The future of EVs, with Rivian’s RJ Scaringe

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0:53 Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. This Masters of Scale live event presented by Atlassian was recorded at Atlassian Team Twenty Six in Anaheim, California. in instability or comfort in chaos is really actually important.

1:50 You have to go into it knowing this is like full contact, multi-dimensional chess. And you're doing it sometimes in the middle of the tornado inside of a storm. Multi-dimensional chess inside a tornado, perhaps also while making dinner, caring for a baby, and writing a Broadway musical. If you're leading a business right now, that description probably feels pretty accurate. So how does Rivian founder and CEO RJ Scarynch weather the endless storms?

2:21 For me a recognition that like Resilience. And Comfort. in instability or comfort and chaos is really actually important. With that, we have a whole process inside the leadership team of like checking our own assumptions. Like the world's changing so fast. The thing we thought

2:37 Six months ago, is that still right? This is Masters of Scale. I'm Jeff Berman, your host this week on the show, RJ Scaringe. He's the founder and CEO of Rivian Automotive. Rivian just launched the much anticipated follow-up to its first electric vehicle. This one is the R2. It's a crucial moment in the company's scale journey.

3:03 My on stage conversation with R J we dig into how he thinks about competing with Tesla. the hard-won lessons of building a company that makes both vehicles and software, and much, much more. Business is hard. It's not easy leading teams.

3:25 Leading companies. Services are hard, software's hard. Hardware's hard, logistics are hard. You're kinda doing all of them? Like how does that work?

3:34 I knew it would be difficult. It wasn't something I said, Oh, this is gonna be easy path. Uh there's certainly been aspects that are much harder. Uh but but a lot of the elements of building any business ring true within Rivian or whether you're looking at team building, organizational structure design. processes, tool sets, supply chains, but yeah, it's it's definitely it's a challenging business, but I I mean I'm having a ball.

3:57 How do you think about Teams working together when they work on such different parts of the business. Yeah, this is this is one of the things that's maybe most unique about building a car company. When you really look honestly at what's necessary. You need

4:11 many thousands of people to develop one product. That product. requires we have to be on the order of about forty million different decisions. To bring it to life. Forty million. Forty million.

4:23 And there's millions of hours of engineering time necessary delivered. So the only way for this to work is you have to put lots of people working in parallel. Uh, so you have ultimately like a team you know at full size and maybe five and a half, six thousand engineers working at the same time on the same product. And so it becomes a real exercise in coordination because you're not just Talking about

4:43 homogeneous teams of all the same background and all the same skill, you have chemists that are working, you know, battery cell chemistry. You have structural engineers working on the body design. Uh Teams working on designing electronics. Teams are working on building software platforms across the stack from you know the lower levels all the way up through the application layer.

5:04 And um and then you have to also build a go to market teams have sales teams, service teams And and then around that you're a manufacturing team, a supply chain team. So they're very, very different backgrounds, very different experience sets. And the risk is you end up with many little islands of culture, many little silos that operate very differently and

5:23 I think one of the One of the most rewarding things is when you see these very different skill sets with different backgrounds, often from different, um very different experiences. coming together around the common vision. And coming to together to create this amazing set of products.

5:38 But it takes practice and it takes practice around like what are the values of the business, how do we interact, how do we challenge each other? Do we allow for people to actively debate? Do we do we embrace that as as a organizational culture or behavior? So This is something that iteratively we've really worked hard at. But um Yeah, I think with these large organizations when you're building large, complex products

5:58 There is maybe the natural tendency is to have silos and have walls go up and to have The manufacturing team says, Well, if the engineering team would just make it easier to build, that we could build these things and the engineering team said, Well, the car could be so much cooler if manufacturer was in difficult. Those are like natural tensions. And learning to accept that there's gonna be different perspectives on how to solve the same problems is is really important.

6:20 When you've got forty million decisions that go into to making a product Not easy to manage. This is a lot. When there are disagreements within teams, I assume there's a team leader who makes a call. When there are disagreements between teams, how do you manage that? structurally, we've set up like decision processes where here's the vision for the product, here's what we're trying to achieve, here's the frameworks for making these Certainly it can't be me making every decision. It doesn't scale.

