Base Power Raises $1B led by Addition, with Trust Ventures, Valor Equity, Thrive, Lightspeed, a16z, Altimeter, Stepstone, Elad Gil

0:00What SpaceX did to aerospace, what Anderroll did to defense, no one has done to energy. If you look at the energy industry, it is this kind of sad combination of the largest and least innovative companies in the economy. The most valuable asset of the company is the team. Companies are just a bunch of people sitting in a room, welding things and clicking keys on keyboards. And if you don't have the best damn people in that room, like you're just going to lose. You've never heard someone say, I love my power company. And we got to change that. If you're listening to this and you want to do the best work of your career with the smartest people you've ever worked with, you won't find a place where you'll be pushed by your peers in the way you will at base.

0:29Last time we talked, you raised a$200 million Series B led by Edition. Zach and Justin, congratulations on your$200 million Series B announcement. And today you have some extra news. So can you share what happened? Edition is leading a billion dollar Series C. A billion dollar Series C. That is correct. Energy has also become a huge bottleneck in AI and superintelligence, but I'm not sure many people understand. There's two things. One is electricity cost function and how it influences what technologies get built and what doesn't. And then there's the actual access to megawatts problem. I know you're thinking in megawatts, but have you listened to the recent Jensen and BG2 pod?

1:06I have. We're thinking in gigawatts. The race to gigawatts is on.

1:20Zach, welcome back to Sorcery. Thank you, Molly. It's good to be back. Thanks for having me at your new factory. Yes, you are clearly standing right in front of Base Factory One. I had no idea the weather in Austin is so great this time of year. Like, it's not that hot. Yeah, it's blue skies, cool temps, can't beat it. Okay, so I believe we last talked about maybe like five, six months ago, and I had no idea this was going to happen so quick. But last time we talked, you raised a$200 million Series B, led by Edition. and today you have some extra news. So can you share what happened? Yes. Addition is leading a billion dollar Series C.

2:05A billion dollar Series C. That is correct. Yes. Okay. One billion dollars. One billion dollars. How did this happen? How did you guys raise so much capital in such a short period of time? So I'll say a couple of things. The round is led by Addition. All of our existing major investors are reinvesting. So Thrive, our earliest backer, Valor, who led our Series A, Altimeter, Andreessen Horowitz, Lightspeed, Allad Gill, you know, a number of other firms that have been on the cap table and investing in every round. And then routing other firms to the cap table as part of the round. So Ribbit, Capital G, Bond, Spark, Gladebrook, Positive Sum, and Lower Carbon, Avenir, a bunch of other firms that share our kind of long-term orientation and conviction for this opportunity.

2:52What I'll say is a couple, you know, a couple more things, I guess. One is that the business momentum is undeniable. We're growing incredibly quickly. We're adding customers on the order of 30 % month for a month, doing millions of dollars a month in revenue. We've got more demand than we can serve. We've got thousands of customers on our wait list and a multi-month backlog. And the business is ramping in a way where capital allows us to unlock the next phase of growth. And, you know, as you can see, given you're standing clearly right in front of our first factory, we're making investments today that will help us scale into the future on a five and 10 year plus time horizon.

3:36So, you know, our business is vertically integrated capital intense, quite complicated and requires a lot of investment and planning and execution. And so this round is just kind of the next step in that story. It did come faster than we had kind of planned or anticipated, although we don't do much like specific planning around fundraisers. We think about it in a more holistic way around how much capital do we need to get to the next phase? What is the most efficient use of that capital between now and when we get there? And I think Lee, who's on our board, who led the B, as you mentioned, saw the business momentum, saw the opportunity to pull forward some of that vertical integration and saw the execution of the team and the size of the prize kind of on the other side and said, hey, I want to catalyze this round and invest a lot more capital.

4:25and our existing capital tables, you know, excited to participate. And we're able to bring on some really exceptional firms to partner with us on this mission. So the investors that you have in this round are quite diverse. You have lower carbon that focuses a lot on sustainability and climate. You also have Gladebrook, you have positive sum, you have 1789. And then you have some really heavyweight investors like Ribbit, Capital G, bond, valor equity, addition. How do you think about this balance of strategics involved in this financing and how do you manage so many names? Yeah. So we think of our cap table as a strategic asset to your point.

