From SpaceX to Founders Fund to Solving America's Nuclear Fuel Problem

Key Takeaway

When investing, avoid being in love with an idea—it causes dangerous compromises on team quality. But when building a company, you must be passionate about the problem. Smart people have easier ways to make money than starting companies. The founder must genuinely believe the problem is important enough to dedicate years of their life to solving it, even when rational analysis says there are more comfortable paths.

Episode Overview

Scott Nolan, employee #35 at SpaceX and former investor at Founders Fund, shares his journey from engineering at SpaceX to investing in transformative companies to founding General Matter, a uranium enrichment company. He discusses his framework for choosing what to work on, lessons from Peter Thiel about contrarian thinking and avoiding trends, and why he left investing to solve the critical bottleneck preventing America's nuclear energy future.

Full Transcript

Transcript of From SpaceX to Founders Fund to Solving America's Nuclear Fuel Problem from Invest Like The Best. Auto-generated from episode audio; may contain minor errors.

My guest today is Scott Nolan. Scott has led a fascinating career. He was employee number 35 at SpaceX, helping develop some of their critical early systems. He then went on to more than a decade investing at Founders Fund where he invested in SpaceX and many other of the defining companies of this generation. More recently, he started a company incubated that founders fund called General Matter. The topic of today's conversation is his time investing at Founders Fund and more recently his decision to build this company full-time.

General Matter is attacking one of the most interesting bottlenecks in the United States, the enrichment of uranium to create power in nuclear power plants. We don't do any of that in the United States today. We've outsourced it overseas for years. Scott and General Matter are seeking to reverse that through the enrichment of uranium here in the United States. We touch on all aspects of what he learned both as an investor and already building this company in its early years. Please enjoy my conversation with Scott Nolan.

Scott, I think an interesting place to begin our discussion is actually with a a sort of worldview type question, which is how you figure out what to work on. If I just plot your CV over time, you worked at SpaceX very early on. You've been critical to Founders Fund success. Now, you've started your own business and are basically devoting your time to that. And even the path between those things looks very interesting. like when you switch from one to another intrigues me. And so I'm curious both from your perspective and and maybe from the founders fund perspective too since that was a shaping experience for you.

How you think about this question of what to work on and what to spend your time on. My framework has always been just do something that's useful. Do something that you feel like you're making a real contribution and using your talents to make some type of positive impact. What important problem is there that's not going to get solved otherwise that somehow I can contribute to? And so I think all three all three major things I've done have have fit that in some way. Um so if we take them one at a time like yeah SpaceX founders respond and now general matter SpaceX I was you know just an engineer coming out of undergrad and I had worked at Boeing during college just saw what the incumbent aerospace industry was like didn't want to work in that didn't believe it was going to change anything.

And so aerospace background, always wanted to work on rockets, aircraft. Asked myself, okay, what's the most exciting thing to do? And it was it was I still want to be in the industry. I know the incumbents are not going to make an impact, but there's this new company, SpaceX, that is going to ultimately own the entire space launch industry, which I believed even when it was 30 people. Um, and so it was to me a no-brainer to go work there right after college. I I interned during college.

I saw what it was. it was like, "Yeah, these guys are going to win. Um, I want to be a part of that." So, So, So, that was an industry that had stagnated for decades. Um, nobody, no incumbent was doing anything interesting. They were all just writing government cost plus contracts. The US assumed that space launch was a nation state capability that would never be a commercially interesting thing to do and it just had to be subsidized forever. And so the result was cost plus contracts, you know, layers of sub subcontractors, subcontractors, subcontractors, dozens deep, um, and no ability for anyone to like do something really novel.

And so it was going to take a new company. So that led me to SpaceX early on and then found my way to Founders Fund in in 2011. So I was actually at Stanford in business school. Um, started in 2010, was quickly voted most likely to drop out. I wanted to get to work. I just wanted to do stuff. And so I thought about dropping out in actually the first or second month of business school to join Square. And so this one path was maybe go join Square.

And uh Keith who was at Founders Fund for a while tried was the person trying to recruit me to drop out and go to Square. In the meantime Peter um I was sitting in a on a class that he was doing at the law school. I think it was called technology sovereignty and globalization. There was many different readings. There was things about theory of government, how would technology change the power dynamics around, you know, government versus industry. And he convinced me to join his startup in the venture capital space.

And the the basic premise was VC needs innovation. The incumbents won't do it. And circa 2005, this the concept was founder friendly. If you looked at all the most successful companies, they were founderrun all the way to the end. And so the premise was let's give founders back control of their companies and unilaterally support them in building that. That was 2005 genesis of founders fund. But by 2010 when I was talking to Peter 2011, it was more this contrarian thing of what important companies is no one funding and how can we beat the capital for that?

And so the the thing that I focused on when I joined in 2011 was really yeah what set of companies are really promising that people underappreciate and I had just come from SpaceX which was not yet in 2011 like appreciated appreciated uh four years later they were landing rockets and it was obvious that all this stuff was going to work from the inside but the whole world didn't understand it yet. And so my thesis was hey I think there's a huge set of you know physical world companies hardware companies that could be really valuable and this could span biotech computer chips satellites like space launch transportation infrastructure almost anything that was not digital and that this was a huge opportunity area that everybody was ignoring and then came across this problem of enrichment of uranium and the the US's total lack of capacity in the space which essentially forced me to go start general matter.

general matter. general matter. We'll come back in in great detail to general matter. If you think about the 11 or 12 years that you were principally just investing in what ways did Peter most affect the way that you think about things and and and vice versa? There's like many layers to this probably. Like number one was it was just avoiding trends, avoiding the herd, thinking for yourself. That was like probably layer one. The second part was probably that like Peter always took whenever we looked at any companies a very orthogonal view to most people.

So there would be like layers of abstraction. Instead of just doing a spreadsheet and trying to analyze this investment, why don't we think about like why are we even seeing this investment? how should we think about this investment from this like very different perspective than everyone else? And so sometimes there would be like layers of abstraction that were many layers and you would end up with a really different view on things. And so it's like really natural to just dive in and start trying to understand the business.

But trying to develop a very different perspective on it that would yield some alpha was almost always the the approach. And I think he probably also thought at the time, you know, he I think around 2010 it was all what's like very contrarian, what is no one investing in, what's underappreciated. I feel like that was around the time that he was talking a lot about we'd made all this progress in the world of uh bits, but not in the world of Adams and you could be on your cell phone and it was interesting and then you look around and nothing's changed in 50 years.

Um and so I think he was starting already thinking about this probably even more than he was talking about and probably thinking which you know which companies are doing this well where would someone who could kind of understand the business world and the investing world and then also the startup world come from. How do you think you affected him? Some of our hardware investments turned out to be pretty good. So I think I think they exceeded all expectations for everybody. So like you know SpaceX founder son first invested in in 2008 and then what it is today I don't think many people would have predicted like maybe maybe Elon could have seen it going to this length you know the the ultimate purpose is colonize Mars so inherently it has to become this scale of company to do that but I doubt anyone would have expected you know this sort of outcome this quickly maybe it's an obvious question but what is behind the avoid trends concept.

There's two layers of competition. Um, so the avoid competition thing was a huge huge part of this. And so like that's definitely a lesson learned. But there's the competition piece is typically understood as the company level competition. And so if there's a trend, inherently you have many companies going after the same trend. You're going to have new entrance. It's become a thing. It's not about one company, it's about the theme. And if there's a theme that's not about one company, then it's about many companies. And so, you know, how is it not the case that they'll compete profits down to economic equilibrium of perfect perfect competition?

So, there's that piece of avoid a trend for that reason. But then layer two is avoid if there's a trend then probably many investors are looking at it and they're pricing it up. And then how is this not like where's where's your advantage? And so you want to avoid competition on both fronts. This notion of finding something that is not being worked on or is underappreciated. underappreciated. underappreciated. you made so many investments in companies where this was a thing. What are the common through lines or attributes of something that that isn't being worked on but is important like that that quadrant in the 2 by two like is or isn't important is or isn't being worked on is important not being worked on is like the place you hunted.

