Latest / The ReForge Podcast / Harnessing the Industrial Revival (with Matthew Chang) | ReForge 002

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Harnessing the Industrial Revival (with Matthew Chang) | ReForge 002 · The ReForge Podcast

• 0:00
  Matthew Chang: reindustrialization is happening.
• 0:02
  Matthew Chang: It's happening at an absurd pace, and it's happening in a pretty much industry agnostic way.
• 0:08
  Matthew Chang: You're, you're gonna see pharma, aviation, automotive, metal fabrication, primary materials, chemical precursors.
• 0:17
  Matthew Chang: You're just gonna see like that every industry turned on at the same time, and that's never happened before in your, in my lifetime or your lifetime.
• 0:31
  Welcome to the Reforge Podcast.
• 0:34
  I'm Matthew Chang, and we're here to explore all things AI automation and the American worker proving that the American reindustrialization is possible.
• 0:44
  Pivotal pressing.
• 0:45
  Thanks for joining us today.
• 0:47
  Let's get into the episode.
• 0:49
  Colin Russ: All right everyone.
• 0:50
  Colin Russ: Welcome back to the Reforge Podcast.
• 0:53
  Colin Russ: This is episode number two.
• 0:55
  Colin Russ: And I'm Colin Russ.
• 0:57
  Colin Russ: I hope you're ready for an amazing second episode where we're gonna keep talking about what American Reindustrialization is actually going to take, not what you're gonna get from a bunch of consultants who've never done it before.
• 1:08
  Colin Russ: Today we're gonna be talking to one of the Reindustrialization OGs who is doing this.
• 1:13
  Colin Russ: Way before Reindustrialization was a buzzword.
• 1:17
  Colin Russ: He's an engineer, a surfer, philanthropist, community leader.
• 1:21
  Colin Russ: A vc, CEO, published off author and has an awesome mohawk.
• 1:27
  Colin Russ: The one, the only, Matt Chang.
• 1:30
  Colin Russ: Matt, welcome.
• 1:32
  Colin Russ: Glad to co-host with
• 1:34
  Matthew Chang: Yeah.
• 1:36
  Colin Russ: So give us a little bit of a, a run now, give us kind of your, your background before we, we jump into, uh, some of the fun stuff.
• 1:44
  Colin Russ: Tell us, you know, what titles did I possibly miss?
• 1:48
  Matthew Chang: Um, I mean, you covered, you covered some, uh, father of four would be missing, so I'm a uh, yeah, yeah.
• 1:57
  Matthew Chang: I'm a full-time butt wiper and all the stuff that comes with having little kids.
• 2:03
  Matthew Chang: Um, so that nothing keeps you humble, like having a baby boss you around.
• 2:07
  Matthew Chang: So that's the stage of life I'm in.
• 2:10
  Matthew Chang: Um, but no, I had, uh, typical eighties and nineties upbringing.
• 2:16
  Matthew Chang: So, you know, I was, I was born in the eighties.
• 2:19
  Matthew Chang: Um, God bless the folks that were born back when you didn't get to choose what was on tv, right?
• 2:24
  Matthew Chang: It was just on, so saved by the bell generation, if you will.
• 2:28
  Matthew Chang: Uh, I'm a twin.
• 2:30
  Matthew Chang: I had to, the reason I'm in Florida, I had to leave North Carolina'cause my twin brother is faster, smarter, and more handsome than me.
• 2:37
  Matthew Chang: So I had to create a little space and get two states away.
• 2:40
  Matthew Chang: Uh, and um, and so we just had an amazing time growing up in the eighties.
• 2:45
  Matthew Chang: It was like post racism, you know, I don't know what all this racial anxiety is today.
• 2:51
  Matthew Chang: 'cause we didn't have it in the eighties.
• 2:52
  Matthew Chang: It was just everything was good and we didn't worry about that different.
• 2:56
  Matthew Chang: Yeah, it was a different world.
• 2:58
  Matthew Chang: Then, uh, you know, going to high school in the nineties was like the American flag right behind your head.
• 3:03
  Matthew Chang: It was just all America, you know, we had the dream team, you know, in the Olympics and the Soviet Union had collapsed and there was no wars and it was just, you know, um,
• 3:15
  Colin Russ: An era of opportunity and op optimism.
• 3:18
  Matthew Chang: totally.
• 3:19
  Matthew Chang: And so when I got high school, I was super, uh.
• 3:24
  Matthew Chang: Focused on ROTC.
• 3:26
  Matthew Chang: So I was in the junior ROTC for four years.
• 3:28
  Matthew Chang: Uh, my, my junior and senior year I taught ROTC and um, that actually brought my GPA down'cause you couldn't get one of those six point as that you get with the AP classes because I was taking so many ROTC classes, both as a, a student and as a teacher.
• 3:45
  Matthew Chang: And, um, and I loved it.
• 3:48
  Matthew Chang: That was, you can tell it was a different era.
• 3:49
  Matthew Chang: 'cause on Mondays I gotta wear my uniform and I gotta wear the Marine Corps saber my senior year to school around my hip.
• 3:57
  Matthew Chang: Yeah, it was super cool and uh, and so I did that silent drill.
• 4:01
  Matthew Chang: I was the guy out there throwing the mahogany rifles, the old World War I sniper rifles.
• 4:06
  Matthew Chang: Uh, just like the Marine Corps silent drill team.
• 4:09
  Matthew Chang: We won championships in sword drill and silent drill.
• 4:12
  Matthew Chang: Um, and so loved every second of it, you know, played every sport mediocre at the mediocre level in high school.
• 4:20
  Matthew Chang: Um, I, uh, I'm much bigger now than I was in high school.
• 4:23
  Matthew Chang: I was skinny and couldn't eat enough probably'cause I was splitting my food with my twin, you know, my parents couldn't feed us enough, so we never got big enough to like really be elite in sports.
• 4:32
  Matthew Chang: But we played every single sport you could imagine.
• 4:35
  Matthew Chang: And then went to college at Georgia Tech on A-R-O-T-C scholarship.
• 4:39
  Matthew Chang: And so the whole point there was, you know, be an engineer for the Navy.
• 4:43
  Matthew Chang: And um, so I got the full Ride scholarship and then, uh, while I was in college, that was the last wave of the sequester and I got sequestered out.
• 4:54
  Matthew Chang: So they just, they realized, classic Pentagon thinking, right?
• 4:57
  Matthew Chang: Oh my gosh, we gave out all these scholarships.
• 4:59
  Matthew Chang: Now we got a, these, uh, cadets are gonna be, um.
• 5:04
  Matthew Chang: Officers who were gonna have to pay'em for their, their full term.
• 5:08
  Matthew Chang: So I just got random lotto drawn out, which was heartbreaking.
• 5:13
  Matthew Chang: It might have been the first time I ever cried in life was when they pulled my scholarship and told me I was no longer part of the Navy.
• 5:19
  Matthew Chang: And then that was right as the Global War on Terror kicked off.
• 5:22
  Matthew Chang: So it was right as the, the Twin Towers came down.
• 5:25
  Matthew Chang: And then, you know, we had, uh, troops mobilizing to Afghanistan, so got as good.
• 5:31
  Matthew Chang: And God did not want me in Kandahar.
• 5:33
  Matthew Chang: He did not want me on a boat in the Red Sea.
• 5:36
  Matthew Chang: He pulled me out and he is like, you young punk are gonna join a frat party your way through Georgia Tech, and then you're going to travel the world building factories.
• 5:46
  Matthew Chang: And so that's, that was the career change that happened.
• 5:49
  Matthew Chang: And uh, that's what got me, you know, on here with you is I started building factories when I was, uh, in my early twenties and I did it all over the world.
• 5:58
  Matthew Chang: Never stopped.
• 5:59
  Matthew Chang: And uh, and so, you know, for the first decade of my career I was the globalization, you know, we
• 6:05
  Colin Russ: So, so, I mean, that's just a, obviously a whirlwind of a change, you know, planning one direction and having yanked out from, kind of yanked out from under you, um, really throws kinda your plan, quote unquote, if you will, uh, into chaos.
• 6:21
  Colin Russ: So then Navy didn't, didn't, uh, work out what was.
• 6:26
  Colin Russ: Your first job, you said you're traveling the world building factories.
• 6:28
  Colin Russ: What, what was that?
• 6:30
  Matthew Chang: Yeah, my, my first job, you know, once I was a graduate from Georgia Tech was to, to, um.
• 6:39
  Matthew Chang: Work in design build construction, so doing both the engineering and project management to build facilities and.
• 6:45
  Colin Russ: So we're talking ground up.
• 6:48
  Colin Russ: Somebody you know, says, Hey, we wanna build a new, you know, x, y, Z factory to make widgets.
• 6:54
  Colin Russ: How do we do it?
• 6:55
  Matthew Chang: Yeah, just to run through like the first five years of my career and this is when I'm still learning to, to read engineering drawings.
• 7:02
  Matthew Chang: Right.
