Defense Tech Sector Reacts to US-Iran Strike
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This is Bloomberg Tech. Coming up, small moves in stocks this morning as traders eye Iran and oil. We'll bring you the tech sector reaction as Palantir closes in on a new record high. Plus, investments in defense tech, they continue to increase. The venture capital story this hour. And Tesla's robo-taxi.

It finally hits the streets of Austin. Shares soar. We discuss the reality of the company's city expansion. Bloomberg's Ryan Vlastelica joins us now. I start with Palantir, which has been encroaching on a record high once again. It is the defense tech stock that's being played on today.

Yes, absolutely. Thanks for having me on. So it does see a lot of demand and interest from sort of government contracts, defense adjacent sort of services. So the fact that you have this sort of increase in geopolitical uncertainty right now, it's not surprising that Palantir is one of the initial beneficiaries of this.

Let's look at also what the beneficiaries could be more broadly. I want to highlight a note what came from Wedbush analysts this morning. And they're really talking about how maybe if we do dial down anxiety surrounding Iran,

This could end up refueling, regalvanizing the AI trade in particular because of the Middle East focus. They say the biggest threat to the region and the potential black swan event was Iran and its nuclear program, and now that threat is gone. So basically, we can see the AI revolution come more into play. Which stocks does that affect, Ryan?

Well, we've seen a number of these AI companies like NVIDIA announce these major sovereign deals with AI and countries in the Middle East. So if we do see some sort of follow through on these kinds of deals, these kinds of contracts, this kind of region as an area for new unappreciated revenue growth, obviously this is something we could continue to see being a driver of stock prices from here. It's interesting though that NVIDIA started the day lower and it's

ultimately would have pulled the benchmark itself in the red. Why are we seeing a dialing back in risk aversion, do you think?

Well, I think in general, like when you have this kind of rise in geopolitical uncertainty, big tech stocks often act as a kind of safe haven in the market. I think kind of regardless of what else is going on, this is a group that is seen as having pretty durable growth prospects, pretty strong and reliable earnings streams, tons of cash, very strong economic moats and competitive moats. All these things, when you kind of put them together in an uncertain environment, they still look like safe plays

like all things considered, obviously there are some concerns about valuation, but I think ultimately they sort of act as this sort of generation's version of defensive and sort of safe haven trades.

Brian Vlastelica on the market reaction. Thank you so much. Let's bring you more analysis on where next in terms of the geopolitics. Emily Harding is with us. She's from the Center for Strategic and International Studies. You're also the director for its Intelligence, National Security and Technology Program and Vice President of the Defense and Security Department. Emily, we turn to you for your tech and your intelligence expertise here. And actually, you say this is the moment for intelligence officers to shine. Why?

So one of the really important questions going forward is going to be just how much damage was done to Iran's three main nuclear facilities. And I mean, it seems obvious to say it, but you can't exactly walk up to these facilities on the ground and take a look. So it's going to be the skill and the work of people who do things like geospatial analysis, people who collect human intelligence to really do their best work here and figure out what was destroyed and what wasn't. And why that matters is because if Iran was left with an enrichment capability and with

weaponization capability, they could try to sprint to a weapon as soon as the Israeli campaign is over. What's really interesting is, I think, the military satellite makers, in fact, one of them is eyeing an IPO at the moment, ICI. Can you tell us a little bit about the assets that need to be in place for us to get the imagery that's necessary here?

It's a really interesting moment for what we call open source intelligence. And that's just another way of saying that all of these industry actors that are out there with these amazing satellite constellations are doing phenomenal work trying to map and identify things that are going on inside Iran. So you've got the government's exquisite assets, and we call them exquisite because they are the most advanced, generally speaking. They can do things like loiter over

over an area to actually get continuous coverage of a space. But then you have this huge industry space where all of these actors are coming out with really quite good information and a lot of coverage that the government can't provide. And the combination of those two things is going to give us great insight into what's going on on the ground inside Iran. And now the market, but most notably the administration, has to play out what the best and the worst case scenarios potentially are here. What, from a defense tech perspective, might come into play?

So they're going to have to think a lot about defense stocks. We've talked a lot about the defense industrial base inside the U.S. and how deep our bench is basically on some of the key weaponry that we have. Before this round of strikes, there was a big debate inside the administration about what you needed to preserve for a China contingency, what you could send to Ukraine and what you could maintain in the Middle East. This particular operation didn't really draw down our stocks much at all. We can pretty easily replace what we used.

