Latest / The ReForge Podcast / Billion Dollar Bets on American Manufacturing (with Matt and Colin) | ReForge 014

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Billion Dollar Bets on American Manufacturing (with Matt and Colin) | ReForge 014 · The ReForge Podcast

• 0:00
  The only thing that's gonna matter over the next four or five years as we're in a critical crunch of capacity is- Yep your relationships.
• 0:08
  Who do you know?
• 0:09
  Who can you call?
• 0:11
  People are gonna be the only thing that move the needle here.
• 0:13
  If you need to get a truck to your site for a critical delivery, you better know somebody.
• 0:18
  You know, if you need to get a part tomorrow- You gotta have a guy.
• 0:21
  You gotta have a guy.
• 0:22
  So this is...
• 0:24
  I will just tell the audience for the next five years, it's, you gotta know a guy.
• 0:28
  Um, obviously Colin and I are the type of people that our careers are built on knowing a guy.
• 0:32
  So, um, use your network.
• 0:35
  If you don't have one, you better get moving on it.
• 0:41
  Welcome to the Reforge podcast.
• 0:44
  I'm Matthew Chan, and we're here to explore all things AI, automation, and the American worker, proving that the American reindustrialization is possible, pivotal, and pressing.
• 0:55
  Thanks for joining us today.
• 0:57
  Let's get into the episode Welcome back everyone to episode 14 of the Reforge Podcast.
• 1:06
  I'm Colin, and I'm here with Matt.
• 1:09
  Today we're gonna get into some of the high octane, exciting news in the world of reindustrialization.
• 1:16
  How's that sound, Matt?
• 1:18
  Sounds good.
• 1:18
  But before we get started, I wanna congratulate you, Colin, on your recent, um, award you got from YouTube.
• 1:26
  How does that make you- Oh, thank you.
• 1:28
  Y- they're, they're, they're hard earned.
• 1:29
  I mean, you know, y- when, when the, uh, CCP decides to, uh, use their YouTube influence to, you know, try and censor what we're doing here, I think that's a pretty good indication of, uh, being right on target, as you said.
• 1:42
  I would s- yeah, I'd say we're right on target.
• 1:44
  So for the audience, if you're seeing this on X or Rumble, you're not seeing it on YouTube today.
• 1:49
  Reforge, uh, in other words, Matt Chang and Colin Russ that talk about reindustrialization, the workforce and the community, have been permanently suspended from YouTube for t- I think for telling kids to consider trade school instead of college.
• 2:04
  What do, what do you think the reason is, Colin?
• 2:06
  Uh, you know, I've been racking my brain trying to figure it out.
• 2:08
  That is probably the most, uh, rational, I would say, explanation for it.
• 2:14
  Um, I mean, I think we need to look into getting little plaques made instead of the, you know, subscriber count, but just how quickly we were able to get, you know, full out banned.
• 2:22
  Um, I mean, but the fact of the matter is somebody watching, somebody seeing it didn't like, uh, you know, what we were saying because, you know, who knows what reason.
• 2:32
  But at the end of the day w- we're telling the truth here.
• 2:35
  I mean, it, it's the...
• 2:37
  You can stick your head in the sand and pretend like these things aren't changing, pretend like, you know, going to university is always the right s- but facts don't lie.
• 2:46
  I mean, sorry, not sorry.
• 2:49
  Yeah.
• 2:49
  Or it, it could have been, you know, because we, um, we told people to make stuff in America, don't make it overseas.
• 2:56
  So who knows, but- Dangerous, dangerous, dangerous words we're, we're saying.
• 3:01
  Yeah.
• 3:02
  When a factory innovator and a professional engineer get banned from a online platform, uh, you gotta find that amusing.
• 3:07
  So I just wanna congratulate you.
• 3:09
  We worked hard.
• 3:10
  I think we achieved the milestone faster than we thought we would.
• 3:13
  You know- I would agree it was like April 15 we got banned, so.
• 3:17
  I mean, it's pretty, pretty impressive.
• 3:19
  All right.
• 3:20
  Well, let's jump into it on the platforms that are still streaming us, and let's see what we got.
• 3:25
  All righty.
• 3:26
  Let's jump into it.
• 3:28
  Let me make sure I sharing my screen and not leaving.
• 3:32
  So first up, Innovative Refrigeration Systems, they have announced a$19 million expansion in Augusta County, Virginia.
• 3:46
  So this is one of those companies that you don't necessarily hear about, um, kind of the, the supplier for a lot of suppliers type thing.
• 3:55
  Um, but it sounds like they, you know, expanding their existing campus, 50 acres, you know, 430,000 square feet of manufacturing.
