Nuclear Race to Power AI: Valar Atomics, Fuse, Not Boring

23:57You have these power laws about when you find a technology that is actually scalable and is actually cheap, it takes everything. And that's very much our intention here. Amazing. Well, Isaiah, it was a pleasure to have you on as the number one first guest of the day. First guest. I win. We have like 50 more of these. We could just probably close it up now, right? Yeah, mic drop, shut it down, turn off the lights, let's go. That's right, exactly. go enjoy re-industrialized. Thank you. Yeah, thanks, Bella. JC and Packy, welcome to Sorcery. Awesome to be here. Great to be here. Are we your first founder investor duo on Sorcery or no?

24:36I think so. Amazing. Oh, awesome. I think so, at least in the last 48 hours. We'll take it. You've done what, 50 podcasts in the last 48 hours? I think I'm approaching 172. That's awesome. Wow. A lot of hours of footage. People are going to love all that content. You wouldn't believe how many hard drives we've had to fill up. Is that true, actually? People don't talk about the file sizes on 4K video. Should we? No. Let's talk about Fuse. JC, could you bring us up to speed on Fuse? Yeah, so Fuse, our mission is to accelerate the worst transition to fusion energy. We work on fusion technology for both defense and national security as well as long-term clean, safe, abundant and on-demand energy generation.

25:24And so we've built the world's highest pulse power system ever called Titan. We fired that for the first time in March of this year and we live streamed it and published the results in Nature. We also built and a couple weeks ago published in Nature another paper on the most efficient neutron delivery system and pulsed neutron system that we also published in Nature. And more timely, just yesterday on July 16th on the 80th anniversary of the Trinity project, we announced a partnership with Los Alamos National Lab. It was very interesting spending time at Los Amos and hearing the tagline of the project, there's many, but one of is, you know, build a bomb to end the war.

26:11And that successfully happened in 1945. And 80 years later, I believe we're now in a sort of war where there's a very existential threat. threat and, you know, fusion, I believe, is going to help in, you know, ending this next phase of war and maintaining U.S. and Western society and values, supremacy and leadership in the world. Low key about it, but that's huge. Paki, from your perspective, you've been kind of like scouring the space for a while. Like you go super deep into it. You've written about it all over. could you explain fuses positioning within the map i would love to uh so we did a couple of years ago julia dewall and i did a podcast called age of miracles that jc was on we did half the season on fission half the season on fusion and in both cases i kind of want to just understand like energy i want to understand why we weren't doing fission when it was like this miracle source of power i wanted to understand how close we were to actually like getting to to fusion power but like at no point in that series that I think I was doing this as a way to meet companies that I might invest in because vision seems capex intensive fusion seems capex intensive plus unproven and so it's kind of more like I want to get the base energy goes into everything else that I'm interested in investing in but like I don't want to actually invest in any of these companies the big difference and there's like you know JC will do better at telling you like the technical differences and all the different kind of uh generator designs uh and it's like mind numbing the combination of different generators and fuels and all sorts of stuff.

27:49But the big difference, I would say, with Fuse and anybody else is they're already making revenue and that they're not going straight shot for commercial fusion power, but they're selling radiation kind of on the way up towards or down towards, depending on how you want to look at it, towards eventually doing commercial fusion power. And so it's a real business that is going to generate cash flow. And by making kind of more pulse power generators and more of the components that they need to sell radiation, bringing all the components in the eventual reactor down the cost curve. And you could talk about the kind of like three things that you're optimizing for here, but like the commercial business and government business in the short term helps get towards the power business.

28:28And to me, that's just like the most beautiful business model in all of fusion because it is an actual business model. Well, we're all sitting here at Reindustrialize in the beautiful city of Detroit. right? I have to ask you, what is FUSE's role in reindustrialization? Yeah, it's a great question. And I think Paki did a really exceptional job at writing a long memo on the company, which I still encourage a lot of people to read. And part of what was there is how hard it is from the supply chain. So when people talk about fusion, everybody's focused on Q greater than one. But in my mind, we can perhaps do that and show that Q is greater than one, but all the components, the supply chain, the reliability of the millions of parts that would go in a fusion generators need to be on par to meet the promise of fusion, which is a baseload power source.

