Relentless
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?
00:45:18 · Sam D'Amico
[00:45:18] S0: Yeah. So let me start from the demand side. So we're now at the point where, like, are... It seems like we're on track for tens of thousands of units a year of of cooktops and other things. But even with that capacity, let's start with like a... And that's a, know, like you like you could be like a 100,000,000 plus in revenue of your end product, and you would not need even... Like you would not be able to fully saturate the demand, like the the the capa... You would not be able to fully saturate the capacity of like an injection molding machine in some cases. So then it's like, why are you buying this machine that is sitting idle 75% of the time or something like that? And and like, even if you can go finance all the CapEx, can do all this other stuff, but it's like, okay, you're you're literally using something and not at full capacity. So the incentive is to go and fractionally do that. Like, just like for the same reason that, like, if I'm a mobile app company, I'll use AWS. Exact... Like, the exact same reason you'll wanna fractionally use these resources. And so I think there's, like, an... A logical incentive to kind of split the split the universe between design and build where it's like, okay. And hilariously, the Soviets were really good at this model. They had... Would have like a design agency and then they'd pair it with one or more factories that were often in the same town, but that factory would be like building, and you see this in, like, basically you have the design agency that knows how to design tanks, and they're like the best tank designers in the world. And the output of those tank designs go to the factory across the street in Ukraine, and then the factory across the Urals in, in Russia. And that's like how the Soviets built, you know, a lot of their military infrastructure, their space infrastructure, all this other stuff. It's basically Foxconn and Apple. It's almost the same... Almost the same analogy because, like, Foxconn taps different types of capital structures than what Apple can do. And when Apple's ramping production of a new product, like, they're clearly not using all of this all all of these machines.
00:47:06 · Sam D'Amico
So, like, they can fractionally, like, they're not paying for, like, the the next iPhone is not paying for all the complete equipment that is needed, you know, to produce for it two years ahead of time before the... While they're still prototyping it basically. And so you back this up and you're like, okay, well, also like how much money can I raise as an entrepreneur? It's like, this is my first go at it. You know, I'm not I'm not getting a billion dollar seed round or whatever like these AI lab people. If I had a billion dollar seed round, maybe the trade off's a little different. But but basically, but basically, it's like, what can you do with the money you can raise and the leverage you can get? And it's like, well, you definitely wanna use a contract manufacturer, and you definitely want one that ideally comes with a lot of engineering team. So that way, like, complicated design stuff, you know, you can you can leverage them for that. And then the last piece is you also want one that comes with supply chain or a lot of the supply chain. So, like, you give them a complicated thing, they figure out what, how in their network to source it. And then the last thing is you're a startup, so who's gonna work with you? And, and once you kind of go and bake all this stuff off, you kind of end up with like a couple options. You can you can go to firms in Singapore. You can go to... They exist. There's just not as many of them. You can go to firms in Taiwan if your thing is pretty much a standard consumer electronics device. If want build a laptop, you want to build a phone, you can go to the Taiwanese ODMs and and and do it. South Korea and Japan have all the capabilities to do this, but like LG is not a country manufacturer in a lot of cases. Japan's got a lot of the sub suppliers at excellent quality, but they're not... There's not really... There's not really a final assembly house that will play ball with you. And so, yeah, you're you're in China. And so that's kind of that's kind of the that's kind of the play. And then why do the Chinese wanna work with you? It's like they... You... They really respect Silicon Valley and they think that, you know, next generation products come out of there, and they wanna play ball and have... Helping create them in a lot of cases.