America’s Electric Power Grid Is Broken. This Startup Is Trying to Fix It. (Zach Dell, co-founder & CEO of Base)

Speaker A: It's no secret that electricity is the fundamental input to human creation and productivity. There has been very little innovation. I proposed this concept of doing to energy what SpaceX had done to aerospace and Android had done to defense, building around this paradigm shift of solar and storage in this vertically integrated way and focusing first on battery storage, not just storage and retail electricity, but all 4 parts of the power stack, which we defined as make, move, store, and sell. And the battery is just the most effective technology to do that.

We are building infrastructure for the grid and we're not building high-end consumer devices. Are sold with this premium product valence at high gross margins for wealthy people. We're building great infrastructure to serve everybody and ultimately lower cost and increase reliability. And that's the North Star in everything we do. We want to be America's power company. We want to be a symbol for the entrepreneurial spirit, the ambition, the drive of this country, and the great things we can do when we come together to solve hard problems with technology to make the world better.

Speaker B: Nobody loves their power company. There's no Costco of kilowatts or Southwest Airlines of electrons. Zach Dell, the co-founder and CEO of Base, wants to build America's first beloved energy company. He's off to an impressive start. In less than 3 years, he and his team have built a thriving Texas business valued in the billions of dollars. And Zach believes they're still just at the top of the first inning. In today's episode, Zach and I discuss America's stagnant grid infrastructure, the college-era attempt to lease a Hawaiian lava field that first sent him down the energy rabbit hole, how NBA coach Phil Jackson's ability to align superstars shapes the way that he builds teams, and what growing up as the son of Susan and Michael Dell taught him about truth-seeking, competition, and reinvention.

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ai/mario and use code Mario for 3 months free. Speaker B: I'm super excited to chat with you about so many things today, Zach, but in learning about you and learning about Base, there was one sort of anecdote that came up in a podcast before that it felt like it didn't get followed up on, but actually seemed like an interesting link to why you're doing what you're doing. And it was the fact that in high school you wanted to lease Lava Rock to build solar panels on it. Why was that, uh, something that you wanted to do as a 16, 17-year-old, or was it a college student?

Speaker A: It was in college, uh, and the reason is because it proposed an attractive risk-adjusted return. Uh, so the backstory here is that, uh, I— yeah, I got really into solar in college. I, I, uh, and what that means is I was struck by the cost curves Energy was an industry asset class that was interesting to me. I guess, you know, the more high-level point is that I was fascinated by financial markets and companies and, you know, opportunities to create value. And I saw solar as a great example of that.

It was a low-cost way to generate electricity. And if you followed the cost curves, you saw a rapid decline, which meant that if you deployed the asset and you could structure offtake at the right terms, you could generate a really high return. And so that math looked particularly attractive in areas of the country that had high electricity prices. And, uh, Hawaii has extremely high electricity prices because it's an island and it's really hard to get power there. Uh, and the math looks even better where you have low land costs and high electricity prices, right?

You need a lot of land to deploy the solar. And so basically I put together a deal, uh, or try to put together a deal to lease a lava field on the Big Island of Hawaii, uh, build a solar array, sell the power back to Hawaii Electric. A long-term offtake and, uh, and generate a, a, what I thought would be a really attractive risk-adjusted return. Um, and I went out to go raise financing for this project as a certainly naive college kid. Um, and was, was turned down by major banks, uh, on Wall Street, basically with the message of, hey kid, like, not so fast.

Uh, you know, good idea, like, but not, not so fast. Uh, So yeah, that's a fun, a fun story. I, I mean, fun, fun, fun anecdotes of like driving out around the island, looking at different sites, meeting with, you know, farm owners and landowners and, uh, it's just fun. It's fun to get into things and try to build stuff and put 'em together and, you know, do the math and, you know, start with a low-fidelity spreadsheet and then learn more and ask questions and refine the assumptions. And I've just, I've always loved puzzles and solving puzzles.

And this was a puzzle to me. It was, uh, it was that you start with a fuzzy puzzle. You're like, okay, the power prices are high, the land costs are low. You know, this is what it costs to get the equipment. This is where the cost of the equipment is going over time. And then over time, you kind of chip away at the puzzle, you chip away at the math, and you get a clearer picture and you get opportunity and, you know, you have alpha. And that, that to me is a fun process.

Speaker B: Was that the first time that you had started to take a close look at the, you know, grand puzzle of electricity, or had you sort of been, I don't know, chipping away at different pieces of it before then even? Speaker A: Yeah, that, I mean, so in college I started a, a business and I say business in, in air quotes cuz it was really a project to develop anaerobic digestion systems to turn human waste into biogas or compressed methane, uh, in rural parts of the world, specifically in India.

Spent a lot of time in India trying to do this similar thing. It was a puzzle. It was like, okay, there's a billion people on the planet that don't have access to sanitation infrastructure. We've been doing this thing called anaerobic digestion in the US for a very long time on a large scale. And actually the technology is ex— extremely simple. Um, can you scale this down and do it with really low-cost components and kill two birds with one stone? Can you solve the open defecation problem and also create low-cost reliable power source?

And it didn't really work. Uh, it was really hard. Uh, there's a lot of reasons why, you know, building a business like this in India is, is, is challenging, especially for a foreigner. And, you know, there, there wasn't really much of an economic model. The end customer is someone at the slum level that doesn't have any capital and we certainly didn't want to charge people to go to the bathroom. And so there was— it was more of a research product project than a business. But that, that sent me down the path of, of just kind of understanding energy and exploring it and being really interested in it.

And I honestly can't recall what, what set me down the solar path. It was just, you know, in college as I was spending time around energy, it became obvious to me that solar and battery was going to be the future of the energy industry. And I think then as I kind of grew up and, and, uh, you know, joined Blackstone and, and worked with the people there and looked at like large companies, I started to appreciate the dynamics around the energy markets and how these companies are positioned, where they're investing, how their incentives are structured.

Uh, and that of course has all informed, you know, what we're doing today, base. Speaker B: You know, it's, uh, these are all sort of origins, but I find it such an interesting way to try and understand the scale and the complexity and the ambition and also those sort of roots of what you're doing at Base. In studying some of those early experiments, like, you know, you mentioned SQUAT, the project in India, this lava project, there were also these chapters in your career where you, you know, went to Thrive, you, you know, had sort of a career at Blackstone, and you've sort of toggled between more of this founding mindset and investing mindset.

And just hearing you even talk about how you thought about, you know, the lava project was very investor-esque to me. I've heard you talk before about like always wanting to be an entrepreneur as a young kid, but were you also always sort of, I don't know, trading a few stocks or, you know, having a phantom portfolio? Speaker A: Yes. And I still love to invest. And investing is predicting the future. That's what it is, right? And I think people, you know, try to make it something it's not, or maybe downplay that element of it, but to some extent, like you are always trying to predict what happens, sometimes on a long time horizon, sometimes on a short time horizon, sometimes with a wide range of, you know, variables and assumptions and outcomes, sometimes with a very tightly bounded range of variables, variables, assumptions, and outcomes.

And predicting the future is fun. It's super interesting. I mean, it's back to the puzzle thing, right? It's about learning and curiosity and constantly studying the world around you. And that's just like been my version of fun forever. And The reason why I think operating is more fun than investing, I have kind of crystallized this metaphor recently, which is, you know, if you've ever been to an NBA basketball game and you sat like really close to the floor or like on the floor, it's like the coolest thing ever. Like your feet are on the hardwood.

You can like, you know, see the sweat dripping on the players. You watch, you know, their facial expressions. Like it is an incredible, incredible experience. But there's nothing like dribbling the ball. There's nothing like having the ball in your hand with a minute to go, you know, 24 seconds on the shot clock. You're down by 2, your team needs a, needs a bucket and you gotta score. And that feeling is so much more fun and so much more interesting and so much more, you know, full of, of life and, uh, possibility than sitting on the sideline and watching.

Even if your feet are on the hardwood, even if you're, you know, right next to the players. And it's still really fun to watch the game, but there's nothing like playing. So I love investing. I really love building, uh, 'cause it's, you know, you got the ball in your hand. Speaker B: Do you take a lot of inspiration from sports? Because you spoke about that with quite a lot of passion. You seem like you could be someone who, I don't know, uh, studies Bill Walton or, you know, some of these legendary coaches to take, uh, team building tips from them or something.

