0:00 spk_0
From putting together his first taser in his garage in 1993 to today, having a drone business that is growing triple digits, and these drones are helping to protect people at large events. That is the story of founder and CEO of Axon Enterprise Rick Smith, who I caught up with in my new episode of Power Players.Rick, good to see you. It’s been a while,
0:24 spk_1
man. It is awesome to be back on. Thanks.
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The last time I talked to you was a couple of years ago, and I know this is a wildly different business compared to when we talked last time. But for those not familiar with your story, tell it to us, because you founded this company in 1993. You took a lot of big bold bets many years ago. Like, why did you found this company and, and how’d you get going?
0:46 spk_1
So, uh, I got started in this space. I had two friends that were shot and killed. They weren’t like particularly close friends, but it was more just like guys in my social circle. America is more dangerous than many of us realize, like gun violence is a big problem. And the thing that struck me is this is a technology problem. If we had Captain Kirk’s phaser, who would choose to shoot bullets at people anymore? And so I started a journey of discovering the taser had actually been invented before I was born in the late 1960s.The inventor was the chief scientist on the Apollo moon landing program in the 1960s. I mean, this was like a Marvel movie, right? So I call this guy up when I’m 23, like, hey, whatever happened to the taser? The first place I ever saw a taser was in a Jean-Claude Van Damme movie, Time Cop in the mid-1980s. Um, next thing I know, we’re starting his garage in Tucson, 7 years.A miserable failure, bankrupting my parents and their best friends that were funding this thing. Then we turned the corner, took off, was wildly successful, so successful that we got hit with a raft of lawsuits and crazy controversy because we came out of nowhere. And this idea of using electricity to incapacitate people.You know, it turns out that, that’s kind of scary to a lot of folks. And so that’s why we invented the body camera business. It was like, all right, people are worried, like, are police abusing people with the taser? What’s it actually do to people? Let’s just record it. And we made a big bet in around 2008, not only on body cameras, but also on the cloud, cause we realized the only way we could scale body cameras is if every 20-man police department didn’t have to set up their own video servers. And in the moment we did that, it was a pretty crazy bet. I mean,Our stock was down for about 5 years. I took a, a company, this weapon company making electric weapons, it was converting to a software company. So investors thought we’d lost our mind. They’re like, when in history has a weapon company become a software company? Our customers didn’t want to wear cameras. They thought the cloud was illegal for them to put data in something they didn’t fully understand. And luckily, we just stuck with it cause it just, you know, sometimes you just got to believe, like, our customers need to be able to show the world what they do. So, we’re not.Imagining what happens in these terrible policing incidents, and then Ferguson, Missouri happened, and the rest is history. That’s when the business just really took off.
2:54 spk_0
Whenyou found out that you want to go on in on a product called a taser in your early twenties, like, how did you develop that first prototype?
3:03 spk_1
It was crazy. I had no idea like what I was doing, and in some ways that’s a gift as a young entrepreneur, cause you don’t know what you’re not supposed to do. And so again, I discovered this inventor lived in Tucson.I was, this is before the internet. So I was at the ASU Law Library, looking through patents. And I’m like, holy smokes, this guy’s address is like 90 minutes from here. So I dialed 411, and for some reviewers who may not know what that is, before Google, that’s how you got a phone number. And uh he answered the phone, and I basically just went down to visit him. He was 73 and he was pretty frustrated. He’d been at it already for 20 years, had got, he basically started two companies, they both went bankrupt.And here I am, this bright-eyed, bushy-tailed 23 year old. I’m like, hey, man, like, let’s give it another shot. And he basically said, OK, we’ll tell you what, if you pay me some patent royalties, and we, we cut a deal, I’ll, I will help you make the first taser.In my garage. And then once, once you sort of get up and running, I’m gonna go back to retirement. And so that’s what it was. I, I borrowed my, my parents had a trailer they used to take to dog shows on the weekends. So I lived in that, in a trailer park in Tucson. Every morning, I’d show up, knock on Jack’s, you know, door. All right, let’s go. And we built.The first taser in his garage. Like, I’m pretty convinced this guy could have built a nuclear weapon if we had some uranium. Like, it was crazy. We’re building it with parts from Ace Hardware, uh, you know, taking things like bicycle tire valves and cranking them into, welding them into metal casings to make propulsion systems. Uh, and we made our first prototype in exactly 30 days.Uh, I, I remember that. Uh, and then the US government, we made the first prototype to send to the federal government so they can give us a ruling on whether or not it was a firearm, which was the biggest risk to the business. Uh, and they responded in 2 weeks. So 45 days from the founding, we built our first prototype and gotten government approval. Uh, and, and now I look at, you know, now I’ve got like 6000 employees.Doing that would take a team of 50 people several years. Like that’s the startup of, uh, the startup magic, right? You just do crazy things cause you don’t know any better.
