# Building a Power Company for the Next 50 Years | Zach Dell, Base Power David Senra · 2026-09-06 David Senra interviews Base Power co-founder Zach Dell about building an energy company to make electricity affordable and reliable. Dell says the grid is too small, as AI drives demand growth from 2% to 10% a year, and Base's fix is owning home batteries as a fleet—charging when power is cheap, discharging when expensive, providing backup—so customers pay 1/20th to 1/40th of owning one outright. He explains the counterposition—selling electricity, not batteries; 10-year megawatts-as-a-service deals for utilities like CoServe; and a compounding cost advantage via vertical integration and Base's custom battery, the Base Core. He covers the 'Dad Terminal' with Michael Dell, ex-SpaceX lessons, and Base's habits: monthly updates, North Stars, dashboards, a turtle marking the critical path. ## Questions this episode answers ### Why does Base Power own the home batteries instead of selling them to homeowners? Zach Dell explains that homeowners can't use a battery as a wholesale market asset because they lack a trading desk or hedging team, so a sold battery sits idle 99% of the time. By owning the battery, Base earns money in wholesale markets and shares that value with the customer as a lower electricity bill, letting customers pay 1/20th or even 1/40th of the outright cost. [16:24](https://davidsenra.podhood.com/60f2ec8c-1f83-419b-a28a-054d7435db35?t=984000) ### What is the turtle at Base Power and how does it work? Zach Dell describes the turtle as a literal physical turtle placed on the desk of whoever owns the critical path constraint. It can only move when the constraint is resolved. A 'hot potato' squad spins up around the problem, meets daily, and emails weekly updates to the whole company until a resolution email declares it done. [46:39](https://davidsenra.podhood.com/60f2ec8c-1f83-419b-a28a-054d7435db35?t=2799000) ### What is the 'Dad Terminal' that Zach Dell talks about? Zach Dell says the Dad Terminal is his version of a Bloomberg Terminal: he calls his father, Michael Dell, to discuss business topics, strategy, and challenges. Michael has scaled a vertically integrated, capital-intensive hardware company with consumer-facing similarities to Base, so Zach uses the ongoing conversations to learn, while occasionally offering his father new perspective. [30:51](https://davidsenra.podhood.com/60f2ec8c-1f83-419b-a28a-054d7435db35?t=1851000) ### How do batteries make the existing electricity grid more efficient? Zach Dell explains the grid is built for peak demand, so it runs at low utilization, making it expensive. Batteries charge when demand and prices are low, like midday solar surpluses in Texas, and discharge when the sun sets and prices rise. This time-shifting flattens the demand curve, raising capacity factor and lowering total delivered cost without adding new generation. [7:05](https://davidsenra.podhood.com/60f2ec8c-1f83-419b-a28a-054d7435db35?t=425000) ## Key moments - **[0:00] The mission** - [0:14] Zach Dell: "We're in the business of making and delivering megawatts" — Base Power's mission to power human prosperity - **[1:27] Fixing the grid** - [1:32] Why the grid needs fixing: Zach Dell says it's not broken, it's too small — and rate-regulated utilities get paid on CapEx, not R&D - [2:58] US electricity demand grew ~2% a year for 20 years; Zach Dell predicts AI will push it toward 10% — a 5x acceleration - **[3:53] Strategy & batteries** - [4:05] Zach Dell's strategy: the next 50 years of energy will be defined by solar, batteries and software, not coal and gas - [6:19] Batteries move energy through time: how charging cheap and discharging expensive flattens demand and lowers cost - [7:42] Zach Dell's live example: Texas solar floods the midday market, so Base charges batteries cheap and discharges when the sun sets - **[8:49] Founding story** - [9:13] Zach Dell started three companies before college — in eighth grade, high school and college — and none of them worked - [11:19] At 21, Zach Dell pitched banks a $30 million solar farm in Hawaii and got laughed out of every room at Blackstone - [14:25] The insight behind Base Power: utility-scale batteries are blocked by interconnection and transmission, so put them at homes instead - [15:32] Zach Dell's counterposition play: incumbents sell $20,000 home batteries; Base sells electricity and charges 1/20th of that - **[19:58] Business model** - [20:56] Why Base owns the battery: it trades wholesale power 99% of the time and shares the profit as a lower electric bill - [22:22] David Senra compares Base Power to Howard Hughes Sr.'s drill bit: you can't buy it, you can only lease it - [24:22] Regulated vs deregulated electricity, explained: Enron killed California's deregulation and Texas carried the torch - [26:36] Base Power builds battery fleets for Texas co-ops like CoServe — 100 megawatts that lower rates for their members - [28:39] Why utilities never innovate: rate-regulated monopolies earn ~9% on CapEx, so their only incentive is a bigger rate base - [28:45] "Megawatts as a service": Base Power signs 10-year contracts to build and operate battery fleets for utilities - **[29:19] Dad Terminal** - [30:51] The Dad Terminal: how Zach Dell uses his father Michael Dell as a real-time strategy advisor for Base Power - **[32:23] Vertical integration** - [32:26] Zach Dell on vertical integration: "It's only important if you're playing a cost-focused game" - [34:06] Base Power's SpaceX DNA: co-founder Justin and early hires came from Elon Musk's companies and brought the operating culture - **[39:35] North Stars & tools** - [39:50] Zach Dell has written a company-wide monthly update every month for three and a half years — never missing one - [40:58] The red and black notebooks: Zach Dell splits working in the business from working on it, writing by hand every night - [44:58] Zach Dell's three North Stars: largest battery fleet, lowest landed cost per kilowatt hour, and financial sustainability - [46:39] The turtle on the desk: Base Power's physical symbol for whoever owns the constraint on the critical path - [48:05] Base Power's office looks like a Best Buy: TVs overhead show every team's metrics, good ones green and bad ones red - **[50:59] Lessons from investing** - **[55:03] Brand & constraints** - [56:56] Antonio Gracias asks Zach Dell the same question every meeting: "What's your constraint?" - [59:38] Zach Dell and co-founder Justin never discuss what's going well in their Sunday one-on-ones — only problems and constraints - **[1:06:26] Base Core** - [1:06:58] The Base Core battery: designed and manufactured in-house after Base sold out through November by August - [1:08:40] Why Base manufactures its own batteries: suppliers won't invest hundreds of millions on a three-year-old startup's forecast - [1:09:49] How far can vertical integration go? Zach Dell on Henry Ford's railroad and eventually making his own battery cells - **[1:11:12] Last company** - [1:12:03] Zach Dell on selling Base Power: "Are you solving for the mission or are you solving for a paycheck?" - [1:14:45] Energy is four things — make, move, store, sell — and Base Power has ambitions across all of them, aimed at AI demand ## Speakers - **David Senra** (host) - **Zach Dell** (guest) ## Topics Energy & Power Companies ## Mentioned Base Power (company), Blackstone (company), Dell (company), Ramp (company), SolarCity (company), SpaceX (company), Base Core (product) ## Transcript ### The mission **David Senra** [0:03] So, out of every single guest on the show so far, yours is the business that I understand the least. So let's use this conversation as an opportunity to fix that. Explain what you're working on, and like, what your mission is, and how you're doing it. **Zach Dell** [0:14] Yeah. So the grid is something—and the power system and electricity broadly—is a topic that a lot of people don't understand, and it's pretty common. I think that's because there's a ton of nuance to it. It's a very old system, it's highly regulated, and so it's not something that is in, kind of, natural common sight guise. The truth is, our business is very simple. We're in the business of making and delivering megawatts, and our megawatts are the most affordable and reliable megawatts in the world, on the planet. At least that's our ambition. And our mission is to power human prosperity by driving energy abundance. And we look to a very simple correlation between consumption of energy per capita and GDP per capita. And the takeaway is that the more energy a population is able to consume, the better their life gets. And so if you can make megawatts, gigawatts, terawatts, more affordable and reliable, it's the best way to make people's lives better. And that's a mission that we have all rallied around and gotten super passionate about. We think about things in terms of a mission, a vision, and a strategy,right? So the mission is why we're all here. We're all here to fix the grid and deliver affordable, reliable power, and promote human prosperity by driving energy abundance. ### Fixing the grid **David Senra** [1:27] Before we go further, why—explain why the grid needs fixing. What's the problem with it now? **Zach Dell** [1:32] It's not that it's broken, it's that it's too small. **David Senra** [1:35] How could something as important as electricity and power not be something that we can scale? Like, how did we get into this situation to begin with? **Zach Dell** [1:41] I think because, um, capitalism hasn't—hasn't been able to work its magic on the industry, because it's highly regulated. And the companies around it that have built it don't have an incentive to innovate. They're not—they're rate regulated, and they get paid on CapEx, not on R&D,right? And so the amount of money that they spend on R&D as a percentage of their revenue is, like, as low as any industry you'll ever find,right? They're not engineering-led organizations, they're CapEx—they're kind of project management and CapEx-oriented organizations. And so there has not been a bunch of innovation in how can we scale our capacity to consume electricity. It's just like, how do we go build as fast as we can and earn a return on that building? We just change that,right? We are an energy technology company that is R&D-driven, engineering-led, and technology-focused. And we are going to build technology that allows us to scale our consumption of electricity, deliver more megawatts that are reliable and affordable, and help—help meet the moment of the inflection in electricity demand. **David Senra** [2:40] Okay, so that's why you were talking. That's what I was thinking. I was like, okay, so there's this huge surge and it will continue. We need more power and electricity because of everything going on with AI. Before that, was there any other inflection point, or did the demand for electricity in the United States just kind of grow, like, linearly? **Zach Dell** [2:58] Over the last 50 years, demand for electricity in the U.S. has grown at basically the rate of inflation. So it has not really grown much. **David Senra** [3:06] Okay, so this is a first—this is a, like, once-time in history problem that's happeningright now? **Zach Dell** [3:12] I think that there was underlying growth kind of coming, or at least starting to come, from the electrification of transportation and electric vehicles, but that's played out less quickly than some might have thought. I think that will continue to play out as the cost goes down. And things like, you know, electric heat pumps and electrification of heavy industry will drive electricity demand, but the AI infrastructure buildout has massively accelerated it. **David Senra** [3:35] Can you explain, like, how big the demand is for electricity for AI? **Zach Dell** [3:38] I mean, we— **David Senra** [3:39] I don't even know. I hear about it, but I don't know. **Zach Dell** [3:40] Yeah, so the way to think about it is, like, over the last 20 years, electricity demand has grown at roughly a 2% compound annual growth rate, and we think it'll go to, you know, somewhere on the order of 10%, which is obviously a 5x, which on a base as large as energy is really, really, really big. **David Senra** [3:53] Okay, so then go back to your mission and vision. ### Strategy & batteries **Zach Dell** [3:55] Yeah, so we think about it in terms of, you know, the mission, the vision, and the strategy,right? The mission is why you're here. We're here to promote human prosperity by driving energy abundance, which basically just means deliver affordable and reliable power. The vision is, what does that even mean? Like, what does that actually look like? And what that looks like is the modern power company of the electric era,right? We think that there's a generational kind of paradigm shift happening in the energy industry, where the last five decades of energy were defined by coal and then natural gas as the marginal megawatt, and the next five decades will be defined by solar batteries