UFORCE has flown 220,000+ combat missions, sunk 14 Russian warships, and downed two Su-30 fighter jets. Its Magura USV was the first naval drone in history to sink an enemy warship in combat. Its Nemesis UAV flies thousands of missions every night.
In the latest Mission Matters Podcast episode, David Rothzeid and I sat down with Oleg Rogynskyy, CEO of UFORCE, Ukraine's first defense tech unicorn, to talk about what it takes to build systems that actually work when lives are on the line.
A few things that stuck with us:
• A PACOM general told Oleg: "If you can't fix it with a coconut on an island, I don't want it." Most Western defense tech can't pass that test.
• UFORCE has flown more combat missions than all Western defense tech companies combined, and is expanding to NATO allies and the US market now.
• Ukraine's acquisition model is outcomes-based in real time. Units rate their weapons like Amazon reviews, updated from missions flown that morning.
• The lessons from the Black Sea are directly applicable to the Strait of Hormuz, the Baltic, and the Indo-Pacific.
As always, please let us know what you think. And please reach out if you or anyone you know is building at the intersection of technology and national security. 🇺🇸
You can listen to the podcast on Spotify, Apple, YouTube, the Shield Capital website, or right here on Substack.
Transcript
Maggie 01:18
In this episode of the Mission Matters podcast, we’re joined by Oleg Rogynskyy, the CEO of UFORCE, Ukraine’s first defense tech unicorn.
David 01:21
UFORCE builds some of the most consequential battle-tested autonomous systems in the Russia-Ukraine war. Its platforms have executed tens of thousands, nay, hundreds of thousands of real missions in highly contested environments, informing not just autonomy software, but manufacturing, supply chains, deployment, and sustainment at scale.
Maggie 01:44
Perhaps most notably, UFORCE builds the Magura Unmanned Surface Vessel, or USV, the first ever naval drone to sink an enemy warship in combat, destroying eight Russian warships in the Black Sea in its first year of operation and causing hundreds of millions or even billions of dollars of damage to other ships. UFORCE also develops several other defense systems, including the Nemesis Unmanned Aerial Vehicle, UAV, Liut Unmanned Ground Vehicle, UGV, and a command control software platform.
David 02:14
In addition to its Ukrainian customers, UFORCE is expanding to NATO allies and the United States, where it will bring its combat-proven systems to an industrial base in dire need. In this conversation, we dive into what it takes to build defense technology that actually works on a real-world battlefield, the lessons the US, the Middle East, and the rest of Europe should take from Ukraine, what it takes to scale this technology beyond Ukraine and more. And with that, Oleg, thank you so much for joining us. I guess first things first, like how are Ukrainian forces using UFORCE systems today, and where are they creating the biggest operational advantage?
Oleg 02:53
David, thank you for having me here, Maggie. So to your question, we have a number of platforms, and they’re all used in different ways in Ukraine. We’re most known for the Magura USV, and in the beginning when there were still, Russian naval assets in the Black Sea in the open, Magura was used in a number of operations, both as, one-way attack strike platform to strike those ships, but also as a short-range air defense platform to defend the swarms of Maguras from incoming aircraft, incoming drones, et cetera. Magura was also used to find subs, to find sea mines, to deliver UAVs to the enemy shore against the hard targets in fully denied environments, and so on and so on. So that’s just one chapter. The second product we have is Nemesis, which is the workhorse of Ukrainian mid strike capabilities. So every night there is thousands of these drones flying to deliver tens of thousands of payloads, to the distances of 20 to 50 kilometers, return back, reload, and go back out again. All of that driven by software that kind of works like DoorDash, where launch teams just go from spot to spot to spot and relaunch, reload, change the battery of the drones. We also have the ground vehicle, called Liut, that, allows Ukrainian forces to, do first ever, trench assaults without any humans on the line. These are fully remotely controlled UGVs, that have AI capabilities in them, have turrets with guns that both shoot down incoming FPVs as well as help, complete unmanned trench assaults, kind of smoking out enemy soldiers out of the trenches. There’s a mo- a lot more I can tell you, but that’s, those are the three main CONOPs we are running.
