Venture investor Michael Thompson sits down with Navy SEAL and intelligence veteran David Rutherford for a forward-looking briefing on the technologies that will define the next decade: electric flying aircraft, small nuclear reactors, autonomous trucking, and the AI build-out underneath all of it. Thompson — an early backer of Joby Aviation and Oklo — breaks down why "the AI trap" is going to hit middle-management and administrative jobs first, why energy is the real linchpin of American power, and why he believes we're living through a once-in-a-century industrial leap he calls the "1870 thesis." David pulls it back to the only question that matters: what does this mean for your family, your work, and the country's edge over China?
✅ Sponsor: ☕️ Black Rifle Coffee, use code froglogic20 for discount: https://www.blackriflecoffee.com/
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Timestamps:
00:00 — The flying car is finally real
04:00 — Why a helicopter has 48 points of failure
13:00 — "If the physics work, it's just engineering"
27:00 — Where is all the power going to come from?
30:00 — 133 reactors built, then only 2: how America quit
44:00 — "The AI trap" and the coming white-collar job wipeout
50:00 — Why we can't afford to lose the skies to China
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Episode Transcript
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Speaker 1 (00:00):
I just read a beautiful piece by a gentleman from
You Penn and a guy from Boston College, and they
called it the AI trap, right, which is essentially, AI
is going to remove a tremendous amount of middle management,
white collar, administrative type jobs, and as those people go
(00:21):
out of work, you know, the backfill of those service jobs,
the physical jobs or whatever. There's a lag with AI
for that, so it'll take a little bit of time
to catch up.
Speaker 2 (00:34):
I'm naturally optimistic on these types of questions. This is
an incredible time to be a teenager in your twenties,
if you ask me, because you're not going to be
spending twenty hours a day building spreadsheets for an investment
bank in New York. You're going to be building like,
really amazing technologies. They're going to massively benefit the physical world,
(00:56):
and frankly, let's just be honest, keep us ahead of China.
Speaker 1 (01:09):
Welcome back to the show, everybody. I'm your host, David Rutherford.
Today We've got a great show. We have Michael Thompson,
who is a top venture capitalist investor has really invested
in some really incredible SPACs recently. One just a few
weeks ago, Jobe aviation, which is basically of flying taxis
(01:32):
for the future. They did a test flight from JFK
into Manhattan and I just think, you know, you have
it seems Michael like you have your eye on what
the next greatest innovative technologies that are really going to
impact the development of this next phase of what do
(01:54):
they call it the Fifth Industrial Revolution or whatever they're
calling it now. I just think it's fascinating, and so
thanks for coming on to show. Yeah, absolutely tell us
a little bit about Joby if you could.
Speaker 3 (02:06):
And why was this company so appealing to you?
Speaker 2 (02:10):
Yeah, So Jobe is what is the technology itself as
what was referred to as ev TALL, which stands for
Electric Vertical Takeoff and Landing. And the electric piece, at
least the way that I think about it, is really
centered around the physics of how electric engines and electric
motors work versus a combustion a traditional combustion engine. And
(02:34):
one simple way to think about it, just in terms
of the human experience piece of it is, if you've
ever driven a Tesla and you hit the accelerator, it
pins you to the seat. And the reason for that
is because there's a tremendous amount of torque that can
be created by the electric powertrain that's difficult to replicate
because of the friction and the energy loss and things
(02:54):
of this nature with traditional combustion engine. So there's a
lot of things you can do from a from a
physics perspective with an electric power train that's basically impossible
in some ways with a traditional combustion engine. So the
idea behind what Jobe's able to create is a vehicle
that can take off like a helicopter, and very importantly,
(03:16):
it can spin the rotors at a slow enough speed
and be able to space them in a certain way
and build redundancy across the airframe so such that the
safety profile is maturely better than a helicopter, and yet
still have enough torque to get the vehicle off the
ground with a payload and passengers and everything else.
Speaker 1 (03:36):
And in doing so, can I hop in real quick?
I listened to another show you did about those safety precautions,
and they're on a regular helicopter, they're like forty two
points of safety where one thing goes wrong and you
have catastrophic failure. By the way, as a person who's
ridden on a lot of helicopters, when I heard you
(03:56):
say that like.
Speaker 3 (03:57):
A gut flip, going like, oh my god, I never
it was that bad.
Speaker 1 (04:00):
But talk about the redundancy with your platform versus traditional
in terms of safety redundancies.
Speaker 3 (04:07):
Yees.
Speaker 2 (04:08):
So if you look at JOBY, we have six propellers
with five blazes apiece, so thirty blazes in total, and
also a fixed wing, and I'll talk about that in
a second in terms of what the transition period looks
like as you go from taking off like a helicopter
and then flying like an air like a traditional airplane.
(04:29):
But the way the structure is designed is there are
battery packs that are redundant across the wing and across
the airframe. And what that results in we've done this
in testing is we can take out two of the
props and two of the power stations to those props,
and the aircraft still flies, both in hover as well
as in forward flight. And so you compare that to
(04:52):
a helicopter which has in fact it's actually forty eight
and those are the most modern helicopters.
Speaker 4 (04:57):
Other helicopters have even more than that.
Speaker 2 (04:59):
And if one of those things breaks or malfunctions in
some way, and the helicopter's unable to auto rotate, it's
going to crash. And so if you look at what
this technology provides relative to a helicopter, is I was
getting to a second ago.
Speaker 4 (05:16):
It allows you to take off.
Speaker 2 (05:19):
Vertically with a vertical orientation on the propellers at a
descipel level that's about one hundred times quieter than a helicopter,
and that's a huge unlock as you can imagine when
you consider not just the decibel level of a helicopter,
but also the profile of the noise itself. It's a
very low frequency noise, which means it can travel great
distances that can penetrate buildings and be quite annoying to
(05:41):
whoever is around that vehicle. The other thing that I
would quickly add, going back to the current setup of
the vehicle, which is a fully electric powertrain all lithium
ion batteries. One additional issue you have with helicopters when
you're taking off from rooftops, for example, is the most
buildings have their air conditioning infrastructure on the roof, and
(06:04):
so if you're taking off frequently from a helicopter on
a helicopter from a roof, it's sucking all that exhaust
into the AC system, So it's not just an annoying sound,
but it's a you know, it creates a real issue
for anyone that that's inside that building. So the two
big unlocks are the safety profile that we just talked
about and the noise profile. And then what you're able
(06:28):
to do to extend the range and also increase the
safety profile is to transition the propellers from a vertical
orientation to a horizontal orientation such that once you're on
the wing, all of the lift is being provided by
the wing and it's got about a ten to one
glide ratio. So in that scenario you could you could
theoretically knock out all of the power and have a
(06:49):
glide ratio of ten to one and be able to
land the vehicle like you would on a disabled aircraft.
And so the challenge of course, to to be able
to go from that vertical orientation on the props to
this horizontal orientation where you're on the wing is the
transition itself, where you're taking it from the propellers like
(07:10):
this to like this. This this period is the Messi period,
and if you think about it from a very basic perspective,
basic physics perspective, you're going from one hundred percent of
the lift provided by the prop to one hundred percent
of the lift being provided by the wing. But during
that messy phase, it's x one minus x and that's
a very difficult engineering problem, which is frankly why you
haven't seen this in the commercial sector. Historically, you've seen
(07:32):
it with the ospray in a military application. But if
you talk to osprey pilots, they'll tell you it's a
physical act.
Speaker 4 (07:39):
You have to push it.
Speaker 2 (07:39):
You have to physically push it through once you begin
the transition.
Speaker 4 (07:42):
You can't stop. Versus our test pilots when.
Speaker 2 (07:46):
They when they put it into this messy state and
just keep it there, it actually just flies perfectly. And
so one of the reasons, one of the reasons that
that's possible is and Jovie's a totally vertically oriented, vertically
integrated engineering and manufacturing company, which in my opinion, we
can talk about this later if you like, but in
(08:06):
my opinion, that's completely mandatory to make technologies like these
number one reel and the number two scalable. And so
one of the things that we've designed in house and
built in house is the flight system itself. And as
I'm sure you've seen the thousand times. The real hallmark
of a beautifully designed system is simplicity, so that the
(08:28):
interface for the pilot is simply a throttle and a joystick.
You're not doing anything with your feet. It's a relatively
straightforward user interface, and essentially, as you throttle up to
roughly seventy knots, the transition begins and the vehicle goes
from being all the lift provided by the propellers all
(08:49):
the lift being provided by the wing.
Speaker 1 (08:51):
I just think it's the technology is so fascinating to
me because obviously, flying cars is something that we've imagined
right as far back as whatever the nineteen fifties in
comic books and sci fi, and now it seems like
that technology with with being able to have the what
(09:12):
the consistency in that transition period and maintain that torque
and not losing what it does. I mean, I've i
haven't been on too many offsprays, but I've fast roped
out of them.
Speaker 3 (09:23):
I've I've repelled out of the back them.
Speaker 1 (09:26):
And they're just they're just they always felt not as
stable as the Blackhawks or you know, or Sea Wolfz
or whatever else. The forty seven's we were using, and
so for for me, it's like, wow, it seems like
such a a more to be able to have that
vertical and go. It just seems like that's the technology
(09:49):
that works the best, right, And so.
Speaker 3 (09:51):
Then what does it become?
Speaker 2 (09:53):
Then?
Speaker 1 (09:53):
Obviously, you know there's in some of the numbers that
I was looking at it it says, you know, your
operating costs have been upwards near two hundred and thirty
four million. You're expected to gain some revenue this year
at one hundred and five hundred and fifteen million. How
long does it really take to perfect those technologies? We
(10:14):
watched it with Tesla SpaceX, right, all of these like
building something from scratch, which by the way is the
most American thing in the world for me, right, is
that you're able to have that concept from beginning to
end in all in one place. What does it look
like in terms of as a core investor when you
(10:36):
have those long runways of investment that take place in
really great technology.
Speaker 2 (10:43):
Yes, So I would deconstruct the question in a couple
different ways. The first thing is, you know why now,
because as you mentioned, flying cars have been on the
have famously been on the cover of popular mechanics like
twenty ten or whatever going back seventy years now, and
(11:04):
people like Peter Teo famously would say, you know, we
asked for flying cars. We've got one hundred and forty characters,
you know, in reference to old school to old school Twitter.
So I think the first question is why now, And
there's really two answers to that. The first one is
a technology answer and the second, frankly, is a regulatory answer.
And this is my current view for what it's worth.
(11:26):
So one of the things that I've looked for when
investing in companies like this are is basically what I
call the convergence of enabling technologies. And what that means,
in my opinion is oftentimes on these particularly complex engineering problems,
it's not just one technology hitting its.
Speaker 4 (11:49):
Curve at a given point in time.
Speaker 2 (11:52):
It tends to be in my experience, multiple technologies hitting
their curves at a given point in time. So there's
a number of different ways to talk about this with Jobe,
but just to break it down into three of the
primary things that are converging at roughly the same time.
The first, most importantly, because this is currently an all
electric aircraft, like I said, and there's some tremendous benefits
(12:12):
that you get from using a fly by wire electric powertrain.
