← The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show
David Rutherford Show: The Flying Car Is Real — And It Changes Everything | Michael Thompson
00:55:22
Loading summary
Transcript50 lines
- [00:00]
Podcast Host
This is an I Heart podcast.
- [00:02]
Inner Balance Advertiser
Guaranteed human if you're feeling off fatigue, mood changes, skin shifts, yet your labs say everything's normal. You're not alone. Meet Oestra from Inner Balance, the first all in one prescription Strength bioidentical hormone cream that's natural and effective and only takes one drop, 10 seconds a day. Oester replaces five to six products women typically use to treat symptoms and is third party tested to ensure the highest quality. Visit innerbalance.com today to start feeling like yourself again. That's innerbalance.com your pet is your bestie,
- [00:38]
Podcast Host
your therapist, your perfect match. It's easy to love them. It's easy to protect them, too, with pet insurance coverage from Pets Best because it's all fun and games until they chew on something they shouldn't and you get a vet bill to match. With perfect timing, Pets Best helps protect your furry friend and your budget from this imperfect world. Get up to 90% cash back on eligible vet bills from less than a doll dollar a day. Pets Best has plans to cover accidents, injuries and more, from puppies and kittens to seniors. Find your Perfect Match plan and get a quote@petsbest.com Pet insurance products offered and administered by Pets Best Insurance Services, LLC are underwritten by American Pet Insurance Company or Independence American Insurance Company for terms and conditions, visit www.petsbest.com. policy products are underwritten by American Pet Insurance Company, Independence American Insurance Company or Ms. Transverse Insurance Company and administered by Pets Best Insurance Services, LLC. $1.00 a day premium based on 2024 average new policyholder data for accident and illness plans. Pets to 10
- [01:36]
Redfin Advertiser
There's a difference between liking a house and actually getting it. Redfin is built to make up that difference and close the gap between finding and owning the home for you. Redfin agents close twice as many deals as other agents, so when you find a home you love, you're not a step behind when it comes to making an offer. That means less watching great homes disappear and more focus on the one you'll call home. Redfin helps turn saved listings into real addresses. Get started@redfin.com Own the Dream this year,
- [02:08]
Podcast Host
it's Pop's turn for a laugh, so celebrate Father's Day with a gift that really pops a customized Funko Pop of him. First, think of all the things that make your dad the man. Then turn those ideas into a personalized Funko Pop. Select hair, clothing and skin tone options to match his fit. Don't forget to show off his favorite hobbies and sports with amazing accessories. You can even Add his best friend. Start creating now@funko.com unique.
- [02:32]
David Rutherford
Not anyone else. Express it now. Just pop yourself. That's Funko.com I just read a beautiful piece by a gentleman from UPenn and a guy from Boston College and they called it the AI trap, right? Which is essentially AI is going to remove a tremendous amount of middle management, white collar, administrative type jobs. And as those people go out of work, you know, the backfill of those service jobs, the physical jobs or whatever, there's a lag with AI for that. So it'll take a little bit of time to catch up.
- [03:12]
Michael Thompson
I'm naturally optimistic on these types of questions. This is an incredible time to be a teenager in your twenties if you ask me, because you're not going to be spending 20 hours a day building spreadsheets for an investment bank in New York. You're going to be building like really amazing technologies that are going to massively benefit the physical world. And frankly, let's just be honest, keep us ahead of China.
- [03:47]
David Rutherford
Welcome back to the show, everybody. I'm your host, David Rutherford. Today we've got a great show. We have Michael Thompson, who is a top venture capitalist investor, has really invested in some really incredible SPACs recently. One, just a few weeks ago, Joby Aviation, which is basically flying taxis for the future, they did a test flight from JFK into Manhattan. And I just think, you know, you have, it seems, Michael, like you have your eye on what the next greatest innovative technologies that are really going to impact the development of this next phase of, what do they call it, the fifth Industrial Revolution or, or whatever they're calling it now. I just think it's fascinating. So thanks for coming on the show.
- [04:40]
Michael Thompson
Yeah, absolutely.
- [04:42]
David Rutherford
Tell us a little bit about Joby, if you could. And, and why was this company so appealing to you?
- [04:48]
Michael Thompson
Yeah, so Joby is what is the technology itself is what is referred to as evtol, which stands for electric vertical takeoff and landing. And the electric piece, at least the way that I think about it, is really centered around the physics of how electric engines and electric motors work versus a traditional combustion engine. And one simple way to think about it just in terms of the human experience piece of it is if you've ever driven a Tesla and you hit the accelerator, it pins you to the seat. And the reason for that is because there's a tremendous amount of torque that can be created by the electric powertrain that's difficult to replicate because of the friction and the energy loss and things of this nature with traditional combustion engines. So There's a lot of things you can do from a physics perspective with an electric powertrain. That's basically impossible in some ways with a traditional combustion engine. So the idea behind what Joby's able to create is a vehicle that can take off like a helicopter. And very importantly, it can spin the rotors at a slow enough speed and be able to space them in a certain way and build redundancy across the airframe such that the safety profile is materially better than a helicopter and yet still have enough torque to get the vehicle off the ground with a payload and passengers and everything else. And in doing so, can I.
- [06:17]
David Rutherford
Can I hop in real quick? I. I listened to another show you did about those safety precautions, and they're on a regular helicopter, they're like 42 points of safety where one thing goes wrong and you have catastrophic failure. By the way, as a person who's ridden on a lot of helicopters, when I heard you say that, like, my gut flip going like, oh, my God, I never knew it was that bad. But talk about the redundancy with your platform versus traditional in terms of safety redundancies.
