Chris Power, Hadrian: $10B or Zero, Revitalizing American Manufacturing

Preview Two years ago we were like, please take this interview with us. Now it's like, oh, this makes sense. When can I interview with you both from Hadrian but also like software engineers or talent in general Understanding that this category is got real momentum and is like valuable. And I think without Founders Fund Andreessen being that charge from a narrative and capital perspective the ecosystem just simply wouldn't be here. The level of momentum that Katherine Boyle, Trey Stevens have created narrative wise, capital wise is like insane. Like you know within two years they've kind of taken something from like don't know if I want to go work Palantir and or all because like America bad to like the whole country is like cool. We're building hard things for the national mission is is insane and like it gives me a lot of hope for like American competitive this right. Speaker 2 Welcome to Sorceries Podcast. I'm Molly O'Shea, the founder of Sorcery, a weekly top VC Deals newsletter and now podcast highlighting the top GPS founders and deal announcements leading the next innovation cycle. Today we have Chris Power, founder of Hadrian, who recently announced a massive $117 million Series B to revitalize American industry. This was on top of the 90 million raised to date from existing investors such as Founders Fund, A16Z, Lux Capital and more. For background, Hadrian is AUS based automated precision component factory that enables space and defense manufacturers get parts 10 times faster and have the cost to make rockets, satellites, jets and drones. Chris is quite impressive, so I think you'll enjoy this one. Welcome Chris. Congrats on the recent raise. Speaker 1 Thank you. Appreciate it. Hadrian's Massive Series B Raise and Mission to Revitalize American Industry You're a tough one to track down. You're always jetting around to DC and LA and back and forth, but you just raised $117 million Series B. This puts you over the $200 million mark in funding, which is not bad. Could you share more about Hadrian's recent growth and your mission to revitalize America? Speaker 1 I think at that time, I think we're only one of the only hard tech, deep tech series bees that got done at all, which is really a credit to like the team and the progress they've made at Hadrian. In hindsight, I'm glad that we did it versus waiting to lose a year because we're that much further ahead in terms of progress. We're very lucky. I mean the venture market is very tough in general. I think last year it was the toughest year that anybody's ever seen. Super grateful and lucky that the category really makes sense to a lot of people and they're willing to take a bet earlier than they otherwise would have. Yeah, So what happened was we, so we are only we're three years old. We're only five quarters into launching the customers and we have two customer bases. We have new primes and startups and then we have the mega primes which are these massive companies. And we thought that it would take until the end of 2024 to do a good enough job with like startup customers to be able to have the opportunity to serve like the large primes. And what happened around August, September last year was we saw this huge acceleration where a lot of tier ones and primes wanted to work with this way earlier than we'd expected, which is good. But we were massively under resourced. To be able to go do that properly and without customers, you really get like one shot to prove yourself. So we just looked at it, you know the board level and went OK, we have two options. One is that we plan for success, which means we need a lot more capital to keep up the growth and resource up to serve these large customers. Or we can like delay this and delay the raise until Q1 2024, maybe have a little bit more progress. And at the same time, I think you'll remember in August, you know the venture market in August was like maybe no one's getting funded for the next two years. Now it's a different story. But at the time it was like not clear that if we waited till Q1 that there was even a venture market. So basically, because of the acceleration in demand from these large customers where they're onboarding is way faster than we expected. And the fact that we had a good opportunity to raise money then versus like waiting maybe for a high evaluation in 2025, but maybe the venture market's dead anyway, we basically pulled the trigger and did like what we call an emergency fundraise, which is not because we were running out of money, it was because like it was nine months before we planned, but it was basically like accelerating customer demand and then you know, de risking like a very stochastic risky venture market. So we did a bit of prep and then went out from October until November, found some great partners, massively capitalized the business and now we're deploying and growing like hell. So yeah, that's that's why we decided to raise and how it all came together. The Strategic Decision Behind Hadrian's Emergency Fundraise Specifically with this round, what was the construction of it? Was it existing investors? Was it strategic? Was it debt? Was it equity? Speaker 1 So we had about 60% of the capital was new investors, 40% of it was inside investors. Annie Grayson from Construct stepped up with a huge check and has joined the board. And obviously Katherine from Andreessen, Dalian from Founders Funds, Brandon and Josh from Locks all stepped up as well. What about 60% new capital, 40% insiders and then an entirely new debt stack as well, which is great for us because we're a CapEx heavy business. So we like to spend debt instead of venture dollars on factory equipment. And then what happened was we were talking to multiple of our customers about strengthening our partnership and that that might potentially lead to an investment. So in December, it became clear that RTX Ventures, which is the venture of Raytheon also wanted to invest. So we ended up extending the round out to give them the opportunity to invest in the same round. And then what I can share is that more likely than not there will be more announcements of that sort of a theme in the next couple of