Speaker 4 (12:16):
Battery density, getting.
Speaker 2 (12:18):
To north of three hundred white hours of kilogram at
the pack level is a critical unlock for this technology.
In fact, when Joe Bin, who's the founder of joby,
initially founded this company, he founded the company frankly twice.
The first one was in nineteen ninety three, and he
realized relatively early on that battery density in ninety three
just wasn't sufficient to do any of the types of
(12:41):
things he wanted to do. I think it was like
forty or something like this white hours a kilogram back then.
So he shelved the project and started as three other companies,
sold them, took the proceeds, and restarted the company in
two thousand and nine. So battery density hitting its curve
it approximately the moment that we're in right now, is
a huge piece of this unlock. The second, quite frankly,
(13:04):
is just the progression of More's law. The flight computer
on this vehicle is like the size of your iPhone.
And in fact, you've seen this famous graphic I'm sure
on SpaceX where it shows the progression of the raptor engine,
and it goes from a very complex looking engine to
a far more simplistic but far more performative engine and
(13:27):
the same thing. You could do the same thing with
our flight computer. The original flight computer looked like a
large briefcase and now it's smaller than your phone. So
simply the ability to have some substantial amount of compute
on the vehicle at a very low mass and weight
is a very big unlock for making this technology real.
And the third is the ability to mass produce carbon
(13:49):
fiber lightweight carbon fiber, because obviously weight is an incredibly
important consideration on the aircraft. So if any one of
those things wasn't hitting its curve approximately this time, the
technology would be far less advanced. So that's a big
thing that that I've looked for historically, like are these
things actually getting into the realm of realistically possible? You know,
(14:13):
Elon has an amazing quote that I've used, I think,
not just me, probably a lot of people. If the
physics work, then it's just a question of execution and engineering.
Speaker 4 (14:23):
And we're now at the point where the physics for
this type of aircraft works. And the case of.
Speaker 2 (14:27):
Joby, again going back to this transition phase, which is
the one of the most difficult parts of the entire equation.
Speaker 4 (14:35):
Uh, the engineering is working.
Speaker 2 (14:38):
The second part of your equation of your of the
constraints historically is the regulatory piece. And without getting into
the specifics of the previous four years, it was just
a very challenging market for companies like Jobe to progress
the way we wanted to progress, just because the regulatory
(14:58):
state was sclerotic. Frankly in a lot of ways now,
the working level people were fantastic even then, but it
was sort of a lack of visionary leadership. If you
asked me, the contrast then versus where we are now
could not be more stark. I've sent to people like
(15:19):
this is the biggest macro regulatory one to eighty that
I've ever personally seen. It almost doesn't seem real, to
be honest with you. So what this administration has done
is not only continued to progress the type certification process
with job, but also to accelerate the actual applications for
this technology in the market. So the President signed about
(15:42):
a year ago an executive order that created this platform.
This program referred to as EIPP, which is ev Tall
Integrated Pilot Program. So under that program. This has been
announced within the last month or two. Joby is going
to be flying passengers this year in markets like Texas
(16:02):
and Florida and New York and New Jersey. So that's
just a huge accelerant to UH TO, to the to
the the overall adoption of this technology, and frankly just
the market awareness. So that that's that's sort of the
backdrop of of where I think we stand in terms
of this technology becoming live and commercial. The second part
(16:24):
of your question around valuation, you know what what's interesting
is these types of companies UH have existed obviously in
in the venture markets for you know, many years now,
and all sorts of different types of of companies that
are pre revenue that that require a number of different
things to come true to make the business viable to scale.
(16:46):
All these sorts of things what you see today in
today's public market, and frankly some of this is because
of this spackwave in twenty twenty one. There's a number
of types of companies. You know, Oklow is one in
small homagory actors. Joby obviously a company that another company
were involved in called Aurora, which is an autonomous trucking company.
(17:07):
You've seen all the quantum computing companies. Historically speaking, in
the public markets, this type of pre revenue company with
potential significant upside if certain things went the right way,
was by and large reserve for biotech. But now there's
a number of these types of companies that are that
are in the public market. So I think it requires
(17:29):
a different lens from from evaluation perspective than than what
maybe some uh some investors are used to. And there's
a number of uh of sort of large cap companies
that you can point to that that have been valued
this way now for quite some time. You mentioned Tesla,
that's certainly been the case. I'll talk about that in
a second. Even something like Palenteer. I remember maybe eighteen
(17:54):
months ago, two years ago, one of my friends was saying,
you know, Palanteer trades that whatever it was, like a
hundred and fifty times ebitdah or something like that. And
my comment to him was, you know, nothing trades at
one hundred and fifty times ebitdah. And he's like, yeah,
that that's what's concerning me, that maybe the market's overvalued.
I said, no, no, that's that's not what I'm trying
to say, I'm what I'm saying is nothing trades at
(18:15):
one hundred and fifty times EBITDA. So in other words,
I understand you can calculate that number, but that's not
what it's trading on. It's trading on the basic idea
that I'll describe as follows, what is the potential overall
market for what this company is pursuing. And in many
cases it's multiple markets. So you saw, I mean most
(18:35):
recently you saw in the in the in the SPACEXS one,
they have multiple markets that accumulate to twenty eight and
a half twenty eight and a half trillion dollars of
total addressable market. So the market is sort of, you know,
under the surface. Doing a calculation like that for a
company like Palentteer or a company like Tesla, or a
company like Jobi, then it's saying, what do I believe
(18:58):
the market share that this company is going to be
able to capture and at that scale down the road,
what type of unit economics do I project? And that
will obviously result in some amount of cash flow in
the future, and then you discount that all back and
you have what is the current value of the company.
Speaker 4 (19:18):
And I call these companies.
Speaker 2 (19:20):
These businesses DCF companies, and they will be for quite
some time. So the best example I can give you
that I think is a framework of what the market
is currently thinking on something like Jobi is Tesla from
circa twenty thirteen twenty fourteen. So if, off the top
of my head, Tesla from twenty thirteen to twenty fourteen,
(19:42):
off of a reasonable market cap base went up six x,
and you might say to yourself, without knowing anything, oh,
they must have made a lot more cars in twenty fourteen,
they must have made a lot more revenues. Whatever, The
actual analysis, now that you have all the data, is
they made thirty five thousand cars in twenty fourteen versus
(20:04):
Toyota that makes ten million cars a year, and they
burned about three hundred and fifty million dollars of cash.
In fact, if you go from twenty fourteen to twenty
nineteen on Tesla, they burned tumultively something like five million
dollars and the stock went up another three x, again
off off of a meaningful market cap. So so what
(20:26):
I'm just trying to get at is the DCF valuation
framework that I think these types of companies require. Can
result in significant increases in value, well in advance of
meaningful increases of revenue and certainly meaningful increases in cash flow.
So there's this sort of gradually then suddenly situation. And
(20:52):
you know, going back to SpaceX, this is the same
thing that happened to SpaceX in some ways in the
private markets.
Speaker 4 (20:59):
You know, space twenty.
Speaker 2 (21:03):
Fifteen, I guess it was was somewhere in the context
of ten million dollars. By twenty nineteen, I think it
was with somewhere in the context of fifteen or twenty
billion dollars, and then obviously it just it started to
really ramp post twenty twenty, twenty twenty one, and I
think it's I think the valuation is up something like
(21:23):
ten times or something in the last three or four years.
And some people might say, oh, that's that's getting ahead
of itself, and maybe it is, but I think the
other way to look at it, which I think is
the way I would look at it, is the market
is recognizing, in the case of SpaceX, that that there's
going to be a tremendous potential for data centers in space,
(21:47):
whatever you want to call it. And there's one company
that controls the access to space. There's one company that's proven.
Speaker 4 (21:53):
The ability to.
Speaker 2 (21:56):
Scale manufacture frankly better than probably any company history.
Speaker 4 (22:01):
So, just going back to Joby, you mentioned the revenue.
Speaker 2 (22:04):
That revenue is coming almost entirely from the Blade business
that we bought last summer, and the idea on Blade
is to take the existing operations of Blade, which are
all least helicopters, have that footprint as part of Jobi,
and then as our vehicle is certified and as we
start to continue to ramp production, you replace the existing
(22:25):
Blade infrastructure, which again are least helicopters, with the Jobe aircraft.
So I don't think the markets spending too much time,
although I think some people look at it in a
positive way, which it is somewhat positive, But I think
the real value of Joby is what is this market
going to look like. I believe it's going to be
(22:46):
a very very large market. Other third parties like Morgan
Stanley have put some numbers on I think it was
a trillion dollars by the twenty forties or something like that,
So I think it's me a very very large market.
Speaker 4 (22:58):
My personal view, and this has been my view for
a long time.
Speaker 2 (23:01):
Joby is far and away the leader both on technology
and on the regulatory path, and so I think we're
going to capture a tremendous amount of share. And then
just the last thing I'd say is when you have
these vertically integrated companies, which again I believe you have
to have these businesses vertically integrated to have any chance
of success. I think SpaceX proved that. I think Tesla's
(23:22):
proved that. There's a number of companies so joby by
being a vertically integrated company. If things work the way
that I believe they will, what happens is you end
up with multiple businesses in one So you've seen that
with SpaceX, You've seen that with Tesla. I think you're
gonna see it with Jobe.
Speaker 1 (23:37):
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Speaker 3 (25:11):
That makes total sense.
Speaker 1 (25:13):
And that's why I love listening to uh really a
student investors such as yourself as because you know you
when you see it, you know, I think people they
they would never see the leasing play of the other
helicopter company, right, They would never see the you know, uh,
some of the other technologies that will emerge out of it,
(25:34):
that will be integrated in it.
Speaker 2 (25:35):
Right.
Speaker 1 (25:36):
And and that's why that's why, you know, great investors
can find those winners so far ahead than when they
actually start to really you know, cook based on whatever
regulatory confinements are released.
Speaker 3 (25:49):
Right, that always seems to be the case. For sure.
You you you now live in in Miami.
Speaker 1 (25:56):
I heard that, and well, you know, I don't know
how long you've been here, but welcome to Florida, Florida native,
and the more.
Speaker 3 (26:03):
Brilliant minds that come to Florida, the better for me.
I love it.
Speaker 1 (26:07):
One of the things that we hear a lot of
Byron Donald's talking about in terms of his campaign promises
is to really turn Florida into the next major silicon
valley or tech hub or or whatever. And it certainly
appears with all the different financing companies that are coming
here and wealthy billionaires that this looks like it might
be just that as well, as you know, Central South
(26:31):
American investment is really booming down in Miami as well too.
One of the companies you know that potentially could have
a huge impact on Florida's development is Oaklow and that's
the small reactor company.
Speaker 3 (26:45):
You guys chose. With all this data center.
Speaker 1 (26:52):
Drive and how many data centers are being built and
how they're going to power, how they're gonna you know,
you see these small public outcrimes. We saw the big
one with Kevin O'Leary out in Salt Lake City. Right.
Speaker 3 (27:03):
You had the locals be like, we don't.
