Episode Transcript
Please note that this transcript was auto-generated with AI and is not checked for accuracy or spelling
[00:00:04] Speaker A: Welcome.
[00:00:05] Speaker B: You're listening to the podcast where we interview founders innovating at the Near Frontier, whose companies will give you a glimpse of the future. Near Frontier is brought to you by Cantos, a venture firm that invests in world positive deep tech startups at Pre Seed and Seed. To learn more, visit us at Cantos vc.
Hello, my fellow hard tech nuts. This is Ian Rountree, co founder of Cantos Ventures and host of Near Frontier. Today we have a really special guest. We're talking to Soren Monroe Anderson, co founder and CEO of Neros Technologies, who before we had met him, had won the world championship in drone racing. And at that level, you start to tweak your own drones because there's nothing that's sort of, you know, performant enough and you want to customize it to your own specs. And he had met a fellow racer, Olaf Hichawa, who together they had started getting interested in this conundrum where we're seeing what's happening in Ukraine and also noticing that the best commercially available drones by a mile are Chinese. And that's potentially a bit of a problem as these are going to play a big role in warfare going forward. And so they set out to solve this themselves. We led their pre seed round about 18 months ago.
Shaun Maguire at Sequoia led their seed round a few months later. And they just announced this week that VY Capital has led a Series A to take their drones that they'd begun fielding shockingly quickly after we invested to mass production. They are making on the order of thousands already and they're going to ramp that up and it's incredible to see what they've done in 18 months. So let's go talk to Soren here about his journey, the problems they're solving, and maybe take away some lessons for the other founders out there or investors and people who generally think that building in the real world is the coolest thing you can do nowadays. Let's do it. Hey, Soren.
[00:02:03] Speaker A: Hello. Hello.
[00:02:05] Speaker B: How's it going?
[00:02:06] Speaker A: I'm doing great. How are you guys?
[00:02:08] Speaker B: I basically just hit record because, you know, with the founders that are closer to my age, they need like a little introduction. I feel like you zennials are just like, nah, Boomer, I got this hit record. Well, first of all, I know that you guys have had those crazy fires down there and there's been some folks who've like, slept on the workshop floor to get away from the smoke. How's everybody on the team holding up?
[00:02:28] Speaker A: Yeah, we're in a good spot in El Segundo, we've had some people who evacuated from Santa Monica or other areas and did come crash the factory for a little bit. But everyone on the team's doing well, so very thankful for that.
[00:02:41] Speaker B: Good, I'm glad to hear it. Do you think there's, you know, as this was happening, of course, tech Twitter's first reaction is here's all the ways we can solve this. But I feel like maybe drones could have a role to play. I mean, is that something you think maybe not near us, but like, could we have fleets of drones that are fighting fires one day?
[00:03:03] Speaker A: Yeah, I think that's definitely reasonable. I think it's in the same vein as drones as first responders getting to the site much quicker and, and we know about getting drones somewhere quickly and to a precise location. And that same thing could be applied for firefighting. I think you could have a payload that is some type of fire suppressant. Now you wouldn't be dropping massive amounts of water trying to fight the fires like they are with the actual larger aircraft. But I think as the kind of initial response, it makes a lot of sense.
[00:03:35] Speaker B: Tell us what Neros is doing today and what's your end game?
[00:03:40] Speaker A: Yeah, well, so right now Neros is defense first. You know, we're very focused on making the best systems for our warfighters, for allied warfighters.
And the way we, we kind of got to where we are now was from my background and my co founder Olaf's background in drone racing, knowing the FPV first person view technology very, very well. And also kind of seeing it start at the beginning when more of it was owned in America and in Europe and then saw all of it really go over to China and then saw the rise of, you know, dominant Chinese drone companies, mainly dji and how they've really, I mean they, they own by far the most advanced technology stack and manufacturing. And so we kind of realized this core problem is you, you can't go and manufacture low cost drones at large scale in America right now. The component ecosystem does not exist. And there's sort of a formula in the more like traditional sphere, there's sort of a formula for building a pretty expensive defense, quote, defense grade drone. But those components have limitations on their own and they, they especially have manufacturing limitations. And so our, our like core thesis is that we need to rebuild the entire component stack starting with FPV drones because we know them very well. We think this is a place where we can be the best in the world. But it's also, it's a great way of kind of kicking off this component ecosystem that will eventually be applicable to many different types of unmanned systems and really focusing on defense, at least for now, in the foreseeable future so that we can optimize around one thing and do it super, super well.