months. Yes, we're very lucky. It's been incredibly from a fundraising perspective and I know your audience is like a lot of people in startups. We're very lucky that it was an up round clean terms and we had both new investors, existing investors and customers or potential customers who invested in the same round. So we're incredibly lucky and that's how it all played out. It's a big. Speaker 2 Accomplishment. Speaker 1 Yeah, yeah. Yeah, we think so. It's it's given us the opportunity to build the thing TBD on whether we'll get there or not. We have every confidence that we will but this is you know Tesla hard execution. So, but now we have the opportunity to do it, which is amazing for. Chris' Backstory and the Challenges/Opportunities in Manufacturing Software Perspective and context. What is your background and story? How did an Australian such as yourself come to found a very American dynamism company like Adrian? Speaker 1 My my background was actually accounting and law, and then I got involved with the very early days of e-commerce in Australia. Before there was Amazon, before there was Netflix. It was kind of like just when eBay got started and through that I started actually building software for the companies that I was operating because that's where I first became like a semi decent product manager and you know, person who could work with software engineers. And then I ended up running sales and a big chunk of product for a workforce management startup in Australia which did workforce scheduling and HR software for elderly workers. So if you were like a big logistics company and you had 6000 employees, 1000 of them would be on like work day and the 5000 people who were in the warehouses would be on our product. So we got, I got very good at applying software to heavy like heavily operational companies. And because we were responsible for actually deploying the software and helping the company hit the business metrics, we got very good at taking a product, little software and actually deploying it and rolling out to these large enterprise companies. And that's one of the biggest gaps in manufacturing software in general is there's a lot of software that looks good that like provides value and then you implement it in manufacturing companies and it doesn't actually work and it becomes like AR and D or innovation thing that was like a fun experiment but like didn't actually provide any business value. And software for manufacturing or automation for manufacturing in general. The hardest bit is the last 20% going from like cool demo and it works in a test case. So like you can actually roll it out of production. And that's the real value I provide to Hadrian is like I've seen enough of what it takes to get to the last 20% and how to actually get software in operations and have it usable versus just like a tech demo or it works on one production line, but it doesn't actually like get adopted across the whole production lines. So that's that's where it's relevant is the gap in manufacturing automation in the America has never been lack of software, it's the lack of software that actually works in manufacturing. And that's where a lot of the thesis came from is that you know in a very Peter Thiel Straussian kind of way, you know five years ago, it's pretty obvious that there is no software in manufacturing. So you know, it's like why? And my viewpoint was that the mechanism of product as a SAS vendor to manufacturing was completely broken. And I'll give you an analogy that kind of explains this is if anyone off the street who's 1/2 decent software engineer or product manager went and called 10 HR directors and built a software that made like employee onboarding paperwork easy, everyone's been onboarded by a company before. So you've got enough instinct that you can talk to the users and like build product in manufacturing. No software engineer or product manager has actually been in a factory before. Largely it's very hard to access factories as like a, you know, first beta customer. And the level of context you need about operations is like 10X of that you need for like a normal SAS company. That's the reason why all ERP's are terrible is because you can't product manage your way to a good ERP. You kind of have to build it and use it yourself and then it finally becomes good. And that was one of the core reasons why there's never been software in manufacturing. So the obvious trick was, OK, I want to fix American manufacturing. The only way for Americans to be globally competitive with China is literally just a labor equation, right? If we want to keep high wages in America but compete globally, then we have to have high wage people that are using software and robotics to get a 10X advantage. Otherwise you just end up in like a low labor equation, which is what caused the offshoring of American manufacturing in the 1st place. The only way to produce that is that you run a manufacturing company with a vertically integrated software and robotics team so that you're actually build the right product. So that was kind of the core thesis. And the other part of that is, you know, well, if no one's using software in manufacturing and software actually provides operating value to operations on the customer, then and you can get it right. It's like Tesla, hard to get there because you need to build a lot all at once. But if you get there, then you know, you kind of have this dominant position where everyone's walking around with like a sharp pointy stick and you have like a AK47. So it's extremely hard to do it. But if you do it and you get past this tipping point, then you know you're kind of the only option in the market. It's just extremely difficult. So that was the phases. I was basically the only way to do it is the only way to make US manufacturing globally competitive is to leverage American talent with software robotics and make them tenets more productive. And then the only way to do that was basically run, run the factory as the product and then vertically integrate software and traditional product management into the factory itself. And you know, now we're here. Scaling Operations and the Future of Hadrian's Factories Now we're here, and now you have