01:13:13 · Eric Jorgenson, Ty Morse
[01:13:13] S1: Yeah. Bezos has a good, like, binary here, which is like there's two kinds of companies. Some exist to charge more and some exist to charge less, and we will be the latter. That's like Amazon, Walmart, Tesla, like, that is how those companies operate. Of course, you know, Louis Vuitton is the opposite. Right? Luxury brands are always like, how do we maximize margin and perceived value? And, like... But I would argue the customer value, the consumer surplus created by companies that pursue a low cost strategy are almost always higher in the long run, they become the biggest companies and the ones that generate the most equity value because they have the most customers and they do the most good in the world on the way. [01:13:53] S0: When I was interviewing Peter Beck recently from Rocket Lab, he said something that I kind of intuitively thought might be the case, which is if you don't control your ability to launch, then you're effectively operating at the whims of some other third party and like the good graces, and they could pull the plug at any given moment. And he said the only space companies that will matter in ten years are the ones that have the ability to launch rockets. [01:14:18] S1: Meaning, like, they own their own launch pads and Correct. Space.
01:14:18 · Eric Jorgenson, Ty Morse
[01:14:18] S1: Meaning, like, they own their own launch pads and Correct. Space. [01:14:21] S0: Yeah. And, like, their ability to launch. And I thought that was very interesting. I also know there's a whole bunch of startups that are... Like, we're gonna launch a whole bunch of satellites. But if Elon or Peter Beck does decide, sorry, I got to... You know, I have my own capacity. Yeah. And we can't... We, you know, we we are we are scaling launch at this insane rate, but our ability to use that launch is growing at an even faster rate, then suddenly there's really no third party providers. How do you think about that? How do you think that'll play
01:14:21 · Ty Morse, Eric Jorgenson
[01:14:21] S0: Yeah. And, like, their ability to launch. And I thought that was very interesting. I also know there's a whole bunch of startups that are... Like, we're gonna launch a whole bunch of satellites. But if Elon or Peter Beck does decide, sorry, I got to... You know, I have my own capacity. Yeah. And we can't... We, you know, we we are we are scaling launch at this insane rate, but our ability to use that launch is growing at an even faster rate, then suddenly there's really no third party providers. How do you think about that? How do you think that'll play [01:14:51] S1: out? There's an auction at the toll booth to get off the planet and whoever can afford to pay the most, like, will get off the planet first. But to their credit, SpaceX is building as much capacity as they can. I think because one, they know how to use it and two, they know volume drives cost down and cost keeps them ahead. They have a large cost advantage. And if they can do a really high volume of Starships, like, nobody else will even be able to touch them. That's also how they achieve the the mission. Right? If the mission is Mars, the mission is not near term cash flow, maximize profits. If the mission is Mars, you need a massive volume of ships, and volume comes with cost. And so, yes, you'll come up with your own use cases to fill your cargo, but you also want all the customers you get because the customers are helping to fund, you know, and fund additional production, but also fill the volume that drives incremental cost down.
01:14:51 · Eric Jorgenson, Ty Morse
[01:14:51] S1: out? There's an auction at the toll booth to get off the planet and whoever can afford to pay the most, like, will get off the planet first. But to their credit, SpaceX is building as much capacity as they can. I think because one, they know how to use it and two, they know volume drives cost down and cost keeps them ahead. They have a large cost advantage. And if they can do a really high volume of Starships, like, nobody else will even be able to touch them. That's also how they achieve the the mission. Right? If the mission is Mars, the mission is not near term cash flow, maximize profits. If the mission is Mars, you need a massive volume of ships, and volume comes with cost. And so, yes, you'll come up with your own use cases to fill your cargo, but you also want all the customers you get because the customers are helping to fund, you know, and fund additional production, but also fill the volume that drives incremental cost down. [01:15:44] S0: There's an idea that Elon has that I don't think other entrepreneurs or most entrepreneurs share, which is this idea of thinking in limits. And so instead of saying, you know, we're gonna make this robot, and how do we make one robot? He'll he'll first kind of say, if we were gonna make like a billion of these robots, what would the... You know, how how would the curve of cost basically asymptote to zero? Right? And what is the raw material cost and and making that? What do you think the importance of thinking in Lomens is?
01:16:13 · Eric Jorgenson
[01:16:13] S1: I think it's incredibly valuable tool. You know, he does it at a really extreme level. Like, the the kind of entry level to this is Charlie Munger's idea that, like, great brands minimize or maximize a few variables. And so if you just start there and sort of continue it, you know, the the thinking in limits, the first principles thinking, the idiot index are all sort of linked. They're different lenses on the same kind of idea, but the thinking in limits really helps you illustrate... Helps you understand what the theoretically maximum perfect product is or perfect solution might be, and then everything between where you are and that theoretically perfect thing becomes one of these sort of obstacles to tear down or not tolerate or, question until it dissolves. And it's one of the things that I think makes them like a paradigm shifting set of organizations. Right? It changes from incremental improvements. How do we improve 10% to how do we improve 10 x? How do we get closer to this theoretically perfect thing? There's just a very imagination expanding thing. And Elon has a trick for this, which is like when you... Once you conceive of that theoretically perfect, just start asking what would it take? Like, not not why can't you, but what would it take in order to accomplish it? And sometimes the answers to that have been, you know, oh, we can't do this radically simplified, rocket engine design because this material, you know, doesn't have the tensile strength to hold up at this weight. Well, what did it take? It would take a material with different properties. Well, is it physically possible to create that new material, that new alloy? Well, in theory, I guess, why not? Okay. Is anybody on earth working on it? Has anybody made progress on it? Are there any papers written about it? Like, what would it take to build that new material that makes this new design that is a massive step function improvement better? And if you look at the, you know, the the meme of the three Raptor engines, like, there's probably 10,000 or a 100,000 of those decisions that drive simplicity and optimization and new materials and new designs, along that path that increase the cost and effectiveness of that, you know, that engine that's gonna be the thing that takes us hopefully all over the solar system.
01:18:28 · Ty Morse, Eric Jorgenson
[01:18:28] S0: I forgot which CEO tweeted this, but someone posted a picture of the Raptor three engine, and then the CEO commented like, oh, that is beautiful, but, like, it didn't show, you know, it's... They didn't really show the full thing. And then Elon's like, actually, here's a video of it firing. [01:18:44] S1: Yeah. Yeah.