Relentless
00:16:36 · Ty Morse
[00:16:36] S2: And Sam, same kind of question of with this massive decline, do you think like, a, it's reversible and how do we do that? And then if you had a $100,000,000 to invest in a factory today, where would you decide to put it and why?
00:16:49 · Sam D'Amico
[00:16:49] S0: That's the great set of questions. So first thing is, is this reversible? I think there's a silver lining to like some of the stuff when... Actually, I'll disagree with your point of like it's all important. It's, I think you can distill kind of all of the next set of devices into what I would call, like, the electric stack. And so this is... And and if you want a 200 page reading on this, Packy and I put together a really long article about the electric slide, but basically it's lithium ion batteries, power electronics, embedded compute, and then electromagnetics. And I would also add a fifth column, which is like computer vision hardware. So like I've I've worked on camera modules and image sensors and stuff like that. So like... But basically anything from a Waymo to a robot to a stove of all things, you can use those those those technologies and actually make stuff stuff happen. And so, basically, the idea is like pick devices that kind of give you... Let you exercise all of those key, like those four to five key muscles. Make sure there's a portfolio of them, some like portfolio of them that you can then selectively onshore and that... And make sure the volumes are high enough that you can get at least one of every process machine needed in that entire supply chain onshore and at a 100% capacity. Because the problem is, like, if if if I need, five different types of injection molding machines and I'm using each one of them for, like, you know, 10,000 parts a year, well, I'm not gonna be able to fund those. Like, it's not gonna... It's not... It's not gonna actually make sense. The flip side is, like, the only industrialist in The United States that has actually successfully done this recently, Well, one, he doesn't share it, does it in his own ecosystem. But two, but two, he actually can bring the volume to bear to actually go and do this. Like Starlink has enough, enough customers that they can fully do a lights out manufacturing line for that, that, that system, and it makes financial sense to do so. That said, how did he actually do it onshore at the beginning? It was like pandemic era, probably a pain in the butt to go to Vietnam or China or something like that to go and do this. They went and did it in the parking lot in in LA. And I think that goes back to where I... Where I put my factory. And it's like, it's incredibly important.
00:19:00 · Sam D'Amico, Ty Morse
And I I said this earlier, it's like, it's incredibly important to tie the... Like the factory and the engineers need to basically be in sync. And this is the superpower that companies like BYD bring to bear. Like, literally the factory and the engineering office are like in the same facility in most cases. Like, maybe it's a couple buildings away, but it's not it's not across town. [00:19:21] S2: It's in the same campus.
00:19:22 · Sam D'Amico
[00:19:22] S0: It's in the same campus. And there's all of that tacit knowledge of like, yeah, can't really design it that way because this doesn't fit kind of thing. Well, that's like immediately short circuited and the context is already present. And in The US we decided, oh, you got to, like, go do a bake off with a bunch of governors and, like, I mean, you're gonna watch me, you know, be a hypocrite on this whenever I I open a US factory at some point. But it's like, okay, I gotta go, I gotta go... I'm trying to make a stereotypical Republican governor name, but basically, like, I gotta base... I gotta basically, like, go to some red state, tell them how much I love Donald Trump, you know, all this other stuff. And then I get my tax breaks, and I get my free campus, and I get all this stuff. Meanwhile, my engineers are over in Hipsterville in California, and they don't wanna move over there. They don't wanna move to, you know, real Midwestern small town that I am re... Trademark re industrializing. And so this is actually a... I think this is actually a problem. So it's like, think there's like two solutions. One of which is like, we should convince some smart engineers to go move to move to move to these actually kind of awesome Midwestern towns in Ohio. And like, if we can basically rebuild those, it's like, they're gonna be great places to live for smart people because those smart people lived there before. Like, these were walkable communities with, like, you know, with great amenities and, like... And and again, the engineers were next to the factory. The flip side is, like, where would I do it today? Well, where are the smartest engineers on the planet right now? The Bay Area. So you should put it in the Bay Area. How do you do that? Well, there's a guy who successfully expanded a factory in the Bay Area by putting a tent in the parking lot because that was the only way you can get around all the permit constraints and all this other stuff of like needing... I need to... You need to expand the facility in Fremont. So I think that basically the way I'm approaching it from my perspective is the the YIMBY movement was a good start for like, let's unlock housing production to like make it so it's actually affordable to live in places like the... In the most popular places to live on the planet.
00:21:18 · Sam D'Amico, Ty Morse
But there's going to need to be an industrial movement that is kind of its counterpart. If we want to be able to like, you know, make this stuff work and that that movement is gonna need to be kind of like a, yeah, it's okay to build a factory now. And the contrarian take is that like, okay, we basically built up scaffolding of like environmental laws from the sixties onward that have basically made it illegal to do stuff. I'll give you an example of, like, California bit by bit has restricted what I would basically call chemistry at, like, a foundational level where it's, like, basically illegal to do chemistry with metal. And if it's illegal to do chemistry with metals, you can't build anything with the electric stack because fundamentally electric stack, that's batteries. Also, if you wanna coat any metal, like, you wanna anodize anything, yeah, good luck. You gotta do that in... You gotta do that over in Reno. Can [00:22:05] S2: you explain what you mean by California made chemistry with metals illegal?
00:22:08 · Sam D'Amico
[00:22:08] S0: Yeah. So, basically, California was an industrial superpower. We built, like, I don't know, what, like half the world's battleships at one point. We built like the like Kaiser shipyards. Like, we had all this awesome stuff going on. Also, whole facility, by the way, like this was all... This is the center of like manufacturing of like like the bridge superstructures for aircraft carriers were built like right around here and stuff like that. Awesome, awesome, you know, industrial, you know, industrial spot. But obviously, if you do chemistry with metal, it does cause pollution. And so, there are sites throughout the Bay Area, and this is like within human memory, that have like trichloroethylene contamination. Like the Google campus, there are, I think, Teflon barriers below some of the buildings because essentially they're like the like the polluted pollution from both metal, like metalworking and semiconductor production. Because we also used to have tons of fab... All the... Of the fabs were here too. And effectively, that that pollution is still with us today. And you see controversies ranging from, like, Hunters Point hasn't put new housing in where the old naval shipyard because they keep finding, like, little radium painted, markers that were, like, on, like, if you worked on an aircraft carrier at night, you'd basically put these little glowing green dots on you so that you don't get hit by, you know, you know, like a plane landing or whatever. They go find one of these and then, like, that shuts down housing production for, five years. And so... But basically because of the past memory of, like, you know, I would argue kind of reckless environmental stuff. We put in a bunch of scaffolding of new laws, and these were all well intentioned and we built them over many years, but now it's effectively illegal to do chemistry with metal. And so... And if you... And and so that seemed fine, you know, back, you know, you know, back into the nineties and two thousands. It's like, hey, we're we're we're... There still was consumer electronics manufacturing in the Bay Area. Like, the... Like, Google Glass, for instance, was like a consumer device manufactured in California, they had a flex that said, they they have they have flex on the box.