ICYMI: AI Driving Next-Gen Drones
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Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Well, by now we've all seen the dramatic footage from Sunday's drone attack. Ukraine going after different assets of Russia's military deep inside Russian territory in

In fact, Carol, by early 2025, this was remarkable when I was preparing for this, drones were accounting to 60 to 70 percent of the damage and destruction caused to Russian equipment in the war. This is according to data from the U.K.-based think tank, the Royal United Services Institute. I've got to say, the way we think about warfare has definitely changed dramatically. And this is where Florian Seibel comes in. He's a former German Army helicopter pilot.

an aeronautical engineer who a decade ago founded a company called Quantum Systems. It makes multi-sensor drones. Now, 90% of its sales go to the military sector, and it's provided thousands of drones to Ukraine specifically. And so we're kind of dying to talk to him.

Florian Seibel joins us from Italy. Florian, good to have you with us. I know there's a little bit of delay. We appreciate you taking the time and staying up a little late in Europe for us on Bloomberg Businessweek Daily. First big question that I have for you is, given what you know about Sunday's drone attack, were any of your drones actually used in that attack?

So what we know, not as in a way that they would act as being the ultimate weapon. All of the drones that we are building are used for ISR missions, which is intelligence surveillance and reconnaissance. So that means we are spotting potential targets. So our drones have wings. We have flight time of several hours. And then we fly deep into enemy territory. So we spot and then other type of drones come in.

Do your drones ultimately replace the capabilities of aircraft such as the U-2 spy plane? Well, you know, there's a reason for every asset to have. And I think, you know, mostly, you know, war times are times of change and new doctrines are happening and every war that is coming up will not start as the last one ended. So,

You know, I'm not really sure if the next war will be all about drones, but what I can say now, definitely it's a vehicle for Ukraine to fight off Russia because they did not have enough conventional weapons to take them to the battlefield the way Russia would have expected. So, I mean, they were just very...

and using what they have and that's where we are. This is technology changing the way things happen.

Well, that's where, Florian, I kind of want to go. I think after that drone strike by Ukraine and Russia, we had so many conversations in the newsroom about, oh, my gosh, like warfare just continuing to change very dramatically. My dad and his three brothers all fought in World War II. A lot of hand-to-man combat. It was just a very different type of warfare. You know, we've seen the gamification of warfare.

How does drones kind of make it safer on one level in terms of not putting people at the kind of right at the top, you know, the front line, if you will, but at the same time make it easier for someone to flip a switch and send drones into combat? You know, you use the word that describes it quite well, which is gamification. You know, it's using a lot of technology that was spilling over from adjacent industries like drones

cell phone technology, you know a lot of the small stuff, chips, batteries, cameras that they weren't just not available a few years ago to companies like us and you know the cell phone industry basically allowed us all to disrupt classical defense military companies because now you know it's

It's available to everybody. And China is very strong in that regard. And I think what has to happen now is we need to rebuild specifically in the US, but also in Germany and Europe, we need to rebuild the industrial base to be capable of producing thousands, 10,000, 100,000 of these units. It's not about like a few multi-hundred million dollar aircraft anymore. It's about...

large numbers, attributable platforms. You know, you want to saturate your adversary. And there's companies like Quantum and Endural in the US that are changing the rules how we play.

Florian, I am curious though, is there somebody, an entity, a country that you will not sell to? Well, you know, in Germany, all of what we do is very regulated. And so we have a German export control authority, which is called BAFA, which is very much in line with NATO and the BASA.

German governmental official position and so we have to fulfill these guidelines and guard. So it's basically impossible for us from a legal perspective, for example, to sell into countries like Iran and Russia and China, but also that's the legal perspective on it. And then we obviously, we as the founders and we together with our investors,

have made it very clear that even though if we could sell to certain countries, you know, we have to feel comfortable with that as a company. So, for example, Saudi Arabia is probably one of those countries that would be quite obvious that we could sell to, but we would probably have a discussion before we would do so.

You mentioned investors. The company is backed by Peter Thiel. We're going to talk about that in just a minute. Before we get there, I want to talk about the opportunity outside of Europe, because for much of the past three years you have been selling your drones to Ukraine, but you did just open a 135,000 square foot facility here in California. What is the opportunity in the U.S. market?

I think that was a very smart decision to do that because the US DOD is the single largest department of defense in the world and obviously Europe as a total is about the same size but it's very fragmented into 26 member state countries.

