The company building America’s uranium supply from scratch

The U.S. did a first-generation technology to win World War II to stay dominant in the Cold War. We were over 90% of supply globally. It was nicknamed megatons to megawatts, so we imported Russian warheads, blended them down, ran our reactors on it. Congress passed a ban on imports of Russian uranium. That ban goes into effect January 1st, 2028. And so our first mission is produce HALU before the end of the decade for all these reactors. Scott Nolan leads General Matter, an advanced uranium enrichment company. His ultimate goal is to slash energy costs so dramatically that entirely new capabilities become cheap and routine. Cheers. Cheers. Good to see you. Cheers. So, General Matter, what are you guys trying to do? We are enriching uranium. You know, when we started, not many people were talking about uranium, not many people were talking about nuclear energy. This was mid-2023. And I'd been doing investing at Founders Fund for 10 years and investing in some of the reactor companies. I asked them, what's the hardest thing you have to do? And I was like, licensing, obviously. And they said, no, it wasn't licensing, it's actually getting the fuel. We have to get all of our fuel from Russia. It's very hard to import. And so I said, well, you know, why don't the U.S. companies that make all the fuel for the existing fleet of reactors, 94 reactors in the grid, 20% of U.S. power, why don't they make the fuel that you need? And they said, what U.S. companies? Okay, so this is both new nuclear companies, like startups, and existing nuclear plants in the U.S., both require enriched uranium, and both have to source it from Russian companies? Russian or European. Okay. Yeah, but non-U.S. companies. Non-U.S. Yeah. So let's run through the big picture on where fuel comes from. So reactors like any engine or anything producing power does consume something that consumess nuclear fuel. The nuclear fuel is made with five steps. First, you get uranium out of the ground. You then turn it into a gas. You then separate the gas to enrich it, meaning get more density of U-235, the fissile material. You then turn it back into a solid, and then you make your fuel pellets. So five steps. All reactors in the U.S. run on this stack for making nuclear fuel. The more modern reactors, SMRs, advanced reactors, those will use fuel that's enriched to a higher level. Call it 20%, just under 20%. Most of the reactors in the grid today, they go at 3% to 5%. And so the big difference that that unlocks is if you're going low enriched, 3% to 5%, you generally want a much bigger reactor vessel, a core. If you're going up to 19%, 19.75%, 20%, it unlocks a much smaller core that lets you do a factory-built reactor. So a lot of what you're hearing about with advanced reactors is a combination of safety, enhanced passive safety that doesn't exist in the existing fleet, and then a form factor that could be built in a factory, modularly, that lets you bring the cost down. As in, when people talk about small modular reactors, the modularity is that you can mass produce it in a factory rather than needing to build it custom on a site, and you have a bunch of shipping containers that you hook up. Exactly. More or less. Trying to minimize the construction aspect of the project. Okay, but both, so where do, you know, Diablo Canyon, where do they get their enriched uranium? From existing suppliers, that's a combination of Russia and Europe. So in the U.S., we get about a quarter from Russia, still imported, that's going to keep going until 2028. And then the rest from European providers, that's France, and then a European consortium called Urenco. Does the U.S. mine uranium? We do, small quantities. So the problem you're trying to address is that uranium is mined in the U.S. or Canada, it is then shipped across an ocean to be enriched, and then ultimately shipped back as fuel. More or less, yeah. So most of U.S. supply will come from Kazakhstan and Canada, and then where it's turned into a gas varies. Got it. And I presume if you talk to a nuclear startup that wants to get 19% enriched uranium, they, I mean, they agree with you on the kind of the geopolitics of this, it's, you know, be valuable to onshore this stuff, but they probably have more acute problems that you're solving beyond just, it would be good to re-onshore the supply chain. Right. For them, it's mostly about availability. So as they think about their very first deployments and then scaling up in the early 2030s to tens of deployments, it's all about where are we going to get the enriched uranium, the 19.75% enriched uranium, also called HALU, High Assay Low Enriched Uranium. So that's all about availability. That was the first problem that I heard of, and that was the question of, okay, only Russia makes this today commercially. How are we going to import it? In mid-2024, Congress passed a ban on imports of Russian uranium. That ban goes into effect January 1st, 2028. Right now, they're still importing under a waiver, but January 1st, 2028, that ends. And so all these companies are wondering who's going to produce HALU. And so our first mission as a provider is produce HALU before the end of the decade for all these reactors. Part two is bringing the cost down. So that'll be the other big lever that we work on. How is this regulated? Can you give us the map of enriched uranium, where does weapons-grade uranium start to happen? And yeah, who do you have to work with as a regulator for all this? Yeah, so if you're doing commercial sales of nuclear power or fuel, that's going to go through the NRC, the Nuclear Regulatory Commission. In the U.S., that's your regulator. If you are selling to the government, there's potential Department of Energy paths. Or if you're an R&D reactor, you could go through a DOE path. But it's primarily NRC if you're doing commercial operations. How have they been still? Great. Great. Like I said, I think the investment community, the startup community, the whole tech community historically has just heard, oh, the NRC is really difficult or something. Yeah, the NRC is a bad brand. Yeah. That would be the blame is often placed on the NRC. I actually don't think it's deserved. They've been great to work with. Ultimately, they care about two things, safety and security. And then there's an environmental consideration as well. And so all their licensing focuses on those things. This was the answer we got from the SMR company that I knew. We asked them, hey, how hard is it to get the NRC licensing? And they said, it's pretty straightforward. You do the safety analysis, you do the security analysis, you show low environmental impact. And it's a straightforward process. It's a lot of paperwork and analysis, but it's doable. Can you give us a bit of a map of nuclear reactor designs? So there's the traditional designs installed in plants operating today. And then you're talking about these newer startups that are pursuing SMR-type approaches. And there are a bunch of different technical approaches there, but can you just ground us in what everyone's trying to do? And presumably, there's some even that