The Nuclear Narrative We All Fell For | Josh Wolfe

I think that the very thing that environmentalists have wanted for so long, they will get not in spite of technology, but because of it.

Welcome back to another episode of Empire, joined by, per usual, Santiago Santos, and then a very special guest, Mr. Josh Wolfe, co-founder of Lux Capital. Josh, our producer always puts together these intros for me where it's like, you know, maybe a paragraph. And then this one, it just says, 3 sentences. Co-founder, Lux Capital, $4 billion AUM, best deep tech investor in the world, does absolutely everything. Pure polymath. So hope you can live up to the intro from our producer.

Good to be here. Good to see you.

I know we only have an hour, so I want to just jump right into it. You wrote this article in Forbes in 2011, Why Solar Energy Is Flaming Out and Why the World Needs It to Happen Faster. You said solar was going to be like this— the Flight of Icarus, right? So I think it'd be helpful to start there before jumping into nuclear. What is the state of renewable energy, not just nuclear, but really just renewable in the US right now? And why did you write this article over 10 years ago about why solar energy, this thing that everybody seems to maybe love, you seem pretty against it. So let's just start with renewables in general.

Well, some of it was contextual at the time. So go back, you know, 10, 11 years, you were coming off of one wave that really began with Al Gore's movie An Inconvenient Truth. And I don't know how many people in the current generation have seen that, but that was sort of, you know, documentary PowerPoint that basically chronicled the rising levels of carbon and had a prescription about a whole slew of things that you could do. And I think that prescription was towards the end of the movie, and it was like, invest in alternatives and look at biofuels and look at solar, look at electrification of certain things, replace your compact— or your incandescent bulbs with compact fluorescent light bulbs. And I don't even know if they mentioned LEDs. And it created this movement. And you had a handful of prominent venture capitalists at the time. It was John Doerr. It was Vinod Khosla that were basically really hyping the conversion of biomass into energy and solar in particular. And the idea was that solar was going to be like Moore's Law, that the same fundamental components in semiconductors would have the same discrete density scaling that you get, which improves our logic every year and a half or 2 years, you know, for the same dollar cost per compute, that you would get the same thing in solar. And that just wasn't true. Solar did not scale the same way that semiconductors did or do, nor did batteries. Electric chemistry, you know, basically improves at the rate of 6 or 7 or 8% a year. So you're sort of doubling maybe in the course of a decade. And some of that is just basic material science. Some of that is the absence of the same sort of semiconductor capital equipment tools that allowed for the ever self-fulfilling Moore's Law. Some of it was just excessive hype. And so go back 10 or 11 years, and there was almost a religion that had formed, and in my view, it started with the Al Gore movie, around just a handful of technologies that were most dominated as solar and biofuels. And solar today, fast forward, just in preview, lest anybody think like I'm some heretic, You know, we just made one of our largest, you know, alternative energy or energy investments in a company called Aurora Solar, which is sort of focused on the infrastructure of deploying solar and fulfilling it. But I'm a big believer in solar. I just always thought that it would take a lot longer than people expected. So you go back 2010, 2011, thereabout. History doesn't repeat, but it rhymes, as the old cliché goes. And the analogy that we found for solar was global crossing. On Global Crossing, you have to go back 20 years. You had hype around the internet in 1998, '99, 2000. Internet bandwidth, or the belief of internet bandwidth and demand for it, was doubling, people thought, every month. Now, it turned out it wasn't as frequent as every month. It was something like every, you know, year. But George Gilder at the time was a big proponent and sort of pundit about the telecosm and the rise of the need for optical networking. That helped to usher in entrepreneurs, and particularly a guy, Gary Winnick, who was an ex-Milken guy that was able to raise billions of dollars to do a global-scale fiber optic network called Global Crossing. Undersea fiber optic cables. What ended up happening is billions of dollars were spent. Those fiber optic cables got laid and lit. And the beneficiary of most of that was the Third World, who got connected to the internet mostly for free. On the largesse of then VCs and some growth equity investors, the distressed guys did spectacularly well in the cleanup, basically picking up very expensive assets for cents on the dollar. I thought that if history didn't repeat but rhymed, that solar was going to follow the way of Global Crossing, by which all of the entrants propelled by the hype and enthusiasm were going to get funded more and more people would build factories to build solar cells. At the time, there were all kinds of different configurations. They hadn't yet sort of centered on a standard. So you had large flat planar solar cells, you had rolled ones, you had thin film photovoltaics, you had transparent things. People were trying to figure out roofing materials. And so the prophecy that I had, just zooming back, was that 99% of these things would fail. They would, you know, proverbially fly too close to the sun. Their wings would be burned, and they would crash down. And then somebody cleverly would come, just like the distressed guys did with Global Crossing, and pick up those assets for cents on the dollar. Now, I thought it would be private equity firms. It turned out that, by and large, it was Chinese firms that bought US assets and sort of became one of the prime providers globally. And so, so that was the original idea of why we said, as a firm, we're going to sit out the ride. It's a virtuous thing for society. I can't wait for it to happen. But most investors are going to lose money. And in fact, they did. The adjacent technology that we had, also sort of critical, and also wrote sort of a scathing piece, was biofuels. And at the time, again, famous VCs, op-eds, TED Talks, everybody's talking about biofuels, ethanol and other biomass, and using recombinant DNA and high-tech techniques of biotechnology to convert certain plants into useful fuel. I, again, zoomed out, and I was trying to find these directional arrows of progress. That directional arrow of progress would ultimately lead Lux to nuclear. But it started by looking at this and say, okay, wait a second. If you use recombinant DNA, some technique to genetically engineer a bacteria, a microbe to produce something, if the end product is a drug, by definition, you get patent protection on that drug. You have a 17 or 20-year lifespan of monopoly awarded by the government for revealing the composition of matter and how this particular thing works. Your marginal cost to produce that next drug, that molecule, is very low, and your margins are going to be very high, and they're protected. In contrast, if you use all that crazy biotech to produce a commodity like a fuel, which is by definition undifferentiated by anything but price, The market's just not going to care. And so, that was sort of our skeptical or cynical view about biofuels. And then, sure enough, dozens, if not hundreds, of biofuel companies not only raised tons of venture money, but also got tons of government subsidies. And almost all of these things crashed. Many of them were just terminal zeros. They were great short candidates when they went public for public market hedge funds. And very little was left by the wayside in terms of the detritus. For people to take recombinatorial fodder of some of these failed companies and do something with. But all of that, again, zooming out, where you had religious consensus, everybody was praying at the altar of Al Gore, and they were pursuing biofuels and solar because it felt virtuous. And both of those things ended in colossal disasters. You had some firms like Kleiner that really bet their firm at the time on Kleiner Perkins, which was a storied firm. You had Kleiner Sequoia at the time that were just competing head to head about who had credit for Google. And then Kleiner took a bet, and it maybe could have paid off. They went off for clean tech and green tech and alternative energy and John Doerr crying on stages and Sequoia just went Web2 into a different path. It's just very interesting fates on the bets that they took. The insight that we had was actually a very simple physics insight, which was about energy density. When you zoom out and look at mankind's use of energy, we went from carbohydrates, taking wood, and, and burning it and producing fuel and fire and heat to cook and heat ourselves. From carbohydrates to hydrocarbons, you know, dead dinosaurs, oil, natural gas, and remnants of life from millions of years ago. And then we went from carbohydrates to hydrocarbons to uranium and nuclear, and the discovery of an atom just, you know, 102 years ago. I mean, you know, it's crazy. And we'll talk about the rebranding of nuclear and what happened in a bit, but That trend from carbohydrates to hydrocarbons to uranium undeniably was more energy density per unit of raw material. And it was clear to us that you're just not going back to growing fields of fuel. You're not going to take acres and acres and, and grow stuff when a single pellet of uranium could contain more power and unleash more power with zero carbon. So if you were a true environmentalist and really cared about low carbon, this was the only way to go. So that's where it started with that piece on solar led to biofuels. We call them, by the way, biofools, very arrogantly. And, and then it led us into nuclear.