a huge factory. So how big is your current factory and what are your plans for scaling? Speaker 1 So we're in about 90,100 thousand square foot if you include like multiple stories right now, we will run out of capacity by like the end of this year or Q 1/20/25 which means we will be in multiple states by Q1, Q2 2025 to keep scaling going. And we have like a, yeah, nine month window to like pick a state, build a building, figure out the people hope that the software is mature enough that it's copy pastable. Yeah, it's completely intact, but it's, it's the only way to do it. Otherwise we just don't scale as fast as we need to to support the customer base and you know our investors expectations. Speaker 2 Is the state specification or strategy going to be closer to certain customers or is it going to be a TSMC? Let's go to Arizona or Ohio. Speaker 1 The answer is we have six states down selected and to get from six states to one state, it's conversation with the government. It's a conversation with the customer. It's a conversation about we want to be somewhere that's business friendly and efficient, but we also want to be somewhere where there is tons of talent. Many manufacturing companies have only picked like you know a low cost state. What ends up happening is no one wants to work there. So like looks good on an Excel spreadsheet but completely fails operationally. So there's a lot of trade-offs to make. We need to make a decision in the next like quarter or two, you know break ground end of Q4 and then you know be in the building Q1Q2 next year. Speaker 2 So we just had Xander Oldman, one of your seed investors on the pod to talk about his thesis of vertical integration, vertically integrated monopolies and he cited, he cited Hadrian as a prime example just to get deeper into it. On Hadrian's Vertical Integration and Moat So what exactly makes Hadrian so vertically integrated and what is the Moat that you've built for the company? I know in previous documentaries and interviews you've had, you also have a training system to get people on boarded and recruit talent and make sure that everyone's up and running with the actual machines in the in the factory and all of that. Speaker 1 So, yeah, so our vertically, our, our vertical integration is that all of our software is internally developed and the thesis is that we'll be the only one with good software and that gives us way more efficient operations and then a better experience for the customer. The second thing it gives us is a closed loop system of data. So a lot of the problem with manufacturing is silo data where you can't improve yourself because you can't tie one system to another. And then I think the third mode, which is maybe the most important one, is the mechanism of how we develop product that actually is operationally useful and it's a mix of culture, it's a mixture process. But many operationally heavy companies fail with this at scale because they end up having 2000 employees and 500 software engineers and their operations team and a bunch of product managers in the middle where you scope something out. It takes nine months to build it. Operations aren't really involved. So they don't adopt it by the time, it's nine months down the track. The software is not the right thing because you've got a bunch of engineers cooking it with no operating context. A lot of the mode is really how we've architectured the org chart and culture so that operations and software is like moving hand in hand. That's a huge part of the mode. The long range mode is going to be that we're so much more efficient and so much higher quality to the customer experience that it would take someone 2 or $200 million in three years to catch up. And if we establish that mode, then I think it's on a saleable. And I think to Zander's point, large vertically integrated companies have two options. One is basically you do the whole thing and you win and you're like TSMC or like Tesla big, or you like die getting there and there's no kind of halfway mark. So that's the that's the difficult bit. But if you can run like hell for four or five years and get past that tipping point, then like one, no one's crazy enough to catch up All the engineers who want to do more of that thing work for you. And, you know, no one's insane enough to dump another $250 million down the hole to try and catch up because you're already there. But unlike unlike software, in venture maybe you get product market fit for a couple of years, you get to 50 million an ARR and maybe you get acquired by Salesforce or you're like a slack big company. There's a lot of good kind of stuffing off points with vertically integrated deep tech businesses. There is like two options. It's like you get it right and you're like Tesla or you get it wrong and everyone calls you like Elizabeth Holmes. And that's so like the way I would underwrite deep tech is basically like Series B is the biggest risk point because you're starting to tip real money to the company. C&D is like what's already working. It's a fucking near monopoly. C&A is like, well it's insane and you're getting a lot of the company as an investor and you know take a bunch of bets. But the reality is very, very binary market, either you are like Andrew or big or you are 0 and that's the that's the risk and reward which is very different from like traditional software that you got. Recruiting and Training: The Backbone of Hadrian's Success You've been very popular on the media in different circuits. You've had decent coverage of the factory from Jason Carmen's S3 and John Coogan's Hadrian documentary, and I've even been fortunate enough to take a tour of your automated factory. But for those who don't have the pleasure or haven't had the opportunity to see those documentaries, what are the main components that make Hadrian the software, the machines? Are there any new shiny toys that you're excited to add? What are the core components there and how have you been building that? Speaker 1 There were two big things about Hadrian. One is the best software and robotics team that's ever existed in LA, period. The second thing is talent and workforce development and training. Because a big part of what we do is good. Software