00:56:56 · Ty Morse, Olaf Hichwa
[00:56:56] S0: Are there any lessons that you can take from a company like BYD in China? Where this is the only... This is the best example that I can think of of an entire city factory. [00:57:06] S1: Yeah. I mean, DJI's done it. [00:57:08] S0: Sky Factory. How big is their factory? [00:57:10] S1: It's it's this massive skyscraper and a bunch of buildings around it. There's an insane tour that I've probably watched 20 times on YouTube of a drone flying through their campus. It is it is mind boggling. But that's what it takes to, you know, build a million units per year. And it it took them over a decade. [00:57:32] S0: When you think of, like, Chinese production lines and factories versus the thing that you you guys have right here and in general, just United States factories, what are the biggest differences? Like, what enables them to be that much more efficient? [00:57:47] S1: So, you know, one one of the first things I did after getting back from Ukraine was going to China. [00:57:53] S0: You went to China? [00:57:54] S1: I went to China. [00:57:55] S0: Was this before getting blacklisted?
00:57:56 · Olaf Hichwa
[00:57:56] S1: This was before getting blacklisted, before getting sanctioned. But, yeah, I mean, I wanted to build drones. I was a professional drone racing pilot before this. And I wanted to see where the the drones were made. I had friends in China, I mean, sponsors that would send me free stuff. That's kind of the extent of the professionalism, but they would send me free parts. And I knew them. And I knew that they got into building drones for war. They didn't know that I was gonna get into this, but but I knew that. And I I DM'd them. And I was like, hey, I'm gonna be in Shenzhen. Do you think I could see your factory? And they were like, sure. They knew, you know, Sorin had a consumer business selling Chinese drone parts. I also sold Chinese drone parts. And they thought I was a customer. So they showed me around in detail. And they told me where every step of the process had quality checks and what the tolerances were. They were so happy to brag about their specific tolerances on their quality checks and the names of the high end machines they use to build these various parts and the different, you know, steps in the process for ensuring the best quality drone. And, you know, they were showing me drones that were destined to Russia. They showed me these production lines making 2,000 Russian kamikaze drones a day. And, honestly, insanely impactful trip. Right? Like like that... That's the end state. Or not the end state, but that's a... That's where we're going. One of the biggest takeaways there was that their manufacturing is pretty simple. It's a lot of people at desks doing pretty simple labor. And I think it's not exactly how we're gonna run our labor. I think we're gonna care a lot more about the workers. Like, you know, I'm sure you've seen the the images of the Foxconn suicide nets and the, like, you know, dorm rooms for only men or only women, seven days a week. Dorm room factory. Dorm room factory. The the production, you know, obviously the number of people and the scale was impressive, But I think we can do much better here. I think we have, you know, much smarter automation. And I'm sure that's changing in China, like it's moving away from manual labor and and towards automation. But I think we we can beat it by far. What I wanna copy from China and what I was most impressed with is actually not the production side.
01:00:30 · Olaf Hichwa, Ty Morse
I I don't think China is that advanced. They're advanced in the design side. You could literally go to this place, Huaqiangbei. It's like a bazaar, like a street market for electronics. And you could buy chips. Like a a dude will sell you a watermelon and a chip and a FEV drone jammer, but we'll we'll set that to the side. And you could prototype with that, and then you could buy a new chip same day. And you can go to a different guy down the street, and he will, in his, like, sketchy, like, you know, thousand square foot building, build you a printed circuit board with that chip. And you can go to another guy that will build you a CNC enclosure same day. And you have this, like, massive ecosystem that's all down the street from itself that allows you to iterate on products. And this is how they come out with an iPhone every year. This is how they kind of make super rapid progress on designs so that they're manufacturable. And I think that's the secret sauce. It it it is this industrial base, this city, this ecosystem that allows engineers to iterate at ridiculous speed. Like, you know, we spend six weeks waiting for boards, generally, for our for our radios. In China, that is one day. You get one day board spends. It is it is wild. And... [01:01:52] S0: How how are they that much faster?
01:01:52 · Ty Morse, Olaf Hichwa
[01:01:52] S0: How how are they that much faster? [01:01:54] S1: Well, it's just volume. Jiali Sheng, JLC, it's a it's a it's a large printed circuit board vendor. They they rib through boards. They they they make so so so many boards, and it's a light out... Lights out... They're they're winning in automation. It's a lights out automated production line. I I tried very hard to go. They would not show me that part. But the engineering infrastructure, being an engineer in China, it must... You know, you have a lot of luxuries. You maybe you have to deal with Big Brother, but you do have a lot of a lot of luxuries in how fast your design works. I think that is what is needed to build the million driven ecosystem. You need this city of industrial services almost, where you can go down the street and get your board made same day, get your camera made same day, get your lens for your camera cut same day, get your injected molded part done. That that ecosystem is so powerful, and I think that's what the kind of million drone company looks like to a certain degree. It's it's an ecosystem. [01:02:59] S0: I don't think it's fair to say that The US has, like, credible deterrence against a war against China trying to take Taiwan right now? And so if you had to fast forward a few years and say we actually are in a state where The US can credibly deter China trying to do that, what does that look like? Like, what does that require? [01:03:19] S1: I really like to think we we do currently, and and here's why. [01:03:27] S0: World
01:03:27 · Olaf Hichwa
[01:03:27] S1: leaders generally are pretty good at, you know, games of chess, so to speak. Right? They don't get to be president or, you know, chair or whatever they wanna call it by not being, you know, sly. When an opportunity opens, world leaders take it, like, 99.9% of the time. If there is a strategic opportunity for a country to win, to get more territory, to get more influence, they're gonna take it. I mean, maybe there are some exceptions of extreme incompetence, but it is very rare. If America loses its credible deterrence, if America cannot defend Taiwan, thirty seconds, China's gonna do it. That intelligence memo hits the desk of Xi Jinping, he's gonna do it. So I I think we still have credible deterrence. It's just the rate at which it is going away is terrifying. And I think she knows that as well. Right? Like, she has spies in Ukraine. They're a lot smarter than me and that go to Ukrainian drone vendors or drone users and hear the same thing. They hear, you know, quotes like, silly Americans. They think we speak English here in Ukraine. We speak Chinese. We like the Chinese drones, not the American drones because they actually work. Like, they hear these same things that I hear, and those quotes are going up to the highest levels, I'm sure. And basically, there's just this like ticking time bomb. So I think at the moment we we we do have critical deterrence. It is just... Or credible deterrence. It is just going away very, very quickly. And I think what reversing course looks like is a return to building. It's a return to, you know, El Segundo being the aerospace capital of the world, not of America. Because right now it is just the aerospace capital of America in my opinion. The the real capital is probably Shenzhen, China, especially for electronics. But it it is a return to being a country of builders, a a country of people that make physical things. And it's also a return of a country of of patriots. It it is so easy to to kind of listen to the group think almost and just ignore weapons. Say, I'm too good to build weapons, you know, it's just not my problem. Someone else can take care of it. I think that that view, like I said, comes from just a a misunderstanding of the world and it's an easy mistake to make.
01:06:03 · Olaf Hichwa
But I think the the return to a time where we, you know, really put a lot of effort into being the world's police and and being the people that maintain the most peaceful era in human history, has been the past hundred years, is is going to look like a return to folks building systems like Archer.