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Stripe cofounder John Collison interviews founders, builders, and leaders over a pint.
Scott Nolan
The US did a first-generation technology to win World War II to stay dominant in the Cold War. We were over 90% of supply, globally. It was nicknamed Megatons to Megawatts. We imported Russian warheads, blended them down, ran our reactors on it. Congress passed a ban on imports of Russian uranium. That ban goes into effect January 1st, 2028, so our first mission is produce HALEU before the end of the decade for all these reactors.
John Collison
Scott Nolan leads General Matter, an advanced uranium enrichment company. His ultimate goal is to slash energy costs so dramatically that entirely new capabilities become cheap and routine.
John Collison
Cheers.
Scott Nolan
Cheers.
John Collison
General Matter. What are you guys trying to do?
Scott Nolan
We are enriching uranium. When we started, not many people were talking about uranium, not many people were talking about nuclear energy. This was mid-2023. I'd been doing investing at Founders Fund for 10 years and investing in some of the reactor companies. I asked them, "What's the hardest thing you have to do?" I was like, "Licensing, obviously." They said, "No, it wasn't licensing. It's actually getting the fuel. We have to get all of our fuel from Russia. It's very hard to import." And so I said, "Well, why don't the US companies that make all the fuel for the existing fleet of reactors—94 reactors on the grid, 20% of US power—why don't they make the fuel that you need?" They said, "What US companies?"
John Collison
This is both new nuclear companies, like startups, and existing nuclear plants in the US. Both require your enriched uranium, and both have to source it from Russian companies?
Scott Nolan
Russian or European.
John Collison
Okay. But non-US companies.
Scott Nolan
Non-US. Let's run through the big picture on where fuel comes from. Reactors, like any engine or anything producing power, does consume something. It consumes nuclear fuel. The nuclear fuel is made with five steps. First, you get uranium out of the ground. You then turn it into a gas. You then separate the gas to enrich it, meaning get more density of U-235, the fissile material. You then turn it back into a solid, and then you make your fuel pellets. Five steps. All reactors in the US run on this stack for making nuclear fuel.
Scott Nolan
The more modern reactors, SMRs, advanced reactors, those will use fuel that's enriched to a higher level. Call it 20%, just under 20%. Most of the reactors on the grid today, they go at 3-5%. The big difference that that unlocks is if you're going low-enriched, 3-5%, you generally want a much bigger reactor vessel, a core. If you're going up to 19%, 19.75%, 20%, it unlocks a much smaller core that lets you do a factory-built reactor.
Scott Nolan
A lot of what you're hearing about with advanced reactors is a combination of safety, enhanced passive safety that doesn't exist in the existing fleet, and then a form factor that could be built in a factory modularly that lets you bring the cost down.
John Collison
When people talk about small modular reactors, the modularity is that you can mass-produce it in a factory rather than needing to build it custom on a site, and you have a bunch of shipping containers that you hook up.
Scott Nolan
Exactly. More or less. Trying to minimize the construction aspect of the project.
John Collison
Yes. Diablo Canyon, where do they get their enriched uranium?
Scott Nolan
From existing suppliers. That's a combination of Russia and Europe. In the US, we get about a quarter from Russia, still imported. That's going to keep going until 2028. Then the rest from European providers. That's France, and then a European consortium called Urenco.
John Collison
Does US mine uranium?
Scott Nolan
We do, small quantities.
John Collison
The problem you're trying to address is that uranium is mined in the US or Canada, it is then shipped across an ocean to be enriched, and then ultimately shipped back as fuel.
Scott Nolan
More or less, yeah. Most of US supply will come from Kazakhstan and Canada, and then where it's turned into a gas varies.
John Collison
Got it. I presume if you talk to a nuclear startup that wants to get 19% enriched uranium, they agree with you on the geopolitics of this. It would be valuable to onshore this stuff, but they probably have more acute problems that you're solving beyond just it would be good to re-onshore the supply chain.
Scott Nolan
For them, it's mostly about availability. As they think about their very first deployments and then scaling up in the early 2030s to 10s of deployments, it's all about where are we going to get the enriched uranium, the 19.75% enriched uranium, also called HALEU, high-assay low-enriched uranium. That's all about availability. That was the first problem that I heard of. That was the question of, only Russia makes this today commercially. How are we going to import it?
Scott Nolan
In mid-2024, Congress passed a ban on imports of Russian uranium. That ban goes into effect January 1st, 2028. Right now, they're still importing under a waiver, but January 1st, 2028, that ends. So all these companies are wondering, "Who's going to produce HALEU?" Our first mission as a provider is produce HALEU before the end of the decade for all these reactors. Part 2 is bringing the cost down, so that'll be the other big lever that we work on.
John Collison
How is this regulated? Can you give us the map of enriched uranium? Where does weapons-grade uranium start to happen? And, who do you have to work with as a regulator for all this?
Scott Nolan
If you're doing commercial sales of nuclear power or fuel, that's going to go through the NRC, the Nuclear Regulatory Commission. In the US, that's your regulator. If you are selling to the government, there's potential Department of Energy paths, or if you're an R&D reactor, you could go through a DOE path, but it's primarily NRC if you're doing commercial operations.
John Collison
How have they been to deal with?
Scott Nolan
Great. Like I said, I think the investment community, the startup community, the whole tech community historically has just heard: "The NRC is really difficult," or something.
John Collison
The NRC has a bad brand.
Scott Nolan
Yeah. The blame is often placed on the NRC. I actually don't think it's deserved. They've been great to work with. Ultimately, they care about two things: safety and security. And then there's an environmental consideration as well. All their licensing focuses on those things. This was the answer we got from the SMR company that I knew. We asked them, "Hey, how hard is it to get the NRC licensing?" They said, "It's pretty straightforward. You do the safety analysis, you do the security analysis, you show low environmental impact, and it's a straightforward process. It's a lot of paperwork and analysis, but it's doable."
