European Defense Sovereignty Starts in the Factory: Stark’s Uwe Horstmann and Johannes Schaback

Two years after its founding, Stark has roughly 700 employees and strike drones in the field in Ukraine. CEO Uwe Horstmann and CTO Johannes Schaback argue that the real lesson of that war is not any single weapon: the innovation ecosystem behind it is the wonder weapon. They explain why Stark designs every system for mass manufacturing from day one, runs 10 to 15 programs like a venture portfolio, and views the staff sergeant who operates a system as just as important as the general who buys it. Johannes recounts the publicly reported failed trial that became a forging moment, as engineers worked around the clock at a freezing test range until they landed three consecutive hits. They discuss NATO’s principles of responsible AI use and the hard-coded constraints in Stark’s autonomy stack. And Uwe lays out his next big idea: defense contracts structured like cloud contracts with surge capacity built in, so production itself becomes deterrence. Hosted by Pat Grady and Luciana Lixandru, Sequoia Capital Chapters 0:00 – Introduction 1:03 – Billions in contracts in 18 months: Stark's four-part playbook 2:28 – The staff sergeant matters as much as the general, and wood beats plastic 7:42 – Why Europe is ready for a neo prime, and why procurement reform will last 11:45 – Startup DNA, venture-style programs, and "as complex as a washing machine" 16:27 – Born out of fire: the failed trial and the round-the-clock comeback 21:13 – Where Stark finds talent, and why defense is no longer off-limits 23:48 – Anatomy of a strike, from the wooden crate to the kill zone 27:22 – Vertical integration, multiple domains, and shifting left on manufacturing 32:53 – After the Hugging Face hack: guardrails on autonomous weapons 35:56 – Matching the primes on R&D and scaling to 700 people in two years 39:24 – Deterrence by contract, and Europe's next chapter with the US

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I think what came together is obviously an understanding in Europe that Europe needs to take more responsibility for its own defense. You know, that is, of course, something that the US have told us repeatedly. And they're right, you know, Europe has to step up and needs to be able to defend itself. Because that is our way of continuing to live in peace. It's deterrence, right?

• 0:36Pat Grady?

  My partner Luciana and I are here with Uwe and Johannes, the co-founders of Stark, a neo-prime serving the European defense community. Gentlemen, thank you for joining us.

• 0:46Speaker 00

  Thank you so much for having us.

• 0:48Pat Grady?

  Thank you. All right, to get things started, you guys landed billions of dollars of contracts within 18 months of starting the company, which I believe is unheard of in the defense business. What did you do right? How did that happen?

• 1:01Speaker 00

  So obviously, you know, this is something that we like to claim as a big success, but it's also probably a moment that is just optimistic for all of us because something has changed beyond just what we built in our company. And we're moving in the right direction, I think, in Europe. What we did specifically, I think, is four things. We did innovation really close to the battlefield, so really being integrated with units and soldiers who actually use the systems. Then be venture first, thanks to Sequoia and others, which basically means we fund the innovation, kind of the product development ourselves. We don't rely on some government R and D spending. We focus on designing the products in a way that they become really usable and mass

• 1:43Speaker 00

  deployable, so beyond pure innovation use cases, all the way to certification, validation, safety of the system, so really usable for NATO forces. And then number four, we designed the products clearly thinking industrial scaling from the get-go. Like, how can we make sure that those are not only a few exquisite systems that, you know, stand around somewhere, but how can we make sure that, you know, factory is part of the weapon, you know, production is deterrence?

• 2:13Pat Grady?

  Now, let me ask you, point number one, close to the battlefield. I'm guessing that most military units would not let a couple of random guys traipse into their unit and understand their needs. Like, how is it that you gained access to the battlefield so early in the life of the company?

• 2:28Speaker 00

  We do that with a large presence in Ukraine. So we have, yeah, a large team in Ukraine, and we integrate in those units quite extensively. We also do work with the European forces. So there are more and more formats, I would say, where that thing is enabled. So you can connect with the soldiers, you can show up with them, you can go to the battleground and, well, like the testing grounds, the training grounds, and that's where you get the best feedback. That is the most important input factor for us, the capital we can get, you know, again, thanks to Sequoia and other people. But what we really need is that input of the customer, which is not necessarily the buyer, right? The buyer is probably some, you know, high-level official, but the customer oftentimes is a

• 3:12Speaker 00

  relatively simple soldier, you know, on an operational tactical level. We need their input. That's more important to us than anything else.

• 3:19Pat Grady?

  Well, and just to level set on what you guys do, what is it you heard from those customers and what's the product that you've now given them in response?

