Scott Nolan - SpaceX, Founders Fund, and Rebuilding American Uranium Enrichment - [Invest Like the Best, EP.467]

Summary

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Invest Like the Best: Scott Nolan - SpaceX, Founders Fund, and Rebuilding American Uranium Enrichment

Episode 467 | April 14, 2026 | Host: Patrick O’Shaughnessy | Guest: Scott Nolan

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Episode Overview

This episode features Scott Nolan, whose remarkable trajectory spans from early engineering at SpaceX, a decade of influential investing at Founders Fund (including investments in SpaceX and pioneering hardware and energy companies), to founding General Matter, focused on tackling the U.S. bottleneck in uranium enrichment—a critical facet of nuclear power and energy independence. The conversation explores his frameworks for identifying impactful work, lessons learned as an investor, insights into “avoiding trends,” the deep links between government and technology, the future of nuclear energy, and General Matter’s mission to reestablish American uranium enrichment capacity.

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Key Discussion Points & Insights

1. Framework for Choosing What to Work On

[04:12–08:02]

• Scott’s North Star: “Do something useful…make a real contribution and use your talents to make a positive impact.”
• Career choices informed by picking high-leverage, underappreciated problems:
  • SpaceX: Saw stagnation in aerospace, believed SpaceX (even at 30 people) would disrupt it.
  • Founders Fund: Identified the venture capital industry as needing innovation, particularly supporting strong founders—moving from a “bits” (software) focus to “atoms” (hard industries).
  • General Matter: Progressed from hardware and energy investments to directly building solutions for America’s uranium enrichment deficit.

2. Peter Thiel’s Influence & Contrarian Thinking

[08:02–10:53]

• Peter’s approach: Avoiding trends, taking orthogonal, layered perspectives on companies and investments.
• “World of bits vs. atoms” insight: Progress in digital (“bits”) but not in physical (“atoms”) industries became a core thesis.
• Notable quote:

  “Instead of just doing a spreadsheet…think about why are we even seeing this investment?” — Scott Nolan [08:11]

3. Avoiding Trends & Competition

[10:02–13:46]

• Two layers: Company competition (many entrants racing to the bottom) and investor competition (overpriced deals).
• Avoiding trends leads to higher alpha by entering underexplored, uncrowded areas.

“If there’s a trend, inherently you have many companies going after the same thing…how is it not the case that they’ll compete profits down to economic equilibrium?” — Scott Nolan [10:08]

4. Identifying Under-Worked, Important Problems

[10:53–15:30]

• Common factors: Industries that have stagnated, often due to “cost-plus”/oligopolistic structures lacking incentives for innovation (e.g., legacy aerospace, defense, infrastructure, energy).
• Pattern recognition: Exceptional founders deeply obsessed with the problem, able to “take you down the rabbit hole.”
• Success example: Airbnb, dismissed as niche until founder passion/professionalization and detailed work revealed broad potential.

“A huge portion…are going to be industries that somehow just stagnated…cost-plus industries are just prime for this.” — Scott Nolan [12:54]

5. Investing Intuition, Analytics, and Concentration

[16:45–19:24]

• Over time, Scott learned to trust intuition more, but to ask the right questions to hone it.
• Analytics often confirm gut feel, but shouldn’t override it.
• Investment concentration: “Concentrate into the fewest number of companies possible and don’t dilute your average returns by indexing.” — Scott Nolan [17:15]

6. Value, Valuation, and Capital Intensity in Venture

[19:24–21:45]

• Chasing “value deals” in venture is risky; low valuations might indicate underlying issues.
• Founders Fund often doubled down on winners at later rounds even if companies became “popular”—steep up-rounds can mean greater subsequent upside.

“You don’t get paid as an investor based on how close you were to last round’s price. It’s ultimately against exit price.” — Scott Nolan [21:17]

7. Founder Passion vs. Investor Objectivity

[21:45–26:11]

• Dangerous for investors to fall in love with ideas—team is critical.
• Essential for founders to be obsessed, as company building is too hard otherwise.
• Scott’s journey: Not obsessed with enrichment per se, but saw clear strategic necessity through prior investments in energy and nuclear startups.

“On the company side, you have to be in love with the idea…On the investor side, I think being in love with the idea is really dangerous.” — Scott Nolan [22:12]

8. Government-Technology Collaboration

[26:11–29:48]

• First-hand at SpaceX: Deep believers at NASA open to private partnership—intensely collaborative when missions and standards align.
• Key: True believers in agencies, credible/private partners can work together for innovation.

9. Learning by Doing & Vertical Integration

[29:48–33:11]

• U.S. “learning by doing” curve: Outsourcing manufacturing has hindered innovation.
• Vertical integration (engineering co-located with manufacturing) enables rapid iteration and system-level optimization—a core tenet at SpaceX, Tesla, and now General Matter.
• Excessive subcontracting calcifies architectures and impedes iteration.

10. Energy & Civilization: Supply, Growth, and Onshoring

[33:11–39:02]

• Energy consumption per capita strongly correlates with GDP and national prosperity.
• U.S. grid stagnation since 1990s; now surpassed 3x by China.
• Rising pressure from AI/data center demand highlights urgency to expand capacity—and risk of not being able to respond quickly is tangible.

“Energy use and production is the ultimate proxy for human prosperity.” — Scott Nolan [33:33]

• Labor adapts (e.g., electricians), but infrastructure and energy supply are true bottlenecks.

11. Nuclear Energy: Rationale, Safety, and Cost

[39:02–46:54]

• Nuclear = cleanest, safest, most reliable baseload power, but cost and long construction make it less competitive.
• First principles: Nuclear should be far cheaper on a physics/materials basis; new reactor designs and fuel supply could deliver this.
• Advanced reactor taxonomy: Gigawatt scale (grid), megawatt scale (remote/micro), and SMR (100–300 MW; ideal for data centers/behind-the-meter).
• Opportunity: Co-located data centers & nuclear (“BYOE” – Bring Your Own Energy)—could lower community prices, accelerate deployment.

12. Challenges for Advanced Reactors & Business Building at General Matter

[46:54–56:05]

• Critical risk: “They don’t have fuel to operate. That’s a showstopper.” — Scott Nolan [47:13]
• Next: Keeping reactor/energy production cost low enough to compete.
• General Matter’s product: Uranium enrichment services—filling “nuclear fuel cliffs” where U.S. currently relies on Russian/EU supply (particularly urgent for 20% enriched “HALEU” fuel for advanced reactors).
• Product-market fit journey: Triaged supply chain, identified enrichment as chokepoint, started with most urgent (HALEU), then plans to scale to broader low-enriched uranium (LEU) for the grid.

“We decided, let’s hone in on the enrichment step. That’s the bottleneck.” — Scott Nolan [49:47]

13. How Enrichment Works and Nonproliferation

[53:06–55:54]

• Enrichment is similar in all uses—it’s the degree of enrichment that matters; weapons-grade is >90%, power-plant grade is 3–20%.
• Global uranium ore is plentiful; enrichment/refining capacity is the bottleneck.

14. Business Metrics and Customer Value

[58:02–62:22]

• General Matter’s “North Star” = cost per kilogram of uranium to a specific enrichment (%), or dollars per “separative work unit (SWU).”
• For legacy plants, fuel cost is minor; for advanced reactors, it’s majority of total cost—so General Matter’s ability to deliver low-cost enrichment is pivotal for next-gen nuclear economics.
• Market-entry strategy: Serve small, urgent HALEU market for advanced reactors, then expand to larger LEU market as nuclear scales.

15. Building a Great, Enduring Company

[62:22–67:28]

• Team as destiny:
  • Recruiting: Early team and culture as highest priority.
  • Location: Chose Southern California for broad engineering talent, not just nuclear.
  • In-house execution: Following Tesla/SpaceX model; own engineering, procurement, construction for speed and control.
• Scott’s own time: Deeply inward-facing, focusing on hiring, building engineering DNA, setting the pace of execution.

“The team you build is the company you build…The early team you build is the company you build.” — Scott Nolan [62:44]

16. Public Perception, Risk, and Communication on Nuclear

[67:28–69:43]

• Acute, catastrophic events (Chernobyl, Fukushima) shape public fear, but data says nuclear is extraordinarily safe.
• Energy abundance and cost-savings are ultimately most compelling levers to shift public opinion.
• “If your utility bill got cut in half, people would suddenly find that extremely compelling.” — Scott Nolan [68:04]

17. Why So Few Contrarian Founders & Operators?

[69:43–73:13]

• Most “investors” avoid operating due to quality-of-life and preference for idea-driven work—founding is all-consuming and relentless.
• General Matter only happened as an “extreme exception”—operating is far harder but can be vastly higher leverage.

