1 00:00:15,356 --> 00:00:24,116 Speaker 1: Pushkin. One of the really striking things about technological progress 2 00:00:24,676 --> 00:00:28,996 Speaker 1: is the way one breakthrough leads to another. For example, 3 00:00:29,596 --> 00:00:34,316 Speaker 1: mass adoption of laptops led people to create better, cheaper batteries. 4 00:00:34,996 --> 00:00:38,356 Speaker 1: Those better cheaper batteries made it possible to build affordable 5 00:00:38,436 --> 00:00:42,916 Speaker 1: electric vehicles, and then the proliferation of electric vehicles led 6 00:00:42,916 --> 00:00:46,756 Speaker 1: people to create even better, even cheaper batteries, and those 7 00:00:46,836 --> 00:00:51,076 Speaker 1: better cheaper batteries are now leading to everything from grid 8 00:00:51,116 --> 00:00:56,316 Speaker 1: scale energy storage to flying cars. Of course, those advances 9 00:00:56,436 --> 00:00:59,196 Speaker 1: they don't just happen. People have to look at the 10 00:00:59,196 --> 00:01:01,876 Speaker 1: world and think I'm going to start with what exists 11 00:01:01,916 --> 00:01:06,076 Speaker 1: now and build something new. One of those people is 12 00:01:06,276 --> 00:01:07,236 Speaker 1: Mitch Lee. 13 00:01:07,796 --> 00:01:11,596 Speaker 2: That very first time I've one in at Tesla, my 14 00:01:11,756 --> 00:01:14,956 Speaker 2: mind jumped forward two steps to this should exist for boats. 15 00:01:15,676 --> 00:01:21,796 Speaker 2: It makes even more sense in marine applications because gas 16 00:01:21,796 --> 00:01:26,156 Speaker 2: boats have all these acute problems with them. They're loud, 17 00:01:26,196 --> 00:01:29,836 Speaker 2: they've got noxious fumes on them, they're pain to maintain, 18 00:01:30,516 --> 00:01:33,276 Speaker 2: they're super unreliable, they're expensive to operate, and when you 19 00:01:33,316 --> 00:01:42,036 Speaker 2: go electric you end up addressing those acute pain points. 20 00:01:44,596 --> 00:01:46,916 Speaker 1: I'm Jackie Wolstein, and this is what's your problem? The 21 00:01:46,956 --> 00:01:48,996 Speaker 1: show where I talk to people who are trying to 22 00:01:49,036 --> 00:01:53,436 Speaker 1: make technological progress. My guest today is Mitch Lee. He's 23 00:01:53,476 --> 00:01:57,076 Speaker 1: the co founder and CEO of ARC Boats. He grew 24 00:01:57,156 --> 00:02:00,676 Speaker 1: up boating with his family in northern California, eventually became 25 00:02:00,716 --> 00:02:04,116 Speaker 1: a software engineer, and he founded ARC in twenty twenty one. 26 00:02:04,916 --> 00:02:08,116 Speaker 1: Mitch's problem is this, how do you build electric boats 27 00:02:08,156 --> 00:02:10,236 Speaker 1: that are better than gas powered. 28 00:02:09,916 --> 00:02:11,356 Speaker 2: Boats, and how do you. 29 00:02:11,316 --> 00:02:14,996 Speaker 1: Do it at scale and at a competitive price. ARC 30 00:02:15,116 --> 00:02:18,596 Speaker 1: is currently developed being hybrid electric tug boats, and they're 31 00:02:18,596 --> 00:02:21,916 Speaker 1: already selling electric wake boats, boats people can take out 32 00:02:21,956 --> 00:02:25,236 Speaker 1: on lakes or rivers for fun. To start, I asked 33 00:02:25,236 --> 00:02:27,596 Speaker 1: Mitch to tell me the first big problem that he 34 00:02:27,636 --> 00:02:31,436 Speaker 1: and his colleagues had to solve when they started the company. 35 00:02:31,476 --> 00:02:34,116 Speaker 2: The challenge is that boats consume a lot of power. 36 00:02:34,436 --> 00:02:37,076 Speaker 2: Water is a thousand times more dense than air, which 37 00:02:37,116 --> 00:02:40,436 Speaker 2: means that if you want to stain a full day's 38 00:02:40,436 --> 00:02:44,036 Speaker 2: worth of activity out on the water, you need to 39 00:02:44,116 --> 00:02:47,476 Speaker 2: store a lot of energy on board. If you're going 40 00:02:47,556 --> 00:02:51,036 Speaker 2: to go electric, that means really big battery packs. Those 41 00:02:51,076 --> 00:02:54,516 Speaker 2: really big battery packs are the first order problem that 42 00:02:54,516 --> 00:02:56,476 Speaker 2: you need to solve. If we say, hey, we want 43 00:02:56,556 --> 00:02:59,756 Speaker 2: over two hundred kilo hours of battery capacity? Who can 44 00:02:59,756 --> 00:03:02,396 Speaker 2: give it to us? We can't go to Amazon and 45 00:03:02,836 --> 00:03:05,676 Speaker 2: just like buy one. So part of it is as 46 00:03:05,716 --> 00:03:06,636 Speaker 2: it exist. 47 00:03:06,356 --> 00:03:08,836 Speaker 1: And you can't go to like shen Zhen, like there's 48 00:03:08,876 --> 00:03:12,116 Speaker 1: not somebody who sells battery packs to everybody somewhere. 49 00:03:12,236 --> 00:03:15,676 Speaker 2: No, and okay, because they tend to be very specific 50 00:03:15,756 --> 00:03:18,236 Speaker 2: to the use case, the geometry that you want, and 51 00:03:18,236 --> 00:03:20,916 Speaker 2: there are people that are trying to do this. But 52 00:03:21,316 --> 00:03:23,796 Speaker 2: then the problem shifts to okay, well now they're cost 53 00:03:23,916 --> 00:03:27,156 Speaker 2: prohibitive and you almost have to bring them in house 54 00:03:27,516 --> 00:03:30,116 Speaker 2: to get the cost down low enough to be able 55 00:03:30,156 --> 00:03:32,556 Speaker 2: to make your product competitive. What we do is we 56 00:03:32,596 --> 00:03:35,956 Speaker 2: go to automotive suppliers, people that are operated insane scale 57 00:03:36,356 --> 00:03:39,716 Speaker 2: and have incredible quality standards because automotive operates at a 58 00:03:39,796 --> 00:03:44,396 Speaker 2: much higher quality standard than marine, So we get to 59 00:03:44,476 --> 00:03:47,476 Speaker 2: take advantage of all of those and then bring them 60 00:03:47,916 --> 00:03:48,996 Speaker 2: into the marine industry. 61 00:03:49,516 --> 00:03:54,036 Speaker 1: What are the particular challenges of building a battery pack 62 00:03:54,116 --> 00:03:57,196 Speaker 1: for the water One is just its size. 63 00:03:58,036 --> 00:04:03,116 Speaker 2: The arc sport are wakesport both today is two hundred 64 00:04:03,116 --> 00:04:07,276 Speaker 2: and twenty six kilo hours battery pack. That's three or 65 00:04:07,316 --> 00:04:10,596 Speaker 2: four times the size of an Alle Sedan's battery pack. 66 00:04:11,116 --> 00:04:13,596 Speaker 2: That's kind of a sense of scale. So we're a 67 00:04:13,596 --> 00:04:16,836 Speaker 2: little bit constrained on mass, We're not that constrained on volume. 68 00:04:17,116 --> 00:04:20,156 Speaker 2: We're very constrained on price. If you go try to 69 00:04:20,156 --> 00:04:22,116 Speaker 2: build a two hundred and twenty six kilo one hour 70 00:04:22,156 --> 00:04:26,036 Speaker 2: battery pack, that can get very expensive very quickly if 71 00:04:26,116 --> 00:04:31,756 Speaker 2: you are not driving really good economics behind the battery pack. Huh. 72 00:04:31,876 --> 00:04:35,356 Speaker 1: So it's not a technological problem, but it's a technoeconomic 73 00:04:35,476 --> 00:04:37,396 Speaker 1: problem really that you're setting out to solve. 