Speaker A: I do. I, I, I love sports. Uh, sports have been a huge part of my life. As long as I can remember, particularly endurance sports. My mom is a world-class endurance athlete. Yes. She, uh, did the Ironman World Championships in Hawaii, a number of half Ironmans. She's a, a, a total beast, uh, and an absolute fierce competitor. People often think I get my kind of competitive edge from my dad and they clearly have not met my mom because, uh, she, she is on a whole different level. And, uh, I played basketball growing up and, and loved basketball and still love to play basketball and certainly draw a lot of inspiration, particularly from John Wooden.

You mentioned coaches, but A lot of great insights and learnings from him. Same goes for Phil Jackson. Yeah, sports have been a big part of my life and a large source of inspiration for me. Speaker B: Well, what's the, what's the John Wooden or the Phil Jackson things that show up most at Base? Speaker A: I think that buy-in across a team of people who are, you know, I take Phil Jackson for example, right? And, you know, he coached teams with Michael Jordan and Scottie Pippen and Kobe Bryant and Shaquille O'Neal.

And, you know, Dennis Rodman in the case of the Bulls and these, you know, very talented, big personalities, very, you know, high ambition, tons of agency. But he was able to get these teams to all buy into a shared common goal and mission, vision, and strategy. And I love playing the role of player coach where I'm on the field with the team, but I'm also in charge of and responsible for articulating our shared mission, vision, and strategy and making sure, you know, that Michael Jordans and the Scottie Pippen and the Dennis Rodmans and, you know, on our team are aligned and are marching in the same direction.

And if you look at the team that we've built at Base, first of all, this is the most important thing at the company. Our team is our most valuable asset by far. And I would describe our team as absolutely stacked. We just have an incredible lineup of players in the starting lineup, on the bench. We've got a, you know, deep rotation of people who are exceptional at what they do. But most importantly, and back to your question, they're deeply aligned to the mission and they buy in. And, you know, I think if I think back on the best teams I was ever on as a, as a basketball player, there were teams where everyone was bought in.

All the coaches were bought in, the players were bought in. Everyone knew their role. They knew how they fit in the broader system. Not everyone was trying to be the point guard. Not everyone was trying to be the shooting guard. They knew kind of where they fit and where they could add the most value. And, you know, I think the, the thing that we've done best in our first 3 years is building a totally stacked roster and then aligning that roster around a shared mission and having a team that's super bought in.

Speaker B: It seems like you really obsess over talent in a way that, you know, I've seen often people get to quite an elevated level of company building And almost that feels like the piece that annoys them the most or is most frustrating because, you know, there's just, there's a certain number of people at a company. It means that someone's having their worst day of the year every day or, you know, every, every couple days. So, you know, there's this natural human strain, but it strikes me that you kind of have to have that excitement about stacking the deck, stacking the team to do that.

Like, how do you get, stay excited about that to be the person who's You know, still, still looking for amazing people every single day. Speaker A: I think it's really easy to get excited about because these 10x people inflect the performance of the company so dramatically that it's kind of impossible to not see their impact and not want to continue adding world-class talent. So this goes back to my co-founder Justin and, and you know, our, uh, Jared, who was our, our, our first hire, and Cole and Dana and Michael Scaria and you know, Dino and these early people that we brought onto the team, that when you're 2 people and you add 1 person to the team, that's a massive percent increase in, in total capability, right?

And 3 people and 4 people, etc. So, you know, when I started working with Justin, it was obvious that he was a total force of nature, nature, just a world-class operator. And he, you know, massively multiplied what I was able to do kind of running down this opportunity on my own. And then of course we meet Jared and Jared just blew us away in terms of what he was able to do and the way he thought and the way he could communicate his ideas, the way he pushed us to, to communicate our ideas better and think more clearly and be more precise.

And same goes with, with, with Dana and Cole and, and, and, and Michael and Suzanne and Dino and all the people that, that joined us thereafter. And so it becomes very easy to get excited and, and spend time, uh, on this recruiting motion when you see that impact. Speaker B: You mentioned your parents and how you sort of get this competitive zeal from your mother, but you have these two real force of nature parents, your mother Susan, your father Michael Dell, you know, a world-class entrepreneur in his own right. When you look at the two of them, what are the pieces that you've maybe taken from one versus the other?

If, you know, the competitive zeal is from mom, what comes from dad most directly? Speaker A: I think a couple things come to mind. One is, I'm really struck and inspired by the extent to which he is a ruthless truth seeker and deeply curious about what's happening in the world around him with regards to his business, uh, in things that seem, you know, adjacent and maybe not related to his business, but somehow find a way to be, uh, important. He, he is just like totally focused on getting to the ground truth and exploring all of the possibilities.

And I think As the company has scaled and become bigger and more capable, it would've been very easy for him to just kind of focus on what's working and not question, you know, what the business is doing. And he has reinvented that company. Him and the team have reinvented that company multiple times. Speaker B: Yes. Speaker A: And that comes from this concept of constantly questioning assumptions and being truth-seeking and looking out for what they could be wrong about and what they should change. And so he's just not resting on his laurels, right?

He's not like, oh, well, we've got this great business and it's working, and so let's just keep doing that. He's, always thinking about what could be next. And, you know, he, he has talked about this publicly, but, you know, a couple years ago going to a team and saying, hey, there is a company out there that is moving faster than us, is out-innovating us, that is focusing on the next thing. And we either are going to become that company or they're going to put us out of business and we got to become that company.

And having that mindset 35 years into the company, that's super inspiring. I would say back to the beginning of the conversation, He loves puzzles as well, right? And it's, it's this kind of curiosity and this, this, this like, let's study it, let's understand it, let's ask the questions, you know, the Socratic method, uh, wrapping your head around a thing. I would say that, that is probably what I have gotten most from him. I mean, I'm, I'm extremely biased here and it's, you know, hard to think in the third person about like, what have I, you know, what about me is most similar to him?

And I think probably those who know both of us well could comment more accurately about that, but. If I had to do it myself, I would say this kind of like thirst for knowledge and, you know, genuine curiosity and love for puzzle solving. And from my mom, honestly, fierce competitive instinct and will to win and hate, you know, hatred for losing and kind of a love of the pain cave as we like to call it, right? So she, you know, she's a world-class endurance athlete, like This sounds totally ridiculous and I hope she's okay with me sharing this, but so I'm one of 4 kids.

Every year on all of our birthdays, she would ride 100 miles plus our age. Oh, wow. Not because we asked her to do that. Speaker B: Like, yeah, yeah. Speaker A: We're like, oh, mom, could you please ride 107 miles this year for my 7th birth? Like, she, this is a thing that she did out of her own volition because it was important to her because she loved the feeling of accomplishment. And you know, it was. She was in her mind, she was always doing it for us. It was like a thing of like a, it was like a sign of love and commitment and dedication.

And, you know, I then got into endurance sports and cycling and triathlon and running. And I think that taught me this sense of if you want to get better, if you want to get stronger, the only way to do it is to train and to prepare and to go put in the hard yards and the hard hours and get comfortable with that feeling of pain and kind of living in that pain cave. Right. And being. Able to just like feel pain for a long period of time and kind of love, love that feeling because, you know, you're growing and you're developing and you're, and you're in your, and you're learning and you're getting stronger.

And I credit her for that. Speaker B: What has been like the, the deepest, darkest pain cave that you've had to go through with Base? Speaker A: I'm almost certain that that is in our future, not in our, in our past. You know, things only get harder as the business gets bigger and more capable. You know, I think that one version of this is, you know, when we first got started, the amount of people that told Justin and I how wrong we were, how dumb we were, how, you know, this didn't make sense and for X, Y, or Z reason.

And I, you know, it's less of a, you know, it sounds not that painful, but this concept of holding the conviction in your head while all these industry experts tell you these things, you know, why it's not going to work and being able to just kind of cut through the noise and genuinely listen and genuinely take insights from these experts, but be able to kind of like snap to the thesis in your brain of like, okay, yes, they're right about this, right about this, but this is what they're not seeing.

This is what they're missing. And I try to tell other friends who are starting companies this, like, you must get comfortable with the notion that a lot of really smart people that you respect are going to explain to you in excruciating detail why this is not going to work. And you have to be able to see through that and have a clear vision in your mind for why it is going to work. And that is, that can be painful. Uh, and it's, it's really, it's a lot of risk to sit with.

And you know, the imposter syndrome stuff comes up. It's like, well, how, why, why am I right? Like these people know what they're talking about. Like why, why, you know, why am I right? Um, and I think that that is an interesting concept. And, and I'll just say like what gave me confidence, what continues to give me confidence is it's not that I'm right, it's that we are right, right? Like Justin and I, Jared, Justin and I, you know, Jared, Justin, Cole, Dana and I, right? Like as the team grew, we brought these people around who are like very smart, saw what we are seeing.