Maggie 04:52
Oleg, what are the actual combat effects that UFORCE has had in Ukraine to date?
Oleg 04:59
Great question. So, on the maritime front, we have affected latest count, I believe 19 Russian warships, out of which 14 are verified sunk. And then in terms of aircraft, because as you remember, we do, USV, unmanned surface vessel-based short-range air defense and counter-UAS. We’re the first company ever to take down fighter jets. We got two Su-30s, as well as we have two confirmed and a number of unconfirmed, as in we didn’t film them, helicopter kills, over the Black Sea, and that’s the maritime side. The land side, we have flown over 220,000 missions within all versions of Nemesis drones, and that has allowed us to destroy, over 10,000 Russian vehicles And I mean, the body count is really high, as you can imagine. And then, we’re talking over 2,000 armor, we’re talking number of logistics trucks, very large number of logistics trucks. But more importantly, we have been the artillery hunter for the Ukrainian side. So we mow down that thing all day long, every day, all night long, every, all the time. And then we had the technology that got close to 100% of the kills for the North Korean, howitzers that they gave to Russians. So that’s one of the claims to fame.
Maggie 06:32
You know, I think Oleg, I think UFORCE is probably the first company that we have invested in at Shield that had actually been used on the battlefield before we made the investment. What’s it been like building and operating a defense company in Ukraine during wartime, and how has that environment shaped the culture and urgency of the business?
Oleg 06:53
So that’s really interesting because I’m not a founder. I joined as a CEO, two and a half years into the company when the company was already north of $100 million in revenue, and the difference was stark. In Ukraine, everything is real time. You just go and do it right now. You don’t wait. Obviously, there’s downsides in terms of longer term planning, longer term system thinking, et cetera, but at the same time, the sense of urgency, the sense of why it is right now and why it is extremely important is nothing like I’ve seen before. The systems, the communication patterns, everything else in the company is organized around that real-time communication. And that’s different. Now, if you layer on what I’m trying to do, layer on knowledge management systems onto real-time communication, some really good things are happening.
Maggie 07:46
Can you tell us a bit about the origin story of the company and how you came to lead it?
Oleg 07:50
Yeah, absolutely. So the company came together through a merger of initially two companies. One was making Nemesis drone, another one was making a Magura C Drone. And then as those two came together, then became clear that, they were sharing a C2 system by a third company that got brought in. And then turns out there were other companies like a UGV company running on the same C2. So the interesting part is there was a whole cluster of companies and teams that were operating together even pre-merger that kind of were acting as one team, and it was just a very obvious move to bring those together using Western capital and, identify synergies, create scalability across them, start normalizing the tech stack, code base, training, ConOps, TTPs, business development, and so on and so on. So in the end, we now have, I think the latest count was nine companies that have come together, but they all have been operating as one for a while.
David 08:56
Well, like it’s so interesting, and it feels like very organic and like Silicon Valley-esque, right? That everyone’s doing their thing. They’ve got these core competencies. You find these opportunities to sort of collaborate, and then lo and behold, the whole is greater than the sum of its parts, so you start to incorporate raising money, and obviously now headquartered in London and trying to proliferate the combat-proven technology across multiple domains, multiple geographies. And I guess the basis of my question is like how replicable is this, you know, across the Ukraine, entrepreneurial, you know, which has really shown itself, in a pretty inspiring way. But, you know, is UFORCE going to be a one of one, or is this a model that we’ll see happening over and over again?
Oleg 09:47
So I think there is two answers to that one. From one side, it’s replicable. It has to be replicated because the consolidation to achieve scale, especially as the war in Ukraine ebbs and flows, will need to happen. Like at our size and scale, we can, not only continue leading in Ukraine but also start expanding to other markets. On the other hand, the bottleneck is actually in the leadership talent And there’s only so many, leaders out there who have done, and it’s not just me, it’s my whole leadership team, who have done work with Ukraine before, but have also seen Western large scale companies that allows them to not figure out things on the spot, but also bring in Western governance, scalability, finance, and other capabilities to the bear, to combine it with the product market fit that was achieved by the Ukrainian, ingenuity, iteration, and exposure to a real war.
