November 12, 2025 • 30 mins
We're in Sydney with Oleg Vornik, CEO of DroneShield, makers of radio-frequency technology to detect and take down small, hostile drones across 50 countries. While defence demand is rising, airports, data centers, and infrastructure facilities are also looking for protection against small drones used for surveillance, cyber threats, and sabotage.
Learn how DroneShield built the world's largest drone signal library, why simply shooting down drones isn’t viable, and why they’re moving to "micro AI" on tiny, self-learning devices. Hear about the “cat and mouse game” between counter-drone developers and drone manufacturers, constantly innovating to avoid detection.
Plus, find out why Oleg believes counter-drone activity in public spaces like airports, stadiums, and prisons will grow as drones become a fact of life.
This episode was recorded on 15 October 2025. All commentary reflects the timing of the original conversation.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Shared Lunch, brought to you by shares Ease.
In today's episode of Shared Lunch, we're in Sydney with
CEO of drone Shield Old Egg Voneck.
Speaker 2 (00:10):
If a drone is today seen around an airport, you
have to shut down all flights or nor flights taking off,
norf flights landing, and that's a huge disruption. But that's
actually not the worst scenario. We are the only public
list of counter dron company in the world, so there
are plenty of lists of drone companies, but if you
want to have exposed to counter drome, there's really not
a lot of option. Over time, I think the civilian
sector has become probably half a viral revenue. So if
(00:32):
you think about drones disrupting airports, conducting cyber threats to
data centers, we're creating energy infrastructure threats.
Speaker 3 (00:40):
And visiting involves the risk you might lose the money
you start with. We recommend talking to a licensed financial advisor.
We also recommend rereading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 1 (00:55):
Before we get started, I want to acknowledge the Gadigol
people of the Eura nation, the traditional custodians of the land,
water and sky from where we're filming today, and pay
respects to elders past and present. Hi there, Olegg, and
welcome to the show. I want to start a bit
about your backgrounds because you have a really interesting backstory, right,
(01:18):
Can you tell me a little bit about how you
came to be the Sea of Drone Shield.
Speaker 2 (01:22):
So I came to New Zealand as a team with
my mom. We were escaping Russia just as Pultin was
just coming to power, and my mom didn't want me
to be in Church now what it had been at
the time, or Ukraine as of now with a compulsitory
military conscription. And so we ended up in New Zealand
because basically that's one country that would take us as
(01:43):
part of the skilled migrant program. We lived in social
housing in New Zealand, and so when I was going
through my math's degree, because it just happened to like maths,
I was like, oh, man, like I need to get
out of my social housing situation, and so finance and
investment banking seemed like the thing to do for that.
So I ended up doing an economics add on to
my maths degree, and first became a trade and then
(02:06):
a banker. But after about ten years as a banker,
I kind of started to question why I was doing
the old nighters and the hours and the intensity involved.
And so just around that time, I was introduced to
these two American defense scientists who had the idea of
a drome detection business. So I was the first employee
and we listed the business in mid twenty sixteen on
(02:28):
twenty million valuation, raised seven million dollars, and then I
went to the US for a couple of years, and yeah,
the rest is history.
Speaker 1 (02:34):
I'm interested to understand why Drone Shield, What was it
about the business all those years ago that excited you.
Speaker 2 (02:42):
So Interestingly, it was actually the fund that connected me
with the two engineers. So what I find is that
ultimately it's not even so much the organizations that you're
part of, but people inside of those organizations that you trust.
And so I knew the guy was running the New
York Fund who originally came across the two engineers and
connected with them, and the fund became our largest shareholder
(03:05):
for the first several years. And so just the idea
of having them as my largest sharehold, and I actually
really respected the guy who was running it. Really gave
me a lot of confidence because when you're in these situations,
kind of early stage startups, you really need to have
a high degree of trust. So that was the thing
for me.
Speaker 1 (03:20):
Drone Shield has come into focus a lot in recent months,
but this is by no means an overnight success, right.
The business was founded in twenty and fourteen and listed
in two thousand and sixteen. Can you tell us what
is the premise behind Drone Shield? What does drone Shield
actually do.
Speaker 2 (03:40):
Drone Shield does detection and take down of small drones
used in nefarious applications. So, for example, we have hundreds
of systems deployed in Ukraine sensing and taking down Russian
drones when they attacking Ukrainian civilian or military targets, but
really were deployed in about fifty countries around the world.
So the US has been our largest customer across the
Department of Homeland Security agencies, law enforcement intelligence, but also
(04:03):
over time, I think the civilian sector will become probably
half of our revenue. So if you think about drones
disrupting airports, conducting cyber threads to data centers, creating energy
infrastructure threads, because a drone can really be seen as
a surveillance platform and an attack platform as well as
a cyber attack platform. So we are protecting sensitive assets
against small drones doing all of those activities. And it's
(04:26):
a hardware and software business, so what you're seeing is
basically handheld, vehicle based and fixed side families of solutions,
so hardware but with software that we're regularly up there
in the quarterly basis. So that's the SaaS revenue part
of the business, and that gets deployed across thousands of
products out in the field.
Speaker 1 (04:44):
You mentioned about your government customers. I'm interested to know
a little bit more about these. I imagine that when
you're speaking to these customers and trying to negotiate a deal,
it's quite tricky, right, But once you consummate those deals,
you would expect that they're they're quite sticky, right. So
can you tell me a bit more about these customers
(05:04):
and how you see the opportunity with some of them
going forward.
Speaker 2 (05:08):
Selling to military has quite a large degree of obscurity,
and a lot of it is deliberate. You can't, for example, Google,
how do I sell counter dro on to the US
Department of Defense and outcomes a little email and a
phone number. You just call them and hey, I have
some process sell So it's a multi year process to
set it correctly, especially for Nascent products. Right, So, first
time we've front a lot of these customers, they're like,
(05:30):
small drones are toys. That's what I buy kids for Christmas?
Why do I bother? But advantage of being early was
that just as our customers started to look at counter
dron solutions, well we're there and develop those relationships over time.
And like you said, Jackie, unlike the selling to the
consumer space, selling to the governments is very much a
long term trust game. So you build that relationship and
then customers respond by giving you a lot of feedback.
(05:52):
So you build your tech roadmap in accordance to what
the customer says, here are the things I'm looking for.
Here's a data from your own sensors, so use that
to make better products, and then customers respond by buying
more of your products. So once you're in, you're really
deeply embedded. Now, customers usually try to deal with two
or three supplies for any one particular thing, just to
have some redundancy but that trust relationship set with supplies
(06:13):
globally is really important. And also what often happens with
a lot of our customers will say will be their
second counter drone company in the sense that the first
ones would usually be very kind of snake oil that
say hey, approach can do this, this and this, and
customers look at that and they end up buying maybe
a few and they're like, oh, this product just doesn't work.
So then they end up often turning to drone Shield.
