The future of EVs, with Rivian’s RJ Scaringe

RJ Scaringe is the founder and CEO of Rivian Automotive. Host Jeff Berman digs into how Scaringe thinks about competing with Tesla, the hard won lessons of building a company that makes both vehicles and software, and how the company is scaling to fuel the highly anticipated launch of its newest electric vehicle: The R2. This Masters of Scale Live event, sponsored by Atlassian, was recorded at Atlassian Team 2026 in Anaheim. Subscribe to the Masters of Scale weekly newsletter: https://mastersofscale.com/subscribe See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 2:11Speaker 00

  This Masters of Scale live event presented by Atlassian was recorded at Atlassian Team 26 in Anaheim, California.

• 2:20Speaker 02

  In instability or comfort in chaos is really actually important.

• 2:25Speaker 02

  You have to go into it knowing this is like full contact, multi-dimensional chess.

• 2:32Speaker 02

  And you're doing it sometimes in the middle of a tornado inside of a storm.

• 2:36Speaker 00

  Multi-dimensional chess inside a tornado, perhaps also while making dinner, caring for a baby, and writing a Broadway musical. If you're leading a business right now, that description probably feels pretty accurate. So how does Rivian founder and CEO RJ Scaringe weather the endless storms?

• 2:56Speaker 02

  For me, a recognition that resilience and comfort in instability or comfort in chaos is really actually important. With that, we have a whole process inside the leadership team of like checking our own assumptions, like the world's changing so fast, the thing we thought six months ago, is that still right?

• 3:17Speaker 00

  This is Masters of Scale. I'm Jeff Furman, your host. This week on the show, RJ Scaringe. He's the founder and CEO of Rivian Automotive.

• 3:27Speaker 00

  Rivian just launched the much anticipated follow-up to its first electric vehicle. This one is the R2. It's a crucial moment in the company's scale journey. In my onstage conversation with RJ, we dig into how he thinks about competing with Tesla, the hard-won lessons of building a company that makes both vehicles and software, and much, much more.

• 3:56Speaker 00

  RJ, business is hard. It's not easy, leading teams, leading companies. Services are hard, software's hard, hardware's hard, logistics are hard. You're kind of doing all of them? Like, how does that work?

• 4:09Speaker 02

  I knew it would be difficult. It wasn't something I said, this is going to be an easy path.

• 4:14Speaker 02

  There's certainly been aspects that are much harder. But a lot of the elements of building any business ring true within Rivian, or whether you're looking at team building, organizational structure design, processes, toolsets, supply chains, it's definitely, it's a challenging business, but I mean, I'm having a ball.

• 4:32Speaker 00

  How do you think about teams working together when they work on such different parts of the business?

• 4:38Speaker 02

  Yeah, this is one of the things that's maybe most unique about building a car company. When you really look honestly at what's necessary, you need many thousands of people to develop one product. That product requires, we have to be on the order of about 40 million different decisions to bring it to life.

• 4:56Speaker 00

  Forty million?

• 4:57Speaker 02

  Forty million. And there's millions of hours of engineering time necessary delivered. So the only way for this to work is you have to put lots of people working in parallel. So you have ultimately like a team, you know, full size and maybe five and a half, 6,000 engineers working at the same time on the same product. And so it becomes a real exercise in coordination because you're not just talking about homogeneous teams of all the same background and all the same skill. You have chemists that are working, you know, battery cell chemistry. You have structural engineers working on the body design. Teams working on designing electronics. Teams are working on building software platforms across the stack from, you know, the lower levels all the way up through the application layer. And then you have to also build a go-to-market teams.

• 5:41Speaker 02

  You have sales teams, service teams. And then around that, you have a manufacturing team, a supply chain team. So they're very, very different backgrounds, very different experience sets. And the risk is you end up with a sea of many little islands of culture, many little silos that operate very differently. I think one of the, one of the most rewarding things is when you see these very different skill sets with different backgrounds, often from different, very different experiences, coming together around the common vision and coming together to create this amazing set of products. But it takes practice and it takes practice around like, what are the values of the business? How do we interact? How do we challenge each other? Do we allow for people to actively debate? Do we embrace that as an organizational culture or behavior?

• 6:24Speaker 02

  So this is something that iteratively, we've really worked hard at. But, you know, I think with these large organizations and you're building large, complex products, there is maybe the natural tendency is to have silos and have walls go up and to have, you know, the manufacturing team says, well, if the engineering team would just make it easier to build, we could build these things. And the engineering team said, well, the car could be so much cooler if manufacturing wasn't difficult. So those are like natural tensions. And learning to accept that there's going to be different perspectives on how to solve the same problems is really important.

