Episode Transcript
[00:00:00] Speaker A: I was thinking like, oh man, what's the coolest marketplace that ever existed? And so Diagon Alley was one of the marketplace where the wizards would buy all their magical supplies before they go off to Hogwarts for the semester. And I was really thinking like, oh, that would be really cool. I want this to be a place that, where people feel like it's almost a magical experience.
So when I threw the name out there, the kids were the first to tell me, like, that's it right there. Like, so, yeah, we went with Diagonal Foreign.
[00:00:35] Speaker B: Welcome to the first Movers and Makers podcast, which is brought to you by Diagon. We really started with in person events for Movers and Makers where we bring manufacturing and supply chain leaders together in Silicon Valley. And that's really grown to a community of over a thousand professionals, which is pretty incredible. And we're trying to take that community now kind of online and using this podcast as a virtual stage to do that. And so we're hoping this podcast is going to be a medium for both Will and I to share ideas that hopefully we have from our experiences, but to explore new ones, learn new technologies in this manufacturing and supply chain space, and also get to share stories and learn from other people as we bring them on. In today's episode, we're just going to go really through the origin story of Diagon, what problem we're trying to solve and give you context on what we're going to try and do in future episodes. But before we get started, I'm, uh, don't forget, we're actually going to organize another in person event at the end of January. It's going to be bigger and better than the first three events we've had. We're going to host it in San Francisco. So with that, we'll get started. But welcome, Will. And excited to get rolling.
[00:01:42] Speaker A: Me too. Looking forward to this.
[00:01:44] Speaker B: All right, well, I actually thought we'd start with just our background, so maybe a little bit about how we met. Or if you want to start with kind of your origin story of, of Diagon, we can kind of take things from there.
[00:01:55] Speaker A: My name is Will Drury and I'm founder and CEO of Diagon. And we are building a procurement marketplace for manufacturing equipment. And you know, sometimes there's a lot of ambiguity when people are thinking about equipment. And so I think it's worth kind of unpacking what type of equipment we're talking about and why we're doing it. So we're really focused on machinery and equipment that companies would use to make products like batteries, aerospace products and other kind of high tech goods. When you think about, you know, if you're a company, for example, that makes batteries, the machinery and equipment that you need to make those battery cells can be really complex. There are things like mixing tanks, coating machines to deposit materials and things like that. And so what we're doing is we help bring together all those that machinery and equipment so that our customers can buy it. And we make the process much easier than it has been for several years. I oftentimes get asked like, how did we get into this? My origin story prior to starting this company, I've been an equipment buyer for most of my career. When I started out early career, I was a DoD contractor. I worked for a company called PwC and we did consulting for the US government. So I got staffed on a project in 2009 actually to work on a factory rebuilding project in Iraq. I spent about a year there working with cement factories, leather factories, companies that made uniforms for police officers and first responders. And I really just fell in love with the manufacturing process, learning how things get made and providing companies with the tools they need to make products that they want to make. And so I love that experience. I did that for about a year and in 2012 found myself out in Silicon Valley where this early ish stage startup was building electric vehicles. I later came to know that that company was Tesla. And a friend of mine was telling me about how Tesla recently bought this abandoned factory. Pretty much abandoned. At that point they were tearing out all the old equipment and installing new equipment. They needed someone to come in and help source the equipment and get the factory tooled up to make vehicles and battery packs and all these futuristic things, which in 2012 sounded more like science fiction than science fact. We ended up taking on what was probably one of the most ambitious efforts that the company has gone through in its lifetime, sourcing all the metal presses, plastic molding machines, paint shop equipment, final assembly, motor winding, all types of equipment. And so I ended up building out a team of 30 plus people. During that time, I had the privilege of getting to know Greg, who was responsible for metal press, stamping, press equipment. And we really just set out to start solving this problem on our own for our company. It wasn't really until maybe five or six years later that we realized this was a much bigger problem than just the one that Tesla was facing when it came to understanding which companies made the equipment that we needed, what equipment met our specifications, because you can't just buy a tool and expect it to work. You kind of have to put some forethought into what that tool needs to do, what type of material you're going to be working with, what size formats you're going to need. And then once you source that equipment, you need to ship it, install it, finance it and manage it until the day that you retire it. And so that really that knowledge became the foundation on which we built Diagon.
