Casey Handmer of Terraform Industries on solar maximalism, hard tech, and reclaiming the Salton Sea

Description Casey Handmer is the founder of Terraform Industries, who is developing a machine that makes synthetic natural gas from sunlight and air. He joins the podcast to explain his solar maximalist worldview, why he believes solar costs will drop another 10x, and the core physics that doomed Hyperloop from the start. They also discuss the lessons of the underappreciated industrialist Henry Kaiser, Casey's new venture in solar-powered desalination, his grand plan to refill the Salton Sea, and why he believes "hard-edged" leaders are essential for hardware success. Show notes [Read] Ashlee Vance: Elon Musk https://www.amazon.co.uk/Elon-Musk-Billionaire-SpaceX-%20Shaping/dp/075355562X%20%20 [Read] Francis Spufford: Red plenty https://www.amazon.com/Red-Plenty-Francis-Spufford/dp/0571225241[Listen] Beneath the Surface, Episode 2 : Salton Sea https://press.stripe.com/beneath-the-surface%20[Read] Marc Reisner: Cadillac Desert https://www.amazon.com/Cadillac-Desert-American-Disappearing-Water/dp/0140178244[Read] Albert P. Heiner: Henry J. Kaiser https://www.amazon.co.uk/Henry-J-Kaiser-Western-Colossus-ebook/dp/B0CW1HCXGG/ref=sr_1_2%20[Read] Mark S. Foster: Henry Kaiser https://www.amazon.co.uk/Henry-J-Kaiser-Builder-American/dp/0292742266/ref=sr_1_1[Read] Ernest K. Gann: Fate is the Hunter https://www.amazon.co.uk/Fate-Hunter-Ernest-K-Gann/dp/1908059028%20[Read] Captain W. E. Johns: Biggles: The Camels are Coming https://feeds.transistor.fm/%20https:/www.amazon.co.uk/Biggles-Camels-are-Coming-Adventures-ebook/dp/B0CVZRMXRP/ref=sr_1_1%20Key moments (00:00) Intro (02:28) Henry Kaiser (08:49) Introducing Terraform (13:08) Where electricity won’t work (16:50) The solar maximalist perspective (22:57) Terraformer Mark One (27:49) The role of intervention (37:30) American dynamism (47:36) The Origins of Efficiency, by Brian Potter (48:33) Children and education (37:30) American dynamism (55:15) Desalination (01:08:16) Lessons from leadership

• 0:00Speaker 00

  Non-alcoholic, I have insufficient filters as it is. You're perfectly filtered. Just the way you are. You're flattering me.

• 0:06Speaker 01

  You're a solar maximus. People should fully update their worldviews that solar is going to beat out everything.

• 0:11Speaker 00

  The solar wave is exponential, right? People are really bad at like, understanding where they sit on an exponential curve and then correctly projecting into the future. My grand plan is to put another 3 million feet, acre feet of water in the salt and sea, bring it back up to its historical like 1990 era level, stabilise level, stabilise its salinity, and we could do that, and it would pay for itself.

• 0:29Speaker 01

  Have you pitched the Trump administration on this?

• 0:31Speaker 00

  I did write a one pager for the Secretary of the Interior, but I think they've got a lot on their plate. It's not rocket science, and I'm sure they'll figure it out sooner or later.

• 0:38Speaker 01

  I mean, it's a little bit rocket science, you know, a lot of meat in there.

• 0:41Speaker 00

  Actually, it's probably rocket science.

• 0:43Speaker 01

  We had an Irishman here recently, and that was a two pint episode, so that got, that got nice enough filtered by the end. It's like, not that many for a session, but actually kind of a lot for a podcast.

• 0:53Speaker 00

  Especially if you go back to work afterwards.

• 0:56Speaker 01

  Casey Handmer is the founder of Terraform Industries, which is developing a machine that makes synthetic natural gas from sunlight and air. He's also a prodigious blogger and all-round polymath. Cheers.

• 1:09Speaker 01

  So, you started your career at Hyperloop?

• 1:13Speaker 00

  That's where I first escaped from academia, yeah.

• 1:15Speaker 01

  Yeah, a working career. Is Hyperloop ever going to happen?

• 1:19Speaker 00

  No. I think I can safely say that now.

• 1:21Speaker 01

  Okay.

• 1:21Speaker 00

  It's really kind of interesting because you had a bunch of very talented engineers who came together to take a crack at a project that they weren't sure was possible. And it turns out that of all the, it turns out that of all the known unknowns, they basically were able to solve them, like levitation, vacuum, construction, all that sort of stuff. It was this like weird kind of subtlety that, that ended up, you know, if I may say, derailing the whole project, which is that the faster you go, the further you want to be away from the surface of the earth. And you would understand this as a pilot yourself. If you make a habit of flying through canyons and mountains, sooner or later, the cone of ground that you can get to with a 7G turn completely intersects the ground itself and then you die.

• 2:00Speaker 00

  And, and the same thing applies, you know, whether you're in a tube or not. So the practical consequence of that is if you want to build a network of Hyperloops across the United States, you have to drill almost the entire way. Which is a lot of rock. You have to move a lot of rock. It's very expensive. And when you start to tell it, the numbers are California High Speed Rail, supposedly north of a hundred billion dollars now, you say, well, that seems like a lot of money. How many seven three sevens could you build and operate for thirty years for that much money? And it turns out you could move more people more quickly that way than with the hyper.

• 2:28Speaker 01

  You first turned me on to Henry Kaiser. Can you summarize the Henry Kaiser move for people and maybe explain why he's so understudied?

• 2:37Speaker 00

  That's an interesting one. So on my way in here today, I passed by the Kaiser Permanente just down the road. Of course, you have to pay your respects. Henry Kaiser grew up poor, left high school, started off in photography initially, then went into hardware, then into construction, a bunch of other things. Every huge project you've heard of, he worked on. He worked on Shasta. He worked on Grand Coulee. He was the

• 3:00Speaker 01

  Grand Coulee Dam.

• 3:01Speaker 00

  The Grand Coulee Dam. He was the principal behind the Hoover Dam, which at the time they called the Boulder Dam. Just insane work ethic. Would work twenty hours a day every day for his entire life, right? Like right up until he died at eighty five. And he really got going after the Hoover Dam at the beginning of World War Two, when just up the road here at Richmond and a few other places, started the shipyards where they took the techniques they'd learned at Hoover Dam and then applied it to shipbuilding and ultimately able to churn out hundreds and hundreds and hundreds of ships.

• 3:27Speaker 01

  Including the famous four-day Liberty Ship that was a propaganda exercise, but still they built a ship in four days. Like it's pretty effective propaganda.

• 3:34Speaker 00

  The more typical duration on the on the ways would be more like eleven days.

• 3:37Speaker 01

  Yeah.

• 3:38Speaker 00

  What a failure. Yeah. But like, just the idea of of building that many ships in today's America seems stunning. And this is nineteen forty. They invented employer-sponsored healthcare, which became Kaiser Permanente. That was actually initially introduced a few years before that.

• 3:51Speaker 01

  He effectively built the town of Richmond, California.

• 3:53Speaker 00

  Yeah, amongst others. His retirement project was the Hawaii Village Hotel in Honolulu. What else did he do? Did aircraft for a while. He was involved in the Philippine Mars. He was involved in the Spruce Goose. He did cars. He set up South American auto manufacturing, including Jeep, Willis Jeep, was Willis Kaiser Jeep for a long, long, long time. Just a bunch of different things. Now, why is he not so well known about? Well, he kind of took off at the peak of his game and went to Hawaii and his. Organizations, including steel mills and aluminum mills and cement mills and all kinds of stuff, continue to operate, but he didn't really do succession planning very well. And so when he died, all his assets flowed to his second wife and not to his children who'd been, or his surviving son, who'd been running the organization and the other executives. And she basically had no interest or ability to run it. So she sold off pieces of it here and there.

• 4:38Speaker 01

  So the embark on to fall apart.

• 4:39Speaker 00

  And left. But the pieces of it still exist. Kaiser Aluminum is still a going concern. Still a very large company. And Kaiser Permanente, obviously. But it's a really challenging problem. Like, how do you keep it together?

• 4:50Speaker 01

  Yes. There's an Elon-like aspect to his character where, so he started as a roads general contractor, like he built roads. And then he-

• 5:01Speaker 00

  Like 200-foot little strips of roads with mules and wheelbarrows and stuff.

• 5:04Speaker 01

  Exactly. So he was the guy you call to build a road. And then he just kept, he seemed to keep jumping to new technical challenges, all of them with the attitude that, eh, it's not that hard. It's only physics, you know, we can learn it. And so, you know, the dam, it's like, well, that's just like a big construction project. I've done construction projects before. How hard can it be?

• 5:23Speaker 00

  He'd done a lot of dams by that point. He actually formed a partnership with Latourno. So he was the first person, at least on the West Coast, to introduce mechanization to road building and canal building and so on. He did the Colorado River Aqueduct, which is this huge water course that actually runs very close to my house, all the way through Southern California, bringing water from the Colorado River ultimately all the way to Palos Verdes. Just insane stuff. But yes, this idea that you build this organization of ultimately some dozens of very capable, independent, autonomous executives, and then you compound and compound and compound and compound and compound, and just always like double or nothing, you know, find ways to do it. But also, he had personal relationships with the bankers since forever. And so like Bank of Italy came in and underwrote the Hoover

• 6:05Speaker 00

  Dam project, for example, and they all made a lot of money. But in those days, the way that the contracting was-

• 6:10Speaker 01

  Bank of Italy, which was an American bank that became Bank of America.

• 6:12Speaker 00

  Became Bank of America, yeah. So, sorry, for those of you not familiar with the intricacies of the finance history in the United States.

• 6:18Speaker 01

  Yeah.

• 6:19Speaker 00

  Well, Bank of Italy, which was a bank based here in San Francisco, was the bank that like opened its doors the day after the San Francisco earthquake. Started handing out capital to people to rebuild, even though it was going to take them six months to straighten out their accounts because everything had burned down, which they ultimately did. And that's exactly, they understood the role of the bank, which is like issue credit. Just fascinating stuff. And then in the late 1980s, so he died in 1969, late 1980s. Two biographies were published back to back, like six months apart and then,

• 6:44Speaker 01

  Yeah.

• 6:44Speaker 00

  And then nothing. It's kind of bizarre how quickly you vanished without a trace.

• 6:48Speaker 01

  Yeah. And again, there was this first principles thing where, you know, getting into shipbuilding, getting into cars, getting into planes. What is a plane but just a car that flies? It's just a willingness to jump into new industries that again, I associate more with hardware entrepreneurs than than software entrepreneurs. Maybe it's something to do with the hardware space, like there's more opportunities for for new startups. I don't know.

• 7:08Speaker 00

  I suppose he was a tinkerer. So he had multiple workshops, including some up at Livermore and some down here in Oakland and where you'd have like people on payroll, working on stuff, just like trying crazy ideas. He was into speedboat racing, had a state up in Tahoe where he'd like sponsor speedboat races and then ultimately pulled back a bit when a few of them died, I think. He just loved that sort of stuff and he was just, he was a mechanic. He was inventing things his whole life. But yeah, he had his hands in the stuff, so he said, well, you know, we can figure it out.

• 7:36Speaker 01

  Are there other underappreciated industrialist tinkers?