John Collison
Can you give us a bit of a map of nuclear reactor designs? There's the traditional designs installed in plants operating today, and then you were talking about these newer startups that are pursuing SMR-type approaches... There are a bunch of different technical approaches there. But can you just ground us in what everyone's trying to do? Presumably, there's some even that don't use uranium as a fuel, so they're outside of the scope for you, but are maybe relevant to this discussion.
Scott Nolan
Most of the US grid, virtually all of it, runs on light water reactors. These are reactors with uranium enriched to low-enriched uranium levels, LEU levels, 3-5% enrichment. That goes into the core. Your moderator and your coolant is water, just regular water. That's most reactors on the grid. You end up with a pressurized steam line—large dome covering the reactor. That's part of the large construction project that leads to the billions in cost per reactor.
John Collison
Is the large dome covering the...
Scott Nolan
That's a containment dome.
John Collison
I see.
Scott Nolan
In the case of an accident, in the case of loss of cooling, that's meant to do containment of any radiological material.
John Collison
I see.
Scott Nolan
The reactor is not actually that large. It's a much larger dome covering the reactor.
John Collison
Why does the containment dome need to be so big?
Scott Nolan
Mostly for the most extreme accident scenarios. Just making sure the thickness is there, the internal volumes are there.
John Collison
I see. It's small on the inside, it's just very thick.
Scott Nolan
Smaller.
John Collison
That's the traditional light water reactor design. How about the startups?
Scott Nolan
Nearly all of them are focused on going modular, bringing the size down, bringing your core size down. Let's go to stranded demand centers and let's serve those demand centers, and let's go containerized or even smaller than that. You're going to be using HALEU in that very small format. Again, that's the 19.75% enriched, smaller core, smaller format. Now we're talking about fuel formats, but they often go hand in hand with the reactor design.
John Collison
Why do those two things go together?
Scott Nolan
Which pieces?
John Collison
The smaller core and highly enriched uranium.
Scott Nolan
To unlock a smaller core design that could be built in a factory, you want your fuel to be higher octane, so to speak, higher enrichment level. The reason you care about your fuel being at a higher enrichment level is because at some point, as it's consumed, as it reacts, that enrichment level will drop. At some point, you can think of it as the power going out, the reactor fizzling out. If you have a stationary 1-gigawatt reactor, you're running 3-5% enriched uranium. You're probably doing refueling every 18 months, 24 months. That's an acceptable thing.
Scott Nolan
You have a very big reactor, your core will stay critical for quite a while, and the refueling every 18, 24 months is not such a big deal. If you have a very small core, think of it as you need more higher octane fuel. As it burns up, it will pass through acceptable power production down to not even being critical more quickly. Some of these reactors also want to have 5-year, 10-year refueling cycles because they're out somewhere remote, not somewhere central. It's a combination of you want to unlock a smaller core that will remain critical for a longer period.
John Collison
That makes sense. Can you talk about the passive safety advantages of highly enriched uranium that you mentioned?
Scott Nolan
Not highly, but HALEU.
John Collison
Sorry. Yeah.
Scott Nolan
The enrichment level itself does not lead to safety advantages, but people's reactor formats do. Some of these reactors are passively safe. A classically well-known version of this was molten salt reactors. The molten salt has thermal properties that cause it to self-regulate, and then if somehow it were overheated, you could put a plug in the bottom of the reservoir, and then the plug would melt, and then everything drains out, and criticality stops. That's the idea of a molten salt reactor.
Scott Nolan
You have other ones like helium-cooled, where the helium can't be activated, the helium cannot become radioactive. So, even if you had a cooling release, you're not releasing any radioactive material. In general, these newer designs just have either passive safety features or modern architectures around active safety.
John Collison
You can design into the reactor some self-correcting mechanism, like a fuse plug-type thing, where the act of starting to run away from you causes the safety mechanisms to kick in.
Scott Nolan
Right. Well stated.
John Collison
The AI scale-up and power-up has been powered significantly by turbines and other forms of electricity that you can bring online very quickly, generators in some cases. Has it affected your market at all, or really the market for your customers? Or are the timelines for nuclear power too long?
Scott Nolan
I think no, and no. It has not impacted us specifically. A lot of the topics in nuclear today are all about SMRs and advanced nuclear. That's an important segment. I think it's going to grow tremendously over the next decade, but it's still a small market today. As an enricher, most of the contracting volume that we do is with the existing fleet. It's for low-enriched uranium, it's with the utilities.
Scott Nolan
As people think about how are they powering data centers in the next couple of years, we think that some of that will be SMRs as they contract that, but even if it's all natural gas, that's fine, because in the next few years, most of our demand is from existing fleet utility customers.
Scott Nolan
Now, where does that go in five years? I think there will be more and more push to move off of natural gas, move to true base load, and I think that'll be nuclear. Then the really big question, I think, is does that happen through more of the gigawatt-scale reactors, or does it happen through more SMRs, and what's that balance? If you just take a big step back and say, "What type of energy do we want to power these data centers?" I think there's going to be a lot of pressure for it to be safe, and for it to be clean, and for it to be base load.
Scott Nolan
The thing that people forget is that nuclear is by far the cleanest and safest base load. It's actually safer than wind power per terawatt-hour.
John Collison
Sorry, how do people get hurt with wind power, just the maintenance of the turbines?
Scott Nolan
Yeah. If you look at all downstream mortality, it's more dangerous than nuclear. Then, if you look at all downstream CO2 emissions, nuclear is actually the lowest. Lower than wind or solar. If you think that those things matter, and that base load matters, then it will have to be nuclear. The one thing nuclear has not done a good job of in beating everything else is on cost, and I think that's actually what it all comes down to. The question of do we deploy lots of gigawatt-scale reactors, or is the scaling handled by SMRs? It comes down to who is actually deploying more quickly, and cheaply on a per-megawatt scaling basis.
