Why Elon Outcompetes Everyone | Casey Handmer, Terraform Industries

0:00Today I'm sitting down with Casey Hanmer, the founder and CEO of Terraform Industries. This is gonna be the third part in our series of Y Elon outcompete everyone. And I wanna start off with Masteryver on the Moon. So can you go through your essay of making the Masteryver on the Moon work? That's a good question. Masteryver is an interesting one. I worked on high-bluet profeers, so I actually worked with like magnetically accelerated levitated systems. The thing about the Moon is that the gravity is a bit lower than Earth's, and there's no atmosphere. So you can actually, in principle, you can launch mass from the surface of the Moon into space without a rocket, which in the 70s seemed very attractive because back then, rockets were seen is very difficult to do. And also the Moon doesn't have fuel supply. So you can imagine some kind of factory on the surface of the Moon that is processing rocks has nuclear power plant, and perhaps receives its power

1:00being up from Earth, probably even cheaper. And then launches that mass into orbit where you do something with it and then make money. So goes to theory. And if you're not constrained on the acceleration that you subject these things to, your Masteryver could be like, just less than 1,000 feet long, like really short. And it would like shuttle back and forth. So it'd be like a machine gun, right? So you think, oh, you have a rocket launch, you can launch every couple of days if you're really good. No, no, with this Masteryver, you'd have a shuttle that sits in an electromagnetic track that shuttles back and forth. So shuttle actually is a component of a loom like for making cloth, and they shuttle back and forth as well. And once it starts to slow down, you know, roughly halfway down the track, whatever the payload is will separate from momentum and then fly the rest of the way however far it's going into space. And then the shuttle will slow down, accelerate in the other direction and then get reloaded with another, you know,

2:03wire bail of moon rock or whatever and shoot itself back into space. And at the speeds involved, there might be like one a second kind of thing. So like this should will be happening fast. Well, yeah, I mean, you don't need some like colossal Masteryver say if you wanna do, I don't know, 100 tons a day, you don't need to do like one Starship a day. You do it in 86,400 bite size pieces of a few kilograms at a time. So the thing is you could actually build this Masteryver on the Earth, test it on the Earth, launch it as a moon, maybe do a minimum of assembly or like deployment on the moon and then operate it. It would have to be anchored to the surface quite well because of Newton's laws. But it's way easier to do that than, for example, to try and build some like precision aligned structure that's 20 miles long to like accelerate it and more stately pace. Do you have any idea on what the timeline, you know, we're in 2026 right now, what the timeline is for having that fully built?

3:05No idea. And it actually, to be really blunt, like the reason you would do this is to provide some of the mass for StarMind, for the, for the Orbital AI constellation. But it's hard to imagine, like what set of circumstances would make it like, obviously economically preferable to do that as opposed to building more Starships, more Launch Pads, more factories on the Earth where everything's like thousands of times cheaper and it's launching more stuff from the Earth. And I think the constraint might be something like, if you're launching 10,000 Starships a day, people will say, hey, come on. But like, if they don't, then just keep launching from the Earth. Because like Starship will ultimately get launch costs into that constellation down to a few hundred bucks a kilogram, which is not very much compared to the costs of a mass produced high performance GPU. So if you look at like the embodied cost of the, of the item in orbit, most of what we,

4:07the part that does the thinking, the GPU, and then a bunch of other mass associated with radators and solar arrays and communication. But even that is not all that much. And almost all those systems are spiritually too dimensional. So you can fold them up or make them really thin and not very heavy. So it'd be interesting to see. Elon on the Dwarkation, John Carlson podcast, basically said that in three years from the date of that podcast, he believed it would be cheaper to launch like space compute versus building it on the ground. Yeah. So like one of those like multi-poids, which is thing, well, how does that equation work? Well, Starship is getting a little cheaper. Well, I mean, me and everyone else made a little spreadsheet to try and figure this out. Starship will ultimately make launch cheaper, but also much more launch available. So if you're saying, well, we want to do a gigawatt of deployment, that's just not really feasible even with Falcon, but with Starship, that's possible. And then at the same time, I think Elon correctly foresaw that large scale deployments of data centers

5:08on the surface of the earth would run into headwinds that would increase their cost. This didn't require that can exceptionally accurate crystal bowl back in the day, because there's just so many marginal constraints that sooner or later, one of them will come to bite. It kind of seems like the data center thing on Earth, it's like this unicorn where the companies that are building them will almost pay any amount to just have them built. And it seems like there's a whole bunch of other shit that's just getting like layered on on top of the data centers. Yeah, all the local jurisdictions saying, well, we'd like a piece of the action. And exactly. I think they're in what's called a price discovery phase, where they will shortly find out what the market clearing rate is for the appropriate sized official bribe to make these things happen. We're actually working on that at Terraform as well, so it's a neat thing. We currently have a 1.8 megawatt solar array that we built earlier this year. And we can, turns out, you can run your synthetic fuel plant on it during the day. And you can also have the batteries

6:09and then run a continuous, much smaller, but continuous load like a, an AI computing rack or data center rack or something off that at the same time without these two uses conflicting. So you basically like more than double the economic output of your fixed solar infrastructure, which in terms of land use is the dominant contributor. At the end of the day, almost all AI compute over the next say 10 years will converge, will kind of, will be done with this silliness with natural gas and nuclear and so on. And we'll converge on at massive scale, basically like a giant styling satellite in space, which needs, you know, a decent radio antenna and a couple of other bits and pieces to work properly in space, and a GPU. Or basically the same thing on the ground where you, in addition to, you can basically delete the giant radio transmitter and replace a battery. They put a battery there. So the kind of the, the real question mark there

7:10about like asymptotic cost is whether or not batteries are cheaper than launch. Right, because one of them requires a launch and the other one requires battery to last, to run at night. Interesting. And so it's basically like batteries plus bureaucracy. Yeah, plus land. Land is like ridiculously abundant though. You know, like Nevada is like 65 million acres or something. It's, it's absurdly an enormous amount of land. And a lot of that land is still federal because back in the day, they couldn't even give it away. Right, it was so economically marginal. And now this like absurd technological dare sex machine has kind of landed in all our laps where it's a system that's essentially apparently unbounded economically, economic productivity. So it's like way better than farming was in like 1860. And the only thing it needs to operate is, is, is power, which you can get from, from the Sun. That's it. Basically, like in the United States, like income taxation and so basically only occurred in the last century. Prior to that point, in the United States, government was much much smaller and was funded primarily by tariffs.

8:11And so we've had this like massive tax and spend thing that was largely put in place by Roosevelt in 1930s. And it's grown and grown and grown. And, and you can see in other countries that, you know, they started to run out of places to find revenue to fund the government, right? But if if instead like the United States had managed to retain like its small government, like, fairly like light touch on the economy through to the present day, and they start saying, oh, where the feds and we need a source of revenue to run our government, the feds would be getting into building data centers on like federal land in Nevada. And then leasing it out to the highest bidder because the revenue available is just absurd. So it's kind of a funny thing that we're in the situation now. It kind of seems like over time, large scale projects are almost becoming sort of illegal. Yes, very much so in the last 50 years. Do you want to go into that? Well, I did, I did tweet about this the other day. It's very frustrating to me. Now, it is the case that in general, if you, if you murder someone, you go away for a long time. But, you know, the newspaper,