[00:05:23] Speaker B: Yeah, I mean in the defense tech community you sometimes get this debate around like pure defense versus dual use and it sounds like you're probably on one side there. Would you put yourself in one camp or the other?
[00:05:39] Speaker A: I would say we're defense first. I'm not opposed to dual use and I think there are a lot of applications of our drones and our components outside of the direct defense use case. I'm just a big proponent of extreme focus. And so for us right now in the stage we're at, it wouldn't make sense to be really considering the input from multiple different types of customers or you know, going and supporting, selling all of our components. Those things would just take away from the focus of making the best thing right now. And I think that's a good like my advice to defense founders would be to not actually get sucked into the, you know the saying that you need to be dual use because there's almost certainly going to be dual use applications for your technology that you can then leverage later on. But I think delivering something that Neuros has done very well is just deliver value to the end user really quickly and optimize around actual like real world impact versus you know, cool technology demos or whatever it is.
[00:06:42] Speaker B: Yeah, it's funny, sometimes we get into this like it's an oversimplification of course, but in the like, in the deep tech world you have like the engineering minded founder and the science minded founder and I find that sometimes that maps to like a scientist who's like commercializing their PhD research probably is very solution focused and might be searching for a problem to match their doctorate or postdoc work. Whereas the engineer sort of looks at a problem, they're obsessed with the problem and could care less how it's solved. And you want to be problem obsessed and solution agnostic and I find put you guys much more in that engineer archetype. Right? You are clearly obsessed with a problem. How, how did you, how did you come to be obsessed with this problem? And you, you laid out kind of the landscape more, more personally. Like when did you know that you needed to start Neuros? Is it before or after you won the world championships at Multi gp?
[00:07:43] Speaker A: Yeah, it was so I, I've always had a deep interest in defense And I grew up in Anchorage, Alaska and was like, there's big Air force base there and there's just a lot of like boats and planes. And I loved all of that stuff. I loved designing things, I love building things. But I thought the really most interesting technology was happening in defense. When I was about eight years old, I don't actually know the exact age, but I was about eight years old, I wrote a letter to the President with like sketches of weapons that I had, I had designed. And I did get a letter back saying, you know, thank you for your interest in national security. And then kind of got more sucked into the drone racing world and did that through high school, but always had an interest in it and thought it was really important. And then when I was getting out of racing, I was spending more time looking at startups and what existed right now. And I thought that the most interesting ones, but also where I saw a place where I could have an impact was defense. And then I remember like the night when the full scale invasion of Ukraine started and just the like feeling that I had, it was like, wow, it's, it's really insane that this could happen now because through my childhood I was told, you know, the world is a safer place and we don't have land wars. And it sort of just went against the like narrative that was pushed for quite some time. And then I guess really before seeing the videos of Ukrainians using FPV drones, I really, I was thinking about like, oh, you could, you know, you could really utilize this technology. But I wasn't the one who could go and prove it. And then the Ukrainians absolutely proved it. And I think we were, you know, we weren't super early in that we started in mid 2023 when the Ukrainians were already doing this at pretty large scale. But before officially starting the company, I think I had the realization that this is going to be something really big and this is going to significantly shift how wars are fought. And that I think is kind of undebatably true now. And the scale that it's gotten to in Ukraine is pretty ridiculous. And I think it just goes to show that if we can't support that in the US then we're in a disadvantaged spot with our arsenal.
[00:09:59] Speaker B: You mentioned when you started Nero's, you know, you guys weren't necessarily super early to it. There were other companies out there. People were certainly talking about this in defense circles. You know, you had very well funded drone centric startups like your Shields and Andurils and Skydio is Getting more into the defense side of things. What, what made you say there needs to be another one, I need to start Neros. And then, and I love you can all you can overlay. You know, we talk about competition a lot in, in the business context but like anyone who competed in a sport at the level you did is really freaking competitive to have won a world championship. There's like another type of competition like overlay, like your sort of your racing competitive mindset with your like company competitive mindset. And are there any lessons from that?
[00:10:54] Speaker A: Yeah, I think it was.
