Hadrian raises $260M led by Founders Fund and Lux Capital to build Factory 3 in Arizona and launch factories-as-a-service

show. How are you? Nice to see you guys. Thanks for having me. Look at you with this background. Fantastic. Step and repeat. We love it. Give us the update. How is Detroit? It's incredible.

Uh, you know, just relisting to Secretary of the Navy feeling speech and said the main thing you can do that's most patriotic is, uh, you know, not necessarily join the services, but become a machinist, become a welder, and help us build more ships in America.

And uh yeah, we announced today that hopefully I finally get my Jordy Hayes size gong that Founders Fund and Lux are leading a huge $260 million round into Hadrien with authority. Congratulations. Thank you. And Morgan Stanley is providing us this huge instrument as well to uh expand factory capacity.

Let's give it up for excited for the future of American factories and more importantly the new industrial workforce. Fantastic. Uh, talk to me about what's the use of equity, what's the use of debt, are you buying a building? Are you leasing a building and buying equipment that goes in the building? Is it all leased?

What are you building out? What's the scale of the next Where are you doing it? Yeah. Where are you doing it? Yeah. So, uh, last year in Factory 2 in LA, you know, we scaled revenue 10x last year and so obviously need more capacity.

So, we're going to use uh all of the uh factory financing capital to buy more machines and put them in factory 3 in Arizona, which is going to be four times the size of our facility in LA. Mhm. Congratulations. Indeed. And you know, we're using this capital because we don't want to use equity dollars to scale.

We want to use equity dollars to hire more people to build more products for our customers and then use this great financial force of this country to buy all the capex to build, you know, more factories, more machines, more production. incredibly excited. Dumb question. Um, Factory 2, it's beautiful. It's amazing.

It's It has really high ceilings. You can fly drones around it. Most of the Hormley's the CNC machines are like maybe 10 feet tall, but the ceilings are like 40t tall. Are you going to double stack this stuff? Are you going to get a building with lower ceilings or do you need high ceilings? We love high ceilings. Okay.

Why? We have the most beautiful, highest ceilings you've ever seen. Okay. Uh, no. I mean, we love high ceilings. who love HVAC. Um the Arizona facility will be just as tall. We're going to go retrofit it. So, same exact setup.

So, is that because you have that tower thing in the tower valuable for like stacking materials and you want to have like, you know, big warehouse space as well in here. Yeah. So, you need you need every machine or robot in any one of our factories to have be isolated on 18in concrete foundations.

So, you know, if a truck drives past, nothing moves. You can't double st double stack these things. Someone someone might die. So yeah, what's the scale of the products that you like are in the Adrian wheelhouse right now? Ship building's obviously um a big focus.

You already mentioned it, but I imagine you can't see and see an entire destroyer. Or maybe you can, but are we talking nuts and bolts and screws or p pieces of complex weapon systems like like what are the shape of the stuff that's coming out of the other end of the Hadrien facility?

So, Factory 3 will be uh pure machining um with all of the machining formats because we're releasing some new products that are dedicated to engines and you know, round things and different material types to really complete our R&D of the whole machining category in Factory 3. Mhm.

The other thing that we've been working on in secret is factories as a service, which is not just parts, not assemblies, but full products.

So, hey, if you've got factories that are years behind schedule with many manufacturing methods or you're designing a program from scratch, you know, everyone needs a Tesla Gigafactory, John. I actually think every American should have a Tesla Gigafactory and Hun will be the one to grow and build them.

So, of course, I need one in my backyard badly. So, we'll scale out machining in factory 3, four times the size. It's going to be awesome.

And then we'll also use the capital to continue the journey that we've been secretly on for the last 12 months, which is in new manufacturing domains like welding, castings, additive, all these other manufacturing puzzle pieces that once you have them all, it's like collecting Pokémon. You are the manufacturing master.

Um, and that's that's the thing that we've been working on in Secret of Factories as a service as well as scaling out our operational productivity as well. How does one of those deals work? If factory is a service, I come to you.

I want to make as many podcast microphones as I possibly can and I and I have insight into my business. I'm making a h 100,000 a year, so I need a factory. You're going to set it up for me, but then like what if I bail? Is this a revenue concentration issue?

Like, are you going to be like, you know, oh, we'd only have one customer and if they got a business, we're screwed. But you everyone has faith that they're not going to like how do you think about that debate?

We're we're mostly working with um government partners and massive primes to look at, you know, what are these big programs that are years behind schedule that need advanced factories combined with a new American workforce to go fix them and speed them up.