and software. And we are going to build that company that is oriented around that new paradigm. And then the strategy is, how do we win? Like, what is our competitive approach? What is our formula for success? And I would describe that as developing a compounding cost advantage through vertical integration and technology. And the reason why that is a strategy is because energy, electricity, is a commodity. And the best commodity is the least expensive, most reliable commodity,right? And so we've oriented the entire business around the fundamentals of the industry, which is to develop a cost advantage, use technology, use vertical integration, oriented all around the mission of human prosperity and energy abundance. And then, you know, in the last three years, something interesting has happened, which is a new consumer of electricity has showed up, and it's now the fastest growing and soon going to be the largest consumer of electricity in the world, and its name is AI. And so we're going to orient the company around that to serve that demand and meet that moment so that we can continue to expand our AI infrastructure and accelerate all the incredible advances that will come as a result of this technology, which I think is the greatest technological breakthrough of our lifetime. **David Senra** [5:36] So explain how you're reorienting the company around that. **Zach Dell** [5:38] Well, it's less of a reorientation and more of a using all the technology that we're already building and planning to build to accelerate the build-out of AI infrastructure by bringing the power to the compute and bringing the compute to the power. And what this means is accelerating the build-out of these centralized data centers by deploying our megawatts around those data centers and offsetting that load so we can add headroom to the system so we can build more of it. And then taking that compute hardware and actually bringing it to this massive fleet of energy that we've developed to accelerate the deployment of it. **David Senra** [6:15] Okay, so how do you generate more power then? **Zach Dell** [6:19] So there are really two distinct things to think about here. There's generation, and then there's transmission and distribution,right? So generation is where the new electrons come from,right? Solar, wind, gas, coal, geothermal, hydroelectric. There's tons of different ways to—fusion, fission. There's a bunch of different ways to generate energy. And then you have to move it,right? And poles and wires move energy through space, and batteries move energy through time. The grid is the system by which the transmission and distribution happens, and it's built for the peak. So it's massively oversized, which means that you have a bunch of inefficiency and that it's not being used all the time. It's not being highly utilized. And when you have a system that runs at low utilization, it makes the system very expensive. Batteries allow you to increase the utilization of that system because you can charge them when demand is really low, and you can discharge them when demand is really high. And so you can take, you know, the curve of demand and you can flatten it. And therefore, you can lower the total delivered cost because the capacity factor, as it's called in the industry, or the utilization, has gone up. So with our current product set today, focused on battery storage, we're not making more electricity, we're just using it more efficiently to drive the cost down. **David Senra** [7:31] Okay, so if I understand, like, the optimization here is not you're not adding more lines and wires. You're actually just optimizing the existing system better through batteries. **Zach Dell** [7:41] Exactly. **David Senra** [7:42] Okay. **Zach Dell** [7:42] We're taking—there's a map. Like, think about in the middle of the day in Texas. Like,right now, it's hot as hell outside. **David Senra** [7:48] It's hot as hell outside. **Zach Dell** [7:49] The sun is high in the sky. And if you go to ercot.com and you go look at the prices, I bet you wholesale prices are really low. And that's because we have a ton of solar in the state. It's amazing,right? And so we're charging our batteriesright now. Not—I can't tell you that for sure, but like, we are most likely charging, you know, during the solar ramp today,right, when like, the prices go down. And then when the sun goes down tonight and everyone goes home and they turn on their AC from work, prices are going to go up because demand is going up and supply is going down,right? So the sun is down, the solar is no longer producing, prices go up, we discharge the batteries. So we didn't create new electricity, but we time-shifted it. What was happening before? We were. **David Senra** [8:24] Our companies were doing nothing? **Zach Dell** [8:25] Well, we are—we were just using the system less efficiently. So we were, you know, curtailing solar. We still are curtailing solar. And, you know, there's a bunch of excess generation that's happening in the middle of the day where that's why prices go so low is because we're generating more solar than we can use, but we can't time-shift that to be used when the sun goes down in the evenings. **David Senra** [8:47] So that's why you're obsessed with batteries. **Zach Dell** [8:49] And I've been obsessed with batteries since college. And batteries have been around, you know, for decades. And actually, you know, John B. Goodenough, the original PhD scientist who worked on the LFP battery chemistry. ### Founding story **David Senra** [9:01] Hold on, his name was Goodenough? **Zach Dell** [9:03] Goodenough. Goodenough. May he rest in peace. He was a professor at the University of Texas, just down the street. **David Senra** [9:09] Okay. So how does a kid get obsessed with batteries, though? **Zach Dell** [9:13] I mean, it's kind of a long story, but. **David Senra** [9:15] We have time. **Zach Dell** [9:16] Yes, we have time. Look, I mean, as you know, and we talked about a bunch, I mean, growing up, I was always obsessed with big, hard problems and just trying to—and that was always what I—my understanding of capitalism and company building was just organizing people around the hardest problems. And the bigger the problem, the larger the economic outcome downstream of the solution. And I watched my dad do it, and I watched him, you know, totally inflect the PC industry and now what he's doing with the AI infrastructure build-out and the server business. And that was always my strongest motivation. I mean, he was my hero, and he's still my hero. And I always wanted to be like him. And there's, you know, there's just no two ways about it. Like, I wanted to be an entrepreneur. I mean, I started my first company in eighth grade, and I started my second company my sophomore year of high school, and I started my third company my sophomore year of college. And basically, none of them worked, but I was just learning stuff and just trying to get out there and solve problems. And in college, I was working on a business to—and, you know, "business" in air quotes is more of a science project. It was not really a good commercial idea—to convert human waste into compressed methane or biogas that could be used as a source of low-cost electricity in the rural world because I was obsessed with this idea of providing people with access to low-cost power that didn't have it because it was this obvious way to make their life better. And around that time, I was just—I was really kind of, you know, nerd-sniped, for lack of a better phrase, by solar. I thought solar was the coolest thing ever. And solar was great, but the problem with the sun is that it goes away unless you're in space. And so you need a mechanism by which you can use that energy that's produced when the sun is out, at times when the sun is not there. And batteries are the answer. And battery technology, you know, most of the batteries in the early days, you know, you had a lot of different chemistries out there, and you had iron-air, and you had solid state, and then you had this kind of NMC, high-nickel lithium-ion chemistry. Catch a lot of steam. And most of the EVs and the early EV build-out were this high-nickel NMC chemistry. And only in the last five years or so, this low-nickel LFP chemistry, which is really better for stationary storage, it's safer, it's longer duration, it started to emerge. When I was in college, I was really excited about solar, really excited about batteries. In fact, I tried to put together a deal as a, you know, 21-year-old college kid to go lease a piece of land on the Big Island of Hawaii, which has really low-cost land and really high-cost electricity, build a solar array. Actually, it was going to be EPC at the time by SolarCity, who was doing a lot of utility-scale EPC. **David Senra** [11:39] This is before they sold to Tesla? **Zach Dell** [11:41] Yes. **David Senra** [11:41] Okay. **Zach Dell** [11:42] And sign a power purchase agreement with Hawaii Electric, which is a 20-year PPA, and then go finance the whole project at, you know, 90% loan-to-value and, you know, earn a 20% leverage IRR. And I, you know, in college—so, you know, after I'm working on this project in India, I ended up going into finance, you know, down the internet. Basically, I was like, "Okay, this business isn't going to work. Before I start another company, I need to go learn about good businesses. And so I'm going to go to the place where I can find the smartest people that work the hardest, and I'm just going to sit next to them and just work my butt off and try to get smarter, basically, and build tools for my toolkit." **David Senra** [12:15] But you knew no matter what you were going to be an entrepreneur. **Zach Dell** [12:17] For sure. There was no question. I never—there was no—I was never like, "Oh, I'm going to be a private equity partner at Blackstone or whatever." **David Senra** [12:21] No, but you are one of the, you know, because we talk a bunch also, but you are one of all my founder friends that talk the most like a PE guy. **Zach Dell** [12:30] You could take the kid out of Blackstone, but not the Blackstone out of the kid, I guess. I do love—I'm very quantitative and I'm competitive, and I love markets and companies. And I think that's because I grew up studying companies and markets. And like any good, you know, young Jewish boy, I took my bar mitzvah money and put it in the stock market and, you know, tracked companies. And it's like, you know, still manage a PA that I have a lot of fun, you know, following companies. And I just love studying businesses and what makes good businesses. And like you, I was a, you know, big fan of, you know, the Berkshire letters and, you know, the Amazon shareholder letters and, you know, the Constellation letters and would devour those things. And so it was more of—I'm so interested in finance and accounting and investing and capital allocation because it is a necessary skill to be a great CEO of a capital-intensive business,right? And that was always why I've been interested in those things. And so, long story short, I'm in college and I go, you know, intern at Blackstone. I get the return offer. I'm back in college before going back to Blackstone. And I'm like, "Oh, I know how to use spreadsheets now," whatever. And so I build a model, a memo, slides for this, like, solar project. And I go to New York and I go get in touch with a bunch of, like, project finance teams at these big banks. And I go pitch them on my, you know, $30 million loan that I want to go build the solar array in Hawaii. And they're all like, and, you know, I get to meetings and it's nice people will take the meeting with this college kid. And I present my model and my memo, and they're like, "Who is going to run this project? Like, where's your team?" I was like, "Oh, I am." Like, I'm going to—what are you talking about? I'm going to just do it and I have everything figured out and here's the memo. And they're like, "You're going to go be an analyst at Blackstone." Like, this is—and I got basically laughed out of the room by everybody, but I was dead serious. I was like, "This is the math pencils." And I think that would have been a great investment. It would have worked. But, like, I was very bullish on solar economics back then. And I show up at Blackstone and there's a bunch of people who are kind of poking around the battery industry. The supply chain, you know, we looked at carving out a lithium mine, which I spent a bunch of time on. The firm ended up buying a business that's now one of the largest utility-scale battery developers in the country. And I got really excited about what was happening in the battery space. But there was this obvious issue with utility-scale batteries. And when I say utility-scale batteries, I mean big shipping containers in a farm field somewhere. And you can probably think about what that looks like and you've seen pictures of that. And that's been a really good asset class over the last decade or two. And there's, you