从 SpaceX、Founders Fund，到解决美国核燃料问题

My guest today is Scott Nolan. Scott has led a fascinating career. He was employee number 35 at SpaceX, helping develop some of its critical early systems. He then went on to spend more than a decade investing at Founders Fund, where he invested in SpaceX and many other defining companies of this generation.

More recently, he started a company incubated at Founders Fund called General Matter. The topic of today's conversation is his time investing at Founders Fund and, more recently, his decision to build this company full-time. General Matter is attacking one of the most interesting bottlenecks in the United States: the enrichment of uranium to create power in nuclear power plants. We don't do any of that in the United States today. We've outsourced it overseas for years, and Scott and General Matter are seeking to reverse that through the enrichment of uranium here in the United States.

We touch on all aspects of what he learned both as an investor and while already building this company in its early years. Please enjoy my conversation with Scott Nolan.

1. Frameworks for Finding Important Problems

Scott, I think an interesting place to begin our discussion is actually with a sort of worldview-type question, which is how you figure out what to work on. If I just plot your CV over time, you worked at SpaceX very early on, you've been critical to Founders Fund's success, and now you've started your own business and are basically devoting your time to that.

Even the path between those things looks very interesting. When you switched from one to another intrigues me. I'm curious, both from your perspective and maybe from the Founders Fund perspective, since that was a shaping experience for you, how you think about this question of what to work on and what to spend your time on.

2. The First Principles Case for Nuclear Power

My framework has always been: just do something that's useful. Do something that you feel like you're making a real contribution and using your talents to make some type of positive impact. What important problem is there that's not going to get solved otherwise, that somehow I can contribute to?

I think all three major things I've done have fit that in some way. If we take them one at a time, there's SpaceX, Founders Fund, and now General Matter.

SpaceX—I was just an engineer coming out of undergrad. I had worked at Boeing during college and saw what the incumbent aerospace industry was like. I didn't want to work in that, and I didn't believe it was going to change anything. I had an aerospace background and always wanted to work on rockets and aircraft. I asked myself, "What's the most exciting thing to do?" I wanted to be in the industry, I knew the incumbents were not going to make an impact, but there was this new company, SpaceX, that was going to ultimately own the entire space-launch industry, which I believed even when it was 30 people. To me, it was a no-brainer to go work there right after college. I interned during college, saw what it was, and thought, "These guys are going to win. I want to be a part of that."

It was an industry that had stagnated for decades. No incumbent was doing anything interesting. They were all just riding government cost-plus contracts. The United States assumed that space launch was a nation-state capability that would never be a commercially interesting thing to do and just had to be subsidized forever.

The result was cost-plus contracts, layers of subcontractors dozens deep, and no ability for anyone to do something really novel. It was going to take a new company. So that led me to SpaceX early on.

Then I found my way to Founders Fund in 2011. I was actually at Stanford in business school. I started in 2010 and was quickly voted most likely to drop out. I wanted to get to work. I just wanted to do stuff. I thought about dropping out in the first or second month of business school to join Square. One path was maybe to go join Square, and Keith Rabois, who was at Founders Fund for a while, was the person trying to recruit me to drop out and go to Square.

In the meantime, I met Peter. I was sitting in a class that he was doing at the law school. I think it was called “Technology, Sovereignty, and Globalization.” There were many different readings—things about theories of government and how technology would change the power dynamics around government versus industry. He convinced me to join his startup in the venture-capital space.

The basic premise was that venture capital needs innovation; the incumbents won't do it. Circa 2005, the concept was founder-friendly. If you looked at all the most successful companies, they were founder-run all the way to the end. The premise was, let's give founders back control of their companies and unilaterally support them in building that. That was the 2005 genesis of Founders Fund.

By 2010, when I was talking to Peter—2011—it was more this contrarian thing of: What important companies is no one funding, and how can we be the capital for that?

The thing that I focused on when I joined in 2011 was really, what set of companies are promising that people underappreciate? I had just come from SpaceX, which in 2011 was not yet appreciated. Four years later, they were landing rockets, and it was obvious that all that stuff was going to work from the inside, but the whole world didn't understand it yet.

My thesis was, I think there's a huge set of physical-world companies—hardware companies—that could be really valuable. This could span biotech, computer chips, satellites, space launch, transportation, infrastructure, almost anything that was not digital. This was a huge opportunity area that everybody was ignoring.

Then I came across this problem of enrichment of uranium and the United States' total lack of capacity in the space, which essentially forced me to go start General Matter.

If you think about the 11 or 12 years that you were principally just investing, in what ways did Peter most affect the way that you think about things, and vice versa? There are many layers to this, probably.

3. Lessons from Peter Thiel: Avoiding Trends

Number one was just avoiding trends, avoiding the herd, and thinking for yourself. That was probably layer one.

The second part was that Peter always took, whenever we looked at any companies, a very orthogonal view to most people. There would be layers of abstraction. Instead of just doing a spreadsheet and trying to analyze an investment, why don't we think about why we're even seeing this investment? How should we think about this investment from a very different perspective than everyone else?

Sometimes there would be layers of abstraction that were many layers deep, and you would end up with a really different view on things. It's natural to just dive in and start trying to understand the business, but trying to develop a very different perspective on it that would yield some alpha was almost always the approach.

I think he probably also thought at the time—it was around 2010—about what was very contrarian, what no one was investing in, and what was underappreciated. I feel like that was around the time he was talking a lot about how we'd made all this progress in the world of bits, but not in the world of atoms. You could be on your cell phone and it was interesting, and then you would look around and nothing had changed in 50 years.

I think he was already starting to think about this, probably even more than he was talking about it, and probably thinking about which companies were doing this well. Where would someone who could understand the business world and the investing world, and then also the startup world, come from?

How do you think you affected him?

Some of our hardware investments turned out to be pretty good, so I think they exceeded all expectations for everybody. SpaceX—Founders Fund first invested in 2008—and what it is today, I don't think many people would have predicted. Maybe Elon could have seen it going to this length. The ultimate purpose is to colonize Mars, so inherently it has to become the scale company to do that. But I doubt anyone would have expected this sort of outcome this quickly.

Maybe it's an obvious question, but what is behind the “avoid trends” concept?

There are 2 layers of competition. The avoid-competition thing was a huge part of this, and that's definitely a lesson learned.

The competition piece is typically understood as competition at the company level. If there's a trend, inherently you have many companies going after the same trend. You're going to have new entrants. It's become a thing; it's not about one company, it's about the theme. If there's a theme that's not about one company, then it's about many companies.

How is it not the case that competition drives profits down to economic equilibrium and perfect competition? So there's that piece of avoiding a trend for that reason.

But then layer 2 is that if there's a trend, probably many investors are looking at it and pricing it up. Where's your advantage? You want to avoid competition on both fronts.

4. Spotting Underappreciated Companies

This notion of finding something that is not being worked on or is underappreciated—you made so many investments in companies where this was a thing. What are the common through lines or attributes of something that isn't being worked on but is important? That quadrant in the 2-by-2: is or isn't important, is or isn't being worked on. “Isn't important, not being worked on” is the place you hunted. What are the typical causes behind that being the case? Because it doesn't really make sense that something doesn't get worked on if it's really important.

Unfortunately, or for better or worse, they can draw you into a potentially brute-force sort of approach. The first few years at Founders Fund, I'm looking for great founders, I'm looking for underexplored ideas. It's just lots and lots of meetings.

