Speaker 1: Since founding Archer Aviation in twenty eighteen, Adam Goldstein has
Speaker 1: been constructing a very real business based on a very
Speaker 1: vivid vision.
Speaker 2: Imagine you have a flight to thirty minutes and you're
Speaker 2: just leaving your house. You can now pop into a
Speaker 2: vehicle that can fly you to the airport in five minutes.
Speaker 2: We're building the future of aerospace, the future of aerial
Speaker 2: ride sharing. That's what electric vertical takeoff and landing aircraft
Speaker 2: can do.
Speaker 1: Electric vertical takeoff and landing EVY tolls for short vis
Speaker 1: are aircraft designed to carry passengers short distances at high speeds,
Speaker 1: running on batteries the recharge within minutes. It sounds like
Speaker 1: science fiction. We're talking about an air taxi or a
Speaker 1: flying taxi or aerial ride sharing, which is hard to
Speaker 1: fathom for a lot of people anywhere in the world.
Speaker 2: Electric air taxis were really introduced to the world by
Speaker 2: being called flying cars, very similar to cars, like a
Speaker 2: car with a wing. But the concept of calling these
Speaker 2: products flying cars really creates this sense that these products
Speaker 2: are many many years off, when the reality is the
Speaker 2: products are very close to coming to market.
Speaker 1: How close you will.
Speaker 2: See these products come to market by the year twenty
Speaker 2: twenty five.
Speaker 1: Twenty twenty five is when the Federal Aviation Administration is
Speaker 1: laid out a plan for ev tolls to begin limited
Speaker 1: commercial operations. Getting to market will take vision, technical acumen,
Speaker 1: not least shrewd allocation of resources. For this. Gold Steam
Speaker 1: relies on CFO Mark Mesler.
Speaker 3: Our timeline to complete the twenty twenty four annual operating plan.
Speaker 3: We compliment each other. I'm used to supporting like the visionary,
Speaker 3: passionate founder who's out there selling the dream.
Speaker 1: And that's a classic Citlicon Valley story.
Speaker 3: That's right, that's right, And I'm a rational, left brain
Speaker 3: CFO who I can tell the story, but I have
Speaker 3: to tell it in a way that investors will understand,
Speaker 3: and it's very pragmatic and it's very databased.
Speaker 2: I would say Mark has been really phenomenal in helping
Speaker 2: us manage our process and really manage it with speed.
Speaker 3: George just turning.
Speaker 2: Mark and I partner really to try to keep the
Speaker 2: company moving on this path, to really make sure we
Speaker 2: hit our timelines, stay on budget, and ultimately have enough
Speaker 2: capital to get to the finish line.
Speaker 1: The launch of ev Toolls in twenty twenty five would
Speaker 1: also be the starting line for an urban and ability
Speaker 1: industry that many believe has the potential to be transformative.
Speaker 4: The opportunity here is to really take the pain points
Speaker 4: and hassle out of travel. These excitement cautious optimism. Let's
Speaker 4: say it is excitement that you're going to create some
Speaker 4: new forms of travel that should enhance you overall travel landscape.
Speaker 4: And we're closer to this being realized than we've ever been.
Speaker 5: Some of the early cities like Los Angeles really and
Speaker 5: New York and others started paying attention about I would
Speaker 5: say twenty eight team really saw interest in the industry
Speaker 5: then of what might happen with this technology coming As
Speaker 5: the industry has advanced, there's more viable entrance to the market.
Speaker 5: Now we're seeing other cities really try and figure out
Speaker 5: where this technology fits in their urban landscapes.
Speaker 1: Adam Goldstein, Mark Messler and the team at Archer are
Speaker 1: on a path that's never been trodden. They believe it's
Speaker 1: a path to success.
Speaker 2: The product that Archer's building has the potential to change
Speaker 2: the world, and I feel incredibly lucky for the opportunity
Speaker 2: to build that we're building.
Speaker 3: So we view finance and I view finance as a
Speaker 3: key business partner to all the operating functions within the company.