5:06So there are the growth funds and the kind of sector specific funds like lower carbon that bring unique insight and experience and kind of pattern matching around other companies of our ilk or similar businesses that are going after large incumbent dominated industries with kind of new business models. Take SpaceX, obviously, Valor is an early investor there. Many of our investors were early investors in companies like Uber and some even in companies like Amazon and Tesla and businesses that are going after large industries with new business models and you know they're technology driven and r &d focused and engineering led and so uh we're adding folks at the cap table who see that kind of pattern match and want to be a part of of that growth um and then yeah we've added some strategics to the cap table so lennar has been an investor they're obviously one of the largest single family home builders in the country they've been an investor since our seed round uh we have starwood on our cap table which is one of the largest real estate developers in the country um and maybe a hint as to where some of our next products are going.

6:14And we can talk more about that. And then we've got some institutions on the cap table as well. The WashU Endowment is investing directly. We have a couple other endowments investing that we're really excited to be a steward of their capital too. So I think it's about bringing resources, bringing expertise, bringing sector-specific knowledge to the team. We think of these investors as part of our team. And we're excited to leverage all they bring to help us in our next phase of growth. I reached out to some of your investors for some questions for you. And one of them is of all the investors who backed you, one of their names starts with E and ends with lad.

6:54Who is your most favorite and most helpful investor? A lot is definitely the most handsome.

7:08You can't pick favorites here. We spend a lot of time with our board, Valor and Addition. The Addition team is, I think the board members and the people who lead these firms, Lee in the case of Addition and Antonio in the case of Valor, get a lot of the public recognition, but their teams are incredibly strong. So Roshni and Todd at Edition and John Shulkin and Ana at Valor and the rest of their team, they've got incredibly talented people that have seen, like I said, businesses like this. They know how to help us. They know what problems we're going to face. And they're incredibly good. I mean, Valor had a team of people down in our office for a couple of months helping us work on some of our deployment factory scaling problems in the early days and they were extremely helpful.

7:55Addition has been really involved in our regulated utility business, which is becoming a larger and larger focus for the company. So super grateful to have both those firms on our board. Obviously, very grateful to have Alad on the cap table. And he's certainly one of our favorites too. Alad is an interesting, great guy to have on the cap table. Another question that we have from one of your investors, it's Eric at Altimeter. And so he mentioned that BASE has a refreshingly blue collar culture. Can you tell us more about the phrase chop wood, carry water? And what does it mean embodying that and other mantras within the culture?

8:31Yeah, it's the concept that there's no job too small. And we get up every day, we come to the office and we get to work and, you know, we show up early, we stay late, we do the little things. We don't sit around thinking about, you know, strategy and, you know, pontificating, basically, we just like get to work. And I mean, And you can literally see it happening behind me. These are not paid actors. Like this is this is our HQ. This is the middle of the office where, you know, until we move all of our stuff into base factory one where you're standing in front of. Like we're just doing a bunch of the assembly of our test modules, like literally right behind me right now.

9:08So we get our hands dirty. You know, all of our leaders are ICs. You know, I'm still doing IC work all the time, every day today. And we take a lot of pride in that. And I think, you know, one thing to think about here is like, if you look at our leadership team, so to speak, it's basically the first five people at the company. And so these were the only ICs, right? They weren't like hired managers to go build teams to do the work like these people did the work, right? So our first hire, Jared Green, was our head of software. He came from, you know, he led the laser topology team at SpaceX, the team that built the mesh that connects all the satellites in space.

9:42He's our first software engineer. He wrote the first line of code at base. He's our head of software, right? Our head of deployments, Dana Paz, who was a manufacturing engineer at Anderil, leads all of our deployments efforts. Like the first batteries were installed by Dana. They weren't installed by people that Dana hired. Right. So Cole Jones, our head of GoToMarket, he ran GoToMarket at Starlink. The first customers, like I vividly remember Cole and I getting in the car, driving up to Round Rock, knocking on doors and trying to convince people to be our first customers when we had, you know, no product, no revenue, no customers, nothing to show for.

