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00:00My assumption is that the president's true social post was scheduled for 8 a.m. Pacific, 11 a.m. Eastern.
00:04We don't know. But it's very simple.
00:08He had said that he intended to meet with Xi in two weeks' time, now doesn't see a reason to do so.
00:14He threatened to massively increase tariffs on Chinese goods and says that China is becoming increasingly hostile.
00:20When you and I met in January, you opened our entire conversation with a forecast on where you felt the relationship between U.S. and China was going.
00:28Were you right?
00:30Yeah, I think so. I mean, the reality is that our interests are relatively divergent at this point.
00:36And that's particularly true when it comes to semiconductors, when it comes to Taiwan.
00:41And so Trump, you know, I think what he's doing right now is he's playing the art of the deal.
00:46He's trying to get the best deal that he can.
00:48And I understand that he has to manage this reality that right now we are kind of dependent on China for a lot of things.
00:57But, you know, I think what we talked about last time is this is why we need to re-industrialize.
01:02This is why we need to have our own rare earth supply.
01:04This is why we need to be able to make our own chips and our own computers and our own products downstream because it takes away leverage from China.
01:10They do have a lot of leverage right now.
01:12And so it's very hard to make deals with them.
01:15But I think it's actually healthy for the U.S.-China relationship for it to not be so dependent on China.
01:22Right now, we don't have great solutions.
01:24Can you kind of quantify it?
01:25I mean, so you're so involved in Arsenal 1.
01:27We will talk about that.
01:28But right now, the weapons that Anderil makes and the autonomous systems, how dependent is that specific supply chain at this moment on China?
01:38Anderil's done a uniquely good job of getting away from China versus not just other defense companies, but also compared to most American companies in general.
01:46Remember that we are sanctioned by China.
01:48Remember that our executives are personally sanctioned by China.
01:52And so we have, we can't, we're not doing this for, you know, leverage or negotiating reasons.
01:58We have to get off of Chinese supply chain and not just things that are literally made in China, but even things that are dependent on China.
02:05So if it's dependent on Chinese precursor chemicals or Chinese equipment or machinery or processing, we have to make very aggressive moves to stay away from that and keep a U.S. and allied supply chain to the absolute greatest extent possible.
02:19So I would say Anderil's not even really what I'm concerned about.
02:23It's the broader economy and maybe some other defense companies.
02:27If you can believe it, there's lots of U.S. defense companies that haven't been sanctioned by China.
02:31And therefore, they haven't had the foresight to go and build it as you are in Ohio.
02:38How is that going?
02:39How is Arsenal managing to hit the milestones you want to see?
02:42So Arsenal is not just important, but it's necessary.
02:45So you guys know it's about 5 million square feet of manufacturing capacity that we're building in Ohio.
02:49We have to build it.
02:50We have so much volume that we just have to output that we can't do it without that new site.
02:55We started building that site many months before the government gave us these contracts that are now going to fulfill its capacity.
03:03And thank goodness we did.
03:05Like this year, our production is up 400 percent over last year.
03:09I'm sorry, as in Arsenal?
03:11Non-Arsenal one.
03:12I'm saying our non-Arsenal production is up 400 percent.
03:16And then so next year, we expect to see an equally large bump up.
03:20And that is going to be critical for Arsenal to come online.
03:22We actually already have the first round of employees who are going to be working in Arsenal.
03:26We brought them from Ohio to HQ.
03:29They're going to be here for the next six months.
03:31I guess it's less than six months now.
03:32They've been here for a while.
03:34And that way, they're able to get indoctrinated in our processes, work on our existing manufacturing systems.
03:39And then when Arsenal one opens next year, they can go in and hit the ground running day one.
03:44What do you need from the Department of War?
03:46What do I need from the Department of War?
03:49I'm getting a lot of the support that I need.
03:50I mean, across the Navy and the Army and the Air Force, there is a recognition that we don't have time as a country for business as usual,
03:56that we need to move much faster, that we need to be building new things in new ways,
04:00that we need to design weapons that can be manufactured by the industrial base we have, the talent base that we have.
04:06And we've got that talent?
04:07Oh, the country has the talent in spades.
04:09They're just working on the wrong things.
04:11Most of our best talent, contrast this with the Cold War, is no longer working on national security problems,
04:16but is working on things like advertising optimization, on new apps, on tools of entertainment rather than tools of deterrence.
04:23And I've seen that reversing.
