Relentless
00:00:00 · Sam D'Amico, Aaron Slodov, Ty Morse
[00:00:00] S0: I just got trolled. Why did I not learn Chinese? It's not just that you get a factory, you get a full engineering team that codesigns the product for you. And they codesign the product around their supply chain, around the tooling they've got. [00:00:10] S1: If somebody else can make all the stuff that you want, that's not good. We have only so much tribal knowledge left. Once it's gone, it's it's gone. [00:00:18] S0: In China, there are 20 Elons. Maybe their Elons are not as good. You can debate that sort of thing. But, like, if I'm an American entrepreneur that wants to build the most advanced device of its category, I can just go there and do it. [00:00:28] S1: When you hear these analogies, you kinda wanna just like hit your head against the wall. Like, yes, of course, they're great at doing all these things, but like, what are we doing? [00:00:38] S2: Welcome to this US versus China manufacturing debate. In the nineteen eighties, The US produced roughly 30% of the world's manufactured goods, and today it's roughly around 16%. Over that same time frame, China has gone from almost nothing to nearly 30%. This has created one of the biggest transfers of power in human history. And so today, I'm talking with Aaron Slodov and Sam D'Amico. We're having a debate about what this means and more importantly, what comes next. So Aaron, in five minutes, can you please explain how this decline happened and please give a little introduction to yourself?
00:01:10 · Aaron Slodov
[00:01:10] S1: Sure. So I'm a Rust Belt Midwest boy. Grew up in Cleveland, clawed my way out, eventually moved out here to San Francisco, lived in New York, LA, India, couple other places strangely, but I have a background in like physics engineering. Most of my pursuits have been chasing like moonshot ideas basically. And part of my early career was actually building Waymo before it was Waymo here. And I have a pretty decent breadth of hardware projects. The the kind of, like, genesis of how I got to where I am is trying to make a consumer product by myself. And I had no exposure whatsoever to manufacturing and, you know, the thing that I wanted to make ultimately was a stupid, like, plastic widget. And I found out the hard way, what, like, tooling was and how to find suppliers. And all of my buddies who worked, you know, like, still at Google and, like, other big tech companies on hardware teams were unanimously just like, Yeah, go to China. Like, go find a supplier, get on Alibaba, get a WeChat, you know, like, find somebody. I tried that for a little while, and ultimately, the overwhelming kind of consensus was that I'd have to, like, fly there and live in a factory, basically, for a little bit. And this is kind of like a rite of passage, you know? I wasn't really that willing to do it at the time because this was just like a side project of mine. I was like, like, what is going on with this? Like, why do I have to go do this? And so ultimately, I tried to go find American suppliers, and that was an even, you know, worse shit show because they don't care. I learned over time the reason they don't care isn't because they don't hear about me or my product, it's just they've been squeezed, you know, to the absolute margin on what they can do. And this is part of, right, like, the global manufacturing world stage. This is something to me that I thought was an insane problem, because in in my brain, what didn't compute was we became, you know, so wealthy and smart and powerful that we just kind of offloaded all this work. And, you know, obviously over time China became very good at what they do. So in the beginning, weren't, you know. This is like a whole train of people handing off skills and learning and undercutting and building capacity.
00:03:38 · Aaron Slodov, Ty Morse
So it's a fascinating story ultimately, but one that really hit me hard being from, like a Midwest Rust Belt town because growing up, you never think about why your city is like decimated, you know, and like what happened? This was the richest place in the country for like a hundred years. So yeah, and like you you do learn this stuff obviously like in high school, in college when you're taking economics classes and poli sci. So it's just it's fascinating to really see it all kind of like unwind in front of your face. And my answer to it was trying to build a response, right, with the company that I'm now building. And it's kind of like a, you know, a marriage of Silicon Valley engineering talent with Detroit world class manufacturing talent. And so to me, I think that, you know, we can we can do this. It... It's really gonna come down to a matter of will ultimately. So that's, it's a quick background on how I'm sitting here now. [00:04:40] S2: And, Sam.
