Chief Future Officer: Mark Mesler, Archer

Since founding Archer Aviation in twenty eighteen, Adam Goldstein has been constructing a very real business based on a very vivid vision.

Imagine you have a flight to thirty minutes and you're just leaving your house. You can now pop into a vehicle that can fly you to the airport in five minutes. We're building the future of aerospace, the future of aerial ride sharing. That's what electric vertical takeoff and landing aircraft can do.

Electric vertical takeoff and landing EVY tolls for short vis are aircraft designed to carry passengers short distances at high speeds, running on batteries the recharge within minutes. It sounds like science fiction. We're talking about an air taxi or a flying taxi or aerial ride sharing, which is hard to fathom for a lot of people anywhere in the world.

Electric air taxis were really introduced to the world by being called flying cars, very similar to cars, like a car with a wing. But the concept of calling these products flying cars really creates this sense that these products are many many years off, when the reality is the products are very close to coming to market.

How close you will.

See these products come to market by the year twenty twenty five.

Twenty twenty five is when the Federal Aviation Administration is laid out a plan for ev tolls to begin limited commercial operations. Getting to market will take vision, technical acumen, not least shrewd allocation of resources. For this. Gold Steam relies on CFO Mark Mesler.

Our timeline to complete the twenty twenty four annual operating plan. We compliment each other. I'm used to supporting like the visionary, passionate founder who's out there selling the dream.

And that's a classic Citlicon Valley story.

That's right, that's right, And I'm a rational, left brain CFO who I can tell the story, but I have to tell it in a way that investors will understand, and it's very pragmatic and it's very databased.

I would say Mark has been really phenomenal in helping us manage our process and really manage it with speed.

George just turning.

Mark and I partner really to try to keep the company moving on this path, to really make sure we hit our timelines, stay on budget, and ultimately have enough capital to get to the finish line.

The launch of ev Toolls in twenty twenty five would also be the starting line for an urban and ability industry that many believe has the potential to be transformative.

The opportunity here is to really take the pain points and hassle out of travel. These excitement cautious optimism. Let's say it is excitement that you're going to create some new forms of travel that should enhance you overall travel landscape. And we're closer to this being realized than we've ever been.

Some of the early cities like Los Angeles really and New York and others started paying attention about I would say twenty eight team really saw interest in the industry then of what might happen with this technology coming As the industry has advanced, there's more viable entrance to the market. Now we're seeing other cities really try and figure out where this technology fits in their urban landscapes.

Adam Goldstein, Mark Messler and the team at Archer are on a path that's never been trodden. They believe it's a path to success.

The product that Archer's building has the potential to change the world, and I feel incredibly lucky for the opportunity to build that we're building.

So we view finance and I view finance as a key business partner to all the operating functions within the company. We want to be a part of the decision support mechanisms that help them make decisions daily. We also want to be able to put process in place to facilitate those decisions, such as it's non random outcomes. I'm a big proponent of process. I'm a big proponent of creating predictability in the business. There's things you can control and

In October twenty twenty three, Archer's Midnight aircraft made its first flight at the company's testing facility in California, one more milestone on the journey to FAA certification. Archer is one of several eve Told companies aiming to come to market in twenty twenty five. It's chosen a very particular route to get that.

We are not trying to build the highest flying, farthest flying, fastest flying vehicle. We will build the internal powertrain, which for electric aviation hasn't existed before on certified products. But Archer picked a specific business model and then picked an

Partnerships are foundational to Archer's commercialization strategy.

On the operating side, we partner with the United Airlines. United has helped us not only in just design of the aircraft, but also ways to really set up the operations of the aircraft.

Archer and United planned to launch the company's first commercial air taxi route between New accare Port and Lower Manhattan.

United is an investor but they're a very good operating partner. They're also a customer. They gave us a an up to a billion dollar contract for two hundred aircraft with an option for another one hundred.

On the OEM side, we partnered with Stallantis, one of the world's best and largest auto manufacturers.

