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The a16z Show
Energy, Minerals, and the Physical Stack Behind AI
00:24:33
Erin Price-Wright speaks with Turner Caldwell and Drew Baglino about what it will take to close America's critical minerals gap and modernize the power infrastructure that underpins the AI economy. With the US more than 50 years behind China in critical mineral supply and grid infrastructure built on systems designed a century ago, they examine where the real bottlenecks are and how to move faster. The conversation covers how automation, reinforcement learning, and vertically integrated operations can compress the timelines for mining and refining, and why co-locating supply chains matters more than labor costs in the race to reshore manufacturing. Baglino explains how solid state transformers can replace aging mechanical grid equipment with silicon and software, while Caldwell outlines how Mariana Minerals is applying autonomous systems to remove the know-how bottleneck from critical mineral processing. They also discuss the lessons both founders carried from Tesla — techno-optimi...
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- [00:01]
Turner Caldwell
The US is 50 years behind on critical minerals supply. We are too slow at designing, building and ramping up new minerals capacity even after we have licensed operating.
- [00:10]
Drew Baglino
Even though there's so much innovation happening at the edge of the grid, on the other side of the wire, there's really been no change.
- [00:15]
Aaron Price Wright
You both came out of Tesla. What does the Tesla model give you that a traditional industrial company doesn't have?
- [00:20]
Turner Caldwell
The belief that you can innovate on systems that are old and archaic. If the outcome is worth it, Tesla will fight through the challenges of getting to that outcome. We're making a big bet on autonomy in refineries, where we use reinforcement learning to actually remove humans from the loop in determining how refineries operate.
- [00:37]
Drew Baglino
The world's leading producer of silicon carbide, which is a key power semiconductor, is based here in the US and so we should be leveraging the applications of that technology here first, manufacturing here at home.
- [00:48]
Podcast Host/Announcer
And if we don't, the US power grid runs on mechanical systems designed before World War II. American critical mineral supply sits 50 years behind China. And demand for both is accelerating faster than at any point in history. For decades, the bet was that innovation at the edge, better batteries, smarter software, faster chips would be enough. It wasn't. The infrastructure underneath never kept up. Grid transformers are still steel, oil and copper. Critical minerals still flow through refineries the US doesn't own or control. Two founders who built the Megapack, the 4680 battery cell and Tesla's Global Mineral Supply CH think the same playbook that rewired the auto industry can rewire the grid and the mine. The constraint isn't ambition, it's whether American industry can move fast enough to matter. Turner Caldwell and Drew Baglino speak with Aaron Price Wright about megawatts minerals and the new strategic high ground.
- [01:53]
Aaron Price Wright
Now it's tempting to talk about the
- [01:55]
Podcast Host/Intro Speaker
AI race as a competition of models and chips. But the truth is that AI dominance and re industrialization more broadly are physical projects. They are energy projects. They are mining and refining projects. They are manufacturing projects. They are grid scale projects. Every breakthrough model, new factory and autonomous system that we'll talk about here today has a real world requirement underneath it. Materials, energy and the ability to move electricity where it's needed, when it's needed. We increasingly hear concerns that AI will put an undue strain on an already faltering grid, will demand more energy than we can give, more build out than we can keep up with. And in many ways these are fair concerns. But rather than taking this at face value and Putting our pencils down on progress. We see this as a call to action, an opportunity. We can do great things in this country. We have rallied around national projects before, accomplished things few dreamed possible, and we can do so again. This is the next chapter of American dynamism. If we want to rebuild the industrial backbone of the United States, we have to rethink the entire stack. From critical minerals, to energy generation, to transmission, to how we build and interconnect new infrastruct at the speed that it's needed. This next conversation brings together two incredible entrepreneurs building across that stack to talk about what it will take to do just that. Please join me in welcoming co founder and CEO of Mariana Minerals, Turner Caldwell, and founder and CEO of Heron Power, Drew Baglino. We'll spend a lot more time in
- [03:44]
Aaron Price Wright
this room today talking about AI, but the constraint on America's AI future. And as I mentioned, I think reindustrialization more broadly is in many ways Adams and not algorithms. So you two are both building fundamental pieces of this physical infrastructure that the future AI economy can't live without. So maybe just for the audience to get started, why don't you briefly explain what you both build and why these physical industries matter.
