Competing to Build the Fastest-Growing Energy Startup Ever | Base Power, Zach Dell & Justin Lopas

Summary

Zach Dell and Justin Lopas, co-founders of Base Power, discuss their mission to become the fastest-growing energy startup ever by building the largest distributed battery fleet in the world. Their competitive advantage is a cost structure advantage achieved through vertical integration and technology - they handle everything from customer acquisition through long-term battery maintenance, allowing them to offer the cheapest and most reliable electrons to customers.

The company operates with what they call “base pace” - an intense bias towards action where they minimize the time anything sits in their court. In just two and a half years, they’ve grown from 40 employees to 240, enabled by hiring experienced leaders early who know how to manage and scale. Their leadership team - including co-founders and first hires from SpaceX, Ramp, and Stripe backgrounds - was assembled in the first 20 people and operates with high ownership in a super decentralized structure.

Base Power’s flywheel is simple: vertical integration and technology lower costs, lower costs yield higher returns, higher returns enable lower prices to customers, lower prices drive more demand, more demand creates more scale, and more scale further lowers costs. They’re now building their Gen 3 custom battery hardware (after learning from a 6-month Gen 2 mistake), establishing their first factory across the street from engineering in Austin, and expanding beyond Texas’s retail choice market by partnering with utilities in other states.

Highlights

”Lower costs, higher returns, lower prices, more demand, more scale - there’s your flywheel”

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“We vertically integrate and develop technology to lower our costs. Lower cost equals higher returns. Higher returns means we pass on those returns as lower prices. When price goes down, you have more demand. More demand leads to more scale. More scale leads to lower cost. There’s your flywheel.” — Zach Dell, 0:00

”Minimize the seconds the ball is in our court - that’s base pace”

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“We have a pretty intense bias towards action. In any interaction with a counterparty, the ball is either in our court or theirs - we just minimize the seconds it’s in our court. That allows everything to move faster. We call it base pace - as fast as reasonably possible without breaking too much.” — Justin Lopas, 1:00

”If you’re not breaking something, you probably haven’t pushed far enough”

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“We’ve grown from 40 employees to 240 in 10-12 months. Things definitely do break and that’s accepted. If you’re not breaking something, you probably haven’t pushed it far enough - that’s the general mantra.” — Zach Dell, 4:29

”Our first installer was a random guy from Craigslist - Darren may not have been sober”

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“We didn’t start on our first installation with a Base electrician. He no longer works with us. It’s just a random guy that Jared found on Craigslist. Darren may not have been sober. But that’s where we started.” — Zach Dell, 28:30

”We lost 6 months on Gen 2 - Elon says burn the boats and skip intermediate steps”

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“Gen 2 was a mistake - we lost 6 months pursuing white-labeled custom hardware. Should have gone straight to fully custom Gen 3. Learned from Elon: burn the boats and skip intermediate steps. Go directly to the end goal.” — Justin Lopas, 9:31

”Your intensity is mirrored exactly by your team”

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“Frank Slootman balances intensity and focus. What you bring in terms of intensity every day is almost exactly mirrored one for one with what your team brings. The leader’s mood sets everything.” — Zach Dell, 15:10

Key Points

Cost structure flywheel (0:00) - Vertical integration lowers costs, higher returns get passed to customers as lower prices, lower prices drive demand, demand creates scale, scale lowers costs further
Base pace culture (1:00) - Intense bias towards action, minimize seconds the ball is in their court with any counterparty
Metrics on screens everywhere (1:47) - Team-specific dashboards with green/yellow/red indicators; “customers in bad state” must always be zero
SpaceX-inspired practices (3:43) - Jared (software lead) brought TV metrics displays from SpaceX experience
Decentralized leadership (4:07) - Set north stars and let capable leaders across functions lead in their own ways
40 to 240 employees in 10-12 months (4:29) - Scaled rapidly due to strong talent network and passionate mission
First 5 people became leadership (5:53) - Zach, Justin, Jared (first hire), Dana, Cole, and Dino formed leadership team from the beginning
Mission unchanged from day one (7:42) - Lowering cost of delivered electricity has been constant; original 10-page memo still describes what they’re doing
Gen 2 hardware mistake (9:31) - Lost 6 months pursuing white-labeled custom hardware instead of going straight to fully custom Gen 3
Burn the boats (10:32) - Learned from Elon to skip intermediate steps and go directly to the end goal
Production hell is summation of problems (11:10) - No single hard part; it’s machine lead times, hiring, real estate, and hundreds of small-to-medium issues combined
Texas permitting solved via legislation (12:17) - Supported a bill in the last legislative session that solved permitting challenges
Seeking feedback aggressively (14:08) - Ask specific questions like “what behaviors would you like to see more or less of?”
Frank Slootman admiration (15:10) - Balances intensity and focus; leader’s mood is mirrored exactly by the team
Saying no to distractions (16:00) - Could do generation, different retail products, different states - almost none should be done right now
Gemba walks (17:51) - Toyota Production System concept of management going to see the actual thing at the actual place
Factory across the street (18:53) - Negotiated deal for Base Factory One to be 2-minute walk from engineering team in Austin
Descoping pulls in schedule (19:40) - Deleting parts, processes, and skipping unnecessary steps is fastest way to accelerate timelines
Specific delivery dates (20:15) - “November 3rd” not “Q3” or “February” - tight measurement drives urgency
Engine of success presentation (20:40) - Quarterly playbook presentation explaining how they win, given to entire company
Sacred lunch time (23:20) - 12:00-12:30 on everyone’s calendar; leadership sits with new hires and frontline workers
Dog fooding the product (24:15) - Cole (head of growth) did undercover boss installation at his parents’ house in Dallas

