Newsletter 042

Happy Friday. Welcome to the hundreds of you who have flocked to my home ‘town’ of Austin, the land of live music, barbeque, open skies, and (unfortunately) running clubs that continue to swell by the day. SXSW started yesterday, and like Burning Man, it’s become a pilgrimage of sorts for Bay Area types to parachute into an unfamiliar locale (Texas) and momentarily abandon their performative lifestyles (by eating brisket, drinking Lone Star beer, and staying up past 8 PM).

Austin often feels like the place where you can most viscerally feel the pointy edge of real-world progress — across autonomy, energy, space/defense, hardware, and housing — so I for one welcome seeing these themes more front-and-center at SXSW, over the AI wrapper and NFT zeitgeists of past years.

And speaking of the real world… up top today, Joy, cofounder of Per Aspera, and I take a look at a struggling American sector that represents a generational opportunity, one that’s deeply in the national interest…

IN THIS WEEK’S EDITION:
🍓 Supermarket of the world
🙅 Pariah does as pariah must
🕘 Stat of the week: nine minutes
🏰 Bestsellers, buildout maps, and more

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Last year, a datacenter developer offered an 86-year-old Pennsylvania farmer $60,000 an acre for his 261 acres outside Harrisburg — nearly $16M in total!

But he rejected the offer. He sold the development rights to a farmland trust for under $2M. “I was not interested in destroying my farms,” the seller, 86-year-old farmer Mervin Raudabaugh, told the local news.

Roughly 300M American farming acres are set to change hands in the coming decades. Facing declining farming income on one hand, and a check on the other to part ways with acreage that has 4X’d since 2000, what decision do you think most will make? Probably not the same as Mervin…

For nearly 60 years, the U.S. ran an agricultural trade surplus, shipping grain out of the heartland in volumes that doubled as soft power and hard trade leverage. Then the curves crossed in 2019, and in the last fiscal year, the U.S. imported $40B+ more in ag products than we sold. Washington has started saying the right words, with the USDA and DOW linking food and national security, bills percolating through Congress, and ag being discussed the way chips were in 2021.

All of which sounds right, none of which changes what is happening on the ground. Because the ground is the problem.

Farming an acre of American soil is about the hardest it has ever been. Farmers are caught between the double squeeze of input costs that spiked during the 2021-22 supply chain shock, and crop prices that have come back down. The country is losing about 2,000 farmland acres a day, with 18M projected to convert by 2040.

Datacenters, chip fabs, and megaprojects need exactly what farms need: flat land, abundant water, reliable power. Samsung's new $17B fab sits outside a Texas town that once called itself the largest inland cotton market in the world. And we shouldn’t pretend this is irrational. A fab generates far more value per acre than any farm could, and we need these domestic megaprojects. But the math that makes each individual conversion obvious is the same math that, in the aggregate, leaves you short on food.

Capital is moving accordingly. As small operators exit or sell, acreage consolidates into scaled businesses, institutional portfolios, or conversion option plays (buy farmland at ag tax rates, wait for rezoning). And Wall Street has strange bedfellows on its side of the trade, with sovereigns piling in to scoop up American acreage.

The long arc of agro-doomerism and technological revolutions say there’s reasons for optimism. Hoping and praying for AGI or another Norman Borlaug to save our bacon is not a strategy, but abundance-oriented technology stacks that don’t force a zero-sum choice between preservation and productivity might be.

Washington (and Maslow’s Hierarchy) say farming is a sovereign capacity you cannot surrender. Mr. Market says the incremental American acre wants to leave agriculture. Where do we go from here?

For four decades, the Islamic Republic behaved like a revisionist but still calculation-bound power, extending influence through an “Axis of Resistance” of Shia militias and Islamist movements while staying mostly inside the gray zone. Tehran armed Hezbollah on Israel’s northern frontier, cultivated Iraqi Shia militias around U.S. bases, enabled the Houthis astride the Red Sea, and sponsored a constellation of terrorist and insurgent networks from Gaza to the Gulf. It was coercive enough to shape events, but deniable enough to avoid full pariah status.

Since the current war began, and especially after the systematic decapitation of multiple layers of regime, IRGC, and proxy leadership, the gray zone between aggrieved regional power and outright rogue state has effectively dissolved. If Iran is to bear the costs of pariah status regardless, it will extract the leverage available to a pariah, salvos of ballistic missiles, mass-produced Shahed-class drones, deliberately indiscriminate strikes on Sunni neighbours, and the long-theoretical, now-demonstrated capacity to hold Hormuz hostage. Iranian strikes have arced across the Levant, deep into the Gulf, and stretched all the way to the South Caucasus, hitting sovereign territory and critical infrastructure in states that had previously tried to remain neutral or de-escalatory.

What Iran considers targetable has expanded to include the Gulf’s cosmopolitan financial capitals — those that had assiduously worked to keep the region’s conflicts at arm’s length — and their hotels, dense urban areas, and peripheral dual-use energy infrastructure. Iran is striking at the seams of technologically advanced societies that engineered their way out of a desert: desalination plants, datacenters, power and pumping stations.

The unfortunate takeaway here: modernity’s plumbing is part of the battlespace.