• 4:07
  Um, you know, that is huge'cause as, as mentioned here, you know, these are cooling solutions not just for, you know, food storage type thing.
• 4:16
  We've got life sciences, data centers, um, a lot of those industries that are truly, truly important for everything across the supply chain, not just keeping your milk cold or whatever.
• 4:29
  Um, so this is super exciting.
• 4:33
  Um, it also mentions here quickly, which I think is they've been u- been using that apprenticeship, um, program that we've, we mentioned in those previous episodes, kind of those alternative, uh, education pathways.
• 4:45
  So, you know, Virginia once again showing up strong with, with some more manufacturing, uh, you know, announcements here.
• 4:53
  Yeah, that's great.
• 4:54
  And just for the audience, there's kinda, in my mind, there's kinda two categories for refrigeration.
• 5:00
  There's packaged systems, so your refrigerator at home is a packaged system.
• 5:04
  The AC system in your car is a packaged system.
• 5:07
  So, so in the packaged systems, uh, which obviously are gonna be large and, and kind of industrial or commercial size, those are being produced in this factory, I assume, Colin, and then they're getting shipped to customer site to be installed?
• 5:19
  That's what it sounds like.
• 5:22
  Um, a, a lot of the component pieces, I, I didn't have a chance to get too far into their, uh, whole supply chain piece of it.
• 5:28
  But they- Yeah these don't sound like they're full finished units.
• 5:31
  And then the se- the second type is basically a field-built refrigeration system.
• 5:35
  This is like if you need to build a cold storage distribution center, um, or like a, a frozen receiving facility at a port where you're bringing in frozen product and you gotta put it into a building.
• 5:47
  Those are ammonia-based systems, and I saw that up in, in their product offering.
• 5:51
  So when you run ammonia on site, that's a safety rated system So they're, you know, they're...
• 5:57
  This is actually pretty hardcore mechanical, pretty high-tech stuff, uh, to deliver to site a system that has to be assembled on site, right?
• 6:05
  It's too big to, to figure out.
• 6:07
  You're not going to Lowe's or Home Depot to pick this thing up.
• 6:09
  That's right.
• 6:10
  That's right.
• 6:10
  It's gotta be engineered.
• 6:11
  It's gotta be inspected by, you know, the, the fire marshal and the building inspector and all those sort of things.
• 6:16
  And then for ammonia-based systems, the company that has it installed, say the, the cold storage distribution center or, um, all your medical supply chain that's temperature-dependent goes through this type of facility, uh, then they have to have on staff and present at all times somebody that's been trained and rated in ammonia systems, right?
• 6:39
  So it's similar to a boiler for folks that, you know, the audience that know what, how boilers work in factories.
• 6:44
  Uh, you have to have a boiler tech.
• 6:46
  You also have to have an ammonia tech.
• 6:47
  So this is a pretty sophisticated company if they're delivering ammonia-based systems to site.
• 6:53
  I mean, a- and with that fact, I think, you know, hearing that they are expanding that footprint, you know, sizably, that's clearly an indicator of huge market demand for it.
• 7:04
  This is not an investment that they're gonna make unless those dependent industries need it.
• 7:09
  That's right.
• 7:10
  And considering, you know, we're talking about chemical precursors, pharmaceuticals, all of those things, that is a very positive sign in my book that we're, we're getting into that 10-year bull run that we keep talking about.
• 7:22
  Totally.
• 7:23
  And that goes with all these, uh, expos I've seen about trucking being short, trucking load rejections.
• 7:30
  Everything this company makes c- makes goes out on a truck, so.
• 7:34
  It's huge.
• 7:35
  Huge- Yeah huge, huge.
• 7:36
  All righty.
• 7:37
  We are going to keep going onto our next piece of news.
• 7:41
  This one you ga- kind of alluded to the likelihood of it a few weeks ago when we were talking energy a bit, but Ford is repurposing their Kentucky, uh, battery facility to actually produce their new, uh, battery energy storage systems, uh- Mm-hmm for utilities data centers.
• 8:02
  So, uh- Oh you had brought this one up suggesting, we were talking, you know, Georgia, North Carolina, South Carolina, all that, got all these battery factories.
• 8:12
  Um, Ford is making, in my mind, a very smart move in getting- Mm-hmm into that battery storage space and, you know, fits perfectly with w- with their existing capabilities.
• 8:22
  Obviously as they re-platform their- Yeah entire fleet around, you know, trying to that, that u- uniform platform around EVs, this is a great way to add some cash and, you know, really expand into a huge new market.
