Three Startups Reinventing Critical Infrastructure

27:33Because one mine does not actually have consistent ore coming out of it. The earth is heterogeneous. The ore grades are changing. The impurity concentrations are changing. There are different ore zones that have different properties and how they are floated or how they're concentrated, how they perform in a leaching circuit. And all of those things are kind of custom built for a specific asset. I mean, we've seen this from the investor side. Like we've, you know, there are a lot of really exciting new technologies being developed for mining and a lot of incredibly impressive startups that are building for, you know, various pieces of the mining lifecycle journey.

28:07whether it's autonomous vehicles or drilling or, you know, other various software and hardware tools for mining. But the challenge seems to be like, how do you get these kind of calcified large incumbents who operate in a very decentralized way, have very low risk appetite and, you know, not a strong internal culture or affinity for tech? Like, how do you get them to adopt them quickly? Like you're kind of, if you're a young startup, you're sort of at the beck and call of this behemoth and you have very little control over your own destiny, which I think has made it really hard for tech to kind of penetrate this market up until now.

28:42That's at least what we've observed on the VC side. Calcified is a good word. I think the, you know, the way that it's, there's construction companies and mining companies and really a lot of big companies is that the way that they'll identify and evaluate risk is, you know, fixing the status quo or making like a step change improvement in the status quo kind of requires doing like a thousand things. but you'll evaluate risk on each individual thing of that thousand things and the downside of each individual thousand things is that the plant goes down which is a multi-million dollar event and so you're really not incentivized to change things like even small changes could result in multi-million dollars of loss and and you you need to kind of like approach it of like how do i do the thousand things all at once so that i'm not stacking incremental returns on innovation with the same risk every single time.

29:35And that's where kind of like spot technical solutions are challenging to sell into the mining industry. And they'll do pilots. They'll definitely do a pilot. Like there's no skin off their back to do kind of like a pilot. But you'll end up doing a lot of pilots. And because they don't build enough plants kind of sequentially, like they'll build one big mine every five years, if that. And like there just aren't a lot of opportunities to get into a commercial scale application. And if you don't time it perfectly where like your pilot plant was five years before the commercial scale plant was planned for, like you're not going to be in that one.

30:11So you'll be in the next one, which is five years later. And so the just like the pace at which the industry moves in terms of like deploying commercial scale infrastructure means that there just isn't a lot of opportunity to get new tech into commercial scale applications. And so there's a lot of folks that are doing like SaaS products to which is kind of the lowest cost way to get into to like generate uplift in a mining project or a minerals refinery. And the like barrier there is ultimately how do you get the operators to trust the recommendations from like this SaaS tool from this small company that is trying to kind of tell you how to run a plant.

30:52And, you know, the culture is typically like, don't touch my things, don't touch my cash register. And like, what do you all know about running a mine? And it does stack up and it makes, you know, I've been calling it a death spiral for a lot of the folks that are trying to sell into the mining industry because it's hard. Just to like step back a little bit on the geopolitical context, like, you know, the stuff you're describing, I think very obviously true with a lot of Western companies, but at the same time, a lot of Chinese companies that have sprouted over the last 20, 30 years have grown rapidly.

31:26Curious, why do you think that is? Yeah, I mean, I think that there's like a lot of top down and early recognition that critical minerals were going to be critical and needed to be supported. And so like shouldn't kind of like the everything around policy and everything around kind of like supporting companies to go and deploy both infrastructure domestically and infrastructure internationally to kind of like secure critical minerals, build infrastructure that secures a position like that has definitely happened. But I think that what people often don't talk about enough is that the talent pool is insane.

32:00Like it is not just a large talent pool. It is a large, skilled, experienced talent pool. I was in Indonesia in February and was kind of visiting one of the recent Chinese nickel refining operations. And so they buy ore. They also have some mining operations. but they had 13 ,000 people on site during construction and commissioning and if we were building a refinery in the US which we did it's hard to mobilize a tenth of that realistically and when you have it's not just about the number of people it's about being able to iterate on every individual work front as fast as humanly possible and we just don't have that label 15 years ago or 20 years ago would the same companies that were big now have been big then?

32:47Like, where's kind of the evolution of the space event? Yeah, I think that there's been like a clear splintering on kind of who does the exploration and who does the development. Like right now, the industry is set up where junior mining companies, which don't mine, they explore, go and they kind of, you know, they sometimes get, they'll get maybe a resource from a major mining company that's like held in their portfolio for a long time. but it's like a different risk reward profile than what the mining industry is ultimately like the mining majors are ultimately looking for. And so you have this junior mining ecosystem that sometimes is well-funded and sometimes is competing for capital with like the cannabis industry in Canada.