- [06:45]
Michael Thompson
Yeah. So if you look at Joby, we have six propellers with five blades apiece. So 30 blades in total, and also a fixed wing. And I'll talk about that in a second in terms of what the transition period looks like as you go from taking off like a helicopter and then flying like an air, like a traditional airplane. But the way the structure is designed is there are battery packs that are redundant across the wing and across the airframe. And what that results in, and we've done this in testing, is we can take out two of the props and two of the power stations to those props, and the aircraft still flies both in hover as well as in forward flight. And so you compare that to a helicopter, which has. In fact, it's actually 48. And those are the most modern helicopters. Other helicopters have even more than that. And if one of those things breaks or malfunctions in some way and the helicopter is unable to auto rotate, it's going to crash. And so if you look at what this technology provides relative to a helicopter, as I was getting to a second ago, it allows you to take off vertically with a vertical orientation on the propellers at a decibel level that's about 100 times quieter than helicopter. And that's a huge unlock, as you can imagine, when you consider not just the decibel level of a helicopter, but also the profile of the noise itself. It's a Very low frequency noise, which means it can travel great distances, it can penetrate buildings and be quite annoying to whoever is around that vehicle. The other thing that I would quickly add going back to the current setup of the vehicle, which is a fully electric powertrain, all lithium ion batteries. One additional issue you have with helicopters when you're taking off from rooftops, for example, is most buildings have their air conditioning infrastructure on the roof. And so if you're taking off frequently from a helicopter, from a roof, it's sucking all that exhaust into the AC system. So it's not just an annoying sound, but it creates a real issue for anyone that's inside that building. So the two big unlocks are the safety profile that we just talked about and the noise profile. And then what you're able to do to extend the range and also increase the safety profile is to transition the propellers from a vertical orientation to a horizontal orientation, such that once you're on the wing, all of the lift is being provided by the wing and it's got about a 10 to 1 glide ratio. So in that scenario, you could theoretically knock out all of the power and have a glide ratio of 10 to 1 and be able to land the vehicle like you would on a disabled aircraft. And so the challenge, of course, to be able to go from that vertical orientation on the props to this horizontal orientation where you're on the wing is the transition itself. Where you're taking it from the propellers like this to like this. This period is the messy period. And if you think about it from a very basic perspective, basic physics perspective, you're going from 100% of the lift provided by the prop to 100% of the lift being provided by the wing. But during that messy phase, it's X1, minus X. And that's a very difficult engineering problem, which is, frankly, why you haven't seen this in the commercial sector. Historically, you've seen it with the Osprey in a military application. But if you talk to Osprey pilots, they'll tell you it's a physical act. You have to physically push it through. Once you begin the transition, you can't stop versus our test pilots, when they put it into this messy state and just keep it there, it actually just flies perfectly. And so one of the reasons that that's possible is, and Joby's a totally oriented, vertically integrated engineering and manufacturing company, which in my opinion, we can talk about this later if you'd like, but in my opinion, that's completely mandatory to make technologies like these, number one, real and then number two, scalable. And so one of the things that we've designed in house and built in house is the flight system itself. And as I'm sure you've seen a thousand times, the real hallmark of a beautifully designed system is simplicity. So the interface for the pilot is simply a throttle and a joystick. You're not doing anything with your feet. It's a relatively straightforward user interface. And essentially, as you throttle up to roughly 70 knots, the transition begins and the vehicle goes from being all the lift provided by the propellers to all the lift being provided by the wing.
- [11:29]
David Rutherford
I just think the technology is so fascinating to me because obviously flying cars is something that we've imagined as far back as whatever the 1950s in comic books, books and sci fi. And now it seems like that technology with the, with being able to have the, what, the consistency in that transition period and maintain that torque and not losing what it does. I mean, I've, I've, I haven't been on too many Ospreys, but I've, I've fast roped out of them. I've, I've rappelled out of the back and they're just, they're just, they always felt not as stable as the Blackhawks or, you know, or Seawolves or whatever else the 47s we were using. And so for, for me, it's like, wow, it seems like such a, a more to be able to have that vertical and go. It just seems like that's the technology that works the best.
- [12:28]
Michael Thompson
Right.
- [12:29]
David Rutherford
And so then it, what it, what does it become then? Obviously, you know, there's in, in some of the numbers that I was looking at it, it says, you know, your operating costs have been upwards near 234 million. You're expected to gain some revenue this year at 105 to 115 million. How long does it really take to perfect those technologies? We watched it with Tesla, SpaceX, right. All of these like building something from scratch, which by the way, is the most American thing in the world for me. Right. Is that you're able to have that concept from beginning to end in all in one place. What does it look like in terms of, as a core investor when you have those long runways of investment that take place in really great technology?