know, basically every big private equity firm has a utility-scale battery platform. Apollo and KKR and Blackstone and Oak Tree and all these guys, Aries, Brookfield. They all own these assets and they, you know, they're highly levered and they're a nice return. But they're fundamentally constrained really by two things. One is interconnection capacity. So there's not enough places on the grid to go put these big shipping containers. And the second is transmission congestion. These big load pockets, like downtown Austin, downtown Dallas, downtown Houston, where you need the power, that's not where you can put the shipping container battery,right? And so you have transmission congestion, which shows up in pricing, and you're unable to get the power where you need it at theright time. And so that really showed me or kind of brought to light the insight around a distributed architecture. Deploying batteries, deploying megawatts. **David Senra** [15:23] That's the actual house. **Zach Dell** [15:24] Where the interconnection exists, where the load is. **David Senra** [15:27] Got it. **Zach Dell** [15:27] Right? And so you don't have to worry about the transmission problem and you don't have to worry about the interconnection problem. **David Senra** [15:32] That's really fucking interesting. I don't think I understood that before you just said that. **Zach Dell** [15:35] So then I started studying the distributed battery world and the residential battery world. And I looked at every company in the space and, you know, read the 10Ks and the S1s and, you know, talked to the analysts. And you learn that, you know, the publicly traded companies and all the companies in the space, they're all selling a high-margin premium product. It's a $20,000 home battery or a $20,000 home generator that they sell you outright. They make a gross margin on and they're done. And they're not actually building it like infrastructure. They're not utilizing it like infrastructure. And so it was this aha moment of like, "Oh, the distributed architecture is the answer." And all the companies that are around that problem, they're focused on the wrong business model. They're focused on high-margin upfront sales. And then I start getting really excited because I'm like, "Oh my God, if you're going to take on an incumbent, my view is the best way to do it is to have a counterposition business model." Because if I showed up and said, "I have, you know, the best home battery on the market, the best home generator on the market, and I'm going to sell it to you for 10% below the big guys, your margin is my opportunity,"right? Like, these big guys are going to compete on price. They're going to—first, they're going to copy my product. It was better. Then they're going to drop their price and they're going to run me out of business. But if I show up and say, "I don't sell batteries, I sell electricity, and we're going to install this battery on your home. When the grid's up and running, we use it. As a result, you get cheap electricity. When the grid goes down, you use it. And because of our different business model, you pay 1/20th or even 1/40th of what you pay to own it outright, then I can win. And if you want to compete with me and you're one of the incumbents, you've got to completely change your business model," which, as you know, for a public company is very hard,right? Because you go to Wall Street and you say, "We've been making money this way for the last decade, and now we're going to make money an entirely new way." Typically, Wall Street doesn't like that very much. So I got really excited about this setup of this distributed architecture, this counterposition business model, and then the opportunity to really put it in the universe and go after an opportunity that not only was large in scale but in importance and impact on the world. Back to the point around human prosperity, energy abundance, energy consumption per capita, GDP per capita, and that correlation. **David Senra** [17:39] I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world, and one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the Ramp data too. The median company running on Ramp also grows their revenue by 16%. 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And I don't even know if this makes sense to Zach, but, like, everybody's like, "Oh, you should do more episodes of Founders on Howard Hughes." ### Business model **David Senra** [20:09] And I was like, "I've done like one or two." And he's actually interesting, but, like, if you read about, like, I find his dad more interesting than Howard Hughes,right? Because his dad was selling a really advanced drill bit,right, in the second oil boom that was taking place largely in Texas and Oklahoma and everything else. Howard Hughes, I think, Sr., was one of the richest people alive. And his one innovation, his business model innovation, was that you couldn't buy it from him. You had to lease it. So he would service it like it would break. He'd have to sharpen it and everything else. But, like, you literally were essentially you just had this reoccurring revenue coming in because you can't buy it from me. You can't just buy it and take off and I never see you again. You have to pay me every month. And then that compounded and you just wind up, you know, printing cash. And there was the cash from his dad's business that Howard Hughes used to do, you know, the movies and the planes and everything else. There's like an interesting parallel to, I think, what you're doing. **Zach Dell** [20:56] The way that I've thought about the business model and Justin and I, the way we've thought about it from the beginning, is it just starts with the customer and what they want,right? If I ask you, "David, what would you like out of your power company?" My guess is you'd say something like, "I want my bill to go down and I want to never lose electricity." Is there anything else you want out of your power company? **David Senra** [21:14] No. **Zach Dell** [21:15] No. Right? And so how do we deliver that outcome for you? Well, if I sell you the battery, you're not a wholesale power market participant. You're not a qualified scheduling entity or a load scheduling entity, and you don't have a hedging team and a trading desk, and you're not thinking about commodity prices,right? And so you can't actually use that battery 99% of the time when the grid is up and running to your benefit. You can't use it to lower your power prices,right? It just sits there on your home, and then when an outage happens, awesome, you have backup that you pay 20 grand for, and you probably feel like you overpaid a little bit, but, like, you're happy. By us owning the battery, we can use it the 99% of the time that the grid is up and running as a wholesale power market asset. And then we can leverage the value of that to lower your bill, to drop your price because we're creating value. It's like we have a box on your house that is going to generate money, and we're going to share the money with you in the form of a lower electricity bill. It's really that simple. So the asset ownership model is not because, you know, we're greedy or we really just, like, want to own things. It's because it's a way to deliver the best product to the customer. That's all that matters. **David Senra** [22:17] Yeah. And in an industry where they don't really give a shit about the customer because they're a monopoly in most cases. **Zach Dell** [22:22] Yes, it's complicated. So first of all, there's, you know, regulated and deregulated states. **David Senra** [22:29] We were talking about this before we started recording. This is really interesting. Can you explain this? **Zach Dell** [22:32] So regulated and deregulated states in the US. It's kind of a history lesson here, but if you look back, you know, over 50 years, electricity is one of the few industries in the US that did not get entirely deregulated. Shipping, airlines, telecom, trucking, you know, electricity in the late '90s, early 2000s. Actually, in California, deregulation started there and basically Enron manipulated the market and kind of busted the power market in California and deregulation totally stopped. And Rick Perry and George Bush in Texas carried the torch of deregulation. And the Public Utility Commission in Texas pushed this kind of competitive market contract. Now, it's going to get even more complicated. In Texas, 80% of the market is deregulated. 20% of the market is still regulated. So Austin Energy is a municipal utility. So we sit here in Austin in our office that is served by Austin Energy. We cannot be the electricity provider to Austin Energy. Same thing in San Antonio. CPS is the municipal utility there. Same thing in Georgetown. Georgetown Electric is the municipal utility there. There's another category of utility called a co-op or a cooperative. This is more in the rural areas, but now there's really big cooperatives like CoServe, who's a customer of ours, or Petronas Electric Co-op. That's the largest co-op in the country, also in Texas. And these are, think of them as kind of nonprofits that operate for the benefit of the members. All the members, like the cooperative, are owners of the cooperative, and their job is to lower rates. And so in Texas, you have 80% of the market, Houston, Dallas, North Austin, Encore Center Point, AEP territory. That is deregulated, competitive. You can sign up to be an energy retailer. You can sell power to anybody. You have the generators who operate the gas plants, the coal plants, and the nuclear plants, and they sell power to a retail provider like us, directly to the consumer. And then you have the municipal utilities in Austin, San Antonio, and Georgetown. You have the co-ops, CoServe, Waterloo Bay Valley Electric Co-op, Farmers Electric. These are all customers of ours. **David Senra** [24:25] What do you mean by customers of yours? **Zach Dell** [24:27] So we build battery fleets for the utilities that they use in the same way that we do. So for CoServe Electric, for example, we have built them or are in the process of building them 100 megawatt and soon to be expanded fleet of batteries that they use in the same way that we do in the deregulated markets. They charge the batteries when the price of power is low. They discharge the batteries when the price of power is high. They make money in the spread. They share that spread with their members in the form of lower prices. **David Senra** [24:52] And they're the ones installing your batteries or you installed the installation? **Zach Dell** [24:55] We installed them. We installed the fleet for them. So we build them this fleet. So it's much like them going and saying, "I need 100 megawatts of utility-scale battery." Instead of the big shipping container battery, we go put thousands of batteries on their service territory and we give them a piece of software, basepowercompany.com/coserve. They can go in, they see their whole fleet, they can charge, discharge, they can schedule behavior off the fleet, and it's a wholesale power asset that they can use to lower prices, and then they get the reliability benefit for their homeowners. **David Senra** [25:19] Okay. And so that was going to be my next question. You're only installingright now batteries on individual homes, correct? **Zach Dell** [25:25] That'sright. **David Senra** [25:26] Are you doing anything else besides that at the moment? **Zach Dell** [25:28] Today, we're only focused on residential homes. Yeah. So back to the market setup, you know, in the early 2000s, you had this deregulation push. Texas really carried the torch. A couple other states in the Midwest, Ohio and Illinois, and the Northeast, Pennsylvania, New Jersey, Connecticut, Massachusetts, parts of New York, but it's kind of complicated, all deregulated to an extent. Not all of them, and none of them really as far as Texas. Texas is kind of the most competitive and deregulated. That's why we decided to start here. And relative to the deregulated markets, we compete with the retail energy providers, the Gin Tailors, Fisher Constellation, NRG. And then in the regulated markets, we are a vendor to the utilities and we're a partner to them. And you're totallyright. They don't have an incentive to innovate and go build a factory and come up with new kinds of batteries and technology because that's not how they're set up to earn. They're rate regulated. **David Senra** [26:17] Explain why they don't have the incentive to do so. **Zach Dell** [26:19] Yeah. So if you had a utility that had a monopoly ownership over a service territory, for example, let's say, you know, PG&E has all of California, which is not exactly true. There's LADWP in Southern California. There's Socon Edison as well. But let's say PG&E, for the illustrative example, has a monopoly over all of California. They can just raise rates indefinitely and just, like, jack profits, and, you know, that would be bad for consumers. And so instead, you have this concept of the