502: Chris Power—The Other Hadrian's Wall

0:00Hello friends, me again with another episode of the way I heard it. My guest today is Chris Power, a remarkable American who sounds an awful lot like he came from Australia. Because he did. He immigrated over here a few years ago with $6,000 I think he told me. In that period of time, Bill DeCompany called Hadrian, which now employs lots of people and is worth about $78 billion. It's a defense company and if you're a student of history, you'll recognize the name as belonging to a famous Roman emperor. By the way, this episode was recorded at the Ronald Reagan Library. The gift that just keeps on giving, I was there a couple of months ago for an economic conference and just ran into so many cool people who I thought had stories that you guys might appreciate. This guy in particular has done something near and dear to micro works. I really wanted to talk to him and I was so glad he had an hour to spare because what

1:01he's built, I think it's important, not just for our national defense, but for our national identity. If you know your history and believe me, Mr. Power does, he studies how empires rise and fall, particularly the Roman Empire. You can draw a couple of really cool parallels between Hadrian, the emperor, his philosophy and Chris's modern defense mission. First thing that'll jump out is borders. It's all about securing borders over expansion. In the old days, the Roman emperors, they focused very heavily on invading new territories. That's how they grew. Hadrian was the guy, the first one really, to pivot toward domestic consolidation. He built a massive wall. Hadrian's wall. To reinforce and protect what Rome already had. Power chose the name for his company because Hadrian is doing something almost identical. They're focusing on reinforcing America's domestic supply chains, ensuring up defense walls,

2:07rather than outsourcing dependencies overseas. It really comes down to infrastructure as well. This was very inspired by Emperor Hadrian's sweeping historical efforts to restructure and stabilize and rebuild Rome's infrastructure from the inside out. His startup was created to tackle a modern version of that same crisis, rebuilding the hollowed out US industrial base and rescuing the aging aerospace manufacturing sector from terminal to climb. There's a lot of crossover in this episode. The stuff I've been doing with the Pentagon over the last year, they've dropped a lot of names and we've rebooted a show and we're going back and we're highlighting companies like Hadrian. In fact, I'm going to reach out to Chris and see if he'd like our cameras to come. Maybe to Alabama or Arizona where he's building his factories. I'm telling you, it's so impressive what he's done and it's so important.

3:12Kind of validating, frankly, to talk to somebody who confirms a lot of the stuff I've been mouthing off about for the last couple of years. He has a front row seat to what it takes to reinvigorate the skilled trades in this country and he talks at length about some of the things that they're doing internally the way they're shifting from a manual labor to technical oversight. He talks about the autopilot model. The workers on a floor at a Hadrian factory, they operate a lot less like manual crank and cut machineists and more like flight controllers. There's massive output leverage to talk about a ton of career growth. Mostly though, it's the onboarding speed. They've got proprietary software. I hope I get this right. I think you called it Opus, but they absorb the super complicated tasks of machine programming. They're bringing people up to speed, like they're training factory technicians in 30 days or less in an effort to address the skilled labor shortage.

4:18It's a super intuitive onboarding system that he's perfected. They're actively recruiting and elevating individuals with zero manufacturing background. This is just an amazing story and a huge bit of good news for veterans and former nurses and hospitality workers and people who want to jump into the manufacturing game from the ground up. This is definitely a place for you to consider. It's a great conversation with a great American who talks kind of funny on a county. He's from Melbourne. It's the other Hadrian's wall with Chris Power right after this. Dumb. Make news this week in the wide world of agriculture in an effort to lower beef prices. The government's okayed the importation of 300,000 metric tons of foreign ground beef into the US market without the normal tariff. This is a decision that's got a lot of people up in arms and I'm going to talk about it at length in an upcoming podcast.

5:18But for now, I'm just going to remind you that when that beef finds its way onto the shelves of your local grocery store, you'll have no way of knowing where it came from. The administration's working on correcting that as well. But for now, if you want beef grown and delivered by American ranchers, you need to shop at Good Ranchers. This is the number one company delivering 100% American meat to your door. Good ranchers partners with over 100 local farmers and ranchers to deliver 100% American meat straight to your door. This is past your raised. That has no antibiotics, no added hormones, none of the other stuff that you need to think about when you're eating imported meat. This is the number one option for American meat delivery with over 25,000 five-star reviews on Trust Pilot, including my own. Yes, I left them a five-star review. I've been eating their meat for over a year now and I love it. For limited time, you can get a free ground beef bundle with your first Good Ranchers order.

6:21That's four pounds of 100% American Angus ground beef to help stock your freezer. This is Good Ranchers.com slash Mike. Declaim your free ground beef bundle. Plus, when you start a plan, you'll get free meat with every order. That's Good Ranchers.com slash Mike for your free four-pound ground beef bundle. Good Ranchers.com American meat delivered. Power or powers? Singular. Really? Yeah. I guess that's Good. I mean, from an individualistic standpoint, you think Austin Powers and of course that's here into the zeitgeist, but you're simply Chris Power. One man, one power. Yeah, that's it. What part of Australia? Melbourne.