- [13:21]
Michael Thompson
Yes. So I would deconstruct the question in a couple of different ways. The first thing is why now? Because as you mentioned, flying cars have been on the, have famously been on the COVID of popular mechanics like 20 times or whatever, going back 70 years now. And people Like Peter Thiel famously would say, we asked for flying cars, we got 140 characters in reference to old school Twitter. So I think the first question is why now? And there's really two answers to that. The first one is a technology answer. The second, frankly is a regulatory answer. And this is my current view, for what it's worth. So one of the things that I've looked for when investing in companies like this is basically what I call the convergence of enabling technologies. And what that means, in my opinion, is oftentimes on these particularly complex engineering problems, it's not just one technology hitting its curve at a given point in time. It tends to be, in my experience, multiple technologies hitting their curves at a given point in time. So there's a number of different ways to talk about this with Joby, but just to break it down into three of the primary things that are converging at roughly the same time. The first, most importantly, because this is currently an all electric aircraft, like I said, and there's some tremendous benefits that you get from using a fly by wire electric powertrain. Battery density getting to north of 300 watt hours a kilogram at the pack level is a critical unlock for this technology. In fact, when, when Joe Ben, who's the founder of Joby, initially founded this company, he's founded the company, frankly twice. The first one was in 1993 and he realized relatively early on that battery density in 93 just wasn't sufficient to do any of the types of things he wanted to do. I think it was like 40 or something like this watt hours a kilogram back then. So he shelved the project and started three other companies, sold them, took the proceeds and restarted the company in 2009. So battery density hitting its curve in approximately the moment that we're in right now is a huge piece of this unlock. The second, quite frankly, is just the progression of Moore's Law. The flight computer on this vehicle is like the size of your iPhone. And in fact, you've seen this famous graphic, I'm sure, on SpaceX, where it shows the progression of the Raptor engine. And it goes from very complex looking engine to a far more simplistic but far more performative engine. And the same thing. You could do the same thing with our flight computer. The original flight computer looked like a large briefcase and now it's smaller than your phone. So simply the ability to have substantial amount of compute on the vehicle at a very low mass and weight is a very big unlock for making this technology real. And the third Is is the ability to mass produce carbon fiber, lightweight carbon fiber. Because obviously weight is an incredibly important consideration on the aircraft. So if any one of those things wasn't hitting its curve at approximately this time, the technology would be far less advanced. So that's a big thing that I've looked for historically. Like, are these things actually getting into the realm of realistically possible? Elon has an amazing quote that I've used. I think not just me, probably a lot of people. If the physics work, then it's just a question of execution and engineering. And we're now at the point where the physics for this type of aircraft works. And in the case of Joby, again, going back to this transition phase, which is one of the most difficult parts of the entire equation, the engineering is working. The second part of your equation, of the constraints historically, is the regulatory piece. And without getting into the specifics of the previous four years, it was just a very challenging market for companies like Joby to progress the way we wanted to progress. Just because the regulatory state was sclerotic, frankly, in a lot of ways. Now, the working level people were fantastic even then, but it was sort of a lack of visionary leadership, if you ask me. The contrast then versus where we are now could not be more stark. I've said to people like, this is the biggest macro regulatory 180 that I've ever personally seen. It almost doesn't seem real, to be honest with you. So what this administration has done is not only continue to progress the type certification process with joby, but also to accelerate the actual applications for this technology in the market. So the president signed about a year ago an executive order that created this platform, this program referred to as eipp, which is evtol integrated pilot program. So under that program, this has been announced within the last month or two. Joby's going to be flying passengers later this year in markets like Texas and Florida, New York and New Jersey. So that's just a huge accelerant to the overall adoption of this technology and frankly, just the market awareness. So that's sort of the backdrop of where I think we stand in terms of this technology becoming live and commercial. The second part of your question around valuation, what's interesting is these types of companies have existed obviously in the venture markets for many years now. All sorts of different types of. Of companies that are pre revenue, that require a number of different things to come true to make the business viable, to scale, all these sorts of things. What you see today in today's public market, and frankly, some of this was because of the SPAC wave in 2020, 2021. There's a number of types of companies, you know, OKLO is one in small modular reactors, Joby, obviously a company that another company we're involved in called Aurora, which is an autonomous trucking company. You've seen all the quantum computing companies, historically speaking, in the public markets. This type of pre revenue company with potential significant upside if certain things went the right way was by and large reserved for biotech. But now there's a number of these types of companies that are in the public market. So I think it requires a different lens from a valuation perspective than what maybe some, some investors are used to. And there's a number of sort of large cap companies that you can point to that have been valued this way now for quite some time. You mentioned Tesla, that's certainly been the case. I'll talk about that in a second. Even something like Palantir. I remember maybe 18 months ago, two years ago, one of my friends was saying Palantir trades that whatever it was like 150 times EBITDA or something like that. And my comment to him was nothing trades at 150 times EBITDA. And he's like, yeah, that's what's concerning me, that maybe the market's overvalued. I said no, that's not what I'm trying to say. What I'm saying is nothing trades at 150 times EBITDA. So in other words, I understand you can calculate that number, but that's not what it's trading on. It's trading on the basic idea that I'll describe as follows. What is the potential overall market for what this company is pursuing? And in many cases it's multiple markets. Most recently you saw in the SpaceX S1, they have multiple markets that accumulate to $28.5 trillion of total addressable market. So the market is sort of under the surface doing a calculation like that for a company like Palantir or a company like Tesla or a company like Joby. Then it's saying what do I believe the market share that this company is going to be able to capture and at that scale down the road, what type of unit economics do I project? And that will obviously result in some amount of cash flow in the future and then you discount that all back and you have what is the current value of the company? I call these companies, these businesses DCF companies and they will be for quite some time. So, so the best example I can give you that I think is a framework of, of what the market is currently thinking on something like Joby is Tesla from circa 2013, 2014. So if, if off the top of my head, Tesla from 2013 to 2014, off of a reasonable market cap base, went up 6x. And you might say to yourself, without knowing anything, oh, they must have made a lot more cars in 2014, they must have made a lot more revenues, whatever. The actual analysis, now that you have all the data, is they made 35,000 cars in 2014 versus Toyota. That makes 10 million cars a year. And they burned about $350 million of cash. In fact, if you go from 2014 to 2019 on Tesla, they burned cumulatively something like $5 billion and the stock went up another 3x again off of a meaningful market cap. So what I'm just trying to get at is the DCF valuation framework that I think these types of companies require can result in significant increases in value well in advance of meaningful increases of revenue and certainly meaningful increases in cash flow. So there's this sort of gradually then suddenly situation. And going back to SpaceX, this is the same thing that happened to SpaceX in some ways in the private markets. SpaceX in 2015, I guess it was, was somewhere in the context of $10 billion. By 2019, I think it was, was somewhere in the context of 15 or 20 billion dollars. And then obviously it started to really ramp post 2020, 2021. And I think the valuation is up something like 10 times or something in the last three or four years. And some people might say, oh, that's getting ahead of itself. And maybe it is. But I think the other way to look at it, which I think is the way I would look at it, is the market is recognizing in the case of SpaceX, that there's going to be a tremendous potential for data centers in space, whatever you want to call it. And there's one company that controls the access to space. There's one company that's proven the ability to scale manufacture, frankly better than probably any company in history. And so just going back to Joby, you mentioned the revenue. That revenue is coming almost entirely from the Blade business that we bought last summer. And the idea on Blade is to take the existing operations of Blade, which are all leased helicopters, have that footprint as part of Joby. And then as our vehicle is certified and as we start to continue to ramp production, you replace the existing Blade infrastructure, which again are leased helicopters, with the Joby aircraft. So I don't think the market's spending too much Time. Although I think some people look at it in a positive way, which it is somewhat positive. But I think the real value of Joby is what is this market going to look like? I believe it's going to be a very, very large market. Other third parties like Morgan Stanley have put some numbers on it. I think it was a trillion dollars by the 2000s or something like that. So I think it's going to be a very, very large market. My personal view, and this has been my view for a long time, Joby is far and away the leader both on technology and on the regulatory path. And so I think we're going to capture a tremendous amount of share. And then just the last thing I'd say is when you have these vertically integrated companies, which, again, I believe you have to have these businesses vertically integrated to have any chance of success, I think SpaceX proved that. I think Tesla's proved that there's a number of companies. So Joby, by being a vertically integrated company, if things work the way that I believe they will, what happens is you end up with multiple businesses in one. So you've seen that with SpaceX, you've seen that with Tesla. I think you're going to see it with Joby.