29:21A fusion is not operational. A fusion power plant is not operational 99.9 % of the time. Or if you have to rebuild it every few months, it's pretty much useless. So therefore, there's a whole supply chain ecosystem that needs to be built that doesn't exist today, frankly. And therefore, there's a lot of components. There's an ecosystem. And even when you think about... So I'll give you one example of how it died and why we need to revitalize it. The National Ignition Facility, which is at Lawrence Livermore National Lab, is the most powerful laser on the planet. They're the only facility that's demonstrated fusion break-even.

30:01they have these very specialized components that they've built in the 1990s, early 2000s. And they've supported a whole ecosystem of suppliers. Some of them are even overseas, close allied countries. And those companies died because after NIF was built, there was no demand. And so we've lost a generation of know-how, of supply chain, of manufacturing, of reliability, of optimization. And we really need to rebuild that. And Fuse has invested significantly in vertical integration and bringing manufacturing in-house. You know, Titan has 40 ,000 parts. We make roughly 75 % of them in-house. And we're continuing to increase that percentage.

30:43Because otherwise, we have no way to get to the economic price point. As well as the technical requirements. And third, meeting just the timeline. So there's how do we make Fusion economically possible? as supply chain components in a large way. Second is continuing to meet the technical requirements for highly demanding technical specs. And third, continuing to respect timelines so we're on time and on budget. Can I jump in with a question? So obviously, I've gotten obsessed with this kind of vertically integrated model. I came up with that thesis for the fund, in part by seeing what you're doing at Fuse and seeing that if there's a piece or a component that is over cost or slow or whatever, you can just go make it.

31:32And it's beautiful to be able to iterate that fast. Do you think it's just a function of where we are, though? In an ideal world in 15 years, is there an ecosystem that's developed and you actually build less of the components? Or do you want to stay that vertically integrated kind of throughout? Well, so the choice to vertically integrate is like a really painful one, because every time we try not to vertically integrate and we start and we keep paying that same lesson over time, it's like, oh, this is a trusted supplier that seems to have worked with defense companies for like a decade or so, and I supply in others so we can trust them.

32:04And then we get disappointed more often than we would like. And sometimes we're not. There's some vendors we've worked with that are really great. And that's really awesome because that's one of the things we have to do. And so I'm really betting and hoping that over time, while we will still continue to take on the risks that we must take in order to continue to hit our timelines and milestones, I really hope and believe that there's going to be a time where supply chain in America becomes as reliable. And China has, for example, been reliable in electronics manufacturing. And so that's why people then feel the need to vertically integrate 10, 20 years or 30 years ago, right?

32:49And so there's examples of how an ecosystem of highly efficient suppliers is really rewarding to build fast. And right now, the only reason we have to do it, and I believe companies like SpaceX have to do it, is because just the culture of suppliers now, they're always late because it's increased your cost plus budget anyway. So there's really little incentive to be on time and on budget. Power and energy has become one of the hottest topics right now because we've entered this cascading transformative evolution of AI and it's just increasing demand across the board. And so we're just seeing so much uplift and sentiment around the new administration, around the tech industry, and that sort of thing.

33:33I'm curious from your perspective, going in and out of the White House, what is the sentiment there? And have they taken to fuse well? What's the What's the relationship like? Yeah, well, I think people are starting to realize that the main bottleneck for data centers, for compute, for model, is not really as much GPUs or construction capacity. It's literally how do you power the data centers. And Jensen Huang mentioned a couple months ago that one gigabyte of power to power a data center is around$60 billion to build. that's how much revenue Boeing makes a year. And so that's really untenable and uneconomical.

34:19And third, also unaffordable completely. And I think that the dollar per kilowatt hour is directly related to how much GDP outcome we can produce, how much compute you can use. And I believe more energy is directly equals more intelligence. And so therefore, our limiting factor to building compute is not the training models, it's not the data centers, it's literally how much power we can have. And right now there's, so, and first US has become, we've made it really hard to build and people realize that. You see a lot of people from Secretary of Energy to the president and and others in this administration that really realize that.

