[00:01] From putting together his first Taser in his garage in 1993 to today having a 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
[00:16] Enterprise Rick Smith, who I caught up with in my new episode of Power Players. >> It is awesome to be back on. Thanks. >> The last time I talked to you was a couple years ago and I know this is a wildly different business compared to
[00:32] 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
[00:44] company and and how did you get going? >> So uh I got started in this space. I had two friends who were shot and killed. They weren't like particularly close friends, but it was more just like guys in my social circle. America's more
[00:56] dangerous than many of us realize. Like gun violence is a big problem. And the technology problem. If we had Captain Kirk's phaser, who would choose to shoot And so I started a journey of discovering the Taser. It actually been
[01:10] invented before I was born in the late 1960s. The inventor was the chief program in the 1960s. I mean this is like a Marvel movie, right? So I called whatever happened to the Taser? The first place I ever saw a Taser was in a
[01:25] Jean-Claude Van Damme movie, Time Cop, in the mid-80s. Um next thing I know we're starting in his garage in Tucson. Seven years of miserable failure, friends that were funding this thing. Then we turned the corner, took off, was
[01:39] wildly successful. So successful that we got hit with a raft of lawsuits and crazy controversy cuz we came out of nowhere. And this idea of using electricity to incapacitate people it turns out that that's kind of scary
[01:53] invented the body camera business. Was like, all right, people are worried like Taser? What does it actually do to people? Let's just record it. And we people? Let's just record it. And we made a big bet in uh about 2008, not
[02:05] only on body cameras, but also on the cloud, cuz 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
[02:17] crazy bet. I mean, our stock was down for about 5 years. I took a a company this weapon company making electric weapons, was converting thought we'd lost our mind. They're like, "When in history has a weapon
[02:30] customers didn't want to wear cameras. They thought the cloud was illegal for didn't fully understand. And luckily, we just stuck with it cuz it's just you Like, our customers need to be able to show the world what they do, so we're
[02:46] terrible policing incidents. And then Ferguson, Missouri happened, and the business just really took off. >> When you found out that you want to go >> When you found out that you want to go all in on a product called a Taser in
[02:59] that first prototype? >> It was crazy. I had no idea like what I gift as a young entrepreneur, cuz you don't know what you're not supposed to do. And so again, I discovered this inventor lived in Tucson.
[03:14] 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 of your viewers who may not
[03:26] 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 basically started two companies. They both went bankrupt.
[03:40] bushy-tailed 23-year-old. I'm like, "Hey, man. Like, let's give it another And he basically said, "Okay, 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
[03:54] in my garage and then once once you sort of get up and running, I'm going to go it was. I I borrowed my my parents had a trailer they used to take the dog shows on the weekend, so I lived in that in a trailer park in Tucson. Every morning
[04:07] I'd show up, knock on Jack's, you know, door. All right, let's go. And we built pretty convinced this guy could have built a nuclear weapon if we had some uranium. Like, it was crazy. We're building with parts from Ace Hardware.
[04:20] things like bicycle tire valves and cranking them into welding them into the metal casings to make propulsion systems. Uh and we made our first prototype in exactly 30 days. Uh I remember that. Uh and then the US
[04:34] to send to the federal government so they could 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'd built our
[04:46] approval. Uh and and now I look at, you know, now I've got like 6,000 employees. Doing that would take a team of 50 people several years. Like, that's the startup startup magic, right? You just
[04:58] better. >> And of course they're not made from Ace >> [laughter] >> They're not made from Ace Hardware, from Ace. >> So what do you So you have this Taser
[05:11] device? I mean, what do you go up to local police precincts and say, um gun and uh buy my Taser thing. Here's how it works. How do you demonstrate >> That was pretty much it. So, we launched as a consumer product and failed cuz
[05:25] hey, and we launched it in the Sharper Image. If you remember the Sharper Image Image. If you remember the Sharper Image catalog, it had cool little Tasers. okay, this isn't real. This has got to be some kind of gimmick. Uh then we had
[05:39] a second product launch that was a a car security thing. We were just struggling to figure out a product that would pay the light bill. And then it on the verge of failure we pivoted into policing and and we basically dialed in the product
[05:52] and we had no money to launch it. So, it literally was exactly what you said. We 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
[06:05] King in Los Angeles and it failed twice. That was before I started this company, their batons and obviously the rest is history. So, the Taser had a horrible worked. And so, when we would show up at police departments, we gave this guy a
[06:20] like, "All right, if you don't believe the Taser works, here's 100 bucks. Who wants to try it?" And then literally, we'd hook them up. Nobody got the 100 bucks, they would fall down. Like, word
[06:32] spread like wildfire. One thing about the police community, they all talk to communiques they share back and forth. And suddenly, you know, within 12 months, we were cash flow positive. 18 months from the launch
[06:46] of the M-26, we went public on the Nasdaq. It a massive $10 million million. >> And now you're a $40 billion market cap. >> How tell us, you know, explain to us a
[07:02] little bit from an entrepreneurial standpoint, how do you how did you scale up the business? I mean, cuz it's not like you could just sit give someone a former Marine a $100 bills and go to
[07:14] you get the business where it needed to be in those early days? >> Well, it really was that. It was like I was out personally leading instructor courses. What we learned is in policing, the
[07:28] 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 All right. So, me and this Marine, he happened to be the former chief
[07:41] the US Marine Corps. So, he knew about developing lesson plans. And when you're So, we developed it together. Uh and then three of us would go out and we would offer these courses. Now, the buzz began
[07:56] with him going cross-country in this 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 cuz we also discovered in policing
[08:08] if the class is free, some cops will show up just because it like it helps, you know, with their resume to get more certifications. And most in companies charge for certification. So, this is like another a freebie for any
[08:21] 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 only lead bullets. We just you scratch and claw and fight
[08:35] And then then once it took off, you know, then you start hiring people following scaling, uh you know, with sales people. And And it turns out uh a lot of instructors in law enforcement will
[08:48] uh 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
[09:02] 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 cop. You're paid to train me, but you don't make any money if I buy or not.