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Notable Quotes & Memorable Moments

• On Problem Selection:

  “What important problem is there that’s not going to get solved otherwise that somehow I can contribute to?” — Scott Nolan [04:12]

• Contrarian Investing:

  “Avoid trends. The competition piece is…typically understood as the company level…But then if there’s a trend, then probably many investors are looking at it and they’re pricing it up. Where’s your advantage?” — Scott Nolan [10:08]

• On Hardware Investing:

  “Some of our hardware investments turned out to be pretty good. I think they exceeded all expectations.” — Scott Nolan [09:34]

• On Passion in Entrepreneurship:

  “It’s not that rational to start a company. There’s a lot easier, more comfortable ways to make money…if you want to actually start a company, it better be something that you’re really passionate about.” — Scott Nolan [22:12]

• Vertical Integration:

  “At a minimum, I think you need to pull the engineering together and vertically integrate and just sign up for doing more of the engineering yourself and not outsource it.” — Scott Nolan [30:27]

• Energy as Prosperity:

  “Energy use and production is the ultimate proxy for human prosperity, for economic activity, for all these things.” — Scott Nolan [33:33]

• Team as Destiny:

  “The team you build is the company you build…The early team you build is the company you build.” — Scott Nolan [62:44]

• On Nuclear Safety and Cost:

  “If you ask me, what’s the safest, cleanest form of baseload—nuclear, absolutely…if your utility bill got cut in half, I think people would suddenly find that extremely compelling." — Scott Nolan [39:06, 68:04]

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Timestamps for Key Segments

• Career Framework & Early Choices – [04:12–08:02]
• Thiel’s Contrarian Mentality – [08:02–10:53]
• Investment Competition & Trends – [10:02–13:46]
• Underappreciated Problem Attributes – [10:53–15:30]
• Trusting Intuition as Investor – [16:45–19:24]
• Valuation, Capital Intensity Discussion – [19:24–21:45]
• Passion for Founders & Investors – [21:45–26:11]
• SpaceX, Tech-Government Collaboration – [26:11–29:48]
• Onshoring, Learning by Doing – [29:48–33:11]
• Energy & Economy Relationship – [33:11–39:02]
• Nuclear’s Baseload Case – [39:02–46:54]
• Data Centers & Nuclear: BYOE – [44:37–45:42]
• Advanced Reactor Risks – [46:54–48:11]
• General Matter’s Product-Market Journey – [49:47–56:05]
• Business North Star Metric – [58:02–61:29]
• Great Company Building & Execution – [62:22–67:28]
• Nuclear Safety, Public Perceptions – [67:28–69:43]
• Why Few Contrarian/Operator Types – [69:43–73:13]
• Kindest Thing – Peter Thiel’s Support – [73:34–74:07]

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Memorable Final Exchange

“The transition from Founders Fund to General Matter…goes all the way back to being recruited into Founders Fund by Peter [Thiel] and then support through a decade of investing…being along for that journey and then ultimately joining our board as one of very few boards that he’s on, really appreciate that.”
— Scott Nolan [73:34]

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Conclusion

Scott Nolan’s journey highlights the rare dynamism of individuals who identify underappreciated, urgent societal bottlenecks (from spaceflight to energy), act decisively, build engineering-first teams, and ultimately create new markets through perseverance, focus, and a refusal to follow trends. Whether as investor or operator, his approach—rooted in first principles, team DNA, and relentless drive—offers a playbook for high-impact entrepreneurship at the intersection of technology, industry, and national interest.

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Transcript

[Patrick O'Shaughnessy]

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[Scott Nolan]

My framework has always been just do something that's useful, do something that you feel like you're making a real contribution and using your talents to make some type of positive impact. It's what important problem is there that's not going to get solved otherwise that somehow I can contribute to. I think all three major things I've done have fit that in some way if we take them one at a time. Like yeah, SpaceX founders find it now general matter SpaceX I was just an engineer coming out of undergrad. I had worked at Boeing during College just saw what the incumbent aerospace industry was like, didn't want to work in that, didn't believe it was going to change anything. And so aerospace background, always wanted to work on rockets, aircraft, asked myself, okay, what's the most exciting thing to do? And it was I still want to be in the industry. I know the incumbents are not going to make an impact, but there's this new company, SpaceX, that is going to ultimately own the entire space launch industry, which I believed even when it was 30 people it was to me a no brainer to go work there. Right after college. I interned during college. I saw what it was, it was like, yeah, these guys are going to win. I want to be a part of that. That was an industry that had stagnated for decades. No incumbent was doing anything interesting. They were all just writing government cost plus contracts. The US assumed that space launch was a nation state capability. That would never be a commercially interesting thing to do and it just had to be subsidized forever. And so the result was cost plus contracts, layers of subcontractors, dozens deep and no ability for anyone to do something really novel. It was going to take a new company. So that led me to SpaceX early on and then found my way to founders fund in 2011. So I was actually at Stanford in business school, started in 2010, was quickly voted most likely to drop out. It wasn't exactly I wanted to get to work, I just wanted to do stuff. And so I thought about dropping out in actually the first or second month of business school to join Square. And so this one path was maybe go join Square. And Keith, who was at Founders Fund for a while, was the person trying to recruit me to drop out and go to Squares in the meantime met Peter. I was sitting in a class that he was doing at the law school. This one was called Technology Sovereignty and Globalization. There was many different readings. There was things about theory of government, how would technology change the power dynamics around government versus industry. And he convinced me to join his startup in the venture capital space. And the basic premise was VC needs innovation, the incumbents won't do it. And circa 2005 the concept was founder friendly. If you looked at all the most successful companies, they were founder run all the way to the end. And so the premise was let's give founders back control of their companies and unilaterally support them in building that. That was 2005 Genesis of Founders Fund. But by 2010 when I was talking to Peter 2011 it was more this contrarian thing. Of what important companies is no. 1 funding and how can we beat the capital for that? The thing that I focused on when I joined in 2011 was really, yeah, what set of companies are really promising that people underappreciate? And I had just come from SpaceX, which was not yet in 2011, like appreciated, appreciated. Four years later they were landing rockets. And it was obvious that all this stuff was going to work from the inside, but the whole world didn't understand it yet. And so my thesis was, hey, I think there's a huge set of physical world companies that could be really valuable. And this could span biotech, computer chips, satellites, space launch, transportation infrastructure, almost anything that was not digital. And that this was a huge opportunity area that everybody was ignoring. And then came across this problem of enrichment of uranium in the US's total lack of capacity in the space, which essentially forced me to go start general matter.

[Patrick O'Shaughnessy]

If you think about the 11 or 12 years that you were principally just investing in, what ways did Peter most affect the way that you think about things and vice versa?

[Scott Nolan]

There's many layers to this. Number one was it was just avoiding trends, avoiding the herd, thinking for yourself. That was probably layer one. The second part was probably that whenever we looked at any companies, Peter always took a very orthogonal view to most people, so there'd be layers of abstraction. Instead of just doing a spreadsheet and trying to analyze this investment, why don't we think about why are we even seeing this investment? How should we think about this investment from this very different perspective than everyone else? And so sometimes there would be layers of abstraction that were many layers and you would end up with a really different view on things. It's really natural to just dive in and start trying to understand the business, but trying to develop a very different perspective on it that would yield some alpha. He probably also thought at the time, I think around 2010, it was all very contrarian. Is no one investing in what's underappreciated? I feel like that was around the time that he was talking a lot about we'd made all this progress in the world of bits, but not in the world of atoms. You could be on your cell phone and it was interesting and then you look around and nothing's changed in 50 years. And so I think he was starting to already thinking about this probably even more than he was talking about and probably thinking which companies are doing this well, where would someone who could kind of understand the business world and the investing world and then also the startup world come from?

[Patrick O'Shaughnessy]

How do you think you affected him or changed his mind?