Maggie 10:51
Yeah, Oleg, I think that’s an interesting point that you make. I know that your experience previous to this was as a CEO of a software company in Silicon Valley. Can you talk a little bit about how you bring some of the principles from running a business like that, which as far as I know, had no connection to defense into this new market area?
Oleg 11:11
Yeah. Running a software in AI company in Silicon Valley taught me a lot. I mean, what’s happening in defense right now is that there is a massive amount of growth opportunities happening all the time, and that means you gotta be hiring fast, but with really, consistent quality. You have to be working with capital markets. You have to be thinking about, capacity models, both on the manufacturing but also on the sales side, on customer support, success, et cetera side. And SaaS and AI were the places where those skills had to be developed at significant, scale because of the templatization of, SaaS industry that happened in between 2010 and 2020 or so. So having learned those pathways, having learned those patterns, has been extremely helpful in order to scale up this business very quickly. I mean, we went from over, from about 800 people to 13, 1400 people in less than Nine months, 10 months, something like that. So the growth is staggering. The bookings growth, I don’t wanna talk about it, but it’s also staggering. And all of that is only happening if you’re able to hire people at consistent, significant scale and consistent quality. And then one more thing to actually to bring to that is we learn how to run efficient companies in Silicon Valley between 2020 and 2024, kind of through the downturn, through COVID, et cetera. And so scaling up a business like UFORCE is very hard on its own, but scaling it up efficiently without lighting massive piles of money on fire on stupid things is a lot harder. And then doing that while introducing AI capabilities in every part of the business, both in terms of personnel efficiency, documentation, engineering, sales, everywhere, is also a challenge of its own, especially in high OpSec environment where every minute Russians are trying to get you, and not just Russians. So it’s been probably the most challenging and the most exciting thing I’ve ever done, but man, it’s a lot of work
Maggie 13:33
Yeah, I mean, speaking of some of those OPSEC challenges and, you know, just actually what it takes to build for real combat conditions, can you tell us about some of the biggest technical and operational challenges that you’ve had to work through in order to actually harden these systems for real-world battlefield deployments?
Oleg 13:51
Yeah. I mean, first of all, in Ukraine, everything is kind of move fast and break things because Ukraine knows, Ukrainian soldiers know that whatever is the weapons are today, it’s not gonna be the same tomorrow. So nobody’s focusing on building that highly certified, highly perfect, highly integrated set of systems, just the rate of change is so fast. And so, on one hand, that leads to, really fast iteration. On the other hand, it leads to kind of more dynamic environment that what Western militaries are used to. And then from OPSEC perspective, you have to approach it very differently. If everything’s changing all the time, you cannot defend your perimeter as well, ‘cause you cannot think through every little bit of operational security. And so what you gotta focus on is a lot more prevention of the lateral movements. You assume they’re in, you gotta stop them from moving to other places. Very different, approach in the West, where you have to really focus on your perimeter security, you have to really focus your interoperability to your NATO certification, other certifications, and other integrations and slow things that you can afford when you’re not at war. So completely two different cultures, and you have to be very conscious about what’s relevant from wartime to peacetime and the other way.
Maggie 15:12
Kind of following up on some of the technical deployments here, you know, something I found interesting when you read about what’s happening in Ukraine, in the news and elsewhere, there’s a lot of discussion of autonomy, you know, completely human out-of-the-loop action. But if you actually look at a lot of the technology being used today, most of it is still mostly remotely operated, you know, maybe there’s some small pieces of autonomy in terminal guidance or elsewhere. What will it take to move towards greater autonomy, and how do you see this future of software-defined warfare and UFORCE role in that?
