SpaceX’s Secret, Nuclear's Rebirth, and the AI Power Crisis

0:00 I joined SpaceX in 2003. The company was maybe 30 people. I remember getting there on day one and reading the employee handbook and on the top of page one was >> you're a partner at Founders Fund. You're the founder and CEO at General Matter. >> We enrich uranium for nuclear energy. That's the one step the US doesn't do at any scale. We have to import it from Russia. In 2010, we were completely tied neck andneck with China on grid total capacity. In the 15 years since 2010, they've tripled. The whole thing is how do you bring down cost?

0:29 >> What are the new possibilities for nuclear? >> If you just think how are we going to power things on the moon, especially the dark side of the moon? Nuclear just makes the most sense by far. We're going to have a science fiction future that everybody was promised as long as we don't stop it. CEO and founder Delic.

1:00 >> We're attempting to re-industrialize in America, but power is too expensive. China has gone in the last 15 years from the same amount of power as us to three times the amount of power. They're adding a Texas to their grid every year. What are we going to do? Scott Nolan is a partner at Peter Thiel's Founders Fund. He was a leader at SpaceX early on and he's building general matter. He's identified the key bottlenecks in the nuclear industry. He's going to help us enrich uranium. He's putting billions of dollars to work to help ensure the nuclear supply chain is ready to scale nuclear massively and help America be re-industrialized in the next 10 years.

1:32 Let's learn about it from him. Welcome to American Optimist. Really excited to have our friend Scott Nolan here with us. Scott, thanks for joining. >> Yeah, thanks for having me on. >> Scott, you're a partner at Founders Fund. you're the founder and CEO at General Matter. Uh before we go into the company, tell us a little bit what's your background? Where do you come from? >> Yeah. Um I was always an engineer. So my background started with, you know, with science technology. Probably in middle school, high school, I was, you know, just building model rockets. That's what I did for fun.

1:57 >> Where'd you grow up? >> Pennsylvania. >> Pennsylvania. Building model rockets. I guess Peter Teal at PayPal said a lot of them built bombs. You didn't build bombs. It's not a bomb. It's more rocket. It's like a controlled bomb. you know, you have like you you would have to go to the hobby store and go buy your um your solid little rocket motors made by Estus and uh you could buy the different sizes. So, they're basically like, you know, explosives but inside a rocket motor. And so, >> how high would these things go?

2:22 >> Few thousand feet if you built them yourself and put enough motors on it. >> Sounds could could be dangerous if you wanted it to. That's impressive. Yeah. >> Yeah. I mean, yeah, I guess it could be. They were small. Um but started off doing that and then in college led a rocket team um at Cornell and so did that uh for a few years there and uh Cornell has this internship program and so got to work at Boeing during college.

2:46 Got to see what a cost plus government program looked like thousands of people going extremely slow. Decided I didn't want to do that. Didn't want to go back to Boeing. Instead went to SpaceX which I was fortunate had just gotten started and uh started off there as an intern. one of the early team members there had reached out to a bunch of Cornell professors and said who here you know do you know do you know anyone on campus that likes Rockets or would be interested in what we're doing and my name popped up and then ended up joining as an intern and then full-time after that in 2004.

3:15 >> So going back to that a little bit you saw what cost plus looked like for for our listeners. What does that mean? How is Boeing different than SpaceX having experienced both of those? Yeah. So the US space industry had been going on since, you know, the the 60s and uh there was all this hope that there there'd be all this progress and then it never really materialized the way people thought it would. And then the question was well well why not? And I think, you know, the program I was on was, like I said, a cost plus program. And what that meant was, you know, as as much as everyone at Boeing might have wanted stuff to move really fast and be exciting and innovative, the fundamental business model was um you do work and you get paid for the cost of that work plus some additional amount. So you might make 110% of the amount of money that you spent on the program. Um, and you know, if you do the the simple logic, the way to make the most money then is make the program bigger and bigger and bigger.

4:12 >> The incentives, even if these aren't bad people, the incentives somehow for cause them to want to spend a lot more money rather than actually get things done >> or or at least it doesn't discourage it. So then the the program optimization basically becomes how do we keep this program on track? How do we make sure we deliver? Let's give extreme high quality. Cost is no no obstacle to doing doing the best job possible. let's hire subcontractors who are specialists in this and it ends up being that dynamic of like subcontractors all the way down and then you get all this stacking of costs and so everyone's trying to spend more money to do something as perfect there's not really competition I guess so there's no if you spend $5 billion on something who's who's to say that there should you shouldn't right because there's no competition doing it for a tenth as much >> yeah I think the idea with cost plus is that it's for programs that are not well understood and hey we really need this capability let's go build it let's do whatever we have to do to make it work very hard to get give a cost estimate just go do it and you'll make some decent margin. I wouldn't say that individuals are saying let's make the number bigger. I think there's just no strong incentive against that. And then in any organization if there's no incentive against cost increasing it'll just increase. So Boeing obviously with a cost plus culture was a culture that would just spend whatever it took to get things done not trying to be super efficient. How's that different than maybe insights in the culture at SpaceX?

