji Mavic on a cluttered background moving very quickly. It's not the same exact application as like, you know, some of the stuff they're doing in self driving. Like we're trying to put a bullet through this Drone too, to be honest. And so like, that's another kind of a novel use case. And so we need a little bit more out of the computer vision than, you know, industry is really providing. So we're on kind of the bleeding edge of some of the research around this. Obviously I would love to just ride the wave and be able to use what's already built and what these guys are all doing, but it doesn't quite exactly work for what we're doing. So yeah, there's, there's a little bit of like researchy stuff there that we're working on.

Yeah. When you think about the opportunity to go work at, in computer vision at acs where they're, you're like, you know, getting the, like I've seen a lot of the videos and you guys have some of these videos like, you know, public on your YouTube channel and stuff like that. But, you know, getting to work on something where you're actually taking a gun and like taking a drone out of, out of the sky. The alternative is like, you could go work at, you know, some high profile, you know, humanoid robotic companies that are just like, you know, looking at the laundry or whatever.

You got to give the robots guns. You got to give the robots guns. This is what makes it fun.

All our only request is get some unitree robots at some point and just put some bullets on them.

Yeah, I know.

I want to have them running over the hilltop like an army of unit tree robots and then bullfrog sniping them all. Head shotting them all.

Oh my God.

Here's the other challenge. 360, no scopes.

360?

Yeah, 360, no scopes on the turret. I want to see that. That would be viral.

Wait, the sweet. You guys, you guys do like sweep sniping, you know that From Halo to.

You do that. Oh yeah, yeah. Sweet.

Snip. Yeah.

Oh yeah. You can do that.

I think J.D.

Vance did that a lot. I think he played a lot of.

Awesome, awesome, crazy Lord. Well, thanks for stopping by. This is.

Congratulations.

Congratulations.

I'm gonna play a quick song for you on the way out.

You got the hot break.

Congratulations to the team and Sax. Great one.

Yeah, congrats to Sax. That's fantastic. Well, we got A.J. piplica coming in the temple of technology from Hermeus. He's coming in in just a second. Are you familiar with this company? Very cool. Building a supersonic plane. And their goal has been to build one plane per year. And we'll hear the full breakdown from him. He's Here he's in the factory.

Home with the hat.

With a hat. Welcome to the show. How you doing?

I'm good. How are y' all doing? Good. John, Good to see you.

Yeah, good to see you again. You're still in Atlanta?

Yep, yep. That's right Here at the factory, still wearing this stupid hat.

I love it.

Do you have, like, a rule? Is it like, you're not taking the hat off until, you know?

Yeah.

So I, I, well, I, I wore it one day because I was making fun of one of my co founders who wore fedora out, out in the field. We were testing the airplane. I was like, yeah, you look silly. I got a hat I can make. I can look even sillier. And then I was like, I want to do something like, until we fly. And, like, not everybody can grow a beard. Not everybody can grow their hair up, but anybody can wear a hat. So I'm like, all right, I'll wear this, you know, I'll wear this silly hat until we fly, which is actually one of my favorite hats. Like, really great. Friend gave it to me a long, long, long time ago. And it looks good, Whatever. So, like, I had to make sure that, like, it doesn't get Marie Kondo'd out of my house. I have to wear it like, once a year, so I'd always incorporate it into my Halloween costume. Little did I know I'd be wearing, wearing it for, like, you know, six months now. But so now, now I hate it. And nobody else has worn hats every single day. That lasted for about three days. So, yeah, when we, when we fly our first airplane, as soon as it lands, we're gonna, I'm gonna stick this thing on a stake behind the airplane and burn it in the afterburner, and I'll do something with the ashes, but there we go.

Amazing.

That's amazing. I want to hear little, little backstory on the company, little company update. I want to hear your take on the F47 and the DoD continuing resolution. But let's just start with overview of the company and where you guys are at.

Sure. So, yeah, at Hermeus, we build very fast airplanes, and we build them fast. So long term vision of the business has been to radically accelerate air Travel with Mach 5 aircraft. So hypersonic, hypersonic passenger aircraft. But as we build the technology along the way, deliver products that solve some really pressing national security challenges here in the near term that build us a strong, growing financial foundation and kind of gave us the right to go, you know, try for that, that really long term. Future of, you know, adding a couple percentage points to global gdp. Company's about six years old now. We've, we've done a ton of development on the propulsion systems, engines necessary for these kinds of vehicles. And now over the past couple years, as you mentioned, we've been starting to get into our aircraft development cadence. So a lot of the blood here comes from SpaceX. So the way that we've kind of designed our, our program for how do you build fast airplanes, planes is to build a lot of prototypes and build them on a very fast cadence. So really bringing iterative development to aircraft for the first time in a very, very long time. So that's resulted in us being able to develop our first aircraft from setting requirements to being ready to fly minus the faa. So here's, here's the hat still, but ready to fly in, in about 15 months, which as far as I've found is like the fastest, fastest jet aircraft development in about 50 years. So this is like back to the Kelly Johnson skunk work days. So we've proven we can.

Right. Right away, my first question is, you're going from, you know, zero to real product in 15 months. That's intense speed even for somebody building like a robust CRM, right? You guys got to do something a bit more just, you got to be a bit more than just robust, right? If you're going to like fly, fly something through the air. But where do you even start with this? Like, is there, is there like effectively like open source kind of like designs, information, schematics, et cetera that you can kind of pull from to like pull forward that development timeline? Or is it just like.

It's actually chatgpt. I'd like one blueprint for one blueprint.

We're a grok company here. Oh, yeah, no, like the, the place that you start is fundamental physics. That's it. Like, there's, there's plenty of stuff in the supply chain where you can, you can, you can buy parts and components and things where you don't have to reinvent the wheel. But if you are not starting with the fundamental, like understanding the problem and simplifying it as much as possible, there's no way you'll ever meet a timeline like that. So, like really simplifying the problem, making the problem dumber than you so that you're not trying to outsmart it, and you're only doing the things that really go to answer the questions that you're trying to answer. Which for us for this first airplane isn't like, can we build A hypersonic airplane. It's can we build an airplane and can we do it fast enough to support this development cadence? So like this, you know, quarter horse mark 1, which is the first aircraft, it really only has to do like two things. Take off and land. That's it. And we've, you know, we've learned a ton already that we've already integrated into like how we're building the second aircraft. So our second aircraft, Quarter Horse Mark two is supersonic. So it's, you can probably hear it being put together literally right behind me. So that, that one should be ready to fly later this year, probably early fourth quarter, which is super exciting.

Can you give a quick overview of the actual tech? Ramjet, scramjet, all this mumbo jumbo. Can you break it down, what you're doing?

Yeah, so we, we don't use, we don't use scramjets here. It's all ramjets. So it's like, it's literally the simplest propulsion concepts that, that there is out there for everything. Propulsion. Like when you, when you're in aerospace engineering school and you're learning through all these different engine types, the very first one you start with is a, is a ram jet because there's no moving parts, it's just compression, add fuel, burn it, exhaust through a nozzle, generate thrust. So those engines can't really run efficiently until you get up to somewhere between Mach 2 and a half and Mach 3. So you have to use a gas turbine engine, turbojet, turbofan to get up there. So we've, we've put those two types of engines together into a single engine. We've demonstrated that on the ground, transitioning from a pre cooled afterburning turbojet to a pure ramjet and then back again. So we've, we, you know, we have an engine capable of, of doing that and now it's a matter of iterating through the aircraft side to be able to do that in the air.

You talked a little bit about FAA sort of approval delay that cycle. Was there ever a possibility or is this even something that you would consider to say? Like, you know, the FAA is going to take a long time. Why don't we just ship our, you know, plane to some other country that will approve it quickly?

SpaceX do Kajalein.

Yeah, because there's a N Nuclear company out of El Segundo that like just in the Philippines.

Philippines, yeah.

And I was just sort of wondering is there something you could do there to kind of like you're building so quickly. Ideally you could test quickly and not get held up.

Yeah, yeah. I think we'd have to be incorporated in a different country fully to be able to do that. So that has. That has other implications. But, yeah, like, even. Even if we took the aircraft to, you know, Australia or, you know, Kwajalein or somewhere out there, we're still an American company, so we're still under the jurisdiction of the faa, even though we're some. And, you know, and the reason for. The reason for that is because, like, yes, other countries have their own versions of the faa. You know, there's an international body called icao, but generally, since the US has pretty much always been the leader in aviation and technology, and especially on the commercial side, everybody just kind of defers to what the FAA does. So it kind of just trickles back to them at the end of the day as well.

You talked a little bit about your technology one day being able to increase global gdp. I assume that if you can just move stuff around the world faster, move people and products around the world faster, that will just sort of accelerate growth. But could you extrapolate that on that a little bit?

Yeah, I mean, it's a historical trend that you can see in a number of different things over the course of human history where you've accelerated the rate of transportation within a network and that has increased trade. So trade. Trade and cost, and therefore distance are proportional to each other. So if the kind of unit that's used in these type of analyses is called economic distance, so it's a mix of actual distance and cost and time, and all of those things kind of wrapped into a single metric. So if you can shrink the economic distance between two economies, you will increase the trade between them. It's a gravity model. So you have two bodies. The closer you bring them together, the stronger the force of gravity is. So trade is like gravity in this. In this case.

So can you talk a little bit about your reaction to the F47 program? Boeing won a $20 billion contract for the 6th gen fighter. It's a nod, the design is a nod to the P47 fighter. And there's. There's competition between the major primes. But I'm sure you have, you know, some insight into what's going on on here. Can you break it down?

Yeah, I certainly have no insight behind closed doors, of course. So I guess I can. I guess I can make up whatever I want. But I think from. From the outside, you know, I think, you know, it's. It's clearly a capability that, you know, the US Air Force really thinks that we need to solve some, some really, really tough challenges. You know, when you look at what the Air Force is tasked to do and maintain air superiority basically globally, all the places where we have interests and one of the most important, one of those places is in the Pacific and maintaining freedom of navigation. We're seeing how that's going in the Middle east right now. We all got a nice inside look to some of that this week, but it's a really hard problem. The distances are really long and our, our current fleets of fighters, be they 4th gen, 5th or gen, they really don't have the legs to cover the kind of ground that's required out there. So I would not be surprised if this aircraft was significantly larger than what we've seen before. Increased range, those kinds of things. That's just kind of the nature of the problem that's out there.

But 20 million feels low to me since I, in the, in my mind it's like F35, it's a trillion dollar program. Is this one of those?

Yeah, I mean this is, this is like start just for the, the EMD phase. Engineering, manufacturing, development. So it's like, it's like the R and D phase. Like so you built a prototype, now like go turn that prototype.

This is like the chat GPT prompt phase. Right.

Do these companies get so big that there's just like, you know, massively massive variance in terms of like competency? Right, right. Because like over the last couple of years I think a lot of people that I know are like, I don't want to fly on this like you know, Boeing jet. I'm going to go like take this flight with the Airbus or whatever. But like clearly the government has like confidence in, in Boeing. Is that, is that just like the norm for all these contractors once they get to a certain scale? Like there's certain teams that are just like highly competent and sort of at the forefront of some of this stuff and other teams that just have maybe leadership issues or, or more cultural issues, et cetera.