[00:05:34] Speaker B: I realized yesterday I was putting it together that we kind of have eight years of experience at Tesla because I think you were there from 2012 and I was there through 2020. So it's like, and it's a very transformational time. So I think we'll talk more about that formative experience as we, as we kind of go through this. So my origin story here was I'm originally from a place called Newfoundland, which is on the far east coast of Canada. Mechanical engineer by training. I started in the oil industry which was a very, never thought I would end up here. I think when I finished engineering school Tesla didn't exist or had just been kind of formed. So it wasn't even something I really considered. Although I did follow Silicon Valley and Apple, Steve Jobs, those kind of stories for as long as I could remember. But they really felt more of like a dream than a career path. And so I became a drilling engineer, worked for ExxonMobil, which at the time was the biggest company in the world. And it was an eye opening experience for me to work around the world, maybe similar. I didn't go to Iraq, but I got to go to, to Russia and it brought me to the US as an expat and just gave me exposure.
[00:06:35] Speaker A: Arguably more tenuous than Iraq these days.
[00:06:38] Speaker B: Yeah, so I spent about 10 years working in the oil industry in 2016, you know, during a downturn, both my wife and I, who also was an eng at Exxon, we decided that opportunities kind of dried up in that period and we just said, you know, we could do similar jobs that we've been doing for the last 10 years or we could go take a chance and move to Silicon Valley and kind of see what tech is like, if it's what what we kind of had imagined. And so we actually left Exxon, we took some like a short time off in the summer of 2016 and then moved here actually without Jobs, which was a pretty incredible risk in hindsight, but was worth it and we obviously had planned for it. I landed a job at Tesla and supply chain doing capex procurement for stamping presses. And my wife has been at Apple since Since then. But that experience of working at Tesla for four years was very transformational. I spent a bunch of time doing capital equipment procurement. I also did direct materials for all body structures and actually raw material right back to the steel mills to where we bought steel and aluminum from. And then also got the opportunity to do autopilot hardware. So all the cameras and car computers and sourcing electronics for like the world's most advanced self driving hardware was a pretty incredible experience as well. And then what brought me to Diagon, you know, after leaving Tesla I was very hungry to work in a much earlier stage company. Both Exxon and even Tesla at the time were big companies with tens of thousands of employees. And I just had a yearning to work in a much earlier stage company and sort of build something for myself or with a group of people from scratch. And so started investing in some early stage companies and actually joined Diagon as an investor first, then as a contractor and then you know, kind of came in as a co founder. So I will pull me in deeper and deeper as we went, but it was an amazing opportunity and we'll talk more about that journey as we go.
[00:08:33] Speaker A: So maybe before we move on. I am always a big fan of story time and every once in a while, well, maybe on travel, on trips to Korea, we have enough time to talk about these things. But one thing about your background that stands out to me is that time that you spent in Russia. I'm curious if you have any interesting stories about that time when you were at Exxon or early Tesla days.
[00:08:57] Speaker B: The Russia experience, there was one maybe is very personal to me. I had this.
One of my jobs was to get the budget approved for my team. And you know, obviously it was a big group effort but we spent about a billion dollars a year in capex and I had to go to Russia and get it approved by both the Russian government and our partners which were Indian, Japanese and Russian. I remember this, this day that I like sat in this kind of ornate fancy boardroom in Moscow and I was sitting on one side of the table and I was probably like 30 at the time and I was sitting with this group of four or five other Exxon kind of executives or managers. And then on one side of the table and then on the other side of the table there's basically all these like Russian. It was, this was just the Russian government at the time and we kind of presented the budget and through Russian translation basically because the Russian government didn't speak English and I just had, it wasn't really about that particular thing, it kind of went fine, but it was this experience. I remember being like, how did I get here? I'm like this kid from Newfoundland sitting with like the biggest company in the world presenting to the Russian government for this like billion dollar budget. And it was like the most. It was a very surreal experience for me. And I still think about that. And it wasn't like doing it didn't feel that crazy. But there was this moment where I stepped back and be like, this is a really incredible, like moment for me professionally and personally to be in this circumstance. And it is something that stands out to me.