5:29 What are some takeaways from there? >> Yeah, polar opposite. So uh I joined SpaceX as an intern in 2003. The company was maybe 30 people. Then went back 2004 50some people. That's when I joined full-time. And even from that point I felt like this team of this really small team of people could ultimately do a better job than the thousands of people that were working on this other program. Um it would take growing the team and everything but the basic the basic software that ran the company was all about performance. It was all about uh cost adjusted performance, not extreme over reliability or let's take years and years and years to do this program. It was let's go quickly and then let's optimize the system for delivering the most performance for the lowest cost.

6:14 That was basically it. And it was whatever it took to do that is what you did. Um, I remember getting there on day one and reading the employee handbook and on the top of page one was just a single line that was in bold and it said uh this is not a science experiment. So it was all about we're not trying to do any crazy new technology. We're trying to get uh rockets to be much cheaper and so we will just have to clean sheet engineer them to take costs out of the system and that's it. And it was almost that simple.

6:43 >> Were they more concerned maybe about costs back then than they are now? Now, I remember one of the famous Elon quotes I've heard more recently is the cost of time is greater than the cost of cost, which is obviously true for things like SpaceX. Back then, the cost of cost was pretty high though because you didn't have that much money, right? >> Yeah. Yeah. Well, I think the original formula was it was always a cost trade with time. Yeah.

7:03 >> And so, it's almost like, you know, you're filming a movie, every day cost some amount. If you can pack in the scenes into a shorter amount of time, your movie cost you less to produce. And the concept was the same at SpaceX. the the formula was basically, hey, every single day we're spending X dollars. If you're on the critical path of schedule and you can make a one-time decision to pull in schedule by a day, like you can expedite something that's otherwise going to make us have to exist as a company for two more days, five more days, and it's worth less. It costs you less than that one day.

7:33 >> The day is very expensive to wait. >> Exactly. Exactly. That's And that's the day today that you're spending. If you pull in schedule a day and you're really online in a year or your first launch is in a year, you're gonna be spending a lot more in one year. >> Yeah. >> And so that was always the cost time trade back then. And it was all about how do we minimize the cost of getting the first rocket to orbit.

7:53 >> It's very unintuitive to people because something that costs a million dollars might seem wasteful if you could do it for $100,000, but if it's going to save you, you know, five days and every day the company costs a million dollars or something like that, then it becomes worth it just to spend the extra money. >> Yeah. And the the thing you have to be careful of is it needs to be the thing that actually pulls in the schedule.

8:10 >> Yep. >> There's 15 things people are working on at once. You can't spend it across all >> you spend the extra money. This is 5 days faster, but then this is still taking longer. It's not worth it. So you have to really be sure that >> maybe on the other thing you spend less and let it take longer. Like ideally everything's kind of just lined up on the same schedule. So that's that's the optimization that was run. Now that was back then. I think now the company, you know, has money and can be cash flow positive whenever they want to be. And so now it's much more about how do we just go as quickly as possible and make that right trade. It's not it's not about minimizing total cost to to the milestone. It's about how do we make the overall progress go faster.

8:46 >> It is a really fun kind of problem though where you have all these optionality. In some cases it's worth spending less and taking longer because it's not the long pull. Y >> and someone someone has to be aware of that. I guess that must be the the CEO who's aware of that most >> right. Um yeah that's that's right. Right? I mean, there's probably a bunch of people in the organization that are aware of what that long pole is, but then it's actually delegated down to the individual teams to make the right decisions. It's like, okay, team A, you are on uh you are on critical path. Now, all these rules of thumb apply to you.

9:15 Bring in schedule. Do whatever you can to go faster. So, let's talk about how this applies to general matter. I'm actually really curious. We haven't had a chance to have a strategy session in a while. I'm a I'm a small investor. General matter. I'm so I'm really curious about the long polls here. Tell tell our audience first of all, what is general matter? So, General Matters uh an American enrichment company uh we enrich uranium for nuclear energy and uh you know you go to I guess to give some background in the space uh every nuclear reactor in the world runs on nuclear fuel and there's five steps to make nuclear fuel. You have to mine it out of the ground. You have to convert it into a gas. You enrich it, turn it back into a solid and then you form your specific fuel pellet. So when you mine it out of the ground like I think you need like a million pounds of uranium for example if it's uranium to get like a pound of U235 which is the radioactive one right? Is that correct?