- [26:16]
David Rutherford
I just want to really talk about my incredible partnership with one of my best friends, and that's Evan Hafer and the boys over at Black Rifle Coffee. I'm so honored to be a part of their organization and just really can't thank them enough for allowing me to participate. What I want you to do is go toBlack Rifle Coffee.com and I want to check out their new energy drinks. They have these incredible energy drinks that you can buy at all different kinds of stores. Walmart, Bass Sports and others. Or you can go online and order. And if you want to put in your little promo code froglogic20 there, you get a little discount on stuff there. I highly recommend that for me. It's my morning coffee. I am addicted to Black Rifle coffees. Just black. I think the tiger stripe camo definitely reels me in. The other one I love is the AK Espresso. This one right here is phenomenal. Love these. But they have so many different things that you can get at Black Rifle Coffee. You will love it again, when you go over blackrifflecoffee.com and you're checking out, type in FrogLogic2.0, get your little discount quote and tell old ruddy Rut rut said you. So to all those folks out there who love coffee like I do, Please do yourself a favor and go over and check out my my brothers at brcc.
- [27:49]
Inner Balance Advertiser
If you're feeling off fatigue, mood changes, skin shifts, yet your labs say everything's normal. You're not alone. Meet Oestra from Inner Balance the first all in one prescription strength bioidentical hormone cream that's natural and effective and only takes one drop, 10 seconds a day. Oester replaces five to six products women typically use to treat symptoms and is third party tested to ensure the highest quality. Visit innerbalance.com today to start feeling like yourself again. That's innerbalance.com protect your pet with insurance
- [28:23]
Podcast Host
from Pets Best Plans Start from less than a dollar a day. Visit petsbest.com Pet insurance products offered in administrative Registered by Pets Best Insurance Services, LLC or underwritten by American Pet Insurance Company or Independence American Insurance Company for terms and conditions, visit www.petsbest.com. policy products are underwritten by American Pet Insurance Company, Independence American Insurance Company or Ms. Transverse Insurance Company and administered by Pets Best Insurance Services, LLC. $1 day premium based on 2024 average new policyholder data for accident and illness plans. Pets age 0 to 10 let's talk
- [28:52]
Redfin Advertiser
about modern home shopping. It's sort of become a fun side hobby, right? Scrolling listings at night, dreaming about kitchens you've never seen or backyards you haven't even stepped foot in. All from the comfort of pretty much anywhere. Redfin knows a lot of people like you want to own but are stuck in this browsing mode loop. That's where Redfin flips the script with listings that update within minutes and tours you can book right from the Redfin app. You can see your dream home the moment it appears. Now, liking a listing is easy, but actually landing it? That's where Redfin comes in. Redfin has over 2200 agents with local expertise, and Redfin agents close twice as many deals as other agents. That means they want to help you win. Not just window shop. Redfin is built to help you go from just looking to wait. This could actually be home. So become the newest neighbor on the block. Visit redfin.com to start finding and start owning. That's redfin.com your social media feed delivers
- [29:54]
Podcast Host
plenty of advice, but it doesn't know you. It doesn't ask questions. It doesn't give physical exams or order tests doctors do. At the American Medical association, we believe the best care starts with a real conversation, with someone who understands the science and your unique health. So stay curious. Ask questions. But when it's time to make decisions, make them with a doctor learn more at amahealth versus hype.org that's AMA Health
- [30:20]
David Rutherford
Vs. Hype.org that makes total sense. And that's why I love listening to really astute investors such as yourself is because, you know, you, when you see it, you know, I think people, they, they, they would never see the leasing play of the other helicopter company, right? They would never see the, you know, some of the other technologies that will emerge out of it, that'll be integrated in it. Right. And, and that's why, that's why. And you know, great investors can find those winners so far ahead than when they actually start to really, you know, cook based on whatever regulatory confinements are released. Right? That always seems to be the case for sure. You, you, you now live in, in Miami. I heard that. And well, you know, I don't know how long you've been here, but welcome to Florida. I'm a Florida native and the more brilliant minds that come to Florida, the better for me. I love it. One of the things that we hear a lot of Byron Donald's talking about in terms of his campaign promises is, is to really turn Florida into the next major Silicon Valley or tech hub or, or whatever. And it certainly appears with all the different financing companies that are coming here and, and wealthy billionaires, that this looks like it might be just that as well as, you know, Central South American investment is really booming down in Miami as well, too. One of the companies, you know, that potentially could have a huge impact on Florida's development is oklo. And that's the small reactor company you guys chose with all this data center drive and how many data centers are being built and how they're going to power, how they're going to, you know, you see these small public outcries. We saw the big one with Kevin o' Leary out in Salt Lake City, right? You had the locals be like, we don't want it here. Get it out of here. And him pushing back, like, why wouldn't you want this in your state, right? How do you guys assess what you're doing with small reactors and what that develop that space is going to look like? Because I believe that the number one issue that will change the world in ways that we can't even fathom yet is the, is the micro reactors. I just believe once we can get away from, from natural gas and oil and if we can magnify solar, I think there's a value there. But I just believe, you know what, in, in, in 40 years, you're going to punch, you know, A reactor into your Joby, you know, solo and you're going to go up and you're going to fly to work just like you would drive or whatever. So explain that play for you guys and why that's so important for where you're at.