Oleg 15:46
Yeah. So there is an interesting stat for why autonomy is not picking up in Ukraine, and it’s actually harder for it to pick up elsewhere. There’s not enough targets, and so it would be akin to over-engineering if people went for full autonomy right away. There is pockets of it developing really rapidly, such as terminal guidance in denied, in fully denied environments, autonomous resupply using aerial ground and sea drones, Swarm intelligence, but in a very basic way. Like, how do you queue up multiple drones in case one drone gets distracted to another target, opportunistic target? How do you make sure the others are following and both missions get completed? So kind of mission queuing, et cetera. But nobody in Ukraine is thinking about, “Well, I’m gonna send in drones over there and have them figure it out.” The kill boxes are too undefined, the terrain is too complex, the assets are too sparse, the battery ranges are too low. And so from that perspective, it basically would be an overkill. Now, when you look at Indo-Pacific, for example, where distances are massive, you know roughly you expect better ISR, but then at the same time you expect denial and kind of peer-to-peer, fight, autonomy would play a much bigger role there. And so you have to modulate what’s relevant and where. In fact, that leads to the base mantra that UFORCE carries with it everywhere, which is we start with the customer. I call us, we are the first bottoms-up adoption defense tech company. Other defense techs go and go straight to the ivory tower and push the top down. Okay, capture the Congress, shove down $20 billion of contracts down your throat, and then see what COCOMs do. We try to do the opposite, and Ukraine taught us that. We got the users who love the product and ask for more, and then Ukrainian government has enabled commanders of individual units to have a say in what weapons they get to fight the war, specifically of the type that they are facing. And so that’s the approach we’re taking elsewhere. We have combatant commanders of different theaters in the US being very excited about what we do before the Pentagon figures out. We have individual war fighters of war-fighting leaders kind of ask for our hardware because it works, because it’s battle proven before we show up to the procurement teams. And that has been very different Of an approach, and it’s a much more wartime approach. But unfortunately, the world is becoming less stable than more, so that approach is gonna be taking more and more space.
David 18:47
Yeah. Oleg, I definitely wanna jump into it, and I know you brought up a little bit about the Indo-Pacific Theater and INDOPACOM. And then, you know, saying a little bit of heresy there, that centralized control and decision-making at the world’s largest bureaucracy, the Pentagon, maybe isn’t the best path to creating innovation and combat-proven technology. But before we jump into that, maybe just like one quick anecdote for our listeners about how the Ukrainian acquisition system and its fixation on outcomes-based, capability, development and funding versus this requirements-based that we sort of have here in the US, where you have to think about what it is you want to build, then you go and build it, then you test and you iterate, and then at some point it reaches the operational environment. But in Ukraine, it’s obviously been different ‘cause you don’t have the luxury of test and evaluation. It’s just outcomes-based. So can you maybe just highlight a little bit of that?
Oleg 19:53
Yeah, absolutely. So in Ukraine, you don’t have the time. You don’t have the time to develop a thing and then spend couple years certifying it and getting it, and then perfecting it, et cetera. Everything gets to the front line in Ukraine in days, weeks. It gets iterated within hours, gets upgraded. If you don’t ship code same day as you got the mission data, you’re out. And so that’s the speed at which Ukraine operates nonstop, and that’s the only way to play. And so that speed is actually enabled by a number of inventions that only Ukraine so far has. Now, some of them are only possible because Ukraine is in an active fight, and we... at the same time, we’ve seen lack of those innovations, slow things down in the Gulf, for example And what I mean by that is, so in Ukraine, both vendors and units get points for kill videos that they get submitted. So basically, you fly a mission, you got a kill, you submit the video to a government website. There is like a government Amazon for weapons. And the AI verifies that this video is unique and not AI generated. And then, you basically get points, and you can use those points to buy weapons that you want for your next mission. They even have Amazon Prime for that. You can spend more points to get it by tomorrow. And so that is very interesting because it pushes down the decision-making to a unit commander level, and at the same time, it gives the government perfect data of what works. Because if it doesn’t work, people won’t order it again. There is literally reviews you can go and read on every drone and from missions that were flown this morning. I’m not even talking about, like, last year on a slick sheet. And then from there, the government is now starting to layer on more and more data, like how many missions did this system actually fly? How many kills did they have? How many... What kind of units are using it? What kind of operators are more successful with them? So they are now collecting the ecosystem metadata and segmenting the procurement data about what can be bought with factual battlefield data to an insane extent. And then on the other side of this invention, they have created very tight partnerships between the tech partners like us and the units themselves. And so for example, we are closely paired up with Unit 412 Nemesis, which started as a battalion, and then it became a regiment, and now it’s a brigade. And rumors are, unconfirmed rumors, that it’s gonna become a corps at some point And what it means is we started with 100 operators, which became 1,000, which then became 5,000 operators, who could become 25,000 operators that are sitting and whose job is not just to fly missions, but to deliver feedback to us. And our job is to iterate on that feedback in real time with them. There is tens of thousands of code commits and design changes that happen all the time based on that real-time feedback. So now that you know there are units that can access the data and influence procurement in real time through the government system, and all this kit is being co-developed with people that are trusted in real time, things are changing very quickly and improving all the time.