[Scott Nolan]

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

[Patrick O'Shaughnessy]

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

[Scott Nolan]

There's two layers of competition. So the avoid competition thing was a huge, huge part of this. That's definitely a lesson learned. But the competition piece is typically understood as the company level competition. And so if there's a trend inherently you have many companies going after the same trend. You're going to have new entrants. It's become a thing. It's not about one company, it's about the theme. And if there's a theme that's not about one company, then it's about many companies. And so how is it not the case that they'll compete profits down to economic equilibrium of perfect competition? So there's that piece of avoid a trend for that reason. But then layer two is if there's a trend, then probably many investors are looking at it and they're pricing it up. Where's your advantage? And so you want to avoid competition on both fronts. And when there's trends you usually have both fronts.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

For better or worse, they can draw you into a potentially brute force sort of approach. First few years at Founders Fund, I'm looking for great founders. I'm looking for underexplored ideas. It's just lots and lots of meetings. So from the investor perspective, unless you have things that you're into that you think are underappreciated by the world and you've maybe been really excited about them for a really long time. And why does no one think about this? And maybe it's this idea in your head that you just keep digging on and maybe someday you find a company that's actually an expression of that trade. Then it's just meeting a lot of people and trying to find what's interesting and what sounds really different and what makes sense. From the investor perspective, the attributes are something like, hey, you meet a founder, they seem really smart, they're talking about this thing no one's really talking about, they're telling you why. Everyone who's thought about this problem either thinks it's impossible or. Or they're all going about it in the completely wrong way. And if you adjust and come at it from a different point of view, it results in a really different solution that has really different business characteristics. When you meet a founder like that who's working on something like this, usually they're not just going to give you superficial answers to convince you to give them money. The conversations with great companies like that always felt more like this person is really into this thing for some reason. And when I ask them a question, they're not just giving me an answer and trying to bounce back to the surface. They're like, here's the answer, here's the next question you're going to ask and let's take you all the way down the rabbit hole. So they like showing you around the space. That's how it felt from the investor seat. If you think about what are the attributes of industries where this is the case, I think a huge portion of them are going to be industries that somehow just stagnated. And I think the thing that's most linked to stagnation is probably being a cost plus industry where there's very little incentive for progress, not much incentive to bring the cost structure down. And therefore you end up with this fixed market size that never takes off because you just get in a stalemate where all the companies maybe get to like oligopoly status. The equation for max profits is just make pricing high enough to the breaking point, collect your cost plus revenue and your margins and then it never becomes a really compelling thing. So like Space Launch for example, to some extent defense, which you see with Anduril trying to break that, to some extent infrastructure, like the boring company. This is their prime thesis. So I think incumbent stagnated oligopolistic cost plus industries are just prime for this.

[Patrick O'Shaughnessy]

If forced to go beyond that definition, there's only so many of those and you've probably invested in companies, effectively attacking each category for each subcategory, A lot of those doing extraordinarily well. What else would you say? Like, there's lots of great Founders Fund investments that weren't in Cost Plus Industries or something. What would I find if I went digging on this same thread there?

[Scott Nolan]

I mean, Airbnb is a classic huge example. When Founders Fund invested, it was still crossing from kind of a weird backpacking couch surfing air mattress in someone's living room to what it is today. And so not that many people were that interested in sleeping on air mattresses in people's houses. But that was something that that team was really into. And how do we turn this into something much larger where people can meet each other and have like a really authentic experience when going somewhere instead of just staying in a hotel? That wasn't something many people were thinking about. And yet when you actually looked at it, you realized how big the market could be and if they could cross over to a mainstream thing, it could be huge. That's one example. Sean Parker was on the Founders one team right when I joined and led the Spotify investment. And the internal memo or thread on the Spotify investment was just so well reasoned. And it was because of this history of understanding music and doing the Napster thing. And then years and years of trying to find the right company that was taking the right formula, I think led to that and led to him seeing the potential of Spotify and why it was the perfect geography to start in and the perfect licensing strategy. And so I think it's often just like a really deep interest in something that's of personal interest to a founder and they believe it should exist. They believe there should be some way to solve this, and everyone's done it the wrong way. And here's the right way. I think sometimes people are sitting with those ideas for five or 10 years.

[Patrick O'Shaughnessy]

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[Scott Nolan]

It probably wasn't even the meeting itself. It was probably just trusting your judgment more. So I think on day one, it was just, okay, I don't know anything. I'm going to take a lot of meetings. Some of these seem good, some seem not so good. We need to do the work, because what do I know? I think early on, the intuition was all that you had to go on. And I think it's usually correct. And then I get probably a little bit better at the job in the next couple of years, get better at trying to analyze things, understand it. That might actually lead you astray.

[Patrick O'Shaughnessy]

I think the analytics might, because then

[Scott Nolan]

you start doing the analysis when you kind of already know, like, oh, I guess we should do the work, but you kind of already know which ones you like. In fact, you should just concentrate into the fewest number of companies possible and don't dilute your average returns by indexing. And then over time, get better at asking the right questions to help harness the intuition. Or like, okay, we should dig into this.

[Patrick O'Shaughnessy]

Can you think of a single investment that your gut was not flashing? Yes. Almost immediately that you, like, worked your way to get there and did it.

[Scott Nolan]

Airbnb was one of these. We did a lot of work on it at the time. So founders hun did a small angel check early on and then did a much bigger check in the next round. And so at the angel check, it was still the very informal air mattresses. I think there had been something where some guests completely destroyed a home, and there was a whole bunch of controversy around that. And then the company took a hard stance on that and said, we will reimburse the host and we are professionalizing this. And I think that was maybe the moment that you could tell it was going to go mainstream. And then FoundersWind made a huge investment. But if you just look back at the past, you might say, oh, this seems like a niche thing. But if you did the work, you could see a bunch of different trends you could see the demographics were shifting to slightly older crowd, not just backpackers out of college like some people had perceived. The market share in different markets was increasing a lot. We did the work, we looked at like every single market, sliced market share, marketing spend and you could see like all these markets that they were in, they were just taking share and becoming the dominant thing. So you analyze the data and it was like they're winning, it's over, they're going to win.

[Patrick O'Shaughnessy]

There's two other components of the no competition idea. One is the valuation and price that you have to pay and the second is capital intensity. You've invested in lots of stuff that requires lots of money to get the thing up and running and to revenue and to profitability. Curious how you learned about those two dimensions of earning. High returns that did low competition bring lower entry prices on average. And is that something you cared about much once you found someone that was doing one of these things? And then also how you think about the amount of capital that you would have to put into the company to make it work.

[Scott Nolan]

The low competition thing typically would be associated with lower valuations. But I think that's trying to find value deals in venture is a dumb idea. It's not the right plan. Maybe if you have a very small fund and you can pick up some interesting IP or this company maybe will never be that huge, but this is a really good deal and you look at multiples and stuff and starts to look a little bit more like PE or something, I think that can probably be okay. But for True Venture, I think it's dangerous because either it says something about the company's ability to raise capital that they're unable to at market prices and unless this is the last round that they need to raise or they really are going to be a capital efficient business, that's probably a risky thing. Maybe the team is incredible at debt financing, but terrible adventure financing and so they're going to switch to debt and that's going to be amazing. You can imagine a situation like that. But typically if you're meeting a company and it's a crazy value deal, it's probably just not going to end up being that good is what I've observed empirically.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

That may be the case. Yeah. If you look at actual dollars deployed, it's probably more the whole concentrate into the winners strategy. I think the way that that can still be a good strategy, even if the company's popular, is A, it's popular, but not as popular as it will be, or B, this idea that up rounds, it's almost like anchoring on the past versus looking to the future. Peter has said this a bunch of times and has guided the founders fund team to think this way. It was more talked about in the early 2010s, but if you've got a company that was growing steadily but then there's a big up round, it's probably the case that that up round is not even enough up that if it's like a 2x up round, maybe it should be a 4x up.

[Patrick O'Shaughnessy]

Yeah, what's going on there? There's that famous quote of his which is the steeper the up round, the greater the undervaluation. What is actually happening that makes that true?

[Scott Nolan]

Yeah, people are just anchoring on the past or they're like, oh, last round was this. I guess it should be reasonable compared to last round price. And then in reality like, okay, all that matters is next round price. How do we make sure the next round's an up round? Like, what are the catalysts going to be for further increases? And so, yeah, you don't get paid as an investor based on how close you were to last run's price. It's ultimately against exit price. But the only thing you have to go off of that's actual data or empirical is the past. And so people are much more anchored on that.

[Patrick O'Shaughnessy]

What have you learned about how much to be in love with the problem itself? This is a good excuse to talk about general matter too. Like, are you inherently fascinated by in love with uranium enrichment or is there some other big thing going on behind the scenes? And I'm curious if you think about all these founders you backed. My guess is most of them were deeply passionate about the domain because they had this thing where they could go down the rabbit hole or whatever. How much does passion matter in selection of founders from the investor seat?