9:11writers and so on, love the outrageous headline where they find, you know, some bizarre confluence of factors that results in, in a murder of being released early or not even getting convicted or whatever. That's fine. You know, everyone deserves a dead and caught. Yeah, I prefer to live in a, in a world where, where justice is imperfect, but, you know, innocent people stay for a kind of thing. But on the other hand, the, the presumption behind like giant projects that are building or maintaining infrastructure for the public good is that it's going to result in an environmental impact with unbounded downside. I can imagine a process that could do that, but it'd be pretty hard work, actually. And, and, and just the de facto, like, way that this is kind of worked its way through the system over the last 50 years, mostly with regulations, is not even in statute, is that if you want to do anything at all, at large scale, in California, but also measure the rest of the country, you have to go through this, like, debilitating process that, that takes so long, I mean, costs so much money,

10:12and has so many handouts everyone involved, that the, you know, it's not just that like, the, the project doesn't pencil on paper, unaterally, but the sorts of people you need to run these sorts of projects, that is not interested. Right, like, who's going to sit around in 15 years, waiting for mission to fix some basic thing in their backyard, it's ridiculous. Yeah, so it's like, I just kind of had Grock run the numbers for me on like, you know, in terms of like the value of a statistical life, what is the, the net loss to our society for, you know, California's inability to repair the California aqueduct, which has been, I mean, it's nominally it, it's can transport like four and a half million acre feet a year of water to LA from the Sacramento of Adelta, but its actual capacity is like maybe 50% of that, because a couple of hundred miles in the Southern section have subsided due to groundwater extraction over the last 30, 40 years. And obviously it's like, you know, between pumping stations, it's meant to be pretty flat. And so section subsides, it will overflow if it's too full. I mean, well, there's not rocket sides, bulldozer concrete done, okay?

11:15And, and we know that, you know, when a bit of the freeway falls down or something, we can fix it in a week or two. Like that capacity does exist. And so instead, we live in this insane situation where the farmers haven't got enough water and Southern California doesn't have enough water and the infrastructure already exists in a corridor where it's already been built, where the environmental disturbance has already taken place and just the process of getting permission to like send out, you know, a local road repair crew with the bulldozer and cement to like, make this canal work at its design capacity, they're solving everyone's problems. They're like, fix everything easily button is like 10 years and billions of dollars, right? So coming back to the value of statistical life, the, the economic value that's lost as a result of this, of this kind of clot, just with this one example is roughly equivalent to 10,000 lives, right? So if you're like, I don't know, scrolling on, on, on TikTok and you run some kid over, that's vehicular manslaughter. And if you're unlucky and you have a bad lawyer, you'll probably get a prison for a while. But like, you'll get out of prison

12:16and that project will still be in like, the, the approval agency hasn't even looked at it yet. Pergotry, right? And, and in that meantime, that one year, like equivalent to 1,000 statistical lives have been, have been lost completely just due to our inability to fix it. It drives me crazy. It drives me absolutely crazy. We know we can move extremely fast. And we also know that the key to delivering like, really cost effective, high value infrastructure at scale for people that benefits everyone. It's super progressive because it benefits poor people, way more than it benefits rich people. We'll be able to afford services no matter what. Rich people are not running out of water. It only hums poor people when these things fall apart, really, is to move really quickly because, because then your labor cost is less because you're getting more stuff done in a given unit of time. This is how we built ships really quickly. More work to, it's how we build aircraft, you know, the plant is to cross the road here in World War II. Just like reduce the number of labor hours per unit by a factor of 10. And, and actually increased output by like a factor of 50. So, so labor did well as well. Everyone got more basically just for moving quickly.

13:16But, but these days it's, it seems insane. Like it's, it's essentially impossible to get, to get the green light to do it. I mean, this was starting to happen in the 50s. And Henry Kaiser was, was the, the entrepreneur who, who did the, the, the Hoover Dam, and a few other things and the Liberty ships in Richmond. And he wanted to build a, and a state up in Lake Tahoe. And he was older by that point. He didn't want to screw around. So, he just had his construction crew up there and build it 24 hours a day under lights, including six feet of fill and like multiple structures and a dark and, and a place for his speedboats and, and you know, a couple of large houses and house for guests for staff and so on. And he managed to complete the project before an injunction was able to be filed. Right, did the whole thing in 22 days. Right. That's insane. Like, Altonina burned down, but almost two years ago, 20 months ago. And just now, just a little house built. Yes, there are few now. There's, there's, there's, there's, there are a few now. A year ago, nothing. Now there's been a few houses built, but you know, they lost 10,000 structures.

14:16They'll be at the current rate, still rebuilding by the time the next fire goes through in 20 years. So, man, what was the housing crisis anyway? At the same time that it's like effectively becoming illegal to build large mega projects, you have Elon turn around and say, actually we're gonna build the biggest building in the world by like maybe double or something in the form of tariff app. Oh, tariff app, yeah. In Texas. So how does, if you had to like think about how he's thinking about that project, he's both saying like it's impossibly difficult to get this stuff through. And yet, I'm gonna do it anyway. And in the next five years, it may be the case that he gets the green light to like begin part of it sooner because of like national national security imperatives in particular like ensuring of chip production. But yeah, if he just went through the same lane as everyone else has to go through, like even in Texas, you would get, you'd get stuck with the project of that scale. Why do you think that he thinks that he's able to pull this off? Well, he's done it many times at this point, but also like he knows the numbers to call to say like,

15:17hey, do you want chips or do you want to lose the next water China? Right? And it actually helps to be on the critical path for national security at a certain scale. And in those cases, you can sometimes cut some corners, but the reality is that most of US economic growth is not happening by like one or two people, right? It's tens of thousands of small businesses that are growing gradually like miners that are providing mentorship and opportunities people to, to like build their skills and level up and could pay and local housing and tax revenue for the local cities and all the rest. And I mean, actually I really, really listen to our interview this morning in my way to work, just so I'd be up to the moment. And a year ago I said, we're in this castle and we're going to gradually expand through this entire neighborhood until we're up to the freeway, which would be, there's probably 500,000 square feet or something. Maybe maybe a million square feet between the freeway. Like plenty, basically over the next 5, 10, 15 years. I like it. The city likes us. We get on well. We like the local fibergate.

16:17It's convenient. All the people are already living nearby. There's local residential areas. It's a great place to build, okay? But, but it turns out that even here in like heavy industrial zone, Burbank, there are enough restrictions that basically make it as impossible for us to expand here. And we're going to have to move into like down the road, like miles and miles into another, another industrial area that's larger. I can give you some examples. The, all the buildings east of here, they're like a few blocks east of here. We're redeveloped in the 90s. And even though it's heavy industrial, it's own land, they're rebuilt as light industrial. And so, even though the city will permit heavy industrial use the building owner won't. So, they're just going to have like, you know, city block full of vacant studios because all the studio businesses left Burbank, generating zero income or tax revenue for the city for, you know, as long as the landlord can afford to be patient, I guess, decades, that's just as an example. You know, and then meanwhile, just up the road here, we have some of the last

17:18anodizing plants in California because it's now illegal to do metal, metal refining in California of any kind. You can't even build like PCB, like printed circuit board traces here. Sand and meco is very good on this. And so, you got these legacy shops that are like 100 years old and like ridiculously bad for the environment and for the people who work in them. And they bet their grandfathered in and they'll never shut them down. Because once they do, that's it. They'll have to go, they'll have to go to Texas, Texas, all the Louisiana to do this work. So, this neighborhood and this whole city was once like a global center of aircraft manufacturing. Like, it built maybe a hundred thousand aircraft here in World War II. And it's pretty much all gone. It's a stasolate. I mean, there's still businesses occurring here. LA is still a vibrant and economically dynamic place, but it's not like it was. And it's no longer a center of manufacturing. Second-gen manufacturing is massively underrated for its importance. I think it's like the single biggest value increase. Right, so the purpose of a business is to consume inputs where they're cheap and then produce outputs and sell them where they're expensive or market where they're valuable and they'll generate value.

