Hadrian raises $1.37B as factories-as-a-service scales to Navy, Army, Lockheed, and international defense

Speaker 4: Oh, it's so much fun.

Speaker 8: It's great.

Speaker 2: It's an honor

Speaker 4: to be on. You guys do great work.

Speaker 1: Thank you. You too.

Speaker 2: Great to meet Cheers.

Speaker 1: Goodbye. Let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy web app, servers, databases, more while Railway automatically takes care of scaling, monitoring, and security. We have Chris Power from Adrian coming in the studio. We gotta get the Gong ready. We gotta hit the Gong. Tell us what happened. Had?

Speaker 2: 1,370,000, baby.

Speaker 1: Congratulations. It warmed up now. So good to see you. How are

Speaker 2: things, Luke? Mad lad. Mad dog. I love you.

Speaker 7: I'm in New York repping the set

Speaker 1: fellas. Fantastic. You Fantastic.

Speaker 2: I think wear the the I think you wear that more than anyone. It's amazing. It's amazing.

Speaker 1: Think

Speaker 7: economy flights wearing this than anybody else.

Speaker 1: Every time you wear it, we get a text message of someone who sees a picture, takes a picture of you. Paparazzi is coming for you. What's the what's been the biggest driver of the growth that unlocked this round? Is it technology, is it efficiency, the actual output? Is it just raw scaling, more customers, a little bit of everything? What's going on?

Speaker 7: Raw scaling and then the proof that, you know, factories as a service was a desperately needed to create and that people are adopting it at mass scale across the Navy, the Army, our customers like Lockheed Martin. That's big point number one. Second point is, the regulatory environment just changed.

Speaker 1: Sure.

Speaker 7: You know, we finally banned Chinese components from missiles. Finally banned drone components. We have a lot of policy that just enables this.

Speaker 1: Huminoids. We're growing

Speaker 7: to billions in revenue very quickly.

Speaker 1: It's amazing. How are you are you focused at all on setting the company up to continue to support the next wave of like small hard tech defense tech companies? Because obviously it's great that you're working with the government, great that you're working with Anderol, RTX, Lockheed Martin. But there's probably someone out there who's just got a seed round to build like a new washing machine or something and they need parts. Are you going to work with them? Or is there something where you just have to go upmarket and be just purely enterprise?

Speaker 7: So so for customers, it will be purely enterprise, but we're actually doing the reverse. So we're partnering with a lot of new industrials companies that have small puzzle pieces and integrating them into factories as a service and Opus itself. Mhmm. So we can we can bring them up the enterprise stack and we can offer a more complete solution to the primes and the power of war.

Speaker 2: What are the ways that Hadrian makes money?

Speaker 7: The biggest part of our revenue is factories as a service. So, you know, design agnostic, highly automated factories. Jordy's got a new missile design that he loves. We'll build and operate the factory for Jordy. And then, actually

Speaker 2: And that's like know, we we announced Basically, like, you bring the IP and you guys handle the rest. Is that the way I should think about it?

Speaker 7: That's the way you should think about it.

Speaker 2: And if second thing is shot GBT image of missile. I can just give you that and it's good to go?

Speaker 7: That's the way it works.

Speaker 2: Okay. Okay.

Speaker 1: Yeah. Yeah. So when you go from wanting like one gong a year to you want a new daily gong manufactured for you, you will go to Hadrian What about every ten minutes? Because at the rate you break them, we're gonna need this. So then you build the factory. But when factories of service, like, where is the where where are the parameters? Are you doing site selection and and leasing and and helping me understand how much power needs to go into a building? Or is it more like I have a powered shell and you're going to show up with a bunch of machines that are wired up properly to produce the good or the product that I want?

Speaker 7: We're we're doing everything from planning Yeah. Development, bring up and then, you know, a decade's worth of operations. Full Wow.

Speaker 1: And then

Speaker 2: How do you how do you underwrite? So so how do you underwrite a customer? Because it it feels like if someone's like a startup and they they've even raised like a $100,000,000 and they want you to build a factory for them, but you're looking at what it's gonna look like to get into a lease and Sure. Sure they're a part of guaranteeing that. But then getting into a lease, buying all this equipment, I'm sure you're financing the equipment. There's all these different stages. I can see why you're starting and working, you know, with with the the big Yeah. Crimes. Yeah. But I imagine you also wanna help bring on the next generation.

Speaker 7: So so fundamentally, the big primes are underwrite because they've got a lot more revenue visibility and predictability. But the second thing is we we have such high flexible utilization rates in our factories that we can actually take a lot more underwriting risk than a single line factory. So at least 80% of our CapEx, if one program goes away, we can reuse it for another program Mhmm. As like a virtual factory. And then the third thing, frankly, is we're we're we have to be as close to our customers' customers as they are to underwrite underwrite the sort of revenue risk. We're we're getting really good at it, but that's how we think about it.

Speaker 1: There was a pitch years ago in Silicon Valley. Somebody needs to make AWS for manufacturing, something that was I feel like the thesis of that era was way less, like way more shallow integration, not deeply integrated like what you just said. It was, yeah, there's a factory and I just upload a CAD file and I get the part and I don't even know them and they're not building anything for me and I'm just paying per part. This was a part of like the we'll all have three d printers in our houses and if you want a missile, you'll just click a button. And it feels like we're going a completely different way. Is that how you think about the history of that era of Silicon Valley?

