Why Elon Outcompetes Everyone | Casey Handmer, Terraform Industries

0:00Today I'm sitting down with Casey Handmer, the founder and CEO of Terraform Industries. This is going to be the third part in our series of why Elon outcompetes everyone. And I want to start off with mass driver on the moon. So can you go through your essay of making the mass driver on the moon work?

0:18Casey Handmer:That's a good question. Mass driver is an interesting one. I worked on Hyperloop for a few years. So I actually worked with like magnetically accelerated levitated systems. the thing about the moon is that the gravity is a bit lower than Earth's and there's no atmosphere so you can actually in principle you can launch mass from the surface of the moon into space without a rocket which in the 70s seemed very attractive because back then rockets were seen as very very difficult to do and also the moon doesn't have you know fuel supply so you can imagine you know some kind of factory on the surface of the moon that is processing rocks has nuclear power plant and um perhaps receives its power beamed up from earth probably even cheaper and then launches that mass into orbit where you do something with it and then make make money so goes the theory um and if you're not constrained on the acceleration that you subject these things to your mass driver could be like just like less than a thousand feet long like really short no it would like shuttle back and forth so it'd be like a like a like a machine gun, right?

1:23Casey Handmer:So you think, oh, well, you have a rocket launch. You can launch every couple of days if you're really good. No, no. With this mass driver, you'd have a shuttle that sits in an electromagnetic track that shuttles back and forth. So shuttle actually is a component of a loom like for making cloth and they shuttle back and forth as well. And once it starts to slow down, roughly halfway down the track, whatever the payload is will separate from momentum and then fly the rest of the way however far it's going into space uh and then the the shuttle will slow down accelerate in the other direction and then get reloaded with another you know wire bale of moon rock or whatever and uh and shoot itself uh back into space and at the speeds involved it might be like one a second kind of thing so like this shit will be happening fast well yeah i mean you don't need some like colossal mass driver say if you want to do i don't 100 tons a day.

2:19Casey Handmer:You don't need to do like one starship a day. You do it in 86 ,400 bite-sized pieces of a few kilograms at a time. So the thing is you could actually build this mass driver on the Earth, test it on the Earth, launch it to the moon, maybe do a minimum of assembly or like deployment on the moon, and then operate it. It would have to be anchored to the surface quite well because of Newton's laws. But it's way easier to do that than, for example, to try and build some like precision aligned structure that's 20 miles long to like accelerate at a more stately pace do you have any idea on what the timeline you know we're in 2026 right now what the timeline is for having that fully built um no idea and it actually to be really blunt like the reason you would do this is to provide some of the mass for star mind for the for the orbital ai constellation but it's it's hard to imagine like what set of circumstances would make it like obviously economically preferable to do that as opposed to building more starships more launch pads more factories on the earth where everything's like thousands of times cheaper and it's launching more stuff from the earth and i think the constraint might be something like if you're launching 10 000 starships a day people will say hey come on but like if they don't then just keep launching from the earth because like starship will ultimately get launch costs into that constellation down to a few hundred bucks a kilogram which is not very much compared to the costs of a mass-produced high-performance gpu so if you look at like the embodied cost of the of the item in orbit most will be the part that does the thinking the gpu and then a bunch of other mass associated with radiators and solar arrays and communication but even that is not all that much and almost all those systems are spiritually two-dimensional so you can fold them up or make them really thin and not very heavy so it'll be interesting to see elon on the dvarkesh and john collison podcast basically said that in three years from the date of that podcast he believed it would be cheaper to launch like space compute yeah versus building it on the ground yeah it's like one of those like monkey point twitches thing well how does that equation work well starship is getting a little cheaper well i mean me and everyone else made a little spreadsheet to try and figure this out um starship will ultimately ultimately make launch cheaper but also much more launch available so if you're saying well we want to do a gigawatt of deployment that's just not really feasible even with Falcon, but with Starship, that's possible.

