Elon's Former Battery Chief: AI Data Centers Will Make Electricity Cheaper

Can today's power grid handle the explosive growth of AI data centers? Tesla Alum Drew Baglino https://www.linkedin.com/in/baglino/, now founder & CEO of Heron Power https://www.linkedin.com/company/heron-power-electronics/, doesn't think so. In this episode, he joins Lukas Biewald https://www.linkedin.com/in/lbiewald/?skipRedirect=true to talk about why scaling compute requires a fundamental overhaul of grid-to-chip infrastructure, not just bigger power plants. They cover how Heron Power raised $140M to cut power losses in half, shrink massive oil-filled transformers by 100x, and unlock 35MW of extra compute for every gigawatt data center, and what that means for the future of AI energy efficiency. Connect with us here: Drew Baglino https://www.linkedin.com/in/baglino/Heron Power https://www.linkedin.com/company/heron-power-electronics/Lukas Biewald https://www.linkedin.com/in/lbiewald/?skipRedirect=trueWeights and Biases https://www.linkedin.com/company/wandb/posts/?feedView=all

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

• 0:00Speaker 00

  That's actually what a data center is. You take a gigawatt of power and you convert it into 700 megawatts of heat. You spend 300 megawatts to get that heat into the atmosphere.

• 0:09Lukas Biewald?

  I guess presumably your transformer is going to be more efficient than the 10% loss.

• 0:13Speaker 00

  We can reduce the loss from grid to chip by about a factor of two. Our core first product, the Heron Link, the transformer part is 100 times smaller. You still need to go through an isolation stage when you're going from like a high voltage grid to like a computer. So you need to galvanically isolate, but rather than doing it at 60 Hz, which is how we do it today, we can do it at hundreds of kilohertz because these devices I'm talking about can switch so fast. So it's a material science thing. You're trying to find materials that can block more voltage, are more thermally conductive, because a semiconductor is either conducting or not. And there's a bajillion transistors in a GPU and a power device has one.

• 0:48Lukas Biewald?

  Right, right.

• 0:48Speaker 00

  But it's one like highly engineered device. And what silicon carbide is doing is allowing you not to make like a one volt transistor like you have in a GPU, but like you can make a 10,000 volt transistor. And it is actually smaller than the GPU, so we have the loss. So for somebody building like a gigawatt data center, it means they can get 35 megawatts more useful compute out.

• 1:07Lukas Biewald?

  Okay, so why did California power rates go up?

• 1:09Speaker 00

  There's like a lot of weird reasons. One is...

• 1:14Lukas Biewald?

  You're listening to Gradient Dissent, a show about making machine learning work in the real world. And I'm your host, Lukas Biewald. Today I'm talking with Drew Baglino, an old friend of mine who started as a junior engineer at Tesla and ended up running all of powertrain and energy, which is most of the company and reporting directly to Elon. He then went and started Heron Power, which has raised hundreds of millions of dollars to revolutionize the energy grid. This is a really interesting conversation on topics I know a lot less about than AI. I hope you enjoy it. I'm super excited to talk to you about your company, but I haven't known you for a long time. And I kind of wanted to go back and start with like your career at Tesla because that was a really interesting ride.

• 1:57Lukas Biewald?

  I think you were there for 18 years. Can you talk about that experience?

• 2:02Speaker 00

  Sure. Well, maybe I'll say first, yeah, we knew each other in college, went to Stanford together. Maybe lived in some funny off-campus housing together, more than one of those off-campus houses, I think. And I remember even back then, you and I would talk about, you know, different ways in which software would change the world. And, and, you know, you were always better at the software classes than I was. But I took them too. So I have a little bit of a software background. But yeah, that's, that's actually kind of what, a little bit of what brought me to Tesla was, was some connections back at Stanford.

• 2:47Speaker 00

  So I ended up in this, signing up for this energy field trips class that Gil Masters was running where it sounded like the coolest class ever. Like you were going to go to, you know, zero emissions buildings and you were going to go visit like wind turbine manufacturing facilities and solar manufacturing facilities and large installations. Like we went to the Hoover Dam and we went to some large wind farms and solar installations, including like the SEGS, like parabolic trough mirror solar installations and the Mojave, which are actually pretty cool to check out. They're still running today.

• 3:27Lukas Biewald?

  I think I see them from the airplane sometimes on New York.

• 3:29Speaker 00

  Yeah, not the power tower one. That one's nuts. But no, you do also see these. They're, they're, they're on that like the 15, I think. But I signed up for that class. It sounded really fun. And that's where I met JB Strabell, who, you know, the, one of the early Tesla founders. And he and I just kept in touch. And, and even though after we lived together in Dire Wolf, was that what it was called? I don't remember what it was called, to be honest, but that house on...

• 3:55Lukas Biewald?

  Some Grateful Dead song.

• 3:56Speaker 00

  Yeah, yeah, that house on in Barcadere. I left that, that house and went to DC to work at this think tank called Resources for the Future. And I was basically doing programming there. I was like coding up this crazy model in some bizarre like database language that I can't remember what, maybe it's called Stata or R, or maybe it was both of those languages, but...

• 4:18Lukas Biewald?

  Some bizarre languages, by the way.

• 4:20Speaker 00

  Yeah.

• 4:21Lukas Biewald?

  Classic stats languages.

• 4:23Speaker 00

  Yeah, totally. I think, I think, I can't remember which one it was, but, um, but I was working on this really interesting economic model of the Washington DC metro area and bored kind of out of my mind, mostly about the impact of it. I just didn't, I was like, it was interesting work, but it was translating into nothing that I could see in the physical world, at least not on a time horizon that was interesting to me. And so I kept in touch with JB and, and, and at some point it was like, you know, I think we might have a role for you. I had this background in embedded DSP stuff, uh, because I took some graduate courses at Stanford in robotics and in communications that were in embedded DSPs. And he's like, we need somebody who knows embedded DSPs. I was like, oh, I can do that.

• 5:07Speaker 00

  And that's, that's how I ended up there because, and the first project was, hey, we licensed all this

• 5:15Speaker 00

  analog control design for the motor control and for the charge control and for the battery management. We licensed it all from AC propulsion. That's how Tesla got a lot of its early technology was through licenses from AC propulsion, including the motor design.

• 5:33Speaker 00

  And we want to, we want to replace all that analog stuff that's controlling the car. It doesn't work well.

• 5:40Speaker 00

  We want to do it in a DSP. And I was like, sweet, that sounds like an amazing project. So that was really the first project that I was responsible for from beginning to end at Tesla. And it meant I spent a lot of time in electric cars, driving around these streets,

• 5:58Speaker 00

  roadsters parking in the Mission District. And, and also there was a really fun project involving converting a,

• 6:09Speaker 00

  an internal combustion engine smart car that we bought in Mexico to an electric smart car. And I remember parking it on like 22nd and Bryant, like at the Bryant's. You remember that house I lived on, on Bryant Street?

• 6:23Lukas Biewald?

  Totally.

• 6:26Speaker 00

  So I would just park it on the sidewalk. It like fit on the sidewalk, right next to the staircase. And it didn't even like block the sidewalk. That's how small the smart car, uh, smart car was. And it was, it was great, like learning how to, you know, going from working on code in Stata to model like the economy and the transportation system of Washington DC to embedded software that immediately you could see the result of it in the vehicle that you were driving yourself, like, and I'd be driving it and I'd have the laptop out, like showing me the signals of what was going on. It couldn't be more real time feedback.

• 7:06Speaker 00

  That's sort of what got me hooked on, on what we were doing at Tesla and, and what sort of why I stayed there so long was just seeing the work that you do translate into the real world so quickly.

• 7:15Lukas Biewald?

  Well, I feel like you also had this awesome experience of working really closely with Elon before it was clear what a successful entrepreneur he was going to become. Do you have any fun stories of Elon back then?

• 7:25Speaker 00

  Yeah. I can, I can talk through a really early, my first exposure to Elon, actually.

• 7:35Speaker 00

  So I worked for JB, the CTO directly throughout my early years. And one of the things that I was responsible beyond like all this embedded software that made the cargo and, and things related to that, was modeling the like physics of our products. So like, how far could they go? How much energy would they consume per mile? You know, would the car overheat when it's towing, you know, a boat? You know, all of these sort of like physical aspects of the electric powertrain and the systems attached to the electric powertrain, how quickly could it charge and things like this?

• 8:15Speaker 00

  And so in the period of time when we were, you know, conceptualizing what Model S could be our first, you know, let's say mass market EV, I mean, the Model 3 was truly the mass market EV, but Model S was way more mass market than the Roadster was. I was, I was sort of in that architectural role defining, you know, if we want to make the car do this, that means the battery needs to look like this. That means the motor needs to look like this. This is what an optimization of that system would be. And, you know, we got some guidance from JB and others about like what kind of car we were trying to make. And so we brought our presentation to Elon of like, well, this is what we think the battery needs to be,

• 8:59Speaker 00

  like how big it needs to be, how much energy needs to be in the battery.

• 9:04Speaker 00

  And, you know, we went through the assumptions, like we think the car will weigh this. We think the, it'll be this slippery. We think we can get tires that are this efficient. You know, we, we know we want to hit this EPA range and, you know, you, there were a couple of other like dimensioning load cases and we kind of went through most of that with him and he was following most of it. And then we get to the conclusion, it's like, we think we need to have somewhere between 8,000 and 8,800 cells. You know, just it, and then ultimately it's complicated math, but like it is just math. Like, you know, you have some sensitivities on how good all of these numbers could be. And like, this is the range, 8,000 to 8,800 cells.

• 9:46Speaker 00

  This is the first time I've, you know, ever interacted with, with Elon. And he just says, it can't be more than 7,200. Like it's, it's 7,200. And we're like, okay. Do you want to like go through any of the assumptions? Like where do you think we're wrong? He's like, it can't be more than 7,200. And like, meeting's over. You know, it's like, everybody is like, what just happened? You know, like, and...

