Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: At the start of twenty twenty two, Luba Shapovich was
Speaker 2: a successful Ukrainian American software engineer and entrepreneur living in
Speaker 2: the US. Her it outsourcing business was humming along. She'd
Speaker 2: been in the States since two thousand and eight, but
Speaker 2: when Russia launched its full scale invasion of her home
Speaker 2: country on February twenty fourth, twenty twenty two, she says
Speaker 2: she felt a duty to go back to Ukraine and
Speaker 2: help in any way she could.
Speaker 3: I saw that uncommon for Ukraine. For one month, just
Speaker 3: so established firehouse as Logistics Sharing Ukraine.
Speaker 2: Luba flew to Ukraine and got straight to work. She
Speaker 2: launched a tech nonprofit called Dignitas and started raising money.
Speaker 3: Bought the zen Las sire Eliza hell, let's scare it
Speaker 3: being signs and and just look from all aside constantly
Speaker 3: I'm doing enough.
Speaker 2: Her planned month long stay turned into a longer one,
Speaker 2: and Luba has been based in Ukraine ever since. Through Dignitas,
Speaker 2: she's raised millions of dollars and has been spending it
Speaker 2: on supplies, technology, and training initiatives that could help Ukraine
Speaker 2: weather the war.
Speaker 3: So I met, trained, people helping saw Cingulan smartphone, saw Cilan,
Speaker 3: star luxA, Cielan, Rendios SA and war conditions.
Speaker 2: But one of Dignitas's most important roles is as an intermediary.
Speaker 2: It's helping supply Ukrainian troops with a military technology that's
Speaker 2: become increasingly central to the country's wartime strategy, drones. Luba
Speaker 2: is just one of a growing number of Ukrainian entrepreneurs, engineers,
Speaker 2: and tech workers who have dropped everything to join a
Speaker 2: grassroots war effort to make or deliver thousands of low cost,
Speaker 2: high impact drones for the countries. Military drones that can
Speaker 2: do everything from transporting supplies to dropping bombs across enemy lines.
Speaker 3: They helps, You'll come up with songs on the survive.
Speaker 1: They're just they're so desperate for solutions and anything that
Speaker 1: can help the fight against Russia that they're open to everybody.
Speaker 2: Bloomberg Technology editor Jake Ridnisky travel to Ukraine to meet
Speaker 2: with the people behind the country's evolving defense industry. Drone
Speaker 2: makers in particular are working under unique constraints, and their
Speaker 2: innovation has been fueled by a desire to end the
Speaker 2: war with Russia.
Speaker 1: It's been very transformative and allowed them to create a
Speaker 1: defense industry that, for all intents and purposes, was a
Speaker 1: bit of a dinosaur before.
Speaker 2: Today on the show, how duct tape and toy drones
Speaker 2: are transforming the battlefield in the Russia Ukraine War and
Speaker 2: what the shift to scrappier tactics could mean for conflicts
Speaker 2: around the world. This is the big take from Bloomberg News.
Speaker 2: I'm Sarah Holder.
Speaker 1: What people don't realize about Ukraine is before the war,
Speaker 1: it was one of the biggest military weapons exporters in
Speaker 1: the world.
Speaker 2: Bloomberg Technology editor Jake Runisky started his reporting career in
Speaker 2: Kiev and lived in Moscow for around twenty years. He's
Speaker 2: now based in Berlin.
Speaker 1: A lot of the Soviet unions, weapons factories and arms
Speaker 1: factories were based in the Ukraine, and so the stuff
Speaker 1: that they were exporting was very kind of old school
Speaker 1: bulky stuff, you know, kaloshnikovs, eggs, we call him AK
Speaker 1: forty sevens tanks, stuff that's mass produced, not particularly technologically sophisticated,
Speaker 1: and cheap. Now, since the war started, that model no
Speaker 1: longer works.
Speaker 2: While Ukraine does rely on some older US weapons and munitions,
Speaker 2: its own existing manufacturing infrastructure isn't entirely reliable, in part
Speaker 2: because the factories where those weapons are manufactured in Ukraine
Speaker 2: are too easy to bomb, and because they were designed
Speaker 2: to make equipment to fight a twentieth century war, not
Speaker 2: a twenty first century one.
Speaker 1: The old military industrial complex is no longer functional.
Speaker 2: The US has sent Ukraine tens of billions of dollars
Speaker 2: worth of military support, including tanks, missiles, and artillery shells,
Speaker 2: and just last week, the White House announced a new
Speaker 2: two point three billion dollar defense package for Ukraine that
Speaker 2: comes with more arms and munitions. But Jake says the
Speaker 2: country can't rely on Western weapons alone.
Speaker 1: Although obviously they want them and they need them, but
Speaker 1: it's not enough because there are forces out of their control,
Speaker 1: like a spat in Congress can mean a delay of
Speaker 1: months for American weapons to arrive.
Speaker 2: To fight Russia. The Ukrainian military knew it needed more
Speaker 2: arms fast and for cheap, so Ukrainians have leaned into
Speaker 2: scrappier technology like those cheap drones. Luba Shapovich's company has
Speaker 2: been buying for the military outfitted with cameras, supplies, and bombs.
