Inspired with Alexa von Tobel
00:07:42 · Charlotte Ross, Alexa von Tobel, Steven Simoni
[00:07:42] S2: Like, to kind of maybe go back to your comment on war, obviously it doesn't feel like we're in war. I mean, are and we're where we're on, but doesn't... Say more about what you see out there that maybe we [00:07:56] S0: don't see? [00:07:57] S1: Yeah. Mean, I'm sure it didn't feel like... You know, if you're like a citizen of Rome during the Roman Empire, probably didn't feel like you're in war in Germania. Yeah. But we're in war. You know, the world's at war right now. And wars... We're seeing two very different wars. The Ukraine Russia front of the war has a much different landscape than the Iran war. In the Iran war, what we're learning is kind of how war is changing, especially for, yeah, the American empire, [00:08:25] S0: I [00:08:26] S1: would say, which is that it's all about long range standoff now. You know what standoff is? No. Standoff's like a military term for, like, the distance you wanna engage at. So, like, you can imagine in... I just watched the movie Troy with Brad Pitt. He's hot. They're like fighting sword hand to hand. Yeah. So the standoff's like zero meters. Right. Right. That's who they're fighting. Correct. Yeah. That's not a modern war. No one wants to see the whites of anyone's eyes anymore. Like, you don't wanna actually see the person you're killing. Yeah. So now, especially for The US where we have really no appetite for troop loss at all anymore. Have zero appetite. Wars are now far. [00:09:00] S0: Which is a good thing. Which isn't like a thank god.
00:09:00 · Alexa von Tobel, Steven Simoni, Charlotte Ross
[00:09:00] S0: Which is a good thing. Which isn't like a thank god. [00:09:02] S1: Obviously, potentially. Yeah. Potentially good. Mean, we can debate that. That's a that's a deeper topic. But on the surface, good. So you have, like... Basically, you wanna have miles and miles of standoff. Like, we're talking five, six, five. You don't wanna see any... You don't wanna see humans on either side. That's like how The US is fighting more now. So you're in Iran too. So you're seeing, like, Iran has these missile launchers underground. They bring them above ground. They fire off a bunch of missiles at our bases, bring them back underground, and then we respond by firing some missiles back or trying to intercept those missiles. And it's very long range, long standoff battle in the air. And that's kind of modern war. And then the way it works is it's all about what's called escalation dominance. So that means first you do a round of barrages on on each side, and then you go on Twitter, and you're like, okay. Leaders of Iran, if you don't surrender now or make a deal, we're gonna blow up your bridge. And then they respond, like, blow up my bridge, bro. I don't care. And that's kinda... So it's like Twitter Twitter... Like, those heads of state aren't... They're not flying back and forth. They're on Twitter discussing this. And they're using long range arsenal to see who's gonna take a beating harder. And that's kind of like... That's like modern warfare. Same thing. [00:10:22] S2: I hear it is that. [00:10:23] S1: Has a lot of implications, I would say.
00:10:23 · Steven Simoni, Alexa von Tobel
[00:10:23] S1: Has a lot of implications, I would say. [00:10:24] S0: Okay. So like what? [00:10:25] S1: Like Yeah. Same more. A lot of implications for, like, what is getting procured, like what the military procures. So, like, you don't really want to spend a ton of money, and this is where it's kind of... It's more of a hot take. You don't really want to spend a ton of money augmenting soldiers. Like, you know, with like, I don't know, the IVAS program or something, like giving them like heads up displays or new armor packs or use... There's, like, products that you can, like, wear that... It's like a soldier infantry drone detector. So, like, when you're, like, on patrol, you can, like... It'll, like, tell you there's a drone in the area. Oh, interesting. These products don't matter as much because we're not fighting hand to hand combat, you know? Like, it's... That's not that's not modern warfare. And even in Russia and Ukraine, those products matter a little more. But even there, there's... The the front line is a five mile wasteland on each side. And, like, if you go into that... If you're a human that goes into that five mile wasteland, a drone will find you and probably kill you. So, like, you're seeing just the standoff extend very far. And that's that's pretty new. [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.
00:11:27 · 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