10:03 >> That's that's about right. Yeah. >> And then and then now you have this U235 which you're going to use. Why you turning into a gas? What's going on here? >> Yeah. So the I mean you can think of it as like 1% not maybe not a million pounds of one pound actually 1%. >> It's 1%. Okay. So so 100 100 pounds gives you a pound of it. >> Yeah. So so essentially um yeah out of the ground you have 711% U235. call it 1%.

10:24 >> Got it. I'm probably thinking of all the other rock you need you're taking the uranium out of or something. >> Yeah. Yeah. So, it also depends on your or deposits like is your is your deposit that you're mining out of 1% uranium 2%. Um and there's a wide range on that. >> So, it's a 7% of whatever percent the uranium is. Now, you have the U235. Now, what do you do? >> Yep. Now you do now you do milling. Uh what's milling?

10:44 >> Milling can be either if you're doing open pit, it's basically uh turning the raw ore into just raw uranium. you you're trying to get to U308 yellow cake. The newer mining techniques really combine uh mining and milling by running an underground process that's somewhat similar to fracking. You put a fluid down, you draw it back out, and then you isolate the U308. >> So what's U308? What's >> that's uh that's commonly called yellow cake. >> Why is it called three what's three ways mean?

11:13 >> Uh it's the molecule has three uraniums uh eight oxygen. That's that's what comes out of the ground. Um, yeah, this is good that we're breaking it down. So, essentially, you're trying to get the uranium. Yep. >> And the way the way you end up getting it out of a mining process is as U308. It's an oxidized uranium. Yep. >> You then want to actually find a way to separate it not based on uranium versus other elements. You want to separate it based on its isotope.

11:37 >> Um, so how many neutrons are in the uranium? And so the common ones are U235, U238. U235 is file. U238 is not. So the U235 is the one that's kind of unstable which you can use to make energy. >> That's the one that you want and that's the one that in enough concentration can sustain a chain reaction. >> It could also make a bomb >> at a high enough enrichment level uh with lots of other technology people make. Yeah.

12:03 >> But that's a different thing. So do you get enough of this to to sustain a fision a physical reaction to to to make nuclear energy? >> That's right. So most reactors, the big ones people think about gigawatt scale reactors, they need that u the uranium enriched to about 3 to 5% U235 and then the small ones 19.75% is where everyone's ending up. But it can be >> So you got to really enrich it a lot for the small ones.

12:27 >> Yeah. On a relative basis a lot more. >> But the small reactors may be much easier to massproduce. >> That's the idea. So the whole the whole thing we're hearing about in the advanced reactor world is really two things. One's been safety and passively safe designs. Designs that may use types of fuel that are self-contained. Um, but also making them factory built. So, the real push here is nuclear energy for the past 50 years has been the cleanest form of energy, no carbon emissions, the safest form of base load, which people find really surprising, but fewer human deaths per terowatt hour than any other base load, and even any other energy source except solar. It's basically tied with solar. So, safest and cleanest, just not the cheapest.

13:09 >> So, all the reactor companies that are trying to do uh new designs, a lot of these designs are oriented around how do we actually build these things at scale in a factory. If we can factory build them instead of stick build them on site, >> then you can make a lot of them, but they're all going to need even more enriched fuel for those to work. So, going back to this, so you have this yellow cake and you're turning into a explain explain what's the next step.

13:30 >> Yep. So, step step two is turn into a gas. So, that's convert it. So, that's a chemical conversion. Once it's a gas, you can more easily pull apart the different types of uranium. >> You can separate them based on other attributes. That's right. >> And now you've got the U30 235 as a gas. Then what do you do? >> Uh then if you if you've enriched it up to enough concentration that it's ready to become fuel, then it's turned back into a solid with a deconversion process and then put into pellet form.

13:52 >> And these pellets are what you're used for giving to the nuclear plants. >> Yeah. And I think you the size you can kind of keep in mind is like the end of your pinky, the final joint or almost like um for this is for traditional pellets or like the earplugs, you know, those short little cylindrical ear plugs. >> Yeah. So So and how much energy can you get out of one of these tiny little pellets?

14:11 >> One of those pellets is equivalent to uh over a 100 barrels of oil or over a ton of coal. >> That's really cool. It's a ton of coal. 100 barrels of oil or this little thing size the end of your pinky >> and that's enriched to 3 to 5%. Yep. >> So now if we're talking the more enriched fuel, um that often comes in a different format. A lot of people doing the fuel for advanced reactors, they want that fuel to even be safer than any reactor. They want the reactor to be safer than any other reactor design that's that's been done. And so they will take the fuel and they'll take a tiny bit of uranium and they will put it inside a coating um a silicon carbide type of coating with zirconium.

