00:52:50 · Ty Morse, Scott Nolan
[00:52:50] S1: Is this a little bit more of the product is the factory, and that's what you have to get great at building? [00:52:56] S0: That's right. Yeah. And that extends to, obviously, the guts of the factory. But the thing that was unexpected or that we learned over time and that's now obvious in hindsight is you should design your building the way that you need it to be, and you should manage that project just like every other piece. Did you [00:53:12] S1: try to outsource this initially? [00:53:14] S0: We didn't go too far down that path, but it's what's typically done in the industry. You hire a GC, they run your project, they do all that. And we felt like it was important to do that in house. And that's something we saw and learned by talking with people who had been part of the Tesla Gigafactory builds and just hearing what their experiences were when they tried to do certain things with third parties with who are going to need more guidance than you can provide versus just doing it in house. [00:53:45] S1: So we were just talking about the IDEA index in reference to basically the cost of the finished good versus the raw material inputs. I also think something that's interesting to think about is how long a conventional timeline is versus what the actual timeline is if you kind of eliminated all the unnecessary requirements and all these other [00:54:02] S0: things. Yep. [00:54:03] S1: How do you think about kind of the idiot index for timelines?
00:54:06 · Scott Nolan
[00:54:06] S0: Yeah. The the idiot index is a pretty harsh way of saying it because often... I mean, often things are the way they are, and the people working on them are really smart. Like, they're really smart people. They're not idiots. They're, they're trying pretty hard to to do their best, but people are often working on something quite narrow, or their piece of the puzzle is just what they're working on. And the the thing you really have to do is just rethink the puzzle from from big picture. And so, yeah, the schedule piece. So I I think commonly understood it's a cost thing. Like, a rocket, yeah, it costs a $100,000,000 for a launch. You throw the rocket away every time. Why is it that $100,000,000 comes from only $1,000,000 of parts? How can we make this thing cheaper? There's the same thing on schedule side where if you just take the conventional approach and you say, Okay. This is how it's been done. Let's continue doing it that way. We do this step first. We do this step next, and we keep, you know, working our way down the chain. It's gonna take five years, and that's just how we should do it. A lot of times, you can just question, do you really need to do everything in sequence? Which things can we do in parallel? Maybe we're taking some financial risk to do it in parallel. Maybe we will have to go back and redesign something that's inconsequential for some other paths but to do it better. But how do we just get going, and how do we get something started or online or launched as quickly as we can because time's wasting? And in our case, the industry needs us to do this. And so how do we go quickly in safe, responsible way that may end up being slightly higher cost but may actually be cheaper because we did it in half the time? And so the cost side is pretty well discussed at this point. On the schedule side, I think there's really probably two main variables. One is which things are you doing sequentially versus in parallel, and then how long does each step take? And both have to be interrogated to really get to get the shortest amount of time.
00:56:13 · Scott Nolan
In our case, that means everything from, at the same time, doing engineering work, tech development, standing at manufacturing capability, finding the location of the facility, preparing the grounds of the facility for construction, working on licensing, all these things at the exact same time so that you're not just waiting for something to be completely done and perfected and then going to the next step, which could make your project take twenty years versus Five. Five, three years. So one big dimension is parallelization. I think that's pretty obvious. The second dimension that's probably not fully appreciated is one that wasn't even, to me, evident at SpaceX in the early days. It's how much are you really questioning each block of time? What's the resolution of a Gantt chart? Is it one month? Is it one week? Is it one day? Is it an hour? And so can we question these tasks of like, oh, yeah, that'll take me a week. Okay. Is it really a week, or is it like four days? And how do we start really pushing on the limits of what can we do? How quickly can we get this stuff done? Why are we gonna wait for a week from now when someone's waiting on the decision from us to go design this other component? When we're all in a room right now, no one's leaving this room. Let's just decide right now in the next fifteen minutes based on what we know. If we can't get to a decision because we need more information, let's reconvene tonight. Please go get that piece of information. Let's decide because that other team over here is waiting on that. We need to get them that information, or they're gonna just be burning time, and we could be moving forward. So I think it's really those two things of how do you parallel path things. Second, how do you bring in the time or bring in the resolution of this? And I guess there's a military saying about this, that minutes make hours, hours make days, days make months. And so how do we just really focus on the minimum amount of time that we can get something done? There's probably a third piece that I did see at SpaceX even from the earliest days I was there, which was this idea that instead of deliberating over something to get to 99% certainty, let's just get to where we think it's probably the right choice with some degree of certainty,
