Archer acquires three Boeing subsidiaries — Whisk, In Situ, and SkyGrid — in all-stock deal to accelerate eVTOL commercialization

Speaker 1: Yeah. Yeah.

Speaker 2: For its, you know.

Speaker 1: The other side of that is that it's going be a very competitive market and there's a lot of different tools and wrappers. But I I just think like if you create an opinionated product that's really delightful to use, has good NPS, you can carve out a fantastic business as they have. Anyway, our next guests are Adam Goldstein and Brian Yutko from Archer and Boeing. We're very excited to talk to them about this partnership. What's

Speaker 2: going on?

Speaker 1: Welcome to the show and welcome back. What's up, How are you doing? Good to see you again.

Speaker 5: Good. Good to be here.

Speaker 1: Can you kick us off with some introductions and then set up the partnership for us?

Speaker 5: Yeah. Sure. I'm Adam Goldstein, founder and CEO at Archer.

Speaker 3: Yeah.

Speaker 6: I'm Brian Yutko. I lead product development for Boeing.

Speaker 1: Amazing. And what are you working on together?

Speaker 5: So today we announced a pretty big strategic transaction where Archer will be acquiring three businesses from Boeing. Whisk, which is their advanced air mobility platform, In Situ, which is their ISR drone platform, and SkyGrid, which is their air traffic control product.

Speaker 1: Wow. How long have you guys been working together, talking about potentially doing some sort of deal? What what what what's the story behind this story?

Speaker 5: Yeah. So Brian and I have known each other for, you know, for several years. Brian's actually he comes from the startup world too.

Speaker 1: Oh, cool.

Speaker 5: And so I'll let you give him you know, he'll give his his story there. But, you know, Boeing has always viewed us this, you know, this big company that we all know that has amazing product we fly in every day, but they do a lot of really cool innovative stuff too. And Brian's the guy that leads a lot of that projects.

Speaker 6: Yeah. Thanks, Adam. Yeah. We yeah. We got pretty we got pretty involved chatting a couple of years back when, know, we were developing some autonomous electric aircraft. Adam and his team were developing some piloted electric aircraft. There's some natural kind of, you know, complementarity between those things, and and, you know, it's been a couple of year collaboration, frankly, you know, going back to probably early twenty two or so.

Speaker 1: And for what does this mean for Archer? Should I think about this as pulling forward an r and d roadmap, developing a stronger customer base, jumping forward on revenue or profit? How are you thinking about integrating these new products and companies?

Speaker 5: Yeah. In the world of eVTOLs, it's a pretty small universe. Right? And so there hasn't been a scenario here where two companies have come together like this. This is kind of like shaking it up in our industry. Yeah. But if there ever were two companies to come together, it's the perfect match. We were actually both building aircraft that had similar architectures. We both had 12 sets of engines and six propellers that will tilt and six propellers that are stationary. A similar type of architecture. But Archer took this pathway where we were all about commercialization and Boeing took this pathway where they were advancing all the new technologies like autonomy. So bringing them together really allows us to supercharge the path to market but also some of the advanced capabilities.

Speaker 2: Yeah. What what can you share about what the relationship will look like on a go forward basis? Sure. It feels like you guys are getting on together so this is unless this is goodbye, I imagine you're gonna be doing a lot more work together.

Speaker 5: Yeah. So the deal is actually an all stock transaction, so it makes us partners now.

Speaker 1: Okay.

Speaker 5: And so Boeing locked up the stock. There's some incentives for us to collaborate together and they're really this kind of mutually aligned roadmap that we're working on. We're both trying to go build the future of aviation and it just aligns us to be able to do it together and we can do it now as partners.

Speaker 6: I think it's a really great example of kind of a large institutional company being really creative in the deal space you know, in advanced technology. Because, you know, frankly, you know, we see an opportunity here where we can take some of the pioneering capabilities that we developed for autonomous aviation. We can add them to what Adam and his team have built and really kind of supercharge some of what can be built in the advanced air mobility market. And then at the same time, through our relationship, can build we can bring some of those advanced capabilities back to our core products as we go off and start trying to win the future on that kind of next wave of commercial aviation.

Speaker 1: What can you tell us about Archer's overall surface area or theory around partnerships? I've been seeing a bunch of these. Obviously, the Andoril one happened recently. Is is how do you think about the overall structure of partnerships right now? Like, what makes for a great deal?

Speaker 5: Well, aviation is actually very collaborative. And so even on the defense base, most of the primes will end up working with each other on different projects.

Speaker 1: Sure.

Speaker 5: And so a lot of it is just working together to advance these really complex products that ultimately are better for the country if we can do it because they are really country level initiatives. This is the first new product category in The US in almost sixty years. So it's big deal that this is happening and The US wants to lead that. So I think it's common that a lot of these companies will work together in this industry. One of the unique elements to this one too was the company In Situ where In Situ is a revenue producing company, a cash flowing company. So in the startup land of aviation, you generally don't see early revenue that comes to these companies. The joke is like the Silicon Valley show. It's like, revenue? It's like,

Speaker 4: are you sure? Are you sure you want that revenue?

Speaker 5: So it's kind of like this funny period of time where it's actually a way for us to get products to market, test out the new capabilities on these smaller drones, generate cash flow to help extend the runway, and really allow us to keep building ultimately to the big commercial markets where we want to get to.

Speaker 2: Yeah. You're wearing a LA Olympics jacket. It looks like it's a little far away, but what what should people I've been starting to see Olympic signage going up around LA, getting excited. What what should people expect from from Archer around the Olympics?

Speaker 5: So Archer was selected as the exclusive air taxi provider for the LA twenty eight games. That was a huge deal for us. It's really a chance for the world to see these products on the big stage. Mhmm. And that's what it was all about. And so, it also served as a timeline, like an unslippable date for the company, the regulators, the ecosystem, the infrastructure partners to all work towards getting these products to markets. It's important for the administration to see America leading in aviation, so we're really trying to help create those forcing functions to do that. The goal is to be flying at the games, lots of aircraft flying around, people see this new technology. But really, you can think about it as an industry promotion to help show it's safe, it's new technology, and good consumer experience.

Speaker 1: I mean, I'm super excited for it. It's going to be an incredible moment. How do you think about reaching the sort of like iPhone moment, ChatGPT moment, Waymo moment of of this of product specifically, this market? Because there's these some of these technologies, they work for they're they're in the lab for a decade, two decades, and then all of a sudden it's like, okay, if you go to San Francisco, you see Waymo's on the road and you know that self driving is a real thing. It's here. How how are you how do you think that moment will happen for you?

Speaker 5: So we've been working on this this project together that for the as an industry called the EIPP or EBTL Integration Pilot Program. And that came from an executive order from President Trump last year. That will allow us as an industry to start flying in these big cities and that will take place it's really already started and it's it's really kind of ramping Sure. The back half of this year. So Archer's been doing that, Wisk has been doing that and the goal is to really take those aircraft to show them to people so they can see them, they can get comfortable around them Yep. But ultimately so the regulators can get comfortable around them that these are safe. It's not just an Archer thing or a WIST thing, it's an industry thing Sure. That all of a sudden we can expand the amount that are out there and they can be ultimately become a part of our everyday life.