• What’s your sentence: People will only remember one sentence, at best, about your company. What is it! How clear is it? Is it something that matters to them? Should they want to share that w/ someone in passing?

• Map it out: Find the 50 people who matter and give them content worth sharing. Define your desired outcome with them. Know what they must believe, who influences them, and their information sources. Inject your message at leverage points.

• You: Personal outreach works better than corporate messaging. Build champions by inviting feedback and co-creation. Use your personal accounts. Write under your name.

• Set core principles. Then anything goes: Operate where your beliefs overlap with company relevance and audience values. Take strong positions within these bounds. After that, don’t set rules on what you let yourself speak about or on. Everything else is room for authenticity.

• Name your opposition: A credible antagonist makes your mission necessary. Your success is predetermined by how necessary the market feels your mission is. Choose something tied to current sentiment to build momentum.

• Alienate people: Reject preset cultural divisions. Draw boundaries around those you serve. Plan to alienate non-customers. Execute ways for your tribe to be excited about alienating others.

• Earn attention directly: Your value comes from your message, not your investors. a16z invested cannot be what people remember about your company. But it’s great if they remember one sentence about what you care about and that a16z backed it up.

Better yet, if you don’t see anyone doing messaging well in a space you’re irrationally excited about, it’s an opportunity worth looking into.

The world’s going to turn over in a decade, which means that most anything that we take for granted won’t look the same. Here are a few examples of people doing this well for physical products.

• Sam is building new battery and electric powered appliances for the home.

• Jim is making parts at reliable speeds and predictable prices.

• Augustus is making it rain when you need water most.

• Zane is giving you large amounts of metal at upfront prices.

• Shreyas is making a cheap phone you want to carry on the weekends.

I’m suggesting that building a hardware company might be as dumb as taking on a market where the discourse is stale, but it’s something that you and others might care about! The better you feel about executing the message, the more likely it’s something real. Get online, go to conferences, write long form, and just show up.

Everyone says not to start a commodity business. But the truth is, the best businesses are commodity businesses that really own the commodity. The trick is to build a structural cost advantage in production, or differentiate the product enough for customers to no longer view it as a commodity.

Why build a vertically integrated business

The magic of vertical integration is that it takes something perfectly fungible — aluminum, oil, electrons — and makes it yours. That’s how you turn a commodity into an empire.

The prize is clear: a large, durable business with 5+ of Hamilton Helmer’s ‘7 Powers” of businesses with a long term competitive advantage.

✅ Scale Economies

✅ Cornered Resource

✅ Network Economies

✅ Process Power

✅ Branding

🤔 Counter-Positioning (maybe to get there)

🤔 Switching Costs (if your customers bought infrastructure that only works with you)

Opportunities for integration

Opportunities to start an integrated business are a subset of the circumstance that enable any new business.

New technology

Netflix: Streaming was only viable once broadband became cheap.

Alcoa: Aluminum was more expense than gold until the Hall-Héroult smelting process industrialized production.

New demand curve

Amazon Retail: Bezos started Amazon because the internet was growing 2,300% / year

FedEx: Globalization made overnight shipping essential.

Standard Oil: Industrialization, later automobiles.

Certainty (safety, scarcity, reliability)

Standard Oil: Low quality kerosene killed people. Standard was just that.

Meter: WiFi always fails at the worst time. Meter guarantees reliability.

Moderna / mRNA vaccines: First COVID vaccine candidate created in two days.

Distribution / logistics

Coca Cola: Global bottling and distribution enabled the same drink to be served everywhere.

Walmart: global distribution enabled cheap imported goods everywhere

Amazon Retail (internet)

Structurally lower cost basis (control of inputs)

Saudi Aramco: Controls the world’s cheapest oil to produce.

SpaceX: Made their own engines (Elon tried to buy a Russian ICBM first).

Alcoa (owned electrical generation in Tennessee and Quebec Canada)

Regulatory or institutional openings

19th Century Railroads: Granted right-of ways, eminent domain by the government and owned all the land on their routes.

Electric utilities: Traditionally owned generation and delivery to customers.

Half baked integration

Most companies that fail to vertically integrate do so because they can’t reach the scale they need to realize the benefits of integration, don’t integrate the things that accrue the most value, or are in a market that commodifies faster than they can become dominant.

Integration without scale

Not enough scale

GoPro: Tried to launch a a video ecosystem but had too small of a user base.

Rent the Backyard (my previous company): We solved scarcity but priced it like a commodity before reaching scale.

Industry commodifies before you reach scale

SunRun / Solar City: Responsible for solar panels on roofs across America by creating the “solar lease” funded with government incentives. SolarCity tried to go into the solar panel market in 2016 but the product was undifferentiated and Chinese manufacturers were dominant.

Uber: Divested self driving team in 2020. Now, you can book a Waymo via the Uber app in Atlanta and Austin but Waymo has its own app with >25% market share in San Francisco…

Integration in the wrong place

WeWork: Financing innovation turned out to be raising money to burn on riskier than expected leases. Owning buildings wasn’t the bottleneck.

BlueApron: Unit economics were so broken vertical integration of food prep couldn’t help.

Integration with distraction

Juicero: Integrated hardware + proprietary juice packs + logistics. Not enough product differentiation.