Now you can of course fall into the groupthink stuff, which is dangerous, but if you have a team of people who are also willing to question and poke and push, you really respect them, they really respect you, and you can build conviction together, uh, that allows you to cut through. And, and is another reason why I I just, to friends who are starting companies, I really, you know, I tell 'em, it's like, hey, find a co-founder. 'Cause like for me, you know, there's no base without Justin. Like you, you need a really capable, like starting companies is lonely.

And I, I frankly don't know how my dad did it as a solo co-founder or solo founder. But that's just not the, not the, not the life I, I, I want. I like building things with teams and that's really worked well. And then, uh, focus maniacally on, on the talent and the team so that you can have a peop— a group of people who can, you know, sit in this pain cave with you. And, you know, cut through the noise. Speaker B: You know, we were talking before we started recording a little bit.

I was mentioning, you know, I've had my first kid, my son, not so long ago. And as I study sort of, you know, you can't help yourself probably as a parent, how to give your kids the best possible education, the best chance of different kinds. One of the things that really comes up a lot in the histories of exceptional people, and there's a wonderful blog post by a writer called Henrik Carlsson, I believe, where he studied all these exceptional people is that a lot of the time their parents or a tutor of some kind really treated their ideas as an intellectual equal, brought them into their world, explained what they were working on, what they cared about.

I wonder to what extent, you know, you had that experience with your, with your parents, like were the challenges of Dell and what your dad was going through sort of things that you were hearing about and seeing how he dealt with them? Have there been things that you've been able to draw from there or was it you know, not necessarily the way things played out. Speaker A: Yeah, absolutely. My dad and I love talking shop. Like, we have a lot of fun doing that, talking about his business, talking about my business.

And it's kind of our— it's our love language, to use a funny, funny term that I don't know is appropriate in this context. Speaker B: No, no, totally. Speaker A: You know what I mean? It's like we, we both are passionate about building businesses and we're passionate about, you know, each other's interests. And so it's a really fun way for us to, you know, get into the weeds with each other and help each other and push each other and learn about each other. And that started when I was really young.

And I have vivid memories from, you know, early adolescence, you know, whether we're, you know, in the car or at the dinner table or, you know, walking around the house talking about what he's working on and what the business is doing. And, you know, explaining things to a 7-year-old is challenging. Yes. And, you know, certainly a 7-year-old who likes to ask a lot of questions. And those are really fun memories that I have, and I'm super grateful for that. And I think it would've been very easy for him to dismiss my questions or tell, you know, you don't understand this and you're too young.

Uh, and of course I'm sure there were things that, you know, he, he, you know, summarized and didn't get into the nuances of for, for those reasons. But I was very lucky to be exposed to a lot of the things he was doing very early, and I was curious and I asked a lot of questions and very grateful for that. Speaker A: You know what I mean? It's like we, we both are passionate about building businesses and we're passionate about, you know, each other's interests. And so it's a really fun way for us to, you know, get into the weeds with each other and help each other and push each other and learn about each other.

And that started when I was really young. And I have vivid memories from, you know, early adolescence, you know, whether we're, you know, in the car or at the dinner table or, you know, walking around the house talking about what he's working on and what the business is doing. And, you know, explaining things to a 7-year-old is challenging. Yes. And, you know, certainly a 7-year-old who likes to ask a lot of questions. And those are really fun memories that I have, and I'm super grateful for that. And I think it would've been very easy for him to dismiss my questions or tell, you know, you don't understand this and you're too young.

Uh, and of course I'm sure there were things that, you know, he, he, you know, summarized and didn't get into the nuances of for, for those reasons. But I was very lucky to be exposed to a lot of the things he was doing very early, and I was curious and I asked a lot of questions and very grateful for that. Speaker B: I mean, I imagine this is, you know, maybe this is the sign of someone who doesn't understand really how things work at that level. But I imagine actually in a purely pragmatic sense, he also probably got a lot of signal from you because if someone is, you know, there's a wonderful naivety to kids that they can sometimes cut through with a question that is actually really profound and forces you to distill something.

And if you have to, you know, it's like the Richard Feynman heuristic of like, you know, you probably don't understand something until you can teach it to a 7-year-old, I would imagine. Speaker A: You'd have to ask him, but, uh, I, I, I imagine there's definitely some truth to that. Yeah. Speaker B: Yeah. Fascinating. I think one of the things that, uh, we really, uh, should spend some time on is Justin, because it seems like he is such a, a core part of this company. You, you've mentioned before that you met him when you were sort of doing diligence on Angerell.

You know, it's probably too much to say it was a love at first sight moment, but, uh, how, how would you describe sort of the, the effect of that first meeting? Speaker A: You're absolutely right. Uh, there, there's no Base without Justin. He is a, a true force of nature. I, I really don't think I've ever come across anyone like him. Uh, he is deeply technical, extremely operational, probably the highest ownership person I've ever worked with, and is just an absolute execution machine. And I think when I first met him, I was struck mostly by his intelligence.

Uh, you know, he also just has incredibly high horsepower and his attention to detail and his understanding of the systems and you know, at Thrive and in my previous role at Blackstone, you know, and just broadly, like I met a lot of companies and I've met a, you know, done a lot of these kinds of meetings where you ask people a lot of questions about the thing they're working on. And he was in the top, you know, percentile of knowledge and subject matter expertise and understanding. And I, you know, we also just hit it off, right?

Like at some point, at some level you need to have a shared kind of rapport and a, yeah, a kind of worldview and, and, you know, perspective. And we certainly don't agree on everything and we, you know, we definitely have many, you different approaches and I'd say our skill sets are very different. But I think in that first meeting and the subsequent days and weeks that followed that where we kind of stayed in touch and we're talking about different ideas and identified the— yeah, extremely high horsepower, deeply operational and technical, very complementary skill sets.

And then frankly, high integrity. Like he's a good— he's a good human. And he— yeah, we have, you know, similar, similar values, similar worldviews. And I think if you're going to build something with someone, particularly if you're planning to do it for a number of decades, that stuff was really important. Speaker B: You said such an interesting and specific phrase that I'm like, this must mean something to you. When you say the highest ownership person you've ever met, like, how do you see that? Where does that show up? And is that something you're almost always looking for in some sense with people?

Speaker A: Yeah, absolutely. When Justin tells you he's going to do something, he's going to do it and he's going to do it in the way that he told you he would do it. And if he learned something along the way, that changes how he thinks it should be done, he's going to communicate it to you in great detail and very, very promptly. And it leads to a very effective operator who gets shit done. And there are a few people who get shit done at the velocity and quality, uh, that, that he does.

Frankly, I have never met anyone that, that can do it at the level that he can. And that has become a core part of our culture at the company. And I think He has made me a way better operator, uh, in that I have learned and pattern matched and tried to mimic, uh, this ability that he has. And I think you would hear the same thing from the rest of our leadership team and many other of the people at the company. And it's now actually, you know, it's such a big part of our culture that it's something that we explicitly screen for.

And I'll, I'll give you an example of this. So when we're in an interview, we'll ask some version of, you know, tell me about the hardest problem you've ever solved, or tell me about what your core skill is, or walk me through the problem that you saw that you're most proud of at your last role. And people will often answer with, well, you know, we did this and my team and, you know, I was a part of this group. And, you know, the kind of Justinism here is like, well, Mario, what was your contribution?

What did you do? And it's like, well, I was a part of this group. No, no, it's like, what piece did you own? What were you specifically responsible for? And what did you have to do to achieve that? And what were the challenges and what were the missteps and You know, can you go down to the atomic unit of the thing? Do you really understand the first principles of why you did what you did? And oftentimes the answer is no. And, and just that pattern match or that kind of fact pattern of, uh, you know, trying to pull out the, you know, how, how, how Justin-like are they, has been a very high signal hiring, uh, mechanism for us because the people that match well to that, that have really high ownership and are able to articulate super precisely what they owned and why they did it, uh, they perform super well.

And those who speak in vague generalities and do a lot of hand waving often don't get hired. And if, if we, we, we do end up hiring them, you know, th— those people tend to struggle. Speaker B: The way this story often gets told is that you guys meet each other at Anduril and then you start like almost very naturally, uh, talking about business ideas and texting about them. I'm so curious, like how did you make that transition? Because sharing business ideas is like one of the highest vulnerability things you can do.