rate base where there's a public utility commission that kind of governs the utility, tells them what they can build and what they can't build, and then they earn a return that's regulated and it's typically, you know, 9% unlevered on the capex they deploy. So they go to the regulator and they file what's called a rate case, which is like, "We need to build all this stuff to meet demand and to upgrade the system." And the regulator says, "Yes, you can build that." And then they go build it and they earn a return on it. And so there's no financial incentive for them to come up with new technology. Their only financial incentive is to go increase the size of the rate base and go build more assets. And so we show up and say, "We are your technology partner. We are your outsourced R&D engine. We're going to bring to you better solutions so that you can scale your infrastructure without increasing rates for your rate payers." And that's how we serve the regulated utility. So today, our business is really one technology stack, which we can talk in depth about, that is brought to market behind two business models, regulated and deregulated. The deregulated model, we directly sell power to the homeowner. We install a battery on their home. We own and operate it. We bid it into the wholesale power market till the grid's up and running. When the grid is down, the homeowner gets that battery. **David Senra** [27:57] That would be your preferred. You could snap your fingers. The entire country would be like that, correct? Would that be better for your business or no? **Zach Dell** [28:03] Not necessarily. I mean, we love the utility partnership model too because it has really large reach and there are benefits to, you know, working with one counterparty to address a large service territory. And there are some synergies. For example, like, you wouldn't want, you know, 10 different wires going to a home,right? That would be redundant,right? So it makes sense to have the poles and wires be regulated. And look, I think there's a lot of nuance in energy markets, and so it's hard to say the whole grid should be regulated, the whole grid should be deregulated. It's a very geographically defined problem. But the DREG business is direct-to-consumer retail power and wholesale market participation of our technology. The REG business is we are a vendor to the utilities. We build them these battery fleets, and then we sign 10-year contracts with them, and they pay us for that fleet over time. It's megawatts as a service. That's what that business is. Megawatts as a service. We build 100 megawatts, 500 megawatts, 1,000 megawatts, or a gigawatt, and they pay us for that. They use those megawatts, and we make money on them basically buying those megawatts from us over time. **David Senra** [29:00] Okay. Wait. And say something more about that. You said these are 10-year contracts? **Zach Dell** [29:03] Yeah. They're typically long-duration contracts where we build them a fleet of batteries and they operate them for 10 years. **David Senra** [29:08] Why is the long duration important? **Zach Dell** [29:10] Well, they're highly capital-intense and. **David Senra** [29:12] For you or for them? **Zach Dell** [29:13] For us because we're building them. And so the long-duration contract gives us certainty of cash flows, which we can use to finance. **David Senra** [29:19] I think I have a better understanding of your business now. Definitely for the non-regulated than the regulated. I want to talk about, like, how you think about company building. You've been obsessed with entrepreneurship since you were a kid. ### Dad Terminal **David Senra** [29:29] You started your first company. You said in eighth grade, seventh grade, something like that? **Zach Dell** [29:32] Eighth grade. **David Senra** [29:32] Okay. Talk about, like. **Zach Dell** [29:33] My cousins who were in high school, they had, you know, they had a little more experience than me, but not much. **David Senra** [29:38] Okay. **Zach Dell** [29:38] I mean, I've been studying this since, I mean, I mean, when I was a little kid. I mean, I had a front row seat to one of the, bias, but one of the greatest entrepreneurs of all time, still operating as one of the greatest entrepreneurs of all time. And the rate of learning, I mean, I just get to learn from him every day, and we're incredibly close, as you know. And, you know, we compare notes about, and we talk about his business and we talk about our business, and we provide each other feedback and we disagree and we argue, and it's a ton of fun. And so I've been studying the art of company building for as long as I can remember, both in that context and then also, you know, in the investing roles. I mean, investing is really just trying to predict the future in the context of understanding what makes a great company and which ones are going to win that version of the future. And so it feels like, you know, it felt like to me the perfect training ground to become an entrepreneur. **David Senra** [30:22] So you said earlier that your dad, Michael Dell, is your hero. He's one of my heroes too. I actually talked to him yesterday. And the funny thing about that is, I mean, he's got such a, like, a friendly UI, but he's so competitive and so, like, determined to win that there's such a, I don't even know how to, like, justice a position between, like, how friendly he is and just how fiercely competitive he is. Since you mentioned him, I want to bring up something you told me one time that you called the Dad Terminal. Can you say what the Dad Terminal is? **Zach Dell** [30:51] Yeah. So you joke that I'm, you know, kind of a financially-minded person, and the Bloomberg Terminal is obviously this, like, incredible technology that, you know, people in the finance industry use to ask questions and get information and think and analyze opportunities. And the Dad Terminal is my version of that where I call up Dad, and we have conversations about business topics and strategic objectives and challenges that I'm facing. And it's the most fun, it's the most fun thing ever because, you know, he has more context than anyone but my mom probably on me and what's going on in my brain. And he's got a lot of context on the business because we talk all the time. And he's scaled a vertically integrated capital-intense hardware company, consumer-facing. There's a lot of similarities between our two businesses, and so I use it as an opportunity to learn from him. And I like to think that every once in a while, you know, he gets a new perspective or I ask an interesting question, he learns a thing from me. **David Senra** [31:46] I was going to ask, like, when's the last time you presented him a situation that was new to him? **Zach Dell** [31:52] I like to think it happens pretty often. You have to ask him. Yeah. But it's fun. We challenge each other and push each other, and we spend basically no time, like, celebrating, you know, and basically all the time trying to solve problems. And you'reright, he's totally competitive and incredibly focused, but he does it with a smile. And I try to do the same thing. And I think you talked to the team here, like, they would tell you that I'm pretty intense and pretty competitive and quite focused, but I do it with a smile and I try to have fun and I take, you know, the job really seriously, but I don't take myself that seriously. **David Senra** [32:23] You mentioned vertical integration a couple of times. Why is that so important? ### Vertical integration **Zach Dell** [32:26] It's only important if you're playing a cost-focused game,right? Like, it's not vertical integration because it's fun or because it's cool. It's because we're trying to compete on cost. Vertical integration is a great strategy to win on cost,right? Electricity is a commodity. The best form of commodity is the cheapest one. And if you're going to deliver that, you got to vertically integrate. So that's why we vertically integrate. **David Senra** [32:46] When you first started the company, though, like, how do you go from this company doesn't exist to I'm going to create a, like, a new, essentially, power company that's vertically integrated? **Zach Dell** [32:55] A lot of reading, writing, thinking, and, you know, deliberation with my co-founder Justin and, you know, Jared, who's our first hire, and Dana and Cole and the early people that joined the company. I think we still do this to this day. Like, we do a lot of, you know, crawl, walk, run, a lot of iterating, a lot of testing and learning. And look, I think we started, Justin and I, with a belief that the energy industry was going through a paradigm shift, that battery storage was a really valuable technology in that paradigm shift, and that building a battery pack, you know, highly optimized battery pack assembly business in the US was going to be a really strong position to be in. And that's a balance. **David Senra** [33:33] Why on that point? **Zach Dell** [33:34] Because batteries had a lot of value and there was a lot of margin being captured by the OEMs, basically. **David Senra** [33:41] So why is it important to manufacture it here, though? **Zach Dell** [33:43] To control the supply chain. It's less about, like, physically where it is being in this country or another country and the fact that coupling engineering and manufacturing and actually, like, making the thing where you design the thing and having the engineers that make the thing and the engineers that design the thing. **David Senra** [33:57] Yeah. When we talk, you have a lot of, like, I did this episode on Elon, how Elon works. I think it's the most downloaded episode of Founders ever. You have, there's a lot of, like, SpaceX culture or ideas that I hear from you. **Zach Dell** [34:08] Yeah. **David Senra** [34:09] And obviously, Justin was there. **Zach Dell** [34:10] Yeah. **David Senra** [34:10] Like. **Zach Dell** [34:11] Yeah. I mean, Justin, Justin was there for kind of the formative years of his career, obviously, Andrew as well. Jared, our first hire, was there for the formative years of his career. Same with Cole Jones. It was hire number four. We've got a lot of SpaceX people here. It's a company that I deeply admire. I've gotten to know Brett Johnson, the CFO there. Really admire him and Gwyn and, of course, Elon is, you know, the greatest technologist of all time. And I think the culture inside of SpaceX and the operational cadence and the way their kind of ability to focus on the critical path and unblock things in their path to get to their goals that are all oriented around their mission is super inspiring. It's something we've tried to replicate. **David Senra** [34:51] And they're really hard to compete against office space. I think it was here last year or, like, maybe six months ago. And you're like, yeah, that building over there, we almost had a lease and then Elon came in and swooped it up. **Zach Dell** [35:01] They did. Yeah. It was a bummer, but you can only look forward, not backward. So we found a new spot. It's going to be better, actually. We're going to build a campus with manufacturing, engineering, everything in one place. **David Senra** [35:13] Is this the one out by the airport? **Zach Dell** [35:14] Yeah. **David Senra** [35:14] So talk more about this. **Zach Dell** [35:15] Yeah. So the business is growing and we've got to expand our manufacturing footprint. And of course, like, the headcount too. I mean, last time you were here, I think we were just on the first floor. Now we're on all three floors. You know, we'll soon fill up the whole thing. **David Senra** [35:25] Dude, the growth is crazy. So I was reading through all of your company, like, monthly reports. **Zach Dell** [35:31] Monthly updates. Yeah. **David Senra** [35:31] It's like, okay, we're going to, we're doing, like, 1.3 a day or 6 a day. And then I skipped, like, I went to the end and it's just like, and we have tens of thousands of these things everywhere. It's pretty impressive. **Zach Dell** [35:39] It's just like, you know, maniacal focus, relentless execution, and try to get, you know, a little bit better every day, every week, every month, and you can get a lot done. But yeah, business is growing a ton and we've got to expand our manufacturing footprint. Our headcount's growing and we feel really strongly about in-person work, having everyone in the same place, you know, one team, one dream, one culture. It's not like, oh, the factory people and the office people. It's like one company and we eat lunch together, we spend time together. And so having everyone co-located is really important. **David Senra** [36:06] Yeah. Your desk isright here. **Zach Dell** [36:08] Yeah. Yeah. **David Senra** [36:08] Like, and just the same as anybody else's. **Zach Dell** [36:11] Yeah, of course. **David Senra** [36:11] There's a lot of, again, like, I am fascinated by the way Elon runs his companies and he has what I feel is like very simple ideas, but they all work together. Obviously, he's