• 7:39Speaker 00

  Probably all of them are underappreciated. If you look at the, you know, the Gundo guys or whatever, like this kind of new generation of industrially ambitious hardware entrepreneurs. Almost all of them have like an origin story that goes back into their into their early teens or earlier of like just trying to make stuff. Right? And it's just the sweat equity. I mean, on the software side, I would say like, you started coding well before you went to school to learn how to code, right?

• 8:03Speaker 01

  Well, I never went to school to learn to code.

• 8:05Speaker 00

  But like the same idea, but like, I don't know, I interview people every day and I can't tell you how sad it is to like be screening someone who's got a 3.9 GPA out of UCLA, mechanical engineering school, which is generally pretty good. And you say, okay, this is your portfolio, but can you give me an example of one project you ever built using your skills that was not required for a class? And they're like, why would I do that? And I'm like, I don't know, because you just spent four years of your life like,

• 8:26Speaker 01

  Yes.

• 8:27Speaker 00

  deciding to specialize in this particular field of all fields.

• 8:31Speaker 01

  If you interpret Henry Kaiser, Howard Hughes, Elon Musk, they decide that their circle of competence is not rockets or roads or what have you, but is engineering and that engineering competence can be broadly applied to many potential domains. I associate this trait with you. Maybe for the listeners who are not familiar, summarize what Terraform is building.

• 8:55Speaker 00

  Terraform is building a machine that connects to standard quantized solar ray and produces natural gas. This is a pretty neat trick.

• 9:04Speaker 01

  Yeah, explain it for people who are, who remember their high school chemistry.

• 9:10Speaker 00

  Okay, sure. I just like, the philosophy of what this is doing is very strange because normally we would burn gas to make electricity, but like the solar has gotten so cheap that you can actually kind of do the reverse process and it makes financial sense, increasingly so over time. In terms of the chemistry, well, hydrocarbons made of hydrogen and carbon, it's not very complicated. So the source of carbon is like carbon dioxide in the air. Actually, this beautiful table is made of a biopolymer, which was also extracted from water and air, as water and CO2 that ultimately came from the air. We also make hydrogen from water. And unlike this poor tree, we don't have to use rubisco to do that. We can just electrolyze stuff at a couple hundred degrees Celsius and then feed that into a

• 9:54Speaker 00

  high pressure, high temperature reactor of the sort that were pioneered in Germany in like 1905. And then outcomes to natural gas, which is a very neat trick.

• 10:01Speaker 01

  Okay, so you take electricity from solar panels.

• 10:04Speaker 00

  Yep.

• 10:04Speaker 01

  You take carbon from the atmosphere.

• 10:07Speaker 00

  Yep.

• 10:07Speaker 01

  You take the hydrogen from water.

• 10:08Speaker 00

  Yep.

• 10:09Speaker 01

  And then you use those to produce currently short chain, in future longer chain hydrocarbons.

• 10:15Speaker 00

  Yeah.

• 10:15Speaker 01

  And the reason that you get carbon emissions when you burn gasoline is we're taking carbon that was sequestered in the ground. We had it stored away through, you know, all the many, many years of breakdown there.

• 10:27Speaker 00

  Dinosaur stuff, basically, yeah.

• 10:29Speaker 01

  Exactly.

• 10:29Speaker 00

  So you got this, so actually that carbon was originally in the atmosphere too, but it's been stored underground and it would stay there forever essentially. And so when you, when you burn gasoline or kerosene, you're participating in this kind of broad industrial scale, civilizational scale effort to pump carbon out of the crust and put it into the atmosphere with many positive like side effects of that process. In our process, the, the carbon comes from the atmosphere and is reused. So it's actually like burning wood. Which is technically carbon neutral. So it's like, that helps on the climate front, in that you can create a an economic forcing function around going and sourcing our entire civilization's carbon from the air rather than from the crust. It also helps from kind of a energy abundance front, which is to say, if you need sun, you go outside, but if you need oil, you have to be friends with Saudi Arabia.

• 11:14Speaker 00

  Or one of the handful of other places on earth that are generally uninhabitable but have oil. But everywhere pretty much that people live has enough sun that you can make, you know, can grow enough food to survive. And if you can grow enough food to survive, you can synthesize enough fuel to run your modern industrial economy. Plants are great, even this plastic one here. But their net throughput efficiency is about 100 times lower than than a synthetic process like the one we're using, in terms of like area of land into reduced carbon fuel.

• 11:40Speaker 01

  There are people who think that we should all be flying less because of the carbon impact. Whereas you think, hey, this is just a tech problem. We should all be flying much more and you can make zero carbon flying despite the fact that, you know, flying is one of the places where it's really useful to have hydrocarbons. But you can just produce zero carbon jet fuel. And then you can fly as much as you want in a closed system that is not emitting net new carbon.

• 12:00Speaker 00

  Yeah, I mean, would you disagree that flying is awesome?

• 12:02Speaker 01

  No, but I'm probably not the unbiased.

• 12:06Speaker 00

  Yeah, so one, one school of thought here would, would hold that like flying aircraft accounts for about 2% of emissions. And it's, it's almost all like relatively wealthy people who are doing it. And therefore it's like this moral valence to it in that we're screwing up the planet on behalf of the 10 million richest people on earth. And so what, what we should do in order to disincentivize this behavior is tax aviation fuel and then like feed the money into, I don't know, something to try and solve that social problem. And that will make aviation more expensive and less accessible. That's actually super like regressive, because, because people like you and I will still be able to afford to fly. We're not super price sensitive when it comes to, you know, flying, flying United. But, but actually it's the, the people on the margin who could, you know, it makes a difference between them flying, say, once in their life and five times in their life. Makes a big difference to have access to those opportunities and the privileges.

• 12:50Speaker 00

  So my radical point of view is, I want to find ways to make aviation fuel cheaper. And to build hypersonic magnesium aircraft that that use liquefied natural gas as their fuel and go much faster. And I want to expand the access to this privilege to everyone, not just the 10 or 50 million richest people on earth.

• 13:09Speaker 01

  If you say you want to avoid carbon emitting use cases, and so you want to avoid having kind of carbon emitting flights or carbon emitting cars, there are two ways we can achieve that. One is we've substituted a lot of internal combustion cars with battery powered cars. And that's one way where you just like stop, you eliminate the hydrocarbons altogether, or you could start using zero carbon, zero net new carbon.

• 13:33Speaker 00

  Synthetic.

• 13:34Speaker 01

  Exactly, synthetic fuels. Where do you think the world goes? Which things go towards electrification and just removing the hydrocarbons altogether? And which things do we go to using clean hydrocarbons?

• 13:45Speaker 00

  Yeah, I mean, I have opinions on this. At the end of the day, the market will decide.

• 13:48Speaker 01

  Sure.

• 13:48Speaker 00

  The market is correct. My prediction is that electric cars are really great. And that.

• 13:54Speaker 01

  We just had RJ from Rivian. It's a great product.

• 13:57Speaker 00

  Yeah, exactly. And that over time, we will see more other successful, hopefully Western electric car manufacturers that can compete with Tesla and Tesla can continue to grow its market share and so on. And it would not surprise me if when we're like crusty old men sitting here, like, you know, let's say, in our late 80s, that pretty much all the cars and all the trucks were electric, all the ground based transport was electric. But at the same time, wouldn't it be amazing if aviation by that point had grown by 20 or 50x? And so instead of 50 million people flying planes, more or less occasionally, it was 500 million or a billion people flying planes, getting to fly in planes. And just that by itself would would more than use all the oil that humanity currently uses.

• 14:35Speaker 01

  Yes.

• 14:35Speaker 00

  Right? So I think like the really energy intense, high speed transportation stuff will will stay fuel. Rockets, obviously, will stay fuel.

• 14:41Speaker 01

  Yeah, to give people an intuition for this, isn't it the case that versus current battery chemistry, jet fuel, I think, is two orders of magnitude, it's 100x more energy dense by unit weight than batteries. And so it could be a while before you can build the battery powered triple seven.

• 14:55Speaker 00

  At the end of the day, we have a planet that has a certain size and a certain gravity. And if you want to fly from one side to the other, then you have to go 20,000 miles. That's actually a little far.

• 15:02Speaker 01

  10,000 miles.

• 15:03Speaker 00

  10,000 miles. If you think like, well, what would, what, what could a battery chemistry look like that would have the energy density comparable to LNG? It's 55 megajoules a kilogram. Like, that's, I don't, I'm not saying it's impossible, but I would be surprised. I would be very surprised if that it could. That said, I would not be surprised to see some really high performance electric powered aviation in the future. Particular power densities are great, so you can do, I think, potentially much cheaper, much more safe electric VTOL.

• 15:26Speaker 01

  Yeah, there's clearly a bunch of exciting stuff.

• 15:27Speaker 00

  Short range electric supersonic.

• 15:28Speaker 01

  Beta, Jovi, all these guys.

• 15:30Speaker 00

  Yeah, exactly. Yeah.

• 15:31Speaker 01

  But sorry, you're going back to, you're dividing the world. So you think big aircrafts stay on hydrocarbons?

• 15:35Speaker 00

  Fast aircraft, fast aircraft, big aircraft, long range aircraft, hydrocarbons. Probably longer shipping would stay that way, like LNG is just so cheap. It's going to stay that way for a long time. Paints are going to stay hydrocarbon based.

• 15:45Speaker 01

  Yes.

• 15:46Speaker 00

  Chemicals, pesticides, herbicides, pharmaceuticals, and all that stuff, plastics.

• 15:52Speaker 01

  Industrial gas turbines are really backlogged right now. I think people don't realize this, but one of the easiest ways to bring new

• 16:00Speaker 01

  power online, if you're building an AI data center, for example, is you get an industrial gas turbine, which is basically pretty similar to a jet engine. In your vision of the world, shouldn't those data centers be powered by solar arrays and batteries? And why, that isn't happening yet, to the best of my knowledge. Why not?

• 16:18Speaker 00

  It's at a very small scale, but I think we're just at the beginning, beginning stages of, of kind of the market working this puzzle out. It doesn't happen instantaneously. So it seems pretty clear to me, I think, two years ago, I've got a blog post on this saying that like, we're going to have to go to solar and batteries for AI data centers at scale. And back then, everyone was still talking about like, oh, you're going to build SMRs. You know, and like, well, I love SMRs as much as the next guy. I used to teach nuclear physics.

• 16:38Speaker 01

  Small nuclear reactors.

• 16:39Speaker 00

  Of course, you know, they're great for submarines. But I, I think, I mean, you and I talked about this years and years ago, like, okay, what's it going to take to get 100 gigawatts of SMRs up and running? Like.

• 16:50Speaker 00

  It's not going to happen overnight.

• 16:51Speaker 01

  And we're kind of getting to the thrust of the, as I think about the KC worldview. It is, you're a solar maximalist and you think that people have not internalized the cost improvements and the learning rates of solar enough and realize just how radically different the world will be as a result. And you're building Terraform as one kind of bet on this, but you think just more broadly speaking, people should fully update their worldviews that solar is going to beat out everything. And then you're also a techno hardware optimist, that you think we should just be doing more hard things, we should be willing to make improvements, people should start hardware companies. Is that a good summary of your worldview?

• 17:28Speaker 00

  Well, I mean, people in general, maybe you shouldn't start hardware companies. It's kind of cursed in a way. But if you have the right skillset and the right mindset, and you're determined to just do the most ambitious thing you could possibly achieve, you should do it, right? Like, Henry Kaiser could have had a grand career doing road building for his whole career, right? But he saw this opportunity and he saw that the American West needed water and he's like, I should be part of this. It didn't take Einstein to figure that out, right? And he's like, well, the government thinks that the Hoover Dam should cost $38 million, it's about a billion dollars in today's money to build, and it should take seven and a half years. And they're going to pay us monthly. And I think that I can figure out how to shave two years off that schedule. So we'll bid $38 million, we'll get the bid, and then we'll finish it in five and a half years.

