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

[00:00] 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... [00:09] 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 S. doesn't do at any scale. We have to import it from Russia. In 2010, we were completely tied neck and neck with China on grid total capacity. In the 15 years since 2010, they've tripled. The whole thing is how do you bring down costs?

[00:30] 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. [01:00] 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, the three times amount of power they're adding in Texas to their grid every year.

What are we going to do? Scott Nolan is a partner of Peter Thiel's Founders Fund. [01:15] 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 re-industrialize in the next 10 years. 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 Matters. [01:42] Before we go into the company, tell us a little bit. What's your background? Where'd you come from? Yeah, I was always an engineer. So my background started [01:51] With science and technology, probably in middle school, high school, I was just building model rockets. That's what I did for fun. Where did you grow up? Pennsylvania. Pennsylvania, building model rockets. I guess Peter Thiel at PayPal said a lot of them built bombs.

You didn't build bombs. No bombs. It's like a controlled bomb. You would have to go to the hobby store and go buy your… [02:11] Your solid little rocket motors made by... [02:14] Estes and you can buy the different sizes. So they're basically like [02:18] You know, explosives, but inside a rocket motor. How high would these things go? A few thousand feet if you built them yourself and put enough motors on it. It could be dangerous if you wanted it to. That's impressive. Yeah, I mean, yeah, I guess it could be.

They were small. But started off doing that, and then in college, led a rocket team. [02:36] at Cornell and so did that for a few years there and Cornell has this internship program and so got to work at Boeing during college 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 [02:57] and started off there as an intern. One of the early team members there had reached out to a bunch of Cornell professors and said, do you know anyone on campus that likes rockets or would be interested in what we're doing?

[03:10] And my name popped up and then [03:12] Ended up joining as an intern and then full-time after that in 2004. So going back to that a little bit, you saw what Cost Plus looked like. For our listeners, what does that mean? How is Boeing different than SpaceX, having experienced both of those? Yeah, so the S. space industry had been going on since the 60s. [03:29] there was all this hope that there'd be all this progress. [03:32] And then it never really, [03:34] materialize the way people thought it would. And then the question was, well, why not?

And I think [03:39] you know, the program I was on was, like I said, a cost plus program. And what that meant was, [03:45] you know, as much as everyone at Boeing might have wanted stuff to move really fast and be exciting and innovative, the fundamental [03:52] business model was [03:54] You do work. [03:56] then you get paid for the cost of that work plus some additional amounts. You might make 110% of the amount of money that you spent on the program. And if you do the simple logic, the way to make the most money then is make the program bigger and bigger and bigger.

So the incentives, even if these aren't bad people, the incentives somehow cause them to want to spend a lot more money rather than actually get things done. Or at least it doesn't discourage it. So then the program optimization basically becomes, [04:23] How do we keep this program on track? How do we make sure we deliver? Let's give extreme high quality. [04:28] The cost is no obstacle to doing the best job possible. [04:33] 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 is perfect. There's not really competition, I guess. So there's no, if you spend $5 billion on something, that's, [04:48] Who's to say that you shouldn't, right? Because there's no competition doing it for a 10th 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. [04:59] Let's do whatever we have to do to make it work.

Very hard to give a good 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. [05:18] 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 is that different than maybe insights in the culture of SpaceX? What are some takeaways from there?

Yeah, polar opposite. So – [05:32] I joined SpaceX as an intern in 2003. [05:35] The company was maybe 30 people. [05:38] Then went back 2004, 50-something people. That's when I joined full-time. And even from that point, I felt like this really small team of people [05:47] could ultimately do a better job than the thousands of people that were working on this other program. It would take growing the team and everything, but the basic [05:55] the basic software that ran the company was, [05:57] all about performance. It was all about cost adjusted performance, not [06:03] 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. That was basically it. And it was whatever it took to do that is what you did. [06:17] um, [06:18] I remember getting there on day one and reading the employee handbook. [06:22] and on the top of page one was just a single line that was in bold. [06:26] And it said... [06:27] This is not a science experiment. [06:30] So it was all about, we're not trying to do any crazy new technology.