But what what's what are the typical causes behind that being the case? because it doesn't really make sense that something doesn't get worked on if it's really important. Unfortunately, or for better or worse, they lead you to they can draw you into a a potentially brute force sort of approach. Like first few years at Founders Fund, I'm looking for great founders. I'm looking for underexplored ideas. ideas. ideas. It's just lots and lots of meetings. Yeah. And so from the investor perspective, unless you have things that you're into that you think are underappreciated by the world and you've maybe been really excited about them for a really long time and why does no one think about this and maybe it's this like idea in your head that you just keep digging on and maybe someday you find a company that's that's actually an expression of that trade.

Then it's just meeting a lot of people and trying to find what's interesting and what sounds really different and what makes sense. And so the from the investor perspective, the attributes are something like, hey, you meet a founder, they seem really smart, they're talking about this thing no one's really talking about. They're telling you why everyone who's thought about this problem either thinks it's impossible or they're all going about it in a completely wrong way. And if you, you know, adjust and come at it from a different point of view, it results in a really different solution that has really different business characteristics.

When you meet a founder like that who's working on something like this, usually they're not just going to give you superficial answers to to convince you to give them money. The conversations with great companies like that always felt more like this person is really into this thing for some reason. And when I ask them a question, they're not just giving me an answer and trying to bounce back to the surface. They're like, "Here's the answer. Here's the next question you're going to ask, and let's take you all the way down the rabbit hole." So, they like showing you around the space.

That's how it felt from the investor seat. If you think about what are the attributes attributes attributes of industries where this is the case, I think a huge portion of them are going to be industries that somehow just stagnated. And I think the the thing that's most linked to stagnation is probably being a cost plus industry where there's very little incentive for progress, not much incentive to to bring the cost structure down and therefore you end up with this like this fixed market size that never takes off because um you just get kind of in a stalemate where all the companies maybe get to like igopoly status.

The equation for max profits is just make pricing high enough to the breaking point, collect your cost plus revenue and your margins and then it never becomes a really compelling thing. So like space launch for example, to some extent defense which you see with Anderoll trying to break that um to some extent infrastructure like the Boring Company. This is like their their prime thesis. Um, so yeah, I think I think incumbent, stagnated, oligopolistic, cost plus industries are are just prime for this. Most software companies try to maximize your time on their app to juice engagement.

RAMP does the exact opposite. RAMP understands that no one wants to spend hours filing expense reports, reviewing expense reports, and checking for policy violations. So, they built their tools to give that time back, using AI to automate 85% of expense reviews with 99% accuracy. And since Ramp saves companies 5%, it's no wonder that Shopify runs on RAM, Stripe runs on ramp, and my business does too. To see what happens when you eliminate the busy work, check out ramp.com/invest. OpenAI, Cursor, Enthropic, Perplexity, and Verscell all have something in common.

They all use WorkOS. And here's why. To achieve enterprise adoption at scale, you have to deliver on core capabilities like SSO, skim, arbback, and audit logs. That's where work OS comes in. Instead of spending months building these mission critical capabilities yourself, you can just use work OS APIs to gain all of them on day zero. That's why so many of the top AI teams you hear about already run on work OS. Work OS is the fastest way to become enterprise ready and stay focused on what matters most, your product.

Visit works.com to get started. Every investor should know about Rogo because Rogo Aai's platform is not just another generic chatbot. Instead, it was designed to support how Wall Street bankers and investors actually work. From sourcing, diligence, and modeling to turning analysis into deliverables. For me, three key things differentiate Robo. First, it connects directly to your systems, so it can work with your actual data. Second, it understands your workflows, how work really happens across a deal or an investment. And third, it runs end to end and produces real outputs the way the best people do.

Auditable spreadsheets, investment memos, diligence materials, and slide decks that match your standards. This all comes from the fact that ROGO is built by finance professionals for finance professionals and it's already being adopted by some of the most demanding institutions in the world. To learn more, visit rogo.ai/invest. If if forced to go beyond that definition, there's only so many of those, right? those, right? those, right? And you've probably invested in companies effectively attacking each category or each subcategory. A lot of those doing extraordinarily well. What else would you say like like there's lots of great founders found investments that weren't in cost plus industries or something?

What would be what would I find if I went digging on this same thread there? Airbnb is a classic huge example. Yeah. Yeah. Yeah. Um when Founders Fun invested, it was still crossing from kind of a weird backpacking couch surfing like air mattress in someone's living room to what it is today. And so, yeah, not that many people were that interested in sleeping on air mattresses in people's houses, but that was, you know, something that that that team was really into. And how do we turn this into something much larger where people can meet each other and have like a really authentic experience when going somewhere instead of just staying in a hotel?

Yeah. hotel? Yeah. hotel? Yeah. Like that wasn't something many people were thinking about. And yet when you actually looked at it, you realized how big the market could be and if they could cross over to a mainstream thing, it could be huge. That's one example. Sean Parker was on the founders fund team right when I joined and led the Spotify investment. And the internal memo or thread on the Spotify investment was just so wellreasoned. And it was because of this history of like understanding music and doing the Napster thing.

And then years and years of trying to find the right company that had the was taking the right formula. I think, you know, led to that and led to him seeing the potential of Spotify and why it was the perfect geography to start in and the perfect licensing strategy. And so I think it's often just like a really deep interest in something that's of a personal interest to a founder and they're just they believe it should exist. They believe there should be some way to solve this and everyone's done it the wrong way and here's the right way.

And I think sometimes people are sitting with those ideas for five or 10 years. across all the meetings you did, first meetings, how did you improve at conducting that meeting to figure out if this was the type of person and problem that you could get interested in? in? in? It probably wasn't even the meeting itself. It was probably just trusting your judgment more. On day one, it was just, okay, I don't know anything. I'm going to take a lot of meetings. Some of these seem good, some seem not so good, but we we need to do the work cuz what do I know?

I think early on the intuition was like all that you had to go on. was and I think is usually correct and then and then you know I get probably a little bit better at the job in the next couple years get better at trying to analyze things understand it that might actually lead you astray I think because then you start analy doing the analysis um when you kind of already know like oh I guess we should do the work but you kind of already know which ones you like and in fact you should just concentrate into the fewest number of companies possible and Don't dilute your average returns by indexing.

And then over time, get better at asking the right questions to like help harness the intuition or like, okay, my gut's telling me we should dig into this. into this. into this. Could you think of a single investment that your gut was not flashing yes almost immediately that you like worked your way to get there and did it? Airbnb was one of these. We did a lot of work on it um at the time. So Founders Sun did a small angel check early on and then did a much bigger check in the next round.

And so at the angel check, it was still the very informal, you know, air mattresses. Like I think there had been something where some guest completely destroyed a home. And there's a whole bunch of controversy around that. And then the company took a hard stance on that and said, "We will reimburse the host and we are professionalizing this." And I think that was like maybe the moment that you could tell it was going to go mainstream and then Founders Moon made a huge investment. But if you just look back at the past, you might say, "Oh, there's, you know, this seems like a niche thing." But if you did the work, you could see a bunch of different trends.

Like you could see it was sh the the demographics were shifting to slightly older crowd, not just backpackers out of college like some people had perceived. um the market share in different markets was increasing a lot and so we actually looked at we did the work we looked at like every single market um sliced market share marketing spend and you could see like all these markets that they were in they were just taking share and becoming the dominant dominant thing. So you analyze the data and it was like they're winning like this is it's over they're going to win.

There's two other components of the no competition idea. One is valuation and price. you have to pay and the second is um like capital intensity. You've invested in lots of stuff that requires lots of money to get the thing up and running and two revenue and two profitability. Curious how how you learned about those two dimensions of earning high returns that did low competition bring lower entry prices on average and is that something you cared about much once you found someone that was doing one of these things and then also how you think about you know the the amount of capital that you would have to put into the company to make it work.

Yeah, the the low competition thing typically would be associated with lower valuations, but I think that's trying to find value deals in venture is dumb idea. dumb idea. dumb idea. It's not the right plan. Like in maybe if you have a very small fund and you can pick up some interesting, you know, IP or hey, this company maybe will never be that huge, but this is a really good deal. And you look at multiples and stuff and, you know, it starts to look a little bit more like PE or something.

or something. or something. Yeah. Um, I think that can that could probably be okay, but for true venture, I think it's dangerous because yeah, either it says something about the company's ability to raise capital that they're unable to at market prices and unless this is like the last round that they need to raise or they really are going to be a capital efficient business, that's probably a risky thing. I mean, maybe the team is incredible at debt financing but terrible at venture financing and so they're going to switch to debt and that's going to be amazing.

