Inside The Hard Tech Startups Turning Sci-Fi Into Reality

1. 0:00 – 2:42

   Coming Up

   1. JFJared Friedman0:00

      You actually can make some significant progress with, like, half a million dollars and three months.

   2. SPSpeaker0:05

      The best hard tech founders do have very high clarity of vision around the future.

   3. JFJared Friedman0:11

      For hard tech companies, you have all this technical risk. You don't know if you're going to be able to mine asteroids. But you have no market risk, right? Like, if you can, if you can mine asteroids-

   4. GTGarry Tan0:19

      (laughs)

   5. JFJared Friedman0:19

      ... it's gonna be fricking huge.

   6. SPSpeaker0:21

      I think this is a call to action for a lot of the very hardcore engineers, that this is your chance to build something huge and to really change the world, literally.

   7. GTGarry Tan0:32

      So this is the kind of energy we need in society, solving some of the biggest problems that face humanity. Welcome back to another episode of the Light Cone. You probably know Y Combinator for a lot of our software investments like Stripe, Airbnb, or Coinbase. But it turns out YC has a lot of wins not just in the electrons world, where you're slinging bits around. Some of our best companies have actually been incredible at slinging atoms.

   8. SPSpeaker1:07

      So I'm curious what some of the advice you give to the hard tech companies in the YC batch. Like, in particular, how is it different, the milestones they need to hit during the three months and what metrics they might present on demo day? Well, one of the obvious things is they won't be able to build a rocket, let's say-

   9. GTGarry Tan1:27

      (laughs) Right.

   10. SPSpeaker1:27

       ... in time (laughs) , so they won't have actual revenue. So one of the things we tell them is they still have to show some form of commercial traction. It won't be necessarily actually selling and getting revenue in the bank, but it's a different kind of form. I think we talk a lot about demonstrating that the customers that ultimately they will sell to want this, and it's typically a form of a LOI that is actually significant, with actual values, with actually legit logos.

   11. GTGarry Tan1:56

       I've definitely found LOIs, like letters of intent, are something where everybody knows they're obviously not the same as actually signing up a customer. But for the software companies, if a software company says, "Oh, we got a customer on an LOI for a $1,000 MRR contract," like that's not going to be impressive. But if you can get an LOI for like a $100 million contract, that is actually quite impressive.

   12. JFJared Friedman2:20

       The way that people tend to get this wrong out there in the world is they, th- they're building some hard tech thing and they're, they're like, "Oh, well, I need like $20 million to build my thing." And then they look at YC and they're like, "Well, YC invests half a million dollars. Well, that's not enough. Like, I can't do YC. Like, how would this make sense at all?" And one of the interesting things that I've learned from working

2. 2:42 – 4:19

   YC's Model for Hard Tech

   1. JFJared Friedman2:42

      here is that actually YC works extremely well for hard tech companies, and that for every hard tech company, no matter how crazy the thing you're working on, whether it's a supersonic jet or inventing fusion power, there's always, like, some small part that you can peel off that is like the very initial stage that you actually can make some significant progress with like half a million dollars and three months. Like, always.

   2. SPSpeaker3:07

      My experience, I feel this is familiar with the hard tech companies, is that they start YC and they always come in with this, the central pitch is, "We need to raise, like there's no way we can make this company work unless we raise like $50 million."

   3. JFJared Friedman3:20

      Dollars. And so like, "Hard, can you tell me how to raise $50 million-"

   4. SPSpeaker3:23

      Yeah.

   5. JFJared Friedman3:24

      "... this week?"

   6. SPSpeaker3:25

      Yeah.

   7. JFJared Friedman3:25

      "Introduce me to m- to some VCs who are going to give me my $50 million."

   8. SPSpeaker3:28

      Yeah.

   9. JFJared Friedman3:29

      Right? (laughs)

   10. SPSpeaker3:29

       And my, like, go-to line is always no.

   11. JFJared Friedman3:32

       (laughs)

   12. SPSpeaker3:32

       Like... (laughs) That's your first office hours.

   13. GTGarry Tan3:33

       Yeah.

