00:31:09 · Saurav Shroff
[00:31:09] S1: Yep. Okay. Great question. So we are sitting inside, Starpath Megafactory LA. This building is, near Long Beach. That's a 130,000 square feet, you said. And in about five months, this will turn into a 50,000,000 watts per year fab for Starlight Air, which is the name, the brand name of our ultra thin, low cost solar panel, and a few other products that, we can talk about a little bit later. If you add up the wattage, meaning the power of every single satellite launched including Starlink, it sums to something like 50 megawatts here. If you don't include Starlink, it's like five megawatts here. So the question is, you know, you might ask, okay, why are we building a 50 megawatt fab that's 10 times bigger than demand? Why why would we why would we do this? It seems like, you know, it seems like we spent 10 times too much CapEx. It seems like, you know, big mistake. Why why would we do this? And the answer is quite simple, which is that, the demand that is being forecasted to us by our customers, who by the way are not all, you know, like sometimes people be like, my demand... The demand I'm seeing from my customers and then the customer is like a start up. Okay? And and we we have we have customers that are start ups too and that that's that's fantastic. We we sell to them. Absolutely. But when I'm talking about demand that's being forecasted, I'm talking about from companies who currently spend billions of dollars on data centers. Okay? So the demand that is being forecasted to us by our customers is so immense that, and it grows on such a steep exponential, year over year, quarter over quarter, whatever you want to call it, that it leaves us with two options. You know, so your demand demand is growing on a smooth exponential roughly, and it's very, very steep, and your supply, as in your capacity, grows in steps. So your factory comes online, and then you have the same capacity for a little while, and then another factory comes online, and so you're building basically this like staircase shaped graph, it's like step shaped graph of capacity, and you have you have roughly two choices. You can either build the steps above the exponential, so here's the exponential, and here are the steps of factory one, factory two, factory three, etcetera, or you can build it below.
00:33:32 · Saurav Shroff
And there is one governing word that comes out of every conversation with every customer, and it is not quality, which is important. It is not weight, which is important. It's not cost, which is important. It is capacity. The the questions that our customers are asking us do include those first few things, quality, weight, cost, but mostly include how much capacity do you have in year x, in year x plus one, in year x plus two, and we're talking about numbers that are so immense, they're almost hard for me to comprehend where I am working on building one of the factories right now. Like, like, numbers are like, okay, this is a 50 megawatt factory, that's 50,000,000 watts. Our customers are saying, how fast can you get to 75 gigawatts a year? That is 1,500 times the scale of this factory, which is the largest building I've ever leased in my life by an order of magnitude. And so if we wanna tell a compelling story to our customers that we actually will have the thing that they want, which is capacity, we need to have more capacity than our customers want today. I mean, it's like, it's as simple as that. You wanna sell a big you wanna sell a big amount of stuff, you better show a big amount of machines that can make a big amount of stuff, even if it means you're spending, you know, an extra $50,000,000 on CapEx in a year where you could have gotten away with with with spending like 5. Right? Like... So so the the opera... The operating word of the next ten years for us, not for the whole world, but for us, infrastructure and industrials providers for data centers in space, is capacity. And the capacity required by our customers is so gargantuanly immense that, like, I cannot even understand what they mean. Like like, if we want... Which we won't. If we wanted to do it in LA, which we won't, we would have to lease every building between Long Beach and the 105. Every single one in order to fulfill the demand that our customers wanna see in five years. Now, obviously, we're not gonna do it in LA, we're gonna do it in Texas where, you know, like, it's easier to build, the regulation's more friendly, but, your question was, why are you building 10 x the capacity of what your customers want? And it's because the thing they want is capacity, even if they're not buying it next year.