Like you could you could imagine a situation like that, but typically if you're meeting a company and it's a crazy, you know, value deal, it's probably just not going to end up being that good is is what I've observed empirically. empirically. empirically. Do you think if we did an analysis of the actual dollars deployed by Founders Fund that more of the dollars would have been deployed once the company was already popular? Yeah, that may be the case. If you look at actual dollars deployed, it's probably more, you know, the whole concentrate into the winners strategy.

Yeah, I think the way that that can still be a good strategy even if the company's popular is a, it's popular but not as popular as it will be. be. be. Or B, this idea that up rounds, you know, it's almost like anchoring on the past versus looking to the future. Peter has said this a bunch of times and has like guided the founders team to think this way. Uh certainly more in the like it was more talked about in the early 2010s, but if you've got a company that was like growing steadily, but then there's a big up round, it's probably the case that that up round is not even enough up that if it's like a 2x up round, maybe it should be a 4x up round.

Yeah. What's going on there? There's that famous quote of his which is the steeper the up the greater the undervaluation. So So what is what is actually happening that makes that true? Yeah. people are just anchoring on the past or they're like, "Oh, last round was this. I guess it should be reasonable compared to last round price and then in reality like okay, all that matters is next round price. How do we make sure the next round's an up round?" Like what are the catalyst Like what are the catalyst going to be for f further increases?

Um and so yeah, you don't get paid as an investor based on, you know, how close you were to last run's price. It's ultimately against exit price, but the only thing you have to go off of that's actual data or empirical is the past. And so people are much more anchored on that. that. that. What have you learned about how much to be in love with the problem itself? This is a a good excuse to talk about general matter too. Like are you inherently fascinated by love with uranium enrichment or is there some other big thing going on behind the scenes?

And I'm curious if you think about all these founders you backed. My guess is most of them were deeply passionate about the domain because they had this thing where they could go down the rabbit hole or whatever. How much does passion matter in selection of founders? From the investor seat, I don't think you want to be in love with an idea. I think that's a risky thing. Yeah. Yeah. Yeah. Cuz then you're going to try and find a way to express that by investing and you're going to maybe make some compromises on the team because you know this idea is just so good.

Its time has come. But then if the team isn't there it, you know, 90% of the time it doesn't work. And then there's a whole thing of like horse and jockey. Can you swap out the team? But the whole founders thesis was always no, you need the founder to run the company to have this vision and to see it through. And so from the investor side, I think being in love with the idea is really dangerous and it can cause you to make all sorts of compromises that come back to haunt you and it can cause you to put good money after bad despite the writing on the wall.

But I think on the company side, you have to be in love with the idea. Yeah. It's like not that rational to start a company. There's a lot easier, like more comfortable ways to make money if that's the goal. So, it's got to be about what the company's doing specifically. I think smart people who want to make money, like there's so many good jobs in the finance world for that. Or uh people who just want to build, there's lots of places you can build, but if you want to actually start a company, it better be something that you're really passionate about or you think that the problem is really important.

So, for me, no. enri en enriching uranium never never was something I was specifically excited about. I was always into nuclear energy. I always thought that this was a no-brainer. Probably the two things from sci-fi from like the 60s was always the two industries we were supposed to have, not just from sci-fi, but like what our country thought was we're going to be going to space and we're going to be doing things in space and we're obviously going to have nuclear energy. like we went from burning wood to chemical bonds and now atomic energy was like clearly so much more energy dense and powerful and and should be lower cost.

So th those were always things I was excited about. Never had a specific interest in uranium enrichment but then through the course of investing in founders fund went from 2010 just looking at all sorts of different hardware companies. First investment I ever made was a satellite company, Planet Labs. Then did a lot of different things that were outside of pure software. Last couple years at Founders Fund drifted back towards almost pure hardware by the end. And then really energy where we invested in Crusoe Energy and understood the whole stranded supply of flare gas and what could you do with that and then invested in a company called Radiant which was the inverse stranded demand.

How could you serve that demand? Maybe you could serve it with a small microactor. Even if that microactor's output was expensive, the stranded demand had to pay crazy rates anyway for diesel generators in a remote Alaskan village, for example, or an army base. And so that's a good starting point fitting the whole founder thesis of start with a really small market and grow into a bigger market. Like don't don't worry about your TAM, worry about owning that market and then grow from there. there. there. And so yeah, my path to understanding the bottlenecks in nuclear energy was having invested in Radiant, having met so many other advanced reactor companies along the way.

And then all of them said the exact same thing. We want, you know, we're going to make nuclear affordable. We're going to make it scalable. We're going to take this from huge construction projects to factory built. And yet the one thing that's the hardest is not licensing. Everyone thinks the NRC is impossible to get through, but no, it's not that. They told us it's actually we cannot get the fuel. The fuel comes from Russia. Only Russia makes it. We have to import it. Um, that's quite challenging.

And this was even pre-Russia ban. And we just need some source of fuel. And so I spent all of 2023 looking into this, trying to understand, okay, of the five steps of making fuel, which one, what's stopping it? Is it all of them? Is it is it there's not enough uranium? Is it something about the process? And it was the enrichment step. And so looked at trying to find a company in the enrichment step to debottleneck nuclear and to actually get the nuclear future that we want and could not find anything for an entire year.

And then finally decided if this is going to exist, it's got to be a new company. It's not an incumbent. It's not a government. It needs to be a new private company. And so this was the important company that nobody was building. this was the important problem nobody was solving that I could somehow actually contribute to. to. to. In all the work you did, what did you learn about the thing you alluded to earlier which is the relationship between governments and technology like that? So so much of the history of technology in the US was actually military rooted like so much of what we developed was for a military purpose and then became commercial and so the two seem like they have always been deeply intertwined technology and governments.

curious what you learned about that history. What surprised you? What interested you? Of course, it's relevant for what you're doing now. Yeah. What have you what have you learned about governments and and tech? My experience through SpaceX was just the government wants to work with private industry and wants to solve problems like um at SpaceX, I worked on the engine systems under Tom Mueller and did a lot of the structural thermal work on those and help help make sure that they would stand up to the environments and everything.

uh and be low cost and high performance. That's ultimately what we were optimizing for. And then once those engine systems were were working really well, I moved over to the Dragon capsule. capsule. capsule. And in Dragon, we were on the NASA CS program, commercial orbital transportation services. And it was a multiund million dollar program to bring back uh two things capability of launch to space station and then a first a cargo vehicle and then ultimately a crude crude vehicle that could dock with the space station.

And so the last year or two I was there was really focused on Dragon and working very closely with NASA because we were going to go dock with I guess the most expensive the most expensive asset mankind had ever developed. And so the last thing anybody wants is any sort of issue with a private company's cargo capsule docking with the space station either smashing into it or something. Yeah. like collision, but then you would think collision and yes, that's an issue, but the way orbits work, it's actually there's some ability to avoid it even if things are uh off track.

The harder thing to really get a handle on was things like thermal and pressure and okay, you got this vehicle and it has solar panels and what's the heating on the vehicle and what thermal load is that driving back to the space station and can that handle it? So all these interface requirements interface requirements interface requirements and so we were working closely with NASA on those and ultimately these were you know incredibly smart people who believed in space who had been working at NASA for decades in cases be you know despite not a ton of growth in in space activity.

They were there because they believed it and they loved it. And the opportunity to work with a company to like, okay, we have the space station, we have this program, how do we get you guys to the next step in the milestones? How do we collaborate to like make sure this is safe, but that it actually happens? happens? happens? Super collaborative, uh, very positive. And I so I think my takeaway was in in industries where you have true believers who are in the government agencies and who have been doing this for a long time, they're there because they want it to happen.