But if you're looking at more of a drawn out contingency, if Iran were to unwisely retaliate against the U.S. in a really dramatic way and you're looking at much more activity on the ground, what you'd want to think about is do you have the defense stocks to backfill what you're spending and can you do it quickly? And we have supply chain analysis from certain companies. Giovanni is one of them, for example. I'm interested, Emily, as to which...

is the forward-looking analysis for whether we have the manufacturing capability here in the United States. That is something that many people have debated about bringing that sort of expertise back to the U.S.

It is the key question for the next probably 10 years of deterrence against China. One has to think that they looked at what we just did and went, oh, the U.S. is serious. However, any kind of modeling that we've done of a conflict between us and China, you know, if it were unfortunately to happen, shows that we would run out of precision weaponry very quickly and have to move to backfilling rapidly with our defense industrial base. And that involves not just manufacturing know-how,

but also the ability to scale up very quickly. The U.S. likes to think of itself in sort of the World War II context where we flipped a switch and all of a sudden there was all this dramatic growth in American manufacturing of planes and boats.

I hate to say it, but today's F-35 cannot be made in a Ford factory. You have to have much more specific kind of construction. And we really need to think about preparing for that contingency, in part because we hope it doesn't happen. But Emily, actually, we've seen that preparation. It's inspired the likes of Palmer Luckey, of Trace Stevens to go out there and build Anduril because they've been worried about how quickly we can deploy and manufacture here in the United States. Have we seen that industrial base thicken enough in recent years for this moment? Yeah.

It has thickened, but not enough. You're absolutely right about Palmer Luckey. Chris Brose, who also is at Anduril, is one of the foremost proponents of this, talking about how we can't just depend on what we have. We have to think about how to build. I think that Anduril is leading the way in this. Palantir is in a way, too. But a lot of other sort of, you know, bigger defense firms need to catch up.

Also, I mean, I talk to these folks all the time and what they say is that they're not going to make these huge capital investments if they don't have a demand signal from the U.S. government. So they look at the government and they say, where's our demand signal? And the government sort of shrugs and says, well, it's either stuck in Congress or it's stuck in the president's budget or we can't give it yet.

And that kind of chicken-egg situation is what is keeping us from really building up the way we need to. So are they getting any more signal at this moment? Because it feels as though there's trying to be the words, but what you're saying is that they need the walk, not just the talk at this moment.

Absolutely. So it's nice to sit in a meeting and hear, yes, we need to build up our defense industrial base. But before you spend millions of dollars on a new facility and the environmental studies and recruiting all the talent you need to recruit, what you want is words on paper. The contracts are what's really going to have to come.

Is there enough money financing the startups or at least the ecosystem to be able to put it there? Because there are innovative ways in which we can finance the build out from some of the legacy defense companies, not just the venture capital companies that have been there to foster the Andurils and Sonics and those sorts of companies.

Right. So this year's $1 trillion defense budget, depending on how you measure it, was meant to do some of that to really bolster that startup ecosystem. Plus, the Defense Department has done some innovative things trying to create alternative funding mechanisms for some of these smaller companies. Really, what the tension is, is that if you're not one of the big prime defense contractors, you don't have

the multitude of lawyers and government affairs officials and people who have run through government contracts 500 times to really help you break through that bureaucracy. So one of the things that I think people are really hoping to see out of the Trump administration is a new way of doing business that is much more welcoming to the tech startups and kind of the alternative defense companies, things like Sons of, Anduril, and Palantir.

So that's the technology play of which you are key with expertise. What about the intelligence side here as well? Because are we seeing enough innovation there to be able to decipher what the next move is for Iran?