Speaker 1: This whole volunteer community arose after the initial invasion so
Speaker 1: they would crowdsource the funding for all these new technologies
Speaker 1: that they're producing, and they were producing them in garages
Speaker 1: that amateurs were just kind of trying to figure out
Speaker 1: the best way to create a drone that would be
Speaker 1: able to take out Russians. And so you saw this
Speaker 1: cottage industry, I guess, emerge out of nowhere, and now
Speaker 1: there are over one hundred drone producers in Ukraine.
Speaker 2: Drones have become an increasingly common wartime tool in the
Speaker 2: past decade, but in Ukraine, Jake says, this new wave
Speaker 2: of startups is taking the technology a step further.
Speaker 1: Just last month you had President Zelenski saying that drones
Speaker 1: have become Ukraine's effective artillery during the funding gap when
Speaker 1: American shells were no longer available in mass for the Ukrainians.
Speaker 2: One of Ukraine's top five largest drone producers by volume
Speaker 2: is called viy. Jake visited the company's headquarters, which operates
Speaker 2: from the top three floors of a residential building in Kiev.
Speaker 2: He got a tour from the company's unusual founder, Alexei Bubenko.
Speaker 1: My name is Alexei.
Speaker 3: I will show what we produced already in Ukraine.
Speaker 1: He's twenty five years old, and before the war started,
Speaker 1: he was basically a street performer. He would do these
Speaker 1: fire shows that are kind of like twirling fire and
Speaker 1: he was traveling around Europe on a motorcycle and you know,
Speaker 1: making a decent living for himself, but like not with
Speaker 1: a lot of ambitions. As soon as the war started,
Speaker 1: maybe fittingly, the first thing he did was he made
Speaker 1: a bunch of Molotov cocktails to provide the defense of Kiev.
Speaker 1: But he was a smart guy and he quickly realized
Speaker 1: he had more to contribute than that. I fight for
Speaker 1: Kanchi where I want to leave all my life.
Speaker 2: Like Luba Shapovich, Bibenko told Jake that he wanted to
Speaker 2: do more for the war effort, so he went online
Speaker 2: and ordered a cheap drone from someone he met in
Speaker 2: a chat room. He started tooling around with it.
Speaker 1: It's a really basic drone that you can buy in Walmart.
Speaker 1: It's just one of these squadrocopters that's got four propellers.
Speaker 1: And he started experimenting with duct taped bombs and seeing
Speaker 1: what he could do, and very quickly he was near
Speaker 1: the front trying to bomb Russian positions.
Speaker 2: Bibenko continued to perfect his design and made his exploding
Speaker 2: drones more resilient. From there, he founded very.
Speaker 1: When I visited in March, they were producing six thousand
Speaker 1: drones a month, but now they recently moved into a
Speaker 1: larger facility and they're producing eighteen thousand drones a month.
Speaker 1: They call them FPV drones, which means first person view drones,
Speaker 1: and they're racing drones. They can go up to about
Speaker 1: one hundred mile an hour. They don't carry a.
Speaker 3: Lot, you know.
Speaker 1: They can carry a small explosive, but that's about it.
Speaker 1: And they have a camera. Sometimes they're equipped with night vision.
Speaker 1: Sometimes they're equipped with AI capabilities that allows them to
Speaker 1: kind of do the last, say one hundred yards autonomously.
Speaker 1: But they're very basic stuff and very expensive to assemble,
Speaker 1: and they can make a lot of them, and you
Speaker 1: can literally destroy a Russian tank with two or three
Speaker 1: drones if they hit the right spots.
Speaker 2: Jake says. Part of the reason these drones are so
Speaker 2: useful is because they're cheap enough to be expendable.
Speaker 1: Bubenko can produce a drone for four hundred five hundred dollars,
Speaker 1: and these are used to attack Russian tanks that can
Speaker 1: cost nine million dollars, so you have this huge discrepancy
Speaker 1: between the cost of the weapon the Ukrainians are buying
Speaker 1: and the cost of the equipment that they're taking out.
Speaker 2: Scrappy drones aren't just reached Ukraine's war effort. Russia has
Speaker 2: also taken notice and has been imitating their approach to
Speaker 2: varying degrees of success, and militaries around the world are
Speaker 2: paying attention to We'll get into all of that and
Speaker 2: more after the break. Since the Russia Ukraine War began,
Speaker 2: Ukraine has managed to build a thriving drone startup ecosystem,
Speaker 2: using low cost techniques to make effective weaponry, but Bloomberg
Speaker 2: Technology editor Jake Ridnitsky says Russia has been busy building
Speaker 2: out its own drone capacity.
Speaker 1: In Russia, it's more top down, so I don't think
Speaker 1: you have as many small businesses that have emerged. But
Speaker 1: the Russians have adopted to this new way of warfare
Speaker 1: as well, and they've seen what works, and they've been
Speaker 1: able to look at Ukrainian drones and kind of replicate them.
