Chris Power, founder and CEO of Hadrian, Katherine Boyle, partner at a16z, and Josh Wolfe, co-founder and managing partner at Lux Capital, join Anne Dwane and Erik Torenberg on this episode to discuss:
– How Hadrian is abstracting the supply chain for space, aerospace, and defense manufacturing, and how it is analogous to AWS and Twilio in the software world.
– Why Chris is the right person to tackle this problem. He wants to do this for geopolitical and moral reasons and also has the ability to get into the weeds on a micro level.
– How tech can help people move into higher-skill jobs and how it can increase the total number of jobs in a given field.
– How COVID has made people realize that the world is no longer post-nation state nor post-borders.
– Which policy changes the US government can make to advance its position in the world, technologically and otherwise.
Transcript
Anne Dwane:
Hello & welcome from Erik Torenberg & me, Anne Dwane, co-founders here at Village Global. Today, we’ll talk about reinventing manufacturing, reinvigorating American competitiveness, upskilling workers, protecting national security, and winning the space race so freedom rings throughout the solar system. This isn’t a theoretical discussion..It’s a chat with an audacious founder backed by Village, executing on this bold agenda, in conversation with two visionary VCs from Andreessen Horowitz & Lux Capital…who backed the company to the tune of 90 million dollars in the Series A.
Anne Dwane:
Joining from Andreessen Horowitz is general partner Katherine Boyle, who invests in American Dynamism. Joining from Lux Capital is co-founder and managing partner Josh Wolfe, who invests to make science fiction into science fact. The founder in our midst today is Chris Power at Hadrian, transforming the US industrial base by supplying components 10x faster and 2x cheaper, first to the space industry, and then to the defense sector, semiconductors, energy, medical devices and more.
With that as backdrop, Chris, we’d love to hear you describe Hadrian.
Chris Power:
Thanks for the warm welcome, Anne. Yeah, so we’re Hadrian, we view as the base level infrastructure primitive for all of advanced manufacturing. So as AWS, Stripe, Twilio, and all these infrastructure platforms really unlocked a lot of velocity in softwareland, we’re building out Hadrian to abstract all the supply chain problems so that anyone in advanced manufacturing can focus on doing what they do best, building amazing products, shipping, engineering, innovation, really, really quickly without getting slowed down or bogged down by the supply chain.
Chris Power:
We’re starting by building mostly automated, highly-efficient factories for high-precision space components and using that as a jumping-off point to solve a very similar problem for all advanced manufacturing in the country, whether that’s, as you said, defense, semiconductor, energy, and all those other various industries that need the same innovation in the high-precision supply chain to let them move a lot faster with their side of the equation in terms of innovating really quickly.
Anne Dwane:
Great. And what’s been the response to you announcing your latest momentum and your round?
Chris Power:
Yeah. So the response has been incredible, both from customers from all of these key industries reaching out, the ones that we hadn’t or been engaging, everyone from buyers in programs, individually, to senior VPs directing the entire supply chain who know that they need to transform their industry and want a strong partner to do that. So the response from the customer side has been incredible.
Chris Power:
The response from people working in Web 3.0 or regular SaaS companies, or in FinTech, where maybe some of those companies aren’t as real as we thought they once were, reaching out asking, “Hey, I’m a frontend or backend software engineer, how can I get involved in deep tech with companies, like Hadrian or Anduril, and Varda?” And really looking to jump ship to a really important industrial side of the equation, and what do they want to spend the next couple of years working on? Optimizing ad clicks or building something in the real world? So that’s been incredible.
Chris Power:
And then, yeah, just the general support of the community at large, rallying around the mission has been really incredible. And I think that’s a real sea change, especially for our industry and technology, where a couple of years ago, saying the word defense at a San Francisco house party would probably get you kicked out, and now, it’s top of mind for everyone. And I’m seeing more and more people realize that the peace through strength strategy is the real way to preserve peace. And it’s not this aggressive thing. So, yeah, all three funds, customers, talent and then, yeah, the general community rallying around the mission and the vision has been really incredible to see.
Erik Torenberg:
Optimizing ad clicks is your version of, “Do you want to sell sugar water or do you want to change the world?”
Chris Power:
Yeah. So one of my personal values is no dog-walking apps. I truly believe that you could probably delete 90% of the VC-funded, random SaaS companies. And outside the employee and investor community surrounding that company, the world really wouldn’t blink or even notice that the company was gone. So, yeah, I totally agree.
Erik Torenberg:
With that, let’s hear from the VCs in the room. And Josh, you wrote a blog post saying, “We’re no longer tolerating the decline of American industry.” Talk about the Lux investment thesis for Hadrian.