It's never enough innovation. So this is really an interesting moment for open source intelligence. I grew up in the intelligence community. I grew up believing that what we were getting on the classified side was going to be far better than what we could ever get on the open source side. And for a long time, that was true. But the space has really changed. The amount of open, commercially available data that's out there in the world really can bolster and change the game for intelligence. And there are some companies out there that are trying to do that, that are working with AI, that are

working with huge amounts of data to try to pull the signal out of the noise. It's a moment, I think, for the intelligence community to sort of be open-minded. There's some great leaders inside the ICE right now who are working on this and working to partner with the private sector to make the intelligence that we collect on the classified side

fit really well with that open source intelligence and the two together is going to be much stronger than anything we had in the past. The open-minded on open source. Emily Harding, we love it. Thank you from the Center of Strategic and International Studies. Stay well. Look, another story that we're watching. DeepSeek. Well, it's assisting China's military and intelligence officials while exploring ways to help Beijing circumvent sanctions.

and gain access to advanced chips. That's all according to a Reuters report citing a U.S. State Department official who says that DeepSeek was mentioned more than 150 times in procurement records for the military and defense-affiliated entities. Coming up, Tesla's long-promised driverless taxi service, it hits the road in Austin. We'll discuss the rollout next. This is Bloomberg Tech.

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Tesla, it rolled out its long-promised driverless taxi service to a handful of riders on Sunday. It was a pretty modest debut from what Elon Musk sees as a transformative new business line. Joining us now is Regina Cleelo, CEO and co-founder of Populous. It's a mobility analytics software company. Regina, what did you make of the initial rollout?

Well, it's very exciting to have another big player in the mix. As I'm sure many folks know, Waymo has been active in the market for at least 20 months with commercial service. And so it's a pretty big development to have Tesla now delivering fully autonomous vehicle service. Might have been a modest rollout. It's not a modest stock move. We're up more than 10%. There's a lot of hopes and prayers based on where this technology takes us. In your mind's eye, Regina,

How will we see the rollout in Austin be picked up by other cities? What pressure is it putting on others in terms of their regulatory environment?

Well, San Francisco has been in operation for over 20 months, but Waymo then very quickly began expanding into Los Angeles, Austin, Phoenix, Atlanta with partnerships with Uber. And they have Miami and Washington coming up next year. And it is putting extreme pressure on cities to really catch up and build their digital infrastructure so they can communicate with these vehicles and make sure

that these rollouts occur safely because in the case of Waymo, they've grown very, very quickly in the San Francisco market. And populace is all about that communication, right? Just tell us about what are the learnings? What's the experience? So the states and the cities that are watching, Austin in particular and Texas do this, what do you think they may need to learn? What is it that Waymo and Tesla need to do more efficiently to ensure that streets do remain safe?

Well, many cities are building digital infrastructure to begin preparing for the future of mobility. We work with cities to help them manage shared mobility. So, micro-mobility, shared scooters, services like Lime and Bird, they actually do need to digitally communicate with cities and cities can digitally communicate back.

They can share parking policies, no-ride policies. And these same exact policies are really important for services like autonomous vehicles, whether or not there are major events occurring or protests and cities need to close roads for emergencies, all the way to basic planning services like making sure there are enough pickup and drop-off zones in a city.

To this point, you talk about mobility data specification, MDS. This is basically the establishment of open source standard that's already in place. How quickly do you think these companies, private companies, have been willing to adopt this, to be able to share their data and get the data in return?

Well, we saw with micro-mobility the transition happened very, very quickly. Cities were more prepared after having experienced Uber and Lyft in cities to put down some regulations that required mobility operators to share data in the case of scooters. So it happened within the course of a few months to a year. Almost every city in America and now around the world requires data from those operators through that mobility data specification standard.

And standardization makes it easy for those large operators to then turn on data feeds in cities from Redwood City all the way to New York City. And so we delivered data through our platform using that data standard and with larger operators like Uber, Lyft, Waymo, it's having a little bit more resistance

But what we've seen is that when cities have put down policies that require that data sharing, they are often able to get operators to comply. Maybe there are some battles here and there with states in terms of who's in charge. But we've seen cities prevail on that front in terms of data sharing in the shared mobility space. So it's kind of having to deploy the stick attitude here rather than the carrot of saying, like, here's the rules and regulations for you to ascribe by. But talk us through the carrot.

Because these companies will glean a lot if they get the data back from the city, right? Well, they'll gain a couple of things. One, they'll be able to operate more efficiently if cities are able to then carve off the space that they need in order to do really efficient pickups and drop-offs. We've seen, for example, with the surge of delivery, you have UPS and FedEx trucks that really don't have the space that they need for the volume of delivery that we experience in cities.