35:07It's very hard to build in America. And then second, energy is really the limiting factor for AI and a lot of other technologies that are on the agenda. And then third, China has been building really, really fast. If you look at their growth rate, they're surpassing and exponentially increasing their power capacity, and that's really concerning. Do you think we can catch up to China? Are we left in the dust already? No, I believe we must. And so whatever it takes, we need to do to get there. And the sense of urgency is felt by very smart people. And I believe that this country is built on hope and optimism, but also on being the underdogs and doing whatever it takes to win.

35:52And so I'm committed to winning that race. There's no choice for us to fail. We just can't afford for China to become for fusion or nuclear what other countries have become for oil. What do you think, Paki? No, I mean, I think you look at the solar charts out of China and they're terrifying. You look at nuclear plants being built in China versus nuclear plants being built here, and it's terrifying. You look at their ability to export them to other countries and desire to do that while we kind of sit back and I think for a lot of years just pretended that nuclear was dangerous and unsafe and unclean and all of those things.

36:31And thankfully now I think we're waking up. I mean, we're here at this conference. There's like multiple nuclear companies here. There's one fusion company here, I think. You're the only one here, which is great. There's a lot of companies working, not necessarily on solar panels here, but on like what you do with a ton of solar panels. So there's Terraform, which Casey does. There's other companies doing similar stuff. I think if we can build that kind of machine around energy production so that we can just like put as much power as we possibly can and find uses for it, we can catch up. But it's certainly not easy to be able to do that.

37:05Yeah, one more thing as well. And when you think about how do we beat them, I think we can be incremental. I think we have to think differently. And when you think about fusion, it's the energy density equation. If we solve fusion first, that's replacing from an energy density perspective. It's a million times more than oil or coal. So even if they built a million coal plants faster than us with one fusion plant, we can beat all of those from an energy output perspective or energy density. And I think how much they need to produce in order to beat us. So I think one way to win the race is really to continue doing what the U.S.

37:41has done historically, which is lead with innovation and with new technologies. Yeah, it's funny. Isaiah at Valor Atomics kind of makes this point about the fact I feel like China certainly is putting more nuclear online than we are, but they're using kind of old U.S. designs to do that. And like where we potentially win is on the innovation. Fusion is like the next kind of like bigger example of that, where ideally we get to commercial fusion power quickly and then just roll that out. And I think that could be a big source of advantage. With all your accomplishments to date, what are you most excited for in the next year?

38:18What's the next unlock? Well, we're bringing a new facility online and we're very excited about that. We'll also be announcing a new facility later this year. So, continuing to build, growing the team and continuing to serve customers. We got to get you out to one of these too. I went up for the test fires in Montreal and it's so cool. It's just like red light, these pulses happening. I felt it's like one of the coolest days I've had in the past couple of years. Sounds like a rave. we work hard and play harder and um so it's pretty cool i'm very happy to pack made it and the team is just absurd it's like yeah the the the combination of like jc who i think like if you can't tell already is like one of the most exceptional founders out there people who served in senior positions in the government uh the number of two kind of nuclear scientists uh in in iran who who came over here to kind of work on on our side here and then just like everybody that i met who was like you know working on the machines like top to bottom just like an unbelievably cool team i've like i i maybe this is like the wrong way to think about it and like that's more about me than the companies but like one of the things that i like is you know however like percent dumber i feel than the people that i'm like talking to up and down the stack of the company and i've like maybe never felt dumber than i did a few years they're like here's how you like plug something in and I'm like oh that's amazing that is so cool but like it just like on it was like so cool to see because like you hear about fusion is this thing that is like 20 years away and then to go there and see this like kind of messy like not in a dangerous way or anything but like facility where there's just like wires and like there's like things happening and being built all over the place is it was like very cool it made it very tangible and real that fuses like an actual business that's doing stuff right now yeah we got to get you the next one I'll be there just invite me.