14:49 >> You'll coat you'll coat the uranium. >> Exactly. Okay. So, it's like then it becomes like a poppy poppy seed sized piece of uranium. >> So tiny. >> Mhm. And it's got two attributes. One, the shell can handle up to a very high temperature. So, it basically can't melt down. It will be able to handle any temperature that a reactor could get to. We're talking over a th00and C. And then part two is some of the coating self moderates. So, if it starts getting too hot, it'll automatically uh absorb and stop more neutrons. um it'll effectively make the fuel less reactive and slow down the reactions. So you get this self this feedback loop >> this coding itself would change and it's really really tiny. So you're making it like as perfectly safe as possible for these new reactors.

15:29 >> That's that's what people are going for. So going back to your point though, the whole thing is how do you bring down cost and so it's factory building hitting scale economics on the actual reactor. Part two though is once you make your reactor really cheap, if you're doing the more enriched fuel, you have to go through more of that uranium out of the ground to get that much enriched uranium at 19.75% more of the upstream services. And you're basically just running that process more and more on a bigger funnel at the top of the funnel. Now, obviously, your fuel cost is going to cost more per kilo.

16:01 And so, you do this trade and you see the reactor cost come down, but the fuel cost proportionally goes up. And so you go from a situation where the reactor is over 90% of total cost of energy produced to where and and fuel is obviously singledigit percentages with lowenrich uranium and gigawatt scale reactors and those simple metal fuel pellets to now where the fuel is often more than half the cost and the smaller the reactor the higher the cost proportion. your view of what we should be doing with maybe we should talk about energy as well, but we obviously need a lot more energy in this country and and you think this is a big part of the solution is making lots of these small nuclear plants, but then then you're going to help them make sure they have enough fuel.

16:41 >> Yep. I think that's that's one of the big thrusts over, you know, the past few years, I think the decade ahead. However, I would say I think we should do both. So either way, it's just how do you come down that learning curve? And it requires scale. It it requires not making one at a time, but 10, 100, a thousand at a time. >> And which part of this is general matter doing? You're not taking uranium out of the ground. What are you doing in general matter?

17:00 >> No, we're just doing the middle step of enrichment. So if you've got mining, conversion, enrichment, deconversion, and fuel fabrication, we just do enrichment. The reason we're doing enrichment is because that's the one step the US doesn't do at any scale. >> Why not? >> Uh it's a long history, but we used to so the US in the 80s was actually more than 80% of global enrichment. >> Mhm. uh we used a process called gaseous diffusion that was invented during World War II. We did it a few sites in the US and then the Berlin Wall fell, the Cold War was over and we said we have this old technology that's pretty expensive and uses a lot of electricity. Um when people hear about the Manhattan project using 10% of US energy, it was because of this part of the process.

17:46 >> And so we had an old technology that required a ton of energy. Uh the Cold War was over. we could trade with Russia. We did not want them to have so many warheads. Um, and we started this period of disarmament and said, "Let's take the warheads and let's blend them down and use them to run in our reactors as low and rich uranium." >> We started taking all the all their technology, all their warheads instead to use in our reactors. We turned off all of our stuff.

18:10 >> It was called megat tons of megawatts. We still ran our gaseous fusion for a while. We traded more and more with the Europeans for enrichment on uranium. And eventually we said, "Okay, we can't really operate these plants profitably. It's a free market. We don't need to do this anymore." >> This is like the ultimate though, de-industrialization. We talk a lot about things we turned off in the US. We turned off all of our nuclear capability here in terms of in terms of enriching all of it. There's a little time that we kept somewhere and then for like the army or something or or no.

18:36 >> Uh so what the military has is left over from that era. It's a big stockpile. Um, and we shut down the last enrichment site in 2013. And that site was actually in western Kentucky on DOE land >> that our company is now building on. >> So you're now So you're now going to build where that last site was in Western Kentucky. >> That's right. >> And and once you So you're giving this given this material and and you and you make it a gas and enrich it or maybe you're given the gas and you enrich it and then you give to somebody else once it's enriched because there's already a process for for making the fuel pellets.

19:07 >> That's right. The way this industry works, the utilities take care of their own fuel. They'll go buy the uranium out of the ground from a minor and then they will own title on that and they will buy services all the way through. So they'll just for every for every little piece you do this part, you do this part, you do this part. So there's already people who are really good at making I mean shouldn't you make more of the new little tiny poppy seeds or something because there's going to be more plants and no one's doing it or it's not it's not worth doing that part. Someone else is doing it.

19:29 >> There's there's a bunch of companies doing that. So I think that'll be taken care of. Uh the step that I was most concerned would not be taken care of in time was enrichment. And so we're doing that step. And so to your question, the business looks like a big building. Think of like a warehouse, data center, um bio pharmaceutical plant, big rectangular building, lots of equipment inside. On one end, come in comes in a big cylinder. Think of like the big propane cylinder behind people's homes in rural areas. On the on the other end, out goes two cylinders, one enriched, one not enriched.

