00:40:34 · Scott Nolan
[00:40:34] S0: One company we invested in, probably in my first or second year there, was a cancer therapeutics company. And this cancer therapeutics company was really focused on a slightly different or not articulated theory of cancer, which was that ultimately most cancers were really driven by stem cells. And you just had to really focus on the stem cells and how to differentiate them from the rest and how to specifically try and target those cancer cells. And would say, Okay. And maybe by today, people realize this, and it's not unconventional. But fifteen years ago, it was not popular. And this company was uniquely focused on that and figuring out, Okay, how do we go after those? How do we develop targets for those? And you might say, Okay, let's spend a lot of time looking into the mouse studies, which we did, and let's spend a lot of time looking into the biology of this. But, you know, I think I think the the conclusion was, yes, this all looks good, but we Founders Fund don't have any really special insight into biology more than, you know, people in academia do. They know much more than we do. And so these mouse studies can look good to us. Mouse has been... Cancer has been cured many times in mice before. What's different about this? We can try and figure that out and decode that and come up with a really high conviction answer on why that's the case. But then there's this other layer of, Okay, how do we know that this stem cell theory is correct? And I think at the time, was there was, like, one insight of... At the same time, there had been a very pro stem cell argument in the scientific and and government community about how these were actually useful for many things, which they were. And so there's the conclusion that, hey, maybe this is a really underexplored area because it's maybe unpopular to say that stem cells are involved in cancer because we're supposed to be looking at only positive things about stem cells. This was maybe yeah. And then that company ended up succeeding from a business perspective, and then many of their targets that they developed are now in cancer therapeutics that are coming to market. So it turned out to be correct. So I think that's one example in the biotech space. I think if we go back to the example of SpaceX, at the time, the launch market was not a huge market. It was single digit billions.
00:43:04 · Scott Nolan
And, yeah, I guess this was another example of the abstraction kind of going to a social political level and saying, what things maybe for the first time could be done well by a private company as opposed to a government organization. And so space launch had historically always been done by the government or government contractors. And a lot of people accepted that that was just the way that the industry had always been and would always be and that maybe it could never be highly commercial and it would always need to be subsidized by the government. And we were never gonna get a ton of growth in space launch. It was just a nation state capability that you had to have. And maybe I think the the thinking or the different questioning was around, yeah, is this true? And is it generally the case that, private companies can do things better? And if so, how far does that that span? And so SpaceX has has proven that one.
00:44:03 · Ty Morse
[00:44:03] S1: I think one of the least understood things is it's very important to ask the right questions. And I think prior to SpaceX, people were not asking the right questions as to how to get mass to orbit. And Elon was... From what I can tell the first person, it basically just optimized for this one key variable, which is how do you get mass to orbit instead of, you know, what does the US government want us to do. And then with that, he basically just went all in on this idea of just lowering launch costs with the understanding that, hopefully, there was gonna be a market afterwards. Mhmm. And it seems that, you know, with what he's done recently, it's effectively just scaling his own network of satellites because he's able to fill his own supply. How did you figure out what the right question to ask was for in, like, key KPI to think about when you were starting General Matter?
00:44:54 · Scott Nolan
[00:44:54] S0: Yeah. So the the way we realized the importance of enrichment was talking to the advanced reactor companies. And they not only said, hey. We don't have a source of fuel, but they said, even if we can get it, the fuel's too expensive. At these fuel costs, look at my economics. Look at how much of this fuel cost is driven by the fuel. And then if you decompose the fuel into the different steps, then enrichment was the biggest step. And so was just by digging into the problem and understanding where the cost structure was that we real... Like, for us, we realized that the key cost variable was cost per unit of enrichment drove the cost of fuel, which would drive the cost of nuclear energy going forward. I I think this was similar to the example that that you just gave at SpaceX where, you know, you go back to the nineteen nineties, satellites cost billions of dollars. Therefore, all that mattered about launch was that it was highly reliable, and launch cost, therefore, didn't matter that much. If you're paying 100,000,200 million dollars $300,000,000 for a launch, it is costly, but it is not the difference maker. What you need to ensure is that your launch succeeds. Fast forward to the 2000s, people were talking about microsatellites, smallsats. Those all of a sudden were much, much cheaper. $10,000,000, $1,000,000, not a billion dollars. And so now this $100,000,000 launch cost really, really mattered. And so if you want much more of these small satellites, yeah, we have to bring the launch costs down. Launch cost is really dollars per kilo, but it's dollars per kilo to an orbit, which is really like dollars per kilo times delta v. And so as commonly understood, it was dollars per kilo to low Earth orbit, but that was really dollars per kilo times some delta V. And so for us, the version of that that makes nuclear energy more affordable, makes advanced reactors really succeed economically, and makes their fuel lower cost is bringing down the cost of enrichment, which is dollars per unit of enrichment per kilo. And so you can take that one step further and make it dollars per... It's called SWU, it's the unit of enrichment, really dollars per SWU per kg. And so that's that's the metric that we really focus on, which is colloquially known as dollars per SWU, dollars per separative work unit.
00:47:20 · Scott Nolan, Ty Morse
And so it's basically how much does it cost us to reduce the entropy of a kilo of raw uranium, and the amount that you reduce the entropy is the amount that you're enriching it. [00:47:32] S1: What was the India index for enriching uranium? [00:47:36] S0: That is a great question. We haven't count... We haven't really thought of it as much in those terms. Like, the... In space, the idiot index is generally understood to be what's the cost of a thing compared to the cost of the raw material. So if a rocket costs $100,000,000 but [00:47:56] S1: the raw materials are $1,000,000 then it's $100,000,000
00:48:00 · Scott Nolan
[00:48:00] S0: That's right. Yeah. Yeah. So that's when you're specifically making hardware that then goes and launches and performs a service. In our case, the service that we're performing is enrichment. I would say it's commonly understood to be an energy input problem, so a little bit harder to get the exact idiom index on that. Like, how efficiently can you use energy to enrich? I think in the gaseous diffusion world, it was a lot of energy cost, and so that was the focus of how do we bring this down. But if you actually look at a facility that's doing enrichment, there's a tremendous amount of CapEx, upfront spend in fixed equipment that does the enrichment. And actually, the energy cost is relatively low. And so the version of your question is like the idiot index, as popularized by SpaceX, is a guide on how much should we be able to bring down the cost. And SpaceX has always said we can bring it down 10 times, an order of magnitude over time, maybe two orders of magnitude. Get it all the way down from that $100,000,000 not to $1,000,000 but maybe even lower if we can reuse this hardware and not throw it out every time. For us, the focus has been how do we make the most economical enrichment service in the world? How do we make it extremely safe and reliable but primarily scalable and lower cost? And that comes through really thinking through, how do you design a much, much better facility? How do you do better building construction? How do you make the guts of it better? How do you site in a better location? So on and so forth. And so we think there's easily potential for a 2x reduction in the cost of enrichment versus where it sits today and likely more, and there's a lot of ways you get there. You get there through designing your own technology, not using off the shelf. You get there through building your own in house EPC rather than outsourcing everything to a GC. Instead, manage your own subcontractors and run your own project. And maybe even site in a place with relative... To do those final optimizations, pick locations that have available energy at reasonable cost.