Stillanti is also very strong investor, and we think about unlocking scale in this business. Stallantis is helping us think about that as well.

For ARJA, the twenty twenty four will be about scaling up and accelerating execution in every area.

We're going through the certification process, we're building out our factory, the manufacturing vector, we're working on commercial opportunities, and we're also continuing to advance the text. Really a lot manufacturing is where a lot of our capital is going as well.

In Covington, Georgia, we are building one of the largest aerospace manufacturing facilities really in the world. The first phase of this project can build up the six hundred and fifty planes per year and within the second phase around two thousand planes per year. We need an area that's very favorable towards new technologies, and Georgia really put together a very compelling pitch to entice Archer to come.

It's in a great location outside of Atlantis. We have access to a really good labor pool there, we have access to universities there.

The goals to get the Georgia factory online by middle of next year.

Increased production capacity will help Archer develop its relationship with another customer slash partner, the US Air Force.

The military has taken a really unique approach to electric air taxis. So the way that the Department Offense has really partnered with the industry has been defined what they call non kinetic solutions to use these vehicles for good. So you can think about things like rescue vehicles, and so we start to find different use cases like that in the military that can help us generate revenue and really help the industry get going.

It's a channel for us to develop the tech. It's a channel for us to get InCor funding for those programs. And I think it's a it's a call option in that if you get to the end of the program and that becomes a generational type program for the DoD. It's a call option a lot on a large potential order and program for the company.

If it comes on offer, you take it.

Yep.

Archers laid plenty of groundwork for future revenue, but for now, Mark Messler's most pressing challenge as CFO is conserving capital.

You have to have the short term discipline to sort of circle the wagons around cash. I mean, cash is oxygen. I know where every ounce of cash is going. But we also have to be nimble around that as well, because things change by the day.

Archer went public in twenty twenty one in a reverse merger with a spac Ken Moelis's at Las Crest Investments. Through August twenty twenty three, the company raised over a billion dollars from investors including Stillantis, Boeing, United Airlines, and Caffee Woods Are Investment Management. Does that ARC investment open doors for you to bring in different kinds of institutional money going forward?

It does.

I mean, I think there's a lot of credibility that comes in with an investor like ARC. As I think about my top targeted list of investors over the next two to three years, an investment like that gives us some credibility and gives us a little bit of a little bit of staying powers. I go in and talk to other investors.

With the spac pipe now closed, Archers facing a new phase of raising capital.

I know the folks who aren't willing to invest right now may have large pockets of investment in the future. So I want to be in front of them. I wanting to show them progress. I want to create credibility with them that we are marching towards our goals of commercialization. They may not be a buyer at this point, but I do want to spend a lot of time in front of that other set that is a buyer at this point. They're interested. They want to be an early

Archers stock performance this year suggests there's strong interest in the story, especially if it plays out as planned with FAA certification and commercialization by twenty twenty five. What happens if the FAA delays and you are not certified in twenty twenty five, So.

I would start thinking about cash cash preservation at that point. We've got the capital to weather a delay, but it just depends on how long that delay is.

Of course, there's always a potential for it to take longer than expected. But the good news is there are other applications like the military that can provide diverse revenue streams. I'm confident that the FAA will move along spidious process with Archer and with the industry to allow us to get to market on timeframe that makes sense.

Mark Mesler joined Archer Aviation as CFO in early twenty twenty two, bringing more than twenty five years of experience in the hardware, sustainability and aerospace sectors that included more than a decade at Silicon Valley technology company Bloom Energy.

I started a Bloom. It was a pre revenue company. We scale them to an IPO in July of twenty eighteen, and operately when I left it was a probably billion dollar runnery company. A lot of the engineering milestones and that introduction of a hardware product we went through at Bloom, A lot of the financing mechanisms that we use to deploy our energy servers of Bloom I think have a real application here in the aviation space as well in the wing.

I visited Archer's flight testing facility in Salinas, California with Mesler and Chief Commercial Officer Nikhil Goyle. Goyle co founded Elevate Uber's air taxi division and co offered the twenty sixteen white paper that laid out the vision for a commercial air taxi industry. He explained how advances in technology that brought that vision to the brink of reality.