Um, especially if you're trying to build something in sort of a venture-backed context because you're by definition looking for like very non-obvious things. And so it's very easy to, I don't know, start to psych yourself out and, you know, pick the, the sort of median best idea to share with this person or, you know, you know, do all of these filtrations. How did you build that trust so fast? Speaker A: I think it was gradual and I think there was a little bit of that, right? Like when we first met, I wasn't like, hey, by the way, do you want to build a vertically integrated power company and, you know, go take on you know, the big guys, this is how we're going to do it.

And it was, you know, I had that thought that was, you know, not fully formed. I had a kernel of that thought in the back of my head. And honestly, it was more so, you know, remember I was in an investment firm and the original conversations were like, hey, what ideas do you have that I can help you develop? And then, you know, I'll invest and help you start something. And I imagine, you know, he shared a bunch of things with me and I, and it was a trust building exercise where, you know, he would share an idea and I would do a bunch of work and I would come back with a spreadsheet and some thoughts.

It was like, hey, here's what I think, and showing him like, I can help you write this stuff down, I can help answer some questions, here's how I would think about it. And so we built trust, built trust, built trust. And then over time, I think started to share more. And then, you know, I kind of proposed this concept of, you know, doing to energy what SpaceX had done to aerospace and Andrew had done to defense. And, you know, building around this paradigm shift of solar and storage in this vertically integrated way and focusing first on battery storage and why, you know, pack assembly is an interesting part of the stack and, with him kind of iterated on that concept to, to get to where we are today.

So it was definitely an iterative process. It didn't start with like a, oh, here's all my cards, you know, do you wanna be my partner? We definitely built trust over a number of months and then over time decided that, you know, we wanted to work on this together. Speaker B: I see. Uh, when you look back now, obviously this was, you know, Base was the, the best idea that you guys thought you could come up with. Uh, and that's clearly proving to be a, a good bet. Were there other sort of good contenders?

And then on the other side, what were the ones that you look back on and think, oh gosh, that was truly ludicrous? And I say that thinking that those ones could end up in the future. Who knows? Maybe they'll be the ones that someone finds a way to turn into something magical. Speaker A: I imagine we tossed around a bunch of things, but when we both got, you know, started to pick up momentum around this, you know, modern power company, the electric era, this vertically integrated, technology-driven energy company built around this solar and storage paradigm shift.

It was kind of obvious that that was the most interesting place to focus and we didn't really dwell. There wasn't like a matrix of, okay, here are the 5 ideas or the 3 ideas and let's color code them based on feasibility. It was like, this is interesting, this is interesting, this is really interesting. Let's go spend all of our time on this. So there wasn't really a list. It was, this was kind of idea number 1, 2, and 3. And you know, it's not like we have a list of, oh, here's the next 3 companies we're gonna start.

Like I, And I don't wanna speak for him, but certainly for me, and I believe for him too, you know, this hopefully will be our first and last company. And you know, we think it can be really big and really important. And we think there's a lot to do that maybe doesn't, you know, meet the eye for everybody initially, but you know, really gets us excited to build for many, many decades. Speaker B: What was the transition like for you going from, hey, I'm an investor helping you think through ideas to, Hey, actually, I think we should be doing this together.

Speaker B: What was the transition like for you going from, hey, I'm an investor helping you think through ideas to, Hey, actually, I think we should be doing this together. Speaker A: I had always had it in my head that I wanted to build a company. And so for me, that was, it was kind of a given. And I think Justin could sense that, that I wanted to be an entrepreneur and the investing thing was mostly like a curiosity and passion detour on my way to being an entrepreneur. And yeah, I think there was never really a question of that I was going to be, you know, sitting on the hardwood, sitting front row, but not, you know, dribbling the ball to go back to the earlier metaphor.

From day one, it was like we were gonna be co-founders, we're gonna build this thing together, we're gonna be in the weeds together. So yeah, that never really crossed my mind. Speaker B: Our mutual friend, the, you know, the, the wonderful Packy McCormick has written some, some great pieces about you and the company that you've built. One of them articulates how I think it's, you know, the, the third or fourth week of the business, you sort of lay out the vision for the company and the vision for Base is, you know, not to go retail.

Not to be in Texas, and to be, you know, focus on utility scale. You ended up reversing all three of those, which I think really speaks to, yeah, the openness and, you know, the, the learning to some of the, the things that you came across. Which of those three felt like the hardest in your mind to, to turn on, to, to make the switch on? Speaker A: What happened was when we started looking at this problem, we said, okay, they, these companies are not incentivized to invest dollars in R&D. They're incentivized to invest dollars in, in, in CapEx.

And you know, build more infrastructure. And so let's go build the R&D function for the utilities. Let's go develop hardware and software that we can sell them through different business models based on their regulatory construct. And we can deploy our technology in that way through these utilities. And what we realized was starting in that way was gonna be too slow because utilities, they wanna see proof. They wanna see, do you have thousands of customers? Does the product work? How do we model it? How should we value it? And so that was the kind of reversal we did.

We said, okay, let's actually start with a Ginn Taylor model in the deregulated parts of the market. But if you look at the business today, the, that business, the utility partnerships business is a big part and a very fast growing part of the business. And I, I won't overshare, uh, here cuz, uh, my team will get mad, but in the coming months we will announce a bunch of large partnerships in this part of the business. And this will, this will be a massive part of the company where we are building power plants for utilities.

We're doing it for investor-owned utilities. We're doing it for municipal utilities. We're doing it for co-ops. We're doing it at very large scale, very, uh, low cost and very, very high speeds, very fast efficiency. So, uh, that original insight, like we are doing that today and it's a huge focus of ours. Speaker A: What happened was when we started looking at this problem, we said, okay, they, these companies are not incentivized to invest dollars in R&D. They're incentivized to invest dollars in, in, in CapEx. And you know, build more infrastructure.

And so let's go build the R&D function for the utilities. Let's go develop hardware and software that we can sell them through different business models based on their regulatory construct. And we can deploy our technology in that way through these utilities. And what we realized was starting in that way was gonna be too slow because utilities, they wanna see proof. They wanna see, do you have thousands of customers? Does the product work? How do we model it? How should we value it? And so that was the kind of reversal we did.

We said, okay, let's actually start with a Ginn Taylor model in the deregulated parts of the market. But if you look at the business today, the, that business, the utility partnerships business is a big part and a very fast growing part of the business. And I, I won't overshare, uh, here cuz, uh, my team will get mad, but in the coming months we will announce a bunch of large partnerships in this part of the business. And this will, this will be a massive part of the company where we are building power plants for utilities.

We're doing it for investor-owned utilities. We're doing it for municipal utilities. We're doing it for co-ops. We're doing it at very large scale, very, uh, low cost and very, very high speeds, very fast efficiency. So, uh, that original insight, like we are doing that today and it's a huge focus of ours. Speaker B: Huh. Speaker A: But we had to make the decision to not start there and sequence it differently. Speaker B: Yes, that totally makes sense. Speaker C: This episode is brought to you by Brex. If you're a founder, the hardest part isn't the idea.

It's scaling fast without getting buried in back office work. Speaker B: Huh. Speaker A: But we had to make the decision to not start there and sequence it differently. Speaker B: Yes, that totally makes sense. Speaker C: This episode is brought to you by Brex. If you're a founder, the hardest part isn't the idea. It's scaling fast without getting buried in back office work. Speaker B: That's where Brex comes in. Speaker C: Brex is the intelligent finance platform for founders. With Brex, you get high limit corporate cards, easy banking, and high yield treasury, plus a team of AI agents that handle manual finance tasks for you.

They take care of things like expenses, all according to your rules, so you can move faster while staying in full control. One in 3 startups in the US already runs on Brex. You can too at com/mario. Speaker B: Okay, before we go deeper into Base, maybe it would be useful for folks to sort of understand a little bit of the state of the grid, why it works the way that it does, and as a result, sort of why this is the solution you've come up with. Can you give folks maybe a précis on the American grid and maybe particularly why Texas is, is so different?

Speaker A: Yeah, let's, let's see if I can, uh, do it quickly in a way that's coherent. So, uh, there's basically 3 grids in the US. There's the Eastern Interconnect, the Western Interconnect, and then Texas. There are then kind of 2 layers to those grids. So there's the transmission grid, which runs at high voltages, and the distribution grid that runs at lower voltages. And Texas itself is an, is an island. So it is not interconnected to the Eastern Interconnect and the Western Interconnect, and it is also largely deregulated. So pause, quick history lesson.

