← Azeem Azhar's Exponential View
Azeem Azhar's Exponential View
A tour of the tech boom — 5 waves you need to understand
00:42:28
Azeem Azhar welcomes Packy McCormick, founder and investor at Not Boring, to discuss the current tech landscape – reflections on Web3, why bits and atoms are cool again and how AI and energy are reshaping the world as we know it.
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- [00:00]
Azeem Azhar
I go pretty regularly, I talk to people in the labs. It's pretty consistent what they're saying. We keep discovering new predictable scaling laws and we don't see a point where this trajectory stops.
- [00:11]
Packy McCormick
Half of global GDP that was not an addressable market before is now an addressable market. Where this leads is like you kind of have to be the best version of yourself and in figuring out what you want to get out of all of this, assuming that we have kind of world historical superpowers right at our.
- [00:24]
Azeem Azhar
Fingertips in a way we do have those amazing machines today and yet a lot of people don't feel they get an opportunity to express themselves in the best way. So there is something that is not about the technology, that gets in the way, that constructs a sort of consumptive taker, not maker culture.
- [00:41]
Packy McCormick
It does take some like activation energy to say like given abundance, how can I go experience the world in a different way than I could have before? I think this is like a real challenge. Instead of like a have and have nots, it's a know thyself and know thyself nots or do and do nots.
- [00:54]
Azeem Azhar
You talked about there being a startup in every one of these physical industries that we've ignored.
- [00:59]
Packy McCormick
Name an old company that's 50 years old that is worth over $100 billion market cap and there's now a credible startup going to attack and hopefully rebuild better using technology anduril doing really interesting stuff in the balance of being a modern Prime. Obviously SpaceX, the modern launch company, but I think there's that for like everything.
- [01:16]
Azeem Azhar
Physical, hard things made out of atoms, they have a visceral, tangible quality. And it's amazing to see the entrepreneurial community start to care about that.
- [01:26]
Packy McCormick
I can understand why the average person is kind of like I don't know what has tech done for us. We get Amazon, which is great. Facebook maybe good, maybe bad. There's a lot of stuff that's questionable. If we can start delivering supersonic planes and self driving cars, delivering kind of physical improvements in people's lives, that whole thing starts to flip and people can feel what technology is.
- [01:46]
Azeem Azhar
I think packy of you as a writer, investor, but most of all as a vibe guy, you feel the zeitgeist and we've spoken before. It's great to have you back.
- [01:57]
Packy McCormick
Longtime Exponential View subscriber calling in from Brooklyn from New York, New York. I was in my home office in Brooklyn for a while. Now finally I'm an office. It is great to be here. Glad to do this with You.
- [02:10]
Azeem Azhar
Well, it's fun to have you back. When I say we're vibe guys, I mean, we're both quite broad. We talk to a lot of people, we listen to a lot of people. We are willing to say brave, occasionally unhinged things. Sometimes we're right, sometimes we're offbeat. When we last spoke in 2022, you were vibing around web3 and new governance structures. You know, that I kind of got it in theory, but I never really felt it deeply. What would you say to your 2022 Web3 self?
- [02:40]
Packy McCormick
It's a very good question. I. It still excites a lot of me, like, conceptually, and I'm sure we'll talk about AI. Like, to me, it's actually a little more fascinating than AI because it's, like, messier, and there's just, like, a bunch of different ways that it can go. I think what I would say to myself is, like, the more open a system, the more opportunity there is for people to try to take advantage of it in whatever way they possibly can. And I think a lot of the bad stuff that you've seen in crypto in the past X number of years, and like, even now, I mean, like, the meme coin stuff is fine, but it's like an open casino kind of situation. Like, most people are not as idealistic as, like, my writing about crypto and web 3 is. And so you just need to figure out, I think, like, slowly, evolutionarily, I thought it would take a little bit less time over time, how to build systems that are robust to that. But the more open you are, the harder it is to do that.
- [03:30]
Azeem Azhar
Yeah, it's definitely moving. I mean, I've seen now when I get reports from the bankers, they talk about gold inflows and bond inflows and stock inflows, and they now talk about crypto inflows. So it's anchored itself in the world of finance. But I also do think that there are things that are going to happen because of the change in the administration in the US that will, you know, drive it forward legitimate and maybe take it further down. Some of the ideas that you and I talked about three years ago, maybe.
- [04:02]
Packy McCormick
That would have been my view coming in. I think it really depends. Like, it can't be a free for all. It has to be well regulated. And the risk of the Trump administration, which I was very pro on the crypto side, that this would have been good, but now kind of seeing it play out live, I think the risk of a Trump administration is that you Go to. There are no rules, and, like, just a bunch of unforgivable, unforgettable things happen. While that's the case and while there's no referee such that people are like, you know what? I'm fine with my bank. I'm like, I'm just not going to worry about all this stuff. So I do think that's a risk. But I do think to the extent that, you know, the SEC is not actively trying to kill crypto and regulators will actually try to put regulations in place, I think that's a very helpful thing.