33:29And, you know, they're taking shots in the dark basically trying to, and there's a lot of work that's going into trying to make that exploration activity more intelligent, streamline it, drill less exploration holes while still being able to like interpolate or extrapolate what is in between those drill holes. But it's a, you're going out in kind of the middle of nowhere, either it's really far North in like the Arctic Circle or the Yukon or it's overseas in Africa and you're doing exploration or it's in Southeast Asia or in South America. And those folks, like they have one job, which is to define a resource and pump up its value sufficiently to flip it to a major.

34:10And there's a lot of companies that aren't able to discover a resource that is either large enough because the big mining companies, like they want to deploy large amounts of capital. We're talking about like multi-billion dollar investments. And so they won't really look at projects that don't have the scale that kind of enable them to underwrite their own inefficiency. Like they want to build really large infrastructure that enables them to capture the economies of scale. and so there's a whole bunch of there's actually a really long tail of mining projects that don't have the scale that would justify getting acquired at a major premium and so they'll go into this kind of orphan period is what it's called in the industry and it's hard for them to break out of that orphan period and that's kind of where we see our ability to kind of step in as a more efficient building like builder and operator is kind of take these what the industry calls subscale assets but we see metal there and come in and like bring those into production as we kind of are building the platform and then eventually scale into the same scale that the big mining companies are operating at.

35:10Your thesis being that you can get the metal out and process it into a product that you can sell more efficiently than the majors such that it's economically viable. To offset the scale advantage. Yeah. Yeah. Well, maybe then I think this might be a good opportunity then to talk a little bit more about like what is Mariana's product? Like you said a few minutes ago, you're not a SaaS product. You know, what does it mean to be a diversified metal and minerals company, technology-enabled mining company? Like, take us in a little bit more detail. Yeah. So we're a vertically integrated software-first minerals project developer and operator.

35:51And so we focus on the back end of the minerals value chain, which is actually doing the detailed engineering, getting through the permitting, building the asset, commissioning the asset, and then operating the asset. And going back to some of what we were talking about around the labor pool, like those labor pool shortages exist in construction and they exist in mining. Like they're felt very, very intensely. And so our fundamental thesis is that with a contracting labor pool, you know, you have to start with an awesome team. The table stakes is that you build an awesome team. But how do you enable 200 people to do what 10 ,000 people are needed to do today?

36:31At least on the like parent co side of things. And that comes from leveraging the recent advances advances in LLMs to automate workflows in the construction side of things and the engineering side of things and the procurement side of things, which take an insane amount of time. Like it's a, you make a lot of lists and you fat finger a lot of data between databases. And that is all about reducing churn in construction. I think that there's churn and latency. Latency is one thing that I think people sometimes don't appreciate from like status quo construction, like large scale megaprojects is that what's happening in the field and what the back office kind of sees or what the executive team sees or what the project director sees, there's like a three-week lag generally for like really large construction projects where you are trying to aggregate data from all the different contractors and all the different parts of the facility into a consolidated integrated schedule, which you can then make decisions off of, like how do I prioritize what I'm doing today?

37:33And the way you run from on those, like in between those three weeks is people stand in circles every morning and they say, what are you doing today? What are you doing today? What are you doing today? And they go off and they do the thing. They'll send like a very brief kind of progress report back. And it takes a long time to then take those progress reports and actually measure progress so that you can reevaluate priorities and understand kind of like how the project is trending. And so we're really trying to accelerate and democratize access to data fundamentally and run construction projects like manufacturing facilities.

38:09And it starts there. And the reason construction and mining are so kind of integrated, and some people might disagree with me, but like a mining project is a big civil construction project. It just never ends. It's more like a deconstruction project. Yeah, that's fair. You are, well, you do, when you're, you have to construct piles. And you're building piles. Okay. But there's actually a lot of similarities in kind of like just moving the dirt for like site prep. and the same kind of like software stack that is enabling you to get feedback from the field live is the same thing that the mining industry struggles with.

38:46You know, there are mining companies will lose equipment, like especially in underground mines that are like these like deep mazes and, you know, the industry is getting better at having like actual location sensing on like where the equipment is. But losing equipment in a mine is like how it used to be a super common thing. You know, we start with construction And then we start to get into the second core software stack is what we're calling PlantOS. The construction stack is Capital Project OS. And PlantOS is really aimed at removing humans from the loop and deciding how the chemical processing operations and the refining operations work.

39:19And these are like big refineries are effectively big robots. You have the sensing and telemetry. You have the actuators to control how the plant operates. and, you know, they're, you know, imagine like teleoperating humanoid robots like forever. Like that is what the refining industry and the processing industry has been. And there's obviously like PID control loops that kind of like maintain set points. So you can maintain temperature automatically, maintain pH automatically. But the thing that really matters is that the feed material to the processing facilities is constantly changing because the mine, like the ore body is changing over time.