Speaker 3: We want to be a part of the decision support
Speaker 3: mechanisms that help them make decisions daily. We also want
Speaker 3: to be able to put process in place to facilitate
Speaker 3: those decisions, such as it's non random outcomes. I'm a
Speaker 3: big proponent of process. I'm a big proponent of creating
Speaker 3: predictability in the business. There's things you can control and
Speaker 3: there's things you can't control. And it's I can control
Speaker 3: my R and D spend. I can control the processes
Speaker 3: through which we're putting up our manufacturing plant. There's other
Speaker 3: things I can control. So I have to be thinking
Speaker 3: about what's around the corner. What is that potential bump
Speaker 3: in the road that I'm gonna have to deal with.
Speaker 1: In October twenty twenty three, Archer's Midnight aircraft made its
Speaker 1: first flight at the company's testing facility in California, one
Speaker 1: more milestone on the journey to FAA certification. Archer is
Speaker 1: one of several eve Told companies aiming to come to
Speaker 1: market in twenty twenty five. It's chosen a very particular
Speaker 1: route to get that.
Speaker 2: We are not trying to build the highest flying, farthest flying,
Speaker 2: fastest flying vehicle. We will build the internal powertrain, which
Speaker 2: for electric aviation hasn't existed before on certified products. But
Speaker 2: Archer picked a specific business model and then picked an
Speaker 2: approach that could be the fastest, most efficient path to market. So,
Speaker 2: for example, we'll work with a company like Honeywell or
Speaker 2: Saffron or Garment that have parts that are already certified
Speaker 2: on planes today going through a certification process with a regulator.
Speaker 2: When you start with parts or similar parts that are
Speaker 2: used on existing planes, all of a sudden, there's a
Speaker 2: lot of built in knowledge and trust with those parts.
Speaker 2: So Mark and I will work together to take the
Speaker 2: supply base, combine that together with some of the internal
Speaker 2: core IP that we build to make sure we can
Speaker 2: build this product.
Speaker 1: Partnerships are foundational to Archer's commercialization strategy.
Speaker 2: On the operating side, we partner with the United Airlines.
Speaker 2: United has helped us not only in just design of
Speaker 2: the aircraft, but also ways to really set up the
Speaker 2: operations of the aircraft.
Speaker 1: Archer and United planned to launch the company's first commercial
Speaker 1: air taxi route between New accare Port and Lower Manhattan.
Speaker 3: United is an investor but they're a very good operating partner.
Speaker 3: They're also a customer. They gave us a an up
Speaker 3: to a billion dollar contract for two hundred aircraft with
Speaker 3: an option for another one hundred.
Speaker 2: On the OEM side, we partnered with Stallantis, one of
Speaker 2: the world's best and largest auto manufacturers.
Speaker 3: Stillanti is also very strong investor, and we think about
Speaker 3: unlocking scale in this business. Stallantis is helping us think
Speaker 3: about that as well.
Speaker 1: For ARJA, the twenty twenty four will be about scaling
Speaker 1: up and accelerating execution in every area.
Speaker 3: We're going through the certification process, we're building out our factory,
Speaker 3: the manufacturing vector, we're working on commercial opportunities, and we're
Speaker 3: also continuing to advance the text. Really a lot manufacturing
Speaker 3: is where a lot of our capital is going as well.
Speaker 2: In Covington, Georgia, we are building one of the largest
Speaker 2: aerospace manufacturing facilities really in the world. The first phase
Speaker 2: of this project can build up the six hundred and
Speaker 2: fifty planes per year and within the second phase around
Speaker 2: two thousand planes per year. We need an area that's
Speaker 2: very favorable towards new technologies, and Georgia really put together
Speaker 2: a very compelling pitch to entice Archer to come.
Speaker 3: It's in a great location outside of Atlantis. We have
Speaker 3: access to a really good labor pool there, we have
Speaker 3: access to universities there.
Speaker 2: The goals to get the Georgia factory online by middle
Speaker 2: of next year.
Speaker 1: Increased production capacity will help Archer develop its relationship with
Speaker 1: another customer slash partner, the US Air Force.
Speaker 2: The military has taken a really unique approach to electric
Speaker 2: air taxis. So the way that the Department Offense has
Speaker 2: really partnered with the industry has been defined what they
Speaker 2: call non kinetic solutions to use these vehicles for good.
Speaker 2: So you can think about things like rescue vehicles, and
Speaker 2: so we start to find different use cases like that
Speaker 2: in the military that can help us generate revenue and
Speaker 2: really help the industry get going.