Yeah, I mean, I think each of the primes have their advanced development groups. LockheedIsKunk works, Boeing has Phantomworks, Northrop has their own and so forth that kind of do these early stage development programs that precede production. But frankly, I think all of them have really grown pretty old and sclerotic, to use a Trey Stevens term. And I think the, the evidence of that is like how long it has taken to develop new aircraft in, in the modern day. There's this, this chart that I absolutely love it's a timeline on the bottom and then how many years from like program start to initial operational capability FOR aircraft from 1945 through 2020 2005, 10, something like that. So between 1945 and 1975, the average time to bring a new aircraft from like the beginning of the program capability was five years. And then since 1975, that duration has gone up linearly to the point where I think the F35 was like a 25 year program. And even, even this one, you know, the next generation air dominance fighter is already like 10, 12 years into its program. Like sure, we flew a prototype five years ago, but that was, that was.

Maybe already the opposite of the 100 million dollar arraph where it just keeps getting shorter and shorter.

It's like, it's exactly the opposite in airplanes. And so like too bad this all changed in 1975. Like it's, it's blatantly obvious where the knee and the curve is. So you know what happened in 1975? Kelly Johnson retired from skunk works literally just one guy. You can't, can't make this stuff up. So yeah, like the F117 happened like five years after that. So that was like best Rich and his group. So very much still of that culture, but iterative development. The way that SpaceX develops rockets now, the way that we're building airplanes here now at this one aircraft per year cadence, we haven't done that in decades. And the result is the development timelines for solving hard problems, they just go out and to the right and then you stack on top of that cost type, contracting and incentives and all those kinds of things. And you know, the lack of, you know, like founder led companies building fighter jets today, that, that happens.

Yeah, no, that's a really great point. Do you have a last question?

Is there camaraderie in this sort of supersonic?

It's a bitter rivalry. I've been trying to get BOOM to do a foot race with you. We're going to find out who has the faster plane. I want to find out who the faster founder is. Break it down.

So I'm finally having knee surgery to fix my acl.

Okay.

It's specifically for this reason, so I can run this race. This is why I'm doing it.

So anyway, for those who don't know, Blake Shoal is over at boom also building hypersonic technology. Very different application, very different path, very different scale company and stuff. But I love the idea of there being serious drama in this space and we can track it day by day. Oh, what's AJ doing? Are you on Blake's team or AJ's team? I think it'd be great for the industry.

Like, it's good for the industry overall. Like, hey, we just. We just want to fly at hypersonic speeds. Like, we. We want to be able to. Every application, like, I want to see.

T shirts, just random normies are wearing, like, hermeus merch because they're so invested in the drama. Like, straight up vanderpump rules level. Like, People magazine, paparazzi photos of you anytime you go outside. This is my dream for what tech can be.

Yeah. Yeah. Well, I mean, we. We got a little bit of a race, right? So, boom, Flew supersonic this year, and we're building an airplane behind me that hopes to do the same.

Well, good luck. I mean, I'm rooting for both of you, but I'm especially rooting.

We just want a pod. We. We. We have a pretty fast pace at the show, but we're not hypersonic yet. And being able to do that, do this show from the air with you, do the. Do an interview in the future.

Yes. Would be fantastic.

Incredible. So thank you for coming on. Always. Welcome.

Thanks so much for having me, guys. Appreciate it.

Have a great rest of your day.

You too. You.

I love how everybody's just calling in from the floor. Oh, yeah, it's fantastic.

Well, speaking of love, our next guest is Connor Love.

Connor Love. They named. They named love after Connor.

Did his family create love?

Yeah, they product. They productized it ip. They made their money in love.

They made their money in love.

There he is.

Hi, guys. I mean, I. I wanted the chatter to go on. I feel like I'm on sports talk radio, you know, longtime listener, first time caller, right?

Yeah. Well, good to have you here.

It's great to have you. You had a thoughtful comment. I just said, come on the show. You were like, I'm game. Let's do it. So here we are.

Well, let's start with that thoughtful comment. I mean, first introduce yourself, break down.

Who you are, but then, yeah, no, happy to. I help lead our national security and defense investments here at Lightspeed. Been here for five years. You know, used to sit on that side of the table, actually. Circumstances in the military for a better part of the decade. So, yeah, excited to chat. I think there's a lot of spice. I mean, love Delian to death, but.

Let'S get into it and set the table for us on size, scale of lightspeed. And then is defense tech its own fund, or are you just Making investments.

Yeah, obviously. So history at Silicon Valley firm been around for 25 years. I mean, we talk about ourselves like a platform. So we'll write a million dollar check early or we'll deploy a billion dollars late. So have the full kind of stack platform. Obviously based here in Silicon Valley, but have offices in reach globally. I sit on the Frontier Tech team. So myself, Ravi and Ravi, Raj and Taggart really invest in. We call Frontier Tech. What I lead a lot of is all our national security, all of our defense stuff, and it comes out of the same core fund. So it's not a separate thing where we have to deploy $500 million a year in this. It's. It's really kind of up to the team and up to how we see the ecosystem.

Cool, that's very helpful. Let's go to the drama. You, you and Delian break it down before the drama.

I'd love that. You know, we were actually talking with Deli and how, you know, the last two years a lot of VCs, you know, went amended their LP agreements and said, well, actually I fancy myself a bit of a defense investor myself. You know, I think we all did that. I did that as an angel. Right. My, I've got my bets. Everybody realized it was cool to be a patriot. Do you think that, do you think that it's. Are there real blind spots for investors that don't have military backgrounds? We just had Steve Simony on the show from Alan Control Systems. He was a nuclear engineer in the Navy. Like that clearly sort of informs how he thinks. How much of an edge do you think you have? Because you actually have, have, you know, lived on the customer side.

I mean, like most things in life, if you haven't lived and breathed a problem, it's really hard to roll up your sleeve and understand what's real and what isn't. I think the thing that's quite obvious though is the fundamental pace of change of technology is happening so quickly that even what I was talking about 10 years ago and I sat out in the Pacific kind of before the Pacific was cool, I wrote a million memos about hypersonics and space based systems and I worked directly for the company of the four Star Command of the Pacific. And we were talking about basic shit back then, we just didn't have enough mass on systems. So I do think there's this clear edge of understanding who the customer is. More importantly, the crazy thing about defense tech that I think not a lot of people realize is there's really not the concept of product Led growth. You can't just dog food something with a customer and then all of a sudden the colonel or the general out in the Pacific is like, great, I'm going to buy $100 million of this thing. I mean, it's not how it works. I mean Congress has to say we have program offices. We have this complexity of just utter chaos that makes this really hard. So long story short, it definitely gives me an edge. I just think things are evolving so quickly that again, the edge isn't enough. You need to get lucky 100 times. I mean, what does Trey say all the time? They got kicked in the face for what, seven years straight at and world before coming today. So. So it's not easy. To be clear, I'm not pounding the drum that there's going to be 100 andils. I hate to break it to you, there's not. There's going to be a lot of investors who are going to lose their shirts. There's going to be a lot of entrepreneurs who are going to try and fail. But as the cold blooded American who served and been on that side of the this is all not good for us. More people building new technology to get in the hands of war fighters. The question is, as we As a DoD, are we going to get out of our own way and buy the right stuff at the right timeline?

Yeah, I was, I was always bullish on that with the hard tech. Even if it was a bubble, it's like it's so much better than some of the other tech booms where yeah like it falls out and then what were, what are your durable skills? Just like shilling meme coins and that's what you're gonna do next. It's like at least if you like, you know, graduated college, went to work for some hard tech company, it fails. But you learned like system design. Like, well like, you know, dod, you learn so much of these like tangible skills. Like at the very least, like okay, yeah, the VC dollars, they didn't just go all to Facebook, they went into buying manufacturing capacity. Maybe that manufacturing capacity didn't produce profit, so it's got to get rolled into other stuff. But at least we have more machines in America. So it was always like the, the, the there could be like a peace dividend from a bubble. Even if there is a bubble and there's a washout. Anyway, do you have next question or you want to move on to the continuing resolution?

Yeah, let's get into that.

So, so yeah, can you start by like breaking down just how you processed the information and the news around the continuing resolution, maybe restate what you feel like is going on and then your take on it.

Well, and I think this is, you know, I won't get too in the weeds, but I think this is really important to fundamentally understand how Congress and how our Department of Defense spends money. And I think people just read the headlines of defense news and they're like, Elon's cutting budget, continuing resolution, and yet all these companies are being funded. What's going on? There's this clear misalignment. I think the reality sits actually a bit more nuanced than that. And when you look at how the Department of Defense spends money and Congress allocates money, we pass this thing called the National Defense Authorization Act. And this is literally the president, Congress, both sides of Congress. Congress sit down and they say, what are our needs? What are requirements? And then what they do is they pass a law very clearly that says, here are the budget tables, here are the things that we're going to be spending money on. And it's this, like, I give the andro guys a ton of credit here. It's rocket science and literally what you're building, but it's not rocket science. To figure out what the federal government actually wants, we publish these things called J books. Every year we pass laws. And so historically, if Congress and government works the way it's supposed to work, every year we have this new National Defense Authorization act that gives the Department of Defense a budget table to say, hey, air force, here's $100 million. Go buy space lasers. And when that happens, you get this really predictable nature of what's going to be bought, when it's going to be bought, and the quantity. The problem is when you have disruption like we have right now politically in the government, government, and you can't pass an ndaa. And let's be honest, this has happened a lot in the past. You do this thing called a continuing resolution. And a continuing resolution, just as Dallian said, is this blanket band aid where you just set an arbitrary period of time in the future and you say, hey, just keep the thing going. Let's keep the thing afloat. Let's kick the can down the road. And this is like, let's be clear, this is not bad. This is not good, not how a functioning government should run. But I think the nuance here, and this is what gets me me so giddy. And to Delian's point, yeah, Matt Steckman's of the world, and those guys aren't tweeting at him saying, you're wrong. It's because those guys who really understand what's happening and how to sell the government, they're actually texting their co founders and they're sprinting at shit right now. And that's what's happening. So this continuing resolution, the nuance here that happened is again, go read the section, go read the bill yourself itself. But effectively the rule was changed where you're allowed for new starts. And new starts is just what it sounds like. It means that you can start a new program and allocate money towards something new. And again, there's also a ton of bad in there. There's rescissions, there's like, hey, you can no longer have $100 million for space based lasers, you can now just have 90. But where the like. And I made this, like, there are sharks and there are minnows in this, in your budget happening right now. Now is the sharks. The guys like Brian Hargis has done this at SpaceX and is at Castilian now the Steckmans, and the list goes on and on. What they're doing right now is they're looking at each of these new rescinded budget lines, each of these new minimum lines that Congress has gone back and forth on the CR and they're going to those program offices and they're saying, hey, maybe you don't need 90 million, maybe you need 80. And the nuance here was this is important, is each one of these new budget lines are theoretically, and the key word is theoretically allowed to be moved around now. And so what I'm seeing in my signal chats, in my discussions with both people in government and those what I would define as tier one founders and go getters is like, holy shit, there's $300 million. That again, it's a big F right now, but there's a lot of money being moved around. And so when I made that comment and when I look at kind of this brooch of producers, there's so much disruption and there's so much variation of what could happen one way or the other is like, I actually think you're going to see one of two things happen this year. You're going to see a small amount of companies and timing like anything in venture. And starting a company is really important here if you're in the right spot of the kind of growth journey with your product. And again, this is the beautiful thing about hard tech. If your product doesn't do what it says it can do, who cares, move on, type thing and that's the beauty where the chickens are all going to come out to roost for all of us at some point. But again, I just think there's so much in your money up for grabs that I think by the end of the year, and hold me to this, you're going to see 1, 2, 3 companies that will get, I mean high hundreds of millions of dollars of in year revenue grabbed for real production, real OT contracts. That has never happened before in a CR or non cross.

Very cool. I got a bunch of follow up questions. It feels like the United States does our defense budgeting and planning. We're like building in public and like we joke about this all the time, like building in public for most people, like sure, sure, maybe some progress, like get excited on the timeline a little bit. But generally like you're just sort of inviting like you know, black budgets should.