00:35:55 · Saurav Shroff, Ty Morse
And between building capacity ahead of the curve and building capacity behind the curve, it is the smarter business decision to build it ahead. And for those saying, which nobody was really saying, but if you said like, you know, what about the cost of capital, etcetera, etcetera? I would say, well, what about the cost of losing? [00:36:16] S0: So if you think through basically what your biggest bottlenecks are, you get the lease here, you start filling it out with a bunch of different machines, you have the lineup in, I don't know, six, eight months, [00:36:26] S1: something 2027. [00:36:28] S0: Great. So it's about six months. What does the scaling process look like from going from one factory with a 130,000 square feet and, like, 50 megawatt production annual output to, like, a gigawatt? [00:36:43] S1: So incidentally, 1.2 gigawatts is the size of our next fab, which is called Starpath Austin Giga. Austin [00:36:50] S0: Why Giga did you choose, like, that amount versus a smaller amount? Like, what... What's the logic?
00:36:50 · Ty Morse, Saurav Shroff
[00:36:50] S0: Why Giga did you choose, like, that amount versus a smaller amount? Like, what... What's the logic? [00:36:58] S1: And we need to climb the orders of magnitude. And so you could choose a smaller amount, but it's the same answer as before, which is like in 2027, the things that customers gonna wanna see is capacity, more so than what they need. And then it... Because the next year, they're gonna need it. Right? And then in 2028, or whatever, the year after, the things that customers are gonna wanna see is capacity more so than what they need because they're gonna need it the year after. And then 2029, what are they gonna wanna see? Capacity. Capacity. Exactly right. Customers wanna see capacity because they have huge plans, and those plans, if not done, block billions, if not tens of billions in revenue for them, and that's proven. They know that. So what they wanna see is capacity. In simple English, they're not fucking around. The customers wanna see capacity. So why one gigawatt? It's just like roughly an order of magnitude higher than this facility. This facility, yes, is technically 50 megawatts, so it's 20 times as put to 10 times. Roughly, it's an order of magnitude higher. [00:38:04] S0: What do you expect to get easier as you scale from, like, a factory that roughly... What is that? 24 times the size of this one? [00:38:11] S1: No. I You don't [00:38:12] S0: don't expect anything
00:38:12 · Ty Morse, Saurav Shroff
[00:38:12] S0: don't expect anything [00:38:13] S1: get I mean, I think some things will be easier, like, you know, we will know tons of things going into Austin Giga that we knew nothing about going into this building. This is our this is our first radio. But, you know, like, I don't think that there's anything easy about building a fab. And I think if somebody does think that, I would say, where's your fab? So I don't think it's gonna be easy. It's hundreds and hundreds of millions of dollars of equipment. Almost all of it needs to work almost all of the time. It's not quite all, but, like 90% of it needs to work 90% of the time. There's nothing easy about that, and it's hard for me to foresee what the challenges are, but there... There'll be mess. And with each fab, I will move into the corner of the building. So at this building, we're just in the middle of buying an Airstream. Airstream will be installed in that corner over there, and I will sleep in the Airstream until the fab is producing product that ships to our customers, and then when we go build Austin, Giga, likely the same or maybe a different Airstream, to be honest I haven't thought about it, will be used for the same purpose, in a similar position, the corner. [00:39:28] S0: Why is it important to sleep at the factory?
00:39:28 · Ty Morse, Saurav Shroff
[00:39:28] S0: Why is it important to sleep at the factory? [00:39:31] S1: If you're sleeping in the factory, and, you know, there's not too much sound deadening and you can hear machines and forklifts, then... Okay, actually that... Specifically that might be a little annoying, but it'll be hard to take your mind off of it, which is exactly what I want. [00:39:48] S0: One of the things that you mentioned earlier today when we were basically walking around and you were just like telling me the layout and showing me the layout of everything, is you want roughly half the factory to be producing solar panels, and you want the other half of the factory producing components. Yeah. For, like, AI data center stats. [00:40:05] S1: Yeah. [00:40:06] S0: Why are you even doing that in the first place instead of just focusing, like, really focusing on this one objective?