TechCrunch - Mach CEO Ethan Thornton on what it's like to run a defense tech company in your 20s┃StrictlyVC SF
The conversation highlights the journey of a young entrepreneur in the defense tech sector, emphasizing the importance of innovation in autonomous weapons and decentralized manufacturing. The entrepreneur started building prototypes in high school and college, eventually leading to the creation of a defense tech company. The company focuses on developing advanced military technology, such as hydrogen-powered cannons and drones, to address geopolitical threats like China's military advancements. The entrepreneur discusses the challenges of securing funding, the importance of safety in weapon development, and the strategic shift towards decentralized manufacturing to reduce reliance on Chinese components. The company aims to provide the U.S. military with advanced capabilities to deter conflicts, particularly concerning China's potential invasion of Taiwan. The discussion also touches on the ethical considerations of autonomous weapons and the need for precise targeting to minimize collateral damage.
Key Points:
- Started building defense tech prototypes in high school, leading to a company focused on advanced military technology.
- Secured funding from major VCs like Sequoia by proving the capability to develop innovative tech and work with the government.
- Shifted focus from hydrogen to more practical tech solutions due to military readiness timelines and current fuel logistics.
- Emphasizes decentralized manufacturing to avoid reliance on Chinese components and enhance production resilience.
- Discusses ethical and strategic implications of autonomous weapons, advocating for precise targeting to minimize collateral damage.
Details:
1. 🌟 Journey from College to Defense Tech
- Ethan's journey signifies the increasing relevance of defense tech, as he became Sequoa's first investment in this sector.
- Starting his entrepreneurial journey at 19, Ethan achieved rapid career progression by age 21, demonstrating significant personal and professional growth.
- Defense tech is identified as a 'hot sector,' presenting vast opportunities for innovation and investment, as evidenced by Ethan's successful fundraising efforts.
- Ethan faced and overcame numerous challenges, such as securing funding and building credibility, which are common hurdles for young entrepreneurs in high-tech industries.
- Key milestones in Ethan's journey include his first successful funding round and gaining recognition from major investors like Sequoa, marking his entry into the high-stakes world of defense technology.
2. 🛠 Building Passion and Early Innovations
- The entrepreneur began building various projects, including weapons, from a young age, supported by a $500 investment from his parents for a machine, demonstrating early encouragement and resourcefulness.
- His interests extended beyond weapons to include building furniture and kitchen knives, showcasing a broad and diverse interest in creation and innovation.
- These early projects laid the foundation for his entrepreneurial ventures, illustrating how childhood hobbies can evolve into substantial business initiatives.
3. 🚀 From High School Projects to MIT and Beyond
- The speaker's journey was initially driven by concerns about the US's future role in global conflicts and a deep passion for technology.
- In high school, the speaker demonstrated an early interest in military technology by creating a bazooka-like device.
- The entrepreneurial journey began with raising capital through 1517 Fund and saving money by working as an auto tech, highlighting resourcefulness and initiative.
- High school projects included prototyping and designing items like kitchen knives and furniture, which were pivotal in bootstrapping the startup Mox.
- The speaker faced challenges due to a lack of awareness about venture capital (VC) during high school, making the bootstrapping process difficult yet educational.
- Attending MIT provided exposure to venture capitalists, which opened up significant opportunities and shifted the speaker's strategic approach, although it ultimately led to dropping out.
- The transition from high school to MIT included overcoming specific challenges such as navigating the unfamiliar world of VC and balancing academic demands with entrepreneurial pursuits.
4. 🌍 Geopolitical Concerns and Motivation
- The decision to pursue a career was heavily influenced by geopolitical concerns, particularly the escalating situation in Ukraine, which highlighted vulnerabilities in military technology sectors.
- A critical realization occurred regarding the lack of US companies' military relevance in the unmanned systems sector, prompting a strategic response.
- China's active role in fueling both sides of conflicts served as a significant motivating factor, underscoring the need for technological advancements in defense.
- Despite the high-risk nature of starting a business at the age of 18, the initial intent to serve in the Air Force was redirected towards entrepreneurship to address these strategic gaps.
5. 🔧 Prototyping, Securing VC Funding, and Strategic Shifts
- The speaker emphasizes the importance of taking timely action, noting that starting a project like 'mock' eight years later might have been too late, highlighting the urgency in innovation.