• 7:02
  Matthew Chang: And, and to.
• 7:04
  Matthew Chang: Try to tell much older, wiser subcontractors and journeyman tradesmen how to do their job.
• 7:10
  Matthew Chang: That's the, that's the beauty of a Yeah.
• 7:12
  Matthew Chang: Young guy in construction, you're 24 and somehow you're in charge of a construction site.
• 7:16
  Matthew Chang: Okay.
• 7:17
  Colin Russ: Yeah.
• 7:18
  Matthew Chang: But, uh, but that's the way it works.
• 7:20
  Matthew Chang: And so, um, yeah, I built the first e-commerce center for VF Brands and that was when they wanted to start selling the North base.
• 7:28
  Matthew Chang: Online, so that was super cool.
• 7:30
  Matthew Chang: Just, you know, gigantic e-commerce fulfillment center.
• 7:32
  Matthew Chang: This is before the word e-commerce existed, so we just called it a big ass warehouse full of conveyors and sorters.
• 7:39
  Matthew Chang: Um, and so it was for a very cool company, north Face and Reef Surf, uh, clothes.
• 7:45
  Matthew Chang: Um, then from there went straight into, uh, building a food plant and built a cannery for ConAgra.
• 7:53
  Matthew Chang: They were expanding their, yeah, I don't know if they're expanding canneries right now, but back in those days they were.
• 7:58
  Matthew Chang: And, uh, so, uh, retort, hydrostatic boilers, like all kind of crazy stuff.
• 8:04
  Matthew Chang: I didn't know what it was.
• 8:05
  Matthew Chang: And, and, you know, over the special, over the road trucking permits,'cause the stuff was oversized halls to get it from the, the factory to, um, where the, the process equipment was made to the factory we were building in Texas.
• 8:17
  Matthew Chang: Um, then built
• 8:19
  Colin Russ: a bunch of stuff that nobody realizes exists, let alone
• 8:22
  Matthew Chang: Oh yeah, yeah,
• 8:24
  Colin Russ: on the shelves at the store, but you got to see how the
• 8:27
  Matthew Chang: that's right.
• 8:27
  Matthew Chang: The smallest we can ship the boiler is an 120,000 pound package.
• 8:31
  Matthew Chang: Yeah, that's that size stuff.
• 8:33
  Matthew Chang: Um,
• 8:34
  Colin Russ: I don't think Amazon delivers that next day.
• 8:36
  Matthew Chang: right.
• 8:37
  Matthew Chang: That which takes a little paperwork so that, so, you know, I built a train station extension for the Washington Metro, uh, at that time in, in Alexandria, Virginia.
• 8:48
  Matthew Chang: So I got my first taste of kind of hostile permitting with the permit office.
• 8:52
  Matthew Chang: Lost our approved set of drawings, you know, so we had approved drawings and they lost them.
• 8:57
  Matthew Chang: So they made us
• 8:58
  Colin Russ: Mind.
• 8:58
  Colin Russ: Mind you, I'm sure those were in like triplicate that you submitted them with wet signatures, but of course all of them just disappear magically crazy how that works.
• 9:06
  Matthew Chang: Yeah, from the building department where it's our job to keep drawings.
• 9:09
  Matthew Chang: Yep.
• 9:10
  Matthew Chang: Uh, went on to build, uh, two airplane factories and that was back in the shift to carbon fiber.
• 9:17
  Matthew Chang: So I built that car, the a three 20 wing factory in Malaysia and that was pretty nuts.
• 9:23
  Matthew Chang: Um, so trying to figure out how to do advanced manufacturing, but in a place without the resources and the skilled trades to do it.
• 9:30
  Matthew Chang: Um, that was my first taste of tariffs.
• 9:33
  Matthew Chang: We were, we were being told we're paying 140% tariffs on imported equipment.
• 9:37
  Matthew Chang: Obviously we're importing a hundred percent of the equipment.
• 9:40
  Matthew Chang: Um, so we had to find a way around that.
• 9:43
  Matthew Chang: Uh, then, uh, built the mothership, the A three 50, uh, extra wide body factory in North Carolina.
• 9:50
  Matthew Chang: And that was my first kind of government project.
• 9:53
  Matthew Chang: 'cause that was funded by the state of North Carolina.
• 9:55
  Matthew Chang: And it was personally, you know, sold by the, the governor of North Carolina.
• 10:00
  Matthew Chang: Um.
• 10:01
  Matthew Chang: That was all within the first five years.
• 10:03
  Matthew Chang: So it was just like action packed, you know, global, uh, intense high profile.
• 10:10
  Matthew Chang: Uh, during that time the recession occurred.
• 10:13
  Matthew Chang: And I like to say I never had a recession in my career because I was always hard at work building something major that spanned multiple years.
• 10:21
  Matthew Chang: Uh, post recession is when it got started to go nuts, and that's what really took me to.
• 10:27
  Matthew Chang: Automation and robotics was, we built, um, two converting mills for Georgia Pacific.
• 10:33
  Matthew Chang: The flagship product coming out of there is quilted Northern, uh, toilet paper, excuse me, bath tissue is what it's called.
• 10:40
  Matthew Chang: Uh, although I don't think you use it in the bath.
• 10:42
  Matthew Chang: And, uh, and those were fully driverless.
• 10:47
  Matthew Chang: The, those projects, both the, the Airbus.
• 10:50
  Matthew Chang: Projects and the Georgia Pacific projects look like United Nations on our, our morning standup on the job sites.
• 10:56
  Matthew Chang: I mean, we had companies from Italy and Spain and Japan and Canada.
• 10:59
  Matthew Chang: So all these global experts, you're descending for these super intense projects.
• 11:04
  Matthew Chang: What I like to joke about with doing, spending several years of my life on in paper mills is that if you had toilet paper during COVID, you're welcome because were those not driverless human factories, they would've been shut down and that would've furthered the outage.
• 11:19
  Matthew Chang: So, um, that was kind of my first taste that you could do hardcore heavy industrial, which paper mills are the definition of kind of hardcore, heavy industrial, uh, with full
• 11:31
  Colin Russ: nothing like the smell of that pulp, by the way, I've driven by, you know that that paper mill was down in Brunswick area, Brunswick,
• 11:37
  Matthew Chang: yeah.
• 11:38
  Colin Russ: which is Northeast.
• 11:39
  Colin Russ: Oh, there's a, um.
• 11:40
  Colin Russ: There's a smell to it, say the least.
• 11:42
  Matthew Chang: tough.
• 11:43
  Matthew Chang: I, I don't think I ever got used to it.
• 11:44
  Matthew Chang: When I worked in California.
• 11:46
  Matthew Chang: We had dairy farms on three sides.
• 11:48
  Matthew Chang: So every day you smell dairy farm and I don't think I got used.
• 11:52
  Matthew Chang: People say, oh, you get used to it.
• 11:53
  Matthew Chang: I don't think I did.
• 11:55
  Matthew Chang: And then working in a paper mill, I don't think I ever got used to it.
• 11:58
  Matthew Chang: I think I showed up to the mill every day and I'm like, oh my gosh, this is intense.
• 12:02
  Matthew Chang: Right?
• 12:02
  Colin Russ: Yeah.
• 12:03
  Colin Russ: Those are those smells.
• 12:04
  Colin Russ: Dairy farms, paper mills.
• 12:05
  Colin Russ: You're not supposed to get used to those things.
• 12:07
  Colin Russ: There's a reason you don't, and it's.
• 12:11
  Colin Russ: Best, quite frankly.
• 12:12
  Matthew Chang: Yeah.
• 12:12
  Matthew Chang: So, you know, and then the next chapter, I went hardcore to food.
• 12:16
  Matthew Chang: So there was this, uh, 2010 regulation and, and, um, law that came out from, uh, the bar Barack Obama White House called the Food Safety Modernization Act.
• 12:28
  Matthew Chang: Um, like all legislation that tries to get into industry, it was very flawed, but the intent was great, which is we need to have traceability on our food product.
• 12:40
  Matthew Chang: So at that time I went in in-house for McCormick Foods to help them get a handle on track and trace their challenge.
• 12:47
  Matthew Chang: They source commodity, you know, uh, seasonings and spices from 140 source countries.
• 12:54
  Matthew Chang: And as, as you're aware, Colin, like those supply chains are in intense.
• 12:58
  Matthew Chang: A lot of it gets aggregated.
• 12:59
  Matthew Chang: Picture a grain mill in Iowa.
• 13:01
  Matthew Chang: Which farm did the corn come from?
• 13:03
  Matthew Chang: Uh, how would you know right.
• 13:05
  Colin Russ: Blockchain, right.
• 13:06
  Matthew Chang: Yeah.
• 13:07
  Matthew Chang: We'll just, we'll just implement the blockchain and we can trace it.
• 13:09
  Matthew Chang: This was, this was be early in the Bitcoin days and, um, and so we, you know, we started to put in the first process and control that.
• 13:17
  Matthew Chang: What, what did that require?