10:12By the way, I wouldn't recommend knocking on random doors in Texas because you get some particularly aggressive people, but it is an interesting learning experience. So, you know, I think we have a team of doers and people who are really not afraid to get their hands dirty, not afraid to do IC work. And it's a really good example to set, you know, as we continue to scale the team. sorcery is brought to you by brex the financial stack trusted by more than 30 000 companies including one in three venture-backed startups in the u.s nearly 40 percent of startups fail because they run out of cash brex is literally built to help founders avoid that unlike traditional banks that let your money sit idle shipping away at it with fees brex's designs help you spend smarter and move faster their all-in-one solution combines checking treasury and fdic protection into one powerful account.

11:04You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one. With same day and even same hour liquidity, access your funds anytime. Companies like Scale AI, DoorDash, Service Titan, HIMSS, Anthropic, Flexport, Robinhood, and Plaid trust and use Brex. Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. Talking about your founding team and founding the company, you were at Thrive, you've worked across finance, and then you and Justin came together through his time at Anderle.

11:47Can you talk a little bit more about how you guys came together, how you got conviction on this? I know we already talked about this in our first podcast together, and you guys have a really great explanation, but could you share more about how you came together and the opportunity that you saw? Yeah. So I had been studying this kind of energy paradigm shift for three to four years prior. So I started my career at Blackstone, a big private equity firm in New York, and I kind of looked at opportunities in the space there. And then at Thrive, I kind of picked the thesis back up and started studying the battery value chain.

12:17And the way I would describe the paradigm shift very simply is the last five decades of energy have been defined by coal and then natural gas. And the next five decades of energy will be defined by solar and battery storage. And by the way, it has nothing to do with ESG or climate change or anything like that. It has everything to do with cost. So the lowest marginal cost way to add a watt to the grid, to add a megawatt, will be solar and storage. And that kind of clicked with me in 2018, 2019 when I was at Blackstone and really stuck with me. And then when I was at Thrive, we made large investments in SpaceX and in Anderil.

12:49And I got to see those companies from up close. And it was a pattern match. It was like, oh, wow. You know, what SpaceX did to aerospace, what Anderle did to defense, no one has done to energy. Right. If you look at the energy industry, it is this kind of sad combination of the largest and least innovative companies in the economy. They're not engineering led. They're not tech focused. They're not R &D driven. And when I met Justin, I realized, like, this is the person I was looking for to kind of partner with me and go build the kind of SpaceX of energy. And so after we met and we met as part of the Anderle building process, I went down to a factory tour and Justin was my tour guide.

13:23and we spent all day hanging out, we became friends and we started texting and chatting and throwing ideas back and forth. And I called him one day and I said, Hey, you know, I've got a pretty crazy idea to go build the SpaceX of energy and I need a co-founder. Are you interested? And he was like, yeah, I'm interested. Let's, let's chat. And so we spent the next three, four months kind of running down the opportunity. And then from the day we started the company, our, our kind of number, our number one focus, not kind of number one focus. The number one focus was the team. Like the most valuable asset of the company is the team.

13:50Companies are just a bunch of people sitting in a room, you know, welding things and clicking keys on keyboards. And if you don't have the best damn people in that room, like you're just going to lose. And so we have put an incredible amount of time and effort into recruiting, right? So we talked a little about our early team. We talked about our head of software, Jared, who came from Starlink, our head of go-to-market, Cole, who also came from Starlink, Dana, our head of deployments, who came from Anderil, our head of hardware, Dino, led Powerwall Engineering at Tesla. He was there for 13 years.

14:17His team designed the Powerwall 3. our head of manufacturing led model three battery manufacturing at Tesla, our head of supply chain led procurement at SpaceX for 10 years. So we've got, you know, we've got just incredible players all over the field. And we spend a lot of time with them. We spend a lot of time trying to communicate to them the mission, the vision, the strategy, getting them really excited about what we're doing. And that makes for a really strong culture, right? Because you have people here who are the best at what they do. They're incredibly intelligent. They respond really well to being challenged and being pushed.