To me, it seems like to fight climate change, it's kind of like this linear progress, right? You need to fight climate change. You need to reduce carbon emissions to zero. To do that, we need to electrify more, more stuff. And to do that, we need better sources of reliable cheap, zero-carbon electricity. That's me, like the outsider here. When I'm looking at what's happening, it seems like solar and wind and all that kind of stuff. But it feels like your argument is that's not actually the best thing to do. I saw you tweeted out there's never been a better setup for nuclear in history, right? You've got global energy shock and constraints, higher prices, commodities, metals, mining demand, cheap— cheap energy, and kind of next-gen environmentalists awakening to it. So Paint the picture for us. Why is nuclear this amazing kind of end-all be-all here, and why should we be focusing on it?

Well, whether it's the end-all be-all, it's definitely amazing. And I also said publicly, if atomic energy, if nuclear power, or as I prefer that we rebrand it, elemental energy, was discovered right now and it was on the COVID of Science or Nature or Proceedings of the National Academy of Science, It would be invention of the year. It would be Times, you know, breakthrough of the— Time magazine breakthrough of the year would be 60 Minutes for 4 weeks. You would have an outpouring of billions of dollars of private money. You would have awards bestowed upon its discoverers. People would be running around like, oh my God, we just discovered a miracle. Uh, and instead it suffers from 2 generations And understandably, all this makes perfectly logical sense. We tell stories, you know, you're complimenting, you know, biofools or rebranding nuclear as elemental energy. These are just narratives, and we come up with narratives to influence other people and to move large groups of people who have disparate views. Religions are very good at this, and you can argue that in many ways the cleantech, greentech, alternative energy movement at times has a religiosity to it and a certain dogma of what is what is part of that dogma and what is not. And historically, if you were an environmentalist, you were against nuclear. You were pro-wind, solar, hydro. Maybe you liked natural gas in certain domains, but you were definitely against coal and you were definitely against nuclear. And the reason people were against nuclear is because in the '70s, you had a whole slew of musicians people that my mom, you know, loved coming out of Woodstock— the Neil Youngs and Crosby, Stills, and Nash and Patti Smith and Laura Nyro and folk singers and Paul Simon. And they all came out, and there was actually a concert called No Nukes. And it was around the time in the late '70s that you had Three Mile Island, uh, which was a, a existence proof of how an engineering system could stop a disaster from happening. 'cause actually there was no radiation, nobody died, but Three Mile Island also happened to coincide with a fictionalized movie called "The China Syndrome," which was about a nuclear disaster. So now you've got a real-life headline-grabbing story and you've got, you know, at the time there were fewer movies and they got a lot more attention than what we have today. And that combined with the cultural zeitgeist of influencers at the time, which were musicians, conflated nuclear war which everybody should be against, with nuclear power, which everybody should be for. And you had 30 or 40 years of people that were basically against nukes. So, uh, if you actually look at nuclear power in France, about 80% of electricity generated cleanly, zero carbon. Um, they are engineering forward. They're great leaders in it. Uh, they have far lower dependence on foreigners, in particular Russia, for natural gas. If you take the US, about 20% of our electricity comes from nuclear, and it's been about steady state. The benefits are you have no intermittency, you are not dependent upon the weather, you're not dependent on cloud cover or wind, you're not dependent on, you know, anything exogenous. We have 104 domestic reactors, and we also roughly have another 104 reactors with great operating history that are moving all around the world, and those are inside of Navy nuclear subs. They're smaller modular reactors, maybe 100 megawatts or more versus the gigawatt power plants that we have that basically each one serves around a million people. And so the big question for all these 104 reactors that have been operating for decades is what do you do with the waste? And so when we got interested in the space at the time, 104 domestic reactors, roughly 440 globally, China will talk a lot about clean and green, but they're building more coal plants than anybody. They are also building more nuclear plants than anybody. And so they are racing towards their own energy independence. We looked at every part of the fuel cycle in nuclear and try to figure out, okay, what is actually investable? Because you're talking about, you know, a big hurdle in people's mindsets for acceptance. You have a Nuclear Regulatory Commission that oversees the commissioning of reactors. That hasn't happened in decades. Most of that is political. A lot of it is financial. The cost to build and operate these is very expensive. The cost for renewing licenses is expensive. Maybe about 12 years ago, there was a movement in Congress that passed something called the Combined Operating and Siting License, which would basically allow you to actually build and develop and get government money. Just still was plagued by protests. And delays. Uh, and then you have all kinds of different reactor designs, and some of these designs have decades of phenomenal safety and engineering know-how. And so we looked at every part of the fuel cycle and said, where can you invest? And we started with the uranium miners. We said, okay, if we have our wishful thinking and there actually is growing demand for nuclear, would investing in uranium or uranium miners or extraction, uh, be profitable? And it turns out that uranium is still relatively surface source. It's not deep mined, not like fracking, you know, for gas. So that's number one. Number two, it mostly comes— save for Russia— from friendly places. You've got Canada, South Africa, Australia, Kazakhstan. But most of the enrichment of that uranium, which is basically turning, you know, uranium into uranium-235 so it can turn into uranium-238, for an efficient chain reaction that again, zero carbon involved in that process. You're just exothermically producing heat. That heat boils water, water produces steam, steam turns a generator. The only thing you're really doing is changing the heat source from coal or natural gas that creates fire to uranium, which produces no fire, just a lot of heat. So we decided the uranium