And there's a lot of openness and excitement to working together. If if the company is is credible and is, you know, cares as much about safety and and performance as the agency does. In your operating time at SpaceX, what did you learn about making great things quickly? Great things that work quickly. I think it was all the classic things like there's the Elon algorithm at this point. I don't think it was explicit back then. It was just, hey, we have to get this rocket, you know, launched.

Let's make sure it works. Let's not, you know, overoptimize or have analysis paralysis. Just define what the goal is. Come up with a good solution. This looks like a good solution. That's a good plan. let's run with it. Let's not deliberate for months and months and months over things. Let's just decide and move forward. And if we're wrong, we can always go back because there's, you know, extensive testing along the way. So, it's really um use good engineering principles, think from first principles, move fast, get it to 90 95%, not 99%.

Um we can and it's like get operational and you can make it better later. But if we just never launch, if we never get operational, this isn't going to work. One of the things that's most interesting to me today is this whole learning by doing thing, which has now been carefully studied that it's in the iterations that you gather lots of your learnings and there's like a literal predictable curve to these things and that we've outsourced so much of this especially in manufacturing to overseas. And so it's not that we do innovation and someone else does manufacturing.

It's more that the manufacturing creates a lot of the innovation. And I'm I'm curious how important you think that is in the next, you know, decade or two here in the US. Obviously, you're doing something that got shipped over to Russia and now we're trying to bring it back. Curious for you to say a little bit more about like the broader effort to bring more of that stuff back onto our own shores. Yeah, I think there's the onoring piece, but it's it's maybe even simpler as just vertical integration.

So even domestically you have you know companies in the nuclear space, the aerospace industry like defense, many different sectors where subcontracting is the norm and and and you know you're going to subcontract a subsystem to somebody who subcontracts a component and then that component has different inputs and they subcontract that all the way down. I think in aerospace in at the SpaceX days it was it was like oh there's 30 layers of subcontractors in this one system somehow I think was the case from the space shuttle some crazy number of of subcontractors subcontractors subcontractors and then in the nuclear space recently there was there was one analyst call where a company was bragging about having something like 900 subcontractors and so many that they needed regional organizers of the subcontractors and on one hand it's like okay clearly what you're doing is really complicated then And there's deep barriers to entry, but every one of those interfaces that crosses another company is typically a fixed interface that's not going to move very quickly.

And so you have to treat it as fixed. And so everyone's designing their individual piece against preconceived interface requirements and you end up with a really u calcified architecture of your system. This is just at the system design level. Um and you can't optimize across layers for the overall goal. Now, if you bring all that in house and don't have a lot of subcontractors, you can actually as an engineering team optimize with every iteration, trade off interface requirements. Hey, this thing that you asked of me, you know, over in the electrical team for me, the mechanical team is going to be really really hard.

Do you mind giving me a little bit of breathing room on that and I'll I'm going to make it up somewhere else. And so, you can have those conversations much more easily when two people are sitting side by side at a desk than when you have two separate companies, you know, across the country. And so at a minimum I think you need to pull the engineering together and vertically integrate and just sign up for doing more of the engineering yourself and not outsource it. outsource it.

outsource it. And then part two is the manufacturing. And so And so And so that's just on the design side. If you're actually going to make the thing and you're trying to design for manufacturing, well then maybe you want your manufacturing actually colllocated with engineering. And so that's what all the great hardware companies are now doing is you at least have your first of a kind manufacturing colloccated with engineering under the same roof. And you you basically talk it out of like here's why this thing that you just designed is hard for me to make.

If you can make it this way, then I I don't need a sixaxis CNC. I can use this with a later laser cutter and make this part. We're going to get, you know, 10x throughput at onetenth the cost. And so yeah, I think you need to at a minimum put your first of a kind manufacturing colloccated with engineering and then better yet uh smallcale manufacturing mid-scale manufacturing maybe at large scale you can push it somewhere else and go to a lower cost center as opposed to like Southern California where so many of these companies are but I think it's mandatory you've got to bring it all together.

What have you learned about uh the role that energy plays in a civilization or a society? Like it it it's it's funny like we didn't really talk about energy for a long time. I think like the per capita growth of you know energy was kind of flat for a couple of decades prior prior to this recent surge because of AI and data centers and everything. What is your framework for thinking about the role of energy kind of in general? And then we'll get into the specifics of what you're doing.

you're doing. you're doing. There's like two of my favorite charts are on this topic. one is uh GDP per capita versus energy consumption per capita and it's almost like the R squared on it is you know probably like certainly over point8 you cluster every country on earth you plot GDP per capita you plot energy consumption per capita and there's a very obvious line through through them there's outliers but it's it's just so predictive um and so it's it is the thing like energy use in production is the ultimate proxy for human prosperity for economic activity for all these things.

This is this has been I think pretty well understood for a while but completely underd discussed and then you look at the US this is this is like the other chart I always look at is we grew our grid for a long time and then starting around the '90s essentially no growth until today. China was growing a long time like 2010 we were equal neck and neck. I think this year they now uh will be triple S on total energy production and so the US just needs to do something if it wants to continue to be relevant e economically.

you need more energy production if you want to grow your economy. Then I think just purely outsourcing stuff overseas just gives up capability especially as it gets to like new manufacturing techniques um how to scale manufacturing rapidly all these things that are so so important. How do you think the causality runs when like one idea could be okay if I just create if China surpasses us on a per capita basis and let's say they get to double like is there some rule of the way things work that will just mean they'll find ways to use that energy in some way that raises GDP per capita and drives all this progress or or is or is the causality the other direction like as GDP rises or we find new innovations like energy catches up to rise to meet that demand or something?

I it's it's curious to imagine like if I just air dropped I don't know three times the US capacity of per capita capacity of energy on some random country would that country necessarily become prosperous? The whole argument from the '9s almost till 2020 was something like even if it would increase the economy would you want to? So, okay, do I want to have, you know, dozens of aluminum smelting facilities in my country or is that better done overseas and it's right, right, right, you know, low margin and not interesting and not going to accelerate and not going to accelerate your economy and why do you have people working on that when they can be in the services world and do more interesting things?

Certainly, that was an argument, but I think we're seeing it right now. What happens when you don't when you're not proactive about it? you don't have the capability even of expanding rapidly and and so it's you don't want to be caught completely flatfooted when there's a large demand for energy production and now here we have it with AI and data centers and you look at some of these curves and looks like data centers could consume if they were allowed to the entire grid by 2030 at this growth rate and so I think in theory you would say energy production will come online as we need it but then in practice if you don't develop You may bias yourself towards other things because well, our energy costs are kind of high or our energy cost is higher than other countries because we're tighter on supply and they've overbuilt and they're subsidizing.

But then they take those industries and then they take the the front of the supply chain and just start marching forward to where they can dictate a lot of different different things about the economy. Um, so yeah, I I think that was the classic view is like economies are efficient, markets are efficient. If there's a demand for energy, we will bring it online when we need to. But physical world stuff has a timeline with it. And then in the US, it can be very hard to get stuff permitted to go do things.

And so when there's unexpected demand that's very rapid in its increase, you might be caught completely offguard, which I think is is the situation in the US now with data centers and them scrambling to find power. And where a few years ago, if you looked at a data center and and you thought, okay, where are they going to place it? The answer was they'll put the data center where there's stranded power. Stranded wind in West Texas, stranded flare gas in South Dakota, North Dakota. North Dakota.

North Dakota. Um, and now those stranded assets are gone and now it's time to build new capacity and data centers are completely backed up on getting natural gas turbines and nuclear takes a few years to get installed. So I think just from a energy stability, economic robustness point of view, you want to have capabilities and at least the ability to to stand those up as you need to. As your business scales up, everything gets more complex, especially your compliance and security needs. With so many tools offering band-aids and patches, it's unfortunately far too easy for something to slip through the cracks.

Fortunately, Vanta is a powerful tool designed to simplify and automate your security work and deliver a single source of truth for compliance and risk. There's a reason that Ramp, Cursor, and Snowflake all use Vanta. It frees them to focus on building amazing differentiated products, knowing that compliance and security are under control. Learn more at vanta.com/invest. I know firsthand how complex the tech stack is for asset management firms. And seemingly every new tool and data source makes the problem even worse, adding more complexity, more headcount, and more risk.