18:20And second-gen manufacturing takes in commodified input materials like aluminum or whatever airplane manufacturing. And then, doesn't see those operations on it with extremely sophisticated machine tools. Our neighbors across the road here do aircraft hinges and they're the only, as far as I know, the only certified aircraft hinge manufacturing, all of NATO. So all of Airbus and all of Boeing and all of the military people and their maintainers and everyone else for their hinges that allow flaps and stuff on the wings to work, they get them done here. Right, that's bizarre. Right, but these are just like, you know, all these old places here, they're kind of the original proprietors are aging out now and they were part of the satellite, kind of industrial complex that served the Lockheed plant, which is now an Amazon fulfillment center until the mid-90s. You know, this is where Kelly Johnson built all those airplanes and he was able to go out and get the landing gear made and so on. Like the specialists who do just those things that weren't within the plant itself, they've got to rebuild it. Or we just won't have wealth.

19:21The Australian economy made this mistake. Right, the Australian economy lost its middle and now it's a tertiary services, which is extremely low leverage because it's just one on one stuff, right? And primary production, which is just digging up dirt and shipping it to Asia. And none of those things, you know, basically like you get your first 1% and your last 1% of value generation, you miss the 98% in the middle. The Australian economy's flat, that's insane. Like it's a peaceful, modern, you know, Western liberal democratic system with well-educated, relatively young, demographically vibrant workforce, good culture, no violence, no threats really, like New Zealand's not going to invade and unlimited natural resources and their economy's flat. Let us talk through the build out of Star Mind, the economics behind it. And what the timeline looks like for that. It's interesting. So I'd say like, I wish there was Moon Dirt here. Yeah, yeah, it'd be so cool. Star Mind, I don't like the name very much.

20:21You should talk with Beth. Is it his fault? Yes. Okay. Like Star Think was right there. You like Star Think? Well, it runs a strong, it's got that joke potential. Right. It's an interesting one. So when I first heard of like, oh, we're going to do data centers in space, that was pretty skeptical. There's a couple of good reasons to be skeptical. The first is that the juice is never worth the squeeze when it comes to like, oh, but there's infinite free power in space. There's not infinite and there's not free. And if you're in most orbits, you'll eventually be shadowed by the earth, et cetera, et cetera. But there are a couple of ways to kind of get around that. And I think Star Think really shows the way. So people who've read some of my blogs will know that like space-based solar power is kind of done because you're taking a product where it's expensive and you're selling it somewhere where it's cheap, which is not what a business should do. So in space, power is really expensive. And then you're beaming that power as undifferentiated microwaves down to the earth

21:22where you're collecting them. And now you're having to compete with solar, a nuclear and coal and gas and everything else for like, I don't know, like what is, what is your merchant power producer earn in California? Ten cents a kilowatt hour, like not very much. You pay more than that, but you're paying for distribution. However, Star Think works because instead of just beaming like a shitload of microwaves at the earth for power, they modulate those microwaves with like crammed something or something like some quadrature amplitude modulation radio signal thing that allows them to transmit not power, but been information, right? And so if you run the math on like, what is the revenue per watt of transmitted microwave power for Star Think? It's a billion times higher than space-based solar power. So while SpaceX is making money hand over first with Star Think, and it's worth kind of putting a pin here in the fact that other people have tried and not succeeded, but SpaceX has, their margins might be, I don't know, 100% or something, or optimistically, if you reduce their revenue

22:25by a factor of a billion, they are no longer in business. So basically you take that model and you say, well, we can make money being the middleman transmitting data from a content delivery service or an edge node or whatever, Netflix is down the road here. Via our network, which initially was just this bent pipe system and now they've got laser link setups so they can transmit a lot of data in the shell, the shell of Star Think satellites and then landed again at some other place, either at a consumer place or like a consumer satellite or a fire hotel or a gateway, what they call a gateway, which is like a gigantic dish, which is where all the data goes in. They can make money doing that, which is very cool. Then you say, well, what if we mess up our latency a little bit and so we can put all these satellites in some synchronous orbit so they're always in the sun, except for doing lunar eclipses, and then we don't need anywhere near as many batteries. And we use laser links to transmit data to and from those via the Starlink network,

23:27although if you didn't have that, you could also transmit to the ground. And instead of charging people a hundred bucks a month to relay like Netflix, where like the value of the marginal bit is not all that high. In fact, Netflix like all these systems uses error correction so you can delete 10% of the bits and it'll be fine. You won't notice. And instead of transmitting Netflix, you instead transmit tokens of some hyper intelligent model that you can update with software. So once you've got the hardware flying, you'll have that software. And then you say, well, what is the comparative value between your average Starlink bit versus your average a Star-Mind bit of data? And it's probably at least a thousand times more valuable. Like a token. Like what do you pay for tokens versus like your subscription to Netflix or something, right? It's not even in the same category. I was doing a project on Saturday where I rediscovered that like nested loops, consumer resources, when I basically had an AI go out and scrape the entire internet for all sources of data

24:28on 200 separate topics and then categorize that data across 200 separate principle components. Which is a result in like 40,000 times, it's like 260 bucks of tokens, like unbelievable. Like this is, it gave me better results than a team of expert professional analysts would do with the years work. And this is just like, just as an idea to like me mumbling into my phone and then forgetting about it. Yeah, so that's real money, that's real money right there. It will be interesting to see if economic demand for intelligence in the form of, you know, AI tokens can saturate. I suspect not. Yeah, so that's the idea. Giant solar array, GPUs. Now, and like data center in space, you have this like massive thermal problem, but you don't necessarily have that if you do it right. Like instead of building like a giant box with full of racks of hardware and cooling systems, you can actually just like sprinkle the GPUs out along a solar array, right?

25:28Because like each solar module generates a kilowatt and each GPU consumes a kilowatt and then just have like local Wi-Fi or optical fiber link or something to transmit data up and down the solar array, you know, train or, or chain or whatever. And then you've got a star tracker and a couple of radio antennas and stuff in the middle. And then if your GPU dies, who cares? It's like, it's bolt onto a solar array and the GPU is the expensive part. Does that make sense? So it's like, well, how do you replace the GPU when it dies? In a data center, you got all these fixed costs and if your GPU dies, you got to go find it and rip it out and put new one in in space. You're like, oh no, like I've got 100 GPUs on this particular satellite and one of them just died and then 99 of them are still going fine. And eventually, you know, maybe you're down to one or two with the very old and just deal with it. Spend up crash in Alaska. If you believe that Elon has the same view where token band is effectively infinite and if you just make more tokens or, you know, put more GPUs up there, someone will buy them

26:30and either it'll be him or somewhere else, then how do you think he's thinking through the problem of just maximum scale as fast as possible? Well, that's not exactly a secret. There's one other aspect of this, which is to say, styling as a business model is possible if you have like a legal monopoly lock on, you know, a plurality of the world's most talented engineers and a highly mature launch system that is extremely affordable. And as we've seen with Chinese, Russian, European and other American attempts to compete in this space, it is extremely difficult to do if your satellites are not best in class, like very good value and then you don't have access to, you know, preferred launch basically. So how do you do this as quickly as possible? There's probably some optimization to be done in terms of like maximizing tokens per kilogram, but ultimately it's about maturing Starship design and then scaling up production. So, Starbase-L-E-Z-E-N-A.