Josh Wolfe:
Part of it was like network, like we’re mad as hell, we’re not going to take it anymore. And Chris is amazing. Chris is amazing for a few reasons. First of all, he fakes the best Australian accent I’ve ever heard. I’ve never heard anybody do a better Australian accent. Second, I mean, look at this, you have somebody that’s championing the rise of American industry, right? The thwarting its decline, who comes from Australia, which I just think is a beautiful thing.
Josh Wolfe:
You look around and you see many of the things that Chris was just talking about. And if you, forget about the house party in San Francisco, but if you would’ve just talked about precision machining parts for space 10 years ago, people would’ve been like, “Yeah, sure. I don’t know. Sounds like science fiction, right?” I mean, other than SpaceX, you just had this very weak ecosystem of people that were either interested in doing this or that thought that there was in any demand. And then, once you had this economic flip change where the cost per kilogram to launch stuff up into space got so cheap, it suddenly opened and let a million flowers bloom.
Josh Wolfe:
And now you have lots of startups, whether they’re manufacturing small spacecraft, they’re developing propulsion systems, they’re making satellites, they’re developing buses to be able to manufacture things in lower earth orbit and bring them back down in inversion capsules, none of that, none of those companies existed, in part, because the infrastructure didn’t exist. And then, Chris looked and said, “My gosh, you’ve got, basically, an industrial base of 3,000 mom and pop shops.
Josh Wolfe:
You meet some of these shops and it’s like a family that’s been in this business for 50 or 60 years, still working on products that were being made 50 or 60 years ago. And it just, the gap between the capacity that exists in the industry and the growing demand, fomented by people like us at Lux and people like Katherine at Andreessen, who are now pouring capital into the space and finding and funding the talent, it’s just, there’s an ever clear present need.
Josh Wolfe:
And Chris is just super credible. He looked at this, not only as this macro visionary of, “I want to create this capability and I want to do it for geopolitical and moral and value-driven reasons,” but he could go all the way down into the microeconomics of the margins and the capacity utilization, and having invested in this space before and us having failed, we were like, “This guy’s got it right,” and we were just super excited to back him.
Josh Wolfe:
One other thing I’d say is, on the no dog-walking apps or as we call it, matter that matters, a lot of things that are being funded, and always will be funded, have been funded, depend upon belief, depends upon other people believing that other people believe, ad infinitum. It’s certainly true in elements of crypto and in brands and things like that. But whether or not people believe in a precision-manufactured component, it doesn’t matter. It exists or it doesn’t, there’s no fooling mother nature. And so, there’s something that’s truly hard tech, true-science real about what Chris is pioneering.
Erik Torenberg:
It’s the touch grasp, VC investment thesis. Reality base makes a lot of sense. Katherine, I want to pass it over to you. This is the first official deal I believe you’ve done in the American Dynamism thesis. Why don’t you unpack that investment thesis and how Hadrian fits in and explains it?
Katherine B.:
Sure. Yeah, yeah. No, it’s always convenient when a company satisfies multiple aspects of the mission, and certainly Hadrian is that. The way we’re describing it is, it’s companies that support the national interest, and it’s everything from aerospace, defense, to national security, to public safety, to upskilling the American workforce, to logistics, supply chain. And all of those words tie into what Hadrian is doing. So the literal definition of what Hadrian is doing is, of course, shoring up the supply chain for aerospace and defense.
Katherine B.:
And so, in that way, it satisfies the biggest bottleneck, as Josh just said, to what’s happening in the aerospace and defense sectors, where when you talk to companies about what is deterring their launches, what’s making lag times grow, it is this 3,000 mom-and-pop shop issue where parts are just not being delivered on time, where there’s no visibility into the supply chain, and this problem’s getting worse and worse. There’s a lot of reasons for why it’s getting worse and we can go into that later, but this is a solution that solves that very literal problem.
Katherine B.:
I’d say the second thing that I think is, in some ways, even more impactful is this question of upskilling the American workforce. That is a problem across all sectors. It’s a problem that politicians in Washington have been talking about for quite some time. And I think the issue is there is not enough meaningful work in this country, and there is not enough places where you can go to actually see tangible results of working towards a broader mission. Something that Chris and I have talked a lot about.
Katherine B.:
And when you think about what Hadrian is actually doing, it’s adding automation so that there can be more jobs, so that people can learn a trade that is a very high-skilled trade, that’s hard, it’s both art and science, but when talking to a lot of the people who joined Hadrian in recent months, this is the part of the mission that most resonates, it’s that you are bringing on a different type of worker to work alongside, machinists working alongside computer scientists, working alongside engineers, in order to solve a very important problem. And so, when you see companies that satisfy multiple aspects of an important mission, like American Dynamism, we are just thrilled to be along for the journey.