20:01 >> Amazing. And and let's step back for a second. I we actually I was with Elon recently. He was here and his one of his big concerns for the US was not having enough power. He's very impressed by how much power China's making overall. I think they're bringing on maybe like a new Texas worth of you know electrons every every year or something like that. I think over even though we might be higher per capita, they're like what 3x I think America right now. It's this massive amount. And obviously for the AI race and for AI in general and for I think for the well-being of our average citizen in general, we want more and cheaper energy. And so the question is like what's the answer? And I know he's focused on solar is one of his things. I know natural gas is something I'm pretty excited about. My friends are building more natural gas plants. We have tons of cheap gas in America. Uh like like where does nuclear fit into this? Like what how much of the solution is it? Is is it a key part of the solution? How do you see it?

20:46 >> Yeah. So I was talking with someone about this recently and the US has done an amazing job on actual like fossil fuel production, fracking, natural gas exports, you know, and that's actually been the mechanism that we've used to bring down carbon emissions in the country during the last decade. >> Yeah. fracking and natural gas is way better for the environment than coal and oil and other things. >> Half half the carbon per unit of energy basically. Y >> and so you you just emit much less carbon doing it that way.

21:09 >> You know why fracking was so unpopular? Because Russia spent a bunch of money convincing Europe not to do it. This is one of those things that drives me crazy. I don't know if you know this. They funded the green parties in front of the protests and they turned off fracking in Europe because it's so good for the environment. They tricked everyone because obviously they don't want competition. Yeah. >> So they I think it's probably also a nuclear thing too where people don't it's because nuclear is competition as well. But anyway go on.

21:29 >> Yeah. Well, yeah, US has done a great job there. But to your point on the grid, actual electrons, like that's that's, you know, that's fuel. We can sell that, export it, use it for other things. But when we're talking about literally making electricity, which up until now is, you know, it's always been on the grid powering data centers. If you look at the grid in 2010, we were completely tied neck andneck with China on grid total capacity.

21:52 >> Um, something like 4,000 or 5,000 terowatt hours per year. >> Mhm. Since then, in the 15 years since 2010, they've tripled. I think this year they're actually at 3x the US grid capacity >> and we just haven't got it >> basically. Why not? Like what are we doing? Is it just like why why couldn't we go up? Is it not worth investing? It probably is worth it financially, right? Or do we just not have that demand? Like what's going on?

22:13 >> It's worth it now. I think a lot of people, you know, thought for a long time that it was just about efficiency. It was about us moving out of these energy intensive industries into services industries >> because we were de-industrializing. So China was building manufacturing. we were de-industrializing. We didn't need more power. Now we're realizing, wait a second, we're going to re-industrialize. So, so we need the power again. >> Yeah. Yeah. The conventional wisdom was um GDP is completely correlated with energy consumption up to a point. And once you get to that point and you go past industrial sort of operations and you're doing services, businesses, then maybe you don't need as much. I think now that's completely flipped with data centers consuming so much power and needing them to scale the next few years. and and EVs, advanced manufacturing. Like I think turns out a lot of manufacturing is going to come back on shore, but we need the power. We can't do it.

23:00 >> Yep. That's I mean that's I think we need to turn around from viewing it as being okay that we've had a flat grid to realizing we need to almost go vertical on it. >> I mean it's a disaster for our whole reindustrialization. This is a big theme for all of our stuff, your founders fund and doing a bunch of things in these different areas, right? Like we need to re-industrialize. We need the power. >> Yeah. It's not even the amount of power, it's the cost of power. That's the other part. So that's why I think um you know with nuclear it's not just can we build more nuclear but can we make it so cheap that we bring a lot of these things back to the US like aluminum production steel production these things where the major cost is just electricity cost >> nuclear power could be a very big part of the production you think like what what is that what does that look like what's like what's the cost of power right now what could you do with mass nuclear production >> yeah I mean cost of power is like wildly different based on state I think um yeah what what could it be I think uh back back in the what was it 60s or 70s I think in today's dollars uh nuclear was costing about 3 cents per kilowatt hour that was the actual production cost >> obviously in places like California you're you know people are paying 30 cents so I think there's a lot of room there >> um no I think nuclear should be a huge part of the mix today it's 20% of the US grid which a lot of people don't realize >> so it's already still 20% now and you think it could be a lot more >> yeah it's I think 186 18.7% % right now.

