FlexRadio Chief Executive Officer Matt Youngblood and Mike VA3MW discuss the business of HF radio within FlexRadio Systems.
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Video transcript
An edited version of this webinar’s full transcript has been provided below for your convenience.
Mike Walker — Hi, it’s Mike VA3MW from FlexRadio, and I wanted to welcome you to the QSO Today Expo for September 2022. I have a great interview with Matt Youngblood, the Chief Executive Officer of FlexRadio Systems, and I’ve asked Matt to join us to go over a few things, where we’ve been, what we’ve done for the last couple of years, how the government contracts have really helped with our amateur radio and the investments made in HF radio and amateur radio, and our commitment to amateur radio for the future. And so Matt’s joining us from his home in Austin, Texas. Welcome, Matt. How are you today?
Matt Youngblood — I’m well, how are you, Michael?
M.W. —Not too bad. And we’re recording this about a month and a bit ahead of time, so in case things have changed by the time you would get a chance to watch this because things always change. But Matt did a wonderful presentation of FlexRadio at the Dayton Ham Fest and I’ve asked him to deliver it again to have a much larger crowd experiences and share what he had to say.
M.Y. — Great. Thanks, Michael. All right. Well, I just wanted to start by saying where did we come from? Back in 2003 is when Gerald Youngblood started the company and it was a living room company. He was developing software defined radio just as a hobby for his own interest and he ended up writing a few QEX articles to talk about the technical aspects of software defined radio. Well, he got so much interest that he accidentally sold 500 units within the first year. And this really is important because amateur radio is in our DNA.
So at our core, we consider ourselves innovators. We’ve been innovating in HF for almost 20 years. Actually this upcoming March will be 20 years. And throughout that time the rest of the world outside of amateur radio had forgotten about HF. For example, all of the major governments in the world, they had shifted their attention from HF, or over the horizon communications, to satellite communication and fiber, and those really became the norm. And so at the same time, any major government contractors that were developing HF capabilities had really become complacent.
And so one thing that was really interesting is that in the late 2010s, so this is more like 2018, the US ended up looking up from the Middle East and started to realize that the beyond line of sight communications were vulnerable. This is because multiple adversaries have developed capability of disrupting geostationary satellites. And so throughout that time period, because we’ve been so dependent on satellites, there were very few US manufacturers of HF transceivers that had been innovating over that time period.
And so FlexRadio enters the picture as a small company and we ended up winning this really big contract. You may have heard about our partnership with Raytheon to win an Air Force prototype contract. It’s called AHFRM, and the contract was to modernize an HF radio that flies on all the wide body aircraft in the US Air Force.
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FlexRadio was the design authority for this contract, which means that we developed and own the IP inside the radio. And in order to accomplish this, we had to triple the size of our company. And we did that actually within less than a year period. This was a massive undertaking. And in the end of 2021, we found out that we beat out the competition, which was L3 Harris, to win a production contract. And so we’re actually currently underway with that contract now.
But what about Ham Radio during that time? We were not just sitting idle during that time period. We actually did all this during Covid, and one of the things that happened during that time period is that our contract manufacturer that we used ended up closing their doors as a result of Covid. That was back in 2020. And so we made the hard decision to bring manufacturing in house. But it ended up being a very important step for us because we were able to move to a completely configured to order manufacturing setup.
By having control over the final assembly and tests, we could very efficiently move from a base configuration into all the different models that we sell off the shelf today. We also, during that time period, ramped both the Power Genius XL amplifier and the Tuner Genius XL high power tuner.
Furthermore, we transitioned to all virtual shows during that time period. In fact, QSO Today was probably the biggest virtual trade show that we attended. Ended up being a huge win for us because FlexRadio is highly digital already. And we ended up having a great response from this trade show and it’s been a great event ever since. We ended up shifting our focus from physical selling to digital marketing and sales. So we had a lot more emphasis on our brand, on our website, on the tools that support our website. And despite that difficult environment we have grown our sales every year, in the midst of Covid, and we’re really proud of that fact. But we have so much more to do.