- Initially, the speaker began with limited resources, 'no money, no team,' exemplifying the high-risk startup environment typical in early entrepreneurial ventures.
- During college, the speaker developed a prototype, namely a 'hydrogen-powered cannon,' showcasing hands-on innovation and the practical application of technical skills.
- The collaboration with university resources initially seemed beneficial, but IP ownership issues at Lincoln Labs prompted a shift to independent prototyping efforts.
- The strategic transition from hands-on prototyping to securing venture capital funding from Sequoia indicates a shift in focus from purely technical innovation to business development and scaling.
6. 🔋 From Hydrogen Focus to Military Contracts
- The company initially prioritized building prototypes and demonstrating technology capabilities before expanding its team to target government contracts.
- A significant challenge was navigating federal government processes to establish programs of record, rather than technological limitations.
- Early strategy successes included securing initial contracts, signaling potential in the government market.
- The decision to shift from a hydrogen focus arose from the need for products that enhance military readiness on shorter timeframes and align with strategic defense timelines.
- Field-sourced combustion fuel, such as hydrogen, proved less effective compared to existing solutions, influencing the Department of Defense's reluctance to transition.
- The company redirected focus towards manufacturing comprehensive platforms and all-up capabilities instead of hydrogen.
- Hydrogen was deemed a poor investment, prompting a consideration of methane as a viable alternative for field-sourced combustion fuel.
- Maintaining options for field-sourced combustion fuel remains crucial for future military operations, ensuring adaptability to evolving defense needs.
7. 🔥 Addressing Safety and Capitalization Challenges
7.1. Safety Issues in Early Trials
7.2. Capitalization Efforts and Strategic Partnerships
8. 🎯 Winning Contracts and Navigating Fundraising
8.1. Military Contract and Production Scale-Up
8.2. Fundraising and Industry Insights
9. 🤖 Exploring Autonomy in Warfare
- Building autonomous warfare systems requires billions in capital to scale manufacturing and platforms effectively, signifying a shift in defense spending priorities.
- The US Department of Defense's losses in war games against China underscore the critical need for increased defense funding to maintain strategic superiority.
- Autonomous weapons introduce a paradigm shift as they can operate independently, altering warfare dynamics from focusing on platforms to prioritizing manufacturing efficiency.
- The transition to unmanned systems is projected to span 2-3 decades, presenting significant growth opportunities in the defense sector.
- A critical debate surrounds the extent to which autonomous weapons should function without human intervention, particularly in high-stakes scenarios.
- There are two distinct levels of autonomy: vehicle-level autonomy, which includes navigation and targeting, and fleet-level autonomy, which involves managing multiple units simultaneously.
- Adversaries are expected to develop both levels of autonomy, necessitating similar advancements to remain competitive in the global defense landscape.
- Current precision challenges, such as GPS jamming observed in Ukraine, highlight the urgent need for technological enhancements in targeting accuracy.
10. 🛡 Preparing for Potential Conflicts
- Advocacy for vehicle-level autonomy emphasizes precision, ensuring deployed autonomous systems operate with high accuracy.
- Fleet-level autonomy, involving management of thousands of vehicles, is considered highly complex and not advocated due to operational challenges.
- Defense tech companies, including the speaker's startup, are preparing for potential conflicts, such as a possible Chinese invasion of Taiwan.
- China has announced a date for military readiness to invade Taiwan, prompting U.S. defense readiness as a critical strategic priority.
- The ultimate goal of defense tech developments is to deter conflicts entirely, with systems in place to prevent invasions from occurring.
- If deterrence fails, being prepared to engage and win conflicts remains essential.
11. ⚔️ Battle Testing and Global Defense Relevance
11.1. Strategic Reassessment in US Defense
11.2. Global Market Dynamics in Defense Tech
12. 🏭 Innovating Decentralized Manufacturing
- The company has launched 'Forge', a strategy to partner with other firms for product manufacturing in decentralized facilities, mitigating risks associated with centralized production, especially in conflict zones like Ukraine.
- They are vertically integrating by producing essential components such as jet engines and avionics internally due to the absence of reliable supply chains.
- Forge acts as a consortium where companies collaborate to scale production without depending on centralized or international components.
- A dedicated team ensures that no equipment or components are sourced from China, involving rigorous vendor assessments.
- Decentralization offers increased resilience and flexibility compared to traditional methods, though it requires robust coordination and oversight mechanisms.