- [33:08]
Michael Thompson
Yeah, so, so I, so I'll try to thread a lot of different things together as quick as I quickly as I can.
- [33:14]
David Rutherford
Take your time, take your time. Because I know this is complex. I mean it's obviously from your last description, I think the real value that you can give our listeners is, is how you think about this. Right. Because it's really fascinating to me because, you know, as us, we see the Super 7, we see, you know, kind of hopefully a rebalancing. Come here. Well, we also see profits and, and a lot of the, you know, those core manufacturing companies or you know, the ges or whatever, they're the oil companies.
- [33:45]
Michael Thompson
Right.
- [33:45]
David Rutherford
We're seeing a rise, a reset in there. But I, you know, companies like Joby and oklo, those are the future companies people I think are looking for to be in that early game. Investment.
- [33:58]
Michael Thompson
Yeah. So I started investing in certainly looking at a number of companies and investing in a few what I would call application level, application layer AI companies. This would have been six, seven, eight years ago. And the more I started to wrap my head around what this might look like and again, six, seven, eight years ago was well before ChatGPT and all these other tools were out in the wild. But I started just sort of thinking through what was going to be required, infrastructure wise to make these things really proliferate because it seemed, even back then, it seemed likely that this type of thing was going to proliferate because it just seemed like the technology was going to be able to scale and improve in a way that it would become sort of a ubiquitous use case, which is I think largely what's happened in many ways. So one of the things that I concluded, and probably a lot of people did, was to put it simply, where is all this power going to come from? And so that's when I first started digging into nuclear. I never really spent much time in it, frankly, prior to that. And one of the things I started to conclude was this seems extremely logical that we should be pursuing this as a country because number one, the technology is proven. We really stopped doing this as a country in the 1970s, but the military did not and the Navy continued to put small modular reactors on carriers, on submarines. The safety record has been incredible. But frankly, one of the conclusions I came to at the time was, it seems logical. It seems, frankly, in some scenarios of the world, which I think we're now in, it seems like it might even be mandatory. There's this sort of macro overlay of this arms race, if you want to call it that, with China, China's doing this. So it just seemed practical in so many ways. The issue was, however, that if you look at the track record of the nrc, frankly, just nothing got approved. So the one stat that I've used before is prior to 1970, the NRC was created in 1974. So prior to 1978, there were 133 reactors built in the United States. And since then it's been two. So very obviously this was an industry that the country seemed to be walking away from. And again, going back to the big shift that we've all seen in D.C. in the last 18, 24 months, the four executive orders that the President signed a year ago are unbelievable. We were talking the other day, me and some of the OKLO people like it's. It seems hard to believe that it was, that it was only a year ago. It feels like it was much longer than that. And one of the. So there's several things in these EOs. I just touched on it very quickly. One is it opened up the regulatory path with both the NRC and the doe. It created pathways for fuel, which I'll come back to, because fuel is one of the big constraints. And it also sort of issued a challenge, if you will, to the industry. Can we have at least three reactors go critical by July 4, 2026? So these were all very, very ambitious goals that were set with these EOs. And now the agencies have been working to implement them. And it's been amazing, like I was saying over the last year. So in the case of oklo, this was just announced this week, I think there's a tremendous amount of weapons grade plutonium that the United States has from various programs over the years. It's something like 20 metric tons. And that was all going to be 20 million metric tons. Excuse me, that was all going to be buried in the ground, essentially. But another thing that the administration did was to say, we're not going to do that. We have like two Saudi Arabia equivalents of plutonium in our country. We're going to down blend that fuel and use it. And one of the brilliant design decisions that the founder of Oklo, Jake DeWitt, made years ago was Oklo's reactor is what they call a fast reactor. This is in contrast to a Light water reactor, which is the typical form factor you've seen in the bigger reactors since the 50s. And the reason that's such a brilliant design decision on top of other reasons is a fast reactor has a tremendous amount of flexibility in terms of the fuel stock it can use. So our long term view is that we're going to be using what's called halo high assay, low enrichment uranium, which is basically uranium that's enriched 5 to 20%. And eventually we're going to actually recycle that halio. So this was announced maybe, I don't know, nine months ago that we were going to build a recycling facility in Oak Ridge, which is where the Manhattan Project was sort of secretly headquartered back in World War II. But there's going to be a timeframe to get to that point. And so what this plutonium is going to do, which we applied for and frankly, and just another quick side point, our partner in that is a French company called nucleo and ew c Leo and you talked about SPACs. It was, I just saw it today. It was announced that Nucleo is going to go public via SPAC sometime this year. So anyway, so we applied for that fuel. We were announced this week that we're going to get some amount of it. We don't know how much yet, but that's going to be a huge unlock. Because the real current constraint on spinning up more and more of these small module reactors in addition to the regulatory piece is the fuel availability and not just, not just uranium. Because that's the other thing that happens when, when you sort of slow down meaningfully an industry like we did in this country in the 70s, all of the supply chain slows down. So we have like, you know, if you think about this, if you think about what it takes actually to produce energy from a reactor, it's not just building the reactor, it's not just having uranium laying around or plutonium or what have you. You've got to have conversion facilities, deconversion facilities, enrichment facilities, fabrication facilities, all these things. We have one conversion facility in this country. It was built in 1958. So we've got to spin up all of these things again, you've got to spin up fabrication and conversion and enrichment. The good news is the government's doing this in partnership with private enterprise. So one of our partners called Centris, which used to be a government owned entity, received $900 million. I think it was a grant or a loan from the federal government to build out additional enrichment capacity. So I think it's the best time frankly in my lifetime. I was born in 76. So frankly in my lifetime it's the best time to have a positive view that we're actually going to be a real country and pursue nuclear technology that is safe, it's clean, it's efficient, it's frankly, in my opinion, like I said, mandatory. If we're going to support this build out of data centers and frankly just the broader build out of re industrializing the U.S. i love it.