5:03Casey Handmer:And then at the same time, I think Elon correctly foresaw that large scale deployments of data centers on the surface of the earth would run into headwinds that would increase their cost. And this didn't require like an exceptionally accurate crystal ball back in the day, because there's just so many marginal constraints that sooner or later, one of them will come to bite. It kind of seems like the data center thing on earth it's like this unicorn where the companies that are building them will almost pay any amount to just have them built and it seems like there's a whole bunch of other shit that's just getting like layered on on top of the data centers yeah all the local jurisdictions are saying well we'd like our piece of the action and exactly i think they're in what's called a price discovery phase um where they will yeah shortly find out what the market clearing rate is for the appropriate sized official bribe to make these things happen um i mean we're actually working on that at terraform as well so it's a neat thing we we currently have a 1.8 megawatt solar array that we built earlier this year and um we can turns out you can you can run your synthetic fuel plant on it during the day and you can also go up to batteries and then run a continuous much smaller but continuous load like a an ai computing rack or data center rack or something off that at the same time without these two users conflicting so you basically like more than double the economic output of of your fixed solar infrastructure which in terms of land use is is the dominant contributor at the end of the day almost all ai compute over the next say 10 years will converge will kind of will be done with this silliness with natural gas and nuclear and so on and it will converge on at massive scale basically like a giant Starlink satellite in space which needs you know a decent radio antenna and a couple other bits and pieces to work properly in space and a GPU or basically the same thing on the ground where you in addition to you can basically delete the giant radio transmitter and replace a battery they put a battery there so the kind of the the real question mark there about like asymptotic cost is whether or not batteries are cheaper than launch right because one of them requires a launch and the other one requires a battery to last to run at night interesting and so it's basically like batteries plus bureaucracy yeah plus plus land um land is like ridiculously abundant though you know like nevada is like what 65 million acres or something it's it's absurdly an enormous amount of land and a lot of that land is still federal because back in the day they couldn't even give it away right it was so economically marginal and now this like absurd technological deus ex machina has kind of landed in all our laps where it's a system that's essentially apparently unbounded economically economic productivity so it's like way better than farming was in like 1860 and the only thing it needs to operate is is is power which you can get from from the sun that's it basically like in the united states like income taxation and so on basically only occurred in the last century prior to that point the united states government was much much smaller and was funded primarily by tariffs um and so we've had this like massive tax and spend thing that was largely put in place by roosevelt in the 1930s um and it's grown and grown and grown and and you can see in other countries that you know they're starting to run out of places to find revenue to fund the government right but if if instead like the united states had managed to retain like its small government like fairly like light touch on the economy through to the present day and they start saying with the feds and we need a source of revenue to run our government the feds will be getting into building data centers on like federal land in nevada and then leasing it out to the highest bidder because the revenue available is just absurd so it's kind of a funny thing that we're in this situation now it kind of seems like over time large scale projects are almost becoming sort of illegal yes very much so in the last 50 years do you want to go into that well i did i did tweet about this the other day um it's very frustrating to me now it is the case that in general if you if you murder someone you go away for a long time but you know the newspaper writers and so on love the outrageous headline where they find you know some bizarre confluence of factors that results in in a murder of being released early or not even getting convicted or whatever that's fine you know everyone deserves a day in court yeah i prefer to live in a world where where justice is imperfect but you know innocent people stay free kind of thing um but on the other hand the the presumption behind like giant projects that are building or maintaining infrastructure for the public good is that it's going to um result in an environmental impact with unbounded downside um i can imagine a process that could do that but it'd be pretty hard work actually um and and and just the de facto like way that this has kind of worked its way through the system over the last 50 years, mostly with regulations, it's not even in statute, is that if you want to do anything at all at large scale in California, but also much of the rest of the country, you have to go through this debilitating process that takes so long and costs so much money and has so many handouts to everyone involved that it's not just that the project doesn't pencil on paper unnotarily, but the sorts of people you need to run these sorts of projects are just not interested right like who's going to sit around 15 years waiting for permission to fix some basic thing in their backyard it's ridiculous yeah so it's just like i just kind of had grok run the numbers for me on like you know in terms of like the value of statistical life what is the the net loss to our society for you know california's inability to repair the california aqueduct which has been i think it nominally it can transport like four and a half million acre feet a year of water to LA from the Sacramento River Delta.

10:52Casey Handmer:But its actual capacity is like maybe 50 % of that because a couple of hundred miles in the southern section have subsided due to groundwater extraction over the last 30, 40 years. And obviously it's like, you know, between pumping stations, it's meant to be pretty flat. And so if a section subsides, it will overflow if it's too full. Well, this is not rocket science. Bulldozer, concrete, done. okay and and we know that you know when a bit of the freeway falls down or something we can fix it in a week or two like that capacity does exist and so instead we live in this insane situation where the farmers haven't got enough water and southern california doesn't have enough water and the infrastructure already exists in a corridor where it's already been built um where the environmental disturbance has already taken place and just the process of getting permission to like send out you know a local road repair crew with a bulldozer and cement to like make this canal work at its design capacity, thus solving everyone's problems, they'll fix everything easily button, is like 10 years and billions of dollars.

11:54Casey Handmer:Coming back to the value of statistical life, the economic value that's lost as a result of this kind of clot, just with this one example, is roughly equivalent to 10 ,000 lives. If you're scrolling on TikTok and you run some kid over, that's vehicular manslaughter. If you're unlucky and you have a bad lawyer, you'll probably go to prison for a while but like you'll get out of prison and that project will still be in like yeah the the approval agency hasn't even looked at it yet purgatory right and and in that meantime that one year like equivalent to a thousand statistical lives have been have been lost completely just due to our inability to fix it it drives me crazy it drives me absolutely crazy we know we can move extremely fast and we also know that the key to delivering like really cost-effective high value infrastructure at scale for people that benefits everyone it's super progressive because it benefits poor people way more than it benefits rich people.

12:44Casey Handmer:Rich people will be able to afford services no matter what. Rich people are not running out of water. It only harms the poor people when these things fall apart, really, is to move really quickly because then your labor cost is less because you're getting more stuff done in a given unit of time. This is how we built ships really quickly in World War II. It's how we built aircraft, the plant just across the road here in World War II. Just reduced the number of labor hours per unit by a factor of 10 and um and actually increased output by like a factor of 50. So so labor did well as well everyone got more basically just for moving quickly but but these days it's it seems insane like it's it's essentially impossible to get to get the green light to do it.