[06:34] We're trying to get [06:35] rockets to be much cheaper and so we will just have to clean sheet engineer them [06:40] to take costs out of the system and that's it and it was almost that simple. Were they more concerned maybe about costs back then than they are 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 costs, which is obviously true for things like SpaceX. Back then the cost of costs 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. And so it's almost like you're filming a movie. [07:05] Every day costs some amount. If you can pack in the scenes into a shorter amount of time, your movie costs you less to produce. And the concept was the same at SpaceX. The formula was basically, hey, every single day we're spending X dollars. [07:19] 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, [07:31] And it costs you less than that one day.

So the day is very expensive to wait. Exactly. Exactly. And that's the day today that you're spending. [07:39] If you pull in schedule, [07:40] a day and you're really online in a year or your first launch is in a year, you're going to 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? It's very unintuitive to people because something that costs a million dollars might seem wasteful if you could do it for a hundred thousand dollars.

[07:58] but if it's going to save you, [08:00] in 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 thing you have to be careful of is it needs to be the thing that actually pulls in the schedule. Yep. There's 15 things people are working on at once. You can't spend it across all. Yeah. Spend the extra money. This is five days faster, but then this is still taking longer. It's not worth it.

So you have to really be sure that. And maybe, and 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. [08:28] Now that was back then. I think now, [08:30] The company [08:31] you know, has money and can be cashflow positive whenever they want to be. [08:35] 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 the milestone.

It's about how do we make the overall progress go faster? It is really a fun kind of problem, though. We have all this optionality. In some cases, it's worth spending less and taking longer because it's not the long pole. Yeah. And so it's someone has to be aware of that. I guess that must be the CEO who's aware of that most. Right. Right. [08:58] Um, [08:59] Yeah, that's that's right. I mean, there's probably a bunch of people in the organization that are aware of what that long poll 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. [09:11] You are on critical path. Now all these rules of thumb apply to you. 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 small investor in General Matter. I'm really curious about the long pulls here. Tell our audience, first of all, what is General Matter? So General Matter is an American enrichment company. We enrich uranium for nuclear energy.

[09:35] And you go to, I guess, to give some background in the space, [09:40] Every nuclear reactor in the world runs on nuclear fuel, and there's five steps to make nuclear fuel. [09:46] You have to mine it out of the ground. [09:47] You have to convert it into a gas. You enrich it, turn it back into a solid, [09:52] And then you form your specific fuel pellet. So when you mine out of the ground, I think you need like a million pounds of uranium, for example, if it's uranium, to get like a pound of U-235, which is the radioactive one, right?

Is that correct? That's about right, yeah. And then now you have this U-235, which you're going to use. Why are you turning it into a gas? What's going on here? Yeah, so the – I mean you can think of it as like 1%. Maybe not a million pounds to one pound. Actually, 1%. [10:14] Minutes for warmers. Okay, so 100 pounds gives you a pound of it. Yeah, so essentially – [10:19] Yeah, out of the ground, you have 0.711%, U-235. Call it 1%. Got it. I'm probably thinking of all the other rock you need that you're taking the uranium out of or something.

Yeah, yeah. So it also depends on your ore deposits. Like, is your deposit that you're mining out of 1% uranium? Yeah. [10:34] 2%. And there's a wide range on that. So it's a 0.7% of whatever percent the uranium is. Now you have the U-235. Now what do you do? Yep. Now you do milling. What's milling? Milling can be either if you're doing open pit, it's basically turning the raw ore into just raw uranium. You're trying to get to U-308, yellow cake. [10:55] The newer mining techniques really combine 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? That's commonly called yellow cake. Why is it called three? What's three ways? The molecule has three uraniums, eight oxygen. That's what comes out of the ground. [11:19] yeah, this is good that we're breaking it down. So essentially, you're trying to get the uranium. And the way you end up getting it out of a mining process is as U308. It's an oxidized uranium. You then want to actually find a way to separate it [11:32] not based on uranium versus [11:34] other elements, you want to separate it based on its isotope.

