The Factory of the Future with Chris Power

1. 0:00 – 2:03

   Introduction

   1. CPChris Power0:00

      In some ways, it's manifest destiny. Like, humans are built to expand and explore, and that is just, like, a core drive of the species. And with that sort of an argument, it just comes down to, like, growth versus degrowth. Like, that is the eternal cultural fight, and you can call it capitalism or communism, or you can call it, like, the state versus the people, or you can call it decentralization versus centralization. But what it comes down to is, like, are we going to use the limited resources on the planet to go get new resources so we can continue this magical species-wide journey, or are we gonna accept the status quo and sit there and, like, you know, continue to, like, shit in a hole instead of inventing the toilet or whatever, like?

   2. SSSteph Smith0:38

      [upbeat music] Today we have on Chris Power. Chris is the founder and CEO of Hadrian. Hadrian is trying to build the factories of the future. And in today's episode, we talk about what advanced manufacturing is, how advanced it really is, what's happened since the first Space Race, the complexity of onshoring manufacturing, the killer app for space, and how simplifying the world of atoms can actually be done through bits. And ultimately, what kind of experimentation that might unlock. If you like this episode, I have a feeling you'll also like our recently published and first-ever American Dynamism Fifty list. This is a list of fifty companies building in the national interest that embody the ethos of American dynamism. And guess who's on that list? Hadrian. You can find it at our homepage at a16z.com or at a16z.com/american-dynamism-fifty. Enjoy.

   3. SPSpeaker1:27

      [upbeat music] The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any a16z fund. For more details, please see a16z.com/disclosures.

   4. SSSteph Smith1:45

      [upbeat music] Chris, welcome to the show.

   5. CPChris Power1:58

      Thank you for having me.

   6. SSSteph Smith1:59

      All right. Let's start with a really simple definition. What is

2. 2:03 – 5:00

   What is advanced manufacturing?

   1. SSSteph Smith2:03

      advanced manufacturing?

   2. CPChris Power2:04

      Advanced manufacturing is an industry term that generally covers, uh, the complex and high-precision side of all industries, which is usually semiconductor, aerospace, defense. Uh, basically anything that you think of from, like, The Jetsons' flying car future is generally bucketed into advanced manufacturing.

   3. SSSteph Smith2:22

      I think it's, it's interesting that this term advanced m- manufacturing covers an industry which at least isn't always that advanced or maybe hasn't kept up with the times. So could you give a couple examples of ways that this space of ad- advanced manufacturing is maybe not the reality that people might expect?

   4. CPChris Power2:42

      On the defense side is a great example. Um, you know, everyone sees defense primes coming out with drone programs or, you know, advanced fighter jets and stuff and, you know, really flashy products and marketing and thinks, wow, like everything, everything works perfectly. Um, under the hood, once you get below the assembly level, you know, someone making a fighter jet, really what they're doing is outsourcing all of the components, but the wing, the engine, you know, everything to a tiered layer of, you know, ten mini primes, then 20, you know, tier three suppliers, and then literally ten thousand small suppliers dotted across the country that are doing everything from a machine component to, I don't know, the circuit board that is one part of the fire control system or whatever. And that entire layer is basically, basically chaos. You know, the B-2 bomber, which is one of our most strategic assets in terms of, um, you know, the nuclear program. About a year ago, the government had to issue an RFQ for some of the parts on the B-2, not just to replace the parts, but because no one-- You know, the guy that designed it or engineered it retired, and they didn't have it documented anywhere. Like, there's literally no, you know, manual or document of how to make that part. So the government had to go out and say, "Hey, we need someone to come up and, like, reverse engineer this entire thing." So there's stuff like that that's really scary. And another example is we shipped the Ukrainians, uh, what we thought was three years of inventory of Stinger and Javelin missiles, which are shoulder-mounted really cheap missiles that can take out a tank or something. So for providing that to a human force in Taiwan or the Ukraine, it's exactly what we want to be sending people to deter, uh, invasions. Um, so we shipped them three years' worth of inventory. The Ukrainians blew through it in three weeks. And then the Raytheon CEO basically came out and said, you know, "Hey, Biden administration, you want more Stingers and Javelins, but one, it'll take us a year or two to spin up manufacturing. Secondly, uh, we don't know how to make some of the components anymore." So basically below that, you know, veneer of product, everything else is a complete, is a complete disaster. And I think because of the flashy, flashy products and, you know, you're making like a really incredible fighter jet or drone, people think it's, you know, super advanced under the hood. In reality, it's a bunch of people in garages making components that look like they're out of The Fast and the Furious 2, and it's, it's all, it's all duct tape and spit.

3. 5:00 – 7:03

   When a hatch is jammed at the ISS

   1. SSSteph Smith5:00

      Yeah. I mean, you use the word insane, but it really does surprise me to hear that there are these examples. And it also sounds like these examples are not unique. I heard in a couple other interviews you mentioning that, like, fifty percent of F-16s are grounded because they don't have the requisite parts. Or I think you gave another example of the International Space Station, something happening to it, a hatch getting jammed, and then a similar phenomena happening where they had to, like, go and hunt down a piece of paper, right? Can you tell that story?

   2. CPChris Power5:28

      The F-16 one is, is the scariest. But basically, if you look at the DoD stats, more than, more than fifty percent of the, uh, F-16s are grounded, and it's mostly because they can't maintain them, and it's mostly because they can't get parts. And what ends up happening is they end up cannibalizing other planes for parts, and that makes the problem worse and worse and worse and worse and worse because of this, you know, advanced manufacturing supply chain issue, which is not a COVID issue. It's not, you know, an inflation issue. It's been going on for years. It's just now that it's coming to the forefront as, you know, more and more people are realizing how important defense was and is. And the space station one is hilarious. So there's a... I'm gonna get some of the details wrong here. Um, so if anyone from NASA is listening, I apologize. But basically, you know, the, the hatch at the space station gets jammed, and astr-astronauts want to know how much, like force they can apply to unjam the hatch, 'cause if they apply too much force and they snap it, like, you know, we're screwed. Um, so, you know, they ask NASA, "What's the spec for this hatch component?" And it takes them several days to figure it out because there's no, there's no record of that part. And eventually they find that, you know, the guy that made it 20 years ago or whatever is retired, and as the story goes, you know, they find the drawing in his desk drawer, you know, from the paperwork that they managed to save when the business got shut down. And that was why-- that, that was how we knew, uh, how much force to apply, um, to the bay door to get it open. And for something as advanced and, uh, you know, symbolic as the International Space Station, like that is, that is the ground floor reality of how the supply chain works, which is, yeah, completely bonkers.

4. 7:03 – 10:08

   What’s happened since Space Race 1?

   1. SSSteph Smith7:03

      That is bonkers. But this, as you mentioned, didn't happen overnight, right? We didn't wake up one day and have everything broken. So what's happened in the last couple decades if y-you know, we trace back all the way to when some of these things were being created decades ago during the first space race? What happened between now and then?

   2. CPChris Power7:21

      You know, and the US really won World War II because of manufacturing and logistics, not because we necessarily had the shiniest missile or whatever. What ended up happening is we had a really good aviation industry, we had a really strong automotive industry, and we had a really couple of strong, like core manufacturing industries that we could very quickly retool to missile production or fighter jet production or, you know, or something like that. After that, through the financialization of everything, you know, in the late '70s and the '80s, basically the, you know, corporate incentive outsourced everything to, you know, lower cost countries, um, like China, where we basically sacrificed robustness for, you know, profit and loss, uh, optimization. And through that, we drove a lot of manufacturing out of the country. And what people real-- what people don't realize is that when you do that, you don't just lose that, you know, base layer manufacturing of the, the cheap stuff. You lose the skill set and the culture that people know how to manufacture things so that we went-- then we w- when we need to retool it to semiconductor or we need to retool it to defense production or space production, you know, that talent base and that capacity just simply doesn't exist in the system anymore. So, um, part of the reason is cost plus manufacturing, just because everyone's been so fat and happy in defense for a long, long time, you know, that flows through the supply base and really, you know, i-if the government can't really do anything about it if you're shipping fighter jets late, then does the supply chain really care about it, you know, at a base layer of... You know, so culturally, basically the entire industry is tooled up around, "Fifty percent of our promises we break all the time." And once that sets in and that becomes like the accepted norm, then it's really, really hard to turn that, turn that needle, you know, another way, both culturally and systematically. Um, and then over the last 30 years, because we haven't really had to fight a great power competitor, we've only been really going up against like a bunch of people in the hills or, you know, some really, really, uh, you know, small countries or, you know, basically warlord bands. None of that system has really been tested because we can just kind of show up and look scary and people run for the hills. So none of the stresses in the system have been revealed until now, where it's really, really started to break down rapidly. And it's a bit like, you know, if you, um, don't maintain your personal health for like ten years, you know, you might seem fine on the surface, but until you go try and play like a, a game of touch football or something with your college buddies and you realize that your knee is completely fucked. You know, it's the same type-

   3. SSSteph Smith9:47

      [chuckles]

   4. CPChris Power9:47

      ... of situation where we think we're fine and then it takes 10 years to find out we're not fine, but by that point, the rust has kind of set into the system and we're in a really dangerous strategic position.

   5. SSSteph Smith9:56

      Yeah, I mean, I think the fitness analogy is a great one 'cause everyone can relate to that idea where they're like, "Oh, I'm, I'm totally in shape," and they try sprinting 100 meters.