There was enough good stuff going on that I was getting excited about it and you know, spending more time looking at defense companies and you know, there was a lot of inspiration there, but there was also a lot of frustration in the fact that I just didn't think anyone was taking the right approach and I didn't think anyone was actually solving mass manufacturing. Like the numbers of, the numbers of drones produced by US drone companies are abysmal. It's, it's just so, so crazy when you compare, you know, any, any Ukrainian FPV manufacturer or to DJI or really like any Chinese drone company, what they're doing per month versus you know, maybe a few hundred low thousands maybe from kind of the biggest US drone companies and then also looking at what they cost. And I've no, nothing against, you know, having the best and sometimes most expensive systems when that means you really get incredible capability. But seeing that, seeing what you could do with an FPV drone and how inexpensive that can be, but then like looking what the DoD pays for that capability right now, just completely unacceptable in my, in my eyes. And so I didn't before really figuring out what Neuros would be, I kind of thought my, like I knew I was going to do a startup I think, but I didn't know. I didn't really think it would be in drones actually. I was sort of like felt like I had done what I wanted to do in drone racing and was, was actually kind of disappointed by the US drone industry and wasn't really thinking that would be the, the path. Like I thought I would do a startup, but it wouldn't be related to, to, to FPV drone racing, drones in general until kind of having this realization and seeing how useful the technology stack is and also what's wrong with it currently. And that just became the problem that I got obsessed with. It's like if, if US companies aren't measuring their success by their actual impact in the war that's going on Right now, but they're measuring it by their fundraising rounds. I mean, DOD contracts are awesome. We all want them, we're all going trying to get them. But I think people need to be more, much more aggressive about what are my products actually doing?
How is my company changing the landscape of the battlefield and not just thinking about the theoretical wars of tomorrow, but because I think it's not a good excuse to say we're building a more advanced capability that'll be relevant in the future, but we don't have anything deployed in Ukraine. To me, that just means you're not a useful company. Yeah.
[00:13:33] Speaker B: It's funny, my wife is a very competitive distance runner and I see some similarities in the way you think about Neros competing and how people who race think there's something to it. Where I think in business, there's this temptation to kind of intellectualize it and study your competitive advantages versus the competition. And yeah, at a certain scale, that matters. But people who race, they usually are just thinking about their race and they're not thinking that much about the competition. They're like, how can I get faster? And they're just focused on themselves and their body and they're not constantly looking over their shoulder at who's may or may not be right next to them or behind them. And I think there's something to that. In startups, you kind of have to just go do things and solve the problem, and then, I don't know, you get to a certain scale and you're having to report publicly, then sure, drive some competitive advantage such the margins don't erode. But like, that's kind of putting the cart before the horse when you're just starting something.
[00:14:53] Speaker A: Yeah, I think that's right. And when you were talking about that, I kind of thought of an analogy to drone racing, and maybe it does kind of carry over from the way I approach that to the way I approach Neros, which is in drone racing, there's a lot of people kind of the thing you do is you post your. Your practice videos and you try and make the fastest looking edit. And my specialty as a pilot was never being the absolute fastest when it comes to just speed. I thrived on having really, really good gear and showing up to the race super prepared and having this performing very well under pressure. And so it's called dvr. My DVR wasn't the fastest. There's a lot of people who compare, like, oh, well, this guy looks so much faster in practice. And that would kind of get the attention at first.
And that was really never what I was good at, but I did just have a very consistent set of results over many years of podiums and wins.
And I think it just comes from. It comes from being good at distilling the thing that actually matters or the core of the problem and then focusing on that. And I definitely see this in startups as well, where a superpower is just like getting rid of all the noise and focusing on the thing that actually really matters. Just optimize on that, learn how to say no to the other stuff. And that is something that I think is really important for founders to be good at.
[00:16:22] Speaker B: Yeah, there's a theme that's similar with sort of like high performing engineering culture that your head of hardware, Sean knows very well, having come from SpaceX. And I remember asking one of his former colleagues, why are you guys launching Kuiper? This is a direct competitor to Starlink, who you are enabling. And their attitude was basically, bring it on, we're better.
Like there wasn't some fancy answer that like, you know, investor would love to underwrite. It was just like sheer competitive mindset.
[00:17:07] Speaker A: Yeah. Yeah, that's interesting. I mean, I. You sort of have to have just this inherent belief that you are better than your competition, which, like, even if you feel like, you know, that helps if you're in a spot where you feel like you're behind from all these kind of objective measures, you just can still have that mindset and see what happens.
[00:17:29] Speaker B: Well, you to me are like the canonical meme of you can just go do things and I don't know, how did you. Once you decided that Neros needed to exist, what were the first steps you took?
How do you turn an idea into a functioning business and a product?
[00:17:50] Speaker A: Yeah, I like that. I do really live by the. You can just do things. The process was.
So I sort of started having my ideas around the product of like, what could be built, what could be built that would be better, higher performing. But then I started talking to like actually talking to Ukrainians and other people in the space and realized my original idea was, hold on, how do you just.