[00:10:24] Speaker A: Yeah, I can relate to that. I'd say that similarly to you, my time in Iraq would have been that, that kind of formative time. I remember on one of our factory trips, we were working with this cement factory in a city of Fallujah. And Fallujah was known during the war to be like one of the most volatile cities or regions in the country. Every morning we'd have our security detail, we'd go through a briefing on how we'd get out to these factories. And it was almost like they had this Google Maps type of app that they would pull up and the streets that we were going to take were red, yellow, green. But red didn't mean there was traffic. It meant there was an attack or an event on that road in the last few weeks. And any road like that that we had to take, we would have to get approval from our company and the US Military to, to take that route. And so we get out to this factory. It took us four hours for what should have been like a 45 minute drive. And you know, as we're walking through the factory, the Director general, these were state owned factories. They don't have a CEO. The Director general is like a government appointed person that manages each of these factories. He was telling us stories about how this factory was really one of the outposts for the insurgents during the war. It was a really tall structure and it was kind of near the highway, so they would stake out and attack people that were passing by on the highway. And I remember asking him like, oh my God, this is, that's crazy. Like, what happened to all of those people? Are they in jail? Like, did they, you know, did they get killed? And he's like, oh, no, they, they work here. Like you met some of them downstairs. And I was just like, you've got to be kidding me. And I just remember having this moment where he, he was telling us, you know, yeah, these guys, not all of them are bad people. A lot of times people that are in, you know, bad economic situations, if there's a group that tells them, hey, we're going to pay you money, if you can, you know, do this thing, then they're going to do that so that they can provide for their, their kids and their, their families. But if you give them a better option to, you know, have gainful employment doing something productive for society and actually like working in the factory, then they would opt for that almost 10 times out of 10. So yeah. So I remember that being a really humbling experience and one that was pretty eye opening for me and kind of brought me back to some of my early childhood days in Pittsburgh when we were going through a similar era. Kind of like that.
[00:12:51] Speaker B: That's incredible. No, that's great. I think those experiences are transformational for both of us. It could make you grateful for the circumstance you're in, or it just kind of creates a new paradigm for maybe what you think is achievable or even in those challenging environments, like what they're able to achieve, but it feels impossible or really difficult. And Tesla also was an experience like that for me where it just broke a paradigm on what I, or we as a team could accomplish. When you're really pushed, and I'm sure we'll talk more about the pros and cons of Elon's approach to building and running these big companies and even some of what he's planning to do in the government in the coming years. You sort of touched on this, but one I'd love for you to talk about. You really came up with the name of the company and I'd love for you to share the origin story of it a little bit. We get questions about it and I think it'd be great to share the, the origin story.
[00:13:43] Speaker A: I wanted to build a company that was helping manufacturers get the equipment they needed. And I remember around the time when I was trying to figure out a name for this company was like Christmas of 2022 and I was bouncing names off of, off the wall with my family, my, my kids and my wife. You know, I was thinking through like, okay, is this like automation hub or equipment place? And my family, they were just like, you gotta be kidding me, these names are terrible. So they trashed everything I was throwing out there. But we have a Christmas tradition of watching the Harry Potter movies. And when I was watching, I was thinking like, oh man, what's the coolest marketplace that ever existed? And so Diagon Alley was one of the marketplace where the wizards would buy all their magical supplies before they go off to Hogwarts for the semester. And I was really thinking like, oh, that would be really cool. This is, I want this to be a place that, where people feel like it's almost a magical experience.
So when I threw the name out there, the kids were the first to tell me like that's it right there. Like so yeah, we went with, we went with Diagon.
[00:14:51] Speaker B: I feel like it's a bit of an Easter egg for real Harry Potter fans because most people kind of don't know and they just think it's maybe some generic name. But then periodically people are like, oh yeah, I like that Diagon Alley. And, and people really pick up on it. So I think it's great.
[00:15:05] Speaker A: So for people that live outside of Silicon Valley, this is really a thing here. I'd say that there are certain books and stories that are like canon, the Lord of the Rings being one of them. Companies that have their names derived from Lord of the Rings or the Hobbit or Dungeons and Dragons. So if you were to look at several companies that where and where they derive their names from, it actually becomes a kind of an Easter egg for the audience to figure out where they came up with this name and why it's relevant to what the company's doing.
[00:15:38] Speaker B: You sort of talked about this and maybe even separate a little bit from like the company itself. But like why start a company at all? Like do you have like what motivated you? It's like it's a hard journey to especially take that first step. But why?
[00:15:54] Speaker A: Yeah, when I started this company I had a bunch of mentors tell me like, you know, starting a company is not for everybod. After doing it, I feel like it's almost not for anybody.