• 8:35
  Yeah.
• 8:35
  We, th- this would be probably a surprise to most people.
• 8:38
  We're way over capacity.
• 8:40
  We have too much capacity to produce battery cells in this country.
• 8:45
  Uh, the packaging.
• 8:46
  So some of the cell manufacturer's done by your Samsungs and Panasonics.
• 8:50
  You know, it's the...
• 8:51
  Looks like the size of a D size battery.
• 8:53
  Um, but then those all go into a housing.
• 8:56
  That's the package.
• 8:57
  And then that you, with a system like this, you're gonna have thermal management that has to be repackaged in into, like, a little C container.
• 9:04
  Yeah.
• 9:04
  It's got a radiator.
• 9:05
  It's got some electronics to manage everything.
• 9:07
  It's got, uh, power side equipment, like inverters.
• 9:11
  So this is, uh, this is gonna be a pretty sweet product by Ford as they get it figured out.
• 9:17
  Um, quick note on factory design.
• 9:20
  Uh, you know, we have been crazy bus- busy designing incredibly high power consumption factories this year, uh, especially in the metal sector where they just have massive power draws.
• 9:31
  Huge.
• 9:31
  Quasi two or greater than data centers.
• 9:35
  And, um, and so one of the things I've been advising all of my clients on, and we've been including in our engineering designs, you gotta have a battery system on the plant.
• 9:44
  You have to.
• 9:45
  Uh, power reliability across the country right now is horrendous.
• 9:50
  Oh, it, it's insane.
• 9:52
  And so y- this is gonna be a surprise, but I know of major producers that, that are owned by Fortune 500 companies that have rolling blackouts at the mill, rolling blackouts at the plant.
• 10:03
  Um, and it's a routine thing.
• 10:05
  It just destroys productivity and yield.
• 10:07
  It tears up motors.
• 10:09
  You know, they don't have the p- the protection equipment on the inside of these factories to deal with- Nope power.
• 10:14
  And it's not always a true brownout or blackout.
• 10:18
  A lot of the times you get power quality issues and the power comes in out of phase.
• 10:23
  So what most people don't realize is- What the utility's gonna charge you is what hits the meter.
• 10:30
  Okay?
• 10:31
  So if they deliver, you know, a megawatt to the meter, that's what they're gonna charge you.
• 10:36
  If due to power quality issues, harmonics and being out of phase, the power coming in is only 60% usable, well, then you just paid the full rate for something you only got 60% of the benefit for.
• 10:51
  And then inside the plant, a lot of that bad power's gonna burn off in your actual equipment in the form of heat.
• 10:58
  So you're putting a lot of load on your equipment, you're shortening the maintenance cycle, you're gonna burn up the motors faster, um, all because of this issue.
• 11:07
  So I think, I think Ford, uh, made an excellent move here.
• 11:12
  I'm gonna have to retrain my vocabulary'cause I always tell my clients we need to install a, a megapack area, which is the Tesla product.
• 11:18
  Well, exactly.
• 11:19
  Tes- Tesla, you know, a- has done such i- incredible work in terms of scaling that business and showing it.
• 11:26
  I mean, what you were just talking about, you know, the, arguably only having, you know, reduced, uh, performance of machines is, is a best case scenario.
• 11:37
  You know, when you get into some of these more precision types, you know, when you've got multi-phase power, i- if those are not started, shut down, you know, in the proper sequence, you've got a very expensive paperweight on your hands.
• 11:50
  Um, and that, you know, it's not just the machine that's out.
• 11:54
  You've got whatever jobs were in process.
• 11:56
  If that's scrap...
• 11:57
  I mean, it's, it's we're talking potentially hundreds of thousands of dollars per hour of downtime.
• 12:03
  So- That's right you know, that's awesome hearing that you guys are really incorporating battery backup.
• 12:09
  It, it's a no-brainer.
• 12:10
  I mean, that's...
• 12:10
  You look at the feed stocks for any business, you know, if y- you can have the nicest everything in the world in your factory, if you don't have reliable power, you're SOL, plain and simple.
• 12:21
  That's right.
• 12:22
  So- And, and just to, to be a little bit of a factory nerd here, when you install the battery pack system, it may only buffer the plant for, you know, a set number of hours, one hour, six hours, what- whatever the design requires that's based off good economics.
• 12:39
  But when you install that battery system, what it also tells you is you have to clean up the utility side power So we need phase correction, you know, we need capacitance banks, we need all this extra equipment so we don't tear up our batteries.
• 12:52
  Well, if we're thinking about it that way, it means we're also not gonna tear up the equipment inside the plant.
