01:25:38 · Ethan Thornton, Ty Morse
And if if you're willing to, like, just start back where you start or go back to where you start and rebuild your thing, that makes it very, very easy to think about spending down specific product lines or specific ventures we take as a business. Like, at some point, I fully plan to be manufacturing commercial aircraft. Like, I think it is an embarrassment that Boeing is the company that does this for America. I think it's an embarrassment that that has actually gotten worse, the commercial air travel experience over the last few decades. Like, I plan to do that. And I'm starting to line up bets in that direction. But if I have to spend that down, that will be significantly less painful. And so you can only earn the right to do these things if you're okay spinning them down at the right time and if you're the most aggressive about it. But folks folks usually overestimate the risk of doing stuff like this and underestimate the risk of not getting done the mission that needs to get done because you've been so cautious about, like, this is my one thing for the next five years. I think in a [01:26:33] S0: lot of situations, the biggest danger to most companies is inaction and not taking actions that may be tough short term, but are the right move with the mission in mind and with the long term focus in mind. Have there been any other like major decisions where you had to decide this is not going to be pleasant, people are not going to like this, but I know it's right?
01:26:53 · Ethan Thornton
[01:26:53] S1: I'd started the business in Austin. This is like three months after the hydrogen thing. So like already a very hard time, but I had started the business in Austin. And this was back when Austin was like this new emerging hub post COVID. I'm from about an hour and a half from Austin. Again, why it's important to separate decisions. I did make that decision partially because of that, and I think that's part of what led me to make the wrong decision. And Austin was cheap. I had like $5,000,000 to employ, so I was like, I need to be in Austin because I'm gonna run out of money in California. And so we built in Austin. We got to, like, 40 employees in Austin. I stood up a shop. It felt like a huge shop at the time. Small shop, 20,000 square feet, probably a couple million dollars of... No. Probably a million dollars of CapEx. And we're hiring and hiring is so brutally painful. And it starts... A theme starts to emerge and it's like, LA is where the talent is. And I I go into our applicant tracking system and 98% of our talent is in LA. So I'm like, crap. This is the wrong decision. So then I flew to LA every Sunday for, like, three months in a row. I... This is hard hard time in life. I was like, I still do this, I guess, but six hours a day... Six days a week, and then I'd fly Sunday morning to LA, fly back Sunday night, and I'd meet with, like, 10 or 15 candidates. And it wasn't interviews. It was literally, like, discussing, hey. Here's my company. How attractive is this company in Austin? How attractive is this company in LA? And overwhelmingly, people are like, I want to join this company, but I have kids, and I I just cannot leave and and pull my kids up. And so then I was like, okay. We need to be in LA. This is one of the weakest moments of leadership I've had in the company. I said, I wanna be in LA, but I need everyone to want to be in LA. I'm gonna try and bring people along for this decision. And folks have been watching me go to LA. They knew that this was the dynamic.
01:28:47 · Ty Morse, Ethan Thornton
[01:28:47] S0: For, like, 12 times at this point. Yeah. Over three months. [01:28:50] S1: Yeah. People knew this was the dynamic. I think they probably knew it was better for the business, but they also had kids here and liked the company. And then some of them wanted to move and couldn't move. And I walk into the room and I'm like, okay. We're gonna make a decision. Raise your hand if you wanna stay in Austin. And I was trying to, like... I expected everyone to say based on how abundantly obvious it was based on data that we should be in LA. Every hand went up to stay in Austin. Raise your hand if you think it is in any world the right decision to move to LA. No hands went up. And in that moment, I was, like, very clear I had, like, executed super poorly as a leader. And you can't excuse these things. Like, I should have done better back then, but also this is, like, nine months into the company building process. I had no idea what I was doing. My only real job had been as an auto tech, and this is all unfolded really quickly. If I had to do that again, I would deeply deeply bring people along for that journey and convince them along the way, hear their input along the way, but make it very clear that this is a decision I own. Like, is not a committee decision. But I was I was trying to be a good leader and try to make it seem like a committee decision, expecting the decision to go my way. So then, like, I was crushed. I had to come back the next day and be like, alright. We're moving to LA.