6:45 I learned that early. Um But Often you'll have these decisions escalate if there's not alignment. And we we often have times where there's a a point of disagreement. We say we there's a disagreement on how we're gonna approach this. We're gonna make a decision and then we're gonna all line around that decision.

7:02 And that process of accepting we won't always agree. There's just by virtue of the complexity of what we're building. But we ultimately have to build together. means that once a decision is made, everybody gets on board. You referenced it it doesn't scale and you learn that early if every decision runs through you. Was there a moment early on where you realized that that was a pain point that you had to solve? Well, so I'm I'm

7:23 I'm an engineer I started the company when I was twenty six and um Started the day after I finished my PhD. And I love to build things. I grew up restoring and building classic cars. And so um Not surprisingly but like day one of the business, the first thing I did is I got

7:38 my CAD station set up and I started designing parts. Like so I'm like, Oh, let me design this and And you know, for it's it's not as if I wasn't already thinking about what was gonna go into the vehicle. But very quickly. It's clear that like wow there's thousands and thousands of components and that go into a car.

7:55 This won't work if my job in leading the company is designing all the parts. I have to design the teams and get the teams to work together and participate in And creating scale. And so I think for any any time an engineer forming a business, there's there's a tendency to be really close to the product, which I think is fantastic. It's it's really a wonderful characteristic of of technical founders.

8:16 But you also need to recognize you can't be in every decision or in every meeting. And as the organization scales, finding ways to have influence or to impact the product. But to do it in a way that that doesn't lead to the whole team waiting to say well well what's you know, in Ravine's case, like what's RJ gonna say? And sort of paralyzed waiting for a decision to come from the top.

8:37 Uh so I I often describe like a car company as an exercise in enabling highly distributed decision making that's highly coordinated, which are two things that maybe don't always you know, go together. It's thousands of people making decisions. But it needs to come out as a product that looks as if one brain, one human

8:54 Did everything, which of course you you can't do. Th there's a theory of organizational growth. It's factors of one and three. One person at three, a ten at thirty, and so on. And what tends to happen between thirty and a hundred is to your point about silos, companies literally create divisions, right? It's like one of the worst words in a company you can use. As you were going through that phase. thirty to hundred, hundred to three hundred, et cetera. Um, was there something that you realized you had to do differently? Than than you'd done before, maybe than you'd seen other companies do. Yeah, many times. And um One of the things that I was I look back in hindsight and I say is is a

9:28 very fortunate that things played out this way. is Rivian was highly undercapitalized in the early years. The reason I say it's fortunate is allowed me to learn how to run a company. So my first time starting a business, my first time running a business. one of the things that was helpful for me is we we were able to grow slowly, but I was making mistakes. I was learning

9:47 But the impact of those mistakes was fairly small because we just by virtual of us not having huge budgets or a huge team. And so I I Through that I I directly experience the difference of a one person team, a ten person team

10:01 a twenty person team and it it was happening at a pace that I was sort of able to keep up my own learning. And I remember early on The first time we we were doing a Like

10:11 all hands every week. In the beginning it was like the whole company met every day because the whole company was all sitting at like around the same table. But There's a point where we all didn't fit in one room. So the Solution there was all the all hands would go to like a bigger room.

10:24 But eventually you get to a point where The room size doesn't matter. And you quickly learn that like disseminating and distributing information. both the decisions that are being made for the business, but also how to approach making decisions becomes a real key exercise.

10:41 And um I give this advice all the time to people starting businesses is you also recognize the organizational structure is gonna change All the time. And so you you need to be really cautious around getting overly fixated on this is exactly the structures. And the way I characterize it today is

10:57 The organizational structures The the The most efficient. way to try to organise people. To get work done efficiently.

11:05 But by virtue of it being a structure, it's not perfect. It's always gonna be imperfect. There's there's of course gonna be communication and decisioning happening. Like across the lines. And so we should not look at this as how we communicate or how we work together. It's how we're trying to organize ourselves to be as efficient as possible, but It will change. And so It looked very different at thirty people than it did at a hundred people, which looks wildly different than it does at

11:30 You know, uh let's say a thousand people today we have seventeen thousand employees and We we couldn't possibly all meet in the same room. We couldn't possibly have an open discussion amongst the whole team. And so I think that Like getting ready for that for me was really important. Yeah, at this point at team meetings in an NBA arena. Uh and at some point it may be an NFL stadium. One of the things I'm not sure everyone knows about Rivian is you also are a software company, not just for yourself, but you all made a decision to license software to Volkswagen. Um, which is at least nominally, if not actually a competitor.

