00:20:09 · Ty Morse
[00:20:09] S0: I haven't heard very many people talk about profitability, and profitability of a specific product, And one of the things that I saw was you guys kind of measuring, you know, here's how long the development process was on a new product, you know, we've had it for like eight months or something at this point, and here's where we are on, I think it was like a couple tens of millions or something in revenue, and like, now we've basically broke even on the development costs plus, you know, the the product costs themselves. So, like, when you think of building a new product, how are you kind of deciding how much are we going to invest, and then what is our payback period on that?
00:20:45 · Adam Bry
[00:20:45] S1: Well, I mean, touched on a lot of pieces of it. I think we're we're getting more and more sophisticated and just kind of measuring what we're doing in a granular way. And again, you don't wanna like... This is kind of a cliche, like Boeing has come under a lot of fire on this, of like the, you know, the accountant started running the company and they stopped caring about making great products. Like everything we do is really oriented towards great... Building great products, but the efficiency with which we can build this stuff matters a huge amount. And again, I think this is not broadly understood, eventually it will be, but we really have, I think, one of the best robotics businesses in the world. We're at hundreds of millions of revenue, we're growing extremely quickly, we have very strong unit economics, and I think we've, I think I know, we've gotten here by being really like, one, having super capable lean team, so with a very small number of people we can do incredible things, and also being very thoughtful about the kind of investments that we're making. And so, you know, in my mind I kind of have a map of, you know, how much are we spending in different areas, what's my kind of expected payback time scale for these things, and sometimes it's short, sometimes it's very long, you know, we'll work on things that we think might be five year plus payback, but it's certainly satisfying to like, to be able to add up, here's all, you know, here's everything we spent developing our 10, here's how many of them we sold so far, and in a pretty short period of time, this is already like a profitable program for us.
00:22:10 · Ty Morse, Adam Bry
[00:22:10] S0: You mentioned that basically building the dock that allows drones to autonomously, you know, fly up, go do a mission, and then come back and like charge was a major unlock. When you were working on that or starting the development of that, how were you thinking about it? [00:22:25] S1: Yeah, it's a great question, and I say this was one of those more, this was just kind of one of those existential gut bets for the company, where there was no, so when we started really investing heavily in docs in like 2021, there was no market for doc products, there were no customers that were saying, you know, like, we want to buy these things at scale, there were no budgets set aside for this, and we were burning a shitload of money to develop it, and it was, you know, we were arguing about it of like, the only thing we're making money on now is selling standalone drones, we're wildly, at the time, wildly unprofitable as a company, you know, sentiment towards drones and the kinds of things we've done has gone up and down, and so at low moments there where you're like burning a ton of money, investors aren't really excited about it. [00:23:16] S0: And there's no customers.
00:23:16 · Ty Morse, Adam Bry
[00:23:16] S0: And there's no customers. [00:23:16] S1: There's no customers, there's no market. It's like, what the fuck are we doing? You know? And that was one where we just had like, we had very deep conviction that like this was the way the market was gonna go. And you know, I could have drawn up a spreadsheet that show, you know, if I had drawn up a spreadsheet in 2022 that is showing what's now happening with the business, I think people just wouldn't have believed it, you know, it'd be like, sure, if that comes true, it's gonna make sense, but like, it won't. There's like no data to suggest that's how the world's gonna work. And look, I think sometimes that's the stuff that like great products and great companies are born out of, is like, making bets like that and being right about them, and then putting yourself in a position to like, really capture a new frontier. [00:23:58] S0: And like government sales, you make the thing, you get the contract, and then like some political change makes it so you literally can't deploy the thing. How do you think about making these contracts when you're in that sort of environment?
00:24:10 · Adam Bry
[00:24:10] S1: We sell to a variety of customers, we have a very big, what we call commercial business, which is selling to private enterprise, so this is selling to energy utilities, construction companies, and so on. We also sell to a lot of government customers, we sell to government customers at the federal level, the military, and then state and local level for public safety, departments of transportation. My overall outlook on this is like, when we are selling to government customers, our products are being bought with taxpayer dollars and it is healthy and right that like we are going to be subject to political processes. You know, these things are messy and noisy and imperfect but over time it's basically like people expressing what they care about, what they value, and electing political leaders that reflect that, and then political leaders making decisions on their behalf, and those things have real consequences for us. You know, we don't necessarily always agree with it, but I think it's like it's healthy and good, and one of the things that I've really come to appreciate with our state and local government business is just the, like, the degree of community engagement and feedback and accountability that comes with it. Like, when we sell to a law enforcement agency, our ultimate customer there is the community that's being served. We're obviously working with the agency and contracting with the agency, but both us and the agency have pretty strong alignment that like, we're only gonna do this if it makes sense for the community, and the vast majority of the time that works out well for us because our products, I think at this point, are pretty well proven to like, in this instance, really improve public safety, like, get fundamentally better outcomes, keep officers safer, keep communities safer, and do so in a way that protects people's privacy and in a very transparent way that the community can understand what's going on. And so, I think overall that's been very good for us. Sometimes elected officials or leaders have less emphasis on public safety or don't like the idea of deploying a particular kind of technology for public safety, and that's fine too. Like, we may not agree with it, but I think it's, it puts the right kind of pressure on us to make sure that we're, we're doing right by the communities that we serve.
00:26:10 · Ty Morse
[00:26:10] S0: I assume that you have thought a lot about the privacy situation, and the way that you guys are operating, you'll have, you know, if there's some incident and a police area, like someone calls 911, and they say, hey, there's a situation, You'll have a drone just take off that was static, fly out to that thing, take a video of it, and then kind of return back. Is there any products that you decided not to make because they were going to be too invasive or not really fit that mission set?