Speaker 3: It's a channel for us to develop the tech. It's
Speaker 3: a channel for us to get InCor funding for those programs.
Speaker 3: And I think it's a it's a call option in
Speaker 3: that if you get to the end of the program
Speaker 3: and that becomes a generational type program for the DoD.
Speaker 3: It's a call option a lot on a large potential
Speaker 3: order and program for the company.
Speaker 1: If it comes on offer, you take it.
Speaker 4: Yep.
Speaker 1: Archers laid plenty of groundwork for future revenue, but for now,
Speaker 1: Mark Messler's most pressing challenge as CFO is conserving capital.
Speaker 3: You have to have the short term discipline to sort
Speaker 3: of circle the wagons around cash. I mean, cash is oxygen.
Speaker 3: I know where every ounce of cash is going. But
Speaker 3: we also have to be nimble around that as well,
Speaker 3: because things change by the day.
Speaker 1: Archer went public in twenty twenty one in a reverse
Speaker 1: merger with a spac Ken Moelis's at Las Crest Investments.
Speaker 1: Through August twenty twenty three, the company raised over a
Speaker 1: billion dollars from investors including Stillantis, Boeing, United Airlines, and
Speaker 1: Caffee Woods Are Investment Management. Does that ARC investment open
Speaker 1: doors for you to bring in different kinds of institutional
Speaker 1: money going forward?
Speaker 4: It does.
Speaker 3: I mean, I think there's a lot of credibility that
Speaker 3: comes in with an investor like ARC. As I think
Speaker 3: about my top targeted list of investors over the next
Speaker 3: two to three years, an investment like that gives us
Speaker 3: some credibility and gives us a little bit of a
Speaker 3: little bit of staying powers. I go in and talk
Speaker 3: to other investors.
Speaker 1: With the spac pipe now closed, Archers facing a new
Speaker 1: phase of raising capital.
Speaker 3: I know the folks who aren't willing to invest right
Speaker 3: now may have large pockets of investment in the future.
Speaker 3: So I want to be in front of them. I
Speaker 3: wanting to show them progress. I want to create credibility
Speaker 3: with them that we are marching towards our goals of commercialization.
Speaker 3: They may not be a buyer at this point, but
Speaker 3: I do want to spend a lot of time in
Speaker 3: front of that other set that is a buyer at
Speaker 3: this point. They're interested. They want to be an early
Speaker 3: adopter of the stock. They're interested in the story.
Speaker 1: Archers stock performance this year suggests there's strong interest in
Speaker 1: the story, especially if it plays out as planned with
Speaker 1: FAA certification and commercialization by twenty twenty five. What happens
Speaker 1: if the FAA delays and you are not certified in
Speaker 1: twenty twenty five, So.
Speaker 3: I would start thinking about cash cash preservation at that point.
Speaker 3: We've got the capital to weather a delay, but it
Speaker 3: just depends on how long that delay is.
Speaker 2: Of course, there's always a potential for it to take
Speaker 2: longer than expected. But the good news is there are
Speaker 2: other applications like the military that can provide diverse revenue streams.
Speaker 2: I'm confident that the FAA will move along spidious process
Speaker 2: with Archer and with the industry to allow us to
Speaker 2: get to market on timeframe that makes sense.
Speaker 1: Mark Mesler joined Archer Aviation as CFO in early twenty
Speaker 1: twenty two, bringing more than twenty five years of experience
Speaker 1: in the hardware, sustainability and aerospace sectors that included more
Speaker 1: than a decade at Silicon Valley technology company Bloom Energy.
Speaker 3: I started a Bloom. It was a pre revenue company.
Speaker 3: We scale them to an IPO in July of twenty eighteen,
Speaker 3: and operately when I left it was a probably billion
Speaker 3: dollar runnery company. A lot of the engineering milestones and
Speaker 3: that introduction of a hardware product we went through at Bloom,
Speaker 3: A lot of the financing mechanisms that we use to
Speaker 3: deploy our energy servers of Bloom I think have a
Speaker 3: real application here in the aviation space as well in
Speaker 3: the wing.