04:24There's a lot of people, and of all ages, we're talking people who have been in the industry for 20, 30 years,
04:29all the way down to kids who are just going into school, learning disciplines that are relevant to aerospace and defense.
04:35I think that there's a lot of people who are realizing we've been resting on our laurels and coasting for a couple decades,
04:40and that our tech industry has to get in gear and work on more important problems.
04:44Palmer, there was a report about the NGC2 system.
04:48It named both Anderle and Palantir.
04:51We've asked Palantir through Shom to comment on that.
04:55But the report in Palantir's case, Moved Markets, could you just respond to that reporting,
05:01which came from Reuters, and explain the sort of timeline and the inaccuracies that you feel there are in that report?
05:09So you may or may not remember this, but I was a journalism major myself.
05:13I was only a semester and a half away from graduating.
05:16I was the online editor of the Daily 49er, which was the Cal State Long Beach student-run newspaper.
05:21So I care a lot about this stuff, both as an Anderle perspective and then also just from a journalist perspective.
05:26The journalist who wrote that Reuters story would have been failed out of the class by any of my professors.
05:30He refused to include our on-the-record statement.
05:33He refused to include the on-the-record statement from the Army because they fundamentally made the whole story not a story.
05:38There was an analysis saying, hey, there's all of these security problems like the system, the prototype for NGC2, next generation command and control.
05:46It's not tracking what the users are doing.
05:48It doesn't have any passwords to log in.
05:49There's no security turned on.
05:51And they said, oh, my God, this is a huge problem.
05:53And we said, guys, this was an early prototype.
05:56The Army wasn't paying us to demonstrate user accounts.
05:58It was paying us to demonstrate integration of different sensors, different weapon systems, all into one pipeline.
06:04And Lattice has all this functionality.
06:06We do this all the time.
06:07It's not like we don't know how to do this.
06:10And the Army said the same.
06:11They said, yeah, we just turned on all those features.
06:13Just a few weeks later, all these issues that you're talking about didn't exist.
06:17This was an internal security audit, just noting that these things were a factor in that early prototype.
06:23Yes, there's no access control.
06:25Yes, that is a risk.
06:26Yes, we have not audited all of their security code.
06:29That is a risk.
06:30But that's completely normal for early development.
06:33But Reuters didn't include our quote, didn't include the Army's quote, because that would have made the entire story irrelevant.
06:37So instead, they include quotes exclusively from our competitors and from so-called anonymous sources, saying that Anderl and Palantir are running this fundamentally insecure thing.
06:4699% chance that was planted by one of our competitors who had access to that memo.
06:50And there's only a few people who could have done it.
06:52And I can make people look bad by slicing and dicing memos, too.
06:54I'll show you if I want.
06:55I'll get back into the journalism game.
06:56We can say pretty definitively we've given you the opportunity to comment on that report.
07:01You absolutely have.
07:02I'm using this opportunity to attack my enemies.
07:04You just mentioned your competitors.
07:06Let's call them legacy primes, right?
07:08Before you came to set, I read the data piece about still the dominance of those companies in proportionately war contracts,
07:17the Department of War contracts they're getting versus Anderl.
07:20They're still getting them, Palma.
07:22Look, remember, I did not say that it was necessarily a prime who planted it.
07:26There's a lot of people who are competing.
07:27I think there are like 40 companies competing for NGC2.
07:29I'm not saying that it isn't.
07:30I'm just not saying that I didn't say that it is.
07:33Look, these guys are still winning a lot of contracts.
07:36The reality, whether we like it or not, is that these companies do have a lot of important weapons capability.
07:40We don't want them to go out of business.
07:42We don't want them to fall over.
07:43Anderl's working with a lot of them.
07:44I mean, that's my bias here.
07:46I mean, we're working with Raytheon.
07:47We're working with Lockheed.
07:48We're working with Northrop.
07:49We're also competing with them for programs.
07:51I think that in general, the industry needs to move towards a model where companies invest more of their own money in these products,
07:57where they fail.
07:58They need to skin their own knees, not the knees of taxpayers.
08:01And companies disagree as to the extent of whether that should be true.
08:05I think companies like Anderl in the short term and the long run are going to do much better,
08:10especially because the services want to see more companies acting like Anderl.
08:13They want us to have more skin in the game.
08:15They want everybody to have more skin in the game.
08:17They know that it incentivizes the right kind of behavior.
08:19Talking of skin in the game, there are a lot of retail investors,
08:22a lot of institution investors who want more access to be able to skin their knees when you slip up,
08:28but also benefit from your growth.