miners were mostly hucksters and fraudsters in New Mexico and Nevada. There were all kinds of, you know, mining people that just seemed to run schemes and scams. And so we said no to that. But we also said no to uranium for another reason, which is unlike natural gas or oil, where the marginal cost of the fuel basically defines the productivity of investing in that kind of stuff, uranium is like under 5 or 6 or 7% of the total cost of operating a nuclear power plant. So it doesn't really matter if uranium went from like $2 to $35 a ton, or to $70 and back down to $14. The volatility of the price really didn't impact the total cost of operating nuclear, which was sort of interesting distinction versus coal and nat gas and some of the more commodity-driven pieces. Then we looked at modular reactors. I mean, geez, we're a venture fund. We're not going to fund a billion-dollar power plant. What about these 100-megawatt plants? Maybe you can build an array of them. You could have 10 or 100 of them. And you can put them on as you need them and build. And it turns out there, these things are really expensive and you still need NRC approval, Nuclear Regulatory Commission approval. And you have this paradox of they're not going to approve it unless a customer is actually paying for it, and the customer is not going to pay for it unless they know that they're getting approval. And so a lot of those things have sort of died on the vine. And you had, you know, NuScale, Hyperion, Westinghouse pitched us on spinning out a reactor called IRIS. You know, most of these things become vanity projects for somebody that wants to be able to say that they're investing in nuclear. You could see modular reactors being deployed in US allied sovereign states that want to have some small nuclear presence, maybe military bases. But I'm still quite skeptical about that. I'm not as skeptical as I am about a lot of the fusion projects, which I think are unnecessary. But, you know, I applaud the people that are funding these things. So we decided no to uranium mining, no to modular reactors. And then you look around and you say, well, what's the biggest unsolved problem? And the biggest unsolved problem, both technologically and perceptually, is what do you do with the waste? The, the two extremes are you do nothing with the waste and you keep it on site at the 104 domestic reactors. It turns out there's two companies that basically have an oligopoly on how to treat that. One is called Transnuclear, which is owned by Areva. One is called Holtec, which is a small business or now large business out of Philadelphia area, Pennsylvania area. One makes a coffin that is vertical, one makes a coffin that is, uh, horizontal. That's it, that's the difference. Uh, they're concrete and steel, and a robotic arm basically takes, uh, when, when nuclear, uh, uh, rods are done, they, they are moved, uh, after they've burned down, they're moved into a pool of water. They sit there for 5 years. Water is a natural neutron absorber, so just basically burning off heat. And then they're picked up and put into these coffins, these canisters. They're large and they just sit on site. The entirety of all of the nuclear waste in this country could fit onto one football field. Again, talking about the density of this power, it's just, it's just maybe it's two football fields, but it's tiny. And so you've got somebody that makes the infrastructure that basically holds the nuclear waste, the spent fuel in the rods. The next extreme is that you take that waste and you would ship it somewhere. And I was with two senators from Nevada recently and before I could even finish the question, the question being, will Yucca Mountain ever, I meant to say, will Yucca Mountain ever open? They were like, no. Yucca Mountain is a geological repository in Nevada. It has a giant mountain site. Billions of dollars have been spent developing this with the idea that one day in the future, which will never occur, waste would be shipped there and stored safely and protected from the environment. Nevada will never let it happen for NIMBY reasons, and frankly, Even if they did, I think every other state would be like, hell no, you're not shipping nuclear waste, you know, on a train or truck, you know, through my state. So, so the geological repository likely will never happen. The most likely thing is just these on site. The alternative is what Bill Gates was trying to do with TerraPower. And TerraPower was a traveling wave nuclear reactor that would basically say, why don't we take the spent nuclear fuel and try to create more fuel out of that? And it was a reactor design that would allow you to do that. So you basically use waste as fuel, which is clever design. He actually got quite close. They got quite close in getting China to actually deploy this. And then for a variety of geopolitical and other reasons, that got killed a few years ago. And now its fate is really in question. And unless Bill, which he's entirely capable of, will continue to fund it, you know, it's going to have some serious financial risk. Where we decided to focus is on two classes of waste. One was the low-level waste that is at nuclear power plants, and the other is high-level waste. Low-level waste is what a worker gets when they are exposed to a certain amount of radiation working on site. They all wear dosimeters that basically, you know, tell them how much radiation they have, and they can only be, you know, for certain periods of time. Their clothes, the equipment, all that kind of stuff, you can treat that stuff. The high-level waste is the really attractive stuff, which is— it turns out, after I read a paper, uh, and it literally said like there were billions of curies— curie is a measure for radioactive radioactivity in a place called Hanford. I had never heard of this. And as I did more and more work and research this, I learned that Hanford and Savannah River and Idaho National Labs and a handful of other sites in the U.S., once secretive, now known, were the sites where our pre- and post-Cold War bombs were being made, atomic bombs were being made. And the waste at a place like Hanford is hundreds and hundreds of millions of gallons of radioactive waste, giant drums, you know, thousands of square feet wide, uh, and, and hundreds and hundreds of these things. And what's crazy is about a quarter of the Department of Energy's budget is spent on cleaning this stuff up. So you think that DOE is spending on clean and green and solar and all this kind of stuff, they're actually spending at places like Hanford to clean up nuclear waste. That money went to URS, CH2M Hill, Fluor, the big engineering primes. And we basically said there's got to be a technologically better way to do this And then we would go and, you know, start this company, Curion.