So going to the U.S. and entering that single biggest market was a must-do for us. There were a lot of people saying it's going to be hard for a non-U.S. company to do well, but I think we managed to do so. You know, I've spent two years of my life in the U.S., one year in high school, one year when I was trained as a professional helicopter pilot in Fort Rock, Alabama. So I think I picked a little bit up of the way of –

yeah, how America works and what's the life over there and how the people do business. And so I was very lucky to hire an excellent CEO coming from the drone defense industry. And he was setting up

uh quantum inc in moore park and um he has been doing incredibly well and so i think you know um it's it's not the us or europe i think part of our mission is also to in these uncertain times of of what we see at the moment where the us is trying to break away from europe that economic

companies that are on the free market. Yeah, act as a glue maybe to get us through these times because you know, the US has been always the biggest ally to Europe, especially what is coming up tomorrow D-Day. And, you know, we want to pay back a little bit here. And so for me, it was a natural thing to go to the US. Yeah.

Okay, so we are Bloomberg and we are always curious about interesting startups and as they are growing and as Tim mentioned you are backed by Peter Thiel. You just raised about 181 million dollars a financing round valuing you at more than a billion dollars. So kind of going into that unicorn status. When is the IPO? If there is one, will it be Europe? Will it be the United States? What will you guys do?

It's unclear at the moment. Right now we're doing very well. We're probably going to raise one or two more rounds. Being on the capital market also means you're very transparent in what you do. These big government contracts, we are after they're either zero or one. We don't want to end up being the goal of speculative companies

Betting on us or against us on Wall Street so I think we'll take like one or two more years one or two more financing rounds and then Probably as we are a German company We could look into doing a European IPO or as you said, you know, New York Stock Exchange is

Probably depends a little bit also on how well we do with our U.S. facility. As you said, we have heavily invested in 135,000 square foot. We need to fill that with business. We expect the U.S. government to give us more contracts

to pay back that we invest so heavily into the US now. And then it's an open decision, I would say, as of today. Well, it's always interesting. We talk so much about here we are in San Francisco, the heart of Silicon Valley, just nearby. Innovation that happens around the world. You are based in Munich. How does that startup environment differ there over in Europe, in Munich specifically, versus maybe elsewhere, versus the United States, for example?

Yeah, so you know, having lived in the United States and having met a lot of US investors in the last six, eight, ten years, you can definitely say that the spirit of go big or go home or think big is definitely a part of Silicon Valley culture. Whereas in Germany, we have excellent engineering, I would say, at very decent levels.

price and cost of living. So I think there's an advantage for both locations to be. Obviously, especially in the beginning, I was always a little bit jealous looking at the amount and the number of companies that are still being founded in the US. So it's so much more and bigger than Europe. But I think

and we're catching up you know what has happened the last two or three years it's clear for for us now in europe that we are on our own we need to reinvent ourselves we need to define who we are who we want to be in that world you know and and germany always has been the place of great world leading tech companies um i think we have just not had that in the last one or two decades and i think it's time to change that again and we are ready to do that

Hey, Florian, before we let you go, I know you're focused on these UAVs that are really about reconnaissance, but I want to pick your brain a little bit about the areas of innovation, especially here in the U.S., because back in March, the U.S. government awarded Boeing the new Air Force F-47 stealth fighter jet. There's sort of a lot of controversy around this because it's still going to be crew-based, though the president did say it will be able to fly remotely. Should the U.S. right now, or should countries...

be investing in any crude aircraft right now or is the future 100% in your view UAV I think the future is unmanned it's definitely about robotics and unmanned systems the question is how fast will that happen I think the UK has just brought up a new defense policy they call it 20 40 40

saying 20% will be or should be assets classical assets like there used to be so manned fighter jets 40% ISR and intelligence and 40% unmanned strike capabilities so I think

I think it's not either or. I think it's a combination both, but definitely more than we used to see. And, you know, I don't know if the F-47 is going to be manned or unmanned.

probably these high value assets will still be manned but they will definitely not fly into into enemy territory i think they they have a standoff capability um extreme long range radar range because they're so super expensive um and um but but let's see you know um uh it's changing maybe in the next war will be not fought on drones maybe it's in space

Or maybe we won't have a war, which would, sorry for you, but it would make me kind of happy. They do agricultural drones too. So do that, do that. It's just the mix has been really military focused over the last few years. Peace would be nice. It would be. Now you're asking for a lot, Carol. I know, I know. I always do. Hey, Florian, thanks for joining us. That's Florian Seibel, CEO of Quantum Systems, joining us from Italy just now. He's also featured in Business Week's One to Watch in Technology. It's a guide.

to the people you'll be hearing more about in the near future. So check that out in the current issue of Bloomberg Business. Always a great list.

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