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- [00:03]
A
Bloomberg Audio Studios, podcasts, radio news.
- [00:08]
B
Well, CBS Day 2 is well underway. And with that in mind, let's go to Bloomberg Tech co hosts Caroline Hyde and Ed Ludlow, who are on the ground in Las Vegas with Paul Lucky. He is the founder of Duril. Over to you guys.
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A
Thank you, Katie. Thank you very much indeed. And we are on the floor of cs. But there's some serious conversations to have, not just about retro technology that has been brought back by Palmer Lackey in one of his startups, but we also want to talk about Andrew because very much defense tech is in the eye of the storm right now. We have two truth social posts coming out from the President talking about the publicly traded defense companies shouldn't be doing stock buybacks, shouldn't be paying dividends, and need to focus on investing in America. Where do you think that is being pointed at and why do you think it's being announced now?
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C
Well, you can probably guess where I fall on this issue. President Trump is saying that he wants to see defense companies building new plants, building new factories, delivering on time, and then maintaining systems cost effectively. And that's trying to do more. That is why I started, Andrew, eight years ago, because I looked at the United States and defense industrial base and realized we weren't moving fast enough. We weren't building new plants, we weren't building the new technologies that we needed. And so I'd say I'm, I'm broadly aligned. Personally speaking, I think dividends and buybacks are actually very, very different in, in their tenor. And, you know, I think probably I'm much more on the sides of not allowing these companies to do dividends, certainly not when they' behind on critical programs where they are failing to invest in new things. Stock buybacks are a little different because you're investing in yourself. You're basing, I believe, that my future is better than my past. That's different than a dividend, which effectively ends up just being a tax on taxpayers to pay for defense straight into the pockets of public market investors. So I look at these little things a little differently. Big picture. If these companies were doing really well and if they were living up to their end of the bargain, I don't think you would see any action from Trump or others on this. It's really a reflection of how many problems we have with our defense industrial drawback.
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D
These are your competitors, right, Palmer? You compete against them for contracts. That's the same pot of money.
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C
That's right.
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D
And you know, to be fair, in the time that you and I have been doing interviews. You are typically transparent. One of the provisions that the President proposes is a salary cap of $5 million. In the Bloomberg story outlined some of the comp of those CEOs. Would you be willing to say what you pay yourself? And if you would abide by I pay my.
- [02:35]
C
I pay myself $100,000 a year.
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D
So significantly less than a 5 million DOL cap.
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C
True. But I also own a lot of my company. And so, so you know, this, this measure is not really written in a way where it's intended to hit new companies, starting new things. You know, act like if Kelly Johnson were alive today and he owned a bunch of, you know, Lockheed Martin or Northrop Grumman or Raytheon, I don't think that anyone would have nearly much of a problem with him. Yeah, I pay myself $100,000 a year. That's my compensation package. I own a bunch of, of Andro because I started the company. That's so my motivation is to try and build it the biggest thing possible. I will say people and said, but Palmer, you know, are you really a neutral party here? Are you really in a position to comment given you're competing with these companies? I'd say two things. One, these measures do apply in equal measure to me. I now cannot pay dividends. I now cannot do stock buybacks if I'm not investing in new plants, if I'm not doing these two things. The other thing is it's always tricky when you want to you, I'm in defense because I wanted to help solve these problems. Right. It's actually the same thing with like mod retro in the gaming space. Like, oh, of course Palmer would criticize these other game companies. After all, he's in the gaming space. It's like, but, yeah, but I'm in the gaming space because I want to solve these problems. It's kind of this like catch 22. Like, like if you're outside of it, they'll say, well, why don't you do something about it then? And you do something like, who cares what you're doing? You're just part of the problem. It's always been emotionally difficult for me.
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A
We also have posts that President Trump is thinking more than a trillion should be invested in the area of defense.
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C
The budget should budget anti defense or anti defense company. That's not for sure. That's for sure.
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A
What's interesting is your company is, dare I say, considering going public.
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C
Yes.
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A
Would your CEO, do you think the CEO that leads the business when it's gone public should be on these sorts of restrictions from an executive order. Do you think that?
- [04:19]
C
I think that when you are on the dole and when you're effectively run on the public's wallet that the public should be able to impose whatever restrictions they want on you. I think you're not asking whether it should be like, like, you know, if I am getting paid by taxpayers, they should have the ability to elect people, elect representatives, elect, you know, who will then nominate people who can hold me to account in any way they wish. If they want to say that I only pay myself 5 million DOL dollars until I'm caught up with my schedules, they should be allowed to do that. If they say that I'm not allowed to pay myself $1 until I get caught up, I think they should be allowed to do that. When you are working on the, when you are working on taxpayer dime, there is no level of oversight or intervention that I am against. Conceptually now I think some of these might be bad moves. They might not necessarily help the defense base. But in concept I think everything should be on the table and I think it's even good maybe to scare some people sometimes. You don't necessarily go to people and say this is the way it's going to be forever. You, this is how it's going to be until you get your act together. You remember being a teenager, your parents say you're grounded until X, Y and Z bring up your grades, solve your problems and then we will talk about altering the deal. You say, but, but this deal has so many problems. If it's like this my whole life, if I'm grounded for the rest of my life, that means I'll have no social life. And your parents are not necessarily looking to ground you for life. They're saying right now you're grounded. I think that that's what you're seeing right now. It's not necessarily a lifetime.
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D
Let me, let me jump in here. I want to bring the Bloomberg television audience the reporting because these are two true social posts by the president that' proposals. But what Bloomberg's reporting in the last hour is that he is considering an EO according to sources, to make this happen. Answer this. Is Andariel on track with the pledges and commitments it's made in Ohio, the projects that it is contractually obliged the military on, not just in this country but around the world.