• 13:18
  Matthew Chang: It required digital factory, right?
• 13:20
  Matthew Chang: So that we actually knew when we ran what product, where it came from.
• 13:25
  Matthew Chang: We might not know where the supplier got it from, but we knew when we ran it in the factory.
• 13:30
  Matthew Chang: and so doing that.
• 13:31
  Colin Russ: you're talking bleeding edge.
• 13:32
  Colin Russ: I mean, at this point in time, like this was still, you've got your fun little white papers that every ERP system is trying to push their quote unquote new capabilities.
• 13:41
  Colin Russ: This is bleeding edge stuff that you were doing actually on the ground, like a actually making it happen.
• 13:47
  Matthew Chang: Yeah.
• 13:47
  Matthew Chang: And, and for brands that everybody in America has in their kitchen, right?
• 13:51
  Matthew Chang: So this is this high profile stuff for iconic companies and.
• 13:55
  Matthew Chang: And just trying to play catch up honestly.
• 13:57
  Matthew Chang: 'cause new regulation hits and nobody's ready for it.
• 13:59
  Matthew Chang: Just, just like we've witnessed the tariffs hit over the last 12 months and nobody was ready for it.
• 14:04
  Matthew Chang: Even if they knew it was coming, they weren't ready.
• 14:06
  Matthew Chang: So, so we, we helped them get caught up.
• 14:08
  Matthew Chang: And um, and then, uh, the final kind of chapter that all kind of closed with is I started to get into heavy r and d work, which was, um, the, the pinnacle of that.
• 14:20
  Matthew Chang: If you've ever had an RX bar.
• 14:22
  Matthew Chang: We got selected by Rembrandt Foods to develop their RX bar factory.
• 14:29
  Matthew Chang: And so what was different about that one?
• 14:31
  Matthew Chang: It's egg protein instead of whey protein that goes into a, a simple ingredient list.
• 14:36
  Matthew Chang: Um, health, you know, protein bar, workout bar.
• 14:40
  Matthew Chang: And, um, their breakthrough was figuring out how to make powderized egg protein without turning it into scrambled eggs.
• 14:48
  Matthew Chang: Previously nobody had figured out how to get the protein out of eggs
• 14:51
  Colin Russ: It was just powdered eggs otherwise,
• 14:54
  Matthew Chang: Yeah.
• 14:55
  Matthew Chang: Most people, they try to do that.
• 14:56
  Matthew Chang: They just have a bunch of scrambled eggs.
• 14:57
  Matthew Chang: So, um, so Rembrandt Foods cracked the code on that, and then they had to take the lab version of it and scale it up into a factory that could support a nationwide product.
• 15:08
  Colin Russ: Wow.
• 15:08
  Matthew Chang: So that's what we did for them is built that, that first plant.
• 15:12
  Matthew Chang: And that's really kind of the end of my working for a company journey before I launched Chang Robotics.
• 15:20
  Colin Russ: Wow.
• 15:20
  Colin Russ: I mean it, so that's a lot in a relatively short period of time.
• 15:27
  Colin Russ: It's the, you know, proverbial drinking from the fire, you know, fire hose type thing.
• 15:31
  Colin Russ: But I, I'm one of those people that obviously loves those types of.
• 15:37
  Colin Russ: Opportunities.
• 15:38
  Colin Russ: You know, if you're not learning, if you're not uncomfortable and kind of pushing it, then you're not necessarily making any real progress.
• 15:46
  Colin Russ: Um, and, and so you, you mentioned, you know, obviously it led to change robotics, but I just wanna kind of.
• 15:53
  Colin Russ: Step back.
• 15:54
  Colin Russ: You mentioned a lot of that in obviously, um, your book Risk Taking is Biblical, which, you know, read it a couple times, absolutely loved it.
• 16:02
  Colin Russ: But you, one of the things that you hit on in there was you point out that the Bible is full of risk takers from Abraham to Peter.
• 16:14
  Colin Russ: You write that.
• 16:15
  Colin Russ: Comfort isn't kingdom value, if I phrase that properly.
• 16:20
  Colin Russ: Um, so, you know, you, you go from, I don't wanna say cushy, um, but you, when you're working for somebody else, there's a little bit more comfort, um, in, in where that paycheck's coming from.
• 16:33
  Colin Russ: You know, what's next?
• 16:35
  Colin Russ: It's tough to make that jump to be an entrepreneur.
• 16:38
  Colin Russ: You obviously have done that.
• 16:40
  Colin Russ: Um, and so I guess, you know, for operators, for, for people out there who are all in on Reindustrialization, um, you know, what was it that helped you kind of make that decision to, to take that leap to, to be ready to say, Hey, I have this genuine biblical calling.
• 17:02
  Colin Russ: I need to go do this and, and take this risk because it's the right thing to do.
• 17:07
  Matthew Chang: Yeah.
• 17:08
  Matthew Chang: You know, I, I just firmly believe that the Lord prepares the way.
• 17:11
  Matthew Chang: And so, you know, starting with early, the painful, um, for me, you know, occurrence of getting pulled outta the Navy, that stung a lot.
• 17:21
  Matthew Chang: You know, that just changed who I thought I was preparing to be for five years as a young man and, and was super patriotic and wanted to.
• 17:28
  Matthew Chang: To be part of the military and then going full-time into engineering, which, um, turned into a rollercoaster ride, you know, of, of, uh, global travels, you know, so what I always tell young people is never say no when you go to work, if you're working in something high technical.
• 17:45
  Matthew Chang: I, I personally don't put a lot of stock in the 22 and 23-year-old founders.
• 17:50
  Matthew Chang: Um, not to say there haven't been some that have done great work, but for high technical trades, you really don't know anything yet, right?
• 17:58
  Matthew Chang: You need to go apprentice and learn.
• 18:00
  Matthew Chang: It takes five years, for example, of apprenticeship to become a professional engineer.
• 18:04
  Matthew Chang: So I had to work under the supervision of professional engineers for five years to become licensed.
• 18:10
  Matthew Chang: So that model of apprenticeship is incredibly important in the trades.
• 18:14
  Matthew Chang: Uh, so that's, that's the first part is I certainly earned what I call my PhD in, in engineering for industrial through all those exploits.
• 18:23
  Matthew Chang: Um.
• 18:26
  Matthew Chang: Once I knew that, now I'm dangerous.
• 18:28
  Matthew Chang: But to your point, I was not business savvy, right?
• 18:31
  Matthew Chang: I knew how to run projects, get'em done on time to performance.
• 18:35
  Matthew Chang: I knew how to run contracts.
• 18:36
  Matthew Chang: I didn't know how to run a business.
• 18:38
  Matthew Chang: And, um, so when I started my company.
• 18:42
  Matthew Chang: Yeah, there's tons of mistakes, man.
• 18:44
  Matthew Chang: 'cause it's not like I was like some private equity business building, bro.
• 18:47
  Matthew Chang: That was
• 18:48
  Colin Russ: you're learning.
• 18:49
  Matthew Chang: corporate structures and tax structures in place.
• 18:51
  Matthew Chang: Yeah.
• 18:52
  Matthew Chang: We just, I, in Florida, you can have a company in like 30 minutes.
• 18:56
  Matthew Chang: So you just go to the state website, click, click, click.
• 18:59
  Matthew Chang: I can't remember the price.
• 19:00
  Matthew Chang: It's like 99 or 199 bucks.
• 19:03
  Matthew Chang: Pay the fee.
• 19:04
  Matthew Chang: Boom company.
• 19:05
  Colin Russ: You are good to go.
• 19:07
  Matthew Chang: And so that.
• 19:08
  Matthew Chang: That was how simple it was to get started was just open a company.
• 19:12
  Matthew Chang: And I also like to say this is counter to startup culture, that you don't actually have a company unless you have customers.
• 19:21
  Matthew Chang: Right?
• 19:21
  Matthew Chang: If nobody's paying you for what you do, then what you're doing is a hobby, right?
• 19:25
  Matthew Chang: And, uh, and so we were just blessed that on the founding of the company, you know, I, I submitted a covenant at church on, on middle school, um, covenant Night.
• 19:37
  Matthew Chang: So I was the youth group leader for the seventh grade boys.
• 19:40
  Matthew Chang: I was filling out the covenant card with the, the boys.
• 19:44
  Matthew Chang: They're riding.
• 19:45
  Matthew Chang: I won't kick my sister, I'll clean my room, I'll do my homework.
• 19:48
  Matthew Chang: That was their covenant.
• 19:49
  Matthew Chang: And mine was, dear God, I will start a Christian engineering company.
• 19:53
  Matthew Chang: That was it.
• 19:54
  Matthew Chang: And then I sent it in, uh, we put it at the altar and then I feel bound by that'cause I've made a covenant with God about it.
• 20:03
  Matthew Chang: And then lo and behold.
• 20:05
  Matthew Chang: Five days later, I get a call from a, a female engineer from Iowa and she says, I need you up here Tuesday, get a haircut, get a suit, get a company.