00:58:34 · Ty Morse, Scott Nolan
[00:58:34] S1: more Maybe than eighty fifty percent. [00:58:37] S0: Maybe in some cases, like 50%. Maybe there's cases where, hey, these two things we really understand, they're both pretty good paths. Instead of figuring out which one is 10% better, let's just pick one and not waste three months, and let's just go, and let's let's make forward progress because that momentum... Like, every day we're waiting. We're spending money. There's salaries. There's other costs. The opportunity might be going away. The industry might be struggling because we're not there to help. And so it's this concept of if something is reversible, if it's a easily reversible decision, just go. And so I think that can shave months as well. [00:59:14] S1: I remember Elon said that he had... Or like in Walter Isaacson's biography, they had this mental model where he would say every day that they didn't, like, get to orbit or, you know, some other metric was basically a lost future day of 10,000,000 of revenue. And so if there was something that they could just move one day sooner by, like, spending a $100,000, that may make sense, like flying one part from, like, LA to quads or something like that. Yep. How do you kind of think about taking risk and what things are you willing to basically take risk on in order to move the timeline just slightly faster or maybe move the probability of the timeline happening faster?
00:59:51 · Scott Nolan
[00:59:51] S0: Yeah. Yeah. There's two versions of that metric. One version is the tail end. Like, okay. What date do we go online, to your point? How much... How many dollars per day of of launch revenue or, whatever business you're in? So that's the once you're online date. And if you're building, like, a pharmaceutical plant, okay, a million dollars a day of revenue. Every day we can bring that in is worth a million dollars. The other version of it, if you're a very early stage company, imagine, like, three people in a garage working, and they say, well, our product, it's out there, we'll be making hundreds of thousands a day. We need to spend $100,000 today to go one day faster. You could run out of money. So there's a current burn version of this. There's a future revenue version, and there's a current burn version. And the current burden version is basically how much are we spending today on salaries if we can bring our schedule in by one day? We know it's at least worth that. So there's two bounding versions of it. Probably the big picture one to really focus on is the once you're online version and not be myopic and just worry about today's spend because you're trying to really get to that end target. But you've got to survive to get there. And so the right answer is typically somewhere in between those two things, subject to one requirement, which is you're not increasing your cost structure of the company with that decision on an ongoing basis. So if you said, Hey, my burn today as a company is $10 a day. Let's bump it to $20 a day to bring in schedule one day. The next day, when you evaluate this question, you're going say, Our burn today is $20 per day. We should bring it in by day. You can get into sort of escalating spend, but when they're one off decisions, usually there's opportunities that are not marginal. It's not like, Oh, we're going to earn an additional million in revenue by spending $900, it's usually much more like, hey, everybody take a step back. We can shave this amount of time off the schedule and increase revenue, like total revenue that we ever collect by a million dollars by spending $5. I think that's a good trade. Let's do that.
01:02:05 · Scott Nolan, Ty Morse
And people are very reluctant to, in a big company, propose those things, like propose we're going to spend a lot more money on this project to get it there faster, but I think that's one of the tools that's in the toolkit to accelerate. And you see the same thing even in the film industry. Sometimes they will have to wrap up filming of a movie faster to actually save money. And so a lot of people think, going back to the speed question, people associate going faster with spending more. Sometimes you can actually go faster and spend less and get a better product. So I think that's not commonly appreciated, remembering that's really important. [01:02:45] S1: What's been a moment over the past, like, two years while you've been working on this where you've been able to make one of those rapid decisions that was able to kind of bring in timelines or, you know, you spend a little bit of money and shave some massive hurdle off your checklist?