• 10:14Speaker 00

  And it was such, for me, it was also like, did we do something wrong? Like, you know, we didn't really understand how to take it. And looking backwards at it, you know, he had information that I didn't have access to, like, you know, how much energy, how much would the cells cost? He was in the background pushing Panasonic, our cell partner, way out of their comfort zone on how much energy density they could get per cell. I didn't know any of that. But, and I don't actually think he did either. He just was like doing the math in his head of like, oh my God, if it is 8,000 cells, like, how do I fit that many cells? Like, how much is it?

• 10:57Speaker 00

  Is the car still going to be affordable, accessible? He didn't communicate any of that. But actually, that's part of, I would say, his genius is like, by putting out what seemed like impossible targets. Like, yeah, you said it has to be 10 to 20% more than this number, but I can't be, I'm telling you, it can't be more than 7,200. You know, what it forces, and we did it, was, okay, we got to make the motor more efficient. We got to figure out how to, you know, make the car more slippery, use less energy on the road, cooling itself and conditioning the cabin. We do have to push Panasonic really hard to make the cell more energy dense.

• 11:40Speaker 00

  And sort of, you're braking everybody's back at the same time. I mean, you're trying not to. Let's say you're loading everybody's back equally to sort of achieve this goal. And, uh, and doing it in a way that, that forces kind of like the A game out of everyone. So that's sort of like a classic example of, I think, how Elon operates. At the time, I was like, I never want to be in a meeting with him again, because it was such an intense interaction with not a lot of context. But when you, when you, when you sort of step back and appreciate sort of like why that's the way it's communicated and, um, and, and how that drives results, like, it certainly drove the result we needed,

• 12:23Speaker 00

  which is like, everything that I just said happened. Like, we did get a more efficient powertrain and the battery energy density was, was much higher than Panasonic was initially proposing. And it's almost good, too, that we did that, because other things changed along the way. Like, the way range was measured by the, you know, the EPA changed in a not so favorable way. So like, you kind of needed everything to, to go this way, just to have a compelling product anyways.

• 12:56Lukas Biewald?

  Well, I guess one thing that I've observed from the outside, watching you and a lot of my other friends or mutual friends kind of work for Elon, is people seem to burn out pretty quickly for this reason. I mean, everyone's kind of got a story like that. And most people seem to walk away from that story being like, this is like ridiculous. And I kind of told him the truth and he just didn't listen. And then he fired me when, when I said, it turned out to be the truth, right? I hear that all the time. But you seem to kind of enjoy the experience and you managed to work for him quite a long time and really rise up inside Tesla. Do you think there's something about you that's different than most people?

• 13:28Speaker 00

  Uh, you need to have a thick skin. You need to decouple your work product from your ego. Not everybody can do that. I think that's actually probably one of the hardest things for engineers, especially in high-paced companies to do, is to accept that what they just spent the last three months on might get torched, and for really good reason. You know, it may not as, it may not initially be obvious to them why, but in retrospect, as if they think back on it, whether they're at the company or not, they'll be like, oh yeah, that was the right decision. And I think that is just hard for engineers to, to do.

• 14:11Speaker 00

  But you kind of need to be able to do that. If you're going to be nimble, if you're going to respond to the newest information, if you're gonna find the failures in what you develop, whether in software or in hardware, you can't attach your ego to your work product. And I think that's something that, I mean, with JB's support, I mean, JB like helped me through that, right? And having a great manager early on, I had two amazing managers early on. One was JB Schraube, the other was Craig Carlson, who was a, like, I would say, highly contributing energy, uh, sorry,

• 14:49Speaker 00

  engineering executive at Tesla from like, I don't know, 2008 or '07 or something until 2013. And he ran software at Tesla, because I was responsible for a lot of this powertrain software. Like, I worked for Craig for a while. Both of those leaders really taught me how to, how to, how to like check your ego at the door, basically. If you're gonna, if you're gonna do a good job in a, in a like hardcore engineering organization, I think that is hard for any young engineer to do. But if you can do it, you can, you can go far. And I think that's true in business generally, not just like in an Elon company.

• 15:33Lukas Biewald?

  What was it like when JB left and he kind of stepped into his role, right? I mean, what, what was that like?

• 15:38Speaker 00

  Um, it was fulfilling to be exposed to so many new areas of technology. I think that was really what like retained me at the company was all of these new problems. So, yeah, when, when JB left, I was responsible at the time for kind of this like powertrain architecture. So that's the physical modeling of all of the systems in the vehicle and how do you optimize them to deliver the best results? And so that was a team of like, I don't know, 20 or so people that did what we would call a model versus actual. So you are both like responsible for predicting what the range of the vehicle will be

• 16:20Speaker 00

  or the watt hour per mile will be, or, or whether it'll overheat on a, a grade going up to Tahoe. But not just predicting it, but also then going out of running the test. And if it doesn't match, figuring out why and, and, and like using the gap between model and actual to make everything better, not the actual better and the model better. So that was that team. And then I was also leading this energy engineering organization. So the team that was building and, you know, designing and building and kind of installing the power wall and the power pack. And, and we were already starting to work on the, the next versions of, of that stuff at, at that point. And the superchargers also, we were responsible for engineering the superchargers.

• 17:04Speaker 00

  And so when JB left, I took on the battery pack, like how are batteries made? And, and, and the cell roadmap of, that's inside those batteries. So, you know, how do we improve the cell energy density, the cell affordability? And, uh, and also took on the propulsion system. So like the, how, how do you, how do you actually physically design and validate the motors? And the gearboxes and, and then also all the power electronics that are in all of these systems. So I, I took on all of these like new areas of technology that were really fun. And then I also started to play a more significant role in the business aspect of, of energy. Like, how do you make money with our energy products?

• 17:47Speaker 00

  Because that was something that JB had also sort of been the executive steward of. And then the last thing I, I became was one of the officers of the company and, you know, joined all the board, uh, the board meetings and the, and the earnings calls, which, I mean, it's just fascinating. It's fascinating.

• 18:03Lukas Biewald?

  Give us a story. Tell us a story if people might not have heard of, of that experience. I feel like you got this inside look at a really iconic company and a really interesting time with the...

• 18:14Speaker 00

  I mean, yeah, it was always...

• 18:17Lukas Biewald?

  Help me get some clicks here, Drew. Come on.

• 18:19Speaker 00

  Yeah, okay. Um, look, I don't think it's, it should, will be a surprise to you at all that Elon is, leads a very busy life, right? Like, and what was always impressive to me was, you know, we are ahead of an earnings call, like, you know, I work closely with Zach Kirkhor and I work closely with the other leadership team, like Jerome and others. And we're like, we have a lot of anxiety about the, these calls and like prepare a lot, you know? And, and frequently, like Elon would be coming from probably Neuralink or, you know, maybe, maybe even, uh, OpenAI at the time, to be honest,

• 19:04Speaker 00

  because he was heavily involved still with OpenAI at the time. And then like, just show up with, and maybe have like five minutes in the room to like chat with us. And then the recording button starts for the earnings call. And like, you know, it's, that's, I don't know how he did it. To be honest, I don't know how he did it. I mean, that's just part of his genius is that he can do that. But it was certainly anxiety, it was high anxiety times for us. And, and you know, like, are we aligned going into this? Are we gonna say the same things? You know, those were, those were difficult times. But, but we, of course, maintained good alignment with, with Elon through other avenues,

• 19:46Speaker 00

  not just, you know, the, what comes up ahead of one of those earnings calls. Trying to think if there's anything else, like any specific event.

• 19:57Speaker 00

  But I mean, you can imagine it's not quite like a live recorded podcast in a studio like this. Hello. But, but you know, you have the people that are going to move the stock, listening on every word you say. And if you're not prepared, and you if you put your foot in your mouth, yeah, you're probably not going to be at the company the next day. So probably some of the more stressful moments in my life.

• 20:23Lukas Biewald?

  Anything else in your experience worth sharing?

• 20:28Speaker 00

  Yeah, I've got, I've got some other good, good stories. I think there's been a lot made of like, production hell, kind of ramping Model 3 was very intense. And there were so many reasons why, like, the company was in a major growth period in so many facets of like, how to operate itself, not just how to produce those that many vehicles, but like, get the parts in, get them in a quality, once they've been produced, deliver them to customers, once they're delivered to customers, keep them serviced and operating well. Every aspect of the company to grow massively in Model 3, or like, orders of magnitude. But there's been a lot made of like, the production hell part of it. And I think this

• 21:11Speaker 00

  is another area where, like, a lot of people, as you would say, were like, oh, I said, I said the truth, and then I was fired. And, and there's always two sides to the story. And I'm not here to defend Elon, I'm just here to provide like, another layer of context to all of that. You, you have to step back and think about how are you, how to run this company that is trying to do like, probably one of the hardest things any company will ever do, you know, go from delivering 10,000 to 20,000 cars a year, maybe 50,000 that we were doing at that point, I don't know, maybe it was 100,000 Model Xs and Ss that

• 21:54Speaker 00

  we did in that timeframe per year, I think it was, to, you know, doing millions of cars a year. And just when you think about the like, sheer tonnage of material, the, the millions of dollars and billions of dollars of, of, of work in progress, like, it's an intense time. And any given interaction that any executive would have with anybody at that time, you know, you as the executive, you're like, trying to drive like, the end outcome, right? And while maybe in an interaction on a production line, you know, an executive

• 22:35Speaker 00

  might say like, just delete that thing, or like, we don't need that, you know, is that actually what they really mean? Or what they're trying to say is like, we need to produce more units? And so, any interaction with any individual bottleneck, like, you don't want to overindex on like, oh, well, he said, we shouldn't do that here, so we shouldn't do it anywhere. Well, actually, what really the point was, was, how do we make more product, like, holistically? And I don't want to, you know, it's not like, anybody wanted to make bad product, it's like, you just wanted to make more product. And, and sometimes, you need to make a point of like, one thing, that, and we actually, one, one thing that

• 23:20Speaker 00

  we, I'll, I'll, I'll actually get into details on this one. So, we had this robot that was trying to install this, like, I think it was like, a moisture, it's kind of like, a, it's like this flimsy bag filled with a desiccant or material or something, try to avoid condensation building up between the battery pack top and the, and the, and like, the underfloor of where the seats, you know, where your feet's foot, foot is. And it was like, partially to, to maybe act as a desk can, partially to be like, a noise barrier. But it was this

