Terraform Industries Targets Solar Hydrocarbons to Displace Middle East Oil

Terraform Industries 拟利用太阳能合成烃替代中东石油 创始人 Casey Handmer 断言，太阳能成本的指数级下降将使合成天然气与海水淡化在商业上超越化石燃料，使各国能够彻底绕开传统能源供应链。 在这场内容广泛的对话中，Casey Handmer 描绘了一个以超低成本太阳能为核心、由技术驱动的乐观未来。他预测固定式太阳能阵列将使碳中和碳氢化合物合成及地面交通电气化得以普及。他将这一宏大愿景与实际工程和历史商业现实相结合，批判了学术界、NASA 等政府机构的体制性失败，以及 Hyperloop 等低效项目。Handmer 强调，要解决从人口萎缩与老龄化到美国西部区域性缺水等复杂的现代危机，需要极高要求、作风硬朗的领导力来执行可扩展的硬件自动化，而非满足于不可行且华而不实的演示。 太阳能正呈指数级扩张并将超越所有其他能源形式，其成本还将再降低 10 倍。 (0:00) Hyperloop 走向失败是因为其必须遵循直线的几何与物理现实，为避免极端过载（G力）不得不进行无休止的掘进钻探。 (1:09) Henry Kaiser 的工业帝国在拓展大型基础设施项目规模、自主执行力以及一体化工程能力方面提供了重要启示。 (2:28) Terraform Industries 通过捕获大气中的二氧化碳，并利用超廉价太阳能电解水，来制造碳中和的合成天然气与甲醇。 (8:48) 地面交通将完全实现电气化，但航空、远洋航运及重化工行业仍将依赖高能量密度的碳氢化合物。 (13:42)

Terraform Industries founder Casey Handmer contends that rapid, exponential cost declines in solar energy will underpin a new era of industrial abundance, unlocking cheap synthetic fuels and large-scale desalination. However, realizing this potential requires abandoning degrowth mindsets, cutting through permitting paralysis, and reviving an uncompromising, first-principles culture in hardware engineering. Solar Economics and Synthetic Hydrocarbon Abundance (8:48) Handmer argues that solar panel manufacturing follows a consistent learning curve, reducing costs by roughly 40% for every doubling of cumulative capacity—translating to roughly a 20% annual cost decline. He anticipates panel costs dropping from $0.08 per watt to $0.04, making solar electricity dramatically cheaper than the energy found in food. Handmer maintains that high-speed and long-range transport cannot realistically rely on batteries, noting that jet fuel remains roughly two orders of magnitude more energy-dense by weight. Consequently, he expects passenger cars to fully electrify while aviation, long-haul shipping, and chemical production remain reliant on hydrocarbons. To supply clean hydrocarbons without fossil extraction, Terraform Industries connects direct air capture and water electrolysis systems to standard solar installations to generate synthetic natural gas and methanol. While synthetic gas was an initial target, Handmer notes the company pivoted toward methanol because it yields roughly six times higher revenue per carbon atom and functions as an easily transportable liquid. Handmer argues that synthetic hydrocarbons democratize global energy by recycling atmospheric carbon, rendering aviation fuel taxes regressive and counterproductive to human flourishing. Hardware Realism and Demanding Operational Leadership (1:09) Handmer contrasts viable hardware with conceptual dead ends, pointing to his early career work at Hyperloop. Despite engineers solving levitation and vacuum challenges, he states the system failed due to basic terrestrial geometry: maintaining safe G-forces at high velocities on uneven terrain requires tunneling and rock movement that make cross-country tubes economically non-viable compared to commercial aviation. Highlighting historical industrialist Henry Kaiser—who mechanized dam construction and compressed wartime Liberty ship fabrication down to an 11-day average—Handmer laments that contemporary engineering curricula produce graduates who excel in coursework but lack practical fabrication experience. Drawing on lessons from running Terraform, Handmer asserts that successful hardware manufacturing in the United States demands an intense, uncompromising leadership style. He acknowledges updating his view from believing organizations could succeed through gentle coaching to recognizing that breakthrough physical engineering requires high extrinsic pressure. Citing historical leaders like Leslie Groves and Hyman Rickover alongside modern examples like SpaceX, Handmer contends that founders must treat organizations as direct extensions of their own technical standards, which necessitates direct negative feedback and decisive termination of underperforming personnel. Solar-Powered Desalination and Mega-Scale Land Reclamation (54:04) Handmer identifies low-cost thermal desalination as a major frontier, developing a solar-powered system via Terraform Desalination that relies on vacuum-assisted phase changes rather than reverse osmosis membranes. While recognizing that Israeli reverse osmosis currently produces water at approximately $400 per acre-foot, Handmer targets a long-term operating cost of $99 per acre-foot. By discharging slightly concentrated brine that dilutes naturally back into ocean currents, he argues this intermittent, solar-coupled thermal approach minimizes wear parts and avoids complex grid infrastructure. Handmer proposes using large-scale desalination to reverse environmental degradation and unlock regional development, focusing primarily on California's Salton Sea. His plan calls for injecting 3 million acre-feet of desalinated water via a dedicated canal to stabilize water levels and salinity. Handmer claims this project could yield a 50-to-1 economic return by opening 110 miles of shoreline for real estate and urban centers, financed without public debt by granting a 10% land allocation to developers. On a broader scale, he envisions pumping desalinated water into Nevada's underutilized federal valleys to establish perennial river systems and industrial corridors. Energy Competitiveness, Geopolitics, and Institutional Renewal (27:51) Handmer links national prosperity directly to energy abundance, arguing that countries with inexpensive energy maintain robust economic growth even amidst domestic governance inefficiencies. In contrast, he notes that nations with expensive power, such as the United Kingdom and Japan, suffer from persistent stagnation. In solar manufacturing, Handmer points out that Chinese state-backed, zero-interest financing has driven unprecedented deployment volumes, allowing China to install more solar in three months than the United States has deployed throughout its history. He predicts this aggressive domestic transition will largely eliminate China's vulnerability to naval chokepoints like the Strait of Malacca by 2035. To counter foreign industrial scale, Handmer urges the United States to institute 'by-right' solar permitting on private land and federal Bureau of Land Management acreage, paired with mandatory end-of-life cleanup bonds. Addressing broader state capacity, he highlights the decay of institutions like the Jet Propulsion Laboratory as evidence that federal scientific agencies suffer from severe bureaucratic inertia. Handmer proposes establishing mandatory 10-year sunset clauses for public research bodies, forcing automatic reconstitutions to preserve technical competence and prevent strategic complacency. Handmer's vision of energy and water abundance rests on whether hardware startups can overcome the high capital intensity and strict regulatory barriers of coastal development, and whether Western policymakers can streamline land-use permitting before state-backed international competitors permanently dominate global manufacturing.

Terraform Industries 创始人 Casey Handmer 主张，太阳能的指数级降本正从根本上重塑全球能源与材料经济体系；利用廉价光伏电力合成碳氢燃料与推进大规模海水淡化，不仅能在无需压制人类消费与流动性的前提下实现碳中和，亦是重塑区域地理与国家工业竞争力的核心抓手。 太阳能指数降本与合成碳氢燃料路线 (8:48) Handmer 认为，公众普遍未能充分认知太阳能遵循的技术学习曲线。光伏面板累计产量每翻一番，其制造成本约下降 40%（年均降幅约 20%）；他预测面板成本有望从目前的每瓦 8 美分降至 4 美分，硅材料的物理特性更预示着未来成本可能较目前进一步降低 10 倍。Terraform Industries 的商业模式建立在“将互补品商品化”之上，即由外部成熟供应链承担光伏板的规模化降本，自身则专注于高附加值转化设备，直接连接标准太阳能阵列，从大气中捕获二氧化碳并电解水制氢，通过成熟的高温高压反应合成天然气。相较于依赖光合酶且效率低下的生物质燃料，这一合成路线在单位土地面积上的能量产出效率高出约 100 倍。由于美国国内天然气现货价格偏低，该公司正加速推进制取甲醇的工艺路径，以使处理每摩尔碳原子的营收提升约 6 倍。 在交通脱碳方面，Handmer 预测乘用车与轻型卡车将在未来数十年内几乎全部电动化，但在高能量密度与高航程领域，液体燃料依然不可替代。航空煤油的能量密度约为现有锂电池化学体系的 100 倍，液化天然气约为 55 兆焦耳/千克。据其预测，若未来全球航空出行人口从当前的 5000 万扩大到 5 亿至 10 亿人，仅航空业消耗的燃料就将超过人类目前的石油总用量。Handmer 反对针对航空征税的“去增长”环保主张，认为通过光伏合成净零碳氢燃料既能为中低收入群体普及快速出行，也能打破依赖特定产油国地缘政治的资源束缚。 光伏低成本淡化与索尔顿海生态重塑 (54:04) Handmer 将廉价光伏赋能的物理转化思路延伸至水资源领域，正在推进专注于低压低温相变热蒸馏的海水淡化项目 Terraform Desalination，目标是通过消除高维护损耗部件，使设备能在间歇性光伏供电下低成本运行。目前以色列沿海反渗透海水淡化的成本约为每英亩英尺 400 美元，而 Handmer 设定的长期破坏性成本目标是每英亩英尺 99 美元。他批评加利福尼亚州水资源管理陷入传统大坝与水渠的路径依赖，例如该州考虑耗资 200 亿美元开展萨克拉门托三角洲工程以年均回收 10 万英亩英尺淡水，而同等投资若用于淡化，理论上足以将科罗拉多河年径流量翻倍。 在此基础上，Handmer 提出了重构加州索尔顿海的工程构想：通过引入 300 万英亩英尺淡化水，将这一因过度蒸发导致鱼类绝迹的退化水体恢复至 1990 年代历史水位并稳定其盐度，进而利用释放出的 110 英里海岸线建设工业园区和退休宜居新城。由于索尔顿海本身源于 1905 年的灌溉事故而非原始自然生态，他主张该工程不存在传统环保阻力，并能产生高达 50 比 1 的经济杠杆。项目可通过将 10% 的新生土地授予开发实体获取自筹资金，其余 90% 归属公众。对于内华达州等内陆荒漠，他同样主张通过专用光伏阵列驱动泵站将水输往低海拔盆地，重塑常年河流与区域气候生态。 硬件制造第一性原理与严苛管理范式 (4:51) Handmer 高度推崇 20 世纪美国工业家亨利·凯撒（Henry Kaiser）的实践哲学。凯撒早年仅是依靠独轮车铺设路面的小承包商，却秉持“一切皆为物理学，我们能够学会”的信念，主导了胡佛大坝、大古力大坝等超级工程，并在二战期间通过标准化预制以平均 11 天、最快 4 天的速度下水建造自由轮。Handmer 强调，凯撒、霍华德·休斯与埃隆·马斯克的共同优势在于将工程学视作通用的物理问题解决框架，而非局限于狭窄学科。他坦言当前大学工程教育与产业脱节，许多机械工程毕业生即便取得了 3.9 的高绩点，在课外却从未动手做过实际项目。 针对硬科技初创公司的管理，Handmer 反思自身教训，指出打造极具竞争力的硬件制造企业必须推行严苛标准与强外部激励。他警告初创公司创始人切忌陷入“辅导一小时等于解雇一小时”的思维陷阱，强调当员工长期无法达成目标时，果断解除合作是对企业与员工双方职业生涯更负责的选择。在 Terraform 的组织架构中，职位图谱被颠倒绘制以直观反映“问题自上向下流动”；他认为初创组织必须充当创始人思维与执行力的放大器，向莱斯利·格罗夫斯建设曼哈顿计划或海曼·里科弗打造核动力海军的模式看齐，在硬件开发中将成功作为硬性指标。 能源繁荣基石、产业政策与机构重组 (31:03) Handmer 论证指出，能源成本的高低直接决定了国家的长期繁荣与容错空间。美国之所以能在诸多治理短板下维持富裕，核心得益于廉价能源禀赋；反观英国与日本等能源昂贵的发达国家，人均经济增长普遍陷入长期停滞。在产业竞争层面，中国依靠极低能源成本与零息贷款支持，在钢铁、铝、镁等工业金属产能上达到美国的 10 至 100 倍，且仅在三个月内新增的光伏装机量就超过了美国历史总和。Handmer 据此预测，中国大规模部署光伏与电动汽车的进程，将使其在 2035 年前基本摆脱对途经马六甲海峡海运石油的依赖，直接削弱外部地缘施压手段。 为加速美国本土的能源转型与再工业化，Handmer 呼吁实行激进的审批制度改革，将联邦土地管理局（BLM）管理的公有荒地及私人土地的光伏建设改为“法定权利”（by-right），取消与高污染化工厂同等繁琐的许可流程，并通过预提清理基金解决数十年后的退役环保关切。与此同时，他针对美国国家实验室与公共研发部门的活力衰退提出制度性改造方案：建议为 NASA 和喷气推进实验室（JPL）等政府机构设立 10 年法定重组期（sunset clause），到期后强制执行整体拆分与职能再造，以类似南极科考站轮换承包商的机制倒逼组织迭代，防止科研官僚化导致在月球探测等关键领域落后于地缘对手。 Handmer 勾勒了一幅由廉价清洁能源与先进自动化制造支撑的“超级美国”（Hyperamerica）远景，主张年轻工程技术人才应避开舒适型企业，投身极具挑战的重硬件创新。然而该构想仍面临多重现实阻力：重工业硬件创业门槛高昂且竞争者寥寥；索尔顿海与输水工程受制于加州海岸委员会等监管机构的传统审批惯性；此外，西方社会老龄化加剧与养老金支出膨胀正挤压公共财政，能否长期汇聚充裕资本用于回报周期漫长的特大基础设施，仍是未解难题。

[1:09] Casey Handmer: The faster you go, the further you want to be away from the surface of the Earth [19:42] Casey Handmer: blessed that one of the most abundant elements on the Earth squeaks electrons when you shine a light on it. [19:42] Casey Handmer: commodifying a compliment [22:59] Casey Handmer: I promise you it would still not work... It's the same as brewing beer. I can buy all the pipes, right? I can make something undrinkable. [31:03] Casey Handmer: electron ranching. [47:39] Casey Handmer: the psychic damage is the same, but the pay is better at SpaceX. [47:39] Casey Handmer: You do have a social obligation to not waste that opportunity, [50:24] Casey Handmer: Kids are fucking great... I might have six more of these [62:08] Casey Handmer: Salton Sea is not in a state of nature; it's in the state of altered effluence, [66:44] Casey Handmer: steamroll the California Coast Commission [68:20] Casey Handmer: leadership through service. [68:20] Casey Handmer: that an hour of coaching is as good as an hour of firing. [68:20] Casey Handmer: build their career elsewhere. [71:12] Casey Handmer: the jewel of space science in the United States [75:15] Casey Handmer: Hyperamerica with a trillion Americans and a trillion planets,

[0:00] Non-alcoholic Guinness. [0:00] I have insufficient filter as it is. [0:03] I think you're perfectly filtered, just they way you are. [0:05] You flatter me. [0:06] You're a solar maximalist. [0:08] People should fully update their worldview [0:10] that solar is going to beat out everything. [0:11] The solar wave is exponential, right? [0:13] People are really bad at understanding [0:16] where they sit on an exponential curve, [0:17] and then correctly projecting into the future. [0:19] My grand plan is you put another 3 million acre-feet [0:22] of water in the Salton Sea, bring it back up [0:23] to its historical 1990-era level; [0:26] stabilize the level, stabilize the salinity. [0:27] And we could do that, and it would pay for itself. [0:29] Have you pitched the Trump Administration on this? [0:31] I did write a one-pager for the Secretary of the Interior, [0:34] but I think they've got a lot on their plate. [0:35] It's not rocket science, [0:36] and I'm sure they'll figure it out sooner or later. [0:38] I mean, it's a little bit rocket science. [0:39] You know, a lot of meat in there. [0:41] Actually, yeah, it's probably rocket science. [0:43] We had a Irishman here recently, [0:45] and that was a two-pint episode, [0:47] so that got nice and unfiltered by the end. [0:50] It's, like, not that many for a session, [0:52] but actually kind of a lot for a podcast. [0:53] Especially when you go back to work afterwards. [0:56] Casey Handmer is the founder of Terraform Industries, [0:58] which is developing a machine [0:59] that makes synthetic natural gas from sunlight and air. [1:02] He's also a prodigious blogger and all-around polymath. [1:05] Cheers. [1:09] So, you started your career at Hyperloop. [1:13] That's where I first escaped from academia, yeah. [1:15] Yeah. [1:15] And a working career. [1:17] Is Hyperloop ever going to happen? [1:18] No. [1:20] I think I can safely say that now. [1:21] Okay. [1:22] It's really kind of interesting, because you had a bunch [1:23] of very talented engineers that came together [1:24] to take a crack at a project [1:25] that they weren't sure was possible. [1:27] And it turns out that, of all the— [1:28] It wasn't. [1:29] Well, it turns out that, of all the known unknowns, [1:31] they basically were able to solve them. [1:32] The levitation, vacuum, construction, [1:35] all that sort of stuff. [1:37] It was this weird kind of subtlety [1:40] that ended up, you know, if I may say, [1:42] derailing the whole project, [1:43] which is that: the faster you go, [1:45] the further you want to [1:46] be away from the surface of the Earth. [1:47] And you would understand this as a pilot yourself. [1:49] If you make a habit of flying through canyons [1:50] and mountains, sooner or later, the cone of ground [1:54] that you can get to with a 7G turn [1:56] completely intersects the ground itself, [1:57] and then you die. [1:59] And the same thing applies, [2:01] whether you're in a tube or not. [2:03] So, the practical consequence of that [2:05] is, if you want tobuild a network of hyperloops [2:06] across the United States, [2:08] you have to drill almost the entire way, [2:10] which is a lot of rock. [2:11] You have to move a lot of rock. [2:12] It's very expensive. [2:13] And when you start tallying up the numbers, [2:15] California High-Speed Rail, [2:16] supposedly north of a hundred billion dollars now. [2:18] And you say, "Well, that seems like a lot of money." [2:21] How many 737s could you build [2:22] and operate for 30 years for that much money? [2:24] And it turns out you could move more people more quickly [2:26] that way than with the Hyperloop. [2:28] You first turned me on to Henry Kaiser. [2:30] Can you summarize the Henry Kaiser oeuvre for people [2:35] and maybe explain why he's so understudied? [2:37] That's an interesting one. [2:37] So, on my way in here today, [2:40] I passed by the Kaiser Permanente just down the road. [2:44] Of course, you have to pay your respects. [2:45] Henry Kaiser grew up poor, left high school, [2:49] started off in photography initially, [2:51] then went into hardware, [2:52] then into construction, a bunch of other things. [2:55] Every huge project you've heard of, he worked on. [2:56] He worked on Shasta, he worked on Grand Coulee. [2:59] The Grand Coulee Dam. [3:00] The Grand Coulee Dam. [3:01] He was the principal behind the Hoover Dam, [3:02] which