[00:18:15] Speaker B: You like just phone a Ukrainian Is there 1 800? How do you do that?
[00:18:20] Speaker A: I found people on Twitter and you know, somehow got like signal contacts of relatively important people and started like, I cold reached out to people on signal and then I was lucky enough that someone actually read that and responded and was, you know, in a position to connect me to a bunch of end users. And so that was really what kicked it off, was just like them and my message was basically like, hey, this is who I am. I have a lot of experience in fpv. I want to help. I want to help build something better. Can you please just give me people to talk to you so I can learn more about this? And then, yeah, in summer of 2023, I was just getting on zoom calls and in signal chats with, with people in Ukraine and hearing about, like, the issues with their current FPV drones and, you know, coming with, with my own ideas. And that's also when I was like, pulling off into the fray, trying to get him on board. And I just felt this. There was like such a strong obsession that this is all I want to do all day. It was such a driving force, even when there was not really anything to show for it yet. Like, we had no funding, no product, nothing. But I just, like, this is all I could do all day. And I wouldn't be happy if I wasn't doing anything. Like, if I was doing anything else, I wouldn't be happy. And so that pretty quickly turned into having an idea for the first product, getting a prototype together, and then setting the goal that we're going to go, we're going to build 30 drones and we're going to bring them to Ukraine and we're going to start actually getting feedback on them. And this is kind of around the time period that we met, which was like, we actually know what we want to do now. We need some funding for this. I. I met at. In New York when it was like, you know, the ideas were kind of all over the place, but he saw the vision, which I'm very grateful for. And then, you know, very shortly after you guys did the pre seed, me and Olaf were over in Ukraine.
[00:20:19] Speaker B: Yeah, I remember we, like, you know, we wired.
I think maybe do we even have to, like, wait for you guys to incorporate or maybe you were.
[00:20:27] Speaker A: I'd incorporated at that point. Yeah, we were incorporated, but I think we were getting like. Because that was also when Olaf decided to come on board. So we were like, getting Olaf's, you know, legal stuff figured out at that point.
[00:20:38] Speaker B: Yeah, that's what it was. I remember there was. We had to like, wait for something. And then so, you know, we. We invested in August 2023, and then like that week we got that video of the prototype, like, you know, pulling six seven GS, whatever, and like your. Your parents backyard or wherever that was. And. And then like a few days later, you were like, yeah, we're going to Ukraine. And I was like, wait, wait, what so, like, how did. Yeah, tell us, like, you know, what are the craziest stories that you can share from. From Eastern Europe.
[00:21:19] Speaker A: Yeah, and that wasn't the original plan. We just ended up realizing that the, the. If we want to be serious about this, we need to go talk to the people in person. And I'm really glad we made that decision. And now it's turned into, like, a very, very strong relationship. That kind of all kicked off from that first trip. I've, you know, gotten to see some really, really cool things. I've gotten to go to test ranges and, like, seen, you know, I won't be too specific, but seen things that kind of. In testing that then you. You see about in the news, like, a few months later, gotten to do, you know, really rigorous electronic warfare testing with our product. We've gotten to meet a lot of the units directly face to face who are using the systems. And I think for me, it's just like, it adds a really. It adds a layer of reality. Like, a lot of people in defense in the US Are just building things in isolation, and they're not.
There's a, like, yeah, this is important, right? Like, we need to build. Build weapon systems. But when, you know, the people who are actually using your product really adds a layer of. Of seriousness. And just going, you know, going to Kyiv, going to other parts of Ukraine, and like, seeing all the efforts, people that are working so hard to build up their own defense industrial base and come up with new ideas. There's so many new ideas being tried there, and we get to see that, which is, I think, a really special opportunity. And I do think there's very, very impressive technology being developed in Ukraine, although a lot of the time in a super scrappy way. And so we've actually also seen times when people are really excited about their idea and we talk to them about it, and they don't necessarily have the resources to fully execute on it. And they're really excited to collaborate with us and share what they've learned. And we share with them, they share with us. And just trying to have that collaboration going so that everyone ends up and, you know, at the end of the day, the war fighter ends up with a better product that lets them do their job.
[00:23:24] Speaker B: What is. Do you think there are.
Gosh, this is tricky because, of course we, you know, we wish the war in Ukraine had never happened. But, like, are there advantages to being able to test in, in, you know, that theater versus, like, having to go directly to DOD and like, you know, maybe go the like old school route.