Lyft Bike: Doesn’t lead to more Lyft rides. Now Waymo has more market share in San Francisco.

How to integrate

Vertical integration is easy to romanticize or dismiss, but its logic is surgical: it only works when you own a step of the value chain that captures an outsized share of value, or when you change the terms of competition.

Find the bottleneck

Scarce input, distribution channel, reliability guarantee, etc.

Control it

Integrate upstream or downstream to surround that choke point.

Decide how to compete

Option A: Develop a lower cost basis

When everyone gets the same price for a product, the only way to win is to offer your product on a lower cost basis. Economies of scale are most straightforward, but technology or process advantages can get you there too.

Option B: Break the commodity perception

If customers don’t view you as a commodity, you having pricing power. This can mean wrapping your product in a brand that signals trust, engineering reliability guarantees others can’t match, or building an ecosystem that locks in demand.

Follow where value accrues

Early on, this usually means chasing fat margins around scarcity, reliability, or a new technology. As the product commodifies, margins move downstream toward distribution, logistics, and trust, or upstream into scarce inputs and capital intensity.

Owning the commodity

Owning a commodity isn’t about fighting commodification, it’s about bending it to your advantage. The world’s great industrial empires didn’t escape commodity markets; they mastered them by grabbing the choke points where value accumulated, then relentlessly scaling or differentiating themselves.

When frequently referenced in pop culture, it’s often reduced to a daydream Esther has while bored at a dinner:

"I saw my life branching out before me like the green fig tree in the story. From the tip of every branch, like a fat purple fig, a wonderful future beckoned and winked. One fig was a husband and a happy home and children, and another fig was a famous poet and another fig was a brilliant professor, and another fig was Ee Gee, the amazing editor, and another fig was Europe and Africa and South America, and another fig was Constantin and Socrates and Attila and a pack of other lovers with queer names and offbeat professions, and another fig was an Olympic lady crew champion, and beyond and above these figs were many more figs I couldn't quite make out. I saw myself sitting in the crotch of this fig tree, starving to death, just because I couldn't make up my mind which of the figs I would choose. I wanted each and every one of them, but choosing one meant losing all the rest, and, as I sat there, unable to decide, the figs began to wrinkle and go black, and, one by one, they plopped to the ground at my feet." - Plath, The Bell Jar

The message seems simple: Choose something and do it. Hesitation leads to lost opportunities. Plath ends the chapter with Esther waking up at the dinner with:

"Oh, I realized I was just hungry"

It's human nature to try and find meaning out of every fork in the road, every point when we're faced with making a decision. When we read books and watch movies, these are the moments we tunnel in on. Who doesn't want to live in a movie! So the act of deciding brings pressure, grief, and anxiety.

Whatever the decision, it's only hard because we choose to make much of it. Don't.

Rarely is any single decision alone of serious consequence, and our path isn't made of any single decision. Our path is about acting consistently, a byproduct of a million decisions, often made unconsciously. When we overemphasize a moment in time, it's usually because we're vulnerable and scared.

Rather, take a look at each of these figs and imagine making the most of any of the situations presented. Making choices becomes difficult and daunting because we often make them defensively, trying to avoid pain. We rarely realize this leads to weak decisions. If you're going to dream, dream of how well things can be, not of how bad they can get.

The path that’s easiest to dream highly and often of will be the easiest to make the most of. If you’re wrong, pick the next and do it quickly!

I encourage you to see all of your options and your contention with them as an opportunity to find yourself. God knows I’ve struggled more than most to do so. Now that I see my purpose and spend my days sustaining the cathedrals around me, I kick myself for time wasted staring at the tree not reaching. Mindset from scarcity to plenty might be everything.

I imagine most of you will find yourself in such a position. Maybe some in the exact transition of moving back to building for the physical world, and realize it was fear holding you back. My favorite childhood memories were from building robots, model bridges, chem lab, and spending time on my dad’s construction sites. The fig was always there, I could have kept reaching for it. Pick a fig, and if you don’t like it, chuck it! Trust your tree to keep bearing fruit.

Hydrocarbons borrow energy from the past

Set aside climate for a moment and ask a simpler question: is continued growth in energy use structurally viable?

The classic de-growth argument says “no” because most modern energy comes from hydrocarbons (oil, gas, coal). These are finite geologic windfalls, so we’re effectively living off photosynthesis from millions of years ago. As those reserves deplete, the claim goes, society must ratchet back to something closer to nature’s replenishment rate.

In the long run, this is a pretty good argument against hydrocarbons! We’ve probably used around 50% of accessible oil reserves and depletion raises extraction effort.1 The more oil we pump, the more expensive the next marginal oil becomes.2

The declining EROI (energy return on investment) of hydrocarbons

You see depletion most cleanly in oil’s decreasing EROI: how many units of energy you get back for each unit you invest to find, extract, process, and deliver energy.3

An EROI of ~10 is needed for an energy source to “support complex modern societies.”

An EROI of 3 is the “minimum … value required for a fuel to be minimally useful to society.”

In the early 1900s, US oil wells had an EROI of 100-1000.

Today, US oil wells have an EROI of ~10.

US shale (fracking): ~7.

Canada’s tar sands: ~5.4

Corn ethanol: 1.0 - 1.7 (it’s not very efficient to burn oil in tractors and on fertilizer to grow a plant you turn into oil!)

