Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: You must get to defense tech startup Anderill being selected
Speaker 2: and having selected Ohio as the location of a new
Speaker 2: manufacturing facility that will produce tens of thousands of autonomous
Speaker 2: systems and weapons annually. All this part of a plan
Speaker 2: to become a key provider of drones and other technology
Speaker 2: for the US military. Let's bringing our own ed Ludlow,
Speaker 2: who's in rather cold Ohio right now, ed.
Speaker 3: Thank you Caroline. At full capacity. Arsenal one will be
Speaker 3: five million square feet, it will create four thousand jobs
Speaker 3: over ten years, and Andreil's putting a billion dollars of
Speaker 3: its own cash into the project. Who better to discuss
Speaker 3: that with than with one of the co founders of Anderil,
Speaker 3: Palmer Lucky, also chief technology officer.
Speaker 1: Thank you so much for having me.
Speaker 3: It's incredibly aggressive. The timeline to manufacture the first phase
Speaker 3: of this site and then start production mid twenty twenty six.
Speaker 3: How big a fact is that timeline in the highest
Speaker 3: selection Partmer.
Speaker 4: It has to be this fast because we don't have
Speaker 4: time for business as usual. The types of threats threats
Speaker 4: of the United States is facing that our allies around
Speaker 4: the world are facing the fact that we are predicted
Speaker 4: to run out of munitions within the first eight days
Speaker 4: of a potential conflict with China mean that we need
Speaker 4: to hyper scale our manufacturing of these.
Speaker 3: So was this the only state that could guarantee that timeline?
Speaker 4: I think that they were the state that gave us
Speaker 4: the best shot of hitting that timeline.
Speaker 1: Look, we've really engaged well with.
Speaker 4: Jobs Ohio with a lot of the politicians here, not
Speaker 4: just at the state level, with the local level. You know,
Speaker 4: like you said, we're hiring four thousand people here in
Speaker 4: direct jobs, a lot more jobs than that in a
Speaker 4: direct or sorry, an indirect capacity. It's the largest single
Speaker 4: job creation event in Ohio history.
Speaker 1: It was a state that told us we have the workforce.
Speaker 4: We have a million people who are capable of working
Speaker 4: in the facility within a forty five minute drive. We're
Speaker 4: willing to work with you on higher education to help train.
Speaker 1: People so that they can come in and they can
Speaker 1: work with you.
Speaker 4: Our customer in the form of the United air The
Speaker 4: United States Air Force obviously is a huge presence here
Speaker 4: in the form of Right Patterson Air Force Base.
Speaker 1: So really all the scars.
Speaker 4: Aligned to make Ohio a great place for us to
Speaker 4: do it and to do it fast, and speaking candidly
Speaker 4: as someone who is from California, there's some states that
Speaker 4: are really good at pushing you out and slowing you down,
Speaker 4: and there's others that are great at pulling you in
Speaker 4: and speeding you up.
Speaker 1: And that's what Ohio was.
Speaker 3: Let's go there was California at any point a likely candidate,
Speaker 3: and if not, why.
Speaker 4: There was a zero percent chance at any point of
Speaker 4: Arsenal one being located in California.
Speaker 1: There's a lot of reasons for that, but I mean,
Speaker 1: you can go through them.
Speaker 4: It's the high cost of living, It's the very high
Speaker 4: energy cost, It's in some cases, the unreliability of the
Speaker 4: energy systems.
Speaker 1: It's the unreliability of the.
Speaker 4: State politics and the worry on the regulatory side, and
Speaker 4: just you know, the reality is California has enough money
Speaker 4: and enough really successful companies that they don't really have
Speaker 4: to worry about a company like Mind, a company like Androl.
Speaker 4: The jobs that we are bringing here to Ohio, they
Speaker 4: are material and they are something that the state really
Speaker 4: really cares about. And it doesn't hurt that one of
Speaker 4: our co founders, Tray Stevens, is Nato Bourne, Ohio, and
Speaker 4: I won't say that's why that we made the final decision,
Speaker 4: but I definitely made sure that Ohio was at the
Speaker 4: top of the list from the beginning.