7:22Yeah. Great cafe society that is. Yes. Best coffee in the world. I mean, I haven't been in years, but I was there, I guess maybe 20 years ago. Do they still, there's a river festival? Yes. Is it the Mamba maybe? Yeah, Mamba, Mamba Festival. That still happens. So there was an F1, there was this river festival. Yep. There was a lot of jet lag and there was just, there's nothing I could tell you about Australia and you don't know, but what do you have? What a spontaneous, fun loving, dangerous group of bipeds. Yes, you are. Yes, they call it the lucky country for the reason because it's the best sport, beer, everything in the world. It's also why nothing ever really happens, of significance. Well, then why'd you leave? I mean, simply put, personally doing business in Australia always feels like being at the kids' table at Christmas. And then secondly, I wanted to work on something that was very difficult like I work on for

8:25a hundred years and then I'd be, I'd be perfectly happy working 24-7 on. And I'm a big history guy and I'm a big strategic finance interest rate guy. What does that even mean? So basically what happened is I was working for the software company and I said I'm going to move to America and got 12 months to replace me. And I spent that 12 months rereading history, rereading all my interest rate books and trying to figure out where is the world going. And it was very obvious, at least to me seven years ago when I've not been in the country for six years, is that three big things are really going on. The only thing that mattered was the West versus the CCP and that's largely just America because everyone else is pretty degraded in capability. The second thing is that we'd stretched the manufacturing system of the defense and commercial industrial base to the point where there basically was none. And but it hadn't been tested in a long time.

9:27We think we're Mike Tyson in his prime, but we're actually Mike Tyson just before the Buster Douglas fight. And then the third thing is that we traded for 40, 40 years or so, we traded financial returns for industrial resiliency and we offshored 95% of all jobs in manufacturing capacity, largely in China. Now what you're saying, we, the United States, referring to the United States. And were you still using that pronoun when you were in Australia? No, I think I became an American in my mind four or five years ago. Interesting. Yeah. So when you're diving into the history, yeah, part of this is it like big world geopolitical stuff that you're interested in. You're looking top line stuff. Top line stuff. Roughly every 120 years, the reserve coach, the world changes because the global order gets reset because of a great conflict. The last one was well bought too. But underpinning all of that is this cycle of industrial capacity, military readiness and

10:31strength, reserve currency. And then you get really lazy and you lose that. And that's what happened to the British and the Dutch. People forget that the reason why America saved the world in World War II is because we had the largest manufacturing logistics base. And we didn't even have like the best tanks. We just McDonald's the hell out of everybody else. We were able to pivot. You were able to pivot because of the commercial manufacturing base. And it is, but what about the specs? I asked Palmer lucky about this and he had a whole kind of riff on it where we basically used the specs that we had committed to commercially and just use those same specs in the war effort. But he's very concerned that we couldn't do that now. No, or really anything approaching it. There's two reasons behind this and I agree. Warnies, the systems are way more complicated. Where it's like, I don't know, well, well, two bombers, like not that hot and we can give

11:35it to Ford and they'll figure it out. The second primary reason though is there was commercial capacity. America has no commercial capacity anymore because we off short at all and we also cut defense jobs over the last manufacturing jobs by 63% just after the gold warranted. So the first problem is there's no capacity. And then you've got 40 years of basically no one wanted to get into manufacturing. So everyone's retiring out as we go. I think average age of a skills worker is early 60s. There's no one coming behind them because we killed all the jobs for 40 years. So why would anyone get into it? And the third and I think the most important thing is culturally we became a, America became a finance and technology services culture. And we told all the kids in the 80s and 90s that if you didn't have a four year journalism degree, you weren't worth much of anything. And that is just as important as the kind of economics and manufacturing of are there actually good paying jobs or jobs to be done.

12:37And then the advancements in technology especially for, I don't know, whether it's munitions or ships or whatever. They've kind of been built off actually the specs from the post called war industrial base. But they're also such as it's because it's systems that you probably couldn't hand them today to a commercial manufacturing company in the United States even if one did exist. So you kind of have to stop with the defense industrial base and build that back up and then rebuild the commercial base because there's just no demand for commercial manufacturing without the president's tariffs and stuff as there was, you know, in the 50s or even before the 50s. So to your company, when do you form it? Why do you form it? Is it a direct result of reading these history books combined with whatever your inner wonk is regarding finance? How does this happen? It's just so interesting that an Aussie comes over here armed with all these big ideas and now you're like a regular guest at the Pentagon. Yeah. Well, what happened was I moved to the US with $30,000 and I knew that I wanted to do highly automated manufacturing.

13:45The reason why you have to do highly automated manufacturing to solve the skills and labor capacity gap is because it takes 20 to 30 years to catch up. So you have to make everyone 10 times more productive to even have a hope. And the only way you can do that is mass skilled immigration or software and we were never going to do mass skilled immigration into the defense industrial base. So, okay, highly automated factories. So there's door number one, door number one or door number one. Yeah. Now door number two, which I think is slightly more interesting is I then spent six months cold-colling factories in Dallas and Oregon and ever just basically be like, can I come in and talk to you and talk to the supply chain guys and talk to the factory guys like, you know, what's actually going on? And I started to get a good feel for what was actually going on. And then after that, I actually decided to raise a small, very small private equity fund because all advanced manufacturing in the US is highly certified and regulated. So you can't become a SpaceX or Lockheed Martin or Raytheon supplier unless your quality management system of manufacturing has to be extremely complicated.

14:52It usually takes people seven years to get their foot in the door, also known as the primes. The primes. So what I decided was the only way to actually, so if you start an unsertified manufacturing, you're competing with China, fail. But it takes seven, eight years to get AS9100 and qualifies Lockheed supplier or whatever. It's just complicated and it's very, it's as complicated as like a hospital billing system. Like you really need to get it right to ensure that what you're producing is up to spec, up to code, etc. So I raised a small private equity fund and spent 12 months diligently seeing a bunch of aerospace exchange shops. Because you had to buy the certification first and then put the technology into them. And through that, through that process, and then 12 months later, I changed my mind and the basic reason was I realized that you had to rebase the capex and the training and the software at the same time. And it's for those who are. Oh, it was like $500,000. Okay. And you get a bunch of group investors together and they basically give you two years worth of runway to try and find a deal and they'll fund it if it's a good deal.