David 23:17
Yeah. That’s fascinating. I mean, it’s a real markets-based approach to capability development and acquisition procurement, and definitely some lessons that could be learned over here in the United States military. Maybe from, like, the operational standpoint, right? Like, the last couple months, the US has been embroiled in a number of different conflicts. You know, there was Venezuela, which went fairly quickly, and now nobody talks about that. And of course, you know, the situation with Iran, Given where our capability deployments have been, and there was a great chart within the first couple weeks of the Iranian conflict that kind of highlighted that there were very few capabilities developed in the last 10 years that were actually operationally being used, in Iran. And I’m wondering, you know, at some point, did the Pentagon come calling or people in Central Command or European command about, “Hey, how can we get some of this stuff over there?” And then, you know, could Ukrainian combat-developed technology be useful to helping the situation with the Strait of Hormuz?
Oleg 24:30
I can’t really comment on specific engagements, but as I mentioned in one of the interviews, the phone had been ringing and has been ringing off the hook, with interest because when you are dealing with the challenges that we saw in Iran, the lessons from Ukraine are directly transportable. These are the same Shahed drones flying. The tactics and concepts of operations that Iranians are using against Dubai and Qatar is no different than what they’re doing against Odesa in Ukraine. Russians are doing it against Odesa in Ukraine. The mining, demining in Hormuz is no different than when Russians tried to mine the grain routes to bring Ukrainian grain out of Ukraine. So the analogy is all there. Maybe the temperatures are slightly different, but the sea is also similar. Black Sea and, the Gulf both go maximum sea state three, and so on and so on. So lots of lessons to be learned from there. Ukrainian experience is extremely, effective there. As you know, there was a delegation from Ukraine helping take down a number of Shahed drones in Middle East. That has been extremely successful, and lots of lessons learned from there, including in design of interceptor drones. Ukraine was able to change how interceptor drones are designed in less than two weeks to match the Middle Eastern requirements, which was very interesting. So yeah. I think, also there is a very effective knowledge transfer that happened from those examples of how Ukraine fights to people on the ground in Bahrain and other parts of US military installations in Middle East right now. People are learning. We saw the Lucas program. There is many other programs where Ukrainian experience is being implemented right away. Now, when is it gonna arrive to Pentagon? Great question. Hopefully soon.
David 26:30
Yeah. And hopefully, your investor at Shield Capital is helping, you know, accelerate that whole process, which I know can feel a bit mind-numbing. Now maybe just real quick, speaking of engaging with the Pentagon, you just hired your US-based CEO, Sean Planke. Maybe talk a little bit about how you met Sean and what you were looking for in somebody to help sort of, push out the US, UFORCE, exposure.
Oleg 27:01
Yeah. So, we got our introduction to Sean through our investors. And then what’s interesting is at least three of our investors triangulated the same person to us around the same time, which was, a great way to know that we’re talking to someone who is for real, where, all of the US really plugged in defense investors we have on the cap table at once said, “That’s the guy.” And then at the same time, just the level of expertise that we saw, the level of ability to navigate, Washington DC, which is not easy to navigate. But also the knowledge of having served, the knowledge of having met a number of people in a number of missions and just being super mission-aligned is something that really caught our eye. Level of energy is more than mine, which is really hard to imagine. But guess what? We were just in a, literally in a bunker with a number of commanders a couple days ago. It was day eight on the job, and I was sitting in the back of the room. I’m like, “Huh, I’m not really needed here anymore. That’s amazing.”
