A tour of the tech boom — 5 waves you need to understand

Azeem Azhar welcomes Packy McCormick, founder and investor at Not Boring, to discuss the current tech landscape – reflections on Web3, why bits and atoms are cool again and how AI and energy are reshaping the world as we know it.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Azeem Azhar?

  I go pretty regularly. I talk to people in the labs. It's pretty consistent what they're saying. We keep discovering new predictable scaling laws and we don't see a point where this trajectory stops.

• 0:11Speaker 01

  Half of global GDP that was not an addressable market before is now an addressable market. Where this leads is that you kind of have to be the best version of yourself in figuring out what you want to get out of all of this, assuming that we have kind of world historical superpowers right at our fingertips.

• 0:25Azeem Azhar?

  In a way, we do have those amazing machines today and yet a lot of people don't feel they get an opportunity to express themselves in the best way. So there is something that is not about the technology that gets in the way that constructs a sort of consumptive taker, not maker culture.

• 0:41Speaker 01

  It does take some like activation energy to say like, given abundance, how can I go experience the world in a different way than I could have before? I think this is like a real challenge. Instead of like a have and have nots and say know thyself and know thyself nots or do and do nots.

• 0:54Azeem Azhar?

  You talked about there being a startup in every one of these physical industries that we've ignored.

• 0:59Speaker 01

  Name an old company that's 50 years old, that is worth over a hundred billion dollars market cap. And there's now a credible startup going to attack and hopefully rebuild better using technology and a role doing, you know, really interesting stuff in the event of being a modern prime. Obviously SpaceX, the modern lunch company. But I think there's that for like everything.

• 1:15Azeem Azhar?

  Physical hard things made out of atoms, they have a visceral tangible quality and it's amazing to see the entrepreneurial community start to care about that.

• 1:25Speaker 01

  I can understand why the average person is kind of like, I don't know, what has tech done for us? We get Amazon, which is great. Facebook may be good, maybe bad. You know, like there's a lot of stuff that's questionable. If we can start delivering supersonic planes and self-driving cars, delivering kind of physical improvements in people's lives, that whole thing starts to flip and people can feel what technology is.

• 1:46Azeem Azhar?

  I think Paki, of you as a writer, investor, but most of all as a vibe guy, you feel the zeitgeist and we've spoken before. It's great to have you back.

• 1:57Speaker 01

  Longtime exponential view subscriber, calling in from Brooklyn, from New York, New York. I was in my home office in Brooklyn for a while. Now finally I have an office. It is great to be here. Glad to do this with you.

• 2:09Azeem Azhar?

  Well, it's it's fun to have you back. When I say we're vibe guys, I mean, we're both quite broad. We talk to a lot of people. We listen to a lot of people. We are willing to say brave, occasionally unhinged things. Sometimes we're right, sometimes we're offbeat. When we last spoke in 2022, you were vibing around Web three and new governance structures. You know that I kind of got it in theory, but I never really felt it deeply. What would you say to your 2022 Web three self?

• 2:40Speaker 01

  It's a very good question. Um, I say it's still excites a lot of me like conceptually. And I'm sure we'll talk about AI. Like, to me, it's actually a little more fascinating than AI because it's like messier and there's just like a lot, a bunch of different ways that it can go. I think what I would say to myself is like, the more open a system, the more opportunity there is for people to try to take advantage of it in whatever way they possibly can. And I think a lot of the bad stuff that you've seen in crypto over the past X number of years. And like, even now, I mean, the meme coin stuff is fine, but it's like an open casino kind of situation. Like, most people are not as idealistic as like my writing about crypto and Web three is. And so you just need to figure out, I think, like slowly, evolutionarily, I thought it would take a little bit less time, uh, over time, how to build systems

• 3:25Speaker 01

  that are robust to that. But the more open you are, the harder it is to do that.

• 3:29Azeem Azhar?

  Yeah, it's definitely moving. I mean, I've seen now when I get, uh, reports from the bankers, they talk about gold inflows and bond inflows and stock inflows, and they now talk about crypto and inflows. So it's anchored itself in the world of finance. But I also do think that there are things that are going to happen because of the change in the administration in the US that will, you know, drive it forward, legitimize it, and maybe take it further down some of the ideas that you and I talked about three years ago.

• 4:01Speaker 01

  Maybe that would have been my view coming in. I think it really depends. Like it can't be a free for all. It has to be well regulated and the risk of the Trump administration, which I was very pro on the crypto side. This would have been good, but now kind of seeing it play out live. I think the risk of a Trump administration is that you go to there are no rules. And like just a bunch of unforgivable, unforgettable things happen while that's the case and while there's no referee. Such that people are like, you know what? I'm fine with my bank. I'm like, I'm just not going to worry about all this stuff. Uh, and so I do think that's a risk, but I do think to the extent that, uh, you know, the SEC is not actively trying to, to kill crypto. And regulators will actually try to put regulations in place. I think that's a very healthy thing.

• 4:42Azeem Azhar?