BYD's new Blade Battery charges from 10% to 97% in nine minutes, on a 1,500kW charger it designed and manufactures, with 20,000 stations targeted across China by year-end. That’s ~3X the peak output of Tesla’s newest V4 Superchargers, and ~6X what most of its stations deploy today. BYD practices ultra-vertical integration, from chips to ships, and it is pulling ahead. Tesla, meanwhile, is reorienting for a different fight, slowing its Supercharger buildout, winding down Model S/X sales, and absorbing a 45% YoY China sales drop amid a wider global EV plateau (BYD sales fell 30% and 41% YoY in Jan & Feb, FWIW). Broadly speaking, whereas BYD’s ambitions may be to become the global megacorp of the electro-industrial stack, Tesla is going full bore on the AI brain and its body (robotaxis & humanoids).

001 / EYES ON ORBIT… Anduril announced the acquisition of ExoAnalytic Solutions on March 11 (pending regulatory approval), picking up ~400 ground-based optical telescopes built over 18 years and an active $42.5M Air Force contract for space surveillance work. The 130-person team will double Anduril's space unit to ~250. Watch this space!

002 / GONE WITH THE WIND (TURBINES)… Europe’s chemical industry is sliding into crisis, with high/volatile power prices, CO₂ costs, tighter safety/ESG rules, and Ukraine/Iran conspiring to crush margins, close plants, and chill new investment across the continent. Chem plant closures are up 6× since 2022, taking ~37% Mt of capacity offline (~9% of Europe’s total), with net losses in petrochemicals, basic inorganics, and polymers. New capacity investments dropped ~86% over the same stretch, creating casualties out of at least nine steam crackers so far (steam crackers = the ethylene workhorses for entire industrial clusters). European champions such as BASF and Solvay redirecting production/capex toward China, the U.S., and other Asian hubs. We’d bet on something like the Critical Chemicals Act passing on the continent soon, as our European friends (and everyone else) are reminded that chemicals are underrated.

003 / STOP, FOLD, FLY… DARPA and SOCOM's SPRINT program has cleared CDR and Bell Textron is now building the X-76 experimental aircraft: a stop/fold tiltrotor that lifts off vertically on wingtip proprotors, then folds the blades away mid-flight and cruises at 400+ knots like a fixed-wing. No runway, no forward operating base, no problem! The goal is to make rotor-to-cruise transition reliable enough for SOF operators working off unprepared surfaces in denied environments. Flight testing is slated for early 2028, and the out-of-sequence "76" designation is a nod to 1776 timed to the semiquincentennial (we appreciate the branding).

001 / TOM CHI’S BEST SELLER. Tom Chi, co-founder and GP of At One Ventures, hit the USA Today bestsellers list with Climate Capital: Investing in the Tools for a Regenerative Future 📚🥇. The book unpacks the "The Triad": (i) disruptive deep tech, (ii) 2.5–3x unit economics improvement, and (iii) climate-positive outcomes, stacked — which is also the intellectual scaffolding behind their $375M fund. Congratulations, Tom!

002 / SPACE CAPITAL’S FUND IV. Space Capital announced their Fund IV — the latest chapter from one of the few space-dedicated VC firms to survive multiple market cycles 🌌. Only 17% of VC firms ever reach a fourth fund. With private space investment up 48% YoY, the timing reflects what CEO Chad Anderson calls the end of the “skepticism phase” (who BTW started Space Capital in 2012, long before others caught on). Kudos to Space Capital!

003 / CESIUMASTRO’S SXSW HOUSE. CesiumAstro is throwing Space House at SXSW (March 14–15, Austin 🤠). The festival's first official commercial space activation lands amidst a major newsmaking streak from Cesium, including its $500M, 270,000-sq-ft new HQ and the acquisition of AI company Vidrovr to bring edge compute to orbit. Joe Ellis's Q&A on the AI integration roadmap is worth the read. CesiumAstro, killas.

General Electric Aerospace has announced a $1B injection into American Manufacturing this year to accelerate engine deliveries, ramp production of parts “that extend time between maintenance shop visits,” and accelerate defense-focused lines to keep pace with demand. This is GE’s second consecutive $1B annual investment, on top of its annual $3B R&D outlay. $100M+ of this is allocated to GE’s external supplier base, to provide tooling and equipment that will help stabilize production schedules. You truly love to see it!

On March 10, the 150th anniversary of Alexander Graham Bell's first telephone call, AT&T CEO John Stankey committed $250B to advance U.S. connectivity through 2030 and expand fiber, 5G, and satellite coverage across 100M+ American customers. Big shout out to AT&T partner AST SpaceMobile, the Midland, Texas-based company building a LEO constellation to connect to unmodified mobile devices (and going up against Starlink D2C)…

It’s officially official: Yann LeCun, a godfather of deep learning and longtime chief AI scientist at Meta, has launched Advanced Machine Intelligence, or AMI, a Paris-based frontier AI lab fresh out of stealth with a nicely articulated thesis around “real world” intelligence and a $1.03B seed round / $3.5B post-money valuation (inflation is crazy these days).

Iran allegedly has a new variant of the smaller Shahed-101, with a front propeller, electric motor, X-shaped tail, and jet-powered booster that’s jettisoned after takeoff. ICYMI: last week we told the story of the Shahed, and the cat-and-mouse game of drone/counterdrone iteration.

Re: today’s second story, the U.S. already recognizes water treatment and IT hardware among its 16 critical infrastructure sectors. Still, our new age of drone warfare may necessitate “hardening” premiums for already-expensive, new-build megaprojects in geographically exposed or geopolitically sensitive regions.