does two things. One is it takes a 20 hour task down to two hours, but it also makes doing that two hours way simpler, you know, and I think Rippling's a good example of this. It's like, sure, you need less finance people, like rap, you need less finance people. But also like the people doing that job don't have to be like ACFO because they're kind of getting guided through the decisions. It's error proof, you know. And we're never going to be, like fully, fully automated because like Tesla tried to do this, SpaceX tried to do this. It's just like a bad idea because you build this inflexible system that's just super brutal. So we're a big human loop company on purpose. So the second part of Adrian is that like 90% of our people now we recruit have never set foot inside a factory. They come from all sorts of backgrounds and from a workforce and training piece. We can train and on board them in 20 to 30 days from they're at Home Depot, they're a bus driver, literally any background with a huge cohort of military people coming in right now, which is really good for us. But the other piece is you have to scale operations really, really fast to hit a venture growth curve. And that means hiring and training a lot of people in a in a real systematic way. And that's another big piece that we've invested a lot into that's paying off is that sure, there's a lot of automation, robotics. The other big trick is how do we get young people or people would never set foot inside a factory or want to switch careers, excited about manufacturing? And then how do we teach them the skills and the processes fast enough that usually in skilled manufacturing it might take 10 years for you to be an expert And how do we shorten that down to 30 days? Otherwise, it just takes too long to scale, you know? And the stuff we're dealing with is not like Amazon logistics pick up a box. Anyone can do it. It's like you're making things that go on human spaceflight or like a plane. Like you can't screw this up. We get audited by the government. So that's something that's extremely valuable. That is, it's kind of hard to explain from someone who hasn't run a factory before, but is one of the most valuable parts of the company and one of the things that we're most proud. Speaker 2 So for human in the loop, you're like 10 percent, 20%, you're not going to get to 100% automation from software. You're always going to have someone in there. There's going to be constraints. There goes there's going to be. Speaker 1 Netflix, the same thing is like RAMP. You know, RAMP makes finance teams 20X more efficient. There's still someone in there, like driving the shit. Pitching to Software Engineers and the Engineering Challenges at Hadrian You know, if software is very critical in the business, how do you think about hiring software engineers and what's the pitch to them? Speaker 1 The pitch is basically, hey, we have real engineering problems, Half of this, half of this, half of the stuff we're building, like might be possible. So like would you like to come and do that where the outcome is like we'll know in two years whether this is a $10 billion company or a $1.00 company and the team is like 9 out of 10 rock stars. And you get to work on actual engineering problems versus like shipping more SAS software, you know, And the best engineers frankly just want two things. One is like three things work with other fantastic engineers work on really hard engineering problems that actually create business value and then have as few product managers as humanly possible. So that's why engineers come to work for Hadrian. Who we look for is a mix. Some of our team are software engineers with math backgrounds because we have a lot of, like geometry problems in some parts of the business. Some of the team are robotics engineers from like Boston Dynamics. Some of the team are people that have built operating systems for like large e-commerce companies, like the entire inventory system for one of the largest e-commerce companies. So we look for a mix, but the thing we test for is obviously raw engineering throughput, but also like can you be your own product manager. We don't hire engineers that want to be given a spec of what to build and then they just go do it in the dark room. We want people that are happy to like get halfway through and go talk to our director of operations and be like, hey, like, you know, so that's something we really test for. And then everyone and Adrian Bar handful are like fully on site writing software on the factory floor, hand in hand with operations. And some people don't want to do that. Some people are like, this is insane and hilarious. And I definitely want to do this because I'm, I've been stuck in COVID land with my remote people and I'm just kind of sick of it and I want to go back to the office and I want to work on really hard engineering problems. So you're telling me that you have no idea whether half of this is possible or not. If we pull it off, it's an enormous company and I just get to talk to the user and like build stuff that if I get it right has a real impact on operations and the customer experience within like weeks instead of getting in like product management hell, Nothing ever shifts largely like OK, great this, this makes this makes a ton of sense. You know that's it's as simple as that, you know? Speaker 2 Yeah, so that's a big deal and it's, I love the video and even going into the factory, seeing the automated machines running and the bits being changed out and how intense that is, honestly, like it's very intensive. Speaker 1 Oh yeah, and like software bugs are real. Like if you get a sort function wrong, like yeah, $3,000,000 pieces of equipment just destroy themselves. So it's real engineering. It's like real engineering, which is fun for a lot of people. Really high bar software engineers want to do real engineering. We got a lot of that. Expanding the Team and the Future Goals for Hadrian So are you guys hiring right now? What are the roles you're hiring out for? What are you going to be doing with this capital? Speaker 1 Everything. So our job is basically two very simple things. One is 10X revenue like a software company and automate enough that operations