Scott Nolan
Isn't the true competitor for nuclear "solar + batteries?" Because both are coming down a very aggressive cost curve? And so, you could just be cost-competed by solar and batteries in a lot of use cases?
Scott Nolan
I believe the solar cost curve. I haven't seen data that's as compelling on the battery cost curve. That could be coming, but if you want a data center that's five-nines, you need a lot of storage. I'd actually delete one thing, the battery piece, and I would say the competitor for nuclear is actually pure solar, solar in sun-sync orbit for data centers, if we're talking data centers. I do think that that's the one other angle that's pretty smart and could possibly win. If we're talking about power on the ground, I think nuclear still wins, whether that's data center, industrial, whatever it is.
John Collison
How will cost get solved, or will it get solved?
Scott Nolan
It will get solved. And then the way it gets solved depends on what you think the cause of the cost issues in nuclear are being. This is one of those overdetermined problems of, "Why haven't we scaled nuclear?" I think most people just say safety. They look back to the '70s, and they say: "There was a movie, The China Syndrome. You had Three Mile Island. You had Chernobyl. Clearly nuclear was going to stop, and we wouldn't scale it."
Scott Nolan
I do think the scaling piece is actually one of the proximate causes. We never hit economies of scale. We weren't doing it quickly enough. We never built out the supply chains. The workforces would shift around from project to project. Vogtle was way over budget, way over schedule. But, at a time of historically low interest rates, 20% of Vogtle's cost overruns were interest rate overruns, interest payment overruns. You realize that the overnight cost of a plant, when they take 10 years to build, actually doesn't matter as much as interest rates and how long are you actually taking to build these things.
Scott Nolan
If you think about the big reactors, I think the way that we bring the cost down dramatically is just build them quicker and build more of them. I think that goes a very long way. If you look at the period when things really slowed down, and that downward spiral began for nuclear, it was the '70s. You had oil price shocks, you had oil prices going very low, you had interest rates that peaked, I think, in 1981 on mortgages, 18% mortgages at that point. How do you finance a huge infrastructure project when your cost of capital is well north of 10%, way north of that?
John Collison
Because the classic old story of what happened is this very accident-based mood of things like Three Mile Island and Chernobyl, and you basically reject that as an explanation, where you don't think it was that we saw these near-misses and accidents and things and said, "Screw that... We're going to strangulate nuclear and overregulation," everything like that. You think it was much more of a WTF happened in 1971-type story where we lost the ability to build large infrastructure projects, generally, and nuclear plants are an example of a large infrastructure project?
Scott Nolan
Yeah. Maybe the safety concerns put a slight pause on it, but I think that that is often blamed as the only thing. And maybe that kicked off this cycle to some extent, but I think it was probably inevitable anyway when your product is not cost-competitive. I think fundamentally that's the thing in nuclear. It's the cleanest base load, the safest base load, not the cheapest base load. You have to be the cheapest.
Scott Nolan
I also think for people in general, if presented with, "Here's a new technology. Would you like this to power your grid? You've maybe heard some safety issues with it that are probably confusing of which side to believe, and then also your energy won't be cheaper." If we're talking about being in the 1970s, 1980s, when global warming was not really a topic, and emissions wasn't as front and center, why would you say yes to: "I want a more expensive electricity bill"? I think that put us here. I think the way it gets solved is building more.
Scott Nolan
I think the other side of it, if we want to talk about the cost structure thing in terms of being overdetermined, you have to ask yourself, "Why did the cost get high? Why wasn't there more downward pressure on them?" I think there just wasn't a strong enough incentive in the ecosystem to push prices down. You had utilities that are more like cost-plus organizations, and they're generally going to outsource the construction of the facility. You end up with this dynamic that was, in some ways, similar to the launch industry of no very strong economic pressure to reduce price.
John Collison
It just stopped being a market and started to become a place where people rent-extract in all their local corners.
Scott Nolan
Maybe not intentionally, but I think absent a strong pressure to keep prices low and push them down and compete them down. I think in a lot of industries that happens. It happened in space launch as well.
John Collison
It feels like, in general, the nuclear mood is this very interesting story of extremes, where there was crazy unbridled optimism early on. Remember the Radium watches, where people were making watches with Radium-226 for the glow-in-the-dark dials, and this energy too cheap to meter, and the Jetsons future. It was really ebullient in its optimism. Then there was this crazy pessimism, where nuclear became the public enemy number one, and the enemy of environmentalists, which is ironic given you're saying it is provably the safest and lowest-carbon format.
Scott Nolan
It was a big debate with the Sierra Club, actually, internally. There was about half of the Sierra Club.
John Collison
There was a pro-nuclear side of the Sierra Club?
Scott Nolan
Very pro-nuclear, and it was divided on this around the time of Ansel Adams taking photos for the Sierra Club. I remember this as being something that created some huge rift. The argument was basically, "We can try and have less energy consumption as a society, and that might be the best thing for the environment, but it seems unlikely. Therefore, the alternative is more coal, other things we're doing."
Scott Nolan
Maybe solar can work, maybe wind can work, but those are visually and in terms of acreage, more impactful to the environment. And so, nuclear may be the most environmental source of energy if you think we're going to consume it. That was a big internal argument, even amongst the environmental movement around that time.
John Collison
I hadn't realized that there was a rift there, but ultimately one side won out.
Scott Nolan
Yeah.
John Collison
Where I was going was, it feels like we are now getting to a better spot where, at least amongst the youth, opinions are very striated by age, but younger people are much more likely to be pro-nuclear. Do you think we're getting to a better spot, generally, in terms of public perception?