Mentions

Companies

Base Power (0:38) - The distributed battery company Zach and Justin co-founded
SpaceX (3:43) - Where Justin and Jared worked; source of metrics dashboard culture
Tesla (11:01) - Referenced for Model 3 production hell fires in Fremont in 2018
Ramp (3:55) - Company that contributed to Base Power’s culture practices
Stripe (3:55) - Company that contributed to Base Power’s culture practices
Raising Canes (25:30) - Todd Graves greenlights every Instagram reel; $20 billion company
Toyota (17:51) - Their production system bible and Gemba walks concept
Snowflake (15:10) - Context for Frank Slootman’s leadership style discussion

Products & Technologies

Gen 1 battery (9:41) - 30% custom, 70% off-the-shelf product they started with
Gen 2 battery (9:51) - White-labeled custom hardware designed by third party - the 6-month mistake
Gen 3 battery (10:02) - Fully custom, fully designed and manufactured by Base Power
Base Factory One (18:53) - Production facility across the street from engineering in Austin

People

Zach Dell (0:38) - Co-founder of Base Power; finance background
Justin Lopas (0:38) - Co-founder of Base Power; SpaceX background
Jared (2:40) - Software lead, first hire, set up first TV metrics displays; from SpaceX
Dana (6:16) - Leadership team member, one of first five hires
Cole (6:16) - Head of growth; did undercover boss install at parents’ house
Dino (6:16) - Leadership team member, joined couple months after first five
Gab (26:00) - Team member for website/copy decisions
Yash (26:00) - Team member for website/copy decisions
Frank Slootman (15:10) - Admired for balancing intensity and focus
Elon Musk (10:32) - “Burn the boats” philosophy; worked with Justin at SpaceX
Brian Chesky (13:45) - “You have to grow ahead of your company” referenced
Todd Graves (25:30) - Raising Canes founder who greenlights every Instagram reel
Sam Walton (22:30) - Talked with truck drivers at 5 a.m., flew plane to determine Walmart locations
Matt (24:00) - Base Power member in Houston whose home Zach visited
Ty Morse (0:38) - Host of Relentless podcast

Surprising Quotes

“If you’re not breaking something, you probably haven’t pushed it far enough is kind of the general mantra that I have.” — 4:50

“The hard part about production is not any one thing… It is the summation of all of the small to medium-sized problems.” — 11:30

“What you bring in terms of intensity every day is almost exactly mirrored one for one with what your team brings.” — 15:45

“We didn’t start on our first installation with a Base electrician… He no longer works with us. It’s just a random guy that Jared found on Craigslist. Darren may not have been sober.” — 28:30

“It’s like you kind of default into that actually because it’s like more comfortable. You don’t have to worry about the problems as much. It’s sort of like less mentally taxing… but that’s terrible.” — 23:50

Transcript

0:00 If you’re in the market for electrons and ours are the cheapest and the most reliable, you’re going to buy them. The competitive advantage for us is a cost structure advantage. And the way we get to a cost structure advantage is through vertical integration and technology. It’s doing the entire thing, so to speak, from customer acquisition through long-term maintenance of the battery on the home. Every sort of aspect of the whole thing as opposed to piecing together a bunch of external parties.

0:20 We vertically integrate and develop technology to lower our costs. Lower cost equals higher returns at the asset level. Higher returns at the asset level means we pass on those returns to the customer in the form of lower prices. When the price goes down, you have more demand. More demand leads to more scale. More scale leads to lower cost. Lower cost leads to higher returns. There’s your flywheel.

0:38 This is Zach Dell and Justin Lopas from Base Power. I love this line, violent execution. When was the most recent time that you felt like you were violently executing? So that was not a term that we coined. It was coined by a third party. And it’s kind of - we think more about this concept of base pace and the cadence with which we operate. So we have a pretty intense bias towards action here. We do things with extreme levels of urgency. We don’t like to wait around.

1:15 We had this concept I think Justin articulates well where in an interaction with a counterparty the ball is either in our court or their court and we just like minimize the seconds that it’s in our court and that allows everything to move faster. And so there’s not like oh yeah we were executing super violently yesterday at 10 a.m. We every day show up and just do the thing and get to work and don’t stop ever and try to make progress all the time at this pace that we kind of call base pace which is like as fast as reasonably possible without breaking too much.

1:47 You guys have screens all over your office. They all have metrics on them. I know that you’re very conscious about which metrics to focus on and if it’s a good metric it should be on a screen and if it isn’t on a screen it probably doesn’t matter. How did you decide like which metrics matter to you?

2:00 You know it’s honestly it’s team by team. So if you look at if you walk around the office and you see a team sitting under a TV that has a bunch of metrics on it, it is metrics that that team specifically cares about. And what you’ll find for the most part hopefully is that if the metric is good, it’s in green. If it’s okay, it’s in yellow. If it’s bad, it’s in red. It’s like there’s this concept in production where you want things to be super obvious and totally blatant if they’re bad.

2:28 And we have that same concept here with metrics on the screen. Which ones to focus on? It’s up to the team leader. We have a pretty - I’d say our leadership style generally is like very high ownership on the individual team lead. And so Jared, who leads our software team as an example, is the one - him and his team set what metrics they care about, what red means, what green means, and what yellow means in terms of each individual metric.

2:52 And like they need to be not only like just a metric, a random metric just to see what’s going on, but like something that is actionable. So for instance we have a queue of customers that are like we say in a bad state. This means like they fell off or we forgot about them in some way or we had a hole in the process or they fell out of the process in some way. That number should always be zero and therefore the only green number is zero. Everything else is red which is bad. And that sits over our deployments team who handles the entire deployments pipeline as an example.