40:05Send me a, send me a Cal invite. You need to do it like months in advance now, by the way. I try to get like a last minute conversation with somebody in Molly and she's like, are you kidding me? Like I can't do this. You send me like the week of, I'm like, Paki, I'm like in Paris right now. Like how am I going to get there in time? I'm not that fancy. So I'm able to hop on, but I understand that you're in Paris sometimes. So I need a mobile kit with me. You do. I do. Love premium merch just as much as we do. That's why sorcery uses fourth wall. Everyone from creators like Marcus Brownlee to podcasts like acquired to orgs like the Smithsonian Institute are using 4th Wall.

40:39They let you create and sell premium products without having to stress the details. They handle everything from production, shipping, customer support, taxes, even giveaways. When it's time to level up and make gear that people are actually proud to wear, that's when it's time to use 4th Wall. And that's why we've trusted 4th Wall for all of our brand wear at Sorcery since day one. Use my link in the description to get free credits for your first order. And for any VCs, DM me on X and I can get all your portfolio companies set up with a free samples credit deal. But yeah, so as we as we shift over to the packy side of this conversation, roaming around, I mean, we saw a robot on stage today, which was a part one piece of the great differentiation that you wrote about not too long ago, which I thought was like a really good solidification of like what brand personality has become and how important that is for companies today.

41:37We're in like a sea of AI slop left and right. Like people are not creative anymore. And there are some real leaders in this space that are super creative and putting a stamp on it. So from the horse's mouth, tell us about the great differentiation. Nay. No, so the idea behind it, actually, before I wrote this piece of great differentiation, I think you summarized it well, that kind of like there's, if there's all this AI slap out there and there's all this sameness, then like that just creates this like very big opportunity to do different stuff. And, you know, we saw it with John Collison at Stripe doing Cheeky Pint in like a pub that like another founder who's not Irish, like can't pull off doing the Guinness in a pub thing.

42:20Like it's very much like their thing or Vlad Tenev doing the announcement about crypto token stocks in this like beautiful, you know, palace in Cannes and like this well-produced thing with James Bond music in the background and like drawing on chalkboards. It was just like unlike it wasn't a Steve Jobs presentation. It was like a very unique, like kind of net new thing. seeing more examples of that from like the companies that have like taste or the companies that like understand that to stand out like you actually do need to do something that's both different but like different in a way that's that's unique to you I wrote the piece like I had actually written a full other draft like I've done this a few times where I like start writing like a kind of negative like impacts of AI draft I'm like that's a negative version of the story like let me talk about the positive version and then I saw the Robin Hood thing and I was like that is what I'm talking about.

43:10And I think like one of the things that I wrote about the piece that I think is true is like, it's understandable that if you're making kind of, you know, like B2B SaaS and love B2B SaaS, you know, there, there are some great B2B SaaS companies out there. I don't think we get to the spot that we're at here at re-industrialized if people haven't been building software for the past 50 years. So like, this is not a knock, but if you're building a product that like lives in this little screen and like, looks kind of like, you know, people have to be familiar with these products, you don't have that much room to kind of roam on, on your branding and messaging.

43:41A lot of these companies like do JC has, you know, has pulse power generators that like shoot just like a ton of energy at like this very small target and make red lights and, you know, loud, loud noises. Uh, you know, there's robots on stage and roll has, it's like anime, but it also has, it's like kind of full, you know, autonomous drones that it can fly out and take video of. And like for these companies, there's just like actually an opportunity to just show off what you're doing. And like that in itself is differentiated because it's so hard to do that like just actually getting the thing done, like kind of creates all of this unbelievable content for you that other people just like definitionally can't copy.

44:17I mean, I think like I wrote about Rainmaker in the piece right before Augustus got blown up. And I think did like an unbelievable job of handling it, but he's doing something that's just like so far outside of what other people are doing that everybody's going to talk about it. One of the reasons that I like investing in this type of company and writing about this type of company is because there's just this like built-in marketing and passion that people have for this stuff that I don't think you can get with a lot of other types of companies. I agree. I mean, I think it's like, we're only going to experience more and more, but we're also going to experience more and more of a slot, but also like extremely high quality production of everything.

