Neros Technologies raises $75M Series B to scale FPV drone production for Western militaries

Speaker 2: Good to see you. Congratulations. Give us the news. What, what happened today?

Speaker 5: Yeah. So today, Niras is announcing our $75,000,000 Wow. Series b.

Speaker 2: Do I ring the gong or

Speaker 1: does You hit the gong. You hit

Speaker 2: the would hit the gong. Please hit the gong for us. Thank you, sir.

Speaker 1: Hit it. Woah. So,

Speaker 2: for those who have been, living in a Still going. Yeah.

Speaker 1: Woah. Power of good Power

Speaker 2: of good Yeah. For those who have been living in a foxhole, what do you do? How do you describe the business and the shape of the business right now?

Speaker 5: Yeah. So Neuros is focused on low cost drones

Speaker 1: Mhmm.

Speaker 5: Primarily for the military. So we say we are trying to build an asymmetric advantage for the West. Yeah. What that means is our products have extremely high impact on the battlefield, but are low cost and are built with consumer technology, which allows us to produce at large scale. We're very focused on manufacturing as well. So that's kind of in a nutshell what we're doing. But right now, we're focused on FPV drones. So first person view drones, these are very precise manually piloted systems.

Speaker 2: Manually piloted.

Speaker 5: Manually piloted.

Speaker 1: Yep.

Speaker 5: And it's it's the type of drone that's revolutionized the war in Ukraine. Sure. I think FPVs and Starlink are are, like, the two technologies that have allowed Interesting. Ukraine to, do as well as they have and and defend themselves. And so we saw that back in 2023 when we started the company, and both myself and Olaf come from a drone racing background. We were both professional drone racing pilots, we saw this technology was actually, like, changing the nature of warfare. And so that's what we we got into this and realized the the whole supply chain is generally controlled by China for this type of of drone, and just drones in general. So our our biggest focus is on a China free supply chain and manufacturing this stuff in America and in the West. Yeah.

Speaker 1: What percentage of drone FPV drones that are active in Ukraine are dependent on Starlink today? So Can you guys do Starlink

Speaker 2: to the drone? Because direct to cell is coming, but drones, it's kind of it's not as big as a plane.

Speaker 1: Because there's also the the what what is the the really light wires that you

Speaker 3: can Fiber optic.

Speaker 1: Fiber optic.

Speaker 2: Yeah. I wanna hear about that too.

Speaker 5: So, yeah, they're they're experimenting with tons of different types of comms. Starlink is used on larger drones, not typically on FPV drones.

Speaker 1: Got it.

Speaker 5: It's a little bit higher latency.

Speaker 1: Yeah. A little bit of lag that would make

Speaker 2: Yeah.

Speaker 5: Little latency and then just the size of the terminal. So it doesn't make it ideal for for our use case where we're focused on very low latency comms, and we actually do custom communications links at Niras. So Mhmm. That's one of our focuses is that low latency anti jam, characteristic. And that's also what fiber optic is used for, because you can't you can't jam fiber.

Speaker 1: Yeah.

Speaker 2: Yeah. It feels like AI is so controversial, adult content getting one shot. How does it feel working in an uncontroversial category now?

Speaker 1: I mean, I don't I don't I don't think Are being sarcastic? It It

Speaker 2: does feel like a lot of the, a lot of the, like, you know, is this is this bad energy has been absorbed? Like, you're not gonna be clack crash the global economy. It feels like the the vibes have definitely shifted. Give me, like, the broader update on, like, how you think that, just military technology in general is being perceived by America or any any constituents.

Speaker 5: Yeah. I do think there's been a huge shift in the last couple years. Yeah. The world's watching what's happening in Ukraine Yeah. And thinking to themselves, well, if it can happen to them, it can happen to us. Yeah. And so it's no longer controversial to, like, think that you have to build systems that allow you to defend your territory. And and so that's what like, our primary goal is territorial defense of sovereign nations, and that should be a very uncontroversial thing to work on. Now, there's a lot of talent out there that just doesn't wanna work on defense Sure. Or isn't comfortable working on actual, like, kinetic systems. Mhmm. But we're we're, you know, very upfront about what we do. We make drones that explode. Good. So if people do wanna work on that, then they tend to be very, very motivated because they see the impact that it's having.

Speaker 2: Do you like Palmer's framing of, like, America as not the world police, but as the world's arms dealer? This idea that America should be turning all of our adversaries or or all of our, all of our allies into spiky porcupines. I think that's the phrase he uses. Do you like that?