• 18:10Speaker 00

  And they did. Eight million goes in their pocket. And that's how government used to run acquisitions. So it works quite well. But at the same time, like, the solar wave is exponential, right? And we know from COVID amongst other things, that people are really bad at like, understanding where they sit on an exponential curve and then correctly projecting into the future.

• 18:27Speaker 01

  What is the rate of panel cost, of solar cost improvement?

• 18:30Speaker 00

  It's like 40 something percent per doubling of production and currently production's doubling roughly every two years. So you could say 20% a year, that's the panel by itself, right? That's not necessarily the cost that you end up seeing at the wall.

• 18:40Speaker 01

  Right. And that's the objection people make to this line of argumentation, is they say panels are a pretty small component of the overall installed cost. And so costs are not improving that quickly anymore.

• 18:49Speaker 00

  So that's true. But what tends to happen is, is like, the fundamental commodity at the base of your tech stack, like, decosts, and then other things behind it kind of fall in behind it. So it is, for example, the case that the cost per transistor for a computer chip has fallen astonishingly quickly over time, and yet Microsoft Windows license will still cost you a hundred bucks. Why is that the case? And it's true that actually Windows has gotten cheaper over time, especially when taken into account inflation, but it Track the same cost curve. And that's the same sort of thing you're seeing here. But if you're able to to build systems that sit on top of the fundamental technology with fewer intermediating layers, then you can take advantage of those cost savings. And then essentially, you're trading headaches for like the headaches of integrating with

• 19:32Speaker 00

  like the Aurora technology and then pass those savings on to your customers. That's absolutely essential for synthetic fuels. There's no two ways about it. You cannot run synthetic fuels unless you have the cheapest possible electricity you can get.

• 19:42Speaker 01

  And you think in a way solar power will get much simpler and dumber, where, for example, people used to optimize solar power by having movable panels that track the sun. And again, what happened as the panels became cheaper is just put more of them down. Don't bother having them follow the sun. And yeah, it costs a little bit more in the panel cost, but you save all that money in the super advanced hardware. And you think we have further to go in making the panels simpler? Like, how far does that go?

• 20:11Speaker 00

  Economically speaking, we should have deleted trackers in 2016. Right, like the trackers are the systems that move the panels around. Obviously, we're still in 2025 installing trackers.

• 20:20Speaker 01

  Why?

• 20:21Speaker 00

  Why? Well, because, you know.

• 20:23Speaker 01

  But the people who run these projects are smart and they want to make money. I don't think people are acting irrationally tends to be a great explanation.

• 20:29Speaker 00

  Some amount of irrationality, I think, is involved. And I also think that there are certain participants in this market who are quite happy with like cozy oligopolies and whatnot. So like, there's a lot of, I'd say, the area is ripe for disruption. So that was the first half of the question. The second half was, oh, can panels get cheaper? They certainly can. So if you if you look at like capital flows into solar panel manufacturing facilities in Southeast Asia or United States or Europe or whatever, like what assumptions they must be making about the economics in order to justify that investment? They could probably see line of sight to like another two extra action in cost. So we go from eight cents a watt down to four cents a watt. Just to like pause for a second, four cents a watt is an absurdly low price. So the electricity that comes out of that is like a thousand times cheaper than the cheapest food that humans can digest on a like dual for dual calorie for calorie basis.

• 21:13Speaker 00

  The limit of physics on how cheap a solar panel can be is like at least 10 times cheaper than it currently is because.

• 21:18Speaker 01

  How would you achieve that?

• 21:19Speaker 00

  A very, very thin layer of structured silicon on some kind of inexpensive plastic backing or something like that. In terms of like, well fundamentally, what do you need? You need some kind of um diode, like transparent diode. That that creates this like Fermi level nonsense that like allows the electrons to to do their thing as they go around. And like in terms of limited physics, that could be the most generic thing imaginable.

• 21:39Speaker 01

  Close your line, you know, we're blessed that one of the most abundant elements on the earth squeaks electrons when you shine a light on it.

• 21:45Speaker 00

  I don't know if that's my line, but yes, it's certainly the case.

• 21:47Speaker 01

  Well, it's a line you taught me. Maybe you didn't you didn't invent this, but okay. So solar panels can get a lot cheaper. Why aren't you working on, why does Terra Farm not produce really cheap solar panels if you think everyone's doing it wrong?

• 21:57Speaker 00

  I think that the companies producing cheap solar panels are doing it right. They're doing a fabulous job. It's very competitive.

• 22:02Speaker 01

  But you just said people are buying expensive solar installs when they should be buying cheap ones.

• 22:06Speaker 00

  Well, so you've got the the EPCs, which are the companies whose job it is to sell a solar array development to to a buyer like a utility. And they'll be buying the modules from probably a retailer. Probably not directly from the factory and they'll be buying the other various components and doing the engineering and the becoming the construction and the construction will be, you know, subbed out as well. So that that model obviously needs to be refined. Why am I not competing in that? Maybe I am. But making modules themselves, I don't I don't know why you would go into that fight unless you unless you absolutely had to. There's a there's a lesson here. This is what David Center talks about a lot, which is really good businesses are built by commodifying a compliment and the compliment be commodified here is is like as much as possible of the solar development, which is pretty much reduced to practice and commodified already at this point.

• 22:49Speaker 00

  And the part that you sit on top of that is the thing that takes that and turns into something useful for the end customer. And then you end up, you know, providing that value. Transformation.

• 22:57Speaker 01

  You sell a kiss. I think your nominal design size is one megawatt, right? Like that's what you guys are building for. And one megawatt, for context, is a few hundred homes.

• 23:05Speaker 00

  The power. Maybe in Europe.

• 23:07Speaker 01

  Okay, yeah, yeah. In America.

• 23:09Speaker 00

  Twenty or thirty homes here, I think.

• 23:10Speaker 01

  Oh, okay. Yeah, air twenty thirty air conditioned homes with a pool and everything.

• 23:14Speaker 00

  Ten thousand square feet.

• 23:15Speaker 01

  Exactly.

• 23:16Speaker 00

  Like a kitchen on the kitchen on the kitchen.

• 23:17Speaker 01

  Exactly, yeah. So that's a megawatt. And so you you sell a one megawatt kiss that's, you know, captures the solar power and produces the hydrocarbons.

• 23:27Speaker 00

  Instant oil well.

• 23:28Speaker 01

  Exactly. When will you have your first customer paying you for hydrocarbons that doesn't want you to turn it off? So not like a demo pilot or something like that.

• 23:37Speaker 00

  We're in the process right now of attempting to acquire land, which would then result in construction and development of these. All goes well, could be early next year. I strongly suspect at this point, you know, got a few bruises, not everything will go well. So we'll see.

• 23:47Speaker 01

  But potentially next year, you're selling oil.

• 23:51Speaker 00

  Well, natural gas, yeah. So actually, there's an interesting point there, which is, you know, obviously, there's been some political shenanigans here. And we've got to the point now where actually we're looking at doing methanol, like accelerating the methanol pathway as well. The reason for that is that natural gas prices are basically set by the marginal producer, which is not us, and it's pretty cheap. Now, I think that as our export capacity to Europe increases and our fields continue to deplete and so on, we're going to see that price rise quite a bit, but probably not next year. So in the meantime, we can produce methanol and sell that at, it's roughly six times higher revenue per carbon atom handled. Assembling molecules atom by atom is tedious.

• 24:26Speaker 01

  I'm sorry, where do you mean methanol in the economy?

• 24:28Speaker 00

  Methanol is, it's used for all kinds of things, but it's a precursor. So, so again, like this is somewhat subtle point, but the Terraform's job is to take, you know, sunlight, which is intermittent, but it's free.

• 24:42Speaker 00

  And in the form of solar panels, make electricity that's intermittent and then do a bunch of like very scary chemical engineering to it to turn it into a tangible, storable, offloadable commodity. Right? So we make hydrogen, but I would never dream of trying to sell that hydrogen as like our major product because just there's no mechanisms for transporting that to market. No one wants it in bulk. It's an intermediate product, not the final product. I mean, carbon dioxide, same story. Put them together, now we have something that you can store in a tank. Right? Methanol itself is chemically like in terms of boiling point and so on, it's very similar to water. So you literally store it in a tank. Then if you want to, you can pipe it across the road to a standard old school refinery and they can turn it into gasoline or something.

• 25:20Speaker 01

  Yeah.

• 25:21Speaker 00

  I could do that myself. I could build a refinery, but, but like what is Terraform good at?

• 25:25Speaker 01

  Yeah.

• 25:25Speaker 00

  We don't know much about making large scale chemical plants and we'd have to go and license the MTG process anyway.

• 25:30Speaker 01

  Yes.

• 25:30Speaker 00

  Methanol to gasoline process. So why not just hand that off to someone who can do that already and we just focus on the thing that we do really well.

• 25:38Speaker 01

  The methanol to gasoline process is like a proprietary process that you have to pay a

• 25:42Speaker 00

  Mobile developed in the seventies. I mean. But is it patented? Is it a trade secret? It's almost certainly out of patent at this point, but like. It's just protected by trade secrets? So the thing is, like, even if you, even if I had all the patents in front of me right now, and blueprints of the plant, right? It's just process knowledge. And access to half a dozen expert chemical engineers who've done this before, and then I went and built it, I promise you it would still not work. It's Walter White's cook. Something like that. I've not seen that show, but, but I mean, it's the same as brewing beer. Like, if you, I can buy all the pipes, right? And I can make something undrinkable. But. I, I believe that. Oh, yeah. But. I mean, you're Australian. It's near culture.

• 26:18Speaker 00

  No, no. I'm, I'm American now as well. Fifteen years Sunday. It's just, yeah, it's a very finicky process. I think it involves blood sacrifice to get it right, actually, to be perfectly honest. Okay, so that's methanol. And sorry, you mentioned you could do cement. How does that work? Well, so we, we already, we use what's called lime calcite cycle to capture CO2. And so that involves calcinating, calcium carbonate, which make calcium oxide, which is the active ingredient in cement. So like, that's sixty percent of the difficulty of making cement there. So we do that already. And then cement is about seven percent of global emissions. The challenge with cement is that it's forty bucks a ton, you know, at the plant. And so if you want to compete,

• 26:56Speaker 00

  it's like, one of the big mistakes that I see in, in my sector generally, which is like the climate-aligned energy sector and so on, this applies not just to the climate companies, but they say, oh, we figured out how to do this. That's, that's very impressive. But like, are you able to actually sell this at a price that people want to buy it? And then having a demo, having a shiny demo of something that works, but is not commercially viable. Even that is impressive in itself. I mean, Rivian, for example, they make a beautiful product, but they're yet to make money with it. But just getting a product to market that people like, that in itself is worthy of admiration. Yes. A beautiful car, they've just got to figure out how to delete about thirty percent of the components and probably in business, and far be it for me to criticize. But like, if you're able to make cement with a carbon neutral process and you're like sixty bucks,

• 27:40Speaker 00

  you probably have an argument that you could like find enough off-takers who want to pay for the carbon credits or whatever. Yes. Then you can stay in business. Yes. But it was six thousand dollars a ton. Right. It's very slim. How causal were the solar subsidies along the way, like Germany's, to solar success on the current cost curve? That's a good question. I think it's very hard to run the counter factual. I think that the Germany solar subsidies did not accrue. The appropriate reward to Germany that they probably should have.

