WEBVTT - What an American Stove Maker Wants You to Know About US Manufacturing 0:00:02.720 --> 0:00:13.960 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.480 --> 0:00:22.400 Hello and welcome to another episode of the Odd Lots podcast. 0:00:22.520 --> 0:00:24.919 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:25.200 --> 0:00:28.000 Tracy, I think one of the most interesting dynamics going 0:00:28.040 --> 0:00:30.800 on right now is that you have a White House 0:00:30.840 --> 0:00:33.400 and a lot of people in both parties, but specifically 0:00:33.440 --> 0:00:36.199 the White House right now, that are very set on 0:00:36.720 --> 0:00:41.040 reindustrializing manufacturing in the US. At the same time, actually 0:00:41.200 --> 0:00:45.240 existing US manufacturers are talking about, Wait, everything you're talking 0:00:45.240 --> 0:00:47.519 about is throwing our business into extreme chaos. 0:00:47.640 --> 0:00:50.519 Yeah, and we've had a lot of anecdotal evidence so 0:00:50.640 --> 0:00:53.680 far of this happening. So we've already mentioned at this 0:00:53.760 --> 0:00:57.120 point the Dallas Fed Energy Survey and a bunch of 0:00:57.200 --> 0:01:00.720 businesses in the oil patch saying that things are slowing down, 0:01:00.960 --> 0:01:05.319 they're having difficulty planning for long term capital investments. There 0:01:05.400 --> 0:01:08.400 was one anonymous company that basically said they were asked 0:01:08.440 --> 0:01:12.480 by a Canadian client if they could move production to Canada, 0:01:12.600 --> 0:01:16.160 which again seems to be the opposite of what you 0:01:16.200 --> 0:01:20.119 would assume the Trump administration is trying to achieve here. 0:01:20.920 --> 0:01:24.960 We've talked to Rian Peterson about factories slowing down production 0:01:25.160 --> 0:01:27.559 and things like that. And I think the big question 0:01:27.640 --> 0:01:31.280 here is, Okay, tariffs are on pause, but are we 0:01:31.360 --> 0:01:36.080 going to see lingering issues, lingering uncertainty because the assumption 0:01:36.720 --> 0:01:40.520 of business people is Trump could always turn them back 0:01:40.560 --> 0:01:43.160 on he could always start threatening them. And then the 0:01:43.200 --> 0:01:46.400 other thing I would ask is, there's actually so many 0:01:46.720 --> 0:01:49.160 questions that you could ask about all of this. But 0:01:49.320 --> 0:01:52.280 Trump keeps talking about how he wants to do both 0:01:52.560 --> 0:01:57.520 basic industrial manufacturing in the US, but also every once 0:01:57.560 --> 0:01:59.520 in a while he talks about, you know, doing really 0:01:59.840 --> 0:02:04.280 advanced stuff, and he wants to do everything I guess, 0:02:04.320 --> 0:02:07.080 and it seems really difficult to me to thread the 0:02:07.120 --> 0:02:11.760 needle between like very expensive high tech stuff where you 0:02:11.800 --> 0:02:14.919 have to pay people a lot, and then very I 0:02:14.919 --> 0:02:17.560 don't want to say it's cheap, because factories still cost 0:02:17.639 --> 0:02:20.680 quite a lot, but less expensive basic stuff. 0:02:20.720 --> 0:02:22.000 I don't know. Here's the thing. 0:02:22.480 --> 0:02:24.600 I want to set up a factory in the United 0:02:24.600 --> 0:02:26.560 States that's at the cutting edge of production. 0:02:26.840 --> 0:02:27.560 But some of the. 0:02:27.440 --> 0:02:29.600 Tools I might need for my factory might be made 0:02:29.639 --> 0:02:32.080 in Germany, or maybe they're made in China or Vietnam. 0:02:32.200 --> 0:02:34.680 And this seems like an issue. A couple of days ago, 0:02:34.720 --> 0:02:37.320 we had headlines a company called has, which I have 0:02:37.360 --> 0:02:39.040 to admit I had not heard of. They make c 0:02:39.200 --> 0:02:43.079 and see lathes talking about how they were like canceling 0:02:43.480 --> 0:02:46.480 over time, pausing all hiring, et cetera. Anyway, remember we 0:02:46.480 --> 0:02:50.040 were out in San Francisco and we visited Impulse Labs. 0:02:50.200 --> 0:02:53.120 They make that amazing stove. We had this great steak 0:02:53.200 --> 0:02:54.680 and boils water in like two seconds. 