• 24:01Speaker 00

  super like, flimsy object. And there was this like, robot, like, trying to get it on to the top of the battery pack. And I, I think Elon may have coined at this, or like, somebody else did, but like, we called it like, the fluffer bot or something, because it just like, looked at like, this ridiculous thing, and was always erroring out. And when you like, step back and looked at this, and you said, like, why, what, like, two things, like, why do we have this part? Second, why do we have like, a robot installing it? It was like, it had to be like, taped down, it was really complicated. And, in like, classic outcome, like, this is true of so many things in life, like, first, we got rid of this

• 24:44Speaker 00

  robot, the line was stop, because like, the thing wouldn't get installed correctly, right? Like, that's, like, you don't need to stop the line, like, a person can fix it, like, there's space for a person to go and just like, correct it, like, don't stop the line. Then it's like, why are we even using a robot at all? Like, if you're gonna have a person fixing the robot, just get rid of the robot. And then it's like, wait a minute, this part should just be deleted, just get rid of this part, you know, and like, you go through that process, I think in this case, we went through that process in a matter of like, two or three days, you know, and just by taking that, like, one fluffer bot, or I can't remember the name of it, it was something like that, somebody is gonna respond, you know, comment on this and say, this is what it was actually called, just by like, you

• 25:25Speaker 00

  know, going through that example, with the team, like, they find like, seven other versions like that, you know, seven other, similar opportunities where like, the part could be deleted, the process, or like, the way we're automating it. I mean, and sometimes those interactions are really painful, especially if like, the person that is in that interaction with Elon is the person that spent the last like, two weeks coding up this complicated robot, and like, defending their work, and then, you know, maybe not there the next day. But like, then the broader team is like, oh, yeah, I get it, I get it. It's not really about the fluffer bot, or the part, it's about this overall system, like, there's other examples where we're making decisions, that if you viewed them from another lens,

• 26:10Speaker 00

  you could delete, delete, delete, or simplify, automate, whatever.

• 26:13Lukas Biewald?

  So what about now that you're like, running a company yourself, and you've seen this one example in CEO of this really iconic, inimitable CEO, what do you, what do you take from it? And are there things that you leave behind? How do you find your own style?

• 26:28Speaker 00

  Yeah. Well, even working within, you know, Tesla, it was like, yeah, I learned a lot from Elon, I learned a lot from Zach, I learned a lot from Jerome, I learned a lot from Doug, Craig, you know, I think I was developing my own like, merger of all of these individuals that were my role models or influencers, you know, peers. What, what I value, more than anything else, in, in my organizations that I build, is, is like, humility and transparent communication. And, and sort of this like, commitment to

• 27:12Speaker 00

  try to fail fast. This is another reason why ego attached to your work product is a bad thing. So if you attach a lot of ego to your work product, you're more likely to take like, the positive side of any finding. Oh, this test result, it's a little funny. I, it, you know, it's not like it passed or failed, it's funny, you know, it, maybe we need to retest it. That's like-

• 27:39Lukas Biewald?

  Okay, I gotta stop you here then, but yeah, but totally, but, and I, like, the stories you've told Elon's been right. But like, I guess my experience of Elon is mostly from Twitter, where this doesn't seem like a guy with zero ego, who's sort of dispassionately-

• 27:53Speaker 00

  I'm not talking about, I'm not talking about Elon.

• 27:55Lukas Biewald?

  I see.

• 27:56Speaker 00

  Yeah, I'm not talking about Elon here, I'm talking about how I try to run my-

• 28:00Lukas Biewald?

  I see.

• 28:01Speaker 00

  -companies, and why I reinforce the divorcement of ego from your, your work product. Yeah, Elon is, in his companies, Elon is the alpha, for sure, he's, he's the, yeah, there's no question about that. Like, he, he brings the-

• 28:16Lukas Biewald?

  So that's a different style.

• 28:19Speaker 00

  I'm talking about what's important in, for the people in my team, that I ask from them. And it, and that's not, that's not a question of like, my style, I'm not talking about my style necessarily.

• 28:30Lukas Biewald?

  I see.

• 28:30Speaker 00

  I'm talking about what I want to see in my, you know, team members. And the reason, the, I'm just providing another, I guess, analogy, like, you're, if you put a lot of ego into your work, you're not going to find the problems in your work. And if you want your product to get to market and be the best in the, in the market, and you want it to get into the market quickly, and you want to iterate quickly, like, you need to find the problems quickly. And that's where, you know, trying to like, detach yourself from your work product, and, and being able to like, attack it, as, as openly as anybody else could, as openly as Elon, undoubtedly would, to use, to bring Elon back to the

• 29:13Speaker 00

  conversation, like, I think, that is key. And so, that aspect of what I learned at Tesla, I try to bring to Heron Power, where I, you know, where I'm the founder CEO now. And it's, anyway, so that's, that's key. The other things that I, I value are, are like, a, a commitment to hiring people who are better than you, which I think is, is not, also doesn't always come natural to people, like, people have a habit of wanting to throw their weight over their, you know, reports, and, and, and one of the ways in which they do that is they feel better than them. And, and one of the ways they feel

• 29:58Speaker 00

  better with them is they think they're smarter than them, or whatever. But actually, you want to do the exact opposite, like, you want to bring on people that are, you know, smarter than you, have done, have more experience than you do, you know, fill the, fill in the blind spots that you have, and, and really elevate them. Because, because that's how you grow too, you know, like, and, and, yeah, there, I've, I've like, a whole like, management philosophy, I'll send it to you, that I've kind of developed over time, I'm, I'm forgetting, there's a bunch more, but, but those are, the humility, the, the higher, higher, higher, better than you, are two key ones. I'll think of some more as we keep chatting.

• 30:40Lukas Biewald?

  What about like, really aggressively pushing? Is that, I mean, that's something I've actually noticed that people that come out of working for Elon often have, is, is a, a style where they, they push really hard. Do, do you also do that?

• 30:54Speaker 00

  I do. I try to use, but I try to do it pragmatically, but I do. I think the, it's something I learned from my father. My father was an electric engineer.

• 31:05Lukas Biewald?

  I met him, yeah.

• 31:05Speaker 00

  Yeah, yeah, yeah, but awesome guy.

• 31:07Lukas Biewald?

  What's your father?

• 31:08Speaker 00

  My father, actually, it's funny. My father does consulting on electricity grids.

• 31:12Lukas Biewald?

  Yeah, yeah, he's also, I remember that, yeah.

• 31:15Speaker 00

  My father was an electric engineer and, and he was also an engineering manager and, you know, led divisions within Teradyne as like the delivering the products. And he was always telling me, even before I was at Tesla, that like you, you basically, when you develop a timeline, you kind of, you have to like do the bottoms up thing where like the team says this is how long I think it's going to take. And then you have to kind of bring your top down view of like, well, what does the business need or what do I think the team can do? And, and you sort of like push as hard as you can for something in between because you give people 12 months, they'll take 15 months. If you give people nine months, they'll

• 31:59Speaker 00

  take 10 or whatever. And that's just human nature. So yeah, I, I try to bring pragmatism to it. I, I don't, I don't think it's worth, I don't think it's worth, you know, denying some reality. I think that is where you run into problems if, if you're like, okay, well, we've got this large, you know, stamping tool and it's going to take, you know, whatever, 40 weeks to get it cut and delivered and, and ramped up as a tool. I've been through enough programs to know that that's like, that's the like, probably

• 32:40Speaker 00

  that's not that compressible. Like maybe you can make it 38 or something. But, but then you have to, when the team brings that as the reason why the project is two years long, then you have to say, well, we could soft tool it. We can like work around that part for a lot of the early prototyping. Like we can find ways to compress the program that maybe add a little bit of cost, but, but, you know, don't, don't require the project to be this long. I think people have this habit of long pole in the tent, whack a mole, where they're like trying to put a pole up to make the schedule be what they want the schedule to be.

• 33:21Speaker 00

  And it's sort of your job as an engineering executive or an executive of a company to just keep like cutting the poles down.

• 33:30Lukas Biewald?

  Wait, the long pole though, right? Do they want to cut down the long pole?

• 33:33Speaker 00

  Yeah, yeah. But the people just keep putting up new examples. It's like, oh, it's okay. Okay. So we figured out how to have the stamping now be your problem. Now it's, now it's something else. Like, and you just have to keep kind of going through that a couple of times and, and sort of like train the team on, on what, how you're willing to let the schedule be developed. Cause I, I think when people, when people land on a long pole, then anybody that isn't the long pole just sort of like rests. And it's like, well, we gotta wait for that stamping to show up. So like, I don't need my part to be done until, you know, 36 weeks from now. Cause my lead time is only four. And it's like, uh-uh, no. If your lead time's only four, you know, do your work now. Get

• 34:17Speaker 00

  in here in four weeks, rev it till it's perfect and go help the guy with the 36 week lead time, get it done sooner.

• 34:21Lukas Biewald?

  You know, it's funny, my experience with software is kind of different where I feel like what usually happens with software projects is if you ask people how long each component's going to take, they way underestimate it, right? They're talking about the first 90%, the second 90%, the third 90%. And so if you really do like a bottom up analysis and you let a team do it, especially a junior team, you'll end up with this like ludicrously like short timeline and you end up like really needing to pad it and watch it. And then you kind of watch, you know, it expand over time. It's not usually taking a longer timeline and pushing them to compress it. It's more like trying to get people to be realistic.

• 34:58Speaker 00

  I mean, yeah. So with software, I totally agree. Software is so different than hardware. I think with software, it's all about what's the list of like integration milestones or like demonstra, functionality demonstration milestones that you want to rally around? And like architecting that list and like sequence in a way where you're kind of getting the nights and weekends work, but you're also like focusing folks. Cause I think software is, is, there's a lot of hazards in software. You can basically fill time endlessly with more code or re-architecting over and over again.