Speaker 5: Yeah. I think that's a great framing. I'd also say there's a tremendous amount of development, being done in other places right now where America actually needs to, like, catch up. Yeah. So the other, like, large announcement that we have today is that we were selected by the US Army's, purpose built attributable system program. In, normal speak, it's basically the way that the Army is gonna buy our type of drone, buy FPV drones. Sure. So this is a really big deal because it shows that the Department of War and the army, are moving very quickly on actually, like, getting these, getting these drones deployed to to their forces Yep. And teaching people how to fly FPV. And this is currently, like the The US is so far behind on this right now. But you have like, the Marine Corps, we just announced a $17,000,000 purchase order with them. The Army selected us for the PBAS program. You've got the, drone dominance and and, just all the the support from the top level with with Hagsef. The the Department of War is very, very serious about drones now, which is incredible to see.

Speaker 2: Yeah. I was always I I was wondering about how you balance out that framing of, like, we have to build for a Ukrainian person, a Ukrainian soldier because the Ukraine war is not a place where we're sending hundreds of thousands of Americans boots on the ground. Like, that's not what the modern battlefield looks like. It looks much more like this arms dealer relationship that Palmer outlines. But at the same time, there we do need to keep our own armed forces equipped with the best technology. We need them up to speed in case something does happen and we do go boots on the ground. How how do you think about, like is it like a tech transfer where you're using stuff you've learned in Ukraine and bringing that to the army and just getting them up to speed with this Marine Corps? Like, how how do the two what is the flow between the r and d cycle that's happening abroad for another nation, for an ally, and then also something that's happening for American soldiers?

Speaker 5: Yeah. That's a a great question. It's all about the iteration loop that we can build. Yeah. And so this is why Neuros operates in Ukraine. We have an office in Ukraine. We have a team there Mhmm. And we've sent thousands of systems to Ukraine. And so what that allows allows us to do is work directly with the military units there and understand how our systems are working and not working.

Speaker 7: Mhmm.

Speaker 5: A lot of US companies, unfortunately, deployed things into Ukraine at the start of the full scale invasion, but then were turned off by the fact that their things didn't work and people told them they didn't work, and then they didn't go through the cycle of improving them. And then you hear a lot of talk about sort of the regulatory hurdles and why it's hard to work with Ukraine, which it is. There are plenty of hurdles, but it's absolutely critical that we're looking at the cutting edge, the battlefield where this stuff is being proven, being developed to make it actually effective for our soldiers. Because I have a pretty strong feeling that a lot of the technology that's being developed in America right now is going to fall flat on its face when it actually sees primetime.

Speaker 2: Yeah. Jordy?

Speaker 1: Are countries do countries want a sovereign, like, drone manufacturing base? Are are you exploring?

Speaker 2: Interesting.

Speaker 1: Because, like, part of part of, I think, Ukraine's success at least in in, you know, at least dragging this war into this, like, you know, basically, like, slowing slowing the pace has been their own internal production capacity, which I'm sure you guys don't know if you would classify it as, like, competing with, but, like, certainly, I'm sure, like, the systems are are both being used in the same, in the same fronts. So I'm wondering in the same way that countries are want, like, a sovereign AI strategy, they want their own data centers, that they also want to make sure they have local drone capacity, or if they're comfortable saying, like, we have our partner for this, and we just need to know that we can, scale up, the supply side on whenever we want.

Speaker 5: Yeah. Countries absolutely do want their own drone industrial base, their own, like, domestic supply. And this is something we recognize and we're we're working on. So, I think it's you gotta realize that the supply chain has to be somewhat global to compete with China. There's no one country that's even close. And so if we're gonna have a chance at this, it's a collaborative effort. The way Niros thinks about this is, you know, at some point, we're gonna build a a massive factory that's capable of giant volumes. But what's coming out of that factory, might be, you know, 70% components and drones that are assembled in other places, like the these nodes that are, in other countries. We think it's really important to be a Western defense company, not just an American defense company. Sure. And and that's you know, again, with our our work in Ukraine, we have a a presence in in London. We are also we're basically expanding globally earlier than I could have guessed Yeah. And and earlier than most start ups do because drones are a category that are inherently like like, countries want it close to their chest, and and they want to work with systems that are proven and that are interoperable with their allied partners, but they do need that that industrial domestically.