- [04:42]
Azeem Azhar
Yeah, you speak about that as an experience, your experience of having been a banker.
- [04:46]
Packy McCormick
Right.
- [04:47]
Azeem Azhar
You worked in finance, and I think you've seen what happens when there aren't the right guardrails.
- [04:52]
Packy McCormick
Of course, yeah. I mean, I think this is true of anything. And I think maybe again, kind of the more open, the more there need to be guardrails. But this is like a tale as old as time in. In history. The railroad, early stock exchange, like, anything that can be manipulated will be manipulated. I think that's true in money. I think that's true. You know, like on the Internet. That is just human nature, or even if it's a, you know, 1% of humans have that nature, they will be the 1% who try to manipulate it. And so I think you just do need those. Those guardrails. And now it's not. It's not, you know, there's no Goldman screening process on the whole thing to then be able to manipulate. It's just anybody in the world with an Internet connection has the ability to do that. And so you definitely need some guardrails there.
- [05:33]
Azeem Azhar
You know, it's so wild that we're talking about crypto in the midst of this amazing AI transformation that's going on. And the bit that's getting me really excited is what's happening with AI. And it's not one thing. I mean, last week I wrote that how venture capital needs a platform on which to build. And that's been the history of it. First it was semiconductors, then in the 70s it was PCs, then it was 80s, it was software, then it was the Internet, then it was social and mobile and cloud. And then I think we got into this weird spot in 2015 where there wasn't a new platform and people were casting around for the metaverse or for crypto. And if you're a product person like me, it didn't quite make sense because a lot of other things had to be true, but they've now got this platform and it's AI and it's really electrified things. My life has completely changed. I'm curious about you and how excited you've got about AI and what in particular has done that for you.
- [06:39]
Packy McCormick
It's interesting. AI is the first time that I felt like the curmudgeonly old guy. And there are a few reasons for that. And now I can see why people would be like, oh, you blew up crypto too much and all that because it weirds me out how much of it. There's this call pro or con that thinks like in two years AI will be God, humans will be worthless. Like all of that. And it makes absolutely no sense to me that the. And like I see no signs that that would be the case. I think as a, you know, I've been calling it like kind of Super SaaS. I think it's like an amazing Super SaaS and I use it every day. I told, I told CHAT GPT and chatgpt is now I think retaking the lead over Claude as my like of daily driver favorite.
- [07:21]
Azeem Azhar
Yes. Are you, you're unfaithful as well then? Because I was with Claude and Now I'm with ChatGPT and who knows?
- [07:28]
Packy McCormick
Deeply, deeply unfaithful here. Whoever gives me the best, the best information. I think there's probably like something to building up projects over time in one that might make. Make one or the other more sticky. But I'd say like Claude takes more active putting stuff in there, whereas chatgpt just like knows me very well at this point. But I told it to that it was the best coach in the world, $5,000 an hour, asked it to give me a bunch of different plans for stuff and I'm like actually following them and they work pretty well. So like that kind of stuff I think is like mind blowingly cool. And I think the experiences you can build on top of that, it's like mind blowingly cool. And there's a bit of me that's like everybody chill out. Like I don't know if it's a foregone conclusion that it's had this, this nice run where it can now do stuff kind of like PhDs do and all of that where like if there's nothing in the training data that is above, you know, the smartest human level, that it will just be able to intuit that it'd be cool if it, if it were. Um, but that, that's my like one hesitancy is just like how much people are telling us that like humans are pretty much worthless in a couple of years where I don't think that's the case.
- [08:25]
Azeem Azhar
Yeah, I, well I, I think that we have to hold these different ideas in our head at the same time. So yes, it's really useful. Some people who are well positioned to make this argument because they're building the systems say we think these are going to get really, really powerful post PhD level beyond that. But even that's not consistent, right? So Dario Amadai from Anthropic talks about thousands of geniuses in a data center. Yann Lecun from Meta says this is just not going to happen and this is not how it works. The one thing I would say, I would note is I was in the Bay Area last week. I go pretty regularly talk to people in the labs, both formally and over a coffee and over a cup of tea. It's pretty consistent what they're saying, which is we understand the scaling laws, we understand how much you put into what you need to get out. We keep discovering new predictable scaling laws and we don't see a point where this trajectory stops improving. So I take that largely at face value. I mean everyone can be wrong. Long term Capital management was right until they were wrong. But I take it at face value. But even if they are right, my perspective is a bit like yours. Things don't change overnight in 2027 or 2028. Right. There's lots of other stuff that we haven't thought about that needs to change. Not everything changes because you can suddenly do research a hundred times faster than before.
