Chris Power, founder and CEO of Hadrian, joins Lucas Bagno and Ian Cinnamon to discuss:
– Why manufacturing is key to a strong position in the world order.
– The changes in the landscape that have enabled a company like Hadrian to be possible now, where it wasn’t five years ago.
– What Chris would do if he was running the United States to win the new space race.
– How to change the culture in the US so that more serious people can work on serious problems.
– Why it’s easier than you think to get involved in deep tech.
Transcript
Lucas Bagno:
Hello, everyone. Welcome to another episode of Village Global’s Solarpunk. I’m here today with my co-host Ian Cinnamon. Today we have a very special guest, Chris Power. Chris is the founder and CEO of Hadrian, which is building the factories for the future of rocket ships and advanced manufacturing with a mission of reinvigorating the US space and defense, industrial base.
Lucas Bagno:
Hadrian is backed not only by Village, but also by other amazing investors, including Founders Fund, Lux Capital, A16Z, Floodgate and others. Chris, welcome to the show.
Chris Power:
Thanks guys. This is a pleasure.
Lucas Bagno:
Awesome. Chris, why don’t we start off by just hearing a little bit more about your background at Hadrian. How do you describe what you do?
Chris Power:
Yeah, so, Hadrian, very simply is in the short run, building highly automated factories for high precision machining for commercial space, where we’re basically doing things 10 times faster and 50% cheaper than anybody else. And to give you a sense of the space supply chain for parts at the moment, whether it’s rockets, satellites, jets, drones, anything, you’re getting parts in eight to 12 weeks, sometimes up to 18 weeks.
Chris Power:
40% of the orders can be late or have quality issues. And the customer service and transparency is terrible. So, you call Ian’s Machine Shop and he says, I say, “Where are my parts?” And Ian has no idea. So, it’s a complete shit show.
Chris Power:
So, what we’re building is a better mousetrap for high precision machining in space, which is parts in one to two weeks, Amazon Prime level reliability, and complete transparency where everyone’s got a live, real time dashboard of their parts in our factory.
Chris Power:
That’s kind of like product market fit version one, but that will lead us into having automated machining for space, defense, semiconductor, eVTOL, energy, because basically the entire advanced manufacturing market in the US routes 80 to 90% of their manufacturing through the same 3000 small, high precision machine shops.
Chris Power:
So, what we’re building for space is the same automation that we all use for a defense and semiconductor in these other advanced industries. And what we’re doing alongside of that is rebuilding the American advanced manufacturing workforce and actually retraining thousands of people on our highly automated machines and systems to be able to enable that growth.
Chris Power:
Because what people don’t realize is that it’s a 50, $60 billion revenue per year industry that’s split up across about 4,000 small businesses. The average revenue of which is, eight to $12 million in their mom and pops. And all those mom and pops are owned by 60 year olds.
Chris Power:
So, over the next decade, in the same decade that we’re butting heads with China or trying to win space race II, you’re going to see the supply base completely collapsed domestically. So, kind of version one of Hadrian is this amazing order of magnitude, better factories, a service product for commercial space. But the real mission is to build out factories across the country for all those advanced manufacturing industries, so that we can kind of replace the legacy industrial base as these folks retire out and making sure that we’ve got another good 50 to a hundred years, at least, of American dominance in advanced manufacturing.
Lucas Bagno:
I love that. And Chris, I have to ask as a fellow immigrant, why are you working on frontier technologies to support America? What drives you, out of everything you could be doing, what compelled you to dedicate your life to this?
Chris Power:
So, I view manufacturing as basically the underpinning of freedom and safety. I’m a big subscriber in, you want to have a big stick, you carry it softly. And what people don’t realize is that it’s not about how good a specific fighter jet is or how efficient a rocket is. It’s about how much you can produce. You know, logistics and manufacturing are what win conflicts. It’s not one piece of high technology that happens to be 20% better than the next guy’s fighter jet or whatever.
Chris Power:
And if you look back historically, roughly every a hundred years, the reserve currency, the world and the power balance of the world shifts. It went from Germany to the British empire, British empire to the American empire. And now we’re kind of at the tail end of that, as well.
Chris Power:
And, if you look geopolitically, the last time this shift happened, we went from one liberal democracy in the Brits to the American liberal democracy and net net for the world, that’s a pretty good position to be in. The option we have on the table now is basically if America fails, the CCP is the next obvious choice for reserve currency of the world holder, and the dominant force in the kind of global order, which is a really scary position to be in.
Chris Power:
So, as an immigrant, coming from Australia and Australians generally tend to have a much more balanced worldview than Americans whose worldview effectively is Russia bad, is often the case, is you can look at these things happening across the world and you realize that for all of the flaws, America is the last bastion of freedom and hope of like a certain way of life.
Chris Power:
And what I realized was I had a certain perspective and skillset on how to scale up industrials, businesses and combine them with technology to reinvigorate that supply base. And that, doing a thesis like that in Australia was kind of useless in a mission driven sense because you could build a highly successful business, but it wouldn’t really tip the scales of history in kind of the free world’s favor.
Chris Power:
So, the only option is to build it in the U.S. That’s kind of my reason for dedicating my life to this is because I believe manufacturing is a fundamental ingredient in having an incredibly strong culture and an incredibly strong position in the world. And that because America lost it, it cascaded into these series of events where we now find ourselves in a relatively weak position, with the knowledge that it’s kind of us or the CCP are the two, like, global order options.
Chris Power:
America is obviously flawed, but the only good option out of those two. And that is, in a decade, this decade is probably the one that will decide who wins and who loses. And it’s worth pushing as much energy into that mission as humanly possible.
Ian Cinnamon:
So on that note, when you think about fast forwarding, call it five years, you talked a little bit about the longer term vision of Hadrian. But I’d love to understand a little more in depth on that longer term vision, but also the implications for the west and the world as you just described. What do you envision society looking like in five years or maybe even 10 years into the future as Hadrian continues to grow and succeed, and allow us to have that automated advanced manufacturing?