• 20:17
  Matthew Chang: And I'm like, I like to joke.
• 20:19
  Matthew Chang: I did two of the three'cause obviously I didn't comply with the corporate hair rules.
• 20:22
  Matthew Chang: But um,
• 20:23
  Colin Russ: Two outta three ain't bad.
• 20:25
  Colin Russ: You're making Hall of Fame.
• 20:25
  Colin Russ: That's hall of fame numbers in most sports.
• 20:27
  Matthew Chang: That's right.
• 20:28
  Matthew Chang: So the, so I fly up there, you know, bet on the come, I don't know what I'm supposed to do.
• 20:33
  Matthew Chang: I just say, okay, I'll, I'll be in the game.
• 20:35
  Matthew Chang: I'll get up there at the end of the week they get me contracted and paid, and now I'm officially their, you know, their, um, consulting engineer one.
• 20:46
  Matthew Chang: Right.
• 20:47
  Matthew Chang: And it just snowballed after that was once I hung, once I took that leap of faith, that risk to hang a shingle and say that I'm out here doing it.
• 20:56
  Matthew Chang: It seemed like every, about every month or every other month, we're getting a new interested party saying, Hey, now that you've taken this step, we want you to solve a problem for us.
• 21:05
  Matthew Chang: And uh, that first year of the company was insane.
• 21:10
  Matthew Chang: We ended up building the first fully digital and iot coffee factory in the world back of food.
• 21:17
  Matthew Chang: Love Me some coffee.
• 21:18
  Matthew Chang: We did that consulting engineering for, um, a company that a lot of dads like Craig Tool.
• 21:25
  Matthew Chang: Which is a, a wonderful Iowa company.
• 21:27
  Matthew Chang: If you, if you're into making your own cabinetry or, or doing a precision carpentry, then you know who Craig Jewel is, uh, made in USA beautiful company.
• 21:35
  Matthew Chang: And then, uh,
• 21:36
  Colin Russ: stuff.
• 21:38
  Matthew Chang: right, the, the blue stuff.
• 21:40
  Matthew Chang: But if, if you're making furniture for your wife, you need it.
• 21:42
  Matthew Chang: And then finally, like the one that really, uh, solidified my focus on robotics was the, the city of Jacksonville asked me to design a driverless bus system.
• 21:55
  Matthew Chang: I just remember laughing.
• 21:56
  Matthew Chang: I was like, what are you guys, what makes you feel qualified?
• 22:00
  Matthew Chang: And they're like, well, we're gonna take a run at it.
• 22:03
  Matthew Chang: So as the story unfolded, we did, you know, I went in to City Hall as a contracted employee, uh, after I'd started Chang Robotics, designed for them the architecture of how to do an autonomous bus system.
• 22:18
  Matthew Chang: Then we submitted in the most competitive U-S-D-O-T grant of all time, which was the Driverless Cities grant, uh, in 2017 and 2018.
• 22:29
  Matthew Chang: And then we get at Tweeted by Marco Rubio.
• 22:33
  Matthew Chang: Congrats City of Jacksonville.
• 22:35
  Matthew Chang: He, he had just gotten out of the appropriations committee.
• 22:38
  Matthew Chang: Um, you are, you are the winner of the Driverless Cities grant.
• 22:43
  Matthew Chang: And so if God's not in that.
• 22:45
  Matthew Chang: You tell me how that happened.
• 22:46
  Matthew Chang: Because we beat Atlanta, Miami, Boston, San Francisco, Chicago,
• 22:51
  Colin Russ: mean, yeah, I, I mean, I'm, I'm on the planning commission, you know, here, here in Erie and just the, the grants, you know, they, there's so many and they are so competitive.
• 23:01
  Colin Russ: That it's tough for, you know, any city, especially big ones'cause there's so many finite dollars.
• 23:08
  Colin Russ: But then you get into something where it's.
• 23:10
  Colin Russ: You know, truly ahead of the curve with, you know, autonomous transit type stuff.
• 23:16
  Colin Russ: That's, I mean, that's huge.
• 23:18
  Colin Russ: That's, that's a, a big bite too.
• 23:21
  Colin Russ: I mean, getting into kind of that civic, you know, public tech type stuff that's, you know, has a, there's a, there's a special place in my heart for that stuff.
• 23:30
  Colin Russ: 'cause that's how you really start to help your community too.
• 23:32
  Colin Russ: And where I think.
• 23:34
  Colin Russ: Personally, reindustrialization plays such a big part is helping to rebuild communities and help elevate them, so
• 23:40
  Matthew Chang: Yeah, that one's crazy.
• 23:42
  Matthew Chang: I'll just kind of jump to the conclusion.
• 23:44
  Matthew Chang: So that system is up and running.
• 23:46
  Matthew Chang: We have currently order magnitude 14 autonomous buses in downtown Jacksonville.
• 23:51
  Matthew Chang: The city's ready to expand that to over a hundred.
• 23:55
  Matthew Chang: Yep.
• 23:55
  Matthew Chang: So now that the proof of concept's out there and it works, it's safe, it works.
• 24:00
  Matthew Chang: I've taken my kids on it several times.
• 24:02
  Matthew Chang: Um, the city's ready to scale and, uh, so currently service runs from our downtown bus terminal.
• 24:10
  Matthew Chang: And our downtown monorail to the Jaguar stadium.
• 24:12
  Matthew Chang: It, it just goes back and forth on roughly a linear path.
• 24:16
  Matthew Chang: Oh, it was super hard to get to an NFL stadium and I gotta design the route.
• 24:21
  Matthew Chang: So they said, why are you doing that?
• 24:23
  Matthew Chang: That's so hard.
• 24:23
  Matthew Chang: I'm like, because if it doesn't go to the NFL stadium, what are we even doing?
• 24:26
  Matthew Chang: Right?
• 24:27
  Matthew Chang: Like it's gotta go
• 24:28
  Colin Russ: Absolutely.
• 24:29
  Matthew Chang: Um, the whole point is not to be in a corner driving in a circle.
• 24:32
  Matthew Chang: We gotta get people from the mo nodes of transit to the NFL stadium.
• 24:36
  Matthew Chang: That's the point.
• 24:38
  Matthew Chang: Um, so that's working.
• 24:40
  Matthew Chang: Uh, but what it's led to for the community, this is, I think the point is, first off, state local funding, we've gotten matched on all the federal money we've gotten matched by the governor and by the mayor.
• 24:53
  Matthew Chang: The next thing that happened was we've attracted private investment and Jacksonville has landed multiple economic development projects, including the construction of an autonomous bus company's factory in Jacksonville at the port of Jacksonville.
• 25:06
  Matthew Chang: So you talk about like true synergy is we're doing the manufacturing in a port, whatever components need to come in, they, they go straight to the factory.
• 25:15
  Matthew Chang: The autonomous buses get manufactured.
• 25:17
  Matthew Chang: And then for global export, we ship'em back out to the rest of the world, you know, after they get manufactured in Jacksonville.
• 25:24
  Colin Russ: Wow, that's just ni nice, clean and simple.
• 25:28
  Colin Russ: Well, we are going to shift to the fun segment here for a second.
• 25:32
  Colin Russ: Um, and so are you, first off, are you a chat GBT Gemini Anthropic Rock.
• 25:40
  Colin Russ: What, what's your AI of choice?
• 25:43
  Matthew Chang: I am gr um, I was, I was a multi subscription user until about four months ago, and then my observation was grok just took a step function at, at GR four 20.
• 25:57
  Matthew Chang: The, uh, the newest version, the multi-agent system, so I've down selected to that.
• 26:02
  Matthew Chang: My engineers are anthropic users.
• 26:05
  Matthew Chang: There's one simple reason Anthropic plugs into Excel and PowerPoint.
• 26:09
  Matthew Chang: So you want to work with engineers, you better get into Microsoft.
• 26:13
  Matthew Chang: And so hats off to Anthropic for being the first company to plug in like that and offer really specific tools for, you know, MS.
• 26:20
  Matthew Chang: Office users.
• 26:22
  Matthew Chang: Um, we, we use a ton of AI in the company, but we do it within the copilot sandbox, so Microsoft copilot.
• 26:33
  Matthew Chang: No offense to Microsoft.
• 26:34
  Matthew Chang: It's like kind of a mediocre, it's like ai, if you don't wanna pay for one, is what the copilot is.
• 26:40
  Matthew Chang: But they have a
• 26:41
  Colin Russ: putting it.
• 26:42
  Matthew Chang: they have a sandbox within your, um, your SharePoint where you can install other agent systems.
• 26:50
  Matthew Chang: So we run cursor, rept, anthropic, like whatever.
• 26:53
  Matthew Chang: We run it all within the secured environment of Microsoft.
• 26:58
  Matthew Chang: I'm big on cybersecurity and the, the theory there is.
• 27:02
  Matthew Chang: Microsoft loses your data, you're screwed anyways.
