00:16:57 · Chris Power
[00:16:57] S1: It means that sometimes, actually most of the time, you just gotta be right. And in businesses where you're dealing with long correction timelines, you just have to be really fucking good. And one of my... This is one of my favorite TV shows of all time is Battlestar Galactica. And you're fighting an asymmetric war and you don't know what's going on, and everyone's like, well, you know, we gotta we gotta go raid this fuel depot and all. And the opposing force is 10 times bigger. And, you know, you're gonna risk a lot of fighter jets going getting this, you know, fuel for Battlestar. And everyone's like, well, we're gonna... You know, it's it's very risky. It's super asymmetric. It's never gonna work. But the option space is basically, you don't do it. You don't win and you run out of fuel, or you just win and you gotta roll a hard six. And you gotta... You know, like in in in in dungeons and dragons, it's a natural 20. So mostly, the right attitude is there's no way to manage this. You just gotta roll a bunch of hard sixes. And if you... Once you understand that that is the business, that's fine. But there are no one way or two day doors. There are there are only one way doors. And then you gotta get very good at doing that and understanding the difference between something that you can fix later and something that you're not gonna be able to fix later. I'll give you a great example. So usually when you're constructing your factory, you wanna have a very good design and layout. And the layout determines your construction costs because some parts of the layout you need very expensive foundations and electrical clean rooms, etcetera. If you're moving fast, you're not gonna have the perfect layout. You wanna really think it through because whatever the layout... Like once you land the CapEx, it's stuck. And a lot of factory layout determines your operating efficiency in weird ways. Travel time, sure, but like where people communicate and stuff like that. What the way... One of the ways we think about it is, okay, the... One of the longest poles in factory bring up is literally where the electrical drops and where the foundations are. Now if you wanna aim for perfection, maybe you don't have to lay 20 inches concrete vibration isolated foundations everywhere.
00:19:34 · Chris Power, Ty Morse
But if you wanna kick off construction tomorrow, you're better off spending $25,000,000 on foundations instead of $15,000,000 so that you're buying your layout team four months worth of simulation time, and they can put the CapEx wherever they want. And that is a calculation of terminal efficiency value of that factory. So we overinvest in things like we're gonna do electrical drops everywhere, And the reason why we do that is you can pay an electrical contractor to do electrical drops everywhere, and you're not gonna use 30% of them. That's kinda counterintuitive, but one, they can just do mass electrical drops in two weeks, bang them everywhere. And then, you know, a manufacturing engineer can connect an electrical drop to a machine. So you wanna arbitrage the very expensive lock in things while not waiting for long lead decisions like foundation build outs or CapEx selection. And you have to think about the calculation of risk in a in a kind of different way. [00:20:42] S0: There's this idea in warfare of like asymmetry where if you have like, take China, for example, where they have, like, 232 to one shipbuilding capacity to The United States. If you tried to just front, you know, gun it and build a bunch of shipbuilding capacity in The United States, you couldn't beat them. But if you can figure out, like, to how take out their shipbuilding capacity and stuff, you can kinda, like, even the playing field. Yeah. Left to veteran. Is there such a thing in manufacturing as, like, asymmetric manufacturing? No.
00:20:42 · Ty Morse, Chris Power
[00:20:42] S0: There's this idea in warfare of like asymmetry where if you have like, take China, for example, where they have, like, 232 to one shipbuilding capacity to The United States. If you tried to just front, you know, gun it and build a bunch of shipbuilding capacity in The United States, you couldn't beat them. But if you can figure out, like, to how take out their shipbuilding capacity and stuff, you can kinda, like, even the playing field. Yeah. Left to veteran. Is there such a thing in manufacturing as, like, asymmetric manufacturing? No. [00:21:13] S1: Fuck. There's asymmetric products. Like I think you can design a thing that's gotta cost a kilo per thousand, you know. There's no asymmetric asymmetric manufacturing. There's scale flex... Scale flexibility and agility, which we can do. There's no asymmetric manufacturing method where you magically gonna make a tomahawk casting for a dollar. You know, it doesn't exist. [00:21:45] S0: When you built the first factory in 2022, I got to imagine that there's a whole bunch of things that you did back then that you would not do today if you were to build the same factory. What have been the biggest learnings of how to build factories really efficiently over the past like four years?