Scott Nolan
Yeah, I think we are. You look at not just age demographics, but also just politically. Ten years ago, nuclear was much less popular in general, and also it was a political issue. Now it's got bipartisan support. You look at the Biden administration wanted to triple nuclear production in the US by 2050, the Trump administration wants to quadruple it. There's good alignment politically around nuclear now. I think it's because people who historically would have been concerned more with environmental are realizing it's the cleanest, lowest CO2 emissions source, and it's actually extremely safe.
John Collison
Yes. Who do you sell to, who are your customers or prospective customers? I know you probably can't pick favorites, but what are a few of the most exciting approaches that you see amongst the startups?
Scott Nolan
If we're talking about specifics, let's just go smallest to biggest in no particular order.
John Collison
You're so diplomatic. Finish your Guinness.
Scott Nolan
The smallest would be like, Antares. That's going to be more for forward-deployed military, space, things like that. They have an incredible business in that market. Next size up would be Radiant 1-megawatt, very good reactor design, containerized for remote applications, primarily in base resilience. Great business there.
Scott Nolan
Then you start getting up into the SMR size, and you have people like Aalo, or Valar, or even Oklo. Then you go bigger. That would be serving the data center market, primarily. That's probably the first applications there and the ones that are most urgent. Then you go larger than that, and you're looking at Oklo, X-energy, TerraPower—larger format that can really compete on the grid in the near term. Not all of these are using HALEU today. Some might use low-enriched or LEU+, 6–10%, because that's available—
John Collison
But all of them could. It's like putting 100 octane in your car. It can take it.
Scott Nolan
I don't think all of them can. If you go big enough—those are all the advanced ones. I think none that I named... I'm not aware of any limitations of any that I named. I think all of those can run HALEU at some point. Some are choosing to run LEU or LEU+ today because that's what's available. If you go bigger on the grid today, those large reactors, those gigawatt-scale AP1000s, the Westinghouse design, that cannot run HALEU, but they are looking at operating and running LEU+.
John Collison
Got it.
Scott Nolan
Again, going back to what we were talking about before, you increase the enrichment level, and you don't have to refuel as often, or you can get a little bit more power out of it. So, that's the landscape. Think large-format light water reactors, really the ones people associate with Homer Simpson, that's low-enriched uranium. And then everything else that's happening generally trends towards a higher enrichment level, just under 20% HALEU.
John Collison
Is this relevant to submarines and all the non-power plant—
Scott Nolan
No, submarines care even more about refueling cycles. When you refuel a submarine, you have to cut it open and remove the reactor, so as infrequent as possible is ideal there, and they'll run north of 90% enrichment.
John Collison
Which is, again, getting into a different regulatory regime. You cannot, as a civilian company, use that.
Scott Nolan
Completely different, and that's why all of the new SMRs, all the advanced reactor designs, specifically choose HALEU, 19.75%, just under 20, which is the cutoff for different regulation internationally and domestically.
John Collison
I see. 20% is the cutoff, because beyond that, you're getting...
Scott Nolan
You're getting close.
John Collison
Too close. That makes sense. Where are you guys in the development of the company? We're talking a lot about the market, but how many people... Do you have a bunch of uranium sitting in a warehouse somewhere? When do you enrich it? Just a description of where you are on the journey.
Scott Nolan
Big picture, we started end of 2023. Today, here we are, almost three years later. The team is just over 200 people, scaling pretty quickly. We have facilities in LA as headquarters, engineering. The facility that we're building is in Paducah, Kentucky, so western Kentucky. Everything we're doing at the company is aimed towards bringing that online by the end of the decade. That means licensing. We just submitted our NRC license last week. It means all engineering efforts. It means manufacturing, construction, pretty much every piece of this is targeting that end-of-decade timeline.
John Collison
You're delivering enriched uranium by the end of the decade?
Scott Nolan
Yes, yeah. On the commercial side, all of our contracts are lined up against that date, because we know that's when both the ban on Russian uranium imports starts January 1st, 2028. Utilities do have some inventory, they do have some other contracts that can see them through for a little bit, but we want to be online as soon as we can after that to help plug that gap, which is about a quarter of US demand. Then all of the advanced reactors are more or less targeting first deployments in '28, '29 commercially, and then scaling up from there. That's about the right time to be online for the market, and it's about as fast as we can go.
John Collison
You worked at SpaceX. Elon's companies have this green lights to Malibu concept with planning. The idea is, as I understand it, that it costs you time to plan conservatively a timeline that you can hit because you're building in buffers into the schedule. Instead, you should plan based on a green lights to Malibu, what if all the traffic lights were green, basis. Curious what you think of this idea, generally. But then two, is this end-of-the-decade an Elon-style green lights to Malibu, we'll have FSD next year-type timeline, or is it a timeline you guys are going to hit?
Scott Nolan
This is one we'll hit. That's our external timeline. We're speaking publicly.
John Collison
I see. You have a secret internal timeline as well.
Scott Nolan
Secret internal timeline is to go as fast as we can. We do, we have an internal timeline. That schedule philosophy of green lights to Malibu, it comes out of this idea that if you give people more time, they will simply take more time. There is a minimum... And you can maybe go too quick and squeeze all time out of the schedule to the point where now you're doing things that are not in support of the correct architecture or a very long-term cost structure. That's always the critique.
John Collison
That is the tension.
Scott Nolan
That's the tension. That's even the internal tension at any company trying to run a green lights to Malibu schedule, is: Number 1, do you have waste? Number 2, do you make the wrong architectural decisions? Then number 3, how do you manage people against this plan? If you're doing performance-based management, and you give someone a very difficult plan that maybe is perfection, it's more difficult to judge the performance against that.
Scott Nolan
You have to have in your own mind, "What's a little bit of buffer? What's a reasonable thing?" It's often very useful. The green lights to Malibu is not only a scheduling tool, it's also a constraints tool of if we really try and dial this in and remove all buffer, what breaks? What's the thing that's the critical path that's preventing us from...
John Collison
It's a bottleneck discovery tool.