15:56And they thought I was nuts because they never done a manufacturing deal before. And when we, when we closed it, we gave everyone the money back and the hundred grand we spent something we rolled into Hadrian into severe discount. So everyone's very happy. But at the end of that, I basically decided that you could make legacy manufacturing businesses maybe 30% more efficient. But you could never go the whole way to re-industrialize the country. So you have to greenfield everything. Workforce training, the capital equipment itself, the software at the same time. I've explained that greenfield, because the first time I heard that expression was in the Pentagon. People talk about it all the time, but I'm sure a lot of people don't quite understand. Well, there's this existing factories that you can go and attempts to upgrade or improve with lean six sigma operations processes or buy software and try and plug it into it. Greenfield is simply start with empty building and build the factory inside of it. Clean sheet, brand new factory, brand new systems processes. So I decided that the only way to re-industrialize America to the degree it needed to was that you have to basically do everything to yourself from scratch.

16:58And then started raising money for Hadrian, I guess five and a half years ago now, what you call it, Hadrian. Because in the history of Rome, which rhymes with American history, at that period in time, there were three big things going on in Rome. The empire was massively overextended. The culture and more importantly, the reserve currency were being debased and degraded and hyperinflated. So less silver going into a dry area. And the third one was a lot of the core infrastructure like the aqueducts and stuff like that with crumbling. My read of Roman history is that Hadrian basically reversed that by consolidating the empire into a strong core, rebased the currency and fixed a lot of the crumbling infrastructure and bought the empire another 500 years. So the mission is kind of in the name. You see yourself as Hadrian? No, no, no, no, I'm just trying to help everybody, but I do think it's important to name the company against what the mission is for because there's no confusion about what we're here to do, which is.

18:04So flashing forward to today, what's the company look like? What exactly are you making that you're able to discuss and how large are you at this point? So we have two R&D facilities in LA and one coming up in San Francisco where we do. All of our software development, although that actually looks like is a bunch of software engineers standing around every possible machine you could possibly think of figuring it out. Factory two, which is a production facility in LA, which is high precision aerospace machining. We have factory three in Arizona, which is almost 300,000 square foot, which is a mixed model, which I'll talk about in a sec. And we announced a couple of months ago at 2.25 million square foot factory in Alabama to help with the. Virginia and Columbia class submarine construction. Are they still on a two plus one cadence? Is it? We the American taxpayer has bought two plus one.

19:06The actual publicly reported production rate, I think, is 0.6 a year. Just so people understand we're supposed to be we two Virginia one Columbia. Yeah, right? Yeah. So if you could just take a quick pivot and explain to people building a submarine, I mean it's crazy. To my girl works foundation, we've been awarding work ethic scholarships for the last two decades to people who demonstrate the most valuable quality that an employee can offer initiative. I'm talking about the lift driver who carries your bags to the door or the grocery clerk who shows you exactly where an item is on the shelf or the doctor who personally calls to explain your test results. That's initiative and if you're hiring you want to encourage Initiative zipper Cruder has a great way to let you do that It allows candidates who apply for your job to tell you in their own words

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21:10Manifactored products that America makes it would be Columbia class Virginia class starship Falcon 9 everything else and The core problem basically is that and this is publicly reported that they are 50 million labor hours in deficit So it's primarily a workforce issue and What we are able to do I'll tell you a little bit more about the company is With the software our workforce are anywhere between four and ten times more productive depending on the task that they're doing and Because the software also makes the Task more accessible 100% of our manufacturing workforce have never set foot inside a factory before we can train them in 30 days And that's the kind of productivity gap It's primarily a workforce issue at the company scale we are On track to do close to a billion revenue next year we have about 700 people now will be about two thousand people next year and we have three groups of people that we hire We hire

22:10All of the old manufacturing experts we can possibly get their hands out of the that have seen every Top problem in a foundry that ever existed so like a you'd hire 65 year old 100% but we put them on the software engineering team Yeah because and we pay them like software engineers with equity in the company because The the value they're creating is teaching us what went wrong over the last 40 years and plugging their brains into software Then we have a massive software robotics controls engineers to automate every process we can both begin and then the third and most Interested group is our technician workforce, which are almost 100% of never set foot inside a factory before so you're Kids right out of high school you're packing shelves at home depot you're a bus driver you're a nurse you actually were a paralegal and you hate your desk job and Those three things combined are effectively our Platform which is Manufacturing is a service which means we're taking someone else's designs creating a digital twin building and operating factories that are At automotive levels of efficiency except for high mix low volume

23:14With this new workforce of the future that is software robotics first and We are able to also give them equity in the company. They have the same healthcare that software engineers get so by that you're actively recruiting People from all these different disciplines. Yes into Software is assert that was SAS Yeah, and that that appears to be on the ropes to a certain degree. Yeah, thanks to AI But is mass a new thing manufacturing as a service? Yes, and the reason the reason why is This is gonna get a little bit financing, but it's actually important you got two big problems to solve in the industrialization of America the people I hate calling people labor. It's silly. It's like a dumb McKinsey thing, right? And that is a skills gap and a capacity gap We can make the skills gap easy with software. We can make the capacity gap Easier with more automation and we can pay people more and train them and also the working environments Awesome because they're not gonna get rents thrown at their head. They're like running six robots at once and it's sick

24:18The second one is just we're probably half a trillion dollars in cat-backs behind and the primary reason is when Behind the cat-backs capacity gap or what you need to recapitulate. Okay And to give to well, you know this but to give people a sense the reason why Germany and Japan have such good like car Manufacturing and stuff is because all of their factories got bombed in well-bored too, so they had to reset them America's factories are literally this literally the same factories from the 30s Maybe just the Cold War so a lot of those have to be rebased on capital equipment as well They went full greenfield they went full greenfield and America's never had the chance because we want so Rather than reset the table we just kept Plugging things on within the plates around and just moving the plates around okay and in some sense it's it's The the government and the primes in concept have kind of created this issue, but right now It's kind of not their fault because I'm not sure with a

25:21Legacy workforce where you cannot possibly hire a welder for the Navy anymore at any cost and factories that have been cobbled together over time From World War 2 to the Cold War you kind of fighting with two hands behind your back So we will take your designs micro and we will build and operate an automated factory as a service and the output you get is Whatever you want within some tight bounds of what we're capable of doing now. We'll be able to do in the future We run a highly automated model with a workforce of the future that is Highly productive and more importantly we can train them in 30 days Into our system Otherwise, you know a Navy welder maybe it's 10 years to get good, you know or aerospace machinist so okay This is a question I ask a lot How how broken Is the vocational educational system in the country like if you look at it in terms of certifications and just the whole time rubric like are we looking at it?