don't use uranium as a fuel, so they're outside of the scope for you, but are maybe relevant to this discussion. Yeah. So most of the U.S. grid, virtually all of it, runs on light water reactors. These are reactors with uranium-enriched to low-enriched uranium levels, LEU levels, 3% to 5% enrichment. That goes into the core. And your moderator and your coolant is water, just regular water. And so that's most reactors on the grid. You end up with a pressurized steam line, large dome covering the reactor. That's part of the large construction project that leads to the billions in cost per reactor. Is the large dome covering the... That's a containment dome. I see. Okay. Yeah. So in the case of an accident, in the case of loss of cooling, that's meant to do containment of any radiological material. I see. Yeah. So the reactor is not actually that large. It's a much larger dome covering the reactor. Why does a containment dome need to be so big? Mostly for the most extreme accident scenarios. Just making sure the thickness is there, the internal volumes are there. I see. Yeah. And the inside is just very thick. Smaller. Yeah. Smaller. Yeah. Okay. So that's the traditional light water reactor design. Yeah. How about the startups? Nearly all of them are focused on going modular, bringing the size down, bringing your core size down. So let's go to stranded demand centers and let's serve those demand centers and let's go containerized or even smaller than that. You're going to be using HALU in that very small format. Again, that's the 19.75% enriched, smaller core, smaller format. So now we're talking about fuel formats, but they often go hand in hand with the reactor design. But why do those two things go together? Which pieces? The smaller core and highly enriched uranium. To unlock a smaller core design that could be built in a factory, you want your fuel to be higher octane, so to speak, higher enrichment level. The reason you care about your fuel being at a higher enrichment level is because at some point as it's consumed, as it reacts, that enrichment level will drop. And at some point you can think of it as the power going out, the reactor fizzling out. If you have a stationary one gigawatt reactor, you're running three to 5% enriched uranium. You're probably doing refueling every 18 months, 24 months. And so that's an acceptable thing. You have a very big reactor. Your core will stay critical for quite a while. And the refueling every 18, 24 months is not such a big deal. If you have a very small core, think of it as you need more higher octane fuel. As it burns up, it will pass through acceptable power production down to not even being critical more quickly. And some of these reactors also want to have five-year, 10-year refueling cycles because they're out somewhere remote, not somewhere central. And so it's a combination of you want to unlock a smaller core that will remain critical for a longer period. Yeah. Okay. That makes sense. Can you talk about the passive safety advantages of highly enriched uranium that you mentioned? Not highly, but halo. Oh, sorry. Yeah, yeah, yeah. Yeah. So the enrichment level itself does not lead to safety advantages, but people's reactor formats do. And so some of these reactors are passively safe. So a classically well-known version of this was like molten salt reactors. The molten salt has thermal properties that cause it to self-regulate. And then if somehow it were overheated, you could put a plug in the bottom of the reservoir and then the plug would melt and then everything drains out and criticality stops. That's kind of the idea of a molten salt reactor. You have other ones like helium-cooled, where the helium can't be activated. The helium cannot become radioactive. So even if you had a cooling release, you're not releasing any radioactive material. And in general, these newer designs just have either passive safety features or modern architectures around active safety. Got it. So you can design into the reactor some kind of self-correcting mechanism like a fuse plug type thing where the act of starting to run away from you causes the safety mechanisms to kick in. Right. Yeah. Yeah. Well stated. The AI scale-up and power-up has been powered significantly by turbines and other forms of electricity that you can bring online very quickly, generators in some cases. Has it affected your market at all or really the market for your customers or are the timelines for nuclear power too long? I think no and no. So it has not impacted us specifically. So a lot of the topics in nuclear today are all about SMRs and advanced nuclear. That's an important segment. I think it's going to grow tremendously over the next decade. But it's still a small market today. And as an enricher, most of the contracting volume that we do is with the existing fleet. It's for low-enriched uranium. It's with the utilities. So as people think about how are they powering data centers in the next couple of years, we think that some of that will be SMRs as they contract that. But even if it's all natural gas, that's fine because in the next few years, most of our demand is from existing fleet utility customers. Now where does it go in five years? I think there will be more and more push to move off of natural gas, move to true baseload. And I think that'll be nuclear. And then the question, the really big question I think is, does that happen through more of the gigawatt scale reactors or does it happen through more SMRs and what's that balance? And I think if you just take a big step back and say, okay, what type of energy do we want to power these data centers? I think there's going to be a lot of pressure for it to be safe and for it to be clean and for it to be baseload. And so the thing that people forget is that nuclear is by far the cleanest and safest baseload. It's actually safer than wind power per terawatt hour. Sorry, how do people get harsh with wind power, just the maintenance of the turbines? Yeah, if you look at all downstream mortality, it's more dangerous than nuclear. And then if you look at all downstream CO2 emissions, nuclear is actually the lowest, lower than wind or solar. So if you think that those things matter and that baseload matters, then it will have to be nuclear. The one thing nuclear has not done a good job of in beating everything else is on cost. And so I think that's actually what it all comes down to. So the question of do we deploy lots of gigawatt scale reactors or is the scaling handled by SMRs comes down to who is actually deploying more quickly and cheaply on a per megawatt scale basis? Yeah, isn't the true competitor for nuclear solar plus batteries, because those are coming down this, both are coming down a very aggressive cost curve. And so you could just be cost competed by solar and batteries in a lot of use cases. I believe the solar cost curve, I haven't seen data that's as compelling on the battery cost curve that could be coming. But if you want a data center that's five nines, you need a lot of storage. So I'd actually delete one thing, the battery piece, and I would say the competitor for nuclear is actually pure solar. Solar