Scrappy Drone Startups Are Transforming Ukraine’s Frontlines

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At the start of twenty twenty two, Luba Shapovich was a successful Ukrainian American software engineer and entrepreneur living in the US. Her it outsourcing business was humming along. She'd been in the States since two thousand and eight, but when Russia launched its full scale invasion of her home country on February twenty fourth, twenty twenty two, she says she felt a duty to go back to Ukraine and help in any way she could.

I saw that uncommon for Ukraine. For one month, just so established firehouse as Logistics Sharing Ukraine.

Luba flew to Ukraine and got straight to work. She launched a tech nonprofit called Dignitas and started raising money.

Bought the zen Las sire Eliza hell, let's scare it being signs and and just look from all aside constantly I'm doing enough.

Her planned month long stay turned into a longer one, and Luba has been based in Ukraine ever since. Through Dignitas, she's raised millions of dollars and has been spending it on supplies, technology, and training initiatives that could help Ukraine weather the war.

So I met, trained, people helping saw Cingulan smartphone, saw Cilan, star luxA, Cielan, Rendios SA and war conditions.

But one of Dignitas's most important roles is as an intermediary. It's helping supply Ukrainian troops with a military technology that's become increasingly central to the country's wartime strategy, drones. Luba is just one of a growing number of Ukrainian entrepreneurs, engineers, and tech workers who have dropped everything to join a grassroots war effort to make or deliver thousands of low cost,

They helps, You'll come up with songs on the survive.

They're just they're so desperate for solutions and anything that can help the fight against Russia that they're open to everybody.

Bloomberg Technology editor Jake Ridnisky travel to Ukraine to meet with the people behind the country's evolving defense industry. Drone makers in particular are working under unique constraints, and their innovation has been fueled by a desire to end the war with Russia.

It's been very transformative and allowed them to create a defense industry that, for all intents and purposes, was a bit of a dinosaur before.

Today on the show, how duct tape and toy drones are transforming the battlefield in the Russia Ukraine War and what the shift to scrappier tactics could mean for conflicts around the world. This is the big take from Bloomberg News. I'm Sarah Holder.

What people don't realize about Ukraine is before the war, it was one of the biggest military weapons exporters in the world.

Bloomberg Technology editor Jake Runisky started his reporting career in Kiev and lived in Moscow for around twenty years. He's now based in Berlin.

A lot of the Soviet unions, weapons factories and arms factories were based in the Ukraine, and so the stuff that they were exporting was very kind of old school bulky stuff, you know, kaloshnikovs, eggs, we call him AK forty sevens tanks, stuff that's mass produced, not particularly technologically sophisticated, and cheap. Now, since the war started, that model no longer works.

While Ukraine does rely on some older US weapons and munitions, its own existing manufacturing infrastructure isn't entirely reliable, in part because the factories where those weapons are manufactured in Ukraine are too easy to bomb, and because they were designed to make equipment to fight a twentieth century war, not a twenty first century one.

The old military industrial complex is no longer functional.

The US has sent Ukraine tens of billions of dollars worth of military support, including tanks, missiles, and artillery shells, and just last week, the White House announced a new two point three billion dollar defense package for Ukraine that comes with more arms and munitions. But Jake says the country can't rely on Western weapons alone.

Although obviously they want them and they need them, but it's not enough because there are forces out of their control, like a spat in Congress can mean a delay of months for American weapons to arrive.

To fight Russia. The Ukrainian military knew it needed more arms fast and for cheap, so Ukrainians have leaned into scrappier technology like those cheap drones. Luba Shapovich's company has been buying for the military outfitted with cameras, supplies, and bombs.

This whole volunteer community arose after the initial invasion so they would crowdsource the funding for all these new technologies that they're producing, and they were producing them in garages that amateurs were just kind of trying to figure out the best way to create a drone that would be able to take out Russians. And so you saw this cottage industry, I guess, emerge out of nowhere, and now there are over one hundred drone producers in Ukraine.

Drones have become an increasingly common wartime tool in the past decade, but in Ukraine, Jake says, this new wave of startups is taking the technology a step further.

Just last month you had President Zelenski saying that drones have become Ukraine's effective artillery during the funding gap when American shells were no longer available in mass for the Ukrainians.

One of Ukraine's top five largest drone producers by volume is called viy. Jake visited the company's headquarters, which operates from the top three floors of a residential building in Kiev. He got a tour from the company's unusual founder, Alexei Bubenko.

My name is Alexei.

I will show what we produced already in Ukraine.