12:00 Um why? Why? Fair question. Um Well I have to uh wind the story back a little further. So

12:11 Ear on in building the business. as um as an engineer. There's a desire to build everything. And so I I often joke that if if given infinite resources, given no constraints our supply chain would be we buy land and we'd extract resources and we'd we'd make

12:28 Yeah, aluminum smell we do everything. And of course, full vertical integration. No limits. pieces of earth and you're not even using it. I mean that's how far you're willing to go here. Unlimited constraints. Okay. And that's like the way At least I'm wired. I w I would left unchecked, I might end up there. Um

12:46 But Of course there are constraints, and those constraints are not only money, it's time, it's focus, and so you end up having to be very intentional around what you do build. Uh so you don't end up buying plots of land to extract. You know, raw materials. Which is funny'cause now we actually have done some of that, but

13:02 The way we looked at is we said there's a few areas we need to completely own. And so that was the software platform in the vehicle. To do the software platform well, we have to own all the electronics. And we're gonna architect the way the vehicle networks, the way the software's you know integrated into the vehicle. In a very thoughtful way where we consolidate

13:21 computers down to a very small number of what we call zonal computers. So rather than computers tying to a function, which is what Essentially every car on the road does today where you have a computer that corresponds to, let's say, the air conditioning system or a computer that corresponds to the seats and there's little ECUs supplied by third party suppliers with little islands of software on them.

13:40 We're gonna make a very small number of computers where we build all the software. And so I remember making that decision. And When Rivian was still much younger and we had Not a lot of money.

13:52 And our board said to me RJ, you're like you're Crazy. Like you want to computers and write all the software yourself. And I said this trust me. And I was very convicted. So I said something like

14:02 I was emphatic. I was like Trust me, this is what's gonna be most important for us from a competitive point of view and from a product differentiating point of view. And I Obviously made the case, we ultimately made that decision. But at the end of that conversation I said, look, you've if we do this really well Who knows, we could end up licensing this as another way to monetize this huge investment we're gonna make.

14:21 And everyone's like, ah, that's not gonna happen. Anyways, fast forward like a decade. And we did a five point eight billion dollar software licensing deal with the second largest car company in the world with Volkswagen Group. And This was after Volkswagen Group had spent an enormous amount of money trying to build

14:38 uh software architecture themselves. And what drove us to say yes to doing this wasn't just the the the financials of the deal, it really goes back to the core mission of the business and Core mission of the business. The reason I started it. was the desire to have

14:53 An impact on how we think about transportation. And to accelerate The speed at which we We is Consumers shift towards electrification and increasingly electrification coupled with

15:05 highly intelligent vehicles, so vehicles that are capable of driving themselves and vehicles that are capable performing a lot of tasks through software. And so as we looked at that, we said, Boy, we're gonna do that with our own products. We're gonna launch R two. This is a h our first high volume product we're launch we're actually launching it as we speak. That's followed by R three. You can imagine there's probably an R four, an R five. We're gonna continue to grow our revenue and the business. And we wanna be a company that's making millions of cars over time.

15:31 But we can also help enable creating really interesting and compelling products with other manufacturers. And I I say this really sort of remarkable. When we were thinking about that, we said the we thought the best brand to start this with would be Volkswagen Group. It because it's such a

15:48 broad companies, so many different brands, so many different form factors. It has some really incredible brands within it. Porsche Audi, of course the the volume brand Volkswagen. A host of brands in Europe. And we said, but that's a really interesting

16:02 exercise in showing how well we can productize this offering. And so we signed the deal and the first product launches next year. It's uh it's a product for Europe. It's a It'll be the lowest cost E V in Europe. It's gonna be very cool. It's called the I D one. VW I D one. So Google it, check it out.

16:17 But it's I'm so excited for people to buy it and Take the car apart. This is common in the auto industry. People buy the products, disassemble them and Benchmark. the benchmarking company is gonna be blown away. The simplicity and the elegance of the electronics and the network architecture.