  Yeah. You speak about that as an experience, your experience of having been a banker, right? You worked in finance and I think you've seen what happens when there aren't the right guardrails.

• 4:52Speaker 01

  Of course. Yeah. I mean, like, I think this is true of anything. And I think maybe again, kind of the more open, the more there need to be guardrails. But this is like a tale as old as time, uh, in, in history, the railroad, early stock exchange, like anything that can be manipulated will be manipulated. I think that's true in money. I think that's true, you know, like on the internet, that it's just human nature. Or even if it's a, you know, 1% of humans have that nature, they will be the 1% and you're trying to manipulate it. And so I think you just do need those, those guardrails. And now it's not, it's not, you know, there's no Goldman screening process on the whole thing to then be able to manipulate. It's just anybody in the world with an internet connection has the ability to do that. And so you definitely need some guardrails there.

• 5:33Azeem Azhar?

  Uh, you know, it's so wild that we're talking about crypto in the midst of this amazing AI transformation that is, that's going on. And the bit that's getting me really, uh, excited is what's happening with, with AI. And it's not one thing. I mean, last week I wrote that, that how venture capital needs a platform on which to build. Uh, and that's been the history of it. First it was semiconductors, then in the seventies it was PCs, then it was eighties, it was software, then it was the internet. Then it was social and mobile and cloud. And then I think we got into this weird spot in 2015. Where there wasn't a new platform and people were casting around for the metaverse or for crypto.

• 6:17Azeem Azhar?

  And and if you're a product person like me, it didn't quite make sense because a lot of other things had to be true. But they've now got this platform and it's AI. And it's really electrified things. My my life has completely changed. I'm curious about about you and how excited you've got about AI. And what in particular has done that for you?

• 6:38Speaker 01

  It's interesting. AI is the first time that I felt like the curmudgeonly old guy. And there are a few reasons for that. And now I can see like why people would be like, oh, you know, like you you blew up crypto too much and all that. Because it weirds me out how much of it like there's this like call pro or con that thinks like in two years, AI will be gone. Humans will be worthless, like all of that. And it makes absolutely no sense to me that the and like I see no signs that that would be the case. I think as a, you know, I've been calling it like kind of super sass. I think it's like an amazing super sass and I use it every day. I told I told ChatGPT and ChatGPT is now, I think, retaking the lead over Claude as my like kind of daily driver favorite.

• 7:20Azeem Azhar?

  Yes, are you you're unfaithful as well then because I was with Claude and now I'm with ChatGPT and who knows?

• 7:27Speaker 01

  Deeply, deeply unfaithful here. Whoever gives me the best the best information. I didn't there's probably like something to building up projects over time and one that might make make one or the other horse sticky. But I'd say like Claude takes more active putting stuff in there, whereas ChatGPT just like knows me very well at this point. But I told it to that it was the best coach in the world. Five thousand dollars an hour asked it to give me a bunch of different plans for stuff. And I'm like actually following them and they work pretty well. So like that kind of stuff I think is like mind-blowingly cool. And I think the experiences you can build on top of that, it's like mind-blowingly cool. And there's a bit of me that's like, everybody chill out. Like, I I don't know if it's a foregone conclusion that it's had this this nice run where it can now do stuff kind of like PhDs do and all of that.

• 8:08Speaker 01

  Where like if there's nothing in the training data that is above, you know, the smartest human level, that it will just be able to intuit that. It'd be cool if it if it were. But that that's my like one hesitancy is just like how much people are telling us that like humans are pretty much worthless in a couple of years, where I don't think that's the case.

• 8:25Azeem Azhar?

  Yeah, well, I think that we have to hold these different ideas in our head at the same time. So yes, it's really useful. Some people who are well positioned to make this argument because they're building the systems say, we think these are going to get really, really powerful post PhD level beyond that. But even that's not consistent, right? So Dario Amadai from Anthropic talks about thousands of geniuses in a data center. Jan LeCoon from Meta says, this is just not going to happen. And this is not how it works. The one thing I would say, I would note is I was in the Bay Area last week. I go pretty regularly. I talk to people in the labs, both, you know, formally and over a coffee

• 9:09Azeem Azhar?

  and over a cup of tea. It's pretty consistent what they're saying, which is, we understand the scaling laws. We understand how much you put into what you need to get out. We keep discovering new predictable scaling laws. And we don't see a point where this trajectory stops improving. So I take that largely at face value. I mean, everyone can be wrong. Long term capital management was right until they were wrong. But I take it at face value. But even if they are right, my perspective is a bit like yours. Things don't change overnight in 2027 or 2028. There's lots of other stuff that we haven't thought

• 9:49Azeem Azhar?

  about that needs to change. Not everything changes because you can suddenly do research 100 times faster than than before.

