The Exchanges

Q Yeah. And the Corsair, which is my favorite ship, just based on the name, I believe for my research, this meat was originally meant like a pirate ship or a privateering ship, but it's, Is it now standard lingo that that's a 24 foot boat and has a certain profile, do you know? Is that how these designations come about? The names of these ships?

A I mean, I wouldn't say that Corsair is now universal 24 foot autonomous surface vessel. It's the name of our product lines, and we chose it very purposefully, and we chose all our names purposefully, even the name of the company. I mean, we were talking about, you know, our Greek heritage before the show and where that came from. You know, the Saronic Gulf is a Gulf off the coast of Athens where the Battle of Salamis happened. It's one of the most famous naval battles in history. It came after the Battle of Thermopylae or the famous stand of the Sparta, 300 Spartans. And it was the naval battle between, um, the Greeks and the Persians where the Greeks were wildly amassed. The Persians had much, much larger ships. They had a much larger fleet and the Greeks were able to lure them into this narrow strait. And use smaller, more maneuverable products to ultimately, uh, defeat the Persians.

AI assessment note: “I wouldn't say that Corsair is now universal 24 foot autonomous surface vessel.”

Q it. But if you're up against an adversary who says, Hey, no, no, we built this thing. Anybody comes in to the blockade in Taiwan, which, you know, we think is, uh, you know, a pretty significant non-zero probability in our lifetime. If you're up against Somebody who says, I'm just going to have these ships kill anything. That's not our ship. Period. Full stop. Then we lose. Don't we?

A No, because the, the technologies that all you're doing is putting policy thresholds and approval thresholds into the technology. There's a real world scenario where doomsday scenario, we go to world war three, the Taiwan straight is a complete conflict. Exactly what you said. Our commanders are going to make that same judgment. Right. They'll be like, hey, if anything, there's no fishing boats out here right now. Yeah. There's no cruise ships coming through the Taiwan Strait. If you're not a, if you're not a friendly vessel, you're an enemy vessel, and that's that. And our technologies actually enables that. What we were talking about earlier is like the autonomy, the artificial intelligence, and everything else is there, and you're building the policies into the software based on government procedures and when those authorizations need to be in place. Those authorizations will change based on The threat environment that we're in.

AI assessment note: “No, because the, the technologies that all you're doing is putting policy thresholds”

Q there's an adversary, ah, in the Pacific who is able to produce a lot of ships. It's known as the Chinese Communist Party. So maybe from first principles you could just explain what you're building and why it's important and just how insane Uh, the incompetence of the West in terms of building ships has become, I mean, we are really bad at making ships right now. Am I correct?

A We're beyond bad. Uh, let me, I'll take a step back and just kind of highlight where we're at, and then I'll let Viv go through what we're doing about it, how, how we're changing that dynamic. But Jason, what you were saying, right, just to put it in context, The United States can build a 100,000 gross tons of ships every year. Gross ton is this volumetric measure of ships, so if you build, you know, a 200 foot ship, that's different than an 800 foot ship, but let's compare apples to apples. A 100,000 gross tons. The Chinese, which you were referencing, can build twenty three million gross tons. So they can outbuild the US 230 to one. And it wasn't always the case, right? 30 years ago, the Chinese didn't have this capability. They have five percent of the world's shipbuilding capacity. Today, they have 57% of the world's shipbuilding capacity. And actually, that problem is getting worse because The communist party is just constantly subsidizing the entire industry. So they're undercutting the commercial market on price. They're not just subsidizing the direct cost to build. They're subsidizing raw material and labor costs. So the ship built in the United States is actually five to six times the cost of that same ship built in China. And so they keep getting more and more orders. So that number of 57% is just going up.

AI assessment note: “We're beyond bad. Uh, let me, I'll take a step back and just kind of highlight”

Q uh, drones, you know, where there's no pilots. They're just pilots in a Shipping container dropped somewhere either, you know, in the middle of America and doing it remote like we've done. Is that the future of warfare with these ships? Or, and what do you lose when you don't have a team there on the boat? What is the criticism, valid or invalid, that people have of unmanned ships?