16:32 Uh or what you know, in a big part enable this incredible vehicle to be so low priced. And so that Like ties right into our our mission. Which is great, but uh if I'm on your board, I think I'm at least asking like Well if the ID one is a hit.

16:46 And it's a competitor to the R two, R three, R four, R J, whatever you're gonna end up launching. Like, doesn't that cannibalize your own business? How do you run that analysis? Well Um well one part of our vehicle is software.

17:00 Um And so that's what we've licensed Volkswagen. But we didn't license them our self driving platform. We didn't license them our vehicle designs. But

17:08 I I say put all that aside, there's a There's a d a deeper held view within Vivian. That that like obviously comes from my perspective on this. Which is For us to electrify, for us to shift away from

17:22 dependents on fossil fuels and you know gasoline powered vehicles or diesel powered vehicles. It will only happen if we have A wide variety of great choices. And the auto industry is is unique in that it's so big. That it's unlikely

17:37 It's more than unlikely. It's unlikely and not exciting. To think about a world in which the hundred ish million cars sold every year on our planet are provided by one company and you have like two or three choices. Uh growing up as a car enthusiast, I think This is a space that benefits from from having lots of choice. And so

17:55 In the United States, for example, one of the things that I think has really stalled EV adoption. is we do have an extreme lack of choice. And so in the uh call it fiftyish thousand dollar price point, which is where the the majority of the market is. The the average price of a new car in the United States is fifty thousand dollars. In that price range today. Well now the R two's launch is different, but prior to R two launching, I'd say there's really one highly compelling set of choices, the model Y or the Model Three.

18:20 It's a model one, it's model three. And that vehicle you know generates fifty five to sixty percent market share for the whole A V market in the United States. That is not a reflection of a healthy market. That's reflection on a market that's wildly underserved.

18:34 And That's nothing it's not saying anything negative about the Tesla products. I've I've owned those products. They're they're great vehicles and and it's why they've accumulated so much market share. But we need other choices. We need different form factors, different brands, different Uh Yeah.

18:49 Not everyone is gonna want that exact shape or that exact form factor, that exact look. And so Riving can do a part in that. We're doing as much as we can. But we'll We're very happy to help others do that. And of course we generate meaningful profit margin on

19:03 Those the software business. And so I think of it as we m we make money selling vehicles and we make money Selling technology and they're they can coexist. Still ahead, RJ on competing with Tesla, how self-driving cars will transform our lives and more. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely. From Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode.

20:01 I hope to see you there. Humans will never be more intelligent than AI. There's gonna be two types of companies. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered.

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20:49 Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel. And be sure to check out the link in the show notes to subscribe to our newsletter. because you referenced Elon and Tesla. Um I have to imagine you've benefited from some of the tech Tesla backlash. I was having breakfast two days ago with my friend Lay Sulvin who founded TaskRabbit. That is a

21:17 Rivian driver loves your product, was like raving about it. Um, and she she asked me to ask you um one what what has given you the intestinal fortitude to go up against Elon and two What have you learned from going up against him that would help others who are fighting their own evil empires.

21:40 Hm. Uh I mean the way This is like I think a classic way to think about competition.

21:48 Uh which is It's an important thing. Is we focus on saying let's make incredible products. Let's make those products. Super desirable and let's play our own game.

21:59 And where I think Folks have failed in the tr in automotive. in competing with Tesla. Is where they say Tesla's been very successful with Let's say the model Y.

22:09 And rather than having deep conviction around building a product that's y linked to your brand. There have been a lot of model Y Copies. And so if you're like

22:20 take a number of the EVs that are in market that have been unsuccessful. And you were to draw like a a profile of the vehicle, the center line profile. And look at the vehicle packaging so where the seats You know where does everything sort of sit inside the vehicle look at the size and the dimensions. It is remarkable how many

22:37 Companies took the approach of saying, Well, Tesla's successful with this, let's make our own version. And the unfortunate thing is that is if you want to buy a Tesla Model Y, you don't want X Y Z company's version of a model Y. You'll just get the model Y. And so we've been

22:51 Really clear on Like if you take In the in the premium segment, the flagship. Space. We have an SUVR R one S.