- [09:57]
Packy McCormick
Yep, I think that's what I'll say. And I think for a very long time, I mean I've written about the slew that I wrote a piece called Most Human Wins. It really just like looking at the history of when things get commoditized, what happens and you know, value appears at the next layer, then the next layer, then the next layer. And speaking to Tina today, who wrote a great piece on Jevons Paradox as it applies to people and I think like everybody who's, who's thinking a lot about this, like it's the same point which is where this leads is like you kind of have to be the best version of yourself and it's like kind of cheesy sounding to say and I think like kind of human differentiation and figuring out what you want to get out of all of this, assuming that we have kind of world historical superpowers right at our fingertips, ends up being the most, the most important things. And maybe it is kind of Beautiful that even if the economy and everything gets abstracted away and is available kind of at the click of a button, there's still more for us to experience and do. And figuring out what that is is really interesting.
- [10:52]
Azeem Azhar
I love the way you said that, actually. This idea that we have to be the best people we can be, which. Which in of itself also talks to that process of discovery. Right. How do you go about discovering who you are and what you can be? And it reminds me a little bit of the discussion I had with Kevin Kelly a couple of weeks ago, who was a co founder of Wired. And Kevin said something quite similar to you. I mean, I think, which was people will just be able to express themselves more because we have these amazing machines around us doing it all for us. But I guess the counter argument to that would be, in a way, we do have those amazing machines today and have had for 20 or 30 years. And yet a lot of people don't feel they get an opportunity to express themselves in the best way. So there is something that is not about the technology that gets in the way, that constructs a sort of consumptive taker, not maker culture. You think a lot about this both in your writing, your personal life. So what is that? What do you think is that source that gets people wanting to be makers finding their best selves?
- [12:01]
Packy McCormick
I think it's almost, it's almost an impossible plan. It took me, you know, till I was 20, 30, 32, to start kind of writing and going that way. I was talking to Tina about this this morning and I think like one of the, one of the questions that came in my head is like, do you need to be a certain level of financially secure? Like, certainly, like there's always a starving artist and all of that. But I think there's a lot of people who like to kind of get to a point of financial security and then they can figure out kind of how they want to be their best self. And so that's kind of one interesting aspect of it. I think this is like a real challenge though. Instead of like a have and have nots, it's a know thyself and know thyself knots or want or do and do nots. Like there is, you know, some people, it's just gonna be like, this is so easy. I can get like close of a button and food at the push of a button and like, I don't know, I'm going to go out and drink and it sounds great and you know, to each his or her own, but I do Think it does take some, like, activation energy to say, like, given abundance, how can I go experience the world in a different way than I could have before? And I don't think there's like, an easy patent answer that kind of applies to everybody. I think it's really, what do you want? And even for each individual person at different times in their life, that's going to be a different. A different thing.
- [13:12]
Azeem Azhar
I think it also connects to cultural context as well, in the sense that the types of discussion we're having now are very different to the ones that happen in Asia around AI. The discussions around Asia are not bounded in the sense of losing autonomy or negative fears of the risks. They're actually deeply connected to the opportunities a new set of technologies provides. But I also expect, and I'm going to look into this when I travel around later this year, that there'll be differences, kind of cultural differences as well, between the different Asian countries that I'll have the chance to spend. Spend time in. And. But it strikes me that we're having a very Anglo Atlantic discussion about this, this, this issue.
- [14:00]
Packy McCormick
Yes. And that's. I think that's totally right. And overall, I'm super excited by it. But I do think, like, there is certainly a dog kind of chasing the car situation where it's like, all right, we have everything. What now? That would be a great spot to get to, but it's worth thinking about ahead of time.
- [14:16]
Azeem Azhar
Yeah. Well, I mean, I've been pulling up all my books on Affluenza and sort of the. Sort of what the historians have said when cultures get to get a bit rich and a bit idle and don't have enough hunger. So I'm in Europe, obviously, I'm in the uk. Is it still in Europe? What should we say when you look.
- [14:34]
Packy McCormick
At Europe adjacent and, you know, things.
- [14:37]
Azeem Azhar
Have changed here as well. I mean, I'm curious about how Americans see us right now, whether they understand what's going on here.
- [14:44]
Packy McCormick
I would speak on behalf of all America and say no. And I would love an update from across the pond. I mean, you know, I saw that Harry Stebbings is trying to kind of reinvigorate investments into European founders, which is great. It seems like there's some real kind of European pride happening in the tech community. But, you know, still in my mind is, you know, Germany shuts down all of its nuclear plants and, you know, Barcelona wants no American tourists in town. So it does feel like those are the two things kind of competing in my head. The one things are moving Backwards. And then two, there's maybe feeling like there's this little pull to pull it forward.