Chris Power:
Yeah. So, the way I look at it is, and you know, it’s a Village Global podcast. So, I think the software analogy is going to resonate here is, one of the reasons why we have so many great software companies is because the fundamental infrastructure isn’t in place to make creating software very cheap and very scalable. Right? You no longer have to spend 50% of your backend software engineering resources standing up servers. You can just turn on AWS.
Chris Power:
You no longer have to build notifications. You can just switch on Twilio. You no longer have to build payments. You can just switch on Stripe, right? Which allows the cost of starting a new software company to be super cheap. And it also allows the velocity of new companies being formed to be much, much, much, much greater. Right?
Chris Power:
So, you’re seeing both a decrease in the cost of starting new companies and a velocity in the existing companies where they’re focusing on the innovative side, the products, the deep engineering, not the basic infrastructure, which is repeated across every company.
Chris Power:
With advanced manufacturing, and if you think ahead, five to 10 years in the future of the future that you want to see, which is a very solarpunk thing, or like the Jetsons future. Right? There’s flying cars. It’s the green earth. You’ve got in orbit or highly efficient manufacturing that’s not polluting the earth. You’ve got all this cool automation.
Chris Power:
All of that, basically, requires this advanced manufacturing sub-component infrastructure layer. And without that, you don’t really get all these innovative companies being able to scale up in any of these arenas. Right? So, hopefully in five years time, what we’ve got is 10, 15 factories across the country in each of these large manufacturing hubs that are serving space, defense, semiconductor, energy, and eVTOL, and all these other categories.
Chris Power:
And what we’ve managed to do is the same impact that say Stripe or AWS had on software, where for someone to scale up a successful EV toll company can be at the touch of a button because they’re just spooling up half a Hadrian factory, not having to figure out an entire ridiculous supply chain just to get parts in on time.
Chris Power:
And that we are truly seeing this order of magnitude increase in the iteration cycle of how fast an aerospace design engineer can iterate towards a product. And that we’ve really, really have half the cost of advanced manufacturing in the country. And if we nail that for one or two industries in five years, that’ll be your dream. And hopefully we can move a lot faster than that.
Ian Cinnamon:
So, I want to call out, we have a lot of listeners who love hardware, as well, but appreciate you catering it to the software analogy. So, on the note of being able to kind of manufacture what needs to be made at will, as we look into the future, help explain the other side of that, which is procurement. On some of the prior episodes of Solarpunk we talked to some great investors and founders, who’ve talked a lot about how procurement could be made better or change.
Ian Cinnamon:
How do you think our ability to manufacture things, more advanced items more rapidly, ties into how the U.S. government, and per se, handles procurement and buying items? Do you think those need to go hand in hand? Or do you think of those as totally isolated, separate issues?
Chris Power:
Yeah. I think companies that partner with Hadrian will have a much better time of going through more agile procurement cycles. Right? So, we deal with the procurement people in commercial companies. So, they have really, there’s some defense primes, which might be slower than new space companies, but broadly compared to, say, the government they’re pretty fast. Right?
Chris Power:
And we’re dealing with millions of dollars as an individual contract, not like F35 program or something in Anduril, which is a congressional line item that’s a $100 million and takes five years to get something across the line. But, I will say that because large OEMs or large manufacturers like, say, Northrop Grumman are used to having these long procurement cycles. That means that their supply chain planning can be very slow in line with that.
Chris Power:
Like if you know, you’re going to win a deal in two years time and it’s got a 10 year delivery cycle, you can spin up your supply chain, which would be Hadrian, like, pretty, pretty slowly and pretty carefully. Whereas, what we’re seeing in commercial space is, oh, there’s a StarLink version II is coming out. We need to change the supply chain across a two week period and have the supply chain as agile as the customer.
Chris Power:
So, what I think you’ll see is as the government moves towards a more agile procurement cycle, so the loop is much shorter, that will have this downstream impact of, oh, Anduril’s winning all these contracts, because they’re super agile. And how does maybe a legacy defense OEM compete with that? Well then they have to speed up their supply chain as much as they speed up themselves.
Chris Power:
And if they continue to partner with legacy businesses that are used to delivering parts in 18 weeks, or, they can’t spin up something new, faster than six months. And they’re not going to be able to react fast enough. But you know, Hadrian’s procurement problem as a commercial company is much less difficult than someone selling directly to the Defense Department. But definitely, I think those companies selling to the DOD they can be enabled by Hadrian in a really material way
Ian Cinnamon:
And everything you’re describing about Hadrian’s mission, how it came to be, it’s all very logical to me, at least, and Lucas, that’s why we invested. It makes a tremendous amount of sense. Why has this not been done until now? Like what makes this the right time to start Hadrian as opposed to why didn’t this happen five years ago, 10 years ago?
Chris Power:
There’s a couple of macro reasons. One is that if you tried this five years ago, there’s simply not a group of growing customers, which you can build a fast growth startup off of. Right? So, five years ago, if you try and go start a new machine shop and then go sell to Lockheed, your sales cycle might be three years or you might not even get a foot in the door. Right?
Chris Power:
But what we’ve got is all these advanced, agile companies in commercial space, like Joby aviation, who, because they’re trying to move fast, they’re growing super quickly. They’re willing to, and you know, they’re run by 30 year olds who are from startup land. They’re willing to try new solutions on the supply chain side. And that was just not the case five years ago.
Chris Power:
And in startups, in general, you do need this set of customers who have real pain that are growing super fast, that are the early adopter archetype to be able to fuel that initial kind of go to market cycle. And then you cross the chasm to your big customers. Right?
Chris Power:
So, would Stripe be able to sell to Walgreens or whatever if they didn’t have Y Combinator startups who were willing to use the shitty first version? No. So, that patent for Hadrian only exists now. It really did not five years ago.