at the time they called the Boulder Dam. [3:04] Just insane work ethic. [3:05] He worked 20 hours a day every day [3:07] for his entire life, right? [3:08] Right up until he died at 85. [3:10] And he really got going after the Hoover Dam [3:12] at the beginning of World War II [3:13] when, just up the road here at Richmond [3:16] and a few other places, started the shipyards [3:19] where they took the techniques they'd learned [3:20] at Hoover Dam and then applied it to ship-building. [3:23] And they were ultimately able to churn out hundreds [3:25] and hundreds and hundreds of ships, [3:27] which is mind boggling. Including the famous [3:28] four-day Liberty ship that was a propaganda exercise, [3:31] but still they built a ship in four days. [3:33] Like, it was pretty effective propaganda. [3:34] The more typical duration on the waves [3:36] would be more like 11 days. [3:38] What a failure. [3:38] Yeah. [3:39] But just the idea of building [3:40] that many ships in today's America seems stunning. [3:43] And this is 1940. [3:44] They invented employer-sponsored healthcare, [3:46] which became Kaiser Permanente. [3:49] That was actually initially introduced [3:50] a few years before that. [3:51] He effectively built the town of Richmond, California. [3:53] Yeah, amongst others. [3:54] His retirement project [3:54] was the Hawaii Village Hotel in Honolulu. [3:57] What else did he do? [3:58] He did aircraft for a while. [3:59] He was involved in the Philippine Mars. [4:00] He was involved in the Spruce Goose. [4:01] He did cars. [4:03] He set up South American auto manufacturing, [4:06] including Jeep, like Willys Jeep [4:07] was Willys Kaiser Jeep for a long, long, long time. [4:09] Just a bunch of different things. [4:10] Now, why is he not so well known about? [4:11] Well, he kind of took off at the peak of his game [4:13] and went to Hawaii, and his organizations, [4:16] including steel mills and aluminum mills and cement mills [4:19] and all kinds of stuff, continued to operate. [4:20] But he didn't really do succession planning very well. [4:23] And so, when he died, all his assets flowed [4:25] to his second wife and not to his children, [4:28] or his surviving son, who'd been running the organization [4:30] and the other executives. [4:33] And she basically had no interest or ability to run it. [4:36] So, she sold off pieces of it here and there. [4:37] Ah, so the empire kind of fell apart a bit. [4:39] And left. [4:39] But pieces of it still exists. [4:40] Kaiser Aluminum is still a going concern. [4:42] Yes. [4:43] It's still a very large company. [4:46] And Kaiser Permanente obviously. [4:47] But it's a really challenging problem. [4:49] Like, how do you keep it together? [4:50] Yes. [4:51] There's an Elon-like aspect to his character [4:54] where, so he started as a roads general contractor. [4:59] Like, he built roads. [5:00] And then, he— [5:01] Like, 200-foot little strips of roads with mules [5:03] and wheelbarrows and stuff. [5:04] Exactly. [5:05] So, he was the guy you called to build a road. [5:06] And then, he seemed to keep jumping [5:10] to new technical challenges, all of them with the attitude [5:13] that, "Ah, it's not that hard. [5:15] It's only physics. [5:16] You know, we can learn it." [5:17] And so, you know, the dam, it's like, [5:18] "Well, that's just like a big construction project. [5:21] I've done construction projects before. [5:22] How hard can it be?" [5:23] He'd done a lot of dams by that point. [5:24] He actually formed a partnership with LeTourneau. [5:27] So, he was the first person, at least on the west coast, [5:30] to introduce mechanization to road building [5:32] and canal building and so on. [5:34] He did the Colorado River Aqueduct, [5:35] which is this huge watercourse that actually runs very close [5:38] to my house all the way through southern California, [5:40] bringing water from the Colorado River, [5:42] ultimately all the way to Palos Verdes. [5:43] Just insane stuff. [5:44] But yes, this idea that you build this organization [5:46] of, ultimately, some dozens [5:48] of very capable independent autonomous executives, [5:51] and then you compound [5:52] and compound and compound and compound and compound, [5:53] and just always, like, double or nothing, [5:55] find ways to do it. [5:57] But also, he had personal relationships [5:58] with the bankers since forever. [6:02] And so, Bank of Italy came in [6:03] and underwrote the Hoover Dam project, for example. [6:06] And they all made a lot of money. [6:08] But in those days, the way that the contracting worked— [6:09] Bank of Italy, which was an American bank [6:11] that became Bank of America. [6:12] Became Bank of America, yeah. [6:13] Sorry, for those of you not familiar [6:15] with the intricacies [6:16] of finance history. The finance history [6:17] of Bank of America, yeah. [6:19] Well, Bank of Italy, which was a bank [6:20] based here in San Francisco, was the bank [6:22] that opened its doors [6:23] the day after the San Francisco earthquake [6:25] and started handing out capital to people to rebuild, [6:27] even though it was going to take them [6:28] six months to straighten out their accounts [6:30] because everything had burned down, [6:31] which they ultimately did. [6:32] And that's exactly, they understood the role of the bank, [6:33] which is issue credit. [6:35] Just fascinating stuff. [6:36] And then, in the late 1980s, so he died in 1969. [6:38] Late 1980s, two biographies were published [6:42] back-to-back, like six months apart. [6:44] Yeah. [6:44] And then, nothing. [6:45] It's kind of bizarre [6:46] how quickly he vanished without a trace. [6:48] Yeah. [6:48] And again, there was this first principles thing [6:50] where, getting into shipbuilding, [6:51] getting into cars, getting into planes; what is a plane? [6:54] Well, just a car that flies. [6:55] Just a willingness to jump into new industries [6:58] that, again, I associate more [7:00] with hardware entrepreneurs than software entrepreneurs. [7:03] Maybe it's something to do with the hardware space. [7:05] Like, there's more opportunities for new startups. [7:07] I don't know. [7:08] Well, he was a tinkerer, so he had multiple workshops, [7:10] including some up at Livermore and some down here in Oakland [7:12] and where he'd have people on payroll, [7:16] working on stuff, just trying crazy ideas. [7:18] He was into speedboat racing. [7:19] He had a estate up in Tahoe [7:21] where he'd sponsor speedboat races, [7:23] and then ultimately pulled back a bit [7:24] when a few of them died, I think. [7:26] But he just loved that sort of stuff, [7:28] and he was just, he was a mechanic. [7:30] He was inventing things his whole life. [7:32] Yes. [7:33] But yeah, he had his hands in the stuff. [7:33] So, he said, "Well, we can figure it out." [7:36] Are there other underappreciated industrialist tinkerers? [7:39] Oh, probably all of them are underappreciated. [7:41] If you look at the Gundo guys [7:43] or whatever, this kind of new generation [7:45] of industrially ambitious hardware entrepreneurs. [7:49] Almost all of them have an origin story [7:52] that goes back into their early teens or earlier [7:55] of just trying to make stuff, right? [7:56] And it's just this sweat equity. [7:58] I mean, on the software side, [7:59] I would say, you started coding [8:01] well before you went to school to learn [8:02] how to code, right? [8:03] Well, I never went to school to learn to code, so yeah. [8:05] Well, like, the same idea, [8:06] but, I don't know, I meet people every day [8:07] and I can't tell you how sad it is [8:08] to, like, be screening someone who's got a 3.9 GPA [8:11] out of UCLA mechanical engineering school, [8:13] which is generally pretty good. [8:15] And you say, "Okay, this is your portfolio, [8:17] but can you give me an example of one project you ever built [8:19] using your skills that was not required for a class?" [8:21] And they're like, "Why would I do that?" [8:23] And I'm like, "I don't know, [8:23] because you just spent four years [8:25] of your life deciding [8:27] to specialize in this particular field of all fields." [8:30] So, if you interpret Henry Kaiser, Howard Hughes, [8:34] Elon Musk, they decide that their circle of competence [8:38] is not rockets or roads or what have you, [8:41] but is engineering. [8:42] And that engineering competence can be broadly applied [8:45] to many potential domains. [8:48] I associate this trait with you. [8:50] Maybe for the listeners who are not familiar, summarize [8:53] what Terraform is building. [8:55] Terraform is building a machine that connects [8:58] to a standard quantized solar array [9:00] and produces natural gas; it's a pretty neat trick. [9:04] Yeah, explain for people who remember [9:08] their high school chemistry. [9:09] Okay, sure. [9:11] I just, like, the philosophy [9:13] of what this is doing is very strange, [9:14] because normally we would burn gas to make electricity, [9:17] but the solar has gotten so cheap [9:18] that you can actually do the reverse process, [9:21] and it makes financial sense, increasingly so over time. [9:24] In terms of the chemistry, well, hydrocarbons [9:26] made of hydrogen and carbon; it's not very complicated. [9:29] So the source of carbon is carbon dioxide in the air. [9:33] Actually, this beautiful table is made of a biopolymer, [9:36] which was also extracted from water and air, [9:39] water and CO2 that ultimately came from the air. [9:42] We also make hydrogen from water. [9:45] And unlike this poor tree, [9:46] we don't have to use Rubisco to do that. [9:47] We can just electrolyze stuff [9:49] at a couple hundred degrees Celsius, [9:51] and then feed that [9:52] into a high-pressure, high-temperature reactor [9:55] of the sort that were pioneered in Germany in, like, 1905. [9:58] And then, out comes natural gas, [10:00] which is, it's a very neat trick. [10:01] Okay, so you take electricity from solar panels. [10:04] Yep. [10:05] You take carbon from the atmosphere. [10:06] Yep. [10:07] You take the hydrogen from water. [10:08] Yep. [10:09] And then, you use those [10:10] to produce currently short chain, in future longer chain, [10:13] hydrocarbons. [10:14] Yeah. [10:15] And the reason that you get carbon emissions [10:18] when you burn gasoline [10:20] is we're taking carbon that was sequestered in the ground. [10:22] We had it stored away [10:23] through all the many, many years [10:26] of breakdown there. [10:27] Dinosaur stuff basically. [10:28] Exactly. [10:29] So, you got this, so actually that carbon [10:31] was originally in the atmosphere, too, [10:32] but it's been stored underground, [10:33] and it would stay there forever essentially. [10:34] And so, when you burn gasoline [10:36] or kerosene, you're participating [10:39] in this kind of broad industrial-scale, [10:41] civilizational-scale effort to pump carbon out of the crust [10:44] and put it into the atmosphere, [10:45] with many positive side effects of that process. [10:48] In our process, the carbon comes from the atmosphere [10:51] and is reused. [10:52] So, it's actually like burning wood, [10:53] which is technically carbon-neutral. [10:55] So, it's like, that helps on the climate front, [10:57] in that you can create an economic forcing function [10:59] around going and sourcing our entire civilization's carbon [11:03] from the air rather than from the crust. [11:05] It also helps from an energy abundance front, [11:08] which is to say, if you need sun, you go outside, [11:11] but if you need oil, you have to be friends [11:12] with Saudi Arabia [11:14] or one of the handful of other places on Earth [11:16] that are generally uninhabitable but have oil. [11:19] But everywhere pretty much that people live has enough sun [11:21] that you can make, you know, you can grow enough food [11:23] to survive. [11:24] And if you can grow enough food to survive, [11:25] you can synthesize enough fuel [11:26] to run your modern industrial economy. [11:28] Plants are great, even this plastic one here. [11:31] But the net throughput efficiency [11:33] is about a hundred times lower than a synthetic process [11:36] like the one we're using [11:36] in terms of area of land into reduced carbon fuel. [11:40] There are people who think [11:41] that we should all be flying less [11:42] because of the carbon impact, [11:43] whereas you think, "Hey, this is just a tech problem. [11:46] We should all be flying much more, [11:47] and you can make zero-carbon flying, [11:49] despite the fact that flying is one of the places [11:51] where it's really useful to have hydrocarbons, [11:53] but you can just produce zero-carbon jet fuel, [11:56] and then you can fly as much as you want in a closed system [11:58] that is not emitting net new carbon. [12:00] Yeah, I mean, would you disagree that flying is awesome? [12:02] Yeah, exactly. No, I but I'm probably not [12:03] the unbiased— [12:05] Yeah, so one school of thought here [12:07] would would hold that flying aircraft [12:08] accounts about 2% of emissions, [12:11] and it's almost all, like, relatively wealthy people [12:13] who are doing it, and therefore it's like, [12:14] there's moral valence to it in that we're screwing up [12:16] the planet on behalf of the 10 million richest people [12:18] on Earth. [12:19] And so, what we should do [12:20] in order to disincentivize this behavior [12:22] is tax aviation fuel, and then feed the money [12:25] into, I don't know, something to try and solve [12:27] that social problem, and that will make aviation [12:30] more expensive and less accessible. [12:31] But that's actually super regressive, [12:33] because people like you and I [12:35] will still be able to afford to fly. [12:36] We're not super price-sensitive when it comes [12:38] to, you know, flying United. [12:39] But actually, it's the people on the margin [12:42] who could, you know, it makes a difference [12:43] between them flying, say, once in their life [12:45] and five times in their life. [12:46] It makes a big difference to have access [12:48] to those opportunities and those privileges. [12:50] So, my radical point of view is I want to find ways [12:52] to make aviation fuel cheaper [12:54] and to build hypersonic magnesium aircraft [12:56] that use liquified natural gas [12:59] as their fuel and go much faster. [13:02] And I want to expand the access to this privilege [13:05] to everyone, not just the 10 or 15 million richest people [13:09] on earth. [13:09] If you say you want to avoid carbon-emitting use cases, [13:14] and so you want to avoid [13:16] having carbon-emitting flights [13:17] or carbon-emitting cars. [13:19] There are two ways we can achieve that. [13:21] One is we substitute a lot of internal combustion cars [13:24] with battery-powered cars, [13:26] and that's one way where you just stop, [13:27] you eliminate the hydrocarbons altogether. [13:29] Or you could start using zero-carbon, zero net new carbon— [13:33] Synthetics, yeah. [13:34] Exactly. Synthetic fuels. [13:36] Where do you think the world goes? [13:37] Which things go towards electrification [13:40] and just removing the hydrocarbons altogether, [13:42] and which things do we go to using clean hydrocarbons? [13:44] Yeah, I mean, I have opinions on this. [13:46] At the end of the day, the market will decide. [13:48] The market is