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C
There are a handful of things where we are not, but in most cases we are. So like you brought up Ohio, we're building this huge plant arsenal one in Columbus Ohio, where we're building autonomous fighter jets and a bunch of other things, building about 6 million square feet there. We're actually a ahead of schedule on that. We had a bunch of people from Ohio that we hired, the first round of factory workers. We brought them out to California on our dime. So we were housing them, we're paying them, and we brought them so that we could put them into our existing factory, teach them how Andrew works, you know, indoctrinate them into our way of manufacturing, our way of thinking. And we've actually already finished that training process and we've already sent them back to Ohio where they're helping stand up the factory. We're going into production this summer and we have a new batch of people that have already been sent back. So on Arsenal 1, we are ahead of schedule. We are hitting our commitments. I think we're building a new plant to build new things and we're doing it on our own dime. We're spending $900 million of our own money to build this plant.
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A
Where. Aren't you. You are very transparent. Some places you're not. Are the weapons working as you want them to? Are they performing in the field?
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C
So some of these things I can talk about, some that I can't talk about. But like, for example, I. I have a project that is a man portable counter UAS system.
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D
And it's Andrew.
- [07:19]
C
Oh, Andro, sorry. I am Andrew in my perspective. Yeah, sorry about that. Anduril has a project building a man mobile counter UAS system. We really wanted to have that actually fielded right about now. And instead, because of a variety of reasons, look, we're developing basically a thing that goes on a person and it shoots down drones that are trying to attack you. It's turned out to be a more technically challenging problem than we thought. Now, in that case, it's not a failure of, you know, like we're not building a factory or we don't want to invest. It's just. It's a harder technical problem than we thought. I suspect that we're going to continue to run to those. If you, if you only build things with no technical risk, you're not trying hard enough. I think NREL will continue to do things that from time to time will turn out to be harder than we thought. But, you know, I just need to flip more heads than tails when we're.
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A
Thinking about where you stand. Where us stands versus China.
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C
Yep.
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A
Where does it. In terms of drone technology, we're in this context of a geopolitical strain that started this Year off with Venezuela. We look now to Russia. How do you see China and the Taiwan question?
- [08:24]
C
China has an incredibly strong drone industry. It is a largely a result of state intervention. It's like largely result of industrial policy, of supply chain investments that the government has made and even trade deals that China has made around the world to allow for these drones to freely flow out in other marketplaces. Yet China has the best drone industry in the world. It's not even close. It's definitely a weakness that the United States has. Now you saw recently this ban on DJI drones.
- [08:48]
D
Yes.
- [08:49]
C
The intention there is to try and fix that. You can fix these things. The US is capable of building drones. It's just we aren't capable of competing with the labor laws, emissions laws, energy prices from coal plants, etc. Etc. That you see in China. So I'm hoping that this ban on DJI drones results in a strong US drone market popping up to take its place over the next one to three years. Andrew actually is a drone that we were showing off in Japan recently that's made with 100% Japanese parts. Japan is another nation that can build their own drones. They don't need dji. But it's hard for that to make economic sense when China is allowed to flood the market.
- [09:27]
D
Let's pivot and talk about Mod Retro for the lay person. No, I got to do it. That's why you're here, right. Your background rounds in virtual rally and you've basically rebirthed the Game Boy. I don't know if there's some IP issue on that.
- [09:41]
C
Retro is actually a company I started when I was about 14 years old combining retro technology and modern technology to build these kind of tributes that bring the best of both worlds. So like we make for example something called the Mod Retro Chromatic. Think of it as like the ultimate tribute to the Nintendo Game Boy. It's a Game Boy cartridge compatible console that has an aluminum magnesium shell. Instead of a plastic window over the screen it has a lab grown sapphire crystal window. It's largest sapphire crystal window of any product ever. Way bigger than you would typically see on like a Rolex or something because I've got to cover an entire screen. We're also building a new console called the moderator M64 which plays Nintendo 64 games. Think of it again is like the ultimate Nintendo 64. What would it look like if the Nintendo 64 were built with no, with you know, money is no object. The ultimate thing. And we've got some other new stuff coming, coming down the Pipe as well. But, you know, I've been coming to see us for 17 years now. First year I came was 2010. They was 16 or 17 years old at the. I'd use a fake ID to get into the show because you had to be an adult and you had to be industry. So I just had a fake business card and a fake ID and I pretended to be from a different company. Now I'm coming with a real ID and with a real company and I'm seeing all my friends from the VR days, all my friends from the Retro days, and of course, a lot of defense presence here.
- [10:55]
A
Can Mod Retro be.
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C
Man, Retro is never going to be as big as Apple. It's never going to be as big, is it?
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D
Currently?
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C
Currently. Look, you've got a couple dozen people building things for people who really, really care about this stuff that there's some things we have coming down the line that are going to be more broadly interesting. For example, we're working on something. I won't get into the details because I'm not supposed to talk about it. It's a TV that works. So, you know, if you've ever bought a smart TV and had problems, imagine a TV that instead it just did what it was supposed to.
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A
Guess who was complaining about his TV today?
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D
Yeah, I was.
- [11:30]
C
Look, there's a lot of things that we're working on that are kind of learning from the lessons of the past and trying to just bring them into the future. Like what would you rather have, a smart TV or a TV that shows what you plug into? I think I know what most people would want, but that's a pretty Retro idea, unfortunately.
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D
Now, a television that works. Palmer Lucky, founder of Anderil, founder of Mod Retro, also CTO and a real. I would say, frankly, could not have had a more timely conversation, given the headlines of the day.