3:20 Did you guys come up with that on your own? I’ve seen this at other companies and so it’s also not something super novel but I think we over time made it a key component to the culture. Jared who I was mentioning, just our software lead, set up the first few TVs in our first office which was a house down the street here. And those TVs had very specific metrics on them. I think it’s something that he learned at SpaceX if memory serves.

3:43 Yeah. I think we try to take the best things we’ve seen from other companies, whether it’s my background in finance world and Justin and Jared’s background at SpaceX or other people who come from Ramp or Stripe or whatever it might be. And we say, “Oh, that thing that you brought is really good. Let’s do more of that, right?” And we try to just kind of make it our own.

4:05 And to Justin’s point, like the company is built in a super decentralized way where we have extremely capable leaders across all different functions and they lead in their own ways and we don’t really tell them how to lead. We set north stars. We make sure the company is all kind of speaking the same language, but we really rely on strong leaders across the company to identify these metrics, hold the teams to them, drive them towards outcomes in a way that is very self-directed.

4:29 I know that you guys are only like two and a half years old. And I’m pretty sure I was talking with - I forgot what his name is, but he basically said that in the last roughly 10 to 12 months, you guys have grown from like 40 employees to 240. What has that been like? Because I know that typically a company can only grow at a few multiples every year or else things start to really break. How has that been for you guys?

4:50 Yeah, I mean things definitely do break and that’s accepted and understood. We obviously try to have them break as little as possible, but like if you’re not breaking something, you probably haven’t pushed it far enough is kind of the general mantra that I have.

5:05 So in terms of headcount growth, we’ve been able to scale pretty rapidly because we’ve built out a really good talent network. We have a great talent team that leads a handful of folks that have sort of unique skill sets in this area and because of the press and all of the stuff that we’ve been doing, we’ve gotten a lot of notoriety and folks that are interested in the company.

5:25 I think also when we bring somebody in the office for an on-site or we talk to them on the phone, our passion for the mission and our passion for the subject matter comes through and the best people want to work with people that are passionate about what they’re doing. And so that’s also allowed us to attract folks.

5:40 And look, we’ve also hired a lot in our front lines. So we have a team of over 100 now that’s between our warehouse manufacturing locations and our electricians in the field. And that’s been somewhat easier to scale just from a numbers perspective just because there’s folks sort of in those domains already and we’re able to hire relatively quickly there.

5:55 Yeah. And reflecting on it, I think it’s been made possible because we have a super strong leadership team that has managed big teams before and that leadership team was - we’re like all in the first 20 people and all of them except one in the first five people of the company, right? And so we hired these people. I mean, myself and Justin, Jared, our first hire, Dana, Cole, and then Dino, who came a couple months later, that’s the leadership team, and they’ve all run big teams at big companies working on really hard things.

6:25 And so, you don’t have to teach these people how to manage. They know how to hire. They know how to lead. They know how to coach. They know how to let people go when you need to let people go. And point them in a different direction or give them more rope and ownership and scope - these aren’t things that like we have to go teach. They just know how to do it. And they’ve been here since the beginning. So, they’re just like super aligned with the mission, the vision, and the strategy.

6:50 And I think that has made it a lot easier to scale versus had we hired a bunch of very junior people early and then tried to bring in senior people over them. That would have been a little more difficult.

7:00 So, you guys like actively chose to not hire people early days for like slope, but more like for actual domain expertise? It’s - I don’t think it was that. I think we just said we got to get the best people on the planet here. Like, where are they? And we went and found them. And they happen to - and we’re still doing that obviously but like now we have a lot of the people in the seat that we need and so we’re going and finding, filling other seats.

7:25 I think we just - Justin and I both spent a lot of our time in the first year of the company on hiring, recruiting, getting the best people in the door, convincing them that they should join us and that has paid dividends is kind of more the point I’m making.

7:42 Interesting. How much from the initial idea or plan that you guys created has kind of stayed through versus what’s shifted? I’d say the overall theme and mission of lowering the cost of delivered electricity to humans and Americans has not changed. That’s been a northstar for us for a while.

8:00 How we get there certainly has changed. So, or to a degree at least has changed. We’ve learned a lot along the way in relation to how you access the electricity markets, how you position the product, what the product offering is. And frankly, I’d say the ambition also has grown as we’ve developed the company.

8:20 When we started, we’re like, “Okay, we’re going to do some batteries. It’s going to be great.” And now I think we’ve really sort of seen how impactful that business model can be and is and really expanded the mission even more broadly to really just being this vertically integrated energy company.

8:40 I think it actually hasn’t changed that much. I think before we started the company, Justin and I spent a number of months kind of researching, iterating, questioning, learning. And then when we really hit the go button, if you go read the original memo we wrote, 10 pages, on what we’re going to do, how we’re going to do it, if you read it today, like that’s basically exactly - Yeah. I think my point was more around the path in which we take to get to that end outcome certainly has - we’ve just learned a lot along the way.

9:10 I think we’ve learned a ton about the shape of the problem. But the mission, vision, strategy has stayed basically exactly the same. What are the things that have changed? What have those been? They’re more tactical things like around like are we a retailer or are we not? Do we partner with an installation company or do we do it ourselves? How soon and to what magnitude do we do custom hardware? They’re all like 10 to 40% changes not like we were going to do nuclear reactors now we’re doing batteries. That hasn’t changed.