[Scott Nolan]

I don't think you want to be in love with an idea. I think that's a risky thing because then you're going to try and find a way to express that by investing. And you're going to maybe make some compromises on the team because you know, this idea is just so good, its time has come. But then if the team isn't there 90% of the time, it doesn't work, then there's a whole thing. Of course, in jockey, can you swap out the team? But the whole founders fund thesis Was always no, you need the founder to run the company to have this vision and to see it through from the investor side. I think being in love with an idea is really dangerous and it can cause you to make all sorts of compromises that come back to haunt you. And it can cause you to put good money after bad, despite the writing on the wall. But I think on the company side, you have to be in love with the idea. It's not that rational to start a company. There's a lot easier, more comfortable ways to make money if that's the goal. So it's got to be about what the company is doing specifically. I think smart people who want to make money, like there's so many good jobs in the finance world for that or people who just want to build. There's lots of places you can build. But if you want to actually start a company, it better be something that you're really passionate about or you think that the problem's really important. So for me, no enriching uranium never, never was something I was specifically excited about. I was always into nuclear energy. I always thought that this was a no brainer. Probably the two things from sci fi from the 60s was always the two industries we were supposed to have. Not just from sci fi, but what our country thought was we're going to be going to space and we're going to be doing things in space and we're obviously going to have nuclear energy. We went from burning wood to chemical bonds and now atomic energy was clearly so much more energy dense and powerful and should be lower cost. Those were always things I was excited about. Never had a specific interest in uranium enrichment. But then through the course of investing in Founders fund went from 2010 just looking at all sorts of different hardware companies. First investment I ever made was a satellite company. Planet Labs then did a lot of different things that were outside of pure software. Last couple of years at Founders Fund drifted back towards almost pure hardware by the end. And then really energy, where we invested in Crusoe Energy and understood the whole stranded supply inside of things and what could you do with that? And then invested in a company called Radiant, which was the inverse stranded demand. How could you serve that demand? Maybe you could serve it with a small microreactor. Even if that microreactor's output was expensive, the stranded demand had to pay crazy rates anyway for diesel generators in a remote Alaskan village, for example, or an army base. And so that's a good starting point. Fitting the whole Founders Fund thesis of start with a really small market and grow into a bigger market. Like don't worry about your tam, worry about owning that market and then grow from there. And so yeah, my path to understanding the bottlenecks in nuclear energy was having invested in Radiant, having met so many other advanced reactor companies along the way, and then all of them said the exact same thing. We're going to make nuclear affordable, we're going to make it scalable, we're going to take this from huge construction projects to factory built. And yet the one thing that's the hardest is not licensing. Everyone thinks the NRC is impossible to get through, but no, it's not that. They told us it's actually we cannot get the fuel. The fuel comes from Russia, only Russia makes it. We have to import it. That's quite challenging. And this was even pre Russia ban. We just need some source of fuel. And so I spent all of 2023 looking into this, trying to understand, okay, of the five steps of making fuel, what's stopping it? Is it all of them? Is it. There's not enough uranium, is it something about the process? And it was the enrichment step. And so looked at trying to find a company in the enrichment step to debottleneck nuclear and to actually get the nuclear future that we want, could not find anything for an entire year. Finally decided, if this is going to exist, it's got to be a new company. It's not an incumbent, it's not a government. It needs to be a new private company. And so this was the important company that nobody was building. This was the important problem nobody was solving that I could somehow actually contribute to.

[Patrick O'Shaughnessy]

In all the work you did, what did you learn about the thing you alluded to earlier, which is the relationship between governments and technology? So much of the history of technology in the US was actually military rooted. So much of what we developed was for a military purpose and then became commercial. So the two seem like there have always been deeply intertwined technology and governments. Curious what you learned about that history. What surprised you, what interested you? Of course it's relevant for what you're doing now. What have you learned about governments and tech?

[Scott Nolan]

My experience through SpaceX was the government wants to work with private industry and wants to solve problems. At SpaceX, I worked on the engine systems under Tom Mueller and did a lot of the structural thermal work on those and helped make sure that they would stand up to the environments and everything and be low cost and high performance. That's ultimately what we were optimizing for. And then once those engine systems were Working really well. I moved over to the Dragon capsule and in Dragon we were on the NASA COTS program, Commercial Orbital transportation services. And it was a multi hundred million dollar program to bring back two things. Capability of launch to space station and then first a cargo vehicle and then ultimately a crewed vehicle that could dock with the space station. The last year or two I was there was really focus on Dragon and working very closely with NASA because we were going to go dock with I guess the most expensive asset mankind had ever developed. And so the last thing anybody wants is any sort of issue with a private company's cargo capsule docking with the space station, either smashing into it or something. Yeah, like you would think collision, then yes, that's an issue. But the way orbits work, it's actually, there's some ability to avoid it even if things are off track. The harder thing to really get a handle on was things like thermal and pressure. And okay, you've got this vehicle and it has solar panels and what's the heating on the vehicle and what thermal load is that driving back to the space station and can that handle it? So all these interface requirements and so we were working closely with NASA on those. And ultimately these were incredibly smart people who believed in space, who had been working at NASA for decades in cases despite not a ton of growth in space activity. They were there because they believed it and they loved it. And the opportunity to work with a company to like, okay, we have the space station, we have this program. How do we get you guys to the next step in the milestones? How do we collaborate to make sure this is safe, but that it actually happens? Super collaborative, very positive. So I think my takeaway was in industries where you have true believers who are in the government agencies and who have been doing this for a long time, they're there because they want it to happen in there's a lot of openness and excitement to working together. If the company is credible and cares as much about safety and performance as the agency does.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

I think there's all the classic things. There's the Elon algorithm at this point. I don't think it was explicit back then. It was just, hey, we have to get this rocket launched, let's make sure it works. Let's not over optimize or have analysis paralysis. Just define what the goal is, come up with a good solution. This looks like a good solution, that's a good plan, let's run with it. Let's not deliberate for months and months and months over things. Let's just decide and move forward. And if we're wrong, we can always go back because there's extensive testing along the way. So it's really. Use good engineering principles, think from first principles, move fast, get it to 90, 95%, not 99%, get operational, and you can make it better later. But if we just never launch, if we never get operational, this isn't going to work.

[Patrick O'Shaughnessy]

One of the things that's most interesting to me today is this whole learning by doing thing, which has now been carefully studied, that it's in the iterations that you gather lots of your learnings and there's like a literal predictable curve to these things, and that we've outsourced so much of this, especially in manufacturing, to overseas. And so it's not that we do innovation and someone else does manufacturing. It's more that the manufacturing creates a lot of the innovation. And I'm curious how important you think that is in the next decade or two here in the US Obviously you're doing something that got shipped over to Russia and now we're trying to bring it back. Curious for you to say a little bit more about the broader effort to bring more of that stuff back onto our own shores.

[Scott Nolan]

Yeah, I think there's the onshoring piece, but it's maybe even simpler. It's just vertical integration. So even domestically, you have companies in the nuclear space, the aerospace industry, like defense, many different sectors where subcontracting is the norm, and you're going to subcontract a subsystem to somebody who subcontracts a component, and then that component has different inputs and they subcontract that all the way down. I think in aerospace at the SpaceX days, it was 30 layers of subcontractors in this one system. Somehow, I think was the case from the space shuttle, some crazy number of subcontractors. And then in the nuclear space recently, there was one analyst call where a company was bragging about having something like 900 subcontractors and so many that they needed regional organizers of the subcontractors. And on one hand it's like, okay, clearly what you're doing is really complicated then, and there's deep barriers to entry. But every one of those interfaces that crosses another company is typically a fixed interface that's not going to move very quickly. And so you have to treat it as fixed. And so everyone's designing their individual piece against preconceived interface requirements. And you end up with a really calcified architecture of your system. This is just at the system design level and you can't optimize across layers for the overall goal. Now if you bring all that in house and don't have a lot of subcontractors, you can actually as an engineering team optimize with every iteration, trade off interface requirements. Hey, this thing that you asked of me over in the electrical team, for me, the mechanical team is going to be really, really hard. Do you mind giving me a little bit of breathing room on that? I'm going to make it up somewhere else. And so you can have those conversations much more easily when two people are sitting side by side at a desk than when you have two separate companies across the country. And so at a minimum, I think you need to pull the engineering together and vertically integrate and just sign up for doing more of the engineering yourself and not outsource it. And then part two is the manufacturing that's just on the design side. If you're actually going to make the thing and you're trying to design for manufacturing, well then maybe you want your manufacturing actually co located with engineering. And so that's what all the great hardware companies are now doing is you at least have your first of a kind manufacturing co located with engineering under the same roof. You basically talk it out of. Here's why this thing that you just designed is hard for me to make. If you can make it this way. I don't need a 6 axis CNC. I can use this with a laser cutter and make this part. We're going to get 10x throughput at 1:10 the cost. And so I think you need to at a minimum put your first of a kind manufacturing co located with engineering and then better yet, small scale manufacturing, mid scale manufacturing, maybe a large scale, you can push it somewhere else and go to a lower cost center as opposed to like Southern California where so many of these companies are. But I think it's mandatory. You've got to bring it all together.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