Anne Dwane:
And can we dig in on that a little bit? So sometimes we think of automation as eliminating jobs, not elevating people. So, Chris, can you tell us, specifically, how do people learn at Hadrian and how do humans and machines team?
Chris Power:
Yeah, I think that’s a really good point. And I think just taking it back to the macro view, in advanced manufacturing the average age of a worker is late 50s and every year that number goes up, right? So there are no new entrants to the workforce and yet demand for what they do is growing massively. So unlike a market, like self-driving trucks, where truly, there’s a moral quandary if you’re an entrepreneur doing self-driving trucks, because you automate self-driving trucks and you automate millions of jobs away of people of healthy working age, who’ve got another 20 or 30 years left, right?
Chris Power:
In advanced manufacturing, it’s simply the fact that there’s millions and millions and millions of workers that are retiring out every year, and to retrain those people from scratch is impossible without automation. So, a lot of what we’re doing is, and this is why I feel very morally aligned in this is, we literally have to do the 80% automation strategy so that we’re trying to train 10,000 people, not a million people, and that’s actually possible, right? So for us, the alignment of, it starts with, well, how can we get machinists to work with software engineers?
Chris Power:
And they understand that the only way to scale out and fix this industry is to automate their own jobs, because they understand that we’re not, you can’t find a hundred great machinists, you can find 30, right? So there’s a lot of alignment inside the company around, we have to automate to elevate people instead of just wiping out jobs, right? And I think that’s a really important position for people to understand is, we’re never going to be able to scale out unless we get to that 80 or 90% automation level and make the tools easy enough where we can train volumes of people without having to spend five years in an apprenticeship or a journeyman program. That’s the other trick.
Josh Wolfe:
By the way, Chris, this is an important point. If you can explain the idea that these are not people that are working hand lathes and going back to our fellow nerds in woodshop class. The degree of software overtaking from computer-automated oriented manufacturing to design, to digital precision control over some of these devices. I mean, the idea that software people can come into these areas without the requisite training, it might be worth commenting on it.
Chris Power:
Yeah. So I think that’s a really good point is, for advanced manufacturing, especially, 70 to 80% of the labor tasks are in front of a desk or in front of a CNC machine, that’s actually running Windows 10, running an incredibly complicated user interface of, and you’ve got machinists driving these machines in real time, right? So it’s very, very software heavy for the workforce already. And a lot of what the people are doing is generating G-code or inspection code, which is, it’s like a shitty version of Python, right? At some degree and they’re doing trigonometry in their head and linear algebra and doing this on the fly under pressure. So a lot of it is very close to softwareland already.
Chris Power:
And I think the other thing to understand is, for something like automotive, where you’re making a thousand of something, it’s incredibly easy to set up a discrete manufacturing line that makes things over and over and over again. But for aerospace defense and all these advanced manufacturing industries, we’re talking about lot sizes of two to 10 units, which means that the cost to program the machines is a significant chunk of the cost of a single part. And all of that problem is actually in softwareland and coordinationland versus, “Hey, someone’s picking up a block of metal and putting it on the machine, let’s automate that away.” That’s actually like the last thing we want to automate, if that makes sense.
Erik Torenberg:
Yeah. Okay, Katherine, Josh, you both think about storytelling a lot. And when we, as a industry, talk about, we say things like, “software’s eating the world.” We talk about, use the words automation. That, to people outside of tech, sometimes is a scary concept. And so, it’s not obvious when you hear automation, oh, more jobs. When we think about storytelling, whether it’s the context of automation or tech more broadly, how should we better be telling this story of the impact that tech is having? What words should we not be using or be using differently that come to mind?
Josh Wolfe:
I don’t know if there’s a rebranding more than a re-education. I mean, the canonical example, which I think came from David Autor’s at MIT, is ATM machines. If you thought about simple thing like bank tellers. Bank tellers existed, you go, you swap your money, deposit, take out your checking, whatever. And then all of a sudden, these ATM machines came and people were aghast, “My gosh, tellers are going to be replaced. It’s all going to be automated. People are just using their bank cards.” And what ended up happening, it’s always a fun quiz to do, but I’m going to give you the relative rough numbers, not the absolute exact numbers.