14:47And so they just really build on each other when they get here. And, you know, you didn't ask this question, but I'll kind of make the segue myself. You know, what does the billion dollars do for us? Like, yes, it allows us to build factories and invest in, you know, hard infrastructure and battery CapEx, but it also allows us to scale the team. And to build the future of American power, to build the modern power company, the electric era, we need the best engineers, operators, and creatives in the world to join our team. And this capital allows us to go do that, not because we're going to pay open AI and meta salaries.

15:21We think about it a little bit differently, but because we can go tell these candidates and show them that we are willing to make the capital investments necessary to play this game on the biggest stage. And I'll say something to you that I've said to the team, which is like, this capital raise is necessary, but not sufficient to achieve our mission. And the game that we are playing, which has become a global energy market leader, a billion dollars is just like the ante to sit at the poker table. Right. Like now we're in the game and we can kind of get started. Before we were just kind of like playing around in the kiddie pool.

15:56Right. Now we're like in the deep end and we can really start playing the game. And so this will be the beginning or just one of what will be future fundraisers and future efforts to establish ourselves as a market leader. But all of that will be driven by the team that we build and it will remain a core focus of ours going forward. It's so fascinating and impactful. I'm curious, as you mentioned, with this funding, you're going to be hiring out. But what is the process for that? How do you see the next couple milestones that you need to hit? and what are the teams underneath it that you have to fill out?

16:31Yeah, so you're standing in front of Base Factory 1, which will be the site of our first custom manufactured base battery. It's happening behind you right here. Some of our modules are going out for testing. So the next phase of the company is really landing our custom hardware, becoming the fastest deployer of battery storage in the world at the lowest landed cost in the world. Those are really the two operational north stars of the business, and every team will be working on that. So on the hardware side, it's developing the technology, working on our next generation product, working on some future products that we're not yet ready to talk about, but will be able to soon, which is all kind of pointed towards the broader North Star of affordable, reliable power for all.

17:12On the software side, it's managing the network to make best use of these hundreds of megawatts and very soon gigawatts of capacity that we have on the grid. It's building the consumer facing software. It's managing all the internal processes to make our system more efficient. And then on the go-to-market demand side, this one is really exciting, I think, which is building the first beloved brand in energy, right? I mean, you've never heard someone say, I love my power company. And we got to change that, right? And so we have the opportunity to do some really innovative and exciting things on the brand side, marketing, design, front-end engineering, which we think will be really differentiated in the industry.

17:52So we're hiring across hardware, supply chain, manufacturing, software, firmware, power electronics, design, marketing, sales, support, finance, business development, recruiting, talent. By the way, we have a two-person talent team that has built this team of 200 people. Now, they're incredibly good and they work super hard and I spend a lot and I'm not included in that. I spend a ton of my time on hiring, recruiting, and all of our six leads spend a bunch of their time on it too, but we've got to build the team to build a team as well. So we're hiring across every part of the business, which is really exciting.

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19:01One of the things that I remember from our first conversation that I was absolutely astonished by was the fact that people were moving across the country to come work for you. Have you seen that accelerate? How many people on the team are coming from outside of the state or outside of, you know, Austin? Yeah, a lot. I mean, I don't have a number off the top of my head, but I imagine it's close to half of the team has relocated to Austin to join us. Part of it is that Austin is a really awesome place to live. And I think people are figuring that out in kind of mainstream, but it's still underrated in my opinion.

19:32And I think Austin's best days are certainly ahead of it. And we're very early in the kind of Austin arc. And I think the next decade for Austin is going to be really exciting. So it's a great place to live, but also base is just a really freaking fun place to work. You're, you know, we like to have fun here. Like we take our work very, very seriously, but we take ourselves not that seriously. So, you know, we crack jokes, we high five, we laugh, we, you know, give each other a hard time. We've got inside jokes of the company. Like it's just a very fun place to work. And so what often happens is we'll kind of nerd snipe candidates with like the interesting technical problems that we're working on and the scope of our ambition and the size of the opportunity.