doing complex shit, but it's not like rocket science. **Zach Dell** [36:21] Private offices are lame. Like, I want to be in the thick of it. I want to be with everyone. I want to overhear stuff. I want people to overhear me. I want people to feel like they can come over to my desk and ask me questions. And it's just better. It's more fun. I like, I love the team. I like being with them. There's no reason to, like, hide away in a private office. And also, I don't deserve special treatment. I'm on the team, just like the interns are on the team, just like, you know, the person who started a week ago is on the team, just like the third hire is on the team. And we're all on the same team together. We eat the same food. We have the same desk. We use the same tools. And I just think that's theright way to operate. And so, yeah, this new facility is going to be amazing. We're going to have everything co-located. And look, I mean, go to Round Rock and I think you've been, you see the Dell facility. I mean, for a long time, everyone was there. And of course, now the company is at global scale and they've got offices all over the place. But I've seen, I've seen that work really well for other companies and I think it'll work well for us. **David Senra** [37:10] Okay. So talk about more of the structure. You don't separate design, engineering, and manufacturing. It's all in one location? **Zach Dell** [37:16] Right. **David Senra** [37:16] Okay. And that's taking placeright now across the street. **Zach Dell** [37:19] Yeah. So, I mean, you could walk for two minutes that way and you'll hit Base Factory One and you'll see there's like a little driveway here and you'll see engineers walking back and forth all day long. And most of them have scooters and golf carts and, you know, things like that. And that's where the product is made. This is where the product is designed. And so it's a walk or a golf cart or a scoot to get back and forth. And just having the ability to go design a part, walk over to the factory, see how the part is being assembled, figure out the failure mode and fix it and iterate quickly with people that you see every single day, it's just a massive accelerant and pace of execution. **David Senra** [37:56] It's funny to me because, like, I've read, you know, a ton about the Robert Behrens, the Industrial Revolution, and I feel like there was a good, I don't know, 50, 70-year chunk in American history we kind of forgot these things. But the way you're describing is exactly what, like, Ford used to do. It's what Carnegie did. It's like what all of industry in the United States before it was moved out used to do. And it's like we had, we kind of, like, lost that knowledge and now it's like coming back. It's like, yeah, guys, it's exactly what they used to do. Why don't we just do it that way too? **Zach Dell** [38:20] Totally. And we have a lot of the Elon companies, Tesla and SpaceX, but also, you know, Anduril. We have these companies to thank for training a whole cohort of engineers on how to build hardware products, how to scale manufacturing, how to ramp a supply chain. And we didn't, like. **David Senra** [38:38] I'm glad you brought that up. I was thinking to the other day I was like, could you imagine the deficit that America would have if Elon didn't exist in this domain? Software would be crushing, but this, like, there's one guy. **Zach Dell** [38:51] It's the most incredible contribution I think anyone has ever made to humanity is not just the companies that he's built, but the engineers that he's trained that have gone on to build other great companies. It's, like I said, he's the greatest technologist of all time, in my opinion. It's been a massive advantage being able to hire people that he's trained that have, you know, worked with him, that have learned from him. They bring their best practices here. And then, to be fair, we adapt them,right? Like, we do things in a very base way. We have all kinds of things like Base Pace and, you know, the turtles and the dashboards and, you know, our North Stars and all these things that are core to our culture that just kind of bubbled up out of the way that our team operates and the way that we solve problems. And many of them are inspired by companies like SpaceX and Tesla, but a lot of them are kind of organic to us. **David Senra** [39:35] Okay. So explain some of these things to me. ### North Stars & tools **Zach Dell** [39:37] So look, I think we, from the earliest days, and you can go back and look at some of the artifacts and writing of this, I've been very focused on a small number of important goals that are very clear and understandable by the whole company. We've been accountable to those goals. Like, we write updates every month on, like, what do we do, what do we not do, what are we going to do next month? And we do that. You know, I've written one of these monthly updates now for the last, you know, three and a half years, every single month. Never miss a month. Don't plan to. It's a huge, it's really cathartic for me to sit down and kind of write the whole thing. And I think it's an asset for the company to have this kind of account of, okay, what happened, what's going to happen next month? They're a great recruiting tool. They're a great fundraising tool. So from the beginning, we, you know, we started the company with a memo,right? I think you've read it. It's 10 pages top to bottom. Like, what is Base Power? Why does it exist? What is the problem that we're solving? How are we going to do it? **David Senra** [40:26] Where did you get the idea to write that initial memo? **Zach Dell** [40:29] I'm just the kind of person that has to write clearly to think clearly. I've always been a writer. I loved writing. I love reading, much like you. And I think maybe some of the memo culture stuff comes from finance and investing and getting your ideas out on paper, but I just can't think clearly if I don't write clearly. And so I needed the memo for myself and for Justin. **David Senra** [40:46] I mean, you come in here, you, like, carry this, like, little notebook with you too. **Zach Dell** [40:48] Yeah. I've always got my notebooks. I have, like, two notebooks. I have the red notebook, which is, like, you know, in the business, and I have my black notebook, which is, like, on the business. And the red notebook I'm carrying around in the office and meetings. And the black notebook is, you know, for at home and I'm trying to strategize and. **David Senra** [41:01] Wait, explain the big idea. **Zach Dell** [41:02] In and on. So I think there's a concept of working in the business or working on the business,right? And working in the business is I'm blocking and tackling and solving problems that are blocking us today. And I'm, you know, trying to figure out personnel problems and product problems and, you know, acute issues that are near term. And then working on the business is thinking six months out, 12 months out, and kind of strategic war gaming and, you know, chess playing. **David Senra** [41:22] I would love to read that notebook, by the way. It might be private if you don't want to, but. **Zach Dell** [41:26] There's some good stuff in there. There's also all kinds of bad stuff in there. **David Senra** [41:30] I know. That's great. **Zach Dell** [41:31] I try to segment out my day with very specific, like, okay, when I'm in the office, I'm largely, almost always exclusively working in the business. And then, you know, I leave the office basically at 9 p.m. every night. If it were up to me, I'd stay longer, but I have a wife who I love and I want to spend time with before she goes to bed. So I'd leave at 9, I'd go hang out with her until she goes to bed. And then, you know, 10 to 11 or, you know, you know, 9 to 10, I'm with her roughly and she goes to bed. And then I open up the black notebook and I sit and my phone's in another room, my computer's in another room, and I just focus on strategy and what's most important and, you know, what are we not thinking about? And, you know, sometimes there's very specific things I need to do, which is, like, I need to go write, you know, an outline of a memo or of a, you know, a big thing that's happening in the next couple of weeks that I have to figure out, like a big problem. And sometimes I just sit and I have no idea what I'm going to write about and I just stare at a page until something pops into my head. And that process has yielded some of the best ideas that have come. And I think by, like, deliberately allocating time in the day towards working on the business versus in the business, it helps you. And, like, actually physically having a different notebook that is, like, a different color. And I open the black notebook and I'm like, it's time to get creative. Like that. And I'm not in the office. I'm like at home. It's after hours. And that just has really, really helped me, that segmentation of, you know, when to work in the business and when to work on the business. **David Senra** [42:47] Do you think there's something special about it being analog that you're actually writing with pen to paper? **Zach Dell** [42:51] For sure. I've tried to move to a computer and all the good ideas go away. I mean, not entirely,right? And, like, what happens is, you know, I wake up pretty early in the mornings and, you know, 6 to 8 a.m. is kind of my most productive time. But that, I'm in the morning, I'm kind of like doing the work that I assigned myself the night before. So I'm like, okay, I got to solve this, I solve that. And then I open the computer and that's all on the computer. And then I'm like actually executing. But there's like this special, you know, 30 to 60 minutes in the evening with a pen and a paper and no distractions. I can't get a notification. I can't get a call. Like, I'm just focused. And I really enjoy that. And I'm sure some people have the capacity to focus, you know, using digital tools, but, like, the analog is really clarifying and focusing for me. **David Senra** [43:35] Deel is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. 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Learn how they can help your business today by going to deel.com/senra. That is deel.com/senra. Okay, so go back to this idea of North Star. This is a handful of simple ideas that you're getting the entire company to focus on. How do you describe this? **Zach Dell** [44:57] It's three things that we must accomplish this year to stay on path towards our mission. So it's become the largest distributed battery fleet in the world. The fastest growing battery fleet in the world. Land the batteries at the lowest landed cost because it costs us everything in a commodity business. **David Senra** [45:15] What does land mean? **Zach Dell** [45:17] Get the batteries on the grid on a per kilowatt hour basis, cheaper than anyone. **David Senra** [45:23] And how do you affect the price of that? **Zach Dell** [45:26] The bill of materials of the hardware, the installation cost, the customer acquisition cost, all the overhead in the operations to get the battery there. **David Senra** [45:32] Okay. **Zach Dell** [45:32] So it's fastest growing battery fleet, lowest cost megawatts, basically, and then financial sustainability, which is basically profitability, unit economics,right? Those are the three things. And those are the three North Stars. And if you walk in the office, in the middle of the office by the stairs, there's a poster. Beautiful. It's well designed by our design team on purpose, but it only has the three North Stars. And that same poster is in the middle of the factory. And everyone walks by it every single day. And at the beginning of the year, I sat on email with the team and I said, "Look, these are our three North Stars. If we get these three things done, these three things done, this year we're going to be on track towards our mission." And so people know, okay, if we want to achieve this mission, these are the three things we have to get done. And then there are goals that come downstream of the North Stars that are kind of specific things that we have to accomplish to hit the North Star. And so everything we're doing internally is focused on those North Stars. So we have these very specific North Stars. We have these monthly updates that organize the team. And then we're just maniacally focused on unblocking whatever is on critical path towards achieving those North Stars, which keep us in track for that mission. So I mentioned the turtle. So the turtle is this device that we use. And there's devices,right? There's like tools. The turtle is a tool. The metrics and dashboards are a tool. We'll talk about both of them. And the updates are a tool. The writing and the kind of organizing of thoughts. So the turtle is a literal physical turtle. Now there's actually a couple of them that goes on the desk of the person that is on critical path. That turtle can only be moved when critical path is resolved. So with turtle comes a thing called a hot