I want to actually get into some of the geopolitics of this for a second because you've mentioned China a couple of times. I'm also thinking about Russia and what's going on right now with Ukraine. There was this Paul Graham tweet that I, that I want to get your take on. He said, first COVID accelerated the shift to remote work, and now the Ukraine war is accelerating the shift to nuclear. Crises force people to see the future. And there was a— I think that was a kind of quote tweet to something. Belgium is set to postpone its plan to shut down nuclear energy by 10 years amid the energy crisis. So how does what's going on in Russia and Ukraine impact what you think the state of nuclear will become?

I think for almost a decade there was a group of people, myself included, that sounded almost conspiratorial in the belief that the rise of the Green Party, the environmental wing in Germany that was calling for the shutdown of nuclear, was fomented by information operations from foreign sources, meaning Putin using tactics that has been used in other countries to affect elections, our own and around the world, was not having to fire a shot, was not having to seize assets, was not having to sabotage reactors, just had to feed and foment an environmental movement that was calling for the shutdown of their nuclear power plants, the consequence of which in Germany in particular would be increasing, if not outright dependence on Russian natural gas. I mean, what a brilliant evil genius chess move. Now, if it happened entirely organically, amazing. Uh, if it happened with little nudges from Putin and FSB or KGB uh, truly admirably evil genius brilliant. You had an engineer in Angela Merkel who was one of the most rational world leaders, absolutely just barraged by protests and environmentalists. And when Fukushima happened in Japan, it really, you know, accelerated the protests, uh, beginning around the, you know, 2011, maybe into 2012. And it just took a decade, uh, for Germany to start shutting down its nuclear power plants. It took, you know, other countries to basically get on this bandwagon that, you know, the environmental movement— as a friend had written, sometimes the environmentalists are the environment's worst enemy, um, the sort of hard green, you know, almost far-left contingent that again are like religious in their dogma of this, uh, geopolitically now people realize if you want energy independence, and that is not only on sourcing commodity like natural gas or coal, which many industries right now need. I mean, you even had, I think, Elon tweeted saying we've got to restart, you know, coal, uh, just to make sure that we've got power. You're going to have truly horrible ripple effects in the coming months, and not only of food scarcity for a significant portion of countries that depend on wheat from Ukraine, but energy shortages partially by embargo and restrictions and partially by the stuff being, um, resourced and withheld, whether it's China or elsewhere. And so it was a wake-up call to people to say, my gosh, what are we doing here? You know, you're worrying about shutting down nuclear, which may impact you decades in the future, and you're thinking about it in the wrong way in the first place. And we literally don't have power now. I mean, this is the same thing, by the way, that happened at a micro scale in California when protesters shut down the Rancho Seco plant, uh, in Southern California. You had people going without electricity, so they had to end up importing the electricity. And where did they get it from? Arizona. And how did Arizona produce their electricity? By nuclear. Same thing happened in Germany with the rise of the Green Party. In the very beginning, people were short electricity, so what did they do? They imported it from France. And where did France produce it? By nuclear. So a lot of people were just basically whitewashing, like, we're not getting our power from nuclear, we're just getting it from another country or another state that's producing it. So I'm actually very hopeful that the negative catalyst, uh, of, of Putin's invasion in Ukraine has woken up Europe and others to say we need clean, steady, reliable, non-intermittent power. And I think that, you know, as I call it, elemental energy is the best answer.

