🧬 Grant Aarons - FabricNano - Part 1

Episode Overview

• Grant Aarons discusses how his early fascination with infrastructure and a hands-on engineering education at Cooper Union shaped his first-principles approach to problem-solving.
• He explains his career pivot from traditional engineering to finance, driven by a search for faster "feedback loops" than the decades-long timelines of large-scale engineering projects.
• Aarons draws on his experience at the Federal Reserve to explain how macroeconomic policies, specifically interest rates, create the investment environment for capital-intensive startups.
• He argues that deep tech and biotech companies should not shy away from being capital-intensive, but must strategically pair it with capital efficiency to build defensible, high-return businesses.

Key Concepts

• A hands-on, practical education from day one can instill a foundational, first-principles approach to engineering and building things.
• The concept of "feedback loops" is a critical factor in career and business decisions; traditional engineering has very slow loops, while software and finance offer much faster ones.
• The Federal Reserve's policies, particularly the federal funds rate, set the "base rate" for all borrowing and fundamentally influence how investors evaluate the risk and potential return of capital-intensive businesses.
• In a high-interest-rate environment, the key to success for deep tech is not avoiding capital intensity but pairing it with capital efficiency—ensuring that large investments lead to highly valuable and defensible outcomes.

Quotes

• At 3:13 - "That is consistently what it feels like to be running a company. It's just constantly thinking about the world around you and how it operates." - Grant connects his early curiosity about systems to the mindset required to be a CEO.
• At 18:32 - "The feedback loops in engineering are incredibly slow." - Aarons explains the core reason he pivoted away from a traditional engineering career path.
• At 25:08 - "We're going to lift Fed funds rate... We've had a zero interest rate for 10 years. What happens when it goes off of zero? And everyone's freaking out." - Aarons recalls the critical questions being asked at the Fed around 2015, highlighting the unprecedented economic territory they were navigating.
• At 38:33 - "Deep tech should embrace its capital dependency, but you should find the application areas where the capital invested leads to the highest efficiency of multiple return on the business that you're trying to build." - He shares his thesis on how deep tech companies should approach their business models in the current market.
• At 39:03 - "If you need a tank to grow every kilogram of your product, you're in trouble. If you need a tank to grow a kilogram of a very special product that's used for 10 years... you're in a great place." - Aarons uses a vivid example to distinguish between inefficient and efficient uses of capital in industrial biology.

Takeaways

• A foundational, hands-on understanding of how things are built is invaluable for leadership in a technical field.
• Consider the speed of feedback loops when choosing a career path or business model, as it dictates the pace of learning and iteration.
• Macroeconomic trends, especially interest rates, are not abstract concepts; they directly impact startup funding and strategy.
• For deep tech ventures, the strategic goal is capital efficiency, not just capital avoidance; focus on where large investments can create the most defensible value.