13:22Casey Handmer:I mean this was starting to happen in the 50s and Henry Kaiser was was the uh the entrepreneur um who who did the the Hoover Dam and a few other things and the Liberty Ships in richmond and he wanted to build a an estate up in lake tahoe and he was older by that point he'd want to screw around so um he just had his construction crew up there and build it 24 hours a day under lights including six feet of fill and like multiple structures and a dock and and uh and a place for his speed boats and and you know a couple of large houses and house for guests for staff and so on and um he managed to complete the project before an injunction was able to be filed right did the whole thing in 22 days right that's insane like altadena burned down what almost two years ago uh 20 months ago and just now house built yes there are a few now there's there are a few now a year ago nothing uh now there's been a few houses built um but you know they lost 10 000 structures they'll be at the current rate still rebuilding by the time the next fire goes through in 20 years so man it was a housing crisis anyway at the same time that it's like effectively becoming illegal to build large mega projects you have elon turn around and say actually we're going to build the biggest building in the world by like maybe double or something uh in the form of terrafab oh terrafab yeah in texas so how does if you had to like think about how he's thinking about that project he's both saying like it's impossibly difficult to get this stuff through and yet i'm going to do it anyway in the next five years it may be the case that that he gets the green light to like begin part of it sooner because of like national national security imperatives um in particular like on shoring of chip production but yeah if he just went through the same lane as everyone else has to go through like even in texas you would get you'd get stuck with a project of that scale why do you think that he thinks that he's able to pull this off well he's done it many times at this point but also like he knows the numbers to call to say like hey do you want chips or do you want to lose the next water china right and it actually helps to be on the critical path for national security at a certain scale and and you know in in those cases you can you can sometimes cut some corners but but you know the the reality is that most of us economic growth is not happening by like one or two people right it's it's tens of thousands of of small businesses that are growing gradually like minors that are providing mentorship and opportunities for people to like build their skills and level up and good pay and local housing and tax revenue for the local cities and all the rest.

15:51Casey Handmer:And I mean, actually, I re-listened to our interview this morning on my way to work, just so I'd be, you know, up to the moment. And a year ago, I said, we're in this castle and we're going to gradually expand through this entire neighborhood until we're up to the freeway, which would be, it's probably 500 ,000 square feet or something, maybe a million square feet between here and the freeway. like plenty basically over the next 5, 10, 15 years. I like it. The city likes us. We get on well. We like the local fire brigade. It's convenient. All the people already live nearby. There's local residential areas.

16:21Casey Handmer:It's a great place to build, okay? But it turns out that even here in like heavy industrially zoned Burbank, there are enough restrictions that basically make it impossible for us to expand here. And we're going to have to move into like down the road, like miles and miles into another area, another industrial area that's larger. um i can give you some examples uh the all the buildings east of here they're like a few blocks east of here were redeveloped in the 90s and even though it's it's heavy industrialized land they're built as light industrial and so even though the city will permit heavy industrial use the building owner won't so they're just going to have like you know city block full of vacant studios because all the studio businesses left burbank generating zero income on tax revenue for the city for you know as long as the landlord can afford to be patient i guess decades um that's just as an example you know and then meanwhile just up the road here we have some of the last anodizing plants in california because it's now illegal to do metal metal refining in california of any kind you can't even build like a pcb like printed circuit board um tracers here sam d 'amico is very good on this and so you've got these legacy shops that are like 100 years old and like ridiculously bad for the environment for the people who work in them and but they're grandfathered in and they'll they'll never shut them down because once they do that's it they'll have to go have to go to texas texas or louisiana do this work so this neighborhood and this whole city was once like a global center of aircraft manufacturing they built maybe a hundred thousand aircraft here in world war ii and it's it's pretty much all gone it's desolate it's i mean there's still businesses occurring here la is still a vibrant and economically dynamic place but it's not like it was and it's no longer a center of manufacturing and secondary manufacturing is is massively underrated for its importance i think it's like the single biggest like value increase right so the purpose of a business is to like consume inputs where they're cheap and then produce outputs and sell them where they're expensive or market them where they're valuable and thus generate value and secondary manufacturing takes in commodified input uh you know materials like aluminum or whatever airplane manufacturing and then doesn't see those operations on it with extremely sophisticated machine tools our neighbors across the road here do aircraft hinges and they're the only as far as i know the only certified aircraft hinge manufacturer in all of NATO.

18:37Casey Handmer:So all of Airbus and all of Boeing and all of the military people and their maintainers and everyone else for the hinges that allow flaps and stuff on the wings to work, they get them done here. It's bizarre. But these are just like all these old places here. Their original proprietors are aging out now and they were part of the satellite kind of industrial complex that served the lockheed plant which is now an amazon fulfillment center um until the mid 90s you know this is where kelly johnson built all those airplanes and he was able to go out and get the landing gear made and so on like the specialists who do just those things that weren't within the plant itself they've got to rebuild it or we just won't have wealth the australian economy made this mistake right the australian economy lost its middle and now it's just tertiary services which is extremely low leverage because it's just one on one-on-one stuff right and primary production which is just digging up dirt and shipping it to asia and none of those things you know basically like you get your first one percent and your last one percent of value generation and you miss the 98 in the middle the australia's economy is flat that's insane like it's a peaceful modern you know western liberal democratic system with well-educated relatively young demographically vibrant workforce good culture no violence no no threats really like new zealand's not going to invade um and unlimited natural resources and their economy's flat latest numbers let's talk through the build-out of starmind uh the economics behind it and what the timeline looks like for that it's interesting so i'd say like i wish there was moon dirt here yeah yeah be so cool um starmind i don't like the name very much you should talk with bev is it his fault yes okay um like starthink was right there you like starthink well it rhymes with starlink uh it's got that joke potential right all right it's an interesting one so when i when i first you know heard of like oh we're gonna do data centers in space i was pretty skeptical there's a couple of good reasons to be skeptical the first is that you know the juice is never worth the squeeze when it comes to like oh but there's infinite free power in space.

