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the ups and downs of the anti-drone business
Cheap drones now help bad guys disrupt airports and get past traditional military defences (as we've seen in the Ukraine war).
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Late last year, Copenhagen Airport cancelled all aircraft landings due to unidentified drones in the area. Their Prime Minister called it “the most serious attack on Danish critical infrastructure (yet)”. No wonder anti-drone tech is hot.
Welcome to this month’s Strategy Standoff.
Our subject this time is DroneShield, an Australian company with a business in drone detection and blocking.
Warning: There's a twist in their tale you may have already read about. If you're an investor, you undoubtedly will already know what happened and probably hate me for even thinking about this case!
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The Rise of the Counter-Drone Market
Today, you are CEO of DroneShield. Your product is a hi-tech system that senses drones then jams their control signal to disable them. You've got early sales to the US Department of Defence (USDoD) and now it's time to ride the wave.
That should be easy since you estimate your global counter-drone total market opportunity at US$60 billion (split half-half between military applications and civilian aviation).
With your DoD deal, you found it easy to excite investors about your growth prospects. Your share price has a rocket under it.
But now it's time to decide where you build your factory to meet your expected contract demand. Should you relocate operations to the USA, or commit to Australian factory capability?
the strategy standoff
Strategy A: Australia First
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You could scale up Sydney plant production and keep government stakeholders and staff happy.
Staying in Sydney would still give you Five Eyes clearances but let you keep access to Aussie innovation and defence grants.
You'd hold on to your Sydney-based tech staff, but on the other hand, you'd be stuck with higher labour costs.
Strategy B: USA Footprint
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You could move your manufacturing from Australia to the US.
This would put your supply close to your largest market, skirt any US tariffs, reduce shipping times, and increase the love from USDoD procurement.
On the other hand, this would require you to set up a new supply chain, leave behind Australian R&D incentives and require key staff to relocate from Sydney.
so, which did they choose?
Cast your vote to find out!
Australia First
USA Footprint
good job, strategy a was chosen!
better luck next time, strategy a was chosen!
But what did this mean for DroneShield...
outcome: facilitator commentary
Matt Braithwaite-Young
Managing Partner
t +61 2 9002 3100
DroneShield stayed in Australia​
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DroneShield opted to expand their Sydney facility with a $13 million investment to increase their throughput by 500% and target sales of A$2.4 billion by end 2026.
DroneShield thought the US would be fine with Australia as a trusted supply location and the share price surged, supported by their well-timed publicity drive.
....But then DroneShield leadership and board kicked the mother of all own-goals.
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Outcome: Facilitator Commentary
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I do know a few investors in Drone Shield, so if that's you, you probably won't want to read the rest (and you know the story already).
Getting the supply chain decisions and investment right was one part of the mix supporting their growing share price. The PR blitz by CEO Oleg Vornik also added fuel to the investor excitement about DroneShield. ​​
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​​Business is Up and Down
It wasn't that long ago, and I remember being impressed at the time with how frequently Vornik was on TV doing product demos with reporters.
Then the CEO and Chairman sell all their shares at once, on November 26. Vornik suddenly sold ALL his shares for A$49.5 million! And so did their chairman and another director. They all got rich, but investors (understandably) panicked. Why would any CEO dump his stock in such large quantities, all at once?
In the Ukraine war, front-line drones use fibre-optic connections, which means radio jamming doesn't work. Was this the end of the line for the DroneShield approach? The company told the market the share sales were routine, but the share price collapsed 30% in one day, leaving a lot of angry investors.
Even strong products need leadership alignment and some contact with market realities. Executive and board actions that look self-serving or out of touch undermine even the best plans.
Is your leadership committed long-term? At Turning Leaf, we facilitate strategies that align actions with goals, building resilience under scrutiny.
Contact us today
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Matt Braithwaite-Young, Turning Leaf 02 9002 3100
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