Speaker 1: I visited Archer's flight testing facility in Salinas, California with
Speaker 1: Mesler and Chief Commercial Officer Nikhil Goyle. Goyle co founded
Speaker 1: Elevate Uber's air taxi division and co offered the twenty
Speaker 1: sixteen white paper that laid out the vision for a
Speaker 1: commercial air taxi industry. He explained how advances in technology
Speaker 1: that brought that vision to the brink of reality.
Speaker 6: Instead of using fuel and one large rotor like a helicopter,
Speaker 6: you can use batteries to power a dozen rotors. So
Speaker 6: on the Archer Night aircraft you see twelve rotors, six
Speaker 6: in the back, six in the front. All twelve of
Speaker 6: those let you take off vertically, just like a helicopter.
Speaker 6: But then these six on the front here, they tilt forward.
Speaker 6: And what that does is it lets you power forward
Speaker 6: flight like an airplane in tandem with the wing that's
Speaker 6: on our Archer aircraft.
Speaker 3: We made the decision early on that we were only
Speaker 3: going to invest internally on key differentiating technologies, and clearly
Speaker 3: the powertrain is the key differentiating technology Yousour investment is
Speaker 3: a recurring investment with respect to the powertrain team, the
Speaker 3: battery team which is part of it, the engine team,
Speaker 3: electric engine team which is part of it. And we
Speaker 3: also have a lot of non recurring costs with the
Speaker 3: other with the other components because we're not developing those internally,
Speaker 3: we're using the existing aerospace defense supplier base for most
Speaker 3: of the other components.
Speaker 1: The Midnight testing aircraft was built at Archers manufacturing facility
Speaker 1: in San Jose, around the corner from its corporate headquarters.
Speaker 3: We bifurcated the production system such as San Jose is
Speaker 3: really a test lab in a low rate introductory production plant,
Speaker 3: so we'll build our first minimum six aircraft out of there.
Speaker 3: We're currently building Covington, Georgia all the way up to
Speaker 3: Phase two. We'll get us to twenty three hundred aircraft
Speaker 3: per year as well.
Speaker 1: Why spend the money on both? Why bifer kate as
Speaker 1: you put it.
Speaker 3: Well, it's optionality for us because we're going to see
Speaker 3: what the market bears out. Nikhil and his team will
Speaker 3: be out developing the market, so I have a call
Speaker 3: option on that Phase two Phase one I can ramp
Speaker 3: up to as the market supports.
Speaker 1: At the core of Midnight's commercial appeal is the passenger experience.
Speaker 1: Is designed to seat a pilot and four travelers plus luggage.
Speaker 1: The test aircraft isn't fully fitted out for passengers, but
Speaker 1: it's easy to imagine what the ride would feel like.
Speaker 1: All right, this is it, This is inside Midnight Welcome.
Speaker 1: The design is four passenger seats front row, back row,
Speaker 1: and one pilot. How after all this time did you
Speaker 1: arrive at that configuration four passengers, one pilot.
Speaker 6: Our goal is to be the Uber of the air.
Speaker 6: When I was at Uber, we took all the data
Speaker 6: of Uber trips going back and forth all over the world,
Speaker 6: and what we figured out was that four passengers was
Speaker 6: the optimal configuration to do one thing, which is lower
Speaker 6: the cost per passenger for these trips. So four passengers,
Speaker 6: just like a sedan, you can split that cost amongst
Speaker 6: four passengers and make that equivalent to what you might
Speaker 6: spend on an Uber or attack.
Speaker 4: Right.
Speaker 3: And there's a lot more to it from a financial
Speaker 3: standpoint than just the passengers. That's one fact. We also
Speaker 3: look at capacity on the route, so we understand what
Speaker 3: the cost of the aircraft is. We understand what the
Speaker 3: cost of the pilot is. We understand what the cost
Speaker 3: of the repair and maintenance of this is, we understand
Speaker 3: battery cost. All of that feeds into our unit level
Speaker 3: economic model, and it does show that pricing at ride
Speaker 3: sharing prices allows us to make an economic profit on the.
Speaker 1: Back At Archer headquarters, I actually got to fly midnight, Okay,
Speaker 1: not for real virtually in the company's E simulator. Training
Speaker 1: pilots is another hurdle. The EVE tool industry will have
Speaker 1: to clear how much burden are you going to take
Speaker 1: in the training process? You know, why does that fall
Speaker 1: to Archer? And if it does, what does it look
Speaker 1: like for you guys?