[09:16] You know, you it I can trust that you're going to like give me the real scoop on >> Was there a moment that you could point to that you knew this company was going to be big? >> When Sacramento police
[09:28] bought Tasers for every officer, that was that was a a crazy moment cuz like, man, the capital of California. And that was about 3 months before our IPO. Uh say that was probably the moment. Maybe the one right before that was the
[09:43] 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. >> Rick, I've never seen one of those
[09:57] before. Could you show Could you show it again real quick? That that is that is wild. And it just recharges? >> Yep. It's got a a rechargeable battery. 10 rounds in it. This one's unloaded so I don't, you know,
[10:10] play with a live weapon while I'm on on an interview. But yeah, it it's it's what we've basically learned is if we're going to be successful, we away. You know, that would be
[10:24] just 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 which is what you want. Like, when police use lethal force, they don't use
[10:37] it because it's lethal. They use it because it's reliable. reliable as a gun yet. we have When you mention like, "What do we not do yet?"
[10:50] Today, our biggest limitation is we have this through heavy clothing. If you're wearing a down jacket, we may or may not be able to get through it. So, I'm spending a fair amount of my
[11:03] time in the labs with our engineers working on a new cartridge system that is designed to penetrate through heavy clothing, which, believe it or the hard part. The same cartridge, if you're wearing a
[11:17] parka, we got to make it through. But if you're naked and we fire it at you, we in your intestines causing a serious injury. So, we needed to penetrate through clothing and then stop as soon as it punches through the skin. And we
[11:30] >> I mean, like I I like that's why love doing this podcast. Like I can he actually hear stories like this and go holy This Well, I love to hear that and you're still in the labs like helping to
[11:42] drive product innovation. >> Yeah. Oh, yeah. Yeah, in fact, I we launched we call this new cartridge the Apollo cartridge because we talk about bit thematic and and like try to get people focused. Like we're not we're not
[11:56] mission to make the bullet obsolete. And when you think of things that way, it ultimately that's good for the business. Like good risks. Like don't just sit on slightly better than the last one. We're going to go from two shots to 10. And
[12:11] issue. Anyways, we launched the we ago. And to be honest, it it was failing in testing. We weren't getting through the pause button. And so, yeah, I parachute back in with the engineers.
[12:25] Like, "Okay, 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 going to do? Like, I I don't want to claim victory yet, but we're close. I
[12:40] are testing very well." >> Is it You think this year? >> Wow. >> And then when we do, this weapon will actually outperform a 9 mm bullet. And by that, I mean from the time you pull
[12:55] that trigger till the time he's on the ground and can't move, this will be >> That is >> And that's going to be a game changer. that Is that the first step in making the bullet obsolete?
[13:08] >> 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, derringer pistol with two shots cuz it's hard to hit people.