• 3:27Speaker 00

  So we, at any point in time, we probably run 10 to 15 different programs, almost like a venture-like innovation portfolio. The one at the moment is a, you know, you would probably call it a strike drone. It's actually a munition, but it's like a weapon system that is very much software and AI-driven. It's relatively inexpensive compared to what other weapon systems are out there. And we got a lot of great feedback on the usability, you know, there is, we only begin to understand what does it do to the mental load of a soldier, for example, who is supposed to operate those unmanned swarms? How exactly does that work? How should the box be created? Should it be wood? Should it be plastics?

• 4:06Speaker 00

  How, you know, how do we visualize a swarm on a small screen so that a soldier can operate it?

• 4:13Pat Grady?

  Earlier, you had this interesting anecdote about plastic versus wood on the boxes that go into the field. Can you share that anecdote? Because I think that really illustrates kind of the difference between the lab and the field.

• 4:25Speaker 00

  1,000%, because like, you often have those great ideas, how this product should be, and you came up with the idea on a whiteboard. And then you put it in front of the users, the soldiers using it in the field, either, you know, in real battle or in trainings and simulations. And sometimes it's, you know, very, very different. So, for example, we show up with this beautiful plastic box that is light to carry, and the soldiers look at us like, what do we do with this? Why don't you give us wood? Because wood, at least we can, you know, put in the fire and it keeps us warm in the winter and like, didn't think about that. And there's many anecdotes like that. There is, the feedback is so valuable.

• 5:06Speaker 00

  So traditionally, you would say, you know, most important soldiers in, you know, the product development and the procurement are the generals who tell you that's where the big budgets are and you should do this and that. And for us, we always like to say, you know, the staff sergeants, the enlisted personnel who then actually use those systems are maybe even more important to us because in like a true startup spirit, you want to be close to the customer, you want to develop for that customer. The customer for us, yes, it's the buyer, but it's also the user. And those are not the same people in the military situation. And we're just beginning, for example, to understand, if you think about a drone swarm that you are now controlling, how exactly do you do that? Like, do you have a mouse?

• 5:51Speaker 00

  Do you have a keyboard? Do you have a touchpad? How does all of that work? How does it work when you wear gloves? You know, what clicks are okay? Where do you need to be really precise? All those things. What is the mental load? How many, how much information can I possess at the same time? We're only beginning to understand. And if you treat soldiers, they are used to industry just showing up and dumping stuff on them and saying like, here, this is the best thing, you know? If you have issues with it, it's because you didn't understand it. You really need to change it around. You need to treat them as your customer. The most valuable thing they can give to you is their time and their feedback. And sometimes we show up and they say like, you know what? This is absolute shit.

• 6:33Speaker 00

  But you can really win trust by saying, tell us how exactly this shit? And we'll show up again tomorrow or the day after tomorrow. We do, you know, we create a new version and we'll be a little bit less shit tomorrow. And that goes a long way. And some of the things that make me the proudest of this company is we gained like a lots of, you know, minds and hearts in the, in the community by people saying, you know what? Those guys, they approach it from the right perspective, you know? They have a soldier-centric view and they really want to build a product that's good for us. It's quite obvious for startup people, right? Probably all, everybody who sits here says like, yeah, we want to build for the customer. The customer needs to be happy, net promoter score and, you know, retention and NRR, ARR growth.

• 7:18Speaker 00

  And for us, the translation to that is listen to the soldiers, build with them, build for them, and hopefully good things will happen on the procurement side as well.

• 7:26Speaker 02

  Can we take a step back? You mentioned that there is a favorable moment in Europe right now for building defense companies. And Uwe, you and I have known each other for a long time. We started as venture capitalists in Europe and you saw the opportunity in defense before other people. You were investing in defense before, way before it was obvious, I would say. And you also have a background in the military yourself. Can you tell us a little bit firstly about what came together in Europe and why there is this opportunity to build a new neo-prime today?

• 7:59Speaker 00

  I think what came together is obviously an understanding in Europe that Europe needs to take more responsibility for its own defense. You know, that is, of course, something that the US have told us repeatedly. And they're right, you know, Europe has to step up and needs to be able to defend itself. Because that is our way of continuing to live in peace. It's deterrence, right? We probably understand now that the world is unfortunately probably not as default peaceful as it ideally would be, but it needs to be defended. And the only way we can be safe is by deterring a potential attacker. So that understanding has really, you know, really materialized in people's minds. And it came together with a point where people also understand something's happening on

• 8:44Speaker 00

  the battlefield. New technologies emerge. It's software-driven, AI-driven. It's relatively inexpensive to produce. It is small scale. And those two points, you know, came together. And we give a lot of credits to the Germans and other governments who also understood, well, if that's the case, we should, A, procure those solutions where the capabilities that we have are lacking, where there is a gap. And we also need to change the process of how we procure because you don't procure a drone like you procure a battleship, you know? It's just different. So that did come together. And that was also probably like the starting point for us, coinciding us with the founding of the company, saying, okay, now we need to lean in.