5:01 spk_0
And of course they’re not made from Ace Hardware materials anymore.They’re not made from
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Ace hardware.
5:07 spk_0
That’s true. That’s true.
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But I do miss making stuff from Ace.
5:10 spk_0
So what, so you have this taser device. I mean, what do you go up to local police precincts and say, um, Mr. and Mrs. Cop, please put away your gun and, uh, buy my taser thing. Here’s how it works. How’d you demonstrate?
5:20 spk_1
That was pretty much it. So we.Launched as a consumer product and failed because consumers were skeptical. They’re like, Hey, and we launched it in the sharper image if you remember the sharper image
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of cool little gadgets.Here’s a taser right right next to the sharper image.
5:35 spk_1
And shockingly, consumers were like, OK, this isn’t real. This has gotta be a gimmick. Uh, then we had a second product launch that was, uh, a car security thing. We’re just struggling to figure out a product that would pay the light bill.And then on the verge of failure, we pivoted into policing and, and we basically dialed in the product, and we had no money to launch it. So it literally was exactly what you said. We hired a former marine in a Winnebago who went cross-country knocking on doors at police departments.Like, hey, let me show you the new taser. And in the early 90s, a taser was used on Rodney King in Los Angeles, and it failed twice. That was before I started this company, that was an old taser. And they went to their batons and obviously the rest is history. So, the taser had a horrible name in policing. Nobody believed it worked. And so when we would show up at police departments, we gave this guy a couple of $100 bills, and the pitch was like, all right, if you don’t believe the taser works, here’s $100 who wants to try it? And then literally, we’d hook him up.Nobody got the $100 they would fall down. Like word spread like wildfire. One thing about the police community, they all talk to each other. There’s all these communiques they share back and forth. And, and suddenly, uh, you know, within 12 months, we were cash flow positive. Uh, 18 months from the launch of the M26, we went public on the NASDAQ in a massive $10 million money raise. That was our IPO raised $10 million. And
6:56 spk_0
now you’re a $40 billion market cap.
6:58 spk_1
We’ve come a ways, yeah.
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How, how it tell us, you know, explain to us a little bit from an entrepreneurial standpoint, how do youHow did you scale up the business? I mean, cause it’s not like you could just give someone a former marine $100 bills and go to every police department. Like how did you get the business where it needed to be in those early days?
7:20 spk_1
Well, it really was that it was like I was out personally leading instructor courses. Um, what we learned is in policing, the first thing you got to do is you’ve got to have an instructor’s class so that they know how to use the equipment and, and that there’s a certification process. They will not take anything out on the street without certification. All right? So, me and this marine, he happened to be the former chief instructor of hand to hand combat for the US Marine Corps. So he knew about developing lesson plans.And when you’re small, you just figure it out, right? So we developed it together, uh, and then,Three of us would go out and we would offer these courses. Now, the buzz began with him going cross-country in his Winnebago, knocking on doors, and then as the buzz picked up, agencies were offering to host classes. Uh, and we give classes away for free, cause we also discovered in policing.If the class is free, some cops will show up just because it’s like, it helps, you know, with their resume to get more certifications, and most companies charge for certification. So, this is like another, uh, a freebie for any instructor to get another certification on their resume. And it was just, it was the grunt work, uh, that, that got us going. There was absolutely zero magic, you know, there’s that old like, there’s no silver bullets, only lead bullets. We just, you scratch and claw and fight your way to survival.And then, then once it took off, you know, then you start hiring people and scaling, uh, you know, with salespeople, and, and it turns out, uh, a lot of instructors in law enforcement willUh, basically work as consultants to train at other agencies. They typically can’t work for a company while they’re doing work at their own agency. That would be a conflict of interest. But like a Seattle PD officer can be an instructor and go train at other departments. In fact, that’s standard in the industry. Most police departments do not want to be trained by a sales guy. They would rather be trained by somebody that they know, OK, you’re a professional cop, you’re paid to train me, but you don’t make any money if I buy or not.You know, you, it, I can trust that you’re gonna like give me the real scoop on this.
9:22 spk_0
Was there a moment that you could point to that you knew?This company was going to be big.