• 6:55Speaker 00

  When you've got 40 million decisions that go into making a product, not easy to manage. This is a lot. When there are disagreements within teams, I assume there's a team leader who makes a call. When there are disagreements between teams, how do you manage that?

• 7:10Speaker 02

  Structurally, we've set up like decision processes where here's the vision for the product. Here's what we're trying to achieve. Here's the frameworks for making these. Certainly, it can't be me making every decision. It doesn't scale. I learned that early.

• 7:23Speaker 02

  But often you'll have these decisions escalate if there's not alignment. And we often have times where there's a point of disagreement. We say there's a disagreement on how we're going to approach this. We're going to make a decision and then we're going to all align around that decision. And that process of accepting we won't always agree. There's just by virtue of the complexity of what we're building. But we ultimately have to build together. Means that once a decision is made, everybody gets on board.

• 7:49Speaker 00

  You referenced it doesn't scale and you learn that early if every decision runs through you. Was there a moment early on where you realized that that was a pain point you had to solve?

• 7:57Speaker 02

  Well, so I'm an engineer. I started the company when I was 26. And I started the day after I finished my PhD. And I love to build things. I grew up restoring and building classic cars. And so not surprisingly, like day one of the business, the first thing I did is I got my CAD station set up and I started designing parts. Like, so I'm like, oh, let me design this. And, you know, it's not as if I wasn't already thinking about what was going to go into the vehicle. But very quickly, it's clear that like, wow, there's thousands and thousands of components and that go into a car. This won't work if my job in leading the company is designing all the parts. I have to design the teams and get the teams to work together and participate in creating scale.

• 8:40Speaker 02

  And so I think for any time an engineer is forming a business, there's a tendency to be really close to the product, which I think is fantastic. It's really a wonderful characteristic of technical founders. But you also need to recognize you can't be in every decision or in every meeting. And as the organization scales, finding ways to have influence or to impact the product, but to do it in a way that doesn't lead to the whole team waiting to say, well, what's, you know, in Rivian's case, like, what's RJ going to say? And sort of paralyzed, waiting for a decision to come from the top. So I often describe like a car company as an exercise in enabling highly distributed decision-making that's highly coordinated, which are two things that maybe don't always,

• 9:22Speaker 02

  you know, go together. It's thousands of people making decisions, but it needs to come out as a product that looks as if one brain, one human did everything, which of course you can't do.

• 9:31Speaker 00

  There's a theory of organizational growth. It's factors of one and three. One company, one person at three, at 10, at 30, and so on. And what tends to happen between 30 and 100 is to your point about silos. Companies literally create divisions, right? It's like one of the worst words in a company you can use. As you were going through that phase, 30 to 100, 100 to 300, et cetera, was there something that you realized you had to do differently than you'd done before, maybe than you'd seen other companies do?

• 9:57Speaker 02

  Yeah, many times. And one of the things that I was, I look back in hindsight and I say is a very fortunate that things played out this way, is Rivian was highly undercapitalized in the early years. And the reason I say it's fortunate is it allowed me to learn how to run a company. This is my first time starting a business, my first time running a business. One of the things that was helpful for me is we were able to grow slowly, but I was making mistakes. I was learning. But the impact of those mistakes was fairly small because we just, by virtue of us not having huge budgets or a huge team. And so I, through that, I directly experienced the difference of a one-person team, a 10-person team, a 20-person team. And it was happening at a pace that I was sort of able to keep up my

• 10:41Speaker 02

  own learning. And I remember early on, the first time we were doing like all hands every week, in the beginning, it was like the whole company met every day because the whole company was all sitting at like around the same table. But there's a point where we all didn't fit in one room. So the solution there was all the all hands, we go to like a bigger room. But eventually you get to a point where the room size doesn't matter. You can't have everybody in the room. And you quickly learn that like disseminating and distributing information. Both the decisions that are being made for the business, but also how to approach making decisions becomes a real key exercise. And I give this advice all the time to people starting businesses is you also recognize the organizational structure is going to change all the time.

• 11:24Speaker 02

  And so you need to be really cautious around getting overly fixated on this is exactly the structure. And the way I characterize it today is the organizational structure is the most efficient way to try to organize people to get work done efficiently. But by virtue of it being a structure, it's not perfect. It's always going to be imperfect. There's, of course, going to be communication and decisioning happening like across the lines. And so we should not look at this as how we communicate or how we work together. It's how we're trying to organize ourselves to be as efficient as possible, but it will change. And so it looked very different in 30 people than it did at 100 people, which looks wildly different than it does at, you know, let's say 1,000 people.