• 35:38Lukas Biewald?

  And that's why I think short deadlines are really important in software, right? Cause you get people to cut scope and do the thing that actually matters.

• 35:44Speaker 00

  Yeah. And so one of the things that, because I started writing software in like physical systems and the physical systems had, you know, real deadlines, like, well, the car needs to be driving for this event. Like we're going to have, you know, we're going to do this. With Roadster, it was crazy. We did like, we had like a 400 person event at a airport in LA. I remember Arnold went and lots of the celebs went and like every single one of them was going to do a 0 to 60 drive. Like they were all going to experience the four second 0 to 60 in the Roadster. And, you know, the date was fixed and it's like the software, everything needs to work. Like there's no, it's incompressible, you

• 36:29Speaker 00

  know? And so it's super focusing and, and, and the only thing we couldn't figure out how to deal with was keeping the whole system cool and all the back to back 0 to 60s. So actually the, the like vehicle technicians came up with this like liquid, no, it wasn't like an nitrogen. It was like dry ice, like rapid chiller setup that like the car would go behind the curtain and they were like doing this thing with dry ice to like cool everything down and then like send it back out. And we did all those 0 to 60s and everything was fine, except for the magnesium cast motor mount cracked at like 300 or something. And

• 37:11Speaker 00

  so the, luckily the motor was pinned between the back of the battery pack and the, there was this like rear trunk thing. And so when you floor it, the motor would like slam into the battery pack. So you heard like a thump.

• 37:28Lukas Biewald?

  But it still worked.

• 37:29Speaker 00

  Nice. And then, and then, and then when you slowed down and went on regen, it would like thunk into the trunk, but everything was fine. But anyway, that was a fun example. But yeah, no, you need, you need integration milestones that if you're going to, if that date was like 10 weeks from now or, you know, and this is something that Craig Carlson taught me and he was amazing at. It's like, okay, what are we doing this week? What are we doing next week? What are we doing after week? And like just laser focusing the team on that stuff.

• 37:59Lukas Biewald?

  This is total aside, and I do want to get to Heron Power, but I had this interaction with you, I think like 10 years ago, where you were talking about like luxury cars and what makes a luxury car. And it was things that were so stupid, like having like a bigger piece of like metal or something, that it's completely made me not ever want to buy a luxury car and always drive cheap cars. Did I take the right takeaway from, from that conversation?

• 38:27Speaker 00

  Um, I'm trying to remember the conversation, but.

• 38:33Lukas Biewald?

  What makes a car like fancy? Like are they actually sort of faster or?

• 38:38Speaker 00

  Well, okay. What makes a luxury car? I think some of it is the choice of metal. I think, yeah. So there's some interesting examples, like the NVH package, the noise, vibration and harshness, harshness package, which is basically the content that you add to absorb the sound that the wheels make on the road or the tires make on the road that, that they're the primary sound generator. And then in an engine car, yeah, an internal engine, combustion engine car, the engine makes noise. So you basically spend money to absorb that sound. And in a budget car, you spend not a lot of money. And in a luxury

• 39:23Speaker 00

  car, you'll spend, I don't know, $400 or $500. And so the difference between the, the regular sedan, where you spend 50 bucks on NVH material and the luxury sedan, where you spend $500 on NVH material, is the difference between a quiet cabin and a acceptably noisy one. You know, that's, that's an example.

• 39:48Lukas Biewald?

  That's pretty good. Yeah.

• 39:49Speaker 00

  Yeah. But that's the kind of thing you're doing with a luxury car. Another example would be like closing the door. Okay. So a luxury car, it sounds nice when you close the door. It's got this like satisfying thunk, you know, it's like, ah, this is a well-built car. Like I will, I'm happy I bought this car. Right? And a not luxury car, it's like the car door closed and stayed closed when it was supposed to stay closed in this accident, that accident. And like, that's what it did. You know, and, and the difference between the satisfying sound and the not so satisfying sound is like the stiffness of the structure of the door and the, the, the like, how many lips on the seals and all of these things

• 40:34Speaker 00

  contribute to like that thunk and the solidity feeling of the door. Again, it's, it's weight basically, like materials that you've added. You can always optimize it, but the thing is if you take the optimized luxury car, it just means the not luxury car will be lighter. Like the, the, that is kind of the thing you're trading. You're trading some mass, I think it is mass and, and some cost for these sort of creature comforts or these perception aspects of the vehicle.

• 41:05Lukas Biewald?

  And are you like a car guy after all these years? Like working on cars? Do you like look at cars and think about?

• 41:10Speaker 00

  No.

• 41:12Speaker 00

  I never was much of a car guy. I mean, I love. I will never drive a non-electric car, or at least not happily.

• 41:20Lukas Biewald?

  Yeah.

• 41:20Speaker 00

  I mean, I love how much quieter they are, the responsiveness. I can understand like the linearity of steering and what good damping feels like on the suspension system. Like, I can appreciate all of these things. But um. I was never, I'm not like on the weekends going and like rally driving on the racetrack or, or really following. I mean, of course, when I was at Tesla, I was following all of the competitors, but like as soon as I left Tesla, I really wasn't.

• 41:48Lukas Biewald?

  Although you do kind of drive like a maniac, is my.

• 41:51Speaker 00

  Yes.

• 41:51Lukas Biewald?

  Is that because you are confident in the specs of the car or was that before Tesla?

• 41:56Speaker 00

  Um, no, Tesla definitely, yeah. I spent a lot of time on racetracks at Tesla, um, developing the traction control, the stability control. Um, you know, I was responsible for that aspect, like sort of how the car stays on the road from their perspective of braking and steering and, and uh, and the, and the, you know, the propulsion system.

• 42:18Speaker 00

  So yeah, I've been spent times on, you know, dry racetracks, like slick, um, like where you put water on to understand what rain, driving the rain is. I've been on, I've been in Alaska, Minnesota, um, Sweden on snow and ice driving. And you learn how to interpret where you are relative to like the edge of stability on a vehicle. Just from the feedback you get to the steering wheel, the sound of the tires, like you learn these things. Um, and since I did it for so much time, uh, and I'm still driving those same cars today, like I still, I drove a Model 3 here today. You know, the car really well, you can understand its limits and you can have fun.

• 43:03Lukas Biewald?

  Nice.

• 43:05Speaker 00

  And I'm always chronically late, so I think that's another reason I drive like a little bit faster than most people find comfortable.

• 43:12Lukas Biewald?

  What about autonomy? I mean, you were one of the first people I knew talking about autonomous vehicles and then it got really hot and you were right in the middle of it.

• 43:18Speaker 00

  Yeah.

• 43:18Lukas Biewald?

  How is that? Tell me about what you're thinking when it started and then how is the trajectory surprised you?

• 43:26Speaker 00

  You know, it was, yeah.

• 43:30Speaker 00

  So I, uh, JB, one of the things that JB asked me to do in 2012, 2013 was start working on this problem statement and like, you know, we needed to be competitive. The Model S needed to be competitive with all these German cars and, you know, have adaptive cruise control and a lot of these like active safety systems. So I went out and, you know, met with Bosch to like see their radars and I talked to Mobileye and like, you know, understood what was out there and I hired some people. I hired,

• 44:08Speaker 00

  you know, some, some, some controls folks to start developing the autonomy stack. At the time, we didn't really call it the autonomy stack. We called it adaptive cruise control, but to develop the, the car driving itself functionality.

• 44:22Speaker 00

  And was responsible for autopilot, like in the first year or so as we were putting the team together.

• 44:31Speaker 00

  And you know, I didn't have your background, like I didn't have any exposure to machine learning at that point. I didn't have any exposure to what computer vision could be. You know, I was and still am like very much like a physics first control systems. I took, I've, I was an electrical engineer undergrad and I had a concentration in, you know, signals and systems, which is basically like control theory and in electrical circuits and in, and in, and in software.

• 44:59Speaker 00

  And so I came at it from like a physics-based perspective, like, okay, if I'm going to have a car drive itself, you know, I'm going to create a physical model of the world around me. I already can fully model the car and can plan optimal control for like the car from here to there. If I understand where the car needs to go, like that's. And that worked really well for adaptive cruise control.

• 45:26Speaker 00

  But you know,

• 45:29Speaker 00

  it pretty quickly became clear that that wasn't going to work well all the way to the end, even back then.

• 45:37Speaker 00

  And, and you know, I think what was interesting to me in that whole period of time, this was 2014, uh, 2015, I think, or I think it was 2014. So Mobileye had a demonstrator car to sell their cameras and their demonstrator car was an Audi B8 or something like that. And they would, you know, have the car drive itself off of their single monocular, like single camera, uh, image sensing.

• 46:05Lukas Biewald?

  Wow, just one camera?

• 46:06Speaker 00

  Just one camera.

• 46:07Lukas Biewald?

  Wow.

• 46:07Speaker 00

  They have the car drive itself. And I think they also did some fusion with the radar or something. So they had like camera and radar and that they have the car drive itself. It was a really impressive demo. And Elon got a demo from the Mobileye CEO. And, you know, we were doing adaptive cruise control. We weren't talking about the car driving itself, nothing like that. Um, we were, we were developing the platform of the vehicle to meet the Euro NCAP like crash safety standards, which is sort of, or active safety standards, like detect pedestrians, cyclists, you know, automatic emergency braking, do all this stuff with like some radar, some camera. So we had been developing, this was, um, me and this guy Satish were developing this like platform

• 46:52Speaker 00

  that could hit all the European requirements and also have the car do adaptive cruise control. Um, this is, yeah, early 2014 and Elon comes out of this Mobileye drive and it's like,

• 47:04Speaker 00

  we're going to have the car drive itself. And so then it's like, you know, forget about meeting the European requirements. We're just going to have the car drive itself, uh, fully. And we're like, so this is the hardware we got. We're going to use this hardware. And he's like, yeah, that hardware can do it. And we're, and it was like, okay, you know, and that's when the like, people have two, two, two eyes, like, you know, they drive, why, why can't we drive the car with, uh, with just vision? That's when that sort of started. It really came out of that Mobileye drive. Um, and you know, I was in the position to meet with Elon every week to be like, so when's the car going to drive itself from California to Boston? You know, that was the, every meeting, that was his question. To me and, and the early autopilot team. And he's like, can it be next week?