Speaker 1: And so would you pursue, like, a GoCo model at some point where, like, a country would actually, like, own the facility and and you guys would effectively, like, provide the IP on that? Is that is that a model that you guys are pursuing?

Speaker 5: Yeah. That's, that's definitely something that we are are looking into. We are trying to figure out how to build out the most robust supply chain and then put our, you know, put our manufacturing into a, not a literal box, but into a box, and and be able to teach kind of any, group of folks around the globe, like, is how you assemble archers. Yeah. And a lot of that also looks like building really great testing and and just being very confident in the components in the supply chain. And so it's a it's a very, very large effort to get there, but we are going in that direction.

Speaker 1: What's the progress on the capacity front? I think when we had you on the show last, you were in the was it single? Like, you were doing I wanna say it was something like a thousand drones a month Yep. But you're ramping it up from there. Where how's the pacing?

Speaker 5: Yeah. So right now, we're currently, like, actually producing, about 2,500 Archers per month. That's mostly driven by demand. So we're we're ready to scale well beyond that. And we've been on a pretty, like, steady ramp since the that thousand number earlier this year.

Speaker 6: Yeah.

Speaker 5: And we're we're leaning very forward on our capacity and our supply chain, because we do expect that the the tens of thousands a month, demand is gonna be there next year.

Speaker 2: And Ukraine's using something like 5,000,000 drones a year or something?

Speaker 5: That's right.

Speaker 2: So, I mean, like, it it's you're at, like, 1%, but, obviously, that's incredible considering that you started the company just a few years

Speaker 5: As far as we know, Nerus is the highest rate drone producer in America.

Speaker 2: Yeah.

Speaker 5: No no one has, has proved us wrong on that yet.

Speaker 1: I'm sure they'll I'm sure they'll reach out if

Speaker 5: Yeah. Yeah.

Speaker 1: They do. So what what are the you mentioned pathways in the military now that you can become an FPV pilot. Is that gonna be a track now in the various groups, whether it's, you know, army, navy, etcetera, where people will go in and and choose, like, I wanna be an FPV pilot?

Speaker 5: It's not set in stone yet, but there's various different paths. So Neuros does training courses. We we offer this as a service to our customers. But there are also efforts like, you can look at the Marine Corps attack drone team. They've done a fantastic job just leaning forward, and sort of, like, from the bottoms up figuring out FPV tactics, and training a group of experts, and then they're passing that across the whole, Marine Corps. So you you see that a lot in the FPV world where guys are actually into it as hobbyists, and then they see, you know, what's happening in Ukraine. They're like, wow. We we actually need to figure this out for our own unit. And so it just kind of happens organically. And then now with all the top level support as well, those two things are kind of meeting in the middle.

Speaker 2: Take me through a little bit of the supply chain. Obviously, with the iPhone completely made in China, there's a push to make an iPhone in America. But we everyone knows that it's gonna be Vietnam, India, South Korea, Taiwan, a bunch of other things in the interim. You mentioned wanting to be a western defense company. Where are you seeing pockets of just excitement on the industrial side within the American allies world? Like, where are you finding, oh, we can find motors in Canada or or Taiwan's coming online for something else. Like, where where is interesting in the supply chain globally?

Speaker 5: People are really starting to pay attention to the, like, critical minerals

Speaker 2: Yeah.

Speaker 5: Which is, you know, super, super important for things like motors and batteries.

Speaker 2: Sure.

Speaker 5: So, you know, there was a a deal that I think was announced last week

Speaker 1: Yeah.

Speaker 5: Like a $1,500,000,000 deal with Vulcan Elements

Speaker 2: Yeah. Vulcan. Department of War.

Speaker 5: Yeah. There is similar efforts with, like, MP Materials Yeah. Domestically. And we do see, like, smaller kind of start ups going after the actual motor assembly side. So that one, I think, has been pretty clearly highlighted and people are working on it. Yeah. It goes, you know, beyond Nerus, beyond the drone industry. It's it's just like a industrial base wide problem when you get to the material level.

Speaker 2: Those are Redwood Redwood materials, which is just recycling for I I imagine if you're if you're on a battlefield and you're blowing up a bunch of drones, then you can go and get the magnets back. Like, that's that's a pretty easy thing to recycle, would imagine. Although it's probably hard to get it out of the of the battlefield.

Speaker 5: Yeah. But over time battlefield would be very difficult. But think about all the, you know, washing machines. Like

Speaker 2: For sure.