0:02:54.760 --> 0:02:55.639 Oh, it was so good. 0:02:55.800 --> 0:02:58.360 Like that stove seemed like one of those products that 0:02:58.400 --> 0:03:01.960 I would expect to see on TikTok from a Chinese 0:03:02.000 --> 0:03:04.440 propaganda video about how good they have it over here. 0:03:04.560 --> 0:03:06.840 But it's actually an American company like that, I said, 0:03:06.840 --> 0:03:09.840 think it actually exists here, and I kind of want 0:03:09.840 --> 0:03:12.040 to know what building that stove is like in a 0:03:12.080 --> 0:03:13.119 world of teriff. 0:03:12.880 --> 0:03:15.640 Yeah, and looking back on it now that we have 0:03:15.720 --> 0:03:18.680 Trump as president, there are a bunch of broader themes 0:03:18.720 --> 0:03:21.919 that it definitely touches on. So it's an electric stove, 0:03:22.040 --> 0:03:25.639 as you mentioned, electric battery in it. Yeah, electric versus 0:03:25.639 --> 0:03:28.280 gas has been in the midst of the culture war 0:03:28.480 --> 0:03:31.640 at various times recently. But then also it feeds into 0:03:31.639 --> 0:03:36.400 green technology. We're not really certain how Trump feels about 0:03:36.440 --> 0:03:40.080 green tech. He wants America to do cool stuff, presumably 0:03:40.120 --> 0:03:45.120 make cool products, but does that include electric things, batteries, 0:03:45.240 --> 0:03:47.400 green stuff? Again, I don't know. 0:03:47.720 --> 0:03:49.720 Well, let's find out some more. 0:03:50.360 --> 0:03:53.280 He cooked us an amazing steak several months ago, but 0:03:53.440 --> 0:03:55.800 now we're not tager steak. We're talking about the reality 0:03:55.800 --> 0:03:59.280 of us manufacturing. Back on the show, Sam Dimico, founder 0:03:59.320 --> 0:04:02.840 and CEO of Impulse Labs. Sam, thanks for joining us. 0:04:03.000 --> 0:04:05.400 Yeah, good morning everyone. It's been a fun week or so. 0:04:06.800 --> 0:04:09.600 I'm enjoying it in the news business. If you're having fun, 0:04:09.640 --> 0:04:12.080 I'm at least relieved that someone in industry is also 0:04:12.440 --> 0:04:15.800 enjoying it. Let's start with this question. Listeners can go 0:04:15.880 --> 0:04:18.159 back and check out our episode where we ate this 0:04:18.240 --> 0:04:20.560 amazing steak, and like I said, you make this amazing 0:04:20.600 --> 0:04:22.320 stove and it hits a battery in it and boils 0:04:22.400 --> 0:04:24.560 water in two seconds and it will never burn an egg. 0:04:24.839 --> 0:04:27.440 All this stuff, but just describe, like what do you 0:04:27.440 --> 0:04:30.520 build here? And what are the inputs of the stove, 0:04:31.120 --> 0:04:33.400 where do they come from? And then what do you assemble? 0:04:33.560 --> 0:04:35.400 So this is a really good question because you'll you 0:04:35.480 --> 0:04:37.839 might see how my brain works, because I'll like build 0:04:37.839 --> 0:04:39.960 it up from the base lego layer up. I'll try 0:04:40.000 --> 0:04:42.080 to avoid that because our listeners love this stuff. 0:04:42.160 --> 0:04:42.360 Yeah. 0:04:42.440 --> 0:04:46.479 Basically, think of this like you mashed a Tesla power wall, 0:04:47.080 --> 0:04:50.440 so like a Tesla home battery product with an induction 0:04:50.600 --> 0:04:55.360 stove with like a tablet computer, and then a bunch 0:04:55.360 --> 0:04:58.480 of sensor technology that requires us to do custom ceramic 0:04:58.520 --> 0:05:01.880 parts and other things that aren't in the normal induction 0:05:01.960 --> 0:05:02.920 stove supply chain. 0:05:03.520 --> 0:05:05.200 So that sounds like a lot. 0:05:05.279 --> 0:05:07.719 And what that means is the surface area of the 0:05:07.800 --> 0:05:10.920 types of stuff we touch as inputs is quite substantial. 