(06:34):
It's like, Okay, now finally the product actually does what
we are looking to do. But also for a lot
of customers we have deployed from the very very early
days and they're still continue to buy probably ninety percent
of our solutions. Our sales are to repeat customers. So
I guess in terms of the future, we say, now
we're deployed in about fifty countries around the world, then
gradually our customers are buying more. So the market situation
(06:57):
is really small. So if you think about the military
is only really started in mass looking at procurement maybe
three years ago, since the start of the Ukraine War,
and now they're saying, okay, well, future of conflict will
be drones and counter drone solutions, and we have very
little of it, so we have to buy quite a bit,
and the civilian sector is basically zero market situation. So
no airport around the world unfortunately has a fully deployed
(07:19):
counterdron system, So all of that wave acquisitions are still coming.
Speaker 1 (07:24):
What are the key products that you have, What do
they do? How are they different to what else is
on the market.
Speaker 2 (07:31):
So radiofrequency is the key technology we use. So drone
communicates its location and what it sees with its camera
to then user, and then user sends to the drone
where to go, and we can listen to that traffic
in terms of both way communication and triangulate real time
location of the drone and often also location of the pilot.
So these are the core technologies. Are f radio frequency
(07:53):
for detection and defeat, but also we add secondary modalities,
so you think of radars, cameras, acoustics. We actually started
ten eleven years ago as an acoustics based business before
we moved to radio frequency. And then for the defeat
you can have things like cybers, so we've added that
as a secondary technology. Hyph power microwaves, which basically like
a real life version of matrix or your fry circuits
(08:15):
and any electronic item that moves towards you like a drone,
And so we do integration of all of that, So
we're both a product maker as well as integrate or
third party technologies in a multisensor solution. And on that
a lot of people say, well, what about fiber optic
drones and AI control drones. And what we're finding is
that ourf is very much a backbone of the drone
(08:36):
communications drone connection and for those unusual situations, that's when
our secondary modalities like creators or high part microwave would
kick in, you.
Speaker 1 (08:44):
Know, very sophisticated hardware and software, and you can do
a lot of damage to drones. Are these harmful at
all to humans?
Speaker 2 (08:54):
Everything we do is completely harmless to humans. So it
works on drones by basically confusing them with one exception
of high power microwave where you fry the circuit, but
even that is harmless to humans. So that's a deliberate strategy.
So one we're finding that if you're doing a kinetic
solution like bullets or missiles, it's either not cost symmetrics.
(09:15):
So the problem with drones, it's costs the symmetry game.
So you're thinking of a two hundred dollars drone a
five million dollar tank if you start and it can
blow up of a million dollar tank. Now, if you
start shooting fifty thousand dollar missiles like two hundred dollar drones,
you will very quickly run out of fifty thousand dollars missiles.
And then if you're thinking of bullets, the problem is
in a lot of settings it's just not practical. So firstly,
in Ukraine, drones often go very high and then dive
(09:36):
down on targets, so very hard to actually shoot at,
especially for objects which are dinner played size, moving one
hundred kilometers an hour. And then you imagine a swarm
of them coming from different directions, so very very difficult.
But then besides, in a lot of situations you can't
physically shoot down a drone. You imagine here in Sydney
you have the Navy Guden Island Base. I can assure
you they will not be using machine guns in the
middle of Sydney Harbor for just about any situation. Right
(10:00):
when you think about the civilian sector like stadiums, airports,
so having products which are completely harmless for humans is
really important for mass adoption, which is what Drone Shield does.
Speaker 1 (10:08):
Interested to understand how you use AI in your technology
and then also related to that, how you work with
your customers in terms of getting data that supports the software.
Speaker 2 (10:22):
We realized about five years ago that counter dron is
going to be an AI game because drones started to
develop exponentially. So back when we started, there might have
been maybe five common dron models. Now you have unlimited
amount of drone protocols that essentially coming on market. So
in the early days we had a manual like call
it radiofrequency fingerprint library type approach where in the radiofrequency
(10:45):
domain you're saying, right, a drone sounds a bit like this,
I match it against a non signature and if there's
a match, it's an alert. But the problem is you
need now to have a sensor recognizing the software recognizing
a drone that it has never seen before and for
that AI. So it's pretty well the problem with AI
is writing algorithms is the relatively simple part. The hard
part is maintaining enormous databases for the AI engines to
(11:08):
train on. So five years ago we started basically collecting
what is now the largest drone signal library of its
kind in the world, so drone signals in Japan and US, Europe, Ukraine,
Australian so on. And now we have thousands of devices
out there in the field, including very large number that
with customers consent, actually remit the data from the sensors
(11:32):
back to us every time the customer connects those sensors
to the Internet, which means our data engineering teams can
then update our data sets, look for edge cases, and
the algorithm becomes smarter. Now what we're super excited about
is what we're looking to do to the AI engine
next year. People think of AI as large language models
basically chat GPT, but in the military setting, you can't
(11:54):
connect to the cloud all the time. You need to
be completely what's in your hands, So we call it
mic AI. So we develop hardware and software for AI
to specifically walk on tiny devices in a palm of
your hand. And now you make in that fully self
learned as you go. That means that even if drone
technology evolves literally on a daily basis, the device will
learn with it.
Speaker 1 (12:15):
You've spoken about some of your government clients, but there's
very broad application for your products, right and there's a
civilian or commercial market for your products across airports, etc.
Can you talk to me a bit about what this
opportunity is with these types of clients and how you
see that going forward.
Speaker 2 (12:35):
So, drones can easily disrupt airports, as we're now seeing
in Europe with lots of drone flights around Scandinavia and
other areas, because if a drone gets ingested into the
engine of a plane, you will likely blow out the
engine and with it potentially down the whole airline, and
not to talk about even cracking of windscreen of the
airplanes or damaging the body the fuselage of the airplane
(12:57):
and so with it. If a drone is today seen
around an airport, you have to shut down all flights,
so no flights taking off nor flights landing, and that's
a huge disruption. But that's actually not the worst scenario.
The worst scenario is if you actually have the aircraft
coming down because of the drone strike. So, if you
think about now data centers, drones land on the roofs
of data centers and use proximity to hack into the
(13:19):
data center networks conduct cyber attacks. We have seen energy
infrastructure getting attacked by drones. So you think of oil wells,
for example, highly flamable situation. Now a drone can create
a lot of damage in those scenarios. So whether it's
an activist or a terrorist or even a child, it
doesn't really matter. You're trying to keep all these drones
away from your energy infrastructure. And there's a lot of
(13:40):
other scenarios stadiums with potential terrorism attacks, or even sports
teams using drones to film events and go around the
TV presenter rights and so on. So there's a huge
amount and we think it's about US thirty billion dollar
totally addressable market in the civilian space on top of
roughly thirty billion dollar tam in the military space.
Speaker 1 (14:03):
So significant market opportunity, right, But I guess the market
for counter drone solutions is still somewhat nascent, although that's evolving.
How do you see the competitive landscape and what would
you say? You've alluded to some of it, but what
would you say are your key points of difference?
Speaker 2 (14:25):
We have unique technical and commercial differentiators. On the technical front,
we're there just before anybody else ten or eleven years ago,
and we through out the whole time had the largest
engineering team in the market deliberately looking at counter dron technology.
