Relentless
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.
00:42:45 · Sam D'Amico
[00:42:45] S0: And this is actually gonna cause reinforcement learning into stupidity is the problem. Because basically, like, if you're if you're like, oh, cool. Like, I'll give an example, like, the sat... Like, if you're building a satellite, so, like, Astranis across the street. Right? If you're building a satellite, I can pick on them because I'm an investor. So I'll just pick on all of these. I'll pick on all these neo primes. I think Astranis has, like, the supply chain for that. They end up wanting to vertical... You end up vertically integrating your supply chain just like SpaceX did because you're finding out that basically the suppliers that claim they can go and give you something, whether it's like, you know, ion propulsion, solar panels. Like like, there's a whole list of stuff. I'll pick on Star Trackers because that's like a... That's a great one because it's just a camera. And so... But then if you go to Ball Aerospace, they're gonna charge you several $100 for a camera or something like that. Maybe they've gotten cheaper. But but the idea is, like, because there was, like, only one game in town, we're only launching tens of satellites a year or whatever we were doing back, you know, back before, you know, back in the before times. These vendors basically were, the only game in town, and they essentially learn to... You know, they're not consumer electronics companies, they're consulting consulting firms. And so it's like, go and order a, like, verified space grade part. And the thing is basically, like, the guy who designed it has been dead for twenty years and it's manufactured by a company that bought another company that bought another company. And you're like... And maybe they... Maybe their technician forgot how to, you know, do a certain process step or something like that. And you don't know any of that because this is all black box to you. And it's ITAR and all other stuff. And like, they all claim, oh, this is the most advanced thing ever. And it's like, meanwhile, like you go ask me to go to the Shenzhen Electronics market and I can be like, cool, that plus that plus that gets you a thing with like 10 x the performance. And this example that I kind of just made up appears to exist across a huge swath of American capabilities. And so if you're trying to rebuild American manufacturing, you're building a...
00:44:49 · Sam D'Amico, Ty Morse
Like getting your supply chains to actually be capable of volume, you end up falling into the same solution that Elon fall... Fell into, which is like, oh yeah, like Starlink makes their own printed circuit boards. And then [00:45:01] S2: you run into the chemistry being a legal problem, and you give up. Most most people give up. And Sam, when you were setting up the supply chain for Impulse, why did you decide to go to China? And then what was the, like, main limiting factor stopping you from just building the same supply chain in The United States and vertically integrating?