0:05:10.960 --> 0:05:12.720 It is probably the best way to put it. It's 0:05:12.760 --> 0:05:18.359 like everything from lithium ion battery cells all the way 0:05:18.680 --> 0:05:22.000 to those customer ceramic parts in our temperature sensor which 0:05:22.080 --> 0:05:26.240 lets you hold exact temperature in the pan, to like chips, 0:05:26.279 --> 0:05:28.120 some of which are made in the United States, but 0:05:28.760 --> 0:05:30.960 most are not packaged in the United States, if that 0:05:30.960 --> 0:05:31.560 makes any sense. 0:05:31.600 --> 0:05:31.800 Yep. 0:05:32.279 --> 0:05:35.080 So where are you actually getting these things from? Like 0:05:35.200 --> 0:05:38.600 walk us through I guess the evolution of your suppliers, 0:05:38.640 --> 0:05:41.040 because I imagine it must have changed a little bit 0:05:41.120 --> 0:05:41.599 over time. 0:05:41.839 --> 0:05:43.880 Yeah, so I'll go through kind of like the transition 0:05:43.920 --> 0:05:45.680 of the company, because this is like key to kind 0:05:45.720 --> 0:05:49.160 of understanding how to build complex hardware. There's an Elon 0:05:49.600 --> 0:05:51.840 tweet I think it's actually a reply, but it's buried 0:05:51.839 --> 0:05:54.160 in the replies, but basically says the factory is the product. 0:05:54.920 --> 0:05:58.919 And this is incredibly true, where basically your supply chain 0:05:59.480 --> 0:06:01.960 is how you build stuff. It's kind of like you're 0:06:02.000 --> 0:06:06.000 picking a bin of legos effectively, and those legos may 0:06:06.040 --> 0:06:08.320 mostly already exist, and you try to minimize the number 0:06:08.360 --> 0:06:10.640 of new parts you have to make because like making 0:06:10.680 --> 0:06:12.960 a new Lego brick is complicated and requires you to 0:06:12.960 --> 0:06:15.120 make a new injection mold in that case. But if 0:06:15.120 --> 0:06:16.840 you've got a bin of legos, and that bin of 0:06:16.920 --> 0:06:20.600 legos is expansive and cheap, and then there's a lot 0:06:20.640 --> 0:06:23.000 of experience with team knowing how to put those legos together, 0:06:23.480 --> 0:06:26.599 like you have huge tailwinds and advantages. So basically first 0:06:26.640 --> 0:06:29.360 year or so of the company, we essentially built prototypes 0:06:29.400 --> 0:06:32.039 of like what we expected to need. And so the 0:06:32.080 --> 0:06:34.400 example there would be like we built like a single 0:06:35.240 --> 0:06:39.080 heating element temperature controlled stove prototype that ran off a 0:06:39.080 --> 0:06:42.039 battery that we sourced from like some low volume battery 0:06:42.080 --> 0:06:45.320 manufacturer or build ourselves. We needed to get the architecture right. 0:06:45.360 --> 0:06:47.560 We needed to know how to build the product like 0:06:47.600 --> 0:06:50.039 from a like it's almost like the specs you see 0:06:50.200 --> 0:06:52.719 on like best buy dot com. You kind of needed 0:06:52.720 --> 0:06:54.960 to figure out what those were and maybe some of 0:06:54.960 --> 0:06:57.320 the high level stuff and also enough to tell like 0:06:57.360 --> 0:07:00.520 your industrial designer and industrial designer is like the Johnny 0:07:00.520 --> 0:07:04.200 Ive type character that like defines how the product looks 0:07:04.279 --> 0:07:07.120 and feels and kind of like the interaction model and 0:07:07.120 --> 0:07:07.719 stuff like that. 0:07:08.000 --> 0:07:09.640 So we need to do that prototyping. 0:07:09.880 --> 0:07:12.160 But then at that point we basically were like, Okay, 0:07:12.320 --> 0:07:14.800 we know what we're going to make roughly, we don't 0:07:14.800 --> 0:07:17.080 know how we're going to make it exactly. Let's go 0:07:17.160 --> 0:07:21.040 start talking to what I call contract manufacturers to like 0:07:21.200 --> 0:07:24.680 help us basically bring this thing to production. And we're 0:07:24.720 --> 0:07:28.160 still like around twenty five people as a small team. 0:07:28.200 --> 0:07:30.040 There's a couple of different ways to actually go and 0:07:30.080 --> 0:07:32.440 design and build a product, and I think this is 0:07:32.480 --> 0:07:35.440 something that is not well understood even by hardware founders 0:07:35.440 --> 0:07:38.720 in many cases. So if you're a defense tech founder, 0:07:38.760 --> 0:07:40.640 your options are cut out for you because you can't 0:07:40.920 --> 0:07:43.560 go overseas and have a Chinese company or a cream 0:07:43.600 --> 0:07:46.960 company or a Taiwanese company co design the product. 