There's two of my favorite charts around this Topic one is GDP per capita versus energy consumption per capita. The R squared on it is certainly over 0.8. You cluster every country on earth, you plot GDP per capita, you plot energy consumption per capita. And there's a very obvious line through them. There's outliers, but it's so predictive. It is the thing. Energy use and production is the ultimate proxy for human prosperity, for economic activity, for all these things. This has been I think pretty well understood for a while, but completely under discussed. And then you look at the us this is the other chart I always look at is we grew our grid for a long time and then starting around the 90s, essentially no growth until today. China was growing a long time. 2010 we were equal neck and neck. I think this year they now will be triple us on total energy production. And so the US just needs to do something if it wants to continue to be relevant economically. You need more energy production if you want to grow your economy. And I think just purely outsourcing stuff overseas just gives up capability, especially as it gets like new manufacturing techniques, how to scale manufacturing rapidly, all these things that are so important.

[Patrick O'Shaughnessy]

How do you think the causality runs? One idea could be if China surpasses us on a per capita basis and let's say they get to double, is there some rule of the way things work that will just mean they'll find ways to use that energy in some way that raises GDP per capita and drives all this progress? Or is the causality the other direction as GDP rises or we find new innovations like energy catches up to rise to meet that demand? Or something. It's curious to imagine if I just airdropped, I don't know, three times the US per capita capacity of energy on some random country, would that country necessarily become prosperous?

[Scott Nolan]

The whole argument from the 90s almost till 2020 was something like even if it would increase the economy, would you want to. So okay, do I want to have dozens of aluminum smelting facilities in my country or is that better done overseas? And it's low margin and not interesting and not going to accelerate your economy. And why do you have people working on that when they can be in the services world and do more interesting things? Certainly that was an argument, but I think we're seeing it right now. What happens when you're not proactive about it, when you don't have the capability even of expanding rapidly and you don't want to be caught completely flat footed when there's a large demand for energy production. And now here we have it with AI and data centers and you look at some of these curves and looks like data centers could consume if they were allowed to the entire grid by 2030 at this growth rate. And so I think in theory you would say energy production will come online as we need it. But then in practice, if you don't develop it, you may bias yourself towards other things because, well, our energy costs are kind of high or our energy cost is higher than other countries because we're tighter on supply and they've overbuilt and they're subsidizing. But then they take those industries and then they take the front of the supply chain and just start marching forward to where they can dictate a lot of different things about the economy. That was the classic view is economies are efficient, markets are efficient. If there's a demand for energy, we will bring it online when we need to. But physical world stuff has a timeline with it. And then in the US it can be very hard to get stuff permitted to go do things. And so when there's unexpected demand that's very rapid in its increase, you might be caught completely off guard. Which I think is the situation in the US now with data centers and then scrambling to find power. And where a few years ago if you looked at a data center and you thought, okay, where are they going to place it? The answer was they'll put the data center where there's stranded power, stranded wind in West Texas, stranded flare gas in South Dakota, North Dakota. And now those stranded assets are gone and now it's time to build new capacity. And data centers are completely backed up on getting natural gas turbines and nuclear takes a few years to get installed. So I think just from a energy stability, economic robustness point of view, you want to have capabilities and at least the ability to stand those up as you need to.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

The state's been fine until now and then the direction is completely flat. So to me the issue is that we have not increased at all in decades. On the supply side, the direction don't feel great. The state, I wish we had more. I wish we were not one third of China. I think we could be doing a lot more things if energy was not just abundant, but cheap. And so just making more high cost energy also won't bring back certain industries. It won't cause us to start doing things we used to do.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

I think the labor is actually the one that's probably the most responsive. If there's really compelling jobs in a field, people will shift over to that. The classic one the last couple of years has been electricians.

[Patrick O'Shaughnessy]

Massively undersupplied.

[Scott Nolan]

Massively undersupplied. Can't get enough to build all the data centers they're commanding. Very high, great wages. Can make more than people who went and got a master.

[Patrick O'Shaughnessy]

Yeah, yeah.

[Scott Nolan]

It's like an incredible career and now get a lot of people shifting into it. I think labor responds. It probably takes a few years, but it's faster than building infrastructure. Infrastructure is probably the bottleneck. And then is it just energy? Probably not just energy. Probably permitting can take a while. And so I think there's a bunch of different bottlenecks to getting things online.

[Patrick O'Shaughnessy]

Why do you believe in nuclear? Why that specifically?

[Scott Nolan]

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

[Patrick O'Shaughnessy]

Baseload meaning always on, always on, very

[Scott Nolan]

reliable supply of electricity. Not intermittent, but something you can actually design an industrial process around as the foundation of the economy. Even data centers want baseload. And so solar with enough storage could be baseload. But typically it's not anywhere near that amount of storage. Usually solar's more intermittent, more for peak shaving. So if you really want baseload, if you want something that businesses and industry can rely on, it has to be on almost all the time. You need it to be highly reliable. And so nuclear is the most reliable. So you check the baseload box. People only in the last 10, 20 years have started caring about climate even remotely as much as they do now. And if you care about climate, I think maybe you care about carbon, you probably also care about particulate. Nuclear is the cleanest by far on these dimensions. So on the environmental side, nuclear winds for baseload. And then the safety side, this is the part that people think they question the safety side. It's the safest by far of baseload too. You have fossil fuel plant that has known impact on human well being from emissions and nuclear has none of the carbon emissions. And there have been high profile accidents with nuclear, you think of Chernobyl, Three Mile Island, Fukushima, but the actual risk associated with nuclear, despite those high profile incidents is still far, far lower than any other form of baseload energy. And so it's like, okay, if you ask me, what's the safest, cleanest form of baseload nuclear? Absolutely. Why do I believe in nuclear? I think those things are important. Okay, what about cost? How does it stack up on cost? And this is the piece where it gets really exciting to where over time we did less and less and less nuclear, probably starting in the 70s, and you see the cost of nuclear going up as we do less of it. You look at where the cost of nuclear is today and it's more than fossil fuels. It's like, okay, unless you really care about safety, which is pretty acceptable from all forms, or you really care about carbon emissions, is it really worth it? Are you really going to do nuclear when it can take 10 years, 15 years to build a reactor and they can be double the expected budget? That's really hard for a utility to stand up to and say, yeah, I want to do more of this. They need to bring costs down for ratepayers, they need to have predictability and when they're going to bring capacity online. On those dimensions, nuclear has not been the best. It's not highly responsive new energy generation, and it hasn't been the lowest cost. So you say, okay, why care about nuclear? It's because on first principles, it should be one the lowest cost. You've got much more powerful physics, much potentially smaller reactors outputting a lot of energy. If you look at a pellet of nuclear fuel and the amount of coal that that's equivalent to is like a ton of coal. And so I can take all this stuff, all this space and pack it in so much smaller, as much material for my reactor, I'm not going to be going through as much mined product. It's just an order of magnitude different. And so on first principles, nuclear should be an extremely affordable thing, potentially much more affordable than fossil fuels. Now it has not been at all, but that's the goal. And so now you see this whole wave of advanced reactors trying to make that true on the reactor side, and then we're trying to do it on the fuel side.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

Take that one piece at a time. So on the reactor side, everyone thinks of the Cooling towers. You have cooling towers in other industrial processes too. But everyone thinks of the cooling tower, which all it is is steam cooling off, hot water cooling off so that it can be reused as a coolant at the start of the cycle. So lots of industrial processes do that, but nuclear is known for it. That's typically about a gigawatt scale reactor, often in the US an AP1000 Westinghouse gigawatt scale reactor design, which we can get into the technical of what type of coolant they use and what type of fuel, which might be interesting. But the thing to think about in my mind is that's a big reactor, that's a gigawatt scale. I think the interesting buckets are around the size because they link to applications and markets. And that's grid. So you want to go battle it out on the grid. You need gigawatt scale because it moves the needle on the grid and you're getting the scale that can bring your cost down as low as possible, at least for now. Then that's a good format. On the other end of the spectrum you have microreactors where you're saying there's a stranded community that's doing diesel generators. This is both bad for the environment and not that cheap. We can beat them on cost. And so you go microreactor, think 1 megawatt scale, not gigawatt megawatt. And then you have the middle, which is 100 to 300 total megawatts. SMR, where SMR is small modular reactor. And all three buckets have different approaches on the technology side, but I think all three are going to be important. And so if gigawatt scale is for the grid and megawatt scale is for remote communities or government installations, then the middle scale I think is going to find its niche behind the meter with data centers over the next five to

[Patrick O'Shaughnessy]

10 years, where one unit could be dedicated to one data center. Like something that doesn't interrupt the cost that I'm paying as a ratepayer in whatever district I'm in. Even if there's a data center there. Like something that's more cordoned off.