20:50Casey Handmer:It's not infinite and it's not free. And if you're in most orbits, you'll eventually be shadowed by the Earth, et cetera, et cetera. But there are a couple of ways to kind of get around that. And I think Starlink really shows the way. So people who've read some of my blogs will know that space-based solar power is kind of dumb because you're taking a product where it's expensive and you're selling it somewhere where it's cheap, which is not what a business should do. So in space, power is really expensive. And then you're beaming that power as undifferentiated microwaves down to the earth where you're collecting them.

21:23Casey Handmer:And now you're having to compete with solar and nuclear and coal and gas and everything else for like, I don't know, like what does your merchant power producer earn in California? 10 cents a kilowatt hour? Like not very much. You pay more than that, but you're paying for distribution. However, Starlink works because instead of just beaming like a shitload of microwaves at the earth for power, they modulate those microwaves with like something or other, like some quadrature amplitude modulation radio signal thing that allows them to transmit not power, but information. Right. And so if you, if you run the math on like, what is the revenue per watt of transmitted microwave power for Starlink?

22:04Casey Handmer:It's a billion times higher than space-based solar power. So while SpaceX is making money hand over fist with Starlink, and it's worth kind of putting a pin here in the fact that other people have tried and not succeeded, but SpaceX has, their margins might be, I don't know, 100 % or something, optimistically. If you reduce their revenue by a factor of a billion, they are no longer in business. So basically, you take that model and you say, well, we can make money being the middleman transmitting data from your content delivery service or an edge node or whatever, Netflix is down the road here, via our network, which initially was just this bent pipe system, and now they've got LaserLink set up so they can transmit a lot of data in the shell, the shell of Starlink satellites, and then land it again at some other place, either at a consumer place or like a consumer satellite dish or a fiber hotel or a gateway, what they call a gateway, which is like a gigantic dish, which is where all the data goes in they can make money doing that which is very cool then you say well what if we like mess up our latency a little bit and so we can put all these satellites in sun synchronous orbit so they're always in the sun except for during lunar eclipses and then we don't need anywhere near as many batteries and we use laser links to transmit data to and from those via the starlink network although if you didn't have that you could also transmit to the ground and instead of charging people 100 bucks a month to relay like Netflix, where like the value of the marginal bit is not all that high.

23:37Casey Handmer:In fact, Netflix, like all these systems, uses error correction. So you can delete 10 % of the bits and it'll be fine. You won't notice. And instead of transmitting Netflix, you instead transmit tokens of some hyper-intelligent model that you can update with software. So once you got the hardware flying, you update software. And then you say, well, what is the comparative value between your average Starlink bit versus your average Starmind bit of data. And it's probably at least a thousand times more valuable. Like a token. Like what do you pay for tokens versus like your subscription to Netflix or something, right?

24:13Casey Handmer:It's not even in the same category. I was doing a project on Saturday where I rediscovered that like nested loops, consume resources. When I basically had an AI go out and scrape the entire internet for all sources of data on 200 separate topics and then categorize that data across 200 separate principal components, which resulted in like 40 ,000 times. Anyway, it's like 260 bucks of tokens. Like unbelievable. It gave me better results than a team of expert professional analysts would do with a year's work. And this is just like, just as an idea, just like me mumbling into my phone and then forgetting about it um yeah so that's that's real money that's real money right there um it will be interesting to see if uh economic demand for intelligence in the form of you know ai tokens can saturate i suspect not yeah so that's the idea giant giant solar array uh gpus no and and like data center in space you have this like massive thermal problem but you don't necessarily have that if you do it right.

25:20Casey Handmer:Instead of building a giant box with full of racks of hardware and cooling systems, you can actually just sprinkle the GPUs out along the solar array. Because each solar module generates a kilowatt and each GPU consumes a kilowatt. And then just have local Wi-Fi or optical fiber link or something to transmit data up and down the solar array train or chain or whatever. and then you've got a star tracker and a couple of radio antennas and stuff in the middle. Then if your GPU dies, who cares? And it's like, it's bolted onto a solar array and the GPU is the expensive part. Does that make sense? So it's like, well, how do you replace a GPU when it dies?

