Oct 14, 2026 · 56 min
Listen from 21:32
Listen at 21:32
Autonomous underwater systems target a new defense model
E442: Nelson Mills on Building a $100 Billion Company, the China Threat, and the Future of War
The episode examines whether affordable autonomy and scalable manufacturing can reshape maritime deterrence as China and Taiwan sharpen strategic risks.
- 1Undersea autonomy is becoming viable as AI, navigation, and hardware advances solve longstanding technical and cost barriers.
- 2Vatn Systems is pursuing a focused defense-prime model built around modular products, shared subsystems, and scalable maritime manufacturing.
- 3Affordable autonomous systems could give the United States and its allies asymmetric options against expensive naval assets and evolving threats.
Don't miss
Mills explains how low-cost autonomous systems could create asymmetric maritime power by targeting, sensing, and countering mines without relying on expensive naval platforms.
The brief
Nelson Mills left venture capital to build Vatn Systems, drawing on maritime experience, startup networks, and a conviction that underwater autonomy had finally become practical.
The timing rests on a convergence of better AI, navigation, and hardware. Mills argues that cost and scale matter as much as technical capability in making undersea systems useful.
Vatn is moving from concept to production with its S6 vehicle, a new 90,000-square-foot facility, more than $40 million in contracts, and ambitions for a focused defense prime.
The strategic case is asymmetric: inexpensive autonomous systems can collect data, counter mines, and threaten costly naval assets, potentially strengthening deterrence around Taiwan and beyond.
Mills closes on the less visible challenge of building a defense company: hiring well, accepting feedback, persisting through uncertainty, and creating more opportunities for luck.
What was said on this episode
19 statements · 12 positive · 7 negative
Investors may fund startups showing capable teams and large markets despite technical risk.
“if you can convince people that you're the right people to... potentially solve this problem and you can show that like hey there's a really big market at the other end of this um then people will take the risk and give you”
Listen at 14:40
De-risking technology and markets leads investors to assign higher valuations.
“as you develop and de-risk your technology and de-risk your market, people will give you higher and higher valuations”
Listen at 15:44
Vaughton’s $2 million pre-seed funded its initial prototype.
“$2 million really got us to an initial prototype”
Listen at 16:03
Vaughton has raised $85 million in total.
“we've raised 85 million dollars”
Listen at 16:25
SpaceX’s Starship launch approach will never be cost-effective.
“if you're trying to shoot rockets and launch you know because spacex's starship that's never going to be cost effective”
Listen at 16:38
About 60% of seed-funded companies fail to reach Series A.
“it's something like 60 percent of companies that raise this seed don't make it to series a”
Listen at 20:36
Hands-on demonstrations substantially increase Vaughton’s investor closing rate.
“if we can get an investor to our facility in Rhode Island and get them hands on the vehicle and get them out in the water with it, we almost always close that investor”
Listen at 21:03
Vaughton’s new facility can scale S6 production to hundreds monthly.
“that can scale that to hundreds a month”
Listen at 27:39
Vaughton has won more than $40 million in contracts.
“We've won over 40 million in contracts”
Listen at 27:43
A focused, vertically integrated undersea company can reach $100 billion.
“And you can build a $100 billion company.”
Listen at 29:28
Vaughton’s two differently sized vehicles share about 50% of their bill of materials.
“something like 50 of the bomb is shared”
Listen at 30:32
Anduril demonstrated government startups can rapidly grow revenue while staying agile.
“Andrel proved that you can build a startup in the government space, that you can grow revenue rapidly. And you can do that while still remaining agile and fast moving”
Listen at 33:43
Scaled superior defense technology can deter adversaries and reduce war.
“if we can show hey we can take this new technology that's better than yours and build it at massive scale and make it too costly then we will have less war more peace”
Listen at 35:17
Future conflicts involving Iran, Ukraine, or Russia will continue.
“there will continue to be conflicts like we have with Iran, perhaps conflicts around Ukraine or with Russia and other areas”
Listen at 35:36
China, Taiwan, and the United States are not fully prepared for a potential conflict.
“I don't think China, Taiwan, or the U.S. are fully ready for this conflict.”
Listen at 36:25
The United States has the world’s best navy.
“I think the U.S. does have the best navy in the world”
Listen at 36:30
China possesses a very large missile arsenal relevant to regional naval warfare.
“China just has so many missiles”
Listen at 37:09
Current Patriot and THAAD interceptor usage rates make defense difficult.
“currently at the rate we're shooting patriots and thads, it's going to be tough”
Listen at 37:24
A China war could produce issues similar to Russia’s wartime problems.
“I think what we'll see is we'll see similar issues if that war starts with China that Russia had”
Listen at 37:34
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.