And so, from the investor perspective, unless you have things that you're into that you think are underappreciated by the world, and you've maybe been really excited about them for a really long time—why does no one think about this?—maybe it's this idea in your head that you just keep digging on, and maybe someday you find a company that's actually an expression of that thesis. Then it's just meeting a lot of people and trying to find what's interesting, what sounds really different, and what makes sense.

From the investor perspective, the attributes are something like, “Hey, you meet a founder, they seem really smart, they're talking about this thing no one's really talking about. They're telling you why everyone who's thought about this problem either thinks it's impossible or they're all going about it in the completely wrong way. And if you adjust and come at it from a different point of view, it results in a really different solution that has really different business characteristics.”

When you meet a founder like that who's working on something like this, usually they're not just going to give you superficial answers to convince you to give them money. The conversations with great companies like that always felt more like, “This person is really into this thing for some reason, and when I ask them a question, they're not just giving me an answer and trying to bounce back to the surface.” They're like, “Here's the answer. Here's the next question you're going to ask, and let's take you all the way down the rabbit hole.” So they like showing you around the space. That's how it felt from the investor seat.

If you think about what the attributes are of industries where this is the case, I think a huge portion of them are going to be industries that have somehow just stagnated. And I think the thing that's most linked to stagnation is probably being a cost-plus industry, where there's very little incentive for progress, not much incentive to bring the cost structure down, and therefore you end up with this fixed market size that never takes off because you just get in a stalemate, where all the companies maybe get to oligopoly status.

The equation for max profits is just: make pricing high enough to the breaking point, collect your cost-plus revenue and your margins, and then it never becomes a really compelling thing. So, space launch, for example; to some extent, defense, which you see with Anduril trying to break that; to some extent, infrastructure, like The Boring Company—this is their prime thesis. So, I think incumbent, stagnated, oligopolistic cost-plus industries are just prime for this.

If forced to go beyond that definition, there are only so many of those, right? And you've probably invested in companies effectively attacking each category, each subcategory. A lot of those are doing extraordinarily well. What else would you say? There are lots of great founders and investments that weren't in cost-plus industries or something. What would I find if I went digging on this same thread? Airbnb is a classic huge example.

Yeah. When Founders Fund invested, it was still crossing over from a weird, backpacking, couch-surfing air mattress in someone's living room to what it is today. Not that many people were interested in sleeping on air mattresses in people's houses, but that was something that the team was really into. And how do we turn this into something much larger where people can meet each other and have a really authentic experience when going somewhere instead of just staying in a hotel? That wasn't something many people were thinking about.

And yet, when you actually looked at it, you realized how big the market could be, and if they could cross over to a mainstream thing, it could be huge. That's one example.

Sean Parker was on the Founders Fund team right when I joined and led the Spotify investment. The internal memo or thread on the Spotify investment was just so well reasoned. It was because of this history of understanding music and doing the Napster thing, and then years and years of just trying to find the right company that had the right formula. I think that led to him seeing the potential of Spotify and why it was the perfect geography to start in and the perfect licensing strategy.

And so I think it's often just a really deep interest in something that's of personal interest to a founder, and they just believe it should exist. They believe there should be some way to solve this. Everyone's tried to do it the wrong way, and here's the right way. I think sometimes people are sitting with those ideas for 5 or 10 years.

Across all the meetings you did—the first meetings—how did you improve at conducting that meeting to figure out if this was the type of person and problem that you could get interested in?

It probably wasn't even the meeting itself. It was probably just trusting your judgment more. On day 1, it was just, “Okay, I don't know anything. I'm going to take a lot of meetings.” Some of these seem good, some seem not so good, but we need to do the work, because what do I know?

I think early on, intuition was all that you had to go on, and I think it's usually correct. Then I got a little bit better at the job over the next couple of years, got better at trying to analyze things and understand them. That might actually lead you astray, I think, because then you start doing the analysis when you kind of already know. “Oh, I guess we should do the work,” but you kind of already know which ones you like.

In fact, you should just concentrate on the fewest number of companies possible. Don't dilute your average returns by indexing. Then, over time, get better at asking the right questions to help harness the intuition. My gut's telling me we should dig into this.

Could you think of a single investment where your gut was not flashing yes almost immediately, that you worked your way to getting there and did?

Airbnb was one of these. We did a lot of work on it. At the time, Founders Fund did a small angel check early on and then a much bigger check in the next round.

At the angel check stage, it was still the very informal air-mattress thing. I think there had been something where some guest completely destroyed a home, and there was a whole bunch of controversy around that. Then the company took a hard stance on that and said, “We will reimburse the hosts, and we are professionalizing this.” I think that was maybe the moment when you could tell it was going mainstream.

Then Founders Fund made a huge investment. But if you just look back at the past, you might say, “Oh, this seems like a niche thing.” If you did the work, you could see a bunch of different trends. You could see the demographics were shifting to a slightly older crowd, not just backpackers out of college, as some people had perceived. The market share in different markets was increasing a lot.

And so we actually looked at—we did the work. We looked at every single market, sliced market share and marketing spend, and you could see all these markets that they were in. They were just taking share and becoming the dominant thing. So you analyze the data, and it was like, “They're winning. This is over.”

They’re going to win. There are 2 other components of the no-competition idea. One is valuation and the price you have to pay, and the second is capital intensity. You’ve invested in lots of things that require lots of money to get the thing up and running, to revenue, and to profitability.

I’m curious how you learned about those 2 dimensions of earning higher returns. Does low competition bring lower entry prices on average, and is that something you cared about much once you found someone who was doing one of these things? Also, how do you think about the amount of capital that you would have to put into the company to make it work?

Yeah, the low-competition thing typically would be associated with lower valuations, but I think trying to find value deals in venture is a dumb idea. It’s not the right plan. Maybe if you have a very small fund and you can pick up some interesting IP, or this company maybe will never be that huge, but it’s a really good deal, and you look at multiples and stuff and it starts to look a little bit more like PE or something, I think that could probably be okay.

But for true venture, I think it’s dangerous because either it says something about the company’s ability to raise capital—that they’re unable to raise it at market prices—or, unless this is the last round that they need to raise or they really are going to be a capital-efficient business, that’s probably a risky thing. Maybe the team is incredible at debt financing but terrible at venture financing, and so they’re going to switch to debt and it’s going to be amazing. You could imagine a situation like that, but typically if you’re meeting a company and it’s a crazy value deal, it’s probably just not going to end up being that good, is what I’ve observed empirically.

Do you think if we did an analysis of the actual dollars deployed by Founders Fund, more of the dollars would have been deployed once the company was already popular?

Yeah, that may be the case. If you look at actual dollars deployed, it’s probably more concentrated into the winners strategy. I think the way that can still be a good strategy, even if the company’s popular, is, A, it’s popular but not as popular as it will be. Or, B, there’s this idea that up rounds are almost like anchoring on the past versus looking to the future.

5. The Danger of Falling in Love with Ideas

Peter has said this a bunch of times and has guided the Founders Fund team to think this way. It was certainly talked about more in the early 2010s, but if you’ve got a company that was growing steadily and then there’s a big up round, it’s probably the case that the up round is not even enough of an up round. If it’s a 2× up round, maybe it should be a 4× up round.

What’s going on there? There’s that famous quote of his, which is, “The steeper the up round, the greater the undervaluation.” So what is actually happening that makes that true?