So when other people had five engineers, we had fifteen.
When others had fifteen, we had fifty. Today we have
(14:46):
over three hundred engineers here in Sydney working full time
on the counter dron solution and we have really high
agility culture. And Australia makes great engineers if you think
of both software so you're at lessons and or even hardware.
If you think about med tech medical technology devices, Australia
has great reputation with that. So you think about cock clear,
(15:07):
you think about road microphones, and so we're drawing and
all the talent we import talent, So Sydney is a
great place to bring talent from overseas. One of our
competitors is a Danish company that is literally in the
Arctic Circle. Now why you're on mind, would anybody come
to Ourctic circle unless you're there to work. So Sydney's
a great place to actually host talent as well. So
(15:27):
we're quite proud of the engineering team we've assembled. So
as a result, we're able to detect further, defeat further,
a bit more effective products, meet other customer technical requirements.
We talked about the largest AI data set that anybody has,
which basically means way even more effective than others when
it comes to commercial differentiators. So as those trusted relationships
(15:49):
within customers. So we've been again been there for years.
Our products were doing what it says in the TIN,
and customers, often in the military space, form those deep
trusted relationships and they give you information their requirements, and
most of our sales contrary to what people think, I'm
not actually tendered. So when you work in the national
security reasons, you often have sol source to your sales
(16:13):
because otherwise, if you tender, you have to reveal your
specifications like you think you're putting out tender and saying, okay,
I want to detect a drown five kilometers away if
you have, for example, American military base, So Johnny's a
be right. If I can do a drone that can
do surveillance from six kilometers, then I'll be fine. So
because of that, customers tend to do sole source awards,
and so because of that, we would tend to be
(16:34):
really well placed.
Speaker 1 (16:34):
Usually with the customers that you're speaking to, how much
knowledge do you think that they have the importance of
your products? Is there much of an education process.
Speaker 2 (16:45):
In the beginning, it was quite a lot of education,
which also contributed to pretty long sales cycles, so maybe
five seven years ago it could be up to two
years from the first handshake to a sale, and a
lot of it was driven by explaining to customers what
a counter drawn system can do. But now, thankfully, customer
knowledge gets much better because most of our customers are
repeat purchases and they're just buying more of the same
(17:08):
because they have such low level of deployment. And so
because of that, we're finding that, yes, you still need
to do some training, and the technology evolves all the
time as well, but you're not studying from zero, which
really helps shortened sales cycles to and generally just for
us to conduct sales to audiences who already understand. So
this is in the military market. Civilian market is probably
one step behind in the sense that they're a bit
(17:30):
earlier to the adoption cycle, so they're still learning. But
the good thing if you can sell to the military,
the performance criteria for the civilian sector are usually lower.
Now the price points often also tend to be lower,
although not for airports or data centers, who are usually
pretty well funded. If you now look at stadiums at prisons.
Prisons especially are very very tight with funding, but they
(17:52):
have really huge drone problems. So you think about drones
delivering drugs, weapons, cigarettes, escape kits, right to prison windows,
Amazon style, we say, look, don't even bring the drone down.
We'll tell you where the pilot is going to arrest
the pilot. That's probably a better solution for you. So
things like that.
Speaker 1 (18:07):
Across those alternative commercial areas. Where are you saying the
biggest opportunity at the moment, Is it with stadiums, Is
it prisons? Is it airports?
Speaker 2 (18:17):
Data centers and airports they're probably two our biggest customer
sets right now, and they're fairly centralized, so there are
only a few really big names in the data centers globally.
And also airports tend to be fairly centralized. So for example,
in the US, every airport, unlike in Australia, is actually
government owned and they take very strict guidance from FAA
in the US, which is the agency regulating the air
(18:38):
traffic safety. So once fa finally issues recommendation to deploy
counter drone systems, and we think there's going to be
a few systems being recommended, we think that were really
commence deployment at their large scale. And similarly elsewhere around
the world, we spend a lot of time talking to
regulators saying, hey, here is speaking of education, here is
the realm of possible. You really need to have all
(18:58):
the airports in your domain having counter drone systems, and
then the regulators talk to the airports.
Speaker 1 (19:03):
You mentioned. The regulatory environment quite sophisticated and complex as
you look across different jurisdictions. Multiple government agencies regulate airspace.
How do you go about navigating some of the challenges there?
Speaker 2 (19:22):
There are multiple regulations, like, for example, airspace who owns
the airspace? So for example, just because quantus aircraft might
be flying over your house every morning, you can't get
just annoy it and shoult it down. So drones technically
enjoying the same privilege, right, So what it practically means
is detection usually has a lot greater ability in terms
(19:42):
of everybody being able to sense drones. But then when
it comes to the defeat, it really becomes domain of
government agencies to take down the drones, which is still
a very large market for US. So if you think
about the military's law enforcement, intelligence, homeland security, but even
for customers that cannot like for examp, state and local
law enforcement in the US, and by the way that
(20:03):
legislation is changing to enable them, we think soon to
defeat drones as well. We can indicate often location of
the pilot to them, which would still be legal for them,
and then they'll go and apprehend the pilot. So you
kind of work around it, and a lot of your
job is also educating the customers legally on what they
cannot do too. Airports often would have law enforcement offices
as part of airport's security, so even if airport itself
(20:26):
cannot take down drones, Australian Federal Police being inside of
Sydney Airport will be able to.
Speaker 1 (20:31):
We've seen a number of announcements recently in terms of
investments in R and D facilities in South Australia and Virginia.
Can you talk to me a bit more about what
your plans are there and how that will transform your
ability to scale and service your customers.
Speaker 2 (20:49):
We operate in about fifty countries around the world, so
that means we want to both capture talent on a
global basis. So Adelaide as well recognized as Australia's capital
of electronic warfare and a lot of Australia defense companies
are based in Ittalyaide, so we've been historically taking people
from Adelaide and moving them to Sydney and today the
form part of our Sydney engineering team. But also we
(21:10):
feel that our new office will be able to capture
a lot of additional talent to feed into our overall
engineering solution. Now, when it comes to manufacturing, we have
a number of initiatives. So today we are moving from
five hundred million annual production capacity, so five hundred million
dollars a year to about two point four billion by
end of next year, so about five x increase and
(21:31):
adds through significant expansion in Sydney, so we're moving from
current four hundred square meter space to three thousand square
meter facility. Our two contract manufacturers are expanding as well
as new contract manufacturers, one in the US and one
in Europe, and that will assist with localizing. So a
lot of our customers are saying hey, like, for example,
in Europe, we have all these programs, but they require
(21:54):
sixty five percent local content, and so having a European
contract manufacturer achieves that too Australian I and then similarly
in the US, you can really do much more if
you can say, hey, it's American jobs and American made
and so that's what we're seeking to do.
Speaker 1 (22:08):
You mentioned the use of contracts manufacturing. What would you
say the advantages of using that and do you foresee
that that might change as the business grows and evolves.