Ridgeline offers a better way forward. One unified platform that automates away the complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more, all at scale. Ridgeline is revolutionizing investment management, helping ambitious firms scale faster, operate smarter, and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. ridgeline.ai. ridgeline.ai. Obviously, you're doing something about it, but how do you feel about the state of things overall? Energ the state of energy in the United States overall, both state and direction.

The state's been fine until now and then the direction's completely flat. So, to me, the the issue is that we have not increased at all decades on the supply side. side. side. So, the direction don't feel great. The state, I wish we had more. I wish we were not one-third of China. Um I think we could be doing a lot more things if energy was not just abundant but cheap. And so yeah, just making more high-cost energy also won't bring back certain industries. It won't cause us to start doing things we used to do.

You think energy is the bottleneck to us bringing back some of these industries that have left or is it more labor? I think the labor is actually the one that's probably the most responsive. Like if there's really compelling jobs in in a field, people will will shift over to that. Y Y Y um like the classic one the last couple years has been electricians, you know, massively under supplied. Massively under supplied. Can't get enough to build all the data centers. They're commanding like very high great wages, you know, can make more than people who went and got a masters.

Yeah. Yeah. It's like an incredible career and now you're probably gonna get a lot of people shifting into it. Um, so I think those I think labor responds. It probably takes a few years, but it's faster than building infrastructure. And so infrastructure is probably the bottleneck. And then is it just energy? Probably not just energy. Probably permitting um can take a while. And so yeah, I think I think there's a bunch of different bottlenecks to getting things online. online. online. Why do you believe in nuclear?

Why that specifically? specifically? specifically? If you look statistically, it's always been the safest, cleanest base load. So I think for the economy, what you really want is base load. Base load meaning always on. always on, very reliable supply of electricity, not intermittent, but something you can actually design an industrial process around as the foundation of the economy. Even data centers want base load. And so solar with enough storage could be base load, but typically it's not anywhere near that amount of storage. Usually solar's more intermittent, more for peak shaving.

So if you really want base load, if you want something that businesses and industry can rely on, it has to be on almost all the time, you need it to be highly reliable. And so nuclear is the most reliable. Um so you check the base load box. People only in the last 10 20 years have started caring about climate as much, you know, even remotely as much as they do now. And if you care about climate, I think maybe you care about carbon, you probably also care about particulate and nuclear is the cleanest by far on these dimensions.

So on the environmental side, nuclear winds for base load. And then the safety side, this is the part that people think, you know, they're they question. The safety side, it's the safest by far of base load, too. You have, you know, you have a fossil fuel plant that has known impact on human well-being from from emissions and nuclear has none of the carbon emissions and there have been high-profile accidents with nuclear. You think of Chernobyl, 3M Island, Fukushima. Um, but the actual the actual the actual risk associated with nuclear despite those high-profile incidents is still far far lower than any other form of base load energy.

And so it's like, okay, if you ask me what's the safest, cleanest form of base load, nuclear, absolutely. Why do I believe in nuclear? I think those things are important. Okay, what about cost? How does it stack up on cost? And this is the piece that I think is like where it gets really exciting to where over time we did less and less and less nuclear probably starting in the 70s and you see the cost of nuclear going up as we do less of it. And you look at where the cost of nuclear is today and it's it's more than fossil fuels.

It's like okay unless you really care about safety which is pretty acceptable from all forms all forms all forms um and or you really care about carbon emissions is it really worth it? are you really going to do nuclear when it can take 10 years, 15 years to build a reactor and they can be double the expected budget. Like that's really hard for a utility to stand up to and say, "Yeah, I want to do more of this." Um, they need to bring costs down for rateayers.

They need to have predictability and when they're going to bring capacity online. So on those dimensions, nuclear has not been the best. It's not highly responsive new energy generation and it hasn't been the lowest cost. So you say, okay, why why care about nuclear? It's because on on first principles, it should be one of the lowest cost. Um, you've got much more powerful physics, physics, physics, much potentially smaller uh reactors outputting a lot of energy. Like you look at a pellet of nuclear uh fuel and the amount of coal that that's equivalent to is like a ton of coal.

And so I can take all this all this stuff, all this space and pack it in so much smaller. I don't need as much material for my reactor. I'm not going to be going through as much mind product. Like it's just an order of magnitude different. And so on on first principles, nuclear should be an extremely affordable thing, potentially much more affordable than than fossil fuels. Now it has not been at all, but that's the goal. And so now you see this whole wave of advanced reactors trying to make that true on the reactor side.

And then we're trying to do it on the fuel side. fuel side. fuel side. Can you create a taxonomy of the advanced reactors? Like what what kinds of approaches are being tried? I think everyone thinks of nuclear as the you know the massive the massive kind of plants and the stacks that they're used to seeing pictures of and are very evocative and it's sort of been that same way for a long time. They cost $10 billion to make or something. What are the things being tried on the reactor side?

Yeah. Everyone thinks of the cooling towers. You have cooling towers in other industrial processes too. Um, but everyone thinks of the cooling tower, which all it is is steam cooling off, hot water cooling off so that it can be reused as a cool as a coolant at the start of the cycle. Um, so lots of industrial processes do that. Uh, but nuclear is known for it. That's typically about a gigawatt scale reactor often in the US. uh an AP-1000 Westinghouse gigawatt scale reactor design which we can get into the tech like technical of what type of coolant they use and what type of fuel which might be interesting but the thing to think about in in my mind is that's a big reactor that's a gigawatt scale I think the interesting buckets are around the size because they link to applications and markets and that's grid so you want to go battle it out on the grid you need gigawatt scale because it moves the needle on the grid and you're getting the scale that can bring your cost down as low as possible um at least for now.

And that's that's a good format. format. format. On the other end of the spectrum, you have micro reactors where you're saying there's a stranded community that's doing diesel generators. This is both bad for the environment and not that cheap. We can beat them on cost. And so you go micro reactor. Think yeah, one megawatt scale, not gigawatt, megawatt. And then you have the middle which is 100 to 300 total megawws SMR where SMR is small modular reactor. And all three buckets have different approaches on the technology side.

Um but I think all three are going to be important. And so if if if gigawatt scale is for the grid and megawatt scale is for remote communities or you know government installations then the middle scale I think is going to find its niche behind the meter with data centers over the next 5 to 10 years where where one unit could be dedicated to one data center like a one like sort of something that doesn't interrupt the cost that I'm paying as a rateayer in whatever district I'm in even if there's a data center there like something that's more cordoned off.

Yeah. Exactly. So, think of it as like the ultimate behind the meter thing is just an island. Imagine a fence around a few hundred acres. You got a data center and you've got its nuclear power plant there or whatever other form that they might have like peaker plants, natural gas turbines, maybe even solar in some cases. Okay, that's all cordoned off. It does not even touch the grid. It's not impacting the grid. It's not doing anything to the communities like rate cost completely separate. I actually think there's a huge opportunity to improve communities through this.

So if you have a data center putting billions into a data like both the compute and the power production, let's say they're even 50/50 on power production and compute. Okay, we can we increase that power production 10%. Which is only a 5% project increase and bring in the case of a gigawatt sort of data center, bring an extra 100 megawatts to a community. That's huge. That would plummet utility prices for that community. So I think at a minimum we're going to see people going behind the meter or not disconnected from the grid and ideally we see them actually feeding the grid and feeding base load.

That reminds me of your BYOE concept. Maybe just spell that out a little bit. Yeah. I mean this was the concept. Hey, we're doing all this investment in the grid for the first time in decades. Private companies are making the investment. They will make the investment with bringing their own power, bring their own energy, BOE. and they're going to be doing that investment anyway. investment anyway. investment anyway. Their biggest worry is probably something like will I be allowed to build this data center in this community over the last year.

I think that's been this, you know, the start of a discussion and if they want to get to the right answer on that and they can tell a community, hey, we're going to be over here on this unused land and are you okay with us being here and running a bunch of compute and net uh being net positive to your grid? Can we just plug in and give you some extra power in return for inviting us to be a neighbor? I to me that's a complete no-brainer for everybody that a slight cost increase during a time when you know hyperscalers building data centers are all about speed to power and they want to be online as fast as possible because this is the contest so who can get to the greatest scale first that is a very low cost compared to the advantage of deploying quickly in a community and being invited there versus being rebuffed right so I think total no-brainer and the modern data centers can do completely closed loop cooling So the water issue is not an issue.