- [15:20]
Azeem Azhar
Right now we're on the enjoying the bullwhip of the new administration. So in, at the start of January, I would say the mood in Europe was really, really funereal. It was like someone had died. And I was at a big event in Munich, which is a big kind of tech event. And then I went on to the event in Davos and it was happening at the time of the administration, the inauguration. And the mood was so negative you didn't even say hello to people. You'd say, Europe's in dire straits, isn't it? I mean, there was no greeting. We'd abandoned politeness and etiquette. And there has been a real shift. There has been a flippening in the last six weeks that has been electrifying. I mean, the context for a lot of this I think has been that Europe has become so dependent on the US but particularly for defense and security. And since 1992, I guess all your life, pretty much Paki Europe has underspent on defense about $2 trillion below what it promised, which is a lot of money even for the U.S. government. And I think understandably, and I'd written about this quite a lot over the last two or three years, that it was unjustifiable and at some point the Americans would get annoyed, whether it was Trump or somebody else, and that he's got annoyed in the way he has and it has made them feel so vulnerable. When Musk started to say, well, I'll just turn off Starlink and then he recanted, right? He did edit's Tweet in the 60 Minute window, whatever it was, they got very, very nervous and they got understandably nervous that their F35 planes won't fly. And so even Germany is reconsidering whether to buy those or not. And sleepy Europe in a six week period really started to galvanize and the leaders started to support each other. And that's why European defense companies have done a real Nvidia this year. Rheinmetall is up 100%, Thales is up 73%. And there's this initiative to build resilience and rearmament across Europe with an understanding which I actually, honestly, it's common sense. I'm a father, a parent, I'm a homeowner. I take responsibility for the security and the physical integrity of my home. I don't expect my neighbor 200 yards away to do it for me. I do it for myself. So this is kind of washing your hands after you use the toilet, use the bathroom kind of stuff that we're now doing. But $800 billion euros that's been allocated is an incredible injection in building atoms. It is hardware factories and so on. And that's what I think has created this tailwind that you described. Our mutual friend Harry Stebbings putting this Project Europe together to ignite what is quite a small defense tech area. But it is a, you know, teams, teams need a flag, a goal to run towards.
- [18:25]
Packy McCormick
There is something about building atoms and building weapons and defense systems that is, I guess, just good for the soul, you know, Like I'm no fan of war. I think it's, it's, you know, something that we need to figure out how to get, get past at some point here. But you know, reading Freedom's Forge, it's like it's hard not to get excited about what it means to all of the sudden say like, hey, we all, we have to all come together. This is an existential, existential thing that we need to build for and then to get, get out there and do it. There's something animating about that that I don't think software can do in the same, in the same way. And I think that's like a little bit of, kind of what has caused a reawakening here as well is that, you know, defense is cool again, building things in Atom is cool is cool again. I know AI is one platform in the DC side, but to me like the most exciting platform is people building, kind of rebuilding the infrastructure of the world. And so there's Andrew doing, you know, really interesting stuff in events and being a modern prime, obviously SpaceX, the modern launch company, but I think there's that for like everything. Name an old company that's 50 years old that is worth over $100 billion market cap. And there's now a credible startup going to attack and hopefully rebuild better using technology, what they have, what they have done. And that's just exciting, you know, exciting for the people involved, exciting for investors, but exciting for hopefully, you know, I can understand why the average person is kind of like, I don't know what has tech done for us. We get Amazon, which is great, Facebook maybe good, maybe bad. You know, like there's a lot of stuff that's questionable if we can start delivering supersonic planes and self driving cars. And I know there's people in SF who don't like the self driving cars, whatever, but I think if you start delivering kind of physical improvements in people's lives, that kind of whole thing starts to flip and people can feel what technology is. So that's what's made me super optimistic. And it's cool to see that it's happening in Europe, too. It really can invigorate you in months.
- [20:18]
Azeem Azhar
I think it's starting to happen. And you've identified another cultural thread, though, that is so important. So Peter Thiel had this line which was, we wanted flying cars and we got 140 characters, and I think we're finally starting to get to get flying cars. One of the things that I found really shocking was that the amount of electricity that the US industry was producing had not increased since Jeb Bush was governor of Florida. Right. Since before, I think, when George W. Was elected. I mean, it's an incredibly long period of time for what is essentially the oxygen of the modern economy. Not. Not to increase. I mean, no Mountaineer gets to Everest with the same VO2 max as they did when they were, you know, £300 and lying around watching Netflix. So that was really interesting. And what just happened today in London, you may not have caught this, but our biggest airport, Heathrow Airport, which is one of the largest in the world, is shut because it depended on one electricity cable coming in and the substation that power powers that is in a really overloaded part of London and has caught fire. So the 2, 300, 400,000 people who would have shown up in Heathrow today and the same number who would have left are not. Because we don't invest in infrastructure, we don't invest in resilience. I mean, I have two Internet connections in my house and, you know, Heathrow, which depends on electricity, thought we'd just have one power supply. And I think this is the flip side of what you were describing, which is that physical, hard things made out of atoms are real. They're really interesting. They have a visceral, tangible quality. And it's amazing to see the entrepreneurial community start to care about that.