39:59And so the way that the industry manages that today is they will blend the feedstock to minimize variability that's going into the processing facilities, and that enables them to minimize the amount of change that has to happen on the processing facility. So we're trying to flip that and say, okay, if we build a hyperdynamic and highly flexible refining circuit, ideally without adding a whole bunch of costs, what does that do to, like, optimizing the global operation from the mine to the refinery? But it's first aimed at reducing reagent consumption, reducing energy consumption. And, you know, Google kind of proved this.

40:31They bought DeepMind in 2016, 2017. And one of the first things they did was, you know, throw the DeepMind team at automating and optimizing the data center thermal systems. So air handler, chiller, cooling tower. And, you know, that's not a super complex system. You have weather, which is a factor. You have loads within the building, which is a factor. but you ultimately have like nine control variables between airflow rate, supplier temperature, the cooling water temperatures and flow rates, both in the chiller system and in the cooling tower system. And just in that relatively simple system, they were able to reduce energy consumption by 30, 40%.

41:10Yeah, it was like 40%. Yeah. And it happened relatively quickly. And so that's the opportunity when you remove humans from making the decisions on how kind of like these process systems operate. Like that's the opportunity. And then when we look at kind of refining and processing facilities, that's like a thousand control variables. And it's no longer single pass because what's really interesting about minerals refining is that you never want to lose the metal, right? Every piece of metal that you or every atom that you lose kind of in the processing facility is another atom that you have to mine.

41:42So recovery in the refinery is actually like the biggest lever when it comes to cost. And so what that means is that the upstream unit operations, think of a refinery as like 20 unit operations kind of all in series in a relatively simple refinery. The upstream operations... Relatively simple. Yeah, right. The upstream operations obviously impact the downstream operations because if you're changing the process conditions in the upstream operation, that changes what the downstream operation is seeing. But the downstream operations will recycle the, like, reject stream back into the upstream operations.

42:16And so it's this big interconnected web where if you make a change in one part of the circuit, and it's a high latency web also, where if you make a change in one part of the circuit, you may not see that change cascade for another 24 or 48 hours. And when we're commissioning refineries like the world, And that like latency ends up being a major driver of kind of the time it takes to bring a refining operation to spec and eventually ramp it to throughput. So how long does it take to bring a refining, to commission a refinery today? I mean, there are some refineries that were built recently that are still not commissioned.

42:53The like that were built in like the like four, three years ago. But it's like the it's, you know, the Chinese companies are doing it in like six months. And a lot of Western companies, it takes two to four years. And that stacks up where we need to build like an insane number of mines and refineries. And if you are kind of four times longer or five times longer every time you build a refinery. At every step of the process. Yeah. And so we're trying to bring down the time that it takes to bring the refinery to spec, basically, throughput and hitting the kind of like output requirements of the product that you're making.

43:29And then ultimately you start this like historically very long haul of gradually bringing down the cost over time. And that's something that we think that reinforcement learning is going to do quickly, much, much faster, kind of like in line with what Google demonstrated with the thermal systems and data centers is, you know, achieve global optimal operating conditions, you know, on an order of magnitude faster at times game. timescale. So how do you think about like you're building a company that mines and refines a product? There's a lot of tech that you can interject at essentially every step of that process.

44:12Like how are you deciding what to build, where to partner, you know, what are you developing in-house versus, you know, where are you going to market? Yeah, I think we're at the beginning, we're focused on how do we take kind of commercially demonstrated unit operations and be a better integrator and a better operator of that integrated circuit. And so focus on the software systems that enable you to kind of control the plant more optimally. And that's generally what project-level financing parties want to see also. Like it's hard to get project finance on a first-of-a-kind facility where you're demonstrating a new unit operation for the first time.

44:49And so we think that as we're kind of entering the market, the right place to start is take commercially demonstrated individual unit operations that operate globally and try to achieve, go after the uplift that's available just by being a better integrated operator. There's a whole bunch of bottlenecks in building these facilities that we will need to solve. I mean, the like industrial supply base just for like manufacturing tanks is broken. Like the kind of, there's specialty. That's a new one. It's just like things that we kind of take for granted just take a really long time. if you want to kind of not go to China for sourcing that equipment.

45:30And that has a big impact on the operating side of things too where the supply chain for like a new pump in Australia could take, you know, 30 weeks and getting that exact same pump. But with a mine in China, it shows up in, you know, a week or three days. And so like that entire industrial like equipment supply base we're going to have to look at at some point. That's obviously a much bigger bite to go after like commodity equipment manufacturing. You're not going to vertically integrate to be a mining equipment manufacturing company for you. Mining equipment manufacturing company. I don't think so.