Speaker 1 (27:04):
Want it here, get it out of here, and him
pushing back like why wouldn't you want this in your state?
Speaker 2 (27:10):
Right?
Speaker 1 (27:10):
How do you guys assess what you're doing with small
reactors and what that developed that space is going to
look like. Because I believe that the number one issue
that will change the world in ways that we can't
even fathom yet is the is the micro reactors. I
just believe once we can get away from from natural
(27:32):
gas and oil and if we can magnify solar, I
think there's a value there. But I just believe, you
know what, in in forty years, you're going to punch
you know, a reactor into your jobie, you know, solo,
and you're going to go up and you're going to
fly to work just like you would drive or whatever.
So explain that play for you guys, and why that's
(27:55):
so important for where you're at.
Speaker 2 (27:57):
Yeah so, I so I'll try to thread a lot
of different things together as quick as I quickly as
I can.
Speaker 1 (28:03):
Take your time, Take your time, because I know this
is complex. I mean it's obviously from your last description.
I think the real value that you can give our
listeners is how you think about this, right, because it's
really fascinating to me because you know, as us, we
see the super seven, we see you know, kind of
hopefully a rebalancing come here. Well we also see profits
(28:26):
and a lot of the you know, those core manufacturing
companies or uh you know, the gees or whatever, they're
the oil companies, right, We're seeing the rise or reset
and there. But I you know, companies like Joby and Oaklow,
those are the future companies people I think are looking for,
uh to be in that early game investment.
Speaker 4 (28:47):
Yeah, so.
Speaker 2 (28:49):
I started investing in certainly looking at a number of
companies and investing in a few what I would call
application level application layer AI company. This would have been
six seven, eight years ago, and the more I started
to wrap my head around what this might look like.
And again, you know, six seven, eight years ago was
(29:10):
well before chat, GPT and all these other tools were
out in the wild. But I started just sort of
thinking through what was going to be required infrastructure wise
to make these things really proliferate, because it seemed even
back then, it seemed likely that this type of thing
was going to proliferate because it just seemed like the
(29:33):
technology was going to be able to scale and improve
in a way that it would become a sort of
a ubiquitous use case, which is I think largely what's
happened in many ways. So one of the things that
I concluded, and probably a lot of people did, was
to put it simply, where's all this power going to
(29:53):
come from? And so that's when I first started digging
into nuclear I'd never really spent much time it, frankly,
prior to that, and one of the things I started
to conclude was, this seems extremely logical that we should
be pursuing this as a country, because number one, the
technology is proven. We really stopped doing this as a
(30:16):
country in the nineteen seventies, but the military did not,
and the Navy continued to put small major actors on
carriers on submarines. The safety record has been incredible, but frankly,
one of the conclusions I came to at the time
was it seems logical. It seems frankly, it's in some
(30:41):
scenarios of the world, which I think we're now in,
it seems like it might even be mandatory. You know,
there's this sort of macro overlay of this arms race,
if you want to call it that, with China, like
China's doing this, So it just seemed practical in so
many ways. The issue was, however, that if you look
at the track record of the NRC, frankly, just nothing
(31:03):
got nothing got approved. So the one stat that I've
used before is prior to nineteen seventy The NRC was
created in nineteen seventy four, So prior to nineteen seventy eight,
there were one hundred and thirty three reactors built in
the United States and since then it's been two. So
very obviously, this was an industry that the country seemed
(31:24):
to be walking away from. And again going back to
the big shift that we've all seen in DC in
the last eighteen twenty four months, the four Executive Orders
that the President signed a year ago are unbelievable. We
were talking the other day, me and some of the
Oklahow people. It seems hard to believe that it was
(31:45):
only a year ago. It feels like it was much
longer than that. And one of the thing, so there's
several things in these eos, I just touched on it
very quickly. One is it opened up the regulatory path
with both the NRC and the DOE. It created pathways
for fuel, which I'll come back to because fuel is
one of the big constraints. And it also sort of
(32:09):
issued a challenge, if you will, to the industry, can
we have at least three reactors go critical by July fourth,
twenty twenty six. So these are all very very ambitious
goals that were set with these eos, and now the
agencies have been working to implement them and it's been amazing,
Like I was saying, over the last year. So in
(32:32):
the case of Oklow, this was just announced this week.
I think there's a tremendous amount of weapons grade plutonium
that the United States has from various programs over the years.
It's something like twenty metric tons.
Speaker 4 (32:50):
And that was all going to be.
Speaker 2 (32:54):
Twenty million metric tons excuse me, that was all going
to be buried in the ground essentially. But another thing
that the administration did was to say, we're not going
to do that. We have like two Saudi Arabia equivalents
of plutonium in our country. We're going to down blend
that fuel and use it. And one of the brilliant
design decisions that the founder of Oklow, Jake DeWitt, made
(33:17):
years ago was oak closed reactor is what they call
a fast reactor. This is in contrast to a light
water reactor, which is the typical form factor you've seen
in the bigger reactors you know, since the fifties. And
the reason that's such a brilliant design decision, on top
of other reasons, is a fast reactor has a tremendous
(33:37):
amount of flexibility in terms of the fuel stock it
can use. So our long term view is that we're
going to be using what's called haley you high as say, low.
Speaker 4 (33:45):
Enrichment uranium, which is basically uranium.
Speaker 2 (33:48):
It's enriched five to twenty percent, and eventually we're going
to actually recycle that that Haley you. So this was
announced maybe I don't know, nine months ago that we
were going to build a recycling facility in Oakridge, which
is where the Manhattan Project was sort of secretly headquartered
back in World War Two. But there's gonna be a
(34:08):
timeframe to get to that point, and so what this
plutonium is going to do, which we applied for Frank
And just another quick side point. Our partner in that
is a French company called Nucleo in E W CLO.
And you talked about SPACs was I just saw it today.
It was announced that Nucleo is going to go public
via s back sometime this year. So anyway, so we
(34:32):
applied for that fuel. We were announced this week that
we're going to get some amount of it. We don't
know how much yet, but that's going to be a
huge unlocked because the real current constraint on spinning up
more and more of these small auder reactors in addition
to the regulatory piece, is the fuel availability and not
just not just uranium, because that's the other thing that
(34:52):
happens when when you sort of slow down meaningfully in industry,
like we did in this country in the seventies, all
of the flight chain slows down.
Speaker 4 (35:01):
So we have like you know, if.
Speaker 2 (35:03):
You think about this if you think about what it
takes to actually to produce energy from a reactor, it's
not just building the reactor. It's not just having uranium
laying around or plutonium or what have you. You've got
to have conversion facilities, deconversion facilities, enrichment facilities, fabrication facilities,
all these things. We have one conversion facility in this country.
It was built in nineteen fifty eight. So we've got
(35:25):
to spin up all of these things again. You've got
to spin up fabrication and conversion and enrichment. The good
news is the government's doing this, you know, in partnership
with private enterprise. So one of our partners called Centrist,
which used to be a government owned entity, is received
nine hundred million dollars. I think it was a grant
(35:45):
or a loan from the federal government to build out
additional enrichment capacity. So I think it's the best time, frankly,
in my lifetime. I was born in seventy six, so frankly,
in my life time, it's the best time to have
a positive view that we're actually going to be a
(36:06):
real country and pursue nuclear technology that is safe, it's clean,
it's efficient, it's frankly, in my opinion, like I said, mandatory,
if we're going to if we're going to support this
build out of data centers and frankly just the broader
build out of reindustrializing the US.
Speaker 3 (36:22):
I love it. I agree with you wholeheartedly.
Speaker 1 (36:25):
I think that's the lynchpin in my mind when you
look at the strategic initiatives of what the future in
particular always you know, I kind of have this lens
from my background to kind of look at advancement in
those areas as it could bleed over into the civilian
market and you know, battery development, right, the controlling of
(36:46):
the space through SpaceX and our satellite capabilities, as well
as you know, these small modulated nuclear reactors and how
it would just you know what every single major economists
throughout history, you know, basically looks at these industrial periods
and looks at what energy production looks like to be
(37:10):
able to what gauge the massive potentiality of our industrial increase.
Speaker 3 (37:16):
Right.
Speaker 1 (37:17):
You talk about something called the eighteen seventy thesis. Can
you talk about that concept as it relates to where
we're at right now in.
Speaker 3 (37:29):
You know, the end of May and twenty twenty six.
Speaker 4 (37:34):
Yeah.
Speaker 2 (37:34):
I mean when I first really started thinking about this,
you know, to be honest with you, it was somewhat
aspirational because the overwhelming challenge to this basic thesis coming
true is over regulation and just kind of a lack
of exploratory and risk taking mindset. And frankly, our country
(38:01):
got into this stance. You know, again, a lot of
this dates back. We could talk about this forever. A
lot of this dates back to the seventies if you
asked me. But the basics of the thesis is as
follows if And the first time I described it in
this way was four years ago when I gave this
graduation speech at the high school that I went to,
(38:23):
because it was the first time I had talked about
it outside of just talking about it with my friends.
And of course, when you're graduating from high school, you're
eighteen years old, so I fed it. I framed it
in this way for these people. You know, imagine being
eighteen years old in the eighteen seventies. By the time
you're an old this is an old boys school. So
by the time you're an old man in the nineteen thirties,
(38:44):
the entire physical world had changed in like profound ways.
So I mean, if you just sort of ticked the list,
like in you know, indoor plumbing, elevators and skyscrapers, mass
adoption of electricity, mass adoption of railroads later on RABI.
Speaker 3 (39:02):
Or everything you name. I mean, it was everything everything.
Speaker 2 (39:08):
And if you and if you roll it forward to
the fifties and maybe the sixties, it really kind of
ended with some combination of the jet age and the
interstate highway system. And so I started thinking to myself,
this kind of this is kind of what we talked
about with the fly Where's My Flying Car thing? There's
(39:29):
a there's a book called Where's My Flying Car? Like,
I'm not the only person that's ever thought of this,
but I started thinking about a lot in the context
of SpaceX, because if you go back to sort of
the venture market, call it ten years ago, and certainly
before that, none of these high capital intensive, very few
of these high capital intensity businesses were getting funded.
Speaker 4 (39:51):
So SpaceX was really an outlier.
Speaker 2 (39:54):
And you know, sort of all the credit to that
team and obviously to Elon, but it was really an
outlier when you think about in the broad scheme of things,
ten years ago wasn't that long ago.
Speaker 4 (40:03):
So it's great how much things have changed since then.
Speaker 2 (40:07):
But I started thinking, like, why did this sort of
pioneering spirit and this desire to positively improve the physical
world that we all live in? Why did this stop?
And a lot of it was the regulation, which we
talked about, But frankly, to be fair, I think some
of it is starting in the city early two thousands
(40:30):
was hyper rational from a capital flows perspective, because if
you think about the way that I think about the world,
like a flow started capital capital should first flow to
companies industries that can massively scale with as little amount
of capital as possible.
Speaker 4 (40:46):
And that's what happened.
Speaker 2 (40:47):
So if you go back to like two thousand and seven,
the biggest companies were things like City Bank and JP
Morgan and General Electric and these.