Speaker 2 (22:21):
So we do both our own manufacturing as well as
contract manufacturing. So advantages of contract manufacturing is these are
people who are highly experienced in large volume game our
experiences in rapid innovation, which are fairly different skill sets.
And also contract manufacturers tend to operate on fairly modest margins,
so under ten percent, while we're as a business operate
(22:41):
and roughly sixty five percent gross profit margins. So more
of your own manufacturing you do more. Essentially, you're reducing
your overall blended gross margin, which is not what our
investors would like to see. But also importantly underneath both
out for call it like heavy grade industrial stuff, so metal, fabrication, plastics, injection,
A C and C machining and so on, and a
(23:02):
lot of these companies have really grown with us. We
love working with them. We normally try to have two
or three supplies for every part and bill of materials,
so you're basically baking recipe for every product is normally
about two hundred line items, and so we go to
these fifty manufacturers for a lot of these line items,
and then they're the ones investing into heavy capex and
(23:22):
getting better in the process and then servicing other customers,
not just drone shield even for a lot of them,
we might be a significant customer and driving local jobs.
Speaker 1 (23:31):
So you've had a record breaking first half of twenty
twenty five, significant improvement across all key financial metrics versus
the prior corresponding period. Can you taught me through some
of the financial results.
Speaker 2 (23:45):
So firstly, we're now profitable and our aim is to
continue being consistently operating cash profitable and cashlow positive going forward.
And that revenue is very much underpinned by not just
geopolitics what you're seeing in the news, because often larger
orders are not necessarily reactions to what's been happening at
(24:07):
airports or military based the previous week, but processes that
go for months that eventuate with very large orders and
in tens of millions, and hopefully some and hundreds of
millions of dollars. So our customers are looking for mass
deployment of counter drome equipment. So they've been looking at
this problem now for about three years since the start
of the Ukraine War, and a lot of them now
(24:28):
have limited amount of equipment. They're saying right now time
for mass deployment, and dron Shield is really well positioned
on the global stage in terms of us versus some
of our competitors, and we talked about the differentiators, and
we don't really compete much with defense primes because they
tend to find counter drome with its rapid innovation, is
not really their game. Most of our competitors tend to
(24:48):
be in mid tier private equity backed rollups, and so
we find that we are pretty confident with our market
share as our customers are starting to really go into
mass procurement.
Speaker 1 (24:59):
Can you talk me through those sort of early years
as a listed company and how you've evolved, how the
business has evolved since then.
Speaker 2 (25:08):
In nine years, we've gone from twenty five million market
cap to sx two hundred as we stand today. And
in the early years the issue was you essentially always
come raised because you're making no revenue to speak of,
you need to have heavy investment in R and D
and you might have cash flow runway, maybe for another
six months, and that's pretty stressful. If you can go
(25:31):
through years of having three to six months of cash
in the bank, whatever happens to you afterwards is not
really that stressful, right. So, and then as you scale up,
you're still very much in retail business because when you
are a tiny company, institutions don't tend to invest because
there's not enough liquidity for them to get in or
get out. And even if institutions participate as part of
(25:51):
your capital raises, they often tend to leave within the
first couple of months of participating in the placement. So
for us, the game was how do you make the
registered more institution. We're now seeing there's a lot of
not just Australian but also international investors and we're squarely
on their radar because we're now large enough, liquid enough,
and we are the only public listed counter dron company
(26:11):
in the world. So there are plenty of lists of
drone companies, but if you want to have exposed to
counter drome, there's really not a lot of options to
go to and it's super exciting. So I was in London,
for example, for DSCI, the largest defense show in the world,
about a month ago when we met with a number
of UK fund managers and they've been exposed to our
story for the very first time and they absolutely loved it.
(26:32):
But even twelve months ago would have been too small,
too liquid for a lot of them. So we're now
in this virtual cycle where finally we're becoming investable by
a lot of very large funds.
Speaker 1 (26:41):
That's right. Certainly the inclusion into the ASX two hundred
industry with the September quarterly rebalance has put you on
the radar of a lot of big fund managers.
Speaker 2 (26:50):
That's right. Yeah, So we've gone from a SX three
hundred to two hundred in space for twelve months and
now scaling to see how quickly we can get to
hopeful air sex one hundred.
Speaker 1 (26:59):
So if we think about the the drones that your
products are taking down, what's the dynamic with the drone manufacturers?
Do you think and I suppose you're watching each other
quite carefully in terms of how the technology is evolving.
What's your experience been there?
Speaker 2 (27:16):
I remember where this defense show, which is how you
really meet a lot of the industry, and the Hotel
Ceo Ortel, being one of two main Chinese dron makers,
came to our standard and they're like, drone shield, we're
really closely watching you. So it's very much a catamouse
game where dron manufacturers maybe five ten years ago, we're
prioritizing how do you make your drone fly the furthest
(27:36):
and not crash into trees, and carry the most payload,
have the best camera. Now it's all of that, plus
how do you avoid drone shield. So for that they're
looking at really sophisticated techniques and it's pretty astounding. So
you can buy a twenty thousand dollars Ortel drone off
the shelf, and twenty thousand dollars may sound like quite
a lot, but in the military domain, it's actually not
that much, and it would have electronic warfare communication techniques
(28:01):
inside of it that five years ago would be classified
military secret, which is insane. And now you can buy
this as a family drone. And the reason they do
this is because they are basically thinking, well, this is
going to be deployed in the war zone eventually, and
this needs to have hardened techniques to avoid detection and defeat.
And for us this is great. I mean, we want
the Chinese and the Russians and Iranians to keep innovating
(28:21):
because if draw manufacturers would stop innovating, then the whole
industry would just collapse. Our gross margins would collapse, and
so we want to stay in front of everybody else.
By the nature of drones themselves innovating. But it's a
bit like a fence. People can climb over fences, kind
of holds through fences, but you still build them because
that takes care of most of your threats. So we're
(28:42):
better than any other counter drong company and we'll continue
getting better. So software updates every three months, hardware refreshers
every three to four years, huge engineering team being really agile,
and so on. So we set draw manufacturers, Yeah, let's
do this. We will love this competition.
Speaker 1 (28:57):
So you just keep redesigning the fence. I suppose that's.
Speaker 2 (29:00):
Right, the new defense technology sector.
Speaker 1 (29:03):
Yes, what would you say your definition of success looks
like for drone shield? Is there an ambition or a
milestone in mind where when you achieve that, you'll be
able to reflect and say we've done it, We've made it.
Speaker 2 (29:17):
Well, success for us has been a journey, right, So
all the time, when we're a ten person company with
only six months cash runway, success was just to survive
for the next twelve months. Now, we just had our
largest contract yet, the sixty two million dollar contract with
European Defense Ministry earlier in the year, and we've delivered
it in record time, within about two months. So the
(29:40):
next bracket of size we've been hundreds of millions of dollars,
and we have opportunities in our pipeline matching that that
we're actively working on. There are new generations of technology.