22:58 And it's By a pretty significant degree it's this best selling premium electric SUV in the country. And so it you know significantly outsold the model X. Uh it outsells everything. Um

23:10 But it It's seven seats. It's got four tires, four sets of doors. Um it's very quick. So all those things I just said would have s you could have equally described the model X as that. But outside of those characteristics, the cars couldn't be more different.

23:25 And I think that's really important. It gets back to this point on variety and choice and so Tesla's was successful with model X, then successful with model Y. And we developed our two, we didn't say We want R two.

23:36 to try to copy model why we want it to be its own product. And so that's like informed a lot of how we think about The decisioning and we really Go back to what what do we believe? What's the philosophy we're approaching product development with? Uh, where are we gonna make trade offs, you know, between

23:52 cost and features and Performance and capability. Is everything's a trade off? Um And

23:59 are ultimately we we create this set of trade offs that lead into this product and we have a perspective that we think draws people in. And so I that's where I see the the important thing now. There's lots of noise around Tesla. I I always just uh Sort of.

24:13 Focus on the cars, you know, and and don't get drawn into that. You're running your own race. You're not you're not looking at or thinking about what's going on over there. Yeah, please. This is unique to cars. So I think in s in certain technology arenas. It's it's not like this, but in the auto space The largest car manufacturer in the world represents about ten percent of global demand.

24:35 And I I say that. This is not a space in which there's one winner. Th that's not true in all segments. Uh but it it

24:46 It is likely, I I believe, and I I hope There are many winners. I do think there is the potential of having less car companies in the future than we have today. Um because of some of the technology shifts that are happening. But I do think there's gonna be

25:02 Certainly more than five large Automotive players in the Western world that are Like the big dominant players. Maybe not more than ten, but more than five. And so Our success doesn't require someone else's fail failure and vice versa.

25:17 One of the ways you optimize for being in that five or however many there will ultimately be. is by finding advantages in distribution and creative ways to drive revenue. You recently did a pretty big Uber deal. Um could could you share um what went into putting that deal together and why that deal is so strategic for Rivian? Yeah, so we have put an enormous amount of focus on self driving.

25:41 And the fruits of that are just starting to come out. So we um when we launched our first products in twenty twenty one. They they were using What I would call like a one dot oh version of autonomy and it was

25:52 leveraging a mobile eye camera, which is a supplier, which provide the front camera. And it was part of uh a rules based approach to self driving. And the planner was not AI. The planet was actually a human written Like code version of how to drive. Like

26:07 It's over oversimplified a whole series of offense statements. And um That was what was used until twenty twenty one, maybe twenty twenty two. And that's what we launched with. But we fully understood that that wasn't

26:19 The future state and so in twenty twenty two or late twenty one, beginning twenty two, we began a process to completely redesign our system and Pull it fully in house. And with that designing a system instead around The sensors are things that we completely control.

26:34 very high level of compute in the vehicle and then building a large multi billion parameter model, a foundation model or a neural net. that we're training with the benefit of all the data coming off of our vehicles. And so that hardware stack took some time to build the first version of that launched uh about a year and a half ago in what we call our Gen 2 vehicles. And that data fly will start to grow. And we're now at a point where the data flywheels

26:58 Allowing us to start to roll out features that are Yeah, big steps forward from where we were in the past. And so later this year we'll have a full supervised point to point, which is which should be very similar to like Tesla's FSD. And that'll roll out to all of our Gen Two vehicles and of course our two. then next year we allow it to go unsupervised, so you can take your eyes off the road, which is really nice. So unsupervised, full point to point.

27:22 And then the next is it getting to full Capability to be able to be driven empty, meaning no one in the car. Or you not in the front seat. And that unlocks like airport drop offs or you can pick your kids up from school. And so we've been developing that for a while for our personal vehicles, so vehicles that you own. But we also see it as unlocking new business models, Robo Taxi being one of them.

27:43 And um we took the decision to partner with Uber. So we could focus on the tech and leverage them for their access to a a big distribution channel. So you of course they've a huge number of users or Again, talking about competition they're really a category of one. There's no one quite uh at their scale or at their um reach.

28:02 And so we were really excited we'll be deploying fifty thousand Robo taxi versions of R two. We start that in twenty twenty eight with with like paid Yeah, regular rides, but leading into that we'll have Vehicles on the platform with safety drivers with people in the in the front seat.