Josh Wolfe:
It was like 250,000 tellers, and one would imagine that it went down to, I don’t know, 200, or 150, or 50. Instead, it went up to over 500,000. And the reason was that ATMs got cheaper, elements of banking got more efficient. ATMs were everywhere, and it basically freed up the teller to move into higher-value aspects. And I think it’s the same thing that you’re going to see here, where technology can free people from doing the rote and routine, in some cases, dangerous, and start to unlock human creativity that gets amplified by machines.
Josh Wolfe:
So I am always very fond of that anecdotal example of the ATMs, that it was an example of technology that nobody was ever going back and saying, “I’d prefer to use a teller for this,” I mean, in some discrete cases. But it just improved efficiency of productivity and freed up the tellers to do other higher-value stuff, wealth management, advising, issuing mortgages, all kinds of stuff like that. And ATMs were on every single corner. So I think you’re going to see the same thing here. Technology, in the short term, can be a little bit disruptive. And in the example that Chris gave of truck drivers, it’s more direct substitution. And in most of these virtuous cases, it’s a technology that ended up increasing the total number of jobs in the field.
Chris Power:
I agree. And I’ll give you a direct point is, usually a machinist starts their shift and they’re trying to set up a job, and the first couple of hours are literally running around, trying to find the work or trying to find the one specific cutting tool that they need to run the job, and it’s a complete waste of time. That type of work sucks. And it’s annoying, because it’s just, the tool should have been in the machine already. Bob’s got the tool, we have to run around and figure it out.
Chris Power:
That’s the type of activity which is, actually, incredibly inefficient that we’ve solved through software automation, routing tools throughout the factory as part of the product. And that’s something that no machinist wants to do, it’s incredibly annoying. And now, they get to spend that three hours working on more and more complex problems, as Josh said, and that’s the type of activity that we are focused on automating, not the super high-value human stuff, which is actually very hard for computers to do at the end of the day.
Katherine B.:
I’ll add, though, to your question about why has tech been bad at telling the story? I actually think we have been a little bit flip in how we’ve told the story over the years, and by not telling it, by not, by just saying, “Oh, you don’t understand technology, person in middle America, that lost your job because of private equity shops. But it’ll help you. And, oh, by the way, you’re going to learn to code. Everything’s going to be fine.” I mean, that is a story that does not resonate with most people in middle America.
Katherine B.:
And I think we’ve actually done a very poor job of explaining the difference between a 20-year type of finance, or 30 years of roll-ups, of people losing their jobs in the name of efficiency, which is very different than what tech does, which creates abundance. When we talk about what, the difference between what Hadrian is doing now versus what a lot of others have done trying to do roll-ups in the space, it is creating more workers, it’s creating more parts, it’s doing things faster and cheaper through automation that will ultimately create more jobs.
Katherine B.:
And I think we have to be good at telling that story. I think part of the reason why Chris is so special and so serious is because he is excellent at explaining that story to people. But we have, tech is now at this point where we can no longer just say, “You’ll understand it when you see it. Don’t worry about it.” And I actually think 20 years of doing that has been detrimental for everyone who’s working on these important missions.
Chris Power:
I agree, but also, I think there is an element where both the private equity and the software world coming from elite coastal cities has actually had this weird attitude of, “You work with your hands, I don’t want to explain this to you because I have a PhD or an MBA.” Yeah. So I think we are bad at telling that story. But I honestly think for the last eight years, the attitude from both of those communities has been very much looking down on flyover states, and that is not the right, that is not the way to bring people along for the journey.
Chris Power:
And I think that cultural aspect of Hadrian, where everyone eats lunch at the same table or whatever, and you have a Yale graduate with an applied maths degree, arguing over the same problem as a machinist who never graduated high school, but coming from a place of respect and on equal footing, is literally 90% of the trick. But I do think it’s not just the storytelling. I do think both coastal elite groups have a real, have had a real attitude problem, which is, hopefully, changing now of genuinely thinking that they’re better than people in the flyover states when that’s just simply not true.
Erik Torenberg:
And what I love about what you’re doing Katherine, with American Dynamism is, I remember 15, 20 years ago, I was coming up and there was this big concern about the privatization of government services. And there were all these critiques of, oh, what’s going to happen if government services get privatized, all these people get squeezed out, et cetera? And I think what American Dynamism is saying, hey, this is how the world’s going to be amazing if the private sector starts to contribute into ameliorating, helping some of these central services.
Katherine B.:
Yeah, no. And it’s not necessarily even a choice at this point. I mean, it’s a 50-year trend of privatization that I think everyone just has to understand is happening. And that’s fine. Aerospace and defense have always been privatized, it’s always been the history of that there’s a procurement methodology for government to work with a lot of these companies. But beyond even aerospace and defense, there are now civic functions that we know Silicon Valley technologists, and technologists around the country, can do better.