We talked about the operations scaling, so opening our outsource
factories in the US and Europe, expanding in Australiament. I
think about the business as sales, tech and operations, So
(30:03):
each one has its own milestones, and then there's overall
operational milestone as the organization marshals forward. How do you
make sure that in a company, not just top ten
per cent of the employees contribute, but all four hundred
are humming along and contributing at the max pro activity?
How do you keep your workforce engaged? So all of
these things are a measures of success for us.
Speaker 1 (30:23):
Thank you ol egg for joining us, and thanks everyone
for tuning in leisure
Welcome to Shared Lunch, brought to you by shares Ease.
In today's episode of Shared Lunch, we're in Sydney with
CEO of drone Shield Old Egg Voneck.
Speaker 2 (00:10):
If a drone is today seen around an airport, you
have to shut down all flights or nor flights taking off,
norf flights landing, and that's a huge disruption. But that's
actually not the worst scenario. We are the only public
list of counter dron company in the world, so there
are plenty of lists of drone companies, but if you
want to have exposed to counter drome, there's really not
a lot of option. Over time, I think the civilian
sector has become probably half a viral revenue. So if
(00:32):
you think about drones disrupting airports, conducting cyber threats to
data centers, we're creating energy infrastructure threats.
Speaker 3 (00:40):
And visiting involves the risk you might lose the money
you start with. We recommend talking to a licensed financial advisor.
We also recommend rereading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at
the time of recording.
Speaker 1 (00:55):
Before we get started, I want to acknowledge the Gadigol
people of the Eura nation, the traditional custodians of the land,
water and sky from where we're filming today, and pay
respects to elders past and present. Hi there, Olegg, and
welcome to the show. I want to start a bit
about your backgrounds because you have a really interesting backstory, right,
(01:18):
Can you tell me a little bit about how you
came to be the Sea of Drone Shield.
Speaker 2 (01:22):
So I came to New Zealand as a team with
my mom. We were escaping Russia just as Pultin was
just coming to power, and my mom didn't want me
to be in Church now what it had been at
the time, or Ukraine as of now with a compulsitory
military conscription. And so we ended up in New Zealand
because basically that's one country that would take us as
(01:43):
part of the skilled migrant program. We lived in social
housing in New Zealand, and so when I was going
through my math's degree, because it just happened to like maths,
I was like, oh, man, like I need to get
out of my social housing situation, and so finance and
investment banking seemed like the thing to do for that.
So I ended up doing an economics add on to
my maths degree, and first became a trade and then
(02:06):
a banker. But after about ten years as a banker,
I kind of started to question why I was doing
the old nighters and the hours and the intensity involved.
And so just around that time, I was introduced to
these two American defense scientists who had the idea of
a drome detection business. So I was the first employee
and we listed the business in mid twenty sixteen on
(02:28):
twenty million valuation, raised seven million dollars, and then I
went to the US for a couple of years, and yeah,
the rest is history.
Speaker 1 (02:34):
I'm interested to understand why Drone Shield, What was it
about the business all those years ago that excited you.
Speaker 2 (02:42):
So Interestingly, it was actually the fund that connected me
with the two engineers. So what I find is that
ultimately it's not even so much the organizations that you're
part of, but people inside of those organizations that you trust.
And so I knew the guy was running the New
York Fund who originally came across the two engineers and
connected with them, and the fund became our largest shareholder
(03:05):
for the first several years. And so just the idea
of having them as my largest sharehold, and I actually
really respected the guy who was running it. Really gave
me a lot of confidence because when you're in these situations,
kind of early stage startups, you really need to have
a high degree of trust. So that was the thing
for me.
Speaker 1 (03:20):
Drone Shield has come into focus a lot in recent months,
but this is by no means an overnight success, right.
The business was founded in twenty and fourteen and listed
in two thousand and sixteen. Can you tell us what
is the premise behind Drone Shield? What does drone Shield
actually do.
Speaker 2 (03:40):
Drone Shield does detection and take down of small drones
used in nefarious applications. So, for example, we have hundreds
of systems deployed in Ukraine sensing and taking down Russian
drones when they attacking Ukrainian civilian or military targets, but
really were deployed in about fifty countries around the world.
So the US has been our largest customer across the
Department of Homeland Security agencies, law enforcement intelligence, but also
(04:03):
over time, I think the civilian sector will become probably
half of our revenue. So if you think about drones
disrupting airports, conducting cyber threads to data centers, creating energy
infrastructure threads, because a drone can really be seen as
a surveillance platform and an attack platform as well as
a cyber attack platform. So we are protecting sensitive assets
against small drones doing all of those activities. And it's
(04:26):
a hardware and software business, so what you're seeing is
basically handheld, vehicle based and fixed side families of solutions,
so hardware but with software that we're regularly up there
in the quarterly basis. So that's the SaaS revenue part
of the business, and that gets deployed across thousands of
products out in the field.
Speaker 1 (04:44):
You mentioned about your government customers. I'm interested to know
a little bit more about these. I imagine that when
you're speaking to these customers and trying to negotiate a deal,
it's quite tricky, right, But once you consummate those deals,
you would expect that they're they're quite sticky, right. So
can you tell me a bit more about these customers
(05:04):
and how you see the opportunity with some of them
going forward.
Speaker 2 (05:08):
Selling to military has quite a large degree of obscurity,
and a lot of it is deliberate. You can't, for example, Google,
how do I sell counter dro on to the US
Department of Defense and outcomes a little email and a
phone number. You just call them and hey, I have
some process sell So it's a multi year process to
set it correctly, especially for Nascent products. Right, So, first
time we've front a lot of these customers, they're like,
(05:30):
small drones are toys. That's what I buy kids for Christmas?
Why do I bother? But advantage of being early was
that just as our customers started to look at counter
dron solutions, well we're there and develop those relationships over time.
And like you said, Jackie, unlike the selling to the
consumer space, selling to the governments is very much a
long term trust game. So you build that relationship and
then customers respond by giving you a lot of feedback.
(05:52):
So you build your tech roadmap in accordance to what
the customer says, here are the things I'm looking for.
Here's a data from your own sensors, so use that
to make better products, and then customers respond by buying
more of your products. So once you're in, you're really
deeply embedded. Now, customers usually try to deal with two
or three supplies for any one particular thing, just to
have some redundancy but that trust relationship set with supplies
(06:13):
globally is really important. And also what often happens with
a lot of our customers will say will be their
second counter drone company in the sense that the first
ones would usually be very kind of snake oil that
say hey, approach can do this, this and this, and
customers look at that and they end up buying maybe
a few and they're like, oh, this product just doesn't work.
So then they end up often turning to drone Shield.
(06:34):
It's like, Okay, now finally the product actually does what
we are looking to do. But also for a lot
of customers we have deployed from the very very early
days and they're still continue to buy probably ninety percent
of our solutions. Our sales are to repeat customers. So
I guess in terms of the future, we say, now
we're deployed in about fifty countries around the world, then
gradually our customers are buying more. So the market situation
(06:57):
is really small. So if you think about the military
is only really started in mass looking at procurement maybe
three years ago, since the start of the Ukraine War,
and now they're saying, okay, well, future of conflict will
be drones and counter drone solutions, and we have very
little of it, so we have to buy quite a bit,
and the civilian sector is basically zero market situation. So
no airport around the world unfortunately has a fully deployed
(07:19):
counterdron system, So all of that wave acquisitions are still coming.