26:21wrong When we look at it through how much time should it take to become a welder as opposed to some more Meritocratic approach I think there are a couple of different big flaws in what we're doing the first thing is most of the primes Have legal mandates from the government to pay people's wages lower than what they could get in McDonald's So it's like okay, why can't we hire any welders well the guys on 25 bucks an hour after Donald Okay, on the training and certification pipeline I actually think that it's not a trade school gap It's a first year on the job gap both for big companies and small businesses and my viewpoint on this is Let's say you're a small machine shop that's a supplier to Boeing and you need people and you can't hire any of the old guys Because they don't exist and the local colleges doing a machining shop class and let's say they run that really well in reality unless you're highly automated you need a year on the job To actually be productive and helpful to that small business owner

27:24The problem is as soon as you get any sort of apprenticeship you're just gonna get stolen the year after so what I see on the ground floor for a lot of small businesses I don't really want to take the kids and train them because I get poached they're gonna get poached by the primes Which is no one's fault. That's just the market if there was one policy change I would make apart from You know, let's stop subsidizing university degrees Because that's just market correction needs to happen. I would actually refund every small business owner for the first 18 months of A kid straight out of a trade school Um, and that's the gap I would close. I actually think we've got plenty of competent trade schools I don't think the certification is too crazy. I think that's probably right But it's almost like um you get your law degree and then you're a junior lawyer for four years Okay, there's no version of that for manufacturing and because a lot of the Skill spaces in this more businesses they literally can't afford to do it and have someone unproductive So if I was just to subsidize everything as federal government It's kind of like first 12 to 18 months of on the job

28:26That's where the real training happens in my opinion. That's what Jamie Dime was talking about at least broadly when he said To Congress, you know stop Wasting your time Fighting this this this this in this yeah, we need policy like that real policy changes Right now, I mean if we want to change it from the bottom up anyway Yep, it feels like you have to start there. Yeah, what do you guys make in exactly? So we have uh We think about it as capabilities and products capabilities are machining welding additive sheet metal pipe tube Every inspection method under the sun or expanding that capability set as much as possible as fast as possible um, and then we have Two separate business models one is We're I think one of the best uh aerospace and defense higher-position machining companies that's been lived You buy parts from us and you're some of our customers of public some of them are not And then we have factories as a service which is we're actually going to deliver you

29:27um, either mass manufacturing such as Yeah, tons of sheet metal and welding for the Navy or full products like a sub assembly right now if you use the Uh fort f 150 analogy You know, there's like components for the car. There's the subassemblies of the car like a door and then there's a hole car We're doing One two and I would say half of three right now and by the end of next year will be at three Um, and just take take over the whole thing um, but within that is kind of the manufacturing methodologies that we then let go break into different configurations so As you look forward like we keep talking about general dynamics and L3 and you know, bumbling and so forth What what's gonna happen to them because it it feels like underneath There's this well, there's you guys there's uh There's androle there's there's palantir and I I'm a little confused as to like what kind of layer cake that that is and and

30:28Like who's the dog and who's the tail and what's what's coming It's hard to tell i i think uh i think there's a couple of things that are true is um You know through Sequal Hegseth depth Sequal Fineberg and a meal Michael honorable a meal Michael who runs RNA His job is to make sure there's a couple of new palantirs and androle and a couple of new androles to make new products And everyone else's job is to figure out how to produce the ever loving hell of what is already there And our job is to effectively Help the primes upgrade themselves very rapidly For things that they the companies are too big or they can't do it by themselves or they just need to stop fresh, you know Um we deploy some of our software to the primes as well Um, but primarily it's it's factories as a service And you got to remember 60 to 80% of what the prime's produces actually and their small business supply chain

31:28So i think that the primes in the federal government and companies like ours or you know maybe fort or something like that Figures out this production issue and we've got to very quickly We got to start with the people first The small businesses i don't think anyone's got a really good soul for yet and the reason why is Their payment terms are 300 days long Uh and after the 2008 financial crisis it became illegal effectively for a small business owner to get a machine loan And And they kind of gotten squeezed over 40 years with like really crappy margins If someone comes up with a policy solution for that and it actually works There are potter know 40 to 50,000 certified suppliers In the defense supply chain that have been a massive patriot and been gunning for this sort of opportunity But no one's figured out how to kind of bottoms up enable them We certainly won't it's it's not it's not kind of our our role in this to play But uh there's i think there's a huge unlock in letting the small businesses do a lot more and a lot faster

32:29We got to solve some of these financial issues for them though because they kind of slowed down by it Did you catch the early session with the Wells Fargo and Omdipo over breakfast this morning? No, I missed it. Well they ended with i thought they kind of buried the lead um AI came up at the end And i i really want to get your thoughts on this because i i feel christ like I Know two things can be true at the same time But the smartest people here at this conference all seem to agree that it's inevitable. It's common And we got to win. Yep. They also Seems as sort of admit or maybe even confess that the genie's out of the bottle and we don't quite know Doing like we don't we don't really We don't have The clear line of sight on this but Off we go. Yep, and so with your big brain. Can you like how do you think about that vis-a-vis your industry and all the history you've read and

