Invest Like the Best with Patrick O'Shaughnessy
01:03:33 · Gavin Uberti
[01:03:33] S1: I think that one of our key ways we got started with this process, we thought to ourselves, what is the cheapest possible way we could do this? Decided, well, made almost nothing, and if I ate nothing but ramen, then we would go ahead and spend basically just the money for the mass, left hand amputer tape out, and that would be that, and if so, could go ahead and do it on $30,000,000, an insanely low number, And that we actually went out and got a debt provider, they wanted to go ahead and lend us the money we needed to go across this threshold. From there, I think it was first to go catalyze a series of other, hey, maybe we can go do one more thing, one more thing, one more thing.
01:04:11 · Rob Wachen
[01:04:11] S3: Yeah. So we're at this moment where we're like, if we really want to build this company, because like, we're not going to half ass it. We're not going to go do a test chip and spend years on it and like, let the entire AI market boom while we could be building the product. Like, if we're going do it, we're going go all the way. We're gonna need to find a way to get a $100,000,000. I mean, I remember Gavin and I were like sitting down in the office in Cupertino late at night, just like looking at each other and we're like, could we cut 500 k here? Could we cut a 100 k here? How long could we convince everyone not to take a salary? And we're like, holy fuck, the math is not going to close. We we really need to solve this. And there was a period of a few weeks where you kind of just go into survival mode, and you call every person that could possibly know an investor, and you're like, we need a $100,000,000 to do this. If we do this, we think this could be one of the most important companies of all time. Do you know somebody that wants to take an aggressive bet? That wants to, like, believe in us? Like, here's all the information. Like, we're an open book. Here's the team. It's great people. We've been working super hard. We've done these things in record time, but we have these, you know, 100 things to go. Like, do you want to do this? And like, the snowball starts and you get a million here and 2,000,000 here and you're like, okay, we're not going to run out of money this month. You get a $5,000,000 check, $10,000,000 check. You're like, okay, maybe I can buy those FPGAs. And, you know, the snowball happened where, you know, we were very lucky that we ended up putting it all together. We had a board meeting. I show you the spreadsheet and we look at it and it's like a 103,000,000. It's like, these are all like soft commits. And we all look at each other and we say, we're gonna take it. And that was the series a and it's been much easier since then. And we've raised almost a half dozen rounds since then. Many of them from those investors just doubling and tripling down. That's allowed us to get to market so quickly, like, this rack would not be possible had we not have been so aggressive.
01:05:59 · Gavin Uberti, Patrick O'Shaughnessy
[01:05:59] S1: I also think, like, suppliers too, I think deserve a little bit of a commendation here. Yeah. That TSMC was willing to work with us back before we'd raised any of that $100,000,000, back when it was still really, really scary synopsis, actually went ahead and let us get some of their emulators on extremely favorable terms where we pay over many years, basically a big loan. It takes a lot of belief from your partners to go do this, but at the end of that, you come out with this very strong team, and all the folks who back you are not in it just out of pure financial incentive, they believe. [01:06:32] S0: Why did TSMC believe, do think?
01:06:32 · Patrick O'Shaughnessy, Gavin Uberti
[01:06:32] S0: Why did TSMC believe, do think? [01:06:34] S1: Oh, this is a great story, even before you joined in, at earlier conference, a semi event, and I was one of the only young CEOs of semiconductors, and I think that's kind of a novelty. They asked me to come in there and speak. I got to the semi event, and I am the only speaker there under 40 and only person there under 30. I was at the time of 22. I go up and I speak. There was a speakers dinner afterwards. And by pure luck, happy to connect to this very senior TSMC VP. It was a very nice dinner. There was, like, the former CEO of ARM there. It's very bougie, everyone's in a suit. And I'm there with this VP, and it turns out we both studied math in college. We go and get a little piece of paper, and we begin talking in great detail about how do modern AI models work at the actual per tensor by tensor level. And the guy just gets it. And we begin talking about, hey, how do you run this very effectively? Why is Low Voltage such a critical technology to make this work? And the following day, get an email from TSFC saying, Gavin, I want to work with ETCH. Find a way to make it happen. Chris, they've been a great partner ever since.
01:07:37 · Patrick O'Shaughnessy, Rob Wachen
[01:07:37] S0: It's amazing to think about some of the tropes and obviously like should break the fourth wall here like I'm a big Etch investor, I've been involved for a long time, I think the absolute world of you guys, so like I'm incredibly biased in this conversation. I'm trying to ask questions that are broader and interesting and could be objections to what you're doing, and we'll keep doing that. But it's so interesting to me that when you read about investing, everyone cites this idea of contrarian and right as the quadrant that makes all the money. And it sounds really nice, but contrarian means everyone else thinks you're stupid. And so when you go and you get immediate nos from literally everybody, it is a fascinating quadrant to exist in before you become consensus. [01:08:18] S3: What was it like for you? I'm super curious.
01:08:18 · Rob Wachen, Patrick O'Shaughnessy, Gavin Uberti
[01:08:18] S3: What was it like for you? I'm super curious. [01:08:20] S0: Well, it's interesting at the time, it was the largest by a lot first check that I had written. Suffice it to say, I am not a math expert or a semiconductor expert or an AI expert really at the time. And so it was much more of a believed in the concept of this market potentially being huge, you having made very, very clear bets on how the future was going to look, having positioned the company in order to attack those things in a hardcore way. And then just the two of you and what I felt about you was the majority of the reason why we made the bet when we did in 2023 or whatever it was. But at the time, it was the biggest. And I think the same thing you said about naivete applies to investing as does to maybe building a semiconductor startup, which is like I didn't know what I didn't know. And when I called experts, they were basically like this is stupid. They laid out in very logical terms like why this wasn't going to work and why it was such a low probability bet. And I think one of things I've learned from it is just you kind of have to damn the base rate. If you invested on base rates, you should do something other than what we and I do. [01:09:21] S1: There's always the index fund.