• 12:07Speaker 02

  Today, we have 17,000 employees and we couldn't possibly all meet in the same room. We couldn't possibly have an open discussion amongst the whole team. And so I think that, like getting ready for that for me was really important.

• 12:18Speaker 00

  Yeah, at this point, a team meeting is in an NBA arena. At some point, it may be an NFL stadium. One of the things I'm not sure everyone knows about Rivian is you also are a software company, not just for yourself, but you all made a decision to license software to Volkswagen, which is at least nominally, if not actually a competitor. Why?

• 12:37Speaker 02

  Why?

• 12:40Speaker 00

  Fair question.

• 12:41Speaker 02

  It's a good question, yeah. Well, I have to wind this story back a little further. So early on in building the business, as an engineer, there's a desire to build everything. And so I often joke that if given infinite resources, given no constraints, our supply chain would be buy land and we'd extract resources and we'd make, you know, aluminum smoke, we'd do everything.

• 13:05Speaker 00

  Full vertical integration, no limits.

• 13:08Speaker 02

  We just own pieces of earth.

• 13:10Speaker 00

  You're not even using Atlassian. I mean, that's how far you're willing to go here.

• 13:13Speaker 02

  Unlimited constraints. And that's like the way, at least I'm wired. I would, left unchecked, I might end up there. But of course, there are constraints and those constraints are not only money, it's time, it's focus. And so you end up having to be very intentional around what you do build. So you don't end up buying plots of land to extract, you know, raw materials, which is funny because now we actually have done some of that. But the way we looked at it is we said, there's a few areas we need to completely own. And so that was the software platform in the vehicle. To do the software platform well, we have to own all the electronics. And we're going to architect the way the vehicle networks, the way the software is integrated into the vehicle in a very thoughtful way where

• 13:55Speaker 02

  we consolidate computers down to a very small number of what we call zonal computers. So rather than computers tying to a function, which is what essentially every car on the road does today, where you have a computer that corresponds to, let's say, the air conditioning system, or a computer that corresponds to the seats, and there's little ECUs supplied by third-party suppliers with little islands of software on them. We're going to make a very small number of computers where we build all the software. And so I remember making that decision. And this was when Rivian was still much younger and we had not a lot of money. And our board said to me, Argy, you're like, you're crazy. Like, you want to build computers and write all the software yourself. And I said, this, trust me. And I was very convicted. So I said something like, I was emphatic. I was like, trust me,

• 14:39Speaker 02

  this is what's going to be most important for us from a competitive point of view and from a product differentiation point of view. And I obviously made the case, we ultimately made that decision. But at the end of that conversation, I said, look, if we do this really well, who knows, we could end up licensing this as another way to monetize this huge investment we're going to make. And everyone was like, ah, that's not going to happen. Anyways, fast forward like a decade, and we did a $5.8 billion software licensing deal with the second largest car company in the world, with Volkswagen Group. And this was after Volkswagen Group had spent an enormous amount of money trying to build software architecture themselves. And what drove us to say yes to doing this wasn't just the financials of the deal. It really goes back to the core mission of the business.

• 15:22Speaker 02

  And core mission of the business, the reason I started it, was the desire to have an impact on how we think about transportation, and to accelerate the speed at which we, we as consumers, shift towards electrification and increasingly electrification coupled with highly intelligent vehicles. So vehicles that are capable of driving themselves and vehicles that are capable of performing a lot of tasks through software. And so as we looked at that, we said, boy, we're going to do that with our own products. We're going to launch R2. This is our first high volume product. We're actually launching it as we speak. That's followed by R3. You can imagine there's probably an R4 and R5. We're going to continue to grow our revenue and the business. And we want to be a company that's making millions of cars over time.

• 16:06Speaker 02

  But we can also help enable creating really interesting and compelling products with other manufacturers. And I say this really sort of remarkable. When we were thinking about that, we said that we thought the best brand to start this with would be Volkswagen Group. Because it's such a broad company, there's so many different brands, so many different form factors. It has some really incredible brands within it. Porsche, Audi, of course, their volume brand Volkswagen, a host of brands in Europe. And we said, but it's a really interesting exercise in showing how well we can productize this offer. And so we signed the deal and the first product launches next year. It's a product for Europe. It's a, it'll be the lowest cost EV in Europe. It's going to be very cool. It's called the ID.1 VW ID.1.