[00:23:56] Speaker A: The advantages are massive. They can't be underestimated. I mean, I say that the only reason we have a useful product now is because of all the feedback from Ukraine and all the product, like all the iterations that we've done and the learnings from that theater. So I think it's the most important place when it comes to developing defense products now. I do think there's a thing that you have to be very careful of is if your product isn't mature and you're giving it to someone, they need to obviously know that and be on board with testing something new. But they generally are, as long as you find the right people. But I think it's so critical that we actually take the learnings from Ukraine and apply it to our own arsenal, to our own companies, and to what a future conflict will look like. Because it still feels like, to me, it still feels like there's a lot of lessons being ignored. And it's great to see now that the DoD is really excited about FPV drones and DoD is our primary customer. But the, one of the biggest things that I think isn't being taken seriously is just the quantity and the mass manufacturing aspect. You've had people for four years kind of giving the rhetoric of affordable mass, but where is it? Like, I don't see it in America, and I don't think we're taking that problem seriously enough, which is obviously a lot of what NEAREST tries to work on. But yeah, I think to answer your question, it's so, so critical that we learn from Ukraine. And I think any company that's not there is missing out on a tremendous amount of information.
[00:25:41] Speaker B: What's helpful, what's different when you go from Ukrainian Ministry of defense to the U.S. dOD, there's a lot that's helpful you just told us about, but what do you have to tweak? Change?
[00:25:55] Speaker A: Yeah, I mean, we don't really contract with Ukraine, but we give a lot of things to end users to test. And so that's a very different process than going after a DoD contract. And it works very differently to actually give someone a drone and then they can go use it on the front line versus a DoD end user. There's restrictions around just giving them gear. There's restrictions around where they're able to fly it. They're probably not actually deployed.
And if they are, then there's hurdles to getting your system used in a, you know, when someone is deployed. So there's just so many hurdles that you kind of get past by Working with the end users like Ukrainians, where they don't tend to have those restrictions. But you know, a really critical part of our business is also knowing how to work with the dod and we've gotten a lot of good feedback from them as well. And there are people really pushing the FPV effort forward and that's awesome to see. And so, and it seems like it tends to start with, with hobbyists or just like younger lower ranked guys who are really excited about what they're seeing in Ukraine and thinking about how it could be useful for them and then going in and starting to learn how to fly and asking for equipment and trying to push this up from the bottom. And now, now there's top level support coming down as well. And so connecting those two things together is important to be successful long term with the dod. But it's just such a, such a different process than how we've really tested things quickly in Ukraine.
[00:27:37] Speaker B: I think there's a lot of cynicism in the defense tech community about, you know, like the DoD doesn't buy the best products, it buys the things that you've like lobbied to convince them they, they need. And you know, I think there's probably some truth to that. A lot of that is probably coming from people who are just hurt that they weren't selected for some contract. But you know, to what extent have you experienced that sort of thing or to what extent do you think it's true or not?
[00:28:08] Speaker A: Yeah, I mean that definitely happens and that'll probably happen to Neuros and I'll be upset about it. But I also like to me that kind of also feels like one of the things, it's like a term I really like is skill issue, which is very Gen Z. But what I mean by that is if you are a company building great technology, you know your technology is great, why are you not also going out and lobbying for it? Why are you not understanding how the DoD procurement process works? Why are you not going and hiring good BD people like you can go and learn how to do those things and execute on them. And if, if you're a smart group of people, it doesn't matter if you're engineers or whatever, if you're a smart group of people, then you should be able to go do those things as well, not just build a great product. And we're still getting like, to be clear, we're not the best in the world at this. We're still getting up to speed, we're still learning, we're still like Figuring this stuff out, but everyone has to play the same game. And so I don't think it's a good productive mindset to just be like, oh, we built the best product, but the DoD bought this one. Why did they buy that one? And then go, go do that yourself. Because it is going to take that, you know, it's going to take that level of excellence across the entire business, not just the engineering, to be able to win against the incumbents.
[00:29:24] Speaker B: Yeah, you just gotta get good, bro.
[00:29:28] Speaker A: Precisely.
[00:29:29] Speaker B: Do you expect you will interface with the Primes or do you see them as like sheer competition?
[00:29:36] Speaker A: Well, they don't tend to.
They're not really competing directly in our space, at least not yet. But I have not seen an area where they would add a lot of value to us. I think the way we operate is just so different that it doesn't make sense right now. And I'm not writing it off. And there are actually a lot of great capabilities built by Primes. But the way they've operated historically and kind of what they're known for now in the defense tech ecosystem of being really slow and being really expensive, I think those are generally true. And so it hasn't been something where we've felt like, oh, we need to go partner with Raytheon or Lockheed or whoever it is to be successful because they just operate so, so differently than we do.