We interrupt your programming with a special announcement. Empire has a new sponsor. Santi and I are very excited to welcome BitMEX. That is right, BitMEX is back. The exchange we all know and love is back and better than ever. We're going to be dropping a couple of updates on BitMEX over the next couple of months. This first one is a big one coming soon. BitMEX is rolling out their spot exchange and they're giving away $500,000 in Bitcoin to new users. That's right. Listening to Empire has got the alpha. Santi and I got you $500,000 in Bitcoin going to new users. For the OGs, I don't think I need to tell you why you need to use BitMEX. It's a love of the game kind of thing. You respect crypto. You use BitMEX. For those newer to the industry, BitMEX has a long and great history of innovation since their launch in 2014. They created perps and a whole lot more. Now they're back. They're better than ever. They're making waves. So what do you need to do? Go sign up for the BitMEX spot exchange for a chance to win some of the $500,000 in Bitcoin that BitMEX is giving away. B-I-T-M-E-X. B-I-T-M-E-X. Bitmex.com. That's bitmex.com. Go make it happen. Now let's get back to the show.

My understanding is that Germany, I think, shut down 3 out of 10 reactors, and it is very hard to reinstate that if you wanted to. I think it was— that decision came a few years ago. So assume that the world kind of— the narrative totally changes and you want to make nuclear the number one source of energy. How How quickly can we get there and what perhaps needs to happen?

You saw a war machine in both Germany and the US mobilized in incredible fashion during World War II. The prolific output to produce ships, planes, tanks, real hard materiel was unprecedented in human history. Where there's a will, there's a way. And the will at the moment is largely fractured with people with all kinds of competing interests. Um, there is, observably to me who saw it 15 years ago and then 10 years ago and 5 years ago, just the, the sort of survey of people that were pro-nuclear, you know, in about 10 years ago you had environmentalists that once were pro-Greenpeace, you know, or even Greenpeace founders, brilliant longtime technologists and true environmentalists like Stewart Brand, or in Greenpeace's case, Patrick Moore, who suddenly were turning and saying, wait a second, if we really care about the environment, you know, nuclear is the answer. We can't not look at this. And then others like Michael Shellenberger who have been outspoken. And then, um, you see this younger movement of people that are suddenly not indoctrinated with, as I talked about before, the old Neil Young, you know, Patti Smith musician conflation of nuclear power and nuclear war. And I think it's a beautiful thing because people suddenly see it as a super high-tech, zero-carbon, truly futuristic, you know, sci-fi imagination of like what the future of cities could be. So if the will continues to compound, which it feels like it's becoming a movement, and we can shed even the taboo of nuclear— and as I again I'm a proponent for rebranding it elemental energy, which would include other elements in the world like solar and wind and hydro, and then rocks, which are the form of uranium. I think that in a decade you could see restart of existing plants. You could see an outpouring of talent. You could see software and other problem-solving brilliant technologists coming and looking at what sucks with existing industry. You could see safety features. And most importantly, you can see infrastructure spend from government that lowers the cost of capital to do this stuff. You could see the US increase realistically, you know, 15 or 20%, you know, maybe you went to 120 reactors or something like that. Um, that would be a marvel. And I think you're going to see news of China putting on increasing reactors in a greater percentage, and it's really going to feel like almost— if you ever played SimCity back in the day, you'd have like this old, you know, medieval town and you'd have this futuristic town. Like, we're going to see medieval compared to what China is doing. And yes, they're doing coal at the same time, but Suddenly you see like 200 reactors, nuclear reactors, and people are like, oh my God, they have double the amount of nuclear power that we do. There's no dependence on, you know, coal and that gas and all this kind of stuff. They have energy independence. And geez, we're producing more carbon, uh, footprint from our energy production than they are. Long-winded way to say to your question, I think that if we really could galvanize a movement, um, that in the next decade you could see a 10 or 20% increase from the US and, you know, maybe a 25% increase globally, I think would be incredible.

How you talk about some of these reactors are still fairly expensive to produce. How do you think about investing in nuclear as a venture capitalist? And who else do you see filling this gap of funding, both from research and infrastructure perspective, private sector, public sector? And, and maybe if you could give us kind of an overview landscape of who else is investing in this because it has felt largely underfunded and neglected.

So again, my prescription here is more than technology and know-how. What's needed is just the psychological mindset, you know, the rebranding. And I say that because we have decades of, of, you know, lifetimes of reactors at 99.99999, like 10 nines you know, with zero incidents. It's just, it's a beautiful thing that should be studied. You also have an aging workforce there where a lot of the people that would have gone into nuclear, a lot of MIT-trained nuclear scientists went to quant shops and hedge funds instead of going into the industry because you had sort of a moratorium on new build for 20 years. So in terms of investing, like, we are— we did not want to and did not and are unlikely to— I don't want to be absolutist about it because something might change our mind. Fund reactors just because of how expensive they are and how much time it takes. I think existing reactor designs, which are already widely deployed and have tremendous operating history— so those are like AP1000s, you have, you know, formerly known as Areva or Westinghouse models, there's Toshiba models. And then on top of that, you have a bunch of modular reactors which will find niche uses that potentially could scale. I think the nuclear navy, you know, is a prime candidate for talent for that. Who's funding these? You know, anybody with incentive to make a lot of money. So the best thing that would happen would be an uprising of demand for nuclear and excitement and enthusiasm about it. A new zeitgeist where like, this time is different. Those dangerous words. And then you see private equity groups, could be infrastructure groups from Blackstone, Goldman, you know, Apollo, large PE funds that did a roll-up of some of these companies that are actually doing energy production. Government guarantees on minimum take rates for the equivalent of utilities and publicly listed pure play, I think would create a lot of money. But I think that's where the capital comes from first is large infrastructure players that basically declare they're going to create the equivalent of an Exelon in this current decade.

