Great. Thanks for having me on.
Did I get my intro right?
That's all correct. As far as I recall,
Well, I just asked you before starting. I said 12 and a half years. It's a long time. We're going to have to get into some of how it began and how it's evolved.
it's a, yeah, 12 and a half years is a, it is a long time. We've done a lot. The firm's grown a lot.
The whole premise in 2005, when it started was let's start a new VC fund because the world needs a new VC fund that is going to do something really different. And the thing that's going to be different is we're going to back founders unconditionally. So we're going to just try and not bet on a horse and switch out the jockey.
We're going to bet on somebody with a real mission and vision who wants to build something for 10 years, 20 years. Maybe never sell it. And part of that meant backing companies doing hard engineering.
And so around 2012, the manifesto came out. This was the document that people know for the, you know, we wanted flying cars and we've got 140 characters. And it wasn't a statement about flying cars specifically, but just about making impact in the physical world and not just the digital world.
That was a great line. And tell me more about this investment focus in hard engineering in the physical world.
Yeah, I think, on the one hand, I would say we're interested in investing in engineering, hard engineering not science projects though. So we don't like science projects. We don't really want to take science risk. We think that's for earlier stage
or maybe it's bracket the academic world or something, but we're not looking to take science risk. . We are looking to take tech risk because we think great engineering teams can solve most hard engineering problems. And so we think that's probably an undervalued fact you know, people don't appreciate that great engineers can solve just about anything that's physically possible.
And maybe that is the right role for venture to play. But I think a lot of firms would say they don't like taking tech risk.

So on the tech risk we like taking tech risks, not for the sake of the technology,
for us, it's really about tech for businesses sake. Or for solving a really big problem. So for us, it always just starts with the mission and okay. What's the mission of the company? There's this big problem. We need to solve it. We've thought of every angle that we could try and take to solve the problem. And we have to develop this tech. We don't necessarily want to develop this tech, but we actually just have to do it.
And yes, it's going to require some hard engineering. We wish it were easier, but this is the hard engineering that we have to go do. Not, Oh I, I kind of did a PhD in this space and I really liked this technology.
So for us, it's really oriented around what are the most important companies in the world in 10 or 20 years and what big problems are they solving that are holding humanity back?
Do you have thoughts on when these beds work?
or what makes them most set up to succeed?
yeah, I think the mission has to be real.
Be truly inspiring. You know, some of these solving these problems are, there's a reason that these huge problems still exist. They're just unbelievably hard sometimes. And so you need a really motivated, driven team. And so getting to that critical mass of talent means a mission that can really pull a lot of people together.
It's easier said than done. these companies sometimes take 10 years. SpaceX has been what, almost 22 years now. So they're long, long, long processes sometimes
But these audacious visit vision. long timeframes, large amounts of capital that used to be the purview of public enterprise. and I feel like Amazon is taking over USBs and. Space X is playing in, in the S the space world. I feel like private enterprise is able to do things and moving into the public sector more and more.
Great question. Um, a question. It was meant as a question.
I, generally agree with you.
I think if private companies can do things that currently the government is doing, but isn't doing well, or maybe doesn't want to be doing, that's a great thing for a company to take over.
but you know, SpaceX really started going after the, commercial market. and some of the government launches, but in theory, it wasn't really replacing the government. I mean, it was. replacing a huge incumbent called United Launch Alliance. And so this was the Boeing Lockheed joint venture that, you know, generally made the argument, Hey, government, you want to launch satellites into space.
Were the people doing it, this is how much it costs and at that price point, we're not launching that much. So we need some baseline subsidy to make sure we exist unless we don't want a national capability. but the provider just wasn't competitive.
It was just really a monopoly and an oligopoly at best. So, you know, SpaceX really just replaced that firm largely uh, didn't really replace the government. Maybe the one area where SpaceX took over scope from the government was putting astronauts up at the space station, taking them to orbit.
That's a new thing. And in the last few days, we saw another crewed launch, which barely got any publicity, which is an amazing feat that It's actually started to feel normal.
I mean, you're, where are you? Are you in El Segundo? You're in that vicinity, right?
Yep. South Bay,
tell me a little bit about South Bay, cause that's where you started in SpaceX, right?