and sun-sync orbit for data centers, if we're talking data centers. I do think that that's the one other angle that's pretty smart and could possibly win. If we're talking about power on the ground, I think nuclear still wins, whether that's data center, industrial, whatever it is. How will cost get solved, or will it get solved? It will get solved, and then the way it gets solved depends on what you think the cause of the cost issues in nuclear are being. So this is one of those over-determined problems of, like, why haven't we scaled nuclear? I think most people just say safety. You know, they look back to the 70s, and they say there was a movie, The China Syndrome. You had Three Mile Island. You had Chernobyl. And so clearly nuclear was going to stop, and we wouldn't scale it. And I do think the scaling piece is actually one of the proximate causes. We never hit economies of scale. We weren't doing it quickly enough. We never built out the supply chains. The workforces would shift around from project to project. Vogel was way over budget, way over schedule. But at a time of historically low interest rates, 20% of Vogel's cost overruns were interest rate overruns, interest payment overruns. And so you realize that the overnight cost of a plant, when they take 10 years to build, actually doesn't matter as much as interest rates and how long you're actually taking to build these things. And so if you think about the big reactors, I think the way that we bring the cost down dramatically is just build them quicker and build more of them. I think that goes a very long way. If you look at the period when things really slowed down and that downward spiral began for nuclear, it was the 70s. So you had oil price shocks. You had oil prices going very low. You had interest rates that peaked, I think, in 1981 on mortgages, like 18% mortgages at that point. And so how do you finance a huge infrastructure project when your cost of capital is well north of 10%, way north of that? Because, yeah, the classical story of what happened is this very accident-based mood of things like Three Mile Island and Chernobyl. And you basically reject that as an explanation where you don't think it was that we saw these near misses and accidents and things and said, screw that, we're going to get much, you know, we're going to strangulate nuclear and over-regulate and everything like that. You think it was much more of a WTF happened in 1971 type story where we lost the ability to build large infrastructure projects generally, and nuclear plants are an example of a large infrastructure project? Yeah, and maybe the safety concerns put a slight pause on it, but I think that that is often blamed as the only thing. And maybe that was, you know, kicked off this cycle to some extent, but I think it was probably inevitable anyway when your product is not cost competitive. So I think fundamentally that's the thing in nuclear. It's the cleanest baseload, the safest baseload, not the cheapest baseload. So you have to be the cheapest. I also think people in general, if presented with, you know, here's a new technology, would you like this to power your grid? You've maybe heard some safety issues with it that are probably confusing of which side to believe. And then also your energy won't be cheaper. And so if we're talking about being in 1970s, 1980s, when global warming was not really a topic and emissions wasn't as front and center, why would you say yes to I want a more expensive electricity bill? So I think that put us here. I think the way it gets solved is building more. I think the other side of it, if we want to talk about the cost structure thing in terms of being overdetermined, you have to ask yourself, well, why did the cost get high? Why wasn't there more downward pressure on them? And I think there just wasn't a strong enough incentive in the ecosystem to push prices down. You had utilities that are more like cost plus organizations, and they're generally going to outsource the construction of the facility. And so you end up with this dynamic that was in some ways similar to the launch industry of no very strong economic pressure to reduce price. It just stopped being a market and started to become a place where people rent, extract in all their local corners. Maybe not intentionally, but I think absent a strong pressure to keep prices low and push them down and compete them down. I think in a lot of industries that happens, and it happened in space launch as well. I mean, it feels like in general the nuclear mood is this very interesting story of extremes where there was crazy unbridled optimism early on. Remember the radium watches where people were making watches with radium-226 for the glow-in-the-dark dials and this energy-too-cheap-to-meter and the Jetsons future. It was really ebullient in its optimism. And then there was this crazy pessimism where nuclear became the kind of public enemy number one and the enemy of environmentalists, which is kind of ironic given you're saying it is kind of probably the safest and lowest carbon format. And it was actually a big debate with the Sierra Club actually internally. Really? There was about half of the Sierra Club. There was a pro-nuclear side of the Sierra Club. Pro-nuclear. Yeah, very pro-nuclear. And it was divided on this around the time of Ansel Adams taking photos for the Sierra Club. I remember this as actually being something that let him create some huge rift. And the argument was basically we can try and have less energy consumption as a society, and that might be the best thing for the environment, but it seems unlikely. And therefore the alternative is more coal, other things we're doing. Maybe solar can work. Maybe wind can work. But those are actually visually and in terms of acreage more impactful to the environment. And so nuclear may be actually the most environmental source of energy if you think we're going to consume it. And so that was a big internal argument even amongst the environmental movement around that time. I hadn't realized that there was a rift there, but ultimately one side won out. Yep. But where I was going was it feels like we are now getting to a better spot where at least amongst the youth, I mean opinions are very striated by age, but younger people are much more likely to be pro-nuclear. So do you think we're getting to a better spot generally in terms of public perception? Yeah, I think we are. I think we are. You look at not just age demographics, but also just politically. Ten years ago nuclear was much less popular in general and also it was a political issue. Now it's got bipartisan support. You look at the Biden administration wanted to triple nuclear production in the US by 2050. The Trump administration wants to quadruple it. So there's good alignment politically around nuclear now. And I think it's because people who historically would have been very concerned more with environmental are realizing it's the cleanest, lowest CO2 emission source and it's actually extremely safe. Yes. So who do you sell to? Like who are your customers or prospective customers? I know you probably can't pick favorites, but what are a few