• 9:25Speaker 00

  This is going to be like one of those moments where in a few years, we probably will ask ourselves, what did we do during that time? And for me, you kind of mentioned my biography, things really came together, two big streams, like an interest in military and security, international, you know, relations, things like that. And then the technology part. So it was quite a clear moment for me to say like, okay, I need to step in.

• 9:51Speaker 02

  You think that the procurement process changes are sustainable? Or do you think this is a moment in time for Europe, for Germany and other European countries?

• 10:01Speaker 00

  I think they are sustainable. Changes like that in Europe, they don't happen because there is like a charismatic leader who says, you know, we need to change, this is the way, follow me, here's a great narrative. That's not how Europe works. Europe works based on, well, I guess we kind of have to do it now. It's reality kicking in. And the positive side of that would be hopefully changes are more lasting because they are based on actual structural fundamental changes and you know now we are in a new world.

• 10:32Speaker 00

  And that's what gives me hope that we change the procurement processes that took years to months. And that includes the certification, which is a big, big part of what we do. It's a very boring topic in a way, but it's very, very important. I think those changes are there to last because the real learning from you know, the Ukraine Russia war is probably not drones, no drones. It is about an innovation ecosystem. That is the actual wonder weapon, you know, we always like to read on the internet like what new weapon system, how awesome is it? That doesn't really matter. The whole point is how do we as Western societies set up ourselves so that we can continuously innovate in defense? With all the different ingredients, we'd already talked about the input from fighting soldiers.

• 11:16Speaker 00

  There's a talent aspect of it, you know, like our smartest minds should be willing to work in defense. There's a capital aspect to it and all that stuff. And I think that is there to, to, to last. I'm, I'm quite hopeful about it.

• 11:30Pat Grady?

  What advantages do you guys have as a two-year-old company selling into the defense apparatus? That a 70-year-old company selling into the same customer might not have?

• 11:41Speaker 00

  In that field, you know, that segment of the market, the inexpensive, the AI-driven, the mass scalable systems, you know, our strike drones come to mind, but also for example unmanned boats, you know, and things like that. It is, we have a startup DNA, like we built the prototypes like you would prototype in a startup pretty much. And we built them from the get-go to be mass manufacturing items. Which is not something that defense typically does.

• 12:15Speaker 00

  And when we walk into a factory is we want, just a few days ago, had some operational experts and they looked at us and like, oh, this is about as complex as a washing machine. And I don't know if they tried to insult those, but it is exactly where I want to be. Like if I tell you, hey, Pap, today we're building a thousand washing machines a month. We need to scale this to 10,000 a month or you know, to a million a year. You would say, okay, I mean, it's not easy, but it's doable somehow.

• 12:41Speaker 00

  So that's where you want to be. And the established primes are not necessarily great at that. They're really good at building this exquisite, very important, very expensive systems. And I think they still will play a big role. But there's a part of that industry where it's about rapid innovation, ongoing development, close to the customer, understanding the customer and then building for mass scalability where I think we have a pretty good edge.

• 13:05Pat Grady?

  Awesome. Johannes, can you say a word about the product engineering organization? And as Uwe was saying, like, how do you execute on kind of the rapid innovation close to the customer? You know, it's, it's not the thing we typically associated with hardware companies selling into defense. So say a bit about the organization and a bit about how you move fast.

• 13:28Speaker 03

  At its very core, Stark is an engineering company. It's everything we do. And so the way how we organized the company is by building programs that can act and build very autonomously. And so as Uwe said earlier, we're organizing the company almost and running it almost like a venture fund where we're building small startups in the startup. And so engineers who join Stark found them, find themselves very quickly in a family, a program that is very autonomously and works in a very cross-functional sense towards the mission of the program. That can be fully autonomous maritime systems, that can be fully autonomous naval or aerial systems, strike drones,

• 14:12Speaker 03

  that can be in electronic warfare or that can be in software.

• 14:14Pat Grady?

  And is there a platform layer underneath these different programs or how's that work?

• 14:18Speaker 03

  Exactly. And so, and there is, the programs serve external customers. And then there is a platform layer that we call capability teams and they build capabilities that augment the ecosystem that we're creating. And so, for example, GNSS denied navigation or object classification, target re-identification, communication links. There's various, you know, how we go about flight control. There are certain pieces that we then bring back as a compounding value into the family of systems, into the programs. And so as an engineer, you always, you know, either one can work on a platform and help the entire family of systems.