As oil’s EROI decreases below viable levels, natural gas (EROI of ~30 but also falling) will first fill the void, but coal will backstop the system if we don’t build out alternatives.5

Look at that big bump in coal generation in the mid 2000s :/

The Increasing EROI of Renewables

Renewables aren’t extracted, they’re manufactured.6 Costs and, in practice, EROI improve with time and scale because factories learn, supply chains densify, and everything is standardized.

• Solar PV (photovoltaic) has shown a remarkably stable learning rate for decades. The more panels we build, the cheaper the next watt becomes (independent of commodity cycles). EROI estimates have increased from ~6 in 2005 to ~20 in 2015 and perhaps as high as ~75 in 2025.

• Wind rides a similar curve, albeit slower, with steady gains in rotor diameters, hub heights, and capacity factors pushing it to an EROI of ~18 today.

Today, solar (plus batteries to modulate day / night swings) is quickly becoming the cheapest form of electrical generation in nearly every country in the world.7

Solar’s cost per kWh has been log-linear decreasing for the past 50 years with no sign of stopping.

Now that it’s crossed the cost tipping point, deployment has gone exponential, compounding the increase in EROI even higher.

I believe that capital is accidentally creating an illusion where founders believe the only viable path for deep-tech is selling to government or the DoD.

Even worse, nearly everyone building in deep-tech now adopts the same rhetorical framework as defense companies.3 Not every nuclear startup needs to prioritize military base micro-reactors. Not every manufacturing company needs to position itself primarily through the lens of competition with China.

Great companies necessitate category creation. No need to force the next great technology into the American Dynamism umbrella.

Waymo was pre-American Dynamism. Flock Safety was pre-American Dynamism. Zipline was pre-American Dynamism. SpaceX was pre-American Dynamism. All of these companies will move critical American industries further into the future that any 10x improvement to our defense ecosystem could.

Chasing defense contracts is a distraction from making an impact in larger markets that have dramatically more effect on everyday American’s lives.

If you're building one of these companies, craft your own narrative from day one. Using existing movements like American Dynamism can helpful for initial fundraising or hiring, but don’t let your company be defined by someone else’s vision.

I’m excited to take on our nation’s great unsolved problems: we need terawatts of new energy capacity annually, we need to expand advanced manufacturing 100x, we need to control our food and water supply at scale, and we need affordable housing across the country. Each of these challenges needs its own narrative and its own champions. These are massive opportunities to make the country better, take one and be that champion. I hope you’re one of them.

Shops historically offered a bundle of services to their customer around usually a single type of production process (eg laser cutting, bending, powder coating, etc). Since finding, evaluating, quoting, and scaling with a shop was very involved, customers were extremely sticky.

This is still the case for most large scale production. But the system didn’t work for everyone and a revolution has started. Small startups who just wanted to buy a 25 parts, hobbyists building project cars, and even engineers at big companies who needed parts the next day for their prototype were delayed, ignored, and overcharged by shops who could only process a few, highest priority requests at a time.

Companies serving these markets with the help of new technology have now started the irreversible unbundling of the machine shop ecosystem:

Shops used to sell engineering assistance aka “design for manufacturing” or “DFM” help.

Today, software tools (not even really using AI) can instantly help you with anything flat and many more complicated CNC parts.

Shops used to distinguish themselves on quality and delivering on the timeline promised. Labor skill between shops drove big differences in quality. It was hard to tell if a shop made good parts and delivered on time until you worked with them for awhile.

Today, shops use mostly (the same brands!) computer driven machines. Review sites make it easy to screen for a shop experienced in the type of parts you need and tell if they deliver on time

Shops used to require you to bring them a drawing and it took someone hours to tell you what it would cost.

Today, quoting software tells you immediately or after the sales rep reviews the work in 10 minutes. This has led to the rise of Instant quote powered “horizontally specialists” that produce sheet metal or another specific process at massive scale.

The result: bad shops have really suffered and the average quality in the industry is higher, but good shops are losing the stickiness and DFM differentiation that made them healthy businesses. Most time sensitive work goes to an instant quote marketplace or horizontal specialist. Most extremely cost conscious work goes to China1 or increasingly, a domestic metal service center.2

Shops’ next move

Prototype demand in American metalworking is exploding: supports for solar panels, lunar-lander brackets, and AI datacenter server racks. But shops still operating with the old model are struggling. Unable to compete with the scale of newcomers, but also providing the same services, shops have to pick a lane:

• Double-down on one narrow step (horizontal focus) and become the lowest-cost, fastest producer of that step.

• Climb the value ladder (vertical scope) and re-bundle around a set of physical steps (rather than services) your customers need: cutting, bending, finishing, assembly, even installation. Shift from selling parts to selling solutions.

Margin lives where complexity hides

Horizontal scale wins headlines, but vertical depth wins deposits. When every buyer can click “get quote,” the only defensible profit is the premium people pay to make their problems disappear. That premium pools where a shop owns the whole outcome. From first‐cut DFM tweaks to final torque spec, one PO means one neck to choke.

Horizontal specialists vs vertical integrators

On first look, it seems like these are two parts of a complimentary system:

Horizontal shops win when time and material efficiency are the customer’s top priorities.