And just to clarify, so in that case where you have these infrastructure funds investing behind this, Do you think that they have the visibility today to go and do this? Or as you said, like, it seems like a bit of a paradox because you need the government to signal that they're going to be supportive of this.

You need government to signal and you need investors to start speculating and clamoring around it, right? And so sometimes that does start where you see people funding what seems like foolish things. And then suddenly when you have something that gets very credibly funded, maybe that credible thing goes and buys one of these upstarts that has a crazed following. You need an Elon for the space. You need somebody that is the cheerleading, true believer against all critics, that seems almost heretical, that we're going to build an electric car against an old-school industry, or we're going to go to Mars. And somebody that's like, we want 80— somebody that is like, we should be the France of energy production. That's like, we're going to take this from 20% to 80% and had a path between existing reactors and new reactor designs replacing coal. You need some crazy band leading cheerleader, you know, hypester promoter that goes crazy for it and creates a movement.

One thing that is starting to seem pretty obvious is that China is making a huge push and you talked about it a couple of times. So I think the 4 largest producers of uranium, it's Kazakhstan, Canada, Australia, and Namibia. China owns 90% of the mine uranium mines in Namibia. I watched this crazy propaganda video that they had put out from dancing and the dancing is crazy. Yeah, I was like, oh my God, this is nuts. What happens when China become— it has the ability to produce carbon-free electricity 100 times better or a million times better. I don't know what the actual number is. Better than the United States. What, what is the impact there? What does that do for us?

You know, almost every major conflict was fought over ideological, but often more energy and resources— power, water, food. Um, if you have abundant, cheap electricity your ability to lower your cost for industrial production is huge. Your ability to take— and I think this is the holy grail— seawater and do cheap desalination of that for abundant water means that you've got fresh water for food, agriculture, um, you know, feeding people. Um, and so I think that if you control abundant, cheap energy, you've got the greatest advantage in the world. You are seeing inflation occur across wide segments of industrial production because energy costs are going up. And so if you can lower energy costs, you have a competitive advantage, you can produce more. So the production function is impacted by energy, and every production function— again, you know, food, steel, um cars, computers, semiconductors, let alone crypto, um, you know, everything requires energy. And so the short answer to your question is whoever gets the most reliable, cheapest source of electricity production— not to say the cleanest, although nuclear is— really has a global competitive advantage. China can produce more material. They can produce more ships, more jets, more engines, more cars, more steel, more silicon And if we're sitting here and, you know, rationing energy because we're running out, like you saw in the '70s with like the oil embargo, I mean, it is a recipe for national suicide. Um, and so, you know, if, if, if you were king for the day, the number one thing you would want to do is, you know, for this country, you'd want to have a giant moat around us. Well, geographically, we're pretty lucky we've got that, you know, the Atlantic and the Pacific Ocean. You'd want good allies to your north and your south so that you don't fear constant invasion. We've got that between Canada and Mexico. You'd want to attract the best and the brightest, you know, here so that they could develop on our lands, not elsewhere. We learned during World War II with Nazi persecution of brilliant Jews that came here and helped to deliver us the atomic bomb instead of them, um, you know, the, the value of incredible scientific know-how that gets encapsulated into physics and chemistry that can project power out to the rest of the world. Um, and you want cheap, abundant electricity so that, uh, you know, progress can occur. This is one of the horrible mistakes that the degrowth wing of the environmental movement, which is really an anti-capitalist, you know, um, anti-progress, anti-growth, anti-money movement When people are like, we should be using less electricity or less energy or less power, it's the equivalent of saying people should be eating less food or people should be, you know, having less fun or people should be doing less, like just sit and go for a life of lethargy and sloth. One of the crazy paradoxes that most people don't know is Jevons' paradox. And Jevons' paradox is applicable in so many things in life, but my favorite example is the refrigerator. A lot of people say, well, we need to make our devices more efficient. And who would argue with that? Would you want a more efficient device or a less efficient device? But if your aim is to use less energy, then you have to look at it at the system level, not at the individual unit level. So here's the example that hopefully cements this. Actually, before I even go to energy, I'll give it to you with bandwidth. If you want me to use less bandwidth, you don't give me a more efficient pipe, you give me a less efficient pipe. If you give me a 56k baud modem, uh, with a bulletin board system of 40 years ago, 30 years ago, you can't— we're not streaming on video, my kids aren't on TikTok, I'm not streaming Spotify, you know, I'm sending a text message. Okay, if you give me a fiber optic cable with super high Wi-Fi and I'm just like have infinite bandwidth, you know, I'm using tons of data per second. Same thing holds with electricity. If you want to decrease usage, you want things to be more inefficient, not more efficient. When the refrigerator, which was this hog of electricity, became more efficient, that meant that it used less electricity to produce the same output, which made it cheaper. If a refrigerator got cheaper, it was more affordable, so more people had refrigerators. And now instead of having a refrigerator just in your kitchen, you now had a small one in your office, and you had one in your garage, uh, and you had one in the basement. And so what ended up happening, uh, is that as these things became more efficient, the aggregate energy use of refrigerators— and the same thing for air conditioners— uh, ended up using more electricity. And so, um, what people forget is that You want electricity to be so cheap that all of our technologies can use more and more and more of it to improve progress in society. If you go back to basic physics, same thing. A flame is hugely inefficient. It's more heat than light. And as you go to an incandescent bulb, into a compact fluorescent light bulb, into an LED, and then to a laser, A laser is extremely inefficient, and a laser is hyper-ordered photons that is dumping huge amounts of entropy and waste heat into its surrounding environment to get those highly ordered photons. And so that's what we want. We want a society that is progressing from fire to lasers, and from, uh, incandescent bulbs to LEDs, and from burning crops and wood to nuclear. That directional arrow of progress leads to human productivity and flourishing and thriving. And so we need cheap electricity because everything else comes from that. And the king for a day is abundant nuclear power, desalination plants everywhere, abundant water, and you just get growth and human flourishing.