- [04:10]
Turner Caldwell
Yeah. So Mariana Minerals is a software first, minerals mining and refining company. When I say software first, what that means is that about a quarter of the company is software engineers, machine learning engineers that are developing three core operating systems to accelerate project delivery and increase the amount of autonomy that we see in minerals operations and in refining operations. Capital Project OS is basically a product lifecycle management tool. It's the way to think about it. But that goes from process development, mine development, all the way through engineering, construction and procurement, and doing agentic workflow automation kind of through that stack. Plantos is how we use reinforcement learning to control refineries. And Mineos is again, how we use reinforcement learning to control, do short interval autonomous control of mining operations. But we do not sell software. We are not a SaaS company. We develop, we engineer, build and operate minerals projects. And so we have a copper mine that's operating in southeast Utah that's producing high grade copper materials today, high purity copper materials today. And we're building a lithium refinery in Texas with the goal of building 10 projects in the next 10 years.
- [05:10]
Aaron Price Wright
How about you, Drew?
- [05:11]
Drew Baglino
Yeah. So first, thank you for having me today here representing the Heron Power team. So at Heron Power, we build power electronics to accelerate the electricity sector over the last four decades in parallel with the Moore's Law improvement of transistors in Compute. There's been a similar improvement in power transistors, and over those decades it's enabled more and more applications. We see them in our how we charge our phones, in telecommunications, in data centers, but really that improvement hasn't been brought to the grid itself. And in a time of growing demand for electricity for so many different reasons, all of them positive, and the fact that electricity growth and energy growth is correlated with economic growth and prosperity, we need new solutions. And luckily the power semiconductor space is ready to bring those solutions. And I'm excited to do that. At Heron Power, we're focused on on building solid state transformers to use silicon and software to replace steel, oil and copper in power conversion at data centers, large scale energy installations like solar and battery projects and others.
- [06:15]
Aaron Price Wright
Amazing. So the US government has made it a pretty clear and loud priority to reshore critical supply chains from critical minerals advanced manufacturing. And there's also been a lot of focus in the AI race against China. So maybe in plain terms, where does it leave us if American companies like yours don't exist and when?
- [06:35]
Drew Baglino
Yeah, I can take that first. Well, this power semiconductor capability that is enabling solid state transformers actually is the outgrowth of many decades of partnership between the federal government and academia and industry. Both the DOE and the Navy have focused a lot on advanced semiconductors. So it just makes sense that the place where this technology was first developed should be the place where it all the benefits are commercialized. The world's leading producer of silicon carbide, which is a key power semiconductor, is based here in the US and so we should be leveraging the applications of that technology here first, manufacturing here at home. And if we don't, we're basically losing all the benefits that accrue from that technology to other companies, other countries. And I think we should do that.
- [07:22]
Turner Caldwell
Yeah, I think put plainly, the US is 50 years behind on critical mineral supply. And so if we're not innovating in the critical mineral space, we will be perpetually behind. And the things that China does right now to accelerate.
- [07:34]
Aaron Price Wright
And when you say behind, do you mean specifically behind China?
- [07:37]
Turner Caldwell
Specifically behind China, but I would say also globally we have a couple of decades of flag. The things that we can do at the top level are accelerate permitting, we can make project level finance more available. But that doesn't actually solve the underlying problem, which is that we are too slow at designing, building and ramping up new minerals capacity even after we have license to operate. And so Mariana is laser focused on that phase of project development, which is you have to get Things permitted, yes. But once you start building, it can take five years to get something built, and then it can take three or three to five years to get something actually operating at rate. And that's why we're laser focused on that. So that even if we kind of start to lower the burdens to play catch up with China, we actually have to go faster than China does.
- [08:20]
Aaron Price Wright
Yeah, yeah. Both of you spent a long time at Tesla. Drew, you spent 18 years at Tesla. You're like something of a deity among power electronics nerds, I would say. And now you work on grid scale power systems, which is different. So when you looked at the grid, what convinced you to leave Tesla and tackle this problem? This, I think, seemingly unsexy, unsexy problem. And in this way, and maybe adding on to that, what does it actually take in terms of time, cost, regulatory hurdles?