   14. SPSpeaker3:33

       Don't just-

   15. JFJared Friedman3:33

       That's the first office hour.

   16. SPSpeaker3:34

       "... show me the money."

   17. JFJared Friedman3:35

       (laughs)

   18. SPSpeaker3:35

       Yes. Basically, it's like, "No, like, you're not going to be able to raise like $50 million off the bat. You are going to have to think like a software company, actually. Like, how can we, like, do this cheaply, quickly, and show something on demo day?" And I just find it's always actually at the start, it's a bit of a, like, fight, honestly, to get them to think that way. And then in the second half of the batch is when they finally get some insight because we've just been like pounding on them to think fast, cheap, less money, like, and then they, something clicks. And then they actually have like a plan for the second half of the batch.

   19. JFJared Friedman4:10

       And the remarkable thing I found is actually how well it works. That once they make that mental switch, and they realize that they can do something in three months,

3. 4:19 – 8:30

   Mindset Shift and Proving Technical Feasibility

   1. JFJared Friedman4:19

      then they go do that. And then they have, it's not just an idea anymore, they've got something real and they can go to investors who maybe didn't want to fund them before YC. And now all of a sudden, like, people just want to put money into this thing, because they've actually like, it's actually like going someplace.

   2. GTGarry Tan4:35

      The weird inversion for hard tech I think is, uh, it's not about why. The why is often there's a problem and it's sort of obvious. And then the why now even is often kind of obvious, where there's some cost curve, there's some BOM costs that changed, the build of materials got cheaper, there's some breakthrough. And so the actual question is not why now or why, it's actually, why you? And I think that that's, that links up to what you're saying, which is if you can show that it's you, and it might be LOIs, um, in hard tech, and especially the people who might spend a lot of money on atoms, they tend to be, um, a little bit more, uh, diligent about only signing LOIs with people who are for real. (laughs) And, um-

   3. SPSpeaker5:22

      But it's not just the LOI.

   4. GTGarry Tan5:23

      Yeah.

   5. SPSpeaker5:23

      I think the other piece is, um, they actually need to build a plan and demonstrate the unit cost actually makes sense and have that whole financial viability aspect of it. And I think the other thing is actually, besides LOI, is proving that they can actually make it. Because a lot of things is like the why, to answer the why you, can you show me a kernel of truth of the idea that you actually can build? So besides LOI, the second thing is, um, a technical milestone. And that, of course you can't build a whole, a whole plane, let's say.

   6. JFJared Friedman5:59

      Rocket. Yeah. (laughs)

   7. SPSpeaker6:00

      Rocket. Or build the giant, um...

   8. DHDiana Hu6:04

      ... decarbonization container thing, but maybe do it in a small scale. Maybe if you were aiming to capture at some point, I don't know, 700 metric tons of carbon, maybe just do it like one or hundred-

   9. JFJared Friedman6:17

      Seven grams. (laughs)

   10. DHDiana Hu6:18

       (laughs) Yeah, or seven grams, right? Demonstrate that you can actually do it and know the science and can actually build it.

   11. HTHarj Taggar6:24

       Yeah, I have a trick for helping the hard tech founders present this to investors that I stole from one of our software companies.

   12. DHDiana Hu6:30

       Mm-hmm.

   13. HTHarj Taggar6:30

       So, um, let's start with the software company. It was Brex. So Brex's demo day presentation was, uh, a lot about showing how they were able to move really quickly on, like, getting a banking deal and sort of the regulatory aspects of starting, like, a fintech back then, right? And as I remember it, their presentation had, like, a timeline of here's how long it takes, like, the, um, a regular company to, like, get the banking deal and go live with, like, a, a real credit card, um, or charge card. Um, and then they were like, "And we did it in, like, three months," whereas, like, the actual time was, like, twelve months. So I tell hard tech founders to think about it as, like, what's, like, the timeline to build your product for, like, a regular company? Like, maybe it's twelve months and with cost as well. Like, would it cost, like, a regular hardware company 50 million bucks and twelve months to get to, like, this proof of concept stage and prove that you were able to do it in, like, three months for 500K? And, like, that visual I find is always, like, effective for answering the why you question actually, just like, "Oh, okay, there must be something special about this founder if they're able to do this, like, with less money and much faster."