0:07:47.000 --> 0:07:49.440 With you because that violet export controls. 0:07:49.640 --> 0:07:51.760 So you see hardware founders talk about this, there's kind 0:07:51.760 --> 0:07:53.000 of a I would I would almost call it like 0:07:53.040 --> 0:07:56.160 a split between folks that can use the consumer hardware 0:07:56.440 --> 0:07:58.400 supply chains and folks who can't. 0:07:59.000 --> 0:08:01.920 And so base we had kind of a choice. 0:08:01.920 --> 0:08:04.960 We'd go to like appliance contract manufacturer, or we could 0:08:05.000 --> 0:08:08.440 go to a consumer electronics contract manufacturer. And we basically 0:08:08.440 --> 0:08:11.360 realized it was easier to teach the consumer electronics guys 0:08:11.680 --> 0:08:13.920 how to do the specific appliance stuff because a lot 0:08:13.920 --> 0:08:17.040 of this faciliar plant stuff is handling large sheet metal 0:08:17.040 --> 0:08:19.240 parts and like big boxes and stuff like that. 0:08:19.520 --> 0:08:20.200 So we went to a. 0:08:20.160 --> 0:08:25.240 Consumer electronics manufacturer and then effectively co opted their entire R. 0:08:25.160 --> 0:08:27.400 And D team to help US co design the product. 0:08:29.120 --> 0:08:32.920 But the advantage of this approach is that we got 0:08:32.960 --> 0:08:35.559 to essentially co design it through their supply chain and 0:08:35.600 --> 0:08:38.720 their existing supplier relationships. We did not have to boot 0:08:38.800 --> 0:08:41.319 up that from scratch, which would have taken us I 0:08:41.360 --> 0:08:43.880 don't know, fifty to one hundred people, because we would 0:08:43.920 --> 0:08:46.320 have had, like, there's all these subdisciplines in hardware, and 0:08:46.360 --> 0:08:48.520 even if you only need to fractionally use them, like 0:08:48.840 --> 0:08:51.320 use zero point one percent of them or something like that. Well, 0:08:51.360 --> 0:08:53.160 that would be one headcount if you did it in 0:08:53.200 --> 0:08:55.200 the United States, or did it or even if you 0:08:55.200 --> 0:08:57.200 did it in Mexico and just were going alone. And 0:08:57.240 --> 0:08:59.200 so that's how we've actually been able to maintain a 0:08:59.200 --> 0:08:59.880 really small team. 0:09:00.000 --> 0:09:03.400 So I'm guessing the it sounds like the appliance manufacturer 0:09:03.400 --> 0:09:07.360 I'm guessing is in China. Talk to us about what 0:09:07.480 --> 0:09:12.080 is the You know, there is this existing manufacturing tech 0:09:12.120 --> 0:09:14.679 supply chain in the United States, as you said, it's 0:09:14.679 --> 0:09:18.400 centered around defense for good reason. You can't outsource that stuff. 0:09:18.880 --> 0:09:21.840 Talk to us about that capacity that exists in the 0:09:21.920 --> 0:09:25.000 United States currently or that could you know, like we 0:09:25.080 --> 0:09:27.960 hear the Gundo and all of these defense tech companies 0:09:27.960 --> 0:09:31.040 in southern California that are doing cool stuff. Talk to 0:09:31.120 --> 0:09:32.640 us about like these different options. 0:09:32.840 --> 0:09:33.080 Yeah. 0:09:33.120 --> 0:09:35.120 So I'm a friend and investor with a number of 0:09:35.120 --> 0:09:37.840 these folks. So it's actually really interesting to be like, look, 0:09:37.880 --> 0:09:41.560 what they're doing is admirable, but the volumes here are 0:09:41.880 --> 0:09:44.880 different by orders of magnitude. Okay, so let's actually put 0:09:44.920 --> 0:09:47.080 startups on the shelf, because instantly the startups will need 0:09:47.160 --> 0:09:50.160 like substantial public private partnership money to really scale, so 0:09:50.200 --> 0:09:52.000 it's a volume and some of that stuff is actually, 0:09:52.200 --> 0:09:54.880 to my knowledge is like potentially forthcoming, which is pretty exciting. 