The US power grid was largely or entirely regulated, and by that I mean geographically defined monopolies up until the '90s. And this made a lot of sense because when you were building out the electrical infrastructure of the country, it wouldn't make sense to run, you know, 7 different power lines through a neighborhood, right? You're going to say, okay, this city is going to build a grid here, this city is going to build a grid here. And that was how you had to build out the initial infrastructure. But what happened was— and then the way these, these utilities work from a business model perspective is they invest dollars to build out this infrastructure, and they take the amount of dollars they've invested and they divide it by the number of ratepayers or customers that they have, and those are the rates that you pay.

So they amortize the cost of the infrastructure over the amount of customers they have. And so To make sure that these utilities with monopolies were not over-earning, the federal government put restrictions on what they could earn. So it's a return on equity cap on the dollars that they invest. So they earn a regulated rate of return, and the only way for them to earn that return is to invest more capital in infrastructure. And so in the '90s, there was a push to deregulate the electric grid, and this happened in California actually to start, and then in Texas.

And what happened in California was Enron showed up and manipulated the market. And as a result, bankrupted PG&E. So deregulation in California stopped, but Texas carried it on and Texas took it actually the furthest and deregulated about 80% of the state's electric grid. There are still pockets of Texas that are regulated. We sit in Austin Energy territory in Austin. We are a regulated utility area. So if you live in Austin city limits, Austin Energy is your power company. If you live in San Antonio, most of San Antonio, it's CPS, part of San Antonio, or SERVI.

By Guadalupe Valley Electric, which is a customer of ours. Parts of outside of San Antonio are served by Bandera Electric, also a customer of ours. If you go up to Dallas, you have Farmers Electric, base customer. You have another, another utility up there that will announce a partnership with soon. And you have this kind of patchwork of regulated municipal utilities and co-op utilities. But 80% of the state is deregulated. When I say deregulated, that's really a misnomer. It's actually highly regulated. What it really means is competitive. Speaker B: Hmm. Speaker A: The way the competition works is you have, you have competition on the retail side.

Of selling the power to the customer, and you have competition on the generation side. So generating the power, you have companies that will sit on either side of that. So you have retail electric providers that all they do is they buy wholesale power and they sell to retail and they make a margin. And these are tech-driven businesses that are, you know, trying to acquire customers and then sell wholesale power at retail, make a margin there. And they're pretty low-margin businesses. And then on the generation side, you have wind farms, solar farms, gas plants, coal plants, and they're generating electricity and they're selling it to the retailers or they're selling it to other large buyers of power.

You then have a hybrid, which are called gentailors, public companies like NRG, Vistra, Constellation, that they do both. And this is a really interesting business model because they basically lean their retail book, which is a short position against their generation book, which is a long position. So if you generate power and the price of power goes up, you're long power. If you sell power at a fixed price and the price of power goes up, you're short power, right? So these gentailors, have kind of hedged portfolios across their gen book and their retail book, and that's how they make money.

If you take a step back and you look at the whole country, there's about a terawatt-hour of electricity demand, but average usage on the grid is about 300 gigawatt-hours. So two-thirds of the grid are unutilized. And the way that this is described in the industry is called capacity factor. And that's a utilization concept. The reason why batteries are so useful and so interesting and so important is because they increase utilization, they increase the capacity factor. So batteries are a generation technology, but you, you know, you might hear that and say, well, what do you mean batteries don't create electricity?

Exactly. What they do is they time shift it. So they allow you to charge on low-cost solar in the middle of the day, low-cost wind in the middle of the night, and then discharge when power prices are high, thereby increasing capacity factor, increasing utilization, and decreasing total system costs. So when you think about BASE and what we're here to do, We actually want to build an energy technology platform company oriented around solar and storage. But what that means is not just storage and retail electricity, but all four parts of the power stack, which we define as make, move, store, and sell.

So you have to make electricity, you have to move it because it's not used where it's made. You have to store it because it's not used when it's made, and you have to sell it. We've identified the storage and the retail electricity in a bundled offering as the best place to enter the market. Because we think it's a highly attractive consumer offering. We can offer affordable, reliable power to the customer. And if you're a homeowner in Texas or you're any buyer of power anywhere, what do you care about? You care about affordability and reliability.

I want my bill to go down and I want my lights to stay on. And that's the way we've decided to enter the market. But over time, we see really interesting opportunities to develop products across move and make that can add value to the system and in turn lower prices and increase reliability for customers. And that's really our our North Star. Speaker B: It's clear to me that you've thought about this a little bit. That was amazing. I feel honestly very grateful because, you know, in preparing for this podcast, I read a ton about all of these things and all of these different resources, but you just distilled it in such a way that I would at least have half a chance, I think, of not passing the Feynman test, but maybe at least getting a 50% or something.

So thank you for that. There's so many interesting threads there just to sort of frame it in people's minds. and I'm going to repeat a little bit of what you said— for the customer in a deregulated competitive market, the ultimate experience is picking between different vendors versus in a regulated market, there's really just one, maybe a couple that you could pick from. And so it's a different end user experience, but there's all of these sort of repercussions further up the stack that you're mentioning. Speaker A: Yeah, I mean, the way to think about this is We build technology to lower costs and increase reliability.

We just deliver that technology behind two different business models that's defined by the regulatory construct. So in the deregulated markets, we are a gentailer, right? We have generation in the form of batteries, and then we sell retail electricity to homeowners and eventually business owners. And in the regulated markets, we're a technology vendor and we are just building power plants. We are, you know, megawatts as a service, right? We are developing supply for the utility. To meet growing demand. And that's, that's really all we're doing. So it's one technology stack brought to market through two business models that are defined by the regulatory contract.

Speaker B: This idea also that you said of, you know, batteries shifting power through time was something that, uh, I think Packy writes about it in his piece. And it's such a, in some sense, fundamental and simple observation, but it also is like quite profound when you think about how important many technologies in our lives are that do some version of that, whether you're storing grain in a grain silo or, you know, you're using money as a way to effectively store labor. So many of our core technologies have that sort of quality to them.

How, how much did you think about, you know, the, the battery and that as like the right entry point in that lens, or is that something that's sort of just become more profound to you, more interesting to you over time? Speaker A: Batteries are interesting. You know, they're, they're kind of, they're an energy storage technology. And the problem that you're trying to solve is efficiency and utilization on the electricity grid. And the battery is just the most effective technology to do that. Speaker B: Clearly, there's a huge amount of complexity that you're having to wrangle as you build this business.

But one of the other dynamics that I've heard you talk about quite a lot is just how much better so many other parts of our world have gotten while you know, the way that we generate power has, has really not, like, what were you seeing when you started to tease this new puzzle such that it felt, you know, really primed for a kind of solution like Base? Speaker A: It's no secret that electricity is the fundamental input to human creation and, uh, and technology evolution and productivity. And if you just kind of track human history and the evolution of how we generate and use power, every time that there's been some kind of breakthrough in terms of power availability or cost, GDP per capita goes up.

So it's a really clear economic relationship. The problem though is that the industry has had no incentive to innovate in the last many decades, or I should say has had limited incentives to innovate, right? There are places like Texas that have become laboratories for innovation due to their competitive construct, but it has had less of a kind of competitive frontier than things like internet, for example, or other kind of foundational technologies. And this is largely driven by the, the regulatory construct. And so when we looked at the opportunity, we said this is a core technology for humanity.

There has been very little innovation. There is a paradigm shift coming driven by breakthroughs in technology, notably the cost curve declines in solar and battery. And there needs to be a company that ushers in this new generation of technology with a vertically integrated technology-driven approach. And that was really the impetus for starting the company. Speaker A: It's no secret that electricity is the fundamental input to human creation and, uh, and technology evolution and productivity. And if you just kind of track human history and the evolution of how we generate and use power, every time that there's been some kind of breakthrough in terms of power availability or cost, GDP per capita goes up.

So it's a really clear economic relationship. The problem though is that the industry has had no incentive to innovate in the last many decades, or I should say has had limited incentives to innovate, right? There are places like Texas that have become laboratories for innovation due to their competitive construct, but it has had less of a kind of competitive frontier than things like internet, for example, or other kind of foundational technologies. And this is largely driven by the, the regulatory construct. And so when we looked at the opportunity, we said this is a core technology for humanity.

There has been very little innovation. There is a paradigm shift coming driven by breakthroughs in technology, notably the cost curve declines in solar and battery. And there needs to be a company that ushers in this new generation of technology with a vertically integrated technology-driven approach. And that was really the impetus for starting the company. Speaker B: You know, we sort of have touched on pieces of this as part of your, your explanation on, on the grid, which was super valuable. But just to go even a layer deeper and a little more concrete, What is sort of the, the core product for folks today?