20:10And they'll say, oh, you know, I'm interested, but, you know, I live in the Bay or I live in New York and I'm not sure about Austin. And then they'll come for an onsite, which is the last phase of our interview process we can talk about, and they'll get hooked. They'll be intoxicated by the energy in the office, right? So you come in here and you see all the machines, you see the hardware and you see, you know, the engineering and you talk to the people and you sit and you have lunch with our team, which, you know, we do lunch and dinner together, which is a big part of our culture. And people kind of become, you know, hooked on the energy in the office, no pun intended, and they want to be a part of that.

20:40So it's partially Austin. It's partially just the vibe and the culture at base. It's a very fun and interesting place to work. And then I think obviously the mission really speaks to people. And so people are willing to pick up their lives and relocate to work on something that they feel is really important. Yeah. I've tweeted this out before where, I mean, I definitely feel the energy of certain cities when I'm in them and you feel the influence and the weight of like the legacy and everything infrastructurally that's built it that it's it's like traditionally yes like you go to new york for finance for art you go to san francisco for tech for ai you go to la for creative stuff like texas for me like that seems like the energy capital of america if not most of the world and so like as you think about that and you think about um creating this new culture for energy there what do you think are the like foundational principles that you're trying to instill for setting this new, I don't know, this next generation of energy?

21:38I think it's that you can do really ambitious things and you can work on large scale projects and you can build factories and you can, you know, bring new products to market with unique business models and you can take risk and you can win. And, you You know, I think that in software world, there's a lot of downside protection and kind of, you know, it's, you know, these businesses are largely not very capital intense. And you often see, you know, founders start a company and they try something that doesn't work and they start another company, try something that doesn't work. And then, you know, I think that's less prevalent in capital intense, hardware, manufacturing, operating.

22:19Like it takes 10 years to get the business off the ground, right? Like, yeah, we've had a nice, you know, two and a half year run to get started. But like, we're kind of this is still like the opener to the to the main to the main event. Right. Like we're just getting started and to build something, you know, at scale in the energy industry. And, you know, we talked about the billion dollar ante. Right. To like actually play in the large kind of on the biggest stage. It takes a bunch of time and a bunch of capital and a bunch of, you know, damn hard work. Um, and so I think that, you know, that mindset of like taking big swings, doing it in an analytically rigorous way and having that belief that like we can shape the world around us and we can build, you know, the, the grid of the future and the country that we want to live in.

23:02Um, it's very inspiring to people and it's certainly inspiring to me and the rest of our team. Energy has also become a huge bottleneck in AI and super intelligence, but I'm not sure many people understand, like that's become a headline topic. It's a huge topic. It's very, it's intense. like it is a huge constraint, but I'm not sure many people understand it on the consumer level. Could you break down more of like what's happening on the ground and with your customers? Yeah. So there's, there's two things. One is just like the kind of electricity cost function and how it influences what technologies get built and what doesn't.

23:31And then there's the actual, just like access to megawatts problem. So on the first point, this is, I think pretty straightforward, but it's worth explaining. So electricity is a material percentage of the cost to do a bunch of things, right? Industrial processes and different kinds of technical innovation. And so as the cost of energy goes down, the number of things or manufacturing processes that become bankable or financeable go up, right? As the cost of electricity goes up, the number of things that become bankable or financeable go down, right? So the higher, you know, the cost of electricity in the country has gone up roughly two and a half extra last 20 years.

24:11Like that means that we can't do things. We can't innovate. We can't build big factories at the rate that we could if prices were going down. So if we want to build more data centers, if we want to build more factories, we need to drive the cost electricity down, which is obviously why we're here. So that's one piece of the equation, the cost piece. The other is just the access to megawatts. So today, if you want to put new megawatts on the grid before base, you have to wait in what's called the interconnection queue. You have to get a permitting and kind of interconnection study done. It takes a lot of time.