74 00:04:37,756 --> 00:04:40,796 Speaker 2: Now, the mass does come in in the sense that 75 00:04:41,596 --> 00:04:45,516 Speaker 2: it's not necessarily that your mass constrained. But you now 76 00:04:45,596 --> 00:04:47,996 Speaker 2: have thousands of pounds of battery pack that you need 77 00:04:48,036 --> 00:04:51,156 Speaker 2: to place onto a boat. And where you place that, 78 00:04:51,276 --> 00:04:53,396 Speaker 2: how you integrate it, how you offset the weight of that, 79 00:04:53,436 --> 00:04:56,276 Speaker 2: how you support the weight of that. That all starts 80 00:04:56,276 --> 00:04:58,636 Speaker 2: to become these second order problems that you need to solve. 81 00:04:58,676 --> 00:05:02,356 Speaker 2: So Step one, build really big battery pack. It's heavy, 82 00:05:02,596 --> 00:05:06,436 Speaker 2: it's expensive. Now Step two is go build the boat 83 00:05:06,476 --> 00:05:11,116 Speaker 2: around that and have it compensate for the weight, for 84 00:05:11,276 --> 00:05:15,396 Speaker 2: the price, for the volume of it in a way 85 00:05:15,476 --> 00:05:20,316 Speaker 2: that isn't just not compromising on the experience, but is 86 00:05:20,316 --> 00:05:24,476 Speaker 2: actually making the experience better. Same way automotive comes along. 87 00:05:24,516 --> 00:05:27,396 Speaker 2: They build the car around the battery pack and suddenly 88 00:05:27,436 --> 00:05:29,876 Speaker 2: you have a fronk and a low center of gravity 89 00:05:30,116 --> 00:05:31,756 Speaker 2: and all this performance that you unlock. 90 00:05:32,076 --> 00:05:35,196 Speaker 1: So where are you now? Tell me about the boat 91 00:05:35,276 --> 00:05:36,516 Speaker 1: or boats that you're selling now? 92 00:05:36,796 --> 00:05:40,356 Speaker 2: Yeah, we as a company started on the consumer side 93 00:05:40,716 --> 00:05:43,916 Speaker 2: and started with a product called the ARC one. We 94 00:05:43,996 --> 00:05:46,796 Speaker 2: called it kind of a luxury cruiser. It's got a 95 00:05:46,836 --> 00:05:50,876 Speaker 2: novel seating layout, it's a lot of fun for lakes rivers, 96 00:05:51,156 --> 00:05:55,756 Speaker 2: that sort of thing. And that was really our pilot production, 97 00:05:55,836 --> 00:05:59,316 Speaker 2: our test bed, the product that we use to go 98 00:05:59,436 --> 00:06:03,756 Speaker 2: develop the technology necessary to make electric boats viable at 99 00:06:03,796 --> 00:06:06,636 Speaker 2: a larger scale. And we took all those learnings from 100 00:06:06,636 --> 00:06:12,236 Speaker 2: that program and ported it over to what we are 101 00:06:12,316 --> 00:06:15,956 Speaker 2: now ramping production of, which is the ARC Sport. The 102 00:06:16,036 --> 00:06:18,916 Speaker 2: ARC Sport's a twenty three foot fully electric wakesport boat. 103 00:06:19,836 --> 00:06:22,596 Speaker 2: You know, if you go look out at a laker 104 00:06:22,716 --> 00:06:26,596 Speaker 2: river today, you're going to see families out there wakesurfing, wakeboarding, 105 00:06:26,676 --> 00:06:29,196 Speaker 2: water skiing, pulling inner tubers. This is the type of 106 00:06:29,196 --> 00:06:32,836 Speaker 2: boat that you do it with. We're ramping production of 107 00:06:32,876 --> 00:06:36,036 Speaker 2: that right now. We've got a month's long backlog for 108 00:06:37,076 --> 00:06:38,876 Speaker 2: the product. We're really just trying to keep up with 109 00:06:39,076 --> 00:06:40,316 Speaker 2: the demand that we see for it. 110 00:06:40,956 --> 00:06:42,756 Speaker 1: Yeah, what did it say on your website? Is it? 111 00:06:42,756 --> 00:06:44,836 Speaker 1: It's something twenty twenty six? Is it summer? 112 00:06:44,996 --> 00:06:45,116 Speaker 2: Like? 113 00:06:45,156 --> 00:06:46,916 Speaker 1: If I try and buy one now, when can I 114 00:06:46,996 --> 00:06:47,316 Speaker 1: get one? 115 00:06:47,796 --> 00:06:53,836 Speaker 2: Yeah, we're working through basically the last slots before summer 116 00:06:53,956 --> 00:06:57,436 Speaker 2: of twenty twenty six. That seems like is that a 117 00:06:57,436 --> 00:06:59,796 Speaker 2: good problem to have? I mean, it's better than nobody 118 00:06:59,796 --> 00:07:00,276 Speaker 2: buying it. 119 00:07:00,316 --> 00:07:04,076 Speaker 1: I don't know, is it? How is demand working for you? 120 00:07:05,196 --> 00:07:08,516 Speaker 2: Yes, it's a good problem to have, and it's still 121 00:07:08,516 --> 00:07:11,756 Speaker 2: a problem, and those two things can both be true. 122 00:07:12,036 --> 00:07:15,596 Speaker 2: It's the better problem to have versus nobody wants the product. 123 00:07:16,116 --> 00:07:19,196 Speaker 2: It's still a problem in that we want to deliver 124 00:07:19,236 --> 00:07:22,876 Speaker 2: great customer experiences to people, and your summer season matters 125 00:07:22,876 --> 00:07:26,276 Speaker 2: a lot, and so if we slip production targets by 126 00:07:26,476 --> 00:07:29,436 Speaker 2: a few weeks that can really impact somebody's. 127 00:07:29,356 --> 00:07:32,716 Speaker 1: Yes, yes, it's the difference between February and March nobody 128 00:07:32,756 --> 00:07:35,676 Speaker 1: cares about. But the difference between July and August is 129 00:07:35,676 --> 00:07:37,636 Speaker 1: a big one, right heah out there for the fourth 130 00:07:37,676 --> 00:07:38,796 Speaker 1: of July or whatever. 131 00:07:38,916 --> 00:07:41,356 Speaker 2: So we really emphasize that as a company, and we 132 00:07:41,436 --> 00:07:44,836 Speaker 2: try to not over promise to customers. And you know 133 00:07:45,596 --> 00:07:49,156 Speaker 2: this is it's a balancing act we are that we're 134 00:07:49,156 --> 00:07:49,716 Speaker 2: trying to strike. 135 00:07:50,436 --> 00:07:52,236 Speaker 1: What's the rate limiting step? I mean, you just have 136 00:07:52,356 --> 00:07:55,236 Speaker 1: one factory or are you like supply constrained in some way? 137 00:07:55,916 --> 00:07:58,876 Speaker 2: Yeah, we're supply constrained. One of the things that we're 138 00:07:58,876 --> 00:08:04,636 Speaker 2: doing well from a business perspective here, what we want 139 00:08:04,636 --> 00:08:07,836 Speaker 2: to make sure that we do in priority order is 140 00:08:07,876 --> 00:08:11,196 Speaker 2: build a product that people love and want. Build a 141 00:08:11,236 --> 00:08:14,116 Speaker 2: better boat, deliver better boats to the market. The next 142 00:08:14,116 --> 00:08:16,116 Speaker 2: thing is make sure that we make money on those boats. 143 00:08:16,716 --> 00:08:19,636 Speaker 2: And then the third is ramp production of them, ramp 144 00:08:19,676 --> 00:08:25,236 Speaker 2: supply in order to tackle those last two simultaneously. What 145 00:08:25,276 --> 00:08:28,156 Speaker 2: we're doing is as the way that we're ramping production 146 00:08:28,756 --> 00:08:30,476 Speaker 2: is that we're getting more efficient at production. 147 00:08:30,876 --> 00:08:33,596 Speaker 1: Are you losing money on the marginal boat? Still? 148 00:08:33,676 --> 00:08:36,196 Speaker 2: Is that I make money on the marginal boat. This 149 00:08:36,276 --> 00:08:39,396 Speaker 2: is very different than automotive. Again, you will see many 150 00:08:39,876 --> 00:08:40,396 Speaker 2: car companies. 151 00:08:40,396 --> 00:08:42,076 Speaker 1: You don't have to sell a million of them to 152 00:08:42,276 --> 00:08:43,596 Speaker 1: exactly yeah. 153 00:08:43,676 --> 00:08:46,556 Speaker 2: Yeah, we can make money even on the earliest units 154 00:08:46,596 --> 00:08:51,636 Speaker 2: of them. But the again dissimilar to how the automotive 155 00:08:51,636 --> 00:08:55,956 Speaker 2: industry works, which is very robotic, very automated production lines. 