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When Sacramento police.Bought tasers for every officer. That was, that was a, a crazy moment because we’re like, man, the capital of California, and that was about 3 months before our IPO. Uh, I’d say that was probably the moment, maybe the one right before that was the first time I ever saw a cop carrying a taser out in the wild. It was in the Salt Lake City airport.Uh, when I just looked over and oh my God, that guy’s wearing the thing I make, like, holy, holy cow, like this is working,
9:56 spk_0
Rick. I’ve never seen one of those before. Could you show, could you show it again real quick? That, that is, that is wild, and it just recharges.
10:04 spk_1
Yup, it’s got a rechargeable battery, and then this is the magazine, you put 10 rounds in it, this one’s unloaded, so I don’t, you know, play with a live weapon while I’m on uh, on an interview. But yeah, it, it’s, uh, it’s what we’ve basically learned.I, if we’re gonna be successful, we never talk about taking a cop’s gun away, uh, you know, that would beJust unacceptable in America. There’s so many guns out there, but this is a new kind of gun, right? This is a gun that doesn’t kill people, but it gives you the job of incapacitating them, which is what you want. Like when police use lethal force, they don’t use it because it’s lethal. They use it because it’s reliable. That, our problem is we’re not as reliable as a gun yet. Um, now, we’re getting very close. In fact, we have, when you mentioned like, what do we not do yet? Today,Our biggest limitation is we have this Achilles heel. This may or may not get through heavy clothing. If you’re wearing a down jacket, that we may or may not be able to get through it. So, I’m spending a fair amount of my time in the labs with our engineers.Working on a new cartridge system, uh, that is designed to penetrate through heavy clothing, which, believe it or not, that’s actually pretty easy. Here’s the hard part.The same cartridge, if you’re wearing a parka, we gotta make it through. But if you’re naked and we fire it at you, we gotta make sure it doesn’t end up down in your intestines causing a serious injury. So we need it to penetrate through clothing and then stop as soon as it punches through the skin. Uh, and we got some very clever designs.
11:32 spk_0
I mean, like, I like, that’s why I love doing this podcast because he actually hears stories like this and go, holy shit. Well, I love to hear that, and you’re still in the labs like helping to drive product innovation.
11:44 spk_1
Yeah. Oh yeah.Yeah, in fact, I, we launched, we call this new cartridge, the Apollo cartridge, because we talk about our moonshot mission. We, we tend to be a bit thematic and like, try to get people focused. Like we’re not, we’re not here to make a business. We’re on a mission to make the bullet obsolete. And when you think of things that way.Pushes you to take more risk. Uh, and, and ultimately, that’s good for the business, like good risks. Like, don’t just sit on your butt and, and make the next taser slightly better than the last one. We’re gonna go from 2 shots to 10, and we’re gonna solve this clothing issue. Anyway, so we launched, we, we announced the Apollo cartridge a year ago.And to be honest, it, it was failing in testing. We weren’t getting through clothing well enough, so we had to hit the pause button. And so, yeah, I parachute back in with the engineers. That’s, that’s the fun of the business. Like, OK, guys, it’s crisis mode. This is like Apollo 13 now. Like we’ve spent $10 million on automation equipment. The line is ready to go, but the design ain’t working. What are we gonna do? Like, I, I don’t wanna claim victory yet, but we’re close. I think we’ve got some design mods that are testing very well. What you think this weapon.Uh, yeah, we, I think by next winter we’ll have it. And then when we do, this weapon will actually outperform a 9 millimeter bullet. And by that I mean from the time you pull that trigger till the time he’s on the ground and can’t move, this will be faster than shooting him with a bullet and waiting for him to bleed out.
13:03 spk_0
And
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that’s gonna be a game.
13:04 spk_0
Game changer. That is a game changer. And then does that, is that the first step in making the bullet obsolete?
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Well, you know, the first step was getting the neuromuscular effect dialed in. Then it was getting them enough shots, so we’re competitive with a gun, right? Like, please don’t carry a derringer pistol with two shots because it’s hard to hit people. Now it’s getting through clothing and just getting that last mile of reliability. And then I’ll tell you, the next thing beyond that is going to be, how do we make it so an officer doesn’t have to put their own life at risk.So, today, as I stand here right now, if somebody enters a school with a gun or a hospital or, you know, God forbid, you know, where people go and do these mass shooting events, the only way you can stop them today is you send in more people with more guns and they have a gunfight. Like, this hasn’t changed since the wild west. Now, I can make this much, much more effective, but a cop’s never gonna take this no matter how effective it is to a gunfight. And my answer to that is simple. Don’t get in a gunfight. Send in a drone or a ground robot.And we can remotely incapacitate people. That’s the next step of this, uh, is how do we make it so we don’t have to put anybody at risk. We can immediately send in a device.Probably an aerial drone and stop somebody. And if you think of it this way, like if it’s your kid’s school.Yeah, you wanna stop that shooter. But a shootout now with multiple officers firing high-powered weapons, like, that’s extremely dangerous, far more safe. We could fly in a drone and take that guy down using AI targeting, so it’s gonna be more accurate than a person. If you miss and you accidentally hit somebody, you’re not killing anybody, you know, with, uh, with stray bullets.