You talk about desalination, and my understanding is it's quite related to nuclear. And so you've invested in Curion, believe that was acquired. And you mentioned about, you know, certain technology you invested historically. What areas excite you the most in nuclear? And I'm going to be— feel free to not answer this question, but as a percentage of your fund, how much are you willing to kind of stake towards these— the areas that excite you the most in nuclear?

Well, we— if we found an incredible set of entrepreneurs or an absolutely mind-blowing technology, We'd not be afraid to put 20% of our fund, which latest pool capital was $1.5 billion, you're talking about $300 million into one or more ideas in a sector. Kurion was a really unique example. We founded the idea of a crazy brain fart of an idea that we had, which is the biggest unsolved problem in nuclear is what do you do with waste? It's a question that we always like to ask, and I joke is this most sophisticated of two world questions, which is what sucks? A few hundred thousand dollars, we locked up the best technology and people at a time where, as I noted before, there's this labor arbitrage of, you know, all the MIT-trained people went to quant shops and hedge funds. We got the best people that were under 60, although they were like 57, 58, 59 years old, so they weren't super young and ambitious, but they were really talented. And then we locked up all this technology between robotic handling of stuff, material science, physics, chemistry that could separate isotopes like cesium and strontium and technetium and uranium and plutonium. And, uh, and we originally were focused on cleaning up all the bad stuff at nuclear power plants and at Hanford and Savannah River. All this, you know, the, the $1 in $4 that were being spent by the DOE to the tune of about $6 billion a year. And we just wanted to get a piece of that and do it faster and better and clean all that stuff up. And then when Fukushima happened in Japan, March 11th, 2011, tsunami, earthquake, tsunami, Fukushima disaster, this little company which we conceived of and founded was the only US company picked for the cleanup. And it turned out that technology, almost in like option theory— I always talk about randomness and optionality, that post facto I can explain everything as this perfect linear chain of events, but a priori you never know. One of the technologies that we licensed and got was the ability to remove radioactive isotopes from, uh, salt water. And people were like, why would you ever want that? All of the nuclear power plants use perfect clear, you know, uh, salt-free water. It's like the same kind of stuff that's in semiconductor plants. And we were like, I don't know, you never know. And sure enough, when TEPCO, the Japanese utility, dumped hundreds of millions of gallons of water on the reactor to prevent it from melting down, now you had seawater mixed with radiation. And the only game in town was this little company that we started just a few years before. I mean, literally a year and a half or 2 years before. I mean, just the randomness and the luck of this black swan in Japan, low probability, high magnitude event, with what was a positive black swan for Curion. Curion would've been a phenomenal business over several years, but it basically became a spectacular one overnight. And we went from a total of $3 million of invested capital, just $1.5 million from us and $1.5 million from some of our LPs that, um, that invested alongside us. I think it was at a $3 million pre-money valuation. So we owned about 35% of the business for $1.5 million. Went from $1 million in revenue in its first year to $40 to $90 to $120, $160, and then $40 million of EBITDA, actual profitable business. And then we sold that for 10 times EBITDA, about $400 million, and owned a third of it. And so our $1.5 million turned into $120 million. You know, and it's just a crazy story that of course has the benefit of being true. So that would definitely— I mean, that primed us to find like incredible technology that has a capability that nobody else has. Um, in that case, We got lucky and Japan got unlucky and the timing worked out. We'd be reluctant to fund some of the modular reactors, but I applaud them as a civilian and for society. I think there's a lot of opportunities for software and sort of lightweight tech to help improve efficiency. A lot of these things are still run on decades-old systems. And so whether it's monitoring, maintenance, there's going to be demand there where I think you can have mass improvements. But I think the really heavy stuff is probably going to be done by some of the big infrastructure players.

Josh Wolfe, you mentioned black swans. I think the biggest pushback on nuclear is just a big black swan event, right? Something like a Fukushima or Chernobyl. Whether you're a politician or a person living in, let's say, New York, if somebody said, "We're building a huge nuclear plant in Long Island," there might be pushback because of, you know, I'm sure it'll go well for 30 years, but then there's a black swan event and a Chernobyl happens. What's the, what's the counterargument to something like that?