• 47:50Speaker 00

  Like, that was the question. This is the, this is the, uh, the amazing value of like the distortion, reality distortion field that like folks like Elon and others bring to a conversation. It's not like, so how many years is it going to take? You know, it's like, can it be tomorrow? You know, like, why can't it be tomorrow? It's just like, that's the question.

• 48:11Speaker 00

  And you know, uh, the team is ramping up. We're getting like the computer vision people and we're getting all the people in that can sort of start thinking about how the car could drive itself. Um, and every week that's the question. And at some point I'm like,

• 48:25Speaker 00

  you know, I, I, I'm an energy nerd. I'm like a physical systems person. I, I think I'm going to go do something different. And, uh, that's when I started working on Tesla Energy that, you know, when the first like SuperPAC, uh, Powerwall won, you know, the team was like three engineers. I started doing that. And autopilot moved on to, you know, a series of leaders that tried to work with Elon through the why can't it be tomorrow? Reality. Um, and we're still in the why can't it be tomorrow a little bit, although it's really impressive.

• 49:00Lukas Biewald?

  Really awesome, yeah.

• 49:01Speaker 00

  Ethic is incredible.

• 49:02Lukas Biewald?

  Totally.

• 49:03Speaker 00

  And I mean, the team, uh, Ashok, I actually interviewed Ashok, like back when he joined, you know, um, cause I was part of like building that early team.

• 49:15Speaker 00

  I mean, Ashok is amazing. The team is amazing. The Tesla team is incredible, like what they've done to go from heuristics and physics-based like optimal control planning to nothing but nets, like pixels to actuators is incredible. Um, and, and I like, could I have predicted that? No, like I just didn't have the context at all. You know, I knew how to do estimation and Kalman filters and like all of these things that are in control systems where you are working with unclear, where you don't have all the information and you do have to do effectively like a recursive on the fly state estimation. Like, I was familiar with all of that type of work.

• 49:58Speaker 00

  But I just had, and I had done, I took like an AI class in college that I knew, I knew about like Bayesian trees and like all of that. I think we took the same classes. Yeah. I knew about it, but like I had no idea where it would go. I could never have predicted it and, um, and kudos to the team for like sticking with it and getting to where they've gotten. It's incredible.

• 50:18Lukas Biewald?

  Totally. All right. So let's talk about electricity grid.

• 50:21Speaker 00

  Sure.

• 50:21Lukas Biewald?

  So, um,

• 50:24Lukas Biewald?

  what, what made you start here in power?

• 50:28Speaker 00

  Yeah, it was this conviction that electrification is accelerating, that there's gonna be more electric cars, gonna be more electric heating, we're gonna electrify industry as well.

• 50:45Speaker 00

  Just in general, we're going to see a growth in AI also.

• 50:50Lukas Biewald?

  I was gonna say, you're like two sentences in, you haven't said data center.

• 50:52Speaker 00

  I know, I know, I know. Sometimes I need to stress the other things.

• 50:58Lukas Biewald?

  Nice.

• 50:58Speaker 00

  Because AI is said so often. But yeah, we have like load growth in AI.

• 51:05Speaker 00

  And, which by the way, when I started, heron wasn't as obvious as it is now.

• 51:09Lukas Biewald?

  Totally.

• 51:11Speaker 00

  But.

• 51:12Lukas Biewald?

  But okay, but like maybe backing up because I'm actually really not an expert on this. And probably people, you know, watching or listening are even less experts. Like, you know, what's the problem here? Like, I turn the lights on, the lights consistently go on.

• 51:24Speaker 00

  Sure.

• 51:24Lukas Biewald?

  The electricity grid seems pretty stable. We complain about power prices in California for some reason. But, you know, of all the things in my life, like the electricity grid seems pretty stable and okay. Like, what's the issue?

• 51:36Speaker 00

  Yeah, just an interesting fact about California. So the retail rates are really high in California, but the average household electricity bill in California is like middle of the pack in terms of average electricity bills in the country. And it's because there's just, people don't actually use a lot of electricity in California. Very few people have like air conditioning or everybody's on like, you know, fancy LED lighting. And it's a moderate climate, right? So like, it's not like Texas.

• 52:06Lukas Biewald?

  Right.

• 52:07Speaker 00

  And so while the retail rates are high, the average cost of electricity to a homeowner is middle of the pack, which is just a fascinating thing. So it actually means that, you know, if you go back 10 years before the retail rates were high, electricity was super affordable in California, which is kind of like contrary to the thesis.

• 52:28Speaker 00

  But I'm not here to defend the retail rates of California. I think they need to go down and they are going down as we bring more load on. And maybe that's kind of the point. So from the 70s, maybe 80s, till just a couple of years ago, there really wasn't electricity load growth in the United States and in the Western world. And it was because of energy efficiency in all of these technologies. Lighting, air conditioning, computing as well. You know, data center load growth was not very much. And actually, as a percent of total end use electricity, did not go up very much from like the 90s all the way till like the 2010s.

• 53:12Speaker 00

  Because the efficiency of compute kept improving dramatically. And not just compute, but like storage, like everything that networking, how to cool them, like everything just kept getting more efficient. So you kept adding more compute, but like you kept making it more efficient at the same time.

• 53:27Lukas Biewald?

  So the overall load of the United States hasn't grown since the 80s?

• 53:31Speaker 00

  Yeah, from like 80s, the 80s and the 90s and the 2000s, 2010s, like through that whole period of time, like average load growth was 1% or less. So very little growth in the system. And what that did was, I would say, almost like calcified the industry that supports the utility sector, like the supply chain to the utility sector. Because if you're not in a growth industry, what are you doing? And so a lot of the talent left the States and went to areas that were growing, like Japan and Korea, China, India.

• 54:13Speaker 00

  Because that was where, you know, the demand was going gangbusters, where new things needed to be deployed.

• 54:21Speaker 00

  And so like the new energy technologies were being developed and improved other places. And the other thing that added to this calcification is that

• 54:34Speaker 00

  the utility incentive model was sort of built around the fact that like electricity use isn't always going to go up. And so the way utilities make money is not by increasing the sales of electricity, but by getting a guaranteed rate of return on the CapEx they deploy. So now you imagine this period of time when there's not load growth, really. So the utilities don't have a lot of reason to deploy a lot of CapEx.

• 55:06Speaker 00

  What's gonna happen? The suppliers are gonna charge more money for what they are deploying, because that's how the utilities get a return on investment. And this is all like natural incentives, it's all just incentives.

• 55:17Lukas Biewald?

  The utilities incentivized to spend more money than.

• 55:21Speaker 00

  Yeah, yeah, the utilities have an incentive to deploy more CapEx year over year.

• 55:28Lukas Biewald?

  So I think we would maybe make some awesome projects and get all kinds of wild

• 55:33Lukas Biewald?

  new technology.

• 55:34Speaker 00

  I mean, they're regulated, so like they have to justify their rate case to the public utilities commissions and the public utilities commissions are gonna say like, hey, like, why are you, why are your expenditures outpacing inflation? Like, they have some pushback.

• 55:47Lukas Biewald?

  Okay, so I have to ask, sitting here in California.

• 55:49Speaker 00

  Yeah.

• 55:50Lukas Biewald?

  Why are the rates going up then? It sounds like nothing's changing. What happened?

• 55:56Speaker 00

  Yeah, yeah, yeah. Okay, let me, let me just finish this thought.

• 55:58Lukas Biewald?

  Okay.

• 55:59Speaker 00

  So, so you're in this environment where it's like stagnant, like the, the amount of hardware being deployed is almost like maintenance CapEx. The, the utilities are incentivized to spend kind of like more money on that maintenance CapEx because that's how they make their return. So then the suppliers that are like shipping a flat number of units are just kind of getting like fat and happy, like charging more for that same unit over time. Because that's actually what the utility wants to do, is spend more money on it. So that whole supply base became siloed and a little bit uncompetitive.

• 56:40Speaker 00

  And if we're gonna have electrification growing at the pace that it is now growing, 3%, 4%, 5% per year, I think we need to triple the total amount of electricity generated and consumed if we want to have an all-electric, sustainable energy economy, which I'm really passionate about. We need new suppliers because the suppliers we have are, are like,

• 57:02Speaker 00

  we used to call it at Tesla, it's sort of like towing a dinosaur is kind of what's happening. Or a boat anchor, like the supply base is almost like a boat anchor on the path towards electrification.

• 57:15Lukas Biewald?

  Wait, sorry, I keep interrupting you, but why would electrification need triple the amount of electricity? Like, isn't the main way we consume power through electricity? Like, is there so much like gas cars that, is that gonna be the main thing that?

• 57:31Speaker 00

  Yeah, well, a third, electricity represents like a third of end use energy consumption right now, is like the simplest way to think about it.

• 57:40Lukas Biewald?

  Really? So the gas is more than?

• 57:42Speaker 00

  Yeah, well, you have fossil fuels in industry and buildings. You have fossil fuels in transportation. You have fossil fuels in like the whole chemical sector of like fertilizers and,

• 57:56Speaker 00

  and building material, you know, plastics, composites. So, yeah, there's, if you, I worked on this

• 58:06Speaker 00

  paper called The Master Plan Part 3, which was effectively, can you build a sustainable energy economy? Like, what is involved? Like, do the resources exist? Do the technologies exist? Is it an economical thing to do?

• 58:19Speaker 00

  Short answer, yes, you can. But yeah, it does ultimately mean that we will produce three times as much electricity as we do today.

• 58:26Lukas Biewald?

  Why?

• 58:28Speaker 00

  But in so doing, we will have like a effectively a fully sustainable and more affordable energy economy in the future when we do that.

• 58:38Lukas Biewald?

  Okay, so why did California power rates go up?

• 58:40Speaker 00

  Yeah, there's like a lot of weird reasons.