We have not been able to apply as much attention to amateur radio as we would’ve liked to during that time period. And so we are making an intentional shift to start applying attention to it once again. We’d also like to leverage the new technologies that we’ve been developing on the government side to apply to amateur radio products. We have a lot of ideas, that’s never been our problem, is we’ve never had a shortage of ideas to advance the radio art. And what we’ve been doing over the last several months is even further accelerating our development by staffing up. We’ve been adding additional engineering capabilities so that we can advance these technologies faster.
And so this is where we are headed for in 2023. And that’s a really quick summary about FlexRadio over the last several years and where we’re going from now. So I really want to just thank you for attending QSO Today. That has been a huge benefit for FlexRadio and so many in the amateur radio community over the last few years. And thank you for supporting FlexRadio. We just really greatly appreciate those of you who have purchased our equipment and use it and tell your friends about it. And we are just so thankful for our customers.
M.W. — I have a couple of questions for you. You brought up owning the IP and those of us that have worked in the technology industry know that that’s the gold, right? If we own the development design and et cetera, et cetera. And I think that was a big coup for you guys, was to make sure you continued to own the IP because of the investment of, I don’t know, hundreds of thousands of man hours?
M.Y. — It was a huge undertaking. We actually, like I said, we tripled the size of our staff to achieve that. The vast majority of that was in engineering and program management resources. And this was really key because this is going to set us up to be able to grow faster, to advance technology faster over the coming years. So we’re really excited about what’s going to be happening over the next two years and more. We really feel like we’re going to be growing the radio art and applying that energy and technology to ham radio.
M.W. — And you get to remarket that IP right into different revenue streams, I guess is the word I want, right, which is phenomenal.
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M.Y. — Absolutely. And that’s really important. Having multiple revenue streams is actually beneficial for the amateur radio community. Many people have brought up the TEN TECH as an example of what not to do, where TEN TECH shifted all of their attention to government. And this is a story of lore in the ham radio community, and this is something that we are going to take to heart. We actually believe that amateur radio is strategic for our success going forward. It’s not just another revenue stream for us.
For example, any government and commercial application that we’ve been involved in has had a ham radio operator at the center of it, a strategic influencer in that program. Also, having commercial off the shelf manufacturing in house on a regular run rate sales process, that’s huge for a government commercial side as well, because the competition on that side of the business, they can’t ship a radio quickly, they can’t put a radio into someone’s hands at an inexpensive rate. And so this is a significant advantage for FlexRadio as well.
Furthermore, amateur radio allows us to apply new technologies into the field and have them tested and vetted. And so amateur radio is highly strategic for us and we intend to continue to put it at the core of who we are.
M.W. — You’ve been here, well, since you graduated. Were you amazed at how the old boys, I don’t know, it’s a politically correct term in today’s world, but the old boys network works with ham radio. I mean, have the doors just crack open. I know Gerald had said that many times. Just it actually blows people away that these guys are… We’ve grown up, as a long term ham, on the school of hard knocks, right? We can tell you the stuff they don’t put in textbooks. Because I even see that today in some parts of the hobby I’m dealing with at 10 gigahertz, because I’m something different. Who thought I could fire a signal 800 kilometers at 10 gig? I thought it was line of sight. Sometimes.
M.Y. — Well, ham radio’s a fraternity and you are immediately connected to other hams. And the reputation that we’ve built in ham radio has benefited us significantly in these applications because we already had a reputation of being a technology innovator, a company that stands behind its products and its customers. That has benefited us greatly in stepping into that world. And so we actually intend to have that work both ways. So ham radio is, like I said, a part of our DNA.
M.W. — In the commercial part we’ve been doing a lot of data movement, right. We have in the modem world as well because they generally aren’t just sideband comms and the ability to have these modems, I guess, that had various data rates that are almost plug and play type of thing. Plus the waveform modules allows us to use multiple transmission modes easily, right?