Chris Power:
Secondly, a lot of the technology, frankly, was not there. So, a lot of the trick of Hadrian is that we’re really good at rebuilding everything where we need to, but integrating off the shelf hardware and systems where we can. And that gets us to an automated factory in 12 months, not three years. But if you wind the clock back five years ago was half of that there? You know, probably not.
Chris Power:
And secondly, I think there were a couple of startups that tried to do automated manufacturing, say, eight years ago. And there’s a lot of similar pitfalls and red herrings, regardless of what type of manufacturing you’re trying to do, which gave me the clues of what the right way to navigate the kind of mind puzzle was. And again, so I think if you try this the first time you probably fail.
Chris Power:
So, there’s a bunch of other dynamics. But those, those are kind of three of the key ones why kind of now is the right time.
Lucas Bagno:
And, Chris, to sort of tie in the topic that Ian asked you about procurement, and then what you were talking about, the geopolitical threats that we face,
Chris Power:
Yep.
Lucas Bagno:
How did those things impact the readiness of the defense sector in America, but also in the west broadly? And, what do you think needs to change for us to be able to live up to the challenge?
Chris Power:
So, I think there’s two things. One is procurement of say new fighter jets, like let’s just use the F16 as an example. It’s not a procurement cycle for a new fighter jet. It’s just simply, hey, we might need two Xs as many of them next year. Right?
Chris Power:
Because the supply chain is being baked with a bunch of legacy machine shops, if you try to scale up the number of F16s by even 30%, every one of these machine shops is running at capacity or close to. So, the elasticity of the supply chain to spool up new capacity is like incredibly un-elastic. Right?
Chris Power:
So, the government can say, hey, jump. That doesn’t mean the supply chain is going to react fast enough. And on new procurement cycles, what you want is for a vendor to be able to ship like a drone or something and go, this is the first version, but let’s iterate on it together every month. And it’s more like a SaaS company than it is a like cost plus, big defense contractor.
Chris Power:
So, the government has to adopt those styles of procurement to speed everything up. Because what that enables is, effectively, good product iteration and a competitive dynamic versus, hey, there’s this one big contract that’s getting awarded. And where we end up is the product is not good because there’s no competition. Right?
Chris Power:
So, that’s how I see it. Effectively, it’s like move it from cost plus to a competitive dynamic with real SLAs. And probably you solve, you solve a lot of it in that. Doing that in the real world is probably harder than we think.
Lucas Bagno:
Right. And you mentioned a while ago, the threat of the CCP in where America and the west are in this decade. Is your view that we’re in a Cold War, 2.0 in a new space race? How do you look at the situation?
Chris Power:
Okay. So, definitely in new Space Race. I don’t know why, if that’s not obvious to anyone, it should be. I mean, they have a Rover on the moon and we don’t. There’s obviously a race to who gets the first sustainable moon base for a variety of reasons. So, I think that’s obvious.
Chris Power:
I also think what’s non-obvious that doesn’t get talked about enough is that control of LEO and GEO affects so much on earth. If you just knocked out all the GPS satellites, for example, in orbit, then, literally, you’d win every military battle on land instantly. So, even if it’s not necessarily war fighting in space, having dominance and freedom of action in space is like super critical. And I think it’s obvious from the laser tests between the Russians, to the posturing of the Chinese they’re doing in space that that’s obviously what’s happening.
Chris Power:
So, you don’t want to be an aggressor. But certainly, we have to keep freedom of action and freedom of movement in orbit in order to protect all our ground assets. So, anyone who hasn’t realized that’s going on in orbit, in many orbits is kind of off base.
Chris Power:
In terms of domestically. Yeah, I think you would easily argue we’re at least in a Gray War or a Cold War, but in a very different manner from the kind of eighties, Russian/U.S. Cold War. And I think we’re seeing a lot more kind of frog in the boiling water scenarios where there’s a lot of incrementalism being done to the U.S. by the other side, which goes unnoticed.
Chris Power:
Yes. I certainly believe that if you ask me to flip a coin, like, are we in some kind of conflict or not? I think the answer is yes. It’s just a different kind of conflict.
Lucas Bagno:
Right. And in the context of that conflict, and this is a bit more of a technical question, but given your background in manufacturing supply chain, I’m very curious to hear what you have to say. How careful do we have to be about the supply chain and the disruptions that are going to happen there, especially given the amount of supply that China has on manufacturing materials, like lithium, cobalt, nickel and all these others that are vital to produce a lot of the products that we use today?
Chris Power:
Yeah. Incredibly important. And I would say both on manufacturing capacity itself and skills, if we had all the inputs, can we actually build stuff? Secondly, the process to know how to do that. And then thirdly, yeah, the inputs themselves.
Chris Power:
So, whether it’s like EV battery packs or it’s actual raw material like aluminum, yeah. I think we, if anyone bothered to look up a bill of materials for a certain consumer good that they really relied on, or TVs, or laptops, or, office computers, everything up to CNC machines, to how does a car run because of chips and stuff like that. I think it’s critically important. And in general, we’ve done a pretty poor job of securing supply across the world where we have allies that are producing those raw materials for us.
Chris Power:
I think there’s a lot of people in the U.S. that understand this and it’s starting to change, but certainly, it’s ultra critical to secure supply of that globally. And, unfortunately, in territories like China and Russia, they do have a lot of the mineral deposits of some of those core input materials, but also we do. Also, in South America there’s a ton, in Africa there’s a ton, Australia there’s certainly a ton.
Chris Power:
And yeah, I think in general, is the government responding well enough to this? Probably not. Is awareness starting to creep in that we do need to go secure supply of all this stuff? I think, yes.
Chris Power:
I think the real problem is the consumer. Right? The beautiful thing about America is if the average consumer starts screaming about something, the government gets their shit together and we’ve generally been pretty good about that. So, I think when you can’t buy an iPhone for less than $4,000, because Shenzhen’s been shut down, then I think we’ll see a pretty strong American line response pretty quickly. But at the moment, are we moving fast enough? No.