Yep. That's right. Yeah, I did undergrad at Cornell and there I was running a rocket research program. And one of the, earliest SpaceX hires reached out to a professor there. He was a Cornell guy too. And so he reached out to one of the professors and said, do you know anybody who likes rockets?
I was running that program. So naturally my name came up and you know, this was still during college and there was an internship opportunity. And I think I did a quick phone call interview. And got the job. And I think, you know, for SpaceX, it wasn't too much risk. They just pick out an intern for three months at low cost and maybe they'll do some good work.
And it was good enough that I got the offer to come back in, 2004.
Wow. Super early. Um, and I think you'd agree that the south bay is just buzzing now and feels really top of the game for hardware investing at least.
Yeah, that's why I'm here. So I was, I was an SF from 2011 all the way through 2020 and starting in 2018, I was doing 50, 50 LA SF. Because so much was finally happening down here. just a huge number of alumni from SpaceX starting new things by 2020.
I moved down full time because All my friends were here. Everything interesting that I was the most excited about was happening down here.
a very different culture, I would say.
Yeah, that's right.
I would say it's an engineering as opposed to software culture.
Yeah, I would say it's general engineering culture not just building software. Sometimes there is software that's a part of it. But, yeah, really, you know, is the software ecosystem in LA as robust as in SF? No, it's not. But is the overall engineering ecosystem here just as strong? I think so, and people here have the space to build.
Big physical things. And yeah, it feels very pure. It feels like people are very driven by their, their mission and wanting to build what they're working on. And it doesn't feel like it's a career or resume building sort of thing. Like it feels sometimes up in SF.
agreed as you said, like it's an important mission. I almost feel like, the South Bay has a little bit of disdain for things that are software.
There's probably some people in the South Bay that don't really fully respect software, but I'm not one of them. both matter, I think. If you're a founder, wants to build hardware. I think LA is a great place to be.
It's what is it? Maybe 10 times the square miles of San Francisco's seven by seven.
Yeah, that seven by seven is always kind of crazy to me. Seven miles by seven miles. So before I get too deep into like what you're excited by right now, like just as founders fund, tell me a little bit more when you're talking about these investments, are you entering a seed?
Are you entering an A? What's the fund size? How are you making investment decisions? Yeah, we're, we get involved at every stage. So a new investment could be a seed investment. It could be for the first time getting involved in a company at series D or later. So, we have two funds that we're investing out of right now, a venture fund and a growth fund venture funds a little bit under a billion growth funds roughly three.
And so it's a large amount of capital. And so we're trying to be, very thoughtful about what's the right way to focus. And so. You know, classically, our approach has been just really concentrating into a few companies per fund, so that can look like big, chunky checks into a round where we think it's the right round for us to be involved in, or it can be getting involved really early in a company that we think is a one of a kind company and backing them multiple rounds in a row. And so we've done both, so , it kind of looks like a black box from the outside. We'll sometimes skip rounds and come back in for a huge check later,
I just don't remember, are you part of the early stage team? Are people, generally part of the venture team or the growth team? Or how does that fluidity work?
so people have their natural inclinations, I'd say things that they get more excited about. So short answer is people operate across both on our team all the time. There might be some bias of somebody might be slightly more excited by late stage and really a numbers person that wants to drill into the numbers really deeply.
And there's more numbers at late stage than there would be on day one, but then other people might just be more excited about the idea of a concept and. A founder in particular, and for that reason, maybe in this one case, they want to do a seed investment into something where they would normally be a growth person.
So, yeah, it's all over the place.
And you're pretty small. Like that's the thing I think. I always remember, right, Founders Fund, how many investing partners are you? I know Keith left, but you've always been small
Yeah. Overall team's about 15 on the investment team.
And that's like, we just said almost a billion and 3 billion.
That's small. pretty lean. Yeah. But, But we think yeah, if we're running our strategy of handful of companies that are the most important. To the world and that can be huge fund returning companies, then it's not hundreds of companies. It's maybe dozens. And so you can do it with a small team.
Yeah. So it was a small number of companies, but I've had that. It's just a small number of people.
With that vision who are changing our generation.
Yeah, I'd say I would agree. That's the most important piece. And that's why we're called Founders Fund because ultimately it's just about investing in the founder and backing the founder unconditionally as they build their company.