• 9:57Speaker 01

  Yep. I think that's what I'll say. And I think for a very long time, I mean, I've written about this a little bit. I wrote a piece called Most Human Wins. It really just like looking at the history of when things get commoditized, what happens? And, you know, value appears at the next layer, then the next layer, then the next layer. And speaking to Tina today, who wrote a great piece on Jevon's paradoxes as it applies to people. And I think like everybody who's thinking a lot about this, like it's the same point, which is where this leads is like, you kind of have to be the best version of yourself. And it's like, kind of cheesy sounding to say. And I think like, kind of human differentiation and figuring out what you want to get out of all of this, assuming that we have kind of world historical superpowers right at our fingertips, ends up being the most, the most important things. And maybe it is kind of beautiful, even if the economy

• 10:41Speaker 01

  and everything gets gets abstracted away and is available kind of at the click of a button. There's, there's still, you know, more for us to experience and do and figuring out what that is, is really interesting.

• 10:52Azeem Azhar?

  I love the way you said that, actually, this idea that we have to be the best people we can be, which in of itself also talks to that process of discovery, right? How do you go about discovering who you are and what you can be? And it reminds me a little bit of the discussion I had with Kevin Kelly a couple of weeks ago, who was a co-founder of Wired. And Kevin said something quite similar to you. I mean, I think, which was, people will just be able to express themselves more because we have these amazing machines around us doing it all for us. But I guess the counterargument to that would be, in a way, we do have those amazing machines today and have had for 20 or 30 years.

• 11:34Azeem Azhar?

  And yet, a lot of people don't feel they get an opportunity to express themselves in the best way. So there is something that is not about the technology that gets in the way, that constructs a sort of consumptive taker, not maker, culture. You think a lot about this, both in your writing, your personal life. So what is that? What do you think is that source that gets people wanting to be makers, finding their best selves?

• 12:01Speaker 01

  I think it's almost, it's almost impossible. It took me until I was 20, 30, 32 to start kind of writing and going that way. I was talking to Tina about this this morning. And I think that one of the, one of the questions that came to my head is like, do you need to be a certain level of financially secure? Like, certainly, like, there's always a starting artist and all of that. But I think there's a lot of people who like, kind of get to a point of financial security and then they can figure out kind of how they want to be their best self. And so that's kind of one interesting aspect of it. I think this is like a real challenge, though. Instead of like a have and have nots, it's a know thyself and know thyself nots, or want or do and do nots. Like, there is, you know, some group of people that's just gonna be like, this is so easy. I can get like clothes at the push of a button and food at the push of a button and like,

• 12:46Speaker 01

  I don't know, I'm gonna go out and drink and it sounds great. And, you know, to each his or her own. But I do think it does take some like activation energy to say like, given abundance, how can I go experience the world in a different way than I could have before? And I don't think there's like an easy, pat answer that that kind of applies to everybody. I think it's really, what do you want? And even for each individual person at different times in their life, that's going to be a different, a different thing.

• 13:11Azeem Azhar?

  I think it also connects to cultural contexts as well, in the sense that the types of discussion we're having now are very different to the ones that happen in Asia around AI. The discussions around Asia are not bounded in the sense of losing autonomy or negative fears of the risks, they're actually deeply connected to the opportunities a new set of technologies provides. But I also expect, and I'm going to look into this when I travel around later this year, that there'll be differences, kind of cultural differences as well, between the different Asian countries that I'll have the chance to spend time in.

• 13:53Azeem Azhar?

  But it strikes me that we're having a very Anglo-Atlantic discussion about this issue.

• 13:59Speaker 01

  Yes, I think that's totally right. And overall, I'm super excited by it, but I do think like there is certainly a dog kind of chasing the car situation where it's like, all right, we have everything, what now? That would be a great spot to get to, but it's worth thinking about ahead of time.

• 14:16Azeem Azhar?

  Yeah, well, I mean, I've been pulling up all my books on affluenza and sort of the, what historians have said when cultures get to get a bit rich and a bit idle and don't have enough hunger. So I'm in Europe, obviously, I'm in the UK. Is it in Europe? Can we, what should we say? We're in the continent.

• 14:34Speaker 01

  You're in the UK, you're European.

• 14:36Azeem Azhar?

  And, you know, things have changed here as well. I mean, I'm curious about how Americans see us right now, whether they understand what's going on here.

• 14:43Speaker 01

  I would speak on behalf of all America and say, no, and I would love an update from across the pond. I mean, I saw that Harry Steffings is trying to kind of reinvigorate investments into European donors, which is great. It seems like there's some real kind of European pride happening in the tech community. But, you know, still in my mind is, you know, Germany shuts down all of its nuclear plants and, you know, Barcelona wants no American tourists in town. So it does feel like, those are the two things kind of competing in my head. But one, things are moving backwards. And then two, there's maybe feeling like there's this little pull to pulling forward right now.

• 15:22Azeem Azhar?

  Enjoying the bullwhip of the new administration. So in at the start of January, I would say the mood in Europe was really, really funereal. It was like someone had died. And I was at a big event in Munich, which is a big kind of tech event. And then I went on to the event in Davos. And it was happening at the time of the administration, of the inauguration. And the mood was so negative. You didn't even say hello to people. You'd say, Europe's in dire straits, isn't it? I mean, there was no, there was no greeting. We would abandon politeness and etiquette. And there has been a real shift.