0:09:55.320 --> 0:09:58.080 But I need capacity now, so where would I go 0:09:58.120 --> 0:10:00.440 in the US to do it? And it's basically there's 0:10:00.480 --> 0:10:03.600 a couple different categories of contract manufacturer in the United States. 0:10:04.080 --> 0:10:07.480 The most famous ones are Jabel and Flextronics, and I 0:10:07.520 --> 0:10:09.640 actually this is over ten years ago. I've worked with 0:10:09.679 --> 0:10:13.080 Jabel on a project that was a I'll be ambiguous here, 0:10:13.160 --> 0:10:14.760 but you can figure it out if you poke a bit, 0:10:14.760 --> 0:10:19.800 but a ambitious ahead of its time augmented reality project okay, 0:10:19.840 --> 0:10:22.640 but effectively like there was a decision to make something 0:10:22.679 --> 0:10:25.240 like this in the United States. Also, Motorola successfully did 0:10:25.240 --> 0:10:26.760 a bunch of stuff in the United States as well, 0:10:27.080 --> 0:10:31.040 and historically always did. The issue is into the twenty tens, 0:10:31.040 --> 0:10:33.760 and this must be a I think the Great Financial 0:10:33.800 --> 0:10:37.080 Crisis was actually a much bigger story to this than 0:10:37.320 --> 0:10:40.200 any sort of like China trade policy decision. It was 0:10:40.240 --> 0:10:43.400 like the Great Financial Crisis plus China blasting through with 0:10:43.480 --> 0:10:47.880 investment in manufacturing was the real story. But effectively, none 0:10:47.920 --> 0:10:50.160 of these companies deal with startups anymore or if they do, 0:10:50.240 --> 0:10:51.679 it's specific kind of thing. 0:10:52.559 --> 0:10:55.600 So I remember when we were in San Francisco and 0:10:55.720 --> 0:10:58.440 you were making that very very good stake for us. 0:10:58.880 --> 0:11:01.880 We asked you about tariffs, right because they were already 0:11:02.120 --> 0:11:06.400 floating around, given what was happening with election odds between 0:11:07.120 --> 0:11:10.640 Trump and his competitor, and now here we are. 0:11:10.760 --> 0:11:10.920 Well. 0:11:11.000 --> 0:11:13.559 I think at the time we were talking about twenty percent, 0:11:14.360 --> 0:11:18.960 and you seemed kind of like confident that you could 0:11:19.000 --> 0:11:22.160 handle that. I think you said that that was your 0:11:22.200 --> 0:11:24.679 assumption that we were going to have tariffs, and that 0:11:24.880 --> 0:11:27.440 if they came online, you were going to be prepared, 0:11:27.480 --> 0:11:29.720 and you'd already been doing some stuff to handle it. 0:11:30.640 --> 0:11:34.960 I know what we've seen on China is dramatically higher 0:11:35.080 --> 0:11:40.120 than twenty percent so far, but how well positioned do 0:11:40.200 --> 0:11:42.360 you feel for something like that? 0:11:42.760 --> 0:11:44.880 Yeah, So I have a funny story, is one of 0:11:44.920 --> 0:11:50.040 our key suppliers cut prices enough to almost compensate for 0:11:50.160 --> 0:11:52.600 these tariffs as it. So China's reaction to some of this, 0:11:52.679 --> 0:11:53.840 by the way, is like I don't know if it's 0:11:53.840 --> 0:11:57.640 state subsidy or like they're viewing this stuff as temporary 0:11:57.640 --> 0:11:59.680 and like some of these let's call it well funded 0:11:59.679 --> 0:12:02.200 companies is like, no, they can power through it and 0:12:02.200 --> 0:12:05.559 not upset their existing supply relationships. But my sense is 0:12:05.679 --> 0:12:08.440 like there's something else that people aren't really factoring in, 0:12:08.440 --> 0:12:11.840 which is just how expensive the US is versus everything else. So, like, 0:12:12.440 --> 0:12:14.760 we got a lot of requests from consumers for like 0:12:15.280 --> 0:12:17.240 they're like, I have a thirty six inch stove, but 0:12:17.280 --> 0:12:18.640 I want to take it out and put an impulse in, 0:12:18.640 --> 0:12:19.400 which is thirty inch. 0:12:19.679 --> 0:12:20.960 How do you solve that problem? 