• 15:00Speaker 03

  Or you want to be rather centric or focusing a customer and work on a frontline system.

• 15:06Pat Grady?

  Which capabilities are you most proud of today?

• 15:08Speaker 03

  We're extremely proud about being very, very accurate at hitting targets. That's what we're extremely good at.

• 15:15Pat Grady?

  What does that take?

• 15:17Speaker 03

  It took us a very integrated approach to bringing hardware and software systems tightly integrated together. So just building a hardware system is, is good, but, and just building a separate, isolated software stack that would be able to, to cope in a simulation, for example, is not enough. But the actual sub-meter precision for striking a tank or a moving target that moves at a speed of 60 kilometers per hour requires to fine tune and get the settings into parameterization in terms of compute, in terms of compute budget and memory allocation, all perfectly well done for the system to fulfill its purpose. And that is what we're very, very proud of and that we accomplished.

• 16:00Pat Grady?

  And you guys, you had a moment a year ago-ish where there's an experiment you were running and the experiment didn't quite hit the mark. And it's an experiment, so experiments don't always hit the mark, but it was reported that there's a big hubbub about how it failed. And you had, and you had what, four weeks or something to turn it around and conducted even more, pass an even harder test? Can you just say a word about like, how did it feel to go through that? How did the team rally to get the job done? You know, maybe the details on like, what was it you were trying to do?

• 16:32Speaker 03

  That was a forging moment for Stark. Stark in many regards was born out of fire, but that was a particular moment. So just, you know, to get the context right, we had a major upgrade in one of our systems, the Vertus system, that was hardware as well as software. And as always, every engineer knows that you have a regression. If you have an update, then you know, the center of gravity is off or you know, since the opening angle of the camera changed, you have to retrain some of your edge perception model. That's just how it is. However, the Bundeswehr, like the German Bundesarmy, asked us to participate in a very important experiment. And so we couldn't say no to that.

• 17:15Speaker 03

  And so we went there with a system that we knew is not at our ambition level, but at the same time we also couldn't say, because we also thought that the step wasn't so big. And so we weren't able to fully test. Now that's number one. Number two is also they, we tested that in an environment that was not ideal for the, with the setup that we were at at this time. However, now, you know, the media was all about it. They knew that they wanted to bring us towards the edge and stress us out. And so that was, in their mind, actually not that bad. However, media caught this up and you know, went all about it. And so what we did is essentially, we did an all hands on deck meeting. We said, okay, everybody, this is a make or break moment for the company.

• 18:01Speaker 03

  This is where true engineering excellence will show. So the best minds of the engineering community at Stark has to come together. We booked a three-star spa restaurant, spa hotel, which, you know, for the purpose of just being close to the shooting range where we had access to at the time, it wasn't in November, actually. It was extremely cold. And so, and we worked three shifts around the clock. So while the flight test team went out, collected data, they were sending that back. So we had like at the time several containers set up. We had even, you know, mobile generators, starting, we had like basically buy from DIY stores very, very quickly set up base

• 18:46Speaker 03

  in order to have the necessary infrastructure to like to collect data. And so that, as the flight test team was flying, it was extremely cold. The software engineers took that data and continued to work optimizing the full stack flight test as well as perception. And so at the same time, parts, some parts of the hardware engineers also helped improve the actuation and tuned the system out. And so in the course of actually only two weeks, we were getting to a hit accuracy that was perfect. And, but there was this moment, because we wouldn't hit, we said that we will have, we'll only leave this place if we had three consecutive spot on strikes.

• 19:30Speaker 03

  By then, the tanks that we shot at were totally perforated. They were already like, we wasted a lot of systems on that and they're not exactly cheap, right? But that was clear, you know, no questions asked, you know, money doesn't matter. We have to get to the precision. And so we worked all 20 hours shifts. When the flight test team came back, the hardware engineers came back, repaired some of the systems. We, you know, had to also, you know, since we were flying and shooting so much, we had to basically scrap some of the debris that we have from our own systems, put it back together in order to have a few more shots and stuff like that. And so that was one important, important stream that happened onsite. At the same time, the simulation team helped us further improve the flight dynamic modeling.

• 20:15Speaker 03

  So we were employing AI systems at this, at that time were ready to train flight dynamics modeling in order to improve the accuracy of the simulation so that our AI models can be trained within a simulation better. And so all these two work streams then came together in the end. And after two weeks, as a matter of fact, it was, was less than four weeks. There was this one moment where we realized, okay, that's it. And from there on, we've always hit, we've always hit.