46:03I hope not. You'll let me know. Yeah, that's right. Well, this is the kind of like what is the incentive structure of the partners and the suppliers and like is it required or not. I think that there's a whole bunch of companies that are working on awesome, like, novel process technologies that have not quite gotten over the hump trying to sell to the big mining companies. And we want to be the customer that helps accelerate commercial deployment and the partner that helps accelerate commercial deployment. And one of the big issues that comes up when you're kind of like deploying new processing technologies is that part of the reason why it takes a long time for it to get to the point where it's commercially viable, other than all the headwinds from the industry being conservative and process driven and all those things, is that they, like humans have actually never operated that process chemistry at scale before.

46:51And so you have all the, you'll learn a bunch of things at pilot scale, but pilot doesn't really tell you what's happening at commercial scale. And you have to train people. You have to train the people to operate it. You have to, it's like new environmental things that might come up depending on the chemical that you're using. And that like scale jump is actually something that we think that RL will enable with like a pretty meaningful like pace adjustment. Where you don't need the humans to kind of like fine tune the process conditions around a new process chemistry because the, you know, plant OS is doing it.

47:25Ryan and Erin, how did we approach this industry? Is this a space that we spent a lot of time thinking about or thinking about opportunities in the space or how did we approach it? Yeah, we've wanted to do a mining investment for a long time. You know, when you think about venture capital, you know, we care about massive markets and, you know, there's not that many massive markets left that have been sort of like largely untapped by technology and mining sort of screams one of the largest markets in the world. Very little adoption of technology. So, you know, over many cycles, we've gone out and spent a lot of time meeting companies.

48:08And, you know, as I mentioned before, the challenge is how do you sell a point solution or a point piece of technology into this industry that is has very little incentive to adopt it and is also like has a very complicated geopolitical dynamic where you have a very large global player with their hand on the scale we put out a piece a couple weeks ago around our thesis in mining and why we think a vertical mining company is the answer because you actually we actually do believe you have to control every single piece of the entire journey the entire life cycle of you know, an atom of metal end to end to actually be able to build a tech company here.

48:47This is not about, you know, a point solution for one particular part of the process in order to actually capture the gains in efficiency and build a feasible business. You really have to own the entire process end to end. The only thing I'd add there is that this is the intersection of geopolitical urgency in tech. Like to what Seth Turner's been talking about is like now we have technology that can actually go and disrupt this. But also as a talent base, people coming from companies like Tesla, SpaceX, Andrel, other sort of hard tech companies working in sort of dirty spaces, willing to go out in the fields.

49:16Roll up their sleeves. Yeah, roll up their sleeves, go out in the middle of the desert and work on this stuff. So now's the time to build this company. And the political tailwinds are there. There is, you know, even my, you know, my conservationist mother, who I think if like we had had this conversation five years ago, she would have clutched her pearls. She doesn't wear pearls, but she would have clutched her pearls at the idea of domestic U.S. onshore mining. You know, I think broadly speaking, the American public and certainly the government has come around to the idea that metals are in every single thing we use as consumers.

49:53Our supply chains are highly reliant on China. It's a huge problem. We have to figure out how to address it. And that means investing in mining in the U.S. again. We talked a little about, we mentioned like rare earths, you mentioned lithium and things like that, but like there are many different critical minerals. You talked a little about it in the very beginning, but specifically like what are the interesting ones for you? How does that map to sort of what people see on the headlines and what the business opportunities are? Yeah, I mean, when we look at what needs to happen in the next 10 years and forecasted demand will only materialize if the supply is there, so we'll see if that forecasted demand materializes.

50:31The metals that actually need to grow the most by like mass flow rate are like the big metals. Like we need a lot of aluminum. We need an insane amount of copper. We need more iron. We need more zinc. What are some of the things that these metals are? Yeah, sure thing. I mean like iron goes in everything that is infrastructure. We got iron. We're good with iron. Zinc is one that people sleep on because you actually have to galvanize a lot of that steel. And so zinc oftentimes kind of pops up every once in a while as being something that we really do need to continue to focus on. Um, copper is the, is the workhorse of, you know, this push to electrify everything.

51:07Um, and, and to just grow the grid, um, to be able to supply AI, to be able to, you know, enable accelerated renewable penetration for EV penetration to happen. Like you're going to need a lot of copper. Um, aluminum is one that I think is underestimated. It's like people underestimate kind of its importance. It's actually like the number one most consumed metal in defense applications. like the grid is people talk a lot about copper but there's a lot of aluminum like conductors in the transmission lines that are critical to actually growing the grid capacity and in automotive obviously aluminum is big.