[Scott Nolan]

Yeah, exactly. So think of it as like the ultimate behind the meter thing is just an island. Imagine a fence around a few hundred acres. You've got a data center and you've got its nuclear power plant there or whatever other form that they might have. Beaker plants, natural gas turbines, maybe even solar in some cases. Okay, that's all cordoned off. It does not even touch the grid. It's not impacting the grid, it's not doing anything to the communities like rate costs completely separate. I actually think there's a huge opportunity to improve communities through this. If you have a data center putting billions into both the compute and the power production, let's say they're even 50, 50 on power production and compute, can we increase that power production 10%, which is only a 5% project increase. And in the case of a gigawatt data center, bring an extra 100 megawatts to a community, that's huge, that would plummet utility prices for that community. So I think at a minimum we're going to see people going behind the meter or not disconnected from the grid. And ideally we see them actually feeding the grid and feeding baseload.

[Patrick O'Shaughnessy]

That reminds me of your BYOE concept. Maybe just spell that out a little bit more detail.

[Scott Nolan]

It was just the concept of we're doing all this investment in the grid. For the first time in decades, private companies are making the investment. They will make the investment with bringing their own power, bring their own energy byoe and they're going to be doing that investment anyway. Their biggest worry is probably something like will I be allowed to build this data center in this community? Over the last year, I think that's been the start of a discussion. And if they want to get to the right answer on that and they can tell a community, hey, we're going to be over here on this unused land. Are you okay with us being here and running a bunch of computers and being net positive to your grid? Can we just plug in and give you some extra power in return for inviting us to be a neighbor? To me, that's a complete no brainer for everybody at a slight cost increase during a time when hyperscalers building data centers are all about speed to power and they want to be online as fast as possible because this is the contest to who can get to the greatest scale first. That is a very low cost compared to the advantage of deploying quickly in a community and being invited there versus being rebuffed. So I think total no brainer. And the modern data centers can do completely closed loop cooling. So the water issue is not an issue. It's really just this power thing.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

I'd say number one is they don't have fuel to operate. That's a showstopper. So we're trying to eliminate that risk. And then part two is they're too expensive. I think the physics will work. I don't think anyone's too worried about that. You have dozens of incredible companies with great engineers who are trying to solve the advanced reactor problem. And typically they'll pick a form factor that is of the right size to focus on a certain market, whether that's micro reactor for remote or smarts for data centers or very large gigawatt scale for the grid. And SMRs I think ultimately have the plan of being cheaper than the gigawatt scale construction projects for the grid. But there's many reactors that are trying to solve the reactor's cost side of it and the question is going to be is their energy production cost low enough? But for these advanced reactors, it's not just a fuel availability problem and question. It's a cost question. It's the fuel can be half of their total costs and I think long term enrichment will be half of the fuel cost.

[Patrick O'Shaughnessy]

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[Scott Nolan]

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[Patrick O'Shaughnessy]

It's an AI platform built specifically for Wall street, connected to your data, understanding your process and producing real outputs. Check them out at Rogo AI invest the best AI and software companies from OpenAI to cursor to perplexity. Use WorkOS to become enterprise ready overnight, not in months. Visit workos.com to skip the unglamorous infrastructure work and focus on your product. Ridgeline is redefining asset management technology as a true partner, not just a software vendor. They've helped firms 5x and scale, enabling faster growth, smarter operations and a competitive edge. Visit ridgelineapps.com to see what they can unlock for your firm. For general matters specifically, I'd love to hear at three levels how you're thinking about building this thing. The product level, the business level, and then the company itself. So starting with the product, how have you figured out what the market wants or needs? You're enriching uranium. Uranium is the key fuel source for this. Different parts of this taxonomy for creating energy, there's lots of different kinds of things that you could provide to your customer. What has the journey been like to figure out what the actual product is going to be?

[Scott Nolan]

Yes, this goes all the way back to understanding the fuel cycle or the fuel supply chain for nuclear. So there's five steps. You mine uranium out of the ground, you then convert it into a gas, you then enrich it, you then deconvert it back into a solid. And the enrichment step is really a refining step, a separation step, then you turn it back into a solid and then you form fuel pellets. Five steps to go from ore on the ground into a little pellet into a fuel rod that goes into a reactor. The US has good capability across the board, except in enrichment. It's the one area that we don't have any commercial scale capability. There's some R and D capability, but nothing that's commercial scale or commercially competitive with Russia and Europe. And so we decided, let's hone in on the enrichment step. That's the bottleneck. That's the thing that's leading to these, what we call the nuclear fuel cliffs, where there's three cliffs, Cliff. One is the Hailu supply chain. This is the same problem we heard from all the SMR companies. We don't have a source of Hailu. Haylou is the fuel that they need. Hailu is uranium that's enriched to about 20%. U235, which is the fissile material. They want it enriched a little bit higher to 20% because it helps the reactor be smaller. So that's the first cliff is Hailu for advanced reactors. They have none. If there's no reliable supply in the next few years, it's going to make it very difficult for them to scale up. So far, they have small amounts from the DOE to prove that their reactors work the way they think they will and to do first deployments, but not to scale to where it really moves the needle on the grid. The second nuclear cliff, the nuclear fuel cliff, is 2028, when the U.S. s ban on Russian uranium imports goes into full effect January 1, 2028. We are, through an act of Congress, no longer allowed to import Russian uranium.

[Patrick O'Shaughnessy]

Enriched uranium specifically or, or, or both.

[Scott Nolan]

We will not be importing enriched uranium from Russia or uranium from Russia, which the only place we get it enriched is Europe and Russia. And today Russia is about 25% of U.S. imports. And so 20, 25% immediately goes away in 2028. And so utilities in the U.S. will then start eating into their inventories and trying to work out deals to import more from Europe. But cliff one is Haylou 20%. Cliff two is Leu low enriched uranium at 3 to 5% enrichment. And then at some point in the future, the US stockpile of enriched uranium for propulsion for the Navy and eventually that runs out. And so there's these cliffs. We're focused on the nuclear energy side of it, LEU and Hailu and that's what we're going to be producing. We realized, hey, the most urgent cliff that we need to address as soon as possible is Hailu for advanced reactors. And coincidentally this is the small market, this is the emergent market that we can go after that we don't think any incumbent will go after on the same time frame as us. And we can serve those advanced reactor customers that we've known for years and make sure that they have the halo that they need to deploy and scale their reactors. That's where we're starting. And then phase two is going to LEU production low enriched uranium for the 94 reactors on the grid today and supply them with the fuel that they need, which today in the US is a to $2.5 billion market.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

All enrichment is for the most part the same. If you think of it again as like a refining process or a distillation process, you're just refining it further. Ultimately the product that we make is enrichment services. You can run material through from natural uranium as it comes out of the ground and you can run it through an enrichment process to get to any arbitrary level of enrichment. The commercially relevant ones are you 3 to 5% for existing reactors or Hailu 20% for advanced reactors. And so when we set out to do this, we said, hey, Hailu is what the market needs most right now. And we set out pre Russia ban, so there was no Lau Cliff. We said we're going to develop enrichment capability to serve that market. And the fundamental unit of enrichment capability is it's just the ability to do this refining. It's measured as something called separative work units in the enrichment field. We will provide that service and we will sell that service to utilities and advanced reactors to get them the fuel that they need. So ultimately the product that we developed is enrichment and you can apply it to either of those levels. To your question on how is that different from weapons grade when you see Countries going to weapons grade, they're often trying to go north of 20% which is the internationally agreed limit to where you go to weapons grade. For non proliferation reasons there's strong international consensus that we should all just stay below 20. There's really the risk is not worth the reward to let people go higher. You see countries going to 60% saying that it's for their nuclear energy industry and it's pretty suspect. I think clearly they're just trying to get as close as they can to weapons grade, which is well over 90% and they're trying to develop weapons. And so ultimately it's not different technology, but it's applied in a different way and in a completely non international consensus setup.