[11:37] So how many neutrons? [11:39] are in the uranium. And so the common ones are U-235, U-238. U-235 is fissile. U-238 is not. So the U-235 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... [11:54] can sustain a chain reaction. It could also make a bomb. [11:57] at a high enough enrichment level. [12:00] with lots of other technology people make. But that's a different thing. So do you get enough of this to sustain a fissile reaction to make nuclear energy?

That's right. So most reactors, the big ones, people think about gigawatt scale reactors. [12:14] they need the uranium enriched to about 3% to 5%, U-235. And then the small ones, [12:22] 19.75% is where everyone's ending up. So you've got to really enrich it a lot for the small ones. Yeah. On a relative basis, a lot more. But the small reactors may be much easier to mass produce. That's the idea. [12:33] So 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, 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 baseload, which people find really surprising. But fewer human deaths per terawatt hour than any other baseload. [13:01] and even any other energy source except solar. It's basically tied with solar. So safest and cleanest, just not the cheapest. So all the reactor companies that are trying to do [13:12] 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. [13:22] 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 – explain what's the next step. Yeah, so step two is turn into a gas. So that's converted. So that's a chemical conversion. So if 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 then you've got the U-335 as a gas. Then what do you do? [13:43] 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 giving to the nuclear plants. Yeah, and I think the size you can kind of keep in mind is like the end of your pinky, the final joint, or almost like... [14:01] This is for traditional pellets.

[14:04] Or like the earplugs, you know, those short little cylindrical earplugs. And how much energy can you get out of one of these tiny little pellets? One of those pellets is equivalent to over 100 barrels of oil or over a ton of coal. [14:18] That's really cool. It's a ton of coal, 100 barrels of oil, or this little thing the size of the end of your pinky. And that's enriched to 3% to 5%. Yep. So now if we're talking the more enriched fuel, that often comes in a different format. A lot of people doing...

[14:31] the fuel for advanced reactors, [14:33] 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 been done. And so they will take the fuel and they'll take a tiny bit of uranium. [14:44] And they will put it inside a coating, a silicon carbide type of coating with zirconium. So you'll coat the uranium. Exactly. So then it becomes like a poppy seed-sized piece of uranium. Tiny. And it's got two attributes. One, the shell can handle up to a very high temperature, so it basically can't melt down.

[15:03] it will be able to handle any temperature that a reactor could get to. We're talking over 1000 C. And then part two is, [15:09] some of the coding self-moderates. So if it starts getting too hot, it'll automatically... [15:15] absorb and stop more neutrons. [15:18] it'll effectively make the fuel less reactive and slow down the reactions. So you get this self, this feedback loop. The coating itself would change. And it's really, really tiny. So you're making it as perfectly safe as possible for these new reactors. That's what people are going for.

So going back to your point, though, the whole thing is how do you bring down cost? [15:35] And so it's factory building, hitting scale economics on the actual reactor. [15:40] Part two, though, is once you make your reactor really cheap... [15:43] 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. [15:53] 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 costs come down, but the fuel costs proportionally [16:07] goes up. And so you go from a situation where the reactor is over 90% of total cost of energy produced [16:13] to where and fuel is obviously single digit percentages with low enriched uranium and gigawatt scale reactors and those simple metal fuel pellets to now where [16:23] The fuel is... [16:24] 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 you think this is a big part of the solution is making lots of these small nuclear plants, but then you're going to help them make sure they have enough fuel. Yeah, I think that's one of the big thrusts over the past few years, I think the decade ahead. [16:46] 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 requires not making one at a time, but 10, 100, 1,000 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? 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. [17:08] The reason we're doing enrichment is because [17:10] That's the one step the US doesn't do at any scale. Why not? [17:14] It's a long history, but we used to.

So the US in the 80s was actually more than 80% [17:21] of global enrichment. We used a process called gaseous diffusion, [17:26] That was invented during World War II. [17:28] We did it a few sites in the, [17:31] 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. When people hear about the Manhattan Project using 10% of electricity, [17:42] S. energy. It was because of [17:45] This part of the process. [17:46] And so we had an old technology that required a ton of energy.