• 20:41Speaker 02

  Johannes, if you're building a software company today, it's very clear where the talent pools are. If you're building a defense company, it's not as clear. Tell us a little bit about how you find the best people and, and where you look.

• 20:54Speaker 03

  We look for talent in the classical industry, but also at universities. We're looking at startups. We're also looking at governmental institutions. We look everywhere because the talent that has to come together has to come from everywhere. It's such a breadth of functions that we need that if it's very senior or very junior, we, we have to bring all the greatest minds together. And so if it's an existing established prime, that, you know, usually comes with knowledge that is very, very valuable. But at the same time, the startup mindset is extremely and equally important.

• 21:34Pat Grady?

  So they're coming from different domains and different cultures. How do you stitch all that together and get it to work cohesively, particularly as you guys scale so quickly?

• 21:45Speaker 03

  So the programs build products for the outside world and they're cross-functional. Within each function, there are function heads that bring cohesiveness and consistency across electronical engineering, mechanical engineering of the various functions. And so they build communities of practice within the cross-functional teams. And so that's how we share knowledge, best practices, but also tooling decisions, AI approaches, AI workflows, skills, very important, MCPs across the company.

• 22:17Speaker 00

  There's definitely something of a, a cultural shift in the tech and startup community. A few years ago, it would have been unimaginable for people to go into defense. It was not something you would do. And that is really changing. So we observe all over Europe, in all the countries, basically. The people understand this is a generational challenge. This is a generational task. It's the time, it's time to step up for it. And we see people who have no touchpoints with defense before saying, you know, maybe this is something for me. And for them, people like us, with Stark specifically, can be like a good first touchpoint, right? Because we are as much a defense company as we are a high-growth tech company.

• 22:58Speaker 00

  So we understand both worlds and for people who for the first time really want to apply their technical skills or their general skills into defense because they think, yeah, this is what I want to contribute for. We are very good first home because we understand both sides. You don't need to have worked in defense if you want to work at Stark.

• 23:17Pat Grady?

  Could you walk us through, as a way to illustrate the technology itself? A single strike from launch to strike. What's happening? Like, what are all the different systems? What are the inputs and outputs? Like, can you walk us through that?

• 23:34Speaker 03

  For sure. I'm just wondering where to start because if I was to start at the logistics level, that's, that what matters. So you don't win wars just because you strike, but it leads everything to the strike. And so working backwards from that, it always starts with the logistics. And so we just heard about the wooden boxes that are important. And so how do you disassemble and reassemble a system is extremely important. And how do you transport it? Can it withstand the shocks and vibrations, the pressure if it's transported by air or, you know, of, of a YSC? So there's various different effects, environmental conditions that a system has to withstand until, and you know, in some cases, it actually had a shelf life of say 10 years,

• 24:17Speaker 03

  until it actually gets deployed to the frontline where the system is then assembled or put on a catapult or. And so, and then what happens is the, the concept of operations for all our systems is that an operator prepares the intent. So the system always implements and follows the intent. Think of it as a mission. And so the intent is modeled as say no-fly zones or a kill zone or certain, you know, elements that comprise the mission. And so when the system then takes off, it automatically and autonomously finds its way, evading no-fly zones, evading anti-air installations and flies its way.

• 24:58Speaker 03

  If it's in the combination with a swarm, communicating across the swarm what they see. So they share situational awareness across the swarm, across the members.

• 25:07Pat Grady?

  Would that work only if the swarm is all Stark products? Or can it work? Is there some communication that works across different?

• 25:15Speaker 03

  We are very open to that. We're extremely open and we're going to speak probably about modularity as well. But just to finish that off and then, you know, the system arrives at the kill zone, starts looking for the system. And then depending on how the customers implement human in the loop, either the system fully autonomously seeks and destroys the target. Or if there is a human in the loop element, waits for confirmation by, by the operator and ultimately fulfills its mission.

• 25:42Pat Grady?

  And so it sounds like there's a lot of high-speed, very precise computer vision.

• 25:48Speaker 03

  Correct.

• 25:49Pat Grady?

  That is processing on the device.

• 25:52Speaker 03

  Correct. So the devices, the units need to be fully autonomous. That requires perception that this perception is fed into a reasoning engine this, to act upon the environmental, the perception and the conditions in order to fulfill a mission. So there is a higher order corridor, you may say.

• 26:09Pat Grady?

  Do you need to use your own ASICs to make that work or?

• 26:13Speaker 03

  So we do buy various different components from, from suppliers in order to make that work. So there is an element of recency as we always learn. There is new target types. The war in Ukraine is changing daily. So there is a lot of modularity flexibility built into the systems. And so, yeah, we're buying a lot of components that are procurable in large quantities, such as infrared cameras or electro-optical cameras. Bring them together, sense of use them in order to get a situational awareness onto the system in order to act autonomously.