Vertical shops win when uncertainty (complex parts that benefit from high DFM expertise, complex value-add processes, compliance) is the dominant pain and buyers will pay to transfer it off their plate.

While it’s clear that traditional shops are caught in the middle and will go out of business, if you dig a bit you’ll realize that those who who focus exclusively on horizontal scaling won’t build enduring businesses either.

Horizontal specialist: get big fast

While horizontal shops might look like the better path because of their scale, I expect their opportunity will look a lot more like an airline than a hyperscalers. Selling commodity parts is really hard!

The capex noose: constant investment with no pricing power

Just like airlines, horizontal specialists need intense ongoing capex to stay ahead. This hamster wheel of investment is coupled with low pricing power created by the instant quoting software they need to scale.

Expiring capacity: a prisoner’s dilemma

Shops are built on a queue of work. If there’s no work, machines and people sit losing money. Shops today commonly take unprofitable work from marketplaces like Xometry to recoup whatever costs they can when machines run idle. Horizontal shops will scale to saturate boom time markets before collapsing in downturns.

Data and process are not a moat

Large datasets of parts help get the companies off the ground but the advantage is logarithmic, not exponential. There are only so many way to make thing before your data is repetitive. Worse, a well funded challenger could effectively buy their way to this dataset (and market share) by subsidizing demand.

Geographic disadvantage

A facility can only grow so large before it saturates the area that it’s cost competitive to transport to. That area shrinks when a competitor opens (even a moderately inferior) facility closer to your customers.

Low barriers to entry

Competitors might be someone in their garage right next to your customer. You can start a machine shop with a few thousand dollars!

Instant quoting commodifies the market

Horizontal shops have initially scaled by offering instant quotations. It’s clearly a 10x customer experience that pulls demand to these first adopters. Industry veterans are skeptical, but they’ll be forced to adopt the technology as they hemorrhage customers.

As instant quoting increases, the friction to get quotes decreases, driving prices to converge around the lowest cost (probably VC subsidized) offering.

Vertical integration: get big smart

Vertically integrated companies might not initially be as interesting, but they’re probably the better business to own in the long run.

Relationships = pricing power

Shops historically differentiated themselves by providing DFM feedback. Vertical shops continue this with white glove service tailored for each customer. The success metric: how many shops replace their in house machine shop with your team.

When a competitor offers a cheaper quote, your customer isn’t choosing between parts, they’re choosing between people.

Deep data is a deep process moat

Verticals record fewer unique geometries, but accumulate process sequences: eg which powder spec plays nicely with which bus-bar plating or which torque spec cracks a particular composite insert.

This dataset is much deeper than a a horizontal shop’s so ages much better. The moment every sheet-laser giant knows what a 7075-T6 0.125-in pocket costs, price converges. Knowing that the pocket warps after hard-coat unless you tweak dwell time is harder to replicate.

Knowing the other 50 hard won lessons needed to make your customer’s satellite enclosure are a competitive advantage.

Transportation costs lessen and extend geographic range

Vertical shops save intermittent shipping costs but also ship items with a higher “product value density” than a horizontal shop, reducing the percent of total cost shipping eats and increasing the geographic range it makes sense to serve customers from.

How to win

The choice then, is stark:

1. Race to the bottom with ever-faster lasers and a balance sheet destined for consolidation or bankruptcy.

2. Climb the ladder and charge for certainty, stewardship, and the thousand hard earned tricks that turn steel coils into solutions

For builders, investors, and founders peering into American metalworking, the only enduring margin left is vertical. If you’re not getting paid to shoulder complexity, you’re volunteering to be the cheapest spindle in someone else’s supply chain.

Will our world be full of cheap disposable machines being built offshore, or will there be a robust manufacturing and servicing industry born from more intricate and durable machines?

We see impressive demos every week, but they raise fundamental questions about manufacturing scale that I don't think the industry has adequately addressed. The gap between a working prototype and a mass-produced product is years of R&D of its own, particularly for physical goods with hundreds of components sourced from global supply chains. What do we need to get right for these awesome demos into production, and what do end customers really want their robots to look like?

Making there robots in America will require significant capital investment, skilled workforce development, and long-term commitment to compete against established supply chains. The national security implications of robotics dependency may justify this investment alone, particularly for aerospace and defense applications where cost is not the primary constraint. I care more about the grand prize of mass production. America’s role in manufacturing entirely depends on the lifecycle and the price point the end market wants.

Price point & supply

If the price point and lifecycle of robots looks like consumer toys or sub $2000 units that are incredibly task specific, it’s inevitable that we end up designing incredibly integrated machines that will be disposed of within five years. If really useful robots cost $50,000+, these are high cap-ex investments that will need to be financed. This usually also means a market to maintain and extend the lifecycle of these machines to draw out as much value as possible. These are black and white examples. In the former case, the US plays a minimal role, and in the later the US plays a strong one.

The market has not converged on a price point for general case robotics, and all signs indicate we’re going to end up in a messy middle between electronics and cars.

Let's take humanoids as a case example. On the lower end, Ben Bolte wants to deliver a $8,000 product that's composable and can be remixed to perform specific tasks effectively today. Elon Musk aims to create a more premium product that costs around $30,000 but is better equipped to handle greater variance in requests autonomously. The nuance lies in the underlying design of these systems. The market as easily converge toward either high-end consumer electronics or an intricate OEM process resembling automobile manufacturing.