Yeah, people are just anchoring on the past. They’re like, “Oh, the last round was this. I guess it should be reasonable compared to the last round price.” In reality, all that matters is the next-round price. How do we make sure the next round’s an up round? What are the catalysts going to be for further increases?

You don’t get paid as an investor based on how close you were to the last round’s price. It’s ultimately against the exit price. But the only thing you have to go off of that’s actual data, or empirical, is the past. And so people are much more anchored on that.

What have you learned about how much to be in love with the problem itself? This is a good excuse to talk about General Matter, too. Are you inherently fascinated by and in love with uranium enrichment, or is there some other big thing going on behind the scenes?

I’m curious if you think about all these founders you backed. My guess is most of them were deeply passionate about the domain because they had this thing where they could go down the rabbit hole or whatever. How much does passion matter in the selection of founders?

From the investor seat, I don’t think you want to be in love with an idea. I think that’s a risky thing.

Yeah.

Because then you’re going to try to find a way to express that by investing, and you’re maybe going to make some compromises on the team because this idea is just so good—its time has come. But then if the team isn’t there, 90% of the time it doesn’t work. And then there’s a whole thing of horse and jockey: can you swap out the team?

The whole Founders Fund thesis was always, no, you need the founder to run the company, to have this vision, and to see it through. And so from the investor side, I think being in love with an idea is really dangerous, and it can cause you to make all sorts of compromises that come back to haunt you. It can cause you to put good money after bad despite the writing on the wall.

But I think on the company side, you have to be in love with the idea. It’s not that rational to start a company. There are a lot of easier, more comfortable ways to make money if that’s the goal. So it’s got to be about what the company is doing specifically.

I think smart people who want to make money—there are so many good jobs in the finance world for that. Or people who just want to build—there are lots of places you can build. But if you want to actually start a company, it better be something that you’re really passionate about, or you think that the problem is really important.

So for me, enriching uranium never was something I was specifically excited about. I was always into nuclear energy. I always thought that this was a no-brainer. Probably the 2 things from science fiction from the ’60s were always the 2 industries we were supposed to have.

Not just from science fiction, but from what our country thought: we were going to go to space and do things in space, and we were obviously going to have nuclear energy. We went from burning wood to chemical bonds, and now atomic energy was clearly so much more energy-dense and powerful and should be lower-cost. Those were always things I was excited about.

I never had a specific interest in uranium enrichment, but then through the course of investing in Founders Fund, I started in 2010 just looking at all sorts of different hardware companies. The first investment I ever made was a satellite company, Planet Labs. Then I did a lot of different things that were outside of pure software.

6. Discovering the Nuclear Energy Bottleneck

The last couple of years at Founders Fund, I drifted back toward almost pure hardware by the end, and then really toward energy, where we invested in Crusoe Energy and understood the whole stranded supply of flare gas and what you could do with that. Then we invested in a company called Radiant, which was the inverse—stranded demand. How could you serve that demand? Maybe you could serve it with a small microreactor.

Even if that microreactor’s output was expensive, the stranded demand had to pay crazy rates anyway for diesel generators in a remote Alaskan village, for example, or an army base. And so that’s a good starting point, fitting the whole Founders Fund thesis of starting with a really small market and growing into a bigger market. Don’t worry about your TAM; worry about owning that market and then grow from there.

My path to understanding the bottlenecks in nuclear energy was through having invested in Radiant and having met so many other advanced-reactor companies along the way. And then all of them said the exact same thing: “We want to make nuclear affordable. We’re going to make it scalable. We’re going to take this from huge construction projects to factory-built.”

And yet the one thing that’s the hardest is not licensing. Everyone thinks the NRC is impossible to get through, but no, it’s not that. They told us that, actually, we cannot get the fuel. The fuel comes from Russia; only Russia makes it. We have to import it. That’s quite challenging, and this was even before the Russia ban.

We just need some source of fuel. I spent all of 2023 looking into this, trying to understand: of the 5 steps of making fuel, which one—what’s stopping us? Is it all of them? Is there not enough uranium? Is it something about the process? It was the enrichment step.

And so I looked at trying to find a company in the enrichment step to debottleneck nuclear and to actually get the nuclear future that we want, and I could not find anything for an entire year. Then I finally decided, if this is going to exist, it’s got to be a new company. It’s not an incumbent, it’s not a government; it needs to be a new private company.

And so this was the important company that nobody was building. This was the important problem nobody was solving that I could somehow actually contribute to.

In all the work you did, what did you learn about the thing you alluded to earlier, which is the relationship between governments and technology? So much of the history of technology in the U.S. was actually military-rooted. So much of what we developed was for a military purpose and then became commercial. The 2 seem like they have always been deeply intertwined: technology and governments.

I’m curious what you learned about that history, what surprised you, and what interested you. Of course, it’s relevant for what you’re doing now. What have you learned about governments and tech?

My experience through SpaceX was just that the government wants to work with private industry and wants to solve problems. At SpaceX, I worked on the engine systems under Tom Mueller and did a lot of the structural and thermal work on those, and helped make sure that they would stand up to the environments and everything, and be low-cost and high-performance. That’s ultimately what we were optimizing for.

And then, once those engine systems were working really well, I moved over to the Dragon capsule. On Dragon, we were on the NASA COTS program—Commercial Orbital Transportation Services. It was a multi-hundred-million-dollar program to bring back 2 things: the capability to launch to the space station, and then, first, a cargo vehicle and, ultimately, a crewed vehicle that could dock with the space station.

The last year or 2 I was there was really focused on Dragon and working very closely with NASA, because we were going to dock with, I guess, the most expensive asset mankind had ever developed. The last thing anybody wants is any sort of issue with a private company's cargo capsule docking with the space station, either crashing into it or something.

Yeah, like a collision.

But then, you would think collision—yes, that's an issue—but the way orbits work, there's actually some ability to avoid it even if things are off track. The harder thing to really get a handle on was things like thermal and pressure. You've got this vehicle, and it has solar panels: what's the heating on the vehicle, and what thermal load is that driving back to the space station? Can that handle it?

So, there were all these interface requirements. We were working closely with NASA on those, and ultimately these were incredibly smart people who believed in space, who had been working at NASA for decades in some cases, despite not a ton of growth in space activity. They were there because they believed in it and they loved it, and the opportunity to work with a company was, like, okay, we have the space station, we have this program. How do we get you guys to the next step on the milestones? How do we collaborate to make sure this is safe, but that it actually happens? It was super collaborative, very positive.

So, I think my takeaway was that, in industries where you have true believers who are in the government agencies and who have been doing this for a long time, they're there because they want it to happen. There's a lot of openness and excitement to working together if the company is credible and cares as much about safety and performance as the agency does.

During your time at SpaceX, what did you learn about making great things quickly? Great things that work quickly?

7. Why America Needs to Vertically Integrate

I think there's all the classic things, like the Elon algorithm at this point. I don't think it was explicit back then. It was just, hey, we have to get this rocket launched. Let's make sure it works. Let's not over-optimize or have analysis paralysis. Just define what the goal is, come up with a good solution. This looks like a good solution. That's a good plan. Let's run with it.

Let's not deliberate for months and months and months over things. Let's just decide and move forward. Then, if we're wrong, we can always go back because there was extensive testing along the way. So, it's really: use good engineering principles, think from first principles, move fast, get it to 90%, 95%, 99.9%. We can get operational, and you can make it better later. But if we just never launch, if we never get operational, this isn't going to work.