Be 100% of tax revenue.

Yeah, essentially. Yeah, but no, no, no, I like that. No, but like how does China approach all this stuff? Like I have no idea. And maybe you don't either, but maybe you have insight. Like it seems like they wouldn't be like, yeah, we're going to just like air our dirty laundry out here and like be like, well we, you know, it's America. Yeah. Is that, is it, you know, break, break it down.

Yeah. I mean at a high level what, what we have working against us is for better or for worse, the Chinese government is pumping an insane amount of, amount of state and federal dollars towards these critical technologies. Yeah, there's a VC ecosystem that exists obviously, but it is in nothing in compared to the amount of money that China as a state entity is putting behind everything from rocket launch systems to missiles to autonomous systems to AI ecosystem. And what you don't have obviously in the United States is you don't have this massive kind of call it industrial complex where it's like, yeah, we have this thing called SBIRS, these Small Business Innovation Research grants that are 2, 3, 4 million dollars that help people get off the ground. So there's this huge parody of just R and D spend that is happening. And when it's coming from the government, it might not be efficient, but it's so large in a way where you're just able to fail 500 times. And it's not like the VC fund goes out of business and it's like the government will keep existing and keep pumping dollars into it. I think the edge we have here because I'm an optimistic, autistic, cold blooded American as opposed to A doomer and gloomer is I actually think the competitive ecosystem we have. And I've told this to everyone in government who listened to me. And again, this might be controversial, but we need to stop funding a single sbir in our DOD and in our federal government. And the reason I think that is in an historic world, sbirs have been this thing to get a company off the ground to like, hey, I need some money to develop something and that's like net good for like entrepreneurs and people. But now you have this wonderful thing called, you know, venture capital ecosystem, who's now said, hey, I'm actually really interested in the risk in this and I believe in your vision. I want to back you. You actually get the right incentive alignment here where if we do our job right, and I say collectively, like me, Delian, you know, GC is quite the whole list of folks, then we're going to be funding the right things that, you know, have true technology behind them, have the right entrepreneurs and founders who get what they're doing. And so I would much rather take our system just to be totally blunt and honest than this Chinese like, let's pump trillions of dollars. And they're doing that because I think this is more efficient and I think the cream is going to rise to the top of like you're going to see again, not 100 andils, I hate to say it, but you're going to see some pretty large companies that are, that are solving real problems for the department of Feds.

There's.

You mentioned space lasers randomly. Sorry, is that like this ties into.

Kind of a question I had, which is within defense tech, there's technical risk and then there's distribution risk. And it's almost like the distribution risk kind of weighs over the technical risk. Because even if you're building like, you know, autonomous submarine products, well then it's like, yeah, like you could build the amazing product. Maybe you can't actually sell through. But the on the tying off of the space lasers thing, like, because there's so much distribution risk, are we taking enough technical risk? Are we funding enough sort of like weird science fiction or is that better suited for skunk works in the government and. Or do we need to get weird?

I actually think it's the right question. And you know, I'm biased obviously, and I see how we do things at light speed. I think about things in a spectrum of like, on one end of the spectrum you have what I call like true science and technology risk. Like this is the like bits and atoms thing. If A fusion reaction doesn't take place, you don't have anything, there's nothing there. On the other end of the spectrum you have the kind of commercial products that we know exist. We can get a car to drive, we can get a software system to be a CRM or whatever. It's like you have arguably no tech risk on that end, but you have huge kind of product market fit, customer go to market risk. I think the holy grail scale and again we take this approach at lightspeed is like number one, you need to build a portfolio that's really thoughtful about the type of risk that you take. So on one end of the spectrum I wouldn't take fully science and technology risk. On the other end of the spectrum you're not going to have big enough outcomes if you're just making another CRM or a software tool to apply to the government. The sweet spot in my opinion is what I define as these systems companies. And again, and I'll use Anduril as an example here because everybody knows them, but it's like there's a clear software kind of component to what they do. They're going after end systems, they're building really hard shit that's hard to do. There's some physics kind of barriers to kind of figure out. But the beauty is each new system you add as a systems company only makes that flywheel on go to market that you've secured before easier again when you're a multi product company and Saranic's getting there now, Castilian will get there eventually, K2 and Space will get there too. Once you've made one sale and made one customer really happy, you show up with the next four, five, six different products and you have credibility, you have contract history, you have the ability to actually deliver and do what you said you would do. I mean the dirty little secret that everyone knows about Anduril is the acquisition machine that they are with App and Grim and Bobak and the team there. They're taking things that are are cool pieces of technology and they're 10, 100 x ing them and it's like nobody else can do that. That is such a unique kind of ability as one of these systems companies. So I think if you're a venture capitalist here, number one, I go back to my statement before you need to know what real problems are. If you don't know what real problems are and if you don't know where government is spending money, you're shit out of luck. You're just going to be wandering and throwing Money at the hot thing. But if you know where the pots of money are, if you know what the needs are and you do this really bad balanced approach of some physics risk, some kind of go to market risk and then you just have a bunch of these systems companies that can get really, really big. I mean again I think that's how you return venture funds. I mean that's what I'm in the business, that's what we're in the business of doing at Lightspeed.

Great insights. Do you think there's our shows oriented around venture but in order for some of these venture backed companies to actually do what they need to do, they need to be partner with a bunch of small businesses to actually produce, you know, everything from individual parts and things like it. Do you think there's an opportunity for like basically SMBs to pop up to service some of these venture backed companies that want to focus on the technical risk and selling, but then they have to produce a bunch of components as well and they can't, you know, make 2,000 parts for a single, you know, missile. Right?

Yeah. I mean let's be clear and I'll actually be really blunt about this.

This.

I think how this entire ecosystem, both from an entrepreneurial and a VC perspective, like defense tech, how this goes wrong is we actually cannot deliver on the systems that we are selling the government. I actually think the snowball of accepting new tech while it's still small in the grand scheme of things, of the budget, I do fundamentally believe that snowball has started to move. And so how we fail to be clear is that if we cannot produce at scale with efficiency in the scopes that we say they were going to do it, and for better, for worse, we don't have an industrial base in the United States to solve that. We don't have. I mean the mom and pop shops are dying. I visited them from Southern California initially. You go out into the desert there and it's like one guy after one guy after one, he's built a $7 million business doing this one thing over and over again. Those guys are dying. We do not have an industrial base to serve this, this. So the question, and this is like the real big people push me all the time, like how is this bubble going to pop? How is this going to fail? If companies like those systems, companies can't find a way to vertically integrate themselves or they can't figure out a long tail supply chain of how to produce not just a couple hundreds of these systems but a thousand, then I think we're in real deep doo doo. And you've been in the situation where you've oversold and under delivered, delivered and you don't keep billion dollar contracts if you do that. So I think we have to. Can SMBs do it? I don't know. Maybe it's Chris at Hadrian, maybe it's the long tail defense tax. I mean, I don't know. I mean we'll find out very, very soon.

Yeah, I was going to ask about that in terms of, you know, there's this meme of like, you know, maybe it's very risky to directly compete with Anduril on a program that might, they, they might be launching like next month. Like they launch very quickly. But what, what is interesting to you? Where do you see the opportunities in Hardtack but non competitive with Anduril? We talked to AJ at Hermeus. I don't think Andrew has plans to work on a Mach 5 autonomous plane or passenger airliner. Hadrian and, and even like a Rainmaker, like you know it's, it is like Android hard tech coded but it's so far field that it's feels safe to work on. What would your advice be for the next generation of hard time?

Yeah, I mean, I mean again like I'll start with the same through line. I said before there's not going to be a hundred andils like Anduril has a clear unique market positioning of how they build different products into their family of systems. I think the way to think about it both as an entrepreneur and as an investor is I actually think about like unique fences you can draw around. Not just around like a technical product, you know, assistant, but also a customer. And I think this is like really important when you know, if you don't understand how the DoD works like the Navy has all their different program offices that like some for underwater, some for surface, some for missiles. And those program managers, they want their solution to build the better thing to then deliver better tools to the Navy. So if you can be unique enough and part of this is like yes, looking at what, what the large guys are doing like Anduril and SpaceX and et cetera, you need to be nuanced enough initially with your product that you're showing up to the table with something new where it's like well Anvil is kind of doing that or Roadrunner's kind of that thing. So I might as well just buy that because Anduril's been already there, they're already in the room, they already have the need. But I think the Nuance here is if you can make a leap from a customer and a system to an adjacent enough thing where Anduril might be in the ecosystem, there's still really massive opportunity to be built. I mean, Saronic's a great example of that. Saronic is off to the races now and building a bunch of autonomous boats and it's going to be amazing to see what Deno does. But Anduril's underwater. Anduril is building autonomous systems. I do think there's a world where both of these companies actually work really well together. And in this wonderful world where we're doing teaming and orchestration, a bunch of multiple autonomous systems, you want as many people orchestrating on the same platform as possible. I think the last thing I'll say is just where this goes wrong. This goes wrong in a way where both Anduril, but also these companies start to build kind of stovepipes around what they're doing. There's really basic examples. We want to get to a world where we have Skynet, where these systems are talking to each other and playing out. If you don't allow your infrastructure, your software infrastructure to work with other things, then number one, you're creating a really adversarial environment with Anduril and other big guys. So in my opinion, working with Anduril as opposed to working against Anduril is the answer here.

Jordy, what you got?

This has all been great. I don't think I have any. I think that covered the one thing. I was wondering how you're advising portfolio companies right now. We're in a sort of defense tech bubble. We've, we've sort of aligned on that and it can be a good thing. And so there's a, there's definitely a push for companies to take advantage of that and say like, you have a short period of time potentially before, you know, there's a cooling off period and maybe there's less investor interest and certain investors maintain long term conviction, but then certain others, you know, pull out or pull back. Back. How are you advising portfolio companies on like you need to move super quickly because you know, there, there are these sort of behemoths that are going to be built in the next few years, but at the same time you want to be conservatives because if a contract, if it takes you an extra year and a half to get a contract and then you run out of money, like it just doesn't matter. So like how, how do you advise?

You know, yeah, I'll actually take it one step further, which is like if you believe you're going to win a contract in the near future and you don't make that decision to raise more companies capital now, you actually can't deliver on the contract. Back to my comment of you got to produce real things and if you don't have capital to build out the factory, to build out all the testing infrastructure, you can't do it again, like most things, it's a bit nuanced. I mean the advice that I give portfolio companies is there becomes a terminal value or a value of your business that you only have one path to, to go. And again this number is maybe moving a little bit, but it's like the second you start to raise above 500 million, both early, maybe early investors will get a good outcome, but near term investors and you as a company, you're either going to be a public company or you're going to be bought for a private equity multiple. And I think the level of conviction that founders have internally on the ability to win real production contracts or the ability to deliver and get to a technology milestone should be that internal test of a founder of do I have line of sight to that? Do I believe that will happen? And if the answer is yes and again you're going to need the money, then I advise founders is like, let's take the swing. We're in this to build massive companies. I'm not in this to build a company that gets sold to Lockheed for parts, whatever. Maybe good outcome for a founder, but that's not what we all play for in this ecosystem. We want to build generational companies and I want to back generational, generational founders. So it's really just that internal sense of like, all right, this is the product. We believe we're going to win the product or we're going to win the contract, so let's do it. And so it's, I don't know, you put your pillow down, head on your pillow at night when you're a founder and if you know even all the risk and all the being punched in the stomach that there's true line of sight to real production contract value, then raise the money. I think the time is right.