[13:21] 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
[13:35] 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 people with more guns and they have a gunfight. Like, this hasn't changed
[13:48] since the Wild West. Now, I can make this much, much more effective, but a 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,
[14:02] That's the next step of this. to put anybody at risk, we can immediately send in a device, probably an aerial drone, and stop somebody. And if think about this way,
[14:16] you like if it's your kid's school, yeah, you want to 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
[14:28] that guy down using AI targeting, so it's going to be more accurate than a hit somebody, you're not killing anybody, you know, with the with stray >> This is a I want to tell you this, this is a scary time in this country with
[14:40] large um well-populated Two questions. One, what do you think about what we're seeing here with this? And then number two, like what what have you seen budget-wise from departments,
[14:54] As you get more of these events, are they saying to you, Rick, I've got I've found more money for you uh and your team because you can help prevent things >> Yeah. So, here's what's interesting. When we start talking about putting
[15:07] drones and robots, I actually don't think it's going to be funded by the police because ultimately where it's going to to protect their people. So, I had the pleasure meeting Fred Smith, the uh the
[15:21] >> Oh, man, what an entrepreneur. Did you ever interview him by the >> I've I briefly talked to him, but not interviewed him. But, holy cow. I mean, American icon right there. >> Yeah. Incredible. And we showed him
[15:34] where we're going with Taser-capable drones. 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
[15:46] 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
[15:59] >> Yep. >> Uh you know, in the vernacular of for people going out and and and going on a shooting spree. Um so, I think what will like, "Hey, we want to protect our employees." And businesses are
[16:13] hyper-rational, right? When you put an armed guard at a business, going, "I hope to God they never have to fire a bullet cuz if we're shooting people within our business, that's an extremely high liability event." But, a
[16:26] business that could deploy a drone with a non-lethal weapon, safer for interesting is they'll say things like, "Well, like, "Hey, I'd love to have these in our stores, but I don't know that I want
[16:41] my employees operating a Taser drone." And I said, "Great. Actually, I think society would prefer that that's operated by But, one advantage about the company that was Taser is now Axon,
[16:57] we happen to have built the largest system of connected sensors over a million body cameras. We're the market leader in drones as first responder, in-car cameras. We have a system called Fusus where we can take we
[17:11] can fuse all of your CCTV cameras. And you as a FedEx or as any other business could hit the button and share those to the police. So, now in a crisis if somebody shows up with a gun, right you you don't have to
[17:24] we can immediately share it to police operation center and it'll be operated by a professional. So, I think that's that 5 to 10 years out, but I think that to make sense to show up anywhere with a gun anymore because you'll be detected
[17:38] and stopped by small autonomous robotic systems operated by police, but paid for evolution in your business. Now, this drone business you acquired it what uh
[17:50] ago. Uh it has been growing if if I'm right triple digits. Within that growth 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
[18:04] 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 right now. >> 100%. So, we actually made three
[18:17] acquisitions in this space. One, we bought a small tactical drone company called Skydio. 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
[18:30] called Dedrone. That is counter-drone detection. And so, basically you install sensors and that's the business that's growing at I don't know like north of 500% and that's where you can track drones and then we can integrate with a
[18:43] bunch of different sensors and with different types of interceptors to be able to either jam a drone, hack into the drone, where we're actively building
[18:55] interceptor drone up to take that drone down. And then we have a third area with Skydio which is the leading American drone maker. Skydio is our
[19:08] 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
[19:20] biggest safety challenge in the world right now. And if we can't build the and connect them in. And what we deliver is the connected uh sort of connect dome >> So, the these drones, the drones you have now,
[19:34] you said they're Taser powered. So, they fly down and tip they would actually taze someone on the ground or and then second area like do do you Okay, no, like what do they do exactly? >> Yeah. So, that does not exist yet.
[19:47] somebody is in the future. The drones today uh 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
[20:02] communicate, you can fly them down and distract people, which often works where will interrupt the the things that they're doing. Uh but we do not yet have the ability to put an effect on somebody. Uh but that
[20:17] is something we're actively in R&D. >> How far do you want to push this drone business? And by that I mean uh do you envision the day uh at some company that this is shooting some form of round at someone
[20:30] like a tech drone and like you're selling these to the Department of War. >> 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
[20:43] uh before the pandemic called The End of Killing, where I predicted that we are 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,
[20:56] 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
[21:09] be focused on drones that don't kill, but they can stop people without killing non-lethal portions of this. And we'll let Anderol and others do deal with the >> Rick, lastly, before I let you go, you're founder of a company 1993. You've
[21:24] changed how police do their job, how many people do their job, and how just people stay safe in this country. Um what do you think your legacy would be?
[21:37] >> Um I think if this We are going to make the bullet obsolete. At the end of my career, we're you remember we used to shoot bullets at people here in America?" Like, that's
[21:51] 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,
[22:03] business now, because you can imagine, 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
[22:15] is now transforming the next leg of growth for us. And so, as I look at what when I the big picture, we want to build the future as envisioned by Gene Roddenberry, the the creator of Star Trek, right? Like there, that phasers,
[22:30] they 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
[22:43] 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 our leave to our kids?" Like, that supports democracy, where we make it
[22:57] 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
[23:09] it in a way we're proud of that And uh by the way, for our investors, that's how you build a long-term business. You got to think like, what could go wrong wrong? How do we take more responsibility so that our products are
[23:21] durable and they're going to be here in 50 years and that we don't, you know, step on a landmine because, you know, people were out there abusing our our tech. >> From one product in 1993 found uh by
[23:34] um looking through a at the library through a patent log um to almost a $40 story. Rick, good to see you again. Uh let me know when you're in New New York >> Thanks. Yeah, and uh stay tuned the next couple years. I think we are going to do
[23:49] years than we've done in all of our history to now. welcome on and uh we'll talk to you soon. Take care.