Speaker 4 (40:55):
Swists of companies.
Speaker 2 (40:56):
You know, up until recently, it was all internet and
software companies.
Speaker 4 (41:01):
You know, Navidia is a bit of an outlier now, even.
Speaker 2 (41:04):
To some extent Amazon, But but anyway, so so what
what I think was going on in some ways was
rational because you're able to build these massive software and
internet businesses. But I also think it was you know,
I think that I think that part of it has
really been exposed as a very brief, specific moment in time,
(41:27):
and I think that people are now sort of collectively
thinking about this more and.
Speaker 4 (41:31):
More, like you like another.
Speaker 2 (41:34):
Here's a great example of of what I'm trying to
get across, the arrangement that happened in the last two
or three weeks between Anthropic and UH SpaceX or space
X I I think is is a is a sort
of a direct result of what I'm what I'm talking about,
meaning you can build the most beautiful UH frontier model
(41:55):
in the world, which some people might argue Anthropic is
currently done, but if you don't have the atoms, it
doesn't really matter. And the atoms are the facilities, the
power and the compute. And what what space XI has
has shown is that there's no company on Earth currently
that can build this type of infrastructure on Earth, and
(42:16):
eventually probably in space then they can.
Speaker 4 (42:20):
And so uh.
Speaker 2 (42:22):
The the the reason why I said at the beginning
that when I first started thinking about this and talking
about this, you know again seven eight whatever it was
years ago, it was a bit aspirational, like nuclear nuclear
projects weren't getting approved.
Speaker 1 (42:38):
Uh.
Speaker 4 (42:38):
Some of the some of the enabling technologies were still.
Speaker 2 (42:41):
They're getting close, but they still weren't all the way
where they needed to be to make these things real.
And now it's so exciting to me. I think a
lot of you've probably heard a lot of people say this.
It's it's it's such an amazing thing that we have,
you know, politics aside, it's such an amazing thing. We
have such a forward looking administration at the same time
(43:03):
that all of this technology sort of led by AI
is beginning beginning to put proliferate. And so all this
to me goes hand in hand the reindustrialization, the the
the relaxation of sort of hyperregulation, and the and the
(43:23):
and the massive proliferation of of AI. And just the
last quick thing I was saying on that, I think
even in the public market, the majority of people when
they hear AI still think in terms of, to put it, simply,
large language models, which obviously has been a big piece
(43:46):
of it. And and again I don't think my view
is unique in this way, but I think it's worth
noting I have believed for quite some time that the
biggest application layer for AI is going to be in
the physical world. And so one way that I framed
that and this just kind of goes hand in hand
with the broader eighteen seventies thesis. One way I framed that, I,
you know, I used to run an investment fund, and
(44:07):
I was telling my friend not too long ago, if
I was still running the fund, would I would tell
all the guys like I don't have any interest and
spending the next forty five days figuring out if salesforce
or work day or these types of SaaS companies, I don't,
you know, if they're cheap or if they're some kind
of falling knights. You know, I just don't want to
(44:30):
spend the next forty five days. I'm sure there's an
answer to that question, but I don't want to spend
the next forty five days, you know, figuring that out.
What I want to focus our time on are what
are the companies and so of the corresponding technologies that
we believe under pretty much every scenario that we can
currently contemplate, our radical beneficiaries of these types of tools
(44:53):
getting better and better and better. And so when you
look at Joby, going back to Joby, Jobe, in my opinion,
is one of these companies and just one anecdote of
how to think about that We have some of the
best aeronautical engineers in the world that are working on
these engineering problems day in and day out, and they're
telling me and telling other people within our company, I'm
(45:16):
able to do things now with these tools that are
so accelerating, I'm able to troubleshoot things that previously would
have taken me some number of days or weeks, I'm
able to troubleshoot them in a matter of minutes or hours.
So you're taking these already extremely productive engineers and putting
some kind of force multiplier on them, and that to
(45:39):
me is extremely exciting. And that's where I and that's
where I've been focusing my time, and that's sort of
another layer to this eighteen seventies thesis idea.
Speaker 1 (45:51):
That is a absolute brilliant response to that.
Speaker 3 (45:54):
Thank you, Michael.
Speaker 1 (45:56):
I just again, I just go back to the ideas
as a person that's really seen all this development and
not quite sure, all right, what is something that I
can count on? How do I look at the complete
diagnostic map of AI and where its functionality is going
(46:18):
to be the most impactful for And you say within
the physical world, you know, I think it's going to
be certainly in terms of time saving, but.
Speaker 3 (46:28):
You know, I just don't know, right.
Speaker 1 (46:30):
I just read a beautiful piece by a gentleman from
UPenn and a guy from Boston College and they called
it the AI trap, right, which is essentially AI is
going to remove a tremendous amount of middle management, white
collar administrative type jobs, and as those people go out
(46:51):
of work, you know, the backfill of those service jobs,
the physical jobs or whatever, there's a lag AI for that,
So it'll take a little bit of time to catch up.
As as an investor in future technologies, how are you
and this last question by it because.
Speaker 3 (47:11):
It's your answers are so good.
Speaker 1 (47:14):
How do you look at this future transition point or
this transition.
Speaker 3 (47:21):
Point is it?
Speaker 1 (47:22):
Is it five years, ten years, twenty years? Is it
impossible to see? And where do those two realms of
development in terms of the technology and how it's going
to be able to be implemented by the workforce, Like,
how do you look at that that that you know
that that GPS moving forward?
Speaker 4 (47:46):
Yeah, So I'll answer that in a couple of ways.
The first way is.
Speaker 2 (47:52):
I'm naturally optimistic on these types of questions, and some
of that is probably just how I am for whatever reason,
and some of it.
Speaker 1 (48:01):
I just want to say, thank you, by the way,
thank you for saying that. I just I'm trying to
figure out how to get more people optimistic on what's
going on instead of being entrenched in all of the
negative aspects, because there's so much positive stuff.
Speaker 3 (48:17):
Going on right now.
Speaker 2 (48:18):
Yeah, I totally agree, and and but a lot of it, frankly,
is is informed by history. There's there's I mean, I
would encourage anyone to go and look look at it
on their own, like you look at the turn of
the going and going from the nineteenth century to the
twentieth century. I don't have the exact percentage off the
(48:39):
top of my head, but the overwhelming majority of the
US economy heading into the beginning of the twentieth century
was agrarian. And obviously, when when you fast forward not
only one hundred years, but even fifty years from there,
and this goes back to this eighteen seventy thing we're
talking about, like so much of that econ me transform
(49:01):
so many of the types of jobs people were doing,
and say the eighteen nineties just were no longer viable jobs.
I mean you had people doing hand physical labor farming
that was replaced by a lot of really well designed machines.
And what happened was is the overall prosperity of the
entire country, and frankly the world improved materially. At the
(49:23):
same time, population growth increased substantially. So I just, you know,
I just find it hard to believe that this is
going to be a different outcome. I mean, there'll be
bumps in the road. I'm assuming it certainly won't be uniform.
Some people will get left out, which is obviously, you know, unfortunate.
But you know, these kind of things do have some
(49:44):
sort of transition phase. So depending on where you are
in your life and your career, it can be a
bumping period or something like this. But I actually look
at it extremely positively if you're like a teenager in
your twenties, like figuring out what to do. When I
was a teenager in my twenties, you know, the thing
I remember hearing back then was, well, the way the
(50:05):
way the things we're supposed to work is you go
to college and then you get a job in some
kind of finance function, you know, an accountant, a lawyer
of Wall Street kind of thing whatever, and you do
that for two or three years, and then you go
to either law school or business school, and there's this
There was this whole generation that I was a part of,
(50:27):
and people before that, and frankly probably some people after that,
that there was like this concept of the sort of
professional manager, and I think that is been proven to
be a very very flawed concept in a lot of
different ways. And versus if you're a teenager in your
(50:48):
twenties now, like a lot of the things that you
might have gone into if you know, when you were
my when I was that age, those things are just
not going to be viable things.
Speaker 4 (50:58):
To go into.
Speaker 2 (50:58):
Like you're not going to if you ask me, you're
not going to want to go into accounting or frankly,
even law. I'm not saying there's gonna be no lawyers left,
don't don't get me wrong, but the alternative to me
is far more exciting and frank frankly, very viable because
of the technological progress and hopefully a continued relaxation of
(51:19):
a lot of this regulation. So there's a there's a
beautiful anecdote that I can give you, which which is
an area and outside of Austin called Prototown, and if
you go and visit Prototown, Oklo is there. It's probably
the most mature company that is there. That's where the
isotope reactor is there. This has all been announced publicly,
(51:41):
but there's a lot of startup companies there that are
being run by twenty year olds. The founders of Prototown
themselves are twenty six years old.
Speaker 4 (51:48):
So I equate it to.
Speaker 2 (51:49):
Like the old school, the old days of incubators, where
you'd have like an office building in San Francisco or
New York and you'd have like a bunch of people
in various cubicles programming software for X y Z startup,
which is great, which is fine, But now that same
type of energy and creativity, et cetera is being applied
(52:12):
to these physical world technologies in a place like Prototown.
You know, I used to joke with my buddy, I
was like this, this was like burning man with a purpose.
You know, you're just out in this ranch in the
middle of Texas and people building some really exciting stuff.
Speaker 1 (52:29):
You know.
Speaker 2 (52:29):
You take the best example that I can think of,
You take star Base for SpaceX. I mean, this is
this is basically land that has no alternative use other
than farmland, I guess, and now it's one of the
most exciting places in America. So I would just encourage
the younger people to listen to you, to your show.
(52:50):
This is an incredible time to be a teenager in
your twenties, if you ask me, because you're not going
to be spending twenty hours a day building spreadsheets for
an investment bank in New York. You're going to be
building like, really amazing technologies. They're going to massively benefit
the physical world. And frankly, let's just be honest keep
(53:11):
us ahead of China, which to me is an incredibly critical.
Speaker 4 (53:17):
Thing that we have to we have to accomplish.
Speaker 2 (53:19):
I mean, I said the other day about job like
the United States has invented aviation and has always been
the leader in aviation all the iterations of aviation, going
back to to the Wright Brothers, and we can't afford
to lose that title now.
Speaker 1 (53:33):
Amen, Michael Thompson, thank you so much for your insight today.
I know it helped my audience and it certainly helped me,
And I just wish you all the best in these
organizations and companies and where can people find these and
invest in them and uh, and and if you're available publicly,
(53:55):
where can they kind of find you or follow you
or your company.
Speaker 4 (53:58):
Yeah, so.
Speaker 2 (54:01):
Several of the things I mentioned are public. So obviously
SpaceX is about to be public. Job is already public.
J O b Y is the ticker. OKLO is already public.
Ok l O is the ticker. I mentioned Aurora, which
is the autonomous truck company. Uh, that's already public. The
ticker is au R. I didn't mention several other companies
(54:23):
that we could talk about, like Zona which is private,
or Nimble dot Ai which is private.
Speaker 4 (54:30):
But the good news is, if you ask.