M.Y. — Absolutely. So we had developed a waveform API for our radios well before we had any applications that were on the government side. But this ended up setting us up perfectly for being able to capture this opportunity because waveforms are highly important to the government. They have their own strategic wave forms that they want to be able to apply to these HF radios, and they needed a product that could easily have that inserted and tested in a real world environment. And so that set us up very strategically for success going forward.
M.W. — Contract manufacturing, for those that aren’t aware, Matt, tell us what CM, contract manufacturing, was before.
M.Y. — So we had historically, actually since about 2007, outsourced completely turnkey, a third party who would purchase components, assemble our radios, test them and then provide them to us closed in a box, ready to ship. And we had done that all the way up until Covid in 2020. So at that point we had made a hard decision. We had made several transitions between different third party manufacturers along the way, and we made a transition to bring it in house.
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And this is significant because that’s quite an undertaking. Bringing up manufacturing from scratch is very difficult. But what was actually incredible is we ramped our manufacturing and I believe shipped our first unit off our own line within two to three months. And this is quite significant because manufacturing is not an easy process.
But also in the meantime, we actually created a highly efficient configured order process where these radios are built to a base level with their metal and some of the shared components. And then when an order is placed online through our website, our manufacturing team sees that and immediately begins configuring that individual order for shipment.
And I believe, if I remember correctly, we have 32 different configurations that can come out of a single core chassis configuration. And so every single order is built specifically for that customer.
M.W. — It’s not like it’s on the shelf, right? You order a radio and everybody gets a new radio. Maybe you got a lifespan of a couple of weeks, right, between that and burn in. It hasn’t been sitting on a shelf for a while.
M.Y. — Oh, sure. Well, I mean actually as we’re shipping on a regular basis, we historically, or over the last several months prior to our recent stockout, we’ve been shipping within two to three business days. Unfortunately, supply chain has been a struggle over the past couple of months. We’ve done an amazing job of managing our supply chain throughout Covid. We’ve had very few manufacturing down times. We did recently run into a short term problem and we’re resuming shipments again. This will be well in advance of QSO Today. And so we should be back to shipping rapidly at the time that this airs.
M.W. — We’ve seen delivery times that were what, maybe two weeks, three weeks? Some then went to 16 weeks briefly, and then it went to 52 weeks. And it doesn’t take much to be stockout. Imagine us not being able to get a knob for the front of the radio. You can’t get a power button, you can’t ship the radio, right. It’s…
M.Y. — In fact, this is actually another strategic benefit for us moving manufacturing in house, is that we have a better control of our own supply chain and nobody cares about our supply chain more than we do, right. So we have been able to monitor long lead time parts. We’ve been able to order in economic order quantities to keep our pricing down as much as possible. This has been very important for us and has allowed us to maintain our in stock situation for much of Covid, much better than many other industries. So we’re very proud of how well we’ve managed these supply chain challenges.
M.W. — You guys did a pretty good job on that. And I don’t always see it, but I do appreciate when we were still moving a lot of stuff. But, well, that’s great, Matt. Anything else you want to add? This has been wonderful. I know it’s been a busy week, but thanks for taking the time, but any closing comments or thoughts.
M.Y. — Well, we are just tremendously grateful for the amateur radio community. Like I said, it is a fraternity and it’s something that we really feel blessed to be a part of. We really believe in advancing the radio art, but one of the things that we like to say is that we really exist to enrich lives. And that’s the core mission of FlexRadio, is to enrich lives. And in amateur radio, we believe that we have a strategic advantage in enriching people’s lives and we can use our innovative nature and our ability to advance technology to add to the fun and the joy of amateur radio and being able to operate radio. And so we’re passionate about that and we’re thankful for this community for supporting us and look forward to many more years of doing so.
M.W. — Excellent. Well, Matt, thanks for your time. For everybody else, thanks for listening. If you have any questions you want to reach out to us visit our contact page or email info@flexradio.com. It goes to multiple people and we’re happy to provide as much data or answer questions or do whatever we can to keep you moving forward in the hobby. 73, everybody.