44:55People are going to go to war for good product and good, I don't know, like marketing on it. It's like, you're telling a story, but now you have to tell a story like even better than anybody else. And I think like, I haven't seen your user numbers, but I would imagine like since AI has come out, like your numbers have probably spiked. Like you're a human with a personality and like people I'm sure come to Sorcery for the news and for the founders, but also cause like they've just gotten familiar with you. Like that stuff matters more now too. And like, that's awesome. Like I think whenever I get like a little sad about kind of like I see like a, you know, a stupid reply that is like clearly AI generated or something.

45:32I get a little sad and then I get happy that like it does always kind of like, you know, there is an equal and opposite reaction. So like the more of that stuff there is, the more people want people and fresh stuff and like things that nobody can copy. And so like the market is kind of self-correcting in that way, which is awesome. Every negative comment is a bot. Just remember that. I was wondering. Okay, good. They're all bots. I feel a lot better now. Every dunk that I've had, it's all bots. I'm not worried about it. Good. Me too. I got absolutely ripped by people for saying that you could summarize books with - That was so funny.

46:09I know. Faggy, that was hilarious. And those were real - That went really viral. It went really viral. I think it was like 12 million views. Okay. And I think there is just this visceral, I understand why people are mad if they didn't get the joke. I said that you could summarize Anna Karenina, which to me seems like the least summarizable full book imaginable and like would obviously defeat the whole purpose, but people didn't pick up on that. But there is, I can see, like, I understand that there is this like negative reaction to like, there are people out there who are like, I don't need to read the book.

46:37I'm just going to like do the chat GPT summary. And like, it completely misses the point. I think like, you know, I think I called AI super SAS last time. And I feel really good about that, uh, that, that bet, uh, going forward. But I think like it to me, like really calls into question, like what we're doing here in a lot of cases. Like if you're using ChatGPT to summarize Anna Karenina as like an extreme example, like why are you doing it? Like what is the point of doing that? And I think that's true with some jobs and some other things. So I don't know. I think the most interesting thing about AI is like what it's teaching us about ourselves, as cheesy as that sounds.

47:10But it is like very weird to see kind of how humans respond to this new thing that we have. If online shopping made us realize how lazy we were, this is going to unlock another level. I see it in myself too sometimes. Like I, I will take my, if I'm like stuck in writing an essay, I'll like take the draft, I'll put it in Claude and ask for feedback. And like the feedback is bad. And like, it always like tries to move me more towards average and I ignore it. But like, I just have a tick where I'm like, well, instead of just sitting here and like thinking like it'd be more productive to just like ask Claude for feedback.

47:45And it's like actually not. And like not being comfortable sitting there and just like being silent and thinking through a problem is like really bad and I noticed it in myself I've like had to delete you know x and I'm trying to like take my brain back and I'm sure I'll redownload it but like I do think like there has to be an active and it can't like climate change I think teaches us that like asking people to like you know do the good like it doesn't actually one make an impact like you need to do something better you need fusion as opposed to telling everyone to like turn off their lights because people just like aren't going to do that I wonder what that is going to be for attention because I think that's like dark that Elon is doing like all of this great stuff and then introducing waifus that are like taking over people's you know all of their time like it's insane to me before we wrap up or I guess as we wrap up there's something I need to address Paki we were recently called out by Will O 'Brien for being a part of the Irish cabal how do you feel about this what's your response yeah it's rich coming from a guy with an accent I'm just I'm just like a regular old American dude I will say we were texting me you and Will and I was reading a book on Esalen and like literally everybody involved in that and in charge of Esalen which is like this uh center out in California that was you know part of uh a huge part of like kind of western and American psychological and drug and whatever else history like everybody who led Esalen was Irish and like specifically from Cork County so I you know as a as a descendant of Irish people, I'm kind of proud that I don't think we get enough credit actually for, for the impact that we've made.

49:19We should get a lot of credit. I mean, we invented Halloween. Is that true? Yeah. Awesome. I know. Groundbreaking. Okay. Well, JC, Packy, it was lovely to have you on. Thank you so much. Thanks for having us. Thank you. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.dc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.