has the support they need so that we don't break along the way, go from where we're at today to basically a position where we are so efficient that we can compete with Taiwan in America and we are the most efficient American manufacturer now. But the goal is like to be globally competitive, which means leveraging software innovation to be like globally competitive. And then what you'll get is like a bunch of reassuring everyone cares about costs, right? What that means is we are doubling our engineering team. They're going to have to pull off something that would take any other engineering team, 120 people to do with like 35 people under very short timelines, which is why we only hire the best. And then operations is probably going to double or triple, Sales is going to double or triple and obviously all the support stuff that comes along with that. So yeah, we're we're highly crazy across the board. Wow. Speaker 2 That's that's a lot of work to do, yeah, at speed. Chris Power's Bullish Stance on American Manufacturing So you are a bit of a global politics enthusiasts I would say in terms of America's position, why? Why are you so bullish on America and and your position for manufacturing? Speaker 1 So what is generally going on is that we are 20 or 30 years away from the reserve currency flipping which happens roughly every 120 years. Like everyone just needs to go read the 4th turning. And the reason why it's important this time around is that what usually happens is 3 three things are always true in like late stage companies or late stage countries. Is the currency gets debased through inflation or just, you know, printing money, The culture declines and then you offshore the core production stuff to low, low cost countries, which makes sense as you're scaling, but you end up giving, you end up trading financial engineering for like country's security, right, which works for a while and then people go hold on, like you guys don't do anything other than do marketing and spreadsheets. We make all the oil like we've got the leverage and then the balance of power starts to flip. So America did this in the 80s and 90s and 2000s and this time around, so historically, we went from the British to the Americans, which is a pretty good trade like the global world order. This flip is basically the CCP versus the US And the reason why that's important is the next 20 or 30 years will decide who's got leadership, who's got global leadership in space, who's got global leadership in climate, who's got global leadership in AI. And basically, so if you think about AI, it's like who's got, who's got the most compute and which culture wins That's going to like train the AI. And to do that, you need like to continue to have global leadership. So that's kind of why it's important, why Hadrian manufacturing is basically conflict is prevented or avoided by having this enormously strong industrial base and the industrial base in the US is just not enormously strong. So you can see this in, like we've promised Taiwan and the Ukraine munitions, we need to ship 20X the amount of stuff to space. You know, like if America was a corporation and we were like this late on, promising our customers fighter jets or drones or whatever, we'd be like out of business. So it's mainly a production issue. And you know, you've got like 2 versions of this. There's like the enormous defense primes, new primes, like SpaceX, they're all innovating. They're all catching up. Their supply chain domestically, who basically makes them things that they can then make into satellite jets or drones is a complete mess. And for the software audience, I would say like, imagine if you were Netflix and AWS was like, hey, the amount of compute we've got is going down 20% a year. And like it's a complete disaster. Like that's kind of what America's greatest companies face with their domestic supply chain is it's just like that bad. So my view is that we need to resort our manufacturing to America. The only way to do that is with software and automation and getting American, the American workforce 10X leverage and to like rebuild the industrial base so that it lasts us for 100 years and we have like global leadership again. Otherwise we just simply won't be able to stand up to the CCP and we also won't be able to build as much stuff on shore as we need to to like have these core industries in America. So like that's that's that's why it's important. Vibe Shift in the Venture Capital Ecosystem Let's shift over to the vibe shift of this category. So we were talking about it earlier, but earlier in the summer the markets, the capital markets just like weren't, they weren't easy. We didn't know what was going to happen. It was a lot more dumerism around the VC ecosystem in general, especially at the growth stage where a lot of companies haven't really gotten their markdowns yet and there was a lot of waiting. There was a lot of uncertainty because of AI. We didn't know if Open AI was going to eradicate everyone or if it was just another, you know, part of the tool stack. But anyways, so now here we are, it's probably like 6-9 months later, there's a real vibe shift. People are going back to work. They want to work hard, they want to work towards mission oriented things. American Dynamism is a huge deal and Hadrian is at, you know, almost the core of it, right? It's like it's like Androl, it's Palantir, it's Hadrian. You're you're one of them. So let's talk about this vibe shift. How are you feeling it internally? Are you feeling it with your customers? Are you feeling it with investors, with recruiting? What does it feel like being the boots on the ground? Speaker 1 Recruiting is amazing right now. You know, two years ago we were like, please take this interview with us. Now it's like, oh, this makes sense. When can I interview with you both from Hadrian but also like software engineers or talent in general understanding that this category is got real momentum and is like valuable and I think without Founders Fund Andreessen like leading that charge from a narrative and capital perspective the ecosystem just simply wouldn't be here. Like the the level of momentum that Katherine Boyle, Trey Stevens have created narrative