Maggie 28:14
What have been some of the biggest challenges, you know, or unexpected surprises in scaling UFORCE beyond Ukraine to international markets?
Oleg 28:24
That’s a really good question. So early on, about a year and a half ago, it was financing, not private capital financing, but like walking up to a bank and saying, “Yeah, we want some working capital to make some weapons,” was a difficult thing. In the UK, even opening a bank account was a very difficult thing. We had to go through a chairman of a banking group to get someone to open a bank account for us there. Not an issue anymore. Scaling, talent has been an issue because especially in Europe, where there is much less density of venture scale outcomes and so there’s very few, much fewer people who have seen unicorn growth, 10Xing year over year, et cetera. And so, finding those people was hard. And it’s like I’m juxtaposing them with people who come from defense world, which actually historically has been barely growing has been difficult. How do you get hypergrowth people who know defense? In the US, there is a bit more of that because you have hardware companies that have scaled, they have seen hypergrowth that are not technically defense. But, in Europe it’s very much harder. And even the US defense stuff, like we are talking to number of folks we’re trying to recruit from the larger defense tech companies in the US, and all of them are like, “Yeah, we’ve built shit. Nobody has used it, so we don’t really know if we built the right thing. So we know how to build stuff, we don’t know if anybody’s gonna use that stuff.” And how do you hire that? And they’re like, “And how about hypergrowth? Well, we know how to hypergrow a company on investment capital, but it’s not really revenue-driven hypergrowth.”
Maggie 30:20
Yeah, I think it’s an interesting point that you’re making that a lot of these, you know, international companies have not actually deployed technology yet on the battlefield. And I’m curious, what do you think are some of the things that maybe Western, international defense tech companies misunderstand about what it takes to actually deploy on the battlefield? And what will it take for them to get over that hurdle?
Oleg 30:46
Well, like, everything. There’s only two Western companies that I can think of that have real battlefield effects in Ukraine. It’s Quantum Systems and it’s Tekever, and Destinus. Everybody else, I’m sorry, there’s two wars going on right now, and this is, like, my favorite question for investors to ask other defense tech companies. Ask them how many daily active users they have. Like, there is two active wars right now, and you don’t have daily active users, like people logging in and using your stuff daily? What are you doing? And so to that point, the challenges to deploy are, first of all, just even getting your stuff to the frontline is a whole thing of its own. Like, I was just talking to someone who is like, “Yeah, the, this defense tech company showed up and said, ‘Hey, here is our product. Use it.’ Like, great, I wanna modify something. ‘Oh, you can’t do that. Our agreements and everything doesn’t allow. If you wanna pay us more, we can send in our four deployed techs, and they’re gonna try to do something here.’ Most likely they’re gonna have to ship it back.” That was a real discussion with the top three largest defense tech company in the US. And I’m not even talking Prime, I’m talking, like, hard defense startup company. So that doesn’t work in Ukraine. A general in the PACOM during one of the exercises told me something. He’s like, “Hey, when I’m on an island and you can’t fix your thing with a coconut, I don’t want it.” And so that’s the stuff that Ukraine has figured out, that everything is simple, modular, deployable, doesn’t need experienced MIT PhD field technicians, doesn’t need to be shipped back to the HQ for a software upgrade, or whatnot, and it just works. And unfortunately, defense tech outside of Ukraine is not getting that.
Maggie 32:44
How do you actually scale a manufacturing process or manufacturing facility in the middle of an active war when you yourself as a weapons manufacturer may actually be a target for the enemy?