Scott Nolan
I think it can be, when done properly. Then the critiques I raised, they can be dealt with in other ways if you're just extremely exacting about, "No, this is the architecture we're going to do." If leadership is very deep in the weeds on every engineering decision, and can say, "We have this schedule, but no one in the room thinks we should do this thing just to shave one day. Don't do that thing. Let's do it right. Let's take three days back. It's okay, we can make it up elsewhere."
John Collison
From building great companies to investing in them, Scott Nolan knows both sides. And Stripe Press has two new books tackling each. First up, Built to Grow by Stephanie Friedman, the tactical playbook for building a sales engine from hire number 1 to 100. It's out right now, you can buy it. Then coming soon is Nomad Letters, collecting the insights of Nick Sleep and Qais Zakaria, fund managers who generated a 900% return in just 13 years backing the relentless flywheels of companies like Amazon and Costco. Grab both at press.stripe.com.
John Collison
What did you work on at SpaceX?
Scott Nolan
SpaceX, when I started, I was just an intern, 2003.
John Collison
You were there really early.
Scott Nolan
Yeah, pretty early. One of the first interns.
John Collison
SpaceX was founded in '02?
Scott Nolan
'02. Very, very lucky to graduate at the right time in aerospace. Where prior to SpaceX, there wasn't too much interesting to do. I remember the first summer was working on test stands. We were getting ready for an engine to be able to be mounted vertically and put on a test stand.
Scott Nolan
First winter break was working on a surrogate for the engine. Then after I graduated, I worked on the engine systems. The Merlin engine, a bunch of components on there. I didn't design it myself, there were much more experienced people doing that, but I helped make sure the individual parts could withstand the thermal and structural loading.
Scott Nolan
Then after that, did a series of engines across a few vehicles, including the Dragon capsule, which at the time was just cargo. I was part of the early team and got to work on a few subsystems there, so I was there 2003 to 2007.
John Collison
I'm always struck in US manufacturing, and Chinese manufacturing for that matter, how influential Elon's management style and philosophy has been, where most of the companies founded later explicitly reference some tenets. Just what has been influential for you in terms of the design philosophies?
Scott Nolan
I think the thing that I draw more out of the SpaceX experience is working on something that not everyone agrees is the most important thing. It overlaps with Peter's philosophy.
John Collison
Picking a flying car is not a 140-character type problem.
Scott Nolan
Pick something that's almost, in some ways... What industries have not lived up to their promise over the last 50 years? What are the actual bottlenecks to these things? What are the markets that we know need fixing, even if it's not a completely new greenfield thing, but that is a big lever on a much bigger industry?
Scott Nolan
At the time, early 2000s, everybody was talking about modern satellites. How do you do SmallSats? How do you do CubeSats? Then it turned out there was no good way for them to get to launch. When your satellite costs a billion dollars, 100 million for a launch isn't so bad.
Scott Nolan
When it costs $1 billion, now you really need to think about it. It's almost the same thing. You have a small reactor—SMR—a small modular reactor, and now you're no longer doing a multi-billion-dollar construction project, but now you need the fuel. In fact, the fuel cost matters proportionately more, to where some of these SMRs, their total LCOE could be 50% fuel cost with enrichment.
John Collison
It's that high.
Scott Nolan
In some cases, yeah. It depends on the exact design, but at today's market prices, it can be.
John Collison
LCOE is levelized cost of energy, but basically the energy cost, right?
Scott Nolan
Basically, the cost of producing energy, if you factor in both the upfront capital into the reactor and then the operating cost. The fuel cost starts mattering a lot, which is the second part of what I appreciated in 2023. Not only did we need to remove this bottleneck, but for advanced nuclear, to really scale on HALEU, you would want to bring down the cost. The biggest piece that felt like we could influence turned out to be enrichment as well.
John Collison
It feels to me one of the big challenges for you guys is the same challenge that many hardware companies face. Which is dollars required and time required until you're profitable, or even you have meaningful revenue to fundraise against. Because so many hardware companies have had good ideas and have gone out of business because they couldn't prove that the idea was good to investors before they run out of money, and so, ultimately this fundraising risk. How do you burn down that fundraising risk that's inherent in the company?
Scott Nolan
If you really look at the big picture, you've got equity funding, you've got debt funding, and then you've got non-dilutive funding. In our case, when we began, we competed for a program that Congress authorized to help address this ban—
John Collison
As part of the ban.
Scott Nolan
Exactly. And on the lack of availability for fuel for advanced reactors.
Scott Nolan
We competed for that. We were down-selected under the Biden administration, awarded under the Trump administration earlier this year, for a $900 million award for capacity building, which helps us stand up that first facility and takes a lot of that cost off the table. It's a big lever for getting past some of these challenges that companies often have in getting their first project online.
John Collison
That's great. How do you spin up on all this material? You're not a nuclear physicist by background.
Scott Nolan
Luckily—
John Collison
You are?
Scott Nolan
No, I'm definitely not and, luckily, don't need to be. Everyone thinks of enrichment, they hear nuclear, they think, "Is your team half nuclear scientists?" The answer is it's actually relatively few. It's very few.
John Collison
Just chemistry?
Scott Nolan
Not even chemistry. In our facility, there's no nuclear reactions. There's not even any chemical reactions. What you have is a separation of a gas. You still need chemists. You still need nuclear scientists, but mostly for safety analysis. Mostly for making sure you don't have those things happen. No chemical reactions, no nuclear reactions.
John Collison
That's a good question because, actually, I don't know much about enriching uranium, so this is good. It's filling in some gaps for me. You mine uranium out of the ground—
Scott Nolan
As a solid.
John Collison
Exactly, as a solid. It's like a rock-looking thing. It'll look like a rock to you. Then, you boil it?