[17:50] The Cold War was over. [17:52] We could trade with Russia. We did not want them to have so many warheads. And we started this period of disarmament. [17:59] And said, let's take the warheads and let's blend them down and use them to run in our reactors as low enriched uranium. We started taking all their technology, all their warheads instead to use in our reactors. We turned off all of our stuff. It was called megatons and megawatts. We still ran our gaseous diffusion for a while. We traded more and more with the Europeans for enrichment on uranium.

And... [18:19] Eventually we said, okay, we can't really operate these plants profitably. [18:22] It's a free market. We don't need to do this anymore. This is like the ultimate, though, deindustrialization. We talk a lot about things we turned off in the S. We turned off... [18:29] all of our nuclear capability here in terms of enriching it. All of it was a little time that we kept somewhere for the Army or something, or no? So what the military has is leftover from that era. It's a big stockpile. 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 going to build where that last site was in western Kentucky? That's right. And once you – so you're giving this material – [18:58] And you make it a gas and enrich it. Or maybe you're giving the gas and you enrich it. And then you just give it to somebody else once it's enriched because there's already a process for making the fuel pellets. That's right. The way this industry works, the utilities take care of their own fuel. [19:11] They'll go buy the uranium out of the ground from a miner and then they will own title on that and they will buy services all the way through.

So they'll – 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 is doing it or it's not worth doing that part? There's a bunch of companies doing that. So I think that will be taken care of. [19:33] The step that I was most concerned would not be taking care of in time was enrichment.

And so we're doing that step. And so to your question, the business looks like [19:41] a big building, think of like a warehouse, data center, biopharmaceutical plant, [19:47] big rectangular building, lots of equipment inside, [19:49] on one end comes in a big cylinder. Think of like the big propane cylinder behind people's homes. [19:55] in rural areas. On the other end out goes two cylinders, one enriched [20:00] One, not enrich. [20:01] Amazing. And let's step back for a second. 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 – [20:10] China is making overall, I think they're bringing on maybe like a new Texas worth of electrons every year or something like that. I think overall – even though we might be higher per capita, they're like 3X I think America right now. It's this massive amount. And obviously for the AI race and for AI in general and 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. [20:40] Like where does nuclear fit into this? How much of the solution is it? Is it a key part of the solution? How do you see it? Yeah. So I was talking with someone about this recently and the S. has done an amazing job on actual [20:51] like fossil fuel production, fracking, natural gas. [20:54] 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. Yeah, half half the carbon per unit of energy, basically. Yeah. And so you just emit much less carbon doing it that way. You know, I fracking was so unpopular. I [21:11] 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 Party. They funded 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. So I think it's probably also a nuclear thing too where people don't. It's nuclear competition as well. But anyway, go on. Yeah. Well, yeah. The S. has done a great job there. But to your point on the grid… [21:32] 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 [21:42] It's always been on the grid powering data centers.

If you look at the grid, in 2010, we were completely tied neck and neck with China on grid total capacity. Something like 4,000 or 5,000 terawatt hours per year. Yeah. [21:55] Since then, in the 15 years since 2010, they've tripled. I think this year they're actually at 3x the S. grid capacity. And we just haven't gotten it. [22:04] Basically, what are we doing? Is it just like what 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 it's 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. We're deindustrializing. So China was building manufacturing. [22:24] We were deindustrializing. We didn't need more power. Now we're realizing, wait a second, we're going to reindustrialize, so we need the power again. Yeah, yeah. The conventional wisdom was… [22:33] 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, [22:41] operations and you're doing services businesses then maybe you don't need as much

[22:45] I think now that's completely flipped with data centers consuming so much power and needing them to scale the next few years. And EVs, advanced manufacturing. I think it 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] I think we need to turn around from viewing it as being okay that we've had a flat grid [23:06] to realizing we need to [23:08] almost go vertical on it. I mean, it's a disaster for our whole re-industrialization. This is a big theme for all of our stuff.

You're a founder's 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 [23:22] 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? [23:30] steel production. [23:31] These things where the major cost is just electricity costs.