9:45 If you could go back and do one decision differently than you did, what would that be? Oh I got one for sure. I know. I know. So we originally - we started with this product we call Gen One which is primarily off-the-shelf. It’s gotten more custom over time, but it’s only say 30% custom and 70% off-the-shelf product.

10:05 And our strategy that is a mistake that I made was let’s have a stairstep basically to custom hardware. So we had this product that we call Gen 2, very creatively named, that was going to be like a white labeled custom designed for us but by a third party hardware. And then we were going to go into the Gen 3 product which is what we’re building today. You saw maybe downstairs you’re walking around - that was like fully custom, fully designed and manufactured by us.

10:32 And the original thesis was like we kind of crawl walk run - the walk was going to be Gen two. And we realized with a number of the facts on the ground changing and just as we developed this Gen two product that really like the bet of the company needs to be Gen 3. You got to - as I heard Elon say, and we say sometimes around here, you got to burn the boats and just go to the end thing.

10:55 And we definitely held on to Gen 2 too long. I personally was a proponent of this and it ended up being a mistake. It was not a company killing mistake obviously. It was something that we’ve learned a lot from and we’ve been able to course correct and it - we lost 6 months or so worth of time on. That’s by far and away the biggest one. There’s been a ton of tactical other things along the way but that’s a big one.

11:15 I know when the Model S production ramp or Model 3 production ramp was happening in like 2018, there was just a whole bunch of fires all over the factory in Fremont. What have been the biggest like production hell moments for you guys?

11:28 Yeah, we’re just on the production side, we’re just getting into that now with Gen 3. We’re just starting to do production - in a year. I would say like we’re already feeling some of the pain just around like machine lead times and hiring enough people and negotiating the real estate deal and every - the hard part about production is not any one thing and you cannot point to one thing and go oh that’s the hard part like let’s just go solve that and then everything’s easy. It is the summation of all of the small to medium-sized problems. That’s what I would consider production hell.

12:00 We had the same thing down in Brownsville at SpaceX in 2018, 2019 around the same time the Tesla guys were having their challenges. And we expect to be having those Q1, Q2, Q3 next year as we scale.

12:15 But we’ve had our own version of that I guess even today with relation to deployments. So even though it’s not like assembling the hardware, I guess it sort of is actually, but it’s like at the customer site, that is production, just like physically producing the batteries is production. And that we’ve had all kinds of challenges with permitting, interconnections, hiring electricians, how do you get enough vans? Like every little piece is like an operational challenge.

12:40 Yeah. For planning and stuff. I know that like energy is heavily regulated and I imagine that this is one of those things where you have to just be incredibly good at thinking 12 to 24 months in the future and like what are those problems going to be and then like solving for them today. What have those been like on the policy side?

13:00 It’s a fascinatingly complex industry that is heavily regulated as you said. It’s regulated primarily at the state level today and a little bit at the federal level especially here in Texas though it’s very state dependent. So, a few sort of operational challenges have been around permitting and interconnections. We’ve basically solved the permitting one with a bill that was passed in the last legislative session that we strongly supported. And then interconnections is kind of the next big one. Basically, it’s - you can think of it like a permit, but it’s with the utilities.

13:30 On the sort of 12 to 24 month timeline or even further along, we’re being very thoughtful about what is achievable versus what is not. Energy market access I think is a broad topic is one that’s quite interesting to us. In Texas, you can be a retailer and you can put a battery on your retail customer’s home and like directly access the wholesale markets after filling out a bunch of paperwork. Basically, you can’t do that in almost any other state. So, opening up that market access is I think the kind of 12 to 24-month timeline.

14:00 So, is the biggest bottleneck just basically figuring out how to do what you did in Texas elsewhere? There’s a business model that works where we’re partnered with utilities. In fact, we already have that going - and not all of Texas is retail choice. So, we have that already going. So, that will work, but there’s mechanisms in place that make that difficult in certain markets. And those are some barriers we want to knock down.

14:25 As far as like leadership style and your personal evolution. I know Brian Chesky talks about you have to like grow ahead of your company. And so if your company’s growing like 5x year over year in headcount and this kind of scaling, I imagine that’s really tough. How have you guys kind of managed that?

14:45 I think we just show up every day and try to do the best job we can and try to push the ambition of the company, try to push each other. We have the benefit of being surrounded by really talented people that teach us a lot both inside the company and outside the company. And we set a really high bar for ourselves.

15:00 And there’s no playbook. There’s no like, oh, I’m on level three of being a CEO. I need to get to level four to unlock this new thing and then one day I’ll get to level seven. It’s not a straight line to figure out how to build a business like this and how to lead the team in an effective way and level up. So I think the way we do it is very bottoms up. We show up every day. We work really freaking hard. We set really ambitious goals. We push each other to do better. We challenge each other. And good things happen, but there’s really no formula.

15:28 Yeah. I would also add we really try to pretty aggressively and regularly seek feedback. How do you do that? You just ask. It’s not much more complicated than just being very explicit and asking. And particularly timing the feedback is very important. Like I just had an interaction with you as a one-on-one on my team or whatever. I’m like, “Hey, how did that go in the last five minutes? Any feedback for me that I can be helpful on pulling out of you or mentoring or guiding or coaching or getting out of your way more?”

16:00 And I think everyone - there’s like a quote-unquote leadership style. I actually think the best leaders identify the style that works best with the person that they’re talking to at the time and tailor their style to that person. You can’t be one size fits all because it just won’t work for everyone.

