The a16z Show
00:25:12 · Erin Price-Wright, Connor Love
[00:25:12] S1: I mean, Connor and I have the best job of all time. Yeah. I did have to... I I did... I do own steel toed boots now because the number of the number of site visits I've been to with portfolio companies where you... Where they're like, yeah. You gotta show up in steel toed boots. Yeah. [00:25:26] S2: I mean, it's not all sexy, to be honest. I mean, these are locations that are, you know, a lot of times [00:25:32] S1: Hard to get to. [00:25:32] S2: Hard to get to in the middle of nowhere. And in the end, like we're talking about real physical things that require, you know, earth moving. I used to have, at my time in the military, I used to have this kind of senior officer who would always tell me, the physical world doesn't care about you, so just be careful in the physical world. These are moving tons of dirt and massive, these factories being built out, Hadrian or or what AMCO will do. I mean, things are huge. And and it's impressive. Know, my... One of my favorite things is maybe you don't see this at the remote sites, maybe you do, but it's this kind of running competition between these companies who can have the bigger American flag at their side. I actually don't know who currently holds that today. I mean, Hadrian's was pretty big last time I saw it. [00:26:20] S1: I think Valor's is pretty big.
00:26:20 · Erin Price-Wright, Connor Love
[00:26:20] S1: I think Valor's is pretty big. [00:26:22] S2: Is Valor's big too? Okay. Good. Yeah. Yeah. Yeah. And like, again, I mean, that's that's awesome. Like, the the fact that you have that type of like one passion for for something greater than just the the product or the economic opportunity that you're building. I mean, again, it it drives purpose behind a lot of these teams. When you show up at, Mariana, when you show up at Hadrian, when you show up at Castelion, you literally get people who are so passionate about what they're doing, and that produces really good results. When you have to do something really hard in the physical world, if you have people that are willing to run through walls sometimes literally to solve that problem, you just, you know, you get really audacious, great outcomes.
00:27:00 · Erin Price-Wright
[00:27:00] S1: One of my favorite things to do, you know, is visit the same company sort of multiple times within twelve month period, whether they're in the portfolio or not, because you learn a lot by how fast a factory build out happens. And so, you know, that that... That's one thing we do is, like, we... You know, you don't just go once. You go once, and then you go three months later. You go three months later. You go three months later. And, like, I'm not I'm not a manufacturing expert. I spent enough time on the factory floor on a factory floor between my time at Palantir and and now doing this job. You know, I, like, sorta know what some of the machines are and kinda, like, how a line roughly works. But, like, there's just something about seeing stuff accumulate in a factory, and it goes from the process of watching something go from, like, empty warehouse with epoxy floors and the big American flag and maybe, like, a couple of pallets, and the founders just really excited to show you their forklift that they needed. And they're kinda like... Know, they're... They have the basketball hoop set up or, like, the gym set up in the corner to, you know, fast forward six months. And it's just... You know, they're freaking out about how to expand. They're like, oh, we need to get, you know, the the city out to to give us more power because we have too many machines plugged in. It's, like, chaos. There's technicians and operators everywhere, people building stuff. That's really satisfying and and and and really fun and and something I think we're we're lucky to get to see that journey and and and how quickly that can happen.
00:28:18 · Elena Burger, Erin Price-Wright, Connor Love
[00:28:18] S3: Yep. Has anyone ever done, like, a time lapse of [00:28:21] S1: Oh, there's a lot. It's a whole... That's a whole, like, category of filmmaking. Nice. And everyone kinda compares theirs, and it's like a, you know, a bit of a [00:28:29] S2: I do I I do like the gym thing. I remember when I when I first visited many years ago, Isaiah in the Gundow, he made me do a rep on his on [00:28:37] S1: his Yeah. They they all have they all have, [00:28:39] S2: like Yeah. [00:28:39] S1: Yeah. Oh, yeah. All they all have their bed press set up. [00:28:42] S2: Which is cool. [00:28:43] S3: Yeah. Is is there a, like, a contagion effect to things being made in America where it's like, oh, because the actuator is made here, now we can make this and now we can make that. And sort of when you're able to compress one timeline, you can compress multiple timelines. [00:29:00] S2: I don't even think it's just timeline. I also think it's cost [00:29:02] S1: and quality. And quality.
00:29:03 · Connor Love
[00:29:03] S2: I mean, it's interesting because when we look at defense autonomous systems in particular, look, Saronic making a lot of boats, Covenant's making a lot of missiles, Castelion's making lot of missiles, and Anduril's making a lot of things. Like, When you build many systems, you also require many subsystems below that. And again, there are really interesting military systems being built today. The corollary though, back to the comment we had earlier, by building towards defense, you also build for a different industry. We actually don't have a lot of humanoids or robotics that exist in the world today. I mean, there are thousands, maybe, I don't know the exact number, but when you think about the subsystems that go into some of our military systems, it's the exact same subsystems that are gonna go into the future robotic systems. It's the actuators, like it's the motors, it's the valves and switches and those type of things. And I think when you can build those to quality and to cost, then all of a sudden you make other markets that maybe weren't viable or real, all of a sudden makes sense. And again, I think that's gonna happen in the robotics world, which is, we're gonna spend all this time on shoring development of all those sub components, We're gonna build for a lot of these military systems, which is good. We need it for security and safety and deterrence. But then all of a sudden, you're gonna have this kind of robotic wave that will come in America. I said that AI can't turn a wrench yet. They can. They will eventually. And that will be enabled by all that actuators and switches and subsystems that we built. It's gonna serve a different market. And it's gonna make it financially viable, and we're not gonna have to rely on factories in China. And again, I think that is net good because as you build an industrial base, an industrial base can be used for many things, and down to the component level, I just think we don't have enough of it in America, and it's a decision. You talk to a robotics company today that wants to build, you know, some robotic deployment. There's a 99% chance that majority of what they are buying is coming from China and
00:30:57 · Erin Price-Wright
[00:30:57] S1: some much more reform. They, for many reasons, not just geopolitical, want to onshore that purchasing for quality cost, speed of iteration, yeah, and geopolitical reasons. I think, like, one thing it... You know, it's really... Over the last three years, even just it's remarkable how much of a supplier ecosystem has developed. Like, one of the companies in our portfolio, three years ago, would order two times the number of PCB boards... PCBs that they needed because they assumed that they would have throw 50% of them away for quality issues. They would get the batch from their supplier. They would do the testing, and 50% of them wouldn't pass a quality test. Know, then startups have emerged in this category and are like, we're gonna fix this problem. We're gonna use software and modern technology to redo the way PCBs are manufactured in The US. We're gonna do it faster. We're gonna do it cheaper. And guess what? We're gonna do it better. And now that same company buys you know, PCBs from new suppliers and, you know, they're keeping 70, 80, 90% passing quality tests. So it's... Yeah. I think like we underestimate how much the, you know, close colocation and co development of some of this technology with the end customer and their suppliers really matters to to drive quality higher.