It's a really hard, hard thing to do. But it is also very rewarding. I was kind of at this stage of my career where I felt like, man, we've gotten to work at some really, really cool companies. Tesla building electric cars at Tesla. I've helped build apartment buildings using factory based construction at Social Construction, you know, rockets and satellites at Astra. And I really enjoyed working at all these companies that were building these incredibly cool deep tech products. But I did start to feel that at my mid career. I just turned 40 I think Greg, I wasn't far behind you. So I started thinking to myself, you know, I've always had this dream of starting something, but if we were to start something, what's the type of company that I would be best suited to Start and of course I thought about a few deep tech products and building a really cool hardware device. But the thing that was really resonating with me more than anything was just the problem statement of companies that want to build cool things, they need the right tools to make their products. And I wanted to think of how could I help as many founders and growth stage teams as possible achieve their goals, this being one of the ways to do that. So I would say that in some ways we're kind of the non traditional path in Silicon Valley. I think people like to believe that the prototypical founder is a 23 year old symbolic systems major from Stanford that's like dropped out their senior year to build a cool AI tool. And there are some really incredible founders out there that have done that. That's just not me. But I would say that there's a second and also very successful cohort of founders that really find their calling in what I would call mid career. And I'd say that these founders tend to be very successful because they've had enough time in the trenches working on problems and wrestling with them. When you wrestle with a problem for long enough, you become very intimately familiar with it. And this was just one of those things that I feel I've become very intimately familiar with to the point where like I can almost just meet a capex buyer and intuit what their problems are. You know, that was really it for me. I knew that. I always knew that I wanted to start something. It was really just a matter of figuring out what's the right thing. And you know, is this the right stage for me to be doing it?
[00:18:38] Speaker B: Yeah, I think there's something to it. And I'll just talk about my motivation too a little bit. I think part of it for me is I think I got really good at plugging into the machine of big companies and being successful. And the bet, maybe an analogy is just like climbing a ladder. It's like, or turning a crank. You know, it's those jobs are still challenging, but it's just very much felt like routine and often just kind of wrote in some ways which is still very motivated. Like in certain stages it's still very challenging, but it just wasn't what I wanted to do anymore. And I think like the other example, like there's really two things. One is it's opened up a lot of fronts on like learning and development for me. You know, I think I was getting very good at sort of a narrow domain and now this opens up the front of like how many things I'm learning and that could be sales and marketing. It's even software development and design, fundraising and all kinds of other parts of just like running a business with a really small team.
[00:19:41] Speaker A: We should bookmark that this as an episode for the future because building the company and all the things that you have to become an expert in in that process is really herculean task.
[00:19:53] Speaker B: Yeah, it's not for the faint of heart. It can look magical from the outside, but it's difficult to context switch from one thing to another and learn new things. But it's part of the growth that I'm kind of looking for and I've already gotten a lot of here.
[00:20:07] Speaker A: So quick question because I know that I mean you mentioned this, you were doing a lot of angel investing even as an investor in Diagon before you joined. Why not just go the investor route? It seems pretty attractive to me. Like, I think investors like they get to go on these nice retreats up in Napa and Sonoma. What's not to love about it?
[00:20:26] Speaker B: Sounds amazing. Yeah, I think I did consider is like joining a firm. Joining a big VC firm felt also like joining like a big company, like a lot of them. I did say to myself if I found a really small firm like with two or three partners and join like a really small firm, I would consider it but I would say more. So I felt like I was just not to say VCs for old older people, but I was just like I wanted to still operate in the business and I did talk to a lot of people in venture and they just said that to me that you know, venture investing is, it's a, it's a very sales like you're selling. Someone said you're selling money, which didn't sound super inspiring to me. And there's other benefits of it, but you're really sort of on the outside of operations and you basically give people money and you sort of have influence but you don't have control. You're not in there operating the business. And at least the stage of life I was in at the time, I wanted to be in the business operating and still learning and growing in that way. I still do a modest amount of angel investing and I think it gives me two things. One is I'm learning the mechanics of investing because it is like private investing is way more complicated than buying a stock on the stock market and just how to do that effectively and efficiently sort of thing and how to pick companies and especially super early stage ones where it's really just an idea and A small team. And then I think the second part of it is it's been an amazing networking opportunity. It just to invest. There's no better way to build a relationship with a founder is like to give them money, even a modest amount and, and you kind of, you know, it's a vote, it's a very real vote for what you think their idea and, and what they're capable of. And I think that's been great. I didn't do. There's all these avenues for angel investment where you can join basically funds or what they're called, like SPVs or these syndicates. And I didn't like it because you're effectively just pooling your money with like hundreds or thousands of investors. And it wasn't giving me what I wanted out of that experience. It was like I wanted to do a handful of investments from people I knew and trusted and, and could build relationships with over long periods of time. And that approach has worked well for me so far.