Can you give me a little bit of a crash course on KPI's multiples? Like what stats are important for defense tech companies as they're growing? Obviously in SaaS we know triple, triple, double, double, double. We know ARR and churn. What are you looking at in a growth stage?

I mean the geometry of defense tech, you know, company growth looks unlike anything Else, like, it doesn't look like software, it doesn't look like consumer. Consumer what it looks like. Nine times out of ten, and there are some anomalies here, and I actually think there are going to be some anomalies during this continued resolution. But nine times out of ten you get this really small siber revenue. I don't have a system yet. I got to develop the thing. I got to go get someone to pay me for some small, 2, 3, 4, $5,000,000 R&D money. And as an investor in this ecosystem, I actually discount all that revenue to zero. Whatever. It's not like we're applying multiples at the early stage, but, but you see this middling and then you see again this just stepwise change and improvement where people ever use the term program of record. Most times it's actually not a true program of record. It's actually either just a really large ot other than transactional authority or something like that. But then you see this stepwise change of like, okay, you got children dollars, and then you got this massive kind of call it 200, 300, $400 million contract. And so the KPI that I always think about is like, there's a separate technical timeline of de risking your system. And it's our job as investors to roll up our sleeves and be like, is there real progress? Can we see this? Is there more testing what's happening from an iteration perspective? But then the holy grail is like, and this is where you're either really smart as an investor or you're really dumb, is you make the, you lead with the preemptive term sheet. You make the investment actually right before that tick and right before that, big production. Because the beauty is you win a 200, you win a $300 million production contract. Yeah, maybe it's over a couple years, but that's the base cash line of your business. And that's the get out of jail free card of hey, now we're not using a ton of venture dollars to develop the next thing to build the next factory. So to me, it's like you get that internal feeling of where we are are like how close we are to those, those programs. And like, you know, it's, it's, it's not a clean, you know, net dollar retention. Is this odd. You know, you're, you're doubling year over year, tripling year over year. You just got to be nuanced and you got to know what the hell, you know, program offices care about and, and how they move.

That makes a lot of sense.

I've loved having you on.

It was great. Thank you. So much fun. This is really.

Yeah, guys, any. Any, you know, when you're. When you're, you know, next time you're putting $500 million into a cool company, join with the founder. We'd love to have you both on.

That'd be amazing.

Yeah, guys. Well, I appreciate it. Love what you guys are doing. Huge fan.

Thanks so much.

All right, chat soon.

Talk soon.

Bye.

Bye. And we got Chris Power coming onto the show next from Hadrian. He got a little mention in that neck in that earlier interview. Connor mentioned it.

I'll be right back.

And Jordy is taking a break. Well, we will be back in just a few minutes, folks. But in the meantime, let me tell you about Adquick. Adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only Ad Quick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the Globe. Go to adquick.com, sign up, run a campaign and get some beautiful billboards out there. Then take, take some photos, send out a photographer, take some photos, get them on social media, Put something funny on there. The Adquick team is really, really good at coming up with kind of like viral stunts. I mean, Mike Solana did a pirate wires billboard for Ad Quick. They have a partnership together. And I think he got like 100,000 likes on X. I think Elon wound up retweeting it because it was a big milestone for the company they put up. Moon should be a state right in. Right in Times Square. And speaking of the moon, we got one of my good friends who's obsessed with the moon, Chris Power. Welcome to the show. Jordy's slacking off. He's taking a break. He'll be back in a couple minutes. But good to have you. Welcome to the show.

Thanks for having me. It's a pleasure to be in the.

Capital of the Capitol.

Thank you. Yeah, it's good to have you here. How has life been? You've been traveling. You were spotted on. On a flight to Washington, D.C. a couple weeks ago. The paparazzi caught you. Yeah.

That was crazy.

Yeah, that was crazy. I didn't realize that there were so many spies out there in Silicon Valley. But how was your trip to dc?

It was incredible. Obviously. Can't talk about most of it. Some of it's classified. Very impactful, especially with the new administration coming in. Wants to fix American manufacturing and the vice president gave an Incredibly rousing speech about re industrialization at the Indracing Conflict conference. So it was incredible. And yeah, look, I don't know who leaked that photo to you. I was a bit concerned whether it was a fan or like a communist spy tracking down all the defense tech founders. But you know, you got to be careful these days.

Yeah, yeah, you got to be careful. Maybe wear like a full beard and glasses next time. Full display.

I just, I just got to go out and say I think you have the coolest office of anybody that's been on the show so far. It's a fantastic office, what have you. Unless it's a green screen.

It's not. I've been there.

It's real on the green screen.

Real factory and a lot of machines working constantly. How are the lights today? I know that on the top of each one of those machines there's a light. It can turn red, it can turn green. How are we looking today?

Very, very green, fellas. Just like the ramp logo. Everything's going on.

Fantastic. That's good to hear. Well, anyway, you didn't even get a chance to introduce yourself. Can you just give us like the high level pitch for Hadrian, what you're building and where it's going?

Yes, I'm Chris Power. HADRIAN BUILDS AUTONOMOUS FACTORY so you know, we de industrialized the country from the 70s through the 90s and gave all our industrial power to China. And now incredibly skilled workforce that does incredible tactical things in high precision machining or castings are all aging out, so we really don't have an industrial base anymore. So our mission is to re industrialize the US by building highly automated factories that are, you know, as efficient as China with a lot more software, robotics and a new manufacturing workforce.

Lights are on in that factory. We're trying to get to lights out factories. Is that the goal? Is that, is that just Chinese propaganda when I hear them?

No, we're, we're, we're, we're lights out today. We run 24 7.

Oh you do?

A handful of really smart people running the fleet. The lights are on now because we're all here. Yeah, we're 24 7. Seven day a week operation.

Wow, that's awesome.

Can the robots save us? Right? It's a very scary time right now where China's producing a lot of robots that have, can be used for a lot of things, you know, flying, you know, maybe over your kid's birthday party to get fun footage or they can, you know, be used in kamikaze ways. But it feels like Automation and advanced robotics, LED manufacturing is the only way that, like you said it yourself, maybe the only way that we really re industrialize. We just don't have the sort of skilled labor force. But you're betting the company on that. But maybe kind of talk a little bit more about that specifically.

Yeah, I mean, our goal with our software and robotics is to make it so easy to be highly skilled that anyone can do it. And 100% of our workforce of people have never set foot inside a factory before. They're just 10 times more productive because we're getting them superpowers with software and robotics. Right, right. And I would, you know, you guys are big fans of Formula one. So like a lot of what our software does is, you know, imagine if you're a son or daughter who was learning to drive that Tesla Autopilot on an F1 car. They can just, you know, drive a McLaren very quickly without much training. That's kind of what our software does. And we really believe in using the best of software and robotics to give the new workforce 10 times more efficiency with superpowers, you know, versus like replacing them in times entirely.

Yeah. And so is this the same way, like to compare it to yesterday? Anybody can do Ghibli studio, Ghibli animation, so anybody should be able to make the most advanced aerospace parts, et cetera.

That's exactly right. That's exactly right. Yeah.

Do you think we can get to the. What was impactful yesterday is that over the past maybe a couple years, if you were really, really good, good at prompt engineering, you could, you could kind of create some outputs like we were seeing yesterday, but the average person would go into these models and they wouldn't have any success. Right. They tried a couple times and be like, this is slop. Are we still at the point today on the sort of manufacturing side and what you're doing where it's like, you need to be like, actually like very, very good, but you're sort of aiming to get to that point where somebody can come in and just sort of like make, make a part and one shot it.

I think 80% of our processes were at that point where we're in Ghibli mode. One shot. There's some really deep digital manufacturing stuff that you still need an expert to do. So we're in. The software engineer is 10 times more productive land versus anyone can code, but I would say 80% of our factory is like, anyone can code today.

The specific programming language is like CAM programming. Right. Isn't that it?

Yeah.

Is there like a, are there LLMs that are good at that type of coding language? Like there's no cursor for cam that you're like on top of and just plugging in to speed things up? No.

So we had to build that full stack ourselves.

Okay.

And the main reason is all of those digital manufacturing tools, which are super hard to use and you need to be an expert, generate basically terrible assembly code that the machines run on. But because American manufacturing is largely regulated in itar, there is no training data on. So one of the reasons why our internal models actually work for manufacturing, you know, machine learning models, is because we're the only ones with a label data set because we're creating it daily in the factory. There is no stack overflow for manufacturing data. So none of the off the shelf models actually have ever been trained on any of this.

Interesting.

I imagine that every hard tech, defense tech, frontier tech founder eventually has to come through and kiss the ring at your, at your factory just because it's like, hey, they're basically like, hey, we're gonna make, we're gonna make prototypes and then we're gonna go sell contracts and then we're gonna eventually need to deliver on those and like, somebody's got to make the parts. How many, how many companies right now do you have that are like, they're going out there promising these big things and then you know, at the end of the day they're gonna come back to you and be like, okay, now we need to make this.

The king thing is so funny because.

I imagine you work with some of like, like some of these sort of more established companies, but then I'm sure like, I'm sure there's like a hundred plus, you know, pretty exciting companies that are basically like in almost like in your pipeline where they're like, we're going to work with you. We just need to like prove that we can.

Someone's got to make the parts for the F47.

Yeah. And you know, someone's going to make the whole products as well. So, you know, I would say that for a large established customers, like, you know, we're making a lot of stuff for them. For a lot of the newer entrants or for new, new programs, we are becoming a like co prime where the DoD Hey John, you can definitely make 50 drones or 50 of this product, but we'd really love you to partner with Hadrian because we think they should build your Tesla Gigafactory. For this product line. There's really this partnerships model of helping Them prototype and then scale rapidly. But yeah, we're like, you know, we can only build so many factories a year. So the waiting list of everyone wants to Hadrian factory to deploy their products at scale in the US is growing quite a lot, which we're very lucky.

What do you think about the classic Harvard MVA who's like, I'm going to go buy this sort of SMB manufacturing shop that's putting up $5 million of EBITDA and they've done so for 30 years. So they're just going to. Are they like buying like sort of an aging asset or is it worth. Is there sort of like value in sort of like understanding what they're doing and sort of upskilling it or the.

Machine shop roll up idea, Machine shop.

Roll ups of the world?

I think in general it's a terrible idea. And the main reason is, is like you want to run a factory, you got to be leading the people and you got to have that credibility. And no master machinist or welder is going to respect a kid who's got a suit and a Harvard MBA on coming and telling him what to do. I think it's a really tough gig.

Is it also one of those things where you want to.

Chris actually tried to do this like years and years ago.

Yeah. But is it also before it was a trend? No. I imagine there's been so many advancements in everything from robotics to AI that you would want to just think about the factory. Like how would you build a factory today versus sort of buying this asset that's been operational for decades. Because we're having Dhruva on from deterrence later and he's got all these crazy stories. We're walking around these factory floors and there's an active machine being used that's from the 40s, like the 1940s, like it was working in World War II and we're still using it today.

Using it.

And so I imagine if you have the opportunity to partner with a new defense tech company and say, well like here's what's available now. Like you don't have to go and try to take over some old factory.

Yeah. And a lot of the capital equipment in all of the naval facilities or you know, everywhere in machine shops is, you know, somewhere between from the 1950s to the 1980s and it's just impossible to automate it because often none of them have computers on them in the first place. So you really gotta, you really gotta build these factories from scratch. With new technology and new workforce.

How do you think about when you're setting up one of these new factories and for companies that are in defense at all, are there the actual machines themselves that then sit on the factory floor? I imagine a lot of the best ones are built and designed and manufactured everything like in China. So how do you think about sort of the supply chain for the autonomous factories that you guys are building and sort of, you know, it's a very.