Speaker 5: You know, old washing machines in America. There's so much neodymium there. Yeah. Sure. I I don't know how big the supply

Speaker 2: realize that's so much in there.

Speaker 5: I mean, just think, like, anything that has an electric motor that's here domestically. Like, that is stuff that can be recycled.

Speaker 2: So Yeah.

Speaker 5: There is a little bit more, like, there are things that give me hope, but there's plenty of things that scare me.

Speaker 2: Yeah.

Speaker 5: Nearest, we we spend a lot of our time going down to the chip level. Sure. Because one of the things we see pretty frequently in the drone industry is folks saying that they're, you know, NDA compliant, basically, assuming not Chinese. And it just mean the component is assembled outside of China, but it's still using Chinese microchips.

Speaker 2: Yep.

Speaker 5: And to us, that's kinda useless. So we spend a lot of our time working with the actual chip vendors, the chip manufacturers, because you have to ensure, like, this the wafer is not made in China. It's not packaged in China. It never goes through there from the supply chain.

Speaker 2: Yeah.

Speaker 5: And that's, like, not something that's required by the regulations yet. Yeah. So we're trying to get ahead of that, and we're we're we're going very, very deep. But the the the problems scare me all across the

Speaker 2: Yeah.

Speaker 5: The entire supply chain.

Speaker 2: Are there any places where it is fine to buy from China? I'm just imagining, like, like, raw aluminum. Like, that's not in short supply. It's just something that you kinda need. And and it you can't really put a microchip in there or a microphone or do some sort of remote takeover. Like, it is what it is. Just buy it from wherever.

Speaker 5: Yeah. I I think there's an eighty twenty rule. Yeah. I don't think that our progress on for example, like, our progress fielding FPV systems to US forces should not be stopped by requirement that everything has to be completely China free right now because it wouldn't be possible. Yeah. Yeah. And and so what you wanna think about is preparing for the instance where that is completely cut off Sure. And what would be what would be items Yeah. That are are quick to replace. And, you know, we like, when we do our efforts to get rid of China in our bomb, it's basically looking at the things that are most critical first and putting our engineering, like limited engineering resources towards those. And then the the things that are, you you know, would be less catastrophic, those are lower down in the priority step.

Speaker 2: That's bill of materials, not b o m b.

Speaker 5: Right? Sorry. Yes. Bill of materials. It's easy to confuse when you're talking about Niros.

Speaker 2: It is. It is.

Speaker 1: I was confused. To yeah. Well, I wasn't confused. I just assumed you were talking about an actual

Speaker 2: Take me on tour of, of of what, I don't know how much you can share about this, but, what are people excited about on the counter UAS side? Because we've seen Anvil. We've seen then, electronic takeover. Then there's the fiber optics thing that we've seen. There's been a whole bunch of it feels like a game of, like, rock paper scissors on the battlefield. Is it just rock paper scissors, or is it more like chess? Is it

Speaker 1: I saw a video of throwing up nets over Nets.

Speaker 2: I've seen eagles come in and birds. Like, what's actually that one. What's actually getting used? I imagine that the birds didn't make it out into the field, but did they? I don't know.

Speaker 5: The answer is kind of everything because it has to be layered. Okay. So you have your EW systems. Sure. Those are kind of your primary line of defense

Speaker 2: This would be passive?

Speaker 5: FPVs. I mean, they're they're passive Well, you're activating them because you also need your own drones to be able to get through. Right? Okay. So this is one of the things that's actually very tricky in Ukraine Okay. Is coordinating the, like, friendly electronic warfare with the friendly drones that you can pass over that sort of line on the front and get over into enemy territory. Interesting. So there actually needs to be a pretty close, tie between the electronic warfare operators and the drone operators. Yep. You also have sort of the last ditch efforts, and this is things like nets and shotguns. Yep. And I'd say sort of an in between of that is something like, what what, Allen Control Systems is building. Right? Where you have an automated gun turret. Yep. It is it is just smacking drones out of the sky. But personally, I wanna try to take that drone out, you know, well before it gets within hundreds of meters of of where I'm at. So, that's where longer range electronic warfare, things like that are are gonna help.

Speaker 1: But Is there any is there what's the path to having, like, an FPV drone flying using computer vision to identify another, maybe, enemy drone, and then having some type of, like, locking system where you're using drone a friendly drone to take out another drone in the sky?