• 16:50Speaker 02

  So you can Google it, check it out. But it's, I'm so excited for people to buy it and take the car apart. This is common in the auto industry. People buy the products, disassemble them and benchmark. The benchmarking company is going to be blown away. The simplicity and the elegance of the electronics and the network architecture have, are what, you know, in a big part, enable this incredible vehicle to be so low priced. And so that like ties right into our, our mission.

• 17:15Speaker 00

  Which is great, but if I'm on your board, I think I'm at least asking like, well, if the ID.1 is a hit and it's a competitor to the R2, or R3, or R4, RJ, whatever you're going to end up launching, like, doesn't that cannibalize your own business? How do you run that analysis?

• 17:31Speaker 02

  Well, one part of our vehicle is software. And so that's what we've licensed to Volkswagen. But we didn't license to them our self-driving platform. We didn't license them our vehicle designs. But I'd say, put all that aside, there's a, there's a deeper held view within Rivian that like, obviously comes from my perspective on this, which is for us to electrify, for us to shift away from dependence on fossil fuels and, you know, gasoline powered vehicles or diesel powered vehicles. It will only happen if we have a wide variety of great choices. And the auto industry is unique in that it's so big that it's unlikely, and it's more than unlikely,

• 18:13Speaker 02

  it's unlikely and not exciting to think about a world in which the hundred-ish million cars sold every year on our planet are provided by one company and you have like two or three choices. Growing up as a car enthusiast, I think this is a space that benefits from having lots of choice. And so in the United States, for example, one of the things that I think has really stalled EV adoption is we do have an extreme lack of choice. And so in the, I'll call it fifty-ish thousand dollar price point, which is where the majority of the market is, the average price of a new car in the United States is fifty thousand dollars. In that price range today, well now the R2's launch is different, but prior to R2 launching, I'd say there's really one highly compelling set of choices, the Model Y or the Model 3, the Tesla Model Y, Tesla Model 3.

• 18:58Speaker 02

  And that vehicle generates fifty-five to sixty percent market share for the whole EV market in the United States. That is not a reflection of a healthy market. That's a reflection of a market that's wildly underserved. And that's nothing, it's not saying anything negative about the Tesla products. I've owned those products, they're great vehicles and it's why they've accumulated so much market share. But we need other choices, we need different form factors, different brands, different styles. Not everyone is going to want that exact shape or that exact form factor, that exact look. And so Rivian can do a part in that, we're doing as much as we can. But we're very happy to help others do that. And of course, we generate meaningful profit margin on the software business.

• 19:40Speaker 02

  And so I think of it as we make money selling vehicles and we make money selling technology and they can coexist.

• 19:48Speaker 00

  Still ahead, RJ on competing with Tesla, how self-driving cars will transform our lives and more.

• 20:02Speaker 00

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• 21:50Speaker 00

  Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel, and be sure to check out the link in the show notes to subscribe to our newsletter.

• 22:06Speaker 00

  Because you referenced Elon and Tesla, I have to imagine you've benefited from some of the Tesla backlash. I was having breakfast two days ago with my friend Lea Solven, who founded TaskRabbit. It's a Rivian driver, loves your product, was raving about it. And she asked me to ask you, one, what has given you the intestinal fortitude to go up against Elon? And two, what have you learned from going up against him that would help others who are fighting their own evil empires?

• 22:40Speaker 02

  I mean, the way this is like, I think, a classic way to think about competition, which is, it's an important thing, is we focus on saying, let's make incredible products, let's make those products super desirable, and let's play our own game. And where I think folks have failed in automotive, in competing with Tesla, is where they say, Tesla's been very successful with, let's say, the Model Y. And rather than having deep conviction around building a product that links to your brand, there have been a lot of Model Y copies. And so if you were to take a number of the EVs that are in market that have been unsuccessful,

• 23:25Speaker 02

  and you were to draw a profile of the vehicle, the centerline profile, and look at the vehicle packaging, so where are the seats, where does everything sit inside the vehicle, look at the size and the dimensions, it is remarkable how many companies took the approach of saying, well, Tesla's successful with this, let's make our own version. And the unfortunate thing of that is, if you want to buy a Tesla Model Y, you don't want XYZ company's version of a Model Y, you'll just get the Model Y. And so we've been really clear on, like, if you take, in the premium segment, in the flagship space, we have an SUV, our R1S. And it's, by a pretty significant degree, it's this best-selling, premium, electric SUV in the country.