Scott Nolan
Then someone else has step 2 after it's out of the ground, and that's called yellowcake out of the ground, U3O8. Classically, it would be open-pit mining, and then you have a milling process to turn into U3O8 from the ore. Today, that's done with in situ recovery, like enhanced techniques that involve pumping a fluid underground and collecting the uranium out of rocks. That will come out as U3O8. Step 1: Get the U3O8, that's mining and milling. Step 2: Take the U3O8 and chemically convert it into a gas. That's a separate chemical facility that does that work.
John Collison
I see. That's a chemical process to convert it into gas.
Scott Nolan
Then it would arrive at our facility as a gas that we can separate.
John Collison
You just spin it in a centrifuge, and what else is in there? What are you separating it from?
Scott Nolan
There are a few techniques that one might use to go do this. Where we're doing it in Kentucky, we are at the site of the last place that the US did enrichment, which is western Kentucky, Paducah. There was a facility that was shut down in 2013 on a DOE site. That was a gaseous diffusion process. That's the first thing that was pioneered. The Europeans use gas centrifuge, other countries have done aerodynamic processes, and there's even aqueous processes, as well as laser enrichment. So at least five techniques that are classically used, and our technique is one that we'll unveil first half of next year when we'll talk about it.
John Collison
It's gaseous diffusion, and so you...
Scott Nolan
That's what was done in Paducah.
John Collison
I see.
Scott Nolan
That's not necessarily what we're doing. We're building a fresh facility in Paducah on the same site in the last community that did enrichment in the US.
John Collison
If it's simple, why do you need to be in Paducah, where the last version was? Do they leave a bunch of machines behind, and you get to say, "Wow, there's all this free stuff here." Or, is there expertise amongst local employees?
Scott Nolan
Yep.
John Collison
Why Paducah?
Scott Nolan
Our search for Paducah lasted over a year. We went to over 10 states, looked at over 1,000 plots of land. The answer in the end was the obvious one. Go to where the community most recently did this. You have a combination of two things. We always felt like the community was the most important part. We're building a facility that's going to last decades. We want to make sure that the community that we're building in actually welcomes us there.
Scott Nolan
Paducah was extremely familiar with enrichment, comfortable with it, understood it to be a positive thing for the community, and has the talent. So it was this combination of community support for what we're building and the talent base there above anything else. Now, the DOE site had other benefits. By building on a DOE site, we were able to have some shared services. So out of the gates, a little bit less to stand up, already a piece of land there that's 100 acres, just big enough for us to build a first facility, DOE security around it, lots of different benefits.
John Collison
Presumably, it's simpler from a permitting point of view because you're working with the DOE rules, and not county and municipality rules?
Scott Nolan
Could be. We are primarily doing commercial sales out of this facility, so we will be NRC-regulated.
John Collison
But federal, and not state and local.
Scott Nolan
The biggest benefit was that the site had been heavily characterized environmentally. And so the environmental work that was required to get to a point where we knew what the environmental impacts would be was quicker than it would have been on a completely uncharacterized separate piece of land.
John Collison
That makes sense. Again, going back to the enrichment, what are you separating the uranium from when you're enriching uranium?
Scott Nolan
From itself. You have two isotopes.
John Collison
It's the different isotopes. I see.
Scott Nolan
Uranium out of the ground is 0.711% U-235. That's what you want. That's the number when we talk about 3–5 or 19.75. It's 1%—
John Collison
It exists in the world as 0.7%, and then you're enriching it to a number beyond that.
Scott Nolan
Exactly. The rest is primarily U-238, which is not the fissile material you want.
John Collison
If the isotopes have different masses, why can't you just spin it around in a centrifuge and have it separate?
Scott Nolan
Many people do.
John Collison
I see.
Scott Nolan
Many people do. Or you can do an osmosis-type process, which is gaseous diffusion. Or you might split the gas using an aerodynamic process. There's a lot of options.
John Collison
It does sound quite simple when you put it that way.
Scott Nolan
When you put it that way.
John Collison
Why is it hard?
Scott Nolan
The hard part about most of nuclear, I think, nuclear is perceived as this incredibly complicated thing. I think fusion is pretty difficult. That is really new physics. That's new science. Fission has been around for a long time. If we just talk about reactors, it goes back to economics, I think, more than anything. To me, for all the advanced reactors versus the gigawatt scale, the most interesting thing is not just the technology. It's really, what is the cost implication going to be?
Scott Nolan
For us, enrichment has been done before. A number of countries do it. But the real challenge is we don't only want to bring it back in the US, we want to make it globally competitive. We want the US capability to be truly commercial, be able to compete with Europe, Russia, China over time, and so it's all about cost. I think the hard thing is not simply doing enrichment, it's doing it in a way that can be scalable and highly cost-competitive, and so that's the North Star.
John Collison
You don't worry that this is a bad market, somehow, the fact that there isn't a US producer suggests there's something a bit broken about the market and the buyers?
Scott Nolan
No, I don't think so. I think there's a path dependency of how we got here. We can talk through that, but it's—
John Collison
No, please tell me the path to entry.
Scott Nolan
I think the history of it was really the US did a first-generation technology to win World War II, to stay dominant in the Cold War. We were over 90% of supply, globally. Ultimately, that approach, that specific design and technology was not cost-competitive with the European and Russian approaches. We shut those down. We shut them down following the Cold War.
Scott Nolan
The Berlin Wall fell. The US entered a trade agreement with Russia. It was nicknamed Megatons to Megawatts. We imported Russian warheads, blended them down, ran our reactors on it, and started to trade with Russia that way. We, since the '70s, have been trading with Europe. Once we felt like the Cold War is over, there was less reason to keep these plants running in the US.
John Collison
It was a glut moment in the US, basically?
Scott Nolan
Why are we running these more expensive plants when we're now in a world of free trade, and we can trade for this? At the same time, there were efforts inside the US to develop new technologies, but they didn't really hit the cost structure required to compete internationally, and they're still in development to some extent to try and get on that curve, and so I think it's simply a… We used to do it, we then relied on free trade, and then only more recently does this seem like an issue. The issue is really around HALEU availability for advanced reactors and low-enriched uranium availability for the larger reactors given the ban on Russian imports.