[00:30:25] Speaker B: I get this criticism sometimes or you know, people, people know we're investors in Neros and they're like, well, is this just a short term business case? Or like Ukraine needs a lot of drones right now. Like, are you, are your incentives for there to be conflict in the world? Because the more war there is, the more drones will be needed.
Which I think is, you know, the premise of the question is wrong. But how would you answer it?
[00:30:57] Speaker A: Yeah, the US needs the most advanced arsenal for the world to be a safe place. I think the world is historically safer when the US is the most powerful military and we need deterrence to be able to do that. And the place where we are most behind our number one adversary is unmanned systems and mass manufacturable, low cost systems. Now that also applies to, you know, our shipbuilding capacity compared to China and many other things, which is pretty terrifying. But by far in my opinion, the biggest chasm is the drone space. Right. Like there is no American dji, there's no company close to dji, and there's no companies building these things at scale. And so it's like as I said before, both the technology and manufacturing problem, but the approach of Neros is like, go get things into Ukraine and other places very quickly so that we know that they're useful and so that we can kickstart the manufacturing. But our primary goal is building this capability for America and building it for the long term. And it's going to take a long time to solve all the manufacturing issues and do this. So yeah, I agree it's, you know, the premise of the question is wrong. But just look at, just look at our gaps compared to China and then it's pretty clear that for effective deterrence we actually need this type of system.
[00:32:25] Speaker B: There was a time where in your motivation to learn quickly and acknowledge that DJI is leaps and bounds ahead of everyone else in FPV drones.
A couple members of the team wanted to go visit and see the factory in Shenzhen.
[00:32:42] Speaker A: China has spent the past 40 years basically copying everything that America does and then just doing it in a more cost effective manner. And now with a company like dji, that's where they're out way ahead in technology. And they're not even the DJI doesn't even make the kind of simplistic racing style FPV drone. But I think it's because they're so far out ahead of everyone that they're building, you know, by far the best digital video links. And you know, when you go and use a Mavic that is a consumer grade product, it is a better surveillance drone than anything that the US government can buy right now. And so I think that, I think that the US kind of needs to swallow our pride a little bit and realize there are areas where they are actually just better than us in technology and we should learn from that, right? The game is the way they've played it is copy and then improve. I think when you're talking about something as important as the global order, the world order, that's fair game, right? I think we should be copying them. If they know how to do something better, we should know it. So that was kind of the thesis there, I guess, or just the thinking. And it is astounding what Chinese drone factories, and not just dji, Chinese drone factories in general are capable of. And I think if more people had insight into that, then there would be a bigger wave of support for trying to catch up. But for us, we just like, we spend so much of our time trying to build better capabilities that can be built in America for, you know, for a reasonable cost. And it's an uphill battle a lot of the time because, for example, getting electronics made here is so, so, so much more expensive than in China. And the process is worse. So it's not just that like, well, you can go and pay for an advanced PCB here, and it just is tremendously expensive, which it is, but it's also, you probably won't get the same quality you would get out of China. And so that stuff is terrifying to me where it's not just, it's not just China's cheaper, it's that they're better.
[00:34:54] Speaker B: Yeah, this is one thing that keeps me up at night. I think we've been pretty good at finding extraordinarily capable people and backing them, but it's pretty much always the things that are outside of their control that get you and, and going in early. Like, neither we nor, nor even you knew what the maze was going to look like. And I know there have been times where there's like a realization that's like, oh man, yeah, the PCB isn't as good here. Or like, you know, we don't even make this component, whether, I don't know, it's a motor or camera that's small enough or whatever. What do you do when you hit like a dead end in the supply chain?
[00:35:37] Speaker A: So, yeah, for multiple reasons. The core thing for near us is building all the components ourselves, owning that entire stack from sensors to radios to flight compute to powertrain, doing all of it in a manner where we control the design. We can make it better than the one that exists right now.