And maybe you can also unpack a little bit more of that business model because it's, it's not necessarily super obvious, uh, how that would work. Speaker B: You know, we sort of have touched on pieces of this as part of your, your explanation on, on the grid, which was super valuable. But just to go even a layer deeper and a little more concrete, What is sort of the, the core product for folks today? And maybe you can also unpack a little bit more of that business model because it's, it's not necessarily super obvious, uh, how that would work.

Speaker A: Yeah, the core product is electricity. So you sign up with Base and we become your power company. We install a battery on your home that we use to support the grid when the grid's up and running, and you get to back up your home when the grid goes down. So you get all the benefits of home backup without the high upfront cost of a home generator or a traditional backup battery. And when the grid's up and running, we're using that battery and we're using the income we generate off that battery to provide you with low-cost electricity.

So the customer saves money on their monthly bill and has a backup power device for a fraction of the cost of other solutions. Speaker B: And you're trading that energy during sort of periods of, of peak demand to sort of make that, that margin effectively, but keeping enough there so that, you know, if the customer needs it, they, they have it. Speaker A: Yeah, we're operating a power plant, so we are aggregating these distributed batteries as if they are one big battery, and we are participating in the wholesale power markets and doing grid operations, grid support with this, uh, distributed fleet.

That is basically the way the system operates. You mentioned this— we reserve a, uh, a portion of the batteries, 20% of the batteries. And of course, our batteries are really big. They're like multiples of the size of a traditional home battery, and our batteries are only getting bigger. But we reserve a portion of that for the homeowner, so they have guaranteed backup if an outage does occur. And then we also try to monitor state of charge and, uh, preserve as much backup protection for the customer if possible. Speaker B: One of the aspects that I imagine folks maybe don't fully appreciate unless they've really gone down, you know, this, this rabbit hole themselves is clearly the hardware matters a lot, but also having like extremely performant, fast software to trade effectively is like extremely important.

How, how do, how have you thought about that? How have you like gotten your systems to a level so quickly where you're able to do that in the way that you need to, to make the business work? Speaker A: Yeah, I mean, I'll sound like a broken record, but I'll go back to the team. Our, our first hire was an engineer named Jared Green who led the laser topology team at Starlink that was responsible for building the mesh that connects all the satellites in space. And our distributed systems problem on the battery side looks quite similar.

We need a, network of nodes that have, you know, varying reliability, uptime, telemetry to communicate really reliably and trade wholesale power. And that's a really hard problem. You know, the interesting thing about satellites is you can't go back to them. And so you need them to have, you know, be super resilient. Batteries you can go back to, but you prefer not to because it's expensive. And so it starts with Jared, frankly, and the team that he built in the early days and continues to build that is a really world-class distributed systems software engineering team that writes on-device software, you know, on the firmware of the inverter, that's writing, you know, backend cloud infrastructure to manage the systems in real time, uh, and is kind of, you know, building software everywhere in between to make sure the system runs at really high uptime.

Hmm. Speaker B: On the battery side, I imagine, you know, there's some amount of flexibility you also have to have as these things develop. You know, maybe the paradigm now is more lithium-ion, and then it maybe maybe shifts to sodium ion at some point. How do you, how do you start to think about positioning for that and having enough flexibility and, and sort of, yeah, being ahead of where maybe the puck is skating? Speaker B: On the battery side, I imagine, you know, there's some amount of flexibility you also have to have as these things develop.

You know, maybe the paradigm now is more lithium-ion, and then it maybe maybe shifts to sodium ion at some point. How do you, how do you start to think about positioning for that and having enough flexibility and, and sort of, yeah, being ahead of where maybe the puck is skating? Speaker A: Yeah. Part of the original thesis for the company was that we wanted to position ourselves to benefit from advances in cell chemistry. So we have worked hard to establish really strong relationships with all of the leading cell makers on the planet, all over the world.

And our plan is to work with those partners to buy and then deploy the most performant battery cells in the world based on how the, how the science plays out. So we think there's some really interesting things happening in cell chemistry and a lot of interesting, you know, experiments being run across different, different chemistries. Right now our systems are lithium iron phosphate. We're certainly keeping an eye on other, other chemistries that are being worked on and are relying on partners who specialize in this stuff and who invest billions and billions of CapEx annually and, uh, and working on the latest and greatest cell chemistries.

So yeah, we've kind of positioned ourselves to be a buyer of the improvements in, in battery cells over time. Speaker B: So you can sort of allow yourself to take a relatively neutral position and wait for that to play out and, and, you know, take it from there, essentially? Speaker A: Exactly. We think that the improvements in cell efficiency, you know, new chemistries, will be a significant boon to our economics. Over time. Speaker A: Exactly. We think that the improvements in cell efficiency, you know, new chemistries, will be a significant boon to our economics.

Over time. Speaker B: You've been quite open about, um, maybe your Gen 2, uh, not, you know, playing out exactly as you wanted and, and sort of costing you a little bit of time, you know, maybe 6 months. And that Justin actually maybe saw some, some issues with that before you did. What were the things that he saw that, that maybe it took him a little time to convince you on or for, for you to sort of, uh, see the light? Speaker A: Yeah, the credit actually goes to Dino, who, our head of hardware, who right when he joined us basically said, guys, this, this is a bad strategy.

Where he was coming from, really what he was saying was, let's get to where we're going faster? Like, the plan was always to, to develop this in-house, to make our own solution, uh, to control it, you know, control our destiny in this way. Why are we taking this intermediary step? And I think what Justin and I missed was it was a risk mistake. We, we wanted to hedge. We said, oh well, you know, we're not quite ready for that yet. We're not quite ready for this scale manufacturing. Let's do this JDM model where we design it and someone else makes it, because what if XYZ goes wrong?

and we didn't realize we were actually carrying more risk in that scenario than we were by just going right, you know, relying on too many suppliers and, you know, having, you know, uh, low ownership over the technology and, and troubleshooting and, you know, iterating as we got closer to production. And Dino helped us pick our heads up and see that we needed to get to where we were going faster. Speaker B: Dino seems like he's been, you know, uh, an important addition to this story. Spent 13 or so years at Tesla on, on Powerwall, among other things, I'm sure.

What have been, you know, maybe some of the other dividends of that addition? Has he changed how you think about, I don't know, the next phases of the business or other pieces of the company? Speaker B: Dino seems like he's been, you know, uh, an important addition to this story. Spent 13 or so years at Tesla on, on Powerwall, among other things, I'm sure. What have been, you know, maybe some of the other dividends of that addition? Has he changed how you think about, I don't know, the next phases of the business or other pieces of the company?

Speaker A: Yeah, I mean, how much time do you have? The list is very long. Dino is an absolute professional. He's a truly world-class engineer, also a fantastic leader, communicator, and question asker. He is ruthlessly truth-seeking. And, you know, doesn't put up with imprecise thinking. Uh, and, and that has taught me and our team a lot, I think, in the last couple of years. Uh, and he's really forced us to get specific with where we are going and how we are going to get there. He also has attracted an incredible team of people that have frankly followed him from companies he's, he's been at prior, uh, and allowed us to really accelerate our work.

So our, our head of manufacturing, Andy Ross, you know, worked very closely with him. Tesla. And, you know, you can go look him up and poke around his LinkedIn. I mean, the guy has a lot of experience building manufacturing lines for similar products. So more than anything, Dino's clarity of thought, you know, ability to communicate, very precise thinking, focus on the mission has been a huge, huge benefit to the company. Speaker B: You've used the analogy before that the, you know, Tesla Powerwall is sort of more like the Lamborghini in your mind and Base with its sort of unit is trying to be more of the the Corolla, more sort of a, a mass market brand.

It's clear to me that the company is also evolving so fast that things are changing every day. Is that still sort of a, a framing that you, you like for, for the product? Speaker B: You've used the analogy before that the, you know, Tesla Powerwall is sort of more like the Lamborghini in your mind and Base with its sort of unit is trying to be more of the the Corolla, more sort of a, a mass market brand. It's clear to me that the company is also evolving so fast that things are changing every day.

Is that still sort of a, a framing that you, you like for, for the product? Speaker A: Yeah, I think it's more about the fact that we are building infrastructure for the grid and we're not building high-end consumer devices that are sold with this premium product valence at, you know, high gross margins for wealthy people. We're building great infrastructure to serve everybody and ultimately lower cost and increase reliability. And, and that's the North Star in everything we do. And when we roll out future products, they will be in service of the same mission: affordable and reliable electricity for all.