16:20 So yeah, I also think feedback is a skill and it’s not like, “Hey, Ty, I would like some feedback or I have some feedback to give you.” It’s like, hey, are there behaviors that I demonstrate that you would like to see more of or that you would like to see less of? Or in this interaction, what worked and what didn’t work? More specific questions where you can actually elicit real feedback. And I think being intentional about that goes a really long way.

16:45 What do you guys love about Frank Slootman? I think that he has a way of balancing intensity and focus and those two things are kind of where intensity and focus meet is like kind of just fantastic leadership but like where they can miss, right? And you can have a ton of focus with not enough intensity and you can have a ton of intensity with not enough focus and that’s a problem. And I think he has - I don’t know him but I’ve read his book and listened to him talk and I think he has this way of crystallizing this like intensity and focus intersection that is really powerful.

17:15 I think kind of focusing on the intensity side. I think he - again don’t know him just read a lot of his stuff - bringing the intensity every single day and being relentless about it is extremely important because as a leader, and I’ve sort of noticed this over the last few years, people sort of start to mimic you in a way. Both your mannerisms and things that you say and words that you use, but also the way in which you carry yourself. If you’re happy, most people are happy. If you’re upset, most people are upset.

17:45 I saw this with Elon myself, working very closely with him - what you bring in terms of intensity every day is almost exactly mirrored one for one with what your team brings.

17:55 Yeah. On the focusing side, what have you guys had to say no to in order to just be laser focused on this? So much. I mean, this business is - we’re competing in the largest part of the economy. There’s so much to do. There’s so many things we could make. I’d imagine there’s just a million distractions constantly. For sure. There’s so many interesting things we could go build and many of them we will build.

18:15 But you have to have the discipline to prioritize and say no to things. And especially given the team size and the capital position that we have now there’s a lot of things that we could do - we could do generation, we could do different retail products, we could go into different states, we could whatever - there’s an infinitely long list and some of those we definitely will do or should do. Many of those we should not do and probably almost none of them should we do right now because we need to be laser focused to Zach’s point on delivering on the goals that we’ve set out in the near term which is like build the most profitable and largest distributed battery fleet in the world.

18:50 When was the last moment that you guys had to jump on - or individually had to jump on a plane to go solve some fire? I had to - I guess you could kind of call it last week but - maybe a few weeks ago. What was that? We are developing our next generation hardware. We have a small team out in the Bay Area that’s working on a number of pieces of that and basically just like meeting with the team, working with them on a handful of things that - one of which was not going super well.

19:20 We also do this relatively regularly where we send folks out, myself included, out to the field to Dallas and Houston primarily or up north of Austin here to our installations. It’s less about like, oh, there’s something totally going wrong and we must go fix it ourselves right now and more about just like staying very close to the work, to the actual physical work at hand.

19:45 There’s a - not to distract a ton, but there’s this concept in the Toyota Production System which is like the in my opinion the bible of manufacturing called Gemba or Genba - which is like go to see the actual thing, go to the actual place. They do this in Japan at Toyota called Gemba walks which is like management goes down to the line and like sees the actual problem and we try to embody that culture here and have everyone from random software engineers, people in the policy team to everyone - almost everyone that starts goes and sees an install and really feels viscerally like what it’s like installing batteries or packing them up in the warehouse or whatever else.

20:20 Interesting. What about you? Well, not me specifically, but we often do this with suppliers where if we have a problem with a supplier, we’re just like, okay, let’s get on a plane and go to the supplier and just sit down with them and say, “Hey, like this has to get better.”

20:40 The most recent one for me is like we’re trying to recruit someone for a critical path role that’s super important and it’s like, “Hey, Ty, you’re in SF. We should really spend some time together. I’m going to email you on a Sunday night and be like, ‘Hey, great news. I want to be in SF this week. I’d love to have lunch. You let me know when it’s best. I’m just going to be in SF when you tell me you’re available.’”

21:00 I’ve definitely done that. I’ve done that where you say to someone that’s out of country, “Hey, I’m flying to London this week” just so - I do a lot of that when it comes to deal making and when it’s winning time you just put on the winning hat and do whatever is required to win.

21:20 What was the last moment where you did that and something that should have been impossible just magically happened because of it? I can’t share all my secrets so nothing immediately comes to mind.

21:35 One would be our Base Factory One. We really wanted to have production and engineering close to each other and the offices in downtown Austin and there’s not a lot of factory space nearby. We spent a lot of time kind of agonizing over, man, are we going to put this factory out by the airport? It’s going to be really far from engineering.

21:55 And we basically figured out a way to negotiate a deal across the street to allow us to put production a 2-minute walk from our engineering team, which I think had you asked us mid-summer, early summer, like is that possible, we would have said, “No effing way” in our wildest dreams. And we just made it happen. And yeah, that was pretty great.

22:15 Part of the role of the person that’s in charge or the people that are in charge is basically constantly trying to push up timelines. For base pace, I imagine that you constantly want base pace to be accelerating. How are you doing that?

22:30 Yeah, I think there’s basically two levers to pull in schedule. One is to remove stuff that you were otherwise going to do. And the other is to work faster or harder or more hours. There’s a limit to how much you can do the latter. There’s only 24 hours in a day. A human has to sleep at least six of them. So you’re already limited to 18. And realistically people don’t work 18 hours every single day all the time. People work hard but there’s also how long is the person at the company and all that. So, want to be respectful of that.

23:00 So anyways, we already turn the how hard you work dial to the max in sort of like long-term sustainment mode. So, then the other thing that you can do to pull in schedule is reduce work, basically descope. And this is something that I learned from Elon at SpaceX is like deleting parts, deleting processes, skipping steps where they’re not otherwise needed is far and away the fastest way to pull in schedule.