Speaker 5: It's already happening. Yeah. Drone on drone warfare is a very real thing now. And so interceptors have become, one of the sort of latest big developments coming out of Ukraine. So they're intercepting everything from, you know, small FPVs, Mavics, larger reconnaissance drones, and then Shaw head type drones. And so you need different types of interceptors for each of those. But we are starting to get to that point that a lot of people have imagined where it's it's you know, the front line is like drones versus drones. And a lot of the time, you're not even making it to a kind of typical military target because there's just so much drone activity happening.

Speaker 2: Take me through the the biggest or the most exquisite drone that we might see on the battlefield versus, like, the least exquisite. So I imagine that there's no drones that cost $1. That that is just too cheap, and there's no drones that cost a billion dollars. But are we in the there's a thousand dollar drone, there's a million dollar drone? Like, wide is the gap of, like, if you just look at the whole battlefield, what's the gap between, like, the scale of, like, the biggest, most insane drone to, like, the smallest, most attributable?

Speaker 5: Yeah. Drone means so many different things. It's really confusing

Speaker 1: Sure.

Speaker 2: People. Isn't f '35 a drone? Like Right. Might be in a certain context.

Speaker 5: I'd say like the lowest end is kind of your your like FPV system. Yep. That's, you know, if you're if you're, like, getting that in Ukraine, it could be 200, $300. Yep. Primarily built from Chinese components

Speaker 1: Yep.

Speaker 5: Know, very inexpensive. Yeah.

Speaker 2: Almost like like consumer level hardware.

Speaker 5: It's it's consumer level hardware. I mean, it's been modified Sure. To perform better, but

Speaker 2: And then they, like, tape a grenade on it.

Speaker 5: Yeah. Exactly.

Speaker 1: Does does Russia ever call China and say, why why are you guys supplying componentry that gets into the, like, hands of our enemy? Or or is it just kind of, like, is if I'm if I'm Putin, I'm calling up Xi, and I'm saying, hey, our number one problem right now is basically you.

Speaker 5: Yeah. I I would say China has benefited by far, like, absolutely the most from Selling

Speaker 1: to both sides.

Speaker 5: Of Ukraine. They are deliberately selling to both sides Woah. And millions of units. I mean, it's it is, you know, billions, tens of billions of dollars being generated, for for the, the economy in China based on the war in Ukraine. And you can even see, like, Ukrainian entrepreneurs will talk about this where they go to Shenzhen and they're negotiating deals to buy hundreds of millions of dollars of components. And, technically, it's it's banned in China, but everyone's benefiting. So why would they stop it?

Speaker 2: Okay. Take me up the stack. We so you have a $200 drone, Chinese components off the shelf. What's the most exquisite drone that

Speaker 1: Wait. Wait. Before we get before we get higher, there was a YC company that got announced last week using drones to take out mosquitoes. Oh, A lot of people were saying

Speaker 2: It's for assassinations. Well That's what they were saying.

Speaker 1: Well, yeah. But they were saying, like, this is impossible. Oh. Is it is it possible?

Speaker 5: I have no idea. It's hard to say. I probably wouldn't use drones for taking out mosquitoes, but best of luck to them.

Speaker 2: Apparently, the founder is just, like, obsessed. Everyone was like, oh, he's he's doing this for DefenseSec. And it's like, no. Actually, this founder just hates mosquitoes. And he's, like, obsessed. He's been on a lifelong quest to, like, kill the mosquito, which is hilarious.

Speaker 5: I do I I, I align with that.

Speaker 2: I grew

Speaker 5: up in in Alaska, and there's a horrible amount of mosquitoes. So if it works, I'm gonna be pumped.

Speaker 2: You grew up in Alaska. What's with all these Alaskan kids around? Yeah. Do you do you grow up near, Ty Morse?

Speaker 5: We grew up in Anchorage. Yeah. Together? No. We didn't know each other.

Speaker 2: Okay. You didn't

Speaker 5: know each other. This was a crazy connection.

Speaker 2: That is a crazy connection because I feel like there's a lot of shared

Speaker 1: And it's you wanna say 100 people, you guys didn't know each other? Basically. Basically. What's the actual population? It's like

Speaker 5: 350,000 in Anchorage.

Speaker 1: Yeah. Pretty big.

Speaker 5: Yeah. Yeah. That was crazy. And I don't know how we no. Now we've connected and like Yeah. Eye crashes at my apartment when So, he's in Good Alaska connection.