Nuclear power could be a very big part of the production, you think? What does that look like? What's the cost of power right now? What could you do? [23:42] with mass nuclear production. Yeah, I mean, cost of power is like wildly different based on state. I think, yeah, what could it be? I think back in... [23:51] Back in the, what was it, 60s or 70s, I think in today's... [23:55] dollars Nuclear was costing about three 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 Yeah, um [24:08] No, I think nuclear should be a huge part of the mix. Today it's 20% of the S. 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, 18.6%, 18.7% right now. [24:21] We're going to see some up rates the next couple of years, people taking plants that are already online and just amping them up with different fuel. [24:29] And then I think we're going to see some restarts as well.

So we'll see that grow a little bit. [24:33] But you talk to any of the hyperscalers who want to build big data centers in the 2030s, and I think for all of them, it's about nuclear. How did you get this idea? You're also an investor at Founders Fund. You guys have been crushing a lot of areas. Were you looking to potentially invest in nuclear in different areas? This is like this is a gap? [24:51] Yeah, so over a decade of just looking at engineering driven companies, really starting in things like satellites, ended up going all the way across pretty much every space, ending up in energy in the late 2010s.

[25:05] Invested in a company called Crusoe. [25:07] Invest in a company called pantalossa. These were really about stranded energy sources And then invest in a company called radiant that was looking at stranded demand not stranded supply. What does that mean? Western demand so imagine an Alaskan village that goes entirely off of diesel and you know they get a shipment in the summer only when [25:26] when it's not iced over. And so places where people have to pay a lot of [25:32] you know, a high cost of electricity and where [25:35] 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? 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 a [25:51] 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... [26:01] are going to scale. When you asked before, like, oh, should we just do the SMRs? [26:05] I think it's all of 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. And so then you've got SMRs that could be great for data centers and then the small ones. I think there's going to be winners in every single category. But to your point... [26:21] How did I find out about this? [26:23] It was... [26:24] meeting companies in the space for years. [26:26] And... [26:27] The thing they all said was actually getting the license is not as hard as you think.

[26:31] Founders Fund. The hard part is [26:35] Getting the fuel. [26:36] And they said, [26:37] We're really hopeful that we can import some of this fuel, this HALU fuel. HALU stands for [26:42] high assay, low enriched uranium. So that's the 10 to 20 percent [26:47] 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. [26:56] And they said, we can't get the fuel. We have to import it from Russia. [26:59] So the obvious question was, why don't the

S. companies that make all the other fuel just make your specialty fuel? [27:06] And the answer was basically like a blank stare back. Like, what do you mean other, you know, other providers in the U S there are no other providers. Um, and so. [27:16] almost a year looking into that, understanding... [27:20] 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 led enrichment and so tell us about what about you raise a bunch of money for this company?

Like what's where is it right? What's this timeline? Yeah, so timeline I [27:35] is driven by the market. So there's two market dynamics. One is all these new advanced reactors need to not only prove [27:42] you know that they work prove their safety prove their performance prove cost structure they need to scale and [27:48] And so their initial bits of fuel are coming from DOE. [27:51] But to scale deployments, they need new sources. There's already fuel that the Department of Energy has to give them for their tests. But as they start to scale, they're going to need you.

[27:59] So you're ready, you're saying? I think that timing is coming... [28:04] you know, 2028 through 2030, they're going to first really start doing the, you know, single digit 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. 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, [28:34] is probably the timeline driver. - What's that, licensing what? - So getting a license to operate the facility. [28:39] And that comes from the NRC, the Nuclear Regulatory Commission. 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. Do you have to say that because they have to give you a license?

No, absolutely not. If you go back to 2018 – [28:55] and you ask those companies like [28:57] you know, is this the hard part? And they would say, [29:00] 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. [29:06] you know, make sure that this is going to be a safe reactor. That's what everyone would have told you. Um, [29:12] You know, I think today is actually the one year anniversary of the.

[29:15] of the nuclear executive orders [29:17] And so there were four executive orders covering DOE, NRC, DOD, and the supply chain. [29:24] That has really... [29:26] created a huge tailwind for the space. So if we go back to like 2020, people would have told you [29:31] It's a very [29:32] uh... [29:34] you know, clear process of what we have to do, the timeline is unclear. Yeah. If you then go to a week or two ago, you might say, okay, the executive orders, you know, did say, did give some timeline limits on reactors.