[Patrick O'Shaughnessy]

Is the percentage is the right way to think about that, like purity or something?

[Scott Nolan]

Yeah, there's U238, there's U235 as it comes out of the ground. There's other isotopes also, but the main one's U238 and you basically want to filter that out to get U235. U235 is the isotope that wants to react. That's the fissile isotope.

[Patrick O'Shaughnessy]

What do we know about the stock of ore in the world, the raw element? Do we have enough of it?

[Scott Nolan]

Yeah, plenty. I think we've got certainly hundreds of years of supply in the ground. U.S. has supply, we have active mining in the U.S. canada has even more supply, higher grade ores enough to supply us for a very long time, same as Australia. And then Kazakhstan's a huge deposit and US imports from there as well. So on the ore side, not an issue. That'll progress, that'll get more efficient. There's new techniques there. So mining's going to make progress. I think the cost of mining will come down, output will go up, but it's not really an issue.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

I wouldn't say it's so easy at all. And I think the latent demand has not been obvious for a long time until the last couple years. So any large latent demand I think is in the last 24 months linked to the thought that there's going to be a lot more data centers doing AI inference or training jobs. But if you go before that there wasn't a lot of new nuclear being talked about. There was need for Hailu, but that's a pretty Small market. And so I think a lot of people have thought that this is not really something where we need new capacity. If you go back to the 2010s, certainly not for Liu production, certainly not for Hailu, just because it's been emergent so recently. So I think the fact that this is a growing market is we're still betting on that in many ways. It's not the case that we're currently deploying tons of new reactors in the U.S. but we think that's coming. So I think the market we believe in deeply, I don't know that the entire industry believes that the demand is there. They've been through nuclear renaissances before that didn't pan out. And I think their point of view would be we'll build it when we know that there's a need. At least that's been the attitude of many people that we've talked to on the ease of doing this. It's a proven thing. People have done this before, but it's still not easy. I'd say. You see some of these retro technologies that were done in the past and then we lost a lot of the capability because we didn't do it for so long. And so for enrichment, it's been an industry without a lot of change since really the 90s. Not a lot of progress, not a lot of leveraging of new technology. There's a lot of doing the hard engineering work to get back up to speed to modern. And then even once that's done, you're building facilities that are a million square feet and large, large multibillion dollar infrastructure projects in the same way that like maybe building the first Tesla Roadster was hard, but the real challenge was how do you scale this up? I think it's extremely underappreciated how much goes into standing up a huge industrial facility. I think that's actually the hard part.

[Patrick O'Shaughnessy]

How do you think about the North Star metric for the business? Like, if I equate it to space X, the cost per kilogram to orbit or something like that is like a really cool thing to visualize over time. What's your chart going to look like? What's the metric?

[Scott Nolan]

Yeah, so they had costs per kilo to orbit, really to a specific orbit of low Earth orbit, and you can actually decompose the orbital piece into a velocity. So it's almost like cost per kilo to some velocity. Our version is cost per kilo of uranium, that of a payload to some enrichment level. And so it's like cost per kg to 3 to 5% or to 19% which can be described as cost per separative work unit. Where separate of work unit is the industry measure of enrichment to where it's basically kilos times some entropy reduction or separation or organization of the material. And so a separate of work unit is typically referred to as KG swoo kilos times separate of work units. Our North Star metric is dollars per kilo Swoo.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

It is the importance depends on what type of reactor you're running. So if you're doing a gigawatt scale classic AP1000 light water reactor that uses 3 to 5% enriched fuel, low enriched uranium LEU, then the cost of that fuel as a percent of your overall cost is quite low. It doesn't really matter. What you want is availability, you want reliability, you want diversity of suppliers, you want to know that they're going to be there and you don't want them overly concentrating and creating supply risk for you. But the cost of the fuel is not a huge input into your cost of electricity, your lcoe, most of that's going to be capex for your huge $10 billion project. So for them it doesn't matter that much. But for advanced reactors it matters a lot. So some advanced reactors, the cost of the fuel, the hailu fuel that goes into it, enriched further to 19.75% which requires more input material to refine it all the way there as you filter through more and more and more material, that fuel can be more than half of their energy production cost. And so to them it does matter a lot. And the way that fuel has been purchased in the industry so far, which maps directly onto our North Star metric, is five different services. A utility purchases uranium and then it purchases upgrades to the uranium as it goes through the supply chain. So it's really a tolling business where you buy they own license to the material and it's book transfers all the way through. And they are paying different people per unit of service provided to do their work. The service that they provide to us is priced in dollars per swoop. And if you look at the actual cost structure of producing fuel all the way through for low enriched, maybe enrichments a little bit less than a third, but it's one of the largest cost segments. For Haylou it's even more and we think it's going to be the dominant cost Driver of fuel costs, tying it

[Patrick O'Shaughnessy]

back to the founders fund stuff we were talking about at the beginning. You sort of found the highest cost segment of the workflow sold to the highest percentage of the cost. New customer that's emerging, that's small, that you can go on. And that's how you then ultimately build a great business is by driving all of this force through kind of the narrowest possible choke point.

[Scott Nolan]

If you want to put it in investment terms and like business strategy terms, that would be it. But I think if you go back to the very beginning, it just turned out that this was the thing that was most necessary. This step of enrichment was why we didn't have the more enriched fuel that advanced reactors needed. And you realized the US had lost the ability. Despite being the number one in the world during the 80s by far. It was something we were extremely good at. We completely stopped doing it. This bottleneck was going to be the bottleneck to all of nuclear energy. If you believed in advanced nuclear energy, this is the thing we had to solve. So we did it because no one was doing it. And it was extremely important and urgent. And I think that ended up corresponding to this very good entry point for the market. But I think the two are really linked. I don't think it was coincidence that if you're solving a problem that's urgent that no one else is doing on a small but emerging market, it will completely fit that framework.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

It comes back to the team. I think Naval has said this a bunch of times, the team you build is the company you build. And so to us it's team DNA. We want people. We thought about, where do we put the company? This was a big question at the very beginning. And you look at who you actually need on the team and of course you need nuclear engineers, but you also need great mechanical engineers, electrical, software, chemical, every type of engineering. And so you ask yourself, well, where do we want to put the company? And it turns out the percent of the team that's nuclear engineers is single digits. We're not doing a reactor. There's actually no nuclear reactions in our process. We need to make sure that there's no nuclear reactions. But to do that you don't need a huge number of nuclear engineers. And so there was this question of do you go to where the nuclear engineers are or do you go to where all those other types of engineers are? And on dimension one, the nuclear engineers you don't need that many of you need great ones though, where are we going to find them? And you look at where they are in the country and they're just scattered everywhere. There's no one place to go. And so we had to go with the other option. You go to where all the other engineers are, specifically hardware, aerospace, and that's Southern California. The team DNA that we wanted to set up was this is an engineering driven company. We're not doing a science project, no new physics, no going down a multi year R and D path that's uncertain. We need to get this operational as fast as possible. This is an engineering problem. Everything we have to do has to be thought of as engineering. We're engineering cost out of the system, we're engineering performance up, we're engineering cost of capital down. We're engineering scheduled to be as tight as possible. We're even engineering our own buildings. This is taken from the Tesla playbook. Don't hire a GC and outsource everything, you lose total control. The schedule could be it's not in your hands anymore. You need to build your own in house engineer, procure, construct EPC firm as a team to go run your construction projects. Because it's one of the hardest things about this is not just engineering, not just manufacturing, but actually construction of millions of square feet on schedule, on budget. And so the whole DNA of the company is oriented around drive to deliver for the industry as quickly as we can while being safe, reliable. Every other dimension you would want, subject to those constraints, go quickly because the industry needs it. Don't have analysis paralysis, don't deliberate over things that don't matter. Let's get a service live that can deliver for the US industry and then let's bring the cost down over time. And so everything's oriented around schedule and cost.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