Hard question that the country's got to answer. So the machinery market. So we invented in Air Force invented CNC machine and we no longer make CNC machines in the US And I think you saw this article about, you know, Haas white labeling some China ones and selling to the Russians. But the main, the main manufacturing markets where we buy from is China's number one. We don't buy for them because they got spyware all over this stuff. And then it's, you know, Germany, South Korea, Japan are the best machine makers. And it's kind of like the car market. You know, you can buy an Italian one and it behaves like an Alfa Romeo and it's really fast, but it's gonna, it's. You're gonna be in maintenance hell forever. The German ones are really stable and the Korean ones are quite good. So you know, if the balloon goes up with the conflict, you know, can we even buy the amount of capital equipment to put in the factories? Because we don't produce that, that capital equipment in the US anymore. So you know, part of my job is grow super fast and buy all the capex from our, from our allied partners and make sure it's in the U.S. but yeah, we no longer make the underlying machines in the country anymore.

Can you talk a little bit about the continuing resolution? You're not a company that's going directly for program of record, but obviously your faith is kind of tied to that. I mean, yeah, I know that you probably can, but can you talk about how did you interpret the news? There's been a lot of chatter about this is a bear case for the entire industry. Maybe there's green shoots of opportunity. How are you processing it? What's your strategy?

So we're in a really lucky position where we're everyone's factory. So as long as we have enough customers who are winning and losing, we're growing at a rapid clip rate because we're kind of the index of the market, which is really lucky position to be in. We also partner with a select few companies again to co bid on these major programs. That manufacturing is a real challenge. But for our core business, you know, if you're a small defense startup that they've got one big program of record and that gets delayed nine months, your burn rate's through the roof, you're canceling your ramp credit card. You know, you can't put ads on ad quick anymore.

You're in a really tough position.

No aid sleep. Brutal.

No, I mean if you've paid for it, aid sleep's not leaving you.

Yeah, for larger, for larger companies like Andrew, you know, they're working on 10 programs at once. So if a couple of them get delayed, it's not a huge issue. I think Delian's absolutely right about like, if you're a startup and you're bidding on one and that revenue cycle blows out nine months, you're in real trouble. For platform companies like ours, where we're growing with many customers and sure, some of them get delayed, like it doesn't really affect us that much and a really good position where we can eat those long continuing resolution cycles because our core business is growing like 10 times, you know, 10x year on year year. So it doesn't affect us as much. It's kind of like, do you guys really care whether people watch movies on Netflix or Hulu because everyone's using aws? We certainly don't. And we try not to have favorites. We'd love to manufacture everything for everybody.

What does success look like? Just purely from the thing that comes to mind is there was this meme that 30% of venture dollars go to meta. Right. Think it was quite true, but is the future of hadrian. It's like 30% of hard tech dollars just go straight to Hadrian is like, it's like obviously like if you're just. If your job is to produce products, like and you need a factory to do that, like a huge part of the cog should be the factory. And then yeah, I think the most.

Successful companies that are continuing to raise huge growth rounds are building faster and better with Adrian, you know, and Yeah, I think 70% of all the deep tech dollars goes to, you know, there's some headcount for engineering, but a lot of it is producing prototypes and then scaling factories and components. So yeah, we believe that we will are quickly becoming the index of the market. And you know, everyone needs a gigafactory. Right?

That's right. What's going on? What's your thoughts on Europe broadly? We've covered the automotive market quite a lot on the show. Just, you know, Germany's kind of thrown in the towel some Manufacturer, you know, sending their manufacturers. You know, it was even Porsche setting up US manufacturing. I think it's a bit of a shame. Do they. Is there a world in which Hadrian, you know, helps kind of revitalize some of these, you know, the German industrial economy just because maybe they have this great industrial base but then haven't maybe focused as much on sort of core innovation around the factory.

Yeah.

So we have so much work to do here in the US that we'd love to support our allied partners in Europe and the, you know, the Middle east and countries like Japan re industrialize as well and often have the same kind of core skilled labor problem. We've got so much to work to do here. Fixing the navy, fixing munitions production, helping our customers scale. But I think we'll get there in a year or two. I think really what you're seeing in Europe is two warring tribes. One is the people that, you know, set their energy policy based off the poor advice of a 14 year old Swedish girl and gave all the leverage to Russian oil and gas. And then you've got your kind of Richard the Lionhearts. You know, it's like we need to reach reindustrialize Europe. Let's go make our own fighter jets and drones and naval fleets. So you know, it's, it's good that the English are waking up. In my opinion we need it. We need everyone in the fight.

Fantastic. Well that's a great place to wrap up. Thanks so much for coming on the show. We'll have to have you back.

It took way too long to get you.

I know, I know we messed up but this is the great day for.

This and you've been perfect day.

I'm happy to, happy to be at the capital of capital anytime and you know, God bless the United States of America and you know, the financial system of the US economy. Thank you gentlemen.

Just fantastic. Thanks for coming on. Great to see you.

Bye.

Early supporter.

Yeah.

Now always remember that.

Yeah. He always welcomes. He was like I'm working out at the gym and I'm just cracking up laughing about your holiday guide or something like that. We had a lot of fun. We're a lot more serious today. Still trying to inject some humor but having a lot of fun with it. And we have another guest joining in just a minute minute. But I mean maybe we could run it back public.com baby. We've already. We're doing another investing for those who take it seriously. Multi asset investing industry leading yields. They're trusted by millions. Folks. Get over on public.com.

Ben, do we need to do a.

Timeline or do we have a guest? We have a guest in the temple of technology. Welcome to the stream. How you doing, Aaron?

There he is, boys.

How are you? How are you?

We're great. I think if you turn your camera. Camera horizontally, we'll have a little bit better frame over here. Is that possible?

That might be tough. He's on an iPhone. No, that's great. Thank you.

That looks great. I don't know. I don't know what you want to show us, but we love that you're on the factory floor calling in on defense day at tvpn. What's new? Can you introduce yourself? What do you do? Where are you, et cetera?

Sure.

Aaron Slodov, CEO of Atomic Industries. And we're. We're teaching AI how to do mass production here. We're in Detroit. Let me. Can I turn my camera around?

You should. You can do anything on the phone. Yeah, There we go. There we go.

All right. So yeah, this is the Cheddar. This is a very, very big boy. This machine is 18ft tall.

Okay.

And right now we're loading in that job that's going in there. We can go down there, take a little walk.

Cool.

Great. This is a great. This is our Just Detroit correspondent.

Yeah.

Aaron slowed off from.

From the front lines for anybody out there who gets motion sickness.

Yeah, maybe go audio only. Right now behind me, we need to.

Get you a gimbal in these boxes right here. We've got a huge production program going to the New York City subway transit authority. Lots of work happening. Obviously re industrialized. Right, Cool.

So.

So wait, you're doing the meme?

I am doing the meme. I am doing the meme.

You created the meme.

This.

This is. This is a very, very large mill and drill machine that we use for mold making.

Okay.

It's not super apparent here, but like, this is going to be a mold for a drone, ultimately.

Cool.

And that thing is basically like blasting holes in the side of it to like, drill in water channels and things like that to cool off the mold while it's running. Super interesting.

And so you were talking to me earlier, we got coffee like years ago, and you're telling me about, like, if you need to make a lot of bumpers for cars, you need a mold for that. And so you make the mold, but the mold gets hot and so you drill a bunch of holes in there so the heat dissipates. Is that still the playbook or has it evolved a Little bit, yeah.

I mean, basically what we were trying to prove out in the early days is like our mastery over mold making.

Right.

Until like part of mass production is being able to make a mold for something as fast as you can and doing it really well. And obviously this is the domain of tradespeople. It takes hundreds or thousands of hours to actually engineer one of these things and you have to build it too. So ultimately what we're trying to do is teach a computer how to actually engineer these things in minutes instead of weeks and months once, and then have it flow through the factory more efficiently than it ever has been able to. And then, yeah, once you actually put the mold into a production setting, it runs more efficiently too, because it's physics optimized. Yeah. So you can squeeze out way higher efficiency from these things when they're running. So like, here's one of the programs running right now. We've got, you know, got some parts here and check this out.

No idea what those are, but. But they look cool.

Yeah, yeah.

Do you, do. Have you ever done any like microphones, mic stands, like any national security critical stuff, podcasting equipment?

Yeah, it's all national security, all itar, all the time.

Yeah. I do have a question about like how you actually generate the designs that then you manufacture. How much is, you know, physics based solver deterministic computing versus more like AI generative, non deterministic. And then on the AI side, are you getting into reinforcement learning or is this just like, let's get a big pool of data and train like it's an LLM.

Yeah. So basically what we're doing is kind of similar to how self driving cars were built a long time ago. So you do have to have kind of like numerical solvers that characterize a physics problem pretty well. And then once you dial that in, you can start using it to seed a model to do something. And then obviously you have a factory to help you close the loop on the prediction ability. So the idea here is that with the solvers and kind of like the models that we build, on top of this, you have a factory that generates all this awesome data. Ultimately you're trying to do is just predict the physics of a mold and the design of it as fast as you can. So in terms of like LLMs and how they play a part in this stuff, it's. It'll become more apparent over time, I think, but you know, on the physics based side, very little.

Yeah.

And then like, in terms of like coordination and I think like execution of said designs and kind of like factory operations, it's huge. A lot of that stuff can be really great like you know, agentically for helping, you know, the efficiency here.

Yeah, there's a little bit of like when all you have is a hammer, everything looks like a nail syndrome. With the LLM stuff right now where people are like, let's just stuff it in everything. And it's like there are other, there are other algorithms in fact that might be useful and, and that's okay. It's. You don't need to be embarrassed. Yeah.

I imagine when you guys are, you know, in the customer development process, like you're oftentimes. There we go.

That's the poop machine. Poop.

I imagine you're competing with, with, with kind of companies in, in China for, on, on some of these parts. Like a lot of like, you know, when you hear about like the Chinese manufacturing culture, it's like respond really quickly to emails, like get pricing over, you know, be clear.

Like Chinese New Year.

It's. Yeah, don't, don't even think about doing anything around then. But, but like, is that something like do you, do you respect their game when it comes to just like being like really fast, really clear, like focusing on cost reduction, scale, etc? Like do you think we can learn from them?

I think that yeah, there's an interesting story there. Right. Which is like the grit, the grit part of it. And so I do think that like if you're highly motivated and incentivized to actually win as much work as you can, you're gonna do whatever you can to do that.

Right.

And so like a lot of American like high mix manufacturing is. Let me just take a look at this job and see if I'm going to make enough money off of it before I actually even talk to you. So I think this is another really interesting domain of what software and technology will do for American manufacturing is absorbing a lot of that complexity, being able to quote jobs for different types of manufacturing processes instantaneously. This is our superpower is innovation. Figure out how to do that stuff and then you can work around that stuff like this. I don't think there's a shortage of grit here, but like we've been forced into, you know, a back alley of the value chain where we have to take a lot of high margin stuff because somebody else is out there doing it for cheaper. So yeah, I think this is kind of like where we have to focus.

I had kind of a hot take a while back and I wanted to run it by you. I was Saying, like, maybe the secret to China's dominance in electric vehicles now and drones, like, actually goes back to the Happy Meal toy toy. And the fact that America can't make something as simple as a Happy Meal toy in America is a problem that might actually be worth solving. But how does that hot take resonate with you? Do we need to be able to make Happy Meal toys in America?