Oleg 32:58
Well, you approach building manufacturing facilities very differently. Like, nobody in Ukraine builds large, beautiful, brand-new facilities with a big company logo on the roof and kind of people wearing white suits, white space suits or whatever it is, inside, and you can hear a pin drop. Like, in Ukraine, if you do that, you’re gonna get a ballistic missile in 40 seconds, and we’ve, uh... Even without doing that, we’ve lost a number of facilities over the years because you become the prime target. If your kit works, Russia is gonna use their 40 million dollar ballistic missiles to take out the manufacturing facility for your kit. And trust me, every one of the Western factories for weapons is already mapped out by China. It’s already mapped out by whoever needs to map them out, and those things will be gone in the first 30 seconds of a hot exchange. Now, what we do in Ukraine is we use, secondhand or underground facilities for pretty much every critical element so that we can withstand missile strikes. There is a lot of operational security protocols on how to stay under the radar, how to not endanger your people, how to know how to behave when an airstrike is imminent, and how to not use your, not lose your expensive equipment, or don’t use the expensive equipment. So the way we operate our manufacturing processes is it, the factory needs to be built from a local Home Depot using components from a local Best Buy, because you will not have the time to wait for nine months for the machine to arrive, and you’re not gonna have, continuous power, you’re not gonna have continuous supply chain technicians to come fix the machine, et cetera. So it has to be something simple, it has to be something scalable, easy to repair, field deployable, and fast.
Maggie 34:58
How did you all think about designing your systems to be able to be manufactured at scale during this kind of environment?
Oleg 35:06
Well, you take the tools you have, and you build what you can with them, and then when they ask for more, you figure out how to do more of it, and you keep on iterating until you get to large scale. Again, Ukraine doesn’t allow you to build for scale right away has to be... Manufacturing is as much of an iterative process as design and as fielding in Ukraine. You cannot plan for it. Spreadsheets don’t work. You, and the way Ukrainian government is purchasing, it’s all supply-constrained right now. So they walk up to you and they say, “Hey, look, how many can you make? We’re gonna give you margin on top, and we’re gonna buy everything you can make,” versus kinda shelfware and stuff like that.
Maggie 35:49
How have you all thought about managing your supply chain during this conflict? I know today a lot of the systems that Ukraine fields do still come from China or have a lot of componentry coming from China. So how have you thought about that, you know, right now, and then where do you see that going in the medium to long term?
Oleg 36:05
Well, if your stuff really works, your supply chain is gonna be targeted. So we had our supply chain targeted multiple times, and because of that, as a company, we made a decision to insource most of our supply chain. So we make our own drone motors, we make our own cameras, gimbals, battery packs, frames obviously, hulls, you name it. And so, we had to grow up to be fully NDAA compliant and not depend on Chinese and other non-fully aligned national, sources. And so PCBs, circuit boards, all that stuff has to be made in-house. Now, costs are different, but over time you can drive it down, and at our scale, it’s not impossible to execute.
Maggie 36:52
So how are you seeing international demand for battle-tested systems like UFORCE? I guess, you know, geographically, where are you seeing the most demand, and what kinds of products are people most eager to purchase? I mean, it sounds like you have a pretty unique offering on the market as being one of the only scaled or scaling combat-tested defense tech startups.