Ian Cinnamon:
So, on that note, let’s say you were in, let’s call it the position of ultimate power. We could argue whether that’s the President of the United States or some other position. Would there be one or two things that you would do to try to get us on the right track, change our mentality? What would those be?
Chris Power:
So, there’s a couple of key moves that I would make, but you have to do it very carefully to avoid being just like a colonial power all over again. Right? Like we don’t actually want to, like the African nations, we don’t want to go take control of them. We want to build them up as self-sustaining countries and they can have whatever political system that they want.
Chris Power:
But I would definitely go out and broker financial deals where we’re giving African nations cheap infrastructure debt, American construction know how, but do it in a way where we’re lifting up the population instead of the way China’s doing it, where it’s aggressive debt structures, which means they can take the ports or the infrastructure if they default. And a lot of the work is actually being done by Chinese workers that are getting imported into Africa.
Chris Power:
Versus, what should be happening is, hey, let’s send, you know, several thousand Americans who are really good at construction into these nations. Teach people how to build their own shit and actually, you know, build them up as true partners.
Chris Power:
And as part of that, there is a resource deal that we need for some of those core input materials. But there’s a way to do it where America comes off as not a colonial aggressor, that we come off as like a true partner that’s building up nations. And I think that forms a long term partnership that buys a lot of loyalty over time. Right? So, definitely stable, like helping build up African nations with both debt knowhow and training in order to have long term deals for core input materials is really key. Same thing with India. Same thing with South America.
Chris Power:
The second thing, and most of the core input materials like your cobalt, or your lithium, or whatever can be found on the African nation. You know, that’s your EVs, that’s your mic, you know, blah, blah, blah, blah.
Chris Power:
Second thing I would do is massively invest in the Indian healthcare and pharma industries. So, basically there’s kind of, this is way, way, way too broad. And anyone in healthcare is going to cringe at me saying this. But, effectively, there’s like in pharma manufacturing, you’ve got like two bits.
Chris Power:
There’s basically like generate the input materials, which is a lot of really complicated chemistry. And then there’s the second bit, which is like put the pills together and you know, do some mixing and have this massive production arm that’s throwing out a bunch of antibiotics. Right?
Chris Power:
So America outsourced both of those. What people don’t realize, though, is that China actually controls a lot of the manufacturing of the input materials. But countries like India actually have incredibly good bulk manufacturing of generics. Right?
Chris Power:
So, what I would do for the healthcare and pharma side is actually spin up a research agency in the U.S. that was rediscovering how to make all these inputs for antibiotics, for example. But then do exclusive licenses with countries like India that they can be the manufacturing partner.
Chris Power:
But the same pattern again. We reclaim the tech and the know how. We license it for free to a country like India to be that manufacturing power. But again, we do it in a way that’s enabling them to build out their own industries versus it being kind of like this colonial power thing. But that also allows us to secure supply of antibiotics. Right?
Chris Power:
And then the third thing that I would do is actually cybersecurity. So, what people don’t realize about manufacturing is now that all the files are digital. Right? Whether it’s a rocket engine design or a semiconductor chip design, or, you know, whatever it happens to be. Like espionage is a real thing, but also hacking and general like ransomware.
Chris Power:
So, if you look past the news, the amount of logistics companies or small manufacturers that have gone down for 14 to 21 days with like ransomware attacks in the last three months has gone through the roof. Because it’s a signal that, hey, you know, cyber forces that are against us are watching and they’re starting to go after our manufacturing businesses. Right?
Chris Power:
But your average logistics company that’s running on SAP, or, whatever manufacturing company does not have the cybersecurity to go up against the nation state. Frankly, 90% of the hacks that happen aren’t hacks. It’s a phishing email with a ransomware thing. And someone logs into like, you know, hot girl added me on LinkedIn, or like, the CEO sends them an email and then they respond with their phone number and they get a link to click. And then all of a sudden they’ve got access to the entire systems.
Chris Power:
But I think it’s actually, it would be very simple for the government to put together a paid for program where any small business in the critical manufacturing supply chain just got a grant and a SWAT team to just go in and fix the problem. And, you know, if someone really wants to penetrate you, like they’re going to with enough time. But getting everybody to a 90% security level where the cost of penetrating is much, much, much higher at a very scalable ways, is not that hard.
Chris Power:
So, those are the kind of the three big moves that I would make for securing supply of like long term, like critical manufacturing processes.
Lucas Bagno:
I love how tactical those are. I’m curious, Chris, from a cultural perspective, are there changes that you think we should be making, as well? And if so, what are those? I know a couple weeks ago we chatted messages about all the advocacy for environmental movements in Germany that we realized only now that was actually being funded by Putin. Right?
Lucas Bagno:
And we know of a lot of these movements that could potentially be also be used as a way to push people to do the interest of the other side. How do you think that those interact on this topic?
Chris Power:
Look, I think culturally, everything is downstream of culture. And what we have in America is because we’ve been so successful. The current demographics are a group of broadly, and I’m using broad statements here, is unserious people who’ve, are too far abstracted away from the problem of, hey, you know, at some point 200 years ago, we were still tribal and might kill each other over a loaf of bread.
Chris Power:
So, what you have is a bunch of people making these strategic decisions that grew up in such a peaceful and successful time that their patent recognition is basically based on that dynamic, not on a kind of scarcity dynamic, which is where you get these decisions being made of what I would call unserious decisions. Right?
Chris Power:
Like a serious decision for climate change is, hey, American populace, you’re intelligent. Nuclear is pretty rational. Yes, there are some risks here and here’s how we’re mitigating them with technology. And by the way, we’re putting a nuclear plants in the middle of the desert.
Chris Power:
It’s not everyone’s favorite thing, but you can either do that. Or you can do this, some green energy strategies, which are so fragile that if we were getting into a conflict scenario, we’re basically giving the leash to Russia or Saudi Arabia, because now they have oil dominance over us. Right?