[29:47] They did not give clear timeline limits on fuel cycle facilities like ours. Yep. [29:52] But you could say a fuel cycle facility is... [29:55] may be equally difficult or less difficult than a reactor. And so if they're going to do 18 months, [30:02] turnaround on reactor license applications [30:06] you would maybe guess something like that. And if you guess 18 months, then it can end up being the long schedule driver. Yeah. Yeah. [30:13] I think it was Thursday the NRC announced that a new fuel cycle is [30:19] license application went in [30:22] And they're committing to put it on fast track and get it out in 12 months.

There's someone other than you who's doing that. That's right. Yeah. And so... [30:29] If you assume 12 months, all of a sudden it's back on the companies. And now the companies are actually the timeline driver. [30:35] And so it becomes one of these like types of very difficult company called that, you know, Peter at Founders Fund would call a 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.

[30:52] How do you just coordinate everything? So teach us a little bit more. One of the work streams was that license, which you've not applied for yet because you have to do certain things first. What are your main work streams? Yeah, so one work stream is license. So submitting that this year, another work stream would be technology, just improving the technology's performance relative to cost. [31:12] Another one is construction. [31:13] This is one people really underweight, but [31:16] Here in Austin, you guys have seen it firsthand. We like building fast there.

Our friend Omi did that fast with Elon the plane. Yep, yep. Austin Gigafactory. [31:23] And so [31:25] The key thing on construction we found is you can't just hand it off to some other company. No, no, no. You have to own this. Ceronics is doing all of its own stuff. We're doing thousands of autonomous boats here. You've got to do it yourself. You've got to do it yourself. It's part of the core IP. It's classically called EPC, Engineering Procurement Construction. [31:42] 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, cement, everything. But it's run in-house. You have your project managers in-house. You should go so much faster if you do this right. So construction and licensing and the technology itself, those are the main things. [32:06] Um, [32:07] What are you manufacturing? [32:08] The hardware that would go inside the facility. So you've got to design it with the science, and then you actually have to manufacture it all as well. Exactly. So it becomes a scale manufacturing problem. So it's like...

[32:16] You know Starlink we've got a user terminal factory here in Bastrop 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 that's the hard part and then how much money do you need? I think you also got like a massive amount of money and Exim financing right because this is key for the s This is good. 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 venture capital equity [32:47] debt on things like manufacturing equipment. [32:52] There's a grant we received from the DOE. It's really an IDIQ, so Indefinite Duration, Indefinite Quantity Contract. [33:00] in which [33:01] It's a lot like NASA's COTS program, if you remember back to that with SpaceX, where it was completely milestone based. So you do certain things, you unlock capital. [33:10] 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, we received that award.

[33:20] under President Trump's DOE, we actually were down selected. [33:24] and first applied under the Biden administration. They were, it was Congress that appropriated $2.7 billion for HALU enrichment. Um, and we received one of those awards for 900 million. So $900 million milestone based contract. [33:37] which will be earned over the next few years as we build that capability in Kentucky. So that's part one. [33:46] Part two is what you referred to on the Exim side. So the Export-Import Bank of the US wants the US to [33:53] be competitive internationally and be able to play on the same level playing field as other countries and create jobs in the US.

And so we have an LOI with them to [34:02] I, [34:03] wrap our contracts that we sell into Japan and Korea to help pull some of that financing forward to help us build a greater scale. And so right now that's an LOI to go do those contracts and then [34:15] We're working with Japan and Korean utilities to move that [34:19] Ball down the field. That's cool. I did Japan also has like hundreds of billions to invest in us energy. I guess you should Talk to those guys too. Yeah. Yeah, that's right [34:28] I think the XM deal is really just around utility contracts.

And so that's the next big piece. We're not just interested in that as... [34:38] you know something to [34:40] Expand the commercial scope of the business to move internationally. There's a big US [34:47] S. national security benefit of that or like even a global nonproliferation security benefit of that, which is. [34:54] If the US does not provide enrichment, [34:57] 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 U S kind of power group, not, not the other guys.