Katherine B.:
And so, I think it’s a broad thesis that shows that, actually, the most talented people in America, and outside of America, to Josh’s point about it’s taking an Australian to come in and actually shore up this defense space. This is something that people care about and they’re doing it in the private sector. And so, the response to it from Washington, the response to it from government needs to be working hand in hand with the private sector. And I think we’re seeing more of it. It’s exciting and we shouldn’t look at it as the negative thing.
Josh Wolfe:
Katherine, I don’t want to distort your term at all, because I love it, the American Dynamism. It’s interesting, we talk about the branding. Private equity was a beautiful rebranding over leveraged buyouts, right, which was basically, how do we put debt on companies, effectively mortgage a company, load it with debt. And then, what do you do? You need to service that debt. So what are we going to do? We’re going to cut the biggest expense. What’s the biggest expense? Labor, right?
Josh Wolfe:
And so, private equity being lumped in with venture capital, which for endowments that basically do allocation models, are like, okay, PE, VC, that’s alternatives. You can’t invest in liquid stocks. But when Katherine and I are investing in companies, we’re putting capital at risk and you’re trying to grow those companies and hire and hire and grow workforces and capabilities. Whereas, private equity’s often leveraging the company and coming in, and then, basically, decreasing the workforce to get and squeeze efficiencies and service debt, and then flip it. So it’s a very different model.
Josh Wolfe:
But the other aspect of it is, yes, there is a trend, in a word, over 50 years of privatization. But the beauty of what emotionally is evoked in me when I hear American Dynamism is competition. And the beauty of the private markets is competition. And the more competition you have, the better products get, the cheaper they get, and the better the end consumers are. And when you don’t have things private, when you have at one extreme, a Cuba or a Russia, and the other, totally bureaucratic, crony capitalist-captured government services, they just suck. And so, the beauty to me of privatization and true private equity is a flourishing of competition.
Katherine B.:
Yeah. No, no. I love hearing that, and real competition, to your point, not the competition that the government likes to say of five primes that have been around for hundreds of years, or a hundred years since the 1920s, competing against each other for contracts, but actually saying, “Well, you take this one, I’ll take that one.” Actual competition where the best technologists and the best talent, which is what this war is really about is, where are the most talented people in this country going to work? That is the core question. So real… talent.
Josh Wolfe:
Now, a beautiful thing about the existence of Chris and Hadrian is, five years ago, pre-Hadrian, and you think five years from now, post, there are going to be a ton of aerospace and defense companies that are all competing with each other, and they’re able to do it because they’re able to do it more efficiently. They can raise capital from VCs like us, respectively, and then they can go forth.
Josh Wolfe:
They’ve now effectively taken what would’ve been their own CapEx decisions and made it an OpEx decision and shifted it over to Chris, and they can rapidly iterate. One of our companies calls it agile aerospace. So we’re stealing a term from software, but that is just going to create this great flourishing. And that kind of standardization and access to something that didn’t exist before is the virtue of competition.
Erik Torenberg:
Totally. One of the other very exciting things about Hadrian, of course, is that it involves bits and atoms. And Peter Thiel famously lamented, a decade or so ago, that we made tremendous progress in the world of bits, but not in the world of atoms. What is the why now for companies that can use both, as you think about it, Josh and Katherine?
Josh Wolfe:
The why now on physical matter, in many cases, if you look at things like additive manufacturing, breakthroughs, and material science, elements of material science that came, in part, because of software discovery, where you could do rapid combinatorial chemistry and predict things in silico and then make them. A lot of the increased precision that you get from digital control over things, gives you increased precision and performance in both material sets and devices. We see this undeniable, what we call these arrows of progress, but trend towards things that were once mechanical, moving parts to things that become solid state. And you see that, whether it’s in semiconductors and electronics, whether it’s in radar and satellite.
Josh Wolfe:
But you just have this trend where if you really think about what the essence of technology is, it’s knowledge embedded into some system. And so, more, if you have more moving parts in a system, it’s arguably less knowledge than something that’s, the functionality is embedded in the materials themselves. And so, we see it as this nexus between digital design, CAD design, software-controlled systems, software-controlled radios and antennas that get embedded into the physical elements themselves. And so, it’s a beautiful time for the mix of the two.
Katherine B.:
Yeah. I think on top of that, there’s also two macro issues or two events that I think are making people realize how important the physical world is. One, there was this thesis. I think, probably for the last 10 years in Silicon Valley, that we were post-state, post-nation-state, that everything was moving online. And, of course, what’s happening in Ukraine has proven that that is not the case, that there is still an issue with borders, there’s still an issue of nation-states actually being important.