   14. JFJared Friedman7:39

       The cool thing is that if people can build that habit during YC, it doesn't just help them raise money during demo day, but it actually creates a habit that then changes the operating cadence that they work at forever. And a lot of our best hard tech companies, they still have that way of operating, which is they're constantly pushing to do things faster and cheaper than anyone thinks is possible.

   15. HTHarj Taggar7:58

       Should we talk about some examples of companies that have gone through YC and done this successfully?

   16. JFJared Friedman8:03

       Yeah, and I think for each of these, the idea is we're gonna talk about where they are now, and then we're gonna talk about what they were able to do during the three months of YC.

   17. HTHarj Taggar8:13

       Yeah, that's cool.

   18. JFJared Friedman8:14

       (clears throat) Yeah.

   19. HTHarj Taggar8:14

       Let's do it.

   20. JFJared Friedman8:15

       So I thought it'd be fun to start with Boom. Boom is a company that we funded in the Winter '16 batch, and they are building a supersonic jet, supersonic passenger jet, to replace the Concorde, because this is a very strange area in which humans

4. 8:30 – 21:09

   Examples

   1. JFJared Friedman8:30

      have gone backwards in terms of technological progress. Like, young people watching this might not realize, but, like, pe- regular people used to regularly fly supersonic from New York City to London in, like, two hours at, like, mach two point something, and then we stopped doing that because the Concorde was discontinued. And Blake, the founder of Boom, he just thought that this was unacceptable. I remember when Boom was in the batch. They had this crazy idea to build a supersonic passenger jet, which would cost literally billions of dollars to do. Um, and so, like, the question would be how could you possibly make any progress on this insane idea with three months and a few hundred thousand dollars? He did two things during the batch. He tried to de-risk the technology, and he tried to de-risk the commercial interest. And you might think that it's inevitable that there would be commercial interest in this, 'cause, like, supersonic jets, of course, everybody wants a supersonic jet. But the thing is, you can't sell a supersonic jet directly to people. You have to sell it to airlines, which means this is only viable if an airline actually wants to buy the thing. And there was legitimate question as to whether airlines, which are capital constrained and risk-averse, would actually want to take a bet on a crazy new technology like this that'd be very expensive. And so the way Blake de-risked it during the batch is he basically spent the batch trying to get an airline to make an early bet on Boom, and at the very end, just a few days before demo day, he finally was able to get introduced to Richard Branson-

   2. DHDiana Hu10:04

      (laughs)

   3. JFJared Friedman10:05

      ... from Virgin Airlines, and Richard Branson gave him $100 million LOI to buy the first Boom planes.

   4. HTHarj Taggar10:11

      Yep.

   5. JFJared Friedman10:12

      And that was absolutely critical to his ability to raise money, because he showed that, you know, the deep-pocketed customers that would ultimately have to place a bet on this were, were excited enough to sign an LOI like that.

   6. DHDiana Hu10:22

      So Jared, where's Boom today?

   7. JFJared Friedman10:26

      So the really crazy thing is eight years after they went through the YC batch with their, like, Styrofoam scale model, they've literally built a supersonic jet, and it just took its first flight last week, and it worked. And-

   8. DHDiana Hu10:42

      Wow.

   9. JFJared Friedman10:42

      ... for those of us at YC who have been, like, part of the Boom story since the very beginning with, like, the Styrofoam scale model and everything, seeing them actually build and fly a supersonic jet was just, like, an unreal, like, otherworldly experience that they actually pulled it off.

   10. HTHarj Taggar10:56

       That's so awesome.

   11. JFJared Friedman10:57

       It's so cool.

   12. GTGarry Tan10:58

       So you can just literally think things in your brain-

   13. HTHarj Taggar11:01

       (laughs) Yeah.

   14. GTGarry Tan11:02

       ... and then manifest them in reality.

   15. HTHarj Taggar11:05

       (laughs)

   16. JFJared Friedman11:06

       Gary, do you want to talk about one of YC's first, earliest, and most successful hard tech companies, this company called Cruise?