33:34And around and everything that's coming like what How do you handle cap? The most successful business owners don't do it all themselves. They delegate Upwork is where growing businesses find higher and pay highly skilled freelance specialists from software development and AI Implementation to marketing design and business operations With upwork you can fill critical skill gaps launch projects faster and scale support up or down without committing to full-time headcount Visit upwork.com right now to post your job for free. That's UPWORK.com Upwork.com I think that uh the genie's out of the bottle. I think we're going to need more software engineers than ever because uh Intelligence is a scarce resource In terms of the blue collar stuff though. Okay, first thing is true is like If your job is filing paperwork at a paralegal firm you're you're going first unfortunately

34:36You'll still have law firms, but you want three partners and a bunch of AI bots not 10,000 associates Who are largely job-like paperwork So judgment judgment and talent becomes actually more expensive, but just doing white colotask. I think is massively degraded very quickly The blue collar side. I mean I just think that the jobs that we're creating for people at Hadrian and the legacy manufacturing jobs are the most protected jobs from AI In the country and will be for a long time Which I think is a huge opportunity Uh at my viewpoint on this is basically and we do a ton of AI internally. We do we do everything under the sun We've learned of a time is basically Because it's okay. Why is software engineering AI very good? Well all the code is on the internet and has been since the founding of the internet And if you're a software engineer working on your own product you can recursively self-improve it because you're using your dog food in your way there Manufacturing has been offline for 40 years

35:39And there's never been any training data on the internet because it's no one's gonna crazy enough to upload a Raytheon on a bowing blueprint onto stack overflow And then the other thing that's unique to us is Having a blueprint to train an AI model is completely insufficient you actually need the manufacturing data and more importantly You need the quality data of how you inspected what you're producing And the only way to do that and produce that data set is actually to run automated factories So we have this huge Uh Thing going on that no one's really quite worked out yet, which is I kind of think that outside may be optimists At least we're designed to manufacturing we're probably the only ones with you know any sort of AI training set But we use that to enable the workforce to be more productive, which is exactly how you should do it because We need so many more of the workforce If you automated away self-driving trucks, I actually think you put millions of moons of like hardworking 40-year-old Americans out of work In manufacturing you actually need the productivity boost to even have a chance of catching up of what we've lost and then

36:41combating China on that raw manufacturing capacity How this all plays out is like it changes every quarter. It's going so fast that I will probably change my mind every month I just But it's staggering like so what are your what are your friends in the Pentagon Say about this how are they thinking about it? How do you even invest when you don't know quarter to quarter Like the most fundamental tool is liable to upend Every single assumption you've you've you've war planned for well at least on the AI side I think um Secretary Hague's Secretary of Fineberg and Under Secretary Emil Michael have done a very good job because they actually understand this because you've got technologists in the Pentagon And they've actually decided to bring up a system where the models are going to change all the time They're not they're not pot committed to one thing and they're enabling agility for the war fighter and the people in the Pentagon to use AI In terms of the reindustrialization Uh It's it's the toughest job anyone's got

37:41Um, and I won't won't speak for any of our good friends in the Pentagon, but what is observably true is that they are They've gotten incredibly good about about placing big asymmetric tests And I'll give you an example of uh drone dominance, right So for people that don't know dgi Via passing on subsidies to the Americans consumer has a largest drone manufacturing base on the planet And therefore China is extremely good at producing military drones dgi is the Chinese drone company And you know those like cool quadcopters that used to get as a Christmas present. Yeah, the dgi And they cut the prices intentionally so the American consumer would fund the catbacks So there's no commercial drone base in the United States at any sort of scale and now the Pentagon wants literally millions of drones So there's there's a two-part problem there is Who's the best drone companies and which one of them's getting billions dollars and what do you do about the swatchick? The first very smart thing they did was they went to 20 companies and they said you've all got a shot Here's some range testing

38:42You're getting 50 million bucks top three you're getting a billion dollars And on supply chain side all the components that go into drones batteries, printed circuit boards, cameras, they're all Chinese So the government is now and this is public every quarter they're going to ban one of those component sets And then fund the commercial market figure it out of how to recreate that drone industrial base So you get okay you pick some winners and you put them at scale so they can fund their suppliers and you're Not terrorists, but you were banning the Chinese components and forcing the country To reindustrialize under drones that now have a 56.3 billion dollar budget of the president wills it to be in the next six months That is a great example of how they're attacking the three-sided problem of just drones Um, and you you go to do everything else, but that is I think an example of what's been done incredibly well So how do you imagine future again? I know you've read a bunch of history

39:45And I wonder too, you know Is it all is it always relevant? Like when I think about Rome and I think about you know, like there's this the whole Santa Ana thing You know we're we're doomed to repeat The past if we don't learn from it, but on the other hand I'm just having a hard time visualizing Like even what's happening in real time as we speak right now I don't think people understand how that How do we do what we did in Iran as quickly as we did it And what does that mean like Moore's law says it's just gonna keep Faster faster smaller smaller quicker quicker. Yeah, I think people are just baffled like baffled it's it's It's neck-remancing what you guys are doing. Yeah I I think there's There's there's a couple of other big things which is um And I'll go back to history for a sec the other big thing they're doing is trying to treat the primes like a commercial industry and