• 28:09Speaker 01

  I don't think they were intending to.

• 28:10Speaker 00

  But it would be nice if they had.

• 28:12Speaker 01

  Sure, yeah, but I think they were more motivated by do-goodery than that. Well, these things are always bootleggers and Baptists, you know, there's a.

• 28:19Speaker 00

  The total amount of money they spent on it was not all that much in the grand scheme of things.

• 28:23Speaker 01

  But I guess what I mean is if we believe like learning rates are about the idea that with increased volume comes lower cost.

• 28:29Speaker 00

  Yes.

• 28:30Speaker 01

  And you get to be competitive. And again, now the.

• 28:32Speaker 00

  So like in the kind of fact where Germany didn't do it, right? Well, Spain still did it a little bit and Australia did a little bit. You know, maybe it would have delayed things by a year or two.

• 28:39Speaker 01

  Yeah.

• 28:39Speaker 00

  But but like as soon as say China started to do it at scale, they would have swept up that time difference and we'd be where we were today.

• 28:45Speaker 01

  Well, and then how impactful were the Chinese interventions in the market and.

• 28:49Speaker 00

  Enormously, yeah, enormously. Right. It's it's.

• 28:51Speaker 01

  So Chinese subsidies accelerated solar.

• 28:53Speaker 00

  China has deployed more solar in like the last three months than the United States has ever deployed ever. Like they're becoming an electro state and this is an important point that I think is widely underappreciated. The United States has formed an alliance with Australia and Japan and I believe India, I can't remember exactly, to basically try and control oil transiting through South China Sea and adjacent areas. Because they believe that will give them the the political leverage they need to force China to play nice. And China currently imports something at 12 million barrels a day from the Middle East. Across sea lanes they don't control and can't control past countries who are not all that friendly to them in general. And they understand this and the Virginia class nuclear submarine is being built in part to service the needs,

• 29:35Speaker 00

  you know, allied needs to police the Strait of Malacca. That submarine is due to be delivered to Australia in 2035. Do you think by 2035 China is still going to be as dependent on oil through the Straits of Malacca? I don't. At the rate that they're deploying right now, they could cut off that supply if they needed to. You know, in the same way that Germany was ultimately able to cut itself off from supplies in 1939 and it didn't really kill them until 1944.

• 29:57Speaker 01

  But it did kill them.

• 29:58Speaker 00

  Ultimately, yes, but that was mostly the combined bomber offensive delivered by a fleet of Hyperloops flying from, oh, no, wait, they were planes.

• 30:05Speaker 01

  But Sam, and so the way that China reduced its oil dependence is via electrification or via terraform-style synthetic fuels?

• 30:15Speaker 00

  As far as I know, they're not working on synthetic fuels, at least not terraform style, but it's not rocket science, and I'm sure they'll figure it out sooner or later.

• 30:21Speaker 01

  I mean, it's a little bit rocket science, you know, a lot of meat in there.

• 30:24Speaker 00

  Actually, it's probably rocket science.

• 30:25Speaker 01

  Going back to the subsidies, how did the Chinese subsidize solar panels?

• 30:30Speaker 00

  I actually don't know the specifics.

• 30:32Speaker 01

  Okay.

• 30:32Speaker 00

  What I do know is that, like, they basically offered government-backed zero-interest loans to manufacturers, for example, and then they also often...

• 30:40Speaker 01

  Cheap capital.

• 30:41Speaker 00

  Yeah, cheap capital, and then they also... so a lot of this technology is developed in Australia.

• 30:44Speaker 01

  I would like a government-backed zero-interest loan. That sounds lovely.

• 30:47Speaker 00

  Yeah, it'd be great. Actually, to be fair, the financial and legal situation in the United States, as much as you complain about it, would you rather have built Stripe?

• 30:54Speaker 01

  Oh, no, no, we can get this. I agree. The US is a fabulous business environment.

• 30:58Speaker 00

  It's a great business environment. The capital is cheap enough. That's the important thing.

• 31:02Speaker 01

  Where I'm going with this is if the German subsidies were somehow impactful, and if the Chinese subsidies were very impactful to the development of solar, what are the implications here for your grand theory of industrial policy and intervention, where if we want to be able to have nice things like solar panels and things like that, Silicon Valley tends to have this libertarian bent, you know, keep the government out of our innovation, but it seems like top-down government intervention was impactful in bringing solar to us sooner. It would have happened anyway, but it would have happened slower. And so what do you think sensible industrial policy is for the US or for whatever government with, you know, lots of state capacity?

• 31:46Speaker 00

  It's slightly beyond my pay grade there. No, I mean, it's an interesting point. You say, well, the counterfactual surely would be if China was a Western liberal democracy that was also grappling with the fact that it was enormously dependent on oil imports and it was unable to deal with Middle East and maybe wasn't totally friendly with the United States, but they were Western liberal and they had the same business freedom to take for granted here, would they have been able to mobilize the same amount of capital to go and build solar panels? And I think the answer is probably yes.

• 32:08Speaker 01

  But no, the counterfactual is just the Germans never get around to doing the subsidies, the Chinese never get around to doing the subsidies, all the other subsidies are too small. And solar happens much more slowly.

• 32:18Speaker 00

  I mean, maybe, but like at the same time, actually, I kind of sit on both sides of this issue. You can look at the process of Soviet industrialization. There's a fabulous book called Red Plenty by Francis Spufford that is kind of a fictionalized account of this. And you can say, isn't it amazing that the Soviets managed to go from like this kind of desperately undeveloped backwater, then level up prior to and during the World War II, and then World War II having lost 20 million people or something, put the pieces back together and then executed five-year plan after five-year plan after five-year plan, and then by 1980, they were more or less at parity with the poorer parts of the West. Isn't that amazing? You say, yes, it is, but if you look at GDP growth over that time, it's actually slower at its fastest point than the United States was at its slowest point, which indicates to me that miracles were achieved in the Soviet system, but even so, like, it would have been more efficient had they had a freer market, for example.

• 33:00Speaker 01

  Sure, yeah, yeah, but I think we can have something between no intervention at all is bad and communism is bad, you know, somewhere around that spectrum.

• 33:08Speaker 00

  Somewhere between?

• 33:09Speaker 01

  Yeah, yeah, yeah.

• 33:10Speaker 00

  I don't know, I feel like you're as a...

• 33:11Speaker 01

  I'm beating you, yeah.

• 33:12Speaker 00

  You've come from the British Isles, and it's a very British Isles thing to say. No, I don't think anyone in Silicon Valley really complains when the government shows up with a big check and says, we would very much like you to now build the atomic bomb or to build nuclear submarines or to, I know Palantir's doing great business right now, AWS does great business with the government, et cetera, et cetera, et cetera. And I think that's actually a pretty good example of that working quite well. And actually, like, you know, a lot of, you know, the secret history of Silicon Valley is all government work, Raytheon and Lockheed and so on. I mean, indeed, Terraform is right across the road from Skunk Works, which was itself, obviously, largely government-funded. You know, I think that's a pretty good way. I think that Congress, you know, the way that US soft power always works is with fat water bills, and that tends to be metabolized well by the US economy.

• 33:54Speaker 00

  Do I think that we should, you know, raise taxes to spend more money on like, you know, DOE picking winners in the US domestic solar panel manufacturing space? No, I think that probably distorts the market overall.

• 34:03Speaker 01

  But are there places where we should be picking winners?

• 34:05Speaker 00

  Probably, yeah. Or there are at least places where there should be more like decisive government intervention.

• 34:10Speaker 01

  Yeah.

• 34:12Speaker 00

  Well, I think on the energy front, countries that have cheap energy can afford to screw up a lot of things. And they're still, basically, everyone is prosperous. And actually, I would characterize the United States as one of those countries, right? Not a, not a, like, over-governed country, and in many ways, a barely governed country.

• 34:27Speaker 01

  But I think people in the US don't realize how expensive electricity is in other Western countries.

• 34:32Speaker 00

  They probably don't, yeah. Although the people on the, on the Twitter sphere who are like, you know, the Europol meme or something. By the same token, there are very, very few developed Western liberal industrialized economies that have very expensive energy, where they do have, like, good GDP growth, for example, and good wealth. And, you know, you say Japan has expensive energy, and their GDP has been, like, pretty much flat, and UK, GDP flat. Singapore even is like, you know, GDP per capita is not spectacular by comparison to the United States. And so the moral of the story is, when a new technology like solar comes along, you need to make sure that, that your markets are able to deploy that at the scale necessary to make sure that you stay ahead of the pack. Because, you know, we're already in a situation right now where China is outproducing the United States on all the metals, like steel, aluminum, magnesium, and so on and so forth, by like a factor of between 10 and 100,

• 35:18Speaker 00

  because their energy is cheap, because they basically have interest-free loans to completely unregulated coal mines, amongst other things. And basically, to the, to the victor go the spoils. So that's something we should be careful about.

• 35:29Speaker 01

  If you could wave a magic wand to speed up US solar deployment, not manufacturing, just deployment, what would you, what would you do?

• 35:36Speaker 00

  The, the single biggest intervention you could allow is by right development of solar panels on private land. And ideally, even like BLM land would be great. BLM land has been set up for ranching, and you can run your cows on it with very little friction. And, and I think sections of that should be set aside for like-

• 35:53Speaker 01

  It's just electron ranching.

• 35:54Speaker 00

  You can put your solar panels there, and you have, you have something like California's fire insurance scheme, right? So that if, if, you know, one batch of solar panels goes bad, or after 50 years we have fusion, we want to take them out, there's money there that we can take them out and put them, put them away, it goes back to being desert. But right now- To permit a solar array, even on private land, for the sort of applications we want to use.

• 36:14Speaker 01

  Yes.

• 36:15Speaker 00

  It's often just as tiresome and expensive and difficult as permitting a new chemical plant or, you know, something that's

• 36:21Speaker 01

  Much dirtier.

• 36:22Speaker 00

  Much dirtier and much worse for the, and actually, I think solar overall is a net benefit for the environment. We should be encouraging it. It should be like, you get credits for deploying more solar on government-owned land.

• 36:30Speaker 01

  Yes.

• 36:30Speaker 00

  Ninety percent of Nevada is BLM, is like federal land.

• 36:33Speaker 01

  Yeah.

• 36:33Speaker 00

  And that's the best place. The reason it's federal land is because they couldn't give it away back in the day. Right? Because it's so inhospitable.

• 36:40Speaker 01

  I'd never thought about that. It's the land that's left over.

• 36:42Speaker 00

  Yeah.

• 36:42Speaker 01

  Canada has this too, where a huge amount of Canada is Crown land, and it's just the untitled document of Canada. You know, it's just the land that they never did anything with because all the settlements happened, you know.

• 36:51Speaker 00

  No one ever ran a railway through it, because why would you? Yeah, that would be nice. And every time I fly to like Texas or wherever, I look at the

• 36:57Speaker 01

  That is very empty. Yeah.

• 36:58Speaker 00

  Man, like, there's about a hundred valleys in Nevada, and one of them is already like basically used for nuclear testing, and one of this for Vegas, and one of this for Reno, and there's like ninety-seven left out. One's a Burning Man.

• 37:07Speaker 01

  Have you ever looked at the plane flying near Vegas? And you see the big solar collector, and it's like something out of a sci-fi movie.

• 37:12Speaker 00

  I'm part, yeah.