Chris Power:
But the way I would describe it culturally is like, are we serious? Or are we unserious? Are you serious about building the country for the next several hundred years and having rational, adult conversations about all those trade offs? Or are you going to have a, two militant parts of the population, one saying ESG good, and one saying ESG bad, and both of them are wrong?
Chris Power:
So I think culturally, what we need to see very quickly is not a tribalism thing. It’s just everyone coming around the table under this concept of like, are we serious about building the country and all these dynamics and making some hard nuance trade offs? Or are we going to be un-seriousness and revert to like, one side or the other without all this nuance. Right?
Chris Power:
And I think culturally, that’s what we need to see is that seriousness, not anything more or less discrete from that, if that makes sense.
Lucas Bagno:
No, it does. And I’m curious, is part of that answer, somehow, the sort of like American patriotism, American greatness that we saw maybe the good version of it back in the seventies, the eighties, and now maybe a weirder version of it coming out in the last five to 10 years? Or do we need something new? How do you think about that?
Chris Power:
So, I don’t think, I think patriotism is too wrapped up in nationalism and yet it’s co-opted by both sides as either good or bad. But I think the original version of America was a bunch of serious people wanting to start something new and argue over everything until it was right, or they agreed to it. Right? That was the ultimate core of the country in the first place. You know?
Chris Power:
And then you have patriotism and nationalism of celebrating that and then it gets twisted over the years. And there’s become a form of like maybe some types of patriotism or nationalism actually are less helpful than they are helpful. But coming back to the core of the founding story of America, which was, obviously, full of problems with things like slavery, but ultimately, from a like source of geopolitics and culture, it was, hey, we’ve got all these problems in the British empire, the French empire where we all came from, let’s create something new and take that process of creating something new seriously.
Chris Power:
It wasn’t just that we ended up with the Constitution or whatever. It was, let’s think all these dynamics of how to build a culture and a process structure that this thing survives. Right?
Chris Power:
But now you have hundreds of years of that being successful and people resting on their laurels. And what we’ve forgotten is that the culture that, basically, we’ve lost the culture that produces success in the first place and rediscovering that art of, hey, we’re all building this thing together. Like this thing isn’t working, but it’s cool.
Chris Power:
Don’t get attached to it. Let’s just edit it and move on and try and do that. Now that’s like a big ask. That’s what America means to me is the seriousness of building a country, which gives us all the ability to spend our time on podcasts and stuff, not fighting each other over food or fighting the British. Right?
Chris Power:
But in American culture, what we lost was the maintenance of that. And by maintenance, I mean, if you look at the Roman empire as an example, if you think about, hey, we’re so successful over a thousand year period, what are we going to do with all the senators in 500 years time that they’re 60, but they’ve never fought the Barbarians? So, how are they going to take the process of governing the empire seriously?
Chris Power:
The answer is they’re not, unless you enforce a cultural thing where when you’re young, you get reminded of what, how important it is in a very visceral way. And one answer to that is things like the draft, because if you send someone, you know, a young Centurion to fight the Barbarians and then he or she is a Senator at 50 years old or whatever, you can be damn sure that they’ve got enough patent recognition to make incredibly good decisions. Right?
Chris Power:
Because they’ve seen that abstraction layer. We’re not so far away from being on the street, fighting each other. Right? And one thing, this is also something that Jewish people do incredibly well with the rituals of maintaining that culture that made them successful in the first place.
Chris Power:
America does not have that. We do not have the shared winter solstice ritual, or the draft, or that thing that maintains the generational discipline over time so that the culture continually produces serious people that govern the country well, and are willing to make hard decisions that are based in reality.
Chris Power:
Whereas, at the moment through, honestly, through no people’s fault, it’s just a mixture of bad rituals, bad culture, and like, we had so much success that if you grew up thinking that your hardest problem was arguing over of the color of someone’s hair, you’re not going to make good decisions because you’ve forgotten that, actually, we used to, not so long ago, 50 years ago, like no one could eat, no one could drink water at the same table. We’re still segregating black and white people. We’re still at war. We were sending our 17 year olds to die.
Chris Power:
Like it’s that sort of cultural ritual and reminder that we’ve lost that has produced this many un-serious people that are making decisions that they genuinely, this is the scary thing, decisions that they genuinely think are good because their patent recognition is so far abstracted across the reality of how the world really works. That’s the really dangerous situation. And that’s what we need to correct on a cultural level, is that mechanism or ritual of reminding people where we got from in the first place. Right?
Lucas Bagno:
I love that. It reminds me, I think we’ve brought this up on the show before, but there’s this quote by Margaret Thatcher, which is, “Europe was created by history. And America was created by philosophy.” Right? And that’s something really unique and powerful about this country.
Chris Power:
I think you’re completely right. And that has to have a very integrated view of, the dream of America is true for some people, it is not true for everybody. There are still vast waves of the population where the system is genuinely bent against them. Right?
Chris Power:
But the original thing of America was let’s build a system and let’s edit it together when we see that it’s not working. What we’ve lost is kind of the detachment of the population from the system that is governing us. Like, people forget that the reason why there’s a red traffic light is because some guy crashed a car when it wasn’t a horse anymore. And someone was like, we should probably make this a thing so that no one crashes cars into each other. Right? But none of it is real. It’s all an abstraction over a process and things that we’ve invented.
Chris Power:
But what we’ve lost is the cultural seriousness of looking at as a fun problem to solve versus, oh, the system is against me. Or, it’s not editable. Or, the system’s not important in the first place because look, everything functions.
Chris Power:
I’ll give you a really practical example. This is going to sound stupid. Outside the factory we’ve got a fire hydrant. A couple of months ago, some guy ran his car into it. Not a huge deal, a little bit of water in the street.
Chris Power:
The Head of Operations calls the Fire Department and they say, no, it’s the water company’s problem. Call the water company. They say, no, it’s the fire company’s problem. So, now there’s a fire hydrant leaking on the street. Right? So we just fix the problem because we’ve got a bunch of capable people who know how to use a wrench. Right? Okay. Problem solved.