23:25 Also you can parallel path things. So for instance, we’re doing our safety certification around our system today and like normally you do one test then do the next test then do the next test and instead we’re like why don’t we just do all the tests at the same time. So now a serial path schedule goes to a parallel path schedule.

23:45 We just ask the question is like do we need to do that thing and often times the answer is no so we don’t do it and then if we do need to do it it’s like how can we shorten its timeline, automate it, or put it in parallel with other things.

24:00 Yeah. The other trick would be - and this is kind of a gerism - would be giving things a specific date that you want it delivered. So most companies will be like we’re going to do this in Q3 or we’re going to do this in February or we’re going to do this at some point in the future - right - like we’re going to do this on November 3rd - and then it’s like okay XYZ happened the day has slipped by 3 days by 4 days - and just tightening the kind of measurement or making it more specific I think really helps drive urgency.

24:25 Yeah. How do you align everyone to kind of understand exactly what the why is in any given moment? I think this is a hyper mission-driven company where if you walk around the office and you ask people like hey what’s the mission here like everyone will tell you affordable reliable power in some way. Some people say lower the cost of electricity for all. Some people say affordable reliable power.

24:48 And everyone kind of feels that and knows that. And then there’s little things like we do a monthly all hands which is probably more frequently than most companies where we talk about our northstar goals. We have like three goals and they’re tied to metrics and we put them at the top of the all hands document everyone stares at and we talk about it.

25:05 And then we write this very detailed monthly update that goes to the whole company that talks about what did we do, what did we not do, are we making progress or not making progress. I give a presentation every quarter called engine of success which is what we call how we win - it’s our playbook for how we win - and everyone is kind of indoctrinated in that engine and they understand how the engine runs. So I think it’s a disproportionately large part of our culture relative to other companies just given the business that we’re in.

25:35 Has the how do we win thing changed over time a lot or not really? Not really. The way we’ve articulated it has gotten better, I think. I was probably a little too technical on some things and I’ve kind of made it a little more easy to understand as the team’s gotten bigger. But no, it really hasn’t changed. I think we have a very simple business strategy. It’s just - and it’s a flywheel and you have to kind of understand how the flywheel works.

26:00 How do you guys think about building a competitive advantage that no one else can compete with? Well, that’s a great question because it ties to the flywheel. So, you have to - the competitive advantage is tied to the thing that you’re selling, right? If you’re making Diet Cokes, your competitive advantage is something different than if you’re selling electrons.

26:20 Electricity is a commodity and the best electron is the cheapest electron. So, the competitive advantage for us is a cost structure advantage. And the way we get to a cost structure advantage is through vertical integration and technology. So, the way we think about this is we vertically integrate and develop technology to lower our costs. Lower cost equals higher returns at the asset level. Higher returns at the asset level means we pass on those returns to the customer in the form of lower prices.

26:48 Lower cost electron - price of electron goes down. Presumably in a commodity market when the price goes down, you have more demand. More demand leads to more scale. More scale leads to lower cost. Lower cost leads to higher returns. Higher returns leads to lower prices. There’s your flywheel.

27:05 So that’s the competitive advantage - if you’re in the market for electrons and ours are the cheapest and the most reliable, you’re going to buy them. And that’s how we win.

27:15 And I would add the way in which we get to that cost advantage is through vertical integration as Zach was mentioning. It’s doing the entire thing so to speak from customer acquisition through long-term maintenance of the battery on the home inclusive of logistics and warehousing and manufacturing and design and brand and every sort of aspect of the whole thing as opposed to piecing together a bunch of external parties.

27:40 There’s successful businesses that do the piecing together thing. We think that the strategy that Zach outlined is best equipped when you do everything in the value chain.

27:52 Yeah. On the vertical integration point, how did you guys initially start out versus now on how much you’re bringing in house and at what points does it make sense to just bring the entire thing in house versus just some of the components?

28:05 Yeah, we’ve definitely stepped into it over time. We didn’t start on our first installation with a Base electrician as an example because A, we didn’t know what we wanted from a hiring standpoint and B, we wanted to learn. So we hired an electrician and they were - off of Craigslist. Yeah, it’s not a great story actually. He no longer works with us. It’s just a random guy that Jared actually found on Craigslist. Darren may not have been sober. Unclear. We never worked with him again.

28:35 But anyways, you start by outsourcing very simply to learn, right? Especially because Zach and I definitely don’t have all the answers for sure, but we also didn’t have a background in these areas specifically. And frankly, a lot of our early team and a lot of our team today actually doesn’t. We’re learning and thinking about things from first principles.

28:55 And so we start outsourcing and then when you’ve learned the trade, so to speak, whether it’s electricians or we did the same thing for warehousing - we started with third party logistics firms. Now we have all of it in house. We learn how they do it. We learn what good looks like and what bad looks like. We build up a team. We build up the internal tooling and processes and then we go do it ourselves.

29:18 I think that goes for almost everything - not everything - we didn’t make the chairs we’re sitting on. There’s things that are your business and there’s things that aren’t. When we started we didn’t do anything ourselves. We had a white labelled rep. We had third party hardware. We had a third party installer.

29:38 I guess we acquired the customers ourselves and we just knocked on doors and we’re like, “Hey, would you like a battery?” And because we had to learn what we wanted to make, right? And so I think - and also there’s another version of the company where we sat in a lab for two years and perfected the perfect thing and that’s not our style. You didn’t really get any contact with the enemy sort of situation.