   6. CPChris Power10:04

      Yeah, yeah.

   7. SSSteph Smith10:04

      And even that is like [chuckles] shock to the system.

5. 10:08 – 14:48

   A retiring workforce

   1. CPChris Power10:08

      Yeah.

   2. SSSteph Smith10:08

      So i-it sounds like we haven't kept up, but I think there's, there's also something you've talked about, which is that the people who were involved several decades ago are also starting to retire. So what does that look like? How many companies are actually involved in this space of advanced manufacturing, and what are we seeing there in terms of that almost lapsing?

   3. CPChris Power10:28

      Yeah. So there, there's something like 20 to 30,000 small businesses that make up the majority of the defense industrial base. And I think just to frame this before I go into the detail, basically, if you're making a fighter jet, you know, you're actually outsourcing most of the assemblies, like a wing or an engine, to another company like Pratt & Whitney, and then Pratt & Whitney has a network of, you know, 2,000 suppliers that give them the components, and they might do some engineering. And then... So what these companies are actually doing is taking a lot of com-- taking the Lego kits and assembling them and then throwing the assembly up another layer, and then Lockheed finally stitches the whole thing together, to, to give an example. So there's about 30,000 or so of these small manufacturers that in aggregate make up the entire defense industrial base, but individually are like small businesses where maybe they have 10 to 20 million in revenue max and there's maybe 15 to 20 employees. And the danger there is, um, because we outsource manufacturing and because we culturally decided that if you don't have a college degree, you're worthless to society, there's been no new entrants to the manufacturing workforce because it's not sexy and it's not rewarded in the culture. And because we've had no shocks to the system, no one's realized what a big problem it is. So basically, that entire band of owner-operators at that 20,000, 30,000 small business level, average age of a worker is like 55. Average age of an owner-operator who's a small business owner that is actually, you know, needed to function in the business, um, is 62. So basically, you know, if you switch back to the first space race or, you know, kind of the Cold War, there's a bunch of 30-year-olds that went and started businesses. Um, and now 30 years later, they're, you know, 60, 62. And because we're not rewarding culturally, um, you know, being in manufacturing, uh, you know, all those people were relatively successful, so their sons and daughters got a college degree, so they didn't want to take over the business. So basically, we have this problem where the entire defense and space and semiconductor industrial base is on this house of cards of sixty-two-year-olds that, through no fault of their own, are retiring. There's no one to take over those businesses, and also the knowledge that is used to make those parts is not like in some, you know, GitHub or something, uh, where they can pass it on to Lockheed and say, "Hey, someone else can go make this part." It, it may or may not be written down or recorded in their business. It's mostly in some, you know, two or three people's heads that have been making that thing for ten years, and it is complete art. So, you know, regardless of capital or talent, uh, the IP or the knowledge of how to make that component is not even fungible or transferable. So you have this situation where it's not just a matter of throwing a billion dollars at the s- at the, uh, the problem and going out scaling some new factories. It's like, no, literally, there's like two guys in the country that know how to make this turbine blade for this engine component, and they're all retiring, and once they retire, you know, good luck. Now there's six months of reverse engineering just to figure it out. Um, and often this is on, like, specialized equipment. One of the Northrop suppliers, this is a couple of years ago, um, but there are many, many examples of this. We're trying to move the production of one part from one facility to another, and it was in, in a different state, right? And part of making this part is to coat it with, you know, coat it with a coating that makes the, makes the component work how it's meant to work. Uh, so it's like a chemical process. And, uh, did all the manufacturing engineering, rehoused it in this new facility in a different state, and they couldn't get it to work for like a year. And they finally figured out that there was a mineral content of the water in the different state that was slightly different and undocumented. So the water as part of the process was different, and they literally couldn't figure it out because you've got these minute differences in, you know, whatever, like the localized environment, which can all be controlled for and is not that scary on an individual basis. But in an aggregate, when you think-- when you realize that there's like a hundred billion dollars a year of these parts being produced, and it's all kind of crazy, like duct tape accidents that it works at all, uh, that's kind of like the situation that we're in as a country.

   4. SSSteph Smith14:22

      Yeah, I mean, it almost reminds me of those memes that are like expectations versus reality, and expectations are like you have just like this image of, let's say, like a SpaceX rocket taking off, and you're like, "Oh my gosh, look how far we've come." And then the reality behind it is like these people about to retire with desktop drawings in their drawers, or in this case, [chuckles] like a specific mineral content in the water that's, that's changing their ability to, to produce these products.

6. 14:48 – 22:59

   What is at stake?

   1. SSSteph Smith14:48

      So I-I've actually heard you use the term dangerous when you, when you speak to the point that we're at i-in, in terms of this, this pipeline and this particular space of advanced manufacturing. And so, you know, if someone's listening, they might be like, "Okay, a bunch of people are retiring. Some people are, are not very keen on the idea of us continuing to pursue space." But what would you say, you know, to, to the average person? Like, what's at stake here? What are we gonna lose if, if these people retire, and we don't have these things documented?

   2. CPChris Power15:19

      Unless we solve this problem, I think the country and, you know, our way of life is, is at a su- a existential risk. And the analogy I give to people is if you're living in a small town or something like that, you know, we've built up two hundred layers of abstractions in society so that, like, you can be an artist or you can be a painter or, like, you know, you can be in finance or in crypto or, you know, making video games or whatever it happens to be. And the reality of the world is that, you know, two hundred years ago, you know, we were killing each other over food and, like, it's a, it's a miracle in the first place that we're here and that, you know, society is relatively stable and, like, the roads get paved. People forget because they grow up in America that it's so successful that, like, you know, they don't have to worry about having a bulletproof car. Otherwise, if you have more than, like, a hundred thousand dollar net worth, someone in a gang might try and steal your daughter, which for the rest of the world is like a reality, right? Um, but because, you know, America is so isolated culturally, you know, most Americans' view of geopolitics is Russia bad. You don't learn those lessons, and as a younger person, you don't realize that, you know, unless we, quote-unquote, "keep the, keep the roads paved," like this can all fall over, you know, very, very quickly. So if you run the scenario of saying, "Okay, r-right now, basically, we are successful because, you know, we are the world's police," and whether we should play that role or not is, is obviously up for debate. But the reality is, is that we are fine culturally because everyone understands that if you fuck with America, we will, you know, put a missile over your head and you're dead. Um, or if we go into a great power conflict, we have enough logistics and infrastructure to go and win that conflict or at least be scary enough that that conflict never exists in the first place. And the analogy I like to tell people is, you know, bar fights happen when both people mispredict their ability to win the fight, and bar fights don't happen for three, you know, two reasons. One is there's two UFC fighters, you know, staring down each other, and they both know the cost of a conflict, and both the other person is scary, so that fight never happens. Or there's a bunch of morons, but there's a bouncer and, like, he's big and scary enough that, like, the conflict never happens in the first place. Um, but that construct of a bar fight relies on impressions and kind of social trade-offs that like, hey, enough people have seen their friend getting beaten up by a bouncer, so I'm probably not gonna even test that assumption that this is a real thing. Now, the reality, of course, is that most police officers and most bouncers, you know, are probably incompetent, can probably get taken out by someone relatively competent as a civilian. But, you know, we have enough, uh, social construct around the concept that that is a really dumb idea that no one wants to take the risk. And it's what I describe it in defense land is, it's a lethality mirage. And a lethality mirage is basically, you know, everyone else's impression of you is that you're a ten out of ten lethal, so they're absolutely not, not gonna fuck with you. And then maybe you lose one small conflict and someone goes, "Well, hold on, like, maybe these guys aren't so scary as we thought they were." Um, and in reality, I think we're about a, a three out of ten. And the real danger comes when, you know, a, a great power competitor finds out before you find out that you're actually a three out of ten. So the problem with everyone thinking advanced manufacturing is in a really good place is that we don't go fix the problem. You know, 'cause culturally everyone thinks it's fine. You know, the roads are getting paved, fighter jets get made. Y- you know, if we go into a conflict, we're fine. In reality, we're probably so far away from doing that, that if we have one conflict with China where we expend most of our ballistics inventory, we might not be able to remake it for like five years, then we're basically standing around, you know, with our hands tied behind our backs. And when there is not one or two great powers, you know, in the globe kind of keeping the peace, that's when you get fragmentations and you get despots and dictators pushing the boundaries of what can be done in their country. And then also they see weakness and then they start, you know, moving into invasions of other countries and we get back to this kind of multipolar fragmented world. So it really is quite serious and, you know, to go from the state that we are currently in where it's kind of the tail end of, you know, Pax Americana and peace through strength to a, you know, highly conflicted world is a really scary position and it's not gonna be a matter of like, oh, we go to war. It's like, oh, we go to war and we lose and also like we don't have food and like, you know, the American consumer can't buy an iPhone for less than $10,000 or have laptops at all. You know, imagine if GPS went down. Imagine if we just didn't have GPS, right? So there are obvious impacts of that in terms of being able to drive or whatever, but all of the airlines run on GPS, all the train systems run on GPS. Our ability to, uh, coordinate military conflict relies on GPS. But there are like less than 50 GPS satellites and, uh, all of those can be shot out of the air pretty easily. And all that's preventing, you know, some adversary doing that and basically collapsing Western civilization in one fell swoop, taking out, you know, less than 10 satellites for the cost of maybe $200 million in lasers or hypersonic missiles is the fear that the response from America is so great that, you know, we will win any conflict that's put ahead of us. And what our adversaries are starting to realize faster than we are realizing is that our lethality is more like a three out of ten, you know, versus an eight or a ten out of ten. As, as VCs know, uh, risk happens slowly and then all, all at once.