And so, yeah, for us, it is always about the founder question. How do we find those founders?
Mostly through our network. So I think most of the founders that we've backed, we've either met through people that we've worked with before or really trust or that we've worked with directly ourselves. not really networking events, not really demo days.
Usually there's some preexisting relationship there and some. Something about our network that helps us find them early.
And so, you know, Peter on our team has a saying, networking is not working. So it's not, you know, going to some meetup and just shaking hands and exchanging business cards and saying, hi, let's do business together doesn't feel very authentic.
And do you have close relationships with some seed funds or angels or others tend to feed you? Good deals.
Yeah, that's right. And so usually those, the tightest relationships we would have with seed funds. Would be on companies where maybe they back to company early and, you know, we know them because maybe we've worked together before in some capacity and we have some pre existing relationship and then we work together on a company and we get to know them even better and then they know what we're looking for.
Do you guys operate very independently from each other? Like, is it a, this is a Scott deal? How do you, you know, ultimately make decisions on companies?
Yeah, I'd say every investment we make is a team decision. So we're very collaborative. You know, when we invest in a company it's, a founder's fund company. not any individual person's company. It's not their portfolio. It's founder's funds portfolio. And so we're all there. Once we invest to support the company you know, at the same time, there are people that are occasionally going to take a board seat or be a board observer or just be point person with a company.
And, you know, I just described the process at the moment of investing or after it. Earlier on, it is pretty solo.
So it's very much divide and conquer for the first meetings and then escalate as needed. But we don't have.[00:13:00] You know, full partner meetings on Mondays where every company is brought in and everyone on the team feels like they need to present a certain number of companies or something like that.
So it's not a Monday meeting. I pitched you guys but
Was it on a Monday?
Hi, uh, this woman, I'm not sure. I don't remember, but felt like a pretty regular pitch.
meeting.
Okay. I mean, it could have been a Monday that we do work on Mondays too, but yeah, odds are it wasn't.
So any investments, a founder fund investment. But like, do you have full authority? Like, can you do an investment and like come in champion that, or does everyone need to agree with you?
If somebody on our team comes in just incredibly excited about a company. , you know, everyone's job is to try and poke holes in, you know, both appreciate the company, appreciate the founder, understand what the insights are and why this is really important. And at the same time, try and really challenge it because, you know, even founder's sake of that company, even if we don't invest, if we can [00:14:00] surface potential flaws in the strategy or anything, it's you know, that's positive, that's helpful.
I think great founders want that. And the great founders that we've met. You know, they're both very driven to solve the problem they're going after. They're very mission oriented. They're almost maniacally focused on it. They're not going to give up, but they're also not defensive. So if we ask them questions they welcome it usually because they've actually asked themselves those same questions.
And if they haven't usually a big surprise, but when they have often, they'll say, You know, that's, that's a good question. Here's the answer. And you know, the next question that comes after that one is the following, cause that's the next challenge we're going to have. And here's the answer to that. So they kind of, they take you all the way down the rabbit hole is as far as you want to go.
And they're not trying to prevent you from looking down the rabbit hole basically.
I like that description a lot.
But to answer your question, yeah, if somebody comes in super excited about a company and we all try and critique it, we all try and. You know, find the flaws. [00:15:00] And it can stand up to scrutiny, then even if we came in skeptical, we're going to make that investment.
And so at the same time, yeah, no one person can just unilaterally do anything. There's, you know, the bigger the check, the more support we want across the team, but there's certainly leeway for everybody if they're excited enough and can defend it to make an investment in a founder they really believe in.
Makes sense. One question I like to ask people is the personalities around the room. Uh, like which partner is usually pushing for what? And what's your role in the room.
Yeah, good. Yeah. I don't know. I guess you're you know, no one can answer this about themselves or something. Well, no, everybody. Yeah. If you asked, other people, what I would be focused on, they would probably tell you hard engineering more technology, heavy stuff things that maybe.
Have multiple chapters to them, not multiple miracles, but multiple chapters. And so, you know, SpaceX is maybe one that had multiple chapters where you do the launch business first and the launch [00:16:00] business unlocks the Starlink business, and then you go from there.