Speaker 2: Been a great run. That video that you put out, or that he did with like checking in on the Gundow, the whole like table was awesome because, I feel like two years ago or something we met, and the total amount raised across the entire Gundow crew was, like, $5,000,000, and now it's, like, close to half a billion.

Speaker 5: Yeah. That's wild to think about. In in one of the the group chats earlier this morning, Isaiah posted his raise.

Speaker 2: Yeah. Yep.

Speaker 5: And then we posted our raise. And someone else was like, another quarter billion to the fellas. It's insane. It's ridiculous.

Speaker 2: It's good. It's exactly what should happen. Like, they like, when when the the reason I mean, the Gunda was like this meme. It was this moment. It was this like, oh, like, there's this cool movement happening. But, like, fundamentally, it was like, okay. This is actually what works, and this is where the capital should be going. It should not be going to Yeah.

Speaker 1: The critique the critique was

Speaker 2: the other junk stuff.

Speaker 1: Was a lot of these companies aren't gonna work. You can apply that critique to any sector or region that gets venture capital dollars. Anyway, so

Speaker 5: we're moving up critique was was kind of valid. Right? Because there was a lot of, like, we're talking about crazy ambitious things that were, you know and also in a kind of silly manner

Speaker 2: Sure.

Speaker 5: Which attracted a lot of attention. And I I think there's reason to critique that, but now you see that, like, the El Segundo companies are truly executing. Yeah. And that's that's where the difference is. We went heads down for a year and a half, two years, and now the results are are starting

Speaker 2: It was very clearly in that group chat, like, a somewhat of a moratorium on posting at some point because Yes.

Speaker 1: Because We get off the timeline.

Speaker 2: But it worked. It worked. And it was great because We gotta lock in. There was a world where it was like, okay. Everyone in El Segundo winds up becoming a podcaster. And, like, it's like, okay. Well, there's actually nothing getting built. Like, you you like, you guys really did get, like, lost in the sauce, but that never happened. It was just like, oh, wow. Another puff piece from the legacy media. And they just and it was great because that that's super high leverage because you just, like, show up, you get the thing, and then you

Speaker 1: move on. Up the stack.

Speaker 2: Move up the stack for us.

Speaker 5: Yeah. So on the the other end of the range of drone Yeah. That I I would call that, like, the the CCA, Collaborative Combat Aircraft Okay. You know, that Anderl's working on

Speaker 2: Yeah.

Speaker 5: As well as other other startups and primes. Yeah. That's I mean, it's an autonomous fighter jet. It's hard to get more exquisite than that in the in the drone world.

Speaker 2: So Anderil just flew theirs yesterday, the YFQ 44 a, and then, General Atomic has a a similar, program in the CCA. Those aren't live in Ukraine yet. Right?

Speaker 5: No. Definitely not.

Speaker 2: Okay. So then there must be something that's, like, the next best that's out there. Is that right?

Speaker 5: Well, there there's tons of there's too many categories to make in drone. So, like, you go up the stack from

Speaker 9: You make

Speaker 5: it FPV to a fixed wing that'll go like 5,100 kilometers. Then you're you're also looking at a bunch of reconnaissance drones.

Speaker 3: You have

Speaker 2: Your Reaper.

Speaker 5: DJI Mavics, like, you know, small, cheap, but also up to really expensive fixed wings.

Speaker 2: Sure. Sure.

Speaker 5: And those are kind of all, like, deployable by one or two people. And then you get into the really big stuff, and that's your, like, Reapers and Yeah. Kind of in between that is the, like, Shield VBAT. Yeah. And so, you know, you can look at all there's there's a group one through five

Speaker 2: Okay.

Speaker 5: Classification

Speaker 2: There you go.

Speaker 5: For drones. So and within those, there's tons of different categories.

Speaker 2: And and are you firmly in one group and you plan to stay there? Do you want to be in all five groups? Is that even like the right way to think about growing your business? Or are there other business lines that you could expand into that doesn't just mean total dominance of the groups?

Speaker 5: Yeah. So true success for Niros means making the West the West drone industrial base competitive with China. Yeah. So there's a lot to do in that. Right? Yeah. We're not gonna just be doing FPV drones in the future. Sure. But we do know that, like, focus is probably the most important thing

Speaker 1: Yeah.

Speaker 5: For a startup. Yeah. And the the market for FPV drones is massive and and only growing. Mhmm. And they are, like, I believe they are the most important type of drone to be working on right now. And until America can produce them in the millions, we we are pretty focused on that.

