Chris Power, founder and CEO of industrial automation startup Hadrian, is a student of history. And in his studies, he observed that history repeats itself: In particular, the cycle of empires ascending and descending, nearly all of them outsourcing core industries to lower-cost countries and paying for it in internal stagnation and, eventually, decline.
“Never before in history has a declining empire beaten a rising empire, ever,” he said in a recent interview.
He foresaw the same cycle threatening to repeat itself in the present. So it was that in 2019, with $6,000 dollars in his pocket and a single close contact in the United States — an uncle, who lived in Texas — Power emigrated from his native Australia to San Francisco.
“I literally moved over here because I had this thesis that the U.S. industrial base was in massive decline,” he said in a recent interview. Given the threat of a war in the South China Sea, he felt convinced that something should be done about it. He wasn’t sure what. He had been running small e-commerce businesses and had been head of sales and marketing at an enterprise software company in Australia. Power says he spent around two months in a hotel room in Texas cold-calling hundreds of manufacturers to figure out the most tractable problem he could target.
“I basically stumbled into aerospace and defense and realized that there is a couple of really interesting dynamics,” he said. “One is that there’s zero automation, basically. But more importantly, it’s not like people doing tasks. It’s real experts doing things where you can’t even scale it. The American industrial base is not just unautomated, it’s at a point where it’s relying on Bob or Jeff, who’s been making this thing for Northrop Grumman for the last 20 years and they’re literally the only person who knows how to do it.”
The demographic issues are especially prescient given that the Bobs and Jeffs of the trade, those with the most tribal knowledge, will soon retire, and there are few skilled workers trained to replace them. Seeing an opportunity, he started a private equity fund called ADSC focused on acquiring strategic manufacturing companies focused on aerospace and defense.
But Power soon became convinced that the only way to move fast enough — to recover Pax Americana from the brink of destruction, essentially — was to leverage software and automation as much as possible: to make the factory the product. A year later, he started Hadrian.
The factory is the product
Hadrian is targeting high-precision CNC machining, a manufacturing process where parts frequently require tolerances down to the micron level (a single human hair is anywhere from 50-120 microns in thickness). Power said the company is focused on automating the core, labor-intensive steps that start when the customer orders a part to that part being shipped — which includes programming the CNC cutting and inspection machines but extends well beyond that, to many other aspects of factory operations: scheduling, task management, paperwork.
The idea is to leverage software as much as possible up to around 80-90%, and leave the rest to humans, possibly forever; according to Power, this strategy still gives humans what are essentially superpowers without having to wait years to solve the hardest problems.
“You don’t want everything to be a science project,” he said. “You have to exercise some really good judgment of what is too hard.”
The company raised a $9.5 million seed and launched its first facility, a small, 20,000-square-foot R&D facility in Hawthorne, California (which is now closed); that was followed by a $90 million Series A in early 2022. Hadrian launched a second facility, five times the size of the first, in Torrance, California, shortly after. Twelve months after launching to customers, Power said the company is “well above $20 million in revenue.”
The startup has since become one of the buzzier amongst its cohort, which can broadly be defined as those operating under the banner of “American Dynamism,” a phrase coined by a16z investor (and Hadrian board member) Katherine Boyle. No doubt it’s a lot of pressure, and Power admits that his company’s pursuit — as with anything worthwhile, it must be admitted — is incredibly challenging.
For example, Power says that the CNC machines in the Torrance facility are already operating at a major increase in productivity, because Hadrian has automated the machine programming, so one person can run four to six machines simultaneously (as opposed to a single expert assigned to each machine). But he doesn’t want to stop there; his aim is to double the efficiency even from where it is today.
“There is a lot to build,” he said. “Right now we are three to four times more efficient than industry standard, but we know we can get to 10 times more efficient.”
In addition, the company has been exclusively offering aluminum components, but it’s aiming to roll out steel to all customers by the end of this quarter. In the longer term, Hadrian is also planning on eventually adding even more component materials, like titanium or plastics.
Increased efficiency, increased capabilities — such ambitions demand more resources. Even the addition of one more type of metal, like steel, adds a new layer of complexity. In the background of the business’ growth with its current customers, Power said the company started seeing a flood of interest in multiyear production contracts from aerospace primes and Tier 1s.
As a result, Power started fundraising a venture round last fall, which ballooned as strategic customers put in additional capital and the company secured around $25 million in debt financing for equipment and expansion. As a result of this effort, which was completed last December, the company closed a $117 million Series B, in a mix of equity and debt, with new participation from RTX Ventures, the venture arm of defense prime RTX (formerly called Raytheon). Construct Capital, WCM, Bracket Capital, Shrug Capital, Lux Capital, a16z, Founders Fund, S&A, Silent Ventures, Cubit Capital, Caffeinated, Tru Arrow Partners and other existing investors also participated.
With the new funding, Power is aiming to double the automation and software team in order to improve the automation processes and meet new customer demand. He added that they expect to be out of bookable capacity at the Torrance facility by early 2025, which means the company will also need to break ground on a second factory — which will not be in California, and will be three to four times the size of the current facility — in the third quarter of this year.
“The amount of stuff we have to do in software and robotics to be able to scale our software and systems to multiple sites is a huge lift that our software team is preparing for. Because we have to be able to copy-paste these facilities as fast as, say, Chick-fil-A copy-pastes a franchise or Amazon logistics copy-pastes a logistics center.”
“There’s tons of work to do”
The new interest from aerospace primes has brought with it major bookings and new business opportunities. Power said some customers expressed interest in alternate models, like having Hadrian build a dedicated facility to ensure committed factory capacity. The company is also considering setting up some factories under a joint venture with the customer; these would be focused on specific production areas, so the customer can essentially use Hadrian’s technology and systems to accelerate their own production in a focused area.
With these alternate ventures in mind, Power said he anticipates at least one additional partner factory — a facility dedicated to a specific customer, or a joint venture facility — coming online by the end of 2025.
“It’s insane that we’re 13 months into this and that’s what customers are telling us that they want. Hence why we did such a big fundraise, to double our own automation team, to continue to drive speed and cost efficiencies for our customers, expand into multiple factories to different states, as well as having this massive customer demand for these dedicated instance factories or joint venture automation factories to solve these core production issues,” he said.
“We’ve got a lot to do in the next two years, but very grateful that in a very tough fundraising environment that new investors and existing investors and industry players like Raytheon are stepping up to the plate and giving us the capital that we need to keep up with the customer demand.”
Comment