00:47:00 · Olaf Hichwa, Ty Morse
[00:47:00] S1: In some ways it's getting shorter, in some ways it's getting longer. I'd say we're engineering faster at this point. Like one of the things I really love about engineering at Neros is that it is a bunch of like really small teams that are all behaving like an early start up. You know, we're only three years old, so we have a lot of that DNA in us. But also we're, like, perpetually terrified of big company bullshit. So we we keep teams that are super, super tight that, you know, iterate quickly and are able to ship quickly. With that being said, big production lines, they don't transition overnight. It is a it is a big ship to steer when you're making these kinds of quantities. Starlink doesn't come out with 10,000 variants, and and it builds one thing and it builds one thing well. So I'd say we're... We are faster at iterating on new designs and kind of making... Adding features when you're in engineering land. Like prototyping. Exactly. Faster prototyping, but slower mass production changes. The the line is fixed. [00:48:00] S0: In your mind, when you're kind of doing these two different modes of like mass production or prototyping, which one's more fun?
00:48:07 · Olaf Hichwa
[00:48:07] S1: Well, I'm a masochist. So mass production is more fun for sure. Just the the weight of the problem is much bigger. Like, you see, you know, a station go down on the line, and then literally, like, a drone comes out of the building every two minutes. So you just... Like, drones just start stacking and stacking. You're like, we gotta fix it. We gotta fix it. And the the thing with production is that we pay for materials to come into the factory, obviously, and we only get paid when materials go out of the factory. But generally, the materials coming in don't stop. So you start piling up, and you just see like the the inventory piling, piling, piling and getting perpetually closer and closer to bankruptcy as the company's balance sheet just gets converted into parts. It's a stressful... It's a crazy stressful activity, but it's so fun. Like the the magnitude of the challenge is so real. And you have to be so worried about like every little part of the design that can get you. You know, there's so much, yeah, it'll fly. Like, we'll take the risk on in in prototyping, but in in production, you gotta be a lot more careful. It's like a game of three d chess. You gotta, you know, anything that can bite you will bite you. Of course, they both have their fun. You know, some engineers much prefer this stage of development where you you have more freedom to mess around, and we we have both. But if I had to pick one, it is production for sure.
00:49:24 · Ty Morse, Olaf Hichwa
[00:49:24] S0: I know that Elon has this idea of, like, walk to the red when he was going through production hell in 2018 for the Model three production ramp. I think there'd effectively be screens all over the factory of whatever was like slow on the line. Yeah. And he would just go to one of the red screens and then just unfuck the bottleneck and then go to the next red screen and unfuck that bottleneck and just continue doing that until the line worked. When you like go on the line and you see some bottleneck, how often are you like figuring out there's some part or process that you don't even need to be doing? [00:49:58] S1: I mean, all the time, like, you'd be really surprised how simple the solutions are to some of these problems. Right? Like, especially as the as the company grows, like, there are... There's a lot of juice to squeeze in in simple solutions. You know, you gotta try the the idiot checks. Do we even need this part? Can we delete this? Like, you know, who qualified this part? Show me the test data. Did we make sure this part works? But walking to the red, I'm a big fan of it. Like, Sorin and I, we both try very, very, very hard to put incredible people in charge of basically every responsibility we have by default. And then we spend a lot our time just unfucking. Like, in theory, if the company's running well, our calendar should be free. And we're able to just pick the most fucked area and dig there. That's that's of course not always possible. There's some things you want, you know, high touch on, but that's generally our philosophy.
00:49:58 · Olaf Hichwa, Ty Morse
[00:49:58] S1: I mean, all the time, like, you'd be really surprised how simple the solutions are to some of these problems. Right? Like, especially as the as the company grows, like, there are... There's a lot of juice to squeeze in in simple solutions. You know, you gotta try the the idiot checks. Do we even need this part? Can we delete this? Like, you know, who qualified this part? Show me the test data. Did we make sure this part works? But walking to the red, I'm a big fan of it. Like, Sorin and I, we both try very, very, very hard to put incredible people in charge of basically every responsibility we have by default. And then we spend a lot our time just unfucking. Like, in theory, if the company's running well, our calendar should be free. And we're able to just pick the most fucked area and dig there. That's that's of course not always possible. There's some things you want, you know, high touch on, but that's generally our philosophy. [00:50:58] S0: One of the biggest challenges with scaling this type of business is you have a, like, almost single customer. Yeah. And that customer has to scale with you or else, again, just like you'd have inventory piling up or, like, parts and stuff piling up, you can't scale without people buying the drones. So how does that relationship with the US government and other governments work? And are they kind of moving ahead of where you can scale? Or are they not?
00:51:24 · Olaf Hichwa, Ty Morse
[00:51:24] S1: It's such an important and complex relationship. There's a lot of really, really impressive, impactful work being done in that domain. If we wanna build this factory that credibly deters conflict, it needs to be profitable. It can't be like a charity item, you know. Our drones are $2,000 each. A million drones are $2,000,000,000 worth of drones. And that's just the drones. Like, what about the production, the engineers? There's a lot of stuff that goes into that. That's not like something that happens without a profitable enterprise around it. And the government really wants this too. Like, our incentives are super aligned. Right? Like, we exist to serve the American warfighter and to provide travel deterrence. And most of the people that are in the government, they they have dedicated their lives to this. Right? Like, they could get way better pay outside the government. Often, they served in the armed forces. They care so much deeply, deeply about making sure that America has credible deterrence. So the the, like, incentives are often aligned. It's just the government is a big organization. You know, it's a really, really big organization, largest employer. [00:52:39] S0: It's like the ultimate aircraft carrier. It takes Yeah. Know, 200 miles to turn.
00:52:43 · Olaf Hichwa
[00:52:43] S1: Every return. And and a lot a lot of details that go into, like, writing a company a $2,000,000,000 contract to build a million drones. Right? It's it's not, like, something that happens overnight. So that relationship, it's often, it's a lot of strategizing together. It's a lot of, like, you know, working with the customer. It's explaining the customer. Like I mentioned in the beginning, it's explaining to the customer what the warfighter needs. Explaining to the government what the warfighter needs. It's also explaining to the government how to contract, you know, a million drones and what they need to do. And these, like, very, very well meaning folks in the government, we sometimes have to explain to them, like, what we need. And and they also explain to us, like what their blockers are, what makes it hard to actually like buy these things or field these things. Like, you know, they tell us as an example, listen, marines wanna fly this drone, but they can't without crazy sign offs, very very very senior, you know, exception to policies because of spectrum regulation. So we go, great. The answer is a JF 12. That is like a approval to use the drone on any military base. And then we work, we figure out how does the JF 12 process work? Who do we need to talk to to move through that quickly? What engineering resources can we give? We start doing a bunch of testing ourselves to to make it so at the end of the day, the marine can fly the drone, and they don't have to stress about it. But it's very much a symbiotic relationship, and it's a partnership that goes very deeply. We really appreciate government partners that understand the importance of explaining the what but not the how. I think government is very good at, like... They they told us, you know, the marine can't fly can't fly the drone or we need to strike a target, you know, far away, x x kilometers far away. Those kinds of, like, high level capabilities are something great... Well described by the government, and then we work on how that's done. Like, we own the implementation, and we work best with customers that understand that really well.