28:18 But it is pretty um It's almost like twist your mind when you recognize how much is gonna change over the next five years. I think in the world of autonomy, and this is true in all physical AI. And we've seen it play out in the world of you know, written AI or videos or images with with you know, Gemini and ChatGPT and platforms like that.

28:36 But The rate of change we're gonna see over the next five years, say between twenty twenty six and twenty thirty one. Is Demonstrably different. than the rate of change we've seen over the last five years.

28:47 So what do you see that might be science fiction to everyone watching and listening? That you're like, Oh, this is coming. So self drive is one that we've talked about for a while. And we've had like Bread crumbs of it.

29:00 Where it's implemented. In a way that if you're tech forward, it's easy to understand. You can drive the vehicle, but you're sort of still in the driver's seat providing some supervision. And that's been around for quite some time. The shift to the vehicle fully driving itself. is going to happen over the next couple of years and it's going to go from something that

29:20 uh is like a nice feature, you know, for maybe twenty, twenty five percent of buyers, it's an important feature to have. Like some level of self driving. Two, it's absolutely necessary. And I think it's a good thing.

29:32 It'll become unimaginable to have a car that can't fully drive itself. In the way that um It sounds funny to say this, but There was a time when all of our phones weren't connected. The phone was just a phone.

29:44 And Well they were connected to the wall, if you go back farther. Like you you weren't sending emails on your phone. You weren't you weren't doing anything other than maybe very simple text. And Now it's like you couldn't even imagine living in that world. It's it's hard to picture. And so I think that will happen with self driving. It'll just happen very fast. And I don't believe society fully

30:05 recognizes how fast this technology is moving. the ability to deploy these AI models to train much faster is just staggering how quick progress is happening, and it's so different than what it looked like. Yeah, it's sort sort of wild, but like Two years ago. It's just the rate of progress.

30:21 with transformer based encoding and and building these large multi you know, multi billion parameter uh multi dimensional models. Is um It's just mind blowing. It's and it's so exciting.

30:32 RJ, one of the other things that um is clear now is that the technology that you've built, the data that you have, the hardware capability, et cetera, lends itself to robotics to the point where you have spun out a robotics company. At what point did you realize that you had the opportunity to to do that? And how did you make the decision to spin it out rather than keep it inside Rivian proper? So I've been thinking about robotics for a while. Um robots for particularly for industrial applications are quite interesting. Because um Yeah, in the in the fullness of time when you we talked about what does the next twenty years look like, I think we're gonna see

31:05 A very diverse set of Mechatronic embodiments for different robots. You're gonna see almost like Like um different form factors with different capabilities. And so when you think of robots.

31:19 It's easy to sort of think of robots in a purely human form, so full humanoid robot. And we're gonna have those But we're gonna see. A diversity of form factors. Maybe not as broad as the biological world. But certainly a lot broader than just human shaped robots. We're gonna have robots that can do all sorts of tasks.

31:38 And some of those robots would be very similar to humans with maybe certain tweaks for their application. And some will be very different than humans. Um you know a good example of that is a car. A car that drives itself. It does not look like a human, but it's doing something that humans used to do. And so We started really studying this with Enrivian to look at it through the lens of manufacturing. And about a year ago I

31:58 I came to the view that We should absolutely go build this business. the addressable market is enormous. It's like a third of the world's GDP is in industrial labor. industrial labor is a real shortage for manufacturing goods and it's it's a It's a real challenge given our cost for sure in the United States for us to be competitive globally in manufacturing and because of that we've seen

32:17 a very significant portion of manufacturing in the United States and for that matter in the Western world. Move to very low cost countries. And so I I deeply believe that the way we bring a lot of that manufacturing capability back

32:30 into the United States and into the Western world. is not with asking people, Hey, you're gonna have to make one eighth what you make today and you have to work Seventy hours instead of forty hours. It's using technology and using robots. Mm.

32:41 in conjunction with people. Uh to run much more sophisticated plants. Anyways, long way of me saying I I decided to start a company. And I I

32:50 So enormously excited by this company and and what we're building. But um That was late last year. We've raised a lot of capital for it. Uh and so we're We're moving very quickly. to deploy our first robots into manufacturing applications with Rivian as a first customer.