Scott Nolan
If you tried to start a company like this 10 years ago, you might say, "What's the market?" The utilities are fully contracted. There's no gaps. Why would they leave gaps? They're going to make sure that they have reliable source. Then there is not a really big advanced reactor market that you could sell into. And so, both on the LEU side and the HALEU side, it would have been much more challenging to get to some critical mass that could support a new entrant. Today, that window is open.
John Collison
Classically, cost advantages in manufacturing come from scale, that's one common one, or simplicity in design. It feels like the market is what the market is. It'll grow, hopefully, but it's not like you guys are going to come out of the gates targeting 10x or 100x larger scale than the incumbents. Then also, when you say simplicity, as you described, there's a few approaches that everyone knows here, and so you don't get to have a radically simpler process. And so, how do you plan to have a cost advantage versus all the incumbents?
Scott Nolan
I'd say you missed one more. There's economies of scale, there's simplicity, and then the third, honestly, is decades of technology improvement that no one's captured. The last time anyone, to our knowledge, reinvented enrichment, at least if you look at the incumbents being Russia, China, and two European firms that use the same underlying technology, the last time anyone's done a clean-sheet redesign was decades ago. If you think of all the progress in technology over the last few decades, there's a lot you can do in addition to economies of scale and simplification.
Scott Nolan
Meanwhile, there's no public domain technology in this space since the '50s or '60s. And so, you look at those few decades of technology that you could leverage. Then you do a clean-sheet redesign doing something very novel, and you can end up somewhere pretty different.
John Collison
I want to try something on. It feels like sometimes you have a trend that sweeps an industry that takes place at many companies at once. In the US, in the '70s and '80s, this happened with lean manufacturing, where a lot of the success of private equity firms at that time or early Danaher were... There were all these US firms that had not embraced lean manufacturing. And so, you can buy a manufacturing firm, just adopt the lean stuff about better inventory management and everything like that. You can make the business much better, because it turns out this is a managerial technology, that had not been adopted by a whole bunch of firms.
Scott Nolan
Maybe there's people doing this today with AI, applying it to services industries.
John Collison
Exactly, that would be another example. It feels like this may be another trend that you're a part of in hardware. Which is, there is this stasis in companies, where there was stasis in launch until SpaceX came along and targeted much lower-cost launch. There was stasis amongst the primes, and then Anduril, and now a whole bunch of other neo-primes are coming along.
John Collison
Similarly, you're identifying stasis in the existing companies that enrich uranium that you can very easily… Does that resonate with you as a trend where there's something that has not been adopted amongst a whole set of companies, and entrepreneurs are coming along and finding those weak spots and building better competitors?
Scott Nolan
It seems like it, although each of those three examples is at least a decade apart, I'd say, on average. SpaceX, Anduril, us, would be on average a decade in between. The only way that those opportunities were found were by people trying to actually go deep in the space. Nobody really thought that space launch was the thing until Elon tried to launch something and realized it was the cost of the launch. Trae at Founders Fund was looking for a defense company, couldn't find someone that was taking this holistic approach. Then, we only discovered this because I knew many or virtually all of the advanced reactor producers, and they had the same issue.
John Collison
What is the thing that all of the incumbents miss? Why do they become slow and stodgy? Presumably, this is not a problem for you yet. But it will be a problem when you're successful, that you'll also need to avoid becoming slow and stodgy.
Scott Nolan
You definitely want to avoid that.
John Collison
How do you avoid becoming ULA or Lockheed Martin?
Scott Nolan
I think all those industries, not to single them out, but they were all cost-plus industries. That was my experience. Before SpaceX, I did work at one of the aerospace incumbents as an intern.
John Collison
Which one?
Scott Nolan
Boeing. I worked on a military program. It was cost-plus. There was a big project, there was a goal of getting online. At some point while I was there, it felt like more and more people were working on the project, and it just didn't feel like we were going faster. You realize that is one tool, put more people on the project. If there's not strong downward pressure on cost, your incentives are just not aligned with moving fast and doing it in a lean way. I think these industries that end up getting stagnant often have that same characteristic.
Scott Nolan
Now, people assume once a company gets to a certain size that it becomes that way. I think it doesn't have to at all. I think the best companies that get large, even tens of thousands of people, always have that new project, that new thing that's borderline existential, where if they mess it up, they're going to be in a much worse place than if they never tried it. It almost risks the business, and I think that's almost the thing to stay young as a company, you just have to keep doing that next project, and not just say: "I have this nice business, I'm just going to earn my economic rents and do nothing else ever again." You have to have a vision for the future of what you want this industry to be.
John Collison
What were your other takeaways from Boeing?
Scott Nolan
Really, the main takeaway, I think, that I walked away with was that the cost-plus structure was not the right structure to motivate moving fast. That was just empirically evident by working at both.
John Collison
It sounds like you more broadly think it's a completely broken incentive system.
Scott Nolan
I think the whole point of cost-plus is to make sure people can work on projects whose costs are very uncertain. We have a very urgent project, the government needs you to do XYZ. We need some of the suppliers to come forward and actually say that they'll try and do this, and it's for everyone's good.
John Collison
It's a wartime, and not a peacetime incentive system.
Scott Nolan
I think so, or it's something where it's very urgent, never been done before, and it's very uncertain what the cost will be. Once you get to equilibrium, I don't think that structure makes sense, at least not to motivate the right behaviors. I think the bigger thing I walked away with after Boeing, even in just being an intern at SpaceX when it was sub-50 people, was at the end of the first week or month, I felt pretty high certainty that SpaceX would eventually win, even though it was at most 1/1,000th the size. It was just because of the speed of execution.