   3. SSSteph Smith20:44

      Yes.

   4. CPChris Power20:44

      And by the time you realize the risk and it starts cascading, it's, it's kind of too late to respond. The difference between this time around and last time around was, yes, risk happened slowly and then very quickly in World War II, but at least we had the fundamental culture and infrastructure of a defense and industrial base to be able to go, "We're making great cars, so let's, you know, shift that to making fighter jet chassis and we're kind of okay and the response time might be 18 months to two years." When you don't have that fundamental infrastructure, you know, the response time can be 10 years and you're in a really serious position where you're caught with your hands behind your back and you can't respond and everyone knows you can't respond and then basically everyone can, you know, run around doing whatever they want and that's how you get, you know, the collapse of society. You know, as soon as someone realizes the police force are incompetent, you get a bunch of bad actors that creep through the system and that's basically the state that we're at but not just kind of a, like a localized bar fight level, but like at, you know, how the globe operates in general. Um, so yeah, it's incredibly scary and I think people are gonna get a really hard wake-up call in the next, in the next two years.

   5. SSSteph Smith21:46

      Yeah, I mean, I think you brought up a lot of good points there. One of them is this idea of space that many people think is a frivolous endeavor, but what happens in space directly impacts what happens on Earth. You mentioned GPS, but it's also weather, it's also agriculture, it's us understanding climate change. All of this, uh, happens within space, but I think you've also brought up the defense side and then even if people aren't interested in either of those, there is the direct relationship to manufacturing that happens with, as you mentioned, iPhones, but also medical devices, semiconductors which are in so many of the devices that we use. This is all part of advanced manufacturing and so I think it's important for people to realize that, you know, even if they, they don't believe in this idea of American dynamism, which we obviously do, uh, there are direct correlations to their everyday life that will happen if we don't have this infrastructure.

   6. CPChris Power22:35

      For sure. You know, even, even if you're an EA type of person-

   7. SSSteph Smith22:38

      Yeah

   8. CPChris Power22:38

      ... or you know you're a pacifist or whatever or if you're into climate change or like, you know, pick, pick any industry that you think is important, like good luck running compute on GPT-3 if there are no chips.

   9. SSSteph Smith22:48

      [laughs]

   10. CPChris Power22:49

       Or China takes Taiwan and then the only chips you can buy have like a bug in them. You know, like it's, it's not-

   11. SSSteph Smith22:56

       Right

   12. CPChris Power22:56

       ... that hard to take a line to draw and it's like very serious,

7. 22:59 – 26:18

   Onshoring manufacturing

   1. CPChris Power22:59

      you know?

   2. SSSteph Smith22:59

      Well, I wanna understand this idea of onshoring or bringing some of this technology back to the system in the United States and what I wanna understand here is it sounds like there is a delta between where we are and where we wanna be and how much of that delta is broken down into the investment in the space versus the talent available or the technology that we have available or even is it, is it just a matter of time for us to catch up? Obvi- obviously it's a, you know, multivariate equation, but what would you say are the, the most important drivers or maybe the things that are underrated by people? Because I, I would imagine that some folks might just say, "Okay, let's just pour a trillion dollars into this." Well, that'll fix the problem, but will it?

   3. CPChris Power23:40

      It won't and the most important bit is, uh, talent. So if you, if you, if you think about software engineering, um, and you wanna, you wanna solve the problem of how, how can we produce more data scientists or people that are capable of working at OpenAI or something like that, you know, which is arguably like the top tier of software engineering. The way that you get more of those people is having this base layer of, you know, application developers and then front and back end engineers and then more hardcore back end engineers and then SREs and the data scientists and, you know, maybe you have a million people you produce like- A thousand really incredible people in these, like, domain spaces. And, and knowledge, like science, knowledge stacks on each other. You have this talent competition and you produce amazing people in these fields. Like, you know, US doesn't have the, uh, track team that goes and wins the Olympics unless we have, you know, thousands of colleges that are really competitive for track and field, right? That's, that's how it goes. And to take that sports example, you can't just start from a cold start and say, "Well, we wanna be competitive. Uh, we wanna go blow a trillion dollars and win the Olympics." It doesn't work like that. You know, that, that takes years and years of training. You need to get people when they're 14. You need to train them up. Like, it's a cultural thing. Like, why would a kid wanna go s- do sports in the first place? And in America, we have that problem solved because America loves sports like the Romans did, and it makes sense. So if you think about that from a manufacturing talent level, you know, you wanna go solve, uh, rocketry or defense or hypersonics or semiconductor, it's not a capital problem. It's a, where are the people that are gonna go engineer that system and then run that system? And the re- the reality is they don't exist. Um, so what the impact of that is, is time. So, you know, you look at the semiconductor problem and go, "How fast can we reshore semiconductor?" The reality is, you know, the Biden administration gives Intel $50 billion. Um, that's arguably the hardest... You know, that's the heavyweight division of manufacturing, and the talent doesn't exist. You know, you can't go and hire 20,000 people or even 1,000 people that know how to go and execute that construction, how to go engineer that factory, how to go run that factory. They just simply don't exist. Um, and you cannot simply go, uh, and train someone up in even three years to go from, like, you know, a junior college, you know, track and field to, like, winning the Olympics. It doesn't, it doesn't work like that. You know, you need the coaches, you need the entire cultural infrastructure. So that's really what we lost when we outsourced manufacturing in the '80s, is there is no talent base, uh, that is generative of the genius types of people that can actually go and do all these

8. 26:18 – 26:56

   Is capital enough?

   1. CPChris Power26:18

      advanced things. And that is the thing that people don't realize is, yeah, it's not, it's not a capital problem, it's a time and investment problem, and you have to have the base layers there to be ab- able to execute the hard stuff.

   2. SSSteph Smith26:28

      Yeah. Using the fitness analogy, it's like taking the Olympians from 30 years ago and saying, "We're just gonna toss them back in and, and compete in the next Olympics." And it's like, doesn't really work that way.

   3. CPChris Power26:39

      Yeah. Or, or like, "Hey, we've, you know, we've, we've got these kids and they kind of fit, and by the way, we've got this training program, and in two years they'll be winning the Olympics."

   4. SSSteph Smith26:45

      [laughs]

   5. CPChris Power26:45

      Like, it doesn't, doesn't work like that.

   6. SSSteph Smith26:46

      Right. Definitely. Okay. So it sounds like what Hadrian is doing to solve this problem is a mix between fixing the talent pipeline and also using technology.

9. 26:56 – 31:27

   Fixing the problem with technology

   1. SSSteph Smith26:56

      So let's return to the talent, but how, how are you using technology to fix this problem?

   2. CPChris Power27:00

      So the way we look at it is there's, like, five or six core parts of high-precision machining. Some are lower skilled than others, but they're all pretty highly skilled. So what we are doing is basically at each part of the factory, um, developing software, uh, basically grabbing the last smart people in each of those domains, um, that exist and pairing them with the best software engineers that we can find and saying, "Go, go automate as much as possible that, you know, that part of the skill." And in reality, you can only ever automate, you know, 60 to 80% of that. Um, you know, some of it is just like the technology curve doesn't exist. You know, you're, like, waiting for 10 years of machine vision to catch up. So, you know, the job of a startup is to industrialize, you know, research or existing technology and apply it to a new domain. It's not go to... It's not sit there with 40 PhDs and, you know, try and create something that's, like, high-risk. That is, like, the science pipeline. So we grab, we grab and integrate whatever we can, um, and build software around those, you know, talent bases to remove the boring stuff, automate what we can. Um, and then the last 20 or 30% where it's impossible to automate, we build software that is highly process-driven where we can throw someone new to that role in there. Within 30 to 90 days, depending on the role, they can be trained up into that and have enough scaffolding that if they just kind of follow the instructions, they will, like, get 90% of the way there. And for some, for some parts of high-precision machining, that is way harder than, you know, others. Um, but basically we're using technology to solve the talent problem. Um, and then where we can't use technology, we have to simplify it so that you can hire in someone who has had no aerospace experience, and they're making flight hardware for a rocket program in, you know, 30 to 60 days. Because for us to scale up to replace the 50 billion, so let's argue that we can get to 10 billion, um, you know, we can't go and hire a million machinists. We have to, we have to automate our way so that we can only... we can go train 100,000. And that is, like, barely doable, but it has to be a combination of, yeah, solving the talent pipeline and using, using automation to basically, like, lower the burden of that talent pipeline problem, um, and then focusing on the areas where talent is scarce or harder to come by, as well as attracting as much as possible entrants to the new workforce, which is why, you know, branding and marketing is so important and speaking about this problem over and over and over again, because people don't know it's a problem, and then they realize, like, "Oh, I'm a software engineer at Google, I can actually contribute here," or, "I work in hospitality and I can actually, like, you know, get in the fight and help, help solve this problem," is really important from that aspect as well. And that's why the cultural reward system where, like, manufacturing is not really sexy is a huge problem because, you know, unless... This is gonna sound dumb, but, like, unless some 19-year-old from, like, you know, UCLA can go, you know, basically, like, convince some hot girl at a bar that, like, manufacturing is cool, then, like, why, why would they ever go shoot for manufacturing versus going to work for Google or Goldman Sachs, you know? And that's, that's a huge... This is why I ke- keep going back to the cultural challenge, 'cause unless it's awesome and celebrated, you know, that's a, that's a really, really hard problem to solve.