- [08:51]
Drew Baglino
Do this in the U.S. big question there.
- [08:55]
Aaron Price Wright
Two questions. I apologize.
- [08:56]
Drew Baglino
Yeah, well, I was, I had a front row seat to an amazing set of impactful innovations at the grid's edge, right? EVs becoming more affordable. Not just more affordable, but more omnipresent around us. Building the supercharging infrastructure, support those electric vehicles, and then working on grid storage. I was responsible for Megapack and scaling the energy business at Tesla. And all along the way, what I saw was, even though there's so much innovation happening at the edge of the grid, on the other side of the wire, there's really been no change. The systems underpinning the grid today are the same largely mechanical systems that were developed over a hundred years ago. And you don't get control, you don't get monitoring. You end up with an overbuilt system that is fragile. And also there's not a lot of suppliers providing that equipment. And most of them are actually headquartered overseas. And that just doesn't seem like a secure position for such critical infrastructure for us to have here in the United States. What does it take to get things done here? I think you can. I mean, I built the mega factory with my team. My team was super awesome. In Lathrop, California, in 11 months, it was a JCPenney warehouse. Eleven months later, the first product came off the line. But ultimately what it comes down to is alignment. When you're working with your local jurisdiction, they can use the process for a code compliant project to say no at every step, or they can say yes at every step. And so how do we as a collective, you know, gain alignment? That building re industrializing the US Building critical infrastructure and supporting our critical supply chains. Here in the US is a good thing. And identifying ways to say yes at every step along the way and really accelerate these processes versus no. And when you do find that it can be magical. That's been my experience.
- [10:35]
Aaron Price Wright
And I know in particular you've talked, you know, we've talked about sort of labor costs and labor shortages and oftentimes people point to that as the reason why they can't get things done in the US but what's your experience then?
- [10:47]
Drew Baglino
Yeah, I mean these, today's factories are really automated. If you're building a new factory today, you know, in China or the U.S. the labor differential is less than 10% of cost of goods sold. It might even be less than 5%. But what actually is driving the competitiveness of the different locations in my mind is it comes down to supply chain. And how do we develop co located critical supply chains in the United States where the logistics costs are much, much shorter and much, much lower because the logistics time is much, much shorter. If you look at, you know, China, they are so thoughtful about building these industrial areas. You know, everything that you could possibly need to build a car which has 7,000 parts in it, you know, is within less than a three hours drive. Getting to that kind of co location of the supply base in the United States would be a major unlock along with automation while still providing immense numbers of, of, of like high paying, you know, important jobs. I think that's a vision that I'd like to advocate for.
- [11:48]
Aaron Price Wright
Yeah, and I mean when we're talking about jobs on the within factories, this isn't, you know, your grandfather great grandfather's supply chain assembly line, factory floor. These are, you know, technical jobs, may require training, but you know, have skill and the pay associated with that.
- [12:09]
Drew Baglino
100%.
- [12:11]
Aaron Price Wright
Okay, Turner. The U.S. government ranks onshoring critical minerals as essential to economic and national security. It's been in the news a lot for the last year. Rare earths, critical minerals, you know, these things feel very bottlenecked. Yet so much of the processing capacity for these materials sits overseas, especially in geopolitical rivals, namely China. So given that vulnerability, how does Mariana minerals work help the US reclaim not just the extraction side, the actual mining, but processing and supply chain sovereignty for critical minerals.