Changes over time. So my strong preference is internal facing and so to really be there, helping to do the work internally. Right now we're in a phase of company building and team building and so we're rapidly hiring. So a lot of my days right now is interviewing people. I'm the last step in the interview then what I'm screening for is does this person not just have the skills which have already been screened for at that point, but do they have the attitude of they care about this problem? They know that there's lots of places that they could work, but this may be the only place that they can work on this problem in a private company. And they know that there's probably places that they could potentially go make more salary, that they could have an easier job, a more predictable schedule. But we're trying to do this mission that requires us to go as quickly as possible and to deliver before end of decade for both the advanced reactor industry and the existing reactors on the grid, which is like 20% of our grid. And this is going to mean a lot of late nights, weekends, just working as hard as we possibly can. And is that something that they've done before? Is that something they like doing? Do they know what they're signing up for? Are they really motivated by this? Those are things I'll typically screen for, subject to everything else being already verified. And so a lot of my day right now is trying to make sure we have the right early people on the team to build the right culture to, for them to then go recruit and hire the next people. And so it's the saying, yeah, it's not just the team you build is the company you build, but the early team you build is the company you build. And that's the modified naval quote. And so right now, so much of the time is spent on recruiting, interviewing, filtering, which is actually what drives a lot of my external facing stuff is we got to get the word out to the right people so they know what we're working on, they know why this is important, why this is the bottleneck to scaling nuclear and to scaling energy in the country, and why they should join our team.

[Patrick O'Shaughnessy]

How do you reason through the what seemed to me like illogical, data free fears that people have about nuclear in general? You started to address them earlier around. Just the amount of waste is actually quite small. I think it fits in like this room or something, something crazy. The bad events that we can call to mind Chernobyl and Three Mile island were bad. But if you dig into the data, it seems like nuclear is very safe. But these fears really do seem to be the reason why we don't have a lot more of it. What matters is reality, not the data. How would you pitch people on not being worried about these things so we can get over this problem?

[Scott Nolan]

You're pointing out kind of the difference between acute and chronic sort of events. And I think acute events that are very attention worthy, people remember those and the things that are just low level in the background. People don't think about car crashes every day, car crashes, all these things. You can think of it in terms of catastrophic, catastrophic events like that. You can think of it in terms of your health and what are we chronically doing that's unhealthy, that's taking its toll versus acute things that take their toll. I think people have a strong bias towards that. But often it's the right thing, is to look at the data. I don't think most people find that compelling. I think the more compelling thing in nuclear for me is think of a world in which we are not constrained by energy and we won't be constrained because we can all agree that it's good because it's baseload, it's very affordable, it's going to bring down your rates, it's safe and it's clean and we can debate those and we can look at the data. But let's imagine that future world in which we have all those things. I think the way to make nuclear really compelling to people is actually to check the final box which is cost. Again, going back to why have we not had more nuclear? The schedule to bring it online for the large gigawatt scale projects has been uncertain. The costs are often above what's projected. And when you look at the total package, it's not cheaper than coal, it's not cheaper than natural gas, it's not cheaper than hydro. So why do we want this? And I think if you told someone, okay, nuclear is safe, we can dig into that. Understood. You're not interested if it's more expensive? Why would you be? But what if it's cheaper? What if your utility bill got cut in half? I think people would suddenly find that extremely compelling for something that could be tens of miles away from their house and still powering the grid to bring

[Patrick O'Shaughnessy]

it back to where we began the conversation. Why do you think there are not more founders funds and more founders pursuing some radically different or unique vision for the future? It doesn't seem like there's many of these people. More investors have taken on this mantle of big, contrarian, unique projects, I suppose. But why are there not more of each. It seems so strange.

[Scott Nolan]

It's all case by case, even for Founders Fund. It's not a programmatic thing that Founders Fund has tried to do. It's almost the opposite. Founders Fund recruits are people that want to be investors, that don't want to be entrepreneurs. If they want to be entrepreneurs, they should go be entrepreneurs. And the two roles are extremely different. People that have done both realize how different operating is than investing. And so Founders Fund explicitly selects for people that want to be investors. And yet once in a while, a company will start just because it almost feels like a disservice to Natco started. So in this case, decade plus of investing met all the reactor companies. They all say the same problem, no one's doing it. And then you look at the final thing of like, okay, important problem, no one's doing it. Maybe I can do it. And you look at what it takes to actually go do that and you realize, wait, my background is really aligned with that. If I don't do this, then if the goal is to have an impact on the world and we can have positive impact through investing, but a much greater impact through starting this specific company, then it's actually wrong to not go do that. And so it's almost like there's a desire to not start companies full stop, and then only with extreme exceptions will we start them. I think if it's an extreme exception, it makes sense that it doesn't happen that often. Now. Why don't most people do that? I think the investing life is probably far better than the operator life.

[Patrick O'Shaughnessy]

Have you experienced it that way so far?

[Scott Nolan]

I like what we're doing a lot, but in terms of quality of life, it's not as good. I think any entrepreneur would tell you that the quality of life is not as good as once you start a company, you're taking the harness and you're latching on whatever it is you have to go do. It's not optional if you're an investor and deal comes across your plate. But I'm a little bit too busy. I've got enough over here I got to work on. It is easy to let that one go and not have to do that work. I think when you're running a company, there's stuff that comes up that you just have to deal with and you have to take care of it or it's going to be a problem. Now that's also a function of the time horizons of each job. So I think when you're operating, you can see the feedback cycle very quickly. As an investor, that company that you might have just chosen to not meet with to preserve quality of life, that could be the next great company. You might not realize that you're not doing well until five years from now when you don't have that return from that company. Some people are just wired a certain way. Like even in the investing role. I would take 10 meetings a day, like to the point of definitely diminishing returns, but want to work hard and make sure you see everything. The other thing about investing, when properly understood, is that you actually don't need to invest in that many companies. And while you can brute force it and boil the ocean and try and meet everyone and try and be extremely helpful to everybody, all that ultimately matters is a few companies per vintage and you just have to be into those certainly as a vc, much more than even private equity or hedge funds. As a vc, you don't actually have to work that hard meeting everybody. You can dive in as much as you want into specific companies and value add and help them and be their preferred investor. But it is not a job of labor. It's really a job of ideas and thinking. The quality of life of being surrounded by smart people talking through ideas and thinking, I think can be a lot more comfortable than rolling up the sleeves and diving in.

[Patrick O'Shaughnessy]

Well, I for one am glad that you're now working on the problem that you're working on. It seems enormously high leverage and I certainly hope that the future that you might enable is the one that we get to see. I think there's very little arguments against more cheaper, cleaner energy. So an incredible project. When I do these interviews, I ask everyone the same final question. What is the kindest thing that anyone's ever done for you?

[Scott Nolan]

Maybe the recent example that's completely linked to this conversation is the transition from Founders Fund to general matter. And you have to say, okay, well, what was this thread that led me here? It goes all the way back to being recruited into Founders Fund by Peter and then support through a decade of investing and then as I wanted to go shift focus to this, total support for doing that. Obviously Peter tried to beat up the idea and make sure it's good, but being along for that journey and then ultimately joining our board as one of very few boards that he's on, really appreciate that.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

through all the abstract layers of meta level questions, of just even going back to the fact of like, we haven't had any new nuclear in A long time. Why is that? Is nuclear just regulated to death? Is the regulation actually a thing that's meant to stop it? Basically make it illegal? So all these questions of like, why is it really the case that we're going to get more nuclear now? And I think it was that challenging of this that force us to ask a lot of hard questions that we feel great about our answers to. Like even the one you asked of, are you dependent on every SMR succeeding to make a real market? On the Haylou side, yes. The Haylou production ultimately will be SMRs that create that demand. But to make haylou you have to make leu. And LEU is what goes into the grid today. Our technology works on LEU also and we'll be building LU capacity. And so there's this 2 billion plus US market and a similar size market in our allied partners that we can sell into. And so there's this known good market. And so you work through questions like that when being challenged on what if nuclear doesn't grow? And it's like, well, worst case, there's an existing market, we can start a business there and time is then on our side for when and if nuclear grows, which we think it will grow very rapidly, we're in a good position. And a lot of these conversations that I had with Peter were 2023, before the AI data center boom. And so now it's extremely obvious why we do this.

[Patrick O'Shaughnessy]

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

[Scott Nolan]

Yeah, thank you.

[Patrick O'Shaughnessy]

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