potato. And a hot potato is like a squad, basically, that spins up around a problem. So we have a problem in the business. There's a part of the supply chain that, you know, there's a part that we can't get at volume. And so there's a turtle on the desk of the head of the supply chain. And there's a team of people that are all working on solving that problem. And there's a meeting every single day. And there's an email that goes out every week to the entire company to updates@basepowercompany.com. That is a hot potato update. And it's like, "Hey, this is the constraint in the businessright now. This is what we're doing to resolve the constraint. These are the next steps to get the thing resolved." And then when the hot potato is resolved, there's an email that goes out and says, "Hot potato resolved. It's done." And then those people go back to their normal course of business. And it's not like they're in a meeting every single day forever. They're in a meeting until the job gets done,right? And the turtle physically. And it's like a funny silly thing. It's like we have now there's like a plush turtle, there's a ceramic turtle, there's like all kinds of turtles around the office. And there's like a little version of this where we like need to unblock. And it's this concept of like, take your work really seriously, but don't take yourself that seriously. We have freaking turtle stuffed animals all over the place and, you know, little inside jokes like this, but they're really motivating for people. And people take pride in having the turtle because it's like, it's my job now to unblock the business and to move the business forward. So we talk about, you know, that's a tool,right? You know, every company uses metrics and dashboards, but I think we do it in a really thoughtful way. So if you walk around the office, what you have, it looks like a Best Buy. There's TVs popping out everywhere. And every TV has metrics that matter to the company on those TVs. Good ones in green, bad ones in red. And we joke that every team at the company, as you noted, we all sit in kind of bullpen seating, open floor plan. Every team in the company has TVs that literally hang over their head with the metrics that matter to that team. Good ones in green, bad ones in red. And so you show up every day and you know things are good or things are bad,right? Because the TVs are telling you so,right? And those metrics are really focused and specific. And if they're not high signal, the leaders of the company, their job, and everyone at the company, their job is to point that out and be like, "Hey, that's a bad dashboard." Like that dashboard isn't telling us something useful. That's guiding us towards the wrong thing,right? And so if you measure something that's not useful, you're going to end up going off in directions that are not actually moving you forward. And so the metrics have to be super specific. They have to be oriented towards the North Stars, and they have to be very visible and readable. And that's been a powerful tool to get everyone focused on theright things and then onboarded quickly. Because if you just joined the company and you don't know about the North Stars and you're just learning about them for the first time and you're not, you're like still kind of wrapping your head around, you know, our mission, vision, and strategy, these metrics that point you to very specific things for your team really help you get focused quickly. And then over the time of the, over your time at the company, you get steeped in our mission, our vision, our strategy. And I've told you about, you know, there's a presentation I give every quarter called Engine of Success, which I'm actually giving tomorrow. I'm really excited for it, which explains our formula for winning,right? It's like, how do we win? It's our super top secret, you know, like this is our formula for success. This is how we beat the competition. And it's a lecture effectively that I give to the whole company. And it's really designed for the new cohort of people that joined in that quarter because I want everyone from the interns to the most senior people to understand like how are we going to do this thing? What's the plan,right? I think a lot of companies, when you join them at our scale, 500 people and growing really fast, they're like, "Hey, here's your desk, here's your computer. You're working on this very small part of the thing. Like, good luck and do a good job." I really care, Justin, and I really care that the leadership team here, we all really care about everyone understanding why we're here, what we're after, and how we're going to do it. Because we want people to come up with all kinds of good ideas on things that are not necessarily directly in their scope because we want to hear them. Good ideas can come from everywhere. And so, and then you have more context on the specific thing that you're working on and how it impacts the broader business. And so we teach these things. And it's really my job. And I'm kind of like a coach and a teacher to the company in a lot of ways. It's a big part of my job. It's like writing these monthly updates, giving these quarterly presentations, really clearly explaining these North Stars, making them theright North Stars, putting them on a poster, making sure all the metrics areright, guiding us in theright direction, that working on the business so that people working in the business, which I also work in the business every day and I love doing that, can make sure they're working on theright things. ### Lessons from investing **David Senra** [50:59] Yeah, I've heard you describe your role. You view your role as like a player coach. Can you say more about that? **Zach Dell** [51:03] Yeah. So I think the coach side is the working on the business. And, you know, also there's a personal element to running a company, which is, man, we are grinding. Like it is hard. Like this group hustles. I think you've seen that working with the team and meeting the team. And I mean, it is busy here at 9 p.m. It is busy here on Saturdays. And it's stressful. And so there's a lot of, you know, helping the team and the people, the humans do the best work of their career. And that's a lot of the coach side and working with them and trying to, you know, I studied psychology in college, which definitely doesn't make me an expert, but like, you know, I've read all kinds of behavioral psychology books and it's a topic that I really enjoy learning about. And I love helping people become the best version of themselves. And then, of course, guiding the company towards theright North Stars, theright metrics, theright quarterly goals, focusing on theright things. That's really the coach side. And then the player side is I also want to be a world-class IC. And there are things that I can do day to day in the business to unblock the company, to help go put points on the board, you know, to use a sports analogy. I'm a big basketball player. Like when the game's on the line and the team needs a bucket, they can give me the ball and I can go score,right? And I can also guard the best player on the opposing team. And I also know if I'm double-teamed, who to pass it to,right? And it's like, you got to be able to drop the play and help, you know, motivate your teammate when he misses a big shot. And also if your team needs a bucket, like you got to go get a bucket. **David Senra** [52:30] I interrupted you earlier. You were saying some insights you drew about entrepreneurship from starting out investing. What were you going to say about that? **Zach Dell** [52:39] I mean, I think investing, and maybe this is just my perspective of it, is the art of studying good businesses. What makes a good business and what makes a bad business? And how do you predict which ones are going to be good and which ones are going to be bad? I'm quite competitive and quantitative and I'm like interested in things like accounting and capital allocation and capital markets. **David Senra** [52:55] You'd be shocked to how many of the robber barons like started out accounting, you know, like Rockefeller. **Zach Dell** [53:00] I mean, it's the language of business,right? You have to be steeped in it to understand what makes a business tick and what makes a healthy business and an unhealthy business. And so, and there's a lot of also the study of people too, back to the psychology point. And, you know, I think this is one of the things that makes Josh, our mutual friend and who I used to work for at Thrive, world-class at his job is he's just an incredible identifier of talent and he's really good at understanding like who's going to be a good CEO and not and, you know, what's a good leadership team and not. And so my interest in and passion for investing was largely driven by this is a place where I can pick up a lot of skills to become a great entrepreneur. I can learn accounting. I can learn capital allocation. I can learn what makes great leadership teams. And I still love thinking about businesses and thinking about investing primarily as a means to the end of learning how to be a great entrepreneur. Like the companies I want to invest in are the ones run by entrepreneurs that I want to emulate and I want to learn from. **David Senra** [53:55] Tell me some of the entrepreneurs you want to emulate. That's interesting. **Zach Dell** [53:58] I mean, my dad's at the top of the list, but I really admire Patrick Collison and John as well, but the Collison brothers, I think the way that they've run that business is really impressive. The culture that they've built, the pace of execution, and the way that they've continued to kind of evolve the company over time as it's gotten bigger. Obviously, they started serving startups. Now they're serving enterprises. They're doing a lot of interesting things with kind of emerging technologies like stablecoins. I really admire Eric and Karim at Ramp, who obviously are close friends of yours as well. And the way that they have built an incredible talent magnet in a category that on the surface is maybe not all that sexy. And then they've turned that category into something really sexy. And they've built an incredible suite of products and tools for companies that are incredibly useful in an area where you wouldn't have otherwise thought that that was possible, or at least I wouldn't have. And they're just great operators. They're incredibly customer-obsessed. They're really focused on the product and they want to drive outcomes for their customers. Kind of back to the point of like you care about affordability, reliability. They care about saving you time and money. That's all they care about,right? And, you know, that's why they're able to differentiate in that space. And so those are two different companies. **David Senra** [55:03] And you wouldn't think that a company like Ramp could build a great brand in, you know, what many people consider like an unsexy category. I feel you base is actually, it's the only brand like in power that I can even think of. ### Brand & constraints **Zach Dell** [55:16] We talk about building the first beloved brand in energy all the time. And, you know, if you think about just consumer products, like I think this is another thing, like studying businesses, being an investor, and the value of that in the path to being an entrepreneur. I think that brands are one of the most underrated moats in business,right? Coca-Cola and Nike, you know, these brands are so, it's hard to put a dollar amount on how valuable they are. **David Senra** [55:39] You've read Zero to One, I assume. **Zach Dell** [55:40] Of course. **David Senra** [55:41] I think I just read it for the fourth time. I just did another episode of Founders on it. And, you know, he was talking about all the ways to build a creative monopoly. And in that book, the funny thing is like, well, brands won. He goes, I just don't understand it. To your point. **Zach Dell** [55:52] It's so valuable. And there really aren't any beloved brands in energy, which makes the opportunity even bigger because it's counterpositioned. It's unique,right? And so if you're able to do a thing that no one has ever done in your space, you stand out,right? And so being able to build a beloved brand in this category has become a huge advantage for us. **David Senra** [56:11] Are there any other entrepreneurs that you like emulate or you study? I mean, obviously you mentioned Elon a few times. **Zach Dell** [56:16] Yeah, I mean, Elon is obviously one of the greatest of all time. And I think I've more so learned from the people that I've worked with that have come from his companies and the way that they operate than Elon himself. **David Senra** [56:27] What have you learned from the people that worked for them? **Zach Dell** [56:30] Mostly this maniacal focus on critical path and resolving constraints. And I've also learned a lot of this from Antonio Gracias, who's on my board and has worked very closely with Elon for decades. The first year or two of