Yeah, I mean, a lot of people don't want to do like commoditized, classic stuff like that, Right. Because it's not going to make them enough money. But I do think to your point, right, like, the amount of tribal knowledge and skill built around manufacturing something is what we've lost a lot of. And so that's kind of the whole point of this is like recapturing it somehow. Like, let's take the dying evaporating amount of skill that we have left and transfer it into a machine and make people, you know, 100 times more productive than they've ever been able to be. So I think, like, this is a really hard problem because you're trying to teach a machine how to do some kind of like, yeah, crazy physics based deterministic thing. But ultimately, if you, if you have, if you have like, whoops. If you have crazy skill mastery over.

This is an experiment. It looks fine.

There we go.

Amazing. Yeah, it's, it's basically, it's like, it's all about like the mastery of skill that you have and how you transfer it around. So in my, in my opinion, it's like, I think the fastest way to do that is by trying to teach a computer how to do it. And then, you know, know, obviously, like, think about how long it takes to train people to do this stuff. It's like a decade. Like, do we have a decade to.

Sit around and wait right now?

No.

I mean, yeah.

You are sideways, by the way.

I want. You are sideways.

That's better.

I want some hot takes. How do you feel?

Good.

How do you feel about Waymo, you know, buying cars from China?

Oh, they are.

Yeah.

I didn't know this, huh?

They are. How do you feel? How does that make you feel?

Yeah, you should have gone to Detroit.

I know.

You're in the capital of Motor City. Come on. They could have bought the whole town with like one. One dividend payment.

Yeah, basically. I mean, that's kind of. That's kind of how I feel, honestly. But ultimately, I don't know. I used to work at Waymo, like 15 years ago. It's crazy. And I've seen that Company, you know, like grow over time. But it's. Yeah, I mean it's a great product. It's a great product. And I, you know, I went to San Francisco like a little tourist attraction to try to get in one finally and ride it after, you know, 15 years of not making it. But oh my goodness.

Now you're sideways again. Can you talk a little bit about just the on ramp from our current education system? Gen Z, Gen Alpha is coming up. How, how do we get folks to get excited about what you're doing? Manufacturing, hard tech generally. And then is there a need to change? Do we need to. Like when I went to high school, like there was no machine shop class. It just wasn't an option. And it feels like that took my whole class off the path of like ever pursuing anything related to machine shops. Now most of those people became like consultants and bankers and lawyers and doctors. Doctors. But you know, do we need to bring back machine shop? Do we need to do more in the college circuit or is it really just great memes, great conferences and people will pivot at the last second after they've been studying CS for four years?

Yeah, I think it's two things, like incentive obviously, right? There has to be a reason that you want to do something like this. So it's either going to be pay or the glory. And, and the reason that I wanted to do this is because this is one of the hardest engineering and physics problems that I can imagine. It's utterly insane how hard this is. And I think I'm probably one of the only people stupid enough to do something like this. But ultimately I think the challenge of it is incredibly rewarding. You get to put your hands on steel, you get to get cut and bleed. It's awesome. But beyond that, right? Like if you turn factories like this into a sci fi future, like who's to say you can't pay somebody that works in here the same as they get as like an L5 at Google or something. Right. Like if you're productive enough, I mean, kind of speaks for itself. And like beyond that, I think also, you know, training wise, exposing people to this kind of stuff is ultra important. Being able to do factory tours. Right. Like our buddy Zane, that's we need to like have, have factory tours going on all the time. But there's a transformation happening right from going from the dirty, dangerous and dingy into relatively neat and kind of modern. But there's another version behind this too. So I think really jazzing people up about the opportunity in terms of challenge and incentive is kind of the main thrust for this. And then, yeah, there's memes, but also, I think a lot of, like, preeminent industrialists today could be beating that drum a lot more. And, you know, there's super exciting companies to go work for. It's. Yeah, it's a big party bag full of opportunities right now.

I want one last question.

More spicy, fresh, hot off the grill. Hot take from you before you leave. And we'll have you on again because it's been great. We'll have you on with a stable camera, too, so you can see that handsome face.

I had to walk around.

All right, we're gonna get you a selfie stick straight from Shenzhen, expected in six weeks, but we paid $1 for it.

Last question. Is there a world in the future where you got humanoid robots walking around that factory floor or unnecessary with the other forms of automation that you have going on?

Yeah, I mean, I would love to. I think they could probably be pretty useful for, you know, little stuff that requires less precision and dexterity. But as that improves, obviously probably some interesting work for them to do around here. But for now, it's like walking around the outside with, like, a machine gun. So there we go.

I like the sound of that.

Actually sounds pretty good.

Robots. Guns.

Yeah. Give the robots the robots.

Guns.

Guns, yeah.

Security Detroit first, baby.

Let's go. For sure.

Aaron, it's been fantastic having you on. I'm looking forward to the next one. Keep. Keep pounding the table. It's working, I think.

Yeah. Good luck.

Thank you, guys.

I'll talk to you soon. That was great. And we're staying on manufacturing, right? Deterrence. Druva.

Yes.

Can you break it down? What does the company do?

I want to kind of let him break it down, but, yeah. Deterrence. Deterrence is a company that I have been lucky to be involved with myself since months and months and months prior to incorporation. So Dhruv is texting me right now. Robots needs guns. Well, you know what else? You know what else we need? We need you to join the show, Drew. So let's get him in here. But, yeah, Deterrence is leveraging robotics to manufacture critical components for munitions, starting with something called Primer. And they're doing another. A number of other things at the moment, so we can let him fully break it down.

I got some breaking news. My mom is watching, and she sent me a foghorn sound effect and said, ran across this and thought of Jordy.

No way.

Yeah.

So I have to send it over to you. You can add it to the soundboard. That's great. I think a lot of people are into the soundboard. And let's bring on Dhruva. How you doing?

What's going on?

Great to see you. That's great.

I got my hat on. Yeah. I heard. I heard Aaron talking and I decided to bring the meme out of my backpack.

That's amazing.

Aaron's doing the meme. You're doing the meme. Pretty much everybody today is doing the re industrialized meme.

I love it.

Thank you. For what? For what you do.

Yeah, it's half defense day, half re industrial industrialized day.

Yeah.

Eventually we'll split these out. But much like both important and what.

Dhruva can talk about is how industrial capacity historically has been a deterrent.

Yep.

It's no longer a deterrent, but. But before we get into that. Or maybe like the US doesn't have, like the actual capacity to be an industrial deterrent anymore. But before we get into that. Dhruva, I know you very well, but introduce yourself for the show. Go.

Yep.

Yeah, absolutely. Well, first off, I'm really appreciative to be here. It's been my dream since I was in high school to be on the Technology Brothers podcast. But, yeah, deterrence, just to kind of keep it simple, we're making generalized robots that make energetics, which is a fancy way to say that we're making robots that make explosives. The mission of the company is to close the munitions gap with, we call them the near peer and peer adversaries that the US has around the world. World. We started the company about a year ago. As Jordy mentioned, he was heavily involved in that kind of founding journey. Started the company with a couple other guys. Brian, who is my co founder at a prior company we started called Latch, which was a hardware company that relied on a global supply chain. And Henry, who came over from Tesla and had experience building kind of factories around the world. And yeah, we sort of started to dive in. We heard the headlines of like, the US is enabled to produce munitions for Ukraine at sort of an acceptable cost and rate. Started to try to figure out why that was started to visit factories and ask people in the dib, like what they thought. And, you know, we found a lot of technology there that was from the like 1930s and 40s. So the last time America had to do a big buildup. No, you know, and not a lot has changed, frankly. Including like the people. A lot of them who. A lot of the people who work in these factories are multi generational. So you Know, their grandparents are maybe the ones who started working on the machine, and they're still there. So, yeah, we talk about, talk about.

The dynamic even in some of these legacy factories that are producing munitions that are sort of critical to US national security. We've like, maybe called or FaceTimed at different points when you're like, walking out of a building because you're like, if a single match went off in that place, like, everybody would be toast. Like these sort of. And kind of leading off of that maybe like, you know, how, how far behind some of these facilities are and then like, what are some of like this broader safety issues? Because that was a big kind of part of the genesis of the company as well.

Yeah, safety is a big thing. I mean, just to start with that, you know, we've been really diving in the problem for the last, you know, it's called a couple of years. And roughly every two to three months there is an explosion somewhere that unfortunately creates a fatality in the supply chain. And, you know, it's. And so, like, we felt like that was sort of just like an unsustainable trajectory, especially as we sort of try to re. Re. Energize this industrial place. And yeah, I've, I've FaceTimed you for some interesting places. I mean, I would say, like, safety standards. Some places do quite a good job, others don't. It's like a little bit all over the map. But what's fascinating too is like, a lot of people are borrowing not just like machines from the 1930s, 40s and 50s, but also, like, the safety protocols just haven't been updated to modern state standards. And so to give you like, a little bit more nuance, so, like, a lot of our team worked on like, EV batteries at Tesla and Rivian and some other places. And so, like, when they go into these places, you know, a lot of EV batteries can in a lot of ways be more dangerous than some of the stuff we do because you walk into the wrong room, you will. You could inhale something that will, like, kill you. And so when they walk around, they're like, oh, my goodness, I can't believe people are walking around with no PPE and this and that, like, but that's just kind of how things are done. And it's worked. I mean, I guess the, the other side of it is it's like, it's worked for quite a long time. So, you know, you know, in some ways you have to, like, respect the art a little bit. But yeah, there's definitely room for Improvement.

Yeah, I like that with your company. Like it's so easy in defense tech or anything just to be like we're going to be anduril too. And you found like a very, like it feels very niche. There's probably still a big vision at the end of the road. But you people forget that like before Andrew was Android they were, were like the sensor tower company and they were working, they had a small beachhead and then they grew from there. And that's how these things start. What have been the pros and cons of kind of putting yourself in a more niche box early on? And then when you're on the fundraising trail, hiring employees, pitching customers, how do you still tell that bigger picture story?

Yeah, totally. I mean like the rough metaphor we sometimes use is that know we're sort of like the Shopify, right. So a lot of what we're doing is we're actually partnering with companies, we're building these end weapon systems and munition systems. And so when you look across the entire, you know, spend across the category if you will, I think the army spends about $30 billion on munitions. The Air Force is like 100. When you go globally that number is obviously much bigger. And so we're, we're sort of like in some cases like 20, 30% of that spend is basically energetic kind of stuff. So we, that's how we sort of tell like call it like the, the market story. But I think from like a product story when you're trying to hire talent, especially on the engineering side, what gets folks excited is we're sort of intersecting two kind of interesting disciplines or three maybe things. So one, which is always fun, two, robotics. And then the third thing is like chemistry. So a lot of like, I just like a lot of this chemistry is like super old and so people don't really understand how it works. And that's part of why you'll see like people really resistant to change in this market. They're like literally if you make one tweak here, you might just blow your eyebrows off kind of thing. We see we've met a lot of people who have not all their five fingers, let's say doing, doing this work. And anyway, so like what we tell people is like you're able, we're able to like maybe work on some like pretty hardcore problems that will probably take 10 years to fully realize, I guess. Right. And so people get excited about. Yeah, the near term thing. I, I like to tell the team internally like we have like a mission that is macro but like, there's a lot of like, micro things that seem to be happening right now in robotics, AI and all these other places that, you know, we're hopefully able to lean into for the next couple of decades here.

Talk about the continuing resolution, which has been kind of an ongoing topic. And then what's, what's, what's been your strategy as a CEO of deterrence and kind of navigating that.

It's definitely been an interesting time to be in dc. I think this may be the most obvious thing that's been said all time. The day you live in, you live.

You like, live in the D.C. area and you've been there for years. So it's, it's, it's. You've kind of lived it, which is different than most people that are just kind of popping in for a week at a time or whatever.