• 24:06Speaker 02

  And so it significantly outsold the Model X, it outsells everything. But it's seven seats, it's got four tires, four sets of doors, it's very quick. So all those things I just said, you could have equally described the Model X as that. But outside of those characteristics, the cars couldn't be more different. And I think that's really important. It gets back to this point on variety and choice. And so Tesla was successful with Model X, successful with Model Y, and we developed R2. We didn't say, we want R2 to try to copy Model Y. We want it to be its own product. And so that's like informed a lot of how we think about the decisioning. And we really go back to what do we believe? What's the philosophy we're approaching product

• 24:49Speaker 02

  development with? Where are we going to make trade offs between cost and features and performance and capability? Because everything's a trade off. And ultimately, we create this set of trade offs that lead into this product, and we have a perspective that we think draws people in. And so that's where I see the important thing now. There's lots of noise around Tesla. I always just sort of try to tell people, like, focus on the cars, and don't get drawn into that.

• 25:19Speaker 00

  You're running your own race. You're not looking at or thinking about what's going on over there.

• 25:23Speaker 02

  One other thing I'll say.

• 25:24Speaker 00

  Yeah, please.

• 25:25Speaker 02

  This is unique to cars. So I think in certain technology areas, it's not like this. But in the auto space, the largest car manufacturer in the world represents about 10% of global demand. And I say that to illustrate that this is not a space in which there's one winner. That's not true in all segments. But it is likely, I believe, and I hope, there are many winners. I do think there is the potential of having less car companies in the future than we have today, because of some of the technology shifts that are happening. But I do think there's going to be certainly more than five large

• 26:06Speaker 02

  automotive players in the Western world that are like the big dominant players. Maybe not more than 10, but more than five. And so our success doesn't require someone else's failure and vice versa.

• 26:18Speaker 00

  One of the ways you optimize for being in that five, or however many there will ultimately be, is by finding advantages in distribution and creative ways to drive revenue. You recently did a pretty big Uber deal. Could you share what went into putting that deal together and why that deal is so strategic for Rivian?

• 26:38Speaker 02

  Yeah, so we have put an enormous amount of focus on self-driving. And the fruits of that are just starting to come out. So we, when we launched our first products in 2021, they were using what I would call like a 1.0 version of autonomy. And it was leveraging a mobile eye camera, which is a supplier, which provide the front camera. And it was part of a rules-based approach to self-driving. And the planner was not AI. The planner was actually a human-written, like, code version of how to drive, like, to over, over-simplify a whole series of offense statements. And that was what was used until 2021, maybe 2022. And that's what we launched with. But we fully understood that that wasn't the future state.

• 27:22Speaker 02

  And so in 2022, or late 21, beginning 22, we began a process to completely redesign our system and pull it fully in-house. And with that, designing a system instead around the sensors are things that we completely control, very high level of compute in the vehicle, and then building a large, multi-billion parameter model, a foundation model, or a neural net, that we're training with the benefit of all the data coming off of our vehicles. And so that hardware stack took some time to build. The first version of that launched about a year and a half ago in what we call our Gen 2 vehicles. And that data flywheel started to grow. And we're now at a point where the data flywheels allowing us to start to roll out features that are, you know, big steps forward from where we were in the past.

• 28:06Speaker 02

  And so later this year, we'll have a full supervised point-to-point, which is, which would be very similar to like Tesla's FSD. And that'll roll out to all of our Gen 2 vehicles and of course, R2. Then next year, we allow it to go unsupervised. So you can take your eyes off the road, which is really nice. So unsupervised, full point-to-point. And then the next is it getting to full capability to be able to be driven empty, meaning no one in the car, or you not in the front seat. And that unlocks like airport drop-offs, or you pick your kids up from school. And so we've been developing that for a while for our personal vehicles, so vehicles that you own. But we also see it as unlocking new business models, robotaxi being one of them. And we took the decision to partner with Uber so we could focus on the tech and leverage

• 28:50Speaker 02

  them for their access to a big distribution channel. So of course, they have a huge number of users or... Again, talking about competition, they're really a category of one. There's no one quite at their scale or at their reach. And so we were really excited. We'll be deploying 50,000 robotaxi versions of R2. We start that in 2028 with like paid regular rides. But leading into that, we'll have vehicles on the platform with safety drivers with people in the in the front seat. But it is pretty, it's almost like twist your mind when you recognize how much is going to change over the next five years. I think in the world of autonomy, and this is true in all physical AI.

• 29:29Speaker 02

  And we've seen it play out in the world of, you know, written AI or videos or images with with Gemini and ChatGPT and platforms like that. But the rate of change we're going to see over the next five years, say between 2026 and 2031, is demonstrably different than the rate of change we've seen over the last five years.

• 29:49Speaker 00

  So what do you see that might be science fiction to everyone watching and listening? That you're like, oh, this is coming.