• 12:57
  And if you put one sensor on the usable side of your power, so this is, you know, after the meter and on the, um, the owner side of the, uh, the, the meter that measures what your actual usable electricity is, then every month you can get a rebate for the bad power that was sent to you so you don't pay full price.
• 13:17
  So th- these types of things, in my opinion, pay for themselves in terms of downtime, you know, extended maintenance life cycle on all the equipment, and then rebates on the electrical.
• 13:28
  Huge.
• 13:28
  Yeah, we're, we're gonna have to definitely, I think, find some time to get into the whole electrical discussion because when I saw this, that wa- you know, you're, you're hitting on kind of all the things that popped in my mind.
• 13:37
  It's a no-brainer for Ford.
• 13:39
  I think brand recognition is gonna be a huge asset for them in this space.
• 13:44
  Um, I, I think there's a good chance that they, they...
• 13:47
  I'm not gonna say they give Tesla a run for their money, but I think they're gonna be highly competitive in that.
• 13:53
  So- Me too we'll keep an eye on it All righty.
• 13:57
  We are going to keep with the car brand, uh, I guess automaker theme here for a second and get over to Toyota, who is looking for a pretty substantial expansion down in Texas for their San Antonio plant.
• 14:17
  Uh, it's called Project Orca.
• 14:19
  $2 billion they wanna spend according to a filing, uh, with the st- state of Texas.
• 14:25
  Um, it's going to be a completely new assembly line for vehicles.
• 14:30
  So this isn't, um, necessarily a refit of anything.
• 14:33
  This is true net new capacity, that they're adding 2,000 jobs, um, very well-paying jobs, as it says.
• 14:41
  Um, and they are hoping to be able to get into construction later this year.
• 14:46
  So they're in the site selection- Okay process, which is a whole nother animal in and of itself, but, um, very, very big opportunity, um- Project Killer Whale?
• 14:56
  Yeah.
• 14:56
  Did I read that right?
• 14:57
  May- maybe it's'cause there's the SeaWorld in San, or was a SeaWorld in San Antonio, the orcas.
• 15:02
  I don't know.
• 15:04
  Yeah.
• 15:05
  Have you ever been part of a, uh, project code name selection, Colin?
• 15:09
  I, I have.
• 15:10
  I have, and I think I, I've yet to come across one that is good and not something you don't cringe at, you know, years later.
• 15:18
  We're actually working on our first r- uh, really well-named project right now, but I also did a series of projects for a client that named every, every project after a, a flower.
• 15:30
  And we did a lot of projects in series, and by the end it was getting kind of weird'cause, you know, you'd hear the name and you're like- Super obscure?
• 15:40
  Yeah, yeah, very, very obscure.
• 15:41
  Kinda read like a Latin, you know, genus or something.
• 15:45
  But yeah, I don't know how they come up with these names, but this is super exciting.
• 15:48
  Did they say what product line they're making there?
• 15:51
  Uh, I thi- I don't know.
• 15:54
  I mean, San Antonio, I know that's where they build the, uh, Tundras and I believe the Sequoias.
• 15:59
  Mm.
• 16:00
  Um, so I suspect if they are going to be doing that- So it's gonna be their larger vehicles, that's all yeah, it's their big SUV, full-size platform.
• 16:08
  Um, I would not be surprised if it, uh, is more of that capacity.
• 16:13
  Obviously, SUVs are, you know, in high demand.
• 16:19
  That's exciting but yeah, I mean, that- that's big.
• 16:21
  It's not particularly surprising.
• 16:24
  Um, I mean, Toyota continues to invest, but, um, Texas keeps, you know, is another state that just keeps winning, winning, winning on those, uh, job fronts.
• 16:33
  Now they have to build a power plant.
• 16:35
  Last I saw, Texas was way out of power based on utility interconnect applications versus their current generation capacity.
• 16:42
  It's like something like- They- two and a half times their current capacity has been applied for, uh, to connect to the grid.
• 16:50
  Er- yeah, ERCOT has, like, a weird, or not weird, but has a great method of basically you build it and then you interconnect, and if there are issues, you know, with system balancing or whatnot, then you have to fix it and you're on the hook for it.
• 17:03
  But they don't go through the insane process of, like, PJM or, um, some of the, you know, southeast utilities.
• 17:11
  So for their...
• 17:14
  I- they add capacity so darn quickly it doesn't even surprise me.
• 17:18
  So- Yeah I doubt, doubt that'll end up being a bottleneck for them, which is probably the only state in the country where you can say that's the case.
• 17:25
  That's awesome All righty, and now on to, uh, the last kind of piece of news that we are going to hit on.