of the most exciting approaches that you see amongst the startups? So if we're talking about specifics, let's just go smallest to biggest in no particular order. You're so diplomatic. Smallest would be like Antares. That's going to be more for forward deployed military space, things like that. They have an incredible business in that market. Next size up would be Radiant, one megawatt. Very good reactor design, containerized for remote applications primarily and base resilience. Great business there. Then you start getting up into the SMR size. And so you have people like Allo or Valor or even Oklo. Then you go bigger. So that would be serving the data center market primarily. That's probably the first applications there and the ones that are most urgent. And then you go larger than that and you're looking at Oklo, Xenergy, TerraPower. Larger format that can really compete on the grid in the near term. And so not all of these are using HALU today. Some might use Lower Enrich or LEU Plus, 6% to 10% because it's available. But all of them could. It's like putting 100 octane in your car. I mean, price can take it. I don't think all of them can. So if you go big enough, those are all the advanced ones. I think none that I named. I'm not aware of any limitations of any that I named. I think all of those can run HALU at some point. Some are choosing to run LEU or LEU Plus today because that's what's available. If you go bigger on the grid today, those large reactors, those gigawatt scale AP1000s, the Westinghouse design, that cannot run HALU. But they are looking at operating and running like LEU Plus. And again, going back to what we were talking about before, you increase the enrichment level, and you don't have to refuel as often, or you can get a little bit more power out of it. So that's kind of the landscape. I think large format light water reactors, really the ones people associate with Homer Simpson, that's Low Enrich Uranium, and then everything else that's happening generally trends towards a higher enrichment level, just under 20% HALU. Is it relevant to submarines and all the non-power plant? No. Submarines care even more about refueling cycles. So when you refuel a submarine, you have to cut it open and remove the reactor. So as infrequent as possible is ideal there. And they'll run north of 90% enrichment. Which is, again, getting into a different regulatory regime. You cannot, as a civilian company, use that. Completely different. And that's why all of the new SMRs, all the advanced reactor designs, specifically choose HALU. 19.75%, just under 20%, which is the cutoff for different regulation internationally and domestically. I see. 20% is the cutoff, because beyond that you're getting... You're getting close. Too close. Yeah. Okay, that makes sense. Where are you guys in the development of the company? We're talking a lot about the market, but how many people? Do you have a bunch of uranium sitting in a warehouse somewhere? When do you enrich it? Just describe to me where you are on the journey. Yeah, so big picture, we started end of 2023. Today, here we are almost three years later. The team is just over 200 people, scaling pretty quickly. We have facilities in LA as headquarters, engineering. The facility that we're building is in Paducah, Kentucky, so western Kentucky. And everything we're doing at the company is aimed towards bringing that online by the end of the decade. So that means licensing. We just submitted our NRC license last week. It means all engineering efforts. It means manufacturing, construction. Pretty much every piece of this is targeting that end of decade timeline. So you're delivering enriched uranium by the end of the decade? Yes, yeah. And on the commercial side, all of our contracts are lined up against that date, because we know that's when both the ban on Russian uranium imports starts, January 1st, 2028. Utilities do have some inventory. They do have some other contracts that can see them through for a little bit. But we want to be online as soon as we can after that to help plug that gap, which is about a quarter of U.S. demand. And then all of the advanced reactors are more or less targeting first deployments in 2028, 2029 commercially, and then scaling up from there. So that's about the right time to be online for the market, and it's about as fast as we can go. You worked at SpaceX. Elon's companies have this Green Lights to Malibu concept with planning. The idea is, as I understand it, that it costs you time to plan kind of conservatively a timeline that you can hit because you're building in buffers into the schedule, and instead you should plan based on a Green Lights to Malibu, you know, what if all the traffic lights were green basis. I'm curious what you think of this phenomenon, this idea generally, but then, too, is this end of the decade a Elon-style Green Lights to Malibu, we'll have FSD next year type timeline, or is it a timeline you guys are actually going to hit? This is one we'll actually hit. So that's our external timeline. This is, you know, we're speaking publicly. So you have a secret internal timeline as well. Secret internal timeline is go as fast as we can. Yeah. And we do. Yeah, we do have an internal timeline. Yeah. Yeah, that schedule philosophy of Green Lights to Malibu, it comes out of this idea that if you give people more time, they will simply take more time. Now, there is a minimum, and there is, you can maybe go too quick and squeeze all time out of the schedule, to the point where now you're doing things that are not in support of the correct architecture or a very long-term cost structure. That's always the, you know, the critique. That is the tension. Yeah, that's the tension. And that's even the internal tension at any company trying to run a Green Lights to Malibu schedule is, number one, do you have waste? Number two, do you make the wrong architectural decisions? Yeah. And then, number three, like, how do you manage people against this plan? So if you're doing performance-based management and you give someone a very difficult plan that maybe is perfection, it's more difficult to judge their performance against that. And so you have to have in your own mind, like, okay, what's a little bit of buffer? What's a reasonable thing? But, yeah, it's often very useful. The Green Lights to Malibu is not only like a scheduling tool, it's also a constraints tool of if we really try and dial this in and remove all buffer, what breaks? And so what's the thing that's actually the critical path that's preventing us? So it's a bottleneck discovery tool. I think it can be when done properly. And then the critiques I raised, they can be dealt with in other ways. If you're just, like, extremely exacting about, no, this is the architecture we're going to do. And if leadership is very deep in the weeds on every engineering decision and can say, okay, we have this schedule, but no one in the room thinks we should do this thing just to shave one day. Don't do that thing. Let's do it right. Let's take three days back. It's okay. We can make it up elsewhere. From building great companies to investing in them, Scott Nolan knows both sides. And Strive Press has two new books tackling each. First up, Built to Grow by Stephanie Friedman, the tactical playbook for building a sales engine from hire number one to hire number two. 200. And it's out right now. You can buy it. And then coming soon is Nomad Letters, collecting the insights of Nick Sleep and Kajs Zakaria, fund managers who generated a 900% return in just 13 years, backing the relentless flywheels of companies like Amazon and Costco. So grab both at press.stripe.com. What did you work on in SpaceX? SpaceX, when I started, I was just an intern, 2003. Oh, but you were there really early. Relative, yeah, pretty early. Yeah, one of the first interns. SpaceX was founded in 2002? 