Speaker 2: Yeah. Makes sense.

Speaker 1: What is the state of drone racing today? Is it growing in popularity? Or is it staying staying niche? Is it yeah. Are you guys hiring out of it?

Speaker 5: We are definitely hiring out of it. Mhmm. We have lots of drone racers on the nearest team. Yeah. It it's been a great talent pool. I do think that, unfortunately, it has sort of fallen off in popularity from its peak. Really? But I do think it's gonna come back, especially with all of the relevance to military. We're starting to even see military drone racing leagues coming up. And Yeah. That's where, like, I think that is gonna become the the pipeline for drone racing talent in the future.

Speaker 1: The new, like, sports shooting where on a base, it's like who can who's the fastest That's the accurate pilot versus

Speaker 2: would be fun. The other thing that would be interesting, I don't know if anyone's doing this, but autonomous drone racing league. That feels like pretty valuable to build out that skill set. Can you can you write can you, as a team, build a software stack that gets you through all of the different obstacles while they're while you're being jammed or while there's flashing lights going on and off and adding some sort of variability.

Speaker 5: Yeah. I think the you would have to add a lot of variability because the hardest thing about autonomy is not making a drone go to a known point Sure. Or or making many drones go to a known point. It's operating when you don't have GPS, when it's dark out, when there's bad weather, when your comms denied. Like, that's why autonomy is I I think it's behind where most people think. Totally. Like, most drones in Ukraine are not autonomous at all. Yeah. And so But that's but that's true of self driving cars in America. Yeah. Like Yeah. I I there's

Speaker 2: a lot of teleop going on. There's a lot of stuff like that. And and and, yeah, the like, we're we're we're just still years away from it actually being.

Speaker 5: Exact and we're huge believers in autonomy.

Speaker 1: Of course.

Speaker 5: We're scaling our autonomy program, and it's it's gonna make drones just so much more effective for soldiers. But the there's been AI drone racing leagues for a long time. And, like, the the University of Zurich has been working on this for for many years, and they have a drone that's beaten, like, professional pilots around a closed course.

Speaker 2: Okay.

Speaker 5: But it only works in a closed course. And often, they have, you know, hundreds of camera angles, and they're set, like, tracking the position of the drone

Speaker 2: yeah. No. From outside drone.

Speaker 1: Yeah. That that that

Speaker 5: that is, like That doesn't actually apply

Speaker 2: to drone. Exactly. Yeah. You need to narrow it down because I imagine that I I have this, joke. This is, like, joke of a test for AGI, which is, like, I want the humanoid robot to get into a a manual sports car and do the Nurburgring in seven minutes, like, shifting gears Yeah. Like, with the g forces. Like, that is extremely difficult, and we are clearly decades away from that. And and I think the same thing is probably true for for actual drone racing, like, how how long it takes if you don't have all of the extra perfect information. Like, you actually try and simulate what it's like for the human.

Speaker 5: Well, I think the, the lap record on the Nurburgring for a manual sports car is is, I think it's right above seven minutes. Yeah. They'd have to be doing really well. Gotta get the

Speaker 1: robot robot can a robot can take it to the edge. Right? Like, you could Yeah. A robot could crash like 20 times in order to to actually get the lap time. So potentially you could be like, well, on this corner we can hit it at

Speaker 2: That was

Speaker 1: 180 even though like there's a

Speaker 2: Maybe push it further.

Speaker 1: 51% chance we'll

Speaker 2: Yeah.

Speaker 1: Go into the Can we

Speaker 5: be the next episode from the Nurburgring? From the

Speaker 1: passenger That'd be amazing. From the passenger seat.

Speaker 6: I'd love that.

Speaker 5: Up the stakes.

Speaker 1: Up stakes.

Speaker 2: Have we gotten into racing? I know some of the Gundot guys love racing.

Speaker 5: Yeah. I mean, I But you have

Speaker 10: a lot.

Speaker 5: Love racing sports from a young age and know, was focused on drone racing Sure. For about ten years, but I'm I'm also a huge car guy. And Yeah. So I follow follow a lot of it.

Speaker 2: That's cool.

Speaker 1: We gotta we're gonna do a TBP on track day.

Speaker 5: Yeah. We gotta do incredible.

Speaker 1: You will get the invite.

Speaker 2: Yeah. What's the what's the team size like? How big is the company?

Speaker 5: So we're at 80 people now, and we're hiring as fast as we can.