- [22:08]
Packy McCormick
I mean, you've written about electricity being a technology and being an energy source. It's a technology and it's amazing. And we could spend the rest of the time talking about this. But I think, just to your point, quickly talk about the cultural shift across the world 10 years ago. It's not just that we were making less energy, it's that energy was bad. You know, like, the more energy we used the worst. Solar wasn't quite good enough yet. Nuclear was for, you know, whatever, not whatever reason, a bunch of historical reasons, Persona non Grata on the, on the energy side. And so the idea was to, to grow, and to grow your energy usage meant like inevitably, invariably killing the environment. And so we made less of it. We tried to focus on efficiency and like, that's just not how, not how things work. And I am like, of anything in the world, most excited about the fact that we want to produce and transmit and store and whatever, do all of those things with electricity now and rebuild the economy around the kind of electricity and batteries as kind of the animating force. I think that is incredibly, incredibly, incredibly exciting. There should be a thousand base power batteries sitting next to Heathrow just making sure that, you know, nothing goes, goes wrong.
- [23:14]
Azeem Azhar
That was, that was exactly my thought today. I was thinking, how long would you need, what would you need to make this happen? But you talked about there being a startup in every one of these physical industries that we've ignored for 30 years. From the ones that you see because you see so many. What is one that you're really excited about?
- [23:33]
Packy McCormick
Well, I mean, the one that I just mentioned, I think is really exciting. This company, Base Power Company based out of Texas. They've started in Texas because Texas is unique in America, where it's the only state with its own energy grid. There's pretty much like the east coast, the west coast and then Texas. And so it means that it's more volatile and messy in the short term, but it means that you can also innovate faster and there's more incentive to because it's so volatile. So Base essentially is your electric company. They install batteries on your home that they still own. They take in energy when the sun is shining and the wind is blowing, uh, which happens an awful lot in Texas. It's like right in the cross of where those things happen. And so you can get really, really, really cheap energy and discharge it at, at times when energy is expensive. By doing that, you help kind of balance, balance the grid out. A huge problem that we have in America, and I'm sure there too is transformers are backlog. It takes forever to get new transmission lines put in. So you kind of have to figure out how to do more with the same amount of grid that you have right now. And one way to do that is, is to make sure that the lines are kind of utilized more. And so when demand would be low otherwise, you charge up batteries. When demand is too high, you discharge those batteries at the source. And so I think, you know, if we think that that electricity is kind of at the root of everything, there's been A ton of cool stuff happening on the generation side. There's nuclear, there's geothermal, there's fusion stuff starting to happen. But that has to get somewhere and actually be usable. And I think BASE is a big step in that direction.
- [25:00]
Azeem Azhar
Yes. I mean, the US grid, I think the loading is about 53% on average, which means that you could probably take it up to 75 before the safety engineers get a bit upset. So there's loads of room in there. So in the case of base, they effectively are doing a kind of time arbitrage across electricity in some sense. So can you just talk us through, how does that work? Do they buy the batteries? They rent them to you? What's the model for the homeowner?
- [25:26]
Packy McCormick
Yeah, so they're pretty much vertically integrated on everything above the kind of cell level. So they'll buy cells and then they'll do their own battery pack assembly and manufacturing and design. And they're kind of designing it as a whole system, including how quick it is to install in your house. You know, the ability to provide kind of full home backup. So, you know, the, the line can go into the battery and then the battery can go into the panel and just power the whole house. You don't have to do a bunch of electrical work. But the way it works for consumers is you sign up for base, they become your electric provider. So every month you pay the bill to them. The base team will come, they'll install a battery right next to your home. You know, again, battery that they've designed. But cells are what you should not somebody else sells. Unless you're like huge, huge, huge scale, they'll do that. And then you pay a monthly kind of fee for the battery. And so BASE still owns the battery and they trade it. But now they're. They've already started. This was kind of later in the plan. They've already started lowering bills because of 10% right now below what you pay on average. Because they're able to trade that power back to the grid and make money that way. And because they're able to partner with utilities to stabilize a grid and get paid for that and make money that way. And so now you get this kind of free, essentially home backup that you pay for, but then you get less on your energy bill. So it's like kind of this win, win, win, win, win, which is what technology is supposed to do.