156 00:08:57,196 --> 00:09:01,516 Speaker 2: Boat building is much more labor intensive, is a bit 157 00:09:01,556 --> 00:09:02,276 Speaker 2: of a craft. 158 00:09:02,796 --> 00:09:05,916 Speaker 1: Indeed, boat companies have craft in the name sometimes. 159 00:09:05,396 --> 00:09:08,556 Speaker 2: Right, exactly, it is very much a craft. 160 00:09:08,676 --> 00:09:12,236 Speaker 1: I'm a business standpoint. That seems bad, right, Like that 161 00:09:12,316 --> 00:09:15,276 Speaker 1: sounds like high unit cost to me when you say craft. 162 00:09:15,396 --> 00:09:17,316 Speaker 2: It is high unit costs. And you'll see that boats 163 00:09:17,316 --> 00:09:18,796 Speaker 2: are actually quite expensive. 164 00:09:18,796 --> 00:09:21,316 Speaker 1: So, yes, your boat is expensive, right, How much does 165 00:09:21,356 --> 00:09:22,196 Speaker 1: your boat cost? 166 00:09:22,676 --> 00:09:25,036 Speaker 2: It's it starts a two hundred and sixty eight thousand 167 00:09:25,036 --> 00:09:26,916 Speaker 2: dollars for the wake sport boat. 168 00:09:27,076 --> 00:09:29,236 Speaker 1: Which I don't know anything about wakesport bucks. I was 169 00:09:29,276 --> 00:09:30,956 Speaker 1: shocked by how expensive that is. 170 00:09:31,476 --> 00:09:35,596 Speaker 2: That's shocked expensive. And the rest of the market is 171 00:09:35,596 --> 00:09:38,036 Speaker 2: also there for the premium side of this market. 172 00:09:38,316 --> 00:09:41,276 Speaker 1: So how many people in America buy a three hundred 173 00:09:41,356 --> 00:09:43,036 Speaker 1: thousand dollars boat every year? 174 00:09:43,796 --> 00:09:47,476 Speaker 2: The marine industry is interesting for a variety of reasons, 175 00:09:47,516 --> 00:09:49,716 Speaker 2: and in this market in particular, one of the things 176 00:09:49,716 --> 00:09:54,676 Speaker 2: that you see is that, well, you look at your 177 00:09:54,796 --> 00:09:58,756 Speaker 2: sedan market and you have your Hanta Civics, your Nissan Ultimas, 178 00:09:59,436 --> 00:10:01,836 Speaker 2: but then you have your Mercedes S Class, your your 179 00:10:02,156 --> 00:10:06,036 Speaker 2: model ass whatever it is, and you see the volume 180 00:10:06,276 --> 00:10:09,636 Speaker 2: really favors that economy class sedan, and then it's a 181 00:10:09,676 --> 00:10:13,756 Speaker 2: smaller peak of demand at that premium sand class. In boating, 182 00:10:13,836 --> 00:10:15,396 Speaker 2: it's the opposite. 183 00:10:14,836 --> 00:10:17,236 Speaker 1: Well, because nobody needs a boat to get to work. 184 00:10:17,196 --> 00:10:20,156 Speaker 2: Right, right, and if you have this house on a 185 00:10:20,316 --> 00:10:23,676 Speaker 2: lake or a river, you know you care about Hey, 186 00:10:23,716 --> 00:10:26,676 Speaker 2: I just want the best boat. You're probably rich, right, yes, 187 00:10:27,316 --> 00:10:30,156 Speaker 2: so you end up wanting to buy the best one. 188 00:10:30,196 --> 00:10:32,436 Speaker 2: So the demand is actually at that higher end, which 189 00:10:32,476 --> 00:10:35,116 Speaker 2: is why you see the prices go. And kind of 190 00:10:35,116 --> 00:10:38,436 Speaker 2: going back to that roadmap, that business is what ultimately 191 00:10:38,436 --> 00:10:40,916 Speaker 2: supports everything else that we're doing. We started here for 192 00:10:40,956 --> 00:10:44,236 Speaker 2: a reason. It's a premium class of boat. It has 193 00:10:44,316 --> 00:10:47,076 Speaker 2: moderate volumes to it, so we could really scale up 194 00:10:47,116 --> 00:10:51,956 Speaker 2: to a meaningful business just in that market alone. But 195 00:10:52,116 --> 00:10:54,116 Speaker 2: what we're doing is we're taking that same technology and 196 00:10:55,196 --> 00:10:58,276 Speaker 2: copying it over to other sectors. You could look at 197 00:10:58,356 --> 00:11:02,076 Speaker 2: kind of any car company that uses the same platform 198 00:11:02,116 --> 00:11:07,516 Speaker 2: to build multiple products. We're doing that same thing at ARC, 199 00:11:07,796 --> 00:11:11,396 Speaker 2: so that allows us to expand pretty quickly into other 200 00:11:11,476 --> 00:11:13,716 Speaker 2: consumer segments. We've already announced the Our Coast that's a 201 00:11:13,756 --> 00:11:16,876 Speaker 2: center console boat that is intended for that fishing and 202 00:11:16,956 --> 00:11:20,316 Speaker 2: leisure market that gets a lot more popular in Florida 203 00:11:20,356 --> 00:11:23,876 Speaker 2: and the East Coast. And that same technology is also 204 00:11:24,116 --> 00:11:26,276 Speaker 2: what lays the foundation for us to get into commercial, 205 00:11:26,316 --> 00:11:28,316 Speaker 2: which is one of our big expansions recently. 206 00:11:29,316 --> 00:11:31,236 Speaker 1: Yeah, I want to talk a lot about commercial. I 207 00:11:31,276 --> 00:11:35,116 Speaker 1: mean that seems from a sort of broader it seems 208 00:11:35,156 --> 00:11:38,556 Speaker 1: like a much bigger market presumably, right, if just in 209 00:11:38,636 --> 00:11:41,356 Speaker 1: terms of dollars, in terms of emissions, in terms of 210 00:11:41,356 --> 00:11:43,196 Speaker 1: lots of things. I feel like commercial is a really 211 00:11:43,196 --> 00:11:45,476 Speaker 1: interesting part of the conversation. But before we get there, 212 00:11:47,356 --> 00:11:50,396 Speaker 1: just a couple of things, Like one, tell me about 213 00:11:50,436 --> 00:11:53,556 Speaker 1: safety and when you're sort of building an electric boat 214 00:11:53,596 --> 00:11:55,156 Speaker 1: from scratch, what do you got to think about in 215 00:11:55,236 --> 00:11:55,996 Speaker 1: terms of safety. 216 00:11:56,836 --> 00:12:00,876 Speaker 2: We care about making sure that we are moving this 217 00:12:01,036 --> 00:12:04,916 Speaker 2: industry in a safer direction. Gas boats today are not 218 00:12:05,036 --> 00:12:10,436 Speaker 2: that safe. Engine fires are pretty common. You end up 219 00:12:10,516 --> 00:12:16,436 Speaker 2: running these combustion engines in a chamber that traps fumes 220 00:12:16,516 --> 00:12:19,036 Speaker 2: in it. So the whole of this boat can trap fumes, 221 00:12:19,036 --> 00:12:21,716 Speaker 2: and so boats come with these things called blowers that 222 00:12:21,756 --> 00:12:24,276 Speaker 2: eject those fumes. If you forget to run a blower, 223 00:12:24,516 --> 00:12:27,116 Speaker 2: it can be disastrous and incredibly dangerous. 224 00:12:27,476 --> 00:12:29,116 Speaker 1: So you're telling me your boat doesn't have to be 225 00:12:29,236 --> 00:12:31,756 Speaker 1: that safe to be higher than a boat, I'm. 226 00:12:31,636 --> 00:12:35,756 Speaker 2: Saying that you're dramatically safer where the industry is at today, 227 00:12:36,916 --> 00:12:39,156 Speaker 2: I mean, is there, Like I take your point, and 228 00:12:39,276 --> 00:12:42,396 Speaker 2: internal combustion engines are just kind of crazy, right, It's 229 00:12:42,396 --> 00:12:45,356 Speaker 2: crazy that they work by having little explosions thousands of 230 00:12:45,396 --> 00:12:46,116 Speaker 2: times per minute. 231 00:12:46,156 --> 00:12:50,156 Speaker 1: But that's actually what's going on. I mean presumably, Like 232 00:12:50,196 --> 00:12:53,036 Speaker 1: I totally believe that your boats are safer. Surely there 233 00:12:53,036 --> 00:12:56,676 Speaker 1: are some risks associated with putting a giant battery pack 234 00:12:56,716 --> 00:12:59,036 Speaker 1: on a boat. I mean, tell me about that. 235 00:12:59,396 --> 00:13:02,796 Speaker 2: Yeah, So you think about safety in terms of redundancy. 