Katherine B.:
And then second, I think that there’s also this view of coming out of COVID, people realize that the virtual world did save us, but the physical world also does matter. And that’s things like healthcare, that’s things like housing, that’s things like… The virtual world and the movement to remote work has allowed us to have a more federalist society, where people can move to various states as I have in the last year.
Katherine B.:
And I think that means that people are taking much more stock of their physical world and realizing that atoms and bits, that they’re not in competition with each other, that there’s an interplay that’s really important. And that the next 10, 20 years coming out of this COVID experience and out of this, we’re not post-borders, we’re not post-nation-state, that there’s going to be a movement towards people actually wanting to see the interplay be more important.
Chris Power:
Yeah. And I think, to both Josh and Katherine’s point of why bits, sorry, why atoms not bits is ultimately, as a society, at a very, very, very macro view, we get to spend intelligent brain time trading pictures of dogs on the internet for millions of dollars, because there is an abstracted layer of society where there is a fireman, there is a guy that keeps us safe at night, there is a person cooking food. We’ve built up this incredibly successful society so that we get to spend brain power on things like Burning Man and crypto, and all these abstracted software things.
Chris Power:
Because, effectively, the societal infrastructure is there so that I don’t have to worry about eating. I can spend time on more esoteric things, right? And I think, as a country, we’ve failed to maintain the culture of seriousness, which is effectively that, yes, all of this is possible, but at some point that meta structure of society has to be maintained and eventually it runs out. And what I think we’ve had over the last 10 years, especially in softwareland is, we’ve been so successful of the country, all that infrastructure of society is there.
Chris Power:
So you grow up as a 20-year-old in Silicon Valley, thinking that the hardest problem you’ve got to solve is a SaaS customer yelling at you because your code is buggy, right? And now, I think people are realizing that like, “Oh, shit, we have not maintained any of this core societal infrastructure. This is a real red, flashing light in terms of the whole thing, and the collapse can come really quickly.” And I think that culture of seriousness is going to come back where there’s a healthy respect for no, the guy that is maintaining the fire hydrant outside the factory is just as important as the person working on esoteric software stuff.
Chris Power:
Because if you do not have all those societal abstractions and people maintaining that society seriously at each rung, you don’t get to do the cool stuff in the future. And I think there’s a big swath of 25 to 35-year-olds that are about to find out that without the maintenance of that culture and society, things can go bad really quickly. And that’s also why, at a meta level, I think you’re going to see more and more people, like software engineers from Google, as a Hadrian example, going, “I’m working on really hard engaging problems that are intellectually stimulating, but if I zoom out, everything is going wrong in the real world, I need to go work on something that actually matters.”
Chris Power:
And I think the shock of the Ukraine, the shock of COVID, and the shock of all the stuff that Katherine was talking about, is going to wake a lot of people up from the matrix, and they’re going to realize very, very quickly that they need to spend the next 10 years of their life working on intellectually-stimulating hard problems that are going to print money, but that also really matter in the real world. And I think a lot of that is going to happen very quickly. Yeah.
Anne Dwane:
And Chris, you paint a really compelling picture for talent to be on these mission-driven problems. And can you talk tactically? What’s it like to work with legacy companies in the ecosystem?
Chris Power:
In terms of existing machine shops or customers?
Anne Dwane:
Yeah… All of the above. Because you’re a new entrant and, arguably, before the commercialization of space, it was hard for startups to be accepted or taken seriously.
Chris Power:
Yeah. And I think that’s driven by competition at the primes level, right? Is five years ago, would Honeywell or Northrop Grumman take a call from a random machining startup saying, “Hey, I’m going to disrupt your supply base”? The answer is probably no. But at a macro level, because you’ve got companies like SpaceX and Anduril, and Varda and Planet Labs, all these amazing venture-funded companies that are effectively going to be new primes, that’s now being driven from the top of, “Wow, we’re losing contracts to SpaceX or we’re losing contracts to Planet,” or something like that.
Chris Power:
And therefore, all this leadership at these, I wouldn’t say legacy companies, just these large primes that haven’t had much competition for the last 10 to 20 years, now having to move at the product layer a lot faster to keep their business humming. And therefore, the pressure is cascading down, and therefore, you’ve got someone in the supply chain team going, “Okay, this is a real problem. I’m going to take the risk and adopt a new solution.” The other thing is that engagement with older, more legacy industries, where they haven’t had supply chain disruption for a while, is going to take several years.