Chris Power:
But what that says to me is that those people on the other end of the line are un-serious. They’re not serious about what they’re doing. And it doesn’t matter what you’re doing. You can be a bartender, you can be a driver, you can be a manufacturer. You can be a venture capitalist. You can be a waiter, or you can be a finance person,
Chris Power:
But all of this society that we’ve built of these different roles that we play to support each other is what got us from, hey, everyone’s fighting over food, to no; Ian is the town security guard. Lucas is the mayor. And Chris is the court jester. And we play all those roles because that creates the meta structure that allows us to do fun shit and build society instead of having to regress back to this point of fighting over food or whatever.
Chris Power:
And when you see people like the water company or the fire company, taking their roles in society un- seriously, then you know that that’s a signal that everyone is too comfortable with how stable everything is and has forgotten that we’re for…
Chris Power:
The water company says it’s not my responsibility. The fire company says it’s not my responsibility. You’ve got 10 more rungs at the abstraction layer of society that say not my responsibility and they’re un-serious about it? Very quickly you get down to people are clouding industry. Right? That’s the problem.
Ian Cinnamon:
What’s your overall take, bullish or bearish on the future of the U.S.?
Chris Power:
I’ll tell you that like the rational economic decision that one might make is to start learning Mandarin as fast as possible. But, I’m bullish because humans have a great ability to rise to a great challenge when it really matters. And this is one of those challenges where, like the end game is effectively, this is how I think about it, is this is the 10 to 20 year period where humanity will settle the moon as the first island in settling the solar system. Right?
Chris Power:
So, we think a million years in the future, like this is the 10 to 20 year period where humanity goes through that level 1, 2, 3 civilization stack. We’re about to hit the first wrung on the cosmic lab. And if you care at all about history and maybe you don’t, fuck the U.S. versus CCP thing. Who cares about it?
Chris Power:
Do you want people in a million year’s time to look back and go, wow. Like the people leading this push were totalitarians that chemically castrate millions of women and have like huge amounts of slavery, like making iPhones for people? No, that’s just simply how, that is not how I want humanity to be remembered. That’s not how anybody who wants humanity to be remembered.
Chris Power:
So, regardless of all the politics that cannot be our foot on the cosmic ladder. That’s just not how this is going to play out. And I think when people start realizing that that’s what’s going on and that’s what’s really at stake, it’s monumental.
Chris Power:
This isn’t like a turf war over Cuba. You know? This isn’t like, hey, we’ll touch off on the moon and we’ll come back. This is like really serious. And how we play out the next 20 years really affects the next thousand, because space is the ultimate high ground. And you have all these knock on effects and like, yada, yada.
Chris Power:
So, I wouldn’t say I’m necessarily bullish on the U.S. I would say I’m bullish on the U.S. population as a, the best descriptor we’ve got of the best humanity has to offer. Because I think it’ll be a combination of a U.S.-led charge, but like many other people getting involved.
Chris Power:
But I’m ultimately bullish in our ability to recognize what’s at stake. Rise to the challenge and ensure that the next hundred years are governed by a largely rational, largely free, roughly democratic, roughly fair society, the best we can possibly construct versus a totalitarian state that’s doing all sorts of bad stuff that’s simply no one wants to be under the yoke of.
Chris Power:
And I think historically when humans of any race, religion, or creator being faced with something as substantial as that, we’ve risen to the challenge and we’ve always defeated it. Otherwise, we wouldn’t be here.
Chris Power:
So, that’s why I’m ultimately bullish. But I think it’s going to come from a place of humans save the world. Not anything like rational, you can put on a spreadsheet. You know what I mean?
Ian Cinnamon:
One thing that I’d be very curious to get your take on, is as we look at the world in Silicon Valley and we’ll use Silicon Valley not as the physical location, but the idea of people raising money and going and building these kind of ventures. It started out building silicon chips, right? Very hardware, very, you know, manufacturing oriented. That’s the original.
Ian Cinnamon:
Then in the last 20 years, it’s really shifted towards software. And we see a lot of people, nothing wrong with building a great SaaS company. We’ve backed a lot of great SaaS companies. But there’s this big trend towards, okay, what can we do at the lowest cost to get started? And it makes sense whether there’s a lot of shifting towards there.
Ian Cinnamon:
In the last several years, we’ve all, I think, noticed this new trend of backing these actual deep tech hardware, frontier tech companies. And I think that trend is amazing because it’s what society, the Western world, the entire planet, needs. I’d be curious to get your take on how you think that trajectory is going to continue.
Ian Cinnamon:
Do you think there’ll be more and more funding for deep tech ideas? Obviously, there’s still a high bar to get anything funded. But how do you think that market will continue to evolve? And how do we foster getting more entrepreneurs interested in hard tech, deep tech, building real physical things, not just software? And again, we love software, but how do we go beyond that to some degree?
Chris Power:
Yeah. So, I think, actually, our mutual friend, Delian caught onto this a couple of years ago, and you can hear him in a previous couple of podcasts. And he throws out this one liner, which I think is more prescient than people give him credit for. And it’s that over the next cycle, all the returns will be in atoms not bits, but it’s returns.
Chris Power:
And basically, because the arbitrage of SaaS pricing has been ironed out. That everyone’s got a discounted IRR model that links customer growth rate to net dollar revenue retention, you know, blah, blah, blah, blah, blah, such that basically the returns are ironed out because everyone’s using the same spreadsheet. Right?
Chris Power:
So, I think because everyone knows how to invest in SaaS companies at a capital markets level, people then seek risk. Right? And then through the risk seeking for higher IRR or differentiated returns, you have to go into deep tech companies. Right? That’s just how it goes.