40:45it's kind of a blessing that you've got like I undersecretary Duffy who runs a ns and depth sec fine book and a couple of these other guys in there that really understand the commercial market And people fit forget like the lucky mountain CEO you stront-american telecom right And it's really hard to build a lot of factories that have a lot of cap ex and ask Maybe jp morgan maybe morgan Stanley to help you fund those factories If the government's only going to pay you once a year and they might they may or may not buy missiles next year. Yeah um So the Pentagon's done an incredibly good job of doing what they can under the rules to create a durable demand signal to allow private capital to invest behind factories On the history point I think the two begun proven things that are different this time around is firstly Uh the one child policy So everyone knows China's economy's fake no one prints six percent GDP growth for 40 years We keep investing in it But the one child policy means that their demographics are going to have overnight almost overnight somewhere in the next 20 to 25 years

41:52That's true population collapse. Yes What that means in my opinion is that they have to go to Taiwan or Take over Africa or something In this 15 year window because outside of that they're they're they're done all they have to invest heavily in robotics So that is they don't think is never happened in history before of a rising power and a great man The second thing is You know, I think people really forget at the end of the day That America is America because everyone's like a nutcase cowboy and the kind of one of my framings of America is just like uh It's still the Wild West and we were just all wearing suits now. Yeah, but you I was gonna ask about that jacket you got but you got it you got to remember like Americans are incredibly good at moving at light speed against problems only after they get punched in the face The momentum in the Pentagon the momentum the industrial base the momentum and venture capital one was last time You sure any venture capitalist ever invest in factory companies and there's now like 40 of them right

42:57You know um have we been punched? I think we've been punched on industrial capacity And that started off in when russian redded Ukraine and we shipped three years worth of missile inventory to them to the Ukrainians to support them and they blew through it in six weeks And then everyone went oh shit Yeah, and then that kept happening with uh, you know I'll support of Israel certainly with Iran where we're shooting so much mass and then we're going back to the industrial state saying we've got 500 billion dollars can I have some more and the answer is no and now all allies are saying the same thing is just like where the My weapon. Yeah So I think we've been scared enough that everyone's moving really fast Which is honestly a good thing because the system is now being tested because factory capacity is the deterrence is not Stuff seeing an inventory. It's the ability to like refill the magazine and out produce now compete And the third thing I think is this administration specifically has a really good read on culture And we're lucky enough to have a visit at one of our factories from seqawhegseth

43:59And they've done this at many other companies, but their entire message about the startups and the primes is basically that the workforce is the most important thing in the warfighter Can't do their job unless reindustrialization happens I thought I'd never see that in my entire life. Ah So I think there's a lot of hard work to do, but it's hard to argue that It's it's going now. I think the scale of this thing is important for me to understand which is like The capital deployment here needs to be in the two to three hundred billion range in the next five years Same with workforce training like because we're just starting from a capital deployment toward the manufacturing yep for the tools necessary Yeah, prosecute the next conflict. Yes Or even just refill the battery that we just exalted, you know And you this is public and um, you know, I think we've been purchasing a hundred tomahawks a year for Raytheon something like that It's people can google it and we shot eight hundred and fifty in one day in Iran So you can do the math on like Really filling that magazine alone not to mention submarines not to mention a tritable systems

45:03You know drones etc etc Because all of it comes down to just like manufacturing capacity at the end of the day at the end of the day That is a skilled labor issue. Yep And we're gonna I think we'll be fine as long as we focus on the people Well, you've met Kavnazi. Yes I mean for what it's worth I and I'm sure I'm not telling anything you don't know, but they They're so paying attention to this issue now And for me we were joking about it earlier But I stopped here in the sound of the drum. I've been beating for 18 years Right I this whole thing started with an open letter to Obama In was 2009 Just saying look we have to make a more persuasive case for the those three million shovel ready jobs that you're talking about Yep, because they're not going to fill themselves and people aren't standing in line waiting to do it This is the first administration and the first conversations I've had with people who are We're not just like nodding in in agreement because nobody ever really disagreed with me Chris, but now

46:06It's like a memo went out and that's why I'm so interested to talk To you and and and guys that are in this space because I haven't met anybody You got a big brain for a lot of different topics, but it's just so fundamentally primal to come Back to two hands yes and the work yes and and and and making a case For the work and making it cool. Yeah, I mean that's what a SW Kahnazi said and that's what is teamed that they're like listen We have to show people How bad as it is what they're doing over at Hadrian what they're what like there's an opportunity 75% of women who seek men of poscair don't receive it The lying awake at 3 a.m. Wondering what's happening to your body ends now Midi is virtual care built for women in parry menopause and menopause with clinicians who specialize in women's health Plus it's covered by most major insurances getting started is easy You can book your first visit with a clinician right away midlife needs midi visit join midi.com to book your first visit today

47:12That's join m-i-d-i.com insurance coverage varies check with your plan for coverage There's an opportunity for a citizen To get his or her hands on something that's truly consequential. Yes, and maybe even historic And and I I feel like that's what you that's part of what your company is offering to the country Yes, and and I think there there are three important things that we We got right and we continue to try and get right and we make some mistakes long ways Everyone at our company knows that all of the product we build for our customers or software is ultimately down to how easy how easy and graceful it is for the technician who's actually doing the work not the operations manager How do you get really good customer quality? Well a lot of systems and software and a culture that is really important and there's no hierarchy Yeah, the second thing is for the manufacturing experts we hire and the technicians Private equity and venture capital have treated manufacturing experts or the workforce like second-class citizens for 40 years and

48:16uh we Give everyone equity in the company to a degree that we don't have to yeah But if you're going to re-industrialize the country a big part of the healing that needs to happen is that we We literally killed the middle of the country and drove all the wealth to the coasts So Silicon Valley and the Pentagon and private equity and private credit are going to spend a bunch of money making $100 billion mega cap companies that are going to The wealth has got to go to the manufacturing experts that are putting their brains in the software and the wealth has to flow To the technicians and the workforce that are actually going to do the thing on the floor And then the third thing is if you're a kid and this is what I think happens in the trade schools. Yeah You get obsessed with Casting or forging on machining. It's math heavy. It's cool. Yeah, you know, etc And then you walk into your like local business and it sucks Someone's yelling at you. It's a dirt floor. It clearly hasn't been nothing's been changed in 30 years You don't feel proud So one of my one of my acid tests for hajure and I don't want to sound a little bit offensive