30:00 Exactly. You got to get in the field, get your hands dirty, start doing the thing, learning, taking some punches and then you can start to build knowledge and experience and you start to figure out what you’re going to do such that you can vertically integrate in an effective way. Had we started designing our custom battery on day one, we would have designed something probably pretty crappy because we didn’t actually know what was required.

30:25 I know Sam Walton would go to like distribution centers that were in the center of multiple different Walmart locations and just talk with the truck drivers at 5 a.m. before they went out and delivered to everywhere and got like a pulse for the company. And I also know he bought a plane at one point and basically flew around to decide where the traffic met and where was the most logical place to build a Walmart. How have you guys kind of kept a pulse - keep on knocking on doors even as the company’s scaling?

30:55 Yeah, I mean just get on the phone with customers, talk to them. Customers will still email me. My email is just zach@basepowercompany.com. You can figure it out pretty easily and they’ll email me and they’ll have feedback and we’ll talk to them or I’ll - our energy advisors sit over there. I’ll go hop on the phone with some of the customers and hear from them directly. You can’t replace getting that direct feedback from the customer.

31:20 And in the early days Cole and I, our head of growth, did a lot of the door knocking ourselves. We’d walk door to door and knock on the door say hey, when was the last time you had a power outage? Okay, great. Well, let’s make sure that never happens again. By the way, what are you paying for electricity? Oh, we’re gonna cut that by 10%. Having these conversations with people is super helpful.

31:45 And then little things - I still, my wife is annoyed by now, but like we’re out to dinner and I’m like, by the way, when’s the last time you had a power outage and who’s your power company and what are you paying for electricity - and Ubers and that kind of thing. You have to just live and breathe this stuff and it’s fun. I mean this is what we do for fun.

32:08 And also little things - we have this cool part of our company culture where everyone eats lunch together. We have sacred lunch time on everyone’s calendar. You probably saw it today from 12:00 to 12:30. Everyone goes in the backyard, sits down and has lunch. And I think Justin and I both try to make a point to sit down with people who we know less, right? They just joined the company or they’re working in the warehouse or they’re working in the field and they happen to be at the office for lunch that day. Sit next to them like, “Hey, how are things? What are you seeing? What are you learning?” And those are incredible opportunities for us to get this bottoms up firsthand information.

32:45 Yeah. I think as companies grow or big companies generally do this - even small companies - especially the leadership or management team will have this sort of separation from the real thing, what’s actually going on, whether it’s the customer or problems on the production line or our warehouse employees that - you put layers of fog in between them and the people they should actually be engaging with.

33:10 Yeah. And it’s like you kind of default into that actually because it’s like more comfortable. You don’t have to worry about the problems as much. It’s sort of like less mentally taxing in a way. But that’s terrible. We really strive to not do that. You want to be as viscerally close to what’s going on on the road, so to speak, as you’re driving as much as possible. You don’t want 17 layers of damping in between you and the road.

33:40 What have been the biggest things that you guys have shifted just by talking with some guy at a restaurant or in an Uber about their situation in life? That one’s best for you, I think. I don’t know if there’s any one thing that was like, oh, I met this person and they told me this thing. We have to change our strategy.

34:00 It’s more that it shines a light on what people care about and what people think about. But in our business, it’s pretty clear - people want their bills to go down and their lights to stay on and it’s pretty damn simple that that’s what they want.

34:15 So I think there are a bunch of little things actually. For example, when you sign up with Base, you have the option to schedule a call with one of our energy advisors and they answer your questions. And some people who are less technology literate, they get confused in the flow and they’re like, “Oh, am I scheduling my install? Am I scheduling my call?” And getting that piece of information like, “Oh, we should make this clear. We need better education up the funnel.”

34:42 And maybe we should send an email out when someone signs up and says, “Hey, this is just a call that’s going to help you answer your questions and then we’re going to -” There’s little things like that that are like in the email copy, in the way that the website flows, in the buttons that you click, the title, the subheading on the photo - these little things matter and that’s really what you get from those conversations. It’s not wholesale product changes. It’s small iterations that increase conversion rates and make this whole system more efficient.

35:10 And dog fooding the product yourself. Also, our head of growth, Cole, we installed on his parents house in Dallas when we opened up the Dallas market and he took extremely detailed notes of everything that the electricians told him because we didn’t tell them that it was him and did a little sort of undercover boss secret shopper type work. That goes a long way.

35:35 Last time I was in Houston, one of our members, Matt - I went to his house. I sat in his living room for like an hour and I just hung out with him, just chatted with him about the product and his experience and his feedback. And that kind of firsthand conversation is so valuable.

35:55 I think Todd Graves from Raising Canes greenlights every single piece of - every reel that goes out on Instagram before something goes out and his company’s worth like $20 billion. How much are you guys going to try and stay in the details and which aspects of the details do you want to be focused on as the company scales?

36:15 Yeah, I would say we will not be doing that - or at least I’ll speak for myself. You would probably agree, Zach. It’s less about - I think being in the details and being super controlling are two very different things. I would categorize that maybe in a somewhat negative way. It’s just like that’s being controlling.

36:35 I think what actually matters is that you know what’s going on, can do or at least help or mentor the person that is doing the thing. And certainly when there are problems you know enough to be helpful. Being in the details is not good in and of itself just because it’s cool or whatever. What matters is how you can use that to help the team.

36:58 And yeah there are certain things that we have strong opinions on and we’ll voice them. But back to the distributed leadership concept - we highly trust the group leads we call them to make decisions on their own. We’ll check in and we’ll be a thought partner or whatever else but we are not checking every Instagram reel that goes out. We’ll have opinions and happy to share them if you want to bring them up but we’re not -

37:20 Said differently, the people who are making those decisions are way better at making those decisions than we are. And so we’re not going to get in their way. Now if we have opinions we will tell them and we’ll challenge them and poke them and prod them. And that’s the benefit of working together and working in a bullpen. You see, there’s no private offices. We all sit next to each other.