wise, capital wise is like insane. Like you know within two years they've kind of taken something from like don't know if I want to go work a palantir and or all because like America bad to like the whole country is like cool we're building hard things for the national mission is is insane and like just gives me a lot of hope for like American competitive this right. So we feel a little on the ground with recruiting. We feel all the ground from customers who are like yeah, huge problem, we're going to take a bet on you way earlier. We're going to help and investors, I would say like there are true believers who are doing it for the national mission who have been investing in this category for five to 10 years. There's this new way of coming into the ecosystem which some of them are tourists because defense tech went like this like crypto AI. Some of them are building 10 year practices that they like really want to invest in the category for a long time. So it's it's very good that there's a flood of capital coming into the system. But the worst possible thing that could happen to this ecosystem is that all the momentum investors go, this is actually hard and bounce out of the market like what happened to crypto or what might happen AI in a couple of years. But there is enough stable capital and enough people who actually care about the national mission that I don't think that will happen. So the capital flood is good. I think people will realize that these companies are a lot harder to build in the next two or three years than they maybe expect. And I don't think, you know, Founders Fun and Reason Lux, they basically know that you can underwrite companies. They're really going to be a $10 billion company or they're going to delete delete themselves. I'm not entirely convinced that the rest of the venture capital market understands that. So the way people underwrite companies is very different. So our investors understand this. It's like it's either it's either A10B or it's a 0. But the way you invest in these companies has got to be very different because of the returns profile. And I think we're probably going to see some like bruised brews return profiles in the next two years of you know people flooding capital of the companies that aren't a platform on a multi product company. But the opportunity is still there and like the government is investing the DoD approved matched massive budget, there's momentum. It's all going to come together in a very short amount of period of time. But like yes it's like incredibly impressive. This has gone from 10 years ago. How dare Palmer Lucky or the Palantir folks like Bill for the national mission to This is what everyone's doing. And it's extremely impressive because giving a lot of hope that American industry can like perform for America instead of just building, you know, optimizing ad clicks at a big tech company. Speaker 2 Yeah, and Andrew's Birch. Their merch shop also is helping. It's amazing. It looks like Tokyo St. Wear. Like, it's really great. When is Adrian going to drop their merch shop? Speaker 1 So we actually do internal merch drops every quarter, OK. We're talking about whether we can do a merch shop or not, or whether we want to keep it exclusive, but you can have some merch. Speaker 2 Thank you. I would love some merch. Don't keep it exclusive, but if you do keep it exclusive, do a nice merch, drop on Twitter and see what happens there and then maybe you can recruit some some new folks out of that as well. Foundational Challenges of Deep Tech Startups So I want to go back to the early days of Hadrian. I think. I think this is an important point because people are getting into the hard throes of building in this category and may not have the expectations for it. But from your story, you locked yourself in a hotel room, you called up every manufacturing facility, you went out and you visited them. So talk to me about the early beginnings of Hadrian and why you think that's so important for what has built a long tailwind of customer interactions to now? Speaker 1 The thing about manufacturing and deep tech in general is that the answers are not on the Internet And I think a lot of founders don't get their hands dirty enough with like customer discovery or operational discovery earlier. And I'm I'm a big believer in you should take a year off to audit your own thinking before you start something. Because the other thing about deep tech is there is no, there is no iteration. Honestly, software companies, you can raise a couple of 1,000,000 bucks, have an idea, test an idea, ship something new in four weeks. Whoops, customer base sucks. Pivot, pivot, pivot, pivot. The amount of complexity in deep tech is just such that you kind of have to have the thesis baked from the start like Peter Teal has this thing. It's basically like either the company is founded correctly or there's like this sin that can never be pegged down. And that's Tripoli is true with deep tech because you've kind of just got to be right from the outset. So there's two things. It's like, hey, will this customer buy this thing? Who knows, You got to go talk to them. And at a deeper level, can you actually automate this? That's like at a deeper level, you have to really understand operating these companies to be able to even make that decision. I also just think as Elon says, which is correct, is that to do this your pain tolerance has to be like aggressively high, aggressively high. So personally it was like, you know, very difficult to be running on $3040 a day, running out of money in four months and then be like in the middle of nowhere visiting manufacturing plants to learn. But by proxy, if you're scared of that, you're probably dead anyway because like that is not the hardest thing that's going to happen and you're paying threshold for complexity and risk has to be 100 times higher than a normal startup. So it's kind of like a good, a good litmus test. Like if you're not willing to get your hands dirty and go do that sort of work up front, it's like it's an acid test. And I think people shouldn't kid themselves about how hard this is. It's not as hard as people think it is, but it is certainly, like psychologically and physiologically 