Speaker 2: And and are you gonna stay in El Segundo? Do you have to graduate and leave? Like, is

Speaker 1: They're already global.

Speaker 2: It's already

Speaker 1: It's already an international businessman.

Speaker 2: Yeah. But I mean, in terms of HQ, it feels like El is like this amazing, like, proving ground for all these companies. But at a certain point, if you want 20,000 square feet, 200,000 square feet, it just makes sense to, even just go, like, one, you know, one city over. But what's that like?

Speaker 5: We're expanding, and we're trying to stay in El Segundo. Cool. There there are big buildings. Yeah.

Speaker 2: ABL's there.

Speaker 5: Right? It's Yeah. I mean, you you have to kinda be intentional about it, and and it's not an easy real estate market by any means. But we're trying very hard because this I think the city's done a lot for us, and we wanna stay there. Yeah. And, yeah, we're we're growing a ton in the the headquarters in Los Angeles as well as our other other global locations. So the really, I would say the biggest limiting factor to our execution is just the the number of great people we can get on board.

Speaker 2: Mhmm. Is there is there gonna be, like, a separation on, like, where the factory is at some point? Like, you'd set up a factory in, like, a Midwestern city or something like that at some point?

Speaker 5: Yeah. That's that's very likely. At some point, it doesn't make sense to do the scale that we're talking about, in California. Yep. But you have access to the best engineering talent. Sure. Sure.

Speaker 2: So for design stuff

Speaker 5: and then you still need a lot of those engineers to be willing to also go out to, know, the the factory, wherever it is because Yeah. It it is critical to have your engineering talent right next to your production.

Speaker 2: What about automation on the production line? Like, get me up to speed on, on how relevant that is versus you're trying to iterate. And at a certain point, you might learn something from the battlefield and need to change the entire design so you don't wanna bake everything in. Right?

Speaker 5: Yep. Automate is the last step in the formula. Okay. And so you can even look at, like, the iPhone production

Speaker 2: Yeah.

Speaker 5: Where, you know, they make a new version every year. And a lot of that is hand assembly done with, like, simple tooling.

Speaker 2: Yeah.

Speaker 5: Tooling's really important Mhmm. And and being smart about your your workstations and your work instructions and and, you know, you wanna be making it as easy as possible for the human operator. But a lot of the time, it does not make sense to automate.

Speaker 2: So is the DJI blackout factory fake news?

Speaker 5: I think it's real.

Speaker 2: You think it's real?

Speaker 5: Yeah. And it's hard to say because the last time they let a camera into a DGI factory was like five years ago. Mhmm. But I think that should tell you something about what what they're working on. Interesting.

Speaker 2: Well, they could be faking it. Right? Because they could be like, yeah. Because if the iPhone I think the iPhone pulls in like $2,000,000

Speaker 1: There's just a bunch of people bunch of workers in there with night vision goggles. Was really really

Speaker 5: blackout back.

Speaker 2: Yeah. Turn the lights off like, we got you owned. Like, tried this. Americans, you guys suck.

Speaker 1: And it's just like working

Speaker 2: with night vision. I I don't know. But you you you think they're pretty advanced?

Speaker 5: But at some point, it it doesn't

Speaker 2: You don't you don't like, you don't think it breaks the laws of physics or something.

Speaker 5: So Well well, it it doesn't necessarily matter if you're able to produce at scale Yeah. At cost, like, which they're already doing. So Yeah. Exactly. Whether they're doing it with all with robots or all with people

Speaker 2: Yeah.

Speaker 5: They're already able to do it. So it doesn't it doesn't really matter. We need to figure out how we can do it in America.

Speaker 2: Totally. Totally. Yeah. Yeah.

Speaker 1: That, yeah, that makes a ton of sense.

Speaker 7: It's funny.

Speaker 1: Great stuff. Well, thank you for the update.

Speaker 2: Yeah. Thanks

Speaker 1: for doing this work.

Speaker 2: And congratulations on the round.

Speaker 5: Thank you, guys. Great to see you.

Speaker 1: We'll, we'll see you at the track. Awesome.

Speaker 2: Track soon. We'll talk to you soon. Thank you so much. Let me tell you about ProFound. Get your brand mentioned in ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. Our next guest is already here in the TBP And Ultradome looking fantastic.

Speaker 6: What an

Speaker 2: outfit. You're gonna have to break that down for us. Thank you so much. We have Jeff from Anderle. Great to see you.