So, we're not worried about the revenue concentration risk, but you can think about it, John, as like you can buy parts like AWS, you can buy some compute transactionally or hey, you're going to need a data center for the next 10 years. Now, what's in that a range of parts? A whole product. Yeah.

Um, for new DoD programs of record where we're partnering with companies to go attack these where production is the real issue like munitions is a great example. Uh, we have to think really carefully about who we partner with. How much are we investing ahead?

How much are we kind of playing that game of, you know, being very uh conservative and responsible with our capital. But ultimately what it looks like is we will help you design the product from day one to be better.

It will help you prototype it and then when it goes to production scale, we will run that engine for you over a decade much faster, much more efficiently. And in a lot of areas like submarines, ship building, munitions, it's not about automation to make things cheaper. It's just no one can find the workforce.

So you have to use our model of advanced manufacturing combined with this new industrial workforce that we're so grateful to work with. Yeah. That's the power.

because you know you could give me a billion dollars and say go hire 2,000 welders and we can no longer have we no longer have that scaled workforce in the country. So automated factories are sometimes the only way to win in these critical domains. Yeah, it's interesting.

It's kind of like uh what we're seeing with Crusoe where they're building an AI factory, a data center for Stargate, which is its own entity, but for a program ChatGpt and OpenAI that's going to be wanting tokens for a very long time and then Oracle's involved.

It's like you have to puzzle piece all this together and I feel like you're like the master of this like understanding the full landscape. Um but uh yeah, who are the other critical partners?

The government and I guess I'm also interested in like you you've you've mentioned a few different uh value props like how much of this is is there is a government mandate to make this thing in America so we need to reshore versus we need to make this faster versus we don't even have the capability to make this anywhere and it's a new thing and so or just like we need to do it cheaper.

there's like a whole bunch of different tension when you're making something like like what are you seeing in the in the customer landscape and and the demand uh for for manufactured products? Yeah.

So for for machining which is is most of our revenue and the core of the company and the mother of all manufacturing processes, it's basically we're scaling a new program of record and no one else can keep up. You know, we're going from one aircraft to 20. How are we going to do it?

Well, we're going to do it with Adrian. Um, in the second example, a lot of the primes have, you know, a billion dollars in spend a year and their suppliers are delivering on time 60% and they're often 3 to 5 months late.

So that is less about cost and that's more about I want a stable supply chain that I don't want to have to worry about because if you have one part missing, your manufacturing line goes down and then it's millions of dollars a day, right?

So people are really coming to us for the schedule and the capacity and stability versus cost. How do you think about the history of the shape of the industry? Is this is like back in the day before the last breakfast or last supper? The first breakfast is coming up, right?

Uh the last supper and there were so many different prime, so many different defense contractors. Was there a split between the factory producer, the factory builder, and the and the prime?

Is this a natural split that we're just returning to or is or is this a new industry structure that you think we're going to be uh building towards for a long time? Because like back in the day when you started a website, you needed a data center. Then AWS came up.

Then the websites got so big that you had to build your own data center again, we kind of went back uh and that's what's happening in the AI world. But uh but how has this evolved in the past? And then is it going to stay like this forever?

And there's going to be this separation between the the the designer and the and the manufacturer of the factory. So we've uh you know historically as a country all the primes have always had massive supply chains of small businesses you know in the billions of dollars and then critical tier one or two suppliers.

It's always been not purely vertically integrated. I I think for the industrial base at large, you know, from the 70s to the 2020s, you used to be able to run a manufacturing company where 70% of your revenue was stable commercial demand and then you get some ups and downs with the DoD.

So, what happened to a lot of the talent in industrial base when we offshored all of commercial manufacturing was that you you lost your stable revenue, right? And now you're just dealing with this up and down demand.

I I think because of that, you know, in the 80s and 90s, you know, your dad lost your job in the factory, so you told your son or daughter like, "Go get a four-year college degree. This is not a good industry.

" And now we're in a position where in a lot of these areas, we don't make it on shore, or there isn't the workforce to do it. And that is changing the dynamic between what is the hardest thing to do.

Actually, the hardest thing to do is manufacture things at scale, at rate, and on time, which is what you're seeing in munitions or ship building. is really a we hollowed out the talent base. We don't have a lot of the talent anymore.

The only way to do that is use software and robotics to enable this workforce to be 10 times more productive.

Um, and it's it's it's now flipping and I think a lot of people in the country forgot how to manufacture products correctly and now they're coming to us to help them out with that journey just because of this like you know hollowing out that's now going to come back.

So I I think it is a new structure, but that the primes have always had multiple tiers of partner suppliers and multiple different configurations of that that value chain.