Chris Power:
But one of the reasons why Hadrian works right now is because a lot of these new primes, Anduril, all these other space companies that, VCs like Josh and Lux have funded, as well as Katherine is, they are run by innovative people and they are much more willing to adopt a new solution and move a lot faster. And we have to have that core customer base that allows us to then, eventually, cross the chasm to all these other industries. And that’s also why Hadrian’s only possible now. If you tried to do this five years ago, you’d just be spinning your wheels and never get any initial contracts.
Anne Dwane:
In both, as an operator, and then for the investors on the call, what’s still missing in the ecosystem. What do you wish existed to help you move even faster?
Chris Power:
I can speak for the operator side. And I think, in short, I would say anyone who’s a software engineer and operator who wants to work on really hard, deep tech problems should realize that you don’t need special training, you don’t need to even think about a transition. If you’re a backend engineer working on Stripe, you can be running mechatronics automation within 30 days. It’s exact same thing. Most of the problems are just regular software engineering. And yet, you’ve got to fight some pretty janky machine APIs, because no one’s ever used them before.
Chris Power:
I think that’s the main thing is, if people realize… I was talking to Matt Grimm from Anduril the other day and they’re hiring a ton of software engineers, and you don’t need special deep tech training in hardware. Most of it is just software engineering. And I think once people realize that, and that they can just jump on board without hesitating of, “I’m working in FinTech, how can I transition to a company like Hadrian?” The answer that we need to spread is basically you don’t, it’s all software engineering. You can just jump in and start firing. And then, we’ll unlock that swath of people who are the next wave coming into work on all these important problems.
Katherine B.:
To build off that, and this goes beyond Hadrian. I think one of the most dangerous myths that we told people over the last 30, 40 years, and, of course, the government also perpetuated this myth by giving people free money, or supposedly free money, to go to college, is that everyone needs to go to college. In order to function in American society, everyone needs to have a four-year degree and that this is a noble goal and that we should be doing everything in our power to make sure that that is true. And what that did was it meant that anyone who had a trade skill, anyone that wanted to work in a high-skill trade, that wanted to do something with their hands, to do something in the physical world, was told that they were not enough and that they should not want to do that.
Katherine B.:
And I think the biggest thing that we can do is to say, “Actually, it is really cool to work with your hands and you don’t need to go to college.” And I actually think the movement of, “You don’t go to college to become a software engineer,” has probably done more good for this country over the last 10 years, and that’s going to actually enter the physical world as well. But I think we need to make sure that we’re not forcing young people, who have talents in engineering, who have talents in working with their hands, who want to be skilled tradespeople, that they have to get a four-year degree and that they have to be reading certain books in order to feel worthy. And I do think that that is probably one of the biggest myths that we need to destroy if we’re going to see progress over the next decade.
Josh Wolfe:
I think that’s beautifully said. As a culture, we get what we celebrate. And on the one hand, if you’re just celebrating celebrities, on the other hand, if you’re celebrating the idea that you need four, six, eight years of elite education, which only increased in cost, in part, because of the provision of enormous amounts of debt, to which the suppliers of said product, universities, kept raising prices, as they rationally should have. So I agree strongly with that. And I also think a rallying cry, which Elon has done a good job of this around SpaceX, and I think Chris is going to do it on cutting-edge manufacturing for aerospace and defense.
Josh Wolfe:
And I think there will be an ecosystem of other odd entrepreneurs and operators and investors that will sing this rallying cry. And I think that people getting excited about making and not just consuming, that we take for granted, just as a cheesy analogy, the surface level superficial that you might take for granted on a person, and, obviously, there’s insane complexity of biology inside of our bodies. I’m looking at a little thing I have in my office here, which is just a dissection of an iPhone, and the number of components.
Josh Wolfe:
To play on an iPhone and just tinker with Instagram or whatever trivial apps, or just shop or play video games, but the amount of complexity in physics and chemistry and material science, and even the conversation that we’re having now, with the complexity of the chemistry and liquid crystals, and the optics in the camera, and the fiber optic, erbium-doped fiber that allows us to actually send and, with zero latency, communicate with each other, and the copper that is powering everything, and the lithium ion batteries.
Josh Wolfe:
I mean, the complexity of the guts of the stuff, which we all take for granted, because you just get a device and you flip it on and it works, and you’re just on this abstracted application layer. I think the great generations were the builders of semiconductor industry and so forth, and electronics and laying down fiber optic cable as an infrastructure, and the builders. It’s interesting when we think about the race we are pitted against, in both a space race with other sovereigns and, in particular, Russia and China.