Scott Nolan
The thing I walked away with that, especially in the early years with that as a more recent memory while I was at Founders Fund, was these small teams. Even though they seem completely outmatched, by moving quickly with a good group of people, you can still beat incumbents.
John Collison
It gave you that ability to be optimistic about the odds of a five-person startup.
Scott Nolan
Bet on the small guy. If they have a vision, if they have some insights about how they want to do it differently, especially if they're motivated by something more than just, "Let's stand up a small business here." No, let's actually change things long-term.
John Collison
The three examples I used were SpaceX, Anduril, and General Matter. I hadn't realized until you said it, in formulating those examples, that all three are deeply tied to Founders Fund. What is it about Founders Fund and the culture that makes it a good breeding ground for these sorts of companies?
Scott Nolan
Maybe the one thing, SpaceX was started before Founders Fund. I don't think Founders Fund can take too much credit—
John Collison
Founders Fund was an early high-conviction backer.
Scott Nolan
First outside investor at a time when very few others wanted to do it. I think the—
John Collison
I'm going to go with deeply tied.
Scott Nolan
Yeah. I think, you know, SpaceX, they get the credit. Elon gets the credit. You could say that it's something coming out of the whole zero-to-one mindset, and these frameworks of working on something that's important that other people don't realize. What important truth do you believe that most of your peers would disagree with you on? Don't go after a trillion-dollar market on day 1, focus on a small market that really needs a new solution, and satisfy those customers. Make them love your product, own that market, and go from there. Those, I think, are common to those companies.
Scott Nolan
Probably even more than that is Founders Fund does not programmatically start companies, and it doesn't want to either. Everyone there is selected for wanting to be an investor, not hoping that they can someday be an entrepreneur. I think this leads to a mindset of, "don't start companies, don't do it programmatically." It's almost like that airplane with all the war wounds on it, which you would think, "What about all the companies that didn't get started out of Founders Fund?"
Scott Nolan
I think the bar when you're starting something, at least for me, was always being an investor is a great job. It's a great career. It's awesome in so many ways. To actually go start something, it had better be extremely important. You have to believe no one else is doing it, which is why, in both Anduril and our case, there was a long search for someone doing it, because if there was, it wouldn't be worth starting a new company.
Scott Nolan
Then finally, the one that's seemingly the most difficult is, in my case, it should be something where my skill set actually contributes to making it more likely. And so, extremely important, no one doing it, and actually lines up with skills is such a small Venn diagram that it's almost like that activation energy is so high to go do it. It has to be extremely compelling. Then most of the risk, I think, ends up being on execution. You end up with these forgotten opportunities that were overlooked for a long time, but that are actually really central to an industry taking off. It just so happens no one did them for a long time because there wasn't the convergence of market opportunity, and often it was just extremely hard.
John Collison
How much conviction did you get on the idea before you took the jump and went and started the company?
Scott Nolan
I would say, extreme conviction.
John Collison
What are the intermediate milestones for you guys as you approach production in Paducah by the end of the decade? Presumably, that is not the target on the whiteboard in the office. You have short-term targets.
Scott Nolan
Nothing in between. If you think of the big workstreams to do that... At the end of it, you have a large facility, and it's filled with equipment, and the equipment is operating. If it's operating, that means it's licensed. One workstream is licensing. As I mentioned, late last month, we submitted our NRC license. That's one of the workstreams. Another one is, you have this big building that's operating. Let's work backwards. You have your license, that's how it's able to operate, but also the building exists. That's important, and so you have a large construction effort.
Scott Nolan
Typically, in the nuclear space, people outsource the construction of their facilities. In our case, we copied the Tesla playbook of build your own in-house construction EPC team.
John Collison
What's EPC?
Scott Nolan
Engineering, procurement, construct. Design your buildings, order the steel, build it. We have our own GC on the construction side. We have our own procurement and engineering teams internally. And, so that building is being designed and built. And... it'll exist in time to install hardware, and commission it, and operate it by the end of the decade.
Scott Nolan
Then, of course, you need all of your equipment inside. That's ordering out of your supply chain. It's manufacturing, and manufacturing final designs that hit the economics that you want. I think a lot of people think of nuclear, and they think it's all about core technology, or it's all about licensing. For the reactors, it's actually about... If you're a big reactor, it's probably about a construction project. If you're a small one, it may be mostly about building your factory. For us, it's more that, it's more manufacturing. Manufacturing is the thing that relatively few companies in the US have really proven that they can do at scale. I think that'll be the really exciting part in a year or two.
John Collison
Last question. We've talked about what you learned at SpaceX and Boeing and various places. What did you learn working at Founders Fund?
Scott Nolan
Avoid competition. Which happens automatically if you work on something that's really important that no one else is doing, and that you can uniquely be good at. Avoid competition... You achieve it that way, but it's also something that will inherently be true if you're solving a problem that's not solved. What important truth do you believe, or what important problem is no one working on?
Scott Nolan
I think that was actually the thing that led us here was, it wasn't a desire to start a company, it wasn't anything specific like that. It was: What thing is actually holding back the nuclear industry? What is the bottleneck? What is the one thing that could prevent all the reactors from scaling, all the SMRs, or gigawatt-scale light water reactors? It's fuel. A lot of the other pieces have been solved, and so it's just fuel.
John Collison
For other future entrepreneurs, there's presumably equally big opportunities just staring them in the face.
Scott Nolan
There certainly are. I don't know what they are. I think it takes a lot of digging to see them.
John Collison
Enriching.
Scott Nolan
Then enriching and turning into a gas. No, I think you only find out about these things if you follow some passion that you might have that not everyone's thinking about. It's usually not part of a trend, or at least it's ahead of the trend. If you're into something, and you think it has value, and you go deeper, and you work in that space, you'll see what the problems are. I think they become obvious to those who go deep enough.
John Collison
Scott, thank you.
Scott Nolan
Thank you.