   3. SSSteph Smith30:11

      Yeah. I actually met one of your newly trained or currently trained machinists who used to be a copywriter, Everest, I think last week at LA Tech Week.

   4. CPChris Power30:19

      Yeah. Everest is awesome.

   5. SSSteph Smith30:20

      Um, yeah. And so it is a fascinating- Process that you guys are, uh, undertaking to take people who aren't within this sphere and training them up to be machinists. And something I've heard you talk about before is this maybe counterintuitive idea that to actually take the existing systems, you need to simplify them in order to enable these new jobs, right? Because you can't train a mach- a, a previous copywriter to be the machinist from thirty years ago that can do everything that per- that person did. But if you do simplify those processes, that opens up the job pipeline for many of these people to, to become that, that machinist.

   6. CPChris Power30:57

      Totally. And this is something that software engineering has done, done really well, where there's like a clear delineation between SRE, DevOps, data science, front-end, back-end, you know, and different tiers within that. And traditionally, machining has often been there's one guy that does ninety percent of the-- that whole pipeline themselves. So there's no clear snap-off points where there's a degradation of skill where you can kind of put someone here and then they learn the next run. It's all one person solo operating the entire thing, which just, just doesn't scale.

   7. SSSteph Smith31:26

      How

10. 31:27 – 34:00

    Convincing the old guard

    1. SSSteph Smith31:27

       do you convince the existing machinist to transfer this knowledge? I'd imagine there's some sort of incentive that you need to put into place because, I mean, maybe I'm wrong about this, but I imagine they, they might feel like their jobs are being automated away or that they're being replaced in some way. And of course, some of them it sounds like they're planning to retire. But how do you actually convince the person who has all this knowledge to, to want to share it and be part of this new system?

    2. CPChris Power31:53

       I think there's a couple of things. Th-the first one is the smartest and best people know that the industry is due for a transformation and that it's inevitable that someone's gonna come along and do this, and they wanna be part of the winning team, not, not left behind. So that's a big part of it. Yeah, incentives really matter, and I think culturally in manufacturing, you don't get many opportunities for growth. And there's a bunch of really smart people out there who've been kind of siloed and not given the opportunity to, you know, stretch and grow. And I think culturally, they understand that if we're automating one part of the factory, we're not gonna suddenly like fire twenty people. Like, no, no, no, you go pick whatever else you wanna do, you know, manufacturing engineering or CMM or a higher skill level of CAM programming. Um, and I think the other thing is, yeah, incentives really matter, and I think we're probably the only factory on the planet outside of SpaceX that is giving everyone in these roles, you know, the same, uh, tier of equity as the best software engineers have. You know, our-- every technician in Hadrian, whether you're packing boxes or whether you're an absolute master of your trade and maybe you, you know, you're one of the only twenty people left that can do it, is being given the opportunity to have, you know, probably the only opportunity they've ever had to create generational wealth for them and their families. And with that, you're an owner of the company, and then you're highly incentivized to contribute to the system instead of being like, "Well, I'm on forty dollars an hour and this guy's on twenty dollars an hour, and I'm on forty dollars an hour because I have this tribal knowledge. Why, why would I go and share it?" Because that's what, you know, that's the incentive. And that's why like, oddly there is no like Stack Overflow for machining because I, I, I think it's basically a function of, uh, the fact that manufacturing has been an hourly workforce for such a long time, even the highest skill positions. Because then you get this like weird localized competitive set where even within your facility, you're not really wanting to train or contribute to people 'cause you're putting your own, you know, job at risk. Um, whereas in software engineering, you're salaried, you're in high demand, you know, it's more about sharing knowledge and going as fast as possible. And I think, yeah, that all comes

11. 34:00 – 37:35

    Building a new culture

    1. CPChris Power34:00

       down to culture, but I think that actually gets driven off like historical being an hourly position for such a long time with no meaningful equity upside because then why would you share your knowledge if, you know, you're just gonna train someone up to replace you or, you know, then the owner of the crappy factory that yells at you every day of why the part is late, you know, is, is no longer incentivized to give you an higher, higher, you know, hourly wage, you know?

    2. SSSteph Smith34:22

       Yeah, totally. And, and obviously there's positives and negatives to each of those cultures, but something I've heard you talk about before is you have all of those different roles sit together at lunch or actually meld together in a way so that there isn't like the software engineers here and then the new machinists here and the old machinists elsewhere. And so can you speak a little bit to that and what you're seeing in terms of what aspects of each culture are being brought together and, and highlighted?

    3. CPChris Power34:49

       Yeah, I think-- and again, we're not perfect. We're probably the only ones doing it at all, but many, many, many challenges. Um, I think the first one is making sure that the software engineering team understands that, uh, the person that's operating is the, is the golden goose and they are the customer, and changing that mindset from, "Oh, there's this internal team that does some function," you know, it's like the customer service team at a SaaS startup, like, who cares? You know, whatever. But if the customer s-- if a SaaS customer screams and says, "We need this feature," like everyone knows to go and jump. So making sure we understand that our internal team is the customer of what we're building and, you know, if they have one hour of downtime, it's a really serious problem, and also their happiness as a user is like a really, a really serious problem. And that creates this interesting dynamic where, yeah, you've got like technicians that are, you know, on hourly wage or whatever, and they're the software engineer from Stripe running around being like, "Oh, shit, this guy thinks my product is terrible." Like, you know, this is a really, this is a really serious issue [chuckles] and that, that means a lot. The big problem to solve is continually reinforcing that everyone's working hard and there are, you know, there are different challenges and I think people not from a software domain are like, "Why are you building this feature?" And it's like, that is six months of two software engineers. And yes, I understand it's painful, but like he, he-- you know, so continually like melding those communication streams together and letting people, you know, understand each other's worlds is really important. I mean, the ultimate Hadrian employee would be like a person filling out quality paperwork who was also always a software engineer, so that like the localized pain they would just go and fix, you know? Um, or, or vice versa. So- Yeah, there are many, many challenges to getting that right. But the important thing is to, like, have, have some shared pain both ways and then make sure that the interaction is like operator gives feedback, software engineer picks it up. But, you know, the rating-- the really difficult part is like, this is really, this is really painful for you, but it's also six months of software engineering, so it's getting deprioritized. But, like, how do you make sure that that is actually understood and communicated throughout a rapidly growing organization is an incredibly hard, incredibly hard problem. And even really simple things like making sure software engineers are out on the factory floor as much as humanly possible, sitting behind operators and even doing their jobs where possible, um, is incredibly important culturally and also just for, like, decentralizing the product learning. I mean, there's this classic trap of, like, you think the product's good and it's not, and then whatever feedback mechanism you've got is imperfect. So trying to get it down to single-threaded, like the person that's building the automation for this part of the product is, is capable of actually doing that job and is forced to do that job every couple of weeks and, like, relearn the real, real user pain is, is, uh, an enormous challenge, but is probably the most important thing that we can be doing to maintain that culture at scale as we're rapidly

12. 37:35 – 40:23

    Experimenting with hardware

    1. CPChris Power37:35

       growing.

    2. SSSteph Smith37:35

       Yeah. I mean, you hear of some companies doing this. Like if you work at Airbnb, you're encouraged to stay at Airbnbs and understand the product. But this is obviously a different level of that. Um, something that stood out to me, though, is, is you speaking to-- obviously, this is a really hard problem to solve, and I think, you know, people say that anything that integrates into some form of hardware, not just, you know, software and, and bytes, is like playing on hard mode. Uh, and I can speak to that. I mean, I've-

    3. CPChris Power38:00

       Yeah

    4. SSSteph Smith38:00

       ... as in I've s- mostly worked in the, in the arena of bytes and even, uh, within the marketing sphere, and so within that sphere, you can just kind of A/B test the shit out of everything. If you're unsure, you, you test it, right?

    5. CPChris Power38:12

       Yeah.

    6. SSSteph Smith38:12

       If you have the right amount of traffic. Uh, with hardware, you can't really do that. And so I'm curious to know, as you're building this company, how are you deciding what bets to take? And also, like, what signals are you looking for to make sure that you're on the right track because you don't have, you know, millions of, of page views that you can just test to, to get the signal from that noise?