So generally the types of companies that I get excited about are ones where the technology is solving a seemingly impossible, trade off that you had to deal with. And so, I think those are the ones. And so often there's hard engineering.
I mean, do you want to jump in and talk about one of those areas? I know there's a variety of areas. You told me you're not trend investors, but there's some areas that I know you're excited about.
Yeah. We're not trend investors because by the time there's a trend, there's probably a lot of capital going towards there. And so we're famous for wanting to back. Companies that are one of a kind and are not competing with others. But we're also very focused on not competing with other VCs and not just because we don't like competition, but because we think if there's already a bunch of capital chasing a company, Then, you know, that capital is not really going to make a huge difference in the world. And so the framing that we try to maintain on, [00:17:00] at least I really focus on when I'm looking at an investment, can this be a big, important company? Can the founder take it all the way? But on top of that, is our capital making you a unique difference to the company here?
Either through the advice we're going to give the way we're going to work with them, or simply helping it exist. And so, you know, there's, the counterfactual of, if we hadn't invested, what would have happened? Maybe the company wouldn't exist.
Was probably, you know, space X. We were the first outside investors after some of the early launch challenges. And, you know, I think if we hadn't come in, I think the company has said it was, it was just a really critical moment for them and we helped it keep going. And then incubations are another example.
We before we hit incubations, I would love to hear more about the early space X investment. yeah founders fund invested in August, 2008 in SpaceX. And this was right after the third failed SpaceX launch. and. , we were the first outside investors prior to that had been all [00:18:00] Elon’s money. So Elon had taken all the money he had gotten out of zip two and PayPal, his two prior companies and went all in on SpaceX and you know, his mindset was, we're going to make this work no matter what, either this is going to work or I'm going to be living in my parents basement.
And so Elon was all in we went through three launches. After the third failures, Founders Fund invested and pretty contrarian move at the time. but the team at the time did their, they really did their work and they looked into it and they said, okay, the press says, you know, there's these multiple failures of SpaceX and the company, it just doesn't work.
But when we look more closely, each launch is better than the one before. And the first launch maybe, you know, didn't get off the pad too far. Uh, Didn't make it to second stage, but each progressive launch is actually making it a lot further. And this last one basically almost made it. It was just this one [00:19:00] anomaly went wrong and we really think that they almost had it and it's just kind of bad luck that they didn't.
And if we give them some money, they're going to be able to make it.
And the fourth worked. Yep. Fourth worked.
And did anyone else? . Did you compete with anyone for that? Investment,
I wasn't at the fund at the times, but not that I'm aware of.
It was not popular. I think one other VC fund, I forget who it was. The story has it that some other VC even wrote to their LPs, don't worry. You won't see us investing in companies like this. We're going to stick to software companies.
So, for us, it was just a but on the SpaceX team, a bet on Elon, a bet that no matter what, they were going to figure out how to make this work.
Wow. I had forgotten that he had put so much of his personal net worth into it. I mean, did you have you gotten to know Elon over the years? How have you interacted? Seen him evolve?
Yeah. So when I started at SpaceX, the company was 30 something. And so, you know, we all worked close together and,[00:20:00] I think people kind of wonder about SpaceX culture and Tesla culture and, oh, it's too extreme. And what's it like working there? You know, it must be tough.
And I would say it is tough, and it's only for people that So I was really excited to be there, but the number one takeaway I had even from day one there is that, you know, as tough a culture as it is, and as hard as everyone works, you can be sure Elon's working just as hard. And so he always led by example.
So, I really don't think that in those years I was there, I don't think I saw anyone outworking. He was not only all in financially, but. Personally, emotionally, just every ounce really poured into the company to, to get it over the line.
Yeah. Yeah, I think. I don't know. From the outside, that seems to be the way he lives his life, almost to his detriment.
Yeah. I'd say any, kind of expectations he has of other people, he's holding himself to even higher expectations you know, anyone who says that they don't like the culture, they're critical of it. It's like, okay, [00:21:00] that's fine. You don't have to like it. You don't have to work there.
But the people who are there are doing this for a reason. And so you know, don't knock it.
