How This Drone CEO Looks At His Business - Meet Allan Evans, CEO, Unusual Machines Ticker: $UMAC

You have to take risk when you're a small company. You absolutely have to guess and go. People very often aren't willing to take the risk because they're worried about failure. Once you discover what it is, you now have to focus on just what it is. And what makes a great leader? The really good leaders I—

Thanks, Adam. I'm excited to be here.

Well— was a cold dark— no, I was an engineering student. When I was a kid I built computers, so I ended up going into engineering, got my PhD in electrical engineering doing MEMS, so like the small sensor stuff. Ended up starting a company as a technology transfer out of National Lab. Was in Silicon Valley doing VR headsets, a company called Aagon, who raised some money from Intel Capital, some other places. Ended up going over to China all the time to build factories to build production for VR headsets. While over there, ended up becoming the CEO of a company called Fat Shark, which does or did all the goggles for drone racing, so first-person view goggles. So if you've seen drone racing on TV, or more recently if you've seen the people wearing goggles in the conflict in Ukraine, etc., you know we built a whole bunch of those. And then in COVID we sold that into Red Cat Holdings, where I was the COO, you know, there on the NASDAQ, and we uplisted and then went and acquired Teal Drones. I helped build the factory to do US drones in Salt Lake City. And then about a year ago took over as the CEO of Unusual Machines, and we listed it. So that's the quick story. There's a lot of fun lessons in there.

Yeah, Unusual Machines has a retail part where we sell first-person view, like hobbyist parts, into the US drone parts market. We realized about a year ago we're selling a lot of drone parts, and coming from Red Cat, we realized there aren't a lot of drone parts made in the US. So we've been working on onshoring the production of drone parts for other drone companies and additionally to our channel. And then very recently we announced the acquisition of Aloft, which whenever anybody goes and flies, they have to register with the FAA, and before you fly, they do about 70% of those registrations. And they also do airspace management. So if you're a city manager and you're in the police, you can see where the firefighters are, where the hospitals are, where the individuals are flying. So the deployment of this will stop that New Jersey drone problem in the future. And so we're trying to really do some of the American pieces of the drone industry that aren't the drones themselves, to really help out the drone manufacturers.

Not really. You have some individual component providers. So like, there's a publicly traded company that does radios, particularly the radio link. But really, we realized a whole bunch of people are trying to go do the air vehicles, and like, the parts are kind of boring, right? The sticky stuff in the middle is just not sexy. And so we saw this really big gap and we're just trying to fill it. And we see the Chinese companies that we're trying to displace that are way ahead as our real competitors. If we can't be a drop-in replacement that's as good at the same price, then we actually haven't achieved anything.

You have to take risk when you're small, and we're small. Or when you're a small company, you absolutely have to guess and go. And I think too many people get trapped by 'what if.' So there's a couple of simple things I had heard when I was much younger that stuck with me. The first thing is I can make a decision and go as fast as I can one way, and find out I'm wrong and change my mind and go the opposite direction faster than a committee can decide what way to go. And so it's not a risk if you pay attention while you're doing it, or not as much of a risk. And then, yeah, the other thing is that I see happen is once something gets really big and the flywheel's spinning and everything's working, you have to very quickly shut off risk. You have to now babysit it because it's there. So I think in the early stages of a new endeavor, people very often aren't willing to take the risk because they're worried about failure, where you're absolutely going to fail, just accept it and go as fast as you can. But then once it's working, you have to completely change your risk attitude to 'no, babysit the flywheel,' and then go put the risk, move the risk to some other entity, and have these people be very, you know, very detailed, very specific, and very babysitting what is going on. So I think people are not risk-forward enough and then are too risk-forward. You have to be extremely risk-taking and then extremely not risk-taking, and there's got to be a very sharp line there.

Yeah, exactly. I think there's some companies that have done a very good job. Let's take Google, because you can go back in time. They were figuring out search and they were trying all this different stuff and they were doing everything, and then suddenly AdWords worked. And that's when Eric Schmidt came in and he's like, 'Look, go do whatever, founders. Go figure out Android. Like, we need to babysit the crap out of AdWords and turn it into this flywheel that works and do the nuance there and not take risks with search or AdWords, not suddenly change the homepage, not change how everybody engages, but instead just dial it in and then iterate and really perfect it.' And I think that's where— that's the change you see is once you discover what it is, you know to focus on just what it is. And so a lot of people still want to go in 10 different directions. You're like, 'Stop, go this one direction.' And I think that's a transition state that a lot of companies have trouble with.

Yeah, exactly. I think about it like a flywheel. Like this whole time you're trying to get a flywheel spinning. Once it's spinning, babysit it. Keep adding energy to the flywheel.

Hire slowly. I mean, that— I think that's the most important one. What we do to this date is basically everyone you're going to work with has a chance, sit down, meet with you, do everything. If anybody says no, we don't hire. Doesn't matter what it looks like on paper. Tend to find aptitude and personality matches over experience. I found that people with the right aptitudes and the right attitudes can very often get stuff done regardless of age, regardless of gender, regardless of anything else. You're like, 'Oh man, they're perfect for it. They might not know it, but they're perfect for it.' You know, they get along with everybody, so they make it work. I think that one's really important. Another one that we try to do that I found works really well, and my CEO calls this sort of race car operations. We go as fast as we can all the time, but then I require about once a year everybody to take 10 consecutive days off where they don't check email or do anything else. And I do the same thing. I take 10 consecutive days off at least once a year, and where that full disconnect lets you come back totally refreshed to whatever you're doing. And I think encouraging that behavior is really positive. And then it solves the redundancy problem that everybody's like, 'Well, what if you get hit by a bus?' That's morbid, that's dark and stupid. It's more like, 'Everybody, you need to take vacation, so be sure that it's okay for you to take vacation and it doesn't fall apart.' So that I think has been something that's really effective for what we do, for keeping people really engaged and preventing burnout.