• 16:04Azeem Azhar?

  There has been a flipping in the last six weeks that has been electrifying. I mean, you know, the context for a lot of this, I think, has been that, you know, Europe has become so dependent on the US, but particularly for defence and security. And since 1992, I guess, all your life, pretty much, Paki. Europe has underspent on defence, about $2 trillion below what it promised, which is a lot of money even for the US government. And I think understandably, and I've written about this quite a lot over the last two or three years, that it was unjustifiable and at some point the Americans would get annoyed, whether it was Trump or somebody else. And that he's got annoyed in the way he has. And it has made them feel so vulnerable.

• 16:49Azeem Azhar?

  When, when Musk started to say, well, I'll just turn off Starlink. And then he recanted, right? He did edit tweet in the 60 minute window, whatever it was. They, they got very, very nervous and they got understandably nervous that their F-35 planes won't fly. And so even, you know, Germany is reconsidering whether to buy those or not. And sleepy Europe in a six week period really starts to galvanise. And the leaders started to support each other. And that's why European defence companies have done a real Nvidia this year. Rheinmetall is up 100%. Thales is up 73%. And there's this initiative to build resilience and rearmament across Europe with an understanding,

• 17:34Azeem Azhar?

  which I actually, honestly, it's common sense. I'm I'm a father, a parent, I'm a homeowner. I take responsibility for the security and the physical integrity of my home. I don't expect my neighbor two hundred yards away to do it for me. I do it for myself. So this is kind of washing your hands after you use the toilet, use the bathroom kind of stuff that we're now doing. But eight hundred billion dollars euros that's been allocated is an incredible injection in building atoms, you know, it is it is hardware factories and so on. And that's what I think has created this tailwind that you described. Our mutual friend, Harry Stebbings, putting this project Europe together to ignite

• 18:16Azeem Azhar?

  what is quite a small defense tech area, but it is a, you know, teams, teams need a flag, a goal to run towards.

• 18:25Speaker 01

  There is something about building atoms and building weapons and defense systems that is, I guess, just good for the soul, you know, like I'm no fan of war. I think it's it's something that we need to figure out how to get get past at some point here. But, you know, reading Freedom's Forge, it's like it's hard not to get excited about what it means to all of the sudden say like, hey, we have to all come together. This is an existential existential thing that we need to build for. And then to get get out there and do it, there's something animating about that that I don't think software can do in the same in the same way. And I think that's like a little bit of kind of what has caused a reawakening here as well is that, you know, defense is cool again, building things and atoms is cool again.

• 19:07Speaker 01

  I know AI is one platform on the VC side, but to me, like the the most exciting platform is people building, kind of rebuilding the infrastructure of the world. And so there's Andorl doing, you know, really interesting stuff in defense and being a modern prime. Obviously SpaceX, the modern launch company. But I think there's that for like everything. You name an old company that's fifty years old, that is worth over a hundred billion dollars market cap. And there's now a credible startup going to attack and hopefully rebuild better using technology, what they have, what they have done. And that's just exciting, like, you know, exciting for the people involved, exciting for investors, but exciting for hopefully, you know, I can understand why the average person is kind of like, I don't know, what has tech done for us? We get Amazon, which is great.

• 19:50Speaker 01

  Facebook may be good, maybe bad, you know, like there's a lot of stuff that's questionable. If we can start delivering supersonic planes and self-driving cars, and I know there's people in SF who don't like the self-driving cars, whatever, but I think if you start delivering kind of physical improvements in people's lives. That kind of whole thing starts to starts to flip and people can feel what technology is. So that's what's made me super optimistic and it's cool to see that it's happening in Europe too. It really can invigorate you in like months.

• 20:18Azeem Azhar?

  I think it's starting to happen and you've identified another cultural thread though that is so important. So so Peter Thiel had this line, which was, you know, we wanted flying cars and we got one hundred and forty characters. And I think we're finally starting to get to get flying cars. At one of the the things I found really shocking was that the amount of electricity that the US industry was producing had not increased since Jeb Bush was governor of Florida, right? Since before, I think when George W was was was elected. I mean, it's an incredibly long period of time for what is essentially the oxygen of the modern economy not not to increase. I mean, no mountaineer gets to Everest with the same VO two max

• 21:03Azeem Azhar?

  as they did when they were, you know, three hundred pounds and lying around watching Netflix. And so that was really interesting. And what just happened today in London, you you may not have caught this, but our biggest airport, Heathrow Airport, which is one of the largest in the world, is shut because it depended on one electricity cable coming in and the substation that power powers that is in a really overloaded part of London and has caught fire. So the two, three hundred, four hundred thousand people would have shown up in Heathrow today and the the same number who would have left are not. Because we don't invest in infrastructure, we don't invest in resilience. I mean, I have two internet connections in my house. And, you know, Heathrow, which depends on electricity, thought we'd just have one power supply.

• 21:47Azeem Azhar?