Instead of using fuel and one large rotor like a helicopter, you can use batteries to power a dozen rotors. So on the Archer Night aircraft you see twelve rotors, six in the back, six in the front. All twelve of those let you take off vertically, just like a helicopter. But then these six on the front here, they tilt forward. And what that does is it lets you power forward flight like an airplane in tandem with the wing that's on our Archer aircraft.

We made the decision early on that we were only going to invest internally on key differentiating technologies, and clearly the powertrain is the key differentiating technology Yousour investment is a recurring investment with respect to the powertrain team, the battery team which is part of it, the engine team,

The Midnight testing aircraft was built at Archers manufacturing facility in San Jose, around the corner from its corporate headquarters.

We bifurcated the production system such as San Jose is really a test lab in a low rate introductory production plant, so we'll build our first minimum six aircraft out of there. We're currently building Covington, Georgia all the way up to Phase two. We'll get us to twenty three hundred aircraft per year as well.

Why spend the money on both? Why bifer kate as you put it.

Well, it's optionality for us because we're going to see what the market bears out. Nikhil and his team will be out developing the market, so I have a call option on that Phase two Phase one I can ramp up to as the market supports.

At the core of Midnight's commercial appeal is the passenger experience. Is designed to seat a pilot and four travelers plus luggage. The test aircraft isn't fully fitted out for passengers, but it's easy to imagine what the ride would feel like. All right, this is it, This is inside Midnight Welcome. The design is four passenger seats front row, back row, and one pilot. How after all this time did you arrive at that configuration four passengers, one pilot.

Our goal is to be the Uber of the air. When I was at Uber, we took all the data of Uber trips going back and forth all over the world, and what we figured out was that four passengers was the optimal configuration to do one thing, which is lower the cost per passenger for these trips. So four passengers, just like a sedan, you can split that cost amongst four passengers and make that equivalent to what you might spend on an Uber or attack.

Right.

And there's a lot more to it from a financial standpoint than just the passengers. That's one fact. We also look at capacity on the route, so we understand what the cost of the aircraft is. We understand what the cost of the pilot is. We understand what the cost of the repair and maintenance of this is, we understand battery cost. All of that feeds into our unit level economic model, and it does show that pricing at ride sharing prices allows us to make an economic profit on the.

Back At Archer headquarters, I actually got to fly midnight, Okay, not for real virtually in the company's E simulator. Training pilots is another hurdle. The EVE tool industry will have to clear how much burden are you going to take in the training process? You know, why does that fall to Archer? And if it does, what does it look like for you guys?

I think initially we are going to be training our own pilots. This is our own technology. I think eventually, as we look to scale, and we're always talking about unlocking scale, we could look to partners to help us do some of the training. Early on, pilot training will be a critical part of our of our own operations.

The simulators really help you get a sense for how easy the vehicles are to fly. In fact, what we found is people with less flying experience are actually better at flying these planes because you don't have to unlearn as much.

Does that include me?

That includes you?

So within five minutes you were able to take off, fly around the island of Manhattan and land successfully. And that's your first time you've ever been in a simulator, and that's pretty incredible.

The Eve toll industry is poised for takeoff in twenty twenty five. That's when the FAA has said it plans to authorize limited operation of electric air taxis utilizing existing routes and infrastructure, while Archer Aviation puts is midnight aircraft through testing for certification. It's also mapping out the launch of its commercial business.

Twenty twenty five is going to start with a few aircraft and a few cities. So the first places that we're looking to fly are what we call our trunk routes, which are city centers to airports. There's already existing operators that fly those routes. So there's an existing heliport on the Manhattan side, and there's an existing heliport on the airport side, So imagine then all you have to do is swap the equipment and add charging.

And if all goes according to plan, twenty twenty eight will be the year the industry scales up.