correct. Sure, but what [13:49] are your predictions? [13:50] You watch this market My prediction [13:50] is electric cars are really great. [13:54] We just had RJ from Rivian; it's a great product. [13:56] Yeah, exactly. [13:57] And that, over time, [13:58] we will see more other successful, [14:01] hopefully, western electric car manufacturers [14:03] that can compete with Tesla, [14:04] and Tesla can continue to grow its market share, and so on. [14:08] And it would not surprise me [14:09] if, when we're crusty old men sitting here, [14:11] let's say in our late eighties, [14:14] that pretty much all the cars [14:15] and all the trucks were electric, [14:17] all the ground-based transport was electric. [14:18] But at the same time, wouldn't it be amazing [14:20] if aviation by that point had grown by 20 or 50x, [14:22] and so instead of 50 million people flying planes, [14:25] more or less occasionally, it was 500 million [14:28] or a billion people flying planes, getting to fly in planes [14:30] and just that by itself would more than use all the oil [14:33] that humanity currently uses. [14:35] Yes. Right? [14:35] So, I think the really energy-intense, [14:37] high-speed transportation stuff will stay fuel. [14:39] Rockets obviously will stay fuel. [14:40] Yeah, to give people an intuition for this, [14:42] isn't it the case that, versus current battery chemistry, [14:45] jet fuel I think is two orders of magnitude, [14:48] it's 100x more energy-dense [14:50] by unit weight than batteries, [14:52] and so, it could be a while [14:53] before you could build the battery power of 777. [14:55] At the end of the day, we have a planet [14:56] that has a certain size and a certain gravity, [14:57] and if you want to fly from one side to the other, [14:58] then you have to go 20,000 miles. [15:00] That's actually a little far. [15:01] 10,000 miles. [15:02] 10,000 miles. [15:03] Yeah. [15:04] If you think, well, what could a battery chemistry [15:06] look like that would have the energy density [15:07] comparable to LNG? [15:08] It's 55 megajoules a kilogram. [15:10] Like, I'm not saying it's impossible [15:12] but I would be surprised. [15:13] I would be very surprised if that occurred. [15:15] That said, I would not be surprised to see [15:17] some really high-performance, electric-powered aviation [15:19] in the future, particularly power densities are great, [15:21] so you can do I think potentially much cheaper, [15:23] much more safe electric VTOL. [15:25] Yeah, there's clearly a bunch of exciting stuff [15:27] with Beta and Joby; [15:29] all these guys. [15:30] Yeah, exactly. Yeah. [15:31] But sorry, you're going back to, you're dividing [15:32] up the world. [15:33] So, you think big aircraft stay on hydrocarbons. [15:35] Fast aircraft. [15:36] Fast aircraft, big aircraft, long-range aircraft, [15:38] hydrocarbons. [15:39] Probably long-range shipping would stay [15:40] that way, like LNG. It's just so cheap. [15:42] It's going to stay that way for a long time. [15:43] Paints are going to stay hydrocarbon based. [15:45] Yes. [15:46] Chemicals, pesticides, herbicides, [15:49] pharmaceuticals, and all that stuff. Plastics. [15:52] Industrial gas turbines [15:53] are really backlogged right now. [15:54] I think people don't realize this, [15:55] but one of the easiest ways to bring new power online [16:00] if you're building an AI data center, for example, [16:03] is you get an industrial gas turbine, [16:05] which is basically pretty similar [16:07] to a jet engine. [16:09] In your vision of the world, [16:10] shouldn't those data centers be powered by solar arrays [16:14] and batteries, and why that isn't happening yet, [16:16] to the best of my knowledge. [16:17] Why not? [16:18] It's a very small scale, [16:19] but I think we're just at the beginning stages [16:21] of the market, working this puzzle out. [16:24] It doesn't happen instantaneously. [16:25] It seemed pretty clear to me, I think two years ago, [16:28] I've got a blog post on this, [16:29] saying that we're going to have to go to solar [16:30] and batteries for AI data centers at scale. [16:32] And back then, everyone was still talking [16:34] about like, "Oh, we're going to build SMRs." [16:35] You know, and I'm like, "Well I love SMRs [16:36] as much as the next guy. [16:37] I used to teach nuclear physics." [16:38] Small nuclear reactors. [16:39] Yeah, of course. [16:40] You know, they're great for submarines. [16:41] But I think, I mean you and I talked about this [16:43] years and years ago. [16:44] Like, okay, what's it going to take [16:45] to get a hundred gigawatts of SMRs up and running? [16:48] Like. [16:49] It's not going to happen overnight. [16:51] And we're kind of getting to the thrust [16:52] of the, as I think about kind of the Casey worldview, [16:56] it is, you're a solar maximalist, [16:58] and you think that people have not internalized [17:02] the cost improvements and the learning rate of solar enough [17:05] and realize just how radically different [17:08] the world will be as a result. [17:09] And you're building Terraform as one bet on this, [17:12] but you think just, more broadly speaking, [17:14] people should fully update their worldviews [17:16] that solar is going to beat out everything. [17:18] And then, you're also a techno-hardware optimist [17:21] that you think we should just be doing more hard things. [17:23] We should be willing to make improvements. [17:25] People should start hardware companies. [17:26] Is that a good summary of your worldview? [17:28] Well, people in general [17:30] maybe shouldn't start hardware companies. [17:31] It's kind of cursed in a way. [17:34] But if you have the right skillset and the right mindset, [17:37] and you're determined to just do the most ambitious thing [17:40] you could possibly achieve, you should do it, right? [17:42] Henry Kaiser could have had a grand career [17:45] doing road-building for his whole career, right? [17:47] But he saw there's an opportunity, [17:48] and he saw that the American West needed water, [17:49] and he's like, "I should be part of this." [17:51] Right, it didn't take Einstein to figure that out. [17:53] And he's like, "Well, the government thinks [17:55] that the Hoover Dam should cost $38 million." [17:58] It's about a billion dollars in today's money to build. [17:59] "And it should take seven and a half years, [18:00] and they're going to pay us monthly. [18:02] And I think that I can figure out [18:03] how to shave two years off that schedule. [18:05] So, we'll bid $38 million. [18:06] We'll get the bid, and then we'll finish it [18:09] in five and a half years," and they did. [18:11] 8 million goes in their pocket. [18:12] And that's how government used to run acquisitions. [18:15] So, it works quite well. [18:16] But at the same time, the solar wave is exponential, [18:19] right? [18:20] And we know from COVID, amongst other things, [18:21] that people are really bad at understanding [18:23] where they sit on an exponential curve, [18:24] and then correctly projecting into the future. [18:27] What is the rate of panel cost, of solar cost improvement? [18:30] It's, like, 40 something percent per doubling [18:32] of production, and currently production's doubling [18:34] roughly every two years. [18:35] So, you could say 20% a year. [18:36] That's the panel by itself, right? [18:38] That's not necessarily the cost that you end up seeing [18:40] at the wall, you know? [18:41] Right, and that's the objection [18:41] people make to this line of argumentation. [18:43] They say panels are a pretty small component [18:45] of the overall installed cost. [18:46] And so, costs are not improving that quickly anymore. [18:49] So, it's true, but what tends to happen [18:50] is the fundamental commodity at the base [18:53] of your tech stack decosts, [18:54] and then other things behind it, kind of, falling behind it. [18:57] So, it is, for example, the case [18:58] that the cost per transistor for a computer chip [19:04] has fallen astonishingly quickly over time, [19:06] and yet Microsoft Windows license [19:08] will still cost you a hundred bucks. [19:09] Why is that the case? [19:10] And it's true that actually Windows [19:11] has gotten cheaper over time, [19:12] especially when you take into account inflation, [19:13] but it hasn't tracked the same cost curve. [19:16] And that's the same sort of thing you're seeing here. [19:18] But if you're able to build systems [19:21] that sit on top of the fundamental technology [19:23] with fewer intermediating layers, [19:24] then you can take advantage [19:26] of those cost savings. [19:27] And then, essentially you're trading headaches, [19:31] the headaches of integrating [19:32] with the raw technology, [19:33] and then pass those savings onto your customers. [19:35] And that's absolutely essential for synthetic fuels. [19:37] There's no two ways about it. [19:37] You cannot run synthetic fuels [19:39] unless you have the cheapest [19:40] possible electricity you can get. [19:42] And you think in a way solar power will get much simpler [19:46] and dumber where, for example, [19:48] people used to optimize solar power [19:51] by having movable panels— [19:52] Trackers and things, yeah. [19:53] That track the sun. [19:54] And again, what happened as the panels became cheaper [19:57] is just put more of them down, [19:59] don't bother having them follow the sun. [20:00] And yeah, it costs a little bit more in the panel cost, [20:02] but you save all that money in the super advanced hardware. [20:06] That's right. And you think [20:07] we have further to go in making the panels simpler? [20:10] Like, how far does that go? [20:11] Economically speaking, we should have deleted trackers [20:13] in 2016, right? [20:14] Like, the trackers of the systems [20:16] that move the panels around. [20:17] Obviously we're still, in 2025, installing trackers, [20:20] so, like— [20:20] Why? [20:21] Well, because the marketers— [20:24] But the people who run [20:25] this project are smart, and they want to make money. [20:26] And, I don't think people are acting irrationally [20:28] tends to be a great explanation. [20:29] Some amount of rationality I think is involved, [20:32] and I also think [20:32] that there are certain participants [20:34] in this market who are quite happy [20:35] with cozy oligopolies and whatnot. [20:37] So, there's a lot of, I'd say, the areas [20:40] ripe for disruption. [20:41] Mm. [20:42] So, that was the first half of the question. [20:43] The second half was, oh, can panels get cheaper? [20:46] They certainly can. [20:47] So, if you look at capital flows [20:49] into solar panel manufacturing facilities [20:51] in Southeast Asia or United States or Europe or whatever, [20:54] like, what assumptions they must be making [20:55] about the economics in order to justify [20:57] that investment. [20:58] They could probably see line-of-sight [20:59] to another 2x reduction in cost. [21:00] So, we go from 8 cents a watt [21:01] down to 4 cents a watt. [21:02] Just to pause for a second, [21:04] 4 cents a watt is an absurdly low price. [21:06] So, the electricity that comes out of that [21:07] is a thousand times cheaper than the cheapest food [21:09] that humans can digest [21:10] on a joule-for-joule, calorie-over-calorie basis. [21:13] The limited physics on how cheap a solar panel can be [21:15] is at least 10 times cheaper than it currently is. [21:17] How would you achieve that? [21:19] A very, very thin layer of structured silicon [21:21] on some kind of inexpensive plastic backing [21:23] or something like that. [21:24] But in terms of, well, fundamentally, [21:26] what do you need? [21:27] You need some kind of transparent diode [21:29] that creates this, like, foamy-level nonsense [21:32] that allows the electrons to do their thing [21:34] as they go around. [21:35] And like in terms of limited physics, [21:36] that could be the most generic thing imaginable. [21:39] What was your line? [21:40] We're blessed [21:41] that one of the most abundant elements on the Earth [21:42] squeaks electrons when you shine a light on it. [21:44] I don't know if that's my line, [21:45] but yes, it's certainly the case. [21:47] Well, it's a line you told me. [21:48] Maybe you didn't invent it. [21:50] Okay, so solar panels can get a lot cheaper. [21:54] Why does Terraform not produce [21:55] really cheap solar panels [21:56] if you think everyone's doing it wrong? [21:57] I think that the companies producing [21:58] cheap solar panels are doing it right. [22:00] They're doing a fabulous job. [22:01] It's very competitive. [22:02] But you just said people are buying [22:03] expensive solar installs [22:04] when they should be buying cheap ones. [22:05] Well, so you've got the EPCs, [22:07] which are the companies whose job it is [22:08] to sell a solar array development [22:10] to a buyer like a utility. [22:13] And they'll be buying the modules from probably a retailer, [22:16] probably not directly from the factory, [22:17] and they'll be buying other various components [22:18] and doing the engineering and the construction, [22:21] and the construction will be subbed out as well. [22:22] So, that model obviously needs to be refined. [22:26] Why am I not competing in that? [22:27] Maybe I am. [22:29] But making modules themselves, I don't know [22:30] why you would go into that fight [22:32] unless you absolutely had to. [22:34] There's a lesson here. [22:35] This is what David Senra talks about a lot, [22:37] which is really good businesses are built [22:39] by commodifying a compliment, [22:40] and the compliment be commodified here is as much [22:43] as possible of the solar development, [22:45] which is pretty much reduced to practice [22:47] and commodified already at this point. [22:49] And the part that you sit on top of that is the thing [22:51] that takes that and turns into something useful [22:52] for the end customer, and then you end up [22:54] providing that value. Transformation. [22:59] You sell a kit. [23:00] I think your nominal design size is one megawatt, right? [23:03] Yes. Like, that's what you guys [23:03] are building for. [23:04] And one megawatt for context is a few hundred homes, [23:06] the power consumption of— [23:07] Maybe in Europe. [23:08] Okay, yeah, yeah. [23:09] In America, you know. [23:11] 20 or 30 homes here, I think. [23:12] Oh okay. Yeah. [23:13] 20 to 30 air-conditioned homes with a pool and everything. [23:15] 10,000 square feet. [23:16] Exactly. Yeah, yeah, yeah. [23:18] Like a kitchen on the kitchen on the kitchen. [23:19] Exactly. Yeah. [23:20] So, that's a megawatt. [23:21] And so, you sell a one megawatt kit [23:24] that, again, captures the solar power [23:26] and produces the hydrocarbons. [23:28] Instant oil well. [23:29] Exactly. [23:30] When will you have your first customer paying you [23:33] for hydrocarbons that doesn't want you to turn it off? [23:36] So, not like a demo pilot or something like that. [23:38] We're in the process right now of attempting [23:39] to acquire land, which would then result in construction [23:41] and development of these. [23:43] If all goes well, could be early next year. [23:45] I strongly suspect at this point. You know, [23:46] got a few bruises, not everything will go well, [23:48] so we'll see. [23:49] But potentially, next