[00:22:36] Speaker A: You know, even being a founder who's now like taking checks from some institutions, some SPVs, some angels, you really kind of get a mix of not just experience levels, but really every investor has their superpower. For some it's going to be access to talent and they might be able to make some like great referrals to you for people that can help you build the business. For others it's going to be advisor networks. We've got the fortune of having our main investor is the Wesley Group. Steve Wesley, the founding partner, was one of the ebay early founding team. And so like having someone like him that has the experience with building and growing marketplace like ebay, I think gives us superpowers. And then others still we've got even some of our smallest investors. People have put in like $10,000. You know, some of them have actually made the most customer intros than, than anybody. So yeah, it's, it's, I'd say that it really does become an art form. And as a founder I think we, we get a sense for how investors contribute value so that, you know, further down the road you want to get into investing, you kind of know like what things are going to be helpful and which things are just going to piss off the founders.
[00:23:57] Speaker B: Yeah, it's hard I think because I want, I was going to ask you about challenges next and maybe this is like a good segue, but there's this interview clip where Vinod Khosla is interviewing Sam Altman and he says something to the effect of like VCs. Most add like negative value. And I don't want to disparage VCs too much, but it can be hard because you get so much advice, I would say more broadly from both investors, mentors. There's a lot of people in this community and everyone is trying to be helpful. But he kind of makes this point. Getting bad advice from credible sources can be very dangerous from whoever it might be, whether it's an investor or not. And I think you and I probably have gone through that a little bit, where sometimes there's almost too many voices and there's a sense where we just kind of have to use. You can take those things in, but be very mindful over, like, staying true to what your vision of the company needs to be and, and also making some of your own mistakes, but just trying to do that on your own and not listening too much. And even when I do mentor startups and investments, like, and honestly, I try and ask more questions than to. We'll say, like, give prescriptive advice because there's so much context from them individually or as a business, it's just really hard to. We'll say, like, give someone the answer, if you know what I mean.
[00:25:13] Speaker A: I would say this actually would be a perfect time to talk about some of those things. I mean, there's. Starting a company comes with no shortage of challenges. Definitely. I would say in the course of fundraising for Diagon and even, like, when we're not fundraising, I've probably talked to 150, maybe 200 at this point, VCs, which sounds insane, but it's. I mean, talk to any founder who's raised any amount of money, and unless they're, you know, these super founders that can do it in one fell swoop, it's really, you know, it's going to take quite a few conversations. And I would say that some of the things that are less helpful are like, you know, when you're, when you're starting a company, it's really a creative process. You're starting from nothing or with an idea, and you're trying to build that idea out of thin air, like really taking something that was an idea and build it into reality. And sometimes in doing that, you're building a market that's a new market. So investors tend to be obsessed with tem. So for people who aren't familiar, TEM is total addressable market. And total addressable market is intended to mean, like, what's the market size that you can grow this business into to capture that addressable market? And the reason investors ask about that is because the market needs to be sufficiently big that if you want to build a billion dollar business, there has to be at least a billion dollars worth of addressable market there for you to tap into. And if there's not, you might just be building that company in futility. Here's the problem. A lot of times investors ask about the TEM because they believe that the only TEM that's available is the TEM that's available today. And if that were the case, companies like Airbnb, companies like Rover and some of the pet offerings, things just wouldn't exist because you wouldn't know that there is an addressable market there until you, until you build a business.
[00:27:09] Speaker B: Uber's like that with like the black car business was pretty niche, you know, and that was their original go to market. But you think about it, it's like, it's. Yeah.
[00:27:17] Speaker A: Anyways, I think, yeah, no, this is the perfect, perfect analogies. Right. I would say that the, the better question that I get from investors is, how big do you think this TEM can be? Or how big do you think this market can be? Investors that really want to understand what you're trying to tap into will also get a sense for adjacent markets and they'll ask questions like, how are people doing this today? How is this problem being solved? Is it being solved with people? Is it being solved with technology? And when you ask those questions, you start to get a sense for like, okay, well, the addressable market today is maybe $10 billion, but that's really because no one's applied this to some of these adjacent markets or most of this being offline today, where people are doing the, solving the problem manually. So I would say that that's probably one of the biggest challenges as a founder that you're going to face is really just trying to understand and articulate your market. And some investors just naturally are going to understand it and get it, and some won't. And sometimes it's because maybe you do have a dumb idea. I'd like to give founders the benefit of the doubt though, because I've seen founders who are really passionate about a certain industry and that really know it well. They oftentimes have insights that no one else does. And so no investor, there's no advisor or consulting firm that's going to be able to tell you the answers to something that a founder has personal, intimate experience with. And that's where I always try to leave room for the, the probability that I could be wrong about this and they might know something. That I don't. And I'd say that's really, really where you can get some incredible insights from founders.
