Hardware firms can control quality in-house or through suppliers

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 49:09

   side. You know, you get axed from China a couple of years ago, and you have to bring a lot in-house, and then you have to decide, like, which things are we going to vertically integrate versus which things are we just going to partner with suppliers on? How do you kind of make the trade-off on, you know, we might not make the camera or the battery, but we're going to make these other things. So I think that this is a, this idea of like vertical integration, I think is a little bit misunderstood. Like vertical integration is all relative. Um, and you know, nobody's running their own mind. Like even the companies that are like considered very vertically integrated, like Tesla. Yeah. I mean, in a few instances, but they're not doing it for everything, right?

2. 49:44

   Like Tesla is considered highly vertically integrated. Tesla works with a ton of great suppliers. And if you, you know, they have a supply chain team and, and if you like dive into that, like a lot of what goes into a car and a lot of Tesla's success can be attributed to having a great supply chain. The thing that I think is universally true is if you want to be building like world-leading hardware capability reliably at scale, you need to have a lot of control over everything that's going into your product. And you can either do that by doing it yourself and having it be done inside your company, or you can do it by forging deeper and deeper relationships and partnerships with companies that are building key components. And every company that's successful at scale with hardware building great products does some mix of those two things and we're no

3. 50:29

   different if you look at it through that lens it's really a question of like where is there where are there gaps in what we want to exist that are stopping us from being able to build the best products that that we think uh should exist and and if nobody if no other company is building that thing then we're going to go uh after it ourselves um and you know we're in a fortunate position where like, you know, we are extremely demanding when it comes to cameras and we've gotten more vertically integrated with cameras over time. We have a world-class camera team in hardware and software and supply chain, but we're not grinding glass ourselves to make lenses, right? Because there's companies that are world-class that wake up every day thinking about how to better grind glass. We're just like partnering with them. We're not making our own

4. 51:13

   silicon yet because the things that we want out of our compute are extremely well aligned with with the chips that go into, like, other kinds of robots, AR devices, VR, and so on. I think a lot of the mechanical stuff, there's, like, there's more nuance there where we've had to go deeper and do more things ourselves. But, you know, we're still in a position where we can benefit enormously from tens of billions of dollars that are being spent in supply ecosystems that are much broader than just drones.