year you're selling oil. [23:52] Natural gas. [23:53] Natural gas, yeah. [23:54] So, actually there's an interesting point there, [23:55] which is, you know, obviously there's been [23:56] some political shenanigans here, [23:58] and we've got to the point now [23:59] where actually we're looking at doing methanol. [24:00] Accelerating the methanol pathway as well. [24:02] And the reason for that [24:03] is that natural gas prices are basically set [24:06] by the marginal producer, which is not us. [24:08] And it's pretty cheap. [24:09] I think that as our export capacity to Europe increases [24:12] and our fields continue to deplete and so on, [24:15] we're going to see that price rise quite a bit, [24:16] but probably not next year. [24:18] So, in the meantime we can produce methanol [24:20] and sell that. [24:21] It's roughly six times higher revenue [24:23] per carbon atom handled. [24:25] Assembling molecules atom-by-atom is tedious. [24:28] I'm sorry, where do we use methanol in the economy? [24:30] Methanol is used for all kinds of things, [24:32] but it's a precursor. [24:34] So, again, this is a somewhat subtle point, [24:35] but Terraform's job is to take sunlight, [24:39] which is intermittent but it's free, [24:43] and in the form of solar panels, make electricity [24:45] that's intermittent, and then do a bunch [24:47] of very scary chemical engineering to it [24:50] to turn it into a tangible, storable, offloadable commodity, [24:54] right? [24:55] So, we make hydrogen, but I would never dream of trying [24:57] to sell that hydrogen as our major product, [24:59] because there's no mechanisms [25:02] for transporting that to market. [25:03] No one wants it in bulk. [25:04] It's a intermediate product; it's not the final product. [25:06] We make carbon dioxide, same story. [25:08] Put them together, now we have something [25:09] that you can store in a tank, right? [25:10] Methanol itself is chemically, like, in terms [25:13] of boiling point and so on, it's very similar to water. [25:14] So, you can literally store it in a tank. [25:16] Then, if you want to, you can pipe it across the road [25:18] to a standard old-school refinery, [25:20] and they can turn it into gasoline or something. [25:22] I could do that myself. [25:23] I could build a refinery, [25:24] but, what is Terraform good at? [25:26] Eh, we don't know much about making [25:27] large-scale chemical plants, and we'd have to go [25:30] and license the MTG process anyway. [25:32] Methanol's a gasoline process. [25:33] So, why not just hand that off to someone [25:35] who can do that already, [25:36] and we just focus on the thing that we do really well? [25:39] The methanol to gasoline process [25:41] is like a proprietary process [25:42] that you have to pay a— [25:44] Mobil developed it in the seventies. [25:46] But is it patented? [25:47] Is it a trade secret? [25:47] It's almost certainly had a patent at this point, [25:49] but like— [25:50] So, it's just protected by trade secrets? [25:51] So, the thing is even if I had all the patents [25:53] in front of me right now [25:54] and blueprints of the plant. [25:56] Which is process knowledge. [25:57] And access to half a dozen expert chemical engineers [26:00] who'd done this before, and then I went and built it, [26:01] I promise you it would still not work. [26:03] It's Walter White's cook. [26:06] Something like that. [26:06] I've not seen that show, [26:07] but I mean, it's the same as brewing beer. [26:09] Like, I can buy all the pipes, right? [26:11] I can make something undrinkable. [26:14] I believe that. [26:15] Oh yeah. [26:16] But— [26:17] I mean, you're Australian. [26:18] It's in your culture. [26:19] No, no. [26:21] I'm American now as well. 15 years, Sunday. [26:24] It's just a very finicky process. [26:26] I think it involves blood sacrifice [26:28] to get it right actually, to be perfectly honest. [26:30] Okay, so that's methanol. [26:31] And sorry, you mentioned you could do cement. [26:33] How does that work? [26:33] Well, so we already, we use [26:35] what's called lime calcite cycle to capture CO2. [26:37] And so, that involves calcining calcium carbonate [26:40] to make calcium oxide, [26:42] which is the active ingredient in cement. [26:44] So, that's 60% of the difficulty [26:47] of making cement there. [26:48] So, we do that already. [26:50] And then, cement is about 7% of global emissions. [26:52] The challenge with cement is that it's 40 bucks a ton [26:54] at the plant. [26:56] And so, if you want to compete, [26:57] it's... One of the big mistakes [26:59] that I see in my sector generally, [27:00] which is the climate-aligned energy sector [27:03] and so on. This applies not just to the climate companies, [27:05] but they say, "Oh, we figured out how to do this." [27:07] I'm like, "That's very impressive. [27:09] But are you able to actually sell [27:11] the setup price that people want to buy it?" [27:12] Then having a demo, having a shiny demo [27:14] of something that works but is not commercially viable. [27:17] Even that is impressive in itself. [27:19] I mean, Rivian, for example, [27:21] they make a beautiful product, [27:23] but they're yet to make money with it. [27:24] But just getting a product to market that people like, [27:26] that in itself is worthy of admiration. [27:31] A beautiful car. [27:32] They just got to figure out how to delete [27:33] about 30% of the components, and they'll be in business. [27:35] And far be it for me to criticize, [27:36] but if you are able to make cement [27:38] with a carbon-neutral process, [27:39] and you're, like, 60 bucks, you probably have an argument [27:42] that you could find enough off-takers [27:44] who want to pay for the carbon credits or whatever, [27:47] then you can stay in business. [27:48] But if it's $6,000 a ton, it's very slim. [27:51] How causal were the solar subsidies along the way [27:55] like Germany's, to solar success on the current cost curve? [27:58] That's a good question. [28:00] I think it's very hard to run the counterfactual. [28:02] I think that the Germany solar subsidies did not accrue [28:07] the appropriate reward to Germany [28:09] that they probably should have. [28:10] But I don't think they were intending to— [28:12] It would've been nice if they had. [28:13] Sure, yeah, but I think they were more motivated [28:17] by do-goodery than... Well, these things [28:18] are always bootleggers and Baptists. [28:21] Well, the total amount [28:22] of money they spent on it was not all that much [28:23] in the grand scheme of things. [28:24] But I guess, what I mean is if we believe, [28:26] like, learning rates are about the idea [28:28] that with increased volume comes lower cost. [28:31] And you get to be competitive. [28:33] And again now, the— [28:34] So, like, in the counteractual [28:35] where Germany didn't do it, right? [28:36] Well, Spain still did it a little bit [28:37] and Australia did a little bit. [28:38] You know, maybe it would've delayed things by a year or two. [28:40] Yeah. [28:41] But as soon as, say, China [28:43] started to do it at scale, [28:44] they would've slurped up that time difference, [28:45] and we'd be where we were today. [28:46] Well, and then how impactful [28:48] were the Chinese interventions in the market? [28:50] Enormously. [28:51] Enormously, right? [28:53] So, China's subsidies accelerated solar? [28:55] China has deployed more solar [28:56] in the last three months [28:57] than the United States has ever deployed, ever. [28:58] Like, they're becoming electric state. [29:00] And this is an important point [29:02] that I think is widely underappreciated. [29:04] United States has formed an alliance with Australia [29:07] and Japan and I believe India, I can't remember exactly, [29:11] to basically try and control oil transiting [29:13] through South China Sea and adjacent areas [29:17] because they believe [29:18] that will give them the political leverage they need [29:20] to force China to play nice. [29:22] And China currently imports something [29:22] like 12 million barrels a day from the Middle East [29:25] across lands they don't control [29:27] and can't control past countries [29:29] who are not all that friendly to them in general. [29:30] And they understand this, [29:31] and the Virginia-class nuclear submarine is being built, [29:34] in part, to service the needs, allied needs [29:37] to police the Strait of Malacca. [29:39] That submarine is due to be delivered to Australia in 2035. [29:41] Do you think, by 2035, China is still going to be [29:44] as dependent on oil through the Strait of Malacca? [29:45] I don't. [29:46] At the rate that they're deploying right now, [29:47] they could cut off that supply if they needed to [29:50] in the same way that Germany [29:53] was ultimately able [29:54] to cut itself off from supplies in 1939, [29:56] and it didn't really kill them until 1944. [29:58] But it did kill them. [29:59] Ultimately, yes, [30:00] but that was mostly the combined bomb offensive [30:02] delivered by a fleet of hyperloops flying [30:04] from, oh no, wait, they were planes. [30:06] But, and so the way that China reduced its oil dependence [30:11] is via electrification, [30:13] or via Terraform-style synthetic fuels? [30:16] As far as I know, they're not working on synthetic fuels. [30:18] At least not Terraform style, but it's not rocket science. [30:21] And I'm sure they'll figure it out sooner or later. [30:23] I mean, it's a little bit rocket science. [30:24] You know, a lot of meat in there. [30:26] Actually, yeah, it's probably rocket science. [30:27] Going back to the subsidies. [30:29] How did the Chinese subsidize solar panels? [30:32] I actually don't know the specifics. [30:33] Okay. [30:34] What I do know is that, like, they basically offered [30:37] government-backed, zero-interest loans [30:39] to manufacturers, for example. [30:40] Oh. Cheap capital. [30:42] Yeah, cheap capital [30:43] and then they also—so a lot of these technologies [30:44] developed in Australia. [30:46] I would like a government-backed, zero-interest loan. [30:47] That sounds lovely. [30:48] Yeah, it'd be great. [30:49] Actually, to be fair, the financial and legal situation [30:52] in the United States, as much as we complaint about it, [30:54] would you rather have built Stripe [30:55] in Hong Kong or something? Oh, no, no, no, we can get [30:57] to that. [30:58] Yeah, I agree. [30:59] The US is a fabulous business environment. [31:00] It's a great business environment. [31:00] The capital is cheap enough. [31:02] That's the important thing. [31:03] Where I'm going with this is, if the German subsidies [31:06] were somewhat impactful, [31:07] and if the Chinese subsidies were very impactful [31:09] to the development of solar, [31:11] what are the implications here for your grand theory [31:15] of industrial policy [31:17] and intervention where, if we want to be able [31:19] to have nice things like solar panels [31:20] and things like that, Silicon Valley tends [31:22] to have this libertarian-bent, keep the government [31:26] out of our innovation, but it seems [31:29] like top-down government intervention was impactful [31:34] in bringing solar to us sooner. [31:37] It would've happened anyway, [31:38] but it would've happened slower. [31:39] And so, what do you think sensible industrial policy [31:43] is for the US or for whatever government [31:46] with lots of stake— [31:47] Slightly beyond [31:48] my pay grade there. [31:48] No, I mean, it's an interesting point. [31:49] You say, well, the counterfactual surely [31:51] would be if China was a western liberal democracy [31:54] that was also grappling [31:55] with the fact that it was enormously dependent [31:57] on oil imports and it was unable to deal with Middle East [31:59] and maybe wasn't totally friendly with the United States, [32:02] but they were western liberal [32:02] and they had the same business freedom [32:04] to take for granted here. [32:05] Would they have been able to mobilize the same amount [32:06] of capital to go and build solar panels? [32:08] And I think the answer is probably yes. [32:10] But no, the counterfactual [32:11] is just the Germans never get around to doing the subsidies. [32:14] The Chinese never get around to the subsidies. [32:15] All the other subsidies are too small. [32:17] And solar happens much more slowly. [32:19] I mean, maybe, but at the same time, [32:21] actually I kind of sit on both sides of this issue. [32:23] You can look at the process of Soviet industrialization. [32:25] There's a fabulous book called "Red Plenty" [32:27] by Francis Spufford [32:27] that is kind of a fictionalized account of this. [32:29] And you can say, "Isn't it amazing that the Soviets managed [32:31] to go from this kind of desperately underdeveloped [32:34] backwater, then level up prior to and during World War II, [32:37] and then World War II, having lost 20 million people [32:38] or something, put the pieces back together, [32:40] and then execute a five-year plan [32:42] after five-year plan after five-year plan, [32:43] and then by 1980 they were more or less at parity [32:45] with the poorer parts of the west. [32:46] Isn't that amazing?" [32:48] You say, "Yes, it is, but if you look at GDP growth [32:50] over that time, it's actually slower at its fastest point [32:52] than the United States was at its slowest point, [32:54] which indicates to me that miracles were achieved [32:55] in the Soviet system, but even so, [32:58] it would've been more efficient [32:59] had they had a freer market for example. [33:01] Sure, yeah, yeah. [33:02] But I think we can have something between no intervention [33:05] at all is bad and communism is bad. [33:08] You know, somewhere along that spectrum. [33:09] Somewhere between? [33:10] Yeah, yeah, yeah. [33:11] I don't know, I feel like you're, as a— [33:13] I'm baiting you, yeah. [33:14] You've come from the British Isles, [33:15] and it's a very British Isles thing to say. [33:17] No, I don't think anyone in Silicon Valley [33:18] really complains when the government shows up [33:20] with a big check and says, "We would very much like you [33:22] to now build the atomic bomb, [33:23] or to build nuclear submarines, or to..." [33:26] I know Palantir's doing great business right now, [33:28] AWS does great business with the government, [33:29] et cetera, et cetera, et cetera. [33:30] And I think that's actually a pretty good example [33:32] of that working quite well. [33:34] And actually, [33:34] a lot of the secret history of Silicon Valley [33:37] is all government work; Raytheon and Lockheed [33:40] and so on. [33:40] And indeed, Terraform is right across the road [33:41] from Skunk Works, which was itself, [33:43] obviously, largely government-funded. [33:45] You know, I think that's a pretty good way. [33:46] I think that Congress, you know, the way that US soft power [33:48] always works is with fat water bills, [33:50] and that tends to be metabolized well by the US economy. [33:55] Do I think that we should raise taxes [33:57] to spend more money [33:58] on like, you know, DoE picking winners [34:01] in the US domestic solar panel manufacturing space? [34:03] No, I think that probably distorts the market overall. [34:05] But are there places where we should be picking winners? [34:07] Probably, yeah. [34:08] Or