27:32Right? You got one launch pad in Texas, two actually now. Couple going up in the Cape and they're saying 10 or 12 in Louisiana and who knows where else? This is another thing. He's building this massive launch facility in Louisiana. And I don't think any like, don't has been turned over yet. Again, like, you have to go through the federal agencies because it touches the coast and it touches the inter-post-a-waterway and it touches the Mississippi system. So the Army Corps of Engineers is going to get a say and it's adjacent to wildlife refuges. So like National Park is going to get a say and then the state's going to get a say. And like by the time even at Elon's speed, it may take a long time to get the thumbs up to really start moving on that. You think so? I kind of feel like he, you know, if I think about the infrastructure projects that Elon has said that he's going to start, I can't think of a single one that didn't maybe Hyperloop might be one where he kind of said like he didn't do that personally. Yeah, if you think about like, well, they started work on Starbase in 2012 or something

28:33and like not much really took place there until 2018 and then once they started working in Inernos, they were held up for months at a time. Do you not think that he's, he has like built teams that are much more effective in like ways that are much more effective? I think you better get these large scale projects done. I mean, yeah, it's definitely like the reps, you don't get worse at it for doing more of it. Yeah, yeah. And that's actually an interesting point. I think Anthony Kilangela makes his point on Managing Cut-Off quite often, which is that people say, well, you know, SpaceX makes the best rockets and so on, but actually like SpaceX and Tesla are also probably like the pre-eminent real estate development firms in the entire country right now. For example, for large scale projects, just in general. Like if you look at, if you look at Total Cash Flow to add it to those particular areas, they're just like best in class across at range of areas at this point. Did you had to think about the way that Elon operated 10 years ago versus today, what do you think the biggest changes are? That's a good question. I was wondering about this myself the other day,

29:34because it certainly seems to me that there's less filter and he goes faster now. Yeah, be interesting. Interesting to get him on record about how he feels about that, you know, whether he's become more or less hardcore or more or less consequentialist or, you know, how he approaches talent development now versus in the past. For me personally, it certainly been a case of like unlearning a bunch of fairly like logically consistent, but not actually useful assumptions or not correct assumptions that I had going in and then finding a hard way that like, no, actually the world doesn't look that way. I've noticed with a lot of Elon's companies, there's like this decade long baking period before he came to the company. Yeah, I'm surprised like boring company didn't, I mean like they're drilling holes, it's great. Like it seems like it incubated for a long time. Yeah, all complicated things take time. I should know that as well as anyone. We've been at this for over four years now, but maybe it's just like there's a minimum like six years bend or something to do a new kind of thing

30:35from the ground up. I don't know. Elon 10 years ago or 20 years ago would start off with a relatively small team and the company would just take probably like six or eight years to bake before they had like a real, you know, good product that they wanted to ship. Like I think it took that long for Tesla. I think that's okay. Roughly that long for a rocket to make it orbit. I think it's the same thing. Very beginning. Yeah, I think it's the same thing for near-link and boring company where they're starting to, like they're starting to ramp on the near-link implants and they're starting to ramp on the number of tunnel stug. We're like, well, I think for near-link, there was a fairly well understood like set of steps that had to be gone through to get approvals to do like, you know, state-state trials and humans and then scale up. It's hard to say. I suspect that for the projects that are not like, obviously on the critical path, they probably don't get like prior to access to talent. And it really matters having the right people on the job. Like, it's kind of a strange thing.

31:36People might assume from the bottom looking up, actually I think Sean went on about this for a while, that like, you know, two or three steps above my level, like talent saturates. But it doesn't. And this is, if you watch sport, it's intuitive, if you're obvious that at the higher levels of anything it separates, you know, and differentiates. And so, you know, the three best people at SpaceX work on getting styling up and running made that project possible. And previously they had fully staffed the project with talented well-regarded engineers who were making progress, but they weren't going to ship and Elon fired them off. So it makes a huge difference. There's essentially like, I think, particularly like, a lot of talented people come through school and they're like, yeah, I got like, you know, 98% plus in all my exams, pretty much saturated the metrics. Nope, like in the real world, there's not about, there's no, there's no, like, limit to the upside. You know, you're 10 times better than the next person. Good, why don't you 100 times better? But what would 100,000 times better look like?

32:39Point is what does it take to get there? You would see this in podcasting as well, right? It's parallel distributed. And the best, the best are really good. Yes. Chris Bauer said you've gotten better. I don't know if I can see it. We'll have to wait and see. I was having a conversation with one of my founder buddies last night and we were kind of talking about the evolution of Elon over time. And he didn't believe that, you know, 20 years ago, Elon would go into a room and they just like fire an entire team and walk out. But he kind of does that today. He does some other things today. He found a friend believes that now. I believe so. Yeah. I learned pretty early on that, and actually it's the same with parenting as well, that there's no upside in being like highly finessed when it comes to solving problems, right? If you want to motivate your team to solve the problem and not escalate it to you, they have to believe that like, if they don't solve the problem and it escalates to you, it's going to be messy. And it will be, you know, and I just part of it, I think.

33:44But I don't have a recruiting team here, right? Whereas Elon, Elon has very prestigious companies and there's always, all the people who want to come in and work really hard. And he just takes in a lot of talented people and gives them steadily graded, increasing difficulty of problems. And it's up or out, you know, and that's how you surface talent. Like it's not like you can do some exam at the end of high school and we're like, oh, your destined to be like, like one in a million project manager. The only way you find out is you find 10, one in a hundred thousand project managers and you give them the next level problem of difficulty and you see who succeeds. If you look at Elon over time, he becomes more and more raw. It seems not only like public facing on social media and X, but also like privately. It feels like he just makes decisions faster. I'm not sure. I think there's more exposure now, but I know a few people who worked with him in PayPal days and I think he also shopped from the hip then as well sometimes. I think I think he did. I just don't think he did it in the same way. And do you think that there's any other skills? He didn't have, yeah, 100,000 people to deal with his messes.

34:45So do you think there's any advantages to being like, maybe a little bit more course like Sandpaper? Well, there is a kind of a question here, which is I think a lot of managers or startup founders or whatever will reach a point where they can't really scale to the next size of the business, right? But Elon has been able to work effectively at organizations or range of sizes. That's actually pretty unusual. The important thing is getting the message out and it's crazy how easy it is to be misunderstood on even the stuff you think is the simplest. And I've been coaching my managers here to like boil it down, boil it down. Like your message is getting lost. Like one bit of information, like a single bit of information is really all that needs to be transmitted. If you can transmit it well, that's enough. But you know, you don't have enough time in the day to like sit over all your reports, shoulders, all the time. They have to model what you're gonna say in their head so you don't have to say it. So it, you definitely have to have a big personality or the appearance of a big personality to achieve that. Do you think that you suffer from

35:46probably the warm buff? It has this idea of, you know, there's like investing hurdles where sometimes you have to like be a genius and jump over this 10 foot bar and other investments. It's like this one foot bar and you like two buttons. He likes to just step over the bar. Whereas I think he mentioned that a lot of smart people get stuck in this trap of trying to jump over the 10 foot bar because they like it's intellectually challenging and interesting. Yes. I think that you suffer from that problem. With a caveat maybe. Warren Buffett was probably dragging Jim Simon in that quote. And Warren Buffett strategy works brilliantly. If you plan to live to 100 years old, which worked for him, but not for everyone. I think he was dragging long-term capital management actually, the yes. Probably them too. He actually, he and Charlie has a lot of respect for Jim Simon's management. Oh, of course, as friends do. Like I'm dragging you from time to time. Actually, Charlie had this amazing book called Paul Charlie's Armanek. It's really good.