  And I think this is the flip side of what you were describing, which is that physical hard things made out of atoms are real, they're really interesting. They they have a visceral tangible quality and it's it's amazing to see the entrepreneurial community start to care about that.

• 22:08Speaker 01

  I mean, you've written about electricity being a technology and like being an energy source is a technology and it's amazing and we spend the rest of the time talking about this. But I think just to your point quickly, like talk about the cultural shift across the world. 10 years ago, it's not just like we were making less energy, it's that energy was bad. You know, like the more energy we use, the worse. Solar wasn't quite good enough yet. Nuclear was for, you know, whatever, not whatever reason, a bunch of historical reasons. Persona non grata on the, on the energy side. And so the idea was to, to grow and to grow your energy usage meant like inevitably, invariably killing the environment. And so we made less of it. We tried to focus on efficiency and like, that's just not how, not how things work.

• 22:49Speaker 01

  And I am like of anything in the world, most excited about the fact that we want to produce and transmit and store and whatever, do all of those things with electricity now and rebuild the economy around a kind of electricity and batteries as, as kind of the animating force. I, I think that is incredibly, incredibly, incredibly exciting. There should be a thousand base power batteries sitting next to Heathrow, just making sure that, you know, nothing goes, goes wrong.

• 23:14Azeem Azhar?

  That was, that was exactly my thought today. I was thinking, how long would you need, what would you need to make this happen? But you talked about there being a startup in every one of these physical industries that we've ignored for 30 years. From the ones that you see, because you see so many, what is one that you're really excited about?

• 23:32Speaker 01

  Well, I mean, the one that, the one that I just mentioned, I think is really exciting. This company, Base Power Company, based in Texas. They're, it's starting in Texas because Texas is unique in America where it's the only state with its own energy grid. There's pretty much like the East Coast, the West Coast, and then Texas. And so it means that it's more volatile and messy in the short term, but it means that you can also innovate faster and there's more incentive to because it's so volatile. So base essentially is your electric company. They install batteries on your home that they still own. They take in energy when, you know, the sun is shining and the wind is blowing, which happens an awful lot in Texas. It's like right in the cross of where those things happen. And so you can get really, really, really cheap energy and discharge it at, at times when energy is expensive. By doing that, you help kind of balance.

• 24:17Speaker 01

  Balance the grid out. A huge problem that we have in America, and I'm sure there too, is transformers are backlog. It takes forever to get new transmission lines put in. So you kind of have to figure out how to do more with the same amount of grid that you have right now. And one way to do that is to make sure that the lines are kind of utilized more. And so when demand would be low, otherwise you charge up batteries. When demand is too high, you discharge those batteries at the source. And so I think, you know, if we think that that electricity is kind of the root of everything, there's been a ton of cool stuff happening on the generation side. There's nuclear, there's geothermal, there's fusion stuff starting to happen. But that has to get somewhere and actually be usable. And I think base is a big step in that direction.

• 24:59Azeem Azhar?

  Yes, I mean, the US grid, I think the loading is about fifty three percent on average, which means that you could probably take it up to seventy five before the safety engineers get a bit upset. So there's loads of room in there. So with, in the case of base, they effectively are doing a kind of time arbitrage across electricity in some sense. So can you just talk, talk us through, how does that work? Are they, do they buy the batteries? They rent them to you? What's the model for the homeowner?

• 25:26Speaker 01

  Yeah, so they're pretty much vertically integrated on everything above the kind of cell level. So they'll buy cells and then they'll do their battery pack, assembly and manufacturing and design. And they're kind of designing it as a whole system, including how quick it is to install in your house. You know, the ability to provide kind of full home backup. So, you know, the, the line can go into the battery and then the battery can go to the panel and just power the whole house. You don't have to do a bunch of electrical work. But the way it works for consumers is you sign up for base. They become your electric provider. So every month you pay the bill to them. The base team will come, they'll install a battery right next to your home. You know, again, battery that they've designed, but cells are what you should not.

• 26:06Azeem Azhar?

  Somebody else.

• 26:07Speaker 01

  Cells are much, they're like huge, huge, huge scale. They'll do that and then you pay a monthly kind of fee for the battery. And so base still owns the battery and they trade it. But now they're, they've already started, this was kind of later in the plan. They've already started lowering bills kind of ten percent right now below what you pay on average because they're able to trade that power back, back to the grid and make money that way. And because they're able to partner with utilities to stabilize the grid and get paid for that and make money that way. And so now you get this kind of free essentially home backup that you pay for, but then you get less on your energy bill. It's, it's like kind of this win, win, win, win, win, which is what technology is supposed to do.

• 26:45Azeem Azhar?