Speaker 3: What you did say as a company is that it
Speaker 3: had nothing to do with Vice President elect JD Vans. No,
Speaker 3: that was not a fact.
Speaker 4: This decision has been going on a lot longer than that.
Speaker 4: We're finally able to talk about it today. But I mean,
Speaker 4: you saw the renders, you saw the site, the site plans,
Speaker 4: things like that take a long time to put together.
Speaker 4: We raised our one point five billion dollar round of
Speaker 4: financing last year specifically to build this facility.
Speaker 3: One of the questions from our audience on social media
Speaker 3: was about the jobs. Yep, four thousand over ten years.
Speaker 3: There must be a mix of those originating from Ohio,
Speaker 3: but you must also be trying to attract talent out
Speaker 3: of state to move here. And I know you'll be
Speaker 3: spending a lot of time here as well.
Speaker 1: Well. I'm definitely going to be buying the house out here.
Speaker 4: I'm blessed with financial success from my first company, Oculus
Speaker 4: VR that allows me to get a place so I
Speaker 4: don't have to get a hotel room when I'm spending
Speaker 4: time out here. The thing about you, like, Yes, we're
Speaker 4: gonna hire a lot of nato oh islands. I think
Speaker 4: we're also going to have a lot of people who
Speaker 4: are imports, who are coming in and adding to the
Speaker 4: economy here. You look at our headquarters in California, we're
Speaker 4: about eighty percent imports. About eighty percent of our employees
Speaker 4: are coming from outside of the state into California. And
Speaker 4: I think we're gonna do. I think we're gonna we're
Speaker 4: gonna bring a lot of people here as well. Maybe
Speaker 4: not eighty percent, but there's gonna be a lot of
Speaker 4: people who are moving to the area economically building it up.
Speaker 3: The supply chain you hire is actually very interesting. So
Speaker 3: you will have use of two runways where we are
Speaker 3: now Rickonbucket Airport.
Speaker 1: That's right.
Speaker 3: But my understanding is that take, for example, Fury behind us.
Speaker 3: In some cases you'll be able literally to take off
Speaker 3: from the runway which is just a few feet from
Speaker 3: where we're sitting, and deliver that technology direct to customer, explain.
Speaker 1: Direct to customer, or directly to the action.
Speaker 4: I mean, so this is Fury, this is our CCA
Speaker 4: collaborative combat aircraft. It's basically an autonomous loyal wingman fighter
Speaker 4: jet that can fight alongside F thirty and other fighters
Speaker 4: of the United States and.
Speaker 1: Our allies use.
Speaker 4: But you're right, the goal here is that we can
Speaker 4: manufacture these aircraft at scale, thousands of these spider jets here,
Speaker 4: and then we can either fly them directly to the
Speaker 4: customer or in some cases directly to the theater.
Speaker 1: Of course, probably with refueling stops along the way.
Speaker 4: But that's that's what we did during World War Two,
Speaker 4: and that's what we plan on doing it again.
Speaker 3: Ohio is quite busy. Intel has a fab going up
Speaker 3: that's right quite nearby. Do you see that as a
Speaker 3: sort of competition for talent or do you see it
Speaker 3: as value add to being here.
Speaker 1: It's both.
Speaker 4: There's value added, and of course I'm probably going to
Speaker 4: hire some of their people and they're going to hire
Speaker 4: some of our people.
Speaker 1: That's just the way that these things always go.
Speaker 4: What you want to try to do is create make
Speaker 4: the area more attractive in general, right right, Like if
Speaker 4: andro was here and we were the only company that
Speaker 4: was in the area, it'd be harder to get really
Speaker 4: really world class people to want to stay in the
Speaker 4: area or move to the area because we're the only
Speaker 4: game in town. When they know that it's a healthy
Speaker 4: ecosystem of career choices, it's a lot easier to get
Speaker 4: people to come even if you if you do, manage.