there are at least places where there should be more [34:10] decisive government intervention. [34:11] Yeah. [34:12] Absolutely. [34:13] Well, I think, on the energy front, countries [34:15] that have cheap energy can afford to screw up [34:17] a lot of things, and they're still basically everyone [34:19] is prosperous. [34:20] And actually, I would characterize the United States [34:21] as one of those countries, right? [34:22] Not a over-governed country, [34:25] and in many ways, a barely governed country, [34:28] but rich. I think people in the US [34:29] don't realize how expensive electricity is [34:31] in other Western countries. [34:33] They probably don't. [34:34] Yeah. [34:35] Although the people on the Twitter-sphere [34:37] who are like, you know, the Europoor meme or something. [34:39] By the same token, there are very, very few [34:42] developed western liberal industrialized economies [34:45] that have very expensive energy [34:47] where they do have good GDP growth, [34:49] for example, and good wealth. [34:51] And, you know, you say Japan is expensive energy, [34:53] and their GDP has been pretty much flat, [34:54] and UK, GDP flat. [34:56] Singapore even, you know, GDP per capita [34:58] is not spectacular by comparison to the United States. [35:01] And so, the moral of the story is when a new technology [35:04] like solar comes along, you need to make sure [35:06] that your markets are able to deploy that [35:08] at the scale necessary [35:09] to make sure that you stay ahead of the pack. [35:11] Because we're already in a situation right now [35:13] where China is out-producing the United States [35:15] on all the metals like steel, aluminum, magnesium, [35:17] and so on and so forth, by a factor [35:18] of between 10 and 100, because their energy is cheap [35:22] because they basically have interest-free loans [35:24] to completely unregulated coal mines, amongst other things. [35:27] And basically, to the victor go the spoils. [35:29] So, that's something we should be careful about. [35:31] If you could wave a magic wand to speed up [35:32] US solar deployment, not manufacturing, [35:34] just deployment, what would you do? [35:37] The single biggest intervention you could allow [35:39] is by-right development of solar panels on private land, [35:43] and ideally even BLM land would be great, right? [35:46] BLM land has been set up for ranching, [35:48] and you can run your cows on it with very little friction. [35:51] And I think sections of that should be set aside for, like— [35:54] It's just electron ranching. [35:55] You can put your solar panels there, [35:57] and you have something [35:58] like California's fire insurance scheme, [36:01] so that if one batch of solar panels goes bad, [36:04] or after 50 years, we have fusion [36:06] and we want to take them out, there's money there [36:07] that we can take them out and put them away. [36:09] It goes back to being desert. [36:10] But right now, to permit a solar array, [36:13] even on private land, for the sort of applications [36:15] we want to use, it's often just as tiresome and expensive [36:18] and difficult as permitting a new chemical plant [36:21] or something that's— [36:23] Much dirtier. [36:23] Much dirtier and much worse for, and actually, [36:25] I think solar overall is a net benefit for the environment. [36:28] We should be encouraging it. [36:28] It should be like you get credits [36:29] for deploying more solar on government-owned land. [36:32] 90% of Nevada is BLM, is like federal land. [36:34] And that's the best place. [36:36] The reason it's federal land [36:36] is because they couldn't give it away [36:37] back in the day, right? [36:40] Because it's so inhospitable. [36:41] I'd never thought about that. [36:42] It's the land that's left over. [36:43] Yeah. [36:44] Canada has this, too, where a huge amount [36:45] of Canada is crown land, [36:46] and it's just the untitled document of Canada. [36:48] It's just the land [36:49] that they never did anything with [36:51] because all the settlement happened [36:53] right next to it. No one ever ran a railway [36:54] through it, because why would you? [36:54] Yeah, that would be nice. [36:55] And every time I fly to, like, Texas [36:57] or wherever I look at— [36:58] Nevada's very empty. [36:59] Yeah. [37:00] Man, there's about a hundred valleys [37:01] in Nevada, and one of them is already basically used [37:04] for nuclear testing, and one of them's for Vegas, [37:05] and one of them's Reno, [37:06] and there's like 97 left over. One's for Burning Man. [37:08] Have you ever looked at the plane flying near Vegas, [37:11] and you see the big solar collector, [37:12] and it's like something out of a sci-fi movie? [37:14] Ivanpah, yeah. [37:15] It really catches you by surprise. [37:16] They're going to close it down, so enjoy it. [37:17] Are they? [37:18] Yeah, yeah. [37:19] Yeah, it never really worked very well. [37:20] Okay. Yeah. [37:21] But as you're flying actually past Henry Kaiser Monument, [37:23] Hoover Dam, near Boulder City, there's a huge solar arrays [37:26] right there if you've ever landed to that airport. [37:28] Basically all the way from there down to the border [37:30] is solar now. [37:30] That's cool. [37:31] Which is good. [37:32] We're talking about Chinese manufacturing here, [37:35] and obviously the American dynamism movement [37:38] has a lot of energy right now. [37:42] It feels like there are some things [37:43] where we are obviously not going to, obviously to me, [37:46] not going to be competitive in manufacturing, [37:49] like just general light electronics, [37:51] like that stuff doesn't seem to me [37:52] like it's—consumer electronics [37:54] is not necessarily coming back. [37:57] However, we just had Keller from Zipline on, [38:00] talking about the drone manufacturing [38:01] they're doing right here in South San Francisco. [38:03] You guys are manufacturing in Burbank for your sins. [38:08] Do you think it makes sense [38:09] to think about areas of manufacturing we should be trying [38:12] to win or trying to succeed in? [38:13] Yes. [38:14] Okay, then what are those areas? [38:16] What would you say "Whatever. [38:18] It's not coming back. [38:19] We're just going to let it go," [38:20] versus "These the ones that we really want to win, [38:22] or those national security considerations." [38:24] Or what have you. [38:25] Well, conventional wisdom [38:26] would say, well, we've got to maintain our supply chains [38:28] for our national security stuff, [38:29] so we'll keep them as a life support, [38:30] but all the rest doesn't matter. [38:31] And we've seen how well that goes. [38:33] I think, actually, you can't afford [38:34] to say, "Well, we'll just let the Southeast Asians [38:37] keep consumer electronics manufacturing." [38:38] If you want to have the ability [38:39] to rapidly prototype electronic systems, [38:42] you got to have that here, servicing the US market, [38:44] which is the strongest consumer market on Earth. [38:46] And there's no reason you can't do it. [38:47] No, you don't want to have 14 year olds [38:49] in sweatshops soldering stuff together. [38:51] But if you look at the Bastrop plant [38:52] where Starlink terminals are made, [38:53] it's all in the United States. [38:54] It's 99.99% automated, and that's how we can do it. [38:58] We should be doing it here. [38:59] I grew up in Australia [39:00] where the limited manufacturing sector we had [39:02] just evaporated overnight [39:03] when China basically came in, [39:05] and now Australia's in deep trouble, really, [39:09] on the basis of this. [39:10] But at the time, it was like, "Well, [39:10] we can't compete with China. [39:11] That's impossible. [39:12] You could never compete with China." [39:13] You know, on what basis? [39:15] There's no reason why you can't compete. [39:16] Obviously your factors of production are different, [39:18] so you have to balance them but this whole idea, [39:20] like comparative advantage, [39:21] that the United States should just be intrinsically bad [39:23] or un-uncompetitive [39:24] at certain kinds of things is crap. [39:26] It has every advantage you could possibly want. [39:28] What success stories should we be looking at [39:31] to model US manufacturing after? [39:33] So, you mentioned SpaceX. How about its own? [39:35] How do you mean? [39:36] US was, and in some ways still remains, [39:38] the manufacturing powerhouse, absolute titan. [39:40] Yes, but again, I feel like [39:44] that was quite a different environment [39:45] of more trade barriers and different labor dynamics. [39:49] And I'm saying if you think [39:51] about kind of manufacturing today, [39:53] SpaceX's Starlink terminal manufacturing plant, [39:56] which is very impressive [39:57] and much larger scale than people realize. [39:58] How many Starlink terminals are they producing now? [40:01] Must be like a million a year or something. [40:02] Yeah, it's a lot. [40:03] But yeah, who else should we be looking at [40:05] and saying we should be doing more [40:06] of that kind of thing here? [40:07] Well, in terms of US, [40:08] I think Chris Powell's doing really well at Hadrian, [40:10] but I think— [40:12] What does Hadrian do? [40:12] They make parts for military aircraft mostly. [40:15] But the idea is you increase [40:17] the machine-to-machinist ratio with software, [40:20] which is not exactly astounding. [40:21] Like, how many cores are in your phone? [40:24] I mean, it's actually quite hard to do in practice. [40:26] And I think the edges or whatever, [40:28] like, the corner cases [40:29] that the current entrepreneurs are grabbing onto [40:31] for and mass production is like, "Well, I don't have [40:33] $10 billion to, like, go and set up Foxconn 2.0 [40:36] here in the United States if I even wanted to. [40:38] But I could build this really high-value product [40:43] for a discerning customer, US-branded type stuff. [40:46] Sam D'Amico, for example, down at Impulse [40:48] has done that with his stoves, right? [40:49] It's a premium product. [40:51] When people need to replace their stoves, [40:52] they do it in a hurry. [40:53] He's as available, has all these other ancillary benefits. [40:55] Because it's so nice, you can sell it. [40:57] They're actually being produced in China though. [40:59] But isn't it hard to rely on producing [41:00] premium products? [41:02] That's where you start, right? [41:03] That's the beachhead, and then you diversify outwards. [41:05] But if you're able to build [41:06] a mostly automated factory [41:09] that can produce a few thousand units a year, [41:11] then it's relatively straightforward to go from there [41:13] to 10,000, 100,000, a million. [41:14] And then, as you get those economies of scale, [41:16] continue to push the price down. [41:17] And I saw some stat the other day that Apple had spent [41:19] a hundred billion dollars on manufacturing investment [41:22] in China. [41:23] Imagine if they'd spent it here. [41:24] Do you think they could not have succeeded [41:25] in building a really nice iPhone, [41:27] even here in Silicon Valley, [41:29] if they'd spent a hundred billion dollars in factories? [41:32] People in tech follow Elon a lot [41:34] and have read the Walter Isaacson book, [41:36] and they're familiar with the oeuvre [41:37] and know much about how he works. [41:40] Ashlee's book is good too. [41:41] Ashlee's book is very good as well. [41:42] What do you think, nevermind people at a distance [41:46] or people are very bothered by Elon [41:48] or something like that, [41:49] people in tech who follow this stuff. [41:51] What do you think they still misunderstand [41:53] about the Elon production function? [41:55] Oh, that is a good question. [41:57] Well, I think actually I'd be more surprised [41:59] if there was someone who had succeeded [42:00] as well as Elon had in his various fields [42:02] who was better liked, if that makes sense. [42:03] Like, you should expect to make enemies [42:05] if you're going to be that effective [42:06] in that sort of area for whatever reason. [42:07] I mean, he has his own views. [42:08] So, you think the hard edgeness is not— [42:10] Oh yeah. [42:11] An incidental trait. [42:13] You think it's a part [42:14] of the success. Definitely correlated. [42:15] Yeah. Yeah. [42:16] I didn't always think that. [42:17] I used to think that it probably was possible [42:19] to build an organization as successful as SpaceX [42:21] without being quite so uncompromisingly [42:24] demanding on your employees. [42:25] And then you started a company. [42:26] Then I ran my own hardware company, and I'm like. [42:27] And so, how did you update? [42:29] Many hard lessons learned over and over again [42:31] until I finally worked out that, oh, actually, [42:33] people are in general capable of achieving [42:35] far more than they would think, [42:37] but almost always they require [42:39] extrinsic motivation to do that. [42:40] And usually it's like, "I expect you to do better" [42:43] kind of thing. [42:44] But there are lots of people who are very successful [42:47] and generally are regarded as pretty nice people. [42:49] Successful, yes, but successful in building [42:51] competitive hardware manufacturing companies [42:54] in the United States in 2025. Okay, so you think [42:55] it's intrinsic to hardware? [42:56] Hardware is, I think... [42:58] Well, statistically speaking, it would seem [43:01] that a software company is a surer ticket [43:03] to ungodly riches than a hardware company. [43:06] That would be my guess. [43:07] Yeah. [43:08] Okay, so that's one thing. [43:09] You have to be somewhat hard-edged. [43:10] What else? [43:11] I think he works really hard. [43:12] I think that he compounds his own knowledge. [43:14] I think he's super smart. [43:16] I think he understands that physics is the law. [43:18] Everything else is a recommendation. [43:20] But yeah, I don't know him, at all really. [43:22] So, I can only speculate from the outside. [43:24] Actually, I think that one of the things [43:26] that frustrates me somewhat about Isaacson's book [43:27] is Isaacson is quite clearly a very sharp guy, right? [43:32] And he spent a year and a half with Elon, [43:34] and yet if you read his book, [43:34] particularly the last third or quarter of it, [43:37] which is talking about all the recent stuff, [43:38] the Twitter stuff, and so on. [43:40] It's just very clear that he doesn't get it. [43:42] He doesn't understand why Elon is doing these things [43:44] that seem completely crazy, right? [43:47] But yet, he keeps rolling sixes. [43:49] Like, why is that the case? [43:51] And my point of view on this, and I wrote a blog post [43:53] about this at one point, [43:54] was if I see someone who is pretty successful [43:57] do a series of crazy things over and over again, [43:59] and yet they work out every single time, [44:02] either they have root access to the simulation, [44:05] or their model of reality is better than mine [44:08] in some key way that I don't understand. [44:10] But I might be able to understand if I assume [44:12] that they made a sensible decision, given knowledge [44:14] that they must have, but I don't have. [44:16] What can you infer about this? [44:17] You've talked about how many SpaceX alumni [44:24] have gone