It's really just this power thing. What would be the explanation for these new advanced reactors ultimately not working? Like what what keeps you up at night? Because this is kind of out of your control. You're not designing these advanced reactors yourself. You're you're helping them achieve their mission, but they need to be successful. What What do you think if you had to handicap the reasons why they might not be are the most likely? I'd say number one is they don't have fuel to operate. That's definitely a problem.

That's a that's a show showstopper. So, we're trying to eliminate that risk. And then part two is they're too expensive. I think the physics will work. I don't think anyone's too worried about that. You have dozens of incredible companies with great engineers who are trying to solve the advanced reactor uh problem and really go and typically they'll pick a form factor that is of the right size to focus on a certain market. um whether that's micro reactor for remote or SMRs for data centers or very large gigawatt scale for the grid.

Um and SMRs I think ultimately have the plan of being cheaper than the gigawatt scale construction projects for the grid. But there's many reactors that are trying to solve the reactors cost side of it. And the question is going to be is their energy production cost low enough. But for these advanced reactors, it's not just a fuel availability problem and question. It's a cost question. It's the fuel can be half of their total cost and I think long-term enrichment will be half of the fuel cost.

For general matters specifically, I'd love to hear at three levels how you're thinking about building this thing. The product level, the business level, and then the company itself. So, starting with the product, how have you figured out what the market wants or needs? Obviously, there's uran, you're enriching uranium. Uranium is the key, you know, fuel source for these different, you know, there's different parts of this taxonomy for creating energy. But how do you know? There's lots of different kinds of your of things that you could provide to your customer.

What has the journey been like to figure out what the actual product is going to be? So, this goes all the way back to understanding the fuel cycle or the fuel supply chain for for nuclear. So, there's five steps. You mine uranium out of the ground. You then convert it into a gas. You then enrich it. You then deconvert it back into a solid. And the enrichment step is really refining step, a separation step. Then you turn it back into a solid. And then you form fuel pellets.

five steps to go from ore in the ground into a little pellet into a fuel rod that goes into a reactor. Um the US has good capability across the board except in enrichment. It's the one area that we don't have any commercial scale capability. There's some R&D capability but nothing that's commercial scale or commercially competitive with Russia and Europe. And so we decided let's hone in on the enrichment step. That's the bottleneck. That's the thing that's leading to these nuclear what we call the nuclear fuel cliffs where there's three cliffs.

Cliff one is the Halo supply chain. This is the same problem we heard from all the SMR companies. We don't have a source of Halo. Um Halo is the fuel that they need. Halo is uranium that's enriched to about 20% U235 which is the fistal material. They want it enriched a little bit higher to 20% because it helps their reactor be smaller. So that's the first cliff is halo for advanced reactors. They have none. If there's no reliable supply in the next few years, it's going to make it very difficult for them to scale up.

So far, they they have small amounts from the DOE to prove their that their reactors work the way they think they will and to do first deployments, but not to scale to where it really moves moves the needle on the grid. The second nuclear cliff, the nuclear fuel cliff is 2028 when the US's ban on Russian uranium imports goes into full effect. January 1st, 2028, uh we are through an act of Congress no longer allowed to import Russian uranium. uranium. uranium. At that point, enriched uranium specifically or or both.

We will not be we will not be importing uh enriched uranium from Russia or uranium from Russia which the only place we get it enriched is Europe and Russia and today Russia is about 25% of US imports and so 20 25% immediately goes away in 2028 and so utilities in the US will then start eating into their uh inventories and trying to work out deals to import more from Europe. But cliff one is HLOU 20%. Cliff two is LEU, lowenriched uranium at 3 to 5% enrichment.

And then at some point in the future, the US stockpile of enriched uranium for propulsion for the Navy. And eventually that runs out. And so there's these cliffs. We're focused on the nuclear energy side of it, LEU and Halo, and that's what we're going to be producing. We realized, hey, the most urgent cliff that we need to address as soon as possible is Halo for advanced reactors. And coincidentally, this is this the small market. This is the emergent market that we can go after that we don't think any incumbent will go after on the same time frame as us.

And we can serve those advanced reactor customers that we've known for years and make sure that they have the halo that they need to deploy and scale their reactors. Um, that's where we're starting. And then phase two is go into LEU production, lowenrich uranium for the 94 reactors on the grid today and supply them with the fuel that they need, which today in the US is a two2 and a half billion dollar market. What's the relationship between this kind of enrichment and a more weaponsoriented type of enrichment?

Yeah, so all enrichment is for the most part the same. It's if you think of it again as like a refining process or a distillation process um you're just refining it further. Ultimately the product that we make is enrichment services and you can run material through from natural uranium as it comes out of the ground and you can run it through an enrichment process to get to any arbitrary level of enrichment. The commercially relevant ones are LEU 3 to 5% for existing reactors or Halo 20% for advanced reactors.

And so when we set out to do this, we we said, "Hey, Halo is what the market needs most right now." And we set out pre-Russia ban. So there was no LEU cliff. Yeah. Yeah. Yeah. And we said we're going to develop enrichment capability to serve that market. And the fundamental unit of enrichment capability is it's just the ability to do this refining. It's measured as something called separative work units in the enrichment field. And we will provide that service and we will sell that service to utilities and advanced reactors to get them the fuel that they need.

So ultimately the product that we developed is enrichment. And you can apply it to either of those levels. Uh to your question on how is that different from weapons grade? When you see countries going to weapons grade, they're they're often trying to go north of 20% which is the internationally agreed limit to where you go to weapons grade for non-prololiferation reasons. There's strong international consensus that we should all just stay below 20. There's not really the risk is not worth the reward to let people go higher.

you see countries going to 60% saying that it's for their nuclear, you know, energy industry and it's it's pretty suspect. I think clearly they're just trying to get as close as they can to weapons grade, which is well over 90%. 90%. 90%. And they're trying to develop weapons. And so, um, ultimately it's not different technology, but it's applied in a different way and in a completely non- international consensus setup. Is the percentage is the right way to think about that like purity or something? Yeah, there's U238, there's U235 as it comes out of the ground.

There's other isotopes also, but um the main one's U238 and you basically want to filter that out to get U235 and U2 U235 is the isotope that wants to wants to react. That's the fizzle isotope. What do we know about the like the stock of ore in the world or just like the raw element element element we've got? Yeah, certainly hundreds of years of supply in the ground. US has supply. We have active mining in the US. Canada has even more supply, higher grade or um enough to supply us for a very long time.

Same as Australia and then um Kazakhstan's a huge deposit and US imports from there as well. So on the on the or side, not an issue. How do you build a great business on top of this product? Is it so easy just because there's so much latent demand for it from these this new segment or are there other considerations? I wouldn't say it's so easy at all and I think the latent demand has not been obvious for a long time until until the last couple years.

So any any large latent demand I think is in the last 24 months linked to the thought that there's going to be a lot more data centers doing AI inference or training jobs. And but if you go before that, there wasn't a lot of new nuclear being talked about. There was need for Halo, but that's a pretty small market. And so I think a lot of people have thought that this is not really something where we need new capacity. If you go back to the 2010s, the 2010s, the 2010s, uh really no new capacity building anywhere in the 2010s and um certainly not for LEU production, certainly not for Halo just because it's been emerging so recently.

So I think the fact that this is a growing market is, you know, we're still betting on that in many ways. It's not the case that we're currently deploying tons of new reactors in the US, but we think that's coming. And then so I think the market we believe in deeply. I don't know that the entire industry believes that the demand is there. They've been through nuclear renaissances before that didn't pan out. And I think their point of view would be we'll build it when we know that there's a need.