  It it is. I mean, Texas is also so huge. I mean, but my big experience in Texas, I was there last week, was that the Kit Kat, which we have in the UK, has four fingers. In Texas, it has eight, because everything has to be bigger in Texas. And I was talking to someone who did battery storage in homes while I was there, and not not at base now, I wish I had seen them when I was out there. And and she was telling me that the typical Texan home needs a fifty kilowatt hour battery, because they're so big. Just to give you a context, like in New York or the UK, you'd have a ten kilowatt hour battery. And that would be more than enough, maybe five. But Texans, everything, everything is much bigger. But the other thing that I think is so important as a theme to pull out of that is that effectively, the reason ERCOT,

• 27:29Azeem Azhar?

  which is a kind of Texas energy system, is able to innovate is because it's basically a free for all, for better or for worse. But the second thing is, part of the solution to to this capacity issue is actually making the electricity market work more efficiently. Because what we're doing is, right, we have to think of electrons as bananas that that go bad, right? And and bananas get produced really rapidly, and there aren't enough people to eat them. And then refrigerators showed up, and now fewer bananas go bad, more people get to eat them, and the price comes down. And and I think that this is a lesson that will get taken across from Texas to other places, which is that we have some portion

• 28:11Azeem Azhar?

  of the solution already there, right? And this, it's just solving this problem of what do we do with the electrons in the time when they're not needed?

• 28:19Speaker 01

  And you you've nailed that. I think this has been base's view, but also I think how how Texas and ERCOT view themselves is really as this kind of like testbed for what's going to happen kind of everywhere else in the country, because it is just, you know, it's a deregulated kind of cowboy market down there. And so they they really do, I think, take pride as a state in kind of being the place where people innovate first and then it spreads. And I think you're already starting to see other states demanding, you know, base and battery solutions generally, because it's expensive. You know, I I hope we get to a point in America where it's not so expensive to do really, really big infrastructure projects anymore. But right now, relative Relative to like a distributed solution. Big infrastructure projects are just slow, held up by permitting, you know, all sorts of issues that they have.

• 29:04Speaker 01

  And so the more that you can, you know, this is like the classic almost leapfrogging story, the more that you can kind of like leapfrog having to do all that stuff. And just provide better edge edge solutions, I think, you know, the better for for all of us.

• 29:15Azeem Azhar?

  I I want to get into this one with you because you've been thinking a lot about it. But I I wanted to ask about one other hard startup. So I know that you you've been thinking about space a bit, you've written quite a lot about space and SpaceX amongst other things. I saw that Eric Schmidt came in and took the CEO job at Relativity Space. So I have a theory about it, but I'd love to hear your theory.

• 29:35Speaker 01

  I would love to, I I actually, that confused a lot of me. I I would love to hear your theory on it.

• 29:39Azeem Azhar?

  Okay, so so let's put it in context, right? So Eric Schmidt has is phenomenal character. He's incredibly successful. He really deeply understands hard technologies, but he also built Google. And he's he's reasonably well off, you know, one could assume that he's self funding as needed. I reckon, my theory, no validation, is that he's taken over Relativity, which is going to become a competitor to SpaceX, simply because SpaceX has got a monopoly. And you know what? It'll be really fun. It's easy to chip at a monopoly. I mean, he built a business that ends up having monopolistic characteristics still to be determined by the FTC, but maybe they'll decide that was the case in Google.

• 30:22Azeem Azhar?

  And and I think it's just a big, interesting, challenging, difficult opportunity. It has new characteristics to it, to things he's done before. And you're just essentially up against an incumbent. Now, it's not a sleepy incumbent, it's Elon Musk and Glenn Shotwell, but it's still an incumbent.

• 30:38Speaker 01

  I like that theory a lot, and I think that's probably right, right? Like, I don't think that he's like, we're gonna beat SpaceX or, you know, I think there's an opportunity. Nobody wants there to be kind of like a a single, a single supplier to to orbit and and all that. I would wonder if if it ends up being kind of another like company that kind of looks like a SpaceX, that ends up, you know, taking share from SpaceX. Or if it ends up being something like a long shot space, where essentially you have a long tube in the middle of the desert, and you get mass to space that way. Obviously, you're not gonna, you know, shoot humans to space. And so like, there's different needs for different things, but that can get you there, you know, at an order of magnitude, cheaper cost or more or something like.

• 31:17Azeem Azhar?

  Is is long shot a railgun?

• 31:18Speaker 01

  Yeah, long shot's essentially a railgun.

• 31:20Azeem Azhar?

  Oh, so we've now got a solution, which is that you. Basically use free electricity during July in Texas for all your space launches.

• 31:30Speaker 01

  There you go. I mean, in energy abundant society, these are the types of trade offs that you can make. But I just mean like for these really hard things, like I think you do have to have some fairly big advantage to go out and compete. I think there's a really big business to be built for relativity, just on the fact that like, you know, NASA wants a dual source launches and, you know, other space agencies want to do source launches and you don't want to be reliant, particularly now that Elon has made himself the big character and enemy of half the world. I think there's like an actual business opportunity there, but if you were to say like, what really makes a meaningful difference? Maybe it's something like a long shot or, you know, like a radian aerospace, which is doing single stage to orbit and, you know, comes down and kind of lands the plane like. I think there's just different characteristics that you can play with that I would personally want to play with as opposed to being like, all right, we're going to go try to compete.