Speaker 2 (54:32):
Me, there there are a number of existing public ways
to express these views. And there are a number of
really interesting private companies that if things hopefully continue the
way they currently are, they'll be public within.
Speaker 4 (54:46):
You know, within this decade, I believe.
Speaker 2 (54:48):
So, I guess it's a really interesting time as a
public market investor to to sort of develop your own
thought process around evaluation framework and and and start to
analyze these types of companies.
Speaker 3 (55:06):
Outstanding, Michael Thompson, Thank you so much, sir.
Speaker 4 (55:09):
God bless you, God bless me. Thank you.
Speaker 1 (55:13):
M
I just read a beautiful piece by a gentleman from
You Penn and a guy from Boston College, and they
called it the AI trap, right, which is essentially, AI
is going to remove a tremendous amount of middle management,
white collar, administrative type jobs, and as those people go
(00:21):
out of work, you know, the backfill of those service jobs,
the physical jobs or whatever. There's a lag with AI
for that, so it'll take a little bit of time
to catch up.
Speaker 2 (00:34):
I'm naturally optimistic on these types of questions. This is
an incredible time to be a teenager in your twenties,
if you ask me, because you're not going to be
spending twenty hours a day building spreadsheets for an investment
bank in New York. You're going to be building like,
really amazing technologies. They're going to massively benefit the physical world,
(00:56):
and frankly, let's just be honest, keep us ahead of China.
Speaker 1 (01:09):
Welcome back to the show, everybody. I'm your host, David Rutherford.
Today We've got a great show. We have Michael Thompson,
who is a top venture capitalist investor has really invested
in some really incredible SPACs recently. One just a few
weeks ago, Jobe aviation, which is basically of flying taxis
(01:32):
for the future. They did a test flight from JFK
into Manhattan and I just think, you know, you have
it seems Michael like you have your eye on what
the next greatest innovative technologies that are really going to
impact the development of this next phase of what do
(01:54):
they call it the Fifth Industrial Revolution or whatever they're
calling it now. I just think it's fascinating, and so
thanks for coming on to show. Yeah, absolutely tell us
a little bit about Joby if you could.
Speaker 3 (02:06):
And why was this company so appealing to you?
Speaker 2 (02:10):
Yeah, So Jobe is what is the technology itself as
what was referred to as ev TALL, which stands for
Electric Vertical Takeoff and Landing. And the electric piece, at
least the way that I think about it, is really
centered around the physics of how electric engines and electric
motors work versus a combustion a traditional combustion engine. And
(02:34):
one simple way to think about it, just in terms
of the human experience piece of it is, if you've
ever driven a Tesla and you hit the accelerator, it
pins you to the seat. And the reason for that
is because there's a tremendous amount of torque that can
be created by the electric powertrain that's difficult to replicate
because of the friction and the energy loss and things
(02:54):
of this nature with traditional combustion engine. So there's a
lot of things you can do from a from a
physics perspective with an electric power train that's basically impossible
in some ways with a traditional combustion engine. So the
idea behind what Jobe's able to create is a vehicle
that can take off like a helicopter, and very importantly,
(03:16):
it can spin the rotors at a slow enough speed
and be able to space them in a certain way
and build redundancy across the airframe so such that the
safety profile is maturely better than a helicopter, and yet
still have enough torque to get the vehicle off the
ground with a payload and passengers and everything else.
Speaker 1 (03:36):
And in doing so, can I hop in real quick?
I listened to another show you did about those safety precautions,
and they're on a regular helicopter, they're like forty two
points of safety where one thing goes wrong and you
have catastrophic failure. By the way, as a person who's
ridden on a lot of helicopters, when I heard you
(03:56):
say that like.
Speaker 3 (03:57):
A gut flip, going like, oh my god, I never
it was that bad.
Speaker 1 (04:00):
But talk about the redundancy with your platform versus traditional
in terms of safety redundancies.
Speaker 3 (04:07):
Yees.
Speaker 2 (04:08):
So if you look at JOBY, we have six propellers
with five blazes apiece, so thirty blazes in total, and
also a fixed wing, and I'll talk about that in
a second in terms of what the transition period looks
like as you go from taking off like a helicopter
and then flying like an air like a traditional airplane.
(04:29):
But the way the structure is designed is there are
battery packs that are redundant across the wing and across
the airframe. And what that results in we've done this
in testing is we can take out two of the
props and two of the power stations to those props,
and the aircraft still flies, both in hover as well
as in forward flight. And so you compare that to
(04:52):
a helicopter which has in fact it's actually forty eight
and those are the most modern helicopters.
Speaker 4 (04:57):
Other helicopters have even more than that.
Speaker 2 (04:59):
And if one of those things breaks or malfunctions in
some way, and the helicopter's unable to auto rotate, it's
going to crash. And so if you look at what
this technology provides relative to a helicopter, is I was
getting to a second ago.
Speaker 4 (05:16):
It allows you to take off.
Speaker 2 (05:19):
Vertically with a vertical orientation on the propellers at a
descipel level that's about one hundred times quieter than a helicopter,
and that's a huge unlock as you can imagine when
you consider not just the decibel level of a helicopter,
but also the profile of the noise itself. It's a
very low frequency noise, which means it can travel great
distances that can penetrate buildings and be quite annoying to
(05:41):
whoever is around that vehicle. The other thing that I
would quickly add, going back to the current setup of
the vehicle, which is a fully electric powertrain all lithium
ion batteries. One additional issue you have with helicopters when
you're taking off from rooftops, for example, is the most
buildings have their air conditioning infrastructure on the roof, and
(06:04):
so if you're taking off frequently from a helicopter on
a helicopter from a roof, it's sucking all that exhaust
into the AC system, So it's not just an annoying sound,
but it's a you know, it creates a real issue
for anyone that that's inside that building. So the two
big unlocks are the safety profile that we just talked
about and the noise profile. And then what you're able
(06:28):
to do to extend the range and also increase the
safety profile is to transition the propellers from a vertical
orientation to a horizontal orientation such that once you're on
the wing, all of the lift is being provided by
the wing and it's got about a ten to one
glide ratio. So in that scenario you could you could
theoretically knock out all of the power and have a
(06:49):
glide ratio of ten to one and be able to
land the vehicle like you would on a disabled aircraft.
And so the challenge of course, to to be able
to go from that vertical orientation on the props to
this horizontal orientation where you're on the wing is the
transition itself, where you're taking it from the propellers like
(07:10):
this to like this. This this period is the Messi period,
and if you think about it from a very basic perspective,
basic physics perspective, you're going from one hundred percent of
the lift provided by the prop to one hundred percent
of the lift being provided by the wing. But during
that messy phase, it's x one minus x and that's
a very difficult engineering problem, which is frankly why you
haven't seen this in the commercial sector. Historically, you've seen
(07:32):
it with the ospray in a military application. But if
you talk to osprey pilots, they'll tell you it's a
physical act.
Speaker 4 (07:39):
You have to push it.
Speaker 2 (07:39):
You have to physically push it through once you begin
the transition.
Speaker 4 (07:42):
You can't stop. Versus our test pilots when.
Speaker 2 (07:46):
They when they put it into this messy state and
just keep it there, it actually just flies perfectly. And
so one of the reasons, one of the reasons that
that's possible is and Jovie's a totally vertically oriented, vertically
integrated engineering and manufacturing company, which in my opinion, we
can talk about this later if you like, but in
(08:06):
my opinion, that's completely mandatory to make technologies like these
number one reel and the number two scalable. And so
one of the things that we've designed in house and
built in house is the flight system itself. And as
I'm sure you've seen the thousand times. The real hallmark
of a beautifully designed system is simplicity, so that the
(08:28):
interface for the pilot is simply a throttle and a joystick.
You're not doing anything with your feet. It's a relatively
straightforward user interface, and essentially, as you throttle up to
roughly seventy knots, the transition begins and the vehicle goes
from being all the lift provided by the propellers all
(08:49):
the lift being provided by the wing.
Speaker 1 (08:51):
I just think it's the technology is so fascinating to
me because obviously, flying cars is something that we've imagined
right as far back as whatever the nineteen fifties in
comic books and sci fi, and now it seems like
that technology with with being able to have the what
(09:12):
the consistency in that transition period and maintain that torque
and not losing what it does. I mean, I've i
haven't been on too many offsprays, but I've fast roped
out of them.
Speaker 3 (09:23):
I've I've repelled out of the back them.
Speaker 1 (09:26):
And they're just they're just they always felt not as
stable as the Blackhawks or you know, or Sea Wolfz
or whatever else. The forty seven's we were using, and
so for for me, it's like, wow, it seems like
such a a more to be able to have that
vertical and go. It just seems like that's the technology
(09:49):
that works the best, right, And so.
Speaker 3 (09:51):
Then what does it become?
Speaker 2 (09:53):
Then?
Speaker 1 (09:53):
Obviously, you know there's in some of the numbers that
I was looking at it it says, you know, your
operating costs have been upwards near two hundred and thirty
four million. You're expected to gain some revenue this year
at one hundred and five hundred and fifteen million. How
long does it really take to perfect those technologies? We
(10:14):
watched it with Tesla SpaceX, right, all of these like
building something from scratch, which by the way is the
most American thing in the world for me, right, is
that you're able to have that concept from beginning to
end in all in one place. What does it look
like in terms of as a core investor when you
(10:36):
have those long runways of investment that take place in
really great technology.
Speaker 2 (10:43):
Yes, So I would deconstruct the question in a couple
different ways. The first thing is, you know why now,
because as you mentioned, flying cars have been on the
have famously been on the cover of popular mechanics like
twenty ten or whatever going back seventy years now, and
(11:04):
people like Peter Teo famously would say, you know, we
asked for flying cars. We've got one hundred and forty characters,
you know, in reference to old school to old school Twitter.
So I think the first question is why now, And
there's really two answers to that. The first one is
a technology answer and the second, frankly, is a regulatory answer.
And this is my current view for what it's worth.
(11:26):
So one of the things that I've looked for when
investing in companies like this are is basically what I
call the convergence of enabling technologies. And what that means,
in my opinion is oftentimes on these particularly complex engineering problems,
it's not just one technology hitting its.
Speaker 4 (11:49):
Curve at a given point in time.
Speaker 2 (11:52):
It tends to be in my experience, multiple technologies hitting
their curves at a given point in time. So there's
a number of different ways to talk about this with Jobe,
but just to break it down into three of the
primary things that are converging at roughly the same time.
The first, most importantly, because this is currently an all
electric aircraft, like I said, and there's some tremendous benefits
(12:12):
that you get from using a fly by wire electric powertrain.
Speaker 4 (12:16):
Battery density, getting.
Speaker 2 (12:18):
To north of three hundred white hours of kilogram at
the pack level is a critical unlock for this technology.
In fact, when Joe Bin, who's the founder of joby,
initially founded this company, he founded the company frankly twice.
The first one was in nineteen ninety three, and he
realized relatively early on that battery density in ninety three
just wasn't sufficient to do any of the types of
(12:41):
things he wanted to do. I think it was like
forty or something like this white hours a kilogram back then.