Yeah, no, totally. And I also have encouraged some founders lately, like, especially if they're small, not like an. I mean, Andrew has a huge team here and stuff like that, but folks who are smaller to spend time here because information is moving like, pretty quickly. Like, I've, I've had things where, where I take like a meeting with one member and their staff and then across bump into someone we had met before and like, get a completely different perspective on it. Yeah, look, I mean, like, I think every defense tech company has, you know, roughly three, four layers of stuff they think about.

Right.

So they think about, you know, how do I message to my direct customers, like the program office, how do I message to the building, which is the fancy word we use for the Pentagon, and how do we mention work on the Hill? I think what's unique in the last two to three months is like, all three of those things seem to be moving and you've got this added component that the administration has some very specific things that they're trying to get done. And so like on the continuing resolution stuff, you know, what we've been doing is like, it's, you know, there's money that can still move around. So like, our customers still have money to spend. So we're in a fortunate spot where they've, they're asking for the same thing and we're sort of going to the same program offices for, for stuff that hasn't been expended yet. I do think there's a lot of program offices out there. Just like free advice to any startup who's listening that haven't spent all their dollars. It's just sometimes hard to find. Like, you'll have to really burrow in there and you'll, you know, meet somebody who's like, I got like $10 million to spend on manufacturing and I have no ideas. And you can, believe me, you can give them new ideas.

It's great.

So that's a component, obviously the Hill, the, there's a reconciliation process that's happening right now. Those priorities, I think there's like four or five that have been sort of widely published.

Published.

Those all seem to line up with what startups are doing. So again, my, my advice is just get in front of folks and tell your story. Do it directly too. Don't always do it through a lobbyist or whatever, because no one's going to be better than a founder telling their story. And then the last thing I'd say is like, you know, you know, the administration's only been around for what, 40, 50, 60 days or something like that. And so they've got some of the top level folks, but they haven't really put people in the seats at the bottom. So really getting, getting close to your customer right now is important to help them think through like, what they might do. And essentially their new management layer kind of pops in. So if you think of like all those undersecretaries and stuff like that, like a lot of them start quote unquote in the seat. So there's kind of an opportunity to be like a strategy shaper. So, you know, Longwood way of saying like chaos can be an accelerant for a startup. And like, that's kind of the situation in D.C. right now.

Do you have a follow up?

Yeah, I have a more of like historical question.

I was just going to ask questions like, can you zoom out and just give me like the really basic, like, explain like I'm 5 on energetics, primers, explosives. You said the army is spending something like 30 billion. My conception of what's going on abroad is like a hand grenade on a DJI drone. But like, like, how does, how does your product actually get into a, you know, like a weapon system and. Yeah, yeah, exactly. Like, I, I'm thinking at the level of like, I'm seeing cartoon TNT right now. But I want to go deeper.

Not far from the truth. All that, all that time I spent on Cartoon Network as a kid is finally playing off. Just avoid all the things with big red boxes on them or whatever.

Yeah, exactly.

So I mean, energetic materials, broadly, they're basically just a material that has like a high amount of sort of stored energy. And then when you apply some, you know, if you apply another Sort of catalyst to it. It expends more energy.

Y.

So that. That mean, like. So if you think of explosives, like fireworks, pyro. Pyrotech stuff, propellants, like those all kind of fall in energetics. The specific stuff will maybe start with primers, that is. Which is what we're starting with. So we're starting with primers for small caliber rounds.

So actual, like, bullets in a rifle that. That a soldier would shoot.

That's right.

Got it. So. So we're inside the bull bullet.

That's right. So standard bullet is four parts, right. So you've got the brass, which is what falls to your feet when you shoot it. The projectile, the little powder in there, too. So again, growing up on. On Cartoon Network, I assume that, like, the gunpowder was the part that went boom or whatever. It's, like, not actually true. It's actually the primer. So the primer is in the back of the bullet. When the hammer hits it, it kind of pops. Like if you took the primer out and threw it at the ground. Look at like a cherry bump. And so what it does is it creates a mini explosion in the bullet, and then it burns off the gunpowder to start an explosive train. And that's what shoots the bullet out, essentially. Like a little rocket, right?

Yeah.

Way it's made today, and a lot. A lot of energetics, like the. The broad sort of steps that a lot of energetics are made is you start with mixing some chemicals, right? So we take a bunch of chemical precursors. You mix them together in primers, those kind of come together, and they almost turn into, like, a. A doughy ball, if you will. That doughy ball is then passed to someone who is at, like, kind of like an application station. These stations are typically in, like, clean rooms. So think like, wedded in, like on Stairway. It's like wetted floor, rubber boots, rubber gloves, all this kind of stuff. So you've got someone who's standing there all day, and they're sort of rubbing up and down on these primers, like that clay ball. Basically, it's somewhere between. It's. It's a bit like parmesan cheese on.

If you want to. That's helpful.

Yeah. And then from there, there's like a. There's a pressing process that happens. So, you know, my. My cuff under. Henry likes to say it's like a lot of what we're doing is rubbing and smushing, essentially, material. But you want to do it in an even way, right? Because you don't want one bullet to work and another bullet to not work, which come back to a second. The last step, obviously, you know, quality assurance. Right. So just making sure that it was applied in the right way to, to have the right like performance characteristic, you'd be.

Yeah. And there's a lot of stuff you can do with like computer vision here where before it was like a human like looking at it. All right.

So much automation.

And now, you know, deterrence is basically able to leverage like the thing that, you know, when Dhruva, you know, first kind of like pitched me this sort of the high level vision for deterrence and we started talking about it. What I thought was appealing is it felt like every defense tech company was going after these super sort of like sexy like, oh, we're gonna, you know, this sort of F47, like these sort of big programs with this futuristic tech. And Druva was basically like, had been sort of touring these facilities and saying like, I like look like. Yeah, yeah, more so like are we even doing the basics?

Yeah, sure, sure.

Like if you walk around these facilities in there. If we were to get into a, you know, real hot war and we're relying on machinery from the 40s to produce the basic, basic bullets that we need to keep our war fighters less sexy.

But it's just as important. Yeah, makes sense.

That's right. And these markets are pretty big, right?

Yeah, totally.

Look at the 155 shell. Like just some of the sub components we've looked at. I mean they're like the contract size for like this. The glue is like in the hundreds of millions.

Right.

Not the thing, the glue.

Wow.

Basically.

Well, we gotta go shooting. We. Are there some good ranges out in dc? We, we got to go out there and have a, have a.

Ranges in D.C. are funny because you look around and you're like, oh, you're really good. I wonder what you do for your day.

Oh yeah, for sure, for sure. Well, well, maybe we can live stream it. Either way, we'll definitely have you back soon. Congratulations on all the progress.

Our D.C. correspondent.

Yeah, and we'll talk to you soon.

Look forward to the next one.

Thanks guys. Take care.

See ya.

Cool.

I wanted to ask about history. We can do it another time. Just kind of sort of of like the history of America's sort of industrial deterrence. Right. This idea that you don't want to go to war with America because we will just out produce you. And it's sort of flipped around and now China's in a sort of similar position.

But, but we got cam Coming in the temple of technology. Welcome to the show. How are you doing?

What's going on?

Good to, good to be here.

Yeah, thanks so much. I, you know, I realized we were texting to meet up like years ago and I'm glad that we finally got to make it happen. Could you do like just a quick intro on who you are, what your company does? Just set the table for us. Yeah.

Awesome. I'm Cameron, I'm the CEO and one of the co founders of Nominal. So we describe what we do is we're building software for continuous hardware test. So we're all about helping people test and validate their hardware products faster. So I was just listening to you guys talking like we were very much like the unsexy. Very, very important, you know, very specific thing which is, which is helping people move faster.

Can you give me a little bit of like history and progress of the company? I know that there was a big fundraise recently. How big is the company, when did it start, that type of stuff. Sure.

Yeah. So we are.

We just had our three year old.

Yeah.

We started our third birthday as a company. We're about 55 people.

Cool.

And yeah, I mean our kind of like the origin story lot was, is like we have folks who. My former employer, Anduril.

Right.

Like we had folks that come from Anduril, from SpaceX, from Applied Intuition, companies like this that have seen, you know, everyone building this amazing, you know, amazing tech. But so often the problem is actually the software that's just facilitating how people are organizing that data, you know, doing this.

So.

Yeah, yeah.

And the recent fundraise, did you break that?

Yeah, so we, we, we, we announced it a little bit late, but yeah, we, we did a series a. We raised 20 million. It was led by General Catalyst. That was a year ago now. Which is like God times quickly. So.

Yeah, yeah. Well, so yeah, I mean what, what's the next milestone is the Program of Record Framework sbir then Program of Record. That's kind of like the meme pathway. Defense tech. Does that apply here or do you have different customers?

It's really interesting. Yeah, we actually think more in terms of like system of record. So what that means for us is like we work with organization like trmc. It's one maybe you haven't heard of, but Test Resource Management Center. Right. So it's a OSD office Secretary of Defense program, but they govern all of the like test infrastructure for, for the U.S. so if you're, you know, if you're hermeus. Right. Like you have to be working very closely with TRMC about how you're going to like, you know, define what it's like to test and validate a new hypersonic aircraft. Phenomenal. Like that's, that's our kind of like customer. That's our target. We want to get to the place where they, you know, they say, hey, everyone should, should be using nominal. Like this is the better way to sort of test and collaborate and do data. So for us that's, that's the end goal.

Yeah.

How hard is hardware? It seems like your, your job is to make building hardware like quite a bit easier if you can test more efficiently. But like, I think people don't understand like, you know, they see a company raise hundreds of millions of dollars and it doesn't work or, or you know, they struggle and it's like you had so much money, you had such a great team, but it's like I feel like the average person doesn't appreciate just how hard it is to build a single like that. Just the engine of a rocket or a missile or whatever.

Yeah, yeah, it's so, it's so true. And I think like we, you know, a lot of the value that we try to like provide for customers is, you know, it's like you're doing so much if you're hardware company like you have to, you know, you're doing all the production, manufacturing, you know, iteration. And often these teams like they will hire software engineers and they have the daily decision of like, do I send those precious, very valuable software engineers to build the software that is like value additive to my software defined hardware product? If I'm, you know, if you're druva deterrence, you're like, I want my software engineers building the like robotic, you know, systems to do energetics. I don't necessarily want them, them building data analysis and management and kind of like visualization infrastructure because it's already hard enough. And so our big bet, the bet we are making is there's this massive re industrialization movement. We are solving as a nation incrementally the different bottlenecks. Whether it's rare earth materials, it's the supply chain, it's the production manufacturing, it's people actually building these systems. And so this rising tide, like where that condenses often is this very specific vertical slice of it which is like, I need to use software to test all those things before I feel them and deploy them. And making this big bet like all that those trends are going to really condense on like the area that nominal Is trying to build in talk about.

Your experience using maybe alternatives to nominal or just building basically the product, you know, internally. Back at Anduril like I think a lot of you probably have the benefit where your competitors phenomenal now are like 40 years old, very clunky, maybe don't even run on Mac os.

Yeah, it's so true. We think about the actual sort of competitors phenomenal like National Instruments is the massive one like Emerson, Siemens, those types of technologies. So they did this massive industrial software land grab 40 years ago ago and they've not been innovated again since. So they've like in this world like they established best in suite and so there's huge network effects of like all of the different pieces of software you want for testing and you know, validating a hardware thing like it's very annoying as an organization if you have to build the connectors between those and I you know, grab this territory and they've owned it since. What's happened in the last like I don't know, 15 years and saw this at Andrew and other places is the software world solved this problem for software. So continuous delivery, linking, testing and operations and observability like all the Datadog, Splunk, Grafana, different pieces of technology like that. So it's been happening in the industry as people have been trying to basically use those to get rid of the old NI or Emerson type tools but those don't work for a variety of reasons. And so with startups and scale ups I say we often replace someone trying to use yeah like a Grafana and a matlab and maybe some Python scripting analysis kind of holding all together maybe like data bricks or something on the back end. Pieces of technology that are good but they're not for this like industrial operations world. And then at the bigger, you know, the big five type type customers like it is a lot of that really, really old software that we're displacing.