    7. CPChris Power38:35

       Yeah, that's a, that's a really good question. So there, there are, like, very obvious projects that from the outset everyone knows are the biggest points of pain, whether it's time or annoyance or whatever it is. And then you can't sit in a room for three years and try and build an automated factory is because you only really know what's actually-- what actually matters and what doesn't matter at all is by running a factory and then being very prepared to rip up half your roadmap and realize that what, you know, what you've been doing for the last year was an assumption and not reality. So yeah, you can observe a lot of pain. You can observe where bottlenecks appear that you didn't expect them to. Um, and there are two layers to that. One is like a localized layer, like, okay, what is causing this team this amount of downtime or pain or effort? But then at a factory level, what is producing costs outside those localized things? Because in the real world, you can have a highly optimized process over here, but if it's spitting out unclear results or there's some, like, stochastic variability, then very quickly the factory can go from smooth to chaos, and all of a sudden, thirty percent of the down-- thirty percent of the people in the downstream roles are, like, dealing with the poor outputs of this other thing. So constantly going up and down those layers and making sure kind of each team has the ability to scream for what they need, but then also having observability of the factory itself and going like, "Yeah, you guys think the cost is here, and it is, but we're not solving it here. We're gonna solve it here," because that's, that, that was actually the original root cause of why this issue came across here. And some of that is systems, some of that is just really good foundational operational leadership and, you know, being intellectually honest enough to go like, "Yeah, this is not like a paperwork problem. This is because, like, the customer did this, and we need to build a product around here because that's actually what prevents all these downstream issues." I think the other problem that people don't realize, and you were talking about, you know, marketing data, no factory on the planet

13. 40:23 – 44:06

    The value of observability

    1. CPChris Power40:23

       has observability. So you can't simply... And maybe like Foxconn does. Uh, but you can't simply throw open a dashboard and go, "What is my uptime? Where are the costs for this job? How much labor did we spend on it?" It's all kind of swags and, like, fuzzy maths and people standing around, you know, trying to do time studies which have their own psychological flaws, you know? So a big part of the technology that we're building is a factory data platform where all of the people and all of the hardware are hooked up to one internal data service so that... And it took us like a year to build this, and we're still three months away from, like, having it operationalized, so that everyone in the automation team and operations can look at it and go, "Oh, shit, we actually thought we were really efficient over here, but we're not." And then it becomes much more clear where, where the costs and the systems are. But even getting to that point is a bunch of software engineering that no one has ever done purely to solve the observability problem. Then it becomes much more obvious to everybody where, where to point resources and where the pain is coming from.

    2. SSSteph Smith41:24

       Yeah, that, that's fascinating because, again, bringing my experience from marketing, there are so many times where you think something is an issue or some article is gonna work or some landing page copy is gonna be best, and you're wrong all the time. And so if you really don't have that data layer-

    3. CPChris Power41:40

       Yep

    4. SSSteph Smith41:40

       ... it's so hard to tell what's truly going on. And I'm curious to know how that impacts the end customer, right? So if you're a SpaceX or an Anduril buying parts, uh, through Hadrian, do they get access to that data? And if so, how does that impact that relationship compared to what they're used to experiencing?

    5. CPChris Power41:57

       What customers want is effectively like DevOps-level visibility that's not muddied by human aggressiveness or, "Hey, we'll get the job done. Don't worry. We'll, you know, we'll pull it out of the fire." So, you know, like the world's best Gantt chart, basically. Uh, to build that though, you need the entire factory data system to get that data because if you just have... You know, the Flexport strategy in the early days was thr- you know, build the customer portal first and then have a bunch of, like, analysts just, like, ty-typing and shipping and receiving data. You can't do that in manufacturing 'cause it's so complicated, and you have all these, like, cultural issues of people are always gonna say, "I'm gonna get the job done," and that's not Because they're lying, it's because, like, they're, you know, they're gonna-- they got white line fever, they're gonna get the job done. We're a couple of weeks-ish away from launching this to customers 'cause it took so long to build that internal scaffolding to give people the data. But yes, it's like even now we're sending like just Excel spreadsheet summaries of like, "Hey, here's where we're at in this production run," and people are literally responding like, "This is amazing." Like no one's, you know, no one's ever given this data or whatever, which is from, from like software land is completely insane. It would be like, you know, AWS not having a dashboard of like what's your, what's your like SLA uptime, which is insane. Um, that's a really hard problem to solve. But yeah, that's what customers want is like, "No, this is a, this is a platform, it's a service, and we have observability." And then when things do go wrong, you're learning about it an hour after it goes wrong, not six weeks down the track when like we have to face up to the problem and we can't ship parts. Um, which seems, seems crazy from anyone outside the industry, but it's like a, yeah, it's like a magic wand to everybody else in the industry.

    6. SSSteph Smith43:30

       Yeah, I mean, even extrapolating past advanced manufacturing, I think it's just like a cultural phenomena that we expect these updates. [metal clanking] Like even if you talk about like ordering from Amazon, people have come to expect, "My package is gonna arrive on this date, and if it's not, I'm gonna get a notification," and only some small fraction of, of packages get delayed within that sphere. And of course, advanced manufacturing is much more complex. There's many more reasons why you can't have that level of precision. But it is, I think, like again, a cultural phenomena that you s- you have come to expect that kind of, of system, and it's interesting that this is now being implemented within advanced manufacturing.

14. 44:06 – 48:42

    The cost of timeliness

    1. SSSteph Smith44:06

       Um, I'm, I'm curious to know within the, the spectrum of, of Hadrian and, and your customers, with this implemented, let's say you do get to the point where you have that precision update, what happens? You know, the, the, the obvious thing is like, okay, a rock-rocket gets, uh, shipped on time. But how does that actually influence the wider industry? Does this mean that because things are being shipped on time, companies have, you know, better margins because they operate better and therefore more companies can enter the space? Or can you speak to like the downstream, or you could say like second, third order effects of actually having that system in place?

    2. CPChris Power44:43

       Yeah. So if you, if you skip a couple of years ahead and like everything's being done through Hadrian, whether we're building it first party, but like either everything is being shipped on time or you've got forewarning where something's going wrong, two big things happen. One is something like fifty percent of the total cost of a product, like a satellite, for example, is through delays or inventory levels, which you shouldn't need to have. So as, as an example, if you think about a Gantt chart to build a satellite and there's-- it takes ninety days and, you know, you do this piece first and this piece first, and all the parts have to arrive on time. Firstly, because the supply chain is super unreliable, no one is building that Gantt chart super tightly. They're building it with about fifty percent of slack in it because, you know, you can't rely on those inputs coming in at the right time. So once we get customers to a point where they know that if we say, "Here is the date," it's reliable, everyone can compress their schedules around that reliability and that-- and because manufacturing, you know, time is payroll cost, it's working capital of inventory, it's a build rate. It's-- if you just compress time in manufacturing, you just win on cost. And so, so I think that most of the products will be able to drop their manufacturing costs by like thirty to fifty percent, not because of cheaper parts, but because of the reliability and the ability to compress the schedule around that reliability. The second point is fore notice of errors. So if you have a manufacturing line down because some vendor was giving you a bunch of satellite parts and you expected them on Monday, and then you find out on Monday they're not gonna come for t- for two weeks, which happens like thirty to forty percent of the purchase orders, that dynamic happens, then you've literally got people standing around and they can't, they can't do anything, which is a huge cost in and unto itself. And another CEO I was talking to last week, basically, you know, and the way aerospace works is you have an order book, and then you can't book revenue until you actually deliver your satellite or your product or whatever, and they would've had an extra billion dollars in revenue last quarter had more of their parts been delivered on time. Growth is slowing because they can't meet their order book, not because they're not working hard, because the supply chain is a complete, is a complete mess. So, you know, the example I would give is like, you know, if you're a backend software engineer and like you weren't really sure whether you could spin up a new like, uh, EC2 instance or not, and like it might take three months, it might take a week, like you, you don't know. So all of your sprint planning is out the door. All of your like, "Can I get this product out to the customer and compete?" is out the door. And potentially you're sitting around as a backend software engineer like twiddling your thumbs for three weeks because you're blocked on this core piece of infrastructure. Um, so like imagine if, you know, there was no supply chain team and all these smart people could, could be doing more value-added activity versus like calling Bob's machine shop three times a week being like, "Bob, have you put the parts on the machine yet?" and getting lied to. Or the aerospace engineers themselves like not, not waiting for parts for six weeks and being able to have parts every two weeks so that they can like make a test satellite and blow it up and then iterate really, really fast. When I, when I say like, we can let companies move ten X faster and, you know, lower their cost of manufacturing by thirty percent, I don't mean because we are cheaper, and we are cheaper when we can be, but the main benefit is that you have this high reliability infrastructure layer so you can compress schedule around it and like that's, that's the huge win is, you know, you can make a fighter jet in six months, not twelve months, and that, that's what makes it a hundred and fifty million, not three hundred million.

    3. SSSteph Smith48:14

       Yeah. I mean, I'm, I'm coming back to this meme of expectations versus reality and you imagine like these very, very talented machinists and you, you picture what their, their job is from the outside and [chuckles] then really it's, it's calling Bob's machine shop three times a week being like, "Where's my part?" Uh-

    4. CPChris Power48:29

       Yeah

    5. SSSteph Smith48:29

       ... so I think, yeah-

    6. CPChris Power48:30

       Yeah

    7. SSSteph Smith48:30

       ... a lot of that is, is illuminating to, to realize that the, the supply chain Of course, it's complex, um, but with the use of technology and, and training the right people can be simplified.

15. 48:42 – 51:59

    Hadrian’s key risks

    1. SSSteph Smith48:42

       Um, but within Hadrian itself, what would you say the key risks are? So, so this paints a really, really interesting picture of what we can do to solve the problem. If Hadrian were to fail, why would that be? Would it be financing? Would it be, you know, a, a miscalculation on, on how complex some of these systems are? What do you think, you know, some of the, the key risks are?