[00:28:55] Speaker B: And I think there's something too, like as I've gotten older, too, like listening to intuition where like, you might, you probably have a feeling or an intuition that there's not. There's a big opportunity, but sometimes it is hard to articulate, and it's like there's no other way besides doing it than to prove it. You know, I think you can kind of describe it or build PowerPoint slides, but I think a big part of it is just doing. And you have this kind of intuition that there's a lot of people building factories that market. You can go and research how big it is, but you just have this intuition that from years and years of, you know, basically building factories and man, there's got to be a better way. You know, digitizing and modernizing how factories, you know, how you buy equipment but plan them and, and, and construct them. There's got to be a better way.
[00:29:39] Speaker A: Yeah, I mean, that's, that's really the space that we're in. So I mean, this could be a good opportunity to talk about that because there's really a lot happening in the, the world of, of manufacturing. The things that people are familiar with to, you know, the things that people are probably less familiar with, but they should be, you know, if you were to ask someone, you know, like, I like to use the mom test. So like, ask any of our moms, like, hey, what do you think are some of the big technologies that are going to be important over the next 10 years or so? You know, people will probably point to AI, generative AI. They'll point to electrification and renewable energy just for other sources of energy. And then also maybe like space technology or defense. There's like a bunch of things that generally broadly fall into that, that category. So I would say that like for the underlying premise for Diagon, the thing that we are thinking through is, okay, for any of those things to become a reality, what needs to be so. So that we can actually enjoy the benefits of those technologies. So maybe starting with AI, another company that's maybe become a household name that people had no idea about 10 or 20 years ago is Nvidia. Most people would have had no idea which companies were designing the chips that compute this type of information. But with Nvidia being one of those companies that designs the chips and companies like tsmc, Taiwanese Semiconductor company that are actually making and manufacturing those chips, there is a voracious appetite for that end product being the GPUs and the computers that will power AI and power the data centers. But who's going to be making those things? Like today you have to look to countries outside of the U.S. mostly in Taiwan, to provide these chips so that we can use them. And there is a prevailing belief that we need to have some of that manufacturing capability, a lot of it here in the US and we can't do that unless we have the right tools to do it. And batteries maybe being another example in the renewable energy space, I'd say as EVs and stationary storage, like electricity storage systems have become really popular all across the US People have been asking how do we make more batteries in the U.S. why don't we source more batteries from American companies? And it's not like you can just magically turn on a supplier here and say like oh, I'm going to source it from Greg's battery company. You actually need to have suppliers that are tooled up and ready to make those products in order to do it. And so what we're seeing now is that companies are spending not just billions but like hundreds of billions of dollars to invest in the capital expenditures capex to build that kind of infrastructure so that we can build chip fabs, we can build satellite production facilities, we can build battery manufacturing lines. And really I'd say that like high level, that's the thing that we're betting on is we've made a promise to ourselves that we want to make these products. But unless we have the tools and make sure that those tools get in the hands of the right companies, the right tools at the right time and at the right price, it's going to be really difficult to make good on that promise.