36:46I highly recommend it. So it's definitely true that when you set out on your entrepreneurial journey and a year ago, I said, you're a smart guy access to rich people. Why don't you give up this chit chat nonsense and actually start making things that are useful for people. And here we are. Maybe, maybe you just can't. Oh my god. I'm trying to do a competition to see who's the meanest Australian hardware startup founder in LA. And you're adjudicating this competition now. Earlier, Tite told me that no one thinks that Australians can be mean. I think that they can try to be mean. I just don't think that anyone serious would listen to their voice and think, you know, feel bad. Like, we're not testing that proposition. All right, go for it. As we just did. I feel great. When you start a company, if hypothetically one were, you want to find an area where you have ideally persistent differential advantage. And so for example, when I was thinking of starting a company,

37:48I was also thinking of working on drones. But it's very clear that like, Sauron and Co, like, they're just gonna do a better job than I am, right? There are some areas where I would have insights because of my background and knowledge that would help me, but it would not help me enough to clear the hurdle which is that this is already an obvious thing for capitalism to work on. And capitalism is already reasonably effectively allocating capital, human capital, and money capital towards solving this problem. And that was before the Ukraine war, like, popped off. And now it's like, this is six years ago, seven years ago. So now it is extremely obvious that like, if you don't have AI and drones, you don't have national sovereignty and a handful of countries, you've even got the memo on that. So for me, I wanted to find something that I was interested in enough to actually work on for a long time, where my particular interest in skills would give me any kind of advantage and where capitalism was not currently doing a very good job

38:49of allocating resources towards solving the problem. So it has to be like kind of on the front here. And Synthetic Fuel actually works quite well for that. If you had to, you know, plot or put a synthetic fuel on that one foot to 10 foot bar, where is it? In terms of like raw difficulty? Sure. Oh, I'm not even sure yet. It's higher than I've seen. It's really ridiculously difficult. It's not as hard as orbital rockets, I think. But actually doing this as a successful business that makes money, no one's ever done. Yeah. Is it currently in the science projects, fairs? I think we've mostly passed the science project phase at this point. And the technology, like, the science has been around for a hundred years, or longer. But like basically making the scientific process is legible to a manufacturing process that has more in common with kitchen appliances, for example, or consumer electronics appliances is just ridiculously impossibly difficult. And we're just talking over lunch. Like I made a list the other day of like hardware companies

39:51that have taken a crack in this direction, not just Synthetic Fuel, but a few other things in the same area. Carbon capture, hydrogen and bunch of others. And just the field is littered. I mean, evolution, like capitalism in general, is a system that actually does a pretty good job of recycling talent after ventures fail. And you can discharge debts and all the rest. It's a good system. But I feel like this particular field is littered more than most with the carcasses of like very respectable attempts to experimentally discover if a particular business model would be capable of generating net value in the space and finding out 10 or 100 or a thousand million dollars later that no note cut. But to kind of misquote Timothy Shalame in the next June film, there is a way. I can see a way it's rather narrow, but we're on the right track here. We've figured it out. But it's like at the time I was like, this is incredibly obvious. And then I went and explained it to 100 people, smart people,

40:53who know what they're talking about. And I realized, this is not obvious at all. It's one of those things where it seems extremely obvious to me, but it is not in fact obvious at all. And even now, if I try and put it down on paper in like a thousand words or so, why it is obvious? It is extremely difficult. In much the same way that I think probably SpaceX had difficulty motivating reasonable rockets when they first started doing that in 2014 or 2015. And you had highly compensated professional CEOs of rival rocket companies with technical backgrounds themselves, like that Ariane Spas guy, stand up and say, as bullshit, there's never going to work. And even if it did, it wouldn't be a good idea why is anyone even thinking about this? And of course, turns out, as Elon says, his right more often than you would than chance would allow for. His intuition is correct. Actually, I think I'm reasonably confident now actually that a lot of Elon's advantage here is that actually he is very intuitive and his intuition is correct, rather than him sitting down in some like secret chamber full of spreadsheets

41:53and like deriving some weird thing that no one else saw. Why do you think he's so abrasive publicly? If most, like if he's got a good intuition and predicting human behavior and how do you do that? He would have your technical stuff. Really? Because he kind of does predict human behavior with his companies. Like he's saying like people on the car, he can just kind of way. But the car. He's seldom kind of way. I think he's got a good feeling for product. Okay. Yeah, but like he's obviously not the sort of person who would go out and win an election, put it that way. Is he not? I don't think so. He's kind of doing that as companies. He's too unguarded. No, he owns a business and is controlled support. It's not a popularity contest. You've never win a popularity contest. He just wouldn't. I mean, we saw that in Doge. Like he's too easy to hate. He's too easy to make fun of. He's too easy to misunderstand. He's too easy to take out of context. He's too unfiltered, which are all good things for us overall. Because he'd be wasted as a politician. This is something that's happened since last we

42:55talked is he left Doge. And the way that I think about Doge is it is one of the only things that Elon, you know, organizations or situations that Elon's ever coming in contact with. And been like, this is too hard from what I can tell. Or it's like the reward for trying is just not great enough. Well, Doge did a bunch of different things. Okay. And I think it's not very well understood in general what they were doing. But one of the things they did was assemble a whole bunch of programs that should be cut. And Congress voted on it and they voted against it. You know, I know that point. You could continue working their day to day. Doing the other things that Doge was working on. Particularly things within your executive control or things to do with modernization of government services and systems. But actually a lot of that work has continued without him. And you also have to wonder like what's the opportunity cost of his time? It's probably like millions of dollars per minute. And he is an officer of multiple publicly traded companies.

43:57So you can't just like abandon those companies to go and fill around the government. Especially when I think, well, I think I said in the last podcast, like it was weird to see for me, you know, a bunch of my like, you know, I have friends on all sides of the political spectrum. But like, you know, team left, you know, the ultra-world kind of deep state types team up with the ultra-right deep state types to kick this newcomer out. Which is what they did essentially. So anyway, we'll see. But yeah, I think, you know, it was as a society, we're better off with Elon on the outside trying to outgrow the spending state than on the inside trying to prune it. I do worry about it though. And I think as I said last time, it seems to me highly unlikely that our political system can survive its long-term structural challenges without solving the problem of old age dependency through like radical extensions in longevity. And also like radically increasing growth. So you have to like either smash through these regulatory barriers we discussed earlier or

45:00or build new kinds of economic growth that can exist in places that are not yet regulated to death. So that you actually have like permission to grow the economy faster than dependency, which is a tough, a tough ask these days, you know, an FDR put in place the new deal in the 30s. It looked like it could be sustained for, you know, 50 plus years and that was long enough to solve the problem it solved at the time. But you know, the basically any country on Earth, one day we'll get they'll develop until they're rich enough that people are no longer dying young, which is a great thing. It's a great thing that, you know, people your age, my age aren't dying of preventable disease. But that just means sooner or later, we like your description of New Zealand. And everyone around there is old and everyone has health problems and everyone has dependencies and everyone like children are like crazy dependent and relatively expensive for a few years at the very beginning. Then they're relatively independent, but they're not economically productive for another decade or so. And then they become economically productive. But for old people, you know, there's no like economic productivity ahead of them. There's just spending down whatever the

46:06society is managed to accumulate, which is not like it's it's it's a socially worthwhile thing to do. But at the same time, it is not compounding. Right. And and generally, everyone's old. You can walk around, you know, Germany right now, the median age is 48. 48. Right. And the median voter age is older than that obviously because children don't vote. And you wonder why it is that these societies, why Europe is kind of in its own death row. Well, why wouldn't they be? They don't, like the median voter is is past the point where they can vote for a future they want to be part of. You think for this outside of like a major war, is there any ability for us to downregulate? That's a good question. Some people say, well, you know, the regulations get cleared out in a major war, but it's pretty clear that a major war in 2026 would be extremely different from a major war in 1941. Basically, what happens in a war is you end up with this like always seeing this in your run right now. This kind of extremely kinetic exchange of explosives and weapons that the net effect of it is you're killing people who don't want to die and in many cases,