And it's very difficult. I believe there are a lot of conversations around bureaucracy and how governments can sometimes move slowly. It's really important for cities to be able to have data in order to facilitate making change more quickly. And we've seen when opportunities

share data with cities, cities are able then to respond much more quickly to create the space that they need to run efficient services. I mean mobility is slowly slowly then all at once. I mean it's extraordinary to think how we all have access to an electric bike or an electric scooter now in most cities and the way in which we sort of expanded the catchment areas. How quickly do you think that adoption will be replicated when it comes to actually not having someone in the front of the car and steering the vehicle?

The growth of Waymo in San Francisco has been pretty incredible. They only launched their widespread commercial service that anyone could sign up for about 18 months ago, and now they have more than 27% of the market. So they've already passed Lyft, one of the earlier players in the space. And so I would anticipate that we'll see similar rapid adoption of other AV services in other cities.

because people enjoy the service. Some data shows that people are willing to pay over $20 an hour for a Waymo versus just over $15 for an Uber. So I expect we'll see pretty rapid adoption in other major metros as well. - Of course, we get a humorous price point of $4.20 coming from Elon Musk's company. How do things differ with Tesla?

Well, I think that, you know, Tesla is catching up on that front. They do have a brand that's interesting. And so there are definitely people who really enjoy that experience who have been diehard customers for a while. And so we'll see how their rollout is different from Waymo's and how quickly they're able to grow.

It's been great speaking with you, Regina Cleelo. Thanks so much for your time, CEO of Populous. It is time now for Talking Tech. First up, OpenAI has removed details of its deal with former Apple designer Johnny Ives from the web over a trademark dispute. Now, the $6.5 billion acquisition of Ives' startup called IO Products is meant to help the ChachiBT maker move into AI devices. A judge temporarily blocked OpenAI from using the IO moniker after a

audio device maker accused it of trademark infringement. Plus, tech investor ProSys reported a profit for the first time. Under its new CEO, the company has acquired businesses including online travel firm that Dispago and food delivery business Just Eat, with an eye toward building out large e-commerce platforms.

And Chinese tech giant Xiaomi will be releasing a host of new products at an event later this month. They include a tablet powered by self-developed O1 chip and its first SUV. Pricing for the new vehicle, the YU7 is also supposed to be released at the event.

Welcome back to Bloomberg Tech. I'm Caroline Hyde in New York. Let's get you a check on these markets because the geopolitical anxiety is dialing back just a little bit. We're still all focused on Israel, Iran, and of course what occurred over the course of the weekend as the U.S. struck those three sites in Iran. We're seeing, though, a bounce back in stocks. We're up by five-tenths of a percent. And I want to dig into some of the individual moves in a moment, but

Bitcoin as well, looking more like a proxy for, well, some stability rather than risk aversion over the course of the weekend. We saw some of the altcoins perform much worse than Bitcoin. We're now in our 101,000 level. I'm looking at what's happening to the individual names, though, and Palo Alto Networks up more than a percentage point. I'm looking also at Checkpoint. Why? Because we're thinking about the cyber implications here after the U.S. attack on Iran and what's happening between Israel and Iran more generally. U.S. officials are, in fact,

issuing a warning to businesses to brace for potential cyber attacks from Iran. This following U.S. airstrikes that we saw the country's nuclear facilities really be targeted. Bloomberg's Patrick Howell-O'Neill joins us for more. And Patrick, some of the names that we highlighted are on the higher side because people are thinking companies are going to have to double down here.

That's right. So the Department of Homeland Security issued a warning over the weekend that U.S. companies are going to have to watch out for Iranian cyber activity. But I think one important note here to make is that they specifically emphasize that it would be, quote, low-level activity. And the key there is that this is a threat actor who's been prolific and brazen but not

particularly sophisticated. And so it really speaks to the kind of level of threat and the specific things that U.S. companies and organizations and individuals are going to have to be looking out for. So perhaps not that sophisticated, perhaps the bark is worse than the bite, but Iran has primarily targeted who in the past?

Well, the real answer to that would be Israel. There's been an incredible amount of Israel-Iran cyber activity over the years back and forth. But in the U.S., look, there's been a long history of Iranian cyber activity of varying levels. Famously, they targeted U.S. financial institutions. About 10 or 15 years ago, they were able to get some top Wall Street banks off the Internet.