37:45 And so, if I have a question about copy on the website, I just walk up to Yash’s desk or Cole’s desk or Gab’s desk. I’m like, “Yo, I don’t think it should say this. What do you think?” And they’re like, “Oh, no. Actually, we thought about that. We decided to go this direction.” And I’m like, “Oh.” And usually, “Oh, I think you’re right. Okay, great.”

38:05 So, there are things at the company where I am the best person to make that decision, so I make it. Same goes for Justin. But actually, most things there’s someone at the company that is better positioned to make that decision. And so, those people are doing that. It’s our job to make sure they’re focused on the right northstar metrics. They’re all skating in the right direction. They’re focused on the right things. We have the right people in the right seats. That kind of stuff.

38:32 There’s a good example of this actually that is a hiring process that Zach primarily set up which is basically - we have a hiring manager. There’s a panel. There’s nothing extremely unique in the way in which we do the interview.

38:48 But at the end of the interview, we do a debrief. And the hiring manager is the person that ultimately makes the call and everyone else is not a vote, it’s just a suggestion. So if Zach’s the hiring manager and I’m on the panel, I can be thumbs down and say, “Zach, I don’t think this person is great.” And Zach can think the person is great and hire them and it’s up to them.

39:10 And this is the case for not just Zach and I, but everyone, everyone on my team, everyone on Zach’s team. The hiring manager makes the ultimate call because we defer to them because they will live with either the benefits or consequences of that decision.

39:28 And it’s frequent that - let’s say you’re the hiring manager and Justin and I are on the panel. Justin and I are both thumbs down. The way this works is we have a debrief. We come in and this sounds - maybe I’m sharing some of the secret sauce here. This is some of the cult information, some of the lore.

39:48 So, you come into the debrief, everyone knows exactly what’s going down. You sit around the table and we go 3 2 1 and it’s thumb up, thumb down. And it’s not a vote. So you, Ty, are the decision maker.

40:02 The design of this is to elicit strong opinions. And the rule is “F yes or no.” So if you’re a thumbs up, you are willing to fight for this person. You’re like, “Screw you guys. You’re wrong. We are hiring this person.” And if you’re thumbs down, it’s not like you’re absolutely not. It’s just like I wasn’t blown away.

40:25 And so it’s very rare that you have the unanimous thumb ups and it does happen. Those people are like we got to get this person tomorrow. It’s often that you have kind of a split room because in a 30-minute conversation, it’s really hard to get signal.

40:42 It’s very often though that Ty is a hiring manager, Justin and I are thumbs down. We’re not like F no, we’re just not F yes. And you’re like, “Hey, I disagree with you guys. I think this person’s exceptional. We’re going to hire them.”

40:58 Now, if you hire that person and they don’t do well and we let them go, which I think we’re pretty good about - we do that pretty quickly - that’s on you. Now, you’re not automatically fired, but we’re going to sit with you and say, “Hey, what did we miss? Why did we get that wrong? Let’s make sure it doesn’t happen again.”

41:18 Why did the decision get made? What were the mental models that you were using? But you own that decision entirely. And so, some might interpret that and say, “Oh, that’s not founder mode.” Like, no, it’s just not micromanagement. Yeah.

41:35 Is there any other specific things that you do here that you haven’t seen at other companies that are like the special sauce that make things operate way better? I think it’s all about just culture on a day-to-day basis. You can write down whatever you want from a culture perspective and be like, “Yeah, we move quickly.” But it’s like, do you actually embody it every day? Does the leadership team embody it? Yeah, it’s hard to point to one magic sauce thing and go, “Yep, that’s it.”

42:02 I think our hiring process is very unique. I think the vibes in the office are very unique. We have a lot of fun here. And people really enjoy coming to the office, I think. And we have group lunches and group dinner. We cater two meals a day, delicious, healthy, fresh food because we want people to be here and not spend a lot of time thinking about what they’re going to eat. And also, we want people to sit with each other and have conversations and get to know each other better.

42:30 It’s an extremely flat organization. We’ve said it a couple times. No private offices. My desk looks like Justin’s desk looks like the intern’s desk. We sit in the same place. We all sit side by side. All of our calendars are open. You want to schedule time with me, you just put it on my calendar. Now, if you abuse it, “Hey, stop abusing my time. It’s a bad use of time.”

42:55 And we’re pretty shameless or just willing to basically be super direct with people in a respectful way. And it’s like, “Hey, you had this meeting. You had eight people in this meeting. It’s a very expensive meeting. This meeting was a bad use of time. We’re not gonna have this meeting anymore. You’re going to send an email with the decision that needs to be made or with the thing that you want to explain to everybody.”

43:18 So we just treat people with respect and we expect them to do a really good job and when they do something that’s not culture aligned or not mission aligned, it’s not like F you, what the hell. It’s just like, hey, this was bad. Let’s not do this again. And sometimes it’s like, oh, I miss - I look at it a different way. I was trying to - and then we have a conversation and usually both sides learn something from that interaction.

43:37 But I think we try to just have a very flat decentralized - it’s back to the dashboards and the bullpen seating and everyone eats together. It’s just kind of like, hey, we’re all in this together. We’re frontline generals. We’re kind of leading from the front. We’re in the weeds with you. We understand the thing you’re working on. You don’t need to explain it to us again. And I think that’s kind of how I describe our culture.