• 58:46Speaker 00

  One is the cost of wildfire abatement and the liability of prior wildfires. It's probably like the signal, single individual

• 58:59Speaker 00

  like adder in California relative to other places. The other is

• 59:05Speaker 00

  a little bit what I'm talking about of like the incentive structure and, you know, the cost of the components that go into maintaining and building out the grid,

• 59:15Speaker 00

  inflating over time. The other is like California is actually kind of like a big state. And it's, and it's, it's a pretty like on average sort of rural state. So there's actually a lot of distribution lines relative to the number of people. And we do have, you know, and like the utilities have a mandate to like serve the rural folks in northern Mendocino County, you know, as much as they do in downtown San Francisco. You know, you compare that to like Delaware or like Maryland. It's just like the ratio is not in favor of the California utilities. And, and California kind of got built out long enough ago that a lot of stuff needs to be like repaired and replaced. So that's like a unique thing in California.

• 59:58Speaker 00

  And then another one, and this is probably one of the ones that is the most controversial, is for a long time, California had net energy metering for solar, which meant that you as an end customer get compensated at the retail price of electricity for putting, you know, your solar onto the grid. You don't get compensated at the same price that the utility pays to send you electricity from the grid. So if you think about how that works conceptually, like when the sun is not out, the utility pays the spot market price of electricity, which is whatever it is.

• 1:00:41Speaker 00

  Plus, it has to pay for transmitting the power from where it's generated to you and then distributing the power to you. So the utility kind of like pays for all those things.

• 1:00:50Speaker 00

  And then you pay a retail price of electricity for the power that you consume. But when you go the other way, the utility has to buy it back at the retail price, not at the spot price, whereas they could have bought power from the market at the spot price. So effectively, they're paying you way more than they would pay a generator anywhere else.

• 1:01:11Lukas Biewald?

  Where they're not making money they would have otherwise made.

• 1:01:14Speaker 00

  Well, the simple way to think about it is if you have all the kilowatt hours, if the way that you amortize the cost of your infrastructure is all of your costs divided by all the kilowatt hours that you serve. Well, the kilowatt hours that are served by rooftop solar, you don't get to put in the denominator. So those fixed costs get divided over fewer kilowatt hours served. And so the fixed costs go up and rooftop solar is so popular in California that it has a significant impact on the denominator. The denominator got a lot smaller or didn't grow.

• 1:01:59Speaker 00

  So the numerator, even if it stayed fixed, it means the like per kilowatt hour cost has to go up for the same infrastructure. And the thing that is changing that now is, you know, there's a high penetration of rooftop solar. So like fewer people want to have it. NAM has been changed so that you don't get compensated in the same way. And we have load growth again, we have electric cars in homes, we have heat pumps in homes, we have data centers, maybe even in homes, like extra is this like idea of data centers in homes. So all of those things have meant that for the first time in like many decades, PG&E actually had the numerator go up. The numerator of that equation went up, and so that's why the rates didn't go up in California.

• 1:02:43Speaker 00

  And they think the numerator is going to go up next year, and they think the rates will even go down. If you listen to Patty Poppy, CEO of PG&E, who I know Patty is great. Hi Patty, if you're listening. That's what she's saying. She's saying if we keep having this load growth and the regulatory structure doesn't change, we're actually going to reduce rates in California, which would be great.

• 1:03:00Lukas Biewald?

  So what are you going to make? I would have thought maybe you look at this and think, okay, I should make solar panels or some kind of new energy generation. But that's not what you're doing.

• 1:03:09Speaker 00

  Yeah. So, yeah, so what we're, what we're trying to do is, is provide alternative, let's say, software and silicon based solutions to the largely mechanical passive solutions that utilities and people building power plants and people building factories have to choose from today. And again, going back to why this opportunity exists, it's because there wasn't a lot of load growth. There wasn't a lot of need for innovation in that supply base. And I saw it directly, like I was responsible for deploying mega packs. And we did over 10 years, we did four different versions of utility scale storage.

• 1:03:54Speaker 00

  We did like power pack one, power pack two, mega pack one, mega pack two. In the course of like eight to 10 years, we iterated and dramatically improved the cost, made it easier to install, did all of these things. But over that same period, like we were still interconnecting to the same annoying stuff that was hard to get from the same suppliers that were largely made abroad that weren't improving.

• 1:04:18Lukas Biewald?

  So like, what are these things that like, what are we talking about?

• 1:04:21Speaker 00

  It's like switchgear that, you know, controls the flow of electricity or interrupts the flow of electricity, think like large mechanical switches that take like hundreds of milliseconds or maybe even seconds to open. So switchgear.

• 1:04:40Lukas Biewald?

  Is like a physical thing?

• 1:04:41Speaker 00

  Physical object.

• 1:04:42Lukas Biewald?

  Is it like those like blade switches from like Frankenstein?

• 1:04:44Speaker 00

  Total, which is from Frankenstein, but imagine they're motorized.

• 1:04:48Lukas Biewald?

  Nice.

• 1:04:48Speaker 00

  And sometimes they're inside of a vacuum or maybe they're in some other like inert gas that is, helps suppress the arc.

• 1:04:55Lukas Biewald?

  But like, I guess I might look at that and say, how could you, how could you make like a motorized blade switch better? Like what, what more can it do it? Like what's the power through or not?

• 1:05:04Speaker 00

  Um, well, yeah, I mean, I'll get there.

• 1:05:07Lukas Biewald?

  Or pick, pick, pick any.

• 1:05:09Speaker 00

  No, no, I'll get there. Yeah, yeah, yeah, yeah, yeah. So, so switchgear is one. And if you go to a, somebody building a data center or a factory, like the, one of the longest lead time things they have to buy is the switchgear. So why is maybe the question? Cause it is just simple mechanical stuff. And then transformers. And all the things that are around the switchgear and the transformers, which are like meters and sensors for voltage and current. And all of that gear is kind of like this cottage industry that partially because the utility industry is really Balkanized. There's, you know, 3,000 utilities in the United States and they all have their own rules and requirements.

• 1:05:54Speaker 00

  And, and, and, you know, when they all were formed, you know, a hundred years ago, there wasn't a federal highway system, there wasn't the internet, you know, so every, they all have like their down the road supplier. So they all develop their own requirements and their own custom stuff. So that is the ecosystem that we're looking at is, is this world of passive steel and oil and copper wound transformers, mechanical switches, you know, you know, ancillary components that have a little bit of software written around them to control them. That, that is the, what we're trying to provide alternative solutions for.

• 1:06:35Speaker 00

  And what we're doing, how we're doing that is by using wide band gap power semiconductor material in the form of like really robust, capable, proven devices that have been deployed in electric vehicles and grid scale batteries to replace these mechanical objects.

• 1:06:54Lukas Biewald?

  Sorry, what is a wide band gap? Is that a wire?

• 1:06:58Speaker 00

  A wide band gap semiconductor. So, you know, you've seen, you know, an integrated circuit, you've seen a GPU, right? Now imagine that that highly engineered, you know, multi-layered device isn't engineered to store ones and zeros and move ones and zeros really quickly and do math and all that kind of stuff. But instead is designed to optimally conduct and interrupt the flow of electricity and block voltage. So that is what power semiconductor materials do.

• 1:07:31Lukas Biewald?

  Wait, let's talk about that because it makes sense to me that like a compute would need a really complicated system. But I feel like interrupting power and letting power through, that feels like very, very simple. Like, how do you actually, what do you actually doing?

• 1:07:49Speaker 00

  Did you, did you take semiconductor physics at Stanford?

• 1:07:52Lukas Biewald?

  I didn't, and I'm sure people watching this have it, so you might get to back up.

• 1:07:56Speaker 00

  By the way, like it's pretty, it's pretty awesome. But the way, you know, the way all semiconductor devices work, you know, is like you're selectively choosing or doping different regions of the base material, which is a, the semiconductor of choice. And, and, you know, she uses, she uses silicon. In some power devices, it's not, it's silicon carbide or GaN or other materials. So you, you start with some substrate and then you kind of like dope different regions, etch different regions to selectively channel or, or, or be able to control the flow of electrons

• 1:08:39Speaker 00

  or even like enhance the, the number of electrons in different regions of the material. So it's, it's a very like mechanical process ultimately of how you make these semiconductor devices. With, where you have like masks for photolithography, where you have, you know, you're doing like vapor deposition or, or atomic layer deposition of like atoms, like doping atom by atom into the matrix of the, the, the substrate, like.

• 1:09:12Lukas Biewald?

  But again, like on GPUs, like the, the flow of actual electrons is, is really light, right? These are really small currents at the level of the chip. I mean, oh, if you add them all up.

• 1:09:22Speaker 00

  Currents are nuts at the GPU because it's one volt and it's like a kilowatt. And so it's a thousand amps.

• 1:09:28Lukas Biewald?

  But like, I think on each individual part of the chip, it's a pretty small flow, right?

• 1:09:34Speaker 00

  No, it's, I mean, that's actually how the power density and the compute performance over time has improved is you're actually driving higher and higher current density in the chips and figuring out more effectively how to like pull the heat out, like the heat flux out. Cause, cause, uh, you know, effectively the, you know, all of the operations that are happening in the chip are, especially at high frequency. You know, you're, you're just every clock cycle, you're charging capacitor, discharging your capacitor. And it's all of these like parasitic capacitances in the, in the, in the device.

• 1:10:15Speaker 00

  And then you're, you're actually like moving electrons and like electrons are moving through a resistive medium. The resistor that they're, they're generating heat. So you have like capacitive discharge and charge, and then you have the actual current flow. All of those things have, are generating massive amounts of heat. I mean, that's what data centers basically are. You take a gigawatt of power and you convert it into something like 700 megawatts of heat. And you spend 300 megawatts to get that heat into the atmosphere. That's actually what a data center is. And the 700 megawatts of heat is almost all inside the chips. There's maybe eight percent lost in power conversion on the way to the chip, maybe 10% depending on the architecture.

• 1:10:59Speaker 00

  So you get a gigawatt. At the grid, you get 250 megawatts to 300 megawatts of cooling power, and maybe 650 megawatts of useful compute.

