Key Takeaways

  • Global factories produce roughly 20 million aerial drones every year, compared to only 1,000 to 2,000 commercial and defense underwater drones.
  • Legacy maritime suppliers build for low-volume, high-margin defense projects, making it impossible to buy off-the-shelf parts at consumer scale.
  • Ulysses scales production by designing parts in-house and purchasing components from electric vehicle and consumer electronics supply chains.
  • A decade ago, pitch meetings centered on vertical US manufacturing ended in the parking lot; today, factory design is the primary bottleneck to 100x growth.

Why Legacy Marine Parts Keep Hardware Companies Tiny

If you want to build millions of units of any machine, you cannot buy parts from suppliers who celebrate selling a few hundred items per year. On Cheeky Pint, Will O'Brien pointed out the massive gulf between air and sea. As O'Brien explained, “There's about 20 million aerial drones built every year. There's maybe 1,000 to 2,000 underwater drones. For us to really fully manifest our vision, we need to be building millions of underwater drones.”

The traditional marine hardware sector runs on low volume and high markup. Because legacy contractors sell to government agencies with bloated budgets, every acoustic sensor, motor seal, and specialized cable carries a defense-contract price tag. If you assemble an underwater robot out of those catalog parts, your bill of materials guarantees your unit cost stays in the six figures. You remain trapped in the same low-volume trap as the incumbents.

O'Brien realized that Ulysses could not reach mass deployment for tasks like seagrass restoration, offshore wind turbine inspection, or naval operations by acting as an integrator of legacy marine components. To hit real scale, the company had to reject the existing maritime supply base entirely.

Borrowing From Electric Vehicles to Build In-House

Instead of paying defense premiums for subsea components, Ulysses borrows components from industries that already manufacture at consumer scale. “Insofar as we can, we try to build as much on top of electronic vehicle supply chains, drone supply chains, where you have to buy from somewhere else, or consumer electronics supply chains where things are made in the order of millions, and not maritime supply chains,” O'Brien said.

Automotive and consumer tech suppliers have spent decades shaving pennies off batteries, microcontrollers, and motor drives. When an underwater startup adapts those mass-market inputs to survive salt water and pressure, its cost curve drops sharply. Anything that cannot be sourced from high-volume automotive lines must be designed, machined, and validated under the company's own roof.

This marks a complete reversal in venture capital sentiment. As Chris Sacca noted during the conversation:

"If you had come to a venture capitalist 10, 12 years ago, for some maybe six years ago, and said, 'Hey, we are going to verticalize manufacturing, we are actually going to build things in the US, we're not going to outsource them to Foxconn or Shenzhen or whatever. And so, we're going to... And for those components that seem like the supply chain might be dicey, we will literally make them from scratch so that we control everything, the entire vertical stack of our device.' That would get you shown to the parking lot."

Now, the playbook flips. The companies winning in hard tech look less like software sales teams and more like industrial operations. As O'Brien put it, “The things that we think about on a daily basis right now are not like, how do we sell more? It's, how do we build a factory?”

Sacca emphasized that true scale belongs to founders who master their physical constraints: “We have now started to see companies like this really get to be supply chain experts and see what's standing in the way of their 100x from today.”

What to Do With This

Audit your bill of materials this week and flag every component purchased from vendors who sell fewer than 10,000 units annually. For each flagged part, calculate whether you can replace it with an adapted automotive component or bring its assembly in-house before your next production run.