00:03:31 · Soren Monroe-Anderson, Ty Morse
We've been, with our current production, running into limitations on what we can get from suppliers outside of China, and we've sort of known for a long time that to do what we wanna do eventually, it will really involve vertical integration, but with the demand signal we're seeing right now from the US government and from our allied partners, and just the... Honestly, the direction that the the world is going and how important FPV systems are, building massive sovereign capacity is really our number one mandate. So we wanted to find a size facility that could support the long term growth of the company, not be another, you know, two, three year stepping stone, be something that we can actually build into the global headquarters of Neros. You know, it'll be a lot of construction even to just get the, like, office space that we need in here, and then, you know, the the... An empty building doesn't equal a million drones per year. There's huge CapEx investments and and build out and just great, you know, engineering that needs to be done to to actually turn this into a factory. So it's... You know, we we haven't done the thing, but we've we've bought ourself a canvas to do the thing. [00:04:50] S1: You basically have all the the paints and the canvas ready to go, and now you just gotta go paint something.
00:04:50 · Ty Morse, Soren Monroe-Anderson
[00:04:50] S1: You basically have all the the paints and the canvas ready to go, and now you just gotta go paint something. [00:04:55] S0: Yeah. I'd say the the paint is still, you know, the the some of that's still lacking with with talent that we need to hire. You know, we have an amazing team, and we have the right building blocks, but we gotta get a lot more great people in to to be able to do to do this. [00:05:13] S1: Very few people have kind of had a pulse like you have on how the Russia Ukraine conflict has kind of evolved. So do you wanna just talk about what it was like going into early twenty twenty two and what's happened over the past three and a half years?
00:05:26 · Soren Monroe-Anderson
[00:05:26] S0: Yeah. Coming up on, I mean, basically four years now. Yeah. You know, Neros has not been around for for all of that, but I've I've been closely tracking since the full scale invasion started. And when it started, it was a very impactful moment for me. And I've talked about this in the past, so I won't go totally deep into that, but I... It's been very, very interesting to see how it's made the world react to the technology that Neros is building because, you you know, we sort of had our own ideas even before the... We saw the Ukrainians doing it, and before Neros was a company, we had our own ideas of drone racing technology applied to defense applications, and, you know, thought it could be meaningful, but couldn't prove it really. And then the Ukrainians went and proved it. And then in 2023, when we were starting the company, we were just focused on building a better product for the Ukrainians that we were working with. And the the excitement from The US side was really limited. There was like most most people in the Pentagon did not care about small quadcopters, kind of understandably because they had not been a meaningful capability increase for the most part. So it would... From from what they had seen. Focusing on Ukraine for the first, you know, twelve months of the company was, I think, the right decision because we ended up making a much more useful product out of that, and it's still a really big focus of the company. But it's it's been interesting to see that the, you know, the mindset in America has totally flipped one eighty. Small drones are now a top priority from, you know, the senior leaders of of the Pentagon and of the country. So we definitely started at the right time and built up a... Like a competency incredibly fast. Exactly. We built up a competency, and then we were ready to deliver for these initial programs that The US is spinning up. And now we are trying to build capacity ahead of the government actually putting out contracts for, you know, millions of drones per year. There there's been some talk from the Pentagon and from, like, the Army saying that they're they're gonna try to acquire a million drones over the next year or two. Nobody exists to to deliver that right now. And I think, you know, that's not gonna happen on a on a one or two year timeline.
00:07:53 · Soren Monroe-Anderson, Ty Morse
I think two to three years, we're gonna start to be able to deliver that, and the country's gonna start to be able to deliver that, and we're gonna push to go as fast as possible. But it's, you know, the the government is is trying to provide some amount of demand signal, industry is is responding. I would say we are out ahead in terms of FPV drone manufacturers, just in terms of our actual like proven production scale. And now with, you know, with this facility, again, it's just a big empty box right now, but it will be the largest the largest small drone factory in America, and yeah, it's gonna it's gonna allow us to the way we think about it is it's going to allow us to create credible deterrence. I think under sort of under this scale and without having the blueprint for factories like this, America does not have credible deterrence. And so that's what we were trying to build to put it most simply. [00:08:51] S1: If there's not a blueprint that exists on how to spin up some sort of supply chain and factory like you're trying to do here, how are you kind of coming up with that, you know, from first principles?
00:08:51 · Ty Morse, Soren Monroe-Anderson
[00:08:51] S1: If there's not a blueprint that exists on how to spin up some sort of supply chain and factory like you're trying to do here, how are you kind of coming up with that, you know, from first principles? [00:09:02] S0: There are things to look at outside of drones. So I've given this example a few times, but of course the SpaceX Starlink user terminal factory is a really great example. I mean, the best example of modern consumer electronics manufacturing in America. Incredibly high rate, actually a lot of similarities between the products in terms of, you know, the the like core processes that make up the the product and, you know, being a very electronics and RF heavy system, and and then you have sort of this more simple structure that your your main electronics go into, and basically, the, you know, the way you build Starlink user terminals and the way you build drones are not that far away from each other, And SpaceX has been able to do that at the, you know, millions per year, and the full assembled product in that vertically integrated factory is cheaper than what they could do in China, which is unbelievable. And that's that's the bar. So... [00:10:05] S1: And that's like a first for America. Right?
00:10:07 · Soren Monroe-Anderson
[00:10:07] S0: It's a first for America in the last ten years. You know, we used to own a lot more manufacturing like that, and there's still some companies, you know, really big CMs that operate in America, but now they also, you know, they operate in a ton of countries and most of them have pretty strong ties into China now, and it was like America taught China how to do all the stuff that they're doing, then China went and realized the advantage of that and and made a concerted effort to be better at it and to scale it way beyond anybody else. So the the thing, like, the limitations, you know, we run into is is like electronics in America are so expensive, and the lead time is much longer, and the quality is much lower, and and I believe SpaceX is the largest PCB manufacturer in America now. It's not one of the, you know, large board houses because... And there aren't that many. It's it's SpaceX. I'm I'm pretty sure. So that's sort of the blueprint, but a lot of what we need to do is look at China and understand how their drone factories are operating. A lot of stuff is not wildly complex on its own, but building an entire factory that operates efficiently and then produces a high performance system, that's where the that's where the the magic is. It's it's the like tying the, you know, performance of the product and every single little design detail that goes into that back into something that is manufacturable, and then iterating, you know, being able to iterate quickly while producing at high volume. So that's why it is such an advantage to own the factory and own the product. It's like there there's this iteration loop that you do not get without that, and you need to have engineers who are responsible for, you know, their part being both performance and manufacturable, and understanding the impacts to the customer when they change something, but also understanding the impacts to the line when they change something. So this is why at SpaceX, when an engineer is designing a part, they're owning everything through all the way through manufacturing, and that's the same mindset that we take. It's it's, you know, not just like the responsible engineering mindset, but having people who own the entire life cycle of the of the part design.