So he shelved the project and started as three other companies,
sold them, took the proceeds, and restarted the company in
two thousand and nine. So battery density hitting its curve
it approximately the moment that we're in right now, is
a huge piece of this unlock. The second, quite frankly,
(13:04):
is just the progression of More's law. The flight computer
on this vehicle is like the size of your iPhone.
And in fact, you've seen this famous graphic I'm sure
on SpaceX where it shows the progression of the raptor engine,
and it goes from a very complex looking engine to
a far more simplistic but far more performative engine and
(13:27):
the same thing. You could do the same thing with
our flight computer. The original flight computer looked like a
large briefcase and now it's smaller than your phone. So
simply the ability to have some substantial amount of compute
on the vehicle at a very low mass and weight
is a very big unlock for making this technology real.
And the third is the ability to mass produce carbon
(13:49):
fiber lightweight carbon fiber, because obviously weight is an incredibly
important consideration on the aircraft. So if any one of
those things wasn't hitting its curve approximately this time, the
technology would be far less advanced. So that's a big
thing that that I've looked for historically, like are these
things actually getting into the realm of realistically possible? You know,
(14:13):
Elon has an amazing quote that I've used, I think,
not just me, probably a lot of people. If the
physics work, then it's just a question of execution and engineering.
Speaker 4 (14:23):
And we're now at the point where the physics for
this type of aircraft works. And the case of.
Speaker 2 (14:27):
Joby, again going back to this transition phase, which is
the one of the most difficult parts of the entire equation.
Speaker 4 (14:35):
Uh, the engineering is working.
Speaker 2 (14:38):
The second part of your equation of your of the
constraints historically is the regulatory piece. And without getting into
the specifics of the previous four years, it was just
a very challenging market for companies like Jobe to progress
the way we wanted to progress, just because the regulatory
(14:58):
state was sclerotic. Frankly in a lot of ways now,
the working level people were fantastic even then, but it
was sort of a lack of visionary leadership. If you
asked me, the contrast then versus where we are now
could not be more stark. I've sent to people like
(15:19):
this is the biggest macro regulatory one to eighty that
I've ever personally seen. It almost doesn't seem real, to
be honest with you. So what this administration has done
is not only continued to progress the type certification process
with job, but also to accelerate the actual applications for
this technology in the market. So the President signed about
(15:42):
a year ago an executive order that created this platform.
This program referred to as EIPP, which is ev Tall
Integrated Pilot Program. So under that program. This has been
announced within the last month or two. Joby is going
to be flying passengers this year in markets like Texas
(16:02):
and Florida and New York and New Jersey. So that's
just a huge accelerant to UH TO, to the to
the the overall adoption of this technology, and frankly just
the market awareness. So that that's that's sort of the
backdrop of of where I think we stand in terms
of this technology becoming live and commercial. The second part
(16:24):
of your question around valuation, you know what what's interesting
is these types of companies UH have existed obviously in
in the venture markets for you know, many years now,
and all sorts of different types of of companies that
are pre revenue that that require a number of different
things to come true to make the business viable to scale.
(16:46):
All these sorts of things what you see today in
today's public market, and frankly some of this is because
of this spackwave in twenty twenty one. There's a number
of types of companies. You know, Oklow is one in
small homagory actors. Joby obviously a company that another company
were involved in called Aurora, which is an autonomous trucking company.
(17:07):
You've seen all the quantum computing companies. Historically speaking, in
the public markets, this type of pre revenue company with
potential significant upside if certain things went the right way,
was by and large reserve for biotech. But now there's
a number of these types of companies that are that
are in the public market. So I think it requires
(17:29):
a different lens from from evaluation perspective than than what
maybe some uh some investors are used to. And there's
a number of uh of sort of large cap companies
that you can point to that that have been valued
this way now for quite some time. You mentioned Tesla,
that's certainly been the case. I'll talk about that in
a second. Even something like Palenteer. I remember maybe eighteen
(17:54):
months ago, two years ago, one of my friends was saying,
you know, Palanteer trades that whatever it was, like a
hundred and fifty times ebitdah or something like that. And
my comment to him was, you know, nothing trades at
one hundred and fifty times ebitdah. And he's like, yeah,
that that's what's concerning me, that maybe the market's overvalued.
I said, no, no, that's that's not what I'm trying
to say, I'm what I'm saying is nothing trades at
(18:15):
one hundred and fifty times EBITDA. So in other words,
I understand you can calculate that number, but that's not
what it's trading on. It's trading on the basic idea
that I'll describe as follows, what is the potential overall
market for what this company is pursuing. And in many
cases it's multiple markets. So you saw, I mean most
(18:35):
recently you saw in the in the in the SPACEXS one,
they have multiple markets that accumulate to twenty eight and
a half twenty eight and a half trillion dollars of
total addressable market. So the market is sort of, you know,
under the surface. Doing a calculation like that for a
company like Palentteer or a company like Tesla, or a
company like Jobi, then it's saying, what do I believe
(18:58):
the market share that this company is going to be
able to capture and at that scale down the road,
what type of unit economics do I project? And that
will obviously result in some amount of cash flow in
the future, and then you discount that all back and
you have what is the current value of the company.
Speaker 4 (19:18):
And I call these companies.
Speaker 2 (19:20):
These businesses DCF companies, and they will be for quite
some time. So the best example I can give you
that I think is a framework of what the market
is currently thinking on something like Jobi is Tesla from
circa twenty thirteen twenty fourteen. So if, off the top
of my head, Tesla from twenty thirteen to twenty fourteen,
(19:42):
off of a reasonable market cap base went up six x,
and you might say to yourself, without knowing anything, oh,
they must have made a lot more cars in twenty fourteen,
they must have made a lot more revenues. Whatever, The
actual analysis, now that you have all the data, is
they made thirty five thousand cars in twenty fourteen versus
(20:04):
Toyota that makes ten million cars a year, and they
burned about three hundred and fifty million dollars of cash.
In fact, if you go from twenty fourteen to twenty
nineteen on Tesla, they burned tumultively something like five million
dollars and the stock went up another three x, again
off off of a meaningful market cap. So so what
(20:26):
I'm just trying to get at is the DCF valuation
framework that I think these types of companies require. Can
result in significant increases in value, well in advance of
meaningful increases of revenue and certainly meaningful increases in cash flow.
So there's this sort of gradually then suddenly situation. And
(20:52):
you know, going back to SpaceX, this is the same
thing that happened to SpaceX in some ways in the
private markets.
Speaker 4 (20:59):
You know, space twenty.
Speaker 2 (21:03):
Fifteen, I guess it was was somewhere in the context
of ten million dollars. By twenty nineteen, I think it
was with somewhere in the context of fifteen or twenty
billion dollars, and then obviously it just it started to
really ramp post twenty twenty, twenty twenty one, and I
think it's I think the valuation is up something like
(21:23):
ten times or something in the last three or four years.
And some people might say, oh, that's that's getting ahead
of itself, and maybe it is, but I think the
other way to look at it, which I think is
the way I would look at it, is the market
is recognizing, in the case of SpaceX, that that there's
going to be a tremendous potential for data centers in space,
(21:47):
whatever you want to call it. And there's one company
that controls the access to space. There's one company that's proven.
Speaker 4 (21:53):
The ability to.
Speaker 2 (21:56):
Scale manufacture frankly better than probably any company history.
Speaker 4 (22:01):
So, just going back to Joby, you mentioned the revenue.
Speaker 2 (22:04):
That revenue is coming almost entirely from the Blade business
that we bought last summer, and the idea on Blade
is to take the existing operations of Blade, which are
all least helicopters, have that footprint as part of Jobi,
and then as our vehicle is certified and as we
start to continue to ramp production, you replace the existing
(22:25):
Blade infrastructure, which again are least helicopters, with the Jobe aircraft.
So I don't think the markets spending too much time,
although I think some people look at it in a
positive way, which it is somewhat positive, But I think
the real value of Joby is what is this market
going to look like. I believe it's going to be
(22:46):
a very very large market. Other third parties like Morgan
Stanley have put some numbers on I think it was
a trillion dollars by the twenty forties or something like that,
So I think it's me a very very large market.
Speaker 4 (22:58):
My personal view, and this has been my view for
a long time.
Speaker 2 (23:01):
Joby is far and away the leader both on technology
and on the regulatory path, and so I think we're
going to capture a tremendous amount of share. And then
just the last thing I'd say is when you have
these vertically integrated companies, which again I believe you have
to have these businesses vertically integrated to have any chance
of success. I think SpaceX proved that. I think Tesla's
(23:22):
proved that. There's a number of companies so joby by
being a vertically integrated company. If things work the way
that I believe they will, what happens is you end
up with multiple businesses in one So you've seen that
with SpaceX, You've seen that with Tesla. I think you're
gonna see it with Jobe.
Speaker 1 (23:37):
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(23:59):
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(24:43):
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(25:04):
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Speaker 3 (25:11):
That makes total sense.
Speaker 1 (25:13):
And that's why I love listening to uh really a
student investors such as yourself as because you know you
when you see it, you know, I think people they
they would never see the leasing play of the other
helicopter company, right, They would never see the you know, uh,
some of the other technologies that will emerge out of it,
(25:34):
that will be integrated in it.
Speaker 2 (25:35):
Right.
Speaker 1 (25:36):
And and that's why that's why, you know, great investors
can find those winners so far ahead than when they
actually start to really you know, cook based on whatever
regulatory confinements are released.
Speaker 3 (25:49):
Right, that always seems to be the case. For sure.
You you you now live in in Miami.
Speaker 1 (25:56):
I heard that, and well, you know, I don't know
how long you've been here, but welcome to Florida, Florida native,
and the more.
Speaker 3 (26:03):
Brilliant minds that come to Florida, the better for me.
I love it.
Speaker 1 (26:07):
One of the things that we hear a lot of
Byron Donald's talking about in terms of his campaign promises
is to really turn Florida into the next major silicon
valley or tech hub or or whatever. And it certainly
appears with all the different financing companies that are coming
here and wealthy billionaires that this looks like it might
be just that as well, as you know, Central South
(26:31):
American investment is really booming down in Miami as well too.
One of the companies you know that potentially could have
a huge impact on Florida's development is Oaklow and that's
the small reactor company.
Speaker 3 (26:45):
You guys chose. With all this data center.
Speaker 1 (26:52):
Drive and how many data centers are being built and
how they're going to power, how they're gonna you know,
you see these small public outcrimes. We saw the big
one with Kevin O'Leary out in Salt Lake City. Right.
Speaker 3 (27:03):
You had the locals be like, we don't.
Speaker 1 (27:04):
Want it here, get it out of here, and him
pushing back like why wouldn't you want this in your state?
Speaker 2 (27:10):
Right?
Speaker 1 (27:10):
How do you guys assess what you're doing with small
reactors and what that developed that space is going to
look like. Because I believe that the number one issue
that will change the world in ways that we can't
even fathom yet is the is the micro reactors. I
just believe once we can get away from from natural
(27:32):
gas and oil and if we can magnify solar, I
think there's a value there. But I just believe, you
know what, in in forty years, you're going to punch
you know, a reactor into your jobie, you know, solo,
and you're going to go up and you're going to
fly to work just like you would drive or whatever.