- [41:34]
David Rutherford
I agree with you wholeheartedly. I think that's the linchpin in my mind. When you look at the strategic initiatives of the future in particular, I have this lens from my background to look at advancement in those areas as it could bleed over into the civilian market and you know, battery development. Right. The controlling of the space through space X and our satellite capabilities as well as, you know, these small modulated nuclear reactors and how it would just, you know, what every single major economist throughout history, you know, basically looks at, at these industrial periods and, and looks at what energy production looks like to be able to what, gauge the massive potentiality of our industrial increase. Right. You talk about something called the 1870 thesis. Can you talk about that concept as it relates to where we're at right now in the end of May in 2026?
- [42:44]
Michael Thompson
Yeah, I mean when I first really started thinking about this, to be honest with you, it was somewhat aspirational because the overwhelming challenge to this basic thesis coming true is overregulation and just kind of a lack of exploratory and risk taking mindset. And frankly, our country got into this stance again. A lot of this dates back and we could talk about this forever. A lot of this dates back to the 70s if you ask me. But the basics of the thesis is as follows. The first time I described it in this way was four years ago when I gave this graduation speech at the high school that I went to because it was the first time I had talked about it outside of just talking about it with my friends. And of course when you're graduating from high school, you're 18 years old. So I framed it in this way for these people. You know, imagine being 18 years old in the 1870s. By the time you're an old, an old, this is an all boys school. So by the time you're an old man in the 1930s, the entire physical world had changed in like profound ways. So I mean if you just sort of tick the list like indoor plumbing, elevators and skyscrapers, mass adoption of electricity, mass adoption of railroads, later, automobiles, everything,
- [44:14]
David Rutherford
plumbing, you name it. I mean, it was everything, steel production.
- [44:20]
Michael Thompson
And if you roll it forward to the 50s and maybe the 60s, it really kind of ended with some combination of the jet age and the interstate highway system. And so I started thinking to myself, this is kind of what we talked about with where's my flying car? Thing. There's a book called Where's My Flying Car? I'm not the only person that's ever thought of, but I started thinking about a lot in the context of SpaceX. Because if you go back to sort of the venture market, call it 10 years ago, and certainly before that, none of these high capital intensive, very few of these high capital intensity businesses were getting funded. So SpaceX was really an outlier and sort of all the credit to that team and obviously to Elon, but it was really an outlier. When you think about it, in the broad scheme of things, 10 years ago wasn't that long ago. So it's great how much things have changed since then. But I started thinking, why did this sort of pioneering spirit and this desire to positively improve the physical world that we all live in, why did this stop? And a lot of it was the regulation which we talked about. But frankly, to be fair, I think some of it, starting in say the early 2000s, was hyper rational from a capital flows perspective. Because if you think about the way that I think about the world, like a flowchart of capital, capital should first flow to companies, industries that can massively scale with as little amount of capital as possible. And that's what happened. So if you go Back to like 2007, the biggest companies were things like Citibank and JP Morgan and General Electric and these sorts of companies. Up until recently it was all Internet and software companies. Nvidia is a bit of an outlier now, even to some extent Amazon. But anyway, so what I think was going on in some ways was rational because you're able to build these massive software and Internet businesses. But I also think it was. I think that, I think that part of it has really been exposed as a very brief, specific moment in time. And I think that people are now sort of collectively thinking about this more and more. Like, here's a great example of what I'm trying to get across. The arrangement that happened in the last two or three weeks between anthropic and SpaceX or SpaceXi I think is sort of a direct result of what I'm talking about. Meaning you can build the most beautiful frontier model in the world, which some people might argue anthropic is currently done, but if you don't have the atoms, it doesn't really matter. And the atoms are the facilities, the power and the compute. And what SpaceXi has shown is that there is no company on earth currently that can build this type of infrastructure on earth and eventually probably in space than they can. And so the reason why I said at the beginning that when I first started thinking about this and talking about this again, seven, eight, whatever it was years ago, it was a bit aspirational. Like nuclear projects weren't getting approved, some of the enabling technologies were still, they were getting close, but they still weren't all the way where they needed to be to make these things real. And now what's so exciting to me, I think you've probably heard a lot of people say this. It's such an amazing thing that we have, politics aside, it's such an amazing thing, we have such a forward looking administration at the same time that all of this technology sort of led by AI is beginning to proliferate. And so all this to me goes hand in hand. The re industrialization, the relaxation of sort of hyperregulation and the massive proliferation of AI. And just the last quick thing I'll say on that, I think even in the public market the majority of people when they hear AI still think in terms of, to put it simply, large language models, which obviously has been a big piece of it. And again, I don't think my view is unique in this way, but I think it's worth noting I have believed for quite some time that the biggest application layer for AI is going to be in the physical world. And so one way that I frame that, and this kind of goes hand in hand with the broader 1870s thesis, one way I frame that I used to run an investment fund and I was telling my friend not too long ago, if I was still running the fund, I would tell all the guys I don't have any interest in spending the next 45 days figuring out if Salesforce or Workday or these types of SaaS companies, if they're cheap or if they're some kind of falling knife, you know, I just don't want to spend the next 45 days. I'm sure there's an answer to that question, but I don't want to spend the next 45 days, you know, figuring that out. What I want to focus our time on are what are the companies in sort of the corresponding technologies that we believe under pretty much every scenario that we can currently contemplate are radical beneficiaries of these types of tools getting better and better and better. And so when you look at Joby, going back to Joby, Joby, in my opinion, is one of these companies. And just one anecdote of how to think about that. We have some of the best aeronautical engineers in the world that are working on these engineering problems day in and day out, and they're telling me and telling other people within our company. I'm able to do things now with these tools that are so accelerating. I'm able to troubleshoot things that previously would have taken me some number of days or weeks. I'm able to troubleshoot them in a matter of minutes or hours. So you're taking these already extremely productive engineers and putting some kind of force multiplier on them. And that, to me, is extremely exciting. And that's where I've been focusing my time. And that's sort of another layer to this 1870s thesis idea.