236 00:13:02,836 --> 00:13:05,636 Speaker 2: No system is perfectly safe, and so you're thinking about, Okay, 237 00:13:05,636 --> 00:13:08,756 Speaker 2: if something fails, then how many war times can it 238 00:13:08,756 --> 00:13:11,996 Speaker 2: fail before it actually becomes a concern. When we think 239 00:13:12,036 --> 00:13:14,836 Speaker 2: about the battery pack, the obvious thing that you want 240 00:13:14,876 --> 00:13:17,916 Speaker 2: to make sure you're safe for is water ingress. You 241 00:13:17,956 --> 00:13:20,236 Speaker 2: want to make sure no water gets into that battery pack. 242 00:13:20,396 --> 00:13:22,836 Speaker 1: And just to be clear, just like dumb question, why 243 00:13:22,876 --> 00:13:24,396 Speaker 1: is it bad if the battery gets wet? 244 00:13:24,796 --> 00:13:28,036 Speaker 2: Yeah, I mean because if you in theory, if you 245 00:13:28,116 --> 00:13:30,956 Speaker 2: take a battery pack and you dunk it in water. 246 00:13:31,036 --> 00:13:33,716 Speaker 2: It can it can go into what's known as thermal runaway. 247 00:13:33,756 --> 00:13:37,036 Speaker 2: It can catch fire, and stopping a battery fire is 248 00:13:37,076 --> 00:13:40,956 Speaker 2: really hard because those chemicals are good at burning even 249 00:13:41,076 --> 00:13:41,996 Speaker 2: absent oxygen. 250 00:13:42,116 --> 00:13:45,676 Speaker 1: That is obviously bad anywhere, and obviously particularly bad if 251 00:13:45,676 --> 00:13:48,356 Speaker 1: you're out on the water. Classic thing you don't want 252 00:13:48,396 --> 00:13:48,836 Speaker 1: on a boat. 253 00:13:48,916 --> 00:13:52,756 Speaker 2: Yes, yeah, So if you kind of rapidly step through 254 00:13:52,796 --> 00:13:54,876 Speaker 2: these steps, you're like, okay, you want to get notified 255 00:13:54,876 --> 00:13:57,476 Speaker 2: about this. Great, Yeah, you've got leak sensors in there. 256 00:13:57,596 --> 00:13:59,796 Speaker 2: Then you want to allow as much water into the 257 00:13:59,836 --> 00:14:03,956 Speaker 2: pack as possible before it actually becomes a safety concern. Oh. Interesting, 258 00:14:04,276 --> 00:14:05,996 Speaker 2: So you design the pack in a way that can 259 00:14:05,996 --> 00:14:08,196 Speaker 2: actually tolerate a fair amount of water in the pack 260 00:14:08,236 --> 00:14:11,356 Speaker 2: before it becomes a pro And then you say, okay, 261 00:14:11,356 --> 00:14:14,636 Speaker 2: well then if it does, you know, if you just 262 00:14:14,676 --> 00:14:18,876 Speaker 2: flood this pack with water, then what happens? And how 263 00:14:18,916 --> 00:14:21,116 Speaker 2: much time do I have to react? And you step 264 00:14:21,196 --> 00:14:22,996 Speaker 2: through all of this, and what it comes down to is, 265 00:14:23,996 --> 00:14:27,636 Speaker 2: first off, we've designed the packs to be essentially IP 266 00:14:27,716 --> 00:14:30,756 Speaker 2: six seven rated, which means you could submerge it in 267 00:14:30,796 --> 00:14:34,276 Speaker 2: a meter of water for thirty minutes without water getting in, 268 00:14:34,316 --> 00:14:37,076 Speaker 2: which is an insane standard to hold for a battery 269 00:14:37,076 --> 00:14:40,636 Speaker 2: pack of this size. If water does get in, you've 270 00:14:40,676 --> 00:14:44,836 Speaker 2: got time. Those league sensors are are alerting you on 271 00:14:44,876 --> 00:14:49,116 Speaker 2: the boat, alerting our systems to give you a lot 272 00:14:49,116 --> 00:14:52,396 Speaker 2: of notice. And then in the event that you do 273 00:14:52,716 --> 00:14:57,636 Speaker 2: end up tripping a thermal runaway event, you have a 274 00:14:57,676 --> 00:14:59,756 Speaker 2: lot of time to get off of the boat. Like 275 00:14:59,796 --> 00:15:02,436 Speaker 2: we actually alert you and say, hey, you've got maybe 276 00:15:02,476 --> 00:15:05,196 Speaker 2: ten minutes to put on your life jackets. It's safely 277 00:15:05,356 --> 00:15:08,756 Speaker 2: get off the boat. All of these things really lend 278 00:15:08,796 --> 00:15:12,116 Speaker 2: to this safety profile and compared to gas, it's you know, 279 00:15:12,236 --> 00:15:12,876 Speaker 2: been comparable. 280 00:15:16,316 --> 00:15:29,156 Speaker 1: We'll be back in just a minute. Let's talk about 281 00:15:29,156 --> 00:15:34,436 Speaker 1: commercial boats. You're you're building a tugboat or you're building 282 00:15:34,436 --> 00:15:37,116 Speaker 1: a tugboat with somebody, right, is that the place to start. 283 00:15:37,516 --> 00:15:44,156 Speaker 2: Yes, we are entering the commercial market with hybrid electric 284 00:15:44,156 --> 00:15:48,876 Speaker 2: commercial workboats. Okay. We signed a deal with Curtain Maritime. 285 00:15:49,796 --> 00:15:53,836 Speaker 2: They are a major commercial operator. They started on the 286 00:15:53,916 --> 00:16:00,716 Speaker 2: dredging side. They're also known for moving some of SpaceX's 287 00:16:00,876 --> 00:16:04,556 Speaker 2: barges around. They are entering the tugboat market and the 288 00:16:04,596 --> 00:16:08,196 Speaker 2: way that they are doing this is by buying a 289 00:16:08,236 --> 00:16:12,316 Speaker 2: fleet of hybrid electric tugboats from US. 290 00:16:12,836 --> 00:16:16,236 Speaker 1: Okay, so you're so what they placed a big order, right, 291 00:16:16,276 --> 00:16:18,316 Speaker 1: Like you're supposed to sell them a bunch of tugboats. 292 00:16:18,556 --> 00:16:22,076 Speaker 2: Yeah, it's it's for eight tugboats, which is a large 293 00:16:22,076 --> 00:16:24,676 Speaker 2: amount of tugboats when each one of these is on 294 00:16:24,796 --> 00:16:26,316 Speaker 2: the order of twenty million dollars. 295 00:16:26,756 --> 00:16:29,236 Speaker 1: Yeah, so you have to sell a lot of wake boats. 296 00:16:29,836 --> 00:16:31,636 Speaker 1: So you have that much money to do. So are 297 00:16:31,716 --> 00:16:34,796 Speaker 1: you designing a hybrid electric tugboat right now? Like? Where 298 00:16:34,796 --> 00:16:35,956 Speaker 1: are you in that process? 299 00:16:36,516 --> 00:16:42,516 Speaker 2: So boats are basically two parts to the boat, maybe 300 00:16:42,556 --> 00:16:44,356 Speaker 2: maybe three parts if I were to break it down. 301 00:16:45,116 --> 00:16:48,556 Speaker 2: The first is the thing that floats. That's the steel structure. Okay, 302 00:16:49,436 --> 00:16:52,516 Speaker 2: you take a bunch of steel, you cut it up 303 00:16:52,596 --> 00:16:54,476 Speaker 2: into pieces, and then you weld it all together and 304 00:16:54,796 --> 00:16:58,756 Speaker 2: you have something that floats. We're partnering with a shipyard 305 00:16:58,756 --> 00:17:01,356 Speaker 2: to do that. Okay. Then there's the part of this 306 00:17:01,596 --> 00:17:07,076 Speaker 2: that tugboats are kind of like houses. You have people 307 00:17:07,116 --> 00:17:10,676 Speaker 2: on board that stay on board for long periods of 308 00:17:10,716 --> 00:17:14,036 Speaker 2: time doing these jobs, or or at least spend all 309 00:17:14,116 --> 00:17:16,716 Speaker 2: day out on them doing the jobs. So you care 310 00:17:16,756 --> 00:17:21,116 Speaker 2: about where's the refrigerator and where do they stay, and 311 00:17:21,236 --> 00:17:24,396 Speaker 2: what's the visibility from their control tower or what's known 312 00:17:24,396 --> 00:17:28,556 Speaker 2: as the house of the boat or the wheelhouse, where's 313 00:17:28,556 --> 00:17:31,156 Speaker 2: the winch go? How do you push and pull on 314 00:17:31,196 --> 00:17:34,556 Speaker 2: these other boats? So that's kind of the operating portion 315 00:17:34,876 --> 00:17:37,996 Speaker 2: of the curtain. Maritime has a ton of experience and 316 00:17:37,996 --> 00:17:41,076 Speaker 2: how do you go optimize the operating ok Then the 317 00:17:41,156 --> 00:17:43,596 Speaker 2: last piece of this is how do you make the 318 00:17:43,636 --> 00:17:47,036 Speaker 2: boat go? How do you actually like push it through 319 00:17:47,076 --> 00:17:49,516 Speaker 2: the water. That's what I mean when I say powertrain. 