[00:33:04] Speaker B: I do think that because timing is one thing that comes up in startup investing a lot. It's like why now? And I think we have a really compelling proposition for that. And it's really this post Covid world where you realize how much we are reliant on China for supply of all like everything almost. And you know how de industrialized the I think a lot of people didn't realize it kind of happened so gradually through the, you know, 80s and 90s of this DE industrialization and outsourcing efforts that all of a sudd it was like 20 or 30 years later and you realize like we don't really make anything anymore. And I think that became maybe more acutely aware through Covid and now, you know, now there's a real resurgence of like re industrializing not just the US but all of North America with Canada and Mexico as well. And that does not seem to be a temporary thing. It seems to be a, you know, a really long term trend of how you re industrialize. And I think and it's come like it is going to take a long time, tens or hundreds of billions of dollars to re industrialize and it's going to be very different. I think like the cost of labor, like the level of automation that's going to be required, even the expertise to do it. Just there hasn't been that many factories built like these large scale gigafactories and other things that just haven't been built in, you know, in the last 20 or so years. And so there's kind of a relearning process and but that's the opportunity. And then I think the last thing I'll mention is you talked about sticks and carrots and I think we'll probably talk about politics at some point and whether it's like the inflation Reduction act is a big carrot for re industrialization of a lot of the energy business. And then there's a CHIPS act for incentives around chip making. And then with the Trump administration coming in, there's likely going to be a lot of sticks increasing tariffs that will make it more difficult to import finished goods into the US and other materials and things like that, which could create actually an even more attractive environment for re industrializing. But it's complicated. I think it's asymmetric. Some will benefit a lot, others will get harmed or even that might be true within the same company. And so we'll unpack that more. But it's going to be an exciting couple of years ahead. There's no doubt.
[00:35:25] Speaker A: Yeah, there's certainly going to be a lot to unpack, I'll say that just on that topic, one of the things that I think a lot of companies are fearful of or mindful of is that it's going to be more difficult or more expensive for them to build the capacity to make products. And really I think that that's going to require some very mindful tactics on what types of products do those tariffs get imposed. Are they the finished goods or is that the equipment? And then I think that we also need to know and understand that for every action there's going to be an equal but opposite reaction. So you know, this is a in the game theory of like, you know, the US does this, you've got to expect that, you know, countries like China are going to also have some recourse on, on other things that might just throw a wild card our way. So I think as we're talking about some of the current events over the next few months, a lot of it is going to seem like, all right, here's a new curveball that got thrown our way. How do we expect the manufacturers and companies are going to respond to them?
[00:36:28] Speaker B: Yeah, there's no doubt. And I was at Tesla drawing the original Trump administration. We were dealing with that all the time, whether steel, aluminum, sourcing and some things around electronics tariffs and things came in place. And those things matter, you know, because it drives incentives and most companies will just, you know, do what's in their economic best interest. So they definitely have an effect some. I think they can also have unintended consequences. But we can talk more about, about that.
[00:36:59] Speaker A: I mean, as a, as a supply chain manager, I know the question you would get often that just gives you the sweaty palms immediately is like your, your manager VP comes to you in a frantic rush and they're just like, you know, war just broke out in Ukraine and there's going to be a shortage of this type of material. How's it going to affect our, our supply base? And then you're just like scrambling for the next 48 to 72 hours just trying to figure out like, you know, how is this going to make my life a living hell over the next few months? I feel like we've all been there.
[00:37:32] Speaker B: Yeah, yeah. The supply chain has just gotten so complicated, you know, and you realize in automotive anyways, like how, how deep the tentacles go and you don't, you source to, you know, most of the supply chain managers are sourcing direct to tier ones. But when I got to do the experience of like sourcing right back to the, you know, raw materials, there's just so many things that happen between, you know, a steel mill or even a mine and what when a finished part or a car rolls out the, the factory door. And there's just so many variables. And Elon used to have this thing that like, you know, the cars, I can't remember exactly but have something like 10,000 parts in them and you only need to be missing one to not be able to make it. And you can't. You also, I learned about, you can't have too much inventory because it's very capital intensive and so you got to have just enough. And it's a tricky, it's a tricky thing to manage for sure. Automotive is a very difficult business to run profitably. So just to outline, we have these three main Themes that we can talk through a little bit. But the big buckets or themes we're going to cover is factory building. We'll call it factory building strategies. And this could cover all kinds of things. And well, Nye's core expertise is in procurement and capital equipment procurement specifically. But we have a lot of folks in our network that are adjacent to that. Whether it's, you know, how do manufacturing engineers design and build and specify equipment, or how do you even pick a site, you know, how do you pick a location, which state, what incentives do you get, what specific location do you actually build it in? And with so many of these factors being built, we have great network of folks we'll bring on and talk through some of these criteria, but really excited to talk about how to build factories effectively. Both kind of greenfield as well as maybe doing brownfield, like modifying existing facilities. For instance. Tesla had bought this new plant from Toyota and turned what I think it was like the second biggest factory or building in the US into this kind of modern automated factory. But you know, it took a lot of work and I know Will and I went through a lot of pain to make that happen. But anything else on that theme, Will, before we talk about some of the others?