14:37 spk_0
This is, uh, I’ll tell you this, this is a scary time in this country with these, these mass shootings at these very large, um, well populated, uh, events.Two questions. One, what do you think about what we’re seeing here with this? And then number 2, like what, what have you seen budget wise from departments, police departments across the country, as we get more of these events, are they’re saying to you, Rick, I’ve, I’ve found more money for you, uh, and your team, because you can help prevent things like this.
15:04 spk_1
Yeah, so here’s what’s interesting. When we start talking about putting drones and robots, I actually don’t think it’s gonna be funded by the police because ultimately where it’s gonna come from are the businesses that have to protect their people. So I had the pleasure of meeting Fred Smith, the, uh, the founder of FedEx. Oh man, what an entrepreneur. Did you ever interview him, by the way?
15:26 spk_0
I’ve, I briefly talked to him, but not interview him, but holy cow, I mean, American icon right there.
15:32 spk_1
Yeah, incredible.And we showed him where we’re going with taser-capable drones.And he said, this is one of the most amazing things I’ve ever seen. I want to put them in all of our stores. Now, of course, he’s now passed away, and that was more philosophical. So, you know, since we’re talking about investments, so we should take that as an order. But the point was this FedEx had a shooting occur in one of their stores. Remember back before people would go to schools, they would go to the post office. We used to call it going postal, uh, you know, in the vernacular or for people going out and, and, and going on a shooting spree.Um, so I think what will actually happen is businesses will be like, hey, we want to protect our employees, and businesses are hyper rational, right? When you put an armed guard in a business,Your risk people who look at that going, I hope to God they never have to fire a bullet, cause if we’re shooting people within our business, that’s an extremely high liability event. But a business that could deploy a drone with a non-lethal weapon, safer for everybody. But where it gets really interesting isThey’ll say things like, well,And, and, and Fred actually in our conversation, he said this as well. He’s like, hey, I’d love to have these in our stores, but I don’t know that I want my employees operating a taser drone. And I said, great. And actually, I think society would prefer that that’s operated by a sworn law enforcement officer anyway. But one advantage about the company that was taser is now Axon. We happen to have built the largest system of connected sensors.In the world for government. We have over a million body cameras. We’re the market leader in drones as first responder, in-car cameras. We have a system called FUI where we can take, we can fuse all of your CCTV cameras, and you as a FedEx or as any other business can hit the button and share those to the police. So, now in a crisis, if somebody shows up with a gun, great use, you don’t have to operate that drone. You hit a button and we can immediately share it to a police operations center, and it’ll be operated by a professional.So I think that’s, that’s 5 to 10 years out, but I think that is the game changer where it’s not gonna make sense to show up anywhere with a gun anymore because you’ll be detected and stopped by small autonomous robotic systems operated by police but paid for by the private sector.
17:45 spk_0
Well, thisbrings up, I think, the evolution in your business. Now, this drone business, you acquired what, uh, it’s called a different name 18 months ago. Uh, it has been growing, if, if I’m right, triple digits. Within that growth rate.Who is, who is buying these drones? And I was very intrigued by maybe one group that is buying it, and these companies that are making data centers, and I see the uproar with people like, oh, don’t put a data center in my backyard. I would imagine if you were building a data center, you want protection of that really large asset right now.
18:16 spk_1
100%. So, we actually made 3 acquisitions in this space. One, we bought a small tactical drone company called Sky Hero. They make drones for Special Forces and for SWAT teams. So you haven’t heard much about that yet, but stay tuned. The second is a company called D-Drone. That is counter drone detection. And so basically, you install sensors, and that’s the business that’s growing at.I don’t like north of 500%. And that’s where you can track drones, and then we can integrate with a bunch of different sensors, and with different types of interceptors to be able to either jam a drone, hack into the drone.Or like we have partners in Ukraine, where we’re actively building integrations if you need to fly a small interceptor drone up to take that drone down. And then we have a third area which we’ve done through a partnership with Skydio, which is the leading American drone maker. Skydio is our partner for outdoor long-range drones.So, if I take a step back, the way I look at it is like, our job is to figure out how to help our customers solve these really interesting public safety challenges, and drones are probably the biggest safety challenge in the world right now. And if we can’t build the best system, we’ll go find a partner and, and connect them and, and what we deliver is the connected, uh, sort of connect dome of all these devices.