Speaker 1 (07:24):
What are the key products that you have, What do
they do? How are they different to what else is
on the market.
Speaker 2 (07:31):
So radiofrequency is the key technology we use. So drone
communicates its location and what it sees with its camera
to then user, and then user sends to the drone
where to go, and we can listen to that traffic
in terms of both way communication and triangulate real time
location of the drone and often also location of the pilot.
So these are the core technologies. Are f radio frequency
(07:53):
for detection and defeat, but also we add secondary modalities,
so you think of radars, cameras, acoustics. We actually started
ten eleven years ago as an acoustics based business before
we moved to radio frequency. And then for the defeat
you can have things like cybers, so we've added that
as a secondary technology. Hyph power microwaves, which basically like
a real life version of matrix or your fry circuits
(08:15):
and any electronic item that moves towards you like a drone,
And so we do integration of all of that, So
we're both a product maker as well as integrate or
third party technologies in a multisensor solution. And on that
a lot of people say, well, what about fiber optic
drones and AI control drones. And what we're finding is
that ourf is very much a backbone of the drone
(08:36):
communications drone connection and for those unusual situations, that's when
our secondary modalities like creators or high part microwave would
kick in, you.
Speaker 1 (08:44):
Know, very sophisticated hardware and software, and you can do
a lot of damage to drones. Are these harmful at
all to humans?
Speaker 2 (08:54):
Everything we do is completely harmless to humans. So it
works on drones by basically confusing them with one exception
of high power microwave where you fry the circuit, but
even that is harmless to humans. So that's a deliberate strategy.
So one we're finding that if you're doing a kinetic
solution like bullets or missiles, it's either not cost symmetrics.
(09:15):
So the problem with drones, it's costs the symmetry game.
So you're thinking of a two hundred dollars drone a
five million dollar tank if you start and it can
blow up of a million dollar tank. Now, if you
start shooting fifty thousand dollar missiles like two hundred dollar drones,
you will very quickly run out of fifty thousand dollars missiles.
And then if you're thinking of bullets, the problem is
in a lot of settings it's just not practical. So firstly,
in Ukraine, drones often go very high and then dive
(09:36):
down on targets, so very hard to actually shoot at,
especially for objects which are dinner played size, moving one
hundred kilometers an hour. And then you imagine a swarm
of them coming from different directions, so very very difficult.
But then besides, in a lot of situations you can't
physically shoot down a drone. You imagine here in Sydney
you have the Navy Guden Island Base. I can assure
you they will not be using machine guns in the
middle of Sydney Harbor for just about any situation. Right
(10:00):
when you think about the civilian sector like stadiums, airports,
so having products which are completely harmless for humans is
really important for mass adoption, which is what Drone Shield does.
Speaker 1 (10:08):
Interested to understand how you use AI in your technology
and then also related to that, how you work with
your customers in terms of getting data that supports the software.
Speaker 2 (10:22):
We realized about five years ago that counter dron is
going to be an AI game because drones started to
develop exponentially. So back when we started, there might have
been maybe five common dron models. Now you have unlimited
amount of drone protocols that essentially coming on market. So
in the early days we had a manual like call
it radiofrequency fingerprint library type approach where in the radiofrequency
(10:45):
domain you're saying, right, a drone sounds a bit like this,
I match it against a non signature and if there's
a match, it's an alert. But the problem is you
need now to have a sensor recognizing the software recognizing
a drone that it has never seen before and for
that AI. So it's pretty well the problem with AI
is writing algorithms is the relatively simple part. The hard
part is maintaining enormous databases for the AI engines to
(11:08):
train on. So five years ago we started basically collecting
what is now the largest drone signal library of its
kind in the world, so drone signals in Japan and US, Europe, Ukraine,
Australian so on. And now we have thousands of devices
out there in the field, including very large number that
with customers consent, actually remit the data from the sensors
(11:32):
back to us every time the customer connects those sensors
to the Internet, which means our data engineering teams can
then update our data sets, look for edge cases, and
the algorithm becomes smarter. Now what we're super excited about
is what we're looking to do to the AI engine
next year. People think of AI as large language models
basically chat GPT, but in the military setting, you can't
(11:54):
connect to the cloud all the time. You need to
be completely what's in your hands, So we call it
mic AI. So we develop hardware and software for AI
to specifically walk on tiny devices in a palm of
your hand. And now you make in that fully self
learned as you go. That means that even if drone
technology evolves literally on a daily basis, the device will
learn with it.
Speaker 1 (12:15):
You've spoken about some of your government clients, but there's
very broad application for your products, right and there's a
civilian or commercial market for your products across airports, etc.
Can you talk to me a bit about what this
opportunity is with these types of clients and how you
see that going forward.
Speaker 2 (12:35):
So, drones can easily disrupt airports, as we're now seeing
in Europe with lots of drone flights around Scandinavia and
other areas, because if a drone gets ingested into the
engine of a plane, you will likely blow out the
engine and with it potentially down the whole airline, and
not to talk about even cracking of windscreen of the
airplanes or damaging the body the fuselage of the airplane
(12:57):
and so with it. If a drone is today seen
around an airport, you have to shut down all flights,
so no flights taking off nor flights landing, and that's
a huge disruption. But that's actually not the worst scenario.
The worst scenario is if you actually have the aircraft
coming down because of the drone strike. So, if you
think about now data centers, drones land on the roofs
of data centers and use proximity to hack into the
(13:19):
data center networks conduct cyber attacks. We have seen energy
infrastructure getting attacked by drones. So you think of oil wells,
for example, highly flamable situation. Now a drone can create
a lot of damage in those scenarios. So whether it's
an activist or a terrorist or even a child, it
doesn't really matter. You're trying to keep all these drones
away from your energy infrastructure. And there's a lot of
(13:40):
other scenarios stadiums with potential terrorism attacks, or even sports
teams using drones to film events and go around the
TV presenter rights and so on. So there's a huge
amount and we think it's about US thirty billion dollar
totally addressable market in the civilian space on top of
roughly thirty billion dollar tam in the military space.
Speaker 1 (14:03):
So significant market opportunity, right, But I guess the market
for counter drone solutions is still somewhat nascent, although that's evolving.
How do you see the competitive landscape and what would
you say? You've alluded to some of it, but what
would you say are your key points of difference?
Speaker 2 (14:25):
We have unique technical and commercial differentiators. On the technical front,
we're there just before anybody else ten or eleven years ago,
and we through out the whole time had the largest
engineering team in the market deliberately looking at counter dron technology.
So when other people had five engineers, we had fifteen.
When others had fifteen, we had fifty. Today we have
(14:46):
over three hundred engineers here in Sydney working full time
on the counter dron solution and we have really high
agility culture. And Australia makes great engineers if you think
of both software so you're at lessons and or even hardware.