Um, at least that's been the attitude of many people that we've talked to on the ease of doing this. It's still, you know, it's it's a proven thing. People have done this before, but it's still not easy. I'd say you see some of these like retro technologies that were done in the past and then we lost a lot of the capability because we didn't do it for so long. And so for enrichment, um, you know, there's it's been an industry without a lot of change since really the '9s.

not a lot of progress, not a lot of leveraging of new technology. And so there's a lot of doing the hard engineering work to get back up to speed to modern. Um, and then even once that's done, there's, you know, you're building facilities that are a million square feet and large large, you know, multi-billion dollar infrastructure projects. And so in the same way that like maybe building the first Tesla Roadster was hard, but the real challenge was how do you scale this up? I think it's extremely underappreciated how much goes into standing up a huge industrial facility and I think that's actually the hard part.

part. part. How do you think about like the Northstar metric for the business? Like if I equate it to SpaceX the cost per kilogram to orbit or something like that is like a really cool thing to visualize over time. What's your chart going to look like? What's the metric? Yeah. So they had cost per kilo to orbit and specific to a like really to a specific orbit of low earth orbit and you can actually decompose the orbital piece into a velocity. So it's almost like cost per kilo to some velocity.

Our version is cost per kilo of uranium not of a payload to some enrichment level. Um and so it's like cost per kilogram to 3 to 5% or to 19%. which can be described as cost per separative work unit where separative work unit is the industry measure of enrichment to where it's basically kilos times some um entropy reduction or separation or organization of the material and so a separative work unit is typically referred to as uh kg swoo kilos times separative work units and so our our northstar metric is dollars per kilo swoo.

swoo. swoo. And is that does that map on to the value creation cycle of your customer? Like is that the is that input cost the key determinant of their success as a business? business? business? It is. Yeah. So depends the importance depends on what type of reactor you're running, running, running, right? So if you're doing a gigawatt scale classic, you know, AP-1000 lightwater reactor that uses 3 to 5% enriched fuel, lowenrich uranium, LEU, then the cost of that fuel as a percent of your overall cost is quite low.

It doesn't really matter. What you want is availability. You want reliability. You want diversity of suppliers. You want to know that they're going to be there. And you don't want them, you know, overly concentrating and and creating supply risk for you. But the cost of the fuel is not a huge input into input into input into um your your cost of electricity, your LCOE. LCOE. LCOE. Most of that's going to be capex for your huge, you know, $10 billion project. Um so for them, it doesn't matter that much, but for advanced reactors, it matters a lot.

So some of some advanced reactors the cost of the fuel the halo fuel that goes into it enriched further to 19.75%. Which requires more input material to refine it all the way there as you filter through more and more and more material that fuel can be more than half of their energy production cost. And so to them it does matter a lot. And the way that they that that fuel has been purchased in the industry so far which maps directly onto our northstar metric is as five different services.

A utility purchases uranium and then it purchases upgrades to the uranium as it goes through the supply chain. So it's really a tolling business where you buy they own license to the material and it's booked transfers all the way through and they are paying different people per unit of service provided um to to do their work. And so the service that they provide to us is priced in dollars per swoot. And if you look at the actual cost structure of producing fuel all the way through for lowenriched maybe enrichment's you know a little bit less than a third but it's one of the largest cost segments for halo it's even more and and we think it's going to be the dominant cost driver of of fuel cost.

So back to tying it back to the founders fund stuff we were talking about at the beginning you sort of have found the highest cost segment of the workflow sold to the highest percentage of the cost. um new customer that's emerging that's small that you can go own and that's how you then ultimately build a great business is by driving all of that through like the all this force through kind of the narrowest possible choke point. choke point. choke point. Yeah. If you if you want to put it in investment terms and like business business strategy terms that would be it but it's um I think if you go back to the very beginning it just turned out that this was the thing that was most necessary.

This was like this step of enrichment was why we didn't have the more enriched fuel that advanced reactors needed and you realized the US had lost the ability despite being number one in the world during the 80s by far and it was something it was something we were extremely good at and we completely stopped doing it and that this bottleneck was going to be the bottleneck to all of nuclear energy if you believed in advanced nuclear energy and this is the thing we had to solve.

So, we did it because no one was doing it and it was extremely important and urgent and I think that ended up corresponding to this like very good entry point for the market. But I think the two are really linked. I I don't think it was coincidence that if you're solving a problem that's urgent that no one else is doing on a small but emerging market, it it will completely fit that framework. And then the final step is building a great like a great enduring company.

By which I mean not just a flow of cash flow but a collection of people, a a set of impacts on the country. How do you think about the the most important things you can do starting now to build a great company and like what does that mean to you? You've invested in many great companies like what is a great company on top of a good product and a stream of you know cash flow. It comes back to the team. Um I think Naval has said this a bunch of times like the team you build is the company you build.

And so to us it's team DNA. We want people, you know, we thought about where do we put the company. This was a big question at the very beginning. And you know, you look at who you actually need on the team and of course you need nuclear engineers, but you also need great mechanical engineers, electrical, software, chemical, like every type of engineering. And so you ask yourself, well, where do we want to put the company? And it turns out the number of the percent of the team that's nuclear engineers is single digits.

You don't need, we're not doing a reactor. there's actually no nuclear reactions in our process. We need to make sure that there's no nuclear reactions. But to do that, you don't need a huge number of nuclear engineers. And so there was this question of do you go to where the nuclear engine engineers are or do you go to where all those other types of engineers are? engineers are? engineers are? And you know on dimension one the nuclear engineers you don't need that many of. You need great ones though.

Where are we going to find them? And you look at where they are in the country and they're just scattered everywhere. There's no one place to go. And so we had to go the other option. You go to where all the other engineers are, specifically hardware, aerospace, and that's Southern California. And so the team DNA that we wanted to set up was this is an engineering driven company. We're not doing a science project. No new physics, no going down a multi-year R&D path that's uncertain. We need to get this operational as fast as possible.

This is an engineering problem. Everything we have to do has to be thought of as engineering. We're engineering cost out of the system. We're engineering performance up. We're engineering cost of capital down. We're going to do we're we're engineering schedule to be as tight as possible. We're even engineering our own buildings. Like this is taken from this the Tesla playbook. Don't hire a GC and outsource everything. You lose total control. The schedule could be it's not in your hands anymore. You need to build your own in-house engineer, procure, construct, EPC firm as a team to go run your construction projects because it's one of the hardest things about this is not just engineering, not just manufacturing, but actually construction of millions of square feet on schedule, on budget.

And so the whole DNA of the company is oriented around drive to deliver for the industry as quickly as we can while being safe um reliable like every other dimension you would want subject to those constraints. Go quickly because the industry needs it. Don't have analysis paralysis. Don't deliberate over things that don't matter. Let's get a service live that can deliver for the US industry and then let's bring the cost down over time. And so everything's oriented around scheduling cost. How do you run the company?

Like literally your time as one of the key inputs into this everything you just described happening or not. You've watched a lot of vertically integrated companies that that own a process end to end do that really really well. How are you running the thing? Like if I were to follow you around for a week, what would it look like? Yeah, it changes over time. So my my strong preference is internal facing facing facing and so to really be there helping to do the work internally. Right now we're in a phase of of company building and team building and so we're rapidly hiring.

So a lot of my days right now is interviewing people. I'm the last step in the interview. Then what I'm screening for is does this person not just have the skills which have already been screened for at that point but do they have the attitude of you know they care about this problem. They know that there's lots of places that that they could work but this may be the only place that they can work on this problem in a in a private company and they know that there's probably places that they could potentially go make more salary that they could have an easier job a more predictable schedule.

But we're trying to do this mission that requires us to go as quickly as possible and to deliver before end of decade for both the advanced reactor industry and the existing reactors on the grid which is like 20% of our grid. And this is going to mean a lot of late nights, weekends, like just working as hard as we possibly can. And is that something that they've done before? Is that something they like doing? Do they know what they're signing up for? Um are they really motivated by this?

Those are things I'll typically screen for subject to everything else being already verified. And so a lot of my day right now is trying to make sure we have the right early people on the team to build the right culture for them to then go recruit and hire the next people. It's not just the team you build is the company build you build, but the the early team you build is the company you build, which is actually what drives a lot of my external facing stuff is we got to get the word out to the right people so they know what we're working on.

they know why this is important, why this is the bottleneck to scaling nuclear and to scaling energy in the country um and why they they should join our team. our team. our team. How do you reason through the what seemed to me like illogical uh data uh datafree fears that people have about nuclear in general? You you started to address them earlier around just the amount of waste is actually quite small. I think it fits in like this room or something some something crazy. the bad events that we can call to mind Chernobyl and Three-Mile Island were bad, but if you dig into the data, it seems like nuclear is very safe, but these fears really do seem to be the reason why we don't have a lot more of it.