24:21 Um, we're going to see some upgrades in the next couple years. People taking plants that are already online and just amping them up with different fuel. Um, and then I think we're going to see some restarts as well. So, we'll see that grow a little bit, but you talk to any of the hyperscalers who want to build big data centers in the, you know, 2030s and I think for all of them it's about nuclear. >> How did you get this idea? You're you're you're also an investor at Founders Fund. You guys have been crushing in a lot of areas. Were you looking to potentially invest in nuclear in like different areas? This is like this was a gap.

24:51 >> Yeah. So over, you know, over a decade of just looking at engineering driven companies, really starting in things like satellites. Uh ended up going all the way across pretty much every space, ending up in energy in the late 2010s. Invested in a company called Crusoe. Um invested in a company called Panthalasa. These were really about stranded energy sources. >> Um and then invested in a company called Radiant that was looking at stranded demand. had stranded supply.

25:17 >> What does that mean? What's stranded demand? >> So imagine an Alaskan village that goes entirely off of diesel and you know they get a shipment in the summer only when when it's not iced over. >> Yeah. >> And so places where people have to pay a lot of uh you know a high cost of electricity and where a small nuclear reactor can actually compete with the cost that they're already paying. >> So what companies are you bullish on providing those reactors by the way? Are there certain ones that you're more bullish on than others? I I mean I would say there's three segments. You have the micros which are for applications like that. You've got SMRs which can be anything from uh data centers to industrial processes. And then you've got the really big reactors gigawatt scale for grid. And so I think we need all three. I think all three are going to scale. When you asked before like oh should we just do the SMRs? I think it's all the above. We should do way more gigawatt scale. Get really good at building them. Build them the same way every single time. Bring that cost down.

26:13 And so then you've got SMRs that could be great for data centers and and then the small ones. I think there's going to be winners in every single category. Um but to your point, how did I find out about this? It was meeting companies in the space for years and the thing they all said was actually getting the license is not as hard as you think. Founders Fund, uh the hard part is getting the fuel and they said we're really hopeful that we can import some of this fuel, this Halo fuel. Halo stands for high assay lowenrich uranium.

26:44 So that's the 10 to 20% uh enrichment level which everyone converges on 19.75 because >> it keeps you out of weapons grade but helps you get the most density of energy in your reactor. >> Yep. >> And they said we can't get the fuel. We have to import it from Russia. So the obvious question was why don't the US companies that make all the other fuel just make your specialty fuel? And the answer was basically like a blank stare back. like what do you mean other you know other providers in the US there are no other providers um and so spent almost a year looking into that understanding what's broken on the supply chain what part is missing and the answer was it was the enrichment piece we didn't have domestic US company enrichment >> and so tell us about about you raised a bunch of money for this company like what's where is it right what's it timeline >> yeah so timeline uh is driven by the market so there's two market dynamics one is all these New advanced reactors need to not only prove uh you know that they work, prove their safety, prove their performance, prove cost structure, they need to scale. And so their initial bits of fuel are coming from DOE, but to scale deployments, they need new sources.

27:54 >> There's already fuel the Department of Energy has to give them for their tests. Y >> but as they start to scale, they're going to need you. >> So So you're so you're ready. You're saying >> uh that I think those that timing is coming, you know, 2028 through 2030. They're going to first really start doing the you know, singledigit deployments and then I think 2030 is where it really ramps >> in 2030 you could potentially see a lot of these plants coming online in which case the demand goes way up for you >> and so we're our commitment is to be online by end of decade.

28:20 >> Got it. So you need to you need to rush right now. So we were talking earlier about like what's the thing that's going to hold you back? What's the thing that's going to be the take the longest? Like tell us about that. Like what are the things you're sprinting to get done? >> Yeah. So if you look historically at timelines um you would look to licensing as probably the timeline driver. >> What's that? Licensing what? So getting a license to operate the facility and that comes from the NRC, the Nuclear Regulatory Commission.

28:42 >> That used to be impossible to deal with. I'd imagine it's a little bit easier to deal with now or maybe not necessarily. >> Oh, it's become much easier. So, uh, >> do you have to say that because they have to give you a license? >> No, absolutely not. Uh, if you go back to if you go back to 2018, um, and you ask those companies like, you know, is this the hard part? And they would say, no, it's not the hard part. It takes a little while and you have to do the work, but it's predictable. And what we're all trying to figure out is, you know, make sure that this is going to be a safe reactor. That's what everyone would have told you. Um, you know, I think today is actually the one-year anniversary of the of the nuclear executive orders.

29:18 >> Um, and so there were four executive orders covering DOE, NRC, DoD, and the supply chain that has really created a huge tailwind for the space. So if we go back to like 2020, people would have told you it's a very uh you know clear process of what we have to do. The timeline is unclear. >> Y >> if you then go to a week or two ago, you might say, okay, the executive orders uh you know did say did give some timeline limits on reactors. They did not give clear timeline limits on uh fuel cycle facilities like ours.