- [12:43]
Turner Caldwell
Yeah. So you know, we focus on the full chain from mining all the way through refining. You have to focus on the full chain. That handoff in the middle leads to a lot of actual like market inefficiencies. But the, you know, we've, we're making a big bet on autonomy fundamentally like we're making a big bet on the fact that we can build systems that enable us to engineer things faster using large language models, accelerate the pure the procurement life cycle and do autonomous short interval control of construction operations where you're really doing resource balancing between what materials do you have on site, what's your list of tasks and what people do you have on site. And kind of like doing that optimization is all things that can be done algorithmically. And then we're making big bets on autonomy and refineries where we use reinforcement learning to actually remove humans from the loop and determining how refineries operate. And so when you have a highly variable feedstock, because the earth is heterogeneous, you need to constantly be tuning the temperatures, the flow rates, the chemical addition rates, the resonance times of a highly complex refining circuit. And we don't have that labor pool here that has that embedded know how that can walk up to a refinery and quickly get it operating on spec and then also manage that variability. And the same is true on the, the mining side of things, where mining at those mine sites, we're making thousands of decisions a day. And when you don't have that labor pool of folks that are able to make the right decisions, the right thousand decisions that can cascade into low productivity, low availability of equipment and low utilization of equipment. And. But the, the software angle is really not enough. When we kind of talked about how we're vertically int the gate to software penetration, really not the gate. What sets the rate of software penetration and technology penetration into these plants and into these mines ultimately is the operating teams. It's like what is the tech stack that they're comfortable with. And then for the most part it is pen and paper and maybe 150 spreadsheets that are kind of scattered around an operation. And what you need to do in order to actually accelerate software uptake in the space is you have to go down into that operating layer, understand the core problems that they're facing, but then also really control the culture, etc, and make sure that the software tools themselves are designed for the folks that are going to have to be interfacing with them. And that's why we think that sitting the software engineers right next to the operating teams, but not in a forward deploy engineer type way where everyone has the same incentives, is what's going to yield the best results when it comes to trying to optimize these assets.
- [15:12]
Aaron Price Wright
Now, as I mentioned before, you both came out of Tesla, it's one of the companies that proved the template for American Dynamism success built factories in America for the first time in a long time. Turner, you led Tesla's minerals and metals team. Drew, you ran powertrain and energy. What does the Tesla model give you that a traditional industrial company doesn't have? And what is genuinely different maybe about building in your new respective sectors that you didn't expect relative to Tesla?
- [15:44]
Turner Caldwell
Yeah, I'd say there are three big ones and they might overlap a little bit with Drew's. But I think that the general techno optimism and what technology can do in these sectors is much, much higher at Tesla. Right. The belief that you can innovate on systems that are old and archaic is at the core of the company. The other is a general appetite for risk, which enables super fast decision making and enables the teams to move really quickly without being burdened with fear of making the wrong. And the last is like a clear, you know, firm commitment to not giving up on projects that have the outcome. Like if the outcome is worth it. Like we, Tesla will like fight through the challenges of getting to that outcome. And I think what we see at least in the minerals industry is like, folks will give it a shot for a year. You know, people have tried to do autonomy and mining for a long time and generally a lot of companies will just end up, you know, they'll fail, they'll put it on the shelf or they'll isolate it into a small team that goes and they don't get really tasked. And Tesla does a really good job of just like barreling through the challenges as long as the outcome is worth it.
- [16:54]
Drew Baglino
I would add a couple more aspects of it. Many times in Tesla's history, the company's future success really like whether or not the paycheck will clear was bet on the team within the company executing well. And that is a very like focusing reality and it drives people to do their best work. And like you end up needing to manifest that outcome. You know, it's, I hate to say do or die, but it's equivalent to that. So that's, that's something that exists uniquely within startups. I mean, I think, you know, Turner and I are going to try to bring that, are bringing that to our own teams, but. And wouldn't be in a legacy industrial company. The other thing is there was always a clear vision of the purpose of the company and that's like a beacon for talent. Right. People are like, oh, I want to work on that, that sounds amazing. And so you get to basically pick from the best already and then you're in this high growth environment. Anybody who is excited about their career trajectory and having a trend in a good direction is also going to want to work there and then is also going to want to stay there and see it through because their impact is real. They see the impact of their actions on the outcomes around them and then those outcomes result in their own growth. Right. They move from one part of the company like Turner did, to another or myself, I mean my career history. So I think those are in stark comparison to, you know, multi product conglomerate, industrial conglomerate that's selling the same thing today that they were selling, you know, decades ago or a mining company that's got 150 years of heritage. So that's a hard thing to replicate, not in a startup and it's a hard thing to maintain within a startup. But I think it's really important to getting things done.