• 1:11:12Lukas Biewald?

  I guess presumably your transformer is going to be more efficient than the 10% loss?

• 1:11:16Speaker 00

  Yeah, yeah, we can reduce the loss from grid to chip by about a factor of two. So we have the loss. So for somebody building like a gigawatt data center, it means they can get 35 megawatts more useful compute out.

• 1:11:30Lukas Biewald?

  I see, cool. And the switches, presumably you can switch faster?

• 1:11:34Speaker 00

  Yeah, so back to like what's happening at the semiconductor device. So wide band gap means that you can, effectively, you can, intrinsically, the way the material works, you can block more voltage per unit, like micron or nanometer of material. And you can be more efficient, like there's less loss. Like the highway that the electrons travel through when the semiconductor is acting as a conductor is more efficient. And because you can block more voltage per unit of the material, you have like less parasitic capacitance between where the electrons are flowing

• 1:12:19Speaker 00

  and however your cooling device or the bottom of the device. And so you can actually switch the device faster. Because that parasitic capacitance that like charge, has to charge. Every time you like imagine lifting the output of the power semiconductor, like what you're doing is you're, if you, if, you know, this is like the top voltage that is connected to the device. This is the bottom of the voltage that's connected to the device. The like output of the device needs to swing from like the lowest voltage potential to the highest voltage potential. And there's all these like parasitic capacitances in the material, which are all like physical. And when you go to these wide band gap materials, you can make them physically smaller. And that means they can switch faster.

• 1:13:03Speaker 00

  And so, or for the same loss, they can switch way faster. If, you know, and that's ultimately what silicon carbide and these other materials are. GaN is even better at that. And so it's a material science thing. You're trying to find materials that can block more voltage, are more thermally conductive, and are low loss when they're in the on state. Like they can conduct electrons really well when they are trying to conduct. Because a semiconductor is either conducting or not. Like that's what makes them a semiconductor. You can control that with the gate voltage on a transistor, right? Like you can control whether the thing, whether the channel in the device is conducting electrons or not.

• 1:13:47Speaker 00

  You turn that on and off with the gate voltage. And there's a bajillion transistors in a GPU. Like I don't even know how many trillions or whatever. And a power device has one. But it's one like highly engineered device. And what silicon carbide is doing is allowing you not to make like a one volt transistor like you have in a GPU, but like you can make a 10,000 volt transistor. And actually, almost smaller. It is actually smaller than the GPU. And it's able to block, you know, 10,000 volts. And that's what material science has enabled over the past like three or four decades. And so now, when you're thinking about this like mechanical switch that we were using to control the flow of electricity,

• 1:14:32Speaker 00

  that literally physically needs to move the distance of my arm, because otherwise we're going to have an arc in free air. Now you can do that inside of a material, like a solid state material. You can start and stop the flow of electricity across 10,000 volts. All within a solid state material, no, nothing moving. That is what power electronics is. That's the power of power electronics.

• 1:14:56Lukas Biewald?

  So are you imagining that these big transformers that like freak people out? That like we see around, you know, San Francisco and the world? Do you imagine those become tiny?

• 1:15:05Speaker 00

  Yeah, so our core, our core first product, the Heron Link, you know, the transformer part is 100 times smaller, volumetrically, per unit power. And the way we're doing that is because we're switching the, you still need to go through an isolation stage when you're going from like a high power grid or a high voltage grid to like a computer. Because otherwise, if you had like lightning or something like that, you know, you might see the voltage from the grid side come over to your computer. That would be very bad. So you need to isolate, galvanically isolate the high side from the low side. But rather than doing it at 60 hertz,

• 1:15:49Speaker 00

  which was how we do it today, in these giant oil filled gray boxes, we can do it at hundreds of kilohertz. Because these devices I'm talking about can switch so fast. So you take that 60 hertz power, and you use these power devices to like chop it up to super high frequency, hundreds of kilohertz. You run it through a high frequency transformer that because of the way the physics works, can be much, much, much smaller. It's actually like inversely proportional. So as the frequency goes up, you can make the transformer that much smaller. Because it's really an energy product thing. And like the way you store the energy in a transformer is a simple way to think about it is that at 60 times a second, you can move a packet of energy through versus 100,000 times a second, you can move a packet of energy to through. It's the simple way to think about it.

• 1:16:34Speaker 00

  Because if the voltage is the same, and the energy is basically current at that voltage moving up and down, if it moves up and down 200,000 times a second instead of 60, well, it could be 200,000 times physically smaller. And that's, that's, that's the principle at work. And that's the, that's the objective is, yeah, we're making the transformers way smaller. And then these giant switchgear objects that are, you know, interrupting the flow of electricity. Well, now we have power electronics on either side of this transformer. They can natively interrupt the flow of electricity. You don't need another mechanical switch. Because the passive transformer is that. It's passive. It can't, it can't change voltage on one side to the other,

• 1:17:19Speaker 00

  other than in a static ratio. It can't stop the flow of electricity. It can't do anything. So you need to have these like large mechanical arms, levers, do that work for you.

• 1:17:29Lukas Biewald?

  So do you imagine replacing all the infrastructure with these new devices?

• 1:17:37Speaker 00

  Yeah, over time, I think as, you know, we've got 50 year old stuff out there and needs to be replaced. Yeah, you're going to replace it with active, you know, solid state transformers instead of the passive ones. Because you can get all of these interesting functions integrated into one object, and they're smaller. They're easier to service, easier to maintain. They're not flammable, like the oil in those transformers lights on fire. I don't know if you have seen it, but when I lived in Bernal, more than one transformer lit on fire down the road. And, you know, you have a power outage. And they're just, it's a flammable oil. Like, and you've got this thing that's getting hot inside. And if you don't maintain it, and even if you do maintain it, sometimes these things happen.

• 1:18:20Speaker 00

  So there's lots of reasons why you'll use it to replace the existing. But the primary focus we have right now is the grid is growing really quickly. There's people building solar, people building battery facilities, people building factories, people building data centers. And they need, they want a more scalable, better solution. So that's, that's our first focus is those folks, building the new stuff.

• 1:18:41Lukas Biewald?

  Do you have a point of view on data centers and their impact on the grid? I feel like that's become a pretty controversial topic lately.

• 1:18:49Speaker 00

  I think properly designed data centers can be like a grid positive. Because, you know, data centers are like the best utility customer. They are baseload. They consume a ton of kilowatt hours per kilowatt. You know, if you look at your house where you have, you know, a 200 amp service, you maybe, which is like 40 kilowatts? Like, I mean, you're probably never, 40 to 50 kilowatts, you're probably never using more than 10 kilowatts peak. And on average, you're probably using one or two kilowatts, maybe even less. So the utility has invested in the infrastructure

• 1:19:33Speaker 00

  to serve you 50 kilowatts, and you use one kilowatt on average. Data center, you invest in all the capacity to deliver a gigawatt, and the data center uses 800 megawatts on average. They're a way better customer. If you think about the simple equation I described before, numerator, total cost to keep the grid healthy, denominator, total kilowatt hour served. The data centers are the best customers. They're basically like aluminum smelters or steel mills. Like they are the customers that make the grid affordable for everybody else. The way they, the way that could not end up being true is if, you know, they're, the utilities, because of their incentive structure, are building more than they need to,

• 1:20:18Speaker 00

  to serve that data center. Or they're amortizing the costs of like connecting that data center, more on the residential rate payers than they are in the data center. I mean, I actually think the data center should just pay for the infrastructure that comes to them. Because the return on investment of these data centers is so high, and that infrastructure actually isn't that expensive compared to the GPUs. But if you think of data centers as a utility customer, they're the best ones. And if you actually look at the numbers, the states with the highest penetrations of the data centers overwhelmingly have had the lowest electricity rates and actually have had rates reduced.

• 1:20:57Lukas Biewald?

  So you actually think data centers will cause electricity rates to go down?

• 1:21:00Speaker 00

  I do.

• 1:21:00Lukas Biewald?

  Interesting.

• 1:21:01Speaker 00

  And the other thing is, because of the uniqueness of like training, data centers need to have some energy storage, participating in absorbing all of that training ripple. And once you put energy storage at a data center, now the data center can support the grid through like peaks of, like peak periods of high load. They can stabilize the grid frequency and voltage rather than disconnecting whenever there's a problem. So they can do all these things to be like grid support networks in addition to being an awesome customer. That should also drive down the cost of the utility.

• 1:21:43Speaker 00

  Whereas historically, they've actually done some things on the opposite side. The rectifiers they used have had like flicker problems. Utilities have had to kind of clean that up with extra hardware. Or like just happened this week, three gigawatts of data centers all turned off at the same time. Because they didn't have storage set up to do that, you know, and there was a little bit of a grid wobble, and they all disconnected. And then that can cause a liability concern. So historically, data centers were maybe a grid liability from a stability perspective. In the future, I think they can be an asset, and they can drive rates down.

• 1:22:15Lukas Biewald?

  What do you think about nuclear power?

• 1:22:20Speaker 00

  Yeah, I mean, I'm a

• 1:22:24Speaker 00

  I'm down for nukes. Nukes, I don't really have like any aversion to nuclear power. I'm happy that Diablo Canyon was recently extended here in California.

• 1:22:35Speaker 00

  I think that with proper engineering controls, like nuclear power plants can be safe. And of course, you need to maintain them and do all of those things. I would love to see the US like focus on its like waste plan because there are plans in place in other countries and we don't really have one, but we should have one.

• 1:22:54Speaker 00

  I think the history of, you know, nuclear in Asia has been

• 1:23:01Speaker 00

  a history of nuclear power plants continuing to be more affordable to be to build. Like as the countries get reps, you know, the, the like thousands of dollars per kilowatt have progressively come down. And I think it is, you know, the US hasn't seen that trend because we kind of stopped building nuclear. But I'm confident if we start building nuclear again, we can find ways to do it more affordably like like has happened in Asia. And they did that without a safety, any safety problems or anything like that. So it's not like you're trading safety for cost. So yeah, I think nuclear is needed.