47:08uninvolved civilians. The number of people involved in this, in actually fighting these wars is collapsing, right. Even in Ukraine, the number of people involved in active combat has been a skill compared to all the one and all the two. And so, and say, what are you doing is blowing up infrastructure and you're just making money expensive and destroying wealth. Right. So, it's just pushing us back in the stone age and you say, well, we need to rebuild this stuff maybe. It seems to me that the forcing function for improving regulations is more likely to be competitive pressure. So, you end up in a situation actually we're already seeing this where the Anglophone West is relatively economically non-dynamic compared to parts of Asia, for example, particularly South Asia, and has a lot of homologation in their regulatory setup. So, for example, if you're an entrepreneur in England and you don't like the fact that the English government has a certain policy, you could say go to the EU and work there, but how different is the EU? They have all the same structural problems and much of the same wars and despite Brexit, it's pretty much the same

48:08deal. You can go to United States and you get a better deal because capital is more capital here, it's more pervasive environment and so on. But if you're Japanese, right, you're a young Japanese guy or woman and you want to start a company and build a new business and build wealth and help the economy grow. Nope, you have to learn a new language, go to a new country. And so, what I would like to see is we would only take one of these countries to defect from the current consensus that we just have to increase spending, increase taxation, increase the size of the public sector by three or four acts the size of your overall economy on an ongoing basis. I wrote a blog post a couple months ago pointing out that Australia for 15 years now has been locked into a future where it becomes fully communist, essentially like full government control of the economy because the private economy, the economy that actually generates net wealth and tax taxes is shrinking. But you only need one of these countries to say face an existential problem, realize it's facing an existential problem and undergo massive reform. It's actually

49:11Patrick Holson and Maria Draghi recently announced the Rhinegrip, which is a kind of a think tank, whose efforts are around restoring European dynamism. I find it's an interesting or useful thought experiment to think of Europe as a, as kind of a successor civilization to the civilization that built all the infrastructure that's kind of living in the ruins that infrastructure, but isn't capable of building it again. And we're talking like not 1700, we're talking like 1960, anything like only a few generations ago. I think a lot of it was driven by energy scarcity. Right, so like big, big economy shock in the 1970s when basically the Saudis nationalized Saudi Amco and then formed the OPEC oil cartel. And we were able to find like a modicum of economic growth in the intervening periods through capital deepening, improvement in public health, kind of a little bit of Cold War nonsense and kind of elevation of the developing world. And then more recently in software, consumer software, which is a really great way of improving productivity without increasing energetic inputs, particularly.

50:15Although now data centers have grown to the point where they're like pushing double digits of total energy consumption and like Mr. Underwater says limits again. And so it's really important, I think, for us to grow to break these constraints on energy availability. So Afran Dazaea is working on this, for example, on nuclear energy and obviously solar is a key way to go that direction. And then bring back permission to do things. One thing is that Japanese do do nicely. And it has its own proclivities and weirdness as though, but they normalize construction. So they're actually constructing things all the time. And part of the reason they've got an extremely powerful steel cartel basically with very politically connected that wants to keep on building things. But they also understand that like, you know, a city is really on the city if it's constantly in the process of regeneration and recreation. And it's completely acceptable to say, well, yeah, there's one or two nice buildings. We'll keep them nice. We'll restore them. But in general, we want to replace 98% of the fabric of the city every 50 years. What a radical point of view that is. But 98% of the fabric of the city every 50 years is just means that an average of

51:18buildings are 25 years old instead of 150 years old, which is a major problem. We have to face it in the West. And it means that you get lots of practice in construction. You get lots of practice and project financing and management. And if you build a real stinker, you're not stuck with it forever. You just rip it down and try a game. So I'd love to do something with this old and C1 day. This is environmentally desolate wasteland and the southern end of California that could be like like Phoenix, Arizona, but with with this beautiful lake in the middle of it. It could be the most extraordinarily beautiful part of the world. And like, there's no downside to trying. The worst that can happen is it remains an environmental catastrophe. It is already an environmental catastrophe. You could only improve it by changing it. You know, it's kind of like the right to try laws around using weird drugs if you're but dying of cancer anyway, like what differences do make? On the same kind of threat of regulation. Yes. In America. America. I've never understood this idea that if Elon believes that the kind of like American system and all regulation that surrounds this is basically like this unstoppable, you know,

52:24thousand strings. You can't do anything over time situation. Like he's not going to import that bad system to another planet. One would hope not. And I think that's kind of the libertarian. You know, you need you need one state which tries things differently. It does things differently to become competitive, right? So like in some sense, the the Arab states do this like UAE has radically lower taxes. It's quite attractive to certain areas. And in the United States, the federation different states are able to compete in terms of their, you know, regulatory approach to various things. So some states have decided they're going to be like business friendly places. Other states are so wealthy through no fault of their own that they can afford to be extremely profil get in the way that they spend money. Coff, California, Coff. Yeah, there's never been a really strong forcing function for great governance in any part of the United States. But yeah, we need we need one. Western liberal, ideally, Angelfone democracy to defect and say we're going to adopt a extremely like aggressive to regulatory agenda. Like, hey, I was a great way to do it.

53:28You say like, hey, I had Claude 4.6 do this a year ago. Like, ingest the complete corpus of American law and regulation and compress it to 4,000 pages, which is a mastercard, a catalog book, right? I'm a fit guy. I should be able to fit the laws of the land in an overhead locker, right? In an overhead bin. That should be your constraint. Like, you can't just keep on adding laws forever. How many laws do you really need? You know, we, anyone who's developed software knows that there's an optimum size, right? And you should not have too much or too little. You should have an optimum size. But there's no forcing function. There's no process even for the destruction of laws that are, you know, obsolete on no longer needed in the reconstruction period after the civil war. I think under Jackson, there was a an effort for the first time actually get all of U.S. law in one place. So you have the Constitution, the founding documents, obviously, they've been, he had lots of laws for the other place. It wasn't particularly well kept. He came to 1700 pages at that time. 1700 pages. But like Lincoln himself was originally a trial circuit lawyer in

54:36Illinois, I believe, being prior to his election. And so those days, they're just like terrible lifestyle, just like going from town to town, trying cases and getting to other people. And yeah, and they didn't have like a central source of truth for what the law was back then. Kind of while. Obviously, the federal government was much smaller back then. But yeah, 1700 pages seems like a good number. 4000 pages I could live with. We've got airplanes and stuff now to deal with. 12 million pages. That's the current law. Yeah. Yeah. Federal code and regulations. 12 million pages, which is more than anyone could even read the index for in a lifetime. It's absurd. I've thought a lot about this whole idea of dictatorships and companies. How many dictatorships are basically like especially in Fowderland companies, they are many dictatorships where you live or die based on how good you are at making something that people want. Different though. Like the nice thing is in our system, and this is 10 years ago, I would not

55:36have seen the value of this. Now I do is, and I think it maybe was Parmalache or someone who was talking about the value of the limited stock or joint stock company as an innovation. Every single company in the entire country is governed differently. You have everything under the sun and within very broad bounds, almost anything is legal. You can have a company where you've got a constitution and all your employees have proportional votes and they vote on what gets done. And the thing is, this works really well because no one's locked in. Anyone can resign and go to another company. It's not like a religion where if you're an apostate, you get killed. You can always leave. It's voluntary association, but it becomes this laboratory for experimentation of different government systems that work better for particular types of businesses, particular types of founders for particular times in history. Different systems work better. The other great thing is it's kind of lived by the sword, died by the sword. And if your system doesn't work, you rapidly get killed. Oh yeah, for sure. And this is the difference between

56:38the US government where it has like an unfunctional, non-functional system. A site for the USAID, but like agencies, like his oratical idea, the executive should be allowed a spool of agencies to solve problems. That makes sense to me. Some of those agencies are chartered in the constitution. Some of them are not for the ones that are not. They get automatically sunseted after 10 years. That solves all the problems, because you could then, you could then, you could always recharge it. DARPA does this automatically. So whoever invented DARPA was a genius, because they knew that the problem of all agencies is that you get a founding team, that team sits in place, and they hire people like them, and over time it gets captured on sclerotic, and it can't do its job anymore. And we've just seen this over and over and over again. This 400 something agencies in the United States, and their ability, like if they were actually independently operated businesses, like with paying customers, they'd be out of business tomorrow. Like they just can't, they don't function in a functional way that we'd recognize in the private sector. They're funded by the private sector. They can never go out of business. In DARPA, if you're an employee of DARPA, you can only be an employee for a fixed term. And then you're out.