This discussion remains largely hypothetical since no vendor has achieved real scale yet. Current robotics companies focus primarily on software and system integration, but mass production demands expertise in component sourcing, supply chain management, and manufacturing processes that most of these companies lack. No standard playbook has emerged across robotics companies due to significant variation in design approaches and product philosophies. When robotics experiences its "ChatGPT moment," many of these details will become much clearer.

For today, we can focus on breaking out four major areas that will be essential for robotics manufacturing, each accruing value in different ways.

1: Big three components

The three major component drivers in robot manufacturing are PCBs, brushless motors, and injection molded materials. Robots need numerous printed circuit boards for processing, sensors, and microcontrollers. Brushless motors enable movement, with humanoid designs requiring more motors to create additional degrees of freedom. Structural components and casings primarily consist of injection molded plastics. China has developed significant advantages in PCB and motor production, which raises serious questions about supply chain resilience and America's competitive positioning in this market.

Brushless motors represent a materials and manpower challenge. The magnets require rare earth elements, and the precision manufacturing requires skilled workforce development. Apple's investment in Chinese manufacturing capabilities (rumored to be $55 billion / year) has created a skilled labor force that has proliferated throughout Chinese industry. This creates a significant cost disadvantage for alternative manufacturing locations.

PCBs represent China's most developed manufacturing ecosystem. The Chinese have solved instant quoting, developed sophisticated design-for-manufacturing processes, and automated most of their production pipeline. The ecosystem is sufficiently developed that replicating it elsewhere would require rebuilding much of the integrated circuits supply chain.

Injection molding presents a stronger opportunity for American manufacturing. The die creation process still relies heavily on skilled craftsmen with tribal knowledge about temperature, pressure, and material flow relationships. This creates both a bottleneck and an opportunity for process optimization and automation. Companies that can systematize this knowledge could achieve significant competitive advantages.

2: Mechanical Design → Production

Robotics companies are poorly prepared for the complexities of hardware procurement. Unlike software companies that can scale with a few clicks on the AWS console, robotics companies require hundreds of specialized components produced on an ongoing basis with different suppliers, lead times, and failure modes. Even large scale consumer hardware (laptops and phones) don’t have nearly the same amount of manufacturing complexity. There’s probably linear curve in complexity with the degrees of freedom hardware might have with the complexity of scaling it’s production.

Consider the BCN3D-Moveo robot arm as a simple example with 5 degrees of freedom. This open-source design requires structural components, fasteners, bearings, motors, and power systems. The motors alone require rare earth magnets, high-conductivity copper, and precision manufacturing capabilities. Each component category has different optimization criteria: cost, weight, reliability, and manufacturing complexity. Each complication in the supply chain of any component makes the end product exponentially more complex. Robots in our world will be far more complex than the Moveo.

Robotics company founders are thoughtful about product and designed problems. Only the best know much about getting parts, working with suppliers, or making products at scale. This creates a strategic vulnerability where a single hiccup in the supply chain can halt production entirely. Given the amount of components, robotics supply chains might end up being really long and complex! Most startups have tried to solve this problem by directly stealing talent from automotive or aerospace because this is the talent that’s readily available in America. Neither market shares enough of the same workflow or design challenges to directly translate into robotics.

3: Assembly

Robotics companies are assembling robots in-house. Mostly because no one has moved more than 2,000 units. This could continue like the automotive model (Tesla, Ford) or shift to the consumer electronics model (outsourced to contract manufacturers). The choice depends on the feedback loop requirements between design and production.

In-house assembly provides several advantages during the early development phase: rapid iteration, resource optimization, and quality control. When product designs are still evolving, having the production line adjacent to the engineering team enables tight feedback loops that are difficult to replicate with outsourced assembly.

The question is whether this arrangement persists as the market matures. In the automotive industry, most successful companies have maintained in-house assembly for their core products. In consumer electronics, most companies have outsourced assembly to specialized contract manufacturers. Both cases are a direct result of where value accrued for each business. For American manufacturing to be involved, the robotics industry will likely need to follow the automotive model due to the complexity of calibration, software optimization, and quality assurance processes. The less complex the underlying supply chain, the fewer opportunities to create new optimizations that differentiate from the ones in consumer electronics.

4: Service & Support

Robots, like cars, have physical components that degrade over time, require maintenance, and need periodic upgrades. This creates service location-dependent and relationship-intensive service opportunities: a recipe for decentralization.

In commercial applications, there will likely be significant demand for forward-deployed technical talent. As manufacturing, retail, food service, and construction become increasingly automated, job functions will shift toward maintaining automated systems rather than performing the work directly. This could follow the Microsoft partner model: specialized companies that understand both the technology and industry-specific requirements.

The consumer market presents additional opportunities. Like cars, most consumers will not develop sufficient technical expertise to maintain complex robots independently. If the market moves toward $8,000+ humanoid robots rather than isolated single-purpose machines, there's a business case for specialized support networks providing delivery, setup, training, and maintenance services.

Some value accrues at the service layer if multiple robot manufacturers compete in the market, similar to how the physical complexity of cars led to a network of dealers and repair shops.