• 26:50Pat Grady?

  How do you guys think about where you need to be vertically integrated? And where you want to leverage the ecosystem or the supply chain that's already in place?

• 26:58Speaker 00

  The governing principle for us is how do we solve the customer issue? And the scalability of output is a big customer issue. So that would be my first question towards vertical integration. A strong argument for vertical integration is can be solved the scalability issue through that. There is, that's one force, kind of like putting on that. There's another force which goes exactly the opposite way in a way, which is it's so helpful for us if we sell those systems to other countries, if they can plug in their own suppliers, basically. Because we want to root the production of those systems in the countries in which they're being procured. So that's kind of like the ongoing balance, I would say. Number one, you know, principle, can we solve the scaling issue?

• 27:41Speaker 00

  Number two, how can we plug in different suppliers to make everything more resilient?

• 27:46Speaker 02

  You've talked a lot about your strike drone product. What's your philosophy around being a single product company, but being the best in the world at that one product versus being multi-product since day one?

• 27:57Speaker 00

  So we look towards where are those capability gaps? Those are basically self-described by militaries and like, hey, we have a capability gap here. And we observe them quite closely while they're being analyzed and formulated. And then we look at them, we think, can we be a good supplier? Can we be a bit provided out? Do we have a right to offer a solution for this? And is there one in the market? And that's kind of like the first exercise that we do when thinking about the product portfolio. That pretty quickly also gets you to multi-product. Because we don't see an abundance of offerings in the things that we do. So it's almost like a, it's almost like a mandate. We have to try.

• 28:39Speaker 00

  We of course always have to counterbalance against the complexity of, you know, and loss of focus of multiple programs. But I think our first initial reaction would be there is a capability gap. It is evolving. We try to contribute to the definition of that gap. And then we probably will always ask ourselves, can we help? Can we contribute? Because multiple things, you know, on the technological side, on the understanding of the concept of operation side can be taken, for example, from, from the aerial domain to the maritime domain as an example. You know, what Johannes mentioned, there is an intent planning, a mission planning. That doesn't matter if, you know, the, the asset is flying or, or swimming. There is navigation in, you know, denied environments where there is jamming, you know,

• 29:24Speaker 00

  both happens in, you know, in the maritime domain and the aerial domain. There is object detection, recognition, again, the same. There's even some targeting, you know, that I'm homing in on a target. So there's a lot of things that we can use across domains, as we call them, so dimensions, if you, if you will.

• 29:39Speaker 02

  Can we talk about a topic that may sound boring on the surface, but it's really make it or break it for a company like you, which is manufacturing? How do you go from? Zero to manufacturing at real scale.

• 29:52Speaker 03

  There are two goals when we start a program. We optimize for time to market. And second, we optimize for production readiness. And they are often partially competing. Because if you're optimizing only time for market, then you may end up relatively quickly with a product that you can show and demonstrate. But then it's very difficult to manufacture. For example, if only like one car, you only build one. You're very quick, you know, in order to be ready, but you hardly ever produce them in large quantities. And so from an engineering perspective, this has to happen. We shift left on manufacturability.

• 30:32Speaker 03

  That's extremely important because otherwise you accrue a debt that you have to fix later on. And that is really just the beginning because of the moment you decide on which components you buy. Supply chain resilience plays a massive role in the decision making process early on as well. And so we may not always buy, to the analogy of the washing machine, the greatest and like most leading edge camera, for example, but we buy those that are very, very good, top quartile, but actually procurable in large numbers.

• 31:04Speaker 02

  People in defense talk a lot about local supply chains. Is that realistic in Europe? Or do you have to look at, say, China or other countries as well?

• 31:15Speaker 00

  I think it is realistic. It is realistic specifically for certain components where it is fairly simple. And, you know, kind of like the first step, oh, yeah, here we can diversify and we can source from different suppliers and even from different countries. And, you know, conventional wisdom would be, well, is that good from a bottom line profitability perspective? But it's probably good from resilience perspective and even more so in if your whole business is resilient.

• 31:43Speaker 00

  There are still certain components, I would say, where, you know, we have dependencies as the Western world entirely on, you know, for example, Chinese supply and so on and so forth. We try, of course, to work on that and we reduce it dramatically. I think, you know, the current systems are have hardly any reliance anymore. But there are also things where I think we as an industry, all of us have to come together and together with, you know, politics or militaries and figuring out what are the strategies on those things where, you know, raw chemicals, ingredients are needed that maybe go beyond the scope of just one company. It's probably more of an industrial coordination effort that's needed.

• 32:22Pat Grady?