Speaker B: It's clear that, you know, partially I'm sure because of, of Justin's, uh, background, that Angerill is a company that you guys take inspiration from and maybe take some ideas from in a productive sense. One of them that seems clear to me is that you've invested a lot in what one might refer to as like soft power and sort of making beautiful videos, sort of like getting people excited about the work that you're doing, you know, creating a newspaper sort of campaign, amazingly clever sort of billboards. These are not things that are usually very fun when another power generating company does them, if they would.

Why is that important to what you're doing and how have you thought about, you know, some of, some of that side of things? Speaker A: Our team takes a lot of inspiration from the idea that nobody loves their power company and there's never really been a beloved brand in energy. And we have the opportunity to build the first one and we take that super seriously, and we think of it as a huge opportunity. So, you know, we want to communicate to the world that we are a new kind of power company that is extremely member obsessed.

And we think the way that we show up in the world and communicate our message, our mission, our vision, our strategy really matters in that regard. So we want to be America's power company. We want to be, uh, a symbol for the entrepreneurial spirit, the ambition, the drive of this country, and the great things we can do when we come together to, to solve hard problems with technology to, to make the world better. And that's just really the ethos of the company is this technology-driven business that is, you know, by the people, for the people.

And it comes back to our team. We've got an incredible group of people led by Cole Jones, our head of growth, who are really passionate about good design, good communications, good marketing, clear messaging. And we're a consumer-facing business. So the way that we show up to consumers and communicate to them really matters. And we've invested heavily in building America's first beloved energy brand. And, you know, for us, we think we're in the top of the first inning. It's, you know, we're just getting started in what we need to do to build that first beloved energy brand in America.

But it seems like we're off to a good start. Speaker B: It seems to me that certainly no beloved energy brands that I can think of, but it strikes me that there might not even be a beloved brand around any commodity. And so that makes me wonder if there's something fundamental about that category that is difficult to get people historically excited about. Have you thought about that? Speaker A: Yeah, I don't know that I agree. I mean, I, you know, if you consider groceries are commodity, a commodity, I mean, I think Costco is a beloved brand that we look up to.

I think you could say the same about Southwest Airlines. Airplane flights are kind of commoditized, and Southwest has been able to build a beloved brand there. You know, specific to Texas, H-E-B is extremely beloved in the grocery industry. So I think that there is a way to build loyalty and brand recognition and, you know, this beloved, this beloved kind of dynamic around commodity businesses where the product quality is really high, prices are really low, um, and you know, that's the best version of a commodity, right? This is the cheapest version, uh, and so we, we are building the business with a cost structure advantage in mind as our North Star.

Speaker B: You mentioned Costco, you know, in particular there. What is it that you think they've done so well on, on creating that beloved brand? I mean, clearly the pricing is is a big part of that, but are there certain cues that you take, I don't know, perhaps from their culture or the way that they have managed their own growth that, uh, you're particularly excited by or particularly interested in? Speaker A: I mean, I think the, the most important thing is just the alignment around the business model. Like, it's, it's enabled by the business model.

Like, they have a cost structure advantage, you know, all the way to the way that they set up the store in the warehouse. And, you know, the, the, the way that they run their business is designed to give them a cost advantage, which allows them to have market-beating prices, which allows them to position as the mass market grocery store and the value. You know, when you go to Costco, you don't necessarily think I'm getting cheap stuff. You think I'm getting really good value. Speaker B: Yes. Speaker A: Um, and that, that I think, uh, we really like.

Speaker B: Maybe to, to sort of enter our last inning. Here, I'd love to return to some of the pieces around, around culture and talent, because it does feel like that is really a key part of this whole story. I, I, I read somewhere that you hired the sort of first 50 people yourself, which doesn't always happen, uh, at a startup. Now that you've done that, I'm sure many, many more times, I'm curious how your pattern recognition has changed or your interviewing process. Like, what are you looking for now that maybe you didn't know to look for them?

Speaker A: Well, I'll just say, I mean, I led the hiring for the first 50 people, but the founding team and the leadership team and the core team was deeply, deeply involved. And I think this is a really important point. Every leader at the company has got to be bought into talent acquisition. It is the most important thing at the company, particularly in the early days, but even in the, in the later stages of the company. I mean, we're, we're, we're still early being, you know, not even 3 years old, but Having buy-in, and we, you know, talked about buy-in earlier, having deep buy-in from the other leaders of the company willing to invest time and care into the hiring process was a huge advantage and continues to be a huge advantage for us.

You know, what do we look for today that we didn't look for then? Uh, I mean, one interesting thing that comes to mind is, uh, we are very scared of not appropriately capitalizing on the AI tools that are being released what feels like every hour. And, you know, we have a— I think I have very healthy amount of, uh, paranoia internally, largely led by Justin, which I really appreciate, around, hey guys, if we do not adopt these tools faster and better than anyone, someone is going to show up and eat our lunch, and they're going to use these tools to do it.

And, you know, 3 years ago, 2 and a half years ago when we were interviewing the early team, we weren't like screening them on how well they leverage AI tools. Uh, it was like, you know, people just pulled up ChatGPT and used it every once in a while and it was kind of good and, you know, missed some stuff. And the world has totally changed. Like everyone's workflows are deeply dependent, or at least some of them are deeply dependent on these tools. And if you can't demonstrate like a clear handle over them, That's going to be challenging for a lot of roles, not every role, but a lot of roles.

So that's new. Um, but I, I think there's more that stayed the same than anything, which is really high ownership. I mean, serious, serious ambition, a desire to be in a, in a pressure cooker, frankly, and be surrounded by some of the best people you've ever worked with, pushed to do the best work of your career, a strong mission orientation. And when I tell people, it's like, hey, this is going to be the hardest job you've ever had. And so If you don't really give a crap about our mission, it's just not going to be fun for you.

Speaker B: Yeah. Speaker A: And then, you know, that's not going to work out for anybody. And then buy-in, right? This idea that like you're going to join a team of people and, you know, it's all about the sum of the parts and, you know, pick up a shovel and dig. And it's not like, you know, we don't play hero ball here. It's not about one person. We're all members of a team that are all doing the best we can to solve hard problems with each other. And it's all in service of the mission.

Hmm. Speaker B: It's really interesting to me that you mention the use of these AI models. It feels like clearly it's been on a lot of people's minds for, you know, the past couple years, but I've sensed a real shift even in the past 6 months talking to some of the more highly effective CEOs that I, you know, get to know where people are spending so much time themselves, even as the CEO, in these models, playing with Claude Code, building things, figuring out which part of their business maybe someone hasn't realized can actually be fully automated and just sort of one-shotting it.

How much are you finding it affects your day-to-day workflows? Where have you found the most leverage for yourself out of it? Speaker A: Yeah, this reminds me of the meme going around that I love where people are like, oh, have you tried Claude Code? It's incredible. And people are like, yeah, what are you using it for? Like, oh, it's changing everything. It's like, yeah, but what are you actually using it for? No, that's unbelievable. Speaker B: Don't ask me. Speaker A: Yeah, I laugh about that a little bit. Uh, so, you know, oh, we're using you for everything.

No. Um, look, I, I think that it, it is compressing cycle times, right? Is it allowing us to get smarter on things faster? And in a, in a company where we are like, you know, aggressively truth-seeking and very Socratic and always trying to, you know, get to the answer really quickly and, you know, get shit done. Like the, anything that compresses cycle times is incredibly valuable. So that's, that's what it's being used for largely. And then I think we are trying to build tooling internally to make our systems more efficient and automate away, you know, manual work.

It's really simple stuff. It's, you know, the same stuff that all these AI roll-up platforms are doing at the, you know, accounting firms and the, you know, the HOA managers that they're rolling up. Like, we're doing a lot of the same stuff in retail, energy operations, customer management, on the sales side, on the marketing side. So we're building automations, but we're also just compressing cycle times of learning when it— with regards to new products, new opportunities. that, that kind of stuff. Speaker B: Don't ask me. Speaker A: Yeah, I laugh about that a little bit.

Uh, so, you know, oh, we're using you for everything. No. Um, look, I, I think that it, it is compressing cycle times, right? Is it allowing us to get smarter on things faster? And in a, in a company where we are like, you know, aggressively truth-seeking and very Socratic and always trying to, you know, get to the answer really quickly and, you know, get shit done. Like the, anything that compresses cycle times is incredibly valuable. So that's, that's what it's being used for largely. And then I think we are trying to build tooling internally to make our systems more efficient and automate away, you know, manual work.