0:12:21.160 --> 0:12:23.960 So we ended up designing and building an adapter that 0:12:24.040 --> 0:12:25.720 you can just put in and then you put our 0:12:25.800 --> 0:12:28.320 thirty inch stoven and it looks pretty nice too, And hopefully 0:12:28.320 --> 0:12:30.640 that goes on the website relatively soon. But I'm maybe 0:12:30.640 --> 0:12:33.679 spoiling this from marketing team. But basically we quoted that 0:12:33.720 --> 0:12:35.240 out in the US because we're like, this is a 0:12:35.280 --> 0:12:37.000 stamped sheet metal part, we should just be able to 0:12:37.040 --> 0:12:39.680 do that. In the US, that's simple seven hundred dollars, 0:12:40.040 --> 0:12:42.160 and it was like sub two hundred in China. So 0:12:42.440 --> 0:12:44.719 from a tariff standpoint, I don't know, Trump needs to 0:12:44.800 --> 0:12:46.520 up to hundre percent or something like that. 0:12:46.600 --> 0:12:50.400 So this is the headline American manufacturer who is heavily 0:12:50.480 --> 0:12:53.600 reliant on Chinese parts. Trump increased the terriff for three 0:12:53.679 --> 0:12:55.960 hundred percent. Now I'm just kidding, but anyway, go on, 0:12:56.080 --> 0:12:56.320 go on. 0:12:56.600 --> 0:12:58.400 But that's that's a simple seat metal part and you 0:12:58.440 --> 0:13:00.439 can imagine simple shoot. Yeah, And then I kind of 0:13:00.520 --> 0:13:03.120 like was like why and this was a Bay Area vendor. 0:13:03.480 --> 0:13:06.400 I won't dox them because they're actually great, but who 0:13:06.440 --> 0:13:09.280 are their customers? And it's like, if your customers are 0:13:09.320 --> 0:13:14.600 like Google street view vehicles, medical device companies that make 0:13:14.720 --> 0:13:18.679 like yeah, LiPo, like not liposeection, but those like cool. 0:13:18.400 --> 0:13:20.760 Sculpting machines, oh yeah, and like. 0:13:21.040 --> 0:13:26.360 Defense companies, you probably don't have cost sensitive customers. And 0:13:26.440 --> 0:13:28.559 the volumes and mixed level like when you get a 0:13:28.600 --> 0:13:30.520 big order from a customer, it's one hundred unit, it's 0:13:30.600 --> 0:13:34.400 not like one hundred thousand units. And so a lot 0:13:34.400 --> 0:13:39.480 of the US manufacturing capability is like exquisite and medium 0:13:39.559 --> 0:13:42.400 or low volume, or if it's high volume, it's incredibly 0:13:42.440 --> 0:13:46.720 automated and not retooling. So like, yeah, there's giant injection 0:13:46.800 --> 0:13:50.040 molding firms in the US that make like lawn shares 0:13:50.600 --> 0:13:53.440 or whatever, but like, good luck being able to call 0:13:53.440 --> 0:13:55.280 them up and being like can you make me like 0:13:55.360 --> 0:13:57.920 the underside enclosure for my stove or something like that. 0:13:57.920 --> 0:14:00.400 They'd be like, no, go away. So that's the point 0:14:00.400 --> 0:14:01.239 of like China. 0:14:01.080 --> 0:14:04.600 Being like extremely eager to take your business even if 0:14:04.640 --> 0:14:08.400 you're like a crank startup founder like me, versus the 0:14:08.520 --> 0:14:12.160 US being like almost like actively dissuading you from talking 0:14:12.160 --> 0:14:12.439 to them. 0:14:12.600 --> 0:14:15.240 I've heard this, Like people will say, like, you know, 0:14:15.320 --> 0:14:19.120 you can WhatsApp the uh maker of some factory owner 0:14:19.160 --> 0:14:21.400 at one in the morning. I saw some tweets about 0:14:21.400 --> 0:14:22.720 this at one in the chat. 0:14:22.800 --> 0:14:23.320 Yeah, and you can't. 0:14:23.360 --> 0:14:25.720 Yeah, you can chat the factory owner like one in 0:14:25.720 --> 0:14:27.000 the morning and they'll get back to you with a 0:14:27.040 --> 0:14:28.080 quote in like five minutes. 