The $500B Opportunity in Europe’s Defense Buildout

Molly O'Shea (0:00)

Welcome to Sourcery.

Bruno Wejchert (0:10)

The potential of photonics. The technology to interconnect these GPUs. Global payroll and HR platform.

Molly O'Shea (0:16)

8 billion operational data points.

George Hadjiminas (0:18)

Scale-ups over startups.

Aistis Šimaitis (0:20)

You'd rather have a million of something than one of anything.

Bruno Wejchert (0:22)

Building the intelligence layer through the fence. There isn't enough power, there's not enough memory chips.

George Hadjiminas (0:27)

We're at the end of physics of what we can still do.

Molly O'Shea (0:40)

All right, so for this one, we're going to do something special and hand the baton to Bruno to introduce our lovely guests today. Bruno is a host for us with Strike and at Villa Charlotte. So, Bruno.

Bruno Wejchert (0:54)

Perfect. Well, we're here today with Aistis, who was leading Palantir's commercial business for Europe and now is a co-founder and CEO at Onodrim Industries. And we're here with George Hadjiminas, who is the Chief Strategy Officer at Fionn. Thank you guys for coming.

George Hadjiminas (1:10)

Thank you, Bruno.

Molly O'Shea (1:12)

For the audience, without much context, so we're going to be talking about European defense right now. And I would love to start with both of you, just give a little bit of background.

Aistis Šimaitis (1:22)

Onodrim's mission is strengthening foundations of European defense.

So our company will not building like another prime or new prime. We actually look to find the very good manufacturing and critical mission system businesses in Europe, acquire them and make them not a bottleneck to European defense to make sure that the defense primes can deliver the orders in the next decade. So that's our mission.

George Hadjiminas (1:46)

Well, Theon is an established player in the European defense industry. The focus is electro-optics, both for manned portable and platform applications. An example for everyone would be night vision systems, augmented reality, head-up displays, things like this.

We are a company, one of these companies that was well positioned to take advantage of this boom in European defense over the past few years, both through an IPO in 2024 and having a pretty strong growth trajectory since then.

Molly O'Shea (2:14)

So what is the current state of European defense and how has warfare changed since the start of the Ukraine war?

George Hadjiminas (2:22)

So to answer this question, we have to look at where Europe was a few years ago versus where it is today. Europe really was under spending on defense for the past few decades. Ukraine proved that this can no longer be the case. We need to prepare, we need to be ready, we need to industrialize.

It showed a lot of the weaknesses, so to speak, that we had in terms of our own ability to manufacture at scale and supply our militaries at scale. Now, obviously, there is a very large influx of money that is being poured into defense as Europe and European nations aim to strengthen up their arsenals and build up their armies. This provides a very interesting opportunity to a lot of companies to scale up, to develop technologies, to create new technologies, and to really achieve scale that a few years ago, in this industry, in Europe would not have been achievable.

Aistis Šimaitis (3:19)

And I will add, sort of elaborating on the scale paradigm, I think the biggest lesson for defense companies, sort of lesson from the Russian invasion of Ukraine, and the war that's happening, is actually that the advantage is technology and volume. Just having technology is not enough. And actually, if you had to pick between the two, you would go for volume. Like volume wins. Like large scale, you'd rather have a million of something than one of anything. So ideally, we have to do both. But really, I think a lot of defense industry, pre-full scale invasion of Ukraine, was exquisite technologies, this advanced technologies that are like a dreams of generals that cannot be mass produced.

But now what we see the shift in the realities of defense, anything you do has to be produced in tens of thousands, hundreds of thousands or millions. So volume matters a lot. So this is, I think, the biggest conceptual change. Ideally, it also has to be technology.

And ideally, also not easily copy pasteable.

Bruno Wejchert (4:26)

And to maybe double down on what Aistis said, a lot of the systems that have been new and tested in the United States, that have been deployed in Ukraine, frankly, at the beginning of the war didn't work. And they needed to go through these iterative cycles where they keep on updating them and making them better. So even before they reach scale, they have done extremely well in testing environments, but they just have not managed to perform towards the beginning of the war as well as expected.