But something that's been kind of immediate value add to our US customers is being the first to build it in the US or just out of China. So one example of this is like an analog video transmitter. I don't think you can go. I think Neros is, so far as I've seen, the only company that has an analog video transmitter that's built in America for fpv. And so, but you need that, right? Like the DOD needs that. And it's like we run into those things pretty consistently, but it doesn't stop us because the goal is to own it anyway. So we would rather not be using any off the shelf parts. I think where it gets scarier is when you think about like raw materials and get down to that level. It's like, oh, okay, who owns majority of copper supply? Who owns majority of lithium supply? Who owns the majority of neodymium supply? And then you realize a lot of those answers point back to China and like, in a very big way. And we're not the ones to be solving that yet. But I do Think that some of those things are getting attention now, which is great, and there's some big investments going into it, but over time, those are the things that'll matter more. And we spend a lot of effort knowing where every single microchip in our drone comes from. Does it ever touch China in any way? Because you can check a data sheet and it'll say country of origin, Taiwan. But if you dig deeper, it was actually packaged in China, the wafer was made in Taiwan and that was packaged in China. And that's just part of the supply chain. So you have to dig very deep. And we do that on everything. So it does take a significant amount more effort to do it properly. But I think it's obviously critical to actually be prepared.
[00:37:50] Speaker B: Would you sell those components for which you are the only American manufacturer of quality to, say, another military drone startup?
[00:38:04] Speaker A: It's not out of the realm of possibility.
I would say, again, in terms of focus, like right now we're trying to make the absolute best version of the system, the full capability. And going and supporting other types of customers would be a distraction. And building a component so that it works for many different systems is pretty different than building it so that it works in ours. There's a lot of documentation. All these things are reasons to not do it at the moment. But my goal with Neros is to fix the American drone industrial base. And so over time, things like selling components are definitely not crazy ideas.
[00:38:44] Speaker B: Do you think that let's hope that the war in Ukraine is resolved and do you think that that capacity they've built up could result in Ukraine being a net exporter of drones?
[00:38:58] Speaker A: Yeah, absolutely. There's.
We, we try and stay very close to the Ukrainian ecosystem and, you know, know a lot of people there. And there are some companies doing really incredible things. There's currently some, some pretty, pretty harsh export restrictions for Ukrainian companies. And I think that would, like, the regulatory side would need to shift for them to become a global defense supplier. But I do actually see that as a very real possibility because they are much better at building a lot of these, these systems now than really anyone else. So I think it's very possible and I think that we're like, there's also going to be the opportunity or is very possible that a lot of that gets wasted if the regulatory situation doesn't improve. Or again, there's just not enough emphasis on, like, there's so many lessons in Ukraine. We need to make sure they don't get lost even after the war ends. Right. And that, that would Be a really terrible scenario where Ukraine has learned all of these super important things and then war is over, people stop caring and then they're not carried over into, you know, more Western militaries and they're not. And Ukrainian companies aren't exporting the things they've developed. That would be kind of worst case scenario post war.
[00:40:20] Speaker B: On the business side, like, how do you go. When we first met, I think you were still 19.
How do you like learn to be a manager or a CEO? Like where does, where do you go to learn about management, finance, recruiting?
[00:40:39] Speaker A: Slowly and painfully. I mean, it is just a process of doing it, getting a lot of feedback, getting better at it. And these are always things I've been interested in. And so I don't feel like I'm going into it completely blind, but I'm also just learning so much so quickly. And I think one of the things that determines success for a startup is not how much experience do you go into it with, but how quickly can you learn. And I think nearest does a pretty good job of learning quickly. And I try and do try. I, you know, I try my best to learn very quickly, especially on, on these types of things. But it's, it's an evolving process. I would say that having like really great people around me is very, very useful. You know, having a co founder who's also young, but very observant, very quick to give great feedback. Like when we kind of in the earlier stages of near us, it was like every day we go outside and be like, hey, I think you did this thing really bad. But it's not like in a personal way. It's like we just all want to improve. Right. And now it's less frequent that we have to do that, but we still give each other very candid feedback and that's huge. And I also think that's why having a co founder is really important. And then just having good mentors around me, whether it's investors that I really respect and get good information from or if it's other founders who have been at it longer. I think there's a really good community here in El Segundo of people to learn from. And so all of those things have contributed.
[00:42:13] Speaker B: Yeah, tell us about the, you know, what's this Gundo thing all about? It seems like there's like an electric energy there that echoes when I moved to San Francisco in 2012. And then we sort of, you know, tech got so big that it was lost that, that energy and the closeness. And so that's why I love coming down your way and we work with a lot of your neighbors, of course. Yeah, tell us about it.