Josh Wolfe:
China is celebrating the new class of heroes. They are telling their people, “This is who you should celebrate.” They have a 40-episode, Netflix-equivalent drama. I forget if it’s called Silicon Beach or something like that, where there’s a Chinese nationalist who has gone to the US, worked in the semiconductor industry, come back, and whether he was inspired or stole the IP, is rebuilding the semiconductor industry, and he’s the hero of the nation. I mean, we just aren’t telling those stories, and we will, but in part, because they’ll be the true stories that are being created by entrepreneurs like Chris, and they just need to be told loudly and publicly just like you’re doing.
Chris Power:
And I also think, Josh, that people are going to get a real punch in the face in the real world when they can’t buy an iPhone because they can’t get a chip or whatever. And I think that slap to the face is how Americans learn, which is great. Because then we respond and we fix the problem. But yeah, that’s going to come very hard and fast as well, when people realize that the real world is not as easy as they thought it was.
Anne Dwane:
And Chris, you’ve talked a lot about agility and resilience in supply chains with Hadrian. Do you have any requests for government, or Katherine and Josh are also involved in this, in terms of changes to industrial policy that might help innovation?
Chris Power:
Yeah, I think there’s two big areas where the government can actually have an impact. One is, they can do strategic things like the Intel deal in Arizona, with funding… Like Operation Warp Speed actually got this right for COVID, which was just pre-solving the revenue problem and allowing capital companies to take massive amounts of risk and be caught, so that they could move a lot faster, right? So the same thing needs to be done in semiconductor, pharma, especially. There should be an Operation Warp Speed for pharma production to re-shore a lot of that, because of China.
Chris Power:
But in terms of policy, I actually think we’re in a really sticky situation with the talent base to execute on that policy, that I don’t think the government can do much about, which is, hey, the government can go allocate capital and say, “Hey, we’re going to front run the semiconductive problem. Let’s put $40 billion and fund three winners, and one of them’s going to win, but we’re going to have semiconductors.” Right? But they need to be way more aggressive on immigration and poaching global talent.
Chris Power:
Because it’s not as simple as throw money at the problem. There are literally not a hundred people in America that know how to build a semiconductor plant, and that process knowledge is so scarce that, effectively, we need to be going out and basically opening up green cards for anyone who knows how to do this stuff, or ASML, or whether it’s TSMC, or the pharma equivalent or the industrial supply chain equivalent from Germany for machine tools. We need to be going, like any good startup, go and poaching the top talent and build this supply chain industrial base.
Chris Power:
And if the government can set up programs that, both on immigration and rehousing families, and helping companies fund those talent poachings, that’s what we really need to do. Because the capital alone isn’t enough, because we do not have the talent in the country at a large enough scale and a specific enough niche to be able to actually execute on these programs. That’s the main problem that I don’t think anyone’s solving at a rapid enough pace.
Anne Dwane:
Okay. And you’re saying, in addition to upskilling the existing talent, we should be doing this. And I think, I’ll credit Jason Calacanis who said, we should relabel some forms of immigration, talent acquisition, where we have shortages in the short term. And Katherine or Josh, did you have any comments on procurement processes or industrial policy that you wanted to add?
Josh Wolfe:
I’ll just add that I think that the best thing that the government could do, and this is more theoretical than practical, is state a need, tell the market what it is, and a superior industrial base and superior technologies are going to come from competition. They’re not going to come from decree. Competition comes from free markets, or mostly free markets, and that often comes from human greed, which is not a bad thing in this case. Let human greed, in competitive markets, fund alternatives that are competing on price and performance on whatever the product is, and let that compete against the existing thing that, presumably, somebody looks at it and says, “That sucks,” and that’s how we get better stuff. So, state a need, and then let the market do its thing and get out of the way.
Chris Power:
I actually think a great example of this where government has really done an incredibly good job is the last two NASA administrations, where they’ve taken the attitude of bring back regolith from the moon and we’ll pay you X dollars for X amount of regolith, and then let the market sort itself out, and provide this scaffolding for people to climb up, and it’s an incredible example.
Chris Power:
And honestly, we’ve seen a lot of, not just SpaceX, it’s Astrolab building the Rover, and all these other companies trying to compete for the new International Space Station, and all this lunar and cislunar infrastructure. And that administration, the last couple of administrations, has really got that right in providing an incentive, saying this is what we want and letting the market sort itself out. And I think that’s a shining example of how it can be done in a public-private partnership incredibly effectively.
Anne Dwane:
Wonderful. Thanks everybody.
Chris Power:
Thanks. Appreciate it.