- [18:51]
Aaron Price Wright
Yeah, yeah, totally talking about kind of getting things done and building that team and being able to hire. You know, one thing that jumps out is both of your companies are building real facilities that will create real jobs. Turner, your initial lithium and copper projects should add, you know, over 500 construction jobs and additional full time jobs in the next 18 months with many more as you scale operations. Drew, your Heron is getting ready to build out its first large factory which should also be something around 500 jobs. And you know, that's just the first factory of many. What have you both learned about, about building an industrial workforce in the US in 2026?
- [19:35]
Drew Baglino
I think you have to be creative here in the US we are re industrializing and I can't just go to like a phone tree of power electronics manufacturing engineers or, or, or production associates. And I mean in my background I built, I was responsible for building along with my team the 4680 program manufacturing facility, a 50 GWh battery facility in Texas. And at that point there were really not a lot of battery operations in the United States. So you instead have to look for analogs. So I was hiring people out of high speed bottling plants and out of syringe manufacturing facilities where they're making billions of syringes. And if you can get that creative hat going, you find that there's immense depth of talent in the US and people are excited to work in new industries and you build that shared vision of the future. And I'm very positive about what you can get accomplished here.
- [20:27]
Turner Caldwell
Yeah, I would say that looking at analys analog industries is a great point. It's the, you know, for, for the mining industry we're in a similar position where we're kind of, we've had 35 years of just meaningful attrition in the, in the labor pool. But the oil and gas sector has a bunch of extremely good talent. And the, the software space, you know, a lot of the underlying optimization algorithms that we're writing for our plants, they look very, very similar to the optimization algorithms that are in dog walking apps and uber ride optimization, underwriting loans, ad optimization. And so the, there is in the, in the like broader U.S. talent pool. What's important is building that talent magnet. And it's a, it's an interesting one for us because you know the mining industry, like the villains in every movie are the resource extraction folks. And so we have to, we have to like combat that and kind of
- [21:18]
Aaron Price Wright
save mining sexy again.
- [21:20]
Turner Caldwell
Well, that's, that's right, that's.
- [21:21]
Drew Baglino
Yeah.
- [21:24]
Aaron Price Wright
Finally. I know we're out of time, but if you had one specific and actionable ask for the people in this room that would materially speed up production onshore manufact, create jobs in the next 12 to 24 months. What would, what would you say? You have the floor.
- [21:39]
Turner Caldwell
I'll go, I'll go first. I think the, you know, if we have a minerals mandate, what we should do is we should look at everything that was done in the last 50 years for oil and gas when we had an energy mandate and we still have an energy mandate. And you know, that's a lot of asks boiled down into one. But there are a lot of tools in the toolkit and I think the most important thing is providing the right incentive structure that mobilizes the private capital markets behind these projects so that they're confident that there is a market in the long term and that the rug isn't going to get pulled out from, from under them in an industry that you know, for the last 30 years really hasn't been built out in the
- [22:15]
Drew Baglino
U.S. yeah, I think durable industrial policy that you can plan around. I mean I'm very pro manufacturing in the United States building these technologies in the United States. But you know, my suppliers, maybe my financiers are not as certain Britain. So yeah, durable industrial policy driving in this direction. I think a concerted effort between the federal government and the states to identify areas of energy and manufacturing build out so you can get those co located supply chains that I mentioned before would be a major win where the local jurisdictions are getting to yes with you rather than trying to find ways to say no all the way along the project. And then the last thing is I'm a fan of the electricity sector. I think it's enabling so much growth. I like the idea of a federal highway trust fund for the grid. It never has existed and that's sort of why we have this patchwork. How do we find a master plan of build out of linear infrastructure that maybe connects those manufacturing energy build out zones to improve resilience, reduce cost and really move us forward as a nation.
- [23:28]
Aaron Price Wright
Awesome. Thanks so much. You heard it here.
- [23:30]
Drew Baglino
Great thing.
- [23:31]
Turner Caldwell
Thanks.
- [23:31]
Drew Baglino
Thank you.
- [23:34]
Podcast Host/Announcer
Thanks for listening to this episode of the A16Z podcast. If you like this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes go to YouTube, Apple Podcasts and Spotify. Follow us on x16z and subscribe to our substack@a16z.substack.com thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the company companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com disclosures.