They've also targeted individuals that they deem to be enemies of the regime. They've done defacements. They've done ransomware. So it's a wide gamut of targets. And a lot of it is about the psychological impact. A lot of it is about looking powerful, intimidation, rather than a real demonstrable impact in many cases. And I imagine defense contractors, government bodies right now are really bracing themselves, Patrick. But

But what is also been demonstrated is the impact that Israel has had on Iran in terms of cyber as well. What have we seen over the last few weeks? It's been really interesting. So to describe what we've seen, we have to preface it with the potentially obvious fact that there is a really significant fog of war right now. So we're still doing our best to understand.

But most notably, there is a group called Predatory Sparrow, and it maintains this image of a hacktivist activist group, but it's been engaged in some really high-profile activity. It's taken a huge Iranian bank offline because of alleged links to the IRGC, the Republican Guard. It's essentially burned tens of millions of dollars in crypto from a major Iranian crypto exchange, again, because of links to evading sanctions.

And it's all really been in the effort of having a psychological impact. Again, I mean, don't get me wrong, the financial impact is significant, but I think it's about, in their case, showcasing that the emperor has no clothes in this case and that Israel, this group that most experts say is aligned with Israel, is really able to operate freely during this conflict.

Fascinating. Patrick Howell O'Neill, do come back. Thanks so much. And let's just stick with defense tech more broadly now. Marlin Spike is a notable VC investor in the sector, backing companies such as Palantir, Shield AI, Andruil. Marlin Spike CEO, Neil Keegan, joins us now. Look, you've been in this game a long time. What is it, since 2020, you've been backing some of these names. Palantir's near a record high today, so congratulations. What are we seeing in terms of the rest of the VC industry following your lead?

Sure. Well, first of all, thank you very much for having me, Caroline. It's an honor to be on Bloomberg, particularly on a day where there's a lot more green than red on the screen. So what we're seeing, particularly as it relates to defense technology and dual use, which is where we spend our time investing, we're looking for very disruptive companies that can make an impact on our industrial base. I mean, we're here to build technology.

with these high-growth technology companies, the most robust and durable industrial base that we can. And as it relates to Iran, look, this was a long time coming for this strike, and we've significantly degraded their capabilities. But I think it highlights that a country like Iran and some of our other countries

are not going to come at us in traditional ways. We need to be ready for asymmetric threats. And that is one of the real goals for where we're investing in looking for companies that can not suffer a failure of imagination after 9-11. We need to focus on all the tools that we have at hand in terms of AI,

autonomous systems and advanced manufacturing. These are the new companies that are going to work in concert with some of the great defense companies that we have that produce our exquisite capital systems that we actually saw on display over the weekend. Working concert. Is that happening more at the moment, Neil?

Absolutely. And first of all, hats off to our brave men and women that planned this decisive strike. There was a lot of thought and coordination that went into this. And I like to paraphrase Admiral Papara, who likes to say, we need not only the will, but the capability. And I think we demonstrated both with a high degree of success on Saturday evening.

I do see, or we do see from our team, more coordination with the large legacy primes and really the new, you can call them new kids in the block, but companies like SpaceX and Palantir have been around for over 20 years. And what I think is really fascinating is we're seeing

a very open tie-up between these market leaders to work together so we can effectively renew Freedom's Forge 2.0, which is the coming together of the public and the private markets to defend America and our allies so we can be ready with the best possible tech to give it to our warfighters and intelligence community.

Neil, it's interesting you say the intelligence community. We do understand still really a battle damage assessment is needed to show clarity of the effectiveness of what happened over the course of the weekend. We started this conversation, this show with CSIS Emily Harding on the show, really talking about how now intelligence could be an area of innovation and of fostering. Is that something you've been looking at? How is AI changing that game?

Sure. It certainly is, and it's an integrated part. I mean, you mentioned Palantir. Palantir was really formed in the wake of 9-11. They were an early In-Q-Tel investment. In-Q-Tel, as you and a lot of your viewers may know, has been investing in the intelligence community on behalf of our country for over 25 years. This is a group that we're very close to.

We understand their return on mission. We're also in this to make great returns for our investors. But it's very important that these groups work hand in glove together. And I see that happening more and more and more. And that's a great thing, not only at the later stage where these companies have really blossomed and they've got product market fit, growing revenues, getting major contracts, but also on the earlier stage. We're very excited to see that

It seems like almost every day there are bright young men and women that are leaving great companies like Tesla and Andro and Palantir and SpaceX. And they're starting new companies with new capabilities. And we're excited to spend time with them and to back them in the earlier stages as well.