33:05 But ultimately with the goal of being in many manufacturing plants uh for many different types of products uh quite quickly. And was the decision to spin it out because you could unlock more value and have more freedom not as a public company to do what you wanted to do there? Yeah, I mean the the scale of this is huge. So to build Like the goal is to build one of the largest robotics companies in the world and to do that you need A l a lot of capital, more capital than Rivan was able to to invest at this point. And then we also wanted to create

33:31 Like absolute. Clarity. a focus within this business on building and deploying robotics at scale. And so it's for me really enjoyable because I've

33:42 I've been building. Rivine for seventeen years, as we just described, I've learned a lot about building a company. And so I often get qu asked the question like what would you do differently? And I now I'm having the chance to Build another company from scratch.

33:55 In this case it's um you know, it doesn't have the same capital constraints that Rivian had, so it's going very, very fast, very quickly. But it's uh it's as if like the last seventeen years with Rivian was training for how to run this other business. What's the biggest lesson you've applied from your your growth at Rivian to to the robotics company. It's a lesson I apply within Riving as well.

34:16 I think that When you're looking at an overwhelming large Challenge, like a big tactical task. Uh, and especially if you have People that are watching, let's say investors.

34:30 Or board. It is very common and lots of businesses do this. that don't contribute to making progress. But generate motion.

34:41 And so Th this is the curse of like Infinite do loops of demos. And some of that very unfortunately is necessary. If you don't have the ability to raise capital very quickly, you end up Spending a lot of time

34:53 Building presentations. You know, building mock ups of what you want to build. To convince somebody that's a good idea. But the reality is a lot of that is just a waste of time. And so

35:03 We've been Like within Rivian, this is true within Uh within Mind robotics this is true is we're very focused on making progress, not motion. And so we actually have a a a expression said, Make progress, not motion. So

35:18 That means It's very enticing to say, Let me just get my CAD station out and start drawing parts or Let me start like generating a model. Let me just I'm just gonna spool up these sixty four GPUs to like run a you know, do a run of the model really quick. without being thoughtful in planning. And so what's the architecture, what's the intent, how does this work cross functionally?

35:38 And so being very intentional in building things. actually allows you to go much faster later on. And so R two is a great embodying that within Rivian, where the program is ramping much faster than R one. It's much smoother, but we

35:52 were like much more thoughtful in how we went about developing it. versus the sort of Chaos and lack of planfulness that existed on our first set of products due to immaturity of the business, immaturity of our processes and systems. On the R two, the question I really want to ask you is I've given you my hundred bucks. Can you do you know so we can move you up the list or we'll talk about it off stage. It's sitting outside. Great. Awesome.

36:15 To to get Arrivian down to this price point. How do you decide what goes into it and what gets left out? I mean a lot of it's subjective. Um So there's I'd say there's like three big categories of of what ultimately is gonna drive costs. So the first is Engineering the product to deliver the same capabilities, but in

36:34 More cost effective way. So it's Part consolidation, part elimination, maybe new processes. The second is Yeah, heightened supplier leverage. And this is a

36:44 very important category for Rivian when we launched R one. You have to imagine imagine going into a supplier. a windshield supplier and saying, I want to buy windshields and I say, Well Yeah, well tell me about your company. Well well, we haven't sold any cars yet. Well, can I drive one? Well no, it's not ready to drive.

37:00 Um are you convinced customers don't like it? I'm really convinced. And so you end up in a situation that the suppliers are making a leap of faith on our one that the brand was gonna work, that we could execute the product'cause the suppliers have to commit way before the product is like in production, obviously. And so We were carrying an enormous

37:19 Call it. first time tax or You know, additional costs just because of the risk factor of of You know, launching a first product. Our one resonated so well, the brand connected. Uh all the things that

37:34 Sort of you hope will happen it happen in terms of the brand. coming across the world in the way that we wanted it to. Such that when we went to R two, we had all this supplier leverage. Suppliers are much more willing to work with us. And then the third is content. And the content decisions are um

37:49 Yeah, they're they're They're very subjective. And so I I often some some will say like Why did you make this decision? And I I think often their perspective is like we forgot. Like on R one has a really good example.