Right. [35:10] That seems really critical for the S. to get this right. And have you thought about like what's the tradeoff? 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 feels like more – [35:25] 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 there's something about just the one piece you've got to ace, I guess, for now. Yeah, I mean, this is always, thinking back to the very beginnings of my time at Founders Fund, it was working on Peter's class, CS183, that became the book, Zero to One. [35:44] One of the core lessons from that was [35:47] You know, don't think of this as. [35:49] 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 [35:56] Focus on something that you can do.

On the narrow piece first. Yeah, focus on the really narrow thing where no one's meeting the need and where you can actually deliver huge value to the industry and where... [36:05] You can just perfect that and then you expand out. - Once you win that, who knows, you can start building other things, being more aggressive. - That's right. And I think fortunately in many other parts of the supply chain, there's dozens of reactor companies, there's a bunch of people making the fuel pellets, [36:19] I think the thing that we want to solve is the enrichment piece.

And if we do that, we think... [36:23] That alone can be a huge business. [36:25] It definitely can be. So it's just stepping back a little bit. Let's look ahead. What are the new possibilities for nuclear? [36:30] Otherwise, I think Jared Isaacman, who is on this show, runs NASA. He wants to maybe do nuclear power in space. Is that something you think this stuff's going to happen? Absolutely. Yeah, I was just reading some of the announcements. I think they're aiming for spaceflight. [36:43] nuclear-driven space propulsion by 2028. [36:48] And then they're talking about reactors on...

[36:50] on the moon's surface to, you know, create heat and power things. It's great. Um, I think it's, [36:56] You think about like [36:58] If you just think... [36:59] How are we going to power things on the moon, especially the dark side of the moon? [37:04] Nuclear just makes the most sense by far. You just got to make sure it doesn't blow up on the way up there. It causes a lot of trouble. [37:09] Yeah, true. We have some pretty reliable rockets these days, fortunately. And I guess moon aside, what does it mean to have energy abundance on our planet?

If we can make energy as cheap, go back to three cents everywhere or whatever, or it's much cheaper everywhere, what does that mean for us? Yeah, I think three cents shouldn't even be the limit. That was three cents building huge gigawatt scale energy. [37:29] mega construction projects, not factory production. And so I think we should physically be able to get less than three cents if we were doing it before. [37:37] And you start talking about energy that cheap, [37:41] there was the classic phrase, too cheap to meter. [37:44] 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.

[37:49] I think that might not really make that much sense. But... [37:53] 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 economic growth. I think that's exactly what happens. I think it's kind of fun. If energy is really, really cheap and AI is really, really good. [38:08] and it starts working in the physical world, then basically anyone in the middle class – [38:11] is going to be able to build this giant... [38:14] cave that they designed that's like 40 rooms in the ground, right?

Or whatever. I just think about it. It's like crazy or a beautiful castle. You're going to be able to have castles being designed and built. [38:23] by everyone if they want. I mean, probably HOA should have rules. As long as HOA is okay with this underground. I don't necessarily want giant cows everywhere I live, but you can go buy your own land. 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.

Everything should be cheap. Everything should be a lot cheaper for everyone. [38:42] I love it. Well, I'm very bullish on the future. We started this podcast actually to push back on some things and do more. What makes you optimistic for America? Somebody was reminding me that this year is America's 250th anniversary. And they said, OK, what do you think about the next 250 years? And I thought back and, you know, you look up, OK, 1776. [39:01] long time ago, what do we have? [39:03] 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, [39:10] another 250 years. [39:11] and you say things are actually accelerating, what's it going to look like, I think? [39:15] We're going to have the science fiction future that everybody was promised as long as we don't stop it. I think today we'll look even more backwards 250 years from now. Than the last 250 years. I think people don't realize that. They'll see us and they'll see us as these crazy barbaric ancestors.

Everything's completely weird and different and hard. Yeah. 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. We're just going to make sure everyone stays tough. Yeah, because if everything's too easy, it's like... Fair, fair. The cycle. But yeah, in general, I'm very optimistic though. Well, thanks to Scott for joining us. Yeah, thank you. [39:45].