[00:39:43] Speaker A: Yeah, I love that theme. Just because, you know, when you're, when you're setting out, I'd say that growth stage and earlier stage companies, they think that this is a far off problem that they're not going to have to deal with for a long time. But with any luck they experience some success, some market adoption for their products, and then a few years down the road they need to think about how they're going to scale from their R and D scale, just production and testing on getting to product viability to then setting up a pilot facility. And so the set of factors that will tell you whether you've got a great place for R and D facility versus a pilot facility, they might be different, you might be looking at different workforces, different, just local factors in supply chain. And then certainly going from pilot to production scale, where you're building tens or hundreds of a product to hundreds of thousands or even millions is just another very gargantuan task. And then that's where companies are thinking like, how far are we from the nearest port? Is there enough electricity on the grid available for us to build this factory? And we've seen every version of those problems. They're really just gnarly problems to solve, but fascinating to hear how people think through solving them.
[00:40:57] Speaker B: I'm also really energized about is what we're calling like how it's made. And I think both of us are curious just about different manufacturing processes or how individual products are actually made. And I think hopefully we'll follow our curiosity and what we find interesting and hopefully as we bring folks on or investigate some of these different manufacturing processes that, that you can kind of learn through that as well.
[00:41:20] Speaker A: We're going to have to get our moms to tune in because like my objective is to make sure that anybody that's explaining a manufacturing process is going to have to be understandable too. It used to be either at a very intelligent fifth grader or a parent and now having a close to fifth grader realizing that that bar might be set a little too high, they can understand a lot more than we think they can. So I think it is always really incredible when you find someone that knows their craft well enough to explain it to someone that doesn't know it that well.
[00:41:52] Speaker B: Yeah, it's incredible. And that was a part of like working at Tesla too, that I actually thought I would be sort of an outsider coming from like the oil industry in. But I realized that maybe half, like this is kind of a guess, but like kind of half the employees there had traditional automotive backgrounds, but then the other half came from big tech and other industries. And I think there's like a real benefit of having this mixture. There's certainly like core competencies that are super important. But then having a diverse set of perspectives on doing other things was a really nice like mixing pot of experiences.
[00:42:25] Speaker A: Yeah, maybe one more note on that because I think it will also give some color on like who are the types of people that we are going to have on explaining these, these processes is that I would say 100% of what I know about automotive or aerospace manufacturing I learned from the engineers that I work with or the suppliers that I was buying the equipment from. And so I think it'll also be a great opportunity to bring suppliers in who are the companies that make these lithography and coding and other types of tools because they know it really well. And I think I will certainly get a kick out of it. I know that other people will too.
[00:43:01] Speaker B: It is pretty incredible to hear people like to get to meet them and talk with them, whether it's an engineer or at, you know, a manufacturing company or a supplier when they've been doing it for 20 years or something like that, and can share the nuance of, of what they're working on. Yeah, it's incredible. And then the last and this will be a very dynamic and interesting thing is really current events and some market insights. So the current events will be kind of what's happening in the news. And then market insights we're going to try and provide is like, you know, we're talking as a marketplace business, we're talking to both buyers and sellers all the time. And I think we can provide insights. Some of it's anecdotal, which I still think is valu, and we'll share what we're kind of learning as we go. And so current events could be all kinds of things around, and it will be kind of core to manufacturing and those kind of things. But trying to understand kind of as current news arises and how it may affect you as a manufacturing engineer or an executive that's looking to make sourcing decisions or anything like that, we'll try and cover those topics in a timely and hopefully useful and insightful manner.
[00:44:06] Speaker A: Or even as a consumer. I think, you know, if you're not a maker of these things, at some point, you'll probably be a user of them.
[00:44:14] Speaker B: Yeah, I'm sure there's lots of people right now trying supply chain or consumer to decide, like, do I buy something now before tariffs and other things, because maybe it could impact pricing, you know, because a lot of that stuff gets handed on to the consumer as well.
[00:44:27] Speaker A: Yeah.
[00:44:28] Speaker B: All right. Well, I think that covers the main purpose of today. I think this was really to set context, to provide an introduction to the Movers and Makers podcast, introduce Will and I a little bit and some of the origin story and then set some expectations. But I think some of the future episodes will be focused around these big themes around factory building, learning how different things are made, and then covering market insights and current events. So I'm super excited to dive into those and certainly share your feedback through LinkedIn or other mediums. And we're really excited.
[00:45:02] Speaker A: Thanks for hosting this, Greg, and thanks for everybody for tuning in to listen.