One of the things that's most interesting to me today is this whole learning-by-doing thing, which has now been carefully studied: it's in the iterations that you gather lots of your learnings, and there's a literal predictable curve to these things. We've outsourced so much of this, especially in manufacturing, overseas. So, it's not that we do innovation and someone else does manufacturing; it's more that the manufacturing creates a lot of the innovation.

I'm curious how important you think that is in the next decade or 2 here in the U.S. Obviously, you're doing something that got shipped over to Russia, and now we're trying to bring it back. I'm curious for you to say a little bit more about the broader effort to bring more of that stuff back onto our own shores.

Yeah, I think there's the onshoring piece, but it's maybe even simpler as just vertical integration. Even domestically, you have companies in the nuclear space, the aerospace industry, defense, and many different sectors where subcontracting is the norm. You're going to subcontract a subsystem to somebody who subcontracts a component, and then that component has different inputs, and they subcontract that all the way down.

I think in aerospace and in the SpaceX days, it was like, “Oh, there's 30 layers of subcontractors in this one system somehow.” I think that was the case from the Space Shuttle—some crazy number of subcontractors. Then, in the nuclear space recently, there was one analyst call where a company was bragging about having something like 900 subcontractors, so many that they needed regional organizers of the subcontractors.

On one hand, it's like, okay, clearly what you're doing is really complicated then and there are deep barriers to entry. But every one of those interfaces that crosses another company is typically a fixed interface that's not going to move very quickly. And so, you have to treat it as fixed. Everyone's designing their individual piece against preconceived interface requirements. You end up with a really calcified architecture of your system.

This is just at the system design level. You can't optimize across layers for the overall goal. Now, if you bring all that in-house and don't have a lot of subcontractors, you can actually, as an engineering team, optimize with every iteration and trade off interface requirements.

“Hey, this thing that you asked of me over in the electrical team, for me on the mechanical team, is going to be really, really hard. Do you mind giving me a little bit of breathing room on that, and I'll make it up somewhere else?”

You can have those conversations much more easily when 2 people are sitting side by side at a desk than when you have 2 separate companies across the country. At a minimum, I think you need to pull the engineering together and vertically integrate, and just sign up for doing more of the engineering yourself and not outsource it.

8. Energy Production as a Proxy for Prosperity

Then part 2 is the manufacturing. That's just on the design side. If you're actually going to make the thing and you're trying to design for manufacturing, maybe you want your manufacturing actually co-located with engineering. That's what all of the great hardware companies are now doing: you at least have your first-of-a-kind manufacturing co-located with engineering under the same roof, and you basically talk it out.

“Here's why this thing that you just designed is hard for me to make. If you can make it this way, then I don't need a 6-axis CNC. I can use a laser cutter and make this part. We're going to get 10× throughput at 1/10 the cost.”

And so, yeah, I think you need to, at a minimum, put your first-of-a-kind manufacturing co-located with engineering. Better yet, small-scale manufacturing, mid-scale manufacturing, maybe at large scale you can push it somewhere else and go to a lower-cost center, as opposed to Southern California, where so many of these companies are. But I think it's mandatory. You've got to bring it all together.

What have you learned about the role that energy plays in a civilization or a society? It's funny—we didn't really talk about energy for a long time. I think the per-capita growth of energy was kind of flat for a couple of decades prior to this recent surge because of AI, data centers, and everything. What is your framework for thinking about the role of energy in general? Then we'll get into the specifics of what you're doing.

There are 2 of my favorite charts around this topic. One is GDP per capita versus energy consumption per capita. The R-squared on it is certainly over 0.8. You cluster every country on Earth, you plot GDP per capita, you plot energy consumption per capita, and there's a very obvious line through them. There are outliers, but it's just so predictive.

Energy use and production is the ultimate proxy for human prosperity, for economic activity, for all these things. This has been pretty well understood for a while, but completely under-discussed. Then you look at the U.S. This is the other chart I always look at.

We grew our grid for a long time, and then, starting around the ’90s, essentially no growth until today. China was growing a long time; in 2010, we were equal, neck and neck. I think this year they now will be triple us on total energy production. And so, the U.S. just needs to do something if it wants to continue to be relevant economically. You need more energy production if you want to grow your economy.

I think just purely outsourcing stuff overseas gives up capability, especially when it comes to new manufacturing techniques and how to scale manufacturing rapidly—all these things that are so important.

9. AI, Data Centers, and the Energy Squeeze

How do you think the causality runs? One idea could be, okay, if China surpasses us on a per-capita basis, and let's say they get to double, is there some rule in the way things work that will just mean they'll find ways to use that energy in some way that raises GDP per capita and drives all this progress? Or is the causality the other direction? As GDP rises, or we find new innovations, energy catches up to rise to meet that demand or something?

It's curious to imagine: if I just air-dropped, I don't know, 3 times the U.S. per-capita energy capacity on some random country, would that country necessarily become prosperous?

The whole argument from the ’90s almost until 2020 was something like, even if it would increase the economy, would you want to? So, okay, do I want to have dozens of aluminum-smelting facilities in my country, or is that better done overseas? It's low-margin and not interesting, and it's not going to accelerate your economy. Why do you have people working on that when they can be in the services world and do more interesting things?

Certainly, that was an argument, but I think we're seeing right now what happens when you're not proactive about it, when you don't have the capability even of expanding rapidly. You don't want to be caught completely flat-footed when there's a large demand for energy production, and now here we have it with AI and data centers. You look at some of these curves, and it looks like data centers can consume, if they were allowed to, the entire grid by 2030 at this growth rate.

In theory, you would say energy production will come online as we need it. But then, in practice, if you don't develop it, you may bias yourself toward other things because our energy cost is higher than other countries' because we're tighter on supply. They've overbuilt and they're subsidizing, but then they take those industries. Then they take the front of the supply chain and just start marching forward to where they can dictate a lot of different things about the economy.

I think that was the classic view: economies are efficient, markets are efficient, and if there's a demand for energy, we will bring it online when we need to. But physical-world stuff has a timeline with it, and then in the US, it can be very hard to get stuff permitted and go do things. When there's unexpected demand that's very rapid in its increase, you might be caught completely off guard, which I think is the situation in the US now with data centers.

A few years ago, if you looked at a data center and thought, “Okay, where are they going to place it?” the answer was, “They'll put the data center where there's stranded power”: stranded wind in West Texas, stranded flare gas in South Dakota or North Dakota. Now those stranded assets are gone, and it's time to build new capacity. Data centers are completely backed up on getting natural-gas turbines, and nuclear takes a few years to get installed.

I think, just from an energy-stability and economic-robustness point of view, you want to have the capabilities, and at least the ability, to stand those up as you need to.

Obviously, you're doing something about it, but how do you feel about the state of things overall and the state of energy in the United States overall, both state and direction?

The state's been fine until now, and then the direction's completely flat. To me, the issue is that we have not increased at all in decades on the supply side, so the direction doesn't feel great. The state—I wish we had more. I wish we were not one-third of China.

I think we could be a lot more things if energy was not just abundant, but cheap. Just making more high-cost energy also won't bring back certain industries. It won't cause us to start doing things we used to do.

Do you think energy is the bottleneck to us bringing back some of these industries that have left, or is it more labor?

I think labor is actually the one that's probably the most responsive. If there are really compelling jobs in a field, people will shift over to that.

Yeah. The classic one over the last couple of years has been electricians.

Right. They're massively undersupplied. They can't get enough to build all the data centers.

They're commanding very high wages. You can make more than people who went and got a master's. Yeah, yeah, it's like an incredible career.

