Relentless
00:34:29 · Sam D'Amico, Aaron Slodov
[00:34:29] S0: I mean, I mean, you had me run industrial policy, would be... Things would be a little different, but like, but basically, I don't want to nominate myself, you know, in future administration, but basically, I want to run businesses. But basically, basically, I think that we need to be thinking about this from the systemic level of like, you need to have a baseline capability of being able to do this stuff. And to... And military demand is not enough to sustain... Like, I got someone who was yelling at me about, like, like how I didn't understand American PCB manufacturing, and there's, like, this one company that basically makes, like, all the US military's PCBs. And I'm like, I actually have never heard of this company because they don't do anything for consumer electronics, except for Huawei apparently, which is a little interesting. And so we basically don't work that muscle at all now for the reasons that, like, I think you've described, which is, like, the American vendors are, like, have been squeezed so much. They don't wanna play ball with, like, crazy stove guy or whatever. Yeah. And frankly, like, then you go go to China, and it's, like, red carpet rolled out. Hey. Do you wanna work on some cool stuff? It'd be really cool to build that because it's just cool. [00:35:34] S1: There's a South Park clip about that.
00:35:34 · Aaron Slodov, Sam D'Amico
[00:35:34] S1: There's a South Park clip about that. [00:35:38] S0: And and it's like it's like... And and it's awesome. And also it also also, like, it's such a flex when these companies go and, like, pick you up in a car or whatever, and it's literally a car they make. I mean, the... There there's another company... Like, the only other company can do this is basically, you know, in the Elon universe, obviously, obviously, that's... That that exists, but it's kind of like, oh, but in China, there's 20 of these. And there's 20 of these, and you can hire them to do advanced manufacturing projects for you. So, like, if I could go hire Tesla to go build the best induction stove in the world and they gave me their Bay Area engineers to do it, would it be worth it? Probably. I think it would actually I think it would actually work great. Now, are they set up as a business to do that? Absolutely not. And, that's the other missing piece of The US ecosystem is like, I don't think that's a venture scale business or maybe it is, but like, maybe I need to be more thoughtful about what the financial structure ends up looking like. But we don't have the incentives in the capital markets for businesses like BYD or Goertek or like Longcheer or, I'm thinking of a couple or or or or, yeah, to exist, basically. [00:36:50] S1: I I can push back on this a little bit just because I've been trying to make a case that this level of basically, like, let's just build Chinese level capacity here. Right? [00:37:02] S0: Take.
00:37:02 · Sam D'Amico, Aaron Slodov
[00:37:02] S0: Take. [00:37:02] S1: It... It's... So it it... Like, the venture back wall piece is really interesting, right, because this is where the rubber really meets the road. So it is, it's really challenging if your narrative is, I just need a factory, right? In America, you can't, like, we're going back to the systemic level here. So you can't walk into a bank and just say, I wanna go get like a machine shop, like hook me up with 10,000,100 [00:37:27] S0: years ago, you could totally do that. [00:37:28] S1: Exactly. Now, no. In China, you can do that. Yeah. And it's just like the kind of time and place of the shop and the SMB, we might be looking at like the end of that, right? And so the idea that you could, if you actually do this in an intelligent way where you have, you know, you might start in a more manual capacity kind of setting, but the, like, the dollars that you need for the R and D and for market capture is very well suited for Venture, especially if you just bum rush it. Right? Like, this... It's probably the only hope that Venture has at building these companies at any scale because otherwise, it's like you're hopping on one leg with your arms tied behind your back, you know, and you have to kinda, like, build a little factory and show some good progress in unit economics when, like, the bigger prize is just, like, building, you know, multiple $100,000,000 factories and, like, can founders actually, you know, do that? So
00:38:33 · Sam D'Amico
[00:38:33] S0: I have I have I have... There's a spicy take that is, like, hiding in plain sight, which is, like, related to, like, Anduril, for instance. And so Anduril has announced a lot of, like, hey, we're gonna build this, like, advanced manufacturing campus in Ohio. We're gonna do all this other stuff. I think, like, you know, like... By the way, like, they'll IPO and be very successful. So, like, they're like... So I'm gonna I'm gonna lead with that lead with that piece. Like, I I... I'm I'm very bullish on Anduril, the stock. But the, there's a there's a flip side of it that I think they even know. Like, they they, like, they know this, based on kind of, you know, I've I've... This is not confidential information or anything like that, but, like, the the spicy thing is if you build a business that is essentially, like, designed to service the US government as a customer, the US government until very recently has not been the customer that would incentivize Anduril to build base level capacity of like the base capabilities. They're much more of a like, okay, SOCOM wants this type of drone helicopter. The Marines want this type of anti drone interceptor. There's some high volume, but really low end requests coming from Ukraine. There's like, you know, like, basically the... You end up being a product portfolio company and in some sense, like... And it venture in a way because it's like, you're not you're not building a advanced factory. You're building you're building a, like... You're you're basically building a bunch of options that could turn into the next f 35 program or whatever. But what that means is you'd have a company that's almost ten years old that, like, hasn't ramped volume production of any one item and then use that to teach itself to do the next thing. And you can contrast this with, like, SpaceX, for instance, which is, like, much more limited in terms of product scope. Now, SpaceX found a very deep market that they uniquely could dominate, which I don't think the DOD has provided, yet. But I do think that, like, this is a really important thing of, like, this is where I'm also getting obsessed about the data center thing because I'm like, that's a very high volume deep market that you could just go and you could go and just do.
00:40:40 · Sam D'Amico
And so I think I think that's something that's kind of worth describing where, like, Anduril now has to learn this muscle now because, okay, we've got the drone dominance program. We've got all these other things where it's like, oh, will DOD order or DOW, sorry, order order a million of one... A million of anything. And, yes, they order millions of bullets, but they only... Only until the Ukraine war were they ordering millions of artillery shells. And now they're gonna be ordering millions of drones, which again use the electric stack. And so you then have to be good at that. And then if I go have an FPV drone and put it on the hypothetical table here, the lithium ion battery, no one really makes in high volume yet, high discharge rate lithium ion batteries pouch cells, in The US, at scale. You could argue you could, you know, repurpose the Tesla Panasonic line for something like this, but again, not current, like Elon's not gonna share, necessarily. You then look at the the the PCB, probably doable in The US, but the chips there, are those packaged in The United States? No. Probably packaged in Malaysia. The, the camera module on that thing, I believe there's basically zero camera module manufacturing in The United States. If you wanted a cheap thermal camera, that sensor is probably made in China, not made by FLIR. You can go down the list and basically be like, okay, there's a lot of tech that's gonna have to land stateside to kind of, you know you know, or or friendshore basically to to do this. The US can totally do this with with their allies, like, you know, you know, like like, US plus Japan plus Singapore gets you a good chunk of... And plus South Korea gets you most of this. But I don't think... Like, my point is, like, I I think the, like, defense procurement world has been so separate from the consumer electronics world for, thirty years, basically, like, since the end... The fall of the Soviet Union, these have been, like, we've been split brand here, that I think that it's going to be a challenge.
00:42:34 · Aaron Slodov
[00:42:34] S1: I posted about this this morning, I think, where it's just like, you know, less than 5% of everything in defense is produced at higher than 10,000 of anything per year.