   17. GTGarry Tan11:13

       Yeah, of course. So, uh, Kyle from Cruise, of course, was one of the early co-founders at Justin.tv, which became Twitch. Famously, he was the guy who figured out the GPRS and edge modems, uh, in a backpack so Justin Kan could wear the little camera on his head all day.

   18. DHDiana Hu11:30

       Kyle worked on the hardest technical problems of, uh, Twitch, which is with a lot of the video streaming and encoding, where he made it so efficient, and to this day, Twitch runs their own video servers.... is what made them profitable too.

   19. GTGarry Tan11:46

       Yeah.

   20. DHDiana Hu11:46

       So it was, like, the key thing that he unlocked. And just for a bit of, um, background, he's like this technical genius basically.

   21. GTGarry Tan11:52

       Oh, definitely. Polymath, it turns out. I remember interviewing him for YC. Uh, the interview room was, uh, Sam Altman, myself, and Geoff Ralston. Uh, incidentally the subsequent (laughs) presidents of YC, which was kind of funny. Um, and I remember it was a very short interview. Um, he came in and said, "Well, I worked on the MIT autonomous car team. I really like that, and I think that it's possible for us to make a commercial version of this." And he left the room, it was a great interview. And we looked at each other and said, "Well, we have to do it 'cause it's Kyle. But, uh, it's probably a research project."

   22. DHDiana Hu12:28

       (laughs)

   23. GTGarry Tan12:28

       And we shut our laptops and went to lunch.

   24. DHDiana Hu12:30

       (laughs)

   25. JFJared Friedman12:31

       (laughs)

   26. GTGarry Tan12:31

       And of course it became the biggest, fastest liquid exit of, uh, almost any Y Combinator company at the time. So-

   27. JFJared Friedman12:40

       How much was it sold for?

   28. GTGarry Tan12:41

       Uh, almost a billion dollars, which was really wild. And-

   29. JFJared Friedman12:44

       And just how long after you interviewed him?

   30. GTGarry Tan12:47

       Ah, I mean, it was a matter of years.
5. 21:09 – 22:18

   Evaluating Risk in Hard Tech

   1. GTGarry Tan21:09

      it would be great if they could prove that they had picked, they were able to pick an asteroid that actually had precious metals in high concentration. Uh, and there's a weird interesting, um, regulatory, uh, aspect to it too, in that, um, I believe the United States has actually, uh, s- spoken to this saying, "If you land on an asteroid, you actually confer ownership rights to it." (laughs)

   2. JFJared Friedman21:36

      (laughs)

   3. GTGarry Tan21:36

      So there are many ways to monetize, and, um, I think that that speaks to what you were saying earlier. We want sort of achievable traunches that are not outrageous. You don't have to do self-driving cars on day one. You don't have to actually fly back a billion dollars worth of platinum on day one. You have to show that there is a clear path to build the tech to get there.

   4. JFJared Friedman21:57

      So Relativity Space was also in the Winter '16 batch. Amazingly, we actually had three billion dollar aerospace companies in the same batch.

   5. HTHarj Taggar22:06

      (laughs)

   6. GTGarry Tan22:06

      (laughs)

   7. JFJared Friedman22:06

      Isn't that wild?

   8. HTHarj Taggar22:07

      Yeah.

   9. JFJared Friedman22:07

      Um, wow. Well, Winter '16, that was a special time, and I- I- I think the- the reason is what Garry was saying, which is, like, this confluence of factors. Like, 2016 turned out to be an amazing time to be starting

6. 22:18 – 37:12

   More Examples

   1. JFJared Friedman22:18

      an aerospace company. Um, and Relativity Space, they make 3D printed rockets and the founders were super young. They were, like, 23-ish years old when they started it. Basically, their Demo Day goal was to prove that they could 3D print a rocket engine, um, not one that you could actually take into space, that's impossible, but just, like, a scaled model to prove that the thing was, like, feasible technically. And I remember Jordan and Tim walking around th- Demo Day carrying this, like, rocket engine and it was small, but it was a real rocket engine. It had all the injectors, it had the right nozzle design. Like, it was actually a thing that you could, like, fire up and would produce thrust.