    2. CPChris Power49:04

       Yeah. I, I, I think the broad risk of Hadrian is that it's just unbelievably complicated, and if one piece doesn't work, then the whole thing doesn't work. So the execution, you know, it, it's a complex coordination problem to take a, to take a teal, uh, meme. I think the second problem is as the business grows, the reality, the, the truth-seeking of like is this automation possible within X timeframe and how are we planning headcount around that is, is, is really, really hard 'cause you have to make sure that people are being realistic around are we actually saving time with this, or did we just build scaffolding for this process? Which is totally fine. Like, you can't really build automation until you have the scaffolding and the process. But recruiting cycle of someone highly skilled, it might take three months. And as you're growing revenue at an exponential monthly rate and you're booking customer sales on your ability to deliver that, and you're expecting the automation curve to go here and intersect your hiring plan here, and the automation curve turns out to be here, and you have this gap, it's not as simple as, "Hey, we're breaking even on this part of the project. Let's just put more labor into it for another 12 months," because you can't hire into that gap for three months, so then you're behind the eight ball, and then customers hate you. And like, so the prediction of when projects are gonna land and when things may or may not be industrialized as a new piece of automation or process is, is really, really hard. And then the other thing-- I think the third big risk is in manufacturing, if you have a bad process, and a bad process maybe is like something that generates an error more than one out of 100 times, um, that's not like a mistake. It's like, okay, now, now this has downstream impacts on schedule or, you know, this machine is down or whatever. If you scale before there is a level of error-proofing that lets you scale, you end up scaling to a point. Something that was happening once a week now happens 100 times a week, and there's so much negative work in the system that like, yes, not only do you make no money, but then, like, you're chasing your tail, and now you're behind on everything, and you start this, like, really dangerous kind of like negative spiral of negative work. And I think having the discipline to understand where that point is and continually say no to customers, even though they really want stuff, which is really exciting and like, you know, I wanna grow a massive business, so I also wanna scale as fast as possible. But if you go too fast before you're really ready to scale, um, and have that level of error reduction, you can basically blow yourself up, and you won't even know what's happening until the last minute. Once you've told customers you're ready to go and you're ready to scale, and then you blow up a production order and you, like, break the promise that like, "Hey, we won't ever have a launch delay because of us," then you lose the magic, right? And startups c- startups can basically survive infinitely as long as, as long as you hold the magic. So that is something that I think about a lot is when is the right time to push those buttons and what level of scaling can we do now versus how do we need to be disciplined around error reduction versus, you know, shooting ourselves in the foot.

    3. SSSteph Smith51:49

       Yeah. I mean, every company deals with some amount of technical debt, but you're right that hitting that scale button too soon can, can really exponentially increase that amount.

16. 51:59 – 55:04

    Why Hadrian pivoted

    1. SSSteph Smith51:59

       One of the things that I think you explored originally when you discovered this problem was, okay, a bunch of people are retiring. These machine shops, uh, may go out of business. Why don't I just acquire them? Why don't I do like a private equity play and just acquire these shops? Instead of doing what you've done now, which is more so build the technology, train individuals to, to service, um, them, or almost like absorb that, that intelligence. So can you tell us a little bit more about why you pivoted there and, and why you didn't go with that original approach?

    2. CPChris Power52:28

       One of the things that, you know, you don't really learn until you're in the weeds is every, every piece of hardware variability, whether that's a different machine or a different cutting tool or a different vise or piece of work holding, every new combination of those things that you add on to the kind of like the search space of the problem has a nonlinear impact on the software engineering complexity that you need to build to like, you know, get to that-- get to a level of automation that actually solves a problem versus just, hey, you're twenty percent better than your competitors, so you have a great private equity roll-up. It wasn't until I was in the weeds of that problem that I realized that most legacy machine shops have one of every machine ever made, and even within... You know, they have twenty machines. Five of them might be the same. But even those five are set up a completely different way, and that adds this e- enormous nonlinear complexity in terms of the software automation that you have to build on top of those systems to the point where it's, it's close enough to impossible that you can call it impossible and you can squeeze out some margin improvement. But you would never, ever, ever get it to the point where it was a scalable system or it was repeatable enough that it was, you know, gonna solve the problem at the kind of multi-billion dollar level that I wanna solve the problem at. So that was, that was the core reason why you have to build, you have to build this from scratch, hardware hand in hand with software hand in hand with processes, is so you're making those localized trade-offs, and you can standardize the physical world to be able to abstract it into software, to be able to abstract that into process. And now that we have, now that we have the base of that with clear line of sight to what that looks like at scale, then we're actually going back into acquisitions 'cause then we can reliably say to customers and machine shop owners who wanna exit is, one, we actually know what we're doing now. Secondly, we have this standardized system. So to transfer, you know, a legacy machine shop's parts to Hadrian, it's, it's-- there is a process, whether it's a new customer order or whether it's an acquisition. It doesn't, it doesn't matter. There is now a clean funnel at which this can be done. And then in terms of training and re-skilling, some of these people that we acquire might wanna stay on for the journey, and that's great. And now we have this kind of integrated system where we can plug them in and they can learn new skills, and they can be like a part of the winning team. Um, but without building all of that from scratch, you never have that core of like what does great, what does great look like, and then how can you You know, merge people into that, starting from a incredibly divergent hardware base and process base. It's almost impossible to go in and clean that up, both culturally and then just, like, systematically. It's even like, cool, now you're doing 200 hardware integrations instead of three. It's just like, it's impossible, you know?

    3. SSSteph Smith55:00

       Yeah, I mean, the complexity is, is hard enough within one, one of those shops.

17. 55:04 – 1:00:22

    What talent is needed

    1. SSSteph Smith55:04

       Something that I noticed on your jobs page is that you have around 20 open jobs at the moment. It's always changing, but there are so many different types of jobs as well. So there's data scientists, there's mechatronics engineers, there's security officers, there's salespeople. We talked about the importance of marketing within this space as well. Uh, but I'm curious to know across the spectrum that you're working in, what talent is most needed right now? Like what-- Are there, are there specific types of folks that you just wish there was like 10X more of?

    2. CPChris Power55:30

       It's everybody.

    3. SSSteph Smith55:31

       Everyone? [laughs]

    4. CPChris Power55:32

       I-- Yeah, and the reality is it's everybody. Um, the reality is it's everybody. I think if I had to wave my hand, I would say give me 100 software engineers that worked at a startup and then worked at big tech, but actually have an aerospace engineering degree and did an internship at Boeing. Because where we see people go the fastest is they have high context around what the real problem is versus having to kind of like learn the ropes on what is, what is manufacturing, what is aerospace engineering. So that would be like the magic wand, which, which obviously doesn't exist.

    5. SSSteph Smith56:05

       I was gonna say, how many people-

    6. CPChris Power56:06

       But the answer is everything

    7. SSSteph Smith56:06

       ... [laughs] fit that bill? Three? [laughs]

    8. CPChris Power56:09

       Handfuls. Yeah.

    9. SSSteph Smith56:10

       Yeah.

    10. CPChris Power56:10

        Handfuls. Um, the factory talent is, yes, we always need more people, but there's no, like, one critical talent base where we're really, really struggling. I think in terms of automation, yeah, y- we just need all hands on deck, and I think what people don't realize that we struggle with sometimes in recruiting or at least have to over message, you know, to make sure people understand is that you don't need a hardware or manufacturing background to come into a business like Hadrian or SpaceX or Anduril to be able to, you know, be a competitive candidate or create value, you know, with your software skills. Like, a lot of what we're building looks and smells like enterprise SaaS, except our customer is internal users, not external users. Um, and even the deep tech side is very close to like, you know, if you're a developer that's been working on like Unity and building like video game, you know, geometry engines and stuff like that, uh, that's, that is very close to the software engineering we do internally. And even integrating with the hardware, if you're the type of software engineer that is okay with like reverse engineering some crappy API, you know, which anyone from like a Rippling, for example, has done with like some crappy pay-payroll API from the one vendor that like doesn't have it fully documented, that's the exact same problem space. And I would say that tons and tons of software engineers need to kind of get it through their head that it's all just regular software engineering problems, hard software engineering problems, you know, don't get me wrong, but that you don't need a manufacturing background or a, you know, aerospace background or a space background to kind of get in the mix and start adding a lot of value very quickly.

    11. SSSteph Smith57:45

        I love that you mentioned Rippling because I think there are so many examples of successful companies that really just did venture into a space that was surprisingly complex and just document it and simplify it. I mean, I'm a Canadian who, who happens-

    12. CPChris Power57:57

        Yeah

    13. SSSteph Smith57:57

        ... to work in Canada, and using a product like Rippling is so nice. Or, you know, there's, there's other products out there that do the same thing, like Workday. But the idea is that I just have to click a bunch of buttons and say, "Are you an immigrant alien? Are you not?" Or, you know, "What state are you in?"

    14. CPChris Power58:11

        Yeah.

    15. SSSteph Smith58:11

        Et cetera. And it just, it just outlines the process for you, and I think that's a nice parallel because many people have probably used tools like that before. And imagining a parallel within advanced manufacturing of, of course, this stuff is incredibly complex, but if you can simplify it for the end customer to just understand, okay, I'm gonna get it exactly on these dates, and then internally, what are the key steps along that way for us to map out and, and insert-

    16. CPChris Power58:34

        Exactly

    17. SSSteph Smith58:34

        ... automation where possible.

    18. CPChris Power58:36

        Yeah. That, that's a great example is like, you know, a HR rep to do that without Rippling is twenty, forty hours, and you still need a HR rep to do that job, but it takes them thirty minutes and, you know, they're not filling out forms for like, you know, forty hours a week and, you know, drinking a bottle of wine at night 'cause they're sick of filling out forty, [laughs] forty hours of forms a week. And it's the same. It's like we're not, we're not replacing the human in machining. We're just like, "Hey, click three buttons, not click twenty dumb buttons," where you do it a bajillion times a week and it's, you know, it's painful, you know? And also, click buttons in a nice workflow. Don't have to like go read the paper manual on like what immigration policy is for Canadian, you know, B, Z visa holders or whatever 'cause, you know, it's all like workflow logic. It's all a process, and yeah, it's, it's very gnarly to wrap your hands around that entire problem simultaneously. But yeah, that's the game we're playing. It's good.