If you think about med tech medical technology devices, Australia
has great reputation with that. So you think about cock clear,
(15:07):
you think about road microphones, and so we're drawing and
all the talent we import talent, So Sydney is a
great place to bring talent from overseas. One of our
competitors is a Danish company that is literally in the
Arctic Circle. Now why you're on mind, would anybody come
to Ourctic circle unless you're there to work. So Sydney's
a great place to actually host talent as well. So
(15:27):
we're quite proud of the engineering team we've assembled. So
as a result, we're able to detect further, defeat further,
a bit more effective products, meet other customer technical requirements.
We talked about the largest AI data set that anybody has,
which basically means way even more effective than others when
it comes to commercial differentiators. So as those trusted relationships
(15:49):
within customers. So we've been again been there for years.
Our products were doing what it says in the TIN,
and customers, often in the military space, form those deep
trusted relationships and they give you information their requirements, and
most of our sales contrary to what people think, I'm
not actually tendered. So when you work in the national
security reasons, you often have sol source to your sales
(16:13):
because otherwise, if you tender, you have to reveal your
specifications like you think you're putting out tender and saying, okay,
I want to detect a drown five kilometers away if
you have, for example, American military base, So Johnny's a
be right. If I can do a drone that can
do surveillance from six kilometers, then I'll be fine. So
because of that, customers tend to do sole source awards,
and so because of that, we would tend to be
(16:34):
really well placed.
Speaker 1 (16:34):
Usually with the customers that you're speaking to, how much
knowledge do you think that they have the importance of
your products? Is there much of an education process.
Speaker 2 (16:45):
In the beginning, it was quite a lot of education,
which also contributed to pretty long sales cycles, so maybe
five seven years ago it could be up to two
years from the first handshake to a sale, and a
lot of it was driven by explaining to customers what
a counter drawn system can do. But now, thankfully, customer
knowledge gets much better because most of our customers are
repeat purchases and they're just buying more of the same
(17:08):
because they have such low level of deployment. And so
because of that, we're finding that, yes, you still need
to do some training, and the technology evolves all the
time as well, but you're not studying from zero, which
really helps shortened sales cycles to and generally just for
us to conduct sales to audiences who already understand. So
this is in the military market. Civilian market is probably
one step behind in the sense that they're a bit
(17:30):
earlier to the adoption cycle, so they're still learning. But
the good thing if you can sell to the military,
the performance criteria for the civilian sector are usually lower.
Now the price points often also tend to be lower,
although not for airports or data centers, who are usually
pretty well funded. If you now look at stadiums at prisons.
Prisons especially are very very tight with funding, but they
(17:52):
have really huge drone problems. So you think about drones
delivering drugs, weapons, cigarettes, escape kits, right to prison windows,
Amazon style, we say, look, don't even bring the drone down.
We'll tell you where the pilot is going to arrest
the pilot. That's probably a better solution for you. So
things like that.
Speaker 1 (18:07):
Across those alternative commercial areas. Where are you saying the
biggest opportunity at the moment, Is it with stadiums, Is
it prisons? Is it airports?
Speaker 2 (18:17):
Data centers and airports they're probably two our biggest customer
sets right now, and they're fairly centralized, so there are
only a few really big names in the data centers globally.
And also airports tend to be fairly centralized. So for example,
in the US, every airport, unlike in Australia, is actually
government owned and they take very strict guidance from FAA
in the US, which is the agency regulating the air
(18:38):
traffic safety. So once fa finally issues recommendation to deploy
counter drone systems, and we think there's going to be
a few systems being recommended, we think that were really
commence deployment at their large scale. And similarly elsewhere around
the world, we spend a lot of time talking to
regulators saying, hey, here is speaking of education, here is
the realm of possible. You really need to have all
(18:58):
the airports in your domain having counter drone systems, and
then the regulators talk to the airports.
Speaker 1 (19:03):
You mentioned. The regulatory environment quite sophisticated and complex as
you look across different jurisdictions. Multiple government agencies regulate airspace.
How do you go about navigating some of the challenges there?
Speaker 2 (19:22):
There are multiple regulations, like, for example, airspace who owns
the airspace? So for example, just because quantus aircraft might
be flying over your house every morning, you can't get
just annoy it and shoult it down. So drones technically
enjoying the same privilege, right, So what it practically means
is detection usually has a lot greater ability in terms
(19:42):
of everybody being able to sense drones. But then when
it comes to the defeat, it really becomes domain of
government agencies to take down the drones, which is still
a very large market for US. So if you think
about the military's law enforcement, intelligence, homeland security, but even
for customers that cannot like for examp, state and local
law enforcement in the US, and by the way that
(20:03):
legislation is changing to enable them, we think soon to
defeat drones as well. We can indicate often location of
the pilot to them, which would still be legal for them,
and then they'll go and apprehend the pilot. So you
kind of work around it, and a lot of your
job is also educating the customers legally on what they
cannot do too. Airports often would have law enforcement offices
as part of airport's security, so even if airport itself
(20:26):
cannot take down drones, Australian Federal Police being inside of
Sydney Airport will be able to.
Speaker 1 (20:31):
We've seen a number of announcements recently in terms of
investments in R and D facilities in South Australia and Virginia.
Can you talk to me a bit more about what
your plans are there and how that will transform your
ability to scale and service your customers.
Speaker 2 (20:49):
We operate in about fifty countries around the world, so
that means we want to both capture talent on a
global basis. So Adelaide as well recognized as Australia's capital
of electronic warfare and a lot of Australia defense companies
are based in Ittalyaide, so we've been historically taking people
from Adelaide and moving them to Sydney and today the
form part of our Sydney engineering team. But also we
(21:10):
feel that our new office will be able to capture
a lot of additional talent to feed into our overall
engineering solution. Now, when it comes to manufacturing, we have
a number of initiatives. So today we are moving from
five hundred million annual production capacity, so five hundred million
dollars a year to about two point four billion by
end of next year, so about five x increase and
(21:31):
adds through significant expansion in Sydney, so we're moving from
current four hundred square meter space to three thousand square
meter facility. Our two contract manufacturers are expanding as well
as new contract manufacturers, one in the US and one
in Europe, and that will assist with localizing. So a
lot of our customers are saying hey, like, for example,
in Europe, we have all these programs, but they require
(21:54):
sixty five percent local content, and so having a European
contract manufacturer achieves that too Australian I and then similarly
in the US, you can really do much more if
you can say, hey, it's American jobs and American made
and so that's what we're seeking to do.
Speaker 1 (22:08):
You mentioned the use of contracts manufacturing. What would you
say the advantages of using that and do you foresee
that that might change as the business grows and evolves.
Speaker 2 (22:21):
So we do both our own manufacturing as well as
contract manufacturing. So advantages of contract manufacturing is these are
people who are highly experienced in large volume game our
experiences in rapid innovation, which are fairly different skill sets.