49:18It's like I think we've won when you walk into a random bar in the middle uh wherever Um, and you've got some like 18-year-old kid mouth and off to some blonde girl is trying to hit on being like no, I work in manufacturing You know And we've been telling kids Since the 80s that if you didn't have a four-year college degree in anything you're gonna get stuck doing that pretty thing And that's that is that is crazy. That's crazy um, so yeah creating like the sickest design factories ever Is really important because then you're some kid who's like Yeah, we industrialized American you walk into it. Okay. It's it's great. It's clean. There's royal bots. There's great people That it has to work like that So if I show up at one of your factories assuming I'm invited and we bring cameras What what can we show people who can I meet everybody like how How would you make the most persuasive case For the opportunities that exist within your own company The only thing that we got to blow out is that the actual stuff we make for customers because it's all super sensitive

50:24Um, apart from the factory tours. I think you just interview the workforce Yeah, honestly, they're the best storytellers Because people think this is like a even our investors are like, you know, because we're doing the board meeting and it's hunting No, no, just anyone just Diving instructor X-Marine um So why are they there like because they believe in the mission They know everything they're producing has some meaning whether it's human space flight weapon systems nuclear submarines um And we pay and reward them like their owners of the company which I don't think for a blue collar workforce anyone's never done before And um, I think the fifth thing frankly is we just ran the stats on this the other day is 30% Of a cohort so we we we have workforce training capacity in hiring for about 50 new technicians every month right now and that's that scaling

51:25and 100% of our shift managers have not been hired external to the company to be promoted from technicians and then now on Close to if not six figure salaries five to ten percent end up Changing roles to become software engineers. Mm-hmm because they're smart They just didn't go to Stanford and they're sitting next to a software engineer trying to figure out how to make themselves more productive and they start writing code themselves And the third ones become technical manufacturing experts um, so I think You know companies like to say things like oh my you know you start here and you'll eventually get here and everyone knows as bullshit Uh, but you know they come in an interview with a team and there's like well, who's my manager? Well one of my favorite guys is guy called Jacob and now he's one of our what we call factory leads shift manager I'll say Jacob. Yeah, he started two years ago, and now he's like running half the factory. How old is he? Jacob I don't know he's got to be late late 20s Great hilarious guy um, but but that's the same thing one of my one of my other favorite guys is

52:27This kid named Owen and he was literally packing shells at home depot And he only applied because on our job at it said we will we will pay for your forklift certification And now he's on a software engineering team But we also have people uh, who are You know 40 to 55 years old there were a nurse there a bus driver And they're back to work. It's cool Uh, and it it's high school kids through 25 year olds through ex-military folks through like yeah 50 year olds on the factory floor having a blast I mean what we do is very difficult no doubt But you called it meaningful work before it is like like like purpose driven how how important Is that in this whole proposition hugely important because I think at the end of the day How much the company cares about the mission and what the customers missions are Is the most important thing It's pretty easy to get fired up with the fact that you're contributing to national events or human space flight And there aren't that many jobs where you can actually go home and be like man my day was tough the CEO Chris is kind of an asshole

53:33You know like at the end of the day. I'm putting in effort because it's Furthering the country and it's also furthering something really cool. That's like really good for America And I think that I think that that means a lot and it's it's purposeful and meaningful work Not because it's some marketing line because it actually is And I think a swkennazi and you guys are absolutely right about this is like that's the message And you see all these like submarine builders where secretary hegseth visits or whatever and they're fired up And they need to be fired up because it matters And one of the most powerful things that I realized with this factory were starting to construct now in Alabama to be online and about a year is That population now in Alabama in World War 2 there was 60,000 people that were just crushing shipbuilding They just outproduced the axis And then we shut them off and that whole area is just being degraded and What I'd hope to find down there was that the They kind of still had it in them, you know, and they do they're fired up They understand why it's important. They know it's going to be make you know

54:34generational changes to that area in terms of economic impact But the most important thing is they're fired up to have a job that's not You know doing whatever Pretty good job. They're fired up to work on something meaningful like making submarines or making munitions or You know making spaceflight hardware for some of our space customers like and then The culture of that is just so Insanely important because at the end of the day if you're not like proud to tell your friends at a bar that you got this really cool Joe manufacturing and it's it's hard like every job, but it's going really well and You you maybe get to buy a house because you've actually got shares in the company. Yeah That's what matters the most and let the American people figure out the rest, you know It's it's a little polyanna, but I I read this thing the other day As a long commentary on work and the interesting part in it Came down to dignified work. Yes. There's something people talk to me about all the time You know what's well is that it isn't a dignified job Like well, you know the pad answer is all jobs are

55:36dignified. I think you know certainly on dirty jobs A lot of people would look sort of a scant at that and go okay. Well, it's not easy, but but but Like what what makes a job dignified and the point of this piece was to say It has nothing to do with the circumstances of the work itself. It has nothing to do with with the inherent labor What makes it dignified is whether or not it it serves somebody else If it blesses somebody else, right like you are are you doing something That improves somebody else's life or is it all inward? Is it are you doing it because it makes Right yep, and so I think what you're saying is fundamentally patriotic, but but it's also Historic I mean that's how empires get get built yes, I think It has to be for a cause yeah