on to start rocket companies [44:27] that are essentially just trying to build Falcon 1, [44:29] and despite the fact that SpaceX [44:31] was kind of doing that for the first time [44:33] and had to learn lots of hard lessons. [44:34] They got to work at SpaceX, and they knew all the lessons [44:38] and they'd seen everything, [44:39] and still a lot of them have struggled. [44:42] I haven't heard you espouse a theory [44:43] as to why they've struggled. [44:46] It's got to be really hard. [44:47] Yeah. [44:48] Well, I know that a lot of people leave SpaceX, [44:50] and a few of them are like, [44:51] "I'm going to start my own company, [44:52] and I'm going to try what it's like to be Elon." [44:54] And then, they get horrible experience. [44:56] And some of them are like, "I'm glad [44:57] I got a horrible experience." [44:59] But I think a lot of them are like, [45:00] "Well, I always disagreed [45:01] with this particular technical choice." [45:03] And then, they make it differently, [45:04] and then their rocket explodes. [45:05] And maybe it's because that choice was actually correct [45:06] but they didn't understand it, [45:07] and maybe it's because it's unlucky, [45:09] and maybe the organization didn't work well enough. [45:11] In the space sector, at least, it's quite astounding [45:14] the extent to which SpaceX is dominant, right? [45:17] This is not the case that, like, Apple [45:18] has what, 20, 30, 40% market share in smartphones, [45:21] and Pixel has 10%, and Huawei and so on has— [45:23] This is like, SpaceX has like 95% market share [45:27] for the entire world, [45:29] and then the second place getter is China [45:30] or something. [45:31] And then the next closest was like 15 years ago [45:35] a United States' main launch company, [45:36] and then it's very much what I'd call an anomaly [45:39] in the matrix. [45:40] Yeah. [45:41] Solar getting cheaper every year is also another anomaly. [45:43] It's like a big wave that can be surfed, [45:45] and people don't really recognize it [45:46] or how to use it or how to lever it. [45:48] What advice do you have for highly-technical youngsters? [45:53] Say, someone who's in college listening to this. [45:55] Well, don't validate my life choices [45:58] by repeating them. [46:01] But realize that your life is on a spectrum, [46:03] like a continuum, and certain things are easy now [46:05] and they'll be hard later and vice versa. [46:07] And if you see yourself as someone [46:09] who's the technological elite, [46:12] you should challenge yourself as much as you can. [46:13] You should go out and find a worthy challenge, [46:16] and yeah, just level up. [46:17] Don't go to someplace that that puts you [46:19] in a holding pattern for 10 years. [46:20] You've only got 40 something years [46:22] of really good work ahead to level up [46:25] as much as you can. [46:26] So go work somewhere that's very demanding. [46:27] As much as you can take. For as long as you can take it. [46:30] Yeah. [46:31] Probably more than a hundred people have asked me [46:33] over the years, "Oh, I got into grad school [46:34] and I got into SpaceX. [46:35] What should I do?" [46:36] And I said, "Well, the psychic damage is the same, [46:38] but the pay is better at SpaceX," [46:40] which is hard to believe but true. [46:42] And I really believe that. [46:43] You know, you want to go and work with the best people [46:46] on the things that you care about. [46:47] Whoever they are, wherever they are, whatever it takes. [46:50] Don't settle for second best. [46:53] On the other hand, if you've recently graduated [46:55] or you're about to graduate, it's more important [46:57] that you get a job and you kill it. [47:00] Do really, really well straight out of school, [47:02] then that you sit on the job market for a year, [47:04] and then compete against the next brand. [47:07] I see a lot of resumes, no doubt you've seen [47:09] a lot of resumes over the years, [47:10] and really you're only as good as your most recent job. [47:12] And if your first job out of school is super important [47:15] to set the foundation upon which you can build [47:18] the rest of your career, even if it sucks, [47:21] stick it out for 18 months to two years, [47:23] and make sure everyone there has something nice [47:24] to say about you. [47:27] And then you can build on that. [47:29] But yeah, it's really sad [47:30] when you see someone, you know, ostensibly decent degree [47:33] out of decent school, [47:34] and they failed to launch in some way. [47:39] As Casey is describing, [47:40] and as we've heard a lot about on Cheeky Pint, [47:42] prototyping is easy but production is hard. [47:44] A surprisingly large slice of human progress comes down [47:46] to reducing the timing cost [47:48] of industrial production processes. [47:50] In Stripe Press's newest book, [47:51] "The Origins of Efficiency", author Brian Potter [47:53] breaks down precisely how that progress happens. [47:56] He draws on 100 years worth of research [47:58] to explain the fundamental steps of a production process, [48:01] and how each can be made faster, cheaper, and more reliable. [48:05] He includes detailed examples, [48:06] from steel and semiconductors to wind turbines [48:09] and container shipping, to Tesla and the Model T. [48:11] And he discusses how the principles of production efficiency [48:14] can be applied to domains like construction, medicine, [48:17] and education, where much work remains to be done. [48:21] And Brian should know. [48:22] He's the author [48:23] of the popular Construction Physics newsletter, [48:26] and worked for 15 years in the construction industry. [48:28] "The Origins of Efficiency" just came out. [48:30] You can buy it on press.stripe.com [48:32] where we offer all Stripe Press books. [48:36] How are you planning to educate your kids? [48:38] Mostly benign neglect, I think. [48:40] No, but actually. [48:41] Well, they're in the local school. [48:43] But presumably that's not the limit of your plans. [48:46] Yeah, I mean, so I'm not worried [48:48] that they're going to find [48:49] a uninspiring academic environment at home, right? [48:52] We have a house full of books; that's going to be fine. [48:54] So, why do we send them to school? [48:55] To get the stuff they can't get at home, [48:57] like how do you deal with people [48:58] who aren't your immediate relatives [48:59] and obsessed with space as you are? [49:02] That said, it seems not entirely unlikely to me [49:05] that, at some point, the schooling system [49:07] will, I don't know, not be quite sufficient in some way. [49:11] But in particular, [49:12] the Bloom 2 Sigma effect [49:15] is one of the biggest effects in education, [49:19] the idea that you get way better outcomes [49:25] with one-on-one tutoring focused on mastery learning, [49:29] where you only progress through topics [49:31] once the student has mastered the prior topic, [49:33] and you move your way sequentially through things. [49:35] And schools almost definitionally can't do that. [49:38] They can't do that, yeah. [49:39] I actually think that maybe the Bloom 2 Sigma effect, [49:42] you can kind of achieve it on your own if you're able [49:44] to follow your areas of curiosity [49:46] and have access to resources and learn. [49:48] So, actually, in my case, probably the reason [49:49] I'm not a chemist, for example, [49:51] is that I didn't have access to chemistry textbooks [49:52] until I was in late high school. [49:54] What I want for my children, especially in a world [49:56] with, like, AIs and all kinds of nonsense coming. [49:58] I don't really care what they do, [50:01] as long as they love it and they're as good [50:03] as they can be, right? [50:04] They have to love it, and they have to try, [50:07] they have to sweat, they have to contend with the material, [50:11] because incredible privileges have come to them [50:15] and to me and to some of my more recent ancestors. [50:19] And I feel like you do have a social obligation [50:22] to not waste that opportunity. [50:24] Do you buy the explanation on the falling fertility rates [50:28] that we've just made it too expensive to have kids? [50:30] Like, have you seen the "Booster seats [50:31] as contraception" paper? [50:33] Yes, yes. [50:34] You know, and all these— [50:35] I just forwarded that [50:36] to one of my Congresspeople actually, [50:36] and they were saying, "Come to California [50:38] Highway Patrol's session on fitting your car seats." [50:40] And I was like, "How about we just tweak the law, [50:43] so if you have three or more kids, [50:45] you don't get them taken away [50:46] for putting them in a sedan?" [50:48] For reference, something like 58 children's lives [50:51] saved in the United States every year, statistically, [50:55] by car seats, [50:55] and something like 10,000 births are averted by families [50:59] who cannot afford to upgrade their cars, [51:00] which is a bit of a problem. [51:02] No, even if you had all those 10,000 additional births, [51:04] it still wouldn't reverse the demographic decline. [51:07] Well, but that's one example [51:08] of where I think people don't fully internalize [51:10] the barriers to having kids. [51:11] So, car seats is, again, it sounds [51:14] like almost an oddly trivial one, [51:16] but it does have [51:17] a measurable impact. Measurable impact. [51:19] And that's before you get to housing, education, you know? [51:21] No, I think you could certainly say, [51:23] well, what if we took all these things [51:25] that have some marginal effect, [51:26] and we just turned them all up to 11 and saw what happened. [51:29] And I think you'd make a plausible argument [51:30] that you'd see a bump in fertility, [51:31] especially if you had a pro-natalism law package [51:36] that did all these things at once. [51:37] And so, you start a national conversation [51:39] around how kids are great, we need to have more kids, [51:41] and we specifically focused on existing families [51:43] and got them to go to n+1 or n+2. [51:45] Make a big difference. [51:47] And that's what Australia actually did [51:49] when I was in my teens, [51:50] so let's say around 2000 [51:51] was like, "Have a third child for the treasurer." [51:54] But, the same problems kind of stick there. [51:56] But this is obviously a very complicated problem, [51:58] because there are many countries on Earth [52:00] where these counterfactuals exist, at least in part, [52:01] and it hasn't miraculously turned around the birth rate. [52:03] And actually, the number [52:04] of developed western liberal democracies [52:06] where the birth rate [52:07] is not either already catastrophically low [52:09] or falling fast is very, very small, [52:13] and probably will be zero before long. [52:15] But it did occur to me today, [52:17] when I was having spoken to a friend of mine [52:19] about children, whether or not to have children and so on, [52:22] that our revolution did not depend upon us in the past, [52:26] having a deep obsession with the need [52:27] to have children, right? [52:29] Because we didn't have contraception, and we had sex drive. [52:32] So, like, children would just happen. [52:34] But once you have kids, [52:36] then you're all about kids, right? [52:37] As soon as you hold the baby in your hands, [52:39] you're like, "Kids are fucking great. [52:40] This is great." [52:41] And you're like, "I might have six more of these." [52:42] Okay, but until you have that first one, you don't realize. [52:44] You don't know. [52:45] It hasn't come in yet. [52:46] So, there's no evolved necessity to go out and have kids. [52:49] Whereas, with food, [52:50] it's obvious. People get excited about food. [52:53] So, sucks to be evolution in that case, I guess. [52:56] But actually, if you run the math on the demographics [52:59] right now and how dire it is, [53:02] even if, like, as a result [53:04] of listening to this podcast, every single person [53:07] in the West just immediately started [53:09] looking after babies— Got after it. [53:10] It still wouldn't really, for many decades, [53:15] halt this hole we've dug for ourselves. [53:17] There's basically no way out of that. [53:19] There's no way to avoid it. [53:20] I think the news that came out yesterday [53:21] was the triple lock in the UK is going to go up [53:22] by 4.7% against a backdrop of inflation [53:26] of two point something percent, [53:27] and economic growth of like 0%. [53:29] What's the triple lock? [53:30] The triple lock is the process [53:31] by which the pension in the United Kingdom is increased [53:33] by the biggest of three separate factors. [53:36] One being employment rate, one being—I don't remember [53:38] exactly what the are, but I think one's inflation, [53:39] one's GDP, and one's something. [53:41] So, it's like this insane ratchet, right? [53:44] And the dependency ratio is, of course, increasing [53:45] because people are getting older [53:46] and older because we're able [53:47] to keep people alive longer. [53:49] And these are actually all good things, right? [53:51] But we need to have some way of thinking rationally [53:52] about paying for these things or making sure [53:54] we're able to provide for people adequately, [53:56] because otherwise we'll burn the seed corn, [53:59] or this insane stat in France recently [54:01] that the average pension is now higher [54:04] than the average income for working-age adults in France. [54:07] Hmm. This could be a problem. [54:09] And I just don't think there's any way out [54:11] other than, you know, Arc Institute gets its act together, [54:14] invents a pill that keeps me young and everyone else young [54:18] and lifts this burden of non-negotiable disease [54:20] from every single person who's lucky enough [54:21] to live through their youth. [54:25] Don't we also maybe get bailed out [54:26] by AI productivity growth? [54:29] Maybe. [54:30] But do you really think that, like, 10% year-over-year [54:32] productivity growth [54:33] is going to localize itself in the UK? [54:35] No, but just if you— [54:39] United States are going to be like, [54:40] "Oh, here's a big transfer [54:41] payment for all your old people." [54:42] I don't think so, right? [54:44] So, it's certainly the case that AI seems likely [54:47] to produce enormous additional wealth. [54:49] Whether that wealth will find its way to alleviating [54:51] the tax burden on the working class [54:53] in the 200 countries on Earth [54:55] that don't have their own AI industry [54:57] seems somewhat unlikely to me, whereas a pill [54:59] that, I mean, actually already Ozempic [55:00] probably does this. Slows down your aging by some factor, [55:04] would be enormously important. [55:06] No one could have seen this coming. [55:07] No one could have possibly anticipated that social security [55:09] and other stuff would result [55:10] in ever-increasing dependency ratios. [55:13] And we're just fortunate that we got rich so fast [55:16] that it took this long to bite. [55:17] It's a big problem. [55:18] Yeah. [55:19] And I realize I'm asking you for ideas [55:21] for hardware companies. [55:22] You're always banging on about desalination. [55:24] Presumably that's a good hardware company. [55:25] I'm working on it. [55:26] I already have a hardware company doing it. [55:27] Oh, you