And also contract manufacturers tend to operate on fairly modest margins,
so under ten percent, while we're as a business operate
(22:41):
and roughly sixty five percent gross profit margins. So more
of your own manufacturing you do more. Essentially, you're reducing
your overall blended gross margin, which is not what our
investors would like to see. But also importantly underneath both
out for call it like heavy grade industrial stuff, so metal, fabrication, plastics, injection,
A C and C machining and so on, and a
(23:02):
lot of these companies have really grown with us. We
love working with them. We normally try to have two
or three supplies for every part and bill of materials,
so you're basically baking recipe for every product is normally
about two hundred line items, and so we go to
these fifty manufacturers for a lot of these line items,
and then they're the ones investing into heavy capex and
(23:22):
getting better in the process and then servicing other customers,
not just drone shield even for a lot of them,
we might be a significant customer and driving local jobs.
Speaker 1 (23:31):
So you've had a record breaking first half of twenty
twenty five, significant improvement across all key financial metrics versus
the prior corresponding period. Can you taught me through some
of the financial results.
Speaker 2 (23:45):
So firstly, we're now profitable and our aim is to
continue being consistently operating cash profitable and cashlow positive going forward.
And that revenue is very much underpinned by not just
geopolitics what you're seeing in the news, because often larger
orders are not necessarily reactions to what's been happening at
(24:07):
airports or military based the previous week, but processes that
go for months that eventuate with very large orders and
in tens of millions, and hopefully some and hundreds of
millions of dollars. So our customers are looking for mass
deployment of counter drome equipment. So they've been looking at
this problem now for about three years since the start
of the Ukraine War, and a lot of them now
(24:28):
have limited amount of equipment. They're saying right now time
for mass deployment, and dron Shield is really well positioned
on the global stage in terms of us versus some
of our competitors, and we talked about the differentiators, and
we don't really compete much with defense primes because they
tend to find counter drome with its rapid innovation, is
not really their game. Most of our competitors tend to
(24:48):
be in mid tier private equity backed rollups, and so
we find that we are pretty confident with our market
share as our customers are starting to really go into
mass procurement.
Speaker 1 (24:59):
Can you talk me through those sort of early years
as a listed company and how you've evolved, how the
business has evolved since then.
Speaker 2 (25:08):
In nine years, we've gone from twenty five million market
cap to sx two hundred as we stand today. And
in the early years the issue was you essentially always
come raised because you're making no revenue to speak of,
you need to have heavy investment in R and D
and you might have cash flow runway, maybe for another
six months, and that's pretty stressful. If you can go
(25:31):
through years of having three to six months of cash
in the bank, whatever happens to you afterwards is not
really that stressful, right. So, and then as you scale up,
you're still very much in retail business because when you
are a tiny company, institutions don't tend to invest because
there's not enough liquidity for them to get in or
get out. And even if institutions participate as part of
(25:51):
your capital raises, they often tend to leave within the
first couple of months of participating in the placement. So
for us, the game was how do you make the
registered more institution. We're now seeing there's a lot of
not just Australian but also international investors and we're squarely
on their radar because we're now large enough, liquid enough,
and we are the only public listed counter dron company
(26:11):
in the world. So there are plenty of lists of
drone companies, but if you want to have exposed to
counter drome, there's really not a lot of options to
go to and it's super exciting. So I was in London,
for example, for DSCI, the largest defense show in the world,
about a month ago when we met with a number
of UK fund managers and they've been exposed to our
story for the very first time and they absolutely loved it.
(26:32):
But even twelve months ago would have been too small,
too liquid for a lot of them. So we're now
in this virtual cycle where finally we're becoming investable by
a lot of very large funds.
Speaker 1 (26:41):
That's right. Certainly the inclusion into the ASX two hundred
industry with the September quarterly rebalance has put you on
the radar of a lot of big fund managers.
Speaker 2 (26:50):
That's right. Yeah, So we've gone from a SX three
hundred to two hundred in space for twelve months and
now scaling to see how quickly we can get to
hopeful air sex one hundred.
Speaker 1 (26:59):
So if we think about the the drones that your
products are taking down, what's the dynamic with the drone manufacturers?
Do you think and I suppose you're watching each other
quite carefully in terms of how the technology is evolving.
What's your experience been there?
Speaker 2 (27:16):
I remember where this defense show, which is how you
really meet a lot of the industry, and the Hotel
Ceo Ortel, being one of two main Chinese dron makers,
came to our standard and they're like, drone shield, we're
really closely watching you. So it's very much a catamouse
game where dron manufacturers maybe five ten years ago, we're
prioritizing how do you make your drone fly the furthest
(27:36):
and not crash into trees, and carry the most payload,
have the best camera. Now it's all of that, plus
how do you avoid drone shield. So for that they're
looking at really sophisticated techniques and it's pretty astounding. So
you can buy a twenty thousand dollars Ortel drone off
the shelf, and twenty thousand dollars may sound like quite
a lot, but in the military domain, it's actually not
that much, and it would have electronic warfare communication techniques
(28:01):
inside of it that five years ago would be classified
military secret, which is insane. And now you can buy
this as a family drone. And the reason they do
this is because they are basically thinking, well, this is
going to be deployed in the war zone eventually, and
this needs to have hardened techniques to avoid detection and defeat.
And for us this is great. I mean, we want
the Chinese and the Russians and Iranians to keep innovating
(28:21):
because if draw manufacturers would stop innovating, then the whole
industry would just collapse. Our gross margins would collapse, and
so we want to stay in front of everybody else.
By the nature of drones themselves innovating. But it's a
bit like a fence. People can climb over fences, kind
of holds through fences, but you still build them because
that takes care of most of your threats. So we're
(28:42):
better than any other counter drong company and we'll continue
getting better. So software updates every three months, hardware refreshers
every three to four years, huge engineering team being really agile,
and so on. So we set draw manufacturers, Yeah, let's
do this. We will love this competition.
Speaker 1 (28:57):
So you just keep redesigning the fence. I suppose that's.
Speaker 2 (29:00):
Right, the new defense technology sector.
Speaker 1 (29:03):
Yes, what would you say your definition of success looks
like for drone shield? Is there an ambition or a
milestone in mind where when you achieve that, you'll be
able to reflect and say we've done it, We've made it.
Speaker 2 (29:17):
Well, success for us has been a journey, right, So
all the time, when we're a ten person company with
only six months cash runway, success was just to survive
for the next twelve months. Now, we just had our
largest contract yet, the sixty two million dollar contract with
European Defense Ministry earlier in the year, and we've delivered
it in record time, within about two months. So the
(29:40):
next bracket of size we've been hundreds of millions of dollars,
and we have opportunities in our pipeline matching that that
we're actively working on. There are new generations of technology.
We talked about the operations scaling, so opening our outsource
factories in the US and Europe, expanding in Australiament. I
think about the business as sales, tech and operations, So
(30:03):
each one has its own milestones, and then there's overall
operational milestone as the organization marshals forward. How do you
make sure that in a company, not just top ten
per cent of the employees contribute, but all four hundred
are humming along and contributing at the max pro activity?
How do you keep your workforce engaged? So all of
these things are a measures of success for us.
Speaker 1 (30:23):
Thank you ol egg for joining us, and thanks everyone
for tuning in leisure
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