- [26:46]
Azeem Azhar
It is. I mean, Texas is also so huge. I mean, my big experience in Texas, I was there last week, was that the Kit Kat, which we have in The UK has four fingers. In Texas, it has eight, because everything has to be bigger in Texas. And I was talking to someone who did battery storage in homes while I was there, and not. Not at base. Now, I wish I had seen them when I was out there and she was telling me that the typical Texan home needs a 50 kilowatt hour battery because they're so big. Just to give you a context, like in New York or the UK, you'd have a 10 kilowatt hour battery and that would be more than enough, maybe five. But Texans, everything, everything is much bigger. But the other thing I think so important as a theme to pull out of that is that effectively the reason ercot, which is a kind of Texas energy system, is able to innovate is because it's basically a free for all, for better or for worse. But the second thing is, part of the solution to this capacity issue is actually making the electricity market work more efficiently. Because what we're doing is right. We have to think of electrons as bananas that go bad, right? And bananas get produced really rapidly and there aren't enough people to eat them. And then refrigerators showed up and now fewer bananas go bad, more people get to eat them and the price comes down. And I think that this is a lesson that will get taken across from Texas to other places, which is that we have some portion of the solution already. There's right, and it's just solving this problem of what do we do with the electrons in the time when they're not needed.
- [28:20]
Packy McCormick
And you've nailed that. I think this has been base's view, but also I think how Texas and ERCOT view themselves is really as this kind of like, test bed for what's going to happen kind of everywhere else in the country, because it is just deregulated kind of cowboy market down there. And so they really do, I think, take pride as a state in kind of being the place where people innovate first and then it spreads. And I think you're already starting to see other states demanding, you know, base and battery solutions generally because it's expensive. You know, I hope we get to a point in America where it's not so expensive to do really, really big infrastructure projects anymore. But right now, relative to, like a distributed solution, big infrastructure projects are just slow, held up by permitting, you know, all sorts of issues that they have. And so the more that you can, you know, this is like the classic almost leapfrogging story, the more that you can kind of like leapfrog having to do all that stuff and just provide better edge solutions. I think, you know, the better for all of us.
- [29:16]
Azeem Azhar
I want to get into this one with you because you've been thinking a lot about it, but I wanted to ask about one other hard startup, so I know that you, you've been thinking about space a bit, you've written quite a lot about space and SpaceX amongst other things. I saw that Eric Schmidt came in and took the CEO job at Relativity Space. So I have a theory about it. But I'd love to hear your theory.
- [29:35]
Packy McCormick
I would love to. I actually, that confused the hell out of me. I would love to hear your theory on it.
- [29:40]
Azeem Azhar
Okay, so let's put it in context, right? So Eric Schmidt is phenomenal character. He's incredibly successful, he really deeply understands hard technologies. But he also built Google and he's reasonably well off. You know, one could assume that he's self funding as needed. I reckon my theory, no validation, is that he's taken over Relativity, which is going to become a competitor to SpaceX simply because SpaceX has got a monopoly. And you know what, it'll be really fun. It's easy to chip at a monopoly. I mean, he built a business that ends up having monopolistic characteristics still to be determined by the ftc, but maybe they'll decide that was the case in Google. And I think it's just a big, interesting, challenging, difficult opportunity. It has new characteristics to it, to things he's done before. And you're just essentially up against an incumbent now. It's not a sleepy incumbent, it's Elon Musk and Glyn Shotwell, but it's still an incumbent.
- [30:38]
Packy McCormick
I like that theory a lot and I think that's probably right. Right. Like I don't think that he's like we're going to beat SpaceX or you know, there's an opportunity nobody wants there to be. Kind of like a single, a single supplier to orbit and all of that. I would wonder if it ends up being kind of another like company that kind of looks like a SpaceX that ends up, you know, taking share from SpaceX or if it ends up being something like a long shot space where essentially you have a long tube in the middle of the desert and you get mass to space that way and obviously you're not going to, you know, shoot humans to space. And so like there's different needs for different things, but that can get you there, you know, at an order of magnitude cheaper cost or more or something.
- [31:17]
Azeem Azhar
Like is, is long shot. A railgun.
- [31:19]
Packy McCormick
Yeah, long Shot's essentially a railgun.
- [31:21]
Azeem Azhar
Oh, so we've now got a solution which is that you basically use free electricity during July in Texas for all your space launches.
- [31:30]
Packy McCormick
There you go. I mean in energy abundant society these are the types of trade offs that you can make. But I just mean for these really hard things I think you do have to have some fairly big advantage to go out and compete. I think there's a really big business to be built for relativity just on the fact that NASA will want a dual source launches and other space agencies want a dual source launches. And you don't want to be reliant, particularly now that Elon has made himself the main character and enemy of half the world. I think there's like an actual business opportunity there. But if you were to say like what really makes a meaningful difference? Maybe it's something like a long shot or you know, like a radiant aerospace which is doing single stage to orbit and you know, comes down and kind of lands the plane. Like I think there's just different characteristics that you can play with that I would personally want to play with as opposed to being like, all right, we're going to go try to compete almost directly with SpaceX kind of doing what they do. That seems like a way to build a pretty good business that will never be within an order of magnitude of SpaceX kind of size.