So explain that play for you guys, and why that's
(27:55):
so important for where you're at.
Speaker 2 (27:57):
Yeah so, I so I'll try to thread a lot
of different things together as quick as I quickly as
I can.
Speaker 1 (28:03):
Take your time, Take your time, because I know this
is complex. I mean it's obviously from your last description.
I think the real value that you can give our
listeners is how you think about this, right, because it's
really fascinating to me because you know, as us, we
see the super seven, we see you know, kind of
hopefully a rebalancing come here. Well we also see profits
(28:26):
and a lot of the you know, those core manufacturing
companies or uh you know, the gees or whatever, they're
the oil companies, right, We're seeing the rise or reset
and there. But I you know, companies like Joby and Oaklow,
those are the future companies people I think are looking for,
uh to be in that early game investment.
Speaker 4 (28:47):
Yeah, so.
Speaker 2 (28:49):
I started investing in certainly looking at a number of
companies and investing in a few what I would call
application level application layer AI company. This would have been
six seven, eight years ago, and the more I started
to wrap my head around what this might look like.
And again, you know, six seven, eight years ago was
(29:10):
well before chat, GPT and all these other tools were
out in the wild. But I started just sort of
thinking through what was going to be required infrastructure wise
to make these things really proliferate, because it seemed even
back then, it seemed likely that this type of thing
was going to proliferate because it just seemed like the
(29:33):
technology was going to be able to scale and improve
in a way that it would become a sort of
a ubiquitous use case, which is I think largely what's
happened in many ways. So one of the things that
I concluded, and probably a lot of people did, was
to put it simply, where's all this power going to
(29:53):
come from? And so that's when I first started digging
into nuclear I'd never really spent much time it, frankly,
prior to that, and one of the things I started
to conclude was, this seems extremely logical that we should
be pursuing this as a country, because number one, the
technology is proven. We really stopped doing this as a
(30:16):
country in the nineteen seventies, but the military did not,
and the Navy continued to put small major actors on
carriers on submarines. The safety record has been incredible, but frankly,
one of the conclusions I came to at the time
was it seems logical. It seems frankly, it's in some
(30:41):
scenarios of the world, which I think we're now in,
it seems like it might even be mandatory. You know,
there's this sort of macro overlay of this arms race,
if you want to call it that, with China, like
China's doing this, So it just seemed practical in so
many ways. The issue was, however, that if you look
at the track record of the NRC, frankly, just nothing
(31:03):
got nothing got approved. So the one stat that I've
used before is prior to nineteen seventy The NRC was
created in nineteen seventy four, So prior to nineteen seventy eight,
there were one hundred and thirty three reactors built in
the United States and since then it's been two. So
very obviously, this was an industry that the country seemed
(31:24):
to be walking away from. And again going back to
the big shift that we've all seen in DC in
the last eighteen twenty four months, the four Executive Orders
that the President signed a year ago are unbelievable. We
were talking the other day, me and some of the
Oklahow people. It seems hard to believe that it was
(31:45):
only a year ago. It feels like it was much
longer than that. And one of the thing, so there's
several things in these eos, I just touched on it
very quickly. One is it opened up the regulatory path
with both the NRC and the DOE. It created pathways
for fuel, which I'll come back to because fuel is
one of the big constraints. And it also sort of
(32:09):
issued a challenge, if you will, to the industry, can
we have at least three reactors go critical by July fourth,
twenty twenty six. So these are all very very ambitious
goals that were set with these eos, and now the
agencies have been working to implement them and it's been amazing,
Like I was saying, over the last year. So in
(32:32):
the case of Oklow, this was just announced this week.
I think there's a tremendous amount of weapons grade plutonium
that the United States has from various programs over the years.
It's something like twenty metric tons.
Speaker 4 (32:50):
And that was all going to be.
Speaker 2 (32:54):
Twenty million metric tons excuse me, that was all going
to be buried in the ground essentially. But another thing
that the administration did was to say, we're not going
to do that. We have like two Saudi Arabia equivalents
of plutonium in our country. We're going to down blend
that fuel and use it. And one of the brilliant
design decisions that the founder of Oklow, Jake DeWitt, made
(33:17):
years ago was oak closed reactor is what they call
a fast reactor. This is in contrast to a light
water reactor, which is the typical form factor you've seen
in the bigger reactors you know, since the fifties. And
the reason that's such a brilliant design decision, on top
of other reasons, is a fast reactor has a tremendous
(33:37):
amount of flexibility in terms of the fuel stock it
can use. So our long term view is that we're
going to be using what's called haley you high as say, low.
Speaker 4 (33:45):
Enrichment uranium, which is basically uranium.
Speaker 2 (33:48):
It's enriched five to twenty percent, and eventually we're going
to actually recycle that that Haley you. So this was
announced maybe I don't know, nine months ago that we
were going to build a recycling facility in Oakridge, which
is where the Manhattan Project was sort of secretly headquartered
back in World War Two. But there's gonna be a
(34:08):
timeframe to get to that point, and so what this
plutonium is going to do, which we applied for Frank
And just another quick side point. Our partner in that
is a French company called Nucleo in E W CLO.
And you talked about SPACs was I just saw it today.
It was announced that Nucleo is going to go public
via s back sometime this year. So anyway, so we
(34:32):
applied for that fuel. We were announced this week that
we're going to get some amount of it. We don't
know how much yet, but that's going to be a
huge unlocked because the real current constraint on spinning up
more and more of these small auder reactors in addition
to the regulatory piece, is the fuel availability and not
just not just uranium, because that's the other thing that
(34:52):
happens when when you sort of slow down meaningfully in industry,
like we did in this country in the seventies, all
of the flight chain slows down.
Speaker 4 (35:01):
So we have like you know, if.
Speaker 2 (35:03):
You think about this if you think about what it
takes to actually to produce energy from a reactor, it's
not just building the reactor. It's not just having uranium
laying around or plutonium or what have you. You've got
to have conversion facilities, deconversion facilities, enrichment facilities, fabrication facilities,
all these things. We have one conversion facility in this country.
It was built in nineteen fifty eight. So we've got
(35:25):
to spin up all of these things again. You've got
to spin up fabrication and conversion and enrichment. The good
news is the government's doing this, you know, in partnership
with private enterprise. So one of our partners called Centrist,
which used to be a government owned entity, is received
nine hundred million dollars. I think it was a grant
(35:45):
or a loan from the federal government to build out
additional enrichment capacity. So I think it's the best time, frankly,
in my lifetime. I was born in seventy six, so frankly,
in my life time, it's the best time to have
a positive view that we're actually going to be a
(36:06):
real country and pursue nuclear technology that is safe, it's clean,
it's efficient, it's frankly, in my opinion, like I said, mandatory,
if we're going to if we're going to support this
build out of data centers and frankly just the broader
build out of reindustrializing the US.
Speaker 3 (36:22):
I love it. I agree with you wholeheartedly.
Speaker 1 (36:25):
I think that's the lynchpin in my mind when you
look at the strategic initiatives of what the future in
particular always you know, I kind of have this lens
from my background to kind of look at advancement in
those areas as it could bleed over into the civilian
market and you know, battery development, right, the controlling of
(36:46):
the space through SpaceX and our satellite capabilities, as well
as you know, these small modulated nuclear reactors and how
it would just you know what every single major economists
throughout history, you know, basically looks at these industrial periods
and looks at what energy production looks like to be
(37:10):
able to what gauge the massive potentiality of our industrial increase.
Speaker 3 (37:16):
Right.
Speaker 1 (37:17):
You talk about something called the eighteen seventy thesis. Can
you talk about that concept as it relates to where
we're at right now in.
Speaker 3 (37:29):
You know, the end of May and twenty twenty six.
Speaker 4 (37:34):
Yeah.
Speaker 2 (37:34):
I mean when I first really started thinking about this,
you know, to be honest with you, it was somewhat
aspirational because the overwhelming challenge to this basic thesis coming
true is over regulation and just kind of a lack
of exploratory and risk taking mindset. And frankly, our country
(38:01):
got into this stance. You know, again, a lot of
this dates back. We could talk about this forever. A
lot of this dates back to the seventies if you
asked me. But the basics of the thesis is as
follows if And the first time I described it in
this way was four years ago when I gave this
graduation speech at the high school that I went to,
(38:23):
because it was the first time I had talked about
it outside of just talking about it with my friends.
And of course, when you're graduating from high school, you're
eighteen years old, so I fed it. I framed it
in this way for these people. You know, imagine being
eighteen years old in the eighteen seventies. By the time
you're an old this is an old boys school. So
by the time you're an old man in the nineteen thirties,
(38:44):
the entire physical world had changed in like profound ways.
So I mean, if you just sort of ticked the list,
like in you know, indoor plumbing, elevators and skyscrapers, mass
adoption of electricity, mass adoption of railroads later on RABI.
Speaker 3 (39:02):
Or everything you name. I mean, it was everything everything.
Speaker 2 (39:08):
And if you and if you roll it forward to
the fifties and maybe the sixties, it really kind of
ended with some combination of the jet age and the
interstate highway system. And so I started thinking to myself,
this kind of this is kind of what we talked
about with the fly Where's My Flying Car thing? There's
(39:29):
a there's a book called Where's My Flying Car? Like,
I'm not the only person that's ever thought of this,
but I started thinking about a lot in the context
of SpaceX, because if you go back to sort of
the venture market, call it ten years ago, and certainly
before that, none of these high capital intensive, very few
of these high capital intensity businesses were getting funded.
Speaker 4 (39:51):
So SpaceX was really an outlier.
Speaker 2 (39:54):
And you know, sort of all the credit to that
team and obviously to Elon, but it was really an
outlier when you think about in the broad scheme of things,
ten years ago wasn't that long ago.
Speaker 4 (40:03):
So it's great how much things have changed since then.
Speaker 2 (40:07):
But I started thinking, like, why did this sort of
pioneering spirit and this desire to positively improve the physical
world that we all live in? Why did this stop?
And a lot of it was the regulation, which we
talked about, But frankly, to be fair, I think some
of it is starting in the city early two thousands
(40:30):
was hyper rational from a capital flows perspective, because if
you think about the way that I think about the world,
like a flow started capital capital should first flow to
companies industries that can massively scale with as little amount
of capital as possible.
Speaker 4 (40:46):
And that's what happened.
Speaker 2 (40:47):
So if you go back to like two thousand and seven,
the biggest companies were things like City Bank and JP
Morgan and General Electric and these.
Speaker 4 (40:55):
Swists of companies.
Speaker 2 (40:56):
You know, up until recently, it was all internet and
software companies.
Speaker 4 (41:01):
You know, Navidia is a bit of an outlier now, even.
Speaker 2 (41:04):
To some extent Amazon, But but anyway, so so what
what I think was going on in some ways was
rational because you're able to build these massive software and
internet businesses. But I also think it was you know,
I think that I think that part of it has
really been exposed as a very brief, specific moment in time,
(41:27):
and I think that people are now sort of collectively
thinking about this more and.