It's really simple stuff. It's, you know, the same stuff that all these AI roll-up platforms are doing at the, you know, accounting firms and the, you know, the HOA managers that they're rolling up. Like, we're doing a lot of the same stuff in retail, energy operations, customer management, on the sales side, on the marketing side. So we're building automations, but we're also just compressing cycle times of learning when it— with regards to new products, new opportunities. that, that kind of stuff. Speaker B: How have you found, uh, you're most effective at generating new ideas for the business, sort of protecting your own, I don't know, mental, mental climate such that you can be generative?

Speaker A: I have to dedicate time for it specifically, which I typically do at night, uh, when I, when I get home and I'm away from the office, you know, 9:00 PM, uh, and I do in an analog way. So I, I, I literally use it, notebook that, you know, goes with me everywhere and I draw ideas throughout the day. And then at night I sit at home, not in front of a computer, not looking at my phone, and I try to think about what is the most important thing for me to focus on.

Oftentimes it is very obvious there's one thing I need to figure out and I just have to— I'm a person who has to write clearly to think clearly. I think if you talk to my, any of my colleagues from Blackstone or Thrive or Base, they would all tell you that, you know, they're kind of sick of reading my writing 'cause I'm always just, I'm writing a lot. Uh, and go back to the Packy article and the memos and the monthly updates that I still write. That is just my way of thinking clearly.

And so, uh, I do a lot of that, you know, through a notebook in an analog way. And then, you know, I have a separate notebook actually at home that's like an idea notebook. And sometimes I'll bring it into the office and I'll, you know, pull things out of it. And I have to compartmentalize 'cause when I'm in the office, it's, you know, a lot of meetings, a lot of collaboration, a lot of reactive. Um, and you know, I try to, in the early morning time, I'm I'm a really early morning guy, and so early mornings are good, but those are more for, you know, focused blocks of work, things I just need to get done.

The evenings are for idea generation and getting creative, and those are some of the, you know, my favorite hours of the day. Hmm. Speaker B: Yeah, it's amazing to me how important some of those analog tools are for that kind of work. Like, I noticed that pattern with a lot of people, certainly with myself, where if you're going to come up with, with something fresh, uh, the more you can step away from some of the thinking machines that we've created, uh, the, the better it gets often. Speaker A: You can, uh, augment with them.

So one interesting thing is like, my handwriting sucks and I had to improve it for this, but you know, I'll, I'll just like write like crazy in my notebook, right? And you know, sometimes the next morning I'll take the ideas and I'll, you know, bring them to the office or I'll write an email or whatever. And sometimes they just kind of get lost. And so now what I've started doing is I'll just like, when I'm done, I'll just snap a photo and I'll like send it to an LLM and I'll say, hey, like summarize this and send it to my inbox or summarize this and, you know, give me something that I can just send to someone.

Uh, and it's just that extra step. It's back to this compressing cycle times versus me looking at it, going line by line, typing it up. I just snap a photo. Speaker B: Yeah. Speaker A: And it's like, I don't have to think about it. And so you still get the benefit of the analog, no screen, no distraction, just like your brain and a piece of paper. But then you, you can still get the cycle time compression of the tool, which is very valuable. Speaker B: I always like to wrap up with a few sort of more thought experiment questions for you.

If you had unlimited resources and no operational constraints, what's, uh, an experiment you would like to run? Speaker A: I don't know. I think I'm, I'm, I'm running my dream experiment right now. And, uh, it's hard for me to— people ask me, they're like, oh, well, you know, if you could start another business, you know, what's the big idea? Uh, like I, this is my big idea. Like I, I, I, I believe that we are in the midst of a paradigm shift in the energy industry and there is a generational technology company to be built in its wake.

Uh, and that is kind of all I think about. Uh, so there's like some interesting energy experiments, you know, I think, uh, there are some people who are working on, you know, can you put solar in space and beam it down to Earth? And you know, that, that stuff's interesting. I, I don't know that that's gonna work. I think the lasers are probably pretty lossy. Maybe they can solve that, but, uh, I'm running the experiment of my dreams right now. So I don't know that I have much for you there.

Speaker A: I don't know. I think I'm, I'm, I'm running my dream experiment right now. And, uh, it's hard for me to— people ask me, they're like, oh, well, you know, if you could start another business, you know, what's the big idea? Uh, like I, this is my big idea. Like I, I, I, I believe that we are in the midst of a paradigm shift in the energy industry and there is a generational technology company to be built in its wake. Uh, and that is kind of all I think about.

Uh, so there's like some interesting energy experiments, you know, I think, uh, there are some people who are working on, you know, can you put solar in space and beam it down to Earth? And you know, that, that stuff's interesting. I, I don't know that that's gonna work. I think the lasers are probably pretty lossy. Maybe they can solve that, but, uh, I'm running the experiment of my dreams right now. So I don't know that I have much for you there. Speaker B: No, I think that totally makes sense. I almost imagine there might be a million experiments that would help you run this experiment better.

Like, you know, how can I get the, you know, do a run of 1,000 different types of talent and figure out which ones are the best or whatever that might be. If you had to, pick a custom from a different culture or a different era that we should adopt more widely today? Is there something that comes to mind? Speaker A: I think writing. I think, you know, this analog, you know, with a notebook, you know, forcing yourself to put pen to paper on good ideas and new things. I mean, people, you know, used to write letters constantly and write in a journal constantly and This has been a big unlock for me, both analog and digital.

Obviously, you know, typing is just faster words per minute, and so that's more effective. But I think, you know, getting good at writing, getting really good at communicating your thoughts in a concise way has been a big unlock for me. And I think that's something that people should do more of. Speaker A: I think writing. I think, you know, this analog, you know, with a notebook, you know, forcing yourself to put pen to paper on good ideas and new things. I mean, people, you know, used to write letters constantly and write in a journal constantly and This has been a big unlock for me, both analog and digital.

Obviously, you know, typing is just faster words per minute, and so that's more effective. But I think, you know, getting good at writing, getting really good at communicating your thoughts in a concise way has been a big unlock for me. And I think that's something that people should do more of. Speaker B: Final question. If you were given the chance to give everyone on earth a book to read and know that they would understand it, what would you want to give them? Speaker A: If you haven't figured out, or, or, you know, talk to people I work with, uh, I'm a big optimist.

I love, I love technology. I love our country. Uh, I'm, I'm incredibly grateful, uh, for, for the life that I have. And, you know, being born, I think this is the greatest time ever to be born. And I often, you know, I think in life you come across people who are, they're negative. They're, they're, they're, they look at the world and they say, this place sucks. And you know, this is, And, and there's good reason for that in, in certain pockets. But, uh, I read a book in college, uh, I think it was in college or maybe just after called Factfulness by Hans Rosling.

And basically what the book does is it kind of takes you from a vibes-based worldview to a data-based worldview, and it unravels cognitive biases that we have around the way the world works using data. And I'm a psychology nerd. I studied psychology in college, so I think I'm you know, particularly, uh, primed to like a book like this, no pun intended. Uh, but, um, it is extremely motivating because it basically says, hey, we are living in the greatest period ever in human history, and it's only getting better. And, you know, it was very inspiring for me.

And what I took from it was I gotta pick up a shovel and dig. Like, I need to be part of this improvement. Um, and, and that's been, been very inspiring. Speaker B: Oh, I, I can't keep my promise and say that's the last question because you said you're such a psychology nerd. I'm now curious if there are other books that you particularly love in that lens, because that's certainly an area that I, I like to read in. Speaker A: I, I think in kind of, uh, buckets of authors. Um, and I think Robert Greene is a particularly interesting one.

I mean, some of his perspectives and methods maybe are, uh, not exactly like what, what I would do or how I would apply some of these concepts, but he is one of the more compelling writers when it comes to understanding human psychology. And I have had a lot of fun reading his books. Again, I don't agree with all of his methods, but I think his writing is very valuable. And if people are interested in psychology, I would point you to basically all of Robert Greene's writings or most of them, I could say.

Speaker B: Yeah, agreed. They're very well observed. There are things that you can see throughout history and think, gosh, that might terrify me, or that, you know, wouldn't be how I would do it, but it's an interesting observation. Amazing. Well, Zach, thank you so much for spending this time with me. Uh, I really appreciate it and I really enjoyed it. Speaker A: Thank you for having me. It was a lot of fun. That's it. Speaker B: Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app.

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