Speaker 3: I think initially we are going to be training our
Speaker 3: own pilots. This is our own technology. I think eventually,
Speaker 3: as we look to scale, and we're always talking about
Speaker 3: unlocking scale, we could look to partners to help us
Speaker 3: do some of the training. Early on, pilot training will
Speaker 3: be a critical part of our of our own operations.
Speaker 2: The simulators really help you get a sense for how
Speaker 2: easy the vehicles are to fly. In fact, what we
Speaker 2: found is people with less flying experience are actually better
Speaker 2: at flying these planes because you don't have to unlearn
Speaker 2: as much.
Speaker 1: Does that include me?
Speaker 6: That includes you?
Speaker 2: So within five minutes you were able to take off,
Speaker 2: fly around the island of Manhattan and land successfully. And
Speaker 2: that's your first time you've ever been in a simulator,
Speaker 2: and that's pretty incredible.
Speaker 1: The Eve toll industry is poised for takeoff in twenty
Speaker 1: twenty five. That's when the FAA has said it plans
Speaker 1: to authorize limited operation of electric air taxis utilizing existing
Speaker 1: routes and infrastructure, while Archer Aviation puts is midnight aircraft
Speaker 1: through testing for certification. It's also mapping out the launch
Speaker 1: of its commercial business.
Speaker 2: Twenty twenty five is going to start with a few
Speaker 2: aircraft and a few cities. So the first places that
Speaker 2: we're looking to fly are what we call our trunk routes,
Speaker 2: which are city centers to airports. There's already existing operators
Speaker 2: that fly those routes. So there's an existing heliport on
Speaker 2: the Manhattan side, and there's an existing heliport on the
Speaker 2: airport side, So imagine then all you have to do
Speaker 2: is swap the equipment and add charging.
Speaker 1: And if all goes according to plan, twenty twenty eight
Speaker 1: will be the year the industry scales up.
Speaker 2: Billy Norman, the former administrator, put out what he called
Speaker 2: Innovate twenty twenty eight, which was the use of mass
Speaker 2: amounts of air taxis at the LA Olympics in twenty
Speaker 2: twenty eight. We're not talking ten planes, We're talking potentially
Speaker 2: hundreds of planes. So the whole industry is getting ready.
Speaker 1: Billy Nolan, who spearheaded the FAA report is now helping
Speaker 1: guide Archer's progress to market. Is the company's chief safety officer.
Speaker 7: We will be you know, entry into service in twenty
Speaker 7: twenty five, and then you start to think about some
Speaker 7: sort of scale by the time you get to twenty
Speaker 7: twenty eight. We use an LA Olympics as a forcing function.
Speaker 7: You start to move into a mature industry as you
Speaker 7: get to twenty thirty and you've got like full maturation
Speaker 7: by the time you're in twenty thirty three to twenty
Speaker 7: thirty five, and then this will only continue to grow.
Speaker 3: We've got a contract with United that is more of
Speaker 3: like an OEM type relationship. We also are going to
Speaker 3: be building our network to operate these as well, because
Speaker 3: we think the long term value is that customer experience
Speaker 3: and that Archer brand, and we want people to Archer everywhere.
Speaker 3: That is how we're going to market and that's how
Speaker 3: we generate revenue.
Speaker 6: We're thinking about things like what cities are going to
Speaker 6: deploy in, how do we work with the municipal authorities
Speaker 6: to get permission and sort of support to go deploy
Speaker 6: in those cities. How do we think about things like
Speaker 6: infrastructure and creating a really magical consumer experience.
Speaker 7: This is not about empty promises. It's about delivering on
Speaker 7: a vision, and it's about executing into that vision and
Speaker 7: then bringing something to market that is truly transformational, and
Speaker 7: we will get there.
Speaker 1: Archer's vision for its business is global. In October twenty
Speaker 1: twenty three, the company signed a memorandum of understanding with
Speaker 1: the Abu Dhabi Investment Office to launch air taxi service
Speaker 1: in the UAE as early as twenty twenty six.
Speaker 2: The UAE has been one of the leading countries to
Speaker 2: say we want to bring air taxis to market. The
Speaker 2: country wants new mobility solutions, new technology solutions.