57:41And it might even be for life. And so you don't have that problem of the kind of, I'd say Boomer, but there were Boomer's 50 years ago in these places as well. It's like the people who stay there forever. It's a real problem, and this is why in all these agencies, anyone who's got any degree of risk tolerance or labor market value over time will be a trition, like a trite from the system, because they'll get cross-recreated or they'll leave to do something different. And so if you solve for the equilibrium, the people who remain will be the people who either can't or don't want to leave ever. And they might have good reasons not to, but on average, the character of the organization will just trend more and more risk of us and older and older and more and more conservative risk of decision making. And so their ability to actually dynamically execute against their purported and stated goals will diminish necessarily, and their ability to attract new talent to work on them will diminish. And so you have to have a natural mechanism for

58:41sunsetting this. And in the capitalist system, this happens naturally. Most businesses don't last that long. And the ones that do, sometimes you wish they hadn't. They kind of have a full life cycle. The resources get recycled. I do find the government kind of fascinating, because you have this organization that over time just grows and grows and grows and grows. It's just a corporation in the limit. It's revenue sources, taxes or printing money. And then it's like, tax is by disguise, because if you're just diluting everyone else's money supply, you're just stealing wealth from them. Yes. And their effective output is rules and regulations from what I can tell for the most part. Okay. Well, some agencies make things as well. I mean, like to be clear, like NIST outputs standards, right? And NASA outputs rockets and space probes and they build things. And actually some of these agencies, you know, department transportation, like outputs, roads that generate economic value. And you don't have to pay a toll when you drive to Vegas. So like, I'm not trying to say here that like agencies just can burn money up on, you know, infertles, right? But if we got 40 trillion of value, is the question?

59:43The question is, do these agencies operate with equivalent efficiency or productivity of the private sector? And the answer there is not absolutely not, but not even close. Not even within a factor of two. In some cases, not even within a factor of 10. And given that, you know, I ran the math a couple of months ago, I took out financial data and plugged it into an LM and said, you figure out what's going on here. So, I don't know, in the guys' game of things, like the call of sense of put a few million dollars into this business. Okay. That's probably information. They wouldn't mind me saying that. I'm proud to be associated with them. Whether they're proud to be associated with me, one can never tell. But the call of sense of puts money into this business. And the call of sense is very wealthy. How do they get their money? They built an extremely valuable business themselves. Okay. That business is a huge benefit to this country in particular, right? And all the other businesses, like millions and millions of businesses, it depend on it. They're probably responsible. I think they tried to estimate this at some point for like measurable amounts of GDP increase or attributable to striped decreasing friction on transactions.

1:00:44Okay. We should throw these guys a parade. Okay. Pinnah metal on them and make statues in Silicon Valley of them, you know, 100 feet tall. Okay. But like any business, they pay tax. They pay a shitload of tax. They pay all kinds of tax. They had to move to South San Francisco because San Francisco was like, we're going to charge you a transaction tax. Genius move. Okay. So, they had to pay a shitload of tax. The call sense, like most rich founders probably not paid much in the way of salary, but they have equity and they can borrow against the equity. They still pay tax on that. Then, um, initial payroll and some of that money gets invested in companies like ours. And then we pay tax. Okay. So I ran payroll on Monday, and I'm paying on the order of $350, $400,000 a month in payroll. And of that payroll, almost half of that goes into either payroll tax or income tax. So the actual amount of like, and then when my employees go out and like try and rent a building to live in around here or buy food or something, they're paying tax on that as well. So if you think like, what we want here

1:01:46is the net economic surplus to make it from the call sense hyper productivity into actual like physical things that my employees need to survive. What fraction of that value gets siphoned off by the government? It's like 70%. It is unbelievable how much just disappears. And you say, well, why is it that this neighborhood here is no longer full of like vibrant businesses building steady the idea of craft that allow enable people to fly around the world? Could it be that two thirds of the net value between the source of capital and the goods and services that the people actually doing the actual work need in order to survive is just joint out of the system along the way. It's it's nutty. It's absolutely crazy. I'm I'll give one more example. I'm blessed to be married to a very talented woman, Christine. And and she has always and continues to earn more than I do, which is my name for I set my salary, but like

1:02:49it's not even close. And so I asked Grock the other day like, in our net family income does just my income like cover the tax or something? And Grock was like, your income covers less than half of the tax. And I was like, I should just retire. My wife should just retire. We're like comfortably middle class. We effectively buy the company a luxury car every couple of months. Like it's kind of nutty. And I think it's maybe for some people, maybe some people it's different, but to me, I feel like the US people are no longer getting out of the government what they were putting in. Do you think that civilizations just have to do a hard reset every couple hundred years? When the prices won right now, fresh. Like this year, we're in the AI takeoff, we're in the singularity. And like, this is thing that you can you can kind of argue this way that way about demographics, this birth rate, that tax rate, this, you know, offensive drone warfare that all this stuff is swamped by hyperindependentia noise. And so the correct question to ask really is

1:03:55what is it's kind of like, you know, New York City was in a crisis over a century ago due to their inability to dispose of a horse manure from people using horses to trope to things around the place. And even in the Second World War, the German army depended on horses to drag artillery pieces from place to place, right? It was not fully mechanized. And the answer was not like, oh, a taxation on horses or something, right? The answer was we invented new technology, a motor car that has its own problems, better its own benefits. And here we are. So we're literally in the process right now of not so much changing this legacy tax and spend economic system, but like just superseding it entirely. Yeah. So if you think like, let's run the clock 10 years forward in a good outcome scenario, 90% of the net benefit that accrues to humans will be downstream of AI. And AI's will be, you know, incorporating a economic system in a way that's very different from the way that FDR's team. And, you know, the presidents around the Congresses around that time decided that they were going to

1:04:56essentially fund the operations of the government by appropriating a fraction of everyone's labor through income tax, right? Like income tax makes sense. If most of the people in your economy are working for businesses that run payroll where they're like turning screws in a factory or something, which was, you know, reasonably descriptive of the of the 20th century. But most of the economic activity in our economy today is not that. In the United States, still does a lot of manufacturing, but it's not the next economic productivity here. And in the future, it won't be either. Most the economic productivity will be machines emitting streams of ones and zeros in low-ethylbit. I want to talk about Starship. Starship. Okay. Let's talk about Starship. So cool. It's extraordinarily cool. On the Louisiana build out, I think it's like 12 towers. For that? 12, I mean, he really knows. It's somewhere around there. But I think that there's like some constraint for starbase where they can only launch so many Starships a day. Well, Elon's in the process of undergoing regulatory arbitrage. So the impression that I get is that the rear ground valley authorities having jurisdiction