So I still imagine, but tell me if I'm wrong, I still imagine that in most of your investments, there's other term sheets that are coming in when you guys are putting in like a series eight term sheet, Yeah. These days, probably a lot of the deals we look at, we'll have multiple term sheets and Then it is that, then it's a very fair question. What's, what are we doing? That's so different. That makes a huge impact. And so, I think in every case it's something different. So it could be that, nobody else wants to give the company money.
And we are the only term sheet. And I'd say it's very hard to find incredible companies that fall into that bucket. Other times it could be that. Our term sheet is extremely clean and is not going to screw up the company later on, or it's going to propel them to, you know, structured in such a way that they can then raise a lot more money in the future on clean terms.
It could be that we're actually not taking a board seat, and so [00:22:00] the founder is not going to go out of control and maybe get displaced in a few years. it could even be that we are actually taking a board seat specifically to defend a founder. And so that's something that I can think of examples there where, you know, many years ago we invested in some company and, and took a board seat specifically to help the company preserve control over activist investors , that had disrupted a lot of the internals.
Do you think there's anything? I mean, I feel like that is the reputation of Founders Fund, your name Founders Fund. But there's a lot like Founders Fund is a big brand name. Do you think there's anything that's kind of misunderstood about the way Founders Fund works?
Let's see, what do you, I mean, I could ask you for all your impressions and I could try and I could confirm or deny each one or something, but let's see, I guess , if you think the last few years. What are some of the bigger moves we've made? What have they been misinterpreted or something like that?
I guess after COVID, during COVID, or even before COVID, We definitely start spreading out. So Peter moved to L. A. during COVID. We opened Miami office. And [00:23:00] so, you know, some people thought we're not in SF anymore. Well, actually half the team is still in SF. And then people might have thought, well, okay it's, it's all about , the world's greatest companies are going to be in Miami, or they're actually going to be in L.
A. And so we've got to only invest in Miami and L. A. or something like that. And I'd say that's clearly a misconception. When, Peter moved to LA, when, even when we opened Miami, when I moved down to LA, an important thing was that, you know, this is not necessarily purely about LA. It's not like all of our funds should be investing in every LA company or Miami company.
It's. Really that the dominance of San Francisco is the only hub was really waning and that we thought the best opportunities wouldn't only be there And so you see Miami, has an airport that gets you easily down to Latin America and Europe and all on the east coast and L. A. You know, not too far from San Francisco, but definitely gets you out of the echo chamber and thinking a little bit fresher
Yes. And yet, you know, LA is exciting. [00:24:00] I read your post on El Segundo. I recommend it to others. What was the title?
Thank God for El Segundo.

Thank God for Elsa. Gundo it's a great title. I know you guys are not trend investors, but would you like to talk about a few areas that interest you.
Yeah, I guess in terms of, you know, it's hard to predict where the next trends are, but it's easier to talk in retrospect. And if you look over the last four years, five years, maybe unexpectedly, energy has been an area that I've ended up focusing on a little bit.
I guess the first one we didn't energy in a while was, one called Crusoe energy. That was probably about five years ago at this point that we did our first check into Crusoe. And this was something very unorthodox at the time.
They were using oil and gas combined with cryptocurrency. And so it was stranded methane flare gas that was being produced. During fracking and other, oil recovery and flared off because, you know, these sites are in the middle of nowhere. It's not [00:25:00] worth trucking. It's not worth piping out.
You can't build a pipeline just over one. Well, in the middle of nowhere, so it's generally just burned into the open atmosphere releasing so in CO2 And so the company said, you know, instead of wasting. These megawatts of energy, why don't we put that to good use on computing?
And so Crusoe was really the first stranded remote energy investment that we made. And you know, it started off on oil and gas and Bitcoin, and now it's any stranded energy and cloud compute. So as, the machine learning and AI compute workloads have increased dramatically, and there's more and more stranded renewables.
You know, Texas wind, et cetera. They've managed to branch out to that and yeah, build an awesome business.
Wow, that is awesome. And I hadn't really understood the tie to crypto and why it was the right use case.
for them.
Probably two reasons at the time. I think crypto was the most of all the different compute loads that you could run the ratio between OpEx and CapEx. Was [00:26:00] probably the highest. And so the energy intensiveness of it was the highest. And so if you had very cheap, stranded, essentially free energy, that's the one that you wanted to go after because you had the biggest cost advantage relative to your competitors.