51:45Magnesium has a whole bunch of defense applications potentially could get more into automotive applications and like for lightweight metals. Lithium you know needs to 4x in the next in terms of production capacity in the next 10 years, roughly, in order for the batteries that we want to build to be built? Well, we're all about batteries. Right, right, right. Nickel is a big one. I think that what has happened in nickel in the last five years is Indonesian kind of like production capacity has scaled to the point where it's now something like 70 % of global nickel comes out of Indonesia. And a lot of that was on the back of like meaningful investment from China to be able to kind of expand production capacity in Indonesia and then also do more of the downstream and processing in Indonesia.

52:28And nickel goes into everything that is specialty alloys, anything that needs high temperature or corrosion resistance, and also is kind of the unsung hero of high-energy batteries, where these lithiated transition metal oxides, which are high nickel. Manganese is important. Manganese goes into a lot of alloys and also goes into batteries. The uranium, if fission is going to continue to grow and we're going to continue to deploy more nuclear capacity in the U.S. then uranium is going to happen, is going to be needed. It's a long list. And, you know, the rare earths, you know, they're important, obviously.

53:07They are omnipresent in, like, everything that we use. But they show up as, like, a relatively small, kind of, like, on a volume basis when you look at kind of the stack of metals that we need to mine. And where, you know, definitely we need a ton of, like, process innovation in how rarests are refined. Solvent extraction circuits are kind of like the status quo. The chemical intensity is high and the recoveries are relatively low. And the know-how is kind of like highly concentrated in China. But it is a little bit of a frothy market right now. And so being a diversified minerals company kind of enables us to pick our spots in areas where it makes sense.

53:52Like these things still do move on commodity cycles. and you actually want to be building infrastructure at the bottom of commodity cycles, not at the top of commodity cycles. You know, it's the Warren Buffett quote of, you know, invest when there's blood in the water. Like you want to be coming into metals when they are at like this trough, really, where no one is investing in them. They still have like a macro long-term critical point. Lithium is like exactly in this position right now. And that's why we're focused on lithium. Copper just has this like macro trend that is like pretty hard to ignore.

54:24We're just going to need an insane amount of copper. Copper grids are going down globally, which means that our ability to extract copper from those ores is going to get harder and harder to extract copper from those ores. And that's where, you know, the plant OS side of things, we have like a high degree of confidence that we'll be able to step in and kind of like optimize the refining circuits to still be able to extract copper from these lower grade ores without seeing meaningful kind of cost increases. So everyone knows, you know, people here, it takes forever to get a mine started. I don't know how many new greenfield mines we've developed in the United States in the last decade.

54:58Not many. Yeah. So like, and I know Australia and Canada have been able to do this faster, which is interesting. You don't know Canada for moving quickly. What are some of like the bottlenecks there? What does America need to do to accelerate this as one of these companies trying to not only mine, but also refine in the United States, like what needs to be done? Yeah, I think one thing that folks don't always see is actually the permitting requirements for exploration. So there is like, if you are exploring over on federal land, if you're exploring over more than a five acre parcel, you have to submit like a plan of record or plan of operations that needs to be approved by the BLM before you can start to expand, like expand and explore over a larger piece of land.

55:42And so the like bringing down the permitting thresholds and the permitting burden associated with exploring, like that is why we have such a small, like relatively small rare earth resource. It's like it's not because there isn't like the U.S. has tons of natural resources. And the like the the kind of like USGS estimate for U.S. like the U.S. reserve on rare is just picking on that. Like that is tied to a lack of exploration activity, not necessarily fundamentally like a lack of kind of like geological. geological presence. And we haven't looked for it. Yeah, we haven't either. It's kind of hard to find.

56:15Yeah, well, it's hard to find in like high concentrations that are mineable, which we're trying to kind of like drop the percentage requirement that makes something economical. But it's also, there's just a lot of like kind of like permitting burden to be able to actually go and deploy drill rigs to go and actually explore. And then there's definitely a week that the government currently is doing a good job of kind of highlighting the importance of the minerals industry. And you're definitely seeing like a little bit of a tone shift over the last 20 years that is much more supportive. There's way more tailwinds when it comes to kind of like making mining be viewed in a more positive light and a critical light.