working with Antonio, basically every conversation I had with him, and still to this day, this is, you know, the main focus of all of our conversations. Every conversation was the same. Hey, Antonio, how's it going? Good. How are you? What's up? You know, Zach, what's your constraint? Like, what's the constraint in the business? And I would just answer the question and that's all we would talk about. That's it. What's the constraint? What's the constraint? What's the constraint? Like, if we agree on the mission, the vision, and the strategy, okay, we're good there. What's constraining us to get to that? Let's just focus all of our time and energy on that. And that kind of flows into all of the little things in process and kind of how people operate that show up kind of in the day to day with the metrics and the dashboards and the hot potatoes and the turtles. Like all that is, is just trying to get to what is constraining our business and how do we resolve those constraints that are on the critical path on the way towards our mission. **David Senra** [57:32] There's a weird idea here. I've said it a few times on the other podcasts, but I'll just say it here. It's like I'm obsessed with things that last for a very long time. And so I looked, I was like, okay, what human-made things last the longest? It's just like, well, countries last longer than companies. Like companies can last a long time, but countries last longer than countries. What lasts longer than countries? And it's just like, well, is there anything human-made that lasts longer than religions? And I actually think there's like a lot companies can learn by studying religion. And just a few of these ideas were just like, well, first you mentioned earlier, like whether it's an intern or the CEO, I want everybody to have a shared base of knowledge. Religions do this excellent. They usually, it's a book. We all agree on it. We all own it. We don't like, we read it one week and we meet together next week. It's like, oh, no, we're done with that book. No, we go back to that book over and over and over again. We have the same conversation over and over again. We find places to gather with like-minded people, just people that believe the same things we do in regular intervals. Like even if they believe different things, religions have like these parallels or these like similarities that I think companies should use. So I love this idea that this is what pops to my mind when you're talking about, hey, I'm on the phone with this guy all the time over two years and it's just the same conversation over and over again. Explain why that's valuable though. **Zach Dell** [58:42] Because it's focusing and it just forces you. It's kind of the uncomfortable thing. It's like we don't want to talk about like all these fun strategic things and all these bets we can make. It's like, what is constraining us towards our mission? Let's just focus on that. It's incredibly clarifying and it's uncomfortable at first, but over time it becomes very comfortable. **David Senra** [58:59] Wait, why would it be uncomfortable at first? **Zach Dell** [59:00] Because the natural tendency is to talk about all the different things that are going on and all the different opportunities available to you. And the hard thing is to focus and just focus on the most important thing that is the constraint in between you and your goal. It's kind of like a cope, if you will, to talk about the other stuff. Because it's like, oh, yes, there's this constraint, but like there's all this other stuff going on. It's like, no, no, no. Focus on the constraint. I think my co-founder, Justin, is very, very good at this. Like Justin and I, every Sunday, you know, our one-on-ones are on Sundays and we have these kind of strategy conversations on Sundays and we don't ever talk about what's going well. Like, you know, we got a lot of work to do, but I think could largely say the last three years have gone like reasonably well. You would never know it by tuning into the conversations that Justin and I have on Sundays because there's no benefit to that. Like that's in the past. We're only looking forward. What problems can we solve? What things are we worried about? What constraints can we relieve? That is really the only thing that matters. And all the other stuff is kind of just noise. **David Senra** [1:00:04] Yeah. Munger and Buffett have a great line on this. They're like, tell me the bad news because the good news takes care of itself. **Zach Dell** [1:00:08] Exactly. **David Senra** [1:00:09] Is there anything else that you think is beneficial to these conversations? Like how many times when you're talking to a board member, your co-founder, how many times are you, is it just helpful to organize your thoughts with somebody else? Like, you know, Charlie Munger has this thing called the orangutan theory. Have you ever heard of this? **Zach Dell** [1:00:27] No. **David Senra** [1:00:27] Okay. So he says that an intelligent person could sit down and they kind of have a one-sided conversation with an orangutan for, you know, 30 minutes, whatever the case is,right? Get up, leave. The orangutan obviously says nothing. And the person that had that one-sided conversation actually benefits. Just being able to organize your thoughts out loud. **Zach Dell** [1:00:42] This is the notebook,right? **David Senra** [1:00:43] Okay. **Zach Dell** [1:00:44] This is the notebook,right? This is the monthly updates. This is like, write clearly to think clearly. It's like, and my team, you know, when I have a good idea, like I write it down first and I put it in front of them and I'm like, hey, I wrote this thing. What do you think? And it's like, oh, I disagree with this. I disagree with that. And we debate the writing,right? And it's like, that's why every night I sit down with this notebook and I stared at it and I kind of forced myself to write stuff because it just allows you to gather your thoughts. And then, you know, I chew things over with Justin. I chew things over with Jared, with Dana, with Cole, with Dino, with Zina, with my dad, with Lee, with Antonio, with, you know, other friends that, you know, like Zach and, you know, other people who are, you know, around the business, have a lot of context, have a little bit of context, have expertise on the topic. And I think writing, I mean, how many times have you gotten just like a document from me? It's like, what do you think about this? Right? Like that's just my way of communicating ideas and that is how I get my thoughts out of my head is to write. **David Senra** [1:01:43] I came across this other thing the other day. It's called like rubber duck programming where a programmer would sit there. They'd have like kind of like your turtle thing. It's like the rubber duck is sitting here. It's like, and I'm explaining the code I wrote and why I did it this way to the rubber duck and just hearing me put, it's like saying it out loud. It's like very helpful for clarifying thoughts. I do this all the time because obviously my other podcast is a solo podcast and I'll sit down to record and I'll be thinking, oh, I understand why this guy did this or what happened here. And then I hear myself talking like, I don't actually understand this. I have to fucking sit with it for a little bit longer. Like it's fascinating how helpful just having like even a soundboard that doesn't speak back is for your thoughts. **Zach Dell** [1:02:21] And we were talking about the cap table and our investors and, you know, most of my major investors and this is, I mean, I'm constantly sending them things that I write and calling them in early hours in the morning and, you know, late hours in the evening. I'm just trying to brainstorm and just kind of chew on things with them and it's incredibly. **David Senra** [1:02:38] Who do you think's been the most helpful out of any of your investors? **Zach Dell** [1:02:42] I mean, honestly, our mutual friend, Zach. **David Senra** [1:02:44] We can't say his last name. **Zach Dell** [1:02:45] We can't say his last name. Who is not even one of our major investors, but it's just like a, you know, very close personal friend and is a base investor. Is one of the best business strategists I've ever met. I think probably the best investor of our generation, one of the best company builders of our generation. **David Senra** [1:03:00] He doesn't consider himself an investor. I'm seeing him later on today, but I got to tell you a story about this. **Zach Dell** [1:03:06] Yeah, go ahead. **David Senra** [1:03:07] A friend of mine was having an issue. He's got two companies. He couldn't figure out, should I sell one? Should I focus on another? And I had my own opinions on this. Obviously, fucking focus on one thing. And I just arranged for them to sit down. **Zach Dell** [1:03:19] Very predictable take by you. **David Senra** [1:03:21] Exactly. Exactly. And I arranged for them to sit down. Ten minutes later, it took all ten minutes of our mutual friend identifying exactly what's wrong. And then the guy I connected with texted me. He's like, he got to the heart of the issue likeright away. I was like, yeah, that's why he's so fucking good. **Zach Dell** [1:03:35] He just is a brilliant business strategist and operator and has seen a lot and he listens really well. I think he's very patient and thoughtful and he's been incredibly helpful. My dad is near the top of the list. **David Senra** [1:03:47] We talked about this when we were on the phone yesterday because I was supposed to see him last night and I was like, dude, I got to get some sleep. None of the conversations with him is going to be five minutes. If you're his friend, it's going to be like three hours and it's going to be incredible and you're not going to be able to sleep. I was like, I got to get up at five the next day. I'll see you tomorrow. **Zach Dell** [1:04:01] Totally. Yeah. And so I'm very lucky to have a lot of people, you know, like Josh, who I worked with for a couple of years and is obviously a major base investor. Brad Gerstner is a great thought partner and is someone I call all the time with crazy ideas. Leif Fixholt, you know, his firm edition is our largest investor. Antonio and his partner, John Schulken, are super helpful in this regard. **David Senra** [1:04:20] But if you had to only pick one. **Zach Dell** [1:04:22] I mean, it's my dad. It's the truth. **David Senra** [1:04:24] There you go. **Zach Dell** [1:04:24] Yeah. **David Senra** [1:04:24] Okay. Well. **Zach Dell** [1:04:26] He knows me better than anyone. He's known me longer than anyone. Except my twin sister, technically. **David Senra** [1:04:31] I was talking to him yesterday and one thing that we said was just like, one thing I respect about you is like you're just, you're a fusive praise and admiration for him. You know, it was really cool. But I was like, listen, Zach thinks that he loves you. I go, Zach doesn't know what love is until he holds his first child in his hands. And your dad laughed. He's like, he's absolutelyright. Like the way you feel about him, I promise you, it's a thing. Love flows down the generations of humanity. Like he feels that way a thousand times more about you. And you'll understand, you'll fucking appreciate him even more. Hopefully, maybe later on tonight, you start working on the baby. But whenever that happens, say nine months and one day from now, when you're like, fuck, David wasright about this. Like, and then you're going to appreciate your dad even more, which is going to blow your mind. I'm looking forward to that for you. **Zach Dell** [1:05:17] I'm so excited to have kids. I'm one of four and I have an incredibly close relationship with both of my parents and my mom. I mean, if you think my dad is competitive, my mom is on a whole nother level. I mean, she is. **David Senra** [1:05:27] I saw the picture in your dad's office. Your mom's a beast, like an athlete. **Zach Dell** [1:05:31] She's an incredible athlete. She's a world-class endurance athlete. She's done the Ironman World Championship. **David Senra** [1:05:35] Do you think she's crazy shit for your birthdays where it's like every birthday she's like, I'm going to ride like a hundred miles plus your age or something? **Zach Dell** [1:05:41] She every year would ride a hundred miles plus our age for all four kids. Not because we asked her to, but because she wanted a challenge and she wanted to kind of commemorate the birth giving, if you will. And she's just an intense person with an unbelievable amount of love and affection and care and amazing mom and amazing wife to him. And I think, you know, he constantly talks about how, you know, she's the secret weapon and it's really true. And she is the engine of the family and the kind of cornerstone. We are definitely a matriarchal family that kind of revolves around her in the best way. I'm just so lucky to call her my mom and to get to learn from her. And I continue to be inspired by her every day. I mean, she's a force of nature. **David