25:58Casey Handmer:In a data center, you've got all these fixed costs and if your GPU dies, you've got to go find it and rip it out and put a new one in space. You're like, no, no. I've got 100 GPUs on this particular satellite and one of them just died and 99 of them are still going fine. and eventually you know maybe you're down to one or two or they're very old and you just de-orbit burn up crash in alaska if you believe that elon has the same view where token demand is effectively infinite and if you just make more tokens or you know put more gpus up there um someone will buy them and either it'll be him or someone else then how do you think he's thinking through the problem of just maximum scale as fast as possible well it's not exactly a secret oh there's one other aspect of this which is to say uh starlink as a business model is possible if you have like a legal monopoly lock on you know a plurality of the world's most talented engineers and a highly mature launch system that is extremely affordable um and as we've seen with chinese russian european and other american attempts to compete in this space it is extremely difficult to do if your satellites are not best in class, like very good value, and then you don't have access to preferred launch, basically.

27:17Casey Handmer:So how do you do this as quickly as possible? There's probably some optimization to be done in terms of maximizing tokens per kilogram, but ultimately it's about maturing Starship design and then scaling up production. So Starbase, Louisiana. You got one launchpad in Texas, two actually now, a couple going up in the cape and now they're saying 10 or 12 in louisiana and and who knows where else this is another thing he's building this massive launch facility in louisiana and i don't think any i don't think any like dirt has been turned over yet again like you have to go through the federal agencies because it touches the coast and it touches the intercoastal waterway and it touches the mississippi system so the army corps of engineers is going to get a say and it's adjacent to wildlife refuges so like national parks is going to get a say and then the state's going to get a say and like by the time even even at elon speed it may take a long time to get the thumbs up to really start moving on that you think so i kind of feel like he you know if i think about the infrastructure projects that elon has said he's going to start i can't think of a single one that didn't maybe hyperloop uh might be one where he kind of said like he didn't do that personally if you think about like but with these they started work on starbase in what 2012 or something and like not much really took place there until 2018 and then once they started working in in earnest they were held up for months at a time do you not think that he's he has like built teams that are much more effective in like ways that are much more effective at getting these large scale projects done i mean yeah definitely like the reps you don't get worse at it for doing more of it yeah yeah and that's actually an interesting point i think anthony calangelo makes his point on um on main engine cutoff quite often which is that people say well you know spacex makes the best rockets and and so on but actually like spacex and tesla are um are also probably like the preeminent real estate development firms in the entire country right now for example for large-scale projects just in general like if you look at if you look at total cash flow devoted to those particular areas um they're just like best best in class across a range of areas at this point if you had to think about the way that elon operated 10 years ago versus today, what do you think the biggest changes are?

29:30Casey Handmer:That's a good question. I was wondering about this myself the other day because it certainly seems to me that there's less filter and he goes faster now. It'd be interesting to get him on record about how he feels about that, whether he's become more or less hardcore or more or less consequentialist or how he approaches talent development now versus in the past. um for me personally it's certainly been a case of like unlearning a bunch of fairly like logically consistent but not actually useful assumptions or not correct assumptions that i had you know going in um and then finding out the hard way that like no actually the world doesn't work that way i've noticed with a lot of elon's companies there's like this decade-long baking period before yeah i'm surprised like boring company didn't i mean like they're drilling holes it's great like it seems like an incubated for a long time yeah now all complicated things take time i should know that as well as anyone been at this for over four years now but maybe it's just like there's a minimum like six year spend or something to do a new kind of thing from the ground up i don't know elon 10 years ago or 20 years ago would start off with a relatively small team and the company would just take probably like six or eight years to bake before they had like a real you know good product that they wanted to ship like i think it took that long for tesla i think that took it roughly that long for a rocket to make it to orbit um i think it's the very beginning yeah i think it's the same thing for neerolink and boring company where they're starting to like they're starting to ramp on the neerolink implants and they're starting to ramp on the number of tunnels dug or like well i think you know i think for neerolink there was a fairly well understood like set of steps that have to be gone through to get approvals to do like you know stage three trials in humans and then scale up.

31:21Casey Handmer:It's hard to say. I suspect that for the projects that are not obviously on the critical path, they probably don't get priority access to talent. And it really matters having the right people on the job. It's kind of a strange thing. People might assume from the bottom looking up, actually, I think Sean went on about this for a while, that two or three steps above my level, talent saturates. But it doesn't. And if you watch sport, it's intuitively obvious that that at the higher levels of anything it separates you know and um it differentiates and so you know the the three best people at at spacex to work on getting styling up and running made that project possible and previously they had fully staffed the project with talented well-regarded engineers who were making progress but they they weren't going to ship and elon fired them off so it makes a huge difference um there's essentially like i think particularly like a lot of talented people come through school and they're like yeah i got like you know 98 plus in all my exams pretty much saturated the metrics like nope like in the real world there's no upbound there's no there's no there's no like limit to the upside you know like you're 10 times better than the next person good why don't why aren't you 100 times better but what what what would 100 000 times better look like what does it take to get there you would see this in podcasting as well right it's power distributed i think so and the the best the best are really good yes chris bauer said you've gotten better i don't know if i can see it we'll have to wait and see i was having a conversation with one of my founder buddies last night and we were kind of talking about the evolution of elon over time and he didn't believe that you know 20 years ago elon would go into a room and then just like fire an entire team and walk out um but he kind of does that today he does some other things today your founder friend believes that now i believe so yeah um i i learned pretty early on that um and actually it's the same with parenting as well that there's no upside in being like highly finessed when it comes to solving problems right if you're if you want to motivate your team to solve the problem and not escalate it to you they have to believe that like if they don't solve the problem and it escalates to you it's going to be messy and it will be you know and that's just part of it i think but i don't have a recruiting team here right whereas elon elon has very prestigious companies and there's always hordes of people who want to come in and work really hard and he just takes in a lot of talented people and and gives them steadily graded increasing difficulty of problems and it's up or out you know and that's how you surface talent like it's not like you can do some exam at the end of high school and be like oh you're destined to be like one in a million project manager, the only way you find out is you find one in 100 ,000 project managers and you give them the next level problem of difficulty and you see who succeeds.