56:54And that will help to solve some of the talent pool problem where people that are, you know, awesome, they want to go build things. They don't want to go and like work on a project that kind of sits around for five years and maybe gets permitted and maybe doesn't. Like they want to go work on hard problems where they can see the impact of the work that they're doing. And so if we're getting in the way of enabling projects to get built, like that is actually a major deterrent for talent because they won't actually see the output of their work. and then I think the permitting requirements broadly for going from a discovery to an operating asset there should be a big focus on kind of efficiency in reviewing environmental permits there should be a big focus on kind of like streamlining those workflows and the back and forth between kind of like field offices and state offices from the BLM just focusing on the federal side of things because the way that projects get permitted right now is you'll throw a you'll throw like your environmental assessment over the table and then they'll go and they'll divvy it up between a whole bunch of experts that they are like kind of consultants that they bring in to review the permit and they'll get back to you eventually at some point.

58:09But there isn't a lot of visibility into like how they are progressing with reviewing the permit applications and discussions are getting more bilateral. Like the, and again, there's been a little, definitely a change with the new administration where there's a little more accountability on the, like the permitting offices. but there's tons of room for making those reviews more efficient. And again, LLMs will make it more efficient. We just need to kind of like penetrate that side of the federal bureaucracy and like enable people to review things faster. What else? Aside from kind of permitting efficiency, what are other things that if you could send a list of recommendations to the government for what they should do to support the U.S.

58:51mining industry, what would be your top three? Yeah, I think supporting the demand side is probably like the biggest lever. And if you want to mobilize kind of private capital into the sector, having some level of support on the demand side is major. And so that's offtake agreements with floor pricing. And, you know, they did this just now with MP Materials. And that, you know, ideally provides some stability on the revenue side of things so that investors like that there's trillions of dollars of capital kind of like dry powder just sitting around waiting to be deployed. It has historically kind of avoided the mining industry because of the market price uncertainty.

59:24And so as soon as you provide. Commodity cycles. It's a commodity cycle. And like, what if you're building at the wrong time? And, you know, the infrastructure funds are not the ones that are here to play, like be intelligent about the commodity price cycle. Like they're looking for annuity type returns. And so those folks would mobilize if there were more demand side support from the government, either providing price floors or fixed pricing for critical minerals that, you know, you're trying to incentivize more production of in the US. You know, participating in the capital stack is important.

59:54I think lowering the hooks or the extra burden that comes in with receiving government funds is important. And like some government agencies probably have more leeway to do that. Like the DOD, obviously, again, just did this big deal with MP materials and actually went all the way to kind of participating in the cap table or as an equity holder. but when you receive federal funds from the DOE or if you receive federal funds from like a, you know, on the debt side of things from XM, it comes with some like additional burden sometimes. Like if you are building on state land and you just need a state permit and then you bring in federal funds, you now bump your permitting requirement to a federal level permit.

1:00:43And that's the NEPA process, which, you know, again, the NEPA process wouldn't be as burdensome unless there was some more efficiency on the permitting side of things. Mineral deposits, specifically like high-grade mineral deposits, don't obey borders. Like, is there a broader international strategy here? I mean, I would love to think we can mine and refine everything in the United States, but obviously there's a lot, Australia, Canada, Latin America, curious sort of what Africa, underwater, seafloor, like what is the overall strategy in your mind? Yeah, we're starting in the U.S. because it's closer to home and we're focused on developing a platform that we can scale off of.

1:01:19But at no point have we told ourselves that the U.S. is kind of like the only, the sole focus. Like you have to be able to like bolster the company to be able to operate internationally if you want to be able to scale beyond kind of like the resource base that the U.S. has like available today. And so more exploration is going to happen in the U.S. We'll probably discover more resources and like that pool will grow over time of projects that we can build in the U.S. But yes, we are absolutely going to expand overseas and underwater maybe. When we look back a decade from now, what's the single clearest indicator that Mariana has achieved what it set out to do?

1:01:54We won't be as worried about our ability to secure the critical minerals that we want to secure because we will have kind of rebuilt and established like an entity, ideally, that is able to go across borders, to your point, and build these projects cost-effectively, time-effectively, and responsibly, ultimately. And the reason that we are so panicked about it right now is because we have fundamentally lost the ability to build large-scale infrastructure, and we have lost the ability to, like, operate complex minerals plants. Like, that's what we have lost. And we need to build that back. You know, we want to build 10 projects in 10 years.

1:02:35Those projects will be in increasing scale over time, but the work will not be done in 10 years. What I think will have demonstrated that the 10-year mission will have been accomplished other than building those 10 plants is that we will no longer be as worried about our fundamental capability to go and build this complex infrastructure like we will have unlocked it. Last up, Doug Birdauer, founder and CEO of Radiant alongside Drew Baglino, founder and CEO of Heron joined me and A16Z general partner Aaron Price Wright to discuss nuclear's role in rebuilding America's energy infrastructure. Talk about the moment, the insight, the why now that led you to start your respective companies.