• 32:15Speaker 01

  Almost directly with SpaceX kind of doing what they do. That seems like a way to build a pretty good business that will never be within order of magnitude of SpaceX kind of size.

• 32:25Azeem Azhar?

  I mean SpaceX is a multi hundred billion dollar business. So I guess, you know, getting to within 10% of that is, is okay. It's a, it's an okay outcome. I mean, it's not a not boring or exponential view outcome, but it's okay.

• 32:38Speaker 01

  Yeah, I mean, honestly, I think that's, I think that's true. And so if you're coming out of retirement essentially to do that, to like, to get second place because somebody has to be second place. That's not particularly exciting to me. I would, I would much rather be working on something that's like, tries to, you know, undercut space. I, I'm still waiting for somebody to, you know, now that, now that the, uh, the guy who blooms up outside of, uh, you know, in the Cybertruck. Said that we have anti-gravity tech. I'm waiting for somebody to beat SpaceX with anti-gravity tech. That's what I'm, that's what I'm looking for.

• 33:08Azeem Azhar?

  I, I'm not sure he was a reliable, uh, reliable scientific source and we're not going to talk about what they found under the pyramids either. We do need electricity and when we started this about Europe and Germany shutting down its nuclear power stations and. Europe is a tale of two stories on nuclear because you also have France, which broke every rule by. Building N dozen nuclear power stations in about five years with nineteen seventies technology, let alone twenty twenties technology. My view on nuclear is this, is that, you know, nuclear is this amazingly clean, amazingly safe form of generating electricity. A plant runs ninety two percent of the time.

• 33:51Azeem Azhar?

  It is solid and reliable as you, as you like. We know that they run overrun. We know that they are expensive, but in a way, like any bag of shopping, some items are cheap and some items are expensive and you want the whole, you want the whole bag. So I can see there being an important place in, in nuclear and absolutely would encourage and I'm motivated by seeing nuclear announcements. But the but in my mind is distributed resources are getting so cheap so quickly and the flywheel has taken off. Solar panels, probably forty, fifty percent price cuts in the next decade, if not more. Batteries are still at the steep part of their learning curve where they're getting cheaper, much, much faster.

• 34:36Azeem Azhar?

  We're putting back storage in every car as well. Where do you stand on nuclear?

• 34:42Speaker 01

  Yeah, I mean, I'm very pro. I think it's hard to argue against solar and batteries. So we did this, me and Almen and Julie DeWall, who is a co-founder of a company called Antares, we did a season long podcast called Age of Miracles on nuclear fission, nuclear fusion, talked about why it was so expensive historically and what needs to change for that no longer to be the case. We had Casey Hanmer on to talk about, you know, to be the, to be solar's champion and we had Noah on to be, Noah Smith on to be batteries champion. And so we're very open to saying like, look, we need all of it. I think nuclear is phenomenal, baseload, reliable, clean, safe power. I think if you can kind of get over some of the regulatory hurdles, which are a big

• 35:24Speaker 01

  deal, and I know China, you know, it's not like China builds it for nothing with, with less regulation, but there's a bunch of companies out there right now that are, you know, talking about putting reactors right next to data centers. It's just like really easy to install relatively thing that doesn't take up as much space as solar panels and provides Kind of just reliable power that churns. It has a different use case. I think solar and battery will continue to grow faster. I don't think nuclear catches it at this point. I think, you know, the the counterfactual world where uh in the nineteen seventies, we just kept building nuclear. You know, the world is a cleaner, more energy abundant place, and it's a shame that that uh that that that didn't happen. I don't think it catches up now. But I do think that it can get more on those lending curves. I think there's a lot of entrepreneurs who are thinking about how you churn out a hundred nuclear reactors a year. So I think you can make it a lot cheaper.

• 36:09Speaker 01

  Uh, and you know, hopefully, hopefully, it's an event where there's, you know, another ice age and we were not fully reliant on solar. But I think with the less kind of absurd version of that is I I just don't think you want to be reliant on any one particular uh energy source at any given time. I think it's the last thing on nuclear is I just want to see a couple of decades of people really cranking on it because I do think you can get it to kind of come down the cost curves and it is. You know, cost physics wise, the amount of material and the energy density uh, you know, in uranium is just so far superior to anything else. That it it is, if we can actually kind of like engineer the challenges away, I think, you know, part of the long term energy, energy mix for sure. And then hopefully we get fusion at some point too, but uh there's a long way to go, I think, to get that kind of.

• 36:52Azeem Azhar?

  I mean, I generally uh vibe with that. I I would say that there's something that's really important for me around nuclear, which is there is no scientific reason for us not to be building lots of nuclear and for us not to have built lots of nuclear over the past twenty five years. For me, for us to just go out and say, we're going to build this is a is a return to acknowledging how valuable scientific evidence, argument, fact is. And so I've been discussing this, you know, privately with with various sort of people in different parts of the world, saying just change your regulations, even if you're not going to build anything, get rid of the ban because that is your acknowledging that science has value

• 37:33Azeem Azhar?

  in your society, in your politics, in your economy. There there is no reason for there to be this, these bans. If we can't build it for reasons of economics, that's a different class of ban in a way.