And what what matters is reality, not the data. Um, so how do you how would you like pitch people on not being worried about these things so we can get over this problem? You're pointing out kind of the difference between acute and chronic sort of events. And I think acute events that are very attention attention worthy. People remember those. And the things that are just lowlevel in the background, people don't think about even car crashes every day. Car crashes, like all these things. Um I think are just Yeah, you can you can think of it in terms of catastrophic events like that.

You can think of it in terms of your health and you know, what are we chronically doing that's unhealthy that's taking its toll versus acute things that take their toll. I think people have a strong bias towards that, but often it's you know, the right thing is to look at the data. I don't think most people find that compelling. I think the more compelling thing in nuclear for me is think of a world in which we are not constrained by energy and we won't be constrained because we can all agree that it's good because it's base load it's very affordable it's going to bring down your rates um it's safe and it's clean and we can you know we can debate those and we can look at the data but let's imagine that future world in which we have all those things I think the way to make nuclear really compelling to people is actually to check the final box which is cost.

And so again going back to why have we not had more nuclear? The schedule to bring it online for the large gigawatt scale projects has been uncertain. The costs are often above what's projected. And when you look at the total package, it's not cheaper than coal. It's not cheaper than natural gas. It's not cheaper than hydro. So why do we want this? And I think if you told someone, okay, tr like nuclear is safe. We can we can dig into that. Understood you're not interested if it's more expensive.

Why would you be? But what if it's cheaper? What if your what if your utility bill got cut in half? I think people would suddenly find that extremely compelling for something that could be tens of miles away from their house and still powering powering their powering powering the grid. To bring it back to where we began the conversation, why do you think there are not more founders funds and more founders pursuing some, you know, radically different very unique vision for the future? It doesn't seem like there's many of these people.

There's only one found more investors have kind of taken on this mantle of um big big contrarian unique projects I suppose. But why are there not more of each? It seems so strange. It's all case by case even for Founders Fund. It's not it's not a programmatic thing that Founders Fund has tried to do. It's almost the opposite of that. It's you know Founders Fund recruits for people that want to be investors that don't want to be entrepreneurs. If they want to be entrepreneurs, they should go be entrepreneurs.

And the two roles are extremely different if you know if for people that have done both, they realize how different operating it is is than investing. And so Founders Fund explicitly selects for people that want to be investors. And yet once in a while a company will start just cuz it's it almost feels like a disservice to not go start it. So in this case decade plus of investing met all the reactor companies they all say the same problem no one's doing it and then you look at the final thing of like okay important problem no one's doing it maybe I can do it and you look at what what it takes to actually go do that and you realize wait my background is really aligned with that if I don't do this then you know if the goal is to have an impact on the world and we can have positive impact through investing but a much greater impact through starting this specific company then it's it's actually wrong to not go do that.

And so it's almost like there's a desire to not start companies start companies start companies like full stop and then only with extreme exceptions will we start them. And so I think if it's an extreme exception, it it makes sense that it doesn't happen that often. Now, why don't most people do that? I think um you know the investing life is is probably far better than the operator life. And so it's it's Have you experienced it that way so far? I mean, I I like what we're doing a lot, but in terms of quality of life, it's it's not as good.

I think any any entrepreneur would tell you that the quality of life is not as good. I think once you start a company, you're really like, you know, you're taking the harness and you're latching on like whatever it is you have to go do. It's it's not optional. If you're an investor and, you know, a deal comes ac across your plate, but I'm a little bit too busy. I've got I've got enough over here I got to work on. It is easy to let that one go and not have to do that work.

I have to not have to do that work. I think when you're running a company, there's stuff that comes up that you just have to deal with and you have to take care of it or it's going to be a problem. Now, that's also a function of the time horizons of of each job. So, I think when you're operating, you can see the feedback cycle very quickly as an investor. that company that you might have just chosen to not meet with to preserve quality of life, that could be the next great company.

And so you might not realize that you're not doing well until five years from now when you don't have that return from that company. And so, you know, some people are just wired a certain way, like even in the investing role, I would take 10 meetings a day, like to the point of definitely diminishing returns, but want to work hard and make sure you see everything. I think I think the other thing about investing when properly understood is that you actually don't need to invest in that many companies.

And while you can brute force it and boil the ocean and try and meet everyone and try and be extremely helpful to everybody, all that ultimately matters is a few companies per vintage and you just have to be into those. And so certainly as a VC much more than even private equity or hedge funds as a VC you don't actually have to work that hard meeting everybody. You can dive in as much as you want into specific companies and value add and help them and be their preferred investor.

But it is not a job of labor. It's really a job of ideas and thinking. And so the quality of life of being surrounded by smart people, talking through ideas and thinking, I think can be a lot more comfortable than rolling up the sleeves and diving in. Well, I for one, I'm glad that you're now working on the problem that you're working on. It seems enormously high leverage and I certainly hope that the future that you might enable is the one that we get to see.

I I think there's very little arguments against more cheaper, cleaner energy. So, an incredible project. When I do these interviews, I ask everyone the same final question. What is the kindest thing that anyone's ever done for you? There's maybe the recent example that's like completely linked to this conversation is the transition from founders fund to general matter and you know you have to say okay well what was this thread that led led me here and I think it it goes all the way back to like being recruited into founders fund by Peter and then support through a decade of investing and then as I wanted to go shift focus to this total support for doing that.

Obviously, Peter like tried to beat up the idea and make make sure it's good, but being along for that journey and then ultimately joining our board as one of very few boards that he's on was uh yeah, really appreciate that. that. that. What was the hardest part about him beating up the idea? What was like the hardest aspect to get through? Um it was probably all the all the abstract like layers of um metal level questions of just even going back to the fact of like we haven't had any new nuclear in a long time.

Why is that? Is nuclear just regulated to death? Is the regulation a thing that's meant to stop it like basically make it illegal? And so all these questions of like why why is it really the case that we're going to get more nuclear now? And I think it was that that challenging of this that really forced us to ask a lot of hard questions that we feel great about our answers to like even the one you asked of of of are you dependent on every SMR, you know, succeeding to make a real market.

On the Halo side, yes, the Halo production ultimately will be SMRs that create that demand. Um, but to make Halo, you have to make LEU and LEU is what goes into the grid today. And our technology works in LEU also. And we'll be building LEU capacity. And so there's this, you know, two billion plus US market and a similar size market in our allied, you know, partners um that we can sell into. And so there's this known good market. And and so you work through questions like that when being challenged on what if nuclear doesn't grow.

And it's like, well, worst case, there's an existing market and we can start a business there and time is then on our side for when and if nuclear grows, which we think it will grow very rapidly. Um, we're in a good position and a lot of these conversations that I had with Peter were 2023. Yeah. Yeah. Yeah. Before the AI data center boom. And so now it's extremely obvious why we need this. this. this. Yeah. In a good position. Scott, this has been so much fun.

Thank you so much for your time. Yeah. Thank you. Your finance team isn't losing money on big mistakes. It's leaking through a thousand tiny decisions nobody's watching. Ramp puts guard rails on spending before it happens. Real-time limits, automatic rules, zero firefighting. Try it at ramp.com/invest. As your business grows, Vant scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more at vanta.com/invest. Ridgeline is redefining asset management technology as a true partner, not just a software vendor. They've helped firms 5x and scale, enabling faster growth, smarter operations, and a competitive edge.

Visit ridgelineapps.com to see what they can unlock for your firm. Every investment firm is unique, and generic AI doesn't understand your process. Rogo does. It's an AI platform built specifically for Wall Street, connected to your data, understanding your process, and producing real outputs. Check them out at rogo.ai/invest. The best AI and software companies from OpenAI to Cursor to Perplexity use work OS to become enterprise ready overnight, not in months. Visit works.com to skip the unglamorous infrastructure work and focus on your product.