do? [55:28] Tell me about your desalination company. [55:29] So, desalination is not strictly ripping oxygen [55:31] off stuff to make fuel or metals, [55:34] but it does involve ripping water off salt. [55:37] So, you know, the oxygen in water is what makes it polar, [55:41] so Terraform Desalination is the project. [55:43] It's very early stages now, [55:45] but it's kind of insane to me [55:46] that we live in the state in California. [55:48] And can you also just do it with electricity [55:49] and not much else? [55:50] Yeah. [55:51] All right. [55:52] What's the reaction? [55:53] The reaction is that the salt which is dissolved in water [55:55] gets separated somehow, either thermally or with filters. [55:58] I mean, there's probably 30 different ways [55:59] of doing desalination. [56:00] Okay, but what's the Terraform approach? [56:02] The Terraform approach is thermal. Yeah. [56:03] So, basically distillation on steroids. [56:05] I see, so you're just boiling off the water [56:07] and recapturing it? [56:08] Yeah, essentially. [56:09] Yeah. [56:10] Do you have to boil it? [56:12] There has to be a phase change. [56:13] Okay, yeah. [56:15] When people think boiling, they think hot, [56:16] but you can actually boil at low temperatures [56:17] if you reduce pressure. [56:18] So, we're getting into trade secrets here, [56:20] and there's nothing new [56:21] under the sun. [56:22] The challenge to Terraform-ize this technology [56:25] and make it cheap enough that you can run it intermittently [56:27] off solar arrays, or solar power in general, [56:30] and still make money. [56:31] That's quite challenging. [56:33] But it is insane to me that we live in the state [56:35] in California where they're talking about doing this [56:38] project under the delta, in Sacramento River Delta. [56:41] You're going to spend $20 billion on it, [56:43] and it's going to potentially recover [56:44] on the order of 100,000 acre-feet of water a year. [56:46] If you spent $20 billion on desalination, [56:48] you could literally double the flow of the Colorado, [56:51] about 5 million acre-feet. [56:52] So, why is California ignoring desalination? [56:55] Again, I think it's like anchoring to the past [56:58] where the way you got water was you went [56:59] and built a big dam in the mountains, [57:00] then built canals and stuff. [57:02] Henry Kaiser, eat your heart out. [57:04] And desalination, I mean, there's the odd desal plant [57:06] here and there, but they're very small. [57:07] They're mostly set up to help cities out. [57:10] Oh, there is desal in California already? [57:11] Yeah, there's a plant in Santa Barbara. [57:14] There's a plant I think in San Diego, maybe. [57:16] And they supply water for the city? [57:18] Normally they don't actually. [57:19] It's only if the city runs short on water, then they do. [57:21] Ah, they're emergency desalinizing. [57:22] Because they run off the grid, [57:24] and the reverse osmosis plants, [57:26] they're quite expensive to operate, [57:27] and they're also, they have wear parts. [57:28] So, as you run them, it costs money. [57:30] But yours will not have [57:31] significant wear parts. [57:33] Hopefully not. [57:34] I mean, it's still mostly spreadsheets [57:35] and some doodling in the kitchen at this point, [57:39] which is how Terraform started really. [57:41] And then the garage, and then in the castle. [57:43] But California has more coastline on the West coast [57:45] than any other state; [57:46] maybe Alaska has a bit more, I don't know. [57:47] So, why are we short on water? [57:48] It's right there. [57:49] Like, it's called a pipe. Are there private entities [57:51] you can contract with? [57:51] Just because government procurement cycles are very long [57:53] and politically involved and everything like that. [57:55] Can you sell to the city of Irvine? [57:56] Like, are there ways— [57:57] Yeah, I mean, that would be the way to do it, [57:58] or to sell directly to a consortium of farmers [58:00] or something like that. [58:01] The challenge in California [58:02] is the California Coastal Commission, [58:04] which I believe you've probably encountered. [58:05] Yeah. [58:06] And for a variety of— No sense of humor. [58:09] A variety of interesting and I think mostly valid reasons. [58:11] They sought to try and slow down development [58:14] of the California coast, which is fine. [58:16] I don't want to develop the California coast, [58:17] I want to bury a pipeline under the beach that goes out [58:20] to the ocean and sucks up some water, [58:21] and then puts back some salty water, and it's fine, [58:23] because the ocean's made of salt water. [58:25] Are you putting back salty water? [58:26] Yeah, so what happens is you take off salt water, [58:29] so you take 10 gallons of salt water, [58:31] and you pull out one gallon of fresh, [58:32] and then you have nine gallons of slightly saltier water [58:35] that go out and mix. [58:36] And it's fine, because that's how rain is formed [58:38] in the first place. It's the ocean. [58:39] Dilution is the solution. It's the ocean. [58:40] It'll be fine. [58:41] It'll be fine. [58:42] Now, if you were to take out [58:43] nine and a half gallons of fresh water [58:45] and put back half a gallon of supersaturated brine, [58:49] even that would be fine if you mixed it in, [58:50] but there's no need to. [58:51] So, that's a general plan, [58:52] and just do that at massive scale [58:54] and at the lowest possible cost. [58:55] I believe that it should be possible to produce water, [59:00] desalinated water, for 99 bucks an acre foot, [59:03] which would be transformational, right? [59:04] That means it's no longer, like, "Oh, well, [59:05] if we're really short on water, we'll turn on [59:06] the desal system, and you can flush your toilets [59:08] and drink water." [59:08] It's like, the rain came in a bit weak [59:11] this year in the Sierras. [59:12] That's fine. [59:13] California Central Valley agriculture will be fine. [59:16] We need about 14 or 15 million more acre-feet [59:18] to saturate demand. [59:19] That's about double what we currently have. [59:21] Bring all this additional agricultural production online, [59:22] reduce costs, improve the ecological impact [59:25] of farming on places that are short on water anyway, [59:28] and, like, pay for itself. [59:29] Can you do stuff in the delta where it is brackish, [59:33] without running into the California Coastal Commission? [59:35] I honestly don't know. [59:36] That could be tricky because— [59:37] I know they're sensitive [59:38] about the delta and the hydrology there regardless. [59:40] Yeah. [59:41] You might want to run a line, for instance, [59:42] along the floor of the bay, all the way out to [59:45] the coastal current where you put [59:46] the stream or something. Oh, because you'd be [59:47] increasing the salinity of the delta. [59:49] Something like that. Yeah. [59:50] The best way to pay for this, actually, [59:51] is land value appreciation. [59:52] So my hobby horse is the Salton Sea, [59:54] which is pretty relevant [59:54] to your Northern California liberal elite crowd. [59:58] But us true southern Californians, [60:00] the Salton Sea was formed as a result [60:02] of an irrigation accident in the early 1900s, [60:04] and it's about the same size [60:05] as the entire San Francisco Bay. [60:07] It has 110 miles of coastline [60:09] and you could not give it away. [60:11] It's owned by a patchwork [60:12] of different entities. Sorry, and the Salton Sea, [60:14] is there water there right now? [60:15] Yes. [60:16] Okay. [60:17] There's like three and half million feet [60:18] in there. And it's super salty. [60:19] It's too saline for fish to survive now, yes. [60:21] About 15 years ago, the last fish died. [60:23] It's pretty smelly. [60:24] But when it first formed, [60:25] and through the sixties, it was actually pretty much fresh, [60:28] and then it got saltier over time. [60:29] How did it get saltier? [60:30] Evaporation. [60:31] Yeah, so. [60:32] But how was there water there to begin with to evaporate? [60:36] Like, what's the manmade intervention? [60:37] Irrigation runoff. [60:38] So, a lot of water is diverted [60:40] out of the Colorado River— Oh, okay, got it. [60:41] Through the All-American canal. [60:43] And it's accumulated. [60:44] 1.2 million acre-feet a year. [60:46] And then, most of that is used in irrigation [60:49] and some of it runs off into the Salton Sea. [60:51] I see. [60:51] But how is the water a little bit salty? [60:53] It originally formed when, like, the Colorado River [60:55] burst its banks in 1905 or something like that [60:57] and flowed down there for a couple years [60:59] before, I think, the railroad [61:01] was like "Enough of that," and then cut it off. [61:03] But yeah, I mean, I think [61:05] it's quite a starkly beautiful place. [61:06] And how does the salt get into the Salton Sea [61:08] in the first place? [61:09] The Colorado River is quite saline itself. [61:12] [John] Why, how? [61:13] Mexico sued the United States for the Colorado [61:14] being too salty. Do I not understand [61:15] how rivers work? [61:16] Yeah, because they erode rocks, [61:17] and rocks have salts in them. [61:18] Ah, okay. [61:19] Yeah, that's why the ocean is salty. [61:21] Really? [61:22] Yes, really? That's where the salt [61:23] comes from? [61:24] Yeah, from dissolved rocks. [61:25] Why the salinity of the ocean [61:26] is so stable is another question. [61:28] But yeah, my grand plan is you put [61:29] another 3 million acre-feet of water in the Salton Sea, [61:32] bring it back up to its historical 1990-era level, [61:35] stabilize the level, stabilize the salinity, build a canal [61:38] that comes in from either Mexico [61:40] or maybe under the mountains from maybe both, [61:42] maybe from San Diego, put some whales and stuff [61:44] in there, like SeaWorld but bigger, [61:46] and start building gigantic hyperdrive cities [61:49] around the edge to do industrialization [61:51] and retirees and bit of everything. [61:54] 110 miles of beautiful coastline with a climate like Phoenix [61:58] and Tahoe but warm, you know? [62:01] And we could do that, and it would pay for itself [62:04] because you just didn't run the math on 110 miles [62:06] of coastline on a nice river. [62:08] Have you pitched the Trump Administration on this? [62:10] This feels like the kind of thing that they'd be into. [62:11] I did write a one-pager for the Secretary of the Interior, [62:14] but I think they've got a lot on their plate. [62:15] But actually, United States has an agency [62:17] called Bureau of Reclamation, which is part [62:18] of Department of the Interior, whose job it is [62:20] to figure stuff like this out. [62:21] And it had one extremely powerful charismatic leader [62:25] who basically led all the big projects. [62:27] If you've read "Cadillac Desert", [62:28] it goes into some detail here. [62:28] That's a great book. [62:29] And then... that's generous. [62:32] You don't like it? [62:33] No, it's so scoldy. [62:33] It's like, "Humans should not live in the west. [62:35] It's too dry." [62:35] I'm like. [62:36] Eh. [62:37] But if you're judging... [62:39] There's so many, like, the Kaiser book was bad in a way, [62:41] but there's really good takeaways [62:44] from it. Which one? [62:44] One of them was written by this Mormon fellow [62:46] who was his 2iC for many, many years [62:48] at the Kaiser-Frazer car company amongst other things. [62:51] And the other one was some independent researcher. [62:52] I don't know. [62:53] We'll put them in the show notes, but. [62:54] Okay. They're both fine. [62:55] They're both great books. [62:57] But they're great because of the subject matter. [62:58] Some of them are a bit long-winded. [62:59] Yeah, you have to be able to read past all this stuff. [63:01] Yeah, but the Bureau of Reclamation [63:03] hasn't built a major dam in 50 years, [63:04] so they've pretty much forgotten how at this point, I think. [63:05] But your Salton Sea development, part of the reason [63:08] it feels plausible [63:09] is because there's no conservation argument [63:11] for keeping it the way it is, [63:12] because you're only conserving prior human errors. [63:14] Well, you make it much better. [63:15] You could actually make it have a point. [63:16] No, but my point is, even if, like— [63:18] if you wanted to develop [63:18] the California coast, [63:19] and you say, "We'll make it much better." [63:20] Yeah. [63:21] People will say, "No, sorry, that's not how it is, [63:24] and we need to keep it in a state of nature." [63:26] But Salton Sea is not in a state of nature; [63:28] it's in the state of altered effluence. [63:30] It's in a state of neglect, really. Profound neglect. [63:33] And various studies have happened over the years. [63:35] They want to spend $100 million there, [63:36] $200 million there to try and stabilize it [63:39] to an extent. [63:40] But I think that the mistake is assuming [63:42] that it's always got to be this festering, [63:44] pustule environmental catastrophe. [63:46] It doesn't. [63:47] We could restore it, [63:48] and then unlock enormous economic value for people [63:51] who need a place to live and could live around it, [63:53] and build it into [63:55] a new city in the United States. [63:56] Hasn't been built for a long time. [63:59] And yeah, they can be so cool. [64:01] I'd go there. [64:02] Like, build that city. [64:03] Let's do it. [64:04] And then, you know, essentially infinite solar power, [64:06] lots of critical minerals just like bubbling [64:08] out of the ground. Very close to the Mexican border, [64:11] which has its advantages obviously. [64:12] And you can produce plenty of fresh water [64:13] for Mexicans as well; part of a deal. [64:15] Everyone wins. [64:17] It feels like— [64:18] It's only like 50 to one, [64:19] just back-of-the-envelope calculation [64:21] is like 50-to-one economic leverage. [64:23] It would generate so much value [64:25] that you'd actually, the way you would do it [64:27] is you say, "Well, whoever comes and develops [64:30] all the desalination technology," could be us, [64:32] could be consortium, could be the Israelis, whatever. [64:34] "We'll give you some fraction of the coastline, right? [64:36] And then, you get to either sell that off or keep it [64:38] and hold that money." I think Irvine [64:40] did it that way, right? [64:41] And that's how you fund it, right? [64:42] I don't want to box myself in here, [64:44] but I think you could give like 10% [64:45] of that coastline away to the developing entity, [64:47] and 90% could be to the people of California in general, [64:50] and you would still be making money hand over fist. [64:52] That's pretty unusual. [64:53] You don't ordinarily find, like, mega projects like this [64:55] where there's so much value on the table [64:58] that you can be that generous with it. [64:59] Part of what feels attractive to me about desalination [65:02] for you is, currently, Terraform sells commodities, [65:06] be they natural gas or methanol or things like that, [65:11] whereas someone who wants water in a location, [65:14] they need to buy water in that location, [65:16] which has a price. Getting water to he city [65:20] of San Francisco, or getting water to Los Angeles [65:23] is not a commodity. It's a very specific project, [65:27] and getting water across the delta [65:29] in this specific context [65:30] costs $20 billion with that capital project [65:32] that you were mentioning. [65:33] And so, you presumably, even at the early stages [65:37] of the project, even when it's more expensive [65:39] than it will be at large volumes, you can find somewhere [65:41] where they really value having [65:45] an incremental water supply, [65:46] and they're willing to pay for it. [65:48] Yeah, I mean, the value to be unlocked [65:50] by bringing even small amounts of water [65:51] onto this land is enormous. [65:52] So, again, why is Nevada 90% federal land? [65:56] Couldn't give it away. [65:57] Could you pump significant quantities of water into Nevada? [66:00] Yes, of course you could. [66:02] It's actually downhill like three quarters of the way. [66:05] Sorry, three quarters of the way to Nevada? [66:07] Yeah. [66:08] So, for example, there's already an existing aqueduct [66:10] that runs from the delta here, [66:12] all the way down to the Cajon pass, [66:16] which is the pass that takes you [66:17] from LA up to Vegas, right? [66:19] And from there, if you were to release, [66:21] so you need to upgrade that canal [66:22] to carry a little more water, [66:23] you could release water, it'd flow downhill [66:24] down the Mojave River down towards Death Valley, right? [66:26] You can divert it at the Armargosa Dunes, [66:29] and then pump it up the Armargosa Valley [66:31] there and then, basically. [66:32] Ah, I see you're doing very little pumping. [66:33] And not it's net downhill most of the way, [66:35] but it's by distance. Well, no, it's not downhill [66:37] most of the way. [66:37] The pumping is actually not that expensive, [66:39] because solar array, pump. [66:41] Like, it's relatively straightforward. [66:43] I'm sensing a pattern here. [66:43] There's a pattern. [66:44] It's like, anything that you want from SpaceX, [66:46] it's like, starship will do it for you, [66:47] and anything you want from Terraform, [66:48] it's just solar panels plus other stuff. [66:50] Yeah, and then you say, "Well, Nevada has 100 valleys, [66:52] and we've got cities in a few of them, [66:53] and Burning Man in one of them, [66:54] and you've got nuclear testing in one of them [66:56] and Area 51 in one of them, and that's fine. [66:58] And then, most of them can stay as desert, [66:59] and, like, maybe half a dozen of them turn into solar [67:02] for synthetic fuel, and half a dozen of them [67:04] you run a river the size of the Colorado River [67:06] through them with a few pumping stations here and there, [67:08] but mostly natural flows down into the Humboldt River, [67:11] which will now become a perennial stream [67:12] down into the Carson Sink where you scoop it up, [67:14] and then pop it back to the beginning, [67:15] or drop it into Lake Mead past Vegas, [67:18] when there it can find its way back out to the ocean." [67:21] So not very much scribbling on a map [67:24] is required to make this work. [67:26] Nevada doesn't even have a significant river at all. [67:29] You could be the first. [67:30] It could be the first, [67:31] but like, it's an entire state worth of land [67:32] that would have the climate of Switzerland [67:33] if it just had water. [67:35] Do the Israelis do a lot of desal? [67:37] Yeah, reverse osmosis is largely developed there. [67:40] Actually, I think they just announced [67:41] that they're using coastal desalination in the Mediterranean [67:44] to refill the Sea of Galilee, [67:46] which is, in essence, the reservoir that they use [67:50] to feed downstream irrigation on the Jordan Valley. [67:52] Why not produce your Terraform desal edition [67:56] and sell it to the Israelis [67:58] for, are they already there? [67:59] They're already very good at it. [68:01] But this wouldn't be cost competitive, [68:02] or wouldn't be anything competitive. [68:03] I'm honestly not sure. [68:05] I think they can produce it 400 bucks per acre foot, [68:07] and to be honest, if I was able to produce at 400 bucks [68:09] per acre foot- [68:10] You'd be happy. [68:11] I'd be very happy right now. [68:11] Long term, $99. [68:12] At $99, I think I can steamroll [68:14] the California Coast Commission if I need to. [68:16] But even $400 would be pretty extraordinary. [68:20] What have you learned about leadership, running Terraform? [68:24] That's a good question. [68:25] I went to a high school [68:26] where there was a leadership program in a way, [68:29] and it was kind of a Judeo-Christian based type thing. [68:33] And so, there was idea [68:34] of leadership through service was taught, [68:36] which I think is super valuable [68:37] and something I've always thought about, [68:38] and our org chart is drawn upside down, [68:40] because ultimately that's the way the... [68:42] Can I swear on this podcast? [68:43] Yeah. [68:44] The problems flow downhill. [68:45] Yeah, exactly. [68:46] So, that's an important one. [68:48] I think that I've made plenty of mistakes [68:51] at this point, but having made those mistakes, [68:54] I can now read Leslie Grove's work [68:57] about the Manhattan Project, [68:58] or Rickover's work about the nuclear Navy project, [69:01] and interpret those texts [69:02] and understand what they really mean, [69:04] or have a better insight [69:06] into the sorts of problems they're actually dealing with, [69:08] because they don't necessarily translate that well [69:09] into a narrative form. [69:12] Yeah, just learning to hold myself accountable, [69:14] hold other people accountable [69:16] about how to titrate how demanding you're being [69:19] versus other things about how to understand [69:22] what people want rather than what they say they want. [69:24] And then, make sure they get what they need. [69:26] Stuff like that. [69:27] You dial up your demandingness, dial it down? [69:29] Dial it up. [69:30] Okay. [69:30] Dial it up. [69:31] Yeah, absolutely. [69:32] And is it about also finding [69:34] constructive forms of it that lead to better performance? [69:36] Yes, it's a balance. [69:39] One of the mistakes I've seen a lot of first-time founders [69:41] make is they assume that an hour of coaching [69:43] is as good as an hour of firing. [69:45] because, at the end of the day, you can't be [69:46] some other founder, you can only be yourself. [69:47] And so, you want to build an organization [69:49] that essentially is like an extended mind for you [69:53] and for your hands and arms, and the ways [69:54] that you think about a problem, right? [69:56] And I think Stripe is very much a reflection [69:57] of you and Patrick. [69:58] I'm not sure which one the most, actually. [70:01] I have a question for you about that next up. [70:04] And so, to an extent, the parts of Terraform [70:07] that weren't working with the parts [70:08] that I was trying to build, not my way, [70:10] against my better judgment. [70:12] And when I just gave up on that and said, "Screw it, [70:13] I'll do it my way," it suddenly started working, [70:15] because I could understand and intuit how it worked. [70:17] Yeah, had to become pretty demanding there. [70:19] And obviously, no one's perfect at recruiting. [70:22] And so, the success to that is you've got to give people [70:25] extremely direct feedback and coaching and mentoring, [70:27] and ultimately invite them to build their career elsewhere. [70:31] It's been really tough. [70:32] Some of the people I had to let go, [70:34] people I really like, people I was [70:35] friends with for many years, [70:36] in some cases, and obviously I wish them the best. [70:40] But again, having read resume after resume after resume, [70:43] nothing is worse for your career than sitting in a job [70:45] failing for you because you don't have the guts to quit [70:47] and your manager won't fire you, [70:48] and I've just seen this so many times, [70:50] because it's not that you're not growing, [70:52] it's you're going backwards, in that time. [70:54] Like, since now for a couple of years, [70:55] success is mandatory. [70:56] Like, I don't really care that much [70:58] about how you go about succeeding. [71:00] I'm happy to help you, but at the end of the day, [71:03] you have to succeed. [71:04] We're going to force you to succeed. [71:06] Success is mandatory, no matter what you're doing. [71:09] That did not come naturally to me. [71:11] But it's very intuitively obvious. [71:12] So, my question for you is, in the counterfactual [71:15] where you and Patrick founded YC companies together, [71:19] but they weren't Stripe, they were two separate companies, [71:21] what would the world now look like? [71:24] Oh, I have no idea. [71:26] Like, would he have founded Stripe, [71:27] or would you have founded Stripe, [71:28] and then the other one would something different, or? [71:30] Stripe was much more his idea than mine. [71:32] Would you be in the United States? [71:34] Plausibly not. [71:35] Like, he came here first. [71:36] I mean, we both came here for college. [71:37] What were you studying in school? [71:39] I did not stick around long enough [71:40] to declare a major, but. [71:43] You can make something up. [71:43] Yeah. [71:44] Physics. You would've done physics. [71:45] I would've done physics. [71:46] MIT or Harvard? [71:47] I was at Harvard. [71:48] Harvard. [71:49] Maybe you would've wound up at Draper Lab or something. [71:50] Or a JPL, you know? [71:51] Oh, god, yeah, I wouldn't curse you. [71:55] That is a sad story. [71:57] Yeah. [71:57] Anyway. [71:58] Is there any hope for it? [72:00] I would like to think so, [72:01] but much to my consternation, people who I knew [72:04] who were there, who I always thought [72:06] were, like, JPL boosters and were like, [72:06] "We're going to succeed, [72:08] no matter what." [72:09] And now, like, it's beyond hope. [72:11] And I'm like, "Well, if you think it's beyond hope, [72:12] then that's a bit dismal," [72:14] which is a real problem [72:15] because it's really the jewel of space science [72:18] in the United States [72:19] and much of our technology besides, [72:22] but it has been allowed to wither. [72:25] Do we need more [72:26] private research organizations in this area, [72:29] where obviously there's the many tech companies [72:33] built research organizations model [72:34] after kind of the Bell Labs type thing; [72:36] Xerox Park, Microsoft Research, many parts of Google. [72:42] Do we need that in business? [72:44] I think a better model. [72:46] I don't know how to get there from here, [72:47] but a better model might be that every time [72:50] a lab or an agency or something is set up, [72:53] it's automatically set up with its destructor, [72:57] and after some fixed period it sunsets, [72:59] People always say this, [73:00] and I don't know. [73:01] Like, it's sunsetting [73:02] regulations. And then, it's not like [73:02] you fire everyone. Yeah. [73:03] But you have to reconstitute it, [73:04] and you have an opportunity to do a reorg. [73:06] So after 10 years, say, NASA gets [73:10] summarily executed, and then either [73:13] you bring up another copy of it [73:16] and this time maybe you sell off two of the labs [73:18] to DoE, or you buy up another lab [73:21] that you wanted but you couldn't [73:22] because you had to support these two other labs [73:23] that weren't doing things [73:24] that were useful for your current mission anymore. [73:25] But people probably don't want the offshoots. [73:28] Like, does DoE want to take on the budgetary expense [73:30] of the offshoots? [73:31] Well, that's part of the problem, [73:33] because, well, the idea [73:34] is any existing agency could bid for it. [73:37] And actually the Antarctic stations, for example, [73:39] they're run this way, in that the contractor [73:43] who runs them is cycled from time to time. [73:45] But the alternative is you have the core [73:49] of some function that is ostensibly important enough [73:52] to US national security and soft power and so on, [73:54] that it has to be government-funded, right? [73:56] Screw Milton Friedman. [73:57] It has to be nationally funded. [73:59] But if its mission is that important, [74:00] then you must insist that it continue to succeed, right? [74:03] And we have this conversation every few years [74:05] about the Air Force and the nuclear missiles, right? [74:08] And someone finds something's gone wrong, [74:10] and it's like, "We'd better make sure works, okay?" [74:12] But like, that kind of applies across the board. [74:13] And if you don't do that, then what happens [74:16] is it just kind of withers [74:17] and festers, and then when you need it, it's not there. [74:20] And when we relaxed the Outer Space Treaty in 2017 [74:24] with the Outer Space Accord, so the Artemis Accords, [74:26] so we can go and kind of make a land-grab on the moon, [74:28] and then it turns out China's going to get there first. [74:30] Like, "Oops." [74:31] Maybe we shouldn't have done that. [74:33] If we weren't sure we could win that one, [74:35] why can't we win it? [74:36] Because NASA, the organization whose entire job [74:37] is like, "No more Sputnik moments, please," has kind of lost [74:42] the plot because it wasn't forced to reconstitute itself, [74:45] and so on and so forth. [74:46] And you say the same thing here, I hate to say it, [74:47] but in Silicon Valley, most of the companies [74:49] don't last that long, or they get acquired or spun off. [74:51] And the ones that do, in many cases, [74:53] you'd really rather they haven't. [74:54] Yeah, the IBM problem. [74:56] Well, IBM is still around, [74:57] but there are plenty of other companies [74:59] that have become quite large and successful [75:01] and in some ways victims of their own success. [75:03] And I think, again, one of the anomalous things [75:05] about Elon's companies is that they're now quite old [75:07] and quite large, and they've got [75:09] other organizational pathologies, [75:11] but they haven't had that problem. [75:13] People should figure out how and why. [75:15] Last question. [75:16] What's the shirt? [75:18] This is the Hyperamerica shirt, which I wore today [75:20] because it was kind of a theme [75:22] with, like, if people like you don't strike out [75:27] for the hills and try [75:28] and do insanely ambitious hardware projects, [75:30] it's just Elon and a few other wannabes. [75:33] Like, we're not going to get Hyperamerica [75:35] with a trillion Americans and a trillion planets. [75:37] Maybe Stripe should take on a hardware line of business. [75:39] If we find one that's good enough, [75:41] we wouldn't be opposed to it. [75:42] I think we just haven't had a good idea yet. [75:44] It could be Desal is taken. [75:46] Stripe banner. [75:47] No, I mean, I welcome competition. [75:48] I'm kind of sad actually that, at Terraform, [75:50] it's been four years, and there's only one other company [75:52] that has come in, which, of course. [75:55] Reven. [75:55] Yeah, Reven. [75:57] And there should be many more. [75:58] And I think actually it would help us [76:00] if there was competition, but it is really hard. [76:02] I can understand why people look at it [76:03] and be like, "No, thank you." [76:07] On that note, thank you. [76:08] Thank you very much.