Speaker 6: It's one of the fastest growing regions in the world,
Speaker 6: and you've got millions of people moving to city and
Speaker 6: a lot of congestion that we can help solve. You
Speaker 6: We've gotten top level support from the SHAKE, We've gotten
Speaker 6: top level support from the GCA, which is the regulatory body,
Speaker 6: as well as the government of Bobbi Dabby.
Speaker 5: I think we may very well see some of those
Speaker 5: global deployments first before we see really large scale deployments
Speaker 5: in the United States.
Speaker 4: I do think you're going to see a very global
Speaker 4: footprint and it also will be partly driven by how
Speaker 4: quickly the regulatory agencies move. There's a lot of different
Speaker 4: areas that need to kind of come together to make
Speaker 4: this work. And in some jurisdictions, for various reasons, it
Speaker 4: might be easier to launch operations than in others. So
Speaker 4: I think this is going to be a very global approach.
Speaker 2: I feel very confident that the industry will bring aircraft
Speaker 2: to market in a very reasonable timeframe, and by the
Speaker 2: twenty thirties, you will see these aircraft widely used around
Speaker 2: the world and people start to understand the real potential
Speaker 2: what the industry can be.
Speaker 1: CFO mart Mesla will play a central when helping Archer
Speaker 1: fulfill its potential and deliver on its promise. I asked
Speaker 1: him what he sees when he looks ahead. The year
Speaker 1: is twenty twenty eight, you are still Archer, CFO. What
Speaker 1: does your job look like then different to today.
Speaker 3: Well, at that point, I'll be running a multi billion
Speaker 3: dollar organization. I've created, along with the executive team at Archer,
Speaker 3: a once in a generation type company that is moving people,
Speaker 3: you know, throughout the world in urban environments, and we're
Speaker 3: still looking to grow and build outside of the geographies
Speaker 3: that we're there. I mean, that's really the goal for
Speaker 3: twenty twenty eight.
Speaker 1: What's the one challenge that you're you're worried about most
Speaker 1: that you think you're going to have to confront.
Speaker 3: It's probably not one thing. It's the unknown. I can
Speaker 3: control everything in our budget, I can control our business model.
Speaker 3: There's always something that is around the corner, so we
Speaker 3: have to have our radar on and I have to
Speaker 3: have the right processes in place to deal with that unknown.
Speaker 3: For me in the past, that's the one thing that
Speaker 3: we can't control, and that's the one thing that worries
Speaker 3: me because I just don't know what it is yet.
Speaker 1: The world of the CFO is changing. The days of
Speaker 1: spreadsheets and accounting only is no more. How are the
Speaker 1: skill sets of the CFO going to change? To your
Speaker 1: mind in the next five or even ten years.
Speaker 3: I think the cfo's role is one that is a
Speaker 3: portfolio of skill sets, because you have to be able
Speaker 3: to talk to investors, you have to understand hardcore gap accounting,
Speaker 3: you have to be able to create predictability in the
Speaker 3: business model, and honestly, I think probably one of the
Speaker 3: primary roles of the CFO is to drive that business
Speaker 3: model and create accountability across the executive team to achieve
Speaker 3: those outcomes. You can't just sit behind a green eye
Speaker 3: shade and roll up numbers, and you can't just be
Speaker 3: out talking to investors. You have to be an operator.
Speaker 3: And I think, especially when you're pairing with sort of
Speaker 3: a visionary founder who maybe hasn't done this before, you're
Speaker 3: the person who's going to be driving that operational accountability
Speaker 3: in the delivery of the business model.
Speaker 1: If one of your best friends phones you and says, Mark,
Speaker 1: I just took a job as a CFO, what's the
Speaker 1: advice that you would give them.
Speaker 3: I would say, beef up and become very good at planning,
Speaker 3: because planning is going to get you the output you want.
Speaker 3: Planning is going to help you know where your cash
Speaker 3: is going to go, and it's also going to involve
Speaker 3: other members of the executive team, and the inputs from
Speaker 3: them will create some accountability around what they're delivering as well.
Speaker 3: So it's not your financial plan, it's the company's financial plan.
Speaker 1: I met Ludlow, this is Bloomberg