00:29:33 · Jim Belosic, Ty Morse
[00:29:33] S1: Yeah. So I think we have 1,200 amps in this building and you start to add more and more machines. And then we're like, oh, turns out we miscalculated on how much air compression we need. And so, know, really the manufacturer says it uses this much air, but it actually uses a little bit more Then you need a second compressor. Compressors use way more electricity than our CNC machines do. And so you're like, okay, crap. That one compressor is gonna take the electrical footprint of four machines. So we need to figure out what our next batch of machines is gonna be. It's just these little unexpected things. We'll be like, hey, we gotta land all these machines. And we're so focused on getting the machines, negotiating the price, scheduling the techs to come out that like, oh, we also need a lot of electricians here that day. And, our favorite electrician is booked out six weeks because they just landed a huge job somewhere. So we have to go to a backup electrician and they don't know us as much and they're unfamiliar with the equipment. And then they wire it a different way. It's just like all these little things that just... It's like death by a thousand cuts. [00:30:37] S0: Is that another thing? When we were talking last night, you said that you wanted to buy like a much larger, you know, warehouse to turn into a factory very quickly, but it just didn't have the power requirements that you needed. Like, is that one of the biggest constraints is the buildings that you want just literally don't have the necessary functionality effectively to make it work?
00:30:55 · Jim Belosic
[00:30:55] S1: Yeah. I was talking to, Saurav from Starpath, and I was just talking to Ed from Makena Labs the other day. And they're... They were kind of thinking about like, hey, Reno seems pretty cool. Like, should we come to Reno? I was like, yeah, Reno's great for a lot of reasons. We have huge buildings. There's almost no power in them. And, you know, because this is a region that's dedicated to logistics. And in logistics, you need a lot of space, but only enough power to charge forklifts or whatever. So we're trying to figure out how do we get power in incredibly quickly? How do we, you know, go to NV Energy and try and get to the top of their list and then order transformers that maybe aren't approved by NV Energy, but we can get them from, you know, a different state, and then you have to go in through a permitting process and try and get them, like, recertified or whatever. Things that that you don't think about become these huge bottlenecks. So then when we're looking at other locations, we're like, okay, can we go to a metro that has a lot of power? They have a manufacturing background or a history of it. You know, these buildings that already have 4,000 amps of power. And that's one of our big decisions moving forward is because it's hard to go to these cities and states that, don't have the infrastructure. And I think that's actually a big problem in The US in general. It's just power infrastructure now sucks. Everyone wants to re industrialize, but we don't have the power for it. Three, a 100 times more power than we have.
00:32:22 · Ty Morse, Jim Belosic
[00:32:22] S0: Is there any, like, other major bottlenecks that The US infrastructure just does not support? [00:32:27] S1: I think our incentives are misaligned. What do you [00:32:31] S0: mean by that? [00:32:32] S1: I think that the incentives that a software company gets for creating jobs or whatever is... I think it's easier to get, than it is to, you know, grow a manufacturer. I think the way that venture capital looks at software versus manufacturing is, you know, we're we're tier eight citizens, you know, compared to software because it's capital light. And they see these, you know, huge multiples or whatever. Whereas manufacturing is incredibly critical. You just don't have the same access to capital as everybody else. Or at least at least that's how it was. I think it's changing. There's a lot of big shifts right now where manufacturing is kinda becoming sexy. And it's a little bit easier to get, but it hasn't changed, you know, as nearly as much as we should. So yeah, money, power. Otherwise, we have a decent amount of raw material. People complain, you know, that it's nowhere as cheap as you can get it offshore or whatever, But it does exist. And there are mills that are starting to come back online. It's kind of too little too late, you know, because for new mills to be spun up, it's incredibly expensive. It takes five years, but it's... At least it's starting to happen now. So I think it'll be better in the next five to ten years.
00:32:32 · Jim Belosic, Ty Morse
[00:32:32] S1: I think that the incentives that a software company gets for creating jobs or whatever is... I think it's easier to get, than it is to, you know, grow a manufacturer. I think the way that venture capital looks at software versus manufacturing is, you know, we're we're tier eight citizens, you know, compared to software because it's capital light. And they see these, you know, huge multiples or whatever. Whereas manufacturing is incredibly critical. You just don't have the same access to capital as everybody else. Or at least at least that's how it was. I think it's changing. There's a lot of big shifts right now where manufacturing is kinda becoming sexy. And it's a little bit easier to get, but it hasn't changed, you know, as nearly as much as we should. So yeah, money, power. Otherwise, we have a decent amount of raw material. People complain, you know, that it's nowhere as cheap as you can get it offshore or whatever, But it does exist. And there are mills that are starting to come back online. It's kind of too little too late, you know, because for new mills to be spun up, it's incredibly expensive. It takes five years, but it's... At least it's starting to happen now. So I think it'll be better in the next five to ten years. [00:33:47] S0: How do you kind of think it's going to shift with having more capacity, raw material costs dropping, and, like, how fast you're able to turn products around? [00:33:55] S1: Did you say raw material costs dropping? [00:33:57] S0: Yeah. [00:33:58] S1: Yeah. That doesn't happen. [00:33:59] S0: That doesn't happen at all.
00:33:59 · Ty Morse, Jim Belosic
[00:33:59] S0: That doesn't happen at all. [00:33:59] S1: Oh my god. It just... Raw material prices do nothing but go up from what I've seen. You know, and something like, you know, the Strait Of Hormuz being closed, you know, all of a sudden it's like, okay, there's, you know, 15% of the global supply of aluminum is is cut off. So therefore, prices, go up. When the Strait opens back up, like, it's... Prices aren't gonna drop 15%. You know, it's like gas prices. Gas prices go up a dollar if there's, you know, more oil or whatever, like, maybe it'll go down 25¢. It it never goes all the way back down. So the way that we get lower prices to our customers is just purchasing in scale. So instead of us buying, you know, a 100 tons at a time, can we buy a thousand, or can we buy 10,000? Can we, you know, use those efficiencies of scale in negotiation and efficiency with our vendors, so that they're not starting and stopping a production line for us or something like that? We... You can negotiate, you know, a few pennies here and there, you know, per pound off of that. And then we pass that along to the customer because we wanna be incredibly competitive. And even if we have no competition, like, I want the customer to have just a mind blowing price so that they're encouraged to make more stuff.
00:35:20 · Ty Morse, Jim Belosic
[00:35:20] S0: Now remember when, like, Costco has this rule that they never make more than 15% on any given item in a sale. And there was this one specific case where a, like, shipment of jeans came in, and they were way below cost. And so suddenly they were able to, if they wanted to, sell at the normal price and get, like, a 50% margin on these jeans, and they decided not to because they didn't wanna set a bad precedent. Do you have anything like that where you're kind of saying we could charge more, but we're going to not charge more because we want to basically create the best customer experience and know that when you're coming to SendCutSend, you get the best price. [00:35:58] S1: Yeah, of course. I don't know. It's gouging and it's gross. You have to protect your margins, especially when you're bootstrapping. Like, your margin is your ability to scale. But consumers are very smart. Like our customers are are geniuses. They know if you're trying to, you know, steal from them. And there's there's always options out there. And there's always like research. People go out and they're like, hey, you know, you're charging me $58 for this. And I'm looking at the raw material, you know, and it's a dollar a pound. Like, what the hell are you doing? I don't wanna have that conversation. I want it to feel very, very fair. So like I said, even if there's no competition, we should focus on having the absolute lowest prices, the fastest service, so that people just kinda get used to like, oh, this is how manufacturing should be done. I don't feel like I'm getting screwed over.