  Speaking of supply chain, I want to ask you about a very different part of your supply chain, which is AI. And part of the future of warfare is not just this move from exquisite systems to attributable systems. It's also the move from humans doing everything to more autonomous systems. And we're kind of sitting here in the wake of the hugging face hack where these civilizations of agents, so to speak, broke out of their sandbox and wrecked havoc. And so I guess I'm curious, do you, given the power of the system and the inherent dangers in the in the product that you guys have, how do you think about the possibility of AI going rogue? Or, you know, it's somehow not working exactly the way that it's supposed to?

• 33:06Speaker 03

  Stark has since the beginning implemented NATO's principle of responsible use of AI. And that entails that we are auditing our own systems, not only by humans, but also by safeguard or layers that safeguard the AI in a corridor to be restricted to implement the operator's intent. That is what we what governs the entire autonomy stack at Stark, at every system. And so and also at every stage of the mission. And so that are hardcoded constraints that depending on where the system is, for example, if it's flying over a particular inhabited area, it may not arm as one example.

• 33:52Speaker 03

  And so there are certain safeguards and I E C sixty one five oh eight and several things we borrowed from autonomous driving that we have learned and that also found its way into our autonomous systems.

• 34:03Pat Grady?

  More generally, I know that autonomy is kind of interwoven throughout the the product and and the operations of the product. Can you kind of sketch out, like, when we talk about autonomous systems, what does it mean? Like, where does the AI actually show up in the product or in the operations of the product?

• 34:19Speaker 03

  It shows up in every bit of the product, also in every part of the mission. And so whenever there is a decision to be made, be it on what the system perceives, how the system interacts with its environment, also how the mission is planned on the ground before the system actually takes off. That's a very important aspect because, you know, mission planning is or used to be in the past very cumbersome and long.

• 34:45Pat Grady?

  Yeah, actually, can we talk about that? What like, how does AI plan and plan a mission planning? What's a good example?

• 34:52Speaker 03

  Imagine that there is a target coming in, very hands on example, and that the operator has three systems at his or her disposal. And then the first decision to be made is how many systems do I shoot at this target? What's the most cost effective way of addressing this threat? And so that's the first decision to be made. And then once that trade off has been made, the, in our case, the ground control system called Minerva, optimizes the mission planning in order to address this threat accurately and most cost effectively.

• 35:24Speaker 02

  You saw a gap in the markets and you went for for strike drones, maritime drones and other products. Why haven't existing primes, traditional primes, figured this out as well?

• 35:36Speaker 00

  I think they do to a certain degree, sometimes more, sometimes less. Some of them like kind of leaned into this and sometimes some of them, including some that speak to us, say like, that's just not our DNA. We're not, you know, we're not an organization that builds cheap systems. We are a system that, so we're a company that is focusing on like on different end of the market and some are trying to. We welcome that. I think like one of the core ideas of what we need to do now is to start a competitive process. We want to compete against those those people and their systems and jointly will get better, right? I mean, at the end of the day, we're all on the same team. So some are trying, some are not so much, but we welcome all kinds of competition.

• 36:19Speaker 02

  Arguably, they have more capital than you. How do you think about that?

• 36:22Speaker 00

  Yes and no. If you look at, and that's maybe an interesting fact, if you just look at how much capital we intend to invest over the next twelve, twenty four, thirty six months, it's a sum of probably something like six hundred million euros. You know, significantly more than half a billion dollars, potentially much more. That's all going to go into research and development and products, you know, production capability built up. And when you just compare that to the orders of magnitude of spending, R and D spending of the big European primes. And if you subtract all the R and D spending that is government funded, but the actual core R and D spending that those companies do, we're not way off.

• 37:07Speaker 00

  So that's not automatically a good thing, like, you know, we want to stay nimble. We want to focus on our segment of the market, but we want to do meaningful contribution. You know, what I said earlier about understanding the customer, building exactly what the customer wants, getting that feedback from a staff sergeant, it needs to be different, training, iterating with them. That's what we intend to do. And I think we're in a good position with the startup spirit and now with the capital in our hands to hopefully build a real pillar of the Western defense architecture.

• 37:37Speaker 02

  You mentioned the capital you raised. You have done a lot in two years. You also went from zero to seven hundred people in two years. Is it chaos? How do you handle all of it?

• 37:50Speaker 03

  So first and foremost, the blueprints of the company need to be crystal clear. We spoke about that earlier. Number two is, yes, growth always comes at the trade off that there are sometimes hard decisions to be made. However, that is a process that is very manageable. We are improving towards our talent, you know, growth as always. Generally, we feel that the blueprint works very well, but we also need to be clear that the problem that we're helping to solve is now. And so we have to be fast. We have to make a dent now. And so being slow is not an option.