34:15If you look at Elon over time, he becomes more and more raw, it seems, not only publicly facing on social media and X, but also privately. It feels like he just makes decisions faster. I'm not sure.

34:29Casey Handmer:I think there's more exposure now, but I know a few people who worked with him in paypal days and i think he also shot from the hip then as well sometimes i think i think he did i just don't think he did it in the same way and do you think do you think that there's certainly not a scale he didn't have yeah a hundred thousand people to deal with his messes so do you think there's any advantages to being like maybe a little bit more coarse like sandpaper well there is a there is there is a kind of a question here which is i think a lot of managers or startup founders or whatever will reach a point where where they can't really scale to the next size of the business right but elon has been able to work effectively at organizations or range of sizes that's actually pretty unusual the important thing is getting the message out and it's it's crazy how easy it is to be misunderstood on even the stuff you think is the simplest and i've been coaching my managers here to like boil it down boil it down like your message is getting lost like one bit of information like a single bit of information is really all that needs to be transmitted if you can transmit it well that's enough but you know you you don't have enough time in the day to like sit over all your reports shoulders all the time they have to model what you're going to say in their head so you don't have to say it so it you definitely have to have a big personality or the appearance of a big personality to achieve that do you think that you suffer from probably basically

35:50be warren buffett has this idea of you know there's like investing hurdles where sometimes you have to like be a genius and jump over this 10-foot bar and other investments it's like this one foot bar and he likes to just he likes to just step over the bar whereas i think he mentioned that a lot of smart people get stuck in this trap of trying to jump over the 10-foot bar because they like it's intellectually challenging and interesting yes do you think that you suffer from

36:15Casey Handmer:that problem with a caveat maybe um warren buffett was probably dragging jim simon in that quote and warren buffett's strategy works brilliantly if you plan to live to 100 years old which worked for him but not for everyone i think he was dragging long-term capital management actually probably them too he actually he and charlie has a lot of respect for jim simon's oh of course as friends do like i'm dragging you from time to time um actually charlie uh had this amazing book called Poor Charlie's Amanak. It's really good. Highly recommend it. So it's definitely true that when you set out on your entrepreneurial journey and a year ago, I said, you're a smart guy, access to rich people.

36:53Casey Handmer:Why don't you give up this chit chat nonsense and actually start making things that are useful for people? And here we are. Maybe, maybe you just can't. Oh my God. Apparently there's a competition to see who's the meanest Australian hardware startup founder in LA. And you're adjudicating this competition now earlier ty told me that no one thinks that australians can be mean i think that they can try to be mean i just don't think that anyone serious would listen to their voice and think you know feel bad like we're not testing that proposition all right go for it as we just did um i feel great when you start a company if hypothetically one were um you want to find and an area where you have ideally persistent differential advantage.

37:45Casey Handmer:And so, for example, when I was thinking of starting a company, I was also thinking of working on drones. But it's very clear that like Sauron and co, like they're just going to do a better job than I am, right? There are some areas where I would have insights because of my background and knowledge that would help me, but it would not help me enough to clear the hurdle, which is that this is already an obvious thing for capitalism to work on and capitalism is already reasonably effectively allocating capital human capital and money capital towards solving this problem and that was before the ukraine war like popped off and now it's like this is six years ago seven years ago so now it is extremely obvious that like if you don't have ai and drones you don't have national sovereignty and a handful of countries have even got the memo on that so for me i wanted to find something that i was interested in enough to actually work on for a long time where my particular interests and skills would give me any kind of advantage um and where capitalism was not currently doing a very good job of allocating resources towards solving the problem so it has to be like kind of on the frontier and synthetic fuel actually works quite well for that if you had to you know plot or put uh synthetic fuel on that one foot to ten foot bar where is it in terms of like raw difficulty sure oh well i'm not even sure yet it's it's higher than i've seen it's really ridiculously difficult it it's not as hard as orbital rockets i think but actually doing doing this as a successful business that makes money no one's ever done yeah is it currently in the science projects phase um i think we're mostly past the science project phase at this point like the technology like the science has been around for 100 years or longer but like basically making the scientific process is legible to a manufacturing process that has more in common with kitchen appliances for example um or consumer consumer electronics appliances is just ridiculously impossibly difficult and uh we were just talking over lunch like i made a list the other day of of like hardware companies that have taken a crack in this direction not just synthetic fuel but but a few other things in the same area carbon capture Hydron and a bunch of others.