Speaker 3: To keep them around Palmer. When I spoke to Ohio
Speaker 3: Governor Mike Dewayan earlier, I asked him what was the
Speaker 3: sort of single biggest factor that gave him conviction about
Speaker 3: you meeting your timelines, not just for manufacturing, but your
Speaker 3: commitments to this state. In my career, with respect, every
Speaker 3: sort of industrial technology company I've covered, no matter how
Speaker 3: many billions of dollars they've raised from private sources, venture
Speaker 3: private growth equity, have never met their manufacturing timelines. There's
Speaker 3: always slippage. Granted the pandemic's been a factory. He said
Speaker 3: that that factor was you and your colleagues. Just from
Speaker 3: meeting you, you are the point of difference. What can
Speaker 3: you tell me about how the team guarantees that twenty
Speaker 3: twenty six timeline.
Speaker 4: I think that, like I said earlier, we don't have
Speaker 4: time for business as usual right now. People are predicting
Speaker 4: that there is going to be a window of opportunity
Speaker 4: for g in China that opens in twenty twenty seven.
Speaker 4: That means that you necessarily need to be ready for
Speaker 4: a potential great power conflict with China in twenty twenty
Speaker 4: seven and for at least a few years after that.
Speaker 4: So we have to write there's there's no other option.
Speaker 4: The whole point here, the reason we raised that one
Speaker 4: point five billion dollars round, the reason that we've been
Speaker 4: accelerating this process, the reason that we're investing in building
Speaker 4: this factory ahead of the customer actually paying us to
Speaker 4: do it, is because we believe in that timeline.
Speaker 1: Because we have to believe in it. It is it
Speaker 1: is critical that we hit it, and I think we will.
Speaker 3: Are you guessing some financial incentives from the States.
Speaker 1: Of the High Absolutely they were.
Speaker 4: They gave us a great incentive package, and that was
Speaker 4: definitely that was definitely.
Speaker 3: Part of our decision was the value and what does
Speaker 3: it look like? What is its composition?
Speaker 4: I am going to let somebody else tackle it, because
Speaker 4: I'm actual, I can tell you it's in the hundreds
Speaker 4: of millions versus the billions that we're going to be putting.
Speaker 3: Out two point one billion.
Speaker 4: Yeah, I think they did a better job negotiating than
Speaker 4: than me. Maybe I don't know, but I'm really glad
Speaker 4: that Intel is here. They're really they're a really great partner. Obviously,
Speaker 4: they're they're they're making they're making a lot of US
Speaker 4: conductors that are competitive with competitive with the things that
Speaker 4: are being done in other countries, and it's critical for
Speaker 4: our products that we have advance and be conductors that
Speaker 4: are made in the United States.
Speaker 1: So I'm really glad that they're down the road from US.
Speaker 3: Palmer, it's important to have some extended time with you
Speaker 3: to talk about Arsenal one. I think one of the
Speaker 3: most common questions I get from the audience, even if
Speaker 3: they're familiar with ANDERIL, is what does ANDERIL actually do.
Speaker 3: They might know you as a weapons manufacturer or if
Speaker 3: they are a bit more research at autonomous defense systems,
Speaker 3: but could we just simply talk about what Arsenal one
Speaker 3: is going to manufacture and where that technology will be
Speaker 3: sold and deployed.
Speaker 4: The way we look at ourselves is as a defense
Speaker 4: product company, not a contractor, but a product company, meaning
Speaker 4: we take a product company approach. We decide what to
Speaker 4: build it, how to build it, when it's done, and
Speaker 4: we invest our own money into making that happen. Then
Speaker 4: we sell products to the customer. Now we work hand
Speaker 4: in hand with customers through that process. It's not like
Speaker 4: I can go off and build a batmobile and try
Speaker 4: to sell it to them because I think it's cool,
Speaker 4: but I think that I'm sorry.
Speaker 1: What was the second part of the question I heard question?
Speaker 3: Is what specifically, what's the similarity buildings?
Speaker 4: So the things that we're building, they're driven by what
Speaker 4: our customers need, but we are adussing a lot of
Speaker 4: our own money in them. So obviously we're building Fury,
Speaker 4: you know, our autonomous spider jets.
Speaker 1: Behind you, you.