01:28:50 · Ethan Thornton, Ty Morse
[01:28:50] S1: Yeah. People knew this was the dynamic. I think they probably knew it was better for the business, but they also had kids here and liked the company. And then some of them wanted to move and couldn't move. And I walk into the room and I'm like, okay. We're gonna make a decision. Raise your hand if you wanna stay in Austin. And I was trying to, like... I expected everyone to say based on how abundantly obvious it was based on data that we should be in LA. Every hand went up to stay in Austin. Raise your hand if you think it is in any world the right decision to move to LA. No hands went up. And in that moment, I was, like, very clear I had, like, executed super poorly as a leader. And you can't excuse these things. Like, I should have done better back then, but also this is, like, nine months into the company building process. I had no idea what I was doing. My only real job had been as an auto tech, and this is all unfolded really quickly. If I had to do that again, I would deeply deeply bring people along for that journey and convince them along the way, hear their input along the way, but make it very clear that this is a decision I own. Like, is not a committee decision. But I was I was trying to be a good leader and try to make it seem like a committee decision, expecting the decision to go my way. So then, like, I was crushed. I had to come back the next day and be like, alright. We're moving to LA. [01:30:07] S0: At that point, did you have to basically let everyone go or how did that work?
01:30:11 · Ethan Thornton
[01:30:11] S1: No. And I would not do this again this way. Like, this is... The biggest reason for action is to learn. You and I talked about that earlier. So, like, I learned how to do stuff like this. It's been several years since this happened. I wouldn't do that again. But in the in the process, basically, it was... We had to be in LA. Like, we're hiring, like, an engineer a month in Austin, which, again, when you have to create deterrence in three years, that is that is not okay, which is import... Again, why it is important to make these decisions based on mission. Like, if this were, like, a money based decision, I'd be like, well, my odds of building... Making x money here versus y money here. It's a very muddled decision. It's like, I need to deliver capability on this timeline to prevent what might be either a world war or a loss of the AI race. The idea of having to have this hard conversation with, like, 40 people and say, you know what? I'm really, really sorry. But, like, for the sake of the world, we have to move to LA if we want engineers. It does get easier. The decision and the explanation process. So I ended up getting most of them to move. So there... That kicked off this whole, like, two month process of, like, convincing people to move. This is also at a very hard time in the company. Like, today, this would be very different. This is when we had, like, five months of runway. Stuff was kind of a a shit show because we just spun down hydrogen. I frankly was not doing a very good job executing in the company. I think there were, like, two people on that team that we wanted to stay with the company that ended up not leaving Austin. And we picked up and we moved to LA altogether, which was such an incredible moment for the company. Like, that's the weird thing. These things are objectively mistakes, but you also look back and they're very important for how you got to where you are. Like the hydrogen thing, if I had to do it over, I wouldn't go to execute the hydrogen thing. But also don't think we ever would have been able to raise capital or win contracts or attract talent without it. Same on the awesome thing. Getting to LA, it was this interesting moment as a company where we all showed up in this factory. Very, very, very few of us in this wide open factory, a bunch of Texans that didn't know anyone in California.
01:32:12 · Ethan Thornton
They knew nothing about California. All we had was, like, the ability to, like, hang out with each other and, like, work together, and it was a great positive filter. The only people that picked up and moved across two time zones were the people who fundamentally wanted to be there for the mission. Because it also certainly wasn't for the money given the stage of the business. So ended up being people who are there for the mission. Right? And you... You'd burn the boats. Like, I I read... And Cortez is not someone to to emulate in anything he does, but, like, burn... Burning the boats is is is a good strategy on occasion. I would have liked to have executed it on purpose. And don't get me wrong. It's hard to predict. I think the company would certainly be in a much better spot if we're in LA. So I'm not saying I'd do it again, but it did have this benefit of all of us just being so obsessive for such a period of time and forming this very, very distinctive pocket of culture in California that has actually scaled a lot with the business.