• 38:34Speaker 03

  And so allocating these seven hundred, not all engineers, but the majority are engineers, to extremely important and valuable programs is key. And so and this is what we set out to do. Are we at the end of the journey? Of course not. However, we're very determined to succeed in these programs.

• 38:53Speaker 02

  Is there a very hard problem you're trying to solve right now? Is there something, but what's on the roadmap that you haven't figured out yet?

• 38:59Speaker 03

  So what we always see in Ukraine is that systems are flying faster. That is something that we are leapfrogging, that we're going into as well a lot. We see that compute becomes more accessible. We're thinking a lot around how we can be further drive AI on the systems in a safe manner, but give it more capabilities to deal with to be, for example, adjustable to targets that are, you know, on the naval side as well as maybe in the air and not only on the ground. There is various areas we're going into, but also in the electromagnetic space. There is a massive disruption happening thanks to software defined radios and affordable compute

• 39:43Speaker 03

  that allows to bring down costs for sensors of the electromagnetic space. That's extremely interesting.

• 39:50Speaker 00

  I'm really interested in solving the next big thing, which for me is kind of like the contractual design. Because I think there's a big deterrent possibility in the way we structure those contracts. Because it's one thing that we sell hundreds of thousands or potentially tens of thousands, hundreds of thousands of those systems. But what's really interesting is can we come to a contractual design between the government and us and potentially others, actually, that already kind of like

• 40:22Speaker 00

  has everything in place for the massive surge in scaling that we need if there's ever a hot conflict for us. Because that would be very interesting. All of a sudden, we maybe think about this more in terms of like cloud contracts, you know, with with surges and so on and so forth. Because if we get that done, that is probably where the real deterrence comes from. It's not about the individual capabilities of one product here or there.

• 40:48Pat Grady?

  What would that look like? So there's some stockpile, presumably, but then they prepay for manufacturing capacity that you can just spin up in the event something gets out.

• 40:57Speaker 00

  I mean, there's a big question about the supply chain. There's a big question about storage of systems. There's a big question about who updates those systems. You know, probably if you look at a drone at the moment, probably, you know, the motors, they're good for three years, but a software probably should be updated every week with new training data and so on and so forth. So how do we how do we structure all of that? That's something that's very interesting to me. Because that's one way how you can create real deterrence, I think.

• 41:26Speaker 02

  Has anyone in the Western world figured this out?

• 41:29Speaker 00

  I don't think so necessarily. There's not a blueprint. The same goes for all things that we do in procurement and all things we do in product development. There's not like hundreds of people who have done this and now they can just teach us. I think we all learn together. And that, by the way, kind of crosses both sides. On the government side, on the military side, on the industrial side.

• 41:51Speaker 00

  I do think there is like an optimistic spirit of, okay, we need to figure out a few things because we don't have the right tools just yet. But in that spirit, I think we need to solve it together. I don't think somebody has the perfect playbook. Here is how it's done. Just copy this. We don't have that yet. But it makes the whole thing so exciting. It's at the forefront of what's technological possible. It is very clearly what's required to, you know, be able to survive in those battles. And bringing those two things together is kind of like allowing us to make a real contribution to kind of continue to live in peace.

• 42:25Pat Grady?

  What is the mission of the company?

• 42:28Speaker 00

  The mission is quite clearly, we want to be one of the absolute pillars of our European and Western defense architecture. And that means, yes, we want to be a sizable company that specifically delivers the, you know, capabilities that we talked about. But we also want to help orchestrate a real innovation ecosystem. We want to be a good collaborator with other people. We want to work with the large ones, the small ones, our peers, with everybody. Because when we think about the one mission for the company is very closely linked to all to all of our mission. That's very important for me to to stress that we want to be a pillar of the, you know, we want to be a dominating pillar, of course, but it's not a mission that can be achieved by one single company alone.

• 43:09Pat Grady?

  And if you do achieve the mission and we're sitting here five or 10 years from now, what does Stark look like? What does Europe look like? What does the world look like?

• 43:18Speaker 00

  I think Europe will become a better partner for the US again. You know, there will be hopefully a a new chapter of transatlantic cooperation. Europe is a helpful, strong, you know, principled ally to among each other and towards the US and other partners in in the world. And we live, hopefully, in more peaceful times where we go back to how the world was a few years ago. And hopefully, we have deescalated some of the wars and situations in the world and others have never flared up.

• 43:49Pat Grady?

  Amazing. Uwe Johannes, thank you for joining us.

• 43:52Speaker 00

  Thank you so much.

• 43:53Speaker 02

  Thank you.