What's interesting is we're still perhaps wondering what the key buy signal is here for yet more contracts, Neil. We keep saying the same names time and time again, Palantir, Andral, because they have made such moves. They have managed to intertwine themselves with the administration and get more contracts. But is that going broader? Because Emily Harding at the top of the show was sort of outlining that there's a lot of talk about allocating funds towards these startups, but sometimes not enough walk.

I would say it's a fair assessment and I don't want to belabor the valley of death comment in our space. There's been a lot written about that. We must change what we buy, how we buy it, and get new technology with a lot of the newer entrants in the space

to the war fighter. And thankfully that is happening. In our view it's not happening fast enough, but there are pockets of opportunity. I think Golden Dome is gonna be a really good example. We're very pleased to see the new energy around this because I think this is something that is much bigger than just counter defenses. This is an integrated layered system

both at home and abroad. It's gonna involve very exquisite programs, but also asymmetric defense. Again, I said it before and I'll say it again, we can't failure the lack of imagination after 9/11. So we need to be very creative as it comes to homeland defense, securing our border, critical infrastructure, cyber, capital markets, and some of these newer, more innovative companies are going after this, and I think they've got a real role to play in concert with the large legacy primes.

as well as the new market leaders like Andruil and Poundtier. Neil, I like the way you said there's new energy. There is new energy around, well, defense tech investing more broadly, far more VCs getting in on it, but far more big tech companies willing to go there. You think Meta and their relationship that they're now having with Andruil. You're thinking of the relationship that we're seeing Google now redeploying and focusing on military applications. Has that taken you by surprise as someone who's been working on this intersection since 2020?

I wouldn't say it's taken me by surprise or our team by surprise. I mean, our team has been in this space a long time. Uh, you know, my, my background, I was a Naval Academy graduate and Naval officer was actually, um, in the Arabian Gulf in the, in the late nineties going through the Straits of Hormuz. So, you know, we, we were ready, we were ready then. And, uh,

as we're ready now. We need to continue to be ready for these asymmetric threats. And I think this is where, you know, we're going to shine. And I'm actually very pleased and gratified to see this continued, not only public recognition, but having the private sector really stepped into this. And I think a lot of the tech leaders back in the, you know, late teens, you know, I think, again, Andral, you know,

is a great example where this is private capital. These are founders. These are folks that are very tech savvy that they took a risk. They built a great company and then now more have followed. So I think that's going to be a continued trend. And again, there are more entrants in the defense tech dual use investing space. And that's a good thing. We need that.

We are all mission-driven. We co-invest together. We share ideas. And the bottom line is we're in this not only for profit but also for purpose. And that's the mission mindset I see of our cohort in this space. Well, we take note that you've invested in 25 companies so far and some of the leading names that have stood out in defense tech. So, Neil Keegan, we listen to you with Marlon Spike. Thanks so much for joining.

Coming up, Senra Systems. It aims to modernize the way a key component in aerospace and defense tech is made. We speak with Senra Systems CEO Jordan Black next. This is Bloomberg Tech.

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With Azure AI Foundry, GitHub Copilot, and VS Code, you have the support to build the way you want. You can design, customize, and manage AI agents, automating routine tasks to give you the time to focus on your vision. You can innovate confidently with responsible AI and security that's built in from the start. Microsoft has everything you need to help you push what's possible.

To learn more, go to developer.microsoft.com slash AI. That's developer.microsoft.com slash AI. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform, all while consolidating your corporate food spend so you can control costs.

streamlining billing and payment and simplifying reporting. EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. We have some breaking news for you. Let's just take you out to Qatar to temporarily suspend traffic over its airspace. This is, of course, as we've

anxieties have dialed up and indeed real-world implications for Iran after the attacks from the US over the course of the weekend and Israel and Iran the tensions continue to foster over this weekend we have seen notable lack of access to Dubai for example certain airlines British Airways for example detailing some their flights to those destinations now we understand that Qatar is to temporarily suspend traffic over its airspace will keep you up to date with all the news meanwhile Senra Systems

I want to talk about how it's announced it's raised $25 million in a Series A funding round and then aimed to modernize wire harnesses using the aerospace and defense industry. Jordan Black, Center Systems CEO and co-founder joins us now. Congrats on the raise. Talk to us about harnesses. What exactly is it that you're making? What exactly is it that you feel needs to be disrupted?