And now you're probably going to get a lot of people shifting into it. So, I think labor responds. It probably takes a few years, but it's faster than building infrastructure. Infrastructure is probably the bottleneck.

And then, is it just energy? Probably not just energy. Permitting can take a while. I think there's a bunch of different bottlenecks to getting things online.

Why do you believe in nuclear? Why that specifically?

If you look statistically, it's always been the safest, cleanest baseload. So, I think for the economy, what you really want is baseload—meaning always on.

Always on?

A very reliable supply of electricity, not intermittent, but something you can actually design an industrial process around as the foundation of the economy. Even data centers want baseload. Solar with enough storage could be baseload, but typically it's not anywhere near that amount of storage. Usually, solar is more intermittent, more for peak shaving.

If you really want baseload, if you want something that businesses and industry can rely on, it has to be on almost all the time. You need it to be highly reliable, and nuclear is the most reliable. So, you check the baseload box.

People only in the last 10–20 years have started caring about climate as much as they do now. If you care about climate, I think maybe you care about carbon. You probably also care about particulates. Nuclear is the cleanest by far on these dimensions. On the environmental side, nuclear wins for baseload.

Then, on the safety side, this is the part that people question. On the safety side, it's the safest by far of baseload, too. You have a fossil-fuel plant that has a known impact on human well-being from emissions, and nuclear has none of the carbon emissions. There have been high-profile accidents with nuclear—you think of Chernobyl, Three Mile Island, and Fukushima—but the actual risk associated with nuclear, despite those high-profile incidents, is still far, far lower than any other form of baseload energy.

If you ask me what's the safest, cleanest form of baseload, it's nuclear, absolutely. Why do I believe in nuclear? I think those things are important.

Okay, what about cost? How does it stack up on cost?

10. Advanced Nuclear Reactors

This is the piece where it gets really exciting. Over time, we did less and less and less nuclear, probably starting in the '70s, and you see the cost of nuclear going up as we do less of it. You look at where the cost of nuclear is today, and it's more than fossil fuels. It's like, okay, unless you really care about safety, which is pretty acceptable from all forms, or you really care about carbon emissions, is it really worth it?

Are you really going to do nuclear when it can take 10 years or 15 years to build a reactor? They can be double the expected budget. That's really hard for a utility to stand up to and say, “Yeah, I want to do more of this.”

They need to bring costs down for ratepayers. They need to have predictability in when they're going to bring capacity online. On those dimensions, nuclear has not been the best. It's not highly responsive new energy generation, and it hasn't been the lowest-cost.

So, you say, “Okay, why care about nuclear?” It's because, on first principles, it should be one of the lowest-cost options. You've got much more powerful physics and potentially much smaller reactors outputting a lot of energy.

You look at a pellet of nuclear fuel, and the amount of coal that's equivalent to it is like a ton of coal. I can take all this stuff and all this space and package it into something so much smaller. I don't need as much material for my reactor. I'm not going to be going through as much mined product. It's just an order of magnitude different.

On first principles, nuclear should be an extremely affordable thing, potentially much more affordable than fossil fuels. It has not been at all, but that's the goal. Now you see this whole wave of advanced reactors trying to make that true on the reactor side, and then we're trying to do it on the fuel side.

Can you create a taxonomy of the advanced reactors? What kinds of approaches are being tried? I think everyone thinks of nuclear as the massive plants and the stacks they're used to seeing in pictures, and it's sort of been that same way for a long time. They cost $10 billion to make or something. What are the things being tried?

On the reactor side, everyone thinks of the cooling towers. You have cooling towers in other industrial processes, too, but everyone thinks of the cooling tower, which all it is is steam cooling off—hot water cooling off—so that it can be reused as a coolant at the start of the cycle. Lots of industrial processes do that, but nuclear is known for it.

That's typically about a gigawatt-scale reactor. Often in the US, an AP1000 Westinghouse gigawatt-scale reactor design, which we can get into—the technical details of what type of coolant they use and what type of fuel—which might be interesting. But the thing to think about, in my mind, is that that's a big reactor.

That's a gigawatt scale. I think the interesting buckets are around the size, because they link to applications and markets. There's the grid: if you want to go battle it out on the grid, you need gigawatt scale because it moves the needle on the grid, and you're getting the scale that can bring your cost down as low as possible, at least for now. That's a good format.

On the other end of the spectrum, you have microreactors, where you're saying there's a stranded community that's using diesel generators. This is bad for the environment and not that cheap. We can beat them on cost, so you go with a microreactor. Think 1-megawatt scale—not gigawatt, megawatt. Then you have the middle, which is 100 to 300 total megawatts: SMR, where SMR is small modular reactor.

11. The Bring Your Own Energy (BYOE) Concept

All 3 buckets have different approaches on the technology side, but I think all 3 are going to be important. If gigawatt scale is for the grid and megawatt scale is for remote communities or government installations, then the middle scale is going to find its niche behind the meter with data centers over the next 5 to 10 years. One unit could be dedicated to 1 data center, something that doesn't impact the cost that I'm paying as a ratepayer in whatever district I'm in, even if there's a data center there—something that's more cordoned off.

Yeah, exactly. Think of it as the ultimate behind-the-meter thing: it's just an island. Imagine a fence around a few hundred acres. You've got a data center, and you've got its nuclear power plant there, or whatever other form they might have, like peaker plants, natural-gas turbines, maybe even solar in some cases.

Okay, that's all cordoned off. It doesn't even touch the grid. It's not impacting the grid, it's not doing anything to the communities' rate costs—it's completely separate. I actually think there's a huge opportunity to improve communities through this. If you have a data center putting billions into both the compute and the power production, let's say they're even 50/50 on power production and compute, could we increase that power production 10%? That's only a 5% project increase.

In the case of a gigawatt-scale data center, that would bring an extra 100 megawatts to a community. That's huge. That would plummet utility prices for that community. I think, at a minimum, we're going to see people going behind the meter, but not disconnected from the grid. Ideally, we see them actually feeding the grid and feeding baseload.

That reminds me of your BYOE concept. Maybe just spell that out a little more for the audience.

BYOE was the concept: Hey, we're doing all this investment in the grid for the first time in decades. Private companies are making the investment. They will make the investment by bringing their own power, bringing their own energy: BYOE.

They're going to be doing that investment anyway. Their biggest worry is probably something like, "Will I be allowed to build this data center in this community?" Over the last year, I think that's been the start of a discussion. If they want to get to the right answer on that, they can tell a community, "Hey, we're going to be over here on this unused land. Are you okay with us being here, running a bunch of compute, and being net positive to your grid? Can we just plug in and give you some extra power in return for inviting us to be a neighbor?"

To me, that's a complete no-brainer for everybody, at a slight cost increase during a time when hyperscalers building data centers are all about speed to power. They want to be online as fast as possible because this is the contest to see who can get to the greatest scale first. That is a very low cost compared to the advantage of deploying quickly in a community and being invited there versus being rebuffed. I think it's a total no-brainer, and modern data centers can do completely closed-loop cooling. So, the water issue is not an issue. It's really just this power thing.

What would be the explanation for these new advanced reactors ultimately not working? What keeps you up at night? This is kind of out of your control. You're not designing these advanced reactors yourself. You're helping them achieve their mission, but they need to be successful. What do you think, if you had to handicap the reasons why they might not be successful, are the most likely?

I'd say number 1 is that they don't have fuel to operate. That's definitely a—

Solve that problem.