Speaker 4 (41:31):
More, like you like another.
Speaker 2 (41:34):
Here's a great example of of what I'm trying to
get across, the arrangement that happened in the last two
or three weeks between Anthropic and UH SpaceX or space
X I I think is is a is a sort
of a direct result of what I'm what I'm talking about,
meaning you can build the most beautiful UH frontier model
(41:55):
in the world, which some people might argue Anthropic is
currently done, but if you don't have the atoms, it
doesn't really matter. And the atoms are the facilities, the
power and the compute. And what what space XI has
has shown is that there's no company on Earth currently
that can build this type of infrastructure on Earth, and
(42:16):
eventually probably in space then they can.
Speaker 4 (42:20):
And so uh.
Speaker 2 (42:22):
The the the reason why I said at the beginning
that when I first started thinking about this and talking
about this, you know again seven eight whatever it was
years ago, it was a bit aspirational, like nuclear nuclear
projects weren't getting approved.
Speaker 1 (42:38):
Uh.
Speaker 4 (42:38):
Some of the some of the enabling technologies were still.
Speaker 2 (42:41):
They're getting close, but they still weren't all the way
where they needed to be to make these things real.
And now it's so exciting to me. I think a
lot of you've probably heard a lot of people say this.
It's it's it's such an amazing thing that we have,
you know, politics aside, it's such an amazing thing. We
have such a forward looking administration at the same time
(43:03):
that all of this technology sort of led by AI
is beginning beginning to put proliferate. And so all this
to me goes hand in hand the reindustrialization, the the
the relaxation of sort of hyperregulation, and the and the
(43:23):
and the massive proliferation of of AI. And just the
last quick thing I was saying on that, I think
even in the public market, the majority of people when
they hear AI still think in terms of, to put it, simply,
large language models, which obviously has been a big piece
(43:46):
of it. And and again I don't think my view
is unique in this way, but I think it's worth
noting I have believed for quite some time that the
biggest application layer for AI is going to be in
the physical world. And so one way that I framed
that and this just kind of goes hand in hand
with the broader eighteen seventies thesis. One way I framed that, I,
you know, I used to run an investment fund, and
(44:07):
I was telling my friend not too long ago, if
I was still running the fund, would I would tell
all the guys like I don't have any interest and
spending the next forty five days figuring out if salesforce
or work day or these types of SaaS companies, I don't,
you know, if they're cheap or if they're some kind
of falling knights. You know, I just don't want to
(44:30):
spend the next forty five days. I'm sure there's an
answer to that question, but I don't want to spend
the next forty five days, you know, figuring that out.
What I want to focus our time on are what
are the companies and so of the corresponding technologies that
we believe under pretty much every scenario that we can
currently contemplate, our radical beneficiaries of these types of tools
(44:53):
getting better and better and better. And so when you
look at Joby, going back to Joby, Jobe, in my opinion,
is one of these companies and just one anecdote of
how to think about that We have some of the
best aeronautical engineers in the world that are working on
these engineering problems day in and day out, and they're
telling me and telling other people within our company, I'm
(45:16):
able to do things now with these tools that are
so accelerating, I'm able to troubleshoot things that previously would
have taken me some number of days or weeks, I'm
able to troubleshoot them in a matter of minutes or hours.
So you're taking these already extremely productive engineers and putting
some kind of force multiplier on them, and that to
(45:39):
me is extremely exciting. And that's where I and that's
where I've been focusing my time, and that's sort of
another layer to this eighteen seventies thesis idea.
Speaker 1 (45:51):
That is a absolute brilliant response to that.
Speaker 3 (45:54):
Thank you, Michael.
Speaker 1 (45:56):
I just again, I just go back to the ideas
as a person that's really seen all this development and
not quite sure, all right, what is something that I
can count on? How do I look at the complete
diagnostic map of AI and where its functionality is going
(46:18):
to be the most impactful for And you say within
the physical world, you know, I think it's going to
be certainly in terms of time saving, but.
Speaker 3 (46:28):
You know, I just don't know, right.
Speaker 1 (46:30):
I just read a beautiful piece by a gentleman from
UPenn and a guy from Boston College and they called
it the AI trap, right, which is essentially AI is
going to remove a tremendous amount of middle management, white
collar administrative type jobs, and as those people go out
(46:51):
of work, you know, the backfill of those service jobs,
the physical jobs or whatever, there's a lag AI for that,
So it'll take a little bit of time to catch up.
As as an investor in future technologies, how are you
and this last question by it because.
Speaker 3 (47:11):
It's your answers are so good.
Speaker 1 (47:14):
How do you look at this future transition point or
this transition.
Speaker 3 (47:21):
Point is it?
Speaker 1 (47:22):
Is it five years, ten years, twenty years? Is it
impossible to see? And where do those two realms of
development in terms of the technology and how it's going
to be able to be implemented by the workforce, Like,
how do you look at that that that you know
that that GPS moving forward?
Speaker 4 (47:46):
Yeah, So I'll answer that in a couple of ways.
The first way is.
Speaker 2 (47:52):
I'm naturally optimistic on these types of questions, and some
of that is probably just how I am for whatever reason,
and some of it.
Speaker 1 (48:01):
I just want to say, thank you, by the way,
thank you for saying that. I just I'm trying to
figure out how to get more people optimistic on what's
going on instead of being entrenched in all of the
negative aspects, because there's so much positive stuff.
Speaker 3 (48:17):
Going on right now.
Speaker 2 (48:18):
Yeah, I totally agree, and and but a lot of it, frankly,
is is informed by history. There's there's I mean, I
would encourage anyone to go and look look at it
on their own, like you look at the turn of
the going and going from the nineteenth century to the
twentieth century. I don't have the exact percentage off the
(48:39):
top of my head, but the overwhelming majority of the
US economy heading into the beginning of the twentieth century
was agrarian. And obviously, when when you fast forward not
only one hundred years, but even fifty years from there,
and this goes back to this eighteen seventy thing we're
talking about, like so much of that econ me transform
(49:01):
so many of the types of jobs people were doing,
and say the eighteen nineties just were no longer viable jobs.
I mean you had people doing hand physical labor farming
that was replaced by a lot of really well designed machines.
And what happened was is the overall prosperity of the
entire country, and frankly the world improved materially. At the
(49:23):
same time, population growth increased substantially. So I just, you know,
I just find it hard to believe that this is
going to be a different outcome. I mean, there'll be
bumps in the road. I'm assuming it certainly won't be uniform.
Some people will get left out, which is obviously, you know, unfortunate.
But you know, these kind of things do have some
(49:44):
sort of transition phase. So depending on where you are
in your life and your career, it can be a
bumping period or something like this. But I actually look
at it extremely positively if you're like a teenager in
your twenties, like figuring out what to do. When I
was a teenager in my twenties, you know, the thing
I remember hearing back then was, well, the way the
(50:05):
way the things we're supposed to work is you go
to college and then you get a job in some
kind of finance function, you know, an accountant, a lawyer
of Wall Street kind of thing whatever, and you do
that for two or three years, and then you go
to either law school or business school, and there's this
There was this whole generation that I was a part of,
(50:27):
and people before that, and frankly probably some people after that,
that there was like this concept of the sort of
professional manager, and I think that is been proven to
be a very very flawed concept in a lot of
different ways. And versus if you're a teenager in your
(50:48):
twenties now, like a lot of the things that you
might have gone into if you know, when you were
my when I was that age, those things are just
not going to be viable things.
Speaker 4 (50:58):
To go into.
Speaker 2 (50:58):
Like you're not going to if you ask me, you're
not going to want to go into accounting or frankly,
even law. I'm not saying there's gonna be no lawyers left,
don't don't get me wrong, but the alternative to me
is far more exciting and frank frankly, very viable because
of the technological progress and hopefully a continued relaxation of
(51:19):
a lot of this regulation. So there's a there's a
beautiful anecdote that I can give you, which which is
an area and outside of Austin called Prototown, and if
you go and visit Prototown, Oklo is there. It's probably
the most mature company that is there. That's where the
isotope reactor is there. This has all been announced publicly,
(51:41):
but there's a lot of startup companies there that are
being run by twenty year olds. The founders of Prototown
themselves are twenty six years old.
Speaker 4 (51:48):
So I equate it to.
Speaker 2 (51:49):
Like the old school, the old days of incubators, where
you'd have like an office building in San Francisco or
New York and you'd have like a bunch of people
in various cubicles programming software for X y Z startup,
which is great, which is fine, But now that same
type of energy and creativity, et cetera is being applied
(52:12):
to these physical world technologies in a place like Prototown.
You know, I used to joke with my buddy, I
was like this, this was like burning man with a purpose.
You know, you're just out in this ranch in the
middle of Texas and people building some really exciting stuff.
Speaker 1 (52:29):
You know.
Speaker 2 (52:29):
You take the best example that I can think of,
You take star Base for SpaceX. I mean, this is
this is basically land that has no alternative use other
than farmland, I guess, and now it's one of the
most exciting places in America. So I would just encourage
the younger people to listen to you, to your show.
(52:50):
This is an incredible time to be a teenager in
your twenties, if you ask me, because you're not going
to be spending twenty hours a day building spreadsheets for
an investment bank in New York. You're going to be
building like, really amazing technologies. They're going to massively benefit
the physical world. And frankly, let's just be honest keep
(53:11):
us ahead of China, which to me is an incredibly critical.
Speaker 4 (53:17):
Thing that we have to we have to accomplish.
Speaker 2 (53:19):
I mean, I said the other day about job like
the United States has invented aviation and has always been
the leader in aviation all the iterations of aviation, going
back to to the Wright Brothers, and we can't afford
to lose that title now.
Speaker 1 (53:33):
Amen, Michael Thompson, thank you so much for your insight today.
I know it helped my audience and it certainly helped me,
And I just wish you all the best in these
organizations and companies and where can people find these and
invest in them and uh, and and if you're available publicly,
(53:55):
where can they kind of find you or follow you
or your company.
Speaker 4 (53:58):
Yeah, so.
Speaker 2 (54:01):
Several of the things I mentioned are public. So obviously
SpaceX is about to be public. Job is already public.
J O b Y is the ticker. OKLO is already public.
Ok l O is the ticker. I mentioned Aurora, which
is the autonomous truck company. Uh, that's already public. The
ticker is au R. I didn't mention several other companies
(54:23):
that we could talk about, like Zona which is private,
or Nimble dot Ai which is private.
Speaker 4 (54:30):
But the good news is, if you ask.
Speaker 2 (54:32):
Me, there there are a number of existing public ways
to express these views. And there are a number of
really interesting private companies that if things hopefully continue the
way they currently are, they'll be public within.
Speaker 4 (54:46):
You know, within this decade, I believe.
Speaker 2 (54:48):
So, I guess it's a really interesting time as a
public market investor to to sort of develop your own
thought process around evaluation framework and and and start to
analyze these types of companies.
Speaker 3 (55:06):
Outstanding, Michael Thompson, Thank you so much, sir.
Speaker 4 (55:09):
God bless you, God bless me. Thank you.
Speaker 1 (55:13):
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