   2. HTHarj Taggar22:56

      Hm.

   3. GTGarry Tan22:56

      It is such a wacky idea. Who would've thought that it is possible to 3D print a rocket to space because there's so much of a tolerance with s- with heat dissipation, energy and to get everything at the right manufacturing, very, uh, like, super high precision.

   4. JFJared Friedman23:12

      And the cool thing is they actually did it. In March of last year, they actually launched a full-scale rocket that was almost entirely 3D printed.

   5. GTGarry Tan23:24

      Incredible.

   6. HTHarj Taggar23:24

      Amazing.

   7. JFJared Friedman23:24

      It's the first time anyone's ever done that.

   8. GTGarry Tan23:26

      Wow. That's so cool.

   9. HTHarj Taggar23:28

      So we talked a bunch about aerospace companies. Uh, another area we've invested a bunch in is climate, um, and energy companies. Uh, Diana, I think you worked with Heart Aerospace, right?

   10. GTGarry Tan23:39

       Oh, no. That was Gustav that worked with it.

   11. HTHarj Taggar23:40

       Ah, okay.

   12. GTGarry Tan23:41

       So he worked with, uh, Heart Aerospace, which is a Winter '19 batch company. What they're trying to build are fully electrical planes and that sounds doable, but it has not been done. Part of it is that the batteries in planes are too heavy and don't have enough range and what they figure out is that a lot of regional flights are the sweet spot. Because actually today, with regular planes, fuel-based planes, uh, regional flights, they're actually losing money and they're subsidized by the government. And what they figure out is they're going after the market, and during the batch, they signed a bunch of, uh, LOIs with a lot of airlines. Because this is actually a burning problem for airlines. They're actually losing money in all these flights. And the other interesting thing on the why for them, they're actually located in Sweden and Sweden and Nordic countries are o- s-

   13. DHDiana Hu24:37

       ... one of the most progressive countries in the world. There's a goal for them to fully electrify all flights by regulation by 2040, which is like, a huge thing, talking to the why now and making the pain even bigger. What they achieve is actually to this, uh, it's been four years later, they actually build a version of it. They even have a test pilot.

   14. JFJared Friedman24:59

       Wow, that's a big plane.

   15. DHDiana Hu25:00

       Yeah. It's a-

   16. JFJared Friedman25:01

       Yeah.

   17. DHDiana Hu25:01

       I think it's a 19-seater.

   18. JFJared Friedman25:02

       Wow, their first, their first plane is going to be a 19-seater.

   19. DHDiana Hu25:05

       So they actually have, uh, built models for it already. That's, that's pretty cool to see, right? And the other cool thing about hardware companies, as they progress, you need a lot of funding to get this going and VC funding's not going to be enough. You have to get customers to pay you for it. So they actually got purchase orders from United, Air Canada, and other regional airlines locally, as well as, uh, government grants. Remora's a very interesting company. It is another of these wacky ideas that is trying to retrofit semi-trucks to be carbon-neutral, to sequester all the carbon while they're moving, which sounds like, wild. So, how do you do that with a truck? Because, uh, truck emissions in the US is about 3% of the total emissions. The US emits close to 6 million ton per year and they could capture, uh, make a huge dent. So, the way they went about it was first principle. Paul was very interested in working in climate and he studied and looked at all the emissions in the US, and the top one was transportation. Then he found this thesis from Christina, who is the world expert, and published his PhD in 2019 on mobile carbon capture for heavy-duty vehicles. It was like, the only thesis in the world, and he basically got in touch with her and convinced her to be his co-founder.

   20. JFJared Friedman26:26

       Wow.

   21. DHDiana Hu26:27

       And it is a wacky idea that there's nothing built like this in the world. You see now where they are, they actually built it. You see these giant tanks that's actually capturing right now 80% of, um-

   22. JFJared Friedman26:38

       Wow.