That's a showstopper. So, we're trying to eliminate that risk. Part 2 is that they're too expensive. I think the physics will work. I don't think anyone's too worried about that.

You have dozens of incredible companies with great engineers who are trying to solve the advanced-reactor problem and really go at it. Typically, they'll pick a form factor that is the right size to focus on a certain market, whether that's a microreactor for remote communities, SMRs for data centers, or very large gigawatt scale for the grid. SMRs, I think, ultimately have the plan of being cheaper than the gigawatt-scale construction projects for the grid.

There are many reactors that are trying to solve the reactor-cost problem. The question is going to be whether their energy-production cost is low enough. For these advanced reactors, it's not just a fuel-availability problem; it's a cost question. The fuel can be half of their total cost, and I think long-term enrichment will be half of the fuel cost.

12. Navigating America's Nuclear Fuel Cliffs

For General Atomics specifically, I'd love to hear, at 3 levels, how you're thinking about building this thing: the product level, the business level, and then the company itself. Starting with the product, how have you figured out what the market wants or needs? Obviously, you're enriching uranium. Uranium's the key fuel source for these different parts of this taxonomy for creating energy. How do you know? There are lots of different kinds of things that you could provide to your customer. What has the journey been like to figure out what the actual product is going to be?

This goes all the way back to understanding the fuel cycle, or the fuel supply chain, for nuclear. There are 5 steps. You mine uranium out of the ground, then convert it into a gas, then enrich it, then deconvert it back into a solid, and then form fuel pellets. The enrichment step is really a refining step, a separation step. Five steps to go from ore in the ground into a little pellet, into a fuel rod that goes into a reactor.

The U.S. has good capability across the board except in enrichment. It's the 1 area where we don't have any commercial-scale capability. There's some R&D capability, but nothing that's commercial scale or commercially competitive with Russia and Europe. So, we decided, "Let's hone in on the enrichment step." That's the bottleneck. That's the thing that's leading to what we call the nuclear fuel cliffs.

There are 3 cliffs. Cliff 1 is the HALEU supply chain. This is the same problem we heard from all the SMR companies: we don't have a source of HALEU. HALEU is the fuel that they need. HALEU is uranium that's enriched to about 20% U-235, which is the fissile material. They want it enriched a little higher, to 20%, because it helps the reactor be smaller.

That's the first cliff: HALEU for advanced reactors. They have none. If there's no reliable supply in the next few years, it's going to make it very difficult for them to scale up. So far, they have small amounts from the DOE to prove that their reactors work the way they think they will and to do first deployments, but not to scale to where it really moves the needle on the grid.

At that point, enriched uranium specifically, or both?

We will not be importing enriched uranium from Russia or uranium from Russia. The only places we get it enriched are Europe and Russia. Today, Russia is about 25% of U.S. imports, so roughly 20–25% immediately goes away in 2028. Utilities in the U.S. will then start eating into their inventories and trying to work out deals to import more from Europe.

Cliff 1 is HALEU at 20%; cliff 2 is LEU, low-enriched uranium, at 3% to 5% enrichment. Then, at some point in the future, the U.S. stockpile of enriched uranium for propulsion for the Navy will eventually run out. So, there are these cliffs.

We're focused on the nuclear-energy side of it, LEU and HALEU, and that's what we're going to be producing. We realized, "Hey, the most urgent cliff that we need to address as soon as possible is HALEU for advanced reactors." Coincidentally, this is the small market—the emergent market that we don't think any incumbent will go after on the same time frame as us.

We can serve those advanced-reactor customers that we've known for years and make sure that they have the HALEU they need to deploy and scale their reactors. That's where we're starting. Phase 2 is going to be LEU production, low-enriched uranium for the 94 reactors on the grid today, supplying them with the fuel they need. Today, in the U.S., that's a $2–$2.5 billion market.

What's the relationship between this kind of enrichment and a more weapons-oriented type of enrichment?

All enrichment is, for the most part, the same. If you think of it again as a refining process or a distillation process, you're just refining it further. Ultimately, the product that we make is enrichment services, and you can run material through an enrichment process from natural uranium, as it comes out of the ground, to get to any arbitrary level of enrichment.

The commercially relevant ones are LEU, 3 to 5% for existing reactors, or HALEU, 20% for advanced reactors. When we set out to do this, we said, “Hey, HALEU is what the market needs most right now.” We set out before the Russia ban, so there was no LEU cliff. We said we were going to develop enrichment capability to serve that market.

The fundamental unit of enrichment capability is simply the ability to do this refining. It’s measured as something called separative work units in the enrichment field. We will provide that service and sell it to utilities and advanced reactors to get them the fuel they need. Ultimately, the product we developed is enrichment, and you can apply it to either of those levels.

To your question about how that’s different from weapons-grade enrichment, when you see countries going to weapons grade, they’re often trying to go north of 20%, which is the internationally agreed limit for where you move toward weapons grade. For nonproliferation reasons, there’s strong international consensus that we should all stay below 20%. The risk isn’t worth the reward of letting people go higher. You see countries going to 60% and saying it’s for their nuclear energy industry, and it’s pretty suspect. I think they’re clearly just trying to get as close as they can to weapons grade, which is well over 90%, and they’re trying to develop weapons. Ultimately, it’s not different technology, but it’s applied in a different way and in a setup that’s completely outside the international consensus.

Is the percentage—is there a way to think about that like purity or something?

Yeah. There’s U-238 and U-235 as it comes out of the ground. There are other isotopes as well, but the main ones are U-238 and U-235. You basically want to filter out the U-238 to get U-235, and U-235 is the isotope that wants to react. That’s the fissile isotope.

What do we know about the stock of ore in the world, or just the raw element?

We’ve certainly got hundreds of years of supply in the ground. The US has supply, and we have active mining in the US. Canada has even more supply and higher-grade ores—enough to supply us for a very long time. It’s the same in Australia. Kazakhstan has a huge deposit, and the US imports from there as well. On the ore side, it’s not an issue.

How do you build a great business on top of this product? Is it so easy just because there’s so much latent demand for it from this new segment, or are there other considerations?

I wouldn’t say it’s so easy at all. I think the latent demand hasn’t been obvious for a long time, until the last couple of years. Any large latent demand in the last 24 months, I think, is linked to the thought that there are going to be a lot more data centers doing AI inference or training jobs. If you go before that, there wasn’t a lot of new nuclear being talked about. There was a need for HALEU, but that’s a pretty small market.

I think a lot of people have thought that this isn’t really something where we need new capacity. If you go back to the 2010s, there was really no new capacity being built anywhere. Certainly not for LEU production, and certainly not for HALEU, because it’s emerged so recently.

I think the fact that this is a growing market is something we’re still betting on in many ways. It’s not the case that we’re currently deploying tons of new reactors in the US, but we think that’s coming. We believe deeply in the market. I don’t know that the entire industry believes the demand is there. They’ve been through nuclear renaissances before that didn’t pan out, and I think their point of view would be, “We’ll build it when we know that there’s a need.” At least that’s been the attitude of many people we’ve talked to.

On the ease of doing this, it’s a proven thing. People have done it before, but it’s still not easy. You see some of these legacy technologies that were used in the past, and then we lost a lot of the capability because we didn’t do it for so long. For enrichment, it’s been an industry without a lot of change since really the ’90s. There hasn’t been a lot of progress or leveraging of new technology, so there’s a lot of hard engineering work to get back up to speed with modern technology.