The counterargument is one part history and one part, you know, I guess a little bit of whataboutism history. Again, in the US, with all of the 104 reactors in the decades of operating history, we've had, you know, you probably had dozens and dozens of incidents, but none of them have actually, you know, ever tripped anything. And you could argue that the engineering and failsafe systems and the high reliability and the culture, which I've never Honestly, I've never seen a culture of safety like I saw working in the nuclear industry. Like, when we did Curion, our board meetings would start not with an update on how much money we're making or on, um, you know, valuation, or like first 20 minutes just as a cultural thing, we're all about safety. What are we doing? What do we need to do? Like, it was just remarkable. And none of my other companies, even in biotech or crazy cutting-edge robotics or manufacturing, I ever saw that. So I really have a lot of respect for the sort of old guard of nuclear, where safety first is, is truly like the, uh, the mantra. So we've had no incidents in the US, and the one incident that became this salacious one, which was Three Mile Island, was basically a steam valve bust and then zero radiation leak. Nobody died. Chernobyl, certifiable disaster. And if you watch the movie, you see that this was less of a technological failure than it was of a human one, and of a human system that discouraged, because of consequence, of reporting error. I mean, there's so many things in that step when you go back to the diagnosis to say, like, what could we have done, you know, that could have averted that disaster? And most of it was human error. And again, you haven't seen that happen, you know, elsewhere. Fukushima, you know, um, earthquake, tsunami, disaster. You can make an argument that you don't want these near fault zones, you know. And, and even in California, there are some of these where you'd say, like, maybe if you did have this sort of 100-year earthquake you wouldn't want this. Um, but there are other places, you know, Indian Point in New York— there's no reason that that should be shut down. That was entirely political. There's nothing geographic, geo— geological, or otherwise. So, um, I think you have to put the right, you know, safety systems in place. But, um, the counter— the second counter, which is a little bit of whataboutism, is, you know, we've got rockets that blow up, uh, you've got, um, you know, uh, ships, you know, that sink that You've got, uh, you know, 50,000-ish people a year that die in automotive accidents. Like, you look at the statistics of how many people have died in nuclear versus how many people die from vehicular manslaughter, from handguns, from drug overdose. I mean, it's just— it pales in comparison. And it's scary because it's monolithic and it seems big and it's poorly understood, but there's so many more things that are so much more dangerous. You know, it's sort of like the the sharks versus coconuts. You know, more people die from like coconuts falling on their head— maybe this is apocryphal anecdote— but you know, then get— then die from, uh, being killed by sharks. But sharks are a lot scarier. It's scary. And so you got to change the narrative and educate people. As I tell my kids, we're only scared of what we don't know. And, uh, it's something that people should be educated about and embrace and celebrate.

Josh Wolfe, as a closing question here, you are investing kind of at the, the deepest ends of technology. You've got non-volatile memory and nuclear waste technology things that connect the gut and the brain, CRISPR delivery, 4D LiDAR. Can you just paint, Santiago and me, can you just paint a picture for us of what the future looks like, maybe not in 2 or 3 years, but in 10 to 15 years? What are the— you strike me as someone who's a real optimist. Like, what does the future look like? And that maybe weren't things that we're not thinking about yet.

You know, there's some obvious things like cars on roads, you know, in a generation are just gonna change. The idea, you know, outside my New York City office here, I can look and I can see thousands of parked cars on the side, you know, and I think that that will change. I think you'll see more green spaces, increasing urbanization. I think that the very thing that environmentalists have wanted for so long, they will get, not in spite of technology, but because of it. You know, autonomous cars that can shuttle you around and deliver 24 hours a day, you know, a grid of cheap electricity, um, you know, more green spaces. People want that. People want more green spaces. They don't want these brutalist, cold, you know, institutional, um, buildings. And, and so, so I think that the city of the future, life in the future, I imagine that— and you will always have one end of the cohort of people that are going to want to be ensconced in, you know, some future, future virtual reality, uh, with ever higher fidelity And then you'll have a whole group of people that will want to reject that and just be around each other. And, you know, I think COVID was sort of like a preview of this. You know, there are people that now are happy to see their personalities and the multidimensional matrix of who we are compressed into two-dimensional pixels as we are all talking now and are happy to, you know, be able to multitask and shift from this to playing games to doing emails and being productive and just sitting in front of a screen. And there's other people that want to be back out, you know, with people, whether that's in offices or at festivals or concerts or restaurants or whatever. And so you're always going to have a bifurcation of humans. And I think the future is going to be very much like the past. If you really were honest today and you said like, what has changed? On the one hand, yes, we have information at the tip of our fingers. You have every song catalog, every movie catalog, infinite remixability. But mostly, if you went back 30 years or 50 years or 70 years. We just have a lot more screens around us. That's probably the biggest thing. There's screens everywhere, uh, and the screens are flat and they're abundant and they're on our body and they're on our walls. But, you know, people still go to the bathroom, they still eat dinner together, they still drink wine, they still fight. Human nature is a constant. And so the future is going to mostly resemble the past with a lot more machines helping us. And, uh, and I do think that most of the machines are going to be, you know, of that poem much more of machines of love and grace than they will be non-benevolent Terminator killers.

Yeah, it's awesome. It's great to have someone like you, Josh Wolfe, because I think crypto— what initially inspired this episode was because we see a lot of similarities in narrative in crypto over the last 10 years, how much has that changed. And hopefully nuclear goes through that similar evolution. And so I think if you have Or will we now be thinking of who could be that champion for nuclear? Maybe you, maybe someone else.

It'll happen organically. It's going to be somebody more brash and younger than me and super inspiring in the same way, you know, whoever Satoshi is, whoever adopted that, whoever started promoting it. You know, you had a bifurcation of like hucksters and promoters and then hardcore mathematicians and computer scientists. It was met, as every movement is, with a combination of like true believers and skeptics. And then it just started to evolve and create a movement. And so I think you need the same sort of thing. You know, somebody will create a movement as almost everything has. And that movement happens not because of technology, but because of, you know, our humanity, ambition, greed, desire, quest for status, vainglorious, all of it. And so it'll happen. But it'll, you know, whoever she or he is, you know, is out there.

Well, thanks so much for coming on the show. And I think this can be really useful for folks to learn about nuclear and get this brain dump from you.

So really appreciate it. Yeah, talk to you guys later.