He's twenty five years old, and before the war started, he was basically a street performer. He would do these fire shows that are kind of like twirling fire and he was traveling around Europe on a motorcycle and you know, making a decent living for himself, but like not with a lot of ambitions. As soon as the war started, maybe fittingly, the first thing he did was he made a bunch of Molotov cocktails to provide the defense of Kiev. But he was a smart guy and he quickly realized

Like Luba Shapovich, Bibenko told Jake that he wanted to do more for the war effort, so he went online and ordered a cheap drone from someone he met in a chat room. He started tooling around with it.

It's a really basic drone that you can buy in Walmart. It's just one of these squadrocopters that's got four propellers. And he started experimenting with duct taped bombs and seeing what he could do, and very quickly he was near the front trying to bomb Russian positions.

Bibenko continued to perfect his design and made his exploding drones more resilient. From there, he founded very.

When I visited in March, they were producing six thousand drones a month, but now they recently moved into a larger facility and they're producing eighteen thousand drones a month. They call them FPV drones, which means first person view drones, and they're racing drones. They can go up to about one hundred mile an hour. They don't carry a.

Lot, you know.

They can carry a small explosive, but that's about it. And they have a camera. Sometimes they're equipped with night vision. Sometimes they're equipped with AI capabilities that allows them to kind of do the last, say one hundred yards autonomously. But they're very basic stuff and very expensive to assemble, and they can make a lot of them, and you can literally destroy a Russian tank with two or three drones if they hit the right spots.

Jake says. Part of the reason these drones are so useful is because they're cheap enough to be expendable.

Bubenko can produce a drone for four hundred five hundred dollars, and these are used to attack Russian tanks that can cost nine million dollars, so you have this huge discrepancy between the cost of the weapon the Ukrainians are buying and the cost of the equipment that they're taking out.

Scrappy drones aren't just reached Ukraine's war effort. Russia has also taken notice and has been imitating their approach to varying degrees of success, and militaries around the world are paying attention to We'll get into all of that and

In Russia, it's more top down, so I don't think you have as many small businesses that have emerged. But the Russians have adopted to this new way of warfare as well, and they've seen what works, and they've been able to look at Ukrainian drones and kind of replicate them. And when Russia does something, you know, Russia's much big, it's much richer, and it's able to do things at

For Ukraine, drones offer another advantage besides their low cost. As the war stretches into its third summer, the Ukrainian military is struggling to find enough people to power both

I met with the head trainer of the Ukrainian Army, Andrea Onestrat, and basically Ukraine can't get enough pilots. There's a manpower shortage in Ukraine in general, but they just never have enough pilots, and he's he said, he'll train just about anybody. He finds that younger people who maybe have some experience using video games and playing video games tend to be a little bit better than older veterans.

How has the use of these drones changed the situation on the ground and the way this war is being conducted.

They're definitely changing the nature of the battlefield, so they've lifted the fog of war. Before you had one side was on one side of the trenches, and then there's trenches on the other side, and you would kind of lob missiles over and try to hit them, and you would have kind of an idea of where things were shot from. But now you have over the entire length of the front, you have drones that can give you

More are you seeing other countries and other militaries pick up on Ukrainian strategy here?

Absolutely? I think there's a big push among NATO countries, for example, to figure out how to produce weapons more cheaply. The kind of military procurement process is very bloated and very expensive, and it's dominated by very large companies, and so I think there's a shift, and there's going to be more of a shift that moves away from highly specialized and stuff that's manufactured by Pentagon contracts that cost millions or billions of dollars into stuff that you can

For the drone makers who have joined the fight in Ukraine, there's a sense of urgency as the death toll mounts on both sides. Just this week, a Russian missile attack struck a children's hospital in Kiev. It was part of a barrage of strikes across Ukraine that killed at least thirty nine people.

Everybody who's in the drone industry, or really anybody in Ukraine now nobody's untouched by the war. Everybody's working in some way, shape or form for the front. These entrepreneurs are not thinking about what happens the day after the war, how to market these things. They're trying to produce these weapons as cheaply as possible, with minimal markups, so that they can get to the front faster and hopefully, you know,

This is the Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Jessica Beck and Thomas lou It was edited by Aaron Edwards and Mark Million. It was mixed by Rishi Bajacole. It was fact checked by Arafat Jalasho Perry. Our senior producers are Naomi Shaven and Kim Gettelson. Our senior editor is Elizabeth Ponso. Nicole Bumsterbor is our executive producer. Sage Bauman is Bloomberg's Head of Podcasts. Special Thanks to Tom Gibson and the Bloomberg Originals Team.