1:03:19Doug, let's start with you right here. Oh man, it's a fun story. So I was at SpaceX for 12 years. I joined in 2007. So I joined when they had two failed rockets, no successful rockets. And so I got to work on the first ones that worked. And you're like, this is the company to be at. Yeah, I just wanted to work on an important mission. And I really just cared, kind of like polish one stone of this like great big pyramid that is like some lifetime achievement for someone else even. Right. That's what I wanted. So yeah, I joined. I did that. I did the first two Falcon 9s. Did the ground system for it entirely, which involved all the permitting also.

1:03:53So this is like launching a rocket from a military base. There's a lot of like regulatory stuff there. Your first foray. Yeah. Into the permitting wilderness. Totally. And not to eat up all the time. I mean, I worked on like the first rocket with legs called Grasshopper back in 2011. It was a four person team really designing, building the whole thing, the whole thing. And we were reporting directly to Elon, like just Elon to us for and then building the whole thing. And it was awesome because we did really well. We got lucky a lot of times, but we made a rocket that flew and landed on legs. And then I did all the weird Elon side projects and ideas.

1:04:25So Hyperloop, when he got really serious, I got tapped into that and into the Boring Company and then Mars Colony design. and in doing the Mars colony design I was looking at how do you take Starship there make fuel from what's on Mars make fuel from the ice that's there and if you do that you need megawatts of power and I was trying to do it with solar and getting totally stuck and showing Elon these plans that were like four miracles we need on a single mission and it was just ridiculous and so Elon was like you probably should look at nuclear and that's really the jumping off point I started to learn and then three years later I left to go run I found a radiant and left to go run it and really trying to make mass-producible, portable micro-reactors.

1:05:07Not for space, but currently we're focused on a trailer-sized thing. But also needed in space. Right, yeah. So I do eventually want to do products for space, but we've got to have customers. We've got to have funds that are actually there. Doug, it seems like the tide turned on nuclear a few years ago in that more and more people started to realize the importance of criticality of it. What is sort of the progress that we've made as an industry? What have we achieved and what are the biggest bottlenecks remaining in terms of really making progress as a country? Yeah. It's a good question. I think there's a bunch of fun ways to answer it.

1:05:44I mean, the one thing I like to say, it sounds a little sensationalist, is that there is no nuclear industry. That's really true. You know, we're kind of, it's almost like we're getting excited about flight before Kitty Hawk, right? To a certain degree. there's a really coming very soon deadline. A lot of companies, a lot of little nuclear startups have actually been given access to fuel and facilities and just expedited support from the subject matter experts required to regulate to make sure that these are going to be safe tests. And so by July 4th, several companies will have reactors built that go critical that are fundamentally new designs, completely new and from scratch, but it hasn't happened yet.

1:06:26So it just feels like a little bit of cart before the horse. Does that worry you at all? Not too much. You know, I've been doing nuclear, well, thinking about it since 2016. But I founded Radiant in 2019. And then for a year, just learned how to do reactor design. And then raised money in 2020. And I never founded a company before, never intended to really do that. And I kind of slow rolled into it. I could have tried to go much faster. But I've stayed totally committed to just building. And actually the funny thing is like in 2020, I said in 2026, I will put a full scale reactor and get it critical and get it up to full power.

1:07:03And we're on schedule to do that, which is kind of wild. It's not like that was really the actual plan, but it was just I was resilient to all the challenges that were put in the way. We are now the only reactor permitted to of these new reactors to go to full power. So a lot of others are getting to critical, which doesn't mean you get to high temperatures or high power. and those things are very challenging on all the parts in the system, right? And they require careful consideration of the thermal gradients and the alloys, right? You need high strength materials to do that. So that's really exciting, but we're like not quite there yet.

1:07:35And I think if we're doing the same discussion next year, it's going to be dramatically different because we're going to be able to point at all these different designs, what you could do with them. And I think the products, like nuclear reactors as products has never been seen before, right? There are always usually these giant mega projects where you dig a huge hole in the ground and you take five to 10 years or up to 15 for the slower, the bad projects out there. But reactors that can just come, ours, you know, we're targeting one per week coming off of a production line from our Tennessee facility, which is an 80 acre site we just signed for in October, not even a year ago.

