The Exchanges

Q like a friendly UI. But he's so competitive and so, like, determined to win that there's just a, I don't even know how to, like, juxtaposition between, like, how friendly he is and just how fiercely competitive he is. Uh, since you mentioned him, uh, I want to bring up something you told me one time that you called the dad terminal. Can you say what the dad terminal is?

A Yeah. So you, you, you, you joke that I'm, you know, kind of a financially minded person, and, and, uh, uh, the Bloomberg terminal is obviously this, like, incredible technology That, you know, people in the finance industry use to ask questions and get information and think and analyze opportunities. And the dad terminal is, is my version of that where I call up dad and we have conversations about business topics and strategic objectives and challenges that I'm facing. And, uh, and it's the most fun, it's the most fun thing ever because, uh, you know, he has more context than anyone but my mom probably on, on me and what's going on in my brain. And he's got a lot of context on the business because we talk all the time. And he's scaled a vertically integrated capital intense hardware company, consumer facing. Uh, there's a lot of similarities between our two businesses, and so I use it as an opportunity to learn from him, and I like to think that every once in a while, you know, he gets a new perspective, or I ask an interesting question, he learns a thing from me.

AI assessment note: “the dad terminal is, is my version of that where I call up dad”

Q We were talking about this before we started recording. This is really interesting. Can you explain?

A Regulated and deregulated states in the U.S. If you look, it's kind of a history lesson here, but if you look back, you know, over 50 years, electricity is one of the few industries in the U.S. that did not get entirely deregulated. Shipping, uh, airlines, telecom, trucking, uh, you know, electricity in the, in the late nineties, early 2000, actually in California, deregulation, uh, started there. And basically, Enron manipulated the market and kind of busted the power market in California and deregulated deregulation, like, totally stopped. And Rick Perry and George Bush in Texas, like, carried the torch of deregulation. And the public utility commission in Texas pushed this kind of competitive market construct. Now, it's going to get even more complicated. In Texas, 80% of the market is deregulated. 20% of the market is still regulated. So Austin Energy is a municipal utility. So we sit here in Austin in our office that is served by Austin Energy. We cannot be the electricity provider to Austin Energy. Same thing in San Antonio. CPS is a municipal utility there. Same thing in Georgetown. Georgetown Electric is a municipal utility there. There's another category of utility called a co-op or cooperative. This is more in the rural areas, uh, but now there's, there's really big cooperatives like CoServe, who's a customer of ours, or Pedernales Electric Co-op, that's the largest c…

AI assessment note: “Regulated and deregulated states in the U.S.”

Q Do you think there's something special about it being analog that you're actually writing with pen to paper?

A For sure. I've tried to move to computer. And all the good ideas go away. I mean, not entirely, right? And like, what happens is, now I wake up pretty early in the mornings, and you know, six to eight a.m. is kind of my most productive time, but that, I'm, I'm in the morning, I'm, I'm kind of like doing the work that I assigned myself the night before. So I'm like, okay, I gotta solve this, I solve that, and then I open the computer, and that's all on the computer, and then I'm like actually executing, but there's like this special, you know, 30 to 60 minutes in the evening with a pen and a paper and no distractions. I can't get a notification. I can't get a call. Like I'm just focused and I really enjoy that. And I'm sure some people have the, have the capacity to focus, you know, using digital tools, but like the analog is really, uh, clarifying and focusing for me.

AI assessment note: “For sure. I've tried to move to computer. And all the good ideas go away.”

Q What have you, like, what did you learn from the people that worked for Tim?

A Mostly this maniacal focus on critical path and resolving constraints, and I've also learned a lot of this from Antonio Gracias, who's on my board and has worked very closely with Elon for decades. The first year or two of working with Antonio, basically every conversation I had with him, and still to this day, this is, you know, the main focus of all of our conversations, every conversation was the same. Hey Antonio, how's it going? Good, how are you? What's up? Um, you know, Zach, uh, what, what's your constraint? Like what's the constraint of the business? And I'll just answer the question and that's all we can talk about. That's it. What's the constraint? What's the constraint? What's the constraint? Like if we agree on the mission, the vision and the strategy, okay, we're good there. What's constraining us to get to that? Let's just focus all of our time and energy on that. And that, Kind of flows into all of the little things in process and kind of how people operate that show up kind of in the day to day with the metrics and the dashboards and the hot potatoes and the turtles. Like all that is, is just trying to get to what is constraining our business and how do we resolve those constraints that are on the critical path on the way towards our mission.

AI assessment note: “Mostly this maniacal focus on critical path and resolving constraints”

Q Ok, so, how do you generate more power then?

A So, there are Really two distinct things to think about here. There's generation, and then there's transmission and distribution, right? So generation is, is where the new electrons come from, right? Solar, wind, gas, coal, geothermal, hydroelectric. There's tons of different ways to fusion, fission. There's a bunch of different ways to generate energy, and then you have to move it, right? And poles and wires move energy through space, and batteries move energy through time. The grid is a system by which the transmission distribution happens, and it's built for the peak, so it's massively oversized, which means that you have a bunch of inefficiency, and that it's not being used all the time. It's not being highly utilized, and when you have a system that runs at low utilization, it makes the system very expensive. Batteries allow you to increase the utilization of that system, because you can charge them when demand is really low, and you can discharge them when demand is really high, and so you can take, you know, the curve of demand, and you can Flatten it. And therefore, you can lower the total delivered cost because the capacity factor, as it's called in the industry, or the utilization has gone up. So with our current product set today focused on battery storage, we're not making more electricity. We're just using it more efficiently to drive the cost down.

AI assessment note: “we're not making more electricity. We're just using it more efficiently”

Q And then I just had Torsen Real who's the founder of Helsing who it has, it's not out yet, but he's just like, he said, I think started the conversation. Cause his whole thing is like, Europe needs its own way to defend itself. This is not a fucking business. This is a mission. He goes, we're not selling this for any amount of money. What's your opinion on this?

A Look, you said it. It's what are you solving for? Are you solving for the mission? Are you solving for a paycheck? I think you could probably guess based on where I come from that I'm not solving for a paycheck, right? And the way I talk about the business and the way we act and the way the business is run, we're here to achieve a mission. That mission is kind of never ending, right? Human prosperity, energy, abundance, affordable, reliable power. We're never like, well, we did it. Like we, we did the affordable, reliable power thing. Like what's, what's next, right? Like that will, that is a mission that will live on forever. Probably I'll outlive the company, outlive me. Hopefully the company outlives me. And then, and then the mission will go on forever. And eventually You know, either, either, you know, the, the, um, something will take out the earth that will kill the company. Right.

AI assessment note: “It's what are you solving for? Are you solving for the mission?”