• 29:56Speaker 02

  So self-driving is one that we've talked about for a while. And we've had like breadcrumbs of it where it's implemented in a way that if you're tech forward, it's easy to understand. You can drive the vehicle, but you're sort of still in the driver's seats, providing some supervision. And that's been around for quite some time. The shift to the vehicle fully driving itself is going to happen over the next couple of years. And it's going to go from something that is like a nice feature, you know, for maybe 20, 25% of buyers. It's an important feature to have, like some level of self-driving to it's absolutely necessary. And sort of, and I think it'll become unimaginable to have a car that can't fully drive itself.

• 30:38Speaker 02

  In the way that, it sounds funny to say this, but there was a time when all of our phones weren't connected. The phone was just a phone and

• 30:46Speaker 00

  Well, they were connected to the wall, if you go back far enough.

• 30:49Speaker 02

  But like you weren't sending emails on your phone. You weren't, you weren't doing anything other than maybe very simple texts. And now it's like, you couldn't even imagine living in that world. It's hard to picture. And so I think that will happen with self-driving, it will just happen very fast. And I don't believe society fully Recognizes how fast this technology is moving. The ability to deploy these AI models to train much faster is just staggering how quick progress is happening. And it's so different than what it looked like. I mean, it's sort of wild, but like two years ago. It's just the rate of progress with transformer-based encoding and building these large multi-billion parameter, multi-dimensional models is, it's just mind-blowing. And it's so exciting.

• 31:34Speaker 00

  RJ, one of the other things that is clear now is that the technology that you've built, the data that you have, the hardware capability, et cetera, lends itself to robotics to the point where you have spun out a robotics company. At what point did you realize that you had the opportunity to do that? And how did you make the decision to spin it out rather than keep it inside Rivian proper?

• 31:53Speaker 02

  I've been thinking about robotics for a while. Robots, particularly for industrial applications, are quite interesting because in the fullness of time, when we talk about what does the next 20 years look like, I think we're going to see a very diverse set of mechatronic embodiments for different robots. You're going to see almost like different form factors with different capabilities. And so when you think of robots, it's easy to sort of think of robots in a purely human form, so a full humanoid robot. And we're going to have those. But we're going to see a diversity of form factors, maybe not as broad as the biological world, but certainly a lot broader than just human-shaped robots.

• 32:36Speaker 02

  So we're going to have robots that can do all sorts of tasks. And some of those robots will be very similar to humans with maybe certain tweaks for their application, and some will be very different than humans. A good example of that is a car, a car that drives itself. It does not look like a human, but it's doing something that humans used to do. And so we started really studying this within Rivian to look at it through the lens of manufacturing. And about a year ago, I came to the view that we should absolutely go build this business. The addressable market is enormous. It's like a third of the world's GDP is in industrial labor. Industrial labor is a real shortage for manufacturing goods, and it's a real challenge, given our cost structure in the United States, for us to be competitive globally in manufacturing. And because of that, we've seen

• 33:19Speaker 02

  A very significant portion of manufacturing in the United States, and for that matter, in the Western world, moved to very low-cost countries. And so I deeply believe that the way we bring a lot of that manufacturing capability back into the United States and into the Western world is not with asking people, hey, you're going to have to make one-eighth what you make today, and you have to work 70 hours instead of 40 hours. It's using technology and using robots in conjunction with people to run much more sophisticated plants. Anyways, that long way of me saying I decided to start a company, and I'm so enormously excited by this company and what we're building. But I was late last year. We've raised a lot of capital for it. And so we're moving very quickly to deploy our first robots

• 34:03Speaker 02

  into manufacturing applications with Rivian as a first customer, but ultimately with the goal of being in many manufacturing plants for many different types of products quite quickly.

• 34:12Speaker 00

  And was the decision to spin it out because you could unlock more value and have more freedom, not as a public company, to do what you wanted to do there?

• 34:19Speaker 02

  Yeah, I mean, the scale of this is huge. So to build, like, the goal is to build one of the largest robotics companies in the world. And to do that, you need a lot of capital, more capital than Rivian was able to invest at this point. And then we also wanted to create, like, absolute clarity of focus within this business on building and deploying robotics at scale. And so it's, for me, really enjoyable because I've been building Rivian for 17 years. As we just described, I've learned a lot about building a company. And so I often get asked the question, like, what would you do differently? And now I'm having the chance to build another company from scratch. In this case, it's, you know, it doesn't have the same capital constraints that Rivian had, so it's going very, very fast, very quickly.

• 35:04Speaker 02

  But it's as if, like, the last 17 years with Rivian was training for how to run this other business.