0:14:28.320 --> 0:14:28.760 Yeah. 0:14:28.880 --> 0:14:33.720 I've gotten battery vendors email me cold being and these 0:14:33.720 --> 0:14:36.400 guys like represent fairly large scale battery vendors. They're like 0:14:36.680 --> 0:14:38.880 email me cold and they're like, what's your spec? And 0:14:38.920 --> 0:14:41.160 I just like email them back like three lines and 0:14:41.200 --> 0:14:43.800 then I get like a quoted design from them. 0:14:43.920 --> 0:15:03.520 It's weird, okay, just on the pricing note, I mean, 0:15:03.560 --> 0:15:07.920 it does feel like the outlook for American inflation certainly 0:15:07.960 --> 0:15:12.920 depends on how companies decide to pass on or not 0:15:13.080 --> 0:15:16.720 pass on all these additional tariff costs. Do you get 0:15:16.720 --> 0:15:20.280 the sense that some of that depends on your relationship 0:15:20.320 --> 0:15:23.400 with your supplier and how important you are for that business. 0:15:23.440 --> 0:15:26.400 So I imagine, for instance, we've had news this week 0:15:26.440 --> 0:15:30.960 saying that Walmart is trying to negotiate even lower prices 0:15:31.160 --> 0:15:34.760 with its Chinese suppliers. I don't think it's been successful 0:15:35.320 --> 0:15:39.360 just yet, but you can imagine Walmart is a huge, huge, 0:15:39.440 --> 0:15:43.240 gigantic business and a really important one for a lot 0:15:43.280 --> 0:15:46.560 of Chinese companies. So maybe they'll end up being successful 0:15:46.560 --> 0:15:51.400 at it versus a startup that's only making a limited volume. 0:15:51.600 --> 0:15:54.640 Maybe the suppliers don't care about that business that much 0:15:55.000 --> 0:15:56.160 and we'll treat it differently. 0:15:56.640 --> 0:15:58.480 Yeah, So, I mean I think there's a couple questions 0:15:58.480 --> 0:16:03.120 going on too, because again, China runs a different industrial policy, 0:16:03.240 --> 0:16:05.080 Like there's kind of this debate on the tariff side, 0:16:05.120 --> 0:16:06.560 but it's like what is trying to actually do? And 0:16:06.680 --> 0:16:09.440 could we rerun their playbook? And it's like China has 0:16:09.440 --> 0:16:12.520 the equivalent of like state level champions. It's almost like 0:16:12.600 --> 0:16:16.000 bid is like Guandong Province's champion, so you can be 0:16:16.000 --> 0:16:19.000 like that's California's champion, and then c ATL is like 0:16:19.440 --> 0:16:22.240 Texas is champion kind of thing, and the money flows 0:16:22.280 --> 0:16:25.680 from this national government into the provincial governments. The provincial 0:16:25.680 --> 0:16:29.040 governments actually like are the ones helping boost a lot 0:16:29.040 --> 0:16:31.520 of these things because there's almost like delegated control. But 0:16:31.600 --> 0:16:33.680 what this means is there's an aspect of competition here 0:16:33.720 --> 0:16:37.840 where in China. It's not just like especially at the 0:16:37.880 --> 0:16:40.800 Walmart level, like you're in competition with your rival province 0:16:40.840 --> 0:16:41.640 to get that business. 0:16:41.840 --> 0:16:42.840 Oh yeah, yeah. 0:16:43.120 --> 0:16:46.040 This is a really important aspect of Chinese capitalism that 0:16:46.080 --> 0:16:50.480 I think people don't really realize is how intensely the 0:16:50.520 --> 0:16:53.760 province levels compete with each other. And you know we 0:16:53.840 --> 0:16:55.280 have that here right like you. 0:16:55.240 --> 0:16:57.000 Know, I think we'll have more of it here. 0:16:57.280 --> 0:16:59.800 But the thing but people don't understand the way the 0:17:00.360 --> 0:17:05.399 works there different. It's like because it's a single party system. Yeah, 0:17:05.560 --> 0:17:08.239 it's almost like Gavin Newsom's boss is Donald Trump, vers 0:17:08.400 --> 0:17:11.120 is their arrivals with different systems. 