[00:42:41] Speaker A: Yeah, it's an incredible place to be when you're building something hard because there's many other people trying to do the exact same thing. And so startups are very lonely. I think that's pretty well known. But when you can kind of zoom out and say, oh, there's actually 20 other companies that are trying to do really hard things and they're all going through, going through similar stuff, I think that helps put things in perspective. But it also, you know, now it's, it's becoming a, it's becoming an attraction for talent. They're hearing about El Segundo, they want to go work at El Segundo companies. And there's obviously like some pretty, there's some pretty loud people here, like online posting, maybe. Whether they're reasonable or ridiculous, you know, I won't be the one to say. But there are also, there's just people building like really hard things and are really focused. And that part I think gets overlooked. Right. Because you, you. It's not necessarily the same when you see all the like loud things about El Segundo. It's not necessarily about the companies or the people who are the most heads down, most focused, but there are a lot of those people here and it's a, you know, the, the city is so start like pro, pro startup. So willing to be helpful and I think that's the community aspect and just being a great place for talent, great place to set up a headquarters. That's why people are here. So I think it's a very special one. I think it's going to go down in history as kind of where the hard tech revolution was centered, which is really cool. I think it's kind of like Silicon Valley 2.0 in some ways.
[00:44:17] Speaker B: Yeah.
Going in, what did you think was like, what's been easier than you thought? What's been harder than you thought it would be?
[00:44:28] Speaker A: Trying to think if anything has been easier than I thought it would be.
I'm not sure that's the case. I will say that I think we've been very quick to get our product to a pretty mature state to find end users and acquisitions people who, you know, we've been very quick to find real traction and I think that is, that wasn't a given when we started. And so I, it feels like there's kind of external forces that are pulling near us forward and pulling us quicker. So the tail, the tailwind is There. And maybe I didn't necessarily know that would be the case when starting the company. I think I, I very well, you know, could have said like, we'll be a pre seed company for two years and a seed company for three years. You know, that, that, that could all just take longer to develop. And I think maybe, maybe it's not easier, but it is, it is faster than I would have expected. Many, many things are harder, for sure. And again, a lot of learning, a lot of failures, A lot of like learning how to, you know, how good, good engineering works. Like that was. I spent a lot of my life building things individually, but I had never really worked in an engineering organization. And luckily Olaf knows a lot more about that than I do and he leads the engineering team. But I've personally learned a ton and I think we've both gotten much better at leading a company that relies on building good technology.
[00:46:02] Speaker B: Last question before I let you go.
In your mind's eye, what do you see neros being in 20 years? What are your hopes and dreams for this company?
[00:46:15] Speaker A: Zooming out to the 20 year lens or the 20 year lens is where I do see Neros doing things besides defense. Doing things besides just selling, just selling the systems.
My underlying goal is to build this really great technology, build real manufacturing capacity behind it in America, help revitalize our industrial base and make manufacturing cool again.
Let people work on really hard, important problems.
And so if in 20 years we're building really great, really important weapon systems, that's awesome. I want to do that. But at the same time, if we're building, you know, the best consumer drone and it's actually competitive with the Chinese version without needing to, you know, rely on restrictions or bans or tariffs. Like, if we can just actually be competitive with China in drones, then I will feel like Nero's has, has kind of done its job and that would be incredibly satisfying. So it's not necessarily about the kind of specific thing that we'll build, but, but more on a, on a, on a deeper level that I just kind of touched on.
[00:47:34] Speaker B: Well, it's been an absolute pleasure working with you guys. Thanks for letting us be your, you know, first venture investor. And I, I just, you know, I learned so much from you and Olaf. It's really incredible. You're an inspiration. Grant on our team likes to say your bar for excellence is the best you've ever seen. And you and Olaf and a handful of other folks who had the pleasure of backing just continue to increase that bar for us.
[00:48:01] Speaker A: I appreciate that it's been absolute pleasure working with you guys. I think we're so lucky that you and your team saw the vision really, really early on. I think we could have been in the kind of like pre funding stage for much longer and getting to work with you guys from the get go I think set us up in a really great position. So yeah, it's been an absolute pleasure being on this journey so far and there's a lot more, a lot more interesting things to come for sure.
[00:48:29] Speaker B: Well I'll see you when I'm down there in a couple weeks. Appreciate you hopping on the podcast. I'll let you go. I know you have much more important stuff to do. Tell the guys hey for me.
[00:48:37] Speaker A: Absolutely, see you soon.
[00:48:39] Speaker B: We hope you enjoyed this episode of Near Frontier. Links to external content mentioned are available in the show notes and at nearfrontier.com where you can also find other episodes of the show to leave feedback or suggest future guests. You can find us on Twitter at @Cantos.