• 35:10Speaker 00

  What's the biggest lesson you've applied from your growth at Rivian to the robotics company?

• 35:16Speaker 02

  It's a lesson I applied within Rivian as well. I think that when you're looking at an overwhelming, large challenge, like a big technical task, and especially if you have people that are watching, let's say investors or a board.

• 35:34Speaker 02

  It is very common, and lots of businesses do this, to do things that don't contribute to making progress, but generate motion. And so this is the curse of like infinite do loops of demos. And some of that, very unfortunately, is necessary. If you don't have the ability to raise capital very quickly, you end up spending a lot of time building presentations, you know, building mockups of what you want to build to convince somebody that's a good idea. But the reality is, is a lot of that is just a waste of time. And so we've been, like within Rivian, this is true. Within Mind Robotics, this is true. We're very focused on making progress, not motion. And so we actually have an expression that says, "Make progress, not motion."

• 36:19Speaker 02

  So that means it's very enticing to say, "Let me just get my CAD station out and start drawing parts." Or, "Let me start like generating a model. Let me just, I'm just going to spool up these 64 GPUs to like run a, you know, do a run of the model really quick without being thoughtful and planning. And so what's the architecture? What's the intent? How does this work cross-functionally? And so being very intentional in building things actually allows you to go much faster later on. And so R2 is a great embodiment of that within Rivian, where the program is ramping much faster than R1. It's much smoother, but we were like much more thoughtful in how we went about developing it versus the sort of chaos and lack of planfulness that existed on our first set of products

• 37:04Speaker 02

  due to immaturity of the business, immaturity of our processes and systems.

• 37:07Speaker 00

  On the R2, the question I really want to ask you is, I've given you my hundred bucks. Can you, do you notice we can move you up the list? We'll talk about it offstage.

• 37:15Speaker 02

  It's sitting outside.

• 37:15Speaker 00

  Great, awesome. To get a Rivian down to this price point, how do you decide what goes into it and what gets left out?

• 37:24Speaker 02

  I mean, a lot of it's subjective. So there's, I'd say there's like three big categories of what ultimately is going to drive costs. So the first is engineering the product to deliver the same capabilities, but in more cost-effective ways. So that's part consolidation, part elimination, maybe new processes. The second is heightened supplier leverage. And this is a very important category. For Rivian, when we launched R1, you have to imagine, imagine going into a supplier, a windshield supplier, and saying, "I want to buy windshields." And they say, "Well..." You know, tell me about your company. Well, we haven't sold any cars yet. Well, can I drive one? Well, no, it's not ready to drive.

• 38:03Speaker 02

  Are you convinced customers don't like it? I'm really convinced. And so you end up in a situation that the suppliers are making a leap of faith on R1, that the brand was going to work, that we could execute the product. Because the suppliers have to commit way before the product is like in production, obviously. And so we were carrying an enormous, call it first time tax or you know, additional costs just because of the risk factor of, you know, launching a first product. R1 resonated so well, the brand connected, all the things that sort of you hope will happen had happened in terms of the brand coming across the world in the way that we wanted it to. Such that when we went to R2, we had all this supplier leverage. Suppliers are much more willing to work with us. And then the third is content.

• 38:48Speaker 02

  And the content decisions are, you know, they're, they're, they're very subjective. And so I often, someone will say like, why did you make this decision? And I think often their perspective is like, we forgot. Like on R1 is a really good example. We didn't put a glove box in the car. So we have a really big center console. And we said, we want to use the space in the area of the glove box. We go to put actually a bunch of computers in there. And we can make the front trunk a little bigger. And it also saved us some costs. So we could put like more money into suspension of areas. A lot of people disagreed with that. We reflected, we said, you know what? We think we're going to take that decision differently in R2. So in R2, we have two glove boxes. And it's like, there you go.

• 39:30Speaker 00

  Yeah. The sweet spot might be in between. I don't know. I mean, you know, one and a half, you'll pick a number.

• 39:36Speaker 02

  But it's like a very good example of, it's not like we forgot. It's like, oh shoot, we forgot to put a glove box in R1. No, it was a very intentional decision. And so there's, as I described, there's millions of decisions. It's like the Bob Dylan line, like you can make some of the people happy some of the time. It's just a challenge to get every single feature that everyone wants. And this is why it's so important to have a very small number of people that make the like very customer facing decisions. One of the things we do now to help make those decisions thoughtfully is on the first six months of a program. We don't allow more than 50 people to be involved. We learned this because Rivian on R1 naturally had this. The team was small. We grew into a larger team. As we finished R1, we said, let's put that whole team on R2.