0:17:11.160 --> 0:17:13.760 This is a really important point. The governors of American 0:17:13.800 --> 0:17:17.919 states are incentivized to win re election. The provincial leaders 0:17:17.920 --> 0:17:20.919 in China are incentivized to rise up within the Chinese 0:17:20.920 --> 0:17:23.959 Communist Party, and they do that based on various goals 0:17:23.960 --> 0:17:26.399 that are set. And so even though you have some 0:17:26.600 --> 0:17:30.240 analogy of state versus state competition with exists here and 0:17:30.320 --> 0:17:33.879 on service that might have looked like provincial competition, the 0:17:33.960 --> 0:17:38.160 reality is that in the US system, it's not obvious 0:17:38.240 --> 0:17:42.679 that any given governor is actually optimizing for economic performance 0:17:42.920 --> 0:17:46.320 as opposed to reelection. And of course sometimes that might 0:17:46.359 --> 0:17:49.439 be correlated good economy more likely to be reelected, but 0:17:49.520 --> 0:17:51.359 certainly not at all. And I think this is like 0:17:51.440 --> 0:17:54.600 a very interesting difference. But let's say we accept this 0:17:54.640 --> 0:17:57.560 premise and I kind of do that is not great 0:17:57.960 --> 0:18:01.040 for the world to be so dependent on China for 0:18:01.320 --> 0:18:05.200 manufactured goods, et cetera, Like is there a middle path here? 0:18:05.240 --> 0:18:07.680 Like what would you're Okay, someone hears this from the 0:18:07.680 --> 0:18:10.399 White House, Like, Sam, you're into manufacturing, You've worked with 0:18:10.440 --> 0:18:12.359 all these companies. We want to be able to have 0:18:12.400 --> 0:18:14.919 a competitive stovemaker here in the US that doesn't have 0:18:14.920 --> 0:18:17.720 to rely on a sheet metal company in China or 0:18:17.720 --> 0:18:21.120 a final assembly in China. Like give us some outlines 0:18:21.160 --> 0:18:23.440 of what you think needs to be fixed here or 0:18:23.560 --> 0:18:24.600 dressed addressed here. 0:18:24.640 --> 0:18:28.520 So let's actually look at who has solved this problem. Okay, Yeah, 0:18:28.640 --> 0:18:31.000 what BS he had to deal with. It's funny that 0:18:31.359 --> 0:18:32.840 when I say who and then I use. 0:18:32.800 --> 0:18:34.080 This single, we all know it's Elon. 0:18:34.200 --> 0:18:36.960 We know we all know it's Elon, And so how 0:18:37.000 --> 0:18:39.679 the ever living crap this guy pull us off? Yeah, 0:18:39.720 --> 0:18:42.359 and I think I've spent way too much time thinking 0:18:42.440 --> 0:18:45.360 in reverse engineering this because it's really important. But I'll 0:18:45.440 --> 0:18:48.760 use a very simple example. Do you all remember when 0:18:49.080 --> 0:18:51.600 people were making fun of him for building a factory 0:18:51.640 --> 0:18:53.400 any tent in the Fremont parking lot. 0:18:53.760 --> 0:18:56.000 I do remember the tent. People shouldn't made fun of him, 0:18:56.080 --> 0:18:57.760 especially in retrospect. 0:18:57.400 --> 0:18:59.520 I mean it was it worked, so to refresh this 0:18:59.560 --> 0:19:02.359 for the list. This was like during the Tesla Model 0:19:02.359 --> 0:19:05.200 three ramp. They realized they like over automated and over 0:19:05.200 --> 0:19:08.840 complicated the factory with exquisite shit. They then were like, 0:19:08.880 --> 0:19:11.120 this line is misconfigured and we can't fix it because 0:19:11.280 --> 0:19:13.880 there's not enough room in the building. But the problem 0:19:14.000 --> 0:19:17.360 is if you wanted to build a building next to it, 0:19:18.000 --> 0:19:20.680 Let's just say that California is a den of vipers 0:19:20.720 --> 0:19:24.240 and those vipers' names are Nimbi's and you would not 0:19:24.560 --> 0:19:28.800 be able to permit a new building in the time 0:19:28.840 --> 0:19:32.520 that it would take or in Tesla's remaining time left, 0:19:32.560 --> 0:19:34.879 if that makes any sense. Yeah, and you probably couldn't 0:19:34.920 --> 0:19:37.560 get it done in three years, even just because we've 0:19:37.640 --> 0:19:41.960 essentially made building in the built world next to engineers 0:19:42.040 --> 0:19:45.239 illegal effectively, because like if it's a rich area, there 0:19:45.240 --> 0:19:47.840 are nimbi's, and the nimbi's have infinite power. And so 0:19:48.119 --> 0:19:50.640 what Elon did was he realized, you know what those 0:19:50.720 --> 0:19:53.360