What kind of opportunities are there are there at Hrien now for somebody that's maybe 25 years old, never imagined going into manufacturing but realizes there might be a bright bright future for them in the industry. Yeah.

So for for software engineers, you know, manufacturing software is 30 years behind the rest of Silicon Valley. So, it's the your only opportunity outside of AI to do like real engineering and work on the national mission.

And for people with, you know, you're straight out of high school or you're in retail or hospitality or you you're at a desk job that's going to be automated with AI, like manufacturing is the last domain that's going to get fully AI automated and it can be really high-skilled, highpaying jobs in advanced factories that are a really cool place to work.

So, we've got tons of opportunities both help us running our factories, um, help us automating more factories, new types of factories, but I think operations is is the most the most important place that we've got a huge talent base that we're really proud of. The the children yearn for the factory floor.

Um uh what a what what's what's been the difference between this year's reindustrialize and and last year's feels like a decade has passed since then in terms of excitement and interest in uh American dynamism and uh rebuilding the industrial base.

I I think last year you know we we pulled it together the founders especially thanks to Austin Bishop who's really built this over the last year. Um, you know, it was a kind of a hope and a dream of, you know, is the audience going to be there and do we really people believe in the mission?

And then this year, you know, we've got uh trade ambassador Greer talking about, hey, we're going to change all these policies because re-industrialization and manufacturing is is no longer economics is national security.

And you've got the secretary of the navy saying, you know, the best thing you can do for the country right now is learn how to weld or be a machinist or a quality inspector. And I think the sea change on people realizing how important it is to be a sovereign nation with sovereign manufacturing is huge.

And this year we had a 6,000 person weight list. Half of the government is here and all these massive companies and and leaders like uh Sham from Palanteer who are really hellbent on this re-industrialization before we potentially go into a fight with CCP and Robo Robo Palmer. Robo Palmer Palmer Robo Palmer.

Robo Palmer. Um I have a question. Yeah, it's such a I mean it makes uh I think it's an such an exciting time because uh the idea that people don't want to build things, people don't want to create real things, right?

There's so many people I know that you say, "Hey, do you want to send emails for a living or do you want to make ships and planes and and uh any number, you know, cars, any number of things that we need to make?

" And uh that if you actually give them that sort of binary, they're going to say um well make making things sounds sounds really cool and so we need we need companies like Hrien that that say this is uh important. Uh it's cool and we have the resources to do this in a really serious way.

Yeah, it it seems like defense is kind of the most obvious thing to reindustrialize. It's obviously like the most important thing to have ongoing capabilities in. Um, but then walk me through the path of re-industrialization on the product side or on the business side. Like what how do you see this playing out?

Is it like we do the warships and then we do phones or cars and then and then the the vacuums and then the Happy Meal toys come at the end? What what's the flow do you like what flow do you think it will happen? What are you excited about like on the horizon?

So, so I I think the last time we did this, it went from, you know, commercial through defense. Like, you know, we made washing machines and then we made navigation equipment for warships or we we made Ford cars and then then Ford built bombers. And I think this time it's going to go the inverse as we get better at it.

Um, but it's very interesting. It's like why is DJI so powerful? Well, arguably because of Foxcon and that was because of consumer products like Apple making all the iPhones in China. Um, and you know, if you had a similar Foxcon style industrial base, we could probably make a lot of drones here.

Maybe not as cheap as China, but certainly at the scale we needed. So, I think what people forget is that it is an ecosystem that loops into one another. Um, but I think with the cost base and the importance, we start with defense and then loop back.

But, you know, like uh I think it was um might have been Westinghouse or another washing machine manufacturer just like decided to build a $400 million washing machine plant. Uh it's like incredible dream.

Just as that's just as much of a job creator as defense, but I I think that we are going to loop around from all these critical defense industries for Hrien and then right right back into consumer, you know, when the time is right. But obviously, we're extremely focused on the national mission at this point in time.

I cannot wait until our microphones are are built in in Hadrien factories. Fantastic. I don't care if it takes 15 years. Uh I'm looking forward to it. I'm excited. probably way sooner than that. Thanks so much for stopping by. Yeah, congratulations. Have a great time. Say hi to everybody on the ground.

It pains us that we can't be there. We have uh we have overindustrialized our facility and now uh it is an incredible lift to airlift this across the country, but we will definitely be at the next one. Nice to see you. We'll talk to you soon. Bye. Cheers.

Uh really quickly, let me tell you about Adio customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. And um we are uh fortunate to be joined by Jeremy from Semi