00:22:02 · Chris Power
[00:22:02] S1: I'll break the answer into two, which is factory development and then like factory design. And the first one is really easy, and I'll tell you a story. So one of the big things we do at our... One of the parts of Opus is called Mother Brain, and effectively we take over all the CAPEX software and reprogram. And you need some decent a... APIs into the CapEx, or at minimum you need a text file that you can read. But it's brutal engineering. Okay. So you're a small startup and you've got 6,000,000 in CapEx to spend, so we buy two types of machines. Makes sense. And you call the president of the German capex vendor, because your team send them an email saying, can we please have the API documents? And they think you're a hacker. Because no one's ever asked for the API to the machine before. And you explain it to them, and they they give you the API documents, and you read them and it looks all fine. When you get to the factory floor, what ends up happening is both brands of machines, the API that reports off the hardware is completely different, so it gives stochastic and consistent results. And one of the CAPEX brands, you hit all the APIs just to test it, and 50% of the API calls for a per... Return like niche implemented yet in German. And you realize that actually what you're doing, and you know, you you try to build software on top of it, and one of them takes twelve weeks, and the other one takes two weeks. So what you realize is actually what you're doing is dealing with a bunch of unknown unknowns. So you build every single plan against the fact that everyone's gonna fail against you, And you start building capability engineering systems around it. So you never expect like the PLC of the world robot until you've literally integrated it. You have no idea what reality looks like, which is fine as long as you build boatloads of hedges into your timeline and you plan around the fact that the industry is fucked. In terms of factory design, the biggest lesson is that people design factories around the success case. And the success case is like 90% yield, smooth flow, etcetera. I'm not talking about like maintenance downtime. Just one of the things we do which I think is you can only do with software powered factories, but makes complete sense, is you have a ton of slack capacity that's just based around failures.
00:24:32 · Chris Power
So the analogy I'll use is like, okay. So you've got a a five lane freeway and a bunch of Waymo's, and some of them are gonna go screw up at some point. Right? And you've seen traffic jams. Right? You hit the brakes, everything backs up. What you actually wanna do is as soon as someone has a blown tire, there's a... There's an off ramp or there's a a slip lane on the freeway where they can just wait, but it doesn't hold everything back. Most factories are designed with the CapEx, the people, and the... Let's call it business processes that if one of the cars blows a tire, there's no off ramp. And I'm not saying you trash the car. You need to send it back and fix the tire, but you're sacrificing this, like, kind of industrial engineering efficiency for like, you know what you would have wished when that car blew a tire? Man, I really, really wish I had an off ramp so I could put that to the side and fix it while not holding up five lanes of traffic at rush hour. Now what it requires is that every bit of... Every station inside the factory is so standardized that you can switch things out like a GPU, and that you have high enough efficiency that it doesn't hurt your margins or whatever. But that is that is one thing that we've learned very well. The second thing we've learned is that there is a limit to software complexity that doesn't right match the physical world, and I'll give you an example. So in in manufacturing, you've got, yep, production and inspection, and you've got some... Let's say they're components. And they're components that have stable processes at some yield rate. And the the important thing about yield is you can predict it. Because if you can predict yield and it's 20%, you just make 10, you get eight. And and it flows through. And then you have new product introduction where you're you're machining something, you're welding something, you're inspecting it, but you're a 100% sure that that's the right process. And you, you know, you you need to make one to... Okay. Now you end up with this big queuing system. So something goes from manufacturing to inspection. And what you wanna do in new product introduction is have the highest rate of the the lowest possible impedance between inspection data and manufacturing, because the thing that creates cost or late deliveries to the customer is the...
00:27:02 · Chris Power, Ty Morse
Not the cycle time of the manufacturing and the inspection, but the the back and forth. So if you make something I want inspected in an hour, so the feedback loop happens like this. So in software land, this is pretty easy like queuing theory. So if you scan an MPI component into the queue, it goes to the top of the inspection queue, and there's a... You know, this this is very easy software. In reality, it never works like that. So what you do is you have a physical set of CapEx that's just for the fast line. And there's this odd property where that's not just because humans are dumb. It's not because the the... This... It's... You literally need to separate your fast response part of the factory. It can be... There can be a rope between it. And the interesting about that is software gen... Software tends to design itself towards a physical layout of systems. So you need to kind of like bake the factory to the natural software workflows, and that you wanna match that as close as possible so it's interpretable. You know, and the rest of it is like, you know, you just you just gotta fucking go like hell. [00:28:14] S0: On kind of the same thread of sprinting through one way doors, what's been the best example of something that went absolutely horribly wrong should have killed the company. And somehow you're able to, like, pull a rabbit out of a hat and stop it.