• 17:36
  Uh, yesterday, uh, Jim Blosak of SendCutSend announced that they have raised$110 million at a billion-dollar valuation from Sequoia, from...
• 17:53
  Oh, I almost had them memorized.
• 17:55
  Um, let's see.
• 17:57
  All the big guys.
• 17:58
  Yeah.
• 17:58
  Yeah.
• 17:59
  So, some...
• 17:59
  Some big names.
• 18:00
  Uh, two of the co-founders of Stripe as well.
• 18:03
  Um, really just an impressive, uh, you know, I, I, I mean, massive undertaking.
• 18:09
  I'm a huge fan of SendCutSend.
• 18:10
  I've purchased pieces from them.
• 18:13
  They...
• 18:14
  Jim is one of those guys that is just customer obsessed.
• 18:18
  Um- Yeah does an awesome job, and he bootstrapped this literally as a buying his first, you know, laser machine so that he could, uh, build, you know, g- cut pieces for, you know, custom car builds.
• 18:31
  I think it was like an old Toyota that he was putting a, uh...
• 18:33
  Or Honda that he was putting a Tesla motor into years ago, and it turned into him taking a laser, uh, l- laser cutter in his garage, getting buddies to buy parts to pay for it, and, you know, what, eight, nine years later, they're doing 140 million a year in revenue.
• 18:52
  Growing, it's...
• 18:53
  He said 35,000 hours of overtime last year- Wow and they still don't have enough capacity, and over 100% year-over-year growth, so.
• 19:03
  Can you tell Jim to call me?
• 19:04
  He needs robots.
• 19:07
  I mean, he, he'll probably respond to you on X- He's got the Raiders now.
• 19:10
  is the response to that.
• 19:12
  Yeah, yeah.
• 19:12
  He- Yeah there's...
• 19:13
  I, I think that check will, uh, probably w- will clear pretty easily too.
• 19:17
  Um- Yeah, so I- I- I think this is- This is big, bro fascinating.
• 19:20
  You have, you have a, a metal fabrication company, which you have a metal fabrication company, but this is, you know, for your venture landscape, this is like the least sexy thing ever, right?
• 19:33
  Is, is metal fab.
• 19:34
  And then what I love is bootstrapping the company to that size- And then, you know, waiting, it seems like he did a great job protecting his dilution before he hit the accelerator and took, you know, the big institutional money.
• 19:48
  Do you know if that, um, cap table of Sin Kun Sin, was that all employees?
• 19:54
  Uh, so they had taken a little bit of money early, early on, um, when they were doing some expansion, but it's very little, um, dilution.
• 20:04
  Um, previous, you know, comments from Jim have basically said that it's, you know, the growth has been through, uh, SBA debt, you know, equipment financing with the actual, uh- Love it.
• 20:16
  Love it manufacturers.
• 20:17
  I mean, so the way he's done it has been...
• 20:19
  It's incredibly clean.
• 20:21
  Um, and he- So do you mind if I opine on employee-owned companies that have debt?
• 20:27
  Go for it.
• 20:28
  All right.
• 20:29
  So I love this.
• 20:30
  Um, as, as you know, this is, uh, more or less the Chang Robotics story is, is how that company's built and, and the customer-funded revenue model.
• 20:39
  Um- It's hard, right?
• 20:43
  So you said he, he founded this nine years ago?
• 20:46
  Yeah.
• 20:46
  Nine years ago.
• 20:47
  It's really hard bootstrapping from a single laser and then, you know, developing a website where he can intake complex parts and then...
• 20:55
  I've seen some of the parts they've, they've made online, and it's amazingly intricate what you can send over.
• 20:59
  I think people play a game.
• 21:00
  They send them the hardest thing possible, see if they can- Yep.
• 21:03
  Yep make a replication.
• 21:03
  See where, see where the, uh, line is, is that they will, will or will not make it, and I don't think they've said no yet, really.
• 21:10
  Yeah.
• 21:10
  It seems like they'll make anything.
• 21:12
  Um, and, and so, you know, getting in through the SBA, yeah, I've done that, small business owner.
• 21:20
  Um, taking some commercial debt, some probably equipment lending, commercial lines of credit, and just cobbling it together depending on the quality of your product and your response time to lead to more customer spending and higher growth, right?
• 21:34
  And then, and then to get to a, a billion dollar valuation without Silicon Valley, then they wanna come in because,"Hey, we have to invest in some sort of re-industrialized company." Uh, I love this story.
• 21:46
  This is absolutely fantastic.
• 21:48
  It's awesome.