• 1:23:39Speaker 00

  As part of the mix, like you need some base load renewable. I'm actually a big geothermal plan fan. I think geothermal is going to give nuclear a run for its money in terms of affordable base load 24 hour by seven renewable power.

• 1:23:52Lukas Biewald?

  What about just solar plus batteries? Like when I look at the simple math, it seems like that's actually the cheapest way to get a a base load. Like why isn't there more focus on that?

• 1:24:00Speaker 00

  Solar plus batteries can absolutely provide base load power. One of the things we did was we did it on islands like a lot. We, we took some islands in America in Samoa, like fully renewable with solar plus storage. Like you can definitely do it.

• 1:24:14Speaker 00

  And but like when you think about

• 1:24:20Speaker 00

  that the like LCOE, the total throughput of a cost of electricity with solar plus storage, when you consider

• 1:24:30Speaker 00

  kind of that worst case period, the winter with that bad storm or the number of cloudy days, like if you really want to have 100% solar plus storage, the life cycle, like the LCOE, the lifecycle cost of energy is it's still like basically 10 cents. Maybe a little bit more, depending on how good the solar asset is. Maybe you can get it to eight if it's like an incredible solar asset, like a desert and then you don't have to worry about the winter. So like the Middle East or something like that, you get to like seven or eight or something like that. But geothermal, it can be, it can beat that, I think. Like that's definitely what Fervo is trying to do. They're trying to get down to six or five. And nuclear, you know, when you look at the nuclear plants we have today that are like fully

• 1:25:15Speaker 00

  depreciated, like they're like two or three cents. So and can the question is, can you build new nuclear and beat that? Like, that's definitely not what the Georgia facility that we just turned on. Georgia, the Georgia facility we just turned on was, I think, more than 10. But like, could we find affordable nuclear? Could we develop more affordable nuclear that gets down into that, below that?

• 1:25:38Lukas Biewald?

  And is that happening in China or is the government subsidizing it? Because China is actually ramping up nuclear quickly, right?

• 1:25:44Speaker 00

  Yeah, Korea has built a lot of nukes and they've been able to get to this LCOE, China too. Whether they subsidize it or it's like such a tricky question, right? Like, there's so much government support in the like raw material industries in China. So you go and you build a nuclear facility, like you're, you're benefiting from the nuclear, from the government support and the concrete and the steel and the, and the like fancy metals, you know, like whether they directly subsidize the nuke or not, like they've subsidized everything that went into the nuke in some way or the other.

• 1:26:22Lukas Biewald?

  Okay, your, your new transformer is like order of magnitude, maybe, or you're saying double the, the efficiency. Do you feel like that enables new uses of transformers that where people aren't using today?

• 1:26:39Lukas Biewald?

  If that's not the intention, that's fine. I just

• 1:26:41Speaker 00

  Well, no, I, I like the question.

• 1:26:46Speaker 00

  What we're really doing is, is

• 1:26:49Speaker 00

  is, is changing the, the thought process of how you go from medium voltage down to the load. So if you're building a factory right now,

• 1:27:01Speaker 00

  you might actually have like a number of transformers in series. Like you probably have some main

• 1:27:10Speaker 00

  interconnection to the transmission grid. That's 300 kilovolts or something like that. There's a transformer there that goes from 300 kilovolts to something lower, like 13 kilovolts or 34 kilovolts. And you'll distribute that medium voltage around. And then you'll have like another transformer, maybe to 480, and then you'll have another transformer from 480 to 1208. Or you kind of end up with like these cascading series of, of transformers and protection switchgear and all this kind of like stuff in a row. And with, you know, this power electronics approach, you can kind of elegantly do it in like one stage.

• 1:27:49Speaker 00

  And also have multiple different output voltages. And, and so you're just like simplifying the build out of factory infrastructure, electrical infrastructure, or energy facility infrastructure, data center infrastructure. And I think that's a good thing because ultimately, if we are going to triple the electricity sector, we need to be able to, to sort of kill three birds with one stone, right? We're just, we're just doing more with less.

• 1:28:18Lukas Biewald?

  I've been playing around with building little robots in my garage. And, you know, the, the motors you need actually have a significant enough power draw that they can, you know, kind of melt the little wires and, and cause problems. So, you know, I've been using like a little, you know, a little transformer off the battery to get down from like, you know, the 24 volts that the Lipo battery puts down out to like five volts. And that thing is actually surprisingly heavy. Are there like mini versions of what you have that could be used in sort of like consumer electronics?

• 1:28:49Speaker 00

  Yes. Definitely. I'm looking at one right now. That is a probably like a 200 watt, 120 volt, actually it's 240 volt AC to, you know, 15 volt output. You know, it's powering the laptop over there. That is an example of a solid state transformer. And, you know, that's, you know, an Apple, an Apple AC to DC for, for a MacBook, right? You know, that thing is, that thing is probably switching 800,000 times a second, you know, power semiconductor devices inside of it.

• 1:29:27Lukas Biewald?

  But that's like 60 bucks, probably, even if you bought an off brand one.

• 1:29:31Speaker 00

  Yeah.

• 1:29:32Lukas Biewald?

  Shouldn't it be cheaper?

• 1:29:35Speaker 00

  It's definitely cheaper than if you were doing it at 60 hertz. Like that same thing, if it were 60 hertz would be like, I don't know, 10 times bigger, way, way more. And costs a lot more.

• 1:29:46Lukas Biewald?

  Interesting.

• 1:29:46Speaker 00

  So it's, it is sort of like,

• 1:29:50Speaker 00

  you have to like, there's like a grass is greener phenomenon. And like that is much smaller than it would have been for the same power, like five years ago, also with power electronics. And I like to pull out this like 70 watt tiny GaN adapter.

• 1:30:04Lukas Biewald?

  Actually. Oh yeah, let's see it.

• 1:30:07Speaker 00

  It's like 70 watts, two outputs, USB C. Does like five or six different voltages. I mean, it's, and power shares like from one to the other.

• 1:30:18Lukas Biewald?

  Wow.

• 1:30:19Speaker 00

  It's tiny.

• 1:30:20Lukas Biewald?

  How many amps can it do? Oh, plugs right into the wall.

• 1:30:24Lukas Biewald?

  Cool.

• 1:30:27Speaker 00

  So basically what we're doing at Heron is like the same way that this technology has made these, you know, consumer electronics chargers tiny and super capable. We're doing that, but for industrial electronics, you know, mega watts instead of 70 watts. So 5 million watts is the rating of our product instead of 70 watts.

• 1:30:48Lukas Biewald?

  Awesome.

• 1:30:48Speaker 00

  Same concept, though.

• 1:30:50Lukas Biewald?

  Anyway, what's inside this?

• 1:30:52Speaker 00

  So yeah, you've got, you have an isolation transformer. That's probably the size of my pinky. That is isolating the 240 volts AC or 120 volts AC from the five to 15 volts DC. And on either side of that isolation transformer, you have these power electronics semiconductor devices that are the die area of each is probably like 10 millimeter by 10 millimeter or maybe 20 millimeter by 20 millimeter, probably more like five millimeter by five millimeter.

• 1:31:23Lukas Biewald?

  I want to take it apart and look at it.

• 1:31:24Speaker 00

  Yeah. So yeah, you have like five by five die area, power semiconductor devices that are GaN that are switching a million times a second, the voltage waveform from the grid to make the DC across that transformer.

• 1:31:37Lukas Biewald?

  Cool. I mean, one of the things lately, you know, I've, I've noticed my USB C cables, they like power at like wildly different amps. So then I got like little meters to like measure like how much power I'm getting from a USB C. Well, everyone should buy them like amazing. And you realize that some of the cables are actually limiting the amount of the current that you get. And then I kind of realized actually it's upstream that that converter, different ones will put out different amounts of

• 1:32:02Speaker 00

  Yep.

• 1:32:03Lukas Biewald?

  amps. So then I like really wanted to get like good ones where I could like, you know, put a ton of charge into my laptop and, and, and charge it super fast. But I actually like couldn't find ones that actually got to the top of the USB C.

• 1:32:15Speaker 00

  Rating.

• 1:32:15Lukas Biewald?

  Rating. So are we going to, should we expect like better converters coming in the, in the near future?

• 1:32:21Speaker 00

  Yeah, I think it's, I think it's actually happening in tandem. It's like the batteries also have to become more capable because they're, they're also a bottleneck. Like, I like to think of it, have you heard the parking lot problem?

• 1:32:32Lukas Biewald?

  No.

• 1:32:32Speaker 00

  So lithium ion batteries can be thought of as like a giant parking lot at a stadium. Okay. If you imagine that the, the parking lot at a stadium is has exactly the number of spots as there are people going to the stadium. Like it's got 60,000 spots.

• 1:32:52Speaker 00

  If, if the parking lot were set up as like a square,

• 1:32:58Speaker 00

  it would take forever for the 60,000th person to figure out where to park.

• 1:33:03Lukas Biewald?

  Totally.

• 1:33:04Speaker 00

  But if the parking lot were set up as a line and the person could literally just like drive along until they see the, the hole, they could find their, their, their spot really quickly. Now, the line doesn't really help you get to the stadium. You, you need something to like get them from the, the line to the stadium. But that's effectively the battery problem. There are parking spots for lithium ions in the anode and the cathode. And they can only get to their parking space so quickly. And, and making a linear parking lot in a battery is actually super expensive because it's like a ton of surface area.

• 1:33:43Lukas Biewald?

  Interesting.

• 1:33:44Speaker 00

  And so you're always like trading this like 2D, 3D problem.

• 1:33:49Lukas Biewald?

  Is that why the charging slows down so much?

• 1:33:51Speaker 00

  Yes, exactly. It's like you can find the first spot easy in the parking lot. You can find the last spot, it's really hard.

• 1:33:56Lukas Biewald?

  Well, that's great analogy.

• 1:33:57Speaker 00

  It's, it's the best analogy for lithium ion batteries.

• 1:33:59Lukas Biewald?

  All right, maybe good spot then. Thank you so much. Thanks so much for listening to this episode of Grading Descent. Please stay tuned for future episodes.