38:01 We didn't put a glove box in the car. So we we have a really big center console. And uh With some We wanna use the space and

38:09 the area the glove box would go to put actually a bunch of computers in there. And we can make the front trunk a little bigger. And Also saved us some costs so we could put like more money into suspension of the areas. A lot of people disagree with that. We reflected. We said, You know what, we think

38:23 We're gonna take that decision differently in R two. So on our two, we have two glove boxes. And it's like there you go. Yeah. The sweet spot might be in between. I mean, one and one and pick a number. But it's like a very good example of it's not like we forgot. It's like oh shoot, we forgot to put a glove box in our one. No, it was a very intentional decision. And so there's

38:42 As I described, there's millions of decisions. It's like the Bob Dylan line, like where you can make some of the people happy some of the time. Uh it's just a challenge to Get every single feature that everyone wants. And this is why it's so important. Have a very small number of people that make the like very customer facing decisions. One of the things we do now

39:00 To help make those decisions thoughtfully. Is on the first six months of a program. We don't allow more than fifty people to be involved. We learned this. Uh Because Rivan on R one naturally had this. The team was small, we grew into a larger team.

39:15 As we finished our one. We said let's put that whole team in R two. So R two went from like So from day one to like day ten, it was like thousands of people and it was like Whoa we can't make progress. We have all these decisions to make and there's way too many people. And so we reset the program and said.

39:30 Everyone from that was on this focus on making improvements to R one while we define the architecture, define a lot of these big decisions. Get like the rough pieces all in the right space. And so put this very small like swap team together. And that's I I'm doing that with in mind. We did that with in Rivian Far Two, we did that with R three. We're doing that on our future

39:50 You can imagine R four. to get these really small, highly cross functional teams to make these trade offs that are inherently gonna have a lot of subjectivity to them. I wanna close by Asking about we we talked about the the pace of change being truly unprecedented.

40:05 And and it's it's AI, of course, but it's not just that. I mean, it's dizzying, right? I mean we've got you know, trade issues with China, we have climate change, we have shifting EV subsidies in in a more niche way. How are you staying on top of it and how are you working with your team to make sure that they're staying on top of these ever evolving circumstances? I think If you're building a business today.

40:31 You have to go into it knowing this is like full contact. multi dimensional chests and there are And there's and you're doing it sometimes in the middle of of a tornado inside of a storm. Things are moving. And um

40:46 really critical that you have a highly flexible mindset. So you need to be convicted on on the the vision and the mission. But she meet flex one a lot of the details. And You know, for for Rivian. we launched the the company, we launched three products within six months in the middle of a pandemic, which was

41:02 But we did not plan for like work from home in twenty twenty as we're trying to build a plant and trying to plant into something that can operate. So it's maybe the the most challenging environment to launch a plant into. Uh we then had huge supply chain challenges in twenty twenty two, twenty twenty three.

41:18 Where You know, I was flying around begging suppliers to get parts. In all of those situations it's built for for me. A recognition that like resilience

41:30 And Comfort. In uh in in instability or comfort in chaos is really actually important. So we With that we have a whole process inside the leadership team of like

41:43 Checking our own assumptions, like the world's changing so fast. The thing we thought Six months ago, is that still right? And so I I think businesses that are like sitting still or head in the sand, they're just gonna have a really hard time in the world of the future. Things are changing faster, whether those are exciting things like the advent of of AI, completely remapping how we run our businesses.

42:03 or rather the more challenging things like global conflict. you know, uncertainty and and instability that you have to manage around. Well, we can't wait to see what you all do next. It's hard to imagine a more compelling guest for the first live podcast recording from Atlassian stage. RJ, thank you so much

42:25 Thanks again to RJ Scorange for joining us, and a giant thank you to the entire team at Atlassian for hosting Masters of Scale as part of their incredible event, Atlassian Team 26. I'm Jeff Berman. Thank you for listening. Masters of Scale is a Wait What original. Our executive producer is Eve Tro. Senior Supervising Procer is Trisha Bobida. Associate Producer is Masha Makatanina. Video editor is Noah Walstein. Senior town executive is Stephanie Stern. Mixing and mastering by the audio boys, Aaron Bastanelli and Brian Pew. Original music by the legendary Ryan Holiday. Our head of podcast is Le Tal Malad.

43:16 Visit mastersofscom to find the transcript for this episode and to subscribe to our newsletter. And Be sure to check out her YouTube channel.

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