• 21:49
  Yeah.
• 21:49
  I mean, Jim, Jim is...
• 21:51
  You know, interactions with him on X, you know, he responds.
• 21:54
  He is just one...
• 21:55
  Incredibly humble, which is awesome, but also, I mean, what he's built.
• 21:59
  I, and I, I think one of the things that's most significant about this is there's so much conversation out there about raising, you know, getting VCs who want American dynamism and want to invest i- in America and yada, yada, yada, who have only been putting money behind AI slop or defense companies.
• 22:23
  Aside, huge fan of defense tech.
• 22:25
  Love what they're doing.
• 22:27
  It's a small piece of it.
• 22:28
  What Jim and SendCutSend have done is they're making components for makers and, you know, small businesses.
• 22:36
  That's not your defense tech.
• 22:38
  This is really a backbone piece of it.
• 22:42
  They are, in many ways, I think, paving the way for whether it's venture or private capital or to adjust and open their eyes and set those expectations for what i- it is possible in this new era of manufacturing.
• 22:59
  Yeah.
• 22:59
  What, what does the future of production in the US look like?
• 23:04
  Not, you know, your grandfather's manufacturing or parts fabs.
• 23:09
  This is,"Hey, here are margins.
• 23:10
  Here's what's possible.
• 23:13
  This is what you gotta get used to and stop thinking, you know, in, in this very different, through this very different lens." So I think this is huge f- far beyond just SendCutSend.
• 23:23
  Um, but I'm, I can't wait to see what they achieve.
• 23:26
  Well, what, what's so important that Jim did here was, number one, he bootstrapped a company and, and I believe if you don't take on debt in your company- Uh, ass- assuming you need capital, right?
• 23:38
  Or you need, uh, working capital or access to financing.
• 23:41
  If you don't take on debt, you don't actually believe in your company.
• 23:44
  So when- whenever I meet a, a founder that is only taking, taking investor capital, equity capital, um, they have no skin in the game.
• 23:54
  You can shut down the business tomorrow and you're cool.
• 23:58
  Those SBA loans, he had to sign up his house, right?
• 24:02
  So, so you re- Th- th- those personal guarantees are a whole different ballgame.
• 24:06
  That's right.
• 24:06
  He had to go sit down with his wife, and he had to explain,"Hey, honey, I'm taking out this loan, and it actually requires two signatures'cause we're both on the house title, and you have to sign it, too, even though it's my business." To me, that's why I'm a big advocate of what I'm calling the s- the SBA Super Max loans.
• 24:24
  I think they should do SBA loans up to 100 million in this category.
• 24:28
  That would be Jim.
• 24:29
  He would sign that loan, right?
• 24:30
  He already did.
• 24:31
  He's not afraid to do it again.
• 24:32
  Um, I would sign that loan.
• 24:34
  You would sign that loan.
• 24:35
  But for the people that don't believe in their companies, and it's like a big thesis, it's an experiment, and hey, we can just play with other people's money, and I hope it works out, you know, I certainly, I respect some, uh, founders that have, have built amazing companies.
• 24:49
  But I think an early filter is if you won't take on debt and sign the na- sign on the bottom of the, the loan, then you don't actually believe in the company, right?
• 24:58
  If you're looking for the next investor round...
• 25:00
  And so what Jim did here is beautiful.
• 25:02
  He got, he was, he got the scale.
• 25:03
  He got the profit.
• 25:05
  You know, he had all the leverage.
• 25:08
  Uh, and then he said,"Okay, now it's time..." You know, as a profitable company, typically VCs don't invest in even- Yeah profitable companies, which is kind of weird.
• 25:16
  They only invest in money-losing companies, not money-making companies.
• 25:20
  But he waited till he got there, and he did this, and I think, to your point, this sets the template that every other company that's got on his trajectory can point to and say,"Well, look at what Simcoe sent in and Sequoia did here," right?
• 25:31
  And that is the comparator.
• 25:33
  As you know, these finance guys can be a little lazy.
• 25:36
  They can only look at comps and, and compare things.
• 25:39
  Very little original thought goes into pricing companies like this.
• 25:43
  So I'm, I'm really proud of both him and Sequoia for having that original thought and figuring this out.
• 25:48
  Yeah, I mean, it, it's, ha- the, my experience with them as, you know, buying parts from them has been awesome.
• 25:54
  My interactions with Jim have been great.
• 25:56
  He do- the other great thing is, um, and I'm sure you've seen this, they support so many engineering programs, clubs, whatever, at schools across the country.
• 26:06
  Mm-hmm.