Speaker 4: See all three of the different Barracuda cruise missile family,
Speaker 4: so the Varracuda one hundred Baracoud to two fifty Baracoud
Speaker 4: of five hundred autonomous swarming cruise missiles. We're also going
Speaker 4: to be building a lot of our is R drones.
Speaker 4: We're going to be building a lot of our mobile
Speaker 4: command and control systems here, and we're going to be
Speaker 4: building some combat heads up displays here.
Speaker 1: I think you're going to be hearing some news about
Speaker 1: that soon.
Speaker 3: There is a timeline. It doesn't sort of all happen
Speaker 3: at once. So initially, the first phase of the facility
Speaker 3: I think is about five acres, that's right, it goes
Speaker 3: up to five hundred acres. What does that process look like?
Speaker 3: Building out what you call hyper scale defense or weapons manufacturing.
Speaker 4: The process is building this place up in a way
Speaker 4: that only a madman would are Our COO, Matt Grimm,
Speaker 4: has been kind of the hero of the day and
Speaker 4: figuring out how we're going to go from you know,
Speaker 4: a very very minimal footprint today to ninety five a
Speaker 4: ball fields in a very short period of time.
Speaker 1: And it wouldn't be possible if we did never.
Speaker 4: Really close cooperation with the local authorities on the permitting side,
Speaker 4: on the power and utility side, on the one on
Speaker 4: the logistics for example, rail logistics, air logistics, road logistics,
Speaker 4: be able to move things in and out of the
Speaker 4: facility very very quickly. If everybody wasn't on board and
Speaker 4: moving lockstep together, this timeline would be absolutely unreasonable.
Speaker 1: And you keep hitting it.
Speaker 4: But I will note we have competitors who are telling
Speaker 4: us that we are not going to hit these timelines
Speaker 4: and that we are madmen, and so look, you know,
Speaker 4: anyone could be wrong. But I would love to do
Speaker 4: a follow up piece in maybe twenty four months and
Speaker 4: see if we're bad men or not, or if we
Speaker 4: pull those past.
Speaker 3: Four months from now, you and I will sit down again,
Speaker 3: but in an operational facility, is what we were saying.
Speaker 4: We'll sit down an arsenal one and we'll have fighter
Speaker 4: just coming off the line, as my prediction.
Speaker 3: The other big question I get for you direct from
Speaker 3: the audience is how they, as retail investors, can participate
Speaker 3: in this well.
Speaker 4: As you know, the United States government has taken in
Speaker 4: a very un American position in saying that you need
Speaker 4: to be generally an accredited investor to invest in companies
Speaker 4: like ANDREL.
Speaker 1: I think that's totally bogus and it's anti American, especially.
Speaker 4: Because the only thing that being an accredited investor means
Speaker 4: is you have money already.
Speaker 1: I know a lot of people who have money who you.
Speaker 4: Would never say they're accredited to do anything, and vice versa.
Speaker 4: That said, we are on a path to being a
Speaker 4: publicly traded company. I think that's an important thing. I
Speaker 4: want us to be accessible to the American public. I
Speaker 4: think that it's good for people to be able to
Speaker 4: invest in American defense companies, not for them to just
Speaker 4: remain in private forever. I'll take an ideological stand there.
Speaker 4: I think that that is a good thing for the country.
Speaker 4: It's good for us, it's good for our customer. As
Speaker 4: for when that happens, it's hard to say we don't
Speaker 4: need the IPO because we were.
Speaker 1: Doing really well.
Speaker 4: We hate We're winning a lot of contracts, We're making
Speaker 4: quite a bit of money.
Speaker 3: We don't doubled last year to about a billion.
Speaker 1: That's the rumor. That's the rumor.
Speaker 4: Things are doing really, really well, So we don't have
Speaker 4: to IPO to raise money to keep the company going.
Speaker 4: I want to do it at a time when the
Speaker 4: markets are favorable, when people understand what we're doing, and
Speaker 4: I also want to prove out some of these big bets.
Speaker 1: I don't really.