• 37:13Speaker 01

  Really catches you by surprise.

• 37:15Speaker 00

  They're gonna close it down, so enjoy it.

• 37:16Speaker 01

  Are they?

• 37:16Speaker 00

  Yeah. No, never really worked very well.

• 37:19Speaker 01

  Okay.

• 37:19Speaker 00

  But as you're flying, actually past Henry Kaiser Monument, Hoover Dam, near Boulder City, there's a huge solar arrays right there, if you've ever landed at that airport. Basically, all the way from there down to the border is solar now.

• 37:29Speaker 01

  That's cool.

• 37:30Speaker 00

  Which is good.

• 37:31Speaker 01

  We're talking about, you know, Chinese manufacturing here, and obviously, the American dynamism movement has a lot of energy right now. It feels like there are some things where we are obviously not going to, obviously to me, not going to be competitive in manufacturing, like just general light electronics, like that stuff doesn't seem to me like it's consumer electronics. Is not necessarily coming back. However, you know, we just had Keller from ZipLine on, talking about kind of the drone manufacturing they're doing right here in South San Francisco. You guys are manufacturing in Burbank, Pearson's. Do you think it kind of makes sense to think about? Areas of manufacturing we should be trying to win or trying to succeed in?

• 38:12Speaker 00

  Yes.

• 38:12Speaker 01

  And then, okay, then what are those areas? What would you say, whatever, it's not coming back, we're just gonna let it go? Versus these are the ones that we really want to win? Or there's national security consideration?

• 38:23Speaker 00

  Yeah.

• 38:23Speaker 01

  Or what have you?

• 38:24Speaker 00

  Well, conventional wisdom would say, well, we've got to maintain our supply chains for our national security stuff. So we'll keep them as a life support, but all the rest doesn't matter. And we've seen how well that goes.

• 38:31Speaker 01

  Right.

• 38:31Speaker 00

  I think you actually can't afford to say, well, we'll just let the Southeast Asians keep consumer electronics manufacturing. If you want to have the ability to rapidly prototype electronic systems, you've got to have that here, servicing the US market, which is the strongest consumer market on earth. There's no reason you can't do it. No, you don't want to have like 14-year-olds in sweatshops soldering stuff together. But if you look at the Bastrop plant where Starlink terminals are made, it's all in the United States. It's 99.99% automated, and that's how we can do it. We should be doing it here. I grew up in Australia where the limited manufacturing sector we had just evaporated overnight when China basically came in. And now Australia is in deep trouble, really, on the basis of this. But at the time, it was like, well, we can't compete with China. It's impossible. Couldn't, could never compete with China. You know, on what basis? There's no reason why you can't compete.

• 39:15Speaker 00

  Obviously, your factors of production are different, so you have to balance them. But like, this whole idea, like comparative advantage, that the United States should just be intrinsically bad or like uncompetitive at certain kinds of things is crap. Like, this has every advantage you could possibly want.

• 39:27Speaker 01

  What success stories should we be looking at to model US manufacturing after? So you mentioned SpaceX.

• 39:33Speaker 00

  How about its own?

• 39:34Speaker 01

  How do you mean?

• 39:35Speaker 00

  The US was, and in some ways still remains, the manufacturing powerhouse, absolute titan.

• 39:39Speaker 01

  Yes, but again, I feel like that was quite a different environment of more trade barriers and different labor dynamics.

• 39:48Speaker 00

  Yeah.

• 39:48Speaker 01

  And I'm saying, if you think about manufacturing today, SpaceX's Starlink terminal manufacturing plant, which is very impressive and much larger scale than people realize. How many Starlink terminals are they producing now?

• 39:59Speaker 00

  It must be like a million a year or something.

• 40:00Speaker 01

  Yeah, it's a lot. But yeah, who else should we be looking at and saying, we should be doing more of that kind of thing here?

• 40:06Speaker 00

  Well, in terms of US, I think Chris Powell's doing really well at Hedrin. But I think-

• 40:10Speaker 01

  What does Hedrin do?

• 40:11Speaker 00

  They make parts for military aircraft mostly.

• 40:14Speaker 01

  Okay.

• 40:14Speaker 00

  But the idea is you increase the machine-to-machinist ratio with software, which is not exactly astounding. Like, how many cores are in your phone? I mean, it's actually quite hard to do in practice. And I think the edges or whatever, like the corner cases that the current entrepreneurs are grabbing onto for mass production is like, well, I don't have $10 billion to go and set up, you know, Foxconn 2.0 here in the United States, if I even wanted to. But I could- Build this like really high value product for like a discerning customer, US branded type stuff. And so Sam D'Amico, for example, down at Impulse has done that with his stoves, right? It's a premium product. When people need to replace their stoves, they do it in a hurry. He's as available, has all these other ancillary benefits because it's so nice, you know, you can sell it. They're actually being produced in China there.

• 40:57Speaker 01

  But isn't it hard to rely on producing premium products like?

• 41:00Speaker 00

  Well, that's where you start, right? That's the beachhead. And then, and then you diversify outwards. But if you're able to build a mostly automated factory, they can produce a few thousand units a year, then it's relatively straightforward to go from there to 10,000, 100,000, a million. And then as you get those economies of scale, continue to push the price down. I saw some stat the other day that, that Apple had spent $100 billion on manufacturing investment in, in China. Imagine if they'd spent it here. Do you think they could not have succeeded in building a really nice iPhone, even here in Silicon Valley, if they spent $100 billion on factories?

• 41:31Speaker 01

  People in tech follow Elon Musk and, you know, have read the Walter Isaacson book and they're familiar with the Irvin, you know, know much about how he works.

• 41:39Speaker 00

  Ashley's book is good too.

• 41:40Speaker 01

  Ashley's book is very good as well. What do you think, never mind kind of people at a distance, or, you know, people are very bothered by Elon or something like that, people in tech who kind of follow this stuff, what do you think they still misunderstand about the Elon production function?

• 41:54Speaker 00

  Oh, that is a good question. Well, I mean, I think, I think actually it would be, I'd be more surprised if there was someone who had succeeded as well as Elon had in his various fields who was better liked. That makes sense. Like you should expect to make enemies if you're going to be that effective in that sort of area, for whatever reason. I mean, he has his own particular.

• 42:07Speaker 01

  So you think the hard-edgedness is not

• 42:09Speaker 00

  Oh, yeah.

• 42:10Speaker 01

  an incidental trait? You think it's part of the success?

• 42:14Speaker 00

  Yeah, yeah. I didn't always think that. I used to think that, that probably was possible to build an organization as successful as SpaceX without, you know, being quite so uncompromisingly demanding on your employees.

• 42:24Speaker 01

  And then you started a company?

• 42:25Speaker 00

  Then I ran a highway company and I'm like.

• 42:27Speaker 01

  And so how did you update?

• 42:28Speaker 00

  Many hard lessons learned over and over again, until I finally worked out that they're actually, people are in general capable of achieving far more than they would think. But, but almost always they require extensive motivation to do that. And usually it's like. I expect you to do better, I don't think.

• 42:42Speaker 01

  But there are lots of people who are very successful and generally are regarded as pretty nice people.

• 42:48Speaker 00

  Successful, yes, but successful in building like competitive hardware manufacturing companies.

• 42:53Speaker 01

  Okay, so you think it's a thing to hardware?

• 42:55Speaker 00

  Hardware is, I think, well, I mean, statistically speaking, it would seem that that a software company is a shorter ticket to ungodly riches than a hardware company. That would be my guess.

• 43:05Speaker 01

  Yeah, okay, so that's one thing. You have to be talking about hard edge. What else?

• 43:09Speaker 00

  I think he works really hard. I think that he compounds his own knowledge. I think he's super smart. He understands that that physics is the law, everything else is a recommendation. But yeah, I don't know at all, really. So I can only kind of speculate from the outside. Actually, I think that one of the things that frustrates me somewhat about Isaacson's book is like, Isaacson is quite clearly very sharp guy, right? And he spent a year and a half with Elon. And yet, if you read his book, particularly like the last third or a quarter of it, which is talking about all the recent stuff, the Twitter stuff and so on. It's just, it's very clear that he doesn't get it. He doesn't understand why Elon is doing these things that seem completely crazy, right? But yet, he keeps like rolling sixes, like, why is that the case?

• 43:49Speaker 00

  And my point of view on this, and I wrote a blog post about this at one point, was if I see someone who is pretty successful, do a series of crazy things over and over again, and yet they work out every single time. Either they have root access to the simulation, or their model of reality is better than mine in some key way that I don't understand. But I might be able to understand if I assume that they made a sensible decision, given knowledge that they must have, but I don't have. What can you infer about this?

• 44:16Speaker 01

  You've talked about how many SpaceX alumni have gone on to start rocket companies that are essentially just trying to build Falcon 1. And despite the fact that SpaceX was kind of doing that for the first time and had to learn lots of hard lessons, they got to work at SpaceX and they knew all the lessons and they'd seen everything, and still, a lot of them have struggled. I haven't heard you espouse a theory as to Why they've struggled?

• 44:44Speaker 00

  Uh, it's gotta be really hard. Yeah. Well, I know that a lot of people leave SpaceX. And a few of them are like, I'm gonna start my own company and I'm gonna try what it's like to be Elon. And then they get horrible experience. And some of them are like, I'm glad I got a horrible experience. But I think a lot of them are like, well, I always disagreed with this particular technical choice. And then they make it differently and then the rocket explodes. Maybe it's because that choice was actually correct, they didn't understand it. And maybe it's because it's unlucky. Maybe their organization didn't work well enough. In the space sector, at least, it's quite astounding the extent to which SpaceX is dominant. Right? This is not the case that like, Apple has what, twenty, thirty, forty percent market share in smartphones? And Pixel has ten percent and Huawei and so on has a... This is like, SpaceX has like ninety-five percent market share for the entire world.

• 45:27Speaker 00

  And then the second place getter is like China or something. And then like, the next, next closest was like fifteen years ago. United States is main launch company. And then it's this, it's, it's very much what I'd call an anomaly in the matrix. Solely getting cheaper every year is also another anomaly. It's like a big wave that can be surfed and people don't really recognize it or how to use it or how to deliver it.

• 45:47Speaker 01

  What advice do you have for highly technical youngsters, say, you know, someone who's in college listening to this?

• 45:54Speaker 00

  Damn. Well, don't validate my life choices by repeating them.

• 45:59Speaker 00

  But you know, realize that your life is on a spectrum, like a continuum. And, and certain things are easy now and they'll be hard later and vice versa. And, and if you see yourself as someone who's, you know, the, the technological elite, you should challenge yourself as much as you can. Right? You should go out and find a worthy challenge. And yeah, just, just level up. You know, don't, don't go to some place that, that puts you in a holding pattern for ten years. You've only got forty something years of, of really good work, you know, ahead to level up as much as you can.

• 46:24Speaker 01

  Go work somewhere that's very demanding.

• 46:26Speaker 00

  As much as you can take, for as long as you can take it. Yeah. People have, probably more than a hundred people have asked me over the years, oh, I got into grad school and I got into SpaceX. What should I do? And I said, well, the psychic damage is the same, but the pay is better at SpaceX. Which is hard to believe, but true. And I really believe that, you know, so. You wanna go and work with the best people on the things that you care about, whoever they are, wherever they are, whatever it takes. Don't settle for, for second best. On the other hand, if you've recently graduated or you're about to graduate, it's more important that you get a job and you kill it. Do really, really well, straight out of school. Than that you sit on the job market per year and then compete against the next brand. Like if you it's I see a lot of resumes, no doubt you've seen a lot of resumes over the years and really you're only as good as your most recent job.