• 27:05
  Matthew Chang: Right?
• 27:05
  Matthew Chang: So you've already trusted your entire business to them.
• 27:08
  Matthew Chang: You can trust your ai, ag, agentic work, you know, within their ecosystem.
• 27:13
  Matthew Chang: haven't really figured out what's cyber secure though.
• 27:16
  Matthew Chang: Right?
• 27:17
  Matthew Chang: I think that's the big question is like when you're using these other tools, um, who's getting the data?
• 27:23
  Matthew Chang: Like is it going somewhere?
• 27:24
  Matthew Chang: Are you training somebody
• 27:25
  Colin Russ: Traceability is very, very
• 27:27
  Matthew Chang: Yeah.
• 27:27
  Colin Russ: And I think that's, I think that's intentional, but I'm not gonna, again, we're trying not to get shadow banned or anything, so.
• 27:34
  Matthew Chang: Yeah, I think, you know, all companies are figuring it out.
• 27:37
  Matthew Chang: We're, we're trying to be in like, kind of the first 5% of AI adopters within our business.
• 27:42
  Matthew Chang: Not necessarily the first one.
• 27:44
  Matthew Chang: Those are the people that had all their Gmail deleted by, you know, open was that first 1%.
• 27:49
  Matthew Chang: So we're, we're trying to be, be, yeah.
• 27:53
  Matthew Chang: I had set as soon as ai, as soon as chat, GPG came out.
• 27:57
  Matthew Chang: I set a goal for the company and I said, I want, within a a time period, I want 20% of our workflow to be ai.
• 28:05
  Matthew Chang: And then I said, I said the next step is gonna be 40%.
• 28:08
  Matthew Chang: We are currently as a business, in between that 20 and 40% step, we're working on achieving 40%.
• 28:15
  Matthew Chang: All that means for our engineers, they do less busy work.
• 28:20
  Matthew Chang: We've trained agents to do certain functions, uh, that an engineer wouldn't think of, but it took hours from the day, right?
• 28:27
  Matthew Chang: Kind of routine work.
• 28:28
  Matthew Chang: The flip side is you better be good at reviewing because this, these agents, including Claude, which is probably the best for our business, make mistakes all the time.
• 28:38
  Matthew Chang: And so you gotta be good at spot checking and, and have an eye for how to review.
• 28:42
  Matthew Chang: So that experience factor has not gone away.
• 28:44
  Matthew Chang: It's just intensified with ai.
• 28:47
  Matthew Chang: Then the other thing we're doing is coming in May.
• 28:50
  Matthew Chang: This is a warning to everyone in my company.
• 28:52
  Matthew Chang: We are releasing an AI policy of what you can use and what you can't.
• 28:56
  Matthew Chang: The reason is, I, I tracked it for a month.
• 28:59
  Matthew Chang: We had 10 note takers in my business.
• 29:03
  Colin Russ: Ugh.
• 29:03
  Matthew Chang: Every, every employee and every, you know, independent contractor and every subcontractor is using their own little widgets to take notes.
• 29:12
  Matthew Chang: I'm like, where's this info?
• 29:13
  Matthew Chang: We're definitely talking about confidential things, and I'm the guy at the beginning of a meeting, I kick every notetaker out.
• 29:19
  Colin Russ: Yeah.
• 29:20
  Colin Russ: Oh, they drive me crazy.
• 29:21
  Matthew Chang: Yeah, yeah.
• 29:22
  Matthew Chang: I've got the master control on every meeting I'm in.
• 29:24
  Matthew Chang: Me notetakers out, but that's annoying.
• 29:27
  Matthew Chang: So we want to, we want to understand at least a best philosophy on which ones are working hard to keep your data private if it's a true productivity tool.
• 29:38
  Matthew Chang: Let's use it.
• 29:39
  Matthew Chang: I'm not knocking note takers, I'm just saying I don't need 10.
• 29:42
  Matthew Chang: Right?
• 29:42
  Matthew Chang: We should have one or two within the business that we've already vetted and we have a man on it.
• 29:47
  Matthew Chang: We've got a, a really journeyman expert, uh, a guy named Joe Tanga.
• 29:53
  Matthew Chang: He co-authored the Industrial Cybersecurity white paper with Joshua Steinman.
• 29:56
  Matthew Chang: So these, these two guys are ninjas.
• 29:59
  Matthew Chang: If Joe tells me it's good, we can use it.
• 30:01
  Matthew Chang: If Joe's.
• 30:03
  Matthew Chang: Is that defense about it?
• 30:04
  Matthew Chang: You can't, right?
• 30:05
  Colin Russ: Nope.
• 30:06
  Colin Russ: It's
• 30:06
  Matthew Chang: We deal with secrets man.
• 30:07
  Matthew Chang: Industrial is a very confidential market sector, right?
• 30:12
  Matthew Chang: Boeing doesn't.
• 30:13
  Colin Russ: now, I mean, I, there's, there's more and more that needs to be protected and it's just, you know, more, more, uh, more vulnerabilities as people are learning how to use things properly.
• 30:24
  Colin Russ: But, so let, before we get back to some the, you know, main questions.
• 30:29
  Colin Russ: What was the last thing you asked?
• 30:30
  Colin Russ: Crouch?
• 30:32
  Matthew Chang: What do Halloween crabs eat?
• 30:36
  Matthew Chang: Halloween crab is the little orange and purple guy.
• 30:38
  Matthew Chang: It's like the tropical
• 30:40
  Colin Russ: Oh, yeah, yeah, yeah, yeah,
• 30:41
  Matthew Chang: yeah.
• 30:42
  Matthew Chang: Yeah.
• 30:42
  Matthew Chang: They're like really, really pretty.
• 30:43
  Matthew Chang: They're about, yay, big
• 30:45
  Colin Russ: What was the answer?
• 30:45
  Colin Russ: I.
• 30:47
  Matthew Chang: fruit.
• 30:48
  Matthew Chang: My daughter caught one.
• 30:49
  Matthew Chang: She put it in a sand bucket.
• 30:51
  Matthew Chang: She wanted to build a habitat, so we had to figure out what they eat and happily the answer was they'll, they'll eat fruit.
• 30:57
  Matthew Chang: So we gave it some fruit.
• 30:59
  Colin Russ: Yeah, I feel like a good, like 10% of my AI usage is just answering random questions.
• 31:05
  Colin Russ: My, you know, nine, 9-year-old comes up with, you know, which halftime.
• 31:10
  Colin Russ: I'm like, I can't say I don't know anymore.
• 31:12
  Colin Russ: She, well, can you ask ai?
• 31:14
  Colin Russ: Yep.
• 31:15
  Colin Russ: All right.
• 31:17
  Colin Russ: Exactly.
• 31:18
  Colin Russ: I'm, I'm creating the, you know, the reinstalling my value in, in, in the grand scheme of things.
• 31:23
  Colin Russ: So, uh, okay.
• 31:26
  Colin Russ: So one of the things I want to hit on is your, uh, give to give philosophy.
• 31:31
  Colin Russ: Um, so vc, world Tech startups, they are.
• 31:38
  Colin Russ: Historically very transactional give to get, uh, type of thing.
• 31:43
  Colin Russ: Uh, but you've done something that I think is really cool.
• 31:47
  Colin Russ: You know, obviously Chang Robotics and the, um, Chang Robotics Fund are, are really rooted in that give to give mentality, um, and mindset.
• 31:57
  Colin Russ: Which my kind of read on it is that's, you know, golden rule, uh, based on, so.
• 32:05
  Colin Russ: When, for example, looking at the robotics fund, when you're evaluating you, oh, founders who are looking to build things and, and they're trying to survive the value of death period, trying to get going, whatever.
• 32:18
  Colin Russ: How does that kind of abundance mindset that you have, how does that change the way you underwrite?
• 32:24
  Colin Russ: You mentor them, you invest in them, compared to, say, a traditional vc.
• 32:30
  Matthew Chang: Yeah, well, yeah, so give the, give apply to vc.
• 32:35
  Matthew Chang: That took us time to get ready for that.
• 32:36
  Matthew Chang: It was easy to do in my point of view.
• 32:38
  Matthew Chang: It was easy to do in a company.
• 32:40
  Matthew Chang: It became harder, not harder.
• 32:43
  Matthew Chang: It became more complex once you started doing things like taking LP capital to then invest in startups.
• 32:49
  Matthew Chang: Um, fortunately we were ready for it, so we didn't start there.
• 32:53
  Matthew Chang: So what it means for us is, number one, the Chang Robotics Fund is explicitly a tithing VC and a Christian vc.
• 33:02
  Matthew Chang: So one of the first slides you'll see for anybody that's been through our pitch to invest.
• 33:07
  Matthew Chang: As you'll see that, that we are, we espouse Christian worldview, biblical worldview, and we, um, we tithe our GP carry to ministry.
• 33:18
  Matthew Chang: So before we can make a profit as a vc, we have to give the first 10% to ministry and it has to be Christian ministry.