• 40:20Speaker 02

  So R2 went from like, so from day one to like day 10, it was like thousands of people. And it was like, whoa, we can't make progress. We have all these decisions to make and there's way too many people. And so we reset the program and said, everyone that was on this, focus on making improvements to R1. While we define the architecture, define a lot of these big decisions, get like the rough pieces all in the right space. And so we put this very small SWAT team together. And that's, I'm doing that within Mind. We did that in Rivian for R2. We did that with R3. We're doing that on our future. You can imagine R4. To get these really small, highly cross-functional teams to make these trade-offs that are inherently going to have a lot of subjectivity to them.

• 41:01Speaker 00

  I want to close by asking about, we talked about the pace of change being truly unprecedented. And it's AI, of course, but it's not just that. I mean, it's dizzying, right? I mean, we've got, you know, trade issues with China. We have climate change. We have shifting EV subsidies in a more niche way. How are you staying on top of it? And how are you working with your team to make sure that they're staying on top of these ever-evolving circumstances?

• 41:29Speaker 02

  I think if you're building a business today, you have to go into it knowing this is like full contact, multi-dimensional chess. And there's, and you're doing it sometimes in the middle of a tornado, inside of a storm. Things are moving and really critical that you have a highly flexible mindset. So you need to be convicted on the vision and the mission, but you need to flex on a lot of the details. And, you know, for Rivian, we launched the company, we launched three products within six months in the middle of a pandemic, which was, we did not plan for like work from home in 2020 as we were trying to build a plant and turn a plant into something that can operate.

• 42:12Speaker 02

  So it was maybe the most challenging environment to launch a plant into. We then had huge supply chain challenges in 2022, 2023, where, you know, I was flying around begging suppliers to get parts. And all of those situations, it's built for me, a recognition that like resilience and.

• 42:34Speaker 02

  Comfort in instability or comfort in chaos is really actually important. So with that, we have a whole process inside the leadership team of like checking our own assumptions, like the world's changing so fast, the thing we thought six months ago, is that still right? And so I think businesses that are like sitting still or head in the sand, they're just gonna have a really hard time in the world of the future. Things are changing faster, whether those are exciting things like the advent of AI, completely remapping how we run our businesses, or whether the more challenging things like global conflict. Either way, they introduce uncertainty and instability that you have to manage around.

• 43:13Speaker 00

  Well, we can't wait to see what you all do next. It's hard to imagine a more compelling guest for the first live podcast recording from Atlassian stage. RJ, thank you so much.

• 43:26Speaker 00

  Thanks again to RJ Scarrance for joining us and a giant thank you to the entire team at Atlassian for hosting Masters of Scale as part of their incredible event, Atlassian Team 26. I'm Jeff Berman. Thank you for listening.

• 43:53Speaker 00

  Before we get to the rest of our conversation today, I want to spend a moment sharing with you about Masters of Scale Summit, which returns to San Francisco this October 20th to 22nd. So many of us feel overwhelmed right now. It feels like so much of the world is careening and we don't have power, we don't have agency. That's the thing about the Masters of Scale Summit. It's really designed to remind us that we do have agency, agency to lead, agency to design, to build the relationships and the partnerships that empower us and to make the change that we want to see. We program a stage, we curate an audience, we set a schedule that builds in time for these relationships to be made and to grow, so that by the time you leave Summit, you

• 44:38Speaker 00

  are fired out of a cannon, ready to run through walls to do better in the world with the agency that you actually have. I hope to see you there. Visit mastersofscale.com/summit.

• 44:56Speaker 00

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• 45:36Speaker 03

  Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely, from Ford CEO to NASA's administrator to the lessons from the devil wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

• 46:14Speaker 00

  Masters of Scale is a Wait What original. Our executive producer is Eve Tro. Senior supervising producer is Tricia Bobita. Associate producer is Masha Makatenina. Video editor is Noah Walstein. Senior talent executive is Stephanie Stern. Mixing and mastering by the audio boys, Aaron Bastinelli and Brian Pugh. Original music by the legendary Ryan Holiday. Our head of podcasts is Leetam Malad. Visit mastersofscale.com to find the transcript for this episode and to subscribe to our newsletter. And be sure to check out our YouTube channel.

• 46:56Speaker 04

  Humans will never be more intelligent than AI.

• 46:59Speaker 05

  There's going to be two types of companies. Those who are great at AI and those that went out of business because they weren't.

• 47:04Speaker 06

  How do we build a future that is human centered?

• 47:09Speaker 07

  I'm Rana Elkhauyubi. And on my podcast, Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find Pioneers of AI wherever you tune in.