320 00:17:49,676 --> 00:17:54,116 Speaker 2: It's the thing that actually delivers power into the water, 321 00:17:54,676 --> 00:17:58,676 Speaker 2: and that goes from well, starts from some amount of energy. 322 00:17:58,956 --> 00:18:02,596 Speaker 2: In our case, that is a huge amount of batteries. Okay, 323 00:18:03,436 --> 00:18:09,436 Speaker 2: six eight to eight megawatt hours of battery capacity, a 324 00:18:09,516 --> 00:18:13,356 Speaker 2: crazy amount of battery. Then there's all the okay, well, 325 00:18:13,356 --> 00:18:15,276 Speaker 2: now you have the energy, how do you actually convert 326 00:18:15,316 --> 00:18:18,196 Speaker 2: that down into a propeller under the water, some sort 327 00:18:18,196 --> 00:18:21,516 Speaker 2: of thruster under the water. And that is also all 328 00:18:21,596 --> 00:18:23,076 Speaker 2: part of that power. 329 00:18:22,876 --> 00:18:26,996 Speaker 1: Train, and presumably the integration of this like crazy amount 330 00:18:26,996 --> 00:18:30,156 Speaker 1: of battery mass you're going to need into the whole 331 00:18:30,196 --> 00:18:33,916 Speaker 1: boat and what everybody else is doing. It's going to 332 00:18:33,996 --> 00:18:36,396 Speaker 1: be something to figure out a hard part. One of 333 00:18:36,396 --> 00:18:36,996 Speaker 1: the hard parts. 334 00:18:37,396 --> 00:18:39,356 Speaker 2: It is, it is, it is one of the very 335 00:18:39,396 --> 00:18:42,316 Speaker 2: hard parts. You know, each of these parts is super complex. 336 00:18:42,436 --> 00:18:46,436 Speaker 2: The scale of these vessels is massive. It's hard to 337 00:18:47,436 --> 00:18:53,756 Speaker 2: actually understand the amount of torque that these things put 338 00:18:53,796 --> 00:18:54,116 Speaker 2: out off. 339 00:18:55,036 --> 00:18:57,276 Speaker 1: That's the whole point of a tugboat, right right, That's 340 00:18:57,316 --> 00:18:58,156 Speaker 1: what it's there to do. 341 00:18:59,636 --> 00:19:03,916 Speaker 2: So there are these massive vessels that are capable of 342 00:19:03,916 --> 00:19:08,156 Speaker 2: pushing and pulling these cargo ships that come in to dock, 343 00:19:09,716 --> 00:19:12,436 Speaker 2: and that means that each of the components on there 344 00:19:12,476 --> 00:19:17,116 Speaker 2: is just giant. Your thrusters are these these huge components, 345 00:19:17,436 --> 00:19:22,356 Speaker 2: you know, way bigger than I don't know any any propeller. 346 00:19:22,396 --> 00:19:28,676 Speaker 2: You've certainly seen, way bigger than people. Yeah. So each 347 00:19:28,716 --> 00:19:31,036 Speaker 2: of those comes from different suppliers that have existed for 348 00:19:31,076 --> 00:19:34,636 Speaker 2: long periods of time. And one of the integration challenges is, Okay, great, 349 00:19:35,036 --> 00:19:37,116 Speaker 2: you've got a really big battery pack on board. You've 350 00:19:37,116 --> 00:19:39,356 Speaker 2: got good pricing on that battery pack that makes it 351 00:19:39,636 --> 00:19:44,276 Speaker 2: cost competitive. You still need to go get this entire system, 352 00:19:44,396 --> 00:19:46,716 Speaker 2: all of these different components talking to each other and 353 00:19:46,796 --> 00:19:50,236 Speaker 2: all wired up to work nicely together. And that is 354 00:19:50,316 --> 00:19:53,116 Speaker 2: part of the integration challenge of all of us. 355 00:19:54,196 --> 00:19:56,236 Speaker 1: Where are you on that project? 356 00:19:57,356 --> 00:20:01,956 Speaker 2: We have already started construction on the first of the 357 00:20:01,996 --> 00:20:06,276 Speaker 2: tugboats and we expect to deliver that to market before 358 00:20:06,276 --> 00:20:07,076 Speaker 2: the end of next year. 359 00:20:08,156 --> 00:20:12,436 Speaker 1: I saw in just my ordinary reading that is it 360 00:20:12,556 --> 00:20:18,036 Speaker 1: the domin rsde tug two five one three was shortlisted 361 00:20:18,036 --> 00:20:23,316 Speaker 1: for Tug of the Year. And I missed that? Did you? 362 00:20:23,316 --> 00:20:27,396 Speaker 1: You did not miss that new? Surely you knew that 363 00:20:26,956 --> 00:20:29,476 Speaker 1: that's an electric tug, right, You're not the only one 364 00:20:29,516 --> 00:20:31,676 Speaker 1: doing this. That's why I bring it up, Right, that 365 00:20:31,756 --> 00:20:34,676 Speaker 1: is an electric tug that is new. Like what's the 366 00:20:34,836 --> 00:20:39,836 Speaker 1: broader landscape like of people electrifying boats in general and 367 00:20:39,836 --> 00:20:41,596 Speaker 1: in particular this kind of what do they call them 368 00:20:41,636 --> 00:20:43,836 Speaker 1: harbor vessels? Is that this universe grows? Is that what 369 00:20:43,876 --> 00:20:45,196 Speaker 1: they're called harborcraft young. 370 00:20:46,196 --> 00:20:49,756 Speaker 2: These are more popular internationally than they are in the US. 371 00:20:50,156 --> 00:20:53,756 Speaker 2: The US has a pretty interesting piece of policy in 372 00:20:53,796 --> 00:20:57,396 Speaker 2: place called the nineteen twenty Jones Act, and what it 373 00:20:57,436 --> 00:21:00,556 Speaker 2: means is that if you have a vessel that is 374 00:21:01,236 --> 00:21:04,596 Speaker 2: operates between US ports, it needs to be US manufactured, 375 00:21:04,596 --> 00:21:09,116 Speaker 2: it needs to be US flagged. And what that means 376 00:21:09,236 --> 00:21:12,316 Speaker 2: in practice is that if you are the port of 377 00:21:12,436 --> 00:21:15,676 Speaker 2: la if you're one of these many other reports in 378 00:21:15,716 --> 00:21:17,956 Speaker 2: the US and you have harborcraft. Those need to be 379 00:21:17,996 --> 00:21:20,316 Speaker 2: manufactured in the US, and that limits the number of 380 00:21:20,356 --> 00:21:24,516 Speaker 2: suppliers that you can go to. While there are electric 381 00:21:24,556 --> 00:21:30,116 Speaker 2: tugboats and electric ferries internationally, there's only one that's I'm 382 00:21:30,156 --> 00:21:33,396 Speaker 2: aware of in the US in this kind of ship 383 00:21:33,396 --> 00:21:38,676 Speaker 2: assis market. And it was a heavily subsidized project that 384 00:21:39,596 --> 00:21:43,716 Speaker 2: was very compelling in the theory of it and what 385 00:21:43,796 --> 00:21:46,476 Speaker 2: it could deliver to the market, but it wasn't on 386 00:21:46,556 --> 00:21:51,476 Speaker 2: its own economically viable. What's so compelling about what we're 387 00:21:51,476 --> 00:21:54,956 Speaker 2: doing with Curtain and our entrance into the commercial industry 388 00:21:55,116 --> 00:21:59,196 Speaker 2: is we are entering