Do you even care to go after like the actual, actual primes right now or are you just happy to? Happy to just you know that you have hundreds of newly funded startups that are probably like desperately need your product and like probably like much faster to close.

Yep, no, exactly. It's I think we're in this like exciting. We're basically in this inflection moment where we've been you know, building and validating the product and I excitingly we asked the second product like I think to win big in this space like you, you have to build multiple products across this sort of stack so we've been doing that with this, these like startups and scale ups but now we're moving into these. Yeah. Larger, larger customers now that it works well and you kind of add, you know, add zeros to the, the contracts if they go well.

So yeah, yeah, I can imagine if, if Boeing is signing up for something that, that the, what they'd be willing to pay for the software is like a pretty big number.

So no, it's, I mean on that like, I think, yeah, like a lot of the early conversations around like hey, you'd be building this with an internal team and paying you know, you know, engineering headcount to allocate against that. But for these big, big programs like the value conversation is actually very interesting because it's like hey, I, if I'm you know, company X and I just want a 100 million, 200 million $500 million like program, I'm very willing if nominal can, I'm very willing to pay like half a cent on that dollar or a cent on that dollar for a piece of like test infrastructure that will manage cost, performance schedule. Like that's the value discussions we're getting into now which are very exciting.

So yeah, can you talk a little bit about dual use? I mean is, are we going to see like Ford Motor Company making cars with this? Like how, how, how, how niche are you and how does that expand over time?

Yeah, I think in like the company building thing, it's like we're trying to be really, really, really good at the thing that we are good at now. And so we are, we're focused a lot on the, the A and D market, but on the B2B side and the direct to you know, federal side. So very dual use in that nature within companies that are doing aerospace.

Sure.

But yeah, we work with, I mean we work with some of these like advanced nuclear companies building micro reactors like you as well. So yeah, we're planning strategic flags. Um, you know, some of these robotic like foundational robotic model companies like they use novel as well. I think we're kind of planning these flags in these other robotics, transportation, energy as well. So.

Very cool. Jordy, you have anything else?

I don't have anything else. I'm just extremely bullish because we just got on, on you and what you're doing just because every single person it seems like, yeah, like either needs this or their customers need it. So I'm sure you're probably pretty busy and I appreciate you, you taking the time. Who, what are you, what are you guys hiring for? Right now across, across the whole company, I'm guessing or yeah, hiring across the whole.

Hiring across the whole company. Like for us it's like, you know, folks that, folks that understand software but have done. Done hardware is like the sweet spot for us. So a lot of those customer. Customer success is like the old, you know, type. Well, but we call emission operations. But yeah, people that are people that want to go, you know, to one of these hardware companies and help like deploy the nominal software suite like that is. It's a very special skill set. But if that's you, if you worked at a hardware company and were the software person there, you know who you are.

Yeah. Do you guys think you benefited from Palantir having so much success with the sort of forward deployed engineered model where it used to be so much pushback against that, but now people are like, oh, it actually works. And I imagine you guys start building nominal and you have like some, you sort of have your platform but then every company has some different implementation of it or different underlying sort of like use case for it. So you do maybe need to send an engineer there for like four weeks and just like actually build it out with them. Did they, did they sort of give you guys, were they a catalyst?

Yeah, absolutely. Jason, my co founder and CTO was an early Palantir employee, worked on Foundry and like, you know, we take a lot of that, that DNA. I think the key thing is like the ability to then productize those insights is key.

Right.

At scale, you don't want to get too far in that. But like our folks are, we do, we have them on six week rotations essentially where they'll go do like a customer, customer pump, customer stint.

Right.

And then come back and get back in the main product Org and then it's like what did you learn? Like what did you learn from that customer? And like what are we not thinking about? Because these 20 engineers are not spending customer time and I think that's really, really key to kind of closing that.

Yeah, that loop.

Can you talk a little bit about international expansion? I know there's this big movement towards Europe is going to nationalize. They're going to want their own national champions. But I have to imagine that if you're deeper in the stack, deeper in the supply chain, that's just less of a priority for those governments. It's less of a priority that steep in the supply chain. The difference between buying a DJI drone own and buying a GoPro that was manufactured in China, like people have different aesthetics around that. But how Are you thinking about that?

We're super bullish on international expansion. I think it's a thing that we, we did for the first time. Like we have international customer, it's going very well and so a European customer. And so I think we're excited to double down on that and kind of the two, like one of the reasons is, is you know, this going there and then like deploying the nominal software. Sweden sort of seeing like these folks are generally speaking like pretty enamored with the Andrew, the SpaceX way, the Palantir way of doing stuff. And so I actually think like there's just, there's even like kind of larger Delta in some ways where we can kind of like really wow them with, with our capability. And so that, yeah, we're super, we're super bullish on that. Australia is one where we're really excited to like us broadly there on the aerospace thing. Like a lot of interesting, you know, stuff there and they're very advanced on CCA collaboration with the US and stuff. And so there's just a lot of like interesting trends there that, that we can, you know.

Yeah. Do you think it's only a short flight? I'm sure you're over there back and forth every other week.

We've never asked, we've never asked anyone about this on the show, but I'm curious since you're just starting to go through this process. So a lot of the potential of some of these new AI tools is around like translation and real time translation and there's kind of a crazy scenario now where like you guys could sell to your product to a Spanish speaking country and then you could have one of your engineers like, you know, real time is that.

Oh like forward deployed engineers who don't speak the native language but it doesn't matter.

A lot of engineers end up speaking English. But like, is that even a part of the calculus?

Like do you think only, most engineers don't even speak English, only code?

Yeah, yeah, yeah, yeah, yeah, exactly. Yeah, no, I love the question I've never been asked before, but I think it's like this, this initial, you know, international customer was like a predominantly, you know, conducted business in English. But I think it's like totally enables that. Yeah, I think it like absolutely does make that easier because there is a, you know, there is an implementation sort of like, you know, phase and yeah, that would be a huge.

Yeah.

Well, if you ever want to get into testing live stream infrastructure, we live stream three hours a day. We're always trying to, we're looking for the products. Be the first customer.

We'll be the first customer.

We'll be your design partner on it.

It.

And.

And you can bring a forward deployed engineer into the studio here.

Yeah.

They'll just like sit under the table right here.

Yeah, under the table with all the wires. There's so many wires. It's great having you on. I have no doubt that. Yeah. Next time you raise, come on the show, break it down. Or any other reason. It's great to have you.

Yeah, great to have you. Thanks so much.

Cheers.

We'll talk to you soon. Do you want to rip through some timeline? Get out of here in a couple minutes. Give the fans what they want. I mean, most of the timeline today is just endless Ghibli back and forth, which we kind of already covered.

I wanted. Let's do the David Perel one.

Yeah. Because we're gonna have a show next week.

He says the Ghibli style memes are the beginning of something bigger. The age of minimalism is over. No longer is the Internet stuck in the soulless valley of right angles and flat white backgrounds. Everything from anime to art deco is now just a clever prompt away. A new kind of maximalism is here and it's here to stay. Which is why I post slop my timeline live max maximal slop.

Yeah, it's great.

No, I think it's. I think it's totally sort of.

There was a lot of. There were a lot of takes that were just like, pure bull. It's amazing. I. I can't get enough Ghibli's. They're amazing. I'm just posting all these, getting all these likes. Then there were a lot of people who were just total backlash mode, saying, like, this is terrible. What would Hayao Miyazaki say? But now this is a more nuanced take that's just like, it's almost normative. Not positive. It's just saying, hey, there's a change and the Internet's about to look different.

I mean, there's maybe that's good, maybe.

That'S bad, but it's going to look different.

There's so many. I feel like throughout my career, I've been lucky to be friends with a bunch of great designers. When I have a funny idea, I can just sort of be like, hey, like, this would be funny if, like, you know, you. You made this picture.

Totally, totally.

This 3D asset I use, I actually.

Use Photoshop a lot to make these memes. But now it's way easier and way faster and I saw it's so crazy.

Even. Even a month ago, I was thinking, you know what? I need to go on Fiverr upwork and just find somebody who's a good Photoshop designer that I send stuff to, and I don't need that anymore.

Yeah, yeah, you can move a lot faster. I saw Ashley Vance was posting these memes that were, like, kind of ghiblified, but also making commentary on. He has this one that's like the big Greek horse chat. And it's like, Troy. I don't know if I can just show that. But basically, you know, it's like, it's now layered where he's using the style, but he's generating something that's commenting on a current news story. And it's just. It's just very interesting to see that, like, it's now left the. Just, hey, take an iconic image and give it the filter. And he's already using it to express a different commentary.

So much of creativity is just taking an idea from one place and applying.

It somewhere else, mixing two ideas together, changing things around. I like.

So AI just allows you to do that so efficiently.

Yeah, well, honestly, there aren't that. There aren't that many other news stories here. Arc AGI 2 dropped. If you've been following the AI benchmark, why are you laughing?

I just saw this picture of Jar Jar Binks.

Oh, the Jar Jar Binks one is fantastic.

This is all time. We got to zoom out a little bit.

Yeah, you got to zoom out. Okay, so because it's a North throw.

Up Grumman, you want to read it?

Are you going to do the voice? Mesa is Misa. Misa is detecting threats like never before. Learn how recent combat ID enhancements are evolving mission. So Northrop Grumman has a program called Me s a Misa. And of course, that sounds like the way Jar Jar Binks starts every sentence in. In the early Star wars movies. And so they just put Jar Jar Binks face with the little caption, and it's making it sound like Jar Jar Banks is talking about Northrop Grumman's program, Man. Not a native posting group, the Northrop guys. It's a very different vibe at Northrop from Andrew.

This is like candidate for post of the week.

This might be. This is such a good post.

I'm going to put that in banger archive.

You really should. It's great.

The chat wants us to cover the Fannie Mae IPO that Wall Street Journal is reporting on on probably cover tomorrow.

Yeah, that makes sense.

Thank you for the suggestions, but this was a super fun day.

This is great.

It's great.

I like these theme days. I want to do more of these. They're a little bit harder on the scheduling side, but I think it's well worth it to just have a conversation that flows from one to the next bunch of different people. Maybe we can layer in a debate at some point. I want to do an AI Day. I want to do, you know, more of these defense days. Maybe crypto day, even. Any. Yep. Be very interesting. Anyway, thanks for watching.

Thank you.

Fantastic show. We will see you tomorrow.

Thank you to our wonderful sponsors.

Tomorrow is intellectual day. We got two authors, two Stripe Press authors already already booked. We got Dorkesh Patel coming on, coming tomorrow. And and I, I think I'm going to send out emails to a bunch of other twist Stripe Press authors now and try and get get stacked with the with the author day.

Let's do it. I have the mind of a golden retriever, but I'm excited for it to be an intellectual mind.

Tomorrow will be an intellectual day.

Yeah.

We'll put on our thinking caps. Put on our thinking caps. Take off the tinfoil hat. Put on the thinking cap.

I, I should pull up the whole all every guest with the tinfoil hat on. But don't comment on it.

Don't comment on it.

Thank you everyone for watching. Have a great rest of your Thursday. We will see you tomorrow.

Goodbye.