2002. Yeah. Yep. So very, very lucky to graduate at the right time in aerospace where previous, prior to SpaceX, there wasn't too much interesting to do. I remember the first summer was working on test stands. We were getting ready for an engine to be able to be mounted vertically and put on a test stand. First winter break was working on a surrogate for the engine. And then after I graduated, I worked on the engine systems. So the Merlin engine, a bunch of components on there. I didn't design it myself. There were much more experienced people doing that, but I helped make sure that individual parts could withstand the thermal and structural loading. And then after that, did a series of engines across a few vehicles, including the Dragon capsule, which at the time was just cargo. And I was part of the early team and got to work on a few subsystems there. So I was there 2003 to 2007. I'm always struck in US manufacturing and Chinese manufacturing, for that matter, how influential Elon's management style and philosophy has been, where most of the kind of companies founded later kind of explicitly reference some tenets. Just what has been influential for you in terms of the design philosophies? Yeah. Well, I think the thing that I actually draw more out of the SpaceX experience is working on something that not everyone agrees is the most important thing. It kind of overlaps with Peter's sort of philosophy. Picking a flying car is not 140 characters type problem. Yeah. Pick something that's almost like, in some ways, what industries have not lived up to their promise over the last 50 years. What are the actual bottlenecks to these things? What are the markets that we know need fixing, even if it's not a completely new greenfield sort of thing, but that is a big lever on a much bigger industry. And so at the time, early 2000s, everybody was talking about modern satellites. How do you do smallsats? How do you do cubesats? And then it turned out there was no good way for them to get to launch. When your satellite costs a billion dollars, 100 million for a launch isn't so bad. When it costs $1 million, now you really need to think about it. And so it's almost the same thing. You have a small reactor, SMR, small modular reactor, and now you're no longer doing a multibillion-dollar construction project, but now you need the fuel. And in fact, the fuel cost matters proportionately more to where some of these SMRs, their total LCOE could be 50% fuel cost with enrichment. It's that high. In some cases, yeah. It depends on the exact design, but at today's market prices, it can be. LCOE is levelized cost of energy, but basically the energy cost, right? Basically the cost of producing energy if you factor in both the upfront capital into the reactor and then the operating costs. And so, yeah, the fuel cost starts mattering a lot, which is the second part of what I appreciated in 2023. Not only did we need to remove this bottleneck, but for advanced nuclear to really scale on HALU, you would want to bring down the cost. And so the biggest piece that felt like we could influence actually turned out to be enrichment as well. So it feels to me one of the big challenges for you guys is the same challenge that many hardware companies face, which is dollars required and time required until you're profitable or even you kind of have meaningful revenue to fundraise against. Because so many hardware companies have had good ideas and have gone out of business because they couldn't prove that the idea was good to investors before they ran out of money. And so ultimately there's kind of fundraising risk. How do you burn down that fundraising risk that's inherent in the company? If you really look at the big picture, you've got equity funding, you've got debt funding, and then you've got non-dilutive funding. And in our case, when we began, we competed for a program that Congress authorized to help address this ban on uranium. As part of the ban. Exactly. And on the lack of availability for fuel for advanced reactors. And so we competed for that. We were down-selected under the Biden administration, awarded under the Trump administration earlier this year for a $900 million award for capacity building, which helps us stand up that first facility and takes a lot of that cost off the table. And so it's a big lever for getting past some of these challenges that companies often have in getting their first project online. Oh, that's great. Okay. How do you spin up on all this material? You're not a nuclear physicist by background. Luckily, I'm definitely not, and luckily don't need to be. So everyone thinks of enrichment. They hear nuclear. They think, is your team half nuclear scientists? And the answer is it's actually relatively few. It's very few. Just chemistry? Not even chemistry. So in our facility, there's no nuclear reactions. There's not even any chemical reactions. What you have is a separation of a gas. And so you actually still need chemists. You still need nuclear scientists, but mostly for safety analysis, mostly for making sure you don't have those things happen. No chemical reactions, no nuclear reactions. That's a good question. Because actually, I don't know much about enriching uranium. So this is good. It's filling in some gaps for me. You mine uranium out of the ground. It's a solid. Exactly. It's a solid. It's like a rock looking thing. It looks like a rock to you. And then you boil it to pressure and temperature. Then someone else's step two after it's out of the ground, and that's called yellow cake out of the ground, U308. Classically, it would be open pit mining, and then you have a milling process to turn into U308 from the ore. Today, that's done with in-situ recovery, like enhanced techniques that involves pumping a fluid underground and collecting the uranium out of rocks. That will come out as U308. So step one, get the U308. That's mining and milling. Step two, take the U308 and chemically convert it into a gas. So that's a separate chemical facility that does that. I see. So that's a chemical process to convert it into a gas. And then it would arrive at our facility as a gas that we can separate. And you just spin it in a centrifuge, and what else is in there? What are you separating it from? So there's a few techniques that one might use to go do this. Where we're doing it in Kentucky, we are at the site of the last place that the U.S. did enrichment, which is in western Kentucky, Paducah. There