19:31 spk_0
So,the, these drones, the drones you have now, you said they’re taser-powered, so,They fly down and they would actually tase someone on the ground or and then secondary like, do you, do you, OK, no, like what do they do exactly?
19:45 spk_1
Yeah, so that does not exist yet. The drone that is capable of stopping somebody.is in the future. The drones today, uh, will effectively fly over a scene, and they will give you an immediate awareness of what’s happening, which is a big advantage, but they, right now, they can see, they can observe, they can communicate, you can fly them down and distract people, which often works where they, holy crap, there’s a drone here. It will interrupt the, the things that they’re doing. Uh, but we do not yet have the ability toPut an effect on somebody, uh, but that is something we’re actively in R&D.
20:19 spk_0
How fardo you want to push this drone business, and by that I mean, uh, do you envision the day at some point and when you’re still leading the company, that this is shooting some form of round at someone like attack drones, and like you’re selling these to the Department of War.
20:34 spk_1
Yeah, yeah, we will not make intentionally lethal drones, like, and by the way, the world.I thought wars were over. I wrote a book uh before the pandemic called The End of Killing, where I predicted that we’re at the end of modern wars. I was wrong, catastrophically. War is back. And democracies need tools to win. So, I’m not saying we don’t need lethal drones, we do, but that’s not something we’re ever going to make. Where we view our purpose in this world is, how do we take situations where historically, the solution might be to kill somebody and find a way to not kill them. So, we’re focused onDrones that don’t kill, but they can stop people without killing them. So we’re very focused on the non-lethal portions of this, and we’ll let Andderal and others deal with the lethaldrones.
21:21 spk_0
Rick, lastly, before I let you go, you’re a founder of a company in 1993. You’ve changed howPolice do their job, how many people do their job and howJust people stay safe in this country. Um, what do you think your legacy will be?
21:37 spk_1
Um, I think.If thisLet me take the F out. We are gonna make the bullet obsolete. At the end of my career, we’re gonna look back and remember, gosh, you remember we used to shoot bullets at people here in America? Like, that’s, that’s crazy. We will have brought the phaser to life.But there’s one other piece to this. We started with the taser, then we got into body cameras, and now we have this huge neural network with millions of cameras and sensors, and with AI is at the core of our business now because you can imagine, there’s not enough people to watch all those cameras. So we can use it to like help a police officer write their reports, translate languages to all the different people they deal with. So, AI is now transforming the next leg of growth for us. And so, as I look at whatWhen I, the big picture, we wanna build the future as envisioned by Gene Roddenberry, the, the creator of Star Trek, right? Like they, they had phasers, they had communicators, like technology sort of uplifted civilization. That’s what we’re trying to do. Unfortunately, when you make technology for police.The media tends to immediately run to the George Orwell story of, oh, this is gonna be used to oppress people, to kill people, to take away their freedoms. So we’re really conscious of like, hey, how do we build the technology infrastructure for the world we want to raise our kids in and leave our, leave to our kids, like, that supports democracy, where we make it very hard, like one of these taser devices.It’s got a log that records every time it’s used. We built cameras to watch how you use it, right? So we think a lot about, it’s not just our job to make tech and throw it out there. How do we make it in a way we’re proud of that, and by the way, for our investors, that’s how you build a long-term business. You got to think like, what could go wrong and how do we prevent it from going wrong? How do we take more responsibility so that our products are durable and they’re gonna be here in 50 years, and that we don’t, you know, step on a landmine becauseYou know, people were out there abusing our, our, our tech.
23:31 spk_0
From one product in 1993 found uh by someone um looking through at the library through the patent log um to almost a $40 billion markup, hell of a success story, Rick, good to see you again. Uh, let me know when you’re in New York City again.
23:45 spk_1
Thanks. Yeah, and, uh, stay tuned the next couple of years. I think we are gonna do more impactful products in the next 5 years than we’ve done in all of our history to now.
23:54 spk_0
Well, you keep me posted. You’re always welcome on, and, uh, we’ll talk to you soon. Take care.