   23. DHDiana Hu26:38

       ... of what gets exhausted in a, in a truck. Now, Seabound is this other company, sort of like Remora. So, Seabound is basically retrofitting cargo ships to reduce CO2 emissions, and they're the only solution to date that's possible. And the other thing to why now, there's actually regulations that came up that they're forcing cargo ships to meet carbon goals as well. The cool thing about them during the batch, I worked with them in winter '22, is, um, they were able to close a bunch of LOIs with ship owners, which is really hard industry to break in. And now after the batch, uh, they actually just had their first pilot here, as you can see.

   24. JFJared Friedman27:18

       Whoa.

   25. DHDiana Hu27:18

       They did their first run.

   26. JFJared Friedman27:19

       This is them on an actual cargo ship?

   27. DHDiana Hu27:21

       Yeah, just this year.

   28. JFJared Friedman27:22

       An actual container ship?

   29. DHDiana Hu27:23

       Well, last year actually.

   30. JFJared Friedman27:24

       Whoa.
7. 37:12 – 44:09

   Vision Breakdown

   1. DHDiana Hu37:12

      actually think like software companies.

   2. JFJared Friedman37:14

      Yeah, I do think that the best hard tech founders do have, um, very high clarity of vision around the future, and I think where we help them a lot is on the, sort of the- the compressing the timelines and, like, think about things in a more commercial, like, "How can you prove that people will pay for this?" But the actual, like, the f- they live in the future already, somewhat. Like, they already know where they want to get to, and I think that is probably different to many software companies, where you- you can have a fuzzier vision of the future and iterate and figure it out as you go along, whereas with hard tech companies, like, you kind of n- you often have the vision of the future in your head and it's just proving that you can get there before you run out of money. (laughs)

   3. DHDiana Hu37:56

      I think that's the thing is, like, can you build the road? It's like, what is the first step, the second step? And I think the first one is also very daunting because we have this super clear image of what the future looks like with how your company changes the world because a lot of these companies we talked about, w- when they succeed, they're going to be huge and I th- they're probably going to be a lot bigger than our software companies too. They're going after massive industries like energy, one of the top expenditures and economic GDP index, right?

   4. JFJared Friedman38:25

      Yep. A- AstroForge, I mean, when you're talking about AstroForge, Garry, that... The thought that went through my mind is like, as investors and to some extent as founders, you're thinking of the expected value of your company, right? Like, you know there's no- like, there's a very small chance of it succeeding but, like, hopefully the outcome if it succeeds is quite big. But when you think about a company like AstroForge, like, okay, like, the odds of, like, being able to successfully, like, bring back, mine precious metal from space seems pretty low but if you do that, (laughs) you own the whole asteroid. You own, like... That company could be absolutely gigantic so the expected value ends up actually being, like, really high. Like, that could be one of the most valuable companies on the planet if it actually works.

   5. GTGarry Tan39:04

      And then zooming out, like, that's sort of, um, the job of every hard tech founder, period, is that, uh, in aggregate, the amount of risk might be this much and then we're saying that day one, you don't have to take on this much risk. You need to take on this much to show that you could take on this much, to show that you could take on this much. And so it really is about how do you break down the problem, which is itself, uh, great engineers are very good at decomposing problems to begin with.

   6. DHDiana Hu39:31

      (laughs)

   7. JFJared Friedman39:31

      Yeah. If you are skilled, like if you have the skills to build, like, real things, um, to really go out as startup, you want to think as big as you possibly can. Like, don't make the tea making robot. Build the thing that goes into space and brings back precious metals, right?

   8. GTGarry Tan39:49

      Yeah. (laughs)

   9. JFJared Friedman39:49

      Like that, then you can actually have a shot at the expected value works out in building one of the most valuable companies and it makes the risk worth it, I think. An interesting thing f- that I've noticed looking at the YC portfolio data is that even though there's this reputation that hard tech companies are really risky, when we look at it in terms of our success rates funding these companies, it's actually about the same.

   10. DHDiana Hu40:12

       (laughs) That's kind of true.