- [51:02]
Inner Balance Advertiser
If you're feeling off fatigue, mood changes, skin shifts, yet your labs say everything's normal, you're not alone. Meet Oestra from Inner Balance, the first all in one prescription Strength bioidentical hormone cream that's natural and effective and only takes one drop, 10 seconds a day. Oester replaces five to six products women typically use to treat symptoms and is third party tested to ensure the highest quality. Visit innerbalance.com today to start feeling like yourself again. That's innerbalance.com the following ad is sponsored
- [51:34]
Podcast Host
by Pets Best Insurance Services. You knew right away he's perfect. The one for you. Those puppy dog eyes, that cute little button nose. You don't even mind the drool. When you find your perfect match in a dog or cat, the love is uncanny. Your budget, on the other hand, has realistic limits. Help protect your heart and your wallet with pet insurance from Pets Best. With plans starting from less than a dollar a day, you can get up to 90% cash back on eligible vet bills. Pets Best makes it easy to pick a plan that works for you and your bank account. Find the perfect match for your Perfect match@petsbest.com Pet insurance products offered and administered by Pets Best Insurance Services, LLC are underwritten by American Pet Insurance Company or indirect Independence American Insurance Company for terms and conditions, visit www.petsbest.com. policy products are underwritten by American Pet Insurance Company, Independence American Insurance Company or Ms. Transverse Insurance Company and administered by Pets Best Insurance Services, LLC. $1.00 a day premium based on 2024 average new policyholder data for accident and illness plans. Pets age 0 to 10.
- [52:34]
Redfin Advertiser
Let's talk about modern home shopping. It's sort of become a fun side hobby, right? Scrolling listings at night, dreaming about kitchens you've never seen or backyards you haven't even stepped foot in. All from the comfort of pretty much anywhere. Redfin knows a lot of people like you want to own but are stuck in this browsing mode loop. That's where Redfin flips the script. With listings that update within minutes and tours you can book right from the Redfin app, you can see your dream home the moment it appears. Now, liking a listing is easy, but actually landing it, that's where Redfin comes in. Redfin has over 2200 agents with local expertise. And Redfin agents close twice as many deals as other agents. That means they want to help you win, not just window shop. Redfin is built to help you go from just looking to wait. This could actually be home. So become the newest neighbor on the block. Visit redfin.com to start finding and start owning. That's redfin.com your social media feed delivers
- [53:36]
Podcast Host
plenty of advice, but it doesn't know you. It doesn't ask questions. It doesn't give physical exams or order tests doctors do. At the American Medical association, we believe the best care starts with a real conversation with someone who understands the science and your unique health. So stay curious, ask questions. But when it's time to make decisions, make them with a doctor. Learn more at amahealth versus hype.org that's
- [54:02]
David Rutherford
amahealthvshipe.org that is a absolute brilliant response to that. Thank you Michael. Again, I just go back to the ideas. As a person that's really seen all this development and not quite sure, all right, what is something that I can count on? How do I look at the, the complete diagnostic map of AI and where its functionality is going to be the most impactful for. And you say within the physical world. You know, I, I, I think it's going to be certainly in terms of time saving but I, you know, I just don't know. Right. You, I, I just read a, a beautiful piece by a gentleman from UPENN and a guy from Boston College and they called it the AI trap. Right. Which is essentially AI is going to remove a tremendous amount of middle management, white collar administrative type jobs. And as those people go out of work, you know, the backfill of those service jobs, the physical jobs or whatever, there's a lag with AI for that. So it'll take a little bit of time to catch up as an investor in future technologies, how are you? And this is the last question, by the way, because your answers are so good. How do you look at this future transition point or this transition point? Is it 5 years, 10 years, 20 years? Is it impossible to see? And where do those two realms of development in terms of the technology and how it's going to be able to be implemented by the workforce? Like, how do you look at that, that, that, you know, that, that GPS moving forward?
- [56:00]
Michael Thompson
Yeah, so I'll answer that in a couple of ways. The first way is I'm, I'm naturally optimistic on these types of questions and some of that is probably just how I am for whatever reason. And some of it I just want to say.
- [56:16]
David Rutherford
Thank you, by the way. Thank you for saying that. I just, I, I'm out. How to get more people optimistic on what's going on instead of being entrenched in all of the, the negative aspects. Because there's so much positive stuff going on right now.