08:30When are you going to IPO?
08:31So it's going to be in the next few years.
08:33And we've talked about this before.
08:34But it's still the number one question we get for you.
08:37It is.
08:37It just is.
08:38So, look, we are on a path to IPO.
08:43Like, I can explicitly say that.
08:44I'm not going to be coy about that.
08:46We are running the company as if we are going to be audited by the auditors that are looking at public company,
08:53trading companies.
08:54We're running the company's financials as if we need to be accountable to public market investors.
08:58You need to be a certain shape of company to be in the public markets.
09:01You need to have a certain level of credibility in your accounting process across the organization.
09:05So, like, the old-school Anderle stuff of, hey, you know, toss it in the bin.
09:10No need to do any paperwork.
09:11No, you actually have to properly account for what's on the shelf, what you've thrown away, what's working.
09:16And we've gotten into that swing of things.
09:18It's going to be in low single-digit years.
09:23And, by the way, I'm not...
09:23Do you have to be profitable for that?
09:24Like, at the moment, it is very expensive what you are trying to build.
09:28Agreed.
09:28So, my philosophy on this is that if you are going to be in the public markets, you need to be the shape that the markets want you to be.
09:35I think that's not a very unprofitable company that has a trend that looks very unprofitable.
09:40So, my personal opinion, and I'm not hiding the date from you.
09:43We genuinely don't know.
09:44We're not going to do it until the right moment.
09:45We don't have to.
09:46Private capital is amply available to us.
09:48But what we want to do is either be profitable across the business, or we want to be on very close to it with a clear trend showing it's certainly going to happen.
09:59And I don't mean it's going to happen some of the years in the future.
10:01I mean, like, hey, we have these contracts, and if you just believe that we are going to deliver the things that we've already sold, then you know that we're likely going to be profitable.
10:10Palmer, I'd like to talk about some of the weapons and autonomous systems that are behind us, if we can.
10:16You have both relationships with the U.S. government and defense apparatus, but Western allies, too.
10:23That's right.
10:24Are these prototypes, or do we see militaries around the world deploying them?
10:28Are they real?
10:29There are going to be loads of people watching this show that actually don't know Anderil.
10:32But also many skeptics say, like, you know, these are prototypes, and this is a startup in its infancy.
10:38Well, if we do our job correctly and we stop some of these major wars from starting, then people are going to continue to be unfamiliar with Anderil.
10:44That the bizarre nature of our job and also the job of our military is that a better job we do of not having a fight, the easier it is for people to either not pay attention to us or, in fact, say, well, those guys are useless.
10:55We don't need them.
10:55It's only when everything goes to s*** that everyone talks about how great the military is.
10:59Palmer, I'm going to jump in and apologize for the choice language to our audience, because it's quite early here on the West Coast.
11:04I'm so sorry.
11:05It's okay.
11:06I'm a young guy, and I've got really bad, I'm not, I'm not, I'm not, I don't have, like, that English posh type of, you know, passion.
11:13Yes, exactly.
11:14We accept the apology.
11:16Same question.
11:17Are these systems deployed in the real world by nations in case they need to use them?
11:22So many of these systems are.
11:23For example, Altius has been in Ukraine since early in the war.
11:27We've also shipped a lot of these two nations that are really, I think, on the precipice of conflict, like Taiwan.
11:32Others of these, I think, have not been deployed by anyone but the United States.
11:36You know, Roadrunner has been deployed by the United States, but there are other people in other allied nations who are very interested.
11:41Same thing with Fury.
11:43We've already delivered the first Furies to the United States Air Force, but there's a lot of interest in Korea, in Japan, in a variety of European nations.
11:51Australia.
11:52These are nations that are strongly allied with the United States, and they want to have commonality.
11:55Think of it this way.
11:56Everyone who's buying F-35s is bought into the U.S. plan of how we're going to fight and deter these wars.
12:02Something like Fury that tightly integrates with an F-35 is of a lot of interest to them, especially if it means they don't have to develop it all themselves,
12:10and especially if we're willing to manufacture it in their country, which we are.
12:14I think that we need to be having manufacturing bases across all our allies.
12:17One of the superpowers the U.S. has that China does not is friends around the world.
12:22China does not have friends around the world.
12:24They've got a couple buddies who have to suck up to them in their immediate local region,
12:29but they do not have people across the planet who are willing to work with them to build the war machine that we need to deter their aggression.
12:36We should be taking advantage of that, not pulling back on it.
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