Senra** [1:06:26] I'm going to switch gears real fast because I saw a factory tour of yours. What is this cube? Can you explain like the evolution? I saw the, I went through all your company updates and I saw the evolution of what you guys were installing, how you were making batteries, the lessons that you were learning. ### Base Core **David Senra** [1:06:40] And now this is kind of like the next generation, your latest product. Can you explain like all the learnings I went into and why it looks the way it does? **Zach Dell** [1:06:47] Yeah, the core. So it's called the base core. **David Senra** [1:06:49] Oh, sorry, the car. **Zach Dell** [1:06:49] It's called the base core. **David Senra** [1:06:50] Did I call it the cube? **Zach Dell** [1:06:51] It's okay. It looks like a cube. **David Senra** [1:06:52] Allright, my bad. **Zach Dell** [1:06:52] It looks like a cube. It's called the base core and it is our custom-built battery. And it is the output of the last three years of learning how to install, operate, and manage tens of thousands of distributed home batteries. It's completely designed by us from the ground up. It's manufactured over there across the street, a supply chain that we entirely control and manage. And it's purpose-built for the use case. It's lower landed cost, bill of materials. It installs much faster. It switches over much cleaner. It has more power output, more energy duration, and it's really designed to be a grid resource. And it is the kind of embodiment of our strategy. We talk about mission, vision, strategy, strategy of compounding cost advantage through vertical integration and technology. This is the vertical integration and technology coming to life. And so now our business goes from, you know, good economics installing off-the-shelf hardware to incredible economics with this vertically integrated cost structure and a product that we can scale at an order of magnitude greater than the previous product because we were tapping out our existing supplier. Like we were buying all their stuff and they couldn't make batteries. I mean, we're sold out through November and it's August,right? So we cannot meet the demand with the supply chain that exists today. We have to do it ourselves,right? And so we're building factory one, we're building factory two, we're bringing on module lines and inverter lines as fast as we can to meet the demand. And the only way to do that is with vertical integration. And the base core is the embodiment of that strategy. **David Senra** [1:08:18] Explain why though? **Zach Dell** [1:08:20] Because when you rely on suppliers, you're kind of at the whim of their execution. And when you do it yourself, you control it, you control your own execution, and you can kind of rise to the occasion to meet the demand. And you can invest the CapEx to, you know, you have the conviction. If I go to the supplier and I say, we're going to be the fastest growing energy company of all time. Three years ago, if I said, we're going to be the fastest growing energy company of all time, we're going to install tens of thousands of batteries in the next three years and then hundreds of thousands of batteries in the next five years. And we need you to go invest hundreds of millions of CapEx to build a manufacturing capacity to meet our demand. **David Senra** [1:08:52] They're not going to do it. **Zach Dell** [1:08:53] They're going to be like, get out of here, kid. Like, what are you talking about? Like, send me the PO and then we'll talk. And so we got to do it ourselves. We have to put up the CapEx. We have to build the execution capabilities and expertise to actually go do that stuff. And then when you do it, you have a better cost structure because that OEM that you were buying from no longer collects a margin. That's your margin to keep. And you have more control over the scalability and you can go make those kinds of forward investments to, you know, bet on future growth. **David Senra** [1:09:20] How deep can you take this vertical integration? Like when you were just speaking, again, I had this like, you know, this thorough conversation. It's like, I'm not really thinking about Zach and Base. I'm thinking about like, oh, this reminds me of Henry Ford took vertical integration way further than you could even think that somebody's manufacturing cars to the point he bought his own railroad because he was annoyed at he couldn't get his raw materials like fast enough. So he's like, I can actually run a railroad better than you guys and I will prove it. And he wound up running it, optimizing it, and then I think he sold it for like a $30 million profit too. Like, so how far can you take this? **Zach Dell** [1:09:49] So there's a lot to say here. I mean, we could take it. We could go buy a lithium mine and start refining lithium and, you know, make our own cells and. **David Senra** [1:09:55] All the way down to mining? **Zach Dell** [1:09:56] Sure, you could,right? I mean. **David Senra** [1:09:58] Call Travis. **Zach Dell** [1:09:58] Call Travis. We could do that, but I think it's how far do we want to take it and win,right? And over time, you know, there's kind of like diminishing, but not to zero, maybe plateauing or asymptoting returns to a certain level of vertical integration. And then once you reach a certain scale, it makes sense to vertically integrate further and then further and then further. And based on our current scale, we like the position of final assembly, test, and pack. We design everything. The fabrication is largely done by third parties, our suppliers. We get all the parts, we stick everything together and we test it and we pack it and then we go install it, own it, and operate it. Over time, we could reach a scale where you get economies of scale and you get benefits basically that outweigh the cost of making the cell, refining lithium, mining lithium. **David Senra** [1:10:43] That has to excite you though. **Zach Dell** [1:10:44] That kind of excites me. **David Senra** [1:10:45] I was going to say, the way you are. **Zach Dell** [1:10:46] Of course, but this is a multi-decade, 50-year journey that we're on. And in year three, it doesn't make sense for me to spend any of my energy and brain power thinking about making cells,right? In year 30, it almost certainly will. **David Senra** [1:11:02] Okay, but do you think you're going to get to year 30? And I don't mean that the company's not going to be successful. I love your fucking competitive nature. **Zach Dell** [1:11:09] Of course. ### Last company **David Senra** [1:11:12] No, what I mean about this, like there's something, there's no other word that I have for this. It's just fucking perverted in the entrepreneurship ecosystem. I hate that there's even an entrepreneurship like industrial complex. It's like that's run largely by investors, which I fucking can't stand, which is start, scale, sell. And I'm like, no. Like, then what are you going to do? Like your exercise should be death. So I've had two founders on recently where we talked about this. Like, you know, Scott Woo. **Zach Dell** [1:11:37] Yeah. **David Senra** [1:11:38] Like he's, they're throwing billions at this kid. Billions. And he's saying no so far. And I hope he holds on. But his whole thing, and I think he will because he's already rich. And I believe, and he's super, super competitive. And then I just had Torsten Riehl, who's the founder of Helsing, who it's not out yet, but he's just like, he's, I think, started the conversation because his whole thing is like, Europe needs its own way to defend itself. This is not a fucking business. This is a mission. He goes, we're not selling this for any amount of money. What's your opinion on this? **Zach Dell** [1:12:03] Look, you said it. It's, what are you solving for? Are you solving for the mission or are you solving for a paycheck? I think you could probably guess based on where I come from that I'm not solving for a paycheck,right? And the way I talk about the business and the way we act and the way the business is run, we're here to achieve a mission. That mission is kind of never-ending,right? Human prosperity, energy abundance, affordable, reliable power. We're never like, well, we did it. Like we did the affordable, reliable power thing. Like what's next,right? Like that will, that is a mission that will live on forever. Probably outlive the company, outlive me. Hopefully the company outlives me and then the mission will go on forever. And eventually, you know, either, you know, something will take out the earth that will kill the company,right? But like. **David Senra** [1:12:47] This company's going to last to the end of the universe. **Zach Dell** [1:12:49] That's the plan,right? And like, and so. **David Senra** [1:12:52] Your dad has a great line about this when he was fighting Caro Icahn. He's like, why don't you just start another company? He's like, I'll care about this company after I'm dead. **Zach Dell** [1:12:58] Well, you asked me like, what would it require for your dad to stop working on Dell? And I told you that you'd have to kill him. **David Senra** [1:13:03] Yeah. **Zach Dell** [1:13:03] Right? And so it's about the mission. It's about like, I get to, it's the honor of a lifetime, of a fucking lifetime, blessing of a lifetime to get to come, wake up every day and get to work on this mission with this group of people and come into this building. And, you know, when I'm not here, I'm like wanting to be here,right? And I'm wanting to think about it. And like, I'm, you know, I'm constantly obsessing over moving this mission forward and that'll never change. And your point on vertical integration, like year three, year 30, year 50, like the problems ahead of us or the opportunities that we can go after that will move us closer to that mission will change,right? They'll look more capital intense. They'll look like, you know, vertical integration or, you know, going deep, going wide. Like that'll all change, but it's all about the mission and it always will be. And the reason why, you know, we're focused on other thingsright now other than making cells and refining lithium and mining lithium is because there's a bunch of other opportunities across the stack that we want to go chase that are all aligned with the mission. At a very high level, energy is four things: make, move, store, and sell,right? You have to make it, generation. You have to move it, transmission, distribution. So you have to generate electricity. You have to move it to where it's made. Store, battery storage. You have to store it because it's not always used when it's made,right? You have to move it because it's not used where it's made. You have to store it because it's not used when it's made. And then you have to sell it. Make, move, store, and sell. Generation, transmission, distribution, storage, and retail energy. And all the things around, you know, the software and all the things around selling energy. We started with store and sell because we thought that was the best place in terms of scale and return on capital to enter the market. But we have ambitions across make, move, store, and sell. Because if we are oriented around the mission, which is affordable and reliable electricity, and electricity is four things, if you want to have the biggest impact on the mission, you got to do all four things,right? So rather than deeply vertically integrate in year three on store, I'd rather go build great solutions to drive down cost and drive up reliability in the industry in make, move, and sell. And then over time, as opportunities present themselves to get better at make, move, store, and sell, we'll do that. Whether that means refining and mining lithium or not. And then there's this new kind of interesting angle where we take that stack that we've developed, the make, move, store, and sell stack, and we point it at the largest and fastest growing energy consumer in the world, which is AI, which we talked about at the beginning of the conversation. **David Senra** [1:15:27] Okay, so this is your last company. **Zach Dell** [1:15:29] Absolutely. **David Senra** [1:15:29] Okay. Since you're going to be doing this for the rest of your life, I'm going to be doing what I'm doing for the rest of my life. I'd love if you come on every like six months, whenever you want. We'll have more conversations and then over time over the next few decades, we'll have like an ongoing live history of Base. **Zach Dell** [1:15:42] I love that. I mean, I love every conversation with you. You always push me to think bigger, push harder, really analyze why I'm doing things, draw comparisons to other entrepreneurs throughout history. And I always learn something in our conversation. So I'd love that. **David Senra** [1:15:55] Thanks for making the time, man. **Zach Dell** [1:15:56] Appreciate it. **David Senra** [1:15:56] Awesome. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders. --- This library is powered by PodHood (https://podhood.com), the podcast website platform.