Chris Power:
So, I think the conflation of that dynamic plus people… There’s been several successes like SpaceX, like Anduril, where LPs at Yale or whatever, have realized that the VCs aren’t that crazy. Lux had a big bunch of public SPAC wins, which aren’t fake companies. They’re real companies, you know, like they’re delivering real cash flows, yada, yada, yada.
Chris Power:
That I think those two dynamics are going to drive a lot of investment. And also I think there are very few founders that can actually pull it off. Because, you know, the reason why we have many good aerospace companies is because Elon produced many good 30 year olds that did put their twenties in SpaceX. And now there’s a ton of great aerospace engineers. Right?
Chris Power:
There is not a ton of good deep tech founders because we haven’t gone through the PayPal mafia wave of having these people learn the hard lessons and then spin out and do other things. Which, by the way, then creates a situation where it’s actually K shaped, because you have very few founders, lots of capital, very few opportunities where those two things intersect. Right?
Chris Power:
But then, the capital attracts a founder from Stripe. You know, they want to go into deep tech because they see all the money flooding in and the market will correct itself. Right? But you’re going to need a couple of SpaceX or PayPal mafias to spin out, to have that kind of throughput and like learn the hard lessons of how to build stuff.
Chris Power:
And I do think that is one of the things that we will produce at Hadrian is a number of people from regular software companies, or not from startups, who will learn how to do the thing and then hopefully, you know, go off and found their own things. Because that’s kind of how I see it playing out in the next couple years.
Ian Cinnamon:
I think that makes a lot of sense. It’s the thing I was thinking about is you look at most software SaaS companies and there’s at least two or three people trying very similar things with different tactics and one may win. It feels like in deep tech or at least in the case at Hadrian. Right? It’s really just Hadrian. And I think a lot of that goes back to the point around what’s the Venn diagram of the funding and the founder who actually understands the space and the market, and all of that really coming together.
Lucas Bagno:
On that topic, Chris, like what are the biggest bottlenecks preventing us from creating more companies like Hadrian, more companies like Anduril, et cetera? Is it the lack of capital? Is it the lack of founders that have that sort of prior experience, as you’re saying? Lack of demand from government or other players in the ecosystem? How do you look at it?
Chris Power:
Basically, I think you can’t do the lean startup in deep tech. So, let me wind back a step. If you take a company like Segment. Right? Who, as I remember started off as a, like, it was like a university coaching thing to upload your notes, or like something.
Chris Power:
It was a great idea. But within the first three months they worked, it didn’t work. Right? And they went through like 11 ideas and then finally one of their plugins that was on GitHub would course market it and then suddenly it took off, and now it’s Segment. Right? Amazing.
Chris Power:
But the cost of them to pivot, say, 10 software engineers on a dime to a new path is actually pretty cheap. So, you get to snake through reality and find what works. With deep tech like Hadrian or Varda, or anything else. We’re making $10 million worth of capital bets, and trajectory with a very specific set of skills.
Chris Power:
And if I’ve misaligned that by more than, say, 20 degrees from the arc, you can’t pivot the thing. The machines aren’t compatible. The wrong people got hired, blah, blah, blah, blah, blah. So, and many, many, many entrepreneurs have been taught like “lean startup method” or whatever that really means, don’t think from first principles, just iterate yourself through the market to a solution. Right? Which makes sense.
Chris Power:
But in deep tech you have to think through first principles because of this capital bet kind of scenario, which requires someone who knows finance, debt, manufacturing, like you have to have a decision maker that’s up and down the stack and is thinking first principles about it.
Chris Power:
Otherwise, you fail because you’re basically making a two year bet and you better be damn sure you’re right because you don’t get a second shot on iteration. But we’ve trained a bunch of founders to think in iterations, not in first principles. And that’s what’s really hard that I see people starting deep tech companies.
Chris Power:
It’s like, no, like, man. Like if you’re wrong about this one assumption that this customer base is not going to adopt your thing, you’re going to be 18 months deep into your roadmap. You spent $15 million, you’ve built this thing. Customers don’t want it.
Chris Power:
You’ve got six months worth of cash left and you’ve got no room to pivot. But that’s not from a lack of room to pivot. It’s just, that’s how deep tech works. You just have to be really sure the thing happens. And we, not a lot of founders actually genuinely can think through first principles up and down and abstraction layer to make that right bet.
Lucas Bagno:
And, Chris, I have to ask, related to the conversation that we’re having about aspiration and about the challenges that we’re facing, do you think that those two topics interact at all? Is this sort of marginal thinking that you were describing, in some ways related to the lack of a mission, that we’re talking about a few minutes ago?
Chris Power:
I do because it’s the difference between what are the fundamental drivers of how the real world works? You know, like, is there objective reality or is there not? And yes, I think there is a fundamental cultural driver of people who are successful at manufacturing because they understand there’s objective reality. Like you either made the part or you didn’t. The rocket flies or it doesn’t. Right? That drives a real cultural impact. Right?
Chris Power:
Whereas, if you’re iterating towards a solution, like you can dodge that reality for a long, long, long, long, long, long time. Yes. And I do think deep tech founders who are successful, even in biotech, it’s the same thing. Like you’re making a three year $25 million bet that your thesis is right.
Chris Power:
You have to have thought through all the strategies in and out of that, whether it’s technology or science, or whatever. And yeah, it takes a certain type of cultural brain that produces people who can make those hard decisions.
Ian Cinnamon:
So, Chris, if you’re one of our listeners and this is resonating with you, and you’re excited about this, what is one piece of advice that you would give for someone who really cares about the future of America, western values, et cetera? What should they be doing right now?
Chris Power:
I would say like, so, you know, you’re a software engineer working at Google or a startup or something like that. Or, you’re an analyst at McKinsey, whatever. You’re incredibly successful.
Chris Power:
Is what you’re doing, hurting what we’re trying to achieve or helping it? And what can you do to help? And the barrier to help is actually like pretty small. People think deep tech is this realm of the universe that’s like super complicated, and it is. But like, man, if you’re like an SRE at Google, that’s keeping a thousand hits of day on Google Maps from dying? You know, making one machine talk to another is like not, it’s just not that hard as far as things go.