Oleg 37:15
Yeah. We think about the world in terms of four theaters that are active right now. You have Indo-Pacific, you have CENTCOM, you have EUCOM, and Ukraine, kind of overall. And from that perspective, the, each of these theaters has different problem sets. And so what we are doing, we are figuring out what are the problem sets we can actually solve with the same platform capabilities across the board. It turns out Magura is relevant in all four theaters. In Ukraine, it’s done its job mostly. But in the Baltic and in the Gulf and in the Pacific, Magura can do different things for each one of them. In the Gulf, it’s demining and counter-UAS against Shaheeds. In the Pacific, it’s all kinds of things, from one-way attack to ISR to demining to sub-hunting to C-UAS, you name it. Same in the Baltic. And so, demand is skyrocketing everywhere. There’s a lot more water outside of Ukraine than in Ukraine. At the same time, the distances are much larger, and we are very good at long distances, high endurance, loitering, delivering payloads, working as a truck to get things over there where nothing else can get through. And then the other part is we’re starting to see more and more demand for our Nemesis bomber drones. You know what’s interesting? I don’t think US understands bomber drones. Two days ago, for the first time, I was meeting with a very senior general in the US Army, and he basically for the first time brought up their interest in droppers and how they’re thinking about it. In Ukraine, droppers are Probably more cost-effective than FPVs in some way. And the battlefield damage for droppers is on par with FPVs, it’s just at the longer standoff distance. And so we’re seeing more and more adoption for the dropper technology in Europe. A major European country right now is deploying, is basically upgrading one of their light armor brigades to full CONOPS and TTPs and software and hardware and doctrine we developed for 412 Nemesis, and then rolled out across 40 brigades in Ukraine. And the moment that started happening, other countries with light, started thinking about what is gonna change about what needs to change about their light armored brigades in order to increase their survivability and effectiveness. Because in the world of FPVs, light armored brigades don’t have a future. And so we are seeing a whole queue right now of light armor brigades, which is leading to a whole NATO FLE, the field lethality experiment, which is kind of like a, when NATO as a whole decides, “Hey, we need to change something as a NATO, recommendation across all forces at once.” And so to summarize, demand for Magura where there is more water, outside of Ukraine, and then demand for Nemesis, where they expect a lot of land fighting and a lot of, kind of 20 to 50 kilometer, effects needed.
David 40:29
Well, yeah, I think, what the picture you paint is both terrifying but also in certain respects, like reassuring that opportunity for the US to modernize its capability, its kit, is very much available and very proven. And so maybe just, you know, Oleg, as we kinda come to the end of this, interview, you know, what is the future of UFORCE? We’ve seen some pretty lofty valuations for a couple of these other defense tech companies that have gotten started in the last 10 years, three years in some cases, right? Anduril just raised that, I think 61 billion, and, Saronic raised, I think just sub of 10 billion. Where do you see UFORCE fitting into this picture, across this emerging defense tech landscape?
Oleg 41:19
Well, at some point, customer is gonna ask, “Does this really work?” And that’s kind of where we come in. We’re seeing more and more war fighters and commanders really focus on being combat proven for their kit. And so in terms of valuations cannot comment on it as you can imagine, but, we’re already a unicorn. At some point we’ll be a decacorn, as they say. But the valuation is not the point. What the point is that battle proven kit is how you save war-fighters’ lives and help them achieve their mission. And, the amount of experience we bring to the table is absolutely unparalleled. I think UFORCE has flown together like an order of magnitude more missions than all of the Western defense techs combined and I haven’t done the numbers, but just eyeballing it looks significantly larger. We’ve flown 220,000 combat missions so far. That’s more than all of US forces have flown in, over Iran, for example. Way more. I think it’s, like, 10 times more. And so the future of this is we’re just gonna keep on scaling. We are building stuff that works. It’s not gonna be the most expensive stuff, it’s not gonna be the most exquisite, but you can always rely on it to do the right thing.
Maggie 42:44
Oleg, if you were the American Secretary of War for a day, what changes would you make to the department, the way it buys and what it buys, to ensure that the United States is ready for this next generation of warfare?
Oleg 42:58
That’s a great question. I actually think there are some really good positive dynamics happening at the DOW. The whole team that came in from private equity background is moving fast, and it’s very encouraging. But, what’s less encouraging is just the complexity of procurement with, COCOMs, combatant commanders, basically being in full dependency of Pentagon, where the actual war fighting leaders don’t decide what they need for their region. They can submit a vote, but they don’t really guarantee you get that, is something that needs to change, it needs to change ASAP. Like, Admiral Paparo knows better than anyone else on the planet how to fight the war in the Pacific, and so he should be getting what he wants and needs. Same with the leader of CENTCOM, same with other leaders. And that’s something that I think, only US has for its size. Like, when we work with European countries, the linkage between the combatant commander and the procurement office is extremely tight.
Maggie 44:07
Great. Well, Oleg, thank you so much for coming on the show. We really appreciate it, and we’re super proud to be investors in your business.
Oleg 44:15: Thank you, Maggie. Thank you, David. Appreciate being here. Thank you, Oleg.