What about America?

The robotics market will be moving toward mass production. The question now is if they'll be made in America, or our country will focus on service and integration opportunities.

Service and integration present clearer opportunities. Companies that develop expertise in robot deployment, maintenance, and upgrade services can build defensible businesses with recurring revenue and high switching costs. These businesses require local presence and customer relationships rather than manufacturing scale.

The question is whether focusing on services provides sufficient competitive positioning as the market matures. In the automotive industry, manufacturing capability has remained a core competency for successful companies. In consumer electronics, product companies have captured most of the significant value while outsourcing manufacturing.

I believe the robotics industry will follow something closer to the automotive model due to product complexity and the crucial feedback loop between design and production. This stems from the consolidation we've seen in consumer vehicles and what I expect consumer robotics to resemble. However, robots could potentially follow the consumer electronics path instead. If that happens, China's advantages in the consumer market would likely be insurmountable, as those advantages directly translate from electronics manufacturing.

Maybe none of this matters. Like all great technologies, the largest chunk of value will accrue to end users of robots, and not necessarily to those who manufacture them.

But as an American I do care that we have a reliable supply for the greatest wealth enablement in human history. Investing in robots that have long lifespans, interchangeable components, and accessible maintenance will be the path to securing America’s robotics manufacturing future.

We’re Ron & Spencer: two engineers who met during YC’s S19 batch obsessed with how atoms move through the world and why most software folks still treat factories, power plants, and construction sites like exotic animals in a zoo.

We’ve merged into one publication.

You probably subscribed when Ron shared the shutdown of his multiplayer browser, Sail / Muddy or from when Spencer ran Rent the Backyard, a $10 million-revenue experiment in factory-built housing that crashed head-on into real-world supply chains and interest-rate whiplash.

This blog is our field journal. Expect operator’s-manual takes on U.S. manufacturing, energy infrastructure, and deep-tech business models — written for people whose feeds still overflow with software takes, but whose curiosity has drifted toward things that weigh tons. We’re not here to dunk on SaaS (we love a good gross-margin chart), but we do want to decode the playbooks that actually work when your MVP shows up on a truck instead of in a browser tab.

If that sounds like your idea of fun, join us!

First up: why some of the biggest opportunities in hard tech look less like SaaS flywheels and more like high-grade gold mines — and how not to blow yourself up while you’re swinging the pickaxe.

- Ron & Spencer

But Rung, you’re rich — you’ve got everything. Ladders! Ascots! Why did you need [to steal] a diamond?

I inherited a ladder company. We make the one product in the world that no one ever replaces! Ladders don’t wear out like TVs or personal trainer over 40.

Oh no. They’re built to last which means no sales. Company’s broke!

- Fred Jones & Rung Ladderton, Season 1 Episode 3: Scooby-Doo! Mystery Incorporated

The Scooby-Doo ladder magnate isn’t just a cartoon punch-line, he’s a warning label. For forty years, Silicon Valley has been trained to worship businesses that compound indefinitely: SaaS dashboards that bill monthly, network effects that snowball, and margins that expand with every extra user.

Deep-tech plays in larger markets than SaaS but by a very different rulebook. Many businesses look less like revenue compounders than process compounder1 and the revenue you do have looks like a discovery of gold. Finding gold is rare and it’s not necessarily a given you can strike it twice.

My Gold Mine Business

I have first-hand experience with this, because I ran a gold mine: Rent the Backyard. which built ADUs (backyard homes) across the San Francisco Bay Area. The mine was deep (>100,000 suitable backyards in San Jose alone) but obviously a mine. We weren’t particularly worried about exhausting the market though — ADUs were our initial way to build affordable housing.

At just over 400 square feet (40 square meters), we thought of our ADUs as “minimum viable housing” we could quickly get cost effectively reps building. Built with a flat roof from cross laminated timber, we envisioned combining modules into larger single units or stacking them into multifamily units.

Spoiler: We were killed by small scale production and interest rates, not by running out of gold.2

Anatomy of a Gold Mine

Once you start looking for them, gold mines are remarkably common. Physical installations, financial / technology arbitrage, and products well loved on “r/BIFL” (Buy it for Life) all share the same defining characteristic:

- One-and-done customers: You sell to a customer once. There's no LTV (Lifetime value) calculation, no upsell path, no recurring revenue from the core product. The entire economic value of the relationship is captured in a single transaction.3

This leads to

- Depleting TAM: every sale by you (or a competitor!) reduces the potential customers for your product.

- Depleting customer quality: just like a real miner you go after the more accessible and profitable seams of gold first. Subsequent customers are further from your ICP (ideal customer profile), your sales process gets more difficult, and margins decrease as you grow.4

- Gold rush: running the business isn’t about growing the pie, it’s about gorging yourself until it’s gone. If you don’t already have competitors they’ll be here soon.

Struck Gold or Printing Money?

Most real-world businesses sit somewhere between a pick-once gold mine and an always-on SaaS subscription. Two variables matter more than anything else:

Trying to be SaaSy

The easiest way for most software companies to grow is by increasing revenue from existing customers. Gold mine companies don’t do this!