• 47:11Speaker 00

  And and if your first job out of school is super important to to like set the foundation upon which you can build the rest of your career, even if it sucks, stick it out for 18 months to two years and make sure everyone there has something nice to say about you. And then you can then you can you can you can build on that. But yeah, it's really sad when you see someone, you know, ostensibly decent degree out of decent school and and they kind of fail to launch in some way.

• 47:37Speaker 01

  As Casey is describing, and as we've heard a lot about on Cheeky Pint, prototyping is easy, but production is hard. A surprisingly large slice of human progress comes down to reducing the time and cost of industrial production processes. In Stripe Press's newest book, The Origins of Efficiency, author Brian Potter breaks down precisely how that progress happens. He draws on 100 years' worth of research to explain the fundamental steps of a production process and how each can be made faster, cheaper, and more reliable. He includes detailed examples from steel and semiconductors to wind turbines and container shipping to Tesla and the Model T, and he discusses how the principles of production efficiency can be applied to domains like construction, medicine, and education, where much work remains to be done.

• 48:19Speaker 01

  And Brian should know, he's the author of the popular Construction Physics newsletter and worked for 15 years in the construction industry. The Origins of Efficiency just came out, you can buy it on press.stripe.com, where we offer all Stripe Press books.

• 48:35Speaker 01

  How are you planning to educate your kids?

• 48:37Speaker 00

  Mostly benign neglect, I think.

• 48:39Speaker 01

  No, but actually.

• 48:40Speaker 00

  Well, they're in the local school.

• 48:42Speaker 01

  But presumably that's not the the limit of your plans.

• 48:44Speaker 00

  Yeah, I mean, so I'm not worried that like they're going to find a uninspiring academic environment at home, right? Like maybe a house full of books, that's going to be fine. So why do we send them to school? To get the stuff they can't get at home? Like, how do you deal with people who aren't like your immediate relatives and obsessed with space as you are? That's it. It seems not entirely unlikely to me that at some point, you know, the schooling system will. And not be quite sufficient in some way.

• 49:09Speaker 01

  But in particular, the Bloom two sigma effect is one of the biggest effects in education. The idea that you get a way better, you get way better outcomes with one on one tutoring focused on mastery learning, where you only progress through topics. Once the student has mastered the prior topic and you kind of move your way sequentially through things and schools almost definitionally can't do that.

• 49:37Speaker 00

  They can't do that, yeah. I actually think that maybe the Bloom two sigma effect, you can kind of achieve it on your own if you're able to follow your areas of curiosity and have access to resources and learn. So actually, in my case, maybe probably the reason I'm not a chemist, for example, is that I didn't have access to chemistry textbooks until I was in late high school. What I want for my children, especially in a world with like AIs and all kinds of nonsense coming, like, I don't really care what they do. As long as they they love it and they're as good as they can be, right? They have to love it and they have to they have to try, they have to sweat, they have to contend with the material.

• 50:10Speaker 00

  Because, you know, incredible privileges have come to them and to me and to some of my more recent ancestors. And I feel like you do have like a social obligation to not waste that opportunity.

• 50:22Speaker 01

  Do you buy the explanation on the falling fertility rates that we've just made it too expensive to have had kids? Like, have you seen the booster seats is contraception paper?

• 50:32Speaker 00

  Yes, yes.

• 50:33Speaker 01

  You know, and all these.

• 50:33Speaker 00

  I just forwarded that to one of my congresspeople, actually, and they were saying, come to California Highway Patrol session on fitting your car seats. And I was like, how about we just tweak the law so if you have three or more kids, you don't get them taken away for putting them in a sedan. For reference, something like fifty eight children's lives saved in the United States every year by statistically by by car seats and something like ten thousand births averted by families who cannot afford to upgrade their cars, which is a bit of a problem. No, even if you had all those ten thousand additional births, it still wouldn't reverse the demographic decline.

• 51:05Speaker 01

  Well, but that's one example where it just, I think people don't fully internalize the barriers to having kids. So, you know, car seats is a, again, it it sounds like almost an oddly trivial one, but it does have a measurable measurable impact. And that's before you get to housing, education, you know.

• 51:20Speaker 00

  No, I think I think you could certainly say, well, what if we took all these things that on have some like marginal effect and we just turn them all up to eleven and saw what happened? And I think you'd make a plausible argument that you'd see a bump in fertility, especially if you had like a. Pro-natalism law package that did all these things at once. And so you start a national conversation around how like kids are great, meaning to have more kids. And we've specifically focused on existing families and got them to go to like N plus one or N plus two. Make a big difference. And that's what Australia actually did when I was in, I guess, my teens, so let's say around 2000. Was like, you know, have a third child for the treasurer. But, you know, the same, same problems kind of stick there. But this is obviously a very complicated problem because there are many countries on earth where these counterfactuals exist at least in part. And it hasn't miraculously turned around the birth rate.

• 52:01Speaker 00

  And actually, the number of developed, you know, Western liberal democracies where their birth rate is not like either already catastrophically low or falling fast is very, very small. And probably will be zero before long. But it did occur to me today when I was having spoken to a friend, a friend of mine about, about children, whether or not to have children and so on. That our revolution did not depend upon us in the past, having like a deep obsession with the need to have children. Right? Because we didn't have contraception and we had sex drive. So, so like children would just happen and then, but like, once you have kids, then you're all about kids, right? As soon as you hold the baby in your hands, you're like, kids are fucking great. This is great. Then you're like, I might have six more of these. Okay. But until you have that first one, you don't realize, you don't know. It doesn't, it hasn't come in yet.

• 52:45Speaker 00

  There's no evolved necessity to go out and have kids. Whereas like with food, it's obvious. People, people get excited about food. So sucks to be evolution in that case, I guess. But actually, like, if you run the math on, on a demographics right now and kind of how dire it is, even if, like, as a result of listening to this podcast, every single person in the West just like immediately started just calling out babies. It still wouldn't really, for, for many decades, halt this hole we've dug up, dug for ourselves. There's basically no way out of that. There's no way to avoid it. I think the news that came out yesterday was the triple lock in the UK is going to go up by 4.7% against a backdrop of inflation of 2. something percent and economic growth of like 0%. To us, the triple lock?

• 53:29Speaker 00

  The triple lock is the process by which the pension in the United Kingdom is increased by the biggest of three separate factors. One being employment rate, one being, I know exactly what they are, but I think one's inflation, one's GDP and one's something. So it's like this insane ratchet, right? And the dependency ratios, of course, increasing because people are getting older and older and because we're able to keep people alive for longer. And these are actually all good things, right? But we need to have some way of thinking rationally about paying for these things or making sure we're able to provide for people adequately. Because otherwise we'll burn the seed corn. And I was in a state in France recently that the the average pension is now higher than the pension is now higher than the average income for working age adults in France. Hmm, this could be a problem. And I just don't think there's any way out other than, you know, our institute gets

• 54:12Speaker 00

  this act together, invents a pill that keeps me young and everyone else young and lifts this burden of like non-negotiable disease from every single person who's lucky enough to live, you know, through their youth.

• 54:23Speaker 01

  Don't we also maybe get bailed out by AI productivity growth?

• 54:28Speaker 00

  Maybe, but do you really think that like 10% year-over-year productivity growth is going to like localize itself in UK?

• 54:34Speaker 01

  No, but but just.

• 54:36Speaker 00

  So say it occurs in the United States, the United States is going to be like, oh, here's a big transfer payment for all your old people? I don't think so. Right? So it is certainly the case that AI seems likely to produce enormous additional wealth, where that wealth will find its way to alleviating the tax burden on the working class in, you know, the 200 countries on earth that don't have their own AI industry seems somewhat unlikely to me. Whereas a pill that like, I mean, actually already Ozempic probably does this, slows down your aging by some factor, would be enormously important. No one could have seen this coming. No one, no one could have possibly anticipated that social security and other stuff would result in ever increasing dependency ratios. And we're just fortunate that we got rich so fast that it took this long to bite. It's a big problem.

• 55:17Speaker 01

  And I realize I'm asking you for ideas for hardware companies. You're always banging on about desalination. Presumably that's a good hardware company.

• 55:24Speaker 00

  I'm working on it. I already have a hardware company doing it.

• 55:26Speaker 01

  Oh, you do? Tell me about your desalination company.

• 55:28Speaker 00

  So desalination is not strictly ripping oxygen off stuff to make fuel or metals, but it does involve ripping water off salt. So, you know, the oxygen in water is what makes it polar. Yeah, so terraform desalination is the is the project. It's very early stages now, but it's kind of insane to me that we live in the state in California.

• 55:46Speaker 01

  And can you also just do it with electricity and not much else?

• 55:49Speaker 00

  Yeah, yeah.

• 55:50Speaker 01

  What's the reaction?

• 55:51Speaker 00

  The reaction is that the salt, which is dissolved in water, gets separated somehow, either thermally or or with filters. I mean, there's probably 30 different ways of doing desalination.

• 55:59Speaker 01

  Oh, yeah, but what's the terraform approach?

• 56:00Speaker 00

  The terraform approach is thermal. Yeah, so basically distillation on steroids.

• 56:04Speaker 01

  I see, so you're just boiling off the water and recapturing it?

• 56:06Speaker 00

  Yeah, essentially.

• 56:08Speaker 01

  Okay. Do you have to boil it?

• 56:10Speaker 00

  There has to be a phase change.

• 56:12Speaker 01

  Okay.

• 56:13Speaker 00

  Boiling, when people think boiling, I think hot, but you can actually boil at low temperatures if you reduce pressure. So we're getting into into trade secrets here and there's not, I mean, there's nothing new under the sun. The challenge is to terraformize this technology and make it cheap enough that you can run it intermittently off solar arrays or solar power in general and still make money. That's quite challenging, but it is insane to me that we live in the state in California where they're talking about doing this this project under the delta in Sacramento, the delta. You spend $20 billion on it and it's going to potentially recover on the order of 100,000 acre feet of water a year. If you spent $20 billion on desalination, you could literally double the flow of the Colorado. Five million acre feet.

• 56:51Speaker 01

  So why is California ignoring desalination?

• 56:54Speaker 00

  Again, I think it's like anchoring to the past where like the way you got water was you went and built a big dam in the mountains and then built canals and stuff. Henry Kaiser, eat your heart out. And desalination, I mean, there's the odd desal plant here and there, but they're very small. They're mostly set up to like help cities out.

• 57:08Speaker 01

  Oh, there is desalination in California already?

• 57:10Speaker 00

  Yeah, there's a plant in Santa Barbara, there's a plant, I think in San Diego, maybe.

• 57:14Speaker 01

  And they supply water for the city just?

• 57:16Speaker 00

  Nominally, they don't actually, it's only if the city runs short on water, then they do.

• 57:20Speaker 01

  Their emergency desalination.

• 57:21Speaker 00

  They run off the grid and they're reverse osmosis plants, they're quite expensive to operate and they're also, they have wear parts. So as you run them, it costs money.

• 57:29Speaker 01

  But yours will not have a significant wear part.

• 57:31Speaker 00

  Hopefully not. I mean, it's still like, it's mostly spreadsheets and like some doodling in the kitchen at this point. Which is how Terraform started really. And then the garage and then in the castle. But like California has more coastline, lower coast than any other state, maybe Alaska has a bit more, I don't know. So why are we short on water? It's right there, like.