• 33:25
  Matthew Chang: Um, so that's step one.
• 33:28
  Matthew Chang: Uh, step two is related to the founders.
• 33:31
  Matthew Chang: Um.
• 33:32
  Matthew Chang: When we work with founders, what we really try to do is put ourselves in their shoes.
• 33:37
  Matthew Chang: I'm a founder, so I'm talking to founders.
• 33:39
  Matthew Chang: I'm not just like some guy that was a Stanford Quant or MIT quant that became a vc, and I'm like, power law, power law.
• 33:45
  Matthew Chang: Let's invest in Uber.
• 33:47
  Matthew Chang: I mean, I really empathize with the founders and one of the things I want to message to them is the intense failure rate of vc, so that is something VC likes to keep as a dirty little secret.
• 34:00
  Matthew Chang: The failure rate of companies that take VC capital is above 90%.
• 34:05
  Matthew Chang: So are you, are you mentally prepared that over nine out of 10 founders that take VC capital are going bankrupt?
• 34:15
  Matthew Chang: And then your best hope is to fail up.
• 34:18
  Matthew Chang: You're gonna lose all your investors' money and disappoint all your employees that you hooked up with.
• 34:22
  Matthew Chang: Stock options.
• 34:23
  Matthew Chang: And if you're married, your spouse is gonna be super disappointed that you wasted five to eight years.
• 34:28
  Matthew Chang: Right?
• 34:29
  Matthew Chang: So, uh, nobody tells you that.
• 34:32
  Matthew Chang: Right?
• 34:33
  Matthew Chang: And I tell people that right up front.
• 34:35
  Matthew Chang: Um, the other thing I, I talk to'em about is cap table math.
• 34:39
  Matthew Chang: If you're a founder that I'm backing, we've now backed 10 founders in the Chang Robotics Fund.
• 34:44
  Matthew Chang: So we have 10 Port cos I want those founders to own 50% or more of the stock.
• 34:52
  Matthew Chang: Forever.
• 34:54
  Matthew Chang: That's the opposite of vc.
• 34:55
  Matthew Chang: VC is like, it's like kind of like crack.
• 34:58
  Matthew Chang: It's like, Hey, let's do a seed round.
• 34:59
  Matthew Chang: Let's do a series A.
• 35:00
  Matthew Chang: How about a little series B?
• 35:01
  Matthew Chang: Or you're a little behind.
• 35:02
  Matthew Chang: We better get you to Series C.
• 35:04
  Matthew Chang: Your typical founder team owns less than 15% at exit, and oftentimes it's not unusual to see 5% that they get diluted down through this never ending cycle of capital raising and overspending.
• 35:21
  Matthew Chang: So what we teach our founders is I need you to own more than 50%'cause I'm backing you, not some other VC or some investor that invests in the company.
• 35:29
  Matthew Chang: I'm backing you.
• 35:30
  Matthew Chang: So I need you to stay in control and stay accountable and stay, stay, creating and producing.
• 35:35
  Matthew Chang: And when it's time to tap you on the shoulder and tell you that you're not fit to be the CEO of this.
• 35:40
  Matthew Chang: Success story you've built, we'll tell you that we'll have an open dialogue and say like, Hey, congratulations, you're now, you're now the chairman emeritus, right?
• 35:48
  Matthew Chang: We're gonna bring in somebody with fresh legs to run the CEO race.
• 35:53
  Matthew Chang: Uh, so what we do for that is we mentor all of our port cos heavily on getting off of VC as fast as we can.
• 36:01
  Matthew Chang: So that's counterintuitive.
• 36:02
  Matthew Chang: Typical VC would want to keep raising LP capital, charging management fees, and charging carried interest to the investors.
• 36:09
  Matthew Chang: And keep doing follow on rounds.
• 36:11
  Matthew Chang: I'd prefer to never do a follow on round with a founder if I had my way, because that keeps them in control and it means that they were able to shift the business from early money.
• 36:21
  Matthew Chang: Losing big idea to, we have customers, we make profits, right?
• 36:27
  Matthew Chang: So if you can get customers and make profits, you don't necessarily need capital, right?
• 36:33
  Matthew Chang: So we mentor them like, Hey, once you hit these milestones, you're ready for debt.
• 36:39
  Matthew Chang: A founder that will take on debt.
• 36:41
  Matthew Chang: I'm behind a hundred percent.
• 36:43
  Matthew Chang: Right?
• 36:43
  Colin Russ: So one, one of the, I mean, o off kind of stepping back to a bit, you know, one of the things I love is that, you know, obviously very different approach than most VCs and, and one of those is that you actively bring in your engineering team to help.
• 37:00
  Colin Russ: Founders prototype and, and build.
• 37:02
  Colin Russ: So how does that, that kind of hands-on technical underwriting piece of it, if you will, um, change the way you evaluate the potential of founders or, or their projects.
• 37:15
  Matthew Chang: So what?
• 37:16
  Matthew Chang: Yeah, great.
• 37:17
  Matthew Chang: Great question.
• 37:18
  Matthew Chang: So, just to set up for the audience, there's kind of this model that's well understood in VC called a Venture Studio, which we do, we ha, we have a business, standalone business called IP Studio that's just there to help develop an intellectual property.
• 37:30
  Matthew Chang: But I Venture Studio is like, Hey, we got this solo founder, maybe two co-founders.
• 37:34
  Matthew Chang: They come in here.
• 37:35
  Matthew Chang: They don't know anything about tax, legal, hr, yada, yada, yada.
• 37:39
  Matthew Chang: So we'll provide'em all the baseline services to launch a business.
• 37:42
  Matthew Chang: And for that, like Y Combinator, we'll take, we'll take a little rake off the percentage of the company, provide'em with some early stage capital, and we'll hope, we hope they launch off this platform with a venture studio we have.
• 37:54
  Matthew Chang: That's a horizontal model and it only serves the founder on day one.
• 37:59
  Matthew Chang: So in exchange, that's the barter, gimme some of your company upfront and I'll help you with the basics.
• 38:05
  Matthew Chang: I'm not knocking Venture Studio.
• 38:06
  Matthew Chang: I think it's, it's a wonderful concept.
• 38:08
  Matthew Chang: When I tried to apply that to the way I work, it turned into a vertical model.
• 38:14
  Matthew Chang: So when, when we back a founder, we provide them world, world-class engineering and automation support so that they don't have to over capital raise and try to start an engineering department or an RD department.
• 38:27
  Matthew Chang: So I, I
• 38:28
  Colin Russ: it gets back to that, you know, avoid, avoid burning that money, you know, put it, put it to the product.
• 38:33
  Matthew Chang: It's a mikasa scaa model.
• 38:35
  Matthew Chang: So, look, I've built a wonderful mousetrap for high tech engineering.
• 38:39
  Matthew Chang: Um, just use the stuff that I have, man.
• 38:41
  Matthew Chang: Don't try to reinvent the wheel.
• 38:43
  Matthew Chang: If you, if you look through my pantry and you find something missing, go get that.
• 38:47
  Matthew Chang: We'll help you get it.
• 38:48
  Matthew Chang: But don't try and reinvent the wheels.
• 38:49
  Matthew Chang: So.
• 38:50
  Matthew Chang: As the founders grow from prototype to kind of Gen one product, early deployment pilot deployment, gen two product, now we have multiple customers.
• 39:01
  Matthew Chang: We're starting to go enterprise gen three product.
• 39:03
  Matthew Chang: We're really focusing on cost and industrial robustness.
• 39:07
  Matthew Chang: We are scaling with them, providing our tools of support at every level.
• 39:11
  Matthew Chang: So it's kind of a vertical venture studio model.
• 39:15
  Matthew Chang: The, the main goal is when you look at all these companies raising all these huge amounts of venture capital, I mean, you see the announcements all the time, raises 50 million, 500 million insane numbers.
• 39:26
  Matthew Chang: A lot of that money is going to the technical side of the business, and a lot of it's getting wasted.
• 39:32
  Matthew Chang: You have a bunch, a newly assembled team.
• 39:35
  Matthew Chang: Exploring, trying to figure it out.
• 39:38
  Matthew Chang: Always vertically integrated, right?
• 39:40
  Matthew Chang: Like every VC-backed company has to vertically integrate.
• 39:42
  Matthew Chang: We're gonna own the land and we're gonna do the mining.
• 39:44
  Matthew Chang: We're gonna get steel out of it.
• 39:46
  Matthew Chang: We're gonna convert that into turbines.
• 39:48
  Matthew Chang: Like, alright, okay dude, there's a supply chain for a reason.
• 39:52
  Matthew Chang: Use it.
• 39:52
  Matthew Chang: Right?
• 39:54
  Colin Russ: Ver vertical integration makes sense.
• 39:56
  Colin Russ: In certain cases, in certain instances, cer sure, but there's a reason that it hasn't been that way for a long time in most industries,
• 40:07
  Matthew Chang: I'll give you a simple example.