At Rent the Backyard, we were often encouraged to sell homeowners ancillary or reoccurring services like property management or insurance. Unfortunately, commissions from $50 / month insurance or even $200 / month property management couldn’t move the economics on a $200,000 ADU purchase. Solar panels or battery systems might have been a little better but there wasn’t a conceivable way to double or triple the margins on an installed project.5

Casper spent millions trying to improve the economics of its $1,000 mattress business by selling $50 pillows. The business was bought by private equity for 1/3 its IPO price after two years on the NYSE.

At both companies, it was much better to invest in the core product than ancillary revenue but all companies exist somewhere on the spectrum between mining for gold and selling SaaS.

Mapping the Gold-Mine-to-SaaS Spectrum

Solar Leasing’s Jevon’s Paradox: Growing a Gold Mines to Death

As residential solar panels first became available in the early 2000s, companies like Sunrun and Solar City (now owned by Tesla) were textbook examples of a gold mine business. Massive sales teams went door-to-door signing up homeowners for “solar lease” loans to put solar panels on their roof to save on their utility bills. It was an easy sell: your monthly payment on the solar panel was less than what you’d save on electricity.

At first the market was a true gold mine. There were a finite number of correctly angled, suitably sunny roofs owned by people with good enough credit. Once a house got a solar installation, it was off the market.6

But then solar kept getting cheaper.

The Y-axis (cost per watt) is a log scale 😳

The number of homes solar leasing companies could service rapidly expanded7 giving the companies more TAM to mine but the costs kept dropping. When Sunrun was founded in 2007, a 7 kW system to power a 2,000 square foot house cost ~$60,000. In 2025, that same system would be only ~$14,000.8

Unfortunately for Sunrun, low prices also meant consumers didn’t really need to finance solar panel as much either. Sunrun’s stock is about the same price as when it IPO’d in 2015.

Gold Mine Mistakes

If you realize you're running a gold mine, you have to fight the instincts you've learned from reading about or running typical venture-backed startups.9

Mistake #1: Confusing Yourself with a "Growth" Startup

The single biggest error a gold mine company can make is subsidizing customer acquisition. As a gold mine company, you will make ~all of your money at the time of acquisition or on some short half life thereafter.

The easiest way to recognize a startup that doesn’t know they’re a gold mine business is to see them losing money on CAC. In a normal startup, you might justify that with high LTV or !network effects! But here, the transaction is the beginning and the end. There is no "later" to make it up on volume. You are just lighting money on fire.

Mistake #2: Staying in "Growth Mode" for Too Long

The lifecycle of many gold mine company can be brutally compressed: Growth -> Plateau -> Decline. You have to be ruthlessly honest about which phase you're in. If you're in decline, you can look for clever ways to reinvest in growth or new business lines, but you might never find anything as good as the original business!

It’s okay if you can’t find anything worth investing in but your job becomes gracefully managing decline and creating the best outcome for your stakeholders, employees, investors, and yourself.10

Mistake #3: Returning Capital the Wrong Way

Without a growth story, declining companies have a share price that’s hard to predict but presumably decreasing. While conventional wisdom is now that buying back stock is mechanically ~identical and more tax efficient than issuing dividends, this only applies to companies with a flat or rising market capitalization!

The worst mismanagement of a declining company? IBM:

The company spent ~$200 billion buying back their stock between 1995 and 2019. As recent as November 2023, IBM’s market cap was only ~$100 billion.

The stock has risen with the AI wave to ~$275 billion as of July 2025 and the company has finally switched to paying a ~$6 billion dividend instead of buying back more stock.

Sunset or Pivot

IBM’s buy-back folly shows what happens when a finite-growth company pretends there’s more gold in the mine. The cash would have served shareholders far better as dividends (or even better if they would have built their Watson Jeopardy playing AI into ChatGPT).

If you think you’re running Rung Ladderton’s ladder company, here’s the playbook:

How to Win as a Gold Mine

When the gang finally unmasks Rung Ladderton, he snarls, “I could’ve made it work, if it weren’t for you meddling kids!” The truth is simpler: no amount of villainy, or venture accounting, turns a non-recurring product into a compounding engine.

Gold mine companies aren't "bad" businesses. They can be incredibly lucrative and strategically valuable. But they are fundamentally different to run than a quintessential software business. The key is self-awareness. Know what kind of company you are. Mine your gold, be smart about how the business can grow, and know when to distribute the spoils.

Why bother being good at buying? Sure, you could become a vendor without ever purchasing from another, but you’d miss a critical perspective.

• In today’s markets, it’s almost always faster and cheaper to purchase a solution than to reinvent it. Good buying can be a quick path to solving your business problems if you can do it well.

• Your vendor choices express your taste and worldview. Buying and selling both express judgment about which problems matter and how to solve them. Thoughtfully buying helps you develop taste.

• Smaller companies need to adopt new tools quickly—only buy what clearly helps you reach product-market fit. That focus reveals what will get you to PMF.

• A clear “no” is an active, positive outcome; it’s decisive and builds the muscle for rapid transactional decisions. The same muscle is critical for sales.

Great. So what does it mean to buy well?

• Be relentlessly focused on your top 1–3 outcomes (ship faster, reduce burn, grow revenue) and open‑minded about the problems to solve.

• Reevaluate your problem list frequently and confirm each item is still worth solving.

• Communicate early and clearly when something drifts; surface the issue and propose paths forward.