• 57:48Speaker 01

  Are there private entities you can contract with just because government procurement cycles are very long and politically involved in everything like that?

• 57:53Speaker 00

  Yeah.

• 57:54Speaker 01

  Can you sell to the city of Irvine, like are there ways?

• 57:56Speaker 00

  Yeah, I mean, that would be the way to do it or to sell directly to a consortium of farmers or something like that. The challenge in California is the California Coastal Commission. Which I believe you've probably encountered. And for a variety of a variety of interesting and I think mostly valid reasons, they sought to try and slow down development of the California coast, which is fine. I don't want to develop the California coast. I want to bury a pipeline under the beach that goes out to the ocean and sucks up some water and then puts back some salty water and it's fine because the ocean's made of salt water.

• 58:23Speaker 01

  Are you putting back salty water?

• 58:25Speaker 00

  Yeah. So what happens is you take off salt water.

• 58:27Speaker 01

  Yeah.

• 58:28Speaker 00

  So you take 10 gallons of salt water and you pull out one gallon of fresh and then you have nine gallons of slightly saltier water.

• 58:33Speaker 01

  Yeah, yeah.

• 58:33Speaker 00

  That go out and mix and it's fine because that's how rain is formed in the first place. Dilution is the solution.

• 58:39Speaker 01

  The ocean, it'll be fine.

• 58:40Speaker 00

  It'll be fine. Now, if you if you were to take out nine and a half gallons of fresh water and put back half a gallon of super saturated brine, even that would be fine if you mixed it in. But there's no need to. So that's a general plan and just do that at massive scale and at the lowest possible cost. So I believe that it should be possible to produce water, desalinated water for 99 bucks an acre foot, which would be transformational, right? That means it's no longer like, oh, well, if we're really short on water, we'll turn on the desal system and you can flush your toilets and your water. It's like, you know, the rain came in a bit weak this year in the Sierras. That's fine. California, Central Valley, agriculture will be fine. We need about 14 or 15 million more acre feet to saturate demand. That's about double what we currently have. Bring all this additional agricultural production online, reduce costs, improve the ecological impact of farming on places that are short

• 59:25Speaker 00

  on water anyway and like pay for itself.

• 59:28Speaker 01

  Can you do stuff in the in the Delta where it is brackish without running into the California coast? Permission?

• 59:34Speaker 00

  I honestly don't know. That could be tricky because there's

• 59:36Speaker 01

  I know there's sense about the hydrology there regardless.

• 59:39Speaker 00

  Yeah, you might want to run a line, for instance, along the floor of the bay all the way out to the current, the coastal current, where you put the

• 59:45Speaker 01

  Oh, could you be increasing the salinity of the

• 59:47Speaker 00

  Something like that, yeah. The best way to pay for this actually is land value appreciation. So like my hobby horse is the Salton Sea, which is pretty relevant to your northern California liberal elite crowd, but us true Southern Californians. The Salton Sea was formed as a result of an irrigation accident in the early 1900s and it's about the same size as the entire San Francisco Bay. It has about 110 miles of coastline and you could not give it away. It's owned by a patchwork

• 1:00:11Speaker 01

  The Salton Sea, is this, is there water there right now?

• 1:00:14Speaker 00

  Yes.

• 1:00:15Speaker 01

  Okay.

• 1:00:15Speaker 00

  There's like three and a half million acre feet in there. It's it's too saline for fish to survive now. Yes. About 15 years ago, the last fish died. It's pretty smelly. But when it first formed and through the 60s, it was actually Pretty much fresh and then it got saltier over time.

• 1:00:28Speaker 01

  How did it get saltier?

• 1:00:29Speaker 00

  Evaporation. Yeah, so.

• 1:00:31Speaker 01

  But how was there water there to begin with to evaporate?

• 1:00:33Speaker 00

  Oh, it's.

• 1:00:34Speaker 01

  Like, was it manmade intervention?

• 1:00:36Speaker 00

  Irrigation runoff. So a lot of water is diverted out of the Colorado River through the All American Canal, about one.

• 1:00:42Speaker 01

  And it's accumulated.

• 1:00:43Speaker 00

  1.2 million acre feet a year. And then most of that is used in irrigation and some of it runs off into the Salton Sea.

• 1:00:49Speaker 01

  I see. But how is the water a little bit?

• 1:00:51Speaker 00

  Originally formed when like the Colorado River burst its banks in 1905 or something like that.

• 1:00:56Speaker 01

  Okay.

• 1:00:56Speaker 00

  And flowed down there for a couple of years before. I think the railroad was like enough of that and they cut it off. But yeah, I mean, it's, I think it's quite a starkly beautiful place. It's.

• 1:01:05Speaker 01

  And how does the salt get into the Salton Sea in the first place?

• 1:01:07Speaker 00

  The Colorado River is quite saline itself, like.

• 1:01:11Speaker 01

  Why?

• 1:01:11Speaker 00

  Mexico sued the United States.

• 1:01:12Speaker 01

  Do I not understand how rivers were?

• 1:01:14Speaker 00

  Yeah, because they rode rocks and rocks of salts in them.

• 1:01:17Speaker 01

  Ah, okay.

• 1:01:18Speaker 00

  That's why the ocean is salty.

• 1:01:20Speaker 01

  Really?

• 1:01:20Speaker 00

  Yes.

• 1:01:21Speaker 01

  That's where the salt comes from?

• 1:01:21Speaker 00

  Yeah, from dissolved rocks. Why the salinity of the ocean is so stable is another question. But yeah, my grand plan is to put another 3 million feet acre feet of water in the Salton Sea, bring it back up to its historical, like 1990 era level. Stabilize level, stabilize the salinity, build a canal that comes in from either Mexico or maybe under the mountains from, from maybe both, maybe from San Diego. Put some whales and stuff in there, like SeaWorld, but bigger, and start like building gigantic hyperdrive cities around the edge to do like industrialization and like retirees and bit of everything. And 110 miles of beautiful coastline with a climate like Phoenix and Tahoe, but warm, you know?

• 1:02:00Speaker 00

  And we could do that and it would pay for itself because you just run the math on 110 miles of coastline of like on a nice river.

• 1:02:07Speaker 01

  Have you pitched the Trump administration on this? This feels like the kind of thing.

• 1:02:09Speaker 00

  I did write a one pager for the Secretary of the Interior, but I think they've got a lot on their plate. But actually, the United States has an agency called Bureau of Reclamation, which is part of the Department of the Interior, whose job it is to figure stuff like this out. And it had one extremely powerful charismatic leader who basically led all the big projects. If you've read Cadillac Desert, it goes in some detail here.

• 1:02:27Speaker 01

  It's a great book.

• 1:02:28Speaker 00

  And then, that's generous. And then.

• 1:02:30Speaker 01

  You didn't like it?

• 1:02:31Speaker 00

  No, so scaldy. It's like, humans should not live in the West. It's too dry. I'm like.

• 1:02:35Speaker 01

  But let's, if you're judging, there's so many, like the Kaiser book was bad in a way, but there's really good.

• 1:02:42Speaker 00

  Which one? One of them was written by this Mormon fellow who was his IIIC for many, many years at the Kaiser Fraser Car Company, amongst other things. And the other one was some independent researcher.

• 1:02:51Speaker 01

  I don't know. Well, put it on the show notes, but.

• 1:02:53Speaker 00

  Okay, they're both fine. They're both great books.

• 1:02:55Speaker 01

  But they're great because of the subject matter.

• 1:02:56Speaker 00

  Some of them are a bit long-winded.

• 1:02:57Speaker 01

  Yeah, you have to be able to read past all this stuff.

• 1:02:59Speaker 00

  Yeah, but the Bureau of Reclamation hasn't built a major dam in 50 years, so they've pretty much forgotten how at this point, I think.

• 1:03:04Speaker 01

  But your salt and sea development, part of the reason it feels plausible is because there's no conservation argument for keeping it the way it is. Because you're only conserving prior human areas.

• 1:03:13Speaker 00

  Well, you'd make it much better. You could actually make it.

• 1:03:14Speaker 01

  No, but my point is even if like.

• 1:03:16Speaker 00

  Oh, even if you were.

• 1:03:17Speaker 01

  If you want to develop the California coast, you say it would make it much better.

• 1:03:19Speaker 00

  Yeah.

• 1:03:20Speaker 01

  People will say, no, sorry, that's not how it is. And we need to keep it in a state of nature, but salt and sea is not in a state of nature, in a state of altered.

• 1:03:28Speaker 00

  It's it's in a state of neglect, really, profound neglect. And, you know, various studies have happened over the years. They want to spend $100 million there, $200 million there to try and like stabilize it to an extent. But I think that the mistake is assuming that it's it's always got to be this like festering, postural, like environmental catastrophe. It doesn't. We could restore it and then unlock enormous economic value for people who need a place to live and could live around it. And build it into, you know, a new city in the United States. It hasn't been built for a long time. And, yeah, I think it'd be so cool. I'd go there, like, build that city. Let's do it.

• 1:04:02Speaker 01

  Yeah.

• 1:04:02Speaker 00

  And, you know, essentially infinite solar power, lots of critical minerals just like bubbling out of the ground. Very close to the Mexican border, which has its advantages, obviously, and you've produced plenty of fresh water for Mexicans as well, part of a deal. Everyone, everyone wins.

• 1:04:16Speaker 01

  It feels like.

• 1:04:17Speaker 00

  It's only like 50 to one, like just back of the envelope calculations, like 50 to one economic leverage. Like it's, it would generate so much value that you'd actually, the way you would do it is you say, well, whoever comes and develops all the desalination technology could be asked, could be consortium, could be the Israelis, whatever. We'll give you some fraction of the coastline, right? And then you get to either sell that off or keep it and hold that money, a bit like, I think Irvine did it that way, right? And that's how you fund it, right? I don't want to like box myself in here, but I think like you could give like 10% of that coastline away to the developing entity. And 90% could be to the people of California in general, and you would still be making money hand over fist. That's pretty unusual. You don't ordinarily find like mega projects like this where where there's so much value on the table that you can be that generous with it.

• 1:04:58Speaker 01

  Part of what feels attractive to me about desalination for you is currently terraform sells commodities, be they.

• 1:05:07Speaker 01

  Natural gas or methanol or things like that. Whereas someone who wants water in a location, they need to buy water in that location, which has a price. Getting water to, you know, the city of San Francisco or getting water to Los Angeles is not a commodity. It's a very specific project and, you know, getting water across the delta in, you know, this specific context costs $20 billion for that capital project that you were mentioning. And so you presumably even at the early stages of the project, even when it's more expensive than it will be at large volumes, you can find somewhere where they really value having an incremental water supply and they're willing to pay for it.

• 1:05:46Speaker 00

  Yeah, I mean, the, the value to be unlocked by bringing even small amounts of water onto this land is enormous. So again, like, why is Nevada 90% federal land? Couldn't give it away. Could you pump significant quantities of water into Nevada? Yes, of course you could. It's actually downhill like three quarters of the way.

• 1:06:03Speaker 01

  Three quarters of the way to Nevada?

• 1:06:06Speaker 00

  Yeah, so if, so for example, there's already an existing aqueduct that runs from the, from the delta here all the way down to the Cajon Pass, which is the pass that takes you from LA up to Vegas. Right? And from there, if you were to release, so you need to upgrade that canal to carry a little more water, you could release water and flow downhill down the Mojave River down towards Death Valley. Right? You can divert it at the Amagoza Dunes and then pump it up the Amagoza Valley there and then basically.