• 40:08
  Matthew Chang: Tesla is a very vertically integrated company.
• 40:12
  Matthew Chang: It took huge amounts of capital and it took a long time to get there.
• 40:15
  Matthew Chang: They still don't make their own battery cells.
• 40:18
  Matthew Chang: So like this, this idea of vertical integration actually is what cost hard tech, you know, uh, hardware, technology companies, that's what costing the company more often than not.
• 40:30
  Matthew Chang: Is they, they're trying to build a battery plant.
• 40:32
  Matthew Chang: Can they build a wiring harness plant and they wanna do all this stuff vertically?
• 40:37
  Matthew Chang: Dude, there's companies out there that make it for the biggest, biggest, companies on earth.
• 40:41
  Matthew Chang: Just buy it.
• 40:42
  Matthew Chang: Right?
• 40:42
  Matthew Chang: Get is way better to get better at purchasing and procurement than to try to build your own plant.
• 40:49
  Matthew Chang: 'cause if you're an ideas person and then you build a factory, now you're a factory manager.
• 40:55
  Matthew Chang: Right, and you're a workforce manager and you and I know exactly what that takes.
• 40:59
  Matthew Chang: It's one of the reasons why we push our founders.
• 41:03
  Matthew Chang: You can, you can vertically integrate when you're of the scale to buy the companies underneath you, right?
• 41:10
  Matthew Chang: Just get big enough to where you can buy them.
• 41:12
  Matthew Chang: don't waste all your time,
• 41:13
  Colin Russ: scratch.
• 41:15
  Matthew Chang: right.
• 41:16
  Colin Russ: No, it makes, that's, I, I mean, it's one of those lessons that I think, unfortunately, to your point, 90% VC-backed companies fail.
• 41:23
  Colin Russ: We're gonna see, I, I hate to say it, a lot of very expensive failures in the next decade of these companies trying to chase this elusive vertical integration for the sake of vertical integration, but
• 41:36
  Matthew Chang: you can lemme, uh, tease out some of the issues.
• 41:39
  Matthew Chang: I didn't mean to go to Venture today, but since we're on it, I'm gonna do it.
• 41:44
  Matthew Chang: I, Paul Sweeney, who's, you know, one of the funniest people I know and and smartest people I know on, on X and in real life, he taught me this word about vintage, that private equity specifically is what he meant has vintage like.
• 41:57
  Matthew Chang: So whether is it a 2020 vintage, 2024 vintage that investment companies that just invest for a living have vintage problems?
• 42:07
  Matthew Chang: 'cause they get caught up in market economics.
• 42:10
  Matthew Chang: Kinda like when you buy a house, if you buy a house at the peak, you bought it at the wrong vintage.
• 42:13
  Matthew Chang: If you bought it at the bottom, perfect vintage, right?
• 42:15
  Matthew Chang: And you write it up.
• 42:17
  Matthew Chang: So Venture has a really interesting vintage dilemma here.
• 42:24
  Matthew Chang: Here's what they did.
• 42:25
  Matthew Chang: They sold out on SaaS and social media, right?
• 42:29
  Matthew Chang: So every venture company was like, oh, we gotta have a RR.
• 42:35
  Matthew Chang: We're gonna invest in only SaaS.
• 42:36
  Matthew Chang: It's a, it's an app for truck drivers that helps truck drivers find the rest, stop faster.
• 42:42
  Matthew Chang: You know, the, the TAM is enormous.
• 42:44
  Matthew Chang: That's why I laugh at words like tam, like is that really
• 42:48
  Colin Russ: Pro problems looking for solutions half the
• 42:51
  Matthew Chang: So all of VC generically, I understand there are exceptions, but all of VC chased after SaaS because they loved the predictability of the formula.
• 43:01
  Matthew Chang: They got really good at the spreadsheets, they knew the exits.
• 43:04
  Matthew Chang: They ran that hot for almost 20 years, right?
• 43:07
  Matthew Chang: The software as a service stuff.
• 43:10
  Matthew Chang: The whole house of cards came crashing down.
• 43:12
  Matthew Chang: Once we had AI agents.
• 43:13
  Matthew Chang: I mean, it really started with chat GPT, but once you had a agentic AI that could go replicate a website suddenly,
• 43:19
  Colin Russ: a, it's a game changer.
• 43:20
  Colin Russ: Your, your moat disappeared overnight.
• 43:23
  Matthew Chang: yeah.
• 43:23
  Matthew Chang: Right up the road got pulled.
• 43:25
  Matthew Chang: Just like me leaving the Navy.
• 43:26
  Matthew Chang: You got rugged.
• 43:27
  Matthew Chang: Sorry man.
• 43:28
  Matthew Chang: Um.
• 43:29
  Matthew Chang: So there's a huge vintage problem of portfolios of VC that are heavily SaaS leveraged that have not been written down in market to market.
• 43:37
  Matthew Chang: It's gonna be a bloodbath out there as those funds start to mature.
• 43:41
  Matthew Chang: LPs probably don't know.
• 43:43
  Matthew Chang: Most venture funds are really tenure funds, so problems that started in 2018 haven't been reported to investors yet, right?
• 43:52
  Matthew Chang: Those funds are 10 year funds.
• 43:54
  Matthew Chang: Usually you'll hear it called a eight plus two or a 10 plus two.
• 43:58
  Matthew Chang: So that's gonna happen in the next couple years.
• 44:01
  Matthew Chang: The ne the next thing is they all went in so hard on AI because it was so disruptive.
• 44:06
  Matthew Chang: Every VC dumped.
• 44:08
  Matthew Chang: I think last year 70% of VC capital went to ai and the year before was 80%.
• 44:14
  Colin Russ: I
• 44:15
  Matthew Chang: all VC did was invest in ai because it was so disruptive you had to have a piece of the future.
• 44:20
  Matthew Chang: What did people miss?
• 44:21
  Matthew Chang: AI is disrupting itself.
• 44:24
  Matthew Chang: There's like only 10 AI companies worth investing in, you know, even though there's thousands out there, because it keeps disrupting itself.
• 44:33
  Matthew Chang: So as people dumped money into an AI research project
• 44:37
  Colin Russ: It's already old.
• 44:38
  Matthew Chang: yeah, that got rugged six months later, deep seek as they call it then, then they went into the hyper scaling, okay, well, picks and shovels.
• 44:47
  Matthew Chang: If you can't own the AI company, or they're all, you know, you can't get into the latest anthropic round or the x ai round.
• 44:54
  Matthew Chang: Now we're gonna invest in the hardware.
• 44:56
  Matthew Chang: And I don't, this is the first time, I'll say this publicly, but I, I'm interested to get your take, Colin.
• 45:01
  Matthew Chang: Do those hyperscale data centers that are being built and turned on right now are almost obsolete already?
• 45:09
  Colin Russ: That's the thing that blows my mind is it's like, okay, so you've stockpiled all these H one hundreds.
• 45:14
  Colin Russ: Awesome.
• 45:15
  Colin Russ: By the time you've commissioned your new, new facility, these are, there's already two new generations since then.
• 45:23
  Colin Russ: Like, it's, I'm, I, I'm, I'm with you.
• 45:26
  Colin Russ: I think it's one of those things where.
• 45:27
  Colin Russ: The pace at which things are moving, the acceleration, nobody's gonna be able to keep up with it.
• 45:32
  Colin Russ: You're already, you're, you're buying obsolescence effectively.
• 45:35
  Matthew Chang: so, so it's like whatever the number is that's gone into hyperscale data centers, it's like, I think it's now in the, a few trillion range.
• 45:44
  Matthew Chang: Okay.
• 45:45
  Matthew Chang: So they, it was the H 100 Nvidia.
• 45:48
  Matthew Chang: Well, it turns out you can run most of what you need on a Mac Mini, right?
• 45:52
  Matthew Chang: Well, it turns out you can actually run some fully functioning LL limbs on your iPhone and turns out that Google's built their own chip that doesn't require A GPU and can run Gemini, which is a pretty heavyweight model off of A TPU.
• 46:06
  Matthew Chang: Right?
• 46:06
  Matthew Chang: So the problem is those facilities were funded largely off debt, which was private credit.
• 46:13
  Matthew Chang: So Facebook and everybody else went out and borrowed gobs of capital from the private credit marketplace to build these things that then got passed over, you know, for the most part, to the REITs, which is held by Main Street.
• 46:26
  Matthew Chang: The, what's the depreciation on a AI data center?
• 46:30
  Matthew Chang: Was it like 15 years, 20 years?
• 46:33
  Matthew Chang: 37 and a
• 46:33
  Colin Russ: you're looking at server, you, the, the servers themselves are what, five years?
• 46:37
  Colin Russ: I mean, realistically, probably three.
• 46:38
  Colin Russ: But you, you're, by the time you got'em built, uh, the economics.
• 46:43
  Colin Russ: Are a joke.
• 46:45
  Colin Russ: I mean, unfortunately we, we've got sw, I think we've got Sweeney, we've got Robert coming too.