    19. SSSteph Smith59:30

        Yeah. And, and using that example too, it's like it's-- y- to your point, you're not the experts from the space, right? So if I do have a question of like, what the hell does a resident alien mean? I go to my lawyer and ask them, "Okay, like what-- how should I respond to this?"

    20. CPChris Power59:44

        Of course.

    21. SSSteph Smith59:44

        But I only involve them when necessary, and it's the same thing with machining, right? You're only bringing in the expert machinist when absolutely necessary and then simplifying the rest.

    22. CPChris Power59:54

        Correct. And, and, and... Yes, and then the, then the expert machinist can go learn software engineering or they can go learn, you know, harder and harder levels of machining, or they can just spend a hundred percent of their time on like really gnarly problems that you need an expert for, not like how to program a threaded hole, which they've done for the last ten years successfully, you know, four times a week. And like, you don't ever have to do that again, you know? And cool, go, go solve this other problem and figure out how to automate

18. 1:00:22 – 1:06:47

    Why focus on space first?

    1. CPChris Power1:00:22

       that, you know?

    2. SSSteph Smith1:00:22

       All right. So there are a bunch of different problems that you can attack within advanced manufacturing. We talked about medical, semiconductors, defense, et cetera. Um, sounds like Hadrian is focused, at least at the moment, on space. And, uh, as I mentioned before, there are many people out there-- There are many people who disagree with this, but there are many people that think that space or pursuing it is a frivolous industry. Um, I'll just read you one tweet for fun, uh, from someone that I saw recently that said, "No offense, but I a hundred percent think space colonization is a childish desire." So feel free to respond to that particular tweet, but really what I want to get at is within the sphere Of things that you could pursue within Hadrian. Why specifically space to start?

    3. CPChris Power1:01:06

       The really short version is like Stripe doesn't get to sell to AT&T until they sell to a bunch of Y Combinator startups. And there's just a bunch of huge amounts of capital flowing into commercial space, which means there's a bunch of net new spend, and they're being run by thirty-year-olds, not fifty-year-olds, which, you know, you wanna sell to startups at first, and you wanna hit that early adopter spectrum. So commercial space has all of the complexity of every other industry that we would wanna serve in the future. So the automation we're building for commercial space is almost completely transferable. But there's a real need because these companies are trying to go super fast, so they will pay for speed. You know, if they are sick of calling Bob's Machine Shop, but they're young enough from, you know, all these rocket and satellite companies that they're willing to take a shot on something new and really work with us to develop the system versus... So it's, it's just your classic early adopter problem. Then I think holistically is like, why go to space, uh, at all? Like, why put humanity's resources out there? And I think, you know, we could go through this argument of like, you know, space is a warfighting domain. Like, you need observability if the planet does something, nuclear launches, so you need satellites. You know, like GPS is a great example. We can go through all, like, the time-worn arguments that, like, most of the medical advances on the planet have been downstream of NASA and the ISS and how that flows through to society and all that other stuff. But all of that is, is an abstraction of like, why? You know, why Columbus? Like, why go jump on a shitty raft and go look at a new island in Polynesia as, like, a tribal leader? Like, you know, in some, in some ways it's manifest destiny. Like, humans are built to expand and explore, and that is just, like, a core drive of the species. And with that sort of an argument, it just comes down to, like, growth versus degrowth. Like, that is the eternal cultural fight, and you can call it capitalism or communism, or you can call it, like, the state versus the people, or you can call it decentralization versus centralization. But what it comes down to is like, are we going to use the limited resources on the planet to go get new resources so we can continue this magical species-wide journey, journey of like settling the solar system and finding out what's out there and improving our own lives and like going and getting at it? Or are we gonna accept the status quo and sit there and like, you know, continue to like shit in a hole instead of inventing the toilet or whatever? Like, and, and all these people out there who are like, "By stretching towards the future, we need to concentrate on the problems of today." And what people don't realize is that historically throughout humanity, like you solve poverty by building farms, not by like trying to optimize this shitty, like hodgepodge hunter-gatherer-like system that we've got. And yes, that rewards people, you know, non-linearly to people who are reaching towards that future and like you leave some people behind, but net-net that is what takes the band from here to here and everyone's quality of life goes up. And at some point the Earth's resources are going to die out and we have kind of one shot in the next couple of decades to like expand so that we can get new resources and make ourselves more efficient and start solving all these problems. And I think... But these, these are all like platitudes and economic arguments over the internal cultural problem of humanity, which is like, do you wanna go and do cool shit and like grow as fast as possible and see what's out there? Or do you wanna sit there twiddling your thumbs because you're scared? And that is the eternal like growth versus degrowth fight. And everything that we see in the media, whether it's legacy media or politics or wars or, you know, communism versus capitalism or anything is... Or you know, crony capitalism versus true kind of John Galt capitalism. You know, it's all, it's all a poor abstraction over growth versus degrowth and ultimately like you've got to pick a side, and I pick growth. And if we're picking growth, then yeah, let's go invent new technologies and settle the stars and find out what's out there and mine asteroids for resources instead of ripping up forests in the Amazon, you know? But like you either have to like... Basically it comes down to like expansion or population control. You know, like at a certain point it all comes down to like we're either gonna cut down trees or we're gonna mine asteroids. Okay, don't wanna cut down trees. That makes sense. So let's go, you know, go do something cooler and more sustainable way to do that. But the third option of like restricting resources and, you know, this is like a stupid argument over nuclear. I mean, you know, like, hey, let's not incur some risk of getting totally clean energy that like net-net is way, way, way less, uh, morally and economically impactful than solar panels, where ninety percent of the solar panels in the country are being made in China by basically slave labor, where millions of minority and immigrant women are being chemically castrated every year and forced into servitude. But so ultimately it's like growth versus degrowth, and I think like the case for space is it is the last frontier that we have. And you can think about the moon as the eighth continent, and as a species we're either gonna go out and get it and continue to grow and improve things, or we're gonna stagnate. And if anyone's choosing to stagnate, you're on the wrong side of history and like you're gonna get blown past by everyone else. And I just wish people would frame the problem correctly. It's, you know, it's, it's growth versus degrowth. There is no like economic argument. Like you're either for humanity as an expansive moral species or you're against it and, you know, you wanna like corral us in this bubble where we're just gonna compound the problems. I think it's, I think it's ridiculous.

    4. SSSteph Smith1:06:27

       Yeah, I mean one other way you could put it of growth versus degrowth is also kind of like a zero-sum versus positive-sum mindset, right? Or of like we can pursue space, the technologies will ho-hopefully return back to things on Earth. But also we can pursue space and pursue improving climate change and pursue AI and pursue insert other exciting thing here,

19. 1:06:47 – 1:14:14

    The killer app of space

    1. SSSteph Smith1:06:47

       right? It's, it's not one necessarily versus the other. Although I do think it's really important to point out what we've talked about already several times is that, you know, there are several advancements, uh, from space. I was looking this up because we're doing an episode with Privateer, but like, uh, whether it's like LASIK to like limb replacements to tires on your car-

    2. CPChris Power1:07:05

       Oh, yeah

    3. SSSteph Smith1:07:05

       ... like all of that has been impacted by, you know, unsurprisingly, the very tough engineering challenge, which is to, to build these things in space, return to Earth, because it's much easier to actually apply them here. Um, so-

    4. CPChris Power1:07:17

       Yeah

    5. SSSteph Smith1:07:17

       ... you know, without going down too far that rabbit hole, I do think that one thing that maybe is missing, I might be wrong, but is this idea of like a killer app, right? Something that people can understand within the context of space. And I think some people might argue that like satellites are already like the killer application of space that we use on Earth. Um, but do you have any thoughts there in terms of Whether we already have this quote, unquote killer app within space, um, that people can understand and almost like helps them recognize the value

    6. CPChris Power1:07:48

       I think that's a really, really hard problem because a lot of the benefits of space are not the end product. It's like the infrastructure. It's like GPS. You know, sort of like space invented Google Maps or Apple Maps. It's like it's recognizable by, like, a consumer, and they kind of, they kind of get it, uh, very viscerally. I think, I think there are many... No, I, I don't think there's a killer app, and I don't think there will be because it's, it's like, um, you know, does your average consumer, you know, know about AWS? Not really, like, outside of our technology domain, but, like, can any of the stuff that they love exist without it? Like, probably not. I think there will be something incredible in terms of not quote, unquote, "first-world countries having access to the internet the first time through," um, things like Starlink, which will be really incredible for those parts of the Earth, which will become like a killer app, um, because it's consumer-focused, it's clearly to space. Like, it's cool. It has real benefits in terms of education and, like, you know, teaching kids things, um, versus having, like, crappy internet in the Philippines or something like that. For the American population, I think we're already buried behind so many layers of abstraction that's, like, really, really, really hard. I, I think that potentially it's something in pharma where so much of the, like, cancer or genetic research is, can only be performed or can be performed, like, far, far better in terms of materials or chemical research in space. And I think there... If there's a major pharma breakthrough where it's like, "Oh, we cured lupus," or like, you know, like, "Leukemia doesn't exist anymore," and it's because of the research that happened on the ISS, and it's very publicly done, I think that could be a really killer, like, you know, app. But I think the rest of it's all infrastructure and... Yeah, so, so pharma would be a really amazing one, and I can see like a core kind of consumer link to where they really, like, viscerally feel the impact.

