The High Flyers Podcast with Vidit Agarwal
00:43:10 · Justin Lopas
[00:43:10] S1: Yeah. Androl, I was closer to... Well, I did some supply chain stuff at SpaceX too, I I probably spent more time with suppliers at Androl. And, I mean, there's a ton of learnings we can do. We could spend ten hours on supply chain and frankly still hard learning some hard lessons even now on supply chain. We have not executed as perfectly as I would have liked and have a lot of learnings and growing still to do as an organization here. But what I have learned on on on suppliers on the pricing thing is it's very easy to just get a bunch of quotes, sort sort low to high, and pick the top one. And there's a lot of hidden costs in supply chain that you don't really understand when you're going to source a part or figure out who you're... Who's gonna be a partner for some for some for something. And very rarely, especially for SpaceX and Andoril and certainly the case for base power, is it really a commodity product. We're not buying corn or hogs or oil. Right? We're buying, like, machined components at SpaceX or circuit boards at android or castings here at Base Power. And oftentimes you get what you pay for is, you know, I didn't make up that saying, but it's like very true. And so I think when you're evaluating which which partner to go with, which supplier, it's a holistic approach. Price is definitely a big piece of it and you want to get the best deal you possibly can. But, like, the speed of iteration, frankly, the cultural match of the supplier and your company, the ability to scale with you, the leadership or management team of that supplier, these are all, like, I would say equally or similarly weighted to the cost and price.
00:44:35 · Vidit Agarwal
[00:44:35] S0: Yeah, I think to your point, it's an interesting question. I spent a couple of years in supply chain and I think people don't appreciate the complexity of supply chain. I did it more in a CPG retail context, so it was more food and non food rather than like batteries and hardware that you're doing. Yeah, mean, I mean, think you were saying the other day, you're now working with like Korea and you're working with different parts of Asia, and you've got a global like base of stakeholders that you work with. Right? Can you just touch on Natalie again? There might be times where you have competing priorities. Right? Where your investors might want one thing or one thing base might have a better outcome or suppliers, and culturally, you've got to learn how to work with these folks. How has that been, like, as a learning journey? Because one of the things people say to me is you're very good at learning new topics. Like, touch on that. How have you learned how to work with suppliers around the world with different cultures and different ways of working?
00:45:31 · Justin Lopas
[00:45:31] S1: Yeah, definitely not perfect. And like I said, spending a lot of time thinking about how we can improve. But I guess a few things that I've learned, certainly like there has to be some sort of cultural alignment. And we have... I'd say that predominantly we have, I don't know, call it 75% of our spend or something is in The US, maybe even more, probably more than that. A little bit of Mexico, little bit in Korea, a little bit in the other places here and there. But I think that the biggest... The most important thing with with the supplier relationship is the relationship part. If the supplier doesn't like you, it doesn't matter what's in the contract. It doesn't matter what's on the print. It doesn't matter what processes or volume on the PO it is. They're just not going to bend over backwards for you. And honestly, oftentimes, we're asking suppliers to perform. Right? One of the of the hard things about being a supplier to base power is that we don't let you off easy. This is the same case for Android and SpaceX, by the way. I always said if I started a machine shop or something, I wouldn't wanna be SpaceX's supplier because they... While they treat you well, and I'd like to think that Base Power does as well, they work you quite hard. And if you're gonna be a supplier to Base Power, like, we're gonna hold you accountable. We're gonna be very involved in the industrialization of your line, the should cost, basically, like, much are you charging us versus how much is your cost and therefore what's your margin. Like, we're just... We're gonna be a kinda nosy customer. And I think you can do that in a way that is empowering to the supplier. It's like, look, we're gonna make you guys better. We're gonna help you develop a new process or grow or whatever else. It's not just a transactional relationship. Most suppliers from most companies, big tech, automotive, medical device, it's a business contractual relationship that is not very warm from what I've found. And then when you actually engage on the personal and sort of company level with a supplier, if you do that well, they will go out of their way to help you because you're helping them. Not just grow their business and make money, that's a part of it, but equally if not more importantly, like level up and be better. What we...
00:47:29 · Justin Lopas
What I've found from talking to a bunch of suppliers that are suppliers to SpaceX and Tesla or others is like, they'll say they made us better. They held us to account. They increased our quality. They developed a new casting process or manufacturing process for whatever part or print circuit board fabrication methodology with us. And they also made us a lot better and they up leveled our culture. The hard part about suppliers is that like they're typically kind of big businesses, not always, but we deal with big automotive suppliers in the Midwest as an example. And like they normally are selling to GM Ford and Chrysler and Honda and Hyundai and all this. And like, those customers have very different cultures and hold very different expectations than we do. I was just in Detroit actually over the weekend and talking to one of our suppliers up there. And I was having this conversation with this guy. I was like, we're probably a more difficult customer than the Big three. And he's like, yeah, you are. And then we kind of talked through it and I'd like to think that they think that we're helping them improve on their production process for this part that they're working on for us in a way that the big three did not hold them to account. And certainly on a... From a speed basis, like, well, normally, have a year to develop a program. We're like, well, we're gonna ask you do it in three months, then we're gonna help you get we'll help you get there. So long answer, but that's how I've thought about supply chain.
00:48:47 · Vidit Agarwal
[00:48:47] S0: Yeah. I mean, maybe a way to round that out is what do you think people most misunderstand about base power? And when I say people, it could be suppliers, it could be future employees, it could be investors, it could be government. I know you do a lot of regulatory stuff. What is the biggest misunderstanding about base power?
00:49:07 · Justin Lopas
[00:49:07] S1: That it's a little insignificant consumer product that is really just focused on backing people up when the grid goes out and, like, how important can that be? It does that. It does that quite well, I'll say. And it... We do that at scale with a ton of customers. I think the thing that is often lost is we are... We're really building great infrastructure. It happens to be on the side of a home. It happens to be a consumer oriented product. And we happen to have spent a lot of time, especially publicly talking about our consumer brand because we want that to be out on the when you ask AI about base power, it tells you the consumer oriented angle, not necessarily the grid oriented angle. Because most people care about, I'm getting this product on my house, what is it gonna do for me as a person? Nothing wrong with that. But internally, we spend a lot of time thinking about and architecting our software and hardware stack, how we install the batteries, what our next generation products are. We spend a lot more time thinking about the grid as a system rather than just the individual home. It's... We're shaking hands with the homeowners. Great to meet you. Thank you for allowing us to put this battery in your home. It's gonna be awesome for you. But then we're actually looking at the, like, pole and transformer outside of their house and thinking about how it affects the grid perhaps even more so. And we just don't talk a lot about that publicly because we want to and continue to build a strong consumer brand.