• 46:51
  Colin Russ: Get into.
• 46:53
  Matthew Chang: Oh, we'll let them pick.
• 46:54
  Matthew Chang: We'll let them do a better job than me.
• 46:55
  Matthew Chang: But the facilities are saddled with long-term debt held by Main Street, right, and pension funds and 4 0 1 Ks and all this stuff are holding all the debt via REITs, which then backed Facebook, Amazon, everybody else at Microsoft.
• 47:09
  Matthew Chang: So you've got this long-term debt, and then you've got this technology obsolescence cycle that's happening on the every few years, timescale within the actual compute.
• 47:18
  Matthew Chang: I kind of think these.
• 47:20
  Matthew Chang: These data centers are gonna just be empty boxes, you know, that communities are just begging to get rid of.
• 47:28
  Matthew Chang: It doesn't make
• 47:29
  Colin Russ: I don't think you're wrong.
• 47:30
  Colin Russ: I don't think you're wrong.
• 47:31
  Colin Russ: And that's personally why I would like to see factories everywhere that are actually making things rather than, you know, just, just AI data centers, which
• 47:39
  Matthew Chang: was an investor, I'd say, can I get a, and can you turn this into a factory investment for me?
• 47:46
  Colin Russ: I mean, I create some sort of credit swap for factory AI for factory type thing.
• 47:51
  Colin Russ: I don't know, Sweeney or Sterling can probably figure that one out.
• 47:55
  Colin Russ: They're, they're much smarter than me, so.
• 47:57
  Colin Russ: Well, I know we are, we are coming up at the end of our episode, so kind of final thoughts here.
• 48:03
  Colin Russ: Obviously you've been in this space for a long time doing some very important work.
• 48:07
  Colin Russ: You're now doing so many different things on both the robotics, on the funding it, what are you most excited about over the next five years, um, with, with respect to reindustrialization, with respect some of the founders you're working with?
• 48:20
  Colin Russ: What, what gets you kind of juiced up?
• 48:23
  Matthew Chang: Yeah, I, I'd say my prediction is that we're setting up for a 10 year bull run in manufacturing.
• 48:31
  Matthew Chang: I think it's already started, but this stuff is a bit of a time delay.
• 48:34
  Matthew Chang: 'cause you and I both work off CapEx and capital deployment.
• 48:38
  Matthew Chang: So I, I think what you're gonna see in the economics, you know, starting maybe at the end of this year.
• 48:45
  Matthew Chang: Is that reindustrialization is happening.
• 48:48
  Matthew Chang: It's happening at an absurd pace, and it's happening in a pretty much industry agnostic way.
• 48:54
  Matthew Chang: You're, you're gonna see pharma, aviation, automotive, metal fabrication, primary materials, chemical precursors.
• 49:03
  Matthew Chang: You're just gonna see like that every industry turned on at the same time, and that's never happened before in your, in my lifetime or your lifetime.
• 49:12
  Matthew Chang: It's typically cyclical.
• 49:13
  Matthew Chang: And right now you have a supercycle where, you know, to, to over generalize.
• 49:18
  Matthew Chang: Nobody built a factory in 2020 3, 24, and 25 like no one did.
• 49:24
  Matthew Chang: Um, and then from 26 for the next 10 years, I think you're gonna see this supercycle.
• 49:31
  Matthew Chang: That are just gonna put enormous pressure on trades, on trucking, on energy, on permitting resources, engineering companies.
• 49:42
  Matthew Chang: I know we're like slammed right now.
• 49:44
  Matthew Chang: Um, and so what that's gonna do is I think it's gonna be a structural change in the economy.
• 49:50
  Matthew Chang: Going back to our last pod when we talked about workers, I think you're gonna have a decade of where workers are opting in to manufacturing and that inefficient.
• 50:01
  Matthew Chang: Kind of like white collar industries that are getting disrupted by AI are just gonna get absorbed by manufacturing, I think.
• 50:09
  Matthew Chang: I think we're at the beginning of the awakening the giant here.
• 50:13
  Matthew Chang: And so what I would just encourage people is it's still super early.
• 50:17
  Matthew Chang: If you're interested in getting into manufacturing, whether as a company and you're pivoting in or as a person and you wanna go learn it, like you and I did.
• 50:25
  Matthew Chang: Back when it wasn't popular.
• 50:27
  Matthew Chang: Uh, do it now, like it's an amazing time and we're gonna have a huge bull run just with amazing opportunities and people are gonna be using robotics and AI and just all kind of advanced systems, um, within their plants.
• 50:39
  Matthew Chang: And I also think it's, there's gonna be a step function and efficiency.
• 50:43
  Matthew Chang: So, you know, one of the old paradigms of factories was they were dirty, especially where you lived, right?
• 50:48
  Matthew Chang: People just dump stuff in the lake.
• 50:50
  Matthew Chang: The EPA, the Clean Water Act, the EPA was born outta Jacksonville.
• 50:54
  Matthew Chang: 'cause we should just dump stuff in the river.
• 50:57
  Matthew Chang: Well, that's gone
• 50:58
  Colin Russ: The, the photo, the photos of, of the, uh, great of Lake Erie.
• 51:03
  Colin Russ: I mean, you had just the giant foam plumes and you absolute nightmare.
• 51:07
  Colin Russ: But it's gonna be a big change.
• 51:09
  Matthew Chang: this is, this is gonna be clean energy.
• 51:12
  Matthew Chang: Efficient, safe.
• 51:14
  Matthew Chang: You know, old, older factories were dangerous and hazardous.
• 51:17
  Matthew Chang: You're gonna see safety at the forefront.
• 51:20
  Matthew Chang: And so, you know, we talked about it last episode.
• 51:22
  Matthew Chang: It's just gonna be cool, man.
• 51:23
  Matthew Chang: Like it's, you wanna see all the tech in one building.
• 51:26
  Matthew Chang: You want to go to a factory that's being built today.
• 51:29
  Matthew Chang: Uh, when that thing opens up, it's gonna be the most technical, technologically factory, technologically advanced factory of its kind in the world.
• 51:38
  Matthew Chang: And that's gonna be happening in America in every single state.
• 51:41
  Matthew Chang: And I'm just pumped that you and I are here on day one.
• 51:45
  Colin Russ: Likewise.
• 51:46
  Colin Russ: Best time to build a factory or get into manufacturing was years ago.
• 51:50
  Colin Russ: Second best time is today.
• 51:52
  Colin Russ: So Matt, where can people find you?
• 51:54
  Colin Russ: Where?
• 51:54
  Colin Russ: Where can they get you?
• 51:55
  Colin Russ: On socials,
• 51:56
  Matthew Chang: Yeah.
• 51:56
  Matthew Chang: Yeah.
• 51:57
  Matthew Chang: Just follow Chang robotics.ai, you know, our website.
• 52:01
  Matthew Chang: Follow us on LinkedIn Chang Robotics.
• 52:03
  Matthew Chang: Uh, you can follow up my handles here, uh, for X.
• 52:06
  Matthew Chang: Um, we're on all the socials.
• 52:08
  Matthew Chang: Well, LinkedIn X and um.
• 52:10
  Matthew Chang: We do have a, we do have a TikTok channel.
• 52:13
  Matthew Chang: I don't use it, but I'm aware that there is one.
• 52:16
  Matthew Chang: Uh, so just add us.
• 52:17
  Matthew Chang: We, you can, you can choose the corporate version or just my unfiltered opinion, which is on X, and, um, you can find us there.
• 52:24
  Matthew Chang: And then obviously the reforge podcast.com, the reforge podcast.com.
• 52:30
  Matthew Chang: You and I learned in the pre-show that we have a website now, so that's how we know we're
• 52:33
  Colin Russ: exciting.
• 52:36
  Colin Russ: Very exciting.
• 52:37
  Colin Russ: Well, thank you, Matt.
• 52:38
  Matthew Chang: Where can people find you?
• 52:39
  Colin Russ: Yep.
• 52:40
  Colin Russ: You can find me on X at that, Colin, like, oh, that Colin.
• 52:45
  Colin Russ: Um, or, or LinkedIn as well.
• 52:48
  Colin Russ: Um, like you said though, for those watching, make sure you follow, uh, on social at the Reforge pod and check out the reforge podcast.com.
• 52:58
  Matthew Chang: let's go.
• 52:59
  Colin Russ: thanks for a great episode.
• 53:00
  Colin Russ: Looking forward to the next one.
• 53:02
  Colin Russ: But we got, uh, some great guests queued up.
• 53:04
  Colin Russ: I saw.
• 53:05
  Matthew Chang: Awesome.
• 53:06
  Matthew Chang: Thanks Colin.
• 53:07
  Colin Russ: Thanks.
• 53:12
  Thanks for tuning in to the Reforge Podcast.
• 53:15
  Make sure to like, subscribe and follow us on all of our social media at the Reforge Pod.
• 53:20
  We'll see you next time.