Newsletter 39

Let’s start with a story: The year was 1993. NASA's Mars Observer mission, nearly a decade in the making and nearly 4× over-budget, went silent three days before it was supposed to slip into Martian orbit. The agency’s new honcho — our very own Dan Goldin — told his team: show me the money mission requirements.

What he got was a stack of paper three feet tall. Being the strong-willed, stubborn individual that Dan is, he threw all of it away and named three simple new rules (land on Mars, deploy a robot, do good science), got out of the team’s way, and greenlit the mission that became Mars Pathfinder.

This was the crucible that created the conditions for Faster, Better, Cheaper: a system for building hard things in the real world under real constraints. To embrace FBC is to run an organization that first tells the truth to itself: Physics is real! Money is finite! The old way of building things will break us!

This week, the high priest of Faster Better Cheaper makes his case for running it back — only this time, at the scale of a nation.

IN THIS WEEK’S EDITION:
👟 Faster, Better, Cheaper 2.0
🏦 EXIM & the new capital stack
💭 REE policy, Datacentergate, & Rubio’s remarks
📬 Feed the Question Bank!!!

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Faster, Better, Cheaper is not a super well-known concept outside of space circles. We think it’s time that changes.

Because, you see, over the last quarter century, a peculiar type of pathology has slowly but surely taken hold of American institutions and our critical industries. This pathology preconditions you to overspecify requirements, avoid all risks, push timelines to the right, king-make ‘too-big-to-fail’ sole-source contractors, and calcify programs into political entities. Let’s call this pathology for what it is: Slow, Worse, Expensive (SWE).

The antidote to SWE exists. I deployed it to outmaneuver SWE inside the world’s greatest space agency, and it is being deployed today — to great effect — by the SpaceX’s of the world.

We’re going to need more of it, and this time, at the scale of a nation.

There are basically seven rules: Start with the physics; go Battlestar Galactica mode only when physics demand it; require simplicity (specify mission over method); simulate before you build; fail fast, fail cheap, and learn; run a portfolio, not a flagship; and reduce programs/products to single, simple metrics.

Implementing FBC means you can reduce your performance down to a simple story that’s legible to anyone. Here’s what that looked like for NASA:

If FBC is a virtue, its inverse is a pathology. We’ll give a name to this pathology: SWE (aka, Slow, Worse, Expensive).

Symptoms of SWE may include zero tolerance for risk-taking, a failure of imagination, decades-long timelines, and cost overruns that become self-justifying, because “too much has been spent to walk away”! We aren’t doctors but we can easily diagnose SWE from a mile away. And it brings us no pleasure to report that this condition has metastasized at continental scale.

Here’s what scares us (and should scare you, too): While SWE spread across the West, somebody picked up what we dropped. And today, our principal competitor is running FBC at a nationally distributed scale, with all of its telltale signs: a portfolio of parallelized bets, a shots on goal approach, a tolerance for failure, and a mandate to move quickly, iterate, and globally promote the champions of the Darwinian domestic knifefight.

The historians, armchair pundits, and keyboard warriors have cross-examined and scrutinized FBC from the outside looking in over the years. Today we go straight to the horse’s mouth and breaking down the playbook, from the perspective of the person who knows it best. In the first installment of FBC 2.0 — out today — we cover the seven rules of building FBC, to the ways in which our industrial substrate has degraded to create the conditions for SWE, to how we get our mojo back.

Most of what you’re about to read has never before been committed to paper. Out now, exclusively in Per Aspera.

Three weeks ago, we all cheered as CesiumAstro announced their ~$185M financing from EXIM Bank. This week we wanted to go deeper into the sweeping transformation of the bank, and how it might help 🫵 your company 🫵 … because it doesn’t feel like it’s fully registered for folks!

Historically, EXIM has long acted as a guarantor of loans to foreign buyers of American goods — financing the demand side of U.S. exports. As mid-tier American OEMs who would have historically used EXIM slowly moved production foreign locales (a la Shenzhen), Boeing became the last standing major American exporter that wanted what EXIM was selling, leaning heavily on the vehicle to finance arrangements with foreign airliners purchasing $250-400M widebodies. As a result, EXIM became unofficially known as “Boeing’s Bank”.

But in 2022, after COVID shattered the illusion that overseas supply chains were reliable, EXIM's board unanimously approved the Make More in America Initiative (MMIA). This inverted the agency's 88-year model: EXIM was now empowered to also lend directly to American manufacturers building the factories that produce export goods. MMIA is quite unique, and unlike any other federal tool:

When we first kicked off Per Aspera, the the #1 pain point for builders was ‘lack of capital’. But more and more, that feels like a less viable excuse.

Along with their $185M EXIM government debt, CesiumAstro also closed $15M in JP Morgan working capital, and $270M in Series C equity — all within 18 days. Great execution by a team ready to… build faster, better, cheaper 👆.

If you're a founder or CEO building domestic manufacturing capacity with a plausible export angle, EXIM should be in your capital stack conversation. It’s worth learning from the success of our friends at CesiumAstro (who, BTW, have no idea that we wrote this).

001 / NOT A MOMENT TOO SOON….On Friday, Reps. Jill Tokuda (D-HI) and Neal Dunn (R-FL) introduced the Rare Earth Magnet Market Revitalization Act in the House, a bipartisan swing at the PRC’s chokehold on the NdFeB magnets powering everything from missiles and jets to EVs and datacenters. The bill has three levers: 1) push federal buyers to source from American/Allied providers whenever possible, 2) truly/fiscally incentivize e-waste recycling, and 3) using USG-backed purchase agreements to backstop and derisk new capacity. We laid out our strategic recycling case just last week, so count us in the AY camp for this one.

002 / DATACENTERS V. DEMOCRACY…Texas is seeing local resistance flare across the state, while to the east, a bloc of 13 governors have pressed FERC and PJM to rewrite the rules so hyperscale loads can’t quietly socialize interconnect/capacity costs onto regular ratepayers. The White House is also scheming, per a leaked “AI datacenter compact,” to push hyperscalers toward long-term commitments covering all incremental plants, wires, and cooling costs for their compute clusters, to “hold harmless” households, and to close loopholes for lease-backed/landlord-owned sites. With projected collective capex (≈AI datacenters/power) converging on $650B this year, hyperscalers are facing a trade between A) “pay your way” premiums (e.g. internalize the true cost of a private AI grid), or B) expend enormous political capital going the other way. Seem the former is the better trade?

003 / RUBIO’S REMARKS…Marco Rubio, the Secretary of State, acting National Security Advisor, head of USAID and the National Archives, and if the rumors are to be believed, future coach of the Miami Dolphins, was at the Munich Security Conference last week. In a keynote that mixed warmth with warning, he told his European counterparts that the era of outsourcing the alliance’s arsenals to adversaries is over. In no uncertain terms, Washington is telegraphing that it will increasingly lean on defense systems, reactors, satellites, and critical-system exports as instruments of statecraft, while entrenching American factories/IP/kit at the center of allied supply chains. The gears of government are grinding to back this rhetoric. Case in point: the recent arms transfer EO and our EXIM retooling note (above).