• Hire and fire vendors quickly — track whether they deliver the promised value and act accordingly.

When selling into a disciplined buyer, flipping these same observations makes sales straightforward. It almost exactly lines up with classic 0 → 1 sales advice. 1

• Take the buyer’s stated priorities at face value and work with them to see how you can solve those problems.

• Keep revisiting the buyer’s needs to ensure you’re building something that really matters.

• Communicate proactively; if something breaks, align on the facts and fix it together.

• Hire and fire customers quickly — if you can’t deliver real value, let them go.

The good news: early‑stage startups are sold to constantly — payroll, banking, credit cards, payments, and productivity tools. Every purchase is a chance to sharpen your buying skills. Feed those lessons straight back into becoming the seller you wish you bought from.

Making a purchase is risky because you pay for items or services before you get to use them. You’re not sure whether the new candy bar or video game’s going to be worth it. You give someone your hard-earned money on faith that they'll deliver what they promised. Great businesses are built when their audience can stop constantly questioning whether they trust them.

• If I buy an Apple product, I think that all their products will continue to be near the best, that they’ll be greater together because the integrated experience is so good, I’ll always have access to the best apps, and that people will continue to care about the blue bubble as a result.

• If I like Coke, I believe that the taste/experience I enjoy will continue to be great, and I’ll continue to be able to find it anytime I want one. (Coca-Cola famously has a better logistics network in Africa than any government or NGO)

• If I buy Salesforce, I’m betting that Salesforce will continue to keep up with all the cutting edge functionality that keeps my team competitively efficient and organized. In doing so, I won’t be fired for buying Salesforce.

All enduring margin is a reflection of how much faith your audience has in you.

Find an audience that’s lost faith in existing options (highly fragmented, low NPS h/t Keith Rabois) or find an opportunity to build a 100x service (Google, Stripe, etc h/t Paul Graham). When you’re a startup, you will ideally find a bit of both. What you’re really trying to do is build in markets with huge gaps in faith. 1

• Airbnb entered the couch surfing market at a time when no platform handled payments, creating awkward and risky transactions between hosts and visitors. By processing payments and offering insurance coverage (up to $50,000 for both parties2), they dramatically expanded their potential market.

• Standard Oil heavily invested in refining its kerosene to dramatically improve safety standards. They quickly became the only option consumers trusted to be safe. Using this increased profit margin, Standard Oil rapidly scaled and famously bought out or drove out most competitors across the United States, reinforcing both their market share and the market's inherent faith in them.

• Stripe's first customers paid 5% per transaction—far higher than competitors' standard 2.7% + $0.30—to prove their front-end API and merchant-account-free solution was significantly more valuable. The initial premium helped create a feedback loop confirming their product was truly an order of magnitude better than alternatives.

A good way to build trust is through better UX and technology. By eliminating clutter and friction, reducing load times, and providing more reliability than existing options, you can earn users' confidence. At first, people might doubt how accurate ChatGPT is. But after using it successfully a few times and comparing its answers to Google searches, they start to trust it more. People keep coming back to ChatGPT because it's faster and easier than searching through multiple Google results. ChatGPT took something people aren’t used to paying for (search) and were able to find a premium against it.3

Higher prices enable better service, building customer faith that justifies premium pricing. Enduring businesses are built on the faith premium.

We will keep Muddy and Nototo active for existing users, but do not expect any future updates or large maintenance work (breaking bugs, chromium updates, etc). There are no updates to the terms and conditions, and all our products are now free.

I'm humbled by the thousands of you who tried, learned, and supported our products. Please reach out if you're interested in continuing our work or anything piqued your interest.

We will keep you posted on whatever comes next. If you're no longer interested, please unsubscribe!

Some personal thoughts, crossposted from my twitter X.

Failure is failure, and I'll have to live with that and move forward. Our country and the valley was built by greater fools. I'm glad to be one, and more fulfilled that I got to work with the best fools. We will never get our time back, so I'm thankful I spent it with them.

Grateful to Niko Bonatsos, Quentin Clark , Lachy Groom, Naval Ravikant, Charles Hudson and many others for giving us the space and patience to pursue weird. If you're brave enough to explore on the edges, I highly recommend working with these people. We need more of you.

I started to write a longer postmortem, but the story was simple. We built 3 products that found varying degrees of traction. Each time we reached real scale, our users actively rejected all of our multiplayer features. This forced us (a collaboration company) back to square one.

The wildest part of this wall: It was completely agnostic to however we positioned the product. It could be that the shape the app took lent itself to "knowledge management." It could also be people really just don't want to break silos. Great explanation here from Merci.

Last month, we just ran out of ideas on how to solve the lack of adoption on multiplayer. Muddy was still growing, but we didn't feel that it was right to take on cash offered to build a product we didn't believe in. We decided to return capital and close shop.

We compiled a more expansive retrospective on each of our products here, but please feel free to reach out if I can expand. I hope you pick up where we left off with the energy and curiosity these problems deserve.

sail & muddy: a retrospective

For what's next, Jimmy and I are going to catch up on our twenties. See the world, spend more time with loved ones, and take care of our bodies. Working with Jimmy over the last seven years has been the great joy of my productive life. Pick people over ideas or things!

Embracing the fallow, excited for whatever may come.