• 26:07
  Um, they, like, they sponsor them with, you know, parts, support, that sort of thing, and I, I was listening on a Uh, uh, another podcast that Jim was actually on where he point blank said, you know,"Does that actually result in any money coming in?
• 26:25
  I don't know, but it's awesome what we get to do and we, we get to, you know, support these things." And that's just, again, you know, I, I think part of why this is such a powerful, uh, piece is he's...
• 26:37
  So they're still gonna do that, they're gonna do sponsorships, have their ambassadors.
• 26:40
  They're gonna basically keep doing what they're doing, and frankly, that, not a lot of companies that take this much VC money have the ability to say,"Hey, you're here to support our growth and basically pour fuel on the fire, but we're not changing what's made this company successful- Yeah and built its legion of followers up to this point." This, this is really kind of a growth equity round, right?
• 27:04
  Yeah.
• 27:05
  This is not really much a venture round'cause the, the business is proven, it's already commercially bankable.
• 27:10
  But let's, let's do a little practice on underwriting just from the, uh, the X article here.
• 27:15
  So if you, if you read in the middle it says, uh, 110 million, that's what they took in fresh capital, so they presumably sold, you know, 11, 11% of the company for 110 million.
• 27:28
  Um, when you read the italics it says the company will invest over 250 million in facilities.
• 27:38
  So as I was saying with debt, people that believe in their companies, you know, will use debt to scale.
• 27:45
  They're gonna multiply that 110 million with some amount of debt instrument, probably on their factory assets, you know, the, the construction and the equipment to a c- to, you know, turn it into additional.
• 27:57
  So I don't know what portion of the equity they're doing that with.
• 27:59
  Presumably at least 20% of the facility cost, you know, would be equity.
• 28:04
  But they're already telling you right here in the article that they're, they're gonna use commercial debt to build factories and to buy equipment to put in the factories.
• 28:13
  So I, I did a little bit of- They have to keep sending candy.
• 28:15
  If you order from them, in every order you get like a, a Sour Patch or some piece of candy they have to throw in there.
• 28:21
  Really?
• 28:21
  So yeah, it's, it's awesome.
• 28:23
  I can't wait to see what I get each time.
• 28:24
  But you know what?
• 28:25
  I'm bank- I'm gonna go long on whoever the maker of Sour Patch is, because if it's any indication on what they're planning to do, those sales are gonna go up, too.
• 28:34
  Oh, is that investment advice?
• 28:36
  Oh, we're not allowed to do that.
• 28:37
  No.
• 28:37
  Absolutely not.
• 28:38
  Absolutely not.
• 28:39
  That is my, my pre-diabetic, you know, sweet tooth talking.
• 28:45
  But no, I mean, th- this is one of those things where I was, uh, surprised ultimately to see it, but, you know, I think we've been waiting for something like this.
• 28:54
  There've been a couple of those kind of what I'll call VC darlings that in the reindustrialization, quote-unquote, space, um, I'm not sure I would necessarily say they're really in that space, but they're people who've been in the Silicon Valley VC bubble.
• 29:11
  They, they're the anointed ones, whatever you wanna call them, and they get a boatload of money to do this stuff.
• 29:16
  Um, Jim, you know, Jim Suncutson, those guys are just straight up builders.
• 29:22
  Um, you know, th- the way they hire, they take people with zero experience, they train them up.
• 29:28
  I mean, he's doing a lot of things we've talked about here.
• 29:30
  Um, so it's great to see a company like that, you know, really get the attention, raise money, and hopefully, like I say, it's rocket fuel to pour, uh, rocket fuel for them and everyone gets to tag along for the ride.
• 29:42
  Absolutely.
• 29:44
  All righty.
• 29:45
  Any, uh, any Chang Robotics news, uh, we, we wanna touch on?
• 29:50
  Yeah, I mean, I, I did a, a quick expose on this yesterday, but I was just counting in my head, uh, I think it was last night, um, how many of my staffers have been deployed out to customer site over the last, uh, two weeks, and I got to 30 that I could think of.
• 30:09
  So, you know, if the trucks are out of capacity and you can't buy a transformer'cause the electrical gear suppliers are out of capacity, and you're looking at all these out of capacities, I mean, we are, you know...
• 30:21
  I am, I am not to the point where I will turn down work, but I'm to the point where it's very hard to convince me to say yes to the work.
• 30:28
  And so, you know, we're running the team hard.
• 30:31
  Uh, you know, Delta and United are loving us right now'cause we're, we're sending people out all across these United States.
• 30:38
  Um- Racking up those miles yeah, we're, we're getting, we're just getting hot and heavy into it.