• 1:06:31Speaker 01

  I see you're doing very little pumping and not its net downhill most of the way.

• 1:06:34Speaker 00

  Well, it's not downhill most of the way. The pumping is actually not that expensive because solar ray pump, like, it's relatively straightforward.

• 1:06:41Speaker 01

  I'm sensing a pattern here.

• 1:06:42Speaker 00

  There's a pattern. It's like anything that you want from SpaceX is like Starship will do it for you and anything you want from Terraform is like just solar panels plus other stuff. Yeah, and then you say, well, Nevada is 100 valleys and we've got, you know, cities in a few of them and Burning Man in one of them. And we've got, you know, nuclear testing in one of them and Area 51 in one of them and that's fine. And then most of them can stay as desert, like maybe half a dozen of them turn into solar for synthetic fuel and half a dozen of them, you run a river the size of the Colorado River through them with a few pumping stations here and there, but mostly natural flows down into the Humboldt River, which will now become a perennial stream down into the Carson Sink where you scoop it up and then pump it back to the beginning or drop it into Lake Mead past Vegas when there it can find its way back out to the ocean. So like. Not very much like scribbling on a map is required to make this work. Nevada doesn't even have a significant river at all.

• 1:07:28Speaker 01

  It could be the first.

• 1:07:28Speaker 00

  It could be the first, but like it's an entire state worth of land that would have the climate of Switzerland if it just had water.

• 1:07:33Speaker 01

  Do the Israelis do a lot of desal?

• 1:07:36Speaker 00

  Yeah, reverse osmosis is largely developed there. Actually, I think they just announced that they're using coastal desalination in the Mediterranean to refill the Sea of Galilee, which is in essence the reservoir that they use to feed downstream irrigation on the Jordan Valley.

• 1:07:51Speaker 01

  Why not produce your terraform desal addition and sell it to the Israelis for?

• 1:07:57Speaker 00

  They're already very good at it.

• 1:07:59Speaker 01

  But this wouldn't be cost competitive or wouldn't be anything competitive?

• 1:08:02Speaker 00

  I'm honestly not sure. I think they can produce it 400 bucks per acre foot. And to be honest, if I was able to produce it 400 bucks per acre foot, I'd be very happy right now. Long term, $99. The $99, I think I can steamroll the California Coast Commission if I need to, but even $400 would be pretty extraordinary.

• 1:08:16Speaker 01

  What have you learned about leadership running terraform?

• 1:08:20Speaker 00

  That's a good question. I went to a high school where they, there was kind of a leadership program in a way. And, and it was kind of a Judeo-Christian based type thing. And so this idea of like leadership through service was, was taught, which I think is super valuable and something I've always thought about. And our work chart is drawn upside down because ultimately that's the way the, can I swear on this podcast? Yeah. The problems flow downhill. Yeah, exactly. So that's an important one. I think that, you know, I've made plenty of mistakes at this point. And, but having done, having made those mistakes, I can now read Leslie Grove's work about the Manhattan Project or Rick Over's work about the Nuclear Navy Project and like interpret those texts and understand what they really mean.

• 1:09:00Speaker 00

  Or like have a better insight into the sorts of problems they're actually dealing with because they don't necessarily translate that well into like a narrative form.

• 1:09:09Speaker 00

  Yeah, just learning to like hold myself accountable, hold other people accountable. About like how to, how to titrate, how demanding you're being versus other things about how to understand what people want rather than what they say they want and then make sure they get what they need. Stuff like that.

• 1:09:23Speaker 01

  Dial up your demandingness, dial it down.

• 1:09:25Speaker 00

  Dial it up.

• 1:09:26Speaker 01

  Okay.

• 1:09:26Speaker 00

  Dial it up. Yeah, absolutely.

• 1:09:28Speaker 01

  And is it about also kind of finding constructive forms of it that lead to better performance?

• 1:09:33Speaker 00

  Yes, it's a balance. One of the mistakes I've seen a lot of first time founders make is, is they assume that an hour of coaching is as good as an hour of firing. Because at the end of the day, you can't be some other founder, you can only be yourself. And so you want to build an organization that like. Essentially is like an extended mind for you and for your hands and arms and the ways you think about a problem, right? And I think Stripe is very much a reflection of you and Patrick. I'm not sure which one the most actually. I have a question for you about that next up. And so to an extent, the parts of Terraform that weren't working with the parts that I was trying to build, not my way against my better judgment. And when I just gave up on that and said, screw it, I'll just do it my way, it suddenly started working because I could understand and intuit how it worked. Yeah, had to become pretty

• 1:10:15Speaker 00

  demanding there. And obviously, no one's perfect at recruiting. And so the success to that is you've got to give people extremely direct feedback and coaching and mentoring, and ultimately invite them to build their career elsewhere. It's been really tough. Some of the people I had to let go, people I really liked, people I had friends with for many years in some cases. And, and obviously, I wish them the best. But again, having read resume after resume after resume, nothing is worse for your career than sitting in a job failing for you because you don't have the guts to quit, and your manager won't fire you. And I've just seen this so many times. Because you're not, it's not that you're not growing, it's you're going backwards in that time. Like, since now for a couple of years, like, success is mandatory. Like, I don't, I don't really care that much about how you go about succeeding. I'm happy to help you, but at the end of the day, you

• 1:10:59Speaker 00

  have to succeed. We're going to force you to succeed. Success is mandatory. No matter what you're doing. That did not come naturally to me, but it's very intuitive, obvious. So my question for you is, in the counterfactual where you and Patrick founded Y C companies together, but they weren't Stripe, they were two separate companies, what would the world now look like?

• 1:11:20Speaker 01

  Oh, I have no idea.

• 1:11:22Speaker 00

  Like, would he have founded Stripe, or would you have founded Stripe, and then the other one do something different?

• 1:11:26Speaker 01

  So Stripe was much more his idea than mine.

• 1:11:28Speaker 00

  Would you be in the United States?

• 1:11:30Speaker 01

  Plausibly not. Like, he came here first. I mean, we both came here for college.

• 1:11:33Speaker 00

  What were you studying in school?

• 1:11:35Speaker 01

  I did not stick around long enough to declare a major, but...

• 1:11:39Speaker 00

  So you can make something up?

• 1:11:39Speaker 01

  Yeah.

• 1:11:40Speaker 00

  Physics? You would have done physics?

• 1:11:41Speaker 01

  I was in physics.

• 1:11:42Speaker 00

  MIT? MIT or Harvard?

• 1:11:43Speaker 01

  I was at Harvard.

• 1:11:43Speaker 00

  Harvard. Maybe you would have wound up at Draple Lab or something.

• 1:11:46Speaker 01

  Or JPL, you know?

• 1:11:47Speaker 00

  Oh, yeah, I wouldn't curse you.

• 1:11:51Speaker 00

  There's a sad story. Yeah, anyway.

• 1:11:54Speaker 01

  Is there any hope for it?

• 1:11:56Speaker 00

  I would like to think so, but much to my consternation, people who I knew who were there, who I always thought were like JPL boosters and were like, we're going to succeed no matter what. And now like it's beyond hope. And I'm like, well, if you think it's beyond hope, then that's a bit dismal. Which is a real problem because it is really the jewel of of space science in the United States and much of our technology besides. But it has been it has been allowed to wither.

• 1:12:20Speaker 01

  Do we need more private research organizations in this area where obviously there is the, you know, many tech companies build research organizations, model after kind of the Bell Labs type thing. Xerox PARC, Microsoft Research, many parts of Google.

• 1:12:38Speaker 01

  Do we need that in the business?

• 1:12:41Speaker 00

  I think a better model, I don't know how to get there from here, but a better model might be that every time like a lab or an agency or something is set up, it's it's automatically set up with its destructor, right? And after some fixed period, it sunsets.

• 1:12:55Speaker 01

  Can I always say this? I don't know.

• 1:12:56Speaker 00

  And then it's not like you fire everyone.

• 1:12:59Speaker 01

  Yeah.

• 1:12:59Speaker 00

  But you have to reconstitute it and you have an opportunity to do a reorg, right? So after 10 years, say NASA gets like summarily executed. And then either like Erling, you like, you should bring up another copy of it. And this time, maybe you sell off two of the labs to DOE. Or you buy up another lab that you wanted, but you couldn't because you had to support these two other labs that weren't doing things that were useful for your current mission anymore.

• 1:13:21Speaker 01

  But people probably don't want the offshoots. Like, does DOE want to take on the budgetary expense of the offshoots?

• 1:13:27Speaker 00

  Well, that's that's kind of part of the problem because, well, I mean, the idea is like any existing agency could bid for it. And actually, like the Antarctic stations, for example, are kind of run this way, right? In that the contractor who runs them is cycled from time to time. But like the alternative is you have the core of some function that is ostensibly important enough to US national security and soft power and so on, that it has to be government funded, right? Screw Milton Friedman, it has to be nationally funded. But if its mission is that important, then it must be, you must insist that it continue to succeed, right? And we have this conversation every few years about the the Air Force and their nuclear missiles, right? And someone finds something's gone wrong and it's like, we'd better make sure this works, okay? But like that kind of applies across the board. And if you don't do that.

• 1:14:11Speaker 00

  Then then what happens is it just kind of withers and festers and and then when you need it, it's not there. And when we like relaxed the Outer Space Treaty in 2017 with the Outer Space Accords, so the Artemis Accords, so we can go and kind of make a land grab on the moon. And then it turns out China is going to get there first, like, oops, maybe we shouldn't have done that. If we weren't sure we could win that one, why can't we win it? Because NASA, the organization, whose entire job is like, no more Sputnik moments, please, is has kind of lost the plot because it wasn't forced to reconstitute itself and so on and so forth. And you say the same thing here, I hate to say it, but in Silicon Valley, like, most of the companies don't last that long, or they get acquired or spun off. And the ones that do, in many cases, you'd really rather they hadn't.

• 1:14:50Speaker 01

  Yeah, IBM problem.

• 1:14:52Speaker 00

  Well, IBM, I mean, it's still around, but like, there are plenty of other companies that have become quite large and successful, and in some ways victims of their own success. And I think, again, one of the anomalous things about Elon's companies is that they're now quite old and quite large, and they haven't, they've got other organizational pathologies, but they haven't had that problem. People should figure out how and why.

• 1:15:11Speaker 01

  Last question, what's the shirt?

• 1:15:14Speaker 00

  This is the Hyper America shirt, which I wore today because it was kind of of a theme with like, if people like you don't don't like strike out to the hills and try and do insanely ambitious hardware projects, it's just like Elon and a few other like wannabes, like, we're not going to get Hyper America with a trillion Americans and a trillion planets.

• 1:15:33Speaker 01

  Maybe Stripe should take on a hardware line of business. If we find one, that's good enough. Like, we wouldn't be opposed to it. I think we just haven't had a good idea yet.

• 1:15:40Speaker 00

  It could be.

• 1:15:40Speaker 01

  These are our taken.

• 1:15:41Speaker 00

  Stripe, Stripe banner. No, I mean, I welcome competition. I'm kind of sad, actually, that at Terraform, it's been four years and there's only one other company that has that has come in, which of course.

• 1:15:51Speaker 01

  Reven.

• 1:15:51Speaker 00

  Yeah, Reven. And there should be many more. And I think actually it would help us if there was competition. But it is really hard. Like, I can understand why people look at it and be like, no, thank you.

• 1:16:03Speaker 01

  On that note, thank you.

• 1:16:04Speaker 00

  Thank you for having me.