Speaker 4: Want IPO when people are saying that we're mad men
Speaker 4: and trying to do the impossible. I want to do
Speaker 4: the impossible and then say, look, we did it. All
Speaker 4: you have to do is bet we can.
Speaker 1: Do it again.
Speaker 3: You will be doing business with somebody new in the
Speaker 3: Department of Defense. President elect Trump's pick is mister Henk.
Speaker 3: Say that's right, you know he was not one of
Speaker 3: the names that you had in your head when we
Speaker 3: last spoke a few months. That's right.
Speaker 1: You'd asked me about it, and I said that I
Speaker 1: knew the names.
Speaker 4: I heard a lot of the names coming around, and
Speaker 4: I was a big fan of all of them. You're right,
Speaker 4: he wasn't one of the names that I had heard
Speaker 4: rattling around.
Speaker 3: May I just make a point that, you know, look
Speaker 3: at his CV. He doesn't have experience running an organization
Speaker 3: of that size. You want change and improvement in how
Speaker 3: America does business with the private sector in defense. So
Speaker 3: what we were approach with potentially mister HEGSETHB And what
Speaker 3: do you make of him?
Speaker 4: I think that there's a lot of credentialism that is
Speaker 4: being levied against him that is totally unfair, and I
Speaker 4: personally empathize with him a lot.
Speaker 1: I started Oculus.
Speaker 4: VR when I was nineteen years old, living in a
Speaker 4: camper trailer and putting myself through school. And I didn't
Speaker 4: have the experience to be running that company. And I
Speaker 4: grew to thousands of people and the international business shipping
Speaker 4: millions of virtual reality headsets all over the world. And
Speaker 4: I didn't have the experience to be running arol either.
Speaker 4: I'd absolutely no business running this company. People could have
Speaker 4: made the exact same criticism. What ells Palmer know about
Speaker 4: the military? What the hell does he know about national security?
Speaker 1: Yeah, his heart's in the right place, but he's just
Speaker 1: not qualified. The leap from.
Speaker 4: Where the people say his credentials are and what he
Speaker 4: needs to do is a much smaller leap than the
Speaker 4: best leaps that I've seen people make in my career.
Speaker 4: So I'm never going to be the guy to say, oh,
Speaker 4: I don't think he's qualified. No, He's way more qualified
Speaker 4: than I've ever been to do any job that I've
Speaker 4: ever done, and I'm doing a pretty good job of it.
Speaker 4: So I mean, God bless him. I think that he's
Speaker 4: a great pick. I read his book, The War on Warriors,
Speaker 4: so I was familiar with him, though not his name
Speaker 4: being in the arena.
Speaker 3: I think he's going to kick ass Palmer. Let's end
Speaker 3: on President Electrum. But in the context of Arsenal one,
Speaker 3: you still believe change is needed in that military industrial
Speaker 3: complex procurement process. Absolutely, what specifically needs to change under
Speaker 3: the next over the next four years to allow for
Speaker 3: Arsenal to be one to be a success?
Speaker 4: I think that we well, I think Arsenal one is
Speaker 4: going to be a success. The amount of change we've
Speaker 4: already had in the system I think will allow that.
Speaker 4: I don't think that we actually need radical changes in
Speaker 4: the system for Androl to do very well, but for
Speaker 4: our country to do well, for us to build a
Speaker 4: national security apperas we need to move quickly.
Speaker 1: We need to take targeted risks.
Speaker 4: We need to get more companies into defense manufacturing. That
Speaker 4: includes companies that are not currently defense companies, getting big
Speaker 4: tech in, getting little tech in, getting a lot of
Speaker 4: our industrial providers in. That is how we won World
Speaker 4: War two, is leveraging the whole of the nation. I
Speaker 4: think that that's the only way that we are going
Speaker 4: to win in the future as well, and I think
Speaker 4: that people who are being brought in are have exactly
Speaker 4: that mindset. We need to spend less, do more, and
Speaker 4: do it with the right things.
Speaker 3: Palmer Lucky Andrew co founder Always a Pleasure Technology Officer.
Speaker 3: Here Columbus, Ohio area the site the future site of
Speaker 3: Arsenal one