- [32:26]
Azeem Azhar
I mean SpaceX is, is a multi hundred billion dollar business. So I guess, you know, Getting to within 10% of that is, is okay, It's a, it's an okay outcome. I mean it's not a not boring or exponential view outcome, but it's okay.
- [32:38]
Packy McCormick
Yeah, I mean honestly I think that's, I think that's true. And so if you're coming out of retirement essentially to do that, to like to get second place because somebody has to be second place, that's not particularly exciting to me. I would, I would much rather be working on something that's like tries to, you know, undercut spacing. I'm still waiting for somebody to, you know, now that, now that the, the guy who blooms up outside of, you know, in the cybertruck said that we have anti gravity tech. I'm waiting for somebody to beat SpaceX with anti gravity tech. That's what I'm, that's what I'm looking for.
- [33:09]
Azeem Azhar
I'm not sure he was a reliable, scientific, reliable scientific source. And we're not going to talk about what they found under the pyramids e either. We do need electricity. And when we started this about Europe and Germany shutting down its nuclear power stations. And Europe is a tale of two stories on nuclear because you also have France which broke every rule by building n dozen nuclear power stations in about five years with 1970s technology, let alone 2020s technology. Might view on nuclear is this, is that you know, nuclear is this amazingly clean, amazingly safe form of generating electricity. A plant runs 92% of the time. It is solid and reliable as you like. We know that they run overrun. We know that they are expensive but in a way like any bag of shopping, some items are cheap and some items are expensive and you want the whole bag. So I can see there being an important place in nuclear and I absolutely would encourage and I think motivated by seeing nuclear announcements. The but in my mind is distributed resources are getting so cheap so quickly and the flywheel has taken off solar panels probably 40, 50% price cuts in the next decade, if not more. Batteries are still at the steep part of their learning curve where they're getting cheaper much, much faster. We're putting back storage in every car as well. Where do you stand on nuclear?
- [34:44]
Packy McCormick
Yeah, I mean I'm very pro. I think it's hard to argue against solar and batteries. So we did this, me and a woman named Julia De Waal who is a co founder company called Antares. We did a season long podcast called Age of Miracles on nuclear fission, nuclear fusion talked about why it was so expensive historically and what needs to change for that no longer to be the case. We have Casey Hammer on to talk about, you know, to be the, to be solar's champion. And we had Noah on to be Noah Smith on to be batteries champion. And so we're very open to saying like look, we need all of it. I think nuclear is phenomenal, baseload, reliable, clean, safe power. I think if you can kind of get over some of the regulatory hurdles which are a big deal and I know China, you know, it's not like China builds it for nothing with, with less regulation. But there's a bunch of companies out there right now that are you know talking about putting reactors right as to data centers as this like really easy to install relatively thing that doesn't take up as much space as solar panels and provides this kind of just reliable power that churns it has a different use case. I think solar and battery will continue to grow faster. I don't think nuclear catches it at this point. I think you know, the counterfactual world where in the 1970s we just kept building nuclear, you know, the world is a cleaner, more Energy abundant place. And it's a shame that, that, that that didn't happen. I don't think it catches up now but I do think that it can get more on those learning curves. I think there's a lot of entrepreneurs who are thinking about how do you churn out 100 nuclear reactors a year. So I think you can make it a lot cheaper and you know, hopefully, hopefully an event where there's you know, another ice age and we were not fully reliant on solar. But I think with the less kind of absurd version of that is I just don't think you want to be reliant on any one particular energy source at any given time. I think it's the last thing on nuclear is. I just want to see a couple of decades of people really cranking on it because I do think you can get it to kind of come down the cost curves and it is, you know, cost physics wise the amount of material and the energy density, you know, in uranium is just so far superior to anything else that it is if we can actually kind of like engineer the challenges away, I think, you know, part of the long term energy, energy mix for sure. And then hopefully we get fusion at some point too. But there's a long way to go I think to get that kind of.
- [36:53]
Azeem Azhar
I mean I generally vibe with that. I would say that there's something that's really important for me around nuclear which is there is no scientific reason for us not to be building lots of nuclear and for us not to have built lots of nuclear over the past 25 years. For me, for us to just go out and say we're going to build this is a, is a return to acknowledging how valuable scientific evidence argument fact is. And so I've been discussing this, you know, privately with, with various sort of people in different parts of the world saying just change your regulations even if you're not going to build anything, get rid of the ban because that is your acknowledging that science has value in your society, in your politics, in your economy. There is no reason for there to be these bans if we can't build it for reasons of economics. That's a different class of ban in a way.