Speaker 1: And when Russia does something, you know, Russia's much big,
Speaker 1: it's much richer, and it's able to do things at
Speaker 1: a much larger scale than Ukraine. Rather than say, taking
Speaker 1: over three stories of a residential building in Kiev, they
Speaker 1: have set up drone factories in former shopping malls or
Speaker 1: in large spaces. They're producing at a much higher clip now,
Speaker 1: at least according to the Ukrainians I spoke to. The
Speaker 1: Russian drones are not always as well made as Ukrainians
Speaker 1: and are not maybe quite as cutting edge, but they
Speaker 1: make up for it in numbers.
Speaker 2: For Ukraine, drones offer another advantage besides their low cost.
Speaker 2: As the war stretches into its third summer, the Ukrainian
Speaker 2: military is struggling to find enough people to power both
Speaker 2: its defense and its wartime economy. Jake says Ukraine isn't
Speaker 2: yet launching completely autonomous drones, but with drones made by
Speaker 2: a company called Terminal Autonomy, pilots can essentially pre program
Speaker 2: a destination for a target and walk away after launch
Speaker 2: and for the first person view drones like the ones
Speaker 2: VII is making, a capable pilot can launch dozens of
Speaker 2: them a day.
Speaker 1: I met with the head trainer of the Ukrainian Army,
Speaker 1: Andrea Onestrat, and basically Ukraine can't get enough pilots. There's
Speaker 1: a manpower shortage in Ukraine in general, but they just
Speaker 1: never have enough pilots, and he's he said, he'll train
Speaker 1: just about anybody. He finds that younger people who maybe
Speaker 1: have some experience using video games and playing video games
Speaker 1: tend to be a little bit better than older veterans.
Speaker 2: How has the use of these drones changed the situation
Speaker 2: on the ground and the way this war is being conducted.
Speaker 1: They're definitely changing the nature of the battlefield, so they've
Speaker 1: lifted the fog of war. Before you had one side
Speaker 1: was on one side of the trenches, and then there's
Speaker 1: trenches on the other side, and you would kind of
Speaker 1: lob missiles over and try to hit them, and you
Speaker 1: would have kind of an idea of where things were
Speaker 1: shot from. But now you have over the entire length
Speaker 1: of the front, you have drones that can give you
Speaker 1: a pretty granular view of what's happening. And then using
Speaker 1: those surveillance drones, you can either send in FPV drones
Speaker 1: to target or you can pull an artillery, which is
Speaker 1: what the Russians do.
Speaker 2: More are you seeing other countries and other militaries pick
Speaker 2: up on Ukrainian strategy here?
Speaker 1: Absolutely? I think there's a big push among NATO countries,
Speaker 1: for example, to figure out how to produce weapons more cheaply.
Speaker 1: The kind of military procurement process is very bloated and
Speaker 1: very expensive, and it's dominated by very large companies, and
Speaker 1: so I think there's a shift, and there's going to
Speaker 1: be more of a shift that moves away from highly
Speaker 1: specialized and stuff that's manufactured by Pentagon contracts that cost
Speaker 1: millions or billions of dollars into stuff that you can
Speaker 1: really make on the fly. I think drones are here
Speaker 1: to stay, and I think how they're being used in
Speaker 1: this war is something that's being study by militaries all
Speaker 1: around the world, because certainly any future conflicts are going
Speaker 1: to be very drone heavy.
Speaker 2: For the drone makers who have joined the fight in Ukraine,
Speaker 2: there's a sense of urgency as the death toll mounts
Speaker 2: on both sides. Just this week, a Russian missile attack
Speaker 2: struck a children's hospital in Kiev. It was part of
Speaker 2: a barrage of strikes across Ukraine that killed at least
Speaker 2: thirty nine people.
Speaker 1: Everybody who's in the drone industry, or really anybody in
Speaker 1: Ukraine now nobody's untouched by the war. Everybody's working in
Speaker 1: some way, shape or form for the front. These entrepreneurs
Speaker 1: are not thinking about what happens the day after the war,
Speaker 1: how to market these things. They're trying to produce these
Speaker 1: weapons as cheaply as possible, with minimal markups, so that
Speaker 1: they can get to the front faster and hopefully, you know,
Speaker 1: end this war more quickly. These are not people who
Speaker 1: have trained all their life or prepared all their life
Speaker 1: to be involved in a fight. But the fight came
Speaker 1: to them, and they all, in their own ways, rose
Speaker 1: to the occasion and figured out a way to be useful.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: This episode was produced by Jessica Beck and Thomas lou
Speaker 2: It was edited by Aaron Edwards and Mark Million. It
Speaker 2: was mixed by Rishi Bajacole. It was fact checked by
Speaker 2: Arafat Jalasho Perry. Our senior producers are Naomi Shaven and
Speaker 2: Kim Gettelson. Our senior editor is Elizabeth Ponso. Nicole Bumsterbor
Speaker 2: is our executive producer. Sage Bauman is Bloomberg's Head of Podcasts.
Speaker 2: Special Thanks to Tom Gibson and the Bloomberg Originals Team.
Speaker 2: If you liked this episode, make sure to subscribe and
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Speaker 2: We'll be back tomorrow