00:04:41 · Sam D'Amico
[00:04:41] S0: So, hilariously, we were... We... I think we both started our careers in different buildings in the Google campus, very close by each other. And it's actually really funny because so I I went to college for electrical engineering. I'm also... I just saw... I moonlight as a software engineer occasionally, but, I was on the Google Glass team, which is a little different than Waymo because, you know, it's a consumer electronics device versus a like, at that point it was, you know, in some sense a research project basically. And so the default assumptions were this is going to scale, all all this other stuff. So I I graduate graduated undergrad in electrical engineering, and I'm about to start my master's program. And I'm like an intern at Google. I'm Google X. And I'm like, I just got trolled, with the realization I I had. And I'm like, why did I not learn Chinese? Because I didn't understand, like, if you wanna build, like, scaled consumer electronics, you're going to need to go to China if you wanna run as fast as possible. And I actually encourage, you know, people still in college or if you've got a chance to, you know, change your grad school curriculum or whatever to like, you should take a year of Mandarin minimum, if you want to get into this world, which is kind of an aggressive statement, but I think it's it's it's factually true. So I started going to China in 2013, after I'd become a full time employee there, and got like kind of the download of like where to go in Shanghai, like what to what to go do and sightseeing all this other stuff. I basically realized like, okay, I actually like doing this. It's like pretty cool to go to world class international cities and like and you get to then have engineering meetings and stuff like that, as well. And so there was actually this like travel element to it. Also people like rag on San Francisco for like not having great nightlife and all that other stuff. You can just immediately inoculate that if you're going to China, like once every once every two months or something like that. So, basically basically, I got picked up into this universe. Now, where this really accelerated was Google Glass obviously was a little too early for its time. Oculus was not. And so I went and joined the Oculus team as they were getting bought by Facebook. And, well, they had to... They they they...
00:06:50 · Sam D'Amico
What's interesting is it's kind of the same thing that you mentioned, which is like the transition of China from like a low end manufacturer to a high end advanced manufacturer. I saw this at Oculus. So like Oculus was... The Oculus dev kits were built by, I believe, the same contract manufacturer that made Guitar Hero and Rock Band. And it was a toy... It's a toy factory. And so in some sense, it's like, they can do injection molding of, like, let's call it cosmetically, sort of sort of... I I don't wanna rag on them because I think it's like, you know, it's a different era, basically. Basically think like damp factory in Guangdong... Guangdong province, looked straight out of like the eighties sort of thing like that. It's probably a pretty similar site to what you would see if you were like going to China in the nineties or something like that. And then the advanced electronics piece was kind of kept into a like, okay, they put a computer on the factory line that like does some of the advanced, like software defined hardware stuff that like you need to do for a VR headset or whatever. So that was where they started when they got acquired. Then as soon as, as soon as the acquisition went through, I was involved with some of the initial contract manufacturer selection because I had worked on the Google Glass team on some of, the inside, you know, factory stuff there. And so got to see kind of the next wave of Chinese manufacturers and these folks are not mucking around. Like, this is like, it's not just that you get a factory, a building with some operators that they go and recruit, it's you get a full engineering team that co designs the product for you. And they co design the product around their supply chain, around their, like, like, around the tooling they've got, etcetera. So it's not just that you get a room with some cheap workers, it's you get a machine that effectively can build it for you. I I think the analogy for kind of the audience that that you've got is, like, it's kind of funny to use the Claude code for X sort of joke, but like, it's kind of like you have a LLM that can build hardware and you communicate to it through Google Slides and in person meetings and sometimes drinking some Baijiu at dinner. But like, that is how it actually works. And you were essentially able to be the high level engineering input to that system.
00:09:00 · Sam D'Amico
Now, there's kind of the split brain because you do that, but then you're also doing advanced R and D for like, hey, how does my computer vision system work? How, like, a lot of that stuff ends up has stayed stateside and like, you kind of see where, why this is like, you know, this is the, this is the same transition that you've seen kind of from like The United States still does the high value stuff. They still do the industrial design. They still do like, like Jony Ive didn't lose his job yet. Know, it's kind of the point like, and that team at Apple for instance has like one of every potential machine that they wanna use and they, they piloted different processes and they do it internally. But like, who scales it? Not them, obviously. And so I got to see kind of this transition from like, okay, China's this like cheap labor toy factory. You know, there's lead paint in the, you know, whatever, you know, all the, all the sudden people dismiss China with to like, oh, this has fundamentally changed. And like in the past, you know, couple years as I've been building Impulse, I've seen a different thing, which is like, these guys are not just really good at building stuff and like you can you can scale like an arbitrary VR headset or product through them. It's like they are leaders on the R and D side as well. And if you want the best battery cells, if you want the best process engineering for like how you build a battery pack, if you want like all this stuff, it's like, it's an email away from you getting it. And not only that, they are super eager to go and work with you. And they're super eager to go and work with you for a bunch of reasons. And a lot of them are, I would argue, fairly, like, fairly well intentioned. It's like it's like, well, they see, you know, The United States as, like, the benchmark of, you know, especially Bay Area engineers and stuff like that is like, this... We can learn a ton of stuff from this. And this will mean that we're ahead of our crosstown rivals in a hyper competitive, like like, you could argue that it's like all of these companies have been pumped up by state subsidies. And it's like it's like in China, there are 20 Elons. It's probably the way to think about it. In The US, there's one and the nimbies have basically tried to make it so that that