    7. SSSteph Smith1:09:38

       That reminds me of, of, I think, my final question, which is just the idea of painting this future where Hadrian is successful, or rather painting a future where there's, let's say, ten or 30 Hadrians that are successful. Like, what does that world look like? Does that enable us to go and, you know, cure cancer on a satellite, uh, [chuckles] or on the ISS? Or what, what are the types of things that we might get, and I say might 'cause of course, of course, there's no certainty, with the success of Hadrian or many of them?

    8. CPChris Power1:10:09

       Yeah. So the analogy I use is for software engineering, we have so many incredible software engineers and software products that-- and that is downstream of companies like Stripe or Twilio or Amazon because they lowered the barrier to entry for creating new companies and running more experiments on what's, what's a good thing that the world needs from, like, a million dollars to, like, a hundred dollars. Because that infrastructure exists, you get this Cambrian explosion of randomness, and firstly, the people that exist in the ecosystem can get 100 more tries at building something incredible. And then new people come into the ecosystem because the cost, the cost of entry is so low, the cost of experimentation is so low that you, you get more flood of talent and randomness and, you know... So who knows what comes out of it? But it's obviously true that, like, if you have this cheap infrastructure layer that enables rapid iteration and, uh, lower, lower barrier cost to do an experiment or to launch a product, you get this Cambrian explosion of, like, madness, and then amazing things come out of it. And who knows what they are, but like, uh, you know, who could have predicted that downstream of, like, Microsoft Azure is like Dall-E 2? I don't know. But, like, there's a clear-- Without, without that compute layer existing, none of that would exist, you know? So who, who knows? Um, self-driving cars are all downstream of cloud computing. They're all downstream of, like, elastic, you know, infrastructure layers. Um, so what I hope happens with Hadrian is, apart from speeding up the current companies, you know, making rockets, satellites, jets, and drones an order of magnitude so they can move faster on the iteration pace, we automate this so much that it's basically like flicking the switch on AWS and spinning up a new, you know, like East Coast instance and starting to tool around with something. And by lowering the barrier to entry of complex manufacturing and making it cheaper and making it accessible through an API, we should see two things, which is the smart people in the space get 100 times more experiments, and new entrants to the space don't have to go and work at SpaceX for ten years to figure out what the hell is going on and then go start something. They can kind of drop into it straight out of college and have this manufacturing platform that enables them to, like, rapidly iterate on whatever they want. And all of a sudden we see this, like, ridiculous explosion of, like, who knows what. Hopefully so much so the FAA is just chasing their tail trying to, like, stop kids launching, like, satellites off the roof of their houses, you know? And that's, that's like the generative property that would be a real success case for us is we've built this kind of Archimedes lever of a company that by building it, we've, like, generated all these huge second and third order impacts in the world. And yeah, yeah. I mean, like, apart from helping the defense prime scale and, like, you know, butting heads with the CCP, it's, it's gonna be amazing in a couple of years to see, you know, a bunch of, like, engineering grads, uh, y- you know, tooling around in their garage and, like, seeing, seeing Google style startups happen without forty million dollars in funding and just to get off the ground because they tap a button, parts show up the next day through an API, and then they're, like, experimenting, and then who knows what happens after that. But that would be the huge success case for us is that we are the enabler of that, like, Cambrian explosion of talent and randomness that produces all these wild and crazy experiments in the physical world and lowers that barrier to entry so that we get ourselves closer and closer to the Jetsons flying car future versus, you know, getting stuck, getting stuck where we are today.

    9. SSSteph Smith1:13:26

       I love that because I think maybe it's hard for people to imagine that, you know, Joe Smith in his garage is going to go create a, a space rocket on his own. But- If we actually look back a couple decades ago, the idea of someone publishing online, which now we all do, a- as long as you have an internet connection-

    10. CPChris Power1:13:44

        Exactly

    11. SSSteph Smith1:13:44

        ... was not democratized, right? Like, y- I think the first blog was in the '90s, and you had to spin up your own server, and you had to understand how to do web development. And today it's like, you know, you pull up your phone, you have your, your Twitter app or, uh, your own Substack or whatever it might be, and we can all participate. And it does create this, like, infinite ecosystem on both supply and demand. Um, and, and it'll be fascinating to see if we can achieve that on the hardware side and specifically within space. So that leads me to my final question, which is just, I think

20. 1:14:14 – 1:19:20

    Who inspires Chris?

    1. SSSteph Smith1:14:14

       this work is really inspiring. It is... It inspires me to imagine that future where we have democratized hardware, where people are excited, uh, to participate, even if they don't have a doctorate in, you know, aerospace engineering. I wanna know from you, who is someone that you're inspired by, and what are they working on?

    2. CPChris Power1:14:32

       Inspired by or, like, have learnt from?

    3. SSSteph Smith1:14:35

       Could be either. I'll actually share where this question came from. And there was an interview that Alex Honnold did on Tim Ferriss, uh, years ago, and a lot of people see Alex Honnold as this, like, superhuman. He's, you know, defied the laws of gravity or at least fear, and, and he's, he's free soloing up these mountains. And so it's kind of a, a interesting to imagine that there may be someone that Alex looks up to in a similar domain of like, "Oh my gosh, I can't believe he does this." And his answer was this guy, Marc-André Leclerc. Uh, he-- If you've heard of The Alpinist, it's a wonderful movie. I won't spoil the ending, but, uh, that was kind of like a fascinating thing to understand that this person who I saw, and many other people saw a superhuman, saw someone else in a similar light. And so I'm curious to know if, if there's someone that you are like, "Wow, I can't believe this person is building something. No one's ever heard of them." Because in that case, no one had heard of this guy, Marc-André Leclerc, at the time. So does that help, uh, kind of paint a picture of, of what we're looking for?

    4. CPChris Power1:15:32

       Yeah, yeah, yeah. What really inspires me is musicians that tool away by themselves in, you know, bedrooms or caves for like five years and then produce these, like, works of art, uh, that are orders of magnitudes better than anything that like, you know, publishing studios get out. And whether that was like Boston in the '70s, where literally everyone thought they were in a real rock band. It was like one guy that not only, like, wrote, wr- wrote the music, wrote the albums, played all the instruments, but then half of the recording equipment he custom built himself purely, purely just to like get his work of art out there. Stuff like that is inspiring to me, not because it's like a single human, like, you know, I am nothing without the team, but, um, it's because it's a reminder that, you know, these mythical heroes exist and like, you know, people from non-college educated backgrounds or like completely outside the system are still there, are still there toiling away and like, you know, humanity has still got it. You know, like it's, it's not, it's not a like cattle mill of people coming out of education and going and like clicking buttons on computers at Google or Goldman Sachs or whatever. Like we've still got this like incredible ability to go off and do random things. I mean, uh, like other examples is like I'm obsessed with, uh, these random like YouTube building videos where some like nut case like convinces his wife or whatever that they're gonna like build a cabin out in the woods or whatever, and he has no cons- he has no construction experience and he like does it and it's awesome or like, you know, whatever. Those, those things are what inspires me, not because of the like singular genius, because of just like the doggedness of getting the job done and also like the sheer idiocy of being like, "Yeah, I've never done this before. I don't even know what the music industry is, but I'm just gonna like do this album and toil away at it for like eight years and hold myself to an incredibly high standard and like, you know, create something from scratch." And I think why that's important to me is all of what we're doing is incredibly hard, but it's not that hard. And the way we've built credentialism into our society is like really bad because it's like most of the barrier to entry to doing something amazing is like psychological. And I try and tell people like constantly as much as I can like, "No, I'm a moron, trust me." Like this is hard, but mostly, most of the trick is being able to take the emotional pain of just like hitting the wall with a sledgehammer until it breaks down, you know? And that's not what we teach people. We teach people like you have to have this degree or you have to have this like-- you have to be born a certain way or whatever. And like ninety-nine percent of the time except for like advanced maths, like it's just not true. You just have to be willing to like, you know, get after it and be truthful to yourself and like take good feedback and then like run at it. So yeah, e- examples like that are, are really inspiring and those are the people that I look up to versus like, "Hey, you're this amazing entrepreneur that's had this massive success for one reason or another."

    5. SSSteph Smith1:18:26

       Yeah, it's like perseverance instead of getting it right the first time, which is generally what we're taught. Like get an A on the test instead of like take the test 10 times but ace it by the end and then really understand the material. And it also reminds me of that famous Steve Jobs quote. Uh, it's my favorite one and I'm totally gonna butcher it, but it's something along the lines of, "Everything that is built around us has been built by people no smarter than you." And so I think that's a wonderful place to end off on. Chris, is there somewhere that you'd like to direct people? How do they find out more about Hadrian, what you're working on, or anything that we've talked about today?

    6. CPChris Power1:18:56

       Yeah. Uh, you can follow me on Twitter, uh, 2112Power. And if you want to come work for us and manufacture the future, you can email us at jobs@hadrian.co.

    7. SSSteph Smith1:19:06

       Awesome. Well, thanks for doing this.

    8. CPChris Power1:19:08

       No, appreciate it. It was great.

    9. SSSteph Smith1:19:09

       [upbeat music] Thanks for listening to the a16z Podcast. If you like this episode, don't forget to subscribe here on YouTube to get our exclusive video content. We'll see you next time.

Episode duration: 1:19:30