Even once that’s done, you’re building facilities that are 1 million square feet and large, multibillion-dollar infrastructure projects. In the same way that maybe building the first Tesla Roadster was hard, the real challenge was how you scale this up. I think it’s extremely underappreciated how much goes into standing up a huge industrial facility. I think that’s actually the hard part.

How do you think about the North Star metric for the business? If I equate it to SpaceX, it’s the cost per kilogram to orbit or something like that. It’s a really cool thing to visualize over time. What’s your chart going to look like? What’s the metric?

They had cost per kilogram to orbit, and specifically to a really specific orbit, like low Earth orbit. You can actually decompose the orbital piece into a velocity, so it’s almost like cost per kilogram to some velocity.

Our version is cost per kilogram of uranium, not of a payload, to some enrichment level. It’s like cost per kilogram to 3 to 5% or to 19%, which can be described as cost per separative work unit. A separative work unit is the industry measure of enrichment, where it’s basically kilograms times some entropy reduction, or separation or organization, of the material. A separative work unit is typically referred to as a kg SWU—kilograms times separative work units. Our North Star metric is dollars per kg SWU.

Does that map onto the value-creation cycle of your customer? Is that input cost the key determinant of their success as a business?

It is. The importance depends on what type of reactor you’re running. If you’re doing a gigawatt-scale, classic AP1000 light-water reactor that uses 3 to 5% enriched fuel, or low-enriched uranium—LEU—the cost of that fuel as a percentage of your overall cost is quite low. It doesn’t really matter that much. What you want is availability, reliability, and diversity of suppliers. You want to know that they’re going to be there, and you don’t want them overly concentrating and creating supply risk for you.

The cost of the fuel isn’t a huge input into your cost of electricity, your LCOE. Most of that is going to be CapEx for your huge, $10 billion project. For them, it doesn’t matter that much.

But for advanced reactors, it matters a lot. For some advanced reactors, the cost of the fuel—the HALEU fuel that goes into it, enriched further to 19.75%—can be more than half of their energy-production cost. That requires more input material to refine it all the way there, as you filter through more and more material. To them, it matters a lot.

The way that fuel has been purchased in the industry so far, which maps directly onto our North Star metric, is through 5 different services. A utility purchases uranium, and then it purchases upgrades to the uranium as it goes through the supply chain. It’s really a tolling business where you buy and own the material, and it’s book transfers all the way through. They’re paying different people per unit of service provided to do their work.

The service that we provide to them is priced in dollars per SWU. If you look at the actual cost structure of producing fuel all the way through, for low-enriched uranium, enrichment is maybe a little less than a third, but it’s one of the largest cost segments. For HALEU, it’s even more, and we think it’s going to be the dominant cost driver of fuel cost.

So, going back to the Founders Fund stuff we were talking about at the beginning, you’ve found the highest-cost segment of the workflow, sold to the customer for whom it represents the highest percentage of cost—a new customer that’s emerging, that’s small, that you can go own. That’s how you ultimately build a great business: by driving all of this through the narrowest possible choke point.

Yeah. If you want to put it in investment terms, that would be it.

13. Building an Engineering-Driven Hardware Company

Yeah. In business strategy terms, that would be it. But I think if you go back to the very beginning, it just turned out that this was the thing that was most necessary. This step of enrichment was why we didn’t have the more enriched fuel that advanced reactors needed. You realized the US had lost the ability, despite being the number 1 in the world during the ’80s by far. It was something we were extremely good at, and we completely stopped doing it. This bottleneck was going to be the bottleneck to all of nuclear energy if you believed in advanced nuclear energy. This was the thing we had to solve.

So, we did it because no one was doing it, and it was extremely important and urgent. I think that ended up corresponding to this very good entry point for the market. But I think the 2 are really linked. I don’t think it was a coincidence that if you’re solving a problem that’s urgent, that no one else is doing, on a small but emerging market, it will completely fit that framework.

The final step is building a great, enduring company, by which I mean not just cash flow, but a collection of people and a set of impacts on the country. How do you think about the most important things you can do starting now to build a great company? What does that mean to you? You’ve invested in many great companies.

Like, what is a great company on top of a good product and a stream of cash flow? It comes back to the team. I think Naval has said this a bunch of times: the team you build is the company you build.

To us, it’s team DNA. We thought about where to put the company, which was a big question at the very beginning. You look at who you actually need on the team, and of course you need nuclear engineers, but you also need great mechanical engineers, electrical engineers, software engineers, chemical engineers—every type of engineer. So you ask yourself, where do we want to put the company?

It turns out the percentage of the team that’s nuclear engineers is in the single digits. You don’t need that many nuclear engineers. We’re not doing a reactor. There are actually no nuclear reactions in our process. We need to make sure that there are no nuclear reactions, but to do that, you don’t need a huge number of nuclear engineers.

So there was this question of, do you go to where the nuclear engineers are, or do you go to where all those other types of engineers are? On one dimension, you don’t need that many nuclear engineers. You need great ones, though. Where are we going to find them? You look at where they are in the country, and they’re scattered everywhere. There’s no one place to go.

So we had to go with the other option: you go to where all the other engineers are, specifically hardware and aerospace, and that’s Southern California. The team DNA that we wanted to set up was that this is an engineering-driven company. We’re not doing a science project. There’s no new physics. We’re not going down a multiyear R&D path that’s uncertain.

We need to get this operational as fast as possible. This is an engineering problem. Everything we have to do has to be thought of as engineering. We’re engineering cost out of the system. We’re engineering performance up. We’re engineering cost of capital down. We’re engineering the schedule to be as tight as possible.

We’re even engineering our own buildings. This is taken from the Tesla playbook: don’t hire a GC and outsource everything. You lose total control. The schedule is not in your hands anymore. You need to build your own in-house engineering, procurement, and construction firm—a team to go run your construction projects—because one of the hardest things about this is not just engineering or manufacturing, but actually constructing millions of square feet on schedule and on budget.

The whole DNA of the company is oriented around the drive to deliver for the industry as quickly as we can while being safe, reliable, and every other dimension you would want, subject to those constraints. Go quickly because the industry needs it. Don’t have analysis paralysis. Don’t deliberate over things that don’t matter. Let’s get a service live that can deliver for the U.S. industry, and then let’s bring the cost down over time. Everything is oriented around schedule and cost.

How do you run the company? Literally, what does your time look like as one of the key inputs into everything you just described happening or not? You’ve watched a lot of vertically integrated companies that own a process end to end do that really well. How are you running the thing? If I were to follow you around for a week, what would it look like?

It changes over time. My strong preference is to be internally facing, and to really be there helping to do the work internally. Right now, we’re in a phase of company building and team building, and so we’re rapidly hiring. A lot of my day right now is interviewing people.

I’m the last step in the interview, and what I’m screening for is whether this person not only has the skills, which have already been screened for at that point, but also has the attitude. Do they care about this problem? They know that there are lots of places they could work, but this may be the only place where they can work on this problem in a private company.

They know that there are probably places where they could potentially make more salary, have an easier job, or have a more predictable schedule. But we’re trying to do this mission that requires us to go as quickly as possible and to deliver before the end of the decade for both the advanced reactor industry and the existing reactors on the grid, which are about 20% of our grid.

This is going to be a lot of late nights and weekends, just working as hard as we possibly can. Is that something they’ve done before? Is that something they like doing? Do they know what they’re signing up for? Are they really motivated by this? Those are the things I’ll typically screen for, subject to everything else already being verified.