29:51 >> Yep. But you could say a fuel cycle facility is maybe equally difficult or s, you know, less difficult than a reactor. And so if they're going to do 18 months um turnaround on reactor license applications, you would maybe guess something like that. And if you guess 18 months, then it can end up being the long scheduled driver. >> Yeah. On I think it was Thursday, uh the NRC announced that a new fuel cycle license application went in and they're committing to put it on fast track and get it out in 12 months.

30:25 >> This someone other than you who's doing that doing that application. >> Yeah. And so if you assume 12 months, all of a sudden it's back on the companies and now the companies are actually the timeline driver. And so it becomes one of these like types of very difficult company called that you know Peter at Founders Fund would call complex coordination company where you're working on eight different work streams at the same time to go as fast as possible. If any single one fails it will delay the project and so the key capability is how do you just coordinate everything and >> so teach us a little bit more. One of the work streams was that license which you haven't you've not applied for yet because you know because you have to do certain things first like what are your main work streams then?

31:01 >> Yeah. So one work stream is licensed. So um you know submitting that this year. >> Another work stream would be uh technology just improving the technologies performance relative to cost. Another one is construction. This is one people really underweight but here in Austin you guys have seen it firsthand with >> like building fast. Our friend Omid, right? They did that fast with Elon the Yep. Austin Gigafactory. >> Um and so the key thing on construction we found is you can't just hand it off to some other company.

31:30 >> No, no, you have to own this. Seronic's doing all of its own stuff. you're doing thousands of autonomous boats here. You got you got to do it yourself. You got to do it yourself. >> Yep. So, this is classic >> part of the core IP. >> It's classically called EPC, uh, engineering, procurement, construction. And so, just like those companies, we build an in-house EPC. >> It's about 20 people in Kentucky. They're leading our project. They'll work with the subcontractors, the welders, the grading firms, you know, cement, everything.

31:55 >> Um, but it's run inhouse. You have your project managers in house. And that's >> so much faster if you do this right. >> Yeah. Yeah. So construction and licensing and the technology itself. Those are the main things. >> Manufacturing. Um. Yeah. >> What are you manufacturing? >> The hardware that would go inside the facility. >> So you got to design it with the science then you actually have to manufacture it all. >> Exactly. So it becomes a scale manufacturing problem. So it's like you know Starlink. We've got a user terminal factory here in Bassrop what 30 minutes away. And that's a problem where yeah you can build one but can you build a million of these things? Can you build a million a year? How do you scale that?

32:28 That's the hard part. And then how much money do you need? I think you also got like a massive amount of money in XM financing, right? Because this is key for the US. So So not only did Trump speed up the licensing, he's also like putting money into this area for for cheap loans or what? How does that work? >> Yeah, so the the funding we've gotten spans uh venture capital equity uh debt on things like manufacturing equipment.

32:50 >> Um there's a a grant we received from the DOE. It's really an Idiq, so indefinite duration, indefinite quantity uh contract in which uh it's a lot like NASA's CS program if you remember back to that with SpaceX where it was completely milestone based. So you do certain things, you unlock capital. >> So you prove you're doing it right, they'll give you more money >> and not cost plus but fixed price. And so our whole contract with the DOE, which we received in January, um we received that award uh under President Trump's DOE. We actually were down selected and first applied under the Biden administration. They were it was Congress that appropriated $2.7 billion for Halo Enrichment. Um and we received one of those awards for 900 million. So $900 million milestone based contract which uh will be uh earned over the next few years as we build our capability in in Kentucky. So that's that's part one.

33:46 Part two is what you referred to on on the XM side. So the export import bank of the US wants the US to be competitive internationally, be able to play on the same level playing field as other countries and create jobs in the US. And so um we have an LOI with them to uh wrap our contracts that we sell into Japan and Korea um to help pull some of that financing forward to help us build at greater scale. And so right now that's an LOI to go do those contracts and then we're working with Japan and Korean utilities uh to to move that ball down the field.

34:20 >> That's cool. Japan also has like hundreds of billions to invest in US energy. I guess you should you should probably talk to those guys too. >> Yeah. Yeah, that's right. Uh >> I think you know the XM the XM deal is really just around utility contracts and so that's the next big piece. the you know we're not just interested in that as um you know something to expand the commercial scope of the business to to move internationally. There's a big US um US national security benefit of that or like even a global non-prololiferation sec security benefit of that which is um if the US does not provide enrichment to these countries they will have to get it somewhere else as they build up their nuclear fleet or they turn back on their nuclear fleet and that'll be Russia China. So yeah, you want to be part you want to be part of the US kind of power group, not not the other guys, >> right?