1:08:13But I want to tie back into the grid because I was just, I had some interesting thoughts and we really, our product is for off the grid. right so megawatt reactor on a trailer and you can we build in our factory we drive it or fly it to where the customer wants it to go and turn it on within like 48 hours we go it you know wheels stop moving and then we go to power on your site in that amount of time and then it lasts five years which is like a full oil tanker worth of diesel equivalent it's two million gallon diesel equivalent so it's sort of an unbelievable thing where you can grow the grid or put a put a microgrid anywhere but it's like a totally different problem I think from the grid itself is civilization right electric power is civilization if you go and there's sockets and you pop something into them and you just get power that's very well developed that's civilization and that's using electricity to do what you could otherwise only do with human muscle or animal muscle how should we think about how micro reactors fit within the broader energy landscape do they compete with large centralized plants do they complement them are they serving in different categories of demand how should we think about it Yeah, so they're definitely an off-grid product.

1:09:22So they don't at all compete with larger reactors. Really, if you can build, if you have time to dig a big hole in the ground and put a reactor in that way, then you can do a larger reactor, maybe five or 10 times as big as the one megawatt size that we're looking at. And it's going to win on economics. It definitely should. We're already using like one of the fanciest forms of fuel and that is so that we can set it up anywhere and have it not be a risk to people or facilities nearby. And so we don't compete at all with those things. One of the ways I like to talk about this is you could run a diesel generator or you can run a nuclear reactor, and you're really deciding between those two things.

1:10:00And we don't beat super cheap diesel. We beat diesel at$6.50 a gallon, that kind of a number. So that's where our initial customers need to be. But if you go start looking at what people pay for diesel and what they pay on the edges, not on the center of the bell curve, the average for a country or an area, Like you look at the tough regions, they're paying a lot. And so there's plenty of customers out there. And some examples, I think. Oh, like$10 a gallon is the average in Hong Kong. I think like Iceland and Scandinavia, Northern Europe, those regions are like$7,$8,$9 per gallon for a whole country, actually.

1:10:36So like it's very easy to see. The market is massive. And islands. Yeah. Yeah, islands. Absolutely. I mean Hawaii is pretty high electricity costs and it's I think 80 % diesel powered actually it's got wind and solar that make up the remainder but yeah you could have a cleaner form of power right no emissions the nuclear reactor operates and then rain it takes it and we handle all the complexity but the amount of power people need right they need in the gigawatts for the grid and so we don't really do that we have the niche customers on the edge and we don't want to make thousands and thousands of reactors.

1:11:15At 50 a year, we'll have something in the range of like 1 ,000 or two at the most. But we don't consider, we don't look at it and go, hey, could we make it work for 10 ,000? There's different products and we can do it at better economies. And there's a couple of ways to do it. But Radian doesn't want to dig a hole in the ground and solve that other miracle. It's too many miracles. I think it's important to be able to do it again, but it's not on us to fix it right away. Yeah, serious miracles. You don't want to have too many in a startup. Yeah. You need some. Yeah. Yeah. One miracle that leads to then a product and revenue, right?

1:11:50That's the way. And then you have time to think about another miracle. Totally. So you mentioned that we're very early in the nuclear industry. We're even pre the nuclear industry in some sense. So what is the milestone or the KPI or what would need to be true for us to say, we as a country, the nuclear industry is here and flourishing? I think a couple of things. So we could have access to nuclear fuel and enrichment that are like in completely competitive free markets where there are innovative startups fixing and solving those challenges. We should have a waste storage facility that's some centralized repository, which is way safer for the existing nuclear fleet that's operated since the 60s.

1:12:35That's an unsolved problem. and those things alone would cause everything else to flourish because we already have this middle layer of me and a bunch of other startups trying to get fuel and operate reactors and then if we're able to, as a country, really have a better system to deal with nuclear waste, which actually Radiant doesn't need. Uniquely, at this really small size, we can just put it in the dry cask on about 10 acres of our 80-acre site and that works for like 60 years' worth of reactors and we can always expand and do more. The nuclear waste has got high reactivity elements that will last like 100 years.

1:13:13After that, it's pretty benign. But we already have a waste isolation pilot plant in New Mexico, which is like this deep borehole down inside of a salt structure. So it's like a salt dome. This is where defense waste already goes. And they just said they were going to build it and they built it. And meanwhile, we struggle still on the DOE side to build a repository for big nuclear plants. And because of that, these gigawatt scale plants are operating, generating nuclear waste, and they have to store it at the same site where they're making power. And in California, this is like coastal regions that are risky, where you can have a tsunami or something instead of taking it and putting it in a salt dump structure in the high desert where there's no water, no risk of certain natural disasters.

1:13:59So it's just a smarter, safer, better idea, and we don't do it. Yeah. And actually, it was a huge cost. It's a commitment as well. Like, you got to demonstrate that commitment. It's the, and it's also the NIMBY transition, the not in my backyard to... Nuclear in my backyard. Nuclear in my backyard. Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X, A16Z and subscribe to our Substack at a16z.substack.com.

1:14:37Thanks again for listening and I'll see you in the next episode.

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