Chris Power:
So, I would just say think through first principles about what you’re doing and how it affects your life, and the culture. And like go join a company or an organization that’s more mission aligned to fix it. And that’s it.
Chris Power:
And the reality is you just have to start doing it. You know, there’s no one clean answer. You just have to start moving in the right direction and figure it out along the way. But be really willing to rip up your priors and start again.
Chris Power:
Are the assumptions that you made to get as successful as where you are, are they baked in reality, or have you just climbed an abstraction ladder of a dominance hierarchy that’s based around politics versus having contact with reality because you’ve been so successful and start questioning those, and then start doing something about it?
Lucas Bagno:
Maybe to wrap us up, I think Ian and I never really intended to have a closing question that we always ask people. But, we end up talking about these challenges and this potential grim future that you mentioned. In the face of all of this, what keeps you optimistic?
Chris Power:
That’s an excellent question. You know what, it’s a combination of things are getting better in some demands incredibly rapidly, and also fixing the things that broken aren’t that hard. Honestly, like Hadrian is a hard business to run, but it’s not that hard. You know?
Chris Power:
Like, we used to build… What keeps me optimistic is there were people 40 years ago that built stealth fighter jets in 90 days when given the challenge. Like that is far more complicated than kicking out the DA of San Francisco. Or, like winning an extra thousand votes in the administration. Or, like voting the right way to tell the government they’re doing the wrong things.
Chris Power:
Or, like stepping up to work kind of global bully or whatever. And things might seem like they’re falling apart on a daily or weekly level. But the arc of history is long and the direction of progress is optimistic.
Chris Power:
So, I kind of like to say to the guys, it’s like, the days are hard, but the years, you know, the meta. The type II is like highly, highly positive and like highly optimistic. And that’s the way you have to be to achieve big things.
Chris Power:
You have to be like willing to bear short term pain and be annoyed by it. But, at the end of the day, as you’re going into sleep, being like, no. The arrow of progress is going in the right direction and we’re going to make it. And that’s how big things get done. You know?
Chris Power:
You got a fundamental philosophical choice. You can wake up and be an optimist, a rational optimist, not delusional. You got to be a rational optimist. Or, you could be a pessimist that thinks this, like the world’s falling down. There’s no hope. So, is a fundamental choice.
Chris Power:
Just like, do you believe that the Jetson’s future is possible? Or are you resigned to the fate of history? Do you believe that all of this is big systems that are just whip soaring around individuals and you’ve got no free action? You’ve got, no, you can’t move the needle at all?
Chris Power:
Or are you one of those people that if you just kind of put the right energy out of the universe, you can make a dent and if enough people start moving in the right direction, you can make a really big dent? And at the end of the day, that is the choice that all of us make when we wake up every morning.
Chris Power:
And even if shit is hitting the fan, even if we end up picking up arms and defending the country, I’ll still be an optimist. Because do you really want to live as like a pessimist who believes that we’re all fucked and humans are bad and blah, blah, blah, blah, blah?
Chris Power:
No, that’s like no way to live. That’s no way to live. That’s no way to build. That’s no way to be. So a deeper philosophical level, why would you not be an optimist, at least a rational one, given how far we’ve come over the last 20, 50, 100 years?
Lucas Bagno:
Yeah. I love how you’re describing this. And it sort of reminds me of a little bit of nuance to what you’re saying. It’s something that I think Peter Thiel defined as sort of like the difference between a definite optimist and an indefinite optimist?
Lucas Bagno:
In some ways I feel like we’ve been having too much of this sort of indefinite optimism over the last few decades. And that relates to a lot of the challenges, of a lot of un-serious people that you were talking about that, you know, the future is just going to get better. You can just sit back and enjoy and have an easy life.
Lucas Bagno:
And, you know, what you’re describing is a very definite optimist future that we can actually go and build those hard things. And they’re going to be hard, but they’re going to be worth it.
Chris Power:
Yeah. And I think the way I would frame it is when you’re writing a song or a poem, or inspiring people, or thinking about what your next 10 years of your life want to be like, you should be a rational, indefinite optimist, because humans are going to win. Right?
Chris Power:
When you’re making a decision about, hey, I’m building this company and then we’re going to run out of cash in three months or not. You should be a definite optimist in that it is possible, but you have to really make close contact with the reality. And that, I think, is the thing that people need to get used to is by being realistic about the challenges that are in front of you for the next day, week or month, you can behave that way rationally and be a definite optimist. But be prepared to make contact with reality and do the hard things that are necessary to win.
Chris Power:
But, when you’re having a beer with a friend and talking about how your business is going, or talking about how the country is going, you are absolutely, you have to be an indefinite optimist. Like we are, we are winning, we you’re on the path, but you have to have both.
Chris Power:
Otherwise, you get depressed people who are only worried about what the next day looks like, and things of that, and it’s all going to fall down. Or you get a bunch of irrational un-serious people being like, eh, things are fine, we’ll sort it out, with no connection to the actions that get you there. And the only way to do it is you do both.
Ian Cinnamon:
I love that. I feel like it’s so true. Whether you’re an entrepreneur, you’re working in some job, or just in life to have that kind of dual mentality. You could be a therapist, Chris. It’s great. That’s super helpful.
Chris Power:
This is what you see this in like people who grew up super poor and now they’re successful. It’s like, yeah, I was in a shitty apartment in New York, barely able to live. And every day was painfully hard. But I knew I was going to make it. Four years later they make it, they have some job opportunity. They become an actor or whatever the fuck.
Chris Power:
And always, they were an indefinite optimist, but they were a definite optimist when it came to like, can I put food on the table the next day?
Ian Cinnamon:
Wonderful. Chris, this was so great. Thank you so much. This was incredible.
Chris Power:
No, thanks for having me, guys. I really appreciate it.