A Well, I'm going to let Viv talk about the way that we're using software, because I think the criticism to your question is, Well, what happens if we're in the middle of the ocean and the ship breaks down, who's going to fix it? It's not, it's not that we don't need this technology. It's folks that aren't used to technology saying, oh, how's the technology actually going to work? And that's what we're proving out every single day. To your point of like, what do you lose by not having people on them? Look, it all, it all boils down to the mission, right? And this is why we partner so closely with the Navy. This is why we work with actual operators. It's like, what are you using? What are you delivering? If the mission is long rain fires, we're packing a bunch of VLS tubes on the back of Marauder. You actually don't lose anything, right? You're just delivering those capabilities into the field while keeping people out of harm's way. And that's a very, very important part of the equation. But if our ships, let's be clear, like if our boats and ships aren't accomplishing the mission, then they're not relevant. They're not going to be used in the first place. And there is going to be some mix. I don't know what that mix is. I don't think anybody really knows what that mix is of man and unmanned ships. So what you're going to see in the Navy is like a hybrid Navy. So the things that y…

AI assessment note: “the criticism to your question is, Well, what happens if we're in the middle”

Q history has been able to, uh, control it. If we were to fast forward, and you had your entire fleet, you had, let's assume, uh, not unlimited, but massive capacity, how would you, or would you be able to secure something like the Strait of Hormuz? With these autonomous vehicles, what might that look like? Take us into a, you know, scenario five years from now, what would it take?

A That's the type of scenario that we're building for. I think before talking about the scenario, let's talk about the Strait of Hormuz itself, right? The environment, the part of the world, like what neighborhood is it in, right? It connects. So you have the Persian Gulf, which is 200 miles wide, which narrows down to a 20 mile wide strip, which is the Strait of Hormuz. And then it connects to the Indian Ocean and connects these large oil producing countries to global markets. On the one side of the Persian Gulf, you have, you know, Iraq, Kuwait, Saudi Arabia, UAE, Qatar, and Oman. And on the other side of the Persian Gulf, the north side is all controlled by Iran. So now, I ran and saying, well, how are we going to disrupt traffic in the Strait of Hormuz? Well, it's only a 20 mile wide stretch. I can use missiles, I can use fast attack vessels, I can use naval mines, I can use cheap drones, because I don't have a large distance to cover. I can launch these things anywhere from shore. So it becomes this completely chaotic environment that's sending in naval destroyers into or trying to get commercial ships passed. Becomes extremely dangerous. So using large numbers of autonomous vessels, you can combat these threats in completely different ways. You can offer scale persistence and risk reduction in ways that, you know, man vessels just can't. And again, we won't get into too man…

AI assessment note: “using large numbers of autonomous vessels, you can combat these threats in completely different ways.”

Q How did they get that capability? Is that because As a manufacturer to the world, they needed to ship out products. So they did this in a commercial way for first, or is this always very intentionally? We need to own the South Pacific.

A And then I'll talk about, I want to talk about the status of our Navy, like where the Naval fleet is today, what that means, and then where the Chinese Navy is and where that's going. Because again, 30 years ago, the Chinese Navy was a littoral backwater Navy. Today, they have nuclear submarines, aircraft carriers, and hypersonic missiles. So there's a massive, massive change over the last 30 years. And what's happened in the US shipbuilding industry, it's completely declined. So the US Naval fleet has 296 ships today. There's a congressional mandate, statutory minimum of 355 ships that was set by Congress in 2018. That was eight years ago. Last year, we built nine ships, but we retired 19 naval vessels. So we're going in the wrong, the completely wrong direction. The Chinese delivered somewhere in the ballpark of 30 ships. Their fleet size is around 370. They'll be at 450 before you know it. But the commercial market is where that discrepancy lies even larger, right? They delivered over a thousand commercial ships last year. The United States built five.

AI assessment note: “I want to talk about the status of our Navy, like where the Naval fleet is today”