1:06:03were perhaps getting a little bit cozy or comfortable with their little monopoly on Starship development and the enormous revenue and so on that that's brought to that area. And perhaps becoming a little too extractive or potentially having the ability to become too extractive. And so how do you make sure that you keep that relationship healthy? You create an escape hatch that is non-zero cost and non-internet cost. And then you can now run the regular job a charge. And the Louisiana governor is actually an announcement video is kind of interesting. Louisiana governor had the name tag because no one knew who he was, but Elon brought the bodyguards. That push comes to shove. He will do the Texas what he did to California and say, I'm taking my business elsewhere because you can share the shape but you can't skin him. If you share the shape, it makes more wool. If you skin it, it dies. So you don't want to cut too deep. I guess he wants to get to something like 10,000 flights

1:07:03a year in a very short time. I mean, that's a number of a power of 10, right? But that's a good number because it helps his team are in around like we're not just doing 10 a year. And like 10 million a year is too far off. So 10,000 is a good number. Actually, that's a good question. How do you think Elon sets basically objectives? Are these arbitrary? Are they five years out objectives? He's pretty well calibrated on that actually. I think he's got a lot more calibrated than he was on timelines and also objectives. I think he's always had a good sense of what the the unifying goal, like the North Star for an organization needs to be to give everyone motivated in a land. It's certainly something that has been not super obvious here because when you're in science project phase, it's never quite sure when you're good enough when you're done. So 10,000 I think is a good number to fixate on. Will he hit it in the next five years? Probably not. But you really don't think so. There's kind of these interesting. What we can run the math right now.

1:08:04I mean, let's say like the next generation Starship, which is produced in the next two years, can do 10 landings, right? Like the first Falcon 9 first stage 10 landings. The factory in Starbase is set up, I think, to max out about 250 Starships a year. That's 2500. And maybe the case that they build them there and then launch them and then they land them in Louisiana and then relaunch them there. I don't know. They become like airports, right? You can fly them from you don't have to land at the same place you take off from. It seems that a lot of people both say they believe in AI and can kind of see the exponential, but then also kind of extrapolate out the current trend versus like pulling in, you know, if there's like some intelligence and explosion, who the hell knows what the future looks like. Well, that's the singularity. You can't really predict what comes next. But, you know, I know a number of relatively well-informed people who think that, for example, the real world economic impacts of AI will be diluted by Burmese cost disease that seems to me to be

1:09:08not entirely unlikely. Like you say, well, right now the United States economy grows at 3% a year, which is quite respectable. How much more will it grow as a result of AI? You can make an argument that most of the growth right now is AI, but is that going to go to 5% or 10%? Is it going to go to 10,000%? You know, ultimately what becomes the limiting factor? Time to power? It would be fascinating to live in this world that Elon has talked about where he's like GDP just growing 100% a year, and he's like, we're going to be there in like so many years. He says like you'll have not universal basic income, you'll have universal high income. Yeah, because you'll be able to essentially produce anything that you want on demand. Ironically, I don't think we'll ever have universal high income because I think the way that the hedonic thread will work since human brains, whatever you have, it's like not good enough anymore, and suddenly you want that plus two. Well, we already see that now. We're like not to pick on anyone too much, but like who are these people in New York and the DSA? Right? Like when I was a kid, the leftist labor leaders,

1:10:13the union bosses and so on, who were running even in the 1990s, like you know, wage labor, like hourly labor, labor trade disputes strikes blah, blah, blah, blah, blah. Right? They were genuinely on the bottom end of the economic totem pole. They were often older gentlemen who had grown up in genuine poverty in public housing, often like their data died in more or two or whatever, and they'd worked their way out from the ground floor. They were usually pretty tough, right? They'd not like you and I, not like soft-handed, like weirdos, you know, like they actually, they genuinely worked with their body. They long-sheldened, they loaded ships by hand, like hard work, shit like that. Okay? Nowadays, the lefties that I know and that we see in public and so on, they're the most privileged people you've ever seen in your life. It's astonishing. It's like Elizabeth Warren in the back of a limousine being like,

1:11:15hate the rich. Yeah, posted for my iPhone. Yeah. It's like, you know, we're not sharing the benefits of technology, posted for my iPhone. I'm like, oh, you know, the benefits of wealth. I'm like, you have the same iPhone as Elon Musk. Like, it's basically like once you reach some relatively minimal tier, it's like horseshoe theory. If you're too privileged, you become a champagne socialist or something. Yeah, it's very interesting to me that, you know, 150 years ago, there might have been a major difference in between like the wealthiest people in the world and the poorest people in the world. But if you look across like the US today, the vast majority of activities that people have taken, like you roughly eat the same food, there's not like some billion dollar mattress. There's not, you know, maybe you have like a pool, but you watch the same Netflix or YouTube. You don't have access to a faster door to ash. Yeah, they only have real differences around energy availability. So like, can you afford to air conditioner large house? Can you fly private? Whatever. Yeah, but like honestly, I think people misunderstand private jets as well. Like for Elon, it really what you should compare it to is if unless it's

1:12:20like purely in that in that class, right? Because most people who are actually flying private themselves private citizens and no one knows who they are. Right? So the thing that Elon doesn't have and that you will also one day lose if you become famous enough and I will as well is that you'll be unable to exist in public. The same thing to the movie stars who live in the hills here, right? They can't exist in public because they can't go outside without being harassed or someone trying to kill them. And the same thing for, you know, sufficiently prominent politicians. But most people are not, they don't have enough face recognition that they could do that. Yeah, totally agree with you. People, people bang on about income inequality and so on. Like, the United States is the worst income inequality on earth. I'm like, the United States has the richest poor people on earth. Yeah, there's no like teleportation device for a billion dollars either. Like you actually just have to get in the same roughly same jet and there might be some guy that spends a boatload of money on the flight, but you're going to get there in the same amount of time. I mean, I don't really envy the rich. I mean, I am rich, but I don't envy the super rich. And I'll tell you why,

1:13:21the people who are significantly wealthier than I am, their lives are more complicated. Okay? They're private security. They're usually much older and in much worse health. They don't have privacy, obviously. They have people actively trying to destroy their privacy. They're wealthy enough that they're surrounded by very few relationships and are not transactional one way or another. It's very hard for them to interact with other humans as humans. And the ones that are not ridiculously old or inherited wealth or whatever, a by and large, like cracked founders who have by their own choice, but nonetheless extremely difficult professional lives. So that usually like the family life is not quite there or whatever. And you say like, is that something you really want? I think that this obsessing over income inequality is actually a negative thing. I think the optimum amount of income inequality is not zero. And a certain amount actually incentivizes success. It rewards success. It rewards hard work. It rewards innovation. It rewards technological development. And as a result, it actually lifts the floor. So the thing you should worry about,

1:14:24I think, is not as much income inequality, like some genie coefficient nonsense. It is like other bottom desial in our economic system, starving, or do they have an opportunity to get on that ladder? Do they have opportunities to get educated to try as hard as they can to build a better life for themselves, for their children, for their grandchildren, for their communities? And so on. And on that front, I think the United States has always done a really good job. It's done a better job now than the past, perhaps, but the United States is accumulating wealth for people up and down the spectrum. People say, well, the middle class has disappeared. So like what was the middle class seven years ago, which is like, you know, some guy working early at the Lockheed plant, they're putting his kids through some public school in a car with no safety standards is the middle class. The middle class has disappeared the United States because people have left it through the ceiling. But these things are not not well appreciated or educated or taught or understood. You