And so it's just a battle to who could find the cheapest energy and then get access to A6.
you know, the other potential reason, which it just depends on what year you're talking about is. These are in really remote locations. How do you get data there? if you had huge compute jobs where you had to bring in a ton of data and then run the compute and get it back out, that was tough.
But the Bitcoin protocol, you know, packet size, not that big. So you didn't need a ton of bandwidth. Now that's different now because of Starlink. So I think through things like Starlink, you're now able to run, you know, more bandwidth intensive compute.
Is that right? I didn't really, I hadn't followed a lot of what Starlink canon is being used for today, like in developed ecosystems.
Yeah. Yeah. No, Starlink's being used from everything from [00:27:00] airplane wifi to residential to, you know, super rural residential. To commercial. And so, yeah, that type of application is great for it, especially because there's a certain amount of bandwidth that can come to the ground per square mile.
And so if you're in the middle of nowhere, you know, there's no one battling with you for that bandwidth. so you can get quite a lot
Yeah,
And then with our most recent energy investment in radiant you've got the question of how do you produce energy in a really remote place, much cheaper than the alternative.
And so for them, the answer was nuclear and specifically containerized nuclear. And so, you know, today, Radiant is not trying to you know, put a reactor in the middle of Los Angeles and plug in and beat the grid, that's going to be a tough battle. But they're saying, can we go to places like remote mines where they need power and they have none, maybe Alaska, maybe you know, islands that use diesel, and it's just way too expensive.
Can we start in those relatively small markets, where [00:28:00] the energy cost is just. Exorbitantly high and do it cheaper cleaners, safer and start there. And then as we prove the business, as we grow the business, we will now get manufacturing into like a factory format. And that's the whole reason they're containerized is this insight that nuclear does not actually have to be expensive.
If you look at the inputs, the thing that's made nuclear expensive historically and not as competitive with other sources of energy. Is the construction costs. And so if you can do nuclear, if you can build your nuclear reactors and their install in a factory, which means containerize it or make it small, modular reactors with very little assembly on site, you can run that cost curve.
And hopefully, you know, we expect , be a cheaper source of energy than others that are on the grid today.
And where are we now with nuclear development and use.
Yeah, the, I guess the thing people don't realize nuclear is already 20% of the US grid.
Wow. No, I didn't [00:29:00] realize.
Yeah, just about 20%, which is roughly the same as coal. Um, Just slightly under coal. , and there's 92 nuclear reactors in operation today. Or Depends on the day coming up here. But yeah, over 90 nuclear reactors in operation on the US grid.
At over 60 power plant sites. So some sites have two or three. And so, yeah, it's a huge part of the grid. People think nuclear is really dangerous. If you actually look at the stats, so like, you know, our world and data or some source like that. They actually reveal that nuclear is one of the safest if you look at number of deaths per terawatt hour.
And so you've got things like fossil fuels are just dramatically higher, you know, maybe hundreds of times higher than something like wind, solar or nuclear. And then on, on CO2 emissions, it's actually also one of the, top three. Because, you know, it's not like wind turbines don't take any manufacturing to create, and so you've got to factor that in.
in any case, one of the [00:30:00] safest, one of the cleanest today, not necessarily the cheapest. it is one of the, you know, if you look at all in cost of wind and solar, including transmission and storage and smoothing to match the demand curve, those are actually quite a bit more expensive than nuclear.
So, If the criteria are we want the most affordable, clean, safe source of energy it's actually nuclear.
An interesting insight that it's also the site construction. I
That's the big thing. That's the insight there. there's some good blogs on it.
Okay, I haven't read them all. Scott, it's amazing talking to you. I've kept you over time. But we, just a couple more on you. What are the adjectives your friends would use to describe you?
That one I have no idea. I don't know. I would say, yeah I'll give you some references. You can, I'd be curious what the answers are.
And like in high school, what would they have said about you?
Oh, they would have said that's, that's the kid who's really into rockets for some reason and just plays hockey. All he does is play hockey and build rockets and go to class.
that's awesome. So it's been great to know you. Thanks [00:31:00] for taking the time to come on the podcast. Been great to watch like the growth of, hard tech in LA, really appreciate what you've been contributing.
Yeah, thanks for having me. This was fun.