Gen Z tech founder reveals his Utah-based drone startup will now supply the US Military

The U.S. Army awarded its largest multi-million dollar surveillance aircraft contract to a drone startup founded a decade ago by a Utah high school student.

Red Cat Holdings Salt Lake City-based subsidiary Teal Drones was selected as the winner of the Army's Short Range Reconnaissance (SRR) Program of Record.

Teal was founded in 2014 by George Matus, then 17, with the mission to 'enable unmanned systems to be more than just flying cameras,' according to its website.

On Tuesday, the company announced that it won the SRR bid after test and evaluation process of Teal's next generation Small Unmanned Aircrafts Systems (sUAS) by the military. 

'This is a powerful moment in time, coming after five years of blood, sweat, and tears put into SRR by our incredible team. The long-awaited production selection marks a new era for our company and the future of American drones,' said Matus, founder of Teal and CTO of Red Cat. 

'We were selected based on soldier feedback, technical performance, volume manufacturability, and system cost. Our top priority now is to start ramping production of the next generation system, recently announced as the Black Widow and WEB, and give warfighters the tools they need to be successful on the modern battlefield.'

According to Securities and Exchange Commission filings, the company is focused on ramping up production of Teal’s next generation system to meet the Army’s currently stated acquisition objective for 5,880 systems.

The Wall Street Journal reported that the Army has stated it needs around 11,700 drones of its SRR program and the purchase could give teal round $260 million in revenue in the coming years.

'Warfare has undergone a dramatic transformation over the past two years, with a significant shift towards drone technology, exemplified by the SRR Black Widow. It is an honor to support the U.S. Army by delivering the Black Widow to our warfighters,' said Jeff Thompson, CEO of Red Cat.

'We believe this advanced technology will enable the Army to shape the battlefield, save soldiers' lives, and serve as a powerful tool in their arsenal. This long-term contract will give us the capability to continue to improve the Black Widow, scale production and improve margins.'

Teal's drone - the Black Widow - is a three-pound, backpack sized device that is equipped with anti jamming technology.

It can run autonomously without GPS and can go approximately 40 minutes without emitting a radio frequency which makes it harder to detect, according to WSJ.

Matus told The Washington Post when he started his company it was more about the joy of flight but grew into wanting to help the military.

He wrote in a piece for Utah Business that  when he started his company he applied for the Thiel Fellowship which would give him $100,000 if he agreed to drop out of high school during his junior year.

While he was applying for the fellowship, he got to know a Salt Lake City entrepreneur who invested $150,000 into his company. 

'After raising my first round of institutional investment later in 2015, about $3 million, I learned important lessons,' Matus said.

'I was told by a board member, “George, your job is to hire good people and not run out of money. It’s in your capable hands; don’t f*** it up.” It sounded simple but proved much harder than I thought it would be.'

By 2016, Teal was struggling to stay afloat when China’s DJI launched a 1.6-pound drone called the 'Mavic Pro' for $999.

During this time the company was forced to downsize and Matus said it was then he received another life changing piece of advice.

'With this chapter of Teal coming to an end, one of our early customers reached out—a veteran who lost his legs during the war. He told me that the drone he got from us saved his life: he’d fly every day with video goggles on to experience the freedom of flight. I shared this with the rest of the team, and we felt solace in our efforts not being for nothing.'

Then in 2018, the Defense Department banned the use of DJI drones in the military. That same year at just 20 years old, Matus was listed on Forbes 30 Under 30 in the consumer technology section.

When the Army first launched SRR it passed over Teal for the job, instead awarding drone company Skydio a $29 million contract.

Then soldiers ran into technical issues with those drones and the military reopened its search for a partner. 

Now, Teal and Red Cat forecast to make $50 million in revenue next year. It had $18 million sales the last fiscal year ending in April.