was a facility that was shut down in 2013 on a DOE site that was a gaseous diffusion process. And that's the first thing that was pioneered. The Europeans use gas centrifuge. Other countries have done aerodynamic processes, and there's even aqueous processes, as well as laser enrichment. So at least five techniques that are classically used. And our technique is one that we'll unveil first half of next year when we'll talk about it. But it's gaseous diffusion, and so you... That's what was done in Paducah. I see. That's not necessarily what we're doing. We're building a fresh facility in Paducah on the same site in the last community that did enrichment in the U.S. Got it. If it's kind of simple, why do you need to be in Paducah where the last version was? Do you just, do they leave a bunch of machines behind and you get to say, wow, there's all this free stuff here? Or is there expertise amongst local employees? Yep. So our search for Paducah lasted over a year. We went to over 10 states, looked at over a thousand plots of land. And the answer in the end was kind of the obvious one, go to where the community most recently did this. So you have a combination of two things. Like we always felt like the community was the most important part. We're building a facility that's going to last decades. And so we want to make sure that the community that we're building in actually welcomes us there. And Paducah was extremely familiar with enrichment, comfortable with it, understood it to be a positive thing for the community and has the talent. So it was this combination of community support for what we're building and the talent base there above anything else. Now the DOE site had other benefits. By building on a DOE site, we were able to have some shared services. So out of the gates, a little bit less to stand up, already a piece of land there that's 100 acres, just big enough for us to build a first facility, DOE security around it. So lots of different benefits. It's actually simpler from a permitting point of view because you're working with DOE rules and not county and municipality rules? Could be. We are primarily doing commercial sales out of this facility. So we will be NRC regulated. But I mean, federal and not kind of state and local. The biggest benefit was that the site had been heavily characterized environmentally. And so the environmental work that was required to get to a point where we knew what the environmental impacts would be was quicker than it would have been on a completely uncharacterized separate piece of land. Yeah, that makes sense. And so, okay, going back to the enrichment, what are you separating the uranium from when you're enriching uranium? From itself. So you have two isotopes. I see. So uranium out of the ground is 0.7%, 0.711% U-235. That's what you want. That's the number when we talk about three to five or 19.75. So it exists in the world as 0.7% and then you're enriching it to some number beyond that. Exactly. The rest is primarily U-238, which is not the fissile material you want. And if the isotopes have different masses, why can't you just spin it around in a centrifuge and have it separate? Many people do. I see. Yeah, many people do. Or you can do a sort of osmosis type process, which is gaseous diffusion, or you would do it, you might split the gas using an aerodynamic process. And so there's a lot of options. It does sound quite simple when you put it that way. When you put it that way. So why is it hard? The hard part about most of nuclear, I think, like nuclear is perceived as this incredibly complicated thing. I think fusion is pretty difficult. That is really new physics. That's new science. But fission has been around for a long time. And if we just talk about reactors, it goes back to economics, I think, more than anything. And so to me, for all the advanced reactors versus the gigawatt scale, the most interesting thing is not just the technology. It's really what is the cost implication going to be. For us, enrichment has been done before. A number of countries do it. But the real challenge is we don't only want to bring it back in the U.S. We want to make it globally competitive. We want the U.S. capability to be truly commercial, be able to compete with Europe, Russia, China over time. And so it's all about cost. And so I think the hard thing is not simply doing enrichment. It's doing it in a way that can be scalable and highly cost competitive. And so that's the North Star. You don't worry that this is a bad market somehow, like the fact that there isn't a U.S. producer suggests there's something a bit broken about the market and the buyers? No, I don't think so. I think there's a path dependency of how we got here. And we can talk through that, but it's, you know... No, no, no. Please, tell me the path dependency. Yeah, I think the history of it was really, you know, the U.S. did a first generation technology to win World War II to stay dominant in the Cold War. We were over 90% of supply globally. And ultimately, that approach, that specific design and technology was not cost competitive with the European and Russian approaches. And so we shut those down. We shut them down following the Cold War. So the Berlin Wall fell. The U.S. entered a trade agreement with Russia. It was called, nicknamed Megatons to Megawatts. So we imported Russian warheads, blended them down, ran our reactors on it, and started trade with Russia that way. We, since the 70s, have been trading with Europe. And once we felt like Cold War's over, there was less reason to keep these plants running in the U.S. And so... It was a gloss moment in the U.S., basically. It was, yeah, why are we running these more expensive plants when we're now in a world of free trade and we can trade for this? At the same time, there were efforts inside the U.S. to develop new technologies, but they didn't really hit the cost structure required to compete internationally. And they're still in development to some extent to try and get on that curve. And so I think it's simply a, you know, we used to do it. We then relied on free trade. And then only more recently does this seem like an issue. And the issue is really around HALO availability for advanced reactors and low-enriched uranium availability for the larger reactors, given the ban on Russian imports. So if you tried to start a company like this 10 years ago, you know, you might say, what's the market? The utilities are fully contracted. There's no gaps. Why would they leave gaps? They're going to make sure that they have reliable source. And then there is not a really big advanced reactor market that you could sell into. And so both on the LEU side and the HALO side, it would have been much more challenging to get to some critical mass that could support a new entrant today that that window's open. Classically, cost advantages in manufacturing come from scale. That's one common one. Or simplicity in design. It feels like, I mean, the market is what the market is. I mean, it'll grow hopefully, but it's not like you guys are going to come out of the gates, you know, targeting 10x or 100x larger scale than the incumbents. And