A lot of my day right now is trying to make sure we have the right early people on the team to build the right culture for them to then recruit and hire the next people. It’s not just that the team you build is the company you build; the early team you build is the company you build.

That’s actually what drives a lot of my external-facing stuff. We’ve got to get the word out to the right people so they know what we’re working on, they know why this is important, why this is the bottleneck to scaling nuclear and scaling energy in the country, and why they should join our team.

How do you reason through the illogical, data-free fears that people have about nuclear in general? You started to address them earlier around the amount of waste, which is actually quite small. I think it fits in this room or something crazy.

The bad events that we can call to mind—Chernobyl and Three Mile Island—were bad, but if you dig into the data, it seems like nuclear is very safe. These fears really do seem to be the reason why we don’t have a lot more of it. What matters is reality, not the data. So how would you pitch people on not being worried about these things, so we can get over this problem?

You’re pointing out the difference between acute and chronic events. Acute events that are very attention-worthy, people remember those. The things that are just low-level in the background, people don’t think about, even if they happen every day.

You can think of it in terms of catastrophic events like that. You can think of it in terms of your health: what are we chronically doing that’s unhealthy and taking its toll, versus acute things that take their toll? I think people have a strong bias toward that, but often the right thing is to look at the data. I don’t think most people find that compelling.

I think the more compelling thing in nuclear, for me, is to think of a world in which we are not constrained by energy. We won’t be constrained because we can all agree that it’s good: it’s baseload, it’s very affordable, it’s going to bring down your rates, it’s safe, and it’s clean. We can debate those things and look at the data, but let’s imagine that future world in which we have all those things.

14. The Trade-offs Between Investing and Operating

I think the way to make nuclear really compelling to people is actually to check the final box, which is cost. Going back to why we have not had more nuclear, the schedule to bring it online for the large, gigawatt-scale projects has been uncertain, and the costs are often above what’s projected.

When you look at the total package, it’s not cheaper than coal, it’s not cheaper than natural gas, and it’s not cheaper than hydro. So why do we want this? If you told someone, “Okay, nuclear is safe. We can dig into that,” they’d understand that you’re not interested if it’s more expensive. Why would you be? But what if it’s cheaper? What if your utility bill got cut in half?

I think people would suddenly find that extremely compelling for something that could be tens of miles away from their house and still be powering the grid.

To bring it back to where we began the conversation, why do you think there are not more Founders Funds and more founders pursuing some radically different, very unique vision for the future? It doesn’t seem like there are many of these people. There’s only one Founders Fund.

More investors have taken on this mantle of big, contrarian, unique projects, I suppose. But why are there not more of each? It seems so strange.

It’s all case by case, even for Founders Fund. It’s not a programmatic thing that Founders Fund has tried to do. It’s almost the opposite of that. Founders Fund recruits people who want to be investors, who don’t want to be entrepreneurs. If they want to be entrepreneurs, they should go be entrepreneurs.

The 2 roles are extremely different. For people who have done both, they realize how different operating is from investing. Founders Fund explicitly selects for people who want to be investors.

And yet, once in a while, a company will start because it almost feels like a disservice not to start it. In this case, after a decade-plus of investing in all of the reactor companies, they all see the same problem: no one’s doing it.

Then you look at the final thing: okay, important problem, no one’s doing it. Maybe I can do it. You look at what it takes to actually go do that, and you realize, wait, my background is really aligned with that.

If I don’t do this, then—if the goal is to have an impact on the world, and we can have a positive impact through investing, but a much greater impact through starting this specific company—it’s actually wrong not to go do that. So it’s almost like there’s a desire not to start companies, full stop.

15. Kindest Thing

And then only with extreme exceptions will we start them. And so, I think if it's an extreme exception, it makes sense that it doesn't happen that often. Now, why don't most people do that? I think the investing life is probably far better than the operator life.

Have you explained it that way so far?

I mean, I like what we're doing a lot, but in terms of quality of life, it's not as good. I think any entrepreneur would tell you that the quality of life is not as good. Once you start a company, you're really taking the harness and latching on. Whatever it is, you have to go do; it's not optional.

If you're an investor and a deal comes across your plate, but you're a little bit too busy—you've got enough over here that you have to work on—it is easy to let that one go and not have to do that work. I think when you're running a company, there are things that come up that you just have to deal with and take care of, or it's going to be a problem.

Now, that's also a function of the time horizons of each job. I think when you're operating, you can see the feedback cycle very quickly. As an investor, that company that you might have just chosen not to meet with to preserve quality of life could be the next great company. And so, you might not realize that you're not doing well until 5 years from now, when you don't have that return from that company.

Some people are just wired a certain way. Even in the investing role, I would take 10 meetings a day—to the point of definitely diminishing returns—because I want to work hard and make sure I see everything. I think the other thing about investing, when properly understood, is that you actually don't need to invest in that many companies.

While you can brute-force it and boil the ocean and try to meet everyone and try to be extremely helpful to everybody, ultimately, all that matters is a few companies per vintage, and you just have to be into those. Certainly, as a VC, much more than even private equity or hedge funds, you don't actually have to work that hard meeting everybody.

You can dive in as much as you want into specific companies, add value, help them, and be their preferred investor. But it is not a job of labor. It's really a job of ideas and thinking. The quality of life of being surrounded by smart people, talking through ideas and thinking, can be a lot more comfortable than rolling up the sleeves and diving in.

Well, I, for one, am glad that you're now working on the problem that you're working on. It seems enormously high leverage, and I certainly hope that the future that you might enable is the one that we get to see. There are very few arguments against more, cheaper, cleaner energy. It's an incredible project.

When I do these interviews, I ask everyone the same final question: What is the kindest thing that anyone's ever done for you?

The recent example that's completely linked to this conversation is the transition from Founders Fund to General Matter. You have to say, “Okay, what was this thread that led me here?” I think it goes all the way back to being recruited into Founders Fund by Peter, and then receiving support through a decade of investing.

As I wanted to shift focus to this, there was total support for doing that. Obviously, Peter tried to beat up the idea and make sure it was good, but being along for that journey and then ultimately joining our board as one of the very few boards that he's on was—I really appreciate that.

What was the hardest part about him beating up the idea? What was the hardest aspect to get through?

It was probably all the abstract layers of meta-level questions, just going back to the fact that we haven't had any new nuclear in a long time. Why is that? Is nuclear just regulated to death? Is the regulation a thing that's meant to stop it—basically make it illegal? All these questions of, “Why is it really the case that we're going to get more nuclear now?”

I think that challenge really forced us to ask a lot of hard questions that we feel great about our answers to. Even when you asked, “Are you dependent on every SMR succeeding to make a real market?” On the HALEU side, yes, HALEU production ultimately will be driven by SMRs creating that demand.

But to make HALEU, you have to make LEU. Our technology works on LEU also, and we'll be building LEU capacity. And so, there's a $2 billion-plus U.S. market and a similar-size market in our allied partners that we can sell into.

There's this known-good market. You work through questions like that when being challenged on, “What if nuclear doesn't grow?” It's like, well, worst case, there's an existing market, and we can start a business there. Time is then on our side for when and if nuclear grows—which we think it will grow very rapidly—and we're in a good position.

A lot of these conversations that I had with Peter were in 2023, before the AI data center boom. And so now, it's extremely obvious why we need this.

Yeah, in a good position. Scott, this has been so much fun. Thank you so much for your time.

Yeah, thank you.