at a point that is directly 389 00:21:59,236 --> 00:22:04,636 Speaker 2: cost competitive with making a diesel driven tugboat absent any 390 00:22:04,676 --> 00:22:05,516 Speaker 2: sort of grants, and. 391 00:22:05,476 --> 00:22:08,036 Speaker 1: It's cost competitive just buy in the boat, or it's 392 00:22:08,076 --> 00:22:10,556 Speaker 1: cost competitive when you figure out the sort of cost 393 00:22:10,556 --> 00:22:11,556 Speaker 1: of ownership over. 394 00:22:11,396 --> 00:22:15,196 Speaker 2: Time off off the line. So is cost competitive when 395 00:22:15,196 --> 00:22:17,636 Speaker 2: you buy the boat? And now, how can that be? 396 00:22:17,796 --> 00:22:20,116 Speaker 1: Is it just that batteries got cheap enough for it 397 00:22:20,156 --> 00:22:23,676 Speaker 1: to be possible, Like I'm surprised by that. Is it 398 00:22:23,676 --> 00:22:26,996 Speaker 1: that the domestic industry is super inefficient because it's protected 399 00:22:26,996 --> 00:22:27,796 Speaker 1: by the Jones Act. 400 00:22:29,196 --> 00:22:33,076 Speaker 2: I'm I'm smiling because because you're you're hitting on some 401 00:22:33,116 --> 00:22:36,156 Speaker 2: of the things. So I think it's also that we're 402 00:22:36,236 --> 00:22:37,916 Speaker 2: driving this business in a way that we want to 403 00:22:37,916 --> 00:22:41,036 Speaker 2: be globally competitive. That is, that is our mission here 404 00:22:41,076 --> 00:22:44,716 Speaker 2: is to leap frog and technology and become competitive again 405 00:22:44,796 --> 00:22:48,276 Speaker 2: on the global stage. Now. The things making this viable 406 00:22:48,316 --> 00:22:52,396 Speaker 2: are actually two curves going on. One is your battery 407 00:22:52,476 --> 00:22:56,716 Speaker 2: prices are going down over time, Your your high voltage electronics, 408 00:22:56,716 --> 00:23:00,196 Speaker 2: your power electronics, all of those are getting cheaper over time, 409 00:23:00,836 --> 00:23:04,756 Speaker 2: which drives the cost side down. The other side is 410 00:23:05,316 --> 00:23:07,916 Speaker 2: when you're looking at the cost of those diesel tugs, 411 00:23:08,596 --> 00:23:11,516 Speaker 2: those have been going up over time. The complexity has 412 00:23:11,556 --> 00:23:18,356 Speaker 2: been increasing, honestly exponentially because what's happened is over time 413 00:23:18,596 --> 00:23:25,076 Speaker 2: there have been increasingly stringent regulations surrounding the engines themselves, 414 00:23:26,116 --> 00:23:30,596 Speaker 2: compliance standards around how much carbon you know, is allowed 415 00:23:30,596 --> 00:23:33,396 Speaker 2: to be spewed off of this and how you burn 416 00:23:33,436 --> 00:23:36,676 Speaker 2: it off, and the temperature that that system works at, 417 00:23:36,716 --> 00:23:40,156 Speaker 2: and you need diesel particulate filters, and it's a very 418 00:23:40,196 --> 00:23:44,756 Speaker 2: complex system to try to mitigate the those negative extort 419 00:23:44,996 --> 00:23:46,796 Speaker 2: you know, to try to mitigate the pollution. 420 00:23:47,036 --> 00:23:52,596 Speaker 1: So environmental regulations like emissions regulations have made diesel tugs 421 00:23:52,596 --> 00:23:54,436 Speaker 1: in this country more expensive. 422 00:23:54,156 --> 00:23:58,396 Speaker 2: Exactly, which is also good for you. Yes, so what 423 00:23:58,516 --> 00:24:06,956 Speaker 2: might go wrong for you? I mentioned that our focus 424 00:24:06,996 --> 00:24:09,596 Speaker 2: is building better boats, making sure that we make money 425 00:24:09,596 --> 00:24:11,796 Speaker 2: on them, and then ramping supply of them. That is 426 00:24:11,836 --> 00:24:15,196 Speaker 2: a very simple theory. And we are not taking a 427 00:24:15,236 --> 00:24:18,636 Speaker 2: lot of demand risk. We see incredible demand. We're just 428 00:24:18,676 --> 00:24:21,876 Speaker 2: delivering better products to consumer market, better products to the 429 00:24:21,876 --> 00:24:24,796 Speaker 2: commercial market. We're not taking a lot of technology risk 430 00:24:25,276 --> 00:24:27,596 Speaker 2: because a lot of this exists. We are taking a 431 00:24:27,636 --> 00:24:31,596 Speaker 2: ton of execution risk. Actually pulling these things together is 432 00:24:31,676 --> 00:24:34,316 Speaker 2: really hard, and there's so many levels to this. Even 433 00:24:34,356 --> 00:24:38,396 Speaker 2: the financing side of this is a challenge because you 434 00:24:39,396 --> 00:24:42,396 Speaker 2: have to go do the construction of these vessels and 435 00:24:43,196 --> 00:24:48,236 Speaker 2: make sure that you finance that intelligently so that you 436 00:24:48,996 --> 00:24:51,356 Speaker 2: could actually get these things onto the water and validate 437 00:24:51,396 --> 00:24:55,796 Speaker 2: the technology to unlock even more of the demand. The 438 00:24:55,836 --> 00:25:00,196 Speaker 2: integration is hard. The timelines have a way of only 439 00:25:00,236 --> 00:25:01,116 Speaker 2: moving in one direction. 440 00:25:01,716 --> 00:25:03,796 Speaker 1: It's you're not going to deliver it early. 441 00:25:07,076 --> 00:25:10,236 Speaker 2: I am proud that we have held to the timelines 442 00:25:10,276 --> 00:25:13,356 Speaker 2: that we have held, and it is a constant battle 443 00:25:13,876 --> 00:25:16,996 Speaker 2: because one part I mean, going back to the consumer 444 00:25:17,036 --> 00:25:19,796 Speaker 2: side of this, you can get everything right about a 445 00:25:19,796 --> 00:25:24,636 Speaker 2: production system, and if you are lacking a few critical screws, 446 00:25:24,836 --> 00:25:27,836 Speaker 2: it can halt a production line. And that means that 447 00:25:28,036 --> 00:25:32,236 Speaker 2: every like having every piece in the right place at 448 00:25:32,236 --> 00:25:36,516 Speaker 2: the right time, is so critical to the company. And 449 00:25:36,876 --> 00:25:40,676 Speaker 2: that's this complex orchestration problem. People say, you know what's 450 00:25:40,676 --> 00:25:44,276 Speaker 2: hard about producing these boats or any of that. It's 451 00:25:44,356 --> 00:25:47,476 Speaker 2: no one thing. It's a thousand small things that all 452 00:25:47,556 --> 00:25:50,036 Speaker 2: of these pieces just need to fit together and hum 453 00:25:50,036 --> 00:25:53,396 Speaker 2: which is why we're so intensely focused on execution, on 454 00:25:53,716 --> 00:25:56,276 Speaker 2: continuing to drive against the plan that we have in place. 455 00:25:57,436 --> 00:26:05,636 Speaker 1: What are you going to build after a talk about. 456 00:26:03,476 --> 00:26:06,796 Speaker 2: If you think about across consumer commercial the products I 457 00:26:06,876 --> 00:26:11,596 Speaker 2: mentioned are export or coast, these tugboats. The common thread 458 00:26:11,636 --> 00:26:15,476 Speaker 2: between all of those is that there is a better 459 00:26:15,516 --> 00:26:19,716 Speaker 2: technology that exists for the marine industry in electric power trains. 460 00:26:20,276 --> 00:26:25,436 Speaker 2: It is a fundamentally superior technology to these outdated kind 461 00:26:25,436 --> 00:26:32,836 Speaker 2: of diesel engines or gas engines. That's our core focus 462 00:26:32,636 --> 00:26:35,076 Speaker 2: as a company, and we want to get those power 463 00:26:35,076 --> 00:26:39,356 Speaker 2: trains into as many vessels as possible. On the commercial side, 464 00:26:39,396 --> 00:26:42,756 Speaker 2: we're starting with tugboats. Ferries make a lot of sense. 