Inspired with Alexa von Tobel
00:11:27 · Alexa von Tobel, Steven Simoni, Charlotte Ross
[00:11:27] S0: Can we Just to give people a sense of these budgets, obviously we know The United States spends a ton of money on defense. And my expectation is that those budgets only continue to grow. Give people a sense of what the budgets are coming towards a company like ACS. [00:11:45] S1: This all all the budget gets generated on the hill, in Congress. Right? Like, they they have the power of the purse. That's That's what the constitution says. It's still true to this day. So... And a lot of those budgets are actually... A lot of the existing budgets are allocated to the primes, like the like the legacy primes, the older companies, Lockheed, Northrop, Boeing, Raytheon. To get budget to your company as a startup in this space, you have to create it on the hill. And right now, there is a ton of appetite for them to pass a reconciliation bill, but congress has not. So actually, while there is, like, a lot of money allocated to defense right now, because of politics, you're not really seeing a lot of it actually get allocated all the way. You know, we've been around for a few years, so we've had other budgets that have passed, so we're fine. But if you're a new startup entering today, it can be a very challenging environment. Even though there's a lot of top line number you'd see in the press, there's like... That's what the executive branch wants. You know, but it doesn't necessarily mean that's ever happening if it doesn't get passed on the hill. [00:12:58] S2: But isn't it kind of a purple issue right now?
00:12:58 · Charlotte Ross, Steven Simoni, Alexa von Tobel
[00:12:58] S2: But isn't it kind of a purple issue right now? [00:13:01] S1: It's it's tough. It is it is bipartisan. Defense is typically bipartisan. However, it gets tied up in politics. So, like, right... I mean, right now, a lot of these companies are waiting for reconciliation. [00:13:10] S2: So, like, would you say if you look at the headline numbers, which what are... I mean, are the headline numbers? [00:13:14] S0: Like, it counts as trillion dollar. Okay. [00:13:16] S2: So, like, out of the trillion dollar headline budget, like, what do you think actually it ends up being? [00:13:21] S1: I mean, I would call those headline numbers aspirational, that that's what they want. I think that what it ends up being, if I had like, back of the envelope, I don't I don't have any real data behind this, but back of the envelope, let's say let's say all 1,500,000,000,000 passes, I would say that's $1,200,000,000,000 to existing primes, and like $300,000,000,000 to the rest of us. [00:13:41] S0: One important data point for this conversation, so you guys have raised $242,000,000 [00:13:46] S1: Yeah, we've been really a capital efficient. [00:13:48] S0: At a $2,200,000,000 valuation most recently, and Charlotte and I were lucky to invest in your equivalent of a pre seed. [00:13:56] S1: Yeah, congrats.
00:13:56 · Steven Simoni, Alexa von Tobel, Charlotte Ross
[00:13:56] S1: Yeah, congrats. [00:13:57] S0: We love you, Steve. Thank you. You, in so many ways, the Bullfrog and defense in general is a hit business, right? It's like you need a hit, meaning you need a product that works not just so well and slightly better than other things, but it's a breakout product that dramatically works and that everybody wants, and it works incredibly well. And as a result, you have just seen exceptional demand for this product for armies. [00:14:32] S1: Pretty rare out, I guess patting ourselves on the shoulder, it's been a lot of work, but it's pretty rare to, within three years, after three years of development, to be on the battlefield, actually on the battlefield and in the fight, with a product, with our defense product. Kind of exceptional thing, like in R and R, and we're shipping Bullfrogs onto the battlefield now, like as we speak, as record this. So that's pretty rare. You need a hit product now. I would say you didn't necessarily need it if you started in 2017. A companies lot started with just a vision and was able to raise a ton of money early, and now they're starting to build many different products. But I think if you're entering the market when we entered it or if you're entering it today as a new startup founder, you need to have something they're gonna wanna put on the battlefield within twenty four months to thirty six months. Like, you're gonna... Or the company just won't work. [00:15:24] S0: And so when you say put on [00:15:25] S2: the battlefield in twenty four thirty six months, it
00:15:25 · Charlotte Ross, Alexa von Tobel, Steven Simoni