100 times harder. And your pain threshold just has to be enormous. So I was just like, yeah, no, I don't want to like, I don't want to do this. I'd rather sit in San Francisco, like hanging out. But by the nature of the problem, if you're not willing to go do it, then you're already dead anyway. So it was kind of obvious. And then just stop being a baby about it. I don't know. Call some people, go put some on the ground. Stop. Stop building up your knowledge. Like, I don't know, work. It's very Catholic. Just like, I don't know, get done. You know, what are we talk. What are we what are we talking about? Like just work. It's fine. Suddenly it is what the brilliant thing about was one of the reasons why the best companies have founded directly after recession has nothing to do with, like, pricing. It's just that you get people like Airbnb or Travis from Uber where they're just like I have no other option, so my paying threshold is stupidly high because I have to do this with 200 grand. So the companies that survive just have teams that have a ludicrously high paying threshold, and I think you need that in D tech as well, because like the rewards are 100 X, the risks are 100 X, the paying threshold is 100 X. It's not for everybody. Speaker 2 Look, you've accomplished a lot. You've raised around $200 million in in just three years. So you've been running really hard and you've been growing really, really fast. Reorienting and Resetting While Scaling a Company I'm curious if you've had time throughout that period to just reflect or reset or reorient yourself. Because going from different levels of speed and then knowledge of building and experience and all of these little things throughout time, you might not know it, but like you're in a tunnel vision and so how do you take yourself out of that tunnel vision to reset and then be like, OK, now we're going to go to the next level? Speaker 1 The short answer is I didn't do it for the first two years and now I'm pretty good at it because the the game becomes upgrading yourself as a founder as fast as possible. Not, not, you know sending the next, 12th e-mail. So the only way to do that is really break out of the tunnel vision and go spend a lot of time with other founders or other people who who are three steps ahead of you. I think the other thing is really recognizing what gives you energy and what doesn't give you energy, which for not cases like me is difficult because the answer is we'll just work harder. But that actually is like a two year strategy, not a 10 year strategy. So yeah, you you have to learn. You have to learn that skill as well, which is counterintuitive to being a seed or or a seed or Series A founder which is just like work 24/7. What you have to do as a deep tech founder across a decade long company building is go through these like hunts where like you're spiking really hard but you're building in enough rest time that you're effective across a decade instead of just effective, you know. But then you're kind of burned out after 18 months. And once you start to view it like going to the gym, it's like that's just part of being a good human being. It's like part of being a good CEO. Like what my team needs me to do is make several high quality decisions every week. And if you're not sleeping or burning yourself out, like you're not doing your job as the founder of the company where everyone's relying you to make really high quality decisions. What that takes is discipline and muscle, and it's like a learn skill that second time founders were far better at than the first time founders. So that's one big part of the trick. And the second big part of the trick is that at some point your success is the velocity of the org, not your own personal velocity, which is a transition that you have to make around 60 to 80 people. And it's a very different mode. And if you're growing as fast as us, it's very psychologically interesting because what the org needs you to do changes overnight and it usually takes down to six months to catch up. And so making those transitions as elegantly as possible and realizing that you have to kind of become a different person every nine months because that's what the org needs, is a very interesting thing that I think is like under discussed and scaling companies. But if you talk to any great founder or CEO, they're like, Oh yeah, this is the entire trick. It's all all design and incentives and, you know, figuring out how to keep growing fast without blowing yourself up, It's fascinating. Yeah. The other, the other thing I'll say on this is that there are like employee cohorts, right? So it's like your first thirty people have been in the war with you. You're next, you're 30th engineer, like thinks you're the CEO that don't even know you was the founder. And then all of a sudden you've got 200 people where 80% of them know you was the CEO, not the founder. So like, actually what people expect out of you changes overnight. But you're also dealing with two separate two separate tribes that expect different things out from you 8 to 300 people. And it's a totally different ball game where like most of the people and the customers only interact with you for 15 minutes a week at best. So like if you're tired or like not on it, everyone's like, oh this company's fuck. But like, there's a lot of transitions to make and we haven't got it perfect and I haven't got it, I haven't got it perfect. It it very quickly becomes the most important thing. Speaker 2 Setting expectations and understanding how to grow and scale with the teams. I can't imagine, and I don't understand how teams are able to scale from like 200 to 1000 to 2000 employees in just one year. But it happened quite frequently during COVID and Zerp and all that kind of stuff when there was excess. Speaker 1 Money. I think it's almost always. I think it's almost always a mistake. Speaker 2 You think it's a mistake. Speaker 1 Yeah, yeah. So Patrick Carlson from Stripe and also Eric Schmidt at Google basically had a hard and fast rule that you could only scale teams 30% a year without damaging the cultural York. There's kind of nowhere to go faster because the inefficiency that sets in is insane, but you have to scale really