- [37:45]
Packy McCormick
Yes, I completely, I mean that's why we did, you know, hopefully we do more seasons of this and we talk about a particular technology and or whatever the reason that we did nuclear is like really as much as anything wonder trying to figure out why we have this miracle technology in our hands and you don't build it. Because I think in Tech, we often think like if you build it, they will come and like the technology can solve the problem. And nuclear is this like really good counter example where you built the miracle technology. We're able to pull energy from atoms and people are like, no, no, no, no, thank you. We don't, we don't want any more of that. And so like figuring out and kind of like resetting what happened there. I agree. It's as much a cultural win as anything else.
- [38:22]
Azeem Azhar
I think we will start to see that shift happening. It may take certain parts of Europe who've been very, very cheery about this, actually from even before the Germans to change their minds. But the Chinese are going to, the Koreans are going to the UAE will, the US will, the big tech companies will buy small modular reactors to put behind the meter in data centers. It's going to be useful. I think it's going to be helpful as a message of being a societies that value science. But in the percentages of energy electricity production, I think it'll be small and smaller than it is today in 20 years time because solar and batteries and wind and geothermal will be picking the slack. But we could come back to that bet in a couple of decades if we're both still doing this.
- [39:07]
Packy McCormick
I actually think you're completely right. I think as a percentage it'll be lower and hopefully both numbers are percentages of much, much, much bigger pies.
- [39:15]
Azeem Azhar
Right? Yeah, yeah.
- [39:16]
Packy McCormick
I mean, we haven't even talked about what, what, like what everything going electric enables. I took my first electric boat ride when I was down in Texas and it was awesome. And there's just like so many, you can build better products with batteries. And I like, I think we, I think it's underestimated even as we talk about data centers and all of that. How much of the world is going to go electric assuming we didn't even get to robots. It's, you know, as soon as you get robots.
- [39:38]
Azeem Azhar
You didn't get to robots. No, I know. We have to, we were going to talk about electric and we're going to talk about robots. And I just spoke to somebody who's in, in Beijing and she said to me, you've got to come to Beijing. Fortunately I am in June. She said the roads are silent and the roads are clean because you're at 60, 75, 70% electric vehicles on the, on the road, there are drones delivering lattes to people. You don't really hear them. It is a bet. It's a better way.
- [40:02]
Packy McCormick
It's a, it's Just it's the point of technology is like that over time you can just do things in better ways. And like electric is I think, just a better, better way. And so I think we're going to use a hell of a lot of electricity. And so hopefully some of that's nuclear, solar batteries, geothermal, where it makes sense. Wind, I'm like not the biggest fan of, but in some places it makes sense.
- [40:19]
Azeem Azhar
Yeah. I mean if people are building wind, it's better than building coal is sort of my, my perspective. Look, we have really, we've run to the top of our time and as you say, we didn't get to a couple of topics we wanted to talk about. So maybe that's an excuse to do this again in a, in a few months. But on a kind of final question, right, We've got AI, we've got people building in atoms and bits. We've got Europe reawakening, you've got nuclear. And this move towards producing more electricity. It's a lot to keep in one's head. How do you frame it, this compounding of all these waves one on top of another?
- [40:54]
Packy McCormick
Oh, the two different ways that I frame it. One is that just like tech is going to get so much bigger in a way that I again, I think people appreciate and don't really appreciate that, you know, robots and AI make like half of global gdp. That was not an addressable market before is now an addressable market. Using technology in places that it wasn't before increases margins in places where there have historically been low margins. Like I think the size of the economic impact of this over God knows what period, maybe it's a decade, maybe it's three decades. I think it's still dramatically kind of underappreciated. And I also think we're in a spot where like, I couldn't tell you where we're going to be. And even a decade from now I spend my life thinking about this stuff and to your point, it just like kind of compounds on each other. Another thing we haven't even talked about, but every kind of smart college kid that I've spoken to, even just in the past couple of weeks, like really genius college kids. And I think genius college kids are now smarter than genius college kids were when I was in college. Like they've gotten, like the good ones have gotten really good. Apparently they're all working on bio and neuro specifically. And I've heard this from like different schools in different pockets. And so we haven't even gotten to what we're going to be able to do with our brains. But that's the thing that smart kids are hacking on on the weekends. So I don't. I think things are going to get really wild.
- [42:08]
Azeem Azhar
Let's do this again. We'll find out when. It'll be so much fun. Thanks for coming on the show. So you are notboring, which I guess people can find on Substack and I'm at Exponential View. I host These Friday lives 12:00pm Eastern Time, 9:00pm Pacific Time every week. Paki, thanks so much for coming on the show.
- [42:27]
Packy McCormick
Thanks for having me. This was so much fun.