465 00:26:43,156 --> 00:26:47,356 Speaker 2: You can get into offshore supply vessels. There's you know, 466 00:26:47,436 --> 00:26:52,516 Speaker 2: all sorts of different harbor craft that you can go electrify. 467 00:26:52,556 --> 00:26:55,156 Speaker 2: And then you know, there's this long tail of coastguard 468 00:26:55,196 --> 00:26:59,516 Speaker 2: boats and water taxis and everything else that you want 469 00:26:59,516 --> 00:27:02,876 Speaker 2: to do commercially out on the water, fishing boats. On 470 00:27:02,916 --> 00:27:07,516 Speaker 2: the consumer side, it's wake sport boats, center console boats, 471 00:27:08,236 --> 00:27:12,356 Speaker 2: it's pontoons like every way that you have, sailboats, every 472 00:27:12,356 --> 00:27:14,156 Speaker 2: way that you have of being out of the water. 473 00:27:14,236 --> 00:27:16,076 Speaker 2: We want to go electri it. 474 00:27:19,356 --> 00:27:21,396 Speaker 1: We'll be back in a minute with the lighting round. 475 00:27:33,756 --> 00:27:39,276 Speaker 1: Let's finished with the lightning round. I read you and 476 00:27:39,316 --> 00:27:43,956 Speaker 1: your co founder argue about ideas, which seems healthy, And 477 00:27:43,996 --> 00:27:48,756 Speaker 1: I'm curious, what was one thing where your co founder 478 00:27:48,876 --> 00:27:50,436 Speaker 1: convinced you that you were wrong? 479 00:27:57,156 --> 00:28:01,556 Speaker 2: Never happened. It happened so frequently that trying to think 480 00:28:01,596 --> 00:28:08,356 Speaker 2: of a good example. He is, my co founder is 481 00:28:09,436 --> 00:28:15,236 Speaker 2: Ryan is this incredible engineering brain, and he has this 482 00:28:16,036 --> 00:28:21,516 Speaker 2: great way of distilling problems down into their core elements 483 00:28:21,516 --> 00:28:26,476 Speaker 2: and then just meticulously solving each one. And the memory 484 00:28:26,476 --> 00:28:28,836 Speaker 2: that comes back to me is when we first started ARC, 485 00:28:30,796 --> 00:28:36,876 Speaker 2: I was shying away from technical challenges and saying, hey, 486 00:28:36,876 --> 00:28:39,556 Speaker 2: we should get you know, help here, buy this thing 487 00:28:39,596 --> 00:28:44,516 Speaker 2: off the shelf or whatever else. And he has a 488 00:28:44,636 --> 00:28:47,316 Speaker 2: multiple points convinced me that we could do it, and 489 00:28:47,356 --> 00:28:50,476 Speaker 2: it ended up being way harder than he thought, but 490 00:28:50,556 --> 00:28:53,836 Speaker 2: we did it and it was certainly better for the business. 491 00:28:53,836 --> 00:28:56,316 Speaker 2: And you know, one of those examples was how quickly 492 00:28:56,796 --> 00:29:00,476 Speaker 2: we integrated the battery pack into like, you know, doing 493 00:29:00,556 --> 00:29:03,836 Speaker 2: the battery packs ourselves. I thought that we wanted to 494 00:29:05,036 --> 00:29:07,116 Speaker 2: work for at least a couple of years before we 495 00:29:07,196 --> 00:29:10,756 Speaker 2: really decided to bring battery packs in house. We ended 496 00:29:10,836 --> 00:29:14,476 Speaker 2: up doing it within months of starting the company, given 497 00:29:14,516 --> 00:29:18,276 Speaker 2: the challenges that we saw on procuring off the shelf options. 498 00:29:18,356 --> 00:29:21,116 Speaker 2: And he convinced me of that. 499 00:29:22,156 --> 00:29:24,236 Speaker 1: What's the dumbest thing you ever did on a boat? 500 00:29:24,316 --> 00:29:25,516 Speaker 2: I am not going to answer that. 501 00:29:27,796 --> 00:29:28,196 Speaker 1: Second. 502 00:29:34,436 --> 00:29:37,756 Speaker 2: We used to for the Fourth of July, we would 503 00:29:37,796 --> 00:29:42,156 Speaker 2: go out and watch the fireworks from a boat and 504 00:29:42,316 --> 00:29:45,276 Speaker 2: you could bring your own fireworks. This was I think 505 00:29:45,316 --> 00:29:47,996 Speaker 2: back at a different time where maybe this was legal. 506 00:29:49,356 --> 00:29:51,316 Speaker 1: Or maybe you just I don't. 507 00:29:51,276 --> 00:29:57,276 Speaker 2: Know, I don't want to perjure myself here. So you'd 508 00:29:57,316 --> 00:29:59,436 Speaker 2: go out on these boats and you could watch the 509 00:29:59,476 --> 00:30:04,396 Speaker 2: fireworks they lit off this incredible firework show in LowDye, California, 510 00:30:04,476 --> 00:30:07,836 Speaker 2: and people would bring their own fireworks and kind of 511 00:30:07,836 --> 00:30:11,996 Speaker 2: push them out on like basically launch them off of 512 00:30:12,036 --> 00:30:16,756 Speaker 2: their own boat. And let's just say that that was 513 00:30:16,796 --> 00:30:18,636 Speaker 2: some of the dumber things you've done on a boat 514 00:30:18,676 --> 00:30:19,556 Speaker 2: for fair. 515 00:30:19,956 --> 00:30:23,636 Speaker 1: Fair. What's one thing you know about boats now that 516 00:30:23,716 --> 00:30:25,356 Speaker 1: you didn't know when you started the company. 517 00:30:26,556 --> 00:30:30,556 Speaker 2: The thing that I've learned is that boat building is 518 00:30:30,596 --> 00:30:33,876 Speaker 2: so much more of a craft than I appreciated at 519 00:30:33,916 --> 00:30:34,236 Speaker 2: the time. 520 00:30:34,916 --> 00:30:36,516 Speaker 1: What do you mean when you say craft? 521 00:30:36,556 --> 00:30:41,196 Speaker 2: The whole construction in particular, is is just this art 522 00:30:41,276 --> 00:30:45,196 Speaker 2: form that there's no no. 523 00:30:46,716 --> 00:30:50,436 Speaker 1: A hall being just like the bottom of the interacting 524 00:30:50,476 --> 00:30:56,436 Speaker 1: with the water. Yeah, that that's it's such an interesting 525 00:30:56,596 --> 00:31:02,916 Speaker 1: design challenge because there's no free winnings. You can you 526 00:31:02,916 --> 00:31:05,716 Speaker 1: can make a boat more efficient so that you don't 527 00:31:05,716 --> 00:31:08,716 Speaker 1: have to use as much power to move over the water, 528 00:31:09,236 --> 00:31:14,476 Speaker 1: but you sacrifice something else. It gets, you know, bumpier 529 00:31:14,516 --> 00:31:17,236 Speaker 1: when you're right at it's not as smooth of a ride, 530 00:31:18,316 --> 00:31:21,916 Speaker 1: or that it lets more water in the wetness of 531 00:31:21,996 --> 00:31:25,516 Speaker 1: it is worse, doesn't chop through waves as well like 532 00:31:25,796 --> 00:31:29,596 Speaker 1: they are all these tradeoffs that you're making, how it 533 00:31:29,636 --> 00:31:34,876 Speaker 1: comes up on up to speed changes, and you know 534 00:31:35,476 --> 00:31:37,636 Speaker 1: how high up the bow is when it's going through 535 00:31:37,676 --> 00:31:40,716 Speaker 1: the water. All of these things are trade offs that 536 00:31:40,716 --> 00:31:42,756 Speaker 1: you're making in the design of that and then you 537 00:31:42,796 --> 00:31:45,596 Speaker 1: translate that into the construction side. And one of the 538 00:31:45,636 --> 00:31:50,316 Speaker 1: things I've learned is boat and whole construction in particular 539 00:31:50,956 --> 00:31:56,676 Speaker 1: is kind of like cooking, where you can have this 540 00:31:57,676 --> 00:31:59,556 Speaker 1: recipe in front of you, and if you're a brand 541 00:31:59,596 --> 00:32:02,556 Speaker 1: new cook you've never cooked before, you're