- [56:32]
Michael Thompson
Yeah, I, I totally agree. And, and, and, but, but a lot of it frankly is, is informed by history. There's, there's, I mean, I would encourage anyone to, to go and look, look at it on their own. Like you look at the turn of the, going from the 19th century to the 20th century. I don't have the exact percentage off the top of my head, but the overwhelming majority of the US economy heading into the beginning of the 20th century was agrarian. And obviously when you fast forward not only 100 years, but even 50 years from there, and this goes back to this 1870s thing we're talking about, so much of that economy transformed. So many of the types of jobs people were doing in say the 1890s just were no longer viable jobs. I mean, you had people doing hand physical labor, farming, that was replaced by a lot of really well designed machines. And what happened was, is the overall prosperity of the entire country and frankly the world improved materially. At the same time, population growth increased substantially. So I just, you know, I just find it hard to believe that this is going to be a different outcome. I mean, there'll be bumps in the road, I'm assuming. It certainly won't be uniform. Some people will get left out, which is obviously, you know, unfortunate. But you know, these kind of things do have some sort of transition phase. So depending on where you are in your life and your career, it can be a bumping period or something like this. But I actually look at it extremely positively. If you're like a teenager in your twenties figuring out what to do when I was a teenager in my twenties. The thing I remember hearing back then was, well, the way the things are supposed to work is you go to college and then you get a job in some kind of finance function, an accountant, a lawyer, Wall street kind of thing, whatever. And you do that for two or three years and then you go to either law school or business school. And there was this whole generation that I was a part of and people before that, and frankly probably some people after that that there was like this concept of the sort of professional manager. And I think that has been proven to be a very, very flawed concept in a lot of different ways. And versus if you're a teenager in your 20s now, like a lot of the things that you might have gone into if you know, when you were my, when I was that age, those things are just not going to be viable things to go into. Like you're not going to, if you ask me, you're not going to want to go into accounting or frankly even law. I'm not saying there's going to be no lawyers left, don't get me wrong. But the alternative to me is far more exciting and frankly very viable because of the technological progress and hopefully a continued relaxation of a lot of this regulation. So there's a beautiful anecdote that I can give you which is an area outside of Austin called Proto Town. And if you go and visit Proto Town, Oklo is there. It's probably the most mature company that is there. That's where the isotope reactor is there. This has all been announced publicly, but there's a lot of startup companies there that are being run by 20 year olds. The founders of Prototown themselves are 26 years old. So I equate it to the old school, the old days of incubators where you'd have an office building in San Francisco or New York and you'd have a bunch of people in various cubicles programming software for XYZ startup, which is great, which is fine. But now that same type of energy and creativity, et cetera, is being applied to these physical world technologies in a place like Proto Town. I used to joke with my buddy, I was like, this was like Burning man with a purpose. You're just out in this ranch in the middle of Texas and people building some really exciting stuff. You take the best example that I can think of. You take Starbase for SpaceX. I mean, this is basically land that has no alternative use other than farmland, I guess. And now it's one of the most exciting places in America. So I would just encourage the younger people that listen to your show. This is an incredible time to be a teenager in your 20s, if you ask me, because you're not going to be spending 20 hours a day building spreadsheets for an investment bank in New York. You're going to be building really amazing technologies that are going to massively benefit the physical world. And frankly, let's just be honest, keep us ahead of China, which to me is an incredibly critical thing that we have to accomplish. I said it the other day about Joby. The United States has invented aviation and has always been the leader in aviation, all the iterations of aviation going back to the Wright brothers. And we can't afford to lose that title now.
- [61:47]
David Rutherford
Amen. Michael Thompson, thank you so much for your insight today. I know it helped my audience and it certainly helped me. And I just wish you all the best in, in these organizations and companies. And where can people find these and invest in them and, and, and, and if you're available publicly, where can they kind of find you or follow you or your company?
- [62:12]
Michael Thompson
Yeah, so several of the things I mentioned are public. So obviously SpaceX is about to be public. Joby is already public. J O B Y is the ticker. OKLO is already public. Oklo is the ticker. I mentioned Aurora, which is the autonomous truck company that's already public. The ticker is Aur. I didn't mention several other companies that we could talk about like Zona, which is private, or Nimble AI, which is private. But the good news is, if you ask me, there are a number of existing public ways to express these views and there are a number of really interesting private companies that if things hopefully continue the way they currently are, they'll be public within, you know, within this decade, I believe. So I guess it's a really interesting time as a public market investor to sort of develop your own thought process around evaluation framework and start to analyze these types of companies.
- [63:20]
David Rutherford
Outstanding. Michael Thompson, thank you so much, sir. God bless you.
- [63:24]
Michael Thompson
God bless you. Thank you.
- [63:35]
Inner Balance Advertiser
If you're feeling off fatigue, mood changes, skin shifts, yet your labs say everything's normal, you're not alone. Meet Oestra from Inner Balance. The first all in one prescription strength bioidentical hormone cream that's natural and effective and only takes one drop, 10 seconds a day. Oester replaces five to six products women typically use to treat symptoms and is third party tested to ensure the highest quality. Visit innerbalance.com today to start feeling like yourself again.
- [64:05]
Podcast Host
That's innerbalance.com this is Bethany Frankel from Just Be with Bethenny Frankel. Most dog food is marketing, not nutrition. That is why Biggie and Smalls eat just food for dogs. Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference. Better digestion, healthier skin, more energy. Dogs that feel better. My babies. If you've been on the fence about switching, stop overthinking it. What's more important than your furry babies and their health? Go to justfoodfordogs.com right now and get 50% off your first box. No code needed. Just try it.
- [64:43]
Redfin Advertiser
There's a difference between liking a house and actually getting it. Redfin is built to make up that difference and close the gap between finding and owning the home for you. Redfin agents close twice as many deals as other agents, so when you find a home you love, you're not a step behind when it comes to making an offer. That means less watching great homes disappear and more focus on the one you'll call home. Redfin helps turn saved listings into real addresses. Get started@redfin.com own the dream this year,
- [65:15]
Podcast Host
it's pop's turn for a laugh. So celebrate Father's Day with a gift that really pops a customized Funko Pop of him. First, think of all the things that make your dad the man. Then turn those ideas into a personalized Funko Pop. Select hair, clothing, and skin tone options to match his fit. Don't forget to show off his favorite hobbies and sports with amazing accessories. You can even add his best friend. Start Creating now@funko.com Be unique, not anyone else.
- [65:41]
David Rutherford
Express it now. Just pop yourself.
- [65:43]
Podcast Host
That's Funko.com.