   11. JFJared Friedman40:14

       Our success rate is actually about the same and I think for space companies, it's actually higher than other segments of our portfolio. Like, space companies is, like, one of the highest performing segments of YC and I think the reason is that it's just two different kinds of risk. For hard tech companies, you have all this technical risk. You don't know if you're going to be able to mine asteroids, but you have no market risk, right? Like, if you can, if you can mine asteroids-

   12. DHDiana Hu40:42

       (laughs)

   13. JFJared Friedman40:42

       ... it's gonna be fricking huge.

   14. DHDiana Hu40:44

       (laughs)

   15. JFJared Friedman40:44

       The asteroids are there, they've got, like, platinum. The only question is whether you can get it.

   16. DHDiana Hu40:48

       It's like a machine that turns lead into gold. (laughs)

   17. JFJared Friedman40:50

       Exactly.

   18. DHDiana Hu40:50

       Yes, that would be valuable.

   19. JFJared Friedman40:52

       Our software companies, they may have no technical risk, like of course you can build a website, but they have all this market risk. Nobody knows if you want, if people want this website at all and there's often a lot more competition and so it turns out when you, like, add those two things, uh, or like, when you compare those two things, it actually turns out to be kind of a wash.

   20. DHDiana Hu41:10

       'Cause it's these two variables on our saying of make something that people want, the want is already clear.

   21. JFJared Friedman41:16

       The want is already clear, yeah.

   22. DHDiana Hu41:17

       And all of the rest is stacked up on the make. Can you make it? And I think this is a call to action for a lot of the very hardcore engineers that this is your chance to build something huge and to really change the world literally because these are atoms and huge industries, that you can go after solving climate, creating a lot more efficient chemicals, going after being interplanetary species into this whole vision of space. It's, like, so many cool things that are also very inspiring. I think the other cool thing about founders like this, when you talk to them, they're generally have this level of excitement as they really believe in it and they're s- very good storytellers to really convince not just, like, investors at the beginning but later on, like, they have to hire very hardcore technical experts like Blake, right? He didn't come from... Blake from Boom didn't come from aerospace but he has this level of enthusiasm and clarity that he was able to convince really legit experts to join him and the ability to recruit, tell a story is a huge superpower that founders here need to have.

   23. JFJared Friedman42:32

       I think Blake is actually a really powerful example of this because, um, Boom is actually Blake's second company and he started both kinds of companies. So his second company is Boom, the supersonic jet company and his first company was basically a Groupon clone. It was this, like, social buying site when like Groupon clones and social buying sites were- were all the rage. So it's like a quintessential typical startup-y kind of startup. And so he's had both experiences and he came and he spoke at a YC dinner and he sort of contrasted what it was like to run both a-

   24. JFJared Friedman43:05

       ... super typical startup and a super out there, insanely ambitious hard tech company. And I'll never forget what he said at the dinner. It really stuck with me. What he said is, "You might think that running Boom was much harder than running the social buying site, and actually, it wasn't." (laughs) Um, 'cause like, with the social buying site, it was really easy to, like, get the thing live. Like, you can build a version of, like a, like a V1 of that in, like, a week, and you can launch it. So it's really easy to, like, build the thing and launch. But then what? Now you need to hire great employees, convince them to join, and like, nobody wants... No, like, great, it's really hard to convince great engineers to work at, like, the seventh social buying site. Um, it's really hard to convince investors or users or anyone to care about your site 'cause it's just, like, not that interesting. And so everything after launching is actually, like, really hard. And with Boom, it was the opposite. Like, it's super hard to actually build a supersonic jet. But if you just tell people that that's what you want to try doing, like, the world will, like, rally to the cause, and like, investors and employees and partners

8. 44:09 – 46:25

   Mission-Oriented and Prototyping

   1. JFJared Friedman44:09

      and the press and, like, everybody wants to talk about it, and everybody wants to help you.

   2. DHDiana Hu44:12

      And for all those examples that we highlighted, that is the case. Like, for Seabound, likewise. Like, the two founders are, like, young women out of college and they were able to really assemble a team of hardcore industrial engineers to really pull it off because what they're going after is a very mission-oriented critical. It's, like, really solving the climate crisis and going after the shipping industry. It's like no other companies that are solving climate are trying to touch that industry because it's so hard to sell to, but they've been able to do it. And not just the employees are taking a chance on them, but also the shipping owners. These owners are signing the pilots, the LOIs for them because they really take this bet on the founders.

