Oleg Vornik, Chief Executive Officer at DroneShield, talks to Philip Butterworth-Hayes about the impact of Ukraine on counter-UAS technology provision and the evolution of this rapidly developing industry
What impact has the Ukraine war had on the speed with which you come up with solutions to developing problems?
The counter drone sector came from a somewhat theoretical base to an industry which is now addressing real, pressing problems. It is now essentially a two-tier sector: with militaries extensively using drones in real-life battle scenarios in parallel with systems designed to stop local criminals using a drone to smuggle contraband into prison. So it has become a lot more sophisticated, a lot more real. We have had our staff members in Ukraine several times and as a result we have pretty good intelligence about what drones are being used and where the trends are in terms of how drones operate, what frequencies they use and so on.
I think even if there were a ceasefire in Ukraine tomorrow – which we all hope there will be – the military textbooks for decades will highlight the need for military planners to integrate drone and counter drone equipment into their planning.
Drones won’t replace tanks but when you have USD5,000 drone blowing up a USD5 million military vehicle it’s clear that you need counter drone solutions.
How has Ukraine affected your production run, requirements, size and scale?
We just announced a USD33 million order from the US government which is significantly higher than any other order we’ve done. In 2022 our entire revenue for the year was about AUD17 million. We’ve already reached this figure in the first six months of 2023 alone. We won the US contract on top of other meaningful orders.
We are moving to a new facility with about two-and-a-half times the floor space of where we are now and we are expanding our supply chain partnerships.
The hiring challenges in the past have been mostly focused on getting smart engineers and we’re still hiring engineers but we are also now rapidly seeking to hire operational, supply chain, warehousing people. You look at a typical order and it might be a run of 20 or 50 units. Now we are stepping up to hundreds and probably thousands of units in the not-too-distant future. So everything from assembly floorspace, software development and updates, all of that needs to scale.
How difficult was it for an Australian company to win a US military contract?
Our Virginia office has about 10 people and they are mostly US military veterans, highly experienced in dealing with the US government. The US government essentially deals with an all-American team. For the purposes of US procurement, Australia is actually an exception to the Buy American Act, and Australian-produced gear is seen as equivalent to US-made gear from a legal perspective. The recent AUKUS deal has helped, too.
What kind of new capabilities are you developing?
We’re moving towards higher performance products. Drones by nature are cheap and disposable items and you can’t really have a USD10 million product to counter this kind of threat because it defeats the whole idea of asymmetric warfare.
Drone-defeat technology needs to be as affordable in the same way as drones are affordable.
Russians use very expensive military electronic warfare trucks and you just can’t have too many of them because they’re really expensive.
As a trend we are moving towards the high-end of everything: chips, materials, base-units, cables. In the radio frequency sector a cable needs to be a more higher-performing item than in general electronics, because even slight disturbances with how the radio frequency signal is perceived can have a major impact.
We’re moving towards a very high end in terms of product performance and production. New drones are becoming as software defined as possible, so everything is becoming software driven. We try to make products which will be suitable for several years to come, with updates coming through the software. We use AI where possible to deal with new threats because we can’t rely on a program based on everything that we know today.
How quickly can you get feedback from users and put that back into production/development?
We get pretty good feedback from Ukrainians using our equipment and Ukrainians are pretty high tech. But our products are used across the USA and the world so we get performance and feedback across a very wide range of environments.
A piece of equipment in downtown Tokyo will be a very different test case to rural Ukraine in a war situation.
Drones themselves have different characteristics so, for example, European drones tend to have a much weaker signal – due to the regulations – than US or Australian drones. This filters into our product improvement office, where we have 90 people today, of whom 70 are engineers mainly working on rapid research and development. New software comes out every quarter, so the next update will be early October and new hardware on most of our devices is launched every few years. We launched DroneGun Mk 4 in April and we’re working on several new hardware products as a result of user feedback from Ukraine.
Is feedback from Ukraine filtering across to the civil side? Are the markets diverging?
I think it’s part of the same continuum. It’s easier to sell to civilian markets if you already have a reputation in the defence market, rather than the other way round.
And there’s legislation. In September there will be legislation in the USA coming into force to extend federal authority for operating C-UAS equipment to hopefully state and local authorities. The biggest issue for the non-military market has always been the fact that a New York police officer cannot operate a counter-UAS system while a military police officer can.
In Australia there is no segmentation of that kind and state-based police officers have largely the same authority in this area as federal police officers.
So I think we’ll just continue streamlining the products together.
I think the frustrating thing for everybody in the non-military market has been the slow adoption. If you look at airports and prisons it’s a no-brainer; they need something like this.
How often are you challenged with a requirement from a customer to meet a surprising new threat?
Fairly regularly. Usually it’s a good surprise – we might get a drone we’ve never seen before and our systems are still able to detect and then defeat it. All of our improvements are now incremental, so, for example, in fixed site installation in a particular environment there might be a problem with birds so a customer will need a system that is particularly good at separating birds from drones. When you have sensor fusion that stuff is quite easy because birds don’t emit radio frequency energy. But in a complex environment and you see something new you lodge a ticket with the tech team for urgent stuff and they work on patches so within a couple of days there is often a solution.
We haven’t seen anything of a really revolutionary nature when it comes to drones. They’re all the big themes like drones relying on inertial navigation or being controlled by cell phones.
Are there many cases of truly autonomous drone threats in Ukraine?
It’s interesting. Even if you have a drone like Shahed which can technically fly without input from the operator, the camera is normally switched on at some point so the operator can have a confirmed kill. At that point, the radio frequency detector can pick it up and of course the radar can pick it up.
And we haven’t really seen yet drones that have an effective inertial navigation system (INS) which allows them to navigate over long distances, though there are examples of INS being used over shorter ranges. Is it coming? Yes, probably.
You will then have to start looking at more kinetic defeat solutions and we have forged partnerships with companies that make hard-kill solutions.
DroneShield was one of the first dedicated counter-UAS companies to hit the market; I think you entered the market in 2014.
We call ourselves the original counter-drone pioneer but we are cognizant that the industry is developing really rapidly so we have been actively investing in new technologies like AI in radio frequency, sensor space, radio fusion space and others to stay at the edge, capability wise. We have also expanded into electronic warfare contracts, which no other counter drone companies have done to date, demonstrating our deep capabilities in this space.
There are now hundreds of C-UAS companies producing thousands of different products. How do you stand out?
There are several technical differences in terms of the range of performance, the low false alarm rates and the fact that we are the only company in the world, that I know of, that does handheld, fixed-base and vehicle-based solutions.
We are both an integrator and a sensor maker, which is somewhat different from our competitors.
As one of the pioneers, we invested heavily in engineering, which is fundamentally different from companies who are essentially marketing concerns with an engineering overlay on top. We do rapid development of our technology and we tend to hire engineers from areas as medical technology, because in this culture you need very high levels of reliability. We count progress in days, not years. In addition to tech differentiators there are a lot of commercial differentiators and it has taken us years to build our commercial sales teams.
We operate in about 100 countries around the world – I do not know any competitor that has such a wide network and this was ridiculously difficult to set up.
We remain the only publicly listed counter drone company in the world. We have about 10,000 retail public shareholders in Australia and we’ve raised about AUS100 million in the last eight years.