[00:15:25] S2: the battlefield in twenty four thirty six months, it [00:15:27] S0: sounds like this... Obviously, drones are something people care about. This long range, [00:15:33] S2: like... [00:15:33] S1: Yeah. Like, if I were to start a company today, like, now, another defense company, I'd probably do... And even if the... Even though it's crowded... It's going to be a crowded market soon, would be, a jet powered interceptor. The Iranian... The main Iranian attack drone is called the Shahed one thirty six. There... That's a propeller guided... Or it's propeller... Propulsed drone. They're now making jet powered ones that go much faster, you know, talking like 500 kilometers an hour versus like the 200 kilometers an hour to 300 up a jet propeller version. And so these jet powered drones are coming... The next... Where the puck is moving is jet powered interceptors. So, like, you could probably, if you have a good team, make a jet powered interceptor in twenty four months, you know, twelve to twenty four months, likely twenty four months, to be real. But that's like a market that's going to be large. And, you know, ACS, obviously, as an air defense prime is looking heavily into that market. [00:16:25] S2: And how do you think about making a jet powered interceptor versus just a jet powered drop? [00:16:29] S1: It's always easier to attack. So... Yeah. So, I mean, the interceptors are harder to make or harder to be reliable. [00:16:37] S0: The skills have to be
00:16:37 · Alexa von Tobel, Steven Simoni
[00:16:37] S0: The skills have to be [00:16:38] S1: But it's a similar skill set. You still need aerospace engineers, still need computer vision engineers, still need electrical engineers. Still... Same engineers, just harder to defend this stuff. Which is why you're seeing in the Iran conflict, like, we don't... We can't really defend our bases. So we've, you know... The reports are different, but a lot of our bases are being really damaged because of this new asymmetric warfare. Like, we can only fire so many Patriot missiles at these shaheds, you know, before we just run out. And we don't really have an arsenal of jet powered interceptors and interceptors to send out there. So you're seeing a pretty large retreat from The US and these bases. [00:17:17] S0: How quickly did this shift? And obviously at Inspired, we care deeply about humanity and we would like there to be no war. It does feel precarious, as though the world is heading towards more conflict, not less right now, which I would love your thoughts on that. But in the last fifteen years, it feels like we went from physical combat of humans to more of this, to your point of technical war, really. Yeah. Is that right? Is it When it happened yeah. [00:17:46] S1: The historians would probably say 2017, the Armenia Azerbaijan war was the first drone war, first full drone war. [00:17:55] S0: '27 [00:17:56] S1: There's a book called Seven Seconds to Die that describes it. That's probably the start of modern drone warfare is what people would agree on, I think.
00:17:56 · Steven Simoni, Alexa von Tobel, Charlotte Ross
[00:17:56] S1: There's a book called Seven Seconds to Die that describes it. That's probably the start of modern drone warfare is what people would agree on, I think. [00:18:04] S0: And just say more, how has that evolved everyone's thinking? And I I get your point of it's like five miles between people, you see no eyes. But what else does... What are the other ramifications? [00:18:16] S1: Well, to be real, that was in 2017, and we saw the Azerbaijanis just completely crush the Armenians. They used drones, there's just no stopping it. No one really took a lesson from that. It's almost 2027, so it's been a decade, and our procurement apparatus is still behind. Like, they had that in the Ukraine war, and we're still buying Patriots. And we're still... You know, we just spent 68,000,000,000 on Patriots again. We just bought a bunch of... You know, we're gonna replenish our [00:18:46] S0: THAAD. What's the Patriot? [00:18:47] S1: Patriot missile's like the premier defense missile. Like, it's very expensive, but it works. Like, it works all the time. It's a very great product, but it's just not the right... [00:18:57] S2: You don't wanna He's it made by a brun? [00:18:59] S1: Yeah. Very Lockheed. Yeah. Lockheed. You don't wanna spend... Don't wanna use Patriots on a Shahed, though. Just the cost because [00:19:04] S0: it's like... Makes... Cost out. [00:19:05] S2: They're... They're neutralizing each other. [00:19:06] S1: Right? Well, Patriot costs 10 times more, though. [00:19:08] S0: Okay.