then also when you say simplicity, like as you described, there's a few approaches that everyone knows here. And so you don't get to have like a radically simpler process. And so how do you plan to have a cost advantage versus all the incumbents? I'd say you missed one more. So there's economies of scale. their simplicity, and then the third, honestly, is decades of technology improvement that no one's captured. So the last time anyone, to our knowledge, reinvented enrichment, at least if you look at the incumbents, the incumbents being Russia, China, and two European firms that use the same underlying technology, the last time anyone's done a clean sheet redesign was decades ago. And so if you think of all the progress in technology over the last few decades, there's a lot you can do in addition to economies of scale and simplification. Meanwhile, there's no public domain technology in this space since the 50s or 60s. And so, you know, you look at those few decades of technology that you could leverage, then you do a clean sheet redesign, doing something very novel, and you can end up somewhere pretty different. Okay, I want to try something on. It feels like sometimes you have a trend that sweeps an industry that takes place at many companies at once. And so in the US, in the 70s and 80s, this happened with lean manufacturing, where a lot of the success of private equity firms of that time, or, you know, early Danaher, were there were all these US firms that had not embraced lean manufacturing, and so you can buy a manufacturing firm, just adopt the lean stuff about better inventory management and everything like that, and yeah, you can make the business much better, because it turns out these are like, this is a technology that had not, a managerial technology that had not been adopted by a whole bunch of firms. Right, and maybe there's people doing this today with AI, applying it to services industries. Exactly, that would be another example. It feels like this may be another trend that you're a part of in hardware, which is there is this stasis in companies where there was stasis in launch until SpaceX came along and targeted much lower cost launch, there was stasis amongst the primes, and then Anduril and now kind of a whole bunch of other neoprimes are coming along, and similarly you're identifying stasis in the existing companies that enrich uranium that you can very easily... does that resonate with you as a trend where, you know, there's something that has not been adopted amongst a whole set of companies, and entrepreneurs are coming along and finding those weak spots and building better competitors? Yeah, it seems like it. Although each of those three examples is like at least a decade apart, I'd say, on average. So, yeah, SpaceX, Anduril, us would be on average a decade in between, and the only way that those opportunities were found were by people trying to actually go deep in the space, and so nobody really thought that space launch was the thing until Elon tried to launch something and realized it was the cost of the launch, and you know, Trey at Founders Fund was looking for a defense company, couldn't find someone that was taking this holistic approach, and then we only discovered this because, you know, I knew many or virtually all of the advanced reactor producers, and they had the same issue. What is the thing that all of the incumbents miss? Like, why do they become slow and stodgy? Presumably, like, it's not a problem for you yet, but it will be a problem when you're successful that you also need to avoid becoming slow and stodgy. Yeah, yeah, you definitely want to avoid that. How do you avoid becoming ULA or Lockheed Martin? You know, I think all those industries, not to, you know, not to single them out, but they were all cost-plus industries. That was my experience. So, you know, before SpaceX, I did work at one of the aerospace incumbents as an intern. Which one? Boeing. Okay. And I worked on a military program, it was cost-plus, you know, there was a big project, there was a goal of getting online, and so, you know, at some point while I was there, it felt like more and more people were working on the project, and it just didn't feel like we were going faster. And you realize, like, that is one tool, put more people on the project, and if there's not strong downward pressure on cost, your incentives are just not aligned with, like, moving fast and doing it in a lean way. And so I think these industries that ended up getting stagnant often have that same characteristic. Now, people assume once a company gets to a certain size that it becomes that way. I think it doesn't have to at all. I think the best companies that get large, even like tens of thousands of people, always have that new project, that new thing that's, like, borderline existential, where if they mess it up, they're going to be in a much worse place than if they never tried it. And it almost risks the business, and I think that's almost the thing to stay, to like, stay young as a company. You just have to keep doing that next project and not just say, well, I have this nice business, I'm just going to earn my economic rents and do nothing else ever again. You have to actually have a vision for the future of what you want this industry to be. What were your other takeaways from Boeing? Really the main takeaway, I think, that I walked away with was that the cost-plus structure was not the right structure to motivate moving fast. That was just empirically evident by working at both. I mean, it sounds like you more broadly think it's a completely broken incentive system. I think the whole point of cost-plus is to make sure people can work on projects whose costs are very uncertain. And, okay, we have a very urgent project, the government needs you to do XYZ, we need some of the suppliers to come forward and actually say that they'll try and do this, and it's for everyone's good. It's a wartime and not a peacetime incentive system. I think so, or it's something where it's very urgent, never been done before, and it's very uncertain what the costs will be. Once you get to equilibrium, I don't think that structure makes sense, at least not to motivate the right behaviors. But I think the bigger thing I walked away with after Boeing, even in just being an intern at SpaceX when it was sub-50 people, was at the end of the first week or month, I felt pretty high certainty that SpaceX would eventually win, even though it was at most a 1-1,000th the size. And it was just because of the speed of execution. And so the thing I walked away with that I actually, especially in the early years, with that as a more recent memory while I was at Founders Fund, was these small teams, even though they seem completely outmatched, by moving quickly with a good group of people, you can still beat incumbents. So it gave you the ability to be optimistic about the odds of a five-person startup. Bet on the small guy. Yeah. Yeah. If they have a vision, if they have some insights about how they want to do it differently, especially if they're motivated by something more than just, let's stand up a small business here, now let's