56:37Bigger than the hourly wage in other words it all matters, but I think What's coming out of this is we're going to reshape the way we train people But we also have to kind of rethink the way we Consider what a good job really is yes And again, you've got a front row seat to it. Yes, you're building it Yes, and there's there's two interesting things firstly I think people at their core Understand you can't actually be a sovereign nation without sovereign manufacturing People just get that that's yeah, but it needs to be set out loud more And the second thing is I think the reversing of the betrayal of the Bankers and consultants of the last 40 years that betrayed the middle of America his real people have the right to be frustrated And we're going to go reverse and the reason why you got to go reverse it is Why do you think politic politics are so heated? Well, sorry The people in the coast do have different opinions to the people in the middle of America

57:40Because they have two very different economic and social outcomes That's not a country That's an economic zone An America is a country and it's a people and it is a history That's not about skin color. It's not even about immigration. I'm Australian It's about are you building something that is shared and everyone Roughly on the same page. Yeah, and when you've got most of the population that got betrayed and outsourced to China for the last 40 years you got to go fix that and America is the greatest financial in the human world We do not have a mechanism to provide generational wealth to people in quote unquote blue collage ups right If you've got a four-year college degree or in your venture capital software banking finance media whatever You can climb your way up You have to reattach the people To the economy which means giving them shared wealth creation in the companies that are rebuilding the economy instead of just paying in the alley wage They're built they're building something and it's not just a story that we like to tell people

58:40They're actually building something and the faster we grow the faster they grow The third thing is And this is a little bit esoteric and you might end up cuttings We don't cut anything My opinion of what actually happens to a nation in decline There's all cultural like at the end of the day why why was Google it disrupted right? It's because people are got they just they just got it you can feel it, you know and I think I think at the end of the day In the 70s America became a much less serious country than it was In the founding in the 20s and certainly at the apex of the war I'm not saying don't have fun. I'm just saying like you're in it to do something You the garbage man was important the the journalist was important. It was a serious country And in these errors where you kind of become lazy and you and you Detached from reality you start looking a lot more at spreadsheets than how the people around you are feeling You become a lot less serious like removing the gold standard. It was a very finances now on serious. Yeah

59:44And I think that at the end of the day what that what that really means is how close are most of the population to physical reality Because you can't you know we're trading neo pets and Monkeys on the internet and you think that's the economy. It's not it's just kind of layers and layers and layers of abstraction That at the end of the day is A bond that someone wrote that said it's it's fine to do CBOs and all the houses But at the end of the day it's nuts because it's not resilient. It's not making contact with reality and um It the the the Romans and some religions are very good at this So the old rule in the Roman Senate was if your son is going to become a senator They go and fight the librarians at the front the very military culture The reason why they did that is so that They have contact with the ground floor reality of the people in the hopes that they make better decisions while the the elite right And I think one of the things you lose as a country when you offshore Your heavy industry is that you you lose a You lose a thing that creates a serious population because you are removing more and more people from hard contact with reality every single day

1:00:51because Assumptions don't trade in manufacturing. You're either right or you're wrong Like it's either a good part or it's a bad part. No great And in a kind of peace time I think that one of the things you lose in in manufacturing is that People staring front of computer screens think it's like a very un-serious thing at the end of the day And with people forget the way here because this chips and this Machine tools and this radio printers and this Plains and missiles and the outsourcing of that I think is a big Reason why the culture is kind of fragmented because you're not you're not just You kind of your hands on dirty anymore. You know, we're disconnected. You're disconnected. Yeah How interesting that an Aussie is helping Reconnect the best way to help Australia is to re-industrialize American. This is the only chance we got If you set that down there to Bovers and the shakers and the yeah, they know. Yeah, they sometimes get a little bit grumpy with me But yeah, the best way to help the entirety of the West is to re-industrialize the countries that we have a resilient deterrence

1:01:53And an economy that actually works for all Americans instead of just the people who happen to live on the coasts All got lucky last question fundamentally. Are you Are you bullish? Are you optimistic? I I am scared to death I'm optimistic because the federal government and everybody is moving in a direction now everyone knows what's going on And I'm also optimistic because at the end of the day like It's it's you know, it's America like it'll be five You know, we were all going to and we're all going to direction very fast two things are gonna happen It's gonna look like a complete chaos. There's no plan by bang and it's gonna get done And now that everyone's fired up around this like I genuinely think it'll be fine now We there's a lot there's ten is a decade at least if hard work to do here. Yeah, and a lot of Traps along the way and a lot of bruise degos and bruise dies and but Yeah, when we were getting after it now as like a whole of nation vibe and effort and at the end of the day like would you ever

1:02:57Ever bet against the average American? probably not Well, you know what Jamie thymand said it in a way that just made me laugh when he said okay You've got all the money you got all the money you're gonna get and you can only put it in One place. Yeah, in the whole world. Yeah one country where you gonna put it And it's like oh, I have an idea put it in the place where there's an ocean here. There's an ocean here. I mean like How how could you even ponder putting it any place else? Why would you even ponder it? Yes So that made me feel good now there's some you know Here be dragons Between here and there yeah, but I mean heck if we know exactly how the story ended. Where's fun in that correct and at the end of the day what do you know what are you gonna bet on the the Clinal of the rebirth of the American Empire which is ultimately up to the people and the people will fight up It'll be fine It's gonna be complete chaos and really hard but like You Everyone should be so excited that there's finally a whole of nation effort of actually doing something big again

1:04:01Dude, I love it man. I love to hear that. It's only gonna be chaos really hard. On the other hand, there's that You know It's the greatest country in the face the face of the earth Chris powered Hey drink Only save in the world. Appreciate it. Thanks, sir If you like what you heard And even if you don't I won't you please I hate to beg and I hate to plead but please pretty freaking please Please Please So if you've ever furnished a restaurant hotel or an office you know the drill five vendors five invoices Five delivery windows, but there's a better way to do this Craten barrel contract is a business to business program that covers three brands

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