35:10 >> That it seems really critical for the US to get to get this right. And and and have you thought about like what's the trade-off? A lot of people would think, oh, if you could do this, you might as well be the one making like tons of the power yourself and owning a big utility, but a lot of people say, no, just stay really focused on the thing you're doing. It feel it feels like more like what Elon and some of our other successful entrepreneurs we know would do to own the whole thing yourself versus just do the one piece. But but there's something about just the one piece you got to ace, I guess, for now.

35:33 >> Yeah. I mean this is always um thinking back to like the very beginnings of my time at Founders Fund. It was working on Peter's class CS183. >> Yeah. >> That became the book 0 to1. >> Mhm. >> And one of the core lessons from that was you know don't think of this as don't think of the energy market as a trillion dollar market and oh if only I can get 1% of that trillion dollar market. It's much more focus on something that you can do >> on the narrow piece first.

35:59 >> Yeah. focus on the really narrow thing where the no one's meeting the need and where you can actually deliver huge value to the industry and where you can you can just perfect that and then you expand out >> once you win that who knows you could start building other things being more aggressive >> that's right and and I think fortunately in many other parts of the supply chain you know there's dozens of reactor companies there's a bunch of people making the fuel pellets I think the thing that we want to solve is the enrichment piece and if we do that we think that alone can be a huge business >> yeah it definitely can be so stepping back a little bit let's look ahead what are the new possibilities place for nuclear otherwise. I think Jared Isaacman, who is on the show, who runs NASA, he wants to maybe do nuclear power in space. Is that something you think this stuff's going to happen?

36:37 >> Uh, absolutely. Yeah, I was I was just reading some of the announcements. I think they're aiming for uh space uh ion nuclear driven uh space propulsion by 2028. Um and then they're talking about reactors on on the moon surface to, you know, create heat and power things. It's great. Um, I think it's you think about like if you just think how how are we going to power things on the moon, especially the dark side of the moon, nuclear just makes the most sense by far.

37:06 >> Just got to make sure it doesn't blow up on the way up there or cause a lot of trouble. >> Yeah, we got some pretty reliable rockets these days, fortunately. And I guess moon aside, what does it mean to have like energy abundance on the our planet? If we can make energy as cheap, go back to 3 cents everywhere or whatever or much cheaper everywhere, you know, what what does that mean for us? Yeah, I think 3 cents shouldn't even be the limit. Like that was 3 cents building huge gigawatt scale mega construction projects, not factory production. And so I think we should physically be able to get less than 3 cents >> um if we were doing it before. And uh you know, you start talking about energy that cheap, there was the classic phrase too too cheap to meter, which I don't think, you know, maybe it doesn't have to be so cheap that you can't even afford to put a meter on the house. I think that might not really make that much sense. um but so cheap that you can bring back all these industrial processes to the US, you can build the entire rebuild the manufacturing base and just have immense uh economic growth. I think that's exactly what happens.

38:03 >> I think it's kind of fun. If energy is really really cheap and AI is really really good and it starts working in the physical world, then basically anyone in the middle class is going to be able to build this like you know a giant cave that they designed that's like 40 rooms underground, right? Or whatever. Just think about There's like crazy like or a beautiful castle. You're going to be able to have castles being designed and built by everyone if they want. I mean, probably HOA should up rule.

38:26 >> As long as Yeah. As long as the HOA is okay with this. >> I don't necessarily want giant castles everywhere I live. But you can go buy your own land. You could do it's just going to be amazing. Everyone's going to be able to build things no one could have built before. Right. >> That's the idea. Or just that we get so much more prosperity going. >> Yeah. Everything should be Everything should be cheap, right? Should be everything should be a lot cheaper for everyone.

38:42 >> Yep. >> I love it. Well, I'm very bullish on the future. We started this podcast actually to push back on cynics and doomers. like what makes you optimistic for America? Uh somebody was reminding me that this year is uh America's 250th anniversary and they said okay what do you think about the next 250 years and I thought back and you know you look up okay 1776 a long time ago what do we have we didn't have electricity we didn't have cars we didn't have antibiotics we didn't have any of the stuff we have today and so you fast forward like another 250 years and you say things are actually accelerating what's it going to look like I think we're going to have a the science fiction future that everybody was promised as long as long as we don't stop it.

39:20 >> I think today will look even more backwards 250 years from now >> than the last 250 years. >> I think people don't realize that like they'll see us and they'll see us as these like crazy barbaric ancestors that are like just everything's like completely weird and different and hard. That's my >> view. I think it's going to be exciting. I think the next 10 years we're going to see a lot of this stuff really take off.

39:36 >> We just got to make sure everyone stays tough. >> Yeah, because you know if everything's too easy it's like it's fair the cycle. >> But yeah, in general I'm very optimistic though. Well, thanks Scott for joining us. >> Yeah, thank you.