- Yep, thank you for having me. So probably don't know too much about wire harnessing, but it's in everything. It's in your rockets, it's in your cars, it's in your coffee maker. It's what connects all electronic components together. Without it, nothing would fly, nothing would run, nothing would work, nothing would turn on. And it's an industry that hasn't changed since the Cold War.

mainly because it's an entirely manual process to design it and to also manufacture it from scratch too. It's entirely done by labor. It's very arts and crafts-like, and it's one of those really unsexy businesses that has just been in the U.S. for a while and all over the world, but...

We're excited to disrupt it from start to finish. - You found it sexy. You went around the world when you were working with SpaceX to go and see what really the bottlenecks were as to why you can't scale this. So what's your answer? How would you end up making this more automated, more quickly to replicate?

The way we believe we have to solve this thing is that it comes both from the input and the output side of it too. And what I mean by that is some of the largest companies today are using Excel spreadsheets and PowerPoint slides to design their electrical wire harnessing because there's no industry standard to

to actually design it to give it to a contract manufacturer like ourselves to build off of. And this is where they have the back and forth and a lot of the inefficiency in the process too. So we're creating a design tool called AMP where anyone could pretty much design a wire harness within minutes versus months.

Then we take that data and we send it to our manufacturing facility. So right now the headquarters is in Southern California, Redondo Beach. And we use that data to streamline the entire process from ordering the parts, giving work instructions to the technicians, using machines that we either build internally or off the shelf to empower

almost anyone to be able to build a wire harness too. The thing that was really the biggest struggle even at SpaceX was it would take at least 12 months for someone to be able to be a skilled technician to touch a wire harness that goes into a SpaceX rocket or satellite or anything else like that. And it's just this process of, it hasn't changed since the Cold War like I mentioned too. - So you've got 25 million.

Where does that go? Because is it about ensuring that you can scale the manufacturing, the footprint? You say you're in SoCal, you're in Los Angeles as well with a factory. Do you scale that out? Is it about hiring more technicians of your own? It's both. It's putting more...

effort into our software design tool. Uh, we've already released our beta and we have customers actively using it too, and really being able to create that industry standard right off the bat. And then we're scaling manufacturing. We can't keep up with the demand. Uh, two years ago, I started building wire harnesses in my apartment. A year after that, we're in our current facility and we've already almost outgrown it. And so it's continued to keep up with the demand as we continue to grow too. Uh,

That feels weird that you were able to build a wire harness in your apartment from just a regulatory perspective. I mean, Jordan, what are the sort of boxes you have to tick when you make these things? When I started, unfortunately, my first customer wasn't a SpaceX or a large company like that, but it was actually a pizza automation company. And so I started with just going to almost every startup company

Probably the third week I opened up and said, I don't care what you pay me. I don't care what the harness is. I will just build it for you because I wasn't that eager to just get my hands dirty and be able to start this company right off the scratch. But it shows also how manual the process is, that I'm able to build into my apartment because I don't need very expensive machines or the crazy technology to build this. And that's what the industry needs to be able to scale out of an apartment, per se.

Well, the industry is getting it, not just from you, but also from Hadrian, for example. There is now this push for automated manufacturing here in the United States. You share similar VCs, for example, Founders Fund, A16Z, Caffeinated Capital. Are you seeing this desire come from the capital markets right now? It's really this push to keep up with the demand because I think the industrial supply chain is just dwindling. And at least in wire harnessing, there's 800-plus suppliers

mom and pop shops that build this and they're struggling to scale, they're struggling to keep up with the demand and I think our customers that are emerging such as like the Andrews of the world

They need a supply chain that can quickly iterate, that can build them high-quality harnesses faster, cheaper, everything else on that side of it too. But I think this is why this capital market is very excited for this, is they're not only putting their capital into some of the new incumbents in the space like Anduril, but also the industrial supply chain that's going to make them successful in the long run too. Jordan Black of Senra Systems. Thanks so much for talking about the raise. We appreciate it.

Now that does it for this edition of Bloomberg Tech. You do not want to forget about our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. From New York, this is Bloomberg Tech.

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