• 37:45Speaker 01

  Yes, I completely, I mean, that's why we did, you know, hopefully we did more seasons of this and we talked about a particular technology and whatever. The reason we did nuclear is like really as much as anything, wonder, like trying to figure out why. We have this miracle technology in our hands and you don't build it because I think in tech, we often think like if you build it, they will come and like the technology can solve the problem. And nuclear is just like really good counter example where you've built the miracle technology, were able to pull energy from atoms. And people are like, no, no, no, not thank you. We don't, we don't want any more of that. And so like figuring out and kind of like resetting what happened there. I agree. It's as much a cultural win as, as anything else.

• 38:21Azeem Azhar?

  I think we will, we will start to see that shift happening. It may take certain parts of Europe who've been very, very cherry about this, actually from even before the Germans to change their minds. But you know, the Chinese are going to, the Koreans are going to, the UAE will, the US will. The big tech companies will buy small modular reactors to put behind the meter in data centers. It's going to be useful. I think it's be helpful as a message of being a society, societies that value science. But in the percentages of energy, electricity production, I think it will be small and smaller than it is today in, in 20 years' time.

• 38:58Azeem Azhar?

  Because solar and batteries and wind and geothermal will be picking the slack. But that's a, that, we could come back to that bet in, in a couple of decades if we're both still doing this.

• 39:07Speaker 01

  I actually think you're completely right. I think as a percentage, it'll be lower. And hopefully it, both numbers are percentages of much, much, much bigger pies.

• 39:14Azeem Azhar?

  Right. Yeah, yeah.

• 39:16Speaker 01

  I mean, we haven't even talked about what, uh, what like, what everything going electric enables. I took my first electric boat ride when I was down in Texas and it was awesome. And there's just like so many, you can build better products with batteries and, and I like, I think we, I think it's underestimated, even as we talk about data centers and all of that. How much of the world is going to go electric? And assuming we didn't even get to robots, you know, assuming you get robots.

• 39:37Azeem Azhar?

  Robots. No, I know. We have to, we, we were going to talk about electric and we're going to talk about robots. And I just spoke to somebody who's in, in Beijing. And she said to me, you've got to come to Beijing. Fortunately, I am in June. She said, the roads are silent. And the roads are clean because you're at sixty, seventy-five, seventy percent electric vehicles on, on the road. There are drones delivering lattes to people. You don't really hear them. It is a, it's a better way.

• 40:01Speaker 01

  It's a bit just, it's the point of technology is like that over time, you can just do things in better ways. And like electric is, I think, just a better, better way. And so I think we're going to use a hell of a lot of electricity. And so hopefully some of that's nuclear, solar, batteries, geothermal, where it makes sense. Wind, I'm like, not the biggest fan of, but in some places it makes sense.

• 40:18Azeem Azhar?

  Yeah, I mean, if people are building winds, it's, it's better than building coal is sort of my, my perspective. Look, we have really, we've run to the top of our time. And as you say, we, we didn't get to a couple of topics we wanted to talk about. So maybe that's an excuse to do this again in a, in a few months. But on a kind of final question, right? We've got AI, we've got people building in atoms and bits. We've got Europe reawakening, you, you've got nuclear and this move towards producing more electricity. It's a lot to keep in one's head. How do you frame it? This compounding of all these waves, one on top of another?

• 40:54Speaker 01

  Oh, um, the two different ways that I frame it. One is, uh, it's just like tech is going to get so much bigger in a way that I, again, I think people appreciate and don't really appreciate that. You know, robots and AI make huge, like half of global GDP that was not an addressable market before is now an addressable market. Using technology in places that it wasn't before increases margins in places where there historically been low margins. Like I think the size of the economic impact of this, uh, over God knows what period, maybe it's a decade, maybe it's three decades. I, I think it's still dramatically, uh, kind of underappreciated. And I also think we're in a spot where like, I couldn't tell you where we're going to be in even a decade from now. I spent my life thinking about this stuff. And to your point, it just like kind of compounds on each other.

• 41:36Speaker 01

  Another thing we haven't even talked about, but every kind of smart college kid that I've spoken to, even just in the past couple of weeks, like really genius college kids, and I think genius college kids are now smarter than genius college kids where when I was in college, like they've gotten, like the good ones have gotten really good. Apparently they're all working on, on bio and neuro specifically. And I've heard this from like different schools and different pockets. And so we haven't even gotten to like what we're going to be able to do with our, with our brains. So like, that's the thing that, you know, smart kids are hacking out on the weekends. So I don't, I think things are, things are going to get really wild.

• 42:07Azeem Azhar?

  Let's do this again. We'll find out when, uh, it'll be, it'll be so much fun. Thanks for coming on the show. So you are at not boring, which I guess people can find on Substack and I'm at exponential view. I host these Friday lives 12 PM Eastern time, nine PM Pacific time every week. Paki, thanks so much for coming on the show.

• 42:26Speaker 01

  And thanks for having me. It's been so much fun.