00:23:08 · Soren Monroe-Anderson
[00:23:08] S0: Yeah. Absolutely. And and, you know, the government doesn't need to be our only customer for, forever. It it shouldn't be, actually. But we have to start... If we're trying to fix the drone industrial base, we have to start in defense because right now... Or, you know, in defense is where the regulatory environment and the customer exists that that just totally excludes the Chinese competitors because it's not possible to go head to head with the Chinese competitors in the, you know, consumer enterprise market right now, but that's shifting, and it's shifting in America, especially with the new ruling by the FCC on DJI and just the the direction that we are... The country is pushing in. It's clear that we're gonna have to have a... Or really should have a domestic drone industrial base that supports all of the applications, not just defense. And that's where the, you know, millions per year volume is also just extremely reasonable. You know, if if we're talking about millions per year just for defense, you know, that means we're probably doing some significant stockpiling, we're using a lot in training. I think we should be doing both of those things, but if you look at the number of drones that DJI sells in America every year, you know, millions makes a ton of sense. So we just have to build a, you know, competitor to that, and and the government seems to be pushing in the direction of just not allowing DJI to operate here long term, which is the right decision. So that that creates opportunity for actually fixing an industrial base, not just building sort of a, you know, a one off factory that then just sits unutilized.
00:24:59 · Ty Morse, Soren Monroe-Anderson
[00:24:59] S1: If you had to like look at what the state of the current drone environment is, I think China produces something on the order of, like, 70,000,000 drones a year, whereas The US produces less than, like, a couple 100,000. How do we actually bridge that gap to a point where we're even semi on parity? [00:25:16] S0: I mean, I I think, you know, everything we've been talking about so far is somewhat the answer to that. It's it's, you know, I believe it's a very vertically integrated factory and then many of them. It's basically our roadmap like that that's what that's what the that's what my answer should be because that's what the goal of the company is. So we'll start talking about some of this stuff even more publicly in in the coming months, But I think it's it's... Yeah. The investment into the factory capability and and finding the use cases over time that consume at high volume. [00:25:53] S1: Going through the the first like production ramp in your old factory, what was kind of the biggest moments of production hell? And then, you know, in this new one, what are you kind of predicting the biggest hurdles are gonna be? [00:26:05] S0: The biggest moments of production hell so far have actually been supply chain hell, where you, you know, we we order 98% of the parts you need to build the drone, and then you realize, hey, somehow the $5 part didn't get ordered, and it has a six week lead time, so you're sitting there with, you know, basically the entire bomb cost of the drone for thousands of drones, and you can't build them because you don't have a $5 part.
00:26:05 · Soren Monroe-Anderson, Ty Morse
[00:26:05] S0: The biggest moments of production hell so far have actually been supply chain hell, where you, you know, we we order 98% of the parts you need to build the drone, and then you realize, hey, somehow the $5 part didn't get ordered, and it has a six week lead time, so you're sitting there with, you know, basically the entire bomb cost of the drone for thousands of drones, and you can't build them because you don't have a $5 part. [00:26:33] S1: And you have limited space in your factory, so it's just piling up.
00:26:36 · Soren Monroe-Anderson
[00:26:36] S0: It's piling up, but it's just like you can't operate a factory that's not... Or you you can't sustain a factory that's not producing. You can't... It's just like that's how you that's how you ruin your your ramp. So those have been some of the hardest moments that we dealt with in 2025. We we... That didn't happen to us a lot, but there were certain times where supply chain really limited the amount of drones that could go out the door, and drones that could be built and go out the door. We've tried to spread out sort of the ramp of assembly capacity reasonably, so it's not like these huge jumps. It's like a pretty even build up, and that helps a lot. You know, we can sort of can, like, staff more and more over time. We are consistently driving tact times down across the line, and and having a smooth ramp is just just makes everything so much easier. This is also why we do wanna be sort of ahead in capacity from where we think the contracts are gonna be, because the worst... The the way you really get into trouble is by signing up for a contract that you don't already have the capacity for on a timeline that is too quick. Like impossible to meet. Yeah. And that sounds obvious, but there's a lot of companies that do this. Actually, I'd say the majority of defense companies do this or like new defense startups do this is is like, kind of speak in the manner, like, say you have the capacity, but have not actually proven it, get a contract, have a delivery window, try to go through the production ramp, realize that it's actually really hard, and then fail to deliver on time. That's like the classic story, and I just wish that people would speak a little bit more honestly about the the production capacity they hold today, like what they've actually proven because, you know, the point I was making here is like, yeah, we've got a big empty box that have, you know, in a few years can hopefully produce a million drones per year, but the the, you know, the space isn't everything, the equipment isn't everything, the team isn't everything, it's it's the whole combined thing working together correctly, actually producing the stuff, that's how you measure capacity, and a lot of people don't don't understand that and get themselves into trouble. And then that leaves a bad taste in the mouth of the customer.
00:29:00 · Soren Monroe-Anderson, Ty Morse
So for us, it's figuring out how we can, while still being, you know, financially smart, build capacity ahead of demand, and try to match those two things closely together. [00:29:11] S1: How successful have you been, like, to date on when you say you have a timeline that can work, that it actually does, and then if things do go wrong, how do you kind of rapidly course correct that?
00:29:22 · Soren Monroe-Anderson
[00:29:22] S0: That's a good question, because we've not been perfect. You know, there there have absolutely been failures in in our history of thinking we could do something faster and making a commitment, and then, you know, realizing we can't. I think we've done a very good job of maintaining high communication with the customer, like, you know, balancing... Understanding what is actually mission critical for them versus, you know, what is their sort of desire versus, you you... Like, a lot of it is about the relationship and communication with the customer. I've seen that go really wrong for other companies, just making these commitments burning bridges. We try really hard not to do that. So, like, being... Yeah. Being very honest and and then just getting better, building the muscle of, you know, engineering and production time lining, we started with a team that had, you know, great experience from other verticals and and, you know, have have done parts of this before, but it's clearly a learning process doing it for the first time as as Neros, and so we've we've, I'd say, gotten much better at it. And there there was a time, like, 2025, you know, we're trying to ship our ground station for the first time, ship like production units of it for the first time, and that was really biting us, just getting everything functional and reliable and sort of, you know, working the way we had promised to people, and that was one of the hardest pushes of like, we we just didn't give ourselves enough time to to finish the engineering and then hand it off to production. So, you know, you learn by making mistakes, but I think the severity of those mistakes are seriously defined by, like, how well you communicate externally, and then make it up to people or or, you know, figure out like, what can you do for them, you know, your customer typically, that is solving some of the issue, even if you're not ready to solve all of the issue.