Billy Norman, the former administrator, put out what he called Innovate twenty twenty eight, which was the use of mass amounts of air taxis at the LA Olympics in twenty twenty eight. We're not talking ten planes, We're talking potentially hundreds of planes. So the whole industry is getting ready.

Billy Nolan, who spearheaded the FAA report is now helping guide Archer's progress to market. Is the company's chief safety officer.

We will be you know, entry into service in twenty twenty five, and then you start to think about some sort of scale by the time you get to twenty twenty eight. We use an LA Olympics as a forcing function. You start to move into a mature industry as you get to twenty thirty and you've got like full maturation by the time you're in twenty thirty three to twenty thirty five, and then this will only continue to grow.

We've got a contract with United that is more of like an OEM type relationship. We also are going to be building our network to operate these as well, because we think the long term value is that customer experience and that Archer brand, and we want people to Archer everywhere. That is how we're going to market and that's how we generate revenue.

We're thinking about things like what cities are going to deploy in, how do we work with the municipal authorities to get permission and sort of support to go deploy in those cities. How do we think about things like infrastructure and creating a really magical consumer experience.

This is not about empty promises. It's about delivering on a vision, and it's about executing into that vision and then bringing something to market that is truly transformational, and we will get there.

Archer's vision for its business is global. In October twenty twenty three, the company signed a memorandum of understanding with the Abu Dhabi Investment Office to launch air taxi service in the UAE as early as twenty twenty six.

The UAE has been one of the leading countries to say we want to bring air taxis to market. The country wants new mobility solutions, new technology solutions.

It's one of the fastest growing regions in the world, and you've got millions of people moving to city and a lot of congestion that we can help solve. You We've gotten top level support from the SHAKE, We've gotten top level support from the GCA, which is the regulatory body, as well as the government of Bobbi Dabby.

I think we may very well see some of those global deployments first before we see really large scale deployments in the United States.

I do think you're going to see a very global footprint and it also will be partly driven by how quickly the regulatory agencies move. There's a lot of different areas that need to kind of come together to make this work. And in some jurisdictions, for various reasons, it might be easier to launch operations than in others. So I think this is going to be a very global approach.

I feel very confident that the industry will bring aircraft to market in a very reasonable timeframe, and by the twenty thirties, you will see these aircraft widely used around the world and people start to understand the real potential what the industry can be.

CFO mart Mesla will play a central when helping Archer fulfill its potential and deliver on its promise. I asked him what he sees when he looks ahead. The year is twenty twenty eight, you are still Archer, CFO. What does your job look like then different to today.

Well, at that point, I'll be running a multi billion dollar organization. I've created, along with the executive team at Archer, a once in a generation type company that is moving people, you know, throughout the world in urban environments, and we're still looking to grow and build outside of the geographies that we're there. I mean, that's really the goal for twenty twenty eight.

What's the one challenge that you're you're worried about most that you think you're going to have to confront.

It's probably not one thing. It's the unknown. I can control everything in our budget, I can control our business model. There's always something that is around the corner, so we have to have our radar on and I have to have the right processes in place to deal with that unknown. For me in the past, that's the one thing that we can't control, and that's the one thing that worries me because I just don't know what it is yet.

The world of the CFO is changing. The days of spreadsheets and accounting only is no more. How are the skill sets of the CFO going to change? To your mind in the next five or even ten years.

I think the cfo's role is one that is a portfolio of skill sets, because you have to be able to talk to investors, you have to understand hardcore gap accounting, you have to be able to create predictability in the business model, and honestly, I think probably one of the primary roles of the CFO is to drive that business model and create accountability across the executive team to achieve those outcomes. You can't just sit behind a green eye shade and roll up numbers, and you can't just be

If one of your best friends phones you and says, Mark, I just took a job as a CFO, what's the advice that you would give them.

I would say, beef up and become very good at planning, because planning is going to get you the output you want. Planning is going to help you know where your cash is going to go, and it's also going to involve other members of the executive team, and the inputs from them will create some accountability around what they're delivering as well. So it's not your financial plan, it's the company's financial plan.

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