fast. So balancing that cultural trick, it's like throwing a good party. You know, like you've got this core group of 10 friends that like, hey, we're going out. Everyone knows what that means. You add one more friend to it, they're like, Oh yeah, like we all drink tequila, blah, blah, blah. Like, this is what we're doing. You double that group and you're hiring. Or like, throwing a party for a totally separate group of friends. And then it's just like, feels classy. It's not a good vibe. That's company building. You can go faster by hiring from companies that have a similar culture to you with a really good onboarding process. That's like a mix of, you know, Burning Man and like a military boot camp. But at a certain point, it's human beings learning how to work together. And at a certain point, there is like a throughput rate on just how many people you can ingest versus the culture breaks. And the culture's basically the only thing that is the mode of the company. And if you scale too fast, you're at real risk of that. And that's something that you have to like, prune and tend to very It's like throwing a great party. It's like this guy's amazing. Like, I don't know, kind of the wrong vibe and like everyone's like everyone's, you know, I don't want to say this party till 1:00 AM and like what happened, it was like because you invited 1010 people that were like not the right vibe and everyone's like, I don't want to be at this party anymore, you know, that's like recruiting and company building. Sure you can give someone a technical test and like, hey, you're good culture fit. But ultimately, it's just like, cool. Like we we're all on the same page within the same thing, and it's a very awful thing to do that scale and requires a lot of effort in pruning and being really intentional about it, because it happens naturally at first, then it stops happening naturally, and then you've got to systemize it and you've got to, like, have the symbolism and it's it's a total trip. I strongly recommend experiencing it at some point, OK. Speaker 2 I'll do that. I'll try to scale a company. Yeah, it seems like no, no, no big sweat. OK, so to close out, we have one fun question and one more, you know, standard question. The fun question is from Xander. I don't know if you can answer this or not. I don't know if it's allowed, but what is going on with drilling holes in servers? Speaker 1 Oh, that's an old war story where for my old friend of ours who was an employee of the company where if you we we have not gotten hacked. Plus, because we hold a lot of sensitive data, one of the fastest way to de risk a cybersecurity event if you think something's being breached is to just pull the hard drive out and drill a bunch of holes in it. So it's real. It's real tactical. Yeah. You got to take the Battlestar Galactica view of cybersecurity. Speaker 2 Got to go straight to the metal. Speaker 1 Yeah. Oh yeah. Oh yeah. Yeah, yeah, yeah, yeah, 100%. Yeah. The off switch can't be digital and sometimes the best solution is just put a 8 bit drill through a hard drive. Speaker 2 Yeah, seems right. Seems very right. OK. OK, cool. Future Outlook for Hadrian and Deep Tech Innovation And then lastly, what are you most looking forward to this year despite the pain and growth? What are you most looking forward to? Speaker 1 Give you the 18 month version, which is everyone at Hadrian kind of signed up to do this insane growth and automation journey and I really think they can pull it off. Like I I really think that this is not, it's like barely possible. But they're going to do it. And I think what I'm most looking forward to is like looking at this 18 months in the future backwards and going like, Oh yeah, like the whole company just like went in this direction. And it worked somehow. And you know, there were still, like, tears along the way. There were a lot of, like things that could or could not go wrong. But I think it's like we're at the point where it's going to work. It's really hard. The team were incredible and to do the amount of hiring, scaling and execution that we need to do is like 40% chance at work 60%. We're having this conversation in like 18 months and like company, company no longer works. But I think like it's the team's plan. I think they've got it. With such a good crew over here, what I'm most looking forward to is being like in 18 months, like I didn't do this. You all of you just like, pulled off this miracle somehow. I'm reflecting back on that when we're like very quickly stamping out factories in different states with this same customer base. And now we're like this generational company. And I think we'll be there in like 18 months. But like, we've got the team to do it. And I just think what they have, what they've figured out is barely achievable. But the attitude is like, yeah, this is nearly impossible. We will like find a way to get this done and I think like being able to look at that back at that in 18 months is going to be like insane, you know, that's the thing that I'm most looking forward to. Speaker 2 That's great. I think it's Trey Stevens who maybe this is a media term, but he looks to end points and then works works back. Speaker 1 And. Speaker 2 Like. Speaker 1 No, I think that's the way you got to do it. Yeah. Yeah, that's the way you got to do it. Yeah, it's going to be what? But I think we've we've got all the right ingredients. It's Tesla hard. We're definitely going to pull it off come hell or high water and then we're having a very different conversation in 18 or 20 months it'll. Speaker 2 Be fine? I think so. Speaker 1 It's all hands. It's seriously all hands on deck, Yeah. Speaker 2 You guys have accomplished a lot. You're accomplishing a lot. I know you work really hard, so give yourself like a pat on the back. Wrap It's been amazing to see the growth like even in the last year. So congratulations again and congratulations on the raise. This is a big deal. Thanks again for taking the time and carving out a little hour of your calendar with me. Thank you, Chris. Speaker 1 Of course, of course. Just anybody listening to this invest in the national interest and come work for national interest companies. Speaker 2 Great way to close it out.