Speaker 7: Yes. I I I think that era was very much like consumer driven manufacturing or small business demand Sure. Kind distributed. Yep. In reality, the only large sources of manufacturing demand in The US, apart from all the reassuring we just did, is SpaceX, Tesla, the defense primes.

Speaker 1: Sure.

Speaker 7: That's like 90% of it. And and and enterprise customers want a lot more integration. I mean, we have three enterprise customers today that have actually bought Opus, our physical AI platform and factory autonomy for themselves.

Speaker 1: Oh, interesting.

Speaker 7: And and are deeply integrated. I I I think we look more much like Core Weave plus Palantir style revenue on top of it

Speaker 6: Yep.

Speaker 7: Versus kind of distributed early two thousand Silicon Valley consumer manufacturing.

Speaker 1: I remember years ago, we were I was pitching this idea that if we want to re shore like semiconductors, maybe there's a link in the chain where you also reshor Happy Meal toys because if you're a company if you're a country that can make something as simple as like injection mold plastic, like that has knock on effects that get you to like three nanometer as well. And there's something where the ecosystem of tool and die manufacturers and just like the entire labor force all orients around manufacturing. And you can't just pick space lasers. You need a little bit of everything. Is that true? Is that what you're seeing? Because it feels like you and also the American economy is still pretty laser focused on SpaceX, Tesla and defense primes. But where does this all go? What's the next area that is is a candidate for hadrianification?

Speaker 7: I I think commercial is the next candidate, especially with robotics because the FCC is is banning those as well, which is a huge consumer electronic supply chain.

Speaker 1: Sure.

Speaker 7: And secondly, I think it's a little bit of bottoms up. There are there are so many companies getting funded trying to create bits and pieces of Shenzhen here in America that will enable that. And I think once the capacity exists, it'll be very easy for people to create US products on top of it. But but right now, we're still so short on capacity and capability in the country that you kinda gotta go like, start with defense and get to commercial and then come back around the hoop again.

Speaker 1: Talk about the footprint of the company. The first space that I toured with you years ago was huge, but there's more now. You're expanding up north as well as building a second facility in California. Walk me through how your global expansion pan or domestic expansion pan is playing out.

Speaker 7: So domestically operational right now, we have LA, Arizona and Alabama is under construction Wow. That we announced. And that is 3,000,000 square foot in total. And for engineering and R and D and test factories, we have 500,000 square foot in LA, a million square foot in construction in LA for software engineering and physical AI testing. Wow. And then in the next month or so, we'll announce our location in San Francisco because we gotta, you know, if we're gonna industrialize the whole country, we gotta do Alabama and San Francisco at the same time.

Speaker 1: That's amazing.

Speaker 2: What what's coming down the pipeline? What are you seeing on the innovation on the actual side of the machines and robotics that will eventually be going into the the Hadrian factories of, you know, the 2030, you know, 2030 and beyond. Right? Because you guys are are focused on just, like, yeah, basically ramping up the supply of these factories, but then I'm sure you're getting pitches all the time of of new machinery that will actually go into them over time.

Speaker 7: And that's one of the reasons why we've signed all these teaming agreements because we're really good at figuring out where new manufacturing methods and technology will work, won't work, and how to get them qualified with the government and how to get them qualified to a prime and actually test if they work or not. And most start up, you know, that is a three year journey for most start ups. It's very engineering heavy. So we're hoping that we can actually accelerate the adoption of like new casting techniques, new additive techniques, you know, new types of laser welding techniques that exist but haven't really scaled because they're throttled by the kind of government requirements. That's all possible to change now given how fast the administration is moving, but it takes a year and 30 people to even get the engineering record submitted to try and get a new welding method across the line as, a qualified thing that you can put in a factory for, you know, defense or aerospace. So there's a lot coming down the pipe and we hope to be a really strong adoption path for those small companies that probably just can't eat the qualification cycle with the factories and service partnerships.

Speaker 1: Last question for me. You obviously use artificial intelligence a lot. It's almost surprising that you haven't pivoted to AI at this point in the sense of like if you came on the show and you said like, yeah, we're actually making a ton of natural gas turbine parts and we're making racks for servers like and that's the biggest growth area. I'd be like, yes, that makes sense. Like there's a huge boom there. Is that like philosophical that you want to work in defense and the existing industrial base, is that something that's coming down the line and it's just a little early? Or is there just like that's the right it would be a it would be a round peg in a square hole or

Speaker 7: something like that? Right now, we have so much demand across submarines, munitions, drone industrial base Yeah. Energetics and frankly the organic industrial base with the army and the navy and then our international allies for defense re industrialization that, you know, any any market pivot right now I think will be would be doing a disservice to the mission. Sure. I actually I actually thought you were talking about, you know, building our own physical AI models and I almost thought someone might have leaked something.

Speaker 1: Oh, yeah. No. I'm sure of

Speaker 4: that.

Speaker 1: You're doing Well, heard it here first. Thank you so much for coming on the show. Congratulations. And we'll see you soon.

Speaker 2: We got a scoop. We got some bits.

Speaker 1: Yeah. That's great. Good fun.

Speaker 2: Great to

Speaker 1: see you. Congrats, Chris. Goodbye. Let me tell you about Cisco. Critical infrastructure for the AI era.