actually change things long-term. You know, the three examples I used were SpaceX, Anduril, and General Matter. I hadn't realized until you said it, in formulating those examples, that all three are deeply tied to Founders Fund. Hwas, what is it about Founders Fund and the culture that makes it a good breeding ground for these sorts of companies? Maybe the one thing, you know, SpaceX was started before Founders Fund. I don't think Founders Fund can take too much credit. Founders Fund was an early high-conviction backer. Yeah. First outside investor at a time when very few others wanted to do it. And I think the... And to go deeply tied. Yeah. Yeah. Yeah. But I think, you know, SpaceX gets, you know, they get the credit, Elon gets the credit. You know, you could say that it's something coming out of the whole zero to one mindset and these frameworks of work on something that's important that other people don't realize. So what important truth do you believe that most of your peers would disagree with you on? Don't go after a trillion dollar market on day one. Focus on a small market that really needs a new solution and satisfy those customers. Make them love your product, like own that market and go from there. Those, I think, are common to those companies, but probably even more than that is Founders Fund does not programmatically start companies and it doesn't want to either. Everyone there, you know, is selected for wanting to be an investor, not hoping that they can someday be an entrepreneur. And so I think this leads to a mindset of don't start companies, don't do it programmatically. It's almost like that airplane with all the, you know, war wounds on it. And which, you know, you would think, okay, there's what about all the companies that didn't get started out of Founders Fund? And I think the bar for starting something, at least for me, was always, you know, being investors is a great job. It's a great, you know, great career. It's, it's awesome in so many ways. So to actually go start something, it had better be extremely important. Uh, you have to believe no one else is doing it, which is why, you know, in both Andrew and our case, there was a long search for someone doing it because if there was, it wouldn't be worth starting a new company. And then finally, the one that's seemingly the most difficult is, you know, in my case, it would, it should be something where my skillset actually contributes to making it more likely. And so extremely important, no one doing it and actually lines up with the skills is such a small Venn diagram that the, it's almost like that activation energy is so high to go do it, that it has to be extremely compelling. And then most of the risk, I think, ends up being on execution. And so you end up with these sort of forgotten opportunities that were overlooked for a long time, but that are actually really central to an industry taking off and it just so happens, like no one did them for a long time because there wasn't the convergence of market opportunity and often it was just extremely hard. How much conviction did you get to on the idea before you took the jump and went and started the company? I would say, yeah, extreme conviction. What are the intermediate milestones for you guys as you approach production in Paducah by the end of the decade? Like presumably that is not the target on the whiteboard in the office. You have short term, exactly target. So if you think of the big work streams to do that, okay, at the end of it, you have a large facility and it's filled with equipment and equipment's operating. And it's, if it's operating, that means it's licensed. So one work stream is licensing. As I mentioned late last month, we submitted our NRC license. And so that's one of the work streams that another one is, okay, you have this big building that's operating. Let's work backwards. You have your license. That's how it's able to operate. But also the building exists. That's important. And so you have a large construction effort. Typically in the nuclear space, people outsource the construction of their facilities. In our case, we copied the Tesla playbook of build your own in-house construction, EPC team, engineer, procurement, construct. So design your buildings, order the steel, build it. And so we have our own GC on the construction side. We have our own procurement and engineering teams internally. And so that building is, you know, being designed and built. And that'll basically be online in time to, it'll exist in time to install hardware and commission it and operate it by the end of the decade. Then of course you need all of your equipment inside. So that's ordering out of your supply chain. It's manufacturing and manufacturing final designs that, you know, hit the economics that you want. And so I think a lot of people think of nuclear and they think it's all about core technology or it's all about licensing. And I think for the reactors, it's actually about, if you're a big reactor, it's probably about a construction project. If you're a small one, it may be mostly about building your factory. For us, it's more like that. It's more manufacturing. And manufacturing is the thing that relatively few companies in the U.S. have really proven that they can do at scale. And I think that'll be, that'll be the really exciting part in a, you know, in a year or two. Last question. We've talked about what you learned as SpaceX and Boeing and various places. What did you learn working at Founders Fund? Avoid competition. So, you know, which is, it happens automatically if you work on something that's really important that no one else is doing and that you can uniquely be good at. And so, you know, avoid competition is, you know, you kind of achieve it that way, but it's also something that will inherently be true if you're solving a problem that's not solved. So, you know, what important truth do you believe or like what important problem is no one working on? And I think that was actually the thing that led us here was it wasn't a desire to start a company. It wasn't anything specific like that. It was what thing is actually holding back the nuclear industry? What is the bottleneck? What is the one thing that could prevent all the reactors from scaling, all the SMRs or, you know, gigawatt scale light water reactors? And it's fuel. A lot of the other pieces have been solved and so it's just fuel. For other future entrepreneurs, there's presumably equally big opportunities just staring them in the face. Yeah, there certainly are. I don't know what they are. I think it takes a lot of digging to see them and yeah, just enriching. Yeah. Yeah. Like, yeah. Then enriching and turning into a gas. But no, I think you only find out about these things if you follow some passion that you might have that not everyone's thinking about. So it's, it's usually not part of a trend or at least it's ahead of the trend. If you're into something and you think it has value and you go deeper and you work in that space, you'll see what the problems are. And I think, I think they become obvious to those who are, who go deep enough. Yeah. Scott, thank you. Yeah. Thank you.