   3. HTHarj Taggar44:58

      I think zooming out in general, like, a- another tailwind for the wh- whole hard tech, um, uh, startups is just, like, the cost of prototyping things is coming down over time. There's a good chance that I feel like with AI being able to run simulations and just abstracting away some of, like, maybe even, like, the middleware involved in building robots, for example. All trending in favor of it becoming easier to do things, like, with less money and in, like, faster timescales.

   4. GTGarry Tan45:30

      Yeah, the platforms really seem to build on themselves.

   5. HTHarj Taggar45:33

      Which is what actually, like, space. If you think about space portfolio, that's probably what's happening there, right? I think if you zoom back, like, five, six, seven years, we wouldn't have predicted that space would be the area that the, um, big hard tech-

   6. JFJared Friedman45:45

      Yeah.

   7. HTHarj Taggar45:45

      ... like, wins would be in. And, like, you can speculate that what's going on is sort of like SpaceX set the scene for, "Hey, you can, you can build a company in space." There's a bunch of engineering talent that works there for a bit and leaves, as is the case with, like, our portfolio companies. Um, that talent starts companies, builds on just, like, everything that's come before. Like, there's probably another vertical out there in hard tech, um, that's going to be, like, the next space. It just hasn't-

   8. JFJared Friedman46:13

      Possibly robotics.

   9. HTHarj Taggar46:14

      Probably robotics. Robotics is, like, would be my guess.

   10. GTGarry Tan46:17

       And NVIDIA at its market cap with virtually unlimited access to capital is probably one of the biggest accelerants to

9. 46:25 – 47:58

   Robotics and Fundraising

   1. GTGarry Tan46:25

      compute, and then as a result, like that sort of robotic future.

   2. HTHarj Taggar46:29

      Yeah.

   3. GTGarry Tan46:30

      What a time to be alive.

   4. HTHarj Taggar46:31

      It is, uh, a piece of advice Paul Graham would give, um, way back in YC where it's sort of when you're fundraising, some people are natural fundraisers and some people aren't. And if you're not sure which bucket you're in-

   5. JFJared Friedman46:44

      (laughs)

   6. DHDiana Hu46:45

      (laughs)

   7. HTHarj Taggar46:45

      ... (laughs) you're not a natural fundraiser, right?

   8. JFJared Friedman46:47

      (laughs)

   9. HTHarj Taggar46:47

      So like, I do feel like one of these things is there is clearly an, like, Elon Musk path to building one of these huge companies, which is being a fantastic fundraiser who is able to just attract, like, you know, hundreds of millions of dollars and go out and build Tesla and SpaceX. But, like, there is... If you're not Elon Musk, there is also a path to doing that. It just requires what we've been talking about here. It's like thinking like a software company, and I actually think a consequence of that is, like, the people you want to surround yourself with may actually be software people (laughs) and, like, people, or at least, like, investors who will push you in the right directions 'cause I think it's another thing I see with founders is, hey, like, the advice they want to hear is, "Yes, of course, you need to raise, like, $50 million, and I can teach you how to do that." Like, the advice we give them is, "No, you have to go through the pain of figuring out how to do it with, like, $3 million, not $50 million," right? And I think that can be th- that's a right playbook if you're not Elon, um, which is most people.

   10. GTGarry Tan47:47

       And then at the same time, that teaches a discipline that sets people up to actually run businesses that are real businesses and not money-raising exercises. (laughs)

   11. HTHarj Taggar47:57

       (laughs) Yeah.

10. 47:58 – 48:36

    Outro

    1. GTGarry Tan47:58

       Well, we're almost out of time, but I hope that all of the examples we talked about today give you, the great builder out there, the sense that you don't have to be a multi-time billionaire. You don't have to have all these exits already. You don't have to be an Elon Musk. You just have to be smart, and you can surround yourself with really smart people who will help you figure out the rest. So with that, we'll see you next time. (upbeat music)

Episode duration: 48:36