39:57Casey Handmer:And just the field is littered. I mean, evolution, like capitalism in general, is a system that actually does a pretty good job of recycling talent after ventures fail and you can discharge debts and all the rest. It's a good system. But I feel like this particular field is littered more than most with the carcasses of very respectable attempts to experimentally discover if a particular business model would be capable of generating net value in the space and finding out 10 or 100 or a thousand million dollars later that no no it can't um but to uh kind of misquote uh timothy chalamet in in in the next june film there is a way um i can see a way it's rather narrow uh but we're on the right track here we figured it out but it's it's like at the time i was like this is incredibly obvious and then i went and explained it to 100 people, smart people who know what they're talking about.

40:55Casey Handmer:And I realized this is not obvious at all. It's one of those things where it seems extremely obvious to me, but it is not in fact obvious at all. And even now, if I try and put it down on paper in like a thousand words or so, why it is obvious, it is extremely difficult. In much the same way that I think probably SpaceX had difficulty motivating reusable rockets when they first started doing that in 2014 or 2015. And you had highly compensated professional CEOs of rival rocket companies with technical backgrounds themselves, like that Ariane Spass guy, stand up and say, that's bullshit. It's never going to work.

41:29Casey Handmer:And even if it did, it wouldn't be a good idea. Why is anyone even thinking about this? And of course, it turns out, as Elon says, he's right more often than chance would allow for. His intuition is correct. Actually, I think I'm reasonably confident now, actually, that a lot of elon's advantage here is that actually he is very intuitive and his intuition is is correct rather than him like sitting down in some like secret chamber full of spreadsheets and like deriving some weird thing that no one else saw why do you think he's so abrasive publicly uh if most like if he's got a good intuition and predicting human behavior and human behavior technical stuff really i mean because he kind of does predict human behavior with his companies like he's saying like people maybe like a harry selden kind of way book a car harry selden kind of way i think he's got a good feeling for product okay yeah but like he's obviously not the sort of person who would go out and win an election put it that way is he not i don't think so he's kind of doing that to his companies he's too unguarded no i mean he owns a business and he controls the board it's not a popularity contest he'd never win a popularity contest he just wouldn't i mean we saw that in doge like he's too easy to hate he's too easy to make fun of he's too easy to misunderstand he's too easy to take out of context he's too unfiltered uh which are all good things for us overall because he'd be wasted as a politician this is something that's happened since last we talked is he left doge and the way that i think about doge is it is one of the only things that elon you know organizations or situations that elon's ever coming in contact with and been like this is too hard from what i can tell or it's like the reward for trying is just not great enough well doge did a bunch of different things okay and i think it's not very well understood in general what they were doing but one of the things they did was assemble a whole bunch of programs that should be cut and uh congress voted on it and they they voted against it you know and at that point you could you could continue working there day to day um doing the other things that doge was working on um particularly things within you know your executive uh control or things to do with the modernization of government services and systems but actually a lot of that work has continued without him um and you also have to wonder like what's the opportunity cost of his time it's probably like millions of dollars per minute and he is a officer of multiple publicly traded companies so you can't just like abandon those companies to go and fill around in the government especially when i think well i think i said in the last podcast like it was it was weird to see for me you know a bunch of my like you know i have friends on all sides of the political spectrum but like you know team left you know the ultra work kind of deep state types team up with the uh the ultra right deep state types to kick this newcomer out which is what they did essentially um so anyway we'll see um but yeah i think you know it was as a society we're better off with elon on the outside trying to outgrow the spending state than on the inside trying to trying to prune it i do worry about it though and um i think as i said last time it seems to me highly unlikely that that our political system can survive its long-term structural challenges without solving solving the problem of old age dependency through like radical extensions in in um longevity and um and and also like radically increasing growth so you have to like either smash through these regulatory barriers we discussed earlier or or build new kinds of economic growth that can exist in places that are not yet uh regulated to death uh so that you actually have like permission to grow the economy faster than dependency which is a tough a tough ask these days you know an fdr put in place the new deal in the thirties um it looked like it could be sustained for you know 50 plus years and that was long enough to solve the problem it solved at the time um but you know the basically any country on earth one day will get they'll develop until they're rich enough that people are no longer dying young which is a great thing it's a great thing that you know people your age my age aren't dying of preventable disease but that just means sooner or later we like your description of new zealand and everyone around there is old and everyone has health problems and everyone has dependencies and everyone like children are like crazy dependent and relatively expensive for a few years at the very beginning then they're relatively independent but they're not economically productive for another decade or so and then they become economically productive but for old people you know there's no like economic productivity ahead of them there's just spending down whatever the the society has managed to accumulate which is not like it's it's it's a socially worthwhile thing to do but at the same time it is not compounding right and and sooner or later everyone's old you can walk around you know germany right now the median age is 48 48 right and the median voter age is older than that obviously because children don't vote and you wonder why it is that these these societies why europe is is kind of in its own death throes well why wouldn't they be they don't they don't like the the median voter is is past the point where they can vote for a future they want to be part of you think that this outside of like a major war is there any ability for us to down regulate that's a good question um some people say well you know the regulations get cleared out in a major war but it's pretty clear that a major war in 2026 would be extremely different from a major war in 1941 basically what happens in a war is you end up with this like we're seeing this in iran right now this kind of extremely kinetic exchange of explosives and and weapons that the net effect of it is you're killing people who don't want to die and in many cases uninvolved civilians, the number of people involved in actually fighting these wars is collapsing.