going to mess 542 00:32:02,556 --> 00:32:05,756 Speaker 1: that recipe up somehow. It's temperature sensitive and maybe you 543 00:32:05,756 --> 00:32:08,876 Speaker 1: get the temperature wrong, it's humidity sensitive, maybe you get that. 544 00:32:09,916 --> 00:32:11,996 Speaker 1: You taste it and you're not really sure why it's 545 00:32:12,036 --> 00:32:15,716 Speaker 1: not quite tasting good. If you're a chef that's been 546 00:32:15,716 --> 00:32:18,196 Speaker 1: doing this for twenty years, you could take a quick 547 00:32:18,196 --> 00:32:20,236 Speaker 1: glance at the recipe and you don't even need to 548 00:32:20,236 --> 00:32:22,236 Speaker 1: look at it because you're doing everything by feel. And 549 00:32:22,276 --> 00:32:24,716 Speaker 1: you could look at imperfections in the side of a 550 00:32:24,716 --> 00:32:28,116 Speaker 1: boat and know, even though they look identical to somebody 551 00:32:28,156 --> 00:32:30,916 Speaker 1: with an untrained eye, you know how to fix them. 552 00:32:30,956 --> 00:32:32,876 Speaker 1: And they're two different ways to fix them. One is 553 00:32:32,916 --> 00:32:33,556 Speaker 1: you buff them out. 554 00:32:33,596 --> 00:32:35,436 Speaker 2: The other is, hey, you need to actually go apply 555 00:32:35,556 --> 00:32:39,476 Speaker 2: more jelcoat to it or something. It's such a craft 556 00:32:39,596 --> 00:32:42,196 Speaker 2: in that way, and it was an underappreciated part. I 557 00:32:42,236 --> 00:32:46,716 Speaker 2: came in thinking, oh, well, you know we're gonna reason 558 00:32:46,756 --> 00:32:50,276 Speaker 2: from first principles about all of this. And I have 559 00:32:50,276 --> 00:32:52,716 Speaker 2: a much stronger appreciation for the marine industry. 560 00:32:54,036 --> 00:32:56,516 Speaker 1: So does that mean on every boat you need a 561 00:32:56,596 --> 00:32:59,836 Speaker 1: sort of master craftsman? Not every model, but like every 562 00:32:59,916 --> 00:33:03,156 Speaker 1: single one. The one of the things we're doing on 563 00:33:03,196 --> 00:33:06,676 Speaker 1: the production side, So production, I draw the analogy to 564 00:33:06,796 --> 00:33:13,356 Speaker 1: Ikia furniture. That production is run kind of like assembling 565 00:33:13,396 --> 00:33:14,636 Speaker 1: a piece of Ikea furniture. 566 00:33:14,996 --> 00:33:17,956 Speaker 2: You have this set of instructions and this set of 567 00:33:17,996 --> 00:33:21,276 Speaker 2: parts that you've come with, and you read the instructions 568 00:33:21,276 --> 00:33:24,316 Speaker 2: and you go put the parts on. If you think 569 00:33:24,356 --> 00:33:27,156 Speaker 2: about how do you speed up that process, Well, one 570 00:33:27,196 --> 00:33:30,436 Speaker 2: way is you just get practice at it. If you 571 00:33:30,436 --> 00:33:32,796 Speaker 2: go assemble the same piece of Ikea furniture a bunch 572 00:33:32,836 --> 00:33:35,236 Speaker 2: of different times, then you're just going to get better 573 00:33:35,276 --> 00:33:35,516 Speaker 2: at it. 574 00:33:36,076 --> 00:33:38,716 Speaker 1: Yeah, or even different pieces. Right, I can't have certain 575 00:33:38,836 --> 00:33:41,676 Speaker 1: moves Like I've put together a lot of Ikea furniture. 576 00:33:41,716 --> 00:33:43,316 Speaker 1: I'm like, oh, I know this move it's the thing 577 00:33:43,356 --> 00:33:44,956 Speaker 1: that goes exact exactly turn it. 578 00:33:45,796 --> 00:33:48,796 Speaker 2: So some of it is just that. But then you're like, okay, well, 579 00:33:48,836 --> 00:33:51,236 Speaker 2: but now I need to I need to ten x 580 00:33:51,316 --> 00:33:53,076 Speaker 2: the number of people that are doing this, and I 581 00:33:53,116 --> 00:33:54,716 Speaker 2: want all of them to do it consistently. 582 00:33:55,636 --> 00:33:59,436 Speaker 1: They will have lower skill, right, It's the classic production problem, 583 00:33:59,476 --> 00:34:01,796 Speaker 1: like how can someone who is not a master chef 584 00:34:01,836 --> 00:34:03,396 Speaker 1: who doesn't know the craft. 585 00:34:03,516 --> 00:34:05,156 Speaker 2: Do a good job. So then you go back to 586 00:34:05,236 --> 00:34:07,036 Speaker 2: the instructions themselves and you're like, oh, well, if I 587 00:34:07,076 --> 00:34:10,636 Speaker 2: write better instructions, then yeah, I can make this process 588 00:34:12,316 --> 00:34:14,116 Speaker 2: move more quickly. And then you're like, great, now I've 589 00:34:14,116 --> 00:34:16,036 Speaker 2: got good instructions and people are starting to get reps 590 00:34:16,036 --> 00:34:17,556 Speaker 2: on it, and then you're like there's a missing part. 591 00:34:17,796 --> 00:34:21,156 Speaker 2: Oh no, everything kind of breaks down. And that's why 592 00:34:21,316 --> 00:34:23,716 Speaker 2: you know, sometimes you know, I care furniture, You'll see 593 00:34:24,236 --> 00:34:26,916 Speaker 2: you end up with a few extra you know, bolts 594 00:34:26,996 --> 00:34:29,716 Speaker 2: or something, and it's because they stalked extra because they 595 00:34:29,756 --> 00:34:32,196 Speaker 2: really do not want you to be short a bolt 596 00:34:32,276 --> 00:34:36,676 Speaker 2: because that's painful, annoying, frustrating for everyone. Yeah, we're trying 597 00:34:36,676 --> 00:34:39,076 Speaker 2: to do that same thing on the whole construction, the 598 00:34:39,156 --> 00:34:42,156 Speaker 2: craft part of this, but it's a challenge. So the 599 00:34:42,196 --> 00:34:45,276 Speaker 2: way that to answer your question of do you need 600 00:34:45,356 --> 00:34:49,676 Speaker 2: that kind of chef equivalent on every boat we produce, 601 00:34:50,076 --> 00:34:53,156 Speaker 2: the answer is today more or less yes. And what 602 00:34:53,196 --> 00:34:55,716 Speaker 2: we're trying to do is distill some of that knowledge 603 00:34:55,756 --> 00:35:00,356 Speaker 2: into better work constructions, better processes that allow us to 604 00:35:00,396 --> 00:35:02,916 Speaker 2: do this repeatably, even if you're coming in without a 605 00:35:02,916 --> 00:35:04,996 Speaker 2: lot of prior experience of doing this. 606 00:35:06,116 --> 00:35:10,956 Speaker 1: That's a really interesting kind of process in engineering. Problem 607 00:35:11,036 --> 00:35:14,356 Speaker 1: it is and it's a challenge, and we have learned 608 00:35:14,396 --> 00:35:16,556 Speaker 1: a ton about this and still have so much more 609 00:35:16,596 --> 00:35:19,676 Speaker 1: to learn. And I like to think that two years 610 00:35:19,676 --> 00:35:21,356 Speaker 1: from now we will look back at where we're at 611 00:35:21,396 --> 00:35:23,316 Speaker 1: today and think, Wow. 612 00:35:23,076 --> 00:35:30,156 Speaker 2: We had no idea. 613 00:35:30,436 --> 00:35:33,876 Speaker 1: Mitch Lee is the co founder and CEO of ARC Boats. 614 00:35:34,636 --> 00:35:37,996 Speaker 1: Please email us at problem at pushkin dot fm. We 615 00:35:38,036 --> 00:35:41,756 Speaker 1: are always looking for new guests for the show. Today's 616 00:35:41,756 --> 00:35:45,596 Speaker 1: show was produced by Trinamanino and Gabriel Hunter Chang. It 617 00:35:45,756 --> 00:35:49,596 Speaker 1: was edited by Alexander Garretton and engineered by Sarah Bruguier. 618 00:35:49,956 --> 00:35:52,076 Speaker 1: I'm Jacob Goldstein and we'll be back next week with 619 00:35:52,156 --> 00:35:59,436 Speaker 1: another episode of What's Your Problem