• 30:44
  Uh, I think, you know, y- you and I have talked, we're in the, the middle of placing just some gigantic orders on critical factory elements, you know, related to the, um, the utility side of the plant, the electrical side of the plant.
• 30:58
  Um, r- you know, robotic arms, we have multiple suppliers, all the, all the big names.
• 31:04
  Um, all the sensors.
• 31:06
  We're, we're getting deep into, um, some AI vision projects right now.
• 31:10
  Ooh.
• 31:10
  And so we're, yeah, we're making sure that in our, in a work cell, you know, that we have that visual intelligence that is informing, um, all the robot systems what to do, but it also has the reverse effect.
• 31:24
  It cuts down on the sensors and instrumentations you have to do, right?
• 31:28
  So you think of like a conventional automation, you have like photo eyes and, and things like that, uh, counters, checkers.
• 31:35
  We don't need all that.
• 31:36
  We don't have to go program all that with a AI vision stack.
• 31:39
  So we've been, we've been deploying that now for about, um, a little more than a year, maybe a year and a half.
• 31:45
  Huge success and, uh, and our clients love it, and it just adds efficiency and speed to the deployment.
• 31:52
  Um, so we're really, we're having the most fun, you know, that we've had in a while because every day for me is factory design.
• 32:00
  And- Yeah, of course my CFO's like,"Hey, we need to have a meeting." I'm like,"Not right now.
• 32:03
  We're doing engineering." Right?
• 32:05
  Not, not now, I'm in the zone.
• 32:07
  Yeah.
• 32:08
  So yeah, we're having a great time and, and I think we'll have some big announcements by the end of the summer.
• 32:12
  But as you know, the companies that are really into it, we don't talk about what we do and who we do it for because I've got an NDA with every single client.
• 32:19
  How could I keep that straight?
• 32:20
  Uh, w- it's best just to, uh, to not talk about details.
• 32:23
  But what I can tell you is that we as an industry, I think we'll find our full capacity reached by the end of the year.
• 32:32
  That's how fast things are moving.
• 32:33
  So companies like mine that can, you know, build your plant for you, install all the robotics, design it- There's not gonna be many of us out there that can accept new work by the end of the year.
• 32:45
  Uh, the truckers, it's already been publicized, it's happened to them.
• 32:48
  The gear suppliers, it's happened to them.
• 32:51
  Uh, you can't buy a g- what are the...
• 32:52
  Generators are backed up four years Turbines are e- yeah, I, I think the, the reman ones that are converted are, like, 18 to 24 months.
• 33:00
  Actual net new power gen turbines are four to five years.
• 33:05
  Yeah.
• 33:06
  So we're, we're gonna be rate- like, capacity limited, I think, by the end of the year across the board, right?
• 33:13
  So my encouragement to anybody that is, uh, you know, contemplating their investment, I, I went back with AJ Cortez on X this morning about it, is build the team now.
• 33:24
  Build the team now.
• 33:24
  The only thing that's gonna matter, it's not AI, it's not who your VC is, it's not who your congressman is.
• 33:31
  The only thing that's gonna matter over the next four or five years as we're in a critical crunch of capacity is- Yep your relationships.
• 33:39
  Who do you know?
• 33:41
  Who can you call?
• 33:42
  People are gonna be the only thing that move the needle here.
• 33:45
  If you need to get a truck to your site for a critical delivery, you better know somebody.
• 33:50
  You know, if you need to get a part tomorrow- You gotta have a guy.
• 33:53
  You gotta have a guy.
• 33:54
  So this is...
• 33:55
  I will just tell the audience for the next five years, it's, you gotta know a guy.
• 33:59
  Um, obviously Colin and I are the type of people that our careers are built on knowing a guy.
• 34:04
  So, um, use your network.
• 34:06
  If you don't have one, you better get moving on it.
• 34:09
  Awesome.
• 34:10
  Matt, great ep as always.
• 34:12
  And to all of you listening, thank you for tuning in to the Reforge podcast, whether we're talking robotics on the factory floor, policy that actually moves the needle, or the next generation of American makers, our goal is always the same: to prove that reindustrialization, reindustrialization in America isn't just possible, it's happening right now and it's pivotal.
• 34:33
  If you enjoyed the episode, make sure you subscribe and follow the Reforge pod everywhere, and check out thereforgepodcast.com for more.
• 34:41
  Until next time, keep forging the future.
• 34:45
  Thanks, Colin Thanks for tuning in to The Reforged Podcast.
• 34:52
  Make sure to like, subscribe and follow us on all of our social media@Thereforgedpod.
• 34:58
  We will see you next time