47:13Casey Handmer:Even in Ukraine, the number of people involved in active combat is minuscule compared to World War I and World War II. And so instead of what you're doing is blowing up infrastructure and you're just making money expensive and destroying wealth. So it's just pushing us back in the Stone Age and you say, well, we need to rebuild this stuff maybe. It seems to me that the forcing function for improving regulations is more likely to be competitive pressure. So you end up in a situation, actually we're already seeing this, where the anglophone West is relatively economically non-dynamic compared to parts of Asia, for example, particularly South Asia, and has a lot of homologation in their regulatory setup.

47:53Casey Handmer:So for example, if you're an entrepreneur in England and you don't like the fact that the English government has a certain policy, you could say go to the EU and work there. But how different is the EU? they have all the same structural problems and much of the same laws and despite brexit it's pretty much the same deal you can go to the united states and you get a better deal because capital there's more capital here it's more purposive environment and so on but if you're japanese right you're a young japanese guy and a woman and you want to you want to start a company and and build a new business and build wealth and help the economy grow nope you have to you have to learn a new language go to a new country um and so what i would like to see is it would only take one of these countries to defect from the current consensus that we just have to like increase spending, increase taxation, increase the size of the public sector by like three or four X the size of the overall economy on an ongoing basis.

48:46Casey Handmer:I wrote a blog post a couple of months ago pointing out that Australia for like 15 years now has been locked into a future where it becomes fully communist, essentially like full government control over the economy because the private economy, the economy that actually generates its net wealth and taxes, it's shrinking. But you only need one of these countries to, say, face an existential problem, realize it's facing an existential problem, and undergo massive reform. So actually, Patrick Collison and Mario Draghi recently announced the Rhein Group, which is a kind of a think tank whose efforts are around restoring European dynamism.

49:19Casey Handmer:I find it's an interesting or useful thought experiment to think of Europe as kind of a successor civilization to the civilization that built all the infrastructure that's kind of living in the ruins that infrastructure but isn't capable of building it again and we're talking like not 1700 we're talking like 1960 kind of thing uh like only a few generations ago i think a lot of it was driven by energy scarcity right so like big big economic shock in the 1970s when basically the saudi's nationalized uh satirham co um and uh and then formed the opec oil cartel um and we were able to find like a modicum of economic growth in the intervening periods through capital deepening improvement in public health um kind of a little bit of cold war nonsense and uh and kind of elevation of the developing world and then more recently in software consumer software which is a really great way of improving productivity without increasing energetic inputs particularly although now data centers have grown to the point where they're like pushing double digits of total energy consumption and like we stand around against those limits again.

50:23Casey Handmer:And so it's really important, I think, for us to grow to break these constraints on energy availability. So our friend Isaiah is working on this, for example, with nuclear energy and obviously solar is a key way to go that direction. And then bring back permission to do things. One thing that Japanese do do nicely, and it has its own proclivities and weaknesses, but they normalize construction. So they're actually constructing things all the time. And part of the reason they've got an extremely powerful steel cartel, basically, with very, very politically connected that wants to keep on building things.

50:56Casey Handmer:But they also understand that like, you know, a city is really only a city if it's constantly in the process of regeneration and recreation. And it's completely acceptable to say, well, yeah, there's one or two nice buildings. We'll keep them nice. We'll restore them. But in general, we want to replace 98 % of the fabric of the city every 50 years. Right. What a radical point of view that is. Right. But 98 % of the fabric of the city every 50 years just means that on average your buildings are 25 years old instead of 150 years old, which is a major problem we have faced here in the West. And it means that you get lots of practice in construction.

51:25Casey Handmer:You get lots of practice in project financing and management. And if you build a real stinker, you're not stuck with it forever. You just rip it down and try again. So I'd love to do something with the salt and sea one day. It's this environmentally desolate wasteland in the southern end of California that could be like Phoenix, Arizona, but with this beautiful lake in the middle of it could be the most extraordinarily beautiful part of the world. And there's no downside to trying. The worst that can happen is it remains an environmental catastrophe. It is already an environmental catastrophe.

51:59Casey Handmer:You could only improve it by changing it. It's kind of like the right to try laws around using weird drugs if you're dying of cancer anyway. What difference does it make? On the same kind of threat of regulation in America. America! I've never understood this idea that if Elon believes that the kind of like American system and all the regulation that surrounds this is basically like this unstoppable, you know, thousand strings, you can't do anything over time situation, like he's not going to import that bad system to another planet. One would hope not. And I think that's kind of the libertarian, you know, you need, you need one state, which tries things differently, does things differently to become competitive, right?

52:42Casey Handmer:So in some sense, the Arab states do this. UAE has radically lower taxes. It's quite attractive to certain areas. And in the United States, the federation, different states are able to compete in terms of their regulatory approach to various things. So some states have decided they're going to be business-friendly places. Other states are so wealthy through no fault of their own that they can afford to be extremely profligate in the way that they spend money. Cough, California, cough. um yeah there's never been a really strong forcing function for great governance in any part of the United States um but yeah we we need we need one Western liberal ideally Anglophone democracy to defect and say we're going to adopt a extremely like aggressive to regulatory agenda like AI is a great way to do it you say like hey I I had Claude 4.6 do this a year ago like in just the complete corpus of American law and regulation and compress it to 4 ,000 pages, which is a McMaster car catalog book.